Let's Talk Bitcoin, episode 13, "Movers & Shakers"

8/13/2019 Let's Talk Bitcoin, episode 13, "Movers & Shakers"

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Let's Talk Bitcoin

Episode 13 - Movers and Shakers

Participants

Adam B. Levine (ABL) - Host

Andreas M Antonopolous (AMA) - Co-Host

Dr. Stephanie Murphy (SM) - Co-Host

Charles Hoskinson (CH) ounder o! the Bit"oin #du"ation $ro%e"t

Chris (A&A '!ellotraveller) (*) Developer o! +pen *ransa"tions

Mark Ho"hstein (M,) #ditor o! Ameri"an Banker

Bailey ,eutel (B,) ,eporter at $aymentsSour"e

ABL:Comin up on today/s episode o! Let/s *alk Bit"oin0

1$ro%e"t *alk - ot a "harity2 Have some 3it"oins.

1terk."o4s !ree 5ordpress tip %ar pluin.

1Bit"oin $ress Center6 ith up to 77 lanuaes.

18ntervie ith Charles Hoskinson6 !ounder o! the Bit"oin #du"ation $ro%e"t6 as they roll out their ne

e!!ort.

1Bit"oin neutrality - lookin ahead to not trap innovation ith the limitations e have no.

1+pen transa"tions and Bitmessae - 8 intervie Chris6 3etter knon as fellowtravler, on the intri"a"ies o!

this ne system.

1Mi"ro-transa"tions vs. Bitdust - throin the 3a3y out ith the 3ath ater.

1My ide ranin intervie ith Mark Ho"hstein6 editor o! Ameri"an Banker6 and Bailey ,eutel o!$aymentsSour"e, durin hi"h e "over Bit"oin/s "ompati3ility ith e9istin !inan"ial system6 the %ourney

o! %ournalism6 and ho everythin old really is ne aain.

Hi6 and el"ome to Let/s *alk Bit"oin6 a ti"e eekly sho !o"used on the ideas6 pro%e"ts6 and people

3uildin the ne diital e"onomy and the !uture o! money. 8! you/re 3rand ne to Bit"oin and ould like to

learn more6 please visit .letstalk3it"oin."om:learn to 3e dire"ted to the Bit"oin #du"ation $ro%e"t. My

name is Adam B. Levine. 8/m a riter and speaker ho likes to talk a3out "ompli"ated topi"s in

understanda3le terms. ;oinin me in our ti"e-eekly sear"h !or "larity6 Andreas M. Antonopoulous is an

e9pert in distri3uted systems and de-"entralied netorks.

AMA:Hi6 everyone??6 initially6 as 3e"ause they !ormedhen Bit"oins ere orth >? ea"h and so they ere startin "harities o! ith a >?? 3it"oins o! donations

in the past6 3ut then they "haned it to a >??? hi"h riht no is around 3it"oins or somethin like

that. So6 8 %ust think that this is really "ool6 they/ve already hihlihted some "harities that they/ve helped

a""ept 3it"oins. *hey a"tually %ust helped out Fr33 Aid, and o! "ourse Fr33 Aid as a""eptin 3it"oins

3e!ore e met them hen e ere primarily Bit"oin 3ased "harity6 3e!ore e ran into Bit"oin>??. But they

%ust helped Free Aid out ith a ni"e donation and so e really thank them !or that. But they haven/t had

enouh takers6 !rankly - they still have uite a lare !und that they ant to use to help non-pro!it

oraniations et started ith Bit"oin6 so i! you have a non-pro!it or "harity6 this is6 o! "ourse6 somethin

that4s very important to me as 8/ve talked a3out 3ein involved ith Fr33 Aid the "harity6 earlier on in the

sho. 8! you have a non-pro!it or "harity oraniation that you ant to help et started ith 3it"oins and

start them o!! ith a ni"e donation6 please et in tou"h ith them. *heir e3site is 3it"oin>??.or6 and you

"an !ind out more a3out them there.

ABL: +ne o! the areas that 8 really have 3een !o"usin on is helpin people to monetie oriinal "ontent

that they make on the 8nternet. =ou kno6 makin a release on the 8nternet and it/s hard to et paid to do

that. So6 8 ave a talk a3out this at Bit"oin 7?> at San ;ose. As a result o! that6 there have 3een a

num3er o! pro%e"ts that sprun up and one o! the ones that4s really !ar alon a"tually is a 5ord$ress

pluin6 that is already !un"tional6 "ompletely !ree and essentially automates the pro"ess o! "reatin6 and

displayin6 and e9plainin a tip idet or tip address !or every sinle post that you make6 so that you "an

have readers or listeners or hatever your type o! "ontent is donate to support spe"i!i" pie"es they like6

rather than %ust puttin up a donation thin that %ust oes to you6 they "an say this is somethin that 8

anna reard. So that/s somethin that/s a"tually availa3le no. =ou "an no o and donload that !or

!ree at *-#-,-&-dot-C-+ that4s terk."o6 hi"h is the s"reen-name o! the developer ho has desined this

pluin a"tually. 8! you/re in the "ontent "reation industry6 8 re"ommend you "he"k it out. *erk."o

SM: *hat sounds really use!ul6 and as you ere talkin a3out that6 Adam6 8 kind o! had the thouht pop up

that this sprins up a philosophi"al issue a3out tips. =ou kno6 tips are meant to 3e this market

me"hanism 3y hi"h you provide !eed3a"k a3out some3ody/s servi"e that they/ve iven you6 riht2 *o a

server at restaurant or somethin like that6 i! they/re a reat server6 you/re supposed to ive them a 3ier

tip6 and i! they/re not so reat6 you "an ive them a small tip. But tips are really not that e!!e"tive !or

"ommuni"atin that in the orld that e live in no. 8t/s like6 you kno you/re kinda supposed to ive a

!i!teen-per"ent tip at a restaurant or even tenty-per"ent and i! you don/t ive that hih o! a tip they don/t

kno hy the server has no idea hy. Enless you "ommuni"ate a3out it and rite on your 3ill6 you

kno6 8 ould/ve liked to ive you a 3ier tip6 3ut you didn/t do this or hatever. So6 8 think may3e an app

like this "ould really help people et more pre"ise !eed3a"k a3out hy they are or are not ettin tips.

May3e not here they/re not ettin tips6 3ut "ertainly hy they are 3e"ause you "ould tip a very spe"i!i"thin.

ABL: =ou/ve identi!ied a real "ore point here6 and also the pro3lem ith tips6 hi"h 8 totally aree ith

you. 5hen 8 o into a restaurant6 it/s totally e9pe"ted that you tip no matter hat the servi"e is6 not

3e"ause that/s hat the person ants to 3e tipped6 here they4re like '+h6 ell6 you have to tip me6 no6

3e"ause that/s 3uilt into the earnin assumption. 8t4s 3uilt in that yes6 you/re oin to6 as a server in this

type o! role6 re"eive su"h and su"h per"entae o! your in"ome !rom tips6 and so they/re paid less 3e"ause


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o! that. +n the 8nternet6 it/s kind o! the opposite thin. +n the 8nternet6 no3ody/s paid6 and so it/s like the

e9"eption i! you are paid at all so tips have a hiher disproportionate e!!e"t relative to ho lare they are

in terms o! 3ein a3le to impa"t 3ehavior. So no6 8 think it/s reat and it really is a tool !or "ontent-"reators

and really it4s not %ust "ontent-"reators either. 8 talked ith the oman ho runs antiar."om6 and it/s the

same thin6 they produ"e oriinal "ontent and - they/re "reatin "ontent6 3ut ultimately6 its "reatin

"ontent ith an ideoloi"al 3ent that reports in a spe"i!i" ay6 and so it/s less a3out the spe"i!i" nes item

and more a3out the !a"t that they/re reportin on it. More a3out the !a"t that people appre"iate theperspe"tive that they/re 3rinin - so aain6 they haven/t implemented this yet 3ut 8 think they/re really

"lean use s"enario !or this6 here it/s not really %ust a3out reardin "ontent "reation6 so mu"h as it is

a3out doin the thin in eneral and providin !eed3a"k.

AMA: 8 think i! you sit don and at"h a pie"e o! "ontent ith more than si9 people6 the tip idet should

automati"ally "ount an > per"ent tip.

ABL: (lauhs)

SM:(lauhs)

AMA: ;ust kiddin6 3ut 8 mean6 the loisti"s 3ehind this are uite tri"ky. 5e realie that ith Let/s *alkBit"oin. ;ust "reatin addresses and then 3ein a3le to meanin!ully "orrelate and "onsume the data-!lo

that "omes 3a"k@ the analyti"s - hi"h pie"e o! "ontent are doin ell and hi"h are not. And then 3ein

a3le to "orrelate that ith se"urity settins and thins like that6 3e"ause it/s !airly easy !or someone to o

and in%e"t their on address into some3ody else/s "ontent and then 3asi"ally divert the stream o! tips to

themselves. So6 you have to have some se"urity pro"edures to at"h !or that. 8t/s a lot more than puttin

a tip %ar up there. =ou have to think a3out all o! the loisti"s 3ehind the s"ene6 hi"h is hy these idets

are very interestin and 8 think very valua3le developments.

ABL: *hat/s somethin that e have not really addressed in the sho. =ou/re riht6 these thins "an 3e

hi%a"ked. 5e haven/t a"tually had a pro3lem ith that6 yet6 and 8 think that e/re kind o! at the !ore!ront o!

tryin this te"hnoloy6 so talkin a3out this sort o! invites it. 8/m "urious to see i! there are any pro3lems.

5e/re su"h a nas"ent part o! the development o! all o! this te"hnoloy that all o! these mistakes are reallyeasy to make6 and so it/s interestin to see hi"h ones ind up a"tually 3ein pro3lems6 and hi"h ones

are %ust te"hni"ally possi3le pro3lems.

AMA: =ou kno one o! the ni"e thins a3out the 8nternet and doin this on the 8nternet is that you "an

monitor the tip addresses that are asso"iated ith "ertain pie"es o! "ontent remotely. So6 you "an have a

separate servi"e that at"hes i! the tip address has "haned and noti!ies you. So6 even i! someone is

a3le to "ompletely hi%a"k a site and in%e"t tip addresses6 they ould have to hi%a"k this "ompletely

separate servi"e that monitors. At least that/s the approa"h e/re takin to monitor tip addresses

e9ternally to make sure they haven/t 3een hi%a"ked.

ABL: Fiven aay the 3usiness model there Andreas6 aren/t ya2 (lauhs)

AMA: Go6 8 think se"urity advi"e should 3e shared6 pro3a3ly6 3e"ause 8 think other 3usinesses are onna

run into this pro3lem and the last thin e ant to see is people not trustin tips6 3e"ause 3ut yeah6 8

did ive aay the 3usiness model there.

ABL: *hat/s okay. *hat/s seems to 3e.. (lauhs)

AMA: 8 open sour"ed it.


