E46 Transcript - Life in the Cloud
-
Upload
xkeyscore89 -
Category
Documents
-
view
226 -
download
0
Transcript of E46 Transcript - Life in the Cloud
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 1/38
Let’s Talk Bitcoin
E46: Life in the Cloud
Participants:
Adam B. Levine (ABL) – Host
Andreas M. Antonopolous (AA) – Co-host
Dr. Stephanie Murphy (SM) – Co-host
Benny – (B) –Guest / CloudHashing.com Admin
Emmanuel - (E) – Guest / CloudHashing.com Admin
(INTRO MUSIC)
ABL: Hello, and welcome to episode 46 of Let’s Talk Bitcoin for
October 1st, 2013. Visit us at letstalkbitcoin.com for our daily guest
blog, all our past episodes and, of course, tipping options. We’ll be
in Atlanta for their CryptoCurrency Conference, 10/3/2013 –
10/6/2013. If you’re going to be there, make sure to visit
letstalkbitcoin.com/meetup and say, “Hi.” For those of you unable
to attend, video-conference passes are available at
bitcoinvideopass.com and, of course, both streaming passes and
DVD sets are cheaper when you buy with Bitcoin. My name is Adam
B. Levine, and today, we’re talking about the realities of thesituation. Falkevinge, controversial author of Swarmwise and
founder of the pirate party has done the math, and thinks the price
of Bitcoin is off, way off, orders of magnitude off. Andreas explains
his logic and talk about how value is relative and determined by
what you want to get from your money. Then, I interview Benny
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 2/38
and Emmanuel of Cloud Hashing, a hosted mining service that aims
to give would-be miners instant gratification and positive return-on-
investment (ROI) for a nominal fee. In our continual quest to
discover if mining is really suitable for anyone without five figures
to invest, these guys hope you think they’re the answer. Some ofyou love altcoins, some of you hate them, but the fact is that lots of
different coins are offered up as donations to Let’s Talk Bitcoin and
we wrap up today’s show with a discussion about how to pick which
ones to take versus not. But first, Local Bitcoins, for better or
worse, is a high-traffic and influential source of in-person Bitcoin
sales. Stephanie shares a recent story about what Andreas calls a
cross-site scripting attack that drains your Local Bitcoins account of
funds. Once again, I’m joined by Andreas M. Antonopolous and Dr.
Stephanie Murphy.
SM: There was a scam recently on Local Bitcoins that was going
around and, of course, Local Bitcoins is not free from scammers just
like anywhere in the Bitcoin world. But, this was a scam that hadn’t
really been pulled off before and what was going on was there was a
user who was messaging sellers on Local Bitcoins and saying, “Hey,
you know, I have low feedback but just to put your fears at ease I’m
sending you a picture of my passport photo,” and there was an
attachment to the message. First of all, that’s pretty strange that
somebody would send you a picture of their passport photo. If
you’re a seller on Local Bitcoins, you’re probably not going to be
doing the whole KYC (Know-Your-Customer) thing and requiring a
picture…two forms of government ID, or whatever. There’s a redflag right there. However, some people clicked on the picture and
what happened was it took you to a very blurry looking scan of a
passport photo where you couldn’t see any details anyway, but it
was meant to distract you from the fact that all of your bitcoins on
your Local Bitcoins wallet were being stolen. *(chuckling)*
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 3/38
AA: Ouch.
SM: And what happened was, this somehow, clicking on this picture
– and I don’t know exactly the “computer science-y” details, but
basically, what happens is if you click on this attachment (and) openit in the same window as your Local Bitcoins window, it executed a
Javascript that would initiate a withdrawal from your Local Bitcoins
wallet.
AA: That’s known as a cross-site scripting attack or XSS. That’s
basically when software running in one of your windows or tabs is
attacking software that’s running in another one of your windows or
tabs. In this case, the passport Javascript Trojan, essentially is
attacking the Local Bitcoins tab.
SM: Right. So, a lot of sellers on Local Bitcoins keep their coins in
their wallet on Local Bitcoins because, basically, from there it’s
pretty easy to fund escrows that later go into transactions. So, it’s
convenient to have bitcoins already loaded into Local Bitcoins for
the purpose of trading, but in this case, this person exploited that
fact. Now, there is a bright side to this. Of course, we can learn
from this attack. Don’t click on any attachments in Local Bitcoins,right, and watch out for Javascript. Those are the two lessons I
think we can take from this. But, Local Bitcoins has a security
feature called two-factor authentication which you can use (with)
an app like Google Authenticator, which creates tokens that expire
every 30 seconds. In order to login or withdraw bitcoins from your
account, you’ve got enter the token and the token is on another
device, perhaps, like your cell phone or something or a different
computer. It’s a little bit of a way to ensure that you are actuallythe person who owns the account and you’re approving any
withdrawals that happen. In my mind, this is a big plus in the
column of two-factor authentication, and also, just being really
careful and watching out for scammers and being super-skeptical of
any kind of attachments like that on a site like Local Bitcoins.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 4/38
AA: Let’s try some advice for security newbies when it comes to
Bitcoin. First of all, advice number one, I think it’s great to be
careful but it’s very difficult to not click on things when you’re on
the web. One of the ways I’ve found to protect myself against those
kinds of attacks is to have my browser in, essentially, Javascript-denial mode by default. I run some software called NotScript or
NoScript; on Chrome, it’s called NotScript; on Firefox, it’s called
NoScript. Basically, what this is, is a Javascript-whitelisting service.
If you visit a page you’ve never visited before, by default, all the
Javascript, Flash and other executable content is disabled. Only if
you select to enable programming and code on that page can you
see it. That’s going to break things like your online banking, which
you can then selectively re-enable, but it’s also going to break like
this cross-site scripting attack. Generally speaking, you do not go
running around the internet without wearing some kind of
prophylactic and NotScript is, essentially that. The second piece of
advice, of course, is don’t keep cash on these services. Online
wallets suffer from this risk because the keys are not in your control
and they’re protected by a simple password. They’re very easy to
get out. Use paper wallets, distribute your funds between multiple
services, (and) try to keep it offline as much as possible. The third
piece of advice is multi-factor authentication. Quick primer, multi-
factor authentication means using more than one way to
authenticate yourself; something you remember or something you
know, which is a password; something you have, which would be a
token such as a smartphone application, key fob or something like
that. Perhaps, even a USB keychain and then, something you are,
which is the third factor of authentication you can use. That would
be a biometric like a fingerprint. Something you have, something
you know, something you are or as Chris Hoff puts it, “Something to
beat out of you, something to chop off you and something to steal.”
ABL: (*laughing*)
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 5/38
SM: Yikes!
ABL: So, I am going to make a confession here. I am currently, not
using multi-factor authentication. I sort of made a decision that I
just wasn’t going to use web services so I don’t keep money inanything online and the thought has been that for the most part,
that’ll protect me. I also have paper wallets, of course, and things
like that, offline backups, but I’m not actually using two-factor
authentication. Andreas, do you think given my particular use
cases, I should be?
