 On the panel, we have folks that are kind of on the commercial side of things. Certainly, ShapeShift is, I'd say, a consumer forward-facing business that is taking crypto into America's heartland. You know, it's come along after the initial burst. And also on the panel, we have Roger there and Charles. And you guys are more of the initial kind of first wave of Bitcoin. And going back to the 20, you know, you go back to 2009, I think. Not quite yet already. 2010. He was trying to out you as Satoshi. Right, he was trying to out you. In the first wave, you know, the Bitcoin Jesus, you don't get that moniker unless you're early. You get to early. So I guess the topic of contraction or expansion, so we'll start with Roger. So on the kind of the big picture, if you will, without talking about specific companies per se, but the mission, the vision, the Satoshi vision, is it expanding? Is it contracting? Your thoughts? So without getting into the scaling debate. Cryptocurrency is a whole, obviously, are expanding. It's going crazy. And here we are, you know, one of the most prestigious event centers in the entire country where some really high power events have taken place. We're here at the Aspen Institute talking about cryptocurrencies. That's a sign that this is really catching on mainstream. It's being adopted all over the world. It's not guaranteed that it's going to be Bitcoin in the end. But cryptocurrencies are here to stay. They're not going anywhere. It's only going to get bigger and bigger and more and more popular from here on out. Okay, quick add on. So when you see a state actor like China looking like they're trying to ban Bitcoin, etc. Is that a factor going forward? Are they barking up the wrong tree? That's probably a signal that we should buy more because China has already banned YouTube. They've banned Google. They've banned Facebook. They've banned Twitter. And if you had invested in any of those things early on, you would have done very, very well. Fair enough. Good point. All right. So Charles, take us, walk us through a little bit. You know, you definitely, I heard your talk yesterday. A great overview of Bitcoin, where we are, where we've been, where we're going. So give us your look down through 60,000 feet. Where are we going to be in five years with the crypto space and Bitcoin space? Where are we headed? Okay. So the short answer is I don't know. But I can speculate like everybody else. You know, when I got into the space, it was, I got in academically. I created a class and I taught people about Bitcoin. And then later on in 2013, I got in professionally. Since those early days that Roger and I were in, the growth has been astronomical. It's gone from, you know, anytime somebody mentioned something, it would be front page on Bitcoin Reddit. It would be a huge thread in Bitcoin talk. I mean, like very trivial things to nobody. It's like global phenomena, right? So the question is, is it going to continue to grow? And what ways is it going to grow? Who are the leaders going to be? And I think honestly, the question is, how will this technology actually impact society as a whole? And this is actually where we're going. We're starting to already see dramatic changes in the way banks think. We're starting to already see innovation across every piece of the financial stack. We're starting to see big discussions about identity. So if I had to guess, where are we going to go in three to five years? I think we could go to a password-free internet. I think we can go to a very decentralized way of handling doname names. I think we can talk about putting credentials on a blockchain, breaking up the educational monopoly. We can talk about instantaneous flow of value to countries that really have difficult time with the current banking stack. Now the question is, who's going to be the winner and loser? I just don't know. But I do know this technology is not only here to stay, that the investments are increasing by an order of magnitude every single year. We've seen it go from hundreds of thousands to millions to tens of millions to hundreds of millions to billions of dollars flowing into this space in just a matter of five and a half years, which is extraordinary. So I believe that that's probably the way to look at it is to say, are these trends going to continue? And then what industries are going to get disrupted or changed? Okay, a follow-up to this. And I'm going to go back to Roger for his comment, and then we'll work our way down the line here. So you are a co-founder of Ethereum. And Ethereum went through a split, and we have Ethereum Classic and we have Ethereum. And it seemed by most observers to go down fairly without too much drama. And of course, Roger mentioned the scaling debate. In the case of Bitcoin, there's been a lot of drama around this issue. Why do you think that in Ethereum's case, we did saw very little drama? And why do you see so much of Bitcoin in your opinion? That's a really good question. So in the case of Ethereum, it was over a particular event, and most of the founding core stayed with the original chain, and a small minority branched off. And basically, there was just a brewing malcontent with many decisions that had been made. And so people decided, hey, let's go and choose a different route. In the case of Bitcoin, there's no clear leader. There's no Vitalik buterin, the one we had left a long time ago. And as a consequence, we just had a lot of camps, very powerful, very well-capitalized camps who have a great degree of influence and control. And these camps just couldn't quite find a way to work together well for a variety of reasons. And so they tried very hard, but at the end of the day, it seemed like the divorce had to happen. And unfortunately, it was a pretty messy divorce. I want to bring in Roger Vair on this, because he gave an interesting answer to that question last night about why you thought the Ethereum blockchain had less drama. Well, I guess part of it is that the difficulty for mining Ethereum adjusts after every single block, whereas with Bitcoin, it's after every 2016 blocks. And the hardware that's used for mining Ethereum are graphics cards that people have all over the world, whereas with Bitcoin, it's a very specialized hardware. And I think that there's a lot of fear between the seguit version of Bitcoin, that if the Bitcoin cash version of Bitcoin takes enough of the hash right away from it, it'll really start to cause problems with the seguit version of Bitcoin. So I think that makes the infighting, the animosity just that much more rough. And but from my point of view, I wish the divorce had happened several years ago. And I think the entire ecosystem would be much farther ahead than we are today. Okay, fair enough. So let's move down to the panel line here. So as I tried to break this up a little bit, so these guys are kind of looking at the big picture, the philosophical picture a little bit. And you guys are actually kind of in the day to day, certainly ShapeShift has customers every single day, Zen cash. So what's your experience been just dealing with this on the front line of you're in the crypto business. It's a brand new business. How are you? What are your experiences? What are your challenges? Is this expanding, contracting? What are your thoughts? Hi, my name is Ari again, new kid on the block. So for us, our company is called Storm. We're building Storm Market. And what we're doing is a gamified micro task marketplace. The lingo is anywhere, anytime from any device. And so our perspective and point of view is really around user experience and design. You know, the technology has been around a little bit. There's definitely going to be a lot more improvements to it. But the way you really