Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Elie Chevignard & Mehdi Medjaoui: Oauth.io – Digital Identity in the Blockchain

Episode Date: October 15, 2014

Mehdi Medjaoui (Co-founder and COO) & Elie Chevignard (CMO) are the two guys behind Oauth.io, a service which aims to provide a simple and standardized way for developers to implement Oath. Working in digital identity management, they have an interesting proposal on how to build personal identity management into the blockchain. This proposition would effectively take the power away from centralized single sign on services like Facebook and Google and make them decentralized. Episode links: Oauth.io API Days OneName NameID Namecoin SQRL This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/044

Hello, welcome to Epicenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Kutjua. And I'm Brian from Ukraine. And today we're here for episode 45. And for the first time, in a long time, it's just the two of us. So we don't have a guest today. And we're going to talk about the state of Bitcoin report. So it's a report that comes out every quarter done by CoinDesk.

it kind of gives a comprehensive summary of where Bitcoin's at. So I'm looking forward to, you know, today's show to talk a bit about where we are at this current stage. So, Sebastian, before we get started, how have we been? Pretty good. Really excited to be back on just the two of us, you know, like the original crew. It's been a while. Yeah, absolutely. I don't remember when we last did this, but,

I think the state of Bitcoin report is kind of a good opportunity to have a little fireside chat to kind of, like you say, you know, go over where we are. I mean, personally, we've been involved in the Bitcoin space for almost a year now. And we've been doing this podcast for, it's going to be a year in two months. So I think it's a good opportunity to, like you say, go kind of look back and see how we've progressed in the last year. So the state of Bitcoin report, as Brian said, is published by CoinSummit. Sorry, by CoinDesk. And you may remember that during our coverage of CoinSummit, we released a presentation by Gerrick Hellman where he presented the quarter two report.

So I guess we'll probably also be able to do some comparison as to how things have evolved in the last quarter as well. So before we get started, let me ask you. One thing I've done before the episode today was because I wrote a blog post on January 1st about my predictions for this year. And so I kind of went back and looked at it and it was like, oh, how wrong was I? How right was I? And I'm curious, we're going to come back to some of the details later, but I'm curious to hear from you. What has surprised you, I guess, in the last year or since you've been involved?

What has been different than you would have expected it to be? Well, I guess there's a couple of things. For one, I think a lot of the predictions that we made at the beginning of the year were good predictions, but I think they were probably a little too optimistic and maybe somewhat misinformed. We were just getting into this. We had a lot of, I guess, high expectations as to where the space was going to go. If I can jump in here, I guess we can talk about predictions now. So, you know, I mean, I looked at them.

I think in some areas, they were over-optimistic. And one stands above everything, of course, which is the price. So I wrote then that it was predicted there was going to be $5,000 at the end of the year. And obviously, we're very far from that. Apart from that, you know, there was one of the predictions was that there's going to be institutional money coming in, like hedge funds, like, hedge funds, like, institutional investors we're going to start investing in bitcoin and trading bitcoin and that hasn't happened yet as far as i can tell i think it's going to happen it's it's bound to happen but that was

definitely like premature um also remittances i mean i was more i was more conservative there with the estimation as it was like ah like probably by the end of the year there's going to be some remittance use in bitcoin and uh maybe that's going to happen so far probably hasn't happened yet that haven't seen any signs. Yeah, I think that's one space where we're actually quite hopeful that things were going to evolve quite quickly. Well, I mean, if I read the prediction, it wasn't so optimistic there. It was really optimistic on the financial investors, which was wrong.

But remittances, it was like, I was very cautious. It was like by the end of the year, there will be some between some countries. And then I think it's still possible, actually. We have three months left. And, you know, it's possible that, for example, between the Philippines and the U.S. is going to be starting to be a significant amount of events is done. And Bitcoin possible, maybe not so likely. It's probably going to take longer.

One thing that does persist in where you were right is the Fiat bottleneck. Yeah. Although it's certainly gone better, I mean, circle, not least, with their credit card is a huge improvement. Plus, Coinbase is now available in a lot of European countries. But that being said, yeah, of course, it is still very very. very, very much kind of in the front of the problems we have today. Right. But, I mean, the circle in CoinDest services are mostly geared towards consumers.

I mean, there's definitely a Fiat bottleneck right now for banks and a lot of countries, or I'm sorry, for companies, a lot of countries where they have difficulty securing banking relationships. Oh, that's true. But that's not what I meant with Fia bottleneck. Now, if you have bottleneck was like, yeah, exactly going in and out of Bitcoin. And that has, you know, gotten better, but obviously it's still not great in many cases. Although that has really gotten better quite quickly, I think.

That's especially Circle, I think it's a huge step forward there. Have you tried Circle, by the way? Have you been able to pay, to buy Bitcoins with your credit card? Well, I did try it. But for some reason, my card was declined. Actually, my bank canceled my card and they're going to send me a new one. I don't know why. They said my card information was stolen from some website.

They wouldn't tell me which one. The person I talked to didn't know herself. So I couldn't try it yet. I mean, I've used circle the wallet because I had to pay someone something. So I just sent her the money with Bitcoin because like, and then you can send it to an email just like with Coinbase, you know, it creates like a new account. So I used it for that.

But I haven't yet bought with the card through. circle. I tried to do it as well. What happened with me is it kept telling me that my billing address was wrong. Yeah, I had the same problem, actually. But I had people here, like a friend of mine in Switzerland, bottom.

We had one guy in the office at the bottom, Levin bottom. I think it generally works, but I want to touch maybe one more of those. Well, two more. I pointed out. from those predictions I sort of wanted to touch on, which was one was hardware wallets. I predicted that would be hardware wallets would start to be used a lot because of the security issues.

