Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Tom Cruise Fights to Protect the Blockchain

Episode Date: January 19, 2014

Topics covered in this episode: A host of new businesses start accepting Bitcoin Coinye Coin gets shut down The FBI may sell Bitcoins seized from Silk Road Skyhook announces a sub-$1000 Bitcoin ATM French Senate holds Bitcoin hearings Ethereum: what it is and what it means for the future of Bitcoin This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/003

Welcome to Epicenter Bitcoin, Episode 3, recorded January 18th, 2014. Tom Cruise fights to protect the blockchain. On today's show, we're talking about a whole host of new businesses accepting Bitcoin and wonder whether Bitcoin is about to break through to the mainstream. We're discussing the death of Konyi coin and Mr. West's rather underdeveloped sense of humor. We're talking Silk Road in how the U.S. government is about to become a major Bitcoin trader. We're also revisiting Bitcoin ATM and look into Skyhook, a new cheap and open-source Bitcoin

ATM. Then there's the French Senate who held new hearings on Bitcoin, good signs from there. And finally, Ethereum, a new old coin and protocol layer that aims to revolutionize the future of Bitcoin. If you like the work we're doing and you like to support the show, please go to EpicenterBitcoin.com slash tips for our tipping address. Welcome to the Epicenter Bitcoin. We are super excited to be on our third podcast this week.

My name is Brian Fabian Crane. I'm a Bitcoin entrepreneur in Berlin. I run the Bitcoin startups group here. And I've been spending a lot of time on this podcast. I'm very excited to be here. And I'm Sebastian Kutu. I'm a Canadian developer and user experience designer. and I'm based in Lille, France.

And I'm also very excited to be on our third episode. Things are moving along quite nicely. Yeah, so how's your week been, Sebastian? I've been sick all week. Oh, no. So, excuse my raspy voice. Yeah, well, I hope you're getting better and you're overcoming the pains of winter. How's your week been?

Yeah, it's been good, yeah. We've had the fourth meetup of the Bitcoin Startups Berlin Group here on Tuesday, and it's been quite dramatic how the group has grown. We started in, I think, last October, with about 35 people, and we moved to a bigger space now, and we've had 70 people come to the last meetup, and it's, yeah, it's quite amazing. It's lots of fun to see how fast is growing. That's good news.

What kind of people are you attracting? Like what kind of backgrounds or? Yeah, that's one of the challenges running this group is because I think there's a really diverse group of people. So you have people who have no clue about Bitcoin. We do it at a co-working space called Beto House, which is very well known in Berlin. I think it's like one of their first co-working spaces. and as kind of a leader in the co-working space. So a lot of people just come from there because they heard about it,

the internal agenda. And then we kind of have our regulars who are more into Bitcoin, you know, a lot of Bitcoin developers. So there's really diverse background, which is also challenging because some people have no clue. And then other people do these technical talks about, you know, one guy about he's doing an SMS wallet and he was talking about how he does some of the back end. And so that's actually a challenge to have this really wide difference in backgrounds.

Yeah, but I mean, it's a challenge, but I think it's also an opportunity, right, to, you know, attract different types of people and get different perspectives. Yeah, absolutely. I mean, I think it's great to coming and this is really a great chance for us to introduce them to Bitcoin. But I think what we, well, we need to do, group is to be more friendly to beginners. So they have some space there where they can learn about what is Bitcoin, how it works. And at the same time, we also need to provide a space for people to explore more advanced topics. People really work with Bitcoin.

So I think to do both, you know, to do both within one made-up group is kind of challenging. So I think we'll have to find a way to do that. Oh, great. I announced my meetup yesterday, so it's going to be taking place on the 6th of February at La Machine, which is a bar here in Lille that accepts Bitcoin. They're kind of a geek bar. They do merry-a-card tournaments and things like that, so they attract kind of a technically knowledgeable or technically savvy clientele. For now, I don't have any other speakers other than myself. So if you're in France or in Belgium and you're listening to this show and you're a Bitcoin entrepreneur or an economist or just even an enthusiast and you'd like to do a talk at the Bitcoin

meetup, even if it's, even if it's in English, please get in touch with me and I'll see what we can do about that. Cool. Well, I'll be, I'm sure you'll see a lot of growth and hopefully I can make it to your meetup too at some point. Yeah, I'd love to make it to your meetup. as well. Should we get started? Absolutely. We got lots to cover today. Yeah, indeed. Yeah. So I'm going to start off just briefly talking kind of what's been going on with merchant acceptance. Because, you know, last week we had overstock.com. I think it was last week that they started accepting Bitcoin and they had their first day, I think $124,000 worth of, you know, $124,000 worth of, Bitcoin purchases, which was like 4% of their revenues, which is really a big success.

And they were all over the news. They got a lot of kind of free publicity. And it seems, you know, from all the news we've seen that this has kind of led to an acceleration of Bitcoin adoption. We've now seen a whole bunch of really diverse businesses and companies this week announcing that they're accepting Bitcoin. For example, there was this criminal lawyer in Holland. There was a private jet company, so you can basically, you know, rent a Lisa Chet, Dutch helicopter company, a big Canadian e-commerce company called Coastal Contacts.

They sell, like, glasses and contact lenses and have, you know, $200 million dollars of yearly revenue, so it's a big company. there's a flight school in the UK it's interesting there's actually a lot it seems to be a lot of chat and flight and flying schools i don't know where that comes from but somehow it's big one seems to be popular in that area probably because we're moving large amounts of cash yeah i guess so i don't yeah i don't know and uh maybe most interestingly there's sacramento kings which is an NBA team. Now, that's interesting because they're going about it very differently. So they're, I think they're also using BitPay, which is, you know, a very popular Bitcoin payment processor.

But unlike most companies, especially larger companies that start accepting Bitcoin, they're actually going to keep the Bitcoins. So they're... I think that is. I think they said that, you know, expect the price of Bitcoin to increase, so they want to hold on to it because they think it makes sense in the long term. And that's, you know, that's pretty cool. So they're using Bitcoin payments as an investment strategy, I guess. I guess you could say it like that. I think also

one important point here is that the team is owned by one guy. So he, of course, can make that kind of decision. If it was a public company, it would be, I think it would be much more difficult for the CEO to do something like that because then something goes wrong. Right. You know, everybody's going to yell at you. What's also cool is that they're going to accept Bitcoin for everything, which also includes purchases in the stadium.

So, you know, hot dogs and jerseys and everything. So that's pretty significant decision because they're going to have to train their staff. They're going to have to set up some point of sales system, maybe give their staff tablets, Android tablets and teach them about Bitcoin and they'll have to kind of also give it a prominent visibility in the stadium. So really cool. I'm, well, I mean, I look at all these stories and to me, it's a good indication that Bitcoin is gaining visibility and gaining notoriety. And I think this will do so much to help that notoriety grow. Like just the Sacramento Kings accepting it.

