Let's Talk Bitcoin - Ep 63

8/13/2019 Let's Talk Bitcoin - Ep 63

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LET’S TALK BITCOIN

Episode 63 – Money of the Internet Age

Participants:

Adam B. Levine (AL) – Host

Stephanie Murphy (SM) – Co-host

Jeffrey Tucker (JT) – Foundation for Economic Education & editor of Laissez-Faire Books

David Menes (DM) – Bitcoin Millionaire

Joe the Miner (Joe) – Bitcoin miner

AL: Hi and welcome to Episode 63 of Let’s Talk Bitcoin, a twice weekly show about the

ideas, people and projects building the digital economy and the future of money. Visit us atwww.letstalkbitcoin.com for our daily guest blog, all our past episodes and, of course,

tipping addresses. My name is Adam B. Levine and this show is about deep conversations.

I’m joined by Jeffrey Tucker to talk about the future of cryptocurrency, the irony of Bitcoin’s

biggest detractors and, as always, much, much more. Then, ever want to know how a

Bitcoin millionaire thinks? David Menes joins Let’s Talk Bitcoin for the first time to perform

‘Beggars Can Be Choosers’ by the Bitcoin Monger, for a peek into one such individual’s

mindset. Finally, with the Bitcoin difficulty skyrocketing, but not as much as the price,

Stephanie catches up with Joe, a newly minted ASIC miner with a lot to say about rolling the

dice on buying equipment and just how important the price really is. It’s a long one today,

so we’ll get right into it. Enjoy the show. *1:28+

AL: Jeffrey Tucker is a gentleman and a scholar, the current editor of Laissez Faire Books

and my favorite bow tie aficionado. He joins us to talk, well Bitcoin. Jeffrey, how are you?

[1:48]

JT: Everything’s going great. [1:49]

AL: That’s good. You have no idea what I’m going to talk to you about here because I’ve

kept it a secret. I’m pretty excited to talk to you about this because I think that Jeffrey,

we’ve actually found the future of Bitcoin and nobody knows about it yet.

JT: Was it discussed at the cryptocurrency conference? [2:03]

AL: It was not. I mean, it was kind of, but I think that now we’ve seen the first examples of

it and it’s really interesting. Bitcoin, right? Neutral, stateless, cheap, fast money. The same

could also be said though, about Litecoin or Feathercoin who make tweaks to Bitcoin but,

ultimately, whose value is only really as good as how desirable they are to trade. This is also

true of, even more innovative or unusual coins like, Freicoin which introduces demurrage

features and makes it so that your money loses purchasing power over time to encourage

spending. Or proof of stake based coins which kind of do the opposite and the more coinsyou hold, the more coins that you’re able to mine because the mining comes from your

http://www.letstalkbitcoin.com/





investment into the coins that you already have. The only commonality that these things do

have is that the only thing that they’re good for is as money. That’s sort of a funny thing to

say because we think that money emerges from commodities and that money emerges

from other things that are already useful but what if useful things could emerge from

money that we already have, that’s already good money? What if cryptocurrency wasn’t

restricted to being only good money and what if instead of the value being determined bythe power of the network, it’s determined by what you actually get for holding the

cryptocurrency at distinct points in the future? The idea at this core is the idea that

cryptocurrencies can be backed by private companies. Let me give you an example here for

a second. We’re going to do a timber harvest on the hillside that I live on. It is going to take

out some wood for fire danger, basically. This process is going to generate enough wood to

create about 100,000 cutting boards made from rare wood that comes off of our property.

We know that this is a process that’s going to take between three and f ive years. If we were

to take those estimated production runs and then figure out what our costs are, what our

spin-off time is and then create, say, WoodCoin or something like that, that starts off with a

period of time initially, where anybody can mine them to initially accumulate them and thenwe’ll also be mining them, as with everybody else. After a three month period of time, or

six month period of time while we’re doing the initial financing and figuring out how to

make it all work, then there’s an initial release period where the thing comes out and we

offer to redeem it, at say, 100 WoodCoins per cutting board. We say, we project out into

the future, for the next three years every six months, the value at which we ascribe to

WoodCoins relative to the thing that we’re backing it with, these cutting boards, will

increase in value by, say, 10%. You can instil deflationary trends into cryptocurrencies by

having a private company voluntarily commit, essentially making a social contract to honor

it and if that social contract is believed to be, that it will be honored, then the value of it in

the market should increase, right? [4:46]

JT: Yeah, maybe so. [4:47]

AL: We saw the first example of this. What I just gave you was a totally speculative

example that deals with physical product and all that jazz. What we’ve seen in the last

couple of months has been the release of the ProtoShares protocol, which had a very kind of

difficult time but that is the first real example of this, almost like IPOcoin: that’s the original

name that I believe Charles Hoskinson gave to it – this concept, right? What happens with

ProtoShares is that if you are holding ProtoShares at the point that the company that backs

it, Invictus Innovations, releases their next product which is also a blockchain product, also anew type of cryptocurrency, then it will be forked from ProtoShares. Instead of holding

ProtoShares because you expect someone to want to give you more money for them later,

you’re holding ProtoShares because at distinct points in time you will get double... however

many ProtoShares you hold, you’ll get whatever it is that Invictus just released on a one to

one basis. [5:38]

JT: Yeah, that’s interesting. *5:40+

AL: It’s a very different way of thinking about cryptocurrency because with cryptocurrency,

like Bitcoin or Litecoin, it really is all about the network and to a large degree about fairnesstoo. If it’s perceived that things happen in an unfair fashion with a currency that’s supposed



to be completely neutral, then that’s a very bad thing for the currency. If it happens with

something that’s backed by a private company, I don’t know if that’s necessarily the case

anymore because really, the only factor in determining value is – will the company deliver

on their promise? Again, this is something that’s being pioneered by Invictus but I really see

the future of this is: you could have any company do this with any product. It works even

better if you have something like software as a service, like DropBox, for example, thatcould create a coin that circulates and they would accept it as payment and they wouldn’t

even lose any money because they sell it back onto the market at whatever the market rate

is. The market rate, in a free market, should reflect whatever discount they’re giving it for.

