You are on page 1of 21

Transcription of Episode 56 - Progress & the Pay Protocol

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

Adam B. Levine: Hi and !elcome to episode "# o$ Let%s &al' Bitcoin. A t!ice !ee'l sho! a(out the ideas) people and pro*ects (uildin+ the di+ital econom and the $uture o$ mone . ,isit us at letstal'( $or our dail +uest (lo+) past episodes and o$ course) tippin+ addresses. M name is Adam B. Levine and toda !e%re $inishin+ -... /n episode "" o$ Let%s &al' Bitcoin !e +ot throu+h di+estin+ the $irst hal$ o$ the ma*or upcomin+ Bitcoin -.. update. &oda !e 'ic' ri+ht (ac' in) tal'in+ ne! smarter minin+ $ees and then +ettin+ in to the midi topic and ma*or upcomin+ chan+e +enericall called &he Pa ment Protocol. Are ou one o$ the nearl all o$ us that $inds alphanumeric (itcoin addresses reall di$$icult to use) much less remem(er. &hat%s one o$ the pro(lems the Pa ment Protocol aims to $i0 and its% a prett (i+ deal. &his discussion 12A and e0planation occupies most o$ toda %s sho!. 3%m *oined $or the topic ( Stephanie Murph and Andreas M. Antonopoulos. /n /cto(er "th in the !a'e o$ the Sil' 4oad arrest 3 spo'e !ith the Cr ptocurrenc Con$erence a(out the maturation o$ Bitcoin as 3 see it. 5h the thin+s that used to mean ever thin+ hardl matter at all an more and !here !e +o $rom here. 5rappin+ up the episode) 36ve (een thin'in+ a lot a(out some o$ the memes surroundin+ the 4ipple pro*ect and ho! it compares to Bitcoin) and in a L&B $irst 3 tell ou !hat 3 thin' !ithout an +uests or co-hosts. Am 3 comin+ out o$ m shell7 8id !e *ust onl have $ort minute lon+ intervie!s and not enou+h time to do an o$ them *ustice7 4eall !ho can 'no!7 9ither !a ) en*o &he Pro(lem o$ 4ipple 2 &he Lia(ilities o$ Le+itimac . But $irst) Bitcoin -.. is loo'in+ li'e a (east. Let%s $inish $i+urin+ out !hat all o$ it means.

-So the $inal part o$ this (lo+ post on -..: smarter transaction $ees) a+ain) :uotin+ $rom the (lo+ post. &oda ) the transaction $ees are hardcoded into the Bitcoin1&;Bitcoind !allet so$t!are and the rules surroundin+ those $ees are a collection o$ heuristics that evolved over the last $our ears. 3n short) the current $ee handlin+ code is a complicated mess that !ill stop !or'in+ as soon as transaction dou(les a couple o$ more times. 3n theor ) it should (e simple. &ransaction $ees should (e set ( +ive or ta'e (et!een people creatin+ transactions !ho !ant to pa as little as possi(le and people validatin+ and storin+ transactions) miners) !ho !ould li'e to (e re!arded !ith hi+her $ees. And the code that miners are usin+ toda to select transactions is simple: &he $ill their (loc's !ith the hi+hest $ee;'ilo( te transactions and hi+hest priorit transactions i$ the choose to set aside some space in their (loc's $or $ree transactions. <-=:>-?

Andreas M. Antonopoulos: @rom the earl da s o$ Bitcoin 3 thin' the vision !as al!a s to ma'e the transaction $ees a mar'et) an e$$icient mar'et !here the price o$ the transaction is set to e:uili(rium (et!een suppl and demand. Suppl (ein+ the miners and demand (ein+ the end-users o$ transactions. 9$$ectivel ou !ould have e:uili(rium at the (est price possi(le on the net!or' at an time and ou can ma'e choices: ou pa more) ou +o $aster or ou pa less) ou +et a slo!er transaction time. &hat !as the vision) un$ortunatel it hasn%t et materialiAed) (ut is a reall +ood step in that direction. Here%s the pro(lem !ith the mar'et d namic ri+ht no!: even thou+h miners are settin+ a price implicitl ( choosin+ !hich transactions the put into a (loc') there%s no simple !a $or that price to (e communicated (ac' to the mar'et) so the pro(lem here is price si+nalin+) it%s havin+ a !a to communicate that mar'et price (ac' to the client so the client can ma'e intelli+ent heuristic decisions a(out !hat to pa $or the ne0t transaction in order to achieve a speci$ic time +oal. @or instance) 3 have a transaction o$ B-C) ho! much do 3 need to pa toda to +et that transaction veri$ied in three (loc's ( miners. &hat%s the 'ind o$ :uestion a client is as'in+. <-D:"D?

Stephanie Murph : &hat ma'es sense) (ut can !e +o (ac' $or a second. 3%m !onderin+ ho! a miner EdecidesE !hich transactions to include) li'e) ho! does that !or'7 <->:-D?

A.A: At the moment) the use the %+reed al+orithm%) !hich is) the loo' at all the transactions that are availa(le) the sort them ( the num(er o$ $ees and the ta'e the ones that have the hi+hest $ees;'ilo( te. Fou normaliAe it on the side o$ transactions and then ou put those $irst until ou +ot a (loc' that%s $ull) or $ull enou+h o$ !hat ou !ant to achieve and then ou post that (loc'. So at the moment it%s (asicall hi+hest price transaction $irst or hi+hest $ees;'ilo( te transactions +o in $irst. <->:D=?

S.M.: -So that%s an automated process and !here does that process happen7 3n a minin+ pool7 <->:D#?

A.A.: Fes) it happens in the minin+ so$t!are. 9ach time ou are minin+ $or somethin+) the $irst thin+ ou do is ou create a ne! (loc') stic' all the transactions in and then ou tr to $ind proo$-or-!or' a+ainst that ne! (loc'. And ou do that ever time ou are tr in+ to $ind a (loc'. &hat decision happens in (uildin+ that ne! (loc' to $ind the proo$-o$-!or' and it%s part o$ the minin+ so$t!are. <->:"G?

S.M.: &han's $or clearin+ that up.<->:".?

A.A.: -So miners are reall alread settin+ the price. &he %re settin+ the price ( ma'in+ a choice) and that choice e$$ectivel is the decision o$ !hat transactions to include in the (loc' (ased on the $ees that are in those transactions. Ho! the :uestion is ho! does the client tr to predict !hat%s +oin+ to happen there. And this is the development that has (een done in this particular case) 3 thin' Iavin has (een !ritin+ essentiall code that uses in$ormation $rom previousl mined (loc's to tr to decide !hat the level o$ $ees in the net!or' is ri+ht no! and to create transactions !ith the least $ees ou can pa and +et a!a !ith the con$irmation time ou !ant. And to do that) !hat Iavin is doin+ is he is usin+ a historical anal sis o$ transactions in the several past (loc's) then ta'in+ the medium $ee;'ilo( te. Medium) not avera+e) that means the point in !hich hal$ o$ the transaction are more e0pensive and hal$ o$ transactions are less e0pensive and the reason he pic's the medium is to avoid +amin+ ( the miners !here the could stu$$ it) a $e! miners could (asicall ri+ the +ame to increase the $ees and the is i$ ou have the simulation done e$$ectivel in the client) then it could decide !hat transaction $ees to include !ith the relativel hi+h de+ree o$ certaint that it !ill achieve it%s con$irmation time +oal !ith that level o$ $ee. And it%s relativel hard to +ame (ecause it !ould ta'e collusion ( multiple miners or minin+ pools and an minin+ pool that (ro'e $rom that cartel !ould reap the (ene$its o$ competition ( dra!in+ all o$ the transactions that have not (een serviced. So it%s a relativel e$$icient mar'et !ith +ood $eed(ac' loops) +ood price discover mechanism and $e!er opportunities to +ame. And it%s a mar'et) rather than a $i0ed $ee s stem. &hat%s the advancement that Iavin is su++estin+ and 3 thin' it%s a +reat ne0t step to!ards havin+ a mar'et (ased transaction $ee. <-G:--?