AA: If none of these services have access to either your Bitcoin
funds or your U.S. dollar funds for a bank account then (it’s) really
not a problem as long as you keep the funds limited and you only fill
them up when you’re doing a transaction. It’s not as good as using
two-factor authentication, but actually, I think it’s a better solution
than using two-factor authentication, having 100% of your money on
online. I’d rather have 2% of your money on online and not use
two-factor authentication.
ABL: So, two-factor authentication improves the situation by
making it so that someone has to compromise two separate devicesor two separate vectors as opposed to being able to just stumble
across one, compromise that one and take everything you have.
That’s the advantage. It doesn’t make it impossible to have money
stolen from you it just makes it so that it’s more complex.
AA: It makes it so that the one-factor that most people use which is
something you know, the password. The problem is that can be
very easily captured from a weak endpoint through a keylogger.The advantage of having a token like Google Authenticator is that
it’s much harder to break into that. Generally speaking, when you
see compromises that involve two-factor authentication, it’s
because the service itself was broken. There was a bug somewhere
else or in the last case we saw in was a RNG generating poor quality
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 6/38
sigatures, but effectively, I don’t think we’ve ever seen a service
protected by two-factor authentication where somebody’s had the
second factor compromised. If you use it right it is secure.
SM: There is a small cost to using it though, right, and that is that ifyou use two-factor authentication, it can take a little bit of extra
time and effort. It’s not really as though there’s another password
to lose because all you really need to do is be able to have access to
Google Authenticator or your YubiKey or whatever. It’s not like
there’s an extra thing to forget like a password, but it is an extra
step and any time you introduce an extra step there’s something
else that could potentially go wrong.
AA: Right, absolutely. Though I think what we’re seeing again and
again the lesson is that without two-factor authentication, money
stored in an online account, whether that’s Mt. Gox or Coinbase or
Local Bitcoins or any of them really, is not safe. It’s not safe
because these companies are not doing a good job with security.
They’re doing a relatively good job with security. It’s not safe
simply because your computer is not safe and no one can protect
against that except for two-factor authentication. So, the problem
here is that the endpoints are woefully insecure and we’ve reached
a point in society where we have invented the digital currency that
can be stored on anything but we haven’t yet invented anything
that can store digital currency securely.
ABL: This kind of brings us naturally into the topic of hardware
wallets which, there have been a few…I think I’ve seen one
powered by a Raspberry Pi and I know that there’s a concept
floating around called the Trezor that actually is slated to ship atthe end of October.
AA: I’ve pre-ordered and I’m expecting to receive two of those. As
soon as I get them, I’ll let you know.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 7/38
ABL: What is it that a hardware wallet does that is substantially
different from…A hardware wallet is not two-factor authentication,
a hardware wallet is a distinct device that is only for Bitcoin and,
therefore, can be treated as a secure environment, right?
AA: Well, a hardware wallet could be two-factor authentication or a
hardware wallet, essentially is a second factor in the authentication
scheme. However, a true hardware wallet is one that processes
transactions. So, it signs stuff. It has keys on it. I think that’s
really the issue is being able to store keys in a tamper-proof
environment that can be controlled by the user and usually, when
you have a hardware wallet it has another factor. It’s not (that) the
one factor is better than the other it’s that two factors are betterthan one. If you have a hardware wallet you still need the PIN or
password to protect that hardware wallet. Otherwise, it gets
stolen, so does your money.
ABL: I see, so it’s just that the device in that case is a factor and
the other…
AA: Exactly.
ABL: …ok, I see, I see.
AA: The device is the something you have and you need the second
factor which is something you know and if it had a fingerprint
scanner you’d have a third factor which is something you are.
ABL: One of the natural things that comes up with either a
hardware wallet or a second device used in a two-factor
authentication scheme; what happens if I’m on a boat and I lean
over the side and my phone falls out of my pocket and then, myphone is gone and that’s my second authentication device. It’s not
like I can just load Google Authenticator on another one of my
devices. It was tied to that specific device, right?
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 8/38
AA: Yeah, you’re going to have to go back and use the reset
mechanisms on each one of those sites to reset the two-factor
authentication system and usually, that will involve providing some
other proof of proof of identity. Then, it gets into the manual
process and it’s not easy.
ABL: Do you think that this is, I mean, the direction that we’re going
now where we’re essentially adding additional layers to try and
make it so that you can’t just get through one layer and be there.
Do you think that this is the correct direction to go? I had a
conversation with Jeffrey Paul a couple months ago where he told
me about Sneak’s Law, which is that users cannot or will not adhere
to operational security, basically. (They) will not secure theircomputers because they either can’t or they won’t.
AA: That’s absolutely true so the way you resolve that is you take
operational security and you weave it into the normal workflow or
function that the user is doing so that they don’t know they’re
doing operational security. They simply do it. I think in the case of
these hardware wallets, what you’re doing is you’re making the
two-factor aspect disappear of it into the background because
you’ve physicalized the money and provided a second factor at the
same time. By hiding the security we can get users to adopt it, by
making it a part of the normal interaction of money so you apply the
security without even knowing it is just part of the cultural norm or
the protocol if you like.
ABL: Well, I look forward to hearing what your thoughts are on the
Trezor wallet once you get your hands on it, Andreas. That sounds
pretty exciting.
AA: Yeah, I’m looking forward to it and you know, what’s
interesting about this is that these devices are really enabled by this
parallel revolution that’s happening in amateur hardware in the
ability to take an OLED screen and a Raspberry Pi or a small
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 9/38
microprocessor and throw something together like the Trezor with
some 3D printing. You couldn’t really do that ten years ago. I think
it’s really exciting how those spaces are converging with Bitcoin.
ABL: Just as in a side here, Chris Abrams just $287,859 refundedfrom BFL against their will to Paypal over the last two weeks.
AA: Oh-h….
(Musical Interlude)
AA: This week I was reading an interesting article from Falkevinge.
Falkevinge is the founder of the pirate party and pretty well knownlibertarian freedom pundit. He’s writing about Bitcoin and the core
underlying value of Bitcoin and his basic premise is that Bitcoin
seems to be vastly overvalued and partially caused by illegal price
fixing. His premise is that the current valuation of about $1.5
billion at about a hundred-and-something dollars per bitcoin is
actually vastly inflated and does not represent the underlying value
of Bitcoin. He bases this argument on doing an analysis of money
velocity by looking at the transactional velocity of Bitcoin andlooking at how these bitcoin(s) are being spent. I think the
equivalent in Bitcoin terms is “bitcoin days lost”; I think is the
statistic that we see most often. So, based on his analysis the
bottom line is that Bitcoin should be valued at about $1.20 instead
of $120. He’s saying it’s valued two orders of magnitude higher
than it should be and that the real economy is only about $13
million U.S. dollars not $1.5 billion U.S. dollars.
ABL: Isn’t that speculation? Isn’t the whole price that Bitcoin has
under it right now based on speculation?
AA: I think that’s really the argument that Falkevinge is saying.
He’s saying there is no market behind it, (that) there is no
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 10/38
transactional velocity to Bitcoin. It’s really speculation. It’s
basically price-fixing speculation more than anything else without
any underlying fundamentals. Here’s the thing though. He very
conveniently excludes, right off the bat, drugs and gambling.
