1 00:00:10,680 --> 00:00:14,040 Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast. 2 00:00:14,120 --> 00:00:19,000 Speaker 1: I'm Tracy Alloway and I'm so Joe. I think at 3 00:00:19,000 --> 00:00:23,480 Speaker 1: this point we've had a number of people either involved 4 00:00:23,640 --> 00:00:27,200 Speaker 1: in the cryptocurrency boom or a massive fans of it 5 00:00:27,320 --> 00:00:30,240 Speaker 1: on the podcast. Correct, Yeah, we have now, haven't we. 6 00:00:30,360 --> 00:00:33,360 Speaker 1: I hadn't really like thought about that, but in the 7 00:00:33,440 --> 00:00:36,879 Speaker 1: last um several months, it does feel like even with 8 00:00:37,159 --> 00:00:39,440 Speaker 1: the sort of boom having waned quite a bit over 9 00:00:39,479 --> 00:00:41,920 Speaker 1: the last year, we have talked to a number of 10 00:00:42,520 --> 00:00:46,479 Speaker 1: hardcore true believers. Yes, and we've discussed this before, but 11 00:00:46,560 --> 00:00:49,240 Speaker 1: our timing on this has been absolutely terrible because we 12 00:00:49,320 --> 00:00:53,240 Speaker 1: basically waited until the bubble had burst for us to 13 00:00:53,280 --> 00:00:55,240 Speaker 1: get a bunch of bitcoin people on. But you know, 14 00:00:55,280 --> 00:00:57,840 Speaker 1: at least we didn't contribute to the bubble, because I 15 00:00:57,840 --> 00:01:00,720 Speaker 1: don't think like we did a single cryptopisode in all 16 00:01:00,760 --> 00:01:04,240 Speaker 1: of as far as I know, and so at least 17 00:01:04,800 --> 00:01:07,399 Speaker 1: when everyone was like, you know, losing their heads or 18 00:01:07,520 --> 00:01:09,759 Speaker 1: going crazy, at least we didn't at least we didn't 19 00:01:09,800 --> 00:01:12,880 Speaker 1: amplify the hype. This is very true. But I think 20 00:01:12,959 --> 00:01:16,199 Speaker 1: in the interest of fairness, at this point, we need 21 00:01:16,240 --> 00:01:20,360 Speaker 1: to get a sort of anti crypto person on and 22 00:01:20,480 --> 00:01:25,560 Speaker 1: in my search for this ultimate anti crypto person, I 23 00:01:25,600 --> 00:01:30,880 Speaker 1: think I came upon the most sort of vociferous um 24 00:01:31,000 --> 00:01:36,360 Speaker 1: argument against cryptocurrencies and also the underlying blockchain technology that 25 00:01:36,480 --> 00:01:38,399 Speaker 1: I have ever seen. Wait, are we gonna are we 26 00:01:38,440 --> 00:01:42,040 Speaker 1: talking to Jamie Diamond today? No, it's not Jamie. Jamie 27 00:01:42,080 --> 00:01:45,040 Speaker 1: Diamond was not that convincing, because you know, he came 28 00:01:45,080 --> 00:01:47,480 Speaker 1: to that conference said bitcoin was a fraud. But we 29 00:01:47,560 --> 00:01:49,640 Speaker 1: know that JP Morgan at the same time that it 30 00:01:49,680 --> 00:01:52,640 Speaker 1: says bitcoin as a fraud, claims to be experimenting with 31 00:01:52,680 --> 00:01:55,520 Speaker 1: blockchain technology. So no, no, I mean, there's a there's 32 00:01:55,520 --> 00:01:58,440 Speaker 1: a really interesting there's a really good point here, and 33 00:01:58,480 --> 00:02:01,360 Speaker 1: it's something that I've always foundrustrating in the debate Whisha 34 00:02:01,360 --> 00:02:05,760 Speaker 1: is that there's no shortage of bitcoin skeptics and Bitcoin 35 00:02:05,840 --> 00:02:07,720 Speaker 1: critics and people call it a fraud in the Ponzi 36 00:02:07,760 --> 00:02:10,840 Speaker 1: scheme in a bubble. What there is a shortage of, however, 37 00:02:11,320 --> 00:02:15,200 Speaker 1: are people who are who call bitcoin of fraud or 38 00:02:15,240 --> 00:02:18,119 Speaker 1: their skeptical of it, who have actually done the research 39 00:02:18,240 --> 00:02:21,359 Speaker 1: and have the technical chops to understand it and understand 40 00:02:21,360 --> 00:02:23,639 Speaker 1: what they're talking about. So you get all these people 41 00:02:23,680 --> 00:02:26,040 Speaker 1: on stage or they say bitcoin is a scam, it's 42 00:02:26,080 --> 00:02:28,960 Speaker 1: like okay, but when they usually don't have is anything 43 00:02:29,000 --> 00:02:31,800 Speaker 1: interesting to say after that? And so that is what 44 00:02:31,840 --> 00:02:35,840 Speaker 1: I'm absolutely what I'm hoping that maybe we can accomplish today. Absolutely, 45 00:02:35,840 --> 00:02:38,880 Speaker 1: And what you often hear from the crypto proponents is, oh, well, 46 00:02:39,040 --> 00:02:42,000 Speaker 1: you don't understand the technology, or you don't understand the 47 00:02:42,000 --> 00:02:45,840 Speaker 1: technology is potential, and so it's not worth talking to you, okay. 48 00:02:45,919 --> 00:02:48,760 Speaker 1: So I'm very pleased to say that we have found 49 00:02:48,800 --> 00:02:51,359 Speaker 1: not only a tech expert, but someone who is sort 50 00:02:51,400 --> 00:02:55,280 Speaker 1: of the ultimate anti crypto person who gave a presentation 51 00:02:55,440 --> 00:02:58,560 Speaker 1: at the Enigma Use and Next conference in California just 52 00:02:58,600 --> 00:03:01,400 Speaker 1: about a month ago. The title of this conference was 53 00:03:01,480 --> 00:03:06,000 Speaker 1: Cryptocurrencies and blockchain burn it with fire. You can't get 54 00:03:06,040 --> 00:03:08,680 Speaker 1: stronger than that, can you. So I'm very excited to 55 00:03:08,680 --> 00:03:11,840 Speaker 1: say that our guest for this episode is Nick Weaver. 56 00:03:12,000 --> 00:03:15,720 Speaker 1: He is a researcher at the International Computer Science Institute 57 00:03:15,840 --> 00:03:19,440 Speaker 1: and a lecturer at UC Berkeley. Nick, thanks so much 58 00:03:19,480 --> 00:03:23,440 Speaker 1: for coming on, Thanks for hosting me. Uh So, Nick, 59 00:03:24,160 --> 00:03:27,920 Speaker 1: I gotta say cryptocurrencies burn it with fire. You know 60 00:03:28,360 --> 00:03:30,720 Speaker 1: you're you're clearly not mincing your words here. You have 61 00:03:30,760 --> 00:03:36,040 Speaker 1: strong feelings about the crypto sphere, yes, and that's because 62 00:03:36,160 --> 00:03:40,880 Speaker 1: I've actually been able to watch it for uh three 63 00:03:40,960 --> 00:03:44,680 Speaker 1: quarters of a decade now. So what happened when the 64 00:03:44,800 --> 00:03:54,520 Speaker 1: cryptocurrencies first came out in in and is most people 65 00:03:54,560 --> 00:03:58,080 Speaker 1: who looked at it with technical understanding went, oh, this 