Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"

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  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    Participants:Adam B. Levine (ABL) HostAndreas M. Antonopoulos (AA) Co-hostStephanie Murph (SM) Co-hostBradle !ansen (B!) "ree#an$in%.or% editor

    "ar&od Hashemi ("H) Correspondent

    ABL: Hi' and elcome to Let*s +al$ Bitcoin', a sho or users ne and old ocrptocurrencies and the $in% o them all: Bitcoin. Comin% up on toda*s sho:

    /S e0chan%e Bitloor orced shut can e0chan%es even e0ist in the /S1,

    2hat is "inC34' and h it*s the #i%%est threat to Bitcoin ith Bradle !ansen o"ree#an$in%.or%. Listener 5uestion h don*t people sell Bitcoins or credit cards orPapal1

    6t*s all a#out perspective hen e #rea$don sitchin% rom #itcoins to mili-#itcoins.

    Butterl La#s: a tale o promises #ro$en and the lessons o dealin% ith volatile currencies.

    6s minin% causin% %lo#al armin%1

    Andreas ta$es on 7ru%man and #rin%s the heat.

    And inall' correspondent "ar&od Hashemi tells us a#out #urin% treasure ith our mind.

    8isit us at Letstal$#itcoin.com to su#scri#e or ree to our tice ee$l sho. M name isAdam B. Levine' 6*m a riter and spea$er ho li$es to e0plain complicated topics andunderstanda#le terms. +hat*s reall the purpose o hat e*re doin% here' ta$in% thecomplicated issue a#out crpto%raphicall secured mone and helpin% people see hat itcould mean in their on lives. !oinin% me in our 5uest or clarit are Andreas M.Antonopoulos and 9r. Stephanie Murph.

    SM: Hi.

    AA: Hello.

    ABL: +han$s or #ein% here' ever#od.

    SM: 6*m reall e0cited to #e here.

    AA: reat opportunit. +han$ ou' Adam.

    ABL: lad to have some assistance in this sort o impossi#le 5uest that e*ve #een #ar$edon. So' %ettin% ri%ht into the nes' e*re recordin% this at ;;:;< AM paciic time on the =>rdo April' =?;>. +he top stor o here 6 sit is the recent closure o the /S e0chan%e Bitloor.+he released this statement a e das a%o' 5uote: 6*m sorr to announce that due to

    circumstances outside o our control' Bitloor must cease all tradin% operations indeinitel./nortunatel' our /S #an$ account is scheduled to #e closed and e can no lon%er provide

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    the same level o /S9 deposits and ithdraals as e have in the past. As such' 6 have madethe decision to halt operations and return all unds. @ver the ne0t das' e*ll #e or$in% ithall clients to ensure that everone receives their unds. Please #e patient as e processed ourre5uest., and its si%ned oman' ho as the President o that compan. +his is a #i% deal'not necessaril #ecause o their si&e #ut #ecause this is another /S e0chan%e that is #ein%

    closed or $ind o reasons that don*t seem to #e #usiness related.

    AA: -And don*t seem to #e Bitcoin related. @nce a%ain' it*s all a#out the riction #eteen'ou $no' onderull le0i#le Bitcoin and le%ac currencies that are reall diicult to dealith.

    SM: 6 as reall e0cited a#out Bitloor and 6 had a #unch o riends ho ere startin% to useit' and people li$e it a lot #ecause the ere doin%' hat as it1 ?.; percent' a commission ontrades' hich is insane' ou can*t ind it anhere and it as relativel eas to %et moneinto it via this Capital @ne peer to peer transer. -But' 6 %uess it as too %ood to #e true' atleast accordin% to the /S %overnment ho*s %ot this insane mone launderin% re%ulations

    that*ve ust #een reall ratchetin% up over the last couple o ears.

    ABL: -So' do e thin$ that there is an space in the /nited States or an e0chan%e that isn*t%onna run out these pro#lems1 @r do e ust thin$ that e0chan%es should ust stopunctionall operatin% in the /S1

    AA: 6 a#solutel thin$ that e0chan%es can operate in the /S' and not onl are othere0chan%es operatin%' D#utE can #e accessed. A %ood e0ample: one could sa coin-#ased isanother one' ne ones are openin% at the same time hen e*re seein% a couple o ne ones

    #ein% unded' includin% one that*s 8enture Capital pac$. 6 thin$ it*s deinitel a diicult

    re%ulator environmental or$in%' #ut i ou do our re%ulator homeor$ and persisted it'there*s a reall e0cellent opportunit or proit.

    ABL: -So' it*s that hat e thin$ then1 +hat ust Bitloor didn*t do the re%ulator homeor$and #ro$e some rules that the didn*t $no a#out and so that resulted in this1 -Because' $indo the a that 6 as readin% it' it seemed li$e Bitloor as actuall one o a more a#ove

    #oard' ou $no' the*re operatin% in 4e For$ hich has a lot ver strict anti-monelaunderin% that are even #eond the ederal scope. 6 understand that more e0chan%es can startup' #ut hat*s to sa that the thin% that stopped Bitloor on*t stop Gem all.

    AA: 4othin% much. 6 mean' the main pro#lem is that these re%ulations are not ver clear and

    their enorcement is not ver consistent' so 6 mi%ht %oes ar usin% the ords ar#itrar andcapricious.

    SM: 6 thin$ people are reall scared' especiall those ho are sort o more inside the le%ac#an$in% sstem' the*re reall scared o runnin% aoul o these re%ulations and so the ust%ot out o the a' #end-over #ac$ards to compl' and $inda scre their customers. -And 6thin$ people ho are interested in Bitcoins reall' ma#e don*t have some o that ear ordon*t have that impulse' and the*re in Bitcoin #ecause the ant to oer people #etteralternative to dealin% ith the le%ac #an$in% sstem. -So' ma#e that*s ust one o the

    pro#lems that an Bitcoin e0chan%e ould run up a%ainst. -And as Andreas said thatre%ulations are so va%ue that the can essentiall #e #rou%ht on anone' so 6*m not eelin%

    ver optimistic a#out /S #ased e0chan%es' e0cept ma#e ones that even more decentrali&edin $ind o peer to peer' li$e ou $no' meetin% up ith people via LocalBitcoins or indin%

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    some $ind o local merchants that people can #u rom' so it spreads out the ris$ o all a#unch o people.

    AA: 2ell' ma#e there*s also to aspects o this' one is doin% all our homeor$ in advancesuch DasE chec$in% all the #o0es' ma$in% sure ou ulill all the re%ulations. +he other one is

    actuall #ein% prepared or hat happens hen "inC34 or someone else decides to shine aspotli%ht on ou and that means havin% the laers to i%ht this' and i%ht this vi%orousl incourt' so hen the shutdon one o our #an$ accounts ou ile temporar inunctions' ouappeal the closure' ou open another #an$ accounts' ou have our laers i%htin% everstep o the a' and this is not one o those thin%s here ou preparin% i all %oes ell' all%oes ell' otherise ou*ll ust old. A part o this has to involve a i%htin% spirit' and ou$no' lasuits in the /S are part o doin% #usiness' so ou should #e prepared or them.

    SM: 6 don*t thin$ anone e0pects this Spanish in5uisition' #asicall hat*s comin% don onthem. 6 mean it*s millions o dollars to compl ith these anti-mone launderin% statutes and6 $no' #ut instead o havin% a hell o the time even thou%h the*re ma$in% a lot o proit'

    some o them ust are reall hard to predict and people are startin% ith ver little start-upcapital even thou%h there*s a %reat proit opportunit in tradin% #itcoins and 6 thin$ it*s ustreall diicult to #e prepared or it.

    ABL: 6 thin$ it*s hard or an#od to sin$ a su#stantial amount o mone into #itcoin ri%htno i ou are a serious plaer. 6 ou don*t have anthin% to lose then it doesn*t reallmatter' #ecause ou $no' DtheE orst case scenario is ou*re %onna %o #ac$ to here ou*restarted. -But i ou*re an e0istin% institution and ou step into this am#i%uous arena' it reallseems li$e it*s ust dan%erous territor.

    AA: 2ell' 6 thin$ Papal aced a lot o the same issues hen it irst started up' and had a lotscrutin rom re%ulators and mana%ed to persevere and ma#e the das o doin% that are overand it*s a lot harder no. -But' perhaps proessional investors and lar%er or%ani&ationscomin% into the mar$et can ithstand that $ind o scrutin. Perhaps e0chan%es are not realla %ame or startups in this space and ou reall need to #e e0perienced. 6 ou onl have asmall amount o capital and a small startin% #ase' ma#e e0chan%es isn*t a %ood idea.

