The Bitcoin Group, the American original, for over the last ten seconds, the sharpest Satoshi's, the best Bitcoins, the hardest cryptocurrency talk. This week we'd like to welcome the panelists and Jerez and Tenovelis, Bitcoin developer and commentator. Hey, Derek J Freeman, peace propagandist from Peace News now. Hey y'all. Chris J from Feathercoin. Hello. Kristoff Atlas from Anonymous Bitcoin book. Good to be here. And Will Penguin from Bitcoin, Bill Lockey. Hey everybody. Issue one, Mount Gox, Transaction Malability continues. As predicted by Chris J on last week's show, this week we're talking about Mount Gox. Again, Mount Gox flipped the script this week and instead of leading the price up, it started leading the price down. Withdrawals were frozen either because of transaction-mallability issue in Bitcoin or perhaps because of bad coding on Mount Gox's part. Either way, last night the Mount Gox price hit 340 and it freaked me out. Of course, after I sold a little bit, the price quickly recovered. Mount Gox says they've fixed the problem now. Will everything run smoothly now or will we be goxed again in the future? I ask you and Jerez and Tenovelis. Everything will run smoothly now and yes, we will be goxed again in the future because the two are completely separate. Listen, we're going to have development problems. We're going to have bugs we need to resolve and when that happens, we come together as an industry and we fix things. But there's one thing we can't quite fix and that's management and competence. The problems at Gox are not problems with bugs. They're not problems with solvency. They're not problems with the team. They are problems to start with the leadership. Poor communication, deflecting blame, disorganized chaos, no software development process. These things exhibit themselves every few months as a goxing. We're now in our fifth goxing and if you haven't learned a lesson by now, then history will deliver it again as many times as it takes until you learn it. There are some great opportunities to buy some cheap Bitcoin right now, both in the broader market and on Mount Gox. I quite honestly believe they don't have a solvency issue. They're going to fix this implementation problem and they're probably going to bounce back sometime next week and the price is going to go up again. When that does, the people who bought Bitcoin on Gox had $304, $400. You're going to make it killing when it reaches the market price again. But don't let that fool you. The main problem hasn't changed and that problem is in competence and plow-nish management from the top. Until the CEO steps down and hires a professional, that problem isn't going away. Derek J. Other people might be gogged in the future but I'm not interested in doing business with that company. They've proven to be less than competent. Chris J. So this is like a microcosm of the macrocosm that Bitcoin tries to solve. This is what happens when leaders get comfortable. I think you saw it in that video. Did anyone see that video with that dude who went from London to Tokyo and camped outside right? And then Mark Coppellus rocks up with his frappelate and the guy just looks like he's got no energy. The guy looked like he doesn't care. I think what happened was they got complacent. The fact is that these very, very simple bug that was well understood for three years in Bitcoin with ample notification was allowed to persist and continue without anybody noticing until it was too late. So I mean, I jumped on IRC. I was lucky. I just happened to have some money that I forgot about on Gok so I bought some. I don't think they've got problems with their solvents issues. But this is what happens when we sort of have leaders that lead but don't show any leadership. Like Gok's does lead the price. It has caused many crashes in the past. Brother John F did a retrospective on his latest Bitcoin video where he actually showed a boxing that happened when we went down to like one cent, which is like three years ago. So yeah, Gok's is the biggest problem right now. The biggest problem with them is that they don't have to communicate because they don't fundamentally understand one of the axioms of communication studies, which is you can't not communicate. Even when you don't say anything, you're still saying volumes and volumes and people will read into it. And so people go on the IRC channel where they hide out. It's very difficult to sign up to the IRC channel if you're not familiar with it already. And they camp out in there and all they do is blame one another. Nobody's taking responsibility. And so yeah, I feel like this is kind of a microcosm of the macrocosmic problem that we're trying to solve right now. Christoph, Atlas. Yeah, I think that the Gok story, they were very helpful in the early stages, getting people, getting big coins into the hands of people. I've used them in the past for a long while now. But lately I think they show some of the weaknesses of centralized authorities. There are other exchanges that did a great job handling the malleability issue and bit stamp and some of the other exchanges. But it's a hit or miss thing. And what I'd really like to see is more decentralized, basic exchanges. And I can't really get behind the two minutes of hate for Gok's. It's happening right now. Everyone just is foaming at the mouth. But sometimes the CEO and the press releases that they put out there does kind of piss you off. He just did an interview with Forbes the other day and he said basically, we've run our own Bitcoin implementation and then there were some changes and it turns out that if you didn't follow the changes, then transactions would start getting dropped. We're really busy guys. We didn't quite have time to catch our software up to date with the rest of the Bitcoin software. You're running a Bitcoin exchange people. What is going on here? This madness. Will, Pangman. Yeah, I am getting sick of explaining to people that there's no problems with the Bitcoin protocol or even the currency at this juncture with regard to this problem or past goxins and that it's just as Andreas clearly laid out, just ineptitude on the part of that company. I'm hopeful that I have a feeling that they'll take more time to fix this implementation than some of the other exchanges and of course, as the other panelists have pointed out, we'll probably see this again from their leadership unless some changes are made internally. Folks should wise up and let their money do their talking and walking. I'm eager to get to the point where we can have discussions about the viability of Bitcoin as a currency without talking about exchanges. I try to inject that rhetoric wherever I can when I'm talking to so many new folks. With the influx of all, the new people coming to this technology in the last handful of months, they are attracted by the price. They are attracted by the history, the stories that they're hearing on the mainstream media. It's hard to increase their confidence in this fantastic invention when there's so much ineptitude from several different angles coming. Whether it's the Silk Road or Mt. Gox or other problems, just terrible yellow journalism, whatever it may be, emails upon emails, comments upon comments, folks in person. It's hard to bend folks' ear for longer than a couple minutes if they keep associating this invention with some of these under-effective businesses. Why don't we look at some of the positive things that happened this week? I'd really like to end this on a positive note. We saw something that was a targeted attack against Mt. Gox and it was likely quite successful in causing fraudulent withdrawal. Turn into an industry-wide network-wide attack with some denial of service that was causing a bit of a flood. Then what happened? What happened then was a coordinated effort, a collaborative effort, where members from BitStamp and other exchanges, members from the blockchain infotains, the core developers, and everybody else came together very quickly. Even companies that were not affected by this ran to the IRC groups to help. As a community, we collaborated, we helped each other to understand the problem, to highlight the issue, to understand how to fix it. Then very quickly, within a matter of about an hour and a half, we saw coordinated, well-formed communications that explained the problem that set a timeline to fix it and the promised further updates in the future. Then a coordinated implementation that saw BitStamp fixing implementation issues in less than 48 hours, BTC fixing implementation issues in less than 24 hours while constantly communicating with their members and customers. Then finally, we had complete resolution of the problem across the board. Now we have a network that is more resilient than before because that attack didn't stop. All that stopped was the susceptibility of implementation to it. That attack now is a non-issue across the network, even though it is continuing. The main Bitcoin protocol was unaffected. No funds were lost. The exchanges that did the good job did an absolutely amazing job in a cross-industry collaboration that works beautifully. That's the message of the week. Just to add to what Andreas is saying, I think Mount Gocks was probably taken for a ride with this issue since they were first affected by it. Some of their funds may have been lost, but just to commend especially the blockchain team, but the developers in the Bitcoin community around everywhere, getting together and controlling this narrative, getting out in front of the press on this. I don't know how much of that will make mainstream headlines for the next coming week. Hopefully it will. I think some of those stories are still being written or still about to be published, but just huge kudos to the developing community in Bitcoin as a whole. This is something that we need to do as panelists and viewers watching the show need to do. Control the narrative, get the facts right, and start disseminating them. When you're met with these questions that I mentioned so much frustration in my answer earlier to this topic, have some preparation so that you can control, help control the narrative, and keep it factually based. Get out in front of the misinformation and the salacious headlines. I just want to thank you guys so much for that. All of the things goes to the developing teams at Bitstamp and BTC, the work, endless nights, the core developers who ran to assist in any way they could with their D-Packs for Tees. What we saw from the communications teams was the cornerstone of good communication, which is speak honestly, speak directly, speak clearly, and speak often. People will forgive mistakes as long as they know what's going on, and they know their funds are safe, and they hear from you frequently, and they know you're being honest, they will forgive mistakes. What we saw them is not forgive Mount Gox because they failed on every one of those counts, but Bitstamp did it right, and so did BTC, and we got ahead of this problem. Yeah, I just posted a link in our chatroom to the GitHub pool request, the 3656, which is where a lot of that discussion took place, and a lot of clarification was added by Greg Maxwell and others. Mark O'Pellis did eventually join in, but I don't think he had too much to the dialogue. That's what we have to remember, in words of Martin Creed, the whole world plus your work is the whole world. What Mount Gox has been doing is just leaching off of the rest of us. They've just been writing this popularity wave of Bitcoin, and that's fantastic for them, but they need Bitcoin. More than Bitcoin needs them right now. They're actually deletious and taking away, subtracting from this enterprise. And I think that leads well into our exit question. Is Bitcoin better off with Mount Gox open or closed and Dres? I would say unless there's a change in