LET’S TALK BITCOINEpisode 72 – Powerful Perspectives

Participants:

Adam B. Levine (AL) - HostStephanie Murphy (SM) – Co-hostAndreas M. Antonopoulos (AA) – Co-hostFred Wilson (FW) – Union Square Ventures (Investor and Managing Partner)

AL: Hi and welcome to Episode 72 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 at www.letstalkbitcoin.com for our daily guest blog, all our past episodes and, of course, tipping addresses. My name is Adam B. Levine and today, I’ve got a show for you focused on powerful perspectives. The stars aligned in Vegas. Stephanie, Andreas and I found ourselves in my 34th floor suite, yeti microphone on the table between us for the second time in Let’s Talk Bitcoin history. We go deep as Andreas relates the jarring disconnect between Vegas and Buenos Aires. If you’re an idealist, we end today’s show with a host segment that’s one for the books. First, Fred Wilson is a respected investor and managing partner in Union Square Ventures. In December, he spoke at the LeWeb conference on the trends that are leading us towards the future before us. Specifically, how networks are replacing hierarchies and what those might look like. Wild stuff! Enjoy the show.

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(LeWeb Conference, 10-12 December 2013, Paris)

Loic Le Meur (LLM) – Host (LeWeb conference founder)Fred Wilson (FW) – Union Square Ventures (Investor and Managing Partner)

LLM: Please help me welcome on stage, Fred Wilson. (Clapping) [1:27]

FW: Loic. [1:35]

LLM: Welcome, Fred. [1:36]

FW: How are you? [1:37]

LLM: I’m so glad you’re here. [1:38]

FW: Thank you for having me. It’s a pleasure. [1:40]

LLM: You like Paris, right? [1:41]

FW: I love Paris. (Laughing) [1:42]

LLM: Great. Please... I’ll come back for a few questions. [1:46]

FW: OK, great. Thanks. Hello everybody. Loic asked me to talk about what’s going to happen in the next ten years, as if I had a crystal ball or something. Anyway, I’m going to give it my best shot and try to give you a feeling for how my firm, USV and I, think about these things. When I think about the future and trying to imagine what will happen; we like to use big macro trends and we like to think about how these macro trends come together. That creates a framework for us to think about what are going to be the most interesting opportunities that are going to present themselves and how to invest in those opportunities. We don’t think about technologies; we think about trends. We think about what’s happening in society; what’s happening with people (in terms of how people behave). The technologies are important but we don’t like to invest in mobile or big data, or machine learning, or those kinds of things. We think about them; they matter to us but we really think about things from a behavioral and societal point of view. When I think about the big, most important trends, I think of three. I’m going to talk a little bit about all three and give some examples, and then I’ll bring it all together, and then I’ll talk about some of the things that I think are particularly interesting, and then Loic will come out and ask me some hard questions.

The first big macro trend that we think about is the transition from bureaucratic hierarchies to technology driven networks. Bureaucratic hierarchies are the way that the world has been organized for the past couple of hundred years. You see it in government; you see it in business; you see it in markets and the way markets are shaped; you see it in the way military forces are organized. In those kinds of organizations, you have one person at the top controlling everything and then a pyramid all the way down to the people out in the field. The people out in the field go out, talk to customers or whatever, learn things and then feed that information all the way up to the top where a decision is made. Then, that decision is passed all the way back down to the bottom of the pyramid and then the change is affected. Of course, that’s not a particularly efficient way to do things but it has been the dominant way that the world has been organized. The reason for that is that transaction costs and communication costs were so high in the industrial era that that was the most efficient way to mobilize and get things done. Of course, technology has changed all that; we’re now in the information age, post industrial world and we are seeing technology driven networks replace bureaucratic hierarchies. We think we are just at the very beginning of this trend. I’ll talk about three that you’re intimately familiar with and then I’ll talk about what we see going forward. The first I would talk about is Twitter. This is a company that’s near and dear to my heart that I got involved with early on. Twitter, to me, replaces the newspaper. The bureaucratic hierarchical news organization (pick any newspaper that you grew up with) has an army of reporters who then report to a team of editors, who then report to a publisher. They collect stories; the editors direct what stories are going to get reported on; they get edited; they eventually get published; the paper is printed in the old world; printed and delivered. It’s a very slow moving, bureaucratic approach to delivering

the news and yet, it was the dominant way that news was produced for a long time. Twitter comes along and, all of a sudden, all of us are the reporters. The crowd is determining what news is most important by follower count, by retweet, things like that which gets serviced to the top and we get our news instantly, in a newsfeed on our phone. That’s the demonstration of a technology driven network – a network, because all of us are connected to each other and that is what is starting to replace the newspaper, for many of us. Another example of this is YouTube - a similar story. The way that video used to get produced was in a very hierarchical structure; lots of decision-making; very hard to produce video outside of that system. YouTube comes along and, all of a sudden, all of us are video creators. We publish the video and again, the crowd determines what’s important – quality rises to the top. Now, with YouTube on my phone, I can look at the most important videos to me and I get good stuff all the time. The third one, again this is going to start to sound like a broken record, is SoundCloud. Loic mentioned SoundCloud. I met Alex and Eric, the founders of SoundCloud here at LeWeb five years ago. In 2008, we invested in them a couple of years later. In the SoundCloud model, anybody creates audio; anybody creates music; they post it to SoundCloud; you don’t have to go through a record label; you don’t have to get signed. You just put your content up, which Lorde did a year ago on SoundCloud; you get found by the crowd and you become the most popular act in the world, outside of the traditional hierarchical system of radio and the music industry. Those are examples of where networks are replacing traditional bureaucratic hierarchies. The first place we saw this was in the world of media and entertainment. Radio, newspapers and television were the first industries to really feel networks replacing traditional hierarchies. We’re now seeing it in lots of other places – in hotels, with Airbnb and onefinestay, which is a European company. We’re seeing it in places like creative industries with Kickstarter and VHX (those are two of our portfolio companies) replacing the traditional Hollywood studio system. We’re seeing it in learning. We have two portfolio companies – Codecademy, for learning to code and Duolingo, for learning languages that use a similar network model where everybody teaches everybody delivered on a phone, or a browser. That’s the first big mega trend and if you think about that, we are really, really early in the replacement of bureaucratic hierarchies by technology driven networks.

