Lets Talk Bitcoin

E46: Life in the Cloud

Participants: Adam B. Levine (ABL) Host Andreas M. Antonopolous (AA) Co-host Dr. Stephanie Murphy (SM) Co-host Benny (B) Guest / CloudHashing.com Admin Emmanuel - (E) Guest / CloudHashing.com Admin

(INTRO MUSIC) ABL: Hello, and welcome to episode 46 of Lets Talk Bitcoin for October 1st, 2013. Visit us at letstalkbitcoin.com for our daily guest blog, all our past episodes and, of course, tipping options. Well be in Atlanta for their CryptoCurrency Conference, 10/3/2013 10/6/2013. If youre going to be there, make sure to visit letstalkbitcoin.com/meetup and say, Hi. For those of you unable to attend, video-conference passes are available at bitcoinvideopass.com and, of course, both streaming passes and DVD sets are cheaper when you buy with Bitcoin. My name is Adam B. Levine, and today, were talking about the realities of the situation. Falkevinge, controversial author of Swarmwise and founder of the pirate party has done the math, and thinks the price of Bitcoin is off, way off, orders of magnitude off. Andreas explains his logic and talk about how value is relative and determined by what you want to get from your money. Then, I interview Benny

and Emmanuel of Cloud Hashing, a hosted mining service that aims to give would-be miners instant gratification and positive return-oninvestment (ROI) for a nominal fee. In our continual quest to discover if mining is really suitable for anyone without five figures to invest, these guys hope you think theyre the answer. Some of you love altcoins, some of you hate them, but the fact is that lots of different coins are offered up as donations to Lets Talk Bitcoin and we wrap up todays show with a discussion about how to pick which ones to take versus not. But first, Local Bitcoins, for better or worse, is a high-traffic and influential source of in-person Bitcoin sales. Stephanie shares a recent story about what Andreas calls a cross-site scripting attack that drains your Local Bitcoins account of funds. Once again, Im joined by Andreas M. Antonopolous and Dr. Stephanie Murphy.

SM: There was a scam recently on Local Bitcoins that was going around and, of course, Local Bitcoins is not free from scammers just like anywhere in the Bitcoin world. But, this was a scam that hadnt really been pulled off before and what was going on was there was a user who was messaging sellers on Local Bitcoins and saying, Hey, you know, I have low feedback but just to put your fears at ease Im sending you a picture of my passport photo, and there was an attachment to the message. First of all, thats pretty strange that somebody would send you a picture of their passport photo. If youre a seller on Local Bitcoins, youre probably not going to be doing the whole KYC (Know-Your-Customer) thing and requiring a picturetwo forms of government ID, or whatever. Theres a red flag right there. However, some people clicked on the picture and what happened was it took you to a very blurry looking scan of a passport photo where you couldnt see any details anyway, but it was meant to distract you from the fact that all of your bitcoins on your Local Bitcoins wallet were being stolen. *(chuckling)*

AA: Ouch. SM: And what happened was, this somehow, clicking on this picture and I dont know exactly the computer science-y details, but basically, what happens is if you click on this attachment (and) open it in the same window as your Local Bitcoins window, it executed a Javascript that would initiate a withdrawal from your Local Bitcoins wallet. AA: Thats known as a cross-site scripting attack or XSS. Thats basically when software running in one of your windows or tabs is attacking software thats running in another one of your windows or tabs. In this case, the passport Javascript Trojan, essentially is attacking the Local Bitcoins tab. SM: Right. So, a lot of sellers on Local Bitcoins keep their coins in their wallet on Local Bitcoins because, basically, from there its pretty easy to fund escrows that later go into transactions. So, its convenient to have bitcoins already loaded into Local Bitcoins for the purpose of trading, but in this case, this person exploited that fact. Now, there is a bright side to this. Of course, we can learn from this attack. Dont click on any attachments in Local Bitcoins, right, and watch out for Javascript. Those are the two lessons I think we can take from this. But, Local Bitcoins has a security feature called two-factor authentication which you can use (with) an app like Google Authenticator, which creates tokens that expire every 30 seconds. In order to login or withdraw bitcoins from your account, youve got enter the token and the token is on another device, perhaps, like your cell phone or something or a different computer. Its a little bit of a way to ensure that you are actually the person who owns the account and youre approving any withdrawals that happen. In my mind, this is a big plus in the column of two-factor authentication, and also, just being really careful and watching out for scammers and being super-skeptical of any kind of attachments like that on a site like Local Bitcoins.

AA: Lets try some advice for security newbies when it comes to Bitcoin. First of all, advice number one, I think its great to be careful but its very difficult to not click on things when youre on the web. One of the ways Ive found to protect myself against those kinds of attacks is to have my browser in, essentially, Javascriptdenial mode by default. I run some software called NotScript or NoScript; on Chrome, its called NotScript; on Firefox, its called NoScript. Basically, what this is, is a Javascript-whitelisting service. If you visit a page youve never visited before, by default, all the Javascript, Flash and other executable content is disabled. Only if you select to enable programming and code on that page can you see it. Thats going to break things like your online banking, which you can then selectively re-enable, but its also going to break like this cross-site scripting attack. Generally speaking, you do not go running around the internet without wearing some kind of prophylactic and NotScript is, essentially that. The second piece of advice, of course, is dont keep cash on these services. Online wallets suffer from this risk because the keys are not in your control and theyre protected by a simple password. Theyre very easy to get out. Use paper wallets, distribute your funds between multiple services, (and) try to keep it offline as much as possible. The third piece of advice is multi-factor authentication. Quick primer, multifactor authentication means using more than one way to authenticate yourself; something you remember or something you know, which is a password; something you have, which would be a token such as a smartphone application, key fob or something like that. Perhaps, even a USB keychain and then, something you are, which is the third factor of authentication you can use. That would be a biometric like a fingerprint. Something you have, something you know, something you are or as Chris Hoff puts it, Something to beat out of you, something to chop off you and something to steal. ABL: (*laughing*)

