March 26, 2018 • 56 mins
You've heard of bitcoin before. It's the entirely digital, decentralized currency that supporters tout as the next step in financial evolution -- and critics call a massive scam. But what exactly are cryptocurrencies? How do they work, and why do some people believe they're as much a tool for conspiracy and crime as a tool for trade? In part 1 of this series, the gang invites returning guest Jonathan Strickland to explain the nuts and bolts of bitcoin, along with the advantages and flaws of the system.
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Episode Transcript
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Speaker 1 (00:00):
Hello, a um, this isn't the start of the show.
This is just a surprise welcome to the first part
of two parter episode that you're going to get all
in one single week. That's right, crazy Town, that's right,
Friends and neighbors, the rumors are true. Stuff they don't
want you to know. Is officially coming out not once,
but twice a week every week, and this first entry
(00:22):
is a two parter, a wonderful conversation we have with
our pal Jonathan Strickland on cryptocurrency. But that's not necessarily
what we're gonna be doing with these We've got a
lot of surprising store gonna be All kinds of things
are gonna do with these second episodes, including just the
stuff you're used to and Friday, you're gonna get that
same episode you're always used to getting in your feed,
but with another special treat earlier in the week. This
two parter is coming out on Monday and Friday, but
(00:45):
from now on you will get episodes on Wednesdays and Fridays.
So at the end of the day, nothing is really changing.
You're just getting a little more conspiracy bang for your
conspiracy buck. Wait, the show is free, perfectly said Noel,
let's get on with the show. From UFOs to psychic
powers and government conspiracies, history is riddled with unexplained events.
You can turn back now or learn the stuff they
(01:06):
don't want you to know. M Welcome back to the show,
(01:26):
ladies and gentlemen. My name is Noel, and that feels
weird because that's Matt's part. But he's making a mad
dash for the studio right now and should be joining
us shortly. Yes, our compatriot will be here for the
second part of our two part episode. They call me
Ben you are you. We're here with our super producer
Paul Decans, and that makes this stuff they don't want
(01:49):
you to know. But that makes this a very special
episode of stuff they don't want you to know. Wherein
I promise I will not mention Ben Bucks too often.
We are diving into the strange, nascent world of cryptocurrency today, folks,
and to do so, we decided that we needed an expert.
(02:12):
We needed a Virgil for our collective Dante as we
venture into this darkness. And that is why we were
fortunate enough to persuade our friend Nemesis and returning guests
Jonathan Strickland to come on the show today. I'm so
tempted to say it's time, gentlemen, that that's that's the
wrong show. Uh yeah, thanks for having me on. I
(02:36):
hesitate to refer to myself as an expert subject, refer
to you as I appreciate that. I'll accept it, but
only begrudgingly. And it's not really a shameless plug because
everyone in the room right now is involved. But Jonathan
was referring to another show that Ben and I do
called Ridiculous History, where Jonathan makes a delightful, delightfully cringeworthy
(02:56):
appearance every every now and then as a version of himself.
It's called the quiz stere No, it's pretty much my
true self. I mean, let's let's be fair. So do
do check it out? You will? You want to listen
to a couple of different episodes, because if we could
provide you a peek behind the curtain, friends and neighbors.
(03:16):
Sometimes on the show, Noel and I are not completely
certain win or if Jonathan will show up. He just
kind of pops out of the wings. I have a
question to start, Ben buck Worth these days, I'm glad
you asked. If you're going into it really depends on
the market, because, as we know, all currency functions is
(03:38):
sort of an agreement, an article of faith or confidence.
How many badgers can I buy for a ben buck? Oh, badgers.
Badgers and ben bucks have a pretty solid history. You
can get a ton of badgers for one ben buck.
I'm I'm starting to be concerned that there might be
a bubble. Actually, you don't. You don't need no stinking badgers.
(04:00):
So that's that's a that's an interesting question. Thank you
for plugging ben bucks. No, of course I think that
should be the next big currency. But for now we're
just gonna have to settle for bitcoin, which today is
worth ten thousand, nine four U S. Dollars per bitcoin,
which is kind of crazy because it was not that
long ago that it was worth almost twice that it is. Uh.
(04:22):
That's one of the things about bitcoin in particular in
cryptocurrency in general that I'm sure we'll cover in this
discussion is it's volatility. Yeah, because the value that Noel
just provided us here at the top of the show
will almost certainly be different by the time the show publishes,
and may well be different by the time we're done recording. Absolutely. Yeah,
(04:44):
In fact, that's a big problem with cryptocurrency, but I'm
sure we'll get into that as well. Let's get right
into this shirt off. What's a what's a cryptocurrency? What's
this fancy term you're you're throwing at us? So you
guys know the concept behind crypto bography, right that You've
got essentially some method of encoding information. Someone else has
(05:06):
that method of decoding the information, and that way you
keep the information safe between the sender and the recipient.
If anyone intercepts it, they can't do anything useful with
it because they lack the ability to do that decoding. Uh.
Typically we do this with things called private and public keys.
Public key is something that you share with the entire world,
(05:26):
and any message they want to send to you, they
can encode with a combination of a public key and
a private key. You can then unlock it because you
also have that information. But it's to get more into detail,
gets super technical and it requires a lot of definitions
upon definitions. So rather than do that, will simply say
(05:47):
cryptocurrency is a method for sending a a record of
transaction between two entities. Uh. And record of transaction is
important because one thing you got to remember is that
bitcoins are not physical things at all. Right, there's if
you have quote unquote, if you own bitcoins, you don't
(06:08):
own anything. What you have is a record of transactions
that all terminate with your digital wallet. So it's essentially
just a record of transactions that all came to you.
And that is what we mean when we say I
own like seven bitcoin, What it really means is I
have a record of a accumulation of seven bitcoins that
(06:31):
all terminated with my account. I see. Okay, So typically
when we think of cryptocurrency, for most people, we think
of bitcoin R. It's the it's the windows or the
apple of the cryptocurrency world. But there are other kinds
out there, right, sure, Yeah, there's a theory Um, there's
light coin, there's a manarow, there's Ethereum Classic. You know
(06:55):
when they went to new Ethereum and it didn't go
so well, yeah, they just they want to go back. No,
there really is a cryptocurrency called Ethereum Classic. And then
there's also ethereum z cash, doge coin. I mean, there's
a ton of them, and Bitcoin is the one that's
best known because the the entity that that uh suggested
(07:19):
the creation of bitcoin is kind of looked at as
the person who laid out the basic rules for how
cryptocurrency works, because if you have a digital currency that
doesn't exist in any physical format whatsoever, and you have
to have you have to have a method of being
(07:39):
able to buy something with that cryptocurrency or at least
hand over that cryptocurrency to another person. Otherwise, what's the
point If you can't do anything with it, you just
have it, right, Like, it doesn't do you any good, Franklin,
right exactly. Don't mock them. They are they are going
to appreciate in value or hummels, they're adorable. But yeah,
(08:03):
if you can't, if you can't actually spend it, it's
not currency, it's not any good. Doesn't do you, doesn't
mean anything at all. So you have to I have
a question on that point. I mean, can't you still
invest in something that you you have to make it
liquid before you can spend it, Like you can't technically
spend stock, sure as you get your money back out
of it. And you could argue, and I think it
(08:24):
would be a very convincing argument that cryptocurrency, especially bitcoin,
represents more of a commodity like a stock, rather than
an actual currency. Because of those problems I mentioned. You know, Ben,
you talked about how the value of a bitcoin could
be drastically different by the end of this recording session
than it was the beginning of the recording session. That's
(08:46):
actually true. That could be true within the context of
an a single transaction, which makes it very difficult to
spend any currency if by the time the transaction is over,
the amount of currency is the worth of it is different.
How do you how do you reconcile that? But I
think we all understand how what makes a stock go
up or down? It's tied to something like tangible like
(09:08):
a company doing well, or or an acquisition or something
that you can say, oh, this company is doing well,
the stock is improving, going up in value. How does
that work for bitcoin? Like, what where does this volatility
come from? It's largely due to people's confidence or lack
of confidence in it, and that ends up being people.
Is is a really generic term, but it also means exchanges,
(09:29):
Bitcoin exchanges and companies that have come up around the
periphery of bitcoin. What we just call them, you know,
like players or stakeholders because they're they're not all individuals
as sure, right, some of them are represent conglomerates of
folks who have all kind of dedicated processing power to
the mining of bitcoins. Will get into that in a
(09:51):
little bit. What I'm excited about. Yeah, So it's it's
this crazy thing that you know. Faith is a very
powerful thing, right If I if I really believe that
that coin is going to be worth more in the
near future, and enough of other people also really believe that,
then that's what makes it worth more. Honestly, when it
(10:12):
comes down to it is the value of anything is
determined by how much people are willing to pay for it, right,
There's nothing intrinsic about anything. That belief is also what
makes fairies real. I mean, if we want to boil
down down knell, all cash is a lie, I would
prefer the termly an article of faith or a coupon.
(10:33):
It's just a coupon that can get you more things
than say coupon at that path and beyond. Yeah, but
I mean, okay, so if I if I give you
a piece of paper and I say this is good
for one BackRub which spoiler alert Valentin's days around the corner, Ben,
now you know what you're gonna get. So if I
give that to you. You know the value of that
piece of paper I gave you is one backrup. But
(10:55):
let's say instead I give you a dollar and you
look at this dollar and you say what and I
get for this dollar? The crazy thing is the value
of that dollar is completely dependent upon a huge number
of factors, right, And what you can get for a
dollar at one day is going to be different from
what you can get for a dollar ten years from now.
(11:16):
And so then the argument would be that with cryptocurrency,
we're seeing this at a much higher frequency, of incredible frequency,
to a point where I personally would be terrified to
spend any bitcoins because if I owned them, I do
not in the just for everyone to know, I don't
own any bitcoins, but if I did, I don't know
(11:37):
that I could use it as a currency. Because if
I were to go into a store and I say
I would like that candy bar, and the store owners says, well, Chap,
that candy bar is one dollar, and I slap a
dollar down, and I buy my candy bar, and I
go home and I eat my candy bar, and I'm
all happy. The next day, because of some sort of
calamitous event, I suddenly discover that a dollar would allow
(11:58):
me to buy five hundred candy bars, I would just
think I wasted that dollar I spent yesterday. Right, I
shouldn't have spent that dollar, because I could have. I
could have bought five hundred candy bars today with the
dollar I spent yesterday. Well, that's like bitcoin, except it's
happening every ten minutes. It's also happening in real life.
Early adopters of bitcoin used I think, used it to
(12:21):
buy a pizza famously gus here about that, and then
you know, you can see the very very depressing and
humorous calculation of how much the poor guy actually paid
for that pizza. And this leads us to another question.
So what are the nuts and bolts about how this
bitcoin transaction works. Let's say Noel is selling you the
(12:44):
candy bar, and you are buying the candy barbure buying
it with a bitcoin. How does that money move from
you to knowl and how eventually do you try to
get it out of the system? And then we'll have
another after that? Right, So this is starting to get
into the realm of what blockchain is all about. All right, uh,
(13:08):
And blockchain is in fact the technology the idea that
Satoshi Nakamoto was really talking about in the white papers
that he they she who whomever Satoshi Nakamoto really is
published back in the first decade of the two thousand's.
