Video - Joe Rogan Experience No. 446

Andreas Antonopoulos is a bitcoin entrepreneur, he also serves on the advisory boards of several bitcoin startups and serves as the Chief Security Officer of Blockchain.

Transcript

Transcript generated by YouTube auto-captions. May contain errors.

hey everybody what's up how was your weekend don't answer that we're not really talking that's just the awkward thing to get the get the podcast started words they don't really mean anything takes a few words from here on out everything means something allegedly this episode of The JO ran experience is brought to you by Squarespace congratulations to all those folks who won the Squarespace contest you should be uh getting all your goods your higher primate t-shirt and your swag bag from Squarespace and you get a free year of Squarespace service there were some really cool um entrance a lot of them really too many to to pick four but we managed to pick four that were uh were pretty striking so uh the what what Squarespace is for people tuning in going what the [ __ ] you talking about Squarespace is a fantastic website for creating websites it's really intuitive super easy to use uh it's one that uh I've had L virtually zero complaints about not not virtually actually what I say virtually cuz I was trying to sound smart seem like a good word to fit in there um it's used by you know so many different companies that would have ordinarily had to pay someone a tremendous amount of money to create something just as cool and Slick the way they have it is set up so that if you can do normal computer things like go online drag and drop you know click on things it's if you could do like normal things in the internet create a Word document you could figure out how to make your own beautiful website with things like having an online store very easy to set up for musicians musicians can sell digital music from Squarespace it's just a really cool company that it just a product that's excellent and works really well and for a free trial and 10% off of your first purchase go to squarespace.com and enter in the code Joe and the number one that's Joe and the number one for this month of January that we're in right now now Squarespace has also launched a new help website that 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does that stand for limited liability company yeah and you can do that for just 99 bucks you can also do a last will for just 69 bucks get a living trust power of attorney more all that kind of stuff and Legal Zoom also has a connection to a series of independent attorneys so if you panic and you're like this is [ __ ] I can't do this Legal Zoom will connect you to Independent attorneys who can help you through the process help you through your process um if you're in the middle of it you're like this can't be legal I'm going to jail I'm scared I need to talk to a real lawyer Don't Panic Legal Zoom will hook you up Legal Zoom is not a law firm but they can connect you with a third party attorney and provide you with self-help services and now you get a special discount from listening to this podcast make sure you enter Rogan in the referral box a checkout for more savings um this is probably the easiest way ladies and gentlemen that you can be naked and do law you can do legal things completely naked from the freedom but but you got to put a piece of tape over your your little webcam cuz the [ __ ] government man they're sneaking in they're looking at you do you have a piece of tape over there Andreas even better I have an eff sticker eff the Electronic Frontier Foundation that fights for civil liberties on the internet and they have their own branded stickers you can buy so they have their own stickers that cover webcams yes and they don't they don't leave uh they don't leave glue residue so you can peel it off and put it back on if you want to talk to someone and do video that's beautiful yeah it's a great little thing the internet can't [ __ ] with the Internet it's too strong it got out of control you [ __ ] up government I just keep it on you the government you [ __ ] up you messed up that internet was your downfall when they go look in the history of the human beings and they go back to different erors they will look at the the history of the internet going boy they didn't see that coming oh my goodness anyway on the internet go to Legal zoom.com how about that get yourself an LLC the time is right uh patent some things get a will that's the most important thing I got an LLC on Legal Zoom the thing is a lot of this law stuff is not that complicated but they make you pay you know 150 bucks to do it with an attorney and they really just fill in a form for you most people can do it themselves so it's yeah it works it's great it's a trap yeah it's a trap but for now Legal Zoom is legal so go to who knows what's going to happen go there legal zoom.com and uh use the RO the word Rogan in the referral box at checkout for more savings we're also brought to you by on it.com on it.com the human optimization website what is essentially is all things that I use whether it's uh physical fitness equipment strength and conditioning equipment like kettle bells or battle ropes or AB wheels or anything that we find that is that can Aid Human Performance whether it's human physical performance whether it's cognitive performance whether it aids in enhancing your mood we we actually have a supplement called new mood it's a 5htp and L tryptophan supplement that actually enhances your body's ability to produce dopamine it makes you feel better so much so that there's people that are on anti-depressants or their doctors tell them to not take 5 HTP because you don't want to get too much of that good loving too much of that good what's that ecstasy like why why wouldn't you want too good L say like a serotonin overload or something like that you can have you can have real issues you're not you know it's like too much of a bad a good thing is still bad that's why if guys do steroids and they get to be 350 lbs their dick just shuts down your dick's done too much of a good thing you know your liver is freaking out it's got to process all the [ __ ] that you're pumping into it it's it's all about Balance Ladies and Gentlemen balance and uh all the things that on it um whether it's the strength and conditioning equipment or the supplements all [ __ ] that I use and if we find something out there we try to sell it we try to sell you the best Coke coconut oil we tried to sell you the best buffalo bars the best hemp seed oil from the finest hemp seed with the highest levels of protein in it we just try to sell you the very best [ __ ] available and we sell some controversial things uh things like New Tropics we uh we funded a double blind Placebo study that we'll be able to talk more about in February but we we're spending a lot of money to back up the existing science on neut Tropics because I know a lot of people fear that things are snake oil and I that's a good fear it's good and it's good because it forces companies who sell legitimate things to do the proper testing and just show you there's plenty of examples of things on late night TV they're telling you that your dick's going to grow or you know this I mean that's just one example of things that you know are dubious and you know they're making money because if they weren't making money they wouldn't be having these commercials there is nothing that makes your dick grow if they did on it would have it on the goddamn front page we'd have dick row pills we'd [ __ ] sell them by crates the [ __ ] doesn't work nothing makes your dick row okay the the moment they figure it out go to on it.com o nnit t we'll [ __ ] have it if there's something out there we'll have it but until now we're just trying to sell you the stuff that does work because of the controversy we have a very loose money back guarantee on on our supplements on things like new mood or Alpha Brain there is a 90 pill 30-day 100% money back guarantee excuse me 30 pill I cough in here I reversed it it's a 30 pill 9 day so the first 30 pills you have a 90day 100% money back guarantee and you don't even have to return the product you don't have to send it back in you just you use what you use just say this stuff sucks you get your money back the what we're trying to do is sell you something that is so good that you don't have that Temptation and if you honestly do try Alpha Brain and you say it didn't do anything for you I want you to have your money back I think that's good don't buy it again don't don't buy it anymore and you know maybe it's just not for you that's I don't I don't want anybody to feel ripped off we're so confident that what we're selling is effective and works for us that we're willing to have such a a loose and limber money back guarantee but we're just going to continue to try to sell you the best [ __ ] that we can find and uh whatever science that we can do on whatever supplement we'll absolutely do that as well use the code word Rogan and you will save 10% off any and all supplements all right ladies and gentlemen thanks to everybody who came out to Chicago we had a great [ __ ] time this p weekend it was cold as [ __ ] but the people are cool as [ __ ] um Andreas Antonopoulos is here we're going to talk about cryptocurrency we're going to let some [ __ ] know Jo podcast check it out The Joe Rogan Experience Train by day Joe Rogan podcast by night all [Music] day so I love the fact that you can get on the internet and you have a conversation on Twitter with anybody and the word Bitcoin comes up m and then this swarm of people from like all these different direction Andreas antonoplos Bitcoin Jesus so you know I contact you you contact me boom a week later we're sitting in front of each other and we're going to talk about Bitcoin a million people are going to hear about it I mean that's the the internet is [ __ ] beautiful it's magic I mean it's just it is what it should have the what communication with human beings should have been a long time ago I think it would have all the things that took off and gain ground and and gain momentum throughout human history whether it's religion or whether it's cult rituals ritualistic Behavior like the all that [ __ ] wouldn't have happened if the internet was around the internet would have went it's not that it's this stop what are you saying look right here here's here's the studies there's so much misconception and so much disinformation that human beings have been fed throughout history I think we're just now starting to grasp how huge it is that this is the first time in history where information just flows just back and forth and the most valuable stuff is free the most valuable information that you can get online absolutely free we you know what's the best thing about the the internet is that it's a dumb Network it transmits information from point A to point B and it doesn't care what that information is so if you come up with a new idea a new application and you stick it on the edge of the network you can trans sub MIT that information to anybody else and there's a cherish principle behind it net neutrality that you don't prioritize your content instead of somebody else is you allow equal access to all for all content and the internet doesn't care it's just IP all it sees is bites and it just moves them and then one day somebody invented a new application and stuck it on the edge the internet of money and that's what I'm here to talk about today because they didn't need to ask anybody permission and they launched Bitcoin and it happened and now that it's here it's enabling other people to launch money applications on the internet and it's going to fuel the internet even faster than we've seen before yeah this is a very strange time uh in in that there's actually people that are starting to accept Bitcoin one of the first cryptocurrencies for for solid objects like Tiger Direct is starting to accept Bitcoin for computers you can order a computer on Tiger Direct from [ __ ] Bitcoins and they'll send you goddamn actual computer that you can get online with that starts becoming real well Tiger Direct can very simply take that Bitcoin and immediately converted into dollars so they don't even have any exchange risk and other people are willing to give them dollars for it because they see it as valuable and that's all money is it's a shared understanding that this thing has value because it's scarce that it's not around a lot it's hard to make you can't copy it you can't fake it and once you have those three things you have money and then it has value let's let's explain those how is it possible well what what exactly is Bitcoin for people that are completely on the outside on this and they're listening to this podcast they're like what the [ __ ] is he talking about new money Bitcoin what is what is a Bitcoin so there's layers to this I'll start at the top layer at the top layer Bitcoin is Cash on the internet and I say cash because it's not just any kind of money it's not like an account or credit card it's not like PayPal this is Cash which means that when you have it you have it sitting on your computer as digital cash and then when you send it it goes directly from your computer to the recipient's wallet as digital cache now that's the top layer underneath this is basically a shared Ledger that means that everyone can see all of the transactions and the whole network agrees that Andrea sent Joe you know a tenth of a Bitcoin great now the whole network knows it so that means Joe has a tenth of a Bitcoin and simply based on that you can move money around um there's a lot of security and some complex math but basically Bitcoin is a standard it's an agreement on how to exchange money on the internet just like the web is a standard on how to create pages and view them in a browser there's a lot of skepticism when it comes to bitcoin um uh I've spoken to people that are Financial Wizards that are skeptical and I've spoken to people that are just you know that that have just looked into cryptocurrencies because of the rise of the popularity of Bitcoin they said this doesn't make sense there's no room for inflation there's not enough people you know not enough Bitcoins it's not going to work how are they going to create more there's all these different arguments about why do you think that what we're seeing with the rise of Bitcoin is instead of just addressing all these Financial concerns and all these people that are used to to the current market and the place that it's at right now the the the the the standards that the way they run things instead of that Bitcoin just creates a completely new network driven Community Driven money it says [ __ ] all your old rules it's social network of money it's peer- topair money it means direct from one individual to another individual no matter where they are in the world in seconds for almost free and that has never happened before do you think that part of the skepticism though is because of the fact that this other system exist and that this other system is ourm our standard and we don't want to look at like like Bitcoin objectively just say okay let's pretend that our current system of stocks and bonds and but it's not just it yeah and it's not just the system it's so much part of our culture money is one of the first Technologies you know fire wheel money money has existed for tens of thousands of years going back to shells and feathers and knots on string and giant rocks in the Polynesian Island and then through the Iron Age to minted coins stamped with Emperor's faces this stuff has been part of our culture for tens of thousands of years and as a result it's no longer just technology it's a cultural phenomenon and you are steeped in it from the moment you're born and so you acquire certain no Notions of what money is and how it works and you think the the current system by which money works is the only system because we've had it for thousands of years and even in computer science the idea of getting distributed computers to agree on something without cheating we thought that problem couldn't be solved until 2008 when the invention behind Bitcoin solved that problem and created a new way of doing money and it's going to take a lot of time to understand it primarily because people don't really understand money as it is today they they don't understand how Banks work they don't understand how the Federal Reserve creates money they don't understand a debt-based system for money I've read about it I don't understand it I've read I've read many things I've watched documentaries I don't understand it most of the people when they first face Bitcoin they start asking questions about money and it it quickly becomes apparent to all of us when we do this that we don't know much about money then we learn about money and we start reading about money but um you know it's it's very much part of the culture to the point where I'll talk to people about Bitcoin and they'll say well it's not backed by gold so how can it have value the dollar hasn't been backed by gold for like 60 years and and and you talk to the average person in the street and they still think there's some gold a vault and that stuff does doesn't exist I me what happened all the gold in the vault watches well well that's a whole other question I mean the real issue is this tee we haven't been on a gold standard for decades and all of the currencies in the world are created based on the productive capacity of the country and the legal system and because they have value because you pay your taxes with them MH and then they just float freely in exchange rates so they vary against each other and the because the dollar is used to buy oil it's the world Reserve currency and all the other the currencies are measured against it but there is no gold and and that's fine that doesn't mean it doesn't have value it absolutely has value that [ __ ] up a lot of old action movies man yeah it really does those movies where you would break into the Vault yeah Lone Ranger the bars of gold it would always be brick shaped well the thing is gold isn't that efficient for building a currency on because the the rates at which you can produce gold um is is fixed and it's hoarded and you know you have certain problems now the nice thing about Bitcoin is that it takes um it takes the same concept of of scarcity uh of having something that is a limited resource but it does it by algorithm so you essentially have math that says that every 10 minutes 25 new Bitcoin is created uh by the network as a whole with all of the Computing capacity of the network and that's fixed and every four years we create half as much every 10 minutes so in four years it goes down to 12 and a half Bitcoin every 10 minutes and then it goes down to 6 in a quarter and it keeps going down until you mint the last Bitcoin and then you're done 21 million coins it's done and the idea is that you provide a sound basis for money something that is rare cannot be forged is easily transportable and that is the form of currency so 21 million Bitcoins and then it's over there will be more there you can divide a Bitcoin 100 million pieces so it goes down to eight digits and that means you the lowest unit is called a Satoshi and there's 100 million Satoshi in a Bitcoin so 21 million time 100 million 21 quadril in coins plenty of coins Jesus Christ why why is that so complicated why is it like a 100 million um well I think part of the reason is that it's easier to write a number without a decimal point and just to write a smaller unit with lots of zeros after it um it's easier in computer terms to handle numbers that way but but most importantly it doesn't matter because what you see on your screen at today might be a Bitcoin Co actually on my wallets I use Milli Bitcoins thousands of a Bitcoin because it corresponds more to my daily purchases you know maybe a few years from now you're going to be using a millionth of a Bitcoin to look at your balance it doesn't matter what you call a unit uh the point is what value does it have because someone else is willing to give you that amount of money right but we have like sort of this established ideal in our head what a dollar is worth this is $100 that looks like a$1 thousand computer sure you know we have this idea in our head and that idea will be completely out the window and you start talking about millions of Bitcoins and trying to like figure out like how how much is a laptop from Tiger Direct if I buy a laptop is it 200 millionth of a Bitcoin well no we just talk in mbits a mbit is almost about a dollar it's about 800 something today um so a mbit so a computer would cost you about 1,200 mbits 1,200 mbits all right that seems normal as long as we can get it down to numbers that like correspond with dollars but here's the thing do you know what I mean this this is a global phenomenon and there are so many countries out there where their currency varies 30% a year and some now 30% a month and in