Episode 41 - Bitcoin in Real Life

Participants: Adam B. Levine (AL) - Host Stephanie Murphy (SM) - Co-Host Andreas M. Antonopoulos (AA) - Co-Host eor!e Mandri" (GM) - #ounder o$ eor!e%s #amous Ba"lava AL: Hi and welcome to Let's Talk Bitcoin a twice weekly show about the ideas, people, and projects building the new digital economy and the future of money. isit us at letstalkbitcoin.com for our daily guest blog, show archi!e, and of course tipping options. "y name is #dam B. Le!ine and on today's show we're really digging in. "any of the people we ha!e talked to were fairly new to Bitcoin, disco!ering it and getting in!ol!ed with it the last year. They can see were they think things should go but often don't ha!e a lot of underground e$perience. %tephanie sat down with &eorge "andrik, an agorist merchant who is been accepting Bitcoins for more then two years, both from online sales and high !olume in'person e!ents. "andrik's prospecti!e is a !aluable one and %tephanie(s wide'ranging inter!iew sits in the center of this episode. Later )'m joined by both, %tephanie "urphy and #ndreas ". #ntonopoulos to discuss the %atoshi *orrest project by Bitcoin charity %ean's outpost, the first Bitcoin #T", or !ending machines if you prefer, to hit the market and what situations they make sense in. But first, what the heck is going on with the price'bur between "t. &o$ and e!erybody else+ ,e talk about it. -njoy episode ./ of Let's Talk Bitcoin. 0/:123

&Part '( &':)*( AA: Hey Adam+ Stephanie. ,hat%s the price o$ Bitcoin today- - .h/ 0on%t ans1er that+ it%s a rhetorical 2uestion - ,e have no idea+ 1e have a3solutely no clue. &':4'( SM: 5t depends on 1ho you as". 6i!ht- &':47( AA: 89actly. Price discovery 1as really easy 1hen you had one e9chan!e 1ith+ as they used to say+ :; percent o$ the volume o$ Bitcoin. <o1 1e have three e9chan!es sharin! a3out :;= o$ the volume o$ Bitcoin. And that theoretically should o$$er a 3etter price discovery. >n$ortunately Mt. o9 is still at 2uite a di$$erence $rom the other t1o e9chan!es. ?his is a phenomenon that%s developed over the last months and 5 thin" it%s rather interestin!. ,e see this enormous spread in prices 3et1een Mt. o9 and the other e9chan!es. ,hy is this happenin! and 1hat does this mean $or Bitcoin- ,hat you !uys thin"- &):);( SM: 5%ve a theory. 5 thin" the prices on each e9chan!es are 3asically directly proportional to ho1 di$$icult or easy it is to !et $iat money in or out o$ the e9chan!e. #or instance 1ith B?C8+ 1hich has the lo1est price in !eneral $or Bitcoin+ it%s di$$icult to !et $iat into that e9chan!e. 5t%s "ind o$ arduous and no3ody 1ants to do it and may3e a little s"etchy. As a result the price o$ Bitcoin is really lo1. .n the other hand 1ith Mt. o9 you can !et money into it+ 3ut !ood luc" !ettin! it out. ?here have 3een people 1aitin! to !et $iat money out o$ Mt. o9 $or the lon!est time. So really their only option i$ they have $iat in that e9chan!e is to 3uy Bitcoins and then 1ithdra1 the Bitcoins that then drives the price o$ Bitcoins up. And then Bitstamp is sort o$ some1here in the middle on 3oth o$ those varia3les. So 5 thin" that%s 1hat causin! it. Any other ideas- &7:'@( AA: ?hat%s a !reat theory Stephanie. 5 thin" 1hat%s interestin! is 1hat you%re really sayin! is 1hat 1e are seein! is really a discount on the value o$ dollars and the dollars are 3ein! discounted dependin! on ho1 hard it is to !et them out o$ the e9chan!e. 5t%s not really a$$ectin! the price o$ Bitcoin+ accept as a side e$$ect. 5sn%t it- &7:77( SM: ?hat%s a3solutely ri!ht and it%s "ind o$ interestin! 3ecause a price is in$ormation. ,e 1anna "no1 1hat the real price o$ Bitcoin is. And ho1 do you actually "no1 that 1hen there are 3asically con$oundin! varia3les 1hich is li"e 1hat%s the $iat money doin! on all this di$$erent e9chan!es. &7:@7( AA: ,e%re !ettin! a 3it more in$ormation in our price in$ormation. ,e%re !ettin! the price in$ormation o$ Bitcoin 3ut there%s a 3it more si!nal in that price in$ormation o$ the dollar and ho1 di$$icult it is to !et out o$ the e9chan!e. 8ssentially the mar"et is !ivin! us all the in$ormation there is in that price. >n$ortunately it%s also !ivin! us in$ormation a3out $iat di$$iculties that 1e don%t necessarily 1ant. &4:'7( SM: 5t%s really hard to separate those. 5 !uess+ unless you loo" at the di$$erence e9chan!es and compare those 3ut even that%s a little 3it circuitous. &4:)'( AA: ,ell+ $or that actually 5 "no1 you use the same service 5 use+ 3itcoinavera!e.com. 3itcoinavera!e.com ta"es a 1ei!hted avera!e o$ a 1hole set o$ the di$$erent e9chan!es and produces an avera!e price. ,hat%s really interestin! is they also have a little 3utton that you can use to i!nore the price o$ o9 as an outlier and then sho1 only the others. And 5%ve 3een runnin! it 1ith that ena3led 3ecause 5 really do thin" that the real Bitcoin price is 1ithout a $iat di$$iculty si!nal in there. ?he di$$erence no1 is a3out '; or ') dollars and 5 thin" that%s rather interestin! 3ecause it%s '; or ') dollars out o$ a3out '7;+ and it 1as more then ); dollars out o$ a ';;. So the di$$erence has dropped almost 3y hal$. &@:;7( SM: Are you tal"in! a3out the di$$erence 3et1een Mt. o9 and then the ne9t hi!hest $iat money price o$ Bitcoin on an

