LETS TALK BITCOIN

Episode 68 The Eye of the Beholder

Participants: Adam B. Levine (AL) - Host Stephanie Murphy (SM) Co-host Andreas M. Antonopoulos (AA) Co-host John Light (JL) Founder of Pawncoin Alan Safahi (AS) CEO ZipZap Rik Willard (RW) Founder of Mintcombine

AL: Hi and welcome to Episode 68 of Lets Talk Bitcoin, a twice weekly show about the ideas, people and projects building the digital economy and the future of money. Visit us at www.letstalkbitcoin.com for our daily guest blog, all our past episodes and, of course, tipping addresses. My name is Adam B. Levine and youre going to pawn your bitcoins... Wait!... What? John Light is the founder of new venture Pawncoin that allows you to get a payday loan for part of your cryptocurrencys value. Stephanie and John talk through the idea at the Vegas event. What do you think? Then, bitcoin the currency, or token, is fundamentally different than Bitcoin the technology, or network. Stephanie, Andreas and I, discuss the problems of widely available, but anonymized data and what happens when genuine no one person knows all the answers. Later, Alan Safahi is the CEO of ZipZap, a company that in a perfect world you never even hear about because they blend seamlessly into the background. Andreas is at the Latin American conference, talking pre-paid cards, remittance and the slow creep of progress in a regulated world. Finally, Rik Willard is the founder of Mintcombine, a worldwide incubator taking an interest in Bitcoin. He and Stephanie talk about the HTML to Bitcoins TCP/IP, how he got his first bitcoin and riding the wave of cryptocurrency. Im on vacation. Enjoy the show! *1:37+ SM: Im here today and Im talking with John Light. Hey John, welcome back to Lets Talk Bitcoin. [1:49] JL: Thank you very much, Stephanie. Im glad to be here. *1:51+ SM: Youve been on the show before, havent you? We were talking about your cloudbased identity projects, right? [1:57] JL: Its not really my project. Its something that Im casually interested in though, just because the personal clouds thing is going to lead to a full decentralization of the web and a return to user-centric web experience, which I think is really important, given the really intense centralization that has occurred throughout the history of Web 2.0. Ive recently been focusing on a start-up that Im working on called Pawncoin, which is basically applying the business model of the pawnshop to Bitcoin. Instead of going to a pawnshop and

pawning gold, or some other kind of jewellery, or high end electronics, you can pawn your bitcoins. [2:40] SM: Tell me more about that. [2:41] JL: The website is www.pawncoin.com. Customers are going to be able to come onto our website, create an account and apply for pawn cash advance, based on the value of their bitcoins. If they have $1000 worth of bitcoins, they can get $300 cash advance. After thirty days, the customer can pay us back the cash advance, plus a redemption fee and get their bitcoins back. [3:09] SM: OK. How much would the fee be? Thats a criticism of traditional services like this is that they have 30% fees, and things like that. Usually people dont pay it back, is that right? [3:20] JL: Its a 10% redemption fee. Actually in the pawn industry, in the traditional pawn industry, they typically have a repayment rate of about 80%. Usually, people pawn items that are personally important to them and so they have an incentive to come back and get it. In our case, the incentive is that Bitcoin is an asset with an appreciating value. Of course, there are dips but the long term trend is it crashes up, basically. We want people to come back and get their bitcoins back so that they can either trade on it or use them for a Bitcoin pawn transaction in the future. [4:02] SM: This is, basically, a small short term micro-loan with the bitcoins as collateral, is that right? [4:09] JL: Exactly. We dont ask for any credit history information from the customer because this isnt a line of credit; this is like a collateralized cash advance. In fact, the contract is structured as a sale and the customer just has the option to reverse the contract and get their bitcoins back at the end of the month. [4:30] SM: Yeah. I could see a lot of different possibilities for this but are you envisioning mostly, at first, this is going to be something that people in the U.S. take advantage of, or is it going to be more worldwide? [4:41] JL: We are going to be focusing on the U.S. market, at first because this is a market I know, however, Bitcoin is exploding all over the world - its a global phenomenon and this kind of micro-financing model could make a lot of sense in regions where, maybe, the local currency isnt so stable; or just people want to hold onto their bitcoins but they need cash to cover a short term cash shortage; or they just want to lever up and trade in the market. We definitely have international ambitions with this business model. [5:15] SM: Speaking of the volatility of Bitcoin, I have a question. Lets say somebody wants to take out a payday loan and they have Bitcoin and they put down one bitcoin and they say OK, I need $1000. You pay them $1000 and then, suddenly, in the time in the term of their loan, Bitcoin goes up to $10,000. Do they have to repay $10,000, or do they just have to repay what they borrowed? [5:40]