[6:29]

JT: Yeah. How would you compare that to what Amazon’s doing with Amazon coins? *6:32+

AL: Well the thing about Amazon coins is that there is no interchange. Each one is a walled

garden. What Amazon has done is they’ve created a little internal system very similar

actually, to www.gyft.com – is a gift card company that’s now offering points back forbuying gift cards with them. It’s 1% back of the value if you spend with a credit card, or 2%

back if you spend with PayPal and 3% back if you spend with bitcoin. The only difference

between this and that is that in a situation where it’s a cryptocurrency – first off, people

don’t earn them initially by buying them, they earn them initially by mining them, so they

have a financial incentive because they got something at what they perceived to be a lower

cost. It might have been a higher cost because of electricity but most people don’t really

thing about it like that. Running your computer is just sort of an expected cost in this day

and age, it seems like. That really is the difference – is what it allows you to do, is it allows

you to take all of these little systems that are their own little ponds and connect the liquidity

between them. In this case, right now, if I have points in Gyft and I want to spend points atAmazon, I can’t do that but if both of these were running on cryptocurrencies, then Bitcoin

would be the common thread that ties them altogether. Bitcoin is, essentially, the highway

and each of these little private altcoins is an off ramp. Sometimes there are big

developments at the off ramp and sometimes it’s just a couple of tumbleweeds and there’s

nothing really there. The point is, is that each one is connected to every other off ramp

through the highway that is Bitcoin. [7:53]

JT: Right. How does this compare to something like what Ripple is considering? Have you

looked carefully into that? [7:59]

AL: Ripple is like an infrastructure for running debt of other currencies on top of it. When

you send bitcoin over the Ripple network, you’re not really sending bitcoin; you’re sending

an IOU that’s going to be redeemed at the other end. That’s why they have instant

confirmations and stuff like that. Ripple, at its kind of base level from my perspective, is

more about providing really fast liquidity, right? It’s about liquidity between players who

need a lot of liquidity and then they even up at some point. [8:24]

JT: It’s not that different from... well, it’s like a third party payment system for

cryptocurrencies and other currencies. [8:30]

http://www.gyft.com/






AL: They’re not the only ones doing it too is the other thing that’s really interesting. In a

year, it’s going to still feel futuristic, I think, because the ways that it was built, they skipped

a lot of steps. There’s another project in this space called MasterCoin, who I’ve also been

doing interviews with, that’s kind of trying to do the same thing. Jeffrey, at their core, these

are all attempts to take the Bitcoin currency system and turn it into something that’s more.

We’ve seen this attempt before with ColoredCoins and they haven’t really caught a lot oftraction. The idea is to ascribe smart property and the ownership of property onto actual

currency or onto actual coins. Once you’ve got that infrastructure in place, then creating a

new one for a new company is just as simple as saying – OK, well here’s a new one, here’s

the information that you need to fill out, here’s the pitch you need to make, here’s the

guarantee you need to do and go for it, and you can do it. On the one hand, you could look

at it almost like a marketing expense, right? It’s as if you’re putting coupons out there in the

newspaper because, again, it doesn’t cost the person anything except the work it takes to

cut them out and bring it in and get to the store and all that jazz. At the point that you do,

you can actually sell the coupons back into the market. The idea that’s most interesting to

me about this is the thought that the fundamentals of these cryptocurrencies can be basedon things that are other than monetary fundamentals. To this point, I really had been

thinking about cryptocurrency as a great solution to fix the currency problem and that was

about it. Now, I’m starting to think maybe this really is a solution that fixes everything.

[9:51]

JT: The experimentation here is absolutely essential and I think you make a compelling

point and it’s very possible that .... It’s hard for me to say that this is definitely the future but

what’s important is that cryptocurrency has sort of pioneered the possibility of

entrepreneurship in this realm. I’m fully prepared to be blown away and totally surprised by

developments in the future. I don’t see how anybody can say, in advance, for sure what’sgoing to be what. I mean, I think we should have learned from Bitcoin, in particular, not

that everybody has or were anywhere near this, that essentially we’ve lived in a market

that’s been devoid of entrepreneurship for, like, a hundred years. It’s only now being

unleashed so it would be a little bit crazy to expect that we know what the stable solution is.

You know, that Bitcoin is going to replace it all and that will be the end of history. There’ll

be many other solutions among which things like 3rd party providers and debt based

contracts and company based currencies, new forms of liquidity between companies and

consumers. We’re seeing a gradual evolution take place that went from a very primitive

form of 3rd

party payment systems that were built in the 1950s. Now they’re getting ever

more sophisticated. I was at an Indian website a few days ago, that had probably somethinglike 30 or 40 different payment options, one of which is Bitcoin. We’re going to see ever

more of these things but the point is, that the sanctioned system of the past that is basically

a creation of the state with a handful of private companies has now been exploded into a

new digital realm where there’s communication across borders, where there’s new forms of

organising and association on a financial basis between companies all over the world and

consumers all over the world. I think we’re just at the cusp of seeing what kind of

innovations are going to be possible. All of which, ultimately, are anti-monopolistic. In

other words, the current monopoly system that sort of dominates the world can’t possibly

survive this level of pressure. [11:47]



AL: It’s been fascinating watching the price go up over the last couple of weeks with the

pressure coming from China it seems like. From what I can tell, it feels like they’re about a

year and a half, maybe two years behind where we are here in the Western world, as far as

the general tone of the conversation that’s going on there. They just happen to have a lot

more people who are interested in it right now. I’ve been trying to wrestle with the

implications of what if $800, or $1000, or whatever level we wind up settling at – what ifthis is the new normal. On the one hand, that’s crazy and on the other hand we already saw

it happen once. We saw the new normal go from being under $1 to over $100. I mean, if

that’s true then that means that if this is the new normal then there’s going to be another

new, new normal at some point in the future that will be even higher than this. [12:27]

JT: Yeah. You know, it’s funny – I was just looking at the charts this morning and I had these

flashbacks to the harrowing days of, I think it was in April of this year, which seems like

twenty years ago. I had only recently gotten interested in Bitcoin and it was just like right as

I was kind of really getting interested and I think I was interested when it was $25 maybe

and it reached up to $30 and everybody was screaming – this is a bubble, right? Well, I waswriting about it pretty intensely and in a few short weeks, we went from that straight up to

$260. Of course, the people that were sceptics were saying – this is unsustainable and

indeed, it proved not to be sustainable and fell back to $80, so everybody was saying –

Bitcoin is dead. There were lots of publications that declared this, which amused me at the

time because a fall from $260 back down to $80 still would have put it in double the

territory where everybody had previously been claiming that it was a bubble. You’re right,

people adapt to the price change and they assume it’s the new normal. It fell down to $80

and people were saying – no, look Bitcoin is dead, it’s crashed. If you look from the point of

view of the first of the year, just three months earlier, Bitcoin was $14. Anyway, the point

of the chart that I was looking at this morning, if you look at the current run up and I thinkthere is a high hit just this morning, really. The little rise and fall of this past April looks like

just completely growing pains and not acting really notable at all. [13:57]

AL: Right. [13:58]

JT: It vanishes when we compare it to the whole sweep of what’s happened. I mean,

already today everybody is saying – it’s in the bubble, it’s going to crash and people are

ready to get out. That maybe true and there’s no way to know for sure but it’s also equally

possible that people will be kicking themselves for not having bought it at $800. [14:15]

AL: It’s just this – what is normal and how fast can you acclimate to something being

normal and is it really normal? I mean that’s, of course, the other thing is that: one of the

things I think has really been helpful for us actually, has been that common plaintive cry –

oh well, this is the end of Bitcoin. Every time they’re wrong about it being the end of

Bitcoin, people are like, ok well that didn’t happen again, I guess they’re just wrong. The

boy who cries wolf thing kicks in after a certain point. [14:37]

