Bitcoiners are their own worst enemies

Transcript

hi everybody my name is Paul and welcome to a brand new episode of our weekly cryptocurrency talk show with me of course is co-host yob harto of blockexplorer blog tr.com and today we're going to talk with Tim Swanson author of amongst others great chain of numbers and the anatomy of a money-like informational commodity Tim is also doing business development over at digital asset exchange and wallet melodic domcom and he's adviser at hyperledger with Tim we're going to talk about opportunities and challeng of cryptocurrencies we're also going to talk with Andreas wter and Ruland crave of the Belgian initiative Kent Bitcoin City viewers of course can ask questions using the Q&A tool hi guys welcome Hey great to be here thanks um

Tim um I heard a rumor that you're a sto paid for by the banking cartel to spread fear and wreak havoc in the Bitcoin Community is that true oh I wish that'd be being paided lots to have to deal with all the trolls I deal with uh you know Jan actually uh I have to leave this conversation Qui Janet Yellen just sent me a message hold on one [Music] second yeah I wish I wish that was true yeah no actually I I was um I so quite some Bitcoins today after reading all your stuff over the past few days it make me more of a skeptic I think that's why but do you still own Bitcoin or any any altcoins no I haven't had any coins since I came back from China about 15 months 16 months ago like I did mining

when I was in China uh for both Bitcoin and altcoins didn't make much money actually broke even basically that's just the way mining is and U even though I work in I technically work for an exchange uh called melodic which is in Asia I don't actually own any assets at any kind okay why is that you never see like a very interesting coin you want to pick up or you want to profit from yeah well I I'm sure we all know this if you've done any kind of trading which all of you have is if if you want to do trading I don't want to have to be captivated by like looking at it price apps all the time and and having to deal with you know what what's coming up

what's the sentiment today so uh there's some people who do that and they like doing that they're called Traders and I just don't want to be a Trader so there's nothing wrong with trying to do that by the way I'm not anti people enjoying that activity okay so um today like I said we're going to talk about opportunities and challenges for the different cryptocurrencies blockchain Technologies out there um borrowing from the books and and stuff you wrote um one of the topics we will discuss is remittance or better put re bittens but can you first share what you've learned of the recent Stanford blockchain Global impact Workshop that you attended and any consense is there in the direction the space will take yeah we're all going to jail that was that was consensus no uh so yeah I was there for four days those of you not

familiar with it uh the first two days were kind of like a private like Workshop it was about uh 35 40 people uh I'd say about 10 lawyers um from different parts of the world some people from Australia Canada the us so I guess three parts of the world uh and um we uh split the there was three working groups one was on identity one was like on uh distributed autonomous organizations and one was on like uh legal uh like cial depository uh like what what are the different companies in this space and what how do they actually fit within the current legal framework um I think uh that they'll publish some stuff I'm I'm not sure if I'm allowed to really

talk much it wasn't anything secret I'm sure you saw our photos and stuff like that but um I I think they want to solidify like uh the actual views before it's all published so um nothing that was too Earth Earth shaking but there was one interesting thing from the the Dao group they uh they grabbed a a Delaware LLC just like a general like Cor corate LLC agreement and they pruned it and threw in the words Dao basically and tried to make it to where you could actually use a a uh when you download or use it and now in the future you could use this legal structure to actually protect yourself or the entity uh they're trying to shape it within the current legal framework whether or not

that's allowed I don't know there was no judges there like actual like legal judges uh but it was being crafted by some lawyers including Joshua Fairfield who's a professor at I forget which college he's at but um I'm sure that will be public in in soon uh common Accord was out there if you're not if you guys people aren't fam with common ACC cord there kind of trying to standardize how contracts are read trying to make it more dry code than wet code so uh yeah it was it was a good first couple days and then other two days were public it was um uh a bunch of different panels um were all recorded they'll be on YouTube soon and um I was uh I was a moderator for one on Tech uh some of the tech issues in the space like block uh block scaling or sorry

block sizes and scaling of the network and then um I was a panelist on uh kind of like the bittens panel if you will and um there was a couple other interesting alternative economy panels uh I uh I'll hold opinion I won't mention my own opinion on those but uh anyways yeah it was a it was better than I think most I don't go to bitcoin conferences in general just because it's all um pump pump pump pump you know get excited go to church we're going to be profits profits and stuff like that I'm not interested in that uh this is more academic and more uh more geared towards business professionals yeah and so one of what were some of these technical issues um could you tell a bit more about proposed Solutions and if there was any

