Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Our Predictions for 2014

Episode Date: January 4, 2014

In our first episode of Epicenter Bitcoin, we make our predictions for 2014. From security to regulation to mainstream adoption, we discus 9 areas where bitcoin could face the most change. This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/001

This is Epicenter Bitcoin, a weekly podcast about Bitcoin and cryptocurrencies. Episode 1, recorded December 28th, 2013. Our predictions for 2014. And welcome to Episode 1, a weekly podcast about Bitcoin and cryptocurrencies. My name is Sebastian Kutjou. And I'm Brian Fabian Crane. 2013 has just ended. And today we'll be talking about our predictions.

for the next year. In 2013, Bitcoin has leapfrogged from the obscurity onto the global stage. There's been so many developments. Bitcoin has exploded in price. There have been tons of new started. These have taken notice of Bitcoin and started regulating in all sorts of ways. Lots of money has been flowing into Bitcoin. Tons of new people have joined the Bitcoin. have joined the Bitcoin community. And today we'll be talking about the next year, what 2014 holds in store for Bitcoin. That's right.

And so we've got nine predictions that we'd like to get to. And so we're just going to go through them and discuss each one. Yes, exactly. So I'm going to go ahead with the first one, which is called the field bubble. And Fiat, of course, refers to normal currencies such as euros, dollars, etc. And I call this a bottleneck because this has been a tremendous slowdown for Bitcoin's growth. So let's just discuss this briefly. Today, if you want to buy Bitcoins, you need to register in exchange to their, you know,

sending a utility spill, perhaps sending a copy your passport, wait, it may get rejected. It easily takes weeks for a first-time buyer's to buy the first Bitcoin. Exchanges are also often shut down because of regulatory problems. Or you can, an alternative is resorting to local Bitcoins or peer-to-peer exchanges. But in any case, it's quite a hassle to buy Bitcoins. And this has been a tremendous problem because if we want to have Bitcoin adopted as a mainstream payment system, if it takes you two weeks to buy Bitcoins and then the price changes a lot and this, this is just not possible. So this has been a big problem up to this point and in 2014 this will remain a big problem.

Because all these requirements for exchanges and for buying Bitcoins, they're not going to get easier and they will remain tedious and it will still be difficult for exchanges to become regulated and so this will remain and not a smooth process it will get better we think there will be more high quality exchanges there's a good chance that there will be a proper US exchange and what we've seen recently is Bitcoin ATMs springing up in different places and I think in 2014 we're going to see a lot of them in many different places. So while the situation is going to get better, it will still be the case that buying Bitcoins will be very difficult, let's say too difficult. And this will be a big, a big kind of break on Bitcoin's growth and on the increase in

Bitcoin adoption. Yeah, this is a big issue. I mean, like you said, For most people who start buying Bitcoin, it usually takes them many days or even weeks to acquire their first Bitcoins. And I think that this is a major problem for people who want to get into Bitcoins. I think a lot of people would like to buy Bitcoins, but as soon as they see that they need to send their utilities bill and the copy of their idea to a company that they have no idea that they don't know about, it's a bit scary and intimidating. The local Bitcoin option is obviously interesting, but I think there are perceived risks there as well that you don't know who you're dealing with. Maybe somebody will try to take advantage of you or take your money and not give you the Bitcoins. For me, the Bitcoin ATMs are really, I think, what are going to make acquiring Bitcoin much simpler in, like you said, the next year.

I think that there will be many Bitcoin ATMs springing up around the world. I think some estimates are saying as many as 200 around the world by the end of 2014. So the Bitcoin ATM and what a lot of companies are doing who are implementing Bitcoin ATMs are, they're basically making it very simple for you to acquire Bitcoins with some interesting security measures that they're implementing in the machine. So yeah. Go ahead. That's true.

But the issue is that if you have very stringent regulations about identification, you know, for example, people have to send their utilities, etc., you know, just because you put up an ATM doesn't mean that those requirements go away. So, I mean, I think there's a reason why we haven't seen ATMs in the US, for example, example, it's because in at least there will be places and probably a lot of them, where you won't be able to use those ATMs without perhaps sending you utility spill before to someplace. So the ATMs in principle of course would make it extremely easy to buy Bitcoin. The question is however, can they be operated in a

kind of legally in a legal way and can it be operated in a way that makes it convenient or is it or are the regulations going to make it such a hassle to use them that they're only a limited improvement and i think that's going to depend on the country in canada obviously they're quite um they have quite positive approach for bitcoin and but in other countries i think this is not the case right well as far as bitcoin atms go from what i've heard and And I think it was the founder of the company who created the Bitcoin ATM in Vancouver. From what I could get, from what I can understand, the process of purchasing Bitcoins and authenticating yourself was quite simple. You needed your ID and then it identified you through either through your iris or through

Well, what was it? No, in Canada, they don't need to do any of this, which is great, of course. But they do have the ability to do, you know, to take a picture of you and compare it to having your passport picture. Things like that. It was a picture. Yeah. But I don't think that's in Canada, that's not even necessary at the moment. But yeah, we'll see.

I think you, in any case, I think we will see a lot of Bitcoin. and they will be great. The question of how great they will be will largely depend on regulations. So what do you think would be the simplest way to buy Bitcoin in 2014? I think it will depend a lot on the country. You know, in the US, at the moment,

it quite obviously is Coinbase and that will probably, you know, remain that way. And hopefully we can have similar solutions in other countries. In some countries, Bitcoin ATMs will be very easy to use and super convenient. In other countries, it will be local bitcoins.

And in other countries, it may be easy to use in exchange. So I think they will depend a lot on where you are and what the local regulations are. Yeah. And that brings us on to topic too, which is very closely related to the Fiat bottleneck topic, which is regulation. So as we've seen in the last few months and weeks, a lot of talk about regulation has been coming up in December. A lot of governments and central banks around the world have been waking up to Bitcoin

these last few months. And what we're seeing so far is that governments are trying to grasp the significance of cryptocurrencies and sub-regulation has even been implemented in certain countries. So there are different approaches that are being taken. countries are taking a favorable approach to Bitcoin while others are trying to limit it or ban it for different reasons. Some are talking about security reasons to prevent laundry, money laundering and to keep capital controls. Of course, when companies take a restrictive stand on Bitcoin, what this usually means is that trading Bitcoin for fiat currency will become more and

difficult like we just talked about or nearly impossible through traditional exchanges and because the exchanges is ability to work with payment processors is severely hindered so of course people can also turn to services like local bitcoin to to trade with other people but um this makes trading much more difficult and uh this would likely have negative impacts on the price because it would make Bitcoin less desirable as a commodity for our means of payment. So if we take a look just broadly at different stands that countries have been taking, Thailand, for example, has banned Bitcoin outright. China recently barred banks from using payment and payment processors from working with exchanges,