    SM: 6t is %ettin% harder #ecause these re%ulations are %roin% # the minute' 6 don*t $no iou %us have heard the suspicious activit reports #ut the*re #asicall li$e this monelaunderin% $ind o reports' here i some#od deposits a lar%e amount o cash in a #an$account or instance' or i the tr to transer more than ;?'??? either into or out o the /S.

    6t tri%%ers the suspicious activit report' so called' and the person ma not even $no thatthe have one o these attached to their name #ut the*re #ein% investi%ated # the9epartment o !ustice. -And there are millions o these iled ever sin%le ear and the $eepincreasin% ever ear' most people don*t even $no that*s happenin%' so the re%ulatorclimate deinitel is %ettin% #i%%er. -And 6 also ust ant to mention a#out Papal' 6 mean athat cost to them and to the service that the provide have the complied ith thesere%ulations1 -Because 6 $no a lot o people ho had #een dissatisied ith Papal the a itis no compared to ho it used to #e. +he*ve #een ree&in% people*s accounts' 6*ve had

    personal e0perience ith that actuall ith the #usiness that 6*m part o. Fou $no' theloc$ed don the amous 2i$ilea$s* account and there have #een a lot $ind o hi%h proilecases o this. -So' 6 thin$ Papal had #ecome a $ind o slave to the e0istin% le%ac #an$in%

    sstem or not that much dierent than traditional #an$s. -So' 6 thin$ that*s somethin% thatBitcoin users ma not #e illin% to do to #ecome sort o part o the esta#lishment.

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    AA: +here*s a shoc$in% iron here and somethin% that should concern us all' hich isapparentl the re%ulations don*t appl to the lar%er inancial institutions' the can do prettmuch hatever the ant. -And there*s no such suspicious activit report hen ou steal

    #illions or crash the econom. +here seems to #e a cate%or o too #i% to ail on one end' onthe other end there seems to #e a cate%or or too small to succeed' and that*s reall shoc$in%

    ri%ht no #ecause on the one hand the small companies are #ein% penali&ed or activit thathas nothin% to do ith an o these crimes that the*re loo$in% or' hile the #i% %us are%ettin% aa ith the' ith hal all o massive scale' it*s 5uite shoc$in%.

    ABL: 6t*s actuall a %reat lead in or the intervie 6 did this mornin% ith Bradle !ansen'here #asicall e tal$ed a#out undissected the "inC34 re%ulations anone over a lot o thehistor and e touch a lot o these issues in more detail

    #ac$%round music

    B!: D6*mE Bradle !ansen' 6*m the director o the senate or "inancial Privac and Humani%hts' and in a previous lie 6 as on Paul*s le%islative staer or #an$in% monetar issues'and 6 edited a nesletter orecastin% orei%n e0chan%e rates as m irst o# out o colle%e.

    ABL: Ho did that %o1

    B!: 6t ent ell until the recession came and 6 need to' ell' 6 %ot laid o.

    ABL: @$a' 6 thou%ht it ma$es sense. Fou*re also the editor or...

    B!: "ree#an$in%.or%' es. Feah' it*s a %roup #lo% o most o the promenade ree #an$ers'

    Larr 2hite' eor%e Sel%in' Steve Horit&' and others.

    ABL: 2hat*s the elevator speech or ho someone ould deine themselves as a ree#an$in%advocate1

    B!: +he*re not ans o central #an$in%.

    ABL: As the editor o "ree#an$in%.or%' ou*re ritten a e articles recentl on the "inC34%uidelines. Can ou tell us hat "inC34 is and hat their unction is1

    B!: Feah' "inC34 is the inancial crimes enorcement netor$. 6t*s a #ureau ithin the

    treasur department. 6t*s sort o a vault ithin the treasur to help the netor$ on inancialcrimes and then as made administrative a%enc under the /SA Patriot Act. +he reason orhavin% "inC34 is to enorce the anti-mone launderin% las rom the Ban$ Secrec Act. +heBan$ Secrec Act as passed in ;IJ? as part o the 4i0on*s ar on dru%s. +he ar%ument

    #ein% is mone launders rom the dru% trade ere al$in% in ith' ou $no' dule #a%s ullo cash and dumpin% it on the counter and depositin% it at the #an$s. -So' the ar%ued i e

    passed the Ban$ Secrec Act' the mone ould dr up or the dru% ar and then $idsouldn*t have opportunities to #u dru%s on the streets anmore. "ort ears later' 6*m notsure that' that ar%ument reall carries the same ei%ht than it did then' and ou need to %o

    #ac$ and re-e0amine this. +here ere some other reasons h the ar%ued the needed topass the Ban$ Secrec Act' part o that as the access to records or ta0 raud and cheatin%on our ta0es' thou%h ort ears later e still have a lot o pro#lems ith inancial raud ande still have pro#lem ith people cheatin% on their ta0es. Another reason that*s not much

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    discussed' that as ar%ued on the house loor' is that in ;IJ? it as ille%al or Americans toon monetar %old. Fou can still use %old or our dentistr and reli%ion and other purposes

    #ut not as a monetar instrument. Some Americans ere %ettin% #an$ accounts inSit&erland' here the Siss* ranc as tied to %old. +he /S +reasur ar%ued that #ecause oAmericans ere ille%all onin% %old' e needed to pass the Ban$ Secrec Act to stop them

    rom doin% that. @ course' the ne0t ear 4i0on closed the %old indo' and a e ears aterthat e pro%ressivel re-le%ali&ed the onership o monetar %old and then also the use o%old clause contracts. So' those ustiications or the Ban$ Secrec Act are %one.

    ABL: -So' no the name umps ri%ht out o me hen ou sa Ban$ Secrec Act' 6*mthin$in% that it means' ou $no' that it*s ena#lin% #an$in% secrec #ut it sounds li$e it*sactuall the opposite o that rom hat ou*re tellin% me...

    B!: 2ell' it*s actuall Anti-Secrec Act. 6n act' there ere couple o supreme courtdecisions' #ecause the #an$ers and their customers and others challen%ed the Ban$ SecrecAct' the cases ere consolidated under the Caliornian Ban$ers Association versus Shult&.

    +he Caliornian Ban$ers ar%ued that the had a common la o#li%ation to protect theconidentialit o their #an$in% customers inormation rom third parties. +he ar%ued thatthe had a contractual o#li%ation #ased on the si%nin% up o accounts and the re5uirements osharin% inormation that the had esta#lished ith their customers. -And the ar%ued thatthere ere e0plicit e0pectation o privac under the Caliornia state constitution: that or allo those and other reasons' the Ban$ Secrec Act violated their o#li%ation to protect the

    privac o their customers. Lon% stor short' #ecause o that decision and /S versus Miller'the court #asicall ound that it as premature to ar%ue that e had an e0pectation o privacith inormation e share ith the third part' and the punted it #ac$ to Con%ress in theJ?*s. Con%ress has never properl pic$ed it up' e*re ust no sort o dealin% ith the

    pandora*s #o0 that the opened up' hich is hat e called the +hird Part 9octrineK ouhave no e0pectation o privac ith inormation that can #e shared ith the third part. -So'i ou rite a chec$ and our #an$ cast it and notiied ith the other #an$ in order to clearthe other accounts' ou can*t e0pect that inormation can #e held private. All o this %oes

    #ac$ to the Ban$ Secrec Act and this is the mission o "inC34. -So' a%ain' "inC34*s #eenaround in some orm or another as it evolved in order to enorce the Ban$ Secrec Act. 6n the;II?*s' e had a #i% development in crpto%raph' the sharin% o inormation over theinternet and a lot o technolo%ical advances on privac in encrption and other developments.@ut o that primordial oo&e this developed crpto-#an$in% movement and a lot o otheralternatives. Papal as the most amous e0ample o the alternative currenc movement that

    #e%an then' #ut the ederal re%ulators came don ver hard on Papal #ecause people had

    resources in their Papal accounts' and the eds #asicall orced them to stop #ein% ust apament sstem and to #ecome a depositor institution' "96C insured' ith other rules andre%ulations that come ith all o the rest o #an$s and inancial institutions. 6n addition tothat' there as another pament sstem called e-%old' that as one o the most successul othe electronic commodit mone approaches. And that as the "inC34 that shut don the e-%old compan. +he ar%ued that it as in violation o the Ban$ Secrec Act' as a haven ormone launders and other people that ere trin% to s$irt the la' and #ecause the ere inviolation o the Ban$ Secrec Act' "inC34 had them shut don. 2hat e have seen no is asimilar opportunit or ne electronic currencies o hich Bitcoin is the most successul.-And a%ain' e*re seein% "inC34 rapped up their resources and ocused their attention onemer%in% pament sstems. +he most li$el result o this is %oin% to #e a repeat hat e sa

    under Papal and e-%old. 3ither the*re %oin% to orce them to chan%e and #ecome depositorre%ulator institutions and stop #ein% a pament sstem' or "inC34*s %oin% to set their si%hts

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    on them as the have ith Bitcoin' and e*re %oin% to see prosecutions' and e*re %oin% tosee possi#l the death o the emer%ent pament sstem.

