Andreas Antonopoulos dissects Bitcoin’s early Mt. Gox collapse—$600M–$800M lost due to centralized mismanagement, not the tech itself—and warns against single points of failure like Mark Karpelis’ indictment. He contrasts Apple’s App Store resistance (fear of disruption, 30% cuts, or competing with its rumored digital currency) with Android’s open innovation, while praising multisig wallets for fraud prevention. Bitcoin’s divisibility and real-world use—like Jason King’s 60,000 meals for the homeless—highlight its charity potential, but Antonopoulos cautions against privacy risks after Newsweek’s debacle exposed Dorian Nakamoto to harassment. The episode underscores Bitcoin’s power to bypass traditional systems while exposing their vulnerabilities. [Automatically generated summary]
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Andreas Antonopoulos is here, and we are going to learn more than we did before about the wonderful powers of the Bitcoin.
It was fun having you on before and a lot of feedback.
A lot of people learned a lot about cryptocurrencies and the benefits of them, what's going on, where the push is, where the negative things are, and put a little balance to a lot of the negative press that you hear about.
Bitcoin and all these different various cryptocurrencies in the media because that's literally all I hear.
I mean, I know people are trading things back and forth, but you really put it into perspective for us, especially when you were talking about that, what was it, $150 million transaction?
Is that the one that was done through Bitcoin?
When you start hearing things like that, you go, okay, well, there's some people out there that have some serious fucking money, and they're banking on this.
They're throwing their chips in this corner, at least some of them, to see what's going on.
And I guess the idea is if it's worth $150 million today, who fucking knows what it'll be worth in five years.
That seems like if people were smart, they would buy up a shitload of Bitcoin and then sell like right before and fucking crash the market and then pay their taxes and then buy!
It's way too volatile because it's a growing technology.
It's a brand new technology.
It's still being tested.
It's way too volatile.
For the average investor, that means it's way too risky.
Now, there are some investors, sophisticated investors, who have a broad portfolio and who may want to take a small part of that portfolio and put it into a very high volatility investment in order to churn some returns out.
But they would do that knowing exactly how much risk they're taking, which is a lot, and balancing out that risk over a bigger portfolio.
But your average person?
No, this is definitely not the kind of thing you want to be playing with.
Use it to do transactions.
Hold it for long term.
Playing with this market will only get you burned.
There's this real temptation to try to day trade this market.
And a lot of people fall for that temptation.
I played with it when I first started with Bitcoin.
It's a simple rule, but the problem is you never know where high is, and you never know where low is, and most people essentially end up falling for The basic psychology of panic and greed.
And so they end up actually buying high because of greed and selling low because of panic.
And then they end up flipping that equation and losing a lot of money.
Don't do it.
I mean, it's really not worth it.
This is a very interesting technology.
Treating it like penny stock and trying to greedily make money off it will only get you burned.
So, last year, this time, it jumped from about 100 to 266, and then dropped again down to 50. So, at some point last year, it was 50. And then, in the meantime...
Now it's 500. Then it went all the way up to about 1,000, maybe 1,100 on some markets.
So for folks who don't know what we're talking about, this Mt.
Gox thing was this online exchange that it turned out Someone somehow, whether it was an inside job or not, someone somehow was stealing money to the tune of hundreds of millions of dollars worth of Bitcoin.
So someone somewhere stole an insane amount of money.
You're not hearing about some wild manhunt to get to that money if it was like...
There was a guy named Lee Murray, alright?
And Lee Murray was a mixed martial arts fighter from the UK who was a real crazy man.
He was like as wild as they come.
He was like a real live version of a character from a Guy Ritchie movie.
Guy was nuts.
He fought in the UFC. He was a really good fighter too.
Fought Anderson Silva and Cage Rage.
I mean, high level guy.
Um...
And he was also a fucking thug, like a super legit criminal.
And he was a part of a huge multi-million dollar bank heist where they came in with fucking ski masks and bulletproof vests and high-powered rifles and machine guns.
The full deal, like full black ops, like a movie.
And they have the security cameras of these guys.
And then somehow or another, they all got nabbed.
And this guy, Lee Murray, was one of the ones they chased after the hardest.
He went to Morocco, and he was hiding there, and he got arrested there for kidnapping someone and beating them up after he did the bank job.
This guy's a fucking maniac, right?
But the point is, there was a fucking manhunt!
It was all over the newspapers in the UK. It was everywhere.
They were going after these motherfuckers.
And it seems to me like the amount of money that was stolen in Mt.
$20 billion with a B. And there wasn't a manhunt there because the real truth is that if you want to rob a bank, what you do is you go get a banking license.
Then you rob the bank using a keyboard instead of a machine gun.
Well, there's this instinct to implement the same types of centralized banking institutions.
And here's the thing.
When you have that much money under the control of an individual or an organization, society then builds all of these regulatory institutions because they figured out that when you do that, Those institutions, those organizations, those individuals steal the money again and again.
When you put one person in charge of the money, they steal the money.
That's what power corrupts, absolute power corrupts absolutely, and there is no more powerful corrupting influence than money.
So when you have people who have millions in their control, Bad things happen.
But he provided a really critical service at a time when Bitcoin desperately needed it.
He provided a market where people could buy and sell Bitcoin in a transparent way.
And for the first time you had Bitcoin pricing.
You could figure out how much a Bitcoin was worth because there were lots of people trading it and therefore the price that they settled on over thousands of trades was price discovery.
You need that in a market to function.
So now you had a price and for many years the empty ox price was the price of Bitcoin.
I mean, there was the first time you had a liquid market where people could actually trade not just face-to-face, but could exchange various currencies for Bitcoin.
So he's essentially just a symptom of a growing market that he just wasn't prepared for.
Here's a perfect example.
If I was running something, okay?
I'm a dummy.
When it comes to computers, I'm a real dummy.
So if I was running some sort of online exchange and somehow or another started trading Bitcoin, and then I started seeing hundreds of millions of dollars, I would have to bring people in.
I would have to bring in, like, financial experts and coding experts.
But at the same time, it's a classic story of someone who was in a situation that was way over their head, and then they tried to handle it without asking for help, and then it snowballed, and they tried to cover up some mistakes by making bigger mistakes, and then bigger mistakes, and then bigger mistakes.
Some money was taken in an earlier incident from the system.
