1 00:00:04,200 --> 00:00:07,520 Speaker 1: Get in touch with technology with text stuff from stuff 2 00:00:07,800 --> 00:00:15,200 Speaker 1: dot com. Hey there, everyoneted, Welcome to tech Stuff. I'm 3 00:00:15,280 --> 00:00:18,680 Speaker 1: Jonathan Strickland and I'm Lauren. And in our last episode 4 00:00:18,760 --> 00:00:21,520 Speaker 1: we kind of laid the groundwork about what bitcoin is, 5 00:00:21,600 --> 00:00:25,520 Speaker 1: kind of refreshing your your memory, and also the breaking 6 00:00:25,520 --> 00:00:29,560 Speaker 1: news at the time of recording about the possible identity 7 00:00:30,080 --> 00:00:32,159 Speaker 1: discovered of the guy who who came up with the 8 00:00:32,159 --> 00:00:35,279 Speaker 1: whole idea in the first place, Sato Nakamoto, who might 9 00:00:35,320 --> 00:00:38,199 Speaker 1: in fact be a guy named Satoshi Nakamoto. And this 10 00:00:38,600 --> 00:00:42,639 Speaker 1: was a surprise. So if you missed that episode, go 11 00:00:42,720 --> 00:00:44,920 Speaker 1: back and give it a listen, Yeah, because it'll it'll 12 00:00:45,320 --> 00:00:47,880 Speaker 1: definitely give you some context for what we're going to 13 00:00:47,960 --> 00:00:51,879 Speaker 1: talk about today, which is the controversies of bitcoin and 14 00:00:51,920 --> 00:00:55,880 Speaker 1: also what's in the future. Yo. That's a that's a 15 00:00:55,920 --> 00:00:58,720 Speaker 1: really great question that many people are asking themselves because 16 00:00:58,760 --> 00:01:01,440 Speaker 1: there have been so many con troversies of over bitcoin, 17 00:01:01,800 --> 00:01:05,880 Speaker 1: especially in the past like three to five months. Yeah. Yeah, So, 18 00:01:05,920 --> 00:01:08,959 Speaker 1: I mean, first of all, they're just the very nature 19 00:01:09,040 --> 00:01:11,600 Speaker 1: of bitcoin, the fact that you get at the coins 20 00:01:12,120 --> 00:01:15,800 Speaker 1: by either purchasing them in an exchange or you mind 21 00:01:15,920 --> 00:01:19,440 Speaker 1: them through using computer power to solve mathematical problems. Well, 22 00:01:19,600 --> 00:01:22,600 Speaker 1: if you're thinking, hey, I've done a computer I can 23 00:01:22,640 --> 00:01:25,960 Speaker 1: solve math problems. Well, if you listen to our last episode, 24 00:01:25,959 --> 00:01:28,480 Speaker 1: you know that you need a lot of computing power 25 00:01:28,520 --> 00:01:31,160 Speaker 1: because they're you're just you're The competition you're up against 26 00:01:31,400 --> 00:01:34,679 Speaker 1: is crazy. Yeah, and so some people will join mining 27 00:01:34,760 --> 00:01:37,480 Speaker 1: groups sort of like almost like a lottery pool, like 28 00:01:37,560 --> 00:01:39,880 Speaker 1: we were saying in the last episode. And some people 29 00:01:40,000 --> 00:01:42,720 Speaker 1: force other folks to join a mining group without them 30 00:01:42,760 --> 00:01:46,399 Speaker 1: necessarily knowing about it, by creating buttonets a k a. 31 00:01:46,959 --> 00:01:49,000 Speaker 1: You might have also heard of buttonets being referred to 32 00:01:49,080 --> 00:01:52,800 Speaker 1: as zombie computer armies. Yes, these are the boy. If 33 00:01:52,800 --> 00:01:55,280 Speaker 1: you're a longtime fan of tech stuff, you've heard us 34 00:01:55,280 --> 00:01:57,800 Speaker 1: talk about this. This was one of our first episodes. 35 00:01:57,840 --> 00:02:01,200 Speaker 1: But essentially what this is is when a hacker uses 36 00:02:01,240 --> 00:02:05,880 Speaker 1: software to get administrative access to someone else's computer. Generally, 37 00:02:06,040 --> 00:02:08,720 Speaker 1: this is done by fooling the person into installing a 38 00:02:08,760 --> 00:02:13,680 Speaker 1: program and then yeah, there's usually a trojan horse malware 39 00:02:13,760 --> 00:02:19,360 Speaker 1: that will install a backdoor access point for for someone 40 00:02:19,440 --> 00:02:23,200 Speaker 1: to go over in network and then send commands remotely 41 00:02:23,360 --> 00:02:25,560 Speaker 1: so that they make your machine do stuff they wanted 42 00:02:25,600 --> 00:02:28,200 Speaker 1: to do. And there are lots of different ways that 43 00:02:28,320 --> 00:02:31,320 Speaker 1: hackers use bought nets, and one of them is to 44 00:02:31,480 --> 00:02:34,839 Speaker 1: direct computers to mine for bitcoins. So what they're doing 45 00:02:34,960 --> 00:02:37,600 Speaker 1: is they're trying to get as many different computers as 46 00:02:37,639 --> 00:02:41,760 Speaker 1: possible to coordinate in this task, and then the hacker 47 00:02:41,919 --> 00:02:44,799 Speaker 1: reaps the benefits. So your computer might have actually been 48 00:02:44,840 --> 00:02:47,079 Speaker 1: the one to mind that bitcoin, but you don't see 49 00:02:47,120 --> 00:02:50,320 Speaker 1: any of that because it's going to some hacker somewhere. Yeah. 50 00:02:50,720 --> 00:02:53,799 Speaker 1: One particularly widespread bit of malware like this was was 51 00:02:53,880 --> 00:02:59,120 Speaker 1: busted back in April. Jonathan actually blogged about it back then. Yeah. Yeah, So, 52 00:02:59,240 --> 00:03:00,959 Speaker 1: I mean it's it's still one of those things that 53 00:03:01,160 --> 00:03:04,040 Speaker 1: remains a concern because it's, you know, it's the world 54 00:03:04,120 --> 00:03:06,040 Speaker 1: of the digital realm. I mean, it's it's one of 55 00:03:06,080 --> 00:03:09,600 Speaker 1: those things where you've it's different from our physical world, right, 56 00:03:10,320 --> 00:03:13,400 Speaker 1: and as we alluded to in our previous episode, the 57 00:03:13,520 --> 00:03:15,640 Speaker 1: fact that all of this is different from our physical 58 00:03:15,720 --> 00:03:18,799 Speaker 1: world lens bitcoins. I mean that and the fact that 59 00:03:18,919 --> 00:03:24,000 Speaker 1: they are necessarily decentralized and unregulated means that sometimes people 60 00:03:24,120 --> 00:03:29,200 Speaker 1: use them for less than upright purposes. Yeah, okay, so 61 00:03:29,280 --> 00:03:31,840 Speaker 1: we're gonna we're gonna lay it down. Uh, you know, 62 00:03:32,639 --> 00:03:36,440 Speaker 1: just be perfectly honest and blunt here, because when when 63 00:03:36,480 --> 00:03:38,960 Speaker 1: I did an episode way back in the day, I 64 00:03:39,040 --> 00:03:41,040 Speaker 1: think it wasn't wasn't two thousand eleven, I think we 65 00:03:41,120 --> 00:03:43,880 Speaker 1: said in our previous episode, but we kind of danced 66 00:03:43,880 --> 00:03:45,920 Speaker 1: around it because we didn't really want to address it 67 00:03:46,000 --> 00:03:47,680 Speaker 1: very much. But it's very much something that we have 68 00:03:47,800 --> 00:03:50,720 Speaker 1: to talk about, and this is markets that would support 69 00:03:50,880 --> 00:03:54,920 Speaker 1: illegal trades, and illegal would depend heavily upon where you 70 00:03:55,040 --> 00:03:56,760 Speaker 1: happen to be in the world, because I guess you know, 71 00:03:57,000 --> 00:04:00,320 Speaker 1: laws are different in different places. But absolutely largely this 72 00:04:00,560 --> 00:04:07,720 Speaker 1: was mostly focused on drugs, illicit drugs. So the famous 73 00:04:08,040 --> 00:04:11,480 Speaker 1: market was the Silk Road, now the Silk Road at 74 00:04:11,520 --> 00:04:13,800 Speaker 1: first of all, it took took its name from a 75 00:04:13,920 --> 00:04:18,000 Speaker 1: historic trade route that connected Asia to Europe, and the 76 00:04:18,120 --> 00:04:21,040 Speaker 1: idea was that this was a market where buyers and 77 00:04:21,080 --> 00:04:26,440 Speaker 1: sellers could meet anonymously have these transactions. Bitcoins were accepted there, 78 00:04:26,600 --> 00:04:29,120 Speaker 1: one of the few places that bitcoins were excepted, one 79 00:04:29,120 --> 00:04:32,280 Speaker 1: of the earliest two and uh and you it was 80 00:04:32,320 --> 00:04:36,000 Speaker 1: a tour hidden service. So this meant that you could 81 00:04:36,000 --> 00:04:39,000 Speaker 1: actually log again and you don't have to worry that 82 00:04:39,120 --> 00:04:41,320 Speaker 1: you're being tracked or that your identity is out there 83 00:04:41,360 --> 00:04:44,280 