CoinSummit London – Interviews with Olivier Janssens & Andrew Turner – Michael Jackson

Transcript

[Music] Welcome to Epicenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Couture and I'm Brian Fabian Crane. On July 10th and 11th, we were in London for the Coin Summit Conference. This 2-day event gathered approximately 250 investors, entrepreneurs, and developers to discuss some of the most important issues facing the Bitcoin and cryptocurrency ecosystem. In this episode, we talked to Olivia Jansen's, a Bitcoin early adopter and investor, and his associate Andrew

Turner. And we discussed Olivier's recent $100,000 bounty to replace the Bitcoin Foundation, why he chose Mike Hearn's Lighthouse project as the winner of 40% of that bounty, and the effect that Lighthouse could have on Bitcoin core development funding. We also interviewed Michael Jackson. He's the former chief operating officer of Skype and currently a venture capitalist at Mangrove Capital Partners. We talked about the recent European Banking Authority opinion. He talked about his experiences with the regulation of new and disruptive technologies from his days at Skype. And we talked about investing in Bitcoin companies.

Okay. So, we're here with Andrew Olivia. And you guys are um investors, I guess. Um, can you tell us uh what uh kind of companies you're investing in right now? Well, I don't have like a set target, you know, so I'm open to anything obviously Bitcoin or cryptocurrency related. Um yeah, I' I'd say that we tend to invest in um as a says uh cryptocurrency or bitcoin related or web technology related where we can bring some form of value added. So we tend to look for companies in an

um early seed preede phase where uh they're looking for ticket size around 100k uh US dollars um and where we can bring some form of value added in in terms of management or uh development skills. uh we have a pool of about 50 developers that we have split across Europe and what we like to do is try and invest cash and at the same time bring uh some management skills across uh um sometimes very active sometimes more in a sort of um non-exec kind of way um or and or uh bring on uh development skills at the same time

um combination of using Olivier's rather let's say public uh uh profile to promote uh the investments that we do. So typically we look for instead of just pure o cash investments I mean where we can bring at least some form of value added but this is optional of course I mean it's not like required to you know if if they're short on developers or management then we can always so uh you also created quite a bit of stir I guess about a month ago maybe a bit more when you made a post on Reddit kind of setting this $100,000 bounty to replace the Bitcoin Foundation with software, right? Um,

can you perhaps tell us about what motivated you originally to do that? Well, I guess me and like a lot of other people got increasingly frustrated with with the Bitcoin Foundation. Um, and for example, my current was making more and more posts about accordance being underfunded and I totally agree with that. So um I I was thinking like how do we solve this and and I started analyzing the situation and and my conclusion was that we need to find an authority for the Bitcoin Foundation because uh Bitcoin is decentralized and and nonpolitical and I think the organization is making it political which I think is very bad for Bitcoin. So that's why I decided to

post a bounty and see what people would come up with find an alternative. So I mean you ended up uh giving you know most of the bounty to Mike Kern and his lighthouse project you know which we've had covered on top podcast my current sensor before um but was the idea of funding uh the core development was that your initial main motivation when you started it or not not really u it was much more open at the beginning because I I just wanted to see what people would come up with but in the end my conclusion was that I think the most important thing to focus on is the core diffs. Um so that's why I decided to also fund a platform which could among

other things fund the cordiffs uh which also has already a bit of support from from a core. Um and and I think we can do a lot of other things with with the platform crowdfunding lobbyists or or there well sky's is the limit basically you know if you want to crowdfund your own bitcoin conference uh then just propose something basically a kickstarter but for for bitcoin and of that bounty which you gave uh a good chunk of it to my kerna uh are there other people have come forward with some interesting proposals that uh yeah there were many submissions Um but most of them want to have it remain a secret so I couldn't publish uh any of it. Um maybe a couple but then I had to

contact everyone individually ask permission. So it was a lot of work. I think around 30 or 40 submissions and yeah the most interesting ones were like yeah lighthouse and then um also Harris from um Harris from um from the three guys who made it. Um can you talk about that? Yeah, sure. So, Aries is basically running on on Ethereum and it's um probably one of the first implementations of the full or the range of possibilities that Ethereum can realize. So basically what you can do with it is they they created the first

software platform to really run on Ethereum where you can start a distributed autonomous organization uh a DAO which is all the fuss lately. Um so so they made a first good implementation in my opinion and that's why I chose them because I think Aries also has really nice um possibilities which can decentralize a lot of things not only a bitcoin foundation uh but but corporations and governments. So, so I guess would the goal be in the future that there's some sort of voting as well or perhaps um because you know I guess if you

wanted to replace the Bitcoin Foundation and and the core thing is that they have that they have a board of directors that doesn't work and you know can be able to replace that maybe you can have it elected in a different way or controlled more from a bottom up way. Uh do you you and Lighthouse seems much more limited, right? Is more targeted. Uh do you did you go more in that direction because you think it's more important or because you feel the other thing is maybe technically not feasible yet? No, I'm sure I'm sure it's possible technically to recreate the foundation completely virtually online with with like virtual voting, but I I chose not to do that on purpose because I think

voting and democracy will will entail politics again and and then there will be leaders elected in a new virtual foundation. I think it's just like uh overhead which is necessary. I mean if you look if you take everything away from the Bitcoin Foundation and look at the core aspects of it um it's running the core defing the core def it's it's uh running lobbies and and doing a couple of other things but those things can be done perfectly without a political organization maybe the Bitcoin Foundation or something virtual that's recreated so I chose not to recreate a political system on purpose.