And then I think he tried to cover up the lack of money by essentially generating more fees from the customers and paying for the previous loss by bringing in new customers and trying to stay ahead of the loss.
Which, by the way, we've seen this again and again.
We had one of those cantinas where you could buy donuts and things like that.
So it was kind of like a donut pyramid scheme based on the school cantina.
But they actually drew it on the blackboard as an airplane where you sit at the front and then two people sit behind you and then four people sit behind you.
We don't know how much was stolen by outside people.
He certainly did try to cover losses, but we don't know if those losses occurred because he lost keys to Bitcoin and essentially lost the money or if it was stolen or if it was embezzled or if it was whatever.
We don't know.
And there's now parallel prosecutions happening both in Japan and in the United States to find the answers to that.
Here's the interesting thing.
We're going to find out the answers to that because Bitcoin uses a public ledger and there's forensic evidence sprinkled in the Bitcoin transaction ledger that allows us to track exactly what happened.
This is the most transparent financial system, so we're going to get some really interesting answers.
Well, first of all, Japan has very, very few, very low incidences of violent crime.
There's not too many weapons around.
The culture is not like that.
And then the other culture, which is, well, geeks like me, I mean, you know, trying to attack someone and cause them harm, I'd have to reach for an asthma inhaler four times in the In the process of committing a crime.
And there are a lot of people who are very upset and very hurt by this situation, and a lot of people who lost a lot of money, including it had a ripple effect.
You've got to realize that many Bitcoin businesses had money in accounts there.
So that loss then affected the cash flow of other Bitcoin businesses that suffered and charities, many charities that lost money in MTGOX. Oh, wow.
That goes to the gross incompetence I was talking about earlier.
So that's not how...
There are other businesses who also have custodial accounts over Bitcoin, and they implement very smart systems to segregate Bitcoin.
So, for example, on a daily basis, they will sweep 95% to 98% of the Bitcoin off into wallets that require three out of six people to come together to unlock them with the keys separated on separate devices, And those systems are very difficult to break, right?
Because you need collusion between multiple people.
And that protects both from external theft, but it also protects from internal compromise, malicious insider, embezzlement, fraud, even by the CEO sometimes.
So there are ways to get around this.
You can have good security practices, and all of those good security practices were completely ignored by Mark.
Yeah, so the question really now is gross incompetence or fraud.
And we don't know.
But in either case, it's bad.
It hurt a lot of people.
But in the end, it had nothing to do with Bitcoin.
It was a classic bank failure of the traditional kind.
It was the result of the fact that they fell in a gray area where they didn't have the protections of Bitcoin and they didn't have the regulations of a regular bank.
They were trying to do some kind of structured thing, and then I think it was four or five days ago, the Japanese authorities decided to decline and force them into liquidation.
So they are now done.
MTGox is over.
The one thing we can say about MTGox is that they can no longer hurt anyone else.
Well, I mean, I think the thing is that it didn't really affect Bitcoin itself.
It wasn't a weakness of Bitcoin.
It was, in fact, a very strong argument for why you need to decentralize financial institutions, because when you centralize them, they fail in exactly this fashion.
That's what we're trying to change about financial services, make them more decentralized, diffuse the power so it can't be corrupted and compromised.
There are going to be more.
I'll tell you right now there are going to be more bank failures both in Bitcoin and of course as they happen every single year by the hundreds there are going to be bank failures in every currency including Bitcoin.
There are going to be CEOs who run away with the money until we implement better solutions to control the power.
So for example if you've got a startup and they're raising money in Bitcoin you don't give all of the keys to one person.
You split them among multiple people.
Because the person you think you know, who's your cherished partner in this venture and you've known all your life and your childhood friend, when they have access to a couple million dollars, they change.
People change.
They're dramatically and radically affected by money.
And then all you need is a precipitating event, an illness in the family, a crisis, you know, a bad thing happening to that person, and they will grab that money and run.
That's a market that two decades ago was a $15- $20 billion market and disappeared.
And essentially, they had to restructure operations.
Now, they made up for it.
The smart ones became...
Very good as internet service providers and created whole new businesses that replaced those lost revenues.
So what happened there is you have these telecom companies trying to fight it until some of the smaller ones, some of the ones that don't have solid entrenched positions and can't take advantage of size, think, you know what?
Maybe I'm going to cut off from this herd and go play with that Bitcoin a bit.
And as soon as that starts happening, there's almost a stampede because everybody tries to rush into it.
That's what happened with telecommunications.
The smaller providers started peeling off from the herd and instead of fighting it, they started trying to build service providers.
And Bitcoin threatens some business structures within the banking industry.
It's going to make it difficult for them to charge exorbitant fees to do international wire transfers when you can do it cheaper, just like If you have Skype, you can't justify $3 a minute long-distance calls.
But at the same time, the smart bankers are looking at this and they're saying, yeah, but if we have a cheap, efficient, secure payment system, we can build some really interesting things on top of that and create whole new businesses that are very competitive, that can actually give us a lead.
So we outrun the herd.
Disruption in a competitive market is actually very enticing to the second- and third-tier players, because they don't have an advantage.
They're too small to compete against the big guys.
But if they see this disruptive technology, they think, well, maybe if I hitch a ride on that, I'm going to overtake everybody.
I can be the blockbuster.
Or I can be the Netflix.
I can be the Tower Records.
Or I can be the iTunes.
And we've seen this happen in technology races before.
Yeah, that's fascinating how some people just don't want to buck the trends.
They don't want to go along with the flow of things, or they want to buck the trends.
They want to somehow or another figure out a way where they can prove everybody else wrong, and VHS is making a comeback, and renting movies is still valid.
There's a lot of those fuckers out there that just...
At the moment, being on the top of an industry, especially an industry that's involved in technology, is a very precarious position.
If you talk to Kodak, A decade ago, do you think they would realize that suddenly the largest vendor or manufacturer of cameras in the world would be a telephone company, Nokia?
Nokia, within three years, became the world's largest maker of cameras.
And suddenly the entire industry changed, right?
And how do you compete against that?
They're not even in your industry.
They just came out of left field.
It's like you're suddenly the horse buggy manufacturer and Ford is taking your business and you never expected that was going to happen.
And what he said was that he estimated that because of the way silicon works, every 18 months, the speed of a computer would double or the price would drop by half.