which will make Bitcoin trading there are much more difficult, unless exchanges can find different solutions for trading Bitcoin for Juan. In India, many exchanges have suspended their operations following a statement issued by the Reserve Bank of India where it warns consumers and investors to steer clear of Bitcoin. And shortly after this, authorities forced the closure of one of India's biggest trading platform by-sell Bitcoins. In France, the central bank issued a press release warning consumers and investors about the dangers of Bitcoin. So these are countries that are taking a very restrictive stand, like a restrictive

stand on Bitcoin, while other countries are less restrictive and perhaps even more open to Bitcoin. So I think we're going to see a dichotomy of stance from countries in central banks. So for example, in Poland, the finance ministry has said that Bitcoin is not forbidden, although it can't be considered legal currency. It points out that profits earned through Bitcoin selling should be declared under the tax rule of Polish law, but that basically it's up to people to do that and to come forth with their gains. In Denmark, regulators are stating that Bitcoin doesn't fall into the country's current

regulatory framework, and so that, therefore, it can't be subjected to those, the country's laws in regards of financial regulation. So although there isn't a clear positive stance on Bitcoin is certainly promising to see that the business are essentially leading it up to consumers and businesses to make up their own decisions on whether or not they want to use Bitcoin. So a positive stance on Bitcoin will enable people to use exchanges more easily because payment processors will be able to trade fiat money for Bitcoin. And the Bitcoin economy will flourish as more businesses will start accepting Bitcoin as payment

or even paying their employees and suppliers with it. So there's very mixed views on Bitcoin. And we're just waiting to see how other countries will kind of wake up and how they will react to it. So what do you think is going to happen in 2014? Well, I think that we're going to see, I think that we're going to see many countries start to ban it, unfortunately. The impression that I'm getting so far is that

we will see some companies, some countries rather ban it outright. Other countries will regulate it severely and other countries will leave it to their population or their

consistent to do what they wish. I mean, to be transparent about using Bitcoin about their gains, whatever they make from selling Bitcoin, for instance, and declaring that revenue. But I think that we're going to see very diverse stance from countries around the world. And so this will create sort of local Bitcoin economies.

So if, I mean, different local Bitcoin economies. So for instance, in a country where Bitcoin is, traded regularly, we'll see the price there be X or a certain price in other countries where it's highly regulated and difficult to attain or difficult to trade. We'll see the price be Y. So I'm not quite sure how this will play out in the long term, but I think that 2014 will be the year of Bitcoin regulation all around the world. Yeah, I agree.

there's certainly going to be a lot of things happening in this area and I think we will see very different stances that people take. I mean on a very basic level, the reason is that countries want to put Bitcoin into an existing regulatory category and Bitcoin doesn't fit in the existing regulatory category. That's right. Very well, you know, because it's a currency, it's a protocol, it can be considered a, and, you know, it's a, a, I don't know, commodity. So what they do is they put it in one and this can turn out good or not so good and it can turn out good for some aspects and not so good for other aspects. And I think we will see that and we will see that all around the world. And perhaps, although I don't think that's going

to happen, but it could happen. And I think in the longer run, it has to happen is that some countries should really start creating like a new category also in their regulations they will have to just recognize that Bitcoin doesn't fit in the existing framework. Isn't this what we've seen for everything else since the being of the internet? I guess so, yeah, although you start having to have laws, no, like internet-specific laws, you do have that now. Yeah, but think about how long that took. It's taking a very long time, I agree.

And with Bitcoin, I'm sure it's going to take a very long time too. Hopefully it would be faster than with the internet. But yeah, I think it will take a long time. And there will be lots of confusion and laws made that don't really fit and that don't quite apply. And yeah, it would be an interesting area to watch. And of course, it has a lot of impact because regulations that don't fit well can totally you know destroy Bitcoin startups in that country and can destroy a Bitcoin market so that takes us to topic number three yes so three is the topic of security and this is a

very big topic and it's become it will become an even bigger topic and the reason is that the price increase has made stealing bitcoins extremely lucrative and And as more and more people adopt Bitcoin and more and more people adopt Bitcoin who are not computer experts, this will become even a bigger problem. Now there's, there have already been numerous thefts, you know, of hackers breaking into people's Bitcoin wallets and hackers breaking into websites that would hold Bitcoins for users. Just in the last few months, there's been this inputs I.O. case where it was was like $1.1 million at least at the time.

Then this Chinese exchange that would turn out to be fake, which was like $4 million lost. There's also this silk road-like kind of drug marketplace where that was shut down and supposedly over $100 million were stolen. So there have been quite a few breaches. And now what's going to happen in 2014? I think we will see more mainstream adoption. No one really doubts that.

But of course, as more people start adopting Bitcoin, these people don't necessarily adopt the proper security practices. You know, people choose, you know, one, two, three as passwords, and people do all sorts of things that are very insecure. And you can tell them as long as you want that they need to do it differently. They just don't because it's easy. and convenient to do things that are not secure. The problem now is that they may have large amounts of money on their computer that can just be stolen. So I think we will see malware

that's written specifically to attack Bitcoin wallets. And the question of course is, you know, how do we deal with that? And I think the number one way in the medium term or and hopefully short term to address this problem is hardware wallets. So these are devices that are made specifically to hold Bitcoins and they would hold the Bitcoin private keys, you know, off the computer. So, you know, we kind of know the things from the banking where you have this chip device where to log into your bank account, you need to have an external device where you type in some code. We need to have to have similar things for Bitcoin. And we may need to have things where actually the Bitcoin keys themselves are held on these devices.

There is one already, which is called Dezol and it will be, I think it will be shipped in January. And hopefully, but the problem is it's very expensive. And so we, we need to have cheap devices like that that are secure, well made, you know, for like $20 or so. And I think that will be the solution where it would be easy for, you know, anyone to keep Bitcoins relatively securely. Right. When you were talking about passwords a while ago, I think that for the time being, since Bitcoin users, I think are more technically savvy, generally speaking, they're aware of the security

threat and using strong passwords and enabling two to factor authentication. A lot of the exchanges and services that I've signed up for pretty much all offered to that factor authentication. So as more as the layperson starts being aware of Bitcoin and starts using Bitcoin, especially Bitcoin online Bitcoin wallets, that security issue will become more and more prevalent because they're not aware of the security problem. And they're going to use bad passwords and they're not going to use two factor. Yes, exactly.

