EB108 – Brian, Meher & Sebastien: The Big Chain Powwow

Transcript

this episode of epicenter bitcoin is brought to you by hide me protect yourself against hackers safeguard your identity online with a first-class VPN go to hide me / epicenter and sign up for a free account today and by shape-shift with no counter signup required it's the easiest way to buy and sell gems counterparty monaro dash and other leading cryptocurrencies go to shape-shift I oughta instantly convert your old coins and to discover the future of crypto currency exchanges I welcome to episode a Bitcoin the show which talks about the technologies projects and startups revving decentralization and the global cryptocurrency revolution my name is Sebastian cuiture I'm Hanoi and my name is Robin crane so this is the first time

that the three of us are doing an episode together I think we've talked about this idea a few times before and now it's indeed happening which means you I don't have a guest to look forward to but hopefully you know us talking a little little bit more and talking also a bit more about sort of our opinions of what's been going on will be interesting as well and this will be kind of like a state of blockchain bitcoin episode you know where we'll talk about what the situation is what our views are what we find interesting what projects were paying attention to and yeah so I think it will give you a good interesting view of sort of what has been going on overall yeah and very timely since the

year and it's perfect time to do one of these you know gathering of the hosts episode exactly so you can sit in front of the Christmas tree have a nice glass of wine pat your dog and listen to us talking about the world of Bitcoin of locking so to get started I guess one interesting way to sort of lead into this is to talk a little bit about Bitcoin itself when we started this it was at the beginning of 2014 and it was sort of just after it had hit a thousand dollars and everybody was convinced that this was going to

take over the world in no time and now it's almost two years later and I think a lot has happened in terms of Bitcoin startups becoming much more mature also in terms of a shift of attention that has been extremely pronounced in the last six months where there's been a lot of interest from big companies from banks especially in the finance sector and I think also a lot of this sort of start up interest has as a little bit shifted I was at the booth we see in october i think the the bitcoin accelerator or the accelerator in silicon valley and one thing that I thought was sort of striking was that

there was just five Bitcoin startups there now and they had 20 at the p coming the startups that were there were actually quite impressed if they were doing cool stuff but still you know one noticed is that that sort of wave has has slowed down a little bit and as a there's a new wave and in like you mentioned shift of attention from Bitcoin to block chain I see it sort of as a maturing of the industry you know of the sector and really blotchy and becoming just another subset of FinTech yeah that's a I guess that's an interesting you know discussion we can

have later also bit about those different areas we're also seeing some really bizarre at turns in here for example people starting to talk of Bitcoin as like the blockchain sort of trying to like you know capture that discussion by like acting as if when people talk about a block chain and you're using blocks instances of this context they're really talking about Bitcoin which of course is complete nonsense all and it's an interesting a sort of a marketing ploy but there's not a lot of substance behind that but it is not good employee for Bitcoin hey as a marketing ploy for Bitcoin I think it's a I'm not a big fan

of that marketing ploy but of course it makes it confusing and it also sort of illustrates that people have very different views on this rise to some people for them is you know blockchain and big partner likes anonymous or the idea of a blockchain without Bitcoin it doesn't compute it like doesn't make sense and then obviously a lot of other people have a very different view on this and think that there is a lot of value to that and I mean I personally find that to sort of negate the fact that block chains can be used for something else is completely missing the point about what this technology really

is i mean i think it was rotella clip posted something on Twitter saying that block chains are just database technologies and at the core that's when we could link it to consider them to be like a new type of database and the the the fact that I guess sort of a core Bitcoin community doesn't really want to accept that or really taking it as a possibility just shows that perhaps there needs to be an opening up the mind as to as to what this can potentially become yeah so did this is quote I I just read the other day which i thought

was expressing very well the the kind of state of almost delusion that parts of the Bitcoin ecosystem re and so this was something very silver said Barry Silbert obviously very intelligent and highly accomplished guy who's also sort of a big con visionary but he said so all these banks are trying to get the best attributes of the Bitcoin blockchain without the Bitcoin and ultimately I think you're going to capitulate and revert back to the Bitcoin blockchain so basically the idea that they I've know exactly sure what the idea is so they're trying to use bitcoin bitcoin and then you know at some point they will realize how futile does has been and they will come back to

to Bitcoin say oh I am sorry I i will throw away my sinful past and surrender to the god of VidCon it's absurd that's not going to happen and I think it's important to to realize it you know this is a different thing speak on is great and nothing quick ones really important and bitcoin hopefully will succeed but it the idea that if somebody wants to do something with blotching it has to be using bitcoin it's just it's not going to happen on the one side I agree that if somebody like the blockchain by

itself minus the token might be might be useful in many circumstances in the legacy financial system but my feeling is that the fundamental invention is public economic consensus the idea that hundreds of hundreds of computers around the world can coordinate to do something and maintain a currency is the fundamental idea personally I don't when I look back at the year 2015 and I see the shift from like cryptocurrency and public like focus from changing from cryptocurrency to back up stuff for bags I tend to think that it is just like a

very short shift like if you imagine the diesel engine was invented in 1895 and we had to wait 13 years for the Model T 19 not eight and we had to wait another three years 1911 for the first good petrol forms and we had to wait until nineteen twenty to have a nationwide system of roads and petrol pumps so that the engine could be actually commercialized if you think about it if diesel engine was invented in 1895 and suddenly in nineteen not one people concluded that diesel engine wasn't interesting and something else was maybe applying this chassis of two other things was interesting then maybe is just like a temporary blip in

in the Indian d focus and i think i think this here is like that for public economic consensus we have all kind of moved away from it yes in in terms of media in terms of developer effort but i but i suspect this is like a temporary dip and the end it's it's the it's the real invention it's the big invention and we need many more things for it to really get commercialized things like stable currencies low latency systems so I personally I don't I don't I didn't think like a bhangra doctrine is an interesting but like Bitcoin and etherium do those are the those are the game-changing revolutionary things and