The second big mega trend that we look at is, what we call, unbundling - the theory that everything is eventually going to get unbundled. Unbundling is a little bit like the first thing I talked about, except it has more to do with how services are packaged up and taken to market, not so much about the way the organizations are structured or the way the systems are structured but how products and services are delivered. If you think about it, in the traditional world, it was very expensive to package up and deliver things to market so products got bundled. They got put together and you, basically, only got to buy the thing that had everything in it. Technology, of course, is changing that and now it’s very efficient to package up and deliver things. Everything is getting unbundled and people are starting to deliver much more focused services, best of breed services and you can buy them a la carte. Of course, the newspaper is a great example of that. You used to buy one newspaper; you would get world news, local news, sports; you would get business; you would get fine arts coverage, classified ads. All of that would come in one package; you’d pay one price for it. Now, on mobile and the Internet, you get all of those services from different people and they’re better because the people who produce them are focused only on being the best at sports, or the best at business, or the best at classifieds. That’s the unbundling. That’s a

story we all know pretty well but there’s a bunch of industries right now that we think are going through major unbundling. The first one I’d like to talk about is banking. In the old world, it was very expensive to open up a branch and fill it with customer service people and tellers and service your customers and so, banks would offer everything. You would get your consumer loan there; you’d get your mortgage loan there; you’d get your credit card there; you’d get your small business loan; your big business loan; your working capital finance, all from the same bank. What’s happening now is, that entrepreneurs, technology driven entrepreneurs, like all of you, are starting to pick off each of those lines of business from the banks and delivering them in a network-based business model. We have a bunch of these in our portfolio – companies like Lending Club, which is the leading peer to peer lending network for consumer finance in the United States; companies like Funding Circle, which is the leading small business lending peer to peer platform based out of the U.K. We have a portfolio company in Germany called Auxmoney, which is a peer to peer lending company for the German market. You see entrepreneurs taking very profitable lending franchises away from the banks and delivering them in a technology-driven model. We’re also seeing this in working capital finance. We’ve got a company called C2FO that does that. You’re seeing it in asset management services and a bunch of other things that banks typically did. We think the banking industry is rapidly getting unbundled and using the power of networks to do that. Another industry, of course, is education. You think about the classic university model, which has been around for, I guess, six or seven hundred years now. It was expensive to put a bunch of students in a room like this and have a professor up front. You needed a building to do that. You don’t need that any more. This talk is getting live-streamed. There’s certainly way more people who are watching this right now, live on the Internet, than are in this room. You needed a library, so you had to print books. These books were expensive, so you’d build a library and all the books would be there. Students could go and sit in the library and take the books out of the stack and read them, instead of having to buy them. Of course, that’s not necessary any more. Every one of us has a tablet with an e-reader, or two or three on it and able to get books electronically, instantly and the prices are coming down rapidly, particularly for educational content. Of course, research, which you might think might still be a highly centralized and highly capital dependent business, is also getting unbundled quickly. We have an investment in a company called Science Exchange, which uses a marketplace model, a network-based model to allow researchers all over the world to collaborate. When somebody has got a gene sequencer in one lab and another one’s got another expensive piece of medical equipment in another lab, they can collaborate together on an open, public network doing their research. We think education is very, very much getting unbundled now. I think we’re very, very early in that process and we have a bunch of investments in that sector. The third one, of course, is entertainment. This is, of course, obvious to all of you but it used to be that you would pay your cable subscription bill and you’d get all of your entertainment content on that. Today, we get Netflix on our phone; we get YouTube on our phone; we get services like Hulu and VHX, and others. We can combine the entertainment product that we want, a la carte, on our phone and with services like AirPlay and Chromecast, we can connect our phone to the big screen and enjoy the entertainment we want, controlled the way we want to receive it. That’s the unbundling thesis. That’s the second big thesis and I said that’s a lot to do with how services go to market. There’s an important mega trend there.

The last one is probably the most obvious to all of you and that is that we are all now, personally, a node on the network because of this device. I want to just take a little poll of the audience. You have a choice, OK? You can’t have both. You’re going to have to choose between your smartphone and your desktop, or laptop. You can only have one, OK? You can’t vote for both. If you were forced to make that choice and you could only have one, how many of you would choose your smartphone? (Waits) Alright. How many would choose your desktop/laptop? (Waits) You all couldn’t see that, I could. I think it was about 4:1. It would be my guess about 80% of us chose our smartphone and about 20% of us chose our desktop/laptop (and I raised my hand for the smartphone). If I had to choose, it would be a no-brainer for me because I can do almost everything that I can do, short of writing code or writing a book, on my.... I could even write a book on my phone but I think that would be very difficult. There are things that I can do on my phone that I just cannot do on a desktop because of the sensors that are in the phone, the fact it’s location aware and most importantly, because it’s on me all the time. There are many parts of the world, particularly developing world, where this choice has already been made. They’ve leapfrogged the desktop/laptop world because they could never afford that world. They can afford the cheap $99 or $49 unsubsidized android smartphone and the world is adopting them at a very, very rapid rate. That’s the third trend. The reason it’s important is that we are all now nodes on this network, meaning we’re all connected to each other all the time, not just part of the time but all of the time. That’s really, really important. There are some services which have leveraged that. I’ll talk about three just to give you some examples – Uber and Halo. Halo is a company out of London, a portfolio company of ours. Everybody knows this story; I don’t need to tell it but the reality is that because we are a node on the network and somebody driving a car or a taxi is a node on the network, we can instantly connect and get taken where we want to go. This change seems like such a little one, is profoundly impacting the world of transportation. Of course, it’s impacting the limousine business; of course, it’s impacting the taxi business but it’s also impacting the rental car business; it’s also impacting the delivery business. We’re seeing a simple, really simple move that, in hindsight, was kind of obvious (obviously not as obvious as it should have been to us in the room) changing the world we live in very rapidly. Another one is payments – Venmo and Dwolla, Square and other services that allow you to have, effectively, a wallet on your phone. Particularly with services like Venmo and Dwolla, that are peer to peer, you can literally send money to anybody who has that app on their phone as well. It’s peer to peer; it’s a network – changing the world of payments dramatically. Dating – there’s a service in the United States, maybe it’s a global service, called Tinder. I haven’t dated in thirty years so I’m not a customer of Tinder but everybody who is young in my life tells me that it’s a great way to meet people. It leverages location; it leverages photos, all the things that phones do so well and it’s a network. Everybody is connected to everybody on the network.

Those are the three big mega trends. When we look at the future, the things that we say to ourselves again, and again, and again are – networks not hierarchies; everything’s going to be unbundled and you are a node on the network. When we think about those things, those are the frameworks we look at and every investment that we look at, we put through that framework. That leads us to the things we invest in. That’s sort of the backdrop.