    ABL: 9o ou thin$ that*s hat*s in the cards or Bitcoin1 @n the one hand it seems that"inC34 is reall ocused on disclosure and Bitcoin $ind o ma$es it hard to do that. -But' at

    the same time as ou said' the orced Papal to #ecome somethin% the $inda eren*t' doou thin$ that as a %ood thin% or #ad thin% or Papal and or its users1

    B!: 6 thin$ the lesson rom the I?*s as that ou either #ecome hat "inC34 ants ou to #eor ou*re not %oin% to #e.

    ABL: 9oes that still appl in the case or somethin% that is decentrali&ed li$e Bitcoin1-GCause a%ain' ith e-%old comparison' there as a structure there' there as a compan thatunctionall ran that and so that the ere a#le to #e tar%eted. 6s that...it seems li$e it*sdierent ith Bitcoins. 9o ou thin$ it*s dierent1

    B!: 6t is clearl dierent and "inC34 reco%ni&es it*s dierent' hich is h the put up therecent %uidance. "inC34' the other re%ulators are all trin% to %ra# all ith the netechnolo%ies' peer to peer netor$s' and the decentrali&ed pament sstem developments. 6don*t $no ho it*s %oin% to unold' #ut 6 do $no hat the histor has #een' and 6 do $nothat "inC34 hasn*t chan%ed on ho the approach these issues.

    ABL: So' ta$in% it in a ace value #ased on hat the*ve said so ar' hat is "inC34*s planor Bitcoin1

    B!: 6 have heard throu%h the %rape vine that "inC34 has prosecutions in the or$s or

    Bitcoin' #roadl spea$in%' m %uess #ased on the timin% o the %uidance and hat 6 hadheard previousl throu%h the rumor mill a#out the prosecutions is that "inC34 put up the%uidance sort o e0 post acto in order to usti the prosecutions that the*re a#out to launch.

    ABL: -So ou e0pect this to happen ithin the ne0t couple o months #ased on that timeline1

    B!: A%ain' 6*ve heard dierent rumors so it*s diicult to predict' #ut eah' e $ne that DtheEprosecutions ere in the or$s and then later the %uidance came out' it*s seems sort o a CFAapproach o ho the*re doin% it.

    ABL: 2hat do ou thin$ that*s %onna do to Bitcoin and do ou thin$ that it*s %onna have a

    lastin% impact or somethin% that*s transitor1 6 mean' e haven*t reall seen an sort ore%ulator action in the space et' so it seems a little up in the air a#out the impact.

    B!: 4o' it*s a %reat 5uestion' that*s the 5uestion that all o us are as$in%. 6 don*t $no that ano us have a irm anser. +here a lot o dierent a here this could %o' 6 thin$ it #ehoovesBitcoin communit to stand up and reco%ni&e hat the challen%e is rom "inC34 andunderstand that histor. -And a%ain' re%ulator %uidance is meant to clari issues' so that

    people $no hat is ron% hat is ri%ht that the can stand at the ri%ht side o the la. +he%uidance that the issued here seems' in some respects' to #e muddled mess and raised more5uestions than it ansered. +here ere also 5uestions that' in the %uidance' the e0ceededtheir statutor authorit # ma$in% rules #eond the scope o the intent o Con%ress. -Anda%ain' 6 thin$ there needs to #e a dialo%ue #eteen representatives o the alternative currenc

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    movement ith the re%ulators ust to or$ out some o these 5uestions' #ut as lon% as the*renot tal$in% ith each other' e $ind o $no hat to e0pect #ased on "inC34*s histor.

    ABL: 2ith that same histor in mind' 6*m ust trin% to i%ure out ho the reasona#limpact Bitcoin i there isn*t an centrali&ed point o contact1 Li$e ou*re sain%' ou*re

    sain% that' ou $no' the communit as a hole needs to interace ith the inancialre%ulator hich unctionall hat "inC34 is. -And to' ou $no' or$ ith that essentiall

    put to%ether somethin% that is #etter than hat the ould do i the ust do somethin%'unilaterall # themselves ithout involvin% the communit...

    B!: -@r at least have thin%s here the understand hat the deinitions mean and understandhat the terms mean and understand hat their responsi#ilities are' and "inC34 ould havea #etter understandin% o hat their %uidance ould mean in a practical a in the realorld.

    ABL: -So' ou thin$ that the undamentall the don*t understand the impact o hat the*re%oin% to do' #ecause the don*t have enou%h education on the topic' the don*t have enou%he0perts ho have reall...

    B!: "inC34 has a mission and the*re or$in% to ulill their mission' and their mission isnot to understand Bitcoin' their mission is to stop inancial crimes.

    ABL: i%ht. -So' rom that perspective one o the other thin%s that the reall ocused on isAML or Anti-Mone Launderin% activities. Fou $no' 6*ve #een loo$in% at Bitcoin' a%ain'rom that perspective' rom the perspective o someone ho e0ists in the current currenc

    paradi%m' and loo$s at this thin% that has no centrali&ed structure' 6 mean' doesn*t it all loo$

    li$e mone-launderin%' ho do ou tell hat*s #ad and hat*s %ood rom re%ulator standpoint1

    B!: Bitcoin %ot a lot o pu#licit or appealin% to people that e*re trin% to %et around thela. Sil$ road in #uin% dru%s or other ille%al paraphernalia that attracted the attention o there%ulators. "rom "inC34*s perspective' i ou*re trin% to stop inancial crimes' and this is atool or inancial crime' it is somethin% that arrants their attention.

    ABL: -So' do ou thin$ that the*ll succeed1 6 mean' do ou thin$ it*s possi#le to succeed inthis scenario or them1

    B!: A%ain' 6*ve %iven ou their histor. +he*ve #een the sin%le #i%%est actor or stompin%out currenc competition' rom m perspective.

    ABL: 6 %uess the thin% that 6 %et #ac$ to' it seems li$e i ou*re %oin% to loo$ at this rom there%ulator stand point' there has to #e some entit that can #e re%ulated' and 6...loo$in% atBitcoin' 6 don*t reall see ho that or$s. -So' ou*re sain% that the*ll stomp it out' thatthe can stop it out ust # sain%' ou $no' that this doesn*t or$' it*s ille%al' or...

    B!: "inC34 as a#le to stop currenc competition ith technical innovations in the I?*seven #eore their e0panded poer under the /SA Patriot Act. -And hat e*ve %ot no is"inC34 on steroids ithout clear restriction rom Con%ress' and it*s a ailure o Con%ress todo its o#. 2e $ne that these %uidelines and these prosecutions ere in the or$s even last

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    Con%ress. on Paul as the chairman o the house su#committee that had urisdiction over"inC34' and he never had a sin%le hearin% on this. Con%ress has dropped the #all.

    ABL: 2h is that do ou thin$1

    B!: "or a lot o people these are relativel o#scure 5uestions.

    ABL: -So' ou ust thin$ it*s a %eneral' so man thin%s to orr a#out that this is lo on thetotem pole relativel spea$in%1

    B!: 6 mean' Con%ress is a representative #od that or$s to meet the demands o theirconstituents. +heir constituents are demandin% a #alanced #ud%et or %un control orimmi%ration reorm or somethin% else' those are the issues that ou deal ith.

    ABL: -So' it*s ust too small o an issue to have #een enou%h cause or concern' andespeciall in the Con%ress e have or the last' ou $no' ive or so ears doesn*t seem li$etoo much has #een done in %eneral on anthin%' much less these smaller niche issues.

    B!: 2ell' o$a' #ut ou also need to understand' 6 mean' loo$ at the %un control as ane0ample. +he proponents o the un Control Bill ere ar%uin% that I? percent o the peopleere avored o hat the*re trin% to do' #ut it as a small' dedicated' vocal' ener%i&ed' andor%ani&ed communit that as a#le to stop them. -And i that does not descri#e hat*shappenin% ith Bitcoin' 6 don*t $no hat does.

    ABL: -So' ou thin$ that the maorit in this case ould #e in avor o this tpe o inancialcompetition or reedom that e*re tal$in% a#out here. -And that it*s ust a small %roup o ver

    entrenched interests that have a total' it cannot happen rom their perspective. 6s that hatou*re sain%1

    B!: 4o' 6 thin$ ou %ot it #ac$ards. 6 thin$ most people don*t understand hat Bitcoin is'hat it does' or h do ou need an alternative to ederal reserved notes' #ut it*s not a verimportant issue to them. 6t*s not somethin% or%ani&ed' it*s not somethin% the*re %onna puthold' political donations a#out or %et active on. @n the lip side' those people that areinterested in' are usin% Bitcoin and other alternative currencies' do have a vested interest in

    #ein% a vocal dedicated or%ani&ed and ener%etic minorit o the issue. /nortunatel' the*venot #een so et.

