 This is Think Tech Hawaii. Community Matters here. Hi, how are you doing? Gardner the Tech Star here. Welcome to another thrilling and exciting episode. If you've watched me talk, grab yourself a chair, grab yourself a libation, pull up, sit down, we're going to talk about cryptocurrencies in an update, my monthly update on blockchain and cryptocurrencies and such. As such, I don't have a guest today and I don't have a co-host today, so co-host traveling, guest was traveling, so we're going to shift things around a little bit and do a little update on what's happening in the blockchain and cryptocurrencies areas for this past month, which has been pretty flat. But if you want to call in, if you have any questions, please call us at 808-374-2014 and we'll pop up, let's pop up that first slide, you just had up there a second ago. I've been traveling around town over the past month doing a lot of presentations in blockchain and cryptocurrencies and these four subjects keep coming up, so I thought I would try to do a little summation of what's happening in the blockchain space, what's happening with cryptocurrencies, things like Bitcoin and Ethereum, mining, how that's maturing and what's happening in that space, the proof of work, the proof of stake, things and so on. And then the continuing ongoing business and social implications of what's happening not only in the cryptocurrency space but in the blockchain side of the house. But first of all, let's just talk about where we are as far as market cap is concerned. So right now the market cap for cryptocurrencies is hovering around $321 billion. It's been relatively flat I'd say for the past 30 to 45 days. I cannot tell you why, it's just that it's been flat. There's not been a lot of buying and selling going on out there. There's been a lot of conversation happening. I think people are just kind of like sitting back now and just waiting to see what's happening with what's going on. Bitcoin is still holding the lead in the market cap side at about $125 billion and it's currently trading for around $7300 per Bitcoin. Some of you remember when it was almost $20,000 at the end of last year. That wild ride was something that I would hope not happen that often because this is not for the faint of heart if you get something that's building over time. Ethereum's still holding at the number two spot at about $55 billion ripple which has kind of been an interesting one that I've been watching for quite some while. It's now moved up into the number three slot at $23 billion. Bitcoin Cash is hanging at $18 billion. And EOS, this is a new one. One day I should come and do an overview in EOS there. They're holding down the number five spot at $10 billion. So pretty interesting shifts on what's happening within the space. So let's talk about the adoption. One of the reasons that things speed up and slow down is the adoption of particular technologies. I have a slide that I can bring up and I'll kind of walk you through what's happening in the adoption space to give you a sense of what's happening. The Vogue today is getting me. Excuse me, I apologize for that. Anyway, if you take a look at this graph and we'll make these graphs available, these are various technologies that have been introduced over the decades. It says 1900 from the telephone, not the mobile phone, but the telephone and where it is in the adoption of technology lifecycle. So you look at 1900, the far left there, you look at the telephone, and if you follow that graph, it took a number of years before the telephone was actually adopted as a form of everyday living technology. So it took a while for that to happen. If you look at one, if you get to the middle around 1949, the television, not television, but air flight, transportation air flight, that really took off. That went straight up. It had a skyrocketing effect on what happened in those areas. You move further down to the right-hand side of this graph. You'll see as we get into more technology-oriented things like the mobile phone, the iPod, those technologies were adopted pretty quickly, mostly by the young as you could no doubt tell. And you can see where we are with Bitcoin and where that's sitting out here in our adoption phase. And it's going to be interesting to see what happens over the next number of years as we move forward with this. So let's go back and again, I'm going to go talk about, just briefly going to talk about, you know, the underlying foundation of cryptocurrencies is the blockchain. And so, and I keep getting asked this over and over again, can you please simplify the blockchain? I wish I could really simplify it, but it's just you have to think of it this way. You're keeping a ledger of every transaction that you're involved with on your own personal ledger. So let's use crypto currencies as an example. So I'm keeping a copy of that record in a blockchain. And someone else is keeping a copy of that ledger. Someone else is keeping that copy of that ledger. Someone else is keeping a copy of that ledger. And the purpose of that is to verify and authenticate that the transactions are what they are and that they're legitimate, that I do have the cryptocurrencies to exchange or whatever I'm exchanging it for. And you have the ability to take that cryptocurrency and do whatever you want with it, including selling it to someone else or transferring it to someone else. Now, realizing that, you know, those computer systems that are in the