The Bitcoin Group, the American original. For over the last ten seconds, the sharpest sitoshis, the best Bitcoin's, the hardest cryptocurrency talk. We'd like to welcome our panelists, Chris Ellis from the World Crypto Network. And Will Penguin from Topiki. Hello. And I'm Thomas Sun, also from issue one, BitFinex, hacked. Popular Bitcoin exchange, BitFinex, has been hacked. They lost access to the coins in their hot wallet. However, thanks to proper security practices, 99.5% of their Bitcoins is kept in secure, multi-sick wallets, limiting the loss to only 0.5% at most. Chris Ellis, your thoughts on yet another centralized Bitcoin exchange, getting hacked. Yeah, I mean, this is going to keep on happening because these exchanges are the weakest link and security chain is only as strong as its weakest link. I did have the fortune, though, earlier on to listen to PGP, Phil, from BitFinex himself. He came onto the Whale Club. That's WhaleClub.co. If you're interested, they've got a little team-speak channel, which is where you can kind of get together audio only and listen to each other talk about the Bitcoin price all day. So I went in there to see what the fuss was about. Phil came in. He answered a bunch of questions. He was very candid. It was the complete opposite to empty-gogs and the thing that happened a bit last year. He was very open and transparent about the whole thing. He was basically saying, look, we expect to get attacked as an exchange. We deliberately keep everything segmented and separated. We have different wallets on different servers so that if we do get hacked, the liabilities are very limited. He said that he did not have final figures yet, but the estimates of what the amount that was stolen was something up to about $1500 Bitcoins, which would be about $300,000 worth, which is not enough to, obviously, put the exchange out of business. Actually, in spite of the fact that I've always been very critical of these exchanges, I do think there are more efficient ways of trading in a decentralized manner so that we don't have to be giving up private keys over to these businesses. I do actually applaud the team a bit the next, but actually coming out that quickly and speaking to people with an AMA, I thought that was very impressive. Will Pegman? Yeah, I think the transparency from this has been fantastic. It's night and day from a little over a year ago, what we were experiencing with all the attacks happening to various other companies and exchanges. They had protocols in place to mitigate the risk of trying to serve your customers rapidly, have some amount of funds in a hot wallets so you can quickly execute deposits and withdrawals for your customers because that's a huge thing for an exchange to quickly do that. It's a problem that needs to be solved. I mean, solutions like change-tip, where there's no accounts, no address, no email addresses, just Bitcoin, just crypto working, really take out all of these big security risks, which these exchanges right now as they stand, they serve a very important function, especially Bitfinex being kind of like the giant. I was really interested to see that they got hacked because they are one, some companies maybe have gotten hacked and just haven't told their users who knows what's going on in China, for example, but basically Bitfinex was like the shining example of how to do everything, right? I think even after an attack like this and a hack like this, they still are, apparently. If in fact, 99.5% of customer funds were kept offline, 1500 Bitcoins in a hot wall, that seems like a lot, but again, these guys are the titans of the industry right now. That may just be their hot wall at eyes. It sounds like their process that they had in place was very successful. I'm sure we'll hear more once they roll out the new system for the hot wall at deposits, however, that's going to work for their customers because that's really what they're fixing and probably doing other tests as well before they go back online fully. It's very interesting to watch. This is night and day compared to exit scams and major implosions. Kudos, Bitcoin ecosystem for Bitfinex security. It is interesting though, the size of these hot wallets, perhaps we'll see limitations on their size soon. Exit question, is there an unhackable way for someone else to hold onto your private keys? No, nothing's unhackable, but it's about distributing the risk and making sure that every stakeholder in that chain takes full responsibility for that risk. At the moment, we're not at the moment, we're taking unmeshed risks and we're not thinking about the ultimate downside and we're not really being honest with ourselves about tolerance towards those risks. I would encourage you to look at distributed systems like OpenBazaar, for example, which will appear to appear exchange and it will basically encourage the use of multi-signature so that perhaps for example, an exchange can have one of your private keys and you can have the other one and then you store one on paper. So you store one on your computer, one with the exchange and one as a backup and you need two in order to activate a trade at any one time. That's still a long way off because the technology has a lot of latency. It takes time to execute trades that way. It's not going to be as