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ABL: (lauhs) +kay6 "ool. Andreas6 do you have a pro%e"t you anna talk a3out today2

AMA: 8 ould love to talk a3out the 3it"oinpress"enter.or site. 3it"oinpress"enter.or is a site that 8 3uilt

as part o! ,oute#leven6 my "ompany6 a "ouple months ao and may3e not even that lon6 month and a

hal! ao. And hat it does is it presents a pla"e !or %ournalists in radio6 print6 * to 3e a3le to !ind Bit"oin

e9perts ho "an "omment a3out Bit"oin stories6 "an provide uotes6 "an 3e intervieed !or stories. *hekey thin a3out 3it"oinpress"enter.or is that it4s lo3al !rom the et-o. 5e no have almost I? press

"onta"ts speakin 77 di!!erent lanuaes. *he entire site is eared toards !indin the e9a"t riht person6

so you "an sli"e-and-di"e and !ind spe"i!i" "ountries6 time ones6 lanuaes6 or even areas o! e9pertise i!

you ant someone ho is an e9pert in e"onomi"s6 or so!tare6 or hardare6 or i! you ant someone ho

has e9perien"e as miner6 or mer"hant or user o! the "urren"y. And then you "an narro it don. 8! you

ant to !ind the Cali!ornia e9pert ho speaks arsi6 ho is an e9pert at the so!tare side o! thins6 you

"an !ind him. And so6 e invite people to "ome and nominate e9perts ho speak their lanuae. $lease

visit 3it"oinpress"enter.or and add as many "onta"ts as you think are appropriate ho "an speak to the

media intelliently a3out Bit"oin. 8t/s an open and in"lusive plat!orm and the more people e have6 and

the more ri"h meta-data e have6 the 3etter.

ABL: 8t looks pretty ood6 too. 8 %ust updated my pro!ile last niht6 a"tually.

AMA: 5ell6 it/s very !o"used and 8 think that/s the key. 8t/s not a eneri" site6 it/s a3solutely a3out Bit"oin

and !o"used on Bit"oin6 so it/s very easy to hihliht@ really sho the skills in that spe"i!i" area that you

have.

(short pause ith musi" playin)

ABL: 8/m really pleased today to 3e %oined 3y Charles Hoskinson. Charles has 3een runnin the Bit"oin

#du"ation $ro%e"t !or a3out a month no and he/s ot some pretty e9"itin announ"ements to make. So6

Charles6 hy don/t you e9plain hat e/re talkin a3out here.

CH:*he Bit"oin #du"ation $ro%e"t is somethin e started a3out a month ao and it/s !laship produ"tas a Edemy "ourse named 'Bit"oin6 or Ho 8 Learned to Stop 5orryin and Love Crypto6 and a!ter 8

laun"hed it6 8 realied there as a lot o! people in the "ommunity ho really en%oyed tea"hin a3out

Bit"oin and they ant to "ontri3ute may3e a small pie"e o! "ontent or do a le"ture series. And so6 8 said6

'osh< 8t ould 3e a really ni"e thin to do to areate all o! that into a "entral pro%e"t and so that/s hat

the Bit"oin #du"ation $ro%e"t is all a3out. So over the last !e eeks6 hat 8/ve 3een doin is 3uildin the

e3site6 talkin to people6 re"ruitin ellos and 8/m pleased to announ"e today our o!!i"ial laun"h to

pu3li" on Let/s *alk Bit"oin !or the Bit"oin #du"ation $ro%e"t. +ur oal is to 3uild peer-revieed !ree

"ontent !or pu3li" release6 3oth "ommer"ial and !or personal use6 ith the end oal o! usin this "ontent

to 3rin one million a"tive6 enaed users into the Bit"oin e"osystem.

ABL: *hat/s a pretty am3itious oal there.

CH:,iht6 yeah6 and 3y the end o! 7?>J6 8 should say. Ho e/re oin to a""omplish this is !irst usin

our !laship "ourse6 the Bit"oin "ourse that 8 %ust mentioned6 and to other "ourses that e4re 3uildin

over the summer. So6 one "lass is oin to 3e Bit"oin !or "omputer s"ientists6 and that "ourse is oin to

3e spe"i!i"ally !or raduate level pro!essionals. So6 people ho are in a Master/s proram or a $hD

proram6 or some3ody ho4s in industry ith or J years o! e9perien"e in peer-to-peer netorks and

"ryptoraphy. *he oal there is to a"tually annotate the entire Satoshi proto"ol. So6 e4re onna %ust kind

o! like hat Charles $etold did ith the Annotated *urin6 e4re onna open up Satoshi4s hitepaper and


5/23

o throuh se"tion 3y se"tion and dis"uss hat did Satoshi say6 hat ended up ettin implemented and

here is this oin2 And then also e4re onna have some le"tures on "ryptoraphy and some le"tures

on peer-to-peer netorks and so !orth. *he oal !or this "lass is to kind o! spur adoption in the "omputer

s"ien"e departments o! universities so a"tive resear"h "an 3e done6 and also to en"ourae people to

3ein orkin on the Bit"oin proto"ol and a"tually "olla3orate ith the pro%e"t. *he third "ourse is oin to

3e a 'Bit"oin !or Business $ro!essionals. 8t/s kind o! a Bit"oin !or entrepreneur "ourse. +ne o! the thins

84ve otten no that e4ve had our !irst "ourse out !or a3out a month6 e have >?? students so !ar6 is 84veotten a hue amount o! !eed3a"k !rom people in the "ommunity a3out - they don/t understand the

reulations6 the las. 8! their 3usiness as to a""ept 3it"oins6 hat do they have to orry a3out2 And

those are very valid and very ood uestions and they should 3e addressed thorouhly and a""urately6

and so6 e4re onna laun"h a third "ourse over the summer6 'Bit"oin !or Business $ro!essionals6 and that

"ourse is oin to !o"us on0 hat are the ta9 set las6 hat are the reulations i! you4re oin to use

3it"oins6 ho do you re"ord them in your 3ooks6 and also e4re oin to use that "ourse as an e9pose !or

lot o! mer"hant servi"es that e9ist !or Bit"oin. or e9ample6 i! you ant to a""ept Bit"oin throuh Bitpay6

ho do you a"tually do that2 Ho do you interate that into your e3site2 So6 those are the three pie"es

o! "ontent that e intend on produ"in throuhout the summer and e4re oin to market it heavily and

re!ine it6 update it6 and 3uild it in a very "olla3orative ay6 and our oal is to use that "ontent to 3rin >

million people6 3y the end o! 7?>J6 into Bit"oin.

ABL:So the edu"ation pro3lem is one you4re o3viously really !amiliar ith. 5hat do you think people

have the most trou3le raspin2

CH:*erminoloy is pro3a3ly the !irst 3i issue. $eople have no idea hat a 3lo"k"hain is6 or a 3lo"k. *he

"ryptoraphi" "on"epts are also very di!!i"ult. 8t really depends upon the parti"ular person6 here the

person4s "omin !rom. So6 !or 3usinesses6 really hat/s ve9in them6 they really don/t have any idea hat

the las are ith Bit"oin. *hey don/t really have any idea hat the reulations are. 5hat !orms they have

to !ile2 5hat people they have to talk to2 Ho lon they should hold the 3it"oins2 5here they "an

liuidate the 3it"oins !or ES Dollars or #uros6 and a"tually6 hat makes this pro3lem even more "omple9

is that 3usiness is international so reulations and las are di!!erent in every sinle "ountry. So6 you "ould

3e in "omplian"e in Ameri"a6 !or e9ample6 then all o! a sudden 3e out o! "omplian"e in #urope6 and so

that/s somethin !or the 3usiness side that e "ommonly et a lot o! uestions a3out. or eneral"onsumers6 a lot o! uestions usually "ome o! hy do they have any value hatsoever2 5hy does a

3it"oin - hy is it orth anythin2 5hi"h is an a"tually a very ood uestion6 and e tried to anser it as

3est e "an in our !irst "ourse Bit"oin or 'Ho 5e Learn to Stop 5orryin and Love Crypto. 5e also did

a lot o! uestions a3out ho do 8 se"urely use Bit"oin2 *hat/s somethin that people are alays

"on"erned a3out6 3e"ause e alays tell people 'hey6 these transa"tions are irreversi3le. 8! you4re not

"are!ul people "an steal your private keys throuh so"ial enineerin or throuh 3us in so!tare and so

!orth. So you kno there is a "ertain deree o! "ompeten"y that you have to have6 and it does s"are

averae everyday users and so that/s one o! the thins e et o!ten and e try to anser. *here is no

silver 3ullet !or hat people tend to ask. 8t/s kind o! a spe"trum o! uestions. So that/s hy e4re releasin

a series o! three "lasses 3e"ause e4re tryin to "over as 3road o! a 3ase as possi3le6 3e"ause the

uestions "omputer s"ientists are onna ask are onna 3e mu"h more sophisti"ated and in-depth than6

let/s say6 your randmother ould ask a3out Bit"oin. But they4re 3oth eually valid. 5e need 3oth roupso! people in the e"osystem i! the e"osystem is oin to survive.

ABL:8t seems like ith your annotated Satoshi line that you4re not only tryin to ive the te"hni"al

3a"kround 3ut also kind o! the "onte9tual 3a"kround to hat as 3ein thouht at the time that this

as 3ein "reated.

CH:,iht6 and a"tually6 it/s a very valid and valua3le thin to do !rom an a"ademi" standpoint 3e"ause


6/23

the hitepaper as really sayin6 'these are some pro3lems 8 ould like to resolve and here is the

implementation 8 have "hosen to resolve these pro3lems6 and so i! you understand it !rom that lens6 you

may have "ertain knolede domains that ould 3e a3le to 3etter resolve the pro3lems in the ay the

proto"ol has. A ood e9ample ould 3e the proo!-o!-ork that e "urrently deploy ith Bit"oin. 8t does

resolve to 3i pro3lems. Gum3er >6 ho do you veri!y transa"tions2 And num3er 76 ho do you o

ahead and distri3ute money2 *he pro3lem ith proo!-o!-ork is that6 hile it a""omplishes 3oth o! those

!eatures6 the "omputations are thron aay. *hey4re not so"ially 3ene!i"ial in any sense o! the ay. 8!one6 !or e9ample6 "ould !ind a ay to a""omplish 3oth thins6 veri!y transa"tions and allo more money

into the e"osystem in a !air ay. But at the same time6 let/s say6 may3e interate !oldinKhome !or the

"ity pro%e"t into the proo!-o!-ork then all o! a sudden you4re not only makin 3it"oins6 3ut you4re also

doin somethin so"ially 3ene!i"ial ith minin pro"ess. So this is an e9ample o! here the annotated

Satoshi line "an take us. 8t allos a very diverse roup o! people !rom a"ross the a"ademi" and

pro!essional spe"trum to take a look at the proto"ol6 here it stands6 hat/s 3een done6 and hat are the

pro3lems they4re tryin to resolve. 8t ives them the "onte9t they need to take their on e9perien"es6 and

their on solutions6 and their on ideas into the e"osystem6 and may3e it4ll mean improvin the proto"ol

itsel! or may3e it ill mean the development o! alternative "urren"ies that are superior. But that/s kind o!

the hope6 it/s that e ant to spur that "onversation. 5e ant peer revieed resear"h to start 3ein

produ"ed in "omputer s"ien"e departments that "an help us ro Bit"oin to meet the "hallenes o! the

!uture.