they'll come back in a big way in 2016 autozone 17 maybe 2018 I don't know when I mean the way I think about it is that the potential to have to remove third parties and to have it's basically a blocking is a fundamental solution to coordination problems right and I think that has a huge number of applications that and it's really hard right now to predict where are you know where are those areas where they have a huge amount of utility and I think that what we will see at least it's my expectation that we will have a huge number first of

all a huge number of block chains in use like millions and I also think that they will sort of range from at the one end block chains that are centralized so and a lot of people will be like what is the point of a centralized blockchain I think there actually is a point of a centralized blockchain if let's say we as episode a Bitcoin we would say we're going to run our operations on a blockchain right we're going to really put the logic of the company on a blockchain well all of a sudden we could prove to others how you know we could have a record of everything that's going on inside the company so that could be interesting for

example for shareholders it could be interesting for let's say we did some revenue split with you may her and well while you could verify everything or let's say a third party wants to certify that yes this is a company a bank maybe says okay to i want to give a loan Jepsen in Bitcoin well if their operations we can validate them well that that's the changes log or let's say an auditor says okay let's do real-time auditing not no longer like at the end of the year we inspect all your records no we will help you to like put all the business processes on a blockchain you know we run a note on that or we have receive all the transactions or something like that and we can do

real-time auditing that's really interesting and a lot of novel powerful applications and then on the other end of the spectrum right you have the idea of public chains of like a decentralized currency or like applications that cannot be sensors prediction markets and all that super interesting as well amazing right and then I think you can have a lot in between where it is a group running a network together and I think we will have simply all of that and it's I think it's my expectation that we will be but this might be very wrong but I think we might start more in the enterprise context and that it will

take longer for the big public chains to succeed also because they're harder problems right it's it's hard to get consensus right when you have in the face of basically attackers that are unknown and trying to take you down and stuff like that it's easier to solve these problems when you have known parties that are part participating in that but i feeI think with this you know there's a whole range that is going to happen and that whole range that is really interesting I couple of things I want to mention about what you just said so well one is this problem of consensus that we

seen over the last year with the scalability to bathe which we'll talk about in a few minutes and that's really hard to coordinate and we still trying to find ways to do that maybe those those will come maybe we'll we'll find solutions to those problems and for governance as well the other thing regarding the Bitcoin blockchain specifically are private public blockchains in general is the question of regulation right now is can Enterprise really use this for regulated industries and and then there's those a particle payment as well so Bitcoin as a payment system if if we can't come to if

if basically Bitcoin can't be used for regulated activities and it doesn't find a real use for the currency then I think it it will cease to exist or it'll become sort of this really sort of niche thing that is used for very specific things or you know perhaps buying drugs with that kind of thing unless unless those two unless those two we can get over those two hurdles so either regulation the regulation issue being solved or Bitcoin really being used as a currency I in the current context of things I don't really see it as having much of a future just outside of an itch

currency that's used by you know subsets people on the internet let's take a short break and talk about hide me you know setting up VPN on multiple devices can be complicated say you want to do like three devices and you have ten different exit nodes that you want to configure well that's 30 different configurations that you have to do manually in each of those devices OS and that can take a long time hi thought me makes this super easy with their apps so they have apps for Windows Mac OS Android iOS and Windows Phone so you just install the app log in and boom you're ready to use VPN with Jaime so this is perfect if you're traveling you just install the app on your devices and say you're using public Wi-Fi you turn

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can put your grandmother using a VPN even your dog's tablet you can put on a VPN and you can use any of your exit notes and they've got 30 exit nodes all over the world and of course you can pay with Bitcoin so give it a try and we would like to thank height up me for their support of episode of bacon so regarding the first thing your Bitcoin where the Bitcoin can be used for regulated activity obviously can write I mean properties are accepting it and other companies are building things on top of it I think it is it's also obviously true that it creates complications right i mean we know we see that we're on epson a bitcoin as a

purely bit called business I you know the accounting is going to be a nightmare and and so there's obviously a problem here also if I kirium write the company's having to deal with ether and gas it creates problems right what's risk management going to say about that like so but that being said it doesn't mean it can't be used I tend to think that the applications of cryptocurrencies haven't really come yet um so so I mean in 2014 when I look back I see this whole trend that people try to jump into the remittance market and

then people also try to jump into the idea that bit will be the currency of the unbanked and both of those ideas have kind of failed and if you look at the fundamental reasons why they failed in the remittance market the kind of reason was that people on the other side likes it is a transfer into Canada to the Philippines people in philippines did not have a bitcoin economy to spend those bitcoins in yes so a new or smile yeah the problem of the last mile and therefore because there wasn't an economy there you needed all of those conversion charges those networks and it came came out that there wasn't any

advantage to using Bitcoin like that and from from the perspective of the unbanked market many people who are bullish about it Barry Silbert included and I think I think it's it was premature to target the unbanked market because simply because me being in Indian I I I see that in India Indians only use stuff that it has successful in the West the not the people over like 100 like hundreds of years of technology evolution have kind of observed that what becomes successful like whatever is successful in the West just copy that don't try to innovate copy and it's it's like a hundred years of mentality and so

I was actually very skeptical that people in India would start to use Bitcoin and this is kind of true become because even if I look at kind of my network in India which is the very educated class of India even they don't use Bitcoin today so the idea that the underbanked are going to be the first people to adopt Bitcoin kind of seemed always a bit foolish to me um and kind of these things have gone out or so so we see we are kind of in this state where crypto currencies have not found a brilliant application if you go beyond like the darknet markets but I I tend to think I didn't think that um this will

change oh and there are get a couple of reasons why this change first reason is our if it is it is very hard to develop with Bitcoin so it was really hard to build applications with with with Bitcoin and there were very few developers that could actually do it if i look at it helium the the ease of development has increased by an order of magnitude truly that's that's that's a really big jump and and now that I look back Bitcoin kind of did miss a lot of the features that it's helium has built and now it becomes easier to build applications with crypto currencies and and I think in the next

two or three years we will see a lot of applications many of them initially will be will tend to be things that are illegal in certain jurisdictions like for example you could use crypto currencies to create new kinds of gambling markets and I think that is a huge market out there so then there will be many applications for crypto currencies in the future and we just haven't discovered them now in the theorem ecosystem what was also interesting is the idea of the decentralized autonomous organization that is a group of people spread around the world building a company on the etherium network itself and what this kind of thing could allow them to do is

you know you have a distributed company like people people like in India Israel Germany us like collaborating together with a with a with a distributed company I think these kinds of ideas will come and they will create a demand for the usage of crypto currencies and and we'll get there it's just going to take us time oh this is going to be there's going to be something that develops over the long run and I'm personally I'm not so I'm not your bed bearish about bitcoins thrashing in value I think a digital scarcity is important recently I saw that a few economists from from