consensus yeah so okay so there's four people on the panel I'm sure the video will hope Peter Todd was on it uh John uh Juan Bennett from ipfs filecoin um elain sh she's a professor at University of Maryland and then the fourth person was Joe Beno um who's a post do at Stanford um and rather than just rehashing all the things that we talked about um the things that that came up were typically uh revolved around how do you model um actual economic incentives within this ecosystem like and this is something that comes up all the time I guess on your show even is like centralization of mining why does that

take place why why why do these actors do that even though it's not supposed to be that way in theory right and it just goes back to why does why does Capital pull together and aggregate in the first place and it's it has stuff to do with you know lowering risk and that's where we get things like yield curves so with with Bitcoin you have a Plus on process right that's the bread and butter of how we we do you know basically variance with with blocks and you know on average you in that 50% right there in the middle of the Bel curve it's 10 minutes right but uh any given day you'll have a block not a that doesn't get uh basically built uh for maybe an hour every week you'll have a block that will

take over an hour um and that's just because of the way the variance works and you can't remove that otherwise you you you create a gameable situation um for for any of these work systems so that was something we talked about and and uh in short in offchain if you will uh off record off the video we were we were talk I was talking to some uh there was a bunch of students from MIT one was writing a paper on this and when you look at uh actors in this space especially VCS they want to have a return on investment in terms of Mining and so um it there's a guy named Dave Hudson out in the UK he's written this wonderful blog it's called hashing it.com and he shows that you know it really it's it's the irrational actor

that doesn't participate in in pools because uh pools allow this aggregation uh of capit or this cashing equipment um that that provides a better payout than you would if you were just solo mining so it's rational to pull because it lowers the risk lowers the variance it provides a steady in uh steady uh return on on on um and so you know that's something that that probably won't be removed anytime soon or at least the the the uh Pon process because it it removes some of the the variants that we need to have uh well at least the system needs to have in order to PR G ability right so um let's talk a bit more about your book then because we you already touched upon a challenge uh

potentially or or realistically for Bitcoin but what are the the main challenges you see for Bitcoin or cryptocurrency in general man uh so I guess people like to well some people like to call me like anti- Bitcoin or skeptic I was pretty bullish a couple years ago like uh I'm sure we could dig up old emails and stuff like that if we wanted to but um I think the thing that turned me around with that was this transaction volumes uh was was the biggest one like we had a quint of transaction volume act or sorry a quintupling of merchants that were on boarded last year but we did not have a quint tipling of of transaction volume in fact we had almost no no real transaction volume in terms of retail

change um and we could see that onchain we could see that through coin bases offchain transaction numbers uh there's a website called wallet explorer that clusters all these reused addresses from the payment processors and uh this is not to say it maybe won't change but in general you know if you if you look at the demographics of Bitcoin and there was I'm not going to link to it but there was uh a couple weeks ago coinbase had their their pitch deck basically released and um again I'm I'm not gonna point to who who who leaked it or anything like that or where you could find it but uh the demographics are what you would expect it's it's predominantly male uh young people under 35 uh who live in North America or Europe

basically and when you have demographics like that people that that hold have Bitcoins um have have access to over banked Services if you will we're all over banked we have access to many different services and if you have access to say credit cards that give you cash back reward of 2% there's really no incentive for you to use Bitcoins as it were to actually to use it for actual retail payment so what do you use it for then you use it for two reasons you use it as an investment vehicle and uh if you if you're using as an investment vehicle then you're going to hold on to it with expectations that it appreciates in the future that's a rational activity or at least a rational for them um and then the other thing is you're going to use uh Bitcoins for things you couldn't

use credit cards for so use it for elicit trade um see that with like for example Satoshi dice when Satoshi dice went online in May of 2012 you actually see on the blockchain the TX volume is shot up and then when they blocked us IPS it actually decreased uh their actual uh traffic plummeted Z almost zero uh because what ends up happening is in the Europe as you guys know you have much easier ways to gamble online you can wire money to Banks and so forth whereas in the US we can't do or people can't do that um and so you have to you you end up resorting to these other other methods such as using Bitcoin so um I think the the biggest issue is people people

in the space uh believe Bitcoin will be something that it probably won't be in in in in actual practice um and so they become like kind of their own worst enemies because they overhype uh the ability for it to destroy you know current retail established players like uh payment processors and stuff like that and I just I think that's a it's a diservice actually the community probably is Its Own Worst Enemy right now so you're basically saying that the real adoption is just um lagging behind they're not really um anything substantial well you could uh like again on Shain we could see this I published a paper I think I had um jop look through it not to put words and drops if you look at transaction volume