SM: Yikes! ABL: So, I am going to make a confession here. I am currently, not using multi-factor authentication. I sort of made a decision that I just wasnt going to use web services so I dont keep money in anything online and the thought has been that for the most part, thatll protect me. I also have paper wallets, of course, and things like that, offline backups, but Im not actually using two-factor authentication. Andreas, do you think given my particular use cases, I should be? AA: If none of these services have access to either your Bitcoin funds or your U.S. dollar funds for a bank account then (its) really not a problem as long as you keep the funds limited and you only fill them up when youre doing a transaction. Its not as good as using two-factor authentication, but actually, I think its a better solution than using two-factor authentication, having 100% of your money on online. Id rather have 2% of your money on online and not use two-factor authentication. ABL: So, two-factor authentication improves the situation by making it so that someone has to compromise two separate devices or two separate vectors as opposed to being able to just stumble across one, compromise that one and take everything you have. Thats the advantage. It doesnt make it impossible to have money stolen from you it just makes it so that its more complex. AA: It makes it so that the one-factor that most people use which is something you know, the password. The problem is that can be very easily captured from a weak endpoint through a keylogger. The advantage of having a token like Google Authenticator is that its much harder to break into that. Generally speaking, when you see compromises that involve two-factor authentication, its because the service itself was broken. There was a bug somewhere else or in the last case we saw in was a RNG generating poor quality

sigatures, but effectively, I dont think weve ever seen a service protected by two-factor authentication where somebodys had the second factor compromised. If you use it right it is secure. SM: There is a small cost to using it though, right, and that is that if you use two-factor authentication, it can take a little bit of extra time and effort. Its not really as though theres another password to lose because all you really need to do is be able to have access to Google Authenticator or your YubiKey or whatever. Its not like theres an extra thing to forget like a password, but it is an extra step and any time you introduce an extra step theres something else that could potentially go wrong. AA: Right, absolutely. Though I think what were seeing again and again the lesson is that without two-factor authentication, money stored in an online account, whether thats Mt. Gox or Coinbase or Local Bitcoins or any of them really, is not safe. Its not safe because these companies are not doing a good job with security. Theyre doing a relatively good job with security. Its not safe simply because your computer is not safe and no one can protect against that except for two-factor authentication. So, the problem here is that the endpoints are woefully insecure and weve reached a point in society where we have invented the digital currency that can be stored on anything but we havent yet invented anything that can store digital currency securely. ABL: This kind of brings us naturally into the topic of hardware wallets which, there have been a fewI think Ive seen one powered by a Raspberry Pi and I know that theres a concept floating around called the Trezor that actually is slated to ship at the end of October. AA: Ive pre-ordered and Im expecting to receive two of those. As soon as I get them, Ill let you know.

ABL: What is it that a hardware wallet does that is substantially different fromA hardware wallet is not two-factor authentication, a hardware wallet is a distinct device that is only for Bitcoin and, therefore, can be treated as a secure environment, right? AA: Well, a hardware wallet could be two-factor authentication or a hardware wallet, essentially is a second factor in the authentication scheme. However, a true hardware wallet is one that processes transactions. So, it signs stuff. It has keys on it. I think thats really the issue is being able to store keys in a tamper-proof environment that can be controlled by the user and usually, when you have a hardware wallet it has another factor. Its not (that) the one factor is better than the other its that two factors are better than one. If you have a hardware wallet you still need the PIN or password to protect that hardware wallet. Otherwise, it gets stolen, so does your money. ABL: I see, so its just that the device in that case is a factor and the other AA: Exactly. ABL: ok, I see, I see. AA: The device is the something you have and you need the second factor which is something you know and if it had a fingerprint scanner youd have a third factor which is something you are. ABL: One of the natural things that comes up with either a hardware wallet or a second device used in a two-factor authentication scheme; what happens if Im on a boat and I lean over the side and my phone falls out of my pocket and then, my phone is gone and thats my second authentication device. Its not like I can just load Google Authenticator on another one of my devices. It was tied to that specific device, right?

AA: Yeah, youre going to have to go back and use the reset mechanisms on each one of those sites to reset the two-factor authentication system and usually, that will involve providing some other proof of proof of identity. Then, it gets into the manual process and its not easy. ABL: Do you think that this is, I mean, the direction that were going now where were essentially adding additional layers to try and make it so that you cant just get through one layer and be there. Do you think that this is the correct direction to go? I had a conversation with Jeffrey Paul a couple months ago where he told me about Sneaks Law, which is that users cannot or will not adhere to operational security, basically. (They) will not secure their computers because they either cant or they wont. AA: Thats absolutely true so the way you resolve that is you take operational security and you weave it into the normal workflow or function that the user is doing so that they dont know theyre doing operational security. They simply do it. I think in the case of these hardware wallets, what youre doing is youre making the two-factor aspect disappear of it into the background because youve physicalized the money and provided a second factor at the same time. By hiding the security we can get users to adopt it, by making it a part of the normal interaction of money so you apply the security without even knowing it is just part of the cultural norm or the protocol if you like. ABL: Well, I look forward to hearing what your thoughts are on the Trezor wallet once you get your hands on it, Andreas. That sounds pretty exciting. AA: Yeah, Im looking forward to it and you know, whats interesting about this is that these devices are really enabled by this parallel revolution thats happening in amateur hardware in the ability to take an OLED screen and a Raspberry Pi or a small

microprocessor and throw something together like the Trezor with some 3D printing. You couldnt really do that ten years ago. I think its really exciting how those spaces are converging with Bitcoin. ABL: Just as in a side here, Chris Abrams just $287,859 refunded from BFL against their will to Paypal over the last two weeks. AA: Oh-h. (Musical Interlude)

AA: This week I was reading an interesting article from Falkevinge. Falkevinge is the founder of the pirate party and pretty well known libertarian freedom pundit. Hes writing about Bitcoin and the core underlying value of Bitcoin and his basic premise is that Bitcoin seems to be vastly overvalued and partially caused by illegal price fixing. His premise is that the current valuation of about $1.5 billion at about a hundred-and-something dollars per bitcoin is actually vastly inflated and does not represent the underlying value of Bitcoin. He bases this argument on doing an analysis of money velocity by looking at the transactional velocity of Bitcoin and looking at how these bitcoin(s) are being spent. I think the equivalent in Bitcoin terms is bitcoin days lost; I think is the statistic that we see most often. So, based on his analysis the bottom line is that Bitcoin should be valued at about $1.20 instead of $120. Hes saying its valued two orders of magnitude higher than it should be and that the real economy is only about $13 million U.S. dollars not $1.5 billion U.S. dollars. ABL: Isnt that speculation? Isnt the whole price that Bitcoin has under it right now based on speculation? AA: I think thats really the argument that Falkevinge is saying. Hes saying there is no market behind it, (that) there is no

transactional velocity to Bitcoin. Its really speculation. Its basically price-fixing speculation more than anything else without any underlying fundamentals. Heres the thing though. He very conveniently excludes, right off the bat, drugs and gambling. ABL: (*Laughing*) So, the two biggest parts of the Bitcoin economytheyre not the biggest parts, but theyre primary components for sure. SM: Theyre significant. AA: I think hes talking about the relative volatility and liquidity of the market and dismisses drugs and gambling as illiquid, lacking in velocity, lacking in stickiness, lacking in true value. He goes on to talk about, What about new products and services? By the way, I am horribly paraphrasing and probably butchering his argument and obviously, I disagree. The bottom line is that hes talking about the market being overvalued by two orders of magnitude. ABL: I think that this is how markets behave. Markets look to the future and say, Ok, well, its not about what its worth today, its about what its going to be worth later. Obviously, the price that we have now takes into account a lot of people who have bought with the idea that theyre holding as an investment. I think that its hard to make the argument that its not justified when so many people are using it as a means of savings. I think that savings has its place in a system like this and its not manipulation or speculation even really. Its savings. AA: Yes. Basically, I could take this exact article and do search and replace Bitcoin for gold and based on Falkevinge arguments, gold has zero velocity because its not really used to transact on normal products and services and is entirely a stored value. On his basis, I guess gold would be overvalued by three orders of magnitude, not two but does the value of Bitcoin really demand on the velocity? Because, I think thats the assumption at