JL: They just have to repay what they borrowed. The benefit of our business model to the customer is that it allows them to access the value of their bitcoins without any concern for what the future price of Bitcoin is. If Bitcoin goes up in value, then as quick as they can get the money back to us is as quick as they can get their bitcoins back and they can either sell the bitcoins to realize that appreciation value, or just hold onto them for savings for, you know... to realize even more future gains. [6:09] SM: Yeah, I see. Thats a cool idea. Have you, yourself, ever used a service like this, like a payday lender, or anything like that? [6:16] JL: I havent used payday loans, per se. I have used a pawn shop before when I was younger. Ive pawned items and Ive also gone to pawnshops to buy things, just because you can get things for a good price at pawnshops, sometimes. [6:33] SM: Right. [6:34] JL: Its like a second hand store, you know. I just kind of have nostalgic memories of pawnshops but the service itself is something I have found would be useful to me, as a Bitcoin investor. I dont have stocks. I dont really have a whole lot of physical assets that I can just sell on a whim. Especially, liquid, physical assets that are easy to sell for a good price. Ive always thought that it would be nice to be able to use my bitcoins as collateral for just short term cash whenever I need it. Thats how I got the idea for Pawncoin, in the first place. [7:17] SM: Wow. This is cool and I have a lot of questions but first, I want to ask you how would the person, actually, get the cash? Lets say they go to your website and they say I want to put down one bitcoin. How do they get the cash as what they need as a loan? [7:34] JL: Our first payment options that were going to be offering is money orders and Ripple payments. Ripple is really advantageous because it offers irreversible payments, so when the customer pays us back, we have no risk of a chargeback when we, actually, give the bitcoins back to them. Its also because it allows us to route around the banking system, as Im sure many of your listeners are familiar. Banks, in the U.S., arent very friendly to Bitcoin businesses. Its just Bitcoin. It really is just Bitcoin. I know businesses that are based on Ripple who are not having any problem getting a bank account. Why? Because its not Bitcoin. Were able to route around the banking issue of dealing with ACH pay ments processors, and stuff like that, by going straight to Ripple. We do plan on offering ACH and other kinds of bank related payment options to our customers in the future, if there are any banks who are willing to work with us because that does open us up to a wider potential market for that particular payment option. Right now, were just focusing on money orders and Ripple. [8:46] SM: Conceivably, with a money order or Ripple payment, the person could get access to their funds that day, or the next day after they take out the loan? [8:55]

JL: Yeah. With Ripple, the customer could have their money as quick as the same day, depending on how fast their gateway is able to get the money into their bank account. With a money order, they could potentially have it (if they choose the next day shipping option), then they could have the money order in the mail the next day. [9:14] SM: Are you concerned about government finding out about this and trying to, somehow, claim that youre an unlicensed money transmitter, or whatever? [9:23] JL: No, Im not at all. Our business model in no way falls under money transmission guidelines under any State that weve looked at and there are 48 States with money transmitter licences and two without. Making sure that I could do the business legally and compliantly was the first concern that I had when I first thought of the business model. Its been a couple of months figuring that out and was able to answer all those questions. No, were not a money transmitter. Were not even a money services business. Were a pawn business. [9:58] SM: Right, cool. With pawnshops, you mentioned before that you can usually get good prices on electronics and other items at pawnshops. Thats what I understand to be the case, too. I had a couple a couple of experiences where Ive bought precious metals at pawnshops because you can get a good deal. With this, I imagine it might be a little bit different because if people dont repay their loan, lets say and then youre up to sell their bitcoin. Are you going to be selling their bitcoin, first of all, if they dont repay their loan that they took out? Are you going to be selling it at a discount, or do you think you wont even need to do that? [10:33] JL: If the business really needs cash, then well sell the bitcoins but my plan is really to just keep the bitcoins. As a company, were in the Bitcoin market were long Bitcoin, so it really just makes sense to hold onto the bitcoin. If a customer chooses not to redeem their contract and realize the gains as Bitcoin appreciates over time. [10:56] SM: Yeah, cool. I imagine theres going to be very low overhead, too because another thing with pawnshops is they have to worry about security when theyre talking about ph ysical items. Would this be a completely web-based thing? [11:09] JL: Yeah. This is completely web-based. There is still a little bit of a security overhead but not nearly as much as the physical security necessary for storing large quantities of valuable objects. Instead, our security is more distributed and more technologically oriented. Hopefully, the overhead isnt really that much. We just have a developer team that can help us scale the platform and the real, I guess, overhead is more associated with the capital that were, actually, advancing to customers. Thats going to be the real... where a lot of the money is at in this business. [11:50] SM: Where are you getting that? Are you looking for investors right now or do you have it all set? [11:54] JL: We have some parties who are interested in providing the money thats going to be advanced to customers. Were looking for investors in our seed round, right now, to invest

directly for equity in the company to help fund operations. Throughout our seed stage, as was our early growth stage, right now, were pre-launch. If you go to www.pawncoin.com you can enter your email address and sign up for email updates and access to our early private beta, once the platform is ready for people to start using it. Right now, were just looking for investors, mostly just for operational capital than anything else. [12:34] SM: OK. www.pawncoin.com. Where can people follow you on Twitter and find out about all of your other projects? [12:41] JL: Im on Twitter @lightcoin and, of course, you can sign up through www.pawncoin.com if you want to stay up to date about everything were doing there. *12:52+ SM: Cool, John. Yeah, thanks for telling me about that. Is there anything else you want to add? [12:55] JL: This conference has been really great so far and I encourage everybody, if theres a good conference in your area, please show up and, of course, tip the Lets Talk Bitcoin team because theyre awesome. *13:07+ SM: Thank you so much. I appreciate that and thanks for talking with me today. [13:11] JL: Thank you, Stephanie. [13:11]

