Unchained - Live From Inforum at the Commonwealth Club: Blockchain and Cryptocurrency: The Basics, With Kathryn Haun

Episode Date: April 15, 2018

Through Inforum at the Commonwealth Club, I recently moderated a sold-out discussion on the basics of blockchain technology and cryptocurrency. My guest was Kathryn Haun, a former federal prosecutor who is now teaching a class on cryptocurrency at the Stanford Graduate School of Business and serves on the boards of Coinbase and Hacker One. We go through all the elementary questions most newbies have: what is bitcoin, what is a blockchain, what is Ethereum, what is mining, etc., and give real examples of how this technology could be used. I think it's a perfect primer for people new to crypto -- whether you're listening for tips on how to explain these concepts to your friends and family, or you're a newbie yourself and want a dead-simple explainer. This is the first in a series of talks with Inforum on blockchain and crypto, so stay tuned for future events. Kathryn Haun: https://www.gsb.stanford.edu/faculty-research/faculty/kathryn-haun Inforum at the Commonwealth Club: http://inforumsf.org/ http://inforumsf.org/upcoming-events/2018/4/12/blockchain-and-cryptocurrency-the-basics Thank you to our sponsors! Quantstamp: https://quantstamp.com/ Ethereal Summit: https://etherealsummit.com/ enter the code Unchained10 for 10% off And StartEngine: https://www.startengine.com/unchained for a 20% discount Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Today's special episode is of an interview I did with In Forum at the Commonwealth Club in San Francisco on the basics of blockchain technology and cryptocurrency. My guest was Catherine Hahn, the former federal prosecutor who now teaches at the Stanford Graduate School of Business and is on the board of directors at Coinbase and Hacker 1. I've done a few episodes on the basics of crypto. There was an episode last fall on how to explain blockchains and cryptocurrency to the average person and a Crypto 101 episode last. December that explains all the basic terms. Those are two of my most popular episodes ever, as I imagine many of you were sending them to friends and family, and newbies were seeking out these explainers. Add this to your library of resources to send to friends and family

who are new to the space and want to learn more. Katie and I cover a lot of ground in a very digestible manner, and we fielded some great questions from the audience. Take a listen yourself for more ideas and how to explain this new technology to newbies. Enjoy the show. On May 11th and 12th, some of the most interesting humans from around the globe will come together in Brooklyn for the

Aetherial Summit, hosted by consensus, to collaborate on building the decentralized future. To register and receive 10% off, go to ethereal summit.com and enter the code Unchained 10. This episode is brought to you by Kwanstamp. Kwanstamp is building the first smart contract security auditing protocol designed to secure all smart contracts in a cost-effective and scalable manner. The technology is being developed by a team of PhDs with over $1,000,000. 500 Google Scholar Citations. To learn more or request an audit, visit www.com.

This episode is brought to you by StartEngine, a security token offering platform focused on issuing regulated ICOs. StartEngine has helped over 150 companies raise capital. Go to startengin.com slash unchained for a 20% discount. This ad is not legal advice. Hi, everyone. Welcome to Inforam with the Commonwealth Club. I am Laura Shinn. I'm host of the podcast Unconfirmed and Unchained. And Katie is my friend and a blockchain and crypto leader. She was a former federal prosecutor. And she also teaches at the Stanford Graduate School of Business. And she's on the board of directors at Coinbase and Hacker One. Welcome to all of you and welcome Katie.

Thank you, Laura. Thanks for having me. And thanks for letting me be here with you. So before we dive into our portion of the discussion, I actually wanted to sort of get the sense of what the base of knowledge is in the room. So how many of you feel like you know what Bitcoin is? Okay. And how many of you feel like you could explain how a blockchain works to somebody else? Wait, let's see. The lights are bright. I want to see how many hands went up there.

15% or 10%? Less, maybe, huh? We're calling on you. I see the hands in the back. Okay. And how many of you watch the John Oliver's segment on cryptocurrency and feel like you still don't know what's going on? Okay. Okay.

All right. Well, why don't we just start with the most basic question? What is Bitcoin? Well, that's very basic right now. I think, here's how I think of Bitcoin. I think of Bitcoin as digital money for the Internet. So let me just repeat it again. Digital money for the Internet.

And when you think about money, you can think about money in a couple different ways. You could spend money. You can transfer money to someone else. I could give Laura some money, so I could give Laura some Bitcoin. You can also store money. Think about gold there. So I think Bitcoin is digital money for the Internet that you can spend or transfer, like digital cash. But you could also store it like digital gold.

And certainly with some of the prices we've seen, the volatility, in the past few months, although today it shot back up to a high. I guess it gained about 20% at one point today. That 20% of its high since December, I think, is what I saw. So because of that volatility, a lot of people are, at least a lot of people in the United States are storing it, using it as a store of value, digital gold. Although, as we can talk about in some other jurisdictions, people are using it to make payments where they don't have access to. banking systems that we all do. And where are we seeing some of that activity?

Well, in Venezuela as one example, you know, where the currency, the national currency is not quite so stable. Some places like in sub-Saharan Africa. I think, Laura, you've done some interesting podcasts. I'm thinking of the podcast you did with Roya, where she couldn't have access to a bank account in Afghanistan, so that's how she learned about Bitcoin. Yeah, I'll actually, I'll tell this story briefly for people. This woman, Roya Maboop, she was one of times 100 most influential people and is a serial tech entrepreneur.

And one of her businesses was like a little blogging platform. And she needed to pay the contributors, many of which were women. But I guess culturally in Afghanistan, a lot of women don't have bank accounts. Or if they do, then when they would get the money, maybe their families would take the money away from them. So they eventually decided to start paying them in Bitcoin. and the women were set up with wallets and then taught how to use the wallets. And this one woman, I guess, I think she had, I guess she had an abusive husband. And she eventually saved up the Bitcoin she was earning from this service and then divorced him.

So, you know, that just shows you like this was very empowering. But, you know, in a place like in the U.S. where we have really good financial services, you might not kind of understand what the impact of Bitcoin could be. But in this kind of place, it was very different. So let's also then, so we've just been talking about Bitcoin, which is just sort of... Can I add to Bitcoin? I'm sorry, because I want it, before we move on, just about back to Bitcoin, I did want to say, I think of Bitcoin as like what I think of as three Ds when I think of D like dog,

when I think of kind of some of its characteristics. So can I just... Yeah. So we already said digital, right? It's the first scarce digital asset. Okay, so digital. It's also decentralized. So it's not controlled.

