EB45 – State of Bitcoin Q3 2014: Price, Payment Infrastructure, Adoption, Investment, Regulation

Transcript

hello and 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 cuccio and I'm Brian from in Crane and today we're here for episode 45 um and for the first time in a long time it's just the two of us so we don't have a guest today and we're going to talk about the state of Bitcoin report so it's um a report that comes out every quarter done by coindesk it kind of gives a comprehensive summary of where bitcoin's at so I'm looking forward to you know today's show to talk a bit about where we are at this current stage so Sebastian before we get started how

have you been uh pretty good uh really really excited to be back on just the two of us you know like the original crew uh it's uh it's been a while I don't remember when we last did this but um you know I think I think the state of Bitcoin report is kind of a good opportunity to have a little fireside chat uh to kind of like you said you know go over where we are it's we've I mean personally we've been uh involved in the Bitcoin space for uh almost a year now and we've been doing this podcast for it's gonna be a year and in two months so I think it's a good opportunity to like you say and go kind of look back and see how we've progressed in the last year so the state of Bitcoin report uh

as Brian said is uh published by coin Summit uh uh sorry by coindesk and you may remember that during our coverage of coin Summit we we released a presentation by Gary Coleman where he present presented the quarter two uh report so I guess we'll probably also be able to do some comparison as to how things have evolved in a court in the last quarter as well so before we get started let me ask you um one thing I've done before the episode today was because I wrote a blog post on January 1st about my predictions for this year and so I kind of went back and looked at it and it's like oh how wrong was I how right was I um and I'm curious about we're going to

come back to some of the details later but I'm curious uh to hear from you what has surprised you I guess in the last year or since you've been involved what has been different than you would have expected it to be well I guess there's a couple of things uh I mean for one I think a lot of the predictions that we made at the beginning of the year were good predictions but I think they were probably a little too optimistic and maybe uh somewhat misinformed we were just getting into this we had a lot of I guess high expectations as to where the the space was gonna was gonna go and if I can jump in here I guess we can talk about predictions now so you know I

mean I looked at them I think in some uh in some areas they were they were over optimistic and one stands above everything of course which is the price yeah so you know I I I wrote then that it was predicted there was going to be five thousand dollars at the end of the year now obviously we're very far from that um apart from that you know there was one one of the predictions was that there's going to be institutional money coming in like hedge funds like institutional investors we're gonna start investing in Bitcoin and trading Bitcoin and and that hasn't happened yet as far as I can tell I think it's gonna happen it's a and bound to happen but that was

definitely like premature um also remittances I mean I was more I was more conservative there with the estimation that says like ah like probably by the end of the year there's going to be some remittance use in Bitcoin and maybe that's going to happen and so far probably hasn't happened yet I haven't seen any signs I think that's one space where we're actually quite hopeful that things were were going to evolve quite quickly but uh well I mean if I read the prediction it wasn't so optimistic there it was really optimistic on the financial investors which was wrong but the remittance is it was like I was pretty pretty cautious was like by the end of the year there will be some between some countries and then that I think it's still possible

actually we have three months left and you know it's possible that for example between the Philippines and the US that's going to be starting uh to be a significant amount of remittances done in Bitcoin possible maybe not so likely it's probably going to take longer but one thing that that does persist and where you were right is the the Fiat bottleneck uh that that definitely yeah although it's certainly gone better I mean in a circle not least uh with their credit cards is a huge Improvement Plus coinbase is now available in a lot of European countries but that being said yeah of course it is still very very much uh kind of in the front of the problems we have today right but I

mean as the circle in coindesk services are mostly geared towards uh consumers I mean there's definitely a Fiat bottleneck right now for for banks in a lot of countries prefer I'm sorry for companies a lot of countries where they have difficulty uh securing banking relationships so oh that's true but that's not what I meant if you have online now if your bottleneck was like yeah exactly going in and out of Bitcoin uh and and dance has you know gotten better but obviously so not create in many cases although that has really gotten better quite quickly I think that's especially Circle I think it's a huge step forward there [Music] uh have you tried Circle by the way have you been able to pay I did try it uh but

for some reason my card was declined actually my my car my bank canceled my card and they're gonna send me a new one I don't know why they said my card information was stolen from some website uh they wouldn't tell me which one I didn't the person I talked to didn't know herself so I couldn't try it yet I mean if you Circle the wallet because I had to pay someone something uh so I just sent you the money with Bitcoin because like uh and then you can send it to an email address like with coinbase you know it creates like a new account uh so I used it for that but I haven't yet bought with the car through Circle yeah I tried to do it as well and what happened with me is it kept telling me

that my my billing address was uh was wrong yeah I had the same problem actually so after two or three people here like a friend of mine in Switzerland bought some we had one guy in the office he bought some live in bottom um I think in general it works but I I wanted to touch uh maybe one more of those uh well two more I pointed out um from those predictions I sort of wanted to touch on which was one was Hardware wallets for some I I predicted those three Hardware wallets would start to be used a lot because of the security issues and then that has definitely not happened at all

um and to be quite honest I'm not so sure anymore it will happen um yeah I guess they still are you know I think there may be a market for Hardware wallets with the more uh you know with the enthusiasts um and and this is where maybe we'll get to talk about this in a bit where you know the the large companies that what we call universals are building products and services for you know for the mass Market where uh you don't have to worry about your Bitcoins being secure because they're insured whereas you know the Enthusiast or the kind of the core Bitcoin user uh who who has more ideology uh more of an ideal ideological uh