______________________________

AA: For a while now, weve been talking about the clear distinction between bitcoin, the currency and Bitcoin, the underlying technology. This is a very important distinction because no matter what happens to the currency, as far as Im concerned, currency is only the first app on the Bitcoin network. The bitcoin coins, the currency are only the first application running on top of the Bitcoin network. Really, what Satoshi Nakamoto gave us was an elegant solution to a distributed computing problem that had existed unsolved for forty years. Its called the Byzantine Generals Problem. Its the issue of achieving consensus in the distributed system when none of the parties can be trusted and when the network cannot be trusted. The elegant solution that Satoshi Nakamoto gave us was proof of work. Its not a perfect solution but it is a far optimized solution that works at scale. What we really havent noticed yet is that distributed computing is not the only area where new science has been developed. Id like to introduce two concepts today of new science that I think are going to become highly impactful as a result of the development of cryptocurrencies based on the blockchain. The first one is computational macro-economics. Basically, what this means is macro-economics is the study of whole economies. Its the study of monetary supply, inflation, deflation and GDP across an entire econom y. Its the kind of thing that the Federal Reserve and Central Bank will do. With the invention of cryptocurrencies, we can, actually, do computational macro-economics which means doing macro-economics not based on statistics but based on actual quantitative data derived directly from the blockchain interactions. We can see how many coins are being produced;

we can see the inflation rate of the coin; we can compare it to the exchange rate; we can see an entire economy operation, in real time, with full quantitative analytics. To me, that creates new science because, so far in macro-economics, weve only ever been able to study the whole economies by proxy (through statistical analysis) and usually, far delayed from the actual moment of impact. Youre looking at statistics that are trailing by six to nine months and then youre trying to find causation correlation between the statistics youre looking at and what, actually, happened in the economy. With cryptocurrencies, you dont need to do that. You can do quantitative analysis directly on the data in real time and thats never happened before. Thats whole new science. The other aspect of that is computational micro-economics. Where micro-economics is the study of markets, products and flows within an economy; the study of corporations, balance sheets, commodity pricing etc, within an economy, we can do computational micro-economics with cryptocurrency. Essentially, all of the data you need to study an economy is right there in the blockchain. Im not talking about the big numbers like mining, inflation and coins created, Im talking about individual transactions and being able to gather massive, big data quantitative analytics on the transactions that are occurring within the blockchain. No one has ever had that kind of depth of insight into economies that are this wide. Again, rather than study quarterly reports from companies three months after they occur and looking at this, trying to derive causation correlation of statistical data, we can do quantitative real time data analytics directly on the blockchain. Again, this is completely new science. Its never been done before. I think its one of the things that we overlook when we talk about bitcoin, the currency. Even if the currency goes away, Satoshi has given us new science in several areas of life. I think those things will have a far broader and reaching effect in the future. [17:31] SM: Doesnt a lot of this analysis potentially ride on knowing who is associated with different Bitcoin addresses? There could be some mistaken assumptions built into that, right? Recently, there was a study that was done by some Israeli researchers and they erroneously claimed that some very early created bitcoins, or a very early created wallet, sent a bunch of bitcoins to the alleged Silk Road operator, Ross Ulbricht. They were on his seized computer and then they claimed that it must have been Satoshi Nakamoto because they were created so early that only he would have a wallet. In fact, someone came out and said No, that wasnt Satoshi, it was me. I am not Satoshi. I was just an early adopter and, actually, I sent those bitcoins to MtGox, not to the Silk Road. (Laughter) [18:20] AA: I think its charitable to call that a mistake. Its wort h pointing out two things: one, this paper was sponsored by Citi (Citi, as in Citigroup, one of the largest banks). Second, at first, it had credibility because it was co-authored by Adi Shamir who is the S in R.S.A., as in one of the most respected cryptographers until he published that Paper. Sorry Adi Shamir, you lost my respect for shilling for Citi, right there and then. [18:52] SM: Back to the problem of pseudo-anonymity. We all know that Bitcoin transactions are really not anonymous but theyre not perfectly traceable either, right? Most Bitcoin transactions, we dont have a clue who is, actually, behind moving that money around. How does that factor into an economic analysis when you dont know the demographics of the people who are making the transactions? [19:19]

AA: It factors in two ways. In terms of computational macro-economics, it doesnt matter because youre looking at aggregate flows and youre looking at inflation and things like that, across the economy. In terms of computational micro-economics, what it means is that you can study in depth, in real time with full quantitative data, those companies that are implementing open books on the blockchain. Weve already talked about how charities can implement transparency by publishing which accounts and addresses they use and essentially using the blockchain as an open ledger of accounting. You could do that, also, with public companies and presumably, digital autonomous corporations that are incorporated on the blockchain. Essentially, those that opt in to revealing information about their accounts provide a microcosm that is studiable in incredible detail. The worst case scenario, if you have no information about senders and recipients, youre right back to traditional micro-economics that deals with statistics. The worst case scenario of computational micro-economics is micro-economics and the best case scenario is real time quantitative insight into what companies are doing. Thats certainly an improvement on what we had before. [20:30] AL: It creates a competitive situation where there wasnt a competitive situation before. Thats good for people who are doing the job but for people out there, for companies out there that like the fact that they dont have transparen cy, this might present a problem because if other people are doing it, if this becomes a normal thing, how do you continue to operate and retain your credibility if theres this standard. Do you think we could shift to a cultural norm where transparency is the standard? [20:58] AA: For corporate accounts, yes absolutely. I think not only will we shift but I think its absolutely necessary that we shift. That power shift comes from the fact that cryptocurrencies has fundamentally altered the relationship between people and their money, between people and their governments and, eventually, between people and corporations. Were not just disrupting money; were disrupting the very essence of the modern corporation today. Yeah, its going to create some very interesting incentives and eventually, lack of transparency is going to be seen as a weird kind of antebellum fact, rather than the modern way of doing things which will be transparency. I think there is an opportunity here to shift the culture and certainly the ability to derive useful data from that, valuable data from that is going to do a lot to shift that culture. Start your Hadoop pensions people because when you take the 15G blockchain and you unpack all of those transactions and all of the relationships between them, you end up with a petabyte sized dataset that has enormous value. Theres a lot to mine there. *22:07+ SM: Yes, I guess were going to start seeing firms that are forming for the specific intent of mining the public data on the blockchain and potentially, turning that into something that they can make money off of. Do you think we will also see people kind of, I dont know, moralizing? It seems like a lot of the analysis of the ways that people spend bitcoin; someone is making moral judgements about it, right? Like Oh, these transactions from SatoshiDice are too small so it must be spam. These transactions are too large so somebody must be moving a lot of money around for nefarious purposes. It must be terrorism. Do you think that will increase if there is more analysis that gets done on the blockchain? Maybe its just inevitable. *22:49+