and then you up into statements like gambling uh mixing uh into these different segments you also have Faucets in that um retail volume was almost nothing like sorry sorry it was was basically flat last year U actual Commerce and uh that's not to say that people didn't drive you U ility from these other activities if you're trying to build a you know quotequote payment process if you read section one of the white paper satosi kept on talking about like online payments like is for whatever reason he was evaluated with with with making sure that that had no trusted third parties for online Commerce but so we we we spend like $600 million a year or the Bitcoin ecosystem spends $600 million a year securing a network that no one actually uses for

payments for for online payments as it were um whether that changes I don't know expect do you expect like companies like bit pay to to struggle at the moment then that I mean they're burning a lot of cash supposedly then I guess and and they hardly make a buck if I just um understand that those actual retail figures are still very low yeah I mean I mean again I don't want to I hear lots of things too uh I understand that they did leave laid off a group of people about nine people after the the bitbull uh because they didn't hit certain numbers uh I'm not pointing fingers at anybody I mean that's not something I can do but uh again when you're building it goes back to other economic issues I described like in chapter nine

like uh if you have a a fixed money supply then the only way to you know reflect changes of demand is through a change in price so anytime you have future expectations of utility that come through the news or Through the Grapevine those get priced into present day prices and the only way to really do that is is there's no free lunch to that you end up with this volatility Spike and as a rational actor you if you believe that uh with with low low U what's it called Low Time preferences you your expectation is that appreciate value in the future you're gonna hold on to it that's a rational thing to do so uh yeah I don't think bit pay as much as they want to they could on board a million 10 million a billion Merchants but uh you know as long as you have

volatility and uh as long as you have uh people that actors rather hold on to it as an investment um then I I I think it's going to have a really limited uh circular flow of income you need to have it six seven eight levels deep down where you know employer pays employee who plays suppli and so forth all the way down and no one's really doing that uh maybe that will change it's just it's hard to see why anyone would when hedging volatility actually costs real money for real resources I mean we we see that with the airline industry like people are always like oh Tim you know uh oil is not uh oil is volatile no one would ever use it but no one ever tries to use it for currency people still use it it's just not people don't go around with like you know trailers full of of

oil trying to you know use it for for everyday you know medium of exchange uh in in practice people like stable mediums of exchanges and and uh you need to hedge uh with Bitcoin and most people you are besides you guys you guys are really smart most average people uh that aren't menas Mena people like you guys need to uh need to spend time and you know uh to to figure out prices and it's just a lot of mental calculations that that in practice people don't want to do so yes sir go ahead can I ask a question yeah sure uh do you see the the usability of Bitcoin or the blockchain in general more as a application type of thing than as a as a currency because if people won't use it as a currency but

use it for other things is there uh do you think there's stuff in there because there's a lot of venture capital flowing into the space uh how do you how do you think those guys are planning to make a return on their investment sure yeah so uh a number good questions here so um the first one starts applications like if you put like meta coins or you th you start throwing um like uh assets colored assets or proof of existence titles and stuff like that on the Bitcoin blockchain itself it's probably actually making it less cure you're basically making it top heavy so I'd actually agree with the the core DS and and their criticism towards uh different you know Ed consensus

mechanisms so this makes it less secure because the way the way the system is built is uh in in terms of the currency part if you will is is miners will destroy enough Capital to secure whatever uh Bitcoin is on there effectively up to where the marginal cost equals the marginal value um but uh in in uh in a world where you have you know public companies dumping you their own stock on there like people are always like oh Apple will adopt it and put their stock well you know technically they could but they wouldn't want to do that because if you put $740 billion of Apple equity on top of the blockchain which is only destroying $3 billion worth of capital you have two orders of magnitude difference in terms of you know this this this new vulnerability to where you could attack it it's it's it's a disproportional

reward mechanism so any application that that's being built on bitcoin itself that doesn't uh that tries to get a free ride off of the Senor effectively I think is is probably going to be a destabilizing factor long term if it ever catches on and becomes quotequote kill app um as far as VCS go they each have their own you know vision and stuff like that and uh you know V the way VCS work is they have to be risky like the LPS give the money to take risks for them um and they all can't be experts on specific things so for example some some some funds some of these bigger funds U they they'll be investing in their scope is like in 20 different Tech areas so they could only spend 5% of their time

research and so forth on say Bitcoin and so they can't necessarily become uh Bonafide experts like you guys uh you know obviously they do have their own internal research teams and they talk to experts and stuff like that but that doesn't mean that they necessarily get the best information maybe they're given information by people who have uh an agenda uh or I'm sure people say I have an agenda but look I I'm not trying to kill anything I think I'm very open-minded on this uh but there's people who clearly have a vested interest in in pushing for example people to own coins uh without disclosing the fact that they own coins you know and so on and so forth um going back to um you know we all probably work for trusted third parties at this point that's not necessarily A Bad Thing uh we