JT: Just this morning, I listened to this long debate between, I’m not sure I’d call it a debate;

it was just kind of a back and forth between Stefan Molyneux and Peter Schiff. One thing I

noticed about Schiff, in particular and his objections to Bitcoin is that they were sort of allover the map. He would barely finish with one objection when Molyneux would address it



and he would generate a new one. Somebody should chart this out and probably come up

with 35 different problems he mentioned with Bitcoin, none of which were a decisive

problem at all. There wasn’t a single point that he could really hold onto and argue

consistently throughout the entire debate because every point was just a little too weak, so

he had to kind of keep moving on and moving on and moving on. [15:22]

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ANNOUNCEMENT:

Happy holidays from Let’s Talk Bitcoin. If you like the work we’re doing, we appreciate

bitcoin tips of all sizes at www.letstalkbitcoin.com. Just as importantly, share the show with

your peers and review the show on iTunes. Don’t be kind, be honest. LTB reaches nearly

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______________________________

AL: Besides Peter Schiff, who do you think are the real critics out there being vocal about

Bitcoin at this point? [16:35]

JT: The whole Hard Money Crowd has been strangely out there in opposition to Bitcoin. It’s

funny to say, an opposition to because of course, it doesn’t matter how much you like it or

don’t like it, Bitcoin’s going to do whatever it wants to do. It’s a little strange. The otherthing that’s a little odd about the Hard Money Crowd is they keep comparing Bitcoin to gold.

I don’t know what relevance that has at all. Gold is just gold, it’s not money, it’s just gold.

There hasn’t been anything like money on the international level for some 40 years and it’s

been 80 years since you could convert any dollars into gold at the domestic level. This is all

basically, ancient history and mean, we’re talking about lifetimes ago. There’s absolutely no

chance that, unless you’re just completely full of political fantasy, that governments of the

world are going to somehow see to it to change their currencies from fiat back into gold, in

order to establish sound money. I mean, that’s not going to happen. Why does everybody

keep comparing it to gold? Not only that, but it’s a terrible comparison. Gold is just not

portable in the same way that cryptocurrency is. It’s just not the thing for the internet age.[17:37]













now anyway. That’s just really difficult for people to .... If you haven’t been keeping up for

the last twenty years and the changes and the way the world works and the way software

works, then you’re just going to have a hard time understanding that. The other thing I’ve

noticed about Bitcoin is that, it’s very difficult..... One of the things you’ll find with it are the

opponents, people that are speaking out against it all the time, it’s difficult for them to

admit what they don’t know. I tweeted out yesterday – show me a person who is opposedto Bitcoin and you’ll see a person who believes that he or she knows everything there is to

know about it but, in fact, if you find a real expert on Bitcoin, you hear a real curiosity and a

willingness to learn and watches the markets and follows the markets and be a little bit

humble in the face of this amazing development. There is some principle that governs this

but expertise, like ultimate final expertise in Bitcoin seems to be limited to those people

who are dogmatically opposed to it just because they think they know things they don’t. Let

me just bring up too, a fascinating persistent complaint that keeps going on just because I

was interviewed about this on from Wired Magazine, the other day. For some reason,

Wired seems to have some editorial doubts about Bitcoin. I guess, they’ve done an

extensive number of articles and they think that they’ve seized on one the other day. Theynoticed that it was deflationary. You brought this up at the beginning of this talk, that it’s

deflationary. You can’t have a money supply system that’s deflationary. This is the ultimate

nightmare. It’s funny because I mean, I addressed this on two levels. Number one is that,

the reason people are opposed to a deflationary monetary system is they think that that’s a

sort of a velocity killer, that as something is growing in value, people hold onto it and that’s

not what you’re supposed to do with money. You’re supposed to spend money, you’re not

supposed to just hoard it and that hoarding it will cause liquidity traps, for example in old

fashioned Keynesian terms. The first level of critique of that is to just observe empirically

that yes, theoretically it would seem that people would be holding onto coins more if

they’re growing in value just because, if you spend them now you’re sort of giving up profitsyou could realise later. The thing that you notice from talking to any of the companies that

specialise in providing widgets online for spending bitcoins is that they boom in value when

the price, in terms of dollars, is going up. In other words, when Bitcoin is becoming more

valuable, they see the pace of spending dramatically increase not decrease. We’re actually

seeing empirically, the reverse of what theory would predict. That’s just a fact and I’m just

laying it out there. I just explained it just because, as I’ve told the guy at Wired, the purpose

of currency isn’t just to hoard it forever. I mean, that’s just kind of dumb. The whole

purpose of currency is precisely to spend it. People need stuff and they want stuff and so

they spend it. It’s as simple as that. The pace of what you spend could go up and down with

(??) conditions, but essentially you just think of it intuitively, a person who bought Bitcoin at$8 and it’s suddenly $800, they’re like – I’m going to use this stuff now. [23:24]

AL: Right. [23:25]

JT: So there’s that and the second thing to observe about this whole deflationary fear is

that it’s fundamentally based on nothing whatsoever. It’s one of those kinds of fears that

results from macro-economic text books, in which monetary economists lay out what they

consider to be the ideal monetary system but it’s not actually based on any kind of fact.

There are sectors of economic life that have been living in a state of deflation for twenty or

thirty years. The most obvious example is computers and software. They have been fallingin price for a very long time or another way to put it is that the value of the dollar has



grown, in terms of software, for thirty years now. Even some sectors of the clothing

industry is the same way and other things and it hasn’t actually harmed business. It hasn’t

led to liquidity traps and disasters for company profitability. If you go back further in time,

you can look at the late 19th

century when we actually did go on a government gold

standard following the Civil War. We saw a continuous appreciation of the money, in terms

of goods and services, all the way up until essentially until World War 1 and it alsohappened to be the highest gross period ever in American history. We were seeing 8-9%

per annum economic growth. There’s really no evidence that somehow a currency that’s

rising in value is somehow harmful for economic growth. I think it’s just a fallacy. We’re not

used to it. We’re not used to the fact that we can get money, hold it and then convert it

later and get more for our money than we had before. We’ve lived through a century of

inflation, so we just don’t think that’s supposed to happen somehow. Probably, in a free

market, it is supposed to happen. My final point on this is that Satoshi Nakamoto came up

with this protocol and he threw it out there. If somebody doesn’t like the fact that it’s a

deflationary currency, then switch to something else. If you don’t like it, don’t use it.

Ultimately, there’s got to be some relationship between what people desire in a micro-economic sense and what’s desirable in a macro-economic sense. [25:20]

AL: The differentiating between the micro and the macro, I think, that is 100% the

disconnect on this particular issue. I’ve been thinking about this a lot because you’re right,

it’s a huge issue. People don’t understand, they just assume that this hoarding thing is going

to happen. From my experience, personally, not just with regards to Bitcoin but just broadly

speaking, I’ve had a variety of incomes over my life and the times when I’ve spent a lot of

money are times when I’ve felt like I was really comfortable, like I could comfortably spend a

lot of money without endangering my lifestyle at that current point. In the times when I

haven’t spent a lot of money is when I don’t have any money to spend and I don’t feel likeit’s a responsible decision for me to do that. With Bitcoin, it’s like I mean, the more the

price goes up, the more I feel like I have the ability to spend it because I get to spend less.