management's better off closed, as long as customers don't lose funds, let me be clear and let them close gracefully because everyone left. Derek J. We'd be better off with Gox closed. There are other exchange that appear to run more efficiently, and Gox is introducing a lot of noise into the market. Chris J. Yeah, I think that better off closed. Chris Doth. Well, you know, of course, to the market to decide that I wouldn't want to choose for anyone, but personally, I haven't been using Mount Gox for a long time. I haven't been recommending it to anyone else, so if they close, I don't think that anyone will be particularly missing them. Will, Penguin. I agree with the rest of the panel. I think they're better off closed unless there's some change in management. All right. Issue 2. New York, Bitcoin regulations. New York State's Super Nintendo Losski has thought about Bitcoin for a couple of weeks and now is ready to regulate it. Announcing that the new Bitcoin companies must apply for bit licenses, no details given. We believe that Losski has essentially closed the state of New York to Bitcoin. No exchanges currently exist in the state. Does this blindfolded attempt at regulation inspire confidence? Do you think future Bitcoin businesses will now flock to the state of New York? Derek J. Well, it's interesting to me just to start that a person who probably has very little knowledge, limited knowledge of Bitcoin, of the Bitcoin network, has the authority to issue licenses to other people who do know what they're doing, what gall. The Bitcoin Center is on Wall Street and they have regular publicized Satoshi Square events. Whether that qualifies as an exchange, I'm not sure, but I doubt very much that the people who have been trading Bitcoin for cash and other goods for years are going to start paying attention to regulators. Bitcoin owner, business owners might, but you don't need to be a business owner to be an exchange as we've learned. You just need to be a person with a cell phone. So regulation will separate the insiders from the outsiders and the insiders are going to jump at the opportunity to get a license and ground themselves firmly inside the market and then they have every incentive to keep those barriers to entry high. So the end result will see more people going to jail in New York for Bitcoin than anywhere else. Chris, Jay. Yeah, sorry about that. That must have been down to our video. He must have watched it. He must have watched our New York hearing commentary that we were doing. I don't think this is going to have very much impact on a global scale. To be honest, I'm not that interested in it. When that story came out, I have to be honest. I only read the article because you sent it to me. Yeah, what else am I thinking? Oh, it reminds me of, you know, Jack Welsh always says that the people that know what to do best are those closest to the work and regulation just flies totally contrary to that. You've got one group of being trying to get in the way of another group of human beings that should and are better qualified at knowing what the right thing to do. So I don't have very much to say on this stuff. I think it's a waste of time. Chris, off at this. Well, this regulation dweeb that was quoted in the article said that they want to protect consumers without stifling innovation. But they've already stifled innovation. There's a Bitcoin ATM that's sitting in someone's basement in New York City. I know two entrepreneurs in Philadelphia who have been jumping through regulatory hurdles over the last several months to get the economy, the teams deployed in Philadelphia. And there are countless people that I've talked to that have great business ideas that are simply not going to start the businesses because they live in the United States and they don't want to have to deal with all the regulatory stuff. So it's not some kind of theoretical thing that could happen in the future. Innovation has already been stifled. Our standard of living has already been decreased, which I consider to be criminal. And New York is not going to be a center for cryptocurrency businesses anymore that it's going to be a center for cheap cab rides or really large sodas. When you have stupid rules that restrict business, that just kills business. Will Pangman. Yeah, this is the only play that they can make and preserve. Are you ready, Andreas? Legitimacy? They're going to stifle innovation. And I think that's the wisest thing that they can do. Issue licenses put on an air of allowance for such businesses to exist. New York does want the Bitcoin economy to grow or be a center for it. They want to maintain their profile as the financial center of the world. And so issuing this decree, these licenses for Bitcoin businesses. Some businesses early on may seek offices in New York and open up for operation. But I agree with Christophe. The innovation will not be nearly as rapid in New York as it will be elsewhere because of these bit licenses. Last night, Andreas made a fantastic point in front of our group at Bitcoin Milwaukee that had the government or bureaucracies, MPAA or whoever issued licenses for people sharing on Napster. They wouldn't have awoken their demon of BitTorrent nearly as ferociously. So in that sense, this is the best short term solution for them to not look so draconian to the masses and also to preserve their dirty L word that they don't deserve, Legitimacy. And, Andreas? I think the regulation through centralized authority is really the only response if you see this problem from the context of a centralized trust model that requires access control at the edge in order to protect by only authorizing good actors to join. And that trust model is ineffective as we've seen in the financial regulation of the banks because they're able to steal that will by compromising the regulators. So here's the thing. Why don't we think about some decentralized solutions to regulation and to protecting consumers because we can? Let me give you a couple of suggestions. First of all, with the open distributed ledger of the blockchain, exchanges can certify their solvency by proving cryptographically that they have funds in reserve. And you can do this on the blockchain and you can't do this with viat. And you can prove it without a central trusted authority having to audit or verify it. So why don't we use a decentralized solution for proving solvency? How about the exchanges also use the decentralized blockchain to contribute to a funds that protects customers within exchanges from insolvency events very similar to the federal depositors insurance corporation, which is an independent body that is voluntary that the banks can join and only half of them really do join. But it's a pooling of funds is an insurance scheme. But we can do that again in a completely decentralized fashion on the blockchain by allocating reserves in a cryptographically secured multi-sake joint account that can be used to ensure investor losses. And this can be an industry move that provides higher credibility for investors and higher liquidity in the event of insolvency. And they will not allow bad actors to join that insurance pool because their risk premium will be too high. We can solve this in new ways. We don't need the old ways being reintroduced by regulators like Lasky who see a trust model they don't understand and the only way they can understand it is by looking for a centralized authority of trust. We don't have one. Yeah, I would actually that's a really good point what you say about insurance and also it would drive down the cost of insurance because there would be less risk. At the moment we're paying for fraud. We're subsidizing the fraud because we have this huge insurance industry which is propped up by all the paperwork or the middleman. All these regulators do is create a business and a whole industry around getting around the regulation because these are human laws by definition they are breakable and mutable. These are not physical laws they're not baked into the code. And so they can be gotten around. So you create this industry of consultants who will then consult with your company and tell you how to get around the regulation. All they do is penalize small people. Right. Derek and go ahead Andreas. If we had an insurance pull among the exchanges that all of the exchanges were effectively subsidizing by pulling that risk guess what they would be putting pressure on gocks to fix their TX malleability implementation problems because they would be exposed to that risk and they would translate that risk into a higher premium from gocks and eventually they would ask Carpellis to step down the CEO because the Ciroling confidence would drive the premium so high that gocks could not afford to keep him around. And we don't need a centralized regulator to do that because the people paying into that risk pool would self regulate and fix that problem or they would strip gocks of the insurance pool and then the customers would get a very loud message. This is one of the banks that does not have protection. We can do this in a decentralized fashion so why use the old method? Yeah, I wanted to say you know what Kristoff and Derek pointed out about the you know the lack of understanding or the limited understanding of these regulators compared with the folks who are closest to these businesses and to the technology working on it with their own hands is the best they can do is guess and try to get their rules and their framework structure. These are the terms they keep throwing out. They have to try to get that right for their purposes to satisfy their bosses and it's never going to work because of their limited and lack of understanding and it's you know it's just going to lead to more and more of these conferences and scrambling which in my opinion isn't such a bad thing. They'll be too distracted with their own flaws to keep up. I mean I don't even think they could keep up anyway even if they had a perfect efficiency because they're not the ones working and building on these things and as we've all seen how quickly and rapidly innovation and just the news cycle even goes in the Bitcoin space they would never keep up and this will only slow their you know increase the lead of you know the innovators out there so I kind of am okay with that. Let's look at their track record too. I mean the big banks have been documented to break these rules hundreds of thousands of times a year failing to fulfill their statute or requirements failing to meet their reserve requirements failing to file the so-called suspicious activity reports when they matter when they're actually causing serious crime and funding it failing to do all of these things and based on those rules half of Wall Street should be behind bars right now and half of these organizations should be under federal decrees or in solvent or liquidated or have their banking licenses revoked and has that happened no it hasn't so that's it's a very good thing when they bring these rules to us the question a consumer should ask is how's that working for you because since 2008 I think everybody's got a pretty good understanding that this is the does not work it does not protect consumers. I wish everybody had a perfect understanding of that I I think many do there are many people opening up their eyes to that but I talk to folks every single day who just seem not to be paying attention to that they may be slightly vaguely aware of the immense corruption going on and you know they are defending the slaps on the wrists that seem to be the punishments handed down by these regulatory authorities they're defending these as you know like Chris you're about to jump in too big to fail I mean you know the the fallacies of economics abound with these folks I wish that more folks understood this. Well we have to start we have to start this off as