    ABL: -So' last 5uestion. @ne o the common thin%s ou hear in the Bitcoin communit a#outthese recent %uidelines issued # the %overnment is that #asicall is %ood nes' #ecause onthe one hand the*re ac$noled%in% it and sain%' ou $no' that this is somethin% thatle%itimate enou%h to' ou $no' or us to tal$ a#out rom re%ulator stand point. -And on theother hand' the impression is that the*re treatin% it li$e' 5uote 2orld o 2arcrat old',hich is to sa that in %ame currenc' hich is to sa not a real currenc' hich is to sathe*re not reall re%ulatin% it. 9oes that rin% true to ou1

    B!: 6 thin$ it*s ver clearl a mi0ed verdict. @n the one hand' re%ulator clarit ould #e a%ood thin%' and the reco%nition point is ell ta$en. @n the other hand' e did not %et there%ulator clarit that 6 thin$ e need rom a %uidance rom "inC34. -So' that am#i%uit' the

    possi#le overreach rom the Administrative Procedures Act and some other issues' ma$e the

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    situation more cloud and that is %onna lead to a lot o conusion hich 6 thin$ could #rin%a#out Bitcoins demise.

    ABL: Bitcoins demise1 -So' ou thin$ the could ail1 2hen e*re tal$in% a#out that' do oumean that the particular currenc Bitcoin could ail or e*re tal$in% a#out crptocurrenc in

    #road sense1

    B!: 2ell' 6 mean' ou used Bitcoin as the e0ample' so reerencin% that. 6 the perceptioncomes out throu%h la enorcement' that anone ho uses Bitcoin and also uses the /Sdollar' and potentiall trades Bitcoin or a dollar' receives Bitcoin or pament' and then pasome#od else in dollars' i the*re not or$in% e0clusivel ithin a Bitcoin environment'then the*re %oin% to all under certain re%ulator procedures and certain re%ulatordeinitions that the*re %onna re5uire prior re%istration' re%ular orms' and approvals' and ithe*re not doin% that' the*re %oin% to %o to ail. -And i the start arrestin% people ho areusin% Bitcoin and usin% dollars' potentiall under conused %uidance' es' e can see the endo Bitcoin.

    ABL: 6 $no 6 said that as the last 5uestion' #ut 6 %ot a ollo-up or ou. -So' the pressurepoint' the place here it loo$s li$e the have all o the levera%e in this relationship rom are%ulator standpoint is hen people ho accept or create' ou $no' or mine' Bitcoins'chan%ed them into local currenc' in this case e*re tal$in% a#out /S dollars. 9oes this appli ou don*t convert them into /S dollars1 2hat happen i some#od ust decides tocompletel e0ist' ou $no' in receivin% Bitcoins' sendin% Bitcoin ecosstem' never touchin%another currenc1

    B!: @ne o the e thin%s that is clear in the %uidelines is that i ou stic$s e0clusivel in a

    Bitcoin orld' ou don*t have to ollo the same re%istration re5uirements and reportin%re5uirements to "inC34. -But 6 assume these people also re5uired to pa ta0es.

    ABL: Feah' 6 mean' that assumption seems to #e there #ut doesn*t there need to #ereco%nition o it as a...this is somethin% that 6*ve #een trin% to do Gcause 6*m involved ith anum#er o Bitcoin #usinesses that are %ettin% started' and one o the thin%s e $eep runnin%up a%ainst is ho do e value Bitcoins e receive1 9o e use that as a cost #ases1 -Andthen i e sell them at a hi%her value at later point ater e received them' is that a capital%ain transaction1 2e*ve #een tal$in% to laers and no#od reall have anthin% to saa#out it. 9o ou thin$ that is %onna %et cleared up at an point in the near uture1

    B!: 6t should had #een cleared up in the %uidance #ut it as not. @n the ta0 side' there are alot o multinational companies that deal ith multiple currencies all the time: /S dollars' the3uro' Siss "ranc' !apanese Fen' the ile their ta0es and other reportin% re5uirements' evenin a multicurrenc platorm. +he "inC34 %uidance should have' rom m perspective'clariied those 5uestions that Bitcoin valuations those $inds o reportin% should ollo thesame platorm that the do or other reco%ni&ed currencies. +he did not. -So' this is one othose e0amples here the %uidance should have clariied the 5uestion' here the actuallmade it orse.

    ABL: Put oursel in the shoes o "inC34 or a second. 3verthin% that*s happened to thispoint' has happened to this point. 2hat do ou do ne0t a#out Bitcoin1

    B!: 6 #elieve that the*re continuin% their or$ on current prosecutions.

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    ABL: -So' e*re ust tal$in% court cases. Are e %onna esta#lish precedents1 6 mean' is thatthe %oal here1 6*m ust trin% to i%ure out hat their motivation or these actions. 6t seemsli$e ou said that the made the situation less clear' not more clear hen the intention is toma$e the situation more clear.

    B!: 2ell' their intention is to stamp out inancial crime' and i criminals are usin% Bitcoinsor crimes then its somethin% that the should #e %oin% ater. 6 mean' 6 see a need or thealternative currenc people to #e or$in% to%ether' and then also liaisonin% ith "inC34 toadust some o these 5uestions to #rin% more clarit on #oth sides. 6 other people see thatneed' the should send donations to' via the "ree#an$in%.or% site' actuall interested in thistrin% to help ou %us and 6 don*t see an#od else reall steppin% up to the plate here the

    #i%%est threat to Bitcoin comes.

    ABL: 2hen ou sa ou %us', hat ere ou tal$in% a#out1

    B!: People ho are interested in alternative currencies. +here*s a lot o people or$in% onencrption' and a lot o other parts that are reported or successul alternative currenc' #utthe #i%%est threat is %oin% to come rom "inC34' and 6 don*t see an#od else or$in% onthat.

    ABL: 2ell' than$s or oinin% us toda' Bradle' to help $ind o clari this o#viousl vercomplicated and counter intuitive issue. 6 ou*d li$e to support Bradle*s or$' ou can visit"ree#an$in%.or% and donate to them there.


    If I showed you a website where you could easily purchase electronics from the worldslargest distributor with Bitcoins at zero percent markup, would you think it was too good to

    be true? Good news, its real and its at Bitcoinstore.com. Choose from half a million items,

    sae money oer !mazon and "ewegg, and conert your Bitcoins to real world items. #ou

    can een buy with priacy. !ll they need is a shipping address, but dont take my word for it,

    see for yourself at Bitcoinstore.com.

    ABL: 6 reall enoed m conversation ith Bradle and 6 have to sa 6*ve alread invitedhim #ac$ as he has anthin% else he ants to tal$ a#out. Fou $no' tal$in% throu%h thesecomple0 issues ta$es a lot. Fou have to reall have a comprehensive understandin% o theissue and then to a#le to put it into ords that the avera%e person can understand. A #i% part

    o hat ma$es re%ulation and le%islation in %eneral so hard to understand is the ords thatthe use are oten ust a too complicated rom hat the*re actuall trin% to sa' and soou ind up ith $ind o to sets o lan%ua%e. @ne lan%ua%e is le%al lan%ua%e' and onelan%ua%e that*s' ou $no' or ever#od else that ou can actuall understand. +hat as un."rom the listener mail#a%' e have an interestin% 5uestion' 5uote 2h hasn*t an companta$en the ris$ o alloin% users to #u Bitcoin via de#it or credit cards1 6 understand thehole char%e#ac$ thin%' #ut 6 ould at least thin$ someone ould*ve tried to #u no orcome up ith a more ull proo a o doin% it. @#viousl' hoever i%ures this one out isinline to ma$e some serious cash., 2hat do ou thin$' Andreas1 2h hasn*t this #een tried1

    AA: 2ith %reat reard comes %reat ris$' and the listener*s ri%ht sain% that there*s serious

    cash involved here #ut there*s also a ver serious ris$' and it*s not ust a char%e#ac$ ris$. -So'i ou loo$ at the interace #eteen Bitcoin and national currenc' that*s here most o

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    diiculties arise. -And it reall shines a spotli%ht on the ea$nesses o the traditionalcurrenc sstems and pament sstems. -So' char%e#ac$ ris$' hat is that1 2ell' i oureceive mone rom Papal or credit card or an o the other traditional pament sstems'ou don*t actuall %et the mone. 2hat ou %et is a tentative promise that ou ill %et themone over a period o time' and durin% that time the sender can reverse that transaction.

