The Talk Show

74: Heart of a Gambler


00:00:00   yoko is jeopardy things when they I got my speech I super nice guy just I was [TS]

00:00:08   hating the fact that people give him all this crap for actually playing the game [TS]

00:00:11   well if you see the backlash I have actually seen this where he is or are [TS]

00:00:17   this is actually interesting yeah he's sort of like a Moneyball you know hehehe [TS]

00:00:22   jeopardy like Moneyball is to baseball yeah alright I asked him I was like how [TS]

00:00:27   much did you spend on strategy how much memorizing her time is like totally [TS]

00:00:31   strategy like ed memorize some stuff but he basically figured out how to play [TS]

00:00:35   daily doubles during the games which is the people miss that you can win during [TS]

00:00:41   the game you don't get Final Jeopardy and so you basically wins during the [TS]

00:00:44   game and the most the highest grossing winners have also played the game that [TS]

00:00:50   way I mean Ken Jennings was a little different but he was early after the [TS]

00:00:54   change some of the rules and yeah but I actually who's the new guys name [TS]

00:00:57   what's-his-name our third shoe r32 I actually became aware of him cuz I saw a [TS]

00:01:02   piece that Jennings Road about him defend you is great it was really nice [TS]

00:01:06   so they do sort of like the traditional way to play jeopardy the gentleman style [TS]

00:01:12   if you would [TS]

00:01:13   is you you pick a category if you have control of the board you pick a category [TS]

00:01:17   that appeals to you and you pick the the lowest tonight you know go from the top [TS]

00:01:23   down so in the first round your pic $200 than the $400 if you keep getting it [TS]

00:01:28   right and work your way down to the wire money and you know I guess there's some [TS]

00:01:33   correlation between higher money and harder questions [TS]

00:01:37   well little bit I think the actually we are they do make the they do make the [TS]

00:01:42   questions a little harder as it goes down as it goes down the board not [TS]

00:01:45   always but typically and the producers asked you to go from top to bottom and [TS]

00:01:49   they don't tell you to do instead of rule but they say look most people do [TS]

00:01:53   best this way it's less confusing the audience prefers a [TS]

00:01:57   it's probably a better way to play we're gonna make you do it and it's just in [TS]

00:02:01   the heat of the moment it's very hard to make the right judgment but daily [TS]

00:02:04   doubles are occur predominantly unpredictable locations right they're [TS]

00:02:09   not randomly located that there is if you study the game and look at where [TS]

00:02:13   they've been [TS]

00:02:14   you can you know there's some spots that are higher percentage significantly [TS]

00:02:18   higher percentage chance of being a daily Double than others and its if you [TS]

00:02:22   have control of the board it is to your advantage to 200 yeah he's he's got the [TS]

00:02:28   right combination of buzzer timing domain knowledge it's fairly broad and [TS]

00:02:33   deep in like trivia categories and the strategy I think he's winning against [TS]

00:02:38   sometimes stronger overall players who can master the strategy that's very [TS]

00:02:42   Moneyball it's and it's great and I think the thing is he comes across as a [TS]

00:02:46   feckless on-screen because you know I do this when I'm thinking really hard I go [TS]

00:02:51   slack is playing the game so there is this like this geeky at all tonight [TS]

00:02:56   Asian guys as bentsen racism is is winning the game it's like really is [TS]

00:03:01   very funny so is his Twitter handle is Arthur underscore a theft and I think [TS]

00:03:07   it's hilarious because he's clearly making fun of like the effortless thing [TS]

00:03:11   about it is very funny on Twitter he's very personable in the interview and I [TS]

00:03:16   know for all we know is just one like 20 more games because it's right [TS]

00:03:20   tape months ago so you can talk about it but it is very enjoyable I just like [TS]

00:03:24   playing the game always like to point of the game is to win is not to you at home [TS]

00:03:30   may not like what he's doing great right thing they can Jennings pointed out in [TS]

00:03:34   his piece on him is in addition to the fact that it's to your advantage to get [TS]

00:03:38   the debt huge advantage to get the daily doubles it also by skipping around the [TS]

00:03:46   board from category the category it gives you an advantage over opponents [TS]

00:03:49   because you know if you get it right where you're going next [TS]

00:03:53   and you are ready for that category where is your opponents are don't even [TS]

00:03:56   know which category to be thinking about whereas if you play that traditional way [TS]

00:04:00   and somebody picks you know potent quotables for 200 even if you don't [TS]

00:04:05   doesn't get it you're ready for the next one to be potent quotables for 400 yeah [TS]

00:04:10   it's totally true with so it's a bit since I think it plays into the game [TS]

00:04:13   theory thing and and people have their own preset notions about what they they [TS]

00:04:18   want but you know I am enjoying enjoying watching my boys and I watch them play [TS]

00:04:23   it's very fun yeah it reminds me anything with game 3 but like one of my [TS]

00:04:28   favorites is the history of blackjack yeah we're blackjack it's kind of funny [TS]

00:04:37   because it's like the rules date at least back to the 1800's and were [TS]

00:04:44   apparently you know came about without the help of any sort of computer [TS]

00:04:48   modeling whatsoever and without computer modeling there's really no way to tell [TS]

00:04:52   what perfect strategy is and whether the house actually has an advantage or not [TS]

00:04:58   and so for decades [TS]

00:05:01   decades and decades you know through the until the 1960's typical players in a [TS]

00:05:07   casino like what was considered here's the right way to play actually we're [TS]

00:05:11   playing at a tremendous disadvantage to the house the basic gist of the way most [TS]

00:05:17   people played in a casino and and if you you know and if you sat down and were [TS]

00:05:21   unfamiliar with the game and we're sitting next to somebody who was you [TS]

00:05:25   know clearly a season blackjack player in and ask for help from this is the way [TS]

00:05:29   you would learn to play is that you should never dust whenever you get to 12 [TS]

00:05:35   or 13 you just stop because you could bust and busting is an automatic loss [TS]

00:05:40   and it's you know you know the dealer just takes your chips and it doesn't [TS]

00:05:44   matter what the dealer does you know that's part of what makes the game a [TS]

00:05:47   little complicated is [TS]

00:05:49   if you bust the dealer takes your bad and it's gone and even if the dealer [TS]

00:05:53   subsequently goes on to bust you don't you know there's no time in that [TS]

00:05:56   situation even though in theory it's a tie because you both busted and so [TS]

00:06:02   that's so devastating that the players you know developed this strategy never [TS]

00:06:08   never never take a card if you can bust with the pot you know and in some people [TS]

00:06:12   would play well maybe if they had a 12 maybe they would hit on 12 because [TS]

00:06:16   attend the bus but it ends up that so horrendous horrendous strategy for the [TS]

00:06:21   player in this case ya edwards who worked at I think IBM is he was the [TS]

00:06:26   first guy to beat the game and he did it with not by like working it out through [TS]

00:06:32   formulas but just through brute force computation that he just programmed in a [TS]

00:06:37   simple game of blackjack and just ran it millions and millions of times you know [TS]

00:06:42   given this hand you know if you play this way what you know what happened and [TS]

00:06:46   came up with you know the basic strategy and it's you know it's very different [TS]

00:06:50   from that but what happened then is players who would read the book and [TS]

00:06:54   Thorpe also invented card counting which gave the play actually gave the player [TS]

00:06:59   you know an advantage of 23 percent which is which is huge but even without [TS]

00:07:03   the county park even just the basic strategy where you could just learn [TS]

00:07:07   these simple rules if you have a fourteen and the dealer has a 16 you [TS]

00:07:11   stay if you have a 15 in the dealer has 10 cards showing you have to hit the [TS]

00:07:18   players who had that strategy would do very well and before the casino sort of [TS]

00:07:21   adjusted the game you could maybe even have a slight advantage in the in like [TS]

00:07:25   the sixties you can actually play the game without counting cards have a [TS]

00:07:28   slight advantage but it was like a social thing though where where if these [TS]

00:07:33   other guys at the table we're playing the traditional way and then there's a [TS]

00:07:37   guy who's actually playing the mathematically right way they they would [TS]

00:07:41   some of them would get angry you know they'd be like what the hell you doin [TS]

00:07:44   hit 15 [TS]

00:07:45   because it would seem to be random it would seem to be counter-intuitive it [TS]

00:07:49   seems like you're playing the game wrong even though I mean this is this is the [TS]

00:07:53   the Indiana Jones moment when he shoots the guy we just got the whip like you're [TS]

00:07:58   like wait a minute that's not fair 2008 the point is it's not you're there to [TS]

00:08:04   play the game this is reality TV now I want some seasons of survivor and that [TS]

00:08:08   was the thing that was fascinating I think it all developed into a pattern [TS]

00:08:11   eventually but it was passing it was something like Boston Rob who is much [TS]

00:08:15   reviled he figured out a new way to play the game a few seasons in and it [TS]

00:08:19   transformed the game dynamics and everyone watching him how to play the [TS]

00:08:22   game differently after that but it pisses you off if you're in the middle [TS]

00:08:26   of the situation because it's an evolving game dynamic in which [TS]

00:08:29   everything in your head that you built your strategy around the suddenly wrong [TS]

00:08:33   and you hate that other person because they've changed your not playing the [TS]

00:08:36   same game anymore [TS]

00:08:37   yeah because I watched survivor in a couple years but I did watch first [TS]

00:08:41   couple of years and then I do remember Boston Rob he was great he was the best [TS]

00:08:46   villain he was exactly who he was and I think of all the people and i think i [TS]

00:08:50   watch for five seasons like the guy on the very first season [TS]

00:08:56   Richard Hatch Richard Hatch who he really thought I'd take the plea deal he [TS]

00:09:03   went to jail because he thought he was sprayed on larry is unlike its [TS]

00:09:06   straightforward tax situation but I bet he as the winner of the first series and [TS]

00:09:12   you know seemingly played it pretty smart became like the one that's how you [TS]

00:09:17   play the game [TS]

00:09:18   yeah you know Richard Hadlee then he came back in the day whatever the [TS]

00:09:22   tournament was the all-stars thing a few seasons into it he comes back he tries [TS]

00:09:27   to play the game the same way and he is not like a few days in his favor [TS]

00:09:33   statement was I was bamboozled there is a game changer you're out but the kids [TS]

00:09:38   walk around with your wang wang looking at people and we'll get right well and [TS]

00:09:43   the other thing he seemed unprepared for the fact that the first season [TS]

00:09:47   nobody knew a nobody knew the game and be nobody knew what he was doing [TS]

00:09:52   where else when he came back for the you know what was it like the jeopardy [TS]

00:09:57   champions champions it was clearly everybody there you know as a survivor [TS]

00:10:02   player had watched the first season of Survivor aware of is you know he really [TS]

00:10:08   needed like a new strategy and you know there's a thing called the Markov chain [TS]

00:10:13   and I talked I found out about it because of the game chutes and ladders [TS]

00:10:16   of all things to someone wrote this whole area [TS]

00:10:18   shoots and ladders are snakes or is called stakes letters someone years ago [TS]

00:10:22   wrote this hilarious review / analysis of that kids came looking at it from [TS]

00:10:27   this mathematical standpoint a Markov chain is a mathematical system that [TS]

00:10:34   undergoes transitions from one state to another in the state gonna state space [TS]

00:10:38   it's random things so it's the next action is not followed up on it because [TS]

00:10:43   of the previous action and there are games that are the games are most [TS]

00:10:49   interesting are the ones in which it is there's not a predictable outcome based [TS]

00:10:53   on the sequence of things in which you do so chutes and ladders the diced are [TS]

00:10:58   everything it's really a game that teaches kids how to play games but in [TS]

00:11:01   poker the number of possibilities are two huge outdoor crowd counting they [TS]

00:11:07   still become too huge to be predictable as an outcome from starting states and [TS]

00:11:12   so there's this issue about the tension between games that have Markovian [TS]

00:11:16   properties and non Markovian properties about which ones are fun or not because [TS]

00:11:20   you know as a parent you know shits about her socks and Candyland sucks [TS]

00:11:24   because they're they're [TS]

00:11:27   chain on Marco V and the worst Candyland isn't even really a game because it's [TS]

00:11:34   entirely deterministic you know that there's a deck of cards once the cards [TS]

00:11:38   have been shuffled in you've decided what order the players gonna play in it [TS]

00:11:42   the outcome is already determined that there's a day spa component to it which [TS]

00:11:46   is ostensibly Markovian but the chain Markovian [TS]

00:11:49   each car's plate and sequence so it's just it is horrible but it teaches kids [TS]

00:11:55   how to its simple method he just kids how to play rules and follow the game [TS]

00:11:59   and there's winners I don't think I don't think you can get a lot of his [TS]

00:12:05   lessons whenever we lucked out Jonas ever play for cancer too long but now [TS]

00:12:11   we're to sellers of Catan which is much better if anything Candyland it you have [TS]

00:12:18   no choices and there are devastating you know bad cards you know they get the [TS]

00:12:27   candy cane and send you all the way back to the beginning like you know I don't [TS]

00:12:32   know it doesn't seem like you get any good lessons out of it you don't learn [TS]

00:12:35   any strategy and you learn that you know something terrible happened to you at [TS]

00:12:41   any moment he teaches you the essential hopelessness of life or not the working [TS]

00:12:45   world is like as well yeah it's it's sort of a full of philosophical [TS]

00:12:52   depressing game because it's sort of like you know it's like going back to [TS]

00:12:57   college [TS]

00:12:58   philosophy 101 and you know do you is there such a thing as free choice you [TS]

00:13:02   know in Candyland there is there is no free choice it's reinforces the [TS]

00:13:06   elementary school and college and the job and there's the house near ticky [TS]

00:13:11   tacky about it but the hill is your life did this is the future you know like [TS]

00:13:17   with sufficient knowledge you can already you know you could predict [TS]

00:13:20   exactly when and where you're going to die and you're never gonna get the [TS]

00:13:23   governor only piece of paper given play blackjack game [TS]

00:13:31   a little bit I like the elected instincts you want to win now it's [TS]

00:13:36   actually but I just lose inches like I don't have any I don't have any playing [TS]

00:13:42   jeopardy jeopardy is a different kind of battle but I I just never happen don't [TS]

00:13:46   have the I can't stick to wander off and look at the other things ready for some [TS]

00:13:52   reason when you were on Jeopardy did you do to get daily doubles yeah I think i'd [TS]

00:13:59   i'd never I didn't get a lock I was I was so IBM researchers know Watson one [TS]

00:14:06   of things they do they did this one group in all this game theory and [TS]

00:14:09   analysis and they found that people who were in jeopardy if in three categories [TS]

00:14:13   are sort of regular Champions masters in Grand Masters and I was clearly in the [TS]

00:14:18   regular I eat out a couple wins I'm happy that I want but I wasn't like a [TS]

00:14:24   natural player like some people are so I did I did ok that's the Daily Double [TS]

00:14:30   you know it ties in with blackjack as it is is the one part of jeopardy thats [TS]

00:14:35   well the final Jeopardy is a bit of a gamble but you know it's a gamble where [TS]

00:14:39   where you don't know the question you know where is the regular questions it's [TS]

00:14:44   it's a combination of skill like your actual ability to recall the answer [TS]

00:14:49   know the answer and physically to hit the buzzer first but you do you know you [TS]

00:14:55   get the question so it's not your not gambling i mean you do in n you can [TS]

00:14:59   maybe see you are if you only have certain of the answer and you get a buzz [TS]

00:15:04   in any way and take a chance you got it right as you lose the money if you get [TS]

00:15:08   it wrong in the daily challenges never buzzing when you don't know the answer [TS]

00:15:11   for sure because you lose the money you have in someone else's most likely get [TS]

00:15:16   it right and he backs you must double the different cuz you they've had it [TS]

00:15:19   they've had the time to think about someone misspoke and then the other [TS]

00:15:24   person disposed and got it and they need said almost exactly the right thing I [TS]

00:15:27   remember as a kid when it was newer when when [TS]

00:15:30   you know when it wasn't so ingrained in the culture of marijuana regularly [TS]

00:15:34   anymore but it's been years since I've seen one where somebody forgot to put [TS]

00:15:38   the answer in the form of a question is when I was a kid that happened fairly [TS]

00:15:41   regularly and inevitably somebody else would buzz in with the same answer in [TS]

00:15:47   the question to take the dollars there's actually a tiny rule which is in regular [TS]

00:15:53   jeopardy in the first half of the game they will alert you and you can we [TS]

00:15:57   stayed in double jeopardy you cannot if you say it without being questioned its [TS]

00:16:02   automatic wrong is that a new role I don't remember a couple years I've got a [TS]

00:16:07   couple years ago I know it's funny they just because the second half he later [TS]

00:16:11   became get it but that's your problem doesn't and you have to have the heart [TS]

00:16:16   of a gambler to the really play aggressively on the daily doubles like [TS]

00:16:20   this is it richard too hard to see you [TS]

00:16:24   yeah he's in cuz you if you can it's more likely you are to know the category [TS]

00:16:27   you may have answered questions in the category C you know the kind of [TS]

00:16:30   direction they're taking and then you can go all out and so Roger Craig who is [TS]

00:16:35   now the number that for where authors display stand so far [TS]

00:16:39   number four all-time regular-season winner Roger Craig he won $77,000 in one [TS]

00:16:44   day because Daily Double [TS]

00:16:46   and they got another and it made sense because he knew the category and he [TS]

00:16:51   could have lost but daily doubles twice in a row but it didn't it's funny it [TS]

00:16:57   didn't I don't think it was a bad game decision because he was competent enough [TS]

00:17:02   and he could have much money at that point so there's a point where you've [TS]

00:17:06   already won enough money when enough days like you know you're gonna be in [TS]