So what knell what I would do if I were
buying something, if I was giving NOL some amount of bitcoin,
(13:32):
is that there would be a transaction, and in that
transaction would be some pieces of data that would include, uh,
the public key, the private key, or I use my
private key to sign off on this transaction that kind
of creates this code. There would also be Nol's address
for his wallet, because there has to be a place
for this to go, and then that enters into a
(13:55):
shared ledger that is across the entire bitcoin network. So
when you think about bitcoin or any cryptocurrency, there is
a network of computers. It's it's you know, might be
using the Internet to send information back and forth, but
it's not the same thing as the Internet. It is
its own little network within the greater realm of the Internet.
(14:16):
Everyone running the the software is able to actually take
part in this. That transaction enters into a ledger of
all transactions of all bitcoins that have been generated so far. Ever,
and uh, then the various computers out in the network
(14:38):
are all working on a very very difficult math problem
in order to verify the transaction. This takes about ten
minutes per block of transactions. Once that ten minutes passes
and someone out there has solved the problem, they are rewarded. UH.
This is the mining process where there are bitcoins that
(15:00):
are actually generated in this process until the ultimate number
of bitcoins has been created. At that point, no more
bitcoins can be mined in that way. But that's the
that's the compensation that you get for mining. You you,
if you solve it, get those extra bitcoins. You also
have said, hey, I've just verified that transaction because I
(15:23):
solved this very difficult math problem that was created through
this record of transactions tracing all the way back to
the very first ones. And now this new block can
can be put on the end of this chain. So
that's why you have this technology called blockchain. Each block
is a block of transactions that have been verified by
(15:44):
the various computers running on this system. And once you
have solved that block, which takes on average ten minutes
to do, UH, it gets added to the chain, which
is again shared across all computers, so everyone knows, uh
that the transaction took place. Now, they don't know the
identities of the people who spent and accepted the money,
(16:06):
which is going to be important later, right, that's all anonymous,
But they know that the transaction happened, So in a way,
you could argue they know the accounts involved, they just
don't know who those accounts belong to. You hear a
lot of people losing bitcoin or like having bought it
on a lark, like years ago, and all of a
sudden they're like, oh, I got heard an NPR story
about a guy who's like, I bought this bitcoin and
(16:28):
now I realized it's worth the whole crap ton of money.
And the NPR reporter went with him and helped him
dig through his attic looking for a particular hard drive.
Why is it that specifically, Like, you know, when I
buy something, I would think there's a record in the cloud.
I would need a record on a physical drive. Well,
what's the deal there that that's part of the idea
(16:50):
of keeping this secure so that you and you alone
have access to that cash. Right, if it's something that
just exists in the in the cloud, then arguably with
the right kind of technology, you would be able to
access the information and be able to take advantage of
it and spend bitcoins that are not your own, right,
that's the That's one of the protections is you don't
There are two things the blockchain needs to protect against.
(17:12):
It needs to protect against you spending bitcoins you don't
actually have, or you spending the same bitcoin more than once.
So for example, if I send if I have one
bitcoin or the transaction record really of one bitcoin in
my personal wallet, and I set up a transaction with
you null, and I send that bitcoin to you, and
(17:34):
you accepted immediately before the trends, before the transaction can
be verified. And then I send a bitcoin to Ben,
a bitcoin I do not own, because I've already spent
it with you null, but because you've already you've already
accepted it before the transactions verified, there's no record that
the transaction has yet happened. And then I send one
to Ben, I could potentially try and spend the same
(17:56):
coin twice. That's a problem. We can't do that with
physical currency, right. If I give you a dollar, I
can't magically give that same dollar to Ben because I've
already given it to you know, how does it in
that time? How does the system know which one was
the legitimate transaction? And like it's not legitimate until the
verification occurs, not legitimate until the verification occurs, and it
takes ten minutes, which is why if you're making a
(18:18):
big purchase, typically the vendors will make you wait for
the transaction to have been verified before they will complete.
It happens with stocks as well, like if you're withdrawing
your stock into a fund, you do have a mandated
waiting period. I wouldn't go back to the We're gonna
go back to the question where we talked about generating
(18:40):
new bitcoin like in too far into mining Bye bye
block by solving these math problems. Ye block, bye block,
he said, until it reaches a threshold of the ultimate
amount of coins that can be created. That is not
an absolute ceiling, right, that's per block. Oh no, there
is eventually an absolute ceiling. That one. So those bitcoins
(19:00):
have been mind there will be no more bitcoins ever.
Mind that you get you get to a it's somewhere
in the twenty million range of bitcoins. Once you hit that,
that's it. But you might ask, well, if the trend
if verifying transactions is how you earn extra bitcoins, and
that's why people are interested in dedicating their computers to
(19:23):
doing this. Like they're earning money this way, right, They're
earning bitcoins and that represents wealth. That's an incentive to
be part of this group. If that all the bitcoins
are mind, why would you keep doing it? Right, why
would you keep supporting the system because you're no longer
getting that wealth. Well, in the future, what's going to
happen is you're going to see more and more transaction
(19:44):
fees attached to any transaction where a certain portion of
the amount of bitcoins that are being handed over are
gonna go to whichever computer or computer system verifies those transactions,
so that will perpet to wait the system even after
all the bitcoins have been mined. And this leads us
(20:05):
naturally to a couple of other questions, uh, namely what
these things are used for, because we have a candy
bar example which works to explain it, but that might
not be the reality we see on the digital ground.
And we'll explore this after a word from our sponsor.
(20:30):
And we've returned one of the questions that one of
the questions that we didn't quite get to. They just
want to plant in your head. Here is the idea
of taxation, which I believe governments are still trying to
figure out, like shoring this out and right now, there's
a practice called tumbling wallets, right where wherein someone wants
(20:53):
to avoid being associated legally with some kind of profit,
but they still to have the benefits of that. Right.
It's it's a yeah, it's kind of the digital equivalent
of Swiss bank accounts. Right. It's this idea of having
having a place where your wealth can exist that is
(21:14):
not easily tagged to the actual person, the identity, whereas
you could still in theory at least access that wealth
and perhaps liquefy it and then get access to the
actual dollars that you would use to buy and sell
or whatever. Um. It gets really really complicated. Uh, it's
(21:35):
it's a tricky thing to talk about because you're you know,
you're really you're talking about something that you've manufactured. Uh. Two,
have value. I mean that's the only purpose of bitcoin, right,
is that it has to have value? And why does
it have value? Because people buy into the fact that
it has value. People dedicate ridiculous amounts of processing power
(21:57):
to try and solve those difficult math problems. You know,
I said that it takes ten minutes to verify transactions.
That's by design. The math problems are only as difficult
as they need to be for the amount of computing
processing power there to solve them within about ten minutes.
So if you were to see a sudden drop off,
let's say people just realize, like, I'm losing more money
(22:20):
running this gear than I am getting in bitcoin. It's
actually more expensive for me to mind that I'm I'm
gaining in what I'm getting back, you would see a
lot of processing power drop off from the system. The
problems then would become easier to solve so that it
wouldn't require so much processing power, and the amount of
(22:42):
time it would take to verify transactions would remain ten minutes.
So on the flip side, if more and more processing
power comes onto the system, then the problems get more
and more complicated, which means that the average person running
bitcoin processing stuff on their little laptop computer has no
chance really of having the machine that actually solves these
(23:04):
math problems because elsewhere you have massive grid networks of
computers all doing it. So very complicated stuff. Meanwhile, you've
got the other people who are saying, I want to
use cryptic cryptocurrency in order to uh, to purchase things,
to to sell things, and to accumulate wealth without any
(23:25):
sort of central authority being involved whatsoever, because I don't
think that it has a place in that process. Okay,
So no, um, no central banking system, no governments, nothing
like that. Like in fact, that was one of the
key elements of the design of cryptocurrency was this decentralized approach.
(23:45):
You've you've actually democratized it across a network of computers
all running the bitcoin currency. But how is it illegal? U?
I mean, do you've if you come up to me
nol and you say, hey, Jonathan, I really like that
coffee mug. Would you accept this pen for that coffee bug?
And I say yes, who's gonna stop me? But I'm
just saying, like, how is it taxed? Like there's no way,
(24:06):
there's not. Really, there are a lot of countries out
there that are attempting to find ways to tax this
because when you're talking about very small amounts, like small
personal transactions, like if I'm like, hey, Ben, can you
spot me a five? You know, five dollars, so right,
you know something like that, No one cares, right, it's
it's tiny little stuff. Bitcoin, though, can represent enormous purchases
(24:29):
if you have enough of the currency and the thing
you want is available on one of the markets. Uh.
That's where people start to pay attention. And the fact that,
again the volatility of the value of the currency means
that someone who started off with a relatively small investment
early on could end up with what is much more
(24:49):
valuable a little bit later. And then you've got governments
saying how do I get to cut Yeah. Additionally, what
we're seeing, I would argue, is a common practice that
we've we've explored in the past, both on your show
tech stuff available wherever you get your podcast and on
stuff that once you know in past appearances. And it's
(25:11):
this that technology is inherently disruptive, and legislation typically lags
behind in terms of like we we invent as a species,
We invent these astonishing things, and then we spend the
next few decades figuring out how to handle it for
(25:31):
the applications like we are we ready for television or
or a disruptive ride sharing service that completely undermines and
existing industry that sort of stuff. Well, in this case, also,
you've got to remember that bitcoin is a global currency, right,
It's not something that's innately tied to a specific country.
(25:54):
Even though it was created in the United States, it
could be used in you where. And that also brings
up a host of problems because suddenly you're talking about,
well how do it's it's like whenever anyone talks about
taxing the Internet, well, how do you do that? The
Internet isn't just a thing that resides in one geographic region.
(26:15):
It is global in nature, and uh, and that's been
something that's been a difficult problem to solve for lots
of countries, even for just regular transactions that don't involve cryptocurrency.
You know, you talk about like how do we how
do we legislate that for other types of goods and
services that are going to cross international boundaries, It's it's tough.
(26:40):
Check this up, Johnathan. I just found this page that
does a comparison of like there's these specialized pieces of
hardware for mining bitcoin, which is really interesting and it
gives you like, so this one here is called the
ant Minor S nine UM. It's two thousand bucks and
supposedly will yield you about point three six oh three
bitcoin per month. And I just wanted to point out
(27:01):
too might be stating the obvious, but you can own
part of a bitcoin. Like, it's not at all or
nothing thing. You can have a little fractions. It could
be divided way way way down, like to like to
a millionth of a bitcoin. I think we're gonna save
a lot of this this talk for the next episode.
But this chart for this piece of hardware has these
stats about uh, you know, processing power. Power efficiency is
(27:24):
a big thing because these tools running constantly, it cost
you money, cost you money, and they also use a
lot of a lot of juice. Yeah, that's the thing
is that while you're spending, while you're running it, you're
you're running up your electricity bill. I mean you so
you start you actually do have to start looking at
that thinking what are the statistical odds that I will
earn a bitcoin running this equipment? Because it's not a
(27:46):
sure thing, right, even if you buy the stuff, there's
no sure thing about you actually earning those bitcoins because
if another entity out there does it first, you're out
a lot first past the post, right, And even if
you were to somehow tie with someone else. Let's say
that I'm running a massive bitcoin mining operation and Ben,
(28:06):
as my arch nemesis, you are also running a comparatively
large bitcoin mining operation. I call it dark Blue. It's
a supercomputer. It's not deep blue because I get sued.