ABL: (*Laughing*) So, the two biggest parts of the Bitcoin
economy…they’re not the biggest parts, but they’re primary
components for sure.
SM: They’re significant.
AA: I think he’s talking about the relative volatility and liquidity of
the market and dismisses drugs and gambling as illiquid, lacking in
velocity, lacking in stickiness, lacking in true value. He goes on totalk about, “What about new products and services…?” By the way,
I am horribly paraphrasing and probably butchering his argument
and obviously, I disagree. The bottom line is that he’s talking about
the market being overvalued by two orders of magnitude.
ABL: I think that this is how markets behave. Markets look to the
future and say, “Ok, well, it’s not about what it’s worth today, it’s
about what it’s going to be worth later.” Obviously, the price that
we have now takes into account a lot of people who have bought
with the idea that they’re holding as an investment. I think that it’s
hard to make the argument that it’s not justified when so many
people are using it as a means of savings. I think that savings has its
place in a system like this and it’s not manipulation or speculation
even really. It’s savings.
AA: Yes. Basically, I could take this exact article and do “search
and replace” “Bitcoin” for “gold” and based on Falkevingearguments, gold has zero velocity because it’s not really used to
transact on normal products and services and is entirely a stored
value. On his basis, I guess gold would be overvalued by three
orders of magnitude, not two but does the value of Bitcoin really
demand on the velocity? Because, I think that’s the assumption at
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 11/38
the core of this article. If you accept the assumption that the value
of Bitcoin does or should depend primarily on the velocity of the
currency then yes, Bitcoin is overvalued. I think that really reflects
the fact that most people don’t think that velocity is the only core
value characteristic of Bitcoin and that the savings effect, thefuture potentials, the innovation premium, if you like, looking at an
event like a tech IPO – all of those factors play into the price in a
way that they don’t in other traditional commodities or stocks or
other types of assets.
SM: You know, I’ve seen a lot of articles in the past. It’s kind of
interesting to see Falkevinge writing about this because I’ve seen a
lot of articles in the past, including from people like Max Keiser,who say “No, no, no, Bitcoin is vastly undervalued by at least two
orders of magnitude.” So, maybe the truth somewhere in the
middle and that’s what we’re seeing right now in the current price.
I mean, there’s lots of people who say, “Oh, look at the amount of
bitcoins that there will ever be in existence and look at the world
population and look at the percentage of the world population who
are Bitcoin users, currently, and the potential for new users.” And
suddenly, you’ve got $10,000 bitcoins, for one Bitcoin. The price ofa bitcoin is what somebody is willing to pay for it. We’ve said that
over and over again on this show. There are lots and lots of people
determining that price every moment of every day through Bitcoin
trading, buying, and selling. That’s the current spot price, the
market price, that’s what the price is.
AA: Part of trading on that price is reading articles by Falkevinge,
deciding that you may agree with him and selling lots of Bitcoin ordisagreeing and buying Bitcoin. Falkevinge is doing the job of
adding more information to the market here.
SM: Right, but most people, it seems, either don’t agree with him
or there are enough people who disagree with him that it’s holding
up the market for bitcoins at the current market price. Not enough
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 12/38
to hold it up at $10,000 per Bitcoin, but some of those people as we
said before, are banking on that in the future that bitcoins are going
to worth $10,000 or at least more than $140 - wherever they’re
currently at.
AA: I’d love to think it’s rational pricing that has put the price of
Bitcoin at $125 but then I look at the Dow Jones Industrial Average
at 15,000 (pts.) and I know that people are insane.
ABL: (*Laughing*)
SM: (*Laughing*)
ABL: You know that people respond to stimulus and that sort of
brings up an interesting question.
AA: (*Laughing*)
ABL: Yes, in both ways.
AA: Was that a QE two pun or QE four (pun), wherever we’re at
now?
ABL: It was accidental, but yes, indeed. How we get the price inBitcoin anyway it goes is a total…it’s like a black box, right? Mt. Gox
has one price. When I was talking with Josh Rossi, he’s talking
about his Buttonwood software and how he wants to essentially
collect prices from all of the Satoshi squares live, that are going on
everywhere all the time and also Local Bitcoins and use that as a
way to aggregate and generate a spot price. Really, with
conventional markets, you have to use these broad measures. You
have to pay attention to the entities like Mt. Gox because they’rewhere all the trading happens but in a decentralized network and
especially, a decentralized network like we have with Bitcoin where
regulation is constantly spreading out. First off, regulation is doing
it and then also, companies failing under the weight of their own
success, as we’ve seen with Mt. Gox. It seems like the market is
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 13/38
almost anti-monopoly and is continuing to spread out despite the
fact that the incentives normally would have as large a
concentration of traders on either buying or selling as possible.
Here, that’s not the case.
AA: Here’s the thing though. Even if you look at these price
fluctuations or price differences between the various exchanges,
they all cluster around the midpoint and they all form a very
beautiful Bell curve over time. I know I can’t say with extreme
accuracy what the current price of Bitcoin is. I can discount or
rather, dismiss a(n) overvaluation by two orders of magnitude and I
can dismiss that with a fair amount of statistical certainty. I can
say, for example, that if all of these exchanges are telling us thatthe price at about $130, the chance of the price being $1.30
instead, is 1 in 10,000,000 ( one-in-ten million). Simply, by looking
at the Bell curve you can do that calculation. You can see what the
probability is. It’s four standard deviations off the core. You can
say there’s uncertainty in the market and there’s price fluctuation
in the market and price uncertainty but it’s not in the orders of
magnitude we’re talking about here. There’s no chance of that.
ABL: Is this people picking their favorite reason….because some
people look at savings like hoarding. Some people look at hoarding
like savings. It sort of is just semantics about how you’re going to
represent it. Is this people…is this Falkevinge picking the thing that
he most wants Bitcoin to be? Which is transactional because if it’s
transactional then it’s ubiquitous that means it’s changing the
world, whereas, if it’s savings, then maybe that’s not so true.
Maybe he’s just focusing on that and to him that’s the only validsort of reason why there can be value where in reality, Bitcoin as a
protocol just like the internet, is super-agnostic and doesn’t care
what goes on. It doesn’t care what you do with it and frankly, it
doesn’t care what metrics you pay attention to it. Whatever
metrics you’re looking for, so long as it’s something that’s
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 14/38
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 15/38
your bitcoins to real-world items. You can even buy with privacy.
All they need is a shipping address. But, don’t take my word for it,
see for yourself at bitcoinstore.com.
(Advertisement #2 End – bitcoinstore.com)
ABL: Over the last few months, we’ve been watching the network
hash rate skyrocket as ASIC manufacturers ship overdue product to
anxious customers. As the network passes the one Petahash (PH)
mark, we’re joined by Benny and Emmanuel, two of the minds
behind the Cloud Hashing project. Gentlemen, let’s talk Bitcoin.
The first question that I have is, is there still an opportunity inmining? It seems like the cost of participating in that network is
getting increasingly high and the time-frame to actually recoup your
investment is getting even smaller.
E: If you’ll allow me to answer that question, it’s Emmanuel
speaking here. Absolutely, what we’re seeing is a bit of a shift in
the usual mindset of miners where they used to ROI in the space of
two to four months, depending on delivery. We’re seeing that shift
towards the latter end of the calendar. Depending on when you
receive your hardware and depending on when you made the
purchase, the network difficulty could have literally overtaken you.