attachment to the Bitcoin will uh will want to secure his his coins on a hardware wallet for everyone yeah no I think you're right I think um I mean I I do think Hardware walls when you in the future perhaps you will have a company like Circle you know they give you some sort of like like the banks give you it like a two-factor authentication that you do with some sort of Hardware device but I guess you're right yeah that's right most you move my phones and when you have a hardware wallet where the private key is on your wallet of course even if it's more secure you're still responsible yourself there's no there can't be any insurance

for that uh so I think you're right at most the mainstream consumers will want will prefer to have the sort of secured Insurance service that's hosted like like Circle and conways are providing um and that Hardware wallets I'm sure they will come and I'm sure we'll have a good options for a cheap price at some point um but they probably won't be sort of the the broad answer to bitcoin security right so should we get into this report all right let's let's touch one last thing prediction uh before we do that which was Anthony I I predicted anonymity was going to be a big issue a

topic you know because of the blockchain is not so Anonymous as you think right so people can perhaps Trace uh your payment history and Secret Service Etc so I thought like oh you know this is going to be a big topic like dark wallet and things like that and that hasn't happened uh I I think I suspect a reason is that the negative effect of that is somewhere down the line like so you you use Bitcoin now by the way like for example I I'm what's particularly conscious about like which change addresses and every time a new address and those kind of

things to really keep you Anonymous uh and so of course that makes you vulnerable that in the future a secret service can come and look at it and right and but at the same time it's it's very inconvenient to try to do that um and people don't do it right because you don't feel the negative effects and there was a related to that there was an interesting um interesting thing on desk I think where they talked about dark markets and that dark markets still like exclusively Bitcoin nobody is using like Dark Coin or something like that for that yeah I read that as well and uh I was surprised but then again not so surprised because I I think that people

tend to feel like they're uh uh them using Bitcoins is Anonymous enough yeah right and of course they may be wrong but when they will realize it's too late yes don't be in prison uh all right so let's let's get into these uh into this uh say Bitcoin report uh I wish we had some sort of like Fox News you know roll over Bitcoin kind of thing with Wolf Blitzer coming on and saying I'm sure you can do that yeah I think there's that feature in Google Hangouts um so what should we start with here uh adoption perhaps

yeah sure okay well I guess let's maybe what has your what's your impression today how do you feel uh the Bitcoin ecosystem is developing also taking account what we've read in the state of Bitcoin report well I think you you summarized it quite well a while ago when we're discussing it for the show is sort of sort of slow growth uh and and this is most reflected in what we were just discussing about our predictions uh earlier this year is that there is growth it's slow and steady uh and maybe we're we're waiting for that one

I guess what everybody seems to think is that there will be one or so a few events that will kind of trigger off kind of mass adoption this is what we're all waiting for uh and perhaps that it's not going to happen like that perhaps uh rather than being one or you know a few events that trigger of this sort of massive Facebook effect Mass adoption uh perhaps things will happen more progressively um yeah I mean I do think this is going to happen that that sort of explosive curve which just will probably take longer it is taking longer and and it may be in you know like somewhere it happens for some reason and it grows a

lot and then perhaps it's able for a while maybe at some point the financial required will cause a lot of growth uh I think obviously this this buying pressure is a big thing but but yeah you're right uh there was a nice quote in the report which was that uh Bitcoin ecosystem is in a sort of a quiet building phase and then I think that at least summarizes it well sort of from my perspective as an Insider um but it's also funny because you mentioned this oh it's slow and steady growth of course if you look at the actual numbers it's like 20 up right user numbers in the last three months which is actually a lot um but but to us I mean I totally agree

with you because the expectations are so crazy high the expectations are crazy I think this is one of the big the problems of the the soil industry is at the expectation there's like a slow steady growth of 20 a quarter like how are we gonna anywhere that way I think this kind of characteristic over expectation of the Bitcoin uh it was something sometimes characterize characterized and in in the media you get these little funny YouTube videos that kind of characterize the typical Bitcoin user and maybe maybe we need to just take a step back and and look at this like you said on 20 growth in quarters is is quite

impressive I mean I gotta say that that's the number of wallets yeah I am but yeah so yeah let's I guess let's dive a little bit more into the actually adoption metrics right there's a few mentioned so if people want to get this they can obviously find it on coindesk it's also on SlideShare in the court desk account yeah um so what do we have there so it was like Merchants up 20 wallets up 20 ATMs up 144 so that's huge that was totally expected uh I think from my experience also because I I I understand this pretty well because I do it myself uh

so because of the regulatory stuff it's so complicated setting up ATM in many places you know people buy them and it takes them like six months to figure out how to actually operate them yeah uh so that sort of delay you know that actually made that delay me so we'll be there from like uh all the people who bought ATMs during the the bubble last year because honestly if I had bought it at the time and said like okay I'll try to go ahead it probably would have taken me until now to find a way to actually operate it in Germany right one example is Amazon Bitcoin that has a lamazoo machine sitting there turned off because uh they can't uh they can't assure kyc on it yeah

yeah that's the case for a lot of people yeah exactly so so that's that's kind of expected but so of course and you know 250 yeah it's right now it was a hundred three months ago so I think that's it's good growth and I think this will continue of course there's a question how far it goes in the end if you are able to buy Bitcoins with a credit card then maybe this is not so attractive but I think they also have a function in the role um but yeah so so overall it's a sort of this this kind of um that's the sort of growth we're seeing right it's like 20 30 in terms of users merging

