Transcription of Episode 56 - Progress & the Pay Protocol

Participants: Adam B. Levine (A.L.) Host Andreas M. Antonopoulos (A.A.) Co-host Stephan Murph (S.M.) Co-host

Adam B. Levine: Hi! and "elcome to episode #$ o% Let&s 'al( Bitcoin! a t"ice"ee(l sho" a)out the ideas! people! and pro*ects )uildin+ the di+ital econom and the %uture o% mone . ,isit us at letstal()itcoin.com %or our dail +uest )lo+! past episodes and o% course! tippin+ addresses. M name is Adam B. Levine and toda "e&re %inishin+ -... /n episode ## o% Let&s 'al( Bitcoin "e +ot throu+h di+estin+ the %irst hal% o% the ma*or upcomin+ Bitcoin -.. update. 'oda ! "e (ic( ri+ht )ac( in! tal(in+ ne"! smarter minin+ %ees! and then +ettin+ in to the meat topic and ma*or upcomin+ chan+e +enericall called 'he Pa ment Protocol. Are ou one o% the 0nearl all o% us1 that %inds alphanumeric )itcoin addresses reall di%%icult to use! much less remem)er2 'hat&s one o% the pro)lems the Pa ment Protocol aims to %i3! and it&s a prett )i+ deal. 'his discussion 45A and e3planation occupies most o% toda &s sho". 6&m *oined %or the topic ) Stephanie Murph and Andreas M. Antonopoulos. /n /cto)er #th! in the "a(e o% the Sil( 7oad arrest! 6 spo(e "ith the Cr ptocurrenc Con%erence a)out the maturation o% Bitcoin as 6 see it - "h the thin+s that used to mean ever thin+ hardl matter at all an more! and "here "e +o %rom here. 8rappin+ up the episode! 69ve )een thin(in+ a lot a)out some o% the memes surroundin+ the 7ipple pro*ect and ho" it compares to Bitcoin! and in a L'B %irst! 6 tell ou "hat 6 thin( "ithout an +uests or co-hosts. Am 6 comin+ out o% m shell2 :id "e *ust onl have %ort -minute lon+ intervie"s and not enou+h time to do an o% them *ustice2 7eall ! "ho can (no"2 ;ither "a ! en*o 'he Pro)lem o% 7ipple 5 'he Lia)ilities o% Le+itimac . -But %irst! Bitcoin -.. is loo(in+ li(e a )east. Let&s %inish %i+urin+ out "hat all o% it means.

-So the %inal part o% this )lo+ post on -..: smarter transaction %ees! a+ain! <uotin+ %rom the )lo+ post! 0toda ! the transaction %ees are hardcoded into the

Bitcoin4'=Bitcoind "allet so%t"are and the rules surroundin+ those %ees are a collection o% heuristics that evolved over the last %our ears. 6n short! the current %ee-handlin+ code is a complicated mess that "ill stop "or(in+ as soon as transaction dou)les a couple o% more times. 6n theor ! it should )e simple. 'ransaction %ees should )e set ) +ive or ta(e )et"een people creatin+ transactions! "ho "ant to pa as little as possi)le! and people validatin+ and storin+ transactions - miners! "ho "ould li(e to )e re"arded "ith hi+her %ees. And the code that miners are usin+ toda to select transactions is simple: 'he %ill their )loc(s "ith the hi+hest %ee=(ilo) te transactions and hi+hest priorit transactions i% the choose to set aside some space in their )loc(s %or %ree transactions.1 >-?:@-A

Andreas M. Antonopoulos: Brom the earl da s o% Bitcoin! 6 thin( the vision "as al"a s to ma(e the transaction %ees a mar(et! an e%%icient mar(et "here the price o% the transaction is set to e<uili)rium )et"een suppl and demand. Suppl )ein+ the miners and demand )ein+ the end-users o% transactions. ;%%ectivel ! ou "ould have e<uili)rium at the )est price possi)le on the net"or( at an time! and ou can ma(e choices: ou pa more! ou +o %aster or ou pa less! ou +et a slo"er transaction time. 'hat "as the vision. Cn%ortunatel ! it hasn&t et materialiDed! )ut is a reall +ood step in that direction. Here&s the pro)lem "ith the mar(et d namic ri+ht no": even thou+h miners are settin+ a price implicitl ! ) choosin+ "hich transactions the put into a )loc(! there&s no simple "a %or that price to )e communicated )ac( to the mar(et! so the pro)lem here is price si+nalin+. 6t&s havin+ a "a to communicate that mar(et price )ac( to the client so the client can ma(e intelli+ent! heuristic decisions a)out "hat to pa %or the ne3t transaction in order to achieve a speci%ic time +oal. Bor instance! 6 have a transaction o% E-F. Ho" much do 6 need to pa toda to +et that transaction veri%ied in three )loc(s ) miners2 'hat&s the (ind o% <uestion a client is as(in+. >-G:#GA

Stephanie Murph : 'hat ma(es sense! )ut can "e +o )ac( %or a second2 6&m "onderin+ ho" a miner HdecidesH "hich transactions to include - li(e! ho" does that "or(2 >-@:-GA

AA: At the moment! the use the 0+reed al+orithm!1 "hich is! the loo( at all the transactions that are availa)le! the sort them ) the num)er o% %ees! and the ta(e the ones that have the hi+hest %ees=(ilo) te. Iou normaliDe it on the side o% transactions and then ou put those %irst until ou&ve +ot a )loc( that&s %ull! or %ull enou+h o% "hat ou "ant to achieve! and then ou post that )loc(. -So! at the moment! it&s )asicall hi+hest price transaction %irst or hi+hest %ee=(ilo) te transactions +o in %irst. >-@:G?A

SM: -So that&s an automated process! and "here does that process happen2 6n a minin+ pool2 >-@:G$A

AA: Ies! it happens in the minin+ so%t"are. ;ach time ou are minin+ %or somethin+! the %irst thin+ ou do is ou create a ne" )loc(! stic( all the transactions in! and then ou tr to %ind proo%-or-"or( a+ainst that ne" )loc(. -And ou do that ever time ou are tr in+ to %ind a )loc(. 'hat decision happens in )uildin+ that ne" )loc( to %ind the proo%-o%-"or( and it&s part o% the minin+ so%t"are. >-@:#JA

SM: 'han(s %or clearin+ that up. >-@:#.A AA: -So miners are reall alread settin+ the price. 'he &re settin+ the price ) ma(in+ a choice! and that choice e%%ectivel is the decision o% "hat transactions to include in the )loc( )ased on the %ees that are in those transactions. Ko"! the <uestion is ho" does the client tr to predict "hat&s +oin+ to happen there. -And this is the development that has )een done in this particular case! 6 thin(. Lavin has )een "ritin+ essentiall code that uses in%ormation %rom previousl mined )loc(s to tr to decide "hat the level o% %ees in the net"or( is ri+ht no" and to create transactions "ith the least %ees ou can pa and +et a"a "ith in the con%irmation time ou "ant. -And to do that! "hat Lavin is doin+ is he is usin+ a historical anal sis o% transactions in the several past )loc(s! then ta(in+ the median %ee=(ilo) te. Median! not avera+e - that means the point in "hich hal% o% the transaction are more e3pensive! and hal% o% transactions are less e3pensive and the reason he pic(s the medium is to avoid +amin+ ) the miners "here the could stu%% it! a %e" miners could )asicall ri+ the +ame to increase the %ees. and the is i% ou have the simulation done e%%ectivel in the client! then it can decide "hat transaction %ees to include "ith the relativel hi+h de+ree o% certaint that it "ill achieve it&s con%irmation time +oal "ith that level o% %ee. -And it&s relativel hard to +ame )ecause it "ould ta(e collusion ) multiple miners or minin+ pools! and an minin+ pool that )ro(e %rom that cartel "ould reap the )ene%its o% competition ) dra"in+ all o% the transactions that have not )een serviced. -So it&s a relativel e%%icient mar(et "ith +ood %eed)ac( loops! +ood price discover mechanism! and %e"er opportunities to +ame. -And it&s a mar(et! rather than a %i3ed %ee s stem. 'hat&s the advancement that Lavin is su++estin+! and 6 thin( it&s a +reat ne3t step to"ards havin+ a mar(et )ased transaction %ee. >-J:--A

