The Bitcoin Group, the American original for over the last 10 seconds, the sharpest cento-sheets, the best Bitcoin, the hardest cryptocurrency talk. Issue one. Welcome to the Bitcoin Group. Jay's guests, Andreas and Tenoppelis, Derek J. Freeman and Dovey Barker. Attention live viewers, please use the Q&A feature of Google Hangouts, which I think we forgot to turn on. That's not going to work. You can only turn this off. Okay, so so much for that. You can always stop and restart. We haven't done much. No, I'm not doing that anymore. Rotterly ship. Okay, fortunately we do have a live advertisement to start things out with. Today's episode is brought to you by Alpha Lion Technologies. What's your roar? Raw! Is it my turn? Blah! Check out Alpha Lion Technologies at AlphaLionTechnologies.com. What kind of roar are we going for? Are we going for like forest, bear roar or lion roar? I was going to start. I was going to start. But here we go. Let's try to start the next issue. Here we go. Okay. Bitcoin. 300. Bitcoin prices entered the stratosphere this week, breaking the previous all-time high and then climbing to the heights of 32 on the legendary Bitcoin exchange mount gucks. What's the real value of Bitcoin? Can it really keep climbing? I ask you and Dress and to Nopolis. Well there's two ways to look at this. One is to look at this in terms of what came before and certainly Bitcoin of 300 looks big if you're used to Bitcoin of 30 or Bitcoin of 100. Here's another way to look at this. At $320, Bitcoin has a total valuation of $4 billion, which is a mid-level stock IPO for a nice decent new technology. As a currency, $4 billion as a monetary basis is piddly. So we are still very much in the foothills of the big Bitcoin price ascent. I think $320 is cheap. Dovy? I completely agree. I think that it's low. I think that it's high. It seems high to us because we're early adopters, but I think that the people who see a headline that says Bitcoin is at an all-time high and they hesitate, well they're going to be kicking themselves when it breaks 500. Derek J. The real value of Bitcoin is subjective for the moment. And right now it's about $325 according to the market. But I think we're seeing a bit of a repeat of what we saw in April where the price was mostly bolstered by speculation. I think we're going to see a huge run-up and then another drop-off like we did in April. It's not going to be the end of the story, of course, but I think that's what's happening right now. I think it's tough to say because it's tough to gauge something's value without an all-time high. Before I always thought that Bitcoins were worth $250, even though we were buying them for $100 a coin. But now that it's over that, I have nothing to gauge by because we keep setting a new all-time high every day. I think people are thinking about this all wrong. More along the lines of what Andreas said, it's a monetary unit and it's going to be used as an alternative currency across the world. And we don't even see 1% of the world's money in Bitcoin right now. And if we did, the price per Bitcoin would be closer to $100,000 each. So I think we're looking at a very low price given what it could be in the very near future. The price of one gold bar is around $45,000. Nobody thinks that's too high because nobody buys a whole bar. You buy gold ring instead. So the reason Bitcoin seems high or perhaps low is because we're talking Bitcoins. From my perspective, I think that we're doing very well for the price of a millibit right now. So if Bitcoin keeps going up and we start seeing transactions that are in the other decimal places in the spectrum, we're going to need to come up with better vocabulary. It's like millibit, desibit. I feel like quarters and nickels is what people are used to. And so I feel like there's going to need to emerge a vocabulary for these other units. That's an interesting thing about Bitcoin because you can infinitely divide it at each level of the currency expanding. We're just going to go to a lower and smaller unit. But Dobby's right, we're going to need names for him. I disagree that that's important at all. I think people in different places are going to call them whatever they end up calling them. What's essentially the important part is when you spend them, you're pricing it probably in terms of your local currency. So when I want to buy a drink at the bar, it's going to be $5 now and $5 tomorrow, no matter what the price of Bitcoin is, the merchant's not interested in pricing things in terms of Bitcoin. Yet, yeah, there's a call of loony. There's already a currency called loony. And Greek, it's called the Bitcoin. And so every language will have its own name. I'm sure. Absolutely. As Eric said. Exit question, what is Bitcoin's value on January 1, 2014? And Reyes? I think the value of Bitcoin to humanity is a bit like the value of fire to humanity and you can't press it based on the cost of a box of matches. That would be missing the point on a monumental scale. Bitcoin could be 20 in January. I'll be buying. If it's 