a marketing opportunity for these companies companies have to start advertising themselves as full reserve proof of a falsified will buy by the blockchain as Andreas is saying and use this as a marketing spin and then what you have to do is get the early adopters to say this is we're saying note to this other system because this one is way better and then the pragmatists will eventually come on board because the pragmatists look to the experts for guidance and they will say well why is it the why do you keep going on about centralized scams and it's got to be decentralized eventually they will they will move on board but I think this has to start with the leadership of marketing. Absolutely I agree with Chris if it could be brought on by industry voluntary participation in a scheme like this even the banks can't even believe that they could show how much they have in reserve reserve requirements publicly showing it that would be a revolutionary idea for the banks and the Bitcoin companies could beat them to it. What Andreas is saying is his two ideas of reserve requirements being able to see what's going on inside the bank and then having an independently set up FDIC for Bitcoin are great ideas and the kind of ideas that Loskey isn't going to come up with he's still thinking about regulating miners and regulating tumblers not even seeing that miners is something that's small right now that could be in your refrigerator in a few years and tumblers regulating the network itself regulating anonymous transactions you'd have to be involved in every single Bitcoin transaction to regulate the use of so-called tumblers they don't see this at all they don't understand the technology and so of course they can't regulate it and it's just really clumsy to see them try to regulate it like trying to see a caveman try to fix a computer with a hammer well back in 1906 Britain passed the red flag act after some horrific automobile accidents that occurred at the enormous speeds of 12 miles an hour and they passed an act that required all automobiles to have two operators driver and an engineer as well as a flagman who was someone with a red flag who ran 50 feet ahead of the automobile in order to warn pedestrians that one of these infernal machines was coming and what happens next what happens next was that now the automobile was limited to the speed of a running man and required three people to run and the British automobile industry fell behind and never ever recovered welcome to lots but if it saved if it saved one life it was worth it right well you like I hope someone will think of the children just dump on a thousand flowers of innovation if it'll save one person from getting ripped off I mean it was an incredible statement during the hearings sorry I'd like to see him dump on a thousand banks because a lot of people got ripped off I heard today this is not changing the subject I heard stay from a friend that you can actually buy a bank for like to in distress for like two million dollars and that there were people looking at this like Bitcoin is that we're looking at buying these distressed banks and then you can buy you can pay a company to run it for you so that could be a way in maybe we buy the banks well you know in the ends a well did by time Warner and time Warner cable just a concage just bought time Warner so I think the once it's something that's interesting is looking at this tension with Bitcoin and the public because on one hand we want to convince people to to use Bitcoin but on the other hand a lot of the public has these fairly simple kind of bigoted ideas about how regulation should take place and so they they look to people like this regulatory guy as an expert but the problem is that there are no regulatory experts experts are people who have experience and that are forced to compete with other organizations that's how you innovate that's how you get creative and you make progress and these people by definition are people that do not compete they're frozen in time and so there there are no regulatory experts there are no law enforcement experts there's that you we can't look to these people for how to to you know guide society in the future yeah those that can innovate and those that can't regulate well I completely agree with what you're saying Christoph this is something that's never happened before we've never converted to a virtual currency system so it's very difficult for the media to understand they keep going back to tulips or bubbles or dot com booms and it's very difficult to regulate as well the only thing I can say about New York is that whoever regulates first is going to regulate wrongly like I don't know how or just going to do better but as long as we don't go first we've got a better chance than beating whoever goes first so New York has just set themselves up for failure that's the only thing I know yeah law skis co the law skis creating the red flag act for bitcoin you're gonna have someone running in front of every exchange with a little red flag see how that does for the industry he's already down to exchanges he's out bit floor is gone bit instant is in big trouble obviously there's he has nothing to regulate and yet he's still continuing ahead coin setter is in New York and and I have you know recently talking with Jared not too long ago he spends way too much time worrying about regulation and compliance and that is like 80% of his operational cost and his operational you know opportunity cost I mean it's it was frustrating to hear him confess that yeah I hope he can I hope that I like that that exchange I'm an early tester and I really like him I'd like to see him succeed despite you know fighting that uphill battle yeah I guess who guess who doesn't have time to do cryptographic proof of reserve or multi-sig insurance pools the regulated exchange that's too busy writing compliance manuals and trying to persuade law skis that they're doing something useful and what they're doing is they're writing useless manuals that are not going to help any consumer be safer and we know this because they didn't before and I'm sure coin setter would be welcome in California where your servers can run and still reach the entire internet all right exit question will we soon have 50 states with 50 bit coin laws is this really the way bitcoin should be regulated state by state Derek Jay well no it's not how it should be regulated but unfortunately that's not up to you and so yeah there will likely be different laws for each state but of course it's never been up to us you know I think some of the other panelists are forgetting this when we talk about regulation that it's not really about protecting consumers it's about protecting the people who are already in the industry so if people were truly free regulation would happen between businesses and customers otherwise known as the market but since we're not free it's up to people in fine hats otherwise known as lawmakers and they exist in every state so bribes pay and regulation is how lawmakers get bribed they will happen in every state Chris Jay well why don't they come up with their own coin and then we can let the market decide because that's how markets do decide I'd yeah I think the regulation needs to be baked into the code if they've got other ideas they can do that Christ off at this I like that idea let's have a California coin and a New York coin and they can do whatever they want with it and people can opt into that of it wouldn't that be nice will penguin no there won't be 50 states with 50 different bitcoin laws but there might be 48 or 46 states with bitcoin laws and the other two or three don't make them you know we've seen this in other areas in finance and beyond you know there are states with no state income tax there are states with no sales tax and there are states that don't require money services license for money services businesses while they still of course require that they get the federal license if if they're within that state so yeah I guess that'd be my answer we'll see 40 ish states with different laws and a few that just don't bother and Dre is Antonopolis now it's going to be much worse than that we're going to have 50 states within the United States and then 193 other nation states that are each going to pick their own regulatory regime and that's going to make it very very difficult for large businesses to operate has exchanges and for large businesses to operate as service providers in the bitcoin space and what that means is that it's going to push further decentralization because after all this is a peer to peer currency and peers are not going to be subject to the regulation the banks will be and that's going to prevent banks from competing against crypto currencies while the rest of us go on with our lives and keep using them and building more and more decentralized software that negates the need to build centralized corporations the false subject to the regulation bring it on you're going to create to evolution within the currencies and you're going to push it to a more decentralized peer to peer model of individuals transacting issue three this zany newsman is the Stephen Colbert of bitcoin the mainstream media woke up and smelled the bitcoins this week with fast company labs writing a detailed and glowing profile of the mad bitcoin show available online at madbitcoins.com as the article said the anti-cramer the mad how to of bitcoins is hard to beat madbitcoins great bitcoin show or the greatest bitcoin show i ask you chris j did you the first person to make this subject entertaining and in a way that was engaging in interesting and you don't get enough credit and uh yeah we should we should all actually be helping you a bit more get some we need max kaiser to tweet you out instead of pumping max coin we've been doing for the last week he should be pumping the show well done for you man well done thank you chris christoph atlas yeah i think um it's really exciting to see all the different areas of society that are being decentralized um i think that at this point i have very little interest in mainstream media and i don't even own a tv so you know i don't i'm not interested in any of that stuff all the information that i get is you know off of people that i trust the through twitter and facebook and social media sites so we're decentralizing all the things and i i think that's fantastic that's what we need to do will penguin yeah i want to echo chris you don't get enough credit for leading the way on this you were out front um there were only a couple properties if you will yourself with mad bid coins l t b let's talk bid coin and um plan b podcast which only did seven episodes but the first two or three were really good uh you know especially as this uh this technology was gaining a lot of mainstream attention it was a really nice fun show that introduced folks so i would say those three um with an r ip attached to plan b but uh yeah mad bid coins that does not get enough credit and i really like that you've expanded beyond two and three minute limits for that show i think you've had a lot more to offer the green screen approach the costume the goggles i can't get enough of it and i know a lot of folks to feel the same way and jerry is and to nopolis uh please poster donation address so that's everyone who's listening now consent a few dollars uh and it really does add up and it really provides not just financial support but emotional support and encouragement that says good job tom keep it going thanks chris oh oh big points send some big coins as well greatest bit coin show uh mad bit coins i've been watching for since the early days and you've always uh kept me uh at the edge of knowing what's going on in the world of bitcoins and like chris j mentioned you keep it entertaining man i mean the the hat and goggles and green screen