Transcription of Episode 42 NSA It Ain't So!

Participants: Adam B. Levine (A.L.) Host Andreas M. Antonopolous (A.A.) Co-host Stephan Murph (S.M.) Co-host !endell (!.) - Hive"allet# $uest in second se$ment at %&:'' And Schroder (A.S.) - Bitcoin (luid )ispenser Pro*ect# $uest +n third se$ment at ,,:'-

Adam B. Levine: Hi# and "elcome to episode .& o/ Let0s 1al2 Bitcoin# a t"ice"ee2l sho" a3out the ideas# people and pro*ects 3uildin$ the ne" di$ital econom and the /uture o/ mone . 4isit us at letstal23itcoin.com /or our dail $uest 3lo$# all our past episodes# and# o/ course# tippin$ options. M name is Adam B. Levine and toda the /ocus is on utilit # securit and the international picture. 1he 5SA has 3een in the ne"s a lot# most recentl "ith concerns that the Bitcoin protocol could 3e /undamentall compromised. 1he last se$ment o/ toda 0s sho" has an in-depth conversation "ith m sel/# Andreas and Stephan a3out the particular al$orithms that mi$ht 3e a//ected and "hether or not the are. But /irst# "e0ve $ot a *am-pac2ed sho" /or ou toda . 1he host and + tal2 re$ional alt coins in Marra2esh# intentional communities and the e6plosion o/ con/erences + have intervie"s "ith !endell /rom the upcomin$ ease-o/-use /ocused Hive"allet# and And Schroder# the drivin$ /orce 3ehind the Bitcoin (luid )ispenser pro*ect# 3rin$in$ cash-li2e transactions to a li7uid dispensin$ operation near ou. +0m also pleased to announce that a/ter several "ee2s o/ "or2 3 Michael Sullivan and the team at BitCredits# video con/erence passes are no" availa3le /or preorder at earl -3ird prices in 3oth 8S dollars and Bitcoin. !e0ve partnered "ith 9e//re 1uc2er to capture# in hi$h-de/inition# and ma2e availa3le the entire Cr ptocurrenc Con/erence# set to ta2e place in Atlanta# :eor$ia on ;cto3er -. Prices are# o/ course# less /or the Bitcoin option# 3ut i/ ou0re at all interested in the Bitcoin con/erence e6perience# this is an a//orda3le and on- our-schedule "a to $et /ast access# and support Let0s 1al2 Bitcoin at the same time. 1han2s /or listenin$# and en*o the sho".

Stephan Murph : !hat i/ ou could live in a 3itcoin intentional communit # "here ou are livin$ amon$st people "ho ou ma 3e 2no" /rom the Bitcoin /orums# "ho ou 3u and sell 3itcoins "ith ever da < ou can $o to 3usinesses around ou that accept Bitcoin# and ou can $et a *o3 that pa s ou in Bitcoin. +s that somethin$ ou0d 3e interested in doin$= Andreas M. Antonopolous: + thin2 that "e0re increasin$l livin$ in a "orld "ithout 3orders that actuall matter so much an more. + mean# it0s di//icult to travel# 3ut once ou $et to places# it matters a lot less. + spea2 /rom an outsider0s perspective 3ecause + don0t travel unless + a3solutel have to mostl it0s 3een *ust to spea2 at these con/erences 3ut the concept o/ a$orism and 3 >a$orism?# essentiall + mean participatin$ in s stems that our outside o/ the normal /lo" o/ commercce# li2e these intentional communities i/ the intentional communit has an econom unto itsel/# and people do 3usiness "ith each other in this communit # then that is a /orm o/ a$orism# 3ecause ou0re 3 passin$ "hat "ould 3e the standard methods /or doin$ that same t pe o/ 3usiness. Bitcoin is such an interestin$ currenc 3ecause it levera$es the $lo3al# on the one side# 3ut it0s also ver much a3out the local and especiall once ou $et do"n to the ph sical 3itcoins# li2e "e "ere tal2in$ a3out a couple o/ episodes a$o# + thin2 that the chances /or doin$ somethin$ li2e this# and et havin$ all o/ the advanta$es that Bitcoin o//ers in the $lo3al sense# are reall interestin$. S.M.: Bitcoin is decreasin$ the importance o/ 3orders# ri$ht= Li2e# ou can send Bitcoin all over the "orld# 3ut i/ ou "anna $et a ham3ur$er and ou "anna pa /or it "ith 3itcoins# ou reall have to have people around ou "ho are "illin$ to help ou /acilitate that 2ind o/ transaction. So + can see the value o/ intentional communities# and reall *ust livin$ "ith people "ho are more li2e-minded# and i/ Bitcoin is reall important to ou li2e# ou mi$ht "ant to 3e around people "ho share our love o/ Bitcoin# and the other ideas that sometimes $o alon$ "ith people "ho love Bitcoin. !e see some o/ these intentional communities comin$ up< i/ ou $o to Berlin or some other parts o/ :erman # there are "hole nei$h3ourhoods "here all these 3usinesses accept Bitcoin# and o/ course Ar$entina0s 3ecomin$ reall 3i$# and certain places in the 8S... + mean# all over the place# there are these Bitcoin hotspots that are poppin$ up. !e0ve 3een invited to several Bitcoin con/erences since Bitcoin 3e$an# 3ut no" the 0re 3ecomin$ "orld"ide. Li2e# Ar$entina# 9apan# @n$land# Austria... ever "here has a Bitcoin con/erence# and it0s impossi3le to $o to all o/ them oh# Manila in the Phillippines there0s *ust so man o/ them (laughs) and it can 3e a /ull time *o3 *ettin$ around the "orld to $o to all these Bitcoin con/erences. + thin2 it0s a positive si$n to see them poppin$ up all over the place# 0cause some people *ust "ant local interaction# and the 0re not al"a s $onna $o to the hotspots to 3e a3le to $et that. A.A.: + spent a3out a decade *ettin$ around the "orld# spea2in$ at con/erences /or technolo$ # and + a3solutel loved doin$ that# meetin$ people apart /rom the con/erences# "e0ve also had this rich tradition o/ intentional communities# "hich e6ist 3oth in the cipherpun2 - as "ell as the c 3erpun2 and hac2er - communities

"ith places li2e the Chaos Computer Clu3# and 5oise3rid$e here in San (rancisco# so there0s also this con/luence o/ Bitcoin and other communities that are comin$ to$ether< *ust li2e our Porc(est Li3ertarian $roups up in 5e" Hampshire# here in San (rancisco there0s 5oise3rid$e and thin$s li2e that# and in :erman # the Chaos Computer Clu3. + thin2 there0s a lot o/ overlappin$ communities# and + "ant to visit all o/ them# so + "ill happil pac2 m 3a$s and visit an con/erence "here people are "illin$ to pa m /ares to $et me to spea2 "ith $reat *o A A.L.: And there are a couple o/ other con/erences# too# there are t"o scheduled /or Canada one in ;cto3er# and then another one a/ter the /irst o/ the ear. 1his mornin$ + spo2e "ith the /ol2s /rom 3ehind the Bitcoin C prus Pro*ect# actuall # and the 0re $ettin$ read to put on a con/erence in 5icosia that0ll pro3a3l also 3e ne6t ear. So the con/erence scene has a3solutel e6ploded "e "ent /rom one a ear# t"o ears a$o# and then "e started havin$ a couple a ear# and no" there0s literall at least one ever month throu$h March o/ ne6t ear that + 2no" a3out# and "e0re still hearin$ a3out more on (nearl ) a "ee2l 3asis. So on the one hand# it0s $reat that all these con/erences are happenin$# 3ut on the other hand + "onder i/ people are $onna $et 2ind o/ 3urnt out 3 them# 3ecause there are *ust so man . A.A.: + don0t thin2 so. S.M.: Beah# + don0t thin2 so either + mean# the e6ist 3ecause people are super e6cited and# ou 2no"# some3od "ho0s 9apanese doesn0t necessaril "ant to $o to Canada to attend a Bitcoin con/erence the "ant to 3e a3le to $o to 1o2 o. + thin2 that ma2es sense< "hat "e mi$ht see is a little 3it more o/ a >splittin$ up? o/ the Bitcoin communit - people are more li2el to $o to a con/erence that0s more local to them# and so as a result# ma 3e the "on0t meet the people that live hal/"a across the "orld - 3ut as the communit $ro"s# ma 3e that0s the direction it0s naturall $onna $o in an "a . A.A.: + thin2 "e also have to consider the /act that the $eneral purpose technolo$ con/erences thin$s li2e +nterop and CSA /or securit and various other con/erences involved in teechnolo$ies and telecommunications and pa ment s stems have not et started havin$ dedicated Bitcoin trac2s or dedicated technolo$ sho"cases around Bitcoin# and Bitcoin presentations. Ma2e no mista2e a3out it: "e0re $oin$ to 3e in CSA# at the con/erences# tal2in$ a3out Bitcoin0s securit # and "e0re $oin$ to 3e at the technolo$ con/erences demonstratin$ Bitcoin hard"are. So "e0re $onna start seei$ Bitcoin also "ithin the conte6t o/ other technolo$ and $eneral con/erences. A.L.: So one o/ the other thin$s that "e do here at Let0s 1al2 Bitcoin is "e inter/ace "ith reporters "ho are /rom outside o/ the Bitcoin space# and *ournalists "ho are outside o/ the Bitcoin space# and are loo2in$ /or e6pertise so that the can e6plain this complicated issue to their audience# "ho has even less conte6t to understand it than the did and it0s 3een interestin$ to "atch ho" the various pu3lications have morphed over time in terms o/ their approach. A couple o/ months a$o# there "as a 3i$ rush C5BC# and BBC# and a couple o/ other ver mainstream pu3lications the "ere incredi3l concerned a3out it 3ein$ a PonDi#