    +hat applies to ACH transactions under the 4ACHA rules' it applies to credit cardtransactions under the 8isa Mastercard rules' and it also applies to ire transer' surprisin%l.-So' there are lots o as ho a sender can reverse a transaction and #asicall leave ouholdin% the #a%. @n the other side' ou*re %ivin% out Bitcoin. Bitcoin is irreversi#le and%uaranteed. +he moment ou have si0 conirmations' and honestl 5uiet a #it #eore that'Gcause it*s diicult to do a dou#le spend even ith &ero conirmations' that mone*s %one.-So' i ou*re a merchant ta$in% in uncertain mone on one end and %ivin% out certain moneon the other end' ou*re e0posin% oursel to a lot o ris$. +hen ou*ve %ot the possi#ilit oour account #ein% ro&en or closed on the /S side or the national currenc side as happenedto Bitloor e ust discussed. -And o course then' hen ou open a indo #eteen theinitial char%e that ou ta$e in and the actual pament o Bitcoin' it*s a#out a J to ;? #usiness

    da indo' that means ou receive the mone and ou*re not %uaranteed to hold it or atleast J das' so ou have to ait. 9urin% that time' the price o Bitcoin ma chan%edramaticall. 6 ou assi%ned the price o Bitcoin #ased on the irst da' ou sallo all theris$ o the Bitcoin ou*ve purchased. 6 ou don*t' ou have to purchase Bitcoin in advance'and li$e $eep stoc$in% Bitcoin' that causes all the pro#lems' and %enerall' it e0poses ou to alot o luctuation. +hen our 8isa' Papal' Mastercard' or other merchant account ma #eclosed' and those rules are prett ar#itrar and capricious too. +he ma decide that hatou*re doin% is a%ainst the terms o service' shut ou don' and reall' ou have ver littlerecourse to %et our account #ac$. A lot o this is reall driven #ac$ # the anti-monelaunderin% re%ulations e ust tal$ed a#out' and o course that e0poses ou to even more ris$'

    #ecause i ou are under investi%ation o an o these mone launderin% re%ulations' almostimmediatel one o the irst thin%s that happen is our account*s %ettin% ro&en' hich thenleaves ou a holdin% enormous lia#ilities to our customers and a #unch o mone ou can*ttouch. -And i that*s not enou%h' i ou reall do #ecome successul at this endeavor' ou*re%onna have a lot o mone %oin% in and a lot o mone %oin% out' and an enormous volumeo cashlo to our or%ani&ation. +he tiniest hiccup on either the inputs or the outputs illleave ou ith either a ver lar%e amount o mone loin% in' or ill leave ou ith a verlar%e deicit #ecause the mone isn*t loin% anhere ou need it. -So' all o these thin%sma$e it ver comple0' ver ris$ rom operational perspective' a le%al perspective' and theinancial perspective.

    SM: Feah' 6 reall appreciate ou perspective on that' Andreas' #ecause 6 actuall have thesame 5uestion h no#od hasn*t started this et1 -But that ma$es a lot o sense' a#out thereust enormous amount o ris$ involved. 6t does sound li$e ust as e*re tal$in% a#out a little#it earlier in the sho' some#od ould have to #e alread a prett lar%e entit ith a lot olaers on their side to underta$e this' and so ar e haven*t seen an#od step up ho*s %otthe poer.

    AA: A %ood e0ample o this is reall hat e*re seein% ith some o the e0istin% servicesthat are transactin% cash or currenc or Bitcoin - those services are trin% to address eachone o these ris$ areas individuall. "or e0ample' Bitinstant hich is one o the or%ani&ationsused 5uiet a lot' is usin% mone orders and cash transactions throu%h Mone%ram' that

    reduces their input ris$. -But the*re still havin% maor pro#lems ith cashlo in e0treme%roth and trin% to ust to handle one o those ive pro#lems that 6*ve mentioned is a ull-

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    time o# or that compan. B the time that compan is a#le to handle all o these pro#lemssimultaneousl' the*ve pro#a#l %ron 5uiet a #i% si&e and that*s not an eas endeavor.

    ABL: 9o ou thin$ e*ll reach a point here e can see real inancial institutions actuallstart to ena#le these transactions1 -GCause it seems li$ea compan li$e Bitinstant' or reall

    almost an o the companies that are popped up over the last couple o ears' the*re moreli$e stop %aps' here the*re sain%' @$a' this is somethin% that the le%ac sstem #an$doesn*t ant to en%a%e ith the ne #an$in% sstem' so e*ll #e the #rid%e essentiall

    #eteen them., -And then ever time the %et s5uished' ou $no' ever time the %otpushed out o the #usiness' so ou $no' pressure is applied it*s #ecause the #an$in% sstemhas decided that the*re no lon%er ant to deal ith this middleman' and the*d ust rathernot have the #usiness at all. 6 mean' that*s ho it all loo$s to me rom the outside. 6s that anaccurate relection1

    AA: 6ndeed' the are #rid%es. -And eventuall 6 thin$ re%ular inancial institutions ill #eoinin% the %ame. At the moment' hat e*re seein% is that all o the on-ramps and o-ramps

    into and out o the Bitcoin econom represent the steepest areas o diicult or the lar%estineiciencies. -But i ou are an entrepreneur' ou loo$ at ineicienc and ou seeopportunit. -And 6 thin$ in the end' this is a continuous #alance i ou li$e. People areloo$in% at this and sain%' o$a' does the reard e0ceed the ris$1 4ot 5uiet et' not or me'

    #ut at some point' hen the reard does e0ceed the ris$ on a certain tpe o compan andthe ump in and ill ill this mar$et. +hese $inds o ineiciencies can*t %o on oreverithout someone ta$in% advanta%e o them.

    ABL: 6*ve heard this descri#ed #eore in the conte0t o the prisoner*s dilemma here even ias a hole #an$in% sstem doesn*t ant to en%a%e ith Bitcoin #ecause it $ind o moves

    their monopol on currenc' at the same time there*s an enormous incentive or them to #uin earl' so that as it continues to appreciate i it succeeds' the*ll stand the %ain rom that tooand it*s a sort o a thin% here irst one that #us in has the' ou $no' the loest price

    #ecause non o the other #an$s are in' and then # addin% in the*re essentiall addin% thedemand ithout addin% the suppl. -So' 6 mean is this' are e ust at a point o e5uili#riumri%ht no here no#od ants to ma$e the irst move and then as soon as some maorinstitution ma$es the irst move is %onna start a cascade1

    AA: 6 thin$ there*s a deeper pro#lem than that' Adam' 5uiet honestl' and that is that ou*reassumin% that inancial services institutions have incentives to innovate. -And the don*t'inancial institutions don*t have incentives to innovate and in act' a lar%e part o our

    econom has no incentives to innovate #ecause ta$in% e0istin% mone los' tappin% intothem and leechin% o the proit or securiti&in%' a%ain and a%ain and a%ain' the same stu' andaddin% more and more levera%e' is clearl much more proita#le than ma$in% real thin%sinnovatin% or investin% in real companies' and that*s the main pro#lem in our econom ri%htno. A part o hat e*re seein% is the relection o the #an$s or ma$in% ar more moneessentiall as rent see$ers on mone streams' and that $ills innovation.

    SM: Feah' ri%ht on.

    AA: +a$e that #an$ers.

    #ac$%round music

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    ABL: 2ith onl =; million #itcoins in circulation at the point here e stop essentiallcreate #itcoins' there*s #een a lot o tal$ a#out hat*s %onna happen to transaction si&es as thevalue o #itcoin %oes up. @ne o the chec$s that*s #uilt into the Bitcoin sstem is the a#ilitor people' on an individual #asis' to chan%e ho the loo$ at the Bitcoins that the have andthe receive. -So' ou can loo$ at #itcoins as #itcoins hich is the ;.?. Fou can loo$ at the

    #itcoins as mili-#itcoins. Fou can loo$ at #itcoin as micro-#itcoins' hich are seven decimalsor ive decimals' some#od correct me here...

    SM: 6 thin$ it*s si0' ri%ht1 -GCause mili-#itcoins ould #e three decimal places and thenmicro-#itcoins ould #e si0 places' #oth o them are actors o a thousand.