In terms of, is it profitable to mine? We’d say, absolutely, it is
profitable, it’s still profitable to mine. It depends on your strategy.
It depends on your capital and it depends on who you decide to
partner with to be successful. If we look at what people have been
doing in industry as things stand now, people will be making ordersfrom the four major manufacturers. There will be more coming
online soon. They would wait a period of three to four months.
What our model is and the way in which we’ve approached that is to
essentially use economies of scale to our advantage to purchase a
large amount of hashing power and then, to redistribute that to
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 16/38
customers. We will be, probably, one of the first companies to
literally, enable you to logon and make a purchase of hashing power
and to be mining within ten minutes. That’s a complete shift from
what the market is used to and I think that that’s a model for years
to come. Another thing as well is, people say that the money to bemade in mining is within the first two to three months. Well, that is
true, depending on what your model is but also, if you have the
ability to consistently or constantly add to the armory of your
hashing power that you have, it gives you a much better stance to
pretty much fight the network difficulty and you can’t do that as a
solo miner. The whole market is going to shift. We believe mining
belongs in the cloud just as supercomputing does. We’ve been
pioneers in that field and we believe it’s pretty much, the way to
go.
ABL: Let’s back up for a second here. Can you tell me how you got
into the space and if you’ve had any ventures in Bitcoin things
before? Have you been mining before you got into this Cloud
Hashing business?
E: Oh, yeah. I started off mining with my CPU when it was
interesting. Then, I got bored of it. Then, I kind of left it alone.
Then, the GPUs came into business and I gave that a bit of a go.
Then, my wife started getting a bit annoyed from the heat and the
noise and the lack of spare room when people came to visit. So, I
kind of parked the mining project to the side a bit. When ASICs
came online I thought maybe I could venture there because the
hardware was smaller, it was supposedly less noisy and you could
get more density out of it. As time elapsed, more people becameinterested. So, I began actually, selling ownership of the machines
to friends and family who were interested in Bitcoin just to be able
to give them the ability to do so. I’d manage it. They’d just have to
pay the bills. That was the initial Cloud Hashing model and it burst
itself onto the internet in April (of) this year. We started selling
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 17/38
contracts online and the rest is history. We pretty much grew
organically, from running mining equipment in the bedroom to
running an organization now who have 1,300 individual customers.
ABL: Alright, sound like you’ve made some pretty fast inroads intothe space. Let’s talk mining for a second. The point of mining, I
would argue, is to incentivize the distribution of the Bitcoin
network to the greatest extent possible, but in the few years that
we’ve gone from 2009 to the point that we’re at now, that really
hasn’t been the experience. It seems like because we’ve gone so
fast through the generations of hardware, it’s been very difficult for
people to keep up and essentially where a couple of years ago, you
could mine with your CPU as you started out. Now, someone whowants to experience it for the first time just at that sort of curiosity
level doesn’t have anything like that, doesn’t have anything near
like that. Your service aside, what do you think of this trend,
generally speaking? If you hadn’t been able to access it in the way
that you did, do you think that you would’ve started mining?
B: Yeah, I’ll go into this a bit. The advent of CPU mining was,
essentially as most people involved in Bitcoin mining are aware, to
verify the transactions on the Bitcoin network and incentivize
people to be connected to the Bitcoin network. The entry into that
market was largely in the tech field in the beginning because the
configuration of mining software was not exactly user-friendly or
ease of entry was quite high for the average individual that doesn’t
have background experience working from a console or something
of that sort. In the beginning, people started developing GUIs to
make it easier to begin to configure a mining-platform softwareprogram and then, from there it began to scale to more
sophisticated tools and now, monitoring tools and things of that
sort. But, it still has a large learning curve for people and so, one of
the ideas that we had in the Cloud Hashing model was, how do we
ease the entry point into mining and at the same time help people
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 18/38
understand what Bitcoin mining is and why it’s still advantageous to
the Bitcoin network that people still are mining bitcoins. The
incentive is there. People don’t necessarily mine just because
they’re spirited to be miners. They do want to be rewarded. The
long-term plan for Bitcoin was that people were going to be miningbecause they’re rewarded on the transactions that are taking place
in the blockchain. In essence, you are still incentivized in five
years’ (or) ten years’ time. To get into that market as an individual
that is looking to get familiar with mining and jump into it. It’s not
as simple as just, “Go download a program and start running on your
CPU,” if it becomes quickly evident that there’s no reward there for
you. We wanted to make it possible for people to understand that
the reward is still there, you just have to be able to see how to get
to it. The Cloud Hashing design is to be able to able to bring a
person into mining, show them that there’s an estimated ROI that is
potential and then, that there’s a difficulty that you’re running up
against. We’re trying to make some of this more transparent to
people that are walking into this and going, “Oh, mining, this makes
sense. Just throw some machine on and I should be making
money.” Well, with the cost of power versus the difficulty rising
and the amount of equipment you need to overcome those costs,
we believe that there’s a scalable model that can work and we’ve
implemented that into the business model of Cloud Hashing to
benefit the customers. Ultimately, we have a goal of benefiting the
Bitcoin network alongside that.
ABL: It seems like one of the biggest challenges that you run up
against in mining however you’re going to do it is not necessarily
the fact that the difficulty is going up so much as it is how you’retiming your purchases relative to the rest of the world’s release
schedules because now there are several manufacturers in the
space.
E: Obsoletion, yeah.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 19/38
ABL: Yeah, so if you get a whole bunch of hashing power in the
beginning then, two days later there’s a giant release and suddenly,
you’re swept away. Have you been able to counter that risk?
E: To some extent, we were absolutely affected by those risks atthe advent of the company. We made substantial orders of
equipment that we were waiting to be delivered. Customers were,
obviously, frustrated by the delays. Being a cloud company and
being able to have the capital and the liquidity to go onto the open
market, we’re able to still service our customers because of a skill
that we have. Now, in respects to individuals to make those kinds
of purchases and waiting three to four months where the ROI,
literally, dwindles away; now, we believe that that model willeventually die out because people might not be able to stomach the
risk. A lot of money has gone into pre-orders and a lot of people
are still people are still waiting for delivery and a lot of people have
lost money and a lot of people have been dissatisfied with how it’s
been handled and might not even play again. The model we’re
offering is very different. Essentially, the kind of orders we make,
it gets peoples’ attention. It gets the attentions of the
manufacturer so you can work closely with them to ensurecustomers are not burned by those kinds of delays. If you’re an
individual making an order through the website, you’ll be treated
differently from if you’re a large organization looking to have a
long-term business relationship to pretty much service your
customers and at the same time benefit the manufacturer. I think
the manufacturers themselves, they would be prefer to deal with
larger organizations rather than loads of customers constantly
getting back to them, “Oh my ASIC doesn’t work. Oh, the powerunit has blown up, how do I sort this out?” Those kind of issues will
pretty much be dwindled away if you just took it to the cloud.