AA: Yeah, I think its inevitable. Its a matter of time before a lot of those are proven wrong again, and again, and again and stop doing idle speculation without data. As I said before, the worst case scenario of computation micro-economics is the mess were in today which is a completely opaque economy that is rife with corruption, ransacking and thieving, and all of these problems and we just choose to pretend they are not, actually, happening. [23:19] AL: The counterpoint to this whole thing is that this is not just applicable to corporations, this is very, very much applicable to our political system because one of the problems that we have around the world with our political systems is that there isnt very much financial transparency, right? There is not much accountability either but I think that a big reason why there isnt any accountability is because the transparency has been such a problem. In the past, if you have to keep gold in a vault, then its easy to print more dollars than you can realistically back by gold because who can check. In a Bitcoin empowered financial system, that same problem doesnt apply and every bill could have a different Bitcoin address that has a certain guaranteed amount put into it. That would, actually, be feasible and would work, right? Thats the logical conclusion of this. This isnt Bitcoin to money, its Bitcoin to everything. [24:07] AA: Yeah. I would like to see a world where corporations, governments and large institutions are forced to have transparency and all of the rest of us are using remixers, by default baked into the client and have complete anonymity. Thats how the power balance should be. [24:24] AL: Julian Assange has a quote. You can think what you like about Julian Assange but this quote I really like. He said: Privacy for the weak and transparency for the powerful. I think that really is the, kind of, two sides of the Bitcoin sword here, right? It is privacy but its also transparency at the same time. The question is how large is the scale of the thing that youre doing because if everything is transparent then, Stephanie, youre right. Large transactions will attract attention, so if its all transparent then thats there but small transactions get lost amongst everything else. [24:57] AA: Yeah. They call their privacy, secrecy and national security, to imbibe it with importance and they call our privacy, privacy, to tell us its already dead. That has to change. Exactly. Transparency at the top, privacy at the bottom is how our society should work, not the other way round which is how it works today. [25:17] SM: Is there potential for mistaken identity? Im thinking of a scenario where there is a large transaction that happens and, basically, exactly what happened with the allegation that Satoshi was investing in Silk Road. Somebody said it must have been this and they make up a story about it that sounds really bad and damning but nobody comes out and owns up to it and says No, actually, this was me giving my mother a birthday present. What could potentially happen? I mean, could this be used as evidence against somebody... who knows? Im kind of worried about that. *25:50+ AL: If its used as evidence, then our standards of evidence have gotten even worse than I thought they had. [25:57]

SM: But they are! (Laughter) [25:57] AL: Well, I know they are... but really? I just dont see something like this, in terms of supposition being even... am I wrong? [26:04] AA: No, remixage for the rest of us. Thats basically it. If youre a politician and subject to campaign finance laws, you have to use publically listed Bitcoin addresses so that everyone can check the shared ledger. If youre a corporation that is acting as a non-profit, you have to use publicly listed Bitcoin addresses. All of the rest of us should remix up the wazoo so everything is tainted with everything and no one can track what were doing. Yes, you will have these weird scenarios where people will assume they have privacy and instead, what theyll get is outed for making a transaction. Thats no different from what we have now. The only difference is who... the only people who have the power to out you for financial transactions today, are intelligence agencies, whereas with open blockchain ledger, we can all do this and we can do it to the powerful as much as they can do it to us. I like that better. [26:56] ______________________________

ADVERT: Purse.io is a gift exchange that helps you shop on Amazon with bitcoins and at a 6% discount. How does it work? You create an Amazon wish list, share it with Purse.io and deposit bitcoin equivalent to the cost of your item. Youll soon receive your item in the mail, purchased for you by someone who gets your bitcoin in return. You must try this new service. Lets Talk Bitcoin listeners will even receive additional rewards. Visit www.purse.io. [27:29]

ADVERT: When you shop with bitcoin on Gyft, you can get gift cards from over 200 retailers. Think of the possibilities. Not only is your holiday shopping taken care of in a snap, from your android device or on the web but now, you have a way to purchase everyday items from stores like Target, CVS, Gap and GameStop using your bitcoins. Thats not even the best part. When you should with bitcoin on Gyft, you get 3% back. Ready to shop? Visit www.gyft.com today. [28:12]

______________________________

AA: Hello, this is Andreas Antonopoulos at the Latin American Bitcoin conference here, in Argentina in Buenos Aires. With me today, I have Alan Safahi of ZipZap. Alan, welcome to the show. [28:47]

