Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Tim Swanson: The Bitcoin Hype Buster

Episode Date: January 26, 2015

When it comes to Bitcoin, Tim Swanson is known to many as the man who sees the glass half empty. Whether or not that’s true, it’s fair to say that Tim has critical opinions about Bitcoin and questions many of the assumptions held by those who wish to see it succeed. A researcher and educator, he is the author of several books including “Great Wall of Numbers: Business Opportunities and Challenges in China” and “Great Chain of Numbers: A Guide to Smart Contracts, Smart Property and Trustless Asset Management”. He also blogs about Bitcoin, economics and various other topics at OfNumbers.com. He currently serves as an advisor to Hyperledger and is Head of Business Development at Melotic. Topics covered in this episode: True cost of Bitcoin transactions Bitcoin as a niche technology Vs. Consensus-as-a-service and semi-trusted networks Hyperledger, a decentralised ledger platform Melotic, a digital asset exchange Bitcoin’s adoption as a payment system Trusted transparency in mining Remittances Episode links: OfNumbers.com Dave Hudson's Blog (Hashing It) Slicing data: what comprises blockchain transactions? OP-ED: The Rise and Rise of Lipservice: Viral Western Union Ad Debunked A Year After the Non-Apocalypse: Where Are They Now? Architecture of Internet Money This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/063

This episode of Epicenter Bitcoin is brought to you by Shapeshift.I.O. With no account or sign up required, it's the easiest way to buy and sell light coin, doche coin, dark coin, and other leading cryptocurrencies. Go to shapeshift.io to instantly convert all coins and to discover the future of cryptocurrency exchanges. 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 Kutu. And my name is Brian Robin Crane.

We're here today with Tim Swanson. Tim Swanson is well known in the Bitcoin community as the man who sees the glass half empty. He's written a lot of articles about Bitcoin. And I remember reading some of them a long time ago, often having a very critical opinion of Bitcoin. But I think for a long time he was sort of the one voice that seemed to argue well that maybe things aren't so rosy. and it seems like in the recent month, we have more and more come up with conversations that we sort of questioned some of the assumptions that we've been having about Bitcoin. So it's really exciting that we have Tim on today to dive into a lot of the things he's been

writing about. So thanks for joining us today, Tim. Hey, my pleasure. Thanks for the invitation. So we wanted to start off by asking you just how you got into Bitcoin and what has, what your journey has been in the space. I'm a paid stooge of the banking class. So they just give me money and I just jumped into it.

So I was out in China and I built a couple different mining machines to test it out. In fact, my wife, before she was my wife, she was my girlfriend. She's a chip designer. When she first saw me building these rigs, she's like, what are you doing with these chips I design? Because she apparently was on one of the radion teams that was designing some of these GPUs. So yeah, I was pretty enthusiastic, much more bullish a couple years ago. And then silver time, there was a number of different things I came across.

It swayed me to look at it a little bit differently, starting really a year ago about there was an article by, I think it was Ken Griffith. He wrote Bitcoin, Jack of All Trade, and Master of None. And it was, I think he was actually pushing part of the products that he was making. But he made out a couple interesting points, including like transaction costs and stuff like that. And then at this stage, you became more interested in Bitcoin. You started writing yourself? Yeah, so, you know, I moved back from China a year ago with my wife. And we were both looking at different things to get back involved with.

I mean, she's a chip designer, so she was already doing that. But I was looking to see what kind of new space had some potential. I did a lot of research and compiled it into a book called Great Chain of Embers. It was just about smart contracts and stuff. And then after that, I was actually somewhat disappointed after I'd written that because I'd heard all this promise and potential of this technology, but there was really no use case. And everyone's like, oh, the use case will come. Well, maybe it will.

Maybe it's just, you know, 20 years down the road. But I'm joking. I don't think there's 20. your wait time. But the over the summer I started doing a lot of correspondence with a couple of people Jonathan Levine, he's out there in the UK,

Dave Hudson, actually a lot of British people, Robert Sams, who were actually looking at statistics suggested that things weren't quite going the way the narrative was on Reddit. And I ended putting together another book in August

it's called The Anatomy of Money-like informational commodity. That's not really my own title. There was actually a paper earlier in the year saying, hey, how can we classify what Bitcoin is? And the way they classified it. I'm not saying it is the correct way, but they called it a Malik, a money-like informational commodity.

And along the way, I ended up becoming a business development over at Melodic, which is an asset exchange out in China. And then I'm also an advisor disclosure to hyperledger. So I'm still involved in this space. I'm not anti-Bitcoin like some people like to say I am. I'm very familiar with how it works. I work daily with people who really love Bitcoin, including the people who, you know,

would take the narrative on Bitcoin, on Reddit Bitcoin. But yeah, I think it's good to have those voices. And it's interesting also personally that I feel I've grown more skeptical over the last year of the chance that Bitcoin will actually succeed on the level that a lot of people think it will. and it's an interesting, it's an interesting experience, right? If you're like, the more you learn about it, the more skeptical, the more you see the weaknesses.

It's, I don't know to what extent that is, I would say, a common experience or to what extent it's not. Sure, you have overhype in a lot of spaces. Like, we had that with clean tech. There was a clean tech bubble that started 10 years ago. You had a passionate group of effectively what are environmentalists. that built this organic ground swell of enthusiasm. They got VCs to buy into it. And you had a peak and then you had a drop off.

I'm not saying that Bitcoin will face the same issue, but we've seen this historically, you know, in many different segments. So it's not, you know, we can't necessarily single out Bitcoin. And it's not to even lament, you know, over, overzealous investors. Like, look, to be fair, VCs only can dedicate 5, 10% of their portfolio or their time towards any one particular segment because they're supposed to be diversified. That's what the LPs want. So aside from a few of these accelerators that are Bitcoin only,

you do have VCs that have to focus their attention on other things. And maybe they just haven't had a chance to fully digest the rest of the ecosystem that's being developed, or maybe they haven't looked at some of these, the actual costs. Like, I know you've talked about mining with Vatolic, talked about it with Robert Sams, even with Preston in the last month. But look, Bitcoin transactions were not to be designed to be cheap. Is this the opposite? It was intentionally designed to be inefficient effectively to make it expensive to disrupt and censor and modify.

The selling point, you know, six years ago was in Bitcoin transactions are super cheap. It was if you could get around trusted third parties, you get rid of, you'd around their mediation costs. Therefore, it's a competitive to compete with quote-unquote centralized. institutions. In practice, it hasn't bared out. Like, we know it's, in order to do decentralization in civil protection attack, prevention, you have to pay some money. And that money is the seniorage reward. And we know that the true cost of mining is basically the marginal cost to hash a block. Because the block is what contains the transactions. And without being able to process and protect

those blocks from any kind of attack from a malicious attacker, the network goes to zero. the value goes to zero. But we know, based on that calculation, the cost of a transaction is actually about $10 or $15. Maybe that will change. Maybe true volume will go up at some point. But that doesn't seem to be the case today. Yeah.

