Transcript of Episode 58 The Price of Money Participants: Adam B.

Levine (ABL) ost of LTB

Andreas M. Antonopo!"os (AMA) #o$host of LTB %tephanie M!rphy (%M) #o$host of LTB &eor'e Ettin'er (&E) #ontri(!tin' editor of LTB

Adam B. Levine i) and *e"come to episode 58 of Let+s Ta", Bitcoin) a t*ice$*ee,"y sho* a(o!t the ideas) peop"e) and pro-ects (!i"din' the di'ita" economy and the f!t!re of money. .isit !s at "etsta",(itcoin.com for o!r dai"y '!est ("o') a"" o!r past episodes) and of co!rse) tippin' addresses. My name is Adam B. Levine) and today *e+re ta",in' a(o!t the iss!es of no*. Money made of stone mi'ht not seem "i,e a modern topic) (!t it t!rns o!t its one of the (est a""e'ories for not on"y *hy Bitcoin is va"!a("e) (!t the very nat!re of ho* they+re transacted. LTB contri(!tin' editor &eor'e Ettin'er te""s !s a"" a(o!t it in the /s"and of %tone Money. Then) the price is 'oin' n!ts and the fren0y in #hina may (e to ("ame. 1e *rap !p today+s sho* ta",in' n!m(ers) ATMs) the 2!an) and the !pcomin' #on'ressiona" hearin's in the 3nited %tates. B!t first) /+m -oined (y %tephanie M!rphy and Andreas M. Antonopo!"os to ta", the recent /np!ts.io *a""et hac,) *e( *a""et safety as if that e4ists) t*o$factor a!thentication )and *onder a"o!d *hat it *o!"d ta,e to see ins!red) rep!ta("e on"ine *a""ets. Another 'ood one dead$ahead $ en-oy the sho*. %tephanie M!rphy 5ecent"y there *ere some thefts of (itcoin in the ne*s. 6ne *as the *e(site) /np!ts.io) *hich act!a""y 'ot hac,ed someho*) and it *as a *e( *a""et service and the hac,ers too, a"" the (itcoins from there. Then there *as a '!y) -!st an individ!a") *ho had somethin' "i,e 788 (itcoins on B"oc,chain.info and *asn+t !sin' t*o$factor a!thentication) and someho* some(ody hac,ed his ("oc,chain.info *a""et and transferred a"" the (itcoins o!t to some !n,no*n destination. e very fr!stratin'"y 'ot a notification poppin' !p on his phone *hi"e he *as at the 'ym sayin' 9yo! have sent 788

(itcoins: to some address that he didn+t reco'ni0e. e act!a""y posted a(o!t it on 5eddit and) / mean) if / *ere him and / "ost 788 (itcoins / thin, /+d (e *ay more frea,in' o!t than he *as. e didn+t seem "i,e it *as the end of the *or"d for him) (!t he did *ant to *arn other peop"e a(o!t *hat had happened. %o / fi'!red *e co!"d ta", a(o!t this on the sho*. 1hat can peop"e do to sec!re their Bitcoin *a""ets;

Andreas M. Antonopo!"os 2o! ,no*) Adam) *hen *e first started disc!ssin' this yo! said) 9do *e rea""y need to do another sho* on *hy peop"e sho!"dn+t store a"" of their money on on"ine *a""ets and on"y !se it for spendin' cash;: and the ans*er is yes) apparent"y *e do (eca!se that "esson is somethin' *e+re 'oin' to have to repeat a'ain and a'ain to a"" ne* !sers. /+m not rea""y s!rprised a(o!t the fact that the entire on"ine *a""et inp!ts.io *as hac,ed. /t+s not easy to do information sec!rity on di'ita" money. 1e have < mi""ion years of e4perience doin' physica" sec!rity) *e+re pretty 'ood at that. 1e=ve 'ot "ess than 58 years of e4perience doin' information sec!rity and fran,"y) *e s!c, at it. B!t /+d "i,e to p!t a tiny t*ist on this *hich is) if yo! have 788 (itcoin in an on"ine *a""et and it+s "ost) *ho+s fa!"t is it; Everyone *i"" '"eef!""y point to this poor chap *ho "ost his *a""et $ he didn+t ta,e the necessary sec!rity preca!tions) he didn+t have t*o$factor a!thentication etc. B!t at some point) / thin, it+s a"so important to point the fin'er at the soft*are desi'ners (!i"din' on"ine *a""ets and say) 9come on '!ys) *e can do (etter than this: or 9come on '!ys and 'ir"s) *e can do (etter than this.: /f yo! have 788 (itcoin in yo!r *a""et) there is no reason *hy) if yo! tried to *ithdra* a"" of it) the soft*are can+t say) 9*e"") yo! -!st tried to *ithdra* more than >8 (itcoin. 1e+re 'oin' to either de"ay it for ? ho!rs or yo!+re 'oin' to have to set!p t*o$factor a!thentication and 'o thro!'h additiona" verification): and (y the *ay *e -!st sent an emai" notification that says 9This is yo!r =hai" Mary= emai") a"" of yo!r money is a(o!t to (e *ithdra*n. 2o! have ? ho!rs to stop it if it *asn+t yo!) yo!+"" than, !s "ater.: 2o! ,no* *e can do (etter 3@ desi'n *itho!t chan'in' the core protoco") *itho!t messin' the reversi(i"ity of transactions. 1e can protect !sers a'ainst their o*n mista,es. / thin, this is an area that is ripe for innovation and a "ot of the on"ine *a""ets co!"d do a m!ch (etter -o( ens!rin' that peop"e don+t p!t themse"ves in that sit!ation in the first p"ace) and 'ive them an opport!nity) (eca!se A!ite honest"y) /+d 'o to an on"ine *a""et that had the ? ho!r de"ay 9hai" Mary: emai" if yo! tried to *ithdra* everythin' *itho!t t*o$factor.

%M 2eah) it seems "i,e) ri'ht no*) there+s not m!ch diversity in terms of the services that *e( *a""ets offer. / thin, yo!+re ri'ht a(o!t that Andreas) there is a "ot of opport!nity for innovation there. A"so) yo! (ro!'ht !p a rea""y 'reat point a(o!t ("amin' the victim. / mean yeah of co!rse this poor '!y) no(ody) *e don+t *ant to see any(ody 'et their (itcoin sto"en) (!t he *asn+t as,in' for it (eca!se he didn+t have the proper safety preca!tions on his *a""et) ri'ht; There is sti"" a thief invo"ved) some(ody sti"" sto"e his (itcoin so) *hy not ("ame that person or ("ame the peop"e *ho are ,ind of the sec!rity '!ards) *hich is those *ho are offerin' the *e( *a""et service. ABL / mean) !"timate"y) that+s the case) is that the peop"e *ho are r!nnin' the service are responsi("e for it) (!t does that matter in every circ!mstance; This '!y is B8 years o"d) it+s not "i,e it+s a corporate entity that can (e s!ed. 1hat can (e done; AMA 1e"" in the case of inp!ts.io that "ost a "ot of these Bitcoin) nothin' can (e done. /n the case of the !ser *ho "ost money o!t of a *a""et) and (y the *ay) this *as on one of the *a""et services that / !se) that / p!("ic"y endorse and that /+m very happy *ith) they have very e4tensive sec!rity mechanisms and if yo! !se them and if yo! !se the on"ine *a""et for petty cash and day to day spendin' as / do) then it is a perfect"y sec!re) very convenient) very nice service. The A!estion is) sho!"d *e desi'n the sec!rity for the e4pert !ser) or sho!"d *e desi'n the sec!rity for the everyday !ser; ere+s the pro("em) one of the most insidio!s and misapp"ied s"o'ans in the Bitcoin space is 9(e yo!r o*n (an,.: That+s a terri("e s"o'an. /t+s a terri("e s"o'an for a n!m(er of reasons. Cirst of a"") the main thin' that (an,s do) no(ody *ants to do) any*ay) and don+t need to (e done. %o / don+t ,no* *hy yo! *o!"d *ant to f"eece$$ %M DLa!'hin'E 2eah) report yo!rse"f to the 'overnment. AMA C"eece yo!rse"fF Go s!spicio!s activity reports on yo!rse"f. Cree0e yo!r money every no* and then. &ive yo!rse"f co"d s*eats *hi"eH