and immediatel /rom moment E%# "hen "e $ot on the phone and started tal2in$ to them# the vi3e + "as $ettin$ /rom them "as that the /elt li2e + "as tr in$ to sell them somethin$# and tr in$ to $et them to put their reputation 3ehind somethin$ Fthat "asG $onna 3e a 3i$ scam# that + "as $onna ma2e a 3unch o/ mone o// o/ it and that reall has $one a"a . +ncreasin$l over the last# ma 3e# t"o months# the reporters have 3een $enuinel interested in tr in$ to understand ho" the s stem "or2s and "h it0s somethin$ that their readers and listeners should appreciate. So that0s 3een a reall interestin$ chan$e to see. 1he /lipside o/ that# o/ course# is that a lot o/ them still reall don0t understand it ou tr to use analo$ies that people can relate to< one o/ the $ood ones /or descri3in$ ho" Bitcoin as a protocol "or2s relative to Bitcoin as a compan "hich# o/ course# it "hat most *ournalists thin2 it is is to tal2 a3out 5apster and Bittorrent# 3ecause 5apster "as 3asicall a centraliDed version o/ Bittorrent# and Bittorrent is# o/ course# no" the most commonl used protocol /or sharin$ media /iles on the "e3# i/ +0m not mista2en. +t has no structure# in much the same "a that Bitcoin is a protocol# a set o/ rules that one opts into# rather than 3ein$ somethin$ "here the have o//ices and have revenue and can 3e shut do"n. So# the pro3lem# o/ course# is that then the "ind up comparin$ it to 5apster# 3ecause their readers 2no" a3out 5apster# 3ut the don0t 2no" a3out Bittorrent< so there0s a real 3arrier put in place 3 the comple6it o/ the situation# 3ecause even the $ood analo$ies the people out there "ho trul don0t understand a3out Bitcoin pro3a3l aren0t $onna understand the comparisons too# 3ecause the simpl don0t $et decentraliDed s stems. S.M.: Beah# that0s a real challen$e li2e# ho" do ou e6plain this to our $randma# or to some3od "ho has literall never encountered an thin$ li2e it 3e/ore= Sometimes# + thin2 the 3est "a is *ust to sho" them an e6ample o/ ho" ou mi$ht use it and those are $onna 3ecome more /re7uent as more 3usinesses start acceptin$ Bitcoin# and more people are more "illin$ to tal2 to people in their lives a3out it 3ut that0s a tedious "a o/ spreadin$ a messa$e# ou "ant to 3e a3le to have the sound3ite that ou can $et out on mass media# and descri3e "hat Bitcoin is in a "a that people can understand. 1hat0s a real challen$e. A.A.: +0ve also had a num3er o/ intervie"s "ith *ournalists /rom other countries# and one o/ the other pro3lems is that the sound3ites don0t translate. + thin2 it0s more important to loo2 at this as 3ein$ a3le to deliver an international standard 3ut 3ein$ a3le to deliver it "ith its local /lavor and the local lan$ua$e. And /or that# ou reall need to start 3uildin$ up the local communities o/ 3itcoiners all around the "orld. So# +0m $onna use this opportunit to plu$ the Bitcoin Press Centre# "here ou can /ind contacts "ho spea2 the local lan$ua$e# and the press can that "a /ind someone "ho can tal2 a3out the analo$ to 5apster in Polish# or Hun$arian# or (innish# or "hatever. +t0s increasin$l important to thin2 a3out Bitcoin as a multilin$ual s stem and a multi-cultural s stem# as "ell as a multi-national s stem.

A.L.: !hich is "h # a3solutel # it0s ver ver important to have thin$s li2e the Bitcoin Press Centre# "here people can essentiall have a central place to re$ister as a Bitcoin user# or as someone "ho is capa3le o/ havin$ these conversations and 3ein$ a3le to spea2 a3out it intelli$entl # and ma2in$ that accessi3le to an 3od "ho0s loo2in$ /or it. +t0s li2e help out a reporter# e6cept here0s the central repositor . So# Andreas# + thin2 that continues to 3e a $reat initiative# and it0s a $ood source indeed /or $ettin$ leads to"ards people "ho "anna learn. (Instrumental interlude.) A.L.: Althou$h recentl "e0ve seen lots o/ development in the Bitcoin space# "hat "e reall haven0t seen is too man innovative "allet applications. 1his mornin$ +0m *oined 3 !endell /rom Hive. He0s "or2in$ on a Mac-onl client that has an interestin$ 3usiness model# and 2ind o/ a di//erent approach in $eneral# to ho" "e0re loo2in$ at "allets and "allet transactions Fri$ht no"G. 1han2s /or *oinin$ us toda # !endell. !endell: He Adam# than2s a lot /or havin$ me. A.L.: 1ell me# "hat is Hive= !hat0s the H'-second elevator speech= !.: Hive came a3out 3ecause m /ather "anted to $et into 3itcoins. He0s not reall a computer-savv $u # and + "anted to have an eas "a to $ive him 3itcoins. +0ve 3een around the Bitcoin communit /or a "hile# and + "asn0t too con/ident a3out the lon$evit o/ certain "e3 "allets and thin$s li2e that# and Bitcoin-7t "as ma 3e a little too technical /or him# so + sat do"n and reall tried to come up "ith an idea< ho" can "e ma2e this much easier to use= So the $enesis o/ Hive is li2e# >ho" do ou $ive Bitcoin a $reat user e6perience?= And in addition to that# "hat "e0re tr in$ to do is help people 2no" "hat to do "ith them# so the thin$ that + usuall tell people is FthatG Hive is a $reat "a to $et# send and spend 3itcoins. A.L.: So# tal2in$ a3out user e6perience "hen it comes to "allets# "hat is it that Hive is doin$ that ma2es it more usa3le or more /riendl to ne" users than our standard Bitcoin-7t or another "allet that0s out here= !.: + thin2 the main di//erence 3et"een Hive and other "allet apps is that "e0re reall /ocussin$ on people and or$anisations. !e do local address-3oo2 s ncin$# so ou $et nice ima$es o/ people< "e a3stract a"a a /e" o/ the details. !e tr as much as possi3le to not share 3itcoin addresses. !e ma2e it a little 3it easier to step into the picture. +/ someone that ou 2no" actuall has a 3itcoin address# ou can plop it in there once and ou pro3a3l "on0t have to deal "ith it a$ain. 1hat0s the /irst step. 1he other thin$ that "e0re doin$ is# actuall # "e are ma2in$ it reall eas to discover Bitcoin merchants. So inte$rated into the application is a 2ind o/ app plat/orm /irst o/ all# ou can $ive 3itcoins< "e0re 3uildin$ applications around e6chan$es and ou can also spend 3itcoins. 1here are several merchants# /or