I call it very blue jeans because I'm a big
fan of the Adventure Zone. And so we both are
trying to solve this problem. And let's say that we
both end up solving the transaction block at the same time.
(28:30):
Within the world a bitcoin, both of those blocks will
exist simultaneously. Neither of us will be rewarded with any bitcoins. Yet,
what what will happen is then the systems looking for
whichever chain gets the next block first, and whichever chain
is the longest becomes the verified chain, and the other
(28:51):
person loses out. So it's a constant race, and it
might mean, I mean it's very unlikely to happen, but
it might mean you could see it happen a couple
of time times before someone is able to create the
longest chain before the other one, and that becomes the
one that the entire network accepts as the verified ledger,
and then all those bitcoins would go to that particular
(29:13):
mining operation. Uh. The other thing I want to mention
really quickly is that this has another consequence in the
computing world, which is that it's getting real hard to
find graphics processors because graphics processors tend to be parallel processors,
and parallel processors are very good at trying to solve
the problems that uh, the bitcoin mining is all about
(29:35):
so tangible asset. Oh yeah, yeah, So if you are
a gamer, you might hate bitcoin right now because so
many bitcoin mining operations are buying up graphics processing cards
that it's hard to find them, and it's the demand
is so high that the prices are not coming down
that fast either, so it's actually driving prices up. So
(29:58):
it's getting more and more expensive to be a gamer.
That's going on, you know, the elite side of gaming,
like the professional side. It's hard to build a state
of the art rig with the best equipment because the
bitcoin mining industry is and it's just jumping on those
graphics cards as soon as they're coming off the line.
(30:18):
So that's a disadvantage of this currency. So there are
a lot of more if you want to talk, and
it sounds like I think Noel really hit on some
of the advantages to uh this, this seems like sort
of a new beast for the human species. So yeah,
what are what are some more of the disadvantages or
things people should watch out for? And then what what
(30:42):
are people actually buying with this stuff? Excellent questions. So
we've hit on some of the disadvantages. The idea that
the volatility and price makes it difficult to spend. People
are starting to treat it more like it's uh like
accumulation of wealth that they don't then liquefy. They just
keep trying to accumulate. Well, ultimately, if it's just a currency,
(31:04):
or if it's meant to actually be converted into some
other form of currency, that that will eventually collapse in
on itself, right because you can't you can't sustain that indefinitely.
If if no one is parting with anything, then at
some point you just say, well, now it's not oddly enough,
(31:24):
it's worthless even though everyone's valuing it so highly because
it's there's no exchange happening. This is momentum dependent. Yes,
so there's that part of it. One of the other
disadvantages is again I mentioned that they transaction time can
be so long that the value can change, and that's
creating difficulties when it comes down to actually trying to
(31:46):
use the cryptocurrency for what it's intended purpose was. You know,
when you hear currency, you're thinking that's a unit of exchange,
so that I can hand over something that we have
both agreed upon has a certain out of value for
a product or service that is of an equivalent amount
of value, and then we can have that transaction. Uh,
(32:08):
if that value is fluctuating so quickly that by the
time I finished saying thank you that it's worth a
different amount, that becomes an issue again. So big disadvantages there.
On the advantage side, assuming that you've got a nice
stable value to it, if everything correct, if everything is
working as it was intended to work, then it's uh,
(32:31):
it's you know, decentralized, and it's anonymous. So if you
are concerned with your privacy and you want to be
able to purchase something and whether the legality of it
can be set aside for now. But you want to
purchase something, but you don't like the idea of that
being tracked to you personally for whatever reason, this is
a great way of doing it. It's a great way
(32:51):
of being able to say, like, I want to take
all that other nonsense out of the equation. I don't
want a third party, trusted third party involved in this,
like a credit company. I don't want any of that.
I don't want to bank involved in any of this.
I just all I want is to be able to
have an agreement between two entities. Maybe it's two people,
(33:12):
maybe it's two businesses, it could be any combination thereof.
I just want to have that transaction be as simple
as possible. And we both agreed upon what the value is,
we both agreed upon how many units of this currency
it should represent, and the transaction happens, and that's it
would love this. Yeah, And here's the thing is that
there's a record of that transaction, right because that's part
(33:33):
of the technology. It is completely shared across the entire network.
Now it's not tied to your identity, but but you know,
there's there is a ledger there, so it's not like
it's not like it's so super hush hush, it never happened.
In fact, it happened, and everyone knows it happened. They
don't necessarily know what you bought, and they don't know
who you are, but they know that there was a
(33:55):
transaction because that's how the system works. Okay, I'm gonna
hop in real quick and us that we take a
quick ad break so that we can welcome our pal
Matt into the studio. Here's where it gets crazy on
a couple of different fronts because because I'm here now, Yes,
(34:18):
some things changed during the ad breaks. Folks, Hi, I'm Matt,
um Hi Matt. I'm usually here and now I am.
I did your part at the beginning of the show.
It was weird because I kind of did it in
your voice and I felt kind of hollow inside. It
also took about fifteen seconds to get him going. It
was kind of like starting a dead car. I just
(34:38):
had the dead eyes. I was just like, what, Oh,
welcome to the after ad break. So we're very glad
you're here. Boy. So you came at the right time too,
my guy, because we are now diving into one of
the things that off air. We had talked about the
three of us and planned to ask Jonathan today. Jonathan,
(35:02):
we said, we've agreed that bitcoin is probably the most
famous cryptocurrency out there, by far, the most market capitalized,
even fifty cent. Curtis Jackson recently found eight million dollars
in bitcoin that you forgot he has just like in
his digital couch cushions after the dropper, before the drop recently,
So who knows how much it was, what time of
(35:24):
day is it right now? That story was interesting because,
like again we were talking about earlier, how you have
to be able, you have to accept bitcoin for transactions
for it to have value, and Mr Curtis Jackson totally
did that for a record that he put out there.
I don't think sold particularly well. Um, I think he
ended up with somewhere in the neighborhood of seven hundred
(35:45):
bitcoin or something like that. And yeah, and now he's
you know, and he was he had declared bankruptcy and
now he's uh sitting pretty at least, you know as
we record this podcast. Assuming that you can ever liquefy
your assets, then that's awesome. Is that a question like
is it possible that you couldn't? Yeah, it's absolutely possible.
It's absolutely possible that you could end up with an
(36:06):
amount of bitcoin and then you, uh, you try to
go and liquefy it, and then no one's willing to
actually give you the cash that the market says that
bitcoin is worth. Yeah, no, we could. I want to
save stuff for a part two, So I'm not gonna
I'm not gonna go in to talk about whales. We'll
(36:27):
talk about whales later. Okay, great. For now, we need
to figure out who created bitcoin we talked about we've
we've heard the name listeners, Satoshi Nakamoto. But here's the
thing about Setoshi Nakamoto. People are pretty certain it's a
suited him. No one actually knows who this person is,
(36:48):
or if this is just a monarch or used by
multiple people, and we have a real life Kaiser so
say esque figure in the world of cryptocurrency. Now, first
of all, I would argue, at least one person does
know who he is. That is incredibly likely. But how
hilarious would it be if that person did not know
that they were If you were to tell me that
(37:10):
the white paper on blockchain currency was ghost written by
some random code and that there is no Satoshi Nakamoto,
I would have my brain melt out my ears. I
would also I would go see that movie and wetting
the script I think in fact trademark copyright. So so
what do we know about this we know that this
(37:33):
person's or people in Satoshi Nakamoto maybe the nom de
plume of actually a group of people. Uh, it's a
very very clever computer scientist, right, someone who really understood
the potential for blockchain technology and to be clear, cryptocurrency,
blockchain technology, all of this stuff. These these are all
(37:55):
basic building blocks that had pre existed the creation of
bitcoin by couple of decades. It was Satoshi Nakamoto who
kind of put all the pieces together and laid them
out in a very compelling argument. In I think it
was a two thousand eight white paper that was originally
published just to kind of a a list of people
(38:16):
who are interested in cryptography. Would have been a previous
use for that technology. Well, there are all sorts of
different uses for it. You talk about peer to peer network,
so that that's how the Bitcoin operations work. Peer to
peer network is a way that you can transfer files
across a group of computers and like napster napsters and
(38:38):
or scour if you want to go old schools, more
like the swarm model though kind of like um, yeah,
a bit torrent, you know where you have everyone has
a piece of it, and it all kind of comes
together to create the whole. Well, yeah, where where like
if I have started to download a file and someone
else wants to download that same file, they might start
pulling some of the data that I'm beginning to accumulate
(39:00):
in mind, as well as other parts from other parts
of the network. This speeds up the process overall. Uh,
it's a It's a totally legitimate way to distribute files. However,
it has been used extensively for the purposes of piracy,
which is why he gets a bad name. But that
that's one element, for example of bitcoin that pre existed, Uh,
Satoshi Nakamoto's paper. Now as for Nakamoto, him, her or themselves, Uh,
(39:26):
as you say, we don't really know the identity. There
was a story in two thousand and fourteen of a
guy in California, uh named Satoshi Nakamoto. He actually has
the name, and everyone was saying, is this is this
is this the Satoshi Nakamoo? Poor guy? Can you imagine? Yeah?
He said, uh, I am not that guy. He was
(39:46):
to complicate matters computer scientist living in California. Yeah, so
a lot of people came up to him. He's like, no, Well,
there was another computer scientist who was living not too
far from the real uh world. Satoshi Dakamoto named Um
how Finny, who also could have potentially created the cryptocurrency UH.
(40:10):
He was interviewed Finny however, Um it's difficult to communicate
with him. He's he's locked in. He lacks the ability
to to move and communicate the way the average person would.
So also very koi with this um, very koi about
his potential involvement. There have been people who have said
(40:30):
that there are essentially three human beings in the world
who potentially could have created bitcoin. Uh. There are, by
the way, more than three people who have been associated
as possibly being Satoshi Nakamoto. But those three people would
be Nick Sosbo, Uh way Die or how Finny. Uh.
So there's this belief that it could be one or
(40:53):
more of those three. There's other folks. There was a
guy in Australia, Craig Wright, who for a while was
claiming to have to be Satoshi Nakamoto, saying, yeah, I'm
the one who came up with it. That's my pen name.
