let's talk bitcoin, episode 42, "nsa it ain't so!"

8/13/2019 Let's Talk Bitcoin, episode 42, "NSA It Ain't So!"

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Transcription of Episode 42 NSA It Ain't So!

Participants:

Adam B. Levine (A.L.) Host

Andreas M. Antonopolous (A.A.) Co-host

Stephanie Murph (S.M.) Co-host

!endell (!.) - Hive"allet# $uest in second se$ment at %&:''

And Schroder (A.S.) - Bitcoin luid ispenser Pro*ect# $uest +n third se$ment at

,,:'

Adam B. Levine: Hi# and "elcome to episode & o/ Let0s 1al2 Bitcoin# a t"ice-

"ee2l sho" a3out the ideas# people# and pro*ects 3uildin$ the ne" di$ital

econom and the /uture o/ mone. 4isit us at letstal23itcoin.com /or our dail

$uest 3lo$# all our past episodes# and# o/ course# tippin$ options.

M name is Adam B. Levine and toda# the /ocus is on utilit# securit# and the

international picture. 1he 5SA has 3een in the ne"s a lot# most recentl "ith

concerns that the Bitcoin protocol could 3e /undamentall compromised. 1he lastse$ment o/ toda0s sho" has an in-depth conversation "ith msel/# Andreas and

Stephanie a3out the particular al$orithms that mi$ht 3e a//ected and "hether or

not the are.

But /irst# "e0ve $ot a *am-pac2ed sho" /or ou toda. 1he host and + tal2 re$ional

altcoins in Marra2esh# intentional communities# and the e6plosion o/ con/erences

+ have intervie"s "ith !endell /rom the upcomin$ ease-o/-use /ocused

Hive"allet# and And Schroder# the drivin$ /orce 3ehind the Bitcoin luid

ispenser pro*ect# 3rin$in$ cash-li2e transactions to a li7uid dispensin$ operation

near ou.

+0m also ver pleased to announce that a/ter several "ee2s o/ "or2 3 Michael

Sullivan and the team at BitCredits# video con/erence passes are no" availa3le

/or pre-order at earl-3ird prices in 3oth 8S dollars and 3itcoin. !e0ve partnered

"ith 9e//re 1uc2er to capture# in hi$h-de/inition# and ma2e availa3le the entire

Crpto-currenc Con/erence# set to ta2e place in Atlanta# eor$ia on ;cto3er .

Prices are# o/ course# less /or the Bitcoin option# 3ut i/ ou0re at all interested in

the Bitcoin con/erence e6perience# this is an a//orda3le and on-our-schedule "a

to $et /ast access# and support Let0s 1al2 Bitcoin at the same time. 1han2s /or

listenin$# and en*o the sho".


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Stephanie Murph: !hat i/ ou could live in a 3itcoin-intentional communit#

"here ou are livin$ amon$st people "ho ou ma3e 2no" /rom the Bitcoin

/orums# "ho ou 3u and sell 3itcoins "ith ever da< ou can $o to 3usinesses

around ou that accept Bitcoin# and ou can $et a *o3 that pas ou in Bitcoin. +s

that somethin$ ou0d 3e interested in doin$=

Andreas M. Antonopolous: + thin2 that "e0re increasin$l livin$ in a "orld "ithout

3orders that actuall matter so much anmore. + mean# it0s di//icult to travel# 3ut

once ou $et to places# it matters a lot less. + spea2 /rom an outsider0s

perspective 3ecause + don0t travel unless + a3solutel have to mostl it0s 3een

*ust to spea2 at these con/erences 3ut the concept o/ a$orism and 3

>a$orism#? essentiall + mean participatin$ in sstems that our outside o/ the

normal /lo" o/ commerce# li2e these intentional communities i/ the intentional

communit has an econom unto itsel/# and people do 3usiness "ith each other

in this communit# then that is a /orm o/ a$orism# 3ecause ou0re 3passin$ "hat

"ould 3e the standard methods /or doin$ that same tpe o/ 3usiness.

Bitcoin is such an interestin$ currenc 3ecause it levera$es the $lo3al# on the one

side# 3ut it0s also ver much a3out the local and especiall once ou $et do"n

to the phsical 3itcoins# li2e "e "ere tal2in$ a3out a couple o/ episodes a$o# +

thin2 that the chances /or doin$ somethin$ li2e this# and et havin$ all o/ the

advanta$es that Bitcoin o//ers in the $lo3al sense# are reall# reall interestin$.

S.M.: Bitcoin is decreasin$ the importance o/ 3orders# ri$ht= Li2e# ou can send

Bitcoin all over the "orld# 3ut i/ ou "anna $et a ham3ur$er and ou "anna pa

/or it "ith 3itcoins# ou reall have to have people around ou "ho are "illin$ to

help ou /acilitate that 2ind o/ transaction. So# + can see the value o/ intentionalcommunities# and reall *ust livin$ "ith people "ho are more li2e-minded# and i/

Bitcoin is reall important to ou li2e# ou mi$ht "ant to 3e around people "ho

share our love o/ Bitcoin# and the other ideas that sometimes $o alon$ "ith

people "ho love Bitcoin.

!e see some o/ these intentional communities comin$ up< i/ ou $o to Berlin or

some other parts o/ erman# there are "hole nei$h3orhoods "here all these

3usinesses accept Bitcoin# and o/ course Ar$entina0s 3ecomin$ reall 3i$# and

certain places in the 8S... + mean# all over the place# there are these Bitcoin

hotspots that are poppin$ up. !e0ve 3een invited to several Bitcoin con/erences

since Let0s 1al2 Bitcoin 3e$an# 3ut no" the0re 3ecomin$ "orld"ide. Li2e#

Ar$entina# 9apan# @n$land# Austria... ever"here has a Bitcoin con/erence# and

it0s impossi3le to $o to all o/ them oh# Manila# in the Phillippines there0s *ust so

man o/ them (laughs) and it can 3e a /ull-time *o3 *ettin$ around the "orld to $o

to all these Bitcoin con/erences. + thin2 it0s a positive si$n to see them poppin$ up

all over the place# 0cause some people *ust "ant local interaction# and the0re not

al"as $onna $o to the hotspots to 3e a3le to $et that.

A.A.: + spent a3out a decade *ettin$ around the "orld# spea2in$ at con/erences /or

technolo$# and + a3solutel loved doin$ that# meetin$ people apart /rom the

con/erences# "e0ve also had this rich tradition o/ intentional communities# "hiche6ist 3oth in the cpherpun2 - as "ell as the c3erpun2 and hac2er - communities


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and immediatel /rom moment E%# "hen "e $ot on the phone and started

tal2in$ to them# the vi3e + "as $ettin$ /rom them "as that the /elt li2e + "as

trin$ to sell them somethin$# and trin$ to $et them to put their reputation

3ehind somethin$ Fthat "asG $onna 3e a 3i$ scam# "here + "as $onna ma2e a

3unch o/ mone o// o/ it and that reall has $one a"a. +ncreasin$l over the

last# ma3e# t"o months# the reporters have 3een $enuinel interested in trin$to understand ho" the sstem "or2s and "h it0s somethin$ that their readers

and listeners should "ant to appreciate. So# that0s 3een a reall interestin$

chan$e to see.

1he /lipside o/ that# o/ course# is that a lot o/ them still reall don0t understand it

ou tr to use analo$ies that people can relate to< one o/ the $ood ones /or

descri3in$ ho" Bitcoin as a protocol "or2s relative to Bitcoin as a compan

"hich# o/ course# it "hat most *ournalists thin2 it is is to tal2 a3out 5apster and

Bittorrent# 3ecause 5apster "as 3asicall a centraliDed version o/ Bittorrent# and

Bittorrent is# o/ course# no" the most commonl used protocol /or sharin$ media/iles on the "e3# i/ +0m not mista2en. +t has no structure# in much the same "a

that Bitcoin is a protocol# it0s a set o/ rules that one opts into# rather than 3ein$

somethin$ "here the have o//ices and have revenue and can 3e shut do"n.

