Episode 20

Participants: Adam B. Levine (AL) Host Andreas M. Antonopolous (AA) Co !ost "tep!an# Murp!# ("M) Co !ost "peci$ic to 20.2: %an &amins'# (%an clip onl#( not an actual panelist) "ecurit# researc!er (primaril# in t!e $ield o$ penetration testin)) "peci$ic to 20.*: As!er +an (A+) Co $ounder,CE- coin.ar.io /#an 0!ou (/0( A&A 12!outon)3) Co $ounder,C-- coin.ar.io Cor# 4o!nson (Cor#) Bloom5er) 6est anc!or Emil# C!an) (Emil#) Bloom5er) 6est anc!or

20.7: +!e Ho8 and 6!# o$ local5itcoins.com

AL: Hi( and 8elcome to episode t8ent# o$ Let9s +al' Bitcoin( a t8ice 8ee'l# s!o8 e:plorin) t!e ideas( people and pro.ects 5uildin) a ne8 di)ital econom# and t!e $uture o$ mone#. +8ent# episodes. +!at num5er came up $ast. +oda#9s an e:periment: one o$ t!e most common complaints 8e )et is t!at our s!o8 is too lon) and some listeners 8ould rat!er !ave t!e a5ilit# to pic' and c!oose 8!at order t!e# listen to t!e s!o8 in. ;t9s also ver# intimidatin) $or ne8 users 8!o mi)!t 5e interested in a particular se)ment 5ut not in t!e !al$ !our discussion t!at came 5e$ore. Episode t8ent# 8ill 5e released a num5er o$ parts. <ou s!ould $ind a total o$ $our $iles. ;n 20.7( t!at9s 8!at #ou9re listenin) to no8( "tep!anie and Andreas s!are t!eir e:periences 8it! local5itcoins.com( an alternative to centrali2e e:c!an)es t!at9s not a)ainst t!e rules. ;n 20.2( t!e !osts !ave a lon) conversation a5out 8!at t!e point o$ minin) is and i$ t!e incentive mi)!t !ave 5ecome t!e end result( losin) si)!t o$ "atos!i9s vision. +!is is a must listen to se)ment( and cloc's in at a little under !al$ an !our. ;n 20.*( ; sit do8n 8it! As!er +an and /#an 0!ou( 5etter 'no8n as 0!ou+on)( t8o o$ t!e $ounders 5e!ind coin.ar.io( a ne8 Australian Bitcoin e:c!an)e. At t!e end o$ t!is se)ment #ou can !ear Andreas on Bloom5er) 6est #esterda#. ;n 20.= Andreas tells us a5out t!e upcomin) Bitcoin ;mprovement Pro.ect Proposal num5er *2 8!ic! proposes a ne8 t!ird t#pe o$ 8allet( a !ierarc!ical deterministic 8allet. "ounds tec!nical( and it is( 5ut t!e concept is po8er$ul and it9s 8ort! #our time to tr# to understand t!e potential !ere. 6e appreciate #ou !an)in) 8it! us as 8e tr# t!ese ne8 t!in)s out. Please send all #our

$eed5ac' to Adam>Lets+al'Bitcoin.com. En.o# t!e !o8 and 8!# o$ local5itcoins( $rom t!e team at Lets+al'Bitcoin.com. 7:?2 "M: ; received an email $rom a listener 8!o 8as curious a5out !o8 to )et Bitcoins in )eneral( and said t!at !e 8as !avin) some real di$$iculties .ust )ettin) !is !ands on some Bitcoins and ; 'no8 t!at t!is is a common pro5lem t!at a lot o$ people !ave. He 8as speci$icall# as'in) me a5out t!e 8e5site local5itcoins.com( 8!ic! 8e9ve tal'ed a5out on t!e s!o8 5e$ore. Personall#( ; t!in' 8it! all t!e di$$iculties 8it! e:c!an)es and Bitcoin 8e5sites #ou 'no8( more options are poppin) up all t!e time to 5e a5le to )et Bitcoins and 8e9ve tal'ed a5out a 5unc! o$ t!em li'e Coin5ase and Bit;nstant and Bitstamp and B+C@uic' and all t!ese di$$erent 8e5sites 8!ere #ou can 5u# Bitcoins( 5ut #ou9ve )ot to )o t!rou)! a veri$ication process and lin' #our 5an' account in some cases not ever#5od# 8ants to do t!at( sometimes t!e# .ust 8ant to 5u# Bitcoins 8it! cas! alt!ou)! #ou can do t!at on Bit;nstant( 5ut it can 5e a little more complicatedA #ou9ve )ot to $ind a location and so $ort! and !e 8as curious a5out !o8 to use LocalBitcoins to .ust simpl# 5u# Bitcoins 8it! cas!. +!ere is a 8e5site called local5itcoins.com 8!ere #ou can $ind people in #our area 8!o are 5u#in) or sellin) Bitcoins and !oo' up 8it! t!em t!rou)! t!is 8e5site and t!en #ou can 5ro'er Bitcoin transactions in person. <ou can $ind people 8!o are 5u#in) or people 8!o are sellin)( #ou can 5e a seller on local5itcoins( #ou can 5u# Bitcoins online even( t!ere are online sellers t!at are o$$erin) Bitcoins $or various $orms o$ online pa#ment li'e -&Pa# or %8olla or Per$ectMone#. Local5itcoins.com itsel$ is 5ased in AA: ;t9s in t!e $ree and democratic countr# o$ Binland. *:*0 "M: Binland( #es( t!an' #ou. Local5itcoins itsel$ is not 5ased in t!e C"( 8!at it is ri)!t no8 is a 8a# to !oo' up 8it! ot!er people 8!o 8ant to #ou 5u# #our Bitcoins or sell #ou Bitcoins. 6!at t!e# !ave is li'e user pro$iles( it9s 'ind o$ li'e e 5a#( t!ere9s a $eed5ac' s#stem. +!e# !ave an escro8 met!od as 8ell 8!ere it provides some protection $or 5ot! parties so t!at t!e# can !old t!e Bitcoins in escro8 and t!en t!e seller can release t!em 8!en t!e# )et t!e pa#ment )oin) t!rou)!.+!ere is a little 5it o$ protection 5uilt into it and t!en t!ere9s t!is $eed5ac' s#stem also. <ou pro5a5l# 8ant to do 5usiness 8it! people 8!o !ave positive $eed5ac' and !ave a 5unc! o$ instances o$ positive $eed5ac' i$ #ou9re )oin) to use local5itcoins.com and o$ course( all t!e t!in)s t!at appl# to $or instance online datin) or an#t!in) 8!ere #ou 8ould meet some5od# t!at #ou don9t 'no8 appl# to t!is. <ou al8a#s 8ant to me up 8it! a person in a pu5lic location t!at9s cro8ded( in case an#t!in) )oes sour( 8!atever( t!ere are at least a lot o$ people around to 8itness 8!at9s )oin) on so a lot o$ people meet up in internet ca$es or restaurants or places t!at are a lot o$ people in t!e da#li)!t. <ou can put do8n !ours 8!en #ou9re availa5le and places t!at #ou 8ant to meetA t!e sellers 8ill put t!eir terms in t!eir advertisements on local5itcoins. <ou 'no8( !onestl#( #ou can meet some reall# cool people t!is 8a#( people 8!o are interested in Bitcoins. Dot ever#5od# 8!o9s out t!ere on t!e internet is a monster or s!ad# or an#t!in) li'e t!at. A lot o$ people are .ust re)ular people and t!e#9re ver# nice and t!e#9ll sell #ou some Bitcoins and t!e#9ll !elp #ou out ma#5e even )ettin) started settin) up a 8allet. ; mean( some people do sort o$ o$$er t!at support as 8ell as 5ein) Bitcoin Edealers(E t!e# call it on

local5itcoins. <ou 'no8 i t!in' it9s possi5le to !ave a reall# )reat e:periences 8it! local5itcoins i$ #ou are a little 5it savv# a5out t!ose t!in)s. 4ust deal 8it! people 8!o !ave positive $eed5ac'( ma'e sure t!e#9re communicative 8it! #ou( meet t!em in a pu5lic place in da#li)!tA ; t!in' t!ose are t!e pointers t!at ; 8ould 8ant to )ive. %o #ou )u#s !ave an#t!in) #ou 8ant to add to t!atF ?:2G AA: ; don9t 5elieve t!at t!ere9s an# sort o$ le)all# Huestiona5le in t!e C". ; 5elieve t!e BinCED )uidance t!at came do8n a couple mont!s a)o speci$icall# said t!at so lon) as #ou9re not doin) t!is as a 5usiness( 5ut rat!er it9s .ust person to person transactions( t!at t!at9s somet!in) t!at doesn9t $all under t!eir )uidelines. ?:== Announcement: Let9s +al' BitcoinI is !eard eac! 8ee' 5# t!ousands o$ people 8!o are participatin) in t!e ne8 di)ital econom#. -ur listener 5ase o$ Bitcoin o8ners( miners( investors( tec!nolo)ists( and merc!ants is )ro8in) $ast. 6e o$$er a limited num5er o$ s!ort advertisin) slots in eac! s!o8 to 'eep our listeners en)a)ed and to provide ma:imum impact $or our sponsors. ;$ #ou9d li'e to tal' to us a5out Let9s +al' Bitcoin( send us an email at sponsors>Lets+al'Bitcoin.com. G:77 Advertisement: ;$ ; s!o8ed #ou a 8e5site 8!ere #ou could easil# purc!ase electronics $rom t!e 8orld9s lar)est distri5utor 8it! Bitcoins at 2ero percent mar'up( 8ould #ou t!in' it 8as too )ood to 5e trueF Jood ne8s: it9s real( and it9s at Bitcoin"tore.com. C!oose $rom !al$ a million items( save mone# over Ama2on and De8e))( and convert #our Bitcoins to real 8orld items. <ou can even 5u# 8it! privac#A all t!e# need is a s!ippin) address. But don9t ta'e m# 8ord $or it( see $or #oursel$ at Bitcoin"tore.com. G:=? AA: "o ; did num5er a num5er o$ trades on local5itcoins.com. ; !ave seller accounts 8it! a lot o$ positive $eed5ac'. ; use it primaril# $or mar'et researc! 5ecause t!e 5est 8a# to understand 8!o9s 5u#in) Bitcoin is to meet t!em. "o ; also o$$ered a service to !elp people set up 8allets and to e:plain t!e issues to t!em( and t!en ; met more t!an a do2en people $rom ever# a)e( ever# pro$essional 5ac')round( ever# political 5ent( di$$erent 'inds o$ interests etc etc( all ver# pleasant ver# nice interactions and no pro5lems 8!atsoever. ; 8ould also emp!asi2e 8!at "tep!anie said( to 'eep in mind t!at as a 5u#er #ou9re t!e one !oldin) cas! and )oin) to t!is meetin) 8it! t!e ot!er person 'no8in) #ou9re !oldin) cas!( so don9t )et mu))ed. ; did !ave one occasion 8!en a #oun)er $emale 5u#er !ad a !andle or a pseudon#m !asn9t made it ver# o5vious t!at s!e 8as a #oun)er $emale 5u#er and ; advised !er to c!an)e !er pseudon#m 5ecause it9s it9s reall# not sa$e( .ust li'e it 8ouldn9t 5e sa$e to 5e meetin) people on Crai)slist and advertisin) t!in)s li'e t!at. But ot!er t!an t!at i$ #ou ta'e t!ose 5asic precautions and meet in a pu5lic space ; t!in' t!is is a 5rilliant 8a# to )et Bitcoin( to meet ot!er Bitcoin people( and to esta5lis! relations!ips t!at survive re)ulators 5asicall#.