AS: Thank you. Glad to be here. [28:48] AA: ZipZap is one of the companies that helped me get my first bitcoin in collaboration with BitInstant and I am forever grateful to you for that. It certainly spurred a whole industry for helping people, with a minimal level of hassle, to get cash directly into Bitcoin. [29:08] AS: Thank you so much for that endorsement. (Laughter) [29:10] AA: It is the truth. Tell me a bit about the history of ZipZap. How did you decide to get involved in Bitcoin? What is your background? What is the history behind ZipZap? [29:22] AS: My personal background is pre-paid card processing. I was involved in issuing pre-paid VISA and MasterCard products. We got involved with ZipZap and cash payment because we were getting customers from around the world trying to buy pre-paid cards from us and we, of course, couldnt sell to them because of different franchise rules that the networks have. I started digging into it and found out that people wanted to buy pre-paid cards so they can shop online at the merchants in the U.S. They didnt have credit cards, or if they had it they couldnt use them due to restrictions and fraud controls, and so forth. Thats how, originally, I got involved in the cash payment network because I thought thats the easiest way for customers to shop online. They can just pay cash locally but, of course, it turned out that it was harder to convince the merchants that they should serve these customers that they hadnt served. Even though we had a few merchants that were really interested, it became a challenge because they didnt have resources to implement our solution. They didnt have logistics in place to ship to some of the countries that we were trying to serve. In the process of doing all of this, Ive learned about Bitcoin and Ive found out that this is an area that is underserved. They need liquidity. For a currency to survive and thrive, you have to have cash in and cash out locations, so I decided to pivot and focus on providing support for exchanges, like BitInstant and others. [30:50] AA: When did this happen? [30:52] AS: That was June of 2011, I believe. Actually, June of 2012, I think thats when we started our first transaction with them. [31:03] AA: OK, great. Since then, ZipZap has been a very important player in the cash in and cash out aspect of Bitcoin. Now, I know one of your main partners (at least in the U.S. through which I was introduced to ZipZap) was BitInstant but you have other partnerships around the world. [31:23] AS: Yes. We have a partnership thats going to be going live soon with Kraken in Europe; we have a partnership with CoinEx and CampBX in the U.S.; we have partners in Asia that are integrating with us (Singapore, Hong Kong); a few, even in Latin America; two in Canada. Were expanding globally. Pretty much most of the exchanges, with the notable exception of Coinbase and MtGox, we have everybody. Bitstamp is a client, as well. [31:54]

AA: Thats very good. Where do you see the future of this industry going now that Bitcoin is gradually reaching a level of awareness that we havent had before. I wouldnt call it mainstream anywhere near yet, but certainly, the demand has spiked. For a lot of people, it is very difficult to buy Bitcoin; its very difficult to set up exchange accounts and do all of the KYC AML stuff. Cash is obviously a very popular alternative. Where do you see the hotspots for this development? [32:29] AS: I think that the best use case for Bitcoin is remittance. We are focused on remittance right now. We think micro-transactions and e-commerce could come down the road and become very important but right now, Im focused on building the cash in and the cash out solution and in the middle use Bitcoin for transferring the money between different exchanges. We also did the same thing in partnership with Ripple, to use the Ripple gateways for that. I think that in terms of where the industry is going, the attention that Bitcoin is getting from the rising price, although its not good for it as a currency, it does serve a purpose of educating the public. You see more and more people getting involved in understanding Bitcoin, learning, buying it, getting involved in it. You see more investment, money coming into it which would then, hopefully down the road, create better solutions like easier ways to partner with the wallets and popular exchanges. Its all good. I think, long term, I would like to see the prices stabilize and I think, maybe, theres a lot of speculation built into the price but people often ask me Should I buy Bitcoin at this price, or that price? I say If you take the value of what PayPal is doing, or what Moneygram, or Western Union is doing, or what VISA or MasterCard is doing and you convert that to 11m bitcoins that are out there, a bitcoin could be worth $100,000 or $1 million, if you look at the upside potential of the replacement of those giants. Thats the market really. Its a market that has trillions of dollars of upside potential. In the course of a day, theres $5 trillion worth of currency exchanges that happen every day. Can Bitcoin play a small part of that? Today Bitcoin is only about $200 million a day. There is a lot of upside potential but if somebody gets into Bitcoin and buys it, they should look at it for long term and not speculate that its going to get to that $10,000 or $100,000 by the next week, or by this Christmas. Its not going to happen. (Laughter) *34:42+ AA: The most important advice there is do not panic. [34:45] AS: Do not panic, yeah. Exactly. [34:46] AA: Theres a lot of volatility but if you just hold on there, theres a lot of opportunity. [34:51] AS: You should become a value investor. You invest in Bitcoin... I like what Eric Voorhees said which is there is a ** I think he got this statement the wrong way round ** Bitcoin with a capital B, which is the currency and theres a bitcoin, with a small b which is the platform. I say, invest in the platform because thats the real sustainable value of Bitcoin. The currency is good but, the Bitcoin (capital Bitcoin) is good . Its needed. The reason we should buy the currency is because you believe in the power of the Bitcoin as a platform as what it could do for humanity, which is the subject of my presentation here in Argentina. [35:26]