So# the pro3lem# o/ course# is that then the "ind up comparin$ it to 5apster#

3ecause their readers 2no" a3out 5apster# 3ut the don0t 2no" a3out Bittorrentho" do ou $ive Bitcoin a $reat user e6perience=?

And in addition to that# "hat "e0re trin$ to do is help people 2no" "hat to do

"ith them# so the thin$ that + usuall tell people is FthatG Hive is a $reat "a to

$et# send and spend 3itcoins.

A.L.: So# tal2in$ a3out user e6perience "hen it comes to "allets# "hat is it that

Hive is doin$ that ma2es it more usa3le or more /riendl to ne" users than our

standard Bitcoin-7t or another "allet that0s out here=

!.: + thin2 the main di//erence 3et"een Hive and other "allet apps is that "e0re

reall /ocusin$ on people and or$aniDations. !e do local address-3oo2 sncin$# so

ou $et nice ima$es o/ people< "e a3stract a"a a /e" o/ the details. !e tr as

much as possi3le to not sho" Bitcoin addresses. !e ma2e it a little 3it easier to

step into the picture. +/ someone that ou 2no" actuall has a Bitcoin address#

ou can plop it in there once and ou pro3a3l "on0t have to deal "ith it a$ain.

1hat0s the /irst step.

1he other thin$ that "e0re doin$ is# actuall# "e are ma2in$ it reall eas to

discover Bitcoin merchants. So# inte$rated into the application is a 2ind o/ app

plat/orm /irst o/ all# ou can $ive 3itcoins< "e0re 3uildin$ applications arounde6chan$es and ou can also spend 3itcoins. 1here are several merchants# /or


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e6ample# FthatG no" that also have applications in Hive. So the idea# reall# is

ou ma have heard people sa that Bitcoin0s current sta$e is li2e the +nternet#

circa % ou 2no"# some core technolo$ is deploed# and there0s a lot o/

e6citement a3out its potential# 3ut it0s also ver technical. +/ ou remem3er those

times# /indin$ content "asn0t so eas portals and search en$ines spran$ up to

deal "ith that pro3lem# and +0d sa Hive is similar to that sta$e. !e 2ind o/ "antto 3uild a 3rid$e to the mainstream user.

A.L.: So# "hen ou tal2 a3out inte$ration "ith applications# and speci/icall "ith

e6chan$e plat/orms# are ou a3le to share an o/ that "ith me= ;3viousl# in the

Bitcoin space ri$ht no"# that0s one o/ the sin$le lar$est pro3lems that people run

into over and over a$ain< "henever ou tal2 to someone ne"# /irst the 7uestion is

>ho" + can + start minin$ and ma2in$ mone "ith m computer=#? and then the

second 7uestion is >;I# ho" can + 3u them=#? and that tends to 3e 2ind o/ a

hard ans"er. So are ou $onna ma2e it easier# or is this *ust inte$ratin$ the

e6istin$ solutions into a "allet "hich# to m 2no"led$e# has not 3een done3e/ore=

!.: F1heG /irst step is actuall *ust inte$ratin$ solutions< so# + mean# there0s a lot o/

stu// out there as ou 2no" that can pro3a3l 3e sur/aced a little 3it more

easil /or people< so# /or e6ample# the /irst time ou run Hive# ou0re presented

"ith a "iDard that sas >he# do ou have 3itcoins= o ou need 3itcoins=? and i/

ou need 3itcoins# + present ou "ith a list o/ several options< there are a /e"

e6chan$es# so /or e6ample ou could use BitStamp i/ ou "ant to do a 3an2

trans/er# or "e are actuall ri$ht no" trin$ to inte$rate "ith JipJap# so the idea

is that ou can have local places "here ou can actuall $o and deposit mone

ri$ht availa3le to ou ri$ht there# so ou can sta "here ou are and it "ill *ust

present it to ou. So a$ain# to ma2e this portal analo$# "e0re stic2in$ and

curatin$ pieces to$ether to $ive an overall coherent Bitcoin e6perience# 3ecause#

at the moment# it0s 7uite hard to piece to$ether as a ne" user.

A.L.: Bitcoin is alread 2ind o/ a niche mar2et# and it0s certainl $ro"in$ over

time# 3ut + notice that our plat/orm is tar$eted speci/icall at the Apple mar2et.

!as that a conscious choice /rom a development point o/ vie"= +s this *ust a /irst

deploment= !hat0s the strate$ in terms o/ plat/orms ou0re $onna 3e availa3le

on=

!.: !e 2inda "anted to release on Mac and see ho" it "ent. !e "anted to tar$et

the so-called >novice user.? 1he Mac is ver popular# especiall in 5orth America#

and ri$ht no"# "henever + sho" the e6istin$ Bitcoin "allet apps to m Mac-lovin$

/riends# the0re immediatel + don0t "ant to sa >turned o//? 3 it# 3ut the

pro3lem is that the don0t reall re/lect all o/ the Mac user inter/ace $uidelines

and thin$s li2 that# and "e *ust sa" that as an opportunit# as a startin$ point.

But certainl# i/ there is an opportunit to 3uild Hive# speci/icall# /or their

plat/orms# then "e0ll loo2 into it# 3ut the /irst step is to see ho" this $oes# "ith

the Mac side o/ thin$s.

A.L.: ou0re doin$ some de/initel innovative and interestin$ thin$s here# in termso/ inte$ratin$ other applications into our "allet application# and /ran2l 3ein$


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proactive a3out as2in$ users "hat it is the "ant< as2in$ them i/ the have

3itcoins# or i/ the "ant 3itcoins# and then trin$ to connect those dots /or them#

or at least help them do it. ou mention that ou have 2ind o/ an interestin$

3usiness model +0m curious# ho" are ou plannin$ to monetiDe this=

!.: Actuall# +0ll caveat this 3 sain$ + 3elieve this0ll 3e some"hat controversial inthe Bitcoin communit# 3ut our /irst idea "as that "e "ould 3e a3le to actuall

ta2e transaction /ees /rom the activit that happens "ithin applications. + "ill

admit to ou that all o/ the details ri$ht no" "e0re still "or2in$ all that out# ho"

that "ould 3e done# especiall since "e don0t "ant to centraliDe that0s one o/

our mantras# to 2eep this ver ver decentraliDed. So# "e0re loo2in$ at that# and +

don0t 2no" that that0s necessaril "hat0s $onna 3e the end$ame /or us# 3ut it0s

"hat "e0re $onna 3e trin$ ri$ht no". 1he other possi3ilities that e6ist "ithin this#

o/ course# are i/ "e $et some traction "ith it# "e can do man other thin$s. But

/or no"# this is 2ind o/ "here "e0re at "ith 3aseline.

A.L.: !ell# that0s certainl an innovative model + don0t thin2 "e0ve heard o/

anone doin$ that 3ecause ou0re tal2in$ a3out 3ein$ almost li2e a utilit here#

"hat tpe o/ level "ould these transaction /ees# i/ that0s the "a that ou $us

decide to $o /or monetiDation# "hat "ould that loo2 li2e= Are "e tal2in$ a3out a

small percenta$e-3ased thin$# or "ould it 3e /lat and ver# ver small# li2e the

transaction /ees are no"# or ma3e it0s .'''=

!.: !e thin2 that# pro3a3l# a percenta$e-3ased model "here it0s a ver# ver

tin percenta$e is "hat "e0ll end up pursuin$. Havin$ said FthatG# + have reall no

idea "hat0s $oin$ to 3e accepta3le to the communit# and + hope that "e "ill end

up actuall "or2in$ "ith the communit to /i$ure that out. 1his is $oin$ to 3e anopen-source pro*ect# so + am actuall $oin$ to 3e completel transparent a3out

all that 2ind o/ stu//# and + reall "ould li2e to hear /rom other people a3out "hat

e6actl it is that the thin2 "ould 3e /air< "hat e6actl it is that the "ould li2e to

see i/ the have an ideas a3out "as that "e can 3uild a 3usiness around this

it0s Bitcoin# so it0s all ver open# and it0s all in/inite possi3ilit as /ar as +0m

concerned.