increased democratized access to any sort of technology is really on the front end, the user experience, how you talk about it, how you visualize it, and making sure that there's enough research and enough experts on that front is really important to us. Yeah. So at ShapeShift, I think it's very clear to us that the crypto industry is expanding and expanding very quickly. Three and three and a half years ago, when we started ShapeShift, we had this thesis that the majority of assets in the world would be digitized and that people would want to trade between those digital assets. At the time, many people, including investors, that we were trying to get on board with the exception of someone like Roger, who was nice enough to invest very early on, really thought we were crazy. Even people in the Bitcoin industry didn't really see it. They thought Bitcoin would be the only real digital asset and that nothing else would matter. Over the last year and a half, especially with the rise of token sales and Ethereum and a number of other assets, and it becoming easier to digitize assets, I think our thesis has been proven very correct. And we've seen even some of the older Bitcoin players, such as Coinbase and some of the people who've been around a lot longer, start to move that direction as well, because I think they see the writing on the wall. In our case, ShapeShift has grown tremendously every year of its existence, but especially over the last year and even just the last six months. And we just see things expanding in every direction, and it's very hard to keep up. One of our biggest challenges is dealing with the fact that a lot of the software that we have to run in order to make our system work is often, what I would say, nothing better than a very advanced alpha, if I'm being generous. A lot of the software is not even that good, and even Bitcoin, the core Bitcoin software, is almost never tested at scale by the actual developers. They don't see the kind of transaction volumes that we do, they don't see the kind of throughput that we do, and so often we're talking with all these various communities to help them improve their software, because we have no choice. It's the only way to make it work. So in our sense, there's a lot of challenges and a lot of technical hurdles that are going to need to be overcome, but we think those will be overcome, and it's just going to continue to expand. Okay, so you said that they are now moving more toward expanding and incorporating other cryptocurrencies, which is slightly different than, let's say, the original mission statement was very Bitcoin-specific, and there's this meme of the Bitcoin maximalist in that all others are pretenders, et cetera. But you're seeing a shapeshift, and in your observation of the industry, is that this multi-cryptoworld is emerging, and everyone is kind of getting on the boat here, that Bitcoin is just one of many cryptos? Yes, absolutely. I would say that a lot of the people who are these quote-unquote Bitcoin maximalists, their original vision is that there should only be one type of money or one really good money in that it doesn't make sense to necessarily have competing types of money that that kind of detracts from its value, and in some ways there's an argument there that makes sense, but I think what was missed is that money is obviously not the only type of important asset. We see in the legacy financial system there's thousands and thousands of different types of financial assets, and it's not going to be any different in the cryptoworld. There's no reason that the majority of these assets should not be digitized, and there's no reason that a blockchain is probably not the best way to do that, at least of what we have of current technology. So yeah, what we see is just assets expanding in every direction, and there's no reason that there's only going to be one of these things. In fact, it's inevitable. There's going to be thousands or millions of them. Let's hear from Zencash. Yeah, no, so I would say the cat's out of the bag, and we're at the start of a big revolution that's definitely not going to go away. So we see this all the time where, I mean, it's the difference between a controlled system where you have one monopolist that can do everything that it wants, completely unresponsive to its customers, or you have a fully competitive system that could constantly expand, iterate, innovate, in a permissionless fashion. I think the difference between the two is uncategorically better when you have full competition versus monopolist. I couldn't think of any industry where it would make sense for a monopolist to be the best or optimal solution for any solution set. So what we're seeing here is we're just seeing this massive rapid explosion of innovation where things are happening in real time. And in our market, what I think is really interesting is, so this industry has been dominated basically by US and European developers and early entrepreneurs that kind of got out there upfront. But now we're seeing growth, enormous growth overseas in different regions. And that's actually what we're trying to do. So we have actually our CIS, our Eastern Europe and Russia, I'll lead here right now. So we're growing explosively in parts of the world where the crypto, other cryptocurrency projects may not have initially been focusing. But these people in these regions that we always talk about as being great use cases for what we're doing, we're actually going out there and I think that they're very motivated to get into this revolution. I have a question regarding speaking of explosive growth of initial coin offerings, ICOs. There's been a huge expansion. I get emails like 50 a day saying, oh, we have this new ICO coming out. I want to ask Charles Hoskinson first because he's a cryptographer, so he knows whether or not there's actually any point in many of these so-called tokens and whether or not the SEC, which is now made a ruling on, saying that these are, you can call them tokens, but many of them are securities. Also China's clamping down on that. Do you see any necessity for most of these? And do you think this industry of the ICO market will be hit hard soon? Right, that's a really good question. So first, we remember when color came to movies. It was the Wizard of Oz, a few of them. And a lot of filmmakers didn't actually know how to use color. Things were a bit too vibrant. People would throw up the same for 3D. Anybody been to a 3D movie where it was a little overdone? Maybe at least one of you. And it's the same thing here. ICOs are a neutral thing. They're a tool that one can use to provide liquidity. It's like the ultimate crowd sale. Now, like all tools, you can use them to do great good or great evil. And now that people realize that they can raise tens of millions of dollars without asking anyone's permission or going through any particular channel, they're doing it. I went to an ICO summit recently in Switzerland. It was actually just last week. And I found out there's 200 active ICOs going on this month. I don't even know where the hell they all are. You know, it's pretty crazy. When China shut down the ICO industry, I found out there were 60 platforms running ICOs. With several hundred ICOs that already happened. So to answer your question more specifically, you asked about the regulatory implications. I think it's a facts and circumstances argument as the SEC made evident with their Dow ruling. And if the token has no utility and there's no natural demand for the token outside of speculation, then it's probably a security. The ultimate test you can use the armchair test is remove the company that's raising the money. Is the protocol still there? If Vitalik Buterin was the die-in-a-plane crash and