blockchain that are authenticating those transactions, verifying that I sent you a Bitcoin, they're rewarded by doing that. If they solve a mathematical question first, they get rewarded with that either a percentage, depending on what type of coin it is, or a number of coins. For example, Bitcoin right now, if you verify the transaction first, it's 12.5 Bitcoins you get as the reward for the authenticator of that transaction. So at 12, you know, 12.5 Bitcoin trading at $7,000, that's a substantial amount of money. Why would people do that? Well, just take a look at it. That's the substantial amount of money. And that's why you've got, there's a lot of organizations, companies, individuals out there that are in the Bitcoin mining space to authenticate those transactions. So again, a distributed ledger with everybody keeping copies on it and verifying that the transactions are true. As opposed to a bank, so if you think about it right now, when you go to deposit a check or you send someone some money, it has to go through a central authority. And that central authority is the bank. And your bank will hold that money. You've seen it. You know when you deposit a check, we may not clear that check for three days because you're going through that central authority as opposed to the distributed ledger where it's going through numerous people who want to validate that this is a true transaction because they will get rewarded and the transaction will go very quickly. As a matter of fact, it can go probably less than 10 minutes sometimes as fast as two minutes and sometimes as a matter of seconds without having it being cleared by a central authority. So there's my very simple statement on blockchain and how it works. Now, as with any new technology and blockchain is the new technology and I'm calling it the next disruptor. If you take a look at disruptors, the World Wide Web was a disruptor before that came along. Someone said, why do we need the World Wide Web? And look at where you are today if you're buying and selling goods, if you're for an Amazon or if you're doing any kind of commerce at all, if it wasn't for the World Wide Web, you would not be able to do this commerce. It was a major disruptor. It changed retail. It changed shopping centers. It changed strip malls. It changed everything that we were doing from a retail perspective and that was just one of the things that the World Wide Web did to us. Now, if you think about what the World Wide Web is also known as, we have Netflix. Netflix now is the number one user of the World Wide Web for downloading a product, which is movies. So think of what's happening. Netflix is now number one, which is about 50% of all the transactions happening on the World Wide Web are now done as a Netflix app or part of what Netflix does. So that's, again, that massive disruptor. What does that do? That disrupted the movie industry. It disrupted the television industry. It's just disrupted, disrupted, disrupted. And so blockchain does that. And then cryptocurrencies, which is just one application that sits on the blockchain itself, is money. It's the transfer of funds. It's the moving of commerce from one location to the next location worldwide in a matter of minutes at a low cost. So this now is just the beginning of another major disruptor. Do I know what it will be like in 10 or 20 years? I have no idea. I'll give Amazon as an example. When Amazon first came out, their vision was to sell books online. I think the stock was trading at some points down around 12 cents a share. Now it's over $1,000 a share for Amazon. But Amazon just doesn't sell books anymore. They became a massive international retailer almost, if you see what they've done. So again, cryptocurrencies is just one piece of this little puzzle we've got going here and the number of currencies that are happening in this space. Now what's interesting about the cryptocurrency, the money side of it, is that within itself it's a disruptor. Bitcoin was the early one that came out. It was a form of electronic funds transfer. But as there is with other entities, there's always someone comes out and says they think they can do it better or they have another way to do this thing. And so Ethereum was one of those cryptocurrencies that came out and said that, hey, I think that we can take the blockchain, we can modify the blockchain, which is available open source for anybody. And I think we can create our form of currency and it will be done a little bit different than Bitcoin but still using blockchain type technology to also allow for the exchange of funds. So one way of looking at it is like you could say that Bitcoin is a US dollar and Ethereum is a yen. I mean that's one really over simplifying it but way of saying how it was done. Now what's interesting though is that both the Bitcoin and the blockchain authentication of the transactions and the ledger are done in slightly different ways. But the key is though it's still a distributed ledger. It still has to be authenticated. And it's done through this process that is known as mining. So now what I want to do is I'm going to jump down to way down. I gave a gang 46 slides today. I said I don't think we're going to do 46 slides. It just is not going to happen. But if we can jump down to slide 34 and kind of walk you through a transaction, we'll see what happens through a transaction before we take our first break. It's called the Bitcoin transaction lifecycle. It shows up a slide 