And that has definitely not happened at all. And to be quite honest, I'm not so sure anymore. It will happen. I guess there still are. I think there may be a market for hardware wallets with the more, you know, with the enthusiast. And this is where maybe we'll get to talk about this in a bit where the large companies that what we call universals are building products and services for the mass market where you don't have to worry about your bitcoins being secure because they're insured. Whereas the enthusiast or the kind of the hardcore Bitcoin user who has more ideological more of an ideological attachment to Bitcoin will want to secure his coins on a hardware wallet.

Yeah, no, no. I don't think hardware wallets are for everyone. Yeah, no, I think you're right. I think, um, I mean, I do think hardware wallets will come and you know, in the future, perhaps you will have a company like circle, you know, they give you some sort of like, like the banks give you it like a two factor authentication that you do with some sort of hardware device. But I, but I guess you're right.

Yeah. Yeah, that's right. Most of them are mobile phones. And when you have a hard. wallet where the private key is on your wallet, of course, even if it's more secure, you're still responsible yourself. There's no, there can't be any insurance for that. So I think you're right that most mainstream consumers will want, will prefer to have the sort

of secured insured service, but it's hosted like circle and comets are providing. And that hardware wallets, I'm sure they'll come and I'm sure we'll have a good options for a cheap price at some point. But there probably won't be sort of the broad answer to Bitcoin security. Right. So should we get into this report? Let's touch one last thing, prediction before we do that, which was anonymity. I predicted anonymity was going to be a big issue topic, you know, because of the blockchain

is not so anonymous as you think, right? So people can perhaps trace your payment history and secret service. etc. So I thought like, oh, you know, this is going to be a big topic like dark wallet and and things like that. And that hasn't happened. I think I suspect a reason is that the negative effect of that is somewhere down the line, right?

Like so you use Bitcoin now, use it in a not secure and private way. Like, for example, I do. Right. I'm not particularly conscious about like which change addresses and whatever. every time a new address and those kind of things to really keep you anonymous. And so, of course, that makes you vulnerable that in the future secret service can come and look at it. But at the same time, it's very inconvenient to try to do that. And people don't do it, right, because you don't feel the negative effects.

And there was related to that, there was an interesting thing on CoinDisc, I think, where they talked about dark markets and that dark markets still like exclusively Bitcoin. Nobody's using like dark coin and something like that for that. Yeah, I read that as well. And I was surprised, but then again, not so surprised because I think that people tend to feel like they're, them using Bitcoin is anonymous enough. Yeah, right. And of course, they may be wrong, but when they will realize it's too late.

Yes, they'll be in prison All right, so let's get into this State of Bitcoin report I wish we had sort of like Fox News Roll over State of Bitcoin kind of thing with Wolf Blitzer coming I'm sure you can do that Situation room

Yeah, I think there's that feature in Google Hangouts So what should we start with here? Adoption perhaps? Yeah, sure Well, I guess let's maybe what has your, what's your impression today? How do you feel the Bitcoin ecosystem is developing? Also taking account what we've read in the state of Bitcoin report. Well, I think you summarized it quite well a while ago when we're discussing it before the show.

It's a sort of slow growth. And this is most reflected in what we were just discussing about a prediction. early this year is that there is growth it's slow and steady and maybe we're we're waiting for that one I guess what everybody seems to think is that there will be one or so a few events that will kind of trigger off kind of mass adoption this is what we're all waiting for and perhaps that it's not going to happen like that perhaps rather than being one or a few events that the trigger of that's

sort of massive Facebook effect mass adoption. Perhaps things will happen more progressively. Yeah, I mean, I do think that it's going to happen, that that sort of explosive growth, which just will probably take longer. It is taking longer. And it may be in, you know, like somewhere it happens for some reason and it grows a lot and then perhaps it's stable for a while.

Maybe at some point the financial crisis will cause a lot of growth. I think obviously this buying pressure is a big thing. But yeah, you're right. There was a nice quote in the report, which was that Bitcoin ecosystem is in a sort of a quiet building phase. And I think that at least summarizes it well, sort of from my perspective, as an insider. But it's also funny because you mentioned this, it's slow and steady growth. Of course, if you look at the actual numbers, it's like 20% up, right? User numbers in the last three months, which is actually a lot.

but but to us i mean i totally agree with you because the expectations are so crazy high you think like oh that's the expectations are crazy high i think this is i think this is one of the big one of the what maybe the the problems of the this whole industry it was like a slow steady bro for 20 percent the quarter like how are we going to get anywhere that way I think this kind of characteristic over-expectation of the Bitcoin, which is sometimes characterized in the media. You get these little funny YouTube videos that characterize the typical Bitcoin user. And maybe we need to just take a step back and look at this, like you said,

20% growth in quarter is quite impressive. I mean, I've got to say, that that's the number of, wallets, right? Yeah, yeah. But yeah, so yeah, I guess let's dive a little bit more into the actually adoption metrics. So there's a few mentioned. By the way, just so if people want to get this, they can obviously find it on CoinDesk. It's also on slide share in the Cordesk account.

Yeah. So what do we have there? So it was like merchants up 20% wallets up 20%, ATMs up 144%. So that's huge. That was totally expected. I think from my experience also because I understand this pretty well because I tried to do it myself. So because of the regulatory stuff, it's so complicated setting up ATM in many places. You know, people buy them and it takes them like six months to figure out how to actually operate them.