That’s been true for a lot of people that I know. I know that there certainly are some people

who have their bitcoins on a flash drive stuck in a safety deposit box in three different banks

all over the country and they never plan to touch it for ten years but I don’t think that that’s

the majority of people because it doesn’t make sense. *26:16+

JT: I think you’re right to sort of rely on these intuitions. One of the things you notice about

this form of economics has been conventionally taught at the economic level since about,

conventionally since about 1940s, is that there’s this great disconnect between what’s goodfor the individual and what’s good for society. We’re always hearing about liquidity traps,

for example, or the paradox of Sabien, so called. [26:37]

AL: A liquidity trap in the context of the Keynesian argument that you’re talking about here

would be where everybody holds onto their dollars and saves them and because of that,

there are very few dollars going around through the economy, and so there isn’t enough

liquidity, and so loans are required but they’re hard to get because nobody wants to lend,

right? [26:54]

JT: Right. The idea is that you might think it’s good for you to hold money but actually, it’sbad for you because the economy as a whole needs money circulating around in order to



kick-start it, to provide the grease, you know those weird metaphors that people use – like

grease and machines and other stuff. [27:10]

AL: Right. [27:11]

JT: That speaks to the, so called, paradox of Sabien. You might think it’s a good thing tosave money. Actually, it’s a terrible thing to save money according to the Keynesian view.

You hear presidents talk about this all the time. I remember after 9/11, George Bush was

going around saying we could defeat the terrorism by going out and buying something. A

lot of people had, I think, a very justified sense that maybe going into debt and squandering

a bunch of money at a time of great uncertainty is probably not a good idea. The paradox of

Sabien tries to tell people to do things that are against their own self interest. I think that

any time you hear an economic theory that seems to drive a wedge between what’s good

for you and what’s good for everybody else or good for society, that should be a first tipoff

that there’s something funny going on here. A lot of the fear of deflation really comes down

to that. The Chicago Fed paper also, we should say something about that that came out.About three of four weeks ago, there was a big blast against Bitcoin and I wrote an article

about it because I thought it was just hilarious. They were saying that Bitcoin was sort of a

secretive, confused, highly complex currency that was controlled by a handful of developers

operating in secret. As I read that sentence, I thought – my god that sounds like a perfect

description of the Federal Reserve, actually. [28:25]

AL: That does seem to be more and more true. Whatever they’re saying, probably, they’re

the ones doing it. [28:34]

JT: It seemed like a massive act of Freudian projection of some sort. That entire paper wasvery strange. [28:39]

AL: While we’re on the subject of central banks, the Central Bank of China, one of the

governors of that, recently released a kind of cautiously optimistic statement about Bitcoin

and again, it seems like this movement up in price has been largely driven by the seeming

OKness of the Chinese Communist Party with their people converting Yuan into Bitcoin.

That seems like it’s a real dangerous place, if that’s what the price of Bitcoin is relying on

right now. [29:05]

JT: Yeah, if that’s true. I don’t know to what extent that’s empirically verified. [29:12]

AL: BTC China has seen prices converted to US dollars. They only trade Yuan and Bitcoin.

Converted to US dollars, they’ve seen prices over $1,100, so most of the market right now,

most of the exchanges that are seeing their price spike up, are happening through arbitrage

trades that are going essentially from the US exchanges that have the lower price but you

can’t purchase in Yuan and then being arbitraged over to the BTC China, where it can

achieve a 25% increase. [29:35]

JT: I gather that China has some pretty severe exchange controls and Bitcoin has just

escaped from that, right? At least, that’s what people tell me. *29:45+



AL: Right. That’s been my impression, as well. It’s hard to get good information out of

China, it seems like. Again, the number of people who could give you good information

about what the government is going to do but it seems like in the US, there’s been a harder

line stance where the impression has been that something, you know, they would do

something about it, but maybe they actually won’t do something about it. In China, the

impression has been, they’re ok with it because these things have made their way ontostate television and there have been a variety of documentaries, essentially encouraging

people to look at this currency. Again, I don’t think it’s possible to enforce currency controls

once you’ve stepped away from controlled currency like the Yuan and moved into

something like Bitcoin. [30:20]

JT: You’ve got to figure, too, that China is the ultimate situation where we have vast

amount of (?? Crafty) laws. There’s tons of things on the books that exist, that are not really

well enforced, that party officials themselves regret but they have no power to change

them. One of the things we haven’t really talked about is that government is a kind of big

industry, all over the world and government officials themselves, I would like to imaginethat they’re all squeaky clean and wonderful and not accepting bribes and doing (??) and

stuff like that but the fact is that the real business of government has an underground

economy just as much as anywhere else does. Government officials need a way to

accumulate wealth outside the purview of their colleagues and they need a way to receive

bribes just to make things work right. In the past, you could rely to some extent on Swiss

banking and that sort of thing, but that’s less and less viable now. I’m very interested in this

idea that maybe governments around the world, individual members of cabinets, of staffs,

of (?? old line) bureaucracies, will discover Bitcoin as a viable way to do business for

themselves and be less likely to crack down on the private sector, just because they see so

many personal advantages to it. Otherwise, it’s really difficult to explain how it is that China just had this laissez-faire attitude, unless that laissez-faire attitude has just become

pervasive within the policy culture of Chinese government. I just don’t know. *31:44+

AL: Or it’s worth poking the US dollar in the eye more than they care about preserving their

own capital controls for the minority of people who are going to take advantage of this. I

don’t really know what the answer is but that definitely seems like it’s one of the important

questions that’s going to have to develop over 2014. Jeffrey, our time always goes by too

fast. I look forward to continuing this conversation. Before we end it, are there any projects

that you’re working on right now that are new, that you want to talk about, or anything that

you want to plug? [32:09]

JT: I’m working on this full time now and I’m developing this digital city called Liberty Me.

