Comcastrodors, please welcome filmmaker, entrepreneur, cookie baker, and bitcoin expert Stevie Frederick, contributor to the bitcoin news website qntra.net. Stevie chats with us about the structure and economic impact of bitcoin, from fixed inflation rates to the Wu-Tang Clan name generator. He explains the political challenges of virtual currency, the volatility of bitcoin exchange, and the resiliency of cryptocurrency beyond the power of governments.
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Good evening Internet. Viva la Revolution. They will contrast with this is my screw that easily. We are beginning the interview portion of our show. Good friend of ours and you know more or less good point in the scenario. Good luck to you today Steve is going to explain to us in some detail. Crowd joined heartily and I think we’re going to keep it interesting enough to be over the same time. We really hope you enjoy this. We are thinking and learn a lot and whenever it’s all done you can you too can invest All right let’s do we we’ve been a little rude. We should actually introduce our first guest we’ve ever had on the show. So and then you know it’s a lot of travelers you know. They were welcome to come Castro to our good friend Stevie Frederick A classmate of ours was a what it is. Stevie is a bit of a layman’s expert at the Bitcoin community and we’re just asking to talk about the make money he knows fake money. So we’re going to take the engineering and the financial perspective as well as the hard core inside of in the whole cryptocurrency scene and hopefully explain what’s happening and then explain why it’s serious and what the fuck is going down with this whole universe. Hi Steve Yeah I got a question for you so I’ve heard about this but quite a lot of it gets traded frequently and but more important for people got rich on it I want to reach on Bit Coin. So but but but I’m at least smart enough of my money not to invest in something I don’t understand. So let’s just start from the top. What is a is a big coin like a dollar so I guess we should bring everything back down to like the fundamental problems we have with determining my only value but you know can say. It’s like you know like I guess you can think of it as like trust so to speak between not only like entities but also individuals. So one interesting problem a kind of like the Traveling Salesman Problem and other like math problems that are like hard to solve that haven’t been solved. There was a problem called the Byzantine general problem and essentially it’s a way it’s like the promise proposes a bunch of generals you know are out on the battlefield they have a limited network than what they communicate. So they ought to come up with an attack time to overtake a city at the same time. If I if I have understood correctly it sounds like you are the point of the implementation to solve a problem with basics like root out counterfeit information. Exactly so it’s not so much counterfeit information as there is only two types information there is to legitimate information the one that everyone’s you know consenting on and then information that people aren’t consenting on but you know could be you know that’s it’s like there’s like erroneous information. So they all want to find out they don’t care they really don’t care what time they tack on this one make sure that they know the time that everyone has consented on so so that pretty much is only the consent that time and then and every other time. It’s as you were saying earlier as explained to us that socially hash encryption and computation is like the method that spread across the board to be able to assure what proper time was. Yeah let me give the article but I don’t pull it up right now. OK So before we go on air there has to be at least one listener right now who just said what. So let’s just play it like OK to explain the hash is you need to google the whatever they have a generator. Yes Yes Actually in this is not a joke. A hash for those of you who want to use cow like like a function so so a function is like two X. equals four. Basic algebra right. OK so we would solve for X. two X. would be two so. Two times it was for. That’s your function and we can algebraically determinist but hash is get a little bit more complex right. If you pull up the names that are going to pull up the article and then it was on it was already an crawled at the bottom right. So basically like what we’re doing right now as we’re pulling out the Wu Tang name generator in order to understand what a hash is. So if you go to mess dot be tut flash I need general name that people are much better searching Google for Worked OK yeah whatever and the point of putting your name into the Wu Tang name generator and well just go ahead and start off Stevie take take away what are we doing right now so let’s go and put in everyone is not everyone but a lot people know of this new rapper coming up Donna Donna Glover if you don’t know dog lover then you’re seriously not in the know. There’s a gentleman who’s been crushing it comedically musically from one of our resins from Georgia hopefully hunting. This is out on the shelf. OK so what I’ve done is I’ve entered the name Donald Glover into the generator and I pressed enter and now we have the name Childish Gambino. So every time you put in Donald Glover it will always be trials can be that which is how he got his name you know that’s on his album he was rapper name and this is actually a good example of how hash works is that you put in put in the capital is the same so this is like a giant black box that we don’t understand like the process to get from A to B. but we always have a perfectly reliable reimplementation of this one way function. Yeah and so that’s pretty much what a secure hashing out the rhythm is something like this but you know it uses more complex and you know like module like modules and exponents and whatnot in order to have you know a one way hash like there’s no way to reverse it. There’s probably a way to reverse this hash to figure out you know you know how we have small scale study some of the thing but it’s a good example of what a hash is. But we can’t just reverse it by putting down a glider. I’m sorry and childish gambino back into the generator. Yeah yeah you get a new you’ll get a new. A new name. So is their son and I guess I guess you’re saying there is some sort of a way to maybe maybe crack this light light by legs or some sort of I could some sort of a hacker take childish gambino and then reverse engineer Donald Glover and then I guess you know figure out the hash with this one being so simple definitely. But in terms of these secure hashing algorithms that have been vetted through a cryptography community those are supposed to be those are one way algorithms I guess a few years ago there was an algorithm called Indy five where they actually found a way to attack it so that you know you can actually reverse the hash essentially as you’re saying but with these. Oh sure thats a topic all its own. They may be factors that’s used as a verified download for so many resources like if you have a massive things like installation of these different programs and they want to guarantee that what you have downloaded matches the online thing you can we compute the hash of what your data dataset is of your item you have and if it matches that it you know it’s good but if. You can inject a false positive somehow essentially like you would be able to remake the same hash with this different data but it has to be a specific type of different data so your trip is called a collision so I guess it’s like sand. We can fake a computer say two times X. equals four and then make three the correct answer and basically fool everyone a little bit but would be more like. Like it be like three to some large number like where it like overflows to the memory and then so you