So that sort of delay, you know, that actually made that delay may still be there from like all the people who bought ATMs during the bubble last year. because honestly, if I had bought it at the time and said, like, okay, I'll try to go ahead. It probably would have taken me until now to find a way to actually operate it in Germany. Right. One example is that has a MZOJBitcoin that has a Lama Su machine sitting there turned off because they can't assure KYC on it. Yeah. Yeah. I'm sure that's the case for a lot of people.

Yeah, exactly. So that's kind of expected. But so, of course, and, you know, 250, it's. right now, it was 100, three months ago. So I think that's good growth. And I think this will continue. Of course, there's a question how far it goes. In the end, if you are able to buy Bitcoin's with a credit card,

then maybe this is not so attractive. But I think they'll still have a function in the role. But yeah, so overall, it's a sort of, this kind of, that's the sort of growth we're seeing, right? It's like 20, 30% in terms of users, merchants, et cetera. Yeah, except for market cap, which is greatly reduced. But that's because of the fluctuations in price we'll get to. Right.

So now this is a nice slide that kind of summarizes, so this is page 6, which kind of summarizes the growth that we've been seeing. Just one thing to point out, and this is kind of misleading, is that, Merchant's annual revenue is 86 billion. That's not 86 billion in Bitcoin sales. That's 86 billion is the estimated total annual revenue of all merchants accepting Bitcoin. Well, the main one. So it is sort of a stupid figure.

They just took like, you know, Dell makes $56 billion in revenues. They accept Bitcoin. So we added to these revenues of Bitcoin accepting companies, which doesn't really make any sense. if they sell 1.30% of their revenues in Bitcoin or something like that. Yeah. Well, since we're talking about merchants, one thing that I find kind of interesting, so, you know, to one of the statistics quoted in this document is 70,000 merchants now accepting,

or 76,000 merchants now accepting Bitcoin. It says, so that's 40,000 using BitPay and 35,000 using Coinbase. So that's a big chunk of merchants using BitPaying Coinbase for their payment processing. I guess one of the good pieces of news that we've heard recently is that Coinbase is now operating in Europe. So as consumers, it allows you to buy Bitcoin. I don't know if they have their payment processing solution also launched in Europe, but BitPay definitely has. Now, one thing that I've noticed is that these companies are focused. focusing a lot of their energy on building partnerships with online stores.

When in reality, it's still very cumbersome for a small brick and mortar merchant to accept Bitcoin. A lot of merchants where I've seen them use the BitPay or the Coinbase app, their kind of feedback is that sometimes it doesn't work. it's difficult to use. The fees also are a complaint. So I think we're still waiting for a really good solution and a really easy-to-use solution and like super simple to implement

for small merchants like bars and restaurants. I mean, I think that's going to be, of course, something like Square, where it's integrated in something they already have. That's going to be the only easy solution is if you're already using something and then it can just be added on top. For example, here in our space,

there's a cafe downstairs. They want to take Bitcoin as well, but they're using a company in Berlin called Order Bird. That's, you know, it's something like square a bit. And the problem is they haven't integrated Bitcoin. So for them, it doesn't really matter how good the software is, how great the solution is.

It's just running two systems in parallel is the problem. So if you, you can, but if order bird on the other hand said, hey, you can turn on this Bitcoin functionality, they would do it in like immediately. So I think that's going to be a big part. People don't, small shops, they don't want to run different checkout systems, different payment systems. So I think that's why Square is great. You know, it's really exciting that they're doing this. But of course, Square is only in the US. Only in US, yeah. So in Europe, I don't know if there's going to be like a solution to this.

I think it's just going to be it is, you know, it is a high friction process that's sort of buying in the store and like figuring out people have to understand it. I'm sure we'll get, I think the answer is going to be integration into existing systems. And that's something that's happening fast. No, I mean, Stripe is also integrating Bitcoin as queries. And then those, I think a lot of those payment processing, companies are looking into that.

Yeah, I think so. Obviously, they're all looking into it. But I mean, walk into I don't know if this is the case in other countries in Europe, but just walk into 10 restaurants and bars here in France and how many of them are

using a mobile device for payment. They're all using cash registers and bank car terminals. They're using kind of this legacy hardware. that are embedded hardware, which I think will be a lot harder to implant Bitcoin payments. Absolutely. And of course, another issue is always the integration of accounting. And that can be a big problem.

We have a startup here that they're working on and trying to provide those kind of solutions. That especially becomes relevant if a company tries to hold Bitcoin on their book and doesn't use a payment processor. So that's, I think that is a very big challenge. And, I mean, there's a reason,

there's a big reason why all these companies are, you know, going to US dollars immediately or to euros immediately through payment processor. And I think the biggest hurdle is just how do you, like, how do you even book this in accounting? How do you make this move?

How do you deal with security? There's so many barriers there. and the really good software solutions needed that make this kind of a smooth process. Otherwise, you're not going to have that, right? You're going to have people paying a Bitcoin and immediately sold on the market and companies won't use Bitcoin

to pay their suppliers that way, right? Which is, of course, undesirable because we want to have this sort of integrated ecosystem where everything's in Bitcoin. Maybe that's a good segue into the price fluctuations. Yes. That we've experienced over the last... Yeah, Sebastian, what's going on?

Can you tell me? Well, what happened is I sold 30,000 Bitcoins. Oh. And that drove the price down. Sorry. No, I guess what we should probably mention about this is, obviously, it is a big media focus. The Bitcoin price going down has been largely covered in the media. and Bitcoin media.

And what's interesting is that over the last quarter, so CoinDest does this kind of analysis where they look at their top headlines and said, okay, well, so last quarter out of the top 10 stories on CoinDest, four were related to price. No, seven. For this quarter, seven.