Etc yeah except for market cap which is um greatly reduced but that's because of the fluctuations yeah except there it's a minus 40 percent um right so no this is a this is a nice slide that kind of summarizes so this is Page Six which kind of summarizes the the growth that we've been seeing um just one one thing to point out and this is kind of misleading is that Merchants annual revenue is 86 billion uh that's not 86 billion in Bitcoin sales that's 86 billion is the estimated total annual revenue of all Merchants accepting Bitcoin well the main ones so this is sort of a

stupid figure they just took like you know Dell makes 56 billion dollars in revenues they accept Bitcoin so we added to the uh revenues of Bitcoin accepting companies which doesn't really make any sense if they you know sell 1.30 of their revenues in Bitcoin or something like that yeah um since we're since we're talking about Merchants uh one one thing that I find kind of interesting so you know to one of the the statistics quoted in this document is 70 000 merchants not accepting or 76 000 uh Merchants now accepting Bitcoin it says uh so that's 40 000 using bitpay and thirty five thousand using coinbase so

that's a big chunk of merchants using bit paying coinbase for their payment processing uh I I guess one of the good pieces of news that we've heard recently is that coinbase is now operating in Europe so if as consumers it allows it allows you to buy Bitcoin I don't know if they have their payment processing solution also launched in Europe but bitpay definitely has yeah yeah now one thing that I've that I've uh noticed is that you know these companies are focusing a lot of their energy on uh building Partnerships with online stores where in reality uh it's it's still very cumbersome for a small brick and mortar Merchant to

accept Bitcoin a lot of merchants were of uh where where I've seen them use the the bit pay or the coinbase app their their kind of feedback is that sometimes it doesn't work it's it's difficult to use um the fees also are are a complaint so I think we're still waiting for a really good solution and a really like easy to use solution and like super simple to implement for small Merchants like bars and restaurants I mean I think that's going to be of course uh something like Square where it's integrated in something they

already have right and that's going to be the only easy solution is if you're already using something and then it can just be added on top for example here in our space there's a cafe downstairs they want to take Bitcoin as well but they're using a company in Berlin called order bird uh that's you know something like square a bit and and the problem is they haven't integrated Bitcoin so for them it doesn't really matter how good the software is how great the solution is it's just running two systems in parallel yeah is is a problem so if you can but if all the word on the other hand said hey you can turn on this Bitcoin functionality they would do it in like immediately so I I think that's

going to be a big part you know people don't smoke shops they don't want to run different checkout systems different Payment Systems so I think that's why square is great you know it's really exciting that they're doing this but of course square is only in the US right only in US yeah so in Europe I I don't know if there's going to be like a solution to this I think it's just going to be it's it is you know it is a high friction process that sort of buying in the store and like figuring out people have to understand it uh I'm sure it will get I I think the answer is going to be integration into existing systems and and that's something that's happening fast no I

mean stripe is also integrating Bitcoin as queries and and those I think a lot of those payment processing companies are are looking into that yeah I I think so uh obviously they're all looking into it but I mean walk into uh I don't know if this is the case in other in other countries in Europe but just walk into 10 restaurants and bars here in in France and how many of them are using a mobile device for payment they're all using cash registers and and Bank uh car terminals they're using kind of this Legacy Hardware that are embedded Hardware which yeah of course will be a lot a lot harder to yeah yeah

absolutely absolutely um and of course another issue is always the integration with accounting and that's can be a big problem and we have a startup here that they're working on on trying to provide those kind of solutions Uh I that especially becomes relevant if a company tries to hold Bitcoin on their book and doesn't use a payment processor so that's I think that is a very big Challenge and uh I mean there's a there's a reason there's a big reason why all these companies are you know going to US Dollars immediately

or to yours immediately through payment processor and I think the biggest hurdle is just how do you like how do you even book this in accounting how do you make this move how do you deal with security there's so many barriers there and they're really good software Solutions needed that make this kind of a smooth process right otherwise you're not going to have that right you're going to have like people paying a Bitcoin and immediately sold on the market and and companies won't use Bitcoin to pay their suppliers that way right which is of course undesirable because we want to have this sort of integrated ecosystem where everything's in Bitcoin hmm that's maybe that's a good segue into uh

into the price fluctuations yes that we've experienced over the last three months yeah Sebastian what's going on can you tell me well uh well what happened is I sold 3 000 Bitcoins down um no I guess what what we should probably mention about this is obviously it is a big media Focus the the the Bitcoin price going down has been uh largely covered in the media and Bitcoin media and what's interesting is that over the last quarter uh so cointest does this kind of analysis where they look at the headlines and says okay well

so last quarter out of the top 10 stories on coindesk four were related to price now for this course seven seven no but that's oh yeah yeah this quarter seven days price so I guess that goes I mean people are more interested in the price yeah but no I just chose I mean even Forest crates you know it just goes to show that people in Bitcoin are totally obsessed with surprised but it also makes a lot of sense no I mean I you know people sometimes say oh the price is not relevant I totally disagree with that I think it's so relevant it has such a huge influence you know all these people right like like us all people working with Bitcoin and what the Bitcoin price where it's at