%M Gon+t a""o* yo!rse"f to *ear s!n'"asses. AMA Gisa""o* payments to certain types of entities that the 'overnment no) / mean...yo! don+t *ant to (e that ,ind of (an,. At the same time yo! don+t have the capita" to (e the other ,ind of (an,) the one that does "endin' and H D"a!'hin'E. %o the on"y part of 9(e yo!r o*n (an,: is the sec!rity and rea""y yo! can+t do that. /t+s a very (ad s"o'an) rea""y *ish it+d (e 9(e *itho!t (an,s: $ sho!"d (e the s"o'an. 1e *ant to 'et a"" seven and a ha"f (i""ion of !s !n(an,ed) not (an,ed the others. That *o!"d (e a first. B!t any*ay) (ac, to the point) there is a "ot more *e can do in terms of sec!rity and a "ot of it can (e simp"e !ser e4perience and !ser interface desi'n. There+s no reason *hy that person *asn+t receivin' a na''in' emai" every day after they *ent over a >8 (itcoin (a"ance sayin' 9yo!r set!p is insane"y insec!re) to a "eve" that *i"" (e *ritten a(o!t in the papers and (e in infamy (eca!se it+s so st!pid. /nsta"" t*o$factor a!thentication no*) yo!+"" than, !s "ater.: / mean) *e can do (etter interface desi'n) *e can e4pect more of on"ine *a""ets) *e have pro'ramma("e money peop"eF 3se itF ABL /t comes (ac, to that f!ndamenta" A!estion of are on"ine *a""ets safe -!st at a""; /s there a possi(i"ity to ma,e a *e( *a""et that+s safe; Beca!se there have (een instances of t*o$factor a!thentication) / mean Gavid Perry very ear"y in Let+s Ta", Bitcoin+s career) had t*o$factor a!thentication on his acco!nt) on ("oc,chain.info) and *o!nd !p / thin, he "ost $ / don+t remem(er ho* many) (!t it *as a s!(stantia" amo!nt of money at the time. 1hat+s the pro("em) here; AMA The pro("em is t*ofo"d. 6ne is ass!min' that there is s!ch a thin' as safe. There is no s!ch thin' as safe. Iothin' is >88J safe. 2o! can+t ma,e yo!r money >88J safe) it is impossi("e. 1hat yo! can do is yo! can ma,e it more diffic!"t for the attac,er to 'ain money that is not rea""y *orth it) (eca!se it costs more to attac,) or to minimi0e the impact a (reech *i"" have on yo!r !se) so that yo! can consider that an accepta("e ris,. %o) are on"ine *a""ets safe eno!'h for petty cash and dai"y spendin' !se) *ith the correct !se of the sec!rity feat!res; A(so"!te"y. /+ve (een !sin' them for a year or more) /+m very happy *ith the services and they can tota""y (e made to (e sec!re.

B!t / never ,eep more than 5 (itcoin in there) may(e >8. The rest of my money is offsite) off"ine) co"d stora'e) paper *a""ets) and / !se t*o$factor a!thentication) second pass*ord) first pass*ord) and / ,eep most of the ,eys off. %o) yeah) yo! can do it and they can (e safe. Io* the ne4t A!estion is) ho* do *e ma,e them safer for (roader pop!"ation that is acc!stomed to a reversi("e c!rrency *here (an,s can offer reco!rse in the case of theft) (eca!se they contro" the f"o*; %M 2eah / *as a(o!t to (rin' that point !p) a(o!t t*o$factor a!thentication) and *e+ve disc!ssed on this sho* (efore ho* sometimes it can (e ,ind of a pain. 2o! ,no*) *hat if yo! "ose yo!r phone *ith yo!r a!thentication acco!nt on it and s!dden"y yo! can+t access yo!r (itcoins (eca!se of that; /s it (etter to err on the side of ca!tion and perhaps have some peop"e not (ein' a("e to access their (itcoins) not (eca!se of theft (!t (eca!se they for'ot one of their pass*ords. 6r they "ost their &oo'"e a!thenticator or *hatever. / thin, that A!estion is some*hat !p to the individ!a") (!t it is ,ind of hard to ,no* *hether yo!r more v!"nera("e to theft or yo!+re more v!"nera("e to for'ettin' yo!r pass*ord and thin's "i,e that. AMA 1e"") that+s a diffic!"t A!estion to ans*er primari"y (eca!se *e don+t ,no* *hat the c!stomer service capa(i"ities of these on"ine *a""ets are. 6r rather) *hen *e do have need for c!stomer service) in 'enera" most of them have (een fo!nd *antin' and are not a("e to de"iver the ,ind of c!stomer service that+s reA!ired. %o) it+s not !ncommon to have a pro("em *ith *ithdra*a" or a transaction and *ait for <$5 *ee,s to 'et a reso"!tion from one of these on"ine *a""ets. Part of the iss!e for them is) if they increase sec!rity) they+re a"so 'oin' to increase the n!m(er of s!pport reA!ests for 'ettin' aro!nd that sec!rity or dea"in' *ith pro("ems as yo! said %tephanie. /t+s definite"y not easy. The (ottom "ine is that on"ine *a""ets can (e made sec!re and that+s the main feat!re and capa(i"ity they have to offer) (eca!se offerin') as their on"y feat!re) the a(i"ity to do cheap transactions on"ine) is somethin' that yo! can a"ready do *ith other types of *a""ets and isn+t rea""y a (i' differentiator. / thin, *e+re 'oin' to start seein' sec!rity and c!stomer service ta,e a "ead in (ein' differentiators for these companies and that+s ho* it sho!"d (e. ABL

%o) "et+s ta,e this a different *ay for a second. /s there a niche for a *e( *a""et that act!a""y '!arantees yo!r (a"ance) in the event of *hatever. / mean) it co!"d (e a *a""et that provides it as a service or it co!"d (e third$ party ins!rance (ro,er that essentia""y "oo,s and says 96,) *e"") yo!+re on ("oc,chain.info *ith t*o$factor a!thentication) so *e+re *i""in' to ta,e the ris, on yo!) here+s the payment: and essentia""y '!arantee yo!. %M &ood "!c, findin' someone *ho *i"" '!arantee that D"a!'hsE. AMA and ABL They set standards ABL This is ho* ins!rance act!a""y comes into e4istence) it+s the settin' of standards and the enforcement (y the peop"e *ho act!a""y have it to ris,. The ris, 'oes off of the person *ho is (!yin' the ins!rance and onto the ins!rer) *ho it then (ecomes the f!""$time -o( of. AMA L"oyds of London is !s!a""y the first for o(sc!re and stran'e ne* ins!rance schemes) (!t very) very A!ic,"y thereafter) there are do0ens of reins!rance companies that *i"" act as !nder*riters on different types of po"icies. The A!estion is not *hether yo! can 'et s!ch ins!rance (!t *hat it *i"" cost and ho* m!ch doc!mentation yo! need to provide in order to act!a""y 'et it to *or,) and *e have seen this in the information sec!rity space so 'ettin' ins!rance a'ainst hac,in' and to cover the cost of (reech notification and restoration and restit!tion of !sers. That has e4isted no* for a"most a decade) and it+s (ecome a rather sophisticated) *e"" defined and easi"y avai"a("e type of ins!rance po"icy here in the 3.%. %o) / don+t thin, it+s o!t"andish to ass!me that yo! can have essentia""y private depositors ins!rance that is !nder*ritten (y an ins!rance company. / thin, that is possi("e and / thin, it+s a very interestin' differentiator of prod!ct. ABL This is to (oth of yo!) *o!"d yo! pay for that service; /f it cost 8.85J or there *as H *hat+s a nomina" fee for it; %M

/ don+t thin, it *o!"d cost 8.85J of yo!r (a"ance ann!a""y or *hatever. / thin, it *o!"d (e a "ot more than that. 1e+re seein' that thefts are act!a""y pretty common. / mean) for me) it *o!"d depend on the cost and / *o!"d have to ans*er it (ased on that) (!t then a'ain) ins!rance companies a"so have an incentive to prevent crime (efore it happens and to so"ve crimes after they happen and a"so to prevent ins!rance fra!d) ri'ht; %o) they+re 'oin' to (e "oo,in' into this caref!""y and even if not every(ody (!ys ins!rance) ins!rance companies for Bitcoin *a""ets co!"d potentia""y have a safety$ promotin' or (eneficia" effect on the *ho"e comm!nity as a net. ABL That+s the sort of thin' that *o!"d act!a""y ma,e it so that / *o!"d !se a *e( *a""et) (eca!se /+ve !sed *e( *a""ets for incredi("y sma"" amo!nts *hen / had a(so"!te"y no other option. B!t other than that) / rea""y avoid and) yo! ,no*) *hen /+m !sin' android *a""ets and thin's "i,e that. Then a'ain) that+s -!st ,eep a "itt"e on there !nti" yo! don+t need it anymore and then move it off) (!t if / co!"d ,no* that this is not 'oin' to (e a pro("em /+m 'oin' to have) then its more convenient) (!t "ac,in' that) / don+t tr!st it. AMA 1e"" the (!rden of an ins!rance scheme "i,e this) "i,e depositor ins!rance on a (road *a""et service) *o!"d not fa"" on the c!stomers $ it *o!"dn+t. /t *o!"d fa"" on the provider of that service and they *o!"d pay for it in order to 'et the differentiator and competitive advanta'e that s!ch a '!arantee *o!"d offer. The thin' is) it *o!"dn+t (e a matter of 9here+s o!r sec!rity) no* te"" !s ho* m!ch *e need to pay in order to ins!re this.: /t *o!"d (e more of a (ac, and forth that *o!"d pro(a("y ta,e months *hich *o!"d invo"ve 9here+s o!r sec!rity. 1e"") *e can+t ins!re that.: 9 ere+s *here yo! need to improve and if yo! pass these and these standardsm and s!(mit to these) these) and these a!dits) then *e can offer yo! a p"an for 94.: Essentia""y) the companies *i"" have to !p$sec!re themse"ves to a "eve" that meets the scr!tiny of the ins!rer (efore they+"" iss!e s!ch an ins!rance scheme. /t+s tota""y doa("e and it *o!"d (e a 'ood competitive differentiator) and as far as /+m concerned / don+t thin, the c!stomer sho!"d ever pay for that. That *o!"d the cost of doin' (!siness and a 'reat competitive differentiator. %M B!t they may pass that cost on to the cons!mer and say *e"" there+s a fee to !se o!r *a""et) D"a!'hsE ri'ht;