ABL: 7eadin+ a)out this reall made me thin( a)out ho" Bitcoin compares "ith the e3istin+ %inancial s stem! )ecause ou can loo( at "hat&s happenin+ here "ith ho" the %ees are set in a reall similar li+ht to ho" "e use L6B/7 as a metric to set rates in the 0real "orld!1 and man other mar(ets that are out there. -And )ecause there are so man people participatin+ in the minin+ s stem! there

reall is no advanta+e in tr in+ to +ame the s stem. 8hereas "ith the closed s stem! li(e the L6B/7 s stem "here ever one is participatin+ in the re+ulated environment and ou have to )e chosen to )e on this )oard! suddenl the opportunit %or collusion to tr and %leece the people "ho ou&re supposed to )e providin+ a service to *ust +oes throu+h the roo%! it seems li(e. >-J:@-A

AA: 6 have this concern that no s stem can )e desi+ned that "ill not )e +amed +iven su%%icient opportunit and mar(et participants "ho have developed an advanta+e %or themselves "ithin the mar(et. All mar(et s stems +et +amed eventuall . Ko"! the real advanta+e "ith Bitcoin is even i% Lavin sets this mar(et discover mechanism toda and it starts +ettin+ +amed! he could chan+e it in the ne3t version o% the client! and then chan+e it a+ain! and then chan+e it a+ain! in a ver pu)lic consensus driven approach that has ver o)vious results in the mar(et. 'hat&s "hat ou can&t do "ith L6B/7! )ecause ou discover the scandal %our ears a+o! and "hat e3actl has chan+ed in the calculation o% L6B/72 Kothin+. Mar(ets "ill )e +amed. 'he <uestion is! do ou have the capa)ilit to %le3i)l adapt to that +amin+! hit the reset )utton and level a pla in+ %ield a+ain2 All the other s stems are too ri+idM Bitcoin is %le3i)le enou+h to do that. 'hat&s the (e . >-N:GJA

SM: -So Mi(e Hearn "rote an e3cellent BA4 on the Bitcoin Borum a)out the ne" Pa ment Protocol. -And )asicall ! "hat this is! is it&s +oin+ to chan+e the "a ou can send Bitcoin pa ments. -And this is +oin+ to ta(e a little )it o% e3plainin+! so 6&m *ust +oin+ to read throu+h his BA4: H7ecentl Lavin mer+ed support %or B6P J-! JE! and J? into Bitcoin-4t. B6P J-! AFA the pa ment protocol! is intended to )e a )i+ chan+e to ho" people use Bitcoin. A lot o% <uestions a)out it come up repeatedl ! so here&s an attempt to ans"er the most common ones. 8hat is the pa ment protocol2 /ld-timers "ill remem)er that Bitcoin v-.E (SM: o% "hich 6 am not one! )ecause 6 don&t remem)er this)! the %irst version ever released! allo"ed ou to pa people in t"o "a s. /ne "as ) enterin+ a Bitcoin address. 'he other "as to enter an 6P address. 6% ou entered an 6P address! our computer "ould connect to the node on that 6P and run a rudimentar pa ment protocol that involved as(in+ the node %or a %resh pu)lic (e ! then uploadin+ the pa ment transaction directl . Satoshi thou+ht this pa ment protocol "ould )e ho" people mostl used Bitcoin. 6t had some advanta+es! li(e +uaranteein+ a %resh address. He ori+inall intended addresses to )e used onl %or "hen the recipient "as o%%line. -But he "as "ron+ addresses <uic(l came to dominate! and hardl an one used the pa -to-6P %eature. ;ventuall it "as removed.H :id either o% ou +u s ever use the 6P %eature2 >E-:-NA

AA: Ko. >E-:-.A

SM: 'his must )e reall old-school! )ecause i% Andreas doesn&t remem)er it! ou +u s )oth don&t remem)er it. >E-:E#A

AA: 'his is ?--. and earl ?-E-! so it&s "a )e%ore most o% us. >E-:?GA

SM: Ieah! )ac( in the da . So "h did this connectin+ to an 6P address thin+ %ail2 >Continues to <uote Mi(e HearnA H/ne reason is that it "asn&t ver secure! an one "ho could man-in-the-middle our internet connection (li(e someone sharin+ our 8i-Bi) could steal mone sent this "a . Another! more practical! reason is that )ac( then there "ere no online shops that accepted Bitcoin. 6n %act! Bitcoin "as a 8indo"s-onl pure LC6 app "ith no OS/K-7PC AP6! so no)od could even )uild online shops. -So ou never (ne" i% the person ou "ere tr in+ to pa "ould )e online or not at the time! meanin+ +ivin+ an address "as more relia)le. Also: KA'! %ire"alls! etc.H 8hat&s KA'2 >EE:EEA

AA: Ket"or( Address 'ranslation. 'he %act that man 6P addresses are pro3ied ) a %ire"all or pro3ied ) a router! so ou don&t have a pu)lic address. >EE:ENA

ABL: 'he OS/K-7PC AP6... Andreas! that&s "hat "e "ere tal(in+ a)out earlier "ith ho" most applications inter%ace "ith Bitcoin2 >EE:?$A

AA: Ieah! that&s the north)ound inter%ace o% the )itcoind applicationM it&s the inter%ace that allo"s other applications to )uild on top o% it and +ives access to the Bitcoin net"or( and s stem. >EE:G@A

SM: -So Mi(e Hearn sa s 0-But it "asn&t a )ad idea and so no" "e&re )rin+in+ it )ac(! )ut "ith a )etter desi+n. 'he hope is that over time is that this "ill come to replace Bitcoin addresses %or most usa+es. -But don&t "orr . Addresses aren&t +oin+ to disappear. 'he &ll still )e around i% ou "ant them.H So o(a ! that sounds +oodM 6 had a little panic "hen the said this "as +oin+ to replace Bitcoin addresses. >LaspsA 8hat2 >Li++lesA But the &ll still )e around i% ou "ant them. >EE:#NA

ABL: 6 reall li(e that this it seemed li(e a theme in .-.. 'hat the are addin+ options! )ut the are not ta(in+ a"a an options. 6s that the "a it is +oin+ to pro+ress! "here "e "ill *ust have thin+s added and there "ill )e more options over time2 -/r! eventuall ! "ill some options! li(e addresses! could those )e eliminated and removed2 >E?:E#A AA: A lot o% the code development involves eliminatin+ thin+s *ust as much as it involves addin+ thin+s. 6 thin( it&s an important )alance to maintain. Iou leave too much crud %rom the past in there! then ou have to implement it )ac("ardscompati)l "ith ever thin+ ou ever did in the past. 'hat ma(es development comple3. 6 thin( that the development team has done a %a)ulous *o) o% droppin+ o)solete %eatures "hen the &re o)solete and addin+ %eatures "hen the &re needed! and o%%erin+ choices "here necessar ! and not o%%erin+ choices "here there shouldn&t )e choices. 6t&s a ver delicate )alance! and 6 thin( Lavin did a +reat *o) at this so %ar. >E?:@.A

SM: Ieah! it seems li(e this is a theme. 'here are more options in this ne" thin+ and that could onl )e +ood. >E?:#@A