66 00:03:58,160 --> 00:04:02,880 Speaker 1: is bovine excrement and walked away. But I have a 67 00:04:02,920 --> 00:04:07,839 Speaker 1: monetization model. I can watch the cryptocurrency space and turn 68 00:04:07,920 --> 00:04:12,760 Speaker 1: it into both academic papers and non academic papers, and 69 00:04:12,880 --> 00:04:16,479 Speaker 1: so I've been able to basically mind comedy gold from 70 00:04:16,520 --> 00:04:20,479 Speaker 1: the field for uh several years now. And that means 71 00:04:20,600 --> 00:04:25,640 Speaker 1: I've been aware from the beginning from Saga's such as 72 00:04:26,440 --> 00:04:29,680 Speaker 1: ten percent of all bitcoin being invested in a ponzi 73 00:04:29,760 --> 00:04:34,320 Speaker 1: scheme run by a guy called Pirate at forty so uh. 74 00:04:34,600 --> 00:04:38,800 Speaker 1: In your presentation and in your talks and tweeting your 75 00:04:38,839 --> 00:04:42,120 Speaker 1: critical of both sort of public block chains which is 76 00:04:42,120 --> 00:04:46,760 Speaker 1: what we call cryptocurrency, uh, and also corporate block chains. 77 00:04:46,920 --> 00:04:49,520 Speaker 1: I'm a little less interested in the corporate side because 78 00:04:49,560 --> 00:04:53,600 Speaker 1: I feel like there are very few defenders of them anymore. 79 00:04:54,160 --> 00:04:56,320 Speaker 1: And so you'll find a lot of agreement even among 80 00:04:56,360 --> 00:05:00,719 Speaker 1: cryptocurrency enthusiasts when you look at cryptocurrent these however, and 81 00:05:00,760 --> 00:05:03,880 Speaker 1: this idea of like bitcoin as this sort of permission 82 00:05:03,920 --> 00:05:08,880 Speaker 1: list kind of anonymous payment system, decentralized, what is, in 83 00:05:09,000 --> 00:05:12,240 Speaker 1: your view, the sort of fatal flaw that makes it 84 00:05:12,440 --> 00:05:16,479 Speaker 1: not live up to the hype of its advocates, the 85 00:05:16,560 --> 00:05:20,920 Speaker 1: big fatal flaws. It doesn't actually work as currency if 86 00:05:20,960 --> 00:05:24,560 Speaker 1: you can't use it as a competitor to all the 87 00:05:24,680 --> 00:05:32,359 Speaker 1: other actual digital currency systems we have, like oh, PayPal, Impassa's, 88 00:05:32,680 --> 00:05:37,719 Speaker 1: l Asa. All of these payment systems are vastly more 89 00:05:37,760 --> 00:05:43,520 Speaker 1: efficient than the cryptocurrencies, unless you're interested in criminal activity. 90 00:05:44,000 --> 00:05:48,320 Speaker 1: So walk us through the technical aspects of why you 91 00:05:48,400 --> 00:05:51,560 Speaker 1: think bitcoin doesn't work as a currency or as a 92 00:05:51,600 --> 00:05:57,719 Speaker 1: payment system. Okay, so let's start with the three things 93 00:05:57,720 --> 00:05:59,400 Speaker 1: you need to be able to do with the currency. 94 00:05:59,560 --> 00:06:01,960 Speaker 1: Need to be will acquire it, you need to be 95 00:06:02,000 --> 00:06:04,240 Speaker 1: able to hold onto it, and you need to be 96 00:06:04,279 --> 00:06:09,559 Speaker 1: able to spend it. Now, actually acquiring cryptocurrency is a 97 00:06:09,640 --> 00:06:15,160 Speaker 1: hard problem because cryptocurrency the one property it has that 98 00:06:15,240 --> 00:06:20,520 Speaker 1: the other payment systems don't is it's designed to be irreversible. 99 00:06:20,560 --> 00:06:24,360 Speaker 1: There's no go back or undo button, which means in 100 00:06:24,440 --> 00:06:27,480 Speaker 1: order to buy cryptocurrency, you have to do one of 101 00:06:27,600 --> 00:06:32,039 Speaker 1: three things. You either have to bring cash, so the 102 00:06:32,080 --> 00:06:34,520 Speaker 1: bitcoin a t m S don't take your ATAM card, 103 00:06:34,600 --> 00:06:39,320 Speaker 1: they take cash. Or you have to be given credit 104 00:06:39,720 --> 00:06:42,880 Speaker 1: by the seller of the cryptocurrency, so you transfer your 105 00:06:42,880 --> 00:06:47,200 Speaker 1: money electronically and are given credit. Or you have to wait, 106 00:06:47,400 --> 00:06:51,599 Speaker 1: so you transfer your money your to the exchange. The 107 00:06:51,640 --> 00:06:55,760 Speaker 1: exchange then sits on it for several days. Anyone who 108 00:06:55,880 --> 00:06:59,719 Speaker 1: doesn't follow these three rules when selling you cryptocurrency is 109 00:07:00,040 --> 00:07:04,320 Speaker 1: able to be defrauded because the rest of the financial 110 00:07:04,400 --> 00:07:09,200 Speaker 1: system is all designed with an undue button to mitigate fraud, 111 00:07:09,360 --> 00:07:12,680 Speaker 1: and so for example, one of the early bitcoin exchanges 112 00:07:12,960 --> 00:07:20,120 Speaker 1: used a PayPal clow that promise no chargebacks, and then 113 00:07:20,320 --> 00:07:23,880 Speaker 1: there were chargebacks and they went out of business. Likewise, 114 00:07:24,240 --> 00:07:28,320 Speaker 1: Steve Wozniaks sold seventy thousand dollars worth of bitcoin to 115 00:07:28,440 --> 00:07:31,760 Speaker 1: somebody who paid with PayPal, only to find out that 116 00:07:31,840 --> 00:07:35,360 Speaker 1: it was a fraudulent transaction. The PayPal was reversed and 117 00:07:35,440 --> 00:07:39,120 Speaker 1: he was out the bitcoin. Fortunately, I think the laws 118 00:07:39,240 --> 00:07:43,560 Speaker 1: can afford the loss. So they're hard to buy, they're 119 00:07:43,560 --> 00:07:48,680 Speaker 1: harder to hold onto. So if you store your cryptocurrency 120 00:07:48,920 --> 00:07:53,200 Speaker 1: on a third party exchange, you are on the hook 121 00:07:53,280 --> 00:07:57,560 Speaker 1: if they are hacked, and that has been billions of 122 00:07:57,680 --> 00:08:01,480 Speaker 1: dollars of notional value lost for the years as the 123 00:08:01,520 --> 00:08:05,840 Speaker 1: exchanges are hacked, and apparently North Korea is now one 124 00:08:05,880 --> 00:08:10,000 Speaker 1: of the big hackers on this. So you store your 125 00:08:10,000 --> 00:08:13,559 Speaker 1: cryptocurrency on your own computer, Well you can't do that either, 126 00:08:13,760 --> 00:08:18,080 Speaker 1: because if your computer is hacked, your cryptocurrency gets stolen. 127 00:08:18,160 --> 00:08:21,520 Speaker 1: And in fact, we used this one time to detect 128 00:08:21,640 --> 00:08:29,360 Speaker 1: a break in when the stole the monitored bitcoin from 129 00:08:29,440 --> 00:08:33,840 Speaker 1: a wallet that had a copy on a graduate student's account. 