I mean, you can't expect people to all of a sudden change their habits and start using secure passwords if they haven't done so. Just because they've lost some bitcoins. I'm curious. I'm wondering if at some point, sort of turnkey I don't know it's hard to imagine because it doesn't exist but services will start to uh companies will start to exist where they're basically ensuring your your security so it's sort of like a like a like a like it's like a bitcoin bank which would hold your bitcoin with the high security standards enable you know make sure you're using strong passwords uh

provide you with devices like the treasurer for a price. Yeah. Yeah, that's, I don't know if this is going to happen for the end user, but I think it will happen for startups because you see these companies, they lose, if they're holding customers bitcoins, these can be very large amounts and if you get hacked, it can basically be the end of your business. So I think what will happen is that you'll have insurance companies that tell, you you know, startup, you have to pay a certain amount of money to get insurance and we insure

your customer's funds and you have to do these and these security practices and we'll send someone by the checks you're actually doing them and give you some kind of compliance measures. I think this will happen, yes. But I don't think it will happen for the end user, you know. Right. And let's be clear, there are other security threats than stealing your password. Like we, uh, there's, uh, there have been stories of brain wallets being hacked. So a brain wallet is basically a public and private key that are generated from a passphrase that you give it.

So for example, you would give it a passphrase like my mother's name is Jane, and that passphrase would generate a private and public key. Only if somebody else creates a brain wallet with the passphrase, my mother's name is Jane, they'll have the same public and private key. So very nifty hackers have been using and brute forcing to generate passphrases and try to get the contents of brain wallets. And some people have been hacked this way. There are other types of attacks which can happen on consumers.

So like, for example, men in the middle attacks. So you could be on a public Wi-Fi and you're buying something with Bitcoin and somebody is also on that public Wi-Fi and using a man-in-middle attack method to circumvent the merchant's Bitcoin address. So there are all sorts of potential security threats, which will all individually need to be addressed. Yeah, absolutely. Now, is this a big area? It's a very important area. It's going to become – it's going to stay.

important as it is right now and I think it will be a painful process for many people to go from you know if Bitcoin is adopted in the mainstream let's say many people will lose their money and there will be a lot of pain a lot of hacks a lot of bad things happening until we have a kind of secure systems in place that can actually protect people's bitcoins let's move to topic number before you want to talk about mining is that right right so i want to talk about the industrialization of mining so basically with the rise of mining difficulty it's becoming very expensive to purchase mining equipment with the ambition of being profitable so soon the competition will drive up difficulty

so much that the bitcoins generated will just no longer justify the expenses or the hassle of operating mining equipment especially from your out of your home i mean currently If we look at mining equipment, if you want to be profitable within a reasonable amount of time, you have to pre-order mining equipment, which costs many thousands of dollars upwards of $10,000 or $20,000. That doesn't factor in any of the electricity costs. And obviously, so this is making it more and more difficult for ordinary people to get into mining. So it's obvious that we're heading towards an era of industrialization of mining. Already we're seeing cloud mining services appear, and they're selling mining by the gigahash

or the tarahash per month or per hour. And these industrial mining firms will become the norm and will provide most of the hashing power on the network. So I'd like to talk about an interesting article on the Genesis block, which was written by Jeff Chveh, I hope I'm pronouncing his name right, in August of this year. And he talks about the inevitable cloud future of Bitcoin mining. So in this article, what he says, because the obvious thing that he says is that ASIC chips, so the chips that enable Bitcoin mining, are subject to Moore's law.

also that as difficulty increases, the chips will also become more and more powerful. And he says that decentralized mining, so the mining that we've seen up till now, is highly inefficient because it requires thousands of individual miners to set up and monitor their own mining rigs, which are not always running it up optimal efficiency. I mean, if I get a Bitcoin miner, I mean, I'm quite technically savvy, but I wouldn't necessarily all know all of the ins and outs to have my Bitcoin mining

optimally. So this is okay for enthusiasts, but it can only go so far. The other route that he proposes is that Apple, kind of Apple-like, I'm using air quotes here, products, start

propping up and so they're basically just kind of plug and play out of the box and you require no technical knowledge. They'll run optimally and mine Bitcoin for you. However, these type of products come at a higher price and because, you know, there are more costs involved in producing them. So they may reduce profits long term. So for for him and this is our opinion as well, that centralized and industrialized mining is the obvious long term trend because it's more efficient for miners because there's no learning curve

required, like you don't need any technical knowledge to start mining tomorrow. There's no monitoring required for the miner to address downtime, not having to worry about some of the other aspects of mining, which are where I'm going to store these computers, the heat that's generated by the electricity that I'm going to use. And you can just kind of start and stop at will. So if I want to mine for a week, I can mine for a week and then I can stop mining. and then I can start again later. For mining companies, what it means is that there's no wasted effort in making products

are user-friendly, so that's cost-effective. We can ensure that mining rigs are running optimal efficiency all the time, and these mining cloud companies will be able to choose the location of their data center based on cost of operations. So they may choose to put their data centers where rent is relatively low, and electricity costs are low, and where taxes are, are low. There are risks, however.

Centralized mining means that we're essentially putting all of the mining power into the hands of very few. And it's kind of, it's kind of antithetical to the philosophy of Bitcoin, which is that we want things to be decentralized. So this actually increases the risks for what we call 51% attacks where there's more mining. There is more mining power. Do you want to maybe explain what a 51% attack is? There's more mining power to fool the network.

Yeah. So in a 51% attack, you basically have, if you have miners that own, more than 51% of the mining power, they can double spend money. They can do certain things that they're not supposed to do. Right. They're basically authorizing or verifying phony transactions because they have more, they have more mining power than everybody else so they can catch up. Yeah, I have to say, though, I think this is slightly deviating from this.

Although it may be, it's related to the centralization of mining. Right. I'm not really worried about the 51% attack. Because if you think about it, it's extremely expensive to build up this kind of hardware mining system. Now, what's going to happen if there's a 51% attack? This would be very bad for Bitcoin. And it would dramatically, it would have an extremely negative impact on the Bitcoin price. So if they did a 51% attack, they would, you know, they would basically be completely destroying the value of their own hardware that,

They, you know, the millions and millions of dollars they put into getting into that position. So a 51% attack, I think, is more of a theoretical problem. Yeah. Because it's just, it doesn't mean make any sense, even if you're able to do it. Right. But what I'm more kind of worried about is if you do have a centralization of mining, is that then governments may have some power to pressure miners into, you know, making changes to the Bitcoin protocol or for example that they say they don't want some

transactions to be processed. So you know for example they could require that everyone registers their Bitcoin address with an ID and only people who have done that only those transactions are accepted by minors. So this is theoretically possible. Of course, the issue would be you could send it to a miner somewhere else. It might just take longer for your transaction to be approved. But if it must become more centralized, things like that are at least more possible. Right.

And some of the other risks are physical attacks on data centers. So let's fast forward 10 years where our data centers, you know, the mining power comes from, let's say, 50 data centers around the world and future terrorists start attacking those data centers. There's also risks. But that wouldn't be that much of a security threat to Bitcoin, no, no. I mean, it would be terrible for the miner, but, you know, the hashing power would be great enough so it wouldn't undermine the security off the network.