I mean, to be honest, that's one thing where I did sort of take issue with that comparison, you know, because I don't think you, I think the mining reward, you can't really count into the cost of transactions. I mean, at least it's not the marginal cost of a transaction, right, which is kind of the maybe more interesting part. Although in the long run, of course, it will be interesting to what extent transaction fees can make up for, but just briefly, Sebastian, I'm curious about you.

What has your experience been? Like, how has your view of the potential of Bitcoin involved over the past year? Well, that's a really good question, Brian. My view has evolved. No, I'm kidding because I just heard a Freakonomics episode were all about responding to questions by saying that's a really good question to defer the actual answer. No, my view has sort of shifted from perhaps a naive position

that this was going to take over the world to somewhat more really. views that it's much more nuanced than that, that there are many other things at play, that it's not, you know, so I mean, we can probably get into this first topic that we have here in the rundown, but, you know, the, to the moon, like, we're not going to accept anything, but like total world domination of Bitcoin versus like Bitcoin could be a niche or could be complementary to a lot of other, you know, monetary systems. I think at some conference I heard someone talk about monetary diversity

is probably more of what we're going to go towards probably more realistic anyway yeah Tim I saw you mentioned when we were discussing topics for the show the idea that Bitcoin could attain this niche status can you expand that a bit? Yeah we have this people talking about this binary existence. Bitcoin's going to go to zero or a million or something like that. There's almost no discussion in the middle. And that could be just because they're

invested in underwater and they hope that it pulls out or something like that. I think that for what is worth, by the way, I don't own any coins of any kind whatsoever. So I'm not here pumping anything. But I think it'd be good if these people, especially the media, disclosed. Oh, you don't own any Bitcoin? No, not at all. That's interesting. I remember also talking with Preston, like, at the Bitcoin conference in Amsterdam, he was like, I've never owned any Bitcoins. But I did, though. I mean, I did mine.

Like, I'm not anti-I. I just, you know, this is not something I'd want to be exposed to right now. And it's not because I think it's horrible. Again, I think in the long run, this is going to be a tradable asset. I don't think it's going to be, I don't think hyper-bitcoinization in these, these fan fictions will ever take place. I mean, that doesn't even, there's no logical, it's a non-sequitur to get to that point. Like, like, will maple syrup?

go to the moon and we'll fall to zero, our towels. We have, like, just look in your apartment. You know, I can just side off all these different things. You know, none of these, like, my cereal didn't become a, you know, a multi-trillion dollar industry. And I think setting people up a failure. Like, if we have massive burnout, if all you're doing is going around on the streets and trying to get people in to saying, hey, you're going to be the new 1%,

you're going to be the new wealthy elite with your citadels and your yachts and your islands. It's setting, it's over-promising and effectively under-delivering if it doesn't get to that. And we have, you know, in front of us, you know, Android phones. And this came from Linux. And, you know, 15 years ago, you had a whole group of people saying, oh, desktop Linux is going to destroy Windows and destroy everything. And, you know, they were very sincere, very genuine. They weren't trying to scam anyone. But at the end of the day, most consumers wanted an OS and not a hobby. And the same thing with Bitcoin is most people want a currency and not a hobby. And, you know, if you have to spend, you know, an hour a day tracking, you know, most people don't want to have to spend an

hour a day, you know, worrying about fluctuations and when to buy and sell, you know, to buy their gasoline or to buy, you know, use their bitcoins to buy laundry detergent or something like that. I saw one thing you wrote somewhere. It's like, and I thought this is a very, a very nice quote is that, yeah, people want, you know, people want money. They want to pay for something. don't want a new hobby. Yeah, and they expect people to do this in the developing world. People in developing world have different areas. There's something called Masslow's hierarchy of needs and wants.

And at the very bottom, when you go to these developing countries, I lived in a really poor part of China. It was called Anhui province, and the average salary there was like 500 bucks a month. And, you know, based on what's it called, Engels Law, as a country develops, you spend less money on food and more money on discretionary. items. And in China, I believe the Engels law in terms of like how much you spend on food, it's like 28%. We're in the U.S. is like 10%. So not only do we have more money to spend on healthier food, or sorry, we have more money to spend on other things, but we also could buy food for less and so on.

So like these people in developing countries that spend like half their their wages on their needs, they don't, number one, have the money to necessarily buy bitcoins and then get wiped out. They don't have that kind of cushion. And number two, they don't. don't have, it's like, not like they're going to wake up to the next day. I'm like, oh, you know, I hate my local currency. I'm going to buy Bitcoin. The on-ramping educational profits. It's like, I gave this example. I was at a conference in Singapore, and somebody's like, you know, we should tell more people about the white paper. I was like, are you kidding me? You don't go around. You don't need to have to read the Boeing 747 schematics to realize

that the Boeing airplanes provide utility. I get on airplanes, like the A320 or whatever. I don't have to read how it's built in order to read. realize it provides utility and value for me. And if that's our main sales page, is this brochure that some guy wrote six years ago, I don't think that that's the best way to market it, especially to developing countries. I like the analogy that you made to open source software.

And perhaps we can expect something similar to what happened to Linux in effect is, I mean, Linux didn't develop, the proliferation of Linux or Unix-based systems didn't develop through Linux desktop operating system. It developed through Android, open, you know, open source project, iOS, to a certain extent, MacOS. And so companies, private companies effectively have taken web servers.

Web servers as well, yeah. But that, I mean, you could argue that has always been the case. But effectively, private companies have taken those open source projects and made commercial products with them. But perhaps we can expect to see something similar to that happen with Bitcoin, with cryptocurrencies in general. Absolutely. Like, you have, it's ironic, you have thousands of man hours going into producing this code,

whether it's this free open source stuff 15 years ago or Bitcoin today, by these people who really are anti-establishment figures. But what ends up happening in practice is because it's all public good stuff, there's, you know, funding issues in order, like, going to the, which model, red hat, Mozilla, you know, which model you're supposed to build. Maybe at the end of things, the people who benefit the most are, as you say, these private institutions or governments. I mean, look, 15, 20 years ago when Phil Zimmerman,

was doing the PGPs, you know, fight, I don't think any of those guys expected that the Chinese government would create what's effectively called, you know, the great firewall, the biggest filter in the world, using some of this technology that this open source community made. That's just, you know, the double-edged sword there. And obviously, they probably would have created this software somehow in China, regardless of how the free open source stuff did. But it just, we see this with government agencies in the U.S. or elsewhere. If you make it about politics, you probably, you know, it doesn't seem like it's the smartest way to gain traction, at least in the long run. I'm not saying it won't work out for these very partisan people in the Bitcoin space.