e9chan!e- &@:''( AA: Aes. 6i!ht. Actually 5 1as calculatin! it 3ased on the avera!e 1ithdra1 amount on Mt. then 1hat you Bust said. &@:'C( o9+ 3ut it%s almost the same

SM: And 1hen you say that 3itcoinavera!e.com is a 1ei!hted avera!e. ,hat that means is they actually analyDe the volume o$ tradin! on each e9chan!e. And actually it%s "ind o$ handy. ?hey sho1 you the percenta!e o$ 1hat o$ Bitcoins are 3ein! traded on 1hich e9chan!e. May3e that didn%t ma"e sense 3ut they sho1 you 1hat percent o$ Bitcoin tradin! is 3ein! done on each e9chan!e. 5t%s "ind o$ use$ul i$ you 1anna loo" at that statistic to on the Bitcoin avera!e chart. &@:4@( AA: 6i!ht+ li"e the mar"et share. At the moment it%s sho1in! Mt. o9 at a3out @7= o$ the total volume. .$ course that chan!es durin! the day and it%s rather interestin! 3ecause all o$ these e9chan!es are operatin! on an )4EC 3asis. Aou also see this !eo!raphical di$$erences that have to do 1ith 1ho%s a1a"e and 1hich population is permanently tradin! at that e9chan!e. &F:;@( AL: 4ne of the other factors in play here, and ) don't think you guys really are thinking about, is that e$changes besides "t. &o$ like BT5- and Bitstamp specifically actually allow algorithmic trading to happen. )t's sort of natural that in these places were you can ha!e, ' you can ha!e essentially robots trading 1. hours a day acting on !ery !ery low le!el signals, the !olatility goes way down. Because again you'!e got these people waiting there to scoop up the couple of cents profit that they think they can make in an automated fashion. "t. &o$ ) don't belie!e does that. They'!e got an order book where you can put orders on and they then, as the price mo!es, they can 6ueue through them but that's a bit of a different thing. 07:./3 AA: 6i!ht. 89actly. .ne o$ the mechanisms $or smoothin! out price volatilities is al!orithmic tradin!. So it can operate as a 1ay to smooth out these 3om3s. Another 1ay to smooth out these 3om3s is a practice called ar3itra!e. ,hich is 1here humans 1ho notice the di$$erence in price 3et1een e9chan!es essentially ta"e advanta!e o$ that 3y movin! the commodity that is 3ein! traded $rom one e9chan!e to the otherG 3uyin! it 1here it%s lo1 and sellin! 1here it%s hi!h. >n$ortunately ar3itra!e is not really possi3le to do 3ecause you can do ar3itra!e here on the Bitcoin site. Aou can 3uy Bitcoins some1here+ move it and then sell it some1here else. ?he 1ay the ar3itra!e opportunity 1ould 1or" is essentially you 1ould 3e 3uyin! Bitcoin at one o$ the e9chan!es+ this is not o9+ and you 3e smoothin! it into o9+ sellin! it there and then you stuc" to dollars that you can%t move. ?hat%s the pro3lem+ that%s 1hy ar3itra!e isn%t 1or"in! at the moment. Because you can%t ta"e the dollars 3ac" and repeat the process. 8ssentially in an ar3itra!e 1here you 3e a3le to move the dollars $rom Mt. o9 3ac" to one o$ the other e9chan!es to repeat the cycle 3y Bitcoin a!ain etc.. Aou can%t do that. &C:4C( SM: Aeah. ,hen you see a 3i! spread li"e that it means there is somethin! that%s disrupted 3ecause naturally i$ everythin! 