I mean, it's going to be seen by all these people that go to Sacramento Kings games and they're going to see Bitcoin logos and they're going to be wondering what is this if they don't want to vote it. So I think that, and obviously, obviously, we're stock.com accepting it. I think this kind of follows, falls into what we were talking about last week, I think it was where over the next two or three months, we're going to see a lot of adoption. I think that in February or March, we're going to see adoption rise significantly, like all these people that have been hearing about it over the last two, three months in the news with all that's been happening with regulation. I think we're getting ready for a big spike in use in adoption in the next few months.

Yeah, I absolutely agree. And it's still important to recognize that in terms of merchant adoption, like real businesses and even online businesses except in Bitcoin, this is still so much at the beginning. There's a tiny, tiny number. You know, I think there are a lot more. There are quite a few people interested in it. You know, a lot of developers interested in it.

and people buying Bitcoin, et cetera. But in terms of Bitcoin as a payment system, you can use credit card or use Bitcoin, et cetera, this is so much at the beginning. And it seems to be really accelerating now. So it would be really exciting to see if that continues. I think if somebody right now, if somebody wants to get into consulting companies

on how to start accepting Bitcoin would be a very good move for anybody to get into at this point. Yeah, it could be. Yeah, totally. I thought, I mean, I didn't write these down, but I thought I saw also some other merchants except Bitcoin this week. Or they're not?

Yeah, it's certainly possible. I mean, I might have missed some. So, do you want to move on to maybe the next topic? Or do you have anything else to say about this one? Yeah, I think you were going to tell us about the coin-eater. Yeah. So we spoke about this last week. So this is ongoing.

So coinier is now dead. If you go to the website, which is coinet. coinic coin. So co. coin.com. Co.com.com. Co.com. Right.

Very sad news. Yeah. I mean, it just goes to show that sometimes you, you fight the law and the law wins. So last week when we spoke about coin, the coinier coin, We said that what happens is that we, they, they, they, they, they, they see a cease and desist letter from, uh, Kanye West's lawyers. That cease and desist letter apparently worked because they, the dev team stopped the website early this week.

So they put on the website, Coignee is dead. You win Kanye. If you go to the website now, it says, Kanye is dead and they're still coming. So there's in fact now a lawsuit. So it appears that Kanye West lawyers are taking a further legal action against the creators. There's a 124-page lawsuit that accuses zero-day coins, coinageexchange.com, new exchange, and also some Jane Doe and John Doe's, because we still don't know who the creators of this coin are. And they also cite Amazon, because Amazon is hosting a site of willful trademark infringement,

unfair competition, dilution, and rights of publicity violation amongst a score of other blatant statutory and common law violations. So what does this mean? So what's happening now is that the lawsuit was filed in Manhattan, and a federal court judge is trying to get, I guess, Amazon to hand over the identity of the creators, which they're refusing to do so. Apparently, now what has been circulating, I think there's an article in Ars Technica, where the journalist spoke with the alleged creators on IRC,

Apparently, they're based in Europe. So I'm not sure if Kony OS lawyers are going to be able to go after them. And if they're in Europe, at least it would be a lot more complicated. But the judge says that it's likely that their identity will be unmasked soon and that they're going to be able to force Amazon to give up their identities. It's pretty absurd, the kind of stir he's making about this thing. Oh, definitely. I mean, I guess it just goes to show that this guy takes himself way too seriously.

I don't know Kanye West very much. I don't listen to his music. But the impression that I get from this character is that he doesn't have much of a sense of humor and he takes himself way too seriously. Yeah, I think he can use some improvement in that regard. Maybe he should attend a motivational speech or something like that. I'm also, it's interesting to me that they're giving up in this way because it seems to me, you know, why couldn't they just push this thing to GitHub and, you know, someone else launches it or, you know, they, I don't know, they do it through tour or something. It seems because cryptocurrencies are a decentralized thing.

It should be possible for this thing to be launched without there being anyone that they can really blame this on. Right. Well, it's from the Ars Technic article that I read, it seemed like they wanted to push it forward. So they were trying to find ways that they could revive the currency. And in fact, they're trying to, well, they put it up for sale. So for 1.5 bitcoins, you can get, I guess, all the stuff. source code and they basically hand over the project to you so you can buy it for about $1,200. Perhaps that would be a good estimate, though.

I don't know. Since there's a lawsuit and everything, I don't know if there's any real interest in buying coin yet now. I mean, and also, I mean, all the people that had purchased coin coins on exchanges lost their money because the coin's debt. So. Oh, was it already in an exchange? Oh, yeah. All these exchanges, are being also sued, right? So zero-day coins, coin exchange, and N-W-C-H-G.com, which I think is also an exchange. But so is it still, because if it was released, right, and people downloaded to client, they should still be able to mine it. And is that still happening? Can you still do

conier transactions? I think you're right. I mean, I think that you probably still mine it, But no exchanges are accepting it anymore, I mean, or trading it. All the exchanges stop, sorry. All the exchanges stopped trading since the lawsuit. I guess that's interesting, again, you know, if you come back to kind of the nature of cryptocurrencies and then being decentralized, is that this is a pressure point, no, because that's somewhere where it's centralized and that's somewhere where they can come in and say, no, this violates some trademarks and copyright, you know, stop this.

And, you know, they actually have to do it because they have an office and they can be found and they can be sued. Yeah. What happens then? I mean, say this, say the currency goes on, right? Say we never find the creators and the currency lives on and it's traded on forms. I don't know. I mean, like there's no exchange, but people are still trading it or are trying.

trading it through local bitcoins, what type services? Can there be legal action against those people that are trading this coin? Right. Because it's decentralized. Yeah, he could probably try. I don't know if that would make any sense. If there's a significant number of people, you know, because the cost of going after them will be just absurd.

But yeah, it will be, I'm sure we'll see a lot more cases like that. I mean, on last week you mentioned this coin gen where you can create your own cryptocurrency. And if you look at the names of the things that have been created, there are all kinds of, you know, Ron Paul coin and a lot of other coins that quite obviously use someone else's name or brand. And it would be interesting to see if there are more, you know, more, you know, more common. companies that will try to go after these people. This is not the first time this is up.

And I think I read somewhere also that Chuck Norris, there was a Norris corn. And Chuck Norris also sent cease and desest letters to those people who created it. And that coin died as well. Yeah, yeah. I think I saw that so much too. So, like, to me, if you wanted to sue someone for creating a meme. So I don't know, maybe like say tomorrow, somebody posts. a meme of Kanye West

and it becomes viral and people start posting all over the internet can Kanye West then sue the people who created it because it's completely centralized as well I mean it's just people using using his photo I don't know this is so absurd

yeah I totally agree with you I'm also really curious and I don't know anything about the legal side of this but I'm really curious if he would actually have had a chance of winning this lawsuit. I guess another question from the sides of the creators. There are two things really. One is, are you in the right?