K:02 AL: +!ere9s a variet# o$ di$$erent $ees t!at participants on a local5itcoins o$$er( 8!at do #ou )u#s t!in'( #ou 'no8 Andreas( 8!en #ou 8ere doin) t!is 8!at sort o$ upc!ar)e 8ere #ou c!ar)in)( and 8!at do #ou t!in' is reasona5leF K:7* AA: ; 8as doin) somet!in) sli)!tl# di$$erent 8!ic! 8as ; 8as onl# sellin) up to one Bitcoin or actuall# a5out a !undred dollars 8ort! o$ ma:imum purc!ase( it 8as onl# $or ne8 users( ne8 5u#ers so ; 8anted to see an account t!at didn9t !ave prior purc!ases so ; actuall# o$$ered t!em at a discount over t!e e:c!an)e rate( most people add a sli)!t premium and usuall# #ou do it 8it! a $ormula so #ou sa#( ; 8ant to ta'e Mt Jo: 2= !our price( or a 5lended e:c!an)e 2= !our price and t!en add a ten percent premium or somet!in) li'e t!at. But it 'ind o$ depends. <ou9ll see di$$erent prices t!rou)!out t!e da# and t!e# c!an)e d#namicall# a lot o$ t!e time. K:?2 "M: +!ere are a num5er o$ di$$erent $ormulas t!at #ou can use or #ou can .ust do li'e a $lat price over spot $or Bitcoin( or under spot( ; mean #ou can reall# do 8!atever #ou 8ant i$ #ou9re a seller and i$ #ou9re a 5u#er #ou can $ind t!e 5est price t!at9s t!e most convenient $or #ou 8!ere #ou live or( #ou 'no8( dependin) i$ #ou 8ant to 5u# Bitcoins online #ou could send some5od# mone# online i$ #ou9re com$orta5le 8it! t!at. L:7= AL: "o it9s reall# a prett# varied mar'etplace( it9s a lot li'e eBa# ; t!in'. ; .ust 8ant to mention t!at t!ere is )reat tutorial a5out usin) local5itcoins.com to )ro8 Bitcoin adoption( and t!is is a5out !o8 to 5ecome a seller on local5itcoins and 5asicall# do e:actl# 8!at #ou 8ere doin) Andreas( 8it! tr#in) to !elp people )et interested in Bitcoin and )et started 8it! it. ;t9s 5# a $riend o$ t!e s!o8 8!o9s 5een on t!e s!o8( 4ustus /anvier( and i$ #ou )oo)le searc! usin) local5itcoins.com to !elp )ro8 Bitcoin adoption #ou9ll see a post a5out t!at. MArticle: !ttp:,,local5itcoins.5lo)spot.com,207*,0G,t!is is $irst in series o$ posts.!tmlN +!ere is actuall# one more t!in) t!at ; 8anted to mention a5out local5itcoins. <ou can 5#pass local5itcoins i$ #ou !ave 5asicall# a $riend 8!o #ou 'no8 and trust alread# 8!o 8ants to sell Bitcoin or 5u# some Bitcoins $rom #ou and #ou 'no8 it9s similar to local5itcoins( 5ut #ou 8ouldn9t !ave to pa# t!eir $ee alt!ou)! it is ver# small( #ou 'no8 t!e# do !ave a small $ee $or t!e sellers ; t!in' and i$ #ou !ave a $riend 8!o9s 8illin) to do Bitcoin trades 8it! #ou ; 8ould pre$er t!at option 5ecause it9s some5od# t!at #ou alread# 'no8 and trust and #ou don9t !ave to 8orr# a5out an# potential on sa$et# issues 8it! t!at. But $or t!ose 8!o don9t !ave an# $riends 8!o are into Bitcoin 8!o are local to t!em and 8ant to sell or 5u#( local5itcoins is a )reat option. AA: -r .ust )et #our $riends t!e# )et all t!e )ames start 5u#in) t!at )oin) $rom #ou i$ #our $riends are not into Bitcoin #ou9re doin) somet!in) 8ron). 70:*L

AL: +!an's to %r. "tep!anie Murp!#( Andreas M. Antonopolous( and t!e listener 8!o emailed "tep!anie providin) content $or t!e s!o8. Please send all listener mail to Adam>Lets+al'Bitcoin.com. Especiall# t!is time since 8e9re tr#in) somet!in) ver# ne8 !ere( ;9d li'e as muc! $eed5ac' as possi5le so c!ime in. +!an's $or listenin)

20.2: Minin)( and t!e Borest $or t!e +rees

AL: Hi( and 8elcome 5ac' to episode t8ent# o$ Let9s +al' BitcoinI( a t8ice 8ee'l# s!o8 e:plorin) t!e ideas( people( and pro.ects 5uildin) a ne8 di)ital econom# and t!e $uture o$ mone#. +8ent# episodes. +!at num5er came up $ast. +oda#9s an e:periment: one o$ t!e most common complaints 8e )et is t!at our s!o8 is too lon)( and some listeners 8ould rat!er !ave t!e a5ilit# to pic' and c!oose 8!at order t!e# listen to t!e s!o8 in. ;t9s also ver# intimidatin) $or ne8 users 8!o mi)!t 5e interested in a particular se)ment 5ut not in t!e !al$ !our discussion t!at came 5e$ore. Episode t8ent# 8ill 5e released a num5er o$ parts. <ou s!ould $ind a total o$ $our $iles. ;n 20.7( "tep!anie and Andreas s!are t!eir e:periences 8it! local5itcoins.com( an alternative to centrali2e e:c!an)es t!at9s not a)ainst t!e rules #et. ;n 20.2( t!at9s 8!at #ou9re listenin) to no8( t!e !osts !ave a lon) conversation a5out 8!at t!e point o$ minin) is and i$ t!e incentive mi)!t !ave 5ecome t!e end result( losin) si)!t o$ "atos!i9s vision. +!is is a must listen to se)ment( and cloc's in at a little under !al$ an !our. ;n 20.*( ; sit do8n 8it! As!er +an and /#an 0!ou( 5etter 'no8n as 0!ou+on)( t8o o$ t!e $ounders 5e!ind coin.ar.io( a ne8 Australian Bitcoin e:c!an)e. At t!e end o$ t!is se)ment( #ou can !ear Andreas on Bloom5er) 6est #esterda#. ;n 20.= Andreas tells us a5out t!e upcomin) Bitcoin ;mprovement Pro.ect Proposal num5er *2( 8!ic! proposes a ne8 t!ird t#pe o$ 8allet( a !ierarc!ical deterministic 8allet. "ounds tec!nical( and it is( 5ut t!e concept is po8er$ul and it9s 8ort! #our time to tr# to understand t!e potential !ere. 6e appreciate #ou !an)in) 8it! us as 8e tr# t!ese ne8 t!in)s out. Please send all #our $eed5ac' to Adam>Lets+al'Bitcoin.com. En.o# minin) $or $un( pro$it( or t!e )ood o$ t!e land( $rom t!e team at Lets+al'Bitcoin.com. 7:?? AL: %an &amins'# is a 8ell 'no8n securit# researc!er and 8as recentl# on a panel tal'in) a5out t!e securit# o$ Bitcoin at t!e Bitcoin 207* Con$erence in "an 4ose last mont!. -ne o$ t!e most interestin) t!in)s ; t!in' t!at came out o$ t!e entire con$erence 8as actuall# somet!in) t!at !e said durin) t!at tal'( and ; 8ant to pla# t!e clip no8 so 8e can 'inda discuss t!e implications. 2:7G MclipN %an: ; assi)n 2ero percent pro5a5ilit# t!at 8e 8ill continue 8it! t!e present proo$ o$ 8or' $unction. +!e present proo$ o$ 8or' $unction is not )oin) to survive t!e #ear( period. ;$ t!ere9s one !ard prediction ;9m )oin) to ma'e( it9s )oin) to 5e t!at.+!e realit# is t!at9s it9s impossi5le to model t!e Loo'( #ou !ave to t!in' o$ t!e s#stem in terms o$ re)ulator# steps. -ne dude spins up one 5atc! o$ A";Cs and )ets dou5le di)it percenta)es o$ t!e net8or'. +!at9s -DE )u#. +!at9s not o'a#. Bitcoin depends on t!ere 5ein) so man# $rea'in) people to re)ulate t!at #ou can9t do it t!at 8!en #ou tr# to re)ulate it( #ou don9t )et po8erA #ou .ust )et more people. Bitcoin uses( 5# desi)n( 8as desi)ned to levera)e t!e !undreds o$ millions o$ mac!ines around t!e 8orld t!at do computation. +!at is an impossi5le set to control. -ne dudeF Dot an impossi5le set to control. 6e t!in' t!at t!e A";C )u#s love to sa# EHe#( 8e9ll .ust !ave lots o$ people 5u# A";Cs.E <ea!( #ou li'e t!at ar)ument 5ecause #ou sell A";Cs.