A.L.: 4eadin+ a(out this reall made me thin' a(out ho! Bitcoin compares !ith the e0istin+ $inancial s stem. Because ou can loo' at !hat%s happenin+ here !ith ho! the $ees are set in a reall similar li+ht to ho! !e use L3B/4 as a metric to set rates in the %real !orld% and man other mar'ets that are out there. And (ecause there are so man people participatin+ in the minin+ s stem there reall is no advanta+e in tr in+ to +ame the s stem. 5hereas !ith the closed s stem) li'e the L3B/4 s stem !here ever one is participatin+ in the re+ulated environment and ou have to (e chosen to (e on this (oard) suddenl the opportunit $or collusion to tr and $leece the people !ho ou%re supposed to (e providin+ a service to *ust +oes throu+h the roo$ it seems li'e. <-G:>-?

A.A.: 3 have to concern that no s stem can (e desi+ned that !ill not (e +amed +iven su$$icient opportunit and mar'et participants !ho have developed an advanta+e $or themselves !ithin the mar'et. All mar'et s stems +et +amed eventuall . Ho!) the real advanta+e !ith Bitcoin is even i$ Iavin sets this mar'et discover mechanism toda and it starts +ettin+ +amed he could chan+e it in the ne0t version o$ the client and then chan+e it a+ain and then chan+e it a+ain in a ver pu(lic consensus driven approach that has ver o(vious results in the mar'et. &hat%s !hat ou can%t do !ith L3B/4) (ecause ou discover the scandal $our ears a+o and !hat e0actl has chan+ed in the calculation o$ L3B/4 nothin+. Mar'ets !ill (e +amed. &he :uestion is do ou have the capa(ilit to $le0i(l adapt to that +amin+) hit the reset (utton and level a pla in+ $ield a+ain. All the other s stems are too ri+idJ Bitcoin is $le0i(le enou+h to do that. &hat%s the 'e . <-K:DG?

S.M.: -So Mi'e Hearn !rote an e0cellent @A1 on the Bitcoin @orum a(out the ne! Pa ment Protocol. And (asicall ) !hat this is) it +oin+ to chan+e the !a ou can send Bitcoin pa ments. And this is +oin+ to ta'e a little (it o$ e0plainin+ so 3%m *ust +oin+ to read throu+h his @A1: E4ecentl Iavin mer+ed support $or B3P G-) GB and G= into Bitcoin-1t. B3P G-) a'a the pa ment protocol) is intended to (e a (i+ chan+e to ho! people use Bitcoin. A lot o$ :uestions a(out it come up repeatedl ) so here%s an attempt to ans!er the most common ones. 5hat is the pa ment protocol7 /ld timers !ill remem(er that Bitcoin v-.B (S.M.: o$ !hich 3 am not one) (ecause 3 don%t remem(er this)) the $irst version ever released) allo!ed ou to pa people in t!o !a s. /ne !as ( enterin+ a Bitcoin address. &he other !as to enter an 3P address. 3$ ou entered an 3P address) our computer !ould connect to the node on that 3P and run a rudimentar pa ment protocol that involved as'in+ the node $or a $resh pu(lic 'e ) then uploadin+ the pa ment transaction directl . Satoshi thou+ht this pa ment protocol !ould (e ho! people mostl used Bitcoin. 3t had some advanta+es) li'e +uaranteein+ a $resh address. He ori+inall intended addresses to (e used onl $or !hen the recipient !as o$$line. But he !as !ron+ -

addresses :uic'l came to dominate and hardl an one used the pa -to-3P $eature. 9ventuall it !as removed.E 8id either o$ ou +u s ever use the 3P $eature7 <B-:-K?

A.A: Ho. <B-:-.?

S.M.: &his must (e reall old-school) (ecause i$ Andreas doesn%t remem(er it) ou +u s (oth don%t remem(er it. <B-:B"?

A.A.: &his is =--. and earl =-B-) it%s !a (e$ore most o$ us. <B-:=D?

S.M.: Feah) (ac' in the da . So !h did this connectin+ to an 3P address thin+ $ail7 <Continues to :uote Mi'e Hearn? E/ne reason is that it !asn%t ver secure) an one !ho could M3&M our internet connection (li'e someone sharin+ our 5i@i) could steal mone sent this !a . Another more practical reason is that (ac' then there !ere no online shops that accepted Bitcoin. 3n $act Bitcoin !as a 5indo!s-onl pure IL3 app !ith no MS/H-4PC AP3 so no(od could even (uild online shops. So ou never 'ne! i$ the person ou !ere tr in+ to pa !ould (e online or not at the time) meanin+ +ivin+ an address !as more relia(le. Also: HA&) $ire!alls) etc.E 5hat%s HA&7 <BB:BB?

A.A.: Het!or' Address &ranslation. &he $act that man 3P addresses are pro0ied ( a $ire!all or pro0ied ( a router) so ou don%t have a pu(lic address. <BB:BK?

A.L.: &he MS/H-4PC AP3... Andreas) that%s !hat !e !ere tal'in+ a(out earlier !ith ho! most applications inter$ace !ith Bitcoin. <BB:=#?

A.A.: Feah) that%s the north(ound inter$ace) the (itcoind applicationJ it%s the inter$ace that allo!s other applications to (uild on top o$ it and +ives access to the Bitcoin net!or' and s stem. <BB:D>?

S.M.: -So Mi'e Hearn sa s EBut it !asn%t a (ad idea and so no! !e%re (rin+in+ it (ac') (ut !ith a (etter desi+n. &he hope is that over time this !ill come to replace Bitcoin addresses $or most usa+es. But don%t !orr . Addresses aren%t +oin+ to disappear. &he %ll still (e around i$ ou !ant them.E

So o') that sounds +oodJ 3 had a little panic !hen the said this !as +oin+ to replace Bitcoin addresses. <Iasps? 5hat7 <Ii++les?. But the %ll still (e around i$ ou !ant them. <BB:"K?

A.L.: 3 reall li'e that this it seemed li'e a theme in .-.. &hat the are addin+ options) (ut the are not ta'in+ a!a an options. 3s that the !a it is +oin+ to pro+ress) !here !e !ill *ust have thin+s added and there !ill (e more options over time7 /r eventuall !ill some options) li'e addresses) could those (e eliminated and removed7 <B=:B"? A.A.: A lot o$ the code development involves eliminatin+ thin+s *ust as much as it involves addin+ thin+s. 3 thin' it%s an important (alance to maintain. Fou leave too much crud $rom the past in there) then ou have to implement it (ac'!ards compati(l !ith ever thin+ ou ever did in the past) that ma'es development comple0. 3 thin' that the development team has done a $a(ulous *o( o$ droppin+ o(solete $eatures !hen the %re o(solete and addin+ $eatures !hen the %re needed and o$$erin+ choices !here necessar and not o$$erin+ choices !here there shouldn%t (e choices. 3t%s a ver delicate (alance and 3 thin' Iavin did a +reat *o( at this so $ar. <B=:>.?

S.M.: Feah) it seems li'e this is a theme) there are more options in this ne! thin+ and that could onl (e +ood. <B=:">?