ABL:Both Andreas and 8 have otten involved as !ellos. 5e4ll 3e ivin le"tures !or the pro%e"t. Ho

"an interested people et involved2

CH:+h6 a3solutely. So6 e4re "urrently lookin !or three roups o! help. irst you "an volunteer !or the

pro%e"t6 either your time6 market the pro%e"t6 help us ith !und raisin or even produ"e "ontent. *he 3est

ay o! ettin in "onta"t ith is my email "harles.hoskinsonKmail."om or you "an o to our e3site

3t"edpro%e"t.or. So Barry-*ony-Charlie-#d-Derri"k-pro%e"t-dot-or. So6 that/s a ni"e "entralied e!!ort to

see hat e4re orkin on and hat e4re doin and there are numerous links to "onta"t us there either

se"urely ith $F$ or %ust via email. So6 i! you4d like to volunteer6 e4d love to have you. ,eardless o! i!

you4re a ne3ie or i! you4re a veteran in the "ommunity. *he other to thins you "an de!initely do to help

the pro%e"t - one ould 3e to donate to the pro%e"t. 5e4re startin a !und raisin "ampain6 doin thinslike payin a layer to !iure out hat the reulations are in Ameri"a or orkin ith "omputer s"ientists

to a"tually o throuh sour"e "ode and deal ith the proto"ol are not !ree. Go matter ho many

volunteers you et6 you have to pay people at some point. So6 e4re startin a donation drive to help

"over some o! those e9penses and that/s oin to 3e >?? 3it"oins in ? days. So6 our donation address

ill 3e in the sho notes. 8t/s also on our e3site. So6 you "an de!initely donate to the pro%e"t and e4d

love !or you to do that6 and !inally the last thin you "an do is to tell your !riends and !amily. 8! you like

Bit"oin and you ant to tell them a3out Bit"oin instead o! havin to sit don and e9plain it over the

kit"hen room ta3le6 you "an no %ust ive them our Edemy link6 and i! they take our "ourse6 e think that

it4ll really help them et to here they need to o and hope!ully evanelie them enouh to a"tually

spread the messae amonst their !riends and !amily.

ABL:5ell thanks very mu"h !or doin this important ork6 Charles6 and thanks !or your time today.

CH:*hank you so mu"h6 Adam.

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your kit no at sa!epaperallet."om.

SM:=ou4re listenin to Let/s *alk Bit"oin6 the premier audio "ast@ providin nes and insihts that "over

the rapidly-evolvin orld o! diital money. +ur ti"e-eekly shos in"lude analysis o! late 3reakin

nes6 updates on key te"hni"al6 3usiness6 and reulatory issues6 and in-depth intervies ith the keypeople drivin the ne diital e"onomy. Let/s *alk Bit"oin o!!ers sponsors an attra"tive ay to rea"h a

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AMA:*his is a topi" that/s very "lose to my heart and it/s the topi" o! Bit"oin neutrality. 8t takes a 3it o!

e9planation to e9plain hat Bit"oin neutrality is. But simply enouh6 it is the e9a"t same "on"ept that

e4ve 3een livin on the 8nternet !or the past to de"ades6 and !ortunately6 on the 8nternet6 e4ve 3een

a3le to 3oth e9press that prin"iple and implement it and preserve it aainst attempts to 3reak it don. So6

Bit"oin neutrality is the "on"ept that Bit"oin as a plat!orm should 3e neutral and should 3e a3le to "arry

any type o! payment "ontent !rom any payment initiator to any payee reardless o! ho the oriins are6ho the destinations are6 their sie6 or anythin else and simply "arry the payment6 i! it4s paid !or ith

!ees6 neutrally. *here are other aspe"ts to Bit"oin neutrality 3ut that/s the 3asi" one hi"h means

empoer the end-points. Make the netork itsel! as neutral as possi3le@ a3le to "arry hatever people

may "ome up ith. 8t/s important 3e"ause it re"onies that Bit"oin is a plat!orm and a proto"ol that other

thins ill 3e 3uilt on top o! it - rather than Bit"oin 3ein seen as a payment system that is essentially

done6 "omplete6 and e4re optimiin it as a payment system 3e"ause i! you try to optimie it6 you end up

makin it less neutral. 5hereas6 i! you see it as a plat!orm6 then you 3uild other thins on top o! it that are

more spe"ialied.

ABL:8t/s a uestion o! spe"i!i"ity6 riht2 So6 hen e talk a3out optimiin thins6 optimiin doesn/t

mean you o throuh and6 you kno6 you4re pi"kin throuh all the most e!!i"ient pra"ti"es. +ptimiin

means that you o throuh6 you determine hat the end result is that you4re tryin to a""omplish6 andthen you pi"k all o! the methods and pra"ti"es that a""omplish that oal. So6 8 think emphasiin that

Bit"oin is a plat!orm rather than an end in and o! itsel! is really important here 3e"ause it means that you

"an/t optimie it. 8t means that the ay to optimie it is to 3e as in"lusive as possi3le so that you "an

support as many 3usiness models6 as many di!!erent uses6 and types o! thins that people ant to do

ith it instead o! tryin to !iure out ho to spe"i!i"ally streamline it !or this one use that you had in mind

in the 3einnin.

SM:*here is de!initely room !or spe"ialied uses o! Bit"oin as a system6 and !or sort o! division o! la3or6

!or some people to use Bit"oin !or spe"i!i" purposes at spe"i!i" times as lon as those uses don/t prohi3it

other uses or don/t impine on other uses6 as lon as it remains that Bit"oin is a diverse tool that/s

de"entralied6 that "an 3e used !or potentially a lot o! di!!erent purposes dependin on hat the individual

user ants.

AMA:,eally6 3ein a3le to preserve Bit"oin as a plat!orm6 re"onies the individual "omponents o!

Bit"oin as havin tremendous innovation value themselves. So6 this is a3out sayin hat should o in the

3lo"k"hain2 5hat types o! transa"tions do e ant to ena3le6 and ho do you deal ith thorny issues o!

"ontention around use o! the 3lo"k"hain as they arise2 So6 !or e9ample6 e already have some issues

that are uite "ontroversial around unspenda3le or not-prova3ly unspenda3le outputs. Basi"ally6 outputs

that "an/t 3e reused 3e"ause they4re too small6 or outputs that o to addresses that no3ody has the keys


8/23

!or6 essentially they4re thro-aay money. 8! you don/t kno that they4re thro-aay money6 they %ust sit

around in the 3lo"k"hain !orever hereas i! you kne that those addresses "ould not 3e spent6 you "an

a"tually prune some o! them hile still keepin the !a"t that they entered the 3lo"k"hain. *hose are some

o! the issues that the developers are dealin ith riht no. 8t also ties into issues around the sie o! the

3lo"k"hain6 around the propaation o! messaes on the peer-to-peer netork et". and the "hoi"es e

make no ill a!!e"t ho open and !le9i3le Bit"oin the proto"ol6 Bit"oin the plat!orm6 the 3lo"k"hain ill 3e

to !uture uses that e "an/t even imaine. *hink i! the early 8nternet people said6 'email is thepredominant use6 te9t is hat people are onna 3e usin. Let/s make it very6 very !riendly to te9t and not

parti"ularly !riendly to voi"e and video. 5e ouldn/t have many o! the appli"ations e really "herish

today.

SM:*hat/s a really important point to 3rin up 3e"ause e don/t really kno e9a"tly hat the shape o!

Bit"oin is onna 3e in the !uture6 and there needs to 3e room !or all kinds o! innovation to happen and that

means6 really6 no spe"i!i" individual or roup o! individuals should 3e makin top-don de"isions a3out

hat the riht6 or "orre"t6 or optimal use o! Bit"oin a"tually is. *here needs to 3e the !reedom !or all kinds

o! di!!erent uses to 3e a""epta3le6 okay. And6 you kno6 people may have individual %udments a3out

thins like thro-aay addresses or a3out thins like 'Bitdust6 or anythin like that6 3ut it/s really

important to6 8 uess6 ive those at least the spa"e to e9ist even i! you6 personally6 ould not use Bit"oin

in that ay. 8t/s %ust like !reedom in the rest o! li!e. +ther people need to have the li3erty to live their livesas they "hose and as they see !it ithout any3ody else manain hat they do in order to have a !ree

so"iety.

ABL:*his pro%e"t and this pro3lem seem to 3e tied a lot around the idea that some o! these !un"tions

"an/t 3e done on another 3lo"k"hain 3esides the Bit"oin 3lo"k"hain. So6 84m "urious !or hat every3ody

thinks a3out that2 8 mean6 i! you ere to take an appli"ation like Satoshi Di"e and "reate Satoshi"oin6 or

di"e"oin6 or hatever you anted to "all it6 and it as essentially the same thin6 e9"ept instead o! oin

on the 3lo"k"hain ith every3ody else it used its on 3lo"k"hain and as !or its on purpose sort o! like

datastamp"oin or somethin like that. Be"ause those are the primary thins that people are havin

pro3lems ith. =ou kno like the notary servi"e e talked a3out in the last episode. Eltimately6 it "reates

irredeema3le transa"tions that are 3roken intentionally so that they put this in"orre"t in!ormation that

serves the purpose that it ants to serve6 hi"h is veri!yin that this parti"ular do"ument as veri!ied andput into the 3lo"k"hain at this point in time. So6 "ould you have like an alt-use "hain that does all the

same stu!! as Bit"oin 3ut runs on a parallel pro"ess. 8 mean6 ould that still ork in the same ay6 or does

that lose somethin2

AMA:*hat loses a reat deal. *he 3lo"k"hain really is to thins. 8t/s a tremendously use!ul te"hnoloy6

3ut it/s also a very distri3uted and very 3roadly distri3uted data-set. So6 part o! the advantae o! 3ein on

the Bit"oin 3lo"k"hain is that 3e"ause that people also use it !or payments6 it4s very idely distri3uted6

very "are!ully "he"ked6 it has a massive amount o! hashin poer 3ehind it to veri!y it. 8! you o on

another netork6 you4re doin to thins. irst o! all6 you4re "reatin to di!!erent silos. So6 you4re movin

in the opposite dire"tion o! a plat!orm. 8t/s a 3it like sayin6 ell6 8$ is not so suita3le !or video6 so lets 3uild

a parallel netork to the 8nternet and don/t think that the tele"oms didn/t try to do that - they a3solutely

did. irst6 ith A*M the proto"ol6 asyn"hronous trans!er mode6 "ell-3ased netorks instead o! pa"ket-3ased netorks6 "ell sit"h netorks6 and also sonnet !i3er opti"s netorks6 and all o! those !ailed. And

they !ailed 3e"ause the value o! de"entraliation trumps the spe"ial use-"ase. 8t/s mu"h 3etter to have

one "ommon6 neutral netork that everyone "an play on 3e"ause that in"reases the netork e!!e"t. 8! you

put your transa"tion on the Bit"oin 3lo"k"hain6 that ives you the "ertainty that it/s oin to 3e very idely

distri3uted and uaranteed ith a lot o! hashin poer. *he real uestion is6 "an you do that ithout

3loatin the 3lo"k"hain and ithout "reatin too mu"h pro"essin on the end nodes hi"h tend to 3e

pretty small and in"reasinly mo3ile. *hat/s the real issue here6 and 8 think the developers are already


9/23

dis"ussin that. *he issue is not unspenda3le transa"tions6 it4s rather prova3ly unspenda3le transa"tions.