AA: Remittances is the focus of your business right now. Of the entire international financial market, there are certain many flows with many billions and trillions of dollars going around, why remittances? [35:41] AS: Its the biggest paying point, first of all. Im an immigrant, myself, to the U.S. from Iran and I see the trouble that the foreigners have to go through in any Westernized World to send money back home. We saw, in the U.K. thousands of MSBs lost their bank relationship and because of that, they couldnt service their clients who want to send money back home to like Ethiopia. As a result, the Ethiopian guy who is receiving money from his family in the U.K., maybe, couldnt eat that week. We can make an immediate impact by doing the remittance right and Bitcoin allows us to do that. The fees are being charged that are very, very high. Here in Argentina, I heard that you can pay up to 50% to send money across the water to Uruguay. Some of that has to do with the monetary policies here but the remittance fees are still very high. The average with Western Union, or Moneygram, youre paying up to about average of 9% but in some countries, the poorer the countries the higher the fees so you can pay up to 25% average to send money to some poor country. I thought thats not right. We could do it a lot better. Humanity can do a lot better. We dont need to be enriching our pockets and getting 7-10% quarterly profits when people cant afford... at the back of those people in Third World countries that cant afford it. The other thing is, I look at were giving money away in foreign aid to these count ries, to the top of the governments and hoping that it will trickle down to the bottom of the economy, but at the same time we are taking up to $74 billion a year from the bottom of the economy in remittance fees. Why not just get rid of the remittance fees and not have to give as much in foreign aid? I would like to help these people in these Third World countries to become self sufficient, to come out of poverty, to get clean water, have better sanitation and less diseases. To do that, you have to help by doing innovations and I think Bitcoin is that innovation that allows us to do it. Thats why remittance, for me, is so important because I can very quickly, immediately touch off billions of people and enhance their lives. [38:03] AA: Thats a very powerful message. I think the remittance industry, unfortunately, is probably one of the most exploitative industries in the world. At the moment, they enjoy profit margins that are, depending on how you look at it, obscene but simply unsustainable because the underlying value of what they do, which is transferring payments across borders, is partly offset by risk of exchange rate and things like that but part of it is really just the cost of the underlying infrastructure and pure profit and greed. When you introduce a platform like Bitcoin, where the underlying overhead goes to zero, and you take out some of the greed from that, its truly a world -changing technology and platform. [38:52] AS: I think there is an argument that you have to pay the toll if you cross a bridge but then, after a while, that bridge has been paid for and youre still charging a high toll fee. The poorer you are, the higher the fees and thats the problem I have with remittances. I dont have a problem for anybody to get paid for building the infrastructure to support remittance. MoneyGram, Western Union, all of these guys (???) in the remittance fees and did a great service building that infrastructure. What I have a problem with is for them to continue to charge these higher fees after that remittance platform has been bought and paid for a thousand times over. The other thing is, Bitcoin doesnt have any costs in

transmitting money so, I think businesses should always be disrupted. I believe in disrupting my own businesses. I think there is a better option and I think MoneyGram and Western Union need to adapt to this technology and embrace it instead of fighting it, instead of sitting on the sideline not doing anything about it. They should be part of the solution and really (???) start (???) actually is we want to be partners with them. We want to work together to reduce these fees to the bank but thats up to them, not us. *40:02+ AA: Yes and the unbanked are the vast majority of the immigrants and itinerant workers who depend on remittances to feed, not just a couple of members of family but extended families that support entire communities and entire developing economies back home. [40:18] AS: Yeah, its 53% of the world population are not serviced by financial institutions, according to the World Bank. Thats about 2.5 billion people of those are considered in poverty. They make less than $2/day. In India alone, we have 700 million people that make less than $2/day. They get a lot of money from their families, friends from overseas. Its not a lot of money but for them it would be a lot of money and for them to pay these high fees is not right. I think we can do better and we have to do this in stages so at ZipZap, we are building the cash in and the cash out so the customer puts the cash in and the recipient gets the cash out but they never know they were using Bitcoin in the middle. Eventually, in developed countries, you could have somebody using their mobile wallet to send money to a developing country but then on the receiving side, they are still getting cash but on the sender, theyre using their mobile wallet. The goal is, at some point, to do what M -Pesa did in Kenya, which is mobile to mobile transfer where there is no cost. You have your Bitcoin wallet on your phone and you send it to your family that has a Bitcoin wallet on the other end but Im pragmatic, I know thats not going to happen right away. It took a long time for M-Pesa to do it and they had full support of the government and everybody else, the infrastructure from phone companies. Its going to take time but in the meanwhile, lets do the cash in and cash out and lets slowly adapt to this utopia of having mobile to mobile no cost thats my goal. I want to disrupt my own business where I wont charge any fees for transferring remittance. If I achieve that goal then I think the work is done. We can make money other ways. We dont have to make it by charging fees. *42:11+ AA: Especially for the poorest people in the world. [42:13] AS: Exactly! Yeah. [42:14] AA: I have a feeling I know why youre not going to get much cooperation and partnership from some of these companies and the simple reason is that their entire business model is based on profit margins that even if they try to co-opt and adopt Bitcoin are not sustainable. Unfortunately, when the cost goes to almost zero, the profit margins have to follow and these businesses cannot sustain shareholder reports every quarter where they dont deliver 7% profit. They are going to resist than adapt. [42:48] AS: I agree. I think they need to find a way to explain to the shareholders and explain to Wall Street that they are going to get disrupted, so either they do it or somebody else is going to do it. If you look at the Dow Jones industrial average, the companies that create