A.A.: -5ell) in some cases is +ood) in other cases) ou 'no!) it is the development +roup%s *o( to ma'e some decisions and then ma'e those decisions happen. Some thin+s are not *ust a(out havin+ a choice. Because i$ ou have a choice on ever thin+) then ou reall have no direction or strate+ic vision as !here ou are +oin+. 3t%s *ust ever thin+ is optional. So 3 thin' it%s a(out maintainin+ (alance (et!een ma'in+ decisions and +ivin+ choice. <BD:=B?

S.M.: Feah) 3 mean !ith a $eature li'e ho! ou send pa ments and (asicall that a$$ects ho! ever da users use Bitcoin) so it seems li'e that mi+ht (e a thin+ that%s reall important to have options $or. <B=:DD?

A.A.: Feah) a(solutel . <B=:D>?

S.M.: <continues to :uote Mi'e Hearn? ESo ho! does it !or'7 3t%s a !a to $ormat a small piece o$ data (thin' $ile) that contains instructions on ho! to pa someone (a Pa ment4e:uest messa+e)) and then a $ormal speci$ication o$ ho! to

satis$ those instructions ( su(mittin+ a Pa ment messa+e. &he data is desi+ned to (e e0tensi(le in $uture so !e can add lots o$ use$ul $eatures. 3n $uture) clic'a(le (itcoin lin's !ill loo' li'e this: (itcoin:B9N9:@BdK'D,cALCKF17 re:uestOhttps:;;(;r;aBcd9 5hen clic'ed) our !allet app !ill do!nload the re:uest L4L and read the Pa ment4e:uest it +ets. &he re:uest messa+e contains another L4L) !hich is !here to su(mit the $inished transaction to (instead o$;as !ell as (roadcastin+ it to the P=P net!or').E 3 need some help understandin+ that) Andreas. Basicall lin' and !hat happens a$ter that7 <B>:D"? ou are +oin+ to clic' a

A.A.: 3 thin' the !a to understand the Pa ment Protocol is to thin' o$ it compared to the current situation !hen ou tr to (u somethin+ $rom a store. &he +ive ou an address) ou put that address in our clients and ou create a transaction !hich +oes out in the net!or' and eventuall reaches (ac' to the vendor. &hat%s a ver loosel coupled transaction. All the +ave ou is an address and then ou *ust 'ind o$ thro! mone at it out there in the ether and hope that some o$ that stic's and the merchant sees that transaction come (ac' to them. &his is a much more ti+htl coupled se:uence !hereas it%s a three part. Fou as' them %Ho! do 3 pa ou76 the send ou the parameters o$ ho! the pa ment should (e made) !here the pa ment !ill (e sent to and then ou send (ac' to the vendor the transaction si+n) the si+ned transaction itsel$. Ho! that%s a 'e point (ecause $or man vendors) i$ the have a !a o$ veri$ in+ that the transaction came (ac' and !ent to the net!or') the can even accept it !ith con$irmations. &he can trust it as properl si+ned) ou 'no!) ou%re not li'el to dou(le-spend it ri+ht there so the can +ive ou a - con$irmation. 5hereas (e$ore) the *ust thre! ou an address and then listen on the net!or' and hope that somethin+ came (ac' to that address and it !as $rom ou and it !asn%t in*ected as a dou(le spend and all o$ the other thin+s. 3t%s a much more ti+htl coupled interaction) !hich also allo!s ou to deal !ith pro(lems) (ecause ou are +iven an address and ou send a pa ment and it%s not the ri+ht pa ment. Ho! do ou do a re$und7 8o ou need to send more mone 7 3s the invoice $illed7 8id ou +et a receipt7 All o$ those t pes o$ interactions at the moment) at the moment) are outside the scope o$ the pa ment. All ou%ve done is sent and address. 5hich !ith the Pa ment Protocol all o$ those can (e in scope) properl de$ined) so ou can have all o$ those separate parameters. 3t%s +oin+ to ma'e Point-o$-Sale so much smootherP <B#:=B?

S.M.: &hat sounds li'e it%s a lot more $riendl to merchants !ho !ant to use Bitcoin or accept Bitcoin. <B#:="?

A.A.: And $or users too. Because 'eep in mind) that up to no!) the !a to ma'e a pa ment is to cop a DG character strin+ o$ +i((erish or ta'e a photo o$ a !eird s:uare !ith dots on it. <B#:D#?

<S.M. lau+hin+?

A.A.: &he ne! s stem is (asicall tellin+ our client to +o to a !e(site and then it does some thin+s in the (ac'+round and ou *ust +et an invoice or receipt on the pa ment. So it%s +oin+ to loo' much more li'e a pa ment s stem that ou 'no!. 3t%s +oin+ to (e much more user-$riendl ) (ecause ou can hide the DG di+it +i((erish) ou can hide the 14 codes) ou can ma'e it simpl a(out e0chan+in+ an L4L) !hich ou can do over Bluetooth) over an air$ield communication) a num(er) or the 14 code a+ain i$ ou !ant. <BG:-D?

S.M.: &he $irst thin+ 3 !ondered is there a potential $or e0ploitation in this7 Li'e i$ someone can) (asicall ) dis+uise a lin' as somethin+ that loo's li'e a pa ment re:uest L4L and it%s actuall a malicious script that steals all our (itcoins7 <BG:BG?

A.A: FesP &his introduces L4Ls into the pa ment s stems and introduces H&&Ps. So the clients that do this !ill have to ver care$ull process that L4L and ver care$ull !hatever comes $rom that L4L) (ecause it is not a trusted s stem. &hat%s not much di$$erent $rom scannin+ a random 14 code and EHe P Let%s see !hat happensPE But it%s much more e0plicit) so 3 thin' clients that implement this !ill o(viousl ta'e the necessar precautions to ma'e sure that an data the receive is not compromised) it%s not dan+erous. <BG:"-?

<3ntermission? <Music in the (ac'+round? Ad: ESatoshi8ice - &he most notorious Bitcoin site has unveiled it%s ne!est creation: &ri(ute. 3n Satoshi8ice &ri(ute (ets occur o$$-the-(loc'chain $or $ast and e0citin+ +amepla . 8eposit (itcoins and start pla in+ !ith - con$irmations. All (ets are prova(l $air and easil veri$ia(le. &ri(ute is also social) pla ers compete !ith each other and the top D pla ers at an +iven time receive a portion o$ the (est $rom ever other pla er. &he ran'in+s reset at midni+ht) ena(lin+ an one to (ecome the leader !ith a $e! luc' rolls. BQ o$ all Satoshi8ice earnin+s !ill (e donated to Sha!n%s /utpost. &o 'ic' o$$ the ne! +ame) the $irst thousand pla ers !ho lose -.B (itcoin !ill have that amount automaticall returned to them ris'

$ree. L.S. pla ers are not allo!ed (ecause America is a $ree countr . &he +host o$ Satoshi is !aitin+ $or ouP @ind her at;&ri(ute.E <B.:B.?

S.M.: He0t point $rom Mi'e) E5ho is implementin+ the ne! protocol7 Support !ill (e in the ne0t Bitcoin-1t releaseE !hich the sa on the (lo+ post that !e read previousl it%ll read !hen it%s read ) so !e don%t 'no! e0actl !hen that is Eand is (ein+ !or'ed on $or MultiBit;Android Bitcoin 5allet) CoinBase and CoinPun'. BitPa also committed to implementin+ it) so all merchants !ho use their services !ill +et support automaticall . 3$ ou%re plannin+ to support it) let me 'no! and 3%ll add ou herePR So the alread +ot some prett (i+ names on(oard !ith this ne! protocol. E5hat other $eatures does it add7 3n vB o$ the protocol: 4e$unds. &he sender can su(mit some re$und addresses to the recipient at the same time as su(mittin+ the transactions. Ho! i$ the seller !ants to +ive the (u er a :uic' re$und) the can do so. Ho more pro(lems !ith tr in+ to E+uessE the users address and sometimes +ettin+ it !ron+ due to shared !allets. Bitcoin1t +enerates a re$und address $or ever pa ment done this !a ) (ut ou%ll onl see them i$ ou do actuall +et a re$und. Memos. Clic'a(le lin's can alread contain short strin+s or la(els) (ut their len+th is ti+htl limited ( !hat (ro!sers !ill accept and !hat $its in a 14code. B3P Gallo!s pa ment re:uests to contain ar(itraril lon+ memos) !hich can (e used to descri(e !hat ou are (u in+. &his is super use$ul !hen the pa ment re:uest is authenticated ....E And authentication is the ne0t se+ment) (ut re$unds7 &hat6s hu+eP 5hat the %ve done) it seems li'e to me) is (uilt in a $eature that allo!s $or a !a to +ive re$unds (ut preserves) o$ course) the one-!a nature o$ Bitcoin transactions. <=B:--?

