 The talk was initially announced as hacking, and it's going to be more like society and politics. I'm a legal advisor, I'm not a hacker. I will not be able to provide you with many answers, but more questions. So if you're looking for a technical presentation, there will be only technical questions here, not technical answers. And part of my task is to try to formulate the right questions. So it's more like a society and politics lawyer stuff. And this guy is the last great lawyer, really. I don't know if we have some time, Edwin Hubble. Okay, I'll take over. Something I would like to ask you right now is that after the talk, please take out your trash and all the bottles that you can find. For the talk, he already said it's Peo. He already told you that this is not a hacking talk, it's more a political talk. So if you came for the hacking thing, you might want to leave, I don't know. But maybe you want to stay and hear what he has to say. He just wanted to avoid you being disappointed. The talk will last for about 40 minutes and after that we will have a Q&A session. So if you can think of questions, please do so during the talk. I will go around the room and I'll ask you after the talk to raise your hands and I'll go around the room and hold the microphone in front of you. I won't hand it out. So please give it up for Peo and Electronic Money. They wrote to Bitcoin and it glimpsed forward. Thank you very much. It's an honor to be here and it's a form that I learned a lot from. So I should start by introducing myself. What do I do? As I started, I'm a legal advisor. I usually work for IT companies. In the last four years, I've been working on payment system, payment services and mobile electronic signatures. What do I specifically find the most useful doing is finding legal problem and solution to technical matters. So if you have a technical solution and you think it's ready for the life or exploitation, you usually come to me or if you work in a company and you go back not as happy as you came. Because I'll find a lot of problems and a lot of new questions. And this is what I'm going to achieve. I'm going to define a problem, propose a solution and ask for your help. I'm here to find help in your competence and your understanding of the matter. But why first find the topic important? Otherwise than the people out on the metro station, they gave me a leaflet which was calling for turning back the Deutsche Marker, separating the investment bank, getting back the gold standard and that kind of stuff. The moment is right to get the electronic money right. Electronic money and the ways of doing payments is something very important. I'll compare it to the great work that the guys from Tor are doing. It's the same as the right to express yourself to search and disseminate information. When you do payments, when you conclude contracts online, you express yourself in the very same if not in the very more specific matter. Just imagine Google who has made all these huge databases and put all these efforts in collecting marketing information, which is basically information for your purchasing habits, your buying behavior, what if, and they do have your purchasing information. And the problem is that electronic payments have not been done right. They have too many flaws and too many problems in them. And I'm going to talk about anonymity privacy, making payments anonymous and keeping your privacy as a value that we already have when we use paper money, something that's well known. And freedom that we lost when we switched to electronic payments. This should not be this way. It can be done better. It has been already done better, but the people who made the solution failed somehow. And now we're up into a system which just gives all your information for commercial purposes. Just as a short example, we're for marketing processing companies which process credit card purchasing information and a short advice. If you buy alcohol with your credit card, never buy a cheaper alcohol than you usually buy with your credit card because it would set an alarm bell somewhere in the US. They'll know that something wrong with your credit rating because you're still addicted, but you don't have the money to support your addiction. Another simple example, do not buy food or basic necessities on credit. It would set an immediate alert. This information is very important. It's processed very carefully. Your stereotype, tip is analyzed. I don't know. I don't have to explain you what you can do with that kind of information. And as from point of privacy, we lost that privacy when we switched to electronic payments. So what I'm trying to achieve with this specific talk, this is a very new topic. So my main contribution will be to define a problem. If we ask the right question, if we ask them for different perspectives, we might just simply be thinking in the right direction to get the right answers. I'll propose some solutions, but this will be kind of arrogant because the professor from the university, they were able to identify a lot of problems in the current system. They did not kind of try to propose solution, but I've looked to the current state of the art, at least, that I know, and I see some things that might work and some things that might get better. And finally, the most important, I will be asking for help because this is something that I am not even close to solving myself. So I'm not any kind of leader that just might claim to have all the answers. And because I'm a legal guy, this claimers is the most important thing. First, the thing, I'm not trying to solve by electronic money the economic. So I'll be talking, I'll be focusing only on electronic money as a tool. Any built-in economy like deflation or fair distribution like the guys from Bitcoin do, I'm not interested in the economic part. So I'm not going