that's how you you scale out you have to effectively centralized to do that otherwise it's being decentralized is very difficult uh for for some of these services and um and so you know not the not the point fingers at like coinbase or Circle whatever but any if any of these guys are are successful where the actual growth is taking place in this ecosystem these edges these zapo Circle coinbase they're providing utility through ease of use through uh you know really um Dead brain you know uh usability features that your mom and dad can use and that's great uh but it comes at a cost that cost is it makes the network actually less secure in the long run because if everyone is using and sending transactions offchain miners aren't being paid transaction fees and that

makes miners much more uh they they have to continue to to live off the block reward and as we've seen the past two years in dollar denominated fees like fees to miners in USD is actually basically a two-year low so uh when people are saying oh fees will take up and uh we'll replace the Senor and so forth and make it more secure that doesn't happen in practice so not the point fingers at uh any qu trust a third party but uh the more that the more that we exist uh probably the less secure the network is in the long run but you that's that's another issue we could talk about for hours right um so talk a bit more about crypto cryptocurrencies or blockchain technology in general which which are

the one ones you think are more um valuable in the long run or more will be more successful in the long run all right well I mean this is just my own candid opinion I think that anything that models the Bitcoin limited Supply method will not be effective as in becoming a modern competitive currency that's not to say people won't try to use it as a curreny that doesn't mean people won't try to use it for you know Merchant activity and stuff like that but if you have a limited token like everything that's in existence so far on all these exchanges uh if you have a limited known Supply even if it's you know highly inflationary um it's the only way to change the only way to

reflect changes in demand is through a change in price so you create volatility uh because there's anytime there's future expectations it's priced in to present day prices so uh that's not something people want and I'm not sure if if you if you measure success by actual people using it for a transactional medium I'm not sure if any of them will be successful and that's not to be mean like the people are trying Engineers are are trying but like again it goes back to like if you're going to build a hospital you need to talk to doctors or nurses and right now we have some really brilliant computer Engineers computer scientists trying to build an economy without actually talking to finance or econ professionals because they I hate their view well you know these P they're recreating all the same problems that happened you know over the

last 500 years without learning any of the lessons that these you know econ you know Pros could tell them so um I I don't think that any of them will necessar like cryptocur systems will really catch on fire with um the the public at large aside from Niche use cases but that's just my own view right now based on you know what what what what currencies actually or assets actually exist today so what do you go ahead yeah uh so do you think we an inflationary uh model is the best idea for even for cryptocurrencies um so okay there's there's a a guy would be great on your show I think would be Robert Sams he's

in the UK um he's got startup clear MX which disclosure I'm an adviser for but he published a paper about six months ago called Senor shares what he basically would do is take the useful useful function of a central bank yeah I know people hate central banks in this space but one thing that central banks try to do is they try to create stable purchasing power whether they succeed or I it's I guess a matter of debate but um what they do do at least in the US and some other countries is they try to create uh try to rebase the or yeah basically rebase the money supply to where you know a dollar equals such and such over a certain time frame and if you could do that with a cryptocurrency if you could rebase a cryptocurrency like every day or every week or every

month based on its own internal economy you could have maintain at least try to maintain stable purchasing power and his paper is about it's called Senor shares he tries to do that in a quote trustless manner the two metrics he used to rebase uh the currency are um difficulty rating in transaction volume so it's a difficulty rating in a cryptocurrency are are going up that would mean that there's more hash rate being dumped onto it which means that maybe the chain maybe the chain isote worth more because uh miners are receiving more in Senor or something like that the other metric transaction volume uh if if actual transaction volume is increasing then um maybe that means more people are using the network which means it's supposedly healthy now obviously there's ways to

gain this and so forth but um this is way he he said oh look we could use these two um internal metrics we don't have to we don't have to resort to external information outside the economy to to rebase the currency nobody's done it yet I know um augur has looked at doing it through um they're using a volatility coin that they have two coins on it it's a dual currency Ledger and I think they're launching in May beta or so so I guess we'll we'll finally get to see it in the wild maybe in some in some way in a few months what about new bits and new shares then isn't that also stable coin B built with two elements that's a hack like they just use exchanges like we've been you know I've talked to them they're nice guys they