Bermuda I have proposed that the central bank of bermuda fold bitcoin as a reserve currency now Barry Silbert himself was advocating this in 2000-2014 he he predicted that the first at the end of the thorn 14 the first central bank there will be one central bank that keeps Bitcoin as a reserve currency and suddenly that idea which was a very wacko idea that nobody would have nobody believed except for by silbert himself suddenly that vako idea has gone from a backhoe idea to kind of a mainstream idea by by having two economists from the central bank of Bermuda itself proposing to do that and I i think i think these kinds of things i will not

happen oh they'll take time and it'll be a two-decade game but i think we'll have uses and i think digital scarcity is valuable yeah no I mean I completely agree with you I think with we can talk about this a bit more in a second where you know when we talk about the block size in the future pick on and all but I think for Bitcoin simply not to fail is a huge success right if bitcoin is still going to be around in 10 years and it's going to be you know functioning and doing transactions and stuff even if it doesn't live up to a lot of its promises that will be a huge huge ring when what I mean is simply having like a digital

gold type thing that's removed from the control of any government that's that's a pretty huge right and I think there will be a lot of applications I mean you mentioned it's totally possible that central banks will stop stop start holding that it's possible that will become something like that is simply a part of it you know portfolio distribution of asset managers also it can have a lot of functions in terms of people protecting their asset with that you know when people use this gold freaks out US dollars in countries like Argentina or the countries are not such a good currency you know that the say

okay we'll hold some money in big oying or a tax evasion I think is that the sort of you know you there used to be the Swiss bank account no but that doesn't really exist anymore but baby Bitcoin will be the Swiss bank account of the future and so that so there are a lot of applications for sure and and there is definitely a role for a totally be centralized censorship resistant currency like electronic cash I think that's a huge huge thing and a hugely important thing it's also something where it's really hard to displace Bitcoin now I think if Bitcoin doesn't succeed it will be super hard for

someone else to come in and say okay well here's the the Bitcoin the successor to Bitcoin because there will always be the question well if Bitcoin didn't make it then what about this new thing like you look like bitcoiners can make it for years now this new thing is here but you know can we trust that this isn't also going to be displaced by like some thing after it because this really depends on it having long-term value so because pecan only works as like digital gold if you believe that it's still going to be here in 10 years right but if you're always worried that well maybe won't maybe the next one will come and displace it then that's not going to work so I think that that that trust

thing is actually quite fickle and it could go away easily so I think that that's going to be a key thing and that's actually also and maybe that's something we can talk about right now is the sort of state of Bitcoin when you talk about development and the block sighs debate I remember we had my current on this podcast and I just looked it up before in jun 2014 and he sort of said don't pick on development has ground grata complete halt and there was a lot of arguments about that people but very integrated with a very controversial discussions he created but my impression is now for a year and a

half later he was right really has has come to that how do you guys see that um well just before before we go into so I want to say that I think you made some good points just earlier and I didn't want to sound bearish about Bitcoin like I really do think the big one is great and that we need this centralized censorship persistence currency I just some I'm slightly pessimistic about the enthusiasm that some people have that it you know we're already there and it's there like there's still a lot of hurdles to go through and it will there will be some challenges if bit one wants to be successful and you know the current shift to block chain by enterprise and

seemingly enterprise will use public blockchains for most of what they're going to be doing leads me to question what role Bitcoin will have as a currency and as a platform on which we can develop applications if most of the work is going public private block chains so you sir what was your question again right about the state of development right yes a state of tree all manner of course that also sort of ties into the the block sighs debate that you know we have had on the show quite a few times from from different sides uh I mean I don't have a whole lot of opinions about the state of

development because I don't I don't follow the core development very much I think that the block sighs debate though I mean the fact that you know all all the core devs and all other industry players that are building infrastructure have been able to get together to events and talk about these problems and try to move forward is a step in the right direction I used to not sure if that's accurate description no because for example my current and Gavin Andresen they didn't go to the second one I think Gavin went to the first one but so there's whether there really is progress there I think that is so here's how I

think about this I was in February of this year I was in Spain for a few weeks and sort of working a little bit from there but quite a bit of time and so one of the things I did was I read this book of satoshi which was all his early forum posts and it was quite interesting because you know Satoshi had always been his figure that I had never read anything off except the white paper and then you you know you read about this early emergence of pic on all the questions then and the thing I came away with the impression was really that Bitcoin was just a proof of concept right he just wanted to prove that this can be done and Bitcoin was an amazingly successful proof-of-concept a brilliant

rusev of concept i mean there's probably never been a better proof of concept in like ever but it was a proof of concept developed by one guy mostly at least initially with a very little information i mean he didn't know he didn't know about mining pools probably right he didn't know about a cig hardware he didn't know how it was going to be used there was all sorts of things he just had no idea about and so he made all these choices because they seemed like you know reasonable choices at the time or good enough choices or just they had to make a choice because you can if he had spent you know six months really thinking about what's going to be the game theory of dark this random variable

like three years down the line you know you just can't do that so you just made a bunch of choices and then be concerted and well it was a very successful proof-of-concept still running now 60 years later but that doesn't mean that all the choices made were very good choices having he made a lot of choices that will turn out in retrospect to be pretty poor choices and I think if bitcoin is to be successful it is just absolutely necessary that there is a sort of an openness and flexibility from the part of the community to say okay which of these choices were good choices in which of these were just you know reasonable looking choices at the time

