let's talk bitcoin, episode 1, "let's talk bitcoin!"

8/13/2019 Let's Talk Bitcoin, episode 1, "Let's Talk Bitcoin!"

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Participants:Adam B. Levine (ABL) HostAndreas M. Antonopoulos (AA) Co-hostStephanie Murph (SM) Co-hostBradle !ansen (B!) "ree#an$in%.or% editor

"ar&od Hashemi ("H) Correspondent

ABL: Hi' and elcome to Let*s +al$ Bitcoin', a sho or users ne and old ocrptocurrencies and the $in% o them all: Bitcoin. Comin% up on toda*s sho:

/S e0chan%e Bitloor orced shut can e0chan%es even e0ist in the /S1,

2hat is "inC34' and h it*s the #i%%est threat to Bitcoin ith Bradle !ansen o"ree#an$in%.or%. Listener 5uestion h don*t people sell Bitcoins or credit cards orPapal1

6t*s all a#out perspective hen e #rea$don sitchin% rom #itcoins to mili-#itcoins.

Butterl La#s: a tale o promises #ro$en and the lessons o dealin% ith volatile currencies.

6s minin% causin% %lo#al armin%1

Andreas ta$es on 7ru%man and #rin%s the heat.

And inall' correspondent "ar&od Hashemi tells us a#out #urin% treasure ith our mind.

8isit us at Letstal$#itcoin.com to su#scri#e or ree to our tice ee$l sho. M name isAdam B. Levine' 6*m a riter and spea$er ho li$es to e0plain complicated topics andunderstanda#le terms. +hat*s reall the purpose o hat e*re doin% here' ta$in% thecomplicated issue a#out crpto%raphicall secured mone and helpin% people see hat itcould mean in their on lives. !oinin% me in our 5uest or clarit are Andreas M.Antonopoulos and 9r. Stephanie Murph.

SM: Hi.

AA: Hello.

ABL: +han$s or #ein% here' ever#od.

SM: 6*m reall e0cited to #e here.

AA: reat opportunit. +han$ ou' Adam.

ABL: lad to have some assistance in this sort o impossi#le 5uest that e*ve #een #ar$edon. So' %ettin% ri%ht into the nes' e*re recordin% this at ;;:;< AM paciic time on the =>rdo April' =?;>. +he top stor o here 6 sit is the recent closure o the /S e0chan%e Bitloor.+he released this statement a e das a%o' 5uote: 6*m sorr to announce that due to

circumstances outside o our control' Bitloor must cease all tradin% operations indeinitel./nortunatel' our /S #an$ account is scheduled to #e closed and e can no lon%er provide


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the same level o /S9 deposits and ithdraals as e have in the past. As such' 6 have madethe decision to halt operations and return all unds. @ver the ne0t das' e*ll #e or$in% ithall clients to ensure that everone receives their unds. Please #e patient as e processed ourre5uest., and its si%ned oman' ho as the President o that compan. +his is a #i% deal'not necessaril #ecause o their si&e #ut #ecause this is another /S e0chan%e that is #ein%

closed or $ind o reasons that don*t seem to #e #usiness related.

AA: -And don*t seem to #e Bitcoin related. @nce a%ain' it*s all a#out the riction #eteen'ou $no' onderull le0i#le Bitcoin and le%ac currencies that are reall diicult to dealith.

SM: 6 as reall e0cited a#out Bitloor and 6 had a #unch o riends ho ere startin% to useit' and people li$e it a lot #ecause the ere doin%' hat as it1 ?.; percent' a commission ontrades' hich is insane' ou can*t ind it anhere and it as relativel eas to %et moneinto it via this Capital @ne peer to peer transer. -But' 6 %uess it as too %ood to #e true' atleast accordin% to the /S %overnment ho*s %ot this insane mone launderin% re%ulations

that*ve ust #een reall ratchetin% up over the last couple o ears.

ABL: -So' do e thin$ that there is an space in the /nited States or an e0chan%e that isn*t%onna run out these pro#lems1 @r do e ust thin$ that e0chan%es should ust stopunctionall operatin% in the /S1

AA: 6 a#solutel thin$ that e0chan%es can operate in the /S' and not onl are othere0chan%es operatin%' D#utE can #e accessed. A %ood e0ample: one could sa coin-#ased isanother one' ne ones are openin% at the same time hen e*re seein% a couple o ne ones

#ein% unded' includin% one that*s 8enture Capital pac$. 6 thin$ it*s deinitel a diicult

re%ulator environmental or$in%' #ut i ou do our re%ulator homeor$ and persisted it'there*s a reall e0cellent opportunit or proit.

ABL: -So' it*s that hat e thin$ then1 +hat ust Bitloor didn*t do the re%ulator homeor$and #ro$e some rules that the didn*t $no a#out and so that resulted in this1 -Because' $indo the a that 6 as readin% it' it seemed li$e Bitloor as actuall one o a more a#ove

#oard' ou $no' the*re operatin% in 4e For$ hich has a lot ver strict anti-monelaunderin% that are even #eond the ederal scope. 6 understand that more e0chan%es can startup' #ut hat*s to sa that the thin% that stopped Bitloor on*t stop Gem all.

AA: 4othin% much. 6 mean' the main pro#lem is that these re%ulations are not ver clear and

their enorcement is not ver consistent' so 6 mi%ht %oes ar usin% the ords ar#itrar andcapricious.

SM: 6 thin$ people are reall scared' especiall those ho are sort o more inside the le%ac#an$in% sstem' the*re reall scared o runnin% aoul o these re%ulations and so the ust%ot out o the a' #end-over #ac$ards to compl' and $inda scre their customers. -And 6thin$ people ho are interested in Bitcoins reall' ma#e don*t have some o that ear ordon*t have that impulse' and the*re in Bitcoin #ecause the ant to oer people #etteralternative to dealin% ith the le%ac #an$in% sstem. -So' ma#e that*s ust one o the

pro#lems that an Bitcoin e0chan%e ould run up a%ainst. -And as Andreas said thatre%ulations are so va%ue that the can essentiall #e #rou%ht on anone' so 6*m not eelin%

ver optimistic a#out /S #ased e0chan%es' e0cept ma#e ones that even more decentrali&edin $ind o peer to peer' li$e ou $no' meetin% up ith people via LocalBitcoins or indin%


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some $ind o local merchants that people can #u rom' so it spreads out the ris$ o all a#unch o people.

AA: 2ell' ma#e there*s also to aspects o this' one is doin% all our homeor$ in advancesuch DasE chec$in% all the #o0es' ma$in% sure ou ulill all the re%ulations. +he other one is

actuall #ein% prepared or hat happens hen "inC34 or someone else decides to shine aspotli%ht on ou and that means havin% the laers to i%ht this' and i%ht this vi%orousl incourt' so hen the shutdon one o our #an$ accounts ou ile temporar inunctions' ouappeal the closure' ou open another #an$ accounts' ou have our laers i%htin% everstep o the a' and this is not one o those thin%s here ou preparin% i all %oes ell' all%oes ell' otherise ou*ll ust old. A part o this has to involve a i%htin% spirit' and ou$no' lasuits in the /S are part o doin% #usiness' so ou should #e prepared or them.

SM: 6 don*t thin$ anone e0pects this Spanish in5uisition' #asicall hat*s comin% don onthem. 6 mean it*s millions o dollars to compl ith these anti-mone launderin% statutes and6 $no' #ut instead o havin% a hell o the time even thou%h the*re ma$in% a lot o proit'

some o them ust are reall hard to predict and people are startin% ith ver little start-upcapital even thou%h there*s a %reat proit opportunit in tradin% #itcoins and 6 thin$ it*s ustreall diicult to #e prepared or it.

ABL: 6 thin$ it*s hard or an#od to sin$ a su#stantial amount o mone into #itcoin ri%htno i ou are a serious plaer. 6 ou don*t have anthin% to lose then it doesn*t reallmatter' #ecause ou $no' DtheE orst case scenario is ou*re %onna %o #ac$ to here ou*restarted. -But i ou*re an e0istin% institution and ou step into this am#i%uous arena' it reallseems li$e it*s ust dan%erous territor.

AA: 2ell' 6 thin$ Papal aced a lot o the same issues hen it irst started up' and had a lotscrutin rom re%ulators and mana%ed to persevere and ma#e the das o doin% that are overand it*s a lot harder no. -But' perhaps proessional investors and lar%er or%ani&ationscomin% into the mar$et can ithstand that $ind o scrutin. Perhaps e0chan%es are not realla %ame or startups in this space and ou reall need to #e e0perienced. 6 ou onl have asmall amount o capital and a small startin% #ase' ma#e e0chan%es isn*t a %ood idea.