00:17:09   the term Tournament of Champions [TS]

00:17:11   you have to psychologically want to win more than you were afraid to lose you [TS]

00:17:18   have that's exactly right and do something about that like we're sitting [TS]

00:17:21   position and you're like I could get the highest score writer like let's say [TS]

00:17:24   you've got thirteen thousand and I've got eight thousand [TS]

00:17:28   and you get the daily WTO and normal conservative person is gonna think we'll [TS]

00:17:33   have all i'm up by five thousand already I don't want to risk it I wanna stay up [TS]

00:17:37   even if I get it wrong whereas it's probably a better game theory strategy [TS]

00:17:41   to just go for it you know you know the other players play you know you're doing [TS]

00:17:47   you look at the board if there's time left because you can win the game right [TS]

00:17:50   there on that play [TS]

00:17:51   yeah I mean I lost I did at Wrigley Doublemint the game and I thought I lost [TS]

00:17:55   at five grams and I was going close the enemies of terrible game we're all [TS]

00:17:58   playing we're all off my debt all five grand and I said George Sand's instead [TS]

00:18:03   of George Sand I will never forget you know also tall but I still came back [TS]

00:18:07   after a bit I got another daily double doubles in a row and if I had said [TS]

00:18:12   saying I would have won the game so it was the right choice it was a category I [TS]

00:18:16   knew I'd answered I think the other three or four questions correctly so is [TS]

00:18:20   absolutely right choice and I lost in exactly the right way to lose the thing [TS]

00:18:33   they just finished the five minutes ago a black day the thing that drives the [TS]

00:18:40   blackjack players not if they think that they know the right way to play somebody [TS]

00:18:44   else is playing differently is that then after the guy plays wrong according to [TS]

00:18:51   them whether it's the modern era if you don't play the mathematical basic [TS]

00:18:55   strategy are back in the sixties when people started to and then the next card [TS]

00:18:59   comes out and if it had been the other way around would have you know busted [TS]

00:19:04   the dealer and everybody would have won or whatever they blame the player as [TS]

00:19:08   opposed to as opposed to excite you know like so you know let's say I've got a [TS]

00:19:16   fifteen on the last player to go I've got a fifteen and the dealer as it [TS]

00:19:21   twenty and its 1968 and everybody thinks I should just stay because I could bust [TS]

00:19:25   but I know that I should what I should do is hit because 15 against it dealers [TS]

00:19:30   10 I'm probably gonna lose anyway to terrible hand but I'm gonna lose less if [TS]

00:19:35   I hit lose less out of a play the same here and a thousand times [TS]

00:19:39   I'll lose fewer time so I hit and I take let's say seven and I bus 22 now then [TS]

00:19:47   the dealer turns over their cards and and updated the dealer has 16 and [TS]

00:19:53   they're so the DRS to hit and pulls a 42 have 20 and the dealer wins whereas if I [TS]

00:19:58   had just done what everybody thought I should do and stay on this particular [TS]

00:20:02   hand the dealer would have busted and everybody else who is still in the game [TS]

00:20:06   with a 10 ICC statistically gonna annoy people because that's going to happen [TS]

00:20:09   frequently enough so you come out ahead right and in specific games are going to [TS]

00:20:13   be leaving people and most people don't you know they they don't have any [TS]

00:20:18   concept of you know statistical what's the what's the phrase at large enough [TS]

00:20:25   sample said to be statistically valid right now you know one hand anything [TS]

00:20:30   could happen right some asshole could have it twenty and hit and get an ace to [TS]

00:20:34   make 21 mean it's like the stupidest thing you could do but you know [TS]

00:20:37   sometimes it's gonna work right when I was 13 cards in the deck is an ace it [TS]

00:20:43   doesn't make the right play but then somebody will say we'll see if you won [TS]

00:20:46   its proof that you did the right thing and if you lost its own [TS]

00:20:50   into insanity is people develop their theories in the areas of their not [TS]

00:20:54   statistically valid I mean gets back to the Moneyball thing right Moneyball is a [TS]

00:20:58   battle between people going by their gut which is often wrong and by the [TS]

00:21:02   statistics which which are statistically you know we're in this piece the [TS]

00:21:07   magazine and Michaels wrote a great article called three strikes you shot [TS]

00:21:12   about ten years after Moneyball and what it changed in baseball and there's tons [TS]

00:21:17   of people who still reject ten years later watching the results of it they [TS]

00:21:21   still think everything is a flu shots right there in the big game you know the [TS]

00:21:24   big show they know what's going on and so you obviously don't know cause you to [TS]

00:21:29   play baseball in whatever it's like I'm sorry the statistics are right they are [TS]

00:21:32   and it kind of sucks but they are actually correct yeah absolutely [TS]

00:21:38   less romance [TS]

00:21:39   statistics yeah you still hear about that they're still like old-time [TS]

00:21:42   baseball scouts who just you know don't look at the numbers and just look at how [TS]

00:21:46   the guy looks you know judge eventually they will be and there's a there's a [TS]

00:21:52   little things to like there's a surprising you know it's one of those [TS]

00:21:55   things it's kind of hard to measure because it's it's effectively subjective [TS]

00:22:00   but that better-looking players handsomer young men tend to be scouted [TS]

00:22:06   hired then home layer players sure right and that's you know just you know one of [TS]

00:22:12   those ways you know that good-looking people just have you know better fortune [TS]

00:22:18   in all aspects of life but even in like sports they end up getting better [TS]

00:22:22   scouting reports then players this is a cross I haven't been forced to bear [TS]

00:22:27   there's a site called jeopardy hotties but i wanna tell you what's funny about [TS]

00:22:33   it is it is it is I went to this site and I was like I'm not on it so boring [TS]

00:22:40   boring article which is funny I was no picture of me there's a link to me but I [TS]

00:22:44   look through it I gotta say things about it was non hetero normative and it was [TS]

00:22:49   not on gender normative so the people that the person who had posted these [TS]

00:22:53   pictures for years and years it is not like I only like certain aspects of [TS]

00:23:01   society attractive blonde women it's all kinds of people and I agree the men the [TS]

00:23:07   women the people of different you know [TS]

00:23:09   orientations and so forth like it's also next is a celebration of his duty across [TS]

00:23:15   the lot of different storms but I'm not so terrible analyst of talk show the [TS]

00:23:23   talk shows so we're talking about mark off and all these statistics whatever I [TS]

00:23:30   know you and some questions we hinted around yeah let me do the first sponsor [TS]

00:23:36   in that will get dig into it because that's really why I feel like it's the [TS]

00:23:41   whole bit clinton has reached a breaking point and then build up we have to [TS]

00:23:44   establish credibility members [TS]

00:23:48   this kind of related as the Laughing Man so there's a lot of gambling our first [TS]

00:23:54   sponsors are good friends at igloo igloo is an internet you'll actually like I [TS]

00:24:00   love that too looking to build with easy to use apps that help you work with your [TS]

00:24:04   teams shared calendars private twitter-like microblogs microblogs file [TS]

00:24:12   sharing and more on our website you can go check it out but where they might [TS]

00:24:17   need to talk to you about his SharePoint so igloo partnered with Osterman [TS]

00:24:22   research to study the challenges businesses face when implementing [TS]

00:24:26   SharePoint SharePoint is Microsoft Internet product that dates to like 1983 [TS]

00:24:33   or something to build a whole page about it you can go see it go to this site [TS]

00:24:37   includes software dot com slash the talk show and he came from the show and then [TS]

00:24:43   they have the way people are linked to their new research but there's five main [TS]

00:24:47   points that they got from the research number one SharePoint doesn't work well [TS]

00:24:50   on mobile igloo has responsive web pages for all the aspects of it so everything [TS]

00:24:58   looks great on any kind of mobile device [TS]

00:25:00   any kind of cell phone with a WebKit browsers gonna work great with sure with [TS]

00:25:06   seconding SharePoint is too expensive [TS]

00:25:11   third it requires too many people got a license of a lot of people just to get [TS]

00:25:16   started using it and then the last point is that ends up no one no one actually [TS]

00:25:22   use it it gets put into place in you know from top down [TS]

00:25:27   orders from I T department and then with such a pain in the ass to use what [TS]

00:25:31   happens is the team's end up using other products anyway are going you know [TS]

00:25:35   around the system to share just to get stuff done cuz nobody actually use it [TS]

00:25:41   lou is a thin layer team will actually use they show you their website does [TS]

00:25:47   show you exactly how they do these things better with actual case studies [TS]

00:25:52   from actual customers and reports from analysts they just one product [TS]

00:25:59   Leadership Award from Frost and Sullivan and IDC picked include a power their own [TS]

00:26:03   customer community so go check them out here is the last thing you need to know [TS]

00:26:07   it's free to use with up to 10 people and very affordable after that so you [TS]

00:26:14   can get started tried out with up to 10 people if you only have fewer than 10 [TS]

00:26:18   people you can just keep using it for free [TS]

00:26:21   amazing so go to English software dot com slash the talk show and and check [TS]

00:26:26   them out [TS]

00:26:27   ok [TS]

00:26:28   so I've been putting it off I am vaguely familiar with it but I need you to do I [TS]

00:26:36   really do I need you to explain this to me because I kinda am and I you know and [TS]

00:26:42   I was good at math I really you know more mathematically that kind of kind of [TS]

00:26:47   get the basics of math but I don't know I feel like and it's it clearly I mean [TS]

00:26:57   it's maybe even with the the criminal stuff going on at the Mount dioxin the [TS]

00:27:01   other place now it would still be in the news more and more you know it seems [TS]

00:27:08   like it's a rising tide regardless of those things but then you know what I [TS]

00:27:15   want that too so we'll start from the top [TS]

00:27:18   ok I think there's three things you break it down to three things that you [TS]

00:27:23   have to understand all of which are relatively easy to understand [TS]

00:27:26   ok so big queen has like I guess it's three different aspects one is that the [TS]

00:27:34   bitcoins themselves are just a bundle of cryptographic information of which the [TS]

00:27:38   person who possesses it's sensibly has a secret that only they know about [TS]

00:27:43   whatever quantity of bitcoins are in a particular address as it's called the [TS]

00:27:49   second is that only transfer bitcoins other people you don't receive them you [TS]

00:27:54   only send them and that is again a cryptographically signed transaction and [TS]

00:27:59   that he becomes permanent in a way that I could talk about so you have a Bitcoin [TS]

00:28:04   in you wanna give it to me so I never receive it [TS]

00:28:07   you not technically what's interesting is a transactions are all one way only a [TS]

00:28:12   transaction sends money from one addressed to another and the big wedding [TS]

00:28:16   dresses and wallets are interchangeable terms like the address is this like the [TS]

00:28:20   destination it contains some some of bitcoins from you once at OC which is [TS]

00:28:25   the tiniest up to whatever quantity have so so I've got an address and you send [TS]

00:28:33   me money and I send you money but I don't receive money per se so there's [TS]

00:28:38   there's a big way address [TS]

00:28:40   there's a transaction and then there's the issue of how transactions become [TS]

00:28:45   permanent which is Bitcoin mining those are sort of the three pieces think each [TS]

00:28:50   of them like when you lump it all together it's like what the hell so [TS]

00:28:54   fundamentally what between is about is decentralized trust so no two parties in [TS]

00:29:01   a bit quiet transaction or in any aspect the big quake was system need to have [TS]

00:29:06   any implicit trust in each other like the system itself handles trust by using [TS]

00:29:11   public key cryptography which essentially assures that once you create [TS]

00:29:16   a secret a public keep it publicly peer uses one of multiple different formulas [TS]

00:29:21   but let's say uses a diff is one that people as the diffie-hellman key that [TS]

00:29:28   works and what would you do when you create public-private key pair is using [TS]

00:29:31   very very large prime numbers and you went with two pieces at the end so I [TS]

00:29:36   don't have to I mean you can look up the details of what he wanted her to pieces [TS]

00:29:39   in one piece is a private key that you possess and you keep it absolutely [TS]

00:29:44   secret no one else may never have access to it onto store anywhere has access [TS]

00:29:48   because this private key proves your identity [TS]

00:29:51   the possession or in the possession part of it like you being able to deploy the [TS]

00:29:55   key gives you all the power over a transactions that involve that [TS]

00:30:00   particular public key public-private key pair of you if you got your hands on my [TS]

00:30:06   private key you could send my bitcoins to somebody else [TS]

00:30:13   exactly and this is truly public key cryptography is used all over the place [TS]

00:30:17   as the basis of SSL TLS used for web encryption is used in age transactions [TS]

00:30:23   in the same way so for example to if you had my private keys for SSH [TS]

00:30:28   you could log into during fireball over SSH exactly can't get on the command [TS]

00:30:35   line on daring fireball done that if you had my private keys yeah and the notion [TS]

00:30:40   with public key cryptography is that the public part of this you can be freely [TS]

00:30:44   distribute it and no one can of computation power in the world over I [TS]

00:30:50   forget how many years of its the heat death of the universe [TS]

00:30:52   or not that would allow you to use any known technique to reverse engineer [TS]

00:30:59   brute force attack and recovered the private key so resistant it's an [TS]

00:31:03   asymmetrical key system and so the public he gets used broadly I get any [TS]

00:31:08   system this is this is how you can sign something with the public case you take [TS]

00:31:14   your data and you sign up with the public hearing results result is a [TS]

00:31:19   cryptographic hash that only the recipient with the private key ally [TS]

00:31:24   owner the private key can decrypt that so it's a way for a one-way method for [TS]

00:31:28   someone to send you something securely that only you are the possessor that [TS]

00:31:32   private he can read that's how it gets used you know a lot of time it's true of [TS]

00:31:36   web pages when you do a web transaction the first thing that happens asshole [TS]

00:31:40   digital certificate thing of which we've now found that was recently last three [TS]

00:31:44   days [TS]

00:31:45   not just go to fail but there's a new one that dates back many years and is [TS]

00:31:48   also suspicious and how safe that says let's keep that in mind let's come back [TS]

00:31:54   but the idea that you're [TS]

00:31:57   you have information you want to pass in general the way cryptography is used to [TS]

00:32:02   secure a secret in in Bitcoin it's not securing a secret it's proving ownership [TS]

00:32:07   and identity so in the Bitcoin system you know there is no inherent value [TS]

00:32:13   what's the value is that a set of numbers representing some quantity of [TS]

00:32:18   bitcoins can only provably belong to a person who owns the private key that [TS]

00:32:23   corresponds to that address that contains a number of bitcoins so nobody [TS]

00:32:28   else so no one else can do anything with those crazy cannot prove ownership [TS]

00:32:33   because they cannot because the private key can be used to sign transactions [TS]

00:32:39   that by using the publicly available he can be proven to only have been signed [TS]

00:32:44   by someone who possesses a private key so there's an absolute way to prove that [TS]

00:32:48   you own a thing because you have the private key and there's I don't think [TS]

00:32:52   any other systems things that are parallel but there's no method in the [TS]

00:32:57   real world that corresponds that there's no physical method you know biometric [TS]

00:33:03   identification is one of things but there are ways to fool that [TS]

00:33:05   and you know to the curve I got nothin cutting off and pickling people and so [TS]

00:33:10   forth [TS]

00:33:10   joked about the iPhone 5s so big queen the idea that there is no way to because [TS]

00:33:18   of the process by which they're made there's no way to forge a Bitcoin you [TS]

00:33:22   can't counterfeit and you can't fraudulently transferred from one party [TS]

00:33:27   to another with the access to that first parties private key so that'll be [TS]

00:33:34   surprised if I had a copy of a Bitcoin belong to you now have the I can copy [TS]

00:33:41   the Bitcoin and I can have it on my my computer I can't do anything with it [TS]

00:33:45   because i dont have you were private key that's right what's weird is big claims [TS]

00:33:50   are not store any where some level at the weird thing is let's get to the [TS]

00:33:54   transaction work this explains the next thing so so big win at some level is [TS]

00:33:59   it's a series of transactions is not actually late term banking system is [TS]

00:34:06   ridiculous of course but so you know I do things as weird as like when I was [TS]

00:34:10   serving office space with Jeff Carlson he would send me rent check I paid the [TS]

00:34:14   rent for the whole office and he would go to our credit union he would fill out [TS]

00:34:17   a thing it would make a check and ship it from the Midwest in an envelope it [TS]

00:34:22   would wind up at the office I would take it I would scan the check and a scanner [TS]

00:34:25   electronically deposited destroy the check and that's our banking system [TS]

00:34:29   right like that's the USA USA USA as I mean people are our listeners in europe [TS]

00:34:35   like what I don't think most people in Europe I i most people our age in Europe [TS]

00:34:41   have never even like sent it check yes exactly like checks in in this is [TS]

00:34:46   America checks of now the volume of texts gone way way down because a whole [TS]

00:34:52   bunch of reasons including electronic deposit but so let's to wire transfers [TS]

00:34:59   easier case so because my my my credit union has added three wire transfers a [TS]

00:35:04   couple years ago from person to person stuff so when I don't wire transfer you [TS]

00:35:08   know it's a ledger transactions my bank has a record that its story know it owns [TS]

00:35:13   a certain amount of money and it transfers at another bank of that bank [TS]

00:35:16   agrees that you know yes and that value is transferred forgetting the federal [TS]

00:35:20   the Federal Reserve involved forget there's like some weird thing but like [TS]

00:35:25   they're just transferring money in numbers around but there's no security [TS]

00:35:27   in that process and it's abused all the time you hear all the stories about [TS]

00:35:30   money being transferred out people's bank accounts Ashley companies being [TS]

00:35:34   happy money being transferred in Western Union things and checks being cut the [TS]

00:35:38   system is a secure but in essence it is just that is it is a decrement occurs in [TS]