Speaker 1: for everybody. So it was kind of a haven for 84 00:04:44,400 --> 00:04:48,120 Speaker 1: this sort of activity, so much so that, uh that 85 00:04:48,400 --> 00:04:52,360 Speaker 1: the illicit activity made up the majority of the things 86 00:04:52,440 --> 00:04:54,720 Speaker 1: you could buy on the Silk Road. It wasn't just 87 00:04:55,560 --> 00:04:58,080 Speaker 1: illegal stuff. You could buy legal stuff too. You could 88 00:04:58,120 --> 00:05:00,480 Speaker 1: go to the Silk Road and buy clothing or computer 89 00:05:00,640 --> 00:05:03,920 Speaker 1: parts and things like that. Sure, but one report from 90 00:05:03,960 --> 00:05:07,560 Speaker 1: the Guardian said that drugs were up to sevent of 91 00:05:07,640 --> 00:05:09,680 Speaker 1: what was available on that market. Yeah, at that point, 92 00:05:09,720 --> 00:05:11,920 Speaker 1: you're like, I'm going to an illegal drug store that 93 00:05:12,040 --> 00:05:14,840 Speaker 1: also has a computer aisle. That's essentially what you're talking 94 00:05:14,880 --> 00:05:18,560 Speaker 1: about there. So I mean, and here's the thing. You'll 95 00:05:18,600 --> 00:05:21,479 Speaker 1: see Bitcoin community folks, some of them, not all of them. 96 00:05:21,520 --> 00:05:23,159 Speaker 1: I don't want to paint everyone with a broad brush. 97 00:05:23,320 --> 00:05:25,680 Speaker 1: Certainly not, but there were some who would say, look, 98 00:05:25,720 --> 00:05:27,839 Speaker 1: this is just a free market. The fact that drugs 99 00:05:27,880 --> 00:05:30,560 Speaker 1: are there is that's irrelevant. We're talking about. This is 100 00:05:30,560 --> 00:05:34,080 Speaker 1: where merchants and buyers can get together and exchange goods. 101 00:05:34,160 --> 00:05:37,160 Speaker 1: It's meant without government interference on that level. Sure, I 102 00:05:37,240 --> 00:05:40,000 Speaker 1: mean that that's intellectually I can understand what you're saying. 103 00:05:40,080 --> 00:05:44,839 Speaker 1: But practically seventy percent of the stuff there was illegal. 104 00:05:45,920 --> 00:05:49,240 Speaker 1: So when you when you strip away the philosophy and 105 00:05:49,360 --> 00:05:51,560 Speaker 1: look at the reality, you have to be you have 106 00:05:51,640 --> 00:05:55,680 Speaker 1: to be intellectually honest and say, all right, there, these 107 00:05:55,760 --> 00:05:59,280 Speaker 1: things are being done to to purchase illegal goods. Now 108 00:05:59,360 --> 00:06:01,600 Speaker 1: you might think that those goods shouldn't be illegal, but 109 00:06:01,680 --> 00:06:04,240 Speaker 1: that's a totally different issue. That's the whole other discussion. 110 00:06:04,920 --> 00:06:09,480 Speaker 1: And at any rate, in October, the FBI got pretty 111 00:06:09,520 --> 00:06:13,320 Speaker 1: deeply involved. Yeah, they arrested a man named Ross William 112 00:06:13,400 --> 00:06:17,599 Speaker 1: Albrich on charges of drug trafficking, computer hacking, money laundering, 113 00:06:17,640 --> 00:06:23,920 Speaker 1: and here's the big one, soliciting murder, essentially assassination. So uh, 114 00:06:24,200 --> 00:06:28,360 Speaker 1: they ended up arresting him. They claim that Albrecht is 115 00:06:28,520 --> 00:06:31,600 Speaker 1: the man behind the Silk Road, that he was using 116 00:06:31,640 --> 00:06:36,000 Speaker 1: the handle dread pirate Roberts. Uh. You know, I do 117 00:06:36,120 --> 00:06:38,000 Speaker 1: not think it means what he thinks it thinks it means. 118 00:06:38,040 --> 00:06:40,840 Speaker 1: But at any rate, they arrested him. They claimed that 119 00:06:40,960 --> 00:06:43,320 Speaker 1: that what that he was the guy behind the Silk Road. Albrick, 120 00:06:43,400 --> 00:06:46,440 Speaker 1: for his part, denies it. Uh, and the FBI shut 121 00:06:46,560 --> 00:06:50,800 Speaker 1: down the Silk Road, although almost immediately Silk Road two 122 00:06:50,839 --> 00:06:54,360 Speaker 1: point oh popped up into its place. Certainly, but shutting 123 00:06:54,400 --> 00:06:56,880 Speaker 1: down the system froze all of all of the bitcoins 124 00:06:57,000 --> 00:07:00,080 Speaker 1: that were in circulation in that in the market in 125 00:07:00,080 --> 00:07:03,279 Speaker 1: the market right, which was some three point five million 126 00:07:03,480 --> 00:07:05,520 Speaker 1: US worth at the time, and the fact that the 127 00:07:05,560 --> 00:07:08,920 Speaker 1: FBI sees that amount of bitcoin means that they are 128 00:07:09,040 --> 00:07:11,720 Speaker 1: one of the largest holders of the currency in the world. Yeah, 129 00:07:11,840 --> 00:07:15,000 Speaker 1: Makamoto and the FBI point that'd be a great children's 130 00:07:15,040 --> 00:07:19,080 Speaker 1: book at any rate. Uh So, Yeah, there were a 131 00:07:19,160 --> 00:07:21,880 Speaker 1: lot of people who were not happy about this, including 132 00:07:21,880 --> 00:07:24,000 Speaker 1: the ones who started up Silk Road two point oh 133 00:07:24,120 --> 00:07:27,840 Speaker 1: and Dreadpirate Roberts was active again, presumably on being controlled 134 00:07:27,840 --> 00:07:30,080 Speaker 1: by a different person, assuming of course that Olbrick was 135 00:07:30,160 --> 00:07:34,320 Speaker 1: in fact the original Dreadpire Roberts. So Silk Road two 136 00:07:34,360 --> 00:07:38,520 Speaker 1: point oh on February two thousand fourteen made these would 137 00:07:38,560 --> 00:07:42,200 Speaker 1: be drug dealers unhappy a second time because they announced 138 00:07:42,760 --> 00:07:45,920 Speaker 1: that they had been the target of hackers and that 139 00:07:46,040 --> 00:07:48,840 Speaker 1: the s grow accounts of the Silk Road two point 140 00:07:48,880 --> 00:07:51,920 Speaker 1: oh have been cleaned out of two point seven million 141 00:07:52,040 --> 00:07:56,040 Speaker 1: dollars worth of bitcoins. Uh Following Silk Road two point 142 00:07:56,080 --> 00:08:01,760 Speaker 1: oh was another market called Utopia, which not only allowed 143 00:08:01,840 --> 00:08:03,880 Speaker 1: for the sale of drugs, but opened it up to 144 00:08:04,000 --> 00:08:06,760 Speaker 1: guns as well, because when you're called utopia, that's really 145 00:08:06,840 --> 00:08:09,720 Speaker 1: the true avenue. Yeah no, yeah, that's I think there 146 00:08:09,800 --> 00:08:14,640 Speaker 1: might have been some irony there anyway. They were also 147 00:08:14,760 --> 00:08:18,600 Speaker 1: shut down just days after the site launched. Uh, the 148 00:08:18,640 --> 00:08:21,960 Speaker 1: police held a sting operation and shut that one down. 149 00:08:22,200 --> 00:08:25,480 Speaker 1: Now here's the thing, um, as soon as one of 150 00:08:25,520 --> 00:08:27,760 Speaker 1: these markets goes down, I'm sure other ones pop up 151 00:08:27,800 --> 00:08:31,040 Speaker 1: because the demand is there. So until you get to 152 00:08:31,160 --> 00:08:34,760 Speaker 1: a point where either the demand is not there or 153 00:08:34,880 --> 00:08:37,800 Speaker 1: people feel that there's just not a too much risk 154 00:08:37,840 --> 00:08:41,360 Speaker 1: and on a reward, then it's just going to keep happening. However, 155 00:08:41,480 --> 00:08:45,320 Speaker 1: decentralizing it, you could argue, is um a worthy cause 156 00:08:45,640 --> 00:08:48,959 Speaker 1: if you believe that shutting down this kind of thing 157 00:08:49,120 --> 00:08:51,280 Speaker 1: is a good, good plan, right right. There are people 158 00:08:51,320 --> 00:08:53,439 Speaker 1: in the bitcoin community who say, hey, this shows that 159 00:08:53,480 --> 00:08:56,520 Speaker 1: bitcoins work because you can shut down the markets that 160 00:08:56,600 --> 00:09:00,200 Speaker 1: aren't playing fair and everything else can keep on operating. However, 161 00:09:00,200 --> 00:09:02,360 Speaker 1: the rest of the world is saying, this is a 162 00:09:02,480 --> 00:09:05,800 Speaker 1: currency where the markets can get shut down and then 163 00:09:05,800 --> 00:09:08,959 Speaker 1: all your money goes away, which can of course reduce 164 00:09:09,120 --> 00:09:13,880 Speaker 1: confidence in that currency. So these these events are hurting 165 00:09:13,960 --> 00:09:17,480 Speaker 1: bitcoin in the sense that its value can suffer because 166 00:09:17,520 --> 00:09:20,760 Speaker 1: people feel less confident of it. I can, but that's 167 00:09:20,880 --> 00:09:23,360 Speaker 1: not always the practical outcome of this kind of thing, 168 00:09:23,400 --> 00:09:25,400 Speaker 1: and we'll talk a little bit about that later on, 169 00:09:25,559 --> 00:09:29,679 Speaker 1: I think. Meanwhile, in November, in response to all of 170 00:09:29,760 --> 00:09:32,560 Speaker 1: this hubbub, it was basically right after the FBI had 171 00:09:32,600 --> 00:09:36,040 Speaker 1: had shut down Silk Road one UM, the U S. 172 00:09:36,080 --> 00:09:39,120 Speaker 1: Senate held a hearing on bitcoin and the general potential 173 00:09:39,200 --> 00:09:42,760 Speaker 1: of virtual currencies. The Federal Reserve Chairman at the time, 174 00:09:42,960 --> 00:09:45,640 Speaker 1: Ben Brannank, released a letter ahead of the hearing that 175 00:09:45,840 --> 00:09:48,720 Speaker 1: acknowledged that UM that the government you know, of course 176 00:09:48,840 --> 00:09:53,400 Speaker 1: does not have authority to supervise virtual currencies like bitcoin UM, 177 00:09:53,520 --> 00:09:56,400 Speaker 1: but also said that this kind of stuff and I 178 00:09:56,520 --> 00:09:59,920 Speaker 1: quote may hold long term promise, particularly if the innovations 179 00:10:00,080 --> 00:10:04,319 Speaker 1: promote a faster, more secure, and more efficient payment system UM, 180 00:10:05,320 --> 00:10:08,559 Speaker 1: and that that idea, along with general curiosity about it, 181 00:10:08,600 --> 00:10:10,719 Speaker 1: seemed to really be the moral of this of this 182 00:10:11,240 --> 00:10:15,160 Speaker 1: Senate hearing, which was really interesting to me. UM. There 183 00:10:15,240 --> 00:10:18,240 Speaker 1: was of course concern raised about bitcoin being used to 184 00:10:18,320 --> 00:10:22,319 Speaker 1: drive crime, but the fact that people in the government 185 00:10:22,559 --> 00:10:25,199 Speaker 1: were open to the concept and then thought that it 186 00:10:25,320 --> 00:10:27,800 Speaker 1: was pretty cool and not only you know, to be 187 00:10:27,920 --> 00:10:30,120 Speaker 1: used as a marker for stuff that should be shut down. 188 00:10:30,679 --> 00:10:34,160 Speaker 1: I think it's great. Yeah, there's a there's a there's 189 00:10:34,200 --> 00:10:38,600 Speaker 1: an unequal distribution of savv nous in the government. Absolutely, 190 00:10:39,320 --> 00:10:41,040 Speaker 1: and we're gonna we're gonna cover a little bit more 191 00:10:41,080 --> 00:10:44,760 Speaker 1: of that just second, because you know, some people they 192 00:10:44,840 --> 00:10:47,160 Speaker 1: get it for one thing. You know, once you open 193 00:10:47,240 --> 00:10:50,240 Speaker 1: a door on the Internet, that doors open, right, I mean, 194 00:10:50,280 --> 00:10:53,079 Speaker 1: even if you try and remove everything, it's once it's 195 00:10:53,080 --> 00:10:55,000 Speaker 1: on the internet, the idea is out there. And as 196 00:10:55,040 --> 00:10:57,760 Speaker 1: we've said, bitcoin is not the only digital currency out there, 197 00:10:58,160 --> 00:11:02,800 Speaker 1: and digital currency certainly is poised to be very disruptive. Uh. 198 00:11:03,000 --> 00:11:06,040 Speaker 1: And you know this Bitcoin is kind of the perfect 199 00:11:06,120 --> 00:11:09,080 Speaker 1: example of how disruptive it can be in the extreme. 200 00:11:09,480 --> 00:11:11,880 Speaker 1: It doesn't even have to be that extreme to be disruptive. 201 00:11:12,320 --> 00:11:16,160 Speaker 1: So uh, it's interesting. And and that that senate hearing 202 00:11:16,240 --> 00:11:19,600 Speaker 1: where we had senators talking frankly about this kind of stuff, 203 00:11:19,920 --> 00:11:22,760 Speaker 1: lent a lot of legitimacy to bitcoin in the eyes 204 00:11:22,840 --> 00:11:26,559 Speaker 1: of the community and really the world outside the community. 205 00:11:26,600 --> 00:11:29,280 Speaker 1: A lot of people who were curious about this currency 206 00:11:29,400 --> 00:11:32,400 Speaker 1: but didn't know a whole lot about it. However, that 207 00:11:32,480 --> 00:11:36,600 Speaker 1: does not mean that we suddenly entered a a beautiful 208 00:11:36,679 --> 00:11:39,640 Speaker 1: dream state in which no one was using bitcoin for 209 00:11:39,800 --> 00:11:43,280 Speaker 1: nefarious purposes, and sometimes they may or may not have 210 00:11:43,400 --> 00:11:47,120 Speaker 1: been fully aware of how nefarious they were. So Charlie 211 00:11:47,280 --> 00:11:50,120 Speaker 1: shrim he's a he's a former head of a company 212 00:11:50,160 --> 00:11:53,360 Speaker 1: called bit Instant, who was on a trip. He was 213 00:11:54,080 --> 00:11:57,079 Speaker 1: for the past couple of years been living a pretty 214 00:11:57,200 --> 00:12:01,160 Speaker 1: lush lifestyle, a lot of wining and dining, flying around. Uh, 215 00:12:01,280 --> 00:12:04,160 Speaker 1: this fellow from Brooklyn was living the high life. And 216 00:12:04,880 --> 00:12:06,480 Speaker 1: the reason was he was using you know, a bit 217 00:12:06,600 --> 00:12:09,360 Speaker 1: Instant was this company that was kind of a handler 218 00:12:09,440 --> 00:12:13,920 Speaker 1: for bitcoins, could could facilitate bitcoins and and really acting 219 00:12:13,960 --> 00:12:18,960 Speaker 1: as like a transaction house. Now, he was arrested as 220 00:12:19,000 --> 00:12:21,800 Speaker 1: soon as he got off a plane under charges that 221 00:12:22,559 --> 00:12:26,679 Speaker 1: he had committed conspiracy to commit money laundering and also 222 00:12:26,920 --> 00:12:29,760 Speaker 1: he failed to report suspicious activity. Plus he had a 223 00:12:29,840 --> 00:12:33,880 Speaker 1: charge of acting as an unlicensed money transmitter. Now all 224 00:12:33,920 --> 00:12:37,920 Speaker 1: of those charges are from his alleged business with an 225 00:12:38,559 --> 00:12:42,520 Speaker 1: with a man named Robert Faia, who was accused of 226 00:12:42,600 --> 00:12:45,120 Speaker 1: being a bitcoin merchant who was working with drug dealers 227 00:12:45,200 --> 00:12:48,240 Speaker 1: to buy and sell items on the silk Road. And 228 00:12:48,440 --> 00:12:52,079 Speaker 1: so it's kind of Ah. There's an email exchange between 229 00:12:52,200 --> 00:12:55,760 Speaker 1: shrem and Faia. That's the key of this case, that 230 00:12:56,559 --> 00:13:00,800 Speaker 1: so Faia's approach was that he was trying to transmit 231 00:13:01,160 --> 00:13:05,280 Speaker 1: large amounts of money and bitcoins, and the law is 232 00:13:05,360 --> 00:13:07,839 Speaker 1: still trying to catch up in the United States particularly, 233 00:13:07,920 --> 00:13:11,280 Speaker 1: but across the world in general with the existence of 234 00:13:11,320 --> 00:13:15,120 Speaker 1: bitcoins and how is that handled in transmissions when it's 235 00:13:15,200 --> 00:13:19,840 Speaker 1: not actual US dollars And in general, if you're considered 236 00:13:19,880 --> 00:13:22,520 Speaker 1: you're considered to be a money transmitter once you reach 237 00:13:22,559 --> 00:13:25,079 Speaker 1: a certain level. So a lot of people were telling 238 00:13:25,120 --> 00:13:29,440 Speaker 1: shrim hey, you know, let's let's make the the top 239 00:13:29,600 --> 00:13:32,360 Speaker 1: amount a thousand bitcoins. You can't transmit more than that 240 00:13:32,440 --> 00:13:35,520 Speaker 1: because more than that you're going to get and then 241 00:13:35,559 --> 00:13:38,000 Speaker 1: they're gonna say you are an unlicensed money transmitter, which 242 00:13:38,000 --> 00:13:40,640 Speaker 1: in fact is one of the charges. But this guy 243 00:13:40,760 --> 00:13:42,760 Speaker 1: f i AA was doing a lot of business with them, 244 00:13:42,800 --> 00:13:45,520 Speaker 1: and eventually shrim I guess was feeling really pretty comfortable 245 00:13:45,600 --> 00:13:49,520 Speaker 1: with the whole thing, and they were possibly, uh transmitting 246 00:13:49,520 --> 00:13:53,240 Speaker 1: as much as ten thousand or more bitcoins in a week. 247 00:13:53,679 --> 00:13:56,679 Speaker 1: So yeah, it eventually got the the attention of the 248 00:13:57,440 --> 00:14:01,600 Speaker 1: the government and they went after them. So although part 249 00:14:01,679 --> 00:14:04,559 Speaker 1: of that Senate hearing included the canny observation that that 250 00:14:04,840 --> 00:14:08,840 Speaker 1: cash is probably still the best medium for laundering money. Yeah, 251 00:14:09,040 --> 00:14:11,719 Speaker 1: and in fact, that was that would come back. In 252 00:14:11,840 --> 00:14:16,000 Speaker 1: February two, fourteen, Uh, following this whole bit instant and 253 00:14:16,360 --> 00:14:19,560 Speaker 1: shrim thing, a U S senator proposed that the United 254 00:14:19,560 --> 00:14:23,520 Speaker 1: States put a ban on bitcoins, which doesn't work when 255 00:14:23,520 --> 00:14:26,320 Speaker 1: you're talking about decentralized virtual currency. Yeah, you can't really 256 00:14:26,400 --> 00:14:29,760 Speaker 1: ban something that isn't technically legalized in the first place. 