AMA They may) a"tho!'h over time) / can+t see that "astin' very "on' (eca!se someone e"se is 'oin' to offer it for free. And ,eep in mind that many of the same thin's that ins!rance companies *i"" as, for *i"" event!a""y (ecome re'!"ated constraints and reA!irements in most co!ntries. / *o!"dn+t (e s!rprised if yo! start seein' this. The companies that are interested in re'!"ation *i"" p!rs!e this. %M / -!st $ yeah) / *as *onderin' a(o!t that (efore. 1hy doesn+t somethin' "i,e this e4ist) yet) (!t perhaps it+s comin'. AMA Even if it did e4ist and they+re c!rrent"y in conversation *ith say L"oyds of London) it+s a m!"ti$month or perhaps even m!"ti$year process to reach a "eve" of c"arity. As "on' as L"oyds !nderstands the ris,) and p!t it in a (rac,et and say it+s 'oin' to (e no "ess ris, than this) no more ris, than that) then they can stic, a premi!m on it. Io matter ho* *eird the prod!ct is. /t *i"" ta,e a time for them to (ecome) or any re$ins!rer to (ecome) comforta("e a(o!t the ran'e of ris, they+re ta,in' on in Bitcoin and to !nderstand it. %M K!st ima'ine the day *hen L"oyds of London is ins!rin' Bitcoin st!ff. D"a!'hin'E AMA /t *i"" come soon. They have ins!red everythin' that can (e ins!red ever in the history of ins!rance) so *hy not Bitcoin; ABL 6ne of the thin's to ,eep in mind) %tephanie) is that a year a'o *e *ere in sin'"e di'its for the prices ri'ht; /t+s "i,e Iovem(er no* a year a'o) / thin, *e *ere at LM or L8 or somethin' "i,e that. %o) *e+ve come rea""y) rea""y) rea""y far and a year a'o it -!st didn+t matter at a"") (eca!se the price *as so sma"" that the amo!nts yo! *ere ta",in' a(o!t *eren+t *orth the attention of anyone. B!t no*) a year "ater) this is the sort of pricin' that act!a""y ma,es somethin' "i,e this e4ist. And these are the sorts of events) hi'h$profi"e

events that ma,e somethin' "i,e this come into e4istence (eca!se c"ear"y its needed) and s!dden"y the mar,et is there and *i""in' to pay for it. AMA E4act"y. K!st as those (itcoin are sittin' in yo!r acco!nt) the ris, of ho"din' them increases *ith the increase in price. Price is a"most irre"evant in the "on' term s!rviva" s!ccess and techno"o'y va"!e of Bitcoin) (eca!se Bitcoin is so m!ch more to h!manity than simp"y a c!rrency e4chan'e rate. B!t) in the tactica" short term) the e4chan'e rate defines o!r p!rchasin' po*er) it defines the ris, "eve" *e+re facin') and a"so the ris, premi!m *e+re *i""in' to pay to ins!re o!r "osses. %o) essentia""y) the increase in price created ne* mar,ets no* as yo! said) Adam. ABL And it ,eeps doin' it) too. / mean) that) of co!rse) is the other thin') *hen yo! see this every month somethin' different is happenin' and yo! can trace it (ac, and say) 96N that+s the spi,e *here that person 'ot in.: AMA That+s the aspect of Bitcoin that ma,es it "oo, "i,e an /P6. The e4chan'e rate price increases) is creatin' f!nds amon' many of the peop"e invested in Bitcoin *ho are 'oin' to t!rn aro!nd and reinvest those f!nds in ma,in' Bitcoin (etter. %o *e are "ivin' the /P6 of Bitcoin and *e are ma,in' interna" 'ains in the c!rrency that a""o* peop"e to reinvest. DM!sica" TransitionE ABL i) "istener. ere at Let+s Ta", Bitcoin) *e+re (!i"din' a '"o(a" net*or, of correspondents a("e to contri(!te on$the$'ro!nd perspective *hen crypto$ c!rrency re"ated information comes across their fi"ters. /f yo!+d "i,e to -oin o!r '"o(a" conversation) send an emai") *ith yo!r name and 'eo'raphic or c!"t!ra" niche) to app"y at "etsta",(itcoin.com. K!st "i,e Bitcoin) the on"y (arrier to entry is yo!r time and 'ood *or,. Than,s for "istenin'. DAdvertisementE %M

EasyGI% is the %*iss army ,nife for yo!r domain names) he"pin' to meet their c!stomers= individ!a" needs since >MM8. EasyGI% has (een an o!tspo,en critic of %6PA and #/%PA. EasyGI% *as an ear"y s!pporter of Bitcoin and no* they are pro!d to sponsor this sho*. Go (!siness *ith a company that shares yo!r va"!es. &et a >7J disco!nt *hen yo! pay *ith (itcoin) 'o to (itcoin.easydns.com and (e s!re to !se disco!nt code LTB.
&eor'e Ettin'er 9The /s"and of %tone Bitcoins: (y &eor'e Ettin'er. %o) yo!+ve decided to te"" some(ody a(o!t Bitcoin. /) for one) am '"ad to hear it. 2o! have my con'rat!"ations and respect. E4p"ainin' Bitcoin is a no("e endeavor. 6ther no("e endeavors inc"!de (athin' a "eper) man!a""y c"earin' ("oc,a'e from a constipated m!"e) and app"yin' for anythin' invo"vin' the *ords 9phase one h!man c"inica" tria"s.: My point is) yo!+re doin' somethin' that is hi'h"y necessary and *i"") idea""y) ma,e the *or"d a (etter p"ace in the 'rand scheme) /n the immediate f!t!re ho*ever) yo! *i"" (e misera("e. 2o!+"" (e misera("e) tired) and rea""y *onder ho* anythin' 'ood co!"d come of this. Bitcoin doesn+t "end itse"f to cas!a" e4p"anation or a convenient metaphor. /n fact very fe* comparisons even s!it it. /t+s a c!rrency) (!t it *or,s "i,e a commodity. /t+s mined at "imited A!antities) so it+s a"most "i,e 'o"d e4cept it+s created in an e4act fi4ed rate and *i"" end at an e4act fi4ed point) so it+s not "i,e 'o"d. The *or, of minin' doesn+t rea""y accomp"ish anythin' either. Bitcoin is a train$*rec, of anachronisms to have to d!mp on any !ns!spectin' novice and horri("e pse!do$*ords "i,e ("oc,$chain and hash$cache -!st ma,e it so!nd "i,e more of a scam. Ta,e a"" this ins!ffera("e -ar'on and add the fact that any 'iven person yo!+re e4p"ainin' it too has !sed fiat$c!rrency notes their "ife and yo! have a recipe for H for nothin'. Pro(a("y nothin'. There the s"i'htest s"iver of possi(i"ity they+"" !nderstand and ta,e interest and a m!ch 'reater "i,e"ihood they+"" (ecome e4asperated and simp"y hate the st!ff o!t of fr!stration) and /+m 'ettin' an'ry -!st thin,in' a(o!t it act!a""y. 2o!+re more "i,e"y to create a frothin' madman *ho ca""s Bitcoin a pyramid scheme) sho*in' eA!a""y poor !nderstandin' of Bitcoin and of pyramid schemes) than an e4cited ne* adopter. 1hat *e need is a story. A story *ith a point) *ith a messa'e) *ith an i""!stration of *hat *e+re tryin' to 'et across. /n ancient times) (efore the cent!ries$o"d c!"mination of *ritten h!man "an'!a'e *as a(andoned in favor of ("o''in') this *as ,no*n as an a""e'ory. /n my "ast artic"e) / made mention of a story that he"ped fina""y introd!ce me to the *or"d of Bitcoin. And the more /+ve "earned the more apt the story has (ecome. There+s a stron' a""e'ory for Bitcoin in a c!rrency that+s a"ready (een !sed (efore. That c!rrency is h!ndreds of years o"d and there isn+t anythin' e"se A!ite "i,e it. D.oice$overE The primordia" Bitcoin &E

