The Exchanges

Q So, um, Nathaniel, speaking of Argentina, though, there are plenty of places in the world that have hyperinflation. Um, what about the environment there made Bitcoin take off? I mean, there could have been other alternatives. I mean, it's not like it's the only option.

A It's not the only option, and in fact, people have lots of other ways of, of getting around the local currency and getting around the local financial system, and frankly, the, the most popular way to, to get around the peso is the dollar, so there are already, there's already a whole infrastructure and world of money changers in Argentina who are changing between dollars and pesos, um, and that's, That is something that sort of set the stage for Bitcoin. I think that what Argentina has that a lot of other places don't have with dysfunctional economies is a very well-educated, literate, uh, tech-savvy population that, that knew how to, um, embrace this technology and that had the skills to do that and, and, and a comfort with, The idea of a digital currency. I don't know that that's the same conditions exist in a place like Venezuela or Zimbabwe, so Argentina is somewhat unusual in that respect.

AI assessment note: “what Argentina has that a lot of other places don't have... is a very well-educated, literate, tech-savvy population”

Q interesting theme that comes up in the Argentina story that you tell, too, is this tension between decentralized and centralized players, and how a lot of people don't trust centralized players like banks. Um, but yet so many aspects of the Bitcoin ecosystem are, in fact, Centralize. I mean, there are some choke points in there for better or worse. Do you have any thoughts on how that plays out?

A Well, I think it's, it's certainly one of the, the, the constant tensions in my book as I tell the history of Bitcoin. Um, and, and, and because in reality, many of the crises that have hit Bitcoin, um, Have been as a result of people trusting their bitcoins with some central institution that was essentially allowed to hold their money in the same way that a bank does, but without any insurance. And I think obviously the most notable case of this was Mt. Gox, which essentially held everyone's bitcoins. And, uh, eventually lost or, or stole all of those Bitcoins. The jury's still out on exactly what happened there. But, um, that, that has been an issue that people don't, don't actually seem to trust themselves to use truly decentralized technology, or, or perhaps they don't have the abilities to do so. And so, You know, I think a lot of the focus in the, in the developer community now is on, on building programs that can allow people to get the advantages of the decentralized technology without having to deal with all the complications of it, but I, I think that's a real issue, and, um, I mean, I think it's always at the, at the center of these debates about, Um, the internet, and obviously we now have this with Google and Yahoo. We have a decentralized internet, yes, but you do have these companies that are essentially serving as the middlemen and that have the ability to track…

AI assessment note: “crises that have hit Bitcoin, um, Have been as a result of people trusting”

Q Argentina, um, where people are trading pesos for Bitcoin and vice versa instead of actually into other currencies. Could you talk a little bit about why you think that phenomenon is happening? Um, um, I mean, one of the things you comment on is that it's the only place where ordinary people, that you, you think it's the only place where ordinary people are using Bitcoin for real commercial transactions.

A Yeah, I mean, I, I, in the course of writing this book, I traveled to most of the places where Bitcoin has caught on in any significant way, and I was always on the lookout for people actually using Bitcoin, you know, people who weren't just speculating on the price of Bitcoin or, uh, working on it for sort of Uh, political or technological reasons. I wanted to see people using it in some ordinary way. And in Argentina, as I mentioned, as you mentioned, is really the one place where I saw that happening, where I saw ordinary people who didn't have any political motivations, didn't really understand the technology using Bitcoin because it allowed them to do something they, they couldn't do with their ordinary currency. They couldn't do in the ordinary financial system. And So to me, it was really the, the most interesting experiment for Bitcoin, and the most interesting place to look at to understand how it might be used if this did catch on more. And, um, I think the, the Argentinian experience is clearly a little unusual, and so it would be easy to say that, You know, Bitcoin is catching on there because it's just a totally screwed up. It has a totally screwed up currency. It is a, you know, largely a totally screwed up country. Uh, you know, it's had hyperinflation, multiple incidents of hyperinflation. They've defaulted on their debt, all of this, and so that, that, that is …

AI assessment note: “hyperinflation. They've defaulted on their debt... and so that... is certainly why it's being used”

Q So, um, Nathaniel, speaking of Argentina, though, there are plenty of places in the world that have hyperinflation. Um, what about the environment there made Bitcoin take off? I mean, there could have been other alternatives. I mean, it's not like it's the only option.