AA: -8ell! in some cases it&s +ood! in other cases! ou (no"! it is the development +roup&s *o) to ma(e some decisions and then ma(e those decisions happen. Some thin+s are not *ust a)out havin+ a choice. Because i% ou have a choice on ever thin+! then ou reall have no direction or strate+ic vision as "here ou are +oin+. 6t&s *ust 0ever thin+ is optional.1 So 6 thin( it&s a)out maintainin+ )alance )et"een ma(in+ decisions and +ivin+ choice. >EG:?EA

SM: Ieah! 6 mean! "ith a %eature li(e ho" ou send pa ments and )asicall that a%%ects ho" ever da users use Bitcoin! so it seems li(e that mi+ht )e a thin+ that&s reall important to have options %or. >E?:GGA

AA: Ieah! a)solutel . >E?:G@A

SM: >continues to <uote Mi(e HearnA H-So! ho" does it "or(2 6t&s a "a to %ormat a small piece o% data (thin( %ile) that contains instructions on ho" to pa someone (a Pa ment7e<uest messa+e)! and then a %ormal speci%ication o% ho" to satis% those instructions ) su)mittin+ a Pa ment messa+e. 'he data is desi+ned to )e e3tensi)le in %uture so "e can add lots o% use%ul %eatures. 6n %uture! clic(a)le )itcoin lin(s "ill loo( li(e this: )itcoin:E;P;<BBdN uc.ir?J$E.NJ<J(G,cALCNI42 re<uestQhttps:==)itcoinstore.com=r=aBcd;

8hen clic(ed! our "allet app "ill do"nload the re<uest C7L and read the Pa ment7e<uest it +ets. 'he re<uest messa+e contains another C7L! "hich is "here to su)mit the %inished transaction to (instead o%=as "ell as )roadcastin+ it to the P?P net"or().H 6 need some help understandin+ that! Andreas. Basicall lin( and "hat happens a%ter that2 >E@:G#A ou are +oin+ to clic( a

AA: 6 thin( the "a to understand the Pa ment Protocol is to thin( o% it compared to the current situation. 8hen ou tr to )u somethin+ %rom a store! the +ive ou an address! ou put that address in our clients! and ou create a transaction "hich +oes out in the net"or(! and eventuall reaches )ac( to the vendor. 'hat&s a ver loosel -coupled transaction. All the +ave ou is an address! and then ou *ust (ind o% thro" mone at it out there in the ether and hope that some o% that stic(s! and the merchant sees that transaction come )ac( to them. 'his is a much more ti+htl -coupled se<uence "hereas it&s a three-part transaction. Iou as( them 0Ho" do 6 pa ou21 the send ou the parameters o% ho" the pa ment should )e made! "here the pa ment "ill )e sent to! and then ou send )ac( to the vendor the transaction si+n! the si+ned transaction itsel%. Ko" that&s a (e point )ecause %or man vendors. 6% the have a "a o% veri% in+ that the transaction came )ac( and "ent to the net"or(! the can even accept it "ith Dero con%irmations. 'he can trust it as properl si+ned! ou (no"! ou&re not li(el to dou)le-spend it ri+ht there so the can +ive ou a Dero-con%irmation. 8hereas )e%ore! the *ust thre" ou an address and then listen on the net"or( and hope that somethin+ came )ac( to that address and it "as %rom ou and it "asn&t in*ected as a dou)le spend and all o% the other thin+s. 6t&s a much more ti+htl -coupled interaction! "hich also allo"s ou to deal "ith pro)lems! )ecause ou are +iven an address and ou send a pa ment and it&s not the ri+ht pa ment. Ho" do ou do a re%und2 :o ou need to send more mone 2 6s the invoice %illed2 :id ou +et a receipt2 All o% those t pes o% interactions! at the moment! are outside the scope o% the pa ment. All ou&ve done is sent and address. -8hich "ith the Pa ment Protocol! all o% those can )e in scope! properl de%ined! so ou can have all o% those separate parameters. 6t&s +oin+ to ma(e Point-o%-Sale so much smootherR >E$:?EA

SM: 'hat sounds li(e it&s a lot more %riendl to merchants "ho "ant to use Bitcoin or accept Bitcoin. >E$:?#A

AA: -And %or users too! )ecause (eep in mind! that up to no"! the "a to ma(e a pa ment is to cop a GJ character strin+ o% +i))erish or ta(e a photo o% a "eird s<uare "ith dots on it. >E$:G$A

>S.M. lau+hin+A

AA: 'he ne" s stem is )asicall tellin+ our client to +o to a "e)site and then it does some thin+s in the )ac(+round and ou *ust +et an invoice or receipt on the pa ment. -So it&s +oin+ to loo( much more li(e a pa ment s stem that ou (no". 6t&s +oin+ to )e much more user-%riendl ! )ecause ou can hide the GJ di+it +i))erish! ou can hide 47 codes! ou can ma(e it simpl a)out e3chan+in+ an C7L! "hich ou can do over Bluetooth! over air%ield communication! a num)er! or the 47 code a+ain i% ou "ant. >EJ:-GA

SM: 'he %irst thin+ 6 "ondered is there a potential %or e3ploitation in this2 Li(e i% someone can! )asicall ! dis+uise a lin( as somethin+ that loo(s li(e a pa ment re<uest C7L and it&s actuall a malicious script that steals all our )itcoins2 >EJ:EJA

AA: IesR 'his introduces C7Ls into the pa ment s stems and introduces H''Ps. -So the clients that do this "ill have to ver care%ull process that C7L! and ver care%ull "hatever comes %rom that C7L! )ecause it is not a trusted s stem. 'hat&s not much di%%erent %rom scannin+ a random 47 code and HHe R Let&s see "hat happensRH )ut it&s much more e3plicit! so 6 thin( clients that implement this "ill o)viousl ta(e the necessar precautions to ma(e sure that an data the receive is not compromised and it&s not dan+erous. >EJ:#-A

>6ntermissionA >Music in the )ac(+roundA Ad: HSatoshi:ice - the most notorious Bitcoin +amin+ site has unveiled it&s ne"est creation: 'ri)ute. 6n Satoshi:ice 'ri)ute! )ets occur o%%-the-)loc(chain %or %ast and e3citin+ +amepla . :eposit )itcoins and start pla in+ "ith - con%irmations. All )ets are prova)l -%air and easil -veri%ia)le. 'ri)ute is also social. Pla ers compete "ith each other! and the top G pla ers at an +iven time receive a portion o% the )est %rom ever other pla er. 'he ran(in+s reset at midni+ht! ena)lin+ an one to )ecome the leader "ith a %e" luc( rolls. ES o% all Satoshi:ice earnin+s "ill )e donated to Sha"n&s /utpost. 'o (ic( o%% the ne" +ame! the %irst thousand pla ers "ho lose -.E )itcoin "ill have that amount automaticall returned to them ris(%ree. C.S. pla ers are not allo"ed )ecause America is a 0%ree countr .1 'he +host o% Satoshi is "aitin+ %or ouR Bind her at Satoshi:ice.com='ri)ute.H >E.:E.A