the core of this article. If you accept the assumption that the value of Bitcoin does or should depend primarily on the velocity of the currency then yes, Bitcoin is overvalued. I think that really reflects the fact that most people dont think that velocity is the only core value characteristic of Bitcoin and that the savings effect, the future potentials, the innovation premium, if you like, looking at an event like a tech IPO all of those factors play into the price in a way that they dont in other traditional commodities or stocks or other types of assets. SM: You know, Ive seen a lot of articles in the past. Its kind of interesting to see Falkevinge writing about this because Ive seen a lot of articles in the past, including from people like Max Keiser, who say No, no, no, Bitcoin is vastly undervalued by at least two orders of magnitude. So, maybe the truth somewhere in the middle and thats what were seeing right now in the current price. I mean, theres lots of people who say, Oh, look at the amount of bitcoins that there will ever be in existence and look at the world population and look at the percentage of the world population who are Bitcoin users, currently, and the potential for new users. And suddenly, youve got $10,000 bitcoins, for one Bitcoin. The price of a bitcoin is what somebody is willing to pay for it. Weve said that over and over again on this show. There are lots and lots of people determining that price every moment of every day through Bitcoin trading, buying, and selling. Thats the current spot price, the market price, thats what the price is. AA: Part of trading on that price is reading articles by Falkevinge, deciding that you may agree with him and selling lots of Bitcoin or disagreeing and buying Bitcoin. Falkevinge is doing the job of adding more information to the market here. SM: Right, but most people, it seems, either dont agree with him or there are enough people who disagree with him that its holding up the market for bitcoins at the current market price. Not enough

to hold it up at $10,000 per Bitcoin, but some of those people as we said before, are banking on that in the future that bitcoins are going to worth $10,000 or at least more than $140 - wherever theyre currently at. AA: Id love to think its rational pricing that has put the price of Bitcoin at $125 but then I look at the Dow Jones Industrial Average at 15,000 (pts.) and I know that people are insane. ABL: (*Laughing*) SM: (*Laughing*) ABL: You know that people respond to stimulus and that sort of brings up an interesting question. AA: (*Laughing*) ABL: Yes, in both ways. AA: Was that a QE two pun or QE four (pun), wherever were at now? ABL: It was accidental, but yes, indeed. How we get the price in Bitcoin anyway it goes is a totalits like a black box, right? Mt. Gox has one price. When I was talking with Josh Rossi, hes talking about his Buttonwood software and how he wants to essentially collect prices from all of the Satoshi squares live, that are going on everywhere all the time and also Local Bitcoins and use that as a way to aggregate and generate a spot price. Really, with conventional markets, you have to use these broad measures. You have to pay attention to the entities like Mt. Gox because theyre where all the trading happens but in a decentralized network and especially, a decentralized network like we have with Bitcoin where regulation is constantly spreading out. First off, regulation is doing it and then also, companies failing under the weight of their own success, as weve seen with Mt. Gox. It seems like the market is

almost anti-monopoly and is continuing to spread out despite the fact that the incentives normally would have as large a concentration of traders on either buying or selling as possible. Here, thats not the case. AA: Heres the thing though. Even if you look at these price fluctuations or price differences between the various exchanges, they all cluster around the midpoint and they all form a very beautiful Bell curve over time. I know I cant say with extreme accuracy what the current price of Bitcoin is. I can discount or rather, dismiss a(n) overvaluation by two orders of magnitude and I can dismiss that with a fair amount of statistical certainty. I can say, for example, that if all of these exchanges are telling us that the price at about $130, the chance of the price being $1.30 instead, is 1 in 10,000,000 ( one-in-ten million). Simply, by looking at the Bell curve you can do that calculation. You can see what the probability is. Its four standard deviations off the core. You can say theres uncertainty in the market and theres price fluctuation in the market and price uncertainty but its not in the orders of magnitude were talking about here. Theres no chance of that. ABL: Is this people picking their favorite reason.because some people look at savings like hoarding. Some people look at hoarding like savings. It sort of is just semantics about how youre going to represent it. Is this peopleis this Falkevinge picking the thing that he most wants Bitcoin to be? Which is transactional because if its transactional then its ubiquitous that means its changing the world, whereas, if its savings, then maybe thats not so true. Maybe hes just focusing on that and to him thats the only valid sort of reason why there can be value where in reality, Bitcoin as a protocol just like the internet, is super-agnostic and doesnt care what goes on. It doesnt care what you do with it and frankly, it doesnt care what metrics you pay attention to it. Whatever metrics youre looking for, so long as its something thats

complementary with the overall protocol, you can find value for it or not in it. AA: Value is an emerging metric. Its not a core aspect of the protocol. Its something that emerges from the social behavior around it. At the end of the day, all of this analysis is trying to look at Bitcoin as an asset class and trying to figure out what type of asset class it is. Is it a currency? Is it a bond? Is it a stock? Is it a commodity? What exactly is Bitcoin? The answer really, is that Bitcoin is a cryptocurrency asset class and we dont have analytical tools for figuring out the statistical value or the quantitative analysis that needs to be done in terms of value of that market because we dont have the tools. (Advertisement #1 Start) Jeffrey Tucker: Hello, Im Jeffrey Tucker, Bitcoin enthusiast and host of the upcoming Cryptocurrency conference in Atlanta, Georgia - October 5th. Weve got a marvelously libertarian-infused day of discussion about what is indisputably, the future of money and you are invited. For those of you that cant attend, weve partnered with Lets Talk Bitcoin to offer video-conference passes available for government currency and, of course, Bitcoin. For more information, bitcoinvideopass.com. (Advertisement #1 End)