34 on my slide deck. So here you go. So this is a simple walking game, simply walking you through it. So Rob opens a Bitcoin wallet. So a Bitcoin wallet is your electronic wallet that you have on your mobile device. So this is where I carry my Bitcoin. Now there's other places I can carry it but this is one place where I can carry my Bitcoin. I have it here on this electronic wallet. You have PayPal. Some of you have PayPal on this. Some of you have your credit card on this and such. So Rob has this. And Rob scans a copy of, let's say, Kenrick. She's our new intern. We scan Kenrick's address from this and wants to transfer some Bitcoin to her. So he scans her address which is a QR code and says the amount of Bitcoin that she's going to receive from Rob. Now she will see that transaction happening. Once that happens, that then goes into what's known as the mining. That's the authentication. I just talked to you about it earlier. That's the ledger. So now the miners see that transaction has happened and this is computer systems and they're scrambling like crazy to solve a sophisticated mathematical problem to be the first one to verify that that transaction that I just created is true and legitimate so that they can get the reward. And that can happen in a matter of seconds to minutes just depending on how much transactions and how much traffic is happening in the cycle of this transaction. So the mining is occurring and within minutes, if not less, Bitcoin will be down by the one, let's say I gave one, and the recipient, that will be up by one and it will show up on their particular electronic wallet and they now have that currency in there. So from a transaction standpoint, think about it. If I was buying chickens or I was buying fruits or vegetables, if I could just go into the store with my bag of fruit, they said it was section number of Bitcoin, they scanned it there. The transaction occurred over the blockchain, didn't go through a central bank, didn't go through a credit card company, didn't go through any other central processing authority, all authenticated, all secure and shows up being depleted from my wallet and it goes into the account of the recipient's store. So pretty cool. And that's essentially how it goes through the process and you end up having a blockchain, a Bitcoin. So I've just burned up 15 minutes and we're going to come back and we're going to talk to you a little bit about how you can get a wallet and then we'll talk about some of the, where we are in this new technology field and where we think it might have, what things might happen in the social side. So we'll be back in a minute after we pay some bills. This is Think Tech Hawaii, raising public awareness. Ready for kickoff, MLS clubs and our supporters rise to the challenge. We make responsible decisions while we cheer on our heroes and toast their success. Elevate your match day experience. If you drink, never drive. Hello, I'm Dave Stevens, host of the Cyber Underground. This is where we discuss everything that relates to computers that just kind of scare you out of your mind. So come join us every week here on ThinkTechHawaii.com 1pm on Friday afternoons and then you can go see all our episodes on YouTube. Just look up the Cyber Underground on YouTube. All our shows will show up and please follow us. We're always giving you current, relevant information to protect you. Keepin' you safe. Aloha. Aloha, how are you doing? Gordon of the Tech Star here. We're here at the Kibachi Talk. We're doing a cryptocurrency blockchain update of the month and we left off after we just demonstrated how a transaction gets processed through the blockchain using your electronic wallet. So let's come back now and we showed earlier that where this technology adoption is in its life cycle. And I want to bring up another graph that kind of walks through technologies. And I've been in the technology business for 50 years and this is very typical of how technologies get adopted over the years. And so this is where we are with blockchain and I'm saying not necessarily Bitcoin, but with blockchain and how things have happened. And usually what happens is you've got a technology trigger that happens with research and development. You've got startup companies. You've got first generation products. You've got early adopters. You've got the mass media starts to get involved with it. Supply or proliferation happens in the market. And we've been going through that since 2009 when the blockchain first came on screen. This is where we've been going through this kind of situation. Now are we at the peak yet, which is the next slide, which is the next ball over. I don't think so yet because right now we're dealing between 5% and 10% of the consumption rate of blockchain technology right now. So it's very small and so we're going to go through this cycle that we're in now. So if you go back one slide, go back one slide from what we've got here. So this one here. So if you look at the slide where it says sliding into the trough, the third one over, I'm wondering if we might be there at this point because there's a lot of negative press happening in the Bitcoin area. There's some consolidation. You're seeing some of the exchanges being bought and sold. There's other entities that are getting involved in bringing out their own kinds of blockchain and underlying technologies. As a matter of fact, I'm following one right now. It's just finished their first round of