know it would it would collide. You know I don’t know some other exploit where you know it’s not just three D. like two in like five other numbers that exist in like the whole space of numbers to call for the computer into thinking this is the answer like this is you know five or whatever it always comes out just adds a little fun to what we are also computer and some other names of potential rap superstars. Stevie Frederick our guest maybe also known of the new ten generator as expert. But Gar which was fantastic and I am you’re going to like this one. Here comes Matthew Queen computes into a fearless mastermind I love that which is going to be your subtitle from now on just so you know careless mastermind is that’s my rap name that I would hang the rapping that’s your rap as well make it your contest Renee. Well that’s that’s a big step. I like Matthew queen a lot not but fearless mastermind is our i Macs What do you have here. Max grows max gross comes to the arrogance of Mannus Oh yeah I’ve never seen a better like duo pairing possible like for the guy dropping the hoax versus the guy laying down the rep for this is bull crap. Because I’m way more arrogant than you are and I’m more well I don’t know who’s more fearless. We’re both cowards and you have your deathly more of the technological mastermind I feel like this is wrong everything about this is totally backward. Well that’s a great assessment because I because it essentially is a large scale implementation of a wu tang name generator just for a financial network which according to you is bullshit. OK So I mean I mean so is that is that accurate. So we like and data comes in on one and goes through the hash and it comes out of big callings. There’s a few hours where I make money on this. Exactly so I know there is if you had half of the right you know input goes into the hash in the outcome’s output and it’s always like the same same output with the given input. This is going to confuse some people when people talk about computer science when non computer scientists are listening to computer scientists talk about stuff you guys use words like data and output for those of you out there who are listening. Output literally means like a string of numbers I could be just like three D. xcuse C nine why it’s just jibberish. I think you were describing earlier like the function. And like any kind of like linear function select two X. equals Y.. Like imagine we don’t know what that function is but we can look at the data that we put into it and we know why it is that if you’re saying we know an X. and we get a Y. but we don’t know how we got to that process. Now to derive the function to actually cause why we can just put a bigger dataset and then like infer what’s happening by drawing a graph and seen what the whole behaviors. So this is I guess and check on a massive scale. Yes and that the hash algorithm that we’re looking at is almost incomprehensible no matter how many inputs we attack it with and that actually is how we verify the data because it’s yeah and that’s I guess the either the fundamental of proof of work so I guess I can sit here and explain secure hashing algorithms you know we go through would be very good for a podcast. So a good way to look at it is as you say it’s a black box but in reality though you can it’s open source. It’s out there you can go and look like if you do it now you can go look up how it works you can actually solve that problem yourself you know salt like putting like and patted by hand and whatnot you know it’s I mean it’s a good it’s a good time to be in computing. Actually a really interesting thing in the U.S. is that cryptography. Because if you’ve any sort you know like the strong cryptography was illegal up until like the mid ninety’s so it was considered a weapon you know kind of like oh you know I think you’re right like it created I think all of P.G.P. are pretty good yesterday if I was free to privacy and they actually arrested this guy on federal charges because he just released it as a tool publicly. Oh yeah and the thing is the F.B.I. comes after him saying he just exported like military secrets to the United States something he invented to like enemy nations are now trying to try a matter like. Treasonous bullshit because you just made up the software and shared it on the Internet. And yeah that was actually a really big thing until they just named George Zimmerman. Phil’s a minute the hills are mainly because that’s why I was I was I was so let us know when George Zimmerman shot that killed Trayvon Martin. Right and I was like Is this a cryptology thing all over again. Now would be a glaring oversight by N.B.C. News and huge racist and then just like this all department defense thing as not a board. Glad to hear you’re wrong but wasn’t like early two thousand it was actually the mid ninety’s mixing actually declassified that we declassified but this made it not illegal anymore for people to have like the citizens after Tiger fee in their hands and that’s kind of where we’re actually winning our new Holy crap so they go government deregulation of cryptography then led to the gym. The genesis of cryptocurrency is here. Part of it and also just are like being able to take back our privacy in general like we have no P.G.P. unable to talk like public and private key pairs in order to talk to each other securely even if someone is listening and you know you can this injury I had no idea that that computer scientists were on the cutting edge of civil rights. You’d be surprised. Thanks you very much. You’d be very surprised to hear that having seen the computer scientist who can land probes onto asteroids and comets wearing what Larry. If you search for whatever is being broadcast on T.V. He’s a champion of civil rights right there. They’ve enough from what he’s wearing you know now is the community OK So cryptocurrency is a so big point is a cryptocurrency right. Yes and that and so the genesis of the term cryptocurrency goes comes from the fact that we are encrypting data through our hash. Well if we go back to the whole hashing problem so now we have like a basic understanding of what a hash is you know you input you know something you like give it like the black box you know. Yeah it’s something and then out comes something else but always. Same something else right. So the next step is thinking about proof of work which is the solution to the Byzantine general problem which really get exotic really a way to think about this is you have a bunch of generals who are just trying to attack a city but the author of How to see the same time in order to become victorious. But they get a lot of data about this like and they don’t know which one to trust or they know they are they each announce a time I think send a message you know to each other they’re all geographically separate. Imagine them in a circle around the city so you know you’re sitting in like To the left of me and then you know matching the right to me you guys are both like generals and there’s someone else sitting to your left and right and whatnot until it’s like a complete circle sort of like you know it’s in the communication Exactly so if I announce a time to you then you’re going to get it first and that will get a version I can hand it to you but the guy next to me is like again title exactly so there’s a latency issue. And that’s kind of this like the the fundamental problem of coming to a consensus in a network without having a central authority like someone saying All right well the time is two P.M. You know and you can’t really accomplish that unlike a connected. In that mess structure Exactly so what we sow was so when I got like I mean it’s like it’s so democratic but it’s so cold at the same time like we need to come to a consensus but we’re not going to vote. We’re going have to computer vote for us but it’s not really for us it’s based off of how