The idea is to create an ultimate global communication network for liberty-minded people

to talk about things like cryptocurrency and get good, solid information through information

sharing. There’s no platform like that out there right now, so I’m working and I’ve got the

best developers I know and the best technicians I know and using every tool that I’ve got

and try and put together this massive platform for this purpose, which will be a publishing

platform and social network and we’ll also be, of course, accepting Bitcoin at it. It’s going to

be very edgy and very advanced. We’re talking about something like a February 15th release

and so we hope that goes well and we dazzle the world with the thing. [32:59]



AL: Jeffrey Tucker. Liberty.Me. Thank you very much for your time. [33:04]

JT: That’s alright. *33:04+

______________________________

DM: ‘Beggars Can Be Choosers’ by the Bitcoin Monger of bitcoinmonger.tumbler.com

performed by David Menes

Who am I? What do I believe? These do not matter. I know what question you have and

the answer is 1,240.2 bitcoins. I can’t promise to update this regularly, or at all, after this

one but here’s me thoughts on the ride so far and guesses on the future. Baby, aren’t you

into that? Unlike some of the other early ones, I fortunately, do not have a wife. What I

have is a long term girlfriend and under no legal obligation to spend any of my hoard to

impress her dumb friends. Got in early, after talking about it for a week or so with her andnever mentioning it again. Treat it as if it doesn’t exist, check back in a year, was my

thinking. She saw something about Bitcoin in USA Today and from there it’s been a Gestapo

re-enactment in our apartment. Baby, how many did you buy? Did you keep them? Very

few people know about my Bitcoin interest. I told her, at that point, not to tell her parents,

not to tell her friends, no more than you would tell acquaintances you have a million in a

duffle bag under the sofa. I explained that we need to continue to play the game of

appearing middle class for the next year or two. We’re like spies, I told her, trying to frame

this in a playful way. So far, she’s been good, to be honest. A relationship, no matter how

great, won’t stand between me and discarding the middle class, like a hermit crabs

abandoning shell when the moment comes. If my hard-line stance on not selling too earlyruins our relationship, that’s fine. Then my potential access to other great women becomes

x-1, whereas before, it was x. That’s still a lot of women. Where it will go? I’m staying in

for the same reasons I got in. If you’ve ever spent more money than you should on

something that gives you pleasure, a weekend fishing trip in Wyoming, front row seats at

Cirque du Soleil, whatever. You already understand this. I got in when I did with a bit more

than I was comfortable with because of the very idea of Bitcoin brought me pleasure. A

world where the Visa and MasterCard logo are forced to share space with ‘Bitcoin Accepted

Here’. A world where bankers go to sleep at night stressed and watching their dwindling

assets on the screen is a world where the rest of us can sleep well. Do I pity people who

didn’t get in early? Not at all. I’m the guy who bought concert tickets six months out, gotfront row for a steal and you’re the guy who bought it a month out, paid more for st

seats. You’re still at the concert and that’s what matters. That puts you way ahead of the

people who didn’t buy tickets at all, who watch it on a shaky YouTube video the next day.

They’ll be comfortably upper-middle class, freed f rom the treadmill. I’ll be in Lala Land.

Some people can’t see. Bitcoin didn’t go up 4100% in a year because of hype. Believe me,

there are many who want to discredit Bitcoin and watch the whole thing tumble down.

They just don’t know how. You can’t destroy the pious and Bitcoin is the single most pious

financial instrument humans have cooked up since the cuneiform ledger books of ancient

Mesopotamia. It’s going up because our world is changing. The Chinese have stopped

hoarding US dollars, a shocking change in policy and many of my fellow USA’ers are sadly,unaware. We chant, USA, USA, until our vocal chords fry but that won’t make our economic



privilege come back from the dead. The world is moving on without us. Go buy Madmen on

DVD because that’s the closest thing you’ll come to seeing another American Golden Age.

That’s OK. We’re still good people. We have still one of the most productive swaths of land

on the planet. We’ll do OK but those who understand the shifts happening will do better

than OK. Life changing has been misused by late night infomercials so many times, that

when something actually is life changing, the sheep turn the other way and continue tomunch on their delicious predictable grass. (??) There’s a coffee shop barista I go to often

who looks like one of those hipsters you’ve seen in iPhone commercials. She’s supposed to

know all about new trends but when I asked her if the shop has considered taking Bitcoin, I

had to explain to her what a bitcoin was. You’ve never heard of it? Really? I asked her,

delighted. This is good news for the slightly less early adopters in my mind. That

conversation sparked my curiosity and I spent an afternoon at the mall asking cashiers and

clerks if they knew what Bitcoin was. The only person who knew anything was a young

Asian dude selling tobacco vape pipes at a kiosk. Lottery logic. My background is in maths

and finance, so apologies in advance for blatantly appealing to your base emotional instinct.

I’m going to do so anyways. Consider a lottery ticket. You’re not going to win. You knowyou’re not going to win but you play anyways. Bitcoin is a lottery ticket you could actually

win. Even if Bitcoin becomes more popular than Discover Card, which apparently still exists,

it will make all of us more than satisf ied. Bitcoin beggars. I’m seeing more and more of

these types on discussion boards that talk Bitcoin. Although, at first, it annoyed me

(desperation is annoying, isn’t it?), if Bitcoin weren’t perceived as valuable, people wouldn’t

be so swiftly giving up their social value and dignity in exchange for 0.5 bitcoins. The more

beggars, the more confirmation that Bitcoin is money and I sometimes give, sending

someone an unexpected tip for a job well done, a goody book on bitcoin wallet security, for

example, or buying something from a small business that just started accepting Bitcoin. It’s

part of the responsibility that us early adopters must take on. What would Bruce Waynedo? Probably sit in his mansion for a year, hobbling around on his cane and put his paper

wallet in a vault. Nah, bad example. In all seriousness though, there is a responsibility. The

biggest threat to Bitcoin is that people won’t actually use it. Have to give it a little to get a

lot in return and sometimes that little tip or buying that florist’s arrangement with your

bitcoin is the spark that converts them. You see something in their eye. They’re a part of

the club now, enlightened and they will spread the gospel to other shopkeepers. As a friend

put it, you’ll never go broke by giving to people. That’s completely true. You only go broke

when you selfishly try to make too much, too quickly with too little research or effort. I

must admit, I did sell one bitcoin in a moment of weakness. I wanted money for a new

laptop, the price went up significantly just after that, as if a sign from the gods. Selling thatone bitcoin still f***g stings. I’m not kidding. But the seeding I’ve done hasn’t hurt at all –

it feels good. (??) If it fails. If all goes to hell and my hoard becomes worth nothing, I’ve

been given the gift of an exciting internal life for the past few months. I won’t regret any of

this and reality sometimes, not always, rewards bravery. My ideology is the same. My

belief in a new more fair world is the same. Bitcoin is fair. I won’t get into the technical

details, as you probably already know them but no bank offers you its equivalent of a

blockchain to review at any time. No major currency today is as supply/demand market

based as Bitcoin. There’s no wizard behind the curtain, there’s just you and me hoping for a

better future. One year from today, I’m either back to where I was before this shared

hallucination, which is completely OK, or I’m in suite at the Waldorf Astoria in New York Cityfor a three-day weekend treating my girlfriend to a bottle of champagne and giving her a





Tell me about your decision process? What were you thinking in June about whether I

should buy this equipment? [44:36]

Joe: It was a huge speculation. At the time, in June, I think Bitcoin was around $100 and it

had just gone up, of course. I was thinking, it’s probably going to stay $100 and it’s difficulty

remains approximately the same – probably make a lot of money, but then as time went onin August, September, I got pretty nervous, difficulty going up and then October rolled

around and difficulty’s going up and ..... *45:03+

SM: Yeah and Bitcoin price was staying the same, right? [45:07]

Joe: Staying the same, mhmm. [45:08]

SM: Those are kind of the two wild cards, right? The difficulty of the Bitcoin network, that

is, how many bitcoins can you mine with a certain amount of hashing power and then also,

what is the price of each bitcoin and that matters if you’re not going to hold onto themnecessarily, but you’re going to use the bitcoins you mine to pay off your investment in the

mining software. [45:26]

Joe: Exactly. [45:26]

SM: Did you actually crunch numbers and do calculations? Or did you just give a ballpark

estimate? [45:32]

Joe: I used a few mining calculators online. There’s a few good ones. Yeah I crunched tons

of numbers, like every day, I would.... things would change – the difficulty and the Bitcoinprice and I would keep crunching numbers. As we got closer and closer, I got more and

more nervous but things seemed to work out thanks to the Bitcoin gods and the $800

Bitcoin. [45:54]

SM: So the price of Bitcoin currently has really impacted your bottom line, it sounds like?