1ere $ine and you could !et money out o$ o9 and thin!s li"e that+ people 1ould close that !ap 3y ta"in! advanta!e o$ those ar3itra!e opportunities. 5t only ma"es sense $or people to do that. But the $act that they can%t+ means that there is this 3i! spread and it%s "ind o$ an interestin! phenomenon. &::;*( AA: Aou "no1+ 3eyond that the 1ord on ?1itter+ and it%s $unny that 1e us ?1itter as a source no1+ 3ut there are a couple o$ people 1ho are doin! some interestin! research into there and trac"in! order 3oo"s and thin!s li"e that. #or all o$ Mt. o9%s $aults it does still !et the periodic !i!antic purchases !oin! throu!h it. And so that really has an e$$ect+ especially as volume is !oin! do1n at that e9chan!e overall+ those s1in!s that you !et $rom !iant purchases o$ say a couple o$ thousand Bitcoins or tens o$ thousands o$ Bitcoins really has a much more e9a!!erated e$$ect then it 1ould have even si9 months a!o. &::7C( SM: 5t%s not a pro3lem i$ you are Bust sendin! money into the e9chan!e and ta"in! Bitcoin out as lon! as you%re veri$ied or 1hatever and you can !et the Bitcoins out+ 3ut it%s a pro3lem to !o the other 1ay. &::4:( AA: 5nterestin!ly enou!h you can actually calculate e9actly ho1 much the amount is. 5$ you 1or" out 1hat the di$$erence in price 3et1een the avera!e Bitcoin price on the e9chan!es is corresponds to 3y volume+ you see that essentially Mt. o9 has a3out a 4;;.;;; dollar overhan!. ?hat means there%s 4;;.;;; more dollars in o9 than any o$ the other e9chan!es that you can !et out+ 1hich is a$$ectin! the price. &*:;*( AL: How does something like this resol!e itself+ #re we just waiting for &o$ to essentially fi$ their banking relationships and then the price will properly e6uali8e which will make it easier for people to do the arbitrage transactions. #s opposed to now where you can go in one way but it's much harder to get out the other way. 09:1:3 AA: ?hat%s one possi3ility $or this resolvin! itsel$. ?he other possi3ility is that this is a underlyin! li2uidity pro3lem that "eeps !ettin! 1orse and 1orse until it 3ecomes !reater then the a3ility o$ the or!aniDation to hide it and then the entire thin! e9plodes. &*:7:( AL: Let's assume for a second that "t. &o$ came out and told us e$actly what was going on. ,ould we be able to belie!e them. ) mean is there any way to actually understand what's going on there. Because ) mean ;oger er for e$ample went in and supposedly looked to all their books and welched for them publicly. #nd yet there still is this problem. Both, in terms of the ability to get fiat currency out from that e$change, but also from apparently people being !ery concerned that there are li6uidity problems. ) mean, is there a way for "t. &o$ to address this without, as we ha!e talked about in the past, going with the complete transparency model+ 0/<:/13 AA: <o+ not really. AL: ) am not and ha!e not been trading on "t. &o$ for o!er si$ months. #re either of you guys using "t. &o$ at all any more+ 0/<:1.3