They’ll be dealing with one entity or, sorry actually, four or five
entities instead of the manny(manufacturer). That’s how we’ve
mitigated our risks, working with the manufacturers ourselves
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 20/38
directly and being in the know of the project scope and any
potential delays so that we can adequately make ultimate
arrangements for any delays. That’s kind of where we are now and
that’s where we’re seeing that mature as a model.
ABL: Do you see basically have units standing by so when people
buy them they just switch over to their account instead of crediting
you? I assume you’re running them yourself when you don’t have
customers to run them for, right?
E: Yeah, the way in which we work – I’ll give you a small
background of our model without selling. We’ll purchase large
quantities of ASIC hardware. We’ll put them in data centers and a
data center will have an agreement with us to manage them or we
have our own person to manage it depending on which city it’s in.
Now, the equipment we’re mining (with) constantly. A customer
would go through our website to make a purchase for hashing
power. Now, for the 30th of September this year, as soon as they
make that purchase, within ten minutes they would be mining
automatically because our hardware is already available, it’s
already there. So, there is no delay. There is no pre-order. There
is no wait. It’s instantaneous. That’s what people are used to in
the cloud space. They’re not used to making a purchase and
waiting three to four months or not (being) given a definite time for
delivery. They’re used to making a payment and getting what
they’ve paid for, instantaneously. That’s the model that we’ve
switched to and that’s the model we believe is palatable for the
mass market. Another thing is (with) regards to difficulty increases.
How do you deal with customers worried about the day-to-day,well, sorry, the bi-weekly difficulty increases and how do you pretty
much keep them motivated to mine or to keep them motivated
to…they’ll know that they’ll actually get an ROI. What we do is
we’ll essentially only sell up to 60% of any capacity that we have.
At the end of each month, what we do is we purchase on the behalf
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 21/38
of the clients that hashing power that we have as a reserve so that
they get an increase in hashing power so that it allows them to
either stay online or at least not feel the mass effect of the
difficulty on their returns. That’s a better model than sitting on a
piece of hardware that every two weeks the returns are dropping by20-30%. That’s the model we’ve adopted and that’s the model the
market will be used to. That’s what we’ve worked out with talking
to customers, giving them an idea of the kind of things that tick
them off and try to adapt to the needs of the customers on our
front.
B: I’ll also comment on the network hash rate unpredictability that
a lot of miners are seeing. This is clearly a risk that miners aretaking when they’re buying hardware on the market that has the
pre-order basis. We’ve often said to people that it’s a lot easier to
look at the network hash rate to determine what your potential
return is because the network hash rate is in flux on a constant
basis, whereas, your difficulty changes are built into the algorithm
of the Bitcoin design and so, if you’re in the know in terms of
research and discussing and finding out what the supply chain
challenges are of various manufacturers, it’s a little easier topredict what the network hash rate might look like at a certain
point in time in a given period. We don’t know in a year from now
but we might be able to say in three months, based on these
companies, we can somehow gauge that the network hash rate’s
going to be between X and Y. Then, if we say that your hash rate
with Cloud Hashing is this and that based on our model the hash
rate of your account will increase based on the estimates of the
network hash rate increasing in a proportionate way, you have away of being able to calculate, with some degree of accuracy, what
your ROI could be. Now, we don’t know if a company is going to
come out of the left field that no one’s heard of and dump an
enormous amount of hashing power onto the network. Perhaps, an
ASIC manufacturer that nobody saw coming. That’s always a
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 22/38
possibility. There’s nothing anyone can really do to prevent those
kinds of things happening except for be prepared. That kind of
preparation that we take is in the accumulation of good business
partnerships with ASIC manufacturers that want to support not just
us, but the fact that we are redistributing this hashing power to thecustomers. This is a really key point in one of the reasons why ASIC
manufacturers have worked with us so closely because they believe
in the business model that we have. Sure, there’s a lot of
companies that just want to make a profit. There’s a lot of
individuals that just want to dump a lot of money into mining
hardware and immediately mine for themselves. We get that. We
understand that there’s always going to be that market out there
where there’s people that are very bull on the long-term of Bitcoin.
They’ll put money into mining and take the risks but the attitude
that our customers have is that Cloud Hashing is going to support
them and that the manufacturers are going to support Cloud Hashing
and, in turn, everyone should benefit. We found that the
manufacturers who understand our business model want to keep
our customers in line with the network hash rate increases as much
as possible. (The) reason being is that, like any manufacturer, your
goal is not to sell a product to somebody once. It’s to sell a second
and a third and a fourth time. We believe in the same model. We
want our customers to be return customers, repeat customers. We
want them to tell their friends that this is working for them. For us
to sell one contract to one person is not our ultimate goal. We want
people to believe in the model and understand that there is a long-
term benefit to cloud mining and that it actually has a benefit to the
Bitcoin network, because what we’re doing is making possible that
one or two or a small group of individuals do not have all of this
mining power for themselves. As a result of that, more people are
involved in Bitcoin. It’s distributed as a currency to more
individuals out there and hopefully, that will help the Bitcoin
network thrive.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 23/38
ABL: Okay, I have a couple of questions off of those two answers.
(*Laughing*). First off, is the increase of hashing power standard or
is there a cost associated with it?
E: The way the model works is we essentially…the customer wouldmake a payment for the contract. In the contract, we specify the
two different costs associated with a contract. One is a
management fee then, the other is a reinvestment (fee). We
essentially enable the customer to make a payment of up to 30% of
whatever the mining revenue is. We’re soon going to allow that be
variable, make a payment of what they would want to reinvest in
hashing power and that would automatically be deducted from the
payouts. So, that would automatically go into hashing at the end ofeach month. If they made $100 and they’d set it 30%, they’d take
$30 and use that to buy more ASIC miner hashing power for
themselves.
ABL: I’m just wondering what the ratio is there because it seems
like…as someone who might be interested in one of these, I’m trying
to figure out if that actually is even something that would actually
be beneficial for me to pursue because 30% of what we’re…
E: Oh, absolutely.
ABL: …so, 30% would be buying you more than just taking the
payment would be?
E: Oh, absolutely. The price that you’d be paying with a
reinvestment is a lot less than you would be paying with a contract
so there’s a massive benefit there. If you bought in at the
con(tract)…one thing people need to be aware of as well is themassive increase in hashing power but also the cost per Giga-hash is
dropping. If you look in January we’re looking at cost down by
maybe 80% per Giga-hash. We could buy, in the future, on the
behalf of the customer. So, maybe, in three to four months’ time,
they’re going to get multiples of what they started with as a miner.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 24/38
How would do that as an individual mining and how could you
ensure that you have the hardware on the day you want the
hardware to start mining without making a loss. You couldn’t do
that as an individual unless you have a lot of capital and a lot of
patience. Doing it in the cloud gives you that benefit because it’smanaged on your behalf.