the Ethereum Foundation was to go away, Ethereum would still be here. As would Bitcoin if Coinbase went down. But if you look at a lot of these things, if you remove the central company, the protocol dies, it probably is a security in that sense. Now, your final question was on are these necessary or not? And unfortunately, I think the vast majority that are occurring are just existing or kind of far-fetched business models that haven't gone through peer review or due diligence. And the reality is no, they're not necessary and they will result in failure. But to be frank, this is how venture capital works. We're just exposing the risks and hazards of venture capital now to a larger group of people. The reality is if you're Kleiner Perkins, you will see hundreds and hundreds and hundreds of business plans that are batshit insane. And unfortunately, you will see hundreds and hundreds of ventures you've funded, which in hindsight, turn out to be batshit insane, a la pets.com. And that's just basically where we are as an industry. It's just the risk is now being pushed upon less and less affluent group and a larger and larger group of potential speculators. So you mentioned the VCs there. Are ICOs now going to disrupt the VC business? Well, we've got a VC right here. I mean, Roger, has it disrupted your business at all? Yeah. So we've seen Bitcoin and cryptocurrencies disrupt banks and PayPal and things like that. Of course, ICOs are disrupting venture capital. And in fact, I think just recently, the total amount of money being invested in new businesses due to ICO surpassed the amount that's being invested due to legacy venture capital firms. So that's a really, really incredible turning point. One of the downsides of that is it fills up all of our inboxes every day with a million and one people with their new ICO. It's impossible to tell the difference between any of them. When it was just like five a month or something, it was easy now. It's like five a day or an hour. And you're just like, oh my god, half of these have to be scams. But what about China in terms of these ICOs? This is the first they've really clamped down is stopping the ICOs. How much liquidity were Chinese investors? I know Chinese investors are famously very... They're not risk averse, let's say. They're very gung-ho on any investment. So what sort of liquidity were they providing to the market? And are we going to see Bobby Lee hanged? Hopefully we will not see anybody hanged in China for being involved in the space. But I'm a little bit jet lagged at the moment because I just flew in from Hong Kong and arrived yesterday morning from a big conference that took place in Hong Kong that was supposed to take place a week earlier in Beijing. But they had to cancel the entire conference and move it to Hong Kong from Beijing because of the regulators there. And so there were a bunch of these Chinese businessmen that are running Bitcoin exchanges and cryptocurrency exchanges and are involved in all that. The big talk at the conference was they were talking about how quickly they can move to a country other than China so they can continue doing what they're doing. And I think a lot of them will do exactly that. It might slow it down a little bit within China but this is a worldwide phenomenon and anybody can participate. And the entire point is that this enables permissionless innovation. Meaning you don't need the permission of people in Beijing that you've never met nor the permission from people in Washington DC that you've never met. So that's the entire point of what we're up to here. We're about permissionless innovation, permissionless payments, permissionless freedom. And I want to follow up with ShapeShift the exchanges here regarding ICOs and this ruling from the SEC or the paper they issued saying that many of these are securities. Is that forcing you into doing more due diligence and compliance and what is your role in offering these tokens on your platforms? Yeah, great question. So I do think that the SEC announcement was a bit of what we call a shot across the bow. It was a bit of a warning sign to the industry but at the same time anyone who's been in the industry especially on the exchange side and been paying attention it didn't really contain a lot of news in it. It was not a surprise that the SEC thought some tokens were potentially securities and it wasn't particularly a surprise that the Dow in particular would thought to be a security because it had all sorts of elements of a security such as voting rights, potential profit sharing all these sort of things the SEC looks at to determine whether it's security. An important thing in the SEC ruling I think is that they did not say that all tokens blanketly are securities. They were very clear to not say that. So they actually left the door wide open that there are many tokens out there if structured in a certain way that may be a utility token or may not be a security at all. I do think it's causing a lot of exchanges including ourselves to take more of a fine tooth comb to which tokens and assets were willing to list being very careful not to list ones that we think will be considered a security especially the large order book exchanges some of I talk to a lot of them all the time and they are all certainly being a lot more cautious than they were before but then again it's really important to repeat that I don't anyone who's been paying attention this just it wasn't a big piece of news none of us were surprised that the SEC made that ruling and it didn't really change any of our business models because we were never trying to list tokens that were security in the first place. Okay so with Shapeshift of course because of BitLicense in New York you guys moved jurisdictions correct? So well all we did is we you know Shapeshift is a worldwide entity we serve everybody in the world and you know we're a very global company all we did is we blocked the jurisdiction of New York when they passed the BitLicense we were never based there but we can't serve customers there and we don't believe they should with the kind of onerous reporting requirements they have and honestly you know we helped put up a website right when that happened called pleaseprotectconsumers.com that kind of was used as an industry example of why we don't think these things are a good idea and I think we've just been proven right time and time again ever since then you know the most recent example being the Equifax hack of why these giant institutions should not be holding these treasure troves of data it's not a good thing and it's just a honeypot for hackers to come and get it the best defense against hackers is to not hold the data in the first place May I comment? So we're a company that's actually planning and in the midst of launching a crowd sale we haven't announced a date yet and we're actually dealing with a lot of the unknowns in the space are you security or are you not a security what are you what do you think about the regulators we're working with various lawyers of all different kinds and yes we are based out of the United States and so we have to be very conscious of that but I'd like to take the conversation up a level and go into conceptual conceptually I think we all just have to take a moment and say let's just use common sense you know the VC world has already set best practices of what is a good company and what is likely to not be a good company right they generally I mean I've been working out of 500 starves in San Francisco for many years this isn't our first rodeo and so very often an investor and I've been an angel myself you go do I believe in the team what is the intrinsic motivation on why they exist are they solving a real problem and does this problem