long it takes us to crack this code. Exactly yeah. So it’s kind of like do you think you see that I guess I’m wrong on that is and we don’t need to veer off topic yet but I can see this for voting. Yeah yeah that’s a really good way to look at it it’s actually one of the the proposals that they had when the system was first coming online back in o nine and I was an invitation to like affirm the source of votes through exactly because you don’t have to trust a central authority right you know like the whole the whole point is that you don’t trust anybody. It’ll never work. It’ll never work this is what we’re going to trust the government the One True God I have to say that like I mean because of the power of government like work better because. Don’t want to vote. Like if it was easy to vote like it when your private key was open you have to be like boom for you at the end like you don’t stand a line like that everyone didn’t do that’s just America because in Brazil your mandatory voting is required and if you don’t vote you better have a damn good reason. Like I have a Brazilian friend who had to send in a form every year saying he was in college and America and if you didn’t send that in like they did they would arrest you know it was it was like a little citation it’s like na na na na na you are now an enemy of the government for not participating in the market. Implicitly become like a like toolset of like the Labor Party if we guarantee that everyone votes going to end up absolutely that yeah yeah yeah and that’s why that’s not going to pass in America because they’re trying to do or that we can to disenfranchise voting so if it comes easy and even fun to do it would be fun to vote on it. It was encrypted your private key and putting into it like a block string in the distributed to every other voter and the coming together is giant calculation and the government supercomputer just guarantees every citizen the public key against the thing and says this is right you know I promise as then then you are literally in a democratic society which is not what the founders intended. Remember the Senate was actually voted on by state legislatures in the original constitution and then the executive came through this there’s a lot of things that the founders intended Matthew I don’t know if I was going to see is today they’ll be like holy shit what’s that thing in the sky. Playing a current account. That’s an airplane we take it to go to everywhere in the world and it runs on magic. Not say OK so I derailed us there but I do see some some cryptocurrency crossover with our democratic process. Yes that’s a really good point that you bring up with you know being very cold it is very cool that we don’t like. It’s about putting the individual first as you can we trust yourself right so you only trust yourself and then what mathematical rules of the universe exist like you know that two plus two is going to equal four you know that two times three is an equal six. Stuff like that. Oh since it reminds me of like public kind of rage outbursts you know like back to that exact example of people upset at that. This T. shirt you know there was no authority saying everyone get angry at this. This was sort of like a collectivist like falling into this in the same way that Anonymous is like a political protest group out of people being individually upset with something and then kind of finding a herd mentality of where to attack. Yeah but it’s worthless I mean and the you know one of the protests of two thousand and eight or an I’m sorry I’m sorry I guess was a twenty twelve when anonymous while it was a thing that spread across the nation led by Anonymous. There was like well over half the Occupy Wall Street movement I was kind of in parallel with that but I think many anonymous sort of hacking efforts go in parallel to civil rights efforts in fact I’ve heard people argue that a D.D. O. S. attack where essentially you get one hundred computers to overload a server and make it unable to do business is basically a digital implementation of us civil rights sit in I mean sort of I mean you can look at it that way. The national service like saying oh you know going to you know going in this place you know Martin Luther King basically the denial of service attacks against local restaurants and businesses. I mean essentially you said in interviews he says I’m going to buy anything. Service it was a year. Yeah so you know restless and civil. So here we have to suppose too as computer crime that the F.B.I. will put you in jail forever for players like interns that is herd mentality. It’s because like I just heard it’s kind of like conscious right this is not a conscious system this is like right this is a like it’s a set of computer laws. We act as individuals and be guaranteed as opposed to continuing the hysteria from each one next right. Essentially like I mean like when we’re talking about how like you know you’re trying to filter out the erroneous data from like you know announcing this time when you want to attack you know the city coming to consensus without having a central authority or any like everyone’s able to go and look at this at the same time with the I guess a limitation of the network and also not having a central authority not having a super general or someone you know sitting in the Senate. They can this broadcast all that the same time this is like this is like fundamental to peer to peer networks being able to come to any kind of consensus at all ever like with anything. Are we now going to the same political issue of bitcoins. When we get to peer to peer file storage because like the primary method of peer to peer networks is used either for private conversation or illegal media sharing but torrents argot example of this as a preacher networkers like they’re much stronger than any centralized but more powerful more in deep enduring and faster to access. It’s like a good term that people use anti-fragile where it doesn’t. Yes Doesn’t it just said these aren’t really well I guess it’s like it’s still fragile. Yeah like each node is individual destroyable. Yeah but there’s so many of them it’s like a crystal lattice of of easily destroyable glass but you can only kill one piece and so did my computer be a node for Bitcoin. Yeah well Absolutely absolutely. The Raspberry Pi could be good for Bitcoin not a lawyer. Definitely just know that release these messages you know one of those that make me money does not does Well unfortunately I don’t have you on. So really what you’re trying to buy a Raspberry Pi were three point one four because I did that was way way back in the day I was about you know November of two thousand how much was that worth then that was worth I think like thirty six dollars and he added on shipping and the time the price was going down so I actually like sort of quote unquote made money because actually spent it while you know it was worth less to him when the when the riser pipe he finally showed up. OK yeah well that was because of a word like today at this current market price probably six hundred dollars maybe maybe close seven hundred so you know in a matter of speaking from the volatility of course prices are going to spend six hundred dollars a Raspberry Pi Yeah I mean to someone who spent ten thousand dollars or ten thousand declines on a pizza which is what like like millions right now. I will kill myself. The million dollar pizza it was better. Well I mean you know if it came from Fellini’s plays great I like please but if we’re doing ten million dollars on it they were going to be from Antigo instead and I was free advertising but we love our city we love sharing network like OK so we have these nodes in these nodes could be my computer or my computer can basically download the Wu Tang generator for Bitcoin which is essentially that the hash will bash which is the routing generator for for making