SM: 6t is %ettin% harder #ecause these re%ulations are %roin% # the minute' 6 don*t $no iou %us have heard the suspicious activit reports #ut the*re #asicall li$e this monelaunderin% $ind o reports' here i some#od deposits a lar%e amount o cash in a #an$account or instance' or i the tr to transer more than ;?'??? either into or out o the /S.

6t tri%%ers the suspicious activit report' so called' and the person ma not even $no thatthe have one o these attached to their name #ut the*re #ein% investi%ated # the9epartment o !ustice. -And there are millions o these iled ever sin%le ear and the $eepincreasin% ever ear' most people don*t even $no that*s happenin%' so the re%ulatorclimate deinitel is %ettin% #i%%er. -And 6 also ust ant to mention a#out Papal' 6 mean athat cost to them and to the service that the provide have the complied ith thesere%ulations1 -Because 6 $no a lot o people ho had #een dissatisied ith Papal the a itis no compared to ho it used to #e. +he*ve #een ree&in% people*s accounts' 6*ve had

personal e0perience ith that actuall ith the #usiness that 6*m part o. Fou $no' theloc$ed don the amous 2i$ilea$s* account and there have #een a lot $ind o hi%h proilecases o this. -So' 6 thin$ Papal had #ecome a $ind o slave to the e0istin% le%ac #an$in%

sstem or not that much dierent than traditional #an$s. -So' 6 thin$ that*s somethin% thatBitcoin users ma not #e illin% to do to #ecome sort o part o the esta#lishment.


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AA: +here*s a shoc$in% iron here and somethin% that should concern us all' hich isapparentl the re%ulations don*t appl to the lar%er inancial institutions' the can do prettmuch hatever the ant. -And there*s no such suspicious activit report hen ou steal

#illions or crash the econom. +here seems to #e a cate%or o too #i% to ail on one end' onthe other end there seems to #e a cate%or or too small to succeed' and that*s reall shoc$in%

ri%ht no #ecause on the one hand the small companies are #ein% penali&ed or activit thathas nothin% to do ith an o these crimes that the*re loo$in% or' hile the #i% %us are%ettin% aa ith the' ith hal all o massive scale' it*s 5uite shoc$in%.

ABL: 6t*s actuall a %reat lead in or the intervie 6 did this mornin% ith Bradle !ansen'here #asicall e tal$ed a#out undissected the "inC34 re%ulations anone over a lot o thehistor and e touch a lot o these issues in more detail

#ac$%round music

B!: D6*mE Bradle !ansen' 6*m the director o the senate or "inancial Privac and Humani%hts' and in a previous lie 6 as on Paul*s le%islative staer or #an$in% monetar issues'and 6 edited a nesletter orecastin% orei%n e0chan%e rates as m irst o# out o colle%e.

ABL: Ho did that %o1

B!: 6t ent ell until the recession came and 6 need to' ell' 6 %ot laid o.

ABL: @$a' 6 thou%ht it ma$es sense. Fou*re also the editor or...

B!: "ree#an$in%.or%' es. Feah' it*s a %roup #lo% o most o the promenade ree #an$ers'

Larr 2hite' eor%e Sel%in' Steve Horit&' and others.

ABL: 2hat*s the elevator speech or ho someone ould deine themselves as a ree#an$in%advocate1

B!: +he*re not ans o central #an$in%.

ABL: As the editor o "ree#an$in%.or%' ou*re ritten a e articles recentl on the "inC34%uidelines. Can ou tell us hat "inC34 is and hat their unction is1

B!: Feah' "inC34 is the inancial crimes enorcement netor$. 6t*s a #ureau ithin the

treasur department. 6t*s sort o a vault ithin the treasur to help the netor$ on inancialcrimes and then as made administrative a%enc under the /SA Patriot Act. +he reason orhavin% "inC34 is to enorce the anti-mone launderin% las rom the Ban$ Secrec Act. +heBan$ Secrec Act as passed in ;IJ? as part o the 4i0on*s ar on dru%s. +he ar%ument

#ein% is mone launders rom the dru% trade ere al$in% in ith' ou $no' dule #a%s ullo cash and dumpin% it on the counter and depositin% it at the #an$s. -So' the ar%ued i e

passed the Ban$ Secrec Act' the mone ould dr up or the dru% ar and then $idsouldn*t have opportunities to #u dru%s on the streets anmore. "ort ears later' 6*m notsure that' that ar%ument reall carries the same ei%ht than it did then' and ou need to %o

#ac$ and re-e0amine this. +here ere some other reasons h the ar%ued the needed topass the Ban$ Secrec Act' part o that as the access to records or ta0 raud and cheatin%on our ta0es' thou%h ort ears later e still have a lot o pro#lems ith inancial raud ande still have pro#lem ith people cheatin% on their ta0es. Another reason that*s not much


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discussed' that as ar%ued on the house loor' is that in ;IJ? it as ille%al or Americans toon monetar %old. Fou can still use %old or our dentistr and reli%ion and other purposes

#ut not as a monetar instrument. Some Americans ere %ettin% #an$ accounts inSit&erland' here the Siss* ranc as tied to %old. +he /S +reasur ar%ued that #ecause oAmericans ere ille%all onin% %old' e needed to pass the Ban$ Secrec Act to stop them

rom doin% that. @ course' the ne0t ear 4i0on closed the %old indo' and a e ears aterthat e pro%ressivel re-le%ali&ed the onership o monetar %old and then also the use o%old clause contracts. So' those ustiications or the Ban$ Secrec Act are %one.

ABL: -So' no the name umps ri%ht out o me hen ou sa Ban$ Secrec Act' 6*mthin$in% that it means' ou $no' that it*s ena#lin% #an$in% secrec #ut it sounds li$e it*sactuall the opposite o that rom hat ou*re tellin% me...

B!: 2ell' it*s actuall Anti-Secrec Act. 6n act' there ere couple o supreme courtdecisions' #ecause the #an$ers and their customers and others challen%ed the Ban$ SecrecAct' the cases ere consolidated under the Caliornian Ban$ers Association versus Shult&.

+he Caliornian Ban$ers ar%ued that the had a common la o#li%ation to protect theconidentialit o their #an$in% customers inormation rom third parties. +he ar%ued thatthe had a contractual o#li%ation #ased on the si%nin% up o accounts and the re5uirements osharin% inormation that the had esta#lished ith their customers. -And the ar%ued thatthere ere e0plicit e0pectation o privac under the Caliornia state constitution: that or allo those and other reasons' the Ban$ Secrec Act violated their o#li%ation to protect the

privac o their customers. Lon% stor short' #ecause o that decision and /S versus Miller'the court #asicall ound that it as premature to ar%ue that e had an e0pectation o privacith inormation e share ith the third part' and the punted it #ac$ to Con%ress in theJ?*s. Con%ress has never properl pic$ed it up' e*re ust no sort o dealin% ith the

pandora*s #o0 that the opened up' hich is hat e called the +hird Part 9octrineK ouhave no e0pectation o privac ith inormation that can #e shared ith the third part. -So'i ou rite a chec$ and our #an$ cast it and notiied ith the other #an$ in order to clearthe other accounts' ou can*t e0pect that inormation can #e held private. All o this %oes

#ac$ to the Ban$ Secrec Act and this is the mission o "inC34. -So' a%ain' "inC34*s #eenaround in some orm or another as it evolved in order to enorce the Ban$ Secrec Act. 6n the;II?*s' e had a #i% development in crpto%raph' the sharin% o inormation over theinternet and a lot o technolo%ical advances on privac in encrption and other developments.@ut o that primordial oo&e this developed crpto-#an$in% movement and a lot o otheralternatives. Papal as the most amous e0ample o the alternative currenc movement that

#e%an then' #ut the ederal re%ulators came don ver hard on Papal #ecause people had

resources in their Papal accounts' and the eds #asicall orced them to stop #ein% ust apament sstem and to #ecome a depositor institution' "96C insured' ith other rules andre%ulations that come ith all o the rest o #an$s and inancial institutions. 6n addition tothat' there as another pament sstem called e-%old' that as one o the most successul othe electronic commodit mone approaches. And that as the "inC34 that shut don the e-%old compan. +he ar%ued that it as in violation o the Ban$ Secrec Act' as a haven ormone launders and other people that ere trin% to s$irt the la' and #ecause the ere inviolation o the Ban$ Secrec Act' "inC34 had them shut don. 2hat e have seen no is asimilar opportunit or ne electronic currencies o hich Bitcoin is the most successul.-And a%ain' e*re seein% "inC34 rapped up their resources and ocused their attention onemer%in% pament sstems. +he most li$el result o this is %oin% to #e a repeat hat e sa

under Papal and e-%old. 3ither the*re %oin% to orce them to chan%e and #ecome depositorre%ulator institutions and stop #ein% a pament sstem' or "inC34*s %oin% to set their si%hts


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on them as the have ith Bitcoin' and e*re %oin% to see prosecutions' and e*re %oin% tosee possi#l the death o the emer%ent pament sstem.