130 00:08:34,559 --> 00:08:38,720 Speaker 1: So you use a dedicated device, say like an iPhone 131 00:08:38,800 --> 00:08:43,040 Speaker 1: is a really strong device an iPhone, however, you're dependent 132 00:08:43,120 --> 00:08:47,319 Speaker 1: on the cryptocurrency software, and that cryptocurrency software may be 133 00:08:47,520 --> 00:08:51,800 Speaker 1: dependent on open source modules on GitHub that can be 134 00:08:51,960 --> 00:08:55,760 Speaker 1: bought by somebody else, taken over and include stealing code, 135 00:08:55,800 --> 00:09:00,000 Speaker 1: and this happened, so they're really hard to hold onto. 136 00:09:00,520 --> 00:09:07,040 Speaker 1: And finally you can't actually spend them because the dirty 137 00:09:07,040 --> 00:09:12,600 Speaker 1: little secret is the merchants who say they accept cryptocurrency, Well, 138 00:09:12,679 --> 00:09:17,079 Speaker 1: first of all, the volume hasn't increased in five years, 139 00:09:17,120 --> 00:09:22,880 Speaker 1: but they aren't actually accepting cryptocurrency because the cryptocurrency prices 140 00:09:22,920 --> 00:09:26,240 Speaker 1: bounced up and down. They use a service like bit pay, 141 00:09:26,400 --> 00:09:32,120 Speaker 1: which allows them to price in dollars and it immediately 142 00:09:32,160 --> 00:09:36,440 Speaker 1: converts the cryptocurrency into actual money. Even over Stock up 143 00:09:36,520 --> 00:09:41,240 Speaker 1: until a year ago, basically did not hold any cryptocurrency. 144 00:09:41,320 --> 00:09:45,679 Speaker 1: They just converted it all right away. Um well, they 145 00:09:45,920 --> 00:09:51,280 Speaker 1: held a teen amount um And so in order for 146 00:09:51,320 --> 00:09:56,440 Speaker 1: the system to balance, as somebody buying something with cryptocurrency, 147 00:09:56,520 --> 00:10:00,360 Speaker 1: because of that volatility risk the price bouncing up down, 148 00:10:00,720 --> 00:10:05,760 Speaker 1: you want to immediately transfer your dollars into cryptocurrency then 149 00:10:05,880 --> 00:10:10,560 Speaker 1: spend it, which means a real world cryptocurrency transaction costs 150 00:10:10,679 --> 00:10:14,720 Speaker 1: vastly more than the alternatives when you include those two 151 00:10:14,760 --> 00:10:19,280 Speaker 1: currency conversion steps, and one of which buying the cryptocurrency 152 00:10:19,480 --> 00:10:25,920 Speaker 1: is inherently expensive. So the only people who can avoid 153 00:10:26,000 --> 00:10:29,120 Speaker 1: that expensive buying cryptocurrency is the people who have been 154 00:10:29,520 --> 00:10:33,240 Speaker 1: holding onto it a long time because they're a believer. Now, 155 00:10:33,600 --> 00:10:37,040 Speaker 1: if you don't believe in cryptocurrency, there's no point. If 156 00:10:37,040 --> 00:10:41,280 Speaker 1: you do believe in cryptocurrencies, the one rule of them 157 00:10:41,400 --> 00:10:46,160 Speaker 1: is never actually spend them, because these are designed on 158 00:10:46,440 --> 00:10:50,120 Speaker 1: a gold standard type model. And as we remember our 159 00:10:50,160 --> 00:10:53,839 Speaker 1: economic history from the Great Depression, the only thing worse 160 00:10:53,840 --> 00:10:58,080 Speaker 1: than inflation is deflation that is the notion that your 161 00:10:58,080 --> 00:11:01,599 Speaker 1: currency is going to be worth more to borrow then today. 162 00:11:01,679 --> 00:11:07,079 Speaker 1: And these cryptocurrencies are supposed to be deflationary, which means 163 00:11:07,120 --> 00:11:12,400 Speaker 1: if you say, buy a pizza back in two thousand eleven, um, 164 00:11:12,520 --> 00:11:15,560 Speaker 1: you end up dining on regret when it looks like 165 00:11:15,600 --> 00:11:19,600 Speaker 1: a massive ten million a hundred million dollar pile of 166 00:11:19,640 --> 00:11:24,480 Speaker 1: money in So, if you don't believe in it, they 167 00:11:24,520 --> 00:11:27,080 Speaker 1: don't work for payments, and if you do believe it, 168 00:11:27,679 --> 00:11:32,360 Speaker 1: they don't work for payments. All right, So everything you 169 00:11:32,400 --> 00:11:35,480 Speaker 1: say makes a lot of sense in terms of Bitcoin 170 00:11:35,600 --> 00:11:40,000 Speaker 1: or any other cryptocurrencies not being not making any sense 171 00:11:40,040 --> 00:11:44,240 Speaker 1: whatsoever for what we would call conventional commerce. And um, 172 00:11:44,280 --> 00:11:48,680 Speaker 1: obviously the pro bitcoin rhetoric has changed a lot over time. 173 00:11:49,000 --> 00:11:52,400 Speaker 1: But something that strikes me listening to you and watching 174 00:11:52,440 --> 00:11:57,320 Speaker 1: your presentations and also talking to bitcoin believers is there 175 00:11:57,480 --> 00:12:00,640 Speaker 1: is a point of convergence. So they would say, yeah, 176 00:12:00,760 --> 00:12:05,719 Speaker 1: bitcoin isn't for buying, Bitcoin isn't for coffee, Bitcoin is 177 00:12:05,760 --> 00:12:08,520 Speaker 1: for uh, mostly for holding onto I would never spend 178 00:12:08,520 --> 00:12:11,440 Speaker 1: my bitcoin. The point of convergence, which you say in 179 00:12:11,440 --> 00:12:15,560 Speaker 1: your own presentation, the Tracy reference, is this idea of okay, 180 00:12:15,559 --> 00:12:18,560 Speaker 1: there is one thing that bitcoin is good for that 181 00:12:18,679 --> 00:12:22,560 Speaker 1: is censorship free transactions. So even with all the costs 182 00:12:22,600 --> 00:12:26,160 Speaker 1: that you describe the cost of acquiring, the risk of 183 00:12:26,760 --> 00:12:29,679 Speaker 1: losing your bitcoin, which is a calculable cost in theory, 184 00:12:29,720 --> 00:12:32,959 Speaker 1: and then the volatility cost that for a certain class 185 00:12:33,000 --> 00:12:37,640 Speaker 1: of transactions, um some of them outright crimes, some of 186 00:12:37,679 --> 00:12:41,080 Speaker 1: them gray areas, some of them more privacy related, that 187 00:12:41,280 --> 00:12:45,640 Speaker 1: cost might still be worth it. Yes, the one thing 188 00:12:45,760 --> 00:12:49,520 Speaker 1: that cryptocurrencies do that all the other payment systems don't 189 00:12:50,160 --> 00:12:55,120 Speaker 1: is by having no supposed central authority. We'll get to 190 00:12:55,200 --> 00:12:59,960 Speaker 1: why that's false. But they're designed to be censorship resisted. 