But I think that they're going to find out the hard way that financial institutions, if there's any margins to improve, financial institutions will just incorporate the technology and throw away the stuff that they don't need, including the political ideology. So if you talk about in each case, is there something specific you have in mind? Sure. So you had Robert Sams on, like, I guess two weeks ago. And he's got a new company called Zero Clear. I guess he hasn't spoken too much because it's not quite public. It's still kind of semi-stealth. But the general idea with some of this, and I know there's maybe two to three other, you know, stealth projects that have contacted me or some people I know, basically,

are trying to take some of this consensus ledger technology. and then cobble it together building a stack for enterprises, for private financial institutions. And again, you don't need necessarily proof of work to do that. I'm not to bash proof of work. I think Dave Hudson makes an interesting case for some of the business use cases for it. Maybe he's someone you could have on a show. Listeners might be interested in it's hashingit.com.

That's his website. But Robert Sams is doing this zero-clear thing, doing druidus clearing using business. bits and pieces of this overall tech. It's actually in some ways similar to what Ethereum is doing. But again, I can't spill the beans too much because then it defeats the purpose of being a stealth business, right? But yeah, I do think that there are actual applications that you could take this and that don't require it to be Bitcoin-based blockchains. I'd like to hear more about this consensus as a service idea.

How do you then, you know, ensure that this ledger is trustless if you don't have the block? blockchain and proof of work. Okay. Well, I'll be honest. And I'm guilty of this, too. There's also saying it's really trustless. It's really trust minimizing. Like, Bitcoin itself isn't trustless.

We have to, our third party is minors. And the idea six years ago is, hey, there'd be so many minors, there's so many validators effectively that there's no way the collusion or abuse could take place. But as we've seen, that has kind of narrowed down. And it narrowed down in terms of consolidation and centralization, primarily because it's rational to do. If you want to smooth out your risk curve or your volatility curves, you need to aggregate capital effectively with these data warehouses and so forth. So I don't think that most businesses care about cypherpunk solutions, like in terms of they're not cypherpunks.

Like at the end of the day, Bitcoin was designed to solve problems for cypherpunks, problems for people who were doing, you know, poker stars. I'm not saying that Satoshi was a poker star guy, but he originally wanted to build like a marketplace with a token within it. In fact, version 0.1 had that built in. Anyways, my point is, if you could get rid of some of this stuff that Bitcoin makes it costly with in terms of proof of work, if you have a network or a consortium or a group of institutions that trust each other and know each other, you could use proof of stake or even a simple database. I'm not saying that that is the solution. Obviously, each business has different needs.

But yeah, you don't necessarily need civil protection attack for some of these applications. You just need a block ordering that is cryptographically verifiable. So I know Zucky Mannion from Skew Chain, his phrase that he uses cryptographic primitives when he's talking about how you can integrate blockchains with supply chains. And again, I'm not saying any of these ideas will be successful, but we're looking at it. And that's why I see the space as consensus as a service. going forward and not Bitcoin as a service. I find it interesting that you bring that up and I did sort of ask

present burn about this as well because my idea has always been and my understanding that you know the sort of fundamental breakthrough of Bitcoin is proof of work and and using proof of work to achieve this like you know distributed consensus and have this blockchain and when you do some And it seems like the powerful thing there is the decentralization. So when you get rid of that, I'm just curious and sort of skeptical whether then this whole blockchain design and lecture design still makes sense. Or whether then not the most efficient thing is just database, right? Sure, yeah.

So you have the spectrum, right? Fully decentralized, which would be, I guess, Bitcoin six years ago, not Bitcoin today. and then just like a Mongo database or Oracle database or IBM database. Somebody centralized. Can you do something in between that is effective for certain business use cases? So again, if you know who your nodes are, if you know who you're validating with, that is a semi-trusted network. There's still ways to use, like, for example, proof of stake.

You can use something called delegated proof of stake. And by the way, guys, I understand there's lots of arguments about whether proof of stick is stable or not. I am not saying proof of stake is the solution. It is a proposed solution that many people are looking at. And obviously, people who hate it have the vested interest to hate it because they own a lot of Bitcoin. So if something else comes out about it, then they'll lose a value. They're going back to, you know, they won't beat the moon as they'd hope. But anyways, the basic idea with delegated proof of stake or having these validated notes in different areas is you could just take maybe 100 NGOs.

You put a validating node inside one of these things, and you'd have to convince, like, the Red Cross and Blue Shield and all these different, or I guess Blue Shield's, HMO, it's not an NGO. But if you take these different NGOs, like United Way, you say, hey, can you run this delegated validator? To make that collusion take place, you would roughly have to convince 50, 50 of these nodes to collude or something like that, which would be much more distributed than Bitcoin Today. Bitcoin Today is only, like the Talek said, it's. It's basically a 5 of 10 multi-sig that issues a Coinbase.

So it's 10 pools versus 100. I think 100 is a little bit more distributed. We already know who the pools are. We know who works there. Well, at least 85% of the hash rate. So, I mean, I don't think that in practice, the proof of work became the decentralized network that he had hoped. And I don't think you can re-decentralize it in the way that they're trying.

Because, look, what happens with the security of the network is directly proportional to the actual token value in market. So if you have a $200 token, miners are going to destroy $200 worth of capital to secure it, every 10 minutes or whatever, times 25 or whatever the block reward would be. Anyways, if that is the case, then what's happened, people are like, oh, you know, the good fall, the fallen price is going to re-decentralize Bitcoin right now.

Actually, it's not. All it's going to do is squeeze out marginal players and allow the most competitive to stay around. So survival of the fittest effectively. And the fittest are those who are the most effective with efficiently managing electricity or administrative costs. So like Bit Fury. Their cost of production effectively is like $180. So they're still kind of marginally profitable at this point. It's like a $20 profit window right now.