e6ample# no" that also have applications in Hive. So the idea# reall # is ou ma have heard people sa that Bitcoin0s current sta$e is li2e the internet# circa %HH ou 2no"# some core technolo$ is deplo ed# and there0s a lot o/ e6citement a3out its potential# 3ut it0s also ver technical. +/ ou remem3er those times# /indin$ content "asn0t so eas portals and search en$ines spran$ up to deal "ith that pro3lem# and +0d sa Hive is similar to that sta$e. !e 2ind o/ "ant to 3uild a 3rid$e to the mainstream user. A.L.: So# "hen ou tal2 a3out inte$ration "ith applications# and speci/icall "ith e6chan$e plat/orms# are ou a3le to share an o/ that "ith me= ;3viousl # in the Bitcoin space ri$ht no"# that0s one o/ the sin$le lar$est pro3lems that people run into over and over a$ain< "henever ou tal2 to someone ne"# /irst the 7uestion is >ho" + can + start minin$ and ma2in$ mone "ith m computer=?# and then the second 7uestion is >;I# ho" can + 3u them=?# and that tends to 3e 2ind o/ a hard ans"er. So are ou $onna ma2e it easier# or is this *ust inte$ratin$ the e6istin$ solutions into a "allet "hich# to m 2no"led$e# has not 3een done 3e/ore= !.: F1heG /irst step is actuall *ust inte$ratin$ solutions< so# + mean# there0s a lot o/ stu// out there as ou 2no" that can pro3a3l 3e sur/aced a little 3it more easil /or people< so# /or e6ample# the /irst time ou run Hive# ou0re presented "ith a "iDard that sa s >he # do ou have 3itcoins= )o ou need 3itcoins=?# and i/ ou need 3itcoins# + present ou "ith a list o/ several options< there are a /e" e6chan$es# so /or e6ample ou could use BitStamp i/ ou "ant to do a 3an2 trans/er# or "e are actuall ri$ht no" tr in$ to inte$rate "ith JipJap# so the idea is that ou can have local places "here ou can actuall $o and deposit mone ri$ht availa3le to ou ri$ht there# so ou can sta "here ou are and it "ill *ust present it to ou. So a$ain# to ma2e this portal analo$ # "e0re stic2in$ and curatin$ pieces to$ether to $ive an overall coherent Bitcoin e6perience# 3ecause at the moment it0s 7uite hard to piece to$ether as a ne" user. A.L.: Bitcoin is alread 2ind o/ a niche mar2et# and it0s certainl $ro"in$ over time# 3ut + notice that our plat/orm is tar$eted speci/icall at the Apple mar2et. !as that a conscious choice /rom a development point o/ vie"= +s this *ust a /irst deplo ment= !hat0s the strate$ in terms o/ plat/orms ou0re $onna 3e availa3le on= !.: !e 2inda "anted to release on Mac and see ho" it "ent. !e "anted to tar$et the so-called >novice user?. 1he Mac is ver popular# especiall in 5orth America# and ri$ht no"# "henever + sho" the e6istin$ Bitcoin "allet apps to m Mac-lovin$ /riends# the 0re immediatel + don0t "ant to sa >turned o//? 3 it# 3ut the pro3lem is that the don0t reall re/lect all o/ the Mac user inter/ace $uidelines and all that# and "e *ust sa" that as an opportunit # as a startin$ point. But certainl # i/ there is an opportunit to 3uild Hive# speci/icall # /or FotherG plat/orms# then "e0ll loo2 into it# 3ut the /irst step is to see ho" this $oes# "ith the Mac side o/ thin$s. A.L.: Bou0re doin$ some de/initel innovative and interestin$ thin$s here# in terms o/ inte$ratin$ other applications into our "allet application# and /ran2l 3ein$

proactive a3out as2in$ users "hat it is the "ant< as2in$ them i/ the have 3itcoins# or i/ the "ant 3itcoins# and then tr in$ to connect those dots /or them# or at least help them do it. Bou mention that ou have 2ind o/ an interestin$ 3usiness module +0m curious# ho" are ou plannin$ to monetiDe this= !.: Actuall # +0ll caveat this 3 sa in$ + 3elieve this0ll 3e some"hat controversial in the Bitcoin communit # 3ut our /irst idea "as that "e "ould 3e a3le to actuall ta2e transaction /ees /rom the activit that happens "ithin applications. + "ill admit to ou that all o/ the details ri$ht no" "e0re still "or2in$ all that out# ho" that "ould 3e done# especiall since "e don0t "ant to centraliDe that0s one o/ our mantras# to 2eep this ver ver decentraliDed. So "e0re loo2in$ at that# and + don0t 2no" that that0s necessaril "hat0s $onna 3e the end$ame /or us# 3ut it0s "hat "e0re $onna 3e tr in$ ri$ht no". 1he other possi3ilities that e6ist "ithin this# o/ course# are i/ "e $et some traction "ith it "e can do man other thin$s. But /or no"# this is 2ind o/ "here "e0re at "ith 3aseline. A.L.: !ell# that0s certainl an innovative model + don0t thin2 "e0ve heard o/ an one doin$ that 3ecause ou0re tal2in$ a3out 3ein$ almost li2e a utilit here# "hat t pe o/ level "ould these transaction /ees# i/ that0s the "a that ou $u s decide to $o /or monetiDation# "hat "ould that loo2 li2e= Are "e tal2in$ a3out a small percenta$e-3ased thin$# or "ould it 3e /lat and ver ver small# li2e the transaction /ees are no"# or ma 3e it0s .'''-= !.: !e thin2 that# pro3a3l # a percenta$e-3ased model "here it0s a tin percenta$e is "hat "e0ll end up pursuin$. Havin$ said FthatG# + have reall no idea "hat0s $oin$ to 3e accepta3le to the communit # and + hope that "e "ill end up actuall "or2in$ "ith the communit to /i$ure that out. 1his is $oin$ to 3e an open-source pro*ect# so + am actuall $oin$ to 3e completel transparent a3out all that 2ind o/ stu//# and + reall "ould li2e to hear /rom other people a3out "hat e6actl it is that the thin2 "ould 3e /air< "hat e6actl it is that the "ould li2e to see i/ the have an ideas a3out "a s that "e can 3uild a 3usiness around this it0s Bitcoin# so it0s all ver open# and it0s all in/inite possi3ilit as /ar as +0m concerned. A.L.: + understand "h some pro*ects approach this /rom an open-source perspective# 3ut +0m a little 3it surprised that ou0re approachin$ it# $iven the model ou0re tr in$ to pursue# 3ecause it seems li2e the natural ne6t step a/ter ou0ve done "hat ou0re proposin$ to do here is /or someone to /or2 it# as ou said# and then ta2e o// the /ees and sa >here0s the version /or /ree?. And there0s nothin$ actuall stoppin$ an one /rom doin$ that in this situation. !.: Beah# that0s completel true< people could actuall /or2 this application someone could ta2e it# and remove the /ees# and have the /ree version# 3ut m assumption is that there is enou$h $ood"ill in the Bitcoin communit to understand especiall i/ "e0re transparent a3out it that this is ho" "e0re $oin$ to ma2e our mone < that i/ ou do end up $ettin$ the version that actuall has no /ees# then ou do mana$e to $et around the small /ees# 3ut "e also hope that the /ees "ill 3e small enou$h that it0s trivial and that people "ill "ant to support this.

A.L.: Bour /irst version isn0t out et< "hat0s the timeline on this# and "hen can people e6pect to $et their hands on it to pla around "ith it= Because +0ve seen a video o/ it# and it loo2s li2e it /unctions# at least in the e6ample that ou sho"ed to me. !.: Beah# "e0re actuall $oin$ to 3e pushin$ this thin$ out in mid-Septem3er# and the initial release "ill 3e totall tar$etin$ the Bitcoin communit < +0ll pro3a3l put a discrete post on Bitcoin1al2 as2in$ people to test this and tellin$ them "hat "e0re up to# and then + hope that "e0ll have a 3roader push# includin$ a ne" "e3site# comin$ at the end o/ the month. So another thin$ "e0re doin$ that0s reall help/ul /or the user is automated "allet 3ac2up. As ou use Bitcoin# one o/ the 3i$ pro3lems "ith local "allets is that ou can end up in a reall 3ad situation# so# /or e6ample# m sel/< +0m prett savv # 3ut + damn near lost a "allet "ith a reall su3stantial amount o/ mone in it 3ecause + didn0t 3ac2 it up properl # and 3 the "a # this is a note to all Bitcoin-7t users do not *ust cop our "allet.dat /ile# use the 3ac2up "allet /eatureA 1han2s to Peter !eller /or recoverin$ that "allet. !e0re ma2in$ it reall eas to 3ac2up our "allet. 1he process is completel automated. +t ma2es multiple local 3ac2ups# inte$rates "ith iCloud# so our "allet.dat /ile "ill 3e ver secure and sa/e# ou "on0t even have to thin2 a3out it. And there are multiple recover methods as "ell. A.L.: !ell# !endell# sounds li2e Hive is $oin$ to 3e a reall interestin$ product. + can0t "ait until it comes out and + $et to tr it on m various devices. +/ some3od is interested in the pro*ect and "ants to either learn more or $et involved# are ou loo2in$ /or an thin$ in particular# and ho" "ould someone do that= !.: !ell# i/ ou0re an active i;S %' developer "ho0s "or2in$ on hi$h pro*ects# please $et in touch "ith me at "K$ra3hive.com. !e0re also loo2in$ /or a hand/ul o/ testers# so i/ ou0d li2e to 3e one o/ the /irst people to tr it out# please $o to $ra3hive.com and *ust drop our email address in there# and "e "ill send somethin$ out shortl . A.L.: !ell# "e reall appreciate ou doin$ this open-source "or2 /or the communit # and li2e + said# reall loo2in$ /or"ard to seein$ "hat the results are. 1han2s /or *oinin$ us toda on Let0s 1al2 Bitcoin# !endell /rom HiveA (INTERMISSION ad break) (@MAL@ 4;+C@: More than three hundred thousand users and countin$ trust Bloc2chain.in/o. +t0s a 3itcoin "allet service# and a "ealth o/ Bitcoin in/ormation# and it0s completel /ree to use. !ith a Bloc2chain.in/o "allet# ou0ll $et the convenience o/ a "e3 "allet# and the securit o/ a des2top client. Bloc2chain.in/o is also a 3loc2 e6plorer< ou can use it to see 3itcoin transactions in real-time# chec2 the 3alance o/ an 3itcoin address# and vie" man hand 3itcoin charts# all /or /ree. See "hat the have to o//er toda at Bloc2chain.in/o. (DIFFERENT MUSI NE! "D#ERT$ S"ME #OI E)