mean well I'm not endorsing them you know I don't endorse any coin um it's needs that they're trying to experiment but all they do is just maintain pay walls on exchanges and if you study exchanges you know they historically have like a 45 to 50% you know exit rate and exit I mean by collapse like they steal user funds or they go bankrupt or they just disappear so that's a huge counterparty risk um to deal to deal with and you know if new bit really does you know take off or bit shars really takes off not only do they have to worry about the criminal element coming in and trying to you know dos the the network or hold stuff you know hostage um to break that Peg but then you also have to deal with u the social engineering issues of of law enforcement you know if

if if you have 101 nodes these validators on the in the bitshares network that're they're known entities um with you know identifiable information and they're moving effectively around you know money if you will then they might need to again I'm not a lawyer but you might need a MSB you might need an MTL for each of the jurisdictions you're in and it's so much easier to do that in U A non or a less decentralized way so I I I think it's it's neat to see this the different types of Innovations from a technical level but uh you know uh from an actual social you know side of things I think that they could be you know taking on a lot more risk than they they had intended so what about remittance or

remittance for for some people see as the Panacea or or the killer app for for Bitcoin do you agree with that or what what is your view on on remittance yeah so I was on that I was on a panels on Monday um so just a a quick disclosure of the company I work for madic we have a new uh uh new Corridor between Singapore and ourselves with coin pip um in China Singapore to China not us nowhere else in Europe or anything like that and we're just testing it out like based on our homework our research and uh by the way if people are watching this the two experts really to talk to are Fel con it's got a great uh podcast called it's I think it's called follow

the coin um around the coin I around the coin around the coin sorry Tina is follow and um thenos he's uh I believe uh Chief compliance officer at bit Reserve he's written about this too um so the short answer is Maybe the uh the long answer let me give you that so the term you term remittance is just a play on word it's a kind of remittance plus bit um Bitcoin and uh you see this you know probably six months ago most people in you know on Reddit had no idea how to spell remittance and then somebody at a conference said oh this is this is our new Savior for usage um probably not in most corridors because you need the biggest issue is local liquidity we've

talked to you know different exchanges in different countries and if you're trying to move a significant amount of volume in each day and there's only like five Bitcoin a day in in in volume on the other side of of the uh of the world you're going to move the market and if you move the market there's gonna be slippage somebody has to pay for that probably will be a consumer or somebody has to eat those costs um so that's that's probably one of the the biggest ones that's nobody ever talks about the other two are compliance if you scale up in a jurisdiction you're going to need a physical agents Network on the ground um that costs money those people have you know the amount of feed that can't be automated yet um the other issue is compliance so like if you look at Western Union's 10K form the two biggest

costs for them are compliance and physical agent Network on the ground so at the end of the day you probably end up having to absorb a lot of the same cost that a traditional remittance company will um without having a whole lot of the benefits the one benefit and this is you know this because of how Bitcoin was designed is you could remove maybe a few Banks out of that whole correspondent banking system which might actually remove a few of the fees and might actually make it a little bit faster but again we can't forget that if you want to actually build like a real business in a country developed country you need to uh do compliance otherwise you end up in jail basically or you get sued big time and it's not worth going to jail over you know trying to do uh Magic internet money stuff at least to

me it's not worth going to deal so but but Facebook has to do with compliance student right Facebook um is implementing they got all those lies yeah but if if Facebook would of course they have the power and the money and connections to go through the process much faster so Facebook could easily um become the the the dominant payment service provider for small payments across the world because everyone has an account it's just a matter of making sure you um you comply with with AML and kyc and then everyone can just send each other a few dollars directly instantaneously without much costs or not sure yeah I mean that's the plan like uh I've heard a number of different

Bitcoin companies that basically want to build platforms similar to that uh in different jurisdictions get the licenses um there's one ex company size 44 exchanges now or they're they're based in 44 countries and that's kind of what they want to do they just want to tie all theirs together so you could basically send value around using Bitcoin as a rail system basically maybe look successful but again um one thing to consider also U and I posted all this this information actually just yesterday on in a slides share you know people could more than happy to look at the public data um is minor fees going back like again it's it's cheap right now to send uh because we're all living off of the coattails of of of these block rewards and once you you have block reward

very skeptical about um but uh in the meantime you can um and there's also other Alternatives um you could also use other quotequote all coins if you're just if all you're doing is just moving coins from one location to another and cashing out and doing you know feed on both sides you don't need to necessarily worry about volatility uh you just need to worry about liquidity on the other end can I ask another question about the compliance sure do do you think that uh something like time time stamping on the blockchain could help with the accountability and compliance of uh of businesses so that in their business they uh time stamp certain things to make sure they are uh open about the