00:35:44   one banks ledger increment occurs in another that's the transaction between [TS]

00:35:48   doesn't work that way but Quinn has this thing called the public block chain in [TS]

00:35:52   this is distributed worldwide and its gigabytes in size now it is a record of [TS]

00:35:57   every single transaction has occurred since Bitcoin went live like for over 45 [TS]

00:36:02   years ago now and the transaction ledger if you wanna figure who owns a Bitcoin [TS]

00:36:07   you can trace back the address to its origin and the most the current owner is [TS]

00:36:12   the person who is most recently signed it with their private key they've they [TS]

00:36:15   are versatile person who is most recently received it by virtue of the [TS]

00:36:20   Queen being signed over with the previous owners private key so and so I [TS]

00:36:27   have an address addresses you know one-two-three-four a be CDF right and [TS]

00:36:32   you can transfer money to me at that address by signing a set of bitcoins [TS]

00:36:38   with your private key that corresponds to this but Quins that transaction [TS]

00:36:43   occurs it's locked into the block and i own those there's no transfer from 2.22 [TS]

00:36:49   recognized globally by analyzing the chain that I now possess those and have [TS]

00:36:53   the authority to spend them in some way and that's why all this very very [TS]

00:36:56   different than any monetary system or transaction basis before and it's [TS]

00:37:01   definitely novel yeah it's almost like a central ledger except that it's not [TS]

00:37:05   recording deficits in addition [TS]

00:37:07   transfers and that's what's baffling so you have to [TS]

00:37:09   entire sequence of transfers and the most recent transfer winds essentially a [TS]

00:37:14   surprise ownership so this is where you get into the third part which is like [TS]

00:37:17   our transfers made permanent how do they become a permanent record and that's [TS]

00:37:22   where you get to Bitcoin mining which defeats some people because it seems [TS]

00:37:25   it's so we are at some level mining is the process of finding a so so miners [TS]

00:37:33   run extremely specialized hardware that all they do is they generate tons of [TS]

00:37:37   shock one cryptographic hashes based on specific numbers so the system works [TS]

00:37:45   like this [TS]

00:37:46   people are constantly engaged in between transactions and they generate these [TS]

00:37:52   transactions to say johnnie the city one bit quiet so I use my software its signs [TS]

00:37:57   over 120 your public-address sign in with my private key that transaction is [TS]

00:38:03   then broadcast on the global set of peer to peer nodes and are used by Bitcoin [TS]

00:38:08   miners and other people involved in ecosystem miners are constantly grabbing [TS]

00:38:12   a set of transactions and they get a small fee small to large be sometimes no [TS]

00:38:17   fee for each transaction that they grabbed still take let's save the number [TS]

00:38:20   of thousands transactions they'll take those and they combine that with some [TS]

00:38:26   other information that's unique to me it's randomly generated and they start [TS]

00:38:30   churning away on creating Shah one shoes so a shot one hash hash is where you [TS]

00:38:37   take input it runs algorithm that performs a number of transformations on [TS]

00:38:42   it and the number that comes out the end is predictable it's always the same [TS]

00:38:45   based on the same input but any change to the input no matter how slight [TS]

00:38:50   results in a non deterministic Lee highly variant outwards so if I put in [TS]

00:38:57   John Gruber into child when I get one thing if I put johnnie Graber the result [TS]

00:39:02   is you cannot predict what will be will be so vastly different and there is no [TS]

00:39:06   known way to easily predict how [TS]

00:39:09   to reproduce the same hash from different input so i cant just create a [TS]

00:39:13   slightly different record the same hash so the actor hashing proves that I did [TS]

00:39:19   it because you can take the same inputs run into the same algorithm and produce [TS]

00:39:23   the same results so here's what mining is mining is you're trying to find a [TS]

00:39:30   certain hash but you don't know how to create a hash that match that pattern [TS]

00:39:33   you just have to create billions upon billions of them in Bitcoin you're [TS]

00:39:37   looking for a house that has a certain number of an starting zeros and the more [TS]

00:39:42   computation power that enters into the Bitcoin ecosystem because it's now a [TS]

00:39:47   ridiculous amount the harder the level of finding that number is a keep [TS]

00:39:51   increasing the difficulty is a dynamic thing that's reset every two weeks by [TS]

00:39:54   the system and you have to find like like a hash that's less than you know [TS]

00:39:59   the numbers incredibly long as her meet its long you have to find a half that [TS]

00:40:04   has a certain number of leading zeros and you could churn for you know you [TS]

00:40:09   could run through a trillion transactions and you might not find one [TS]

00:40:12   that meets those parameters [TS]

00:40:13   III since I think so I've heard it described not mathematically similar but [TS]

00:40:20   in layman's terms similar to looking for prime numbers it's a needle in a [TS]

00:40:25   haystack search you're looking for prime numbers each one gets harder and harder [TS]

00:40:31   to find because he has accepted this is random is the problem prime numbers you [TS]

00:40:36   know what you're looking for and you don't there's no I think at this point [TS]

00:40:40   they don't know where the next prime numbers right there's no prime number [TS]

00:40:44   space in this case there's a space of all possible hashes and because you [TS]

00:40:48   don't know which inputs will these two parameters one is you don't know which [TS]

00:40:52   inputs produce which crashed so you don't know how to predict getting one [TS]

00:40:55   with a bunch of zeros and the other is that you're taking up a whole bunch of [TS]

00:40:59   material as a minor and sticking it together it has to be that material [TS]

00:41:03   isn't set by you can't define the starting point of the transactions that [TS]

00:41:07   your mining so but involves a real amount of computational power the last [TS]

00:41:14   time I checked it was I think it was two hundred times the computation power of [TS]

00:41:18   the top 500 supercomputers in the world to find to mind but claims worldwide and [TS]

00:41:26   at this point I've read that it it's much more expensive to power the [TS]

00:41:36   computer that's doing like you said most of the people doing now have specialized [TS]

00:41:40   hardware if I just put software on my side like a brand new Mac and just had [TS]

00:41:46   it start mining for bitcoins I my expectation is that I would spend more [TS]

00:41:51   on electricity running a computer than the value of the Bitcoin might [TS]

00:41:54   eventually trying that's that's right I don't know what it is exactly the same [TS]

00:41:58   exact price a bit fallen but this thing about difficulty lake so big queen [TS]

00:42:03   started on PCs right and then people got more powerful PCs in stock more the [TS]

00:42:07   mining and so I stuck more processors and then they started using graphical [TS]

00:42:11   processing units of course GPUs are very efficient at certain kinds of [TS]

00:42:15   calculations then they started using these things for programmable gate [TS]

00:42:19   arrays I think I forgot the name from there is a specialized term there like a [TS]

00:42:23   programmable chip that you can program even more speed then they went to a 60 [TS]

00:42:29   which are custom circuitry designed specifically to do char one calculations [TS]

00:42:35   a 600 and 1000 metre process to I think they're down 28 29 or something to a [TS]

00:42:40   financial crisis now whatever the smallest things at that level it speeds [TS]

00:42:44   up in speeds up the tab the efficiency ratio of power to calculations not only [TS]

00:42:49   can you calculate faster but the power for calculation get slower you cannot [TS]

00:42:54   compete on a PC or even a field programmable gate array it is called [TS]

00:42:58   against custom [TS]

00:43:01   dynamometer race in other words though that in just four years we've we've gone [TS]

00:43:06   through several generations [TS]

00:43:09   of Computer Engineering hardware computer engineering [TS]

00:43:14   devoted specifically to Bitcoin mining year and it's it's not generalizable to [TS]

00:43:21   modernizing hardware for this one specific so here I just found the number [TS]

00:43:26   here's the numbers at this exact second there are three hundred and fifty-five [TS]

00:43:30   thousand had a flops trillion that's quadrillion operations per second [TS]

00:43:38   355 Quinn chilean floating point operations per second are being used [TS]

00:43:43   globally to mine bitcoins and the top supercomputer in the world has what is [TS]

00:43:50   it has like under a hundred terrified so this is this is here to add them all [TS]

00:43:56   together the 500 or not 3000 teraflops this is hundreds of times more than the [TS]

00:44:03   top 500 supercomputers in the world combined being used for the specialized [TS]

00:44:07   purpose consuming god knows how many gigawatts energy just to find this [TS]

00:44:13   needle in the haystack that lets them in a kind so when when a minor Mensa coin [TS]

00:44:17   when they find this number they broadcast their solution there proof of [TS]

00:44:20   work worldwide across the peer-to-peer network it happens on average in less [TS]

00:44:25   than 10 minutes every 10 minutes every 10 minutes a new Bitcoin is found on [TS]

00:44:29   average somebody finds in fact there are these concerns because it was too hard [TS]

00:44:33   for any individual to bear this so there are groups of minors worldwide that band [TS]

00:44:37   together no one of which has more than I think still twenty or thirty percent as [TS]

00:44:41   a concession all worldwide capacity which is a whole other issue there and [TS]

00:44:47   so some minor in this construction is found in the broadcasting it out there [TS]

00:44:51   to get out there as fast as possible [TS]

00:44:54   someone else and the next microsecond might find a different needle in the [TS]

00:44:57   haystack the moment that's broadcast it gets a broadcaster block and the block [TS]

00:45:03   is a break that that's placed on top of the ball or more during the break [TS]

00:45:07   includes a reward to you as a minor which is 25 bitcoins and that still [TS]

00:45:11   current exchange rates is not [TS]

00:45:13   horrible right now thats whats exchanges like 600 bucks where's that she get 25 [TS]

00:45:19   of them when you finally every four years on average that that we would have [TS]

00:45:26   so was fifty bitcoins for the first four years or so and I was 25 it'll be twelve [TS]

00:45:30   and a half in a few years and this is part of the decreasing money supply is a [TS]

00:45:34   finite number of bitcoins I will ever be mined in the current protocol system [TS]

00:45:38   about 21 million so you're a minor you go boom I found one but that's still you [TS]

00:45:43   don't win you don't win when you find a Bitcoin it's great but you then you have [TS]

00:45:47   to broadcast this out your blog that has all the transactions that are in your [TS]

00:45:52   block and some other numbers and information in it has to be accepted by [TS]

00:45:58   notes all over the world who thin immediately begin calculating the next [TS]

00:46:02   block in each block is cryptographically tied to the one before it [TS]

00:46:06   this is the wonderful secret sauce of Bitcoin this is actually almost more [TS]

00:46:10   important than the public key cryptography lets you protect each [TS]

00:46:14   Bitcoin quantities identity and and ownership the block chaining is it [TS]

00:46:21   builds upon each transaction each block so if you so what can happen in this [TS]

00:46:27   happens frequently is minor in yo Africa [TS]

00:46:32   finds a pic when they transmit their block out and its worldwide [TS]

00:46:35   simultaneously within some short period time another minor has also found based [TS]

00:46:40   on the same previous block they have found a new a new magic number eight and [TS]

00:46:45   they broadcast Thurs so now you have two different chains which have each have [TS]

00:46:50   different ending blocks all the rest of the same going back to 2009 and initial [TS]

00:46:55   deployment but this the variance in what could happen though is different nodes [TS]

00:46:59   on the Bitcoin network because they're still centralized hit accept different [TS]

00:47:04   chains so you can have two different chains that are growing parallel but one [TS]

00:47:08   of them but they don't have the same information for the last block in this [TS]

00:47:12   can go on sometimes for one or two blocks and at a certain point one of [TS]

00:47:15   them has probably shown to do more work like it's clear that it happened faster [TS]

00:47:20   and more work was consumed [TS]

00:47:22   and then they'll be this reconciliation which I believe is automatic in which [TS]

00:47:26   all the nodes in the world except the longer chain that is the chain that has [TS]

00:47:30   more blocks on it faster when that happens all the variants chains which [TS]

00:47:35   may have one or two blocks that are not the same as the one that's been accepted [TS]

00:47:40   those are discarded all the transactions that were exclusively in those blocks [TS]

00:47:45   and did not get minted into these new blocks have to be committed against New [TS]

00:47:51   blocks and you see why this gets complicated so somebody who founded [TS]

00:47:55   found one of those blocks ends up with with nothing because I expected because [TS]

00:47:59   it was a smaller chains precisely and this is a is a process that's that's [TS]

00:48:05   actually this is part of the elegance of you know it's a little crazy at one [TS]

00:48:09   level but it is also a really beautiful idea that then no one has to agree on [TS]

00:48:14   anything you don't have to go into a reconciliation bill which block whatever [TS]

00:48:17   it's no longer block wins and I think yeah I think whatever anybody would [TS]

00:48:21   think about Bitcoin whether you think it's really super is going to [TS]

00:48:24   revolutionize all of digital commerce in may be real world commerce and that it's [TS]

00:48:29   maybe you think it's a great even with the recent stuff it's a great place to [TS]

00:48:33   invest your money or you think the whole thing has gotten ridiculous scam I think [TS]

00:48:41   everybody would agree that mathematically it's beautiful it's a [TS]

00:48:44   beautiful system it's it's gorgeously designed if you disregard any the [TS]

00:48:49   currency speculation part of it I just admire in the paper that you know [TS]

00:48:53   so-called photo she is maybe a composite multiple people but is still preserved [TS]

00:48:58   his or her they are in on it [TS]

00:49:00   anonymity that paper is actually incredibly legible I've read it and I am [TS]

00:49:05   NOT a I'm not a cryptographer and I my math background is not deep enough to [TS]

00:49:10   really really get it but it's actually model of clarity about what's going [TS]

00:49:15   about what the antennas and how it works and all of the [TS]

00:49:19   attributes and that people have have persisted and the idea so so you know [TS]

00:49:23   this is you understand but this has been quite as you have a quantity of currency [TS]

00:49:29   that's protected in a public key which we all understand how public-private [TS]

00:49:33   he's working so only the owner private he can do it [TS]

00:49:35   a transaction transfers value from one party to another miners make their money [TS]

00:49:40   by doing these fiendishly large number of calculations but they have to be on [TS]

00:49:46   the winning side if multiple blocks are being minted it once the longest chain [TS]

00:49:51   for it to be perfect so here's the other part is beautiful and again doesn't [TS]

00:49:55   really relate to whether it's valid as a currency or anything else but it is a [TS]

00:50:00   fantastic transaction system if you don't care about the value at all [TS]

00:50:03   there's no contradicting is a beautiful transit system so here's the deal the [TS]

00:50:08   amount of computation I described is ridiculous right after a few blocks go [TS]

00:50:13   by you would need more computational power than exists in the Bitcoin network [TS]

00:50:18   to go back a few blocks and create a new chain so if the longer chain always wins [TS]

00:50:23   if any entity like a consortium controlled more than 50% in some people [TS]

00:50:28   say the threshold is lower but let's say just at the Dr practical level but the [TS]

00:50:33   theory is if you own under control more than 50% of the bit Queen mining [TS]

00:50:40   capacity worldwide you will always win you will always have the longest chain [TS]

00:50:44   because you can always calculate faster you can outpace everyone else put [TS]

00:50:48   together so this would let you do things like to start the system and double [TS]

00:50:51   spend in a mess of transactions you could do all kinds of bad things the [TS]

00:50:55   Consorzio don't like this and so when anyone consortium has reached a point [TS]

00:51:00   where they're worried about having too much capacity they voluntarily split off [TS]

00:51:05   the breakdown hope things are do all sorts of stuff because it's not in the [TS]

00:51:09   benefit of the system's integrity even for them to real that much control it [TS]

00:51:13   would destabilize [TS]

00:51:15   the validity of the system but it also means that it's a government entity [TS]

00:51:19   let's see iraq says we hate between Russia primary simple says it's going to [TS]

00:51:25   stay W us destroy Bitcoin and you know Putin maybe he's got whatever they would [TS]

00:51:29   have to spend an enormous amount of money ridiculous amount of money to [TS]

00:51:33   build up the capacity just to match the current system then they would have to [TS]

00:51:37   be out there meeting like crazy in you know and be able to overtake everyone [TS]

00:51:42   else in the world and continue their free time and also people would notice [TS]

00:51:47   this is an anonymous process they know where the traffic coming from the know [TS]

00:51:50   what the addresses are so there's really it's not that there's no way for someone [TS]

00:51:55   to subvert the system by gaining control of more than 50% or even a lower [TS]

00:51:59   threshold of mining capacity more that the bar is so high and so expensive now [TS]

00:52:03   it's just very very unlikely one lie I wanna keep gone but here's one last [TS]

00:52:11   question I have about this before we do thanks a bunch of break which is that my [TS]

00:52:16   understanding of its common knowledge that one of the other things about the [TS]

00:52:23   Bitcoin system from the get-go is that there's an upper bound on the eventual [TS]

00:52:28   total global bitcoins that will exist that at a certain point that's it [TS]

00:52:33   the last Bitcoin block will be mind is a trait yeah this is this is the the [TS]

00:52:40   twenty its 21 is approximately 21 million it's just below 21 million and [TS]

00:52:45   this is big queen is clearly influenced by Ludvig when he says that he was the [TS]

00:52:50   Austrian economist that affects a lot of people with specific economic views and [TS]

00:52:56   one level is a test of economic theory by not allowing there's no inflation [TS]

00:53:03   Bitcoin per say you can't print new money the money gets released at regular [TS]

00:53:08   intervals by the by the minors and we should also point out there's this thing [TS]

00:53:14   I was mentioning that as as more computational capacity enters the system [TS]

00:53:18   the difficulty factors adjusted because it's the system rebalances to try to [TS]

00:53:23   take about 10 minutes between each block being rented [TS]

00:53:26   and if because she's been increasing so fast it's more like seven or eight [TS]

00:53:33   minutes but if for instance like everybody involved in this is stupid 99% [TS]