8! you send transa"tions to addresses that everyone "an veri!y6 don/t have private keys6 or are 3ous6

that/s okay 3e"ause no one4s then onna try and spend those or it doesn/t need to keep a re"ord o! them.

*he pro3lem is hen you don/t kno i! the transa"tion "an 3e spent or not6 so you keep it around !orever

in the E*N+ pool.

ABL:Andreas6 "an you please e9plain ho a"tually sees this EN*+ pool that e4ve 3een talkin a3out63e"ause that/s a little a3stra"t.

AMA:E*N+ is the unspent transa"tion outputs. *hink o! it this ay6 every time you ant to "reate a ne

transa"tion6 hat you do is you take all o! the unspent transa"tions you have in your allet and then you

3undle them toether to et the riht amount or more than the riht amount that you4re onna spend6

send that to the payee6 and also have some "hane "omin 3a"k to you i! it/s more than the amount. 8!

you have to use lots o! tiny ones6 that makes a very 3i transa"tion. *he E*N+ pool is shared6 essentially

"onstru"ted dynami"ally6 !rom hat 8 understand6 !rom the 3lo"k"hain. So6 i! you traverse the entire

3lo"k"hain6 you "an !ind all o! the unspent transa"tions6 and 3y keepin that in memory6 you "an

immediately veri!y i! a payment has the "orre"t unspent transa"tions in it - and i! 8 understand6 it4s done

ith a Merkle tree hi"h makes it easier to prune o!! entire sements o! that tree and only keep their

hash. #ssentially it/s like6 "uttin o!! the 3ran"h o! the tree6 3ut knoin that it as there 3e"ause thestump o! the 3ran"h still ives you an idea o! ho 3i that 3ran"h as6 and you kno hat as there

3e!ore ithout havin to veri!y every sinle part o! it. So really6 this is a lo3al data3ase. 8! you have a lot

o! stu!! that/s in there 3ut really "an/t 3e used 3y anyone it %ust makes the sie o! the data3ase larer

ithout 3ein use!ul - the unspent transa"tions. And you keep it there so that you "ould potentially spend

it in the !uture6 and that %ust keeps in"reasin the sie o! the pool.

ABL:*hey4re talkin a3out settin up disin"entives. *hins that make it so you ouldn/t ant to do these

transa"tions that are not the intended Ouse6O hi"h is sendin value ith 3it"oin. 5hat i! a modi!i"ation

as made to the proto"ol that made it so there as a "he"k3o9 that you "ould "he"k that says this is a

other-use transa"tion and it makes it so its prova3ly unspenda3le6 3e"ause it/s not intended to 3e spent.

5ould that 3e a potential solution to this pro3lem or do you think that it %ust needs to 3e "ompletely le!t

alone and all these thins are %ust !urther makin it orse.

AMA:8 think that/s e9a"tly the dis"ussion that/s happenin riht no6 hi"h is a "om3ination o! ho do

you manae the 3lo"k"hain sie and ho do you manae the E*N+ pool - the unspent transa"tion

outputs that needs to 3e6 at least maintained at a reasona3le level and not 3loat ith thins that everyone

knos are useless6 3ut "an/t really prove they4re useless.

SM:8 have a uestion. Bloat is a relative term6 riht2 8t4s su3%e"tive6 its a""ordin to some3ody4s opinion6

and so 84m %ust onderin hat are the "riteria !or 3loated 3lo"k"hain and hat ould 3e Otoo many in the

E*N+ pool.O

AMA:So6 8 ould say there4s a very 3i distin"tion 3eteen the to. 8 think you "an/t really talk a3out

3loat in the 3lo"k"hain 3e"ause that really is a "ompletely su3%e"tive "riteria. Hoever6 i! a transa"tion isnot spenda3le6 then holdin it in the unspent transa"tion output pool is pointless. So that is 3loat. 8 mean it

really has no !un"tional use to 3e in the unspent transa"tion output pool 3e"ause the only reason !or

3ein in there is so that someone "an spend it6 riht2 And i! you kno it "an/t 3e spent6 it/s %ust sittin

there !or no reason6 it ill never 3e spent pra"ti"ally6 and there!ore6 it/s never oin to o aay. *hat is a

te"hni"al pro3lem. (SM0 But doesn4t that--) *here is no donside to not havin those transa"tions in the

pool. *hey4ll still 3e in the 3lo"k"hain. *hey4ll re"onied as havin 3ein "reated. =ou4re %ust re"oniin

the !a"t that they4re no loner spenda3le and there!ore you don/t need to keep the a"tual output around


10/23

!or !uture spendin6 and the dis"ussion riht no is6 ho do you mark them or hat transa"tion s"ript "an

you "reate that makes that a prova3ly unspenda3le output6 so you "an simply in"lude it in the 3lo"k"hain

as a proo! o! e9isten"e and then dis"ard the output 3e"ause it "an/t 3e spent.

(short pause ith musi")

ABL: So6 84m %oined 3y fellowtraveler. Chris6 there4s 3een a lot o! talk re"ently a3out open transa"tionsand Bitmessae. Be!ore e et into that6 "an you ive us6 %ust kind o! !rom >? thousand !eet6 hat is open

transa"tions2

FT:+pen transa"tions is an open sour"e !inan"ial "ryptoraphy li3rary hi"h is availa3le in many di!!erent

lanuaes. 8t/s ritten in CPP6 3ut you "an use it !rom $ython or hatever.

ABL: +kay6 so hat does that mean2

FT:At the 3ase level6 it/s %ust a li3rary that does !inan"ial "ryptoraphy operations and then6 usin that

li3rary6 8 3uilt a server6 a "lient A$8. 5hat you4re a3le to do is6 you4re a3le to "onne"t to these servers and

issue "urren"ies6 open a""ounts6 ithdra "ash6 rite "he"ks6 trade on markets. ;ust all kinds o! di!!erent

!inan"ial operations "an 3e a"hieved throuh the open transa"tions system.

ABL:*he open transa"tions system- one o! its !un"tion is as a de"entralied market6 hi"h is also the

same as a de"entralied e9"hane6 riht2

FT:Go6 not e9a"tly6 3e"ause ea"h server "ontains a market6 or a"tually a set o! markets dependin on the

di!!erent "urren"ies that are 3ein traded there6 so6 !or e9ample6 you "ould "onne"t to a spe"i!i" server

and trade one "urren"y !or another "urren"y. =ou "an say6 '84m onna sell some old to 3uy 3it"oins ith6

or hatever hatever the "urren"ies are that are issued there. *he 3i pro3lem that e had6 i! you

anna have a distri3uted e9"hane6 you anna 3e a3le to have trades that o a"ross servers. Any to

people "an trade on a spe"i!i" server i! they4re a3le to dis"over ea"h other and !ind a server that they4re

onna aree to meet on and per!orm a trade at. But let/s say that there4s hundred servers or thousand

servers out there - these people aren/t ne"essarily on the same server6 and so that/s hat Bitmessaesolved. Bitmessae 3e"ame a p7p dis"overy layer that e "ould use !or anyone to dis"over other users

ho miht 3e on di!!erent servers so that they "an !ind a "ommon server to meet on and do trades on.

ABL:8s it the 3road"ast !eature2 5e4ve 3een playin around ith Bitmessae on the sho6 and one o!

the thins e4ve 3een lookin at6 o! "ourse6 is the 3road"ast !eature. 5e4re thinkin a3out it !or

nesletters. But 84m thinkin6 3ased on the pro3lem you4re talkin a3out hi"h is a 3un"h o! di!!erent

servers runnin markets that are oned 3y di!!erent people ho don/t ne"essarily kno ea"h other6 they

still need to 3e a3le to !ind ea"h other in order !or the market to 3e !ri"tionless6 so to speak.

FT:*hat/s e9a"tly it. 8t/s the 3road"ast !eature.

ABL:5hat does that mean2 Sin"e this is happened6 hat/s the ne9t step in this thouht pro"ess2

FT:5ith Bitmessae and this is %ust one dis"overy layer. 8 really like it6 3e"ause e played around ith

it and proved that e "ould use it and that it ould ork. But te"hni"ally6 you "ould sap it out and use

any other dis"overy layer as ell. But this is onna 3e the !irst implementation6 it/s onna 3e ith

Bitmessae6 and ith Bitmessae hat you "an do is you "an sort o! name a "hannel6 like imaine on

8,C 6i! you say 84m onna et on the Bit"oin "hannel6 and then anyone else that ets on the Bit"oin

"hannel6 they meet you there and they4re all a3le to send messaes to ea"h other. Sort o! like that ith


11/23

Bitmessae6 ith Bitmessae you "an name a "hannel. =ou "an say6 '8 anna meet on the Bit"oin

"hannel6 and anyone else ho4s listenin to that same "hannel ill see your 3road"asts6 and so hat 84m

a3le to do is6 !or e9ample6 let/s say that 8 anna trade old !or silver. Go in open transa"tions6 ea"h

asset type has an 8D. 8t kind o! looks like a Bit"oin address or somethin like that6 it/s %ust this lon hash6

3ase-I7 8D. And so6 hat you "an do is you "an take6 say6 the old 8D and the silver 8D and then N+,

them toether. N+, pro"ess is %ust a "rypto pro"ess that sort o! "om3ines them to "reate this ne 8D

that/s a "om3ination o! the to6 and then 8 use that as my 3road"ast "hannel. So6 anyone else ho4sinterested in old and silver ill 3e listenin to that same "hannel and then so hen 8 say6 OHey6 8 anna

trade old !or silver6 84m illin to pay this mu"h6 or 8 have this mu"h !or sale and 84m on this server6O and

anyone else "an then "onne"t to that server and trade ith me there. So6 it %ust ives us a ay to sort o!6

dis"over ea"h other.