So this is more of a stability issue. But yeah, totally. I mean, I think mining is, it has been interesting to see, especially how quickly this all happened. No, let's, let's remember the first A6, which are specialized chips just for mining Bitcoin's, they came out in 2013. It wasn't, I think it was like nine months ago or something. And we've had this kind of rush to these A6. And this has been very brief, no? I mean, I think today already buying A6 just doesn't make any sense for an individual

because the profitability is just not there. You know, people are losing money on these all the time. And it's been extremely brief how we've had this very brief period where people were buying A6 and it maybe made some sense for some people. But mostly they would probably would have been better off just buying Bitcoin. And now we've had this complete shift or we are seeing. seeing this complete shift towards an industrial, you know, cloud-based mining infrastructure. Right. And what do you think of this other scenario? And I don't, I think it's more theoretical and it's not very probable, but that part of part of the Bitcoin mining, the global Bitcoin mining is decentralized where every computing device is connected, that is connected to the internet.

can use its idle processes and idle cycles to mine and verify transactions. So basically like every cell phone, every tablet, every smart TV or smart fridge or car that's connected to the internet can mine Bitcoin and verify transactions. And so that total hashing power would amount to something much larger. Yeah, I personally don't. I don't find this a very plausible scenario. Now, let me tell you why. I bought one of these USB miners a few months ago,

and I was mining bitcoins for a little bit. But the issue is this thing mined, you know, I picked 20 years for it. It was more an experiment. I just wanted to try out mining. And this thing mined something like 0.0009 bitcoins in the beginning. And then, of course, after a month, it was like quarter as much. you know, kept decreasing dramatically. So this just becomes boring.

After a while, you're like, this doesn't make any sense, so I stopped using it. So the reward is just not there, right? And then if you just putting in the Bitcoin chips and all these things, they still require some resources, even if you can use idle electricity or So I don't think it makes, I don't think this is a plausible scenario. So industrialized mining it is then. It seems like it. But what was interesting in this regard is if Bitcoin, if this is going to be a big problem for Bitcoin, this centralization of mining,

is if then we would see some old coins prevailing, you know, that have different algorithms that don't scale as well. You know, I think, for example, Lightcoin is still not, there are no ASICs for Lightcoin. There is no specialized hardware to mine Lightcoins. And the reason for that is that their mining algorithm just doesn't scale as well. So perhaps if the centralization of mining will become a problem, at the moment it isn't, but it could. Then that might actually be a reason why we would see some alternative currencies, you know, be successful. Which brings us to topic number five. Yeah, indeed.

So five is about investment in Bitcoin and kind of institutional money. So Bitcoin has some really unique properties as an investment. And those make it extremely attractive to some investors. And I'm specifically thinking about hedge funds. And in 2014, we will see large inflows of institutional money and as well as retail investors into Bitcoin. And I think those will have a really dramatic impact on the Bitcoin price as well. Now, let me explain a bit where I'm coming from and why I think that case. So we have seen in 2013 some kind of investment vehicles being created for Bitcoin.

There is a Malta based Bitcoin fund called Exanti. And in the US, there is a Bitcoin investment trust by a second market. And those allow people to buy Bitcoins without directly buying Bitcoin. So basically, you buy a share of this fund, and this fund would hold a certain amount of Bitcoin's for that. So your return would be perfectly correlated with the change in the Bitcoin. price, but you don't have to, you know, find some buyer. You don't have to do all these complicated things.

You don't have to worry about security and all those things. And I think those will be very crucial to see kind of Wall Street money going into Bitcoin. Because these people don't want to deal with those things, you know, the issue of having a lack of liquidity in certain markets, etc. If you can kind of outsource that, that's a positive thing from that perspective. And we have seen some signs of institutional money coming in. I think we've seen various statements by Wall Street people. We've seen investment banks starting to write reports on Bitcoin. We've seen some hedge fund managers declaring that they've bought large positions themselves. And I think

just recently a board member of Goldman Sachs joined the board of Circle, which is a new Bitcoin startup. And the reason why Bitcoin is so interesting from an investment perspective is that Bitcoin is very volatile. Now this is bad for some people, but a lot of people, especially hedge funds, they really want to have highly volatile investments. you know, because that means there's a potential of an extremely high return. So this is one reason.

Another reason is that Bitcoin is really uncorrelated to the whole stock market, to the financial system as a whole. So in a sense, it's a tremendous hedge. Let's just say there will be a financial crisis. Then holding Bitcoin might be a very, very good thing to do. So I think for those reasons, there's a lot of. of it just makes a lot of sense for people to invest at least some money into Bitcoin. And I think we will see this in a very large scale in the new year.

I think in a sense Bitcoin will be started to be thought about as their own asset class, which I think makes sense because there is something something like a commodity, but they're not. And so you know, you think of gold, they would be gold, silver, you know, oil, stocks, And I think there will be Bitcoin you. People will think of Bitcoin as an asset class, at least from an investment perspective. And of course, it's also- Do you think that altcoins will also fall into this category? Yeah, to a lesser extent, you know.

I mean, I think altcoins are very similar to Bitcoin, for the most, at least some are. And I think for investors, they will want to have liquid markets. And so I think for the most part, they will just buy, bitcoins maybe some more adventurous ones will buy old coins but this may change in the future now but at least for 2014 i think we'll be focused on bitcoin uh an important thing in that context will also be whether the bitcoin etf that the vincal boss twins have been uh applying for will be approved so that will basically allow you to buy bitcoin as if you were buying a stock so it will be traded on an exchange it would be

tracking the Bitcoin price. And you know, you could, it would be super convenient for people to buy it. You don't have to identify it all. You don't have anything. And I think in my personal view, I think this is going to be the main driver of the Bitcoin price as well. I think if we see hundreds of millions or many billions of dollars flowing into Bitcoin, I think this will drive the price to, you know, at least $5 per millie Bitcoin. or, you know, $5,000 per Bitcoin or higher.

So, you know, I think it would be an interesting area. And I think there will be a lot of activity in terms of investment interest in Bitcoin. And so this Bitcoin ETF, could you talk about more about what that means exactly? Yeah, sure. For the late person like me who knows nothing about the stock market. Yeah, so an ETF that stands for exchange. traded fund and they come from they're passively managed so they basically have an algorithm that determines what is held by this fund so usually you buy a stock

ETF and it just buys you put some money into the ETF and the ETF buy some stocks so you don't have to buy the stocks directly and then the value of the ETF tracks the value of the stocks that the ETF buys and the same thing exists for gold for example. So instead of buying gold directly, if you don't want to have to hassle of, you know, holding it at home and all those things, you can just buy a gold ETF and then that ETF takes that money and buys gold. So you can have the same thing with Bitcoin.