do a lot to make me laugh and uh you do a great job keep it coming thank you everyone exit question which cable channel will offer mad bitcoins at tv show first will it be comedy central or g4 formerly tech tv chris j and you all the network you you deserve your own network chrisdoth atlas yeah i agree we don't need either of those channels i mean now if you get the offer take the money but um i i don't think we need them i think we're we're growing out of those those old centralize institutions will penguin i agree with the previous two panelists make your own network there's lots there's lots of content out there and you do a great job of delivering it um i was going to submit maybe rt should syndicate your network and and the shows that you put on that network but uh yeah do your thing if there's one network that doesn't completely suck it with the rt so yeah i would get behind that and jerry is end to noblis you know i think that dashing young jensman with the goggles and the hats really deserves to be a headline on play girl oh teric j hopefully the next news network which is on some boss and affiliates and also local tv it wouldn't be that hard for any of us to submit the show to local tv stations which are always looking for more content and that's one cool way that you could probably spread your reach to people who would never hear a bitcoin or you before but for big time cable networks i think g4 the sci-fi channel would consider having it late night sci-fi wouldn't be bad maybe uh adult swim with uh eric andre show quite a good show something like that moving on issue four jp morgan bitcoin is vastly inferior first they ignore you then they laugh at you then they fight you then you win well they certainly aren't laughing anymore with mega bake jp morgan chase man hadn't clearly coming down against the fledgling cryptocurrency the bank attacks bitcoin for its volatility and both celebrates and denigrates its lack of a central bank alleging that central banks can control volatility as i'm sure you've all seen since the united states implemented the federal reserve two days before christmas in 1913 the value of the dollar has gone one way down with a dollar then being worth a nickel now does the mega bank have a point should we just scrap the whole bitcoin thing and go back to the dollar christof atlas well i took a look at what this guy you know i have released that out of out of his his publications and uh basically what he said was that people have to be forced to use a currency under the threat of violence and all he's doing is doing there is exposing himself as a sociopathic sick a fan of capitalism um he wrote uh query who who does one call when there is a problem with bitcoin well i have a question for him who do i call when uh to talk about the declining value of my dollars since i was born in the 1980s um who do i call to complain about the pitiful one person interests that banks are offering me uh as a result of feds zero interest rate policies um you know no one cares what i have to to any concerns that i have to say about the dollar and so to suggest that somehow um having a central authority makes safer for people and more accessible in case something goes wrong is you know complete nonsense will penguin oh yeah this um bitcoin is the only currency human beings are not required to use think about that so uh everything else has to be backed by a military because there are reasons you are forced to use them depending on where you happen to lay your head at night so yes christophe's right this is a revealing of the hypocrisy but i don't think it's an accident i think they know this and they think this is a selling point for their fiat government issued currencies that they manipulate um it's uh it's disgusting people believe this there was a gentleman who asked Gavin and recent at the cfr lunch uh thing um several days ago you know he he stood up and said you know this the reason why i have faith in the dollars because there's an army behind it and people need to take notice and realize this the andreus mentioned it in the first topic and i really appreciate that he touches on this and every talk he gives in front of you know meetups and things like that um to steal his thunder for a moment it's it's governments that give fiat currencies centrally issued currencies their value not the people and it's the people only that give cryptocurrencies their value that's the nature that's that's part of their decentralized nature so the more nodes on a network the more value that system has and that's truly from the people voluntarily um lending their computing power lending their electricity lending their brain power to facilitating um these networks so please if you're new to Bitcoin and you're watching this make note of these things um read deeper than just the headlines on stories like you know like this one the article you're linking their Thomas and and Jamie Diamond and if i was about to slip into a max kaiser impersonation there but i'll all restrain myself and um pass it to andreus here andreus and to noblis you know i want to scribe malice when uh really a lack of understanding of the possibility of a new model for decentralized trust uh in a centralized trust model you have to control access because bad actors can mess up the whole system and you have to give control to a central authority and that means that you trust the central authority and you allow access to only a few selected people with bitcoin we've got no central authority you trust no one and you allow access to everyone because it's an open network that model is very hard to grasp when you've only seen a centralized model before and you've never seen something like this and what this reminds me is of a report to datiantie put out and and several other talk on carriers did similar things back in the 80s and when they talked about the impossibility of of the internet ever succeeding as a global talk communications medium because without uh circuit switching that provided guaranteed end-to-end delivery and quality control it would be impossible to achieve scale for quality of service for voice it would be impossible to guarantee the delivery of the packets and if the packets weren't delivered oh what would you do then and the quality would never arise because bits of the network could fall off and and uh that wasn't guaranteed without a central organization to build the systems to be robust and resilient to what they didn't understand was that the robustness and resilience of a decentralized system comes not from control but for the ability of the system to self-heal and dynamically adapt in a very rapid way and that enabled innovation at the edge and eventually now today every single call you make on the AT&T network runs over IP not only did they allow it on the network they rebuilt their entire network on top of IP and one day we may see the very same thing with cryptocurrencies because cryptocurrencies are anti-fragile and they are resilient because they don't depend on essential authority because recourse can be programmatically added through selective counterparties in a market with multi-sick because resilience comes from adaptability and not built in design constraints and because trust and open networks which used to be contradictory concepts can now not only coexist but reinforce each other through the scale of the trust through computation model and because we've never seen these things before they're very difficult to grasp the more someone is steeped in the existing paradigm and understands it well the more knowledgeable they are about the existing financial system the more incomprehensible and alien decentralized trust models are and the less they're able to understand Bitcoin so JP Morgan Chase will continue to not understand this all the way down Derek J. Well I'm glad the mega banks are attacking Bitcoin it tells me they know the threat that it represents for the first time ever in human history appeared appeared decentralized currency can be transacted instantly frictionlessly for nominal cost across the globe they've got to be scared I mean this is already given birth to new technologies such as a theory and decentralized autonomous organizations Bitcoin is much bigger than just another paid pal it's revamping how money flows and who controls it and if gold were four years old it would be volatile too and when the internet was four years old it was volatile so this is not something to be surprised about so Bitcoiners hang on the mega banks might be praying for it but it doesn't look like Bitcoin's going anywhere this year Chris J so apparently turkeys don't like christmas huh what do we expect them to say I want to pull up a few things that he said in that article um come back in volatility yeah right by expanding the supply that all that does is creates more volatility in the long run look the only thing that changes is change itself right the world is volatile and wrapping us up in cotton wool the way these governments do and trying to protect us giving us the solution that daddy knows best is not the solution if you want to be and can I be a bit philosophical now this goes all the way back to Xenos most famous paradox um Xenos over the year okay and his most famous one was Achilles in the tortoise essentially he's saying uh in order for my hand to get to my other hand here I have to get half of the way there then half of half the way there then half of half the way there and you see what's happening now I've kind of I'm never going to get to my hand and what Xenos fails to understand or maybe he does it deliberately is the infinity i divisibility is different than infinity by extent okay so let's say I have this silver coin all right I can divide the silver coin up into infinitely or I can keep going into discernible units and I can keep putting value between those discernible units I have much to cup of coffee worth is it worth between somewhere between here but I always have the finitude of the ounce that I started with right the problem with going infinity by extent is that you still have the natural human behavior of wanting to expand what is of looking for discernible units in your environment and building value inside of those units but then you have an inflating supply at the same time and so the problem is that the people that get that inflated supply first namely the bankers with their bonuses will they get rich but then they embrace inflation on for everybody else and so really it just becomes a very very cowardly form of theft um and so I think he's being a little bit disingenuous he's also being disingenuous when he talks about the Vimar Republic which is quoted in the article as well because that was a different type of deflation that was um government instituted deflation that wasn't there a nice kind of deflation that you like when the price of your products go down and by the way why don't we talk about all the discounts and the things that you do you like in deflation really deflation should take place naturally like the word current comes from the word currents it's Latin John Locke basically meant it as a way of saying currency is a way of extending the present it gives you the opportunity to declare your preferences reveal your preferences to society and to say right I can actually help this person out like what decent human being wouldn't want a global currency where one person could help another person out at a distance like instantly at no at no cost whatsoever like who what are the motives what are your incentives for wanting to destroy this system I just don't I just can't I can't comprehend it I can't comprehend the lack of curiosity that people are taking to this technology why wouldn't you want to go to the GitHub and get involved and and want to explore this why aren't you just in absolute awe of the thing