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ABL: Over the last few months, weve been watching the network hash rate skyrocket as ASIC manufacturers ship overdue product to anxious customers. As the network passes the one Petahash (PH) mark, were joined by Benny and Emmanuel, two of the minds behind the Cloud Hashing project. Gentlemen, lets talk Bitcoin. The first question that I have is, is there still an opportunity in mining? It seems like the cost of participating in that network is getting increasingly high and the time-frame to actually recoup your investment is getting even smaller. E: If youll allow me to answer that question, its Emmanuel speaking here. Absolutely, what were seeing is a bit of a shift in the usual mindset of miners where they used to ROI in the space of two to four months, depending on delivery. Were seeing that shift towards the latter end of the calendar. Depending on when you receive your hardware and depending on when you made the purchase, the network difficulty could have literally overtaken you. In terms of, is it profitable to mine? Wed say, absolutely, it is profitable, its still profitable to mine. It depends on your strategy. It depends on your capital and it depends on who you decide to partner with to be successful. If we look at what people have been doing in industry as things stand now, people will be making orders from the four major manufacturers. There will be more coming online soon. They would wait a period of three to four months. What our model is and the way in which weve approached that is to essentially use economies of scale to our advantage to purchase a large amount of hashing power and then, to redistribute that to

customers. We will be, probably, one of the first companies to literally, enable you to logon and make a purchase of hashing power and to be mining within ten minutes. Thats a complete shift from what the market is used to and I think that thats a model for years to come. Another thing as well is, people say that the money to be made in mining is within the first two to three months. Well, that is true, depending on what your model is but also, if you have the ability to consistently or constantly add to the armory of your hashing power that you have, it gives you a much better stance to pretty much fight the network difficulty and you cant do that as a solo miner. The whole market is going to shift. We believe mining belongs in the cloud just as supercomputing does. Weve been pioneers in that field and we believe its pretty much, the way to go. ABL: Lets back up for a second here. Can you tell me how you got into the space and if youve had any ventures in Bitcoin things before? Have you been mining before you got into this Cloud Hashing business? E: Oh, yeah. I started off mining with my CPU when it was interesting. Then, I got bored of it. Then, I kind of left it alone. Then, the GPUs came into business and I gave that a bit of a go. Then, my wife started getting a bit annoyed from the heat and the noise and the lack of spare room when people came to visit. So, I kind of parked the mining project to the side a bit. When ASICs came online I thought maybe I could venture there because the hardware was smaller, it was supposedly less noisy and you could get more density out of it. As time elapsed, more people became interested. So, I began actually, selling ownership of the machines to friends and family who were interested in Bitcoin just to be able to give them the ability to do so. Id manage it. Theyd just have to pay the bills. That was the initial Cloud Hashing model and it burst itself onto the internet in April (of) this year. We started selling

contracts online and the rest is history. We pretty much grew organically, from running mining equipment in the bedroom to running an organization now who have 1,300 individual customers. ABL: Alright, sound like youve made some pretty fast inroads into the space. Lets talk mining for a second. The point of mining, I would argue, is to incentivize the distribution of the Bitcoin network to the greatest extent possible, but in the few years that weve gone from 2009 to the point that were at now, that really hasnt been the experience. It seems like because weve gone so fast through the generations of hardware, its been very difficult for people to keep up and essentially where a couple of years ago, you could mine with your CPU as you started out. Now, someone who wants to experience it for the first time just at that sort of curiosity level doesnt have anything like that, doesnt have anything near like that. Your service aside, what do you think of this trend, generally speaking? If you hadnt been able to access it in the way that you did, do you think that you wouldve started mining? B: Yeah, Ill go into this a bit. The advent of CPU mining was, essentially as most people involved in Bitcoin mining are aware, to verify the transactions on the Bitcoin network and incentivize people to be connected to the Bitcoin network. The entry into that market was largely in the tech field in the beginning because the configuration of mining software was not exactly user-friendly or ease of entry was quite high for the average individual that doesnt have background experience working from a console or something of that sort. In the beginning, people started developing GUIs to make it easier to begin to configure a mining-platform software program and then, from there it began to scale to more sophisticated tools and now, monitoring tools and things of that sort. But, it still has a large learning curve for people and so, one of the ideas that we had in the Cloud Hashing model was, how do we ease the entry point into mining and at the same time help people

understand what Bitcoin mining is and why its still advantageous to the Bitcoin network that people still are mining bitcoins. The incentive is there. People dont necessarily mine just because theyre spirited to be miners. They do want to be rewarded. The long-term plan for Bitcoin was that people were going to be mining because theyre rewarded on the transactions that are taking place in the blockchain. In essence, you are still incentivized in five years (or) ten years time. To get into that market as an individual that is looking to get familiar with mining and jump into it. Its not as simple as just, Go download a program and start running on your CPU, if it becomes quickly evident that theres no reward there for you. We wanted to make it possible for people to understand that the reward is still there, you just have to be able to see how to get to it. The Cloud Hashing design is to be able to able to bring a person into mining, show them that theres an estimated ROI that is potential and then, that theres a difficulty that youre running up against. Were trying to make some of this more transparent to people that are walking into this and going, Oh, mining, this makes sense. Just throw some machine on and I should be making money. Well, with the cost of power versus the difficulty rising and the amount of equipment you need to overcome those costs, we believe that theres a scalable model that can work and weve implemented that into the business model of Cloud Hashing to benefit the customers. Ultimately, we have a goal of benefiting the Bitcoin network alongside that. ABL: It seems like one of the biggest challenges that you run up against in mining however youre going to do it is not necessarily the fact that the difficulty is going up so much as it is how youre timing your purchases relative to the rest of the worlds release schedules because now there are several manufacturers in the space. E: Obsoletion, yeah.

ABL: Yeah, so if you get a whole bunch of hashing power in the beginning then, two days later theres a giant release and suddenly, youre swept away. Have you been able to counter that risk? E: To some extent, we were absolutely affected by those risks at the advent of the company. We made substantial orders of equipment that we were waiting to be delivered. Customers were, obviously, frustrated by the delays. Being a cloud company and being able to have the capital and the liquidity to go onto the open market, were able to still service our customers because of a skill that we have. Now, in respects to individuals to make those kinds of purchases and waiting three to four months where the ROI, literally, dwindles away; now, we believe that that model will eventually die out because people might not be able to stomach the risk. A lot of money has gone into pre-orders and a lot of people are still people are still waiting for delivery and a lot of people have lost money and a lot of people have been dissatisfied with how its been handled and might not even play again. The model were offering is very different. Essentially, the kind of orders we make, it gets peoples attention. It gets the attentions of the manufacturer so you can work closely with them to ensure customers are not burned by those kinds of delays. If youre an individual making an order through the website, youll be treated differently from if youre a large organization looking to have a long-term business relationship to pretty much service your customers and at the same time benefit the manufacturer. I think the manufacturers themselves, they would be prefer to deal with larger organizations rather than loads of customers constantly getting back to them, Oh my ASIC doesnt work. Oh, the power unit has blown up, how do I sort this out? Those kind of issues will pretty much be dwindled away if you just took it to the cloud. Theyll be dealing with one entity or, sorry actually, four or five entities instead of the manny(manufacturer). Thats how weve mitigated our risks, working with the manufacturers ourselves