6ff in the Pacific ocean) amon' the #aro"ine /s"ands) is a partic!"ar trio of sma"" is"ands ,no*n to'ether as the /s"and of 2ap. /ts native residences formed severa" comm!nities amon' the is"ands and n!m(er in the tho!sands. Crom its discovery (y %pain in the >? cent!ry !nti" the t!rn of the B8 ) it *as a "ar'e"y i'nored %panish property. 6nce the is"and fe"" !nder &erman o*nership in >8MM) more detai"s of their pec!"iar c!"t!re *ere fina""y e4posed to the 1estern *or"d. More specifica""y) their pec!"iar economy. 2ap *as "!sh in ve'etation and fair"y s!staina("e) (!t had no precio!s meta"s or minera"s to (e fo!nd) so) for f!nction of c!rrency) they made stone coins. The peop"e of 2ap) ,een on not ha"f$assin' the *ho"e coin thin') decided to 'o (i' and to 'o home. They sai"ed !p to <88 mi"es to other is"ands *ith vast "imestone A!arries so they co!"d carve o!t enormo!s stone dis,s 7$>B feet in diameter) *hee"ed them over to rafts) and sai"ed them (ac, to 2ap. The men *ho carved the stone) ro""ed it into a convenient p"ace) even if it too, a do0en e4tra hands to do so) and it *as ready for trade. After they+d mined and moved the coin) its -o!rney rea""y *as done. 1hen the time came for a "ar'e trade) somethin' on par *ith "ivestoc, or a do*ry) the coin chan'ed hands. By 9chan'ed hands): / mean the t*o invo"ved parties "o!d"y and p!("ic"y dec"ared that this partic!"ar coin here *as no* property of so and so) and proceeded to "eave it ri'ht *here it *as. Io(ody co!"d (e arsed to move the ("oody thin's. They *ere massive and the comm!nity *as ti'ht$,nit) so *hy (other; &enerations passed and the stones never moved. Ta""ies *ere never mar,ed or recorded on the stones) it *asn+t necessary. B!siness *as cond!cted and anno!nced p!("ic"y and the ri'htf!" o*ner of any 'iven stone *as common ,no*"ed'e to anyone "ivin' near it. %o these stone coins *eren+t traditiona" coins. 2o! co!"d not fit them in the poc,ets of anythin' (!t the most c"o*n"y of pants. 2o! co!"dn+t even p!t them in a va!"t for safe ,eepin'. They simp"y e4isted) and the comm!nity ,ept the ,no*"ed'e of *ho o*ned *hich at any 'iven time. Anyone *ho has arrived at "etsta",(itcoin.com thro!'h conscio!s effort and not via any e"a(orate cat$on$,ey(oard incident) sho!"d (e a("e to see some of the para""e"s at *or, here. To those of yo! *ho see it) / say) 9sh!t !p) it 'ets even (etter.: D.oice overE The stone ("oc, chain. &E Cor at "east three 'enerations) there *as a partic!"ar fami"y in a partic!"ar home *hose *ea"th *as ,no*n across the is"ands. The fami"y had "on' (een o*ners of *hat mi'ht have (een one of the (i''est coins in circ!"ation) and not one of those peop"e on the is"ands had seen it. Those aforementioned 'enerations ear"ier) this enormo!s coin) *as carved o!t and "oaded !p for transport (y an e4pedition of incredi("y am(itio!s 2ap residents. Their prodi'io!s ha!" s"ipped from import manifests and into mytho$history *hen a harsh storm (attered their rafts -!st a "itt"e *ays from home shores. The raft carryin' ,in'$coin) or coin$,on'; $$ / didn+t rea""y thin, this one thro!'h) sorry $$ *as c!t "oose and their ne*$fo!nd *ea"th
th th

p"!mmeted to the sea f"oor. Io* in a (orin' physica"ity o(sessed fiat economy) this *o!"d (e the tra'ic end of an other*ise !p"iftin' ta"e of heroic and omeric avarice. The story *o!"d (e em(e""ished) ta", of sirens and *i0ards *o!"d (e peppered thro!'ho!t the narrative) and at the end of the day these men *o!"d sti"" (e (ro,e. The peop"e of 2ap) ho*ever) did not see *hat the f!ss *as a(o!t. The men of the e4pedition a"" vo!ched for the proportions of the coin and its 'enera" "ocation. Addin' to this) the fact that it *as "ost on"y in the tan'i("e sense and not in a fisca" one) there *as no reason to 'o on !sin' it. After a"") they "ost their mi""ions to a storm) not to the craps ta("e. K!st "i,e 9that coin (et*een those t*o trees: or 9that coin ne4t to Kim+s ho!se: or 9that coin of Bo(s= that "oo,s conspic!o!s"y "i,e a pha""!s): (!t he 'ets an'ry *hen yo! point it o!t. This coin entered circ!"ation (ased on rep!tation. /t *as 9that coin at the (ottom of the ocean): and this fami"y c"!tched it for years (efore spendin' it on &od ,no*s *hat. The stone coins a"ready e4isted in a decentra"i0ed) comm!nity enforced "ed'er. By this precedent) they no "on'er needed to even (e tacti"e o(-ects. %tone coins *ere simp"y a !nit on a stone coin ("oc, chain) trac,ed (y 'ro!p verified transactions) and *ith on"y so many coins in circ!"ation) the comm!nity ,ept fair"y consistent ta(s on *ho o*ned *hat. 1hether or not 2ap investors "ived in fear of a 5>J attac, is (eyond the scope of this a""e'ory) (!t the point itse"f sho!"d (e a(!ndant"y c"ear (y no*. D.oice overE %o the stone coins are an a""e'ory for Bitcoin; &E The point is that the stone coins are an a""e'ory for Bitcoin. / hope / didn+t ma,e that too s!(t"e $ and this interpretation of the stone money of 2ap as an a""e'ory for Bitcoins) see previo!s sentences) the story (ecome a f!nctiona" teachin' too". The story of 2ap and its coins is a p"ace to start *hen introd!cin' ne*comers to the ("oc,chain) and / cannot emphasi0e teachin' the ("oc,chain near"y eno!'h. 2o! don+t teach a person *hat a Bitcoin is) m!ch as yo! don+t e4p"ain the te4t!re) shape and f"avor of 2ap+s "imestone coins. 2o! te"" them ho* they+re recorded and ho* they+re !sed. K!st as each of !s ,eeps a record of the ("oc,chain) the peop"e of 2ap had to ,eep a*are of *ho o*ned *hat. 6*nership *as a matter of p!("ic dec"aration) (y spreadin' *ord to others it (ecame verification. 2o! didn+t o*n c!rrency !n"ess yo! 'ot the ma-ority of the comm!nity to a'ree yo! did. 2o! did this (y cond!ctin' yo!r (!siness transparent"y and anno!ncin' transactions to the *or"d at "ar'e. A dea" made in secret or made dishonest"y *as impossi("e. Transparency *as part of their protoco". Bitcoin and stone coin chan'ed hands a"most identica""y. 1hether "imestone or crypto) these aren+t the typica" coins one r!st"es from sofa c!shions or the poc,ets of p"ay'ro!nd e4tortion victims. 1e don+t "ay eyes on these coins. 1e -!st a"" a'ree on *here they are and *ho they (e"on' to. A"" o!r Bitcoin are on the metaphorica" ocean f"oor) safe"y a*ay from pryin' eyes and stic,y fin'ers) and every mem(er of the comm!nity is sittin' on a hard copy of the "ed'er. 1e don+t simp"y tr!st) ho*ever. 6!r "ed'er is prod!ced) !pdated) and thoro!'h"y encrypted (y the same soft*are protoco" that made it possi("e. Pryin'

eyes aren+t "eft tota""y in the dar, either. The same ("oc, chain that trac,s the "ed'er is protected from (ein' a"tered) (!t is visi("e to anyone *ho *ants to see *hat coins have moved *here. 1hat 2ap enforced (y c!"t!re) *e enforce (y encryption. 1hat they c!t from stone) *e carve from 'raphics cards. /t+s these traits that made their stones and o!r (itcoins commodities instead of reserve notes. Ca"se va"!e co!"d not simp"y (e printed off a press. Bitcoins and stone coins *eren+t empty promises 'enerated on a *him they are the prod!ct of an investment *hether its time spent sai"in') or time spent minin' a processor. The story of 2ap) the stone coins) and the system they !sed is a 'reat teachin' too") certain"y. B!t it+s not -!st for the o!tsiders. %ee) the story of stone money doesn+t simp"y end there. A"" of !s *ithin the comm!nity can "earn from *hat happened to 2ap+s stone coins *hen the ta4 man came ca""in'.