has a lot of influence right like of goes up then people have more money to start companies to invest the focus fully on bitcoin price goes down people have to like maybe get a different job or do some work on the side Etc um or you know for example if you think of something like ethereum uh you know they raises money in Bitcoins another price goes down and all of a sudden they only have like half as much money as they you know had today there's a bunch of plans they don't work anymore now you don't have so this is it has a I think has a lot of influence and if you see the price going up a lot let's say we go now up by a factor of 10. I think if you look at the activity the startup

activity that's also going to be that's going to be pulled by the price it's going to explode in just the same way um so I think the prices is really important um and then I don't know why it's going down I honestly have absolutely no clue no I agree that the price is important I I don't think we'd be doing this if the price was one Euro Bitcoin or maybe we wouldn't be so interested in it but uh but so there are a couple of theories as to why this is happening um I don't know if you want to get into them or not um I I don't know one interesting theory is that uh the price the drop has is influenced by

miners having to sell Bitcoins to finance the cost of their Hardware as difficulty becomes the difficulty becomes higher uh but I mean it actually makes sense to me yeah I think that's one of them that I think like okay that I understand that to some extent right so I guess because also right maybe in the past it was profitable for some people to mine but now if the Bitcoin price going down that profitably definitely goes down right then maybe they're just break even and then of course if you break even and if costs are as high as your revenues of course you're gonna have to sell all of them to cover your revenues uh your costs but on the other hand if you made

some profit because the price is higher uh you know then you could actually save the profit and and not exchange it so I think I saw when I I I don't know where it was remember so I can't give proper attribution but I saw someone did some analysis of what percentage of Bitcoin I think maybe it was quantum metrics um of what percentage of the Mind begins are held versus old and that's changed quite dramatically you know it used to be that people mind and they kept their Bitcoins and now people mine and they sell all of them or 80 or 90 sold immediately oh do they um yeah I know I've I I think it was

eighty percent I you know I don't have to Source right now but we can look it up and put in show notes um yeah so apart from that I I it doesn't honestly it doesn't really make sense to me right so if you look today that the Bitcoin um the Bitcoin the total value of Bitcoins by five billion dollars right and then if you look at all the VC investment that's been all this expectation about the space I mean it's just doesn't seem to balance right because if Bitcoin has so much potential if it's going to be so big it shouldn't the price be higher um I mean it only makes some sense to me if people say or people think oh you

know cryptocurrencies are going to be very successful but not Bitcoin right it's not going to be reflected in the Bitcoin price um but I personally don't really believe in that and I think bitcoin's gonna be successful too yeah yeah but when you say shouldn't the price be higher but worstly where's the watermark that we have we really have no historical data to to have sort of a price uh um a fixed price in our minds as to what the Bitcoin price should be I mean sure but it could be for all we know you know that that could be the the the were but if you look sure but if you look at like the promise like you know people think like what could Bitcoin do where could Bitcoin go and

then what would that mean for the Bitcoin price you know you can see a certain like oh you know here's this potential that there is and that would mean uh return of so many thousand percent or something and you say oh what's the probability of that happening and what I think is a lot of people starting to build things and and they really think there's a really high chance of this happening but at the same time the Bitcoin price doesn't reflect that because if you do believe with that probability that this is going to happen well then you should buy Bitcoins today because it was a great investment right so of course also from a BC perspective so if you invest in Recon startups it sort of underlies you know there must be some

assumption underneath that of How likely is Bitcoin to succeed and and I think that assumption implies a certain price and I don't see that price being there right now of course where we see the complication is that they're generally not allowed to just buy Bitcoins right so they they don't even have a choice like if they believe in Bitcoin they have to invest in Bitcoin companies but this is different for you know Richard Branson for example who's investing all kinds of Bitcoin companies and also buying Bitcoins I presume or is well to some extent uh but so for other people this is not the case um but actually maybe that's maybe that's a

good answer you know maybe that is part of the reason is that the only institutional investors started investing in the Bitcoin space are Venture Capital firms uh who are only allowed to invest in companies but not on the currency whereas the institutional investors that would be allowed to invest in the currency as well like perhaps hedge funds that they haven't they're not there yet today as far as I can tell they haven't been uh gotten involved really maybe a good segue into into the VC section of this uh of this report uh so what what have you uh taken away from uh from the reporting on

the on the VC growth well it's obviously very strong right so it's been increasing what was it dramatically um where were we at so it's like a 300 317 million in total of BC Investments so that's up uh 40 so about 100 million in the last quarter yeah but last less VC investment in Q3 than in Q2 though 13 million yeah there has been any growth quarter to quarter then again there was a 30 million uh there was just the blockchain which was in India so you know I don't know I wouldn't pay too

much uh this is it's not like it's just a few companies a few Investments really drive this so it's not like we have such a big sample size that we can true uh but overall I think it's really it's really strong in the U.S especially right yeah and what's interesting is how how Europe has has grown I mean not by much it was 13 of the total VC investment in Q2 announced 17 and I guess another interesting area where we need to look out for is uh is Latin America where um second highest uh a quarter quarter increase although it Still Remains at one percent of the total yeah from zero from zero to two