to tell you how to fix the Euro crisis, how to do anything else. This is something that I'm not going to do. Second, very important disclaimer, what I'm going to tell you, especially in the legal part, it's optimized for time and audience. So do not take it as a legal advice. It would be utterly stupid if you do because this is not a good legal advice. These are more like the legal and societal and political concerns that any solution will be facing. This is judging from my experience. So I'll just kind of stop with the disclaimers and now start with the definition of electronic money. When we talk of electronic money, the definition is taken from the Financial Service Authority in the UK. This is a text which is transposition of the European Directive for Electronic Money. And I'll just give a quick reading of it and ask you to pay attention. So it's a monetary value. It's something that it's equal in the cash that's in your pocket, in the money which is in your bank accounts. So it's just something like an aggregate condition like the water. It's not a nice, it's not a vapor, it's a different state of money. Start on an electronic device. It means that they are outside these containers usually of money. A very easy way to determine if you're dealing with electronic money or some other kind of weird payment instrument is the mind test that if you lose the device, do you lose the money? So like when you lose the banknote, you lost the money. So when you lose the token that you might be keeping your money in, if you when you lose it, you lose the money, so it's very likely an electronic money. Issue it on receipt of funds. So usually you exchange it for money from another condition. This is something which is not true on the other example. The other examples that I'm going to give and accept it is a means of payment by person silent in the issuer. So it has some societal value. Let's put it that way. And I'm going to give you another alternatives to electronic money. All these examples I've tried to select. Most of them are from Germany. You can easily see one. But the first one is my favorite. This is the Wirt Schaft, Genossen Schaft from Switzerland. It's a remarkable alternative to money. I urge you to take a look and research it. It's very interesting. I don't have time to describe it right now. Then it's a societal currency, which is on a hub culture. And all the other ones are German local currencies. You might be familiar with them. You might have used it. I haven't seen them. I only read about them. These are the regular gelt, which seem to be very popular in Germany. So if you have an experience with any of these things, or kind of know what this is, and Bitcoin is amongst them, sure. They are alternatives to electronic money. And here I'm going to start by defining the problem by the statement that money is hard. People do not understand what money is. And the problem is that it's hard from various perspectives. It's used in so many ways that it has so many implications that it's way from technical thing. And it has, most importantly, the basic human perspective. It has the technical perspective of how do you make the tool, what kind of properties the tool has, and how it works. It has enormous legal and political perspectives. You can see just by reading the news, it's all about money most of the time. And you have a lot of cost-related business perspectives, which are hard to be ignored because usually your project, your money project fails or succeeds on the cost part. It's usually again about the money in different way when it determines whether you succeed. So each and every perspective imposes its requirements to the general problem of electronic money, and you have to be able to grasp them all and if there is a solution, you should evaluate it from old and different perspectives. So when we talk about, let's say, Bitcoin, because this would be like something that I'll be turning around, it's very good from one perspective, but from others' perspective, it's not good at all. And all the critics that Bitcoin has received, usually they come from different perspectives. It's not like crypto attacking. It's from human, legal, technical, because you have to solve them all. And solving all and making everybody happy, especially when it comes to something that has to be as concessional as money, is very hard. So I'm going to start with a brief description of the human perspective, which I find to be the very basic thing that we all know but we tend to forget. It's so closely integrated into our society that we tend to forget them. Identification and authorization. When we make any kind of deal, we usually would like to know or somehow identify the person that we are dealing with. It depends on the medium that we are dealing with. We usually know who are we dealing with. And identification is the first and very important stage of being able to conclude any transaction to use money. So it's something like a prerequisite to use money. Authorization, if they are not in your pocket, you need to somehow be authorized and identification is a prerequisite for this. Achieving consensus and easy dispute of resolution in a group. This is something, again, that the law is really concerned about. When we do find a solution to a problem, it's not a solution until we agree. In the case of money, we have to agree each and every coin. Let's say if it's a physical coin, it's easy for us to reach a consensus where it's in this current moment. But if it's an electronic one, it's very hard to determine in a not disputable way where this value is, who is the owner and how does it move. It's easy to sense the coin, but if it's an electronic form, it's tremendously harder to achieve consensus in this whole group, which is a good one, where this money is. And if we have some kind of dispute amongst us, if