money so I think as a summary what we should have is just to clarify that this is how the structure of what enables it to be an agreed upon and what the status of the economy. Exactly. Yes an emergent phenomena is what it is what it looks like but it’s emergent in the sense that computers agree on an answer but I’m still not seeing why anyone would ever create a node like what’s in it for. Exactly so that’s that’s actually a problem that will get to eventually does one make sure that everyone on the same page with this proof of the work concept where you’re all trying to come to a consensus right now approval workprint work makes sense if you think of like a big room someone raises and says he has the answer but the answer to our generator never does. That’s right exactly and then you continue on doing more brutal work in the answer becomes more more clear right so yeah. Oh I think. This step that we’ve skipped was that each output we get from has to become sort of a recursive reimplementation as we go along. Orgies in the next half so the old hash is included in the hash of the new group that you were trying to solve the past we’re going to hash. Yes sorry it’s that everyone starts working everyone everyone starts working on it at the same time. Well who creates the new problem. Like where where where is the new generator come from. Told me the first one this is the same place for the first one comes from everyone this was working on the same time and then they all had to come to consensus saying hey this is the end. One person says. This is the answer. We will come to a consensus and then they all start working on a new problem the same the problem is always the same but you know wouldn’t will get to you know like the very variables in the problem of making it more difficult making it less difficult you know. Cetera but the basis of it is that the problem is all this essentially always the same and then the thing that changes is the the previous hash you know I don’t like to talk about the margin University where did the problem come from. As you were explaining the problem was basically just a thing to kind of occupy each node so that you get a verifiable process along the hash. But in order to reach like the right answer like only one person will get it like out of phase with everybody else. Broadcast is what I mean sometimes I get like two people get Bannister like close to the same time but but generally one person’s going to find a solution I like maybe one hundred people and then so on so it’s like it’s. Like I guess thick like you’re proving that you’ve done a certain amount of work you’re trying to prove you know I have put this much effort this much energy this much etc into a problem comes out to be essentially time right. You know put in ten minutes of work into this problem and so you know so one block is ten minutes of time two blocks or twenty minutes of time. Three blocks is thirty mins of time and so on you know it all turned ten minute increments. So essentially this proof of work actually represents time it’s like a metronome is like it is a little like a dry mention and causes us to not have to go into it in order for it to exist. So it’s like a wiki of financial records like self courting the entire history of everything that happened. I won’t call it a wiki because which is kind of like everyone can it’s like OK that’s true that’s is not everyone is allowed to mess with it at the same time the idea that you have a forever persistent record of what happened as a function of just using it at all. Exactly yeah yeah you can you go from the very first block you know and then you go to the what the most current one is. So yeah so it’s existed I mean you could actually multiply our anatomy blocks are probably good. That’s you know it’s been in existence for six years you gotta buy six Interlake however many ten min intervals and you multiply that by you multiply that out and that’s you know how many but what the black white you know how many blocks which exist and so in the structure of it you are saying that the the first person to solve the hash as it’s distributed then gets to update the present state of the economy. Basically new transactions are important at this moment when he says how it’s more of like their duty to update the economy and they’re updating it accurately because it’s it’s proven that there’s proof that they’re updating because everyone is it’s transparent everyone can see that all these functions work out they can go through and check it you know. So for doing that work for being part of the problem you get you have you’re incentivized you get you know a reward for being the first person to find it and that’s how you know the inputs as hell the actual. Money or the Bitcoins are created are actually given out as you’re describing inflation the mining process. Yes Yes So that’s how you know the the amount of inputs or whatever you can spend in a network is is oh so this is an implicit reward for nodes to be providers. Yet the economic record by giving them money if they successfully be the first ones out the status and people who are on no to give transactions they can actually add a fee to their transaction in OR and in the person who solves the problem actually get that reward as well and we were looking at those earlier and they’re like dramatically lower than a credit card uptick fees like three dollars three cents to bad though it was eleven cents in that case to me an eight hundred dollar transaction. Exactly yeah. And somehow this either works out for them as well as a Taiwanese company you know get old enough yet Filipina remittances and that’s it’s interesting that that phenomenon exist because like you know you can see sometimes you can see like someone’s been in like ten thousand or maybe one hundred thousand dollars for all of like five cents like a nickel. Like you never do that you can do that anywhere else. You know like Western Union. Well yeah I mean like I think galleries and Western Union has a sort of a viable business models because the stuff the stuff requires some unpacking I mean just just talking about it right now there’s there’s like one listener who still like fully understanding it. Everyone else is like holding onto the side of this like speeding locomotive down the intellectual I like Oh my God how do they get on there. Well I mean I think what we’ve what we’ve been trying to get at though is that we can say that as an economic record this is a reliable data set like in fact we had theorized earlier that imagine if Master Card records were just wiped clean one day you know like everyone’s money which is not accessible for a day of people losing their minds this becomes like implicit. Record that we can rely on and know what the state of our world’s possessions are here most working at a credit card processor you know a few years ago. There’s actually in the news of they sent out the emails like the news e-mail or whatever that in Europe I think you are on of with Swift or something but one of the big peanut processors slash like embedded with the bank went down for a whole day and no more like a twenty percent population can access money at all. So whatever cash or whatever pounds you had on you I was I was it for like the entire day. So you couldn’t couldn’t make any purchases or people you accept money can people can send it but I’m sure our country that’s all there was in London and I when I was in Europe and Europe Britain as a whole like OK so it was really big in London like they freaked out. London still exists. Luckily but yeah but them and at that time there was actually a memetic popped up it was like going to the called me seems OK They called me says meaning he does that he does that out of spite not not toward me I think he does it just to spite like humans in general because he knows what it sounds like he is I am I like I like this new