Would you win this lawsuit? And the other is, you know, even if you would win, or even if you were to win, do you want to go to all these lengths like, you know, higher lawyer, etc.? Because it might not make sense to do that, regardless of whether it was legal what you did. So I think it might just be the threat, you know, of all this time wasted, this money wasted, that made them shut down.

Yeah. Well, it seems like this shouldn't be illegal. It just doesn't make sense to me. So this is what the lawsuit sets off. Although defendants could have chosen any name for the cryptocurrency, they deliberately chose to trade upon the goodwill associated with Mr. West by adopting names that are admitted plays on his name. Mr. West has been inextricably tied to the defendant's cryptocurrency

as practically every online article and blog post about the Coinier West currency mentions Mr. West and or displays a photograph of Mr. West. So this is what they're basing their lawsuit on. They're basing their lawsuit on the fact that people may be fooled into thinking that Kanye West created this coinware. Obviously, nobody thinks Kanye West created this coin. coin, especially after they changed the, uh, they changed the logo to, uh, the half man, half fish hybrid wearing sunglasses.

Yeah. Well, yeah, I mean, in the end, this was, it was kind of a joke in the first place. So yeah, it doesn't matter too much. Right. I think. Well, I, I mean, we should put this, uh, topic to rest. Yeah. Let's, let's bury coinier coins, uh, you know,

Yeah. All right. So maybe we'll talk about Silk Road now. Yeah, so Silk Road was a big topic right before we started this podcast. So we've never talked about it. And it was a few months ago. Now, Silk Road for those people who don't know, Silk Road was kind of like an eBay where you could buy all kinds of things,

but primarily you could buy drugs there. Yeah. This is where Bitcoin probably gets most of its notoriety with the general public. Yeah, that's right. So a circle was a hidden service on Tor. So Tor is this kind of a routing network that encrypts. So you can use Tor for two things. One, you can be anonymous.

So you can serve the web anonymously because your traffic gets routed through different nodes and it gets encrypted. So nobody knows who you are. where you're coming from. But the other thing is there are also websites that you can only access if we go through that network and they're hidden. So nobody knows where their servers are. So this is great for websites that don't want to be shut down. And so obviously, in the kind of eBay for drugs, would be shut down if they could find the server. But because it was a hidden service on tour, nobody was able to find the server. So Syfurt was operating for two years. and they had to have some way of accepting payments.

And the only way to do this was Bitcoin. So they've been accepting Bitcoin since the very start. And when they started in 2011, Bitcoin was very small. And there was no merchant adoption. So at the time, Silk Growth was very important for Bitcoin. I think it was a lot of the demand for Bitcoin came from Silk Growth. A lot of the attention was because of Silk Road. I think there was an article in the word or in some publication at the time that got a ton of attention about Silk Road.

And that's that caused the kind of first price bike. And so in last October, the FBI found the guy who started Silk Road. It's a guy named Ross Albrecht. They arrested him in San Francisco. And they also seized two Bitcoin wallets. All right. Well, they seized kind of two different Bitcoin, I'd say sort of funds. So one was all the funds of the users of Silk Road.

So if you used Silk Road and you wanted to buy drugs or if you were a seller there, you had a kind of a web wallet hosted by Silk Road. So you would have to transfer Bitcoins into that way wallet in order to make a purchase there. Or if you sold something, you would get the Bitcoins to your red wallet. So that was close to 30,000 Bitcoins that the FBI ceased that way. And the other thing they ceased was Albrecht's personal funds. So he was operating, so growth for two years. And he made a lot of money that way because he got a commission.

I don't remember how much it was, but maybe like, yeah, I don't quite remember. But he, the wallet they cease from him has like 144,000 bitcoins. And I read somewhere that people assume he might have another 300,000. So it's not clear how much he has in total, but he definitely has that much. And they cease that from him too. That's a lot of Bitcoin. A lot of Bitcoins, yeah. So I mean, the 29,000, you know, that's about $25 million now.

His personal wallet with the profits he made through these two years is $120 million roughly. And he may have another $300 million or something. Of course, at the time, you know, his profits were a lot less in dollar terms. So most of that money he made through the appreciation of Bitcoin. Because, you know, in 2011, if you made on a $1,000 purchase, maybe that was, you know, 300 bitcoins or something. And he made, he made 10% of that. That's like maybe $30,000 now with one purchase, one sale through his website. I'm interested in, I'm thinking about this, like, okay, so the FBI arrested him.

How did they seize these Bitcoin wallets? I mean, did you just have them laying around on a computer? Yeah, that's a great question. So I think there was a lot of confusion about that, whether they were actually able to access them, but I think they were because I actually looked into that again before the show and they were transferred. So there was a big transaction for these amounts,

and so they transferred it to another wallet. The FBI transferred it to another wallet, is what you're saying. Yeah, so they were, but there's still this suspicion that maybe he has a lot more, and we don't know where they are, and they might not have access to it, because it's some encrypted somewhere. We just don't know. It certainly possibly has more, and the FBI would have no clue. Because we know the total turnover of the site, I think, was something like,

or the total revenues generated by the side was 600,000. 50,000 Bitcoins or something like that. And of course, you don't know how much his expenses were and how much of that is left, but probably most of it he didn't spend. Yeah, so the news, now onto the news part, a judge basically signed off that the first part. So all the users fund that were held by growth can be sold now. So they will be sold in the near future. And I think the standard way to do this is through.

auction. So they may be auctioned off. I don't know how that would happen. It's interesting to think about it, you know. I don't know if you can show up somewhere in New York in some court or and then you can like bid on the Bitcoin. No, they'll do a Sutherby's auction. Yeah, exactly. Yeah. Yeah, it's, it's funny. It's interesting, you know. This is how stuff that gets seized usually is sold right through auction. They auction it off. Yeah, I think so. I think that's a standard way.

So I don't know if that's what they do here or if they'll have a more intelligent way of going about it. So, yeah, I don't know. And of course, it's quite a substantial amount. I mean, if we just dump 30,000 bitcoins on exchanges, you know, that would probably cause a very significant price drop. And not to talk about 144,000 bitcoins that he has himself. But there, his lawyers basically have moved to block the sale in that they've said, you know, he said, these are my bitcoins. So now they're going to have to wait until he's convicted.