Okay. Okay. No, no, that makes sense. So you feel like you know even if that had been recreated in the same way it's just that the nature of it would become politicized. Yeah exactly and I think now people can sort of vote with their money and and if they see a demand for something like um yeah like all chains um which is highly demanded from from what I heard. You mean side chain? Side chains. Yeah. So they can just um I mean as the developers or the developers can can the core def can make a proposal for the next three to six months that this is their their their their goal right this is their program like on Kickstarter and they can have like um extra goals when they reach this amount

of money so they hire more development developers like that the bitcoin foundation isn't really doing that so I think it's I really hope that once the cordex really start working on it platform that bitcoin development will be streamlined again and I think that that's definitely doable and I think there will be a lot of support from community community to to fund it. I I think side chains would be perfect for this kind of thing though because it's essentially public good. I think it would be hard to make money from it, right? It's something that like a lot of Bitcoin holders probably would like really like to see implemented in Bitcoin and not like Ethereum or some other currency. Yeah, I fully agree. So, I think that would be perfectly suited.

Yeah. and and maybe a lot of other things that people start asking for, the developers have to in their mind, but they never got around to doing it. I think Bitcoin has so many um uh extra stuff built into it that people don't realize it because there's no money for the developers to actually implement it. So for example like multiseek only started getting traction in the last half year to year thanks to among other people my current who sort of focusing on it and people then see the possibilities like oh um mount cooks could have been avoided completely by doing multi so it's having a lot of repercussions that it's underfunded and

and we have like disasters happening because of that you know so I think it's very important that we get it funded properly so what what is your ideal uh to you what what is the ideal scenario moving forward um for Bitcoin development to Bitcoin core development to continue to progress? Well, ideally I think that the developers propose um their their their schedule for the next 3 to 6 months with bonus goals and people can then you know fund it and I think they should also listen to the community. So if community ask for something specific uh unless it's not in line with the constitution which in my

opinion is like the Satoshi paper they should always like keep that into account and not change the core principles of bitcoins like the 21 million limits um and stuff like they shouldn't touch that right but like anything which can be built on top of it which is not like negative I think they should consider and yeah but then if you look at the white paper there's already like a one CP CPU one vote thing. No, that's I mean some things are already kind of what do you mean? Fell by the wayside.

Well, one CPU one vote obviously you know I think this conference is sponsored by G.io, right? Well, that's also I think something which can be solved. Um but I think Kevin talked about that right. So it's it's it's also community awareness how they mine but also maybe something which can be solved um in in in in the protocol. I don't know. Um, so I I've kind of been thinking a lot about some issues especially with transaction fees and some other sort of fundamental issues I see here with Bitcoin and I'm sometimes wondering you know is is it possible actually for Bitcoin to adapt or is it there's too

much intrinsic economic interest that makes it just so hard to like coordinate something else. So I'm I'm wondering do do you see that as a risk that uh Bitcoin might be replaced with something else just because it cannot adapt if problems do arise maybe scalability issues in the future? Well, I think I think that that it's very important that um the developers um like yeah I mean the community there will always be be altcoins right and it also puts pressure on bitcoin to keep self competitive on the other hand bitcoin also has unique properties which are very valuable to it so if it ever changes at those I think it will become

or risk become worthless for example if it suddenly says like okay we're not going um hold the 21 million limit anymore that's like you know that's a disaster right like it's the end of Bitcoin or if they change critical aspects which are bad to change I would never support that personally I think we should keep the core of Bitcoin but we should look at other coins and and learn from them right like the chains I think that that's something which is okay um and I think Bitcoin has a lot of um possibilities like becoming a central ledger for I don't know like real estate you know like replacing notaries or or something like that that's just huge right so there's many possibilities and we can stay up to date and and remain

competitive without touching the essence of Bitcoin I think just to answer your question there's there's one or two things which I remember was at the Amsterdam conference when was that like May yeah two months ago um and it's the first time ever I heard um Gavin Andre talk about um a hard fork in the Bitcoin core protocol. Um and I understand why he said that. I mean um my only concern or the only time that I've been concerned um about uh whether or not Bitcoin is capable enough of adapting as you said. um was

at that point in time because a friend of mine explained some of the technical challenges to me namely that there are a number of let's say core attributes uh in the way that Bitcoin is mined and a number of core values um which if you change them or if you change the way that they're implemented in the protocol could potentially invalidate all ASIC based mining hardware that's out there today. Um that of course is an economic disaster. Um for anybody who has invested capital in in mining, um if you basically get to the point where you