You've probably heard this. It's not controlled by a government. It's not controlled by a central bank. It's just decentralized. And think about in the days of email. Before email came along, if we wanted to send something to someone, that piece of mail would go through the post office. It would go through a central intermediary.

And with Bitcoin, when I say it's decentralized, I mean that you can send it to another person without going through an intermediary like a bank. Just like now, you can send an email to someone without going to the post office or your communication doesn't have to go through that intermediary post office. The third D is deflationary. It's a finite supply.

So only 21 million Bitcoin will ever exist. It can't be added to. And this was the design that the person who invented or persons who invented Bitcoin, the moniker is Satoshi Nakamoto. And he wrote a white paper in 2008, setting forth his vision of Bitcoin. And so this supply is limited. Now, one question that I always get is, and from very educated smart people, they say, well, I'm going to wait until the price goes down a little to get some Bitcoin,

because I don't have enough to buy one whole Bitcoin. And the thing about Bitcoin is it's also divisible. So another D to the eighth decimal point, you don't have to own a whole Bitcoin. If I wanted to pay Laura something, I don't need to pay her one or two Bitcoin. I could pay her a small fraction of Bitcoin. So those are just some properties I wanted to get out there before we moved on. Yeah, so I think Bitcoin is the cryptocurrency that most people know about it was obviously the first. It was the one that set this whole entire craze in motion.

but there's a whole entire class of actually what they call crypto assets. But let's just actually talk about cryptocurrency. How would you define that for people? So again, Bitcoin was one of the first, or was the first, although I want to point out that even before Bitcoin came about with this white paper in 2008, we had things like e-gold. So there were some kind of digital systems that people were looking at. But with cryptocurrency, I think of them as, I actually call them crypto assets, because when you think about what currencies are, there are things that are being used readily to buy and sell things. And I think most of when I think of cryptocurrencies, I don't think they're there yet. So Bitcoin is one of the most popular. Other ones, how many in this room have heard of Ethereum or Ether? Okay, so a decent amount of people. Ether is another. What about light coin?

Okay, so people think of light coin as digital silver, whereas Bitcoin would be digital gold. They all share, all of these cryptocurrencies have slightly unique attributes. Lightcoin is supposed to be cheaper for payments and faster than Bitcoin. Then you have some other crypto assets, things like Zcash and Monaro. And what those assets are focused on is providing privacy. So we can get to that in a bit, but you might already know this. But people think that, oh, Bitcoin is anonymous, but actually that's not true at all. It's pseudonymous.

So you can ultimately figure out for the government who owns what wallets oftentimes. Things like Zcash and Monaro are kind of privacy enhancing cryptocurrencies. And there's one other thing that I wanted to just kind of lay out for people. so we fully define what this is. But a lot of people say, oh, you know, I actually think the money I deal with, like, PayPal and Venmo is digital. How is this different? So PayPal and digital and online banking, for that matter, if you make a transfer, you know, you might think you're moving money. But actually, if I were to make a Venmo transfer to you or a Venmo payment to you, it's not actually physically moving the money then and there.

rather it's a digital veneer on an age-old system called double-entry bookkeeping. And so it's really, again, just a digital veneer. Our banks have to go reconcile and settle up in the end. And anyone who's ever made an international wire transfer knows that that, first of all, can take A, some time. B, it's expensive. It's also not very transparent, and it's certainly not instantaneous. because, again, the banks have to do reconciliation at the end, or these digital systems, PayPal, Venmo, have to do this reconciliation process. Whereas if I was to send you a Bitcoin,

we'd be able to go to the ledger, the Bitcoin ledger, which we'll talk about, that's the blockchain, we'd be able to go to that and see this transfer occur. And so that's really quite revolutionary. Again, if you think about international wire transfers, they can take well over a week. I mean, in this day and age, it's still amazing to me that it's cheaper and faster to FedEx a box of cash to India, for example, than to make an international wire transfer. Now, don't do that because that happens to be illegal and against a federal regulation, but if you were to do it, it would still be faster and cheaper than sending an international wire. and that's because of this digital veneer. So let's then discuss what is a blockchain. So a blockchain, let me try and illustrate a kind of picture in your mind.

I think of a blockchain as a massive shared ledger, kind of a shared global database that includes all of the transactions that have ever happened in the Bitcoin network. Right now I'm just talking about the Bitcoin blockchain. We'll get into some other blockchain. blockchains later. But it's this massive database that anyone can go look at and see what transfers were made in Bitcoin. And again, it's public. So it has, you know, there's some audibility to it, which we can get into. But it's decentralized. And this is very important blockchain

and Bitcoin architecture, this decentralization. This shared global ledger is spread out among thousands of computers all over the world. Okay? Now, if you picture a vault holding this, let's say that you had one ledger and you had a vault holding it. If someone broke into that vault, they could erase some of that ledger,

put in a different number. They could alter it if it were just centralized. But now think of, again, I told you thousands of computers, think of all of those as individual vaults, and they all hold copies of this same digital ledger. Now, if you want to go alter it, you don't just have to break into one vault. You have to break into all of these thousands of vaults

all over the world, all at the same time, because all of these ledgers have to match. Do I have people? Are you following me? Because I think these are very, very complicated topics, but I do think of this one-vault system versus thousands of vault system. And why I tell you this is that makes it very secure, this ledger, because these copies reside, this global ledger,

reside all over the place in these individual vaults. So that's a real piece of the architecture that makes it very secure. It's also very trustworthy, because not anyone can just go update that ledger. We'll get into the process, I think, later by how this ledger gets updated. But you know through some, I always call it cryptographic wizardry. Through cryptographic wizardry, this ledger gets updated in a way that you know is accurate. And then it's maintained all over the world decentralized. So it makes it very hard to tamper with.

So that's how I think of a blockchain. That's the Bitcoin blockchain. So obviously this, you know, is getting us into the weeds and kind of, you know, lifting the hood. But the thing is that as technical as this might sound or as kind of difficult as it might be to follow, like it's actually enabling some really, really interesting things to be possible in the world that just were not possible before. So we're going to give you a few examples of what that looks like. What are some ways in which, or things that are possible now with like blockchain technology? that were not possible before.

So first of all, let's just take a minute and say what, when I say, I was just describing to you the Bitcoin blockchain, which also people refer to as the public blockchain. That's different. You'll now hear people talk about blockchain technology. I think when you're asking about different use cases and what could be possible, we're talking now about blockchain technology, not necessarily with the Bitcoin blockchain. And if you want to get, we're going to give you some terms before you leave here to night, so you'll be really down with some lingo. I'm going to give you the first right now.