those countries there is no stable anything and even the dollar we look at it today and we have this idea of what its value is but if you look back historically its value has been declining for almost a century now MH and today's dollar is worth the same as you know 13 cents at the beginning of the previous Century we don't see that on a day-to-day basis because it's one of the most stable currencies but there's 193 currencies out there and 180 of them are far far worse than the dollar in terms of management and a couple of handful of them are absolutely horrible and the people trapped in these countries can now use Bitcoin so this is a lot broader than just the US dollar it's not just a matter of is this going to be comfy for consumers this can bring people from countries that have extreme poverty extreme problems that are not necessarily based on a a lack of Technology ology that have phones that can use Bitcoin for example but because of politics they're trapped in the situation recently I was in Argentina in Buenos Iris and now they're having an even worse currency crisis uh they devalued 18% last week uh locked the lock down they can't take money out of the country they can't buy things online if they buy something online they have to go pick it up from a customs office and pay 50% tax on it the the country is trying to lock in the money right and you have these extreme situations and then you have a choice suddenly so Bitcoin is a lot bigger than just you know a consumer thing for here in the US how would someone get Bitcoins from those environments like let's say you're in some poor third world country with a really incredibly corrupt system and [ __ ] up economy how does someone from that that environment get a Bitcoin well so um even in Argentino for example which is is not a you know is a second world country that was once the you know the power Latin America and it's still a beautiful place um but it has these difficult political problems uh it's illegal to trade on the black market dollars for pesos right so you can't go in if you're a tourist and say okay I'm just going to give some dude on the street 200 that's illegal and yet on every street corner there's someone who will sell you pesos and last time I went I just asked them will you take Bitcoin and guess what some of them said never heard of it and some of them said yeah we're trying to do that now can you help us whoa soly already have this black market or gray market for currencies and in in the US you never see this but if you travel abroad you see this all the time most places in the world the official currency rate versus the one you can get from a corner uh you know a street s seller who's you know selling vegetables and the local currency for dollars you know you can do that in every in so many countries in the world and for them it's a normal thing now this this novel idea of this new currency is this something that anyone right now is like living off of is anybody getting paid by Bitcoin and paying their rent by Bitcoin buying their food with Bitcoin so first of all my income is entirely Bitcoin has been for several months now how many months um since October perhaps and before that I just didn't have as much income because I've been working on bitcoin you know to to a level almost Obsession because it's such a fascinating technology for me and and as someone who works in security and distributed systems this is you know a once in a-lifetime opportunity to be involved in something Monumental just like when I was involved in the early days of the internet as as a young scientist and now I can do it again with with Bitcoin so I've been obsessed but since October I've also been making a living off Bitcoin and I get paid in Bitcoin wow and how do you pay your rent I convert some of it to dollars to pay my landlord until I can persuade them to take Bitcoin directly but it won't take that long because every time I paying dollars I say would you rather take Bitcoin and that's one of the easiest ways to get Bitcoin by the way is find someone who wants to pay for something with Bitcoin wow and so they're not ready to yet but you think that perhaps they're thinking about it like you might be able to pay your rent in Bitcoin I'm always surprised by who's going to take my Bitcoin sometimes it's a taxi driver in Germany sometimes you know it's uh how do you give it to them they install an app on their phone I'm going to give you some before the end of the show for sure they install an app on their phone and I just zap it across just like I could zap it from here to quala lur in two seconds I can zap it across the table whoow it's just like sending an email and and in fact it's it's remarkably similar I just get you'll install an app and then you'll give me your Bitcoin address which is like your email address kind of and then I'll zap some Bitcoin across to you and few seconds later you'll see it pop up on your phone and that is real Bitcoin and it's and it's on your phone it's not sitting in a bank somewhere you don't have the promise that maybe when you try to withdraw it you're going to have it this isn't is n you know a credit or something like that this is the actual digital amount is locked by a key that's on your phone and is recognized by the entire network as a valid transaction if you left your phone behind in a drunken stuper someone got a hold of your phone could they wreck you financially yeah damn it but supposed to say no so no I'm going to be I'm going to be 100% honest there are there are ways to protect yourself so for example on my phone wallet first of all it has my my phone has a pin then my wallet has a pin of its own and then there's one thing that I can't do with the wallet right away which is I can't send money I can look at my balance I can receive money all of that just with a pin but if I want to send money I have to enter another password pin personal identification number for so I've got a couple of different passwords so that my wallet isn't just sitting there but again as I said this is digital cash so if you had a wallet stuffed with cash and you left it in a cafe what happens to it somebody steals it or you get really lucky and someone gives it back to you and you give them some of that money exactly but most likely you know you don't have someone to call and say hey get that cash back for me it was stolen from so and so location it's G you have a backup like if you lose your phone can you back up from from a cloud well that's the nice thing about it because unlike physical money this is digital money you can make copies of it you can't spend both copies you can only spend one but you can make copies so you can make backups you can even backup right onto a piece of paper which is what I do and this called a paper wallet so I have printed pieces of paper with Bitcoin keys on them and I make two copies and I put one in a safe and I put the other in a safety deposit box and I send Bitcoin to those wallets and then I basically have my Bitcoin sitting on paper in a bank whoa kind of like a barar bond it's like a be Bond you know or like a stock certificate but the only difference is that that magic number that's on there allows me to redeem that Bitcoin anywhere in the world this is way more sophisticated than I thought it was I thought it was a bunch of dorks running around with fake [ __ ] right dung and Dragons money oh no this is this is way more sophisticated we'll get to talking about how you can use this to do stocks bonds distributed companies autonomous companies now when you pay yourent all kinds of things when you pay your rent and you take your Bitcoin you convert it to money who's giving you money for Bitcoin people who want to buy Bitcoin so how do you find these people on Craigslist so there's a number of ways the the the uh the straightforward one if you come from the old banking style world is you open a brokerage account on a virtual Cary exchange that will exchange dollars yen Euros whatever to bitcoin or even some other uh cryptocurrencies and then you can go there and you can wire transfer um you know using your bank account you can wire transfer money into the brokerage account as you would to buy IBM stock you wire some money to your brokerage and then you buy some IBM stock well here you wire some money there and you buy some Bitcoin with it whoa so traditional brokerages deal in Bitcoin as well no this is a specializ exchange that deals in Bitcoin but it works just like a brokerage account so you have a number of different currencies in it and you can buy one and sell the other are there any brokers who deal in Bitcoins uh of like traditional large scale you know not yet not yet but you think that's coming oh absolutely wow yeah because the thing is it's it's uh it's one of the skills they have right they also have the physical locations and branches to sell Bitcoin and before long we're going to see is the same thing that happened in the entertainment industry when MP3 hit the scene like At first everyone was like whoa we don't want to even touch this and then somebody started thinking hey if I start playing with this before everybody else it's going to hurt all of us but it's going to hurt me less and I can start taking advantage and they peel off the herd and boom you have adoption and I think the same thing is going to start happening with banking wow some of the banks perhaps not the big six US Banks they've got a nice uh uh comfortable 70 billion uh a month from the FED right now why would they do Innovation but maybe one of the more Nimble Banks maybe you know in in a country like Cyprus that's been hit hard by these bailin and you have a a very open banking environment maybe Singapore is going to decide this is a good strategic move maybe maau who knows the point is in an International Financial environment all it takes is one yeah one ball gets rolling and that creates the Avalanche and then and they Stampede and then the stand changes right wow this is very exciting it's very complex though and this is what I'm trying to wrap my head around the the amount of this Bitcoin that's created every year is limited and fixed who determined all this who did who created bitcoin who invented the the concept was there several people or yeah you said when you exchange money it's it's almost free I heard so that money goes somewhere who's getting this money so this is where it gets a bit more complicated and um but keep in mind the internet in 1992 you had to know unix's command line skills to send an email and it took two days to cross the network we can get simpler and easier for most people over time but it's still a bit geeky so I'll I'll I'll get into one one question at a time though who who created this so this was created by Satoshi Nakamoto a cryptographer who used an anonymous Identity or pseudonymous identity uh he he uh basically wrote a paper and the Bas basic software a scientific paper that explains how it works it's actually the best way to understand Bitcoin if you have a bit of understanding of of basic science you can you can read it it's very accessible and if you look for the SAT Satoshi nakoto Bitcoin paper or the Bitcoin paper you'll find it online um so he wrote a paper and at the same time he created the software that runs the system right and then gave it out to people and people started running it now keep in mind Bitcoin is an agreement it's a standard it's how you do certain things on the Bitcoin Network that matters right and then there's software that implements that agreement that runs according to those rules just like the internet doesn't belong to anyone it's just an agreement of how you transmit things across the internet and then everybody can write software that can use that standard so satosh kodo created the standard what year did he do this in in 2008 2008 the the paper came out in 2008 and followed uh shortly after by the code the discussion actually lasted about a year as he was mulling this over and discussing it and keep in mind digital money is not new we've been doing digital money since the probably the mid 80s I think the first notable one was David ches digicash and he created a form of digital money using the new technology of cryptography at the time um he and cryptography is is a way of scrambling and unscrambling messages and doing digital signatures and using mathematics to to proove things basically on computers it's also what you use to protect your browsing session when you connect to your bank and it puts that little lock that's using cryptography you're doing an an encrypted session so at the time uh David CH uh basically created digital money and what it is is you can have a number that has a signature on it that proves who owns it and then you can spend that the problem is that you because it's digital you can copy it so what happens if you spend it twice well you have to have something kind of central Authority the checks to see that you don't spend it twice and so he put some servers together and they could handle all of the transactions and make sure nobody spent the money twice and issue the money and do all of the kind of Federal Reserve Central Bank functions and then ran it on the network and it worked unfortunately if you have a central server and you try to uh go against the banking system they stomp on you now how do they stomp on you well in this case um there there was a series of legal battles and then eventually the service got shut down and so we've seen this happen maybe four or five times with different attempts to do digital cach with various levels of centralization but the basic problem was this how do you ensure that the network remains trusted and honest um without having someone in the middle who checks everything an authority how do you put trust not in an institution or Central Authority as most hierarchical system work but but in but spread that trust across the whole network and in 2008 Satoshi aoto solved that problem and he solved it by putting together four or five ideas that each of them had been done somewhat before but he put them together in an incredible combination that just worked and worked beautifully so what the system does is it forces everyone who's participating on the network to do a bit of uh Computing um with their system which is called Mining and so so if you if you just have a wallet you don't do this but if you want to be part of the Bitcoin Network as a minor what you do is you run on a specialized computer and it solves this very difficult problem and it's kind of like a competition it's like looking for a magical number that that if you plug it into an equation it's it's the right number it's it's almost like a global competition like solving a giant Sudoku puzzle so everyone's trying and then somebody every 10 minutes on average finds a solution and that becomes a new block of transactions and when they find that solution they get some Bitcoin which is new Bitcoin that's created for the first time I'm confused yeah I know it's it's find a solution for what all right so basically the idea is um everybody's trying to find uh a way to create a new block of transactions right and in this block they also get a reward for creating the block what is a block of transactions it's basically um it's basically a a an entry on The Ledger so as I mentioned before there's um there's a way to have there's a central transaction Ledger where you can see everybody's transactions in order to write on that in order to create a new transaction that the entire network trusts you have to solve a very difficult problem right but if you do solve the problem you get a reward in Bitcoin okay now when you say you solve the problem is someone physically sitting in front of their computer trying to solve the problem or computer okay so their computer you using their CPU power yes but it's yes exactly okay so it runs in the background it's called proof of work uhuh you do a you're run a program that does proof of work which is basically solving this difficult problem so is this in some way like sort of similar in fact to how Bitcoin how bit torrent Works where bit bit torrent you you leave it on like if you're a a file sharer yes like how bands can spread their music that way they they put their files online let people know where they are then people SE it and then they all start sharing it every Bitcoin wallet works like that it's like a little bit torrent client and it talks to all the wallets it can find on the on the network and communicates but there are some specialized systems which which do this computation problem very very fast and they're big and noisy and have lots of fans because it's gotten very competitive so people upgraded their stuff and then they upgraded it again and then they upgraded it again and it's caused this kind of um arms race of computing power but the basic idea is that you you you buy a box that has has this ability to solve the problem you plug it into the network and it runs and it chews up electricity and it creates a dedicated box to try to help solve this and in the meantime it makes money yeah and it makes a bit of money and people join in groups that are called pools just like playing a lottery pool well look this guy this guy is this is his servers these are all Bitcoin solvers this is if I'm not mistaken this is uh yeah this is a liquid cool uh rack system for folks who haven't seen this photo if you're listen listening to this which is the majority of our people what are they Googling Brian what's the image Bitcoin uh mining it's the first one Bitcoin mining Jesus [ __ ] Christ you have to see this picture folks when you get home Bitcoin mining they have goddamn rooms filled with computers that they're making Bitcoin money we're in The Matrix so let we're here we're in the goddamn Matrix holy [ __ ] this is crazy this is somebody's house so the Bitcoin Network today is bigger than the world's top several hundred supercomputers combined it's the largest single Computing experiment on the internet ever what's using more internet juice Bitcoin or porn at the moment Bitcoin that's not possible son you're talking crazy we need Bitcoin but it's also it's also generating an entire new economy um based on that how much prostitution has been paid for in Bitcoin is that possible I have no ideas are you sure I'm 100% sure it has to be no you're just guessing you're not 100% sure I bet you're pretty sure no you can't say 100 out of all the people in the road that [ __ ] I'm sure one uses one super geak [ __ ] what if you find the first one today all right let me give you an argument for why that might actually make sense if you're a sex worker one of the problems you have is um you're going to get extorted and exploited for that money and you're not going to keep any of it yeah um with a Bitcoin wallet you can basically hide that money and you can also take it in a way that cannot be taken away from you not easily so you know all they have to do is take your phone nope not so easy no because it's backed up and right ex pin number yeah I mean you're not carrying physical cash it's a much safer exchange and so there are many reasons why in many different environments where uh money is difficult uh that Bitcoin is successful I mean here's the thing Bitcoin is very efficient money it's a very good system of money if you can send money like an email anywhere in the world well yeah it's tremendously useful and so in places and that includes criminal activities where it's difficult to move money bitcoin's going to be good for that but but that's not the point because at the end of the day there's another six billion of us who want to do good things with it and just like on the internet you can use it for Crime but it gives so much more to humanity of course you can use Bitcoin for Crime you can use but the reality is US dollars are used for Crime more than any other prostitution is the most ridiculous crime ever it so should be legal it's so ridiculous that people can have sex for free but they can't have sex for money how come you can give massages for money massag is a prostitution okay they are they might as well be prostitution they're awesome don't get me wrong I love massages but it's [ __ ] prostitution the person doesn't want to rub you whether it's a guy or a girl you want them to rub you you give them money they rub you they even pretend they like rubbing you they bring you water they get you a towel they don't give a [ __ ] about that towel [ __ ] come on man that's the that's part of the gig part of the that's part of the prostitution gig the idea that in 2014 it's still illegal to pay someone for sex is so stupid not even hand jobs nothing no penis can't touch it it's a bad place it's a bad place you can't have money involved in your bad place it's like paying money for Crime you called it crime I just found out yes uh it's being used for Constitution uh the first one was September of this year or last year passion VIP and escort agency in England says they now have accepted