need to argue a change because you believe that the future of Bitcoin requires that change, but the downside of that is that all existing mining hardware will be reduced to junk. That's that's that's the kind of crux point which um which I think we'll be the crux point where some cos do because they have power right because they have the power not maybe in the interest uh of Bitcoin in the long term there's no way you can the miners the miners will never do it but on the other hand I mean yeah it'll be interesting to see how how how the whole ecosphere develops because you know if if that kind of problem ever

does sort a rise and you might get an alternative which gets a lot of traction. It'll be interesting to see how the Bitcoin community at that point in time reacts. But these are all things that are far away. That was one of the things which which I thought was you know an extremely interesting sort of uh technical ecosphere issue uh which which which at some point in time might really drive a sort of stake into the ground and and and influence how people might react. But that that touches a lot that touches a lot on what Mike Karn was saying where there's a lot of internal conflicts uh in the core development team and we're talking about um disagreements which are not at you know hard fork level type stuff but just

you know small stuff uh you know soft fork level stuff. So you know if we're not able if if the core development team isn't able to agree on just basic things like that like how can we ever implement these uh larger ideas like side chains and things like that like what are your thoughts on that? Well I think it's consistently shall we say I think we first should get developers from it properly and I think it will already help a lot. I might be wrong but I think it will that once we get the developers funded properly um it will already start helping.

So we'll see what happens. I think we should look at it again in like half year to a year and see if it's it's it's been solved or not. But I think it will really help streamline everything. Also they'll have more feel with the community once they start doing that which might also resolve some issues. Right now yeah there's a Bitcoin foundation and what do people really want? I guess they can they can sort of guess it but it's still not as direct as like working through a crowding platform. I I think I think you you you'll start to see evolutions like um I come from a telecommunications background. Um if you look at Bitcoin it it sort of appeared out of nowhere and then some people I don't mean any disrespect here decided to start a

foundation and said oh well we're the foundation and we'll represent what Bitcoin is. That's I guess a noble idea and has brought along all the complications and misery that went with it. But I think you'll start seeing that turned around. Now you're getting more and more companies who are venture capital funded or running a business or doing whatever who have vested economic interest in the continuity and future of Bitcoin. And I think you'll start seeing industry associations being created by representatives of these companies to agree on technical specifications on what's best for everyone multi-disiplinary. with uh representation from miners, from from

service companies, from intermediate companies, from API developers, all sorts of people, which I think is a much healthier kind of evolution where you see people from various sectors with vested real economic interest in the whole thing doing well basically instead of just some guy standing up and saying, "Right, we've created something. We'll need some sort of association. Here we are." Um it's much better if you get let's say a more technocratic approach at least where you have people who are really dayto-day working on this stuff and saying we need to get together and discuss how to uh tackle all these issues. I think that's I think that'll be a part of how how things can move forward. And then of course as Olivia says you have that proper funding. I

mean nobody works for free and um I think that the great effort by Olivier to uh to work on on at least starting a solution for that. I think that you'll see that kind of evolution moving forward. Yeah. No, I agree. Uh maybe maybe let's uh before we end, let's come back to one topic I'm kind of curious about. So since you've been I know in Bitcoin for a long time when when did you originally get involved? I started money in 2010. 2010 long time. Uh I'm curious what what do you think is going to be the most important area of development maybe in the next year or two years especially when we talk about uh adoption and startups and this that not like like software specific but just in general

just in general like uh you know I I know sometimes people for example say oh I don't believe so much in uh bitcoin as a payment system I believe in you know these other applications some people feel like process. It's going to be developing countries more. It's interesting to hear like how people view this differently. I'm kind of curious what your um or your both your perspectives are. I think the biggest development will be that people start realizing the potential which is almost limitless. you know, so I can't really point one out, but I think that's really the realization that Bitcoin created a new new world almost of possibility of decentralization of of I

mean it's truly a revolution, you know, after the internet. I agree with with Roger that this is the most important invention just realization of possibilities in my opinion. Yeah, I completely agree. I mean it it it's been said by various smart people that that that Bitcoin is the internet of money. Let's say it's it's a um and I'd say that that as an extension it's cryptocurrencies as a as let's say a concept and a protocol suite which are are are the internet of money and just like you saw in the internet boom. I mean as I said I've come from a 15 year career in telecommunications. So I've seen it go from from from nothing to world encompassing mega businesses.