Whereas everyone else has to get off line. There's obviously some other players like in China who have some sweet land deals because they know some governors and stuff like that. But my point is, in practice, Bitcoin did not stay decentralized because it's more effective, as is Dave Hudson's shown, due to the Poisson process to pool your capital together and scale it in a way that gives you guaranteed results. And DPS, again, I'm not saying it is the solution, but it's at least more decentralized than Bitcoin would be. Well, the problem with the example that you just gave were NGOs would effectively be the nodes. The problem with that is that you have to give them the trust, and that is subjective. You know, you could consider that NGOs are not to be trusted. I'm not saying that's the case, but you're adding a degree of subjectivity there that

perhaps is undesirable. Sure. Well, let's look at it this way. It's harder to throw an NFL game, an American football game, because in order to throw it, you have to collude with a ton of different people, whereas boxing is much easier to collude. You just have to get one guy or the ref or one of the players to, to be the fall guy. You just have to convince one of the people or one of the judges. It's much easier

to spoof or throw a game or match that way. And same thing with Bitcoin. You know, when you have 10 effective miners, it's much easier to get them to collude or you have to trust them in the long run not to, you know, do censorship of transactions. Whereas if you have 100 nodes or 1,000 nodes of these different NGOs or financial institutions, then, you know, again, what, what, if we're looking at it from, from the, like we've seen in the last six years, yeah, maybe you don't want to deal with Red Cross, but again, I'm not saying the Red Cross is going to be involved with this. I'm just saying if you have a hundred different entities or 100 different institutions,

that is just topologically, more decentralized than 10 dudes in Finland. or in Ukraine where G-Hash and some of these other facilities are with the theory. Yeah, absolutely. I mean, I think in the end, right, the decentralization is the most important part when it comes to security in that way, right? So, like, obviously with Bitcoin in the mining pools, there is an issue there. Now, maybe there's a way, you know, when we, like, for example, if you're, when, you know, they're looking at if it's really just CPU minable, maybe then that will work, that it's actually

stays decentralized or maybe with proof of stake it's possible to achieve that. But it is, I mean, it's obviously true that right now there is a problem in that it's very expensive the whole Bitcoin mining and it's not very decentralized, right? And it's not very secure in that way. You have all the costs of decentralization without really any of its benefits anymore. Right. And you've created centralization without any of its benefits, which would be time, efficiency, and stuff like that. So yeah, it's kind of like the worst of both worlds. And I'm not saying that to be mean. But like, again, Bitcoin was designed and proof of work being thrown into it was designed for specific purposes. If you already know the nodes, if everyone's already somewhat nominally trusted, you don't need necessarily proof of work anymore. You need some other block ordering scheme or some other way to move transactions in a cryptographically verifiable manner. Again, I'm not saying that proof of stake is a solution. I'm not saying hyperledger is a solution. I'm not saying any of the things that have been proposed.

are the solutions, but there's more than one way to skin a cat, and Bitcoin isn't it? Well, that's all very interesting. And perhaps we can talk about Hyperledger in just a second. I'd like to know more about how that works. But first, let's talk about ShapeShift, our sponsor, Shape, Shift, of course. And ShapeShift is the fast and easy way to trade altcoins. So we've been talking about ShapeShift for quite a while. And what we're going to do today is a little different, because we're going to do today,

because we want to show you the ShapeShift lens Google Chrome extension. We've mentioned it a couple times before, and we want to show you how that works. So as you know, so if you've ever wanted to buy and sell altcoins, you know, you have to go through an exchange. Shapeshift allows you to do that without having to go through an exchange. You go to the website. They've got some sort of a conversion tool there. It looks a little bit like Google Translate for cryptocurrencies. One side you have the currency you want to convert, and the other side you have the currency you want to convert.

and the other side you have the currency you want to convert to you just put your um your address and in a few minutes you can you can trade effectively convert an altcoin into another and it takes a couple of seconds but what if you want to send um uh some some bitcoins to someone and you know you might have some doge coin well they have a great google chrome extension that allows you to do that right from the website so let's go ahead and short my screen here so i can show you how that works There we go. So I went to our support page on our website, on our tips page.

And I've got the ShapeShift's Lens Chrome extension installed. I can see it here in my browser. It's detected that there was a Bitcoin address on this page. So if I scroll down here, and I go to Bitcoin. So I see that there's a Bitcoin address. And I see the little Fox icon show up next to my Bitcoin address. So if I can go ahead and click that,

I'll get this ShapeShift lens pop up and it says pay with and right here I can say, I want to pay with Dogecoin and there we go. So it's already filled in the destination Bitcoin address. I'll say I want a tip. So I want to say maybe like 0.01. So one millimeter bet. Pay.

Ooh. Well, it appears that there's an error. Maybe if I refresh it, it might just move by browser. Okay, so there's an error. Well, that's unfortunate. I'll have to let them know about that. But yeah, so when this does work, you could expect it to work somewhat like ShapeShift, where you just have a QR code and you would send the money to that QR code and it would...

And it would send the Bitcoin in exchange for your Dosecoin. Yeah, I'm sure they'll have it fixed again, you know, within the day or something. But it's a great way you can kind of use any currency. And, you know, you can, as a, I always thought this was going to happen, right? I always thought, for example, payment processes would just take any currency because it's pretty trivial for them to trade it, like as a merger. you don't have, you don't really care. And Chapship sort of makes it possible to do it on the other side, right,

so you can do it on your side. Yeah, I think there was a time where we were speculating that, you know, most payment processes would just integrate all, you know, most alt coins, but they're not doing that. I mean, right now there's no reason to do it because there's no adoption and nobody uses these currencies, right? Exactly. But if they were going to be used, that's what you would see.

And shape shift kind of makes it possible for you as a user to do it sort of on your own right now, at least when the extension is working on. Right. We'll have to let them know about that. Yeah, so they accept a they accept a whole bunch of alt coins. So Bitcoin, Black coin, Bitcoin Dark, Dogecoin, Dark coin, Feathercoin, Lightcoin, Newbits, Namecoin, NXT, Peercoin, the list goes on, Quark, Red coin and Ripple. And so you can convert any one of those coins into any other one of those. coins so the possibilities are, I haven't, I haven't calculated the possibilities, but they are numerous. So, ShapeShift is a fast and easy way to convert your alt coins and no accounts needed. Your personal information stays protected and you only pay a small upfront fee that isn't integrated in the transaction amount. So head over to Shapeshift.io, get a try, tell us what you think, and we'd like to thank

them for the support WebCenter Bitcoin. So we've been talking about consensus as a service and Timis mentioned hyperletcher. is a project he's involved in, I think as an advisor. I've heard of it, but I don't really know exactly what they do, although we did have a quick look at the website. Can you explain to us what hyperletcher is? Sure, yeah. So it's an open source project, and the idea is,

is in order to be a node on the network, you need to take out an SSL from a certificate authority. So it's not fully decentralized, but it's not fully centralized. And instead of having coins, you just have heuristics. You just have blacklisting, white listing, just like spam, spam mechanisms of Gmail. There's no Gmail coin, and yet you're able to still filter out and get most of, you know, the signal-to-noise ratio is pretty good. You get most of the mail you want.

Whereas, like, in your regular mailbox that you meet space in real life, real life, you still get a lot of spam. And those are already marked with money. If somebody actually paid money or got bulk rates or whatever, the U.S. Postal Service is like the largest spam producer in the world, or at least transmitter. So, and yet people pay for it. So the idea is, okay, how can we do this? some of the useful things with Bitcoin. How can we do asset tracking in a cryptographically verifiable way, but not have to worry about coins and have a vendor lock-in with needing a particular

Bitcoin or whatever the alt-coin is? And again, I'm not saying they'll be successful, but it's an interesting way, a different approach. There are consensus mechanisms called something called Practical Byzantine fault tolerance. It's a 15-year-old algorithm. It's been tested. Paxos is a, is, This is actual mechanism it's done with. Again, I'm not saying it is equivalent in terms of secure. The 51% or secure as Bitcoin is, there's a spectrum of security. But it's not designed to be on an untrusted network where Bitcoin was.