So there would be a Bitcoin ETF and people who want to buy Bitcoin by Bitcoin by shares of Bitcoin ETF and the Bitcoin ETF buys Bitcoins with that. And the advantage of course would be that for example, people are allowed to buy Bitcoin buy ETFs, perhaps through their retirement fund even. So there will be more access to ETF. Some people, if you look at institutional investors, some will probably not be allowed to buy Bitcoin outright because they have some kind of restrictions on the type of assets they're allowed to buy, but they may be allowed to buy shares of Bitcoin

ETF. So it's, and most importantly, just it's so much more convenient. If you don't actually care about using Bitcoin to buy things, you know, if you don't care about the protocol, but you care about the potential as an asset, if you don't have to secure the bitcoins yourself, etc., that, you know, that's a huge advantage. And you think that, well, I think that also this Bitcoin ETF kind of gives it a legitimate, gives Bitcoin a legitimacy on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on Wall Street like I mean it gives it gives Bitcoin and a legitimacy in the investment

Absolutely yeah absolutely I mean this would you know it would be listed if you take like the newspaper and look at the stock sections it would be listed there you know it would be like you know the gold ETF that the Bitcoin ETF you know people would see that it would give a completely different visibility it would certainly help in terms of legitimacy it would help a ton in terms of access that a lot of people will be able to buy the ATF. I know with some things, for example, this Exanti fund in Malta, you even are able to cash out your Bitcoin. So, you know, let's say you buy one share of that fund, which is equivalent to one Bitcoin.

You can go to them and say, I want my Bitcoin. I don't think it would be possible with an ETF, but, you know, with some investment vehicles, it would be possible. So it will be a, I think it would be a huge thing. I also don't see why it wouldn't be approved because you have all kinds of ETFs, you know, you have all kinds of investment vehicles tracking underlying assets. So I think it should absolutely be approved, you know, because also you don't have to hold money laundering issues because people are already identified through their

bank or through their securities broker. So yeah, I think it will be very important if that happens and I expect it to happen. So that brings us to topic number six, which is Bitcoin as a payment system. So the significance of Bitcoin as a payment system, I think, will grow rapidly within the next year. That growth might be led by some industries, which are shunned by credit card companies, and we know what those industries are. but as companies realize how relatively easy and inexpensive it is to implement Bitcoin as a payment system, I think they'll too start adopting it.

I mean, right now you can add Bitcoin payments to your e-commerce website relatively easily through payment systems like BitPay or BIPS, and you can start accepting Bitcoin. So I think that once small businesses, small and medium-sized businesses, online businesses, as well as brick-and-mort businesses start seeing that accepting Bitcoin is relatively simple, we'll start seeing more and more of those companies start accepting Bitcoin as payment. And as paying for goods and services with Bitcoin becomes more and more widespread on a local level where we see small and medium, sized businesses accepting Bitcoin. Then larger companies might also join in and start accepting Bitcoin as payment because

they'll see that there's an advantage and there's actually a return on investment for implementing Bitcoin as a payment system because people will be using Bitcoin. So some companies already have started using it. Obviously, there are a lot of companies within the within the, within the. the Bitcoin ecosystem that accept Bitcoin. Other companies as well, like for example, WordPress or different from different sectors. So WordPress, OkCupid, names cheap. Some sellers of Etsy allow are accepting Bitcoin.

And also, like if you have a Shopify, if you have a Shopify e-commerce site, you can allow Bitcoin integration. Also, overstock.com, which is probably the largest retailer to accept Bitcoin, we'll start accepting Bitcoin this year. So this is all good news. There's also other means of using Bitcoin as payment if the merchant that you want to buy from doesn't accept Bitcoin is using gift cards. So we've seen, for example, a company called GIF, GIFT, recently started accepting Bitcoin, and so you can buy Amazon gift cards with Bitcoin and then pay for your products on Amazon with GIF cards. So this may also make it easier for you to buy products with Bitcoin. Do you want to talk about maybe this payment protocol stuff that we were expecting to see also in 2014?

Yeah, sure. So the next version of Bitcoin will be 0.9 and there are a few important changes there. But the most important one is that something called the payment protocol will be implemented. And the payment protocol will make Bitcoin payments much more user-friendly. There are a few ways this is going to happen. So essentially with the payment protocol dollar, and we won't go into very much detail here because it's a bit technical, but it's it allows the merchant to send a payment request to the customer. So right now, how would it work

to make a Bitcoin payment? You know, the merchant would show you a QR code with their address and you would take your wallet and scan that if you talk about the real world case. You would scan that and then it you know would show the address in your wallet and you send them some money. But what can happen in the future is that basically he would send you a request. So you would see instead of the address you would see the name of the place. And you could also sell some information like what it is for, for example, you know, a burger and two beers and the corresponding Fiat price. So I think the main change will be that it would just become much more convenient to make Bitcoin payments.

Bitcoin addresses will kind of start disappearing a bit. You won't see them all the time. They will still be there underneath the system. But you won't actually, you know, you will be paying to the restaurant instead of to some address, you know. So I think it's an important change. And I will certainly help making Bitcoin a more attractive, a payment option. for

you know for I think especially offline you know online as well maybe but I think online if you look at something like BitPay is already super convenient I don't think you can make it much easier than that

but offline it's quite a hassle so I think the payment protocol will be a big step forward in that sense yeah I think generally this is like what we've been saying earlier that once those sort of consumer-friendly, user-friendly, things get added to Bitcoin as Bitcoin evolves,

that's when it will start getting more legitimacy and more mainstream adoption. For now, it remains quite technical. I mean, you've got these Bitcoin addresses with lots of numbers and letters, and people don't really know what it's all about. But once that kind of technical knowledge thing goes away and it's just basically a payment system, which is very simple and straightforward, you show your smartphone, you get a request, you hit okay, and it's done, that's when we're going to start seeing more mainstream adoption on the part of consumers and merchants. Yes, totally.

Maybe one thing I'd like to add here, you know, the first topic we talked about was the issue of this Fiat bottle. Nick and I'm actually not super optimistic on about the speed of Bitcoin's adoption as a payment system. I mean, I think it will grow tremendously. But I think even a year from now, it will still, you know, it won't be prevalent. Most people won't be using Bitcoin, you know, it will be a very small percentage of people. Absolutely. And I think the reason is, yeah, the reason is just that. you know, if it takes you two weeks to buy some bitcoins,

even if it's slightly cheaper and maybe more convenient to pay with bitcoins, unless it's the only option, you'll just use PayPal or a credit card or something. So, of course, you could solve this problem. You know, you could have bank accounts linked to a Bitcoin wallet. So if you want to pay with Bitcoin, it would purchase these bitcoins automatically, you know. I mean, in principle, it can all be solved.

And we may see some things that address this problem. But I think the issue of this, the kind of friction between converting, you know, your regular currency to Bitcoin is still going to be there. And most people don't have coin. So this will be a big barrier for Bitcoin as a payment system. We'll get less so, but it will still be there. And that brings us to our next point, which is anonymity. Yeah.