A.L.: + understand "h some pro*ects approach this /rom an open-source

perspective# 3ut +0m a little 3it surprised that ou0re approachin$ it# $iven the

model ou0re trin$ to pursue# 3ecause it seems li2e the natural ne6t step a/ter

ou0ve done "hat ou0re proposin$ to do here is /or someone to /or2 it# as ou

said# and then ta2e o// the /ees and sa >here0s the version /or /ree.? And there0s

nothin$ actuall stoppin$ anone /rom doin$ that in this situation.

!.: eah# that0s completel true< people could actuall /or2 this application

someone could ta2e it# and remove the /ees# and have the /ree version# 3ut m

assumption is that there is enou$h $ood"ill in the Bitcoin communit to

understand especiall i/ "e0re completel transparent a3out it that this is ho"

"e0re $oin$ to ma2e our mone< that i/ ou do end up $ettin$ the version that

actuall has no /ees# then ou do mana$e to $et around the small /ees# 3ut "e

also hope that the /ees "ill 3e small enou$h that it0s trivial and that people "ill"ant to support this.


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A.L.: our /irst version isn0t out et< "hat0s the timeline on this# and "hen can

people e6pect to $et their hands on it to pla around "ith it= Because +0ve seen a

video o/ it# and it loo2s li2e it /unctions# at least in the e6ample that ou sho"ed

to me.

!.: eah# "e0re actuall $oin$ to 3e pushin$ this thin$ out in mid-Septem3er# andthe initial release "ill 3e totall tar$etin$ the Bitcoin communit< +0ll pro3a3l put

a discrete post on Bitcoin1al2 as2in$ people to test this and tellin$ them "hat

"e0re up to# and then + hope that "e0ll have a 3roader push# includin$ a ne"

"e3site# comin$ at the end o/ the month.

So another thin$ "e0re doin$ that0s reall help/ul /or the user is automated "allet

3ac2up. As ou use Bitcoin# one o/ the 3i$ pro3lems "ith local "allets is that ou

can end up in a reall 3ad situation# so# /or e6ample# msel/< +0m prett savv# 3ut

+ damn near lost a "allet "ith a reall su3stantial amount o/ mone in it 3ecause

+ didn0t 3ac2 it up properl# and 3 the "a# this is a note to all Bitcoin-7t users

do not *ust cop our "allet.dat /ile# use the 3ac2up "allet /eature 1han2s to

Peter !uille /or recoverin$ that "allet.

!e0re ma2in$ it reall eas to 3ac2up our "allet. 1he process is completel

automated. +t ma2es multiple local 3ac2ups# inte$rates "ith iCloud# so our

"allet.dat /ile "ill 3e ver secure and sa/e# ou "on0t even have to thin2 a3out it.

-And there are multiple recover methods as "ell.

A.L.: !ell# !endell# sounds li2e Hive is $oin$ to 3e a reall interestin$ product. +

can0t "ait until it comes out and + $et to tr it on m various devices. +/ some3od

is interested in the pro*ect and "ants to either learn more or $et involved# areou loo2in$ /or anthin$ in particular# and ho" "ould someone do that=

!.: !ell# i/ ou0re an active Mac ;S %' developer "ho0s "or2in$ on hi$h pro*ects#

please $et in touch "ith me at "K$ra3hive.com. !e0re also loo2in$ /or a hand/ul

o/ testers# so i/ ou0d li2e to 3e one o/ the /irst people to tr it out# please $o to

$ra3hive.com and *ust drop our email address in there# and "e "ill send

somethin$ out shortl.

A.L.: !ell# "e reall appreciate ou doin$ this open-source "or2 /or the

communit# and li2e + said# reall loo2in$ /or"ard to seein$ "hat the results are.

1han2s /or *oinin$ us toda on Let0s 1al2 Bitcoin# !endell /rom Hive

(INTERMISSION ad break)

@MAL@ 4;+C@: More than three hundred thousand users and countin$ trust

Bloc2chain.in/o. +t0s a Bitcoin "allet service# and a "ealth o/ Bitcoin in/ormation#

and it0s completel /ree to use. !ith a Bloc2chain.in/o "allet# ou0ll $et the

convenience o/ a "e3 "allet# and the securit o/ a des2top client. Bloc2chain.in/o

is also a 3loc2 e6plorer< ou can use it to see Bitcoin transactions in real-time#

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all /or /ree. See "hat the have to o//er toda at Bloc2chain.in/o.

(DIFFERENT MUSI NE! "D#ERT$ S"ME #OIE)
mailto:[email protected]:[email protected]


9/22

@MAL@ 4;+C@: @as5S is the S"iss Arm 2ni/e /or our domain names# helpin$

meet their customers0 individual needs since %. @as5S has 3een an

outspo2en critic o/ S;PA and C+SPA. @as5S "as an earl supporter o/ Bitcoin#

and no" the are proud to sponsor this sho". o 3usiness "ith a compan that

shares our values. et a %, discount "hen ou pa "ith Bitcoin. o to

3itcoin.easdns.com# and 3e sure to use discount code L1B.

A.A.: + "as tal2in$ "ith 5ilam octor# "ho0s one o/ the candidates "ho is runnin$

/or the Bitcoin oundation seat# and he0s "or2in$ on a reall# reall interestin$

pro*ect that + "anted to tal2 to ou $us a3out. 1he0re puttin$ to$ether#

essentiall# an alternative crptocurrenc that0s 3ased o// o/ Bitcoin# 3ut that is

essentiall $oin$ to 3e le$al tender in the re$ion o/ Marra2esh. So# he0s "or2in$

"ith the /inance minister to create this# and the reason "h the0re $oin$ "ith

that versus a sstem that is 3ased o// o/ Bitcoin is 3ecause even thou$h the

avera$e transaction /ee F/or BitcoinG that + pa is some"here 3et"een cents

and N cents on a per-transaction 3asis eah# that depends on "hat thee6chan$e rate is at the time that ou ma2e the transaction that amount is still

7uite lar$e "hen ou compare it to the relative siDe o/ the avera$e transaction

that ta2es place in this re$ion. And so# /or them# Bitcoin solves some pro3lems#

3ut it creates other pro3lems 3 ma2in$ it so smaller transactions da-to-da

transactions aren0t reall tena3le. So the0ve ta2en the opportunit the0re

still in the process o/ doin$ this to tr and /i6 that# and + thin2 that there0s one or

t"o other thin$s that the0re t"ea2in$ a3out it. !hat do ou thin2 the /uture is

/or the decentraliDation o/ Bitcoin= o ou thin2 it0s possi3le to have a one-siDe-

/its-all approach "ith re$ard to thin$s li2e the transaction /ees= !e don0t see it as

a 3i$ deal# 3ut then in other parts o/ the "orld Fit0sG actuall a real pro3lem.

S.M.: Are "e tal2in$ a3out an altcoin here=

A.A.: + 3elieve so. + haven0t intervie"ed him et speci/icall a3out this topic# 3ut

"e had a conversation a3out it# and that0s "hat it sounded li2e the0re tal2in$

a3out an altcoin that0s# a$ain# 3ased o// the Bitcoin# and the 3eaut part /or

them is 3ecause the0re 3oth crpto-currencies# once mone $oes into their local

altcoin# it can *ust as easil 3e s"itched to 3itcoin# so ou0ve $ot the a3ilit to

save most o/ our mone in 3itcoin i/ ou thin2 that0s the crpto-currenc that

has the most potential# 3ut then "hen it comes to local transactions# ou can still

have this FaltcoinG essentiall availa3le to ou# and it has all the advanta$es that3itcoin has# 3ut it is also more tailored to our local environment.

