 Our next speaker is Roman Skastjur. Roman is an American of Ukrainian ancestry who now lives in the Ukrainian city where Lutikon Mises was born. He battled the helm of Libertarianism, which I prefer to be called by its earlier German name, Lampak. Roman is a writer, entrepreneur and veteran of the United States Army, where he was an infantry officer and a paratrooper. His writing about the military, Bitcoin and Libertarianism has, for example, appeared in the New York Times, the Atlantic, at Mises.org and in the Stanford magazine, where he once studied computer science. Roman recently co-authored the Tea Party Explained with the distinguished Austrian school economist Yuri Maltsev. He has also contributed to anthologies and military fiction, including Fire and Forget, which was published earlier this year. He is now writing a memoir about his last deployment in Afghanistan, which will be interesting to read. Roman has spoken at the PFS conference in Boatru, on Bitcoin as well as the role of the military. It's a privilege to have him within our movement. He will now talk about Bitcoin. Roman, the state is yours. Very much, and thank you, Andy and Emma, for giving me this opportunity to do one of my favorite things about Bitcoin, which is sharing what I know with my dear friends and Libertarian colleagues. A number of you were in Boatrim at the Property of Freedom Society, where I concluded my lecture by giving out what was then $30 worth of Bitcoins and little coupons so you could all try it. That will not be happening again. So I think the most important thing we can do during this brief lecture is to help you understand the nature of Bitcoin and to speculate about its future. Slightly less important, but also interesting, is answering the question of whether or not Bitcoin is money. And I will entertain that just briefly. But I want to first point out that money-ness is not a binary characteristic. If you take even the Austrian explanation of the emergence of gold as a commodity money, there was no moment in time where nobody went from believing gold was money to everybody went from believing it was money. So it is inevitable that a minority of people consider something to be money prior to a majority of people considering it to be money. But I will entertain right now just the colloquial definition of money, which I believe to be the important definition of money. I think the Mises Manger definition was very much focused on the task he had at hand, which was distinguishing legal from economic money and distinguishing claims on money from money itself. So the colloquial definition, as I understand it, has exactly three characteristics. Medium of exchange, store of value, unit of account. Daily Bitcoin transactions in dollars are about 200 million every day, although it's hard to parse that how much of that happens between two different individuals. So if I switch Bitcoin between my wallets or if I buy them on an exchange, it also counts into that. But that is still a significant figure. Medium of exchange. Store of value, fidelity. This week made a strange announcement that they would start having some sort of Bitcoin-related IRA and then backtrack down that statement. Nevertheless, I know many people in the Bitcoin community who are already saying that they don't trust the dollar as much as they trust Bitcoin and are using Bitcoin as a store of value. The third characteristic is unit of account. Admittedly, this is the weakest characteristic for which Bitcoin satisfies the conditions for money. I know of just a couple of things that are denominated in Bitcoin. One is mining hardware. Some manufacturers of Bitcoin mining hardware. Not all of them, but some of them do price their hardware in terms of Bitcoins. I also know of at least one journal that they pay their writers in terms of Bitcoins per visits regardless of the exchange rate. I think it's perfectly reasonable to say that Bitcoin does not yet satisfy unit of account and is not money yet. But we are arguing, over degrees, whether Bitcoin has crossed the necessary threshold yet and it does seem to be trending in the correct direction. Let's return to the more important task which is helping you understand the nature of Bitcoin and speculate about its futures. I want to tell you five interesting and important things about Bitcoin. Most people understand that it is decentralized. There have been earlier attempts at electronic money. There was a company called E-Gold which functioned out of Costa Rica for ten years. Users of E-Gold were pseudonymous just like users of Bitcoin. They needed to create an identity, but no effort was made to see that it was a real identity. And people can send this E-Gold to each other. It was backed by real gold that this company kept in their vaults and they could specify amounts down to one tenth of one gram. There was also Liberty Reserve, a similar idea, although there was no gold. They just specified Liberty Reserve dollars, Liberty Reserve euros. These were both centralized and after a while, the United States authorities found reason to shut them down. So Bitcoin is, of course, decentralized. That's its main characteristic. My wallet that I have on my laptop continually downloads the ledger which is called the blockchain of all the transactions happening in the world. Being decentralized is important because there is no one to shut down. There are no computers to confiscate. There is no one to put in jail. There is no business to close down that would stop Bitcoin. It's a little bit like file sharing. But file sharing is detectable based on traffic analysis. Whereas Bitcoin, you're sending very small amounts of data back and forth. So Bitcoin is much harder to detect than file sharing. Bitcoin is open source. That's another very important characteristic. So if you buy Microsoft Windows or Apple software or Photoshop, you only receive the code in computer readable language. And it is too complex for a human being to reasonably sort through and find out what's happening. Bitcoin is available in human readable form, so any programmer can go and look at it and see exactly what it's doing. There are no secrets in the code and a programmer himself can translate it from human readable to computer readable before running it. So there are no secrets in the Bitcoin protocol. Changes are adopted by consensus. If there's a small change, some people that's backward compatible, some people will adopt it, some will not and the system will continue to function. On the rare