So anonymity is this is kind of really interesting topic because if you talk with most people who I would say aren't too familiar with Bitcoin, they may have heard about it, but they're not, you know, exactly very deep into the matter. They think Bitcoin is anonymous. They think like I, you know, send money to someone. Nobody knows who it was and nobody can trace it. And you see that in the media all the time. You know, they talk about like untraceable Bitcoin and et cetera. And this just mostly is wrong. You know, this is not true.

What you do have is that, you know, all the Bitcoin transactions are, of course, in the blockchain and you can see them. You know, you can see all the money flows. You don't necessarily know who owns these addresses, but if you do your proper amount of research, very often you're actually able to figure it out. You know, let's say you someone sends you their address so you can send them some money. And well, now you can check, for example, what other addresses this is linked to and you may be able to figure out how much money he has and what other addresses he owns and what kind of transaction the person is done.

So this is a very contentious issue in the Bitcoin community because there are basically kind of two sides of this. On the one hand, there are. people who want more anonymity. They want Bitcoin to be truly anonymous so you can really make payments and nobody can trace them and they also want to prevent that people can go to the blockchain and you know figure out who is owning some address and what other address they own as well and things like that and there are a lot of projects that are working on making Bitcoin and more anonymous or

that are working on building tools that allow you to do Bitcoin transactions truly anonymously. You know, one one is dark wallet, which has recently made quite a bit of a stir and there's a project called coin join. There's also zero coin, which is going to be released actually as an alternative currency. So there said before it was supposed to be an improved a change to Bitcoin protocol. Now it's going to be its own currency. So they really want to make it completely anonymous. So there's that side and you know this is a very strong and a large part of the Bitcoin community really believe that it should be possible to make truly anonymous Bitcoin payments. On the other hand, recently there was quite a story about in your company called Coin Validation that wants to basically link Bitcoin addresses to identities.

So you would, you know, maybe go to a post office and show your passport and then, you know, you're some address or through your bank, maybe. They would link an address. Sure. Let's have the post office take care of Bitcoin addresses. I mean, that's in many, in countries, in Germany at least, if you, if it's the identity validation thing, you often do that through the post office. Because you want to have someone who actually looks at your passport and sees like, is this you? Yeah, and this could be an interesting new business model for the post office, which is losing a lot of money on letter mail. Yeah, no, they're doing that already. I mean, everybody's, you know, horribly inefficient and it's just, you know, it's a pain.

But so what the coin validation wants is basically that you have a link between identity and Bitcoin addresses, so you would be able to trace payments. And then maybe people would be regulators with force company that they only accept. Bitcoin payments from addresses that are, you know, validated or where you have a confirmation of the identity of the owners. So this is a controversial issue because I think we have these two polls. On the one hand, we have the ideological crowd who really want an anonymous currency. And on the other hand, we have people who want to, you know, create businesses and they want to make money and they want to have businesses that don't get shut down by regulators.

And to do that, having less anonymity would kind of take away very strong argument governments have against Bitcoin. So they're more pushing for something like that. I think in 2014, so to come to the kind of prediction side, I think we will see some really serious clashes between those groups, you know. I mean, this is a conflict that's already there and I think it will kind of break out much more in the next year. And I think we will see both, you know, strong section, strong forces pushing for both, pushing for more anonymity and changes that make it much harder to trace

and track Bitcoins. And we will also see the other side, which is people who will push towards more, you know, more identity flowing into Bitcoin transaction. actions and we may see regulators that really push towards Bitcoin becoming more transparent in their views or towards basically preventing anonymous use of Bitcoin. Right. And the regulatory debates that governments and financial institutions have been having, have been very centered around the money laundering issue and what anonymity means for money laundering. So perhaps we could even speculate that if regulators have their way, we will get less anonymity in Bitcoin. Absolutely. I mean, we haven't had it's true that regulators have talked a lot about, you know,

the dangers of money laundering with Bitcoin, etc. But what we haven't seen so much is a push towards a less anonymous Bitcoin from regulators. I think that's because they don't understand Bitcoin. Because if they did understand Bitcoin, they might be supporting something like this coin validation thing. Or at least if they understood it somewhat, if you really think about it, it doesn't make a lot of sense. But it would be possible to, for example, require people to, identify and link their identities to certain Bitcoin addresses. And then, you know, it will be possible to require businesses to only accept payments

from such addresses, you know. And I think we will see those pushes, you know. And I think it will be very controversial. And we may even see splits so that some parts of the Bitcoin community say we, we will start working on Bitcoin and we will start working on alternative currencies or altcoins that specifically try to prevent this kind of weakening of anonymity and privacy. Very interesting topic and I think there's lots that needs to have them in this space and I personally, I'm not sure whether I want more anonymity in my Bitcoin transactions or more transparency. It seems like the, it seems, well, from what I perceive it to be is that Bitcoin is supposed to be transparent.

We're supposed to know what we're supposed to have the ledger, which is transparent, and we know all transactions that occur and we're able to verify them. and although I like the idea of transparency and from an ideological point of you may be on a personal level I'm more reluctant to have all my transactions out there and linked back to me I'm coming torn on this issue myself yeah I totally understand that of course I think one one aspect that's really going to or has and will even more influence this this conversation and this debate has been the Snowden and NSA case you know because I think we've just seen how much our privacy has been you know violated and has been kind of destroyed you know and

how deeply surveillance has pervaded all we do online and offline. And I think that kind of adds another aspect to the conversation. And I think it, at least in my personal view, I'm more in favor of a truly anonymous currency. Because I think it would be a powerful thing to take. some power away from, you know, centralizing government forces and give them into the hand of individuals. And I think there's a danger when you don't have anonymity is, is that you can, you can do all kinds of things that undermine the value of Bitcoin and to decentralize power of Bitcoin. But yeah, it's, of course, there are downsides to it as well, you know, I'm going to have

You can of course use it for all kinds of evil things and if it's anonymous then it's easy to do that. You know, and there's no denying that, you know, there's no denying that a currency that's truly anonymous would be useful to criminals as well. Of course it would also be useful to people who, you know, want some privacy, etc. So there are both sides, of course, and I think that's where we're going to see this conflict. So let's get into topic number eight, which is a very interesting topic because it hasn't been covered very much by mainstream media. We've been hearing a lot about Bitcoin, about regulation, about the currency, about what we're classifying it, if it's a virtual currency, virtual commodity. But we haven't heard much about the protocol of Bitcoin, which is really the under-reliation. underlying layer of all Bitcoin transactions.

Yeah, absolutely. It's an interesting topic and it's a very complex topic and there's so many things going on in this area and it's very hard to kind of keep up with them. And even if you do, it's hard to truly understand them, I think. But the interesting thing is that, you know, there are different ways of looking at Bitcoin. You can look at Bitcoin as a currency or as each mentioned as a as a protocol a protocol basically as a as a kind of a layer that enables other layers being built on top as well and this was this idea was there in the very beginning the Bitcoin code base supports that you know very

deeply I think a lot of features were available from the very start built in but that weren't actually you know they're still not being used but there were built with this kind of protocol layer in mind. There are different examples of that, but let me just explain one example, you know, very briefly. And I think it's a it's pretty easy to understand and which is the example of colored coins. So to make an example, let's say I own a company and I want to I want to make a public record of the shares of my company. So I'm going to take, say, I'm going to take a small amount of Bitcoin.