00:53:39   of people got their equipment off the difficulty factor then reduces so [TS]

00:53:44   everyone could be using CPUs again or whatever so you're not you not dependent [TS]

00:53:48   on ever increasing computational papers pencils [TS]

00:53:51   there because a shot one thing by hand so I mention that in part because the [TS]

00:53:57   the Queen creation isn't a factor of computation the computation is intended [TS]

00:54:03   to keep production at a steady pace instead of having inflationary thing [TS]

00:54:08   where someone could certainly be green Queens every five seconds is also the [TS]

00:54:12   system is there a layman's explanation for how there can be an upper limit like [TS]

00:54:17   how there can be a last but Quinn mind yet they do them of the algorithm [TS]

00:54:22   actually should say that there's there's the original paper that she wrote [TS]

00:54:26   there's an implementation that he or they created in the first couple of [TS]

00:54:32   years I understands very deeply involved before he disappeared and then there's [TS]

00:54:36   the Bitcoin foundation other parties that engage in saudi and protocol [TS]

00:54:39   improvements and software updates so the nodes the big cleanup workers have to [TS]

00:54:49   agree to a software upgrade in the roll it out and deprecated previous version [TS]

00:54:53   so there have been changes and improvements over time so right now the [TS]

00:54:58   way the protocol works is that mining delivers 25 bitcoins every 10 say 10 [TS]

00:55:04   minutes on average less and the protocol states that on a certain point after a [TS]

00:55:09   certain number of coins are generated and you can see a table you go to Lake [TS]

00:55:12   Oahe PTAs a table of it will show you what the point is actually estimate the [TS]

00:55:16   date for when this happens suddenly instead of 25 twelve and a half and then [TS]

00:55:21   in the equivalent of roughly four years or a certain number of blocks blocks [TS]

00:55:25   go by it'll be 6.25 and then it will be three point you know 125 and down yeah [TS]

00:55:33   exactly so you'll you'll get closer and closer to 21 million never quite achieve [TS]

00:55:37   it but most coins we mind within I think it was at 12 or 16 years almost all the [TS]

00:55:42   Queen's will be mind and I'll show in other words it's sort of like a calculus [TS]

00:55:45   thing where you know they're never may never exactly be a blast Bitcoin but [TS]

00:55:50   eventually it'll approach this limit of 20 1,000,000 and get ever and ever [TS]

00:55:55   closer and and there'll be ever so fractionally less value in getting a new [TS]

00:56:02   Bitcoin [TS]

00:56:03   here's the last thing free response but here's the thing that what's good what [TS]

00:56:06   this system the system suspect will happen every transaction can have a [TS]

00:56:12   mining fee attached I think some must have a mining fee attached and others [TS]

00:56:16   can be done for free [TS]

00:56:17   however miners preferentially take transactions that have these attached [TS]

00:56:21   they're not required to take empty transactions are typically those get cue [TS]

00:56:25   to me wait longer before their Premier League committed so this is an [TS]

00:56:28   interesting bit of microeconomics microphones Bishop of like a microscale [TS]

00:56:33   thing that goes on his arms in your money john but i dont wanna be a mining [TS]

00:56:36   fees I mark 0 on that it might take like a couple hours worked to get big dinner [TS]

00:56:42   maybe longer sometimes and until it's peaked in then more blocks oriented [TS]

00:56:46   after its not really permanent so that idea of instantaneous transfer his true [TS]

00:56:51   except that until the transaction is permanently baked into a block and at [TS]

00:56:56   least a few blocks of it added after it to ensure that the chain is the correct [TS]

00:57:00   chain we we can't really count that it's true there are some ways around in some [TS]

00:57:04   predictability for it but what the idea that over time those mining fees will [TS]

00:57:08   increase so that as the or decreases people have to pay more per transaction [TS]

00:57:14   fee which right now is calm the argument that the transaction fees it does not [TS]

00:57:19   have required ones most cases but transaction fees will be likely much [TS]

00:57:24   smaller compared to say credit card transaction fees or wire transfers or [TS]

00:57:28   other especially international money transfer that they will be increasing [TS]

00:57:31   number of transaction fees [TS]

00:57:32   that are given to minors to keep them actually engaged in the system and [TS]

00:57:36   making new blocks even when we were disappointed 00001 Bitcoin you get a [TS]

00:57:44   working example of free market economics yeah because if you can't get your [TS]

00:57:50   transaction notice your blog mandatories no mandatory you can just put it out [TS]

00:57:56   there and somebody wants to they can verify it put in the chain for free or [TS]

00:58:00   no fee but if you want to motivate people to prioritize your transaction [TS]

00:58:08   you can offer them yeah and if it's high enough they'll choose to do it and then [TS]

00:58:12   you really will be some there will be some mandatory fees very likely but [TS]

00:58:17   they'll be exceedingly tiny the mandatory ones when those and this this [TS]

00:58:21   sort of pure free market economics at work you could see how this draws [TS]

00:58:28   libertarian minded people to the whole Bitcoin world yes we take a break we'll [TS]

00:58:37   come back and is more I wanna talk about it quite well I do thank our second [TS]

00:58:41   sponsoring our good friends at over 80 [TS]

00:58:45   are however quite simply is the best way to buy and manage domain names you have [TS]

00:58:53   a great idea to get a domain name for it catchy memorable domain name however [TS]

00:58:59   gives you everything you need to get the job done research they have a whole [TS]

00:59:03   bunch of top-level domains to choose from [TS]

00:59:07   help you find that mean you're looking for maybe give you suggestions on [TS]

00:59:10   something close to it [TS]

00:59:12   everybody knows it's hard to find a good one hundred makes it easy [TS]

00:59:17   all sorts of domain registrars of course have searched like that the difference [TS]

00:59:24   between Harbor and typical domain registrars you do you just have to see [TS]

00:59:27   it to believe it because everybody else they're they're trying to make money [TS]

00:59:30   every other way other than just by selling you the domain names up cells [TS]

00:59:35   and also to scare me stuff checkboxes you have to uncheck to get out of these [TS]

00:59:40   add-ons and follow-ups all sorts of nonsense the worst sort of business just [TS]

00:59:47   a lot of scams policy and anybody who's ever used them however is just straight [TS]

00:59:54   forward I mean just go check out their website and you'll see right away that [TS]

00:59:58   they just doesn't even look like other domain registrars no nonsense they make [TS]

01:00:04   money by charging you for domain names and that's it [TS]

01:00:07   they have great great great customer support including something called [TS]

01:00:12   phthalates transfer service so if you've already got a domain and another [TS]

01:00:17   registrar and you're unsatisfied with that registrar and there's a very good [TS]

01:00:21   chance that you are because most register stink you can go to hover sign [TS]

01:00:26   up and they're Valley transfer service will help you or just do the work for [TS]

01:00:32   you you just give them access to the registrar and they'll take care of all [TS]

01:00:36   the DNS stuff all the stuff we need to do to move a transfer registered domains [TS]

01:00:41   from one store to another it's a great service and for most of us it's you know [TS]

01:00:48   it's because we're not experts even I have a bunch of domain names but I [TS]

01:00:52   almost never moved them or change anything to do with them so I'm not a [TS]

01:00:55   DNS expert [TS]

01:00:56   the people that however are this is what they do all day every day so you're in [TS]

01:01:02   great hands [TS]

01:01:03   everybody I know and I know a bunch of friends abuses rally service they swear [TS]

01:01:07   by it they just it sounds too good to be true that you just sign up and let them [TS]

01:01:11   do all the work for you but it actually that's actually how it works where do [TS]

01:01:16   you go to find out more easy going to hover dot com H O R dot com slash talk [TS]

01:01:23   show and I know you came from the show so happy to have him as a sponsored [TS]

01:01:31   really just go check them out and you'll be happy to back to be a couple of [TS]

01:01:43   things I want to ask you about we should talk about why I wanted to but yeah I [TS]

01:01:49   want as part of it [TS]

01:01:50   tell me about it so you may not even be one individual names said the credit for [TS]

01:02:03   creating Bitcoin goes to a Japanese mathematician named said Toshi [TS]

01:02:12   Nakamoto nobody knows an end the very least it's a pseudonym if it is one [TS]

01:02:21   person if it is the work of one person it's Santoshi Nakamoto is apparently a [TS]

01:02:25   pseudonym yeah it's i mean that's the way it's weird because you're not [TS]

01:02:31   anonymous I guess it has to be sitting there is no one has no one has proved [TS]

01:02:36   proven who this person is or if a single person today there's a suspicion and you [TS]

01:02:42   know when you read stuff you know is often when it's the work of one person [TS]

01:02:45   that way it's written and read the paper the paper reads like one person wrote it [TS]

01:02:50   so it's a group one person drafted it does not have the feel is a very [TS]

01:02:54   specific style doesn't have a feeling of a committee yeah I mean it's not a [TS]

01:02:58   citizen in the statement of a very specific there's a style to his person [TS]

01:03:01   posted prob someone as expected to be just an individual because this person [TS]

01:03:07   was actively participating in the early between us [TS]

01:03:09   sessions for years and you know there's a typical things would happen with the [TS]

01:03:13   guy who was arrested for Silk Road the Silk Road Silk Road was arrested in the [TS]

01:03:21   Bay Area he had posted something I know but you know in this is putting this is [TS]

01:03:27   like this is a purely a very common friend 62 forensics technique and I [TS]

01:03:31   heard about like oh this is so brilliant white you know I shoulda guessed what [TS]

01:03:36   they do is they look at the first time someone post under an identity on some [TS]

01:03:40   online thing and they traced back and see who fucks who follow them on Twitter [TS]

01:03:44   who reference them who link to a website who favorite like so they went back and [TS]

01:03:49   they found the Silk Road guy because they were fingerprints all over him [TS]

01:03:52   pointing to the entity that you know he eventually became so that's really a big [TS]

01:03:58   part of how they found it and you have to be very careful about so anyway that [TS]

01:04:03   no ones found that kind of pain was with you know they even though the guy posted [TS]

01:04:09   a guy probably another in other words you're saying like if somebody wanted to [TS]

01:04:13   uncover the Mac elope goin actually think predates Twitter but I say or [TS]

01:04:19   somebody else created a Mac elope like you know pseudonymous colin is the first [TS]

01:04:25   person who retweeted it linked to it did you go to Tumblr and in favor of it love [TS]

01:04:30   it under which is very clever so no one has found his fingerprints and a lot of [TS]

01:04:34   people have looked in some very clever journalists have looked after get there [TS]

01:04:38   is it wired someone did a piece with a look through a lot of likely subjects [TS]

01:04:41   they talked to a ton of people and they're pretty sure it might be this one [TS]

01:04:45   person but it's just there's not enough evidence to show that is the reason [TS]

01:04:51   people care who Satoshi Nakamoto is is because Satoshi Nakamoto has like five [TS]

01:04:55   million bitcoins I think it's it's it's a 45 percent of the outstanding but [TS]

01:05:01   Quins it's a huge number because they were the only person mining initially [TS]

01:05:05   and so whoever that is tryna money even with the current you know the drop to 50 [TS]

01:05:12   dollars Bitcoin this person conceivably has like I don't know what it's like a [TS]

01:05:16   billion dollars eight hundred million dollars it's a huge amount of money if [TS]

01:05:19   they wanted to convert it slowly [TS]

01:05:21   cash now because between all the addresses are public people now watch [TS]

01:05:26   those early bitcoins and see if they get transferred you know to get two [TS]

01:05:30   exchanges are cashed out are used for things and apparently they're all very [TS]

01:05:33   static so that's another aspect of bitcoins that all the transactions are [TS]

01:05:37   done in public the identities are not tied to the bitcoins a person's identity [TS]

01:05:41   isn't but the big coins you can see them move through time and that's an aspect [TS]

01:05:47   of both like and hate about it so you can get somebody who owned like you said [TS]

01:05:54   maybe some five million maybe five million probably too big a number of [TS]

01:05:56   these only 21 it's a big percentage though let's just call it a million [TS]

01:06:04   a lot of money somebody can watch those a million you know look at the Beverly [TS]

01:06:08   bitcoins and if a bunch of them start moving you could you could safely assume [TS]

01:06:13   that it's no wonder whether Nakamoto is a group of some sort of entity or [TS]

01:06:20   something like that but this is the part that to me makes it seem most like a [TS]

01:06:26   science fiction film probably a novel because I think the math is not his [TS]

01:06:32   cinematic is you know but either way it's like a science fiction story is [TS]

01:06:39   that there's a a sort of heroic mystery figure at the top of it you know an [TS]

01:06:47   individual who wrote this paper and made this system and then disappeared very [TS]

01:06:53   cinematic in that sense and it's almost now like a mythic figure yeah not to [TS]

01:07:02   exaggerate in the least right that there's this mythic figure who created [TS]

01:07:05   this beautiful system stands to be enriched personally tremendously by if [TS]

01:07:12   if they so choose [TS]

01:07:14   and then and and was very very very active at the outset and I wasn't just [TS]

01:07:20   like the white paper dropped in the system within the place there's you know [TS]

01:07:24   I guess was it mailing lists I don't know but there's a lot of online [TS]

01:07:28   communication from Satoshi Nakamoto [TS]

01:07:33   just disappeared and the dog did he did he write like ok I or did he just like a [TS]

01:07:43   goodbye letter now and I enjoy her number I think they just stopped hosting [TS]

01:07:49   is not funny I you know that I think that they just don't think they actually [TS]

01:07:59   say goodbye they basically stopped posting and then but an anointed was [TS]

01:08:05   somebody the person is Gavin Edwards something was the head of the bed queen [TS]

01:08:11   foundation Gavin and Andreessen scientists at the Bitcoin foundations [TS]

01:08:16   again very soon as I understand I believe he was sort of anointed as the [TS]

01:08:20   person to carry on the software work but my recollection is that is that it [TS]

01:08:26   wasn't like okay and now I've done my work and I'm leaving was more like like [TS]

01:08:31   just stop posting and I found the numbers 1.5 million coins and so that's [TS]

01:08:36   like eight hundred million dollars in today's exchange rate of 5% of the ones [TS]

01:08:41   outstanding it's about 5% of the ones that will ever exist a little a little [TS]

01:08:45   more so it's it's a it's a big chunk and there's still one of the rumors is that [TS]

01:08:52   a so here's the thing with bitcoins you have to keep that private key secure but [TS]

01:08:57   if you lose the Prodigy put coins are gone forever [TS]

01:09:01   you can't spend that we can transfer them I'm in a Bitcoin miner and he were [TS]

01:09:05   chatting and two interesting things one is I did not know initially but he was a [TS]

01:09:11   few months before he and I met he was generating a significant single-digit [TS]

01:09:15   percentage of all homes worldwide which was interesting and the other was he [TS]

01:09:20   said I've gotta drive over there it's completely dead it is for you [TS]

01:09:24   never recover those and I was at a time when I think it was $100 like a drive [TS]

01:09:29   that has a two million dollars tried everything he could spending $1,000 on [TS]

01:09:36   Dr savers or whatever and so when you lose the key they're not a sponsor this [TS]

01:09:43   week but talking about you too bad Backblaze is hard drives people you know [TS]

01:09:51   there are there issues about storing private keys for Bitcoin so there's [TS]

01:09:57   something called cold storage and you transfer your private key either you've [TS]

01:10:01   never had an internet-connected machine you sign on your transactions on a not [TS]

01:10:06   ever connected you know glue and the USB port WiFi radio removed whatever your [TS]

01:10:14   stuff on a non connected machine and then you signed transactions and you see [TS]

01:10:19   them out but you're extremely careful you move those the public Internet and [TS]

01:10:24   this is critical because if your private key stolen as as happened on a mass [TS]

01:10:29   scale over the last few years at multiple online wallet services and [TS]

01:10:33   exchanges if someone steals your private key they can transfer the money to [TS]

01:10:37   anywhere they want to and in the same thing so the cold storages are some [TS]

01:10:41   places I understand someone actually printed out the key information is like [TS]

01:10:46   a pile of paper as an additional backup in case the spinning media hora sixties [TS]

01:10:51   makes sense so there is no one you know one of the coin services went down and [TS]

01:10:57   forgetting which one another one [TS]

01:10:59   shut down and they did lose some number of coins but they said almost all of the [TS]

01:11:03   coins were in cold storage and they will be transferring them back to their [TS]

01:11:06   owners [TS]

01:11:07   the ones they lost their lives storage was modest and those are gone forever [TS]

01:11:10   for whatever reason but the ones that are cold storage are totally preserved [TS]

01:11:15   ok so tell me about these exchanges wow what is it what what's the point of this [TS]

01:11:25   gets in the basic nature of like you know since I lose money if you try to [TS]

01:11:29   explain this to join unlike a generous and he said as he said to you and he's [TS]

01:11:33   old enough [TS]

01:11:34   like what is actually money i transfer my kids sometimes you know and they know [TS]

01:11:39   that money buys things they can be exchanged for a great line from there is [TS]

01:11:43   a beatles parody group called the rebels that Eric Idle and some other people [TS]

01:11:47   involved in someone said you're just in it for the money and their joke [TS]

01:11:51   responses no no we're not in it for the money so much as the the goods and [TS]

01:11:54   services that money purchases [TS]

01:11:56   you know it's Jonas is still at the point where money is like gravity and [TS]

01:12:02   it's something he accepts and understands the gist of but that it's [TS]

01:12:09   sort of it's at the bottom of you know those why you know kids are so it's the [TS]

01:12:19   greatest thing about childhood is is the natural inclination of almost all [TS]

01:12:23   children to just keep asking why why why they get you know parents of course you [TS]

01:12:28   know you get sick of it but it's actually it you know it shows how what a [TS]