S.M.: 1his reall reminds me o/ an article ou "rote# actuall# Adam# on Let0s 1al2

Bitcoin# called >1he ;pportunit o/ Altcoins#? and 3asicall correct me i/ +0m

"ron$# 3ut it sounded li2e our "hole point "ith that article "as FthatG there0s a

hu$e opportunit to levera$e the po"er o/ altcoins /or e6amples *ust li2e this#

"here# /or instance# ma3e "e don0t "ant these hi$h transaction /ees li2e# /ive

cents is a hi$h transaction /ee# relative to the local thin$s "e0re doin$# so "e0ll

*ust ma2e an altcoin that 3etter suits that purpose and that "ould 3e e6tremel

use/ul to a certain su3set o/ people# 3ut then it "ould also have the advanta$e o/

3ein$ similar to Bitcoin and 3ein$ compati3le "ith Bitcoin i/ ou "anted to# /or


10/22

instance# have a savin$s account "here ou saved our mone in 3itcoin + thin2

that0s the per/ect e6ample o/ "h altcoins could 3e reall use/ul.

A.A.: So localiDation and internaliDation are some o/ the aspects o/ Bitcoin# + thin2#

"ill 3e 2e drivers /or developin$ speci/ic altcoins 3ut# at the same time# there0s

an enormous 3arrier to adoptin$ an altcoin 3ecause o/ the net"or2 e//ect and theincentive to *oin the net"or2 e//ect o/ Bitcoin. Bi$ net"or2s have a net"or2

e//ect< mone net"or2s have a 3i$$er net"or2 e//ect. Mone ma2es the net"or2

e//ect much 3i$$er. Bitcoin has this almost insurmounta3le net"or2 e//ect# "here

in order to introduce an altcoin that0s popular# + thin2 ou have to have a ver

compellin$ di//erentiator either a massive /la" in Bitcoin that ou0re /i6in$# or

somethin$ that0s compellin$ 3ecause o/ its localiDation# local culture or "hatever

other local application.

S.M.: !hat i/ the compellin$ thin$ is /orce= Because that0s "hat le$al tender is

li2e the $overnment sas >ou have to accept this mone#? so "ould that 3e a

valid thin$=

A.A.: orce overcomes all 2inds o/ incentives< it0s the most po"er/ul incentive# so

es# o/ course. !hat +0m sain$ is# ou have a "orld "here 3eatin$ Bitcoin "ill 3e

di//icult 3ecause o/ the net"or2 e//ect# 3ut at the same time# ou have these

incentives to do some customiDation /or local reasons# and + thin2 in the end#

that0s $oin$ to result in essentiall havin$ a ver lar$e Bitcoin and ma3e three#

/our# /ive other altcoins survivin$ alon$side o/ it in a $lo3al mar2et. ou0re $onna

reach an e7uili3rium "here there aren0t 3i$ enou$h /la"s or incentives to leave

Bitcoin# other than the e6istin$ t"o or three altcoins that are survivin$.

A.L.: !ell# since "e0re tal2in$ a3out that article + "asn0t actuall intendin$ to

tal2 a3out the article# *ust that e6ample# 3ut Andreas m ar$ument in that

article is 3asicall that ou0ll have all those pro3lems so lon$ as ou0re mar2etin$

to someone "ho0s alread usin$ Bitcoin or is alread a"are o/ Bitcoin. But that

onl encompasses# ou 2no"# less than a /raction o/ % o/ the "orld population.

So# i/ ou $o into a situation "here there is no a"areness o/ crpto-currencies#

and the /irst crpto-currenc that0s introduced is# in /act# one that is more tailored

to our environment as in this e6ample# the transaction /ees ma2e more sense

relative to ho" ou "ould actuall 3e usin$ it on a da-to-da 3asis then

doesn0t that overcome some o/ the net"or2 e//ect# 3ecause# simpl put# the

net"or2 e//ect doesn0t e6ist there=

A.A.: +t "ould overcome some o/ the net"or2 e//ect# and "ith su//icientl stron$

local mar2etin$# ou could de/initel have this island o/ an altcoin ta2e o//. + thin2

that0s a $reat opportunit# 3ecause "hat + predict "ill happen is that as that ta2es

o//# it "ill 3ecome e6chan$ea3le /or Bitcoin# and as people 3ecome com/orta3le

"ith crpto-currencies and understand "hat the mean# ou should -inaudi3le-

/or Bitcoin to ta2e advanta$e o/ the net"or2 e//ect and so# that altcoin "ill

eventuall disappear. +/ the onl compellin$ ar$ument /or 2eepin$ it /rom

convertin$ to 3itcoins is that people don0t 2no" a3out Bitcoin# then it "ill survive

/or as lon$ as people don0t 2no" a3out Bitcoin. +t "ill 3ecome the per/ectmar2etin$ vehicle. And then= @verone "ill convert to Bitcoin.


11/22

A.L.: Since "e0re tal2in$ a3out that article# ou 2no"# there "ere a couple o/

thin$s that listeners 3rou$ht up and readers 3rou$ht up that + thin2 it0s important

to address# and +0m ver curious /or our /eed3ac2.

1he /irst pro3lem "as that "hen ou0re startin$ an altcoin# especiall i/ ou0re

3ased o// o/ an e6istin$ piece o/ "or2 li2e the same one that Bitcoin uses# oreven the same one that Litecoin uses at this point ou sort o/ /ace a ver

di//icult 3ootstrappin$ pro3lem# "here an3od can devote some o/ their minin$

po"er that comes /rom a much more po"er/ul net"or2 to"ards our net"or2

and# in doin$ so# ou can actuall 3e vulnera3le to % attac2s /rom ver lo"

levels o/ hashin$ po"er relative to the siDe o/ other crpto-currencies.

+ /eel li2e# in an environment "here ou have a local-/ocused altcoin# that0s so

much a pro3lem# 3ecause the 3ootstrappin$ should happen prett 7uic2# i/ ou0re

$oin$ a3out it "ith a mar2etin$ campai$n# and it has all o/ that same earl-

adopter incentive that Bitcoin has had historicall. But ho" much o/ a ris2 do ou

thin2 is there= +s that enou$h o/ a ris2 to sa that it0s 3etter to use another

situation that levera$es Bitcoin and /inds another "a around the pro3lems

rather than creatin$ an altcoin=

A.A.: + "ould sa es# + thin2 that unless ou have a reall compellin$

di//erentiator# all o/ these little incentives# ris2s# or motives "ill $raduall start

addin$ up until the 3ecome insurmounta3le and ou are essentiall s"itchin$

3ac2 to Bitcoin.

A.L.: ;I# so let0s sa that "e "anted to do this pro*ect in Marra2esh and "e didn0t

"ant to use an altcoin# "e "anted to use Bitcoin. ;ne o/ the proposals that +0veseen is to do it entirel in o//-3loc2chain transactions# and essentiall to have

$eo$raphic re$ions "here the have a couple o/ pament processors that

actuall send the 3loc2chain# 3ut /or the most part# da-to-da transactions are

happenin$ o//-3loc2chain some3od0s private data3ase.

1hat has advanta$es in that ou can do essentiall instant transactions 3ecause

there0s no con/irmation time# and there0s no /ees "hatsoever unless the0re put

on 3 the plat/orm# 3ut it also has some disadvanta$es# ri$ht=

S.M.: ;r# ma3e# a lot o/ the currenc "ould 3e phsicall represented# so

essentiall# people "ould 3e handin$ around paper "allets< there0s no realtransaction /ee /or that. Honestl# "hat + "as picturin$ "hen + thou$ht >;I#

there0s $oin$ to 3e this $overnment o/ Marra2esh and the0re $onna sa their

altcoin is le$al tender? "hat + "as picturin$ "as almost li2e a central 3an2

administerin$ the net"or2< almost completel ta2in$ out the decentraliDed

aspect o/ Bitcoin and altcoins. -And that0s not Bitcoin. 1hat0s not a conventional

altcoin 3ut that does sound li2e somethin$ that the "ould do. +/ the0re $onna

sa >ou have to use our altcoin#? then there0s pro3a3l $onna 3e some /ederal

reserve or "hatever in Marra2esh that0s runnin$ a 3unch o/ computers and

creatin$ the net"or2 or somethin$ li2e that# or that no3od has to run a

net"or2 or somethin$ li2e that. + have a hard time 3elievin$ that a $overnment is$onna sa >;I# this is le$al tender< no"%&uma2e the net"or2 o/ people#%&u $o


12/22

ahead and create this net"or2.? + *ust don0t thin2 that "ould /l. So there0s

pro3a3l $onna 3e somethin$ a3out it that0s ver si$ni/icantl di//erent /rom

Bitcoin# and to me# that "ould not 3e m pre/erence. + li2e decentraliDed

net"or2s# and + thin2 that0s a hu$e stren$th o/ Bitcoin 3ut + could see a

$overnment "antin$ to remove that portion o/ it.