[45:59]

Joe: Absolutely. [46:00]

SM: You made the decision to buy this equipment and if you don’t mind talking about it,how much of an investment did you make in the Bitcoin mining hardware? [46:08]

Joe: Each KNC Jupiter was about $7,000, $7,100 with the Saturn to Jupiter upgrade. I had

to pay a little more on the upgrade side. I had to buy a new modem, new wiring, PSUs – did

1000 watt, PSUs, two of those – they were $150 something each. All in all, I’ve probably put

about $15,000 ish into this and it seems to be a..... I seem to have got a return. [46:40]

SM: OK. You put $15,000 in around June and then, now that you’ve received the miners,

when did you actually receive the items? [46:50]



Joe: Actually, on October 14th

, I was a (??day two) Jupiter owner and then I ordered

another one and I got that one on October 17th

. So October 14th

and 17th

. [47:03]

SM: Yeah. So that’s pretty close together. At this point now, you’ve been mining for a little

over a month, is that right? [47:10]

Joe: Correct. [47:10]

SM: Yeah. OK. So we’re recording this on November 26th, just for anybody who’s wanting

to think about that. You’ve been mining for little over a month and with whatever difficulty

was going on at that time, and also with the current Bitcoin price, you say that you’ve made

back your investment already? [47:29]

Joe: Yes. That is correct. [47:31]

SM: Wow. (Laughing) Wow. Yeah. I know KNC Miner was nervous about that because Italked to Sam Cole, one of the principals over there at KNC at the Inside Bitcoins conference

in New York, in July and he said – we really want our customers to make back their

investment, basically, like we want this to be profitable for people and we’re going to do

everything we can to help that happen. It sounds like it has worked out but there was also a

factor in there that they couldn’t control, which was the Bitcoin price. [48:01]

Joe: Yes and the difficulty, of course. [48:02]

SM: It seemed like they had a little influence over the difficulty because their machines

were actually contributing to it quite a bit, right? There are no other companies who havesingle units that are as fast as theirs, that are shipping them. It’s interesting because people

crunch all these numbers and they think well, is it going to be profitable or not to mine. It’s

kind of a thin margin, right? Then, something like this can happen, where there’s a meteoric

rise in the price of Bitcoin and then all those calculations kind of go out the window or they

really need to be adjusted because nobody would have predicted the price of Bitcoin was

going to rise seven or eight times. That’s interesting, so tell me about how you felt when

the miners arrived on your doorstep. [48:43]

Joe: Well, of course, I was tracking them and watching out the window every second –

where’s the UPS man? Even when he came, I was ready. I had everything in my mind andon my computer all set up. Of course, I didn’t really have to have much on my computer set

up. The KNCs came pretty well ready. You just plug them in and play and maybe apply

some firmware and that was pretty much it. It was really simple. [49:09]

SM: What software did you use to do the mining? Did it come with them? [49:12]

Joe: It came with a built in CG miner. It was very well made, although the packing could

have been a little better. I think some folks’ machines got kicked around during shipping

and came over a little jumbled up with a lot of hardware errors for some folks. [49:30]

SM: Yours were OK? [49:31]



Joe: One is good and the second one is a little handicapped but not too bad. I can’t

complain that much. [49:38]

SM: What kind of speeds, what kind of hashing speeds are you getting with both of these

machines? [49:43]

Joe: When I first got it, it was about 550 and with firmware updates, probably around 565

and then the second.... [49:49]

SM: Gigahashes per second, right? [49:51]

Joe: Exactly. Gigahashes. The second one around 505 and then with firmware updates it

kind of went to 535. [49:59]

SM: The firmware really matters in terms of speed? [50:02]

Joe: Yeah. It seemed to correct a few timing issues. [50:06]

SM: Had you done any mining before this, or was this your first experience with Bitcoin

mining? [50:11]

Joe: Yeah. I did do some back in April, some mining on my iMac and Macbook Pro, which

was pretty miniscule and just for fun. I got some USB sticks, which was just for fun, more or

less, nothing really profitable there. [50:28]

SM: You talking about the block erupters? [50:30]

Joe: Yeah. The block erupters, exactly. [50:32]

SM: Those were, if I recall correctly, about 300 megahashes per second, so those are a

thousand times, no not a thousand times.... help me out here ... how much slower were

those? [50:42]

Joe: 300 megahashes, so it takes about three of them to get one gigahash, which was when

they first came out, it was like – oh wow, look at this and then all of a sudden, difficultywent boom and then everybody kind of got nothing really out of them. [50:57]

SM: Right. Those are a thousand times slower than the Jupiter machines? [51:02]

Joe: Oh yeah. Much, much, much slower. [51:04]

SM: They must be fun to play with, I’ve got to admit. *51:07+

Joe: Yeah, like a novelty. [51:08]



SM: You had done a little bit of mining before but just for fun and now, would you call

yourself.... do you think that you could make a living as a miner? Obviously, you still have a

day job, right? [51:19]

Joe: Yeah. I’m a pharmacist by day. I’ve been thinking about it. KNC is coming out with

another one. I don’t know if that’s.... [51:27]

SM: I just saw that today, yeah. [51:29]

Joe: I don’t want to put out any bad press but unless Bitcoin price keeps going up, I don’t

know, I’m just kind of sceptical on this one so I don’t think I can make a living unless I was in

it earlier, I think. Unless I was buying other companies products because other things are

coming out between now and KNC’s next release, so you have to keep on buying, buying

and buying. I think it gets to a point for the personal individual – you’ve got to make a

decision to put the brakes on because you can get in over your head and all of a sudden and

you just have a house full of mining equipment and have your air-conditioning bill throughthe roof. [52:13]

SM: You’re running these out of your home. I know some people run them at work and

get, basically “free electricity”, which is really their employers paying for it or maybe they

run it from a college campus or something, where somebody else is paying the electricity

bill. Is the cost of electricity a factor? How significant is that? [52:32]

Joe: I’m estimating my electric bill will probably be around $200/month, or maybe $250

and considering Bitcoin price at the moment, and the hashing power, that’s really

insignificant. I make that back in less than a day. [52:46]