SM: Ke3t point %rom Mi(e! H8ho is implementin+ the ne" protocol2 Support "ill )e in the ne3t Bitcoin-4t release!1 "hich the sa on the )lo+ post that "e read

previousl it&ll read "hen it&s read ! so "e don&t (no" e3actl "hen that is Hand is )ein+ "or(ed on %or MultiBit=Android Bitcoin 8allet! CoinBase! and CoinPun(. BitPa also committed to implementin+ it! so all merchants "ho use their services "ill +et support automaticall . 6% ou&re plannin+ to support it! let me (no" and 6&ll add ou hereR1 So the &ve alread +ot some prett )i+ names on)oard "ith this ne" protocol. H8hat other %eatures does it add2 6n vE o% the protocol: 7e%unds. 'he sender can su)mit some re%und addresses to the recipient at the same time as su)mittin+ the transactions. Ko"! i% the seller "ants to +ive the )u er a <uic( re%und! the can do so. Ko more pro)lems "ith tr in+ to H+uessH the users address and sometimes +ettin+ it "ron+ due to shared "allets. Bitcoin4t +enerates a re%und address %or ever pa ment done this "a ! )ut ou&ll onl see them i% ou do actuall +et a re%und. Memos. Clic(a)le lin(s can alread contain short strin+s or la)els! )ut their len+th is ti+htl limited ) "hat )ro"sers "ill accept and "hat %its in a 47code. B6P Jallo"s pa ment re<uests to contain ar)itraril lon+ memos! "hich can )e used to descri)e "hat ou are )u in+. 'his is super-use%ul "hen the pa ment re<uest is authenticated ....H -And authentication is the ne3t se+ment! )ut re%unds2 'hat9s hu+eR 8hat the &ve done! it seems li(e to me! is )uilt in a %eature that allo"s %or a "a to +ive re%unds )ut preserves! o% course! the one-"a nature o% Bitcoin transactions. >?E:--A

AA: Ieah! e3actl ! so it&s not reversi)le. 6t&s *ust +ivin+ the merchants "hat is the correct address to send a re%und i% such thin+s should arise. 6 can tell ou! as a merchant in some o% the pro*ects 6 sell! 6 have occasionall had to +ive re%unds! and it&s al"a s a manual process. Iou have to contact the person "ho made the purchase! i% 6 have the contact details! o% course! as( them %or a Bitcoin addressM send the pa ment and hopin+ that "or(s. 'his "ould allo" ou to prearran+e to the possi)ilit o% a re%und and it reall sho"s ho" ou can reall ma(e this transaction much more ti+htl -coupled! so there&s in%ormation %lo"in+ %rom the merchant to the customer! )ut also %rom the customer )ac( to the merchant! i% the "ish to do so. -And )ehind the scenes! the nice thin+ is that this can use as man addresses as ou "ant! "hich means a ne" address %or ever transaction "ithout the comple3it o% tr in+ to %i+ure out "hich address ou used. >?E:#-A

SM: 'hat sounds +reat. Ko" memos! "ould those memos )e pu)lic li(e in the )loc(chain! or are the *ust (ind o% %or our o"n in%ormation sa in+ 6 )ou+ht a sa%e paper "allet (it %rom Andreas on...-- >??:-@A

AA: Ieah! this is an entirel outside o% the )loc(chain. 'his is metadata that is transacted durin+ the pa ment protocol. Basicall ! the in%ormation is sent to our client! "hich presuma)l "ill )e displa ed the screen! perhaps as a "e)pa+e! tellin+ ou "hat this pa ment re<uest is! and it can )e much more ver)ose. -So %or e3ample! ou could have a receipt that has a product name that has a picture o% the product and a price and a ta3 ou paid and all the other in%ormation in that memo and that "ill sho" up on ou screens so ou (no" ou&re pa in+ the ri+ht person %or the ri+ht product. >??:?.A

SM: -But it doesn&t necessaril have to )e incriminatin+ perhaps! )ecause it&s not pu)lic! it&s *ust %or ourT>e es onl 2A >??:G#A

AA: 'his is sent to our client! it can )e discarded ri+ht a%ter. 6t&s not communicated pu)licl at all. 'he nice thin+ is that this actuall continues to preserve privac and anon mit ! in terms o% not revealin+ e3tra in%ormation! )ut at the same time! it allo"s the clients to %ull implement automated rec clin+ o% addresses to insure the never re-use an address. -And that leads to much stron+er anon mit . Ko"! thin( o% it another "a . /ne o% the thin+s ou could do in a pa ment re<uest li(e this is re<uest that the pa ment )e sent to a CoinOoin mi3er! or shared mi3in+ address. -So ou could e%%ectivel use this to pi++ )ac( an anon miDation and remi3in+ service on ever transaction that +oes throu+h a speci%ic merchant ) de%ault. 'hat&s prett coolR >?G:?-A

SM: Ieah! that is prett coolR H8hat is authentication a)out21 Mi(e said! in the last point a)out memos! that memos are reall use%ul "hen the pa ment re<uest is authenticated. So "hat is authentication2 >4uotin+ Mi(e HearnA HBitcoin is a di%%icult pro*ect partl )ecause "e&re movin+ mone around "ith +eneral purpose computers that can )e hac(ed or +et viruses. ,6SA and MasterCard have moved ever one (outside the CSA) to special-purpose hard"are li(e chip cards and dedicated readers "hich can&t have random apps installed on them. /ur approach has to )e a )it di%%erent! )ut dedicated hard"are is still comin+. 'he 'reDor device is a mini-computer *ust %or Bitcoin that plu+s into a HrealH computer via CSB. 6t has a displa and a couple o% )uttons. 6t holds our private (e s. 8hen ou "ant to ma(e a pa ment! the details o% the pa ment are sho"n on the screen! and i% the &re "hat ou "ant! ou press /F and thin+s +et si+ned.

'here&s an o)vious %la" "ith that desi+n "hen com)ined "ith Bitcoin as it is toda . 'he details o% the pa ment ou&ll see on screen "ill loo( li(e this: Pa -.# B'C to E;P;<BBdN uc.ir?J$E.NJ<J(G,cALCNI42 8here did that address come %rom2 8ell! it came %rom our computer! the thin+ that pro)a)l has a virus on it. 'hat virus could have s"apped out the address sent ) the online shop ou&re usin+ %or one o"ned ) the virus author! and )ecause the &re *ust random num)ers! ou&d never (no". Althou+h the virus can&t empt our "allet immediatel ! it can still steal pa ments "hen ou ma(e one! and avoidin+ that is the "hole point o% usin+ special hard"areR 'he pa ment protocol allo"s recipients to si+n their re<uests under an Hidentit .1 An Hidentit H is *ust some ar)itrar strin+ that "as itsel% si+ned ) some Hcerti%icate authorit .1 'he authorit vends si+ned statements that sa (simpli% in+ a )it): H6! Bo) Smith! )elieve address E;P;<BBdN uc.ir?J$E.NJ<J(G,cALCNI4 is o"ned ) Mi(e Hearn.1 Ko"! i% our 'reDor happens to trust that Bo) Smith validates identities relia)l ! it can displa : Pa -.# B'C to Mi(e Hearn2 And that messa+e can&t )e tampered "ith ) an virus. As ou can see! this is much sa%er.H >?#:?#A

AA: Bottom line here is that in this decision Bitcoin developers decided to use e3istin+ technolo+ies %or doin+ )asic identi%ication and certi%icates. -And the technolo+ the &re usin+ is SSL certi%icates. 'he same stu%% "e use on the 8e). U.#-. Certi%icates the &re called! )ut that&s the underl in+ certi%icates that are used %or SSL. -So "hen ou +o to eBa .com and ou see a little padloc( up there! that +uarantees that ou are in %act loo(in+ at eBa .com. 8ithout that! someone could )asicall hi*ac( our session! ta(e ou to a site that loo(s li(e eBa .com )ut isn&t! and then "hen ou put our in%ormation in there it&s stolen! it&s a hone pot. 6n %act! ever Bitcoin address can )e a hone pot. Iou don&t (no" an thin+ a)out itM it&s *ust a random strin+ o% +i))erish. 'his "ill allo" ou to associate that random strin+ o% +i))erish to a speci%ic si+ned certi%icate and then )uild some trust around that. -So "hen ou +o to pa a merchant! ou (no" that mone is +oin+ there. -And this reall ma(es it much harder to run man-in-the-middle attac(s! "here ou su)stitute a Bitcoin address "ith another. 'his is a )i+ pro)lem. Let&s sa ou have a )lo+ at the moment and ou "ant to +et someone to tip ou. Iou put an address in that )lo+. A hac(er could come alon+! hac( into our "e)site! edit that pa+e! and chan+e our address. Ho" lon+ "ould it ta(e ou to notice ou are not +ettin+ an tips an more2 -And that our tips are m steriousl disappearin+ into the ether2 So it&s e3actl that (ind o% scenario ou can solve! in this case! instead o% havin+ *ust an address and te3t! ou "ould have a si+n that is part o% the Pa ment Protocol! ou +et a certi%icate a+ainst it! so it can&t )e su)stituted "ithout )rea(in+ the certi%icate. >?J:-$A