it's here or if it should be here, we have to have an easy way to resolve all disputes amongst us. So when we talk about achieving consensus in a group and dispute resolution in a group, it's something that the law solves this basic problem. And don't forget that if you want to achieve consensus in a group, you should be able to identify all the members in the group. So identification is, again, the first part of a question. Ben Laurie, I have a bibliography list. He has a very good paper on this, which states in a very clear manner about the consensus in a group. Determination of the state of the system at every given moment. This coin is in my possession at this very moment. We should all be able to determine this. Easy when it comes to something physical, way harder than it's come to something not tangible. And like in Bitcoin, they use all this computational power just to do this, to create value and to determine where is the value at every given moment. And it's something that Bitcoin spends most resources on. So electronic money is not expensive, not a cheap thing. And trust is as short here in my presentation as this way much important, because money is a matter of trust. It's a matter of reliability and stability. If we do not trust in the tool that gives us monetary value and how we use it, it's completely lost. It's not good for everything. And this is one of the main reasons, trust, because why the revolutionary method would not work for money. It's a tricky problem, but if all of the society, all of the group is not convinced and sure and safe with the way the consensus was achieved about where your money are and that they are yours, if you do not trust this method, you're completely lost. So this is from the very broad human perspective, which a system brings us to the system or just plain technical risk, which they boil down to two ways to secure, issue money to mint money and to use them, to use them as a payment tool, which brings us to these basic problems. Counterfeiting, how do I know that you cannot provide money? How that I know that you cannot double spend it? How can I know that you should not repudiate your payment statement? Secrecy, anonymity, men in the middle, they're all the familiar risk. This is something that I should not be talking to you, are able to get these from common sense. And actually they've been set up as the risk metrics, which has been set, I've used this as a basis, from the micro mint protocol, something that had been set in 1995. So these things are easy to figure, at least among technically aware people. So this part of the question is not easy to be answered, but the question itself is not that hard. And even that we have the question formulated as the problem, it has not been solved really well for this long time. Because we have a lot of top of legal and political problems on the top of them, which are completely unconnected with them. We have requirements about the entity. Now I'm going to present in a very brief way, it's actually impossible, I'm going to talk the mindset of the regulator, when they give a permission to an entity, let's think a bank or an electronic money institution, to mint money. They have very strong requirements to the people or to the organization, actually the organization, both organizations, the people who are going to run it, who are going to use and actually regulate, issue electronic money. So the people and the organization should be clear. So the responsiveness should be there, somebody should be controlled, somebody should be put in jail, somebody should be stopped. And entity requirements, they talk really directly to the features of anonymization, distribution, decentralization. These current requirements make it a little bit harder to make distributed anonymous currency at Bitcoin would be. Because the great risk is the settlement risk. If I have to explain it in a very simple matter, the settlement risk is the risk for you to give me the money and not giving you the goods. This thing, this exchange, if it's a remote, it has a lot of implication when it's done over the internet or when it's done not in presence. And to avoid the settlement risk, a lot of safety and precaution develop, a lot of legal framework is developed, just for this settlement risk. And talking about Bitcoin, in the very paper, it said that Bitcoin does not address the settlement risk. So if you just pay, you have no warranty that you get your stuff back, which in my opinion, it's called as hard currency, with no warranty currency, and which makes it less applicable to the various conditions that might arise. Counterfeiting accusation, I'm going to talk a little bit more about just minting legal payment tenders. Money laundering and financing of terrorism. You know the magic word of terrorism that stops all thinking. When they say there's terrorism, and whatever they say, they don't have to argument. And this is the bad part in the last 10 years. They have been just stopping all the projects and all of the researchers saying terrorism, terrorism, terrorism and money laundering. These two magic words have stopped a lot of research and they can just stop you because usually you cannot dispute the actions of the authorities. They should preserve the order and actually they should preserve our liberties too, but they mostly tend to shut things down. Tax evasion prevention. This is something that should not stop our tax system for working because even when we talk about Bitcoin, I can easily think of ways that we can use this virtual currency, the ability to make payments all around the world and to convert them immediately, how I can evade taxes, how I can create stuff from nothing, how I can use it to pay for services, how I'm not kind of obliged to put it in the balance. And there are a lot of people who would think of tax evasion