(@MAL@ 4;+C@: @as )5S is the S"iss Arm 2ni/e /or our domain names# helpin$ meet their customers0 individual needs since %HHL. @as )5S has 3een an outspo2en critic o/ S;PA and C+SPA. @as )5S "as an earl supporter o/ Bitcoin# and no" the are proud to sponsor this sho". )o 3usiness "ith a compan that shares our values. :et a %,M discount "hen ou pa "ith Bitcoin. :o to 3itcoin.eas dns.com# and 3e sure to use discount code L1B. A.A.: + "as tal2in$ "ith 5ilam )octor "ho0s one o/ the candidates "ho is runnin$ /or the Bitcoin (oundation seat# and he0s "or2in$ on a reall # reall interestin$ pro*ect that + "anted to tal2 to ou $u s a3out. 1he 0re puttin$ to$ether# essentiall # an alternative cr ptocurrenc that0s 3ased o// o/ Bitcoin# 3ut is essentiall $oin$ to 3e le$al tender in the re$ion o/ Marra2esh. So he0s "or2in$ "ith the /inance minister to create this# and the reason "h the 0re $oin$ "ith that versus a s stem that is 3ased o// o/ Bitcoin is 3ecause even thou$h the avera$e transaction /ee F/or BitcoinG that + pa is some"here 3et"een . cents and N cents on a per transaction 3asis eah# that depends on "hat the e6chan$e rate is at the time that ou ma2e the transaction that amount is still 7uite lar$e "hen ou compare it to the relative siDe o/ the avera$e transaction that ta2es place in this re$ion. And so /or them# Bitcoin solves some pro3lems# 3ut it creates other pro3lems 3 ma2in$ it so smaller transactions da -to-da transactions aren0t reall tena3le. So the 0ve ta2en the opportunit the 0re still in the process o/ doin$ this to tr and /i6 that# and + thin2 that there0s one or t"o other thin$s that the 0re t"ea2in$ a3out it. !hat do ou thin2 the /uture is /or decentraliDation o/ Bitcoin= )o ou thin2 it0s possi3le to have a one-siDe-/its-all approach "ith re$ard to thin$s li2e the transaction /ees= !e don0t see it as a 3i$ deal# 3ut then in other parts o/ the "orld Fit0sG actuall a real pro3lem. S.M.: Are "e tal2in$ a3out an alt coin here= A.A.: + 3elieve so. + haven0t intervie"ed him et speci/icall a3out this topic# 3ut "e had a conversation a3out it# and that0s "hat it sounded li2e the 0re tal2in$ a3out an alt coin that0s# a$ain# 3ased o// the Bitcoin# and the 3eaut part /or them is 3ecause the 0re 3oth cr pto-currencies# once mone $oes into their local alt coin# it can *ust as easil 3e s"itched to 3itcoin# so ou0ve $ot the a3ilit to save most o/ our mone in 3itcoin i/ ou thin2 that0s the cr pto-currenc that has the most potential# 3ut then "hen it comes to local transactions# ou can still have this Falt coinG essentiall availa3le to ou# and it has all the advanta$es that 3itcoin has# 3ut it is also more tailored to our local environment. S.M.: 1his reall reminds me o/ an article ou "rote# actuall # Adam# on Let0s 1al2 Bitcoin# called >1he ;pportunit o/ Alt Coins?# and 3asicall correct me i/ +0m "ron$# 3ut it sounded li2e our "hole point "ith that article "as FthatG there0s a hu$e opportunit to levera$e the po"er o/ alt coins /or e6amples *ust li2e this# "here# /or instance# ma 3e "e don0t "ant these hi$h transaction /ees li2e# /ive cents is a hi$h transaction /ee# relative to the local thin$s "e0re doin$# so "e0ll *ust ma2e an alt coin that 3etter suits that purpose and that "ould 3e e6tremel use/ul to a certain su3set o/ people# 3ut then it "ould also have the advanta$e o/ 3ein$ similar to 3itcoin and 3ein$ compati3le "ith 3itcoin i/ ou "anted to# /or

instance# have a savin$s account "here ou saved our mone in 3itcoin + thin2 that0s the per/ect e6ample o/ "h alt coins could 3e reall use/ul. A.A.: So localiDation and internaliDation are some o/ the aspects o/ Bitcoin# + thin2# "ill 3e 2e drivers /or developin$ speci/ic alt coins 3ut# at the same time# there0s an enormous 3arrier to adoptin$ an alt coin 3ecause o/ the net"or2 e//ect and the incentive to *oin the net"or2 e//ect o/ Bitcoin. Bi$ net"or2s have a net"or2 e//ect< mone net"or2s have a 3i$$er net"or2 e//ect. Bitcoin has this almost insurmounta3le net"or2 e//ect# "here in order to introduce an alt coin that0s popular# + thin2 ou have to have a ver compellin$ di//erentiator either a massive /la" in Bitcoin that ou0re /i6in$# or somethin$ that0s compellin$ 3ecause o/ its localiDation# local culture or "hatever local application. S.M.: !hat i/ the compellin$ thin$ is /orce= Because that0s "hat le$al tender is li2e the $overnment sa s > ou have to accept this mone ?# so "ould that 3e a valid thin$= A.A.: (orce overcomes all 2inds o/ incentives< it0s the most po"er/ul incentive# so es# o/ course. !hat +0m sa in$ is# ou have a "orld "here 3eatin$ Bitcoin "ill 3e di//icult 3ecause o/ the net"or2 e//ect# 3ut at the same time ou have these incentives to do some customiDation /or local reasons# and + thin2 in the end that0s $oin$ to result in essentiall havin$ a ver lar$e Bitcoin and ma 3e three# /our# /ive other alt coins survivin$ alon$side o/ it in a $lo3al mar2et. Bou0re $onna reach an e7uili3rium "here there aren0t 3i$ enou$h /la"s or incentives to leave Bitcoin# other than the e6istin$ t"o or three alt coins that are survivin$. A.L.: !ell# since "e0re tal2in$ a3out that article + "asn0t actuall intendin$ to tal2 a3out the article# *ust that e6ample# 3ut Andreas m ar$ument in that article is 3asicall that ou0ll have all those pro3lems so lon$ as ou0re mar2etin$ to someone "ho0s alread usin$ Bitcoin or is alread a"are o/ Bitcoin. But that onl encompasses# ou 2no"# less than a /raction o/ %M o/ the "orld population. So i/ ou $o into a situation "here there is no a"areness o/ cr pto-currencies# and the /irst cr pto-currenc that0s introduced is# in /act# one that is more tailored to our environment as in this e6ample# the transaction /ees ma2e more sense relative to ho" ou "ould actuall 3e usin$ it on a da -to-da 3asis then doesn0t that overcome some o/ the net"or2 e//ect# 3ecause simpl put the net"or2 e//ect doesn0t e6ist there= A.A.: +t "ould overcome some o/ the net"or2 e//ect# and "ith su//icientl stron$ local mar2etin$# ou could de/initel have this island o/ an alt coin ta2e o//. + thin2 that0s a $reat opportunit # 3ecause "hat + predict "ill happen is that as that ta2es o//# it "ill 3ecome e6chan$ea3le /or Bitcoin# and as people 3ecome com/orta3le "ith cr pto-currencies and understand "hat the mean# ou should /or3id coin to ta2e advanta$e o/ the net"or2 e//ect and so# that alt coin "ill eventuall disappear. +/ the onl compellin$ ar$ument /or 2eepin$ it /rom convertin$ to 3itcoins is that people don0t 2no" a3out Bitcoin# then it "ill survive /or as lon$ as people don0t 2no" a3out Bitcoin. +t "ill 3ecome the per/ect mar2etin$ vehicle. And then= @ver one "ill convert to Bitcoin.