quick, but I am optimistic of the future. We just need more engineers and more, you know, the community to really get behind this and push it. Will Pagman? The exit question. Yeah, I think hackables like a hugely broad term. There are all kinds of ways to hack things, but I guess electronically, it's very, very difficult to strictly, electronically hack multi-signature. So incredibly, incredibly difficult if done properly. And there are lots of solutions out there doing this. Andres Antonopoulos just announced his friend of the Bitcoin group. Just announced his company, third key solution, something he's been doing for months prior and just kind of hanging his shingle now because it's a valuable service that he's tested and that the marketplace is in demand for. So yeah, I mean, solutions like this are going a long way and the average user is now able to do this stuff. If you're compelled to learn how to use a Bitcoin client, it's basically, you know, not much more difficult from that point to learn how to use multi-sign. So you know, that's what people need to be thinking about in terms of securing their funds more and more. And I think that's what we'll see. That's what we saw with Coinapult when they were hacked. They came back with multi-signature everywhere, including for their hot wallet, with the help of Bitcoin, I believe. And Bitcoin was helped out. This is where the community can help itself and they are. That's why I think with all the news or talk out there about how the Bitcoin community is maybe eating itself and there's lots of rivalry and just maybe consolidation that's uncomfortable. There's still this ethic of rising tide raises all ships, which we're seeing. This is a testament to that. So multi-sign general is a testament to that. Moving on, issue two. New Bitcoin license rules and Loskey's leaving. He wrote the rules on the bit license. His ideas now govern the way you can buy and sell Bitcoin in New York State. And now he's going into private consulting. Then why DFS, Super Nintendo Loskey will be a Super Nintendo? No more. He's stepping down, dropping the mic and leaving the stage. Will Pangman was Loskey, Aliyanardo, a Satoshi, is his work of masterpiece. Is the state of New York and the people of New York better off with Ben Loskey's bit license. And his new job privately consulting on the law he broke. Most of the time when bureaucrats, at least in history that I've seen, especially in New York for that matter, they're much more cagey and clever with the way that they do exactly what Loskey has done, which is basically to work for an initiative to create a bunch of friction and then sell your brain, sell yourself as a consultant, advising the very people you've restricted and bound and tied and made more complicated their processes. Guide them through your tangled labyrinth that you just used to owe for them. So I would like, I mean, it's so transparent how he did that, right? It's so obvious. Because this community is very vocal and Reddit would blow up anytime Loskey would say anything in public or any conference he would speak at or any conference that anyone else would like lamb based him in their talk. So yeah, I think people are laughing at him in the halls of power because of how transparent and like they're probably upset with him too, like, dude, you're showing our hand here. This is the formula that has worked for so long and here you go and you just like make it so obvious. So this is more the same, but it's also like brazenly more the same in a way that probably won't make a lot of people happy, including the people that we think are on his side, we being like, let's say the Bitcoin community on Reddit. It may be a bit farcical, but everyone loves it farce. Chris Ellis. Yeah, well, this is it. You don't play a game unless you know you can cheat ahead of time, right? And this is the way it works. It's the golden rule, the people that win are the people that write the rules. And I don't really have a whole bunch to add to what we all said. That's exactly, yeah, the one saving grace I guess is that we all get to see it. But it's right out there. I've got a picture of a Super Nintendo on my screen. I have no idea why. Exit question. Who's a better role model for young children? Ben Lasky who's now consulting on the very laws he wrote or Kim Kardashian, who's famous for being in a sex tape and a reality show? Will Pagman? Definitely Kim Kardashian. Chris Ellis. Kinkha. Oh, Karnasian for the win. And don't forget, you can watch the Bitcoin group at thebitcoingroup.com. Night or day, anytime of the week at worldcryptonenetwork.com, what could be more gratifying than watching the Bitcoin group? You could even type in your questions right now for the show. Your questions on the Bitcoin group. Yes, it's true. It could happen. Moving on, issue three, Bitcoin block size debate. The Bitcoin block size, the number of transactions that can be in each block, is under major debate lately with the core developers, each sharing their views in public in a massive debate about the future of Bitcoin. But with the core argument being, we'll making the block size bigger lead to decentralized, to centralized Bitcoin mining. But Chris Ellis, do we already have centralized mining? Do we need bigger blocks? So there's been a lot of controversy