zero right right uh but it is I think an area that will well yeah the people who certainly believe it that's a lot of potential so I'm curious what about France are there any uh Bitcoin startups in France that have gotten VC money this much zero I mean I I uh no no that is correct in fact no there have been no uh companies in France I've received BC money yet there are some companies that are uh doing rounds of funding and unless you guess who who those are um I think it's quite obvious which uh but no not yet so they are in the process and will

probably get uh funding or one is in the process and is uh from from what I from what I can hear having difficulty securing the funding okay yeah so I mean in what I say in Germany we of course uh actually this is quite relevant so because everyone who has gotten some sort of investment I think institutional investment in Germany uh maybe one exception has been on the podcast so you know rotco of bitpan just been on some episode so he got the first sort of from a traditional ovc in Berlin uh I think 200

um yeah 200 000 Euros I think he got so that's you know it's the first uh the first proper investment and now there are the two companies I think sort of semi-secret but yeah that they're gotten into an accelerator so uh just across the street here so that's of course not really an investment but you know I think they will have a good chance of getting one when they get out at least I hope so um so there's some but of course Very Much beginning and and to be quite honest it's not just that people have difficulties getting Investments also that not that many startups are being

created here in Berlin at least and I think that holds kind of true across Europe yeah I think I think that for now most of the startups and this is Illustrated and in this report as well most of the money being invested and most of the companies are actually located I mean a big chunk of them are located in Silicon Valley now what will be interesting to see is whether or not uh whether or not those startups will move to other places where there have more welcoming jurisdictions like the Isle of Man for instance you know there are 60 companies uh from

what we heard in last in the last show that are that are setting up in the Isle of Man you know if those companies are uh large exchanges and they start rounding up funding you know at 50 million dollars a chunk uh it's pretty soon you've got uh you've got an important amount of uh a VC Funding Company but I mean I feel you will see probably some people will set up maybe legal entities in those places but you know it's not like coinbase can move in a headquarters or something I mean I think you will continue to have that in California and certain value for the most part uh and then of course some will start European offices I mean big pay is down there already in Amsterdam

uh I think Circle has also I think they open an office in Ireland or at least they announce it at some point and and I'm sure that's going to be other companies that do that um and and it could be of course if the US has adopts a really hostile regulatory stance uh towards Bitcoin that some of them will sort of move their legal company abroad and you know maybe just develop software in the US that then is sort of but they don't do um maybe service customers abroad uh and I think to some extent it's just

that you're the European startup scene tends to be well one it's a lot smaller it's a lot less mature and it tends to be it tends to lag behind the US and the Silicon Valley by quite some time and I think that's a factor as well so you don't think this is a a trend that is specific to bitcoin but it's specific just to attack Tech startups and VC Investments I I think for the most part right I mean if you look at the total we see Investments you'd also have a huge imbalance I mean even a company like uber how much did they raise uh like a billion or more I actually

remember huge amount right uh I think it was a billion the value that 17. it was more than a billion yeah like how many you know how much of the European VC investment does that account for a huge part probably you know I I didn't know I I don't know what the figures are but um there's definitely an in volunteer and even if in Berlin we do have an active startup scene and it tends to be money around as well especially around you know some people may have heard of there was two IPOs of salando and Rocket internet of um these uh some robotics who started that originally and those guys are very

successful with them uh but they're really e-commerce focused so there's a lot of e-commerce startups here but not Bitcoin you know and I noticed that at our Bitcoin Meetup um we don't get a lot of started people coming here and and I think I was just meeting with someone yesterday who came back pretty much everywhere yeah I don't know I mean I was I was talking yesterday uh with someone who's just spent two months in Silicon Valley he came back and she came here uh and she said there you know there's just a an insane bars and community and everyone is like Bitcoin and they're like all this uh all these entrepreneurs all these developers starting Bitcoin

things and and I think that is happening there and it is not so much happening here yet hopefully that will change but but so this is a question that we've talked about a lot is how do we bridge the gap between the the kind of typical traditional startup scene and the Bitcoin scene I mean as as two people that run meetups I think we'd like to try to attract as many people as possible from kind of the other uh startup scene what needs to happen I keep asking myself this question like how do I how can I attract Tech entrepreneurs my meetups I mean I think uh there's a few things so I mean first of all when I started

the Meetup here in Berlin this was very much my goal of making that happen and it hasn't happened for the most part I mean obviously there are things like speaking at other meet-offs and speaking at Tech conferences I've done some of that I've spoken at the startup conference here it wasn't as I spoke about Bitcoin to people who aren't bitcoiners and done that at some other Meetup as well so I think that sort of thing is you know it's good of course one has to do a lot of that and I think a lot of it will just be at you know when people see that all this money is being raised by Bitcoin companies and perhaps when people have the first also European become successes yeah

you know when you see examples of it happening around you some at some point people say oh maybe there's something there maybe I'll start um and in the end it's very much a sort of a one by one process right somebody learns about Bitcoin uh they actually find it interesting they understand it and then all of a sudden it's like okay maybe I do something there um but it's slow because for most people this sort of impression they have right now before having done that work of diving into Bitcoin is it's um weird thing some internet currency is like for Libertarians and you know like I hear a lot of people asking me didn't