and wonder I don't I don't I fail to understand it is a mystery and especially since they're supposedly interested in finance this is the most exciting thing not in computers not in programming in finance in all of these fields and the more they know about finance they less they can understand something that represents a fundamental different paradigm Knuth wrote about this when he talked about the evolution of science and technology and he talked about the fact that science does not involve in the linear fashion because the existing paradigm becomes ossified and the people within it are unable to accept radical change and so along comes a Newton and blows up the entire paradigm of the pre material world and along comes a Einstein and not rocks the world through relativity and each time the scientists who are most steeped in the academic discipline cannot understand this new paradigm and are completely baffled by it and are extremely resistant to it here's the other thing we talk about deflation this is another great example the great examples of deflation we have in our world come in two primary varieties one is deflation through collapse of demand this is the deflationary model you see in Japan used to deflationary model you see in the YMR Republic these are deflationary models that come through collapse and demand and the other deflationary model is deflation through increase in value and that's the deflationary model that makes your laptop today the equivalent of a supercomputer in 1980 and one third of the cost that's a deflationary model that says you can get better consumer electronics every single here and the value of those electronics increases that is deflation through creation of value not destruction of demand and an economist should understand the difference yeah I want to pick up where Andreas mentioned you know the deflation argument he touches on what it's compared to the YMR Republic and this stuff these are central structures and the deflation in those systems results from fiat decree you know it results from the uh an accident or malice or or something from a single hand if you will from you know an entity or a person even at the helms at the levers of power changing fundamentally something about those systems that results in these deflationary spirals everything about cryptocurrencies is predictable at least from the code standpoint from the fundamentals from you know it doesn't take much to understand how any given cryptocurrency works if you understand a little bit about the the feature sets there are websites where you can create new cryptocurrencies and there's about six or seven fields where you enter your specifications for you know the total coins released or or the hashing power or the scripting you know or the algorithm for the hashing or you know all these different little feature sets that adjust let's say the the light coin protocol or the bitcoin protocol to create your pseudo clone of those currencies it's simple to understand if you do a brief amount of study on the thing whereas with these fiat systems they're overnight you wake up and you have a deflationary spiral and that's what he's scaremongering against you know andreas you mentioned not to attribute malice where you could easily attribute uh uh fallibility or um i forget the term used i apologize but but the point here is he lies he says that the system is vastly inferior to fiat currency i mean big ones is superhero currency it has the power of teleportation there's nothing that can compare with that nothing we've ever known it's yeah there's no way you could classify it as a currency as inferior to anything in it's you know private prior to its existence this is what's so exciting and why i stumbled over the last few words that i just spoke i just received sorry i just received a 75 cent tip on twitter the other day and so i would like to see jp morgan's chase vastly superior currency do that just go ahead implement it let me know when you have it running and i'd like to see how you do that with your vastly superior currency because as far as i can tell the last 50 years you cannot even approach doing that and there is a fundamental reason why you cannot do that well and like will says the technology here is the difference when you compare a cd to an mp3 an mp3 is mobile you can send it around you can make a copy put it on your iphone hey you know you can send it to a friend a cd is just a cd it can get scratched and broken it can get left behind or forgotten you can't send it across the country if you left it at someone's house and guess what they said they said that the cd quality was vastly superior and it doesn't in matter an mp3 one because vastly superior quality doesn't matter when you have convenience and all the other things and in the end what we experienced through mp3 intisional music today has vastly superior quality in every way from cd's and look at netflix and streaming movies the same thing is happening again with the dvd dying off and the blue ray not catching on the way they wanted it to it's the same argument again and again and again yeah they just don't learn from the past if if people want to look up this this this some of the notions that we've been talking about you can look up complex adaptive system which is what bitcoin is it's a protocol one of the great things about bitcoin is that you can create other currencies out of it there's a disinscentive you to monopolize one currency because you'll always live with a threat that you it can be replaced by somebody else for Goldman Sachs to take over bitcoin would be deletious to the enterprise that the only thing that would do would be to destroy bitcoin so you just go and create another one and with people i haven't really thought about i think what's coming what i'm starting to think about now is the fact that what the nature of physical reality is changed because as you say these these things like cd's they're mutable that you can destroy them what's permanent are ideas ideas never change they can appear in different places they can appear suspiciously simultaneously across the world they never change but what changes is the physical reality i think what we're confusing at the moment is the issue of a stable referent what the internet did is it allowed for existence to emerge without a stable referent and that's because we always assumed that space was that stable referent it's not it's actually memory memory is the stable referent and actually now what we're doing is we're storing our memory using you know hard drives and using mass storage devices and distributing them all over the world that's what bitcoin is by the way it's a dialogue with a memory and it is able to keep a track of every single transaction and that's all i have to say it's all my those are my thoughts stable referent in in this case is let's say the us dollar the world's reserve currency you know we're all comfortable with it we can rely on it it's it is strong compared to so many other things in existence outside of the cryptocurrency realm of course and and this you know these this invention disrupts all of that uh it's it's just going to be amazing to see I I really appreciate you know Andreas I have you to thank for giving me a new outlook on altcoins I'd like to see millions of them now whereas month or two ago I was you know interested in the experimental nature of them and that was it so this is the let's get excited get excited folks and this stable referent is going to to uh decay away because they cannot prove anymore they have to prop it up with a lie maybe it's a lie that they themselves believe you know um and maybe that's where it's not malicious it's it's accidental or or it's just ignorant but um this this is what I love about this technology if you pull a little bit on the string of these precious uh delusions or beliefs or whatever you want to call them that we've all been put through 15,000 hours of education or more to be convinced of everything's going to come unraveled and the reason for that is because we get to see in proof of concept and in practice this thing operate and it will show us in practice how different of a world the truth it will show us facts that defy these lies that we've all been succumbed to or believing in I think will makes a strong point that the dollar is strong but look what they've done with that strength they've built a castle they've built a series of walls they've fixed their fortification yeah to rip us off. Exactly where to strike them Bitcoin is not vastly inferior it's just not strong in the way the dollars are strong Bitcoin is not fixed Bitcoin is not just a wall Bitcoin's far more fluid than that and that's its own kind of strength that they're not willing to acknowledge if you look at the imagino line during world war two it was a completely pointless piece of artifice that they built out of walls pointing at Germany what did Germany do they went around it the only time it was actually used was by Germany fighting against the allies when they came rolling through that's the only time it was used fixed fortifications are a monument to the stupidity of man general patent yeah and uh one thing that engineers learn very quickly about walls is that the greatest enemy is water and Bitcoin is a tsunami and it doesn't care about walls absolutely exit question what can the mega banks do to survive launch their own cryptocurrency JP Morgan coin or maybe one of them will break off from the pack and corner the market on Bitcoin themselves which will happen first a bank accepting Bitcoin or a bank launching its own cryptocurrency Christoff atlas well I think a large organization they could launch their own cryptocurrency and they would be able to achieve some degree of network effect just by being a massive organization that already has existing customer base or an existing you know populous that they're that they control but um unless they can put in place regulations that are going to stop free trade people are going to go to whatever currency is the most effective that has the best and most beautiful properties in terms of acting as a means of transmitting money or acting as a currency and it's hard for me to understand how these banks would ever be able to improve on what's already come out of the free market there the even if they have you know tons of people on their bankroll they have not been the source of innovation for hundreds of years at this point um and so you know I don't see how they can possibly make that happen unless they can put in some place put in place some some form of regulation that is going to kind of stop Bitcoin and its tracks or prevent people from using it but that's a very tough a very tough thing to accomplish they definitely have a lot of bricks and a lot of mortar will penguin um that's a tough question whether which will happen first the bank accepting Bitcoin or launching its own cryptocurrency I think um we may see a non-US bank accepting or dealing in Bitcoin first before we see banks launching their own cryptocurrencies and the tell all will be whether those banks launching their own cryptocurrencies are launching a decentralized one or a proprietary one so that will be interesting to see I think and the market will understand what that means immediately especially those who are seasoned in the cryptocurrency space so um in my opinion the banks that survive this paradigm shift that we're embarking on right now are the ones that want to exist in parallel with cryptocurrency in whatever fashion so whether that's launching their own or whether that's cooperating with any number of different cryptocurrencies the ones that are let's say tolerant of this new paradigm are the ones that are going to survive and the the ones that uh kick and scream are gonna die kicking and screaming and dreads well I think we're gonna