meanie. Yeah that’s like someone’s Grandpa be like Are you playing all the ten doors or something you know actually a Play Station you know God they’re not on the sly because I am pretty much an old man though. Play old man or the both of us I know but I have the old man spirit on like really like I don’t like children. Actually this is this is quite accurate if you can you ARE YOU are the opposite of all man you have you have money secured in electronic currency cryptocurrency which may or may not be a real thing so I haven’t actually gotten to how this thing so so OK so I understand it’s hard to talk about this stuff without explaining what the fuck it’s in the first place. Why I mean we have to do so so I think most of our most of our listeners have gone to we could Pedia Research says the past couple second they’re on board. OK so they understand nodes and flux capacitors and hash and now we are creating. OK So each time we solve this thing we get like a ten coin bonus to have a chance we get for solving a thing you are paid for being an adult is decrypted OK like about right so like you then just got ten coin well or solid that’s the you know you have money as like a process of the coins and will the whole point of it having value as a whole is that they’re finite right there’s a finite amount of them like when I get friends to get a kind of these are the coins will be conversation about scarcity and he was saying you know with like gold and diamonds and what not you know they’re not actually that scares in terms of the universe right. So like an ashtray comes along we put it around. Earth’s orbit was our money ogles not worth anything especially diamonds. Just got a kid. Yeah I mean yeah definitely So we look at it for bed. You’ve actually purchased the fighting line and for your girlfriend and I were starting a conversation and remembering oh my God this is private so I have a lot all of us but I was like you were actually bronze math you can explain from an economics perspective of the perhaps dangers of. Having a adjustable currency like knowing that the inflation is exactly set and that it will hit a final total value would not have any change that. Well I mean inflation people think of inflation as being a bad thing but it’s not necessarily I mean it’s just inflation is that you know my purchasing power is essentially going down over time but deflation is also particularly problematic I mean if you’re if your currency is less valuable then more people are going to purchase things in dollars and in a track skirt it attracts tourists but if your currency is more valuable you can go abroad and spend more money over there because it’s you know it’s got stronger purchasing power. Well I was less thinking about international currency markets and perhaps what happens long term loans if we have no reliance of inflation like if you buy into a mortgage you have an assumption of knowing that. As can be worthless ten twenty years later it will be easy to repay them in the future really what you’re touching on there is kind of like concept of risk and in really what the risk of any sort of a loan is that my currency is still going to maintain its value until until you repay it and a stable inflationary system essentially minimizes that risk in fact based off of what I’m hearing here it could reduce the risk to practically zero. Well that’s not true at all but I guess the risks here would be computer hackers and something in the long run but you know if you can say for sure you know based off of our of our mathematics built into the system our rate of inflation is oh I don’t know two three percent is basically guaranteed to supply as you noted Yeah it reduces or it destroys the risk of someone like Ben Bernanke he or whoever the new Federal Chairman is coming in saying OK we’re going to print money until we satisfy all of our debts and that’s yeah that’s actually interesting topic that’s like really cool you coming with that intuitively because you know this is what attracts a lot of people too is that you know it is finite like to only be a certain amount like you know gold you know is an asteroid you know. In mine and fly you know that’s you know there’s a huge supply of it but they would never ever be you know be a way to create a more like an infinite supply of this like an inflation supplier that you know and I was so really what happened here is you know some genius and there’s no way he is not a genius but some genius created the concept of the cryptocurrency and we now have a new form of money and someone out there has to be said I think this is fake this is bullshit. It’s magic but this is what we mean when Max and I had this discussion before about my dollars a little imagine they are magic. OK And I’d like for those of you out there who are atheists and like to understand why there’s a Jesus you just said that I don’t understand that money is straight up magic. The dollar bill has the value that we say it has and it makes things occur for you and it’s told it’s value is whatever we all agree to it being and you just described the creation of a virtual currency a crypto currency and it sounds like complete and total total bullshit. I mean it’s just it’s not a real thing and but so was a dollar. There’s no difference except the dollar is backed up by guns and this is math backed by mathematics backed up by God as opposed to God But yeah it’s like Nixon who figured out he’s like Duke gold worthless but gun. I guarantee that we’re going to fuck your ass out of you to respect the rights of our so I can easily see like a scifi book where it like you know we have like one real world currency and it’s the cryptocurrency and then all other currencies basically trade with that is the underlying currency Kalak where you know the dollar’s a reserve currency right now I could see the cryptocurrency being in the reserve currency and then everything else functioning off of that would be a very stable reserve currency it might be a mark like you know like to too soon to tell you know what what will happen in the modern trading values are this is patently ridiculous and makes it look volatile is how I think and it’s silly actually belies its underlying the nature of the asset because it doesn’t trade. No one is currently ironic. Yeah we straight it trades like like like a commodity. Yeah and that’s just interest that’s one of the interesting things out because it is finite and he doesn’t you know we’re not printing money there’s no interest rate doesn’t exist it’s just we know what the supply side of the money I mean digitally. I mean you’re literally free money but it’s not like you we will like to sell it will be a future mark where they’ll be quoted of easing in bitcoin you know there’s not like there’s there’s no one to decide that exactly there’s no quantitative and quantitative easing. Look the nature of any currency is such that this is we’re getting back to the inflation argument you have to have more money because if you have more people on this planet if you have a finite amount of money you have to have more dollar bills now each dollar bill mate may be getting less valuable over time as as is the case a bit coin on a longer time frame one bit will be worth less in the future than it is now but if you can predict the rate at which you’re creating new Bitcoins then you have stability and that’s and that’s really all boils down to is you know we have minimized the risk. Well do governments need a method of controlling them. There are markets I think that like there’s like a like a thing that people have used like and also some of them because it also like you see there a lot of modern times like they use the central bank as a way to control you know the flow of money and because everything comes from a central authority write your I.Q. or your bank statement everyone like not use you has access to that those people who