257 00:14:30,080 --> 00:14:31,720 Speaker 1: But in this case, it was funny because you know, 258 00:14:31,880 --> 00:14:35,840 Speaker 1: you had other senators saying this doesn't make any sense. 259 00:14:35,920 --> 00:14:39,280 Speaker 1: And in fact, I propose we banned currency because, as 260 00:14:39,320 --> 00:14:42,440 Speaker 1: it turns out, currency is often used for illegal activities. 261 00:14:42,480 --> 00:14:45,480 Speaker 1: In fact, if you look at currency, the US dollar 262 00:14:46,200 --> 00:14:50,440 Speaker 1: versus the bitcoin, boy, dollars are used in crime way 263 00:14:50,720 --> 00:14:53,840 Speaker 1: more frequently, all the time, every day. So we got 264 00:14:53,960 --> 00:14:56,600 Speaker 1: to get rid of that. And that was I mean, 265 00:14:56,880 --> 00:14:59,320 Speaker 1: that's about where that that new story. It was very 266 00:14:59,440 --> 00:15:03,280 Speaker 1: much a kind of uh, you know, said drowbone kind 267 00:15:03,320 --> 00:15:07,760 Speaker 1: of moment. Then we get to the hacking stories, the 268 00:15:08,560 --> 00:15:13,840 Speaker 1: bigger hacking stories, because we previously mentioned um, uh, well no, 269 00:15:14,000 --> 00:15:16,480 Speaker 1: and also the bot net kind of stuff, of of 270 00:15:16,600 --> 00:15:20,400 Speaker 1: individual hacking. But um, but there is of course hacking 271 00:15:20,440 --> 00:15:24,400 Speaker 1: of bigger fish, bigger money fish. Yes, exactly, because bitcoin 272 00:15:24,600 --> 00:15:27,840 Speaker 1: the currency. They they're very quick to say that the people, 273 00:15:27,880 --> 00:15:30,640 Speaker 1: the keepers of the bitcoin are quick to say that 274 00:15:30,680 --> 00:15:33,680 Speaker 1: the currency itself is not what has been hacked. It's 275 00:15:33,760 --> 00:15:36,960 Speaker 1: not someone has figured out how to unravel the bitcoin 276 00:15:37,120 --> 00:15:39,040 Speaker 1: so that they can make copies of it, which was 277 00:15:39,080 --> 00:15:41,760 Speaker 1: one of the big fears about digital currency. Yeah, because 278 00:15:41,920 --> 00:15:44,520 Speaker 1: people think, hey, if I download a song, I can 279 00:15:44,600 --> 00:15:47,200 Speaker 1: make copies of that song for all of my friends, 280 00:15:47,600 --> 00:15:49,560 Speaker 1: which is exactly what the music companies don't want me 281 00:15:49,600 --> 00:15:51,440 Speaker 1: to do. But I'm totally gonna do it anyway. What 282 00:15:51,520 --> 00:15:54,200 Speaker 1: would stop me from doing the same thing about downloading 283 00:15:54,240 --> 00:15:57,280 Speaker 1: a bitcoin and then making lots of copies. So that 284 00:15:57,560 --> 00:16:03,880 Speaker 1: has remained safe. However, institutions that are dedicated to handling 285 00:16:03,960 --> 00:16:08,800 Speaker 1: bitcoins have not had the same level of safety and security. Absolutely. 286 00:16:09,120 --> 00:16:11,960 Speaker 1: So one of the big ones you've probably heard it, Uh, 287 00:16:12,120 --> 00:16:15,000 Speaker 1: It was a Japanese company called mount Cox, which was 288 00:16:15,080 --> 00:16:20,280 Speaker 1: originally a Magic the Gathering card exchange. Yeah, so weird, 289 00:16:20,920 --> 00:16:24,800 Speaker 1: but at any rate, I believe it was in January. Man, 290 00:16:24,960 --> 00:16:26,760 Speaker 1: this was a big one, right, This was the one 291 00:16:26,880 --> 00:16:30,720 Speaker 1: where they were robbed. Hackers had managed to exploit a 292 00:16:30,800 --> 00:16:34,560 Speaker 1: security vulnerability in the Mount Cox Exchange non exchange. Think 293 00:16:34,600 --> 00:16:37,720 Speaker 1: of an exchange as a place where you can exchange currencies, 294 00:16:37,880 --> 00:16:40,880 Speaker 1: So you could purchase bitcoins or you could sell off 295 00:16:40,960 --> 00:16:44,040 Speaker 1: bitcoins at this exchange. They would base the value on 296 00:16:44,160 --> 00:16:47,080 Speaker 1: whatever the market would bear at that time. Well, the 297 00:16:47,160 --> 00:16:50,120 Speaker 1: hackers had been able to exploit a security vulnerability for 298 00:16:50,520 --> 00:16:53,320 Speaker 1: the course of a couple of years. Actually, Uh, it 299 00:16:53,480 --> 00:16:55,520 Speaker 1: was just that the Mount Cox folks kind of figured 300 00:16:55,560 --> 00:16:58,920 Speaker 1: it out gradually, and then then the news broke and 301 00:16:58,960 --> 00:17:01,960 Speaker 1: then that's when every thing really fell apart. Yeah, February. 302 00:17:02,720 --> 00:17:05,159 Speaker 1: By the way, I mistook that January. Well, it had 303 00:17:05,200 --> 00:17:08,520 Speaker 1: certainly been happening before, but but it wasn't announced till 304 00:17:08,840 --> 00:17:10,959 Speaker 1: till then. Yeah, And and it turned out that they 305 00:17:11,080 --> 00:17:15,800 Speaker 1: lost seven hundred fifty bitcoins that belonged to customers, plus 306 00:17:15,880 --> 00:17:18,880 Speaker 1: an additional hundred bitcoins that belonged to the exchange itself. 307 00:17:19,720 --> 00:17:23,879 Speaker 1: And at the time, that was about half billion dollars 308 00:17:23,960 --> 00:17:27,120 Speaker 1: worth of bitcoins. Uh at if you took it at 309 00:17:27,160 --> 00:17:30,960 Speaker 1: the that the the value of bitcoins in US dollars 310 00:17:31,119 --> 00:17:33,560 Speaker 1: at the time the news was announced, keeping in mind 311 00:17:33,920 --> 00:17:36,159 Speaker 1: these stuffs had been going on for a while as 312 00:17:36,240 --> 00:17:40,639 Speaker 1: hackers had found this vulnerability. So that was pretty much 313 00:17:40,680 --> 00:17:43,960 Speaker 1: the end of Mount Gus at least, maybe not the end, 314 00:17:44,040 --> 00:17:46,760 Speaker 1: but it certainly sent them into the equivalent of bankruptcy 315 00:17:46,880 --> 00:17:50,560 Speaker 1: in Japan. In fact, the CEO had to step forward 316 00:17:50,680 --> 00:17:54,760 Speaker 1: and bow and apologize to uh to customers, because that's 317 00:17:54,840 --> 00:17:58,760 Speaker 1: the that's the custom in Japan. And the last I heard, 318 00:17:59,240 --> 00:18:02,399 Speaker 1: the ends are that he will step down once a 319 00:18:02,880 --> 00:18:06,520 Speaker 1: suitable replacement is found for him. There are other companies 320 00:18:06,640 --> 00:18:09,800 Speaker 1: that are even in worse shape than that. Yeah. Just 321 00:18:09,960 --> 00:18:12,440 Speaker 1: a couple of weeks later, flex Coin, which which is 322 00:18:12,680 --> 00:18:16,160 Speaker 1: a kind of bank for bitcoins UM, had to shut 323 00:18:16,200 --> 00:18:19,399 Speaker 1: down after being hacked and and losing how many eight 324 00:18:19,920 --> 00:18:24,760 Speaker 1: nine bitcoins? Yeah yeah, Now by this time the value 325 00:18:24,760 --> 00:18:27,520 Speaker 1: of those bitcoins were less valuable than the ones from 326 00:18:27,560 --> 00:18:29,959 Speaker 1: the previous ones because bitcoin had taken quite a hit 327 00:18:30,440 --> 00:18:33,640 Speaker 1: in its value. H So, yes, there were more bitcoin 328 00:18:33,760 --> 00:18:37,119 Speaker 1: stolen in the flex coin story, but they were you know, 329 00:18:37,359 --> 00:18:39,160 Speaker 1: they weren't worth quite as much. Yeah, they were. Oddly, 330 00:18:39,200 --> 00:18:42,879 Speaker 1: they were worth less because confidence was lower UM, and 331 00:18:43,720 --> 00:18:48,000 Speaker 1: it also was you know, banking quotation marks because well, 332 00:18:48,320 --> 00:18:52,040 Speaker 1: it's not technically a bank because it is necessarily uninsured. 