Bitcoin die a few months ago uh so so the the overall perception of people's tends to be pretty negative I think people have we're not having like spent time thinking about Bitcoin seems to follow seems to follow the price of course I think if we go up and now it goes higher than the past High people are like oh this isn't actually die maybe there's something there right but uh yeah you're right the price is very important in that in that aspect but I I think

public perception is definitely a barrier um and speaking of public perception so while we're on the topic of BC investment the there are several categories uh in which uh VCS are investing they're investing in exchanges Financial Services mining Payment Processing wallets a lot of a lot of the investment has been going at the wallets but the bigger chunk of Investments have been going to kind of these Universal companies companies like Circle and coinbase that that offer a wide range of products and services and they try to be sort of you know on all fronts um so I guess as as these companies sort of grow and become these large multinationals Implement implanted in

the US and in Europe and perhaps even in developing uh Nations um places like like Africa and South America uh I guess I'd like to prognosticate on the future of these companies uh as the as the the ideology behind Bitcoin is to have a sort of uh decentralization and these companies sort of represent I guess in the in the Bitcoin sense some sort of banks how will they be perceived by the the original uh you know uh people in the space will sort of the uh ideological uh

bitcoiners uh stay away from those companies and though most of the track mainstream users and I'm yeah absolutely really be a bifurcation of of Bitcoin into perhaps like this mainstream coin and some other coins that are that are not uh that these companies don't deal with yeah no uh I think absolutely I mean it's already happening there's a lot of like free samples here in you know in our little Bitcoin Center you know leaving one example uh he hates Circle coinbase all those companies so if the idea of like people should hold their own private key right like that that's very deeply ingrained and a

lot of people who've I guess come towards the more ideological uh old faction of Bitcoin and then these new companies take a very different approach and I think that's interesting right I mean I guess one exception is coin blockchain who raised now 30 million dollars and and they're really a company that is built on this don't hold users private keys and the interesting thing is they may have a real Advantage when it comes to regulations right because they can avoid a lot of regulations um at least probably because they can say we don't touch users money and the circle and coinbase and those companies they won't be able to do that because they obviously are

um so that that's one interesting aspect there and the other thing is just user experience it's just easier to build a good user experience I think if you if you take care of everything for the user so if you allow people to recover their password if they lose it those kind of things um they're just nice right I mean it's it's asking a lot from users to say you know so far you've been able to be extremely negative with your passwords you lose them forget them Etc you can reset them you know like you can choose like uh monkey 12 as your password and maybe you get hacked but you know

whatever um and that's you know reasonable enough you know it's you're not going to get you Bank robbed um and you can reset it if you forget it and companies like blockchain with info these wallets don't allow that they can't allow that and that's a problem right I I agree but I I I agree that the the user experience is is super important for adoption yeah I mean I mean your experience designer this is what I do uh and and I tend to be uh uh I tend to to to be quite appreciative of companies doing things

that are improving you the overall user experience you know companies like Circle uh guys like it like Richard pitano working on handshake you know however that sort of has an antithetical position to what the original kind of Bitcoin ideology is right to have these non non-centralized uh entities and to not entrust your funds to to a company with which holds your private keys and essentially stay away from from because you know these companies are becoming Bitcoin Banks right so we're kind of falling into the same model that we have now so where where is the added value you know I know

that there's a value in this is you're free to transmit and things like that but if we're getting back into the sort of corporate model where you have these large structures these large companies holding all the Bitcoin is that different from what we have now question [Music] um obviously you are giving up some of the some of the advantages of Bitcoin when you do that but I I don't see it as such a negative thing I'm I'm personally open there I feel having a substantial amount of Bitcoin right sort of the your savings I I would rather I think like keep that uh personally right like set

up your own system something like Armory there are people but then also huh like people are people aren't going to do that yeah I don't know do you maybe that sort of thing is also going to become much easier in the future of Hardware wallets and on all of those things uh maybe to a point where not your average user but those really interested can but not super crazy can do it and and it's nice to have a choice you know it's nice to say like oh but I'm also going to use this circle or something like that and and of course you write you know that that conflict is there and some people feel extremely strongly about

that um I know there's you know Peter Todd or or the dark wallet guys and those guys have a feel extremely strongly that that those companies are a threat to bitcoin I personally don't view it that way I think anything that helps Bitcoin grow helps more people use Bitcoin is a good thing um like I don't really you know I think in the end you're gonna have your choice you know circle is not going to be able to stop you from taking your Bitcoins from your account and putting it to the blockchain or info wallet that you control yourself or your your desktop client or something like that

um as long as as long as it's possible to send money to just some Bitcoin address and if that's not possible anymore we don't have Bitcoin anymore but as long as that's possible um I think it's great you you know people have a choice right so you can do both I think you can have totally a coexistence of this uh I'm never going to give my priority to anyone a clan and uh people who just want to use a better a better money I I see what you're saying but I think that we we need to be super careful uh that you know those companies don't have enough power that they can uh start doing things like withdrawal limits you

know um where then it becomes hard for you to get your money out withdrawal limits what do you mean well for instance like I mean you look at your bank right if you try to spend if you try to use your bank card to pay for something that's worth over over 2000 euros they'll they'll they'll block that transaction unless you contact them for security purposes I mean it's good to have that option to set it even even if I I think that actually makes sense right yeah it doesn't sap us already do something like that right or maybe they have this option maybe they don't but I think it makes a lot of sense now you have a hosted wallet and you say Hey you know I I want to have a