Now, I’m going to talk about four sectors that I think are particularly interesting. The first is money. I talked a little bit about payments but I think there is a lot more that is going to happen in the world of money very quickly and that’s because of Bitcoin. Not because of bitcoin the currency and not because bitcoin that went from $35 to $1200, back to $700 and whatever, whatever, whatever because, at its core, Bitcoin is a protocol. It is, in our opinion, the financial and transactional protocol for the Internet that we have not had until now. We have not had a layer of Internet infrastructure that was global; that was distributed; that was not owned and operated and controlled by anybody; that was truly a protocol, until now. What’s most interesting about the Bitcoin protocol is that there is a ledger, called the blockchain which is global and peer to peer. It exists on every Bitcoin wallet that’s out there. Every Bitcoin transaction clears publicly in the blockchain. This is a technology-based architecture that looks like TCP/IP; it looks like HTTP; it looks like SMTP, that entrepreneurs can, and will build tremendous amount of technology and services over the next five or ten years and we will now see payments, money flow on the Internet in the same way that content flows on the Internet; in the same way that images flow on the Internet; in the same way that everything else that we’ve come to know happens on the Internet and it will not be controlled by any company, like PayPal, or VISA or MasterCard. Their lock on our money will be gone and that’s a big trend and a very investible trend.

The next one that I think is important is health and wellness and I’m not talking about healthcare. Healthcare is a complicated world whether you live in Europe or you live in the United States or you live in other parts of the world. Governments got its fingers in it. It is regulated; it is expensive and the situation is probably getting worse almost everywhere in the world. Health and wellness is the opposite side of healthcare. Health and wellness is what keeps you out of the healthcare system. There, I think, these mega trends (all three of them) are going to come to bear in a very important way. Now, we already see services out there; we already see the Fitbits, and the RunKeepers, and the FuelBands and lots of other things where people are starting to wear devices that can report to them, and to others, their vital signs. I think we will see more and more and more of this coming very quickly. We will see genetics; we will see the biology of our own body start to get available on devices that we will wear and can even be, in many cases, on the phone. My wife Joanne, who is here (she’s in the backstage), is an Angel investor and she told me about a company based in Berlin (whose name I wish I could remember right now because maybe their founder is in the audience), that has a little fob that you put on a device (I guess is probably the right word) that you put on your iPhone, like you put the Square thing on and you do a little saliva and it helps women with issues around ovulation and fertility. That’s not a device you’re wearing but, nevertheless, it’s a device that is connected to your smartphone that can start to get vital signs. I think that some of this will be personal and private and some of this will be network-based and some of it will be you and your doctor; you and your caregiver; you and your family, or whatever. This is a big, big deal and I think it will allow us to be healthy and well for much longer in our lives. I know so many people who have lost 50lbs in the past couple of years because of the ability to sort of gamify their own weight loss. My wife tells me that WeightWatchers is the most effective weight loss program she’s ever seen because of the peer pressure but now we’ve added technology and gamification. I just see lots of people getting healthier and better. I think this is going to be profound and important.

The third area that I think is really important for all of us to think about is data leakage. I’m not talking about big data. I think we all know why big data is so important; machine learning and all that stuff but I read something a couple of weeks ago that’s had a big effect on me. What they said was when the industrial revolution came along, we started polluting and yet we didn’t do anything about the industrial pollution for almost a century. Finally we started to clean this all up and it’s a lot of cleanup and a lot of mess and it would have been better had we been focused on the pollution day one. In the information revolution, the pollution is data. It’s the data exhaust; it’s the data that leaks out; it’s the data that’s letting our governments spy on us; it’s the data that’s letting Google spy on us and Facebook spy on us, and other services spy on us when we don’t want them to. In many cases, I’m very happy to have my government, and Google, and Facebook, and others spy on me but there are times when I would prefer that not to have happened. We don’t have control over that. I think that getting control over data leakage, both at the individual level and the societal level is important and somewhat related to the fourth big area, which I think is important, which is trust and identity. We have, in the tech industry, allowed Google and Facebook and, to some extent, Amazon and Twitter, to essentially be our identity service. We log into services all day long (???) with their services and that’s very convenient and I do it all the time and I’m sure all of you do it all the time but, essentially, what we’re doing is we’re giving them access to everything we do. There will be, I predict, a Bitcoin-like service – a protocol, that’s distributed in global, not controlled by anybody; that’s architected like the Internet that will emerge, that will allow us to do the same thing in a manner that we control and that gives us control over our identity, trust and data. When that emerges, I’ll let you all know, I haven’t seen it yet. I’m very excited about it. That’s it. Those are my thoughts. I’ve got five minutes left so, hopefully, Loic can come out and we can have a quick chat about all that. [26:01]

LLM: Thank you, Fred. (Clapping). [26:02]

FW: Are you wearing a Google Glass? [26:04]

LLM: Yes, why not? (Laughter) [26:06]

FW: Don’t film me! (Laughter) Where do you want me to sit? [26:09]

LLM: Yes. I’m supposed to sit here, actually. [26:12]

FW: That’s correct. (Laughter) I was told backstage I’m supposed to sit here. [26:15]

LLM: Sometimes it’s difficult to follow. Thank you for sharing all of this. [26:18]

FW: Yep, it’s my pleasure. [26:19]

LLM: I was wondering what you were thinking about was you don’t mind if I take a picture of you, right? [26:23]

FW: No, go right ahead. [26:24]

LLM: Can I treat it, as well? [26:25]

FW: Absolutely. [26:26]

LLM: OK, very good. Done. What do you think about this? Is that a trend, or is that... [26:30]

FW: I don’t see a lot of people walking down the street wearing Google Glass so I think it’s coming but I don’t think that... this is the Newton of computers and glasses, I think. It’s going to take a new form factor but I think... [26:46]

LLM: Newton is pretty good, I think because with Newton you would say arguably was the first iPhone. [26:49]

FW: Right, exactly. No, they’ll get this right. I just don’t think... [26:52]

LLM: So it’s not a segway? [26:53]

FW: No. No, no, no. It’s coming. (Laughter) [26:57]

LLM: It’s coming. [26:58]

FW: Yeah but I think, you know, how many people in the audience would wear this just walking down the street? [27:04]

LLM: Just raise your hand. (Waits) Ahhh. [27:06]

FW: Alright. That’s a lot more than I thought. That’s probably about 10-15% of the audience. [27:10]

LLM: Yeah. 10% or 15% of the audience. [27:13]

FW: Maybe I ought to get with the program. Maybe I’m the Luddite. [27:15]

LLM: How do you see it evolve? You think it’s going to disappear in our contact lenses? [27:18]

FW: No. I think it will just disappear into the frame, would be my guess. It’s too, I think, it’s too obvious right now and I think there’s a lot of people who have a negative reaction to it. Now, on the other hand, at least you’re being clear about what you’re doing. When it moves into the frame, I think then in some ways, it’s worse because people don’t even know that they’re being photographed. [27:43]