So that may take. I don't know how long, but I guess a while. So could you just elaborate on what happens if, these bitcoins get unloaded onto an exchange? Yeah, I mean, I think there would just be tons of sell orders and, you know, all the, all the people who have buy orders, which are kind of like trying to buy bitcoins, you know, they will buy some from, from this pool. And I guess the danger would be then that there would just be a lot more people, you know,

this would just overwhelm all the people who are trying to buy bitcoins and then, you know, this might cost the price to drop. Would an auction, like say they get auctioned off and so they're worth 120 million now. Let's say they get auctioned off and they're sold at 80 million. How would that affect Bitcoin price? How may that affect Bitcoin price? I guess that depends on what the people would do who bought them. So if they would buy them at an auction for 80 million in the hope that they, you know,

just sell them on on the exchange for some profit, then, you know, it might have a similar effect. I mean, in general, if you want to buy a large amount of Bitcoin or you want to sell a large amount of Bitcoin, or if you look at these investment funds that are now moving into Bitcoin, I think they're trying to do those transactions off the exchanges. So they're never on the order books. They'll try to find some people who have large Bitcoin holdings and buy them directly. So that way they can, you know, maybe take the current Bitcoin price on an exchange and do that transaction. They don't have to go in there and try to buy them at the exchange price because that wouldn't work.

If you try to come in and buy $20 million worth of Bitcoin at the current BitSlam price, you would, you know, the price would increase dramatically immediately. So the intelligent way for them to do this. would be to, you know, to maybe talk to second market, some of these Bitcoin investment funds. So try to sell them that way. I don't know if they're, I don't know if they have some kind of rules on how they have to go about selling assets they seize. So I don't know if they're allowed to do that or if they will do that. But that would definitely be their way to, for them to get the best price, I think.

I think that maybe we'll start seeing governments getting into selling Bitcoin more and more as they get seized in drug trafficking and illegal activity. Yeah, but I think that's one funny, interesting way of looking at it is that the U.S. government is getting into Bitcoin trading now. Yeah. Perhaps we'll see them open their own exchange, you know, that that might be a... Yeah, they have a second market exchange for seizures. Yeah.

All right, so let's move on to the next topic. So the next story is about this new Bitcoin ATM, which is coming out, well, which I guess was released this week in private beta. So it's called the Skyhook open source ATM. So it's a new competitor to the Lama Sue and Robo coin ATMs, which can cost upwards of $20,000. So the difference with this ATM is that it costs under $1,000. and it's open source. For now, I haven't seen any... The robocoon costs 20,000.

Right. LaMousseau is 5,000. Right. So this kind of brings a new competitor onto the market, which is very affordable and that you can, in fact, build yourself. So this new ATM, like I said, it's called Skyhook.

It's built by a guy named John Hannes, who says he got the idea when he was trying to buy a Bitcoin ATM and I thought that it was kind of expensive. And he got into, he started research, doing a bit of research, and, well, discovered that it was easier than he thought to create one. So he posted a video on YouTube where he demonstrates how this works, and it's relatively

easy. I mean, the video lasts a minute and a half, and he spends, so he says, okay, so here's how it works. He's got a Bitcoin address QR code. He flashes the QR code on a built-in camera. He then accepts, confirms the address, and then he puts in US dollars. in the bill feeder and accepts the purchase and that's it. It takes 30 seconds.

20, 20, 23 seconds. It's super quick. So the, not in the video, but in an article that I read, he points out that the machine is made from, I mean, the screen and the camera is an Nexus 7 tablet. It's tethered to a raspberry pie, which is a small handheld, like, portable computer. Like, it's about the size of a pack of cigarettes. So this is really interesting because it just. just goes to show that, well, people are doing creative things. Like, I appreciate the kind of doing yourself aspect of this story.

And just goes to show how easy it is to, you know, get these kind of things started. And also, I mean, it may introduce Bitcoin ATMs in places where we wouldn't expect to see them. So maybe, you know, cafes or corner stores will start doing Bitcoin trading. I mean, we're selling Bitcoin through these machines. Yeah. So I think I saw, I think he's going to sell it, right, for $1,000 or like $999 or something. Right. And then he, but he's also open sourcing the software and, you know, how you build it.

Right. And I saw on CoinDesk, they looked into how much that would cost. And they said, like, you know, let's say you take a bit of a cheaper tablet. And so he, on CoinDest, they estimated that you could build this thing for. 150 pounds or let's say $200. Really? Now, I guess the question is security. So he points out

that you need to hook this up through Ethernet to prevent men in the middle attacks. There's some security also. Like if the machine gets turned off, you've got to enter a password. It can also be bolted to a counter or something like that so that you can't take off with it and all the money that's inside. So I guess it's a question of security that needs to be further looked into. But, I mean, I think that there's a potential market for this type of machine, this low-cost

type of machine that, I mean, we could see potentially who could be in the market for this, corner stores, bakeries. Yeah, I mean, I totally agree. I mean, I think the secure, if you look at it, it doesn't look secure. Well, but even if you look at the Lamassu, I was like, can you just take this thing away? And I talked to the Lamassu guys, and they were pretty convincing that it's actually quite secure. I mean, okay, this is even much smaller than a Lamassi. But you could put this in a cafe or something like that.

And you would, maybe you could do a transaction limit. So you'd say, you know, only up to $100 worth of Bitcoin per transaction. and then if you empty it every day and, you know, it's in an intended area, this will be safe enough. Yeah, I mean, there's, for example, here in France, a lot of stores, small stores, corner stores, bakeries, tobacco shops, they've started, they don't accept, like, they don't take your cash anymore. Like, you have to put your cash in this machine that processes your money.

So it's kind of like this lockdown secured machine that makes sure that there's no, well, you know, nobody can just come in and rob the place. Like the machine's bolted to the counter. It's like this huge thing. So if we see this kind of installation where the Skyhook ATM is kind of like bolted in or built into a cabinet or built into the wall or something like that where you can't really just, you can't take off with it. And the access to cash is from behind the machine and some kind of back area, I think that

would be secure enough. And like you said, like if you limit transactions and the machine is empty to, frequently, then it should be fine. Yeah. One interesting aspect to talk about as well is, is regulations because Bitcoin ATMs, as far as the machine goes and service goes, it's very simple. I mean, I think as this guy showed, you know, it's really easy to build and they're pretty cheap.

I mean, even if you think of Alamos with $5,000, you know, that's not that much, you know, it's not that much money, especially, you know, if you do significant transactions and you charge 3%, 2%, I mean, I think the robocon charges even more of a transaction fee, this money you've earned back in no time. But the issue is how are you allowed to operate? How can you operate those? So I looked into this in Germany and it looks like here that you're probably, because of the money laundering laws, you might have to identify people. And I think in the U.S., the situation is similar. So that's why we haven't seen one yet in the U.S.