delay maybe some of it is like time locked for a week and if somebody tries to take it out it stays in there for a week and I can go back to them and call them and tell them no I didn't authorize this in case I get hacked I think those kind of things are great um and and you know people are are doing this or I think will make this possible if it's not already with projects like a counterparty in ethereum ETC that you have time locks addresses sort of like savings wallets where you um people can't if you get hacked they can't just take your money out um and and then of course hosting companies will offer things like that too so

um there's one other topics perhaps we can touch on briefly before we wrap up which is the sort of a big company is taking interest in the economy becoming involved in Bitcoin and that's something that has been surprisingly and that seems to be happening very rapidly and all over the place at least that's my impression um so it's sort of on the one hand it's these uh Bitcoin competitors right the companies doing trying to do similar things uh or at least one could view them as big on competitors so companies like square and PayPal that are both integrated Bitcoin now at least to some

extent or or they're planning to stripe same thing and I we have the European office of stripe uh just upstairs and the guy told me that all the all the talking about is Bitcoin it's kind of funny uh and you know the funding the Stellar projects so so there you have these Financial companies uh moving into Bitcoin and then you have large Merchants right that increasingly uh adopt Bitcoin and then you know we've had if the IBM people wanting to do this blockchain Internet of Things stuff um and I I've been in contact quite a few times with Oxford Springer which is

the largest or one of the largest media companies in Germany they as well like all constantly thinking now what can we do with Bitcoin meetings about them calling everyone um so there's a lot of things happening there and then I think that's across the board you know and I hear from people I was like oh at one point as some guy from Deutsche Bank was supposed to come to our Meetup and you know this there seems to be a lot of interest and that's happening before mainstream adoption I thought this these companies would be slower but they really um they're really thinking about what's coming and a lot of them you have that interesting dynamic as well that if it is coming of course right even if a

bitcoin's coming and it's going to undermine the profits of the financial industry overall I mean you can say as a as an industry overall that's a bad thing for us we want to prevent that but assuming you can't prevent it the second best thing is you want to be the first company to move in there and get involved in Bitcoin and then you know maybe it's going to decrease the overall profit of the banking industry but at least you're the bank that's in there first it's in there the most active and I think we're seeing that Dynamic I think we're seeing a lot of a lot of people seeing Oh this is inevitable I guess it's going to happen so I better be among the first now what are your thoughts on on Apple pay

and how is positioning itself as a payment system and how that will affect uh you know other companies adopting Bitcoin rather than Apple pay for instance um yeah good question so I I'm not super expert on Apple pay and if it's interesting you know if something like square right they're going to take both um and I saw an interesting uh sort of a chart or an infographic by I think a coinapult if you if you look at you'll probably find it um where they showed uh you know how many people have an iPhone how many people are in the US right because if you know in the US is

not going to work and then off the sort of global uh smartphone penetration and of course it's a tiny tiny percentage so it's just in terms of sort of reach and if you think of developing countries uh people doing uh banking with the smartphones for the first time apple pays so limited so I don't compete to bitcoin on that level and of course it's not the currency so you still have the old uh the old cost of of payments that being said I have no doubt that in terms of user experience it's going to be like much better than what Bitcoin can do for quite a while

uh you know it's just going to be like Smooth amazing and it works and it's uncomplicated and secure and of course they don't use this QR code scanning and I'm sure it will be great you know and I'm sure that but but who is using Bitcoin for a better user experience it I know maybe online in some cases you can say that's the case right it's actually easier to pay your Bitcoin uh but you know mostly people paying in Bitcoin in uh in retail places it's not about the user experience it's because these people are passionate about Bitcoin they want to support it right

um and and and the user experience you know actually that's another thing I was totally wrong with my predictions at the beginning of the year I was like all the user experience is going to improve a lot um and especially about the payment protocol so if you don't remember what the payment protocol is we did an episode about it I think at some point to go back to it but basic idea is to make this sort of um the flow the payments especially in-person payments a lot better for me and that hasn't happened at all I don't think the user experience of of paying Bitcoin has really improved very much um at least not that I've noticed

what do you think I think you're right but I think there's a there's a question that that needs to be addressed with regards to user experiences as as app Developers for instance develop wallets that enable easy payments uh or say say coinbase uh or no take a company like um uh coin kite right the developer uh yeah a payment terminal so they have a let's say a pretty good user experience when it comes to paying with Bitcoin you're using you're using this card it's something that you're

used to Etc but the problem with this is it creates these separate standards right or the lack of standardization I I don't see how I have difficulty seeing how we're going to standardize user experience no I think you're totally right that everybody uses the same standard so uh whether that's NFC you know for for New York near communication payment or uh no yeah no I think you're right I mean I think the payment protocol probably wants to do some things in those directions but I think because we're always on the hardware right it's relying on hardware and even the hardware is non-standard like even NFC is not a standard the NFC in an Apple