A.A.: Feah) e0actl ) so it%s not reversi(le. 3t%s *ust +ivin+ the merchants !hat is the correct address to send a re$und i$ such thin+s should arise. 3 could tell ou) as a merchant in some o$ the pro*ects 3 sell) 3 had occasionall had to +ive re$unds) and it%s al!a s a manual process. Fou have to contact the person !ho made the purchase) i$ 3 have the contact details) o$ course. As' them $or a Bitcoin addressJ send the pa ment and hopin+ that !or's. &his !ould allo! ou to prearran+e to the possi(ilit o$ a re$und and it reall sho!s ho! ou can reall ma'e this transaction much more ti+htl coupled so there%s in$ormation $lo!in+ $rom the merchant to the customer) (ut also $rom the customer (ac' to the merchant) i$ the !ish to do so. And (ehind the scenes) the nice thin+ is that this can use as man addresses as ou !ant) !hich means a ne! address $or ever transaction !ithout the comple0it o$ tr in+ to $i+ure out !hat address ou used. <=B:"-?

S.M.: &hat sounds +reat. Ho! memos) !ould those memos (e pu(lic) li'e in the (loc'chain) or are the *ust 'ind o$ $or our o!n in$ormation sa in+ 3 (ou+ht a sa$e paper !allet 'it $rom Andreas... <==:->?

A.A.: Feah) this is an entirel outside o$ the (loc'chain. &his is metadata that is transacted durin+ the pa ment protocol. Basicall ) the in$ormation is sent to our client) !hich presuma(l !ill (e displa ed the screen) perhaps as a !e(pa+e) tellin+ ou !hat this pa ment re:uest is and it can (e much more ver(ose. So $or e0ample) ou could have a receipt that has a product name that has a picture o$ the product and a price and a ta0 ou paid and all the other in$ormation in that memo and that !ill sho! up on ou screens so ou 'no! ou%re pa in+ the ri+ht person $or the ri+ht product. <==:=.?

S.M.: -But it doesn%t necessaril have to (e incriminatin+ perhaps) (ecause it%s not pu(lic) it%s *ust $or ourS<e es onl 7? <==:D"?

A.A.: &his is sent to our client) it can (e discarded ri+ht a$ter. 3t%s not communicated pu(licl at all. &he nice thin+ is that this actuall continues to preserve privac and anon mit ) in terms o$ not revealin+ e0tra in$ormation) (ut at the same time) it allo!s the clients to $ull implement automated rec clin+ o$ addresses to insure the never re-use an address. And that leads to much stron+er anon mit . Ho!) thin' o$ it another !a ) one o$ the thin+s ou could do in a pa ment re:uest li'e this is re:uest that the pa ment (e sent to a coin-*oin mi0er) or shared mi0in+ address. So ou could e$$ectivel use this to pi++ (ac' an anon miAation and remi0in+ service on ever transaction that +oes throu+h a speci$ic merchant ( de$ault. &hat%s prett coolP <=D:=-?

S.M.: Feah) that is prett coolP E5hat is authentication a(out7R Mi'e said in the last point a(out memos that memos are reall use$ul !hen the pa ment re:uest is authenticated. So !hat is authentication7 <1uotin+ Mi'e Hearn? EBitcoin is a di$$icult pro*ect partl (ecause !e%re movin+ mone around !ith +eneral purpose computers that can (e hac'ed or +et viruses. ,3SA and MasterCard have moved ever one (outside the LSA) to special-purpose hard!are li'e chip cards and dedicated readers !hich can%t have random apps installed on them. /ur approach has to (e a (it di$$erent) (ut dedicated hard!are is still comin+. &he &reAor device is a mini computer *ust $or Bitcoin that plu+s into a

ErealE computer via LSB. 3t has a displa and a couple o$ (uttons. 3t holds our private 'e s. 5hen ou !ant to ma'e a pa ment) the details o$ the pa ment are sho!n on the screen and i$ the %re !hat ou !ant) ou press /C and thin+s +et si+ned. &here%s an o(vious $la! !ith that desi+n !hen com(ined !ith Bitcoin as it is toda . &he Edetails o$ the pa mentE ou%ll see on screen !ill loo' li'e this: Pa -." B&C to B9N9:@BdK'D,cALCKF17 5here did that address come $rom7 5ell) it came $rom our computer) the thin+ that pro(a(l has a virus on it. &hat virus could have s!apped out the address sent ( the online shop ou%re usin+ $or one o!ned ( the virus author) and (ecause the %re *ust random num(ers ou%d never 'no!. Althou+h the virus can%t empt our !allet immediatel ) it can still steal pa ments !hen ou ma'e one) and avoidin+ that is the !hole point o$ usin+ special hard!areP &he pa ment protocol allo!s recipients to si+n their re:uests under an Eidentit E. An Eidentit E is *ust some ar(itrar strin+ that !as itsel$ si+ned ( some Ecerti$icate authorit E. &he authorit vends si+ned statements that sa (simpli$ in+ a (it): E3) Bo( Smith) (elieve address B9N9:@BdK'D,cALCKF1 is o!ned ( Mi'e HearnE. Ho! i$ our &reAor happens to trust that Bo( Smith validates identities relia(l ) it can displa : Pa -." B&C to Mi'e Hearn7 And that messa+e can%t (e tampered !ith ( an virus. As ou can see this is much sa$er.E <=":="?

A.A.: Bottom line here is that in this decision Bitcoin developers decided to use e0istin+ technolo+ies $or doin+ (asic identi$ication and certi$icates. And the technolo+ the %re usin+ is SSL certi$icates. &he same stu$$ !e use on the 5e(. T."-. Certi$icates the %re called) (ut that%s the underl in+ certi$icates that are used $or SSL. So !hen ou +o to eBa .com and ou see a little padloc' up there that +uarantees that ou are in $act loo'in+ at eBa .com. 5ithout that) someone could (asicall hi*ac' our session) ta'e ou to a site that loo's li'e eBa .com) (ut isn%t) and then !hen ou put our in$ormation in there it%s stolen) it%s a hone pot. 3n $act) ever Bitcoin address can (e a hone pot. Fou don%t 'no! an thin+ a(out itJ it%s *ust a random strin+ o$ +i((erish. &his !ill allo! ou to associate that random strin+ o$ +i((erish to a speci$ic si+ned certi$icate and then (uild some trust around that. So !hen ou +o to pa a merchant) ou 'no! that mone is +oin+ there. And this reall ma'es it much harder to run man in the middle attac's) !here ou su(stitute a Bitcoin address !ith another. &his is a (i+ pro(lem. Let%s sa ou have a (lo+ at the moment and ou !ant to +et someone to tip ou. Fou put an address in that (lo+. A hac'er could come alon+) hac' into our !e(site) edit that pa+e) and chan+e our address. Ho! lon+ !ould it ta'e ou to

notice ou are not +ettin+ an tips an more7 And that our tips are m steriousl disappearin+ into the ether. So it%s e0actl that 'ind o$ scenario ou can solve) in this case) instead o$ havin+ *ust an address and te0t) ou !ould have a si+n that is part o$ the Pa ment Protocol) ou +et a certi$icate a+ainst it) so it can%t (e su(stituted !ithout (rea'in+ the certi$icate. <=G:-#?