    ABL: Let*s %o ith that' math is not m stron% suit here. -So' no that e essentiall reached;?? dollars in the #itcoin value' e startin% to tal$' 2ell' o$a...should e sitch the ae loo$ at them to mili-#itcoin1, +hat ould then ta$e that ; #itcoin at' ou $no' ;??dollars or more' and essentiall ta$e it don to a#out ; penn per mili-#itcoin1 -So' DdoE ou%us thin$ it*s time or that1 6s this prett mature1 9oes it even matter i e decide as a

    comprehensive #asis1

    SM: 6 thin$ the mar$et ill i%ure it out' honestl. 6 mean' everthin% a#out Bitcoin isdecentrali&ed' and so ho to reer to them' ho to denominate them is another thin% that 6thin$ is also %oin% to #e decentrali&ed. 6 mean' even ith mili-#itcoins' people are

    pronouncin% it dierentl' the*re ta$in% dierent names or them. 6 remem#er readin% apa%e on the Bitcoin 2i$i' li$e a couple o ears a%o actuall' a#out hat the dierentractions o #itcoins should #e called' and even then there ere several dierent proposals. 6do thin$ there is sort o a pscholo%ical o#stacle or pscholo%ical thin% that comes into plahen people thin$' 2o' ; #itcoin is orth over ;?? /S dollars. 6 6*m %oin% to donate to

    some#od' do 6 reall anna %ive them ; #itcoin that*s more than 6 ant to %ive' #ut 6 don*tant to %ive ?.?; #itcoins' that seems a little #it stin%' hat do 6 do here1, 6 thin$ thathavin% dierent denominations ould help people $ind o overcome that pscholo%ical #loc$- even 6*ve had it #eore. 6 mean' hen 6 anted to ma$e a donation or pa or somethin% andanted to have li$e a nice round num#er that as over ;' #ut ou $no' 6 %uess that*s not thecase. -And' ma#e 6*m used to ust usin% /S dollars' ma#e that*s h that comes in. +here*sthe dollar store that ri%ht the popular thin% in the /S here everthin% costs ; dollar' or it*s inmultiples o ; dollar #ut not ver e0pensive' and' people are happ to do that. But could ouima%ine a store here everthin% costs ?.?; #itcoins1 +hat*s a little #it dierent' ri%ht1

    ABL: -So then' m 5uestion is: is it #etter rom our perspective to %ive a donation o ?.?;

    #itcoins or ;?? mili-#itcoins' Gcause that*s the same num#er' ri%ht1

    SM: Feah' e0actl' 6 thin$ it ould #e #etter' 6 ould eel #etter a#out it or no rational reasonat all' %ivin% a donation o ;?? mili-#itcoins.

    AA: 6 thin$ this %oes to the undamental idea that e*re all rational decision ma$ers' hich'o course' e*re not. +here*s a ver #i% pscholo%ical actor here' and people ho*ve lived incountries ith massivel delatin% or inlatin% currencies used this concept ou $no' once acoee cost a ;??'??? lra' ou chop o three &eroes o the end and turn it into ;?? lra' andvice versa' ou add &eroes i ou have a delationar situation. 2hat*s important is thecali#rates the unit o value to people*s perception o a small purchase. 6 personall li$e the

    purchasin% poer parit inde0 that the economist does on the Bi% Mac.- And hat that allosou to do is to cali#rate all o the currencies around the orld to a common cheap meal that

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    anone can #u in most countries. 6 thin$ e should have somethin% ver similar or Bitcoinhich is i the unit e*re currentl displain%' it as' it used to #e used # Bi% Mac' the priceshould #e #eteen ; and ;? #ecause that ma$es sense to human #ein%s. 6 ou*re trin% toencoura%e smaller transactions hich is a reall antastic capa#ilit o Bitcoin' it*s vercounter intuitive and counter productive to dominate in #itcoin #ecause essentiall

    transactions end up #ein% ?.??..somethin%' and that*s ver diicult or people to calculate. 6oten to ind msel pullin% out the calculator and that*s no a to do transactions. 2hat oureall need is an intuitive correspondence tool and everda tan%i#le e0perience. 6 su%%estthe Bi% Mac' hat that ould mean essentiall is reall movin% to mili-#its. -And this issomethin% that ill impact transaction volume' it does impact people*s perception o hat a

    price is' and hether e0pensive or not. -And or all those reasons' this is not ust a technicalissue' it*s a#solutel a critical part o economics.

    SM: +here is the pi&&a inde0' ri%ht1 -But that*s a#out a million dollar pi&&a or ever' ou$no' over that much ri%ht no. 6 thou%ht o that hen ou said a#out the Bi% Mac inde0'

    #ut 6 a#solutel thin$ ou*re ri%ht' and 6*m even onderin% i this idea o' ou $no' people

    li$e to have a small units that are $ind o eas to calculate or small transactions' 6*m $indaonderin% i that mi%ht #e part o some o the popularit o litecoins #ecause ri%ht nolitecoins are orth a#out = /S dollars and chan%e per litecoin. -And ma#e people are morecomorta#le doin% small transactions ith them as opposed to #itcoin.

    ABL: 2hat is the tippin% point or ou here it ma$es sense that' o$a' #itcoin is orth ??dollars' is that the point1 2hat is the ma%ic num#er here these all ma$e sense to sitch tomili-#itcoins1 7ind o ust on a %eneral level.

    AA: 2e passed it at a#out #itcoin o ten' ater that most o the price start to not ma$e sense

    or da to da transactions that most people are comorta#le ith. -So' as soon as a cup ocoee costs less than ; unit in our currenc' ou*ve %ot a pro#lem and ou have to adust thecurrenc to reali%n it. 2e*ve passed that point.

    SM: +here ma#e even another point. Andreas' ou said e passed one at ten' #ut ou $no'perhaps there is one at ;?? as ell' li$e #eteen ;? and ;??. -And' over ;??' si%niicantlover ;?? it ma need to adust a%ain. @ver ;???' ho $nos1

    AA: 6*m a stron% proponent o the idea that human perception o currenc is tied ithlo%arithmic scale' that*s h the #i% pscholo%ical #arriers to the price ere ;? and ;??' andrarel the ne0t one*s %oin% to #e at ;???. -So es' 6 ould totall a%ree ith that. +here are

    several inlection points here ou have continue redividin%' and 6 ould su%%est a%ain thissimple rule o thum#' a da to da transaction should #e somehere around ; and ;? o unitso currenc. 6 it isn*t' ou*ve %ot a pro#lem.

    ABL: 6t*s ver interestin% ho e*ve placed ourselves in this distri#ution' #ecause m choiceis a#out ;???. 6 thin$ that that*s the point' ou $no' here the #itcoin is orth ;??? and amili-#itcoin is orth a dollar' 6 thin$ that*s $ind o an interestin% parit point #ecause thenou can compare the smaller unit to the essentiall-standard unit o another currenc. +he actthat e all $ind o have these varied opinions on these num#ers and et are still coninin%ourselves to that' ou $no' round di%it o ;?' is tellin% as is to h is this somethin% thatshould #e underta$en on a person-#-person #asis instead o' ou $no' ever#od all at


  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    AA: +heres the other cultural e0perience hich is reall that or most Americans the*reused to eelin% rich # #uin% other currencies at multiples or a dollar' and Bitcoin ma$esthem eel poor.

    ABL: i%ht' 6 mean that*s deinitel true is that Bitcoin turns all o that on and suddenl it*s

    the cleanest shirt.

    AA: Feah' and ou eel li$e ou*re #uin% somethin% e0pensive and that*s not a %ood placehere Bitcoin to #e. 2hen people start to eelin% Bitcoin is e0pensive' a%ain' e*ve passedthat point no.

    ABL: i%ht.

    SM: Feah' a#solutel. 6 $no a lot o people ho had #een sain% to me recentl' @h %osh'6 ould*ve totall #een #uin% #itcoins at dollars per #itcoin' that*s totall mana%a#le' #utno that the*re ;?? dollars plus per #itcoin' 6 ust can*t aord them., -And it*s li$e ell'ou don*t have to #u multiples o ; #itcoin' it*s not li$e a stoc$ or here ou should have atleast one share' #ut there sort o this resistance to understandin% that' so 6 thin$ that isdeinitel accurate.

    AA: Feah' the lip side o that is i ou tell them' ell' ou can #u a ?.; #itcoin' no theeel that the haven*t #ou%ht enou%h. -So' the lip side o that' a%ain' it ma$es them eel poor.6t*s either e0pensive or the can*t aord enou%h.

    SM: 6 heard an interestin% intervie ith !ere +uc$er hen #itcoins ere on this massivepara#olic escalation up to the most recent hi%h at a#out =N? dollars. -And he as sain% that

    Americans are not used to havin% anthin% that resem#les a delationar currenc' somethin%that %ets more valua#le the more ou han% on to it' and has more purchasin% poer. And asresult o that' it reall aects the a ou live our lie' ri%ht1 -Because' i the currenc ou

    primaril use' such as /S dollars' is $ind o slol losin% its value overtime' there*s noincentive to save' there is no incentive to han% on to' ou anna #u hat ou can no

    #eore it decreases in value. But i somethin% does appreciate over time and %ets morepurchasin% poer' then ou reall start to evaluate our decisions a#out hether ou ant tospend it ri%ht no' or perhaps %et some e0tra value in the uture # han%in% on to it. So' 6 ustthin$ it*s interestin% pscholo%icall.