LLM: Yes, especially as there is no red light as it does it. [27:47]

FW: Right. [27:47]

LLM: Anyway, that was the Google Glass question. I agree it’s a little intrusive. I wore them in the Metro yesterday just to see. [27:55]

FW: And? Did you get attacked? [27:57]

LLM: No, no, no. (Laughter) France is very secure. You know Paris is a great city too. [28:04]

FW: No, I just heard that people have gotten attacked in the New York subway system for wearing those. [28:07]

LLM: Oh really? [28:08]

FW: I guess Paris is just much more accepting of technology. (Laughter) [28:11]

LLM: Probably. Fred, how do we get you to invest? You make one or two investments a year, right? Not even? [28:20]

FW: I do one or two investments a year. Our firm does 8-10, maybe a few more sometimes. You know, anything that fits into that framework I just gave is right up our power ally. [28:34]

LLM: So, new currency? A new Bitcoin, we can come and pitch you? [28:38]

FW: Absolutely, absolutely. [28:39]

LLM: How crazy do you like, can you go? I’ll start a new business one day, hopefully, another one. I like to ask what people think I should be doing. I asked that question to Elon Musk two days ago. Elon was like – Oh, you should start an electric plane company. It might take you $1 billion and ten or fifteen years, but it’s interesting. Are you looking for... that’s an extreme, of course. [29:11]

FW: The kinds of things that Elon does – the electric planes, and the Hyperloop, and the SpaceX, and the Tesla – those aren’t things that interest me and those aren’t things that interest our firm. Those are great things and I wish more people would do those. [29:24]

LLM: Why not? It’s too far away? [29:25]

FW: We don’t have a view... we don’t think we have a unique view and point of view about those. The venture capital business, like the business of entrepreneurship, is a very competitive business and I think the only way that you win is by knowing what you’re good at and what you’re not good at and sticking to what you’re good at. That’s my feeling anyway. [29:49]

LLM: OK. No, I would love to take more questions but it looks like we’re going to be out of time so I’m going to ask you one more. What are the two or three companies you’re looking

right now? That you have invested, or not; that you looking at right now; that you think are really interesting. [30:05]

FW: Things that we’re already invested in. [30:06]

LLM: No.... [30:07]

FW: Things that we’re interested in investing in? [30:09]

LLM: How about... what’s your next investment? [30:10]

FW: Let me talk about a company that we just announced. I sure hope we announced it because if we didn’t, I’ll be announcing it right here. We invested in a company in the Bay Area called Human DX. Human DX is trying to marry machine learning with human diagnosis. They’re taking medical school students and they’ve created a game that medical students can play with each other; where they create cases and they solve cases and all of this data then gets put into machine learning algorithms and they hope to train these machines to essentially do medical diagnosis. If we can train machines to do medical diagnosis, then doctors will have tools that will make them more efficient. People will be able to know, even without going to a doctor whether they are really sick and then you start to get all the quantified self data going into those algorithms. I think they’re a very important thing so I’m excited about that. [31:06]

LLM: You’re excited by the fact that we’ll have more and more data about ourselves? [31:09]

FW: Correct. [31:09]

LLM: You’re right. When you drive a car, you have a lot of data about the car and we have nothing about our body, right? [31:14]

FW: Well, other than the fact that we feel bad, right and we don’t know why. (Laughter) [31:17]

LLM: Tell me about that. In ten years, we’ll be monitoring... we’ll have a device that tells us what’s happening in our body? [31:29]

FW: Yeah. I think in ten years... not only that, I think it will change things like insurance. I had lunch with Max (??? Lebchen) last week and Max has a company based in China called Glow. Not only is it an app to help women, who are trying to get pregnant, they’ve also built an insurance product as part of that. Basically, what happens is – you get the app and if you want to pay some money (let’s call it $1000, $2000, I don’t know the exact financial details), you use the app for a year and if, after a year, you cannot get pregnant using the app, they will pay for an invitro, which is very expensive. Now you start to see entrepreneurs marrying the world of insurance with the world of quantified self and behavior changing apps, I think there’s just tremendous opportunity in that sector. [32:16]

LLM: This is amazing, Fred. Unfortunately, we are out of time. I really want to thank you for sharing all those things because it was quite a challenge. When I invited Fred to speak, I said, how about you predict the future for the next ten years. (Laughter) [32:27]

FW: No, I think we just kind of gave an idea of what it might look like. [32:31]

LLM: You did it great and I hope you come back next year. I know you like Paris. [32:35]

FW: I’d like to be back. [32:36]

LLM: Excellent. Thank you so much, Fred. [32:38]

FW: Thank you. [32:38]

LLM: Thank you very much. [32.40]

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AL: Today is Thursday, 12th December 2013. I am joined, as usual, by Stephanie Murphy and Andreas Antonopoulos. [33:03]

SM: Hello. [33:04]

AA: Hi everyone. [33:05]

SM: We’re at the same table. [33:06]

AA: Finally. (Laughter) [33:07]

AL: We have just completed, Andreas much more so than Stephanie or I, have completed a rather whirlwind couple of days - first the Argentinian conference and now the conference in Vegas. They were two, it seems like, very different events but they kind of both speak to the same sort of exponential growth that we’re seeing, not just in terms of pricing but more importantly in terms of people who are interested in terms of adoption, in terms of people who are wanting to learn. We’re all a bit tired here but I thought it was really important that we have a sit down while we have the opportunity to (because it happens so infrequently). We were talking about it before the show and the last time that we were all in the same room to actually record something was at the San Jose conference, which was the first time that we had all met and the first conference that we had attended about Bitcoin. I just kind of wanted to talk about these two conferences that have just occurred in the context both of what’s going on right now in Bitcoin but also in the broader context of the year that we’ve had and what has changed since we started this project. We’re not even a year into Let’s Talk Bitcoin and so much has changed that it feels like it’s been five years. Andreas, the Argentinian conference started first. I was hoping that I could have gone to it but it wound up not really working for me to go. I was very glad that you were

able to attend and speak there. Can you tell us about the event and what your impressions of it were? And just of Argentina, broadly? [34:23]