2000 in January, I'll be buying. If it's 2000 in January, I'll be buying. Derek J. Andreas is right. Bitcoin is priceless to humanity. But for the sake of playing this game, I think that we're going to see Bitcoin at $450 in January. And I'm expecting to see Bitcoin in the $1,000 range in 2014. Dovy Barker? I was going to say 500, but that's so close to Derek's guess. Yeah, I definitely think in 2014, we're going to start seeing it in the thousands. All right. Issue 2. Let's see. Computer. Issue 2. Silk Road 2.0. The FBI spent two years tracking down the alleged dreaded pirate robberts and shutting down the Silk Road. But now there's a new Silk Road and a new dreaded pirate robberts. They rolled the rock up the hill and it rolled back down. What's the point of all this really? Is Bitcoin always going to be linked to illegal drug sales? I ask you, Derek J. No. People are rightly pointing out already that cash is used more often for drug sales and still is than Bitcoin. In fact, most Bitcoin transactions, I think, are still for donations. So I don't see where it gets this negative stigma except from people in the mainstream media who want to put Bitcoin down. But it won't be the end of the story. People are going to catch on and see the value for themselves. Dovy Barker? I'm going to say yes. Bitcoin is always going to be connected to sales. It doesn't matter what you're selling. There is always going to be a market for that thing in Bitcoin. And Dres? All right. Let's drop the puritanical crap right now. Recreational narcotics in all their forms are the second most traded commodity on this planet after food. If your preferred currency can't buy the second most traded commodity on the planet, it's not a very good currency. Yes, Bitcoin will be able to buy drugs. Otherwise, it wouldn't be very good money. It will be able to buy drugs and food and prostitution and sex workers. It will be able to buy lots and lots of things and lease lots of things. That's what money does. It's completely irrelevant to the big picture. Now from the perspective of the FBI, I think the Silk Road was a very, very successful bust. They were able to turn the site into a honeypot for eight months. They have an open distributed ledger that gives them a full trail of all of the accounting information they need. And they have used that to take down two or three of the biggest sellers. So far, they haven't targeted buyers. And honestly, I'd have to give the FBI and A+. Now, I don't agree with the war on drugs, but if that's their mandate, they've followed it pretty much as closely to the laws as they should. So great job. Derek, your thoughts? The thoughts on whether or not the war on drugs will ever stop? Wow, that's a question. The answer is no. What you thought about how the FBI handled the Silk Road take down? I have no comment on that. I wish all peaceful people would be left alone. Exit question. Yes or no question? Will the war on drugs ever stop? Dovey Barker? Yeah, absolutely. As soon as the state collapses, there will be no more war on drugs. There you go. And Dreyis. The war on some drugs, excluding pharmaceutical drugs, smoking and alcohol, will continue for a brief period of time. But unfortunately, it's increasingly becoming intolerable by the people and increasingly visible to the people. So, I predict the war on drugs has at most a decade left in it before it's relegated to the dust in a history where it belongs with other racist and discriminatory policies of the past. Derek J. I'm shocked to be the contrarian on this one. I'm saying the war on drugs will not stop. I see no end in sight. It's too much of a power grab for them. I don't know if you guys came across this story, but there was a, I think this was in New Mexico. There was a man who was in a way raped by police and doctors collaborating in an effort to confiscate drugs from him. That was a complete violation of every natural human right that this person had. And it was in the name of narcotics. So that is a green light that is a get out of jail free card for police officers that they're never going to give up voluntarily. But I don't think that they can hold on to it. I think it's unsustainable. But yeah, they're not going to call it off voluntarily. I've got two pieces of bad news for you, Davi, in regard to that particular incident. One, it wasn't the first time two other motorists have come forward and said that this happened to them. So this is a pattern of behavior. Two, given the warrant was issued by a judge and promoted by the district attorney to the judge, this was almost entirely legal. And that's what we should be worried about. It's worth noting, however, that the local news crew who investigated this incident discovered that the warrant that was given to search the man's private area was not for the county in which he was searched. Oh, there were a few technicalities, but the law on warrants assumes good faith. So basically they will get away with this, although they might stop it temporarily because of the publicity. Moving on from