-t!er voice: ; mean( t!at9s o'a#. +!ere9ve al8a#s 5een economic motivators $or people to ma'e t!eir minin) t!in)s. ; mean( 8it! A";C( even in t!e 5est case #ou9re )oin) to see a massive industriali2ation o$ minin) to a $e8 small pla#ers. ;t9s not )oin) to 5e an A";C in ever# )ara)e. *:=2 %an: i$ t!at !appens( Bitcoin $ails. ;9m not sure 8!at t!e proo$ o$ 8or' $unction( or $unctions( are )oin) to loo' li'e. ; !ad a )reat meetin) let9s .ust sa# ; !ad a meetin) 8it! some people and it 5ecame clear t!at multiple proo$ o$ 8or' $unctions operatin) as a 5as'et o$ currencies is pro5a5l# t!e pat! t!at9s )oin) to !appen. ; don9t 'no8 8!ere t!is is )oin) to )o( #et. All ; 'no8 is t!at Bitcoin is at a li$e or deat! dependenc# on minin) not centrali2in). <ou !ave one minin) pool( B+CJuild( 8it! =KO o$ t!e po8er. <ou t!in' t!is is an accidentF <ou t!in' t!e# .ust Eo!( #ou 'no8 8!at( 8e .ust ran out o$ po8er .ust 5e$ore ?0OEF DoI +!e#9re li'e Eo'a#( ever#one reali2es t!at i$ 8e ever e:ceed ?0O( t!e value o$ ever#t!in) )oes to 2ero( so 8e9re )oin) to stop !ereE. +!is aspect o$ t!e s#stem !as )ot to c!an)e. ;9m not sure 8!at it9s )oin) to c!an)e into. Eit!er Bitcoin c!an)es( or somet!in) else !appens to levera)e t!e !undreds o$ millions o$ mac!ines( 5ecause ri)!t no8 i$ #ou !ave a CPC or JPC( #ou s!ouldn9t 5e minin). =:?K AL: "o t!e Huestion is( i$ 8e could turn 5ac' t!e cloc' and ta'e t!is move to8ards JPCs and A";Cs( and ma'e it )o a8a#( ma'e it so t!at t!at is not somet!in) t!at is $easi5le an# lon)er( is t!at is t!at a )ood t!in)( is t!at a 5ad t!in)F ; mean( are A";Cs are t!e# a curse( are t!e# a 5lessin)F ?:7L AA: %an is a5solutel# ri)!t t!is is a5solutel# a critical pro5lem $or Bitcoin( it is one t!at represents t!e )reatest t!reat to t!e surviva5ilit# o$ Bitcoin( and ;9d li'e to Huote 1"aint "atos!i3 !imsel$( t!is $rom pa)e * o$ t!e "atos!i paper: E+!e proo$ 8or' also solves t!e pro5lem o$ determinin) representation in ma.orit# decision ma'in). ;$ t!e ma.orit# 8ere 5ased on one ;P address( one vote( it could 5e su5verted 5# an#one a5le to allocate man# ;Ps. Proo$ o$ 8or' is essentiall# one CPC( one vote.E +!at9s 8!at "atos!i said. +!at 8as t!e vision. And t!at vision !as ver# muc! 5een su5verted 5# A";Cs 5ecause essentiall# 8!at it sa#s no8 is t!at t!e po8er9s )ettin) concentrated. +!e pro5lem isn9t so muc! t!e $act t!at people can 5u# A";Cs and t!e#9re e:pensive t!e pro5lem is t!at t!e A";C is t!ree( $our( $ive( ten orders o$ ma)nitude more e$$icient t!an CPCs and it 5asicall# cro8ds out ever#5od# else( so centrali2ation destro#s neutralit#( provides a sin)le tar)ets $or re)ulatorsA centrali2ation is t!e t!in) t!at destro#s Bitcoin. A5solutel#( A";Cs are a pro5lem. +!e current proo$ o$ 8or' s#stem in t!e end ends up centrali2in) too muc! po8er into too $e8 miners and violates t!e 5asic precept o$ "atos!i( proo$ o$ 8or' is essentiall# one CPC( one vote no lon)er t!e case. "M: ; can9t reall# 5lame t!em as a pro5lem( ; 'no8 #ou9re not 5lamin) t!em Andreas( 5ut ; t!in' t!e#9re 'ind o$ inevita5le. 6!at ; mean 5# t!at is t!at t!ere9s suc! a )reat incentive to $ind a more e$$icient 8a# to do t!e proo$ o$ 8or'( t!e pressure is so )reat and t!e incentive is so )reat in t!ere so muc! to )ain 5# developin) some tec!nolo)# t!at !elps t!at !appen( t!at o$ course

A";Cs come out. ;$ #ou 'no8 ma#5e t!ere9ll 5e somet!in) even more po8er$ul t!an A";Cs in t!e $uture( ; t!in' ; a)ree 8it! #ou t!at t!ere is a potential pro5lem t!ere 8it! t!e centrali2ation especiall# since A";Cs ri)!t no8 are so e:pensive. %e$initel# centrali2in) po8er. 6e9ve seen some A";Cs come out( 5ut t!ere !ave 5een so man# pro5lems 8it! t!em. ; )uess t!ere9s still some room $or s'epticism ri)!t no8( li'e t!ere9s still room to tal' a5out t!is and sa# 8e can still prevent t!is pro5lem 5e$ore it reall# )ets 5ad. +!ere !asn9t 5een a !u)e !ittin) o$ t!e mar'et so to spea' o$ A";C miners #et. Ho8 could #ou even do t!at 8as BitcoinF 6e can9t turn 5ac' t!e cloc'A t!e onl# t!in) t!at could 5e done ; suppose is create anot!er cr#ptocurrenc# t!at is some!o8 literall# una5le to do an#t!in) 5ut CPC minin)( and ; 'no8 t!at t!ere9s some $ol's 8!o are interested in doin) t!at( 5ut t!en #ou 'no8 #ou !ave to )et people to adopt t!at and use t!at and value it( and 8ill t!e# 8!en t!ere is suc! a stron) pro$it incentive to )o 8it! Bitcoin and t!e A";C miners 8!ic! !ave t!e potential to centrali2e po8er Huite a 5itF K:0G AA: He#( i$ t!e incentives create centrali2ation( don9t 5lame t!e actors 8!o are $ollo8in) t!e incentives as #ou said "tep!anie( 5ut loo' at t!e incentives ver# care$ull#. Are t!ose incentives reall# ali)ned 8it! t!e lon) term vision o$ BitcoinF And t!e ans8er is simple( it9s no. Centrali2ation is anat!ema to Bitcoin. ;t 8ill 5e t!e t!in) t!at could destro# Bitcoin. "o i$ t!e incentives are ali)ned so t!e# create centrali2ation( 8!ic! ; t!in' is o5vious( and ver# muc! !appenin) ri)!t no8( t!en t!at9s a pro5lem. Can it 5e solvedF ; t!in' it can 5e solved 8it! a !ard $or'. ;t9s not an eas# solution. ;t9s not a so$t $or' solution. ;t9s a !ard $or' solution and it loo's 'ind o$ somet!in) li'e t!is: a$ter 5loc' P( 8!ere P is some 5loc' in t!e $uture( t!e onl# 5loc's t!at 8ill 5e accepted 5# t!e re$erence client are t!ose t!at !ave proo$ o$ 8or' 5ased on somet!in) else. +!at could 5e scr#pt. B# t!e 8a#( people !ave pro5a5l# !eard us tal'in) a5out scr#pt( and .ust to clari$# t!at9s s c r # p t( and it9s an al)orit!m t!at is e:tremel# di$$icult to e:pand into an A";C 5ecause it reHuires a trade o$$ 5et8een CPC and memor# so i$ #ou tr# to crunc! it !ard 8it! an A";C 8!at #ou end up doin) is usin) a lot o$ memor#( and #ou can9t scale memor# t!e 8a# #ou can scale computation( so essentiall# 8!at it does is it puts a counter 5alancin) incentive a)ain centrali2ation. "o #ea!( 8e could c!an)e proo$ o$ 8or'( it 8ould 5e a !ard $or'( it 8ould 5e a di$$icult pro.ect t!at 8ould reHuire some 8or' to )et t!ere 5ut i$ an#t!in) is 8ort! a !ard $or' t!at 8ould 5e it. +!e ot!er alternative "M: But 8!# not .ust use LitecoinF L:=L AA: +!e ot!er alternative is Litecoin. +!e issue !ere is simpl# one o$ 5alance( ri)!tF %o #ou $or' to a di$$erent currenc#( or do #ou maintain t!e net8or' e$$ect and do t!e $or' internall# 8it!in BitcoinF ;t9s al8a#s a matter o$ i$ #ou t!in' t!at Bitcoin 8ill succeed in t!e lon) term in t!e net8or' e$$ect and t!e $act t!at man# ot!ers supported and use it is )ood enou)!( t!en #ou )o to Bitcoin. ;$ #ou don9t 5elieve t!at evolution can !appen 8it!in Bitcoin( t!en #ou )o $or Litecoin. And ; t!in' t!ere 8ill al8a#s 5e a 5alance 5et8een t!at natural 'ind o$ incentive to $or' and t!e incentive to sta# on t!e Bitcoin 5loc'c!ain 8!ere t!e net8or' e$$ect is )reatest( so 8e9ll see !o8 t!is pla#s out. +!e )ood ne8s is( Litecoin alread# e:ist so t!e alternative is alread# t!ere and at

t!is point $ails 8!at t!at does is it allo8s Litecoin to succeed. +!at9s t!e nice t!in) a5out !avin) an ecos#stem. 70:=0 AL: "o no8 Litecoin aside( Peter 8as also on t!at panel( Peter $rom Coin5ase 8as also on t!is panel 8it! %an( and t!e t!in) t!at !e 5rou)!t up( ; clipped t!is out a little 5it so it could 5e s!orter one o$ t!e t!in)s t!at !e 5rou)!t up is t!at i$ #ou 8anted to ma'e a c!an)e li'e t!at to Bitcoin itsel$( #ou9d run into a pro5lem 5ecause t!e people 8!o #ou9re #ou9re essentiall# tr#in) to o5solete( #ou 'no8( t!e A";C miners( pro5a5l# 5# t!e time #ou )et around to doin) t!is actuall# !ave more t!an $i$t# one percent o$ net8or'. "o #ou9re essentiall# as'in) t!em to 5e o'a# 8it! and participe in a s8itc! t!at invalidates t!eir rat!er lar)e investments into. "o is t!at even possi5le( or do 8e t!in' t!at is 8!# Litecoin could in $act ta'e over( 5ecause A";Cs 8ouldn9t decide t!at t!e# are )oin) to invalidate t!emselves and so t!e s!i$t !as to !appenF AA: A !ard $or' 8!ere #ou c!an)e t!e proo$ o$ 8or' 8ould 5e ver# di$$icult( 5ut t!in' o$ it $rom t!is perspective t!e centrali2ation !as alread# resulted in essentiall# CPC and JPC miners a5andonin) Bitcoin. +!e minin) increasin)l# 5ein) concentrated on A";Cs. Do8( i$ #ou did( sa#( sometime in t!e $uture( and t!is could 5e si: mont!s out( ei)!t mont!s out( a #ear even( 5ut as lon) as #ou 5a'ed it into t!e protocol in advance( t!en #ou could essentiall# )raduall# ali)n t!e incentives. ;nstantl#( A";Cs 8ould 5e less popular. ;t 8ouldn9t a$$ect t!e current )eneration o$ A";Cs 5ecause t!e# 8ill continue 5ein) pro$ita5le until t!at period o$ time. But it 8ould a$$ect decisions a5out 5u#in) $uture versions o$ A";Cs( and it 8ould also ma'e people evaluate t!e A";Cs and t!e ne8 proo$ o$ 8or' $or $uture value t!at t!e# could 5rin). But at t!e end o$ t!e da#( i$ #ou made t!at c!an)e( it 8ould also allo8 almost a million people 8!o are in Bitcoin toda# to resume CPC minin) on t!is ne8 al)orit!m( and 5rin) t!em into t!e $old. "o i$ A";C miners 8al'ed a8a#( ten t!ousand o$ t!em( and instead #ou !ad a million people 8al' into t!e $old( ; don9t see !o8 t!at9s a pro5lem. ;t9s onl# a pro5lem i$ #ou accept t!e centrali2ation is inevita5le and t!at9s reall# a s#mptom o$ t!e proo$ o$ 8or'( not t!e underpinnin) assumption. "o i$ #ou c!an)e t!e proo$ o$ 8or'( t!e 5alance o$ po8er c!an)es and no8 #ou !ave a million ne8 miners 8!o can enter t!e $ield. "o i$ A";C miners lose some mone# #ou 'no8( t!e# lose some mone# over t!at speculation( 5ut ; don9t t!in' t!at it9d 5e a pro5lem 8it! t!ere a 5loc'c!ain continuin) to 5e more valua5le 8!ile t!e ot!er 5loc'c!ain 8it! all o$ t!ese users on its isn9t. ; t!in' it9s Huite t!e opposite essentiall# people 8ould vote 8it! t!eir minin)( and t!at9s e:actl# 8!at minin) is supposed to do( 5e a vote( so i$ t!e ne8 proo$ o$ 8or' is decentrali2ed( more people can vote. 7*:2= Announcement: Let9s +al' BitcoinI is !eard eac! 8ee' 5# t!ousands o$ people 8!o are participatin) in t!e ne8 di)ital econom#. -ur listener 5ase o$ Bitcoin o8ners( miners( investors( tec!nolo)ists( and merc!ants is )ro8in) $ast. 6e o$$er a limited num5er o$ s!ort advertisin) slots in eac! s!o8 to 'eep our listeners en)a)ed and to provide ma:imum impact $or our sponsors. ;$ #ou9d li'e to tal' to us a5out Let9s +al' Bitcoin( send us an email at sponsors>Lets+al'Bitcoin.com.