AA: I had the same feeling in Athens before that and in Argentina. There’s this palpable sense of purpose, and principle, and commitment, and passion about Bitcoin that you simply don’t get here in North America. I think that contrast became so blatant after I left Argentina and came here and experienced the other side of that coin. We’re really seeing a divergence of the communities. It’s a bit worrying for me because I live in San Francisco and I want to continue living in San Francisco but it seems to me that the Bitcoin community in North America is increasingly engaging in this naval gazing and distraction over trivialities. Here we are in Argentina and the narrative around Bitcoin – I had people and come to me and say – My parents were tortured by the previous regime and I come here in fear of my life but it’s so important to be here today. Who could say that at one of these conferences? The adage that in darkness, the light shines brightest. I had that palpable sense when I went to the conferences in Athens and the conference in Argentina. Here in North America, we start with trying to explain to people why, of Bitcoin, trying to divert the conversation from bitcoin as a currency and a speculative investment, to explaining the earth shaking impact it can have for the other six billion. Then we have to talk about the how of Bitcoin. That conversation was entirely unnecessary in Argentina. They already understand why. They want to know how and they want it now. That’s the same sense I got in Athens and I think that’s really what’s happening in the rest of the developing world. For them, Bitcoin is not an occupation, an industry, an investment. It’s not an opportunity to make VC money and strike it rich. It’s an opportunity to divest oppressive regimes of their power and to achieve individual empowerment for liberty in some of the darkest conditions in the world; places where being involved in the community, means risking your life, your house, your family. They do it anyway because they understand the power of this tool for affecting change and not affecting change through the political process but affecting change directly by removing the levers of power from government control over the currency. They understand the importance of that; of defunding the war machine; of defunding the powers of oppression. I come to Las Vegas and we’re talking about who’s raising the most VC capital and what the next payment application is so that we can enable frictionless shopping. Give me a break! I was really just disappointed. For me, the conferences in the developing world offer me an opportunity to gain perspective... to gain perspective as a white, male, English-speaking man who cannot have perspective within this environment because I go to these conferences and I learn. I learn from the communities that are applying this, on the ground and the front lines to affect massive societal change. Because of that, I have made the decision to limit my involvement in North America and Western Europe and to spend 2014 focusing entirely in South East Asia, Eastern Europe, Middle East and Latin America because there, we are talking about using Bitcoin to affect massive change and not to enrich more bankers and not to help VCs. The conversation is so radically different here in Vegas. The conversation was about – Do we need to play nice with the regulators? Do we need to appease the government legal structure? Do we need to prove our legitimacy? Quite honestly, the other six billion don’t give a shit because they know where the legitimacy lies and they know, more importantly, that there is no legitimacy with their government. That’s a completely different conversation and I found it empowering; it increased my level of passion about the topic and I really can’t tolerate these naval gazing discussions that are so irrelevant to the big picture. [38:43]

AL: There’s almost a correlation between the price of the ticket for a conference between the type of people that you get with like... the less expensive conferences catering to people who are more on the anarchic side, or more on the core of Bitcoin - its anonymity side. On the other side of it, you’ve got... this ticket I think, at the door was $700 for the two day event for the Vegas thing. At that rate, you’ve got people who are investors; you’ve got people who are looking... so I mean, to a certain extent, they are catering the conversation and I can understand why you’re targeting all of your efforts where you feel like you can have the greatest impact, but does that mean that they shouldn’t be having the conversation? [39:17]

AA: No. I think the conversation is useful but I think one of the risks we face right now is that we’re not gaining the advantages of going mainstream but we’re already suffering some of the consequences. One of those consequences is the fact that people external to Bitcoin, people who don’t have the principles and ideology behind Bitcoin and who see it, primarily, as a way of making money are organizing these conferences. The result you get is a conference with an agenda that reflects, I wouldn’t say their values, I would say it reflects no values. It is simply a grab bag of random speakers and random audience members to put together an event and make some money off the tickets. [40:00]

AL: There needs to be a point, basically. It can’t just be – Hey, this is a Bitcoin conference so you’re involved with Bitcoin, in this way and that way and you’re involved in that and all of you just do something. We work with Mediabistro and we were a media partner on this event. I enjoy these events a lot. There was about a thousand people here and we met hundreds of listeners and very passionate people who are very much on the idealist side, who I think recognize a lot of the values that you’re talking about. [40:23]

AA: I enjoyed that, absolutely. I mean, this was a conference about meeting the people of Bitcoin who came from many parts of the country and I got to speak to a lot of people who I wouldn’t otherwise see in person but most of that happened outside the sessions. There’s nothing wrong with these events but what we’re going to see over the next years is an explosion in conferences. [40:42]

SM: They’re going to specialize though because it just can’t be a Bitcoin conference... [40:47]

AL: Seems like they have to. [40:48]

SM: Yeah and they already are. I mean, with the Atlanta conference, it was more explicitly focused on – OK, this is a libertarian conference and it’s about Bitcoin. That’s what we’re going to see. We’re going to see the Bitcoin shopping conference, and the Bitcoin development conference, and all kinds of other stuff. We’re at this awkward in between phase right now, where they’re not really that specialized. You’re getting a mish mash of people and a lot of them are going end up dissatisfied, I think, because of that. Andreas, I feel a little sad, honestly, when I hear you say you’re not interested in doing these North American conferences because I think your voice is needed. You were the only one, or one of the only speakers that I heard, really speaking up and saying – Look, stop framing the

discussion in such a way that Bitcoin needs to prove its legitimacy by kissing the boot of the regulators. That’s bullshit! You called it out, very courageously. If you’re not there to do that, someone else is going to have to do that and it’s too bad. [41:48]

AA: I think it’s not just a matter of location. I think the issue here is what I would like to see in North America. I am participating in a couple of very carefully selected conferences in North America. For example, I’m going to be involved in the Toronto conference and the reason for that is because it’s the kind of conference that’s organized by the local community. It’s a grass roots effort. It comes from within the Bitcoin community of that area and it has a point of view. That’s going to become increasingly important. You have to go into these conferences with a point of view, otherwise what you’re going to end up with is a lukewarm mish mash, as you said, of different perspectives that are really not that important. To me, the real issue here is that we have a unique opportunity, not just to frame the narrative, but to also do important work, world changing work here. Bitcoin is so much more important than a payment system. Unless you bring that point of view forward, essentially, what we’re going to do is condemn ourselves, here, to irrelevance. Like I said yesterday at the conference, if the U.S. tries to regulate away Bitcoin, who loses? Not Bitcoin. The U.S. loses because we’re all going to move away and do other things. So is the investment, and the innovation, and the jobs, and all of the things that can come out of Bitcoin and the U.S. becomes a backwater. I don’t want to see that happen. I want to live in San Francisco. I like it and I want to be able to have an impact here but in order to do that, we have to much more selective, I think, about the events we go to. Also, encourage the local communities to start from the grassroots. For that, you don’t need money. That’s the thing about Bitcoin – organic growth and sponsorship and Angels and many of the original Bitcoiners, who have now a nice capital base, can help us do that kind of work and bring the right level of message and the right tone to this discussion. I think it’s much more important to see more of that. If you’re in an environment where you don’t have a conference in your State, don’t wait for some event company to try and build something commercial around Bitcoin, something opportunistic. I’m very thankful for Mediabistro and the work they’ve done. They’ve helped promote Bitcoin. They’ve helped bring the discussion together. At the same time, I think we’re going to get a lot more value if we see the local Bitcoin community starting their own. Bring the point of view and the audience will follow and the sponsorship will follow. You can make some incredible events. These people in Argentina had no capital base to start with. They just came up with an idea. They saw some of the talks we did in San Jose and they decided that’s the point of view we need to bring to Argentina. They sweated out the details, and they worried about no one showing up, and they worried about no sponsors coming, and it just came together into this incredible event. We’re going to see that happening more and more and we should be doing that right here in the States. [44:43]