A It's not the only option, and in fact, people have lots of other ways of, of getting around the local currency and getting around the local financial system, and frankly, the, the most popular way to, to get around the peso is the dollar, so there are already, there's already a whole infrastructure and world of money changers in Argentina who are changing between dollars and pesos, um, and that's, That is something that sort of set the stage for Bitcoin. I think that what Argentina has that a lot of other places don't have with dysfunctional economies is a very well-educated, literate, uh, tech-savvy population that, that knew how to, um, embrace this technology and that had the skills to do that and, and, and a comfort with, The idea of a digital currency. I don't know that that's the same conditions exist in a place like Venezuela or Zimbabwe, so Argentina is somewhat unusual in that respect.

AI assessment note: “a very well-educated, literate, uh, tech-savvy population that, that knew how to”

Q a bullet to the brain, which I thought is really funny turn of phrase, but why, why would he make that argument? Um, at the same time. So on one hand, you see this phenomenon in Argentina. And on the other hand, you're hearing, you know, folks say that, but countries should not think of it as, you know, as a replacement for their currency or to augment their currency.

A I mean, I think, I think it's similar to the argument that the internet in 1995 Was not equipped to handle Facebook or Netflix. You just, you just didn't have the bandwidth at that point. I mean, the basics of the, of the technology of the internet existed in 1995, but you need a lot of stuff to go into it and to, to, uh, to, to sort of create a foundation for it to allow, to allow more significant things to be built on top of it. And I think It's pretty clear that at this point, Bitcoin is not ready for prime time in that way. There are, there are sort of basic problems with the, with the protocol, with the number of transactions that can go through the system, and significant improvements that need to be made before it can become that sort of workaday thing for larger economies. And I think that Wences, it's interesting to hear him say that, um, but I think it's, it's widely understood among a lot of the people working on this, that this, there's still a lot of work that needs to be done, and, and sometimes there's a desire to see a technology like this, um, you know, embraced immediately. People want this to become the, the global reserve currency next year. And I think the people who are kind of really in the trenches working on this recognize that this sort of thing takes five, 10 years, and, and, you know, Wences often would say that to me when I was talking to him in the…

AI assessment note: “Bitcoin is not ready for prime time in that way. There are sort of basic problems”

Q interesting theme that comes up in the Argentina story that you tell, too, is this tension between decentralized and centralized players, and how a lot of people don't trust centralized players like banks. Um, but yet so many aspects of the Bitcoin ecosystem are, in fact, Centralize. I mean, there are some choke points in there for better or worse. Do you have any thoughts on how that plays out?

A Well, I think it's, it's certainly one of the, the, the constant tensions in my book as I tell the history of Bitcoin. Um, and, and, and because in reality, many of the crises that have hit Bitcoin, um, Have been as a result of people trusting their bitcoins with some central institution that was essentially allowed to hold their money in the same way that a bank does, but without any insurance. And I think obviously the most notable case of this was Mt. Gox, which essentially held everyone's bitcoins. And, uh, eventually lost or, or stole all of those Bitcoins. The jury's still out on exactly what happened there. But, um, that, that has been an issue that people don't, don't actually seem to trust themselves to use truly decentralized technology, or, or perhaps they don't have the abilities to do so. And so, You know, I think a lot of the focus in the, in the developer community now is on, on building programs that can allow people to get the advantages of the decentralized technology without having to deal with all the complications of it, but I, I think that's a real issue, and, um, I mean, I think it's always at the, at the center of these debates about, Um, the internet, and obviously we now have this with Google and Yahoo. We have a decentralized internet, yes, but you do have these companies that are essentially serving as the middlemen and that have the ability to track…

AI assessment note: “people don't, don't actually seem to trust themselves to use truly decentralized technology”

Q with. Um, so maybe email is a better way of, well, maybe email is a better way of thinking of it than even saying internet because everyone uses email. It bypasses, you know, there are central services, but it bypasses Sort of a single central player. Um, I don't know what else about email. Why would you say, what else would you say makes it the financial version of email?