ABL: 9o ou thin$ that*s hat*s in the cards or Bitcoin1 @n the one hand it seems that"inC34 is reall ocused on disclosure and Bitcoin $ind o ma$es it hard to do that. -But' at

the same time as ou said' the orced Papal to #ecome somethin% the $inda eren*t' doou thin$ that as a %ood thin% or #ad thin% or Papal and or its users1

B!: 6 thin$ the lesson rom the I?*s as that ou either #ecome hat "inC34 ants ou to #eor ou*re not %oin% to #e.

ABL: 9oes that still appl in the case or somethin% that is decentrali&ed li$e Bitcoin1-GCause a%ain' ith e-%old comparison' there as a structure there' there as a compan thatunctionall ran that and so that the ere a#le to #e tar%eted. 6s that...it seems li$e it*sdierent ith Bitcoins. 9o ou thin$ it*s dierent1

B!: 6t is clearl dierent and "inC34 reco%ni&es it*s dierent' hich is h the put up therecent %uidance. "inC34' the other re%ulators are all trin% to %ra# all ith the netechnolo%ies' peer to peer netor$s' and the decentrali&ed pament sstem developments. 6don*t $no ho it*s %oin% to unold' #ut 6 do $no hat the histor has #een' and 6 do $nothat "inC34 hasn*t chan%ed on ho the approach these issues.

ABL: So' ta$in% it in a ace value #ased on hat the*ve said so ar' hat is "inC34*s planor Bitcoin1

B!: 6 have heard throu%h the %rape vine that "inC34 has prosecutions in the or$s or

Bitcoin' #roadl spea$in%' m %uess #ased on the timin% o the %uidance and hat 6 hadheard previousl throu%h the rumor mill a#out the prosecutions is that "inC34 put up the%uidance sort o e0 post acto in order to usti the prosecutions that the*re a#out to launch.

ABL: -So ou e0pect this to happen ithin the ne0t couple o months #ased on that timeline1

B!: A%ain' 6*ve heard dierent rumors so it*s diicult to predict' #ut eah' e $ne that DtheEprosecutions ere in the or$s and then later the %uidance came out' it*s seems sort o a CFAapproach o ho the*re doin% it.

ABL: 2hat do ou thin$ that*s %onna do to Bitcoin and do ou thin$ that it*s %onna have a

lastin% impact or somethin% that*s transitor1 6 mean' e haven*t reall seen an sort ore%ulator action in the space et' so it seems a little up in the air a#out the impact.

B!: 4o' it*s a %reat 5uestion' that*s the 5uestion that all o us are as$in%. 6 don*t $no that ano us have a irm anser. +here a lot o dierent a here this could %o' 6 thin$ it #ehoovesBitcoin communit to stand up and reco%ni&e hat the challen%e is rom "inC34 andunderstand that histor. -And a%ain' re%ulator %uidance is meant to clari issues' so that

people $no hat is ron% hat is ri%ht that the can stand at the ri%ht side o the la. +he%uidance that the issued here seems' in some respects' to #e muddled mess and raised more5uestions than it ansered. +here ere also 5uestions that' in the %uidance' the e0ceededtheir statutor authorit # ma$in% rules #eond the scope o the intent o Con%ress. -Anda%ain' 6 thin$ there needs to #e a dialo%ue #eteen representatives o the alternative currenc


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movement ith the re%ulators ust to or$ out some o these 5uestions' #ut as lon% as the*renot tal$in% ith each other' e $ind o $no hat to e0pect #ased on "inC34*s histor.

ABL: 2ith that same histor in mind' 6*m ust trin% to i%ure out ho the reasona#limpact Bitcoin i there isn*t an centrali&ed point o contact1 Li$e ou*re sain%' ou*re

sain% that' ou $no' the communit as a hole needs to interace ith the inancialre%ulator hich unctionall hat "inC34 is. -And to' ou $no' or$ ith that essentiall

put to%ether somethin% that is #etter than hat the ould do i the ust do somethin%'unilaterall # themselves ithout involvin% the communit...

B!: -@r at least have thin%s here the understand hat the deinitions mean and understandhat the terms mean and understand hat their responsi#ilities are' and "inC34 ould havea #etter understandin% o hat their %uidance ould mean in a practical a in the realorld.

ABL: -So' ou thin$ that the undamentall the don*t understand the impact o hat the*re%oin% to do' #ecause the don*t have enou%h education on the topic' the don*t have enou%he0perts ho have reall...

B!: "inC34 has a mission and the*re or$in% to ulill their mission' and their mission isnot to understand Bitcoin' their mission is to stop inancial crimes.

ABL: i%ht. -So' rom that perspective one o the other thin%s that the reall ocused on isAML or Anti-Mone Launderin% activities. Fou $no' 6*ve #een loo$in% at Bitcoin' a%ain'rom that perspective' rom the perspective o someone ho e0ists in the current currenc

paradi%m' and loo$s at this thin% that has no centrali&ed structure' 6 mean' doesn*t it all loo$

li$e mone-launderin%' ho do ou tell hat*s #ad and hat*s %ood rom re%ulator standpoint1

B!: Bitcoin %ot a lot o pu#licit or appealin% to people that e*re trin% to %et around thela. Sil$ road in #uin% dru%s or other ille%al paraphernalia that attracted the attention o there%ulators. "rom "inC34*s perspective' i ou*re trin% to stop inancial crimes' and this is atool or inancial crime' it is somethin% that arrants their attention.

ABL: -So' do ou thin$ that the*ll succeed1 6 mean' do ou thin$ it*s possi#le to succeed inthis scenario or them1

B!: A%ain' 6*ve %iven ou their histor. +he*ve #een the sin%le #i%%est actor or stompin%out currenc competition' rom m perspective.

ABL: 6 %uess the thin% that 6 %et #ac$ to' it seems li$e i ou*re %oin% to loo$ at this rom there%ulator stand point' there has to #e some entit that can #e re%ulated' and 6...loo$in% atBitcoin' 6 don*t reall see ho that or$s. -So' ou*re sain% that the*ll stomp it out' thatthe can stop it out ust # sain%' ou $no' that this doesn*t or$' it*s ille%al' or...

B!: "inC34 as a#le to stop currenc competition ith technical innovations in the I?*seven #eore their e0panded poer under the /SA Patriot Act. -And hat e*ve %ot no is"inC34 on steroids ithout clear restriction rom Con%ress' and it*s a ailure o Con%ress todo its o#. 2e $ne that these %uidelines and these prosecutions ere in the or$s even last


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Con%ress. on Paul as the chairman o the house su#committee that had urisdiction over"inC34' and he never had a sin%le hearin% on this. Con%ress has dropped the #all.

ABL: 2h is that do ou thin$1

B!: "or a lot o people these are relativel o#scure 5uestions.

ABL: -So' ou ust thin$ it*s a %eneral' so man thin%s to orr a#out that this is lo on thetotem pole relativel spea$in%1

B!: 6 mean' Con%ress is a representative #od that or$s to meet the demands o theirconstituents. +heir constituents are demandin% a #alanced #ud%et or %un control orimmi%ration reorm or somethin% else' those are the issues that ou deal ith.

ABL: -So' it*s ust too small o an issue to have #een enou%h cause or concern' andespeciall in the Con%ress e have or the last' ou $no' ive or so ears doesn*t seem li$etoo much has #een done in %eneral on anthin%' much less these smaller niche issues.

B!: 2ell' o$a' #ut ou also need to understand' 6 mean' loo$ at the %un control as ane0ample. +he proponents o the un Control Bill ere ar%uin% that I? percent o the peopleere avored o hat the*re trin% to do' #ut it as a small' dedicated' vocal' ener%i&ed' andor%ani&ed communit that as a#le to stop them. -And i that does not descri#e hat*shappenin% ith Bitcoin' 6 don*t $no hat does.

ABL: -So' ou thin$ that the maorit in this case ould #e in avor o this tpe o inancialcompetition or reedom that e*re tal$in% a#out here. -And that it*s ust a small %roup o ver

entrenched interests that have a total' it cannot happen rom their perspective. 6s that hatou*re sain%1

B!: 4o' 6 thin$ ou %ot it #ac$ards. 6 thin$ most people don*t understand hat Bitcoin is'hat it does' or h do ou need an alternative to ederal reserved notes' #ut it*s not a verimportant issue to them. 6t*s not somethin% or%ani&ed' it*s not somethin% the*re %onna puthold' political donations a#out or %et active on. @n the lip side' those people that areinterested in' are usin% Bitcoin and other alternative currencies' do have a vested interest in

#ein% a vocal dedicated or%ani&ed and ener%etic minorit o the issue. /nortunatel' the*venot #een so et.