191 00:13:00,160 --> 00:13:03,800 Speaker 1: There's nobody as a third party who is willing to 192 00:13:03,840 --> 00:13:09,760 Speaker 1: say no, you can't do forbidden activity. The problem is, 193 00:13:10,040 --> 00:13:13,680 Speaker 1: and this is why I've gotten much more sour over 194 00:13:13,720 --> 00:13:17,480 Speaker 1: the past five years, is I've come to the conclusion 195 00:13:17,720 --> 00:13:23,280 Speaker 1: that that is actually a bad thing. Bitcoin actually has 196 00:13:23,320 --> 00:13:26,200 Speaker 1: committed a crime against me. It has made me believe 197 00:13:26,440 --> 00:13:30,600 Speaker 1: in the need for rigorous enforcement of money laundering laws. 198 00:13:30,640 --> 00:13:34,400 Speaker 1: And I've got I'm a Silicon Valley quasi libertarian, and 199 00:13:34,440 --> 00:13:38,680 Speaker 1: I believe in the jack boot of justice on money laundry. 200 00:13:39,320 --> 00:13:43,440 Speaker 1: So what has happened with the cryptocurrencies, well, they get 201 00:13:43,559 --> 00:13:48,520 Speaker 1: used for drug deals yonn. But more importantly, they get 202 00:13:48,600 --> 00:13:53,120 Speaker 1: used for extortion. So give us cryptocurrency or your data 203 00:13:53,200 --> 00:13:56,240 Speaker 1: get Give us cryptocurrency, or we're going to keep sending 204 00:13:56,400 --> 00:14:00,720 Speaker 1: bomb threats. Um, how long before an airport is blackmailed 205 00:14:00,720 --> 00:14:03,760 Speaker 1: with give us cryptocurrency or you're going to get drones 206 00:14:03,880 --> 00:14:08,959 Speaker 1: flying over Um. It just ends up reaching out and 207 00:14:09,280 --> 00:14:13,000 Speaker 1: touching people in a very bad way. Then there's the theft, 208 00:14:13,280 --> 00:14:18,200 Speaker 1: that billions of dollars worth of theft, and then there's 209 00:14:18,240 --> 00:14:25,240 Speaker 1: the environment of what's left is pure speculation based on 210 00:14:26,000 --> 00:14:30,280 Speaker 1: somebody else being willing to pay more. But those markets 211 00:14:30,360 --> 00:14:37,280 Speaker 1: are so blatantly manipulated and fraudulent. So I consider every 212 00:14:37,400 --> 00:14:42,400 Speaker 1: I c O that was open to non accredited investors. 213 00:14:43,240 --> 00:14:48,560 Speaker 1: It is securities fraud. And that's just what we have 214 00:14:48,760 --> 00:14:54,320 Speaker 1: left is just basically um civil fraud, criminal fraud, and 215 00:14:54,960 --> 00:15:09,200 Speaker 1: rampant speculation and market manipulation. Yeah. So I want to 216 00:15:09,720 --> 00:15:13,280 Speaker 1: uh just pin down and uh not move on from 217 00:15:13,320 --> 00:15:16,000 Speaker 1: something that you said. You know, you say, Okay, the 218 00:15:16,080 --> 00:15:19,040 Speaker 1: only thing that it's really good for things like drug deals, 219 00:15:19,280 --> 00:15:22,480 Speaker 1: and it's given rise to a new model of extortion. 220 00:15:23,480 --> 00:15:27,720 Speaker 1: It only works because in theory the censorship resistance and 221 00:15:27,760 --> 00:15:30,920 Speaker 1: the decentralization so that no one can say this transaction 222 00:15:31,240 --> 00:15:33,880 Speaker 1: isn't allowed. But you threw in there and said we're 223 00:15:33,880 --> 00:15:36,320 Speaker 1: going to get back to it. But even that is 224 00:15:36,320 --> 00:15:38,520 Speaker 1: a false promise. And I really think this is the 225 00:15:38,600 --> 00:15:43,720 Speaker 1: sort of central question of do you think the censorship 226 00:15:43,760 --> 00:15:48,400 Speaker 1: resistant slash decentralization case for bitcoin? Why is that also 227 00:15:48,960 --> 00:15:53,880 Speaker 1: not actually live up to the hype. So it lives 228 00:15:53,960 --> 00:15:58,000 Speaker 1: up to the hype on censorship resistance, it does provide that, 229 00:15:58,520 --> 00:16:03,360 Speaker 1: but the notion of the centralization, So decentralization the idea is, 230 00:16:04,120 --> 00:16:06,920 Speaker 1: let's make it so that you don't have to trust 231 00:16:07,040 --> 00:16:11,160 Speaker 1: any individual or small group of entities, but only the 232 00:16:11,200 --> 00:16:16,520 Speaker 1: system as a whole. Now, the benefits of decentralization, apart 233 00:16:16,760 --> 00:16:22,320 Speaker 1: from censorship resistance, are never clearly articulated. It's basically an 234 00:16:22,440 --> 00:16:28,680 Speaker 1: article of beliefs. But assuming that that is good for something, 235 00:16:29,280 --> 00:16:34,280 Speaker 1: the results has been dismal. They cost a huge amount 236 00:16:34,320 --> 00:16:38,240 Speaker 1: to run, but they don't end up being decentralized. So 237 00:16:38,680 --> 00:16:43,800 Speaker 1: cryptocurrency mining for bitcoin is controlled by basically four entities. 238 00:16:44,160 --> 00:16:50,320 Speaker 1: Four entities can conspire together and completely control what transactions 239 00:16:50,360 --> 00:16:56,840 Speaker 1: get approved or not likewise, so there's no actual decentralization, 240 00:16:56,920 --> 00:17:02,240 Speaker 1: there's just a veneer of decentralization. Likewise, the code developers 241 00:17:02,320 --> 00:17:08,160 Speaker 1: themselves are central authorities as well. So take Etherium for example. 242 00:17:08,160 --> 00:17:12,480 Speaker 1: Ethereum is all code is law and no central authorities. 243 00:17:12,920 --> 00:17:17,320 Speaker 1: But when seven percent of all Ethereum got invested in 244 00:17:17,680 --> 00:17:22,320 Speaker 1: basically a self creating ponzi scheme that had a bug 245 00:17:22,359 --> 00:17:25,199 Speaker 1: in it that allowed the money to get stolen, the 246 00:17:25,280 --> 00:17:29,840 Speaker 1: developers went, oh, you know that whole code is law business. Um, Yeah, 247 00:17:29,880 --> 00:17:33,679 Speaker 1: that's a lie. We're changing the code, undo the theft 248 00:17:33,800 --> 00:17:37,679 Speaker 1: because it was our money you stole. Yeah. I've wondered 249 00:17:37,680 --> 00:17:40,800 Speaker 1: about this at various times, especially with the forks that 250 00:17:40,840 --> 00:17:44,679 Speaker 1: we've seen in well, notably in in bitcoin, where we 251 00:17:44,800 --> 00:17:48,560 Speaker 1: do seem to have the overall direction of bitcoin being 252 00:17:48,640 --> 00:17:53,640 Speaker 1: determined by consensus and by users. So like, how how 253 00:17:53,720 --> 00:17:59,680 Speaker 1: much of a problem are those forks? Well, they are 254 00:18:00,040 --> 00:18:05,359 Speaker 1: and they aren't. They are if you actually believe that 255 00:18:05,440 --> 00:18:09,280 Speaker 1: decentralization is supposed to mean something, because these forks are 256 00:18:09,400 --> 00:18:15,600 Speaker 1: not some large community thing but just a few individuals, 257 00:18:15,680 --> 00:18:21,840 Speaker 1: the the cartels on the mining and or the coders. Um. 258 00:18:22,240 --> 00:18:27,000 Speaker 1: So if you actually believe that decentralization is important somehow 259 00:18:27,400 --> 00:18:30,640 Speaker 1: these forks are problematic. Otherwise for the rest of us, 260 00:18:30,760 --> 00:18:36,840 Speaker 1: it's just basically popcorn. It's entertaining to watch the interesting 261 00:18:37,080 --> 00:18:42,439 Speaker 1: conflicts between various camps and the big block versus small block. 