A.L.: Since "e0re tal2in$ a3out that article# ou 2no"# there "ere a couple o/ thin$s that listeners 3rou$ht up and readers 3rou$ht up that + thin2 it0s important to address# and +0m ver curious /or our /eed3ac2. 1he /irst pro3lem "as that "hen ou0re startin$ an alt coin# especiall i/ ou0re 3ased o// o/ an e6istin$ piece o/ "or2 li2e the same one that Bitcoin uses# or even the same one that Litecoin uses at this point ou sort o/ /ace a ver di//icult 3ootstrappin$ pro3lem "here an 3od can devote some o/ their minin$ po"er that comes /rom a much more po"er/ul net"or2 to"ards our net"or2 and# in doin$ so# ou can actuall 3e vulnera3le to -%M attac2s /rom ver lo" levels o/ hashin$ po"er# relative to the siDe o/ other cr pto-currencies. + /eel li2e# in an environment "here ou have a local /ocused alt coin# that0s so much a pro3lem# 3ecause the 3ootstrappin$ should happen prett 7uic2# i/ ou0re $oin$ a3out it "ith a mar2etin$ campai$n# and it has all o/ that same earl adopter incentive that Bitcoin has had historicall . But ho" much o/ a ris2 do ou thin2 is there= +s that enou$h o/ a ris2 to sa that it0s 3etter to use another situation that levera$s Bitcoin and /inds another "a around the pro3lems rather than creatin$ an alt coin= A.A.: + "ould sa es# + thin2 that unless ou have a reall compellin$ di//erentiator# all o/ these little incentives# ris2s or motives "ill $raduall start addin$ up until the 3ecome insurmounta3le and ou are essentiall s"itchin$ 3ac2 to Bitcoin. A.L.: ;I# so let0s sa that "e "anted to do this pro*ect in Marra2esh and "e didn0t "ant to use an alt coin# "e "anted to use Bitcoin. ;ne o/ the proposals that +0ve seen is to do it entirel in o//-3loc2chain transactions# and essentiall to have $eo$raphic re$ions "here the have a couple o/ pa ment processors that actuall send the 3loc2chain# 3ut /or the most part# da -to-da transactions are happenin$ o//-3loc2chain some3od 0s private data3ase. 1hat has advanta$es in that ou can do essentiall instant transactions 3ecause there0s no con/irmation time# and there0s no /ees "hatsoever unless the 0re put on 3 the plat/orm# 3ut it also has some disadvanta$es# ri$ht= S.M.: ;r# ma 3e# a lot o/ the currenc "ould 3e ph sicall represented# so essentiall people "ould 3e handin$ around paper "allets< there0s no real transaction /ee /or that. Honestl # "hat + "as picturin$ F"asG >;I# there0s $oin$ to 3e this $overnment o/ Marra2esh and the 0re $onna sa their alt coin is le$al tender? "hat + "as picturin$ "as almost li2e a central 3an2 administerin$ the net"or2< almost completel ta2in$ out the decentraliDed aspect o/ Bitcoin and alt coins. And that0s not Bitcoin. 1hat0s not a conventional alt coin 3ut that does sound li2e somethin$ that the "ould do. +/ the 0re $onna sa > ou have to use our alt coin?# then there0s pro3a3l $onna 3e some /ederal reserve or "hatever in Marra2esh that0s runnin$ a 3unch o/ computers and creatin$ the net"or2 or somethin$ li2e that# or that no3od has to run a net"or2 or somethin$ li2e that. + have a hard time 3elievin$ that a $overnment is $onna sa >;I# this is le$al tender< no" %&u ma2e the net"or2 o/ people# %&u $o ahead and create this

net"or2?. + *ust don0t thin2 that "ould /l . So there0s pro3a3l $onna 3e somethin$ a3out it that0s ver si$ni/icantl di//erent /rom Bitcoin# and to me# that "ould not 3e m pre/erence. + li2e decentraliDed net"or2s and + thin2 that0s a hu$e stren$th o/ Bitcoin 3ut + could see a $overnment "antin$ to remove that portion o/ it. A.A.: Let0s also connect this 3ac2 to the idea that people in other countries are much more com/orta3le "ith /inancial uncertaint "ith multiple currencies. !hen + "as in Marra2ech# " traded in dollars# euros# and the local mone # 3ut that "as onl the 3e$innin$ o/ it. +n /act# Marra2ech "as the /irst place "here + "as o//ered camels in e6chan$e /or m "i/e# and that "as as a result o/ her incredi3le ne$otiatin$ pro"ess. She 3asicall sat do"n "ith a 1uare$# and# a/ter t"o and a hal/ hours o/ ne$otiatin$ in (rench# "ore him do"n to the point "here he $ave up and *ust discounted ever thin$# and the "ere so impressed "ith the idea o/ a "oman outne$otiatin$ a 1uare$ that the o//ered to 3u m "i/e /or camels# so there ou $o. S.M.: )id the thin2 she "as $onna ta2e the /irst o//er= A.A.: 1he didn0t as2 her' S.M.: )id the thin2 ou "ere $onna ta2e the /irst o//er= A.A.: 5o# a3solutel A !ell# /irst the /lattered me 3 tellin$ me 7uite clearl that there "ere not enou$h camels in the "orld /or such an incredi3le "oman# 3ut then the o//ered me a more speci/ic price. +0m not *o2in$# this is a true stor # a3solutel . S.M.: !ell# it does ma2e sense that people around the "orld are more com/orta3le "ith multiple currencies# andA.A.: Camels. S.M.: Bes# and camels. (INSTRUMENT"( INTER(UDE) A.L.: 9oinin$ us toda on Let0s 1al2 Bitcoin# And Schroder is the $u 3ehind the Bitcoin (luid )ispenser pro*ect# "hich sounds a little 3it# uh... rudimentar # 3ut + thin2 it0s actuall a reall e6citin$ pro*ect and +0m e6cited to have him on the sho" this mornin$. And # than2s /or sittin$ in "ith us. A.S.: F+t0sG $reat# than2 ou /or havin$ me. A.L.: So# /rom ten thousand /eet# "hat is this pro*ect and "hat does it do= A.S.: M Bitcoin (luid )ispenser pro*ect is 3asicall *ust the /irst o/ its 2ind< an automated s stem that can dispense a certain 7ualit o/ /luid# or "hatever ou ma li2e to sell. M present demonstration uses diesel /uel. Basicall # it accepts pa ment /rom the customer in Bitcoin# and 3ased on ho" much the 0ve paid to the vendor# the dispenser dispenses that 7uantit o/ /luid to them. +t has an

inte$rated /lo" measurement device# as "ell as pump controls. +t 3asicall replaces thin$s li2e card readers in traditional /uel pumps at /uel stations# and also provides man interestin$ /eatures such as remote pa ment and mo3ile pa ment and thin$s that aren0t necessaril eas to do "ith traditional credit card 3ased s stems. +t also provides the a3ilit to return chan$e to the customer i/ the have overpaid or "eren0t necessaril sure ho" much /uel the "anted to purchase. A.L.: So one o/ the applications ou0re tal2in$ a3out here as /ar as the dieselpumpin$ is concerned Fis thatG this "ould replace the credit card reader and the /lo" mechanism at the $as station. But it0s di//erent. !ith Bitcoin# it0s almost li2e a cash purchase# "here ou have to $o and tal2 to the attendant# pa him the mone up/ront ou 2no"# sa >+ "ant /ort dollars on that pump?# and then "al2 3ac2 out and pump to it e6cept there is no attendant# 3ut ou do have to /i$ure out ho" much ou0re $oin$ to 3u 3e/orehand# ri$ht= A.S.: Ah# es# ou do have to ma2e an estimate. As lon$ as our 3alance in our "allet is not ver lo"# ou0re $oin$ to immediatel $et the unspent 7uantit 3ac2 too# so in m opinion it0s not too 3i$ o/ a deal. + mean# "henever + $o to a /uel station and purchase /uel# + t picall $ive the attendant either a /i/t or a hundred dollars and + $et that chan$e 3ac2 as soon as +0m done. Pumpin$ it does re7uire some estimation 3 the customer# 3ut + don0t thin2 it0s too 3i$ o/ a deal# especiall since it0s automated and so 7uic2. A.L: Ci$ht# +0m tr in$ to "rap m head around "hat this sort o/ transaction# i/ +0m doin$ it# "hat that loo2s li2e and "hen ou loo2 at ho" it happens# it loo2s more li2e a cash transaction than it does li2e a credit card transaction# 3ecause FinG the credit card transaction# ou0re essentiall 3ein$ metered as ou dispense# "hereas in the other hand ou prepa and then are re/unded "hatever ou don0t spend. But li2e ou said# it0s automated in this case# so that0s a reall interestin$ approach to it. !ith thin$s li2e remote pa ment# "hat do ou see as the use scenarios /or this= +s this# li2e# +0m sittin$ at m computer and m "i/e calls me and sa s >+0m at the $as station# +0d li2e to $et some $as? so + send mone to her $as pump /rom "here + am= +s that ho" it "ould "or2= A.S.: 1hat could 3e a ver use/ul situation. 1he 2e ones that + /irst identi/ied "ere: sa an emplo er has their emplo ees - "hether the 0re re/uellin$ their vehicles or purchasin$ some other /luid the can send them out to the location "here the ac7uire that ra" material# the /luid# and "hen the $et there the can *ust call up and contact some representative at their place o/ emplo ment and re7uest them to ma2e pa ment /or them and this doesn0t re7uire the emplo ees to carr around lar$e 7uantities o/ cash# or credit cards# or have a speci/ic account set up at a place "here the repeatedl do 3usiness. +t provides sa/et to the emplo ee# 3ecause the don0t have to carr around somethin$ valua3le "ith them it also provides sa/et to the emplo er# 3ecause sometimes ou mi$ht have untrust"orth emplo ees.