It's called DLT. How many of you have heard of DLT? Okay. I heard someone whisper it, but I didn't see a hand. Distributed ledger technology. Whoever said that. That's exactly right. And this is distributed ledger technology. The difference or the interplay between blockchain and distributed ledger technology is that blockchain, the public Bitcoin blockchain, is a form of distributed ledger technology, but there are other kinds of blockchains that aren't the public blockchain. So, for example, think of it like the intranet and the internet. You could have permissioned blockchains, private networks, where certain parties who already

trust each other are sharing a ledger, and that's different from the public blockchain. So I just wanted to kind of throw that out before we talk about some of the use cases. But the use cases are really far-reaching. And I think this is one of the really exciting things about this technology. One example is, again, this distributed ledger technology, not necessarily the public Bitcoin. Because, of course, on a blockchain, you can transfer assets. On the public Bitcoin, blockchain, you're transferring Bitcoin. But there's no reason you can't transfer other assets on a blockchain.

You can transfer anything of value. So what has value in society? One of the really promising use cases for blockchain technology is identity. So could you put identity as an asset? Some governments think possibly you could. So, for example, the state of Illinois right now has a pilot program to put birth certificates onto a blockchain. Again, not the public Bitcoin blockchain, but using blockchain technology. putting the birth certificates and records of individuals' birth on a shared ledger.

Other things that people talk about very exciting use cases are supply chain management. Think about vaccines moving through the system. We don't know where they came from, maybe. We don't know their provenance. We might not know when they expire. Well, there are a lot of programs right now where they're experimenting with tracking vaccines on using blockchain technology. another thing I think is very promising. I know you're aware of this project, but charitable donations.

Right now, actually, I think you were at that same meeting. We met with the former Prime Minister of Haiti. He was the Prime Minister at the time of the earthquake, and he reported that the Red Cross took in $500 million of aid that they couldn't account for. And when he went for this accounting, it wasn't able to be provided. So if you think about some of the fraud, and the corruption, there's just a very much a lack of transparency, which people are pretty excited

that maybe distributed ledger technology or blockchain technology could help solve. So these are just some of the use cases. I could actually go on and on because there are many more that are talked about. And some of these are just ideas, right? And people say, oh, well, that's not possible. I don't know if you want to address that now. Well, the one thing I wanted to add was that same person Laurent is his name, the Prime Minister of Haiti or the former Prime Minister of Haiti. He said in the earthquake there was a building with all the records of, you know, whatever it was birth certificates or something. Land registry too. Right.

And it collapsed or I don't know. Basically all the records were destroyed. But imagine if all of those were held on a blockchain in the cloud in this tamper-proof fashion, then that would be very powerful. And that would have been unaffected by that natural disaster. But now that we've kind of given people, given people an idea of how. how this can be applied. Let's talk about how a blockchain works. Okay.

Now we're going to go back to our Bitcoin blockchain because that's our best example to illustrate how it works. So let's break down the term. So two words comprise blockchain, right? Block. And so what is a block? A block is just a group of transactions,

of Bitcoin transactions, that are all grouped together. And every 10 minutes, a new block of transaction. So a new group of transactions is verified on the Bitcoin network and attached to the prior block. And when I say attached, I mean chained.

So there's the second word. Block chain. So a group of transactions that's attached to another group of transactions in a chain-like fashion. And one of the interesting things about the Bitcoin blockchain architecture, well, there are a lot of interesting things,

But one of the really unique aspects is that that new block has some data from all of the prior block. And it's called a hash. And I don't want to get too down in the weeds. So I just like to think of it as data. So on that new block, it has some data from prior blocks. And I think of it as almost DNA. You know, the new block almost inherits some DNA of the prior blocks. And why that's significant is, again, for reasons concerning the ability to tamper and to trust this ledger.

And it's because it would be really hard if you wanted to go back and change this ledger because all of these blocks relate to each other. They have some, they have data in them. And Lorne, I think you're really good at explaining the hash function here. But the concept is just each subsequent block has data from prior blocks. Yeah. And so if you try to change, you know, some transaction 10 blocks back or something, everybody would know because the chain would then be broken. It wouldn't basically the math equations that kind of link them all together and prove that

they are still linked. They would show that they were no longer linked at, you know, some point. So that's basically how the ledger is shown to be secure. you can kind of prove it essentially mathematically. The Ethereum Summit hosted by consensus is anything but your average blockchain conference. Join builders, philosophers, policymakers, artists, and humanitarians from around the world on May 11th and 12th at the Knockdown Center in Brooklyn. For two days of storytelling and knowledge sharing around how we can build our decentralized future together using blockchain technology. No sitting around and listening to boring presentations.

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The McDonald's Frank's Red Hot menu. They put that shit on it every. you think. Breakfast available until 11 a.m. At participating Canadian restaurants for a limited time. Franks Redhot is a registered trademark of the French's food company LLC. So let's talk about mining, which I'm sure is something a lot of people have heard about. And it's a really important part of how a blockchain does work.

So what is that? I think one of the things about mining that throws people off is it's like mining. We think of mining gold or something. Well, it's not really mining. Another way to think of it is the process. by which the blockchain is secured. So if whenever you hear the word mining, just in your mind, think,

oh, the process that secures the blockchain, I think sometimes that helps. At least it helps me. So again, it's the process by which the blockchain is secured, and it rewards those who are doing the securing. And when I say those, it sounds like I'm talking about people. In this day and age,

I'm really talking about computers and computing power. But we can think of them as people also because people own these computers. And so how it works is basically you have, again, I talked about that decentralized network of computers spread out all over the world. And how it works is that these computers engage in basically a gigantic race

to solve a really complicated math puzzle. And this is what I was talking about, about cryptographic wizardry. But it's a very complex math problem. And these problems get, by the way, harder and harder. And the first computer to solve this puzzle, this math puzzle, two things happen. One, they get the right to add the next block to that chain that we talked about. They also get rewarded financially.

They're incentivized to perform this math computation. And they get rewarded in the form of Bitcoin. This is called a block reward. Okay? And so they think they're doing this great thing. They're getting money for solving a math problem. But in the process, they're adding another block to the chain, verifying transactions, and thus securing the network. Do you have anything to add about mining?

Well, I think the only thing that I would add here is that one other thing that's fascinating about Bitcoin is the way that they incentivized people to join the network was that when the software was first released, it was dispensing 50 new bitcoins every 10 minutes. Then, after four years, that went to 25. and now it's down to 12.5, and then we'll keep going until we reach the 21 million limit. But the point is that, you know, it was sort of like trying to get people on to the network earlier rather than later, right, by dispensing more of them. And so you would want to join before the block reward got halved, as they call it. Right. The halving events happen every four years. And so, you know, as you mentioned, this got people on the network. And of course, 25 Bitcoin, or sorry, 25 Bitcoin back in the day, wasn't worth all that much, ironically, at the time.