And then he said I can even show you how
those first uh, those first transactions happened, and he started
(41:14):
to demonstrate. But then people said, well, technically, if you
just have enough, no how you could probably just recreate
this and make it seem like you were the one
behind it. But you're you're actually just replicating something. And
then he kind of backed off. So this isn't hacking,
This isn't illegally, there's no reason to be anonymous other
than just to maintain the mystique or not want people
(41:35):
to mess with you about Oh, there absolutely is. There
absolutely is. Because Satoshi Nakamoto likely holds a significant number
of bitcoins, and so if you are the owner of
a massive amount of wealth, one of the things you
might not want to do is draw attention to the
fact that you created wealth out of nothing, like Vladimir Putin. Yeah,
(41:59):
so so if you if you go out and you
create shiny pecks and riding of horses, if you if
you create a cryptocurrency, which you know you could say,
all right, well, if we take a big, big step back,
Before you create bitcoin, there was no bitcoin. You created bitcoin,
people bought into the fact that it has value. You
(42:19):
create value out of effectively nothing, and you made yourself
incredibly wealthy through the process of doing this. And you're
the one who understands how the whole system works, which
raises questions in some people's minds. They asked, well, is
there any way to game the system? Surely the person
who created it would know a way of doing that. Um.
(42:41):
The whole purpose of the system, by the way, is
to make it very very very difficult to game the system.
You would have to have fifty one of the computing
power to do it, but so at the beginning there
was no one else doing it. Also not subject to
any government regulation. Right, so you're you have no way
of actually backing up or wealth in this system, and
(43:02):
if you get screwed then you just dis it's over then,
and that has happened with exchanges going under. Right, Like
the system itself is secure in that you don't have
to worry about someone attacking the blockchain directly. It would
just it's impractical because it's too much computing power. But
you could attack and exchange, and people have attacked exchanges.
(43:25):
We've heard about, you know, essentially Oceans eleven style heists
only on the digital scale, where thieves aimed at various
companies that were they essentially provided digital wallets. This is
the reason why you'd want to put it on your
own hard drive rather than on someone else's machine. Because
you get enough bitcoins all in one place, that's a
prime target. So that that's where we see the weakness
(43:49):
in the system. It's not it's not in the currency,
it's not in the transaction process. It's in the storage
end of it. That's where the weakness is. So before
we lose too much about Nakamoto, we do know some
of the claims that Nakamoto made themselves. Claimed to be
a male living in Japan born in nineteen seventy five.
(44:13):
That'd making my age the jerk. Wait are you dude?
Would I be here? Yeah, we're great. We're a lot
of fun to hang out with. Do we were going
to invite you to go play laser tag later. That's
a true story. Well, I mean, I appreciate the compliment,
but I am definitely not Satoshi knock about it. Yeah right, Well,
(44:33):
I wish I could. I wish I could cop up,
you know, I'd say like, yes, uh, I'm I'm living
a very under the radar lifestyle pretending to be Japanese
and my my caviar dreams stuff, at least not not openly. Yeah,
she allergy. I could probably have caviar and not die.
(44:54):
It's not shellfish. What if you just like bathed? Okay,
this is a different Yeah, that's that's opulent right Tuesday night.
We do know that a lot of people don't believe
that Satoshi Nakamoto, whomever he or she or they are,
they don't believe this this entity is actually Japanese and
origin due to some of the language used in forums, right,
(45:17):
the language that sounds British for lack of a better term,
the use of like the word bloody, and some of
the spelling, you know, like the extra L the PM.
I think he's banksy. I think he's banksy. I remember
this conversation. We all We also know that some people
say it was unlikely to be Japanese or they were
(45:38):
unlikely be Japanese because the software itself was not documented
or labeled in Japanese. Well, yeah, and there there's a
lot there's a lot of circumstantial evidence that points to
it being someone outside most theories, you know, pen Satoshi
Nakamoto's identity, assuming that there are there's just one, there
(46:02):
could like I say, there could be multiple people who
all just use that as their group pen name. Uh.
The most people think that we're talking about a European
or American computer scientist who was ultimately responsible for putting
together the whole shebang, or a time traveler or a
time travel it came back to begin the currency that
(46:24):
would one day they had two things to do, stop
the large Hadron collider and launch a cryptocurrency. So we
have a wealth of candidates for the real Satoshi Nakamoto
here and honestly, in some in some circles, I think
people are just picking folks they think of as highly intelligent.
Like you see you probably we all saw the scuttle
(46:46):
butt about Elon Musk, and someone's like, you know, you know,
who has enough time to do this? The guy who's
trying to build a space colony, the guy who's sending
his own sports car to Mars, which is cool. You
could probably bust some sick donuts on Mars. Oh yeah, yeah,
those creators. Yeah, you gotta get the right tires. Do
(47:06):
you ever wonder though somebody like LM. Musk isn't fully
working on those I mean, Ela Musk has his hands
dirty and that stuff, but he's not every day working
on the code. They're working on the He's an entrepreneur,
he's not. He's not the coder. He's not there. He's
not the guy in the chair, as Spider Man Homecoming
(47:27):
taught us. Yes, I guess I'm saying, maybe he does
have the time, but maybe nothing. Know how, I think
that's fair. Well, speaking of the time, it sounds like
it's about time for us to close our first chapter
on cryptocurrency, and we have to thank you, Jonathan. Thanks
for coming on the show. Despite the fact that you
(47:48):
and Nolan I are beefed up in a in a
different show, we we appreciate you coming on and walking
all of us through what cryptocurrency is, how it works,
and helping us try to figure out who this mysterious
person or people behind cryptocurrency actually might be. I mean this,
(48:08):
this is one of those legitimate mysteries out there. For
that then again, like a few people know the real answer,
but most of us are just left wondering. And ultimately,
I don't think it really matters, because what really matters
is that people have uh the belief in the system
and as long as that works, As long as people
have that belief, then there is value there. The question
(48:31):
is will there one day be come a time where
people just completely lose that belief and everything becomes valueless. Uh.
And then ultimately, by the end of it, has anyone
lost anything. These are like big, like philosophical questions that
are hard to answer. Yeah, as with all fiat currency,
eventually the people just stop believing in it. I mean,
(48:54):
you know, that's the only thing that keeps it going, right,
Like you could argue that the that state currencies are
backed by a government, but then you're that just shifts
your belief from the currency to the government and the government. Yeah.
By the way, did we discuss turning your gaming rig
(49:15):
into a bitcoin mining system? We discussed the fact that
it is now getting increasingly difficult to find graphics cards
because they're all being put to use in bitcoin mining.
I was gonna ask you about that. Was it tough
to find when you guys were assembling? Jonathan just let
everyone know, Um, Jonathan and r I t guy Israel
put together an amazing gaming PC, and I was gonna ask,
(49:37):
I know it has a cool parallel graphics processor. Was
that tough to find? It not? But that's because we
gutted some some slightly older Max and they happen to
have graphics cards. One of the few that is compatible
both with MAC and with PC, and we put all
three in parallel so that we got it's got three
(49:57):
parallel g p U s um. So I'm rich now,
but I still can't get a chicken dinner. Your graphics rich? Maybe, Yeah,
chicken dinner another thing that has been severely affected by bitcoin. Yeah,
so we so. I think it's interesting that you're you're
arguing the identity of this creator doesn't matter, not ultimately.
(50:22):
I think I think that's an interesting argument. I would
I would tend to disagree just because just because if
it were some group of people who are aiming to
manipulate a market, then it does matter very much because
there would be a motive that we would not understand,
(50:45):
which makes it and even um less secure investment. You
could argue that, but at this point, I think the
machine is moving forward with so much momentum that anyone
with any particular motivation wouldn't really be able to bring
it into full effect. I mean, unless you have a
(51:06):
plan to essentially sabotage multiple exchanges simultaneously, or if the
whales move all together, the system is going to be
nice and secure. But that's something we should say for
maybe the next episode, and folks, this concludes part one
of our episode on cryptocurrencies. However, off air, we brought
(51:30):
up something that we haven't done in a while. Chat
at Corners, Jonathan, this is an email especially for you.
We thought it's something that you might enjoy. Yes, comes
from Keith Russell. Keith says, greetings, fellow conspirators. It's been
some time since I made contact. I'm a bit wiser
in sending this message, this time not using Gmail. I'm
(51:52):
using proton mail, brought to you by certain makers of
the Mandela Effect. Okay, this email and the incantations there
in is being typed on privately centered keyboard, hosted on
encrypted servers, and being sent through encrypted packets via VPN.
Why am I taking such precautions because of advanced persistent threats.
We have known about the APT for some time, but
(52:14):
we now have a rare glimpse into the operations one
such APT Dark Kara Call Carackle, curasol c A r
A c A L Corackle, Dark Carackle Lookout and E
F F did a great rite up on Dark Coracle.
Oh I'm saying that so wrong. And operation out of
Beirut Lebanon, of course, we know that Lebanon isn't only
(52:37):
player in this space. China and Russia are very active.
China has been responsible for many cyber espionage campaigns and
Russia was most likely responsible for not Pay, Not Payta
not Pathy. Is this something you're aware of, Jonathan? Okay?
But China and Russia aren't the only nation states with
(53:00):
this capability. The shadow brokers and wiki leaks Vault seven
and Vault eight revelations show that the N s A
and c I A are very adept in this space,
though not enough to keep their secrets. And Stuck's net
was probably a joint effort by the US and Israel.
And did you know that there's a company called zero
di Um which buys zero day exploits and brokers them
to the highest government bidder and then he's got links.
(53:23):
They have offered a one million dollar bug bounty to
any hacker who has discovered a zero day on signal Tour,
WhatsApp and other privacy tools. That's a bit scary anyway,
Dark Coracle and Zero Day Market should fill in an episode,
and Shannon Morse would be a great guest. Farewell for now.
This email comes to us from Mr venomous. Hey, your
(53:46):
pal Shannon Morris. Yeah, and she had morrise of Hack
five Fame and and Tech Threat. Yeah, she's put in
a good word. Maybe we can get her on the
show into that episode. I'll let her know. We should
absolutely look into Zero Day exploits. Maybe we can get
you a ship and back on the show in the future. Yeah.
I think that the this email has a lot in it,
(54:07):
and hopefully our super producer can chop it up a
bit to make a little more sense for everybody listening.
Um A p T S and all of that stuff
they're in. Thanks, I have a really pressing one. That
one was was super important, but this one really I
think takes the k um. It is from Nick love
it uh, he says, Hey, guys, nearly an everyday listener
(54:27):
on Spotify at work and in the truck found you
about two months ago and started at the top of
the list and just let it play, of course, in
reverse chronological order. I just came across the May fifth episode,
The Collapse of Atlanta. At the beginning of the show,
Matt questions if the right chips from checks Mix are
sold individually. Well, y'all hadn't already discovered this by now.
It just so happens that I discovered in a convenience
(54:47):
store a while back a bag of Just Ride chips,
So they are in fact available, Matt. That's amazing. I
told you it was important, Was it a QT because
I know where some of those are? Yeah, he didn't
specify the store, but Nick, please write us back and
let us know where to get these delightful snacks. Uh.
And and we really appreciate the tip. And this concludes
(55:08):
ours but not our show. I am so glad we
decided to make this a two part episode because we
have not even scratched the surface of some of the
strangest cryptocurrency conspiracy. So we're not the Joe Rogan Show.
We don't do nine hour episodes. We have to you know,
we like to keep things in little nuggets, digestible. M
(55:31):
Speaking of which, I want to eat lunch. Alright, Well,
if Jonathan is giving us the lunch signal, join us
and wishing him luck on his continuing quest to find
a decent chicken sandwich. In the meantime, you can find
Nol Matt Uh, super producer Paul and I on Instagram, Facebook,
and Twitter, where we are some variation of conspiracy stuff.