Dow Jones, theres only one that has remained - GE, from the original group. Where did U.S. Steel go? Where did all those other dinosaurs go? They didnt adapt. GE adapted and bought TV, bought NBC and other things, medical devices, aircraft and diversified. They exist and they survive and they do well. I think any of these money transfer companies if they dont adapt and embrace new technologies and innovations, theyre going to be extinct. They need to explain that to their shareholders. Its a tough sell; I agree with that but they need to start having those kind of conversations. I know Western Union understands Bitcoin very well and I know that they are monitoring it very closely and will, some day, step in. I just hope its not too late for them. *43:56+ AA: I think probably most of the companies that are looking at Bitcoin fail to see Bitcoin as a platform. They see it, primarily, as a currency and they also fail to anticipate the speed with which this will develop. I think its going to take all of us by surprise how fast these things ... especially if you are able and successful in bootstrapping remittance flows in certain key areas where they are so needed. There is a dammed up, mass of money - $500 billion sitting behind a dam of regulation and inefficiency. You put a little hole in that dam and its going to come crashing down. (Laughter) [44:35] AS: Yeah. Were going to put a big crack in that dam, I tell you . (???) came in and changed e-commerce for ever, utilizing Bitcoin we can change payments. I think payments innovation hasnt been keeping up with the rest of the technology. There havent been a lot of innovations for the past fifty years in payments, so there are tons of opportunities. Its very tough. Its the hardest business to really innovate because of regulations and because of all the established players and the logistics of dealing globally; you need a lot of scale. You cant just do a payment option for San Francisco; you got to do it globally. Its very tough to do and Im one that doesnt shy away from challenges. Im here in Argentina, trying to set up payment centers knowing all the challenges we have here, in terms of getting to remittance and so forth. It can be done and it will be done and we are leveraging the technology for the good. We are not thinking about whether or not its going to affect peoples pocket, shareholders and investors. I think our investors understand that we are building value and creating relationships worldwide and we can make money servicing these customers with other things. Think of as a premium service where you provide a free service for remittance but maybe you can charge for other value added services to make up for your revenues. [45:59] AA: I think this is a very positive and morally correct business model and in finance, thats a pretty rare thing. I think disruption could not happen to a more deserving bunch and, at the same time, if you bring these kinds of services, it could not happen to a more deserving group than humanity that have really been neglected, oppressed and underserved for millennia. [46:25] AS: I agree. I think were spending trillions of dollars with security but we could have really evened out the odds in helping equalize the odds for these people in the Third World countries so they are not prone to terrorism. When people cant make money, when they have unemployment rates of double digits and they are getting these kind of exuberant remittance fees, they turn to violence. I think the bigger humanitarian aspect of Bitcoin is that it allows us to help these people get out of poverty, to help them be able to get clean

water, sanitation, health care and eventually, get their education and maybe down the road they become customers of the West they want the same things we want for their kids. Why not help them achieve that? In Third World countries, the people there have done commerce for thousands of years. We just need to help them, in the future, to do ecommerce give them the tools. Why not, instead of giving foreign aid that goes to the top of the government, help reduce the fees to the bottom of the economy and reduce the remittance fees? Why not give them the tools that they can succeed in e-commerce and micro-transactions down the road? Thats the debate I want to have about Bitcoin. I want the press and the politicians and regulators think about how investing in these infrastructures would actually benefit humanity and benefit us in the West. Its like when they didnt tax the Internet for e-commerce. It helped it grow and prosper. They should do the same thing. Lets not create regulations that make it tough on Bitcoin. We must really invest in Bitcoin. I think government and banks should really invest in Bitcoin to help spread it out, to help these 7 billion people in the world come out of poverty and become customers in the future. [48:19] AA: Its one of the slogans on our show at Lets Talk Bitcoin and we constantly keep repeating this is all about the other 6 billion. Its not about western developed nations. Bitcoin, to us, is a technological fad. Its interesting. It can lead to some interesting entrepreneurial opportunities but to the other 6 billion, its a matter of life and death. [48:40] AS: Absolutely. I agree with that. [48:42] AA: This has been an inspiring interview. I wish you all the success in your mission and thank you so much, Alan Safahi from ZipZap. [48:50] AS: Thank you for the opportunity. I appreciate it. [48:52] AA: Thank you for being on our show. [48:53] AS: Thank you for the great job you guys are doing spreading the word, so keep it up. [48:56] AA: Thank you. Take care. [48:57] ______________________________

ADVERT: Purse.io is a gift exchange that lets you get bitcoins at only a 6% premium and with a credit card. How does it work? You purchase items for other Purse.io members from their Amazon wish lists. In return, you get bitcoins in the amount of the Amazon purchase. The more people participate, the more bitcoins will be available. So, tell your friends. Get exclusive access today at www.purse.io. [49:32]

ADVERT: EasyDNS is the Swiss Army knife for your domain names. Helping meet their customers individual needs since 1998. EasyDNS has been an outspoken critic of SOPA and CISPA. EasyDNS was an early supporter of Bitcoin and now they are proud to sponsor this show. Do business with a company that shares your values. Get a 13% discount when you pay with Bitcoin. Go to bitcoin.easyDNS.com and be sure to use discount code LTB. [50:04]

______________________________

SM: I am here today, talking with Rik Willard. He is the founder of Mintcombine which is a technology incubator for start-ups and its based out of the East Coast but also, worldwide. Is that right? Tell me more about that, Rik. [50:46] RW: Yes. We actually have a presence in North and South America, in Africa and soon in Europe and Asia, as well. Maybe Singapore or Shanghai, were not really sure yet. Were here, actually, at Inside Bitcoins to negotiate something with BTC China, so that would most likely make it Shanghai. Right now, we have portfolio companies in Toronto, New York, Nairobi (Kenya) and in Chile. [51:17] SM: Thats quite an impressive reach. Whats going on in each of those spaces with Bitcoin start-ups? What kind of companies are you seeing come out of each of those places? [51:27] RW: Its really interesting because each has their own regulatory issues. What were seeing in Canada because of their more laissez-faire, relaxed regulatory ecosystem, that were doing a more social commerce. In Chile, and South America in general, what were doing is focusing more on trading aspects and currency valuations and worried about platforms. New York, the same thing but the U.S. has their own regulatory environment mostly building test platforms out of New York. In Africa, for developing and emerging markets, were really doing a lot of mobile work: merging with BitPesa in Nairobi with Duncan Goldie Scot and those people and figuring out how to reach the unbanked and underbanked in emerging markets. [52:24] SM: That is really interesting. I was curious about what was going on in Kenya, especially with the popularity of M-Pesa. Is BitPesa similar to M-Pesa? Whats the difference? *52:34+ RW: BitPesa is, actually, a remittance system based on the infrastructure of M-Pesa. Musoni was a company that Duncan had founded to do micro-finance and micro-payments in Kenya so he just really switched that platform over to Bitcoin, as a remittance network through M-Pesa. [52:56] SM: That would work with just mobile phones that arent necessarily smart phones? [53:01]