AL: The parallel that is often used with Bitcoin is, the Internet, right? In ’93, there were companies like Mediabistro... I think, actually, Mediabistro is one of them that were doing conferences a lot like this for people a lot like us, who saw the future (in that case, they saw the future of the Internet, communications and things like that). So then, the venue needs to be made for people to be brought together. It seems like companies like this that act opportunistically almost catalyze things that aren’t opportunistic. [45:11]

SM: To pick up on your parallel to the Internet, my partner, Brian, noticed at the San Jose conference (seven months ago now) that, he said it feels dotcomy. I’ve gotten that feeling a number of times since then where you just see there are all these Bitcoin start-ups. People are talking about them as if – Oh, if you have an idea for a Bitcoin company, it can’t fail; it’s a good idea. There are even people saying – Look, I’ve got to come up with an idea so I can get some money – just like you both noted. Yeah, some of these Bitcoin start-ups are going to fail. Some of them are not good ideas. There is some danger there for malinvestment of resources, of money, of just not paying attention to, like Andreas was saying, the bigger picture... [45:53]

AA: It’s dumb money. [45:54]

SM: ...what Bitcoin can really do. [45:55]

AA: There’s so much dumb money flowing into Bitcoin right now. This is the hot topic. Every VC on the planet... [46:01]

SM: Dumb money, you mean, people who don’t understand Bitcoin? [46:03]

AL: People who don’t....[46:04]

AA: ...that don’t understand Bitcoin but, more importantly, don’t understand why. Why Bitcoin is important and what impact it can have on the world. I have no problem with VCs sitting around a table right now saying – We need a Bitcoin strategy and we need to figure out how to get into this market. We absolutely need to transition into the mainstream. Transitioning into the mainstream requires us to dilute the ideology, of course. We’re going to have our AOL moment. That moment when AOL dumped 14 million new users onto the Internet and everyone who was already on the Internet called that ‘Black Monday’ and were horrified from all the newbs that got dumped into our pristine, perfect utopian community. You can’t get to a successful adoption of a technology, especially a currency, without going mainstream. The point is that we’re going to go mainstream in the developing world first. The risk here is that we try to gain the advantages of mainstream massively dilute the principles behind it and it ends up happening elsewhere. The reason it happens elsewhere is because their motivation and their passion about Bitcoin so far transcends ours, that they are willing to take much greater risks and they are willing to invest their time, and their passion, and their innovation into this technology at a level that we can’t even copy here. With principle comes this wave of innovation that focuses on things that matter; it focuses your mind on the things that are important to the world. In order to create entrepreneurial spirit, you have to find this perfect marriage between the thing that makes you, as an entrepreneur unable to sleep at night. The thing that brings so much passion to your life, that you can’t eat, can’t sleep, can’t think about anything else. No matter how many people tell you it’s absolutely crazy, you are so committed to the idea and bring that together with a problem that actually needs to be solved. Not solved for the 10 million people who are early adopters in North America but needs to be solved for the 2 billion people who have an immediate need today. That’s where the innovation is going to happen because that’s the magic recipe for innovation. As you said, entrepreneurs looking for an idea – you don’t look for an idea, the idea hits you in the face like a freight train and you can’t avoid the idea. You

can’t handle it and, in fact, it ruins your life at first because it’s so important that you become obsessed. That is the magic that drives entrepreneurship. There are solutions out there and there are people out there who get that magic combination. We need more of that here so if we lose the principles and if we lose the point of view in our attempt to go mainstream too fast, what we end up is diluting the innovation and it moves abroad. I don’t want to see that because we have the money here; we have the individualistic culture; we have the entrepreneurial spirit; we have the spirit of innovation. More importantly, we have the safety of permission to failure. One of the most important things in entrepreneurialism is the ability to fail without severe consequences. In the States, you can fail three times without going to jail and going bankrupt. Try doing that in most other countries. We have the engine of growth right here. All we need to do is target it and focus it on the things that really matter. That’s why I’m disappointed because all of these side discussions really are missing the point. It’s missing the point to see Bitcoin as currency instead of a platform and a network. More importantly, it’s missing the point to see Bitcoin as a consideration for affluent, white, English-speaking Americans and Western Europeans because for them, you know, better shopping. For an Argentinian, whose currency is depreciating 40% a year through inflation and it’s losing its value rapidly, this is about – will I be able to secure some of the funds that I’ve worked my entire life to pass on to my children to the next generation or will I end up drifting gradually into poverty and leave nothing for my children because my government is stealing 40% of my worth, every year. [50:09]

AL: You don’t think that’s happening in the United States for the last... forever? [50:12]

SM: Exactly. [50:13]

AA: It is happening but are those people really vocal in the Bitcoin community? Did you see those people at the conference? [50:19]

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AL: The people who don’t get it are making the wrong investment. This is what I meant by dumb money, right? With the dotcom thing, you had to put your money into a company and so, therefore, a company was better than not a company. You don’t have that choice here with Bitcoin. With Bitcoin, you have the choice of investing in a company or investing in the currency, which is basically an ETF in all the companies that are out there because their success drives adoption and also (???) feedback system. The point is that if an idea is bad and you’re putting money into it, whether it’s Bitcoin or dollars, those are dollars or Bitcoin that you’re not holding as Bitcoin. If our thesis here is that this continues along; adoption continues to grow because it should because this is simply a better option than has ever been available then, in theory, you do actually need both sides of that equation. [52:37]