(55:53):
You can also find us on Instagram Conspiracy Stuff Show.
If you don't want to do any of that stuff,
just hit us up the old fashioned way. We are
conspiracy at how stuff works dot com
Hello, a um, this isn't the start of the show.
This is just a surprise welcome to the first part
of two parter episode that you're going to get all
in one single week. That's right, crazy Town, that's right,
Friends and neighbors, the rumors are true. Stuff they don't
want you to know. Is officially coming out not once,
but twice a week every week, and this first entry
(00:22):
is a two parter, a wonderful conversation we have with
our pal Jonathan Strickland on cryptocurrency. But that's not necessarily
what we're gonna be doing with these We've got a
lot of surprising store gonna be All kinds of things
are gonna do with these second episodes, including just the
stuff you're used to and Friday, you're gonna get that
same episode you're always used to getting in your feed,
but with another special treat earlier in the week. This
two parter is coming out on Monday and Friday, but
(00:45):
from now on you will get episodes on Wednesdays and Fridays.
So at the end of the day, nothing is really changing.
You're just getting a little more conspiracy bang for your
conspiracy buck. Wait, the show is free, perfectly said Noel,
let's get on with the show. From UFOs to psychic
powers and government conspiracies, history is riddled with unexplained events.
You can turn back now or learn the stuff they
(01:06):
don't want you to know. M Welcome back to the show,
(01:26):
ladies and gentlemen. My name is Noel, and that feels
weird because that's Matt's part. But he's making a mad
dash for the studio right now and should be joining
us shortly. Yes, our compatriot will be here for the
second part of our two part episode. They call me
Ben you are you. We're here with our super producer
Paul Decans, and that makes this stuff they don't want
(01:49):
you to know. But that makes this a very special
episode of stuff they don't want you to know. Wherein
I promise I will not mention Ben Bucks too often.
We are diving into the strange, nascent world of cryptocurrency today, folks,
and to do so, we decided that we needed an expert.
(02:12):
We needed a Virgil for our collective Dante as we
venture into this darkness. And that is why we were
fortunate enough to persuade our friend Nemesis and returning guests
Jonathan Strickland to come on the show today. I'm so
tempted to say it's time, gentlemen, that that's that's the
wrong show. Uh yeah, thanks for having me on. I
(02:36):
hesitate to refer to myself as an expert subject, refer
to you as I appreciate that. I'll accept it, but
only begrudgingly. And it's not really a shameless plug because
everyone in the room right now is involved. But Jonathan
was referring to another show that Ben and I do
called Ridiculous History, where Jonathan makes a delightful, delightfully cringeworthy
(02:56):
appearance every every now and then as a version of himself.
It's called the quiz stere No, it's pretty much my
true self. I mean, let's let's be fair. So do
do check it out? You will? You want to listen
to a couple of different episodes, because if we could
provide you a peek behind the curtain, friends and neighbors.
(03:16):
Sometimes on the show, Noel and I are not completely
certain win or if Jonathan will show up. He just
kind of pops out of the wings. I have a
question to start, Ben buck Worth these days, I'm glad
you asked. If you're going into it really depends on
the market, because, as we know, all currency functions is
(03:38):
sort of an agreement, an article of faith or confidence.
How many badgers can I buy for a ben buck? Oh, badgers.
Badgers and ben bucks have a pretty solid history. You
can get a ton of badgers for one ben buck.
I'm I'm starting to be concerned that there might be
a bubble. Actually, you don't. You don't need no stinking badgers.
(04:00):
So that's that's a that's an interesting question. Thank you
for plugging ben bucks. No, of course I think that
should be the next big currency. But for now we're
just gonna have to settle for bitcoin, which today is
worth ten thousand, nine four U S. Dollars per bitcoin,
which is kind of crazy because it was not that
long ago that it was worth almost twice that it is. Uh.
(04:22):
That's one of the things about bitcoin in particular in
cryptocurrency in general that I'm sure we'll cover in this
discussion is it's volatility. Yeah, because the value that Noel
just provided us here at the top of the show
will almost certainly be different by the time the show publishes,
and may well be different by the time we're done recording. Absolutely. Yeah,
(04:44):
In fact, that's a big problem with cryptocurrency, but I'm
sure we'll get into that as well. Let's get right
into this shirt off. What's a what's a cryptocurrency? What's
this fancy term you're you're throwing at us? So you
guys know the concept behind crypto bography, right that You've
got essentially some method of encoding information. Someone else has
(05:06):
that method of decoding the information, and that way you
keep the information safe between the sender and the recipient.
If anyone intercepts it, they can't do anything useful with
it because they lack the ability to do that decoding. Uh.
Typically we do this with things called private and public keys.
Public key is something that you share with the entire world,
(05:26):
and any message they want to send to you, they
can encode with a combination of a public key and
a private key. You can then unlock it because you
also have that information. But it's to get more into detail,
gets super technical and it requires a lot of definitions
upon definitions. So rather than do that, will simply say
(05:47):
cryptocurrency is a method for sending a a record of
transaction between two entities. Uh. And record of transaction is
important because one thing you got to remember is that
bitcoins are not physical things at all. Right, there's if
you have quote unquote, if you own bitcoins, you don't
(06:08):
own anything. What you have is a record of transactions
that all terminate with your digital wallet. So it's essentially
just a record of transactions that all came to you.
And that is what we mean when we say I
own like seven bitcoin, What it really means is I
have a record of a accumulation of seven bitcoins that
(06:31):
all terminated with my account. I see. Okay, So typically
when we think of cryptocurrency, for most people, we think
of bitcoin R. It's the it's the windows or the
apple of the cryptocurrency world. But there are other kinds
out there, right, sure, Yeah, there's a theory Um, there's
light coin, there's a manarow, there's Ethereum Classic. You know
(06:55):
when they went to new Ethereum and it didn't go
so well, yeah, they just they want to go back. No,
there really is a cryptocurrency called Ethereum Classic. And then
there's also ethereum z cash, doge coin. I mean, there's
a ton of them, and Bitcoin is the one that's
best known because the the entity that that uh suggested
(07:19):
the creation of bitcoin is kind of looked at as
the person who laid out the basic rules for how
cryptocurrency works, because if you have a digital currency that
doesn't exist in any physical format whatsoever, and you have
to have you have to have a method of being
(07:39):
able to buy something with that cryptocurrency or at least
hand over that cryptocurrency to another person. Otherwise, what's the
point If you can't do anything with it, you just
have it, right, Like, it doesn't do you any good, Franklin,
right exactly. Don't mock them. They are they are going
to appreciate in value or hummels, they're adorable. But yeah,
(08:03):
if you can't, if you can't actually spend it, it's
not currency, it's not any good. Doesn't do you, doesn't
mean anything at all. So you have to I have
a question on that point. I mean, can't you still
invest in something that you you have to make it
liquid before you can spend it, Like you can't technically
spend stock, sure as you get your money back out
of it. And you could argue, and I think it
(08:24):
would be a very convincing argument that cryptocurrency, especially bitcoin,
represents more of a commodity like a stock, rather than
an actual currency. Because of those problems I mentioned. You know, Ben,
you talked about how the value of a bitcoin could
be drastically different by the end of this recording session
than it was the beginning of the recording session. That's
(08:46):
actually true. That could be true within the context of
an a single transaction, which makes it very difficult to
spend any currency if by the time the transaction is over,
the amount of currency is the worth of it is different.
How do you how do you reconcile that? But I
think we all understand how what makes a stock go
up or down? It's tied to something like tangible like
(09:08):
a company doing well, or or an acquisition or something
that you can say, oh, this company is doing well,
the stock is improving, going up in value. How does
that work for bitcoin? Like, what where does this volatility
come from? It's largely due to people's confidence or lack
of confidence in it, and that ends up being people.
Is is a really generic term, but it also means exchanges,
(09:29):
Bitcoin exchanges and companies that have come up around the
periphery of bitcoin. What we just call them, you know,
like players or stakeholders because they're they're not all individuals
as sure, right, some of them are represent conglomerates of
folks who have all kind of dedicated processing power to
the mining of bitcoins. Will get into that in a
(09:51):
little bit. What I'm excited about. Yeah, So it's it's
this crazy thing that you know. Faith is a very
powerful thing, right If I if I really believe that
that coin is going to be worth more in the
near future, and enough of other people also really believe that,
then that's what makes it worth more. Honestly, when it
(10:12):
comes down to it is the value of anything is
determined by how much people are willing to pay for it, right,
There's nothing intrinsic about anything. That belief is also what
makes fairies real. I mean, if we want to boil
down down knell, all cash is a lie, I would
prefer the termly an article of faith or a coupon.
(10:33):
It's just a coupon that can get you more things
than say coupon at that path and beyond. Yeah, but
I mean, okay, so if I if I give you
a piece of paper and I say this is good
for one BackRub which spoiler alert Valentin's days around the corner, Ben,
now you know what you're gonna get. So if I
give that to you. You know the value of that
piece of paper I gave you is one backrup. But
(10:55):
let's say instead I give you a dollar and you
look at this dollar and you say what and I
get for this dollar? The crazy thing is the value
of that dollar is completely dependent upon a huge number
of factors, right, And what you can get for a
dollar at one day is going to be different from
what you can get for a dollar ten years from now.
(11:16):
And so then the argument would be that with cryptocurrency,
we're seeing this at a much higher frequency, of incredible frequency,
to a point where I personally would be terrified to
spend any bitcoins because if I owned them, I do
not in the just for everyone to know, I don't
own any bitcoins, but if I did, I don't know
(11:37):
that I could use it as a currency. Because if
I were to go into a store and I say
I would like that candy bar, and the store owners says, well, Chap,
that candy bar is one dollar, and I slap a
dollar down, and I buy my candy bar, and I
go home and I eat my candy bar, and I'm
all happy. The next day, because of some sort of
calamitous event, I suddenly discover that a dollar would allow
(11:58):
me to buy five hundred candy bars, I would just
think I wasted that dollar I spent yesterday. Right, I
shouldn't have spent that dollar, because I could have. I
could have bought five hundred candy bars today with the
dollar I spent yesterday. Well, that's like bitcoin, except it's
happening every ten minutes. It's also happening in real life.
Early adopters of bitcoin used I think, used it to
(12:21):
buy a pizza famously gus here about that, and then
you know, you can see the very very depressing and
humorous calculation of how much the poor guy actually paid
for that pizza. And this leads us to another question.
So what are the nuts and bolts about how this
bitcoin transaction works. Let's say Noel is selling you the
(12:44):
candy bar, and you are buying the candy barbure buying
it with a bitcoin. How does that money move from
you to knowl and how eventually do you try to
get it out of the system? And then we'll have
another after that? Right, So this is starting to get
into the realm of what blockchain is all about. All right, uh,
(13:08):
And blockchain is in fact the technology the idea that
Satoshi Nakamoto was really talking about in the white papers
that he they she who whomever Satoshi Nakamoto really is
published back in the first decade of the two thousand's.