that didn't turn out to be so good and then change them to have you know success in the long run and unfortunately see very little willingness and openness to consider any changes and then even with something as simple as increasing the block size is huge discussions and doesn't seem to be possible to do that and in my view we would have to go much further actually then just to look at you know what's the right block size I think we should look at other things that you know people can really consider like unthinkable I think because ng sounds like something one should properly look into that seems like a

really good idea maybe there's some problems with it i don't know but at least we should be open to something like that i think you know the block we were that it's half there for years i think that was a definitely a mistake i think if it should if at all it should be continuously decreasing but quite frankly i think one should go even further and think about shouldn't there be a constant block reward because i have never seen a convincing argument how transaction fees are going to replace the block reward and this just doesn't seem to be going anywhere good but there is no willingness to come to like consider any such fundamental changes to bitcoin and that's something

that worries me so I guess the question is and why is there no willingness to consider these things and you know there's I think the sort of two camps was one camp that things that Satoshi made all the right choices and went it saying city that he didn't I I think there's no willingness to a huge party inertia you know this just a decision was made and and that's just meal decision that's there now and it's super hard because there's such a distributed network to like get people to agree on doing anything you know whether it's something meaningful or not and that's

that's just the way it is and and on top of that you have like disagreements and people don't like each other and people really rude with each other and people like attack each other personally and that just leads to a in environment where you you it's going to be really hard to get any kind of agreement and then of course in the one side also in this debate says well we can't do any changes unless everybody agrees and in an environment where you're never going to get everybody to agree you know that just creates a toxic place where essentially nothing happens and of course one can't overlook as well the

reluctance to change is also very much fueled by fear of one losing a whole lot of money if the choices are bad and between price crashes I think that if people have quite a few you know a lot of bitcoins and they're looking at this and saying that my you know my my my my bitcoins might lose their value then of course there could be reluctant to making any changes good that's absolutely true and a lot i don't think a lot of people talk about that no people that's absolutely true and that's a that's also really valid reason why you'd say okay we want to be careful with making changes so it's certainly it's certainly good that it's hard to

make changes it's certainly good that you know changes are carefully considered no because it's a lot of it a lot it's at stake but i would say on that spectrum of being like aggressive and adapting bitcoin for whatever the environment is today the future versus being like really careful and conservative and not changing anything music anything of it might break something like we are way too far on the conservative side so i think i think that's true if i if i look back at the year and previous two years um really no no big changes have happened in fact the last big one i can i can imagine is multi signature after that i don't see

any any great changes happening that's it initially this used to worry me I used to sing well Bitcoin development has ground to a halt and that's kind of dangerous and when I actually I went to the etherium Def Con this year and I saw what the tedium guys were up to and and I had the feeling in terms of pure innovation Ethie Liam has jumped ahead of Bitcoin by a very large extent i mean it's it's it's probably uh it's probably the case that the etherium ecosystem as in terms of the Cole protocol is probably like 10 times more

innovative than the infinitely Bitcoin one and also if you look at the Atheneum system it's it's led by metallic was 21 year old and generally it's it's generally I mean it's human nature the older you get the more conservative you become and maybe having a 21 year old at the head of the organization helps with etherium because they are not conservative at all and I love that about the tedium ecosystem so if you if you really look at it in a competitive light you have Bitcoin that's kind of becoming this thing that's very hard to change and on the other side you have athyrium that is moving extremely fast and being really innovative take really

good risks and and the false kind of the first the first reaction you can have as a bit coin holder is you worry about Bitcoin that oh my god I have I don't know whatever percent of my savings in bed coin and I see this other currency coming and that is much more innovative and we'll bill bill bitcoin died out because of that that was my kind of the first kind of worried I had back in the middle of the year then I actually oh there was another change in perspective um now I think that Bitcoin actually doesn't need to be innovative to succeed

oh that Bitcoin should perhaps just uh just just just just hold the whole default and on a kind of explain why I think of it like like this right now see the thing is um on was the first thing to observe is or in Bitcoin our change is really hard because that there's a lot of money at stake now this this I've had on a six billion dollars of market cap it's not small and if you are if you were somewhere someone won like blood needs your career is made you are the Bitcoin core developer your career is really made you are you have become famous and you will get good jobs you'll get good offers once you step down from that role

and if you try to make a very big change to Bitcoin and it fails and Bitcoin gets destroyed then basically your career is also destroyed with it because that mistake will always be associated with you as the core developer if I was blood me then if I made a huge change to bitcoin and bitcoin ended up failing in some way then that's on me and my career is destroyed but if I do nothing pitkin stays it just maintains maintains its value then I'm fine then I'm already you know i have already a name as a bitcoin core developer that's a really good tag to have for the future so i think in terms of games here if you look at all

of these developers that are there are they are generally you know say 35 to 50 mostly and and they're quite happy in their positions and i won't begrudge them that um so in terms of game theory doesn't make sense for any of these people to actually go and do something really radical whereas if you look at the TM ecosystem they have to be radical because if they are not radical they are not differentiated from bit corny anyway so if you if you just look at the game theory of this it makes like Bitcoin as the as the Big Brother naturally tends to be more conservative so the second point now is if you look at athyrium arm

like I love the way theorem is innovative I love the way they take risks um but still as a holder of crypto currencies and as a as a decent sub decently sized holder of crypto currencies I can't actually bring up or to sell all my bitcoins the thing is bitcoin has a claim as digital gold like the number 21 million is famous it's in the minds of many people now if you look at athyrium their proof of work schedule is like you know they'll be like billions of ether they start off at 70 million every year you add 70 million and slowly it goes to around izing three

billion ETA into thousands 40 or something ether does not ether does not give the feeling to me of being digital gold so and i can't sell bitcoin even though i think he theorem is more innovative because in bitcoin i feel this is digital gold so I think for me these are two different niches one is like conservative digital gold that you know will keep working because nobody is making any change to it and there is no risks taken with the system so it's like you know you can expect this 21 million to stay and I and I and that fulfills one niche for me and then there's athyrium on the other side which is this young kid on the street taking the