No, but that's for last quarter. So this quarter, seven are related to price. So I guess that goes to show that people are more interested in the price going down. Well, no, it's just shows, I mean, even four is crazy. You know, it just goes to show that people in Bitcoin are totally obsessed with the price. But it also makes a lot of sense.

I mean, you know, people sometimes say, oh, the price is not relevant. I totally disagree with that. I think it's so relevant. It has such a huge influence. You know, all these people, right? Like, like, also people working with Bitcoin. And what the Bitcoin price, where it's at has a lot of influence, right? Like, goes up, then people have more money to start companies to invest, to focus fully on Bitcoin.

price goes down, people have to like maybe get a different job or do some work on the side, etc. Or you know, for example, if you think of something like Ethereum, you know, they raise this money in Bitcoin. Now the price goes down and all of a sudden they only have like half as much money as they, you know, how they did. There's a budget plans. They don't work anymore. Now you don't have. So this is, it has a, I think has a lot of influence. And if you see the price going up a lot, let's say we go now.

up by a factor of 10, I think if you look at the activity, the startup activity, that's also going to be, that's going to be pulled by the price. It's going to explode in just the same way. So I think the price is really important. And I don't know why it's going down. I honestly have absolutely no clue. No, I agree that the price is important. I don't think we'd be doing this if the price was one euro Bitcoin. Or maybe we wouldn't be so interested in it. But yeah. But so there are a couple of theories as to why this is happening. One interesting theory is that the price drop is influenced by miners having to sell Bitcoins to finance the cost of their hardware as difficulty becomes higher. I think that actually makes sense to me.

I think that's one of them that I think like, okay, I understand that to some extent, right? So I guess because also maybe in the past it was profitable for some people to mine. But now with the Bitcoin price going down, that profitability definitely goes down. Maybe they're just break even. And then of course, if you break even and if costs are as high as your revenues, of course, you're going to have to sell all of them to cover your revenues, your costs. But on the other hand, if you made some profit because the Bitcoin price is higher, you know, then you could put that actually save the profit and not exchange it.

So I think I saw someone, I don't know where it was, I don't remember, so I can't give proper attribution. But I saw someone did some analysis of what percentage of Bitcoin. I think maybe it was coinometrics of what percentage of the mined bitcoins are held versus sold. And that's changed quite dramatically. You know, it used to be that people mined and they kept their bitcoins. And now people mine and they sell all of them, or 80% or 90% are just sold immediately. Oh, do they?

Yeah, yeah, no. I think it was 80%. I don't have to source right now, but we can look it up and put in show notes. Yeah, so apart from that, it doesn't, honestly, it doesn't really make sense to me, right? So if you look today that the Bitcoin, the

the total value of Bitcoin is about $5 billion right and then if you look at all the VC investment that's been all this expectation about the space I mean it just doesn't seem to balance

right because if Bitcoin has so much potential if it's going to be so big and shouldn't the price be higher I mean it only makes some sense to me if people say or people think

oh you know cryptocurrencies are going to be very successful, but not Bitcoin, right? It's not going to be reflected in the Bitcoin price. I personally don't really believe in that. I think Bitcoin's going to be successful, too. Yeah, yeah, when you say, shouldn't the price be higher, but where's the watermark for that? I mean, we really have no historical data to have sort of a price,

a fixed price in our minds as to what the Bitcoin price should be. Sure, but... Bitcoin price could be $10.10. for all for all we know you know that that that could be the the the where uh where it flattens out i mean sure but if you look at like the promise like you know people think like what could bitcoin do where could bitcoin go and then what would that mean for the bitcoin price you know you can see a certain like oh you know here's this potential that there is and that would mean a return of so many thousand percent or something and you say oh what's the probability of

that happening and what i think is a lot of people starting to build things and and they really think there's a really high chance of this happening. But at the same time, the Bitcoin price doesn't reflect that because if you do believe with that probability that this is going to happen, well, then you should buy Bitcoins today because it was a great investment, right? So, of course, also from an VC perspective, so if you invest in Bitcoin startups, it's sort of underlies, you know, there must be some assumption underneath that of how likely is Bitcoin to succeed.

And I think that assumption. implies a certain price. And I don't see that price being there right now. Of course, for VC, the complication is that they're generally not allowed to just buy Bitcoins, right? So they don't even have a choice. Like if they believe in Bitcoin, they have to invest in Bitcoin companies. But this is different for, you know, Richard Branson, for example, who's investing all

kinds of Bitcoin companies and also buying Bitcoins, I presume, or is bought to some extent. But so for other people. this is not the case. But actually, maybe that's a good answer. You know, maybe that is part of the reason is that the only institutional investors that are investing in the Bitcoin space are venture capital firms who are only allowed to invest in companies, but not under currency. Whereas institutional investors that would be allowed to invest in the currency as well,

like perhaps hedge funds, they have, they are not. there. As far as I can tell, they haven't been gotten involved, really. So that may be a good segue into the VC section of this report. So what have you taken away from the reporting on the VC growth? Well, it's obviously very strong, right? So it's been increasing, what was it dramatically? where were we at? So it's like a 300, 317 million in total of VC investments.

So that's up 40%. So about 100 million in the last quarter. Yeah, but less VC investment in Q3 than in Q2 though. Yeah. Well, there hasn't been any growth quarter to quarter. Then again, there was a 30 million. There was just the blockchain, which wasn't in there. So, you know, I wouldn't pay too much.

It's not like just a few companies, a few investments really drive this. So it's not like we have such a big sample size that we can. True. But overall, I think it's really strong in the US especially, right? Yeah. And what's interesting is how Europe has grown. I mean, not by much. It was 13% of the total VC investment in Q2 and now is 17%.