B: One of the things that allows industry to scale is to have a lot of
people backing that industry and we looked at that as part how the
model has to integrate. When we designed Cloud Hashing, we
realized something that was very critically important and that is
that it’s not all about how much hashing power you have. The
number specifically isn’t that important. It’s about how manypeople are part of something that are collectively working towards a
goal. Because the Cloud Hashing customer base is well aware that
when they sign-up, this is something that they’re signing into, that
is a collective initiative in a sense, to be able to increase the cloud
mining capacity for the benefit of all customers. Even though it’s
30% as an individual, that 30% goes a lot further than that same 30%
that you would be taking in as an individual miner and then,
hopefully, taking that money and putting it towards, say, your nextpurchase of an ASIC when you reach the ROI point that you can now
afford your next one. On your behalf, every month, this increase is
taking place. It’s adjusted in your hash rate in our system. It’s
visible to you as a client and you’re immediately mining with that
adjusted hash rate as soon as soon as it takes effect, whereas, as an
individual miner that’s buying hardware, you’re actually sitting and
waiting for that hardware to reach a ROI point where you can now
go and buy the next thing. With us, thirty days later or however,maybe less, you have immediately taken some additional hash rate
and put it into your account and now, you’re mining with that. This
is the ability to scale with the network hash rate increase better
than waiting on the next hardware to show up at your doorstep.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 25/38
ABL: So, I hear the decentralized argument and I think that I agree
with you on the decentralized argument but don’t you as the
service provider actually control all of these? It seems like people
aren’t actually mining, they’re more the recipient output. Instead
of it going to your wallet it goes to their wallet.
B: Right. Sure.
ABL: Isn’t there a differentiation? Do they choose what pool they
participate in or is there any control?
B: Well, I’m glad you asked that question. One of the things that
will be rolled here with the next September mine is the cloud
hashing technology which is going to offer a pool technology tominers in a very innovative way. It’ll be the first mine that we’re
aware of that allows people to both mine in the cloud based on the
Cloud Hashing model as well as allowing those customers as well as
others that are not customers of Cloud Hashing to mine through the
Cloud Hashing mining portal. That will essentially make it possible
for anybody that wants to mine within the Cloud Hashing cloud, you
might call it. We’re kind of dropping the cloud word a lot here but
(it) allows people to access this cloud and be able to participate in itas well. On the topic of decentralization, one of the sticking points
that has been often debated is what makes it decentralized. If you
were, for example, a large pool and we’ve seen this out there with
other mining pools. What happens if you reach 51% of the network?
There’s a very common concern amongst miners out there about
the 51% attack potential that a mining operation could achieve if
they had so much hashing power that they could overtake the
network and do what they call a double-spend. One of thetechnologies that we’re implementing into the mining design that
makes this very advantageous for the technical miner is the ability
to select transactions that a person wants to mine within our
system. This is something that we haven’t seen out there done
before by other mines. This allows people to select the transactions
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 26/38
and, in essence, makes it a truly decentralized model from the
outsider connecting to our mine which means that, in essence, a
51% attack would be highly unlikely if not next to impossible.
We’re taking the power away from ourselves and putting in the
hands of people connecting through our portal. It’s become verycommonplace now that we’re often asked by customers and
engaged by people in general conversation in Bitcoin about these
Bitcoin mining calculators. For example, one of the more popular
ones that has become almost a staple in conversation as of late is
the one on the Genesis block which is thegenesisblock.com. They
have a mining dashboard where they are allowing you to look at a
matrix of all the different manufacturers and their hardware and
their costs and so on. What these tools are essentially designed to
do is give a person perspective on what their potential ROI is. What
these things fail to do is give a person a perspective on what
changes based on new hardware being introduced on the supply
chain basis that we talked about. The miners have just a few fields
to fill-in and suddenly, they’re able to predict, based on these
calculators, what their ROI is. It’s a little deceptive to people
because what your ROI is is largely based on your scalability not just
based on the fact that you can plug-in a number and that the
network is going to scale based on X, Y, and Z. The Genesis block,
for example, shows the average over some period of time of
difficulty increases and then, comes up with a prediction of the
difficulty in the next month or the next couple of months over what
they believe will be, you know, some period of time. Well, there’s
also a supply chain aspect to making that even a probable
possibility, you should say. You can’t continually increase the
network over and over and over again without having some pretty
massive supply chain issues that will be hard to overcome for all
manufacturers once the network reaches a certain size and the
difficulty reaches a certain size.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 27/38
E: Can I also add to that? There’s also an economics aspect to that,
in terms of if we’re talking about the network being at 15 PH/s, for
example, or 20 PH/s. How many millions of dollars will need to be
spent to cover the difficulty rises of 80% when we’re talking about a
51%-style attack every thirty days or so. On top of that, we’retalking about an infinite amount of money being able to be thrown
into a market. Right now, there’s worth $1.4 billion and I’m talking
the Bitcoin as a whole. I’m no longer talking about the mining
market. I mean, that’s probably $100 million. Who knows, maybe
less. It’s not…I don’t think the tool is meant for exact calculations
of what hashing power is. It gives people an indicative figure, but at
the same time, it’s deceptive because people don’t know what
other factors are necessarily going to affect the growth of the
Bitcoin network. For example, if we’re going to have consistent
growth above 50%, we’re going to need to new technology, maybe,
14nm technology that costs $16 million just to get to the foundry
and to make an ROI, how many millions of dollars more do you have
to sell? Things about this haven’t been thought of and I think
people need to be aware that just plugging into the Genesis block is
not a sure thing to be saying that you will not make a profit or you
will make a profit.
ABL: Do you think that this is a one-way trip for us and that the
difficulty at this point, because there are so many players involved,
can only go up or do you think that the price, actually, is going to
play a role at some point in that the price, actually, needs to go up
in order for mining to continue to be profitable?
E: Well, price is always a thing. There are three things here. One,the cost of electricity so if you can get electricity dirt-cheap then,
you could mine with…if you mine with the best equipment and you
get electricity really cheap then you could run your hardware as
long as humanly possible compared to having another piece of
hardware that’s less efficient in a state like California where you
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 28/38
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 29/38
E: Thanks, Adam.
(Advertisement #3 - Start – EasyDNS)
Promoter: EasyDNS is the Swiss Army knife for your domain names,
helping meet their customers’ individual needs since 1998.EasyDNS has been an outspoken critic of SOPA and CISPA. EasyDNS
was an early supporter of Bitcoin and now they are proud to sponsor
this show. Do business with a company that shares your values. Get
a 13% discount when you pay with Bitcoin. Go to
bitcoin.easydns.com and be sure to use discount code “LTB.”
(Advertisement #3 – End – EasyDNS)
(Let’s Talk Bitcoin Promo – Start)
SM: You’re listening to Let’s Talk Bitcoin, the premier audiocast
providing news and insights that cover the rapidly evolving world of
digital money. Our twice-weekly shows include analysis of late-
breaking news, updates on key technical, business and regulatory
interviews, and in-depth interviews with the key people driving the
new digital economy. Let’s Talk Bitcoin offers sponsors an attractive
way to reach a targeted and savvy audience. For more information,
email [email protected].