schemes for all their life and they would welcome it to Bitcoin very good. So it's a legal concern for the tax administration in the whole country that electronic currency which is not regulated and not made compliable with everything might be used for tax evasion, which is something which just puts the very foundation of the state in question. I don't know if it's a good thing or bad, but it has this property. Consumia protection requirements. That thing that I just mentioned, you paid for something, it appeared to be crap, how do you get your money back? If you used a hard currency like Bitcoin, you just don't. You might not get your stuff delivered out, so it's a settlement risk, or you'd just not be able to get your money back if it's corrupt. Ways to negotiate to conclude a contract. I'm not sure if you want to get into it because this is a complete set of problems, but this is how do we conclude and how do we understand each other from long distance and how do we fulfill these contracts, how we fulfill our obligations. This is a complete set of problems, and usually if paying is one part of the contract, it's a big issue, the way that it's going to be paid. Auditability, the way to turn back the time and check what's happened with our money if you give your money, and how the burden of proof is distributed. Another big question, because when you paid something, or something has been paid on your behalf, willingly or not, you need a good way to prove that you've been cheated, you've been robbed, or you really did it. So this is another set of questions that, let's say, immature virtual currency like Bitcoin is not able to answer in a very convincing manner. Why the legal part is important, you most probably hate the law and for a reason rightfully so, but in this case of electronic money, I would like to stress that you should not go in the revolutionary way because it's a matter of trustability and predictability. If you're brave enough, you can risk everything. You can put all your savings in Bitcoin. I would not care. But if you want to do everybody from the society, the value of the payment method comes from its widespread usage. So if you want to propose a solution, it should fit to the widest group possible because the more users of it, the more it's more way useful. I don't know if it's a really good explanation, but stability and predictability is something that being illegal does not give you. And okay, if you're brave enough, it doesn't matter. But if you're completely illegal and you do not achieve all your payments in your way, in your virtual way, the opposition will be funded by your other payments. So by your taxes that you pay every day by purchasing everything, you'll be funding your opponents just to come and get you. So if you're not successful enough to do all your payments in your way, you'll be paying your opposition to come and get you. And it's kind of stupid to fund the opposition. And solving the wrong problem, when studying the history of the payment protocols, I found that the problems that they've been posed, all the academics' work of how to make an effective protocol, how to mint money in an effective way, and they compete and they develop and they made slight and major improvements all through the years. But they look from only one and technical perspective. And there is the question amongst the cryptologists. We figured it out. David Schoenfer's publication is in 1992. He has already the idea of the complete system. It's 20 years ago. Still haven't figured it out and still haven't worked. And the good part is regulation is immature and it can be made better. Which means that regulations currently the European Parliament haven't taken to do the dirty stuff and to abandon anonymous distributed money. It's kind of, it has been stopped for 10 years. And now recently we have an additional amendment to the database, but electronic money directive, which is, again, it's not forbidden to have an anonymous digital currency. And if we have the consensus, if we can push the regulators, it can be made better in a way. So feedback on the legally, I'm just going to scary additionally by just giving examples, quick examples actually, of what happened if you are illegal or how illegal electronic money have been concerned. In the US, FBI and the Liberty Reserve, a guy has been running something which is qualified as completely OK electronic money. FBI crushed on him, they sentenced him for treason, terrorism, counterfeiting and something like which sounded like national terrorism and undermining the legal foundations of the American society. And they were pretty harsh, I have it as a link. Again, you can read the statement from the US Attorney. It's not a pleasurable thing. And having in mind that US interprets its jurisdiction like all of the world, they might just come and find you if you are not alignment with them. Deutsche Bank, it was curious to know what your regulator thinks about this regular currency. It's brave enough to refuse any comment. I'm not going to comment on the issue and which is OK. They are still allowed to exist. It's kind of borderline legal or illegal, doesn't matter. The regulator doesn't care. Swiss National Bank on Veer, I pay attention to them. Swiss are OK. These kind of tools which achieve similar results to the regular guilt, they say they do not affect our monetary policy, which is one of the best way. We know them, we monitor them. They are actually founded in 1933, I guess. So it's pretty old, it's pretty stable. Take a look at a little study. It's formidable example, my favorite one. UK financial services authority, the last three are on Bitcoin. So it's something relevant. UK states it's not electronic money, but it might be a tool for money laundering. So it's not what we give you, but it might be legal. It might be legal because