And that has been true now for more than 25 years.
And that thing then plays out in camera megapixels, in storage on SD cards, in the size of your smartphone, in the number of sensors you can put into the smartphone.
Battery life is the one that's lagging behind, and it's the main thing that's holding back this technology.
Moore's Law also applies to things like Bitcoin.
It also applies to networks like the internet.
And what it means is that if you're in an industry that's established and suddenly you have a competitor that's coming at you with the power of Moore's Law, you better watch out because it's not a matter of whether you will be able to compete in a decade.
It's a matter of whether your industry will still exist in a decade.
And I'm stuffing coins as fast as I can into this payphone, and then, you know, four or five minutes later, $10 down the drain, and I've said hello to the entire family, and that's all I could afford.
There's three or four reasons, and I can give you them from the obvious to the cynical and paranoid.
First of all, I think they are worried about this strange technology that they don't know anything about, and they're worried about what kind of reputation hit they'll take if one of these apps is compromised and causes their customers to lose money, right?
More worried than Google, who allow all of these applications on Google Play.
So it's not a legal thing, because Google has lawyers too, and they're quite happy to allow Bitcoin applications, and Apple does not like it.
That's the obvious answer.
Then there's another thing.
Whenever you spend money on buying an app or buying something inside an app, Apple takes like 30%.
So their own payment system through the App Store and iTunes and all of these things generates an enormous amount of revenue because they take a very big cut of these things.
If you could put a wallet in a phone, then you could also put a wallet in an app.
Then you could also do Bitcoin transactions in an app.
Then why give Apple 30% cut If you can just bypass them and do all the payments through that.
Do you think that that's ultimately going to be Apple's demise, though?
I mean, if you want to talk about people that had a grip on a market and then it slowly slipped away, Apple had an enormous chunk of the smartphone market just a few years ago.
I mean, they had the majority of it.
Now, 80-something percent of the smartphones are Android phones.
That's crazy.
I mean, that's quite amazing.
And the technology has surpassed them.
Now you have several choices with Android phones that are waterproof.
Big giant ones, the Sony Xperia.
You could throw it underwater for a fucking half an hour.
Like five feet of water for a half an hour.
I mean, the Galaxy S5, the new one.
Water resistant.
You could take a shower with it and listen to music.
You could put a fucking...
Stuff it in your underwear.
And literally shower with the thing on.
I mean...
Fingerprint sensors, they had them first on iPhones, but now Samsung Galaxy's S5 has a fucking heart rate monitor.
I mean, they're ahead of the curve.
The Android phones aren't playing catch-up with Apple anymore.
Now they're bypassing them.
And I wonder if that's going to happen with things like iTunes, exchanges.
Right now it's convenient to use iTunes, but once I switched over to Android, I found a thing called DoubleTwist, where you could send your music to your phone.
You could use iTunes with this thing.
And also, I found Amazon MP3. Which is just as easy to use, if not easier, than iTunes.
Every time I look at your app, assume I'm accepting.
I like iTunes for some things.
I use it still to buy movies.
I use it on my laptop exclusively.
I use it on my home computer exclusively.
Like if I'm buying music, I buy my music and I buy it all through that.
But on my phone, it's just as easy to buy it through Amazon.
It's very simple.
It's not like some new thing you have to learn.
Same process.
You search a genre, search an artist.
Oh, I wanted to buy...
Like, we were in the green room the other day at the Orlando Hard Rock, me and Joey Diaz, and Joey Diaz goes on this epic rant about Led Zeppelin, Led Zeppelin 1, because there was a poster on the wall that I took a picture of, and I put it up on my Instagram...
It was the first tour poster from Led Zeppelin in 1968-69.
And we were like, could you fucking imagine what that must have been like to experience Zeppelin for the first time back then?
Joey was going off about how it blew people away.
So, listening to him, I get inspired.
I go to my phone.
As he's talking, within like 10 seconds, I type Led Zeppelin in the search.
Boom!
It's downloading.
Three seconds after that, bam!
I'm playing the album.
I mean, like, wow!
That's crazy!
I put it on speaker, we sit down, and we start laughing about how easy that is to do and how amazing this music is.
What happens with technology again and again is that you always have to make this trade-off.
You want to have an experience that's very tightly controlled and therefore consistent.
You combine a very limited set of hardware, a very limited set of features, but what you get is that it works every time consistently.
And then you can have this kind of Wild West situation as you do with Android.
And at first, it creates a lot of fragmentation and everything's inconsistent and it doesn't work very well.
But over time, here's what happens.
The controlled situation that gave you the advantage at first starts lagging behind innovation because it can't change fast enough.
The Wild West starts getting better and better at quality, until eventually it wins.
We've seen this happen over time.
Then the control situation has to open up the borders again, let everybody flood in, do a lot of fragmentation and experimentation, and the cycle starts again.
That's going to happen too.
I mean, we're going to see much more openness in music.
We're going to see more openness in phones as a result of this.
And then Apple will have to actually go out and invent something new instead of just, you know, small incremental changes.
Yeah, and I would be the first to say, hey, you're right, you know, this iPhone is a piece of shit.
I still buy all the newest phones just because I'm looking, just like everyone else, to find something better, but man, I... You can't break this thing being quality.
There was also a report saying that, you know, why it's such a big share is not because of quality, it's because of price.
That Android users are more poor...
and they get more technology for the money so that's why it's become so popular because all the poor markets are buying it so it looks like Android's just destroying Apple In that regards, but it's not meaning that it's a better product.
Best smartphone camera overall, iPhone 5S. It's the mass market audience, especially in Asia where you can get an Android phone for $50 to $100 instead of $300 to $400 equivalents for an iPhone.
Apple has improved its camera I'll tell you one of the coolest things, I think you could do this on the Android also, it's burst mode, but being able to just, and I didn't even know I had it.
If you just hold down the camera, it just takes a million photos.
So if you're with, say you want a picture of Joe Rogan, you just sit there, hold down the camera, it will go and take like 300 photos of you.
And then you can just choose which one you didn't blink and stuff like that.
Yeah, that's all good, dude, but this, I'll take it every day.
I'll take that all day.
It's not important, the camera's not nearly as important to me as being able to do my email, go online, everything plays, like flash, anything that has flash on it plays, no problem.
That, to me, is gigantic.