7*:?2 Advertisement: ;$ ; s!o8ed #ou a 8e5site 8!ere #ou could easil# purc!ase electronics $rom t!e 8orld9s lar)est distri5utor 8it! Bitcoins at 2ero percent mar'up( 8ould #ou t!in' it 8as too )ood to 5e trueF Jood ne8s: it9s real( and it9s at Bitcoin"tore.com. C!oose $rom !al$ a million items( save mone# over Ama2on and De8e))( and convert #our Bitcoins to real 8orld items. <ou can even 5u# 8it! privac#A all t!e# need is a s!ippin) address. But don9t ta'e m# 8ord $or it( see $or #oursel$ at Bitcoin"tore.com. 7=:2G AL: <ou 'no8( ta'in) a step 5ac' $rom t!is( ; t!in' t!at( 5roadl# spea'in)( ; can sa# 8e all 'ind o$ a)ree t!at A";Cs aren9t )reat overall $or t!e !ealt! o$ t!e net8or' 5ecause o$( li'e #ou said( t!e centrali2in) e$$ect( ri)!tF 7=:*Q AA: ; 8ould call it t!e disen$ranc!isin) e$$ect( even more stron)l#. "M. ;9m neutral on t!em( 5ut ; t!in' t!e# do tend to centrali2e a little 5it. 7=:=* AL: -'a#( so $ollo8in) t!at lo)ic( doesn9t t!at also mean t!at JPCs are 5asicall# also 5ad 5ecause in t!e same 8a# t!at $e8er people !ave A";Cs t!an !ave JPCs( similarl# $e8er people !ave JPCs t!at are po8er$ul enou)! to mine in a reasona5le $as!ion compared to CPCsF +!e Huestion ;9m as'in) !ere i )uess is( does t!e total amount o$ po8er in t!e net8or' actuall# matter( or is .ust a5out t!e distri5ution o$ !o8ever muc! po8er t!ere isF "M: ; t!in' #ou9re )ettin) at somet!in) t!at9s 5een sort o$ on m# mind durin) t!is 8!ole discussion Adam( 8!ic! is t!at 8e need to redistri5ute t!e !as!in) po8er on t!e Bitcoin net8or'. <ou 'no8( ; don9t li'e t!at 5ecause t!at itsel$( to me smac's o$ some centrali2ation 8!en an#5od# tal's a5out redistri5ution. Do8 ;9m not sure( li'e( m# t!ou)!ts aren9t completel# $ormed on t!is( 5ut #ea!( ; mean ; )uess i$ 8e ta'e t!at lo)ic to it9s conclusion( i$ somet!in) is done to eliminate A";Cs or )et rid o$ A";Cs( t!en( #ou 'no8( 8!# not JPCs( 8!# can9t 8e are 8e )oin) to 5e sa#in) #ou 'no8 ever#5od# !as to 5e minin)F ;$ #ou9re )onna mine on t!e Bitcoin net8or' it !as to 5e 8it! t!is 8it! a CPC and it !as to 5e t!is speci$ic CPC so t!at ever#5od# !as eHual !as!in) po8erF +!at could )et prett# ridiculous( 8!o )ets to ma'e t!at decision and en$orce it( #ou 'no8F AA: ; 8ould certainl# not .oin in suc! a 5loc'c!ain one t!at prescri5es control over 8!ic! CPC #ou use or somet!in) li'e t!at. ; t!in' it9s a matter o$ orders o$ ma)nitude ri)!t( i$ #ou use a proo$ o$ 8or' t!at !as less o$ a di$$erence 5et8een t!e orders o$ ma)nitude o$ minin) o$ a CPC( a JPC( and an A";C and scr#pt alread# does t!at( it $lattens t!at advanta)e a tin# 5it t!en essentiall# 8it! t!e a5solute minimum amount o$ c!an)e #ou ac!ieve t!e ori)inal incentives o$ Bitcoin( 8!ic! is to distri5ute t!e votin) consensus amon) as man# participants in t!e net8or' as possi5le. ;n m# ideal environment $or Bitcoin( ever# sin)le p!one #ou !ave t!at9s runnin) a

client is also doin) a tin# 5it o$ minin)( ever# sin)le device #ou use use as #our 8allet is doin) a 5it o$ minin). ;$ #ou could distri5ute it to t!at e:tent( t!en it 5ecomes !arder and !arder to stop Bitcoin( and at t!e end o$ t!e da# ; t!in' it9s reall# a survival mec!anism. Centrali2ation in A";Cs is not a pro5lem 5ecause t!e A";Cs people ma'e too muc! mone# or 5ecause 8e 8ant to c!an)e 8!o controls t!e net8or'. ;t9s a pro5lem 5ecause t!e# can 5e attac'ed in re)ulator# terms( and also t!e minin) can 5e s!i$ted to an or)ani2ation t!at doesn9t !ave Bitcoin9s 5est interests in mind. "omeone puts up an A";C $arm( and it9s not t!at !ard to do( t!e# could literall# ta'eover Bitcoin .ust to s!ut it do8n( and t!at9s a 5ad outcome. Do8 it9s less li'el# i$ #ou !ave a proo$ o$ 8or' t!at is not as eas# to scale up as an A";C. 7Q:*0 AL: +!is is ver# tan)ential !ere( 5ut ;9m reall# curious on t!e $lip side( 5ecause CPCs are so u5iHuitous( ri)!t( so let9s assume $or second t!at 8e ma'e a s!i$t and 8e )o( #ou 'no8 JPCs no lon)er 8or'( A";Cs no lon)er 8or'( does t!at put more po8er in t!e !ands o$ corporations t!at !ave lar)e amounts o$ computers( li'e 8or'stations t!at emplo#ees use( #ou 'no8( and t!e# can .ust !ave t!is lo8 level minin) process )oin) in t!e 5ac')roundF ;s t!is a 8a# to )enerate revenue $or companies t!at !ave lar)e amounts o$ computers and 8or'ers on t!emF 7Q:?L AA: ; t!in' #ou9ll $ind t!at t!e num5er o$ computers o8ned 5# corporations is a lot less t!an t!e num5er o$ computers are o8ned 5# individuals( so $rom t!at perspective ; don9t t!in' t!at too muc! o$ a pro5lem( 5ut at t!e same time( 8e9re not tal'in) a5out JPCs no lon)er 8or'( or A";Cs no lon)er 8or'( 8e9re simpl# tal'in) a5out A";Cs don9t )ive #ou a ten t!ousand $old advanta)e over CPCs( t!e# onl# )ive #ou a !undred $old advanta)e or ten$old advanta)e over CPCs. +!e# still 8ould !ave si)ni$icant advanta)es( t!ere9d still 5e plent# o$ incentive $or speciali2ed computin) devices to do t!is( 5ut it 8ould )o 5ac' more to t!e initial environment 8!ere #ou !ave people 5uildin) minin) ri)s t!at could 5e done on an individual 5asis. ; t!in' it9s .ust a matter o$ decidin) 8!ic! incentives )ive us t!e 5est possi5le $uture $or Bitcoin( and( #ou 'no8( t!e core idea o$ t!e distri5uted 5loc'c!ain proo$ o$ 8or' s#stem is one CPC per vote. ;$ #ou can 5u# up all t!e votes in t!e net8or'( t!at9s a pro5lem. 7L:00 AL: ; can tell #ou somet!in) t!at9s a little 5it e:citin) to me( #ou 'no8( on t!is topic( on 4une 2*rd( a )u# 5# t!e name o$ 5#temaster on t!e 5itcointal' $orums released a c!allen)e $or people to tr# and )et more oomp! out o$ a JPC processor or an A";C processor $or t!is proo$ o$ 8or'( and( #ou 'no8( o5viousl#( it9s JPC 5ecause #ou9d !ave to desi)n a speci$ic A";C( 5ecause t!e# are application speci$ic and t!is is a ne8 al)orit!m. Basicall#( t!e protocol is aimed entirel# $or 5ein) as e$$icient as possi5le on CPCs to t!e detriment o$ JPCs and to t!e detriment o$ an# sort o$ dedicated application. +!e 5ount# i$ #ou can )et 2? percent $aster per$ormance out o$ an# JPC compared to 8!at t!e#9re )ettin) out o$ t!eir CPC code is =0 Bitcoins( so i$ t!is is somet!in) t!at #ou !ave e:pertise in and #ou t!in' t!at #ou can ma'e t!is !appen( t!en #ou s!ould de$initel# )o ta'e a loo'. +!ere9ll 5e a lin' in t!e s!o8 notes too( and ;9m ver# curious i$

someone mana)es to come up 8it! a 8a# to 5rea' t!rou)! t!is ne8 al)orit!m( 5ecause it could 5e prett# promisin) ot!er8ise. "M: ;$ t!is passes t!e c!allen)e( creatin) some 'ind o$ ne8 cr#ptocurrenc# 8it! t!e ne8 al)orit!m...F 20:0= AL: <es t!ere9s a currenc# t!at t!e#9ve 5een 8or'in) on called Bit"!ares( ; !ave actuall# spo'en 8it! t!eir lead desi)ner a couple o$ times( )u# named %aniel Larimer. ;t9s )one t!rou)! several iterations( t!is 8as cr#pto C"% t!e $irst time 8e tal'ed a5out( 8e loo'ed at it on t!e s!o8 5e$ore not on t!e s!o8 itsel$( 5ut on t!e 5ac' end tr#in) to $i)ure out i$ it9s somet!in) 8e s!ould tal' a5out( and t!is is t!eir latest iteration o$ it and t!e# seem prett# con$ident t!at it9s entirel# JPC proo$ and A";C resistant 8!ile 5ein) as $ast as possi5le to veri$#. %irect Huote: Eit9s )ood to see people 8or'in) on t!is pro5lem 5ecause t!e centrali2ation t!in)( especiall# as 8e )et into a more A";C de$ined $uture( .ust seems li'e #ou can see t!at t!is is )oin) to 5e a pro5lem. ;t mi)!t not 5e a pro5lem no8( 5ut it9s )oin) to 5e a pro5lem and so it9s )ood to see people 8or'in) to8ard solutions( to8ards t!at( and i$ an#5od# else is 8or'in) to8ard solutions in t!is area please contact 5ecause it9s an are 8e9re activel# interested in.E 20:=K AA: "o could 8e .ust point out t!e $act t!at Bitcoin is .ust ama2in)( simpl# $rom t!e perspective t!at i$ #ou don9t li'e it #ou can )o ma'e #our o8n( and also i$ #ou don9t li'e t!e current decisions )oin) on in t!e Bitcoin code #ou can $or' and $ollo8 a di$$erent 5loc' c!ainF %espite t!e pro5lems 8e9re tal'in) a5out( t!e solutions to t!ese pro5lems are ena5led 5# t!e ver# nature o$ Bitcoin itsel$( 5# t!e $act t!at it9s a consensus driven mec!anism so Bitcoin can solve it9s o8n pro5lems( and can evolve past its o8n pro5lems( and t!at9s reall# a 'e# propert# o$ Bitcoin t!at 8ill allo8 it( ; 5elieve( to survive man# suc! issues( and it !as alread# survived issues li'e t!is in t!e past. -r( it 8ill allo8 alternative coins to arise out o$ t!e ecos#stem and ta'e on more o$ a leadin) role( and t!e incentives are per$ectl# 5alanced( t!e $eed5ac' mec!anisms are super $ast( so t!is is as close as #ou can come to an e$$icient mar'et $or pic'in) t!e currenc# o$ #our c!oice. Even i$ Bitcoin 8ent a8a# tomorro8( #ou could .ump on a ne8 currenc#( and still e:c!an)e #our Bitcoin $or t!is ne8 currenc# relativel# easil#. 22:0* "M: +a'in) t!is incentive idea ; )uess( i$ t!ere is some ne8 cr#ptocurrenc# t!at9s created and is JPC and A";C proo$( 8!at i$ it9s onl# JPC and A";C proo$ durin) t!is initial testin) p!ase 8!en it9s 'inda li'e( t!e incentives aren9t reall# t!ere( 8!at i$ it 5ecomes a multi 5illion dollar currenc# and t!en suddenl# t!ere9re !u)e incentives to ma'e devices or mac!ines ma#5e it9s not JPCs or A";Cs( ma#5e it9s somet!in) completel# di$$erent 5ut to some!o8 ma:imi2e t!e pro$it( 8!at i$ t!at !appens in t!e $utureF ;9m interested to see !o8 t!at pla#s out( ;9m .ust t!in'in) economics !ere( t!at as a cr#ptocurrenc# 5ecomes more valua5le( t!en t!e pro$it incentives 5ecome )reater and )reater. and necessit# is t!e mot!er o$ invention ri)!t( li'e ever#da# said a5out Litecoin( it9s totall# A";C and JPC resistant( 8ell no8 people are tal'in)