AA: 5 haven%t $or si9 months or more no1. SM: Aeah+ 5 thin" my last time 1as may3e+ last #e3ruary. AL: 4k. Let's talk about e$changes for a second. *or the show we're using 5oinbase. #nd then personally )'m using BT5for a couple of things, cause ) wanted to play around with that idea of algorithmic trading. #nd then Bitstamp is another one that )'!e got an account at and that look's like it would be potentially useful. 5oinbase has a real ad!antage in the =% because it has such tight integration with a bank account. 4n the other hand ) just got a note from a listener this morning who is !ery !ery upset. #nd he said like /<.<<< dollars worth in Bitcoins is essentially tied up with them in a transaction for a week and has been unable to get them to really gi!e them any sort of feedback as to what the time frame is for getting that released or what's happening. #nd these are Bitcoin that ha!e been confirmed sent to them and yet for some reason they ha!en't made it happen. #re you guys ha!ing any good e$perience, bad e$periences with other e$changes that might be more worth while. 0//:1>3 SM: 5%m havin! a !reat e9perience 1ith Local Bitcoins. AA: ?hat%s a !reat ans1er and also 1ith the Button1ood S#. By the 1ay Hohn yesterday announced that the Button1ood S# had a 3uyers opportunity+ 3ecause there%s a lot o$ people sellin! ri!ht no1. ?hat%s another 1ay i$ you 1ant to 3uy Bitcoin. 5%ve !ot accounts on pretty much all o$ the e9chan!es. 5 use Coin3ase+ they have 3een convenient 3ecause they are lin"ed to a 3an" account 3ut they have 3een havin! pro3lems lately 1ith 3ein! responsive. 5 thin" that tends to happen 1ith a lot o$ the e9chan!es as they !et over1helmed 1ith customer re2uests. And a tiny little !litch 1ill ma"e all the phones rin!. Someone is al1ays disappointed cause the phone didn%t !et ans1ered 2uic"ly enou!h. 5 can understand i$ you%ve !ot ';.;;; dollars in Bitcoin missin! $or a 1ee". ?hat could 3e 2uiet upsettin!. 5 also sin!ed up recently $or Ira"en 1hich opens day 3e$ore yesterday $or the open Beta. <o volume there+ no li2uidity yet+ o3viously. 8very3ody is still tryin! to !et veri$ied and si!ned up. 5nterestin!ly enou!h that%s another 3i! e9chan!e that opened here in the >S. Let%s see. &'):)C( AL: #nd it opened against a backdrop of Trade Hill closing, ha!ing a real problem with the )nternet #rchi!e 5redit =nion and then winding up closing !ery shortly after ha!ing announced that that plan was going out. ) thought it was !ery interesting, the timing of that sort of disaster for Trade Hill and the opening of ?raken and i wonder what it says about the possibilities again of continuing to do business especially in places like %an *rancisco were e!en though it's a !ery tech' friendly en!ironment it clearly, e!en banks that should be align are still under a lot of pressure to make sure they are not doing business with Bitcoin e$changes. 0/1:>93 AA: Aeah. 8ven the 5nternet Archive >nion 1ould have a lot o$ $le9i3ility 1ith it%s 3oard 1as una3le to really $ul$ill that re2uirement. Loo" at it $rom this prospective+ Si9 month a!o and 1e%re havin! this conversation essentially 1e didn%t have any choices. 5t 1as Local Bitcoins or Mt. o9. ?oday 1e have at least 7 other 1or"in! e9chan!es that have more then ';= or more then @= o$ the li2uidity o$ volume. ,e do have some via3le alternatives+ there are at least 4 via3le e9chan!es and they are increasin!. 5 thin" this is !ood stu$$. radually this is 3ecomin! less and less o$ a pro3lem. &'7:7'( AL: Let's talk about that price for a second cause you guys are talking about Bitcoin#!erage, or Bit#!erage. #nd then ... AA: 5t is 3itcoinavera!e.com AL: )s it Bitcoin#!erage+ ) thought it was bita!erage.com. "aybe )'m thinking of the wrong one here. SM: 3itcoinavera!e.com AL: 4h. ,ell ) use bita!erage.com. #re those different+ 0/::><3 0keyboard sounds...3 AA: Aeah/ BitAvera!e is lame/ AL: #h@ 4k, AL: ,ell then there we go. 4?. ,ell, anyways... AA: <o1 you see 1here 1e%re !ettin! all this !ood data. AL: Aeah, ) do. This does look better. ) was wondering where the data was coming from for the other one. 4?. ) ha!e another 6uestion. 5oindesk just launched their price a!erage. ) don't recall what its called. ,hat they are basically doing is something !ery similar to what Bitcoin#!erage is doing, creating essentially a weighted price and they're actually not including some of the smaller e$changes if they don't ha!e certain !olume re6uirements. #nd one of the other interesting e$clusions was Local Bitcoins. Based on their re6uirements that 5oindesk is put forward to be part of their a!erage and their inde$, Local Bitcoins really should be included into in that and yet they are not. ) mean, do you think that there is place for something like Local Bitcoins in these a!erages or do you think that a person to person price is different then a market price+ 0/.:.B3 SM: Aren%t all mar"et prices essentially person to person prices 1hen you "ind o$ 3rea" i$ do1n- ?he interestin! thin! a3out Local Bitcoins is you can set your price any1here you 1ant. Aou can have Mt. o9 spot+ you can have Mt. o9 plus );=+ you can have B?C8 price+ you can have CampBJ+ anythin! you 1ant. And really the price o$ a Bitcoin is 1hat