333 00:18:52,880 --> 00:18:56,040 Speaker 1: That's you know, that's part of the whole anarchist package, right, 334 00:18:56,119 --> 00:18:59,560 Speaker 1: it's not it isn't beholden to some government agency or 335 00:18:59,640 --> 00:19:03,320 Speaker 1: some other corporate entity. And so because they weren't ensured, 336 00:19:03,400 --> 00:19:06,360 Speaker 1: there's no way to to to cover that money. Yeah, 337 00:19:06,760 --> 00:19:09,520 Speaker 1: so that money is gone and as a result, the 338 00:19:09,560 --> 00:19:13,119 Speaker 1: company is shutting down. The only bitcoins that they retained 339 00:19:13,680 --> 00:19:15,879 Speaker 1: were what in what they called cold storage. They had 340 00:19:15,920 --> 00:19:19,000 Speaker 1: two different styles of storage. There was a hot wallet, 341 00:19:19,560 --> 00:19:23,560 Speaker 1: which was called that because the the bitcoins were active 342 00:19:23,680 --> 00:19:26,480 Speaker 1: on network servers that were connected to the Internet. And 343 00:19:26,560 --> 00:19:28,159 Speaker 1: the reason for that was so that they would be 344 00:19:28,240 --> 00:19:31,760 Speaker 1: available for transactions, because you don't want that transaction to 345 00:19:31,840 --> 00:19:33,680 Speaker 1: take forever. You don't. You don't you don't want to 346 00:19:33,680 --> 00:19:36,240 Speaker 1: have someone to have to go physically hook a hard 347 00:19:36,359 --> 00:19:38,439 Speaker 1: drive up to a server in order to access your 348 00:19:38,440 --> 00:19:42,119 Speaker 1: bitcoin every time. Um, but that cold storage is very 349 00:19:42,200 --> 00:19:45,080 Speaker 1: much the Battlestar Galactica kind of kind of the new 350 00:19:45,280 --> 00:19:47,480 Speaker 1: the New. Okay, I'm looking at you, frankly, I'm like, 351 00:19:47,560 --> 00:19:51,399 Speaker 1: what the big silver cylon or is this sexy cylon 352 00:19:51,720 --> 00:19:55,320 Speaker 1: by Well, it's about sexy silocek. But but but but 353 00:19:55,359 --> 00:19:57,400 Speaker 1: I'm referring, of course, to to the part of Battlestarre 354 00:19:57,440 --> 00:19:59,960 Speaker 1: Galactic at the new series in which a few members 355 00:20:00,000 --> 00:20:01,639 Speaker 1: that the government had started going like, you know, we 356 00:20:01,760 --> 00:20:04,840 Speaker 1: really shouldn't have computer networks or large networks hooked up 357 00:20:04,880 --> 00:20:07,639 Speaker 1: to other large networks, because that's a terrible plan for 358 00:20:07,800 --> 00:20:10,800 Speaker 1: security for security purpose. So and that's exactly what they 359 00:20:10,840 --> 00:20:13,000 Speaker 1: were doing with cold storage, and that they were essentially 360 00:20:13,040 --> 00:20:15,560 Speaker 1: having these on servers that were not connected to the Internet, 361 00:20:15,880 --> 00:20:19,359 Speaker 1: and they said, you know, it's really hard to steal 362 00:20:19,520 --> 00:20:22,200 Speaker 1: money when that money is not connect to the Internet. 363 00:20:22,240 --> 00:20:24,760 Speaker 1: It's not impossible. You can use some social engineering and 364 00:20:24,840 --> 00:20:27,200 Speaker 1: get direct access to the actual machine and be able 365 00:20:27,240 --> 00:20:29,760 Speaker 1: to do it that way. Sure, but that is much 366 00:20:29,800 --> 00:20:33,399 Speaker 1: more difficult. Yeah, that's mission impossible, risky as opposed to 367 00:20:33,560 --> 00:20:36,639 Speaker 1: the net risky. Yes, if I could mix my terrible 368 00:20:37,280 --> 00:20:42,360 Speaker 1: Hollywood depictions of stealing stuff anyway, flex Coin said, it's 369 00:20:42,400 --> 00:20:44,399 Speaker 1: going to work very hard to make sure that the 370 00:20:44,920 --> 00:20:48,440 Speaker 1: coins and cold storage get to the valid owners of 371 00:20:48,560 --> 00:20:52,480 Speaker 1: that currency before they shut down totally. So you would 372 00:20:52,520 --> 00:20:55,000 Speaker 1: think that because we're talking, you know, we're recording this 373 00:20:55,080 --> 00:20:57,600 Speaker 1: in March two thousand fourteen. We're talking about story that 374 00:20:57,720 --> 00:21:01,040 Speaker 1: broke in late February two fourteen. Clearly we wouldn't have 375 00:21:01,080 --> 00:21:04,040 Speaker 1: any more stories to talk about about hackers getting access 376 00:21:04,080 --> 00:21:07,680 Speaker 1: to bitcoins. Ah, yeah, now we do. Yeah, because it 377 00:21:07,760 --> 00:21:09,720 Speaker 1: turned out that this morning, when I was looking at 378 00:21:09,760 --> 00:21:12,600 Speaker 1: the news, one of the items was that actually was 379 00:21:12,640 --> 00:21:15,359 Speaker 1: this afternoon. It was even later than this morning. There 380 00:21:15,400 --> 00:21:18,320 Speaker 1: was a company called Poland Polo n X p O 381 00:21:18,680 --> 00:21:22,080 Speaker 1: l O n I e X poloni x I guess uh. 382 00:21:22,200 --> 00:21:27,159 Speaker 1: They lost around fifty grand worth of bitcoins in US dollars. Uh. 383 00:21:27,240 --> 00:21:29,880 Speaker 1: The actual number of bitcoins lost were seventy six point 384 00:21:30,080 --> 00:21:33,360 Speaker 1: six nine. Like we said in our previous episode, bitcoins 385 00:21:33,400 --> 00:21:36,520 Speaker 1: can be divided down into teeny tiny numbers. They lost 386 00:21:36,560 --> 00:21:39,959 Speaker 1: seventy six point six nine bitcoins, which represents about twelve 387 00:21:40,080 --> 00:21:43,359 Speaker 1: point three percent of all the bitcoins they had in storage. 388 00:21:43,440 --> 00:21:48,040 Speaker 1: So their solution temporarily is to reduce everyone's account by 389 00:21:48,119 --> 00:21:51,440 Speaker 1: twelve point three percent to distribute the loss across all customers. 390 00:21:51,720 --> 00:21:54,760 Speaker 1: That's a terrible way of covering a loss, right, you 391 00:21:54,880 --> 00:21:57,400 Speaker 1: might think, but my money wasn't stolen, and now you're 392 00:21:57,480 --> 00:21:59,919 Speaker 1: stealing my money. Not supposed to be temporary they are 393 00:22:00,040 --> 00:22:04,040 Speaker 1: supposed to work at trying to recover in some fashion 394 00:22:04,240 --> 00:22:07,240 Speaker 1: the value of those bitcoins and restore it to everybody 395 00:22:07,280 --> 00:22:11,040 Speaker 1: so that uh, this distributed loss is not felt so 396 00:22:11,240 --> 00:22:14,240 Speaker 1: keenly and that it's eventually restored. But yeah, you would 397 00:22:14,240 --> 00:22:18,920 Speaker 1: imagine that this would probably make some customers a little miffed. Certainly. 398 00:22:19,080 --> 00:22:22,719 Speaker 1: I've seen some online responses to that my fitness um 399 00:22:23,240 --> 00:22:27,200 Speaker 1: of of people just going like, you participated in a 400 00:22:27,320 --> 00:22:31,760 Speaker 1: currency designed for thievery, and you were surprised when it 401 00:22:31,840 --> 00:22:34,359 Speaker 1: attracted thieves. And I think I think that that's a 402 00:22:34,359 --> 00:22:38,000 Speaker 1: little bit harsh um, but perhaps an interesting point. Yeah, 403 00:22:38,160 --> 00:22:40,920 Speaker 1: there's a there's more than a little speck talk. But 404 00:22:41,880 --> 00:22:43,480 Speaker 1: you know, we've got some more we want to say 405 00:22:43,800 --> 00:22:47,680 Speaker 1: about the crazy shenanigans, what goes on with this crazy currency. 