But now it's worth a whole lot. And so the price obviously fluctuates. So the actual fiat currency value of the block reward also changes. Yeah, the economic system of Bitcoin is so fascinating to me, because I definitely think it's one of the first instances we've seen of just kind of this little mini economy that it's created, where it's like incentivizing all these behaviors. And as one of my other sources always says to me, what's so interesting about it is that often when you get people who don't know each other and you're trying to incentivize different behaviors from them, they don't always do the thing that will, like, create an optimal good for the group. The Bitcoin is one of those first instances where people don't have to trust each other and yet a social good comes out of the way that they've been incentivized. But speaking of kind of social goods, we've heard a lot about hacks and crypto. Have any blockchains been hacked?

How can they be hacked? Well, so my answer sometimes differs here than some other members of the crypto community. And that's because I spent over a decade as a federal prosecutor, and I prosecuted some pretty big hacks in cybercrimes, so I'm never going to tell you anything, can't be hacked. I think a lot of people in this community would tell you the blockchain is unhackable. I won't make that claim. But I will say it's pretty darn secure.

trustworthy. I would bet money that it wouldn't be hacked, but I'm still not going to sit here and tell you it's not possible. When you hear about hacks, and oftentimes not journalists like yourself, Laura, but some other journalists will report that the blockchain was hacked, and it's

actually factually incorrect. What they mean was that an exchange, a cryptocurrency exchange, was hacked. Again, because, see, remember, the blockchain is decentralized. So again, getting back to that notion, would be really, really hard, if not impossible, to hack it.

Exchanges are centralized. It's a centralized single point of failure. And just like we see all kinds of central points of failure being subject to hack, whether it's Equifax or whether it's OPM in the government, cryptocurrency exchanges, or whether it's, by the way, financial institutions, traditional financial institutions, cryptocurrency exchanges aren't any exception. And one of the first really big ones was... was the hack of Mount Gox.

How many of you have heard of Mount Gox? So Mount Gox was a cryptocurrency exchange. It came to be based in Japan, although at some point it had some roots in San Francisco. But it was based in Japan, and it suffered several hacks. And at the time, it was a lot of money. It was about $500 million hacked.

However, that number would be so much more today, because at the time, I think that was in 2014, 2015, I guess, Bitcoin was not worth nearly as much as it is today. And about 850,000 bitcoins were hacked in that series of hacks. So if you think about today, value of Bitcoin is around $8,000 a coin, I think it got up to today, times that by $850,000. Another exchange was hacked was BitFenex, $120,000. thousand bitcoins, which again translates to hundreds of millions of dollars, I guess. I don't want to do the math in my head. And this continues. Coin check was an exchange in Japan where it wasn't Bitcoin that was hacked. It was another cryptocurrency called NEM. NEM was hacked to the tune

of, I forgot, $500 million, I believe. Something like that. And that exchange had actually made so much in profits that it was able to promise to repatriate. the $500 million in cryptocurrency back to its customers, or at least it told the Japanese government that that's its plan. So I think what you hear of is the Bitcoin was hacked, or the blockchain was hacked, you're hearing about exchanges that were hacked. It would just be like as if I said,

if, you know, Bank of America were hacked, and I said cash was hacked. Right, right, which doesn't make sense. Right. But, yeah, in terms of, like, whether or not a blockchain can be hacked, often people say, oh, maybe quantum computing can do it. So that's just to give you an idea of when Katie says it could be possible. It's more in that realm of things.

But one other thing I wanted to ask you about is that a lot of people here in the audience and just generally in the wider world think of Bitcoin as criminal money. And yet you were a federal prosecutor for more than a decade. And yet you are so passionate about this technology and about Bitcoin. Why? Well, let me take you back to when I first heard of Bitcoin, which was in 2012 and I had just done a big, I used to do national security for a while, then I did organized crime and murder cases. So I was out here doing prison gang cases. By the way, I was in San

Francisco for nine years as a federal prosecutor. I was in D.C. for nine years before that. And out here, I kind of had had my fill finally of the organized and violent crime world and thought I would move on to something else. And my superiors asked me to prosecute this new technology, criminal technology, called Bitcoin. And that was in 2012, and I said, sure, I opened up a case file. This is still how the government works. We open a case file, a paper case file, you know, to prosecute Bitcoin. And I went home and I talked to my husband about it who explained to me quickly. He was kind of a sci-fi person into the gaming world. So he already knew about Bitcoin. I didn't. And he said, that's not possible. That's like saying you're going to prosecute

cash or the internet. You better get smart about this. He directed me to the wiki page on Bitcoin, and that was my first exposure to it. And I pretty quickly realized that what really the government's priorities here should be would be around prosecuting some of the worst criminal use cases involving cryptocurrencies like Bitcoin,

just like we focused on some of the worst uses of cash or wire transfers. And so one of the things I realized early on is that, like any new technology, criminals are some of the earliest adopters of new technologies. Now, although all of us in this room use the internet for everything, every single day,

in the early days of the internet, some of the earliest adopters were fraudsters and pornographers. And they loved this new technology that helped them perfect their craft or facilitate their craft. The same is true of cryptocurrency. And in those early days, a lot of criminals thought it was totally anonymous and not trackable. Again, it turns out that that's not at all the case.

And so what the government did was start prosecuting some of the criminal use cases. But just like cash, just like the Internet, it turns out there's a whole lot of really great stuff about the technology. And actually, one of those great things about the technology is that I know it helped you solve some crimes. Can you tell people what those crimes were and how you solve them? Sure, I can, well, see a couple of them. Some of them are still under seal, so maybe you'll read about them someday, but some of the earlier ones I did was, how many of you have heard of Silk Road? Oh, a lot of people in this room have heard of Silk Road,

which was an online dark net marketplace where you could buy everything from fake identification to drugs and other things. And, you know, whether you consider it a libertarian, in paradise or whether you consider it a criminal enterprise, the government considered it a criminal enterprise and was hard at work trying to find out who was the mastermind behind the Silk Road, who was running it. So there were two teams on the East Coast of federal agents trying to find out who was Dread Pirate Roberts or the mastermind behind the Silk Road. Well, it turns out that some of the federal task force members on one of those task forces were themselves really corrupt. And when I got a tip as I was here in San Francisco, and I thought, oh, typical San Franciscans, they think the government, it's always a conspiracy theory. Of course the government's corrupt. Of course there's a dirty agent on the payroll. So I took it with a grade of salt, but I looked with some agents. Well, actually, not many agents, because, you know, one thing that most federal agents don't want to do is investigate other federal agents. And that's where this thing called the blockchain came in because it's public.