262 00:18:42,560 --> 00:18:47,800 Speaker 1: It's like big Indian versus little endian Um. And so 263 00:18:48,000 --> 00:18:55,600 Speaker 1: it's entertainment, but it's not anything really fundamental from a 264 00:18:55,840 --> 00:19:01,760 Speaker 1: systemic viewpoint, because they're all just only worth something because 265 00:19:01,800 --> 00:19:05,760 Speaker 1: somebody else will pay for it. So well, it's a 266 00:19:05,800 --> 00:19:09,080 Speaker 1: good example that the notion of limited supply is. It's 267 00:19:09,119 --> 00:19:11,960 Speaker 1: true because you can just create more of these out 268 00:19:11,960 --> 00:19:17,120 Speaker 1: of the air, but other than that, it's just amusement value. So, Nick, 269 00:19:17,160 --> 00:19:18,840 Speaker 1: I wanted to go back to something you were saying 270 00:19:18,880 --> 00:19:22,560 Speaker 1: earlier about the regulatory response, and this is something that 271 00:19:22,640 --> 00:19:27,080 Speaker 1: I've I've wondered at various times myself, probably on Twitter 272 00:19:27,200 --> 00:19:32,800 Speaker 1: at some point, But if regulators are sort of missing 273 00:19:32,880 --> 00:19:34,679 Speaker 1: a trick because they're going to get a bunch of 274 00:19:34,680 --> 00:19:38,919 Speaker 1: burned investors, either via crypto investments or I c O s, 275 00:19:39,680 --> 00:19:43,040 Speaker 1: why aren't they acting and why? The other thing that 276 00:19:43,040 --> 00:19:45,400 Speaker 1: I often wonder is if if you think that crypto 277 00:19:45,640 --> 00:19:49,160 Speaker 1: is going to be a legitimate currency sometime in the future, 278 00:19:49,600 --> 00:19:52,840 Speaker 1: then surely that would undermine you know, various regulators and 279 00:19:52,880 --> 00:19:56,480 Speaker 1: monetary authorities as well, so they should be acting. So like, 280 00:19:56,680 --> 00:19:59,520 Speaker 1: either way, either it's a fraud or either it's going 281 00:19:59,560 --> 00:20:02,440 Speaker 1: to be six tessful, you would think there should be 282 00:20:02,520 --> 00:20:07,200 Speaker 1: some sort of regulatory response. I would have hoped so, 283 00:20:07,720 --> 00:20:12,080 Speaker 1: But I think what it comes down to is regulators 284 00:20:12,119 --> 00:20:17,280 Speaker 1: these days are afraid of being claimed to stifle innovation. 285 00:20:18,320 --> 00:20:23,440 Speaker 1: And the cryptocurrency believers have talked a very good story 286 00:20:23,680 --> 00:20:28,280 Speaker 1: about how they're being innovative and new um even if 287 00:20:28,359 --> 00:20:32,359 Speaker 1: in reality they're basically speed running five years of economic 288 00:20:32,440 --> 00:20:36,119 Speaker 1: failures over and over and over again. But so the 289 00:20:36,200 --> 00:20:39,760 Speaker 1: result is the regulators have in the past been very 290 00:20:39,880 --> 00:20:43,560 Speaker 1: hands off, so like you had all these I c 291 00:20:43,720 --> 00:20:48,240 Speaker 1: O s and it just you just look at it 292 00:20:48,400 --> 00:20:51,879 Speaker 1: and it fails. The how he tests that, the test 293 00:20:52,000 --> 00:20:56,440 Speaker 1: for is this a security? And what I think has 294 00:20:56,480 --> 00:21:01,000 Speaker 1: happened is now that things are collapsing, the regulators are 295 00:21:01,040 --> 00:21:07,560 Speaker 1: finally starting to pay attention, and so the regulators are reactive. 296 00:21:07,680 --> 00:21:11,080 Speaker 1: They are not proactive, and so as a consequence that 297 00:21:11,560 --> 00:21:17,520 Speaker 1: they sat back during the boom did nothing, and now 298 00:21:17,560 --> 00:21:21,119 Speaker 1: that it's a bus they're going to go and probably 299 00:21:22,800 --> 00:21:26,240 Speaker 1: drop a lot of lawsuits and probably invite some people 300 00:21:26,400 --> 00:21:29,639 Speaker 1: because now that the tide is rushing out, you're seeing 301 00:21:29,680 --> 00:21:35,960 Speaker 1: that everyone is naked. Um, they're actually doing something, and 302 00:21:36,240 --> 00:21:41,080 Speaker 1: I think it really is. Regulators are afraid of regulating 303 00:21:43,080 --> 00:21:47,760 Speaker 1: new or old wine in new bottles. They think it's new, 304 00:21:48,440 --> 00:21:51,760 Speaker 1: they don't know what to do yet, and so as 305 00:21:51,760 --> 00:21:59,040 Speaker 1: a consequence, they just basically did nothing during the and well, 306 00:21:59,160 --> 00:22:01,479 Speaker 1: now they get the joys of picking up the pieces. 307 00:22:02,320 --> 00:22:04,760 Speaker 1: I wanna go back to where you say this whole 308 00:22:04,800 --> 00:22:11,560 Speaker 1: cryptocurrency uh phase has sort of damaged your natural libertarian 309 00:22:11,640 --> 00:22:15,240 Speaker 1: instincts because now you have this appreciation for this money 310 00:22:15,320 --> 00:22:19,439 Speaker 1: laundering regulation. I'm like struck on this point that in 311 00:22:19,440 --> 00:22:23,040 Speaker 1: this sense, your your view on cryptocurrencies is not all 312 00:22:23,119 --> 00:22:25,639 Speaker 1: that different from a lot of believers, which is that 313 00:22:25,960 --> 00:22:29,320 Speaker 1: it really comes down to censorship resistance. You point out 314 00:22:29,440 --> 00:22:32,080 Speaker 1: that that's mostly used for drug dealers and all kinds 315 00:22:32,080 --> 00:22:34,399 Speaker 1: of things that are awful. They would say, yes, that 316 00:22:34,560 --> 00:22:36,919 Speaker 1: is a byproduct of what happens when you have freedom, 317 00:22:36,960 --> 00:22:38,679 Speaker 1: and that you know there are good things that can 318 00:22:38,720 --> 00:22:41,919 Speaker 1: come out of censorship resistance, that there are people in 319 00:22:42,119 --> 00:22:44,920 Speaker 1: areas of the world, or people in lines of work 320 00:22:45,040 --> 00:22:47,119 Speaker 1: for whatever reason they don't want their bank to know, 321 00:22:47,520 --> 00:22:49,520 Speaker 1: or maybe their bank cracks down on their line of 322 00:22:49,560 --> 00:22:52,160 Speaker 1: work if their say a sex work or something like that. 323 00:22:52,600 --> 00:22:55,880 Speaker 1: And they would say that, yes, there's money laundering and crime, 324 00:22:55,920 --> 00:22:57,800 Speaker 1: but that is the price that you pay for also 325 00:22:57,840 --> 00:23:02,240 Speaker 1: having this freedom. And they would also say say that, um, 326 00:23:02,280 --> 00:23:05,920 Speaker 1: this debate has happened before in cryptography and the sort 327 00:23:05,920 --> 00:23:09,520 Speaker 1: of export of you know, a strong cryptography where people say, oh, 328 00:23:09,560 --> 00:23:13,320 Speaker 1: if cryptography exists, and that's going to be good only 329 00:23:13,359 --> 00:23:15,920 Speaker 1: for terrorists, but that also is what enabled the web 330 00:23:15,960 --> 00:23:18,159 Speaker 1: to work. So how much is this really like a 331 00:23:18,240 --> 00:23:24,000 Speaker 1: technical fight versus essentially a values fight? I think at 332 00:23:24,119 --> 00:23:30,119 Speaker 1: this point it is a values fight. And I really 333 00:23:30,200 --> 00:23:36,040 Speaker 1: don't like that cryptography analogy because cryptography we've always seen 334 00:23:36,960 --> 00:23:40,360 Speaker 1: good uses for it right from the start. But with 335 00:23:40,480 --> 00:23:46,159 Speaker 1: the cryptocurrencies, the problem is is people can't point to 336 00:23:47,600 --> 00:23:54,719 Speaker 1: legit payment system. So what has censorship resistance allowed you 337 00:23:54,800 --> 00:24:00,320 Speaker 1: to do that? Um, that the others happen. Well, okay, 338 00:24:00,760 --> 00:24:04,320 Speaker 1: if you need censorship resistance, you always still have cash. 339 00:24:04,840 --> 00:24:09,000 Speaker 1: It's just that cash has both the need for physical 340 00:24:09,080 --> 00:24:17,520 Speaker 1: proximity and significant mass. So scaling cash. Moving a thousand 341 00:24:17,600 --> 00:24:20,920 Speaker 1: bucks is easy, moving a million bucks is hard. So 342 00:24:21,040 --> 00:24:28,480 Speaker 1: cryptocurrencies want to um enable that moving large quantities. And 343 00:24:28,560 --> 00:24:32,520 Speaker 1: the other thing is is I've just seen the damage 344 00:24:32,560 --> 00:24:37,639 Speaker 1: that is done. So people point to cryptocurrency being used 345 00:24:37,640 --> 00:24:43,000 Speaker 1: in two good situations to get around censorship. The first 346 00:24:43,200 --> 00:24:46,120 Speaker 1: was payments to Wiki leaks. So Wiki leaks was cut 347 00:24:46,119 --> 00:24:49,840 Speaker 1: off from the banking system back around when Assange first 348 00:24:49,840 --> 00:24:53,400 Speaker 1: fled to the embassy to avoid the sex assault charges. 349 00:24:54,280 --> 00:24:58,600 Speaker 1: So when that happened, um, you could use cryptocurrency if 350 00:24:58,640 --> 00:25:01,879 Speaker 1: you wanted to support Wiki weeks, and that's all fine 351 00:25:01,880 --> 00:25:05,760 Speaker 1: and good, but Wiki Leaks decided that it's actually better 352 00:25:05,920 --> 00:25:10,760 Speaker 1: just to arrange with a US nonprofit to act as 353 00:25:10,800 --> 00:25:17,320 Speaker 1: an intermediary and basically launder contributions. And then we had Backpage. 354 00:25:17,440 --> 00:25:22,000 Speaker 1: So Backpage was a Craigslist clone that did a lot 355 00:25:22,040 --> 00:25:26,640 Speaker 1: of support for sex workers, and I actually think, yeah, 356 00:25:26,800 --> 00:25:31,520 Speaker 1: that probably was good overall, or at least been less 357 00:25:31,560 --> 00:25:34,480 Speaker 1: damaging than the alternatives. But they were cut off from 358 00:25:34,520 --> 00:25:37,880 Speaker 1: the banking system, and so to pay with them, you'd 359 00:25:37,920 --> 00:25:41,720 Speaker 1: either have to pay with cryptocurrency or you send them 360 00:25:42,240 --> 00:25:45,720 Speaker 1: a check in the mail. UM, and I suspect most 361 00:25:45,760 --> 00:25:50,600 Speaker 1: of their payments became checks in the mail. Now the 362 00:25:50,680 --> 00:25:54,040 Speaker 1: problem is is, let's face it, Backpage turned out to 363 00:25:54,119 --> 00:25:59,600 Speaker 1: be a criminal conspiracy, and so we're left with very 364 00:26:00,040 --> 00:26:06,800 Speaker 1: you non criminal usages because it is so expensive. So 365 00:26:07,960 --> 00:26:12,520 Speaker 1: it's actually a lot more expensive than the other anonymous 366 00:26:12,520 --> 00:26:15,320 Speaker 1: electronic payments you want. So if you want to buy 367 00:26:15,359 --> 00:26:19,879 Speaker 1: your porn anonymously, you go into Target, pay a hundred 368 00:26:19,880 --> 00:26:23,120 Speaker 1: and four dollars for a Visa gift card, and now 369 00:26:23,200 --> 00:26:25,879 Speaker 1: you can use that Visa gift card to buy your porn. 370 00:26:26,040 --> 00:26:30,960 Speaker 1: So the cost of privacy on electronic transactions is actually 371 00:26:31,359 --> 00:26:36,280 Speaker 1: a lot less than the cryptocurrencies offer because you you 372 00:26:36,400 --> 00:26:39,199 Speaker 1: have this huge problem of you can't hold onto the 373 00:26:39,200 --> 00:26:43,000 Speaker 1: cryptocurrencies you can hold onto a Visa gift card. Never 374 00:26:43,080 --> 00:26:46,280 Speaker 1: say odd lots doesn't bring us a useful day to 375 00:26:46,359 --> 00:26:50,160 Speaker 1: day information and life tips um nick. On a serious note, 376 00:26:50,480 --> 00:26:55,679 Speaker 1: if this is all about differences and values or value systems, 377 00:26:55,800 --> 00:27:02,159 Speaker 1: and given that cryptocurrency supporters seemed to be so invested 378 00:27:02,280 --> 00:27:06,679 Speaker 1: in the belief system around crypto and everything that comes 379 00:27:06,760 --> 00:27:10,840 Speaker 1: with it, what ultimately is going to be the thing 380 00:27:11,520 --> 00:27:15,280 Speaker 1: that destroys cryptocurrencies. As you put