brilliant risks being innovative and building a currency that's not time to be digital gold it's trying to have you know billions of them and an inflation will be there like far into the future so these are two different points in the ecosystem and Bitcoin can actually never play a serious game I mean I don't think Bitcoin has it in it in it headed to be as innovative as a theorem so maybe they should stop trying to be like that and just become the old conservative digital gold niche and let etherium be the innovative niche and we are all great we are all better that way because that way I can hold Bitcoin and ether and have

something conservative and have something risky and have a beautiful portfolio yes a few things here so first of all regarding athyrium I think that really remains to be seen whether here iam will be able to like adapt and change and take risks in the future I mean it's it's need to do that of course during the development stage and before you've actually launched and it has not been very long that they've launched and they've had some advantages there and it maybe they've made the right choices so that they won't have to make those huge changes in the future but no one of them that is planned is the switch to proof of stake and that will be a huge change and I am I am personally a little bit

skeptical how you know how well then it's going to go because then you will also have a huge you have fraction for example of the here miners who will have a strong incentive to be against that and so I think it really remains to be seen how well Hyrum can adapt I think that's that the judgment on that is still out the other thing I agree with you right that there's sort of two different things and you can totally see both of them being successful and then fulfilling very different functions it's just that in my view that the prospect of you know Bitcoin not making any changes hence it will not go anywhere and it will keep existing I think those two don't go together for me but for me

is for a Bitcoin to just remain in that niche of being like the digital gold and sort of electronic cash it has to make changes right so I think we we differ there and I think exactly important to be aggressive and try to make changes there for Bitcoin to retain that role without trying to be like a here iam that is nonsensical like definitely idea that a lot of these applications will be built on Bitcoin doesn't make sense i think it is enough to just say it needs to be secure but changes need to be made for that I don't think Bitcoin will be secure without changes it also needs to be able to scale right and to actually

do more transactions and do them securely and and that's that enough I think as goals if you can do that that's great right the idea of having you know side chains and all kinds of complex applications on there I don't think it's essential for the success of Bitcoin so the reason you you you believe Bitcoin needs to innovate to be successful is is is you think that even to hold on to the digital gold niche so your argument is even to hold on to the digital gold niche it needs to

innovate and find applications because otherwise how how is it going to be secured in the future given that dr. boards are going to fall to zero yes so there's a few things I'm concerned about security is definitely a huge one I have a hard time bitcoins I mean it's pretty simple i did a security model of of Bitcoin but you know if you look at proof of work then the security depends a lot on like you know how distributed is a mining power and also just how expensive is it to attack Bitcoin and if the revenues of miners go to zero then well it is very cheap to attack Bitcoin

and you know if the block of work going down it's there's some ounce or problems there and I think the security is definitely one thing I'm concerned about and the other thing is just you know the scalable you at the block size I think needs to increase even even though I'm think lightning network and things like that are very interesting but I think from those two animals it's necessary to make to make changes and goes might not be crazy radical changes when you look at it from sort of the here Emmanuel Wright where you've done all kinds of different things but there are crazy radical changes that are necessary I

think when you look at it in terms of the current pic on debate we're even going from one megabyte to age or something like that creates a huge amount of controversy yeah I mean yeah yeah perhaps yeah perhaps these kinds of changes are needed um I mean like I kind of always thought that Bob like Bitcoin will succeed as digital gold if if it will succeed or it will fail and kind of my impression is that if Bitcoin successes succeeds this digital gold oh it really doesn't need to scale transaction volume for a decade

or two like let's take an example of today you have today you have 25 Bitcoin block reward right at a price of at a market cap of say five billion so that that is around like 400 to 500 million dollars worth of revenue for the miners and most of it is saying your ass nothing like the there's there's no transaction fee elements are very small well maybe one percent is transaction fee today ninety-nine percent is sin you ROG but you have our own say four hundred million dollars worth of incentive for minors to mine and if I actually look at digital gold the idea that there is something that's limited

something that can't be confiscated something that says she resisted if it if that idea is valuable and if it succeeds on that scale I easily see the market cap of Bitcoin going to 60 billion dollars ten tenax in in 10 years I'm not saying it next year I'm I'm not a short dumbest I say in 10 years if you look at any years from now ah the kind of block reward would have gone down from 25 to 12 and a half to 6.25 to 3.125 to 1.5 1.5 something / or a block but if the value of the Bitcoin has has increased 10 times then actually even

with that reduced block reward even tell viewers into the future we have four hundred million dollars worth of incentive for the miners so so if if if if Bitcoin succeeds as digital gold what I'm trying to say is Bitcoin has a strategy like don't try to be anything else just try to be digital gold let the Lightning guys handle the transaction volume don't even try to scale transaction volume just try to be the safe digital gold and see if the market is willing to accept that as an idea if the market does it's easily conceivable that it goes from six billion to 60 billion and that kind of for 15 years you don't need to worry about security of the

blockchain if that happens yeah I totally disagree with that I think you're missing a huge point which is that when the market cap of pecan goes to 60 billion which i think is totally possible right the problem is also it's not just that the revenues of the miners stay the same it's also that incentive and to pay off to attack the coins go up right so the only way for the security of Bitcoin to scale up is that the miners revenues have to scale up along with the market cap otherwise it gets increasingly unstable and insecure so I think you're that doesn't work that way at least not in value today's show is

brought to you by our friends at shape-shift shape-shift is the fast and easy way they trade all coins and in our support over 50 of the most popular altcoins that you know and love when you want to trade all coins of course you can do it the hard way which means creating an account and in exchange giving them a bunch of personal information depositing your money putting your trades through and growing old and hating life waiting for those trades to go through or you can do the easy way which means no accounts no sign ups and getting it done in less than one minute so shape-shift now also has that lens extension for Firefox and Chrome now what the lens extension does is once you have it installed it's going to show a tiny little fox next to every Bitcoin address that's going to appear in your