see banks adopt uh cryptocurrencies and probably Bitcoin for their own operations because they will recognize that money that is fluid frictionless fast secure and cheap is actually a great tool to base a banking system on and so they will gradually start to adopt and um I hope they don't make the mistake of trying to build their own coin because then they will simply be repeating the wall garden mistake of CompuServe and AOL which is that if they try to do that and they apply controls they will stifle innovation at the edge of the network so their solution will be stagnant while Bitcoin will continue not just innovating but accelerating innovations once you realize that this bandwagon is not slowing down there are only two positions you can take on the bandwagon or under the bandwagon Derek J I really want to nail this issue home so people aren't surprised or confused when it happens the banks absolutely can survive this but only if they beg and bribe their friends and government to introduce rules that crush innovation embrace barriers to entry so yes mega banks will absolutely create their own cryptocurrencies we can see it coming well Spargo has been talking about exploring cryptocurrency for months I'm waiting myself for the Jamie Diamond coin I'll ride that pump and dump but uh banks accepting Bitcoin will happen first because it's already happening in Cyprus with be paint be bank and the neo payment network it's a real brick and mortar that allows customers to deposit and withdraw in euros and in Bitcoin this model is going to spread across the world Chris J yeah I think I think the one of the important things is we don't lose the essence of a bank which is about wealth management the reason we got into this mess in the first place is because people stopped asking hard questions they got lazy and what happened was um these bankers had huge disproportionate net present value they had cash on deposit that gave them a gambling addiction they basically went off and flitted it flitted it all away and meanwhile everybody else we're just going about the license if everything was okay and we stopped asking hard questions we stopped holding something to account now I don't think the essence of a bank will go away um but actually you know we often we go online to get offline the internet serves as a map and so I do think that there is a need for tactile experiences for bricks and mortar um and I hope to see some innovation like that I was very pleased like I said earlier to hear today that there are some distress banks who can be operated as a going concern it can be what was it going concern for as little as two million well look there are plenty of Bitcoin as we've made two million in the last you know the last year or so so I'm sure those are going to be plenty of internal investment that's going to see you know the kind of the repurposing of some of those old institutions so that's the way I'd like to see it go all right moving on to questions and answers I'm looking at the questions and a lot of them are statements um I got a quick point while you're looking at the questions they are uh here's some irony for you I store 99.99% of my Bitcoin on paper wallets and guess where those paper wallets are located not at my home they're located in a bank safe deposit box why because banks still do good physical security I don't trust them to not read my private key sets encrypted but I keep those paper wallets in a place where they won't burn down they won't easily get burglarized then there are guards with guns uh and that's something that banks still do well if the problem is that most banks don't do those things anymore they don't do checking accounts they don't do saving accounts because those are costly and not profitable instead they derrivetize gambling and play the money away uh in this vast Ponzi scheme fed by the Fed that's what most banks do today very few banks the credit unions the local banks are actually still in the business of consumer deposits I wouldn't personally store paper wallets in a depository like that um you know I'm wary of the gold confiscation history and and I don't really trust these banks to not let some some jerk uh let them self in and uh take your paper well I have multiple copies and as I said the private keys aren't encrypted they use the BIP 0038 standard uh to have AS encryption of the private key which requires a passphrase the paper wallets itself is really just a storage and backup device and if you have multiple copies in diverse locations confiscating it doesn't hurt me and you can't actually extract the bitcoins from it uh all I need is a place to put the papers so that if there's a fire at my house or someone tries to burglarize me I can still get to the paper sure all right the first question these are hot rumors does anyone find the Silk Road 2 rip off a coincidence also is Silk Road 2 legit or a propaganda honeypot wow I mean this is this is a great great conspiracy theory it starts with people who decided that blocking the decentralized system of Bitcoin and giving their money and putting them into accounts that centralized institution had the keys and then they took that to the extreme of picking a centralized institution run by drug dealers to trust with their money uh most likely one that is a honeypot for the FBI I mean how stupid can you be to put money into that organization and at the same time it might all be as simple as a bunch of people who got a copy of a code base they didn't understand and when they read about this tx malleability thing they said well that sounds like a very long word and it probably has two L's but I'm not sure so and then they got taken for a ride uh you know it's like gocks and competence to the nth power so is it criminality and uh ridiculous trust from customers who gave them money to the wrong people or is it gross incompetence from people who didn't even understand the code they were running um I don't know both scenarios are really hilarious uh I don't trust stilt road 2.0 any more than my uh local drug dealer so I think you should just stick with your local guy and the idea that people were storing their money in there for any period longer than their transaction is just hilarious oh yeah I keep my money in the illegal online drug dealing bank oh that's gonna work out for you well mostly I put it in a little satchel and I leave it with a corner guy so he puts it next to his crack stash I heard that's a good way to store your money he has a very big knife he seems like a very responsible gentleman I'm gonna take a slightly controversial view which is that um I'm a really big fan of silk road in silk road 2.0 and all the other black markets I've never actually been on them I don't personally have any interest in the things that they sell but I think that they're an amazing prototype for free market dynamics and you know I think it's natural to expect that the kind of people that are going to want to buy and sell drugs online might not be the you know the most responsible or you know the the the cream of the crop in terms of competence but that's okay um you know they're still they're still making things happen that is that was not possible before I mean it's amazing that people can buy and drug about buy and sell drugs online and essentially get rid of all of the finances associated with the the drug trade I mean that's a beautiful fantastic amazing thing and they should be widely applauded for that if the drug enforcement agency really sincerely wanted to eliminate violence related to drugs and what they would do is they would be helping to find you know silk road rather than taking it down well I think that's a key point because the reputation system that these online markets provide uh you know this does not disrupt prohibition because prohibition never worked in the first place this disrupts the violent drug cartels and to them this is a terrifying prospect if you had broad base use of safe online markets where people can deal with their addiction in a way that doesn't get them shot stabbed mugged or you know tortured uh then they would and the communities that are being terrorized by drug cartels would find peace because these drug cartels would get divested instantly people are addicted and when people are addicted they will go to extremes to get their drug and there's nothing anyone can do to stop that activity or that human behavior from happening the only choices you have are do you send them to the violent drug cartel that uses that money to dominate and terrorize local populations or do you send them to an online marketplace that's actually safe for them to transact so from that perspective whether you agree with what they're selling or not or whether you want to use it or not you have to accept that in the grand scheme of things this is terrifying for the drug cartels and perhaps that's why uh you know as as we know certain three-letter agencies and drug cartels work hand in hand some some four-letter banks also with those folks as well and and perhaps that's why there's such an incentive for the takedown of these things that are just a blip on the radar of the entire global drug trade so we make such a huge show of it all and and make it sound so scary every single one of these hearings and and you know any convening of these regulating bodies and stuff you can't you can't get away from the you know all the fun associated with the silk road and the like with regard to cryptocurrency well I mean prohibition is a two-sided coin it's really two enormous industries on the one side you've got a trillion dollar drug cartel industry that's full of violence and on the other side you have a half trillion dollar prison industrial complex and law enforcement complex that employs half a million people and expense billions of dollars in militarizing our society in order to stop addicts from getting addicted which is not actually possible so people who are in this if they actually saw a possibility for the drug cartels to go away they would lose their jobs and the funding for the drug war would go away with the cartels prohibition doesn't work and legalization of drugs does we've seen this in Portugal where drug crimes dropped drastically a violent crime was reduced dramatically through the decolonialization and treating addiction as a health issue as a disease or health issue that can be treated so the people can help overcome their addiction and not have to deal with not only dangerous substances that are untested and unsafe but also dangerous people who are violent but the problem is that this supports a very large law enforcement industry that employs hundreds of thousands of people around the world who would not be happy to see their livelihood go away and whether they think about it this way or not they do protect their turf or what about the judges who what about the judges who are receiving money from private prison industries sending innocent people to jail and exchange for dollars I mean the the the fact that these regulators would say oh we need to regulate big coins so we can crack on on drugs that they can say this with a straight face is just completely astounding and vile and detestable the biggest organized crime gang is the government itself it actually allows and facilitates for many tyrannies to emerge because that's the system it it institutes they are the biggest criminals of all but they're protecting their art children right it's all about the children do well and going back to silk road 2.0 I'm disappointed at the lack of technological improvement in this 2.0 product what I really see are three separate services you have your online illegal black market you have your trusted escrow trusted escrow system and you have your reputation system if we could get back to the idea of decentralization break these three things up into three parts