are looking at it and able to track where all your money’s going to be able to control where you want to buy something from someone in Iran then you’re screwed right you send the money and then automatically you’re in cuffs or something. Was the simplicity of the government’s present fear of it as a currency. Exactly yeah and that’s what they want to heavily regulated you know they want to try to get their hooks in it but they can’t really find a way it’s kind of like well when it’s not it’s not American I mean it spread the nodes are international is sovereign in this sense I mean then I don’t know that’s actually Cybernaut digital entity now judges are talking about this in fact this is a major topic and. Law school is whether or not the internet should have its own jurisdiction separate and separate and distinct from the United States Great Britain China lite like is the Internet like its own living thing. Get this Tony is offering digital citizenship you can live anywhere and register to be a citizen of the stonier digitally take residence anywhere and then you can start a business with story keep banking there and just like have that either is a door primary citizenship. Yeah and for those of you who are looking to cheat on your taxes I’ll tell you as your tax attorney do not do so but if you were going to do so well like you have a good friend of who lives full time remotely just towards the world as it does. Software. Yeah and what he’s doing is setting up Estonian banks so what’s happening is because you know he’ll have like a fat like tens of thousands dollars you want to put into a bank but since he has zero credit they won’t open him up an account yeah you just try to do only hope Albert allows him to do that in the problem you can’t open up an account is because he actually matches like a terrorist profile. Oh yes. Something like he was explaining to me that I just don’t want to have like a profile but he was talking a big data perspective like being advertised to having like your life manipulated by like that which has a force around you that you have and he was afraid of all these things and I was saying Matthew that is your profile that’s literally like how terrorists behave stay off every radar off every watch list. I’m sorry bro you look like a villain to our system. So a couple years ago I went to the gun show in Marietta and you want to register you know as I have today because I wrote my name down and this was because at the time I was still in charge of course I mean you know that’s just totally unregulated swapping right just like guns for guns for fun. Now I know there’s actually a little built builds and just for them but this is back when I was doing a clean firm I had my own law firm and I don’t trust her heart at the time so I was just trying to sell them. And yes it’s just that it’s like trying new things so we go to the gun show and I walked around I met a. Just a slew of people who are not terrorists at all but they just they do not trust the government and they were explaining they’re like well I don’t have as many guns as I want. Here’s how it works here’s all here’s you know what I’d like to own but people people are afraid of me for this and so like I met people who are off the map. Like if I don’t like don’t agree style shit yeah it’s like Facebook profile OK yeah that’s just a first step like they did but they didn’t have any US records birth certificates like we did have a dearth certificate and after that like after age eighteen they just vanish and you just keep gold and sort of like dollars Well they had their money tied up in different things probably none of them were sophisticated enough to know much about Bitcoin. You guys might think runts wasn’t a funny character because he doesn’t he keeps all his assets in gold but this is the level of shit we have sort of back. George just type interactions are not bad people it’s just like you know very private. Yeah I mean that there are people out there who still just you know they just really don’t trust the government and like you know remember we we do it we’re from the south I think they’d crush us because we made our own said whatever will make our own government were black checks and hookers and slaves and then when the federal government said no you will not go with a gun and in a committed atrocious war crimes against us in order to ensure that we would not be. Now ironically we actually produce more people for the military than any other part of the country. Oh yeah that well that whole south will rise again for if they wanted to it was the first time I’m done with it. OK So what’s going on with bitcoin now. So like when you look at the like we’re talking about how the one hundred thousand dollars one hundred thousand or two thousand back when Peter. Yeah oh and then like how I paid three point one for the coins for a Raspberry Pi. Yeah and what not so we look at is raspberry by a friend of mine is it was a hacker project to create an incredibly low level like hardware device that will take any sort of program. So it’s basically a hobbyist computer for you take but you can run a chart but you can run a we call it this like any kind of links on an on it and you know what you want to be like flavor of Linux on it and it runs rope relatively you know reliably. Well yes like it’s not like super powerful but I mean it’s more powerful than what you would have in like any computer in the eighty’s or any P.C. in the ninety’s or imagine completely minimize from the bloat of operating systems. For God’s sake. I mean I feel like and this is like I mean I’m just tech savvy enough to know that Linux is making your life hard like I look at Linux and I’m just like you know like a masochist or something like like like like Apple you know it’s pretty streamlined and you know Windows for all its faults you know it’s just it’s easy to use I look at Linux it’s almost like looking like a DOS prompt command that is a fair criticism. And yes many times when you are in touch with the data at that level you prefer a command line interface you don’t want to deal with like all this nonsense like most people I know prefer that even for their get repositories get keeps track of an entire file system and every change to it and the like I don’t want to see the graphics file explore I just need line items because it’s like Apple is a pretty girl Microsoft is some stuffy accountant and Linux is like this bearded Wizard up in a tower doing some strange thing this is a very slim and like no like everything that wizard has is exactly what he intends to have you ever seen a fat wizard by name one. Now a fantasy book that was or not there’s definitely been at least one there is no Merlin is then the temple door is then buy in and off we spent but on that card is then in the card. He’s a wizard of Star Trek those solutions were straight up magic. The Picard maneuver was literally to go in to go into faster than light speed. Shoot someone and then go out so that the missiles are going after them faster than they can ever detect them ever hitting them. It’s actually pretty slick. It’s that’s not magic that’s just signed those probably like ice like that’s probably like W M D level shit if you can send through warp speed like torpedoes to annihilate a planet before it can even detect that it’s you know Star Trek Nemesis where Riker gets his own than ever now that one was pretty silly movie. Like it was an awesome movie but becomes a Star Trek movie is it just as he was is very much the precursor to J.J. Abrams is going entertaining but have we lost Star Trek as a pure down you know and only I would say let’s try to get back on top of my feeling for this conversation the Star Trek tangent is well received by people who’ve made it this far I don’t know if we’re going to talk about because it deserves at least ten minutes of Star Trek to pay. Yeah well I still say that