01:12:34   fantastic state their brains are in their trust seeking answers you know and [TS]

01:12:38   they're coming up at the you know whyyy gravity is one of those things that he's [TS]

01:12:41   never he's never asked me about how exactly is it that we stick to the earth [TS]

01:12:47   and money i think is exactly the same sort of thing it's just there and he [TS]

01:12:52   accepts it and never has gotten to the point where you wonder why I still think [TS]

01:12:57   I'm not sure the kids ask her we volunteer we like to the series of [TS]

01:13:01   parenting lectures at some point came up it was like I tried to explain it and [TS]

01:13:06   money [TS]

01:13:07   sounds ridiculous when you explain it why does this piece of paper I'm giving [TS]

01:13:11   you peace of paper with George Washington case on it and you can go [TS]

01:13:14   anywhere and exchange it for something and people always accepted as legitimate [TS]

01:13:18   and that's ridiculous it's completely ridiculous right so when you start to [TS]

01:13:23   explain but according to people why there's value in it you're like this is [TS]

01:13:27   just crazy and it was easier than money is crazy to is a little bit less crazy [TS]

01:13:32   and I you know again that to get into the political aspects event I guarantee [TS]

01:13:37   you with technical minded show somebody out there is gonna be offended by what [TS]

01:13:41   I'm about to say [TS]

01:13:42   but it it was a lot easier to explain when the EUS was on the gold standard [TS]

01:13:48   yes you could say a correspondent to a specific amount of gold that had an XP [TS]

01:13:53   USA government-owned a tremendous still does own it but I found this tremendous [TS]

01:13:57   amount of gold gold has no true value real value on you know because it's a [TS]

01:14:03   rare mineral that people consider to be beautiful and etc and dollar bill was [TS]

01:14:09   the us- government promising that this dollar bill represented dollars worth of [TS]

01:14:14   gold [TS]

01:14:15   exchanges if you wanted to hear that and that I am i understand you know there's [TS]

01:14:20   a whole bunch of there's always been a political political friends that thinks [TS]

01:14:24   the US-made a true mistake getting off the gold standard get back onto it and I [TS]

01:14:29   owe it not that I think that that's actually a good economic theory I think [TS]

01:14:32   the explanation is that it appeals to many people because it's understandable [TS]

01:14:36   and was its supposedly prevents inflation there's a lot of reasons why [TS]

01:14:40   people like its inflation it's a real thing it prevents printing money it [TS]

01:14:44   controls governments women's game go to war is usually necessarily because they [TS]

01:14:48   can't do all these things that a lot of people here and they think that the gold [TS]

01:14:53   standard answer to them returning to it having the route I just think a big part [TS]

01:14:58   of the appeal is that it's there's no dot dot dot step in which is what you [TS]

01:15:06   have with our current system here so here's the thing that would [TS]

01:15:10   fundamentally what fiat currency or like it was like a 1000 cash money what money [TS]

01:15:15   proved by governments backed by governments has is that you can pay your [TS]

01:15:19   taxes in it and the government pays its bills and it was doing the economist [TS]

01:15:25   articles about becoming and fundamentally that's what a lot of them [TS]

01:15:28   said was was it's the government to use of legal tender as a means of exchange [TS]

01:15:33   not just that it establishes value you know and there's there's the extra angle [TS]

01:15:38   that some people that talk about coercion the recent weeks that money is [TS]

01:15:41   because you know governments have militaries in the forces to if you [TS]

01:15:44   didn't accept money you know they're backed by the police say the body of the [TS]

01:15:48   police military and [TS]

01:15:49   you go to jail there's a penalty you know for how you use it so there you can [TS]

01:15:54   get to a political argument about that but fundamentally it's when you pay the [TS]

01:16:00   american government most governments you have to pay in the currency that they [TS]

01:16:04   accepted the issue that currency to pay all of their bills and so that starts a [TS]

01:16:09   virtuous cycle that gives it value right it's a barter system in which the [TS]

01:16:13   government is the dollar bills are is a former barter we just accept the value [TS]

01:16:18   of the government puts on it and the USA government least with some intervention [TS]

01:16:22   allows the dollar to flow to represent what the market actually thinks it's [TS]

01:16:25   worth is a means of exchange so pick which is weird because that's where you [TS]

01:16:30   get them out of the box and these other exchanges as one aspect of the ecosystem [TS]

01:16:34   is that is moving money in and out of it clean so it's one thing if you are a [TS]

01:16:38   minor in the early days you could run like you can running like a Mac Pro and [TS]

01:16:42   making coins are actually having coin suspended they might not have been worth [TS]

01:16:46   damage each but you know there was some people accepting them they were you can [TS]

01:16:50   use it to exchange that's what some people but you need to move money in and [TS]

01:16:53   out of the system has no inherent value as more and more merchants accept [TS]

01:16:57   Bitcoin which is still going on Overstock will accept Bitcoin through [TS]

01:17:01   intermediaries that establishes value for it but the more you can buy within [TS]

01:17:07   the system less you have to transact in and help but the exchanges exist as a [TS]

01:17:10   way to take dollars and turn them into bitcoins in and vice versa up with some [TS]

01:17:16   good reason I had this one or two mark andreessen [TS]

01:17:19   netscape really interesting guy guy I think was was seen has not very break [TS]

01:17:25   for a while about how we invest in what he did and then it all started to pay [TS]

01:17:28   off and then everyone thinks he's brilliant I think he's brilliant I think [TS]

01:17:32   he was so far ahead of his time as investor that it took a lot like with [TS]

01:17:37   Paul Allen where everyone thought pollen was an idiot for about a decade and that [TS]

01:17:40   everything he thought would happen happened you know satellite television [TS]

01:17:44   and everything just about so he'll the Seahawks even won a Super Bowl so back [TS]

01:17:55   to like 1985 and people that the Seattle Seahawks are gonna [TS]

01:17:59   so you can see you can see that you could say look in two thousand people [TS]

01:18:02   but Marc Andreessen upon we're not very smart in 2014 like in terms of where [TS]

01:18:09   technology when and how they make money so Marc Andreessen wrote this piece cuz [TS]

01:18:12   he's involved with base he's his Andreessen Horowitz they invest in [TS]

01:18:19   between companies and it's part of part of their you know what they're into and [TS]

01:18:24   I think it's it's a pretty sure it's using Vista I hate to see the wrong [TS]

01:18:28   companies are so many bit because we acquit based Andreessen Horowitz put in [TS]

01:18:33   twenty five million dollars as part of the show that was part of the lead [TS]

01:18:38   investor with them but when $5,000,000 few months ago so I go to Queen base and [TS]

01:18:42   I say I want to buy $50 with the Bitcoin and the late great ok verifies [TS]

01:18:46   information do this will text you this thing you should I say I'm like this is [TS]

01:18:51   okay it's like setting up a banking thing or whatever and they're like your [TS]

01:18:54   bitcoins will be available like three to five business days like this its sister [TS]

01:19:00   what's going on in the problem is Bitcoin despite a lot of claims I hear [TS]

01:19:05   this from people who say it's incredibly liquid is not very liquid when you want [TS]

01:19:09   to go into legal tender and so exchanges exist to make that happen but between [TS]

01:19:15   banking regulation where a lot of these exchanges amount Cox fell afoul this [TS]

01:19:19   they have to actually have to deal with certain banking laws in some cases not [TS]

01:19:23   all depends how they construct themselves and there's like reporting [TS]

01:19:26   requirements and whatever between that and just some aspects of like how many [TS]

01:19:31   people participate in the system how you move the coins around to be able to [TS]

01:19:35   exchange value without being too heavily [TS]

01:19:39   exchange can't take so many bitcoins MPs so much you don't have actual legal [TS]

01:19:43   tender and that would be bad change in the volatile place a bit quiet and they [TS]

01:19:49   could be quite sure and maybe a run on the exchange which has happened [TS]

01:19:51   essentially the same way a divided state law says that a casino must have the [TS]

01:19:59   cash in the building [TS]

01:20:02   as they have casino chips in circulation which makes sense right [TS]

01:20:08   perfect sense if everybody in the casino all at once wanted to cash in the chips [TS]

01:20:13   that they have in front of them [TS]

01:20:15   casinos legally obligated have enough cash to cover and this is why the [TS]

01:20:19   wonderful the FDIC is one of the best agencies we have in america I'm [TS]

01:20:25   confident the former head of the FDIC I'm confident even though she did not [TS]

01:20:29   get her role extolled as much she was not one of the boys in the room [TS]

01:20:32   Sheila she is the reason that the entire American economy Sheila Bair which has [TS]

01:20:40   left the FDIC she cut deals that prevented the USS economy from falling [TS]

01:20:44   apart by keeping banks open and she made that happen and the FDIC's [TS]

01:20:49   2002 and 2008 right she she display everyone talking about all these other [TS]

01:20:56   people she is actually the reason our economy did not collapse and we do not [TS]

01:21:01   actually go into depression I'm confident history will prove that [TS]

01:21:03   because the top of the people in the top name all these guys are crapping shit so [TS]

01:21:11   anyway the FDIC exists as an entity because we had bank runs in the regular [TS]

01:21:15   the depression happen thanks did not have enough money your money is in he [TS]

01:21:18   wrote mr Thompson's house and it's it's it's the Bailey savings and loan the [TS]

01:21:23   scene so what's my money doing over there so when you have a run to the bank [TS]

01:21:27   banks are not obliged to keep a hundred percent of their deposits on hand they [TS]

01:21:30   lend them out and make money the FDIC is the backstop and see the Federal Deposit [TS]

01:21:37   Insurance Commission they said they take premiums from banks and they use that to [TS]

01:21:41   have a fund that backstops certain amount of loss thanks go under and the [TS]

01:21:46   FDIC's out their clothes in Bankstown it's kind of cool if you've heard the [TS]

01:21:49   FDIC no it's cool I think Planet Money do they basically they show up on a [TS]

01:21:57   Friday they're all dressed in plain clothes and they show off their [TS]

01:22:01   credentials and they shut down and they take it over and no one of the bank has [TS]

01:22:04   allowed to talk about it they spend the weekend on the books whatever it opens [TS]

01:22:07   on Monday it's like is like it is like a spy operation because they do not want [TS]

01:22:13   to know [TS]

01:22:14   they'll come into town I understand the rent rooms in hotels now the same hotel [TS]

01:22:17   they do people that do not want to run on the bank is the accounting version of [TS]

01:22:22   gangster movie called the cleaner and that's what they do they do it I tell in [TS]

01:22:30   pulp fiction right yeah you know we all sit here and I don't want any attention [TS]

01:22:35   and no no no not Reservoir Dogs Pulp Fiction when they go look we just want [TS]

01:22:40   to clean this mess up [TS]

01:22:41   nobody's gonna know the better right but it's it's a 10 numbers are alleging the [TS]

01:22:48   bank apart into small pieces in the top so I don't make sure but the FDIC [TS]

01:22:56   backstops banks of banks don't have enough money on hand the FDIC is there [TS]

01:23:00   to pay depositors up to a certain amount which is you know you're so small [TS]

01:23:05   depositors never get and so people don't panic don't know we don't runs on the [TS]

01:23:10   bank because people believe that the US government in the form of the FDIC will [TS]

01:23:15   backstop thanks and we saw that in the 2008 crisis there is no FDIC for Bitcoin [TS]

01:23:20   and maybe one will be created but when when there's a run on an operation [TS]

01:23:25   exchange has some of the big win some money cash and they cannot cash [TS]

01:23:28   everything out once and are not obliged to the way they run so let's get down [TS]

01:23:34   like you said that the government you know and it really does annoy me in [TS]

01:23:38   Marco had a good piece this week about it doesn't make any sense to talk about [TS]

01:23:42   the government as a single entity and complain that the government is also the [TS]

01:23:46   government is you know is comprised of of thousands of individual organizations [TS]

01:23:54   from the federal to the state level FDIC is a great example of the government [TS]

01:23:59   work because the main point of it is if you had to see a bank and you see that [TS]

01:24:04   the bank is in the ICU and I believe it's probably not even legal they open a [TS]

01:24:09   bank that part of the FDIC you can't do it like it is open I think tank that's [TS]

01:24:15   all you have to do is to be like a governing regulator there's different [TS]

01:24:18   choices the FDIC insurance but it seems that all of us every single citizen [TS]

01:24:23   can just you don't have to worry about doing the research and figuring out is [TS]

01:24:27   this bank legit is you know if I go in there and put my paycheck in deposit you [TS]

01:24:32   know created checking account and put my whole paycheck in there is that money [TS]

01:24:36   safe you have to worry about it just is you really mean I have to do is have [TS]

01:24:40   faith in the USA government and at one point you remember for a long time the [TS]

01:24:44   FDIC said she noted by the commercial on TV for bank deposits are insured up to [TS]

01:24:48   the maximum $100,000 by the FDIC and then during the crisis they lifted that [TS]

01:24:53   amount of forget to 19 Oakland now because there are enough people who like [TS]

01:24:58   you know you're my parents other house and hundreds of thousands of dollars in [TS]

01:25:02   the house which they plan to live on for the slides in the bank and more than a [TS]

01:25:06   hundred grand in one account and if a bank fails you only ensured in some [TS]

01:25:11   other countries they immediately lifted it to unlimited because they did not [TS]

01:25:14   want any depositors to not be made whole they felt it was a better risk to [TS]

01:25:19   prevent a run on the bank especially by high net worth individuals who might [TS]

01:25:22   have a million bucks and then to worry about the problem of reclaiming my later [TS]

01:25:28   it worked out and the limit I think that that limit was pretty old it you know it [TS]

01:25:36   was like a hundred thousand dollars in nineteen fifty dollars I don't know [TS]

01:25:41   which you know is a far cry from $100,000 in 2008 it's very easy for [TS]

01:25:47   people who are in the age range from like 50 to 80 to 100 grand in the bank [TS]

01:25:52   because of house sales basically they downsize people's parents lived in the [TS]

01:25:57   Bay Area and they've got a million dollars for their house they never [TS]

01:26:00   expected windfall and they might have like a tiny pension whatever they don't [TS]

01:26:05   even know how to handle it so there is nothing there's no backstop and so with [TS]

01:26:09   mount gods so bangkok's has all kinds of weird things you may know it started as [TS]

01:26:13   they called Magic the Gathering online exchange teach you know that I did yes [TS]

01:26:22   so they thought they were going to be a man and what I read the other day [TS]

01:26:27   pointed out that if they'd actually invested in Magic the Gathering coins [TS]

01:26:30   back when they started they would [TS]

01:26:32   cards rather they would probably have a better return than what's happened if [TS]

01:26:36   some cards are worth like to that so many cocks people been documenting for [TS]

01:26:43   years the deficiencies in their programming their security their [TS]

01:26:47   response they they had they didn't find the right paperwork her acting the way [TS]

01:26:52   in the united states and the USS see is that it was five million dollars from [TS]

01:26:56   them because they didn't have they were operating as essentially a kind of [TS]

01:27:00   entity that they were in and they just didn't do the right work like I think [TS]

01:27:03   they could have been operating as identity there are between exchanges of [TS]

01:27:06   operated states that have filed the paperwork correctly so the the earth's [TS]

01:27:13   tilt whole unclear what happened because they have a release enough information [TS]

01:27:19   they claim they've lost what was the number it's a crazy number it's like [TS]

01:27:23   seven percent of all outstanding bitcoins is $750,000 in Queens owned by [TS]

01:27:33   its users and a hundred thousand its own and the issue is we don't know what lost [TS]

01:27:37   means yet because we haven't done a forensics thing in Japan there are based [TS]

01:27:41   in Japan for their offices where it could be they lost all the private keys [TS]

01:27:45   they didn't do a good job and they didn't recover gone from the system [TS]

01:27:49   right and there's some suspicion that there are potentially hundreds of [TS]

01:27:53   thousands or maybe even as many as millions of bitcoins that will never be [TS]

01:27:57   recovered because the private keys are lost there's no recovery process where [TS]

01:28:01   they can be reclaimed so that's one concern the other is it might have been [TS]

01:28:04   left someone got access one party was saying is article recently couple days [TS]

01:28:09   ago about how included all the SSH he is like its private keys in its server code [TS]

01:28:17   and things like that so so it's crazy so like theirs they just are not you know [TS]

01:28:25   they clearly without you know alleging anything it's clear they were not [TS]

01:28:30   rigorously technically technically they were not competent the other thing is [TS]

01:28:36   always that and again I can verify but I saw the other day that they apparently [TS]

01:28:40   the whole system that computer system they were not using any sort of source [TS]

01:28:46   control software was like so so there's that save all kinds of technical [TS]

01:28:53   deficiency but so one suspicion is there's a problem call transaction [TS]

01:28:57   malleability that is suspected might be the cause of a really good analysis [TS]

01:29:02   couple days ago that that suggested that the scale what happened it couldn't be [TS]

01:29:06   so there is a flaw in between in the big Queens software clients and some of the [TS]

01:29:12   implementations I understand it's not a protocol but well she said so this [TS]

01:29:18   transaction thing I was talking about what should happen is I am sending you [TS]

01:29:22   one between John and the transaction that my software generates which [TS]

01:29:26   probably is a standard between library that the Bitcoin foundation essentially [TS]

01:29:30   maintains its open source that Transocean transaction has a transaction [TS]

01:29:34   and even some unique information I signed it and boom so what should be [TS]

01:29:38   impossible for someone else to generate a transaction that is looks like mine [TS]

01:29:43   and validated and even has the same destination so it doesn't hijack who the [TS]

01:29:49   money is going to rate it just looks valid and has the same recipients under [TS]

01:29:54   that should not be possible and it is in fact possible to create fake [TS]

01:29:59   transactions [TS]