ABL: -So' last 5uestion. @ne o the common thin%s ou hear in the Bitcoin communit a#outthese recent %uidelines issued # the %overnment is that #asicall is %ood nes' #ecause onthe one hand the*re ac$noled%in% it and sain%' ou $no' that this is somethin% thatle%itimate enou%h to' ou $no' or us to tal$ a#out rom re%ulator stand point. -And on theother hand' the impression is that the*re treatin% it li$e' 5uote 2orld o 2arcrat old',hich is to sa that in %ame currenc' hich is to sa not a real currenc' hich is to sathe*re not reall re%ulatin% it. 9oes that rin% true to ou1

B!: 6 thin$ it*s ver clearl a mi0ed verdict. @n the one hand' re%ulator clarit ould #e a%ood thin%' and the reco%nition point is ell ta$en. @n the other hand' e did not %et there%ulator clarit that 6 thin$ e need rom a %uidance rom "inC34. -So' that am#i%uit' the

possi#le overreach rom the Administrative Procedures Act and some other issues' ma$e the


9/21

situation more cloud and that is %onna lead to a lot o conusion hich 6 thin$ could #rin%a#out Bitcoins demise.

ABL: Bitcoins demise1 -So' ou thin$ the could ail1 2hen e*re tal$in% a#out that' do oumean that the particular currenc Bitcoin could ail or e*re tal$in% a#out crptocurrenc in

#road sense1

B!: 2ell' 6 mean' ou used Bitcoin as the e0ample' so reerencin% that. 6 the perceptioncomes out throu%h la enorcement' that anone ho uses Bitcoin and also uses the /Sdollar' and potentiall trades Bitcoin or a dollar' receives Bitcoin or pament' and then pasome#od else in dollars' i the*re not or$in% e0clusivel ithin a Bitcoin environment'then the*re %oin% to all under certain re%ulator procedures and certain re%ulatordeinitions that the*re %onna re5uire prior re%istration' re%ular orms' and approvals' and ithe*re not doin% that' the*re %oin% to %o to ail. -And i the start arrestin% people ho areusin% Bitcoin and usin% dollars' potentiall under conused %uidance' es' e can see the endo Bitcoin.

ABL: 6 $no 6 said that as the last 5uestion' #ut 6 %ot a ollo-up or ou. -So' the pressurepoint' the place here it loo$s li$e the have all o the levera%e in this relationship rom are%ulator standpoint is hen people ho accept or create' ou $no' or mine' Bitcoins'chan%ed them into local currenc' in this case e*re tal$in% a#out /S dollars. 9oes this appli ou don*t convert them into /S dollars1 2hat happen i some#od ust decides tocompletel e0ist' ou $no' in receivin% Bitcoins' sendin% Bitcoin ecosstem' never touchin%another currenc1

B!: @ne o the e thin%s that is clear in the %uidelines is that i ou stic$s e0clusivel in a

Bitcoin orld' ou don*t have to ollo the same re%istration re5uirements and reportin%re5uirements to "inC34. -But 6 assume these people also re5uired to pa ta0es.

ABL: Feah' 6 mean' that assumption seems to #e there #ut doesn*t there need to #ereco%nition o it as a...this is somethin% that 6*ve #een trin% to do Gcause 6*m involved ith anum#er o Bitcoin #usinesses that are %ettin% started' and one o the thin%s e $eep runnin%up a%ainst is ho do e value Bitcoins e receive1 9o e use that as a cost #ases1 -Andthen i e sell them at a hi%her value at later point ater e received them' is that a capital%ain transaction1 2e*ve #een tal$in% to laers and no#od reall have anthin% to saa#out it. 9o ou thin$ that is %onna %et cleared up at an point in the near uture1

B!: 6t should had #een cleared up in the %uidance #ut it as not. @n the ta0 side' there are alot o multinational companies that deal ith multiple currencies all the time: /S dollars' the3uro' Siss "ranc' !apanese Fen' the ile their ta0es and other reportin% re5uirements' evenin a multicurrenc platorm. +he "inC34 %uidance should have' rom m perspective'clariied those 5uestions that Bitcoin valuations those $inds o reportin% should ollo thesame platorm that the do or other reco%ni&ed currencies. +he did not. -So' this is one othose e0amples here the %uidance should have clariied the 5uestion' here the actuallmade it orse.

ABL: Put oursel in the shoes o "inC34 or a second. 3verthin% that*s happened to thispoint' has happened to this point. 2hat do ou do ne0t a#out Bitcoin1

B!: 6 #elieve that the*re continuin% their or$ on current prosecutions.


10/21

ABL: -So' e*re ust tal$in% court cases. Are e %onna esta#lish precedents1 6 mean' is thatthe %oal here1 6*m ust trin% to i%ure out hat their motivation or these actions. 6t seemsli$e ou said that the made the situation less clear' not more clear hen the intention is toma$e the situation more clear.

B!: 2ell' their intention is to stamp out inancial crime' and i criminals are usin% Bitcoinsor crimes then its somethin% that the should #e %oin% ater. 6 mean' 6 see a need or thealternative currenc people to #e or$in% to%ether' and then also liaisonin% ith "inC34 toadust some o these 5uestions to #rin% more clarit on #oth sides. 6 other people see thatneed' the should send donations to' via the "ree#an$in%.or% site' actuall interested in thistrin% to help ou %us and 6 don*t see an#od else reall steppin% up to the plate here the

#i%%est threat to Bitcoin comes.

ABL: 2hen ou sa ou %us', hat ere ou tal$in% a#out1

B!: People ho are interested in alternative currencies. +here*s a lot o people or$in% onencrption' and a lot o other parts that are reported or successul alternative currenc' #utthe #i%%est threat is %oin% to come rom "inC34' and 6 don*t see an#od else or$in% onthat.

ABL: 2ell' than$s or oinin% us toda' Bradle' to help $ind o clari this o#viousl vercomplicated and counter intuitive issue. 6 ou*d li$e to support Bradle*s or$' ou can visit"ree#an$in%.or% and donate to them there.

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ABL: 6 reall enoed m conversation ith Bradle and 6 have to sa 6*ve alread invitedhim #ac$ as he has anthin% else he ants to tal$ a#out. Fou $no' tal$in% throu%h thesecomple0 issues ta$es a lot. Fou have to reall have a comprehensive understandin% o theissue and then to a#le to put it into ords that the avera%e person can understand. A #i% part

o hat ma$es re%ulation and le%islation in %eneral so hard to understand is the ords thatthe use are oten ust a too complicated rom hat the*re actuall trin% to sa' and soou ind up ith $ind o to sets o lan%ua%e. @ne lan%ua%e is le%al lan%ua%e' and onelan%ua%e that*s' ou $no' or ever#od else that ou can actuall understand. +hat as un."rom the listener mail#a%' e have an interestin% 5uestion' 5uote 2h hasn*t an companta$en the ris$ o alloin% users to #u Bitcoin via de#it or credit cards1 6 understand thehole char%e#ac$ thin%' #ut 6 ould at least thin$ someone ould*ve tried to #u no orcome up ith a more ull proo a o doin% it. @#viousl' hoever i%ures this one out isinline to ma$e some serious cash., 2hat do ou thin$' Andreas1 2h hasn*t this #een tried1

AA: 2ith %reat reard comes %reat ris$' and the listener*s ri%ht sain% that there*s serious

cash involved here #ut there*s also a ver serious ris$' and it*s not ust a char%e#ac$ ris$. -So'i ou loo$ at the interace #eteen Bitcoin and national currenc' that*s here most o


11/21

diiculties arise. -And it reall shines a spotli%ht on the ea$nesses o the traditionalcurrenc sstems and pament sstems. -So' char%e#ac$ ris$' hat is that1 2ell' i oureceive mone rom Papal or credit card or an o the other traditional pament sstems'ou don*t actuall %et the mone. 2hat ou %et is a tentative promise that ou ill %et themone over a period o time' and durin% that time the sender can reverse that transaction.