When I look at a YouTube video and it's that goddamn big, To me, that's huge.
This thing's so light, and like, you could just keep it everywhere, and like, if you really want to surf the net, you know, even the new one, the small one.
So right here, this comparison between control, quality, but slow innovation versus speed, choice, fragmentation, but flakiness and weird security problems and cutting edge, that choice is playing out.
In many areas of technology, whether it's...
And this choice played out on the internet at first, which was the idea that the internet was a far inferior network to the carefully controlled...
If you like it, the phone companies were doing the iPhone of networks, right?
And the internet was like the scrappy, messy Android of networks.
But over time...
It continued to innovate and get better.
And the other systems got slower and slower and less innovative.
And so the closed systems have that problem.
They lag.
But they offer you much better control and quality and security at first.
So here's the thing.
That's been happening in finance.
And in finance it's much worse because the closed control systems of the banks...
have existed for hundreds of years and this scrappy new Bitcoin thing which is not as fast in many cases but fast in other cases has more choice but also puts more responsibility for security it's more flaky it's more scrappy it's more versatile it gives you a hell of a lot more choice and it allows you to innovate really really fast It doesn't give you the quality.
You don't have the controls and security, supposedly.
But at the same time, the banking system is failing to deliver to consumers.
It's failing to deliver security because people can get away with massive theft on it.
And so now what we're seeing is this exact same scenario that you described, that we saw with the Internet versus telecom networks, that we saw with iPhone versus Android, is now playing out in finance with Bitcoin.
They say that the best camera for power users is that Nokia.
Nokia, they had on Tom's Guide.com is what I'm reading.
They've rated a bunch of different ones.
I don't know why Tom really knows his shit.
Seems like a highly rated sight.
But the 41 megapixel camera apparently is just unbelievable.
The photos are so big that even when you zoom in, like way in, like you could take a photo and zoom way in and still crop it and it's still an excellent photo.
You get to a point of saturation where it becomes good enough.
You remember the time when you bought a computer based on how many gigahertz it had and how fast it was and you needed to upgrade every year?
And then we reached the point probably five or six years ago when you bought a computer and then it was still perfectly fast enough Four or five years later and you didn't need to upgrade it anymore, right?
Or when you used to need a bigger and bigger hard drive every single year and then you reach a terabyte and now you're like, well, I can store everything, so I'm done.
I don't need any more, right?
Same thing with megapixels.
You reach a point where at first it makes a really big difference and then it's such a small difference that it doesn't matter anymore.
You've reached saturation.
You have to find something else to emphasize, some new innovation.
Yeah, at a certain point in time, it's going to be very difficult for one company, like a company like Apple, to compete with the overwhelming amount of companies that are producing Android phones.
And you can really see that, too, if you pay attention to the original Android phones and what they are today, as opposed to the original iPhone, which was incredibly innovative.
The original iPhone is pretty close to what they have today.
I mean, it was very similar in size, very similar in look.
Obviously, the resolution got better, the camera got better, it got quicker, it moves better, it has more features.
It has a washout, rainy look though, unfortunately.
And you have to uninstall.
Look at all this shit.
There's some things about it where you're just like, why don't they just copy what works?
The iPhone works, that's the best way to delete applications, whatever.
So there's a couple things here and there that I don't like.
What's crazy is that down the line, more that droids started becoming more unpopular, they did start copying everything that iPhone used, and that's why they're in court right now, Samsung versus Apple.
Just a lot of different things, like the unlock screen, I think, like how you unlock the phone, and just different operating system shit that pretty much they kind of just copied.
June is supposedly the new iPhone 6, and then they're going to have the giant one, supposedly.
It's just what they do every year, where they announce it in June, and then it's like the next month they'll have one come out.
And then the bigger one, I guess, and the only reason why they're waiting a little bit longer is because the panels that they're going to be using in the new phone are back-ordered so much.
Because when Apple starts selling something new, it's, you know...
It pretty much just destroys anyone that does that.
You know, like, we make 5-inch screens.
Well, yeah, Apple's going to buy 5 million of these.
An actual Apple website was reviewing the HTC One M8 and they were saying that if Apple built an Android phone, this would be the phone that they built.
It's pretty fucking slick.
And they actually have a different approach to cameras entirely.
Yeah, I have one that I use just for after shows, like where I have people line up and take pictures with them, and then I put it up on my website because it saves time.
But the...
The actual need for them for the average person is almost non-existent.
Unless you're one of those SLR type people that has a big crazy lens and all that jazz.
I guess that technology you were talking about, like blurring the foreground, is actually built into the new Android operating system, that whole thing.
I have to say, I think both of them are great hardware solutions.
Then you have to really be careful about what software is loaded on them.
Because depending on which carrier you get it from, they're going to have different quality of software, whether it's the latest KitKat or An earlier version.
I get my phones unlocked, I wipe them, and I replace the software with my own choices immediately.
So I think the reason they're putting two cameras on the back of the phone, which would be interesting, is where you get the ability to shoot 3D directly.
Because if you think about it, this phone is now wide enough that you can separate the cameras by about as much as your eyes are separated, the focal distance, and then you can shoot direct 3D. Off two cameras.
The first iteration of a technology is always flaky, but if it's powerful and disruptive enough, then there'll be an incentive to make it better.
When I used the first iterations of web browsers, they were terrible.
The first versions of Android, they were terrible.
And guess what?
The first versions of Bitcoin wallets are terrible.
But I have choice, and I love that.
I'd rather be on the cutting edge and be dealing with something that's rough around the edges and get to experience the technology as it matures.
Eventually, it will get to the point where it's as easy to use as an iPad, which is how my mom got on the internet, and Bitcoin will get to that point, too.
To me, choice is more important than polish, but for other people, they go with the opposite choice, and that's perfectly understandable.
Yeah, I agree with you in a lot of ways, but I think that there's a similarity to Windows and Apple, you know, as far as, like, Apple phones and, you know, the whole idea of the way Apple locks things down and controls it, and Windows, where they don't, and they allow you to get into the registry, they allow you to do a lot of things with your computers that a lot of power users like.
So, as I said, you know, the straightforward one is that it introduces risk in an environment that is deliberately conservative about quality, security, and control over the environment.
So, they're going to be slow to adopt things that are disruptive.
And it's also self-serving because it threatens their payment network.
