The Bitcoin Group, the American original, for over the last ten seconds, the sharpest satosis, the best bitcoins, the hardest cryptocurrency talk. We'd like to welcome our panelists, Derek J. Freeman from Peace News now. Chris Aless from World CryptoNet and anonymous bitcoinbook.com. Good to be here and talking Bitcoin. And I'm Thomas Hunt from Mad Bittcoins. Without any further ado, issue one Bitcoin banned in China again. Another price drop, another Chinese banned story. Do they meet at this time? Is Bitcoin finally going to be an underground currency in China? Has the cyberpunk future of Blade Runner finally arrived? Derek J. I'm super surprised at how responsive people can be to government news. It's like, oh no, our master told us we're not allowed to use this, but I'd get rid of it. Like, who does that? It might be a Chinese thing because it's certainly not an American phenomenon. Typically, you want to just... I mean, do these Bitcoin users even know that Bitcoin continues to work regardless of what the government says? It seems like they don't. And hopefully, the more back and forth bands happen, the more users of Bitcoin will realize, hey, wait a minute, it actually doesn't matter what the government says. We can still use this currency. Yeah, it might become an underground currency as you put it. But it's not something that has to operate in secret. Something anyone could have on their phone and no one could really know about it. Short of government agents going around and inspecting everyone's phones all of the time. It's just not feasible. Kristoff, Atlas. Yeah, it seems like a lot of the market sentiment with the price of Bitcoin is being dominated by the Chinese central bank, which is a bit disheartening because, of course, they can capriciously and arbitrarily decide whatever they want from day to day. So it's difficult to see that the price is being dominated by that. And meanwhile, investors and speculators are largely ignoring the many fundamental changes that are having with Bitcoin, which are all 100% positive. Seeing more and more exchanges going into proving their reserves. We're seeing a new credit or debit card that you can use to for Bitcoin that's available anywhere where our master card is. I mean, there's so many hugely positive changes that are happening in the Bitcoin landscape. And it's not being reflected in the valuation of the price by speculators. So I don't really know what's going to happen with China. No one really knows. I tried reading that Chinese article and I had a tough time understanding exactly what was going on there. But we'll just have to wait and see. And I hope that people will grow out of this stage where they are betting on Bitcoin based on the decisions of the Chinese central bank because ultimately it's not relevant to the success of Bitcoin. And I'm sure that everyone remembers when the internet came out that China wholeheartedly adopted it and rushed right in to bring the internet and freedom of information to their people. I'm sure you don't remember that because it didn't happen. The Chinese didn't like the internet. They don't like Bitcoin, but they can't seem to get rid of either one of them. They can't stop Bitcoin. They can't stop BitTorrent. They can't even stop news from going in and out of their country. The Chinese seem powerless. The only thing they seem to be able to do is make the market go up and down and up and down. We're joined by Andreas Antonopoulos. We're just discussing China and the recent price drop. Andreas, do you have any thoughts about China? You're not ready yet. You're muted still. China Bands Bitcoin. Then China Unbanned Bitcoin. Then China Bands Bitcoin again. Then China Unbanned Bitcoin. Nobody, especially in China, gives a damn because governments that have arbitrary rule of law have populations that do not respect the law. As a result, when the government in China says they're going to ban something, that thing will continue to happen. In fact, it might make it even more enticing and interesting to the people of China because it's been banned. When something is illegal in a country where the law is a joke, the police, the judges, the military, and the politicians who are above the law get to do that illegal thing. The rich people get to bribe them so that they, indeed, can also do that illegal thing. As a result, Chinese rich people will bribe politicians, judges, cops, and generals to get to get Bitcoin. They will be the first to stuff their suitcases full of Bitcoin, just like happened in Russia when they banned hard dollars and the Politburo was stuffing their suitcases with hard dollars. I agree. It's very reminiscent of the drug war. As soon as drugs were banned, you didn't see any more drugs anywhere in the world. They instantly disappeared. We all know that didn't happen. That's not going to happen to Bitcoin. The internet is still there. The computers are still there. The Chinese people are now being advertised to in a huge way about this new digital currency that apparently their government doesn't like, which is a strange thing for a government that the people might not like to do. It's even better than that because this is a form of product that is entirely virtual. Therefore, its consumption can happen without any visibility. It can be transported without any visibility. It serves a need that is far, far, far more widespread than the needs that addicts suffer towards drugs. The addiction to currency is a common theme for everyone, and everyone