So if you already know some of the nodes, or at least you know some of the people, then you're on a nominally trusted enterprise or enterprise network. Is Paxos is really the Cassandra, no? You know, that's part of it. Like, you know, we could go into this. I'm not, I didn't really know anything about databases, but we did have a talk at our Bitcoin meetup a few a while ago by a guy named Trent, who does a startup called The Scribe in Berlin.

Like they do some basically a blockchain software of digital artwork. And he is, comes from like a machine learning, et cetera, background, not from a cryptocurrency background. So, but he was very familiar with Paxos and Cassandra and some of these database technologies that actually have their own consensus systems. So he was like, why? And of course, in terms of scalability, they're just insanely better than Bitcoin could ever be. You're so judgmental, gosh, why are you so skeptical, man?

So he was like, why isn't someone doing a cryptocurrency based on that? Wouldn't that work? I'm not sure. So it's interesting that it seems like that's exactly the direction hyperletcher is going in. Sure. And there's some other people you could talk to, too, that are working on some interesting products like tenderment. They're doing a different approach.

Pebbles doing another approach. Hyperdex, which is a cool database software from Eamon Seier. He's a professor at Cornell. I've heard really good things about that. Again, people need to look at what are the actual business requirements? What are the consumer requirements? And how do these different technologies fit into that? Not everyone has a cyphor pump problem. Not everyone has a need to get around trusted third parties. If you want to, go for it. But at the end of the day, you know, consumers

seem to want to have insurance, assurance, you know, customer service. And if you wanted to recreate Bitcoin, just go to Visa, fire their whole anti-fog team, fire their other metrics teams and get rid of the customer service. And you've got Bitcoin, but it's on. faster. So like if you want to to replicate any of these, you know, useful networks with value, you have to, you have to add on these different things that the customers actually want. And therefore, you just become a very expensive PayPal. So hyperledger, it's not, because it's not a coin, it's not a Bitcoin alternative really, right? So is that sort of a software as a service thing where, you know, you would basically sell that to, let's say, consortium of

banks to do the settlement between them or can you run us to an example? Yeah, basically if you want to track a particular asset, you can design the, you could program it to be any particular asset. I don't want to say it's currency. Obviously, everyone talks about currency, but I think that the use cases that the team is primarily looking at right now is equities. And basically, again, I'm not saying that they will be adopted by lots and lots of banks. to be cool if they did, or something like it.

But the way the current system works with equity clearing or securities clearing and settlement is it takes several days, not because the banks hate each other and want to get lots of money, it's because there's hundreds of ledgers, DTC, a depository trust company. They're the ones who basically maintain the ledger in which all these other subledgers are based off of. And if there's a way to somehow allow the percolation process, the movement and title transfer to take place much faster, then you would obviously reduce the role of systemic domino effects and so forth. Again, I'm not saying hyperledger will be that,

but Bitcoin isn't even, there's no role for Bitcoin to do that. The 10-minute window, you know, that's just not even, I know that's faster than two to three days. People are like, yeah, let's clear it. But at the end of the day, you're reliant on anonymous miners And if you talk to securities or the big large banks involved with settlement, they don't want to trust anonymous miners. They want to be able to trust somebody else an actual entity. I think that's something that's really, really interesting that I feel like I've seen come up again and again, especially in the last few months.

Projects that view the decentralization and the anonymity of Bitcoin mining more as a liability than a, an advantage, which I find is really interesting. And it goes so much against the original idea of Bitcoin, I think. Which isn't necessarily a bad thing. I'm not, you know, I think it's quite true that in many use cases, you just can't sell Bitcoin to existing institutions because it's just too much, like, too hard to predict. There's no one to complain to. There's no room for error.

They can control it, right? So I understand it, but it's also, it's really, really far away, I think, for the original vision. Sure. You're shoeharning a certain product into all these universal clown cards, basically. That's the example I use is, like, clown cards can move. You can fit a lot of clowns in it, but it's not particularly safe or effective. And that's kind of what's happened with Bitcoin.

Everyone's just cobbling tons of stuff on Bitcoin. Or the example I used a couple months ago was like Superman. If you look at what Superman's powers were like in the 30s, very different than they are today. Like he could only jump really high. And he was changed to be able to fly because cartoonists didn't want to spend all day on the 20-minute cartoon having him jump. They wanted him to get to the place. And so that's kind of what happened with Bitcoin is it started out being a certain solution to a certain problem. And now it could cure cancer and end wars and do all this other stuff.

It's not going to. It's just creating overpromise and under-delivering. So how, because I played around with this a little bit. I installed the command line tools. So there's a server and a client. So in order to become a node, I guess you have to install the server on your system. I believe so.

You definitely need to get an SSL. Again, I'd like to talk to you about that, but I don't want to be seen pushing the product. I think the developers would be much better guests to talk than just the simple lowly advisor. But anyway, it's really easy to install, at least on a Mac it is, and you can create an asset with one line of code.

So it's a cool idea and definitely something that is interesting to. I mean, what I like about this is, you know, it's easy to get started, right? I mean, you just have like your lines of code here on this, on the homepage. You can install the command line tools and get started right away. Sure. It makes it easy for anybody to actually get their hands dirty. Yeah, absolutely. Sure, but don't you know, if you're supporting this, it's going to destroy,

if you're supporting anything but Bitcoin, it's going to destroy Bitcoin. One of the funny things about the Bitcoin maximalists is they have no review mirror of history. Like Mercedes-Benz, like Benz was the largest car company in 1890. It still exists, but the competition didn't destroy the whole automobile industry. Same thing with flight, same thing with like credit cards themselves. Diner's Club was the first credit card that came out like in 1950. And it was later acquired by Discover. Like, just because you're the first mover, just because you've invested a lot,

doesn't mean you're supporting the platform that will win. I mean, web crawler, Palm, Atari, Friendster. I mean, Palm was actually bought by HP. So, just because you're the first mover, you see this with Google. Google was not the first search engine. It was like the 15th. iPod was not the first MVP player. It was like the ninth.

I've written about this before. So, like, again, I'm not saying Hyperledger version one will be it. Maybe there'll be something else. But yeah, I think that competition is really good. We saw that with Linux itself. One of the first distributions was Slackware, came out in 1993. It still exists, even though there's hundreds of other distributions. There wasn't like this massive destruction of the industry.