    AA: 6 love the idea that Bitcoin ill actuall leads to the solution o our consumerism and

    o#esit pro#lems.


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    AA: B"L' the shoed up at CS" and char%e >?'??? dollars or a #o0 o ans. +hat as theteet that ou*ve seen the other da.

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    ABL: @h' 6 thin$ that*s %reat. Fou $no' continuin% all e*re ust tal$in% a#out' in adelicinar currenc environment' reall' this ust lead strai%ht into B"L. -Because ButterlLa#s is one o the primar' at least most out there in a pu#lic sense' AS6C manuacturers'hich is to sa the neest and supposedl pinnacle o Bitcoin minin% technolo%. +hese areapplications speciic computers that used a small amount o ener% relative to the amount o

    minin% math that the can do in order to %enerate #itcoins and process transactions. Bac$ inAu%ust o =?;=' 6*ve placed an order in #itcoin' a pre-order in #itcoin or a !alapeOo' and #the time 6 inall %ot m mone #ac$ or it in !anuar' the num#er that 6 as a#le to %et #ac$o Bitcoins 6 dropped rom =< Bitcoins to ;; Bitcoins. -And' i 6 hadn*t %ot m mone #ac$ atthat point' 6 as %onna trin% to %et a reund at this point' 6 ould #e %ettin% less than =Bitcoins #ac$.

    SM: @h' 6*m sorr to hear a#out that.

    ABL: Fou $no' it*s ine' 6 %ot m mone #ac$. -So' the mone 6 %ot #ac$ in !anuar is noorth' ou $no' at current e0chan%e rates li$e ;N or ;'J?? dollars' hat as ori%inall ;

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    ABL: -But does it matter1

    SM: Feah' %reat 5uestion' Adam' hether or not it matters. 6*ve actuall come up ith thesimilar pro#lem msel #ecause 6 do reelance voice-over or$ and narrations and stu' and6*ve' 6 ould preer to %et paid or m services in coins. -But' sometimes 6 have trou#le

    calculatin% hat 6 should char%e' #ecause the price luctuations in #itcoin are so %reat andsometimes rom the #e%innin% to the end o a proect. 6t ma ta$e 5uiet a hile' and the valueo #itcoins in terms o /S dollars could #e 5uite dierent rom the #e%innin% to the end. -So'usuall hat 6 end up doin% is li$e $inda loosel tin% it to /S dollar rate' and sain%' Loo$'e could rene%otiate this later i the prices chan%es drasticall', #ut it*s #een $ind o achallen%e. 6*d li$e to %et to a point here it doesn*t matter hat the /S dollar price is' #ut6*m ust not sure e0actl' ou $no' hat the value o ; #itcoin is' and 6*m not sure that 6*mthe ri%ht person to determine that' even. 6t has to #e determined # the crod essentiall.

    ABL: 2ell' ortunatel' e*re seein% a period o lo volatilit ri%ht no hich $ept the priceo #itcoin relativel sta#le ith plus or minus > percent ran%e or the last couple o ee$s.

    4o' reall that*s the level o volatilit that*s' at most that*s accepta#le ith another currencthat ou*re %oin% to use or da-to-da transactions' or ou*re %oin% to ma$e promissornotes' or ma$e contractual a%reements to deliver mone later' ou need a volatilit note0ceedin% that' so let*s hope that this is the ne normal.

    SM: +here*s is also the aspect o Bitcoin that it*s a pament netor$ and so' 6 $no there*s#een a lot o criticism a#out Bitcoin recentl #ecause o the price volatilit in terms o /Sdollars. -But' even i the price continues to #e reall volatile' eah sure' people ill losemone rom that and people ill proit rom that. At the end o the da' Bitcoin is also a

    pament sstem' a pament netor$ and that has value on its on. 3ven i the price is super

    volatile' people eel uncomorta#le ith that' it*s still super valua#le a to send and receivepaments.

    AA: @ne thin% to thin$ a#out is that e*re e0periencin% this volatilit #ecause the vastmaorit o us move in and out o #itcoin and #ac$ to our national currencies or da-to-daspendin%. 6 ou loo$ #ac$ at the late ?*s and earl I?*s' the dollar as e0periencin%luctuations o plus and minus >? percent' sometimes plus and minus

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    SM: i%ht' and e $no that #ecause there as a video that recentl came out rom 9avid'rom codin%inmsleep' ri%ht1

    ABL: Feah' 9avid Perr' he*s actuall %onna #e doin% an intervie or the sho tomorro.Supposed to #e or this sho' #ut it %ot #umped.

    SM: Feah' so 9avid Perr had a video that he put out here he received advanced order oone o the Butterl La#s products' hich 6 thin$ as a !alapeOo Mini i%. -And it assupposed to have a certain atta%e per %i%ahash and it did e0ceed that 5uite o#viousl'

    #ecause he put a poer meter actuall to sho ho much poer it as usin%. Fou $no' 6thin$ that Butterl La#s made this promise pu#licl and it*s ine to hold them accounta#le toit - the did put this out there or a reason. 6t*s not a loss or an#od' reall' i the %ive

    #itcoins to charit. -But' ou $no' the*ve also made some other promises pu#licl li$e theould ship # a certain date and that $ept %ettin% pushed #ac$' so 6*m not sure i the have alot o credi#ilit. 6 $no that there are lots o people ho prett pissed' ran$l' at ButterlLa#s ri%ht no.

    AA: So' the 5uestion is are the %oin% to increase their credi#ilit # ulillin% this promise orthe*re %oin% to allo us to repeat the narro advice 5uotation' "ool me tice' ou*re neveroolin% me a%ain,

    SM: i%ht.

    ABL: 6*d li$e to tal$ a#out the AS6C thin% more in detail on pro#a#l the ne0t sho Gcausee*re runnin% out o time on this one. -But it*s a reall complicated topic' and 6 thin$ it could

    #e a reall' reall mess sort o roll out over the ne0t couple o months i suddenl all o

    these AS6Cs hit all at once' and all the hole netor$ %ets up%raded all at once. 6*m vercurious a#out hat*s %onna happen ith that.

    SM: Feah' me too. 6 mean' up until prett recentl' there as no even evidence that ButterlLa#s had or$in% prototpes. -So' it as %reat to see that little video that 9avid did herethe thin% as minin%. -But eah' 6 %et it asn*t e0actl hat as promised' it as lar%er' andit as also usin% more poer. Ma#e it also spea$s to the challen%es o actuall en%ineerin%these Asic miners and puttin% products out there. -And' o course the sain% is real artistsship' ri%ht1 6 %et it that the*ve pro#a#l encountered a lot o unoreseen issues and pro#lems'and the had to $ind o tea$ their desi%n to %et it or$in%. But' ma#e that*s the lesson toother people ho are thin$in% a#out umpin% in to the AS6C mar$et' ma$in% their on

    AS6Cs' that is %onna re5uire a lot o plannin% and a lot o testin%.

    ABL: 2ell' li$e m mother alas sas' i 6 can*t #e a shinin% e0ample at least #e a horri#learnin%. 6 thin$ that Butterl La#s so ar has deinitel ulilled the horri#le arnin%moni$er.

    SM: i%ht.

    AA: So' one o the thin%s that e*ve #een hearin% a lot latel is re%ardin% the ener% input othese devices. @#viousl' this particular device that as tested as consumin% more ener%than promised' and that matters #ecause' i ou are a miner' ou*re loo$in% at the o6 o

    ener% in irst versus Bitcoin out. -And' this e5uation has come under 5uiet a lot o criticismincludin% # 4o#el pri&e inner economist Paul 7ru%man and others' re%ardin% the ener%

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    consumption o the Bitcoin netor$. 6*m callin% BS on that and 5uiet honestl' 6 thin$ it*s aver shallo ar%ument. Let*s loo$ at that in a #it more detail. A lot o the descriptions ouhear out there compare the ener% consumed in minin% ith issuin% a national currenc' #utthat*s not a air comparison #ecause minin% does a lot more than ust mint the coin. 6t actuallensures the inte%rit o all the transactions as ell as the inte%rit o the netor$ a%ainst

    attac$' #oth in the orm o inectin% transactions that are #o%us and in the orm o trin% tota$e over the minin% pool. -So' minin% is doin% a lot more to Bitcoin econom than ustmintin%. -And' a more air comparison ould #e to compare the ener% that %oes into Bitcoinminin% ith the ener% that %oes into the mint' the paper' the metals or coins' #ut also theener% that %oes into the pament netor$' such as 8isa Mastercard' 9iscover' Ame0' anddo&en o others that e0ist' the ener% that %oes into their data centers to do raud prevention'the ener% that %oes into the securit that point o sale merchant sstems' and all o theener% that %oes into the re%ulator rameor$s that are #uilt around trust that cannot #e%uaranteed throu%h computation. --So' it*s reall an unair comparison' #ecause i ou loo$ atit rom that perspective' reall the ener% per volume o transaction in Bitcoin is cheap.