we could just replace the online black market when they shut it down we could keep the trusted reputation system and we could keep the trusted escrow service well we actually have both of those so there are at the moment a number of trusted escrow services and some of the most interesting ones do not have custodial access to your funds but instead use multi signature transactions in order to achieve escrow here's another great myth about bitcoin the idea that transactions are not reversible therefore consumers have no recourse the the truth of that in fact is that in traditional financial systems you have one count of party that's introduced as your third party risk center so if you're transacting with PayPal you have to use PayPal's arbitration rules if you're transacting with visa you have to use visa's arbitration rules in bitcoin you don't have to have a counterparty but you can choose to add not just one but as many counter parties as you want through multi-sick transactions and that means that you can go out in a marketplace of counter parties with different arbitration rules and you and the recipients of your transaction can agree on a suitable counterparty to introduce a layer of trust and escrow into your transaction and that counterparty never has custodial access to your funds your multi signature we can do a hell of a lot better with programmable money and still have trust now at the same time reputation systems can be rebuilt in a decentralized fashion too because you can use surety bonds within a distributed consensus network and surety bonds can create reputation and you can store these reputation metrics directly into the blockchain in a way that there is no provider for these reputation metrics that can go down and remove the reputation metrics we can do both of these things much better on a decentralized system by the way there's a system called Twister that implements both reputation systems and an identity layer on top of bitcoin that can provide for pseudonymous for pseudonymous identification and reputation you combine that with distributed escrow through multi-sick and you've actually got some really good components that not only will give you back the trust that some people think they've lost with bitcoin but without losing any of the control over your funds at any point in time moving on to the next question regulation do you think it is necessary to implement I know this anti money laundering know your customer to change fiat into btc and btc into fiat anonymous is awesome but is it realistic btc to btc and btc to product can still be anonymous tracking is bad but so is money laundering well money launch uh... come on i mean we need know your banker rules not know your customers no you know which of your bankers is a warm on her know which of your bankers is funding the drug cartels for for violent sprees that killed tens of thousands of people know which one of your bankers is stealing your money know your banker people because i would like to file suspicious banker reports against my bank instead of having them file suspicious activity reports because i bought a car with cash i mean come on uh... the pro the real big problem in our financial system is that the bankers are getting away with mega crimes crimes that are not victimless crimes that have millions of victims and that's why i call them mega crimes mortgage frauds on a massive scale is a mega crime it has millions of victims who become homeless or destitute because of this crime lebo rage rigging is a mega crime it affects the lending rates of billions of people around the world precious metals market rigging affects the savings rates of billions of people around the world these are mega crimes and gigacrimes so know your banker and file a suspicious banker report against them yeah consider for a moment that you know money laundering in the vast majority of cases as it's charged is nothing more than a thought crime think about that just just google it think about it research research that concept money laundering is not much more than trying to preserve privacy which is fleeting and and very valuable in in today's society in the internet age and who's to say what money laundering really is look at the uh... gentlemen in floor that were arrested while trying to sell bitcoins on local bitcoins they never really got a chance to report on their taxes they were arrested while they were making the transaction who's to say they wouldn't have gone home and filled out the proper forms i think i we should also challenge the idea that bitcoins is beyond law enforcement or somehow cannot be used by law enforcement that is absolutely ridiculous as well as the idea that bitcoin is not regulated bitcoin is regulated bitcoin is regulated by an elliptic curve or the bitcoin is regulated by a geometrically decreasing monetary supply algorithm and those algorithms are a very trustworthy method of regulation the blockchain actually allows for a range of anonymity from strong anonymity to radical transparency and it is a lot harder to do radical anonymity that it is to do radical transparency money laundering that is involved in crime involves conspiracy and all you need to do is find one of the actors in that conspiracy flip them and pull on that thread and you will get the entire transaction lock right there on the blockchain and you didn't even need to file subpoenas with 15 different financial institutions to get it if law enforcement has an actual crime they can use the blockchain to find all of the participants and unroll that conspiracy what they can't do is ubiquitous surveillance of the money supply they are forced to focus their investigation based on probable cause and due process which may be a quaint concept but it's one that we need to return to yes it's what this country was supposedly founded on and the ubiquitous surveillance you know collecting every bit of data and storing every single bit of it for later use at any whim is the biggest challenge we face I think with with the internet in general with with privacy in general so if you're this is what so profound about the blockchain as a technology is its censorship resistant to these kinds of things and it's robust against these kinds of things and and the very nature of it that's that's what I think some of these regulators would like to see tweaked or changed in the feature set of Bitcoin and other cryptocurrencies is what Andreas just mentioned that you cannot implement ubiquitous network-wide surveillance over everything collect everything and then distill it at your whim you have to do target it you have to do old-fashioned detective work yeah and listen the banks have been forced to have every single instant message every email every telephone call every website tracked every transaction every money wire transfer every purchase of a derivative tracked by the regulators and based on that there is a terror bite and petabyte level a mountain of evidence of their financial crimes there is no lack of evidence of the crimes that were committed during the 2008 crisis or the led up to it the financial fraud that occurred afterwards with the rigging of leabor on the gold precious metal markets or more mortgage fraud and robo signing there are petabytes of evidence and guess what happens with that evidence selective non-prossecution deferred prosecution too big to fail becomes too big to jail so capturing the evidence does nothing if the regulators are spineless and they're co-opted and they have the they have neither the political well nor the political power to actually prosecute the people who are destroying millions of people's lives so if everyone can perform ubiquitous surveillance so for everybody else so which is kind of what the blockchain does yeah putting ubiquitous surveillance in the hands of every single participant would provide some accountability and the biggest players here it's like for example in our current financial system or governmental system the banks and governments would be accountable be much more accountable if we could surveil them back and right why shouldn't we be able to if we're free if this is supposed to be freedom and we're supposed to be spreading democracy why shouldn't that be part of the feature set of say the the bluffdale compounded Utah or you know any any um you know national security agency surveillance practices whatsoever the blockchain provides for this and it's in all of our hands and soon every bit of law or like with all of these fantastic innovations coming out this will be in our hands soon it's not yet but it will be there soon well that's the fundamental difference between privacy and secrecy privacy is an individual right secrecy is a tool of power there are the same thing but applied at different scale and what we have right now is an attempt to destroy individual privacy while maintaining the secrecy of massive organization decentralized blockchain technology completely inverts that it makes it very difficult to do massive organizational secrecy because those organizations have forced towards much easier towards radical transparency than they are towards strong anonymity but it enables individuals to practice strong anonymity to protect themselves and so as a result it rebalances this because what we've seen is the erosion of privacy as a fad as an antiquated notion that that essentially really destroys individual liberty while the amount of secrecy that is claimed by governments and large corporations is ever increasing we have no right to know what they do and they have every right to know what we do they are not watched they are not accountable but we have to be watched all the time just in case we do something now that is an unbalanced society and the blockchain actually inverts the incentives for doing that because radical secrecy is difficult and radical privacy is a lot easier for the individual privacy is a necessary function of the past because it can't the future can't contain privacy because it hasn't happened yet and one of the interesting things philosophically about Bitcoin is that you are you are a chosen witness when you mine you do have ubiquitous surveillance but you have to be there in order to surveil and it also has another important property which is it divorces your legal identity from your actions identity is commitment it requires a commitment to identify your actions with your face or your ability to be recognised by the people around you in a universe that facilitates getting lost that facilitates you running away from that accountability and so I think that the Bitcoin was a very important going back to basics and re and re understanding where we actually came from seeing how the system entirely divorced itself from from those fundamentals I think that Bitcoin is going to get more and more anonymous over time and I think that's a good idea the openness of the Bitcoin the way that the blockchain works is actually not one of the features that I really appreciate I don't think that we can really hope to use that openness to keep tabs on the corporations and governments and so forth while keeping our our own finances private it's going to be the exact opposite it's the NSA that has the supercomputers and the algorithms and and all this stuff to to do the analysis that we are not going to have access to ever we're never going to be on par with the NSA in terms of deanonymizing Bitcoin transactions so what I would actually like to see people implementing more anonymity protecting technologies in Bitcoin and I'd like to see advocates of Bitcoin let's let's drop the the the contention that we don't worry if we can use Bitcoin for law enforcement don't worry it's it's open there's records it's actually good for law enforcement let's drop that and move towards a model in which we should be admit that we're not sure whether law