And it might be self-serving because it also threatens their ability to introduce their own form of digital currency or digital wallet, which there are a lot of rumors that they're in working on that.
You can take all of those together and it makes sense, but it's not a long-term decision because if there's enough momentum behind digital currencies, eventually they're going to add them.
Slower than everybody else, but they will get there.
Have you thought about the future and looked at the technological trends and tried to extrapolate what would be the method for exchanging and controlling Bitcoin in the very near future?
Is there A better version of what these apps can provide on phones that you believe could be implemented sometime in the near future?
I mean, at the moment, you don't want to have a lot of the raw...
Elements of the system exposed to users who don't want to learn anything about these.
So right now, there's a pretty steep learning curve.
If you want to understand digital cryptocurrencies, just a name alone, like cryptocurrencies, sounds so awfully geeky and weird.
But if you want to understand digital money, let's start by renaming that, right?
So digital money.
If you want to understand digital money, You get introduced these terms public key private key encryption address wallet Bitcoin address Transaction all of these are confusing terms because they don't actually mean what they what they what you think they mean so a Bitcoin wallet is It's not actually a wallet, because it doesn't contain coins.
It only contains the keys that allow you to unlock the coins.
The coins are actually on the network.
And you get into all of these things where you've picked a name, that name evokes a thought, but that thought doesn't quite match what's really happening, so it ends up confusing rather than enlightening, right?
So a good name is one that tells you how this is going to work, because it evokes the correct paradigm, the correct user interface Design.
And so we don't have that in Bitcoin yet.
The words are wrong.
The terminology is wrong.
The user interface and user experience is still very, very geeky.
And, you know, that happened on the Internet.
I remember watching in 1994, there's this classic segment on Good Morning America.
When they're like, so the thing with the at sign, is that the internet?
No, no, Kelly, that's email.
And the dot, that's the internet.
And so why are there all these slashes?
And what is an IP address?
And I don't really understand any of this, right?
And you get two things.
One, the technology gets smoother and more polished.
And the words get, at the same time, the culture changes.
And the culture gradually adopts the terminology so that now people are more comfortable with the weird words and the words have gotten less weird and somewhere in the middle they meet and you get mainstream adoption.
So any HTML5 browser, and that's the nice thing about HTML5, it's the new version of the web protocol, and it will run on any browser, on any device, and it will give you a full app-like experience.
And this is what's exciting about the Bitcoin space for me, which is that we talk about this idea that we're going to convert dollars to Bitcoin.
Like, if only, say, Amazon adopts Bitcoin, then all of the stuff they're selling through Bitcoin will now be sold through Bitcoin instead of dollars.
It's like chewing out little parts of the traditional economy and just converting it into a different currency.
And that is boring.
It is so not the point.
That's a bit like thinking that the internet succeeds when all phone calls happen on the internet and we've taken over the entire fax market and now fax is dominated by internet fax.
And the whole point is that it made fax irrelevant.
It didn't replace it.
It made it irrelevant.
And it didn't replace phone calls.
It gave people better communication tools and different communication tools.
I'm more interested in what we can do with Bitcoin that can't be done today rather than replacing the things we already do with dollars or Visa and making a better Visa, a better PayPal, a better online shopping experience.
That stuff is boring.
So here's what's happening.
Within the Bitcoin economy, there's now hundreds of startups and they're hiring people.
We have a jobs fair in Sunnyvale on May 3rd where we're going to have hundreds of people and dozens of companies with job openings hiring developers and designers and marketing professionals and all kinds of things like that.
Now, for those who are probably new to this market, a jobs fair is this thing that happened before 2008 Where companies actually had jobs and would come to you in order to find you.
And we're doing this in Bitcoin because of this incredible spirit of innovation that's been unleashed.
So if you're an entrepreneur and you look at these rough edges and you look at these difficulties in the system and you look at the fact that it's not ready for mainstream adoption, what you see is opportunity.
Massive opportunity.
Because, remember, at first on the internet you couldn't find anything.
So someone said, well, how about we build a search engine?
And now that's a multi-hundred billion dollar company, right?
And search became an entire industry out of a single problem.
And the problem was you couldn't find anything.
Now you can find everything.
And so at first people said, well, the internet's never gonna succeed because you can't find anything on the internet.
And smart entrepreneurs took that problem and said, no, if I solve this problem, not only do I make the internet work, but I also create an entirely new industry.
So right now, Bitcoin is difficult to use.
But if you solve that problem...
If you take, for example, the fact that a Bitcoin address is like a 37-character thing, and it's unreadable, and you hide that, just like we no longer use IP addresses on the internet, we use nice and easy to use names.
We used to use, you know, 192.168.0.1, and I had a list in my wallet of IP addresses.
If I wanted to go to the Stanford website, I had to pull out my wallet and look up their IP address.
That's how it used to work.
And there was no way that was going to go mainstream.
So each one of these problems, each one of these rough edges is an opportunity to create a whole new industry that does things in a different way, that reinvents financial services and that makes them new and innovative and decentralized and enables things that have never been done before.
This is not about making a better shopping experience.
It's about doing things we couldn't do before.
And eventually, people are going to build wallets that are very easy to use, and wallets that are going to be very beautifully designed.
And we're beginning to see that now, as all of these startups are rushing in to fill in the gaps, to polish all the rough edges, and to deliver real quality consumer products, so people can take this incredible underlying power of Bitcoin, And turn it into an everyday experience that a person who doesn't want to know about any of the geeky stuff, about encryption, about keys, about all of that, simply says, I want to send Joe some money.
We don't have to build the physical infrastructure because it's already there.
The internet took a decade and a half to spread in terms of adoption, and one of the big Issues was getting high-speed internet to enough people and then getting fully on all-the-time internet.
It was impossible to get my mom to do email if she had to first turn on the computer, log on, double-click, start the dial-up, do all of this with her phone that made her phone busy so she couldn't actually use it.
So this is a feature that was added to the core protocol, the Bitcoin protocol, back in November of 2013, officially, and would work.
So, when you send Bitcoin to someone, what you're doing is almost like signing a digital check, and you're saying from Joe Rogan's wallet, and you sign at the bottom to say, yes, I'm releasing this money to Redband.
Great.
So you've sent it.
And the Bitcoin network will look at that signature and say, that's Joe Rogan's signature.
Great.
