 So Adam, I hope you're still within that 30-day return policy on the new Lambo because Bitcoin has crashed almost 40% since December 17th high. Is there any hope for those of you who may be holding out there? So times are definitely tough. I've had to sell the tires to keep myself going, and the second mortgage I took out to buy even more Bitcoin isn't looking so great. But there is hope, and that's because Bitcoin has dropped every January for the last four years. Yeah, it equals four is not a great sample size, but it is true that it has dropped every January in the last four years. It's kind of funny because it relates to something we see in the US markets called the January effect, where usually prices will drop or rise in January based on how people are choosing to realize capital gains tax. It's possible that people have simply deferred these taxes to January because it's a bit harder to get your money out of the Bitcoin markets. Now the interesting thing also could be the Lunar New Year. So Lunar New Year occurs in Asian markets around January timeframe, and because of that people could be converted their money into fiat currency in order to buy gifts. Yes, I think we can safely say that we have passed the absolute top of the hype cycle when it comes to Bitcoin. For that reason, we kind of want to take a step back in this segment and focus on the underlying technology, i.e. the blockchain. Now there was this really interesting article that appeared in New York Times a few days ago by Stephen Johnson called Beyond the Bitcoin Bubble, where he looked at the blockchain and tried to figure out, are we going to see useful consumer applications arriving anytime soon? Now in his mind, the blockchain can essentially be thought of as a way to securely transfer information around the internet. This could swell trouble for a company that has a proprietary database or a platform where they're controlling all sorts of information storage and transfer, and now this could be democratized through the blockchain. Yeah, you know, everybody thinks of blockchain as being a cryptocurrency and they think of Bitcoin and becoming a millionaire as we sort of joked about, but the reality of this situation is most people heavily involved in this technology really just see it as a way to transfer information. They actually hearken back to the early days of the internet, where the internet was very open and was based on these protocols that were generally agreed upon by everyone, and there wasn't a real central authority like you see today. So a lot of what you see supported in this article goes back again to this more libertarian style thinking where we want an open and free internet without a lot of large corporate influence. Yes, the author spends a lot of time early on in this article kind of talking about the troubles that he sees the internet falling into today, so things like smartphone addiction and how prominent inventors of the internet like Tim Berners-Lee, for example, have come out and said this wasn't supposed to be how it turned out. One particular example Johnson cites is in media, where he says the dawn of the internet was supposed to be a new era of media where we'd have small egalitarian outlets with niche audiences, everyone would have great content they could find, but that really hasn't happened. Now, I think there's one thing that we kind of have to think about here where we see is the way that media has turned out due to the protocols that were invented by people like Berners-Lee or is it simply due to market forces, but regardless of protocols, it would have turned out the way it did. And in the media example, I think the reason we don't have lots and lots of really small successful outlets is because users don't necessarily want them. You know, when you read media, when you read an article from New York Times, you kind of want to talk about it with your friends. And for that reason, I think it's kind of a natural market dynamic that you would end up with large outlets rather than a bunch of small ones. So for me, I was a little skeptical about this guy's nostalgia when it came to the calls of the internet. I think a lot of attack giants that are around today have risen because of market demand and because consumers want them, not because anything was really wrong with the original protocols of the internet. Yeah, I agree with the author that the open protocols of the early internet were absolutely fundamental to the internet we have today. I think where we probably differ is on some of the nostalgia about the early internet. If you think about it, it was really similar to the community you might see in somewhere like Hacker News, but if you opened up the internet in that way today, you get 4chan. And that's something that not everyone wants. So let's take a step back though and think about a really concrete example of having one of these blockchain protocols in use today. So the example the author gives is of a transit protocol, the idea being you have a transit identifier, you tell the system you're here, you want to go there, and this effectively could replace a system like Uber where you have a centralized control for this type of information. Yes, and I think one of the key points of the author says about the blockchain is that any time you have a large proprietary internet platform, this could potentially be democratized on blockchain with Uber being a prime example. So within this transit protocol, you'd have all kinds of things. You'd have a way to store driver details and information, writer information, mapping systems, ways to connect drivers and riders, billing, all that kind of stuff will be included in this transit protocol and the way to incentivize people to use it and to work on it would be through tokens like a Bitcoin. Yes, so the idea behind tokens is that it would be mined very similar to a Bitcoin as mine. Now, with all blockchain technologies, the early adopters of this would receive more tokens than the later adopters incentivizing a network effect. Now, this has traditionally been seen as the advantage of something like Uber, so perhaps with these network effects being created very dynamically, you perhaps could get a challenger that came out of this protocol rather quickly. Now, from my perspective, I don't think this is going to change all that much because I kind of see it as one protocol is going to be much better than the others. It's going to dominate the marketplace and pretty soon, it's going to be the way that we decide to use transit. And so because of that, I kind of see it as we're going to swap out the centralization of Uber for the centralization of some protocol that happens to control the transit information. Right. You essentially have the value of the tokens that are being distributed as the thing that is driving the creation of network effect rather than Uber's method, which was just to pour billions of dollars of venture capital money into it and get users that way. I think there are a lot of issues when you start moving beyond the kind of infrastructural layer of a blockchain to this app layer, which essentially a right-sharing system would be. Specifically, how do you reward people for certain amounts of work where it's not immediately obvious what the value of the work potentially is? Like, let's say you came up with an amazing improvement to the transit protocol, which increased right-sharing efficiency by 10%. This could be a billion-dollar innovation, perhaps way more than that. But you need kind of the governance in place to actually value that work and give a developer proper credit, which I think is slightly problematic now because these blockchain systems don't have this kind of governance. The other main issue I really see coming down the pipe is when people use a service and something goes wrong, they want somebody to sue. Because if you have a bad experience with Uber, you can theoretically sue them and you know they're a big entity, they have lots of money and you can get lots of compensation. Yeah, that's a great point, Adam. I do not know who you hold accountable if your automated driver using the transit protocol decides to head off a cliff. We'll need somebody to be held liable and we probably won't have that with the type of protocol the author suggests. Now, one interesting thing that the author left out is the idea of smart contracts. That's being used today in a platform like Ethereum where you can actually set up these contracts which in a certain event happens, will automatically trigger. Now, these could be really useful because you can imagine some sort of insurance for other types of blockchains provided by smart contracts. Now, there are some issues with delineating all of those individual situations and of course that sounds a lot like centralization to me. Yes, I think the author's thesis that the blockchain is going to bring back the return of the original goals of the internet is perhaps a little outlandish. But I think he portrays this really interesting potential future whereby consumer apps are built on top of the blockchain and maybe it displays for tech platforms like Uber we've come to know and use all the time today. I think the main advantage of this would not be in terms of user experience because I think in many ways that would stay pretty much exactly the same. I think the main advantage is in the eyes of developers who instead of working for somebody like Apple where a large share of the utility generated from your work is being consumed by Apple, you would instead be paid in these tokens where you would receive a much greater portion of the value that's being generated. To wrap it up, I think Adam and I both agree there are lots of interesting applications of the blockchain that might be in the near future. But this idea of decentralization is probably not going to happen. There'll still be a lot of central authority even with a technology like the blockchain. Of course, there are some uses of the blockchain today like drug money. So for our next book, we'll be covering American Kingpin by Nick Bilton which covers the history of the Silk Road and obviously one of the early adopters of Bitcoin. Thanks for watching. Make sure to subscribe on YouTube and we'll see you next time.