Yeah. which which you just can't imagine don't exist anymore but 10 years ago companies like Vodafone they didn't even exist or they were tiny yeah let alone other companies which do more fancy stuff so I I think you'll see it move in all sorts of directions and just like you know um in telecommunication space you had competition for various uh various protocols like one that was referenced today in the conference was like yeah everybody was always saying oh ethernet's rubbish you know it doesn't work and it's it's useless and uh and who thought of that and token ring is much better. token ring died and went away 10 years ago and EDTE has become the prevalent uh layer 2 protocol for all telecommunications just because it

got traction and it got weight and everybody put their shoulders behind it and said our economic reality is vested in Ethernet and as long as the cryptocurrency community continues to say our economic reality is vested in Bitcoin it will thrive survive and continue to evolve and and and defeat the odds and people will find ways around the problems and because they wanted to succeed and I see exactly the same thing happening. I mean many people have made the uh the comparison and it's completely correct. I mean it's it's the weight and the power of many. So one more thing I think uh if if I have to

pick something I think it will be the development of like a free society online and I think Bitcoin will make it possible to create a complete society without without the government you know so also the political aspects organizational things voting and yeah I think people will for the first time be able to live their lives completely online free from you know any government so basically if they want to yeah they will need a physical location but they can just do everything online. There will be like decentralized course, decentralized companies, everything will just go online and and uh like I say on my Twitter like I think the revolution will be virtual. It means like yeah we're creating basically a new society online which can take over the

existing world. Well, thanks so much. Thanks. Okay, so we're here with Michael Jackson who is a managing partner at Mangrove Capital. Um, and before that he was uh CEO of Skype. So, hello. Hi. Thank you for uh thank you for taking the time to uh speak to us. Um, so perhaps uh can you tell us a bit about how you first heard about Bitcoin?

How you got interested in Bitcoin? That's a good question. And how did I first hear about it? I first heard about it some time ago. I guess about 18 months ago, something like that. I'm going to suggest it was like that. And it was obviously an interesting thing. I've been always interested in the payment space. Um it's been something I've been involved with with billing and payments and backend systems and that kind of thing in telephone companies for many years. And then there was I thought Bitcoin became a payment method, simply a payment method. Uh but then I could see more in it suddenly. Uh one of the side projects I worked on at Skype, it was one of we had three or four of us working on it was a way to pay for media using something called Skype credits,

which was the stuff you use for buying phone calls. And at the point we built in a we we built a a nice demo of how you could access a web page and then pay for that web page with a click and that would take like a microtransaction away from your Skype credit. It never was published. It was That's interesting. Yeah. All right. And and it was one of those the idea was to take it, you know, it could have been very interesting for the media business because as we know it's really really difficult to pay for stuff. Microp payments in on the internet are are really quite difficult. And so the first time I saw Bitcoin I I kind of thought well this could be a handy thing for this. You can do this microp payment personto person not really involving too many people in the

transaction which which naturally keeps the cost right down. And and that's what I still see as the vision for Bitcoin is is in fact around microp payments or one of the main you know one of Why did that skyping uh never get implemented? It just just never did. You know how these things happen. It was a project we did a sort of a weekend project around it. Um you know there's probably only 20 of Skype even though we tried it. It was just a side project that we got running for fun. I've got a video of it somewhere on YouTube. Um and that's the end of it. And uh so when you got first heard about Bitcoin, you were already uh venture capitalism investing in tech companies. Um just you know as for contextual uh purposes, what are some of

the companies that you had already invested in? Uh so Mangroves invested in a lot of e-commerce companies. Uh we had the largest e-commerce company in Russia for example, Koopy VIP. Um e-commerce companies in Germany invest in media companies and uh music companies. uh core computing software companies um consumer brands many different things. We also have a a uh about a third of our fund invested in automotive product as well which is quite interesting. Completely different area.

Yeah. And evolving very very fast. Evolving extremely fast. Yes. Exactly. So um what about the VC uh the Bitcoin space? Have you uh I think you have not made any investments yet. We haven't yet made any we haven't yet made any investments in the Bitcoin space. Not at all. Um not through not looking. We haven't seen anything that we liked yet. Um there are obviously a number of companies who are doing very well. We've seen some massive amounts of money put into some sort of landmark deals at the moment. Huge amounts of money which is bold moves from three or four of the largest venture capital companies and we we are wow. So they're really betting hard on that. So some spaces I think have been

taken. People are trying to put a stake in the ground to own certain sections of the infrastructure, certain sections of the consumer wallets like wallets. Yeah. Like wallets like um yeah, Coinbase for example, Circle these guys, people earning what they're trying I think these guys are trying to be the place where people go to for for wallets, Bit Pay for payments and stuff like that. That's what I think the investment is going towards. I think we'd be from our point of view be interested in services that sit on top of the the the network. Um infrastructure probably not. Yeah. I mean this network I don't know we so we talked about um services to do Bitcoin payments for media industry for example just to say

something or services that use the blockchain to certify documents. Um this kind of thing. Another interesting thing I see is the ability to create an entirely new market which is the certification of original digital art. So you can imagine buying the first pressing like you used to in the vinyl industry of a song. In other words, it would be the song that the when they did you did you uh cuz a friend of mine did the project. Well, he's been writing that white paper and stuff. Okay. I haven't seen that.