ABL:So this is like Bitmessae addresses as deterministi"6 riht2 *hat/s hat you4re doin here6 riht2

=ou4re takin essentially "om3ination o! names that are then turned into these addresses that are then

used as 3road"ast "hannels 3e"ause any3ody ho4s turnin those to parti"ular thins into this

Bitmessae address name is oin to !ind the same thin that the person ho4s doin it oriinally did. 8s

that riht2

FT:*hat/s e9a"tly riht6 and 84ll ive you another e9ample. Let/s say that it asn/t "ross-server tradin.Let/s say that it as a ire6 3e"ause you "an use it !or di!!erent thins. Let/s say 8 anna ire some !unds

!rom server A to server B. or e9ample6 let/s say 8 anna ire some old !rom server A to server B. So6 8

take the old 8D6 the server A 8D and the server B 8D and N+, them toether6 and then 3road"ast on that

"hannel6 and then anyone else ho4s illin to per!orm su"h ires6 anyone else ho has an a""ount on

3oth servers and he4s illin to do it !or hatever !ee that 84m illin to pay6 then he "an reply 3a"k and

say6 OHey 84ll do it6O and then 8 ive him some money on server A and he ives me some money on server

B6 and e4re a3le to neotiate that pro"ess usin es"ro on +*6 here server A keeps it in es"ro and

then server B oes into es"ro and that sort o! thin.

ABL:*hat sounds pretty ood6 that sounds like a really innovative use. =ou4re not... *here hasn/t 3een a

spe"i!i" "lient developed to do this yet6 has there6 or is that hat your proo!-o!-"on"ept is2

FT:+h6 no6 not at all. 8 %ust proposed this a "ouple days ao. 5e ere playin around ith Bitmessae

and this is kind o! a lark. 8 mean this as somethin that as "omin some day and 84ve ritten on my

iki a3out ho this sort o! thin is "omin someday. 5e %ust happen to 3e messin around ith

Bitmessae and e4re like6 OHey6 e "an do server ires ith this. 5e "an do "ross-server tradin ith

this6 lets rite this up.O So6 8 rote out the proto"ols6 the sort o! a 3asi" rite-up o! hat the proto"ols

ould 3e and post it on the Bit"oin !orum6 and it really "aused a splash hi"h is a little surprisin to me in

a sense 3e"ause 8 have said on my iki that this is "omin !or a lon time.

ABL:5ell6 8 think this topi" is pretty sensitive riht no 3e"ause o! all the "on"erns a3out e9"hanes and

people vie open transa"tions in the same ay they vie ,ipple6 hi"h is a ay to move aay !rom the

transa"tions happenin on the "entralied servers like Mt. Fo96 and there4s a lot o! "on"ern in the

"ommunity a3out that6 so you4ve 3een orkin on open transa"tions no !or a3out to years2

FT:8 started in the 3einnin o! 7?>?

ABL:So6 three years.

FT:So6 e4re no at three and a hal! years.


12/23

ABL:Ho sini!i"ant is this2 Does this impa"t the development s"hedule2 8s there a time !rame on open

transa"tions at this point that is even reasona3le to talk a3out2

FT:5ell6 8 mean6 Bitmessae interation has to 3e "oded. 8 "ouldn/t ive a time!rame on that. 8 "an say

that it/s de!initely on the horion no6 no that e4ve !iured out ho it ould 3e done. 8 "an/t say e9a"tly

ho lon it ould 3e.

ABL:*here are already servers that are runnin open transa"tions6 so it/s out there in the ild. Are

people a"tually usin it !or the purpose as intended6 or is it more %ust proo!-o!-"on"ept installations at this

point2

FT:8 ould say its proo!-o!-"on"ept installations. *here are pla"es here it/s 3ein used. But it/s not in

"ommon use6 and the reason !or that is 3e"ause there4s not a really easy "lient yet !or people to use.

Basi"ally6 everyone "an use it riht no i! they anna use the "ommand line. +r i! they anna use the

uly6 %ava6 test FE8 hi"h is really %ust !or developers. Go 8 do have ni"er FE8s "omin. 5hat 8 did as6

!or a "ouple years6 8 %ust !o"used on the "ore6 the enine6 the s"riptin6 the "ommand-line6 3e"ause 8

!iured 84m oin to ive every3ody else a head-start to make "lients. *he li3rary itsel! is already a !ull-

time %o36 and so 8 !iured 84ll %ust make this li3rary and !o"us on this li3rary and then everyone else has the

opportunity to et a head-start and make the "lients that people "an use and they "an sort o! on theiron pro%e"ts. And no6 3asi"ally6 hat/s oin on is6 my "ompany6 e started a "ompany Monetas and

e started to et !undin and so e4ve started implementin "ommer"ial "lients6 like an i$hone app6

Android app6 desktop app6 this kind o! thin. And so it "ould 3e that 84m onna end up havin the !irst

"lients mysel!. 8 "ould say that the 8$hone app ill pro3a3ly 3e orkin in another "ouple o! eeks. 8 don/t

kno i! 8 ould sti"k it up in the app store yet6 3ut 84d 3e a3le to demonstrate it to people.

ABL:As an open sour"e pro%e"t that is kind o! on the 3leedin ede o! this monetary transa"tions te"h6

it/s 3asi"ally you and ,ipple takin a shot at this spa"e. 84m "urious - you4re sayin no one has developed

a "lient !or open transa"tions and you miht 3e the !irst one out even and a hal! years later. So6 84m

onderin6 ere you e9pe"tin more support2 Has there 3een mu"h support !rom other people that

anna develop on top it2

FT:5ell6 8 "an say that there has 3een de!initely a lot o! parti"ipation !rom the open sour"e "ommunity.

*here has not 3een anyone ho has %umped !orard and said6 O84m onna rite some 3adass "lient


13/23

the Android app6 and the Android app is a"tually mu"h more important than the i$hone app. =ou make the

i$hone app !irst 3e"ause all the investors have i$hones. But hat you4re really aimin !or is the Android

app6 3e"ause everyone in A!ri"a is oin to have Android.

ABL:5ell Chris6 e4re oin to have to have you 3a"k on on"e the i$hone app is orkin and e "an

kind o! take a look at that and see ho it orks in real li!e. 8! you4d like to learn more a3out open

transa"tions6 visit letstalk3it"oin."om:ot.

FT:5e4ve also ot a 8,C "hannel on !reenode - ir".!reenode.net. *here4s a open transa"tions "hannel

ith no dash in it and there4s QJ people loed in there riht no.

ABL:5ell6 thank you !or your time Chris6 e4ll look !orard to havin you 3a"k on.

FT:*hank you. *hank you very mu"h.


ABL:So6 84m really "urious a3out disin"entives6 riht2 Be"ause this is like6 makin it less attra"tive to do

these thins and havin it only apply to transa"tions that are transa"tions that e don/t like6 and hen 8say Oe6O 8 mean the netork6 relative to transa"tions that are %ust normal transa"tions. Can you think o!

any ays here you "ould implement disin"entives or even 3e a3le to tell one o! these ood transa"tions

!rom one o! these 3ad transa"tions ithout havin a net neative e!!e"t on the netork2

AMA:=es6 a3solutely. 8 think the issue here is the matter o! timin. So6 the lon-term plan6 as !ar as 8

understand it !rom the dis"ussions amon developers that 8 !ollo6 is to e!!e"tively have an e!!i"ient

market in pro"ess !or the minin that allos transa"tions to 3e in"luded 3ased on the !ees6 and to

streamline that so that the market e!!i"ien"ies make that de"ision. ,eally hat e ere talkin a3out in

the previous episode6 hi"h is %ust let the market de"ides and i! you have value asso"iated or !ree

asso"iated ith it6 it/s ood enouh to o on the 3lo"k"hain. At the moment6 there is no market

me"hanism. So6 hat/s happenin is6 until that market me"hanism is 3uilt6 you have the pro3lem o! hat

do you do in the meantime. Separately6 there is this issue o!6 "an you at least !la these transa"tions sothat they don/t to o into E*N+6 here they4re really not ne"essary6 and everyone arees on that. *hat/s

not a su3%e"tive issue. Enspenda3le transa"tions don/t need to 3e in the E*N+. So6 the uestion is6 ho

do you et !rom here to a !uture here you have a market system ithout 3loin up the netork in the

meantime. And 8 think the idea that/s 3ein dis"ussed a lot6 riht no6 to "reate temporary disin"entives or

to 3alan"e thins more toards payments6 !or no6 hile at the same time6 movin toards a market

model that is more neutral and is 3ased truly on value and to "orre"tly 3rin these e9ternalities 3a"k into

the pri"e. 8 think that/s the real issue@ markets !ail hen they have e9ternalities. 8! you "an take a vat o!

sul!uri" a"id and dump it in the river6 and it "osts you less than pro"essin that "leanly and every3ody

else su!!ers 3e"ause o! that6 3ut you don/t really pay a pri"e6 that/s an e9ternality. Similarly6 i! you "an

pri"e these e9ternalities 3a"k into the market !un"tion6 then you really don/t need to orry a3out them

3e"ause they then 3e"ome part o! the market. Entil that happens6 you need some 3asi" disin"entives6 so

that/s really the dis"ussion oin on riht no and 84m interested in this dis"ussion 3e"ause 8 think that netneutrality !or Bit"oin is 3asi"ally on the "hoppin 3lo"k riht no. 8t/s the topi" that/s a!!e"ted most 3y the

de"isions that are made in the ne9t !e months6 in the ne9t year6 as to ho to these thins are handled.

ABL:8t sounds like hat you4re tellin me here is that6 aain6 tryin to think a3out ays that these

disin"entives "ould ork6 the only thin that 8 "an really think o! is in"reasin the transa"tions !ees6 riht2

Be"ause you4re sayin there4s no market me"hanism !or settin these riht no6 so they "an/t properly

value them. *o in"rease the disin"entives !or smaller transa"tions6 that means that you have to raise the


14/23

relative pri"e o! ea"h smaller transa"tion6 hi"h means you have to raise the transa"tion !ee6 riht2

AMA:*hat/s already happened. Got ne"essarily raisin the transa"tion !ee6 3ut makin it so that6 as a

!irst step6 miners "an prorammati"ally set their minimum !ees and some re"ommendations a3out hat

those minimum !ees should 3e. 5hile at the same time6 keepin the roth o! the 3lo"k"hain6 the

ma9imum 3lo"k sie6 in"reasin in a more "ontrolled !ashion. *hat "reates market pressure in itsel! toonly in"lude transa"tions that pay enouh to 3e orth it. So6 it/s de"reasin the supply o! spa"e in the

3lo"k"hain 3y arti!i"ially "onstrainin the sie o! the 3lo"ks6 the top end6 hi"h e4ve 3een doin all alon.

And that puts a premium on transa"tion sie6 hi"h then in!luen"es the miners into makin "hoi"es a3out

hat transa"tions they put in. So6 it4s 3einnin to 3rin some o! these thins in6 3ut not in a very market-

e!!i"ient manner. ortunately6 this is "learly seen as an interim step 3y everyone involved. *he lon-term

oal is to make this market me"hanism.