they are asking financial services authority. A French court says there was a trial led by the French banks. They said again, it's not electronic money, but we don't know what it is. So again, it might be legal, it might be not. And the most unfortunate part is the electronic frontier foundation. They received a donation in Bitcoin for a very while and after this while they received a statement that they do not understand the legal nature and the legal implications of Bitcoin. So they stopped. They said that this might not or might be illegal, so we rather stop it. So this is the position and I trust and respect them. They know better. Just another perspective, before I get into the so-called solution spot, it's the cost. It usually takes money and this is the best where Bitcoin is the best in. If you're a normal money institution like PayPal, money bookers, chip and pink, a bank institution, you have to spend money on registration, operation support, marketing, customer, IT, whatever. You have a lot of cost going on. Bitcoin did something really formidable. Like from Alice in Wonderland, actually in the mirror world, Bitcoin thought of six impossible things before breakfast or before Bitcoin. And it somehow revived the idea and as the professor from Darmstadt said, it's the first working electronic currency perhaps since David Chaum's DigiCash, which died in 1999. You should take a look and study it too because it was something working and it just went broke. So when Bitcoin appeared and all the hype is not for no reason, it just spread again the hope that you can have a decentralized currency and it's anonymous, independent of what has been already told by the developers itself, confirmed by the lecture that we had a few hours ago. It's anonymous to a way that you cannot prove it. You might have an indication who the guy is, you might have just a positive, but you not have the proof. So it works kind of. There are levels of anonymity. We'll talk about it later, but it kind of does some good job and it might be approved. Operational costs, this is why all the banks and financial institutions are really hurt. Nobody spends money, real money, to run Bitcoin. Everything is done from some incentive base and this is one of the most formidable things about it. It's an open platform. It's not just the source code. The whole system is made this way that you can build services above it. So if you want to protect yourself from settlement risk, you can build an SQL service or you might build an organization service. You might somehow integrate and expand the whole system. So the original design, it's a core, but you might build around the core. This is something which is really a great feature and I don't have to tell you about being open and being accessible to be written and made better. It's something really important and marketing model included. This is something, the economy part, which I just enjoyed that much because people just got it, they started using it and they loved it. Now I'm going to give around some proposition of how can we make it better. So the first problem is that Bitcoin burns money to create money. Actually people would like to make it cheaper to issue money and now we are spending computer power, spending cycles, which is something which is not cheap to create value. Again, Ben Lowry in the linked talks explains it very well. Usually people try to find the cheapest way to do something. Bitcoin does this proof of work to do it. It's not the most rational way to do it. And change for fiat money or buy something else valuable. This is the genuine electronic money approach. They don't want you to create your own currency. They would like just to have you another way of storing your money. So if you exchange for euros or for whatever currency you have back in your country, this is the way that it might be electronic money be issued. I owe you credit debit principle. Examples for alternatives electronic money, they have a lot of different methods of creating value and exchanging value. I owe you this is our debit principle. I'll give you a favor. We'll value it for that much and then you'll give it to him and then he'll give it back. Something which builds a society, something that builds a community, something that is very typical for the German local currencies in Germany. And this is the principle that drives them. Some fair or random distribution. If you want to do initial distribution of wealth, name a distribution and you'll do it cheaper than Bitcoin. Just if you have an idea what a fair distribution according to you is, you might just do it in a cheap way than identity base. Identity base is something that is the concept that every creature is entitled to some money for dignifying existence, to keep his dignity. So if I'm a living creature, I should receive some of this electronic currency. Consensus in a more effective manner. Again, the big problem of Bitcoin is that it spends a lot of its resources, a lot of resources on the network to achieve consensus where the money are and what's the transaction history. Again, this is something that should be optimized. The first thing is the easiest thing. It's the approach that we've known so far. Authoritarianism is cheap. You are appointed dictator which says you have that much money and this is the cheapest to keep a strong central authority. But we don't like it for all the recent history to having somebody who is in complete control. So decentralized trusted backbone. This is something that Bitcoin does currently. It started as an attempt to distribute currency but then by introducing the trust points in the chains, it became just these trust points. It makes it somehow with a trusted backbone. So we have a decentralized but distributed currency. The points of trust might be distributed in various ways and people might look