You can go look on it on the Internet and see some transfers that are going on. And I'm simplifying things now, but it was very important to have this public database. Turns out it was also important to have this immutable, permanent ledger because these agents who were specialists in anonymizing technologies and Tor, one of them was joint duty assigned to the NSA, actually, knew how to really cover their tracks and get other centralized databases to change records. and they could not change the transfers that happened on the blockchain. And long story short, is one of them was stealing,

stole about 21,000 Bitcoin from the Silk Road and made it look like the Silk Road administrator had done that, causing a hit to be put out on his life. In any event, we were able to bring charges, and that agent went to prison. But what we didn't know was there was actually another agent who was also engaged in this kind of same behavior on that task force. And the blockchain allowed us to see the patterns of these two people were very different.

So it encouraged us, I guess, to keep looking because we knew we were dealing with more than one person. So that's one case. And I always say, and it's very true, without the fact that they use Bitcoin and blockchain technology, we never would have caught them. And that I do believe that. another case was, well, the Mount Gox hack I mentioned, it turns out that another exchange that was based in Russia, BTCE, which was unsealed, the indictment was unsealed last summer, some of those coins that were hacked in that Mount Gox hack that I mentioned, some of the 850,000 Bitcoin, about 500,000 of Bitcoin, we were able to trace, again, using the blockchain

to this other exchange, BTCE in Russia, and laundered through their. And using the MLAT, you know, treaty power and all kinds of other investigative techniques, we were able to follow that to certain people's bank accounts. So that case we solved using the Bitcoin blockchain trail. So as we've seen, governments find this technology very useful. But I think there's some other ways where they might find blockchain technology useful. What are those? Well, I think anywhere, well, let's talk first about actually not in U.S.

Because I think there's some interesting stuff going on with government. using this technology not in the United States, although certainly the United States government is also looking at this technology. But Dubai. Dubai has stated that it will be the first blockchain-powered government by the year 2020. And so what Dubai will do is they're going to put all of the business licensing applications

using blockchain technology, so on distributed ledgers, visa applications, and what else? There are a few other things. So V's up, oh, land registry records, and a few other kind of basic civil service, kind of civic services, I guess. They're going to be putting onto this distributed ledger system. And they've estimated that it will save at least 25 million man hours and countless billions of dollars per year.

And that's Dubai. So that's kind of, they haven't done this yet. And in many ways, I think it will be interesting to see what some of these. countries are able to do when we can kind of borrow. The U.S. government could borrow from that. Although the U.S. government is engaged in its own kind of studies and pilot programs, the Postal Service just announced that they're going to be piloting a blockchain program. I mentioned that the state of Illinois is piloting a program to put birth certificates on the blockchain. And I think anything that you, where you think you could improve efficiency, where there's a greater need for

transparency and where there's a lot of fraud, waste, and abuse. And it turns out there is a lot of fraud, waste, and abuse that goes on in government services, unfortunately. And so I think that there are a lot of different ways you could use the blockchain. Now, again, I don't want to make it sound like this is just this miracle technology that can replace everything. The fact of the matter is there's a lot of infrastructure and a lot of structure that needs to be built. And in this way, think of it like the early days of the internet. Like someone said, we're on the dial-up days still. And if you would have said,

you could stream Netflix videos and download photos to you in 1994. On the internet, you would have thought they were crazy because, you know, remember, do those of you in this room, remember those dial-up noises that your modem is connecting, couldn't even barely download an email. And so this technology is also

in its kind of infancy right now. and all of those structures need to be bailed out. And a lot of really talented developers and engineers and computer scientists are working on these projects now. Yeah, and just to, again, underscore this point about sort of where we are versus where we might someday be. One stat that you always mention to me, that just blows my mind, is that in the U.S., I guess, there's 14,000 different legitimate birth certificate forms or something. Yeah, this is like, this always makes people doubt me, and then I tell them, go look online and Google, Health and Human Services Inspector General Report years ago. Still nothing's been done about this.

But in this country, 6,000 different entities. Just in the U.S., 6,000 entities can issue birth certificates using 14,000 different forms. And we wonder why we have an identity theft problem. And we wonder why we have a fraud problem. And in law enforcement, we call this breeder documents, because they breed new identities. Once you're able to get a fake birth certificate, which is really easy because no one can spot a forgery

because there are 14,000 forms. And with all of the advances in printing, it's just, and it's a paper document. And it still is today. And if you think about that, it's kind of mind-blowing that that form of identity, that again can breed new identities, because once you have a birth certificate,

you can go get a credit card, driver's license, whatever, and you get together a few forms of ID, and then you're really in business if you're a criminal. And so I think identity systems is one area where really our government should really actively, I think, be exploring use of blockchain technology. People say, well, is that secure? And I say, well, birth certificates are public records. And certainly the current system isn't secure. Yeah, so let's move into something a little bit more futuristic.

We did talk about Ethereum before. Let's describe what that is for people who don't know. Okay. So Ethereum is a platform, a computing platform. Again, decentralized. Here's the big buzzwords of cryptocurrency and blockchain and decentralization. It's a decentralized computing platform for smart contracts. Now, who knows what smart contracts are?

Okay, see, just a couple hands. Do you want me to explain smart contracts? Yeah, yeah. So think of a contract. You have your paper contract, right? And it's a set of promises. And if someone doesn't live up to those promises, what you hope they do, and usually they do. And if they don't, your recourse is to go to court, I guess.

Which isn't much recourse these days, because it takes a while to get there, and it's very expensive. Think of a smart contract as a set of promises in a digital form, like a digital form, a digital contract, but that contract is programmed upon the completion of certain conditions to execute. transactions. So in its code, it will execute certain transactions when certain conditions are met. We can talk about one example that people always use is escrow agents. So in this way, smart contracts, some say will really remove middlemen, even lawyers. So from the equation, but escrow agent is a great example because, you know, you have to have this trusted middleman or third party. for the title transfer and the funds transfer,

unless those things could happen simultaneously through a smart contract. So basically how I think of, and we'll get to Ethereum, because the currency of smart contracts, I think of it as highly programmable money. You can program your money to go somewhere else when something happens. And people think, well, how does the contract know if something happens? I've had that question myself. I think with the Internet of Things, for example, or with the Internet,

there are certain verifiable, publicly verifiable facts that when they occur, that contract will self-execute. And so that's a smart contract. So when you ask about Ethereum, Ethereum is just the platform, the decentralized computing platform for smart contracts. And in order to use that platform, you need, just like if you're a car, you need gas. To use the Ethereum computing platform for smart contracts, you need gas too.