anal rape, this episode was brought to you by Bitty Liches. The officer was quite a fissious. I thought he was being over suspicious. I wasn't being the least bit malicious. I was just buying my bitcoins through Bitty Liches. Buy your bitcoins today at bittylicious.com. And don't hide them up your butts. Is you three selfish mining? Could a rogue group of miners consisting of less than 10% really forked the blockchain and profit from the chaos? The old number was 51%. Now it's down to 10%. Is this bitcoins fatal flaw? I ask you, dovey Barker. Why is the number down to 10%? I don't understand. It's a new kind of attack where they can make a copy of the Bitcoin blockchain. Then they get people to mine that. And basically people choose to mine that because they're selfish. This forks the two chains. Before I think they could do a 51% attack where they would kind of take over the mining pool with superior force. So it's essentially like 10% of people who have agreed to use a counterfeit blockchain. Is that essentially what you're telling me? If 10% of Bitcoin miners saw this counterfeit blockchain and thought that it was more profitable, which it would be because it would be being mined less than the popular blockchain, they could split off. Doesn't that kind of just make it like an altcoin? Like I don't know how to say that. I was like an altcoin until they start spending the same bitcoins twice. Then you've got a problem. Right. I'd spend from one network into the other and you end up with some sort of conflict. I have no idea. It's basically a shortcut that allows you to orchestrate an attack on the network by delaying the propagation of blocks that you find and going one, two, and three blocks ahead of where the current blockchain is. You can, you would be the only one able to do block two and block three because you've hidden the fact that block one has just been mined. Therefore you can continue building a little chain independently. It gives a slight advantage overall over mining by giving you a higher possibility of gaining the reward without having the adequate hashing power. It's a highly theoretical attack. In practice, it has two major problems. One, it would require collusion of that number of miners to do it and they would have to act against their better interests. Their better interest is far more aligned with the fact that Bitcoin as a whole would suffer such a horrible strike because of some attack like this that it would kill the goose that lays the golden egg. The incentives are aligned completely against selfish mining because it's such a nuclear move. Furthermore, there are ways to stop this. There are ways around. It's very difficult to do in practice and it would be detected and that's very, very critical. It would be detected. What this has led to is a great conversation within the developer group as to how to disarm this particular type of attack with better monitoring and some tweaks to mining algorithm. But really, it's no big deal. It really is no big deal. It requires under very carefully aligned theoretical conditions a certain number of people to collude against their interests and I don't think that would work. Derek? I'm excited and comforted by the fact that there are people out there who want to spend their time and energy researching potential holes that Bitcoin has. However, I think Andreas said it best. These people aren't going to shoot themselves in the foot. They depend on Bitcoin to have value in order to gain and if they were to do this successfully it would lose its value. There's really no such thing as irrational miners. I think the debate is a misnomer. It's not selfish miners versus honest miners, but rational versus irrational. In this case, there are no irrational miners because they won't bite the hand that feeds it. I agree. It sounded much more like a theoretical attack, but maybe if an outside force like a government or a competing cryptocurrency was able to obtain 10% of the miners they could carry this kind of attack out. Absolutely. They could. That's the whole point. This is a theoretical attack that the miners who are currently in the environment would have to get a short-term advantage in reward while ignoring the long-term possibility that they may have just stabbed the currency in the back. That's why the incentives don't exactly align. For a party that doesn't care about Bitcoin, this is a possibility. It's a very remote possibility. It's very difficult to pull off. Now that we know about it, we're not only going to be watching but also creating countermeasures. This is really, really good basic computer science research from Cornell. It's a great paper. It's a great analysis and it's a great addition to the science of Bitcoin. It has nothing to do with a real world of mining today. Absolutely. Exit question. Will a technical flaw take Bitcoin down or will it be patched? Derek J. Every flaw will be patched. There are too many people with too much invested in Bitcoin success. Dovey Barker. It depends on what the technical flaw is and how