So, of course, you can't do that with this one. Right. It's worth mentioning that there's no identity identification on this machine at all. I mean, you just go up to it, flash your QR code and put your cache in. Yeah, but there's also no identity verification on the Lama suit. And on the robocoon there is, but the question is, is that acceptable? For example, here, I don't think that would necessarily comply with the standard ways of doing identity for verification. So, but of course, because these are so cheap and because maybe if you can build

this yourself even, perhaps we will just see them popping up all over the place. I mean, I don't know if it's happened, but it could happen. And then it would be very hard to police that, you know, because there's a difference when you have to invest, let's say for a robocoyne at $20,000, maybe you buy several of them, you know, you start a company for that. There's kind of a point where to regulate this can go and say no and they can regulate you but if this becomes something that just kind of anyone can set up anywhere it's much harder of course to regulate how does this work I mean do you have to buy the bitcoins I mean as somebody who operates a machine do you have to buy the bitcoins ahead of time and kind of have them on a wallet that's sitting on the machine

or are they connected to exchanges it seems to seeming like if they were connected to an exchange the transaction would take a little bit longer because it would have to go over the internet. But if the bitcoins are stored on a wallet that's on the machine and they get transferred immediately. Yeah, that's a great question. So I think the way to do it, you're right, that it's not that predictable how quick you get the transaction when you make a payout out out of the exchange. So you might have to, I mean, I've seen that. You might have to wait 15 minutes or half an hour until it's actually going through. So I think the way to do this is that you'd have a wallet that holds some amount of Bitcoin,

maybe enough for an hour's worth of ATM transactions. So if someone comes, puts in 100 euros, you would send the Bitcoins from that wallet. And then you'd also be holding some money on an exchange, you know, maybe a few thousand euros and then you would buy in real time you would buy the amount of Bitcoin you're selling to this person so you wouldn't have an exchange risk or your exchange risk would be limited to the size of this kind of you know buffer wallet so you know you'd have a limited exchange list you can basically do real time trading for this through you know the APIs of exchanges so you know the risk is is not that big.

You would, however, need to have substantial capital, although that depends on how much transactions you would do, that you hold in the exchange already to buy more Bitcoins, right? Because it will take you a while to take the cash you earn and, you know, kind of get it back to the exchange. So in order to operate these machines, you do have to purchase some Bitcoin capital ahead of time. So the investment isn't limited to the machine, the cost of buying the machine. You also have to buy the Bitcoin that you're going to be selling.

Yeah, yeah, that's right. So let's just say you do 5,000 years a day of transactions, then you might have to also buy a thousand euros worth of Bitcoin beforehand, and you might have to put in, let's say, 10,000 euros into the exchange account, assuming it takes you, you know, two days to get the cash from the machine and get it back into the exchange account. So you have capital cost of, you know, let's say maybe 20,000 for operating a machine like that.

But that depends, right? So the more transaction you do, the more you're going to, the more working capital you need. And the faster, of course, also the faster you get the money in there, the less you need. So I think actually in Europe, it's pretty fast because you have this like separate transfers. So you might have next day kind of pay-ins. but you know if there's if you're in a place where it takes longer then it would make it much more expensive to operate these machines and of course if you're in a place where there's no local bitcoin market no liquid bitcoin market so let's say you want to put one of those up in

Argentina well that makes it much much more complicated because then you have to think like how do you buy these bitcoin so that also limits where you can operate those because unless you have a bank account and you have access to a Bitcoin exchange, especially one where you can do trading through an API. You can't really operate these things, not efficiently at least. I'm looking forward to seeing the first Bitcoin ATM here in my city. Yeah, yeah. No, I can't wait to see the first one here. So you said you were working on, I mean, you had looked into putting one up in Berlin? Yeah, I've been looking into this and I'm still a bit unsure.

So there's two things really. You would be providing financial service. So you have to basically get a license for that, which doesn't make any sense because it's very expensive and very complicated and long. But you can try to work with a bank or something like that for the license. So that's one side. The other side is the money laundering question. So you might have to, at least I looked at a lawyer and it looks as if you would have to identify the people.

Which of course makes it much more of a hassle because then you can't just put up an ATM if people can use it. But you would have to have people, you know, basically make an account with you. You have to verify who they are. and then you kind of set their privilege, give them the right to use the ATM. So that makes it less attractive, of course, because you can't just walk up there and use it, but you might have to spend, you know,

log into a website and it takes you several days until you actually be able to use the ATM. I know there are some in operation. What's that? There are some in operation now, right? We talked about this, I think, last week or the week before, in Finland and in Sweden. I know in Sweden, they require people to, you know, sign up. And I think maybe they have someone there who does it.

So they basically do what I think you might have to do. And I think in Finland, if I'm correct, they just went ahead. So I don't know if that's going to work out. Because, of course, you can just start operating them and then see what. happens you see how long it takes until i don't know the regulators call the police comes yeah but but that might be kind of risky okay maybe we should move on to uh not our last topic this is uh before last topic which uh which uh which really relates to where i live so uh the french senate held a hearing into bitcoin and other digital currencies this wednesday it's on the 15th

Unfortunately, this went completely unnoticed by the media. Since Francois Hollande, the president of France, was holding a press conference that afternoon, and there's been allegations that he's had an affair with a French actress, and so everybody was basically focused on that. In fact, like the two of the larger newspapers here, Le Monde and the Fialo had zero coverage on the French Senate hearings over Bitcoin. Well, of course, if the president is having an affair, then, you know, Yeah, nobody cares about Bitcoin if the president's having an affair. So these hearings were chaired by Philippe Marien.

So there's just a bit of context. So Philippe Marini, who is a UMP senator. So UMP is a center-right party. There's two major parties in France. I mean, there's many parties, but the two larger parties are the UMP, which is the center-right. And then there's the socialist party, which is the current party. power and they're the center left and the EUMP is the party of the former president, Nikodaz

So it was a rather large hearing which featured a large number of representatives from the central bank, the Treasury Department, the Ministry of Finance's anti-money laundering arm, the French intelligence, like a French intelligence agency which is tasked to carry out investigations on smuggling counterfeit money and such. And Fing, which is an organization which is tries to simulate digital innovation. So the hearings also included representative from the industry, notably Gonzagg-Granval, who's the co-founder of Paymium, which operates Bitcoin Central. It's a Bitcoin exchange here in Europe.

And so you've got to, I mean, we have to remember that this is in a context where in December the French Central Bank issued a publication which was very negative towards Bitcoin. If you listened to our pilot episode, we spoke about this, or basically they were issuing very severe warnings against the use of Bitcoin. But this hearing was actually quite positive. There didn't seem to be any prior bias or negative bias towards Bitcoin. The committee speakers dismissed any concerns that Bitcoin would be made illegal in France and feel that there's a real potential for innovation behind it.

That said, it's unclear how the Senate committee will regulate it or what to do next. So, you know, they basically said, okay, we're not thinking of making this illegal, but we still don't know how we're going to regulate it or what's going to happen next. There was a bit of a lack of understanding on the part of the Senate committee members of the concept of decentralized distributed system. So at one point, like one of the Senate committee members apparently asked a question about who owns Bitcoin. And when somebody answered no one, they were kind of baffled and really didn't know what to make of that. The CEO of Pemmium, Gonzaggherg, obviously boasted Bitcoin, pointing out that Bitcoin entrepreneurs can stimulate innovation in France, which is a hot topic right now.