a5out ma'in) A";Cs t!at ma# 5e a5le to mine Litecoin on t!e scr#pt al)orit!m( even t!ou)! t!e spread 8ouldn9t 5e as 5i) as 8it! t!e "HA 2?G al)orit!m li'e $or Bitcoin( 5et8een A";Cs and JPCs( or JPCs and CPCs. ;9m .ust reall# curious to see 8!at !appens 8it! t!is. 2*:0Q AA: +!e or)ani2ation o$$erin) =0 Bitcoin as a 5ount# to overcome t!eir al)orit!m is competin) a)ainst t!e esta5lis!ed econom# o$ Bitcoin t!at o$$ers a 7.Q 5illion dollar 5ount# to an#one 8!o 5rea's t!e encr#ption( 2? Bitcoin ever# ten minutes $or an#one 8!o is a5le to overcome minin) di$$iculties and mine more e$$icientl#. "o #ea!( ; mean( t!e incentives reall# $avor innovation( ver# rapid innovation to8ards ac!ievin) t!e re8ards t!at are on t!e 5loc' c!ain. +!e 5etter solution 8ould 5e to introduce some $le:i5ilit# into t!e proo$ o$ 8or' concept so t!at 8e can )raduall# c!an)e proo$ o$ 8or' t!rou)! consensus as t!e net8or' 5ecomes more centrali2ed. <ou 'no8( a $eed5ac' mec!anism t!at acts to decentrali2e t!e net8or' i$ minin) 5ecomes centrali2ed( 5# c!an)in) proo$ o$ 8or' 8ould 5e a )reat 8a# to solve t!is pro5lem( not .ust t!is time 5ut $or t!e $uture. At t!e end o$ t!e da#( 1too 5i) to $ail3 !appens to an# or)ani2ation 8!et!er it9s a totalitarian s#stem or a democratic s#stem or meritocratic s#stem. All o$ t!ese s#stems )raduall# morp! to8ards centrali2ation( concentration o$ po8er( and 5asicall# t!e# need a reset ever# $e8 #ears. ; !ave no illusions t!at Bitcoin 8on9t also 5ecome more centrali2ed( 8it! t!e po8er more concentrated in $e8er !ands( unless it also )ets a reset ever# $e8 #ears in order to ad.ust to t!e ne8 realit#. +!at s!ould 5e a )oal not somet!in) to $ear. 2=:*K AL: %o #ou t!in' t!at t!at9s somet!in) t!e 8inds up 5ein) automated into t!e protocol itsel$( or is t!at somet!in) 8!ere( #ou 'no8( t!e devs at t!at t!e steerin) 8!eel at t!at particular time ma'e t!e .ud)ment call( sa# Eo'a#( 8ell it9s 5een $our #ears( it9s time to !ave a 5i) rec'onin) a)ainEF <ou 'no8( !o8 do #ou t!in' somet!in) li'e t!at can !appenF 2=:?* AA: 6ell t!e devs !ave s!o8n so $ar t!at t!eir inclination is to8ards creatin) mar'et 5ased $eed5ac' mec!anisms rat!er t!an ma'in) decrees 5# $iat( as #ou mi)!t sa#( and ma'in) decrees as to !o8 t!e al)orit!m s!ould 8or' and ; t!in' t!at $ollo8s t!e spirit o$ "atos!i( 8!ic! is 5e a5le to ma'e t!ese decisions 5# consensus. ;t 5ecomes a 5it more complicated 8!en t!e issue #ou9re tr#in) to resolve is t!e disen$ranc!isement o$ consensus itsel$( and t!at9s a 5it more tric'#( 5ut ; t!in' in t!e lon) term all 8e need to do is $ind sel$ 5alancin) solutions t!at 8or' t!rou)! $eed5ac'. +!at 8ould ma'e t!e currenc# muc! more ro5ust( so i$ #ou t!in' t!at innovation in Bitcoin !asn9t stopped 5ut is onl# 5e)innin)( ; don9t see 8!# 8e couldn9t do innovation in t!at particular area t!at also !onors t!e ori)inal incentive structures o$ "atos!i and ac!ieves t!e one CPC( one vote promise more e$$ectivel#. 2?:?2 AL: +!an's to %r. "tep!anie Murp!# and Andreas M. Antonopolous $or providin) content $or t!is episode. Please send all listener mail to Adam>Lets+al'Bitcoin.com( especiall# t!is time since

8e9re tr#in) somet!in) ver# ne8 !ere ;9d li'e as muc! $eed5ac' as possi5le( so c!ime in. +!an's $or listenin).

20.*: Coin.ar.io( and Andreas on Bloom5er)

AL: Hi( and 8elcome 5ac' to episode t8ent# o$ Let9s +al' BitcoinI( a t8ice 8ee'l# s!o8 e:plorin) t!e ideas( people( and pro.ects 5uildin) a ne8 di)ital econom# and t!e $uture o$ mone#. +8ent# episodes. +!at num5er came up $ast. +oda#9s an e:periment: one o$ t!e most common complaints 8e )et is t!at our s!o8 is too lon)( and some listeners 8ould rat!er !ave t!e a5ilit# to pic' and c!oose 8!at order t!e# listen to t!e s!o8 in. ;t9s also ver# intimidatin) $or ne8 users 8!o mi)!t 5e interested in a particular se)ment 5ut not in t!e !al$ !our discussion t!at came 5e$ore. Episode t8ent# 8ill 5e released a num5er o$ parts. <ou s!ould $ind a total o$ $our $iles. ;n 20.7( "tep!anie and Andreas s!are t!eir e:periences 8it! local5itcoins.com( an alternative to centrali2e e:c!an)es t!at9s not a)ainst t!e rules #et. ;n 20.2( t!e !osts !ave a lon) conversation a5out 8!at t!e point o$ minin) is and i$ t!e incentive mi)!t !ave 5ecome t!e end result( losin) si)!t o$ "atos!i9s vision. +!is is a must listen to se)ment( and cloc's in at a little under !al$ an !our. ;n 20.*( t!at9s 8!at #ou9re listenin) to no8( ; sit do8n 8it! As!er +en and /#an 4oe( 5etter 'no8n as 0!ou+on)( t8o o$ t!e $ounders 5e!ind coin.ar.io( a ne8 Australian Bitcoin e:c!an)e. At t!e end o$ t!is se)ment #ou can !ear Andreas on Bloom5er) 6est #esterda#. ;n 20.= Andreas tells us a5out t!e upcomin) Bitcoin ;mprovement Pro.ect Proposal num5er *2( 8!ic! proposes a ne8 t!ird t#pe o$ 8allet( a !ierarc!ical deterministic 8allet. "ounds tec!nical( and it is 5ut t!e concept is po8er$ul and it9s 8ort! #our time to tr# to understand t!e potential !ere. 6e appreciate #ou !an)in) 8it! us as 8e tr# t!ese ne8 t!in)s out. Please send all #our $eed5ac' to Adam>Lets+al'Bitcoin.com. En.o# m# intervie8 8it! As!er +an and /#an 4oe o$ Coin.ar.io $rom t!e team at letstal'5itcoin.com.

AL: 4oinin) me toda#( 8e9ve )ot As!er +an and /#an 4oe( t8o o$ t!e co $ounders 5e!ind Coin.ar.io( a recentl# released merc!ant plat$orm and e:c!an)e e:istin) in t!e Australian Bitcoin mar'et. As!er( !o8 did t!is come a5out 8!at 8as t!e process t!at too' #ou to 8!ere 8e are toda#F 2:7= A+: 6ell Adam( m# 5ac')round is EconomicsA ; used to 8or' as an economist $or close to $ive #earsA ; 8as 8or'in) on startup pro.ects on t!e side( and at a certain point ; said ; don9t reall# 8ant to !ave m# da# .o5 8ritin) a5out interest rates an# more( let9s start a start up. "o( ; $ound a 0!ou( m# tec!nical co $ounder( 8e started on a $e8 pro.ects( 8e 8ere accepted into an incu5ator pro)ram. +!e incu5ate told us 8e 8ould rat!er muc! #ou !ave a Bitcoin idea t!an #our social eatin) idea( 8!ic! 8as )reat 5ecause 8e 8ere reall# 5ullis! on Bitcoin( and ; 'ne8 e:actl# 8!o to call to .oin our Bitcoin pro.ect( 8!ic! 8as /#an. 2:=K