QC. Okay. No, I haven't seen that. Yeah, in Amsterdam too they had this like innovative projects thing but yeah exactly that actually. Yeah, that sort of thing could be interesting for us. It's more manageable if you like if owning the entire infrastructure of the of the internet of the of the of the owning the entire infrastructure of the Bitcoin infrastructure would be so so is uh what's the reason you haven't invested yet? Is it that you're more interested in that area and you haven't seen anything interesting or do you feel there's starting to be maybe too much competition, too high prices? Yeah, all of the above really. All of those things. I mean, we have to find projects that we like that my partners are going to like. We we always in any venture capital company make decisions as a as a

consortium on these things. So, obviously, your partners are also on board with Bitcoin or Some are, some aren't, right? I mean, as you know, the the whole world's pretty divided on this thing. it doesn't matter who you speak to. They've always got two opinions on it. So some of the guys go like this is just a crazy hyped up whatever. and and others say no now I've been at this for 18 months probably 18 months ago they said you're mad 6 months ago when I was at this event last year they came back and they said you're still mad and now maybe they're thinking oh maybe maybe well you are still mad but maybe that bit didn't change but the rest of it you know we mentioned um investments and how that's been growing obviously and uh I think there

was a figure that was mentioned earlier at the conference about 200,000 uh 200 million uh dollars in uh VC investment so far and only 5 million in European companies. Now what uh we were talking about a second ago is that uh the infrastructure is being built in all of this investment is going in infrastructure and mo mainly in in the US. Um, do you think that perhaps we're going to have this sort of situation where all of the infrastru all the infrastructure is based in the US and European companies are uh basically left to this other higher level stuff uh services built on top of Bitcoin? I I don't know. I don't see there's any reason why that should be. So, first of

all, um I mean that that's how it is now, right? It's Coinbase, Bit Pay, everything's everything's in the US. I'm not sure everything's there, but but certainly a lot of it's there. Um I think the high level stuff is much more ch is I think the high level stuff can come into Europe and some of the facilities on top of it some of the exchanges and things like that. There's tremendous activity here. The regulatory framework in Europe can arguably the regulatory framework in Europe can arguably be much more conducive to Bitcoin than in the US. I think so. Yeah, I do think so.

especially uh after the recent uh European Banking Authority paper. Well, the EBA what they said is is that the they don't recommend that financial institutions hold Bitcoin. That's what they're saying. They're saying as a commodity. It's just not secure enough. I mean, the end the banks hold client funds in general and they don't they consider it just too volatile, too unreliable, too risky and and also ex fundamentally risky. the whole thing if if for example there was a flaw detected in the protocols the whole thing could be worthless tomorrow in theory that's getting less and less likely with time but but nevertheless and I think that's that's their position on that what they're not saying is don't use it and they're just saying banks should not be

holding large quantities of this for the time being but if if if there are services built on top of Bitcoin or people using Bitcoin for transacting that's a totally different discussion so um you feel from the you're talking about the report that came out last week, right? Yes. So, uh has that changed your view on regulations cuz me personally I I felt it was kind of worrying. It was um No, not at all. It didn't worry me at all. It actually kind of made me okay with it because they're talking about we have to split the thing into, if you like, three areas. We have to split Bitcoin into what you might call the commodity side of it where you're dealing and speculating or what have you on the value of the underlying asset.

um and there are funds and stuff doing that. And then you have Bitcoin as the if you like the payment mechanism which is half of what it was built for. And then you have the third generation services that sit on top of that. Um and and those third generation services are not touched by regulation. If you want to use Bitcoin to certify a document, for example, nobody gives a I mean that's not that's true. That's not interesting. I mean who cares? Um if you're using it as a commodity, that's a different thing if you're trading in it. I think the industry itself is very you know I meet a okay I meet a lot of computer programmers in the industry today or computer experts who've suddenly become experts in world finance and world economy and macroeconomics and things like that when really what they know best is you know it's programming

um yeah that's true and you do tend to hear a lot about you know how central banks work and the guy from the central bank um he goes yeah but that's wrong if you speak to him he goes like it's not even right what you're saying it's not even how we work. It's not even how we think. And many of the stories we see about Bitcoin, you're disrupting this and helping that. It's just totally irrelevant. The value of the currency is approaching that of a minor currency now. They say, "Yeah, of course, if you look at it one way, you could argue that, but you have to really work your numbers in a strange way to even get close to that being a thousandth of the correct." Yeah. So, it has a potential for disruption. Absolutely. The idea is not that it is disrupting, but that it

does have a potential. I'm not sure. And if I mean if the EBA and other government bodies and and regulators are starting to look at it, it's also because you know they perhaps see I think they're looking at it. I'm involved with these guys. We we have a working group. I can tell you more about it in a second. We have a working group in Luxembourg um across the entire financial industry, the spectrum from the regulator right through to startups where we discuss openly. There's about 20 of us and we have the head of the regulator in that forum. We have the minister of finance. We have the head of the banking institution. Luxembourg is a large banking industry there. 50% of the GDP comes from banking industry. So it's extremely important and so these are