And I guess another. interesting area where we need to look out for is uh is latin america where um it's the second highest uh quarter to quarter increase although it still remains at one yeah from zero from zero to two from zero right but uh but it is i think an area that that will will grow considerably yeah the people certainly believe it has a lot of potential so i'm i'm curious what about france are there any uh bitcoin startups in France that have gotten VC money? This much. Zero.

I mean, I, no, no, that is correct. In fact, no, there have been no, uh, companies in France that have received VC money yet. There are some companies that are doing rounds of funding. And unless you guess who those are, um, I think it's quite obvious, which one, but no, not yet. So they are in the process and we'll probably get funding or. one is in the process and is from what I from what I can hear having difficulty

securing the funding okay yeah so I mean in in Germany we of course actually is this quite relevant so because everyone who has gotten some sort of investment I think institutional investment

in Germany maybe one exception has been on the forecast. So, you know, Rodko of Bitbond has been on some episode. So he got the first sort of from a traditional VC in Berlin, I think 200, yeah, 200,000 euros, I think he got. So that's, you know, it's sort of the first, the first proper investment. And now there are the two companies, I think, sort of semi-secret, but yeah, that they were gotten into a, an accelerator, so just across the street here. So that's, of course, not really an investment,

but I think they will have a good chance of getting one when they get out. At least I hope so. So there's some, but of course, it's very much at the beginning. And to be quite honest, it's not just that people have difficulties getting investments, also that not that many startups have been created here in Berlin at least. And I think that holds kind of through across Europe. Yeah, I think that for now,

most of the startups, and this is illustrated in this report as well, most of the money being invested and most of the companies are actually located, I mean, a big chunk of them are located in Silicon Valley.

Now, what will be interesting to see is whether or not, uh, whether or not those startups will move to other places where there have more welcoming jurisdictions like the out of man, for instance. I highly doubt it.

No, but really, I mean, look at, look at it. So, you know, there are 60 companies from what we heard in the last show that are setting up in the Isle of Man. You know, if those companies are large exchanges and they start rounding up funding, you know, at $50 million a chunk, pretty soon you've got an important amount of VC funding coming in those areas. but I mean I think what you would see probably is that people will set up maybe legal entities in those places but you know it's not like coinbase is going to move in their headquarters or something I mean I think you will continue to have that in California and Silicon Valley for the most part and then of course some will start European offices I mean bid pay is not already in Amsterdam

I think Circle has also I think they open an office in Ireland or at least they announced it at some point. And I'm sure that's going to be other companies that do that. And it could be, of course, if the U.S. adopts a really hostile regulatory stance towards Bitcoin, that some of them will sort of move their legal company abroad and maybe just develop software in the U.S. that then is sort of, but they don't do maybe service, customers abroad. And I think to some extent, it's just that Europe, the European startup scene tends to be,

well, one, it's a lot smaller. It's a lot less mature. And it tends to be, it tends to lack behind the U.S. and the Silicon Valley by quite some time. And I think that's a factor as well. That's true. So you don't think this is a trend that is specific to Bitcoin, but it's specific just to tech startups and VC investments. I think for the most part, right?

I mean, if you look at the total VC investments, you would also have a huge imbalance. I mean, even a company like Uber, how much did they raise? Like a billion or more? I don't really remember a huge amounts, right? You think it was a billion? It was more than a billion, yeah. Like how much of the European VC investment does that account for? A huge part probably.

You know, I don't know what the figures are, but there's definitely an imbalance here. And even if in Berlin we do have an active startup scene and there tends to be money around as well, especially around, you know, some people may have heard of there was two IPOs of Salondo and Rocket Internet of these somber brothers who started that originally and those guys are very successful of them but they're really e-commerce focused. There's a lot of e-commerce startups here but not Bitcoin

you know and they notice that at our Bitcoin meetup we don't get a lot of startup people coming here and I think I was just meeting with someone yesterday he came back from sitting. I think that's been the case that's pretty much everywhere though.

Yeah I don't know I mean I was I was talking yesterday with someone who just spent two months in Silicon Valley, came back as she came here, and she said, there, you know, there's just an insane buzz and community and everyone is like Bitcoin and they're like all this, all these entrepreneurs and these developers starting Bitcoin things. And I think that is happening there. And it is not so much happening here yet. Hopefully that will change.

But. Well, so this is a question that we've talked about. A lot is how do we bridge the gap between the typical traditional tech startup scene and the Bitcoin scene? I mean, as two people that run meetups, I think we'd like to try to attract as many people as possible from that other startup scene. What needs to happen? I keep asking myself this question. Like, how can they attract tech entrepreneurs from my meetups? I mean, I think there's a few things.

So, first of all, when I started the meetup here in Berlin, this was very much my goal of making that happen. And it hasn't happened for the most part. I mean, obviously, there are things like speaking at other meetups and speaking at tech conferences. So I've done some of that. I've spoken at the startup conference here. It wasn't, I spoke about Bitcoin to people who aren't Bitcoiners and done that at some other meetup as well. So I think that sort of thing is, you know, it's good. of course one has to do a lot of that and i think a lot of it will just be

you know when people see that all this money is being raised by bitcoin companies and perhaps when people have the first also european bitcoin successes you know you know when you see examples of it happening around you some at some point people say oh maybe there's something there maybe i'll also start um and in the end it's a very much a sort of a one-by-one process right somebody learns about Bitcoin, they actually find it interesting, they understand it, and then all of a sudden it's like, okay, maybe I'll do something there. But it's slow because for most people, the sort of impression they have right now before having done that work of diving into Bitcoin is this weird thing, some internet

currencies like for libertarians and I don't know. like can i hear a lot of people asking me didn't bitcoin die uh wasn't wasn't that didn't that die a few months to go so so the overall perception of people's tends to be pretty negative i think people who haven't like spent time thinking about bitcoin and and that's a big I find the overall perception seems to follow the price. Of course. I think if we go up and now it goes higher than the past high, people are like, oh, this isn't actually the high.