it in your presentation, 381 00:27:15,320 --> 00:27:18,600 Speaker 1: that ends up burning them with fire in some way. 382 00:27:19,240 --> 00:27:22,919 Speaker 1: There's two things that can really burn the system with fire. 383 00:27:23,760 --> 00:27:29,000 Speaker 1: The first is the federal government UM getting their act 384 00:27:29,040 --> 00:27:35,040 Speaker 1: together and going after this cryptocurrency called tether. So tether 385 00:27:35,359 --> 00:27:39,520 Speaker 1: is effectively a digital banknote. It's supposedly tied one to 386 00:27:39,640 --> 00:27:44,640 Speaker 1: one with the dollar, but it's not. It's a basically 387 00:27:44,920 --> 00:27:50,760 Speaker 1: it's reinventing eighteenth century banking combined with Liberty Reserve, which 388 00:27:50,800 --> 00:27:54,160 Speaker 1: was a criminal enterprise the Feds shut down a few 389 00:27:54,240 --> 00:27:59,399 Speaker 1: years back, and so it's a rife target for disruption. 390 00:28:00,320 --> 00:28:06,920 Speaker 1: But if the uh tether is removed, that actually destroys 391 00:28:06,960 --> 00:28:13,240 Speaker 1: almost the entire bitcoin exchange ecology. So eight of the 392 00:28:13,240 --> 00:28:17,440 Speaker 1: cryptocurrency volume on the exchanges are on exchanges that are 393 00:28:17,520 --> 00:28:21,200 Speaker 1: already cut off from the banking system because they're viewed 394 00:28:21,200 --> 00:28:25,400 Speaker 1: by the banks. Is basically too high risk fraudulent enterprises 395 00:28:25,560 --> 00:28:28,960 Speaker 1: with a huge amount of wash trading and painting the 396 00:28:29,080 --> 00:28:34,280 Speaker 1: tape and such blatant market manipulation that the price graphs 397 00:28:34,320 --> 00:28:39,400 Speaker 1: look like Bart Simpson's haircuts. UM. So if you remove 398 00:28:39,520 --> 00:28:46,120 Speaker 1: tether basically removed the entire exchange ecology except for a 399 00:28:46,240 --> 00:28:50,920 Speaker 1: few and so that alone would have a huge negative impact, 400 00:28:51,040 --> 00:28:56,480 Speaker 1: and tether is such latently a crime under money laundering 401 00:28:56,600 --> 00:29:00,600 Speaker 1: laws that it's surprising they haven't been prosecuted yet. So 402 00:29:00,720 --> 00:29:05,480 Speaker 1: that's one. Number two is all these proof of work coins. 403 00:29:05,520 --> 00:29:08,600 Speaker 1: So the idea behind proof of work, which is what 404 00:29:08,720 --> 00:29:12,920 Speaker 1: predicts Bitcoin, ethereum and most of the other major cryptocurrencies, 405 00:29:13,480 --> 00:29:19,200 Speaker 1: is basically better described as burning money. So the system 406 00:29:19,240 --> 00:29:24,480 Speaker 1: burns x thousands of dollars an hour under the assumption 407 00:29:24,640 --> 00:29:27,800 Speaker 1: that an attacker to attack the system would have to 408 00:29:27,840 --> 00:29:31,760 Speaker 1: burn more than that. The problem is, in order to 409 00:29:31,880 --> 00:29:35,440 Speaker 1: defend the system, you have to be burning x dollars 410 00:29:35,440 --> 00:29:39,400 Speaker 1: an hour continuously, but an attacker might only have to 411 00:29:39,480 --> 00:29:43,440 Speaker 1: burn x dollars for a limited period of time, an 412 00:29:43,480 --> 00:29:47,480 Speaker 1: hour or two. And so what has happened is the 413 00:29:47,520 --> 00:29:52,200 Speaker 1: cryptocurrency systems that only cost five thousand dollars an hour 414 00:29:52,360 --> 00:29:56,840 Speaker 1: to run, the so called alt coins um, there's less 415 00:29:56,880 --> 00:30:00,800 Speaker 1: polite turns to them as well. Those have actually become 416 00:30:00,960 --> 00:30:06,720 Speaker 1: regularly attacked by people who burn six thousand dollars for 417 00:30:06,800 --> 00:30:12,080 Speaker 1: an hour and use it to conduct fraudulent transactions targeting 418 00:30:12,560 --> 00:30:19,080 Speaker 1: cryptocurrency exchanges. So if you're inefficient, or if you're efficient, 419 00:30:19,320 --> 00:30:25,680 Speaker 1: you're vulnerable but if you're burning bitcoin level of money, uh, 420 00:30:25,960 --> 00:30:29,720 Speaker 1: thousands of dollars or so, like bitcoin is what about 421 00:30:29,880 --> 00:30:34,080 Speaker 1: five million dollars a day right now? Um, if you're 422 00:30:34,080 --> 00:30:37,960 Speaker 1: burning five million dollars a day, yes, you are secure 423 00:30:38,000 --> 00:30:41,920 Speaker 1: against an attacker, but you are so dependent on the 424 00:30:42,000 --> 00:30:45,320 Speaker 1: price that you need five million dollars a day of 425 00:30:45,640 --> 00:30:49,200 Speaker 1: new money coming in just to keep the lights on. 426 00:30:50,080 --> 00:30:56,640 Speaker 1: So if the cryptocurrency drops in price, it actually creates 427 00:30:56,760 --> 00:30:59,640 Speaker 1: a death spiral situation where you've got a lot of 428 00:30:59,680 --> 00:31:03,160 Speaker 1: mind new equipment that we'll get turned off because it's 429 00:31:03,200 --> 00:31:07,520 Speaker 1: not profitable to protect the network, but it may be 430 00:31:07,600 --> 00:31:11,160 Speaker 1: profitable to turn on for an hour or two to 431 00:31:11,320 --> 00:31:16,400 Speaker 1: attack the network. And so as long as the price 432 00:31:16,600 --> 00:31:23,160 Speaker 1: stays high and growing, the system is secure. But in 433 00:31:23,280 --> 00:31:27,160 Speaker 1: order for that to happen, they keep needing five million 434 00:31:27,200 --> 00:31:31,959 Speaker 1: dollars a day plus of new suckers coming in wanting 435 00:31:31,960 --> 00:31:36,680 Speaker 1: to buy the cryptocurrency, and that's net inflow of new money. 