browser now you may say great i want the fox but actually this isn't just Fox if I your browser experience it has more functionality than that if you manage to click on one of those things then what's going to happen this is going to pounce out this pop-up window and shape-shifts going to give you the option to pay that Bitcoin address in any of the old coins day support if you want to add that lens to your browser experience you can get that at the Chrome Web Store or Firefox add-ons just look for shape shift lens and you can add more Fox to your life but like the thanks shape-shift for their support of epson Bitcoin I want to jump in here and talk about the scalability problem from the transaction

volume perspective so the way that I see it after after what you just said mayor I see a bit differently now where the transaction volumes if bitcoin is to be simply digital gold and one can assume that if it only serves that function we don't need crazy high transaction volumes conceivably you know they could be handled by something like like Newton lightning network or perhaps a small block size increase the the transaction volumes that were anticipating on the Bitcoin blockchain are mostly you know transactions being executed by protocols

on top or transactions using upper turn to notarize data into the block chain so if Bitcoin remains as only digital gold and all these other big point to point of applications and everything else that we're building on top of the block chain goes to athyrium and private block chains then perhaps in that scenario we would need extra transaction fight but like you said merit the market needs to establish that bitcoin is is digital gold and that's all it is and all these other applications well we need to use it there IAM to do that or we need to use private box needs to do that yeah i

mean i mean i think i think the i think bigger uncertainty in my mind is exactly that like I will the market except the value proposition of digital gold like pure digital gold forget about all of these other things oh if the market can accept that I think I think Bitcoin has a chance even even like even it being completely conservative but I think the risk for bitcoin is like what brian says is right on the risk for bitcoin is that the market doesn't accept it as digital gold and then this kind of niche falls away and then in terms of

creativity Bitcoin has ceded ground deuterium I I believe it a serial ground already it's not a question of the future but I actually I actually feel slightly differently because i am not really worried about the market not accepting bitcoin as or the value of digital gold i think there is a value there and i am I'm really optimistic that if Bitcoin solve some of the fundamental challenges it has and just exists as this alternative way of storing value and transmitting value uh I think there's going to be a market for that I am really bullish on that and I'm also i think it can be a huge market in

terms of you know just some asset another asset type you know and then you know as you mentioned you know a central bank holding that but the where I'm less malicious you know whether whether that the technical requirements to do that and security and those things will be sufficient that's that's where my fear is my fear is not that there isn't a market for it for a digital gold I think there is it's interesting it's very interesting how how it's like with Bitcoin everyone sees sing a bit differently and kind of that'sthat's that's kind of the challenge as well

right in all of these proposals it's it's everyone sees it differently I don't really have an uncertain i mean my my gut feeling is Bitcoin will find it really hard to evolve like seeing the debates this year i am i'm company pretty skeptical of of quick evolution but but let's see like maybe you are right prior ah maybe it needs to evolve beyond the current state in order to be successful today's magic where it is triangle t RI a and G le head over let's talk bitcoin calm to sign in enter the magic word and claim your part of the listener reward

yes so another topic that I wanted to brush on because I think it's really important and well I think views differ on how important it is or if it is important some people clearly think it's not important which is the the censorship that's going on on our Bitcoin and actually I don't know if it's going on a Bitcoin talk as well because I've never really used to pick on talk but so so before this episode that was briefly looking at this sort of the stats and got some estimates over in our Bitcoin has about 500,000 monthly uniques so that's a bit converted for pettersson in orbit con and that's more

than coindesk so most likely this is the most frequented source of Bitcoin information and media that there is and the moderator avoid bitcoin is guy named famous famous I think or something like that and a min Maya am I viewed the guy is completely crazy and like a sociopath and he has the view that basically other implementations of Bitcoin are an altcoin which seems to be the most nonsensical view of one foothold and he has to view that you know people like

having increasing and my current arguing for paper 101 so bigger block size and now having Bitcoin XT as a sort of competing implementation that this is an old coin I mean I can see why one is against it but calling it an altcoin and so he sends us massively write any basically any other opinion on there and the guy also controls pecan talk but I don't know if something similar is going on there or not so big con talk again it's about the same traffic volume as coindesk so this is a huge amount of the where people consume media is controlled by this guy and this guy is basically

massively abusing his position to just sensor like one side of the debate personally I think this is a huge problem I think this is absolutely massive problem and the problem here too is it so hard to move away from that right it's just that Bitcoin reddit that's the Bitcoin reddit like you can't just start a new pic on reddit and like because people massively disprove this guy everybody switches over it doesn't really work like that and yeah that's I think it's a big problem and I've also been personally sort of highly I must say irritated that I have seen a real lack of people standing up against that

from the side true is basically supported by famous but so basically you know the people who don't want to who are against babe 101 against Bitcoin XT that it just sort of our well you know that's his choice and and you know if he does that it is nothing to do with us and then because of course they benefit from that and I think that's something I find I find extremely hypocritical you know if you sort of on the one hand you say okay I put in all this work to you know make Bitcoin great censorship resistant currency and at the same time sort of benefit and don't stand up

against the main media sites being completely censored of other opinions this is something I I think it's a big problem and unfortunately there seems to be no way out of it no I agree with you that it's very hypocritical and somewhat ironic that Bitcoin one hand is as a currency that is meant to be open censorship resistant and all this and on the other hand you have this kind of its kind of crap happening you know I'm Bitcoin read it in other places like you mentioned my opinion on this is that I I think you're right that it you know being the primary place where people get Bitcoin information is you

know it does make this a big problem right if this one place where a lot of people are getting their information about bitcoin is completely censored and they don't have access to information anywhere else or they don't have access to the information simply because it will check anywhere else well that's that's an issue but I also think that the people that a lot of the people that go on the Bitcoin reddit and are very active they're like he's preaching to that crowd like they're also that also kind of agree with that that box I shouldn't be increased no that's not true at all it's not true most people don't agree with him at all I mean

there's like sticky post you know where like huge new moderation rules like these are not tolerated and like ninety percent of people downloading like any any people are massively against what the guy is doing there okay but just enough time it took one Reddit done he also he made this comment somewhere I remember seeing that that he was like because people were like what everybody is against you nobody wants to censorship here and he was like well if I mean if 90 people ninety percent of the users don't want the censorship didn't ninety percent of the users should go somewhere else yeah he doesn't care about that oh then they should and you know yeah that's easy to say but