SM: Wow, that’s great. *52:49+

Joe: I’m not really too worried about that part. I am curious about what it’s going to be. I

haven’t received my first bill yet but it should be coming any day now. The electric company

is probably wondering what I’m doing. *52:59+

SM: Yeah. I guess that could be a concern because it’s not out of this world and a lot of

people who are into Bitcoin are, some might say, paranoid libertarian types but it’s not

paranoia if you’re right, right? *53:11+

Joe: Yeah, exactly. [53:13]

SM: It’s not out of this world to think that the cops might see a high electric bill and think –

is this person having a grow op, or something like that? [53:21]

Joe: Another point I’d like to bring up is the taxes. I actually called my CPA today. She

didn’t have any clue what I was talking about. I called her up and I said – have you ever

heard of Bitcoin? She’s like – What? So, I just said – Google it. I wasn’t trying to.... I kind of

use the analogy of digging for gold in your back yard and selling it. That’s something thatI’m really, really worried about: just selling on the exchanges and then the banks going –



what are you doing? I’m really taking a serious effort in keeping my papers and books all

straight. I have a Excel file all set out with what I spent on mining and what I’m selling and

trying to keep it all straight and on the up and up because an honest man has nothing to

hide. [54:09]

SM: It’s hard to know because you don’t know what the rules are or what you’re going tobe expected to report on taxes, or whatever for mining. This is all kind of a new area so I’m

really curious to see how that plays out. I’ve seen some ideas of what to do about Bitcoin

taxes but it could be different for miners or it could be.... who knows?.... [54:33]

Joe: It’s kind of weird because bitcoins are already there. We’re just getting them; we’re

just going to get them. It’s not like we’re creating them. They’re already created but

they’re not solved, so to speak. It is a real grey area so I’m just keeping the books right. I’m

going to be honest ... on the up and up and we’ll see what happens. I just want to give my

CPA a heads up now because.... [54:59]

SM: Yeah. She’s got a couple of months to research it, right? [55:02]

Joe: Exactly. [55:04]

SM: I wonder because sometimes it can be such a thin margin on mining bitcoins, that I

wonder if the taxes could make or break some people if they’re going to pay taxes on the

bitcoins that they mined. Could that put some people at a loss, or whatever. I’m curious

about that. [55:18]

Joe: I think that if you have a small operation, it’s not going to be a big deal because I’musing Coinbase so, know your customer rules and everything. If the information needed to

be got, I’m sure the powers that be could get it. I just want to be as transparent as possible

with that regard. With the bitcoins that I’m mining and the Bitcoin price, it’s hard to hide

what you’re making. *55:39]

SM: It’s hard to hide it if you’re selling it, right? If you’re not selling them, if you’re just

holding onto the bitcoins then, it doesn’t seem like it would be too hard to hide, right?

[55:49]

Joe: True. [55:50]

SM: If you’re not selling it, you’re not realising any capital gains, right? *55:55+

Joe: If you’re holding the bitcoin, I don’t think you need to report anything. I think it’s when

you sell on the exchange, when you actually make a public transaction, I think that’s when

you really need to be careful. [56:06]

SM: I’m curious if you plan ... if the difficulty goes way up, like let’s say a KNC Miner comes

out with a new product, or some other company comes out of the woodwork and just

makes a new product that’s really, really fast and the difficulty goes way up and it’s nolonger profitable in a couple of months, let’s say aside from heating your house. It’s spring,



it’s starting to warm up, you don’t need to heat your house anymore and it’s no longer

profitable, it’s costing you more electricity than you’re making in Bitcoin – are you still going

to keep running those machines, or do you think you’re going to turn them off? *56:34+

Joe: That’s something that I’ve thought about and it’s something that I really don’t know.

By the time I get to that point, I’ll probably make a decision but I’m thinking I’m probablygoing to run them for a little bit. If I’m only making 0.1 coins a day, I think I might still do it

because in ten days I can get the bitcoin. If it gets down to below 0.1 a day, I think I might

have to turn them off. [56:55]

SM: Below 0.1? That’s $100 right now. *56:58+

Joe: I know, exactly. That’s what I’m saying. *57:01+

SM: If you’re not making $100 a day, it’s not worth it? *57:03+

Joe: If I’m not paying the electric bill, I guess it’s not worth it. At that point, it’s going to be

warm enough to run the AC a little more, so you have to weigh all these factors. You’re

asking beyond profitability. [57:15]

SM: Actually, I do know people who have the strategy of – well, I just got my 5 gigahash per

second miner from Butterfly Labs a few weeks ago, even though it’s not really generating a

lot of coin, it’s maybe making 0.01 or 0.0 something per day, I’m still going to run it because

I’m just hold that bitcoin until it goes up and then able to make my money back, or

whatever. [57:38]

Joe: Yeah. I’ll probably do that, to a degree. Maybe until 2016, when the 25 per block goes

to 12.5, that could be another thing. Yeah, I have some Butterfly Labs things too. I actually,

just got my last one in the mail yesterday. I’m running those as well. [57:55]

SM: Oh wow. That’s going to add a drop in the bucket to your ..... [58:01]

Joe: A drop in the bucket. I think, like $5 a day. [58:03]

SM: $5 a day invested in Bitcoin could be $50, $500 a day in a couple of years, you never

know. [58:12]

Joe: I know, really. It’s so unpredictable. We don’t know what’s going to happen. *58:16+

______________________________

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______________________________

SM: Where do you see mining, or Bitcoin mining going in the future? Do you have any

ideas? [59:21]

Joe: I do have an idea in the far future. In the near future, I don’t think anybody really

knows. Within the next year, the difficulty’s probably going to level out, it’s going to plateau

and we had a big hockey stick rise and it will even out I think after February. We have a

little evening out right now, it’s kind of levelling off but I think it’s going to spike up again

with a couple of other companies releasing and maybe level off again in the spring, thenKNC again. It’s just kind of like a little game they play. I think after about 2040, I think at

that point, it’s going to be so hard to mine, I mean people.... I mean, assuming when you get

to that point and everything’s good and price thriving and everything, I think everybody will

be mining at that point because people really won’t be making tons of money on Bitcoin

mining at that point because there won’t be any more coins to get. At that point, we’ll just

be verifying transactions. [1:00:24]

SM: The transaction fees would go to the miners, but that’s miniscule compared to.....