It didn't just stop because of all this competition. So I think these maximalists should really look back at history to see, you know, empirically how competition helps and doesn't actually hinder. Yeah, I know. I think it's an interesting and a little bit strange argument we sometimes see, right? Personally, at least in my view, the idea that we should sort of rally behind and one thing. And at this point, just kind of unrealistic, right? Yeah, it's definitely unrealistic. Because there's so much going on.

It's open source. If it's useful, somebody's going to fork it. And how do you stop? And again, I have nothing against Blockstream. I think they're very well-intentioned. and fairly smart people out to create real value. But at the end of the day, how are you going to convince altcoin developers to get on your platform without providing them some kind of fund?

And like $21 million sounds like a lot of money, but there's like 10 altcoins that have market caps of like $10 million. Again, I'm not saying those are all liquid and so forth, but the idea is those developers have an incentive to continue building that product because they have money they can tap into and pay the developers or pay their own bills. Unless Blockstream does something similar, there's no way that they'll be a little bit on board their competitors effectively. I mean, why would you drop everything to go work with, build a chain, a side chain, when

you don't get paid for it? So I wish I'm good luck and I hope that they do create value and succeed, but I just don't see it from a business side. Yeah, no, I do think removing the ability to do crowd sales and create coins that way is a huge issue. It's a huge downside. I think, as Vitalik said, that's just something too good to pass up. But speaking of crowd sales, can you tell us a bit about your involvement in Melodic?

Because I think you're an old coin exchange, right, but also quite connected with the whole decentralized application and app coin space. Sure, sir. So, I mean, when we talk about scam coins, I have to listen to these guys all the time. We get emails or people send me messages on Skype. Hey, check out my client. And I have my own process of like, oh, who's a verifiable developer? And funnily enough, Satoshi probably wouldn't pass it because I want to see your face or I want to see your voice or at least somebody on your team do that.

And again, not to single out Satoshi, whoever he or they were. But yeah, we only list specific assets that have an actual community behind. it, some actual developers correspond at least on a regular basis, either to the public or to us, or to other exchanges, if it is. And if you look at the list, we've pretty much narrowed it down to basically the top 10, top 15 assets out there. That doesn't mean that they won't be delisted. That doesn't mean that they will succeed. Again, I don't own any asset. I'm not out there promoting any particular one. In fact, this is a slight tangent, but the reason you have these different assets being made in part is in why I think calling these protocols is incorrect. That's

not a good analogy. TCIP is not the equivalent analogy because look, when you have a distribution of special interests like we have with Bitcoin, like a certain amount of shareholders effectively that own the coins or the people that join, they're like, oh, this, I want to have that same amount of assets so they fork it. And then another people fork it. You see that with NXT switch to NEM and so like with Ripple to Stellar. And again, I'm not saying that one's going to be successful. or unsuccessful. But my point is, the reason these aren't protocols is because you don't have special interest in SMTP or HTTP forking it. There weren't 21 million internet packets ever just made and people just sat there and held on it, hoping that these internet packets

would somehow become worth so much that you could buy islands. It's like going to New York, going to the subway, and taking all those tokens and then bearing them underneath your bed and thinking, oh, yes, these tokens are going to be worth a lot. New York Subways is just going to make a bunch more. The utility is the actual network. Bitcoin, the actual utility is the network. It's not supposed to be the token. And I think that's why these guys who are so ideological with the money supply are missing the greater point of what the actual utility was created. It's a blockchain is the utility, not the coin. There's plenty of assets and coins out there and fiat currencies to look at. And I think Robert Sams on your show two weeks ago made a beautiful statement. It was a good hour

of discussion on this. And again, I'm not saying the alt support are actually going to be able to incorporate the ideas Robert suggested, but I think we'll continue to see these different forks and different crowd sales and so forth because people just want to either fund their own development that way or because they see something that's not being done in the market that they can try to provide. But I actually think that that idea of the limited supply and, you know, people buying into it and then it appreciating that much was absolutely, I don't think Bitcoin would ever have gotten to where it is without that, you know. So I think that incentivization is hugely important. And I actually think that's why also Robert Sam's proposal is so nice, is because

potentially you'd have, on the one hand, there's sort of a stable coin, but on the other hand, with that the senior shares part, you still have that exact same. speculative dynamic that you have with Bitcoin. And personally, I think that's a really, really powerful thing. So I think projects that leave that away, I mean, in some cases it can make sense, right? If you do like a B2B solution that you sell the banks and stuff, it probably doesn't make sense to have that.

But when you, especially when you reach a wide mass or giving that sort of incentivization, I think, is something really powerful. It may, but it also might attract gamblers. I think the funniest quote I saw about Reddit Bitcoin was looking at the comments that people make every day is like peering into the mind of people who are gambling addicts. You know, to the moon, what's the price, what's the price, what's the price, what's the price. And again, I'm not saying that Bitcoin would have failed. We can't know.

Unless we've like reverse history, we have no idea what an alternative universe in which, you know, senior share was integrated with Bitcoin originally. And that's not to make fun of Satoshi. Like, I, I'm not to, I don't think he had any idea that it wouldn't be used as an actual, like, modern currency. People would just hold it as an actual asset or commodity instead. I don't think he saw that. And I'm not saying that you can't have a successful project that uses something similar to a limited supply or semi-limited or however you come up with a dynamic supply. But, yeah, I mean, I, I, I,

I'm just saying empirically, what we've seen is, as you said, Roberts, Roberts examples have borne out, or at least his thesis is borne out more so than the hyper-Bitcoinization guys who are saying it's going to monetize and become millions of dollars and so forth. Maybe it will. I have doubts, though. Yeah, I mean, I actually wanted to get to that earlier, but somehow we skipped it. But when we had Gary Kielman on, just recently to talk about the State of Bitcoin report, one thing we touched on was the merchant growth and just sort of general adoption, right?

And you, I think someone else wrote a post on this, and I think you've been sort of quoting that on your blog, who tried to analyze the actual volumes, are not just a number of merchants that like BitPay and Coinbase have signed up, but actually the volume that they're doing. and can you just very briefly tell us about what this data showed about how merchant adoption and perhaps more so the actual usage as a payment system is developing? Sure, yeah. Okay, so again, for starters, to quote the white paper, the title of it was a peer-to-peer payment system and the abstract was about payments and the section one was about online commerce.

So the whole purpose of Bitcoin was to provide a payment system, but nobody uses it really for payments. And we know that for on-chain volume. And the guy who got me into Bitcoin, he yells at me all consistently for saying, I don't look at the data correctly. I have a new article. I sent you guys a draft. It'll be out in about a week or so. And one of the segments that I look at within this article is some data from Jorge Stolfi. He's a CS professor in Brazil.

and what he did is he took information from wallet explorer.com. Wallet Explorer basically identifies and docks as reused addresses. BitPay reuses addresses. We can see exactly how many Bitcoins they received. They received two different numbers. We would call wholesale and retail. Wholesale numbers would basically be large batches of Bitcoin coming from miners, miners selling to convert to fiat.