need to be solved do people want this solved right like basic basic human questions need to be asked more than is this a speculative effort and am I going to make a ton of money like that's not the question we want you to think about need to think about human centered fundamentals and this is where we really believe we're solving a big problem if you look at today's payment systems it's not built for micro transactions I mean I hear the conversation over and over again just sitting in the cafeteria here or the tent the unbanked like that's a very popular term that people are talking about but what does the unbanked mean it means there's a whole set of people like human beings that don't have access to resources they're kind of lucky they're unbanked if they're here in the US because everybody was hacked by Equifax so that exactly and I'd like to actually point out that I think one of the main points of cryptocurrency and bitcoin specifically and why I got involved is to unbank the banked the entire point is to make it so that we don't need bank accounts anymore so let's unbank the banked that's really good so now speaking of the bank the biggest in America is JP Morgan you know what question's coming about this JP Morgan Jamie Dimon has been floated often as a possible treasury secretary or you know president they're actually saying that he could run as president he's doubling down again today I guess he said bitcoin is a fraud his his name he has you know he's connected he can speak to people and if he obviously he feels this is a competition do you think the likes of I'll ask Roger first because he's the closest and I could just hand the microphone to you do you think he could have some role in making things difficult for American companies involved with bitcoin I think Jamie Dimon doesn't understand bitcoin and what it's about and I'm more than happy Jamie I'll be your private tutor and I'll teach you all about everything I'll donate my time to do that and once you understand what this is all about you will want to get involved in a big big way because you'll understand that this is one of the most important inventions in the entire history of humankind right up there on par with how important it was with the invention of electricity or the internet itself that's how important the invention of bitcoin was and the distributed literature technologies that it's enabled since then so Jamie I'll be your private tutor that's a good offer he should take him up on that now I'm going to pass it to Charles because Charles Jamie Dimon JP Morgan all these banks Goldman Sachs were involved in trying to develop their own blockchain do you think the process of him of his bank going through that that he really understood how much of a threat blockchain and bitcoin and cryptocurrencies are to their business model now first with respect asking a banker about whether they like bitcoin or not that's kind of like asking a king do you like democracy I mean if you think about it you know these first 13 billion dollars in fines or something like that under his reign the guy's a tapeworm now time to max his impressions but no I mean I honestly it's just so thoroughly frustrating and insulting when people who know very little about what we do watch an up and coming technology and have the audacity to call us all criminals you know we're not the criminals here the whole damn reason this ecosystem exists is because they're the criminals and you know it doesn't really matter at this point what he thinks the genie's out of the bottle somebody in this room or somebody at this conference or somebody around the world is going to solve the problem of decentralized lending and value stable currencies and decentralized exchange and within five to 10 years banks will become less and less relevant just like landline telephones are becoming less and less relevant and we're going to wake up one day and we're going to be in charge of our own money and jamie diamond in retirement can watch the world as it is not the world as he would like it to be I'll say I think he said that to get attention first of all but I'll go to the other point of your question was can he what can he do to to stop this or maybe not him in particular but the type of you know hierarchy that he might represent in a lot of people's minds yes they can actually cause a lot of pain across the board so it's something that we have to just be realistic about so you know as we go forward I think we need to keep that in mind and make sure that we self-regulate on a number of fronts and we try to you know do things very much in the open and just try to be really good examples of good human beings who are doing the right thing from the start rather than have in retrospect people come down on us for doing things that you know they can point to us and say aha I told you all along these guys are a bunch of criminals like we need to show that we're the exact opposite yeah so I would say on this topic you know when you see someone like Jamie Diamond calling Bitcoin a fraud or you see China coming down hard on Bitcoin these are very good signs for the industry this means that they see this technology as an actual real threat do you think they would waste their time saying these things if they didn't actually think it was a threat to their own businesses and you know their own control over you know monetary policy and the you know the world as a whole I don't think they would I think the fact that it's getting more attention and that they're starting to speak up about these things is a natural part of the pushback that comes with the disruptive technology like this you know you wouldn't see in this but it's almost it's almost like watching you know the the US post office back when the internet and emails first starting to come out saying oh email is a fraud this is completely ridiculous it doesn't have a stamp you never you don't send it in the mail it gets there instantly this this this cannot possibly be anything but a fraud that's what I feel like when I see Jamie Diamond calling bitcoin a fraud and just like email started to proliferate and obviously became a much more useful tool than the post office bitcoin and cryptocurrency and you know decentralized assets token sales all these various things that the industry is beginning they're going to be much more useful than any of the other legacy systems and that's why you have this kind of pushback change is hard it's hard for humans no matter who you are or where you are right I have to go with the humanistic answer here and uh but we can do something about it as a community like each one of us in this room to make change easier for our neighbors our friends our bankers I mean we all have relationships it's literally educating people education is the greatest I guess power battle weapon against fear educate our friends our neighbors our family members the people that we work with and that's the best we can do together that's good I'm going to uh Max and I are uh audience facing so we hear back from all sorts of people around the world when we talk about bitcoin so I'll present you with uh some of their arguments and you could address it I already pretty much know how you're going to address it but there's this one notion so we had a hurricane and all the electricity was out and people wrote to us what good is my bitcoin now huh so if there's electricity goes out or an EMP or something like that they always say that the whole electric grid could be knocked off and apparently never brought back online that the government might shut down the internet and then what would your bitcoin be worth so there these sort of arguments and I know like everybody here is quite advanced in in bitcoin and it seems silly but