And that gas is called ether. And ether is another kind of cryptocurrency. So we're actually, we're going to start questions in five minutes. So I just wanted to get people thinking, if you have any questions, you might want to get them ready. And also go stand back near the mic, which is near the door back there. But we're going to keep talking about Ethereum. Okay. Why don't you give maybe some examples of what people can do with Ethereum?

Well, there are examples that I can talk about, which is what people say you'll be able to do with Ethereum. Right now, it's really still in early days. So I told you that Bitcoin was conceived of by Satoshi Nakamoto in 2008. Ethereum was conceived of by a young guy, I'll call him a kid, because he's, in my opinion, he's a kid named Vitalik Buterin. and it launched in 2015, and he wrote a white paper. He had studied Bitcoin, and he thought he would improve upon Bitcoin to make it highly programmable, so a cryptocurrency that was highly programmable. And so in 2015, Ethereum launched.

So Ethereum is newer than Bitcoin, and there are things that are said that we could do with smart contracts. I'll give you a couple examples, but I want to be clear they haven't yet executed. They haven't yet come to fruition. I don't doubt that they will. But some kind of things are like, if you think about, people talk about very futuristic, a peer-to-peer Airbnb, a peer-to-peer Uber. So we're removing the middlemen, the middleman.

So it would be a peer-to-peer network of, probably be self-driving cars by that day, cars and riders. And it would all be run through smart contracts. and so Uber wouldn't be around to take a cut. And then also the same thing, if you think about peer-to-peer Airbnb. There's another project underway right now called FileCoin, and they call it it's basically a platform

where if you have extra space on your computer, it's like an Airbnb for computer space. And one of the really neat things about smart contracts here, and that's underway now. One of the cool things, I know we're wrapping up for questions, but about smart contracts, is it makes certain assets that were illiquid previously, possibly liquid. So, for example, unused file space on your computer, unused computing power, maybe you couldn't previously get paid directly for watching digital advertisements, but why not?

So it will render, they say, assets that were previously liquid. All right. We have a good set of questions there. Why don't we take the first one? Hi. Thank you so much. My question is about, you said, there are several thousand computers updating the ledger, so to speak. What about the energy consumption?

Will it reach a point where it will just be unsustainable? And where are these computers? That's a really great question. Do you want me to answer it? Do you want to? Sure. I mean, you're right that the energy consumption of Bitcoin is quite high now, especially because there are so many computers on the network. I have spoken with some Bitcoin miners, and I do know that they are focused on placing their mining equipment near renewable energy.

So you'll see a lot of them like your hydropower, you know, or geothermal. But you're right. I think the most recent statistics I found was that if Bitcoin were a country would be like, I forget in the 40s in terms of like, you know, it's ranking of energy consumption amongst all nations on Earth. There is Honduras, I read it consumes more power and more energy than the country of Honduras, and it might be even bigger now. Yeah, it really depends on what time you check the stats, basically.

But the thing is that there are actually other ways to secure the network that some people in the crypto world are working on. so like Ethereum is moving to a form of securing the network that is less environmentally intensive. Yeah. But that was a great question. I'm glad that you asked that. And one other thing I wanted to say, which I meant to say earlier when you guys were asking the question. So that was a great question because it was brief and asked a question.

But that's just reminding you of what Moresa said earlier to keep your remarks short and to be a question. And I do think that's a great question. And people are developing alternative criteria. cryptocurrencies for this reason, environmentally friendly cryptocurrencies. So that is in the works. Laura has a great podcast yesterday, actually. I just listened to it today. Was it out yesterday? It was out Tuesday. Tuesday, about that you can go to and download on iTunes all about the consumption used for this. And so that's actually a really timely question. So thank you first. The question is, so actually what happens when you buy a Bitcoin? Where does that

money physically go. Okay, good question. So you can get a Bitcoin in a couple different ways. Like, let me just talk about, well, you could mine a Bitcoin if you had a supercomputer, but let's say that you wanted to just buy a Bitcoin, or get a Bitcoin somehow. Most people now will go to what we call on and off ramps, which are the cryptocurrency exchanges. And those exist all over the world. The biggest one in the United States is Coinbase. I happen to be on the board of directors of Coinbase, so fair and full disclosure, but it's the kind of most popular on and off ramp in the United States. In other countries, other exchanges are popular.

So you would go give, in this case, you would open a Coinbase account, or if you were in Europe, you might open a Bit Stamp account, for example. That's another exchange. And you would give the exchange money, cash money, you know, fiat currency. You could use a credit card, you could use your debit card, or you could link it to your bank account. and in exchange, they will give you, you will have a Bitcoin wallet and you will get Bitcoin. Or you could also buy, for example, Ethereum, or maybe you decide you want light coin.

The other way is that someone could give it to you. And we do have systems in this country called like local Bitcoin. Think of it as like a Craigslist. You could meet someone at a Starbucks and give them cash and they'll transfer you, you know, through your digital devices. You would both have a Bitcoin wallet, which anyone can, just get a Bitcoin wallet online, and you can transfer Bitcoin and pay them cash. So that's probably, those are the easiest, most common ways to get a hold of Bitcoin. Merchants also do take Bitcoin. Yeah. And if you do it that second way, then it's a little bit more like literally dealing in

cash, where you then, there's no like bank or central authority that you can go to to say, hey, I made a mistake with this transaction. Like, can you reverse it or whatever? Because like, let's say within Coinbase, Katie and I both have Coinbase accounts and I send her some money, but then I didn't mean to or whatever. Like, I could maybe say to Coinbase, hey, I screwed up, you know, have her send it back to me or whatever it is that they might do. But if you're dealing with it in more of that digital cash fashion where, you know, maybe it's literally on your, or the way that you're accessing the Bitcoin network is through your phone. It's like you are in control of that. it's much more like literally dealing with cash.

So I know this is like maybe a slightly different concept because technically the Bitcoin will reside in the cloud, but you are controlling that through your phone. And they call that that control of it. It's through what they call a private key. Like a password. So essentially you can either ask a service like Coinbase to manage your private keys or you can say, I'm going to hold my private keys. And be careful if you hold your private keys, as some have learned the hard way.