Maybe there's something there, right? But are you right? The price is very important in that aspect. But I think public perception is definitely a barrier. And speaking of public perceptions, while we're on the topic of VC investment, there are several categories. in which VCs are investing.

They're investing in exchanges, financial services, mining, payment processing, wallets. A lot of the investment has been going at the wallets. But the bigger chunk of investments have been going to kind of these universal companies, companies like Circle and Coinbase, that offer a wide range of products and services and that try to be sort of, you know, on all fronts. So I guess as these companies sort of grow and become these,

these large multinationals implanted in the U.S. and in Europe and perhaps even in developing nations, places like Africa and South America. I guess I'd like to prognosticate on the future of these companies

as the ideology behind Bitcoin is sort of decentralization. And these companies sort of represent, I guess, in the Bitcoin. sense, some sort of banks, how will they be perceived by the original people in the space?

Well, yeah. I think, I think maybe will will sort of the ideological bitcoins stay away from those companies and most of the track mainstream users

and yeah, I'm thinking will it be a bit of bifurcation of Bitcoin into, perhaps like this mainstream coin and some other coins that are that are not that these companies don't deal with yeah no i think absolutely i mean it's already happening there's a lot of like for example here in you know in our little bitcoin center you know levy one example uh he hates circle coinways all those companies and so the idea of like people should hold their own private key right like

that that's very deep ingrained and a lot of people people who've, I guess, count towards the more ideological old faction of Bitcoin. And then these new companies take a very different approach. And I think that's interesting, right? I mean, I guess one exception is coin, blockchain, who raised now $30 million. And they're really a company that is built on this. Don't hold users' private keys. And the interesting thing is they may have a real advantage when it comes to regulations, right?

because they can avoid a lot of regulations, at least probably, because they can say we don't touch users' money. And the Circle and Coinbase and those companies, they won't be able to do that because they obviously are. So that's one interesting aspect there. And the other thing is just user experience. It's just easier to build a good user experience. I think if you take care of everything for the user.

So if you allow people to recover their password if they lose it, those kind of things, they're just nice, right? I mean, it's asking a lot from users to say, you know, so far you've been able to be extremely negligent with your passwords. You lose them, forget them, et cetera. You can reset them, you know, like you can choose like Monkey 12 as your password and maybe you get hacked, but you know, whatever. And that's, you know, reasonable enough, you know, it's not going to get your bank robbed. And you can reset it if you forget it. And companies like blockchain and info, these wallets don't allow that. They can't allow that.

And that's a real problem, right? I agree that the user experience is super important for adoption. I mean, I'm an user experience designer. This is what I do. and I tend to be I tend to be quite appreciative of the companies doing things that are improving the overall user experience

companies like Circle, guys like Richard Katano working on Handshake, you know. However, that sort of has an antithetical position to what the original kind of Bitcoin ideal is, right, to have these non-centralized entities and to not

entrust your funds to a company which holds your private keys. And essentially, stay away from because these companies are sort of becoming Bitcoin banks, right? So we're kind of falling into the same model that we have now. So where is the added value? I know that there is added value in the sense that you have this money that is free to transmit and things like that. But if we're getting back into this sort of corporate model where you have these large structures and large companies holding all the Bitcoin, I mean, I think how is that different for what we have now?

Yeah, good question. Obviously, you are giving up some of the, some of the advantages of Bitcoin when you do that. But I don't see it as such a negative thing. I'm personally open there. I feel having a substantial amount of Bitcoin, right? Sort of the, you savings. I would rather, I think, like, keep that personally, right? Like, set up your own system, something like Armory.

But then also... People aren't going to do that. Huh? Like, people aren't going to do that. Yeah. I don't know. You know, maybe... Who's going to set up Armory? But maybe...

Maybe you would. Maybe that sort of thing is also going to become much easier in the future with hardware their wallets and own all of those things. Maybe to a point where not the average user, but those really interested can, but not super crazy, can do it. And it's nice to have a choice. It's nice to say like, oh, but I'm also going to use this circle or something like that. And of course, you're right.

You know, that conflict is there. And some people feel extremely strongly about that. I know there's Peter Todd or the dark wallet guys and those guys feel extremely strongly that those companies are a threat to Bitcoin. I personally don't view it that way. I think anything that helps Bitcoin grow, helps more people use Bitcoin is a good thing.

I don't really, you know, I think in the end you're going to have your choice, you know. Circle is not going to be able to stop you from taking your bitcoins from your account and putting it to the blockchain or info wallet that you control yourself or your your desktop client or something like that. As long as it's possible to send money to just some Bitcoin address and if that's not possible anymore, we don't have Bitcoin anymore. But as long as that's possible, I think it's great.

You know, people have a choice, right? So you can do both. I think you can have totally a coexistence of this I'm never going to give my private key to anyone, a clan and people who just want to use a better money. I see what you're saying but I think that we need to be

super careful that those companies don't have enough power that they can start doing things like withdrawal limits you know where then it becomes hard for you to get your money out.

Withdrawal limit? What do you mean? Well, for instance, like, I mean, you look at your bank, right? If you try to spend, if you try to use your bank card to pay for something that's worth over, over 2,000 euros, they'll block that transaction unless you contact them first and allow you to do it. They do it for security purposes. I mean, it's good to have that option to set it. Even if I, I think that actually makes sense, right? It doesn't Sappos already do something like that?