436 00:31:37,040 --> 00:31:41,280 Speaker 1: And if that ever stops, the price starts to drop, 437 00:31:41,720 --> 00:31:45,080 Speaker 1: and then we get into these death spiral situations where 438 00:31:45,480 --> 00:31:49,360 Speaker 1: they lose all their security. All right, Well, Nick Weaver, 439 00:31:49,800 --> 00:31:51,600 Speaker 1: it was great having you on. Thanks so much for 440 00:31:51,680 --> 00:31:55,640 Speaker 1: walking us through all the the tech arguments underlying the 441 00:31:55,720 --> 00:31:59,600 Speaker 1: antique crypto case. Thank you, thank you very much for 442 00:31:59,600 --> 00:32:18,160 Speaker 1: having Joe. I thought that conversation was absolutely fantastic, really 443 00:32:18,200 --> 00:32:22,520 Speaker 1: great to get an actual, you know, computer scientist view 444 00:32:22,800 --> 00:32:27,640 Speaker 1: of cryptocurrencies and how blockchain technology is working, but also 445 00:32:27,880 --> 00:32:30,720 Speaker 1: to have someone sort of put it in that comical 446 00:32:30,800 --> 00:32:34,400 Speaker 1: language is just fantastic. Yeah, I agree, and I do 447 00:32:34,480 --> 00:32:36,920 Speaker 1: think it was interesting to me though that like at 448 00:32:36,960 --> 00:32:41,080 Speaker 1: its core, there isn't this area of overlap that in 449 00:32:41,120 --> 00:32:45,880 Speaker 1: a sense, the blockchain or the bitcoin blockchain kind of 450 00:32:45,920 --> 00:32:49,040 Speaker 1: does what it's supposed to do, like it works. It's 451 00:32:49,120 --> 00:32:51,800 Speaker 1: just that it works in a very narrow case, and 452 00:32:51,840 --> 00:32:54,120 Speaker 1: you have to make the case that that narrow u 453 00:32:54,360 --> 00:32:57,000 Speaker 1: that narrow use case actually has some benefit and is 454 00:32:57,000 --> 00:33:00,160 Speaker 1: worth all the cost, which you don't really hear. You're 455 00:33:00,640 --> 00:33:04,360 Speaker 1: even most of these sort of like crypto bitcoin blockchain 456 00:33:04,680 --> 00:33:09,240 Speaker 1: enthusiasts articulating what that point is. So I find it 457 00:33:09,400 --> 00:33:12,280 Speaker 1: very helpful that I feel like we're sort of getting 458 00:33:12,280 --> 00:33:14,920 Speaker 1: to the nub of the issue, which is that is 459 00:33:15,000 --> 00:33:18,880 Speaker 1: this sort of narrow use case actually a benefit, uh 460 00:33:19,080 --> 00:33:23,960 Speaker 1: that societal benefit or not or a project worth pursuing. Well, 461 00:33:24,000 --> 00:33:25,360 Speaker 1: I think that's a good way to frame it. And 462 00:33:25,360 --> 00:33:28,560 Speaker 1: I think there's probably an obvious reason why crypto proponents 463 00:33:28,680 --> 00:33:31,760 Speaker 1: don't talk about the narrow base case, which is essentially 464 00:33:32,120 --> 00:33:35,280 Speaker 1: criminality and money laundring and blackmail. And I say that 465 00:33:35,360 --> 00:33:39,760 Speaker 1: as someone who recently got a blackmail email on the 466 00:33:39,800 --> 00:33:44,600 Speaker 1: Bloomberg system requesting ten thousand dollars worth of bitcoin, which 467 00:33:44,640 --> 00:33:47,400 Speaker 1: they helpfully translated. I think it was to two point 468 00:33:47,480 --> 00:33:52,320 Speaker 1: five or two point six bitcoin immediately deposited into their wallet. Um, 469 00:33:52,480 --> 00:33:56,880 Speaker 1: so that does definitely happen. No, I didn't. Apparently there's 470 00:33:56,920 --> 00:34:00,920 Speaker 1: a pending CIA investigation against me, so if I disappeared tomorrow, 471 00:34:01,000 --> 00:34:04,520 Speaker 1: you know why. But I will say I actually I 472 00:34:04,640 --> 00:34:09,680 Speaker 1: disagree on the point that it does have an especially 473 00:34:09,920 --> 00:34:14,080 Speaker 1: good use for criminal activities. I still think at its 474 00:34:14,080 --> 00:34:19,000 Speaker 1: heart the technology is unwieldy and inefficient for reasons of 475 00:34:19,040 --> 00:34:22,920 Speaker 1: either energy consumption or the notion that the blockchain can 476 00:34:22,960 --> 00:34:26,480 Speaker 1: be edited. It's not immutable, and you're trying to create 477 00:34:26,520 --> 00:34:29,719 Speaker 1: trust amongst entities that don't trust each other anyway, and 478 00:34:29,760 --> 00:34:31,680 Speaker 1: if they did trust each other, they would come up 479 00:34:31,719 --> 00:34:34,880 Speaker 1: with some other sort of contract system. Well, the point 480 00:34:34,960 --> 00:34:38,719 Speaker 1: that Nicholas made at the end that there is. You know, 481 00:34:38,719 --> 00:34:42,000 Speaker 1: there are frailties. I mean, people would there's debate about this, 482 00:34:42,040 --> 00:34:45,359 Speaker 1: but this death spiral, like, ultimately, if there are a 483 00:34:45,400 --> 00:34:49,960 Speaker 1: lot of the value currently in cryptocurrencies is premised on 484 00:34:50,000 --> 00:34:53,520 Speaker 1: the idea that they have. Oh there's all kinds of 485 00:34:53,760 --> 00:34:57,480 Speaker 1: machine internet of things and machine machine transactions, all this stuff. 486 00:34:57,680 --> 00:34:59,640 Speaker 1: If a lot of the value are still people believing 487 00:34:59,680 --> 00:35:02,560 Speaker 1: in that at then it's easy to imagine a big 488 00:35:02,640 --> 00:35:05,120 Speaker 1: drop in value from here that the death spiral, and 489 00:35:05,160 --> 00:35:07,080 Speaker 1: then the whole thing breaks up. And if the trades 490 00:35:07,120 --> 00:35:09,880 Speaker 1: actions were to ever get unwound or edited in some 491 00:35:09,960 --> 00:35:13,000 Speaker 1: way in an attack, then that really would strike to 492 00:35:13,040 --> 00:35:16,080 Speaker 1: the heart of the entire Oh, this is immutable, and 493 00:35:16,160 --> 00:35:19,360 Speaker 1: this is censorship resistant, So it feels like even on 494 00:35:19,440 --> 00:35:22,160 Speaker 1: the core use, the jury is still out about whether 495 00:35:22,200 --> 00:35:24,440 Speaker 1: that will work. Yeah, and on the plus side, I 496 00:35:24,480 --> 00:35:27,719 Speaker 1: guess as the price of bitcoin dips lower, we will 497 00:35:27,840 --> 00:35:30,480 Speaker 1: get to see whether or not the death spiral will 498 00:35:30,480 --> 00:35:34,840 Speaker 1: actually happen. So that's something to look forward to. This 499 00:35:34,920 --> 00:35:37,919 Speaker 1: has been another episode of the Odd Thoughts podcast. I'm 500 00:35:37,960 --> 00:35:41,160 Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway, 501 00:35:41,640 --> 00:35:43,640 Speaker 1: and I'm Joe. Why is it though you can follow 502 00:35:43,680 --> 00:35:47,080 Speaker 1: me on Twitter at the Stalwart, and you should follow 503 00:35:47,120 --> 00:35:51,480 Speaker 1: our guest today, Nicholas Weaver. He is at nc Weaver 504 00:35:52,239 --> 00:35:55,200 Speaker 1: and don't forget to follow our producer, although he was 505 00:35:55,200 --> 00:35:58,160 Speaker 1: out this week. He's at for Hest as well as 506 00:35:58,200 --> 00:36:02,680 Speaker 1: the Bloomberg Head of podcast for Cesca Levi at Francesca Today. 507 00:36:03,000 --> 00:36:03,800 Speaker 1: Thanks for listening.