And the other ones is retail basically you know, you or me buying something online with like New A or Microsoft, one of the, I guess, BitPay suppliers or merchants. And if you add that up in aggregate, since it's all on chain, they only do like a thousand bitcoins a day. And they've been doing that for over a year. So like they may have, you know, they don't need public numbers, but we do have an idea publicly because it's on the blockchain what their actual numbers are. And it hasn't grown. And I know people get angry. Oh, I've spent, I've spent. Yeah, but you're, you know, you're marginal player, and we see the whole aggregate.

So there's no smoke and mirrors. We know exactly what's going on with them. Coinbase, too, you know, they publish an off-chain numbers, which is whatever their own internal merchant sales are, or maybe their vault movements. It's unclear exactly what they might be. And it's been flat, too. And this is not to say it won't take off or won't change,

but again, we need to look at who is the largest holders of Bitcoin. Who are these, you know, people with Bitcoin? In order to use Bitcoin, the network, you have to have these prepaid vouchers, like these collectible plastic figurines. That's basically how Bitcoin is treated by market participants. They treat them as these antique spoons that they don't want to get rid of. And that's rational. They all think it's going to go to become a lot of money. So the rational thing to do is to hold on to it.

It's not to spend it. If you spend it, you're not being rational economic actor. It's true. And we see that in practice. You know, 70, 80% of coins don't move for more than six months or so. And that's not to say it won't change, but again, if you want to pay for fees in the long run, it introduces all these other issues that didn't take place because Satoshi assumed that fees would take over senior shares. If people aren't spending it, then that's not happening.

And we see this time, time again, with the different charts. Hopefully the audience will have a chance to look at the article in a week or so. Yeah, we'll definitely, well, we'll link to your blog in the show notes so people can check that out and then they can find the article there. Well, we're sort of towards the end of a show, but there's one thing you forwarded us in the email that was about something I hadn't heard about, and I thought it sounded totally crazy, and I talked about Sebastian before the show knew about it was like, really? So this thing is called trusted transparency. Tim, can you share what that is? Sure. So there's this effort by specific miners like Bitfury in Spontullis.

The idea is they want to create trusted nodes effectively with Bitcoin. And I talked to, Greg Maxels talked about it. He calls it smart property. I met him, I guess, seven months ago at a block stream events. And the original idea was, hey, you know, what happens if specific hardware is being used to attack the network? Wouldn't it be neat if we could just, you know, get rid of that? And so you kind of a remote kill switch in effect. But even before that, before that idea came up, the idea was, we know these data warehouses exist.

And that probably, the reasons data warehousing for mining exists is because it's so much more efficient to scale that way for admin and operational expenses. which become the biggest costs for these mining facilities. The CAPEX actually becomes less. Anyways, the idea is, well, what if somebody broke into one of these facilities and started tampering with the hardware? Wouldn't it be neat if you could terminate that hardware with a private key? And the only way you could use that hardware is with a private key. So, anyway, so you've had this evolution that started with being able to terminate stolen hardware

to terminate 51% attacks to where now basically the manufacturer, are working with core devs to basically, it exists. Each manufacturer basically has their own proof of work fork, if you will, it allows them to run Bitcoin or be terminated. That's hardware. So, like, for example, if Bit Furious hardware was attacking the network, you could send a kill signal to terminate that specific hardware. And the reason this is important is because of side chains.

Side chains, if it's free to mine side chains, like we've seen with, to do merge mining, then it's also free to attack it. So the only way to secure these is to effectively, you know, building kill switches saying, hey, if you want to participate in the Bitcoin network, you're also going to have a kill switch in it. They obviously have good intentions. I'm not saying they don't, but it creates a trusted scenario. That's what they call it trusted transparency. And again, I'm not saying that they won't get minors on board,

but from at least the conversations I've had with some non-bit Fury, non-spontoolis, people, they're not interested in integrating because it introduces backdoors into their own hardware. they'd rather not have people have. So you basically have two blockchains, the Bitcoin blockchain, and then the private key for the hardware. And now you have to secure both. So it's much easier to make these other guys vulnerable

with this private key now. All you have to do is get on an airplane, find these core developers, or find these people that do this mining manufacturing, and just beat them with a wrench or, you know, blackmail. There's many easier single points of failure and vulnerabilities to that model than it was with, for example,

pre-smart property mining. Yeah, I know. I mean, this just seems so crazy to me, you know, because of course, on a whole number of levels, first of all, you do trust in Bitfury, for example, or whoever, you know, manufactured whoever holds those keys. And another risk that then arises knows that a government could come and, like, extort those people.

It just seems to be, it seems to grow really strongly against, the whole idea of Bitcoin. So it's really, it's bizarre to me. And it seems to me that if sidechains do require that to work, it's sort of a roundabout argument, right? You say like, oh, you want to keep Bitcoin alive because it's a centralized thing and everything should be on Bitcoin

because, you know, that's the future and believe in Bitcoin. But then you also have to like totally undermine the idea of having a purely centralized cryptocurrency or a decentralized cryptocurrency with something like that, by controlling the hardware, essentially. It's really absolutely crazy to me. Well, ironically, you'd recreate the very systems that these maximalists dislike,

which is trusted validated nodes running from either ripple or even hyperledger. I mean, we know where the nodes are, or we have an idea who runs the nodes. And now with Bitcoin, if this comes to pass, again, I'm not saying it will. I'm just saying that this is something that they're quietly pushing. then you end up with the very system that they dislike, but cost, you know, $500 million to maintain. Exactly, right? I mean, because you don't need that proof of work anymore because there's no civil so that everyone knows each other. Yeah, no, exactly, right?

I mean, it's just so absurd because you can just, you really can replace it with a much, much more efficient system if you should get rid of all the mining and stuff. Sure. This is not, by the way, anti-proof of work, anti-Bitcoin. Like, Pyranova, my understanding, has a different way, a different approach. I'm not pumping them. I think that it'd be interesting in a couple months they're supposed to announce their look at this space. They did a different approach on Blockchew. Maybe they won't work too. I don't know. Dave Hudson, he works with them. And I know we're about almost at a time. Do we have a moment to talk about remittance at all? Sure.

Yeah, so I know this is one thing that you and I were going to try and talk about. And again, in the community, for whatever reason, has no idea of how remittances actually work. Everyone thinks that the Western Union and Moneygram have these like 2,000% margins and stuff like that. At the end of the day, their costs are largely two things. And they have to file reports quarterly, you know, their 10K report. The two costs that they have are compliance in the physical network. And not just a physical network of the stores and people, but like commissions to the agents to help out with the cash network. Because, again, developing countries, they don't all use U.S. dollars or euros or Mb.