I'm not sure. Or maybe they have. this option. Maybe they don't. But I think it makes a lot of sense. No, you have a hosted wallet and you say, hey, you know, I, I want to have a delay. Maybe some of it is like time locked for a week. And if somebody tries to take it out, it stays in there for a week and I can go back to them and call them and tell them, no, I didn't authorize this in case I get hacked. I think those kind of things are great. And, and you know, people are doing this or I think we'll make this possible if it's not already

with projects like counterparty in Ethereum, et cetera, that you have time-locked addresses, sort of like savings wallets where you, people can't, if you get hacked, they can't just take your money out.

And then, of course, hosted companies will offer things like that too. There's one other topics. Perhaps we can touch on briefly before we wrap up, which is the sort of big companies taking interest in Bitcoin and becoming involved in Bitcoin. And that's something that has been surprising me. And that seems to be happening very rapidly and all over the place.

At least that's my impression. So it's sort of on the one hand, it's these Bitcoin competitors, right? The company is doing trying to do similar things. Or at least one could view them as Bitcoin competitors. So companies like Square and PayPal that have both integrated Bitcoin now, at least to some extent, or they're planning to. Stripe, same thing. We have the European Office of Stripe just upstairs. And the guy told me that all they're talking about is Bitcoin.

It's kind of funny. And, you know, they're funding the stellar projects. So you have these financial companies moving into Bitcoin. And then you have large merchants that increasingly adopt Bitcoin. And then, you know, you've had things like the IBM people wanting to do these blockchain internet things stuff. And I've been in contact quite a few times with Oxl Springer, which is the largest or one of the largest media companies in Germany. They as well, like all constantly thinking, what can we do with Bitcoin meetings about them, calling everyone? So there's a lot of things happening there.

And I think that's across the board. You know, and I hear from people, I was like, oh, at one point, some guy from Deutsche Bank was supposed to come to RMI Dopp. And there seems to be a lot of interest in this happening before mainstream adoption. I thought these companies would be slower, but they're really thinking about what's coming. And a lot of them, you have that interesting dynamic as well, that if it is coming, of course, right, even if Bitcoin's coming and it's going to undermine the profits of the financial industry overall.

I mean, you can say as an industry overall, that's a bad thing for us. We want to prevent that. But assuming you can't prevent it, the second best thing is you want to be the first company to move in there and get involved in Bitcoin and then, you know, maybe it's going to decrease the overall profit of the banking industry, but at least you're the bank that's in there first and it's in there the most active. And I think we're seeing that dynamic.

I think we're seeing a lot of people seeing, oh, this is inevitable. I guess it's going to happen. So I better be among the first. Now, what are your thoughts on Apple Pay and how it's positioning itself as a payment system and how that will affect other companies adopting Bitcoin

rather than Apple Pay, for instance. Yeah, good question. So I'm not super expert on Apple Pay. I feel it's interesting, you know, if something like Square, right, they're going to take both. And I saw an interesting sort of a chart or an infographic by, I think, a coinapult. If you look at it, you'll probably find it, where they showed, you know, how many people have an iPhone. How many people are in the U.S., right? because if you're not in the US, it's not going to work.

And then off the sort of global smartphone penetration. And of course, it's a tiny, tiny percentage. So it's just in terms of sort of reach, and if you think of developing countries, people doing banking with the smartphones for the first time, Apple pays so limited. So I don't think it competes with Bitcoin on that level. And of course, it's not the currency.

So you still have the old costs of payments. That being said, I have no doubt that in terms of user experience is going to be much better than what Bitcoin can do for quite a while.

You know, it's just going to be like smooth and amazing and it works and it's uncomplicated and secure and feels amazing. Of course, and they don't use QR codes. They don't use this QR code scanning and I'm sure it will be great, you know? And I'm sure that But who is using Bitcoin for a better user experience?

I know maybe online in some cases you can say that's the case, right? It's actually easier to pay with Bitcoin. But, you know, mostly people paying Bitcoin in retail places, it's not about the user experience. It's because these people are passionate about Bitcoin. They want to support it. Right. And the user experience, you know, actually that's another thing.

I was totally wrong with my predictions at the beginning of the year. I was like, oh, the user experience is going to improve a lot. And especially about the payment protocol. So if you don't remember what the payment protocol is, we did an episode about it, I think at some point, go back to it.

But the basic idea is to make the sort of the flow, the payments, especially in-person payments, a lot better. And that hasn't happened at all. I don't think the user experience. of paying with Bitcoin has really improved very much, at least not that I've noticed. What do you think?

I think you're right, but I think there's a question that needs to be addressed with regards to user experiences. As app developers, for instance, develop wallets that enable easy payments, or say Coinbase, or, no, take a company like a coin kite, right, that develop a payment terminal.

So they have a, let's say, a pretty good user experience. When it comes to paying with Bitcoin, you're using this card. It's something that you're used to, et cetera. But the problem with this is it creates these separate standards, right? Or the lack of standardization. I don't see how, I have difficulty seeing how we're going to standardize user, experience. No,

I think you're totally right. And make it so that everybody, yeah, that everybody uses the same standard. So, uh, whether that's NFC, you know,

for, for, for your, in your communication payment or, uh, no, yeah, no,

I think you're right. I mean, I think the payment protocol probably wants to do some things in those directions, but I think overall, like, because it relies on the hardware,

right? It's relying on hardware. And, and even the hardware is non-standard. Like, even NFC is not a standard. Yeah. The NFC and an Apple iPhone is not the same as on a,

on another device. No, but I very much agree. I mean, I think that's why Apple page is just going to be awesome, right? It's going to work. And then with Bitcoin, that's much more difficult, right? You have these QR codes and sometimes they're too small, sometimes they're too large. It doesn't scam. It's a bit of a mess.