Let's say 10,000 Satoshis. And I'm going to say, I'm going to designate one address with 10,000 Satoshi. I'm going to say, now at this point, these represent the shares of my company. And now if I send you a certain amount of those Satoshis, of course, in the blockchain, you would see that of those 10,000 Satoshis, let's say a thousand went to your address, Sebastian. And now anybody, you know, if you make this public that these are the shares of my company, anybody could see that, you know, you own a thousand and you'd be able to verify and approve with your private key that you own those thousand Satoshis representing 10% of my company.

So this is one example called colored coins. So you basically assign meaning to certain Bitcoin. Of course there are some really powerful advantages of this. For example, you wouldn't need to keep a central record of who owns the shares of the company because it would be in the blockchain, you know. And it also could be proved by each owner of the shares that they do. do own those shares, you know, now this is not so trivial. You know, you'd have to have some central registry and I don't know exactly how it works,

but you know, this is a, is not a trivial thing. And you would probably need to go to a third party because if the other party says, no, you don't, then you say you do someone else has to come in and check and it's all not that simple. With Bitcoin, this can be extremely simple and you'd be basically leveraging the mining power and security of Bitcoin. So Color Coins is one example, but there are others. And there's been tons of work in this area.

And it's all been, you know, kind of not broken through to an extent that it's, you know, it hasn't been in the media at all, for example. And many of these applications and developments are kind of in a prototype stage and or they're being tested and they're two, let me mention two projects that are, you know, particularly interesting. One is Mastercoin, which is a particular on top of Bitcoin. It's a bit like colored coins, but more complicated. Another one is BitShairs or Protoshares, which is its own currency.

So it's an alt-coin. They basically took the Bitcoin idea of a blockchain, et cetera, and then they made a different currency with all kinds of features built on top of it. And I think in the next year, because a lot of these things are actually fairly advanced in terms of development, I think in the next year we will see a lot of activity in this area. And we will see things becoming usable and that you can try it out and you will see very powerful applications built on that. It's very hard. I think that this is one of the most untalked about but most interesting aspects of. Bitcoin because we've been like I said we've been talking about the currency so much but

just completely ignoring this other aspect which is which can have real uh useful real world applications like this colored coin for example uh there there are other from what I understand possibilities which uh which are the transmission of data or secure communication on the blockchain or the validation of transactions for example I mean you know of a physical transaction so you can validate that, you know, one has received sent and received goods on the blockchain. And I think that once, as these other application layers gain legitimacy and have real perceived value and start being used,

this will also affect how Bitcoin that currency is, is perceived by people and the media and governments. I think there's a secondary effect. There's a snowball effect that can also positively impact the Bitcoin currency. Yeah, absolutely. I mean, I think if you see really interesting and powerful applications being developed on top of Bitcoin, that way it's just obvious that those wouldn't be possible at all without bitcoin you know that will be a very strong support for bitcoin as a currency as a protocol and i think that will be very important and it would be extremely exciting to watch this area

but yeah it's absolutely you're absolutely right it's it's a complicated area i spend a few hours for example kind of diving into mastercoin and i must say i still understand you know a fraction of it. So it's a complicated area, but I'm sure some of the applications that will be built on top of it would be very simple and very usable. And people will understand

why they're powerful. Right, they're not going to have to, people won't have to understand the underlying technical aspects of it. They'll just have the end user service, which gives them value. Yes, exactly. Yeah, no, it will be super interesting.

Should we talk about remittances? Right. So you were going to cover that. Our last topic, our last prediction for 2014, is about remittances and particularly in developing countries. If you think of Bitcoin as a way to transfer funds from one person to another, it's it's quite interesting to use Bitcoin because of the obvious very low fees. So I myself have had this experience being originally from Canada and living in France.

I have student loans in Canada. This is just one example. So I have student loans in Canada or had student loans and I've had to transfer money through money transfers, through bank transfers. And it could be very expensive. So for me, if I want to send 500 euros, that costs me $70, 70 euros or $70 or whatever. That's like 10% or more of what I'm sending. So I can afford that, but think of someone who lives in China, who goes to work in another country and needs to send money back to his family.

well the banking infrastructure may not permit him to do that easily so he may very well have to go through services like Western Union or other remittance services where the fees are quite high well and so often actually I think banking if you can do it with a bank is even more expensive than Western Union oh yeah and more difficult from from my experience So if you go to another country to try to make money to feed your family and every time you send money back, you're being dinged 10%. That has a huge impact on you, especially if you're doing it over a year. That's 10% of your salary for the year. So Bitcoin becomes very, very interesting in this space. And I think that much of the developments in Bitcoin, come from developing countries in the next year, in the next few years, and particularly in 2014. I don't think that it's going to be that we're going to see a huge spike in use of Bitcoin

developing countries in the next year specifically for transferring, for sending remittances. But I think that we're going to start seeing it. People in developing countries who send remittances are from all around the world really are going to start seeing Bitcoin as an alternative to services like Western Union. Now, there is, uh, uh, there are things that need to be put in place before that Bitcoin can be used as for transferring written remittances. And that is that there needs to be a liquid Bitcoin market in place,

um, in both places in both countries. So if I'm sending money from France to Africa, for instance, I need to be able to buy Bitcoin here and I need to be, and the person I'm setting it to back in Africa needs to to be able to sell it for the out currency, unless he's using Bitcoin to pay for services and products in Bitcoin. So I think that's going to be one of the challenges to using Bitcoin to transfer remittances is the establishment of the liquid market.

Yeah, let's just maybe state very briefly how exactly that might work with remittances. So what might work, let's say someone works in the US and they have relatives in Kenya. You know, that person might have a bank account in US so you connect it with Coinbase. So he would get his salary and he would buy $500 worth of Bitcoins. You know, this is possible with like instant buy so you have it instantly and Coinbase charges a 1% fee. he could take that money send it to his relative in Kenya and the relative in Kenya then she would have it basically immediately and would be able to sell it there

for local currency of course that's mostly where it breaks down at the moment is that there's no local market Bitcoin and I don't know what the currency is in Kenya. So that that's at the moment that's a problem right. Once you have liquid Bitcoin markets in in both sides you can do this and you can do this well I say in the example I just mentioned let's say you have a 1% fee on each side you could do it for maybe 2% or 3% and in the future maybe less versus the 10% or 12% you would pay with Western Union So it's really powerful.