directly and being in the know of the project scope and any potential delays so that we can adequately make ultimate arrangements for any delays. Thats kind of where we are now and thats where were seeing that mature as a model. ABL: Do you see basically have units standing by so when people buy them they just switch over to their account instead of crediting you? I assume youre running them yourself when you dont have customers to run them for, right? E: Yeah, the way in which we work Ill give you a small background of our model without selling. Well purchase large quantities of ASIC hardware. Well put them in data centers and a data center will have an agreement with us to manage them or we have our own person to manage it depending on which city its in. Now, the equipment were mining (with) constantly. A customer would go through our website to make a purchase for hashing power. Now, for the 30th of September this year, as soon as they make that purchase, within ten minutes they would be mining automatically because our hardware is already available, its already there. So, there is no delay. There is no pre-order. There is no wait. Its instantaneous. Thats what people are used to in the cloud space. Theyre not used to making a purchase and waiting three to four months or not (being) given a definite time for delivery. Theyre used to making a payment and getting what theyve paid for, instantaneously. Thats the model that weve switched to and thats the model we believe is palatable for the mass market. Another thing is (with) regards to difficulty increases. How do you deal with customers worried about the day-to-day, well, sorry, the bi-weekly difficulty increases and how do you pretty much keep them motivated to mine or to keep them motivated totheyll know that theyll actually get an ROI. What we do is well essentially only sell up to 60% of any capacity that we have. At the end of each month, what we do is we purchase on the behalf

of the clients that hashing power that we have as a reserve so that they get an increase in hashing power so that it allows them to either stay online or at least not feel the mass effect of the difficulty on their returns. Thats a better model than sitting on a piece of hardware that every two weeks the returns are dropping by 20-30%. Thats the model weve adopted and thats the model the market will be used to. Thats what weve worked out with talking to customers, giving them an idea of the kind of things that tick them off and try to adapt to the needs of the customers on our front. B: Ill also comment on the network hash rate unpredictability that a lot of miners are seeing. This is clearly a risk that miners are taking when theyre buying hardware on the market that has the pre-order basis. Weve often said to people that its a lot easier to look at the network hash rate to determine what your potential return is because the network hash rate is in flux on a constant basis, whereas, your difficulty changes are built into the algorithm of the Bitcoin design and so, if youre in the know in terms of research and discussing and finding out what the supply chain challenges are of various manufacturers, its a little easier to predict what the network hash rate might look like at a certain point in time in a given period. We dont know in a year from now but we might be able to say in three months, based on these companies, we can somehow gauge that the network hash rates going to be between X and Y. Then, if we say that your hash rate with Cloud Hashing is this and that based on our model the hash rate of your account will increase based on the estimates of the network hash rate increasing in a proportionate way, you have a way of being able to calculate, with some degree of accuracy, what your ROI could be. Now, we dont know if a company is going to come out of the left field that no ones heard of and dump an enormous amount of hashing power onto the network. Perhaps, an ASIC manufacturer that nobody saw coming. Thats always a

possibility. Theres nothing anyone can really do to prevent those kinds of things happening except for be prepared. That kind of preparation that we take is in the accumulation of good business partnerships with ASIC manufacturers that want to support not just us, but the fact that we are redistributing this hashing power to the customers. This is a really key point in one of the reasons why ASIC manufacturers have worked with us so closely because they believe in the business model that we have. Sure, theres a lot of companies that just want to make a profit. Theres a lot of individuals that just want to dump a lot of money into mining hardware and immediately mine for themselves. We get that. We understand that theres always going to be that market out there where theres people that are very bull on the long-term of Bitcoin. Theyll put money into mining and take the risks but the attitude that our customers have is that Cloud Hashing is going to support them and that the manufacturers are going to support Cloud Hashing and, in turn, everyone should benefit. We found that the manufacturers who understand our business model want to keep our customers in line with the network hash rate increases as much as possible. (The) reason being is that, like any manufacturer, your goal is not to sell a product to somebody once. Its to sell a second and a third and a fourth time. We believe in the same model. We want our customers to be return customers, repeat customers. We want them to tell their friends that this is working for them. For us to sell one contract to one person is not our ultimate goal. We want people to believe in the model and understand that there is a longterm benefit to cloud mining and that it actually has a benefit to the Bitcoin network, because what were doing is making possible that one or two or a small group of individuals do not have all of this mining power for themselves. As a result of that, more people are involved in Bitcoin. Its distributed as a currency to more individuals out there and hopefully, that will help the Bitcoin network thrive.

ABL: Okay, I have a couple of questions off of those two answers. (*Laughing*). First off, is the increase of hashing power standard or is there a cost associated with it? E: The way the model works is we essentiallythe customer would make a payment for the contract. In the contract, we specify the two different costs associated with a contract. One is a management fee then, the other is a reinvestment (fee). We essentially enable the customer to make a payment of up to 30% of whatever the mining revenue is. Were soon going to allow that be variable, make a payment of what they would want to reinvest in hashing power and that would automatically be deducted from the payouts. So, that would automatically go into hashing at the end of each month. If they made $100 and theyd set it 30%, theyd take $30 and use that to buy more ASIC miner hashing power for themselves. ABL: Im just wondering what the ratio is there because it seems likeas someone who might be interested in one of these, Im trying to figure out if that actually is even something that would actually be beneficial for me to pursue because 30% of what were E: Oh, absolutely. ABL: so, 30% would be buying you more than just taking the payment would be? E: Oh, absolutely. The price that youd be paying with a reinvestment is a lot less than you would be paying with a contract so theres a massive benefit there. If you bought in at the con(tract)one thing people need to be aware of as well is the massive increase in hashing power but also the cost per Giga-hash is dropping. If you look in January were looking at cost down by maybe 80% per Giga-hash. We could buy, in the future, on the behalf of the customer. So, maybe, in three to four months time, theyre going to get multiples of what they started with as a miner.

How would do that as an individual mining and how could you ensure that you have the hardware on the day you want the hardware to start mining without making a loss. You couldnt do that as an individual unless you have a lot of capital and a lot of patience. Doing it in the cloud gives you that benefit because its managed on your behalf. B: One of the things that allows industry to scale is to have a lot of people backing that industry and we looked at that as part how the model has to integrate. When we designed Cloud Hashing, we realized something that was very critically important and that is that its not all about how much hashing power you have. The number specifically isnt that important. Its about how many people are part of something that are collectively working towards a goal. Because the Cloud Hashing customer base is well aware that when they sign-up, this is something that theyre signing into, that is a collective initiative in a sense, to be able to increase the cloud mining capacity for the benefit of all customers. Even though its 30% as an individual, that 30% goes a lot further than that same 30% that you would be taking in as an individual miner and then, hopefully, taking that money and putting it towards, say, your next purchase of an ASIC when you reach the ROI point that you can now afford your next one. On your behalf, every month, this increase is taking place. Its adjusted in your hash rate in our system. Its visible to you as a client and youre immediately mining with that adjusted hash rate as soon as soon as it takes effect, whereas, as an individual miner thats buying hardware, youre actually sitting and waiting for that hardware to reach a ROI point where you can now go and buy the next thing. With us, thirty days later or however, maybe less, you have immediately taken some additional hash rate and put it into your account and now, youre mining with that. This is the ability to scale with the network hash rate increase better than waiting on the next hardware to show up at your doorstep.