01:29:59   transactions [TS]

01:30:00   after a legitimate one is created so other parties can allegedly create bad [TS]

01:30:05   transactions in there have even been denial of service attempts were many bad [TS]

01:30:09   transactions are created for each good one if the bad transactions are taken up [TS]

01:30:13   first they get back into the record and the problem is some software didn't [TS]

01:30:20   validate whether the transaction I D had changed and if they know dorothy was [TS]

01:30:24   just the idea if they notice it had changed it would have invalidated that [TS]

01:30:29   transaction or some other aspect there like so so the coins are actually [TS]

01:30:33   transferred but the exchange for instance this case would not recognize [TS]

01:30:38   it because the transaction I D didn't match so I've done everything right I've [TS]

01:30:42   sent you a coin you say never got it [TS]

01:30:45   exchange say it says in go through and I look and I'm like my software says it [TS]

01:30:49   doesn't look in the block the block says it was minted and you say no my chances [TS]

01:30:53   never went through an ego and mount box apparently had an automated system that [TS]

01:30:58   when a transaction appear to not go through they would send it again it's [TS]

01:31:02   unclear how often would send it again so if you were a malicious party you could [TS]

01:31:06   concoct away in transactions with Matt mountain gods to create false ones and [TS]

01:31:11   get the same money multiple times but because you can't change all the [TS]

01:31:14   printers you can't the seal the coins it's more away to leak money out from [TS]

01:31:18   transactions that are that had some legitimate basis to start with and then [TS]

01:31:22   you can sort of suck money out or people intentionally send more money than they [TS]

01:31:27   meant to end the recipient doesn't even know that more money was sent so that [TS]

01:31:31   was one suspicious does not appear like that the scale of it would make sense [TS]

01:31:34   it's more likely they're bad security led to someone still hold the private [TS]

01:31:38   keys [TS]

01:31:39   well what's the solution to this [TS]

01:31:42   you know how if somebody wanted to get involved [TS]

01:31:45   and buy some bitcoins in have these [TS]

01:31:49   I mean I guess the solution is to find a reputable and technically competent [TS]

01:31:53   exchange but how how how is a normal person supposed to figure out to [TS]

01:31:58   determine what is a reputable and technically competent exchange well I [TS]

01:32:04   think this is what the market trying to do now is you know even though the [TS]

01:32:08   valuation of bitcoins arbitrators enough people involved the system using it that [TS]

01:32:12   even with Matt Cox failure and and all this stuff happening value has not we're [TS]

01:32:19   talking right now to see those 60 hasn't crashed I'm talking and 20 but but the [TS]

01:32:28   the the market and go from $1,000 a Bitcoin 220 you know it went from [TS]

01:32:33   looking right now the current standard as we talk is somewhere in the $600 [TS]

01:32:38   range I actually think and again I am Bitcoin dummy but as you know I've never [TS]

01:32:46   put a nickel into it and then still not tempted to but this is a curious [TS]

01:32:51   observer I would actually say that that what's happened to the value of between [TS]

01:32:55   in the last few weeks actually shows a significant amount of stability you know [TS]

01:33:00   like going from a thousand to 600 is a pretty significant crash but not what I [TS]

01:33:05   would have expected when I first heard about the mailbox and I thought well [TS]

01:33:08   there goes that's the toilet flush you know bitcoins gonna drop down to $25 a [TS]

01:33:14   Bitcoin should have happened if it actually made a fatal event or near [TS]

01:33:18   field event is the value should have just gone off by like 50 percent what [TS]

01:33:22   should happen is people will be trying to get liquidity out of it they would [TS]

01:33:25   have been unable to and they would have accepted lower lower amounts until it [TS]

01:33:28   was like $10 a Bitcoin and in the market collapse instead it went down like a [TS]

01:33:33   five hundred and it's rebounded a bit which means that there are people who [TS]

01:33:37   believe they have enough value in the system and retaining their big win in [TS]

01:33:40   the system that they weren't panicked and tried to exchange around 900 and [TS]

01:33:45   I've sort of avoided linking to a lot of the Big Concept they just don't [TS]

01:33:48   understand it but I know that there's a lot [TS]

01:33:50   of you know sort of hey this is actually a good thing for Bitcoin and then [TS]

01:33:55   there's the skeptics which I kind of agree with this is no this is not now [TS]

01:33:59   cops is not a good thing for Bitcoin you can argue that I I think it's it's sort [TS]

01:34:04   of halfway in the middle which is no its not good that it happened i mean and no [TS]

01:34:08   matter whether it was crime or just incompetent it bad either way but the [TS]

01:34:11   fact that after this bad thing happened which was bad that it was relatively [TS]

01:34:17   stable value wise I think should is a good thing it shows that you know [TS]

01:34:22   there's a certain stability to it you have to all the volatility I think this [TS]

01:34:27   was actually pretty remarkable in some of that comes now because you have [TS]

01:34:30   people like the the Winklevoss twins who have put a pile of money in and they own [TS]

01:34:35   it is a on a single digit percentage of their other parties and so this is one [TS]

01:34:42   of the things that came out the other day I think it was a few hundred people [TS]

01:34:47   on fifty percent of all the coins in which is an undue strain were big [TS]

01:34:52   winners of democratizing you're like ok you know and then like he was like a few [TS]

01:34:56   thousand people on 75 percent so there's this issue about always mentioned [TS]

01:35:03   earlier samarkand rhesus 01 the company's you can look at and I have no [TS]

01:35:06   connection to it in fact might even be seen as a skeptic because I had all this [TS]

01:35:10   back and forth with Marc Andreessen who is incredibly funny on Twitter in a [TS]

01:35:13   really great sparring partner by the way is really a good sport and we'll talk [TS]

01:35:17   about all this stuff which is impressive as most people who have piles of money [TS]

01:35:21   and think there were no everything and they don't want to talk to you but they [TS]

01:35:24   don't listen he listened to the talks he's very funny and so he wrote the [TS]

01:35:27   op-ed piece for The New York Times that the deal book section about why the [TS]

01:35:32   Queen was so wonderful because it reduced transaction fees to practically [TS]

01:35:36   nothing or nothing it would be a great thing for all these parties I i disagree [TS]

01:35:39   with a bunch of his statements I rode along thinking he and I went back for [TS]

01:35:42   that it was very it was elusive to me his thinking about how you make between [TS]

01:35:47   the two a stable thing that this becomes part of the international banking system [TS]

01:35:52   like he is not a political rabble rouser what he wants in the wake of Aussie [TS]

01:35:56   vaccine [TS]

01:35:57   him and the rest of the folks who are trying to make this work is they want a [TS]

01:36:02   system that's outside the inefficiencies that had known as the security of [TS]

01:36:05   Bitcoin is outside of the inefficiency the banking system but doesn't need to [TS]

01:36:09   be above the law and not subject to regulation scrutiny they basically want [TS]

01:36:13   something that makes money move as fast as email and I get that there's a reason [TS]

01:36:18   so marks invested in his base that's where I put 50 bucks in no way between [TS]

01:36:23   dropped in value health because I put 50 bucks worth $25 my faults like washing [TS]

01:36:28   your car so corn-based is clearly a place to start because they're trying to [TS]

01:36:33   do everything right and they're not trying to be chartered in a boat off the [TS]

01:36:38   coast of Iceland and under somali law they're trying to do it so it's [TS]

01:36:42   interesting place to start from a group that's trying to see how they can comply [TS]

01:36:46   work within the system [TS]

01:36:47   Quentin hardy wrote this piece based partly on market my exchange rate this [TS]

01:36:54   thing for the new york times I recommend reading in which he talked about the [TS]

01:36:57   rise of a kind of super rich transnational class he said I threw down [TS]

01:37:02   he said he was sitting with some very very wealthy people he said if I threw [TS]

01:37:05   down passports from was three or five countries all them stay like singapore [TS]

01:37:09   united states whatever which one would you pick up and the guy started the [TS]

01:37:12   debate which one they didn't say the country that I from the Tamil [TS]

01:37:14   nationalist influence he worries in part that pic when less people become it [TS]

01:37:20   takes money outside of the spirit of national influence and make it lets [TS]

01:37:24   people were extremely wealthy sort of live in a cloud above the world so there [TS]

01:37:28   is some of that thinking especially when you see that you know between is [TS]

01:37:32   controlled by relatively small number of people there controlled by a relatively [TS]

01:37:36   small number of people is one reason why the currency remains stable because they [TS]

01:37:39   have the economic wherewithal to not need to pull them out of the system at [TS]

01:37:43   all over [TS]

01:37:44   I would say this though I mean who knows where them and you'll value of it is [TS]

01:37:48   going to go right now though $600 Bitcoin if there's a limited 21 million [TS]

01:37:55   that's somewhere around 12 billion dollars for ivory Bitcoin there could [TS]

01:38:01   ever be human if you double that or triple it you're talking 2550 billion [TS]

01:38:08   dollars now who knows maybe it'll go up tenfold twenty-fold 30 fold and then [TS]

01:38:12   become more and more but as it stands a tired the entirety of Bitcoin is only [TS]

01:38:20   worth ten twenty thirty billion dollars I don't see that as a global dis I can [TS]

01:38:30   see why governments are in that ready to jump in and try to regulate [TS]

01:38:35   brake inflation within the Bitcoin system to make the coins liable enough [TS]

01:38:40   individually they can divide them into tiny pieces explain to me the actual [TS]

01:38:45   bitcoins how is that how can you put $50 in the coin base and have anything [TS]

01:38:50   a Bitcoin 600 bucks this is the ridiculous part so it's almost like [TS]

01:38:55   owning a fraction of a share of stock at some level because be queens are only [TS]

01:38:59   essentially therefore transactions I can only send you money so if I have 50 [TS]

01:39:05   bitcoins in a in my wallet and I want to send you 49 I have to do exchange [TS]

01:39:12   transactions I actually seen you 49 and I sent myself one and this is the way [TS]

01:39:17   the fact that I have to send changed myself there's a flaw in most current [TS]

01:39:21   clients that makes those transactions essentially trackable and researchers [TS]

01:39:25   have shown they can do this thing that even after hundreds of transactions they [TS]

01:39:29   can actually trackback between city origin by unappealing all these change [TS]

01:39:33   transactions see where the money went so I can send you a tiny tiny amount of [TS]

01:39:38   curse of the current smallest unit is one times tend to the negative 88001 [TS]

01:39:45   that's called a set of sheets the basic and the protocol could easily be adapted [TS]

01:39:51   to have smaller fractions or even reverses one between his ass Atocha or [TS]

01:39:57   something there's no there's nothing that prevents that from happening [TS]

01:40:00   without lets me send tiny amounts of money but I sent essentially the things [TS]

01:40:06   people can wind up with all these wallets like you can have piles of [TS]

01:40:10   Bitcoin addresses and then eventually may consolidate them so you take one [TS]

01:40:13   addresses got 43 but there is one of those points 05 and you essentially pay [TS]

01:40:18   yourself all of the small ones he wanted one address and has you know 750,000 so [TS]

01:40:25   there is a lot of mucking around and people typically use client software [TS]

01:40:29   that handles the details but the client software masks a lot of transaction that [TS]

01:40:33   can leak some of the anonymity and there's also even talk about those coin [TS]

01:40:40   I've heard of it i dont getting so and Ars Technica just launched our Scorpio [TS]

01:40:47   dozed Wednesday oge coin yeah it's real thing it's a real thing actually is [TS]

01:40:53   has value and it was a parody was launched two months ago in December 31 [TS]

01:40:58   three months ago december and people are investing it's big it's got different [TS]

01:41:05   properties then it's it's a code for it from Bitcoin which is open source it is [TS]

01:41:10   different properties including mining technique that is not consumed [TS]

01:41:13   eventually the power of our son occupations it's got a non scaling [TS]

01:41:20   discuss whatever is using it using something that does not require the [TS]

01:41:26   scaling capabilities you need to do [TS]

01:41:28   engines actions and and there's late coin which is a different standard [TS]

01:41:33   standard there's something called 0 coin where one guy who's a researcher who [TS]

01:41:38   wanted to create pure anonymity that you could put into Bitcoin after being sort [TS]

01:41:44   of rebuffed about embedding inside that claimed he and other folks are going to [TS]

01:41:48   launch a Bitcoin like currency that will allow Bitcoin like coins and totally [TS]

01:41:53   anonymous coins that no two transactions can be connected to one another to be [TS]

01:41:58   exchanged in so there's always an explosion of crypto currency as well [TS]

01:42:02   those quite as the funniest one but has it it's real people started as a parody [TS]

01:42:08   yeah and it turns out that like it's actually got some properties people like [TS]

01:42:12   including the initial it's the number of very funny just like the initially a [TS]

01:42:18   hundred billion coins can be mined by the end of this year but there is a [TS]

01:42:22   fixed rate of five billion coins after that so there's a built-in inflation and [TS]

01:42:25   it does not shrink over time you're losing me well if it is no time limit on [TS]

01:42:34   how many those coins can IC IC I know it's crazy but crazy love it it's sort [TS]

01:42:40   of funny and it's sort of weird but it's back to I think some of the points you [TS]

01:42:44   had earlier in is that is why I like to make sure everyone listening to this no [TS]

01:42:52   matter whether you're in Europe or America banking is ridiculous bank is [TS]

01:42:56   ridiculous banks existed to the bank's existing structure fees from us and they [TS]

01:43:01   run the most insecure system in the world the booths care system i think is [TS]

01:43:05   like chip and pin is actually and why he's here but that's great for doing [TS]

01:43:08   that kind of transaction but like wire transfers are totally unsecured as its [TS]

01:43:12   past in the clear ATM has the ATMs have certain kinds of encryption and security [TS]

01:43:17   they're really good others at a ridiculous so you can't you know when [TS]

01:43:21   you can add a dollar bill you don't know if it's real what percentage of some [TS]

01:43:24   number about the percentage of $100 bills and circulation the world that are [TS]

01:43:27   that are [TS]

01:43:28   counterfeit fraudulent yeah so the the fact is Bitcoin in systems like the [TS]

01:43:35   something like it will get incorporated into the banking and transaction system [TS]

01:43:39   if not into our currency system because of this property that because that the [TS]

01:43:46   cryptographic nature of it prevents a whole bunch of bad behavior [TS]

01:43:50   France doubles spending Prince counterfeiting it prevents legitimacy [TS]

01:43:55   and ownership it's very hard I mean so people have to these exchanges and [TS]

01:44:00   wallet services in stolen private keys but if you do security correctly which [TS]

01:44:04   people can do then it doesn't matter she get hacked into the keys are still [TS]

01:44:09   protected by another layer of passphrase and their unrecoverable by the thief so [TS]

01:44:13   there's ways to do it correctly it so there is a way where instead of doing a [TS]

01:44:17   credit card transaction the way we do now which is you know ridiculously [TS]

01:44:20   unsecured and just do the numbers and times to do it over the phone that you [TS]

01:44:26   be able to see ya so what if you know what if he's released a web based you [TS]

01:44:31   know signing thing that used that let you use permit was very much like [TS]

01:44:36   Bitcoin but was entirely on their system you'd love it because you said [TS]

01:44:40   Verified by Visa which i think is still in use you go to the merger would pop up [TS]

01:44:44   the visa window and you can check that was a secure connection and you punch [TS]

01:44:49   your password into visa site and it would then confirming you are legitimate [TS]

01:44:52   but your password never went to was like an extra step in that was it's [TS]

01:44:56   reasonable to me that you we could change the credit card system so that [TS]

01:45:00   you couldn't do a transaction over the phone in the same way that we accept you [TS]

01:45:07   can't send cash over the phone right like a vial you 25 bucks I there's no [TS]

01:45:12   way that I can do it right now talking to you over Skype there's no number I [TS]

01:45:15   can read to you that could do it [TS]

01:45:17   I think it's reasonable that we would lose the ability to call somebody over [TS]

01:45:21   the phone and give them a credit card number and have it count because our [TS]

01:45:25   phones more and more are computers with an IP connection that you can run a nap [TS]

01:45:32   or connect to a website and do cryptographic communication will be as [TS]

01:45:39   simple as you know like to factor kind of thing is I could be registered with [TS]

01:45:43   different coins systems or credit card systems in my phone and I call to make a [TS]

01:45:47   transaction that like great ok we like to process that can you read us the six [TS]

01:45:51   digit number that's just been texted to your phone or burundi [TS]

01:45:54   obese authenticator app and you pulled up and you go it's improbable blood and [TS]

01:45:58   that verifies my identity or at least five stolen information is still a lot [TS]

01:46:02   of information from somebody is not just a routine drive by credit card theft and [TS]

01:46:07   but so there's lots of aspects of Bitcoin that I believe this is why you [TS]

01:46:11   know they had a congress held hearings last year about Bitcoin in a friend of [TS]

01:46:16   mine attended them and he was stunned in in the coverage indicated this is well [TS]

01:46:19   how positive in interested senators instead staffers worrying and [TS]

01:46:24   congressmen and women were about the positive aspects of it and the banks are [TS]

01:46:30   very very interested in the regulators are interested in it they don't just [TS]

01:46:32   want to prevent activity or captured taxol that's certainly part of it it's [TS]

01:46:38   also that they do actually see the positive parts of having a [TS]

01:46:43   cryptographically robust I didn't eat secured system that we don't have now [TS]

01:46:48   into those kinda cool I did not expect to see that much openness the people who [TS]

01:46:52   work or between users he the notion typically the government would get [TS]

01:46:55   involved the new people coming in like andreessen the Winklevoss and so forth [TS]

01:46:59   they're much more than having government involvement at a certain level to [TS]

01:47:04   provide both like trust and to remove more the criminal element as well I mean [TS]