it's almost impossible to do right I mean that's to say exact same reason why bitcoin might have a great chance of being to serve additional goal to speak simply it's there and there's an ER sure and it's like baked in and like it's what people use and its people turn to it's the same thing with this so the idea that okay you can just like started competing reddit I mean people try it by this become TC this bit behind the arbiter next TV and stuff but nobody uses it right because it's it's just like impossible to get everybody to switch something else and I mean that's that was I had the discussion with some of the block stream guys about this because I felt like they should stand up against this

they should like say hey they must like you know this you can't do this and they were like well you know everybody can start their own reddit which is of course true but it's also like it's a complete nonsense because the it's so hard to displace that it's just it's like coin market cap right wasn't the great site I mean it's super simple it just does one thing it does it okay but you know it was the first one that was there and if you wanted to look up the prices of different all coins you went to corn market cap and now like you can make it site ten times as good like you're going to have an extremely hard time to replace a coin market cap it's the same thing here yeah hi muscles

behavior I don't think many I don't think I haven't met anyone who agrees with with him and kind of um he he is actually creating a big risks for risk for the Bitcoin ecosystem like like personally i somehow i i i i i do think that right now like Gavin's plan is just too ambitious and and then maybe maybe it should be milder it would be something my let's go from one to two and just just try to try to see how lightning works are I'm pretty much off of that kind of kind kind of thinking but I don't like kind time assess behavior of censorship because what it

risks doing is it risks creating an echo chamber so what would happen is like our Bitcoin becomes like this one read it and then because of the censorship you create another edit say r / BTC or r / beacon xt and then some people migrate there these became become like to echo chambers for the future now if you create to echo chambers to sub communities that have no links no cross communication to each other you are actually increasing the risk of a fork because when communication between humans falls down it becomes harder to to prevent Wars between people like this

happens on this scale of Nations like if you look at the the the war between less the Cold War much of it is actually also that all the Russia's there reading one kind of media and all the Americans are eating another kind of media and both come to a completely different view of the world and both find it easy to hate each other because of this different view of the world and I think this is the kind of thing you risk with its face censorship and you create these two echo chambers and slowly over yours these two echo chambers come two completely different views of the world for Bitcoin and then you actually increase the risk of a fork and the actual fork might

happen on some other debate it might not even be this debate but this kind of thing kind of creates the potential for a fork in the future and i think that's that's pretty dangerous so even as like a small blocks guy quote unquote i I don't like censorship of other opinions I mean that's sort of a slightly different topic but I have always been because Arabic on even before they started this crazy sense ship they did sensor for example here iam stuff and like all of corn related stuff that was never a fan of that idea I always felt like oh there should be a much more inclusive way of looking at it because you exactly have that danger right that

they know you to look to ignore what's going on over here of course you can argue about that I think this is much more a debatable point you can say okay are bitcoins about Bitcoin and like you shouldn't have other topic so i can see that view of its legitimate you even though personally i don't share it i think it's like on this podcast right we certainly aren't you know this Bitcoin in the name certainly aren't limited to bitcoin anyway and i think that's you know personally i I'm a great fan of sort of you know being open and looking at different projects if an opinions constantly also being willing to evolve one's opinion once focus and that

already just by saying okay it's only Bitcoin and strictly bitcoin-related you sort of cut apart they're off and I don't think that's a good thing yeah i agree with you it i don't spend a lot of time I pick on reddit so I mean I don't know exactly what happens there but now i agree with you that if we have censorship hear them it can definitely be a problem as you mentioned mayor have if we start having two communities and you know perhaps one day we'll just have a fork or something like that so but haha I mean what are this what are the some of the solutions for this did you know can Bryan you don't seem to think it's possible that you know another take

blockchain reddit emerges because it has this one has so much traction what do you guys think to them of the solutions it's very difficult I think the only way would be if you had some sort of you know community-wide effort it would be a big effort to like switch to like our BTC is something like that of course I don't know who controls that or how exactly we brought over seems to involve somehow so I think it would be essential to you know have some sort of better governance type system first or these have sort of transparent gurus first but yeah it's a big problem I think it would

at least be worth to make the effort to do so and unfortunately there is definitely my perception is that some parts of the community are basically benefiting because they sort of share some of the viewsat famous has or like their opponents are being censored so they sort of say like okay well let's let's stick with the state of censorship you know it's not the worst of us and certainly not worth it making efforts or that the people with having different views have the chance to have them discussed in that forum as well so moving on to the next topic we want also we mentioned we talked about a theory i'm in bed earlier but want to talk

about the ecosystem a bit more specifically mayor you went to DEFCON a few weeks ago and met a bunch of people there and did a bunch of interviews and we'd like to get you to give us your view about the etherium ecosystem you know where do you think things are going what are the some of the things that you saw though that you thought were really interesting yeah so so far listeners I a simply went to the tedium def Def Con last month and I did around 20 interviews with people in DTM ecosystem will be releasing them soon oh it was a really awesome conference they were there were so many so many people that I thought was like super smart and they

were all dead needle and it was organized brilliantly as well when like spending five days in the in the etherium Def Con gave me the kind of appreciation of two things one is like white alex design ideas have been vindicated on one level like vitalic came out with in 2014 with the idea that you should like the problem with bitcoin is not really that it's not turing-complete scripting language but that the the outputs are value value blind and they don't have any state except for spent and on spent and then

they created this this whole thing that kind of takes care of this short coming and a nice when I think of it like around one or one and a half years back everyone was like no you are trying to solve the wrong problem this isn't a problem at all worth thinking about and you look at Bitcoin talk and it but that was the prevailing opinion at that time your prevailing opinion was also that each idiom could not built and on both of these counts I I felt at the etherium Def Con that that finally there's this big community and they have managed to build etherium and also that their design choices are really good because there are