They have a local currency. And the same thing with Bitcoin, like, there are no merchants in these countries. Like in Kenya, there are, you know, there's not 5, 10, 100,000 Bitcoin merchants. You go to coin map and you see that. So they have to cash out somehow. So Bitcoin doesn't solve a problem Western Union has, and Western Union doesn't have a problem with the Bitcoin solves. Because Bitcoin, in this instance, is just a transmission mechanism. And Western Union already has a secure transmission.

Nobody steals money from Western Union's wire, just like nobody steals money from Visa's wire. It's always these edges. And so with the cost of remittance, again, when you actually look at how much it costs to move to Kenya, it's still cheaper to use Western Union, for example, than Bit Pesa. Maybe that will change, but again, the cost structure is going to be the same because you're going to have to deal with compliance if you have a physical network. And if you have a physical network, then you have to pay the agents to go out there and help people cash in and cash out. So, yeah, again, I think that the animosity towards Western Union, the CIA, he was actually, he did an interview with CoinDes.

He's like, hey, I have some Neptune miners on mining. I understand how Bitcoin is. It doesn't solve a problem for us for the last mile, this agent network. Maybe somebody will, like 37 coins plus coins. But at the end of the day, you know, you might as well just use like ripple or some other network if you're having to do with identities and stuff like that. So again, I'm not saying that you can't squeeze margins somewhere, but I think that the animos. and the anger towards remittance companies is largely unfounded. They provide a value.

They provide a utility. If you think you could do better, then get in line with a bunch of other startups like transfer-wise or get in line with 1,400 other payment companies, startups. If you go to angel this, there's like 1,475 payment startups out there. So Bitcoin is not being developed in a vacuum. The remittance side is not being built in a vacuum. And I think unless we want to end up, like, Harold Camping,

he was this guy in 2011 who promised that the world was going to end and he had these followers and it didn't end. And so, you know, the followers became disenchanted. I think that, you know, if we're selling fear or we're selling anger, the community is going to be largely disappointed and maybe even burn out because these promises won't be up kept. I think you're totally right in many of these points, right? I mean, we see, for example, started using a company called currency fair, right,

for the, like, from Switzerland to here, et cetera. And it's really, really cheap already, right? So it's hard, even if you have, like, perfect Bitcoin on both side, perfect liquidity, really, it's just marginal, any benefit you can get out of there. And yeah, with remittances, right, so even if Western Union did use Bitcoin, maybe it was really liquid on the back end. But they already have mechanisms for moving back.

Maybe if they accepted Bitcoins in and out, okay, sure, but they don't necessarily need those rails. They already have perfectly secure rails that nobody hacks. I mean, you may be able. I mean, I don't know exactly. I was meeting with a friend the other day who was actually looking at starting a room in his company, but not Bitcoin, right? It's a traditional, and they do have some costs.

It may be possible to be like, you know, marginally. Maybe they could save, like, at some point, not right now, like 0.2% or something like that by using cryptocurrencies on the back end, you know, where the rest stays the same. But even that, it's a hard sell to make, and we're far away from that. and the sort of immediate promise, it's difficult, right? Maybe in some niche cases it does work better, but for the most part, it's at least not as hard, it's not as easy and obvious in the immediate market for Bitcoin as we think.

And one thing I found was kind of interesting when I was reading about Western Union a while ago was just how often they've changed their business, no? Because they used to do like telegrams, And they've really totally reinvented themselves as a company a number of times. And they're really, really old. So, you know, I mean, I don't know if they've retained that ability to transform and leave the old behind and start new. But at least they have done so in the past.

But I think to some extent, you know, what you're talking about is also, so what Tim was talking about, it has to do with this ideological component to Bitcoin. which is that, you know, you can send money to anywhere around the world instantly at a low cost. And, you know, when you think of that in a practical sense, well, you're most obviously going to go, you know, after a company like Western Union because, you know, they take huge margins on, well, you know, one could argue huge margins on remittance payments to people who will need the money. So I can see also like how on the other side, you know, you know, one could argue that Western. Union model, the Rimmons model, does need to change. And you know, much like the long distance market was completely, the phone market was completely disrupted and we can now call everywhere around the world pretty much for free.

I mean, this is what we're doing right now. Doing this 20 years ago would have cost, I don't know how much to do. But, you know, I think that as a society, we should be sort of tending towards that in all areas. Yeah, I mean, I think obviously it is happening. I mean, I do think that, I mean, I do think the future ruins is not going to be Western Union, right? Like, I think in the future, you will have this cryptocurrencies, I mean, or something like that. It could also be ripple or something else maybe, right? That works in a different way.

But it will move in that way. but it's just, I guess, Tim's point, if I'm correct here, is that just right now the reality is different, right? Because the real costs are not with the value transfer per se, but with the distribution and that does sort of stuff. Maintaining this huge agent network, which is obviously very expensive. And you don't just get rid of the need for that if you have Bitcoin. But Bitcoin, come on, to the moon.

I mean, it's better. There's at least 250 mobile payment platforms out there that exist in different countries. I believe there's like 80 countries in Africa that use at least one of them. And they're mostly interoperable there. They're not interoperable there. And that's not because of technology. It's largely because of taxes and transaction fees that each country wants to get a hold of. And that's not going to disappear just because you use Bitcoin.

I know everyone's like, oh, you get around that. But no, if you run an actual business with a storefront with, you know, actual employees, you are identifiable. You know, the cops and the officials will come and ask you, hey, where are your papers? So all you're going to do is end up absorbing the same cost structure if you have to do the same exact thing. And again, Bitcoin was designed to get around trusted third parties, but if people want to continue to use it the way they're trying to, you're going to have to build these trusted third parties. So you have this, like, funny kind of seesaw. Like everyone wants to create value, but when they end up doing is recreate the same middleman

same intermediaries and they end up with the same kind of problems except this time the marginal cost is much higher in the long run because of the way the block awards and fees work okay well Tim thanks so much for joining us today it was really interesting talking to you hearing some of your views now we will have in the share notes links to all the things you've talked about you know from hyperlatchity article coming up and of course you block also to those who want to check it out right now it's called off numbers dot com so oaf 1F of Numbers.com. You know, you have a lot of nice articles and some books, too, on Bitcoin.

So I think one is on smart contracts. Do you have another one, too, you know? Hey, thanks for having me. I appreciate it. And I appreciate your patience and not yelling and trying to burn me yet. Maybe you'll maybe you're outside my door. Maybe you'll kick it down. Yeah.

And yeah, thanks for your work. You know, great work you're doing. Keep on writing. and keep on your work in raising the important issues that you have to face and make this makes this all work and they have to be have to be solved yeah and we will be back next week if you want to support the show you know please follow us on Twitter at episode of BTC or leave us an iTunes review or third thing you can do is also subscribe to a YouTube channel so you hear about the new shows and you can

also see when we do the live hangouts. Thanks so much and we'll be about next week.