(Let’s Talk Bitcoin Promo – End)
ABL: So, guys, we have to have a meeting about this because I’ve
been trying to figure out how to proceed and it’s really hurting mybrain. I got an email from, I don’t recall his first name - his last
name is Franko. He’s the creator of the Frankocoin, basically. He
has let us know that he wants to donate to us in Frankos. I looked
into his currency a little bit. It’s derived from Litecoin except it has
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 30/38
a fewer number issued than actually even Bitcoin does. I think it
has half the number issued that will ever be issued of bitcoins. In
theory, it’s going to be quite rare and it has a very fast transaction
time. It has about thirty seconds per block. I emailed him back and
asked what advantages his currency has that would make it so weshould want to accept it besides the two technical differences that
he had done and I hadn’t heard anything back from him, but it kind
of has brought up a larger point. We get these requests sometimes
from people who have alternative cryptocurrencies and I don’t
really know what standard we should be setting for when we should
accept something for donations for the show. Because, on the one
hand, they’re not really buying anything from us and they want to
donate to support what we’re doing, but on the other hand, it’s
definitely a marketing move on their part where they want us to
say, “We accept this.” Then, that adds to the utility of their...so,
it’s not like it’s a selfless thing. I’m wondering, when you guys are
looking at what new alternative cryptocurrencies to pay attention
to or to setup a wallet for, what are the criteria that you use?
SM: That’s such a great question. I wish I could say I actually had
some hard and fast criteria. It’s more like, I have to see it becomea blip on my radar more than a couple of times. I made a fortunate
investment in Litecoin about a year ago which ended up doing really
well, but I’m kind of skeptical about a lot of the other
cryptocurrencies especially, since now there are so, so many of
them and Altcoin really has to differentiate itself to stand out in the
current climate. I just don’t know if we’re at the point where
that’s really likely to happen yet and I can’t see the clear leaders in
the pack. I haven’t been super, super buzzed about altcoins lately,except for maybe, maybe Litecoin, because it seems to have
cleared a certain bar. As far as accepting donations to the show, I
wish there was an easy way you could have a multi-currency wallet.
I know people are working on that but I don’t know of one that
exists yet. If we could have that, it would be easy to administer.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 31/38
We could just have a wallet and when some Frankocoins come in,
we’ll see a little notification and we could do basically whatever we
want with those Frankocoins. Save them, spend them, give them
away; convert them to bitcoins, whatever we want. We’re just not
there yet.
AA: This question that you’re asking, Adam, is the same question
that plays out thousands and thousands of times every time an
altcoin comes up for any buyer, any seller, or any user. This is the
fundamental adoption question, the balance between the network
effect, convenience, and the existing value of Bitcoin versus the
value of an additional coin and in that you have to balance out the
network effect. As I said, you have to balance out the adoptiondifficulty, the technical difficulty of charging in multiple currencies.
You have to balance out the foreign exchange risk of converting it,
how convertible it is, what kind of liquidity there is in the market in
order to convert it, how many access points there are. You have to
look at the history of the currency and how stable it is in terms of
fluctuations or also in terms of mining difficulty because that’s
another aspect of cryptocurrencies that plays on and determines
stability. All of these, essentially compromises or trade-offs happenin the mind of any consumer who’s deciding between Bitcoin and
another currency and I think this all goes to demonstrate why it is
so difficult to unseat the king of cryptocurrencies, why it is so
difficult to say, “I’m going to go with a completely different
alternative.” And the reason is that it has a lot of cost to do that.
As a result, it has to have a really compelling reason, and quite
honestly, I don’t think you have that.
SM: But does that mean they don’t have any value? I mean, I don’t
think so. I think there could be some…
AA: They have dump value.
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 32/38
SM: Yeah, they have dump value but I don’t know, there’s part of
me…I know I just said that I’m not like, super, super excited about
any of the altcoins but there is a part of me that kind of sees like,
“Okay, like, yeah there’s some Primecoin, it’s fun in prime numbers
and PPcoin, it’s got the proof of stake and Feathercoin, has like,great promotion and that might be interesting. At times, I do feel
excited about altcoins and it doesn’t hurt to diversify, you know. If
somebody wants to give us some…some, uh, you know, pick your
favorite coin then, I don’t really see the problem with that. Maybe,
it feels like a headache because we’re kind of trying to decide,
“Well, what do we actually think about all these altcoins? Is this
going to require me doing research on them and do we convert
them to Bitcoin, and essentially cash out, or do we hang on to
them?,” and that decision feels overwhelming and we just don’t
want to deal with it. Could that be sort of what’s going on?
AA: It’s enough to make that decision with Bitcoin.
ABL: (*Laughing*)
SM: (*Laughing*)
AA: (*Laughing*) - You know?
SM: Right, right.
AA: We’re running multiple shows just to decide if we’re holding
Bitcoin or what even the value of Bitcoin is. I think then,
multiplying that by a whole set of other coins…it can really be a
huge headache for merchants. So, it’s easier than adopting multiple
Fiat currencies but it’s not as easy as just having one. ABL: I see a couple of options here for how we could push forward
on this because Stephanie, to your point, I think it really is a
usability thing. When I installed the Feathercoin wallet because we
had a listener who wanted to donate to us in Feathercoin; that was
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 33/38
the fourth wallet that I had setup on this particular computer. In
addition to that, I had Primecoin which I was playing around with
because I was trying mining with it actually which was quite
interesting. Bitcoin, Litecoin, and then, Feathercoin - and when I
setup Feathercoin, I actually had problems with my computer. Notthat it was a problem with Feathercoin, just that like, that was,
apparently, the number of wallets that my computer felt
comfortable running and the number of blockchains that it felt, you
know, so, I really think that so long as you need a separate
installation for each new cryptocurrency…
SM: The feather that broke the camel’s back. (*Laughing*)
ABL: (*Laughing*) – Yeah, exactly. Yes, exactly. When I run three
of them at once it’s all fine, but when I run four of them I tend to
get some instability in my system. I see a couple of ways forward on
this. I can either see setting up a bounty system where we have a
minimum value threshold where people can send their whatever-
coin-it-is to an escrow address that we have setup and at the point
that we reach whatever the threshold is, say it’s like, one Bitcoin
worth of whatever the Altcoin is that we’re talking about. Then, we
go through the trouble of setting up a full wallet for the show and
doing all that stuff or I could also see us partnering with…or it being
a service that’s provided by an exchange like Vircurex, where
they’re already dealing with all of these altcoins and they deal with
a lot of altcoins. As a result of that, they could essentially give us
an application that would let people send something to a show
account that would be able to be denominated in any of those
things and then, we’d have the ability to change it into othercryptocurrencies or keep it in that but not have to maintain all of
the wallets on a series of actual computers that we have to control.
SM: Right, because the exchanges right now, like BTC-E or Vircurex,
they do sort of have multi-currency wallets where you can login and
see your finances and it has a wallet for each of the altcoins that’s
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 34/38
on that exchange and people, you know, you can send funds to it or
whatever. Then, you can easily trade because they’re already in
the exchange. I guess I see a problem with storing the coins on an
exchange because that’s basically, a web wallet, and they’re
vulnerable to hacks, but I really like the idea of, “Hey, let’s have anaddress for each of these coins,” once we reach a certain threshold,
and I think one Bitcoin equivalent of those altcoins is a good
threshold to have. Then, we’ll put that up as a donation address.
I’m all for, like, please, if somebody wants to give me money, I
would like to make it convenient for them to do that, you know
what I mean? If someone wants to support Let’s Talk Bitcoin, let’s
make it easy for them to do that in whatever way they want to. I’m
kind of, erring on the side of, “Yeah, let’s put up an address for
every coin,” but I realize that might look a bit cluttered potentially,
on the website.