+t also saves time FasG the drivers don0t have to chec2 in "ith someone or do an 2ind o/ paper"or2 the paper"or2 could all 3e done 3 someone remotel . Bou also could 3e mu$$ed or somethin$# that0s an un/ortunate situation# 3ut# ma 3e a more leisurel application sa ou0re travellin$ to some e6otic location# ou0re on another part o/ the "orld# ou don0t even necessaril "ant to have access to a lot o/ /unds# 3ecause ou ma 3e in a ver dan$erous location. And i/ ou can onl contact someone and have them ma2e a pa ment /or ou# that mi$ht provide some additional sa/et to ou that is almost preventative o/ actual the/t. 1hose are *ust some ideas that +0ve come up "ith. Ma 3e others can come up "ith somethin$ else# 3ut those are *ust m initial thou$hts. A.L.: So this is a 3asic in/rastructure-level service# and et# as ou mentioned# + thin2 ou0re the onl person "ho0s actuall "or2in$ on a solution to"ards it. Ho" did ou orient on this as a pro3lem that ou "anted to address# and ho" did ou come to the solution that ou did= A.S.: Bou are correct# + don0t 3elieve an one has done this 3e/ore. Basicall # /rom m perspective# F+0mG e6tremel enthusiastic a3out Bitcoin and there0s a certain point "here ou read a lot o/ ne"s articles# and tal2 to ever one ou 2no" a3out it# and tr to $et them e6cited and there0s a certaian point "here ou /eel li2e ou0re not reall doin$ an thin$# and ou have to ta2e it one step /urther. 1his particular pro*ect "as somethin$ that + /elt li2e m s2illset "as /airl "ell-suited to ta2e on. + had 7uite a 3it o/ e6perience in mechanical en$ineerin$ and electrical en$ineerin$# computer net"or2in$# so/t"are development. +0m also ver interested in the ener$ industr # /uels# /luids. 1his *ust seemed the 3et to move the coin closer to mainstream# and + reall thin2 it0s critical that people start loo2in$ at commodities that are not collecti3les thin$s that are consumed< + "ould love to see $rain or coal or man other critical ra" materials in societ availa3le via Bitcoin# and this *ust happens to 3e one that + /elt + could ma2e a dent in. A.L.: Bou identi/ied consuma3les speci/icall . !h are consuma3les speci/icall so important /or Bitcoin= A.S.: !ell# consuma3les are somethin$ that humans need to survive. + didn0t reall mention produce# or corn on the co3# or peaches# 3ut these are thin$s that people need to survive. +/ Bitcoin is $onna have an use/ulness# then it needs to provide people the option to trade /or somethin$ that the need dail . 1here are companies out there# + 3elieve# that have online 3usinesses "here the "ill trade $old or silver /or 3itcoin "hich is de/initel a $reat commodit to 3e a3le to trade 3itcoin /or 3ut at the end o/ the da # $old doesn0t help ou surivive. 1hat0s reall "hat humans need to do. 1he can0t live o// o/ $old# it *ust happens to 3e a mechanism /or tradin$ /or necessities o/ survival. Beaut can 3e o3tained throu$h *e"eller 3ut it0s not a primitive part o/ human societ . + see commodities to 3e so important# speci/icall consuma3le commodities. A.L.: So it has to 3e normal= Am + ri$ht# in a nutshell= +t has to 3e normal and part o/ ever da li/e.

A.S.: Beah# + mean# "hen + tr to convince people ho" a"esome Bitcoin is# the sa >"ell# "hat can + do "ith it=? - it0s li2e# >"ell# ou can 3u stu// online# ou can post an ad on Crai$slist and tr to 3u or sell somethin$# do a 3utter transaction "ith 3itcoin? 3ut the don0t see it as somethin$ that can provide them sustenance and that0s reall "here + thin2 "e need to 3e $oin$ to ma2e this somethin$ that is reall inte$rated into societ . A.L.: Bou have a /unctional protot pe ri$ht no"# Fo/ "hichG there0s a &'-minute demonstration that ou0ve put to$ether that "e0re $onna lin2 to in the sho" notes /or this. Bou0re demonstration unit loo2s li2e it0s /unctional# it loo2s li2e it0s not held to$ether "ith strin$ and 3its o/ tape. So "here are ou in our pro*ect# and "hat0s our ne6t step= A.S.: Somethin$ + can de/initel sa +0m doin$: + "ill 3e at the Cincinatti Ma2er (air ne6t month# sho"in$ m demonstation that ou can see in the video in person. + tried to ma2e the video as detailed and 3elieva3le as possi3le# 3ut + 2no" that people "ant to come see thin$s in real li/e# and touch it# /eel it# hear it# see the /luid movin$# near the pump ou can /eel the pump vi3ratin$ as it0s spinnin$... the protot pe demonstration is /ull -/unctional. + mean# it0s de/initel not production-read # it0s *ust a demonstration# 3ut all the critical /eatures do "or2. +0m also loo2in$ into developin$ a second protot pe that more resem3les a traditional /uel dispenser# "ith 3etter inte$ration into the e6istin$ in/rastructure o/ a /uel station. + do see /uel stations to 3e a critical application< + mentioned man more possi3ilities in m video# and +0ve also demonstrated man mo3ile /eatures# 3ut + "ant to move to an isolated ne"s case# "hich "ould 3e a /uel station# and + thin2 this de/initel can 3e inte$rated into that e6istin$ in/rastructure. A.L.: So "hen do ou thin2 "e can e6pect to start seein$ these= ;3viousl # there0s a 3it o/ a "a s to $o 3et"een here and there# 3ut do ou have a time/rame# or are ou loo2in$ /or partners in this= !hat are ou loo2in$ /or to ma2e this happen= A.S.: +t "ould de/initel 3e $reat to hear /rom a /uel station o"ner "ithin m $eo$raphic re$ion "ho ma 3e interested in demo-in$ this 2ind o/ s stem at their store locations. ;3viousl # + "ould "ant to have the /irst unit dedicated to Bitcoin onl F3utG +0m sure that production units "ould re7uire traditional credit card# as "ell as cash# pa ment options as "ell Fas 3itcoinG# and that0s $oin$ to ta2e a 3it more time to inte$rate three pa ment options into t"elve /uellin$ units at a station. +0d li2e t hear /rom someone "ho is interested in ne" technolo$ # "ho is interested in Bitcoin# someone that + can connect "ith "ithin a reasona3le distance /rom m location. +0m currentl in (ort Mitchell# Ientuc2 # "hich is ver close to Cincinatti# ;hio and the :reat Cincinatti Metropolitan Area. 1hat0s "hat +0m loo2in$ to hear /rom. + "ould li2e to see some sort o/ demonstration availa3le to consumers "ithin the ne6t ear# 3ut ou never 2no" "hat could happen there. +0m not sure i/ there are $oin$ to 3e an unseen 3arriers to puttin$ more o/ these

into a 3eta production t pe o/ application + don0t 2no" "hen "e can see these mass availa3le# 3ut + "ould hope sooner rather than later. A.L.: !ell# "e loo2 /or"ard to chec2in$ in "ith ou as this pro*ect continues to develop. And Schroeder# the Bitcoin (luid )ispenser pro*ect# than2 ou ver much /or our time. A.S.: 1han2 ou# it0s 3een an honour 3ein$ on the sho". (INTERMISSION ad break) MAL@ 4;+C@: Bitcoin has sho"n us that mone and pa ments can 3e improved 3 the same application o/ human ener$ # creativit and cro"dsourced real-time in/ormation that has made ever thin$ else 3etter. And this is an epic insi$ht# one that /undamentall sa2es up monetar economics# pa ment s stems# and even the involvement o/ all peoples in the "orld in the $lo3al division o/ la3our. And this is the reason /or the Cr pto-Currenc Con/erence in Atlanta# ;cto3er - th &'%,. 1he event 3rin$s to$ether le$al theorists# monetar economists# hostin$ visionaries# 3an2in$ pundits# heinous s stems anal sts and dorm-room miners# /or the purpose o/ ma2in$ sense o/ Bitcoin0s rise# and to /oresee the ne6t steps. !e are /ortune to 3e alive to see this happenin$ in our time# and no" is the time to learn# cele3rate# colla3orate and have /un. !e0ll see ou at the Cr ptoCurrenc Con/erence in Atlanta. A.L.: Can0t ma2e it to Atlanta= Let0s 1al2 Bitcoin has ou covered. !e0re capturin$ the "hole event in hi$h-de/inition# "ith pac2a$es availa3le in either dollars or 3itcoins cheaper# o/ course# "ith 3itcoin. (or more in/ormation# visit letstal23itcoin.comOevents. (End &) ad break) A.A.: !e0ve 3een /indin$ out# on a dail 3asis# almost# the revelations a3out the 5SA0s involvement in su3vertin$ the underl in$ encr ption al$orithms that ma2e the /oundation o/ securit /or the internet. So this is ne"s. ;3viousl # the 5SA 3rea2in$ ciphers is nothin$ ne"# 3ut actuall su3vertin$ and introducin$ "ea2nesses to e6istin$ ciphers in order to ma2e them easier to 3rea2 that is ne"s. 1his is not somone ma2in$ sure the can 3rea2 into our house< this is someone /orcin$ all o/ the loc2 /actories in the "orld to ma2e su3standard loc2s so the can 3rea2 into ever 3od 0s house. 1his is a rather serious pro3lem. But does it a//ect Bitcoin= 1hat0s the 7uestion + set out to ans"er last "ee2# and did 7uite a 3it o/ research to /ind out "hether the underl in$ encr ption schemes in Bitcoin "ere a//ected# and "hat the e6perts had to sa . So /irst o/ all# $u s# are ou "orried at all a3out this= +s this a concern /or ou= S.M.: +t *ust seems li2e it 2eeps $ettin$ "orse and "orse. !hat could ou ima$ine a3out the 5SA 3ein$ a3le to sp on people= +/ ou can dream it up# the 0re pro3a3l doin$ that. So + can0t reall sa +0m surprised concerned= Beah# de/initel .