A.A.: Let0s also connect this 3ac2 to the idea that people in other countries are

much more com/orta3le "ith /inancial uncertaint "ith multiple currencies. !hen

+ "as in Marra2esh# "e traded in dollars# euros# and the local mone# 3ut that "as

onl the 3e$innin$ o/ it. +n /act# Marra2esh "as the /irst place "here + "as o//ered

camels in e6chan$e /or m "i/e# and that "as as a result o/ her incredi3le

ne$otiatin$ pro"ess. She 3asicall sat do"n "ith a 1uare$# and# a/ter t"o and a

hal/ hours o/ ne$otiatin$ in rench# "ore him do"n to the point "here he $ave up

and *ust discounted everthin$# and the "ere so impressed "ith the idea o/ a

"oman outne$otiatin$ a 1uare$ that the o//ered to 3u m "i/e /or camels# so

there ou $o.

S.M.: id the thin2 she "as $onna ta2e the /irst o//er=

A.A.: 1he didn0t as2 her'

S.M.: id the thin2 ou "ere $onna ta2e the /irst o//er=

A.A.: 5o# a3solutel !ell# /irst the /lattered me 3 tellin$ me 7uite clearl that

there "ere not enou$h camels in the "orld /or such an incredi3le "oman# 3ut

then the o//ered me a more speci/ic price. +0m not *o2in$# this is a true stor#

a3solutel.

S.M.: !ell# it does ma2e sense that people around the "orld are more

com/orta3le "ith multiple currencies# and-

A.A.: Camels.

S.M.: es# and camels.

(INSTRUMENT" INTERUDE)

A.L.: 9oinin$ us this mornin$ on Let0s 1al2 Bitcoin# And Schroder is the $u 3ehind

the Bitcoin luid ispenser pro*ect# "hich sounds a little 3it# uh... rudimentar#3ut + thin2 it0s actuall a reall e6citin$ pro*ect# and +0m e6cited to have him on

the sho" this mornin$. And# than2s /or sittin$ in "ith us.

A.S.: reat. 1han2 ou /or havin$ me.

A.L.: So# /rom ten-thousand /eet# "hat is this pro*ect and "hat does it do=

A.S.: M Bitcoin luid ispenser pro*ect is 3asicall *ust the /irst o/ its 2ind< an

automated sstem that can dispense a certain 7ualit o/ /luid# or "hatever ou

ma li2e to sell. M present demonstration uses diesel /uel. Basicall# it accepts

pament /rom the customer in Bitcoin# and 3ased on ho" much the0ve paid to

the vendor# the dispenser dispenses that 7uantit o/ /luid to them. +t has an


13/22

inte$rated /lo" measurement device# as "ell as pump controls. +t 3asicall

replaces thin$s li2e credit card readers in traditional /uel pumps at /uel stations#

and also provides man interestin$ /eatures such as remote pament and mo3ile

pament and thin$s that aren0t necessaril eas to do "ith traditional credit card

3ased sstems. +t also provides the a3ilit to return chan$e to the customer i/

the have overpaid or "eren0t necessaril sure ho" much /luid the "anted topurchase.

A.L.: So one o/ the applications ou0re tal2in$ a3out here as /ar as the diesel-

pumpin$ is concerned Fis thatG this "ould replace the credit card reader and the

/lo" mechanism at the $as station. But it0s di//erent. !ith Bitcoin# it0s almost li2e

a cash purchase# "here ou have to $o and tal2 to the attendant# pa him the

mone up/ront ou 2no"# sa >+ "ant /ort dollars on that pump#? and then

"al2 3ac2 out and pump to it e6cept there is no attendant# 3ut ou do have to

/i$ure out ho" much ou0re $oin$ to 3u 3e/orehand# ri$ht=

A.S.: Ah# es# ou do have to ma2e an estimate. As lon$ as our 3alance in our

"allet is not ver lo"# ou0re $oin$ to immediatel $et the unspent 7uantit 3ac2

to ou# so in m opinion# it0s not too 3i$ o/ a deal. + mean# "henever + $o to a /uel

station and purchase /uel# + tpicall $ive the attendant either a /i/t or a hundred

dollars and + $et that chan$e 3ac2 as soon as +0m done pumpin$. +t does re7uire

some estimation 3 the customer# 3ut + don0t thin2 it0s too 3i$ o/ a deal#

especiall since it0s automated and so 7uic2.

A.L: i$ht. +0m trin$ to "rap m head around "hat this sort o/ transaction# i/ +0m

doin$ it# "hat that loo2s li2e and "hen ou loo2 at ho" it happens# it loo2s more

li2e a cash transaction than it does li2e a credit card transaction# 3ecause FinG thecredit card transaction# ou0re essentiall 3ein$ metered as ou dispense#

"hereas on the other hand# ou prepa and then are re/unded "hatever ou

don0t spend. But li2e ou said# it0s automated in this case# so that0s a reall

interestin$ approach to it.

!ith thin$s li2e remote pament# "hat do ou see as the use scenarios /or this=

+s this# li2e# +0m sittin$ at m computer and m "i/e calls me and sas >+0m at the

$as station# +0d li2e to $et some $as#? so + send mone to her $as pump /rom

"here + am= +s that ho" it "ould "or2=

A.S.: 1hat could 3e a ver use/ul situation. 1he 2e ones that + /irst identi/ied

"ere: sa an emploer has their emploees - "hether the0re re/uelin$ their

vehicles or purchasin$ some other /luid the can send them out to the location

"here the ac7uire that ra" material# the /luid# and "hen the $et there the can

*ust call up and contact some representative at their place o/ emploment and

re7uest them to ma2e pament /or them and this doesn0t re7uire the

emploees to carr around lar$e 7uantities o/ cash "ith them# or credit cards# or

have a speci/ic account set up at a place "here the repeatedl do 3usiness. +t

provides sa/et to the emploee# 3ecause the don0t have to carr around

somethin$ valua3le "ith them it also provides sa/et to the emploer# 3ecause

sometimes ou mi$ht have untrust"orth emploees.


14/22

+t also saves time FasG the drivers don0t have to chec2 in "ith someone or do an

2ind o/ paper"or2 the paper"or2 could all 3e done 3 someone remotel. ou

also could 3e mu$$ed or somethin$# that0s an un/ortunate situation# 3ut# ma3e

a more leisurel application sa ou0re travelin$ to some e6otic location# ou0re

on another part o/ the "orld# ou don0t even necessaril "ant to have access to a

lot o/ /unds# 3ecause ou ma 3e in a ver dan$erous location. And i/ ou canonl contact someone and have them ma2e a pament /or ou# that mi$ht

provide some additional sa/et /or ou that is almost preventative o/ actual the/t.

1hose are *ust some ideas that +0ve come up "ith. Ma3e others can come up

"ith somethin$ else# 3ut those are *ust m initial thou$hts.