D.oice overE %tone coin 'oes to 1ashin'ton. &E After &ermany 'ot over the nove"ty of havin' their o*n tiny pre$ind!stria" is"and) it decided to move in) 'et !npac,in'. They) mercif!""y) *eren+t to insistent on disp"acin' or (otherin' the native c!"t!re too m!ch) (!t they *anted room for mi"itary stations aro!nd the is"ands) and they *anted the infrastr!ct!re to connect them. The simp"e 'rave" *a",in' trai"s connectin' a"" of 2ap+s vi""a'es *ere a*esome for (are feet and (atcave$si0ed nove"ty coins) (!t "ess than idea" for &erman road vehic"es. The &erman 'overnment sent o!t *ord to a"" the vi""a'e "eaders that *ider) modern stone roads needed to (e imp"emented across the is"ands. /t isn+t in do!(t *hether or not the e"ders 'ot the messa'e) it -!st seems !n"i,e"y that many of them 'ave a damn *hat their a(sentee forei'n over"oads *anted. There *as "itt"e incentive to appease these stran'ers) and months !pon months *ent (y *itho!t any si'n of the tropica" e4press*ay the mi"itary *as "oo,in' for. The &erman officia"s) reco'ni0in' that no pro'ress *as (ein' made) resorted to other means in motivatin' the "oca"s. 9The ca""o!s &ermans s"a!'htered the is"and inha(itants s*ift"y and (r!ta""y: is *hat yo! e4pected me to say (eca!se yo!) sir) are a racist) and shame on yo!. These *ere t!rn of the cent!ry (!rea!crats not Ia0is) first off. %econd) socia" disa'reements didn+t act!a""y esca"ate into 'raphic vio"ence at the rate modern f"ame *ars *o!"d have yo! (e"ieve. The &erman so"!tion *as so simp"e and non$vio"ent) it made &handi "oo, "i,e Manson. A fe* officia"s *ent aro!nd the is"and spray paintin' si0a("e ("ac, @+s on the (i''est stone coins they co!"d find. They then proc"aimed for a"" to hear that these stones *ere confiscated f!nds of the &erman 'overnment. The peop"e of 2ap had (een fined. G!ra("e modern$ si0ed roads appeared in short order. 3pon comp"etion) friend"y &erman

officia"s *ere dispatched once a'ain) this time *ith so"vents to c"ean the mar,s off the stones. Their "evied fines had (een ref!nded. The peop"e of 2ap *ere manip!"ated) of co!rse. B!t *as their money manip!"ated) or *as their (e"ief; The &ermans never too, a thin' a*ay from the residents of the is"and) they simp"y preyed on their *i""in'ness to p"ay (y their r!"es. /n their 'racio!sness to (e part of a "ar'er *or"d their E!ropean masters presented) the peop"e of 2ap mista,en"y (e"ieved those paint$*ie"din' officia"+s r!"es he"d rea" po*er over them) for'ettin' that they themse"ves) the comm!nity) he"d po*er over their o*n money. They "et the i""!sion of a!thority 'ive a fe* (!rea!crats rea" a!thority. There+s an a"to'ether different) m!ch "ess f!nny) a""e'ory at *or, there. /n the *or"d of Bitcoin) *e+re (eset on seemin'"y a"" sides (y the specter of 'overnment intervention. 1e have men and *omen of o!r o*n comm!nity cryin' o!t for reco'nition) permission) and re'!"ation from vario!s po"itica" masters $ a"" o!t of fear. Bitcoin isn+t (ein' threatened (y the 'overnment) (!t *e are. Bitcoin is a protoco"O it+s not a p"ace or a thin') and to ca"" it internationa" is !nderstatin' its viri"ity. Bitcoin is apo"itica"O it transcends (o!ndaries as if no (o!ndaries e4isted. La* can c"aim a(o!t as m!ch -!risdiction over Bitcoin as it can over *ind and rain. /t simp"y isn+t a"" the v!"nera("e to 'overnance) (!t *e are) and *e+re pro-ectin' o!r *ea,ness onto Bitcoin (y (e''in' for po"itica" "e'itimacy) and threatenin' (!sinesses and individ!a"s over Bitcoin) (!rea!crats are) a'ain) paintin' mar,s on va"!es they don+t respect. They can harm !s as individ!a"s) it+s tr!e) (!t *e can+t 'ive them more po*er than they are d!e. %o "on' as *e 'o (ac, and forth (et*een crypto c!rrency and fiat c!rrency) *e+re pinned !nder their th!m(s. The more *e trade in Bitcoins as a c!rrency) not as a spec!"ative medi!m for do""ar 'ains) the more freedom *e sec!re. B!siness and va"!e are h!man creations) not po"itica" entities) and (y see,in' their approva" and p"acatin' their *hims) *e 'ive them po"itica" a!thority over !s. /f *e ,eep vo"!nteerin' to p"ay the Bitcoin 'ame (y their r!"es) *e may event!a""y start to (e"ieve them) and then Bitcoin *on+t (e Bitcoin anymore $ it+"" (e theirs. Than, yo! for "istenin'. The story of 2ap and the eponymo!s is"and of stone money *as ori'ina""y to"d in >M>8 (y anthropo"o'ist 1i""iam enry Cerness ///. The s!(seA!ent >MM> revisitin' of the s!(-ect (y the oover /nstit!tion *as researched and *ritten (y Mi"ton Criedman. This interpretation and commentary of their *or,s is entire"y the prod!ct of this a!thor. DAdvertisementE /s the (itcoin price in a (!(("e; 6n"y time *i"" te"") (!t one thin'+s for s!reO Bitcoin video passes are on sa"e. Iorma""y LP5 for those payin' in 3.%. f!nds)

visit (itcoinvideopass.com and spend on"y 8.> to 8.B (itcoin) 8.>B (itcoin at the time this *as recorded to access a"" the ta",s and pane"s from the 6cto(er crypto c!rrency conference. %ee ho* easy (!yin' *ith Bitcoin can (e) and e4perience instant access as soon as yo!+ve paid *itho!t even re"oadin' the pa'e. #hec, it o!t at (itcoinvideopass.com DAdvertisementE i) this is Kason Nin') fo!nder at %ean+s 6!tpost) and yo! are "istenin' to Let+s Ta", Bitcoin. %ean+s 6!tpost is a home"ess o!treach in Pensaco"a) C"orida) and *e are pro!d"y po*ered (y Bitcoin. To date) over thirteen tho!sand mea"s have (een fed to the home"ess in o!r area) a"" p!rchased *ith Bitcoin and thro!'h the 'enerosity of the cryptoc!rrency comm!nity. 5ead more a(o!t !s at seanso!tpost.com. Cood) she"ter) Bitcoin) every(odyO seanso!tpost.com. %.M / thin, *e have to ta", a(o!t the thin' that+s on everyone+s minds) and the e"ephant in the room) even tho!'h) persona""y) / thin, the three of !s don+t p!t as m!ch *ei'ht on this partic!"ar thin' as) may(e) peop"e in the mainstream do) and) of co!rse) /+m ta",in' a(o!t the e4chan'e rate of (itcoin) or the price of (itcoin. /t+s !p A!ite a (it. My (itcoin$paranoid app on my phone has (een (!00in' nonstop every >5 seconds *ith ne* a""$time hi'hs. Bitcoin s!rpassed its previo!s a"" time hi'h of LB?? $ that+s the Mt&o4 price) of co!rse $ on Iovem(er 5 and not on"y did Mt&o4 price) *hich is the hi'hest e4chan'e rate) pass the previo!s hi'h (!t a"so the other e4chan'es) too) are *e"" over LB?? c!rrent"y) as *e+re recordin' this. / thin, this is important for at "east a fe* reasons. / mean) price at "east has some re"ation to *ho+s ta,in' an interest in Bitcoin) *ho+s ta,in' a position in Bitcoin) and there+s (een a "ot of ta", a(o!t interest in #hina recent"y. There *as a #anadian Bitcoin ATM or Bitcoin vendin' machine that came o!t that did L>88)888 *orth of transaction in its first co!p"e of days) or over L>88)888 *orth of transactions in its first co!p"e of days. Peop"e are rea""y startin' to notice Bitcoin) and the tradin' vo"!me is hi'h) too) yo! ,no*) so it doesn+t appear to (e that the price is 'oin' !p (!t there+s rea""y not the vo"!me to s!pport it. /t seems "i,e a "ot of peop"e are tradin' Bitcoin. Another thin' / for'ot to add) too) *as *hen Bitcoin 'oes n!ts) a"tcoins a"so 'o n!ts and so a"tcoins are a"so on the move !p*ards as *e are recodin' this sho* ri'ht no*. Go yo! '!ys thin, this can "ast; /t seems "i,e a fast increase. 2o! thin, th