ABL: So, I hear the decentralized argument and I think that I agree with you on the decentralized argument but dont you as the service provider actually control all of these? It seems like people arent actually mining, theyre more the recipient output. Instead of it going to your wallet it goes to their wallet. B: Right. Sure. ABL: Isnt there a differentiation? Do they choose what pool they participate in or is there any control? B: Well, Im glad you asked that question. One of the things that will be rolled here with the next September mine is the cloud hashing technology which is going to offer a pool technology to miners in a very innovative way. Itll be the first mine that were aware of that allows people to both mine in the cloud based on the Cloud Hashing model as well as allowing those customers as well as others that are not customers of Cloud Hashing to mine through the Cloud Hashing mining portal. That will essentially make it possible for anybody that wants to mine within the Cloud Hashing cloud, you might call it. Were kind of dropping the cloud word a lot here but (it) allows people to access this cloud and be able to participate in it as well. On the topic of decentralization, one of the sticking points that has been often debated is what makes it decentralized. If you were, for example, a large pool and weve seen this out there with other mining pools. What happens if you reach 51% of the network? Theres a very common concern amongst miners out there about the 51% attack potential that a mining operation could achieve if they had so much hashing power that they could overtake the network and do what they call a double-spend. One of the technologies that were implementing into the mining design that makes this very advantageous for the technical miner is the ability to select transactions that a person wants to mine within our system. This is something that we havent seen out there done before by other mines. This allows people to select the transactions

and, in essence, makes it a truly decentralized model from the outsider connecting to our mine which means that, in essence, a 51% attack would be highly unlikely if not next to impossible. Were taking the power away from ourselves and putting in the hands of people connecting through our portal. Its become very commonplace now that were often asked by customers and engaged by people in general conversation in Bitcoin about these Bitcoin mining calculators. For example, one of the more popular ones that has become almost a staple in conversation as of late is the one on the Genesis block which is thegenesisblock.com. They have a mining dashboard where they are allowing you to look at a matrix of all the different manufacturers and their hardware and their costs and so on. What these tools are essentially designed to do is give a person perspective on what their potential ROI is. What these things fail to do is give a person a perspective on what changes based on new hardware being introduced on the supply chain basis that we talked about. The miners have just a few fields to fill-in and suddenly, theyre able to predict, based on these calculators, what their ROI is. Its a little deceptive to people because what your ROI is is largely based on your scalability not just based on the fact that you can plug-in a number and that the network is going to scale based on X, Y, and Z. The Genesis block, for example, shows the average over some period of time of difficulty increases and then, comes up with a prediction of the difficulty in the next month or the next couple of months over what they believe will be, you know, some period of time. Well, theres also a supply chain aspect to making that even a probable possibility, you should say. You cant continually increase the network over and over and over again without having some pretty massive supply chain issues that will be hard to overcome for all manufacturers once the network reaches a certain size and the difficulty reaches a certain size.

E: Can I also add to that? Theres also an economics aspect to that, in terms of if were talking about the network being at 15 PH/s, for example, or 20 PH/s. How many millions of dollars will need to be spent to cover the difficulty rises of 80% when were talking about a 51%-style attack every thirty days or so. On top of that, were talking about an infinite amount of money being able to be thrown into a market. Right now, theres worth $1.4 billion and Im talking the Bitcoin as a whole. Im no longer talking about the mining market. I mean, thats probably $100 million. Who knows, maybe less. Its notI dont think the tool is meant for exact calculations of what hashing power is. It gives people an indicative figure, but at the same time, its deceptive because people dont know what other factors are necessarily going to affect the growth of the Bitcoin network. For example, if were going to have consistent growth above 50%, were going to need to new technology, maybe, 14nm technology that costs $16 million just to get to the foundry and to make an ROI, how many millions of dollars more do you have to sell? Things about this havent been thought of and I think people need to be aware that just plugging into the Genesis block is not a sure thing to be saying that you will not make a profit or you will make a profit. ABL: Do you think that this is a one-way trip for us and that the difficulty at this point, because there are so many players involved, can only go up or do you think that the price, actually, is going to play a role at some point in that the price, actually, needs to go up in order for mining to continue to be profitable? E: Well, price is always a thing. There are three things here. One, the cost of electricity so if you can get electricity dirt-cheap then, you could mine withif you mine with the best equipment and you get electricity really cheap then you could run your hardware as long as humanly possible compared to having another piece of hardware thats less efficient in a state like California where you

might not get the best energy rates. Thats one aspect. Your strategy could be based on a long-term strategy where you could see that you just essentially want to hit your ROI based on what the costs, what its costing you to run. Then, theres another model of, Let me make as much money as I can in next three or four months, buy as much hardware as I can, make my ROI and go home. The other model is kind of like our model is, See it out for the next two to three years, make your money back trying to spread it over a three year period so that at least, you can benefit from any rises in that window or space. I do believe (that) everythings going to be controlled ultimately, by price. If Bitcoin does not get adopted then were mining for no reason. If the adoptation (sic) continually grows then were going to see higher and higher prices of Bitcoin. Even price has an effect on mining. You find suddenly, that people turned off their ASIC that was decrepit, a year or (more) ago would now decide to turn it back on or their PGAs or their GPUs just because its costing more than the electricity just to run. Were going to see volatility in the difficulty. Were going to see volatility in the hashing power coming onto the network based on prices. Yeah, we hope prices will go higher. We believe it will because adoption ultimately, is a goal. Were seeing greater and greater adoption in other countries where theyre not actually talked about a lot in the news. ABL: Benny and Emmanuel, if someone wants to learn more about Cloud Hashing, how should they go about it? E: Just simply visit Cloud Hashing.com. We have an intuitive video that gives you an intro to the concept of cloud mining and hopefully, it makes sense. If you have any questions just drop an email to info@Cloud Hashing.com. Well be happy to help. ABL: Well check-in with you in about six months and see where the hash rate is. Thanks for joining us on Lets Talk Bitcoin.