applications on atheneum that I could never imagine being built on Bitcoin like whatever kind of thing you imagine on Bitcoin has a better incarnation as as etherium on the simplest level if you look at Satoshi dice Satoshi dice became really popular in Bitcoin but you can actually build III dice which has way better properties than Satoshi dice and Satoshi dies you actually need to send it to another central server your funds but in and that central server is probably honest but in ether dice you can completely remove their central server and your farms are handled by the etherium network at all so whatever you think of in Bitcoin if you think of one

application on Bitcoin it's very cooler and way better on a cerium so another example might be lightning network itself right like on Bitcoin the lightning network is supposed to be this network that sends money quickly around the world and with low latency with high speed and with low transaction fees and turns out that you can actually build lightning like networks on athyrium and these are called state networks and state networks we should have we have an interview about state networks from the etherium def corn and we explain what they are there but you can basically run whole companies as state networks so

instead of just sending money in lightning you can run organizations on state networks the equivalent of lightning networks on athyrium so what I could see is what I could see is like etherium is has definitely kind of jumped ahead as as an ecosystem in terms of the innovative potential potential there that's it ah on the other side what I also could see is like etherium has its has its own challenges um like one of the big challenges is scaling iam now white Alec had some ideas some brilliant ideas for for scalability but they are quite under most rated the other the other challenge

etherium has the other two challenges etherium has is that their governance is kind of not defined now is helium development like they have run out of the seed capital and you don't know how way to raise the money from and there might be some changes coming coming in in terms of how they raise development money this is kind of undecided that's a big challenge and they kind of start uncertainty that I saw in that ecosystem is a kind of nobody knows how many ethers are going to be there like the initial idea was to have billions of ether but now they are going to switch to proof of stake and then they might go from having billions of ether to only a

hundred million like 200 milliliters or something like that and slowly inflating so nobody seems to know how many ethers are going to be there and these are the kind of uncertainties that are there the new theorem ecosystem the other interesting observation that I also could see there was many people think that side chains are going to come and they are going to kill off ethelia there'll be rootstock the side chain on Bitcoin and you will be able to use Bitcoin and smartphone ties together and that will be the death of each helium or something like that and at the conference idea is that it's things are a bit more complicated than that and it's really hard to build a bitcoin side

chain that so so bitcoin is not curing complete and let's say the side chain in Bitcoin steering complete it's pretty hard for a decentralized side chain like that to be built because one block chain that is not during complete will find it really hard to verify the transaction of another block chain that is to be complete so today only theorem you can actually verify Bitcoin transactions but it's impossible for Bitcoin network to verify etherium transactions and like there's this a symmetry because of the way during completeness works so it might be the case that actually building turing-complete side chains on Bitcoin

may prove to be an impossible task if that happens actually athyrium has a really nice mode like some kind of weapon that bitcoin can never copy and that means that it's helium will be 0 its own big ecosystem that was another interesting observation so um but check out the videos that I have developed for the tedium ecosystem I think they're quite interesting on their own and as time goes on we'll be covering parts of the etm ecosystem on each episode a Bitcoin as well so I look forward to doing that if you have any suggestions for guests do let me know and we'll be so yeah we'll be releasing those videos

starting this week so look for them on our on our YouTube channel their only be as video episode so we won't be releasing them to the podcast feed so you can find them at youtube.com slash Jepsen a Bitcoin and so with that were almost at the end of herb so but not quite so you know as many of you know if example in august i joined air so i started like episode of occurrence would it became I my second priority second project and now save us yeah he has joined the startup where he's starting a starter I called stratum so perhaps you can give us just so the razz me wrap up a little bit of a status update or let us know what's going on with that sure

so yeah so as you mentioned i co-founded a star called stratum so there's four of us richard kitano who is the founder of BTC report the great iphone app and he also just recently read a book about bitcoin PCO myself i'll be doing a marketing and project management stratum and then we also have a sip n flip down who is the CTO and francois de leon or business developer so there's four of us and we've started this company called stratum we're based in Paris and what stratum aims to become is a big one as a Bitcoin as a service platform

so that companies and developers can really really really easily deploy blockchain applications so think of it as sort of Heroku for Bitcoin or for the blockchain where you'll be able to come on to stratum and we'll have a SAS model where you can essentially just bootstrap and launch a block sure network so for different types of use cases for example let's say you want to do fedeli point system but we'll have templates there so that you can bootstrap your fidelity point system really easily tweak a few parameters depending on your needs and then we'll have the block chain solution to do that for you so we might launch that on any theory no network or private ten durban network some of that and then there's loads of different use cases

that we can think of for io te for finance for ya point systems that kind of thing and so exploring knows right now we're very much in research and development mode at the at the moment and we've just we're closing a round of funding so it's all happening very quickly it's very exciting and yeah so we'll be talking more i'll be talking over stratum as as we start communicating and releasing our beta platform which will be in February so yeah very site about that and you also wanted to talk about a certain person that we are looking for yeah right so

we're looking for a wordpress developer we we've been saying that we're going to do a new website for a long time I had been working on it and failed to find the time to properly finish that job so we need someone to help us build in your website and so if you're a wordpress developer if if you're you're good at developing wordpress templates essentially it's what we need we need then get in touch with us at show at epicenter bit more calm and you know well if it works out then we can work together and pay you in Bitcoin and we'll have a brand new website all right well if Dad thanks so much that was that was our episode now if you enjoyed this please

no also we should figure out if you want to do this more often personally I kind of like the idea of doing this you know every every three months or something like that but let us know if you enjoyed this and if you want more episodes like this and of course we'll be back with our regular episodes next week so yeah we put out new episodes of eps and bitcoin every monday so you know you can get it on iTunes or with any podcast app and of course you can get the videos on youtube.com slash episode and ptc and as sebastian mayor mentioned makers has a produce a lot of great interviews at Def Con adhering def con I think there's 19 of them and they'll all be put out or

it's a lot of content a lot of content yeah and they'll all be put out over the coming weeks and so check that out I'll there'll be short interview so you're not as long but hopefully interesting and diverse and give you kind of a good overview and impression of what's going on wavy Syria so thanks so much and we look forward to being back next week