AL: "o /#an( #ou actuall# !ave some 5ac')round in t!is space. +!is is not t!e $irst e:c!an)e t!at #ou9ve 5een part. /0: Actuall#( ; $ounded Bitcoinica t8o #ears a)o. ;t 8as a mar)in tradin) plat$orm t!at allo8s people to trade 8it! more deposit t!an t!e# !ave( also it allo8s trader to s!ort sell. Cn$ortunatel#( a$ter ; sold Bitcoinica to a C" investor( a$ter t!e ne8 mana)ement 8ent on 5oard( t!e e:c!an)e 8as repeatedl# !ac'ed 5# securit# 5reac!es and t!at resulted in !u)e monetar# losses and currenc# deliHuidators 8or'in) on t!e issues ri)!t no8. *:2= AL: "o( ; 'no8 t!at t!ere9s still a little 5it o$ a))ression in t!e communities and some 5ad memories to8ards t!at $or people 8!o lost mone#. +!at9s somet!in) t!at m# understandin) is( t!at #ou !ave no control over at t!is point. ;s t!at ri)!tF *:*Q /0: <ea!( t!at9s ri)!t( 5ut it9s reall# un$ortunate t!at t!is 8!ole t!in) !appened 5ut( 8ell( ;9m startin) over in Coin.ar( and ; 8ant to still continue to contri5ute into t!e Bitcoin communit# 8it! m# e:periences. *:?= AL: "o tell me a5out Coin.ar. 6!at9s t!e plan $or t!e plat$orm( 8!at is it t!at #ou9re actuall# tr#in) to do 8it! t!isF =:00 /0: Currentl#( Coin.ar is a $ull service Bitcoin plat$orm( and 8e provide 8allets( and Bitcoin 5u#in) service( as 8ell as service $or merc!ants. "o Coin.ar is t!e 8allets( 8!ic! is !i)!l# inte)rated 8it! our ot!er parts o$ our plat$orm( and Coin.ar Biller is actuall# t!e $irst service in Australia t!at allo8s #ou to 5u# Bitcoin 8it! not ridiculous $ees( so 8e c!ar)e onl# t8o percent $or 5u#in) transactions and man# Australians reall# love t!is service( and Coin.ar C!ec'out is our merc!ant solution( 8!ic! is similar to BitPa#( and our merc!ants can use Coin.ar C!ec'out to inte)rate 8it! t!eir 8e5site( and )et settled in local currenc# ever# da#. =:=0 A+: <ea!. 6!en 8e started t!is( t!ere 8ere a lot o$ opportunistic pla#ers in t!e mar'et( and 8e didn9t $eel it 8as ri)!t( even t!ou)! 8e could pro5a5l# come in and c!ar)e muc! !i)!er $ees( t!ere 8as no real reason to c!ar)e Bitcoin ent!usiasts ei)!t percent to 5u# Bitcoin and 8e .ust t!ou)!t t!at 8as 8ron)( so our $irst move 8as to ma'e sure t!at 8e !ave a reall# )ood service $or Australians to !old Bitcoin and su5seHuentl# 8or'in) on merc!ant services as 8ell. ?:0Q AL: "o 8!at9s t!e primar# $ocus( ; mean are #ou tr#in) to 5e t!e 5i) pla#er in Australia !ere or is t!e $ocus more on usin) t!at as a launc!pad( min)lin) internationalF 6!at9s t!e planF

?:7G A+: <ea!( ; t!in' 8e do !ave international am5itionsA ri)!t no8 t!e sout!ern !emisp!ere( Australia reall# lac's a stron) pla#er( so ; t!in' i$ 8e can prove ourselves( t!at Mi$N 8e can do a reall# )ood .o5 $or t!e Australian mar'et( 8e 8on9t !ave an# pro5lems 5ranc!in) overseas. ?:*0 AL: Csuall# 8!en 8e tal' to people 8!o run e:c!an)es( t!e#9re not in incu5ators. At least in t!e Cnited "tates and in some parts o$ Europe( t!e idea o$ runnin) e:c!an)e is somet!in) t!at reHuires( #ou 'no8( li'e a le)al sta$$( and 5asicall# #ou !ave to 5e reall# proactive in compl#in) 8it! a 8!ole lot o$ re)ulations t!at deal 8it! mone# launderin) and online crime and t!in)s li'e t!at. ;s t!e situation di$$erent in Australia 5ecause( ; mean( it sounds li'e #ou )u#s are 'ind o$ .ust )ettin) started in and #ou9re loo'in) to ta'e overF ?:?G A+: 6e are still in t!e em5r#onic sta)e o$ $i)urin) out t!e direction o$ our compan#( and Australia as 8ell is Huite unsure o$ 8!at to do 8it! Bitcoin. ; mean( t!e ta: o$$ice !as come out to sa# t!at Bitcoin is no more anon#mous t!an p!#sical cas!( and it doesn9t raise ma.or issues t!at don9t currentl# e:ist. Bitcoin is still a di)ital commodit# in Australia and not #et classi$ied as a di)ital currenc#( or a currenc# per se( so 8e9re still e:empt $rom man# o$ t!e re)ulator# rulin)s t!at e:ist to in America and ot!er countries. G:2G AL: "o /#an( t!e t!in) t!at 8as interestin) a5out t!e Bitcoinica( li'e #ou said it applied levera)e in a 8a# or it allo8ed traders to appl# levera)e in a 8a# t!at 8asn9t reall# possi5le 8it! an# ot!er plat$orm( and to m# 'no8led)e( still is impossi5le 8it! an# ot!er plat$orm. 6!# is it t!at #ou 8ere a5le to do t!at 8!en it9s 5een so di$$icult $or ever#5od# elseF G:=2 /0: 6ell( Bitcoinica actuall# adopted a reall# uniHue model t!at is t!e mar'et ma'er model( 5ecause $or ever# ne8 e:c!an)e t!ere is al8a#s a c!ic'en and e)) pro5lem: 5u#ers 8ill onl# )o t!ere i$ t!e# !ave a lot o$ sellers and sellers( and sellers 8ill onl# )o t!ere i$ t!ere are a lot o$ 5u#ers. +!is is a pro5lem 8it! ever# ne8 e:c!an)e( and Bitcoinica 'ind o$ stopped t!is pro5lem 5# providin) )uaranteed liHuidit# 5# ta'in) t!e spread out o$ t!e current mar'et price at Mt Jo:( and t!en providin) liHuidit# to 5u#ers and sellers so t!at t!e# can start tradin). Also( t!e mar)in tradin) plat$orm 8as inspired 5# a lot o$ t!e $orei)n e:c!an)e tradin) plat$orms t!at ; !ave e:perience in( actuall# it9s reall# similar to ot!er Bore: 5ro'ers. Q:2? AL: ; )uess t!e t!in) t!at9s con$usin) to me is #ou !ad a lot o$ success 8it! t!at( and t!ere9ve 5een so man# mar'ets t!at !ave come out( so man# e:c!an)es t!at !ave come out since Bitcoinica 8ent a8a#( t!at !aven9t reall# 5een a5le to )et muc! traction( surel# t!e# mi)!t !ave 5een a5le to scrape a percenta)e or t8o o$$ o$ Jo:( 5ut it9s not reall# an#t!in) su5stantial and

t!is is somet!in) t!at over and over a)ain( people are sa#in) #ou 'no8 t!is is somet!in) t!at 8ould ma'e $or a more mature mar'et( t!is is somet!in) t!at t!e mar'et needs or at least a lot o$ pla#ers t!in' t!at t!e mar'et needs. %o #ou t!in' t!at t!ere9s )oin) to 5e a pla#er t!at comes 5ac' and does somet!in) li'e t!at( is t!at somet!in) t!at Coin.ar.io is loo'in) to )et into( or are #ou )u#s ta'in) a more traditional e:c!an)e and merc!ant services approac!F Q:?L /0: Currentl#( 8e don9t reall# 8ant to e:pand our services into t!e mar)in tradin) territor#( so $or no8 8e .ust $ocus on simple 5u#in) and sellin)A 5u#in) $or consumers and sellin) $or merc!ants( and as a service plat$orm 8e .ust 8ant to $acilitate Bitcoin transactions rat!er t!an speculation. K:7G A+: Earl# on( /#an told me t!e success o$ Bitcoinica !ad to do 8it! t8o main t!in)s: one 8as desi)n and usa5ilit#( so a lot o$ t!at9s lac'in) at a lot o$ ot!er Bitcoin plat$orms at t!e moment( and t!e ot!er one 8as service 5ecause /#an 8as al8a#s on t!e 5itcointal' $orums tr#in) to !elp users solve user issues. ; t!in' t!ose t8o 'e# t!in)s !elp Bitcoinica succeed. K:*K AL: "o 8it! Coin.ar.io( 8!at do #ou see as t!e potential $or t!e Australian mar'et !ereF %o #ou t!in' t!at t!is is somet!in) t!at could reall# enter 8ide adoptionA !ave #ou participated in an# MeetCp )roups( or do #ou 'no8 o$ ; mean( is t!ere a scene $or start ups t!ere t!at are $ocused on t!e Bitcoin spaceF K:?= A+: Dot so muc! $or startups. /i)!t no8 in Australia( prett# muc! ever# ma.or cit# !as a Bitcoin MeetCp( ; !ost Mel5ourne9s Bitcoin MeetCp and it9s co sponsored 5# Coin.ar and an international Bitcoin compan# 8!ic! 8e9re still $inali2in) t!e details( 5ut 8e9re e:pectin) close to $i$t# people at our ne:t MeetCp so( lots o$ interest in Bitcoin. A5out a mont! a)o 8e also traveled do8n to "in)apore $or a con$erence and a Hac'at!on. +!e main reason 8e attended t!is Hac'at!on 8as 8e $ound out t!at t!e development 5an' o$ "in)apore( %B" Ban' 8ould 5e t!ere. "o 8e 8ent to reall# pitc! to t!e innovation team and )au)e interest in t!e Asia Paci$ic( "in)apore mar'et to see i$ Bitcoin 8as $easi5le c!oice $or t!em. "o 8e 8ent in t!e 8it! a point o$ sale terminal t!at 8e made overni)!t( s!o8ed it to t!em and t!e# 8ere Huite 'een( 5ut at t!e same time( ; don9t t!in' t!e# too' us Huite seriousl# in terms o$ Bitcoin and P2P pa#ments. +!e# did a)ree t!at t!ere9s a lot o$ people unserviced 5# current 5an'in) mar'ets 5ut( at t!e same time( ; t!in' t!e#9re .ust a 5it complacent and don9t reall# see t!e disruptive $orce o$ Bitcoin. 70:0? AL: %o #ou t!in' it9s t!at t!e# don9t see t!e destructive $orce or do #ou t!in' t!at t!ere9s not reall# muc! in it $or t!emF ; mean( 5ecause t!e people 8!o aren9t serviced 5# t!e 5an'in)

s#stem aren9t serviced 5# t!e 5an'in) s#stem 5ecause t!e#9re not pro$ita5le( and so i$ it9s not pro$ita5le t!an t!ere9s no reason to do it. %o #ou t!in' t!at t!e# .ust don9t )et it( t!e# loo' at t!is and t!e# don9t see t!e potential( or t!at it9s somet!in) elseF 70:2= A+: 6ell ; t!in' 5an's !ave .ust 5ecome complacent( especiall# in a place li'e "in)apore 8!ere a 5an'in) monopol# is eas# 5ecause o$ a small population. 70:** /0: +!e 5an' is not too muc! interested in P2P pa#ments mostl# 5ecause it ma# not 5e pro$ita5le $or t!em in t!e $utureA most 5an's are Huite !app# 5ein) a monopol# in $inancial services and ma'e a lot o$ mone# $rom t!e mone# creation process( 5ut Bitcoin actuall# prevents t!at $rom !appenin). Bitcoin 5elon)s to t!e people and t!ere9s no central 5an's in Bitcoin( so ever#t!in) 5ecomes ver# competitive 5ecause t!e 5arriers o$ entr# 5ecomes so lo8 in t!e Bitcoin econom#( t!e 5an's ma# not !ave a 5i) role in t!is 'ind o$ t!in)s i$ it 5ecomes t!e $uture. 77:0Q A+: <ea!( t!e 5an's ma# not reall# 8ant to )et t!e concept 5ecause t!at9s e:actl# 8!at t!e# are not tr#in) to do. 77:7G AL: Bor our Australian listeners( i$ t!e#9d li'e to )et in touc! 8it! #ou( do 5usiness 8it! #ou( 8!at !ave #ou( it9s Coin.ar.io. 77:27 /0: <ea!( t!at9s correct. 77:2= AL: /#an( As!er( t!e# ver# muc! $or 5ein) on t!e s!o8. 77:*0 Advertisement: Let9s +al' BitcoinI is !eard eac! 8ee' 5# t!ousands o$ people 8!o are participatin) in t!e ne8 di)ital econom#. -ur listener 5ase o$ Bitcoin o8ners( miners( investors( tec!nolo)ists( and merc!ants is )ro8in) $ast. 6e o$$er a limited num5er o$ s!ort advertisin) slots in eac! s!o8 to 'eep our listeners en)a)ed and to provide ma:imum impact our sponsors. ;$ #ou9d li'e to tal' to us a5out Let9s +al' Bitcoin( send us an email at sponsors>Lets+al'Bitcoin.com. 77:?Q