S.M.: &hat does sound li'e it ma'es thin+s more secure. So ho! do identities !or'7 5ho is actuall sa in+ that this is Andreas Antonopoulos7 He is sa in+ that essentiall this isn%t li'e a +overnment issued 38 or an thin+ li'e that or ou have to sho! our passport and tie it to all our Bitcoin address or an thin+ li'e that. 5hat this is is Eessentiall ) an one can +et a certi$icate attestin+ to some 'ind o$ identit . /$ten it%s *ust an email address or !e(site domain name (e.+. (itcointal'.or+ has a certi$icate containin+ its domain name). 3t can also (e a le+al name li'e EMichael C HearnE or EMt Io0 LtdE. 3n $act) i$ ou have a passport !ith a chip in it then ou alread have a certi$icate containin+ our passport data) (ut it%s not ver use$ul (ecause there%s no private 'e associated !ith it. Sometimes certi$icates are paid $or and other times the are $ree. &he certi$icate authorities never +et our private 'e . 3nstead ou +enerate a private 'e locall ) then as' the CA to si+n our pu(lic 'e . At the same time ou prove our identit ) i$ our identit is an email address then ou t picall receive a clic'a(le lin' there $or instance. 3$ it%s our name ou mi+ht have to su(mit some paper!or'.E But i$ it%s our $orum name or somethin+ li'e that) ou pro(a(l don%t. Basicall !hat he +oes on to sa is there%s pro(a(l +oin+ to (e a mar'etplace o$ certi$icate authorities that evolve and the %re +oin+ to (e o$$erin+ di$$erent levels) some $ree) some paid $or) o$ certi$icates that are attached to some di$$erent $acets or aspects o$ our identit . So that%s not somethin+ that ma'es Bitcoin less private or less anon mous) it doesn%t have to (e our le+al name) our le+al identit at all) it can totall (e somethin+ li'e a $orum handle or an email address. <=K:>"?

A.A.: And then 'eep in mind this is $or the merchants) and the merchants !ho chose to attach an identit to their pa ments addresses. &his isn%t $or the end users. Fou don%t need to have a certi$icate as a (u er or as a client or as an end user. Because ou don%t need to prove to an one !ho ou are !hen ou are sendin+ mone . Fou onl need to +enerate trust !hen ou%re receivin+ mone . So this reall a$$ects merchants and 3 thin' the smart move over here !as to pi++ (ac' on top o$ the T."-. SSL Certi$icate structure. Because ri+ht no!) i$ 3 !ant to have a domain name or email address certi$ied) 3 can choose $rom Ddi$$erent Certi$icate Authorities $rom ,eriSi+n to Het!or' Solutions to some o$ the smaller and cheaper ones and the can produce a certi$icate that%s !idel trusted. &he have the in$rastructure $or doin+ the veri$ication and it%s relativel ro(ust and has (een alread used as the $oundation $or SSL. So it%s a reall smart move (ecause it levera+es e0istin+ technolo+ nicel . <=.:>G?

S.M.: -So then he +oes into tal'in+ a(out !h can%t !e use the PIP 5e( o$ &rust !hich (asicall ) 3 don%t reall understand it that !ell) (ut PIP is a !a o$ encr ptin+ emails and communications and other thin+s and the 5e( o$ &rust is !hen people validate and si+n each other6s% 'e s) that certain 'e s (elon+ to certain people. &here used to (e) or still are) some thin+s called 'e si+nin+ parties) !here people !ill meet in person and sa %oh eah) this person is !ho the sa the are) 3 can veri$ that their 'e actuall (elon+s to them and 3%m +oin+ to si+n their 'e % and then it%s creates this 5e( o$ &rust) !hich is a (unch o$ people !ho have con$irmed that the all are !ho the sa the are and ou can come to tap into that 5e( o$ &rust to veri$ people%s 38. 3t%s 'ind o$ technical and a little (it on the lon+er side so ma (e !e !on%t +o into that) (ut Mi'e is sa in+ that it%s reall not possi(le to com(ine the PIP 5e( o$ &rust) nor do the !ant to) !ith the ne! Bitcoin protocol. <D-:>#?

A.L.: 3 thin' that this also +ets into the :uestion a(out should the per$ect (e an enem to the +ood7) (ecause that%s essentiall the other ar+ument that Mi'e is ma'in+ here is that) es) there are some pro(lems !ith the e0istin+ SSL Certi$icate Authorit s stem) nota(l that sometimes +et issued to people !ho shouldn%t have them and that sort o$ taints the !hole thin+. So he la s out a couple o$ improvements that could (e applied to this s stem as it is no!. But reall that is the primar thin+) that this is an incremental step to!ards somethin+ (etter then !here !e are no!. 3s that ri+ht7 <DB:B=?

A.A.: 9ven i$ SSL has had some $la!s) it +ot (ro'en) there are issues !ith the certi$icates. 3t is ( $ar the most success$ul (road-(ased deplo ment o$ encr ption the !orld has ever seen and pro(a(l the most e$$ective securit and privac tool that !e have ever deplo ed. 3 thin' the primar reason is reall simple) as a user) ou don%t ma'e a choice to use SSL) it *ust happens) and that6s a 'e element o$ securit and !h SSL has (een so success$ul) the (urden is shi$ted to!ards the merchants !ho have the $unds and motivation and to it and the *ust +et it automaticall !ithout as'in+. &hat%s a reall +ood securit model. And) ou 'no!) despite all it%s $la!s) it%s (een the most success$ul encr ption !e ever had) so it ma'es a lot o$ sense to use !hat alread !or's on the +lo(al scale. <D=:-B?

A.L.: -So it sounds li'e there%s a lot o$ stu$$ comin+ in -... <D=:->?

S.M.: Feah) it seems li'e... +enerall ) this is (ein+ prett !ell received so $ar) at least ( the comments on the $orum. <D=:BB?

A.A.: 3%d li'e to point out that also 3 don%t 'no! ho! much meanin+ to read into this) (ut -.. is a prett si+ni$icant version num(er in itsel$. &he decision to +o versions that start !ith -.. is reall important (ecause that means !e are no! headin+ head-on the B.- release o$ Bitcoin. &hat%s the ne0t step. 9ssentiall these are the release candidates and (etas that !ill lead to the $irst o$$icial version or release o$ Bitcoin. So it%s an important milestone to hit -... &he e0citin+ development in Linu0 happened (et!een -...- and -...K. <D=:"B?

<Bac'+round music? <Adam B. Levine. spea's at the Cr pto Currenc Con$erence) /cto(er "th =-BD (ad audio?