RW: Feature phones, yeah. [53:01] SM: Wow, ok. Thats really interesting. What kinds of things do you look for in Bitcoin start-ups? What indicates that one would show promise? [53:11] RW: I, personally, like people with vision. I like good teams. Every VC or every investor is looking for teams and smart people but mostly I look for, in this space right now... its like the beginning of the Internet... this is the Wild, Wild West... I look for people with far reaching vision, like Dan and people like that, who see beyond and see into the application layer. If you look at Bitcoin as the TCP/IP of money, the application layer the HTML, is what Im looking for. *53:48+ SM: How did you, yourself, first find out about bitcoins? When did you get excited about them? [53:53] RW: I bought my first bitcoin about two years ago. [53:55] SM: Youve been in it for a while. (Laughter) *53:57+ RW: In it for a minute, yeah. (Laughter) I bought lots early on... [54:04] SM: Great. [54:04] RW: ...just to play with, to figure out is it real or is it not and just sort of rode the wave. [54:11] SM: Do you remember where you first heard about it? [54:13] RW: Yeah, actually, I heard about it first from Peter Vessenes. [54:16] SM: OK, yeah. [54:17] RW: Actually, I got my first bitcoin because I had lunch with Peter and I paid for it... he said I dont want you to pay for it, Ill give you the equivalent in Bitcoin. I got my first blockchain app then. That was a while ago. [54:36] SM: Yeah. Thats a cool story. That investment that you made in Bitcoin, obviously, has done well. [54:44] RW: Yeah but Ive invested quite a bit more since. *54:45+ SM: Yeah. I was curious about that. Your strategy has been invest more and buy and hold? [54:51] RW: Well, no. Im not like Brock and those guys who like this Hold, hold, hold. I believe you have to hold 80% but youve got to spend 20%. Youve got to keep liquidity in the

market or else you have no value, right. To me its really important to have some stake in liquid to support that ecosystem and keep things moving smoothly. [55:15] SM: Yeah. When you find a promising Bitcoin start-up, are you funding them in Bitcoin or... how does that work? [55:23] RW: Thats a good question. (Laughter) No, not right now but yes, we will eventually but were looking for a more stable platform. Were really using cash right now. It also services in kind services, as well like any good mentor should do. That being said, there will be a time where we will move that platform over to digital, yes. [55:48] SM: Having the global coverage is kind of a sweet arrangement because if some country decides, like the U.S., if they decide Well, were going to crack down, or whatever, on funding companies with Bitcoin, or whatever, then you can say Alright, well weve got stuff going on in Kenya, China, it doesnt matter, Canada. *56:06+ RW: Exactly. Were in the U.S. and were dragging our feet on this and its a shame , kind of, because the world will move ahead regardless. To me, Bitcoin is an underlying protocol that enables a lot of things on the application level. To me, its a branding issue. Im not married to Bitcoin per se; I am though wed, really strongly, to digital currency. I think Litecoin has great promise. I think Namecoin is really exceptional, and some others who have promise. Most of them are for crap actually, but the ones that have the protocols in place are the ones that were betting on. *56:48+ SM: Youre excited about expanding the idea of Bitcoin into other areas and applications? [56:54] RW: Absolutely, absolutely. Were big believers that - To each place a coin and a coin for each place (corporate coins, government issued coins, private and public sector) and it will be like 120 years ago. In the U.S., we had 1400 different currencies. People dont remember that because we dont have that social imperative to look back and say what actually happened before all of this. Centralized currency is a fairly new phenomenon with human beings. Mostly, weve had decentralized currency and local currencies. I think thats where were going before we talk about a one world currency; there will be a multiverse of currencies. [57:39] SM: Thats really interesting because I dont know if youve noticed but people are kind of split on this issue. There are some people who think there can only be one and its Bitcoin and then some people think theres room for a lot more. *57:50+ RW: Thats nonsense. Thats like saying there can only be one cola, you know. (Laughter) Theres Coke which is huge and monolithic but theres also Pepsi. There are the also rans, like RC Cola which you dont hear about any more, or White Rock Cola. Some will die off; most will die off but there will be some exceptional brands that stick out because of the structure, and because of ease of use, and different kinds of imperatives. [58:15]

SM: Yeah, thats fascinating. One last question. Do you have any altcoins? Are you invested in any altcoins, personally? [58:22] RW: Yes. Im not saying which though. (Laughter) *58:23+ SM: OK. Fair enough. Cool. Where can people find more about your firm on the internet? [58:28] RW: Go to www.on-21.com or you can go also to www.mintcombine.com. [58:41] SM: Rik, thanks so much for talking with me today. I appreciate your time. [58:44] RW: Thank you. Nice to meet you. [58:46] SM: Oh, so great to meet you too. [58:48]

______________________________ CREDITS: AL: Thanks for listening to Episode 68 of Lets Talk Bitcoin. Interviews with John Light and Rik Willard were produced by Stephanie Murphy Mistaken Identity was produced and edited by Adam B. Levine and featured Stephanie Murphy and Andreas Antonopoulos Interview with Alan Safahi was produced by Andreas Antonopoulos Music was provided by Jared Rubens and Calvin Henderson

Questions or comments? Email adam@letstalkbitcoin.com (but Im on vacation) Have a good one! [59:15]