at it as a way for compromise. OpenPGP, we are going to the schemes of trust. You're familiar, I assume, with the PKI hierarchy with OpenPGP which is more like a web of trust way of I trust my peers and trust them that much. This is something that the Ripple project, these are guys who gave lecture to the summer camp. This is the social identification. I know you, I trust you so I will accept information from you about them. This is something like distributed identification which is something relatively new and I'm looking very with great expectancies from the guy who tried to do social networking in a better way, in a non-Facebook way because the social networking case has its great advantages but not at the cost that current so called social networks that offer them. Something really simple. Germany has a way to identify a piece of data legally, electronic data existed in the certain amount of time. Instead of using distributed time stamping like Bitcoin does, can we simply use official time stamping to get a proof that a certain transaction or a certain contract existed in a point of time? And this we can use, this is the so called a signed receipt from a triple account technique that we might use as a proof that something happened at certain amount of time. It's way cheaper than having this distributed thing. Having a point that we'll just sign one thing and will give us back the proof. Practical Byzantine tolerance, this is a method which has been first published in 2001 Miss Barbara Liskov. This is again a way of achieving consensus in a group. I wanted to make some benchmarks if it's going to work better than Bitcoins but it's way above me to make a decent benchmark. So if somebody wants to benchmark practical Byzantine tolerance implementation against the current system of saying who has how much money in which moment of time this might be a great benchmark which results I would like to know. Better anonymity. It's complete anonymity possible. Do we need it first? First when we deal, I told you we need to know who are we dealing with for various reasons. We might just have different grades of anonymity. I know who you are. I know really who you are like say about your face and everything of yours. I know your pseudonym. I know who you are but I cannot prove it. This is something very important from legal perspective. There is in blind signature based schemes like in DigiCache it was something very tricky that if you cheat then your identity is revealed. Just pay attention into the David Chow's paper. He describes an algorithm that if you cheat and if you double spent a coin, an electronic money coin then your identity is revealed. And this is a way to somehow preserve your anonymity if you are fair enough. This is something that might work or you can escrow your ID. There are practical ways you are achieving. I would rather... I don't like the internet that it's right now. So if we have a dedicated layer of anonymity on which we can step, something like... So there is a system which is called eCache. It was active something like it would be three or four years ago which was all completely built on Tor. It was Tor dependent for anonymity. And if you take a look you might find very interesting ideas like the laundry services. Currently Bitcoin has laundry service which is basically if you can identify me by the serial number of my banknotes I would just give you my banknotes and you randomly give me other coins at the same value. This is the money laundering service. Something like a mixing bowl. eCache implemented it first. Now there is a Bitcoin laundry which works as some commission. When it started it was 0.5%. The last time I checked it was 4.5%. So it's getting more expensive with the time. So legal, purely legal and organizational perhaps a role and knowledge separation is something which is important. You all familiar with AirBug and how if I don't have an access to information or if I have to ask somebody to achieve a task or just my competence and the need to know role this might be a good way to preserve anonymity. Euridicinal independence might be. Liberty Reserve was based in Belize. I thought first it was in Africa it happened to be in Latin America. A vague jurisdiction where the strong countries do not have physical control but they happen to have had. So if you have your think or your bank on your remote island you might be safe until you're not too famous. But combining it with other methods it might get better. So I think this is the short list of recommending reading. I should have included way more and this is not a good practice to give you just these few things to read. Micropayment transfer protocol this is something that lays the foundation of payments. Ben Laurie it's a great guy I just enjoy the way he writes. On Bitcoin he has two papers which I just quoted several times I tried to mention him. They are really a must when you understand the basic problems with it the other things are the statements that I'm trying to prove you just please read the FBI statement Liberty Dollar it would scare you and the other things are something that I found from Bitcoin forums. Yeah the FSA statement EFF it's good to know that it's completely new area and what I'm talking about I'm completely not confident if it's what I'm telling you it's right. I have my own opinion I have an experience I have a knowledge of how the regulators work but it's still an opinion and I can't state it in a complete certainty. And the triple anti-accounting and everything from young Greek it's on his side I would highly recommend to read it. And by reading it you ask yourself better questions and perhaps have some better answers than I'll do. So now we should go in the QA if I might be helpful. A round of applause for Peo and we'll start the Q&A session now as I said before I'd like you to raise