needs currency. Now you have a product that everyone needs and cannot be seen. This will be far less effective as a ban than you saw with a drug war or the ban on any other product or service. I agree. The recent story that you told about in Russia during the Soviet Union, they banned the US dollar. Yet on every street corner, you could trade rubles for dollars. I imagine the same thing will happen with Bitcoin, but it's even harder to prove that they have the currency because now they're just standing on a corner talking on their cell phone. You can look inside the cell phone. Maybe the Bitcoin wall is hidden in another app. It looks like a recipe app. There's so many apps, so many possibilities. It could be anywhere. For the last year, people have been asking me again and again, when will we see decentralized exchanges? When will we finally have decentralized exchanges? Well, guess what? The moment China really, really bans the use of centralized exchanges in China. A hundred thousand Chinese developers will start working very hard on building Android-based trading systems and decentralized exchanges that can bypass that ban. So thank you, Chinese government. You just funded the development of decentralized exchanges on a massive scale with some of the best programmers in the world. And the first decentralized exchange I predict today will be written in Mandarin. Innovation always happens in the strangest places. Exit question, how long before China changes their mind on the ban? Derek J. Who is John Gull? Ultimately, it does not matter. Kristoff Atlus. I think the flip flop back and forth on it for a while, and ultimately the way that they end up going will be determined by their relationship to the dollar. Chinese has this kind of love-hate relationship with other fiat currencies and that they are massive holders of the currencies, but they're very nervous about the fact that they're holders of those currencies. They have a sense that they are doomed, particularly the US petriot dollar. And so I think that they're going to make a lot of their decisions based on what their holdings are and foreign currencies. Andres Antonovlis. You know what, I think I would rather see China ban the currency now right away. Well, they're not going to ban the currency because they can't do that, but ban the exchanges of that currency, the above board exchanges in their country now for two reasons. One, uncertainty hurts Bitcoin a hell of a lot more than the certainty of a ban. I'd rather have certainty of a ban than this gray back and forth that's causing a lot of volatility. And two, the moment they do that, as I said, it will unleash the need and the massive demand and the funding to build decentralized exchanges, which we can then replicate around the world for the next idiot who decides to ban something that cannot be banned. Excellent. Moving on, issue two, FEC slows down decision on Bitcoin and politics. It sure looks like Bitcoin is a currency and the Bush Robert Supreme Court claims that money is speech. So therefore, I should be able to donate as much Bitcoin as I'd like to a political candidate. Your thoughts, Kristoff Atlas. Well, I certainly won't be sending any Bitcoin to any political candidates, but I don't know, I have a kind of mixed feelings about this. On one hand, getting politicians behind the currency and getting them, you know, making them stakeholders in the currency would be a very good way to protect the currency because they'll be more reluctant to ban or harm the value of a currency that they are stakeholders in. And I think that they will find politicians will find that Bitcoin is a very convenient method for them to do all the dirty things that they do behind the scenes, and they will find it quite useful for that purpose. So ultimately, I think it's good to see politicians using Bitcoin more. I just personally don't wish to participate in that, that particular exchange. You give some people the greatest tools and they just turn them into knives and dress your thoughts. I'm really looking forward to seeing political campaign contributions with Bitcoin because money is already corrupting politics. The difference is that it's now secret money, whereas with Bitcoin, it will be open and transparent money. It may not be easy to see who the donors are, but it will be very easy to see where that money goes from then on once the politicians get it. And they will be under intense pressure from regulatory agencies like the FEC and their competitors in the political process to create radical transparency mechanisms for their campaign donations. So you will see anonymous donations going in, but very, very easily tracked where that money is being spent, which is a vast improvement over the current political campaign donation system that we have. More importantly, it will provide the kind of motivation the politicians need, and it will make it unassailable legally because it will become protected very strongly by the First Amendment. So I'm looking forward to that. And I don't think the FEC's decisions make a bit of difference. I don't think most of politicians give a damn what they're going to do is they're going to start accepting campaign contributions in Bitcoin. Some of them have already done that. More and more, we'll do it because money is what they're after. And then they will challenge the FEC to tell them that it's wrong. They will ask for forgiveness, not permission. They will collect the contributions and then let the FEC sort