things they need to be open about sure yeah this was actually one of the things that that was brought up at that uh Workshop this past few days um yeah but you don't necessarily need a Bitcoin blockchain to do that I mean whenever was like oh we have to have a we need to have a universal Ledger well you we don't need to have it it'd be nice to or many different ledgers like uh and you don't necessarily need a uh permission I'll have a report I'll be publishing in a couple weeks on the difference between permissioned blockchains and permissionless blockchains I think this isn't for big companies or even small companies you don't necessarily need a Bitcoin like blockchain you could use you could Fork you know any of these other distributed ledgers out there that

provide timestamping functionality or you ability to Tim stamp um and uh try to use it so you don't necessarily need to use the existing stuff that's out there right now but but doesn't the the fact that it is in a blockchain uh with security make the the fact that it can be altered in the in the past um in the future I mean uh is that isn't that a uh part of the the thing that makes it uh more acceptable for other people's people that don't necessarily trust you uh to sure these are really good questions um so it it goes back to reverse and reversib irreversibility so

uh in the in the real world despite what Reddit says most payments aren't reversible like uh if any real-time growth settlement system through a country like fedwire Bank of England sepa uh bank for international settlements you cannot be on their network if you could reverse a transaction so you have irreversibility you know uh push transactions throughout it um and maybe you could do time stamping on there I I I don't know what the particular use case on that one is but like bitcoin's blockchain the the the drawback for it for traditional companies again I'm not saying you can't use it for it but one of the drawbacks of using Bitcoin versus say uh hyperledger which disclosure on an

advisor for ripple or Stellar any of these other you know distributed Ledger systems is um is permission versus permissionless nodes and I'm not saying Bitcoin is bad it's just it specific use case is for permissionless quote unquote um validation and so that's why that the term the block stream came out with was dmms Dynamic multi-party membership signatures or something to that effect um in practice it's actually static like it's not dynamic because you have the same pools and same Farms that do it today maybe that will change in the future but the the point is if if you already have static nodes that uh that are pseudonymous or even dynamic notes that are suit Anonymous if if they

reverse those transactions you have no legal recourse and so it's not a particularly good system suited for existing Financial intermediaries or uh existing institutions I'm not saying you can't use it and judges won't you know recognize it that's that's for those people to decide I'm just saying you don't necessarily need to use that particular you know Anonymous validating system when you could do a trusted validators or pseudo trusted valid or semi- trusted validators okay thanks very interesting um Tim U we are already at 35 minutes so let's let's switch U to the guys from um from Kent um Andreas or or Ruland whoever wants to um tell a bit more about what you guys doing you're

going to open up k for for Bitcoin basically have signed up a few Merchants to start accepting Bitcoin can you tell us a bit more about it yeah sure um so what we are doing is um of course on the small scale we're just we studied in Gant we have lived in Gant as a student at the moment I'm not living in Gant but I plan to move back um and we have been in the Bitcoin space for about two years now of course very interesting all the technical stuff is for us very very interesting to work with um I'm particularly interested in the technology as well uh um but what we want to do with Gan

Bitcoin city is uh now that there are actually applications that make it very easy for merchants to accept Bitcoin um we are going to Merchants we are talking to them and we are explaining them how it works um and how they can set it up um we are working together with uh bit gasa which is of course an operator of a of uh um a Bitcoin acceptance application for your smartphone or your tablet basically um it just a simple URL in your uh in your browser and you you just go there and you can accept the payments and then bitcasa is the one that accepts it for you and you can

instantly convert it to Fiats uh or Euros or you can choose to um keep a percentage of the Bitcoin for yourself um and they make it easy for you to accept Bitcoin as a merchant um we have been going around to to to explain how it works and how easy it is basically um I must be honest half a year ago we wouldn't be able to to have done something like this because there simply wasn't something available to to work with uh back in the day Bitcoin was something that you hold on your computer with a um a very complicated program and now you can really apply it to to a brick and mortar

store so we have talked to uh a couple of merant we've done an information event to explain how it works how they can use it uh and at the moment we have uh 15 Merchants accepting it and growing um it's quite an exciting project uh it started while we were drinking beer half a year ago I think uh when we we were complaining that we couldn't pay it with Bitcoin um and then we the big uh point about it was we wanted to change our own environment so that we could use the Bitcoins we had um and at the same time providing some

extra um usability some extra um yeah um extra services to to the people in Gant and these 50 Merchants already accepted or they will start accepting it on the day you guys celebrate opening uh they they are already ready to accept it if you if you go to most shops they will already be ready to accept it we already did some some test payments um there is already one shop that is also uh giving 10% discount for people that pay with Bitcoin because they think it's a very cool project and they want to go with us in in the little yeah adventure maybe um