SM:Hold on a minute thouh6 3e"ause as 8 understand it6 the 3lo"k sie riht no o! > mea3yte is not

3ein hit. 8t/s not inhi3itin any transa"tions !rom 3ein in"luded riht no - it may in the !uture6 3ut not

riht no. Also another point6 there4s a 3i di!!eren"e 3eteen 3uildin into the "ode an in"reased

transa"tion !ee6 sort o! a "entral ay o! raisin the transa"tion !ees6 versus lettin the miners set their on

minimum transa"tions !ee that they4re oin to in"lude in their 3lo"k. So6 8 think that/s a lot morede"entralied me"hanism.

AMA:At the moment6 e don/t kno hat the out"ome ill 3e. *here4s pressure even i! e4re not hittin

the ma9imum 3lo"k sie6 you have to imaine that a lot o! that is essentially sel!-reulation 3y the miners.

&noin that the ma9imum is there makes you more sele"tively pi"k transa"tions or put settins that

more sele"tively pi"k transa"tions and at the moment it/s not a pro3lem6 3ut 8 think that in turn is

"onstrainin people eneratin transa"tions6 3e"ause they kno that they i! they try to put a lot o! tiny6

tiny6 tiny transa"tions6 that/s oin to push the miners toards !ilterin them. *his 3alan"e is happenin

3ased on "onsensus and understandin here the limits are and not approa"hin them.

ABL:*here are to thins here. +3viously6 this is a loner "onversation and 8 think e4re pro3a3ly oin

to ind up "ontinuin this on the ne9t episode hen e4re talkin a3out mi"ro-transa"tions. But that/s kindo! hat this "omes to. Mi"ro-transa"tions ind up 3ein the 3a3y that ets thron out ith the 3ath ater

in this 3e"ause e4re "on"erned a3out these small transa"tions6 it/s very di!!i"ult to tell a small transa"tion

!rom another small transa"tion. So6 i! you4re talkin a3out a mi"ro payment that/s in the realm o! .?>

3it"oin or .??Q 3it"oin or somethin like that6 then 8 %ust don/t see ho there4s any ay to really

di!!erentiate 3eteen the to sin"e it/s su"h an anosti" proto"ol.

AMA:At the moment6 there isn/t and that/s the pro3lem - hi"h is radually !indin ays to e9pli"itly

en"ode unspenda3le transa"tion hose oal is to e9press data rather than payment so that those are not

taken as spenda3le transa"tions 3y the miners and atta"h !ees to them so that they "an 3e pro"essed

properly like everythin else. So6 in a ay this is really an interim thin. 8 think over the ne9t I months

e4re oin to see some "larity and movin more "learly to a market approa"h. ,iht no6 essentially

e4ve ot the orse o! 3oth orlds. *here is "onstraints on the limit o! the 3lo"k sie and there4s no easyay to tell 3eteen a"tually paya3le transa"tions or non-spenda3le transa"tions 3e"ause you "an/t prove

that they4re not spenda3le.

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SM:5ant to set up an online store that a""epts 3it"oins2 Fo to open3it"oinstore."om and you "an have a

store up and runnin 3e!ore the end o! this messae. ;ust enter your email address and the store name6


15/23

and in less than ?-se"onds6 you4ll have a se"ure 5ord$ress e-"ommer"e site up and runnin that

a""epts 3it"oins and pays you in "ash ithin 7J hours6 and 3est o! all6 it/s "ompletely !ree. Fo to

open3it"oinstore."om today and open !or 3usiness no.

ABL:Let/s *alk Bit"oin is heard ea"h eek 3y thousands o! people ho are parti"ipatin in the ne

diital e"onomy. +ur listener 3ase o! 3it"oin oners6 miners6 investors6 te"hnoloists and mer"hants is

roin !ast. 5e o!!er a limited num3er o! short advertisin slots in ea"h sho to keep our listenersenaed and to provide ma9imum impa"t !or our sponsors. 8! you4d like to talk to us a3out Let/s *alk

Bit"oin6 send us an email at sponsorsKletstalk3it"oin."om.

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ABL:So this mornin 84m %oined 3y Bailey ,eutel ith $aymentsSour"e6 and Mark Ho"hstein ith

Ameri"an Banker. +ver the last "ouple o! eeks there have 3een some interestin developments on the

e9"hane side o! thins and spe"i!i"ally ith Mt. Fo9 and this on-oin Dolla issue6 here there4s 3een

some tension 3eteen the Department o! Homeland Se"urity and one o! payment pro"essors that Mt.

Fo9 uses as its primary on-3oardin me"hani" !or ettin Ameri"an users into their ;apanese system. 8

as onderin6 !rom your perspe"tive6 hat/s oin on here and here do you think it/s oin2

MH:*his as the !irst ma%or reulatory a"tion that e sa aainst a "ompany in the Bit"oin orld and 8

think people ere 3ra"in !or it6 e9pe"tin it to "ome sooner or later. 8t/s oin to 3e interestin to see ho

Mt. Fo9 de!ends its position. 8nterestinly6 it all "omes don to the de!inition o! hat is a money

transmitter and hat is a money servi"es 3usiness. *he inC#G uidelines that "ame out "ouple o!

months ao indi"ated that they e9pe"ted "ertain 3usinesses that are involved in virtual "urren"y6 and they

didn/t spe"i!i"ally mention Bit"oin at the time6 3ut they said that they e9pe"ted these "ompanies to "omply

ith the reistration reuirements !or MSBs and in many "ases6 ith the money transmitter reuirements

hi"h are even more strinent than the MSB reistration6 and it seems that the overnment has de"ided

that Mt. Fo9 is a money transmitter. And 8 kno a lot o! this6 hat 84m tellin you is nothin you don/t

kno6 3ut they de!initely "ame pretty !ast and !urious in terms o! !reein the a""ounts that Mt. Fo9 had

here in the ES ith Dolla and at 5ells aro6 and the so-"alled smokin un that they had hen Mt.Fo9 or a su3sidiary o! Mt. Fo9 applied !or an a""ount ith 5ells aro6 5ells aro asked them6 Oare

you a money transmitter2O and they ansered OGo.O And 8 suspe"t that there may 3e some interestin

"ase at some point6 de3atin hat is the de!inition and do they have any plausi3le denia3ility2

ABL:=ou4re totally riht. *hey did6 at one point6 say that they ere not a money transmitter on one o! their

appli"ations. But kind o! an interestin thin !rom here 8 sit6 is that appli"ation as a"tually !illed out in

early 7?>>6 so at the time..

MH:Lon 3e!ore the inC#G uidelines "ame out6 riht2

ABL:,iht. #9a"tly6 so it seems like hen these reulatory a"tions happen in almost a retroa"tive

!ashion. Ho "an 3usinesses really 3e e9pe"ted to "omply ith that2 Do you think that that/s a !airstandard2

MH:8 think they miht have a "ase ith that. *he inC#G uidelines hen they "ame out a "ouple

months ao6 said that they ere "lari!yin uidelines. *he su3te9t o! that as6 in "ase you had any

dou3ts6 yes6 this does apply to 3usinesses that !it these des"riptions6 that tra!!i" in virtual "urren"ies. But

aain6 8 think it may 3e an interestin de!ense that they "ould theoreti"ally mount. =ou told us a!ter the

!a"t that e ere de!initely su3%e"t to this and no you4re !reein us. 8 don/t think they ot a arnin. 8t
mailto:[email protected]:[email protected]:[email protected]


16/23

asn/t like they ot a "ease and desist letter that says you have ? days to et li"ense as a money

transmitter or e4re shuttin you don6 8 mean6 it "ame pretty ui"kly. And no6 i! they ere a too-3i-to-

!ail 3ank6 they miht4ve otten a little 3it entler treatment6 3ut 8 think as a lot o! money servi"es

3usinesses6 not %ust in the Bit"oin orld6 have learned6 %usti"e is pretty si!t and harsh i! you4re a small

operation6 and i! you4re HSBC or a lare lo3al institution like that6 you et kid loves.

B:8 think this shos the roin attention that/s 3ein put on Bit"oin and these 3usinesses are reallyoin to have to pay attention to the uidelines and hat not. At the Bit"oin "on!eren"e6 some3ody in the

leal realm as talkin a3out ho 5estern Enion as really lookin at Bit"oin too. So6 e4re %ust seein a

lot o! these lea"y systems start payin attention 3e"ause Bit"oin has the opportunity to really disrupt

those industries.

ABL:At the Bit"oin "on!eren"e6 you4re there kind o! representin - you rite !or $aymentsSour"e6 hi"h

talks more a3out "onventional 3ankin and thins like that. 5hat as kind o! your take on Bit"oin. Do you

think that it represents threat2 8s it a ood thin6 is it a 3ad thin2 5hat your read at this point2

B:Bit"oin de!initely poses a threat to "ertain areas riht no. 8 kno they ere talkin a3out this mi"ro-

payments6 like so you "an pay per arti"le instead o! per su3s"riptions. Charita3le ivin is another one

that they talked a3out6 and then international remittan"e as a really 3i deal as ell. So like 8 said65estern Enion and some o! these other ire trans!ers6 Bit"oin de!initely poses a threat to them. But

supposedly6 they4re on it. So6 ill they ork ith Bit"oin or ho ill they ork ith Bit"oin6 8 uess6 is hat

e need to think a3out no2

MH:8n the 3ier pi"ture6 Adam6 all these thins "ould 3e "omplimentary. 5hen people talk a3out

"ompetition6 "ompetition does not alays have to mean inner-take-all. $en"ils and pens "ompete ith

ea"h other in some sense6 3ut there are some types o! ritin that you miht "hose to do ith a pen"il

and there are some types o! ritin that you miht "hose to do ith a pen. Bit"oin4s an alternative that

"ould siphon o!! some transa"tion volume6 3ut it doesn/t mean kno"kin the other thin out o! the 3o9

ne"essarily. Somethin that 8 alays like to talk a3out6 hen e talk a3out oin to a "ashless so"iety -

there are "ertain transa"tions today that 8 like to pay !or ith my "redit "ard6 3e"ause even thouh 8 pay it

o!! the "redit "ard at the end o! every month6 8 like to et the reards6 8 like the !raud prote"tion. So6 thereis some value to that6 3ut there are other transa"tions that today6 8 miht "hose to pay !or ith "ash and i!

"ash oes aay6 8 miht ant some other ay to pay that is not ne"essarily tra"ked6 and tra"ed6 and

data-mined and that there needs to 3e some kind o! an alternative as e o to diital payments6 and

Bit"oin has shon that that/s possi3le.