those questions are out there and you know from ordinary investors and citizens and residents so what do you say to that if you think that your bank account or your credit card or your PayPal account or any of those things are going to work with the internet is offline or electricity is offline you're being naive so of course those things aren't going to work either so same for the world's in big big trouble of the entire world's electricity and internet is offline yeah you have bigger problems to worry about than your bitcoin wallet not being accessible anybody else have anything to add on that yeah I mean just kind of adding on what Roger just said you know I think these are arguments made by people who think that when they deposit you know $50,000 into their bank account that their bank is actually holding $50,000 $1 bills or something crazy like that in a bank vault just waiting for them just you know it's just there when in the reality is the majority of money and asset value is already electronic you know it's the reality is bitcoin and things that are cryptographically can be cryptographically derived the fact that you can actually keep your crypto assets on a paper wallet you know you can have a seed and something that you could always derive later that's going to be much more secure than these centralized databases they get destroyed and you see all the wealth of the world destroyed if all of the electricity went off in fact crypto at that point when people could start getting generators or little bits of electricity would be one of the only assets you could actually recover you're not going to recover from the centralized databases that you know all their backups are destroyed of okay oh I was going to move on from that because that's actually a lot of the people who say this are gold or silver investors and they say I can hold my silver bury it in the backyard yeah yeah we're going to be debating shift about this at four o'clock I believe but what do you say about what we'll talk down to the consumer facing guys down here is that Bitcoin is the gold for the millennial generation it's a safe haven asset for the millennial generation do you see this do you believe it's true and what do you say to people who say like it's never going to be gold it's not money sure no I can speak to this as a financial economist actually and I think that people should stop looking at the world in a binary fashion where you have to believe in Bitcoin 100% in order to start getting some I think that's kind of silly so these and even piggybacking on the last question about the EMP yeah I mean sure that's a massive issue if something like that would happen but you don't put your entire life savings into piles of gold in your house you know so just rationally diversify so the same thing is said for this whole like store value case and kind of digital gold for millennials absolutely I think it should be it's cross-border it's easier to use in gold whatnot but also by some gold by some silver it doesn't have to be one or the other so I really don't understand these debates between gold bugs and and us and crypto it's you know I love gold too you know so I think we should all just get everything yeah I mean I think many gold belts are a little bit angry that they didn't invest in Bitcoin four years ago and I've talked to quite a few who who wish they had because gold has remained relatively flat during that time and Bitcoin is obviously you know not so I think that the younger generation millennials etc they they they have more of a natural affinity for this stuff they've actually grown up kind of using variations of digital assets anyone who's played something you know like an MMO World of Warcraft or you know these video game industries where there's already virtual economies that have existed for you know 10-15 years and they've seen this and they understand that it has actual value and they just don't have this kind of skepticism that you know maybe other generations do who are looking at things like gold and silver and think well they're they're kind of using this this argument from induction what I would call it and which is it's always been this way and therefore it'll always be that way and that's always a good argument until it's not until the rules change and I think some people are starting to realize that the rules are starting to change and that that argument's not going to hold that much water that much longer I mean just reiterating millennials we we already live in this world the world is just catching up to the way we see it and so as gamers yes we've earned tokens and coins and stamina points it's awesome and we grew up with Facebook we've all had grew up with iPads from the you know age of five and on this is normal for us and so and and what we value is a little bit different right the way we shop the way we interact what we like to spend our time and money on is also different we really believe in social networks and reputation and and exchanging ideas and experiences and really going to a fully digital crypto enabled world is an amazing experience and I think we can all embrace that yeah cool maybe a few questions from the audience yes sir so let's say in the event of a financial crisis like we experienced back in 2008-2009 when people were equating their stocks and bonds basically we saw asset values stocks bond real estate pretty much across the board fall in relation to you know the f-currency I don't know f-currency like the dollar and euro how do you think Bitcoin some of the other top cryptocurrency will react in that kind of environment because inevitably that's coming at home point and one of another recession version coming and what's your theory behind that so if you look at thank you if you look at the election of Donald Trump what's what happened to Bitcoin right after he was elected it went up right and did people believe that Trump was going to be stable for the markets or potentially a bit volatile so I think Bitcoin is becoming a a contrarian view of the nation's state or the stability of the world so when chaos and crisis emerge we tend to see things like gold and Bitcoin go up you know I have anecdotal evidence but actually I think Rob would be the only guy who could tell us about this this is what he does sure I mean I want to believe that Bitcoin's negatively correlated to these other things the reality is mathematically they're the zero correlation but that's also a beautiful thing for a portfolio right you want zero correlating assets so we haven't seen Bitcoin largely adopted yet during a major financial crisis but one thing that I can say is a lot of other financial assets they're very like opaque interconnected webs of levered instruments that no one really knows who the other counterparties are we don't exactly have that Bitcoin is largely an equity-based type of asset so I don't imagine it had those kinds of cascading runs yeah I'll just add I don't think we've seen it as much in this country yet mostly because even despite 2008 in the financial crisis the dollar has still remained relatively stable compared to most world currencies but if you look at some other countries such as places like Venezuela where they have runaway inflation they have naturally started to move to other stores of value like Bitcoin because they know the government can't just take it from them or hyperinflate it on them and I think any country that's dealt with those kind of economic problems they understand the possibilities and the opportunity of Bitcoin and crypto much quicker than we do here in this country question yes has gold ever stabilized probably not constant supply non-constant demand yeah my feeling is that as you get into the higher prices the absolute