funding. They were unbelievably successful. They have an interesting product. They hope to deliver using blockchain technologies. And it's not money, it's a product. But we're still at this less than 5% of potential audience has adopted fully this blockchain and related applications. So we're probably somewhere in this sliding through the trough I think at this point in time. And then at some point in time we may get to the slope of enlightenment. And in this case, this could be a couple of years. I just don't know. It's the worldwide web as an example of like it went through this trough and then it picked up and took off. So we'll see, we'll see. Now if you want to just take a particular application, which is the next slide that we had up a little earlier, it's where we are with Bitcoin. Now Bitcoin is just an application that's sitting on blockchain. And we're sitting in here. We're in this earlier adopter stage. There's companies that are looking at it and how they could possibly use it. There are consumers of the product, Bitcoin, that are also looking at using it. So we're sort of in this early adopters. There's definitely not a majority. There's a lot of skeptics out there. And they could be justified. I'm not saying that there's not, there's warranted. We just have to see how it unfolds over the next number of years. And we'll see if within the next two years we might move into the early majority phase. But that's kind of where we are with Bitcoin and its move in this life cycle. But I'm going to throw the next slide up, which is kind of like a shocker slide. And it's just, and there's the giant if. If Bitcoin and the underlying technology for cryptocurrencies were to take off, what would happen in the banking industry, the life cycle of money? And so if you throw up this slide, this is, so where we are today, we have traditional old age paper, currencies, this paper. Well, we have credit cards, but it's still paper. No matter what way you look at it, you've got the paper. Not a lot of people carry cash, but you have like a form of cash in your credit cards, your debit cards that are hanging in your wallet. But there may be a point, especially if I can do transactions quickly at a low cost, where these intersect, where the old transitional processes of moving money around the globe moves away from what we do today with a bank or banks and having to rely on them for the transfer of currencies. And that's where one of the cryptocurrencies comes in that I mentioned earlier, and that is Ripple. Ripple is a cryptocurrency, blockchain based cryptocurrency, but it's pointed towards the banks so that the banks, if they were to buy into this and a number of banks are looking at this technology to use it as their form of transferring funds. So Ripple is in that space where they're looking at international funds transfer using the blockchain technology and the banks are starting to really look at it and see if this might be something that they want to change from the way that they're doing it today. Okay, we've covered blockchain. We've covered cryptocurrencies in Bitcoin and I'm going to just quickly go over just a little bit on mining and proof of work and proof of stake. So I mentioned earlier that the transaction and the ledger has to be authenticated and that's called mining. And essentially, you're working fast to solve the problem. In the Bitcoin world, it's called a proof of work. That's the term that's used for that. So using blockchain and massive computer processing power to solve that problem and get 12 and a half Bitcoin for solving that problem. At some point in the not too distant future, when we hit a certain number of Bitcoins in the field, there'll be 21 million when it's all said and done, but when we hit a certain number, the reward's going to get dropped in half and then it'll drop in half again after that. So that's the proof of work part. Now, again, think of massive computer centers that are doing nothing but trying to solve this problem. And there are, there's investments in Iceland, China, Japan. They are all setting up these massive data centers that are doing whatever they can to solve these mathematical problems to reap the reward of that cryptocurrency. Proof of work, Bitcoin. But there's another way of doing it called proof of stake. And the proof of stake way of looking at it is that rather than having, and you can add, but rather than having these massive data centers, what if you and I were to be involved in that? And our computers were sitting at home, turned on with an application that was running that was looking for a transaction and using a proof of stake methodology to authenticate that transaction on a blockchain. Just a slightly different way of doing it, not a centralized computer system, which you could have also, but you could have a proof of stake where you as an individual or you as a group with all of your separate computers running at your homes, businesses, or whatever. We're out there trying to solve those problems in a proof of stake type of process. So again, proof of work, massive mining, proof of stake, more distributed, which is really kind of like the original methodology what was behind Satoshi Nakamura's creation of the blockchain. And so it's evolved to create this proof of stake way of doing it. So hopefully you're grabbing some of this because I've been asked so many times to try to really, really make this as simple as possible. If you wanted to take a look at