someone is 1illin! to pay $or it+ and 1hat 3etter 1ay to 1or" that out then "ind o$ directly $rom individual to individual. A3solutely+ 5 thin" there is a place $or e9chan!es li"e Local Bitcoins in a Bitcoin avera!e. &'@:':( AA: Local Bitcoins is in the 3itcoinavera!e.com avera!e. Local Bitcoins is hi!her then the avera!e 3ut still less then o9. Essentially you%re re$lectin! three levels o$ di$$iculty. et it easy on one o$ the e9chan!es that isn%t o9. et it via Local Bitcoins 1here you have to !o all the 1ay to the ca$$ee+ youKre payin! a premium $or that. .r !et it 3y o9 1here you%re li"ely to !et L!o9edL and you%re payin! a dou3le premium $or them. &'@:4)(

&Part )( &'F:;;( SM: 5%m here 1ith eor!e Mandri". Hey+ 1elcome to Let%s ?al" Bitcoin.

GM: Hey+ than"s $or havin! me on. SM: eor!e is ...

GM: Aou can call me Mandri". SM: 5t%s 1eird to call you eor!e. 5 "no1 you as Mandri". Mandri" is your nic"name and you have a 3usiness called eor!e%s #amous Ba"lava. GM: Aeah+ it actually Bust turned 4. SM: .h+ 1o1. GM: And 5%ve 3een sellin!... SM: 5s it party trained yetGM: <o+ not yet. >n$ortunately... SM: Pro3a3ly never 1ill 3e. GM: ...drips sirup every1here. SM: ,hat is eor!e%s #amous Ba"lava-

GM: 5t%s my 1e3site. 5 started an a!orist 3usiness that 3e!an 4 years a!o. SM: ,hat is an a!orist 3usiness+ $or someone 1ho doesn%t "no1 this 1ordGM: 5%m Bust 3asically doin! my thin! 1ithout as"in! $or permission in the $orm o$ licenses andEor payin! ta9es or anythin! li"e that. 5t%s Bust transactions 5 do 3et1een mysel$ and my customers. SM: <o3ody in your "itchen insurin! themselves into that transaction the same "itchen you $eed your "ids 1ith+ the same "itchen you $eed yoursel$ 1ith. 6i!htGM: Aeah. SM: ?hat%s 1here you ma"e eor!e%s #amous Ba"lava. 5 thin" it%s cool. Aou%ve 3een doin! this $or 4 years+ sellin! Ba"lava on the internet and you 1ere one o$ my earliest $riends 1ho $ound out a3out Bitcoin and really !ra33ed on to it and said 5 1ould li"e to ma"e this a part o$ my 3usiness. GM: 5 1ould say a3out ) years a!o. Almost ) years no1. 6eally the appeal 1as the $act that there are less $ees then Paypal. 5nitially that 1as the 3est thin! $or it. And 5 could Bust turn these into dollars and 5 !et more money then i$ 5 had an order throu!h Paypal. 5 1ould 3e a3le to "eep more dollars. And that initially 5 didn%t really understand Bitcoin. And that 1as !ood enou!h $or me+ and that%s the start. SM: ,ell+ in );'' some3ody 3uys a pan o$ Ba"lava $or '; Bitcoins you%re sittin! pretty !ood ri!ht no1. 6i!htGM: Actually my $irst order 1as '4 Bitcoins... SM: ,o1/ GM: ...$rom Bitcoin Hesus himsel$. SM: ?hat is a !olden pan o$ Ba"lava. GM: Aeah.