SM: 'hat does sound li(e it ma(es thin+s more secure. So ho" do identities "or(2 8ho is actuall sa in+ that this is Andreas Antonopoulos2 He is sa in+ that essentiall this isn&t li(e a +overnment issued 6:! or an thin+ li(e that or ou have to sho" our passport and tie it to all our Bitcoin address! or an thin+ li(e that. 8hat this is is Hessentiall ! an one can +et a certi%icate attestin+ to some (ind o% identit . /%ten! it&s *ust an email address or "e)site domain name (e.+. )itcointal(.or+ has a certi%icate containin+ its domain name). 6t can also )e a le+al name li(e HMichael C HearnH or HMt Lo3 LtdH. 6n %act! i% ou have a passport "ith a chip in it then ou alread have a certi%icate containin+ our passport data! )ut it&s not ver use%ul )ecause there&s no private (e attached to it. Sometimes certi%icates are paid %or! and other times the are %ree. 'he certi%icate authorities never +et our private (e . 6nstead! ou +enerate a private (e locall ! then as( the CA to si+n our pu)lic (e . At the same time ou prove our identit ! i% our identit is an email address then ou t picall receive a clic(a)le lin( there %or instance. 6% it&s our name ou mi+ht have to su)mit some paper"or(.H But i% it&s our %orum name or somethin+ li(e that! ou pro)a)l don&t. Basicall ! "hat he +oes on to sa is there&s pro)a)l +oin+ to )e a mar(etplace o% certi%icate authorities that evolve! and the &re +oin+ to )e o%%erin+ di%%erent levels - some %ree! some paid %or - o% certi%icates that are attached to some di%%erent %acets or aspects o% our identit . -So this is not somethin+ that ma(es Bitcoin less private or less anon mous. 6t doesn&t have to )e our le+al name! our le+al identit at all! it can totall )e somethin+ li(e a %orum handle or an email address. >?N:@#A

AA: -And then (eep in mind this is %or the merchants! and the merchants "ho chose to attach an identit to their pa ments addresses. 'his isn&t %or the endusers. Iou don&t need to have a certi%icate as a )u er or as a client or as an enduser. -Because ou don&t need to prove to an one "ho ou are "hen ou are sendin+ mone . Iou onl need to +enerate trust "hen ou&re receivin+ mone . So this reall a%%ects merchants! and 6 thin( the smart move over here "as to pi++ )ac( on top o% the U.#-. SSL Certi%icate structure. Because ri+ht no"! i% 6 "ant to have a domain name or email address certi%ied! 6 can choose %rom Gdi%%erent Certi%icate Authorities! %rom ,eriSi+n to Ket"or( Solutions to some o% the smaller and cheaper ones! and the can produce a certi%icate that&s "idel trusted. 'he have the in%rastructure %or doin+ the veri%ication and it&s relativel ro)ust and has )een alread used as the %oundation %or SSL. -So it&s a reall smart move )ecause it levera+es e3istin+ technolo+ nicel . >?.:@JA

SM: -So then he +oes into tal(in+ a)out "h can&t "e use the PLP 8e) o% 'rust "hich )asicall - 6 don&t reall understand it that "ell - )ut PLP is a "a o% encr ptin+ emails and communications! and other thin+s and the 8e) o% 'rust is "hen people validate and si+n each other9s& (e s! that certain (e s )elon+ to

certain people. 'here used to )e! or still are! some thin+s called (e -si+nin+ parties! "here people "ill meet in person and sa 0oh eah! this person is "ho the sa the are! 6 can veri% that their (e actuall )elon+s to them and 6&m +oin+ to si+n their (e !1 and then it&s creates this 8e) o% 'rust! "hich is a )unch o% people "ho have con%irmed that the all are "ho the sa the are and ou can come to tap into that 8e) o% 'rust to veri% people&s 6:. 6t&s (ind o% technical and a little )it on the lon+er side! so ma )e "e "on&t +o into that! )ut Mi(e is sa in+ that it&s reall not possi)le to com)ine the PLP 8e) o% 'rust! nor do the "ant to! "ith the ne" Bitcoin protocol. >G-:@$A

ABL: 6 thin( that this also +ets into the <uestion a)out 0should the per%ect )e an enem to the +ood21 )ecause that&s essentiall the other ar+ument that Mi(e is ma(in+ here is that! es! there are some pro)lems "ith the e3istin+ SSL Certi%icate Authorit s stem! nota)l that sometimes +et issued to people "ho shouldn&t have them and that sort o% taints the "hole thin+. -So he la s out a couple o% improvements that could )e applied to this s stem as it is no". -But reall that is the primar thin+! that this is an incremental step to"ards somethin+ )etter then "here "e are no". 6s that ri+ht2 >GE:E?A

AA: ;ven i% SSL has had some %la"s! it +ot )ro(en! there are issues "ith the certi%icates... 6t is! ) %ar! the most success%ul )road-)ased deplo ment o% encr ption the "orld has ever seen! and pro)a)l the most e%%ective securit and privac tool that "e have ever deplo ed. 6 thin( the primar reason is reall simple. As a user! ou don&t ma(e a choice to use SSL! it *ust happens! and that9s a (e element o% securit and "h SSL has )een so success%ul! the )urden is shi%ted to"ards the merchants "ho have the %unds and motivation! and to it and the *ust +et it automaticall "ithout as(in+. 'hat&s a reall +ood securit model. -And! ou (no"! despite all it&s %la"s! it&s )een the most success%ul encr ption "e&ve ever had! so it ma(es a lot o% sense to use "hat alread "or(s on the +lo)al scale. >G?:-EA

ABL: -So it sounds li(e there&s a lot o% stu%% comin+ in -... >G?:-@A

SM: Ieah! it seems li(e... +enerall ! this is )ein+ prett "ell received so %ar! at least ) the comments on the %orum. >G?:EEA

AA: 6&d li(e to point out that also! 6 don&t (no" ho" much meanin+ to read into this! )ut -.. is a prett si+ni%icant version num)er in itsel%. 'he decision to +o to versions that start "ith -.. is reall important! )ecause that means "e are no" headin+ head-on to the E.- release o% Bitcoin. 'hat&s the ne3t step. ;ssentiall !

these are the release candidates and )etas that "ill lead to the %irst o%%icial version or release o% Bitcoin. -So it&s an important milestone to hit -... 'he e3citin+ development in Linu3 happened )et"een -...- and -...N. >G?:#EA

>Bac(+round musicA >Adam B. Levine. spea(s at the Cr pto Currenc Con%erence! /cto)er #th ?-EGA