it+s 'oin' to crash; Go yo! thin, this price is) may(e) (iased; Go yo! thin, it+s inf"ated; / hesitate to even state those terms (eca!se as *e+ve said (efore) every price is a rea" price. 1hat do yo! thin, a(o!t the Bitcoin e4chan'e rate ri'ht no*; ABL 2o! ,no* %tephanie / -!st *ant to say that) act!a""y) / do care a(o!t the price. / didn+t thin, / cared a(o!t the price) (!t no* / do care a(o!t the price. Beca!se as it t!rns o!t) since / denominate a "ot of the rates that *e pay contractors in (itcoin) it means my prices have 'one do*n. 1e are ,ind of *atchin' a def"ationary c!rrency in action) (!t "itera""y this mornin') / had one of the contractors reach o!t to offer to c!t his price in ha"f (eca!se of the increase in (itcoin+s va"!e over time. %o from my perspective its nothin' (!t a *in. 1hether it+s s!staina("e or not) yo! ,no*) / mean) / don+t ,no*. /+ve (ecome of the %einfe"d schoo" of tho!'ht a(o!t (itcoin price recent"y) *hich is that *hatever / thin, a(o!t it) pro(a("y / represent the frin'iest of the frin'e on the (e"iever side) and /+m a("e to step (ac,) / "i,e to thin,) and try to ma,e rationa" decisions) (!t it+s that ma,in' of rationa" decisions that is the f!ndamenta" pro("em. %o) no* /+ve 'one *ith $ *hatever / (e"ieve) / -!st ass!me the comp"ete opposite at this point. %o) no) / thin, this is not s!staina("e %M %o) yo! *ant to (e"ieve it is s!staina("e) (!t yo!+re ass!min' the opposite and ta,in' a s,eptica" position; ABL 2eah) *e can 'o *ith that. 5ea""y) / -!st don+t ,no* *hat to thin, and every time / try to ma,e any sort of decisions (ased on *hat / thin,) (ased on "i,e as far as *hat the mar,et is 'oin' to do) /+m -!st *ron'. Even *hen /+m *ron' and / try to co!nter and 'et ahead of that and (e "i,e 96N) that+s *hat / thin,) so that+s 'oin' to (e *ron'): then /+m sti"" *ron'. %o) /+ve -!st comp"ete"y stopped p"ayin'. / -!st do st!ff no*. AMA Listen) in order to find the definitive ans*er to *hat e4act"y is happenin') a"" *e need to do is !se the ana"ytic too"s *e have for characteri0in' an asset c"ass that is a cryptoc!rrency) a (ond) a stoc,) an /P6) a commodity) operates on a '"o(a" net*or, and is traded B<QP in a distri(!ted e4chan'e

that spans the '"o(e. Io*) / don+t act!a""y have any ana"ytica" too"s that spea, to that (eca!se *e never seen an asset c"ass "i,e this (efore. 1e can+t say it+s a (!(("e (eca!se (!(("es have on"y ever app"ied previo!s"y to stoc,s or commodities. This isn+t a stoc, or a commodity. /t+s a (it of (oth and a c!rrency as *e"") so *e don+t ,no* a(o!t that. /t ,ind of (ehaves "i,e a (ond) there mi'ht (e a (!(("e there) (!t *e don+t ,no* a(o!t that) either. %o) ana"ytica""y) *e don+t have the too"s) / thin, *e sho!"d deve"op the too"s to start ta",in' a(o!t the cryptoc!rrency asset c"asses more inte""i'ent"y. To !nderstand thin's "i,e) not -!st e4chan'e "iA!idity *hich is the front end) the on$ramp if yo! "i,e) into this economy (!t the depth of the act!a" economy) (oth in terms of !sers in terms of nodes that are minin') as *e"" as the monetary s!pp"y $ M8 meas!re) M> meas!re and MB meas!re no*. ere+s the thin' $ *e don+t have the too"s to do this ana"ysis) (!t /+m foc!sin' on a co!p"e of the !nder"yin' drivers. Cirst of a"") the r!n !p from L>88 to LB88 *as very s"o*) (y Bitcoin standards) and steady. /t *asn+t one of those) yo! ,no* $ in B<hrs h!'e spi,e) and then d!mped. /t *as -!st ,ind of an !phi"" c"im( over a co!p"e of *ee,s. This "atest spi,e has s!rprised me. / 'o to (ed) / *a,e !p in the mornin') /+m richer. Every day / *a,e !p /+m e4pectin' to see Bitcoin at LB8 and /+m ready to (!y) (eca!se / don+t "oo, at this price as a short$term thin') /+m rea""y interested in on"y the "on'$term of Bitcoin. B!t here+s *hat ,eeps me hopef!""y) this is the most important thin' to happen in Bitcoin over the "ast yearO as of this *ee,) BT##hina represents a"most ha"f the vo"!me in Bitcoin sa"es. That has never happened (efore. As of this *ee,) the three other e4chan'es that *eren+t Mt&o4 act!a""y erased the price difference) the (idQas, spread and the spread (et*een e4chan'es that *as imm!ne to ar(itra'e (efore. At some point yesterday) for the first time ever) Bitstamp price overtoo, Mt&o4) and then #oin(ase price overtoo, Mt&o4. That has some very serio!s imp"ications (eca!se it means yo! can no* transfer Bitcoin to those services and ta,e it o!t *itho!t ma,in' a "oss. /t opens some of the (arriers to 3.%. do""ar *ithdra*a"s from Mt&o4. The 'eo'raphy has shifted. 5i'ht no*) the center of 'ravity of Bitcoin is in so!theast Asia) some*here (et*een #hina and /ndia. That is the important ne*s) (eca!se that *ave is deep) it+s (i') and it happened.

ABL %o) that) / thin,) is a rea""y important point) *e+ve act!a""y (een meanin' to 'et to this #hina topic for a *hi"e and /+ve (een ta",in' to some peop"e *ho are active in the space) and / act!a""y have some tho!'hts / *ant to 'et yo!r

opinion on. %o) one thin' $ BT##hina. 6,) so #hina is not yo!r avera'e co!ntry *hen it comes to ho* yo! can !se and acA!ire their c!rrency) ri'ht; The 2!an is very ti'ht"y contro""ed o!tside of main"and #hina and so *hat BT##hina is doin' act!a""y is "ettin' peop"e (!y (itcoin *ith 2!an. /n the 3%) *e have the same sort of thin' $ yo! (!y (itcoin *ith do""ars) (!t the other side of it is that the 3% do""ar is an internationa""y traded C65E@ c!rrency *hereas the #hinese 2!an is not. The #hinese 2!an is very ti'ht"y contro""ed and if yo! need to (!y) "i,e if yo! have a (!siness and need to (!y s!pp"ies or somethin' "i,e that from another co!ntry) then yo! can 'et 3% do""ars from the 'overnment or from a "icensed e4chan'e) (!t !"timate"y it+s very ti'ht"y contro""ed for those reasons. %o BT##hina is essentia""y a""o*in' peop"e to ta,e 2!an that sho!"d on"y (e a("e to (e 2!an and t!rn them into (itcoin) and once they+re (itcoin then they can 'o any*here in the *or"d and do anythin' they *ant) and its comp"ete"y o!tside the #hinese 'overnments contro") *hich seems to (e important to them. %o) / mean) is that s!staina("e;

AMA That+s enormo!s"y s!staina("e. The emer'in' midd"e c"ass and the !r(an midd"e c"ass in #hina is (oth very "ar'e and e4treme"y deep in f!nds) and they have a savin's rate that e4ceeds 58J) so they have a "ot of spare cash aro!nd) and they have c!rrency contro"s that are restrictin' them from !sin' that cash) and they have fear of 'overnment contro". /f yo! add a"" of that) the incentives are there for a very deep) very "on' *ave of #hinese adoption. The on"y A!estion is) 9can they do it *itho!t the 'overnment crac,in' do*n;: and *e+ve had the ans*er to that. Cor the "ast severa" months) there have (een a n!m(er of doc!mentaries on #hinese T. essentia""y e4p"ainin' and promotin' Bitcoin. Those doc!mentaries did not 'et on #hinese T. (y accident. They did not 'et on #hinese T. despite the censors. They 'ot there *ith endorsement and approva" from the hi'hest "eve" of the #hinese #omm!nist Party 'overnment. ABL %o is this a po,e in the eye) then) to the 3.%.; AMA A(so"!te"yF A(so"!te"y) the #hinese 'et this. They !nderstand the (asic eA!ation) *hich is *e *o!"d rather have a *or"d reserve c!rrency that no