In some ways, there's no centralized service holding them, so some people prefer it to hold their own private keys. The only danger in that is that you could lose them, and it's just like losing cash. So there's the famous story of a guy who, I don't know how many hundreds, if not thousands of Bitcoin he had, and basically threw them out in a dumpster with his old computer. Well, when the price of Bitcoin started going through the roof, it was many millions of dollars. And last I heard he finally had permission to look through the landfill site. But the money is gone. Yeah, this was in England.

Because I think initially right when he lost it, it wasn't worth as much. And he was like, oh, forget it. And then last fall, when the price started going up, he asked for permission. But they're working on a lot of custody solutions. This is part of the architecture, the plumbing, the structure that is being built by different companies and developers right now are secure ways to store this stuff. A lot of institutional money on that storage point is yet to come into this space. of people think that will help stability and volatility, because a lot of institutional money we've heard is waiting on the sidelines to come in because there's no what we call in law

qualified custodian. So hedge funds, fund managers, investment professionals under law are required to have crypto funds held by a qualified custodian, and there just aren't those solutions being built yet, but they're in the works now. Next question? Okay, thanks. My head is spinning right now. But my question was sort of like, how do you spend it? I read a story one time that this couple was traveling around the world, and they only wanted to use bitcoins. But, you know, companies or stores or hotel, they have to sign up for this.

So you could only go to places that are signed up to have Bitcoin exchanges. Is that correct? Well, Sue, a lot of merchants are now taking it. It's a bit kind of in fashion now. I know some of the merchants that are taking it, Because the fact is, at least in this country, with the price as high as it is, people aren't actually wanting to make payments in Bitcoin. There's this famous example of a guy who spent 10,000 Bitcoins to buy two pizzas. And so those pizzas would now be worth, what, over $100 million?

No one wants to be that guy. So no one's spending the Bitcoin in this country, not no one, but people are, you know, there's not as much demand right now, I think, for merchants to accept Bitcoin. However, we do see Bitcoin accepted here signs. And so merchants, just like they'll accept credit cards, do have mechanisms that they could accept Bitcoin payments. And I think I forgot if it was Kayak or Expedia, one of those sites, Expedia, like Dell computers overstock. These are some of the big brands that famously do accept Bitcoin.

Again, though, I don't suspect they have a lot of demand right now to be paying in Bitcoin because of the reason I just meant. mentioned. Now, maybe that stability and volatility works itself out. I hope so, because I think Bitcoin is a great payment system. But right now in this country, it's just not being used that way. Yeah, I think in places like Argentina, they use it quite a bit more, where in Argentina, there's sort of like an official government exchange rate to the U.S. dollar that's definitely not the same as what it is on the black market. So I think people like using Bitcoin because they feel like they're getting a fair exchange rate. And obviously, Venezuela is a very

similar situation. So basically we're in places where people don't trust their government money, you see Bitcoin being used a lot more. Next question. So thank you very much. I have two quick questions. So one is how is the value of Bitcoin sort of determined? And then the second one relates specifically to the regulatory framework in the United States. I know like the SEC and the IRS, everybody's looking at it differently. And I'm curious what you see sort of happening there and how people who are holding the currency can deal with it for tax purposes or any kind of disclosure, public disclosure purposes here in the United States. So the first question is pretty easy. It's just market, right? It's what the supply and demand is. And so you can go to any of the major exchanges and look

at what the price of Bitcoin is today. So that's to your first question. Your second question about regulatory framework, much more complicated. I think one of the things we're hearing a lot about in the news now, and we didn't get to this question, I think, Laura, is I, but I, but I do want to leave you with this term, ICO or ICO. You're hearing a lot about ICOs now or initial coin offerings, okay? And these are for tokens, which we can, we could explain for a minute, but a lot of the regulatory questions are kind of coming into play because of, you know, how do regulators think of ICOs? Are these tokens securities or are they not? In terms of the broader regulatory framework, look, one of the hard things about doing business in the United States,

if you're kind of an emerging technology company, is you've got a lot of different regulators. So, for example, using Coinbase as an example, one of the reasons that I joined Coinbase's board is that they early on kind of embraced regulation and said, we're going to end up getting regulated, we're going to go get money transmission licenses, as painful as it is, in all of these 48 states,

because in two states they're not doing business presently. but in the 48 states where they're going to do business, they're going to go get licensed. Even if the person at the financial supervisory board in Mississippi has never heard of Bitcoin, they're going to go try and get a Bitcoin license or a money transmission license to sell, buy and sell Bitcoin. But you also have anti-money laundering laws that Treasury enforces.

And as I said, sometimes it ends up being ironically easier for the federal government to kind of follow the money where cryptocurrencies are used instead of cash. But you then have, as you mentioned, the SEC, they think of some of these as securities. The CFTC has said, no, actually, some of these look to us like commodities, so we regulate them.

And then the tax questions are also difficult. IRS kind of came out in 2014 and said, this is just like property. So account for it as you would property. Now that becomes really complicated if you start using Bitcoin as a payment mechanism. Because what if you made money, but then you spent it on a cup of coffee, and how do you account for that?

So a lot of really complicated tax questions. I think in some ways, you know, the United States is not behind in regulations. They have working groups at all of these agencies looking at this stuff and trying to work together. In other ways, like those working groups are also looking to see what other countries are doing too and how, they're treating these assets. Like in the United Kingdom, you have the Financial Conduct Authority.

One of the nice things about doing business in the UK, if you're one of these financial technology companies, is they have this regulatory sandbox. And they also have one primary financial regulator, the FCA. That's not what we have here. That said, everyone seems to be making their way through, and there's some uncertainty. But as I do always say this, and Laura knows,

I've said this publicly, the government's not looking to go after kind of gray areas in this space. They really, there are enough bad actors that they want to go where they're kind of going to pick the winners or the obvious cases. So I do think when you see enforcement actions or when you see criminal cases brought, you're going to see, well, there was really no question. That was wrong. At least I hope that's the case. Next question. Hi. So I'm also a coin-based user, and there was a lot of commotion of market's disruption over the last Bitcoin fork. So I was wondering, can you explain forks? Why does a currency fork and how do forks affect the crypto market as a whole? Oh, that's a good question about forks. So Bitcoin, basically this code is open source, as I understand it. I mean, this is a very technical question you just asked. But this is open.