ABL: Hi! m name is Adam B. Levine. Li(e 6 said )e%ore! 6 do a t"ice-"ee(l sho" called Let&s 'al( Bitcoin. 6t&s reall important that "e solve the pro)lems that are in %ront o% us! )ecause there are a lot o% pro)lems. 6 thin( that the are solva)le! and so that&s actuall "hat 6 "anted to (ind o% tal( a)out here! is ho" "e are solvin+ some o% these pro)lems and ho" it&s happenin+ in a "a that it doesn&t re<uire permission! "hich means that it&s happenin+ reall %ast. 8ell! thin+s move %ast in the "orld or cr ptocurrenc and since 6 started Let&s 'al( Bitcoin in April ?-EG! "e&ve seen re+ulator compliance that completel reverse the compliance landscape! companies come and +o! and "e&ve seen the Con%erence scene completel e3plode! "ith at least one a month! and sometimes as man as %our a month happenin+ all over the "orld. /ver the last %e" da s! "e&ve seen the apparent demise o% Sil(road! the u)i<uitous Bitcoin ille+al-stu%% mar(et! and the arrested the man accused o% operatin+ it! and the price "as *ust crushed. And then... it "asn&t. 8h is that2 Mt.Lo3! ri+ht! the elephant in the room "hen it comes to centraliDed Bitcoin e3chan+es. 6n the crash and in the "ee( lon+ %reeDe a)out t"o ears a+o! some o% ou mi+ht have not )een in the communit at that point! )ut there "as complete chaos. Ko)od (ne" "hat the price o% Bitcoin "as! and most people had their )itcoins tied up. 6t "as a terri)le situation. Because >it "asA the sin+le e3chan+e service in the hu+e ma*orit o% Bitcoin transactions! it "as )oth an incredi)l lucrative operation! )ut also a hu+e central point o% %ailure! %or not *ust tradin+ Bitcoin %rom one currenc or another! )ut ho" do "e +et the price in the %irst place. Bitcointal(! %or a lon+ time it "as the Bitcoin communit ! it "as the place "here people "ent to meet the communit ! to educate themselves into contemplatin+ this pro*ect! that "e call Bitcoin. A couple o% da s a+o it "as hac(ed and "hen 6 chec(ed it this mornin+! it "as still do"n. 'here are a %e" similarities )et"een these three events. Birst o%%! the &re all controversial sites! the &re u)i<uitous! )ut ever )od loves to hate the %rontrunner and amusin+l ! the Sil(7oad! out o% all those three companies! pro)a)l has the )est reputation >lau+hin+A. 'he also don&t matter. Ko"... a ear a+o! $ months a+o! this "ould&ve )een a ver di%%erent conversation! a much more depressin+ topic! )ut the %ree mar(et&s at "or( here! and "hile in the past these events "ould&ve crushed their +rave natures! that&s contra)and %or Sil(7oad! price li<uidit %or Mt.Lo3! and communit o% thou+ht leadership %or Bitcoin'al(. 'heir success actuall catal Ded and essentialiDed the

ne3t +eneration. -So "hat "e&re seein+ is that these hi+h pro%ile! u)i<uitous and! in the o"n "a ! centraliDed operations are ar+ua)l *ust as dan+erous to their users as ne" pla ers. 'he ma have more reputation! )ut that ma(es them a more temptin+ tar+et %or )oth )ad actors! *ust as it does %or ne" users. ;ven i% these %ields are dominated ) one or t"o pla ers! increasin+l that "on&t )e the case. 'hese thin+s don&t matter an more )ecause there are alternatives that are *ust as +ood! i% not )etter in their o%%erin+s! "ho&ve )een "aitin+ %or that vacuum! a %ailure %rom "hat have )ecome our le+ac institutions our 0too )i+ to %ails.1 ;3cept in a monopol -%ree s stem! li(e Bitcoin is! there is no such thin+ as 0too )i+ to %ail!1 and reall ! these are companies that are *ust standin+ there as road)loc(s! "here the have this momentum. -And momentum! "ith a )i+ compan ! a lot o% times it&s enou+h to (eep it +oin+! enou+h to (eep our customers happ . Because there&s a cost in s"itchin+. But that&s not the "a that thin+s are +oin+ to +o. 'hese institutions "ere the %irst! )ut the &re not the last! ou (no"! Sil(7oad has three or %our similar competitors that are alread %i+htin+ over their customers. Lo3 is alread less impact%ul no" than ever %or the price! as %ar as most people are concerned and! ou (no"! m %avorite price source is BitcoinAvera+e ri+ht no". 6 thin( that the +u s at 6nvictus 6nnovations are "or(in+ on a ver interestin+ pricin+ model )ut ri+ht no" 6&m still usin+ BitcoinAvera+e.com! and it actuall has a )utton up there that ou can select! that completel e3cludes Mt.Lo3 %rom the price list. >Cnintelli+i)le! then lau+hin+A -And o% course! Bitcoin'al( has )een around %or the lon+est time! and that is the onl place "here ou can tal( a)out and no" 7eddit surpassed them! 6 thin( the +et the dou)le num)er o% users and i% +o onto 7eddit in the past couple o% da s! ou&ve pro)a)l seen it&s +oin+ actuall reall slo"! )ecause most o% the people "ho "ere still on Bitcoin'al( have moved over. Mi+ht )e a temporar thin+! )ut it&s de%initel happenin+. -So the point is that "here there used to )e one voice! ho"lin+ a+ainst the "ilderness! "e don&t live in the "ilderness an more. 'he ecos stem %or Bitcoin and Cr ptocurrenc are +ro"in+ up ri+ht in %ront o% our e es! and it&s happenin+ reall ! reall %ast. 6&m privile+ed in devotin+ nearl all o% m time into cr ptocurrenc and 6&ve reall never )een more e3cited that 6 am! ou (no"! in these last couple o% months. 6 thin( "e have a lot o% challen+es ahead o% us! )ut mostl it&s permission )ased. 6t&s )een said )e%ore that the C.S. has a choice in %ront it. 8e can choose to )race this technolo+ and see the %uture! and )e a vital part o% )uildin+ it! or "e can do ever thin+ in our po"er to tr and ma(e it so this is hard and "ill pro)a)l do a +ood *o) at stoppin+ it %rom le+itimate uses in the Cnited States! and ma(e ou love them. So! the pro)lem "ith open-source pro*ects a lot o% times! is that there&s too much availa)ilit o% "or(a)le solutions that don&t do the *o) in a "a that&s accessi)le to people. 'his is especiall true "ith the Satoshi client! 6 thin(. 8e&re *ust no" startin+ to see these ne"er "allets comin+ out that reall can levera+e or ta(e advanta+e o%! ou (no"! *ust some o% the )asic usa)ilit "or( that&s )een done over the last %e" ears. -So these pro)lems are +oin+ a"a . 'here&s a "allet comin+ out called the Hive "allet that reall has a %ocus on usa)ilit and tries to continue this trend o% ampli% in+ the Bitcoin streets! "here