+hat applies to ACH transactions under the 4ACHA rules' it applies to credit cardtransactions under the 8isa Mastercard rules' and it also applies to ire transer' surprisin%l.-So' there are lots o as ho a sender can reverse a transaction and #asicall leave ouholdin% the #a%. @n the other side' ou*re %ivin% out Bitcoin. Bitcoin is irreversi#le and%uaranteed. +he moment ou have si0 conirmations' and honestl 5uiet a #it #eore that'Gcause it*s diicult to do a dou#le spend even ith &ero conirmations' that mone*s %one.-So' i ou*re a merchant ta$in% in uncertain mone on one end and %ivin% out certain moneon the other end' ou*re e0posin% oursel to a lot o ris$. +hen ou*ve %ot the possi#ilit oour account #ein% ro&en or closed on the /S side or the national currenc side as happenedto Bitloor e ust discussed. -And o course then' hen ou open a indo #eteen theinitial char%e that ou ta$e in and the actual pament o Bitcoin' it*s a#out a J to ;? #usiness

da indo' that means ou receive the mone and ou*re not %uaranteed to hold it or atleast J das' so ou have to ait. 9urin% that time' the price o Bitcoin ma chan%edramaticall. 6 ou assi%ned the price o Bitcoin #ased on the irst da' ou sallo all theris$ o the Bitcoin ou*ve purchased. 6 ou don*t' ou have to purchase Bitcoin in advance'and li$e $eep stoc$in% Bitcoin' that causes all the pro#lems' and %enerall' it e0poses ou to alot o luctuation. +hen our 8isa' Papal' Mastercard' or other merchant account ma #eclosed' and those rules are prett ar#itrar and capricious too. +he ma decide that hatou*re doin% is a%ainst the terms o service' shut ou don' and reall' ou have ver littlerecourse to %et our account #ac$. A lot o this is reall driven #ac$ # the anti-monelaunderin% re%ulations e ust tal$ed a#out' and o course that e0poses ou to even more ris$'

#ecause i ou are under investi%ation o an o these mone launderin% re%ulations' almostimmediatel one o the irst thin%s that happen is our account*s %ettin% ro&en' hich thenleaves ou a holdin% enormous lia#ilities to our customers and a #unch o mone ou can*ttouch. -And i that*s not enou%h' i ou reall do #ecome successul at this endeavor' ou*re%onna have a lot o mone %oin% in and a lot o mone %oin% out' and an enormous volumeo cashlo to our or%ani&ation. +he tiniest hiccup on either the inputs or the outputs illleave ou ith either a ver lar%e amount o mone loin% in' or ill leave ou ith a verlar%e deicit #ecause the mone isn*t loin% anhere ou need it. -So' all o these thin%sma$e it ver comple0' ver ris$ rom operational perspective' a le%al perspective' and theinancial perspective.

SM: Feah' 6 reall appreciate ou perspective on that' Andreas' #ecause 6 actuall have thesame 5uestion h no#od hasn*t started this et1 -But that ma$es a lot o sense' a#out thereust enormous amount o ris$ involved. 6t does sound li$e ust as e*re tal$in% a#out a little#it earlier in the sho' some#od ould have to #e alread a prett lar%e entit ith a lot olaers on their side to underta$e this' and so ar e haven*t seen an#od step up ho*s %otthe poer.

AA: A %ood e0ample o this is reall hat e*re seein% ith some o the e0istin% servicesthat are transactin% cash or currenc or Bitcoin - those services are trin% to address eachone o these ris$ areas individuall. "or e0ample' Bitinstant hich is one o the or%ani&ationsused 5uiet a lot' is usin% mone orders and cash transactions throu%h Mone%ram' that

reduces their input ris$. -But the*re still havin% maor pro#lems ith cashlo in e0treme%roth and trin% to ust to handle one o those ive pro#lems that 6*ve mentioned is a ull-


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time o# or that compan. B the time that compan is a#le to handle all o these pro#lemssimultaneousl' the*ve pro#a#l %ron 5uiet a #i% si&e and that*s not an eas endeavor.

ABL: 9o ou thin$ e*ll reach a point here e can see real inancial institutions actuallstart to ena#le these transactions1 -GCause it seems li$ea compan li$e Bitinstant' or reall

almost an o the companies that are popped up over the last couple o ears' the*re moreli$e stop %aps' here the*re sain%' @$a' this is somethin% that the le%ac sstem #an$doesn*t ant to en%a%e ith the ne #an$in% sstem' so e*ll #e the #rid%e essentiall

#eteen them., -And then ever time the %et s5uished' ou $no' ever time the %otpushed out o the #usiness' so ou $no' pressure is applied it*s #ecause the #an$in% sstemhas decided that the*re no lon%er ant to deal ith this middleman' and the*d ust rathernot have the #usiness at all. 6 mean' that*s ho it all loo$s to me rom the outside. 6s that anaccurate relection1

AA: 6ndeed' the are #rid%es. -And eventuall 6 thin$ re%ular inancial institutions ill #eoinin% the %ame. At the moment' hat e*re seein% is that all o the on-ramps and o-ramps

into and out o the Bitcoin econom represent the steepest areas o diicult or the lar%estineiciencies. -But i ou are an entrepreneur' ou loo$ at ineicienc and ou seeopportunit. -And 6 thin$ in the end' this is a continuous #alance i ou li$e. People areloo$in% at this and sain%' o$a' does the reard e0ceed the ris$1 4ot 5uiet et' not or me'

#ut at some point' hen the reard does e0ceed the ris$ on a certain tpe o compan andthe ump in and ill ill this mar$et. +hese $inds o ineiciencies can*t %o on oreverithout someone ta$in% advanta%e o them.

ABL: 6*ve heard this descri#ed #eore in the conte0t o the prisoner*s dilemma here even ias a hole #an$in% sstem doesn*t ant to en%a%e ith Bitcoin #ecause it $ind o moves

their monopol on currenc' at the same time there*s an enormous incentive or them to #uin earl' so that as it continues to appreciate i it succeeds' the*ll stand the %ain rom that tooand it*s a sort o a thin% here irst one that #us in has the' ou $no' the loest price

#ecause non o the other #an$s are in' and then # addin% in the*re essentiall addin% thedemand ithout addin% the suppl. -So' 6 mean is this' are e ust at a point o e5uili#riumri%ht no here no#od ants to ma$e the irst move and then as soon as some maorinstitution ma$es the irst move is %onna start a cascade1

AA: 6 thin$ there*s a deeper pro#lem than that' Adam' 5uiet honestl' and that is that ou*reassumin% that inancial services institutions have incentives to innovate. -And the don*t'inancial institutions don*t have incentives to innovate and in act' a lar%e part o our

econom has no incentives to innovate #ecause ta$in% e0istin% mone los' tappin% intothem and leechin% o the proit or securiti&in%' a%ain and a%ain and a%ain' the same stu' andaddin% more and more levera%e' is clearl much more proita#le than ma$in% real thin%sinnovatin% or investin% in real companies' and that*s the main pro#lem in our econom ri%htno. A part o hat e*re seein% is the relection o the #an$s or ma$in% ar more moneessentiall as rent see$ers on mone streams' and that $ills innovation.

SM: Feah' ri%ht on.

AA: +a$e that #an$ers.

#ac$%round music


13/21

ABL: 2ith onl =; million #itcoins in circulation at the point here e stop essentiallcreate #itcoins' there*s #een a lot o tal$ a#out hat*s %onna happen to transaction si&es as thevalue o #itcoin %oes up. @ne o the chec$s that*s #uilt into the Bitcoin sstem is the a#ilitor people' on an individual #asis' to chan%e ho the loo$ at the Bitcoins that the have andthe receive. -So' ou can loo$ at #itcoins as #itcoins hich is the ;.?. Fou can loo$ at the

#itcoins as mili-#itcoins. Fou can loo$ at #itcoin as micro-#itcoins' hich are seven decimalsor ive decimals' some#od correct me here...

SM: 6 thin$ it*s si0' ri%ht1 -GCause mili-#itcoins ould #e three decimal places and thenmicro-#itcoins ould #e si0 places' #oth o them are actors o a thousand.