Bitcoins as payment Gods be to you passion VIP in England Gods be to you so now we know that kind of crime but let's let's separate ourselves from such controversial talk because this could really screw people's up their idea of what Bitcoin really is no here's the thing Bitcoin is not just money Bitcoin is an invent vention and what that invention allows people to do is move value across the internet and that invention means you can do Bitcoin but it also means you can do a lot of other things and Bitcoin is an incredible invention because it for the first time it completely democratizes money it separates money from a function of power of the state to an individual exchange between people like it used to be when it was shells and feathers right or um you know barter exchange but the beauty of it is that it can at the moment if you think about it there's let's say a billion people in the western world who have not just banking facilities but like turbocharge power banking they have international transactions they can buy stocks on any stock market they can do wire transfers some of them are credited investors Etc the power user of banking there's another maybe two billion people who have a basic bank account and then there's the rest of them right the the giant majority of the population on this planet has very limited access to banking very limited access uh to international finance to lending to Capital to uh the ability to even change their money to another currency and so Bitcoin is so much more important for them I call this the other 6 billion just keep the focus on the other six billion because for the billion it might be a fad but for the other six billion this is an opportunity to change the way we deal with poverty and to change the way we Unite the economic system of the planet which is a whole other level of conversation you we look at Bitcoin and we think of it as just money but it's not just money for the internet money for the internet is what it does and it does it very well but it's the internet of money and it allows people at the Edge by downloading just a simple application to join an economy and then to hold their own money without any state or Corporation being able to steal it from them or inflate it out of value and destroy the their children's future it allows them to hold and control that money and send it to anyone in the world they want to instantly for very little money I mean that's never happened before and the implications it has for poverty for the developing world for the way non-governmental organizations work is staggering just take one example International remittances at the moment 500 or so billion dollars sent every year from the first world two countries in the developing world right and out of that money 74 billion gets spent in fees fees as high as 30 or 40% in fact the poorer the country the higher the percentage of fee you have to pay so Somalian M migrant in the US who's sending a $100 home only 70 gets to the to the to the wife or the brother back home or the husband back home and the rest gets chewed out by the money transfer companies now we give the developed World 150 or so billion and then we take for to the richest and hope it trickles down and then we take 74 billion from the poorest what if we could change that what if we could enable Bitcoin remittances and international payments and redeliver that 74 billion of their money and allow them to send that money directly home without paying that fee that changes um the lives of a billion people wow so you envision Bitcoin as being a universal currency absolutely it already is will it absorb the dollar will will the dollar go away would the dollar coexist along with Bitcoin like what is your hope for this well I mean I think that like many disruptive Technologies is going to change the Power Balance it's not that the dollar goes away or the banking system goes away it just uh has less power and less relevance in a new world where people control their own money and can send it to each other so ultimately the grand hope is that the the money the dollar that we see today becomes in the future much like The Written Letter you don't [ __ ] need it anymore you can send emails you can send someone a text message you don't have to get on a [ __ ] Pony and carry your mail over to another state yes and and the thing is the dollar again is the world Reserve currency and there's only one of it now are there 193 other currencies that that some of them may end up getting replaced uh some of them may end up even converting into cryptocurrencies of a nation state you know like I don't know Thailand coin why not or fedcoin if we're doing it here but the point is that uh we can't judge Bitcoin on the standard of the most comfortable World Reserve currency that's the most stable currency we have to look at the rest of the world and see what their currencies are like and in many countries the currency is worth less than goat [ __ ] because you can burn goat [ __ ] longer than you can burn these bundles of paper money that doesn't burn very well you know and in in those countries this is not a matter of shopping this is a matter of of the future of their children and it's a matter of development wow that's that's really fascinating it's it's what are what are the concerns as far as security what are the concerns as far as if someone steals your Bitcoins is there any sort of regulatory body that can determine whether or not someone's computer or phone's been hacked into and their bit Bitcoins have been stolen I mean have has that become an issue yet or is that a potential issue it it is a potential issue and it has become an issue and yeah people have had their Bitcoin stolen you you has that happened what has happened well their their computer gets hacked and then they have a password on the account but they don't have like um you know one of the things you can do very easily is set up what's called two- Factor authentication so every time you try to use your Bitcoin wallet it sends you a little text message and you have to enter the secret code like you do with your bank High slightly higher so if your computer's being hacked they don't get the text messages they can't easily get into your account what is that P that article you just brought up Brian uh this is the latest hack uh I know that bitcoin's been hacked a few times but this last one is 1.2 million and there's an article on wired called 1.2 million hack shows why you should never store Bitcoins on the internet uh what what happens to something like that that they just lost this right there's no there's no getting this back and and is there somebody that like a group of people that um that you think is responsible for this or well no I mean there there's always been a a thriving hacker underground that uh that uses the most efficient way to steal money and they stole money from Target by compromising all of those credit cards just a few weeks ago and that affected a lot more people than any of these thefts and you know they're going to go after wherever the money is and if the efficient money is Bitcoin they're going to go after Bitcoin too but here's the trick because this money is controlled through mathematical security and because it's programmable we can actually create new ways of securing money so we can innovate whether it's the paper wallet example I gave you where you can create a physical copy that you can secure oldy sty in a safe deposit box whether it's using multi- signature transactions where for example the money is locked and it takes uh two keys or three keys to unlock it so for example you can have a backup company that provides the second key and so if you lose the primary key you could use the secondary key you can do digital backups you can do you can do time locks you can do all kinds of things now with money because it's programmable that allow you to create new ways of securing it so it's still very early early days um you know some some people who don't take care uh put too much of their Bitcoin in one place and yeah that's not a very good idea they have weak passwords so in this situation where these people lost 1.2 million in Bitcoin there's no bringing that back there's no tracing it there's no finding out where it went are there Social Securities on these Bitcoins or or numbers rather on these Bitcoins that nope like dollar bills you know they trace like batches it's cash no it's it's it because it's digital I mean this is one of the key um one of the key controls in the system is that it's like teleporting the digital cache and you know once it's not on your teleporter pad and it's gone you just hope the other teleporter will send it back to you because otherwise it's gone I mean it's digital cache it it can go very easily because it flows very easily um so what we're doing at the moment is developing new security techniques to make it both harder to steal in the in the first place to have backups so that you can um so that you can get back if a if a key stolen before it's used and there's all kinds of things we can do to make this better it's still early days there was that story about that guy who left his Bitcoin on his hard drive and tossed it out accidentally it's worth n million yeah right I'm sure you're aware of that story what happened this was in a this was uh in England and uh throughout the actually all that happened is that a lot of people showed up at the local landfill with uh with metal detectors so a lot of people were looking for this guy treasure Hunters trying to steal it well digital treasure hunting is going to be a thing a part of our future so you people are going to like find old uh hard drives from like 2013 and look for Bitcoins on them wow I love stories like this I was on Reddit the other day and I was reading this great story this student who said you know back in 2010 I did some Bitcoin mining on my laptop and I just found that wallet and it says I have 9117 Bitcoin am I rich or am I missing something cuz this would really my life I've got student loans and the guy had you know at the time it was $900,000 worth of of Bitcoin that he had found from a laptop he left laying around in 2010 and did some Mining and that story is great and it's happened many many times God so did that guy sell that and become like almost a millionaire yep that's insane and this was a student who was like I'm having trouble with my student loans you know this could really help me am I do am I he couldn't believe it he was like am I seeing this wrong that's from mining so okay let's let's get crazy talking monkey studios here we decide to start a mining operation don't don't no I mean it's a high trying to win a million dollars like that I'm tells me don't no so all a sudden I had it figured out so the the the reason people have been successful with Bitcoin is because they got interested in the technology when only a few thousand people knew about it and when they got involved at that point Bitcoins were worth like a hundredth of a penny or a thousandth of a penny and now they're worth $800 so if you ended up mining some then even if you only mined a few you know plus it was a lot easier to mine then because over time the network adjusts the difficulty so the more people trying the harder it gets so the network is autonomous there's no centralized server there's no Central anything it's it's a series of rules that everybody follows and it's hard to grasp at first because we've never seen this type of distributed organization and is there any organization whatsoever as far as like a c CEO or no so where does that money go then every time the transaction goes does it go to satachi Nakamoto [ __ ] like a pimp yeah if he even exists there's not even a real picture of him anywhere on the internet no one's actually ever confirmed his identity so it could be just the government again the X-Men bro or Anonymous what if he's invisible he's an invisible hacker physically invisible so all of the people who are doing the mining who have the the the hardware and they using it to mine for Bitcoin what they do is they sec the network by running this very hard problem they prevent anyone else from cheating because in order essentially they end up voting on every block together with this enormous computing power and that enormous computing power means no one can falsify the block because they would have to do that much computing power to falsify the The Ledger right right so if you can't falsify it without doing enormous amounts of computing power but if you do enormous amounts of computing power you get a reward in Bitcoin well you're going to try and win the game rather than cheat cheating is extremely difficult and not rewarding whereas participating is rewarding I see right so all of these miners are working and what they do is they verify the transactions and they secure the entire network which actually if you look at it on the grand scheme of things is a lot cheaper than guards and armored trucks and alarm companies and vaults and data centers and fraud prevention centers and all of those things that we have in our traditional payment system them it's actually a lot cheaper to do it by proving you're doing all of this computation for the network security now they collect fees so when they verify a block the person who manages to verify it first by finding this little magic number the solution to the problem I'll explain that in a second collects the fees that are in the block so all of the transactions that get verified in the next 10 minutes the minor who finds that block will collect all of the little fees 40 cents here 40 cents there 40 cents there it's about 40 40 cents to send a simple transaction right now and they'll also get a reward of 25 Bitcoin and then everyone will start the race again to to verify the next block of transactions for the next 10 minutes of spending and the first one to find the solution wins gets the reward gets the fees and they all start competing again but you don't know who's going to win it and the enormous amount of computation that goes into it ensures that no one can cheat even if you put together 600 most powerful supercomputers in the world you would not be able to get to to beat the Bitcoin system right now what a fascin element to be added to the idea of economy this this idea of the unified group of computers working on ever increasingly complex computations so the scientific term for it is a consensus assets Ledger which means it's a ledger a list of transactions about Assets in this case Bitcoin that's based on consensus on agreement and the agreement is reached by everyone voting with their computing power and because there's so much of it you can't cheat the election now when you you said that there have been other attempts at a new type of currency that have been shut down by the current banking system that was because they had a place where they had centralized servers they operated the centralized servers or a centralized organization or centralized something what did they do to stop them I mean is there any legality issues when it comes to doing something like this or creating a new type of currency oh sure there there's there's enormous legality issues I mean the banking system has this Fortress wall of regulations around it that acts partly supposedly to protect consumers from misbehaving Banks but also serves very well to prevent competition from small Banks because it's very expensive to do to you know pass all the tests right right so it keeps the ra the rabble out but you know then a lot of the criminals end up being inside this whole system here here's the thing that that whole regulatory system comes down hard on people who decide they want to create their own currency and the nice thing about Bitcoin is that there is no one there I mean basically an agreement when you say comes down hard like in in what Manner like how how would they come down hard like let's say you just asset forfeiture seizures lawsuits uh money laundering charges all kinds of things like that and this is because you're not doing things by regulation is that what you're saying well it has happened that that way in the past so you no matter what if you decide to create your own currency and you have an actual business and you're centralized business that centralized centralized business is responsible for following all of the government's standards on banking 100% across the board and if you don't that's where money laundering charges and that's where larssen and a lot of different charges get brought up is that that's what's goes on yeah now that's avoided somehow or another through Bitcoin because it's not avoided it's simply that Bitcoin is a completely decentralized system it works based on math so there is no there's no one running Bitcoin it was an invention just like someone invented electric El then we all learned how it worked and we all ended up using it but does it matter who you know invented the electricity that makes this light work no um Bitcoin is like that it's a standard it's an idea and it runs by people participating in the network so there's nothing there's no central location there's no company behind it there's no leader there's nothing it's a decentralized just like no one runs the internet right so if you say I don't want the internet to do this who are you going to sue it's a Global Network I mean what Al Gore Al Gore for inventing it right well that's one of the reasons Satoshi Nakamoto disappeared because he was smart enough to know that uh you know smearing him would affect Bitcoin but couldn't he because since he programmed everything have access to everybody's money if he wanted to no so let me explain that the the software itself is so-called open- Source software that means that it's a recipe of code that uh implements the the Bitcoin agreement according to the network standards and you can write your own I mean if you don't want to run that software you can write a version of it in fact there are five or six different um you know fully compliant versions that can participate in the network and even if you take the basic one that started with him writing it but since has involved in a community project with lots of people writing code you know just like the internet it you just agree to play by the rules and then you can read the code and you can see exactly what happens there's no controls in there there's no magic secret Keys you can see how it works hang what are you what are you saying hold on a second there's five or six different types of Bitcoin there's there's five or six different programs that can that can do the full Bitcoin uh language on the Bitcoin Network five or six different versions but they all speak Bitcoin so it doesn't matter but they're what are they doing differently than the other ones just um different way different programming languages different ways of implementing them some are more efficient in some ways some are more efficient in the others but they don't do anything different in terms of Bitcoin so there's just like there are lots of different internet routers and they all speak tcpip on the internet and you know Cisco makes some and Juniper Networks Mak some others and HP makes some others but they all speak the same I see so there's no concern whatsoever that there's any security openings because of the fact these guys are producing their own software that communicates in bit because the trust is based on computation not access so this is a key thing to realize all of our payment systems and banking systems up to now keep trust in the system by keeping people out by controlling very carefully who connects the network and that means the network is always very small in Bitcoin all of the trust is done by this joint computation right and so who talks the network doesn't matter because the network is trusted and safe regardless of what you try to send to it or receive from it or how you interpret it because there's no Center so this has radical implication because that means you can let anyone talk to the network or rather you can let everyone talk to the network and everyone can be a bank on that Network and everyone can send wires transfers on that Network you have the power of a bank on your smartphone and as long as it speaks the Bitcoin language and understands it with the rest of the network you don't need to trust you know that that that application is running the the trust happens in the transactions in the network you can't no matter what you write so what is the motivation to write a new software what is the motivation different efficien like there are different PCS that all run Windows there's you know different clients that all run Bitcoin I see so they just have DEC decided to run their own program that that speaks Bitcoin but it participates in the exact same fashion right you have a Chrome browser you have a Firefox browser why are there two right same thing okay in fact it's it's very similar or like a bit torren client there are