406 00:22:48,040 --> 00:22:50,560 Speaker 1: But before we do that, let's take a quick break 407 00:22:50,600 --> 00:22:54,640 Speaker 1: to thank our sponsor. Now we mentioned before that one 408 00:22:54,680 --> 00:22:57,280 Speaker 1: of the other controversies, or or at least one of 409 00:22:57,320 --> 00:22:59,880 Speaker 1: the other concerns about bitcoins is how did they fit 410 00:23:00,000 --> 00:23:04,240 Speaker 1: in with the world of taxes. Because it's a decentralized currency, 411 00:23:04,400 --> 00:23:07,880 Speaker 1: it's not dependent upon any government. However you are doing 412 00:23:08,080 --> 00:23:10,760 Speaker 1: using it to do business, you may be doing business 413 00:23:10,840 --> 00:23:13,359 Speaker 1: at least you know, the the equipment you use, maybe 414 00:23:13,480 --> 00:23:16,240 Speaker 1: within the confines of a particular country. I'm pretty sure 415 00:23:16,280 --> 00:23:18,280 Speaker 1: you haven't figured out how to put a server someplace 416 00:23:18,400 --> 00:23:22,400 Speaker 1: beyond the reach of all law, right, most most servers 417 00:23:22,480 --> 00:23:25,720 Speaker 1: are not physically in the clouds. Yeah, maybe you found 418 00:23:25,800 --> 00:23:28,400 Speaker 1: some way. Maybe you bought an island and it's your 419 00:23:28,440 --> 00:23:32,000 Speaker 1: own little sovereignation, in which case you can skip forward 420 00:23:32,080 --> 00:23:34,320 Speaker 1: a little bit in this. But does call us because 421 00:23:34,359 --> 00:23:36,280 Speaker 1: that sounds like an awesome party. Yeah, especially if that 422 00:23:36,320 --> 00:23:38,879 Speaker 1: islands like somewhere near the equator, I will totally go. 423 00:23:39,440 --> 00:23:44,720 Speaker 1: But anyway, the the the problem here is that governments 424 00:23:44,760 --> 00:23:47,159 Speaker 1: don't really know how to deal with this properly, in 425 00:23:47,240 --> 00:23:49,240 Speaker 1: the in the sense of how how would we tax 426 00:23:50,119 --> 00:23:52,720 Speaker 1: the use of bitcoins? Could we tax it? Should we 427 00:23:52,880 --> 00:23:55,440 Speaker 1: tax it? I think most governments say, yeah, we should 428 00:23:55,480 --> 00:23:59,480 Speaker 1: totally tax. Now. What what is not beyond question is 429 00:23:59,600 --> 00:24:02,920 Speaker 1: making money through the exchange of bitcoins, Because if you 430 00:24:03,040 --> 00:24:05,960 Speaker 1: are exchanging bitcoins for other currencies and you're making money 431 00:24:06,040 --> 00:24:08,000 Speaker 1: that way, that's something that the government, at least in 432 00:24:08,000 --> 00:24:11,320 Speaker 1: the United States, will totally tax. The old buying, low 433 00:24:11,400 --> 00:24:16,680 Speaker 1: selling or h had a moment of terrible doubt. Yeah, 434 00:24:16,720 --> 00:24:18,640 Speaker 1: well I do whenever I look at the market. Se 435 00:24:18,720 --> 00:24:22,159 Speaker 1: this is why I don't play the stock playing is 436 00:24:22,200 --> 00:24:25,679 Speaker 1: the right word for it. Uh. Yeah. So the idea here, 437 00:24:25,720 --> 00:24:28,520 Speaker 1: of course, is that if I if I invest in bitcoins, 438 00:24:28,560 --> 00:24:32,400 Speaker 1: like and I'm not mining, if I'm actually uh using 439 00:24:32,440 --> 00:24:35,359 Speaker 1: them as a like a commodit change, right, yeah, like 440 00:24:35,480 --> 00:24:39,160 Speaker 1: I exchange. But yes, yeah, I've purchased some bitcoins using 441 00:24:39,280 --> 00:24:42,840 Speaker 1: US dollars. So now I have the equivalent in bitcoins 442 00:24:42,880 --> 00:24:45,680 Speaker 1: available to me, and then the value increases over time, 443 00:24:45,720 --> 00:24:48,560 Speaker 1: and then I sell those bitcoins to get US dollars 444 00:24:48,640 --> 00:24:51,240 Speaker 1: again and thus make a profit. I could be taxed 445 00:24:51,280 --> 00:24:54,520 Speaker 1: on that. So that's in the future we may see 446 00:24:54,600 --> 00:24:59,280 Speaker 1: taxes being applied more broadly across different types of transactions. 447 00:24:59,640 --> 00:25:02,720 Speaker 1: So that's that's another problem with bitcoins in general. And 448 00:25:03,160 --> 00:25:06,200 Speaker 1: uh and the biggest one is kind of related, I think, 449 00:25:06,320 --> 00:25:10,320 Speaker 1: because it's all about the volatility of that market, of 450 00:25:10,400 --> 00:25:13,080 Speaker 1: the exchange market, of how much a bitcoin is worth 451 00:25:13,240 --> 00:25:16,919 Speaker 1: in um forgive me, but real dollars oh sure, yeah, well, 452 00:25:17,080 --> 00:25:19,240 Speaker 1: or just value. You could just say, what's the value 453 00:25:19,280 --> 00:25:22,399 Speaker 1: of a bitcoin? What can a bitcoin get me? And 454 00:25:22,720 --> 00:25:26,600 Speaker 1: the truth of the matter is that changes so quickly 455 00:25:26,720 --> 00:25:29,240 Speaker 1: and so dramatically, even over the course of a day, 456 00:25:29,920 --> 00:25:32,640 Speaker 1: that it's hard to answer that question in a meaningful way. 457 00:25:33,000 --> 00:25:35,920 Speaker 1: I mean, we've seen bitcoin's value go from around a 458 00:25:36,040 --> 00:25:42,720 Speaker 1: dollar per bitcoin US to twelve hundred dollars US per bitcoin. Yeah. Yeah, 459 00:25:42,960 --> 00:25:46,640 Speaker 1: in the span of thirteen alone. Um it went from 460 00:25:46,880 --> 00:25:50,399 Speaker 1: between twelve and thirteen bucks to uh to one thousand, 461 00:25:50,480 --> 00:25:53,520 Speaker 1: two hundred forty two dollars per coin on November twenty nine, 462 00:25:54,160 --> 00:25:56,439 Speaker 1: and then had crashed back to under six hundred by 463 00:25:56,520 --> 00:25:59,280 Speaker 1: late December. So, in other words, here's here's how I 464 00:25:59,359 --> 00:26:02,639 Speaker 1: want to put my argument that I always make, and 465 00:26:02,680 --> 00:26:05,639 Speaker 1: I've made it multiple times, and I've debated this with 466 00:26:05,800 --> 00:26:09,680 Speaker 1: other people in the technology space. I say that bitcoin 467 00:26:09,800 --> 00:26:12,720 Speaker 1: is not really a currency. It's more like a commodity. 468 00:26:12,800 --> 00:26:17,720 Speaker 1: It's more like investing. Yeah, it's something where it you 469 00:26:17,800 --> 00:26:20,720 Speaker 1: know it. You could use it to exchange, but that's 470 00:26:20,760 --> 00:26:23,280 Speaker 1: almost more like bartering than than a currency because the 471 00:26:23,359 --> 00:26:25,960 Speaker 1: value changes so dramatic. Well, although I mean, any any 472 00:26:26,040 --> 00:26:28,520 Speaker 1: money that you're using is a little bit imaginary and 473 00:26:28,960 --> 00:26:31,800 Speaker 1: you're technically bartering with it. But again, that one of 474 00:26:31,840 --> 00:26:35,240 Speaker 1: the benefits of having a regulated currency is that the 475 00:26:35,359 --> 00:26:38,320 Speaker 1: government can take steps to try and keep the value 476 00:26:38,880 --> 00:26:41,439 Speaker 1: as consistent as possible. It doesn't always work, because there 477 00:26:41,480 --> 00:26:44,720 Speaker 1: are situations where you know, inflation will get out of control, 478 00:26:44,880 --> 00:26:48,840 Speaker 1: maybe uh, due to external circumstances. That does happen. We've 479 00:26:48,840 --> 00:26:52,359 Speaker 1: seen it happen across the world, certainly. But I guess 480 00:26:52,920 --> 00:26:55,119 Speaker 1: the thing that you're arguing, and and it's a fair argument, 481 00:26:55,240 --> 00:26:57,320 Speaker 1: is that if you if you're going to believe in 482 00:26:57,400 --> 00:27:00,440 Speaker 1: a money system, then the more official and founded that 483 00:27:00,560 --> 00:27:04,640 Speaker 1: belief is. So the example I have here is, let's 484 00:27:04,640 --> 00:27:07,760 Speaker 1: say that dollars behave the same way that bitcoins have 485 00:27:07,880 --> 00:27:10,280 Speaker 1: behaved over the last couple of years. And I have 486 00:27:10,520 --> 00:27:14,360 Speaker 1: a five dollar bill in my hand, and I'm peckish, 487 00:27:14,760 --> 00:27:16,160 Speaker 1: and I decided I want to go out and buy 488 00:27:16,200 --> 00:27:19,320 Speaker 1: myself it's last pizza. So I go outside and there's 489 00:27:19,320 --> 00:27:22,720 Speaker 1: a pizza vendor and he's selling slices of pizza and 490 00:27:22,800 --> 00:27:24,639 Speaker 1: it's five dollars of slice, and I think, well, you 491 00:27:24,680 --> 00:27:28,080 Speaker 1: know that's I'm hungry, it's exactly what I want to me. 492 00:27:28,880 --> 00:27:32,040 Speaker 1: This slice of pizza is probably worth the five dollars, 493 00:27:32,320 --> 00:27:33,879 Speaker 1: a little more than what I