it out later, because that's how they operate. The FEC is powerless anyway in a toothless tiger. So it doesn't matter what the FEC does. Let them drag their heels. They will be forced by facts on the ground, by politicians actually raising money in Bitcoin, and we're seeing that develop more and more. I'm sure it's much like the first time of political candidate used email. They're like, we need permission to use email. We should all get permission, but then they just used it anyway. Derek J. Yeah, I'm not sure why the FEC is even interested in regulating this because Bitcoin isn't money. Remember, it's property. A free stator and New Hampshire state representative Mark Warden made headlines last year when he accepted Bitcoin donations to fund his election campaign. So whether the ban comes from people wearing mandarin badges or English ones, Bitcoin works. Sophisticated users and increasingly amateur users will be able to continue sending Bitcoins wherever they want, including into the pockets of politicians. Though I wouldn't recommend it. Very good. Moving on, issue three, dark market and the future of decentralized marketplaces. An interesting result from the Toronto Bitcoin Expo hackathon, dark market, which some are now saying should be called free market. A distributed, peer-to-peer marketplace that would allow you to buy and sell things anonymously with no fees. Do we finally have a prospective eBay killer? Are distributed markets the future of online commerce? Andres and to Nobles. Yes, and yes, decentralized markets or decentralized solutions of any kind are the future. Bitcoin represents the spearhead of decentralization, falling on the heels of decentralization of information by the internet, decentralization of currency with Bitcoin and other cryptocurrencies, and the natural outcome of that decentralization of markets. Decentralized markets are more efficient. They scale better and they are impossible to shut down. Dark market is just bought the first of those. And for those who don't like the name, listen, write some code and then you can do whatever marketing you want. Do not confuse the instance with the pattern. Dark market is a pattern implemented as an instance called dark market. Don't like the instance? Clone it. Call it free market. Call it chicken market. Call it purple market. Call it Yahoo market. We will see all of those. We will see hundreds of different iterations of the dark market pattern. But before you go telling those who wrote it in 36 hours of sleepless nights in Toronto and I saw them after they pulled off this amazing feat of engineering and most importantly this amazing feat of principles and liberty. Before you go telling them how to market their product, maybe try creating your own. I don't think you get to politically correctify the naming of somebody else's creation when they have the principles to build it. But if you don't like it, clone your own and call it whatever you want. The most important thing is that there will not be one dark market. There will be a dark market pattern that exhibits itself in 10,000 variations in 160 different languages all around the world. It will be based on common code and it will be completely unstoppable in every one of its instances and even more so as a pattern. Derek J. Yeah, I think the idea of Bitcoin or excuse me, I think the idea of eBay will soon be quaint. Like, oh, the days when it was necessary to use an exchange operated by humans. Think of the fallibility. Well, distributed markets are probably the future of online commerce. I could imagine a centralized exchange that earns a reputation for efficiency and reliability and that could work so long as there aren't politicians trying to bring it down. So that would be the strength. Centralized or decentralized doesn't matter to me in general, but for markets, those are heavily regulated by agents of the state. And the agents would have a much more difficult time trying to regulate a program when they don't speak the language. They don't know how to code. Chris, off atlas. Dark market is not going to be competing with eBay anytime soon. There have been a number of startups that have come up as competitors eBay and they have failed because eBay has a very significant network effect. So something like a dark market is only going to compete with eBay when they can get their fees down low enough because the majority of the eBay's buyers and sellers right now they don't give a damn about censorship resistant technologies. They're just buying and selling stuff that's pretty much above board. And so that's not what dark market about. Dark market is about using the blockchain technology because of its censorship resistance capability. It's not because it's a necessarily a superior form of buying and selling stuff online. So I don't really see that being a competitor to eBay anytime soon. I do think it is interesting though looking at the sentiment towards projects like dark market. Even though Bitcoin is still in an earlier adopter stage, there's a real schism in terms of how people favor these kind of free market transactions. There's the people that are interested in Bitcoin purely as an incremental change to our society. They want to make some money off of the speculation. They want to be able to go to Starbucks and buy some coffee in Bitcoin. They want to buy their sandwiches in Bitcoin. They're thinking of the technology as a peer-to-peer point-to-point technology. And then there's the people that see Bitcoin as