high level people talking about this and and and you know and how we can react to that. So they're very interested in it because their members the banks are asking what should we do about Bitcoin? Their customers are saying what do we do about Bitcoin? Their investors are saying what do we do about Bitcoin? So they have to have an answer and that's why they're bringing out these papers. They're not bringing them out because they see it as a risk. And I I don't think anybody sees this as a disruptive risk to currency or something like that. That's interesting. So you see the potential more on just the technology and then maybe it's use in other other areas you know say you talk about document certification or something but not so much uh as a alternative financial system. Not as an alternative financial system. No, I I think it's a

question of how you define things a little bit, but um ex exactly the latter is the first thing you spoke about document certification that sits on top of everything. And then you have the payment mechanism where people can buy bitcoin. Yeah. Have it in a wallet and pay for stuff everywhere or send it to each other which is very convenient. We just did it at lunch here of course. What else would you do at a Bitcoin conference but you know pay send each other the money. But those mechanisms exist within the um existing banking system. Again, I I live in in Denmark, for example, the mobile banking application is used by everybody. If we if we were sharing lunch in Denmark, we would have shared the bill using the using the the banking app which was developed by the banking industry for

customers. And there's nothing wrong with it at all. It's a perfectly modern, well functioning system that doesn't cost anything to run. Yeah. But of course, this is a closed system, you know, then you want to do that with somebody who's in the UK and Yeah. then you're stuck. Then you're then you're in currency transfer mode, right? Which is a different thing and that's what you completely avoid in Bitcoin. Of course, in this conference, we probably got people from 100 different countries or something. So currency transfer is a really important thing for us for for 99% of the world. They they aren't making transactions outside their native currency kind of ever. So we've got to be careful our niche. We're not applying it into that. But the simple method of doing transactions like that is not present in many countries. Right? In Scandinavia, it exists. But if we go to

America, and I think part of the launch of this stuff is in America, you hear guys, we all hear guys from America coming saying um let me start again. We had a guy at a conference the other day and he he said he was going to fix three things. Um he was going to fix that checks were a waste of time for everybody. Same day money transfer should be a right and and and uh um persontoerson transfer should be free. and he came and gave a pro this this talk at a conference in Luxembourg and everybody went well we kind of we've had this kind of I mean I don't know how any when the last time have you ever used a check you know when did you do you have a checkbook well I mean again it depends on it depends on the country

so from the US people use checks yes actually it's true they don't so uh you know I think the you know the banking industry in every country has their own uh way of functioning and also like these apps for instance I'm in Canada. I know in Canada I can send email money transfer from someone to someone. In France it takes 3 days to do a wire transfer. I don't think ability also between countries in existence. I yeah I'm I I personally view it differently. I think because Bitcoin is so open and you know because it's like you know it's like an API money kind of anyone can build something on top of it. I think that is you know if you talk about this this app in Denmark you need to have a coordination of all the banks that like agree open up that's just a mess. you

know, sometimes it works, but often it won't and it's slow and expensive. So, I think that openness is enormously powerful. So, I I personally do see the potential as as a financial like for money and all those. I see I see us having that that running. Yes. As an alternative currency, I think now I think it's going to be very difficult. But the uh but exactly that the convenience side of things is exactly what we want to be doing with this thing and maintaining parallel wallets and things like that is going to be fine. Um but the the regulators and these people they don't they don't feel threatened by this particularly. In fact they feel curious about it. They want to know about it. They want to adopt it. The guys I speak to there want to understand how it works. And and part of their

challenge is and part of the inconsistency we see in regulation now we'll talk about it later is that um with the industry isn't sending consistent messages to the regulators about what this thing is. You talk to we all have our opinion about what it was right. You just have my opinion, you have your opinion, everybody has their opinion. So the poor guy at the regulator, he's some guy shows up and he says, "Well, I'm going to do this." And okay, cool. So what is it exactly you're going to do? Tell me exactly what you're going to do. Not like what you're dreaming of doing and changing the world and all of that, but what are you doing? What does your company do? What are the money flows or whatever you want to call it, the transaction flows within your system? And very few companies in this

space can actually explain that. It's perverse. They're all like, it's fantastic. think about the you know how great it's all going to be when the world is using Bitcoin. They go, "Yeah, yeah, don't worry about that regulators. I don't want to know. Just tell me how the money goes. Tell me how the money flows." So, um, regarding regulations in the EBA thing, you know, I guess there was two things, right? There was this short-term thing which was like banks ignore banks leave it alone, you know, you can give bank accounts and then, you know, Bitcoin do their own thing kind of thing. And then there was the sort of long-term outlook they talked about which was to have like these uh governing bodies that approve like virtual currency schemes, etc. A lot of those things seem to be to me like literally impossible within a