So what knell what I would do if I were
buying something, if I was giving NOL some amount of bitcoin,
(13:32):
is that there would be a transaction, and in that
transaction would be some pieces of data that would include, uh,
the public key, the private key, or I use my
private key to sign off on this transaction that kind
of creates this code. There would also be Nol's address
for his wallet, because there has to be a place
for this to go, and then that enters into a
(13:55):
shared ledger that is across the entire bitcoin network. So
when you think about bitcoin or any cryptocurrency, there is
a network of computers. It's it's you know, might be
using the Internet to send information back and forth, but
it's not the same thing as the Internet. It is
its own little network within the greater realm of the Internet.
(14:16):
Everyone running the the software is able to actually take
part in this. That transaction enters into a ledger of
all transactions of all bitcoins that have been generated so far. Ever,
and uh, then the various computers out in the network
(14:38):
are all working on a very very difficult math problem
in order to verify the transaction. This takes about ten
minutes per block of transactions. Once that ten minutes passes
and someone out there has solved the problem, they are rewarded. UH.
This is the mining process where there are bitcoins that
(15:00):
are actually generated in this process until the ultimate number
of bitcoins has been created. At that point, no more
bitcoins can be mined in that way. But that's the
that's the compensation that you get for mining. You you,
if you solve it, get those extra bitcoins. You also
have said, hey, I've just verified that transaction because I
(15:23):
solved this very difficult math problem that was created through
this record of transactions tracing all the way back to
the very first ones. And now this new block can
can be put on the end of this chain. So
that's why you have this technology called blockchain. Each block
is a block of transactions that have been verified by
(15:44):
the various computers running on this system. And once you
have solved that block, which takes on average ten minutes
to do, UH, it gets added to the chain, which
is again shared across all computers, so everyone knows, uh
that the transaction took place. Now, they don't know the
identities of the people who spent and accepted the money,
(16:06):
which is going to be important later, right, that's all anonymous,
But they know that the transaction happened, So in a way,
you could argue they know the accounts involved, they just
don't know who those accounts belong to. You hear a
lot of people losing bitcoin or like having bought it
on a lark, like years ago, and all of a
sudden they're like, oh, I got heard an NPR story
about a guy who's like, I bought this bitcoin and
(16:28):
now I realized it's worth the whole crap ton of money.
And the NPR reporter went with him and helped him
dig through his attic looking for a particular hard drive.
Why is it that specifically, Like, you know, when I
buy something, I would think there's a record in the cloud.
I would need a record on a physical drive. Well,
what's the deal there that that's part of the idea
(16:50):
of keeping this secure so that you and you alone
have access to that cash. Right, if it's something that
just exists in the in the cloud, then arguably with
the right kind of technology, you would be able to
access the information and be able to take advantage of
it and spend bitcoins that are not your own, right,
that's the That's one of the protections is you don't
There are two things the blockchain needs to protect against.
(17:12):
It needs to protect against you spending bitcoins you don't
actually have, or you spending the same bitcoin more than once.
So for example, if I send if I have one
bitcoin or the transaction record really of one bitcoin in
my personal wallet, and I set up a transaction with
you null, and I send that bitcoin to you, and
(17:34):
you accepted immediately before the trends, before the transaction can
be verified. And then I send a bitcoin to Ben,
a bitcoin I do not own, because I've already spent
it with you null, but because you've already you've already
accepted it before the transactions verified, there's no record that
the transaction has yet happened. And then I send one
to Ben, I could potentially try and spend the same
(17:56):
coin twice. That's a problem. We can't do that with
physical currency, right. If I give you a dollar, I
can't magically give that same dollar to Ben because I've
already given it to you know, how does it in
that time? How does the system know which one was
the legitimate transaction? And like it's not legitimate until the
verification occurs, not legitimate until the verification occurs, and it
takes ten minutes, which is why if you're making a
(18:18):
big purchase, typically the vendors will make you wait for
the transaction to have been verified before they will complete.
It happens with stocks as well, like if you're withdrawing
your stock into a fund, you do have a mandated
waiting period. I wouldn't go back to the We're gonna
go back to the question where we talked about generating
(18:40):
new bitcoin like in too far into mining Bye bye
block by solving these math problems. Ye block, bye block,
he said, until it reaches a threshold of the ultimate
amount of coins that can be created. That is not
an absolute ceiling, right, that's per block. Oh no, there
is eventually an absolute ceiling. That one. So those bitcoins
(19:00):
have been mind there will be no more bitcoins ever.
Mind that you get you get to a it's somewhere
in the twenty million range of bitcoins. Once you hit that,
that's it. But you might ask, well, if the trend
if verifying transactions is how you earn extra bitcoins, and
that's why people are interested in dedicating their computers to
(19:23):
doing this. Like they're earning money this way, right, They're
earning bitcoins and that represents wealth. That's an incentive to
be part of this group. If that all the bitcoins
are mind, why would you keep doing it? Right, why
would you keep supporting the system because you're no longer
getting that wealth. Well, in the future, what's going to
happen is you're going to see more and more transaction
(19:44):
fees attached to any transaction where a certain portion of
the amount of bitcoins that are being handed over are
gonna go to whichever computer or computer system verifies those transactions,
so that will perpet to wait the system even after
all the bitcoins have been mined. And this leads us
(20:05):
naturally to a couple of other questions, uh, namely what
these things are used for, because we have a candy
bar example which works to explain it, but that might
not be the reality we see on the digital ground.
And we'll explore this after a word from our sponsor.
(20:30):
And we've returned one of the questions that one of
the questions that we didn't quite get to. They just
want to plant in your head. Here is the idea
of taxation, which I believe governments are still trying to
figure out, like shoring this out and right now, there's
a practice called tumbling wallets, right where wherein someone wants
(20:53):
to avoid being associated legally with some kind of profit,
but they still to have the benefits of that. Right.
It's it's a yeah, it's kind of the digital equivalent
of Swiss bank accounts. Right. It's this idea of having
having a place where your wealth can exist that is
(21:14):
not easily tagged to the actual person, the identity, whereas
you could still in theory at least access that wealth
and perhaps liquefy it and then get access to the
actual dollars that you would use to buy and sell
or whatever. Um. It gets really really complicated. Uh, it's
(21:35):
it's a tricky thing to talk about because you're you know,
you're really you're talking about something that you've manufactured. Uh. Two,
have value. I mean that's the only purpose of bitcoin, right,
is that it has to have value? And why does
it have value? Because people buy into the fact that
it has value. People dedicate ridiculous amounts of processing power
(21:57):
to try and solve those difficult math problems. You know,
I said that it takes ten minutes to verify transactions.
That's by design. The math problems are only as difficult
as they need to be for the amount of computing
processing power there to solve them within about ten minutes.
So if you were to see a sudden drop off,
let's say people just realize, like, I'm losing more money
(22:20):
running this gear than I am getting in bitcoin. It's
actually more expensive for me to mind that I'm I'm
gaining in what I'm getting back, you would see a
lot of processing power drop off from the system. The
problems then would become easier to solve so that it
wouldn't require so much processing power, and the amount of
(22:42):
time it would take to verify transactions would remain ten minutes.
So on the flip side, if more and more processing
power comes onto the system, then the problems get more
and more complicated, which means that the average person running
bitcoin processing stuff on their little laptop computer has no
chance really of having the machine that actually solves these
(23:04):
math problems because elsewhere you have massive grid networks of
computers all doing it. So very complicated stuff. Meanwhile, you've
got the other people who are saying, I want to
use cryptic cryptocurrency in order to uh, to purchase things,
to to sell things, and to accumulate wealth without any
(23:25):
sort of central authority being involved whatsoever, because I don't
think that it has a place in that process. Okay,
So no, um, no central banking system, no governments, nothing
like that. Like in fact, that was one of the
key elements of the design of cryptocurrency was this decentralized approach.
(23:45):
You've you've actually democratized it across a network of computers
all running the bitcoin currency. But how is it illegal? U?
I mean, do you've if you come up to me
nol and you say, hey, Jonathan, I really like that
coffee mug. Would you accept this pen for that coffee bug?
And I say yes, who's gonna stop me? But I'm
just saying, like, how is it taxed? Like there's no way,
(24:06):
there's not. Really, there are a lot of countries out
there that are attempting to find ways to tax this
because when you're talking about very small amounts, like small
personal transactions, like if I'm like, hey, Ben, can you
spot me a five? You know, five dollars, so right,
you know something like that, No one cares, right, it's
it's tiny little stuff. Bitcoin, though, can represent enormous purchases
(24:29):
if you have enough of the currency and the thing
you want is available on one of the markets. Uh.
That's where people start to pay attention. And the fact that,
again the volatility of the value of the currency means
that someone who started off with a relatively small investment
early on could end up with what is much more
(24:49):
valuable a little bit later. And then you've got governments
saying how do I get to cut Yeah. Additionally, what
we're seeing, I would argue, is a common practice that
we've we've explored in the past, both on your show
tech stuff available wherever you get your podcast and on
stuff that once you know in past appearances. And it's
(25:11):
this that technology is inherently disruptive, and legislation typically lags
behind in terms of like we we invent as a species,
We invent these astonishing things, and then we spend the
next few decades figuring out how to handle it for
(25:31):
the applications like we are we ready for television or
or a disruptive ride sharing service that completely undermines and
existing industry that sort of stuff. Well, in this case, also,
you've got to remember that bitcoin is a global currency, right,
It's not something that's innately tied to a specific country.
(25:54):
Even though it was created in the United States, it
could be used in you where. And that also brings
up a host of problems because suddenly you're talking about,
well how do it's it's like whenever anyone talks about
taxing the Internet, well, how do you do that? The
Internet isn't just a thing that resides in one geographic region.
(26:15):
It is global in nature, and uh, and that's been
something that's been a difficult problem to solve for lots
of countries, even for just regular transactions that don't involve cryptocurrency.
You know, you talk about like how do we how
do we legislate that for other types of goods and
services that are going to cross international boundaries, It's it's tough.
(26:40):
Check this up, Johnathan. I just found this page that
does a comparison of like there's these specialized pieces of
hardware for mining bitcoin, which is really interesting and it
gives you like, so this one here is called the
ant Minor S nine UM. It's two thousand bucks and
supposedly will yield you about point three six oh three
bitcoin per month. And I just wanted to point out
(27:01):
too might be stating the obvious, but you can own
part of a bitcoin. Like, it's not at all or
nothing thing. You can have a little fractions. It could
be divided way way way down, like to like to
a millionth of a bitcoin. I think we're gonna save
a lot of this this talk for the next episode.
But this chart for this piece of hardware has these
stats about uh, you know, processing power. Power efficiency is
(27:24):
a big thing because these tools running constantly, it cost
you money, cost you money, and they also use a
lot of a lot of juice. Yeah, that's the thing
is that while you're spending, while you're running it, you're
you're running up your electricity bill. I mean you so
you start you actually do have to start looking at
that thinking what are the statistical odds that I will
earn a bitcoin running this equipment? Because it's not a
(27:46):
sure thing, right, even if you buy the stuff, there's
no sure thing about you actually earning those bitcoins because
if another entity out there does it first, you're out
a lot first past the post, right, And even if
you were to somehow tie with someone else. Let's say
that I'm running a massive bitcoin mining operation and Ben,
(28:06):
as my arch nemesis, you are also running a comparatively
large bitcoin mining operation. I call it dark Blue. It's
a supercomputer. It's not deep blue because I get sued.