ABL: Let*s %o ith that' math is not m stron% suit here. -So' no that e essentiall reached;?? dollars in the #itcoin value' e startin% to tal$' 2ell' o$a...should e sitch the ae loo$ at them to mili-#itcoin1, +hat ould then ta$e that ; #itcoin at' ou $no' ;??dollars or more' and essentiall ta$e it don to a#out ; penn per mili-#itcoin1 -So' DdoE ou%us thin$ it*s time or that1 6s this prett mature1 9oes it even matter i e decide as a

comprehensive #asis1

SM: 6 thin$ the mar$et ill i%ure it out' honestl. 6 mean' everthin% a#out Bitcoin isdecentrali&ed' and so ho to reer to them' ho to denominate them is another thin% that 6thin$ is also %oin% to #e decentrali&ed. 6 mean' even ith mili-#itcoins' people are

pronouncin% it dierentl' the*re ta$in% dierent names or them. 6 remem#er readin% apa%e on the Bitcoin 2i$i' li$e a couple o ears a%o actuall' a#out hat the dierentractions o #itcoins should #e called' and even then there ere several dierent proposals. 6do thin$ there is sort o a pscholo%ical o#stacle or pscholo%ical thin% that comes into plahen people thin$' 2o' ; #itcoin is orth over ;?? /S dollars. 6 6*m %oin% to donate to

some#od' do 6 reall anna %ive them ; #itcoin that*s more than 6 ant to %ive' #ut 6 don*tant to %ive ?.?; #itcoins' that seems a little #it stin%' hat do 6 do here1, 6 thin$ thathavin% dierent denominations ould help people $ind o overcome that pscholo%ical #loc$- even 6*ve had it #eore. 6 mean' hen 6 anted to ma$e a donation or pa or somethin% andanted to have li$e a nice round num#er that as over ;' #ut ou $no' 6 %uess that*s not thecase. -And' ma#e 6*m used to ust usin% /S dollars' ma#e that*s h that comes in. +here*sthe dollar store that ri%ht the popular thin% in the /S here everthin% costs ; dollar' or it*s inmultiples o ; dollar #ut not ver e0pensive' and' people are happ to do that. But could ouima%ine a store here everthin% costs ?.?; #itcoins1 +hat*s a little #it dierent' ri%ht1

ABL: -So then' m 5uestion is: is it #etter rom our perspective to %ive a donation o ?.?;

#itcoins or ;?? mili-#itcoins' Gcause that*s the same num#er' ri%ht1

SM: Feah' e0actl' 6 thin$ it ould #e #etter' 6 ould eel #etter a#out it or no rational reasonat all' %ivin% a donation o ;?? mili-#itcoins.

AA: 6 thin$ this %oes to the undamental idea that e*re all rational decision ma$ers' hich'o course' e*re not. +here*s a ver #i% pscholo%ical actor here' and people ho*ve lived incountries ith massivel delatin% or inlatin% currencies used this concept ou $no' once acoee cost a ;??'??? lra' ou chop o three &eroes o the end and turn it into ;?? lra' andvice versa' ou add &eroes i ou have a delationar situation. 2hat*s important is thecali#rates the unit o value to people*s perception o a small purchase. 6 personall li$e the

purchasin% poer parit inde0 that the economist does on the Bi% Mac.- And hat that allosou to do is to cali#rate all o the currencies around the orld to a common cheap meal that


14/21

anone can #u in most countries. 6 thin$ e should have somethin% ver similar or Bitcoinhich is i the unit e*re currentl displain%' it as' it used to #e used # Bi% Mac' the priceshould #e #eteen ; and ;? #ecause that ma$es sense to human #ein%s. 6 ou*re trin% toencoura%e smaller transactions hich is a reall antastic capa#ilit o Bitcoin' it*s vercounter intuitive and counter productive to dominate in #itcoin #ecause essentiall

transactions end up #ein% ?.??..somethin%' and that*s ver diicult or people to calculate. 6oten to ind msel pullin% out the calculator and that*s no a to do transactions. 2hat oureall need is an intuitive correspondence tool and everda tan%i#le e0perience. 6 su%%estthe Bi% Mac' hat that ould mean essentiall is reall movin% to mili-#its. -And this issomethin% that ill impact transaction volume' it does impact people*s perception o hat a

price is' and hether e0pensive or not. -And or all those reasons' this is not ust a technicalissue' it*s a#solutel a critical part o economics.

SM: +here is the pi&&a inde0' ri%ht1 -But that*s a#out a million dollar pi&&a or ever' ou$no' over that much ri%ht no. 6 thou%ht o that hen ou said a#out the Bi% Mac inde0'

#ut 6 a#solutel thin$ ou*re ri%ht' and 6*m even onderin% i this idea o' ou $no' people

li$e to have a small units that are $ind o eas to calculate or small transactions' 6*m $indaonderin% i that mi%ht #e part o some o the popularit o litecoins #ecause ri%ht nolitecoins are orth a#out = /S dollars and chan%e per litecoin. -And ma#e people are morecomorta#le doin% small transactions ith them as opposed to #itcoin.

ABL: 2hat is the tippin% point or ou here it ma$es sense that' o$a' #itcoin is orth ??dollars' is that the point1 2hat is the ma%ic num#er here these all ma$e sense to sitch tomili-#itcoins1 7ind o ust on a %eneral level.

AA: 2e passed it at a#out #itcoin o ten' ater that most o the price start to not ma$e sense

or da to da transactions that most people are comorta#le ith. -So' as soon as a cup ocoee costs less than ; unit in our currenc' ou*ve %ot a pro#lem and ou have to adust thecurrenc to reali%n it. 2e*ve passed that point.

SM: +here ma#e even another point. Andreas' ou said e passed one at ten' #ut ou $no'perhaps there is one at ;?? as ell' li$e #eteen ;? and ;??. -And' over ;??' si%niicantlover ;?? it ma need to adust a%ain. @ver ;???' ho $nos1

AA: 6*m a stron% proponent o the idea that human perception o currenc is tied ithlo%arithmic scale' that*s h the #i% pscholo%ical #arriers to the price ere ;? and ;??' andrarel the ne0t one*s %oin% to #e at ;???. -So es' 6 ould totall a%ree ith that. +here are

several inlection points here ou have continue redividin%' and 6 ould su%%est a%ain thissimple rule o thum#' a da to da transaction should #e somehere around ; and ;? o unitso currenc. 6 it isn*t' ou*ve %ot a pro#lem.

ABL: 6t*s ver interestin% ho e*ve placed ourselves in this distri#ution' #ecause m choiceis a#out ;???. 6 thin$ that that*s the point' ou $no' here the #itcoin is orth ;??? and amili-#itcoin is orth a dollar' 6 thin$ that*s $ind o an interestin% parit point #ecause thenou can compare the smaller unit to the essentiall-standard unit o another currenc. +he actthat e all $ind o have these varied opinions on these num#ers and et are still coninin%ourselves to that' ou $no' round di%it o ;?' is tellin% as is to h is this somethin% thatshould #e underta$en on a person-#-person #asis instead o' ou $no' ever#od all at

once.


15/21

AA: +heres the other cultural e0perience hich is reall that or most Americans the*reused to eelin% rich # #uin% other currencies at multiples or a dollar' and Bitcoin ma$esthem eel poor.

ABL: i%ht' 6 mean that*s deinitel true is that Bitcoin turns all o that on and suddenl it*s

the cleanest shirt.

AA: Feah' and ou eel li$e ou*re #uin% somethin% e0pensive and that*s not a %ood placehere Bitcoin to #e. 2hen people start to eelin% Bitcoin is e0pensive' a%ain' e*ve passedthat point no.

ABL: i%ht.

SM: Feah' a#solutel. 6 $no a lot o people ho had #een sain% to me recentl' @h %osh'6 ould*ve totall #een #uin% #itcoins at dollars per #itcoin' that*s totall mana%a#le' #utno that the*re ;?? dollars plus per #itcoin' 6 ust can*t aord them., -And it*s li$e ell'ou don*t have to #u multiples o ; #itcoin' it*s not li$e a stoc$ or here ou should have atleast one share' #ut there sort o this resistance to understandin% that' so 6 thin$ that isdeinitel accurate.

AA: Feah' the lip side o that is i ou tell them' ell' ou can #u a ?.; #itcoin' no theeel that the haven*t #ou%ht enou%h. -So' the lip side o that' a%ain' it ma$es them eel poor.6t*s either e0pensive or the can*t aord enou%h.

SM: 6 heard an interestin% intervie ith !ere +uc$er hen #itcoins ere on this massivepara#olic escalation up to the most recent hi%h at a#out =N? dollars. -And he as sain% that

Americans are not used to havin% anthin% that resem#les a delationar currenc' somethin%that %ets more valua#le the more ou han% on to it' and has more purchasin% poer. And asresult o that' it reall aects the a ou live our lie' ri%ht1 -Because' i the currenc ou

primaril use' such as /S dollars' is $ind o slol losin% its value overtime' there*s noincentive to save' there is no incentive to han% on to' ou anna #u hat ou can no

#eore it decreases in value. But i somethin% does appreciate over time and %ets morepurchasin% poer' then ou reall start to evaluate our decisions a#out hether ou ant tospend it ri%ht no' or perhaps %et some e0tra value in the uture # han%in% on to it. So' 6 ustthin$ it*s interestin% pscholo%icall.

AA: 6 love the idea that Bitcoin ill actuall leads to the solution o our consumerism and

o#esit pro#lems.