Advertisement: ;$ ; s!o8ed #ou a 8e5site 8!ere #ou could easil# purc!ase electronics $rom t!e 8orld9s lar)est distri5utor 8it! Bitcoins at 2ero percent mar'up( 8ould #ou t!in' it 8as too )ood to 5e trueF Jood ne8s: it9s real( and it9s at Bitcoin"tore.com. C!oose $rom !al$ a million items( save mone# over Ama2on and De8e))( and convert #our Bitcoins to real 8orld items. <ou can even 5u# 8it! privac#A all t!e# need is a s!ippin) address. But don9t ta'e m# 8ord $or it( see $or #oursel$ at Bitcoin"tore.com. 72:*7 Emil#: Cameron and +#ler 6in'levoss( t!e t8ins 5est 'no8n $or t!eir role in t!e !istor# o$ Bace5oo'( are loo'in) to create t!e $irst pu5licl# traded $und $or Bitcoin. An entit# called t!e 6in'levoss Bitcoin +rust !as $iled $or an ;nitial Pu5lic -$$erin) o$ one million s!ares to raise up to t8ent# million dollars in capital. Bor more ; 8ant to 5rin) on m# partner and our editor at lar)e( Cor# 4o!nson. Cor#F 72:?= Cor#: <ea! Emil#( alon) 8it! t!e di)ital currenc# plan t!is is 5ein) met 8it! lots o$ s'epticism( .ust t!e E+B alone. ;9m .oined ri)!t no8 5# Andreas Antonopoulos 8!o9s t!e co !ost o$ Let9s +al' BitcoinI( t!e s!o8 a5out t!e ne8 econom#( t!e $uture o$ mone#. Andreas( t!is notion o$ an E+B t!at9ll trade an amal)amated value o$ t8ent# million dollars 8ort! o$ Bitcoins( !o8 is t!at seen in t!e Bitcoin communit#F 7*:20 AA: ; t!in' it9s seen as )ood ne8s. ;t9s )oin) to 5rin) some volatilit#( it9s )oin) to 5rin) some mainstream vie8s and perspectives and some mainstream investors. 7*:2Q Cor#: And t8ent# million 5uc's( at least. 7*:2L AA: 6ell #es( ; mean compared to t!e 7.? 5illion dollar total mar'et si2e it9s small( 5ut at t!e same time( $or dail# volume t!at9s )reat. 7*:*Q Cor#: Are t!ere certain t!e 8a# it9s )oin) to 8or' i$ t!is 8or's at all is t!e#9re )oin) to tr# to raise t8ent# million 5uc's and t!en )o out and acHuire ; )uess Bitcoins t!emselves and so t!e#9ll 'ind o$ trac' it li'e a currenc# almost( 5ut ; )uess t!e di$$erence is( amon) ot!er t!in)s 8it! t!is( #ou9ll no8 5e a5le to s!ort. Bor all o$ t!ose Bitcoin !aters out t!ere 8!o t!in' t!is tec!nolo)# and t!is currenc# is a .o'e( t!e# can actuall# )o s!ort t!e E+B. 7=:0* AA: A5solutel#. ;t9s an inde: $und so t!e# sa# t!e# alread# !ave one percent o$ t!e Bitcoins t!at are in t!e mar'ets( t!e 6in'levoss t8ins( so t!ere$ore presuma5l# t!e# alread# !ave t!e 5asis

to capitali2e t!is $rom t!e Bitcoin perspective( and as an inde: $und it9s )oin) to 5e )reat 5ecause t!e# can support t!e 5ulls and t!e 5ears. Cor#: ;t 8asn9t clear $rom t!e $ilin) and ma#5e #ou 'no8 more t!an ;( 5ut it 8asn9t clear $rom t!e $ilin) t!at t!e# 8ere )oin) to ta'e t!e mone# raised and sell t!eir o8n Bitcoins to t!e E+BA could t!e actuall# )o in t!e mar'etplace and 5u# t!em( 8ould t!ere 5e a price di$$erence at allF 7=:*2 AA: At t!e moment it9s pro5a5l# tradin) a 5it !i)!er t!an 8!en t!e# ori)inall# 5ou)!t t!eir o8n Bitcoin( so t!e# 8ould pro5a5l# ma'e a loss i$ t!e# did it t!at 8a#( 5ut it9s not clear $rom t!e $ilin). 7=:=* Cor#: 6!at are t!e ta: advanta)es to o8nin) Bitcoin as opposed to o8nin) currenc#( and 8ould t!at c!an)e 8it! an E+BF ;$ #ou9re !oldin) an E+B( #ou 8ill 5e $ull# ta:ed on t!in)s and capital appreciation so on. Are #ou in Bitcoin as 8ellF 7=:?K AA: <es( a5solutel#. ;9m in Bitcoin( and ;9m ta:ed on Bitcoin .ust as ; am on sterlin)( or Euro( or an# ot!er $orei)n currenc#. <ou 'no8( i$ ; 'eep it lon) term( lon) term capital )ains 7?:0G Cor#: "o t!ere9s no real ta: advanta)e or di$$erence 8it! t!is t!in). 7?:70 AA: Do( no( it9s treated .ust li'e a currenc#( t!e ;/" considers it essentiall# capital )ains i$ #ou trade it( income i$ #ou9re actuall# creatin) Bitcoins t!rou)! minin)( 5ut ot!er t!an t!at( capital )ains. Cor#: 6it!in t!e "7 $ilin) $or t!is ne8 t!in)( one o$ man# ris's $actors t!at ; t!ou)!t reall# )ot to t!e cru: o$ it( 8!ic! sa#s essentiall# t!at until Bitcoins is accepted 5# retailers or is used in commerce more it is purel# speculative tool( t!ere$ore su$$erers e:cessitudes o$ tradin) and t!e volatilit# o$ t!at as 8ell. 6it!in t!e Bitcoin communit#( is t!ere a 5elie$ t!at t!ere needs to 5e a pus! to actuall# use t!ese in commerce moreF AA: A5solutel#. ; t!in' in $act it is usin) commerce Huite a lot( #ou 'no8( t!ere are alread# t!ousands o$ retailers 8!o accept it( and $or t!e avera)e retailer( it presents some 5i) opportunities Cor#: A t!ousand retailers is not a lot AA: ;t9s small( it9s tin#( #es Cor#: ; can9t t!in' o$ a sin)le place ;9ve 5een t!at accepts Bitcoin as pa#ment.

7G:0* AA: +!ere9s a $e8 !ere in "an Brancisco( t!e# )ain t!e advanta)e o$ essentiall# non reversi5le transactions and ver# lo8 cost $or t!e pa#ments( so #ou 'no8( $rom t!at perspective it !as a lot o$ advanta)es over traditional pa#ment s#stems and merc!ants love it. 7G:7? Cor#: ;nterestin) stu$$. Alri)!t( Andreas Antonopoulos( t!an' #ou ver# muc! to t!e co !ost o$ Let9s +al' BitcoinI ; appreciate #ou tal'in) Bitcoin 8it! us. 7G:27 AA: +!an' #ou so muc!. 7G:*2 AL: +!an's to As!er +an and /#an 0!ou $or providin) content $or t!is se)ment. Please send all listener mail to Adam>Lets+al'Bitcoin.com especiall# t!is time 5ecause 8e9re tr#in) somet!in) ver# ne8 !ere( ;9d li'e as muc! $eed5ac' as possi5le so c!ime in. +!an's $or listenin).

20.=: Cnderstandin) Hierarc!ical %eterministic 6allets

AL: Hi( and 8elcome 5ac' to episode t8ent# o$ Let9s +al' BitcoinI( a t8ice 8ee'l# s!o8 e:plorin) t!e ideas( people( and pro.ects 5uildin) a ne8 di)ital econom# and t!e $uture o$ mone#. +8ent# episodes. +!at num5er came up $ast. +oda#9s an e:periment: one o$ t!e most common complaints 8e )et is t!at our s!o8 is too lon) and some listeners 8ould rat!er !ave t!e a5ilit# to pic' and c!oose 8!at order t!e# listen to t!e s!o8 in. ;t9s also ver# intimidatin) $or ne8 users 8!o mi)!t 5e interested in a particular se)ment( 5ut not in t!e !al$ !our discussion t!at came 5e$ore. Episode t8ent# 8ill 5e released a num5er o$ parts. <ou s!ould $ind a total o$ $our $iles. ;n 20.7( "tep!anie and Andreas s!are t!eir e:periences 8it! local5itcoins.com( an alternative to centrali2ed e:c!an)es t!at9s not a)ainst t!e rules. ;n 20.2 t!e !osts !ave a lon) conversation a5out 8!at t!e point o$ minin) is and i$ t!e incentive mi)!t !ave 5ecome t!e end result( losin) si)!t o$ "atos!i9s vision. +!is is a must listen to se)ment( and cloc's in at a little under !al$ an !our. ;n 20.*( ; sit do8n 8it! As!er +en and /#an 0!ou( 5etter 'no8n as 0!ou+on)( t8o o$ t!e $ounders 5e!ind coin.ar.io( a ne8 Australian Bitcoin e:c!an)e. At t!e end o$ t!is se)ment( #ou can !ear Andreas on Bloom5er) 6est #esterda#. ;n 20.=( t!at9s 8!at #ou9re listenin) to no8( Andreas tells us a5out t!e upcomin) Bitcoin ;mprovement Pro.ect Proposal num5er *2( 8!ic! proposes a ne8 t!ird t#pe o$ 8allet( a !ierarc!ical deterministic 8allet. "ounds tec!nical( and it is( 5ut t!e concept is po8er$ul and it9s 8ort! #our time to tr# to understand t!e potential !ere. 6e appreciate #ou !an)in) 8it! us as 8e tr# t!ese ne8 t!in)s out. Please send all #our $eed5ac' to Adam>Lets+al'Bitcoin.com. En.o# Hierarc!ical %eterministic 6allets: +!e "eed t!at Becomes t!e Mi)!t# -a'( $rom t!e team at Lets+al'Bitcoin.com 7:?? AA: ;9m ver# interested in a ne8 standard( called !ierarc!ical deterministic 8allets( de$ined in Bitcoin ;mprovement Proposal *2. "o B;P *2 is a standard $or creatin) 8allets in a tree structure t!at can 5e derived $rom a root 'e#. +!is is 5ased on an ori)inal conversation and su))estion 5# Jre) Ma:8ell 8!o9s one o$ t!e core developers( 8!o is reall# a )enius 8it! cr#pto)rap!# and !as t!ese incredi5l# innovative ideas around 'e# mana)ement. Pieter 6uille developed t!at into a $ull proposal and it9s also 5een implemented 5# +ams Blummer in t!e 5its o$ proo$ implementation o$ t!e Bitcoin enterprise server( as 8ell as man# ot!er places. ;9m currentl# 8ritin) an implementation 5ased around t!at. ;9d li'e to tal' a 5it a5out t!e topic. "o 8!at are !ierarc!ical deterministic 8alletsF +#pe 7 8allets( as 8e 'no8 t!em toda#( are 8allets 8!ere t!e private 'e# is derived $rom a random num5er. +!e# allo8 #ou to )enerate a completel# ne8 private pu5lic 'e# pair 8!enever #ou 8ant. +!e pro5lem 8it! t!at is t!at #ou !ave to 5ac'up eac! 8allet individuall# 5ecause t!ere9s no 8a# to recreate t!at private 'e#( it9s 5ased on a random num5er. +#pe 2 8allets are t!e t#pe 8e see in t!e ori)inal implementation in Electrum 8!ere #ou !ave a seed( and t!at seed )enerates not .ust t!e $irst 8allet 5ut 8allets a$ter t!at in a seHuence( so essentiall# all t!e 8allets t!at are )enerated derive $rom t!at ori)inal seed( and #ou can t!en re)enerate t!em and t!at 8or's ver# 8ell as a 5ac'up process. "o ta'in) t!at one step $urt!er( B;P *2 allo8s #ou to !ave a +#pe 2 8allet t!at actuall# !as structure in it( so #ou still !ave a master seed( 5ut t!en #ou can develop su5 8allets to t!at and $or eac! su5 8allet #ou can !ave su5 accounts( and su5 8allets and su5 8allets( 5ut 5asicall#