A.L.: Hi) m name is Adam B. Levine) li'e 3 said (e$ore) 3 do a t!ice !ee'l sho! called Let%s &al' Bitcoin. 3t%s reall important that !e solve the pro(lems that are in $ront o$ us) (ecause there are a lot o$ pro(lems. 3 thin' that the are solva(le and so that%s actuall !hat 3 !anted to 'ind o$ tal' a(out here is ho! !e are solvin+ some o$ these pro(lems and ho! it%s happenin+ in a !a that it doesn%t re:uire permission. 5hich means that it%s happenin+ reall $ast. 5ell thin+s move $ast in the !orld or cr ptocurrenc and since 3 started Let%s &al' Bitcoin in April =-BD !e%ve seen re+ulator compliance that completel reverse the compliance landscape) companies come and +o and !e%ve seen the Con$erence scene completel e0plode !ith at least one a month and sometimes as man as $our a month happenin+ all over the !orld. 5ith the last $e! da s !e%ve seen the apparent demise o$ Sil'road) u(i:uitous to Bitcoin ille+al stu$$ mar'et and the arrested man accused <unintelli+i(le !ord?) and the price !as *ust crushed. And then... it !asn%t. 5h is that7 Mt.Io0) ri+ht) the elephant in the room !hen it comes to centraliAed Bitcoin e0chan+es. 3n the crash and in the !ee' lon+ a(out t!o ears a+o) some o$ ou mi+ht have not (een in the communit at that point) (ut there !as complete chaos. Ho(od 'ne! !hat the price o$ Bitcoin !as) and most people had their (itcoins tied) it !as a terri(le situation. Because o$ the sin+le e0chan+e service in the hu+e ma*orit o$ Bitcoin transactions) it !as (oth an incredi(l lucrative operation) (ut also a hu+e central point o$ $ailure) $or not *ust tradin+ Bitcoin $or one currenc or another) (ut ho! do !e +et the price in the $irst place. Bitcointal') $or a lon+ time it !as the Bitcoin communit ) it !as the place !here people !ent to meet the communit ) to educate themselves into contemplatin+ this pro*ect) that !e call Bitcoin. A couple o$ da s a+o it !as hac'ed and !hen 3 chec'ed it this mornin+) it !as still do!n. &here are a $e! similarities (et!een these three events. @irst o$$) the %re all controversial sites) the %re u(i:uitous) (ut ever (od loves to hate the

$rontrunner and amusin+l ) the Sil'4oad) out o$ all those three companies) pro(a(l has the (est reputation <lau+hin+?. &he also don%t matter. Ho!... a ear a+o) # months a+o) this !ould%ve (een a ver di$$erent conversation) a much more depressin+ topic) (ut the three mar'ets at !or' here) and !hile in the past these events !ould%ve crushed their +rave natures) that%s contra(and $or Sil'4oad) price li:uidit $or Mt.Io0 and communit o$ thou+ht leadership $or Bitcoin&al'. &heir success actuall catal Aed and essentialiAed the ne0t +eneration. So !hat !e%re seein+ is that these hi+h pro$ile) u(i:uitous and in the !ron+ !a centraliAed operations are ar+ua(l *ust as dan+erous to their users as ne! pla ers. &he ma have more reputation) (ut that ma'es them a more temptin+ tar+et $or (oth (ad avera+e<7? as it does $or ne! users. 9ven i$ these $ields are dominated ( one or t!o pla ers) increasin+l that !on%t (e the case. &hese thin+s don%t matter an more (ecause there are alternatives that are *ust as +ood) i$ not (etter in their o$$erin+s) !ho%ve (een !aitin+ $or that vacuum) a $ailure o$ one to (ecome our le+ac institutions) or t!o (i+ $ails. 90cept) in a monopol $ree s stem) li'e Bitcoin is) there is no such thin+ as too (i+ to $ail) and reall ) these are companies that are *ust standin+ there as road(loc's) !here the have this momentum. And momentum) !ith a (i+ compan ) a lot o$ times it%s enou+h to 'eep it +oin+) enou+h to 'eep our customers happ . Because there%s a cost in s!itchin+. But that%s not the !a that thin+s are +oin+ to +o. &hese institutions !ere the $irst) (ut the %re not the last) ou 'no!) Sil'4oad has three or $our similar competitors that are alread $i+htin+ over their customers) Io0 is alread less impact$ul no! than ever $or the price as $ar as most people are concerned and) ou 'no!) m $avorite price source is BitcoinAvera+e ri+ht no!. 3 thin' that the +u s at 3nvictus 3nnovations are !or'in+ on a ver interestin+ pricin+ model (ut ri+ht no! 3%m still usin+ and it actuall has a (utton up there that ou can select) that completel e0cludes Mt.Io0 $rom the price list. <Lnintelli+i(le) then lau+hin+?. And o$ course) Bitcoin&al' has (een around $or the lon+est time and that is the onl place !here ou can tal' a(out and no! 4eddit surpassed them) 3 thin' the +et the dou(le num(er o$ users and i$ +o on to 4eddit in the past couple o$ da s ou pro(a(l seen it%s +oin+ actuall reall slo!) (ecause most o$ the people !ho !ere still on Bitcoin&al' have moved over. Mi+ht (e a temporar thin+) (ut it%s de$initel happenin+. So the point is that !here there used to (e one voice) ho!lin+ a+ainst the !ilderness) !e don%t live in the !ilderness an more. &he ecos stem and Bitcoin and Cr ptocurrenc are +ro!in+ up ri+ht in $ront o$ our e es and it%s happenin+ reall ) reall $ast. 3 privile+e in devotin+ nearl all o$ m time into cr ptocurrenc and 3%ve reall never (een more e0cited that 3 am) ou 'no!) in these last couple o$ months. 3 thin' !e have a lot o$ challen+es ahead o$ us) (ut mostl it%s permission (ased) it%s (een said (e$ore that the L.S. has a choice in $ront it. 5e can choose to (race this technolo+ and see the $uture) and (e a vital part o$ (uildin+ it or !e can do ever thin+ in our po!er to tr and ma'e it so this is hard and !ill pro(a(l do a +ood *o( at stoppin+ it $rom le+itimate uses in the Lnited States) and ma'e ou love them. So) the pro(lem

!ith opensource pro*ects a lot o$ times is that there%s too much availa(ilit o$ !or'a(le solutions that don%t do the *o( in a !a that%s accessi(le to people. &his is especiall true !ith the Satoshi client 3 thin'. 5e%re *ust no! startin+ to see these ne!er !allets comin+ out that reall can levera+e or ta'e advanta+e o$) ou 'no!) *ust some o$ the (asic usa(ilit that%s (een done over the last $e! ears. So these pro(lems are +oin+ a!a ) there%s a !allet comin+ out called the Hive !allet that reall has a $ocus on usa(ilit and tries to continue this trend o$ ampli$ in+ the Bitcoin streets) !here an (od can) ou 'no!) reall +et into sort o$ a (uAA!ord. But it%s reall not this hipster thin+. 3t%s !hat needs to happen. 5e need to $ocus on usa(ilit . Bu in+ products) BitPa is a ma*or) ma*or pla er in that space. But at the same time) the !eren%t tr in+ to reinvent the !heel) as &on (Iallippi) said) !hen it comes to ho! !e (u thin+s !ith Bitcoin. So) to this point) most merchants acceptin+ Bitcoin use that standard shoppin+ cart $lo!) !here ou add a product to our cart and !hen ou are $inished !ith all our shoppin+) ou enter our (illin+ in$ormation) pa the total !ith either our credit card or (u !ith Bitcoin. But reall ) Bitcoin doesn%t need an thin+ li'e that. 3t%s a !or'around created to address pro(lems) associate !ith identit ) (ecause that) o$ course) has (een discussed) ho! our mone !or's. Shall !e associate !ith identit to ac:uire authoriAation or permission and then ou are allo!ed to !ithdra! mone $rom that essentiall . But !ith cr ptocurrenc ) since the holder is the o!ner) !e don%t need to do that an more. And 3 thin' that our pa ment solutions aren%t +oin+ to re:uire an o$ those. Because these aren%t actuall help$ul at all) and actuall it creates more o$ a ris' situation than ou have i$ ou don%t do that. Shameless plo here) Let%s &al' Bitcoin has approved that is $ilmin+ this event and !e%re sellin+ videocasts. 3$ ou +o to ( then ou%ll see our $irst documentation o$ !hat it%s called a BitCredits s stem. &he creators) Ale0andre Bour+et) Luisa Buchanan) have (een !or'in+ on this $or the last couple o$ months. 3t ta'es a loo' at this pro(lem that !e have) o$ needin+ to associate identit ) and it rethin's it $rom the cr ptocurrenc standin+ point. /ccup in+ a(out one third o$ the pa+e and !ith the e0planation te0t !rapped around it) ou don%t actuall ever need to leave that pa+e in order to ma'e a pa ment. 3t *ust has a little inter$ace o$$ there and it prompts ou $or the amount o$ mone that ou are +oin+ to put in) in L.S. dollars and +ives ou that amount and it tells ho! much that is in Bitcoin and ou can essentiall load this up !ith (itcoin) !here then !e ta'e all the e0chan+e ris' and +ive ou (ac' !e(site credits that are denominated in L.S dollars and ou can (u an thin+ on our s stem. &echnicall this tal' is called %8oin+ (usiness !ith a de$lationar currenc % and people thin' this is the (i+ pro(lem) (ecause !ho !ants to spend (itcoins !hen the are hard to ac:uire and the +ain value over time. &here has to (e a compellin+ reason) and a$ter m e0perience !ith this BitCredits thin+) 3 !ant to share m trip !ith ou. Char+e people more) <the ? !ould pa in L.S. dollars <lau+hin+?. Fou could call it a discount $or our Bitcoin price or ou can call it a search ar(itra+e dollar price) (ut i$ ou !ant) people !ill par' !ith their (itcoins