01:47:08   I think like any government regulation is like almost everything in life [TS]

01:47:13   everything where you know moderation is the key [TS]

01:47:17   you know there's too little and there's too much and so on and the polar ends of [TS]

01:47:22   politics there's always going to be people [TS]

01:47:24   pushing for the extreme you know do it true you know almost anarchist [TS]

01:47:28   libertarians who want almost no government regulation over every any [TS]

01:47:34   aspect of life period and on the other end people you know who push for too [TS]

01:47:39   much and I think you know I think Bitcoin and government regulation over [TS]

01:47:46   these sort of Bitcoin in other things like it is no regard for the right [TS]

01:47:52   amount of government regulation is not zero if you've ever tried to pay [TS]

01:47:56   somebody in another country [TS]

01:47:58   anything except through Paypal which has its own issues and problems and its [TS]

01:48:04   weird actually PayPal works as well yeah because every other method is horrible [TS]

01:48:09   to pay you have to pay huge piece or it's impossible takes a long time never [TS]

01:48:13   gets there and there's some there's a huge thing about remittances this is one [TS]

01:48:16   thing that increasing mentioned I think it's worth bringing up is that there is [TS]

01:48:19   a potential benefit for poor people for the poorest people the world especially [TS]

01:48:23   immigrants who live in far-flung countries from other parts of family [TS]

01:48:27   there's a huge amount of money extracted when if you live in America and you say [TS]

01:48:32   money back to you on something like this there's a huge fee that comes out this [TS]

01:48:36   and it's it's not 10 percent I think it's typically multiple percentage [TS]

01:48:40   points and then there's often banks have remittance and other views [TS]

01:48:43   plus the government me take a child as well for incoming money so just like [TS]

01:48:47   Voice over IP at the crack earliest Lake 1200 bps dial-up you could still get a [TS]

01:48:53   voice over it or whatever like the minute Voice over IP became a real thing [TS]

01:48:57   that changed the relationship between all these far-flung people and people [TS]

01:49:02   were able to talk to the family and then Skype video even at low bandwidth let [TS]

01:49:06   them see their families again and so there's as hundreds of billions of [TS]

01:49:10   dollars in the system that are that are sucked out because each year hundreds of [TS]

01:49:14   billions dollars are transferred among countries by poor people essentially [TS]

01:49:17   sending money back home and there is an advantage there and in just in for a [TS]

01:49:20   buddy in the show you in the middle class and above or you know things like [TS]

01:49:23   the unbanked and the non-bank the people who can't or the unbanked unless bank or [TS]

01:49:29   something its [TS]

01:49:30   people have a hard time having a bank account because of the chemical [TS]

01:49:33   imbalance or because they didn't leave that doesn't have bank right like this [TS]

01:49:38   food deserts push in the us- what's your name from the great senator from [TS]

01:49:46   Massachusetts has brought this up to push to turn post offices in the bank's [TS]

01:49:55   let people do simple simple banking at the post offices because there is a Post [TS]

01:50:01   Office accessible to everybody in low-income urban areas so it's only [TS]

01:50:10   three people opposed to her existing banks commercial it's it's expensive to [TS]

01:50:15   be poor [TS]

01:50:16   this is a horrible thing if you're the working poor it's one the most expensive [TS]

01:50:19   things one was expensive ways of life because you have to check cashing [TS]

01:50:23   outfits to get your money [TS]

01:50:25   excessive fees because you don't qualify for the level of things don't have fees [TS]

01:50:28   you pay subprime mortgages you pay like every part of the system is designed to [TS]

01:50:32   keep you down and say it's unintentional it may just be systematic is systemic [TS]

01:50:37   but there's all this predatory action it's and it's it's actually a time gone [TS]

01:50:44   long but the us- post offices anybody's curies Google in read about it's [TS]

01:50:50   actually pretty clever because it works two ways one it would help a lot of [TS]

01:50:54   people who don't have access like you said underbanked non-bank people to it [TS]

01:50:59   would actually help the post office because the post office is [TS]

01:51:03   self-sufficient financially they r operate on the postage that they sell a [TS]

01:51:10   lot of people who are sort of opposed to the post office that day you know should [TS]

01:51:13   just go private or whatever because they think it's sucking up tax money but it's [TS]

01:51:18   not [TS]

01:51:18   but the problem they're running into is that as the world goes digital the [TS]

01:51:22   people are sending less unless mail and so that you know it's getting harder for [TS]

01:51:27   them to keep postage rates low and stay in the black if they got into banking it [TS]

01:51:32   would be it would infuse them with you know funds to be solving sure you know [TS]

01:51:40   the post office not to get too deep to the post of a scam is that the congress [TS]

01:51:43   even though it's essentially a private agency run its own funds congress forces [TS]

01:51:48   them to find their pension at a level that is so far ahead the post office [TS]

01:51:53   required to contribute a level that's far I have solvency and essentially no [TS]

01:51:57   corporation no other part of government no steady state or federal is required [TS]

01:52:01   to fund the pensions their way into the post office actually in better shape [TS]

01:52:05   than it seems accepted obligated to put money away that it does not need to it's [TS]

01:52:09   the weirdest thing it's it's part of the it's it's a longstanding political [TS]

01:52:13   problem but but yeah be great for us to far-field there but it's there are great [TS]

01:52:18   benefits to something like Bitcoin that relies on that doesn't rely on using [TS]

01:52:22   physical pieces of paper or parts of the banking system that are designed to [TS]

01:52:26   extract money at every step that the bars are putting the way not to not for [TS]

01:52:31   sensible reasons like reducing fraud or reducing I don't know the country's know [TS]

01:52:38   where my is moving to pay tax at these things in place for that but a lot of [TS]

01:52:41   the banking system the private banking system is set up for the purpose of [TS]

01:52:44   extracting the most bees from the most people as banks make massive profits off [TS]

01:52:49   typical banking operations so bitcoins potential or things like big way would [TS]

01:52:54   be to break some of the monopoly of banks holding money so you know about [TS]

01:52:59   this thing called hawala rate this a longstanding transfer system ok so we're [TS]

01:53:06   very long haul is a system a chain wala is then it's it's sure you've heard [TS]

01:53:15   about the system it's it's it's not the storm system but it's originated a lot [TS]

01:53:21   of Islamic countries and the ideas that you have people now all around the world [TS]

01:53:24   but used to be traders all around this region's they have account books [TS]

01:53:28   and so now you here's what you do you go to a place you live in Pakistan he said [TS]

01:53:32   he got a hundred dollars to my brother in indiana and goes great and he breaks [TS]

01:53:37   the thing is legit has some codes he calls it the Gunners in DNA says give [TS]

01:53:41   that guy hundred bucks when a guy says okay yeah and then they transfer some of [TS]

01:53:48   the some point of some reconciliation like them there is no somebody in [TS]

01:53:52   burundi [TS]

01:53:53   they work it out its yeah it's a lot of people involved in this I'm sure those [TS]

01:54:00   abuses of with the times but it's a system it's instantaneous money transfer [TS]

01:54:05   based on you know there's some sort of feel like that $101 to send $100 yeah [TS]

01:54:16   it's actually it's but it's there's no other ppl she's actually very [TS]

01:54:20   informative of course as you get the idea is that it's it's in in the [TS]

01:54:27   communities like that even when they're spread out across the world there is a [TS]

01:54:30   lot of trust because there are huge consequences because they're based on [TS]

01:54:33   familial relationships or cultural ones and some countries might be killed if [TS]

01:54:39   you violate the system other countries it's not clear to go to jail or not but [TS]

01:54:42   you be breaking this [TS]

01:54:43   outcasts lost your life from your entire community you would never be able to do [TS]

01:54:47   anything so there's a social component but declined as hawala it's just done [TS]

01:54:52   cryptographically so there's no trusted you can work with untrusted so there is [TS]

01:54:56   a model for this actually has existed just without the cryptographic component [TS]

01:55:00   a lot of people point to halt as something that's a way to bypass banks [TS]

01:55:04   you bypass there are fees but you bypass all the infrastructure put in place and [TS]

01:55:08   as a sort of existence proof that the system could work [TS]

01:55:11   sustainably and if you take trust if the if the one who all is that you need to [TS]

01:55:16   enough people to trust each other [TS]

01:55:18   absolutely that you take trust up by using cryptography [TS]

01:55:22   me take one last break her third final sponsor answer good friends at [TS]

01:55:27   audible.com [TS]

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01:55:46   just go there and purchase individual books but for real savings you can sign [TS]

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01:56:02   because you've got a long commute or some other area where you just love [TS]

01:56:06   listening to audio content of hours to fill audible with more e-books than you [TS]

01:56:14   could our audio books I should say than you could ever listened to in your [TS]

01:56:17   lifetime you should go there and check them out they always want every time [TS]

01:56:21   they sponsor they always want the host of the show to make a pic to pick up [TS]

01:56:26   interesting book I have 1 I've been reading about halfway through on the [TS]

01:56:34   advice of my good friend Scott Simpson spiral author name rich Cohen CEO AGN [TS]

01:56:41   and the book is called monsters the 1985 Chicago Bears wild heart of football [TS]

01:56:49   ostensibly to look back I was just written a just-released think about a [TS]

01:56:53   month ago maybe six weeks ago so it's a new book looking back at the 1985 Bears [TS]

01:56:58   anybody who grew up in the eighties you remember the 1985 Bears they won the [TS]

01:57:02   Super Bowl but there was more than just a football team that was the team had [TS]

01:57:06   the Super Bowl shuffle that Klein oh yeah there was a great day they had a [TS]

01:57:12   video that was like it was like a number one video on MTV they were in a made it [TS]

01:57:17   during the season it would have William the refrigerator Perry he was like a [TS]

01:57:23   three hundred and seventy five pound defensive guy who they would bring bring [TS]

01:57:27   any given handoffs when they needed one yard because he was so big he could [TS]

01:57:31   never fail not to get one yard huge number of colorful characters just as it [TS]

01:57:38   was it was almost like that [TS]

01:57:40   1985 Bears were almost like the World Wrestling Federation brought to [TS]

01:57:45   legitimate sports and it's not a special thing about this book is not a sports [TS]

01:57:51   sports book it's sort of a port says pop culture book and again if you guys know [TS]

01:57:59   anybody know Scott Simpson follow his Twitter whatever you know he's not a [TS]

01:58:02   sports head my wife had to not a football fan and really enjoying the [TS]

01:58:09   book really really interesting book and and it's it's just one of those things [TS]

01:58:13   where I was 12 when the 85 Bears were around in it I just took him for granted [TS]

01:58:17   but now hindsight in reading the book it's like it's a recall what an oddball [TS]

01:58:24   crazy ass team that they were and they were also tremendously successful that's [TS]

01:58:30   my recommendation they've got the unabridged version of it on audible [TS]

01:58:34   check it out [TS]

01:58:35   Monsters by Rick on and just in general where do you go to find out more about [TS]

01:58:43   audible you want to listen to audio books here's where you go [TS]

01:58:47   the URL is audible podcast dot com slash the talk-show audible podcast dot com [TS]

01:58:55   slash the talk show and they'll know you got there from from this podcast show my [TS]

01:59:01   thanks to check them out if you like books here one last thing I thought we [TS]

01:59:07   could talk about before we sign off is no go to fail [TS]

01:59:11   situation which is interesting in and of itself because it's a really i mean you [TS]

01:59:17   know all security updates and security problems in the in a popular OS are [TS]

01:59:21   important but this is a pretty bad and it's also so just he would be bad no [TS]

01:59:27   matter what the actual nature of the bugless but the fact that the nature of [TS]

01:59:32   the bug was it's superfluous line of code that said go to fail is almost [TS]

01:59:40   unimaginably it is too neat rate like if you put that in a movie be like oh come [TS]

01:59:46   on go to fail my initial reaction was this is absolutely a plant rate Marco [TS]

01:59:56   army has to the good question which was if Apple employee I don't exactly this [TS]

02:00:01   way but this is my version of it is if an Apple employee worse aborn let's say [TS]

02:00:05   they were on a plant they weren't hired by the NRC to be coming up employee in [TS]

02:00:09   whatever but the SAU go you not gonna do when they come with the government is my [TS]

02:00:14   whatever you can we talk and you can talk about this because I would be a [TS]

02:00:19   national security violation you go to jail for a huge Matt I'm a huge penalty [TS]

02:00:23   felony in fact you might actually be reminded or we know god knows what I [TS]

02:00:26   couldn't even though american citizens are or disappeared but more like there [TS]

02:00:30   are rules now that we don't totally understand about under which people are [TS]

02:00:33   charged in which the information is not become public right so someone comes and [TS]

02:00:37   says whatever you need to put Atletico do with the analyzed this and you can [TS]

02:00:41   tell it work if it comes up you know maybe be fired thats your problem [TS]

02:00:44   whatever [TS]

02:00:46   like that is not implausible scenario I have heard [TS]

02:00:52   but I've read again you know a lot of this is speculation how we can improve [TS]

02:00:58   it but what I've read is that the way that the NSA goes about this and it's [TS]

02:01:04   sort of an open secret is that it's not so much threatening and it's not so much [TS]

02:01:09   like you gonna do this or you want to but that it's an appeal to patriotism [TS]

02:01:13   and that they may identify people within companies who you know and now how they [TS]

02:01:20   identify them I don't know but there they do and who knows maybe you know in [TS]

02:01:25   the modern era [TS]

02:01:26   you know a lot of that come out of Facebook and Twitter a social-networking [TS]

02:01:33   where they are you know somehow see what their interests are and try to identify [TS]

02:01:37   people who are going to have a sort of pro law enforcement or pro an essay [TS]

02:01:45   minds and that they appeal to them on a patriotic basis and that it's that [TS]

02:01:51   there's really no coercion I mean I think maybe the only part that's [TS]

02:01:54   coercive is probably the UK you know we'd like to talk to you and you can't [TS]

02:01:59   tell anybody about this conversation and so that part is you know you love it [TS]

02:02:06   would be that because they'd be like re just for them talking to me I'm not [TS]

02:02:09   gonna make a stand because they'd find people who are very tricky though for [TS]

02:02:14   the NSA spying but it makes sense to appeal to their patriotism see here's [TS]

02:02:18   what we would like you to do and here's why we it would help your country here's [TS]

02:02:24   you know what would be able to do know you do this it will help us because [TS]

02:02:28   we'll be able to use it to identify [TS]

02:02:31   you know bad guys who are planning bad things to do in the USA and that [TS]

02:02:35   although I thought that was initially I thought that seem more likely but as [TS]

02:02:40   it's come out if you like Marco in and his gang talked about it on my cell take [TS]

02:02:47   podcast quite a bit too is that it doesn't pass the smell test in that this [TS]

02:02:52   particular flaw is probably was probably a mistake because for two reason the [TS]

02:02:57   point is it's extremely broad once you know about you can exploit it and anyone [TS]

02:03:02   can and so the NSA doesn't get it exclusively and that seems like a big [TS]

02:03:07   deal and Stephen relevant to his blog he was the longtime Peter science professor [TS]

02:03:18   teacher is responsible for the tool he created one of the early tools that we [TS]

02:03:24   used to use on UNIX systems in the early days to scan for stuff he's a really [TS]

02:03:27   smart encryption guy very well-respected the FTC is chief technology officer [TS]

02:03:33   chief technologist four-year recently and he said you know the problem with [TS]

02:03:37   the sea manana si did this is just too clumsy it's too easy to spot you know it [TS]

02:03:41   once you find it is gone anywhere else could get to it he said what's much more [TS]

02:03:44   likely in this is why I hear on the idea that that it was just an emerging trees [TS]

02:03:52   or something is that it's so it's a weird thing so I'm testing which is why [TS]

02:03:57   it wasn't spotted its remember this this this has been misrepresented its not [TS]

02:04:01   that it validates a certificate incorrectly bad certificates fail the [TS]

02:04:06   problem is that once you've led the certificated doesn't validate that the [TS]

02:04:09   key for the session was signed by that certificate so you had UK so the key can [TS]

02:04:15   be any can be from any party so your earlobe and you pass along all the [TS]

02:04:20   certificate stuff and everyone's happy with that they need to send a key signed [TS]

02:04:23   by something else and he goes through that's very very weird exploit its very [TS]

02:04:29   effective if you want to use it as you can see how quickly people came up with [TS]

02:04:33   proofs to show you the the problem but his thing was relevant thing which makes [TS]

02:04:36   less sense if he does something like this they put in some weird random [TS]

02:04:40   number thing that they take her with something so they only they're the only [TS]

02:04:43   ones who know the number that triggers it and you can't figure it out unless [TS]

02:04:46   you do some deep analysis we figure there's actually a flaw in the degree of [TS]

02:04:50   entropy or whatever so one key will work and they know the key right they put in [TS]

02:04:55   a back door that they have the key to not that they would put in a back door [TS]

02:04:59   that doesn't have a working walk they don't want everyone I mean you know I do [TS]

02:05:04   actually believe that their mission I think from their standpoint [TS]

02:05:07   their mission is not just to its both offensive and defensive is like they may [TS]

02:05:11   want back doors but they don't want government something like this would [TS]

02:05:16   seem like bill so I yeah I don't think that the goto fail bug in Apple's SSL [TS]

02:05:23   code [TS]

02:05:23   was planted by the NSA buying anything I do they did a very likely that they do [TS]

02:05:30   have morals I don't think this is one because it's a you said they expect you [TS]

02:05:34   think I do I do think that the end and say you said you know it's the sort of [TS]

02:05:40   bug when you look at the source code where if you're not looking for bugs [TS]

02:05:43   it's real I can see how you overlook and it's again like I I blogged about what I [TS]

02:05:48   wrote about it and not to get an argument about C coding style but it's [TS]