a future-changing technology that it is, as Andreas said, a pattern rather than simply an instance of a new technology. And a lot of those people are also quite sympathetic with free market perspectives. And they are all for something like the dark market. And those people are the people that are not going to have problems and have quibbles with the particular terminology that we use. And as it should be called dark, it should be called the free market, it should be called something else. Which generally those people understand that it's not that's not really what's important. That's the technology that's underlying it. Yeah. Exit question. Yes or no? Should eBay feel threatened and dressed? Yes, I'm actually going to disagree a bit with Christoff because I think while he is right about the network effect of eBay in the United States and other Western developed nations, the idea of a decentralized market that requires no infrastructure and that can become efficient at scale globally without intermediaries and that doesn't require a support infrastructure and that works on Bitcoin will actually fuel both Bitcoin and market transactions everywhere else in the world. So I expect dark markets and other instances of that will not threaten eBay in the Western world. But they will gradually gain network effect everywhere else where they can provide solutions that don't exist today, especially in countries where such free market activities are frowned upon even when you're buying and selling chicken, let alone buying and selling weird things or non-mainstream things. So China and Donisia, Philippines, Latin America, the Middle East, wherever else you might see this and eventually even Africa. Decentralized markets scale better, they deliver more value to the participants and they operate at lower cost. And if that can happen for the other six billion, then eBay yes needs to think carefully because they are threatened by decentralized solutions. Once again, it's this fascinating paradigm where technology is invented in the United States might not be perfect for the United States. They might be perfect for the world first, which is not what we're used to thinking about with technology. There's more need for it elsewhere because as Crystal, Crystal is absolutely correct. We have eBay here and eBay works fine, but the rest of the world does not have eBay and they have things that do not work well and they have much more censorship and much more control. So the demand and the need is much bigger and this is global from day one. Derek J, does it threaten eBay? No, not yet, but give it a few years and we might be saying eBay who? Because Crystal makes some good points that yeah, eBay is the number one right now and plenty of people are more than willing to use it. But me for example, I only accept crypto currencies. I only want to deal in crypto. There are more and more people like me every day and we're going to be looking to alternatives to things like eBay. So not yet give it a few years. And remember the feather in eBay's cap is PayPal, which used to be a major advantage for eBay, but now Bitcoin can pretty much match PayPal. All we need is a market. Crystal, yes or no, should eBay feel threatened? Not yet. Unless their business plan is based on massively expanding their market to other places where it's not currently at. I do think that dark market can compete with something like eBay, where eBay is not currently residing, where it does not have that network effect. But I don't think it's going to overtake eBay somewhere in the United States. And Bitcoin is not going to be the competitive edge that dark market has over eBay because as soon as Bitcoin is large enough, places like eBay, like PayPal will find a way to incorporate it integrated into their technologies and then they'll have Bitcoin as a payment option as well. I've got a parting thought here, which is we need to slightly rethink this. We're currently thinking of dark markets as the application competing with eBay, the application as a front-end application or marketplace, an actual instance. But if you stop for a moment and think of the fact that dark market also provides a market platform for building markets on top, because by its very nature, it is an open API. eBay cannot be used as a platform to build markets on top, open markets, relabeled markets, markets for different goods, even goods that eBay does not support. You cannot use all of the technical advantages of eBay to build your own market on top. Dark market is a platform. And as a result, you can build other markets on top of it. You can essentially put a thin layer that creates a localized market, a special purpose market or a myriad of them, all running on a common core of software that will feed innovation and allow innovation to happen at the edges of dark market. Dark market is a market platform, a crypto market platform, and just like Bitcoin enables all kinds of applications to build built on top of it. For now, for the first time, we have a trusted automated market-based platform that has never existed before. That's what eBay needs to worry about, not any one of the instances that are spawned from it. Excellent. Moving on. Issue 4. State of Bitcoin report 2014 shows that Bitcoin venture capital is soaring. China may have banned Bitcoin, but the opposite is happening everywhere else in the world. As venture capital is flowing into Bitcoin at an almost alarming rate. Last year's 99.5 million has been up to this year's $200 