A Well, it's just, it's, it's a way to send things that you have control over. Often, oftentimes people get, get focused on the idea of Bitcoin as a currency because that's the easiest, uh, thing to grasp. Everybody understands money. Everybody understands Gold, and that's true even in the title of my book, Digital Gold, but it's, it's more than just a thing. It's more than just a token. It's a way to move things, and so I think email conveys that, that you're moving something, but the email itself is a thing that's valuable as well, and so, um, that to me is why that, that metaphor makes sense, and obviously it's something that everybody understands and can use, um, Um, and, and really, it is just a way to move money as quickly as email moves information, and of course, both of them are built on top of the internet and rely on that, um, that foundation, but do something new on top of that.

AI assessment note: “it is just a way to move money as quickly as email moves information”

Q Do you think, though, the situation in Argentina is a stopgap, or do you, was your sense from, you know, your observations there that it's actually going to be, people are converted, and they're going to continue doing this, especially as the protocol and the technology evolves?

A I mean, I think, I think the specific situation in Argentina is going to depend a lot, actually, on what the local government does. Um, the, the, the, the real problem with, with transferring money internationally there is this artificial exchange rate that the government creates, and that's where you lose most of your money when you bring, when you bring currency into the country is, is the artificial exchange rate between dollars and pesos. And so, if the government does away with that, if the government begins to deal with inflation, then the advantages of Bitcoin are going to become a lot less significant. Um, now, I think part of what's interesting that you're seeing in Argentina is that people are starting to use it for more than just the Um, just the international transfers. I mean, that was the first big sort of use case, but, um, as people are becoming familiar with it, and more programmers are becoming aware of it, they're seeing the other ways in which it might be used, and one of the really interesting projects that going, that's going on right now is actually being led by Wences' company, Zappo. They have teamed up with, uh, Local social network called Turinga, uh, which is, you know, this, this local sort of Reddit, Facebook site, and they're, they're using Bitcoin not as a way of transferring large amounts of money, but actually as a way of allowing for really sm…

AI assessment note: “the specific situation in Argentina is going to depend a lot, actually, on what”

Q a bullet to the brain, which I thought is really funny turn of phrase, but why, why would he make that argument? Um, at the same time. So on one hand, you see this phenomenon in Argentina. And on the other hand, you're hearing, you know, folks say that, but countries should not think of it as, you know, as a replacement for their currency or to augment their currency.

A I mean, I think, I think it's similar to the argument that the internet in 1995 Was not equipped to handle Facebook or Netflix. You just, you just didn't have the bandwidth at that point. I mean, the basics of the, of the technology of the internet existed in 1995, but you need a lot of stuff to go into it and to, to, uh, to, to sort of create a foundation for it to allow, to allow more significant things to be built on top of it. And I think It's pretty clear that at this point, Bitcoin is not ready for prime time in that way. There are, there are sort of basic problems with the, with the protocol, with the number of transactions that can go through the system, and significant improvements that need to be made before it can become that sort of workaday thing for larger economies. And I think that Wences, it's interesting to hear him say that, um, but I think it's, it's widely understood among a lot of the people working on this, that this, there's still a lot of work that needs to be done, and, and sometimes there's a desire to see a technology like this, um, you know, embraced immediately. People want this to become the, the global reserve currency next year. And I think the people who are kind of really in the trenches working on this recognize that this sort of thing takes five, 10 years, and, and, you know, Wences often would say that to me when I was talking to him in the…

AI assessment note: “Bitcoin is not ready for prime time in that way. There are, there are sort of basic problems”

Q with. Um, so maybe email is a better way of, well, maybe email is a better way of thinking of it than even saying internet because everyone uses email. It bypasses, you know, there are central services, but it bypasses Sort of a single central player. Um, I don't know what else about email. Why would you say, what else would you say makes it the financial version of email?

A Well, it's just, it's, it's a way to send things that you have control over. Often, oftentimes people get, get focused on the idea of Bitcoin as a currency because that's the easiest, uh, thing to grasp. Everybody understands money. Everybody understands Gold, and that's true even in the title of my book, Digital Gold, but it's, it's more than just a thing. It's more than just a token. It's a way to move things, and so I think email conveys that, that you're moving something, but the email itself is a thing that's valuable as well, and so, um, that to me is why that, that metaphor makes sense, and obviously it's something that everybody understands and can use, um, Um, and, and really, it is just a way to move money as quickly as email moves information, and of course, both of them are built on top of the internet and rely on that, um, that foundation, but do something new on top of that.

AI assessment note: “it is just a way to move money as quickly as email moves information”