Everybody's kind of trying to stimulate the economy and digital innovation. It definitely plays a part in that. And he stated that Bitcoin entrepreneurs need government backing so that it would greatly help that ecosystem if the government would support them. He also pointed out that other European companies, such as Germany, were ahead of France on the issue of Bitcoin, and that if France wants to keep their competitive advantage, they need to get things moving. And, you know, everybody knows that France doesn't want to be behind Germany. So I think this resonated with them. That seems like a good selling point. Yeah, yeah.

You don't want to be behind Germany. So you better get your, get your ass moving. And so then some of the other players spoke. And the head of money laundering said that they've been tracking Bitcoin. since 2011 and they had systems in place to intercept criminals and things like that. So they seem to be up on the up and up. That's, that is interesting. Yeah.

2011, that's quite surprising. No, I mean, that's what they said. Maybe they're just. Maybe they, like, read about it once and then they had a news alert or something like that. Right. That was the extent. So this sounds pretty similar to the. Was that?

Yeah, yeah. This sounds really similar to the U.S. Senate hearings that we had in, when was it, November or October or something? Yeah, I didn't really follow the U.S. Senate hearings that much. I had heard that the outcome had been positive, but didn't really go into detail about what was said. Yeah, I mean, there wasn't a concrete outcome. It was more that there was a surprisingly positive tone and the senators, you know, they asked, they seem to actually be interested in it and open to it and see that Bitcoin is not just a negative thing. Because I think the tone and the public discourse has changed quite a lot

since then. But at the time, Bitcoin was still mostly very negatively covered. I think this was just after the Silk Road bus too. So it was surprising that there seemed to be a, a friend fairly open-minded point of view. And it sounds from what you're saying that there's a similar situation in France, a similar thing happening there. Yeah, it definitely seems like it was a positive exchange. I mean, obviously now what needs to happen is legislators are going to go back and look into this further and propose some laws probably that would be adopted whenever

they're proposed. So I think in 2014, we're going to see some. some laws come into play in terms of, well, regulation as to identification, who can buy and sell Bitcoin, whether or not they're considered to be a currency or commodity, all this kind of stuff that we've been talking about over the last few weeks. Yeah, what might be more likely is that they're going to, at least for the time being, it's just that they would put it in some existing categories. So they'll say, like, okay, you have to treat it like foreign currency.

you, something like that. Right. Now, the other question is, how does this, how does this play out in the, from a European perspective? So does Europe have the authority or is it up to Europe to pass laws which regulate Bitcoin or is it up to the countries? Since we're in the Eurozone and currency regulation mostly, largely gets decided on a, on a continental level, does Bitcoin fall into the same category where they would be

regulated globally, I mean, not globally, but at a European level. Yeah, that's a great question. I actually asked my lawyer about this. And in his view, there are kind of two sides to this. On the one hand, there is financial regulations and banking regulations, et cetera. And that is quite sort of a European thing. So if you have a, you know, if you're licensed to do a financial, operate a financial business or your financial service license in one country, it generally is kind of valid in other countries too, although you might have to register in that country.

But then there's also the money laundering thing, and I think the money laundering thing is something that's very much country-specific. So I think there will be some things that will probably be European-wide, and then when it comes to, let's say, rules according to what you need to do to operate in ATM, that might be something that falls under each country's kind of jurisdiction. Right. Yeah. But yeah, I mean, it would be interesting to see what comes out of this.

And it seems like there's a reason to be hopeful. I think there is reason to be hopeful. I think that the Bitcoin community and entrepreneurs that are working with Bitcoin are going to play a major role in how things get decided over the next few months, not just here in France, but everywhere. It's definitely a good thing that people from the industry are being included in these Senate hearings, which I think is usually the case, but that they could basically vouch for Bitcoin and I guess in a way kind of sell it to the regulators as a good thing that can stimulate economy. that can stimulate entrepreneurship. Now, I mean, there isn't very much Bitcoin entrepreneurship happening in France as opposed to, say, in the U.S. or in other European countries, I think. At least I haven't seen much, but it's definitely something that I think we'll need to be,

well, we'll be developing over the next few months. I think we're going to see a lot of startups, at least here in France, pop up all around the place. Let's hope so. All right. So maybe we'll go to our life. topic. Yeah, so the last topic we want to cover today and I think this is a topic when we will come back to in the future is about a new currency or a new protocol called Ethereum, or at least I think that's how we pronounce it. Right. I looked at that way this comes from.

And of course there's the adjective ethereal, which means kind of intangible and also delicate, refined. But Ethereum is also a weapon in World of Warcraft. Yeah, that's what I found when I looked at up. I was trying to find a website. Yeah, so I'm not a gamer, so I wasn't familiar with that, but it's this kind of like double-edged axe. Okay. To me, it sounds like a Tom Cruise movie. Yeah, yeah.

Ethereum in a world where Bitcoin has taken over the economy, this man fights to protect the blockchain. Yes, exactly. It's very dramatic. And then the currency, so Ethereum is the name of the protocol, I guess, and the currency, because it also contains the currency, is called ether, which of course is a chemical element. Yeah. Yeah.

So Ethereum is, you know, it's an old coin, but it's, it's. not, I would say, an ordinary old coin, but it has the ambition to provide as kind of fundamental protocol layer. And there are some other projects in this area. And I look at it as a competition to those other projects. So the other projects are MasterCoin. Then there's the proto shares, Bit Shares project that's led by Invictus Innovation. And colored coins is also a project that's comparable, although it's a bit different because it doesn't have its own currency. But yeah, so this is very interesting.

It's gotten quite a bit of attention, and I think it will get a ton of attention in the next two months and in the future. So a bit about the project. It's led by a guy named Vitalik Buterian. Now, if you've been reading my newsletter, I have, I always include some blog posts. And almost every single week since I've been writing this newsletter, I've been including a blog post by him. Because he's one of the writer for Bitcoin magazine and he's just a phenomenal. Yeah.

I looked, I was looking him up and I realized after that I had read a bunch of his articles because I always see him on the bottom of the, on the footer of the Bitcoin magazine articles. Yeah, yeah, that's right. So he's, he's really great writer. He takes, very technical complex topics and he writes about them in a, you know, in a great, accessible way. Yeah, and he's 19. Yeah, he's 19.

It's incredible. Yeah, it kind of makes you feel, uh, what have you been doing? Yeah, what was I doing when I was 19? Yeah, exactly. Yeah. So, yeah, he's a very smart guy. He's also been involved in a number of different projects. He's involved in colored coins.

He was doing some work there. There's also, I think it's called CryptoKidt. Yeah, he worked on Crypto kit. Yeah, he briefly covered it. It's like a browser extension wallet, pretty cool. And of course, Bitcoin Magazine, he's doing a lot of writing there. He's the co-founder of Bitcoin Magazine, I think. Yeah, I think so, yeah.