ABL: I don’t think it’s a problem with the cluttered look. I just
think that there are so many of these currencies that are going to
fail because they don’t very many fundamental advantages to them
and they don’t have…you need something. It almost doesn’t matter
to a certain extent what angle you’re going to approach theproblem of cryptocurrency from, but you need to do something that
is different; Be it, how you market it or be it how you, you
know…the innovations of the currency, fundamentally, itself. You
still need to have those differentiations and I feel like a lot of those
currencies that are out there, it’s very difficult to make that claim
to. Beyond that, I don’t think that it’s workable, Stephanie,
because we’re talking about…there’s more than 150
cryptocurrencies out there right now and I have to imagine thatthat’s going to continue to expand.
SM: Right, absolutely, but I mean we’re only getting donation
requests for maybe, ten of those, right?
ABL: Right now. (*Laughing*)
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 35/38
SM: (*Laughing*)
ABL: Right now, you know, while we accept…this, of course, brings
me to the other part of this conversation. We started accepting
Litecoin donations I guess about three months ago and the firstcouple of shows were pretty successful and I can look back and
actually, show 11 and show 13 were two of our highest-tipped
shows because we got single donations of 100 litecoins to each of
those shows. That actually, was more substantial than the Bitcoin
donations, at that point. Since then, we get probably between 0.5-
1 litecoin per episode, on a good episode and sometimes, we don’t
get any litecoins. So, the question becomes, is there a minimum
threshold beyond which we should not be generating, I should notbe spending the time to generate the addresses to run the client if
we’re getting these small amounts? Should there be a minimum
threshold?
SM: Maybe, we don’t have an individual…Bitcoin, Litecoin,
Frankocoin, PPcoin, every single coin address for each show.
Maybe, we just have a general show fund for the altcoins that are
not Bitcoin or maybe, not Bitcoin and Litecoin.
AA: Yeah, we can have three-dimensional wallets. Essentially, the
bottom line is that all of these coins at their core use the same
elliptic-curve-cryptography system for the public and private key.
The only difference between a Bitcoin address, a Litecoin address,
and a Feathercoin address is what prefix you stick in front of the
address before you send it out. You can take a single private key
and from that you can generate a public key, which is a point on the
curve, for Litecoin and encode it for Litecoin and then you can takethe same key and encode it for Bitcoin and the same key and
encode for it Feathercoin and the same key and encode it for
PPcoin. Essentially, what you would do is you would have one
wallet with one private key that unlocks all of the public keys of all
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 36/38
of the other coins. I think we’re going to solve this problem over
time and the default will be multi-currency systems.
ABL: So, when can I have that?
AA: I wrote to Protech Implementation, (which) works on top ofBIP-32 but unfortunately, turning that into a business…we need one
of those opportunistic entrepreneurs.
ABL: (*Laughing*)
SM: (*Laughing*) – Yeah, I just googled that, “multi-cryptocurrency
wallet” and I found a thread on the Bitcoin forum that was
suggesting some software for Windows and then, the next post was,
“Yes, complete with wallet-stealing Trojan free of charge.” So,
we’re not there yet.
AA: By the way, that’s one of the disadvantages, right? If you solve
the key-management problem by tying all the keys to a single
private key then, if you lose that one, mmm-hmmm, you’ve lost all
of them.
SM: Right. Adam, maybe what we need is a(n) Altcoin-enthusiast
treasurer for Let’s Talk Bitcoin and I would be happy to be that.
Why don’t we just have everybody send their altcoins to my wallet
on Vircurex and I’ll be the administrator of that.
ABL: Okay.
SM: No, I’m just kidding about that but…
ABL: Ultimately, if it’s not you doing it, it’s me, Stephanie. Yes, to
a certain extent, there’s a little bit less trust, I guess, but it doesn’treally matter.
AA: Yeah, I’d like to also start considering taking other forms of
payment as well so I will be the treasurer for beer and pot and, uh…
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 37/38
ABL: (*Laughing*)
SM: (*Laughing*)
AA: …I will convert those in my digestive system.
ABL: Thank you, Andreas. Thank you very much.
AA: You’re welcome.
SM: Has anybody…actually, that’s a great point. Has anybody ever
offered to donate physical stuff to Let’s Talk Bitcoin? Maybe, other
things like gold or silver or stocks or I mean, I know some
organizations have offers of those but we’re having the problem
where, “Hey, take my altcoins,” right?
ABL: Yeah, no, we haven’t, uh, there’s been no physical offers,
yet. It’s been altcoins and again, the other thing about altcoins of
course, is that it’s not just a donation. It’s a donation because they
want to donate to us but they want us to care about the
cryptocurrency. That’s the fundamental thing. It’s not like they’re
donating because we’re the best people in the world. They’re
donating because there’s an advantage if we get interested in it and
start talking about it with our audience. So…
AA: You mean like, spending ten minutes talking about Frankocoin
that does ADD blockchain confirmation every thirty seconds?
ABL: Exactly. (*Laughing*)
AA: Yeah.
ABL: Exactly, there’s a really fine line to walk here, I think. I’m just not sure how to approach it, yet.
SM: Well, I don’t know if we’ve resolved anything with our on-air
meeting but it’s a good problem to have, right? People are offering
us donations like, yeah, that’s great. Even if there’s strings
8/13/2019 E46 Transcript - Life in the Cloud
http://slidepdf.com/reader/full/e46-transcript-life-in-the-cloud 38/38
attached to it, even if they want us to promote their coin or
whatever; Okay, fine, I’ll take your money, right? (*Laughing*)
ABL: (*Laughing*) – Fair enough. I mean, this is a problem. That’s
the fundamental part here is that this is a problem and Andreas,whether it’s solved in the manner that you described or whether
it’s solved in a manner we can’t even conceive of here, I think it
will get solved and that makes me feel good.
AA: That’s the beauty of frictionless currencies, right? The fact
that all of these coins have very little friction and are very fungible
and very easy to transport and trade is what makes them very easily
transferrable or convertible from one to the other. The advantage
is that unlike the enormous friction we have converting Fiat to
Bitcoin and back. Converting Litecoin to Bitcoin, you know,
Freecoin to Bitcoin? Ah, that’s easy. One of the advantages…what
we’re seeing here is this proliferation of coins is also a symptom of
the fact that you can convert them more easily so it’s easier to
adopt.
(Outro Music – Fade In)
ABL: Thanks for listening to episode 46 of Let’s Talk Bitcoin.
Content for today’s show was provided by Andreas M. Antonopolous,
Stephanie Murphy with Benny and Emmanuel from Cloud Hashing.
This episode was edited by Matthew Zipkin. Music was provided by
Jared Rubens and Jazztown. If you can’t get enough original
thought and discussion, read our daily blog at letstalkbitcoin.com.
Sign-up for our weekly newsletter at theweeklybitcoin.com. To get
in touch, send me mail directly, at [email protected] orvisit letstalkbitcoin.com/talk to be directed to our listener sub-
reddit. See you next time.
(Outro Music – Fade Out)