an )od can! ou (no"! reall +et into sort o% a )uDD"ord. -But it&s reall not this hipster thin+. 6t&s "hat needs to happen. 8e need to %ocus on usa)ilit . Bu in+ products! BitPa is a ma*or! ma*or pla er in that space. But at the same time! the "eren&t tr in+ to reinvent the "heel! as 'on (Lallippi) said! "hen it comes to ho" "e )u thin+s "ith Bitcoin. So! to this point! most merchants acceptin+ Bitcoin use that standard shoppin+ cart %lo"! "here ou add a product to our cart! and "hen ou are %inished "ith all our shoppin+! ou enter our )illin+ in%ormation! pa the total "ith either our credit card or )u "ith Bitcoin. But reall ! Bitcoin doesn&t need an thin+ li(e that. 6t&s a "or(around created to address pro)lems associated "ith identit ! )ecause that! o% course! as has )een discussed! ho" our mone "or(s. Shall "e associate "ith identit to ac<uire authoriDation or permission and then ou are allo"ed to "ithdra" mone %rom that essentiall . But "ith cr ptocurrenc ! since the holder is the o"ner! "e don&t need to do that an more. -And 6 thin( that our pa ment solutions aren&t +oin+ to re<uire that o% us! )ecause these aren&t actuall help%ul at all! and actuall it creates more o% a ris( situation than ou have i% ou don&t do that. Shameless plo here! Let&s 'al( Bitcoin has -inaudi)le- that is %ilmin+ this event and "e&re sellin+ videocasts. 6% ou +o to )itcoinvideocasts.com! then ou&ll see our %irst implementation o% "hat "eMve called a BitCredits s stem. 'he creators! Ale3andre Bour+et! Luisa Buchanan! have )een "or(in+ on this %or the last couple o% months. 6t ta(es a loo( at this pro)lem that "e have! o% needin+ to associate identit ! and it rethin(s it %rom the cr ptocurrenc standin+ point. /ccup in+ a)out one-third o% the pa+e and "ith the e3planation te3t "rapped around it! ou don&t actuall ever need to leave that pa+e in order to ma(e a pa ment. 6t *ust has a little inter%ace up there and it prompts ou %or the amount o% mone that ou are +oin+ to put in! in C.S. :ollars! and +ives ou that amount! and it tells ho" much that is in Bitcoin! and ou can essentiall load this up "ith )itcoin! "here then "e ta(e all the e3chan+e ris( and +ive ou )ac( "e)site credits that are denominated in C.S dollars! and ou can )u an thin+ on our s stem. 'echnicall ! this tal( is called 0:oin+ )usiness "ith a de%lationar currenc !1 and people thin( this is the )i+ pro)lem! )ecause "ho "ants to spend )itcoins "hen the are hard to ac<uire and the +ain value over time. 'here has to )e a compellin+ reason! and a%ter m e3perience "ith this BitCredits thin+! 6 "ant to share m trip "ith ou. Char+e people more! "ho pa in C.S. dollars >lau+hin+A. Iou could call it a discount %or our Bitcoin price! or ou can call it a surchar+e %or our dollar price! )ut i% ou "ant! people "ill par( "ith their )itcoins %or "hatever ou&re sellin+! and ou need to ta(e into account the %uture value o% Bitcoin! )ecause our customer certainl is. -And i% the mental math doesn&t "or( %or them! the &re +oin+ to pa ou in dollars )ecause! "h shouldn&t the 2 Bor our passes! "e o%%er )et"een a ?--G-S discount! and %ound our sales around .#S Bitcoin. Ko"! o)viousl ! 6 do a sho" called Let&s 'al( Bitcoin and "e onl promote this to our audience! )ut! ou (no"! m e3perience has )een that "hen 6&m tr in+ to )u somethin+ 6 spend a lot o% )itcoins! and receive %unds %rom our sponsors in Bitcoin! and "e receive donations %rom our listeners in Bitcoin.

-And so! "hen 6 +o to spend! it reall is a valua)le in%ormation %or me! "here 6&m sa in+ i% it is "orth it to )e a part "ith these )itcoins! (no"in+ that at a later date the are +oin+ to )e "orth"hile! and +enerall 6 demand m GS. 8henever 6&m doin+ services "ith someone or hire another "riter or somethin+ li(e that! it&s has to )e +enerall )e GS! and sometimes it&s a lot more. BitCredits is one option! and 6 li(e it a lot! )ecause it essentiall lets users pla mar(et a+ainst Let&s 'al( Bitcoin. 8hen the )u our o"n site&s credit! our on-site credits! all the volatilit is removed %rom the e<uation. 8e do not ma(e credits in C.S. dollars! so ou can ma(e one transaction "ith a Bitcoin mem)er to load up our "allet! and an commerce ou do on the site is instant and transaction-%ee-%ree. 7i+ht no"! ou can onl )u these passes "hich! incidentall ! are heavil discarded over on our ta)le over there! %or attendees o% the con%erence. -But "ithin the ne3t "ee( or t"o! "e&re +oin+ to roll it out to the entire site. 'his is interestin+! )ecause our sho" is supported ) listener donations! a)out J#S o% "hich come in at *ust under a dollar. So! even in a Bitcoin paradi+m! i% ou have transactions comin+ in that are under a dollar and ou have to pa a %ee that&s some"here )et"een $-?# cents! ) m math is usuall a)out $ cents! and that actuall "inds up )ein+ ver e3pensive. -And ou&re ri+ht )ac( up there "ith credit cards. So there are! o% course! dra")ac(s. B doin+ this! "e essentiall ta(e the transaction o%% the )loc(chain! and "e centraliDe the records o% value on our servers! "hich means that! to a certain e3tent! "e have a responsi)ilit to protect them! )ut a+ain! "e don&t have to collect hardl an in%ormation. Bor di+ital +oods! "e literall onl need an email address. 8e don&t (eep the %unds on our server. 8e don&t (eep the (e s %or our %unds on our server. 'he +o essentiall in a )lac( )o3! and then "e pull them out! )ut there&s no "a to access them throu+h the server directl . ;ventuall ! the s stem is +oin+ to +o )oth "a s and the people "ho "rite %or us! "here the receive tips! the &ll receive these credits that the &ll then )e a)le to cash out at "hatever the e3chan+e rate is at that point. -So the entire time that "e&re holdin+! "e&ve ta(en on that e3chan+e ris( !and 6 thin( that that&s somethin+ that&s reall attractive to a lot o% operations li(e ours! "here "e do have costs - )ut 6 mean! 6&d rather pa m cost in C.S. dollars and 6 rather (eep m tips. 6t&s reall "hat&s come do"n to. 'here are! o% course! others "ho are tr in+ to %ind this price! and the )arrier to entr is reall lo" here! and pa o%% %or "hoever nails this content monetiDation <uestion is +oin+ to )e reall )i+. 'here are some other people "ho are doin+ some +ood "or( in the area! speci%icall the Bit8all.io people - the have a pa "all application s stem that&s ver interestin+. -And then BitMonet! "hich is in partnership "ith BitPa ! and 6&ve )een tr in+ to +et to+ether "ith them to learn more a)out their pro*ect! )ut 6 haven&t )een a)le to ma(e it "or(! et. But even this is a stop +ap %or "here "e&re +oin+. Pro*ects li(e 8atershed or ;+oro >2A! "hich ou "ill )e hearin+ a)out more in the "ee(s and months to come! are creatin+ %rame"or(s to )uild ne" communities

and economies entirel on top o%! "ith cr ptocurrenc inte+rated at the in%rastructure level. -And 6&m especiall e3cited a)out a pro*ect called Ketven+e >2A! that a+ain 6 "ant to learn more a)out! )ut ou can thin( o% it! li(e! a simpli%ied cr ptocurrenc in%rastructure that lets those "antin+ to )uild an (ind o% complicated service that involves a lot o% mone rattlin+ around and +oin+ to various places! to essentiall plu+ it in! (ind o% li(e ou "ould "ith! ou (no"! "ith a little starter circuit )oard! "here all the underl in+ "irin+s there! ou *ust plu+ into the various modules that ou "ant. 6n e3pertise! as "ith ever thin+ else! cr ptocurrenc is a meritocrac . 'he people "ho are up here as e3perts! +enerall spea(in+! are up )ecause the "ant to )e! )ecause the &re passionate a)out the %uture "e&re creatin+ and instead o% "aitin+ %or someone to tell them "hat to do! the %ollo"ed in situations -inaudi)le- "here the *ust did. 6 have to sa ! and 6&ve )een sa in+ a lot! it doesn&t matter that 6 do this no"! )ut in $ months it "ill have mattered that 6 did it $ months a+o. 6 thin( that Bitcoin! that&s reall it in a nutshell. ;ver thin+ is so positional ri+ht no"! and to mi3 some metaphors! "e are arran+in+ loun+e chairs "hile the tsunami approaches! )rin+in+ "ith it a ver di%%erent! and 6&m hope%ull a much )etter "orld. 'han( IouR >@#:#JA >Clappin+A