A.L.: So this is a 3asic in/rastructure-level service# and et# as ou mentioned# +

thin2 ou0re the onl person "ho0s actuall "or2in$ on a solution to"ards it. Ho"

did ou orient on this as a pro3lem that ou "anted to address# and ho" did ou

come to the solution that ou did=

A.S.: ou are correct# + don0t 3elieve anone has done this 3e/ore. Basicall# /rom

m perspective# F+0mG e6tremel enthusiastic a3out Bitcoin and there0s a certain

point "here ou read a lot o/ ne"s articles# and tal2 to everone ou 2no" a3out

it# and tr to $et them e6cited and there0s a certain point "here ou /eel li2e

ou0re not reall doin$ anthin$# and ou have to ta2e it one step /urther. 1his

particular pro*ect "as somethin$ that + /elt li2e m s2illset "as /airl "ell-suited

to ta2e on. + have 7uite a 3it o/ e6perience in mechanical en$ineerin$ and

electrical en$ineerin$# computer net"or2in$# so/t"are development. +0m also ver

interested in the ener$ industr - /uels# /luids. 1his *ust seemed the 3et to move

the coin closer to mainstream# and + reall thin2 it0s critical that people start

loo2in$ at commodities that are not collecti3les thin$s that are consumed< +

"ould love to see $rain or coal or man other critical ra" materials in societ to

3e availa3le via Bitcoin# and this *ust happens to 3e one that + /elt + could ma2e a

dent in.

A.L.: ou identi/ied consuma3les speci/icall. !h are consuma3les# speci/icall#

so important /or Bitcoin=

A.S.: !ell# consuma3les are somethin$ that humans need to survive. + didn0t

reall mention produce# or corn on the co3# or peaches# 3ut these are thin$s that

people need to survive. +/ Bitcoin is $onna have an use/ulness# then it needs to

provide people the option to trade /or somethin$ that the need dail. 1here are

companies out there# + 3elieve# that have online 3usinesses "here the "ill trade

$old or silver /or 3itcoin "hich is de/initel a $reat commodit to 3e a3le to

trade 3itcoin /or 3ut at the end o/ the da# $old doesn0t help ou survive. 1hat0s

reall "hat humans need to do. 1he can0t live o// o/ $old# it *ust happens to 3e a

mechanism /or tradin$ /or necessities o/ survival. Beaut can 3e o3tained

throu$h $old *e"eler# 3ut it0s not a primitive part o/ human societ. + see

commodities to 3e so important# speci/icall consuma3le commodities.

A.L.: So it has to 3e normal= Am + ri$ht# in a nutshell= +t has to 3e normal and part

o/ everda li/e.


15/22


16/22

into a 3eta production tpe o/ application + don0t 2no" "hen "e can see these

mass availa3le# 3ut + "ould hope sooner rather than later.

A.L.: !ell# "e loo2 /or"ard to chec2in$ in "ith ou as this pro*ect continues to

develop. And Schroder# the Bitcoin luid ispenser pro*ect# than2 ou ver much

/or our time.

A.S.: 1han2 ou# it0s 3een an honor 3ein$ on the sho".

(INTERMISSION ad break)

MAL@ 4;+C@: Bitcoin has sho"n us that mone and paments can 3e improved 3

the application o/ the same human ener$# creativit and cro"dsourced real-time

in/ormation that has made everthin$ else 3etter. And this is an epic insi$ht# one

that /undamentall sa2es up monetar economics# pament sstems# and even

the involvement o/ all peoples in the "orld in the $lo3al division o/ la3or. And this

is the reason /or the Crpto-Currenc Con/erence in Atlanta# ;cto3er th#

&'%,.1he event 3rin$s to$ether le$al theorists# monetar economists# hostin$

visionaries# 3an2in$ pundits# heinous sstems analsts and dorm-room miners#

/or the purpose o/ ma2in$ sense o/ Bitcoin0s rise# and to /oresee the ne6t steps.

!e are /ortunate to 3e alive to see this happenin$ in our time# and no" is the

time to learn# cele3rate# colla3orate and have /un. !e0ll see ou at the Crpto-

Currenc Con/erence in Atlanta.

A.L.: Can0t ma2e it to Atlanta= Let0s 1al2 Bitcoin has ou covered. !e0re capturin$

the "hole event in hi$h-de/inition# "ith pac2a$es availa3le in either dollars or

3itcoins cheaper# o/ course# "ith 3itcoin. or more in/ormation# visit

letstal23itcoin.comOevents.

(End & ad break)

A.A.: !e0ve 3een /indin$ out# on a dail 3asis# almost# the revelations a3out the

5SA0s involvement in su3vertin$ the underlin$ encrption al$orithms that ma2e

the /oundation o/ securit /or the +nternet. So this is ne"s. ;3viousl# the 5SA

3rea2in$ cphers is nothin$ ne"# 3ut actuall su3vertin$ and introducin$

"ea2nesses to e6istin$ cphers in order to ma2e them easier to 3rea2 that is

ne"s. 1his is not someone ma2in$ sure the can 3rea2 into our house< this is

someone /orcin$ all o/ the loc2 /actories in the "orld to ma2e su3standard loc2sso the can 3rea2 into ever3od0s house.

1his is a rather serious pro3lem. But does it a//ect Bitcoin= 1hat0s the 7uestion +

set out to ans"er last "ee2# and did 7uite a 3it o/ research to /ind out "hether

the underlin$ encrption schemes in Bitcoin "ere a//ected# and "hat other

e6perts had to sa. So /irst o/ all# $us# are ou "orried at all a3out this= +s this a

concern /or ou=

S.M.: +t *ust seems li2e it 2eeps $ettin$ "orse and "orse. !hat could ou ima$ine

a3out the 5SA 3ein$ a3le to sp on people= +/ ou can dream it up# the0re

pro3a3l doin$ that. So# + can0t reall sa +0m surprised concerned= eah#de/initel.


17/22

A.L.: 1his is 3een one o/ the +S;@5 scenarios# ri$ht= + mean# the "hole idea

3ehind "h Litecoin mi$ht potentiall succeed# is >"hat happens i/ the encrption

al$orithm# the hashin$ al$orithm# that "e use to store 3itcoin is compromised=.?

!hat does that allo" ou to do# Andreas= Are "e tal2in$ a3out dou3le spendin$#

are our 3itcoins $onna 3e ta2en /rom ou= + don0t thin2 that0s the case.

A.A.: So# /irst o/ all# let0s tal2 a3out the t"o di//erent al$orithms that are most

a//ected here. irst# ou tal2ed a3out the hashin$ al$orithm# that0s SHA-&N# the

Secure Hashin$ Al$orithm &N that al$orithm produces a &N-3it di$ital

si$nature# or hash# that summariDes the inputs in a crpto$raphicall-secure

manner. And that0s used throu$hout Bitcoin< it0s used as a proo/-o/-"or2# it0s used

to produce the pu3lic addresses< it0s used in a num3er o/ di//erent places.

1he other al$orithm that0s used is elliptic curve crpto$raph# speci/icall

asmmetric pu3lic 2e encrption usin$ elliptic curves. 1hat is used in order to

$enerate the relationship 3et"een the private 2e and the pu3lic 2e. 1hat0s

essentiall the underlin$ securit that 2eeps our mone loc2ed in the

3loc2chain.

A.L.: ;I# so "e0re de/initel $onna have to stop there and $o 3ac2 throu$h that a

little 3it.

A.A.: So# "hat a hash al$orithm does is it ta2es an document# 3inar /ile#

anthin$ ou "ant# and it provides a si$nature. 1his is a di$ital si$nature it0s

3asicall a di$ital hash# it0s a /in$erprint# i/ ou li2e# a 3inar /in$erprint o/ that

/ile. So in proo/-o/-"or2# "hat ou0re doin$ in Bitcoin is trin$ to /ind the speci/ic

/in$erprint "hich has characteristics less than a tar$et0s di//icult# and i/ ou /indthat# then ou can create a ne" 3loc2< ou have the proo/-o/-"or2. So#

theoreticall# i/ SHA-&N "as 3ro2en# that "ould allo" the 5SA# ver easil# to

pull out a % attac2. @ssentiall# ou "ouldn0t need hashin$ po"er to /ind the

3loc2< ou0d 3e a3le to *ust 3asicall /ind the 3loc2 instantl "ithout $oin$

throu$h millions and millions o/ hashes ou0d *ust 3e a3le to reverse-en$ineer it.