one contro"s than one that o!r (i''est tradin' competitor and enemy potentia""y contro"s. %o) for #hina) this is a very) very strai'ht for*ard) strate'ic move. The *or"d reserve c!rrency and petro$do""ar is a strate'ic disadvanta'e for them $ they+d rather have a ne!tra" p"ayer. 1hat they see is that they sti"" have contro" over their pop!"ation more so than the 3.%. has contro" over its pop!"ation) so they see that any do*nside that Bitcoin mi'ht create) thro!'h "ac, of contro") *i"" (e fe"t more in the 3.%. than it is in #hina) at "east that+s their ca"c!"ation. / thin, this *ave is e4treme"y si'nificant (eca!se it is f!""y endorsed (y the 'overnment) it is promoted (y the 'overnment) and it has a h!mon'o!s emer'in' midd"e c"ass (ehind it. %o) if yo! "oo, at it from that perspective) L788 Bitcoin act!a""y has a pretty so"id (ase from the perspective that this is not ca!sed (y sentiment $ this is ca!sed (y e4pansion of 58J of the mar,et of Bitcoin into a comp"ete"y ne* and !ntapped mar,et *hich is #hina. 6f co!rse) *e+ve 'ot >88 co!ntries to fo""o*) and the one to *atch ne4t is /ndia or possi("y one of the Latin American co!ntries) (!t this is the first non$1estern adoption) and *hat it+s done is its shifted the center of 'ravity of the Bitcoin !niverse firm"y into the midd"e of Asia *hich is *here the center of 'ravity of h!manity is. /f yo! *ant to see the f!t!re of Bitcoin) the f!t!re of Bitcoin is a B8$year$o"d) B8$ year$o"d ma"e an #hinese person) -!st "i,e the avera'e h!man face. %o Bitcoin if firm"y o!t of the hands of the 1estern) 'ee,y) fad$chasers "i,e !s) and it is no* firm"y in the hands of the emer'in' economies of the other ?.5 (i""ion) and that+s the (est ne*s *e+ve had so far. ABL %o) !"timate"y) do *e) / mean) *hether or not the price is s!staina("e) / don+t necessari"y ,no* that it matters) (!t do *e *ant to ma,e end of the year predictions or anythin' "i,e that at this point -!st for the f!n of it; %M 6h 'osh) predictions. Peop"e are 'oin' to ho"d !s to them. / have a prediction) in the "on' r!n) in the ne4t five years Bitcoin are 'oin' to 'o !p. o* a(o!t that; .ery va'!e. AMA / have a prediction. MM.8J of a"" financia" ana"yst predictions e4pressed on Bitcoin *i"" (e *ron' *ithin 7 months) and that prediction is rec!rsive. %M

That+s *hy yo! 'otta 'o rea""y va'!e "i,e / did) Andreas) very -!st Iostradam!s. AMA 1e"" / did a""o* for B percent) ri'ht;D"a!'hterE %M 5i'ht. AMA H to (e correct. %M %ome *i''"e room in there. AMA E4ce""ent -o() yeah. ABL / don+t ,no*. / don+t ,no* if / thin, it+s 'oin' to ho"d) / rea""y -!st don+t ,no*. /+m 'oin' to 'o *ith that. My prediction is / sti"" in 7 months *i"" not ,no* *hat the price is 'oin' to do. AMA Listen. / *o!"d not (e s!rprised if) tomorro* mornin') / *a,e !p and Bitcoin is at LB8. / *o!"d not (e s!rprised in the s"i'htest $ it *o!"d not !pset me) / *o!"d see that as a nat!ra" part of o!r see$sa*) (oom$(!st cyc"e that *e+ve (een 'oin' thro!'h. 1hat / do ,no* is that the ne* consens!s price is m!ch hi'her) and *hat / do ,no* is that peop"e are no* comforta("e *ith three$ di'it price Bitcoin in 3.%. do""ars and that chan'es the 'ame) (eca!se in a "o'arithmic c!rrency) the ne4t step is < di'its. %M / '!ess ,ind of to (rin' this disc!ssion f!"" circ"e) *e started o!t (y mentionin' the Bitcoin machine in #anada that did a h!'e vo"!me of sa"es -!st in the first *ee, that it *as in operation) and *e+re ta",in' a(o!t Bitcoin adoption in #hina and a"" aro!nd the rest of the *or"d $ it+s rea""y a 'reat e4c!se to 'et o!t of this) for those of !s *ho are in the 3.%.) it+s a 'reat

e4c!se to 'et o!t of this 3.%.$centric frame of mind and rea"i0e the *or"d does not revo"ve aro!nd !s. There=s a *ho"e p"anet o!t there) there+s P (i""ion peop"e) and a "ot of them are 'oin' to (e findin' o!t a(o!t Bitcoin very soon. AMA 2es. 1e are no*) very m!ch and tr!"y) a *or"d c!rrency) and / thin, that *as a very important mi"estone. /+m (e'innin' to see a"" of the facts on the 'ro!nd s!pportin' the fact that *e are) *e"" and tr!"y) a *or"d c!rrency. 1e+ve 'ot ne* ATMs in #anada. EhF 1e+ve 'ot ne* (!yers in #hina. 1e+ve 'ot conferences a"" aro!nd the *or"d happenin' *ith 'reat interest) especia""y in co!ntries that are c!rrent"y facin' c!rrency crises. 6ver the ne4t month or so) /+m 'oin' to (e trave"in' a"most contin!o!s"y internationa""y. Cirst) D/+mE 'oin' to Athens &reece in order to spea, at a conference there on disr!ptive techno"o'ies and economics. As far as / can te"") it+s 'oin' to (e attended (y mem(ers of the 'overnment of &reece. Co""o*in' that) D/+m inE Mi"an) *here *e+ve 'ot the hac,athon "a!nch of Gar,1a""et. After that) B!enos Aires) and then fina""y Las .e'as) (ac, here in the 3.%. The internationa" scene is heatin' !p and / very m!ch hope to spend most of ne4t year *ith my (!tt on a p"ane seat) f"yin' aro!nd visitin' Bitcoin comm!nities aro!nd the *or"d) (eca!se it+s a(so"!te"y not a(o!t !s) it+s a(o!t the other ?.5 (i""ion $ inc"!din' o!r ne* friends from #anada. %M 2es) spea,in' of #anada. There is a"so a ne* service "a!nchin' in #anada *here they 'ot a Bitcoin de(itQcredit card $ somethin' "i,e that. /t+s some ,ind of card that yo! can "oad (itcoin onto and pay for st!ff) *hich) *o*. The 3.%. is rea""y 'oin' to (e "eft (ehind especia""y *ith a"" this re'!"atory fervor) sha"" *e say) and !ncertainty. / thin, that+s !nfort!nate) (!t hey) *e can a"*ays move o!r feet. 1e can a"*ays "eave if *e rea""y don+t "i,e it that m!ch. AMA ey) *e don+t *ant no stin,in' innovation in this co!ntry. 1e "i,e co""ectin' fees for doin' nothin'F ABL 2o! ,no*) / *as ta",in' *ith some(ody a(o!t de(it cards to do Bitcoin recent"y act!a""y) they+re m!ch easier to act!a""y man!fact!re and have made than / tho!'ht. / anticipate !s seein' a "ot of these over the ne4t

co!p"e of years (eca!se rea""y the (arrier to entry is "o*) it+s -!st the re'!"atory H AMA K!st the re'!"atory D"a!'hterE %M The pro("em is a"" in the re'!"atory. / mean peop"e *ere ta",in') / remem(er Bit/nstant *as ta",in' a(o!t havin' a Bitcoin de(it card B years a'o and they -!st 'ot he"d !p (y the re'!"atory st!ff. There *as no pro("em *ith the techno"o'y. AMA Even in the pre$paid mar,et here in the 3.%.) the reA!irements for doin' N2# (Nno* 2o!r #!stomer) and co""ectin' identification are so onero!s $ and yo! can see the difference in re'!"ation. %tephanie) yo! mentioned that one of the #anadian ATM has 7 identity feat!res (!t B of those are t!rned off. ABL / did. AMA 6N) sorry. 1e"") t*o o!t of the three identity mechanisms are t!rned off and that+s not techno"o'y) that+s a"" re'!"ation. %o a"ready *e+re seein' this competitive arms race p"ayin' o!t not in the techno"o'y fie"d) (!t in *ho can stomach the ris, of a ne* c!rrency *itho!t tryin' to re'!"ate it o!t of e4istence) and the ans*er so far seems to me) the 3.%. cannot. ABL 2eah so act!a""y / have a perspective on that (eca!se *e+re act!a""y tryin' to find o!t ho* onero!s it is to act!a""y 'et some of these in. /+d "i,e to p!t some of the 5o(ocoin ATMs into a co!p"e of "ocations in #a"ifornia *here *e are. This is of co!rse an impossi("e tas,) another one /+ve decided to try and ta,e on for myse"f. B!t /+ve (een "oo,in' into these machines) and yeah) they have a n!m(er of sec!rity feat!res (!t the one in #anada) (eca!se of the comp"iance sit!ation) on"y !ses the pa"m scanner) ri'ht; %o) it scans the vein in yo!r pa"m to ma,e s!re that yo!+re the same person) and that a'ain is so