AA: Absolutely, you need it. Right here in the U.S., we now have two parallel economies. There is the economy of the Dow Jones Industrial Average that’s doing great; there’s the economy of the 1% that are doing great and right underneath that is everybody else who is, basically, losing their middle class status and the middle class is dying in the States. The question is, in the future of Bitcoin in the U.S., which economy is it supporting? Which economy is it representing? Which community is it representing? I’m afraid that all of these billions of dollars, and VCs, and all of these other things, what they’re doing is they’re pulling the center of gravity of Bitcoin in the United States towards the 1% economy that doesn’t care about any of these principles and will quite happily leave the rest of us behind and keep extracting value. They’ve just found a new goose that lays golden eggs and they’re going to try and co-opt it and capture it and turn it into this watered down, lame copy of PayPal. The problem is, among other things, that a big part of our development community and some of the most powerful institutions in Bitcoin, like the Foundation, are based here. If they get caught up into that narrative, you know, they could very well drag the rest of the protocol with it. That is, I think, a risk. [53:50]

AL: Again, I mean, it’s this exact process that you’re talking about that is making these determinations. Ultimately, the downside, as you said, is that this stuff doesn’t happen in the U.S. It’s not like the Bitcoin Foundation is going to do something that’s going to cause the failure of Bitcoin. If they do that, then people are just going to not do it. The project could be forked and there will be – here’s the Bitcoin Foundation’s version and here’s the other version. It’s the old version. [54:12]

AA: Let me give you a very practical example. Right now, there is both an existential threat and a tremendous opportunity to fix one of the core problems within Bitcoin. That is that the core protocol is not anonymous; it’s pseudonymous. There’s no encryption and, essentially, it becomes a giant data mining database that retains end traffic analysis; can be

used to do massive and ubiquitous surveillance of all of the transactions. This is something that we need to fix and it’s something that we need to fix in the core protocol. We need to fix it faster than they build coin validation filtering, red listing and all of those things, which will kill the currency by destroying the core fungibility layer within the system. We can do identity and we can do verification, at the payment layer above it but the core transactional layer, in order to remain a low risk, no counter party risk, low fee, low overhead system has to be as fungible and as frictionless as possible. How easy is it going to push through those changes when the core development team is being bombarded by this idea that they have to play nice with the regulators, and save Bitcoin from the money laundering forces, and give it legitimacy by, essentially, playing nice. I want to see those changes pushed through. Those changes are radical. They’re going to receive tremendous pushback, especially in the U.S. and yet, we need to resist and we need to put this stuff in the protocol from the get go because we didn’t do it with the Internet and now we’re paying the price. That kind of important decision is, unfortunately, or de facto being made here and it’s being made not by the consensus of the miners or the consensus of the users but simply by the inactivity of the core development team to focus on some of these issues because they are tangential. They are not tangential in Argentina. They are not tangential in some of these most oppressive regimes. The issue is not – can I buy drugs with Bitcoin and get away with it. The issue is – if I try to use Bitcoin to create dissent and subvert an oppressive government, will they drag me and my family away in the middle of the night. For them, anonymity, privacy means freedom of association, freedom of expression and the ability to move forward on these important social issues. Here, it’s being framed as the exact opposite. As, kind of, a luxury for those who want to play dirty on Bitcoin, when we know that all of the dirty stuff is happening on the U.S. dollar. How do you push through those kinds of decisions when we have such centralization in just the basic choices of what goes into the protocol next. [56:47]

AL: We have voluntary centralization. This is the key thing. Yes, we have a development team but that’s the development team that we have now. You can already see this divide happening. We’ve talked about idealists and entrepreneurs before and yes, of course, there are hybrids but they do tend to fall into one of two camps. It is that question. Is it about legitimacy (with big air quotes) or is it about anonymity, or rather privacy? Legitimacy or privacy are, basically, the issues that we’re talking about here. [57:10]

AA: Privacy is a basic human right. It’s about freedom of expression. It’s about freedom of association and privacy is what enables creative expression. If you frame it like that, then establishing those properties within the core protocol is what will take Bitcoin to the next level and make it an even bigger power and force. [57:28]

AL: The developers don’t have that perspective. I mean, this is the thing. You’re asking them to scratch somebody else’s itch. I totally agree with you. This is a problem but it doesn’t seem like berating the development team for an action is the way to do it. It seems like there’s a division that’s already happened. New York has become the center for entrepreneurs. That’s where this is happening. DC to a lesser extent then really it’s people in New York going up to D.C. The other side of the equation is Erik Voorhees has started a pretty major enclave down in Panama and they’re bringing down people. They’re not bringing down people because they’re working on regulation, they’re bringing down people

because they’re completely side-stepping the issue. If a guy wanted to, that’s the thing, start a shadow development team. Start a development team that does the Minority Report and then have so many people involved with that that you’re not the Minority Report, in fact, you’re the most active development team out there and you’re doing the right work. Again, it’s a meritocracy but you’ve got to step up and do it. [58:21]

AA: I hope so but what we’ve seen is that developments in these areas have already happened. Proposals for a number of different solutions have already happened. By the way, hat tip to Greg Maxwell for creating the concept behind CoinJoin. We’ve had some disagreements in the past, (laughing) you know, perhaps some bad blood that I regret but Greg has done some incredible development in simply core innovation around the cryptographic properties around Bitcoin – from CoinJoin to Type 2 deterministic wallets and some of the greatest innovations that have come out of Bitcoin. Again, there are so many proposals that get sidelined and they get sidelined because they are not interesting to the core developers. I think that’s a problem because there is so much momentum and network effect that building a separate center of power within the development group is very, very difficult. It’s a close knit community; it’s very difficult to introduce new voices. Not because they don’t want new voices but because it takes a long time to ramp up your skills, and expertise, and understand the community, and get involved, and contribute, and gain respect, and credibility, and be able to effect change and so, this is already happening. My worry is that it’s too slow. By the time we figure out this stuff, the central core protocol of Bitcoin may already be ossified. We’re looking at this transition phase right now, where we need to reach a state where the core protocol is good enough and then we stop messing with it and move all of the innovation to the layers above. Before we get to that, there are some core functions, especially, around fungibility, privacy and anonymity and fixing some of the early mistakes in Bitcoin that have to be in the core protocol; they have to be in the bottom most layer. Developing on Bitcoin is akin to trying to patch the operating system of a 787 Boeing, while in flight. You’ve got $10 billion riding on it and if you mess it up, you blow up the whole plane and it crashes to the ground, right? It’s a very difficult job and the developers have to be very conservative in what endeavors they pursue and what features they do because this is a live network and there’s no going back if you fuck it up. [1:00:30]

SM: Aren’t altcoins an experimental ground for that? Try different things in the altcoins, on the smaller networks, and if it works, maybe it’ll make it into Bitcoin. [1:00:38]

AL: Zerocoin is a good example of this. [1:00:39]

SM: Yeah (inaudible). [1:00:40]