And maybe one thing I want to mention here, I think in total, the amount of bank fees people pay on remittances is something like $60 billion a year. And if I remember correctly, the total development aid for the third world is something like double that. So it's just fairly absurd if you think about it. know, you know, if you send, if you send, we send some money into developing countries to help them grow, but then half of, half of the money that family sent to those countries, you know, half as much is taken away in bank fees from people sent to their families in developing countries. So this is of course, you know, it's a huge sum and it would be a

a tremendous benefit for the developing world if we could just dramatically reduce those fees. Yeah, you're right. And I think that slowly people will start using it as liquid markets start to emerge in a lot of these nations. people who have moved to other countries and need to send money to their families, we'll start turning to Bitcoin more and more. And I think it's important to mention also that companies like Western Union might even use Bitcoin as kind of the back end for the money, like transparently to the user, they may send money also through Bitcoin. So you may even have services which allow you to transfer money and they're actually using Bitcoin to transfer the money and selling it in the local market.

Yeah, absolutely. I think that's, I mean, people are already working on that. I don't know if Western Union will adopt that, you know, because they have so much investment in the infrastructure and for them, them, you know, the cost was probably in developing that infrastructure. So now they have it. And of course, it's expensive. It needs to be maintained. And that's why they have those expensive fees. I don't know if they will be adopting Bitcoin as a back end. They may.

Who knows? But I'm sure that startups will come in and do exactly that and try to replace Western Union. And I think they will be successful. I mean, I don't think Western Union will exist like that. You know, I don't think they will be a dominant player in the remittance market in the next, let's say, in three years. Really? Three years? I mean, okay, maybe it will take that.

Let's say, let's say they, let's say, I think they will lose significant market sharing. So maybe it will, maybe it'll take five years for them to, or seven years. I don't know exactly, but in any case, I am confident that their business model will not survive. And I think it will be pretty soon that that they will have tremendous problem competing.

Because after all, right? I mean, if you think about it, so they charge 10 plus percent or something. And I mean, maybe it can be less than sometimes, but you know, on average, I think something like 10%. And now they may have, they may be quite thoughtful. I think 10% is is quite a high estimate.

I sent money through Eastern Union recently. I sent 80 euros for a friend who who needed me to transfer money for him. And I think I was charged somewhere around five or six. So yeah, it probably brought up now. Yeah, I think it depends on where it's sent to and also the amount. It's smaller amounts. It's a higher fee. And a lot of remittances are pretty small amounts.

You know, often it's like $200 or something. Right. Yeah, it may be slightly less. I can't vouch for 10%. So let's say between 5% and 10%. Yeah. I have 5%. I mean, I think on average, I know it's about 10% for remittances, the fees.

But, you know, it's just, Western Union doesn't just charge those fees to return profits to the shareholders. Of course they do and they are very profitable, I think. But they also charge those fees because they have this tremendously large infrastructure and system they build and that is costly, you know. So they can't, they can't just get rid of those costs. They're there, you know. And that's going to be their problem. So those are our predictions for 2014. We've got another question we'd like to kind of talk about,

and that is 2014 the year for mainstream adoption. We wanted to add this in our predictions, but we think it's kind of a broad topic and want to address certain points about that. So my impression is that 2014 is obviously too close and too soon for mainstream adoption to happen. I mean, we've only really started hearing about Bitcoin prominently in the media within the last six months or even with the last two, three months since the U.S. Senate hearings and since more and more governments and

central banks have been talking about it. So I think that we're going to see a lot happen in 2014 in terms of Bitcoin use, in terms of adoption, in terms of regulation, all these things that we've talked about. But mainstream adoption, let's face it, it's not going to happen tomorrow. Also, I think it's important to point out that certain places have adopted Bitcoin more than others. So for example, in certain European countries, like I mean, where you live in Berlin, You mentioned that in Berlin there are quite a few coffee shops and cafes and bars that accept Bitcoin. Yes, that's certainly correct. But I would still say it's a pretty long way in Berlin as well from mainstream adoption.

I completely agree with your point. I think mainstream adoption is not going to happen next year. And I think if you look at different aspects of things. Bitcoin. I mean, this is one thing that's been on my mind quite a lot, but I personally believe that, and I think we've seen that to some extent, is that Bitcoin as an investment class and as an asset that people, you know, basically invest in, expecting it to grow in value will precede Bitcoin's mainstream adoption as a payment system. And this is, my conviction we will see if it turns out to be true and i think uh but especially if you've

see things like ets and things like that uh they will be uh they would help that side tremendously so just before we wrap up we wrap up the show um we want to tell you about local bitcoins so uh local bitcoins is a person-to-person bitcoin trading site which allows you to buy bitcoins well, buy and sell bitcoins actually practically anywhere in the world directly from another person. So you can either transfer the bitcoins online or you can meet them in person and have them buy bitcoins from you or you can sell bit to them. And I think you've used local bit quite a bit, Brian. Yeah, I've used local bit extensively and I've actually bought my very first Bitcoin. I bought from the founder of local Bitcoins.

In person though, I'm at, um, the Bitcoin exchange Berlin. And local bitcoins is an excellent site. You can, you can either do online transfers or you can meet someone in person. And they have an escrow service if you want to do online transfers. And you can really use them any place in the world, you know, the most remote place. You can look, is there someone local that either wants to buy Bitcoin? or wants to sell bitcoins. And you can just contact them and do it through that side, you know.

And it's super easy. And it's really great. I think it's a tremendous resource and it really helps to make Bitcoin accessible in so many different places. One thing that's kind of interesting. And it's also been out of my mind a bit. You know, in some places, for example, Argentina, people pay a significant premium for Bitcoin's because it's very difficult to get their pesos out of it.

the country. So they would love to buy Bitcoin's because that way basically they can protect their money from the government. And so they pay about 20% more than what you have to pay here to buy Bitcoin in Europe and US. So what you can do if you go on vacation there, you know, for example, you could buy some bitcons before and then sell them in Argentina for local currencies and you basically be saving 20% of your holiday costs. And And, you know, you could do that through local Bitcoins and you would also be helping some Argentinians and, you know, saving some of their money from the dangers of the Argentinian government. If you want to use local Bitcoins and you want to sign up for the service and you'd also be supporting the show with that, please go to EpicenterBitcoin.com slash local bitcoins. And you can sign up there and this is an affiliate link.

So we would be getting a small commission on the trading fee you pay anyway to local Bitcoins. So you'd be supporting the show as well. And also, if you want to give us a tip, you know, we're just starting this. We're just getting into this podcast thing. But there are some costs doing a podcast. We've had to get some microphones. There's hosting services that need to be paid for and things like that. So if you want to help the show, you can either do so by using our local Bitcoins link,

or you can always send us a tip. That couldn't be easier. You can go to EpicenterBitcoin.com slash tips, T-I-P-S. Our tipping address will be there, and you can send us a Bitcoin tip. Okay, well, thanks so much for listening. This was, you know, was lots of fun to do this show, and we're really excited about taking Epicenter Bitcoin and both the WebExenter Bitcoin and both the website, the podcast,

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