million, causing many to recall when a similar amount of money was invested to the internet during the 90s. Good sign for Bitcoin or the greatest sign. Derek J. Yeah, seeing venture capital flying into Bitcoin the way it has been is a sign that Bitcoin is here to say. And none of us on the panel are going to be surprised to hear that. Well, $200 million might not seem like a lot when we're talking venture capital money. Let's remember that we can do much more with much less thanks to Bitcoin and the internet and the technologies that we have today that we didn't have in the 90s. Christ off Atlas. Now, as a presentation recently, at the Wharton Business School, a colleague of mine was giving a presentation there about Bitcoin, and it was really interesting to see the reaction of the next generation of entrepreneurs and business people, how they reacted to Bitcoin. And it was sort of a mixed reaction in the crowd. Some people were still pretty skeptical. All of them absolutely had heard of Bitcoin, a very significant majority of them actually held some Bitcoin. So the business community and you know, these entrepreneurs are definitely very much paying attention to Bitcoin. Some of them still have some antiquated fears about it. For example, someone started asking about deflation. What about deflation? And I think that the venture capitalists are an example of how deflation is not going to be a problem for Bitcoin because the price of Bitcoin has been shooting up. And yet there are still people that are willing to make loans, aka investments, capital investments, to companies based on the assumption that they're going to be more profitable than simply buying Bitcoin, this deflationary currency where the price keeps going up and up and up and just holding it. So the fact that we have this empirical evidence of people willing to invest in other things other than just this currency, to me is very good evidence that deflation is not going to be a problem. And that these kind of typical fears that some of the business people have are not going to remain for very long because we'll have very good evidence that they're it's not going to be a problem. Andres, your thoughts? Well, keep in mind, I think I'd like to look at these numbers a bit more carefully. $200 million is the per annum run rate, which means that it's taking the current investment for the first quarter of 2014 and extrapolating it by multiplying it by four. That has two assumptions, one that the rate is not going to change and that it's going to be sustained at this level. I think there's two possibilities. One, we might see a drawback in investment, which is the less likely scenario. One might see and I think is more likely is an acceleration of the investment, a massive acceleration of the investment because what we're seeing in Bitcoin is that things change on a quarterly basis, the way on the internet in 95 things changed on a yearly basis, we're running at an accelerated schedule. That means that we could see the type of growth in the next three quarters that on the internet took three years, in which case we could be talking about a billion dollar run right by the end of the year, that would not surprise me at all. Secondly, these amounts include only external investment from the fiat currency into Bitcoin through the most traditional means possible as measured only on the most visible projects. You've got to realize that there's a lot of venture capital that is not being seen in projects that are happening behind the scenes, which are not publicly announced, especially in developing nations and emerging economies like China, Brazil, Russia, India, etc. Things we don't see now, smaller level investments, not necessarily big capital investments from venture capitalists, but there's a hell of a lot more startup activity than the five big investments that we've seen with big millions going in from VC. That alone means that the run rate is already more than half a billion dollars. Finally, and I think even more importantly, none of this is counting the internal investment. We have a five billion dollar valuation economy here, and this economy has Bitcoin that it's using to fund Bitcoin projects in Bitcoin with no fiat at all. This is generating its own economic activity. The early pioneers of Bitcoin did not take their money, sit on them, and hoard them like many would say. In fact, what they did is they took that money and they reinvested it in companies. I work for Blockchain Info, a company that operates entirely in fiat, whose major investor is one of the early adopters of Bitcoin who is invested in more than a thousand companies entirely in Bitcoin and has never touched a dollar in terms of investment. This is all in Bitcoin, and that's not even on the radar of this chart you just showed. How much investment is happening in Bitcoin startups in Bitcoin? That's missed. How much of that is accelerating as the price goes up? In summary, tip of the iceberg is what you showed on the chart. There's a massive iceberg underneath that is moving forward with enormous momentum. This is the most exciting economic activity to happen. Since probably the early 2000s after the recovery from the internet's bubble, and it's going to be global and it's going to be denominated in Bitcoin, and who gives a fuck about the dollars that the big VCs put in? Excellent. Thought to end on. We're moving on to predictions, story of the week, or final thoughts. Derek J, do you have a prediction, a story of the