A.L.: 1his is 3een one o/ the +S;:@5 scenarios# ri$ht= + mean# the "hole idea 3ehind "h Litecoin mi$ht potentiall succeed# is >"hat happens i/ the encr ption al$orithm# the hashin$ al$orithm# that "e use to store 3itcoin is compromised=?. !hat does that allo" ou to do# Andreas= Are "e tal2in$ a3out dou3le spendin$# are our 3itcoins $onna 3e ta2en /rom ou= + don0t thin2 that0s the case. A.A.: So /irst o/ all# let0s tal2 a3out the t"o di//erent al$orithms that are most a//ected here. (irst# ou tal2ed a3out the hashin$ al$orithm# that0s SHA-&-N# the Secure Hashin$ Al$orithm &-N that al$orithm produces a &-N-3it di$ital si$nature# or hash# that summariDes the inputs in a cr pto$raphicall secure manner. And that0s used throu$hout Bitcoin< it0s used as a proo/ o/ "or2# it0s used to produce the pu3lic addresses< it0s used in a num3er o/ di//erent places. 1he other al$orithm that0s used is elliptic curve cr pto$raph # speci/icall as mmetric pu3lic 2e encr ption usin$ elliptic curves. 1hat is used in order to $enerate the relationship 3et"een the private 2e and the pu3lic 2e . 1hat0s essentiall the underl in$ securit that 2eeps our mone loc2ed in the 3loc2chain. A.L.: ;I# so "e0re de/initel $onna have to stop there and $o 3ac2 throu$h that a little 3it. A.A.: So# "hat a hash al$orithm does is it ta2es an document# 3inar /ile# an thin$ ou "ant# and it provides a si$nature. 1his is a di$ital si$nature it0s 3asicall a di$ital hash# it0s a /in$erprint# i/ ou li2e# a 3inar /in$erprint o/ that /ile. So in proo/ o/ "or2# "hat ou0re doin$ in Bitcoin is tr in$ to /ind the speci/ic /in$erprint "hich has characteristics less than a tar$et0s di//icult # and i/ ou /ind that# then ou can create a ne" 3loc2< ou have the proo/ o/ "or2. So# theoreticall # i/ SHA-&-N "as 3ro2en# that "ould allo" the 5SA ver easil to pull out a -%M attac2. @ssentiall # ou "ouldn0t need hashin$ po"er to /ind the 3loc2< ou0d 3e a3le to *ust 3asicall /ind the 3loc2 instantl "ithout $oin$ throu$h millions and millions o/ hashes ou0d *ust 3e a3le to reverse en$ineer it. A.L.: And this is 3ecause ou could 3asicall cheat# ri$ht= So ou could 3asicall cut throu$h all the "or2 and ou0d *ust $et the proo/# 3ut ou didn0t actuall do the "or2. S.M.: So# i/ there is some 2ind o/ vulnera3ilit that the 5SA could e6ploit li2e# ma 3e the have a le$ up 3ecause the 2no" "hat that is 3ecause the /orced that to 3e there 3ut couldn0t a private criminal ta2e advanta$e o/ that too# i/ there "as such a vulnera3ilit = A.A.: Bin$oA And that0s the main concern here# 3ecause "hen ou /orce all the loc2 manu/acturers o/ the "orld to ma2e "ea2er loc2s so ou can 3rea2 in# that means that an 3od else "ho /i$ures out that the loc2s are "ea2 can also 3rea2 in. So that0s the real ris2 here# that i/ a "ea2ness has 3een introduced into these al$orithms# it0s not so much that the 5SA can e6ploit it 3ecause# to 3e honest# the have a prett 3road tool2it that the can e6ploit to dama$e Bitcoin 3ut rather# that other actors no" have an opportunit to e6ploit a certain "ea2ness.

5o"# /or the record# + don0t thin2 SHA-&-N is 3ro2en# and that0s not one o/ m concerns. + thin2 it0s more interestin$ to loo2 at the other al$orithm# thou$h. A.L.: ;I# so the other al$orithm is the elliptical curve# ri$ht= A.A.: Correct. @lliptic curves are a "a /or doin$ pu3lic 2e cr pto$raph . 1he reason ou have a private and pu3lic 2e as part o/ our Bitcoin "allet # and the 2e s that control our "allet itsel/# are 3ased on elliptic curve cr pto$raph . A.L.: Can ou e6plain to me "hat elliptic curve is actuall re/errin$ to= +0m tr in$ to understand ho" this /its. A.A.: +0ll tr and do the %--second e6planation as 3est as + can. An elliptic curve is 3asicall a $eometric shape# a curve# that0s e6pressed 3 a /unction. +n the case o/ Bitcoin# that /unction is B s7uared e7uals P to the cu3e plus Q# and that particular /unction a simple mathematical /unction is used 3ecause ou can e6press a speci/ic mathematical pro3lem# a discrete lo$arithm pro3lem# 3 /indin$ t"o points on the curve and then connectin$ them and seein$ "here a third point on that line ends up on the curve. 1hat0s a lon$ $eometric e6planation# 3ut the 3ottom line is that0s ho" ou can create a pu3lic 2e # 3ut no one can ta2e that pu3lic 2e and reverse it and $et our private 2e s and ta2e our 3itcoin. 8nless# o/ course# there0s a "ea2ness in the elliptic curve cr pto$raph s stem. S.M.: 9ust to clari/ # Andreas# "hen ou0re sa in$ >pu3lic 2e pair? or >pu3lic 2e and private 2e ?# the pu3lic 2e is our 3itcoin address# correct# and then the private 2e is the thin$ that unloc2s the 3itcoins /rom our 3itcoin address. A.A.: 1hat0s ri$ht. 1he pu3lic 2e is hashed t"ice and creates the 3itcoin address# so es# that is the pu3lic 2e # e//ectivel . And the private 2e ou don0t reall see the private 2e the private 2e is encr pted in our "allet and is "hat ou t pe in our pass"ord in order to achieve spendin$ 3itcoins# that0s ho" ou spend 3itcoins# 3 usin$ that private 2e to si$n a transaction. S.M.: Ci$ht# so the analo$ "ould 3e it0s almost li2e an email address# "here ou use our pu3lic 2e # or some3od has our address# "hich is related to the pu3lic 2e # then the can send 3itcoins to ou# 3ut the can0t send them /rom that address 3ut i/ the had the private 2e # then the could move 3itcoins out o/ that address. A.A.: 1he could spend. So the 2e 7uestion here is >are elliptic curves "ea2?= A$ain# m conclusion ri$ht no" is that the particular elliptic curve that Satoshi pic2ed# "hich is called a Io3litD curve# and in /act it0s 2no"n 3 the moni2er S@CP&-NI%# so it0s 2no"n as the I% Io3litD curve# &-N 3its# elliptic curve. So that particular curve is one o/ the curves that "as promoted 3 the 5ational +nstitutes o/ Science and 1echnolo$ # or 5+S1# and the promoted a3out a doDen di//erent curves. So the 7uestion no" is# did the pic2 those curves randoml = )id the pic2 those curves deli3eratel # 2no"in$ that there0s a "ea2ness that the rest o/ the "orld doesn0t 2no" a3out in speci/ic curves= And there0s a 3i$ concern no"#