ABL:=ou say that "rypto "urren"ies represent an alternative6 and 8 think that 8 aree ith that6 3ut the

part that 8 "ome 3a"k to6 you kno6 in the $en"il:$en arument is that may3e that ouldn4t 3e the "ase6 i!

all the orld had ever knon as pens. =ou kno hat 8 mean2 8t seems like that4s true6 3ut riht no6

e have kind o! a de3t 3ased money system6 and Bit"oin isn4t de3t 3ased6 Bit"oin is asset 3ased6 it4s

onership 3ased. ;ust seems like it4s very6 very disruptive to a lot o! e9istin systems 3eyond the ones

that you happen to mention. 8 am "urious !or your thouhts on that2

MH:8t de!initely is an emerin "ompetitor to $ay$al6 and to some e9tent6 to 5estern Enion6

MoneyFram6 3usinesses like that. =ou kno6 there is a report that "ame out a3out a eek ao 3y this

"ompany "alled 8S6 they are vendor o! 3ankin te"hnoloy6 the "ore systems that 3anks run6 they are

one o! the 3i providers o! that. And they did this hole sort o! !o"us roup study a3out real-time

payments6 and they did all these sort o! pollin and resear"h to make a 3usiness "ase that "onsumers

ant real-time payments6 and that they ould "onsider this e9tremely valua3le. And 8 read that6 and 8

thouht it4s kind o! silly that in the orld that e live in today6 here 8 "an send you an email and you4ll et


17/23

it almost instantaneously6 that it4s "onsidered a sort o! a oal or rea"h !or the 3ankin system to ena3le

real-time person-to-person payments or a""ount-to-a""ount trans!ers or real-time remittan"es. Ho hard

"ould it possi3ly 3e2 8! you 3uild the 3ankin system !rom s"rat"h today6 it ould look more like Bit"oin

than the pat"hork that e have6 and so it shos hat 3ankin "ould 3e like i! you didn4t have so many

lea"y systems. ,eulation is also a !a"tor and 8 don4t ant to 3e disinenuous6 8 think that the part o! the

issue the 3anks !a"es they have a AML and &=C reuirements. *hat adds "ost and that adds !ri"tion.

Satoshi didn4t ask !or any li"enses or permissions hen he desined Bit"oin6 he %ust kind o! ent aheadand did it6 and le!t it !or the users to !iure out ho they interate that into the real orld.

B:8t4s de!initely really 3ene!i"ial !or mer"hants that the "urren"y sta3ilies. 8t4s oin to 3e a "heaper

system i! like Mark said6 e "an keep the "ost don6 3ut ith the "urrent reulations 8 am not sure that

that4s oin to 3e possi3le6 3e"ause these 3usiness are oin to have to start ettin state li"enses hi"h

is a pretty 3i e9pense6 3ut you also have the no "hare-3a"k thin hi"h6 !or mer"hants6 looks very

attra"tive. So6 hope!ully6 e "an do that and then it ill 3e a 3i threat6 3ut the reulation riht no is - e

are oin to really have to talk to the reulators6 8 think - the Bit"oiners are a"tually oin to have to o

out and make that happen and not ait !or the overnment to ask them.

ABL:#rik oorhees is one o! the names out there in the Bit"oin "ommunity ho is 3asi"ally sayin that it

is a 3ad idea and askin !or trou3le to operate any kind o! Bit"oin 3ased 3usiness out o! the ES. So6 on

one side o! it6 there4s that. +n the other side o! it6 as you4re talkin a3out hat the reulations and state 3y

state li"enses some states6 su"h as *e9as6 have essentially said that anyone ho does 3usiness ith

anyone livin in *e9as hether or not you have a ne9us6 as they "all them6 ithin the state must "omply

ith6 have all the li"enses and !ollo all o! the rules as i! they ere in the state. Do you think that there is

a pla"e !or Bit"oin 3ased 3usinesses to 3e operated out o! the Enited States6 or do you think e ill see

more o! an e9odus as e move2

B:8 ould %ust say that 8 think there is a lot more states than %ust *e9as. Most o! the states that 8 mean

you have to et li"enses in6 even i! you4re outside o! the ES. So that4s %ust somethin that oin to have to

happen either ay.

MH:8 think it4s oin to 3e hard. 8 think it4s de!initely oin to 3e hard !or Bit"oin-related 3usinesses. #rik

orked that Bit8nstant and they sa the ritin on the all in the sense that they did reister as an MSB a

lon time ao6 like6 more than a year ao6 8 think. *hey reistered as an MSB6 they %ust6 you kno6 it

asn4t ne"essarily that they ere 3ein oody oodies. $eople don4t ant to o to %ail. *hat4s a very

reasona3le motivation. 8 think it4s oin to et harder and 8 think you are seein ripple e!!e"ts !rom the

reulation throuh the 3ankin system. 8 kno o! at least one Bit"oin entrepreneur ho had to put some

plans on hold 3e"ause his 3ank ot !reaked out. -Got that it as 3ased ne"essarily on loi" or reason or

pointin somethin spe"i!i" in the reulations6 it as the Mt. Fo9 seiure nes 3roke6 and the 3ank that

previously had made "ommitments to ork ith him %ust said6 'e are not doin this6 and the uy has to

start !rom s"rat"h aain. So there4s these sort o! indire"t e!!e"ts that are "omin !rom the reulations. 8t4s

oin to 3e hard. 8t4s oin to 3e really interestin to at"h. 8 don4t kno hether there has to 3e an

e9odus6 3ut 8 ouldn4t 3e surprised i! some entrepreneurs souht more el"omin %urisdi"tions.

B:8t oes ith the Bit!loor thin too6 ith ,oman. His a""ount ot shut don at Capital +ne6 and likely

3e"ause they4re lookin at him as risky money transmitter 3usiness6 hi"h even outside o! the Bit"oin

spa"e6 those a""ounts et shutdon uite !reuently. But he4s havin to deal ith like ettin the "he"k

3a"k !rom the 3ank6 and then !indin another 3ank to open an a""ount so he "an et that money 3a"k to

his users 3e!ore6 hi"h is oin to 3e uite di!!i"ult !or him6 so it4s %ust6 yeah6 8 think the ES reulations

and the 3ankin system riht no6 lookin at Bit"oin 3usinesses6 it4s oin to 3e a strule !or Bit"oin


18/23

3usinesses.

ABL:+ne thin that %umped out to me a3out the Mt. Fo9 issue as that the a"tions a"tually taken 3y the

Department o! Homeland Se"urity. 8 had 3een under the impression that this as not enerally an area

that they ere involved in. So6 aain6 !rom your perspe"tive6 is this a normal a"tion2 Should it have "ome

!rom a di!!erent aen"y2 8s it surprisin to you at all2 +r am 8 %ust makin somethin out o! nothin2

MH:8 as surprised. 8 am not an e9pert in all o! the leal issues here 3ut 8 as little 3it surprised6 3e"ause

8 think hen 8 think o! the Department o! Homeland Se"urity6 8 think o! them stoppin ti"kin time 3om3s

or hatever. May3e this does !all under their port!olio6 3ut you kno6 inC#G ould have 3een the

aen"y 8 ould have e9pe"ted to take a"tion6 and o! "ourse it doesn4t really help in terms o! opti"s that it4s

Department o! Homeland Se"urity6 riht6 8 mean...

ABL:Certainly.

MH:8! the kno"k on "rypto-"urren"ies is that they !a"ilitate money launderin6 then even i! this as under

the %urisdi"tion o! DHS it %ust sort o! has all this insinuations that may not 3e !air. 8 mean the "rime that

alleedly as "ommitted 3y Mt. Fo9 as operatin as an unli"ensed money transmitter6 so 8 have seenno eviden"e that any ne!arious "hara"ters or truly ne!arious "hara"ters ere usin Mt. Fo9 to launder

money. 8t as more %ust a violation o! the reuirements to !ile the riht paperork and pay the !ees and

hatnot. But hen you have DHS involved6 that name %ust has "ertain asso"iations ith it.

ABL:5here do you think that this "rypto"urren"y movement is oin2

MH:8 think there is... Bailey had to step out 3y the ay. rom hat she told me a3out the "on!eren"e6

there is still a lot o! interest in it. De!initely !rom the C "ommunity. 8 think that dealin ith the reulators

is oin to 3e a "hallene. 8 think dealin and interatin ith the 3ankin system is oin to 3e a

"hallene. But there is somethin that - 8 alays !oret to note this henever 8 talk a3out 3it"oin ith

people - 3ut there is somethin that "rypto"urren"y has oin !or that it4s sort o! su3%e"tive6 3ut the enery

and the enthusiasm around it in that "ommunity is really somethin. 8 have never heard o! anyone talka3out oin to a Foole 5allet MeetEp6 riht2 Ho many $ay$al user !orums are there out there6 aside

!rom hat people "omplainin a3out $ay$al. *here is a real sort o!... And "riti"s "all it "ultish and 8

a"tually think that it sort o! very endearin ith the people you meet there6 there really into it6 they 3elieve

they are "hanin the orld6 8 don4t kno i! they a"tually are "hanin the orld6 3ut they 3elieve in it and

they are dedi"ated and that "ounts !or somethin. *he other thin6 hen people talk a3out the value o!

"rypto"urren"y6 i! 8 handed you a poker "hip and 8 said6 OAdam6 this poker "hip is really valua3le6O you

ould lauh at my !a"e - it4s %ust a pie"e o! plasti". But i! 8 told you that this poker "hip "ould sprout out

ins and !ly anyhere in the orld pro3a3ly instantaneously6 and at tops 7? minutes6 anyhere 8 said on

"ommand6 and the person re"eivin it ouldn4t even have to kno it "ame !rom me6 ell that has some

value. 5e don4t kno e9a"tly ho mu"h that orth6 3ut it4s orth somethin6 and so 8 think as lon as the

e9"hane rate is... And you kno hat it4s sta3ilied too6 it4s like over a >?? no riht2 8 mean it as like>>7 last 8 "he"ked.

ABL:=eah6 it4s 3een !loatin around there.

MH:=eah6 so6 you kno6 a!ter the volatility !e eeks ao6 it seems to 3e !airly sta3le 3ut as lon as this

thin ets orth more than a penny in terms o! the e9"hane rate6 then the proto"ol is use!ul. So6 8 don4t

kno i! it4s oin to %ust sort o! stay as underround thin or it ill et more mainstream6 3ut it4s oin to

3e really interestin to at"h6 and 8 don4t kno e9a"tly ho it4s oin to play out6 3ut 8 do think it4s oin to


19/23

have some kind o! an impa"t. #veryone makes !un o! me here 3e"ause 8 talk a3out Bit"oin so mu"h

around the o!!i"e6 and 8 have 3een into it !or like a year no6 3ut 8 %ust... 8 really admire that "ommunity. As

!ar as hether Bit"oin "an 3e "ompati3le ith 3ankin - in a 3etter orld it ould 3e. 8 mean6 in reality6 no.

8n reality 8 think there is oin to 3e6 like6 they are either oin to really "ra"k don on these 3usinesses6

or it4s oin to !or"e some kind o! a 3roader "onversation a3out money and priva"y6 hi"h is - the

optimisti" vie is that may3e like people ill take another "loser look at some o! these money launderin

las. Do e really need &=C at the very lo end2 8 ent to MoneyFram last year %ust to pay a 3ill6 and 8

had an invoi"e num3er !or the 3ill6 riht2 So6 8 had the "orre"t amount o! money6 "orre"t amount o! "ash6 8

had the invoi"e num3er6 so the re"ipient o! the payment knos that it4s the riht 3ill6 3ut MoneyFram still

asks and they didn4t6 the re"ipient did not need my name or address.