over this. Bear in mind that's totally limited the Bitcoin block size to help the speed of download of the initial blockchain. So that when you got the Bitcoin QT, while it installed it on your computer, it wouldn't take forever to download. But he didn't intend for it to stay that way forever. I'm inclined to take the side of the engineers here. Since they know the protocol inside and out, this was not only proposed by Gavin Andrews, but also Mike Hirn chimed in on medium his block there. And he was basically saying, look, we know that this tech, we understand it. And the people that seem to be against this seem to be the speculators and the pundits on the sidelines who I'm less inclined to listen to. So here's how the basic math works. The smaller the block size, the fewer transactions that can get in. Therefore, it's scarcer. Therefore, people should be incentivized to put in higher transaction fees to encourage the miners to include their transactions in the block. But as you decrease the Bitcoin size down to zero, the closer it gets to zero, the more you undermine the integrity of the network as a whole. So once you've undermined the integrity of it, utility now ceases. And people use alternative methods of payment like Visa on the legacy payment system, for example. So you have to hit a sweet spot. Now, it's not the same in reverse. Just limiting the block size and letting any number of transactions in doesn't mean that people won't be choosing zero transaction fees with their transactions. And why is that? That's because each miner has full discretion over what transactions they include in the block. So what will naturally happen is that miners will simply say, well, no, I'm not going to put in all these free writing transactions are not going to pay any fees. And so naturally, people will be inclined to pay more in the latest version of the Bitcoin Qt. Well, it actually gives you a sliding scale of how much transaction for you want to pay. And it will tell you how long roughly it will take to get put in the blockchains. So if you don't need the money to go urgently, you can say, I don't want to pay very much, but if you want it to go through right now, you can pay more. I think that's perfectly natural. It's important that because it takes a long period of time to get any changes made on the Bitcoin network because it requires consensus on all parties, it is right that we do this reasonably urgently. Like we shouldn't really have left it this late. If we want the Bitcoin network to scale, we are going to need it to be more than just three transactions a second, which it currently is. It's going to compete with anything like fees, which is orders of magnitude faster. So I'm tempted to go with the experts here and offer the pundits. Will payment. Yeah, I have to agree with Chris. I certainly lean toward the engineers on this, especially having had conversations with some of them, been fortunate in that regard to talk about these very issues with them. So like Chris said, they know the stuff inside and out. They've been preparing for these potentialities. There's really vibrant discussion about this and lots of interesting takes on it that really make the mind boggle at times too, which is interesting. I tend to think with everyone worrying about the centralization of mining, even if the block size doesn't change in the next five years, which likely, I think the prognosis was the next two and a half years, we might reach the one megabyte block size, which we're not currently at, but it's good to have foresight and change these things sooner than later obviously for the health of the network. That's the thing. We want Bitcoin to grow. Most people want Bitcoin to grow, even the people who are critical of the block size increase want Bitcoin to grow. In order for Bitcoin to grow, it's got to grow physically, actually, realistically grow here in these ways. We'll run up against more lawns and things. We'll run up against raw materials, bottlenecks, and we'll see centralization temporarily. Then we'll see democratization, commoditization and decomoditization. We'll see that with various things around Bitcoin mining, especially. People are critical of 21. I'm kind of a big, really interesting bystander about what's going on with 21. People want to figure out a way to democratize or decomoditize mining like soon before the third block haven, which would be awesome for a lot of people because after four or five block havings, it becomes more trivial. Maybe that's why having miners everywhere is at that point saturated is a really, really ingenious and forward thinking plan, you know, by biology and people in 21. I think these things work themselves out. The economics of Bitcoin were really laid bare on purpose so that freedom, freedom, human activity around it could determine its future. Enough people are incentivized to preserve this thing and that's what everyone in this argument is trying to do. It's really interesting. Get involved in this discussion because you'll learn and you know, this is, I think wanted to stay small, that's a conservative approach, you know, and that's being afraid of change, I would say. I would challenge you to think of that being afraid of change is maybe not a wise position in this regard, you know, embracing change like