3ecause o3viousl # "e0ve lost trust "e0ve completel lost trust in an thin$ the 5SA sa s. S.M.: So does the 5+S1# or the 5SA# or the $overnment# use those /or their o"n encr ption= Because ou "ould thin2 the pro3a3l "ant to 2eep some o/ their stu// encr pted too# so "h "ould the promote vulnera3le al$orithms /or their o"n use= A.A.: Bes# the "hole point o/ 5+S1 is that i/ a curve is approved 3 5+S1# and then /urther recommended 3 the 5SA# it is used 3 the $overnment to protect sensitive# secret and top-secret communications. So this is an endorsement to use that encr ption. +t "ould ta2e enormous hu3ris and arro$ance to promote a "ea2 encr ption scheme under the assumption that ou0re smarter than ever 3od else and ou0re the onl one "ho can /i$ure out that "ea2ness and e6ploit it. +t "ould ta2e enormous hu3ris and arro$ance to do that. So let0s ta2e some 3ets. !ho thin2s the 5SA is that arro$ant and "ould actuall do somethin$ that stupid= S.M.: + "ouldn0t put it past them. A.L.: So 3ased on "hat ou0ve 3een a3le to /i$ure out so /ar# Andreas# does it seem li2e either o/ these standards are compromised= A.A.: + /eel that "e came ver close and "e ma have possi3l dod$ed a 3ullet# 3ut the *ur is still out. !e0re still not sure "hat0s happenin$ "ith the elliptic curves. 1he possi3ilit o/ SHA-&-N 3ein$ 3ro2en is ver lo"# and $iven the impact on Bitcoin is not reall a 3i$ concern# 3ecause a$ain ou0d have to 3e a3le to pull a -%M attac2# ou can chan$e the proo/ o/ "or2# there0s a lot o/ thin$s ou can do. +t0s much more disconcertin$# much more "orr in$# i/ elliptic curves are 3ro2en# 3ut o/ all the elliptic curves that "ere recommended 3 5+S1# the least su3*ect to manipulation are the Io3litD curves# 3ecause the 0re not 3ased on random num3ers< the "ere instead 3ased on speci/ic prime num3ers that "ere invented 3 # + 3elieve his name is )an Io3litD# the $u "ho invented elliptic curve cr pto$raph . 1hat curve is less suspect. +/ Satoshi had pic2ed one o/ the random curves# + "ould 3e ver "orried. Li2e# a lot o/ 3usinesses are ver "orried ri$ht no"# 3ecause the 0re usin$ some o/ the random curves# and no" the can0t /i$ure out i/ the random num3ers that are used to desi$n those curves are random# or i/ the have 3een pic2ed speci/icall 3ecause the correspond to "ea2 curves. A.L.: 5o" "hen ou sa a >"ea2 curve?# "e mean 3asicall that the 5SA or an other real a$enc out there that is /ocused into this c 3er-securit area has a lot o/ horsepo"er# /rom a computational standpoint# that the can thro" at these thin$s< and so# i/ the can thro" a "hole 3unch o/ computational po"er at one curve the 2no" to 3e "ea2# the can essentiall map it out# and then i/ that curve $ets adopted then it 3ecomes much# much easier to compromise an thin$ that has used that curve in its securit # is that ri$ht= Because it 3ecomes a 2no"n part o/ it.

A.A.: !ell# map it out= 5o# 3ecause it0s a ver lar$e curve# mappin$ it out is not possi3le. Ho"ever# the idea o/ a "ea2 curve is 3asicall that the curve itsel/ has some characteristic that can 3e e6ploited in order to arrive at a mathematical solution that is less hard than the 3rute/orce solution# so i/ it too2 ou a 7uadrillion ears to do it 3 3rute /orce# i/ ou can /ind a shortcut that is /aster to doin$ this in less than 3rute /orce that0s a "ea2 curve. S.M.: + have a 7uestion that0s related to this. +0ve heard that 3ecause o/ these revelations a3out encr ption "ea2ness that have come out *ust recentl # SSL is no" considered not secure. + thin2 that could potentiall a//ect a lot o/ people usin$ 3itcoins# li2e /or instance "e3 "allets# or even the online 3an2in$ and the le$ac 3an2in$ s stem that the do# or an num3er o/ lo$ins to di//erent sites. +s that ri$ht# Andreas= A.A.: SSL "as not secure a$ainst the 5SA. + thin2 that0s important to understand# and primaril # the attac2s a$ainst the SSL securit have not 3een technolo$ical as much as perhaps or$anisational# political and technolo$ical at the same time. Steal the 2e s# /orce the compan to $ive them to ou# 3lac2mail them into $ivin$ ou a 3ac2 door# etcetera etcetera. 1here0s a 3i$ di//erence# 3ecause in this case "e do not 3elieve that SSL "as made deli3eratel "ea2er. !e 3elieve instead that the 0ve used various e6trale$al techni7ues to 3lac2mail the certi/icates authorities into handin$ over si$nin$ 2e s# and as a result# the can 3asicall spoo/ an SSL site the "ant and do man in the middle attac2s. 1he onl $ood ne"s# the silver linin$ out o/ that cloud# is that i/ that0s the case# that is a capa3ilit that0s uni7ue to the 5SA 3ecause o/ its political clout in the 8S# and there/ore not eas to replicate 3 others< "hereas i/ the 0ve "ea2ened the underl in$ securit primitives then that can 3e replicated 3 an one "ho has mathematicians. A.L.: So /rom a certain point o/ vie"## it0s actuall 3etter that the resort to 3lac2mail# or threats# than to actuall compromise the standardA A.A.: A3solutel # a3solutel A Because in /act# loo2 at this /rom a practical perspective< resortin$ to 3lac2mail is part o/ their institutional mandate. +/ the did it to /orei$ners# perhaps that mi$ht even 3e accepta3le. !ea2enin$ the securit standards is stupid on so man levels 3ecause it violates the 3asic social contract and the 3asic trust 3et"een the 5SA and the American people# that the second part o/ their mission "hich is ma2in$ the American in/rastructure more secure has e//ectivel 3een compromised 3 the /irst part o/ their mission# so that0s the pro3lem. S.M.: So ho" could "e $et 3etter standards /or encr ption= Are there people "ho are not a//iliated "ith the $overnment# "ho are $onna audit each other0s "or2# and mi$ht 3e a3le to put out ne" encr ption technolo$ies /or us to use= A.A.: Beah# that0s a $reat 7uestion# Stephanie. 1he other silver linin$ that has come out o/ this. 1he entire encr ption and securit communit is pissed o//. 4er # ver # ver an$r . 4er 3etra ed# ver an$r and ver resent/ul a3out this. S.M.: !hat did the e6pect=

A.A.: !hat the e6pected "as that the 5SA "ould /ollo" their mandate and act in $ood /aith# at least vis a vis American in/rastructure# American technolo$ and American citiDens. 1hat "as the social contract# and in /act the 5SA has 3een "or2in$ "ith technolo$ companies since its inception# 3ased on that social contract. And the 3ro2e itA And the 0re $onna pa the price. Because ri$ht no"# a 3i$ chun2 o/ the +@1(# a 3i$ chun2 o/ the securit communit and a 3i$ chun2 o/ the cr pto$raph communit has made it their li/e0s $oal to re"rite the internet /rom the 3ottom up and ma2e it 5SA-proo/. 1he pissed o// the "ron$ people. + thin2 ou0re $onna see the internet chan$in$ over the ne6t couple o/ decades. !e 3uilt the internet as an open# $ood-/aith net"or2# and no" "e0re $oin$ to have to re3uild it as a dar2net o/ dar2nets. S.M.: )on0t mess "ith the hac2ers. A.A.: )on0t mess "ith the hac2ersA A.L.: )on0t mess "ith the cr pto$raphersA So# Andreas# *ust to "rap this up# it sounds li2e ri$ht no" there are concerns# 3ut it doesn0t loo2 li2e either o/ the standards that are actuall applica3le to 3itcoin have 3een 3ro2en# or it0s ver unli2el that the 0re 3ro2en< there are other standards that are much more li2el 3ecause o/ the random num3ers in the elliptic curve# as "e "ere tal2in$ a3out 3e/ore. + "anted to 2no": one o/ the thin$s that people tal2 a3out /or Bitcoin is the idea that i/ and "hen "e arrive at a 7uantum-computin$ realit # then CSA is 3asicall out o/ the "indo" 3ecause o/ order o/ ma$nitude< it F"ould 3eG easier than it is no" to compromise that standard. +s there somethin$ to that= +s this somethin$ that "e should 3e concerned a3out= A.A.: !ell /irst o/ all# "e don0t use CSA "ithin Bitcoin A.L.: + 2eep sa in$ CSA instead o/ SHA. A.A.: + don0t thin2 SHA "ould 3e a//ected 3 7uantum computin$ as much as some o/ the other cr pto$raphic primitives "ould 3e. Listen# at the moment# "e0re alread in a 7uantum-computin$ "orld# i/ ou 3elieve the technolo$ical anal sis o/ the )-"ave s stem# "e alread have &-N- and even possi3l -%&cu3it 7uantum computers# and $uess "ho has those= ;/ course# the 5SA. +0m not "orried 3 7uantum computin$ at all /or t"o reasons. 1he /irst one# as + said 3e/ore# is that i/ an attac2 is speci/ic to a certain adversar # and that adversar has other "a s o/ ta2in$ Bitcoin do"n# then that0s not reall causin$ a pro3lem. 1he advanta$e ri$ht no" is that the onl people "ho can 7uantum cr pto$raph are those "ho can 3u 7uantum computers# and luc2il there aren0t that man around. +/ that 3ecame a 3roader pro3lem# and ever one could 3u 7uantum computers# then "e could chan$e the encr ption al$orithms and use those 7uantum computers to do cr pto$raph as "ell as decr ption. So this is an arms race. +/# and "hen# 7uantum computers 3ecome "idespread# then "e "ill use those to 3uild 3etter cr pto$raph # as "ell as 3etter decr ption.

A.L.: 1han2s /or listenin$ to episode .& o/ Let0s 1al2 Bitcoin. Content /or toda 0s sho" "as provided 3 )r. Stephanie Murph # Andreas Antonopolous# !endell /rom Hive and And Schroeder. Music "as provided 3 :erard Cu3ens. +/ ou can0t $et enou$h ori$inal thou$ht and discussion# read our dail 3lo$ at letstal23itcoin.com. Si$n up /or our "ee2l ne"sletter at the"ee2l 3itcoin.com. 1o $et in touch# send me mail at adamKletstal23itcoin.com or visit letstal23itcoin.comOtal2 to 3e directed to our listener su3reddit. Have a $reat da .