$or !hatever ou%re sellin+ and ou need to ta'e into account the $uture value o$ Bitcoin) (ecause our customer certainl is. And i$ the mental math doesn%t !or' $or them) the %re +oin+ to pa ou in dollars (ecause) !h shouldn%t the 7 @or our passes) !e o$$er (et!een a =--D-Q discount) that puts our sales around ."Q Bitcoin. Ho!) o(viousl ) 3 do a sho! called Let%s &al' Bitcoin and !e onl promote this to our audience) (ut) ou 'no!) m e0perience has (een that !hen 3%m tr in+ to (u ) some +u s reall !anted it. And !e do receive $unds $rom our sponsors in Bitcoin and !e receive donations $rom our listeners in Bitcoin. And so) as 3 understand) it reall is a valua(le in$ormation $or me) !here 3%m sa in+ i$ it is !orth it to (e a part o$ this Bitcoin 'no!in+ that at a later date the are +oin+ to (e !orth!hile and +enerall 3 demand m DQ. 5henever 3%m doin+ services !ith someone or hire another !riter or somethin+ li'e that) it%s has to (e +enerall (e DQ and sometimes it%s a lot more. BitCredits is one option and 3 li'e it a lot) (ecause it essentiall lets users pla mar'et a+ainst Let%s &al' Bitcoin. 5hen the (u our o!n site%s credit) all the volatilit is removed $rom the e:uation. 5e do not ma'e credits in L.S. dollars) so ou can ma'e one transaction !ith a Bitcoin mem(er to load up our !allet and an transaction ou do on the site is instant and transaction (e $ree <last part hard to understand due to poor audio?. 4i+ht no! ou can onl (u these houses) !hich incidentall are heavil discarded over our ta(le over there) $or attendees o$ the con$erence. But !ithin the ne0t !ee' or t!o) !e%re +oin+ to roll it out to the entire site. &his is interestin+) (ecause our sho! is supported ( listeners and donations) a(out G"Q o$ !hich donated *ust under a dollar. So) even in a Bitcoin paradi+m) i$ ou have Bitcoin transactions comin+ in that are under a dollar and ou have to pa a $ee that%s some!here (et!een #-=" cents) ( m math is usuall a(out # cents) and that actuall !inds a $ee ver e0pensive. And ou%re ri+ht (ac' up there !ith the credit cards. So there are o$ course dra!(ac's) ( doin+ this !e essentiall ta'e the transaction o$$ the (loc'chain and !e centraliAe the records o$ value on our servers) !hich means the coins ou sent) !e%re responsi(le to protect them) (ut a+ain) !e don%t have to collect hardl an in$ormation) $or visual +oods !e literall onl need an email address. 5e don%t 'eep the $unds on our server. 5e don%t 'eep the 'e s $or our $unds on our server) the +o essentiall in a (lac' (o0) and then !e pull them out) (ut there%s no !a to access them throu+h the server directl . 9ventuall the s stem is +oin+ to +o (oth !a s and our <unintelli+i(le? !here the receive tips) 3%ll receive these credits that the %ll then (e a(le to cash out at !hatever the e0chan+e rate is at that point. So the entire time that !e%re holdin+) !e%ve ta'en on that e0chan+e ris' and 3 thin' that that%s somethin+ that%s reall attractive to a lot o$ operations) li'e ours) !here !e do have costs) (ut 3 mean) 3%d rather pa m cost in L.S. dollars and 3 rather 'eep m tips. 3t%s reall !hat%s come do!n to.

&here are o$ course others !ho are tr in+ to $ind this price) the (are <7? o$ entr is reall lo! here and pa o$$ $or !hoever nails this content monetiAation :uestion is +oin+ to (e reall (i+. &here are some other people !ho are doin+ some +ood !or' in the area) speci$icall the people) the have a pa !all application s stem) it%s ver interestin+. And then BitMonet) !hich is in partnership !ith BitPa ) and 3%ve (een tr in+ to +et to+ether !ith them to learn more a(out their pro*ect) (ut 3 haven%t (een a(le to ma'e it !or' et. But even this is a stop +ap $or !here !e%re +oin+. Pro*ects li'e 5atershed or 9+oro <7?) !hich ou !ill (e hearin+ a(out more in the !ee's and months to come) are creatin+ $rame!or's to (uild ne! communities and economies entirel on top o$) !ith cr ptocurrenc inte+rated at the in$rastructure level. And 3%m especiall e0cited a(out a pro*ect called Hetven+e <7?) that a+ain 3 !ant to learn more a(out) (ut ou can thin' o$ it li'e a simpli$ied cr ptocurrenc in$rastructure that lets those !antin+ to (uild an 'ind o$ complicated service that involves a lot o$ mone rattlin+ around and +oin+ to various places) essentiall plu+ it in) 'ind o$ li'e ou !ould !ith) ou 'no!) !ith a little starter circuit (oard) !here li'e all the underl in+ !irin+s there ou *ust plu+ into the various modules that ou !ant. 3n e0pertise) as !ith ever thin+ else) cr ptocurrenc is a meritocrac . &he people !ho are up here are e0perts) +enerall spea'in+ up (ecause the !ant to (e) (ecause the %re passionate a(out the $uture !e%re creatin+ and instead o$ !aitin+ $or someone to tell them !hat to do) the $ollo!ed in situations !here the *ust did. 3 have to sa ) and 3%ve (een sa in+ a lot) it doesn%t matter that 3 do this no!) (ut in # months it !ill have mattered li'e it did # months a+o. 3 thin' that Bitcoin) that%s reall it in a nutshell. 9ver thin+ is so positional ri+ht no!) and to mi0 some metaphors) !e are arran+in+ loun+e chairs) !hile the tsunami approaches) (rin+in+ !ith it a ver di$$erent) and 3%m hope$ull a much (etter role. &han' FouP <>":"G? <Clappin+?