source. And so if the community doesn't like a particular direction or the way the things are being run, they can copy this open source code and create their own. And so that's what happened in Bitcoin. And Bitcoin forked. And what split off was called Bitcoin Cash. How do you, how do you think of that question about forks? There's multiple ways to do forks. But the way the Bitcoin Cash Group did it was they did it in such a way where anybody who held Bitcoins on the day that they forked, which was August 1st, 2017, would receive the equivalent number of Bitcoin cash. So if you had five Bitcoins, now you suddenly had five Bitcoin cash. If you had 25, you had 25 Bitcoin cash. And what happens then is essentially because these are

kind of ideological and very politically motivated things. What happened right after that was that a lot of the pro-Bitcoin people got super angry and they were dumping or selling their Bitcoin cash. So you saw the price kind of spike up. The second it hit the exchanges, just because that was the first time there was like this known price and then crashed down when all these people decided to sell because they were super mad that like this group had created this competing cryptocurrency. And then there were a few more political developments. And as that happened, the Bitcoin cash side that like I said again was ideologically motivated, sort of gained a little bit of steam. So the price has since gone up. but you're right that I think initially Coinbase did not give its users access to the Bitcoin

cash. So if you weren't keeping your Bitcoins on Coinbase, you actually didn't receive access to them originally. And the reason for that is fires and as soon as you know, there's a lot of kind of engineering that goes into maintaining all these different accounts and these wallets for people. And so I think maybe, you know, I did not interview them about this. So I'm just speculating here. But my guess is that, you know, they just sort of determine cost analysis, oh, like, we don't think that there's going to be great demand for the Bitcoin Cash. They ended up being wrong about that. There's this really funny chart you can see online where you literally can see that the number of users of Coinbase drop down before the fork because people knew that if they were not in control of their private keys, that they would not be able to access their Bitcoins in Coinbase. So literally, they lost like half of the number of Bitcoins that they were keeping, which is crazy. I'm sure that was not a habit. be day there. Well, I do just want to add. It wasn't just engineering resources. There are a number

of, I'm not here to talk about Coinbase business, but I will say there were a number of other reasons that it was announced in advance. Well, in advance that Coinbase wasn't going to initially support Bitcoin Cash, which it now does. And one of the reasons is, as I just mentioned, they have 48 different states' money service business licenses, and there are regulatory requirements to supporting new assets in some of those states. And so that's one of the there are many reasons that went into that. But now Coinbase does support Bitcoin Cash. I should also mention Bitcoin is not the only cryptocurrency that forked or crypto asset that forked.

Ethereum did too. So you have Ethereum and you have Ethereum classic. And when Laura says it's very political, it is that people have religion in this industry. Not all of them. I don't think I do. But a lot of people, especially some of the early people in this community, really have very strongly held views. and what we call, here's a term for you, crypto-twitter. There's a very active Twitter kind of presence for the cryptocurrency or crypto assets community,

and they hotly debate these issues. Yes. Okay. Next question. On Stephen Colbert one night, he was doing a charity, and the website crashed because the crypto people gave all the money. So could you talk a little bit about crypto and charities? Sure. Actually, I'm pleased to talk about one example, and that's called the Pineapple Fund. And the Pineapple Fund is this kind of organization of individuals in the cryptocurrency community. And again, these funds grow quickly when the price of cryptocurrency goes up.

It has given away $53 million so far to charity. I'm not sure. Yeah, I think it raised $53 million, and I believe it's dispensed $53 million to various charities. That's one example. Another example is Ripple, a company, I'll call it a distributed ledger technology company. Ripple Labs, you might have seen in the San Francisco Chronicle, I think, gave $28 million to San Francisco schools a couple weeks ago. The founder of Coinbase has called for a crypto-giving fund and has asked people, or I don't know if he's asked people, but in this medium post, he talked about the importance of some of the early adopters of crypto who have made a lot of money to contribute.

to a fund for that purpose. And so, as I said before, you know, new technologies have good uses and they have bad uses. And we're always going to have bad people using these new technologies. And we're also going to have a lot of great uses for society with these new technologies. And I think that's a prime example. Yeah, and I will say just in general in this space, there is this feeling that this technology can be very democratizing. So a lot of people are motivated to look into philanthropic uses of it. And is there, was that it?

This is going to be our last audience question. Hey, thank you so much for your time. I know this is somewhat insider baseball. So if it doesn't make sense to answer it, feel free to say no thanks. But I wanted to know what, if any, overlap you thought the Big Fish ruling that came down this week from the Ninth Circuit had in regards to virtual currencies. So I clerked on the Ninth Circuit and I clerked for the Supreme Court. and I'm ashamed to say, I don't have any idea what the big fish ruling was. Me neither.

I'm sorry, could you... Sure, so I'm not a lawyer. Long story short. Judge said that the virtual currencies used in video games are real currency, and so a lot of game companies are freaking out because their little coins and their games are considered real gambling. And so this will really mess up the games industry, and it's just the first time, at least, that I've seen it ruling that high up in the court come down on, you know,

what could ostensibly be considered not a blockchain-based virtual currency, but a virtual currency nonetheless. Well, thanks for mentioning it because, like I said, I guess I should be a court watcher, having clerked on that court, and also being in this industry, but I hadn't heard about it, so I'll look it up. I think one of the things, that's nothing new, though, because a company called Linden Labs that made Linden Dollars, They went through similar things years and years ago. And it's actually been an open question before the Treasury Department. They put out guidance in 2013 about virtual currencies. And a lot of people in the gaming community said, well, if this is this broad definition,

why then do frequent flyer miles not count? Why do video game dollars not count? So it's actually an open question. I'll be curious to read that decision. Thanks. So we are going to wrap up with an informed tradition, which is to ask, I'm also the guest what their 60-second idea is to change the world. What's yours, Katie?

I'm going to split it into two in 30-second speech. The first is I want to see us owning our own data, and maybe a blockchain is the way we can do it. I don't know that it's possible, but I have long been a privacy nut, even though I worked for the government as a prosecutor for a decade. I personally, because of that, valued my own privacy. I felt it was a security risk,

and I hate that these companies have collected our data as they have. One of the most interesting things I think from blockchain technology is let's own our own data. Let's own our own health data. If we want to rent it, if we want to sell it, and if we want to donate it to, like a charitable purpose, for example, to a pharmaceutical company doing research. But the notion that these centralized entities own our data and sell it and monetize, number one, without our consent, and number two, without us getting any benefit, seems like we need to change that.

That was 45 seconds. So 15 seconds. Actually, that's my answer. Thank you. Great. Well, let's give a round of applause to Katie. Thank you. And before you, the part, I just wanted to let you know that we planned on those two more programs around blockchain and cryptocurrency. So you should stay tuned for news on those. And then the last thing I wanted to say was thank you for joining us in form of the Commonwealth Club. Thank you so much. Thank you.