your hands if you have questions I'll come to you I'll go inside the rows we also have a signal angel here now so questions can also be asked via IRC please do that for the people who are watching the streams we get a first question here Yes I thought I should mention there's a project called Open Transactions that tries to combine show me on digital cash with Bitcoin by backing it with Bitcoin so it could be advantages from both sides. I'm familiar with the project thank you it's a good reminder if you want to read more legal opinions about the legality of electronic money OpenCoin have made a legal study and it has really important answers really important questions the answers are not valid since the adoption of the electronic money directive but if you want to know you should go read OpenTransaction a great project which is kind of laying the foundation of all these things Next question over here You said about the court cases in the UK and France can you maybe somehow sum up how they reasoned that Bitcoin was not money It's easy to reason that because of the properties that I mentioned in the very beginning UK because the French court decision was translation the lady which answered from the financial services authority she said that somehow you make money out of thin air and the very definition is that you somehow transfer other money like cash or stuff for bank accounts into money and this and other stuff and that's made her unsure this is very important as an administration they usually let's say they are not proactive they don't want to do something unless it's urgent so if they can dodge the ball and say this is not our responsibility they would do it I find this in the Deutsche Bank answer too and there is a link you should read it better I'm not able to reproduce it but obviously the fiat currencies come from nothing it's a long discussion I told you I don't want to get into economy because we'll get just there is no answer there there's another question here I think we're somewhat blinded by the fiat currency system being one system so we're kind of looking for one system one thing that I've taken away from this conference and other places is that we'll need a number of different alternative systems and we now have Bitcoin it's not going away and now we need like 20 different other systems to compete and to have a whole competitive field this might be a solution but as I told you we need a consensus in a wide group a good way to reach consensus is the natural selection yeah, there might be a lot of system which would survive the better, they'll combine themselves actually what I did here is exactly that when I just stated how the problem might be solved better I referred to the tricks and tools that have been applied in previous electronic cash system so this is the way to go actually I would love to see people who just go I should have included a list of all the projects that are worth referring to but like the most DigiCash, please remember that DigiCash is the electronic money system based on blind signatures something else is Shamir Paywort and MicroMint this is another groundbreaking tool in, I should write it down somehow in electronic money because they just laid a foundation I might just give you again, do you see anything hardly it's a bit small no but I'll give you more and more links about the previous works because I'm not just figuring out this out of thin air this has been a previous research which is attempts, failures we should learn from them you're completely right in this any more questions please raise your hands so I can see over there I couldn't hear all the talk but I would like to know what kind what examples you have of use of Bitcoin in transactions what is the most nothing legal nothing legal the first impression that I had about Bitcoin is what I can use it for nothing legal this was my instinctive response because this is the first question that I would like to use it for these properties and I need untraceable cash do you think it's needed to legalize Bitcoin too? I would rather go with the legal part this is why I just paid so much attention on why do you need to be compliant why do you need not a strong opposition if not compliant you don't need a strong resistance these different things there's another question in the fourth row if I understand you correctly you couldn't think of anything legal to use Bitcoins on I've used Bitcoins for a long time and never anything illegal so what's your illegal uses of Bitcoins? I'll use it for tax evasion and money laundering escaping of the regimes of transferring money through boundaries if I want to transfer money to the United States it would take me three days and it would take me something like 15 Euro in expenses this is the first thing that I'm going to use I'm going to buy Bitcoin and where I am I'm going to sell them in US I'm going to transfer monetary value nobody would know nobody would trace me this is not considered legal to transfer monetary value via boundaries if I want to buy something and not know anything anybody not know I'll combine Bitcoin with Tor and I'll try to hide myself as best as possible to purchase it I'll use it for tax evasion like having something like a black cash black pocket I don't know the word in English something which is not in the books I'll use Bitcoin currency to pay somebody and I'll receive value out from Nautica I will not pay taxes on these transactions I'm impaired to have in mind I'm legal guy and I see it too and I'm just starting thinking of ways to exploring it this was my first instinct I'm not saying that it should be used for illegal or it can be it has only illegal this was my first instinct harder, more expensive What did you just say? Could you repeat that? Hold on You can use normal cash the same way it's just examples of how you can use money