Bitcoin itself emerging onto the scene which I think will get to in the next issue. You know, it's going to go through these moments, these huge transitions, whether it's mining, whether it's acceptance levels of, you know, libertarians on up to Wall Street, you know, whatever. So, buckle up, grab your popcorn. Exit question, what's your favorite tetris block? Chris Ellis go. I love this particular tetris block by Paige Peterson who drew this really cool diagram with Peter Todd that shows the difference between centralization distributed and decentralized. Look at the little hands that control the distributed network and this is what happens when you deal with companies like 21 where they're like distributing the mining except who controls the miners. They do. So it's just like, that's my favorite tetris model. That was a very well-answered question. Centralized distribution. Will, Pagman, your favorite tetris block? Well, definitely the straight line block for sure, the highest score one, you know, I always would line stuff up for that. But yeah, just to comment on Chris's point about 21, I'm definitely a wait and see guy with that. But I do see a path toward kind of the ideals that I know Chris and I share in my conversations with Chris. I do see a path. We'll see if they take it. We'll see. And we all dream of Bitcoin mining toasters. The long one is the correct answer. Moving on, issue four. Wall Street, Bitcoin. Wall Street has taken an interest in Bitcoin lately with NASDAQ creating its own Bitcoin-based stock market, apologies to Medici's Patrick Byrne. Goldman Sachs investing $50 million in circle and even NYSE, the New York Stock Exchange, launching its own Bitcoin index. Wall Street and Bitcoin, not just the blockchain are suddenly good buddies. Is this good for Bitcoin? Will payment. I don't think it's bad for Bitcoin. I think, you know, this is what was always going to happen if it stuck around longer than a year or two years. And Bitcoin has been through some incredible, incredible hits, you know. Even before the Mt. Gox implosion, that one probably sticks in everyone's mind as the biggest. But yeah, as long as it survives, I think it's relatively, you know, its integrity remains relatively true. For me, I care about two things. I care about the fixed total supply and the fixed rate of issuance. If either of those things change, I'm going to look differently at Bitcoin. On all of the things, even technologically, I'm pretty okay with how it's going and even the proposed changes out there. So yeah, including with Wall Street jumping on board. You know, everyone wants to see Bitcoin get to the third world and it's probably not going to without, it would eventually, I think, in the long term, but it's certainly going to get there a lot quicker with some Wall Street money and ties behind it. It certainly is. And then it's up to the communities around which are already in place, which is unlike, I mean, rallying around a currency, you know, these authors, these books that are coming out whether it's Nathaniel Popper or the Guys of Wall Street Journal. You know, they're all talk about like just the, how amazing it is that there's such a community fervor from all walks of life, all shapes and sizes and backgrounds, you know, around a currency, you know, a per se. It's much more than that, obviously, it's a network. But once you understand that, you know. So, yeah, I mean, this is part of, we want more participants in the network as long as they can't break the rules and don't try to. And we can tell if they're trying to in real time, like Bitcoin allows, then yeah, anyone come and join Bitcoin. I've heard that Wall Street is even trying to bribe the CEO of Bitcoin, but they still can't find it. Chris Ellis. Yeah, I think this will straighten out. So, it's been running for some time and I think it's politically motivated. So some of the stories that come out in this way and have these kind of SEO keyword terms are really there as a way of controlling the public perception and therefore the price. However, there is some credibility to the NASDAQ story because I did look into it and fact, what, and I pull it up on screen right now. The open assets protocol, which looks pretty cool. It basically allows, so if you just Google this, it's on GitHub, open assets, full slash open assets protocol. It basically gives you the abstract. It looks pretty cool. It basically allows you to buy a section of Bitcoins and of course, remembering it goes to the eighth decimal place and allows you to assign value on top of those coins. So you can say that it's, you know, once a touch, you now equals an orange or something like this or a share in Apple stock, for example. And then if you want to transact on the NASDAQ instead of going through their usual channels, you can simply send that to Toshion, the Bitcoin blockchain from one public key to another and thus effectively changing the share issuance. So you know, I've been calling for this for a long time that we should be really treating Bitcoin for what it is, which is a distributed database that anyone has the ability to take part in. But more importantly, it should be no reason why public exchanges like the NASDAQ, even a small department like the one that's looking at it at the moment, shouldn't be putting all