it9s a tree structure. <ou !ave( at t!e root( a master 'e#( and t!en #ou can derive all t!e c!ildren underneat! t!at and $rom eac! o$ t!e c!ildren #ou can derive more c!ildren. +!e nice t!in) a5out t!is is t!at #ou can s!are an# part o$ t!e tree( so $or e:ample( ; could )ive one o$ t!e su5 trees ; could )ive t!e private 'e#s or pu5lic 'e#s to someone else and t!e# could t!en )enerate 5ranc!es $urt!er do8n t!at tree( $or e:ample( in order to do one 'e# per transaction( or i$ t!e# could use it to monitor some o$ t!ose 'e#s( $or e:ample to do accountin) or transaction countin). ;$ #ou !ave an or)ani2ation( it 8ould allo8 #ou to do departmental spendin)( etc. "o it9s a ver# interestin) protocol. 6!at do #ou )u#s t!in'F =:2L "M: ; 8as )onna sa#( 8ould t!at mean t!e#9re adoptin) #our )randc!ildren or somet!in)F =:** AA: <es( a5solutel#( so it reall# does !ave t!at 'ind o$ structure. <ou can t!in' o$ t!e master 'e# as t!e ancestor and t!en #ou can create descendants( and t!en #ou can essentiall# assi)n di$$erent $amilies o$ 'e#s $or di$$erent uses. =:=L "M: <ea!( ;9m )lad #ou mentioned t!e uses $or 5usiness accountin). ; mean( t!at sounds super use$ul to me and it9s )reat to !ave t!e more concrete idea o$ li'e 8!at t!is could 5e used $or( 5ut ; ima)ine t!ere9s lots o$ ot!er uses 5esides .ust in 5usiness it could even 5e used to mana)e li'e a !ouse!old 5ud)et or somet!in) li'e t!at. ?:0Q AA: +!is is not .ust $or 5usiness and #ou don9t need a !ierarc!ical structure. Let me )ive #ou one speci$ic e:ample: let9s sa# #ou !ave a 8e5 server t!at9s doin) content moneti2ation( and #ou 8ant to 5e a5le to )enerate lots and lots and lots o$ 'e#s( essentiall# once per transaction or one per pa)e. 4ust li'e #ou can do t!at 8it! a master pu5lic in Electrum( in a !ierarc!ical deterministic 8allet 8!at #ou can do is ta'e a 5ranc!( s!are t!e pu5lic 'e# t!at9s t!e !ead o$ t!at 5ranc!( and t!en( $rom t!at( derive millions( 5illions 2.7 5illion 'e#s in $act( t!at are all derived $rom t!at master pu5lic 'e#( 5ut t!en #ou can also unloc' an# o$ t!ose 8allets 8it! a private 'e# t!at never touc!es t!at server( so t!at 8a#( #ou can !ave essentiall# a completel# untrusted server )eneratin) pu5lic 'e#s 8it!out an# 'no8led)e o$ t!e underl#in) private 'e# t!at can unloc' all t!ose transactions. +!at9s a )reat use case. G:0? Announcement: Let9s +al' BitcoinI is !eard eac! 8ee' 5# t!ousands o$ people 8!o are participatin) in t!e ne8 di)ital econom#. -ur listener 5ase o$ Bitcoin o8ners( miners( investors( tec!nolo)ists( and merc!ants is )ro8in) $ast. 6e o$$er a limited num5er o$ s!ort advertisin) slots in eac! s!o8 to 'eep our listeners en)a)ed and to provide ma:imum impact $or our sponsors. ;$ #ou9d li'e to tal' to us a5out Let9s +al' Bitcoin( send us an email at sponsors>Lets+al'Bitcoin.com.

G:** Advertisement: ;$ ; s!o8ed #ou a 8e5site 8!ere #ou could easil# purc!ase electronics $rom t!e 8orld9s lar)est distri5utor 8it! Bitcoins at 2ero percent mar'up( 8ould #ou t!in' it 8as too )ood to 5e trueF Jood ne8s: it9s real( and it9s at Bitcoin"tore.com. C!oose $rom !al$ a million items( save mone# over Ama2on and De8e))( and convert #our Bitcoins to real 8orld items. <ou can even 5u# 8it! privac#A all t!e# need is a s!ippin) address. But don9t ta'e m# 8ord $or it( see $or #oursel$ at Bitcoin"tore.com. Q:0Q AA: Anot!er use case is #ou )ive t!e pu5lic 'e# to someone 8!o9s doin) audits( and t!e# can see all o$ t!e transactions o$ all o$ t!e su5 tree( 5ut t!e# can9t unloc' an# o$ t!em. "o it )ives #ou t!is enormous $le:i5ilit# to s!are parts o$ a 'e# structure( and s!are eit!er t!e pu5lic or t!e private side( and t!en derive an in$inite num5er o$ su5 levels( or near in$inite num5er o$ su5 levels( ver#( ver# Huic'l#. ;t !as a lot o$ usesA ;9m plannin) on usin) it( $or e:ample( $or doin) paper 8allets t!at are all derived o$$ one master 'e#( so t!at #ou can not onl# store t!em individuall# 5ut #ou could also recover an# o$ t!e paper 8allets deterministicall#. Q:=L "M: "o !o8 do 8e )et oneF ; 8ant one. Q:?2 AA: "o it9s still a standard in development( it9s dra$t( 5ut !ere9s 8!at9s interestin): in t!e last development announcement t!at Javin did( 8!ic! 8as t!e development announcement num5er = 8!ere !e tal's a5out version 0.K*( one o$ t!e t!in)s !e said is t!at !is plans include( 5# 0.L( t!e implementation o$ !ierarc!ical deterministic 8allets. ;9m not sure i$ !e9s endorsin) B;P *2 at t!is point( 5ut certainl# t!ere9s enou)! momentum 5e!ind it( t!ere9s alread# t!ree or $our implementations t!at 8or' ver#( ver# 8ell( and so ; t!in' t!is is )oin) to 5e movin) $or8ard Huite $ast. K:2? AL: +!is mi)!t 5e totall# 8ron) 8!en #ou tal' a5out t!e seed t!at #ou used to )enerate t!is !ierarc!# o$ 8allets 5asicall#( is t!eir an# sort o$ connection 5et8een t!at seed and t!e 5rain 8allet conceptF AA: "o a 5rain 8allet is 8!en #ou )enerate a sin)le 'e# o$$ a seed t!at9s !uman memora5le( so $or e:ample a passp!rase. +!eoreticall#( #ou could use a 5rain passp!rase as t!e root $or !ierarc!ical deterministic 8allets. ; 8ould consider t!at a potential securit# ris'( 5ecause i$ #ou are a5le to unloc' t!at master 'e#( #ou unloc' t!e entire trees( so t!at9s a ver# 5ad t!in)( and 5rin) 8allets !ave t!e distinct disadvanta)e t!at include !uman patterns( and i$ it9s memora5le( it9s 5rute $orcea5le. "o ; )enerall# consider 5rain 8allets to 5e e:tremel# insecure ot!er t!an $or ver# sop!isticated users 8!o can )enerate !i)! entrop# passp!rases and not $or)et t!em. Bor t!e purpose o$ !ierarc!ical deterministic 8allets( usuall# #ou start 8it! a random num5er

)enerator and t!en #ou appl# some 'ind o$ passp!rase usin) a !ard to 5rute $orce al)orit!m li'e scr#pt. +!at9s t!e implementation ;9ve seen so $ar( 5ut )enerall# #ou start 8it! a random num5er. 6!at #ou 8ould do is #ou 8ould onl# need to 'eep a ver# stron) 5ac'up o$ t!at master 'e#( and t!e ever#t!in) else $rom t!at level 5elo8 could 5e derived al)orit!micall#. ;t ma'es 5ac'up a lot easier( 5ut it also creates more ris' on t!at sin)le 'e#( so #ou !ave to 5alance it ver# care$ull#. L:?Q AL: -nce t!is ma'es it past t!e standards process and t!e decision ma'in)( 8!at t#pe o$ so$t8are is needed to ena5le t!isF ;s t!is somet!in) t!at 8ill need to 5e 5uilt into 8allets( or 8ill t!ere need to 5e a speci$ic application t!at is .ust a5out !ierarc!ical deterministic addresses or 8!at9s t!e( 8!at do #ou t!in' t!e process is )oin) to 5eF AA: ;t9s pro5a5l# )oin) to 5e 5uilt into 8allets and ot!er applications( so $or e:ample( i$ it9s 5uilt into 5itcoind and 5itcoin Ht( t!en #ou 8ould 5e a5le to )et somet!in) ver# similar to 8!at #ou can do 8it! Electrum toda#( 8!ic! is !ave some 'ind o$ recover# seed t!at #ou can store( and t!en #ou can recover all o$ #our 'e#s in t!e case o$ loss. "o #ou could lose #our entire 8allet( #ou 8ouldn9t need to necessaril# encr#pt #our 8allet on t!e device( 5ecause #ou could #ou could store t!e master 'e# o$$line and in #our 8allet onl# !ave pu5lic 'e#s. "o as a result( #ou can derive pa#ment 'e#s( 5ut #ou can9t actuall# send an# transactions( so t!ere9s all 'inds o$ nice #ou can do. ; t!in' #ou9d see it $irst in 8allets( t!en #ou9d see it as part o$ online in$rastructure( and t!en $inall# #ou9d see it in more comple: services. 77:00 AL: +!an's to Andreas M. Antonopolous and %r. "tep!anie Murp!# $or providin) content $or t!is se)ment. Please send all listener $eed5ac' to Adam>Lets+al'Bitcoin.com. Especiall# t!is time since 8e9re tr#in) somet!in) ver# ne8 !ere( ;9d li'e as muc! $eed5ac' as possi5le( so c!ime in. +!an's $or listenin).