three different versions but they all speak bit torren and your browser all speak HTTP the hypertext transfer protocol so no matter what website you go to and there are lots of websit programs that made by different companies that speak the server side of the web you know there's lots of different versions but what matters is the common language they speak and Bitcoin is like that it's a Common Language a protocol or a standard and that means that no matter what you attach to the network um whether it's a a wallet that's written for Androids or a wallet for that's written for iPhone or a wallet that's fancier or a wallet that's that's more geeky all of these will speak Bitcoin to the network and will work with the system and you and the trust is in the network now when we were talking earlier about the if you had a centralized location centralized server that could be shut down by the Banks and they could charge you with all these crimes is there any concern legally speaking that if you were a person who has all your money in Bitcoin that maybe one day the government can come along and say Bitcoin is not a valid currency it's illegal to use using it as a crime we find it on you we're going to take it from you and we're going to arrest you well actually the government has already said that Bitcoin is legal and that users using Bitcoin are are doing perfectly legal business can you can you pay taxes in Bitcoin um not directly no you'd have to convert it to dollars but there's a company that will take your Bitcoin and pay the taxes for you Bingo done so um uh back in April the finsen which is the financial crime enforcement network uh created a memorandum where it explained how it would treat Bitcoin and it said you know if you're just an individual using Bitcoin to buy and sell things great it's just like anything else you you're going to pay uh you know you're going to pay your transaction and that's it if you're someone who makes a living in Bitcoin you pay income tax and if you're someone who's mining on bitcoin you pay income tax on those Bitcoins if you're an investor you pay capital gains it's treated just like any other currency so if you make your living off Bitcoin that's how you get paid you convert that to Dollars then you pay your percentage in dollars is that what you do you convert like how much you made in Bitcoin per in the year and what that would be in dollar bills and then pay the percentage on that right but I mean that's not different from what I did before when I got paid in Euros I mean occasionally I get a paycheck from a customer in Europe they're going to pay me in Euros right what do you convert it to Dollars you mark the rate at which they paid you you know you invoiced them they paid you in Euros you mark what rate it was and then you put it on your tax return as income people are notoriously bad about reporting income when you know when it's independent when they're not being taxed by their employer when it's not coming directly out of their paycheck comedians are terrible about that I know so many comedians that have had like serious IRS problems because of that I would think that that sort of issue would arise with Bitcoin where people are responsible for paying taxes on these and they don't I mean how much how much of an issue is that and how much of a criminality issue could that become well I I think as Al Capone found out there's one thing you can't do in the US and that's not pay your taxes they might get they might not get you for anything else you pulling up you keep pulling up these AR listen I I pay my taxes and uh and if you earn money in Bitcoin you pay your taxes on bitcoin as simple as that and if you think you can get away with not doing that then you find out like many people before you that the IRS will come will audit you and you will end up paying a lot more yeah even if you want to pay them back and and agree to pay them back they still put you in jail like N I think you need to sit in a cage for a little while and think about what you did I mean that would simply be a monumentally stupid thing to do uh to think that somehow that would protect no I mean they're going to track down your accounts just as effectively with Bitcoin as they do with other things they're not stupid what are these articles you keep pulling up right um I just keep on finding uh new things about uh different news reports like this was four hours ago where two guys have been arrested major uh prominent players in the Bitcoin Universe Charles Sherm was arrested by federal prosecutors on Sunday and accused of helping Grease the wheels for drug transactions you know uh using Bitcoins and uh and Mr shrim was also the founder and chief executive a popular website called bit instant where Bitcoins uh could be bought using dollars and so it's it what it seems like there's a lot of people getting arrested though there was another guy that I I I flashed up earlier that was arrested it it seems like there's a lot of shady stuff going on in this universe right now honestly that's the only reason I never went and got into Bitcoin you don't feel nervous about all these like recent news things at all or because you seem very Pro like I I'm not worried about it at all well I think he already stated his position that you know people are not going to stop going online and shopping on amazon.com if Amazon gets hacked what you're dealing with is a few people that are scumbags that are operating in this uh truly revolutionary system that is very beneficial yeah but this is like savings accounts this is like Bank this is like robbing a bank you know well no whole so here's my perspective um Bitcoin is a technology that is powerful and is being used by school teachers to manage uh PTA groups it's being used used by Churches to manage tithing and their collection plates and their clubs and it's also being used by criminals occasionally to do crimes just like any other currency in fact the the the point is that compared to another currency like the dollar uh you know the the money laundering that happens with the dollar I mean HSBC was found and convicted under a consent agreement I think for $17 billion of money laundering with the worst Mexican cartels and they got a minor fine and no one went to jail and wacovia was uh money laundering hundreds of billions of dollars with uh with uh various drug cartels in Asia and again uh nothing happened so let's not pretend that suddenly Bitcoin is like this criminal uh situation it's not it Just represents just like the internet represents society and you get the whole Spectrum you uh Bitcoin as a currency can be used for economic activity and that means the whole spectrum and you'll have a small subset who are people who take advantage and then you have the vast majority increasingly now as it's getting more mainstream exactly who see the possibility of being able to do um exciting new things with money that weren't possible before and and to enable new forms of Commerce you know there are hundreds of startups that are innovating with new forms of um for example how to do settlement and escrow on a real estate transaction and not spend 2% on that but do it with Bitcoin much more safely much more effectively companies that are working on doing charitable foundations based on bitcoin endowments Charities that are working to do remittances to foreign countries to help the poor people you know all kinds of activities are happening but what is the primary focus of the media it is to generate page views and you know portraying the sensationalist St always wins out so there's a lot more to bitcoin don't get fooled by the fact that you know some some things are emphasized as if that's the be all and end all to bitcoin well certainly some things are emphasized but those are legitimate stories I mean that was a legitimate story the story about the guy getting arrested for you can't judge the media on reporting legitimate crimes no I don't think that's the that's the issue the problem is you know you get a lot more of that than than is actually occurring and you get a lot less of the stuff that that's really interesting and important in my view the positive stories don't positive stories exactly and you know the way I look at Bitcoin I think about the possibility you can create jobs I look at it as a technological innovation I look at it as an engine for growth and a stagnant economy you know so so those are the things that stick in my mind jobs Innovation and growth not you know the fact that uh some bad dude used Bitcoin right to do bad things your your example of the bank that was laundering money with the drug cartels is absolutely perfect because that barely got a peep out of people and that was a very recent decision and you know I mean I saw some outrage from a few Twitter users I literally I read the story and my mouth was just hanging open I was like how could they get away with that and just get a fine like they dealt with murderers and they laundered their drug money and they did it for a long time and they made a lot of money and they just got a slap on the and the fine wasn't even up to the par of the money they made that's the shocking thing it's not even covering the profits they lost which basically rewards it and says yeah go ahead do it again you made a great return on that investment there's a real issue with this whole Mexican drug war is that there's so much money to be made in being a part of it and it leaves so many holes open for corruption and even legal corruption like this type of stuff where it's it's they do something they get fined by whatever regulatory body but yet they're still in business they're still they're enacting and they profited on that decision encouraging literally encouraging people to continue to do business with illegal groups like that if you can make that kind of profit which you know there's a real issue in this country a massive amount of distrust of law enforcement and there's a big part of that becomes uh it comes out of the War on Drugs it comes out of the war on name the drug you know whether it's cocaine or whether it's all these different people that are struggling to keep things ille illegal are pumping up all these businesses that sell these illegal drugs because there's this massive demand for it so when you see a War on Drugs what what you're seeing is is an engine to generate money for Crime that's all it is people are not going to stop altering their Consciousness but you are ensuring that the people that are profiting off of that are going to be criminals and then it leaves the door open for people who are in in actual law enforcement to see these loopholes and see these these ways they can give a little money and take a little bit home for themselves and next thing you know you got corruption and next thing you know you got Bankers going listen I can guarantee you the worst going to happen is we're going to get a fine and the Fine's going to be little and we're going to make a fuckload of money and these guys Pedro's coming over he's got a donkey cart F oh this this is the best part of the story in in one of these Bank uh situations where they had these branches in Mexico and they were putting um literally millions of dollars in suitcases and sticking them through the T window they ended up designing and mass manufacturing suitcases that fit through the slot because they were doing it every single day so they had a teller window slot fitting briefcase so they could stuff that cash through and no one went to jail wow that's amazing so you know I mean we can talk about money all day and money will create situations for people to take advantage absolutely well it does that with guns does that way with everything I mean that's that whole um that fast and furious investigation that you you know about that that was uh where the uh whatever government agency was selling arms to Mexican drug dealers so that they can quote unquote track the guns you know it's ridiculous CU those guns actually got used for killing American um service members American uh you know people that were involved in Border Patrol people that were involved in law enforcement a lot of these uh these guns wound up being used to actually kill Americans more than one and the idea behind it is so Preposterous the idea that you're going to sell weapons to criminals so that you could track where these weapons go like no that's a [ __ ] terrible idea these are the people that are in charge of deciding you know what kind of laws get enforced and what What atmosphere of law enforcement this this country has and when you see things like that it's so frustrating and confusing because it seems almost like a blatant crime like someone sold sold some guns to these Mexican drug lords and they did it under the guys of this crazy operation we're just going to sell them guns and keep an eye on them that way we'll track them and then we're going to get them that way you're giving them guns like that's what they want that's what they need to perform crimes you're giving them tools it's like a guy who's a [ __ ] Carpenter you're giving him a saw on a hammer you're giving it to him and you're literally telling him to go use them I mean that's essentially what you're doing and you're you're profiting off that how was how are you not in jail for selling guns how how can you say that that was a a an idea a plan that you had I mean it's unbelievable it's unbelievable and it's it's impossible to to read those stories and and and understand how we could ever trust the people that are in charge of of of running this country if if this is something you're capable of doing how the [ __ ] can anybody trust you how could anybody ever take your leadership seriously if this is what you do this is madness well I mean that's uh one of the reasons that I think a lot of people are also passionate about Bitcoin is that they've realized especially since 2008 that these same people cannot be trusted to run the money system and we've seen now for the last for example 5 years the FED has been printing between 85 now tapered down to about $70 billion a month and giving it as corporate welfare and direct subsidies to the banks so we didn't get a stimulus but they are continuing for five years now to remain solvent based on $70 billion a month that's a trillion dollars a year almost in dollars generated by the FED most people don't even know this is happening these are the people running our money and what it means is that you go out to use your dollars at the store and suddenly you can buy a lot less bread and a lot less milk and a lot fewer eggs but then they take items out of the inflation index so it looks like there's no inflation whereas anybody who's trying to spend their dollars knows that things are getting harder and harder and harder right these are the people running our money so Bitcoin offers an alternative approach which says let's trust math let's trust that the system runs based on a rule a simple mathematical Rule and everybody agrees that that is the rule by which money is created and no one can monkey with it and and that's the beauty of it because if you know the rules it reduces the uncertainty it reduces is the risk and when you have a simple system where people can interact with each other and exchange money based on simple mathematic rules that system is going to do quite well because people no longer trust their governments even here and it's much worse everywhere else do you think that these issues that we have with the financial system and the law enforcement system are sort of magnified by the solution of Bitcoin that this being the internet of money that really we need an internet of law enforce ment we need an internet of of of regulations we need what we all agree on we don't need what's been stuffed down our throat we need what we agree on by consensus based on the information that's currently available which is what we would get if we didn't have some sort of a centralized group that's in charge of deciding what's legal and not legal how things are enforced how things are done how how how laws are are are created let's talk about smart law and smart contracts because this is a perfect opportunity Bitcoin the underlying invention the blockchain asset Ledger as it's called basically allows people to agree on who owns what and to resolve differences through this computation but the basic thing that that means is that you can start doing smart contracts that means that you can put contracts into the system and then they either get executed because the conditions are met or they do not based on mathematics so you could say for example I'm going to have instead of having a a deed to my car that's registered with the DMV I'm going to have a digital deed that's on the Bitcoin Network and when someone pays me the money to buy that car that transaction is married to the deed transferring to them and the verification happens by the Bitcoin Network which I trust based on distributed consensus no one at the center no one monkeying with the rules so now you can start doing contracts and using the same basic mathematics to fully resolve contracts you could have for example a parent setting up a number of transactions in the blockchain in the Bitcoin Network that send money to their kids in two decades when they're going to be 18 or 20 or 21 right so like a trust fund MH or a will and you could write that as a contract and then execute it on the Bitcoin Network and then no one can stop it no one can reverse it no one can invalidate it that's pretty powerful stuff it allows people to have contracts between them between each other that are adjudicated if you like by the Bitcoin network based on the mathematical rules and how would these things be enforced if they had to be in a court of law would that ever be an option would they ever be considered legally binding well simp the simple matter is that the transaction goes through or the transaction does not go through the transaction is either valid because you presented the right keys or it is not valid and once the trans action has gone through it's gone through I mean that's the simple way the network works so you know adjudication is something that you then have to deal with after the fact like if a if a if a parent put a transaction in the Bitcoin Network that gave uh you know money to their kid as part of a will that can't be contested when that kid presents the key that transaction goes through done the network has agreed that that money has transferred it's transferred so it doesn't need a judge's written consent or it doesn't need no it's mathematical rules instead without you know the the the the benefit of this is that instead of relying on the ambiguity of language which is the basis of most law for many things you will have to but for some simple things like doing an escrow for a house or you know buying a car or transferring property or doing a trust or will you could simply uh convert those legal contracts into Bitcoin transactions that then get executed under a certain set of rules and suddenly you've got a form of smart law self-executing law that happens based on the Bitcoin Network's ability to agree on what's true it's fascinating to think that this could be one step in in in an ultimate revamping of our society and a revamping of our society based on the internet and that if Bitcoin or and things like Bitcoin these pure used groups these groups of you know many people agreeing on a standard and subscribing to a system if that can happen with this it can start happening with a lot of things it can start happening with education it can start happening with you know W with even with law enforcement you know the idea of Community Law Enforcement or or figuring out some way to uh to fund private law enforcement or private contractors based on a situation like this so for for the biggest part of human history a lot of the most difficult problems like communicating at distances or agreeing with lots of different people simply didn't scale and because you couldn't scale solutions to those problems we built hierarchical institutions to solve them representative democracy we built councils and committees to solve decision-making we built Banks and central banks uh in order to solve issuance of currency and other things like that and we built hierarchical media organizations because we needed a single voice to tell us what to think and then gradually we're seeing these solutions that are decentralized that solve the problem without a hierarchical organization and that scale so the internet was the first decentralized Communications that scales to the whole planet and so suddenly all of the hierarchical solutions for communication are no longer necessary they solve a problem that doesn't exist the problem of it being difficult to transmit information across a continent or across the globe once that problem goes away the institutions built to solve it news systems large entertainment and marketing organizations to you know