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(Lets Talk Bitcoin Promo Start) SM: Youre listening to Lets Talk Bitcoin, the premier audiocast providing news and insights that cover the rapidly evolving world of digital money. Our twice-weekly shows include analysis of latebreaking news, updates on key technical, business and regulatory interviews, and in-depth interviews with the key people driving the new digital economy. Lets Talk Bitcoin offers sponsors an attractive way to reach a targeted and savvy audience. For more information, email sponsors@letstalkbitcoin.com. (Lets Talk Bitcoin Promo End)

ABL: So, guys, we have to have a meeting about this because Ive been trying to figure out how to proceed and its really hurting my brain. I got an email from, I dont recall his first name - his last name is Franko. Hes the creator of the Frankocoin, basically. He has let us know that he wants to donate to us in Frankos. I looked into his currency a little bit. Its derived from Litecoin except it has

a fewer number issued than actually even Bitcoin does. I think it has half the number issued that will ever be issued of bitcoins. In theory, its going to be quite rare and it has a very fast transaction time. It has about thirty seconds per block. I emailed him back and asked what advantages his currency has that would make it so we should want to accept it besides the two technical differences that he had done and I hadnt heard anything back from him, but it kind of has brought up a larger point. We get these requests sometimes from people who have alternative cryptocurrencies and I dont really know what standard we should be setting for when we should accept something for donations for the show. Because, on the one hand, theyre not really buying anything from us and they want to donate to support what were doing, but on the other hand, its definitely a marketing move on their part where they want us to say, We accept this. Then, that adds to the utility of their...so, its not like its a selfless thing. Im wondering, when you guys are looking at what new alternative cryptocurrencies to pay attention to or to setup a wallet for, what are the criteria that you use? SM: Thats such a great question. I wish I could say I actually had some hard and fast criteria. Its more like, I have to see it become a blip on my radar more than a couple of times. I made a fortunate investment in Litecoin about a year ago which ended up doing really well, but Im kind of skeptical about a lot of the other cryptocurrencies especially, since now there are so, so many of them and Altcoin really has to differentiate itself to stand out in the current climate. I just dont know if were at the point where thats really likely to happen yet and I cant see the clear leaders in the pack. I havent been super, super buzzed about altcoins lately, except for maybe, maybe Litecoin, because it seems to have cleared a certain bar. As far as accepting donations to the show, I wish there was an easy way you could have a multi-currency wallet. I know people are working on that but I dont know of one that exists yet. If we could have that, it would be easy to administer.

We could just have a wallet and when some Frankocoins come in, well see a little notification and we could do basically whatever we want with those Frankocoins. Save them, spend them, give them away; convert them to bitcoins, whatever we want. Were just not there yet. AA: This question that youre asking, Adam, is the same question that plays out thousands and thousands of times every time an altcoin comes up for any buyer, any seller, or any user. This is the fundamental adoption question, the balance between the network effect, convenience, and the existing value of Bitcoin versus the value of an additional coin and in that you have to balance out the network effect. As I said, you have to balance out the adoption difficulty, the technical difficulty of charging in multiple currencies. You have to balance out the foreign exchange risk of converting it, how convertible it is, what kind of liquidity there is in the market in order to convert it, how many access points there are. You have to look at the history of the currency and how stable it is in terms of fluctuations or also in terms of mining difficulty because thats another aspect of cryptocurrencies that plays on and determines stability. All of these, essentially compromises or trade-offs happen in the mind of any consumer whos deciding between Bitcoin and another currency and I think this all goes to demonstrate why it is so difficult to unseat the king of cryptocurrencies, why it is so difficult to say, Im going to go with a completely different alternative. And the reason is that it has a lot of cost to do that. As a result, it has to have a really compelling reason, and quite honestly, I dont think you have that. SM: But does that mean they dont have any value? I mean, I dont think so. I think there could be some AA: They have dump value.

SM: Yeah, they have dump value but I dont know, theres part of meI know I just said that Im not like, super, super excited about any of the altcoins but there is a part of me that kind of sees like, Okay, like, yeah theres some Primecoin, its fun in prime numbers and PPcoin, its got the proof of stake and Feathercoin, has like, great promotion and that might be interesting. At times, I do feel excited about altcoins and it doesnt hurt to diversify, you know. If somebody wants to give us somesome, uh, you know, pick your favorite coin then, I dont really see the problem with that. Maybe, it feels like a headache because were kind of trying to decide, Well, what do we actually think about all these altcoins? Is this going to require me doing research on them and do we convert them to Bitcoin, and essentially cash out, or do we hang on to them?, and that decision feels overwhelming and we just dont want to deal with it. Could that be sort of whats going on? AA: Its enough to make that decision with Bitcoin. ABL: (*Laughing*) SM: (*Laughing*) AA: (*Laughing*) - You know? SM: Right, right. AA: Were running multiple shows just to decide if were holding Bitcoin or what even the value of Bitcoin is. I think then, multiplying that by a whole set of other coinsit can really be a huge headache for merchants. So, its easier than adopting multiple Fiat currencies but its not as easy as just having one. ABL: I see a couple of options here for how we could push forward on this because Stephanie, to your point, I think it really is a usability thing. When I installed the Feathercoin wallet because we had a listener who wanted to donate to us in Feathercoin; that was

the fourth wallet that I had setup on this particular computer. In addition to that, I had Primecoin which I was playing around with because I was trying mining with it actually which was quite interesting. Bitcoin, Litecoin, and then, Feathercoin - and when I setup Feathercoin, I actually had problems with my computer. Not that it was a problem with Feathercoin, just that like, that was, apparently, the number of wallets that my computer felt comfortable running and the number of blockchains that it felt, you know, so, I really think that so long as you need a separate installation for each new cryptocurrency SM: The feather that broke the camels back. (*Laughing*) ABL: (*Laughing*) Yeah, exactly. Yes, exactly. When I run three of them at once its all fine, but when I run four of them I tend to get some instability in my system. I see a couple of ways forward on this. I can either see setting up a bounty system where we have a minimum value threshold where people can send their whatevercoin-it-is to an escrow address that we have setup and at the point that we reach whatever the threshold is, say its like, one Bitcoin worth of whatever the Altcoin is that were talking about. Then, we go through the trouble of setting up a full wallet for the show and doing all that stuff or I could also see us partnering withor it being a service thats provided by an exchange like Vircurex, where theyre already dealing with all of these altcoins and they deal with a lot of altcoins. As a result of that, they could essentially give us an application that would let people send something to a show account that would be able to be denominated in any of those things and then, wed have the ability to change it into other cryptocurrencies or keep it in that but not have to maintain all of the wallets on a series of actual computers that we have to control. SM: Right, because the exchanges right now, like BTC-E or Vircurex, they do sort of have multi-currency wallets where you can login and see your finances and it has a wallet for each of the altcoins thats