    ABL: 2h do ou thin$ that this is a common ar%ument that e come up a%ainst1

    AA: 6 thin$ it*s reall ear' uncertaint' and dou#t spread # people ho don*t understand thetopic. -And' ust li$e an technolo% that introduces rapid chan%e' there ould #e people hoare shoc$ed # that chan%e or orried # that chan%e and araid # that chan%e and %raspstras to de#un$ it.

    SM: People ma #elieve it #ecause the*re not necessaril educated a#out ho the Bitcoinnetor$ or$s or the*re not. 6t*s $ind o an unseen thin% ho much cost actuall %oes intocreatin% the le%ac currenc sstem and ho much pollution it mi%ht actuall create. -So'

    ma#e education is an issue too' #ut eah' 6 a%ree ith ou Andreas' ear' uncertaint' anddou#t.

    AA: 6*d li$e to' ma#e' ma$e eer e0cuses or the ournalist discussions' #ecause i%norancema #e DanE e0cuse i ou*re a late person and ou*re actuall ust discussin% this in ourlivin% room. -But' i ou*re ritin% a stor that is puttin% to 5uestion the environmentalcredi#ilit o a currenc that*s runnin% transactions' 6 thin$ a modicum research and perhapsreachin% out some people ho $no hat the*re tal$in% a#out ould #e in order. And' that*sa pro#lem.

    SM: 6 don*t $no i ou %entlemen ere aare o this' #ut there*s #een a stor recentl that 6

    ound on the Bitcointal$ orum' that there are certain people ho have #een peoplespo$espeople or Bitcoin or 5uiet a hile up to this point. -And' no that there are some

    people sain% the*re too radical and the*re shouldn*t #e alloed to #e listed on this spea$erpa%es or press. -So' 6 thin$ there is even an active $ind o eort to suppress certainviepoints ithin the Bitcoin communit' that mi%ht #e considered too ree or too radical.

    ABL: 6 e*re presentin% Bitcoin to the mainstream media' then 6 thin$ that there*s a lot oear that people ill essentiall ust #e lau%hed o the sta%e i the have anthin% that can #etied to them in a ne%ative a. +he lip side' thou%h' is that 6 don*t reall thin$ that*s hospo$espeople or Bitcoin are tal$in% to. 6 thin$ people ho anna portra themselves asspo$espeople should #e tal$in% to people ho don*t $no anthin% a#out Bitcoin rom the

    perspective o them not $noin% anthin% a#out Bitcoin and tr to help them see ho it can'ou $no' have an impact in their on lives. -GCause' ou $no' mone in %eneral is a reall

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    a#stract concept - once ou start tal$in% a#out di%ital crptocurrencies then suddenl thea#stractness %oes to the roo. 6t seems li$e it*s a mismatch to me o ho e*re tal$in% to andho a small %roup o people are assumin% that that tar%eted audience ill react.

    SM: i%ht.

    ABL: At the same time' #ecause Bitcoin is such a decentrali&ed sstem' there*s nothin% reallstoppin% anone ho ants to #e a spo$esperson #ut doesn*t ant to en%a%e throu%h thisBitcoin apparatus here there*s a list that are a couple o approved sources. -So' 6 mean isthere anthin% stoppin% anone rom ust sain%' He' 6 ould #e %ood at this o#. Press'contact me., 2hat happens then1

    AA: +here*s nothin% stoppin% anone and in act' even or the people ho are on the oiciallist. +he #i%%er issue is hat nothin% stoppin% anone rom ta$in% Bitcoin and proectin% all otheir on political opinions' desires and e0pectations onto a currenc thats relativel neutral.+a$in% that and then to sho ho Bitcoin is %oin% to #rin% on this ne orld o QFR orhatever their e0pectation is. 6 thin$ that*s the other' the lip side o that ar%ument and thedan%er hich is reall people see Bitcoin the a the ant to see Bitcoin.

    ABL: So' i ou thin$ that ou ould #e a %ood spo$esperson or Bitcoin' ou shoulddeinitel e-mail us. i%ht no the e-mail is still adamminetomatter.or%. -So' that*s a#outall the time e have or this episode o Let*s +al$ A#out Bitcoin., 6*d li$e to than$ m co-hosts' #oth 9r.Stephanie Murph and Mr. Andreas M. Antonopoulos or oinin% me ortoda*s episode.

    AA: +han$ ou.

    SM: Feah' than$ ou so much' Adam' this is reall un.

    ABL: 2as indeed a lot o un. 2e*re %onna leave ou toda ith an intervie ith acorrespondent name "ar&od. 2e ere ori%inall %onna tal$ a#out mone transers' #ut it$inda ound up #ein% #rain allets and #uried treasures. 2e*ll see ou on the ne0t episodeo Let*s +al$ Bitcoin., Fou can visit us and su#scri#e at Letstal$#itcoin.com. 3no.

    #ac$%round music

    "H: M name is "ar&od Hashemi and 6*m a crptocurrencies desi%n and inte%ration strate%ies

    consultant. 2hat 6 li$e is - people themselves need to step up to the #ac$' ta$e this as ane0ample' 6 see that the*re alread have pro#lems in their lives that the*re %oin% to solve'the ust don*t $no ho the solution applies.

    ABL: So' hat pro#lem o ours do the i0 and ho do ou appl them into our lie1

    "H: +o #e honest ith ou' none. 6 didn*t have much pro#lem. 2ell' %its its a ver nice andse0 a to %ive %its. 6 ust %ive a postcard to somoene and the messa%e itsel is aBrainallet. 6 reall li$e doin% that. 6t has tremendous reception. People love it. 6 ust %ivethem a postcard or #irthda or particular occasion or eddin% %it. -And then later on tellthem # the da li$e the da ater. +he messa%e in that ou can enter it in Bloc$chain inoand %et a #unch o #itcoin. -And the ust love it' the %o ecstatic' it*s li$e nothin% else' it*s

    ust a messa%e' it*s a piece o te0t or the irst time in histor' ou can put literal value in

  • 8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"


    inormation' ust that piece o inormation. Brainallets ascinate me. 6 thin$ there istremendous application or them.

    ABL: -So' our tal$in% a#out sendin% phsical mail that has a Brainallet essentiall phraseritten on it' and then an#od even i the are not connected to the same internet DthatE ou

    are. +he can still retrieve that.

    "H: A#osulute li5uidit' ust ords' ou can hisper to someone even #eore choosin% to putthe mone' #eore havin% the mone in the Brainallet' tell them ; PM ; #itcoin in this

    phrase, and it*s done' ou can put the Bitcoin there later ou have had our transaction' ousee hat ust happened. 6 mean' a there is a minimal trust #eteen to people that this

    person is %oin% to pa m on that date ou see ho that ent1

    ABL: Are ou amiliar to the proect called open transactions1

    "H: 8a%uel' eah.

    ABL: "rom hat ou are tellin% me' it sounds li$e ou are usin% Brainallets the same athat open transactions' #asicall hidin% somethin% plain site. 2here it*s not li$e there an%reat loc$in% mechanism on it so much as it is that ou' and hoever ou share theinormation ith are the onl people ho have that inormation. -So hat open transactionunctionall does' is it sas' @$a' e can*t hide anthin% #ecause e ant completetransparenc', thin$ o a %iant %rid ith a million s5uares in an direction and in order toloo$ in a particular %rid ou have to $no the coordinates o that %rid. And so' all ou dothen is ust ta$e hatever it is ou ant to leave ou $no - i it*s a couple o Bitcoins orhatever - and ou place it on one speciic point on that %rid and onl someone ho

    speciicall loo$s there can access it' and the %rid is so lar%e it*s impossi#le or an person todo that in a reasona#le amount o time. 6t*s li$e ou*re #urin% treasure' almost' ith oumind.

    "H: 30actl' e0actl. 4o' ima%ine i that treasure itsel is somethin% that re5uires thin$in%'it*s the anser to a riddle. 4o' 6 ust $eep trin% to come up ith as o doin% that thereare limitations' #ecause o the past needs to #e e0act' ou need to have some %round rules.

    ABL: +han$s or tunin% in to the pilot episode o Let*s +al$ Bitcoin., 2hether ou li$ed orhated the sho' e ant to $no hat ou thin$. Please send all comments' listener5uestions' and critic to adammindtomatter.or% . Sta tune or or ne0t episode' comin%

    Saturda the =Jth o April' eaturin% an intervie ith 9avid Perr' the onl man in theuniverse to ever received an AS6C product rom Butterl La#s' or ma#e not. But he*s #eenminin% or a ee$ no and 6 %ot some 5uestions or him' so sta tuned