create single output products all of those are no longer necessary and the choice blossoms Bitcoin is simply the same concept of decentralization but applied to money and one of the interesting things is that Bitcoin at its core works on the fact that you can decentralize voting and do voting at scale and the voting that's happen right now is the voting to agree on who has the Bitcoin but you could do voting for other things like you know stocks bonds Global lotteries national elections and things like that when you say the Voting is to see who has the Bitcoins like so when when essentially the uh the mining process that verifies each block of transaction and secures it is like a a giant vote an election that happens every 10 minutes and by looking at the transactions you can tell who has the Bitcoin if the entire network has said Andrea sent Joe a Bitcoin and that's being verified by the network then everyone trusts Joe has a Bitcoin and will be willing to accept that Bitcoin in payment for something right so essentially that you have this every 10 minutes you have this consensus where the entire network agrees on all of the transactions that have happened who has what what's going on on the system the ability to at a massive scale have everyone agree on what the truth is that is the core invention behind Bitcoin that makes currency possible but it also makes other things possible including elections so you can do some pretty incredible things because what you've done is you've decentralized decision making the internet decentralized communications Bitcoin is decentralizing money but at its core is an invention that decentralizes decision making now what are the concerns as far as Bitcoin getting shut down and what repercussions or what what kind of blowback if any have you guys received the people that are in charge of you know spreading all of this Bitcoin evangelist as it were I mean is is there any repercussions there any blowback or is there any nope nothing so far no I mean you know there's there's little misunderstandings that happen every now and then and uh you know um people at first who don't understand the technology sometimes um sit down and and have conversations to understand it better but you know the the point is that at the moment Bitcoin is legal to use and it's not just legal to use in the US but it's legal to use in pretty much every country um for individuals certainly I think I don't think any country has banned it or has even attempted to ban it um Bitcoin is money as a piece of content that you can send on the internet so even if you wanted to ban it it would be relatively difficult to do that without shutting down the internet so that's one thing to put out there but the point is that nobody's trying to ban Bitcoin nobody's trying to shut us down I think especially in the US and especially among senior lawmakers like the Senate who had hearings uh recently about Bitcoin the prevailing attitude is look this is generating growth it's generating jobs it's a huge Innovation and um we see that it's being used in a very broad Manner and can change a lot of things you know maybe we should take weency approach uh and the price went up quite dramatically after they said that but the general attitude is most most politicians are far more interested in the possibility that this might generate growth and also jobs and as a result votes and campaign Finance money then they are about you know beating this down because it's going to affect different interests so they're still open to it and I think we've got a tremendous opportunity to educate people about all of the incredible things we can do and also highlight the fact that this Bitcoin economy just in the last year has generated thousands of jobs in an environment where we have economic stagnation we've got this Bloom of innovation and Technology uh much like the first burst of the internet and you know that's a tremendous thing you don't want to squash that just because of a misunderstanding do you think that there's a lack of blowback because the people in the powers of be just haven't considered Bitcoin to be a threat yet because you talking about like politicians not acting to try to silence it to service their the the people that get them in the office the lobbyists or special interest groups or what have you like that's just because they haven't been contacted by those people to try to do something about Bitcoin I think even the banks are ambivalent on this because while it may be disruptive to some of their banking practices it is also one of the most interesting and Innovative things to happen in finance in the last 100 years and so I think a lot of banks are smart enough to say look we we're good at technology um we know money we've got branches we've got customers we've got marketing we've got Brands we know how to do security we could really make a good deal with this Bitcoin thing and use it and make some really interesting Financial things so there's this mix back just like you know and I I'll bring the same example when entertainment companies were first faced with the possibility of MP3 yes some people were like oh my God this is going to destroy everything music will die right which is the same they've said with every previous technology they were right though look but but but no they weren't because right but the the point is that since then the number of genres the number of artists the number of the amount of music has exploded um people get a broader range of music than ever before and MP3s have created so much good in the entertainment industry so much more than damage right and I think even in banking environments they recognize that with Bitcoin there's this mixed bag which is that the good far outweighs the bad and even in a business that's going to get disrupted as banking will be just like entertainment and telephone companies were disrupted by the internet um those that are smart can take advantage and they can build something good with this and they're going to lose some power and leverage but they can make some good money out of this so I don't think any was out to get Bitcoin right now I think people are are kindly evaluating it and and and thinking about what opportunities it can bring and I think that's the best approach would you pull up uh about the taxes because I guess uh there's this whole thing going on that people uh need to claim the the the the the stuff that the the purchases or the money that they get from Bitcoin on your taxes but the IRS hasn't said how to do it yet well I I mean I've discussed this with my accountants and they gave me a pretty straightforward uh formula if I earn income on bitcoin I Mark how many dollars it was at the time and I pay income taxes on that just like anything else I've invested in some Bitcoin if I hold it for less than 6 months I'll declare short-term capital gains more more than a year all long-term capital gains and pay the difference I mean that's basically how I would work with Euros that's how I'm going to work with uh Bitcoin the key word but you're saying how you're going to that's what's interesting about this is you actually haven't started doing that yet because you've only been starting to get paid fully in Bitcoin over the last few months so this is fairly experimental even for you you're basically at The Cutting Edge of this right so I mean there are people who have already filed taxes uh a few times and they've used the same approach um I'm going to be filing uh income taxes in Bitcoin for the first time for 2013 but I mean I'm discussing it with accountants and they think it's pretty straightforward and I think the IRS will give us guidance before April and the reason I think they will is because the IRS is interested in in making revenue and what better way to make revenue from Bitcoin than to Simply explain exactly how people should pay their taxes on it so we can things are going to get really weird if this takes off they're already weird and it already took off you think yeah yeah absolutely I mean I mean kind of but I don't know anybody who's using it all the time I mean you might you might say it's if you're you know you're on involved in these online groups but the actual percentage of people that are using Bitcoin on a regular basis what is it one half of one half of 1% I mean is maybe there's there's probably um you know several million is it over 10 less than 10 um in this country no worldwide but most of it's in this country there's there's at least a million people in this country that are using Bitcoin on a regular basis well that I don't know uh and it's and it's not easy to find out but what I do know is that for it to be taking off is what I'm saying well so what so what I think about is in terms of taking off this has been around for five years it's been a very stable and secure network that has preserved or increased in value at the same time people have gradually improved the technology now we've got this whole raft of startups that are doing Innovation and delivering better and better products around it more and more Merchants are doing it and most importantly it's gone Global it's now being used in dozens of countries around the world and the network is large and getting larger every day so all of those conditions remind me exactly of what the internet was in 1992 again most people didn't hear about it until 94 95 and at that point you had people go on the morning show and say you know is internet the email or what's this ad sign and they were having that conversation but it had already been growing quite rapidly I think that's where we are with bit coin my mom is not going to do you know Bitcoin on her own uh for another six or seven years uh most people won't hear much about it for the next two years they're going to hear about it occasionally but in the meantime it's been building momentum and getting better and uh I think it's already arrived certainly the invention behind it which has also spawned many other currencies um you can't uninvent that invention so in whatever form and if it's not this Bitcoin currency which I think is is already pretty damn strong um you know that same invention can be repeated and improved just like you know the internet the first early versions were really really clunky and gradually it improved and um keep in mind currency is just the first application so if you were on the internet and you only knew email you couldn't even imagine what the web would be like let alone social media or MP3s or digital music and video internet still the Bitcoin is still like that we've got the Bitcoin currency which is just like email and it's the basic application now companies are building the other applications and it's getting really exciting so I think we've got a bit to go until we're mainstream but I think it's already catching on now in other countries it's the the government has been not so sweet about uh use of Bitcoin and there's an article that came out just a few hours ago from uh Russia the Russian Central Bank said that Bitcoin users could face jail time they did yeah it's up there it's actually was it in Time Magazine uh this is off Ria nooski all right lovely also says you know that other countries have done the same thing uh including China and I mean what if you use Bitcoin and then you know two years from now they say it's illegal I mean this is crazy this was released right before we started the podcast a couple hours before that we started this podcast they released this story so this is fairly breaking news so I haven't seen the story what I can say first of all if it's saying that it's the same in China they're wrong so that makes me wonder what else they're wrong about but in in China they ban central banks and other banking institutions from holding Bitcoin on their asset Ledger they didn't ban people from trading in fact Bitcoin is like 60% or more of the trading happens in China they didn't ban people from using it it's perfectly legal to use it there as well um I think you might be it might be an exaggerated headline but even if it isn't um you know if Russia bans Bitcoin I think that probably ends up hurting Russia more than bit Bitcoin yeah China has limited Bitcoin use for its citizens apparently yeah it's on a few different China also limits uh internet use for its citizens but that doesn't devalue the internet I mean that's the that's the point about this and keep in mind there's also a matter of due process of law and there's also a matter of different legal structures so for example in India the first reaction of the of The Regulators was well if it's not specifically licensed and permitted it's not legal that's their their legal system's attit ude is we say it's legal it's legal if we haven't said anything about it then it's illegal right you need the license so it's the inverse of US law right um but uh you know certainly uh here in the US I'm not I'm certainly not worried about it being banned here because there's a lot of legal precedent for private currencies in this country and there's constitutional protections and there's companies that can defend themselves against that but we have a lot of people that listen to this podcast from other countries it's one of the reasons why I wanted to bring that up the Russia story but uh to point out that this is not a universally accepted thing as far as governments and the ambivalence of American banks that they've shown American politicians this may not be the case in other countries was this Bank of Russia issues warning on digital currencies well you know Russia is an incredibly suppressive Place uh we know that uh you know we know what's going on with them and gay people I mean right it's it's a a really it's appalling very strange backwards country in in terms of a lot of the things that they think and a lot of the ways they behave as a nation and you know it's basically also Run by One gangster it's it's not a country of laws that's for sure well I mean without a doubt Putin whether he's a great leader or not is uh he's a gangster you know he's just super awesome one at it he's he's run of that country he used to be the president step down put a puppet government in place and then became the president again I mean the whole thing is magical and then rode around on a horse spare chested in splendor yeah that was pretty crazy and weird he does a lot of weird things him and Obama were uh they were both conflicted they were in some area and they were conflicted as far as like when they could use the gym they they weren't allowed to use the gym together for some [ __ ] reason like as if Putin and Obama can't work out in the gym together like you know how [ __ ] crazy that is like dude I'll be on the StairMaster you hit the weights is that cool no they can't be in the room together like they're afraid that Putin might beat him over the head with a [ __ ] club or something but so while Obama was in the gym working out Putin jumped in the [ __ ] Lake outside the gym so in in clear view of Obama and his uh you know his [ __ ] elastic bands that he's doing his little aerobic stretches with Putin swimming that's hilarious in a [ __ ] Lake freezing freezing cold lake like a man like a be chested Savage in an Old Spice commercial a Russian Old Spice Master unbelievable they're just pissed off about Alaska still did you ever hear that old story that about about how the we they sold Alaska to us for I think it was like $12 million and then we bought it from them like whatever 18800 1700s and then they we found so much gold in Alaska that they they would have you know tripled the amount that we paid for Alaska even more on gold just on gold forget the oil and everything else no Alaska's amazing they [ __ ] up it's way better than Russia dummies they could have had a vacation spot yeah well Anchorage is the [ __ ] man it's one of my favorite places I've ever visited it's amazing and The View when you're driving through the mountains oh my God it's just magical up there it's incredible yeah I don't know Russia's a weird spot man you know Russia has had a long hard history there's been a lot of horrible things that have happened to the Russian people both you know World War II and before that they were they were occupied by the Mongols for 200 years I mean it's just a a rough country and when it comes to their laws they've got some really [ __ ] shady laws and real weird attitudes udes on things too man you know they have a habit of shipping people that don't agree with them off to Siberia like that um that one really wealthy oligarch fellow was one of the most uh richest men in Russia but crossed words with Putin Putin just sent that [ __ ] to jail kept him in jail for 10 years then finally released himh massive public outcry this this guy's you know they trumped up charges against him just locked him up in a cage for a decade yeah well here's the here here's the other persp perspective uh on this which is in places like the us if the if the government bans something they go through a very long arduous process they go through courts they have to prove their case they can just willingly do it and it it takes a long process and generally the people kind of agree with it now in a lot of places in the world when something is banned by the government the people go hm maybe I should look into that so you know the fact that it's banned in Russia doesn't necessarily mean that Bitcoin disappears it simply means means that Bitcoin is more of an underground currency in that place and people have a lot less respect for laws that are arbitrary and capricious so in countries where you have weak rule of law and you have rule of people correspondingly the people don't pay much attention to those uh you know a lot of things are illegal in Russia including you know buying and selling dollars on the black market and you can do it on every corner in Moscow yeah isn't essentially illegal to be gay I mean what what are the laws on gay people they're incredibly restrictive right yeah I have I I don't know what the I don't it's not illegal to be gay but I think it's more um uh there are still sodomy laws and there are still um um bans on public displays and things like that it's it's really or even symbols they arrested someone on the Sochi Parade route with for holding a rainbow flag it was disgusting that's hilarious the gays have taken over the rainbow I love that I mean rainbows when we were a kid that's like [ __ ] leprechauns pot of gold you know a beauti beautiful sunshine after the rain and now it's gay how the [ __ ] did they do that you get arrested for having a [ __ ] rainbow shirt on how would I'm just a fan of rainbows what if there's a rainbow shirt and you got a leprechaun at the end of it what do they say then a if you have a rainbow shirt on a leprechaun and a pot of gold I'm I'm sure you get to argue that in court about 3 months after you're arrested after spending 3 months in a dungeon yeah if so yeah well you have butt sex while you're in there so it might be great well that's the old Lenny Bruce joke you you know that that was like one of the classic Lenny Bruce jokes I don't understand why they would the laws against homosexuality dig they take a guy who's gay and they arrest him and they put him in jail with a bunch of men who want to have sex with him that that was Lenny Bruce Lenny Bruce oh wow yeah that was a classic that was one that people uh stole and they didn't even realize they stole it because a lot of people sort of recognized that it's like when I was uh an open mic night comedian I lived in uh Boston Boston was is of course South of new New Hampshire and New Hampshire had a license plate that said Live Free or Die and of course the the old classic story about license plates is that they were made by prisoners so like 10 guys came up with that joke independently that Live Free or Die well the problem with that is you know they're made by prisoners that's one of those things yeah Bitcoin what where did we go we went off track went into the wood is is there any kind of insurance or a company that's going to back up Bitcoin like an insurance company kind of like you know when a a bank it's Rob is projected uh ashy um as in many areas of kind of Emerging Markets one of the first to move in is Lloyds of London which have historically been involved in in types of insurance that other companies won't necessarily offer first and introduced the new market so there is an organization in the UK that uh will take uh uh where you can store Bitcoin and then have it insured by Lloyds of London for a specific fee and they'll protect it from theft oh wow but here's the interesting thing uh that's a that's a fairly limited approach to it but what you can do with with Bitcoin is you can take insurance contracts and the guarantees of insurance companies and embed them into the transaction system so now you could have for example let's say when you go and buy something on eBay and you do uh a PayPal transaction and they give you the ability to do escrow