AA: Yes and then Zerocoin is now going to Zerocoin 2, and possibly Zerocoin 3, with some of the things that are happening at Johns Hopkins, and some new developments around that. There’s three or four other proposals for doing encrypted transactions with encrypted sender, encrypted recipient and encrypted value which are very promising. I simply don’t see the context in which these can be part of the core platform and protocol and, I think, at the same time, we’re in a race. We’re in a race against legal and regulatory forces that are trying to impose the kind of radical and ubiquitous lack of transparency from the outside in that will turn Bitcoin into, essentially, Surveillance coin. It is already. Bitcoin isn’t

anonymous. It creates the false sense of security of anonymity which is even more dangerous and insidious than if it was completely attached. If Bitcoin addresses were attached to a Social Security number right now, I’d feel more comfortable because that’s more like the reality of it and people would think twice about what they’re doing and they’d demand stronger anonymity and protection but because it gives you this false sense of security, nobody really gets what’s going on and isn’t demanding it. I can guarantee right now, someone’s building big data analytics to do taint on every single coin and they’ve been doing this for years. They’re watching every transaction. They want to weaken the basic fungibility and anonymity of the protocol before it gets into mainstream while we need to strengthen them. This is a race. There is an adversary. Like in any aspect of security, information security, it’s the only technology where you have a direct adversarial arms race against an opponent. We need to wake up and realize that this is what’s going on and take active measures to take positions, and take strong positions about where we want the future of Bitcoin to go. That’s why I’m worried about this narrative and the point of view that’s coming out of these conferences. Let’s play nice with the regulators; let’s self regulate. [1:02:34]

SM: Does it have to be a change in the core protocol to Bitcoin, or are services like CoinJoin or Zerocoin, are those acceptable solutions? Would that be ok? [1:02:43]

AA: I don’t think so because there’s two issues with those. First of all, CoinJoin is, kind of, weak fungibility because it allows you to do some basic masking of the inputs and outputs but you can do a lot of traffic analysis, simply by tracking the values. In order for a security infrastructure like this to be effective, what matters is not what the power users do – we saw that with PGP email that never took off; it was never effective because the power users could use it and everybody else couldn’t. What we need is a model much like SSL, where the average user doesn’t know they’re using it, can’t turn it off, doesn’t have a choice and it simply appears as a little green lock. It’s baked into the basic use of the user experience. We need, essentially, strong privacy, anonymity, fungibility and remixing introduced into every transaction that you make on every wallet for the simple user without even knowing that they’re doing it until they haven’t seen an address because it all happens in the background. When the user is idle and not doing transactions, the wallet is remixing all of their previous outputs that are in their wallet, dynamically, to create even more fungibility among the various coins that are circulating on the network. In order to do that, you have to make a decision that this has to be a ubiquitous property of Bitcoin. Unfortunately, that’s a centralized decision. [1:04:02]

AL: For the last month, I’ve been, basically, saying venture capital is obsolete and... [1:04:07]

AA: Absolutely. [1:04:07]

AL: ...in six months, it’s going to be really, really, really obsolete because everybody who was holding Bitcoin six months ago, they’ve done very well. A lot of people are holding a lot of Bitcoin and now they’re looking to start incubators. I know four people starting incubators right now and other projects. The idea to empower other people is really, really there. This early seed capital thing; it’s just not necessary any more. You might be talking

about larger rounds of funding, or whatever but the point is that I really don’t understand why the solution to this isn’t simply for people who agree with this perspective to finance another development team that can have the right perspective and can deal with this stuff and can do the work, essentially, for them. [1:04:49]

SM: We’ll call it anti-VCs, or something like that. [1:04:52]

AL: It’s not anti-VCs. It’s just like the Minority Report. [1:04:55]

AA: You can call it a dark wallet. [1:04:55]

AL: Yeah, you could call it dark wallet but again, then you’re talking about an application level rather than the protocol level. This is the thing is that I agree with you. This should be done at the protocol level. These changes should be made but I’m just questioning why all of this falls on the existing development team and why it isn’t Bitcoiners who appreciate that this is something that is necessary ponying up and bringing on developers who do agree with them. [1:05:17]

AA: Yeah. Among other things it’s because dangerous. It’s dangerous to take these positions. It’s especially dangerous to take these positions if you live in the U.S. because I can take these positions as speech but the moment I start putting money behind them, I become a target. That’s one of the issues here. There’s a palpable sense of fear. Even in the U.S., about being a proponent for strong anonymity, freedom of expression and freedom of association. Those are passé notions of a pre 9/11 world, or whatever the hell the latest slogan is. We are going to get to decentralized funding. VCs are, absolutely, going to be disrupted. We did peer to peer payments first; peer to peer lending is not far behind and then peer to peer crowd sourcing. The trick here is not to just simply leverage the community of the uber rich Bitcoiners. More importantly, what we need to do is create decentralized structures for doing share ownership and funding of, essentially, company IPOs on a completely decentralized basis right on the blockchain. If we can do that, we can engage the entire Bitcoin community to fund the things that they feel are important to it. At the same time, I’m very cognisant that I’m a minority and we are a minority in terms of thinking out several years ahead and seeing where this is going and what steps need to be taken now. The problem is that the narrative is still squarely in the space of Bitcoin is a coin and Bitcoin is a coin that’s cheaper to use and can make a slightly better VISA. Obviously, I’m not interested in that but the vast majority of the community, that’s the narrative that they understand. Then you’ve got all of the speculative investment behind that. We’re not going to be able to shift that narrative fast enough. Maybe, we will. This is the kind of show where we have to do that and as you said, Stephanie, speaking at North American conferences; one of the reasons we have to do it is to shift that narrative. Make no mistake, this is an arms race. Right now, we’re four years behind. The problem is that we’re ready to hit mass adoption and the bigger this gets, the harder it is to make changes. We’re flying a $10 billion aircraft and trying to patch it in flight. What if it’s $100 billion in three months? What if it’s $500 billion by the end of next year? How much harder is it going to be to introduce hard fork changes within the Bitcoin protocol? That’s what concerns me. We don’t have time. There is no walk here. It’s only run. [1:07:35]

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CREDITS:

AL: Thanks for listening to Episode 72 of Let’s Talk Bitcoin.

Fred Wilson on the Future was provided by LeWeb conference, which you can find out more about at www.leweb.co

Vegas Live (Part 1) was produced by Adam B. Levine, with additional engineering by Krystal Levine. It was edited by Matthew Zipkin and featured Andreas M. Antonopoulos, Stephanie Murphy and Adam B. Levine

Music was provided by Jared Rubens and Calvin Henderson

Questions or comments? Email adam@letstalkbitcoin.com

Have a good one! [1:08:09]