week, or a final thought? I think the story of the week for me is DogeCon, which you are attending. I look forward to hearing about it from Andreas and Thomas. Hopefully, if Chris Ellis is able to make a virtual appearance, I'd like to hear from him as well. The fact that there are these conferences happening more and more frequently, the fact that people are into Doge, and then coming into Bitcoin, that's exciting to me. Absolutely. We should say Happy Birthday to Feathercoin. Hello to Chris Ellis, who's making a speech at Feathercoin's birthday in England right now. Chris, do you have thoughts or story of the week? I've been seeing a number of very exciting developments in the space of anonymous e-cash, dark markets, and so forth. We talked about dark market without Amir Taki, also seeing some very exciting developments in dark coin, a non-coin, just a ton of stuff going on. I think that we're going to see more polarization on these topics as there's going to be some free market fanatics that are really excited about these technologies. Then I just want to buy my subway sandwich with Bitcoin people that are going to be horrified by it. They'll want to change the names to Pink Unicorn Market or whatever. Pink Unicorn Market is a lot safer. And, Dres, your final thoughts or prediction, story of the week. So I think I'll summarize the story of the week as charity, and I was very happy this week to see a couple of things come to fruition. The Dorian Nakamoto fundraiser, which was completed on Monday after delivering some 50 Bitcoin almost to Dorian. He decided to keep the Bitcoin become a member of the community. If you haven't seen the video, you will see a very kind, warm-hearted man be very warm towards the community. And thank all of those who donated more than 2,000 people. It became an international story. It completely contradicted Leah Goodman's awful portrayal of him as in the Loof Geek with no social skills and we saw the truth. And that shows us who was lying throughout this particular story. I then had the honor of sharing a pastrami sandwich and a walk on the pier with Dorian Nakamoto after spending several hours teaching him how to use Bitcoin. I'm waiting for the teacher that says I taught Satoshi Nakamoto how to use Bitcoin and got paid in a pastrami sandwich. But that was one example of charity. The Dorian addresses up in his control and is available for donations. Two more Bitcoin has been raised in the last few days for Dorian. Please continue contributing. On the Joe Rogan Show on Tuesday, Joe Rogan put up his address to raise funds for project operating in the Congo helping Pygmy communities deal with water and sanitation and and shelter and housing and things like that and development. That's one of his friends is running. And that raised just over three Bitcoin I think in a matter of hours making a very big impact, psychological impact on Joe Rogan who is somewhat skeptical but got completely overwhelmed by the donations of the Bitcoin community. Please keep that up. Joe Rogan's address for his fund and Dorian's address are still available online. You can see them at the Joe Rogan Experience site and many other places. Finally, this last week was the final report from Sean's outpost after a year of serving the community of Pensacola, Florida, delivering more than 65,000 lunches and meals to homeless people in Pensacola. One of the first charities to use Bitcoin to propel themselves to a whole other level of fundraising. Sean's outpost.com. Please show an outpouring of charity, Bitcoin charity. That's the narrative. It is the truth of our community. It is a very generous community and this has been a fantastic week for Bitcoin charity. Absolutely. Great point to end on address and congratulations for your work with the Dorian Nakamoto fundraiser. I was just a delivery driver. You were right on it. Dovey was telling us the other day. Before you even walked out of the convention, you knew you had to raise money for this guy. You knew you had to write this wrong that the media was doing to him. Obviously, newsweeks not going to do anything like this. They're not going to even retract their story. It's up to the community and people like just normal ordinary people, given a few bucks, everyone working together and we can really pull some amazing things off with Bitcoin and charity. By the way, another very charitable system that I'm going to be supporting very actively today is the Doge Conference, which I'm going to with a big smile on my face when I first called for Doge Conferences, because I wanted to participate in a different community. I got accused of being a traitor to Bitcoin, a bandoning Bitcoin. I was told, bye-bye, see you later. We won't miss you. I can guarantee you, no one's going to be sending the death threats from Doge Con. They're too happy, go lucky to worry about things like that. Of course, I am still very much committed to Bitcoin, but let's have some fun for a change. Let's do some lighthearted things and I'm really, really looking forward to visiting with a Doge community this afternoon. It's going to be great and you almost stole my prediction. Prediction with great speakers raging from the ranging from the creator of Lightcoin and Dogecoin to Andres and to Nopolis and great fun, including Pizza, Soda, Doge Costume Contest, and even an appearance by Mad Bicquans. Dogecoin, DogeCon in San Francisco is going to be a lot of fun. Now I've just got a drive there. We're out of time. Until next time, bye-bye.