Yeah. So he's the lead developer here. and there are some other people, well-known people that have joined the project. So what's this Ethereum for? The basic idea is that Ethereum is like a platform where you can run applications on it. You can build kind of complex things on top of it. So I want to come back to this in the future to kind of dive more in detail into how this, can look and how this would work.

But I want to mention a few things that you build on top of that. So one thing, for example, is that you could do peck currencies. So that would be currencies who would have their value tied to the U.S. dollar, for example. So they would have some mechanism by which they would get it like a data stream inside that would say, okay, the U.S. dollar is at, you know, at this rate. and then they would, for example, issue more currency if or decrease the money supply just to keep basically exchange rate stable. And there's so much more you could do. You could do basically replicate derivatives, let's say options, bonds, shares, all those things.

Financial instruments you could replicate. one concept that's gotten a lot of attention that you could do with this is the idea of having kind of autonomous agents operating in this. So what does this mean? This means you would basically write a contract or write some kind of code that represents this autonomous agent. Then this code would live in the blockchain and it would be executed and it could make its own transactions, do its own things,

and it would not be controlled by anyone. So if we think into the future kind of science fiction style, if you think about artificial intelligence actually being able to do things, interact with the world, you know, this is the basis for that. Because here, autonomous agents are. starting to be able to do economic transactions. So, of course, we're very far from there, but at least the basis is there. I think actually the difficulties will be more into getting accurate data to those Asians and

things. But at least from an economic perspective, these things will be able to do transactions themselves and things like that. So it's quite crazy. This stuff to me is so abstract. I mean, for me anyway, I think from a lot of people, it's hard to comprehend what these platforms really mean and what they what we're going to be able to do with them and I think until we actually start seeing like for me anyway like I need someone to show me like okay this is what we're

this is how it works you know and I was listening to I was watching this talk uh it's a really good talk on uh on YouTube it's the at the Bitcoin 2012 London conference it's it's a talk by Mike Hearn yeah yeah yeah who's one of the lead developers on the Bitcoin projects if you look it up it's Bitcoin in 2012 London, Mike Hearn, it's about 30 minutes long. And he explains it quite, I mean, he explains it quite well, but still after watching this talk, I still have a lot of questions, but he explains, you know, all of the things that we can do with Bitcoin now, the things that are already built into Bitcoin where we don't even need these other platforms, like it's built into the protocol.

And he talks about all this stuff about, about these autonomous Asians and pro share kind of stuff. phone. It's really interesting. Yeah, no, I agree. I completely agree with you and I feel the same way. I mean, I've been reading about this Ethereum now for a bit. And I've been reading a lot that was written on it from the white paper to a forum post, etc. I've also been reading about MasterCoin for a while and other projects like that.

And I'm still having a great difficulties in truly understanding what's going on here. but I think it's certainly important. Let me say a few more things about how this works. Yeah. So the currency here, Ether, is actually going to be used to pay for computational steps. So because if you do a contract and then you include some code with that, what that means is this code would be executed by the miners. It's kind of crazy to think about it. It would be like a distributed computing platform.

So you would write some contracts and code. You would send this and you would send money with this. And the money would be paid to run the program. And once the money's been used up, it stops running. So this ether would be used for kind of each computational step. So really if you, for example, participate in this fundraiser and buy ether, you really speculating that the demand for this computational platform will be high and, you know, this will cause a high demand for Ether because a lot of computational steps will be executed there.

There's also a property of this, which people are very excited about, and I also don't really understand it. It's called it's Turing Complete, so Turing from Alan Turing, you know, the famous British computer scientist, cryptographer, etc. So the basic idea is that it has its own programming language, this Ethereum,

and you will be able to emulate any calculation, any computer can do with this language. So it's extremely versatile. At least that's the ambition because they've actually not done it so far, right? So it's a white paper at this point. But they say that's one advantage.

over the proto shares project, for example. And so Dave, in the white paper, Vitalik, you know, he writes, he thinks this is going to be as significance to, you know, cryptocurrencies as like Web 2.0 was to the worldwide web, you know, to have this kind of analogy. I also read that, yeah, but still, I don't get it. Yeah. I started reading it in the white paper and then, you know,

you start reading it and then you click on this link that takes you do a wiki because you want to learn about this other thing. And then it says, if you're reading this, we assume that you're well versed in this thing. So I click on the Southern link. Yeah, there's just so much to learn. Yeah, no, totally.

So there's a few more things about that that I guess shouldn't go into too much. Like there's a different proof of work. The idea is it would be CPU friendly, although there's been criticism of that. So you'd be able to mine it on your own computer. There wouldn't be A6. but unclear if that's going to work out. But one thing I think we should briefly cover,

which is the way they're growing about this fundraiser, which is interesting and also very controversial. So MasterCoin, for example, let me briefly explain that so you can kind of see where this Ethereum is coming from. What MasterCoin did was they also did a fundraiser, which was in last August. So for one month, they said, you can send money to this address.

And for each Bitcoin you sent to this specific address, it was called the Exodus address. And it had actually the word Exodus in the Bitcoin address. So for each Bitcoin you sent there, you got, I think, 100 mastercoin it was. And now in this Ethereum, they're doing a similar thing. There's a fundraising period, which starts on January 24th. And it's supposed to last for 60 days, but I think this is not confirmed yet. And during that period, you can send, there will also be an address.

You can send any amount of Bitcoin you want to their address. And for the Bitcoin you send there, you will receive 10,000 ether, so of their currency. Really, you have to look at it like this. For every Bitcoin you send to this address, 15,000 of this currency will be issued, 10,000 will go to the person who sends the Bitcoin there. 2,500 will go to the founders of the project, so Vitalik and the people who work with, and 2,500 will go into a foundation that will fund the development.

So this is where it was controversial, where the founders were getting some of that. Yeah, this is where it's controversial, because, I mean, I think this is going to be a big success. If you look at Mastercoin, the currency increased dramatically, after the fundraising. So if you put in, I think, $1,000 at the time,

it would be worth $100,000 now. So, you know, even compared to the Bitcoin price, the master coin went just up like crazy. And a lot of people think this is even more interesting. The master coin has more potential. So I can imagine this would be, or I think this would be a big success for the fundraiser, you know, they will raise a lot of money.

And so the founders will make a lot of money before they've done anything. You know, this is a white paper really. I mean, they've done something, but the client isn't developed. The project is still really in a conception phase. So they will stand to make a ton of money. And of course, they'll also be running the foundation. So they will, through owning, through the things they award themselves and through controlling definition, there will be in control of a third of the currency.

And then maybe they also buy some. So they might have, you know, they will have more than that even. So that's very controversial. A lot of people said, man, this is a bit questionable, you know, if they want to do a protocol, this kind of fundamental protocol and they're also becoming, you know, rich in the process. Right. Are you going to buy any of this either? I'm thinking about it.