slide number 31, 31 is a Bitcoin and Ethereum mining operation in Iceland. This is a photograph of one of their computer centers in Iceland. You could say to yourself, why would you want to do this in Iceland? There's a couple of reasons. One is it's cold and these computer systems generate a ton of heat. And in addition to that, Iceland's electricity costs are extremely low. And we noticed that this Iceland operation is doing both Bitcoin mining and Ethereum mining. So they're doing both. So they're doing proof of work and proof of stake. Out of this operation that's set up in Iceland. There's also one in China that I've been studying on. Their electric bills are on $80,000 a month just to solve that mathematical problem and get the reward. Okay, so let's jump down now to slide number 40. And I talked to you before. We took a break about a wallet, your digital wallet. So there are many applications on your, available on your phones, whether it be your iPhone, your droid or whatever. And that's the wallet that allows you to transact the cryptocurrency. There's wallets like Uphold, Coinbase. Coinbase you can't do in Hawaii because our state and its infinite wisdom cause them to shut down here. But there's Dice, Dash, Copay, Jax, BitPay. My point here of this is just saying that there are so many different digital wallets out there that the state and its infinite wisdom shutting down one doesn't really cause that much of a problem if people want to be more entrepreneurial or whatever and just go out and shop around and see what's available in other states and or countries. And I'm not vouching for any of these particular wallets. I'm just telling you there's just a number of them out there. There are many. If any of you get into this industry, you better do your homework. That's all I can say. So that's the wallet that's used to conduct the transactions. It holds your cryptocurrencies. You can also hold your cryptocurrencies offline in a separate device. Kind of like keeping it in your safety deposit box at the bank. Kind of like keeping it there. Okay, so we've just, we've taken this and moved it to this and what we'll do is we'll jump down. We'll quickly do the social implications of that. Let's take a look at slide number 44. So what could possibly happen next with what's happening in this space? So I think slide 44 has got kind of an interesting one. At the top of the slide, there's a bunny ranch in brothel in Nevada that now accepts Bitcoin as a form of currency to pay for those transactions. So I'm not going to tell you why. I'm not going to get into it, but it's just, again, the social implications are certainly getting there when it starts to spin into this space. IBM has got a billion dollars. They're banking a billion dollars on the blockchain technology. This slide here shows the courses that you can take. I think the first 30 days free with IBM and you can start using that for learning how to do blockchain coding and development. Healthcare records, I think that's going to be a huge one. I'm right now tracking about 35 different startup companies that are looking at blockchain as a way of managing and tracking healthcare records of various types. Driver's licenses. So think of that, your DMV around the entire country if we used blockchain technologies and look at that. Real estate transactions, I've mentioned this in the past, 40% of all real estate transactions in the state of Hawaii, according to the Bureau of Conveyances are wrong in those records. That's why we have title insurance. But if you use blockchain technologies, again, based on trust and distributed ledgers and authentication, this would certainly help to bring that down. Walmart is looking at this for food, blockchain technology. From the moment that seed is produced and put in the ground to the moment that you purchase that final ear of corn at the store and take it home, they want to track all of that using blockchain technologies. Transportation can be another one you imagine. So you think about you buy something on Amazon and it gets tracked or UPS gets tracked, FedExit gets tracked. The technologies that they're all using, but if they use blockchain, it would then distribute it over multiple processing systems and perhaps we have even consolidating all of those disparate distribution systems into a single distribution system. Again, just thinking outside of the box of what goes on here. So anything that needs a record track could be there. Cybersecurity is another one. It breaches and all the things that happen. So there you go. In 28 minutes, I've tried to give you an overview of where we are in the blockchain cryptocurrency field. Get ready for the next wave. I don't know when it will happen. We'll have to wait and see. I am not telling you to invest. This is not a, I don't give advice in this. This is just something that you may want to call a hobby, but it's not for the faint of heart. There's a term called HODL. People thought it was hold spelled backwards or spelled wrong. It is hold spelled wrong, but it's now being told hold on for dear life because that's what happens when you're investing and playing in the cryptocurrency world. Anyway, go to the tech side here. Thanks so much for watching the show. We'll be back in a couple of weeks. I'm going to take some time off and get some rest and then we'll be back and we'll have some guests and we'll pick up where we left off. And like I say at the end of every show, how you doing?