decentralized currency. So I'm I'm uh it surprised me that you still view this as a positively or the overall direction where things are going. Did you interpret it differently or what do you I think I interpret it differently. Yeah, I think when they're saying the banks should keep away from it, that's because the bank shouldn't hold this stuff because it's not the sort of thing which is secure enough or or reliable enough for a bank to be holding if they want to give. But what they did say in the report was it's okay to give bank accounts, which is really good actually because we need you need interfaces between the two different worlds. And if we go into the Skype world and the telefan world, you had a Skype which was a peer-to-peer infrastructure completely independent of country boundaries or or

whatever, nothing. He had his own namespace, didn't even use DNS. it wasn't relying on the internet protocols except for the underlying transmission of course. Um and then around the world there were various points where that connected into the existing phone system if you wanted to make connect make outbound calls right that's and and these these interfaces these gateways are something that the that the Bitcoin world has into the into the traditional world and those gateways are for some perverse reason specially controlled. I mean it's a bit illogical why those gateways should be controlled more than the rest of the things should be controlled but nevertheless they are um and what what we want to be careful of in our industry is to in the Bitcoin industry is to make sure that that that peer-to-peer element falls outside the

remit of that that regulation and and one of the things we keep asking I think one of the tactical mistakes we've been making in the industry is too many people are lawyers and too many people are running to the regulator asking for advice advice. So, I wouldn't you you're an article on on Coindesk recently and uh making the parallel between when Skype first was released and um the possible implications of regulation with telecom and how that uh overlaps with a lot of what we're talking about now, Bitcoin. Um your view seems to be don't get regulated. I think that's how Absolutely. Yeah. So, uh can you talk more about that? Yeah, absolutely. So I

mean Skype had this going right the phone a lot of regulation was built into the phone network right from the beginning of the phone network for various reasons partially because it was based on monopolies who wanted consumer protection partially it was based on some of the requirements of law enforcement and stuff like that that wanted access to facilities and so on and they were all good reasons. Um but all of them require all of them related to the and and and the legislation or regulation was framed around the existence of big kind of central offices big big locations where equipment was sitting and a kind of star-based network where one guy was in control in the middle and that was fine um and that was great and all the regulations written

and it addresses that environment. So if you then look at the new environment which is a peer-to-peer environment where you don't have any central control where you don't have any people running it particularly nobody it's the rules don't apply. So I'm not saying the rules if you wrote the same rules today you could make them apply but the rules as they're written today do not apply. So if the rules that are written today don't apply then don't try and apply them right cuz you're trying to put a you know kind of a round peg in a square hole. it it it just doesn't work. And let's wait for the rules to be written instead of asking them to apply the old rules to the new paradigm. And this is we're we're asking much too much them to apply the old rules to the new paradigm. We're going

to the regulator say how do your regulations affect Bitcoin? Too many people are doing that. I feel like that's was exactly my conclusion from the EVA thing is when you read that the the last part when they talk about sort of the long-term future, they they exactly do that. It's like, oh, we have all these existing safeguards now. There's this new weird system. So, we're going to need to create some new uh institutions so that that new system, virtual currencies, kind of complies with all the things we already have in place, right? Which is ends up with this bizarre thing. I mean, you need to Yes.

I mean, if you're going to have a regulatory framework, you need to have somebody responsible with that regulation. And in a pan uh in an international environment, I mean, who the hell's responsible for anything? Nobody. Yeah. So this is one of the issues you have with with with forming that regulation and and there's in in in normal even in criminal legislation there's tremendous discussion about which jurisdiction applies when anybody's you know as yourself if some foreigner is arrested in a weird country the first thing they say is well I didn't do anything wrong here I might have done something wrong at home but I didn't do anything wrong here so you can't extradite me right there are various people from our parallel industries mavericks of the internet sitting in various countries today who are not going to be going anywhere where because the jurisdiction they believe

where they are is safe. So how do you manage that? I mean and and you can't manage it. If you look at what's happened in the copyright industry and the in the file sharing industry or industry or file sharing the media industry, their attempts at regulating file sharing have been massive lobbying from American companies primarily owning the media towards the governments and stuff trying to force stuff along and it just doesn't really work that well. They've been trying to force European countries, France, Sweden, wherever to impose file sharing legislation, industry specific legislation, which is really, really weird. Um, and it doesn't work. It doesn't really work. It doesn't really work for 20 years. Yeah. And because there's nobody to get, right?