on that exchange and people, you know, you can send funds to it or whatever. Then, you can easily trade because theyre already in the exchange. I guess I see a problem with storing the coins on an exchange because thats basically, a web wallet, and theyre vulnerable to hacks, but I really like the idea of, Hey, lets have an address for each of these coins, once we reach a certain threshold, and I think one Bitcoin equivalent of those altcoins is a good threshold to have. Then, well put that up as a donation address. Im all for, like, please, if somebody wants to give me money, I would like to make it convenient for them to do that, you know what I mean? If someone wants to support Lets Talk Bitcoin, lets make it easy for them to do that in whatever way they want to. Im kind of, erring on the side of, Yeah, lets put up an address for every coin, but I realize that might look a bit cluttered potentially, on the website. ABL: I dont think its a problem with the cluttered look. I just think that there are so many of these currencies that are going to fail because they dont very many fundamental advantages to them and they dont haveyou need something. It almost doesnt matter to a certain extent what angle youre going to approach the problem of cryptocurrency from, but you need to do something that is different; Be it, how you market it or be it how you, you knowthe innovations of the currency, fundamentally, itself. You still need to have those differentiations and I feel like a lot of those currencies that are out there, its very difficult to make that claim to. Beyond that, I dont think that its workable, Stephanie, because were talking abouttheres more than 150 cryptocurrencies out there right now and I have to imagine that thats going to continue to expand. SM: Right, absolutely, but I mean were only getting donation requests for maybe, ten of those, right? ABL: Right now. (*Laughing*)

SM: (*Laughing*) ABL: Right now, you know, while we acceptthis, of course, brings me to the other part of this conversation. We started accepting Litecoin donations I guess about three months ago and the first couple of shows were pretty successful and I can look back and actually, show 11 and show 13 were two of our highest-tipped shows because we got single donations of 100 litecoins to each of those shows. That actually, was more substantial than the Bitcoin donations, at that point. Since then, we get probably between 0.51 litecoin per episode, on a good episode and sometimes, we dont get any litecoins. So, the question becomes, is there a minimum threshold beyond which we should not be generating, I should not be spending the time to generate the addresses to run the client if were getting these small amounts? Should there be a minimum threshold? SM: Maybe, we dont have an individualBitcoin, Litecoin, Frankocoin, PPcoin, every single coin address for each show. Maybe, we just have a general show fund for the altcoins that are not Bitcoin or maybe, not Bitcoin and Litecoin. AA: Yeah, we can have three-dimensional wallets. Essentially, the bottom line is that all of these coins at their core use the same elliptic-curve-cryptography system for the public and private key. The only difference between a Bitcoin address, a Litecoin address, and a Feathercoin address is what prefix you stick in front of the address before you send it out. You can take a single private key and from that you can generate a public key, which is a point on the curve, for Litecoin and encode it for Litecoin and then you can take the same key and encode it for Bitcoin and the same key and encode for it Feathercoin and the same key and encode it for PPcoin. Essentially, what you would do is you would have one wallet with one private key that unlocks all of the public keys of all

of the other coins. I think were going to solve this problem over time and the default will be multi-currency systems. ABL: So, when can I have that? AA: I wrote to Protech Implementation, (which) works on top of BIP-32 but unfortunately, turning that into a businesswe need one of those opportunistic entrepreneurs. ABL: (*Laughing*) SM: (*Laughing*) Yeah, I just googled that, multi-cryptocurrency wallet and I found a thread on the Bitcoin forum that was suggesting some software for Windows and then, the next post was, Yes, complete with wallet-stealing Trojan free of charge. So, were not there yet. AA: By the way, thats one of the disadvantages, right? If you solve the key-management problem by tying all the keys to a single private key then, if you lose that one, mmm-hmmm, youve lost all of them. SM: Right. Adam, maybe what we need is a(n) Altcoin-enthusiast treasurer for Lets Talk Bitcoin and I would be happy to be that. Why dont we just have everybody send their altcoins to my wallet on Vircurex and Ill be the administrator of that. ABL: Okay. SM: No, Im just kidding about that but ABL: Ultimately, if its not you doing it, its me, Stephanie. Yes, to a certain extent, theres a little bit less trust, I guess, but it doesnt really matter. AA: Yeah, Id like to also start considering taking other forms of payment as well so I will be the treasurer for beer and pot and, uh

ABL: (*Laughing*) SM: (*Laughing*) AA: I will convert those in my digestive system. ABL: Thank you, Andreas. Thank you very much. AA: Youre welcome. SM: Has anybodyactually, thats a great point. Has anybody ever offered to donate physical stuff to Lets Talk Bitcoin? Maybe, other things like gold or silver or stocks or I mean, I know some organizations have offers of those but were having the problem where, Hey, take my altcoins, right? ABL: Yeah, no, we havent, uh, theres been no physical offers, yet. Its been altcoins and again, the other thing about altcoins of course, is that its not just a donation. Its a donation because they want to donate to us but they want us to care about the cryptocurrency. Thats the fundamental thing. Its not like theyre donating because were the best people in the world. Theyre donating because theres an advantage if we get interested in it and start talking about it with our audience. So AA: You mean like, spending ten minutes talking about Frankocoin that does ADD blockchain confirmation every thirty seconds? ABL: Exactly. (*Laughing*) AA: Yeah. ABL: Exactly, theres a really fine line to walk here, I think. Im just not sure how to approach it, yet. SM: Well, I dont know if weve resolved anything with our on-air meeting but its a good problem to have, right? People are offering us donations like, yeah, thats great. Even if theres strings

attached to it, even if they want us to promote their coin or whatever; Okay, fine, Ill take your money, right? (*Laughing*) ABL: (*Laughing*) Fair enough. I mean, this is a problem. Thats the fundamental part here is that this is a problem and Andreas, whether its solved in the manner that you described or whether its solved in a manner we cant even conceive of here, I think it will get solved and that makes me feel good. AA: Thats the beauty of frictionless currencies, right? The fact that all of these coins have very little friction and are very fungible and very easy to transport and trade is what makes them very easily transferrable or convertible from one to the other. The advantage is that unlike the enormous friction we have converting Fiat to Bitcoin and back. Converting Litecoin to Bitcoin, you know, Freecoin to Bitcoin? Ah, thats easy. One of the advantageswhat were seeing here is this proliferation of coins is also a symptom of the fact that you can convert them more easily so its easier to adopt. (Outro Music Fade In) ABL: Thanks for listening to episode 46 of Lets Talk Bitcoin. Content for todays show was provided by Andreas M. Antonopolous, Stephanie Murphy with Benny and Emmanuel from Cloud Hashing. This episode was edited by Matthew Zipkin. Music was provided by Jared Rubens and Jazztown. If you cant get enough original thought and discussion, read our daily blog at letstalkbitcoin.com. Sign-up for our weekly newsletter at theweeklybitcoin.com. To get in touch, send me mail directly, at adam@letstalkbitcoin.com or visit letstalkbitcoin.com/talk to be directed to our listener subreddit. See you next time. (Outro Music Fade Out)