nominal dollar changes on a percentage base is diminished so with Bitcoin at 100,000 of Bitcoin the you know 5 to 1 percent 2 percent move might look great but it's on a percent basis a lot less so it's only because it's on these lower prices that you see these gap moves you have seen I've seen I think four or maybe five crashes of 60, 70, 80 percent already but they're getting less so this recent move from 5,000 to 3,000 it looks scary but on the history of Bitcoin this is ain't nothing this ain't nothing I want to say we got some death threats on like back in 2011 I bought I put all my savings into Bitcoin and now it's seven dollars I bought at 14 how dare you talk about it and it's like so it's all you know it is a very volatile currency as it but I assume it will get less and less so as it's wider and wider adoption and you know back in those days people were a little bit less sure about what the heck this actually was and there were more thefts by the way of Bitcoin I think it's getting a little bit safer more secure a lot of the size but back then everything got hacked like you know I think you probably had a billion dollars worth eventually stolen but it's just like I think it's getting more secure right hopefully yeah I mean the actual protocol of Bitcoin has not ever really been insecure and has never been hacked or anything like that what you've always had is the centralized entities and obviously over time as the industry grows those entities get better at protecting their assets or you know things like hardware wallets start to proliferate or other ways to have cold storage so there is absolutely safe ways to keep this and that will just keep getting better and on the volatility subject I think much like Max said I think the reason it seems so volatile is just because the market cap is so small I mean we look at crypto right now we see you know a hundred thirty hundred fifty billion dollar market cap we're like wow that's so much larger than it used to be but anyone who pays attention to you know the world's financial picture knows that's still a tiny tiny little drop in the bucket there's there's much larger asset classes out there that dwarf this industry and as it continues to grow it will inevitably stabilize you won't you won't see the same percentage swings that you see now when you have a much larger market cap just to put it into context I believe Apple has two hundred and fifty billion in cash on their balance sheet just sitting there so they can buy up every single crypto out there and all the tokens yes exactly although if they try to of course the price would run away to the moon any more questions this guy might be parsing I'd like to make one comment about the future value if you consider how many million are allowed in the world are there more than 21 million there are definitely how many bitcoins will there be eventually 20 less than 20 million so if each many there wants to buy one bitcoin one bitcoin then in there what the price will that is encounterable but on the institutions that hold all the retail investors so that's why we want the price of bitcoin has anybody ever done a study of actually how many bitcoin are lost forever the private key gone I think it's around five percent five percent yeah yeah I hope I find those keys one day that was that was a terrible terrible day I meant to get my blue hat but I picked up my red hat that had the key in it and now terrible oh question in the back okay so the question was they're gonna they're launching futures products later on by CFTC is doing so how will that affect the market yeah well it'll it'll give some depth to the market it'll also give potentially tools of malcontents like a jamie diamond to play around with the market you know one of the reasons jamie is so vocal is because you know ordinarily he could just go into the marketplace and very quietly move prices around as we see in the precious metals sector obviously it's been irrefutably proven but because he doesn't have these tools he has to you know appeal to the to the press and get and just stomp around like a two-year-old because he doesn't have those tools to deal with and that shows you that we don't have them now would it I would give some depth to the market but it also it's a double-edged sword in my view it gives the opens up room for abuse from the same people that abuse the market today but it's it's kind of a race to see whether adoption and the bitcoin ethos can replace the fiat currency and the fiat ethos because in america we've grown up we now believe that in america fraud is an acceptable business model thanks to wall street so i mean crypto hopefully will re-educate and bring in something new i think hopefully so how how good of a job did they do shutting down file sharing and what what country is ip theft legal if they try to shut it down the technology just gets better and we get better and better at avoiding them and so currencies will get more anonymous it'll become harder to know who owns what where decentralized exchanges will get significantly more advanced the other thing is that governments won't coordinate in this respect is there a universal tax code throughout the whole world or are there tax havens you know so there's always going to be governments like switzerland and others who are going to be very pro-crypto in certain respect and so if some government shuts it down there's a mass exodus of people to another jurisdiction going to china for example the very first thing people started asking about when the china band came down is how do we move money to hong kong or to singapore or to similar jurisdictions so i just don't think the event's going to occur and if it does occur in a limited capacity we'll just see a massive investment to decentralization yeah that i would argue that it's it's basically already too late for that to happen if governments had you know started to put this kind of action you know four or five years ago they might have been able to have more of an effect but it's just grown too fast and pretty much exactly what charles just said you can't get the governments of the world to agree on anything you're absolutely not going to get them to all agree to ban crypto at the same time and for everyone every jurisdiction that takes draconian measures there'll be another jurisdiction that sees opportunity and invites the businesses and the opportunity to come there in fact we even see this just within the united states itself you know the united states is kind of this laboratory of democracy at least it likes to claim it is and you do see this that the states have different approaches so you know you get new york with the bit license who tries to clamp things down and put onerous regulations and then you have Delaware you know not in more than a month or two later say hey you all can come here we're not going to put these regulations on you start your companies here and you'll see this on a global scale more and more every country that knocks it down another one we'll see it as an opportunity yeah i just want to quickly add that said i completely agree with the guys but we shouldn't discount the harm that they can actually do to real people so that's the dark side of it right they can't kill the industry but they could hurt a lot of people which you know in some selective cases they already have so do you think jayme diming did when he did to get a better entry point in the state court they're already in man is it a foolish signal you get the question i do know for a fact that his london traders he remember he said in his statement that he would fire anybody who trades bitcoin in his desk i do know for a fact that somebody developed an app for jp morgan traders specifically back in 2013 to trade