I call it very blue jeans because I'm a big
fan of the Adventure Zone. And so we both are
trying to solve this problem. And let's say that we
both end up solving the transaction block at the same time.
(28:30):
Within the world a bitcoin, both of those blocks will
exist simultaneously. Neither of us will be rewarded with any bitcoins. Yet,
what what will happen is then the systems looking for
whichever chain gets the next block first, and whichever chain
is the longest becomes the verified chain, and the other
(28:51):
person loses out. So it's a constant race, and it
might mean, I mean it's very unlikely to happen, but
it might mean you could see it happen a couple
of time times before someone is able to create the
longest chain before the other one, and that becomes the
one that the entire network accepts as the verified ledger,
and then all those bitcoins would go to that particular
(29:13):
mining operation. Uh. The other thing I want to mention
really quickly is that this has another consequence in the
computing world, which is that it's getting real hard to
find graphics processors because graphics processors tend to be parallel processors,
and parallel processors are very good at trying to solve
the problems that uh, the bitcoin mining is all about
(29:35):
so tangible asset. Oh yeah, yeah, So if you are
a gamer, you might hate bitcoin right now because so
many bitcoin mining operations are buying up graphics processing cards
that it's hard to find them, and it's the demand
is so high that the prices are not coming down
that fast either, so it's actually driving prices up. So
(29:58):
it's getting more and more expensive to be a gamer.
That's going on, you know, the elite side of gaming,
like the professional side. It's hard to build a state
of the art rig with the best equipment because the
bitcoin mining industry is and it's just jumping on those
graphics cards as soon as they're coming off the line.
(30:18):
So that's a disadvantage of this currency. So there are
a lot of more if you want to talk, and
it sounds like I think Noel really hit on some
of the advantages to uh this, this seems like sort
of a new beast for the human species. So yeah,
what are what are some more of the disadvantages or
things people should watch out for? And then what what
(30:42):
are people actually buying with this stuff? Excellent questions. So
we've hit on some of the disadvantages. The idea that
the volatility and price makes it difficult to spend. People
are starting to treat it more like it's uh like
accumulation of wealth that they don't then liquefy. They just
keep trying to accumulate. Well, ultimately, if it's just a currency,
(31:04):
or if it's meant to actually be converted into some
other form of currency, that that will eventually collapse in
on itself, right because you can't you can't sustain that indefinitely.
If if no one is parting with anything, then at
some point you just say, well, now it's not oddly enough,
(31:24):
it's worthless even though everyone's valuing it so highly because
it's there's no exchange happening. This is momentum dependent. Yes,
so there's that part of it. One of the other
disadvantages is again I mentioned that they transaction time can
be so long that the value can change, and that's
creating difficulties when it comes down to actually trying to
(31:46):
use the cryptocurrency for what it's intended purpose was. You know,
when you hear currency, you're thinking that's a unit of exchange,
so that I can hand over something that we have
both agreed upon has a certain out of value for
a product or service that is of an equivalent amount
of value, and then we can have that transaction. Uh,
(32:08):
if that value is fluctuating so quickly that by the
time I finished saying thank you that it's worth a
different amount, that becomes an issue again. So big disadvantages there.
On the advantage side, assuming that you've got a nice
stable value to it, if everything correct, if everything is
working as it was intended to work, then it's uh,
(32:31):
it's you know, decentralized, and it's anonymous. So if you
are concerned with your privacy and you want to be
able to purchase something and whether the legality of it
can be set aside for now. But you want to
purchase something, but you don't like the idea of that
being tracked to you personally for whatever reason, this is
a great way of doing it. It's a great way
(32:51):
of being able to say, like, I want to take
all that other nonsense out of the equation. I don't
want a third party, trusted third party involved in this,
like a credit company. I don't want any of that.
I don't want to bank involved in any of this.
I just all I want is to be able to
have an agreement between two entities. Maybe it's two people,
(33:12):
maybe it's two businesses, it could be any combination thereof.
I just want to have that transaction be as simple
as possible. And we both agreed upon what the value is,
we both agreed upon how many units of this currency
it should represent, and the transaction happens, and that's it
would love this. Yeah, And here's the thing is that
there's a record of that transaction, right because that's part
(33:33):
of the technology. It is completely shared across the entire network.
Now it's not tied to your identity, but but you know,
there's there is a ledger there, so it's not like
it's not like it's so super hush hush, it never happened.
In fact, it happened, and everyone knows it happened. They
don't necessarily know what you bought, and they don't know
who you are, but they know that there was a
(33:55):
transaction because that's how the system works. Okay, I'm gonna
hop in real quick and us that we take a
quick ad break so that we can welcome our pal
Matt into the studio. Here's where it gets crazy on
a couple of different fronts because because I'm here now, Yes,
(34:18):
some things changed during the ad breaks. Folks, Hi, I'm Matt,
um Hi Matt. I'm usually here and now I am.
I did your part at the beginning of the show.
It was weird because I kind of did it in
your voice and I felt kind of hollow inside. It
also took about fifteen seconds to get him going. It
was kind of like starting a dead car. I just
(34:38):
had the dead eyes. I was just like, what, Oh,
welcome to the after ad break. So we're very glad
you're here. Boy. So you came at the right time too,
my guy, because we are now diving into one of
the things that off air. We had talked about the
three of us and planned to ask Jonathan today. Jonathan,
(35:02):
we said, we've agreed that bitcoin is probably the most
famous cryptocurrency out there, by far, the most market capitalized,
even fifty cent. Curtis Jackson recently found eight million dollars
in bitcoin that you forgot he has just like in
his digital couch cushions after the dropper, before the drop recently,
So who knows how much it was, what time of
(35:24):
day is it right now? That story was interesting because,
like again we were talking about earlier, how you have
to be able, you have to accept bitcoin for transactions
for it to have value, and Mr Curtis Jackson totally
did that for a record that he put out there.
I don't think sold particularly well. Um, I think he
ended up with somewhere in the neighborhood of seven hundred
(35:45):
bitcoin or something like that. And yeah, and now he's
you know, and he was he had declared bankruptcy and
now he's uh sitting pretty at least, you know as
we record this podcast. Assuming that you can ever liquefy
your assets, then that's awesome. Is that a question like
is it possible that you couldn't? Yeah, it's absolutely possible.
It's absolutely possible that you could end up with an
(36:06):
amount of bitcoin and then you, uh, you try to
go and liquefy it, and then no one's willing to
actually give you the cash that the market says that
bitcoin is worth. Yeah, no, we could. I want to
save stuff for a part two, So I'm not gonna
I'm not gonna go in to talk about whales. We'll
(36:27):
talk about whales later. Okay, great. For now, we need
to figure out who created bitcoin we talked about we've
we've heard the name listeners, Satoshi Nakamoto. But here's the
thing about Setoshi Nakamoto. People are pretty certain it's a
suited him. No one actually knows who this person is,
(36:48):
or if this is just a monarch or used by
multiple people, and we have a real life Kaiser so
say esque figure in the world of cryptocurrency. Now, first
of all, I would argue, at least one person does
know who he is. That is incredibly likely. But how
hilarious would it be if that person did not know
that they were If you were to tell me that
(37:10):
the white paper on blockchain currency was ghost written by
some random code and that there is no Satoshi Nakamoto,
I would have my brain melt out my ears. I
would also I would go see that movie and wetting
the script I think in fact trademark copyright. So so
what do we know about this we know that this
(37:33):
person's or people in Satoshi Nakamoto maybe the nom de
plume of actually a group of people. Uh, it's a
very very clever computer scientist, right, someone who really understood
the potential for blockchain technology and to be clear, cryptocurrency,
blockchain technology, all of this stuff. These these are all
(37:55):
basic building blocks that had pre existed the creation of
bitcoin by couple of decades. It was Satoshi Nakamoto who
kind of put all the pieces together and laid them
out in a very compelling argument. In I think it
was a two thousand eight white paper that was originally
published just to kind of a a list of people
(38:16):
who are interested in cryptography. Would have been a previous
use for that technology. Well, there are all sorts of
different uses for it. You talk about peer to peer network,
so that that's how the Bitcoin operations work. Peer to
peer network is a way that you can transfer files
across a group of computers and like napster napsters and
(38:38):
or scour if you want to go old schools, more
like the swarm model though kind of like um, yeah,
a bit torrent, you know where you have everyone has
a piece of it, and it all kind of comes
together to create the whole. Well, yeah, where where like
if I have started to download a file and someone
else wants to download that same file, they might start
pulling some of the data that I'm beginning to accumulate
(39:00):
in mind, as well as other parts from other parts
of the network. This speeds up the process overall. Uh,
it's a It's a totally legitimate way to distribute files. However,
it has been used extensively for the purposes of piracy,
which is why he gets a bad name. But that
that's one element, for example of bitcoin that pre existed, Uh,
Satoshi Nakamoto's paper. Now as for Nakamoto, him, her or themselves, Uh,
(39:26):
as you say, we don't really know the identity. There
was a story in two thousand and fourteen of a
guy in California, uh named Satoshi Nakamoto. He actually has
the name, and everyone was saying, is this is this
is this the Satoshi Nakamoo? Poor guy? Can you imagine? Yeah?
He said, uh, I am not that guy. He was
(39:46):
to complicate matters computer scientist living in California. Yeah, so
a lot of people came up to him. He's like, no, Well,
there was another computer scientist who was living not too
far from the real uh world. Satoshi Dakamoto named Um
how Finny, who also could have potentially created the cryptocurrency UH.
(40:10):
He was interviewed Finny however, Um it's difficult to communicate
with him. He's he's locked in. He lacks the ability
to to move and communicate the way the average person would.
So also very koi with this um, very koi about
his potential involvement. There have been people who have said
(40:30):
that there are essentially three human beings in the world
who potentially could have created bitcoin. Uh. There are, by
the way, more than three people who have been associated
as possibly being Satoshi Nakamoto. But those three people would
be Nick Sosbo, Uh way Die or how Finny. Uh.
So there's this belief that it could be one or
(40:53):
more of those three. There's other folks. There was a
guy in Australia, Craig Wright, who for a while was
claiming to have to be Satoshi Nakamoto, saying, yeah, I'm
the one who came up with it. That's my pen name.
And then he said I can even show you how
those first uh, those first transactions happened, and he started
(41:14):
to demonstrate. But then people said, well, technically, if you
just have enough, no how you could probably just recreate
this and make it seem like you were the one
behind it. But you're you're actually just replicating something. And
then he kind of backed off. So this isn't hacking,
This isn't illegally, there's no reason to be anonymous other
than just to maintain the mystique or not want people
(41:35):
to mess with you about Oh, there absolutely is. There
absolutely is. Because Satoshi Nakamoto likely holds a significant number
of bitcoins, and so if you are the owner of
a massive amount of wealth, one of the things you
might not want to do is draw attention to the
fact that you created wealth out of nothing, like Vladimir Putin. Yeah,
(41:59):
so so if you if you go out and you
create shiny pecks and riding of horses, if you if
you create a cryptocurrency, which you know you could say,
all right, well, if we take a big, big step back,
Before you create bitcoin, there was no bitcoin. You created bitcoin,
people bought into the fact that it has value. You
(42:19):
create value out of effectively nothing, and you made yourself
incredibly wealthy through the process of doing this. And you're
the one who understands how the whole system works, which
raises questions in some people's minds. They asked, well, is
there any way to game the system? Surely the person
who created it would know a way of doing that. Um.