of these trades publicly. I mean, that's what they're supposed to be. They're supposed to be public. Now what's not clear from the press release is whether they mean people will be executing trades on the blockchain. So they'll be using the color coin the way I just said, which is where they will be trading and expressing their intent through color coins or whether they will just be using it as an audit trail. So actually, you're executed the way you used to through a broker or through some software and then they'll simply mirror that into the blockchain so that anyone can then inspect it, kind of like a public API, but you're using the minus and all the hosts to basically be the host of that API. But no, I think this is exactly what it was meant for and it can only be a good thing because it will increase the intrinsic value of blockchain and therefore, in theory, increase the value of Bitcoin as a whole. Well, you were just going to call on Will's disappeared. We'll move on to our exit question. What's your favorite Wall Street movie, Goodfellas, Casino or the Godfather? This is a very cool position. It's the Godfather. Yeah, obviously the Godfather is the winner in that category. Goodfellas is a very good movie. Casino is also very nice a little long, but nothing compared to the Godfather will. Would you agree with us that Godfather is the best Wall Street movie? I was going to say Blood in Blood Out is the best Wall Street movie. Have you ever seen Blood in Blood Out series? I think I've seen the first one. But yeah. All right, well, we don't really have any questions today. There's still a chance if you want to put your question in, we'll take a look at it in the last few minutes of the show here. Otherwise, I think we're going to move on to predictions or a story of the week. Chris Ellis, do you have a prediction or a story of the week? I just wanted to check in with everyone, say hi, and it's been a while since I've been on air, and I just wanted to let you guys know just briefly what I've been up to. We've been working on Protip. We've been testing it out. Thank you to everybody that's been sending that feedback. We still need more though, because it turns out it was a few more bugs than we realized, and also we're not really happy with the user experience at the moment. We want to improve that. We really do need your support in that. Over the weekend, I'm hopefully going to be putting the new website together. We also have been receiving people who say that they don't know enough websites out there that have Bitcoin addresses on them, and we're going to sort that out as well. The latest version of the app, if you were lucky enough to get hold of a copy, it is shareware, so you're free to share it. We're not going to promote the download of it until we're happy with it, but all the recipients of the code are free to share it. In the latest version of that download, I think you're actually sent. You can download it again. It will be an updated version, and we have now included a few examples of some sites that have Bitcoin addresses on them, so you can go try it out. Hopefully this weekend I'll get the new site up and running, and that will include a list of all the Bitcoin supporting websites. The other thing I'm working on is the World Citizenship Project. I'm back on that again. Actually, that one ended up interrupting Pro Tip, which delayed that crowdfund. Now I'm back on to where I started again. I've been a lot of really good progress. I've been updating it. We're planning on new meet-up in the next couple of months. I would also like to do a hackathon, and Tom, I'd like you to be a part of that. You'd like to get together, group hackers going through, issuing these identities. Eventually, I want to bring that back into with Pro Tip as well, because then you can start to identify who you're tipping by these kind of identity systems. I'd like to do a lot of things that I want to get on top of. My living situation has been a little bit erratic. I'm in a place quite right now, which hasn't had great internet and not great lighting, as you can see. I do plan on getting more insuant and doing more hacks like we were doing last year, so that should be a lot of fun. All right. Will, Penguin. Yeah, I don't know if it's any kind of prediction, but I know the topic earlier about Loskey going into the private sector. I predict he won't be climbing the ladder as he may have wanted to, with the governorship insights on the governorship leak that came out last year or whatever. I don't wish the man any else. I just wish he would maybe change his priorities or his allegiances or whatever, but I don't wish him any else, but I don't predict that his private sector business of consulting on the problems that he created for companies to navigate will go very well. No president Loskey too bad. And finally, I don't have a prediction this week. I can't think of anything to predict, so I just like to recommend this article from Mashable entitled The Oregon Trail Generation, Life Before and After Mainstream Technology and What It's Like to Live in the Strange Generation After Generation X, but Before the Millennials and to have grown up with technology, but to still remember a time before it. Well worth reading. Oh, we're out of time. Until next time. Bye bye.