occasions that there is a significant change to Bitcoin, which will not be backward compatible, there's a huge period of consensus building before that change is adopted. And the worst thing that can happen is not so bad. If some people adopt a change and others refuse, you'll just have a split of fork. And there will be Bitcoin 1 and Bitcoin 2, and they will both continue to operate. That's important because there's talk of, I think some critics say that it's too easy to take over, it's too easy to ruin, but it's not open source software gives it a huge amount of robustness. And even if they do find some critical flaw in the Bitcoin protocol, which at this point seems unlikely, there are hundreds of imitators just chomping at the bit to take over the number one spot. So the cat's out of the bag and it's not going back in. The imitators, which are known collectively as altcoins, they've been a great place for experimentation. Some of them have seen very sophisticated attacks, including attacks that have been the subjects of PhD dissertations at Cornell University in particular. And at worst, these attacks were minor disruptions. So it's just been a good place for the crypto community to learn about these systems and what they can handle. Number three, Bitcoin mining. You hear a lot of discussion of Bitcoin mining and I'll try to put it in late person's terms. For transactions to be secure, it was necessary for some computers somewhere to do math. And in the original idea, who would expend electricity and computers to do this math in order to keep Bitcoin secure? So the idea from the very beginning was that new Bitcoins would arrive on the computers at which this math takes place. Right now they arrive at about 25 Bitcoins every 10 minutes and this falls by half approximately every four years. So the number of Bitcoins right now is about 12 million and it will level off at around 21 million and that will happen in a little over 100 years. I guess to understand mining a little bit more deeply I would say that transactions are not written to the ledger individually. They're written in blocks. The ledger is called the block chain. And it's the computers that solve a math problem on this block of transactions that gets the reward. So if you read about mining you see the language of a competition. Different mining pools are competing with computing power, the more computing power they have, the more likely they are to solve this math problem and the more likely they are to have the privilege of writing the next block to the ledger and thus receiving the award. That's mining. Two more things. I want to talk about anonymity and some events on the Bitcoin horizon. It's made of Bitcoin Bitcoin's anonymity being broken and I think pseudonymous is a more accurate description than anonymous. But I think the bad news is being overreported. For example if you wanted to be perfectly anonymous, which was hugely inconvenient, but you can do it this way, by buying a computer with cash, if you want to be very paranoid, put a little piece of electric tape over the webcam you can never use that computer to log on to Facebook or any of your standard email accounts and you can only use that computer on public networks like in restaurants or hotels and then the best they could do is trace that computer to the IP address of the restaurant you were at and then you could download a Bitcoin client it doesn't require any registration and then all you would have to do is find some secure way of communicating your address. So nothing in this explanation in this 100% anonymous usage of Bitcoin is technically challenging. So that's one thing, I think it is overreported. With casual usage of Bitcoin the way I use it, because I have nothing to hide, I use it at home on my regular computer Bitcoin allows you to create as many addresses as you want and if I send a big transaction it might cluster some of those addresses together. So it does leak a little bit of information but even that is improving some of the best cryptographers in the world are working on a protocol called Zero Coin which sits on top of Bitcoin and should make it fully anonymous. There are third party coin mixers and scramblers so you could send your Bitcoins and get others back and there are other solutions as well. In a word I think the anonymity problem is being overreported and even if it was as bad as is being reported I think it still beats dollars but that will be a discussion for later. A couple of events on the Bitcoin horizon. Bitcoin will go through some growing pains right now it processes about a transaction every second. Visa by contrast has a daily peak of about 4,000 transactions per second and an annual peak before Christmas time of about 20,000 transactions per second. Bitcoin needs to change in a pretty deep way before it can handle that kind of volume. So it will go through some growing pains. These are technical problems. These are not difficult technical problems but if it grows more quickly than the developers fix it we will see a slow down and you will see a huge crash in the price followed by a resurgence as we hope in my opinion but the skepticism is very important and I'm looking forward to hearing it. So in these last couple minutes I want to try to describe the two paradigms that I see among people for understanding Bitcoin and which paradigm you come from kind of dictates whether you're a pessimist or an optimist and the first is that of a commodity and this is what I often hear from people in big finance they consider it just another commodity just like the tulips were and the price is going up and then the price is going to go down. The second paradigm is that of a new technology that of something that allows you to do something which was previously impossible and if you believe it's a new technology then it'll follow a technology adoption curve which they always look the same whether it's electricity or cellular phones or washing machines they rise slowly in the innovator phase then they parabola on mass adoption and then they level off. Of course if you trace the technology far enough maybe a rival technology comes out and then there's a backside to that curve but I personally believe that it's a technology adoption curve in the long term and I think right now it's still very small compared to the other monies that are out there and I think it has a huge upside but the skepticism is also very important and I'm right at my 15 minute mark I think I'll leave it at that for now thank you