illegally Okay, but I don't have to carry it the way that avoiding international money transfer regulation I would use it better and it would work better Okay, there's a question on IRC Hello? Yeah, okay A question from the internet Does electronic money automatically mean that we have one Global Century Bank? Are there systems where I can decide who to trust with creation? Again Okay, it's a double question basically Does electronic money automatically mean that we have one Global Central Bank and are there systems where I can decide who to trust with the creation? No way, no way decentralization should be a very important part of it so nothing like one central authority this would be faulted by design, it's completely it's not the way to go it would be the easiest thing to do in the style of solving all our problems just delegating to some other authority, no but this would be completely stupid if we should do it I'm completely again putting some limits on that but you talk about money laundering and this sort of bad stuff would a limit on transactions make a sense like alright, you cannot transfer over that sort of amount you cannot move that sort of amount of money in that sort of amount of time would that sort of make sense? Yes, there is such limitation like micro payments if you take a look at payment service directive and the transponition you have a different and more lacks on micro payments so if you have a limitation like that even the regulators might be way more to look easy on you micro payments the risk is not that big so you're right, this might be a solution if we set the upper threshold to it's currently something like 30 euro per transaction you might easy get virtual currents but this is a hack with the current regulation We have a question in the third row Yes first off I just want to comment that some of us might think those are legal features not legal problems the other thing is when it comes to discussing decentralization it's important to separate the issue of how you define database integrity and where the database is stored in previous tries to make electronic currencies you've had a centralized database that also defines the integrity that you say you have a few columns and you say this owner here that authenticates by this password has this amount of money in his or her account in the case of bitcoin you have a decentralized time stamp server where the definition of database integrity is whatever more than 50% of the network spent their CPU time on and I think it would certainly be possible to create a bitcoin like system instead of using this distributed time stamp server which is also the creating more money mechanism way of expanding the money supply you could create a bitcoin system where you have the total money supply from the beginning defined by some kind of root key let's say the high bank of Germany and then they start distributing the money and through that you know but then they would define the database integrity your idea might be developed in more detail in open coin they have a paper in which they consider because they use blind signature and the blind signature idea is centralized by design but they have proposals how to split the database in parts and to make it at least decentralized so you might want to take a look at that it just might give you another additional ideas are there any more questions please raise your hands anyone nobody at the back of the room nobody don't be shy the front anyone else yeah over there to what extent has the bitcoin transactions be used so far to what amount in what amount in terms of amount of money oh no you can check this online I don't have statistics right now you mean something like global statistics yes in general just a rough idea I'm not sure you're able to have a right statistics no rough I would rather not I have checked them something like months ago no way anyone else please raise your hand so I can see you anyone no more questions we have another one over there yeah I'd just like to elaborate on the legal aspect that you brought up because I really hope that whoever is designing new monetary systems they might be right here should not care that much about the legal aspects and just do whatever you can to work because the legal aspects are definitely important but one shouldn't be constrained by them pre sort of the system being set up we just have to test different things and get them going and apparently bitcoin is good for some uses and then we'll have to in an organic manner find whatever fits accounting needs legal needs and all those needs I completely agree I did try to restate it currently it's not forbidden this should be okay for you to go it's forbidden usually by the regulations of the central banks who apply the directives into their licensing and monitoring regimes of the electronic money institution so at the legal level at directive level at low level it's still not forbidden which is important to go you don't have to have your business model written in a law you don't have to be good to go from the very start completely agree with you so this might be an important message it's not illegal make it working and if you can prove societal interest big enough to have a lobby these directives can be changed the law can be changed the regulation can be flexible if until there is significant societal interest there should be something to step on so I encourage you to play with it but do not solve only the technical problem just have in mind that there are lots of other problems that just might come and get you read the US guys they are the most unpleasant ones and they'll scare you right away so you know how I have in mind is there one more question we have time for one very quick question otherwise I would ask you for another round of applause for Peyo and electronic money thank you very much