enforcement actually needs to have access to financial records like I said before the way that you become an expert is by competing with other people and law enforcement people do not compete and so when they say well we absolutely need to have these tools we need to have access to this data to prevent terrorism and crime and everything bad my question is how do you know you can't tell us because you don't compete with anyone so that that's that's what I would like to see the direction that to take in the Bitcoin community yeah I in general agree with Christophe I like to see people implementing their own choices with regard to privacy using Bitcoin but the reason that I discuss you know that law enforcement can use good old fashioned detective work using the blockchain is only to placate the fears of new users that I encounter to get them to have some more confidence with this thing and trust it and start to use it that's that's important and that's the current state of it and so to point that out to people who have been pummeled with the endless repetition of the mainstream media about the illicit activities that Bitcoin is exclusively used for all the time it's important to point out that you know especially when I'm rebutting comments about the need for regulation you know Bitcoin is self-regulating Bitcoin is self-sustaining self-preserving so it's I like the fact that that's a you know an arrow in my quiver for conversations with those folks I can placate their fear and encourage them that you know that's not something they can be they they didn't have to be concerned with you know and feel like you know there are emails I get sometimes that bitcoins illegal and all these things I mean it's it's a there's a lot of misinformation to fight through and so that's an important an important point that I I also think you Bick with a surveillance of all parties all the time is an interesting way to look at privacy it's a great this is this is a fan fascinating social experiment if you look at it from that standpoint well I think some organizations benefit from radical transparencies organizations such as charities and non-governmental organizations public accountability organizations that have to manage funds against the public record I think governments and campaign finance and politicians who have their finances because of their position in the public sphere and the power they hold over people should be subject to radical transparency and you can actually achieve that see the thing is privacy is something that happens on an individual basis and as soon as you turn it into an organizational activity then you can move it closer to radical transparency and you can apply pressure to it while at the same time implementing absolutely rock solid strong and animity protections for the individual in a privacy framework a privacy firm that doesn't scale for conspiracy because with good old-fashioned police work bad people who do bad things will be forced to to testify against the other people in the conspiracy you don't need fancy surveillance of every financial activity to do good old-fashioned police work in fact if you look at the bill of rights is not just a protector of individual liberty it's actually a good policing manual it puts in place rules that protect people from being wrongly prosecuted and accused it protects people from being convicted unfairly and it forces the police to do good police work that's why we have civil liberties it's not just for individual liberty but because it's actually an effective way to organize a society if you look at the NSA's practices and things how lazy are they I mean if you and the regulators calling for you know greater surveillance or KYC AML controls on the protocol itself of Bitcoin how lazy do you have to be you know if targeted surveillance you know that's something necessary for any one of us at any given moment in our lives if we if we feel a threat and certainly for the current way the globe is organized you know with nation states and such it's a necessary aspect of what we have to deal with to deal with threats so it's it's object laziness on their part to do this ubiquitous surveillance thing I think it's a little bit more than just laziness but at the very minimum if you're talking to the average Joe on the street this is this is just laziness technology for the lazy well they just want to bait they just want to bait this into the physics they just want to automate their jobs away so that they become part of the physics of the universe this is all about turning ethics into physics well like we'll said earlier the NSA is collecting everything and putting it in a box just in case they need it later so if we change rules or we change rulers they'll have everything in a nice easy to use box and I agree with Christoph's point that Bitcoin seems a little 1.0 right now I know it's the way the blockchain works you need to be able to know what everyone has but if someone gets your address they can tell how much money you have everywhere that you've sent that money and if they decide in the future that one of these addresses is the bad address and it shows up in your list they've got a list right there so it definitely might be changed in the future and danger for the danger for blackmail the potential for blackmail of anybody at any time is just staggering and should be roundly opposed and most new users don't really recognize that especially if you're putting a public address out there you can see everything that I've ever done so yeah we have to have this discussion beyond the confines of the United States where people are not dragged away in the middle of the night and tortured by their regime you know why anonymity is useful because there are places where there's happens and it happens often and those people absolutely understand why they cannot trust their government with ubiquitous surveillance and why they they need an anonymity so that they can preserve freedom of expression freedom of association and freedom of political organization rights that have been embedded in the magna carta for hundreds of years and those things cannot happen if everything you ever do is tracked because there are governments out there fortunately not yet our own at least not on a massive scale that will drag you away and torture you in the middle of the night and they do this on a massive scale when I went to Argentina someone came up to me and said my parents were tortured by the previous regime I came to this conference in fear of my life but I think Bitcoin is that important because we need to protect ourselves from our own government they get it they get it because they had thousands of people thrown out of airplanes they had 15,000 babies kidnapped from their parents and given to fascists to raise in one of the most brutal brutal oppressive regimes that disappear 25,000 people I mean this is what the world has to deal with so let's not just think about this from the rosy comfort of the united states of America where we have it easy where we can have this conversation and every single one of us will log off tonight and we'll go to sleep and no one is breaking down our door and dragging us away just because we said the wrong thing yeah two two important things to say about that one is that people who say that oh we need to change Bitcoin so that it's more compliant with regulations in the US what they're also saying is and I don't care if someone gets dragged out of bed in the night in Argentina because the same technology that with let the US go after whoever they want to is also going to let the Argentinian government do that in Argentina in a much less you know morally acceptable way the other point that I think is is important is well sorry go ahead well and Christoph makes an excellent point there when losky talks about making tumblers or anautomizers illegal he only cares about the United States implications he's not looking global at all he's not being thoughtful about it he's being very closed minded right and this isn't just the hundred and ninety-fifths currency this is the first transnational global fluid currency that is empowering people to do peer-to-peer transactions that is a very important tool it's also a very important political tool and you know we don't like to talk about the politics too much here because people scared get scared when they hear politics about currency but trust me there are plenty of places in the world where this this has life and death implications for people on a daily basis the other point that I was going to make is that the what what the US is able to do affects people in the rest of the world if the NSI can collect data and use that as you know as a targeted drone strike information that's a huge problem so I think that we absolutely do need to consider the rest of the world but the US is a essentially a bad actor to the rest of the world and so giving you know a new abilities to the to the US government is a problem for all the people that you know are have these these drones hovering over their skies all right an excellent discussion today I think we've run out of time for questions so we're going to move on to predictions everyone's favorite part of the show where I ask you to predict the future are you ready Derek Jay yeah I predict that Bitcoiners in New York will ignore flat out ignore the license requirements for trading bitcoins for cash but regulators across the country will be looking their chops at the bribes that super Nintendo law skis receiving and by next week we're going to hear about another state probably California watch out Thomas attempting to get in on the spoils Chris Jay yeah I say this every time but predictions so if each is our predictor they're invented and I think that I predict that more people will sit on the sidelines and wait for other people to do stuff next week I also predict that Gox will not go away I still think we'll be talking about Gox fine next week not again Christ off Atlas I think the regulators are going to continue to have a very uneasy relationship with Bitcoin where they don't want to be blamed for you know stifling innovation and for destroying new jobs which we desperately need to support the economy but they're they're also going to find that Bitcoin is ultimately incompatible with what they want to do with the financial system will payment I predict that upon the issuance of these bit licenses in New York Bitcoin businesses have been waiting on the sidelines for the past calendar year will flock their open offices and play ball for as long as is maybe marginally profitable for them and Dreas and to Nopolis you know a few weeks from now the Bitcoin Bitcoin will still be around and Bitcoin's price will have not collapsed and the narratives that we've heard of the last couple of weeks the gleeful obituaries of Bitcoin written in headlines like Bitcoin withdrawals cancelled plonging price and you know all of those things listen people are paying attention they see these headlines and then they look around and Bitcoin still there they saw the headlines when you said the China banned Bitcoin and it's still 60% of the volume and Bitcoin was going to die in November and it's still around well guess what three or four weeks from now Bitcoin will not have plunged Bitcoin will still be around and when people see this happen three or four times guess what they do they go and open a wallet they go and join an exchange and they buy themselves some Bitcoin and we start the next rally absolutely I agree the world is waking up to Bitcoin a new global consciousness is forming the consensus engine given to us by Satoshi Nakamoto has helped us agree on more than just Bitcoin the people of the world are working together without borders or national identities just one big team team Bitcoin go team we're out of time until next time bye bye