ABL:,iht6 they don4t "are they "are as lon as they et paid.

MH:,iht6 3ut MoneyFram insisted that 8 ive them my name and address. And 8 am sure it4s not

3e"ause MoneyFram really "ares. *hey are pro3a3ly doin it - either they are e9pli"itly reuired to do that

under &=C6 or they are tryin to impress the reulators 3y oin over-and-a3ove sayin look at all this

data e are keepin. But either ay6 8 mean6 hy do 8 have to have my name and address !loatin around

one more data3ase2

ABL:And it kind o! 3rins us 3a"k around to this 3i vs. small is a"tually in reality di!!erent6 3ut the ay

that our rules tend to ork does not di!!erentiate 3eteen those to. 8t4s very one-sie-!its-all solution

aain this is an area here 3e"ause Bit"oin is so ranular in its implementation6 8 mean6 you "an do very6

very small payments very easily6 you "an do very6 very lare payments very easily. 8t seems like the lare

payment sie is kind o! already taken "are o!6 e have systems here that already !un"tions ell and its

"ost relative to the amount that 3ein trans!erred isn4t that 3ad6 3ut it4s on that lo end here these ne

"rypto"urren"ies really seem to 3e innovatin 3y takin out a lot o! this6 !rankly6 heada"he. 8 mean6 do you

think that the system "ould possi3ly develop in su"h a ay so that smaller transa"tions6 or little stu!!6

small-3all stu!!6 is not under the same sort o! reuirements su"h as the &no =our Customer - &=C - and

all o! the other reulatory 3urdens that the 3i 3anks need to have !rom the perspe"tive o! overnment6

3ut may3e don4t make sense on the small ones.

MH:8t "ould 3e ith6 like6 the Lo"al Bit"oin sellers6 3e"ause there is an out in the inC#G reulations. 8t

says you4re su3%e"t to these reuirements6 you4re a money transmitter - MSB - i! you do this 'as a

3usiness. So some o! these Lo"al Bit"oin sellers6 and 8 don4t ho they de!ine 'as a 3usiness6 3ut the

MeetEp roup that e o to6 some o! those people have 3ouht or sold 3it"oins in over the "ounter

market6 and that "ould %ust 3e part o! the solution6 3e"ause they keep under the radar6 they do a little

transa"tions here and there. 8t4s not super e!!i"ient6 3ut it4s harder to "ontrol or shutdon like Mt. Fo9 as.

Mt. Fo9 as the least Bit"oin-like aspe"t o! the Bit"oin orld6 riht2 8 mean Bit"oin is de"entralied6 it4s

peer-to-peer6 it4s distri3uted6 it4s you kno... *his is somethin a"tually you uys should talk a3out ith

your "o-host is that you "an arue that it4s anti-!raile system.

ABL:=eah6 8 am very !amiliar ith this "on"ept. 5e4ve 3een talkin a3out it !or a3out a month no. =eah6

the more you pun"h it6 the less damae you take !rom ea"h pun"h.

MH:,iht6 so 8 think the little Bit"oin sellers "ould 3e part o! the solutions. 8t4s not oin to 3e a reat ay

!or like Cs to 3uy this stu!!6 or !or institutional investors6 3ut i! 8 ant to 3uy somethin !rom... And it4s not

super e!!i"ient either to o to meet someone at the Star3u"ks to et the payment. 8 mean6 that ill 3e a

part o! it@ people ho run a little small 3usinesses i! they %ust start a""eptin 3it"oins and ettin paid in

3it"oins. =ou "an4t live on that6 e9"ept !or that or3es reporter6 you "an4t. *he priva"y aspe"ts o! Bit"oin


20/23


21/23


22/23

oin@ Man6 8 am startin a %ournalisti" oraniation at a time hen %ournalism is !un"tionally 3ein

outlaed and 8 am doin it a3out a topi" that invalidates a lot o! the e9istin poer stru"tures 3e"ause it

takes out all o! the pro!it.

MH:=ou kno6 the pendulum "an sin the other ay. Go that the A$ thin has 3roken they4re makin

a stink a3out it. +ne ould hope that that ould provoke su!!i"ient outrae that there is some push3a"k. 8

don4t think it4s the apo"alypse 3ut it4s %ust 3ad6 and it does not re!le"t ell on this administration6 it does

not re!le"t ell on his party6 o! hi"h 8 as raised to 3elieve that as the party o! "ivil li3erties6 hah< But

shos you ho mu"h attention 8 as payin. 8 mean6 there is enerally a roin mistrust o! institutions

hether they 3e overnment6 media6 the 3anks...

ABL:or me6 it4s a3out "entraliation. 8 mean6 really.

MH:=eah6 8 think that the peer-to-peer thin is a very stron "ase !or it. 8t4s a 3i philosophi" uestion6 3ut

yeah6 you de!initely have a ood point6 3ut the media is 3e"omin more and more di!!use on its on. *he

3i media outlets6 they are all strulin. Ameri"a Banker4s ot a ni"he6 so e4re doin ok. A"tually6 e4re

doin pretty ell6 8 think.

ABL:,iht6 you4re not !inan"ially sensitive6 yeah6 8 aree ith you 8 think that the ni"he that you4ve

approa"hed is ood6 and aain it almost speaks to that idea that the smaller that you et the more

valua3le that you are6 and the inverse o! that is also true6 the larer you et the less relative value you

o!!er to ea"h individual 3e"ause you have to a""ommodate more individuals in your perspe"tive.

MH:=eah6 you kno6 the !unny thin is that e are a"tually the oldest !inan"ial nespaper o! the "ountry.

ABL:8 didn4t realie that.

MH:84ll leave you ith this. 5e ere !ounded in >I hen every 3ank issued it4s on "urren"y6 and

there as no national "urren"y6 and the oriinal mission o! hat as oriinally "alled *hompson4s Bank

Gote ,eporter as to di!!erentiate 3eteen the 3ank notes that ere !or real and the 3ank notes that ere3ee. So you kno he ould e9pose "ounter!eits. ;ohn *hompson ould e9pose 3anks that6 shinplasters

as the term he used. He ould send his sons around ton in Ge =ork6 and they ould o to di!!erent

3anks ith the 3ank notes and say here4s a dollar that you4ve issued "an you ive us a dollar4s orth o!

old2 And the ones that "ould ive them - "ould produ"e the old "oins ould et ood ratins in

*hompson4s Bank Gote ,eporter and the ones that "ouldn4t he ould savae them. So our heritae ties

3a"k to all this stu!!...

ABL:=eah.

MH: He as a "hara"ter. He as a pra"titioner as ell as a %ournalist. He !ounded one o! the 3anks that

is no part o! either Citi3ank or Chase6 8 !orot hi"h. And his sons ere 3ankers too. But here is a ild"hara"ter.

ABL:Mar" Ho"hstein6 Ameri"an Banker. *hank you very mu"h !or your time.

MH:My pleasure.



23/23

AMA:8 may have otten some o! these te"hni"al details not uite riht. So6 8 ill a3solutely el"ome

people4s responses and 3e "orre"ted6 and6 in !a"t6 it ould 3e reat to have some o! the developers

intimately involved in these de"isions and ho understand the 3alan"e and "omprises and tradeo!!s more

"learly talk a3out this6 and perhaps "ome on the sho and 3e intervieed6 3ut the 3ottom-line6 the

prin"iple 8 really !o"us on6 is the prin"iple o! neutrality. 8t4s 3asi"ally re"oniin that e have no idea hat

Bit"oin ill 3e as a plat!orm6 and hat appli"ations ill 3e ena3led. 5e have 3arely s"rat"hed the sur!a"e6

and in terms o! the 8nternet history6 e are at the point o! ena3lin email6 hi"h as on the 8nternet in the

?s. rom there until you et to a"e3ook there is a lot o! evolution that happens6 and none o! it as

!oreseea3le 3a"k in the ?s. So let4s not make netork that "an only do email. *hat4s the 3asi" "on"ept

here. Geutrality ill help us 3uild the ne9t layer o! appli"ations and a3ove that the ne9t and so on.

ABL:8 think that that4s really a reat point to emphasie is %ust that e don4t kno hat4s oin to

happen. 8t4s that e4ve ot this thin that o3viously has potential and there "ould 3e so many thins that

"ould "ome on top o! it6 3ut the appli"ations that are oin to 3e the really revolutionary ones that "hane

everythin e have no idea hat they look like. So6 yeah6 %ust reservin those de"isions. 8! this de"ision

should 3e made it shouldn4t 3e made at this point. 8t needs to 3e made !urther don on the line hen

e4ve seen some o! this roth that "omes on top o! it6 and e say@ +k ell6 these are the thins that

ork and these are the thins that "learly do not ork. But even so6 the point is that the de"ision 3einmade no is a de"ision made in inoran"e and it4s alays a poor "hoi"e to do that.

AMA:=ou4re mu"h more likely to et the de"ision ron at this point. +ur plannin horion is mu"h

shorter than our innovation horion6 so essentially you4re steerin 3lind i! you make de"isions like that

no. *he key here !or me is neutrality is not a la"k o! prin"iples. Geutrality is a prin"iple in itsel!. 8 think it4s

the most important prin"iple in Bit"oin - the one that ives it all its poer.

ABL:*hanks !or tunin into #pisode > o! Let4s *alk Bit"oin. 5hether you liked6 loved or hated the sho6

e ant to kno hat you think. $lease send all "omments6 uestions and o!!ers to help to

mailKletstalk3it"oin."om. *hanks to Andreas M. Antonopoulos6 Dr. Stephanie Murphy6 *homas +4Brien6

Mi"hael Mean6 Chris +dom6 Charles Hoskinson6 Mar" Ho"hstein and Bailey ,eutel !or providin

"ontent !or this episode. Musi" !or this episode as provided 3y ;ared ,u3ens . or more in!ormationa3out the musi" e use and the open sour"e artist to "reate please visit .letstalk3it"oin."om:musi".

Stay tuned !or #pisode >J "omin up on riday6 the th o! ;une !eaturin an intervie ith $eter6 the lead

developer o! eather"oin and Ta"h one o! the minds 3ehind the Bit"oin vendin ma"hines "omin to a

!uture near you. As alays you "an !ind our episode spe"i!i" tip %ars and other support means at

.letstalk3it"oin."om. *hanks !or listenin.

*his episode as trans"ri3ed 3y Lord8* and Mansoor Mua!!ar. *he trans"ription as revieed 3y A3dussamad

(https0::3it"ointalk.or:inde9.php2a"tionUpro!ile@uUQV>). *his trans"ript is released under the Creative Commons

Attri3ution .? li"ense0

http0::"reative"ommons.or:li"enses:3y:.?:

Documents

Let's Talk Bitcoin, episode 13, "Movers & Shakers"