>Music in the )ac(+roundA Ad: Hi listenerR Here at Let&s 'al( Bitcoin "e&re )uildin+ a +lo)al net"or( o% correspondents a)le to contri)ute on the +round perspective on cr ptocurrenc related in%ormation comes across their %ilters. 6% ou&d li(e to *oin our +lo)al conversation! send an email "ith our name and +eo+raphic or cultural niche to appl Vletstal()itcoin.com Oust li(e Bitcoin! the onl )arrier to entr is our time and +ood "or(. 'han(s %or listenin+R >@$:?NA >Music chan+esA Ad: ;as :KS is the S"iss arm (ni%e %or our domain names! helpin+ meet their customer&s individual needs since E..N. ;as :KS has )een an outspo(en critic o% S/PA and C6SPA. ;as :KS "as an earl supporter o% Bitcoin and no" the are proud to sponsor the sho". :o )usiness "ith a compan that shares our valuesM +et a EGS discount "hen ou pa "ith Bitcoin. Lo to eas :KS.com and )e sure to use discount code L'B. >@J:--A

ABL: As a +u on a sho" called Let&s 'al( Bitcoin! it comes as no surprise that 6 thin( Bitcoin is the )ee&s (nees! so %ar as di+ital currenc options are concerned. 7ecentl ! 6 sat on a panel at the C?S, ('he Conver+e Create Silicon ,alle Con%erence) and one o% the other e3perts on the panel "as Chris Larsen o% 7ipple La)s. He said a couple o% thin+s that 6 disa+ree "ith. Birst! that 7ipple is Bitcoin ?.- - that&s a )it o% an odd thin+ to sa - and second! that i% ou can +et la" en%orcement on the side o% our currenc ! ou&ll have "on. Bor those o% ou not %amiliar "ith the 7ipple s stem it can )e thou+ht as a parallel development to Bitcoin that tries to solve man o% the same pro)lems! )an(less mone transmission to an "here in the 6nternet-connected "orld. 7ipple +oes a)out solvin+ the pro)lems sli+htl di%%erentl . 'here are no minersM transaction validit is determined ) a cascadin+ consensus en+ine. 7ipples themselves! U7P! "ere %ull premined and then initiall o"ned ) 7ipple La)s. 'he aren&t reall traded as currenc themselves! so this isn&t as much o% an issue. 6nstead! the are intended as an anti-spam mechanism! li(e a stamp on an envelope! "ith a chec( inside. 'his piece "as pu)lished on Let&s 'al( Bitcoin the da )e%ore 6 recorded this to release on the sho"! and some o% the earl comments pointed out that 7ipple pro*ect has actuall )een under development since ?--@! and i% ou +o )ac( to that ?--@ pa+e! then ri+ht there on the %ront o% it! it sa s 0"e "ant to ma(e our promises as +ood as a )an(&s promises!1 )ecause essentiall that&s "hat the &re sa in+! that&s "hen a )an( e3tends credit! the &re e3tendin+ a promise to pa . 6n the 7ipple thou+ht process! the thin+ is! i% "e have the in%rastructure to issue these credits *ust amon+st people! then "h do "e need the )an(s in order to %acilitate that same sort o% transaction. 7ipple ultimatel loo(s li(e it "as desi+ned to maintain the %unctionalit o% the )an(in+ s stem "hile removin+ the )an(in+ s stem itsel% %rom the e<uation. -So the &re )oth tr in+ to solve this pro)lem! )ut it reall is (ind o% %undamentall at odds ho" the &re tr in+ to do it. Bitcoin does it throu+h an o"nership! person-to-person-)ased s stem! and 7ipple is )uilt on an interconnected net"or( o% P?P credit. Bitcoins are holdin+ do"n "ith no ris( on the redeemin+ part de%aultin+! )ut "ith 7ipple that is a ris(. 'he Bitcoin s stem trans%ers o"nership o% one thin+! )itcoins. People can )uild la ers on top o% it to do other thin+s! )ut at a protocol level it&s *ust )itcoins on the Bitcoin net"or(. -But "hat i% ou don&t "ant to send )itcoins2 'his is "here 7ipple is reall a +ood option. 8hen ou send C.S. dollars to the 7ipple s stem! ou&re reall sendin+ 6/Cs that can )e redeemed some"here else in the s stem. :ependin+ on our need to transact in non-Bitcoin terms! this mi+ht )e important. -/r! ou mi+ht pre%er the "holl -o"ned nature o% cr ptocurrenc . -And this is +ettin+ to )e an interestin+ thin+! as "e move to"ards a more pervasive Bitcoin %utureM "e&re startin+ to see a Bitcoin s stem develop! "here ou reall can +et all o% our needs met "ithout ever touchin+ a currenc )esides a cr ptocurrenc .

-And ri+ht no" this is more true %or Bitcoin! )ut 6 thin( as "e move %or"ard! "e are +oin+ to see these in%rastructures develop! "here the cr ptocurrenc particularities don&t matter! and it&s *ust cr ptocurrenc is accepted here and "hichever one ou happen to use! there&s an e3chan+e rate )ased on that! )ased on this mar(et mechanism. Ko"! 6 don&t thin( it&s %air to sa that 7ipple is Bitcoin ?.-. 6 reall thin( it&s more li(e a parallel evolution that )rin+s it&s o"n stren+ths and "ea(nesses to the ta)le. 6t )etter-%its the needs o% some and it&s "orse %or others. -But there&s no <uestion! i% 7ipple had matured )e%ore Bitcoin came into use! "e&d )e havin+ a ver similar conversation. -And it "ould )e *ust as "ron+ to call Bitcoin 7ipple ?.-. /ne o% the lia)ilities that 7ipple has all to itsel% is a corporate structure. 'he ma(e the ar+ument! as "ell as 6nvictus 6nnovations "hen the launched the BitShares protocol! that *ust )ecause a compan desi+ns! creates! and releases a protocol into the "ild doesn&t im)ue them "ith an responsi)ilit %or an disruptions that protocol mi+ht cause. Satoshi didn&t disappear )ecause o% all the appreciation that "as sure to )e sho"ered upon him! rather the ris(s o% standin+ alon+side such a disruptive thin+ "as sure to +enerate a )ad outcome. Ma )e not %or Satoshi! )ut some)od loses in that scenario! )ecause there are entities and individuals to "hom pressure can )e applied. 6t&s temptin+ to "ant la" en%orcement on our side. 'he &re scar %ol(s doin+ a di%%icult *o). 6 used to have an unreasona)le amount o% respect and a"e %or the people "ho appl our *ustice s stem! )ut over the last %e" ears! e3perience %inds that diminished. 6 see more arrests %or pett crimes and no en%orcement o% the la" "here the most e+re+ious violations have ta(en place %inance. Cltimatel ! there isn&t much <uestion here. 6n Bitcoin! )arrin+ a re+istration process that sees pu)lic (e s issued to speci%ic names! 6 don&t see ho" ou tell si+nal %rom the noise on an thin+ )ut speci%ic cases. 6n 7ipple! 6 don&t (no"! )ut 6&m prett curious. 6t&s also not surprisin+ that 7ipple La)s ta(es this approach. 8hat choice do the have2 6% the &re seen as aidin+ or ena)lin+ ille+al activities! the have %acilities that can )e raided! assets that can )e seiDed. Loo( at ho" la" en%orcement deals "ith media pirac . >Music in )ac(+roundA An thin+ a pa ment net"or( "ould )e +uilt o% is! o% course! "orse. 8e live in stran+e times! )ut some thin+s are so po"er%ul and dan+erous! that to si+n our name to them is tantamount to suicide. Ma )e not %or ou! )ut %or the +oals o% the pro*ect. Ko reason "h a pressured compan has to die! i% instead the compl . 8ith mone ! the issues are al"a s permission! not technolo+ .

'han(s %or listenin+ to episode #$ o% Let&s 'al( Bitcoin. Content %or toda 9s sho" is provided ) Stephanie Murph and Andreas M. Antonopoulos. Music "as

provided ) Oared 7u)ens. An <uestions or comments email adamVletstal()itcoin.com. See ou ne3t timeR