Kirk was a better guy. And I still say that gold plated lab might be the finest curtsey platform brought to us by the farang he has again going so insanely you know like you know Star Trek now you know I’m wearing a fuckin Star Trek insignia instead of the star like Astra which was an ironic joke I am one being that we have to be on board. OK I’m telling you man like like I think that the next generation in many ways was superior to the original model but Captain Kirk and I’m talking to William Shatner here just like the new guy Chris Pine is is pre-judging going audience that’s am just saying that Captain Kirk was a more inspirational man and thought on his feet better than Harkat and they actually did set up later episodes very much like that there was one in D.S. nine where they accidently went back in time and splice them into an old episode of Star Trek mandamus around ideas at some point when I actually was extremely clever it was a very silly one of the dead but I would like the whole episode started where they had a visit from the office of temporal affairs. Oh my goodness and so there’s apparently literal time cops policing time travel situation. My van down inside of the Federation was and I’m glad it was not John Cloud but it was bureaucrat time cops it was even worse. And so they’re like sitting there and being like we’re going to hold you for treason against existence if you alter the timeline zero benefit and they can’t even like do it because there’s a moment where he says are you arguing that your actions were the result of a predestination paradox and Captain Sisko. Like Well not necessarily And they’re like oh good we hate those but then at the very end there are like so I guess so I guess what you’re saying and start again are says that time is one area does not split off into a different time. Forks all the time they go to parallel universes where time would differently in every way I want to go any time to remember fucking bearded Spock that doesn’t make anything but I’m going to time cops if you didn’t have a law if you if you have the exact evidence why you me time comes to prevent like for King of the universe why would you care to differ you river. Maybe that’s true because this is a wide ranging philosophical debate but that’s a dead end with them asking how this is going to set up. Did you did you talk to him and they were referring to this hero of the past like everyone grows up hearing the amazing stories of the renegade like Pioneer Captain Kirk like all of them like the same way that we see like Star Trek is like slightly more boring in the future compared to Kurt. Like that’s exact same shit for them. Like he’s like they’re Clint Eastwood like I’m saying it like for real it comes up like through that way and the first time Captain Sisko mentions Catacomb they’d both like tense up like more records of temporal violation than any man in all of history and then like it goes so far as to despite hating him for like their bureaucratic job just being so inspired by the guy as like a hero you know. So yes the debate is already implicit to the canon of Star Trek as an entire entity. So I’ve got like a substantial portion of the you know I talked to way too long about that but I think it was entertaining it was a timing thing and God damn it. OK we didn’t listen to the Big Horn debate wants to feel good about Star Trek again. OK so we went on ignoring our guest we’re going to see them so sorry. We’re going to turn this into episode two so we’re going to introduce you again just for the sake of it. This is Stevie Frederick we were talking to him earlier as a introduction into the methodology methodology and structure of Bekele and why it’s reliable why it’s safe. Now we want to get into the political implications and what it as Matt was saying it because it shows more as a commodity now and it’s volatility in value relative to other magic value attributes of things like a dollar. Well let’s start with let’s start with a value fluctuation like what is causing it primarily. I know that many times when but Koreans drop tremendously like a crash. I heard it was like the result of like a major bank being hacked at like someone like distributes everything they have at like zero five cents and as a result like the whole tray becomes messed up as if someone sold a bunch of Apple stock for a dollar. Like implicitly declining the whole value of that as a trade. Maybe maybe I’m just going off a weird article that was exactly accurate. Well like I like I guess like with the market you have like an ask and I get bid price so you know these are like these like consist of like an order book so you have a whole book full didn’t ask and if someone is like All right well I want to you know see this ask. They’ll treat it like the Louis ass there is like you know like three hundred ninety three thirteen and three sixteen or whatever works. Closet stuff. Yeah exactly. So you have an order book for you know these things and the only issue that like that’s really come up you know multiple times and still coming up is that there is no reliable exchange or like method of like pricing for Bitcoin because these exchanges actually you know what people call them scams changes because they they don’t really like honor you know their contracts or whatnot like I think the way I think I think it is that with cryptocurrency if you have to have a higher point. Fix than you ever would with normal banking because you have no one enforcing you like yes or like the F.B.I. can calm an attack you whatever but it’s like based on trust right so like if you trust me and I break that trust once then you probably never ever going to be with me again you’re like go through out you know like Seinfeld. So when I describe it is literally like sizing up drug dealers. Yeah that’s exactly I mean that’s how you have to operate in this world is like how a drug dealer operate like I don’t know you don’t know if you want to shift him out of here you know exactly. Yeah well I mean and one of the things that you’re touching on kind of the tangential way is the concept of volume with regard to the stock market so a lot of times you’ll see this is big at the opening of twenty fourteen. A lot of those pot pot stocks out in California went through the roof and if you were smart and picked the right one on the I.P.O. pot sales. Well the pink sheets and that’s like basically penny stocks and you can purchase. I mean I mean it’s literally like five cents will get you a share and some dubious company and it’s generally a scam but a lot of these things went through the roof right afterwards and people were you know paper millionaires overnight because you know I put twenty dollars in this thing it gets you up for Fillion shares and of each of those shares go up to sixteen bucks apiece Well holy crap let me just retired right. Well no volume you have to have someone to whom to sell. Yeah I guess like you hope the book or the market does that exist for a set of orders like it was only you know like smiling is like you speak my language sell finance now is this is this interesting like where like it that is in my mind it’s like it’s like a different it’s a different world but what if you see a book that I don’t think in volume it’s like yes like Look you’re communing. Yeah there’s like the Clintons I mean. Understanding each other they understand no one they just got beaten into submission like the Rodney King Kong and so like you have a certain number of bids that you can actually like to fill that can be filled so there’s only like one hundred thousand hours worth and that’s the most it will get out with whatever is on paper and that’s like really one like they guessed a dubious things of the coin world is that like the exchange like we like Mt Gox was handling a large volume you know at Mt Gox they were they were the first I guess. EX like a real big it’s going