would normally pay, but 494 00:27:33,960 --> 00:27:37,080 Speaker 1: open so I hand over my my hard earned five 495 00:27:37,119 --> 00:27:41,760 Speaker 1: dollar bill, and he hands over his hard earned slice 496 00:27:41,800 --> 00:27:44,800 Speaker 1: of steamy pizza, and then I devour it and I 497 00:27:44,880 --> 00:27:48,160 Speaker 1: go on my merry way. The next day, the value 498 00:27:48,480 --> 00:27:51,919 Speaker 1: of that five dollar bill now has the equivalent buying 499 00:27:52,040 --> 00:27:55,240 Speaker 1: power of what five hundred dollars would have gotten me 500 00:27:55,320 --> 00:27:57,560 Speaker 1: the day before. So, in other words, it's still a 501 00:27:57,640 --> 00:28:01,160 Speaker 1: five dollar bill, but now it can buy five worth 502 00:28:01,200 --> 00:28:03,760 Speaker 1: of stuff. Yeah, from the previous day, from the previous day. 503 00:28:03,880 --> 00:28:06,440 Speaker 1: So so in other words, I just in my mind, 504 00:28:06,520 --> 00:28:10,240 Speaker 1: I'm thinking, yesterday I bought a five hundred dollar slice 505 00:28:10,280 --> 00:28:15,280 Speaker 1: of pizza. I no pizza in my life has ever 506 00:28:15,440 --> 00:28:18,960 Speaker 1: been that good. And I've been to Sorrento, Italy when 507 00:28:19,080 --> 00:28:21,880 Speaker 1: I had amazing pizza there. It was not worth five 508 00:28:22,240 --> 00:28:23,840 Speaker 1: dollars a slice. I can I can imagine it's really 509 00:28:23,840 --> 00:28:27,520 Speaker 1: good truffle oil. I don't know, but maybe twelve dollars 510 00:28:27,680 --> 00:28:30,280 Speaker 1: maybe if I were feeling like like hoity toity. This 511 00:28:30,440 --> 00:28:32,880 Speaker 1: is like a you know, a chic place, and I'm 512 00:28:33,160 --> 00:28:36,240 Speaker 1: there to be seen, Yeah, exactly, but not five dollars 513 00:28:36,240 --> 00:28:38,920 Speaker 1: a slice. So the point I'm making is that the 514 00:28:39,080 --> 00:28:43,680 Speaker 1: volatility makes you nervous about spending the currency. I would 515 00:28:43,760 --> 00:28:47,640 Speaker 1: I would be reluctant to spend my bitcoins for fear 516 00:28:47,800 --> 00:28:50,960 Speaker 1: that I would miss out on the next giant jump 517 00:28:51,000 --> 00:28:53,560 Speaker 1: and value. So that if I ended up, you know, 518 00:28:53,680 --> 00:28:56,680 Speaker 1: having like three or four bitcoins and I'm thinking, oh, wow, 519 00:28:56,800 --> 00:28:59,520 Speaker 1: this is worth five dollars United States money, I'm gonna 520 00:28:59,600 --> 00:29:02,720 Speaker 1: I'm gonna exchange it now, and then a year later 521 00:29:02,880 --> 00:29:07,360 Speaker 1: it's worth thirty six dollars, I would be a little 522 00:29:07,440 --> 00:29:11,400 Speaker 1: perturbed at myself. I'd be upset. And it discourages people 523 00:29:11,480 --> 00:29:13,520 Speaker 1: from using it as a currency. They might use it 524 00:29:13,640 --> 00:29:17,120 Speaker 1: to invest, and they might hold onto stuff, and some 525 00:29:17,560 --> 00:29:19,360 Speaker 1: of the markets we talked about, some of the illegal 526 00:29:19,440 --> 00:29:22,920 Speaker 1: markets might use bitcoins for currency because of the other. Yeah, 527 00:29:22,960 --> 00:29:27,800 Speaker 1: it's easy, but it's you know, if the very basis 528 00:29:27,880 --> 00:29:30,320 Speaker 1: of your currency discourages you from using it, then it's 529 00:29:30,360 --> 00:29:32,840 Speaker 1: not successful as a currency. That's not the fault of 530 00:29:32,880 --> 00:29:36,120 Speaker 1: bitcoin itself. The fault of that is with the market. 531 00:29:36,320 --> 00:29:39,840 Speaker 1: Because the value of something is based upon its demand. 532 00:29:40,320 --> 00:29:43,040 Speaker 1: If demand is high, the value is high, especially if 533 00:29:43,080 --> 00:29:45,280 Speaker 1: you compare it against the supply. If the supply is 534 00:29:45,360 --> 00:29:48,760 Speaker 1: low and demand is high, that thing is valuable, right, 535 00:29:49,200 --> 00:29:52,120 Speaker 1: And in some cases we see things that manipulate markets 536 00:29:52,320 --> 00:29:57,080 Speaker 1: so that you have an artificial value on something because 537 00:29:57,080 --> 00:29:59,320 Speaker 1: it looks like supply is low and demand is high, 538 00:29:59,640 --> 00:30:04,480 Speaker 1: even supply is also high. Yeah. Yeah, if you ever 539 00:30:04,680 --> 00:30:07,480 Speaker 1: want to really get this illusion, look into the diamond 540 00:30:07,560 --> 00:30:10,400 Speaker 1: business and see how there is no shortage of diamonds 541 00:30:10,440 --> 00:30:13,479 Speaker 1: and yet they're being treated like they're this incredibly precious resource. 542 00:30:13,600 --> 00:30:16,360 Speaker 1: I think I'm nearly positive that one of our fellow 543 00:30:16,480 --> 00:30:18,880 Speaker 1: podcasters here at how stuff Works has done an episode 544 00:30:18,920 --> 00:30:21,160 Speaker 1: on that. And I know that there are articles on 545 00:30:21,240 --> 00:30:24,280 Speaker 1: how stuff works dot com that go into deep detail 546 00:30:24,600 --> 00:30:29,440 Speaker 1: and they are they're fascinating, insulting, and terrifying. Um. But yeah, 547 00:30:29,480 --> 00:30:30,840 Speaker 1: I mean, you know, and it's it's the kind of 548 00:30:30,920 --> 00:30:34,640 Speaker 1: thing where it behaves like like a stock, like a commodity. 549 00:30:34,800 --> 00:30:38,040 Speaker 1: And uh, you know, after the news about Mount Cox 550 00:30:38,160 --> 00:30:41,800 Speaker 1: broke in in February, on that exchange, at any rate 551 00:30:41,840 --> 00:30:44,880 Speaker 1: before it was shut down totally, the value of bitcoins 552 00:30:44,960 --> 00:30:48,280 Speaker 1: dropped all the way down to something around two twenty 553 00:30:48,320 --> 00:30:52,560 Speaker 1: dollars for bitcoin. Um, that's that's that's pretty dramatic. Yeah. 554 00:30:53,400 --> 00:30:58,000 Speaker 1: Since then, on on most US exchanges, it's it's hovering 555 00:30:58,160 --> 00:31:01,920 Speaker 1: right around uh six and in eighty dollars or it 556 00:31:02,160 --> 00:31:04,760 Speaker 1: was as of Tuesday. Right now it's around six sixty dollars, 557 00:31:05,160 --> 00:31:07,760 Speaker 1: because that's how it does. Yeah. Yeah, So that's the 558 00:31:07,800 --> 00:31:09,960 Speaker 1: thing is that you see these stories too, and these 559 00:31:09,960 --> 00:31:13,120 Speaker 1: stories start to mount up, and there are two big 560 00:31:14,280 --> 00:31:17,240 Speaker 1: pathways that people have started to say this is what 561 00:31:17,360 --> 00:31:19,560 Speaker 1: bitcoin is going to go down, and they are two 562 00:31:19,680 --> 00:31:23,760 Speaker 1: pathways that go in opposite directions. So you have one 563 00:31:23,880 --> 00:31:29,080 Speaker 1: population saying the currency is robust, it can survive these controversies, 564 00:31:29,400 --> 00:31:32,120 Speaker 1: it can survive all these problems. It's not the currency's 565 00:31:32,160 --> 00:31:35,120 Speaker 1: fault that the bank was robbed, just as you would 566 00:31:35,120 --> 00:31:37,920 Speaker 1: say it wasn't the dollar bills fault. If someone robbed 567 00:31:38,000 --> 00:31:40,320 Speaker 1: a physical bank and stole dollar bills out of it, 568 00:31:40,360 --> 00:31:42,320 Speaker 1: you would say it was the bank's fault for not 569 00:31:42,440 --> 00:31:45,240 Speaker 1: having the right security to meet up with the the 570 00:31:45,480 --> 00:31:48,400 Speaker 1: challenge of fighting off these robbers. Same sort of thing. 