<Music in the (ac'+round? Ad: Hi listenerP Here at Let%s &al' Bitcoin !e%re (uildin+ a +lo(al net!or' o$ correspondents a(le to contri(ute on the +round perspective on cr ptocurrenc related in$ormation comes across their $ilters. 3$ ou%d li'e to *oin our +lo(al conversation) send an email !ith our name and +eo+raphic or cultural niche to appl Uletstal'(

Must li'e Bitcoin) the onl (arrier to entr is our time and +ood !or'. &han's $or listenin+P <>#:=K? <Music chan+es? Ad: 9as 8HS is the S!iss arm 'ni$e $or our domain names) helpin+ meet their customer%s individual needs since B..K. 9as 8HS has (een an outspo'en critic o$ S/PA and C3SPA. 9as 8HS !as an earl supporter o$ Bitcoin and no! the are proud to sponsor the sho!. 8o (usiness !ith a compan that shares our valuesJ +et a BDQ discount !hen ou pa !ith Bitcoin. Io to eas and (e sure to use discount code L&B. <>G:--?

A.L.: As a +u on a sho! called Let%s &al' Bitcoin) it comes as no surprise that Bitcoin is the (ee%s 'nees so $ar as di+ital currenc options are concerned. 4ecentl 3 sat on a panel at the C=S, (&he Conver+e Create Silicon ,alle Con$erence) and one o$ the other e0perts on the panel !as Chris Larsen o$ 4ipple La(s. He said a couple o$ thin+s that 3 disa+ree !ith. @irst) that 4ipple is Bitcoin =.-) that%s a (it o$ an odd thin+ to sa . And second) that i$ ou can +et la! en$orcement on the side o$ our currenc ) ou%ll have !on. @or those o$ ou not $amiliar !ith the 4ipple s stem it can (e thou+ht as a parallel development to Bitcoin) it tries to solve man o$ the same pro(lems) (an'less mone transmission to an !here in the internet connected !orld. 4ipple +oes a(out solvin+ the pro(lems sli+htl di$$erentl . &here are no minersJ transaction validit is determined ( a cascadin+ consensus en+ine. 4ipples themselves) T4P) !ere $ull premined and then initiall o!ned ( 4ipple La(s. &he aren%t reall traded as currenc themselves) so this isn%t as much o$ an issue. 3nstead the are intended as an anti-spam mechanism) li'e a stamp on an envelope) !ith a chec' inside. &his piece !as pu(lished on Let%s &al' Bitcoin the da (e$ore 3 recorded this to release on the sho! and some o$ the earl comments pointed out that 4ipple pro*ect has actuall (een under development since =-->) and i$ ou +o (ac' to that =--> pa+e) then ri+ht there on the $ront o$ it) it sa s %!e !ant to ma'e our promises as +ood as a (an'%s promises%) (ecause essentiall that%s !hat the %re sa in+) that%s !hen a (an' e0tends credit) the %re sendin+ a promise to pa . 3n the 4ipple thou+ht process) the thin+ is) i$ !e have the in$rastructure to issue these credits *ust amon+st people) then !h do !e need the (an's in order to $acilitate that same sort o$ transaction. 4ipple ultimatel loo's li'e it !as desi+ned to maintain the $unctionalit o$ the (an'in+ s stem !hile removin+ the (an'in+ s stem itsel$ $rom the e:uation. So the %re (oth tr in+ to solve this pro(lem) (ut it reall is 'ind o$ $undamentall at odds ho! the %re tr in+ to do it. Bitcoin does a turn o!nership person to person (ase s stem and 4ipple is (uilt on an interconnected net!or' o$ P=P credit. Bitcoins are holdin+ do!n !ith no ris' on the redeemin+ part de$aultin+) (ut !ith 4ipple that is a ris'. &he Bitcoin s stem trans$ers o!nership o$ one thin+) (itcoins. People can (uild la ers on top

o$ it) to do other thin+s) (ut at a protocol level it%s *ust (itcoins on the Bitcoin net!or'. But !hat i$ ou don%t !ant to send (itcoins7 &his is !here 4ipple is reall a +ood option. 5hen ou send L.S. dollars to the 4ipple s stem) ou%re reall sendin+ 3/Ls that can (e redeemed some!here else in the s stem. 8ependin+ on our need to transact in non-Bitcoin terms) this mi+ht (e important. /r) ou mi+ht pre$er the hol o!n nature o$ cr ptocurrenc . And this is +ettin+ to (e an interestin+ thin+) as !e move to!ards a more pervasive Bitcoin $utureJ !e%re startin+ to see a Bitcoin s stem develop !here ou reall can +et all o$ our needs met !ithout ever touchin+ a currenc (eside a cr ptocurrenc . And ri+ht no! this is more true $or Bitcoin) (ut 3 thin' as !e move $or!ard) !e are +oin+ to see these in$rastructures develop !here the cr ptocurrenc particularities don%t matter and it%s *ust cr ptocurrenc is accepted here and !hichever one ou happen to use) there%s an e0chan+e rate (ased on that) (ased on this mar'et mechanism. Ho!) 3 don%t thin' it%s $air to sa that 4ipple is Bitcoin =.-) 3 reall thin' it%s more li'e a parallel evolution that (rin+s it%s o!n stren+ths and !ea'nesses to the ta(le. 3t (etter $its the needs o$ some and it%s !orse $or others. But there%s no :uestion) i$ 4ipple had matured (e$ore Bitcoin came into use) !e%d (e havin+ a ver similar conversation. And it !ould (e *ust as !ron+ to call Bitcoin) 4ipple =.-. /ne o$ the lia(ilities that 4ipple has all to itsel$ is a corporate structure. &he ma'e the ar+ument) as !ell as 3nvictus 3nnovations !hen the launched the BitShares protocol) that *ust (ecause a compan desi+ns) creates and releases a protocol into the !ild doesn%t im(ue them !ith an responsi(ilit $or an disruptions that protocol mi+ht cause. Satoshi didn%t disappear (ecause o$ all the appreciation that !as sure to (e sho!ered upon him) rather the ris's o$ standin+ alon+side o$ such a disruptive thin+ !as sure to +enerate a (ad outcome. Ma (e not $or Satoshi) (ut some(od loses in that scenario) (ecause there are entities and individuals to !hom pressure can (e applied. 3t%s temptin+ to !ant la! en$orcement on our side. &he %re scar $ol's doin+ a di$$icult *o(. 3 used to have an unreasona(le amount o$ respect and a!e $or the people !ho appl our *ustice s stem) (ut over the last $e! ears e0perience $inds that diminished. 3 see more arrests $or pett crimes and no en$orcement o$ the la! !here the most e+re+ious violations have ta'en place - $inance. Lltimatel ) there isn%t much :uestion here. 3n Bitcoin) (arrin+ a re+istration process that sees pu(lic 'e s issued to speci$ic names) 3 don%t see ho! ou tell si+nal $rom the noise on an thin+ (ut speci$ic cases. 3n 4ipple) 3 don%t 'no!) (ut 3%m prett curious. 3t%s also not surprisin+ that 4ipple La(s ta'es this approach. 5hat choice do the have7 3$ the %re seen as aidin+ or ena(lin+ ille+al activities) the have $acilities that can (e raided) assets that can (e seiAed. Loo' at ho! la! en$orcement deals !ith media pirac . <Music in (ac'+round?

An thin+ a pa ment net!or' !ould (e +uilt o$ is or course) !orse. 5e live in stran+e times) (ut some thin+s are so po!er$ul and dan+erous that to si+n our name to them is tantamount to suicide. Ma (e not $or ou) (ut $or the +oals o$ the pro*ect. Ho reason !h a pressured compan has to die) i$ instead the compl . 5ith mone ) the issues are al!a s permission) not technolo+ .

&han's $or listenin+ to episode "# o$ Let%s &al' Bitcoin. Content $or toda 6s sho! is provided ( Stephanie Murph and Andreas M. Antonopolous. Music !as provided ( Mared 4u((ens. An :uestions or comments email adamUletstal'( See ou ne0t timeP