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AA: B"L' the shoed up at CS" and char%e >?'??? dollars or a #o0 o ans. +hat as theteet that ou*ve seen the other da.


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ABL: @h' 6 thin$ that*s %reat. Fou $no' continuin% all e*re ust tal$in% a#out' in adelicinar currenc environment' reall' this ust lead strai%ht into B"L. -Because ButterlLa#s is one o the primar' at least most out there in a pu#lic sense' AS6C manuacturers'hich is to sa the neest and supposedl pinnacle o Bitcoin minin% technolo%. +hese areapplications speciic computers that used a small amount o ener% relative to the amount o

minin% math that the can do in order to %enerate #itcoins and process transactions. Bac$ inAu%ust o =?;=' 6*ve placed an order in #itcoin' a pre-order in #itcoin or a !alapeOo' and #the time 6 inall %ot m mone #ac$ or it in !anuar' the num#er that 6 as a#le to %et #ac$o Bitcoins 6 dropped rom =< Bitcoins to ;; Bitcoins. -And' i 6 hadn*t %ot m mone #ac$ atthat point' 6 as %onna trin% to %et a reund at this point' 6 ould #e %ettin% less than =Bitcoins #ac$.

SM: @h' 6*m sorr to hear a#out that.

ABL: Fou $no' it*s ine' 6 %ot m mone #ac$. -So' the mone 6 %ot #ac$ in !anuar is noorth' ou $no' at current e0chan%e rates li$e ;N or ;'J?? dollars' hat as ori%inall ;


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ABL: -But does it matter1

SM: Feah' %reat 5uestion' Adam' hether or not it matters. 6*ve actuall come up ith thesimilar pro#lem msel #ecause 6 do reelance voice-over or$ and narrations and stu' and6*ve' 6 ould preer to %et paid or m services in coins. -But' sometimes 6 have trou#le

calculatin% hat 6 should char%e' #ecause the price luctuations in #itcoin are so %reat andsometimes rom the #e%innin% to the end o a proect. 6t ma ta$e 5uiet a hile' and the valueo #itcoins in terms o /S dollars could #e 5uite dierent rom the #e%innin% to the end. -So'usuall hat 6 end up doin% is li$e $inda loosel tin% it to /S dollar rate' and sain%' Loo$'e could rene%otiate this later i the prices chan%es drasticall', #ut it*s #een $ind o achallen%e. 6*d li$e to %et to a point here it doesn*t matter hat the /S dollar price is' #ut6*m ust not sure e0actl' ou $no' hat the value o ; #itcoin is' and 6*m not sure that 6*mthe ri%ht person to determine that' even. 6t has to #e determined # the crod essentiall.

ABL: 2ell' ortunatel' e*re seein% a period o lo volatilit ri%ht no hich $ept the priceo #itcoin relativel sta#le ith plus or minus > percent ran%e or the last couple o ee$s.

4o' reall that*s the level o volatilit that*s' at most that*s accepta#le ith another currencthat ou*re %oin% to use or da-to-da transactions' or ou*re %oin% to ma$e promissornotes' or ma$e contractual a%reements to deliver mone later' ou need a volatilit note0ceedin% that' so let*s hope that this is the ne normal.

SM: +here*s is also the aspect o Bitcoin that it*s a pament netor$ and so' 6 $no there*s#een a lot o criticism a#out Bitcoin recentl #ecause o the price volatilit in terms o /Sdollars. -But' even i the price continues to #e reall volatile' eah sure' people ill losemone rom that and people ill proit rom that. At the end o the da' Bitcoin is also a

pament sstem' a pament netor$ and that has value on its on. 3ven i the price is super

volatile' people eel uncomorta#le ith that' it*s still super valua#le a to send and receivepaments.

AA: @ne thin% to thin$ a#out is that e*re e0periencin% this volatilit #ecause the vastmaorit o us move in and out o #itcoin and #ac$ to our national currencies or da-to-daspendin%. 6 ou loo$ #ac$ at the late ?*s and earl I?*s' the dollar as e0periencin%luctuations o plus and minus >? percent' sometimes plus and minus


18/21

SM: i%ht' and e $no that #ecause there as a video that recentl came out rom 9avid'rom codin%inmsleep' ri%ht1

ABL: Feah' 9avid Perr' he*s actuall %onna #e doin% an intervie or the sho tomorro.Supposed to #e or this sho' #ut it %ot #umped.

SM: Feah' so 9avid Perr had a video that he put out here he received advanced order oone o the Butterl La#s products' hich 6 thin$ as a !alapeOo Mini i%. -And it assupposed to have a certain atta%e per %i%ahash and it did e0ceed that 5uite o#viousl'

#ecause he put a poer meter actuall to sho ho much poer it as usin%. Fou $no' 6thin$ that Butterl La#s made this promise pu#licl and it*s ine to hold them accounta#le toit - the did put this out there or a reason. 6t*s not a loss or an#od' reall' i the %ive

#itcoins to charit. -But' ou $no' the*ve also made some other promises pu#licl li$e theould ship # a certain date and that $ept %ettin% pushed #ac$' so 6*m not sure i the have alot o credi#ilit. 6 $no that there are lots o people ho prett pissed' ran$l' at ButterlLa#s ri%ht no.

AA: So' the 5uestion is are the %oin% to increase their credi#ilit # ulillin% this promise orthe*re %oin% to allo us to repeat the narro advice 5uotation' "ool me tice' ou*re neveroolin% me a%ain,

SM: i%ht.

ABL: 6*d li$e to tal$ a#out the AS6C thin% more in detail on pro#a#l the ne0t sho Gcausee*re runnin% out o time on this one. -But it*s a reall complicated topic' and 6 thin$ it could

#e a reall' reall mess sort o roll out over the ne0t couple o months i suddenl all o

these AS6Cs hit all at once' and all the hole netor$ %ets up%raded all at once. 6*m vercurious a#out hat*s %onna happen ith that.

SM: Feah' me too. 6 mean' up until prett recentl' there as no even evidence that ButterlLa#s had or$in% prototpes. -So' it as %reat to see that little video that 9avid did herethe thin% as minin%. -But eah' 6 %et it asn*t e0actl hat as promised' it as lar%er' andit as also usin% more poer. Ma#e it also spea$s to the challen%es o actuall en%ineerin%these Asic miners and puttin% products out there. -And' o course the sain% is real artistsship' ri%ht1 6 %et it that the*ve pro#a#l encountered a lot o unoreseen issues and pro#lems'and the had to $ind o tea$ their desi%n to %et it or$in%. But' ma#e that*s the lesson toother people ho are thin$in% a#out umpin% in to the AS6C mar$et' ma$in% their on

AS6Cs' that is %onna re5uire a lot o plannin% and a lot o testin%.

ABL: 2ell' li$e m mother alas sas' i 6 can*t #e a shinin% e0ample at least #e a horri#learnin%. 6 thin$ that Butterl La#s so ar has deinitel ulilled the horri#le arnin%moni$er.

SM: i%ht.

AA: So' one o the thin%s that e*ve #een hearin% a lot latel is re%ardin% the ener% input othese devices. @#viousl' this particular device that as tested as consumin% more ener%than promised' and that matters #ecause' i ou are a miner' ou*re loo$in% at the o6 o

ener% in irst versus Bitcoin out. -And' this e5uation has come under 5uiet a lot o criticismincludin% # 4o#el pri&e inner economist Paul 7ru%man and others' re%ardin% the ener%


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consumption o the Bitcoin netor$. 6*m callin% BS on that and 5uiet honestl' 6 thin$ it*s aver shallo ar%ument. Let*s loo$ at that in a #it more detail. A lot o the descriptions ouhear out there compare the ener% consumed in minin% ith issuin% a national currenc' #utthat*s not a air comparison #ecause minin% does a lot more than ust mint the coin. 6t actuallensures the inte%rit o all the transactions as ell as the inte%rit o the netor$ a%ainst

attac$' #oth in the orm o inectin% transactions that are #o%us and in the orm o trin% tota$e over the minin% pool. -So' minin% is doin% a lot more to Bitcoin econom than ustmintin%. -And' a more air comparison ould #e to compare the ener% that %oes into Bitcoinminin% ith the ener% that %oes into the mint' the paper' the metals or coins' #ut also theener% that %oes into the pament netor$' such as 8isa Mastercard' 9iscover' Ame0' anddo&en o others that e0ist' the ener% that %oes into their data centers to do raud prevention'the ener% that %oes into the securit that point o sale merchant sstems' and all o theener% that %oes into the re%ulator rameor$s that are #uilt around trust that cannot #e%uaranteed throu%h computation. --So' it*s reall an unair comparison' #ecause i ou loo$ atit rom that perspective' reall the ener% per volume o transaction in Bitcoin is cheap.