A.L.: And this is 3ecause ou could 3asicall cheat# ri$ht= So# ou could 3asicall

cut throu$h all the "or2 and ou0d *ust $et the proo/# 3ut ou didn0t actuall do

the "or2.

S.M.: So# i/ there is some 2ind o/ vulnera3ilit that the 5SA could e6ploit li2e#ma3e the have a le$ up 3ecause the 2no" "hat that is 3ecause the /orced

that to 3e there 3ut couldn0t a private criminal ta2e advanta$e o/ that# too# i/

there "as such a vulnera3ilit=

A.A.: Bin$o And that0s the main concern here# 3ecause "hen ou /orce all the

loc2 manu/acturers o/ the "orld to ma2e "ea2er loc2s so ou can 3rea2 in# that

means that an3od else "ho /i$ures out that the loc2s are "ea2 can also 3rea2

in. So# that0s the real ris2 here# that i/ a "ea2ness has 3een introduced into these

al$orithms# it0s not so much that the 5SA can e6ploit it 3ecause# 7uite honestl#

the have a prett 3road tool2it that the can e6ploit to dama$e Bitcoin 3ut

rather# that other actors no" have an opportunit to e6ploit a certain "ea2ness.


18/22

5o"# /or the record# + don0t thin2 SHA-&N is 3ro2en# and that0s not one o/ m

concerns. + thin2 it0s more interestin$ to loo2 at the other al$orithm# thou$h.

A.L.: ;I# so the other al$orithm is the elliptical curve# ri$ht=

A.A.: Correct. @lliptic curves are a "a /or doin$ pu3lic 2e crpto$raph. 1he

reason ou have a private and pu3lic 2e as part o/ our Bitcoin "allet # and the

2es that control our "allet itsel/# are 3ased on elliptic curve crpto$raph.

A.L.: Can ou e6plain to me "hat elliptic curve is actuall re/errin$ to= +0m trin$

to understand ho" this /its.

A.A.: +0ll tr and do the %-second e6planation as 3est as + can. An elliptic curve is

3asicall a $eometric shape# a curve# that0s e6pressed 3 a /unction. +n the case

o/ Bitcoin# that /unction is s7uared e7uals to the cu3e plus Q# and that

particular /unction a simple mathematical /unction is used 3ecause ou can

e6press a speci/ic mathematical pro3lem# a discrete lo$arithm pro3lem# 3/indin$ t"o points on the curve and then connectin$ them and seein$ "here a

third point on that line ends up on the curve. 1hat0s a lon$ $eometric e6planation#

3ut the 3ottom line is that0s ho" ou can create a pu3lic 2e# 3ut no one can ta2e

that pu3lic 2e and reverse it and $et our private 2es and unloc2 our 3itcoins.

8nless# o/ course# there0s a "ea2ness in the elliptic curve crpto$raph sstem.

S.M.: 9ust to clari/# Andreas# "hen ou0re sain$ >pu3lic 2e pair? or >pu3lic 2e

and private 2e#? the pu3lic 2e is our 3itcoin address# correct# and then the

private 2e is the thin$ that unloc2s the 3itcoins /rom our 3itcoin address.

A.A.: 1hat0s correct. 1he pu3lic 2e is hashed t"ice and creates the Bitcoin

address# so es# that is the pu3lic 2e# e//ectivel. And the private 2e ou don0t

reall see the private 2e the private 2e is encrpted in our "allet and is "hat

ou tpe in our pass"ord in order to achieve spendin$ 3itcoins - that0s ho" ou

spend 3itcoins# 3 usin$ that private 2e to si$n a transaction.

S.M.: i$ht# so the analo$ "ould 3e it0s almost li2e an email address# "here

ou use our pu3lic 2e# or some3od has our address# "hich is related to the

pu3lic 2e# then the can send 3itcoins to ou# 3ut the can0t send them /rom

that address 3ut i/ the had the private 2e# then the could move 3itcoins out

o/ that address.

A.A.: 1he could spend. So the 2e 7uestion here is >are elliptic curves "ea2=?

A$ain# m conclusion ri$ht no" is that the particular elliptic curve that Satoshi

pic2ed# "hich is called a Io3litD curve# and# in /act# it0s 2no"n 3 the moni2er

S@CP&NI%# so it0s 2no"n as the I% Io3litD curve# &N 3its# elliptic curve. So that

particular curve is one o/ the curves that "as promoted 3 the 5ational +nstitutes

o/ Science and 1echnolo$# or 5+S1# and the promoted a3out a doDen di//erent

curves. So the 7uestion no" is# >did the pic2 those curves randoml=? id the

pic2 those curves deli3eratel# 2no"in$ that there0s a "ea2ness that the rest o/

the "orld doesn0t 2no" a3out in speci/ic curves= And there0s a 3i$ concern no"#


19/22

3ecause o3viousl# "e0ve lost trust "e0ve completel lost trust in anthin$ the

5SA sas.

S.M.: So does the 5+S1# or the 5SA# or the $overnment# use those /or their o"n

encrption= Because ou "ould thin2 the pro3a3l "ant to 2eep some o/ their

stu// encrpted too# so "h "ould the promote vulnera3le al$orithms /or theiro"n use=

A.A.: es# the "hole point o/ 5+S1 is that i/ a curve is approved 3 5+S1# and then

/urther recommended 3 the 5SA# it is used 3 the $overnment to protect

sensitive# secret# and top-secret communications. So# this is an endorsement to

use that encrption. +t "ould ta2e enormous hu3ris and arro$ance to promote a

"ea2 encrption scheme under the assumption that ou0re smarter than

ever3od else# and ou0re the onl one "ho can /i$ure out that "ea2ness and

e6ploit it. +t "ould ta2e enormous hu3ris and arro$ance to do that.

So# let0s ta2e some 3ets. !ho thin2s the 5SA is that arro$ant and "ould actualldo somethin$ that stupid=

S.M.: + "ouldn0t put it past them.

A.L.: So# 3ased on "hat ou0ve 3een a3le to /i$ure out so /ar# Andreas# does it

seem li2e either o/ these standards are compromised=

A.A.: + thin2 that "e came ver close and "e ma have possi3l dod$ed a 3ullet#

3ut the *ur is still out. !e0re still not sure "hat0s happenin$ "ith the elliptic

curves. 1he possi3ilit o/ SHA-&N 3ein$ 3ro2en is ver lo"# and $iven the impact

on Bitcoin is not reall a 3i$ concern# 3ecause a$ain ou0d have to 3e a3le to pulla % attac2# ou can chan$e the proo/-o/-"or2# there0s a lot o/ thin$s ou can

do. +t0s much more disconcertin$# much more "orrin$# i/ elliptic curves are

3ro2en# 3ut o/ all the elliptic curves that "ere recommended 3 5+S1# the least

su3*ect to manipulation are the Io3litD curves# 3ecause the0re not 3ased on

random num3ers< the "ere instead 3ased on speci/ic prime num3ers that "ere

invented 3# + 3elieve his name is an Io3litD# the $u "ho invented elliptic curve

crpto$raph. 1hat curve is less suspect. +/ Satoshi had pic2ed one o/ the random

curves# + "ould 3e ver "orried. A lot o/ 3usinesses are ver "orried ri$ht no"#

3ecause the0re usin$ some o/ the random curves# and no" the can0t /i$ure out

i/ the random num3ers that are used to desi$n those curves are random# or i/the have 3een pic2ed speci/icall 3ecause the correspond to "ea2 curves.

A.L.: 5o" "hen ou sa a >"ea2 curve#? "e mean 3asicall that the 5SA# or an

other real a$enc out there that is /ocused into this c3er-securit area# has a lot

o/ horsepo"er# /rom a computational standpoint# that the can thro" at these

thin$s< and so# i/ the can thro" a "hole 3unch o/ computational po"er at one

curve the 2no" to 3e "ea2# the can essentiall map it out# and then i/ that

curve $ets adopted then it 3ecomes much# much easier to compromise anthin$

that has used that curve in its securit# is that ri$ht= Because it 3ecomes a

2no"n part o/ it.