to link exchange the only big change with this like a pick when it changes explains a big point to dollars and they eventually add it on other currencies like the end and you know euros etc So they were brokers they were I guess are kind of like brokers but they were exchanged was like you had to put you to put the money on their platform and then traded with their platform. Kind of like you know you know if you want to buy Facebook stock or you want to buy. Like Microsoft like it’s electric on Nasdaq you know cetera versus like you know the Tokyo exchange or like a Chinese exchange or something. So so after first cryptocurrency We then had the first digital exchange. Yeah kind of kind of an emergent phenomenon. Yeah it was very similar to the way Nasdaq works is now as it doesn’t actually have it like a tree for a computer system you know but I mean that’s a centralized system versus like in the same way that these are centralized so with the intent actually still blows my mind that the New York Stock Exchange is a real thing because again I actually think of it actually understanding your stock exchange better as a kind of an abstract idea like we all come together and we just do business right here because it’s more efficient and there are some we could buy like the whole thing like you could just like purchase a seat on air and I was like How are you just buying an exchange I don’t really understand what it is that I think even these days like all the volume trading in actual business accomplished on the stock exchange is done by supercomputers in fact the very first transaction there’s extreme amounts of money invested by firms to be able to have the guy who can get like a split second faster in the other guy’s computer. Now that’s called day trading and it’s a very popular thing and one of the things that people are saying is that you know once the supercomputers got involved there’s no more room for people like us to sit there and you know make a quick buck and that’s absolutely not true because once you factor that into your own day trading you understand that you know the computers are programmed to kind of go in this sort of a direction or you know you know you start to develop different sorts of patterns. Exact same thing as before from our perspective the only problem is you know getting in and getting out can’t is much tougher for us that is for them. So this is a new dataset it’s something else for us to deal with. It’s you’re you’re never going to make as much money as the super computers but just remember that a computer is very stupid. They’re only programmed to do with their programming you know telling you guess but well compared to human beings but they’re programmed to do with the program to do. They key you can’t account for everything in a human being is inherently creative so you can still come up with you know just using your instinct might make better better choices in day trading then. What. Yeah this is going to look at it it’s a difference between say the New York Stock Exchange or Nasdaq versus the exchanges like Mt Gox which is now defunct. Is that you know they have a higher they were actually much higher caliber you know then. Mt Gox it was like I remember in two thousand and thirteen when they had a huge influx of people back you know when Bitcoin went from like twelve dollars like one hundred dollars and I was like oh I got to get in on this and you know on this you know they had a huge influx of people and into Got says it didn’t really cost much actually sign up you know if you want to go like into the N.Y.S.E. or Nasdaq you know you have to pay a broker to get a fee or whatever if you want to actual seat is going to cost you like like an obscene amount of money. Probably as much to get a fifty yard line seat for the new Falcons stadium I don’t and I get it for your entire life. Well that that bill is going to go way down after the first few years or so. With so with Mt Gox I had like hundreds of users make thousands of users per day signing up and they’re each you know trying to trade on this platform and you have like this in call out like like like training like the second you put in an order like Mark Warner you know would take a long time for it to actually execute you know you’d say here’s my order and then fifty seconds later then that’s when the actual tree would execute So this actually got up to like obscene levels where it was like ten minutes you know you could send you know data to like Pluto or some shit and have it come back through you signals versus like actually adding a tree execute on Mt Gox and this is like has been unheard of you know and most fitting platforms like Nasdaq like within like milliseconds right so I actually heard that that gap between registering into the basic into the bloodstream of getting it like actually put it as like a record in the current financial market was actually sort of protection a term of let’s say your own computer system was hacked or compromised so it sells off your assets you can then like to authorize this before it becomes finalized in the system. Yeah OK I don’t know I guess stated again. Thanks for going on that time and I just read it somewhere and read it and now I’m wrong. Yeah yeah yeah. I don’t much like it but like the rest of America. If your sources read it you’re wrong. If your source is Facebook you’re wrong if your source the New York Times you’re also wrong I’m sorry. Probably but we have these these lags on the exchange trading is what like you kind of you can ask anything just like are they actually being honest like are they their values and what they’re publicizing as what they’re trading actually real and like among many other things so there’s not actually a real like if you really think about it is actually a reliable source of price for Bitcoin like the market is kind of like the actual market where you’re trading between U.S. dollars and the coin is kind of scamming So this actually creates like a like a cannoli conflict the kind of like a. I know what you call it like this like the unknown unknown that’s kind of like affecting the entire financial market but the underlying market of the clinkers like people who want to do real finance can actually do because they don’t have reliable information from these exchanges so that risk you’re looking for earlier. Oh yeah I mean like you just you just nailed risk I think what we said I mean earlier I mean I will backed up what I said earlier bitcoin in a vacuum as an entity as a financial is not a stress free except for hackers but now with these exchanges. Exactly but what I didn’t exchange how how how do we get rid of because we can’t get rid of money well I mean like I don’t know B. of the heard of something called Koala. It’s a really old Arabic I have I haven’t as a matter of fact and it’s actually OK so here’s why it’s actually an Arabian precursor to banks and it’s essentially what it does is it allows you to get around having to you know use for foreign exchanges for reserve currencies actually go ahead. When it was really cool because like you have like a lot of broker and like two different cities you give money to the one hour broker and then you know that guy you know sends a message to the other while a broker in a different city and they release the money to whatever you’re trying to send it to you with like an authorized passage etc And this is like yeah you said it was an Arabian thing way way back in the day you know like you know this is still used to still use Yeah it’s like centuries old and this is actually I think what we’re going to actually see in the big one world you see there’s a cycle of the coins where you can actually train people in cash like you around your city in your local area and that’s a good way to get supply because you know you just give them cash to give you you know a piece of paper with with a key on it. You take th