ABL: 2h do ou thin$ that this is a common ar%ument that e come up a%ainst1

AA: 6 thin$ it*s reall ear' uncertaint' and dou#t spread # people ho don*t understand thetopic. -And' ust li$e an technolo% that introduces rapid chan%e' there ould #e people hoare shoc$ed # that chan%e or orried # that chan%e and araid # that chan%e and %raspstras to de#un$ it.

SM: People ma #elieve it #ecause the*re not necessaril educated a#out ho the Bitcoinnetor$ or$s or the*re not. 6t*s $ind o an unseen thin% ho much cost actuall %oes intocreatin% the le%ac currenc sstem and ho much pollution it mi%ht actuall create. -So'

ma#e education is an issue too' #ut eah' 6 a%ree ith ou Andreas' ear' uncertaint' anddou#t.

AA: 6*d li$e to' ma#e' ma$e eer e0cuses or the ournalist discussions' #ecause i%norancema #e DanE e0cuse i ou*re a late person and ou*re actuall ust discussin% this in ourlivin% room. -But' i ou*re ritin% a stor that is puttin% to 5uestion the environmentalcredi#ilit o a currenc that*s runnin% transactions' 6 thin$ a modicum research and perhapsreachin% out some people ho $no hat the*re tal$in% a#out ould #e in order. And' that*sa pro#lem.

SM: 6 don*t $no i ou %entlemen ere aare o this' #ut there*s #een a stor recentl that 6

ound on the Bitcointal$ orum' that there are certain people ho have #een peoplespo$espeople or Bitcoin or 5uiet a hile up to this point. -And' no that there are some

people sain% the*re too radical and the*re shouldn*t #e alloed to #e listed on this spea$erpa%es or press. -So' 6 thin$ there is even an active $ind o eort to suppress certainviepoints ithin the Bitcoin communit' that mi%ht #e considered too ree or too radical.

ABL: 6 e*re presentin% Bitcoin to the mainstream media' then 6 thin$ that there*s a lot oear that people ill essentiall ust #e lau%hed o the sta%e i the have anthin% that can #etied to them in a ne%ative a. +he lip side' thou%h' is that 6 don*t reall thin$ that*s hospo$espeople or Bitcoin are tal$in% to. 6 thin$ people ho anna portra themselves asspo$espeople should #e tal$in% to people ho don*t $no anthin% a#out Bitcoin rom the

perspective o them not $noin% anthin% a#out Bitcoin and tr to help them see ho it can'ou $no' have an impact in their on lives. -GCause' ou $no' mone in %eneral is a reall


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a#stract concept - once ou start tal$in% a#out di%ital crptocurrencies then suddenl thea#stractness %oes to the roo. 6t seems li$e it*s a mismatch to me o ho e*re tal$in% to andho a small %roup o people are assumin% that that tar%eted audience ill react.

SM: i%ht.

ABL: At the same time' #ecause Bitcoin is such a decentrali&ed sstem' there*s nothin% reallstoppin% anone ho ants to #e a spo$esperson #ut doesn*t ant to en%a%e throu%h thisBitcoin apparatus here there*s a list that are a couple o approved sources. -So' 6 mean isthere anthin% stoppin% anone rom ust sain%' He' 6 ould #e %ood at this o#. Press'contact me., 2hat happens then1

AA: +here*s nothin% stoppin% anone and in act' even or the people ho are on the oiciallist. +he #i%%er issue is hat nothin% stoppin% anone rom ta$in% Bitcoin and proectin% all otheir on political opinions' desires and e0pectations onto a currenc thats relativel neutral.+a$in% that and then to sho ho Bitcoin is %oin% to #rin% on this ne orld o QFR orhatever their e0pectation is. 6 thin$ that*s the other' the lip side o that ar%ument and thedan%er hich is reall people see Bitcoin the a the ant to see Bitcoin.

ABL: So' i ou thin$ that ou ould #e a %ood spo$esperson or Bitcoin' ou shoulddeinitel e-mail us. i%ht no the e-mail is still adamminetomatter.or%. -So' that*s a#outall the time e have or this episode o Let*s +al$ A#out Bitcoin., 6*d li$e to than$ m co-hosts' #oth 9r.Stephanie Murph and Mr. Andreas M. Antonopoulos or oinin% me ortoda*s episode.

AA: +han$ ou.

SM: Feah' than$ ou so much' Adam' this is reall un.

ABL: 2as indeed a lot o un. 2e*re %onna leave ou toda ith an intervie ith acorrespondent name "ar&od. 2e ere ori%inall %onna tal$ a#out mone transers' #ut it$inda ound up #ein% #rain allets and #uried treasures. 2e*ll see ou on the ne0t episodeo Let*s +al$ Bitcoin., Fou can visit us and su#scri#e at Letstal$#itcoin.com. 3no.

#ac$%round music

"H: M name is "ar&od Hashemi and 6*m a crptocurrencies desi%n and inte%ration strate%ies

consultant. 2hat 6 li$e is - people themselves need to step up to the #ac$' ta$e this as ane0ample' 6 see that the*re alread have pro#lems in their lives that the*re %oin% to solve'the ust don*t $no ho the solution applies.

ABL: So' hat pro#lem o ours do the i0 and ho do ou appl them into our lie1

"H: +o #e honest ith ou' none. 6 didn*t have much pro#lem. 2ell' %its its a ver nice andse0 a to %ive %its. 6 ust %ive a postcard to somoene and the messa%e itsel is aBrainallet. 6 reall li$e doin% that. 6t has tremendous reception. People love it. 6 ust %ivethem a postcard or #irthda or particular occasion or eddin% %it. -And then later on tellthem # the da li$e the da ater. +he messa%e in that ou can enter it in Bloc$chain inoand %et a #unch o #itcoin. -And the ust love it' the %o ecstatic' it*s li$e nothin% else' it*s

ust a messa%e' it*s a piece o te0t or the irst time in histor' ou can put literal value in


21/21

inormation' ust that piece o inormation. Brainallets ascinate me. 6 thin$ there istremendous application or them.

ABL: -So' our tal$in% a#out sendin% phsical mail that has a Brainallet essentiall phraseritten on it' and then an#od even i the are not connected to the same internet DthatE ou

are. +he can still retrieve that.

"H: A#osulute li5uidit' ust ords' ou can hisper to someone even #eore choosin% to putthe mone' #eore havin% the mone in the Brainallet' tell them ; PM ; #itcoin in this

phrase, and it*s done' ou can put the Bitcoin there later ou have had our transaction' ousee hat ust happened. 6 mean' a there is a minimal trust #eteen to people that this

person is %oin% to pa m on that date ou see ho that ent1

ABL: Are ou amiliar to the proect called open transactions1

"H: 8a%uel' eah.

ABL: "rom hat ou are tellin% me' it sounds li$e ou are usin% Brainallets the same athat open transactions' #asicall hidin% somethin% plain site. 2here it*s not li$e there an%reat loc$in% mechanism on it so much as it is that ou' and hoever ou share theinormation ith are the onl people ho have that inormation. -So hat open transactionunctionall does' is it sas' @$a' e can*t hide anthin% #ecause e ant completetransparenc', thin$ o a %iant %rid ith a million s5uares in an direction and in order toloo$ in a particular %rid ou have to $no the coordinates o that %rid. And so' all ou dothen is ust ta$e hatever it is ou ant to leave ou $no - i it*s a couple o Bitcoins orhatever - and ou place it on one speciic point on that %rid and onl someone ho

speciicall loo$s there can access it' and the %rid is so lar%e it*s impossi#le or an person todo that in a reasona#le amount o time. 6t*s li$e ou*re #urin% treasure' almost' ith oumind.

"H: 30actl' e0actl. 4o' ima%ine i that treasure itsel is somethin% that re5uires thin$in%'it*s the anser to a riddle. 4o' 6 ust $eep trin% to come up ith as o doin% that thereare limitations' #ecause o the past needs to #e e0act' ou need to have some %round rules.

ABL: +han$s or tunin% in to the pilot episode o Let*s +al$ Bitcoin., 2hether ou li$ed orhated the sho' e ant to $no hat ou thin$. Please send all comments' listener5uestions' and critic to adammindtomatter.or% . Sta tune or or ne0t episode' comin%

Saturda the =Jth o April' eaturin% an intervie ith 9avid Perr' the onl man in theuniverse to ever received an AS6C product rom Butterl La#s' or ma#e not. But he*s #eenminin% or a ee$ no and 6 %ot some 5uestions or him' so sta tuned

let's talk bitcoin, episode 1, "let's talk bitcoin!"

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