They can I mean, they can find the consumer for using the product, which is what they're trying to do in France. They're going to say, "If you use file sharing, then we're going to find you or or whatever or cut off your internet and all this kind of stuff." I don't think it's a myth. I don't think we could actually I've never got a letter. So So far we're okay. In Germany they're sending a lot of letters. So definitely you see it's working right and and they're frightening people off. It does work to an extent. I mean of course you can use VPN and things and yeah if you want to do it you can do it right. But if but you you frighten a lot of the normal people off with um with doing that and we don't want to be doing that in Bitcoin if it's going to be being

used by normal people. They don't want to be getting a letter the day after from the financial regulators saying we don't think you should be using this. Right. that we don't yeah there's one thing regarding regulation I want to touch on and which is kind of the difference between US and Europe how do you see that I mean from the way I've been thinking about it and I don't know if this is correct is that in the US there seems to be much more lobby power behind Bitcoin right you have big VCs that have put in a lot of money you know that obviously connected and uh in in Europe that seems to be completely lacking all right and I think that's an endemic to the US situation so the the US political and regulatory system is the most corrupt in the world. Um, and

by that I mean that the guys who make the rules are all in power financed by the political contributions made into the made by made by companies and individuals within the United States. They necessarily listen to those interests. So when some guy gets 10 million bucks from whatever some industry, he's going to be listening. of course he's going to be listening. I'd be listening and you'd be listening if a guy just gave me 10 million bucks. And that was one of the biggest shocks to me the first time I ever went to Washington and started to discuss with telecom's regulators about how they were approaching the voiceover IP and explaining to them that we were outside that regulation which was very difficult because they found it

difficult to accept that something was outside their control. The US do not like things to be outside their control. They don't care what it is but they want to be in control. Um and the lobby of is there aren't that many politicians who decide the Senate's relatively small, Congress is relatively small and it's heavily influenced by massive companies. So they're heavily influenced by massive companies includes the banking industry, includes transactional service companies and and I mean one of the first casualties if you like of of a peer-to-peer payment protocol like Bitcoin is the people who live off transactions because you're just not needing. They don't they're not necessary anymore. before they were necessary because they had to move a bit of paper up and connect it to and send it in the mail and back down again

because that's how it was 100 years ago and 10 years ago it all went in electronic and still the transactions go through these things because it's the easiest way of doing it and now they don't now they go direct so they anybody involved in transaction processing today is threatened and their businesses you know they're billiond dollar businesses and more in the US so they got tremendous lobbying power so to counter that the Bitcoin interests need lobbying what I see in Europe generally is the politicians and regulator regulators and people tend to be more pragmatic and tend to be actually quite focused on futures. Some countries less than others, but in general they're interested in listening to to new technology. Um, you know, in the UK, France may be less. Well, no, I think it's been the case. I mean, you've had hearings in quite a few European

countries where local Bitcoin foundations will be uh invited and to speak and stuff and you had that in US as well. But yeah. Yeah, sure. But in the US in the end they're going to they're going to weigh down on the side of the existing institutions who pay them a lot of money and it's it's a fact. It's not it hasn't happened so far though, right? So do you do you think uh that's something that will come and in the end that maybe Europe will end up being a more friendly place than US? Yes. I'm completely sure that if we're going to start some peer-to-peer transporter system, if it's going to come up, it'll be coming out of Europe, not out of the US. For sure. I'm absolutely convinced. Absolutely convinced because of that. because there's a pragmaticism amongst European if we go down the regulatory route which

is a question we should discuss whether we should at all but assuming we do we're going to get a lot of freedom there. They're going to they're going to give you know they don't want they're not geared up and they want people to start businesses and to and to build up and to do that. It's entrepreneurial thing. Oddly enough the US used to be like that. It kind of seems to have stopped. They want people to start businesses here and they're not putting things in that they don't consider themselves to be in the way of of um of innovation and things like that. So they're going to find frameworks where we can apply innovation subject to control. I mean we do unfortunately with money have this hang up about sort of anti-moneyaundering and terrorism and it's all a big deal but you you know and

it's very emotive all of that stuff today. It appears to be anyway whether it's rubbish or not is completely different story. There were some interesting stories yesterday about who who um how the terrorism financing was going into Syria with somebody just received $20 million and sure as hell didn't go through Bitcoin and sure as I mean come on. So I mean you going to if you why bother with all complicated things where you can just put it in somebody's underpants, right? I mean let's be realistic for them. It's better. Is there anything um you'd like to end on? Uh yeah, I've rambled a lot here, haven't I? Um, I see a bright future for the for the system, for the currency, if we want to call it that. I see great opportunities for innovation

going way out into the future with this. It's something that I think we've been waiting for. I think Bitcoin is something that should have been built into the fabric of the internet the day it was created. I feel the same way. Yeah. And it was just missing. Nobody ever thought about payment. We should have had, you know, we have routing. We have all sorts of other things. I think I read that they actually they did reserve things in the protocol like there was like placeholders right and there sort of like oh you know at one point but I think the idea was actually to have some sort of payments integrator just didn't know what or how and yeah okay well it never happened it never happened right and and and now it can it's part of the you know now we can move video you know we can move

communications we can move media we can move files we can do all sorts of things now we just need to be able to move money and why not it's it's it's Why not? It has to happen. It can't It can't not happen. This is going to happen in one way or another. Well, thank you very much. Thanks so much for listening to our coverage of Coinsum. If you enjoy this episode, please support us with your donation. It really helps us traveling to conferences and produce highquality content for you. You can donate at epitcoin.com/tips where we have our tipping addresses and also an option for donation subscriptions. Your support is much appreciated and special thanks to those generous souls who have already

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