bitcoin and i guess some of these engineers and code writers over here would understand this better but i believe they made it in xls or something like that because their their actual browser was being monitored by their bosses so they were trading bitcoin and there was a special exception for max kaiser because their algorithm was trading off bitcoin mentions on twitter and at that time in 2013 it wasn't a big story nobody really big in no media was covering it and anytime max would tweet about bitcoin the price would go berserk and they would have to leave their trading desk and jp morgan and go over and like shut down the their app that have been developed so i know they had a sophisticated app developed that couldn't deal with max kaiser yes yes sir so with bitcoin when we get closer to the 21 million dollar 21 million bitcoin supply and there's you know the incentive starts to diminish you know reminders right if the little room eventually goes away how do you see the network being managed at that point well that just kind of did we have more than 100 years until that takes place so that's a problem i think we can wait a couple of decades before we start worrying about the general thought at the moment is that network fees will pick up the slack there but again that's about 120 years from now so tons of time to worry about that later what will bitcoin prices be by then 21 million for still alive right there gentlemen you got some purely on an investment side that hasn't been the student who grows what type of sort of self-policing as there seems to be a smaller amount of people who are making decisions in the crypto world and there's about six or seven people who are very influential in the recommendation but they also run companies they also own a lot of cryptos and where does that become a rather dangerous line as it becomes more and more knowledge coming into it well and so this is the topic of governance right and so i i think i can speak a little bit about dash you know dash has an interesting model where you've got the masternodes who are weighing in on decisions about the protocol and they have a vested interest in how it runs and so they've they've come up with a a governance solution in that that ecosystem that addresses these problems and i think these different coins are approaching these issues according in similar ways by variations on the basic bitcoin theme so then it comes back to competition so if it's a perception is that one group is becoming overly concentrated and making decisions that are not in the best interest of the network or the community the the dynamism of the of the economy is such that people can quickly move into other areas you know the problem with authoritarian regimes in the physical space is that people are trapped you know they can't leave countries you know they they move in freedom of movement is curtailed but here in this frictionless environment you can move and as the interoperability of all these chains become more of a reality then you're going to see a lot of not necessarily price movement fluctuations but migration of of capital not necessarily moving the price around but but moving the influence of different schemes around if you will so that's yet to come you know you look in the sky and you see birds flying in those beautiful patterns depending on what's happening this could happen in the okay i'm rambling now anyone else want to uh ask uh who has more power miners or the developers this is an issue that's often raised like the developers are complaining that the miners have too much power and the miners complaining that the developers have too much power well it's it's pretty darn clear that all the developers are not of one singular mindset and all the miners are not of one singular mindset and uh I guess that's one of Bitcoin in cryptocurrencies biggest strengths and also one of its weaknesses because there's no person you can go to and say hey make a decision and even if you know Vitalik with the Ethereum if he made some decision and the rest of the people didn't like it it wouldn't happen so uh we're gonna kind of find out there's a thousand and one different cryptocurrencies out there and a lot of them have different governance structures it's a big giant evolution of governance as well so we'll find out I think Mike I would on this daily something that happens in the OTC markets all the time and it's against the law and you know that you're likely to to get in trouble a lot of things that have mimic the equity world that have happened here at the internet that has been because because humans make up the equity world because humans make up this world so you're saying you didn't buy the Floyd Mayweather ICO after he recommended it to you is that what you're telling me I think it's it's like all things in life just buyer beware and if Floyd Mayweather tells you to buy his ICO probably don't yeah I mean I but I think the point is that a lot of us in the industry think that the consumers should be making those decisions for themselves in the first place and not a regulatory agency or a government saying here are the rules and you don't have enough money you're not an accredited investor you're not allowed to make these decisions because we don't trust you enough we think consumers should do their own research and they should make their own decisions and if you see someone that's pumping something and you think that it's there's some of the various activity there you might be right don't like be suspicious be skeptical yes sir what should we name it like Bitcoin classic can we sell the naming rights can we have an ICO for that people need to start pulling their heads out of their asses and agreeing it's not productive for the ecosystem they have these types of conversations and I think that we need to learn that compromise is necessary but I don't think it's going to happen and I think we'll see more fracturing and that's okay and that's why there's a thousand altcoins that's why there's tons of different standards and we'll eventually figure it out over the long run actually I have a question about Ethereum so when Ethereum first came out there was this notion that there was going to be so much built on this blockchain how do we broke that I know you they broke it on Kaiser report I didn't get any ether so I don't know exactly so let me see so ether the notion was that there were going to be all these sort of things that were could be put on the blockchain all sorts of applications and it seems to be just these ICOs at the moment is there any work going on like oh that would be that okay okay so far be it for me to to justify Joe and Vitalik and all the things they promoted but we have seen a lot of good innovation and progress on the platform you know for example MakerDAO was trying to create or had tried to create a value stable token we saw things like Gollum which is computation as a service to try to create like an Uber for computation so a decentralized marketplace for that the whole notion of can you build good oracles in your system this is being tackled by auger and gnosis and it's pivotively necessary for for a decentralized application ecosystem decentralized exchange is a is a very important topic because it immunizes us from the evils of the government and Ethereum is a really good platform to experiment with these types of ideas the problem is that Ethereum's capabilities aren't such that it can act as a drop-in replacement for Amazon or for Axebase it's just not capable enough as a platform from both the developer experience as well as from the infrastructure experience as well as a cost experience so it's perfectly legitimate to view Ethereum as a early stage project and it requires another five or ten