So therefore now the money belongs to Redben.
You've done the transaction.
So what your wallet is doing, what your phone is doing when it's sending Bitcoin to someone, is it signing a transaction with your key to basically say, I authorize this.
It takes one signature to release the money from your wallet.
Multisig allows you to build wallets that require multiple signatures.
Let's say you were running a company, and you wanted to make sure that every single time you made a Bitcoin transaction, it had to be signed by the CEO and the chief financial officer.
Now you could say, well, it requires two out of two signatures.
The account has two signatures associated with it.
Both must sign in order to do that.
Or you could create a joint account between two spouses.
You could say it requires one of two signatures.
Here's the signature of one spouse.
Here's the signature of the other spouse.
If either of them signs, you can do it.
You could create a trust account where you have either the signature of one spouse and a trustee or the other spouse and a trustee.
To sign off for the account of a child, for example.
You could create an escrow account where you say, I'm gonna sell you Joe something.
Now, if we have a dispute, You call the arbitrator and you say, I'm not happy, I didn't get this product.
And you and the arbitrator sign and get the refund, send the money back to you.
But if I'm not satisfied because I really did send you the product and you just don't want to pay for it, I persuade the arbitrator that you're cheating, I sign it with the arbitrator, two out of three signatures, get the money to myself.
So you can create these complex environments where you can do escrow, you can do trust accounts, you can have third-party arbitration for refunds, so that you can solve problems.
And you can create more complex forms of transactions that give you better security and better trust.
So when you use the Visa network You abide by Visa's arbitration rules, right?
So if you do a chargeback, and they're going to contact the merchant and say, well, show us a signature from this transaction, and Visa's arbitration rules apply, whether you like it or not.
When you use eBay, PayPal arbitration rules apply.
Whether you like it or not, the means of payment determines the rules of arbitration.
If you like the arbitration rules of that group, you could use them.
Here's the interesting thing, though.
What it does is it allows you to say, I'm going to have a market of arbitration providers, all with different rules and different levels of trust, and some of them will have very good reviews.
Because people had good experiences with them.
Some of them are specialized in real estate and some of them are specialized in auction markets and some of them are specialized in antiques and some of them are specialized in art appraisal.
And so I'm doing a transaction with you and I want to buy an antique.
I'm going to 200 antique arbitrators.
I'm going to pick the one with the highest level of reviews.
He's an expert in appraising antiques.
He's going to do a good job for us.
We agree that's the one we want to use.
Now it opens up all of these possibilities, and it creates a whole new market for these services.
So you've taken trust that was centralized in someone like PayPal.
You didn't have a choice but to use their arbitration.
And you decentralize it, and now you have a market where the buyer and the seller can decide what rules apply.
So do you believe that this is very similar to what we were talking about before with banks, that one person just has to do it, start profiting on it, and then the rush will be for all the others to sort of join in on the bandwagon?
There's already an arbitration market where lawyers and real estate agents and others are providing arbitration services for a small transaction fee, like 0.1% of the transaction, in order to provide escrow capabilities.
And you can do that when you buy something with Bitcoin.
Let me give you another example which is really cool.
A lot of people are worried about their Bitcoin being stolen from their wallets because of a hack.
So one of the ways you can use multisig, which is very interesting, is to have a two of three account.
And what I mean by two of three, it means it has three signatures registered, and you require at least two of those three signatures in order to authorize a transaction.
You keep one.
You keep another one as a backup.
Print it on paper, put it in a safe.
That's your recovery, in case something goes wrong.
And then you give the third signature to a service that checks every transaction for risk.
And what they do is, when you make a payment, they look at the merchant that you paid, they look at their history, they look at what kind of amount it is.
Is this usual?
Is it like $10 and you normally spend that?
Or did you just suddenly try to transfer half a million dollars out of your account and wipe it clean to a random address they've never seen before?
Based on that, they're going to risk score it, and then they're going to call you.
They're going to send you a text message and say, we're seeing a transaction here you've requested for $2,500 to a merchant we've never seen before that you normally don't do.
Are you sure?
Respond 1 for authorizing this transaction.
Respond 2 to cancel it.
And if it's a really big one, maybe they're going to call you on the phone and you're going to speak to Jim.
And Jim is going to say, can you please give me the last four of your social?
I want to check this.
Whatever.
You can reintroduce some of the fraud prevention systems that banks do.
But the really cool thing is, now that's a market.
Instead of having to do it with your payment provider, you can pick who gives you a risk service.
That's fascinating, but it's sort of along the same lines of the difference between Apple locking everything down, you know it's secure, you're not going to get a virus from an app, and the wild world of, like...
Like, say, a perfect example would be like BitTorrent.
Theoretically, you could go and buy a hundred millionth of a Bitcoin if somebody was willing to sell it to you, but usually it's not worth doing for them at that amount.
So you can divide it as much as you want.
You do not need to spend an enormous amount.
And then, again, the thing is, what are you going to use it for?
If you're going to try and use Bitcoin to invest in Bitcoin, be very, very careful.
Do not take your retirement fund and all of your savings and dump them into this wild ride.
That is not smart, right?
And I need to say that again and again.
People, don't do that.
I mean, I've done some of that, and it's not prudent, but my career is tied to this.
You gave me a bunch of your hard drives, I wiped them clean, but I still didn't throw them away because I know that there's programs out there that could just do that.
By the way, charity has become one of the dominant forms of payments in Bitcoin.
A lot of people are doing a lot with charity.
And it's because you can send money very quickly.
You can see how the money is being spent.
There's this fantastic charity that I'd like to mention, which is based in Pensacola, Florida, where they've made it pretty much illegal to be homeless.
They first banned sleeping outdoors, then they banned blankets.
And they try to solve the homeless problem by busing them to other cities around and kicking them out of the area.
So Jason King from Sean's Outpost, seansoutpost.com, started collecting money with Bitcoin and used that money last year in the first year of the charity to feed 60,000 meals to the homeless people of Pensacola, Florida.
That's incredible.
And managed to create fundraising events from all around the world and to convert that money very effectively into food products.
For people who desperately need it.
And that's just one example.
There's a lot of charity.
BitGive, the BitGive Foundation, which coordinates charitable giving 100 bitcoins, which is a charity that will literally give 100 bitcoins to any charity that wants to take bitcoin.