But I'm still, I'm still not. at the, there will be time, right? So you don't have to decide now because the fundraiser is going to last for two months. But I'm certainly thinking about it. Their argument, maybe I should briefly mention, is they compare this as kind of like a startup. So, you know, they say if you found a startup, of course, the founders own some shares. And then over time they get diluted. So this currency is also.

It is mine. So the supply increases over time. And it increases at the same amount each year. So, of course, the inflation rate is going down because, you know, relative to the total money supply, the increase gets smaller. But it's less so than Bitcoin, right? The decrease is less than Bitcoin and it will always increase, increase. So they say, you know, their share gets smaller over time.

It gets like deluded because of the increase of money supply. Of course, it's also true if you invest in it. So that's their argument. And they say, like, you know, how much the spill Gates own of Microsoft? So that's kind of the things they said. I don't know if that's a very valid comparison. Just so I got the straight. This is built on top of Bitcoin or is this another?

No, this is this. This is completely different. This is a new old coin. So this has, it has its own blockchain. It has. Yeah, has its own blockchain. Okay. Mastercoin is built on top of Bitcoin.

On top of Bitcoin. Yeah, yeah. But this is different. This is a new, completely new currency. Okay. So I think it's an interesting topic. So it's a new currency, new protocol, basically with other, with some new added features that Bitcoin doesn't include in its protocol. Well, I would go further than that.

You know, this isn't even aiming to be really a transactional currency. This is aiming to be a kind of a computational platform to do all these complicated contracts, things that Bitcoin kind of can do. You know, there is this scripting language with which you can do some of these things. but their argument is this is not nearly powerful enough. We need to have something specific just for those things and this is it. So people have talked about this as being like Bitcoin 2.0. So really quite fundamentally different. Also, if you think about ether, the currency is not really comparable to Bitcoin, I think.

You know, Bitcoin, we see that now, Bitcoin is becoming a form of money, a currency. You can buy, you know, you can buy MBA tickets soon with Bitcoin. You can buy, pay with Bitcoin at the coffee shop, order your furniture with Bitcoin, et cetera. You can save Bitcoin as, you know, hope, being a little future in the future, et cetera. But this is quite different. I don't think you'll ever be able to pay with Ether in a real-world location. It's really this weird thing where you're purchasing your right to execute computations in this distributed network. So it's quite a different thing.

Of course, it's built on the same fundamental technology. It's still built on this period of period decentralized network with this blockchain. But I guess I'm wondering if it's not a transactional currency, then how does it keep its value? Like, what determines the value? No, that's a great question. And I've really been thinking about this. And it's very difficult to understand because one thing, and I've not seen anything written on this too.

So I'm going to, I'm going to post on the forum because I want to understand this properly. And it's not, I don't think people are thinking about this even when they're discussing Ethereum. Because there are two things here, right? On the one hand, there's the demand for this currency, which will be determined, or there's the demand to execute computational steps, which will be determined by how much are people using this platform. But there's also the cost of executing each step. So they have some formula with which the cost is changed. So that depends on the difficulty.

So this gets very complicated because now the difficulty, the mining difficulty might be affected by the demand for these steps and that might affect the transaction fee. And so I don't know how all these things interact. It's very complicated, I think. So, but the basic idea is over time the transaction fee will decrease. So I don't know what that means for the value of ether. Of course, you will need that the demand for computational steps will increase much faster than the money supply and than the decrease of the transaction fee. But as you can see, and as I've also, I'm aware of myself, is very complicated. I feel like it's complicated.

I'm going to have to read up on this a lot more. Like, what I feel, my impression on this stuff is that it is very complicated. There's lots happening in this space. I think that it's going to change a lot of, I mean, it has a potential to change a lot of aspects of society. I mean, you know, just contracts or how we start companies or how we finance companies. It's going to introduce a whole bunch of new ways that we do things. So whoever, you know, the people that understand this stuff are going to be very well placed,

I guess. I mean, they're going to have an advantage over those who don't. And, yeah, I mean, I'm... Yeah, it certainly sounds, and it's a belief, I think, of, you know, these people and a lot of people working with these things, is that this is absolutely revolutionary. And this is crucial and this will completely change how our economic system works, how our society works, how companies work. Like, when I think about this stuff, even with the lack of understanding I have about it, like, we're going to look back on this 100 years from now, 200 years from now, 200 years. from that. I'd be like, you know, before we did the, we did things this way, things were centralized,

things were run by a very small number of people, and now things are decentralized and everything is cryptographic. Yeah, no. I mean, you, you will really have companies that are based on purely on code, which is weird, you know, and they're like autonomous companies, you know, if you think about it, they'll be able to hire people and things like that. There's actually, let me mention a few more things. So I read these.

I feel like I see this in a movie somewhere, you know, where everything is built on code, you know. No, absolutely. I read these science fiction book. There's a book series by a guy named William Hurtling. And he, it's kind of a Google type company in there. And he writes, the cold, the first one's called, Avogadro Corp.

So A-V-O-G-A-D-R-O-Corp. And in there, the main character writes a program that I think is supposed to improve email. And so basic artificial intelligence. And then also it starts being intelligent and it starts making its own decision and it starts a highway, especially in the second book. There's a second book in the series where you have a lot of. of these artificial intelligences, and they start hiring their own data centers. They start hiring people to improve and maintain their data centers.

And it's crazy. And here you actually see the very rough outlines of how this could work. And it's incredible. Yeah. Looking back on this, we're going to be looking back on it and saying, you know, and this was all created by this guy. that nobody knows who he was, and his name was Satoshi Nakamoto, and it seems like a plot from a movie, you know, where this invisible character changed the world with this cryptographic

currency and which then snowballed into all this other stuff that we're now seeing. And we're just four years in, you know, like, totally. Think about it five years from now, ten years from now, 50 years from now. Like, where's this going to take us? It just blows your mind. It's mind-blowing. I agree. I'll mention one more thing. So if you want to read more about this stuff, the talk you mentioned, Mike Huron has some good talks. There's another one if you look at Turing Festival, and Mike Hearn, that's H-E-R-N on YouTube.

He also talks about this in a very accessible way. And, you know, as I've mentioned, Vitalik Burtarian, who is the lead developer here, He's also a very good writer. So if you go to blog.eithium.org, he has a series which is called bootstrapping a decentralized autonomous corporation. So I've briefly read through this yesterday. And it's certainly not easy to understand. But he, as he always does, he does a great job at making these extremely complicated

the topics, you know, as accessible as one can, I guess. So, so it's definitely interesting. The long articles, but I would recommend if you're interested in this topic, I would recommend you read that and maybe watch the Mike Hearn talks and at least you will have some idea of what's coming here. Yeah, I'm going to read up on this stuff a lot more over the next few weeks. I'm just by the way, it's Mike Earn is H-E-A-R-N. Well, we're running on a an hour and a half here, so we're going to have to wrap this up. Thanks for listening to the podcast. Thank you for all those of you who subscribe and who download it weekly.

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look forward to next time.