[1:00:28]

Joe: Yeah. It would be miniscule and I think everybody will have a Bitcoin miner in their

kitchen, at that point. Who knows what’s going to happen but I think that it will be so

mainstream at that point that everybody will have some sort of Bitcoin miner in their lives

running in the background on such a level, like 1 nanometer chip in their phone, or

whatever. [1:00:49]

SM: So that would be the ultimate in decentralization if everybody had little chips in their

phones and stuff like that. [1:00:55]

Joe: Yeah. [1:00:56]

mailto:[email protected]



http://www.seansoutpost.com/










SM: Yeah. I’m with you on that. I can see some kind of technology that gets built into

devices, like Andreas likes to say – you could mine with your light bulbs, or whatever. Just

some kind of technology that takes unused or idle time on electronic devices and turns it

into mining powers somehow. I think that would be really cool, if Bitcoin is still around at

that point. Maybe, we’ll be mining some other coin, or something else. [1:01:20]

Joe: With that in mind, I thought about pointing these miners at altcoins. [1:01:23]

SM: Oh yeah. Thanks for bringing that up. Tell me more about that. [1:01:26]

Joe: There’s a PPCoin and there’s a few other SHA256 coins out there that I could mine

probably solo on a pretty good basis and the prices of those have been going up, as well.

It’s really amazing and scary, at the same time. [1:01:45]

SM: Why is it scary? [1:01:48]

Joe: Because, they just go up so fast and I just don’t know what to expect in the future from

these things. Are they going to crash and then come back up just kind of like Bitcoin did? Is

there going to be a crash and are they going to go back up again? Who knows? It’s just so

unpredictable. To be specific, PPCoin I think is around $2-$4 right now. NovaCoin went up,

like $17. [1:02:12]

SM: Yeah. [1:02:13]

Joe: Litecoin is up to $14 but of course, you can’t mine that with the KNCs. I know

Litecoin’s a scrypt basis, so I would have to get Bitcoins to buy Litecoins. As far as mininggoes, I haven’t really researched into which altcoins to mine. I think I would just point them

at the one that’s most profitable at the moment. *1:02:33+

SM: How easy is it to do that? If you get a device that’s set up to mine Bitcoins, how easy is

it to make it mine PPCoins, or TerraCoins, or some other coin instead? [1:02:44]

Joe: It’s pretty simple, actually. If you’re using a pool, you just change the miner

configuration. For the KNCs, you can just change the line inside, in the password and just

point it to your pool. To solo mine, you would just point it at your QT client. Of course,

there are some other things you have to do there to get that set up but it’s really not thatdifficult. [1:03:03]

SM: Have you done it? [1:03:05]

Joe: I have done it but I haven’t gotten any coins from it. *1:03:08+

SM: So you tried solo mining? [1:03:10]

Joe: I did try solo with my USB block eruptors for about two weeks and it got nothing.

[1:03:17]



SM: Even with an altcoin that’s relatively way less well known, or way less popular than

Bitcoin, if you’re using something like a block eruptor that gets a pretty decent speed I

guess, maybe for the time, you still can’t get a block solo mining? *1:03:32+

Joe: I calculated it out. I have nine USB sticks, so that’s about 3 gigahashes. *1:03:41+

SM: Wow. Serious. [1:03:42]

Joe: Yeah. When I did the calculations, it’s about 120ish days or so, or 160 days, I can’t

remember, to get a block on average. Of course, luck is a factor. I rented them for 20 days

or so and I wasn’t getting anything and that got me worried so like, am I doing this right? I

guess there’s a way you can test it. I didn’t do that though, I didn’t test the QT client like,

what if scenario isn’t working. I wasn’t getting anything; I was worried it wasn’t working

right, so that also makes me worry about solo mining on these KNCs, whether I’m doing it

right or not. I think I would have to consult someone in person at a meetup or something to

make sure I have all the variables ironed out. I think I could do it, I’m just afraid that if Ipoint them to solo mine, I have to wait 30 days or so, or whatever it is, to really see if it’s

working. It’s a scary endeavour. *1:04:41+

SM: I’m hearing there’s a little bit of unknown about whether the setup is correct but also

there’s an opportunity cost, right? Because you could be using them to mine Bitcoin, which

you know and you can do and it’s straight forward, right? [1:04:52]

Joe: Right. On the pools. [1:04:52]

SM: Do you ever look at the profitability ratios on some of the mining pools? Some of themactually, have a display that says – it’s 2 x as profitable to just mine PPCoins instead of

mining bitcoins and then trade the PPCoins for bitcoins. [1:05:10]

Joe: Yeah, there are sites out there that do a little calculation for you. Right now, Bitcoin is

just off the chart profitable. There’s no way.... I mean, since the rise, other coins are not

nearly as profitable. Just get bitcoins and buy the other coins and trade them on the

exchanges. Before the rise, when Bitcoin was around $120, some days, PPCoin would be

more profitable. There was a point where ZetaCoin was more profitable. There were a

couple of days where I did mine some ZetaCoins, just for fun. [1:05:41]

SM: Then did you trade them for bitcoins. [1:05:44]

Joe: They’re just still sitting in my pool. *1:05:46+

SM: OK. So you hung onto them? [1:05:47]

Joe: Yeah. I didn’t even pull them out of the pool. I don’t even have the QT client for those.

[1:05:52]

SM: Right. Where are you going to put them? (Laughing) [1:05:55]



Joe: I know. I don’t know what to do with them. It’s just fun. It’s just fun to mine. I love it.

[1:06:00]

SM: It sounds like fun. Thank you so much for talking about this. Is there anything else you

wanted to add? [1:06:06]

Joe: For people that are wanting to get into mining, I don’t think it’s really a good point

right now. I mean, this is my opinion of course. I think that if you’re going to get into

mining, you have to really speculate on a rise of Bitcoin price. Difficulty’s definitely going to

go up, it’s going to get harder and with all these new companies coming out, you have to

have your foot in the door months ago. If you’re going to get in right now, it’s really, really

difficult. I think the people that are mining already, like myself and other people with other

companies with their foot in the door for January, February, actually December people are

going to ship, you got to have your foot in the door. If you want to get into Bitcoin, just buy

the bitcoin. [1:06:52]

SM: OK. One last question about that, actually. If you had taken the amount of fiat,

basically, that you spent on the mining hardware and invested into Bitcoin, would you be

doing better now than if you had just bought the mining stuff? [1:07:07]

Joe: I would be doing astronomically better. [1:07:10]

SM: OK. Yeah, that’s what a lot of people say. It wouldn’t be so much fun, right? *1:07:15+

Joe: Right. Exactly and you can’t have a nice story to tell. *1:07:19+

SM: Thank you so much, once again. This was great to talk with you, Joe. Now back to the

show. [1:07:25]

Joe: Thank you, Stephanie. [1:07:25]

______________________________

CREDITS:

AL: Thanks for listening to Episode 63 of Let’s Talk Bitcoin.

The Future of Money, with Jeffrey Tucker, was produced by Adam B. Levine, edited

by Matthew Zipkin and featured Jeffrey Tucker and Adam B. Levine

Beggars Can Be Choosers was written by the Bitcoin Monger, produced and edited

by Adam B. Levine and featured David Menes

Joe the Miner was produced by Stephanie Murphy, edited by Adam B. Levine and

featured Joe the Miner and Stephanie Murphy

Music was provided by Jared Rubens



Questions or comments? Email [email protected]

Have a good one! [1:08:02]





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Let's Talk Bitcoin - Ep 63