They already have, they've raised the money, and now they're trying to find charities to give the money away to.
And then I think it's one of the tabs at the bottom and then The problem is they won't let us make new iPhone applications because it's lagging behind.
At least they still let me download it, though, because I got a new iPhone the other day and they still let me download the old program off the iTunes store.
I have a great story for you exactly about what happened and we've got a video online to share as well.
I was at a conference the morning I found out about this, and I looked into it.
A lot of people in the Bitcoin space are interested in who Satoshi Nakamoto is.
There's been a lot of research.
I think we should leave the person alone, and it's probably not going to be good to find out who it is, because all it's going to do is smear that person.
They're going to try and smear him.
I would rather not know, because it doesn't matter.
The math is what matters, not who it is.
But people are obviously curious.
When I found out about this person in the Los Angeles area that was fingered by Newsweek as Satoshi Nakamoto, then...
And by the way, I don't want to create more publicity for this poor man because he is not Satoshi.
And it's become abundantly clear.
We've got a lot of writing by the original creator of Bitcoin and it doesn't match any of the style of...
Thank you very much for your support throughout this ordeal that I'm still fighting.
And I would like you to see this magazine, which came out in April.
It will be, no, actually, March 14th issue of this year.
The Bitcoin face, the mystery man behind the cryptocurrency.
And I'm not Satoshi Nakamoto as portrayed as a creator.
My name is Dorian Satoshi Nakamoto.
And of course, if I was a real creator, I would never use my real name.
So from that point of view, I'm sure you guys would know that Satoshi Nakamoto is not me.
But Leah thinks so, and Newsweek said so, but it's not true.
Okay, I received the Bitcoin account from Andreas, and I'm very thankful for you, all these people in US, Europe, in Asia, in Africa, in South America, who supported me throughout.
Thank you very much.
I want to hug you.
There's 2,000 of you who donated.
And I'm very happy.
Each one gives me a tick in my heart.
Thank you very much.
And I would like to further state that I'll be one of the Bitcoin users.
Bitcoin community person.
Who would contribute, even if it's a little part of this world, for good of humankind, as Andreas and many other of you end over to make the world a little bit better for everybody, especially for poor people.
Thank you.
And I'll keep my Bitcoin account for many many years and hopefully I can also contribute as you did to me.
Do you think they knew that this guy, do you think they're sticking by the story because he can't prove it?
Do you think they're just trying to not be responsible for their actions or not be financially responsible for any damages that he might have suffered?
And the very real physical danger that is implied by first saying that someone has a lot of money, which he doesn't, and inviting all of the crazies to visit his address by publishing it.
Listen, you get a lot of publicity and marketing, and then you take the Bitcoin and you convert it the same day to US dollars, so you don't get any exchange rate risk.
Well, there's the whole environment which is weird in terms of media and regulation.
It's been good news, bad news, good news, bad news, bit of a roller coaster.
China's banning it, not banning it.
Russia's banning it, not banning it.
Vietnam's banning it, not banning it.
And this is really funny because, of course, the countries in which these iron fist bans are happening are the countries where the rule of law is least respected.
And then the army generals, and then the cops, and then all of the people who in those countries are above the law.
And then the people who are below the law then bribe the people who are above the law, in dollars, of course, to also hold dollars, and the whole thing becomes a mockery.
They'd point to their chin because his name was Vincent the Chin Giganti or Giganti or whatever the hell it was.
But then Gotti came along and was wearing fucking...
$10,000 suits and, you know, was an obvious mobster and had obvious mobsters with him and there was public hits and all this crazy shit and everybody loved him because he was the face of the mob.
This Putin guy is sort of like that in a way but on a crazier scale because he's running a whole country.
I mean he's essentially just grabbed the whole country.
So basically they've nationalized the gas industry.
The gas industry then supplies natural gas, which is one of the ways that we've avoided the impact of peak oil and energy constriction that is killing worldwide economies right now because oil has gotten vastly expensive.
But gas got cheaper because of fracking and other things.
And gas problem produces most of the gas in the world, so much so that That they supply all of Europe with natural gas.
And they supply them through pipelines that go through which country?
We've got to go into World War III. It seems like some weird shit is happening.
Japan is upping its military now.
Its navy is getting larger and larger by the day.
And they're changing their whole policy as far as how they deal with other countries because China is encroaching on a lot of these islands that Japan has been controlling.
And it seems to me like more and more every day that powers are moving into position to dominate portions of the world and it just seems like some shit is about to happen.
The era of cheap energy is over and the world has to reshuffle to accept that fact.
Peak oil changes everything.
You can't sustain the same consumerist behavior in developed countries and that, together with climate change, it's a combination that creates upheaval all around the world.
At the same time, you have the world's worst currency crisis in three generations.
We are currently living through the most significant currency crisis, with dozens of countries suffering from hyperinflation, with their currencies about to collapse, Europe and the euro hanging from a thread, the British sterling hanging from a thread, and the US dollar going crazy with printing.
Into that environment, You now have Bitcoin.
It's a really interesting time to live in because there's so much change going on.
So I'm glad we didn't get very far with a conversation about empowering the poor and discussions about the good Bitcoin can do before Brian dumped us into an escort site.
All the money flows to the men who control and exploit them, right?
And so Bitcoin is being used already in many cases for women to be able to keep control of their money so it can't be stolen by pimps and exploited boyfriends.
And hustlers and all of the other criminals who are around them who take advantage of these women.
So actually it is quite an empowering technology even in that particular occupation or related occupations.
I was having this conversation on Twitter and people were teasing me so I did a A satirical shot.
I said, look, I'm going to start the same business.
I'm going to post a half-naked shot of me and I'm going to make people pay me to stop because I'm a pasty middle-aged male and nobody wants to see that shit.
And I'm going to donate all of the money that I raise.
And now it went viral on Twitter.
It's me doing a Miley Cyrus impersonation of licking a hammer.
But I raised and I'm pretty proud of that photo because I ridiculed and exploited myself and raised $600 which I donated to the Rape and Incest National Network which is a network that helps exploited women.
I extract themselves from the abusive environments and gives them shelter.
Essentially, it's like an underground railroad to get them away from people who are exploiting them or abusing them badly.
You know, one of the things that we've talked about on this podcast before and I think applies here is that there's a certain morality to a lot of these big tech companies and to tech in general that I don't think exists in a lot of other industries.