571 00:31:48,440 --> 00:31:51,160 Speaker 1: You would argue that these institutions didn't have the security 572 00:31:51,280 --> 00:31:54,160 Speaker 1: to keep it safe from hackers, but the currency itself 573 00:31:54,680 --> 00:32:00,280 Speaker 1: was perfectly fine. Um, so those people say everything's gonna 574 00:32:00,280 --> 00:32:03,000 Speaker 1: be fine, We're gonna weather the storm, it will actually 575 00:32:03,120 --> 00:32:08,360 Speaker 1: end up proving that bitcoin is a viable currency currency, right, 576 00:32:08,520 --> 00:32:10,960 Speaker 1: and that in the future this is something we're all 577 00:32:11,000 --> 00:32:13,920 Speaker 1: going to be using. Um, So you still have the 578 00:32:14,200 --> 00:32:16,360 Speaker 1: faithful who really believe in that. I'm sure many of 579 00:32:16,440 --> 00:32:19,520 Speaker 1: them probably hold quite a few bitcoin, sure, and I 580 00:32:19,600 --> 00:32:22,200 Speaker 1: am honestly it has surprised me that, in the face 581 00:32:22,480 --> 00:32:25,920 Speaker 1: of Mount Cox and all all of these other robberies 582 00:32:25,960 --> 00:32:28,920 Speaker 1: that have happened recently, that the value of bitcoin has 583 00:32:29,000 --> 00:32:33,200 Speaker 1: not permanently plummeted or more permanently over the course of 584 00:32:33,240 --> 00:32:35,720 Speaker 1: two weeks, right, right, and and part of this is 585 00:32:35,840 --> 00:32:38,840 Speaker 1: you know, again, the value is all based on perception. 586 00:32:39,200 --> 00:32:42,800 Speaker 1: If everyone loses confidence in bitcoins, then the value will 587 00:32:43,000 --> 00:32:46,240 Speaker 1: will plummet, like you said, but it's only if people 588 00:32:46,280 --> 00:32:48,880 Speaker 1: lose confidence in it. If people don't lose confidence in it, 589 00:32:49,000 --> 00:32:51,640 Speaker 1: if they kind of roll with this, then bitcoin will 590 00:32:51,720 --> 00:32:55,760 Speaker 1: remain valuable. It's all based psychologically. So there are other 591 00:32:55,800 --> 00:32:59,320 Speaker 1: people who say, you know, bitcoin is just doomed to fail. 592 00:32:59,440 --> 00:33:02,440 Speaker 1: There's Antical in New York magazine that's all about the 593 00:33:02,640 --> 00:33:06,680 Speaker 1: cult of bitcoin. Yeah, it's a really long article. It's 594 00:33:06,920 --> 00:33:11,200 Speaker 1: very critical of bitcoin and the bitcoin culture. Uh, and 595 00:33:11,480 --> 00:33:14,560 Speaker 1: also includes a quote from a computer science professor at 596 00:33:14,600 --> 00:33:19,560 Speaker 1: Cornell named Erman Gunn Serrier who said that Bitcoin at 597 00:33:19,560 --> 00:33:21,800 Speaker 1: the moment is in a slump with a community that 598 00:33:21,920 --> 00:33:26,400 Speaker 1: has become its own parody. The bitcoin masses, judging by 599 00:33:26,480 --> 00:33:31,240 Speaker 1: their behavior on forums, have no actual interest in science, technology, 600 00:33:31,480 --> 00:33:35,800 Speaker 1: or even objective reality when it interferes with their market position. 601 00:33:36,160 --> 00:33:39,080 Speaker 1: They believe that holding a bitcoin somehow makes them an 602 00:33:39,120 --> 00:33:42,520 Speaker 1: active participant in a bold new future, even as they 603 00:33:42,640 --> 00:33:49,520 Speaker 1: passively get fleased in the Boulder current present burn Yeah. 604 00:33:50,320 --> 00:33:55,000 Speaker 1: So uh, these two camps obviously very much in disagreement 605 00:33:55,080 --> 00:33:58,959 Speaker 1: about what the future of bitcoin will be. Um, Honestly, 606 00:33:59,080 --> 00:34:02,880 Speaker 1: I don't know. Uh, I'm frankly like you, Lauren, I'm 607 00:34:02,920 --> 00:34:05,680 Speaker 1: kind of surprised that the value hasn't taken a harder 608 00:34:05,840 --> 00:34:10,279 Speaker 1: hit than what it is that right now. Based upon this, 609 00:34:10,480 --> 00:34:14,799 Speaker 1: I would think that people's but they would have all 610 00:34:14,880 --> 00:34:17,800 Speaker 1: pulled out or pulled out more so at least the 611 00:34:17,840 --> 00:34:21,320 Speaker 1: people who aren't, like the hardcore bitcoin community members like that, 612 00:34:21,480 --> 00:34:23,920 Speaker 1: the ones who are really who have who have totally 613 00:34:24,320 --> 00:34:28,480 Speaker 1: bought into that philosophy, that ethos I can completely understand them, 614 00:34:28,520 --> 00:34:32,279 Speaker 1: being like dedicated to the very end, like a like 615 00:34:32,360 --> 00:34:36,520 Speaker 1: a cold computer teddy bear. Yes, And the investors who 616 00:34:36,600 --> 00:34:39,560 Speaker 1: are more likely the ones who they are interested in 617 00:34:39,960 --> 00:34:42,120 Speaker 1: playing the market are who are using it to their 618 00:34:42,160 --> 00:34:44,640 Speaker 1: advantage as a curiosity. I could see them being the 619 00:34:44,719 --> 00:34:47,680 Speaker 1: ones who really are have lost the confidence and want 620 00:34:47,719 --> 00:34:49,879 Speaker 1: to get out. It's it's it's not because they don't 621 00:34:49,920 --> 00:34:52,520 Speaker 1: buy into the philosophy or the ethos they're buying into 622 00:34:52,600 --> 00:34:56,080 Speaker 1: it as this is like yeah, so um, but they 623 00:34:56,200 --> 00:34:58,520 Speaker 1: but they haven't or not enough of them have and right, 624 00:34:58,719 --> 00:35:02,080 Speaker 1: so it'll it'll remain to be seen which of those 625 00:35:02,120 --> 00:35:06,160 Speaker 1: two pathways happen. And again we will eventually not not 626 00:35:06,320 --> 00:35:09,480 Speaker 1: in the very near future, we will eventually cover other 627 00:35:10,080 --> 00:35:13,160 Speaker 1: digital currencies, uh and talk about those and how they 628 00:35:13,239 --> 00:35:17,400 Speaker 1: are similar to and different from bitcoin. And I do 629 00:35:17,640 --> 00:35:20,279 Speaker 1: think that we're going to see some digital currency. We 630 00:35:20,400 --> 00:35:25,520 Speaker 1: may see government regulated digital currencies as well. Who knows. 631 00:35:25,600 --> 00:35:28,759 Speaker 1: We could have lots of competing currencies out there on 632 00:35:28,840 --> 00:35:31,160 Speaker 1: the global market, and uh, it may be that it 633 00:35:31,200 --> 00:35:35,200 Speaker 1: will take years before it settles into something that is, 634 00:35:35,440 --> 00:35:38,239 Speaker 1: you know, stable and reliable. It may very well be 635 00:35:38,360 --> 00:35:41,040 Speaker 1: that we have fractured currencies where if you want to 636 00:35:41,120 --> 00:35:43,359 Speaker 1: buy things off one market, then you need one kind 637 00:35:43,400 --> 00:35:46,799 Speaker 1: of digital currency and another market you need another. For us, 638 00:35:46,880 --> 00:35:49,919 Speaker 1: video gamers were used to this because you can't use 639 00:35:50,120 --> 00:35:54,680 Speaker 1: warcraft dollars to buy stuff in ever. Quest. What I 640 00:35:54,800 --> 00:35:56,840 Speaker 1: what I really hope comes out of all of this 641 00:35:57,000 --> 00:36:02,080 Speaker 1: HUBU is a greater interest in and understanding of cryptography 642 00:36:02,440 --> 00:36:06,239 Speaker 1: and it's potential use for monetary systems. Because whether or 643 00:36:06,280 --> 00:36:11,320 Speaker 1: not you you want to buy into this, this counterculture movement, 644 00:36:11,719 --> 00:36:14,680 Speaker 1: I think that it's a really terrific application for making 645 00:36:14,840 --> 00:36:18,520 Speaker 1: things more secure. Exactly yes, and uh, of course, with 646 00:36:18,640 --> 00:36:22,320 Speaker 1: quantum computers right around the corner, cryptography is going to 647 00:36:22,400 --> 00:36:25,000 Speaker 1: become more and more of a challenging field all on 648 00:36:25,080 --> 00:36:27,919 Speaker 1: its own. But that's another podcast. So we're gonna wrap 649 00:36:28,000 --> 00:36:30,520 Speaker 1: this up. Guys. If you have any suggestions for future 650 00:36:30,560 --> 00:36:33,360 Speaker 1: topics we can tackle here on tech Stuff, let us know. 651 00:36:33,640 --> 00:36:36,120 Speaker 1: Send us a message on many of the social networks 652 00:36:36,160 --> 00:36:39,080 Speaker 1: were on that includes Twitter, Facebook, and Tumbler. We have 653 00:36:39,160 --> 00:36:41,480 Speaker 1: the handle of tech Stuff hs W or if you're 654 00:36:41,520 --> 00:36:44,040 Speaker 1: old school and you like sending those emails, you can 655 00:36:44,080 --> 00:36:46,640 Speaker 1: send us an email with the address tech stuff at 656 00:36:46,840 --> 00:36:49,239 Speaker 1: Discovery dot com and Lauren and I will talk to 657 00:36:49,280 --> 00:36:55,120 Speaker 1: you again really soon for more on this and thousands 658 00:36:55,160 --> 00:36:57,480 Speaker 1: of other topics. Because it how staff works dot Com