and on the 18th of April we are doing an opening event where we uh people can come through try out Bitcoin see how it works uh install a wallet um and we will explain um explain how how they can use it uh we will give them some free Bitcoins um they can also try out an ATM machine if they want and then they can go into the City and walk around see see what's up uh visit the stores that accept it um and it's it's mostly a bit of a an educational experience um to to let people know that it is out there that they can use it if they want

of course if they don't like it they are free to to say so um it's out there uh we think that it's working um if I just um Listen to Tim Tim says well there there is not really a use case for a lot of uh people in Europe and and americaart from speculating may maybe that the price will rise in the future so what is how are you going to convince people in Kent or Belgium to to start using it for for transactional purposes well um personally I've never been really interested in the price of Bitcoin um and the the speculation is one part of it I think another part of it is of course a bit of um people that

want to believe in a certain thing um want to try a different way um Bitcoin was a of course an an uh reaction to the the uh economic crisis um it might be an over engineered solution to a problem that doesn't exist like I read a code a time ago um but I think there's something there um I'm very excited about the technology um and so far as the the transaction uh is concerned it is just working when I want to send Bitcoin to Ruland for example uh because I need to

pay him a a beer or he he gave me something or I need to pay him back I can you guys drink a lot of beer well yeah we're belgians we are very proud on no it's it's okay we don't we're not drinks you know um but the fact that it is working is exciting at least um of course we know that uh the the system is still in a an experimental phase uh a bit like the internet back in the days um nobody know if it's going to work uh but project like ours and for example

r&m Bitcoin city in in in the Netherlands are showing that it is already working uh in r&m they have 60 merchants and they are doing a couple of thousands Euros per month in I have a question for you Andreas like when you say it's working I would wager that there's probably more Merchants that accept Bitcoin actually like people that have Bitcoin period like like how do you define working well the the the um the system the the fact that you can send money to someone else without using a Bank Of course like you have to use a bank when you cash out right yeah for them it is but for the users um but how

do you get the in the first place you buy them shut up if you want me to yeah yeah no you're you're right you're right um what what bis bitcasa is doing um and they are very open about it is they are providing a an intern solution um when they came to to G for their uh to explain what they are offering the merchants uh they also said in the beginning uh we hope that we will become irre irrelevant after a certain time because uh at the moment it is it is impossible to to ask Merchants to accept Bitcoin and keep them because it's uh it's not smart to to speculate

Bitcoin is volatile at the moment um it might stay volatile we don't know but if you ask them to keep the the Bitcoin they they are paid right now it's not possible so well I have a question for you then and I'm just curious to know like how in Europe so like one of the things we've looked at is uh this thing called a round trip like you can't just say I have Bitcoin you have to get Bitcoin through someplace and that someplace is a gateway usually and you have to link your bank account to it so you need a bank account to get Bitcoin to move that Bitcoin to somewhere else where there's a bank account to convert it to Fiat like why do you need Bitcoin to do that when you could just move from one bank account to another bank account through some other mechanism

uh can I say something I think that a big part of it is that people want to avoid using Banks uh we had enough of it is a reaction so how do you get Bitcoin without using Banks uh you can work for it you can accept it as a payment I think uh we we we are still in the early days and the fact that it's volatile is is shows that the community isn't large yet but I think and I'm convinced and it's it's not uh thing we have to say that when the user base grows that the volatility will go down a lot you point what's the evidence of that it's just it's just common sense uh

when people if you talk to people who trade Commodities just because you have more people trading those Commodities doesn't mean volatility disappears like the the reason pric for the the volatility in foreign currencies where not the US dollar or the euro is much larger than than for Euro or dollars dollar pair so I think that shows to a certain extent that Bitcoin volatility is due to the the the smaller Community using it so you're saying that Bitcoin will grow large enough to be the same size as a a large like G7 trading pair basic currency maybe not Bitcoin but maybe

another currency cryptocurrency but I think the fact that people want to use a cryptocurrency will stay because uh people just some people just want to stop using Banks and I think the the important parts here to think about is the the part about Choice um people are basically at the moment are forced to use the euro whether they like it or not because it's the it's the currency of your country where you born in uh and it's either use the euro or move somewhere else um and I think Bitcoin or any other cryptocurrency or model is a as an alternative can of course while

while they stay small it's not going to make a big D difference but you can choose to to use it um of course at the moment as a sort of protest but you you create a something like a competing currency where the other currency actually has to be um attractive to use um I don't know if Bitcoin is uh especially um particularly sorry particularly interesting for a lot of people to use but some people see the the advantage I know some people that are convinced they want to live on bitcoin that they want to use it in their everyday lives um because they don't it's it's just a mental exercise