so if the product never arrives at your doorstep you can get your money back right now when you do that you have to use PayPal escrow you don't really have a choice and when you do that with Visa you have to use Visa escrow well on bitcoin you can pick an escrow provider and have them add their own key into the transaction and now they're going to be your escrow and you chose them um so you can pick from a market of escro companies and they can do it without actually holding your money simply by putting an extra key in the transaction and either authorizing it or not I see so it opens up all of these possibilities for new forms of insurance new forms of escro new forms of financial protections that couldn't be done with traditional money the there was news just out that the Jamaican bob sled team this wasn't from Bitcoin was but it was a Dodge Coin or whatever it's called raised $30,000 for this year's Olympics just the other day yeah and I mean here's the other story that's not told very often which is the charity aspect in stud after study after study looking both at charitable organizations and user profiles um and questionnaires uh Bitcoin users have said repeatedly that the number one thing they do with their Bitcoin is donate or give them away um charity is very active on the Bitcoin uh blocks blockchain on the Bitcoin Network um just recently uh bitcoiners raised a ton of money for the hurricane in the Philippines um there's a number of chartable organizations helping the homeless in Florida um there's other organizations doing the same in San Francisco all based around Bitcoin so there's this incredible charitable giving uh spirit in it and we're seeing that replicate with other coins too um one of the other interesting ones is the Wikileaks recently announced that the vast majority of their uh donations now come in cryptocurrencies Bitcoin and Litecoin this is fascinating because on certain payment networks you can't donate to WikiLeaks right you can't donate to WikiLeaks with PayPal you can't donate to WikiLeaks with Visa they ban you from doing that and that's how they've cut off the funding of that organization yet at the same time on some of those payment networks you could donate to the Klux Clan now that doesn't represent my principles and I have a big problem with that well with Bitcoin you can because you simply can donate to whoever you want you can just send Bitcoin to any address and as a result um you know Wikileaks has seen a rise in the donations they receive uh through Bitcoin but a lot of other organizations too it's it's there's a lot of charitable giving there's a lot of nonprofit organizations using Bitcoin this is a fascinating time uh how many other Bitcoin like alternatives are available and do you feel that those are competition for big for Bitcoin are they just as valid as Bitcoin is there room for a bunch of cryptocurrencies what's the what's the attitude about that that's a great question because we uh generally speaking the term for alternative currencies is altcoins uh some of them are alternative some of them are uh more competitive with Bitcoin all of them are based on the same invention so what this shows is that the underlying invention of how to do computational agreement on the network that invention has spawned all of these other uh currencies uh some of them are very Innovative some of them are just fads and memes and some of them are pump and dump schemes so there's a whole range one of the interesting things that this has created is that in the past money was trusted and had value because not many people could create it and so we trust governments to create money and money has value because only governments can create money now because anyone can create money how you give it value depends on other things which is actually a good lesson because government money doesn't really have that much value in a lot of places either it's just an illusion that somehow that makes it valuable in in the case of Bitcoin what makes Bitcoin valuable is the enormous amount of investment uh both in terms of uh resources in terms of the uh Computing equipment that people have bought in terms of the invested companies that are in it and the people who work in it um other coins have slightly different variations of the same theme um and some of them are based on memes internet memes but here's I I see a future where uh a 5-year-old at school could use a web browser to build a coin in an afternoon and launch it among their friends so will there be more coins yes tens of thousands of them and will those coins have value probably not no more than baseball cards or Pokemon or tagoi but within an environment in with young people you're going to have you're going to have people who create them for trading purposes and as memes and and fats and so they'll have a certain kind of value just not monetary value so you have to evaluate which coins have monetary value based on what's running behind them you know the Bitcoin economy has an actual economy behind it it has Merchants it has retail transactions it has uh startup companies that are investing and developing things with it some of these other coins have some of those things some of them have none of those things but is there a risk of Bitcoin being like the Myspace of cryptocurrencies when you get off to this big head start and you're way ahead of the game but there's holes in your game and Facebook comes in steals all your people so one thing to realize is that money is a lot more sticky than a social site um and when people invest their skills and expertise in companies into a certain cryptocurrency that carries a lot of weight so Bitcoin has already achieved a very high level of network effect which means that the more people are on it the more people it attracts the more people are on it the more people it attracts but at the same time because it's building a capital base that makes it that makes it very difficult to unseat bitcoin um I think what we'll end up seeing is uh one or two major currencies Bitcoin is probably going to be the biggest um and then two or three or four or five secondary currencies that do some kind of Niche thing that's useful for some group um that Bitcoin can't do or won't do because it's antithetic for example uh Bitcoin has reverse inflation deflation because there's a fixed Supply so over time the value is gradually going to increase right um other people have created coins where if you don't spend them you lose a bit which is like inflation so Bitcoin is not going to be able to copy that and take take that feature and say hey that looks good let's do it too but for a lot of other things when when an alternative coin invents something new Bitcoin can simply pick it up and run with it too uh Bitcoin hasn't stopped moving it was invented in 2008 and 5 years of innovation have gone into it and the level of a is accelerating so I think there's a lot of room for a lot of coins in this space and not all of them are going to have value but some of them will have value so are there any that stand down I know Dogecoin do gcoin is one that keeps getting brought up to me to to talk to you about on the internet what about Kanye West's coin you know Kanye West has a coin so I think there are a few coins that have interesting characteristics um you know they Implement new features they do things slightly better or slightly different in some ways than Bitcoin like what like what what do they do better um well for example um one example is uh Litecoin and what Litecoin does is it has a different way of of having the agreement on the network which is which requires more memory on your computer and less CPU so that makes it um more level at the same time uh it does transactions that on a different pace so instead of every 10 minutes it does um you know fewer minutes for per block I think is two and a half and then you have a larger number of total coins so it's a few tweaks the idea is if Bitcoin is gold Litecoin is silver um but that's the general competitive environment now beyond that Dogecoin is in fact or dogcoin or doggy coin whatever I'm not quite sure how it's pronounced is is an enhancement on the original um idea of Litecoin so I took that and then Twisted it a bit more and then you've got this whole list of other coins that um some of them are interesting one uh discovers prime numbers which are useful in mathematics another one uses a different peer-to-peer system um another one is more programmable one of the new coins that's come out now ethereum uh allows each transaction to be uh full code for programming language um you know all of these may have interesting characteristics and then you know Kanye West coin you whatever I hey man don't dismiss it no I mean it's becomes the gold stand first of all they got Su I think or they got cease and desists because had nothing to do with him um but one of the interesting things is that we don't know if one of these catches on MH who knows why not a lot of things in life started as a joke and then became huge things that became embeded in the so what let me ask you this what about these massive fluctuations in value like daytoday intense fluctuations yes very disconcerting to people that are looking for a stable investment when you the I mean several 100% right what is the worst day or the best day as far as the variation so I think the best day was uh was maybe 2 and a half years ago which was uh minus- 40 or- 50% in a day that was a really big crash and it took it to from above 30 to below a dollar um and then there was another crash around 100 and then there was another one around 266 and then there was another one around 1,000 and we're now kind of in a relatively stable band uh between 800 900 somewhere there okay explain but here's the point over time these uh little hiccups get narrower and narrower and here's why they occur if you look at Bitcoin the total market capitalization if you take all of the Bitcoins that exist times the value that they have on the market today it's about A1 billion market right 1010 billion Market might sound like a lot you know certainly if it was was a tech stock it would be a nice siiz Tech stock but as a currency is puny you know there are hundreds of countries that have bigger monetary base for their currency and this is an international currency it's small so what happens is this is a a shallow pool of of uh liquidity and when you have a shallow pool of liquidity like this with a few markets that are not very efficient the end result is that every time someone sneezes all of the liquidity sloshes around and you get these fluctuations but as it gets bigger and size the waves get smaller right so it's not as volatile and if you look at it uh if you plot it on a graph and you plot the volatility you'll see that every year it's getting less and less and less and less and less volatile now if at some point it became large you know the reason currencies like the US dollar are not very volatile is because if you think of A1 14 trillion dollar economy it's like a Titanic it takes you know three miles to turn 10 degrees right mhm so they're much more stable because they have weight behind them and inertia and even if you want to change it you tweak something now and it changes in six months because it takes time to filter through the economy meanwhile think of Bitcoin it's like a little Zodiac boat next to Titanic bouncing up and down in the waves very Nimble but volatile over time as it gets bigger then the waves get smaller by comparison okay what is the cause of these fluctuations to a financial dun like myself what what causes like how can it be worth x amount and then half that in a day so let me start by answering the implicit question of how does it get its value who sets the price okay so it's a free market uh and so if you go and try to buy Bitcoin online at the moment and you say I'm going to pay 800 for it and someone says yes and then during the day the vast volume of people are buying and selling for around $100 $800 great that's the price of Bitcoin it's whatever people are paying to buy and sell Bitcoin and so every time the order changes you know if suddenly you can't find anyone to buy your Bitcoin at 800 you're going to discount it a bit and discount until you find someone who's going to buy it and then that's the new price so it will go down a bit but if you are finding people easily to buy your Bitcoin then you increase the price of bit so it goes up a bit just like the stock market who sets the price of IBM no one it's whatever the last deal was on IBM stock so how is that not make it vulnerable for the same pump and dump issues that you're experiencing with all these other cryptocurrencies well it it's it does make it vulnerable but the point is there's still a fixed amount of Bitcoin so right now that small fixed amount of Bitcoin with you know very big changes a media news piece comes out and it's like Chinese people are buying Bitcoin woo and it goes you know really high everybody gets really excited this is it bit coin's breaking through then the next week Central Bank of China won't let Banks hold Bitcoin down we go you know the every piece of good news pushes the price up Suddenly every piece of bad news knocks it down suddenly but seems like really manipulative Financial experts would be able to move it left and right to their whim in order to profit off of it yeah and there's probably a bit of that going on um scares me but I can tell you that there is a lot more of that's going on in every other Market so that's the interesting thing here we now know that leore the interest rates in the London bank system has been fixed for years and that's the basis for most interest rates we know that the gold Market's fixed we know that the stock markets they're doing front running on high frequency transactions those are fixed every single Market out there is currently rigged and so the people who are playing Within These markets with like fiber optic connections to this main data center you know and they're three feet closer than the other server and can get that transaction in four nond sooner are front running transactions are benefiting are profiting from that distance and these markets are rigged you know you go into your little brokerage account and you trade some IBM and you think you're playing the game yeah right you're the duns in the room because you don't know who the duns in the room is what you're talking about with automated uh transfers like that where you're dealing with Nan high frequency trading as it's called or algorithmic trading unbelievably fascinating stuff yes I mean literally they have racks trying to get closer to the rack where the transactions are happening until data centers had to say no matter where you are in the room you're getting 300 ft of fiber and if it's coiled at the bottom of your rack or if it's stretched out you're still going to have to go you know so that everybody gets the same deal but right now for example uh all of the banks are playing this game how can fast can you do a transaction so what I'm saying is yes there is manipulation in the Bitcoin Market but the manipulation is on the stock on the uh exchange rate that that happens on a day-to-day basis but it's not on the supply of money whereas in the real economy the stock market the New York Stock Exchange not only is the market rigged and not only is the market being manipulated but the currency itself is rigged and being manipulated the FED is printing money and handing it to the banks so the lesser of two evils it's definitely the lesser of the two evils and also the larger it gets the harder it is for Outsiders to manipulate it right because they don't control the levers of power of the currency they're are no levers and that's the beauty of it so you create a system that doesn't have levers to control the currency so all they can control is the price and manipulated but that's a dangerous game to play long term because if the market turns against you you lose a lot of money too so it's currently worth how much is a Bitcoin worth in American dollars um so one place to look up is Bitcoin a.com and that shows you the average across dozens of exchanges all around the world at the moment it's uh 700 hang on one Bitcoin is $784 on average at the moment and that's fairly stable because you were talking about it at 800 before so it's pretty close for the last month it's been in that band um we have seen some wild swings but it seems to be stabilized around that level now which by the way is three times the level it had stabilized before the Big Bounce and how much Bitcoin is actually available out there in the world so I'd have to look that up I would say about 11 million or so have been uh created so far and there's a constant creation of these and every 10 minutes 25 and this constant creation will eventually not just level off but one day stop yes now what happens then well the thing is it it's it starts operating more like a precious metal which is that you know once supply of a precious metal gets restricted it increases in value but the one difference is that a precious metal you can only shave so thin you can't cut it into smaller units and it's difficult to transport and all of that whereas Bitcoin you can divide it into 100 million subunits so basically instead of the money in your pocket losing value over time because the central government is diluting it it's getting concentrated because more people want to use it and there's not enough around so it gains value in your pocket and that's a deflationary currency uh it creates some interesting savings opportunities where do you see this going how how what do you what do you see like the future a 100 years from now what do you what do you think bitcoin's place in the world is going to be I think I can make certain predictions for sure and I can make other predictions with absolute 90% her margin which means I'm pulling it out of my ass so let me tell you one I can make for sure cryptocurrencies will be part of our financial future period doesn't matter what form they take this invention has been invented it will change Finance it will change banking uh and it might not be Bitcoin I think it will but it might not be Bitcoin but it will still be a cryptocurrency the idea of having a mathematical currency based on a distributed peer-to-peer Network happened the invention happened you can't stop people from coming up with variations of it you can't easily shut it down if you shut down one uh 100 others are going to pop up in its place now at the same time I think Bitcoin has a very good chance of being the one that was good enough that grew fast enough and gained enough traction that it will actually have uh as a store value value for a very long time now didn't someone sell a house in Canada through Bitcoin we've seen transactions as big as $150 Million by the way guess what the fee was what zero wow 150 million transferred in seconds for zero fee well who who got $150 million in Bitcoin Justin Bieber that crazy [ __ ] who's who did that were they drunk we have no idea oh they must have been drunk as [ __ ] we don't know I mean you see look at their phone what look at the text messages you made when you were drunk and then look at your Bitcoin folder I did what you think you would know if somebody spent that much money using Bitcoin because they would you know as a Bitcoin user would probably scream I just spend $1.5 million that's why it's so weird for for me to think that like the the guy that created no one knows what he looks like some guys spent $1.5 million but no one knows who this guy is it just seems so weird I mean here's the thing you don't know what's happening in the banking system today people are sending billions of dollars around yeah but for Bitcoin users they're it's almost like buying a cell phone and you're advertising like this is the best cell phone ever I I love it you know that your cell phone sucks because they're almost the most vocal about using Bitcoin that you would think somebody that's going to spend 1.5 would would immediately go to online you know and just what do you mean hold on tell the world I have all this money and I'm spending it I mean that's a dangerous thing to say why would you why would you think that that's what they would do and if they didn't do that they wouldn't it wouldn't be real no I didn't say it's not real I just says it seems so suspicious that you know that there's so many see the my biggest problem because I've been people have been trying to get me on bitcoin for the longest time is things like this where it's it just seems there's so much mystery to it like that especially if you follow the conspiracies of the the guy that created it and if and and you know you you hear reports like somebody just spent you know all these millions of dollars using Bitcoin but yet that's not what he said he said someone bought $1.5 Million worth of bit someone no transferred it5 million a transaction there was a transaction