And I'm sure over time this will improve, but I think you're right. I think the lack of standardization is a problem, and I don't think that's going to change. I mean, we see that even in simple things as what unit you actually use. So, you know, like people use Bitcoin at some point last year, I think towards the end of last year, people are like, oh, this is too high. You need to switch a million bitcoins. In the newsletter actually switched a million bitcoins, right, millie bitcoins. But somehow that didn't happen. And there was not like a coordinated switch.

Like people still use, for the most part, Bitcoin. some people propose bits I'm not even sure what a bit is this is like a million for a Bitcoin or something like that

so even there even though something as simple as that it hasn't been possible to have a coordinated thing so I think it is going to be very challenging and on top of that

Bitcoin development has grounded to a halt so according to some people. So if there's no Bitcoin development, how are you going to develop standards? No, I mean, I'm teasing, but let's wrap this up. Yeah, absolutely. Great show.

I mean, I really enjoyed hanging out just two of us and talking about this stuff. It's good to, we should do this once in a while. I think we should do it every quarter. We should use the state of Bitcoin report as a sort of an excuse to just, you know, get together. We'll need some whiskey and cigars, though. Okay, yeah.

No, no, I think that's a fantastic idea. We'll do that. Next time, we'll get some drinks, and we'll do it again at the Q4 state of Bitcoin report. No, I look forward to that already. But yeah, well, thanks so much. Thanks so much for listening and viewing. So we have some live views, which is great, lots of fun.

Yeah. I don't know if we didn't check the Twitter, but at some point we should have a chat room so people can actually comment. Actually, so there is a chat room. So there's two ways that we can interact with people in my opinion. It would be easy.

So one is that we have a QR code for every episode and we'll tweet that QR code before the episode. And generally that would be like EB-45 for episode 45. Yeah. So follow us on Twitter. Look out for the announcement. We usually announce the hangouts several days in advance.

also Google Plus is a good place obviously because that's where we announced that's where we set up the hangout so they get announced there and if you go on the hangout page you can get into the Q&A session so on the hangout page you'll see the video and you can click on Q&A and that brings you in and you can ask questions live so we'd really much like to have people come in

especially when we have guests so that they can come in and start asking questions and interacting with the guests I think that would be fantastic and of course also that is going to especially those who listen to us on audio, which is still like 99.5% or something with people.

We are doing video now. So you can check out our videos on YouTube at our username is Epistenter BTC. And we are doing also live hangout. So you can actually watch it live and you can ask this question, give comments, etc.

And yeah, as Sebastian said, you can get that information on Twitter from us. One thing I want to mention before we go, So just to remind everyone about BTC2B that's next week. That's on the 16th and 17th. I'll be there both days. I think I'm going to be there both days. I'm not sure yet.

But I'm pretty sure I'm staying overnight. So I'm actually speaking there. I'm doing a panel, a marketing panel, moderated by Richard Catano and Bitcoin Marketing. So actually the preliminary agenda just came out today, I think. So if you go to BTC2B.com, you can see it there. It should be a good conference. I think it'll be pretty small.

It's at a small venue just outside of Brussels. But I think it'll be fun. I think there'll be some good speakers there. Adam Viziri, Stanislav Wolf, Vitellic is there, Matt Rosak. So, yeah, and lots of different topics being covered. So if you're there, definitely, definitely. let me know if you want to get some drinks or something in Brussels. And you can get 15% off by using the code epicenter

when you register on BTC2B.com. And just very briefly, also, many Rosenfeld, some of you may know him, he's the chairman of the Israeli Bitcoin Foundation, and we're going to have him on the podcast in a few weeks. But he's asked me to just mention that they're doing Inside Bitcoin's Conference in Tel Aviv on October 19th, 20th. So if you're interested, you know, check that out too. And we don't have a discount code for that.

But if you want to buy a ticket, email us, and we can probably get you a discount code for that. So, yeah, that's October 19-20th with lots of speakers as Vittalekbutarian, David Johnson, many Rosenfeld who are going to have on, Peter Todd, etc. So, yeah. And by the way, our email is show at epicenterbricone.com for any reason you want to email us. Yeah.

You can email us at show at epistenterbidcom. Yeah. So thanks so much for listening. Absolutely do get in touch. I'd love to have some interaction with our audience. Let us know what you think. If you have some questions, some topics, something we should know about. So do that for us on Twitter.

At the Epicenter BTC can also donate to us. Of course, we do appreciate that. And that's at EpicenterBitcon.com slash tips. We do send out the newsletter every Friday. So that's going out tomorrow. And you can sign up at EpsonBikon.com slash newsletter. And I think that's it. Yeah, one last thing.

I think we should mention who we have on on Sunday. Yeah, absolutely. Why don't you do that? So we have Sean Wilkinson of Storage. Yeah, so Sojay, for those who don't know, is one of those decentralized cloud storage projects. There's quite a few BitCloud. The StorageE, I guess this Maitave is sort of related to that. I'm sure he can tell us more about it on Sunday.

And StoJ, I think it's one of the best known. own of them and maybe oldest, I don't know. But so, yeah, it's something I really look forward to. It's one of those exciting sort of decentralized apps that people often talk about. And perhaps the first one that is really going to work because there's so many projects trying to do that same thing and trying to decentralize a sort of a fundamental internet service as in cloud storage. So it's an episode I really look forward to.

So well. So that's at 4 p.m. UTC on Sunday. so you guys can figure that out on Google. I don't know where you are, but so it's 1600 UTC. Yeah. Yeah. All right. Well, thanks so much for listening, and we'll be back on Sunday.