(42:41):
The whole purpose of the system, by the way, is
to make it very very very difficult to game the system.
You would have to have fifty one of the computing
power to do it, but so at the beginning there
was no one else doing it. Also not subject to
any government regulation. Right, so you're you have no way
of actually backing up or wealth in this system, and
(43:02):
if you get screwed then you just dis it's over then,
and that has happened with exchanges going under. Right, Like
the system itself is secure in that you don't have
to worry about someone attacking the blockchain directly. It would
just it's impractical because it's too much computing power. But
you could attack and exchange, and people have attacked exchanges.
(43:25):
We've heard about, you know, essentially Oceans eleven style heists
only on the digital scale, where thieves aimed at various
companies that were they essentially provided digital wallets. This is
the reason why you'd want to put it on your
own hard drive rather than on someone else's machine. Because
you get enough bitcoins all in one place, that's a
prime target. So that that's where we see the weakness
(43:49):
in the system. It's not it's not in the currency,
it's not in the transaction process. It's in the storage
end of it. That's where the weakness is. So before
we lose too much about Nakamoto, we do know some
of the claims that Nakamoto made themselves. Claimed to be
a male living in Japan born in nineteen seventy five.
(44:13):
That'd making my age the jerk. Wait are you dude?
Would I be here? Yeah, we're great. We're a lot
of fun to hang out with. Do we were going
to invite you to go play laser tag later. That's
a true story. Well, I mean, I appreciate the compliment,
but I am definitely not Satoshi knock about it. Yeah right, Well,
(44:33):
I wish I could. I wish I could cop up,
you know, I'd say like, yes, uh, I'm I'm living
a very under the radar lifestyle pretending to be Japanese
and my my caviar dreams stuff, at least not not openly. Yeah,
she allergy. I could probably have caviar and not die.
(44:54):
It's not shellfish. What if you just like bathed? Okay,
this is a different Yeah, that's that's opulent right Tuesday night.
We do know that a lot of people don't believe
that Satoshi Nakamoto, whomever he or she or they are,
they don't believe this this entity is actually Japanese and
origin due to some of the language used in forums, right,
(45:17):
the language that sounds British for lack of a better term,
the use of like the word bloody, and some of
the spelling, you know, like the extra L the PM.
I think he's banksy. I think he's banksy. I remember
this conversation. We all We also know that some people
say it was unlikely to be Japanese or they were
(45:38):
unlikely be Japanese because the software itself was not documented
or labeled in Japanese. Well, yeah, and there there's a
lot there's a lot of circumstantial evidence that points to
it being someone outside most theories, you know, pen Satoshi
Nakamoto's identity, assuming that there are there's just one, there
(46:02):
could like I say, there could be multiple people who
all just use that as their group pen name. Uh.
The most people think that we're talking about a European
or American computer scientist who was ultimately responsible for putting
together the whole shebang, or a time traveler or a
time travel it came back to begin the currency that
(46:24):
would one day they had two things to do, stop
the large Hadron collider and launch a cryptocurrency. So we
have a wealth of candidates for the real Satoshi Nakamoto
here and honestly, in some in some circles, I think
people are just picking folks they think of as highly intelligent.
Like you see you probably we all saw the scuttle
(46:46):
butt about Elon Musk, and someone's like, you know, you know,
who has enough time to do this? The guy who's
trying to build a space colony, the guy who's sending
his own sports car to Mars, which is cool. You
could probably bust some sick donuts on Mars. Oh yeah, yeah,
those creators. Yeah, you gotta get the right tires. Do
(47:06):
you ever wonder though somebody like LM. Musk isn't fully
working on those I mean, Ela Musk has his hands
dirty and that stuff, but he's not every day working
on the code. They're working on the He's an entrepreneur,
he's not. He's not the coder. He's not there. He's
not the guy in the chair, as Spider Man Homecoming
(47:27):
taught us. Yes, I guess I'm saying, maybe he does
have the time, but maybe nothing. Know how, I think
that's fair. Well, speaking of the time, it sounds like
it's about time for us to close our first chapter
on cryptocurrency, and we have to thank you, Jonathan. Thanks
for coming on the show. Despite the fact that you
(47:48):
and Nolan I are beefed up in a in a
different show, we we appreciate you coming on and walking
all of us through what cryptocurrency is, how it works,
and helping us try to figure out who this mysterious
person or people behind cryptocurrency actually might be. I mean this,
(48:08):
this is one of those legitimate mysteries out there. For
that then again, like a few people know the real answer,
but most of us are just left wondering. And ultimately,
I don't think it really matters, because what really matters
is that people have uh the belief in the system
and as long as that works, As long as people
have that belief, then there is value there. The question
(48:31):
is will there one day be come a time where
people just completely lose that belief and everything becomes valueless. Uh.
And then ultimately, by the end of it, has anyone
lost anything. These are like big, like philosophical questions that
are hard to answer. Yeah, as with all fiat currency,
eventually the people just stop believing in it. I mean,
(48:54):
you know, that's the only thing that keeps it going, right,
Like you could argue that the that state currencies are
backed by a government, but then you're that just shifts
your belief from the currency to the government and the government. Yeah.
By the way, did we discuss turning your gaming rig
(49:15):
into a bitcoin mining system? We discussed the fact that
it is now getting increasingly difficult to find graphics cards
because they're all being put to use in bitcoin mining.
I was gonna ask you about that. Was it tough
to find when you guys were assembling? Jonathan just let
everyone know, Um, Jonathan and r I t guy Israel
put together an amazing gaming PC, and I was gonna ask,
(49:37):
I know it has a cool parallel graphics processor. Was
that tough to find? It not? But that's because we
gutted some some slightly older Max and they happen to
have graphics cards. One of the few that is compatible
both with MAC and with PC, and we put all
three in parallel so that we got it's got three
(49:57):
parallel g p U s um. So I'm rich now,
but I still can't get a chicken dinner. Your graphics rich? Maybe, Yeah,
chicken dinner another thing that has been severely affected by bitcoin. Yeah,
so we so. I think it's interesting that you're you're
arguing the identity of this creator doesn't matter, not ultimately.
(50:22):
I think I think that's an interesting argument. I would
I would tend to disagree just because just because if
it were some group of people who are aiming to
manipulate a market, then it does matter very much because
there would be a motive that we would not understand,
(50:45):
which makes it and even um less secure investment. You
could argue that, but at this point, I think the
machine is moving forward with so much momentum that anyone
with any particular motivation wouldn't really be able to bring
it into full effect. I mean, unless you have a
(51:06):
plan to essentially sabotage multiple exchanges simultaneously, or if the
whales move all together, the system is going to be
nice and secure. But that's something we should say for
maybe the next episode, and folks, this concludes part one
of our episode on cryptocurrencies. However, off air, we brought
(51:30):
up something that we haven't done in a while. Chat
at Corners, Jonathan, this is an email especially for you.
We thought it's something that you might enjoy. Yes, comes
from Keith Russell. Keith says, greetings, fellow conspirators. It's been
some time since I made contact. I'm a bit wiser
in sending this message, this time not using Gmail. I'm
(51:52):
using proton mail, brought to you by certain makers of
the Mandela Effect. Okay, this email and the incantations there
in is being typed on privately centered keyboard, hosted on
encrypted servers, and being sent through encrypted packets via VPN.
Why am I taking such precautions because of advanced persistent threats.
We have known about the APT for some time, but
(52:14):
we now have a rare glimpse into the operations one
such APT Dark Kara Call Carackle, curasol c A r
A c A L Corackle, Dark Carackle Lookout and E
F F did a great rite up on Dark Coracle.
Oh I'm saying that so wrong. And operation out of
Beirut Lebanon, of course, we know that Lebanon isn't only
(52:37):
player in this space. China and Russia are very active.
China has been responsible for many cyber espionage campaigns and
Russia was most likely responsible for not Pay, Not Payta
not Pathy. Is this something you're aware of, Jonathan? Okay?
But China and Russia aren't the only nation states with
(53:00):
this capability. The shadow brokers and wiki leaks Vault seven
and Vault eight revelations show that the N s A
and c I A are very adept in this space,
though not enough to keep their secrets. And Stuck's net
was probably a joint effort by the US and Israel.
And did you know that there's a company called zero
di Um which buys zero day exploits and brokers them
to the highest government bidder and then he's got links.
(53:23):
They have offered a one million dollar bug bounty to
any hacker who has discovered a zero day on signal Tour,
WhatsApp and other privacy tools. That's a bit scary anyway,
Dark Coracle and Zero Day Market should fill in an episode,
and Shannon Morse would be a great guest. Farewell for now.
This email comes to us from Mr venomous. Hey, your
(53:46):
pal Shannon Morris. Yeah, and she had morrise of Hack
five Fame and and Tech Threat. Yeah, she's put in
a good word. Maybe we can get her on the
show into that episode. I'll let her know. We should
absolutely look into Zero Day exploits. Maybe we can get
you a ship and back on the show in the future. Yeah.
I think that the this email has a lot in it,
(54:07):
and hopefully our super producer can chop it up a
bit to make a little more sense for everybody listening.
Um A p T S and all of that stuff
they're in. Thanks, I have a really pressing one. That
one was was super important, but this one really I
think takes the k um. It is from Nick love
it uh, he says, Hey, guys, nearly an everyday listener
(54:27):
on Spotify at work and in the truck found you
about two months ago and started at the top of
the list and just let it play, of course, in
reverse chronological order. I just came across the May fifth episode,
The Collapse of Atlanta. At the beginning of the show,
Matt questions if the right chips from checks Mix are
sold individually. Well, y'all hadn't already discovered this by now.
It just so happens that I discovered in a convenience
(54:47):
store a while back a bag of Just Ride chips,
So they are in fact available, Matt. That's amazing. I
told you it was important, Was it a QT because
I know where some of those are? Yeah, he didn't
specify the store, but Nick, please write us back and
let us know where to get these delightful snacks. Uh.
And and we really appreciate the tip. And this concludes
(55:08):
ours but not our show. I am so glad we
decided to make this a two part episode because we
have not even scratched the surface of some of the
strangest cryptocurrency conspiracy. So we're not the Joe Rogan Show.
We don't do nine hour episodes. We have to you know,
we like to keep things in little nuggets, digestible. M
(55:31):
Speaking of which, I want to eat lunch. Alright, Well,
if Jonathan is giving us the lunch signal, join us
and wishing him luck on his continuing quest to find
a decent chicken sandwich. In the meantime, you can find
Nol Matt Uh, super producer Paul and I on Instagram, Facebook,
and Twitter, where we are some variation of conspiracy stuff.
(55:53):
You can also find us on Instagram Conspiracy Stuff Show.
If you don't want to do any of that stuff,
just hit us up the old fashioned way. We are
conspiracy at how stuff works dot com
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Noel Brown
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