02:05:52   why I think that the no braces if statement the basic gist of if [TS]

02:05:57   statements and see is if you say if this then if there's only one statement you [TS]

02:06:02   don't need to Brabin curly braces and if there is more than one then you have to [TS]

02:06:06   put curly braces to begin and end the block of what's going to happen if that [TS]

02:06:11   conditional is true and I've always felt having been bitten about bitten by that [TS]

02:06:15   laziness and almost gonna do one thing but you invented and then you come back [TS]

02:06:20   to the code a week two weeks later and you've you just quick hit return your [TS]

02:06:27   text editor auto indent and you write the next line it's easy to make that bug [TS]

02:06:33   and once the bug is in there it's easy to overlook it but if you're looking for [TS]

02:06:39   bugs that really jumps out the go to go to everybody like when it when this came [TS]

02:06:43   out everybody who can program even a little bit is i whoa how would that ever [TS]

02:06:47   get in there like if you're actually looking for a bug it its glaring there's [TS]

02:06:51   nothing clever million reviewed it auto merge tool created this problem and no [TS]

02:06:56   one looked yeah and that's the thing is I cannot comes raisin razor argument [TS]

02:07:02   where that's the sort of thing that happens from a diff gone bad you know [TS]

02:07:06   that it when they emerged you know the diff told gets confused by the two [TS]

02:07:13   versions it's trying to merge together a lot of times you'll get a duplicate line [TS]

02:07:17   like that and it just so happened but I do think I do think and it's just just [TS]

02:07:23   based on the way Apple wrote the bug up in a way that they they fixed it [TS]

02:07:27   days before [TS]

02:07:29   during or shortly not days before but a week or two Iowa 7.1 was gonna come out [TS]

02:07:37   anyway I really do think I think that Apple founded in an audit and figured [TS]

02:07:43   you know figured out that it explains how the NSA was claiming to do what they [TS]

02:07:49   were doing the timing is that time you suspicious though like you see the [TS]

02:07:53   PowerPoint thing Apple says we are gonna go through every line coach this is what [TS]

02:07:58   you really the Microsoft to this one of the reasons that Vista actually had a [TS]

02:08:01   superior security model 22 Windows XP was not time it was because Bill Gates [TS]

02:08:09   heat you know everything the company was doing for months to go through it on it [TS]

02:08:13   and it worked because Windows Vista was much more secure allow the XP stuff and [TS]

02:08:17   he never sense and it's actually outpaces Apple typically and that's why [TS]

02:08:22   they're one of the reasons that exploits have moved to new applications and weak [TS]

02:08:26   points like flash and things like that because Windows is more secure so you [TS]

02:08:31   know in so here's another bit of time in which is interesting as well as [TS]

02:08:33   researchers just found I think it's like while recording this that like there's [TS]

02:08:37   another cryptographic flaw that can be exploited involves client certificates [TS]

02:08:43   and TLS SLT last transaction so if you connect to web server and you have a [TS]

02:08:47   client certificate which most people do not you know you get issued a client [TS]

02:08:52   certificate when you log in this specific way so like a normal [TS]

02:08:56   transaction you just going to get the server certificate your browser [TS]

02:09:00   validates that it's accurate to make a secure connection but if you get issued [TS]

02:09:04   one that stored in your browser that brought that certificate apparently bu [TS]

02:09:08   reused by other people and let's be impersonated things like any other [TS]

02:09:14   website in which the same certificates used they can they can use that [TS]

02:09:20   certificate she wears that what what system has this but everything is parts [TS]

02:09:25   actually if I know it's horrible to its a protocol layer flaw that apparently [TS]

02:09:30   will not be difficult to fix but then it's gotta be rolled out but the deal is [TS]

02:09:34   that there are only specific cases in which a client certificates use of some [TS]

02:09:38   kind of WiFi login things where [TS]

02:09:41   you know you take your username and password to login over WiFi throughout [TS]

02:09:45   80221 X all those those systems are using corporations that they've got a [TS]

02:09:50   flaw so it's not like a general problem using my bank but it's in the case [TS]

02:09:54   especially in the enterprise where you may be out in the wild you making a [TS]

02:09:58   secure connection using a client certificate that actually is the [TS]

02:10:01   opportunity for Melissa's malicious interception in a way that would let [TS]

02:10:05   that man the middle use your credentials elsewhere and so a lot of enterprise [TS]

02:10:11   software will need to get fixed as well as web servers just to be on the safe [TS]

02:10:14   side but the enterprise people will probably on it pretty fast but some [TS]

02:10:17   weird again you're like did somebody in all the NSA stuff they got released it [TS]

02:10:22   someone notice it seems like they have a way to do something that seems to be [TS]

02:10:26   implying client certificates maybe we should go back to the protocol and then [TS]

02:10:29   boom something that dates back to think they're saying 2005 and affects the [TS]

02:10:34   entire protocol I know there's a lot of people out there who really do think [TS]

02:10:37   that these big companies are all in cahoots that when the NSA came knocking [TS]

02:10:40   and say can we come in your data center this sure come on and do it every one [TS]

02:10:44   and it is not you know there's no way to disprove it right and it's good in some [TS]

02:10:49   sense it's good that there's some people who are skeptical like that right but I [TS]

02:10:53   I don't think it's true I actually take these companies at their words when they [TS]

02:10:57   say things like no we did not allow the NSA literally physically into our data [TS]

02:11:03   center and the main reason why and it's not just Apple I believe all of these [TS]

02:11:08   companies is that it's it's not in their interests to lie about it if they had [TS]

02:11:13   done it they could just say nothing and they could even say we're not even [TS]

02:11:18   allowed to say we can answer yes or no [TS]

02:11:20   they could just say that and you know and then and then leave it at that [TS]

02:11:24   but by saying by denying it if they're lying about that it opens them up to it [TS]

02:11:30   profound in tremendous loss of trust if it ever turns out otherwise and as we've [TS]

02:11:37   seen with the Snowdon thing anything you know can leak you know there's no just [TS]

02:11:41   because the NSA says you can lie about it will you can trust us you can't trust [TS]

02:11:45   them to have a mistaken leak [TS]

02:11:48   so I just don't see why anybody would lie about it really don't and I think it [TS]

02:11:52   makes sense with the odds with what we're seeing uncovered is what they've [TS]

02:11:55   done is said ok we didn't let them they say they can do it how how is that even [TS]

02:12:01   part where do we need to audit to see that it would be possible for them to do [TS]

02:12:06   it behind our backs without our help to do this I think that's most likely [TS]

02:12:10   because if you got the NSA what they did clearly in let you know it's funny it's [TS]

02:12:16   like as much as I may just like they did this is kind of this is what they've [TS]

02:12:20   been tasked with doing as they went through to find all the flaws in like in [TS]

02:12:23   an ideal world what would have happened since he would have found flaws and they [TS]

02:12:27   would have gone through work privately with every american company to replace [TS]

02:12:31   them and eventually stuff would have trickled out like something like that [TS]

02:12:34   that actually would have been a really great cyber strategy was to not [TS]

02:12:38   implement flaws but he working assiduously to find them maybe exploit [TS]

02:12:41   them at times but also be working to repair them because that would actually [TS]

02:12:45   be good for the country and for what do you make of the one that just came out [TS]

02:12:51   the other day yesterday the day before where it was a very similar to Apple's [TS]

02:12:56   but in the new code oh that's the way this is this is another TLS thing right [TS]

02:13:02   now you don't even see I miss them so the client certificate one what is this [TS]

02:13:07   one said you know that people are looking at its oddly so much more see [TS]

02:13:13   her for this is the thing that makes me wonder though about them all because [TS]

02:13:17   it's oddly similar to Apple's even involves goto statements but it's a lot [TS]

02:13:24   it's looking at the code it's a lot more subtle though it's not as glaring as you [TS]

02:13:33   can create a certificate that would be accepted even though it shouldn't be [TS]

02:13:36   that funny yeah I mean I think I think what it comes down to is that there may [TS]

02:13:42   be a new one it seems really bad me because Apple one I forget how many [TS]

02:13:48   people have already upgraded to 7.2 iOS devices are already on 706 below is one [TS]

02:13:53   of those web [TS]

02:13:55   networks showed that is something like forty percent of iOS devices were [TS]

02:14:00   already on 70 sex is just a tremendous uptake whereas so much stuff is embedded [TS]

02:14:09   systems and routers you know all these things that don't get software updates [TS]

02:14:14   are running this code and will they give you think the Fortune thing is that I [TS]

02:14:18   don't think they're gonna run that code until the until the Howard you know it's [TS]

02:14:25   the AC adapter burns out it's true but the new one like the click the [TS]

02:14:29   fundamental one that was just found two is it has to do with his client [TS]

02:14:34   certificate so it's only in specific cases where like a server in this case [TS]

02:14:40   like the new one a server would accept a certificate should not so you can attack [TS]

02:14:46   a site if it was running the new and you knew it so that's a symmetrical and that [TS]

02:14:50   there's fewer servers update then added Linux devices and the same thing like [TS]

02:14:54   client the client certificate for all of that can be fixed in a few different [TS]

02:14:57   ways the Apple what is particularly horrible because you could have any [TS]

02:15:02   point of intersection though like right you can create a fake session key by [TS]

02:15:06   being a man the middle you can put software to router matters [TS]

02:15:11   hundreds of thousands or you know if you presume that the NSA while they don't [TS]

02:15:16   have access to Apple's data center or Google's let's say but let's say Apple [TS]

02:15:20   AAPL has written this book so they're not and apples building at all but if [TS]

02:15:26   there anywhere on the Internet backbone between that remote device like that [TS]

02:15:33   your iPhone and Apple's data center anywhere in that backbone in between [TS]

02:15:40   this bug opens it up for them to you know it's like a classic man [TS]

02:15:45   man-in-the-middle attack right and you could do it in the country wide basis of [TS]

02:15:48   your iraq someone with an Apple device and whatever you could have been [TS]

02:15:54   countrywide attacks [TS]

02:15:56   well I think about how centralized the internet isn't China yeah exactly right [TS]

02:16:00   so this is this is when these things it's like it's not a back [TS]

02:16:03   you know I don't I think the Sunni where it was an error [TS]

02:16:07   it's it's a sweet I think with this highlights I think what's going to [TS]

02:16:11   happen is you see a lot more bizarre testing I'm surprised that [TS]

02:16:15   implementations are in more thoroughly tested them in certain things like the [TS]

02:16:20   idea to create a malformed client certificate of a certain type of that's [TS]

02:16:25   one weird thing like you can't test every kind of ticket but Apple's one in [TS]

02:16:30   particular its like I would have thought the test we would have checked to make [TS]

02:16:33   sure that when you sent into session he wasn't signed by the same certificate [TS]

02:16:37   that it failed because they test for like self-signed certificates they test [TS]

02:16:41   for lots of kinds of failures and someone asked on Twitter even though [TS]

02:16:45   Chris pepper you know the proper proof reader in an extraordinary program are [TS]

02:16:49   crisp was like will should may also sign certificates pass the test has [TS]

02:16:55   acknowledged leader in the process but that was a good point is if the soup in [TS]

02:16:58   a flaw in a certificate validation tons of programmers would have said why did [TS]

02:17:02   my self signed certificate not generate an error there [TS]

02:17:05   require signing or approvals so this one was a just the point at which most [TS]

02:17:10   people who test this kind of thing or work with security didn't see it and [TS]

02:17:14   that's that may be dubious but it is why I think it went underground for so long [TS]

02:17:19   and clearly there gonna be some apple everyone else the world will be beefing [TS]

02:17:23   up the kinds of automated testing they do whenever they make change libraries [TS]

02:17:27   the sort of thing again [TS]

02:17:28   yeah I definitely think so i think you know I think everybody like you said [TS]

02:17:33   this is what the NSA is tasked with so you know in some sense nothing has been [TS]

02:17:38   surprising with all of the NSA related leaks [TS]

02:17:42   but on the other hand and knowing in your bag a reminder dennis is doing [TS]

02:17:48   something like this is different than getting seen these slides it say here's [TS]

02:17:51   exactly what they're doing and then you know I don't know it somehow they could [TS]

02:17:56   jolt everybody system and I don't think there's any doubt that you know for [TS]

02:18:02   better or for worse and I'll even and play both sides of the coin here and say [TS]

02:18:06   you know there's obviously there could be some downsides to this general I i [TS]

02:18:10   think that it's good news that we've woken up to this but you know who knows [TS]

02:18:14   maybe you know in terms of actually doing with the NSA is tasked with doing [TS]

02:18:19   an actually finding genuine bad guys planning genuinely bad things that this [TS]

02:18:26   is made their job a lot more difficult because it's close gonna end up in [TS]

02:18:29   closing an awful lot of these back doors [TS]

02:18:32   well there's there's that standpoint there's also the lake I wish to say [TS]

02:18:35   there's it's widely stated by many parties that countries like Israel [TS]

02:18:40   France China so far how's that there there's back to him to quit made by [TS]

02:18:47   stones at Israeli companies makes up for that make that work equipment there's a [TS]

02:18:50   long held and often voiced suspicions that every country built back doors and [TS]

02:18:55   stuff that ships out of the country in america where she is being more [TS]

02:18:59   independent Israel even the national security apparatus is more they have [TS]

02:19:03   your constitutional protections and there's more of a state of siege [TS]

02:19:06   mentality there france has a different relationship between business and [TS]

02:19:10   commerce corporate espionage the thing that your government assisted corporate [TS]

02:19:15   espionage the big thing and China so what I was seeing if they were doing was [TS]

02:19:20   constantly working to find report and release information about these kinds of [TS]

02:19:25   laws that affect american companies or companies around the world that are in [TS]

02:19:29   products that are shipping that we're using like that would be a better use of [TS]

02:19:31   resources at some level to secure America on top of their mission have you [TS]

02:19:37   know finding the flaws in exploiting that I don't know it's that would have [TS]

02:19:41   more impact on business to not have you know boeing's plans ripped off Google's [TS]

02:19:44   servers broken into [TS]

02:19:46   yeah I do some of the other some parts [TS]

02:19:49   well that's a good point to wrap up [TS]

02:19:53   clan there's great show I appreciate your time when he won't tell people to [TS]

02:19:59   check out to find more Glenn Fleishman well it's also follow him on Twitter [TS]

02:20:03   whatever you don't think people if you're bad in life you're required to [TS]

02:20:11   follow me [TS]

02:20:11   well the magazines book is actually it's at the printers now shipping soon in the [TS]

02:20:18   eBook version is is more or less done and we've released the PDF format to [TS]

02:20:22   backers were fishing or other flavors the prison is about 1,500 acres small [TS]

02:20:27   print run we have about 1150 1200 committed to backers and other people [TS]

02:20:32   and you can go to the magazine dot com slash book and pre-order a copy of [TS]

02:20:39   either the ebook or e book or a bundle and shipping out books probably a week [TS]

02:20:47   or ten days the books will actually be in some people's hands because it's a [TS]

02:20:51   future books get pretty fast I don't use digital textbooks get pretty fast and [TS]

02:20:54   it's very exciting it's got wait for oil embossing on the spine and things like [TS]

02:21:01   that [TS]

02:21:01   exciting looks good yeah I've seen all the person of color proofs and jacket [TS]

02:21:06   proof's in its gonna be a really nice looking good stories and there'll be [TS]

02:21:12   something to cherish for general know it'll be nice it'll be great it's what I [TS]

02:21:16   was hoping is going to have a really nice we did it we try to do everything [TS]

02:21:21   right so the print version would really be something that was a keeps aiken and [TS]

02:21:24   we something you would actually enjoy having a copy of as a thing as well as [TS]

02:21:27   all the stories inside and i feel like i tweeted something to the effective oh my [TS]

02:21:34   god you guys there's a story here there's a huge story here filled with [TS]

02:21:39   nothing but shelves of printed out e-books it's amazing [TS]

02:21:44   ads so many people got it and laugh but it was probably one of those you know I [TS]

02:21:50   probably got more people who told him miss that it was a joke than any tweet [TS]

02:21:56   here's what's the name of it here's the crazy thing about modern times we were [TS]

02:22:01   doing it was actually much easier to get the book printed it to the ebook part [TS]

02:22:04   wow wow part is a mess [TS]

02:22:08   we ascended PDF and they kill budgetary is and squeeze in cows or something in [TS]

02:22:15   the book but the election but what we're doing is we're gonna have the hardcover [TS]

02:22:20   book offset print well the eBook which will be 300 pages hardcover books toward [TS]

02:22:26   16th we have a bigger book because we're able to find that are and then I'm also [TS]

02:22:30   producing a print on demand version will be a larger size because our hardcover [TS]

02:22:34   books for my small have made a different document in InDesign that's the eBook [TS]

02:22:39   version three hundred and two pages that will be available print on demand [TS]

02:22:42   because it's so god damn expensive to ship overseas but ebooks are printed [TS]

02:22:47   banner printed locally so people in Europe and in Canada at least we'll be [TS]

02:22:52   able to get the full color but they'll be able to get an affordable version of [TS]

02:22:57   the ebook as a parent mantle's ebooks are much more like print is incredibly [TS]

02:23:03   easy now has a deal with the stuff I just given the PDF eBooks you like in [TS]

02:23:09   there like making sausage so it really isn't a joke anymore [TS]

02:23:15   books it's like an industry then there's different chains of command but it's [TS]

02:23:21   like is improving my ebook we're all it's just it's all it's a weird world in [TS]

02:23:27   which having giant chunks of paper wrapped in printed is easier than ebooks [TS]

02:23:32   with that as well I'm glad to hear it I look forward to seeing it [TS]

02:23:36   all right thank you pleasure [TS]