20/22

A.A.: !ell# map it out= 5o# 3ecause it0s a ver lar$e curve# mappin$ it out is not

possi3le. Ho"ever# the idea o/ a "ea2 curve is 3asicall that the curve itsel/ has

some characteristic that can 3e e6ploited in order to arrive at a mathematical

solution that is less hard than the 3rute/orce solution# so i/ it too2 ou a

7uadrillion ears to do it 3 3rute /orce# i/ ou can /ind a shortcut that is /aster

to doin$ this in less than 3rute /orce that0s a "ea2 curve.

S.M.: + have a 7uestion that0s related to this. +0ve heard that 3ecause o/ these

revelations a3out encrption "ea2ness that have come out *ust recentl# SSL is

no" considered not secure. + thin2 that could potentiall a//ect a lot o/ people

usin$ 3itcoins# li2e# /or instance# "e3 "allets# or even the online 3an2in$ and the

le$ac 3an2in$ sstem that the do# or an num3er o/ lo$ins to di//erent sites. +s

that ri$ht# Andreas=

A.A.: SSL "as not secure a$ainst the 5SA. + thin2 that0s important to understand#

and primaril# the attac2s a$ainst the SSL securit have not 3een technolo$ical

as much as or$aniDational# political# and technolo$ical at the same time. Steal the

2es# /orce the compan to $ive them to ou# 3lac2mail them into $ivin$ ou a

3ac2 door# etcetera etcetera. 1here0s a 3i$ di//erence# 3ecause in this case# "e do

not 3elieve that SSL "as made deli3eratel "ea2er. !e 3elieve instead that

the0ve used various e6trale$al techni7ues to 3lac2mail the certi/icates

authorities into handin$ over si$nin$ 2es# and as a result# the can 3asicall

spoo/ an SSL site the "ant and do man in the middle attac2s. 1he onl $ood

ne"s# the silver linin$ out o/ that cloud# is that i/ that0s the case# that is a

capa3ilit that0s uni7ue to the 5SA 3ecause o/ its political clout in the 8S# and

there/ore not eas to replicate 3 others< "hereas i/ the0ve "ea2ened the

underlin$ securit primitives# then that can 3e replicated 3 anone "ho has

mathematicians.

A.L.: So# /rom a certain point o/ vie"# it0s actuall 3etter that the resort to

3lac2mail# or threats# than to actuall compromise the standard

A.A.: A3solutel# a3solutel Because in /act# loo2 at this /rom a practical

perspective< resortin$ to 3lac2mail is part o/ their institutional mandate. +/ the

did it to /orei$ners# perhaps that mi$ht even 3e accepta3le. !ea2enin$ the

securit standards is stupid on so man levels 3ecause it violates the 3asic social

contract and the 3asic trust 3et"een the 5SA and the American people# that the

second part o/ their mission "hich is ma2in$ the American in/rastructure more

secure has e//ectivel 3een compromised 3 the /irst part o/ their mission# so

that0s the pro3lem.

S.M.: So ho" could "e $et 3etter standards /or encrption= Are there people "ho

are not a//iliated "ith the $overnment# "ho are $onna audit each other0s "or2#

and mi$ht 3e a3le to put out ne" encrption technolo$ies /or us to use=

A.A.: eah# that0s a $reat 7uestion# Stephanie. 1he other silver linin$ that has

come out o/ this. 1he entire encrption and securit communit is pissed o//.

4er# ver# ver an$r. 4er 3etraed# ver an$r# and ver resent/ul a3out this.

S.M.: !hat did the e6pect=


21/22

A.A.: !hat the e6pected "as that the 5SA "ould /ollo" their mandate and act in

$ood /aith# at least vis-a-vis American in/rastructure# American technolo$ and

American citiDens. 1hat "as the social contract# and# in /act# the 5SA has 3een

"or2in$ "ith technolo$ companies since its inception# 3ased on that social

contract. And the 3ro2e it And the0re $onna pa the price. Because ri$ht no"#

a 3i$ chun2 o/ the +@1# a 3i$ chun2 o/ the securit communit# and a 3i$ chun2o/ the crpto$raph communit has made it their li/e0s $oal to re"rite the

+nternet /rom the 3ottom up and ma2e it 5SA-proo/. 1he pissed o// the "ron$

people. + thin2 ou0re $onna see the +nternet chan$in$ over the ne6t couple o/

decades. !e 3uilt the +nternet as an open# $ood-/aith net"or2# and no" "e0re

$oin$ to have to re3uild it as a dar2net o/ dar2nets.

S.M.: on0t mess "ith the hac2ers.

A.A.: on0t mess "ith the hac2ers

A.L.: on0t mess "ith the crpto$raphers So# Andreas# *ust to "rap this up# itsounds li2e# ri$ht no"# there are concerns# 3ut it doesn0t loo2 li2e either o/ the

standards that are actuall applica3le to Bitcoin have 3een 3ro2en# or it0s ver

li2el that the0re 3ro2en< there are other standards that are much more li2el

3ecause o/ the random num3ers in the elliptic curve# as "e "ere tal2in$ a3out

3e/ore. + "anted to 2no": one o/ the thin$s that people tal2 a3out /or Bitcoin is

the idea that i/ and "hen "e arrive at a 7uantum-computin$ realit# then SA is

3asicall out o/ the "indo" 3ecause it0s orders o/ ma$nitude easier< it F"ould 3eG

easier than it is no" to compromise that standard. +s there somethin$ to that= +s

this somethin$ that "e should 3e concerned a3out=

A.A.: !ell /irst o/ all# "e don0t use SA "ithin Bitcoin# "e --

A.L.: + 2eep sain$ SA instead o/ SHA.

A.A.: + don0t thin2 SHA "ould 3e a//ected 3 7uantum computin$ as much as

some o/ the other crpto$raphic primitives "ould 3e. Listen# at the moment#

"e0re alread in a 7uantum-computin$ "orld# i/ ou 3elieve the technolo$ical

analsis o/ the -!ave sstem# "e alread have &N- and even possi3l %&-

cu3it 7uantum computers# and $uess "ho has those= ;/ course# the 5SA. +0m not

"orried 3 7uantum computin$ at all /or t"o reasons. 1he /irst one# as + said

3e/ore# is that i/ an attac2 is speci/ic to a sin$le adversar# and that adversarhas other "as o/ ta2in$ Bitcoin do"n# then that0s not reall causin$ a pro3lem.

1he advanta$e ri$ht no" is that the onl people "ho can 7uantum crpto$raph

are those "ho can 3u 7uantum computers# and luc2il there aren0t that man

around. +/ that 3ecame a 3roader pro3lem# and everone could 3u 7uantum

computers# then "e can chan$e the encrption al$orithms and use those

7uantum computers to do crpto$raph as "ell as decrption. So this is an arms

race. +/# and "hen# 7uantum computers 3ecome "idespread# then "e "ill use

those to 3uild 3etter crpto$raph# as "ell as 3etter decrption.


22/22

A.L.: 1han2s /or listenin$ to episode & o/ Let0s 1al2 Bitcoin. Content /or toda0s

sho" "as provided 3 r. Stephanie Murph# Andreas Antonopolous# !endell

/rom Hive# and And Schroeder. Music "as provided 3 9ared u3ens. +/ ou can0t

$et enou$h ori$inal thou$ht and discussion# read our dail 3lo$ at

letstal23itcoin.com. Si$n up /or our "ee2l ne"sletter at the"ee2l3itcoin.com.

1o $et in touch# send me mail at adamKletstal23itcoin.comor visitletstal23itcoin.comOtal2 to 3e directed to our listener su3reddit. Have a $reat da.
mailto:[email protected]:[email protected]

let's talk bitcoin, episode 42, "nsa it ain't so!"

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