and like I have R&B in my wallet because I go to China I'm actually gonna be there in may like I could try to live on R&B in the US I mean that's it seems like the same exact thing like why I mean I'm not saying you you won't be successful or anything like that but like like what is the value proposition for General people to to go through all the frictions to get all these different cryptocurrencies just so they could get the same things they could get with Euros or dollars or something like that well the the the friction only exists in the beginning if you're buying the Bitcoins um once you have them um then you have to deal with volatility yeah that's a choice um well okay well it's uh I think um job wants to chip in as well y if you

can remove your cat cat well my cat has an opinion too not about well um I don't know I just hold the opinion I love Tim's work I I really love it and he makes a lot of sense and we all uh come from different area so I I urge everyone to lead all the Bitcoin maximalist and all the Bitcoin minimalist and please form your own opinion that's why this world was so beautiful yeah we had a lot ofit bitco maximalist in the show actually we had yeah and that's that's why it's very healthy we also hold guys like Tim and and exactly because we had Ro ver Eric vores Andreas anonas Adam Draper Trace Mayer all of them Bitcoin maximalists but now

recently we've had Charles hoskinson and now Tim so I think it's very good and it's it's also nice to see you guys debate some of these core issues one final question maybe Tim before we WRA up do you expect the Euro crisis it kind of um is is related to what Andreas said earlier do you think that um because we have a monoculture in Europe with basically Euro being the dominant payment um system do you expect your crisis especially in Greece Etc to lead to extra demand for alternative currencies like Bitcoin and if if they might might create extra demand for a currency but it might not be Bitcoin I mean like if you had a choice if you have if you have the choice and you need to move money uh and you're not

technically Savvy or something like that and you don't have access to really good uh banking uh facilities are you going to try to get Bitcoin somehow on the street corner from some shady guy on glal bitcoins.com or you g to try and get a hold of US dollars or Euros or know Yen or something like that again I'm not defending current policies and so forth I'm just saying like want to do in practice and to answer your question I don't people will flee to cryptocurrencies which uh maybe they will certain areas certain inches but I think that they would probably go for something that's very liquid uh relatively Universal and uh can be you know uh indistinguishable uh for for uh like going to restaurants and stuff like that you don't have to do any you know

educ user education you don't need to give anyone a white paper to have to use dollar okay last you are allow use yes only the fiat currency like in Argentina so uh when you want to get out of Argentina with your Fiat it's almost impossible so you you need something like Bitcoin to the country if you want like we could say that but in practice it's another thing like we have all these theories about you know uh if these 20,000 different steps take place then everyone in Argentina will have Bitcoins maybe but like in practice they seem to not want that you know everyone buy Bitcoin maybe they will maybe I'll be wrong uh I just theory and practice are two different things I don't think

that Bitcoin needs to to dominate the space to be useful um it's it can be a a niche market where it has certain uses for certain people just to um I I I don't see for example the the technical of course there are issues that need to be worked on but I don't see um I don't see the technology of the blockchain in general I'm not even talking about Bitcoin only to fail and to disappear uh there can be things buil on it and I think in the future there there will be things build on it be it not Bitcoin be it something else be it another old currency be it um

implementation into the current financial markets which might be even more feasible um but there are certain certain things in the technology that are are useful I think I think we on that right yeah sure I think Andre and I found something to agree on right now okay all right well let's let's wrap up because we've been talking for 50 minutes already can I do one more thing before we wrap up can you can share your where where can people find you um it's on G Bitcoin stba of course it's in Dutch because it's for uh Dutch people mostly of course everyone is free to come if

you're coming from China or something just uh you're free to come as well um our opening event is on the 18th of April uh and we are starting at 11:00 in um in The Outpost which is a game center uh there will be uh Bitcoin uh ATM there we will do explanation of how it works for people that are interested um we will give uh our sponsor any coin direct will give some free Bitcoins to the first 100 people. um and then of course we can go into the city uh try it out uh have a beer again with the beer um and make a

nice city trip um so that's our project uh we hope some people are still interested after all the go buy some here guys go do it don't listen to me awesome guys I will see you guys the 18th and fr everybody else I think Paul's microphone is dying right now so uh thank you Tim for being on the show and everybody please go and uh visit Tim's blog uh Tim where can people find you yeah ofn numbers.com ofn numbers.com and U you can find his books in uh the online stores as well well thank you guys and we will cut it out for today and uh see you guys next week see you guys yeah see you byebye