from one address to another address for $150 million in a single transaction keep in mind wait a minute 150 million yes and these happen every second not not that big but transactions happen all the time and so as if you were watching the stream and transaction you're like you know $10 $1,000 $500 $10,000 $150 million you're like what well and you can see that transaction because it's on the public Ledger and it did happen and it has been verified and the transaction went through and they paid zero fee so this $150 million transaction was between two people it was between two addresses it might have been person moving it from one of their own accounts to one of their own accounts or or given it someone else but it's still 150 million American dollars worth of it was about 146,000 145,000 Bitcoin and bitcoin's worth $800 each yeah so at the time it was almost a th000 so yeah it's about 150 million wow which in the big scheme of things by the way in the global monetary system is peanuts but it's not if it's an individual user though if it's either an individual or if it's an is it a corporation might be a corporation might be the government yeah when we seized the Silk Road the government meaning we uh who the the government keeps keep kept that right they're they're actually um I don't think they they want to keep it for too long and I'm not sure they they're Allowed by law to keep it for too long so what they've announced they're going to do is they're going to sell it they're going to sell Silk Road no they're going to sell the Bitcoins They seized oh so so um and they're going to sell them on the on some kind of Market or auction which is which is great because it's going to create some discount opportunities well that's funny so s Bitcoin was a key player in that whole Silk Road Scandal and for folks who don't know what Silk Road was it was a website that allowed you to buy a lot of illegal things online and some of it was purchased through Bitcoin and those things were as illegal as drugs or as guns there was a lot of different things right yeah well it's it's was mostly drugs and the the just today 53 minutes ago or whatever and I don't know the guy that those two people got arrested for that from the the they had a company that was uh uh laundering money using Bitcoins allegedly allegedly allegedly selling Bitcoin to someone who sold Bitcoin to users who bought drugs right this is not exactly money laundering for drugs let's be clear the allegation I read the indictment on the plane and I'm not a lawyer but what what it said is that allegedly uh these people sold Bitcoin MH to someone who then resold it on the Silk Road to other users some of whom used it to buy drugs so how could someone be responsible for that's a pretty that's a thre hop allegation and in my mind if that's the standard then at least half of Wall Street should be in cuffs right yeah um now the thing it's allegedly so let's keep that in there I mean yeah many we've used many allegedly it's very important well there's there's a lot of exaggerated um exaggerated claims and statements in prosecution indictments when you're a career prosecutor and you write up the indictments and decide to take it to the Grand Jury you're not going to just write the littlest thing you do you're going to make it look like you know every person you arrest is the worst person in the world and has massive crimes going on yeah which means that reading that and seeing how much of a weak case it is you know allegedly sold to someone who allegedly sold to users who allegedly bought drugs um I don't know it seems insane it's almost like your employee uh buys drugs with money that you paid him so you are in trouble for him buying drugs I'm not a lawyer I'm not going to figure out what direct sort of connection the same direct sort of connection let's see them try and prove it I mean that's the that's the justice system you have to you have to prove it yeah but it's so scary that someone's freedom is on the line for something is ambiguous is that especially when you're dealing with someone selling Bitcoin to someone who used then used that Bitcoin to buy drugs once it's out of your hand well scary is You' got a 24 year-old sitting in jail for this and you've got the 55-year-old CEO of HSBC who didn't even resign after being fined hundreds of millions of dollars for laundering billions yeah what the [ __ ] government to make us use the internet to run everything that's going to happen right yeah I mean this is actually probably owned by the government they're going to use it in voting in the future and like you said it's probably going to be so here's the thing it doesn't matter if it's owned by the government look listen the government the government invented the the basic protocols behind the internet and then engineers and Geeks took it and turned it into a Global Network and even if the government had invented the math behind Bitcoin we know how it works it's math and we're using it to do things that the government doesn't necessarily control that well so if they did invent it that was a bad idea on some people someone's it was the internet the whole point is that the underlying technology there's nothing mysterious about it you can read The Source codes you can see how it works you can understand how it works and you're not trusting anyone specific you're just trusting that you understand how it works and it's math I mean that's the beauty of it and that's why people are adopting it so easily is because there's no one behind the curtain yeah it's it's also it's sexy you know it's the new kid on the Block it's the new exciting thing it's the the the as you said the internet of money yeah and people want to be the first adopters they want to get on it first that mass is happening in this economy I mean really let's think about it what else is happening in this economy other than the military under other than U more derivatives piled on top of more derivatives by the Banks pretty much everything else is at a standstill except marijuana the money from marijuana yeah well that's the one thing in this economy that's exploded in the places where it's been introduced and allowed to to uh operate in the free market and ironically those the the situation there was that they weren't letting those people who were selling the marijuana put their money in Banks the government has since amended that and said that they're going to now start allowing these people who run these medical marijuana stores to uh put their money in Banks which is a huge Victory and I think you know ultimately it's unconscionable to do anything else because you're you're allowing uh an environment where crime violent crime is most likely going to take place because you are making people targets if you're not allowing them to bank you're you're making sure they have massive amounts of cash on them in a regular basis and they're going to get targeted it's just a matter of time you're you're creating you're going to create victims of of violent crime so I'm glad they decided to not do that but that's it's a perfect example of the kind of [ __ ] that's involved in our government that you could have these people that did pass a law allowing something to be legal and yet still those people are kept from and prohibited from putting that money in Banks it's nuts it's Madness I mean the broader scheme of this is understanding that there's ways to deal this through law including the people's propositions in these states and then there's a lot of these extra legal uh you know shenanigans that happen where suddenly someone gets audited for a dozen years in a row right and yeah J Jed goo had people audited every year of their life um because he didn't like them and some of those practices you know continue to this day now I I would at least like to see the rules followed I mean that's the whole point of this country isn't it's a rule of law equally applied to all at least if we know what the rules are you can follow them or choose not to and then face the consequences but if you don't even know what the rules are because people make them up as they go along that's not a good place to live yeah if uh a business a private business acted the way the IRS did as far as like handing out audits to people that were political opponents handing out audits to people that were personal opponents of people that were in power if a private company acted out that way they would be guilty of all sorts of [ __ ] violations it' probably be somebody in jail I mean it would be a really big issue if you found out but they've been auditing people just to [ __ ] with them for the longest time it's it's pretty gross and scary thing well the good news is they're not auditing bitcoiners and so far we have a nice relationship uh with the IRS and they're looking for ways to help us pay our taxes and I'm looking forward to that time I'm looking forward to filing my taxes uh and paying them this year I'm fascinated by that I mean I pay them every year paying paying taxes specifically for the Bitcoin earnings I've had this year I'm fascinated I'm fascinated to see that um this yakam Nakamoto guy how do you say his name Satoshi Satoshi Nakamoto Satoshi yakamoto have you met this cat no one's met Satoshi Nakamoto not real that's what I'm saying well I mean there's there's a possibility no one's met there's a possibility that well here's what we know we know what he wrote and based on what he wrote we know me trying to figure out his name by changing it to numbers and doing it backwards and Googling stuff and what so funny if you T type in his name backwards into Google it leads you to this whole real long discussion on some board about Bitcoins and like stealing them and stuff like that it's really weird okay please continue I'm sorry about him no no no the the the the thing about Satoshi Nakamoto is we he's written a scientific paper right and before that paper and after that paper he participated in the community for two and a half years having conversations about how to do this so what we know is he's a scientist he's a scientist heavily involved in cryptography in economics and in digital currencies which is a space that's been thriving for 20 years now and he she they found a way to solve a specific problem who whoa whoa whoa whoa whoa whoa whoa he she they so so might not be a person Satoshi Nakamoto might be a woman Satoshi Nakamoto might be a group of two or three people collaborating under a pseudonym to create a scientific solution it doesn't matter they invented science oh for sure it doesn't matter but aren't you fascinated oh I'm totally fascinated but at the same time here's the lesson we've learned Prometheus stole fire from the gods and gave it to the people and they tied him to a [ __ ] rock and had an eagle eats his liver every day Satoshi Nakamoto gave money to the people and he disappeared because he's smart enough or she's smart enough not to get tied to a rock that's the bottom line I don't look into it because I think only bad things can come out of uh outing Nakamoto I see what you're saying so they get smeared immediately right and there's nothing good that will come out of it because at the end of the day since they control nothing and since what they invented is a mathematical solution it doesn't matter so do you believe that potentially this group of people or individual ual person whatever it was whichever scenario whichever sex that they thought about it in advance and well they said they spent several years working on the I mean they were active but not just the the code I'm talking about the repercussions of their actions and they decided to be anonymous in their delivery of this well I think throughout the '90s a lot of the people involved in digital currency environment because some of them were working in oppressive highly oppressive environments and I'm not you know I'm um people may be working from Burma or from China or from who knows where and so it's not a good thing to be doing these with your own name attached so they may they a lot of people in this space were involved anonymously to protect their own safety odds that were working in digital currencies basically doing science work in cryptography and Mathematics and distributed systems that's a very sexy part of the story you can't leave that out anymore when you tell the story you got to tell people that nobody knows if Satoshi Nakamoto is even real that's kind of cool yeah it is kind of cool but you know we do know some things about Satoshi for example he puts two spaces after every period or she or she or they or or is that guy that's Satoshi how do you know that's not Satoshi a lot of people have tried to guess and there's a lot of uh a lot of digital currency U scientists and cryptographers well-known cryptographers who participated in the creation of many of the aspects of Bitcoin and people have fingered them and said you know maybe that's Satoshi maybe that's Satoshi maybe they're all satosi I am Satoshi so this is sort of almost like a Jack the Ripper sort of Investigation only he didn't kill anyone he gave science to to the people I mean in terms of there's so many different theories of who you ever watch a documentary on right we solve Jack the Ripper's murder you know they always find out that it's a totally different guy there's like Story I mean you know this person invented a completely new science or people and and then disappeared for their own safety and yeah that's pretty cool yeah it is and it's going to be ripe for conspiracy theories of all kinds to jump out of that and you know I try to focus primarily on the technology because I it stands alone that's the key it doesn't need any of this there is a culture there's a history there's all of that and it's fascinating but the technology just works and it's simple math and people can read it understand how it works and then use it and and that's the beauty of it because it doesn't depend on anyone you don't have to trust Satoshi you don't have to trust the bank and you don't have to trust someone someone's not going to mess it up because you can see how it works that's such a subject that's ripe for conspiracy theorists boy they're going to jump all over that one they're bigot they're going to chemtrail the [ __ ] out of that one well yeah it's it's uh it's already happening they're going to Tower seven the [ __ ] out of that one how can we make a connection with Bitcoin and Tower 7 there has to be something it's all fun Tower 7 held the original computer that created bitcoin it wasn't done in 2008 it was done in 2001 the NSA the CA and the DEA I've met that guy Alex Jones oh was that Alex Jones I was just guessing I've met several guys like that yeah well there's a lot of those guys boy there's some [ __ ] ferocious conspiracy theorists out there um I'm I'm fascinated by these things I'm fascinating by these new avenues that our culture starts going down and um these incredible Avenues and branches of possibility off of these new New Paths it's it's it's a really amazing amazing time in so many ways and this highlights just this constant repeating subject that comes up with me and my friends is that it's the internet has changed everything and we've pretended that it's only been a little bit oh so you get email now what's the big deal it's it's monstrous it's changed it's changed my life 100% changed the way I think 100% changed my connection with just random human beings i i i interact with thousands of random human beings online on a daily basis and 99.999% of those interactions are positive yes exactly that's the most beautiful aspect about it like Bitcoin is just an expression of that it's a child of the internet you know when people say you know the internet now is so co-opted and restrictive that you can't do anything well I can tell you you can because Bitcoin came right out of that and works on that perfectly today so you know the bit Bitcoin is one more thing that happened because of the internet and now it's turning around and here's the interesting thing it allows you to do very small transactions micro Nano transactions so for example if you want to monetize your podcast and you accepted Bitcoin and people sent you a tenth of a penny or a penny or a dollar and you added up over hundreds of thousands of users because it doesn't cost much to send because it's an easy transaction people will make make transactions smaller and smaller and smaller so suddenly Bitcoin can fund all of the independent content providers and all of the independent infrastructure providers on the internet and transform the internet again from the inside out wow like imagine all of these media companies that have gotten so horribly disrupted because there's basically two media models if you make content on the internet you either sell advertising so you're stuffing junk into the eyeballs of your customers or your ears and the bigger the company the more junk that comes out of it right or you're selling your customer if the product's free you're the product right right your personal information is what generates the value so if you're on a social media site that's free you're the product and so they're selling your information in order to make money so it's either advertising or selling your information well now there's this Third Way which is you can do transactions small enough to have value when accumulated in large numbers that you could independent ly and directly fund content providers and infrastructure on the internet and break the hold of these you know um systems of concentration that advertising and social media have become privacy selling privacy and and selling advertising which require concentration they require enormous concentration what do you think if we set up a dedicated Joe Rogan experienced Bitcoin server right here where we we do not server but computer dedicated to to just Crunchy just out of respect just have one running here in the background all the time can we could we go to jail for that is that possible no of course not in fact you know at the end of the show uh I'd like to help set you up with a wallet on your on your smartphone and I'll send you some Bitcoin that not so sure about that um the other question I wanted to ask you about we we spoke about earlier was net neutrality now um that that's a huge issue for uh anyone who loves the way the internet works and the way the internet does not judge and the internet is freely available to anyone who ports into it at virtually what whatever you you know you pay for your connection you're you're going to you know whatever your download speed is but there's no there's no regulation as far as like right it being easier for Walmart to get online or they have more of a percentage of the pipe or what are we concerned about net neutrality being somehow or another compromised by nefarious sources well I mean n Tri he suffered a massive setback in the courts just a couple of weeks ago with a decision that allowed Verizon communications to not be subject to the FCC rule imposing net neutrality and that sent shock waves through the industry because the average go down what what was the the internet lost well what was the case the case was the FCC made a rule that said that carriers must support net neutrality and Verizon sued and had it overturned as unconstitutional or outside the Mandate of the FCC to be more accurate what did Verizon specifically want well we don't know that they say they want to make the internet better but they just got the rule that says that they have to treat all traffic equally taken out and most people don't realize that the reason the internet allows things like Netflix to happen is because they didn't have to ask anyone's permission now imagine if when Netflix started it had to ask Comcast to run its traffic and pay for a premium well they wouldn't do that because it's a competitor so of course they crowd them out of the market with exorbitant fees net neutrality means that everybody has a fair shake to be heard heard and it's up to the end user to decide who they want to listen to All of the traffic will reach you if you want it as a listener or as a viewer now can they somehow or another limit where the traffic goes to like what we're seeing in other countries where they have restrictive internet laws is that a potential byproduct of this case I think the biggest threat right now comes to companies like Netflix um or things like um streaming radio uh and audio systems uh Spotify Pandora Etc where by uh service providers who have their own TV streams or their own music streams that are competing are going to make their experience great and Netflix experience uh somewhat suckier so they'll limit the bandwidth of Netflix applications they'll choke them right right now I mean they already do in some cases but how do they do that well I mean they all kinds of shenanigans but I mean the ba the basic deal is that this FCC rule was trying to establish a legal framework under which they'd be obliged to give