years before we see the really really good stuff evolving but we're seeing it you know slowly percolate and most of these things will fail but the ones that succeed will change the world I have here who we had on as a guest but they said that you know their notion was that Ethereum the way it's built and all these things being put on top of it in ICOs is actually there's a more incentive for the price to be lower so the fact that the price is so high I mean is this does it have the same sort of built-in store of value should or should it as like Bitcoin has Bitcoin you can see is a deflationary currency is going to go rise in value but is there is the incentive for Ethereum actually to have a lower price so more stuff could happen right so that's a really good question as well so the first question is what are the economics of Ethereum with respect to to infrastructure on top so we always took the position that Ethereum is like oil you know Ether gold Bitcoin's kind of like gold and Ether is the spiritual oil so underneath the hood Ethereum's like a giant computational engine it's not a very efficient one and it takes a lot of gas to run but as you deploy more and more stuff you increase the consumption of that gas so arguably the price of if the supply is stable the price ought to go up as for ICOs causing problems they cause problems in price in a very not such a good way so let's say your food coin and you go and raise 100 million dollars on Ether okay great you have now all this Ether now most of the people don't sell it instantly they don't hatch you just hold on to it and sometimes the price goes up but when the price starts falling rather dramatically as we've seen a lot of volatility in the cryptocurrency space as veterans what do you do you panic because you have a fiduciary obligation to deliver the project and now half your project capital's gone away so you sell well what did you you know what what what you selling 50 million dollars worth of the asset what does that do to the price it pushes it down so then there's another ICO that raised at a lower level and they start selling and then the next one they start selling and you have this kind of cascading failure in the price and that can cause certainly a lot of problems and because it's a mind currency the miners also have the reserves and they have a profit window as well so when the price starts collapsing they have to sell the reserves so we haven't seen quite yet that cascading failure could happen but that is one counter argument to saying ICOs are good for the price the other thing is liquidity of value so most people put money in these ICOs a lot of them are early Ether investors what does that mean it means that that value is illiquid it wasn't in the marketplace it wasn't being traded it was kind of locked up and they got it at a very low price point it's not new money entering Ether to pump up the price so what you're doing is taking illiquid assets and now you're making them liquid which again will probably depress the price of Ether as well so I think it's a fair assessment to say that that you know ICOs can cause price depression you should disagree on that assessment hey good wow let's start Roger so what how do you why do you say that Roger like anything if you have more people using it the price is going to be higher so all the people maybe they buy Etherium to participate in an ICO they put in a hundred million to buy all those Ether and then maybe later on they sell it but all that money came in first you can't sell more money how do we know that it actually brought in people in it's not just a shell game we're removing a liquid asset to a liquid a portion of it would have been new people coming in and if even a portion of it was then the overall price for the ecosystem will be higher than it would have been before so but it definitely can cause lots of gyrations in the price we completely agree on that part so this is actually really interesting like one of my earlier comments I mentioned this whole cascading effect and we probably don't see that you know as much in our case but I do agree Charles that this is potentially a cascading risk that we haven't witnessed yet but we might so in the short term sure more demand for ICOs more demand for Ether you're going to see you know upward pressure on price but we could have this longer term effect of you know in a declining market we could start seeing you know particularly for you know these startups or these other companies that have raised capital and they're seeing their capital that they have pegged to this other asset's price has nothing to do with their projects they have a fiduciary responsibility to their their investors they're going to be forced to sell right so we could see cascades in the future it's certainly a risk one small comment but as the industry and companies get more and more practice standards will be set right there are going to be best practices that come out if you do an a crowdsale and you raise a lot in Ether these are the best practices so you don't cause havoc to the community and so we'll see more and more of that and if you are a company that wants to be more responsible than that you know you'll go out into the community and ask for like what did you learn in your experience what worked what didn't work and take from those and improve upon it right so with this ether question though if you you are calling it the analog of oil right so oil industry tells us something it's it has behind enough to to spur exploration but not too high to dampen demand from consumers so in that way there's a sweet spot unlike let's say bitcoin which is would be more like gold or where a higher price is pretty much always welcome right so the ecosystem of ether what there's a sweet spot not too high not too low that's different than bitcoin where people have a bias toward a higher price and they would support that bias right and there's a collection of computations that are affordable to run for any price window so right now there's only a set of things that ether we can afford to run the vast majority of things we can so as the engine gets more efficient or we invent a whole bunch of new technology in the Ethereum ecosystem to allow us to shard or scale then we can actually start walking into the conventional server space and so forth but at the end of the day you're absolutely right there is an equilibrium point for for any amount of demand and for any amount of infrastructure that's deployed but it wasn't sold as a store of value no it never was in fact we had persistent linear inflation when we released it but you know oil is still pretty valuable yeah but I'm saying that people's expectation about ether who are buying it like I'm gonna buy crypto I'm gonna buy ether I'm gonna buy bitcoin they're not really similar in terms of what you might expect as a bang for the buck right ether there is as you've described it more of a sweet spot that's not too high right right yeah and you know it's also interesting to point out at the Dow ruling that the SEC had they actually called ether a currency in the ruling if you read it really really carefully okay I think we have time for maybe one more question and then we gotta wrap it up crypto show in the back one more time just the back half of the question yes well Ethereum is yes they're moving to Casper and they've been on that roadmap for now over a year and a half I believe or two years they'll go wherever it's most profitable to mine if it's GPU centric maybe they'll go to Zcash maybe they go to ETC you know they'll make that decision on a fax and circumstance basis and a market dynamics basis but I think Ethereum Classic will be pretty competitive for them to go to that's it thanks everybody