that they don+t have "imits ri'ht (eca!se yo!r on"y a""o*ed to se"" a certain n!m(er in a day) so they don+t have to H AMA They can p!t "imits per person instead of "imits overa"" for p!rchases ri'ht; ABL 2eah) so they can p!t per$person "imits -!st (y !sin' the pa"m vein scanner) (!t in the 3.%. *hat *e+"" have to do) is a"so have a separate 'overnment /G that+"" (e he"d !p to a camera *here the pict!re *i"" (e ta,en) then yo!r pict!re as the person *ho is !sin' it *i"" (e ta,en and compared to the pict!re on yo!r /G. %o) those are the other B steps that they haven+t had to t!rn on in the #anadian sit!ation. 6ne of the interestin' A!estions that / have) is ho* "on' is it 'oin' to ta,e for these machines to pay for themse"ves; Beca!se as Dfar asE ATMs 'o) the 5o(ocoin ,ios,s are A!ite e4pensive. ATMs ran'e any*here from "i,e LB)588 to L>5)888 for rea""y advanced ones and the 5o(ocoins areL B8)888 do""ars. AMA /f they did L>88)888 in -!st a fe* days) !mm yeah that+s A!ite impressive) tho!'h. %M #an yo! set yo!r o*n fee on a 5o(ocoin; ABL 2o! can) (!t they have standards. The standard fees are BJ for (!yin' and 5J for se""in'. AMA 6N) so they+ve a"ready made L5)888 on L>88)888; ABL This is) / -!st did the math and it "itera""y is a M8 day t!rn$aro!nd (ased on these initia" n!m(ers) *hich / have to ima'ine *i"" 'et more) not "ess) ri'ht; / mean if Bitcoin stops (ein' pop!"ar they they+"" have) yo! ,no*) then they+re tyin' their fate to that. B!t !"timate"y as a ne* thin'H/ '!ess it 'ot media attention. / don+t ,no*) *e+"" -!st have to *ait and see ho* this sha,es o!t)

(!t /+m s!per c!rio!s to see ho* "on' it ta,es to pay it (ac, (eca!se yo! "itera""y have to have a mi""ion do""ars 'o thro!'h this machine at the defa!"t prices (efore yo!+re seein' any sort of profit. %M The hardest thin' *i"" (e ,eepin' it stoc,ed and comp"yin' *ith a"" the re'!"atory st!ff. ABL 2eah) there+s no stoc,in'. / mean these machines) a'ain that+s another interestin' part is they essentia""y connect direct"y in) they+re not "i,e the Lamass!. The Lamass! machines yo! "oad them !p *ith (itcoin and then they can dispense *hatever (itcoins they have) (!t !"timate"y) once yo! r!n o!t of (itcoin yo!+ve 'ot to p!t more in. A"tho!'h) / '!ess yo! can do that remote"y. 1ith the 5o(ocoin) it+s "itera""y ma,in' mar,et transactions on Bitstamp for yo!. %M B!t *hat if Bitstamp 'oes do*n; ABL They have a"ternatives. / mean) "i,e they have a co!p"e of others that are avai"a("e) that *as the one a'ain it *as shippin' pre$"oaded *ith. AMA And so) in fact) then) the re'!"atory c"imate is pro(a("y the predominate factor in *hether yo! (rea, even) *hether yo! 'et a ret!rn on investment on these devices *hich is *hy s!ch a thin' *i"" (e e4treme"y s!ccessf!" in #anada and *i"" (e e4treme"y s!ccessf!" in other co!ntries that are not ta,in' an approach to Bitcoin that is simi"ar to that they+d ta,e to syphi"is. 1e+re 'oin' to see in emer'in' economies m!ch more s!ccessf!" than in the 3.%.) (eca!se ri'ht no*) -!st the other day) the %enate decided to ca"" for hearin' on Bitcoin to e4amine the ris, that it poses to the economy. They+re a"ready framin' it as a ris, (efore they even have the hearin's. %M /t+s the on"y part of the economy that+s act!a""y doin' 'ood. D"a!'hsE AMA

5i'ht) and it+s the 'reatest invention of the B> cent!ry in comp!ter science. Pro(a("y the most important economic advancement in the "ast 58 years in terms of di'ita" money) (!t "et+s ta", a(o!t it p!re"y in terms of ris,. That+s so short si'hted) it+s "i,e ta",in' a(o!t the /nternet in >MM< and *orryin' that it+s 'oin' to a""o* peop"e to see 5$rated movies that aren+t s!pposed to see 5$rated movies. %M %atoshi Ia,amoto for a Io(e" pri0e in economics. AMA B!t) / *o!"d say first) the MacArth!r &eni!s a*ard for Mathematics) #omp!ter %cience. %M 2es. AMA 2o! ,no*) (eca!se in terms of #omp!ter %cience) distri(!ted time$stamped consens!s thro!'h proof of *or, is the invention of the B> a do!(t. %M And *e a"" ,no* that the Peace Pri0e doesn+t mean anythin' anymore any*ay. ABL This reaction from the %enate act!a""y "oo,s a *ho"e "ot "i,e the reaction from PayPa" to me. They+re interested in it) they need to chec, it o!t) and may(e they+"" have a positive thin' to say a(o!t it) (!t / thin, that if *e "oo, at their motivations (ehind it and *hat they stand to "ose) chances are pretty 'ood *e+re not. AMA They+re -!st 'oin' to faff a(o!t and ma,e !p some more reasons to protect the (an,s from any types of innovation. / have very "itt"e hope or faith that st cent!ry) *itho!t

st

this *i"" prod!ce anythin' meanin'f!" other than more ,nee$-er, re'!"ation. R!ite honest"y) it+s entire"y irre"evant. /t+s entire"y irre"evant (eca!se this is not a(o!t payment net*or,s and this is not a(o!t movin' c!rrency aro!nd. This is a(o!t re$inventin' money) and so far) they are not seein' that. ABL 2o! ,no* the other thin' they are not seein'; They+re not seein' that they+re provin' the point for *hy %atoshi "eft and *hy %atoshi is someone that can never come (ac,) and someone *ho can never ma,e his identity ,no*n *hatsoever) (eca!se it+s -!st invitin' this. AMA /t+s invitin' ad$homonym ri'ht a*ay) yes a(so"!te"y. /f yo! can+t attac, the idea) yo! attac, the person *ho created the idea) and ri'ht no*) they+re havin' tro!("e attac,in' either. %o yeah) %atoshi disappearin' *as pro(a("y the (est thin' that ever happens to Bitcoin. There *as another very interestin' para""e") *hich *as a presentation from 1estern 3nion) *here they said that Bitcoin is not ready for mainstream) and / thin, that *as a very ast!te and correct ana"ysis) (eca!se *hen Bitcoin is ready for mainstream) it *i"" (e very o(vio!s (eca!se then the A!estion *i"" (e 1estern$*ho; 1estern 3nion is 'oin' to (e the B"oc,(!ster of this 'eneration of disr!ption. They *i"" (e disr!pted o!t of (!siness simp"y (eca!se) !n"ess they co$opt and !se Bitcoin) their very reason of e4istence $ *hich is the transfer of s!ms of money internationa""y $ is comp"ete"y so"ved (y an a"'orithm. They+ve (een rep"aced (y a script) and that script costs a "ot "ess to operate than 1estern 3nion. ABL %o) / mean -!st "i,e B"oc,(!ster) yo! ,no*) / *ent somep"ace recent"y and / act!a""y sa* a B"oc,(!ster (eca!se they so"d off a"" the stores at a fraction of the asset va"!e) and in some niches) act!a""y) they have s!rvived. %o) it may (e that+s the f!t!re for 1estern 3nion and these other types of money transfer thin's is -!st areas *here for *hatever reasons Bitcoin simp"y cannot reach. / mean) may(e 1estern 3nion "itera""y 'oes (ac, to horses and p"aces *here there simp"y are no roads and are no phone "ines. AMA R!ite honest"y) /+d "i,e to see 1estern 3nion as the p"ace *here yo! find the 5o(ocoin ATMs.

DM!sicE ABL Than,s for "istenin' to episode 58 of Let+s Ta", Bitcoin. The se'ments T*o$ factor %ec!rity and Bitcoin Price *ere prod!ced (y Adam B. Levine) edited (y Matthe* Sip,in) and feat!red Andreas M. Antonopo!"os) %tephanie M!rphy) and Adam B. Levine. The /s"and of %tone Money *as prod!ced and edited (y Adam B. Levine) *ritten and read (y &eor'e Ettin'er) *ith additiona" voice *or, (y #rysta" Levine. M!sic *as provided (y Kared 5!(ens. R!estions or comments; Emai" adamT"etsta",(itcoin.com. ave a 'ood oneF