equal access to all content as long as the viewer chose that's what they want to see or they wanted to connect to over the Internet they would connect to that with the same bandwidth that they've bought uh you buy bandwidth and you use it for whatever you want and you don't get better bandwidth if you use their shows than Netflix well once they tried to put that rule in place you know um the lawsuit started and now we have a very bad decision that could really really hamper Innovation a lot of the things that we see today on the internet would not have happened if net neutrality weren't observed and the Verizon for for many people who don't realize this Verizon offers home internet connection as well as 4G and and TV most importantly right and payper viiew and video on demand which means that they're directly competing against other content providers yeah Verizon now has a fiber optic system that's you know incredibly fast and connects to you direct download load movies and television shows there's a lot going on right now as far as um as far as internet related content things like Netflix and things like I mean Hulu and Hulu Plus and there's these places are now starting to create their own programming as well it's getting really fascinating because they're not just competing with Verizon now they're competing with NBC and CBS and what have you and if you like that net neutrality is why it happens and therefore we should be defending neutrality so what people should do is probably boycott companies that don't support net neutrality I'm a huge supporter of the eff the Electronic Frontier Foundation that's been fighting for privacy and Liberty and net neutrality on the internet since the uh early '90s and they've won several substantial cases both against organizations like the NSA but also against uh service providers that Tred to abuse their position to prioritize traffic and they've promoted the idea of an open independent transparent and fair Fair internet for all with equal access for everyone I mean that's the thing that's made the internet magic and they've been at the Forefront of doing that e.org I'm a huge supporter that's interesting well we'll look into that and uh maybe we'll [ __ ] put an eff sticker on our website or something like that that's and you can put it on your webcam too they're the same ones who sell those little webcam sers well those guys are on the ball yeah that's that's something to really be concerned with it really is the idea that they could limit your experience whether it's Netflix or whatever downloadable Charter does it to Jamie they won't let him go to Pirate Bay anymore and I've heard that before allegedly allegedly allegedly dude allegedly he doesn't go to Pirate Bay you [ __ ] I mean to download IL legal uh music legal music legal like n snails yeah that's uh and if you're in an area where they have a lockdown on on internet providers you know where some people like can only get Verizon they're in an area that only gets Verizon like AT&T doesn't reach there Time Warner doesn't reach there that sucks that that's that's so disturbing and it's so contrary to the the trends that we would like to see as far as so here's one good idea or one good thought that comes out of this a lot of the problem right now is that you pay for both of your infrastructure and your content in a single payment to your ISP well with Bitcoin you could pay the recipient or the content provider directly in tiny tiny tiny payments so D you really are the Bitcoin genius you're Bitcoin Jesus because you he is because he's offering Bitcoin as a solution for everything well I mean it's powerful can fix that and Bitcoin can fix the internet and Bitcoin can fix Verizon it's almost and I'm not it's just you know it's almost like Evangelistic like it almost like uh like pyramids like when you go to a pyramid type thing where they're sounding like no you know is there anything you don't like about it like what's the number one thing that you're like I I hope something changes with this is there anything yeah sure I mean it's got uh it's got some scalability issues that are being solved it's uh it's software so we we have to be very careful with the upgrades um but you know I mean compared to the existing form of money we have I honestly think it's better money and it's and it's a great technology I've spent 20 years doing security and distributed systems that's my area of expertise as a professional so what I love about this is that I can see the Elegance of the technology and I understand its implications the last time I felt like this was 1992 and it was because I saw the internet and I saw the Elegance of it and I was out telling as many people as I could you know this is really going to change things in ways you don't even expect and I can't even explain to you yet because it's going to unfold in ways no one anticipates because what it does is it democratizes information so yes I'm excited about something that democratizes money but it's because I understand the underlying technology uh you know I don't profit from talking about this uh I'm able to build a career on it sure and I love doing it it but really at the at the heart of it I'm a geek I love the technology and that passion just comes through it's obvious it's obviously you love it you you light up and you you when the word Bitcoin comes out of your mouth it comes out just covered in love juice you love it it's obvious and it's interesting and it's it's um you're in a very unique position because you're at really at the edge of it and you're you're sort of at the front of this ever increasing in Mass ship and uh you're watching it gain momentum it's kind to be pretty exciting it's exciting it's great it was also terrifying for quite a while I mean I've been in this full-time for almost two years and I can tell you that that was uh not a very profitable uh job for what did you do for living before that um I've been an independent uh freelancer I've been starting businesses I'm an entrepreneur uh so I was when you say independent freelancer like what what is your your your background your educational background I I'm a computer scientist with a specialization in distributed systems uh I've been working in security for just over 18 years in information security systems so I worked as a consultant I worked as an adviser I worked as a Chief Information officer for companies I I built research companies I built um companies that built uh internet systems and I followed the internet I'm not one of the pioneers of the internet I was the 16-year-old kid looking over their shoulder as they were doing these things you know so I was buried in it when I was young and you know so so I've uh I've worked as a as an independent professional in this space for many years and then two years ago I first discovered Bitcoin then it hit me again a second time I read the Satoshi paper and I decided this is the job I'm going to do and right now there is no job so I'm not going to make any money at it but I'm going to do this job until it actually becomes a job and I did that for two years and I almost went bankrupt because there wasn't a job there in the beginning and and now it's a job and it's very exciting so this is a conscious decision on your your part back when it wasn't even profitable oh yeah took massive chance and stepped out on the edge of the dock yes I invested in several companies I drained my retirement account I I drained my savings paying my bills until I could generate income doing this wow and I I I mean this is not prudent investment this is not prudent Behavior financially but as a as a technologist as a person who's worked in distributed systems and and security and computer systems I could see that this was an exciting technology and I want to build a career in it so what I've been doing is swapping money for skills and experience and the opportunity to be on the ground floor I was too young when the internet started to to be influential in that space and I see this opportunity as a second opportunity to do that now how did you know that Bitcoin was the solution what made you so confident that you invested this exorbitant amount of time in in in Bitcoin and you know back two years ago this the future could not have looked nearly as bright as it looks now so the key the key here was that I I was in distributed systems in security and then the first time I thought I I heard about it I thought nerd money and then this like everybody does right that's where Brian is right now that POS can't possibly work then I went back and I read the Satoshi paper and I grasped the science and it was confusing then I read it again and I really grasped the science and then suddenly it hit me oh my God this isn't a currency it's a consensus Network this is the Holy Grail of distributed systems of the last 15 years you can do so much more than currency and once that light bulb went off all I could see was the possibilities oh well now that we have this technology we can do this and this and this and the currency will do these things for us and you know all of these possibilities unfolded in my head and it was it was a really dizzy experience but I understood the fundamental building blocks looked so so much like the early internet and I knew what structures like that do they create network effect they create this attractive Force where it gets more useful the more people who use it Network effect was coined first by Bob matafe in 1984 he said the value of the network increases exponentially with the addition of each node because when you join a network you don't just gain that value but by increasing the size of the network you make it more valuable for everyone else because they have one more person to connect to right and if you keep doing that it achieves a scale where it starts multiplying that's how the internet grew and when you have this magic combination of money for the people that can be sent directly between people that forms a network those three things came together in my head I'm like this is this is big and nobody knows it yet and when you see something that big and nobody knows it yet you want to tell everyone and you want to dedicate a large part of your time to doing this because it's incredibly exciting now how did did you initially jump in I mean how do you jump in in the infant stages of of Bitcoin what what's the steps that you took to become a part of this well I spent uh months and months and months reading everything that I could the scientific papers the discussions that Satoshi nakoda had with the other developers as he developed it I started reading the code I started writing code I started building businesses around it I started talking to people I started meeting up with other Bitcoin enthusiasts and then as soon as I could I started buying Bitcoin and you know and basically have been doing that since and what is your average day now consist of going on podcast and telling people how awesome Bitcoin is how often does that come up so I have a day job I'm a technical adviser on a number of Bitcoin startups I'm the chief security officer for blockchain info which is the largest uh Bitcoin web wallet uh in the space um and I work every day as a media um you know as a media pundit a commentator on bitcoin I write code and then I comment about it and I do interviews all the time uh because this is something I believe in strongly I don't get paid for my interviews I have other jobs that that that allow me to pay for international travel for a long time that was my savings account until uh until I was able to get other means Well you certainly uh hope to eventually profit off of this well actually now I'm making income on bitcoin so so so things are stabilized uh you know I'm not a Bitcoin millionaire I may never be a Bitcoin millionaire but I know what career I want to do for the next 15 years wow so how did you know that Bitcoin was going to be worthwhile and that so many people are going to jump on the board uh jump aboard two years ago it seems like two years ago was like well I didn't know I mean what I knew is this is a very elegant technology that had some implications some geopolitical implications some cultural implications some technology implications and I liked all of those and I was very interested in pursuing it and at the time I hoped it was going to get big and I figured you know if it didn't and and I didn't get anywhere with it I could do something else in a couple of years you got to come on again in a year i' love to yeah let's let's let's let this thing cook out there in the crazy world I mean what we say a year but the way things are moving three months yeah you might be right it might be it's been crazy yeah in terms of what happened in the last year alone it's been unbelievable I mean we had our first major Bitcoin conference in April in San Jose and now there's like a 100 conferences going on this year wow and there's the $150 million transaction right exactly and the price was you know when I was working on this the price was $15 I I if you asked me last year did I think Bitcoin would be at a thousand I said no yeah maybe in a couple of years I was surprised too but you know it has a way of growing on you and when it does it grows as a network and people find it useful and they try it they understand how it works it's practical they grasp the usefulness of it and they start using it I wish I had you in here when Peter Schiff was in here I'd be like sick of Andreas tell him what's up I maybe he's right I don't know who's right or you know I don't generally debate on this because the simple truth is that none of us know right and the reason we don't know is because the tools we have to analyze currencies don't apply because it's a completely different type of currency it's not a stock it's not a currency it's not an asset it's not a commodity it's a bit of everything um so can I tell you what it's going to do in two years of course not I don't know nobody knows what I do know is I understand the technology and what I see is something elegant and practical so I'm interested in seeing where this experiment will go because here's the thing if it doesn't work some people lose money if it does work we changed the world of money forever and that's a pretty big thing to say but cryptocurrencies I think are here to stay they offer An Elegant solution to decentralized money and whether Bitcoin survives or not I want to see where this is going to go because it has the possibility of changing a lot of people's lives well it certainly does and I I want to see them find that Nakamoto thing I want to see who it is me crazy I hope they never find yeah cuz you it's like Bigfoot for you it's like search you for uh Searching for Sugar B for me I want to find him it's probably going to be somebody you already know too like the dude you got a Dell guy or somebody I it's unbelievably fascinating it's it's just unbelievably fascinating especially listening to you describe it um your your passion for it makes it even more fascinating it's uh it's really something that I'm going to keep my eyes on and try to follow so uh I appreciate you coming over here and I appreciate you uh giving us your knowledge and spending your time and and uh I guess I'll I'll set up a wallet on my phone now is what I'm going to do sure sure absolutely it an Android phone yes right okay so you can you can download blockchain and I I said before I I I work for blockchain as the chief security officer I was a customer long before that but I think it's uh one of the better ones okay so you download blockchain from your app store and uh then you'll get an address and I can then send you some Bitcoin and you'll have it in a few seconds and if we wanted to put up a computer here a dedicated computer that runs that Bitcoin computations wouldn't [ __ ] with us in any way right wouldn't like mess with our B our bandwidth your electricity it would use off electricity I mean you you can get a little one that's even a USB stick they call it like a clondike it's a little uh stick USB stick you plug it in and it use up some electricity and it generates some Bitcoin you're not going to generate money you like well I'm not trying to get rich I'm a month maybe but it's going to be interesting to play with that's cool Bitcoin Street Credit that's what I'm looking for yeah exactly all right listen man this was very enlightening um I'm obviously going to have to read a lot of [ __ ] after this there's so much involved in this subject and so much involved in cryptocurrencies it's uh it's really really interesting stuff but I think it's badass man and I really respect a guy like you who takes a a giant leap like that and and dives into something and and something that you believe in and you get really passionate about it it's what life is about to me yeah it's about pursuing passions and and I I love the fact that you're really into it and I really really appreciate you coming on here and uh enlightening us thank you so much for for having me you know sometimes you you choose the things you want to do in life but some of the most interesting things in life once you find them you have no choice I had no choice I couldn't sleep at night if I wasn't doing this it's still a choice it was just such a such a big draw but yeah I mean I I hope you see you know I'm not trying to sell anything I'm genuinely passionate about this because I see an elegant solution yes well that is where you know the choice is the choice is in being that person who follows their passions that's inspirational to me it's one of the most inspirational things I encounter both online and in the real world is watching people who are passionate about what they do right you can recognize it in others and yeah it's the only way to live your life it's so contagious for me like it could be a guy who makes handmade knives you know and grinds the blades and sharpens the handles and you know puts everything together I'm fascinating by I'm fascinated by anything that someone's incredibly passionate about and uh so this this Bitcoin thing now is just now it's in there now it's in my list of things I'm fascinated about thank you very much so people want to get in touch with you uh they can uh contact you on Twitter probably the easiest thing is Twitter yeah that's that's the one I can handle the most but listen you're going to get swarmed today so try not to uh pay attention to all those [ __ ] psychos okay it's a a a n t o n o p that's a a n t o n o p on Twitter um and uh Andreas is there anything else you have a website uh antinopolis dcom um yeah sure that's my media site and people can book me for engagements there but uh really on Twitter is where I'm most active uh my name is pretty easy to Google and uh thank you so much for having me I really appreciate please it was an honor um I really think we had like a crazy internet Pioneer in here this is someday we're going to look back on this and say man we had Andre anop I know we should have bought that coin and been like Apple stock let us know what the [ __ ] was he told us not to we could have had a whole room full of computers man we shouldn't have listened to him back then he didn't have enough Faith uh thanks a lot man awesome awesome really appreciate it uh to everyone else uh next big date I got coming up folks uh is um I am in Dallas Texas with arri shaffir and Duncan Trussell that's March 14th at the Verizon Theater uh this weekend this Friday um I'm it's sold out I'm in New York but don't try to get tickets because if you do get tickets you're just supporting scalpers so unless you find somebody online that's that can't go because their [ __ ] got wet but whatever do what you got to do folks um so that's the next big one uh is uh Dallas Verizon Theater March 14 can't [ __ ] wait that's the day before the huge UFC event at Dallas Stadium which is apparently like 50,000 seats or something bananas so that should be a lot of fun um that's it all right you freaks we'll be back this week with uh many more podcasts to be scheduled and uh many more conversations to be had much more fun and uh and much love thanks to our sponsors thank you to squarespace.com the greatest resource online for creating websites go to squarespace.com and use the offer code Joe and the number one that's one word Joe and the number one and save 10% off your first purchase Squarespace is the first place you should stop if you're even thinking about making a website thank you also to Legal zoom.com go and do your legal stuff online at Legal Zoom without going to a Goddamn lawyer's office Legal Zoom is not a law firm but they can connect you with a third party attorney if [ __ ] goes off the rails and they can also provide you with self-help Services when you check out use the code word Rogan in the referral box and thank you also to on it.com that's o nni t use the code word Rogan and save 10% off any and all supplements all right you [ __ ] we love the [ __ ] out of you and we'll see you soon big kiss