iPhone is not the same as on another device so no but I I very much agree I mean I think that's why Apple pay is just gonna be awesome right it's gonna work uh and then with Bitcoin that's much more difficult right you have these QR codes and sometimes they're too small sometimes too large it doesn't scam but like it's it's a bit of a mess um and I'm sure over time this will increase improve but I think you're right I think the lack of standardization is a problem and I don't think that's going to change um I mean I mean we see that even in simple things as what unit you actually use so you know like people use Bitcoin at some point last year I think towards

the end of last year people were like oh this is too high you need to switch a milli Bitcoins in the newsletter actually switched a million Bitcoins right a million Bitcoins but somehow that didn't happen and and there was not like a coordinated switch like people still use for the most part Bitcoin um some people propose bits uh I'm not even sure where the bit is this is like a million for Bitcoin or something like that um so so even there even though something as simple as that would be it hasn't been possible to have a a coordinated thing so I think it is going to be very challenging yeah and on top of that you know Bitcoin

development has description also According to some people so if there's no Bitcoin development how are we going to develop standards no I mean I'm I'm confusing but um let's uh let's wrap this up uh yeah absolutely great show I mean I really enjoyed uh hanging out just two of us and uh and talking about this stuff it's uh it's good totally we should do this once in a while I think I think we should do it every quarter you know we should we should use the state of Bitcoin report as a as a sort of excuse to just you know get together we'll need we'll need some whiskey and cigars though because you know okay yeah no no I think that's a that's a fantastic idea uh we will do that next time we'll get some some drinks and we'll do it again

at the at the Q4 state of Bitcoin report no I look forward to that already okay um but yeah well thanks so much uh thanks so much for listening and viewing so we have some we have some live views which is great lots of fun uh we like I don't know if we didn't check the Twitter but at some point we all should have a chat room so people can actually um actually comment this chat room uh so there's two ways that we can interact with people in my in my opinion that it would be easy so one is that we have a QR code for every episode and we'll tweet that QR code before the episode and generally that would be like EB 45 for episode 45. so yeah look uh follow us on Twitter look out for the for the

announcement we usually announce the Hangouts several days in advance uh also Google Plus is a good place uh obviously because that's where we asked that's where we set up the Hangout so they get announced there and if you go on the hangout page you can you can get into the Q a session so on the hangout page you'll see the video and you can click on Q a and that brings you in and you can ask questions live so we'd really much like to have you know people come in especially when we have guests so that they can come in and start asking questions and interacting with the guests I think that would be fantastic and of course also that going to especially those who listen uh to us on audio which is still like 99.5 or something of people uh we are doing video now so you can check out our

videos on YouTube at our username is epicenter BTC and we are doing also live hangout so you can actually watch it live and you can ask this question give comments Etc um and yeah as Sebastian said you can get that information on Twitter from us uh one thing I want to mention before we go uh so just to remind everyone about about BTC 2B that's next week that's on the 16th and 17th I'll be there uh both days I think I'm gonna be there both days I'm not sure yet but I'm pretty sure I'm staying overnight so I'm actually speaking there I'm doing a panel a marketing panel uh moderated by Richard katano and uh

Bitcoin marketing so they actually the preliminary agenda just came out today I think so if you go to btc2b.com you can see it there should be a good conference I think it'll be pretty small it's at a small venue just at Brussels but I think I think it'll be fun I think uh there'll be some good there's some good speakers there Adam does Siri class love wolf vitalik is there uh Matt rosak so yeah and lots of top different topics being covered so if you're there definitely definitely uh let me know uh if you want to get some drinks or something in Brussels and you can get 15 off by using the code epicenter when you register on vccg.com

and just very briefly and also many Roosevelt some of you may know him is the chairman of the Israeli Bitcoin foundation and we're going to have him on the podcast in a few weeks but he's asked me uh to just mention that they're doing inside bitcoin's conference in Tel Aviv on October 19 20th so if you're interested uh you know check that out too um and we don't have a discount code for that but if you if you want to buy a ticket email us and we can probably get you a discount code for that um so yeah that's open will be 19. 20th with lots of speakers as we take return David Johnson many rosenfels we're gonna have on Peter Todd Etc and by the way the email is Show episode Bitcoin come

for any any reason any reason you want to email us you can email us at the show episode.com um yeah so thanks so much for listening and absolutely do get in touch with you I'd love to have some interaction with our audience let us know when you think if you have some questions some topics something we should know about uh so do that follow us on Twitter app sending BTC you can also donate to us of course we do appreciate that and that's it Epson bitcoin.com tips we do send out the newsletter every Friday so that's going up tomorrow and you can sign up at Epson bitcoin.com newsletter and I think that's it yeah one last thing uh I think we should mention the who we have on on

Sunday yeah absolutely why don't you do that so we have uh uh Sean Wilkinson of uh storage yeah so so Jay for those who don't know is one of those at decentralized cloud storage projects there's quite a few uh bit Cloud the storage a I guess it's made safe sort of related to that I'm sure he can tell us more about it on Sunday uh and in store J I think it's one of the best known of them and maybe all this I don't know but so yeah it's something I really look forward to it's one of those exciting sort of decentralized apps that people often talk about and perhaps the first one that is really gonna work

because there's so many projects trying to do the same thing and trying to decentralize a sort of a fundamental um internet service as in cloud storage so it's an episode I really approach it so that's at 4 P.M UTC on Sunday so you guys can figure that out on Google 1600 UTC uh yeah all right well thanks so much for listening and we'll be back on Sunday foreign