And that there's a lot of companies that are coming up now, tech companies, that are founded by very intelligent, very educated people who also have pretty strong ethics.
And I think that's rare for businesses to have a fairly established trend.
Of ethical consideration involved in their business practices.
And one of the reasons why, I think, is because no one understands transparency more than people that are really into the internet.
No one understands the implications or the ramifications, rather, of your actions, whether positive or negative, more than people that are on the internet.
I was doing some research about the IP thing, because that's the only thing I did have.
But there is some people saying that you could find the IP if you were devoted to it.
Meaning, if I really wanted to find out what your IP address is using the Bitcoin currency, I could just probably figure it out if I was really detailed about it.
Chief scientist for DKH. He wrote in 2011 that you could do that.
And that's what I was basing my findings on.
He said that Unless you're very careful in the way you use Bitcoin and you have the technical know-how to use it with other anonymizing technologies like Tor or I2P, you should assume that a persistent, motivated attacker will be able to associate your IP address with your Bitcoin transactions.
Yeah, and they're not associating the IP address, the Bitcoin address, because it's in the network.
What we're talking about there is a determined attacker who's conducting surveillance of the entire network and has the resources to track down what's happening.
People say that Bitcoin is anonymous, but in fact it's not.
It's pseudonymous and loosely pseudonymous.
That means that if you conduct activities with Bitcoin that associate your Bitcoin address to other things, like for example, you use it to buy something and then that something gets shipped to your home, well now you tied that Bitcoin address to your physical address.
Or I have a donation address that I publish.
Everybody knows that's my address.
Now if I take money from that Bitcoin address, which is my donation address, and I move it into my wallet that I use to spend on other things, now everyone can track that step by step and know, well, that's my wallet.
And then track everything that goes out of that wallet.
So I have to take some basic privacy precautions to protect against that.
It's kind of like an account number, I guess, like at a bank, like you said.
Now, is there technology or is there hackers that can take knowing your account number and recreate it in a program that makes it seem like you are that person and transfer money out of that account?
No, because the address itself is essentially one part of an encryption key, and the other part of the pair of keys, the private key, is the thing you have on your phone wallet.
That's the secret.
That's the thing that allows you to sign transactions.
And the whole basis of cryptography, of encryption systems, is that you can't go from the public address to the private secret.
You can't go backwards.
You can go from the private secret, you can recreate the public address, but you can't go backwards.
That is the whole basis.
That technology is the same technology that's used to secure bank networks.
It's the same technology that's used to secure tomahawk missiles.
It's the same technology that's used to secure everything.
You can rest assured that the cryptography at the core of Bitcoin is solid because it's used across all of the other industries.
So you'd be better off like, hey, you want to charge my phone on your laptop, and then you just download their phone and then re-upload it on your phone, and then you have their wallet.
unidentified
You should provide criminal masterminds with a blueprint.
So that's why you have a password on that application, so that if you steal the data of that application, it's encrypted, and you can't see the keys that are underneath.
That's what the PIN number and password do.
And I have a secondary password that also prevents from spending, specifically for spending.
We would never be this educated about this stuff if it wasn't for you.
And I think you do a huge service to not just the tech community with this, but just the general population, giving them an understanding of what this is all about.
There's so much misinformation and confusion about it.
I mean, we had, just Brian and I, two fucking dunces sitting there staring at each other trying to figure out what it was before you came along.
So it helps us tremendously.
And I think what you're doing is it's brave.
I mean, you're getting paid through Bitcoin.
It's noble.
You're using it in great ways.
I love what you did for Nakamoto.
I just posted his Bitcoin address along with an article explaining what went wrong and how he's not that guy.
What I'm doing is I'm just expressing my enthusiasm for this space.
Let me tell you a couple of quick stories about why this was awesome.
After the first Joe Rogan experience, suddenly I had people everywhere coming and telling me That they got into Bitcoin because of that first show, because they finally were able to understand it.
I'll give you two stories.
A month ago, I was in a Houston airport.
I was sitting down having lunch.
I was in transit between flights.
I'm sitting there, and someone sees my watch, and they go, is that the new Pebble?
I'm like, yeah, it is.
You can write applications.
What kind of applications?
I said, well, the application I have on here, which is pretty cool, is I can check Bitcoin addresses.
I'm like, Bitcoin addresses?
Oh, that's pretty cool, yeah.
I said, you heard of Bitcoin?
Yeah, I've heard of Bitcoin.
Hey, hang on a second.
Is your name Andreas Antonopoulos?
I'm like, yeah.
Were you on the Joe Rogan?
You're the reason I bought Bitcoin!
I got involved in Bitcoin after seeing that episode.
And I was just blown away.
I mean, this is like I'm sitting down for lunch in a transit area in a restaurant.
I'm not used to being recognized that way.
So the better part.
Monday.
Yesterday, I land at LAX. I go to Enterprise, rent a car to pick up my car.
I get into my car.
I drive to the exit.
I hand my driver's license and rental ticket to the booth guy at the exit.
And he takes a look at it and he goes, were you on the Joe Rogan experience?
Like, yeah, you're the reason I bought Bitcoin.
You're the reason I got into Bitcoin and I follow you on Twitter and the Joe Rogan experience got me into Bitcoin.
This story has repeated a dozen times for me and not just from 15,000 people on Twitter who started following me after the first show.
And who got excited about Bitcoin.
But complete strangers in the street and things like that.
And yes, I get my share of crazies and stalkers and all of that.
And it doesn't matter because the vast majority is such a positive experience.
And what everyone says is that you asked really great questions.
You asked the everyman questions.
The question everybody wanted to ask.
The simple questions to try to understand and grasp this topic.
Listen, the beautiful thing about having a podcast is nobody brings anything on the show that I'm not interested in.
It's not like a network demands that I interview this guy who's on this sitcom or something like that.
If I'm talking to somebody, it's because the subject is fascinating and it's actually something I'm truly interested in.
And that's...
Not having all those sort of like ladders and steps that you have to climb to put content out is really what it's all about in a way that sort of mirrors what Bitcoin is.
It's cutting out all the steps that are unnecessary between human beings interacting with each other, whether it's exchanging money or exchanging ideas and information.
It's essentially, it's a lot of it is along the same trend and it's all along the same lines.