long of a timeline you're talking about. I suppose you go out 500 years. Sure. Someone will come up with something. But I'm not worried about it. And Dres? There are two types of technical flaws. The technical flaw that could take down Bitcoin would require some bugs that actually reveals keys, reveals them in a way we don't notice and reveals them for a very, very long time. That would effectively damage the ownership of the credentials and keys behind individual Bitcoin outputs and that would be extremely damaging to the credibility of the network. Anything except that type of attack can lead to a temporary collapse of Bitcoin from which we can reboot by rolling back the blockchain to a period of time we all trust and restart from there. There is no other way to take down Bitcoin completely right now. Unless it's an attack that's long and slow and silent that reveals all the keys we have nothing to worry about. Moving on. Bitcoin is a joke. The insider has labeled Bitcoin as a joke because it is not backed by any country. The next call Bitcoin a complicated Ponzi scheme. Can a currency truly exist without geographical borders and hard copies? Does the lack of paper, Bitcoin is an essential bank forever doomed Bitcoin to perform and stand up in small clubs? I ask you Andreas Antonopoulos. Bitcoin is not a joke. Bitcoin is probably one of the most significant computer science inventions of the 21st century. It introduces two fundamental distributed computing concepts, the blockchain and consensus or proof of work and a timestamp database. Those inventions are going to be reused again and again on a lot more than currency. As a currency it's still an experiment. It's not backed by anything except the enormous computation power of every mining gear out there as well as the will and support of all of the people who own Bitcoin. The worst case scenario fail back off Bitcoin. Even under the attack scenario we just discussed is it becomes as ridiculous as a national fiat currency like the dollar. Bitcoin's worst failure is that it becomes just like another currency. So no, Bitcoin is not a joke. It may have problems. We will fix them. Cryptocurrencies are here to stay, cats out of the bag and it is one of the most exciting inventions of this century. Derek J. Business Insider is wrong. Bitcoin is not a joke because it's not backed by any country. That's not important and it hasn't been important in the past when the US has had competing currencies that were issued by private banks, private scripts. The only thing that makes Bitcoin different from that is that it's digital and decentralized. So the successes, we have historical examples of this. It doesn't make it a joke because the business insider author is just not familiar with something similar. He's just not doing his history reading. And a currency can absolutely exist without geographic borders and hard copies. Although the historical examples that I cite did have hard copies, we know that in the digital age we can have receipts and other things, signatures given in a digital form. And geographic borders, we've already seen that in Thailand that certainly doesn't matter. There's no types of restrictions that people can put on this currency. Dovey. When did business insider jump the shark? I thought this was a fairly like refutable publication. Okay, like, yeah, okay, Bitcoin is a Ponzi scheme except that there is no Ponzi and there is no scheme. It's a completely transparent system. Like I have lost a lot of respect for business insider. I can't even believe this prompt that I'm reading. Yes, absolutely. Economies and currencies and commodities can exist without the backing of a country. I can't believe anybody would even ask that question. Okay. All right, moving on to predictions. This is the part of the show where I ask you to predict something and maybe you didn't prepare. Is everyone prepared? And Dress and Tenoppless. We'll move on to Derek J. Next week Bitcoin will be below $300 again. Dovey Barker. I'm going in the alien Satoshi Nakamoto is going to reveal himself as an alien invader and Bitcoin is the first wave of that invasion. I know you just took my prediction. That's what you just did. And Dress and Tenoppless. We're going to see 1000 Bitcoin long before January at this race and we'll go log rhythmically. Next year is going to be $10,000 Bitcoin, not $1,000. I actually have a serious prediction. I think very soon we're going to see Bitcoin video games and we're going to see either simple flash animation games or things like that. You find free online that are going to incorporate Bitcoin as a reward system or an in-game currency. Both. Or an in-game currency. Well, that would make it the same thing, wouldn't it? Exactly. There's no reason to separate in-game currency for purchase items and reward system with Bitcoin. You could do all three. We should know me. Congressional hearings are coming up. Once Congress starts looking into Bitcoin, they won't stop until they have a Bitcoin tax. We're out of time. Until next time. Bye, bye.