SM: And you had 3een sellin! Ba"lava on e3ay 3e$ore that. 6i!ht- And so you 1ere intimately $amiliar 1ith thin!s li"e Paypal. 5s that ri!htGM: Actually that 1as the $irst time. ,hen 5 started puttin! my Ba"lava on e3ay that 1as 1hen 5 3e!an the 3usiness. 5%ve putted on e3ay as pretty much Bust li"e a advertisement and it lin"ed to my site. 5 mean people 3uy $rom e3ay 3ut 5 rather they 3uy directly $rom the 1e3site 3ut it helps. 5t doesn%t hurt to have it on e3ay. SM: Aou pro3a3ly had enou!h orders on e3ay that you "ne1 some o$ the pro3lems that can come 1ith Paypal. 6i!htGM: .h yeah+ 6i!ht. 89actly. ,ith Paypal i$ some3ody contests a purchase $or any reason they pretty much !oin! to !et a re$und and you%re !onna 3e scre1ed out o$ the money. 5 mean that%s my e9perience... SM: ?a"e the Ba"lava and run+ eat it up and say 5 never !ot it/ - 6i!htGM: And 5 mean i$ a customer comes to me and say%s: Hi+ 5 didn%t li"e this. - Pretty much 5 al1ays !ive a re$und. 5$ some3ody really don%t li"e 1hat they purchase $rom me. 5%m not !onna try to ('::4')... or anythin!. 5%m sorry you didn%t enBoy it so here is your money 3ac". ?hat%s cost o$ a 3usiness "ind o$ thin! 3ut that doesn%t happen o$ten. SM: 5%ve never seen anyone eat your $ood and not li"e it+ li"e your Ba"lava is $amous $or a reason... GM: 6i!ht. SM:...and you can see pictures o$ it i$ you !o to your 1e3site 1hich is mandri".com. Aou start usin! Bitcoin on your 1e3site in );'' and 1hat 1as your e9perience 1ith that at $irst. 0id you thin"+ oh this is cool+ or did you have some issues 1ith itGM: <o. 5 thou!ht it 1as cool. 5 didn%t really had an understandin! o$ Bitcoin at that time. And li"e 5 said+ 5 1as convertin! them. 5 1as sellin! them on Mt. o9 and depositin! them 3ac" on my d1olla account in cash+ at least initially. SM: .h. ?hat 1as 3ac" 1hen you could do that. GM: Aeah. SM: ,hen you could !et money out o$ Mt. o9 and 1hen you could use d1olla 1ith Mt. o9.

GM: 5t%s so much easier in these days. 5 mean Bitcoins 1ere li"e F 3uc"s each or somethin! li"e that. And at this time 5 did said 5 didn%t had a $ull understandin! o$ Bitcoin. 5 didn%t "ne1 1hat 5 "no1 no1. But once 5 did+ over time+ 1ithin a $e1 1ee"sEcouple o$ months 5 1as learnin! more and more and 5 started to realiDe 5 1anna "eep these+ these are really cool and 5 1anna use them $or other thin!s to. And not Bust hold on to them 3ecause 5 thin" they !onna 3e 1orth more. But 3ecause it%s Bust a really cool currency. 5 mean it%s a !reat 1ay to do 3usiness. <o1 it%s turned into my $avorite 1ay to 3e paid. Be$ore 5 1as really into silver 3ut 5%m not so convinced on that anymore as a currency. SM: Aeah. 5 1anna hear more a3out your thou!hts on silver and also 5 "no1 you have some thou!hts on point o$ sell systems and ho1 they mi!ht inte!rate 1ith Bitcoin and merchants usin! Bitcoin. And 5 1anna tal" a3out all this thin!s 3ut $irst 5%m curious+ 1hen you $irst started out ho1 many o$ your customers 1ere payin! 1ith Bitcoin. ,hat 1as the percenta!e 1ould you sayGM: 5t 1as small. 5 mean people aren%t usin! it that o$ten+ 5 thin". ?here 1eren%t that many 3usiness that 1ere acceptin! it. SM: 0id you ever !et emails sayin!+ ,hat the hell is BitcoinGM: <ot really. 5 mean 5 didn%t really have a lot o$ people as"in! me ho1 to use it or anythin! li"e that. 5 can%t really recall any3ody 1ho as"ed me that. 5t seems li"e people 1ho 1here as"in! $or Bitcoin already "ne1 and they 1ere e9ited that 5 1as acceptin! it and they 1ant to pay me in that. 5t 1as initially a small num3er. And o3viously my Bitcoin 3usiness is !ro1in! since then. SM: At this point in );'7+ li"e 1hat percenta!e o$ your orders come in and they are payin! in Bitcoin no1GM: Pro3a3ly li"e );-)@=. SM: ."ay. GM: Somethin! li"e that. 5t%s still not the maBority. SM: 5t%s still not the maBority 3ut you are !ettin! less steady supply o$ Bitcoins comin! in $or orders and that%s one o$ the thin!s that 1e%ve tal"ed a3out on the sho1 3e$ore. People 1rite us and as" ho1 do 5 !et Bitcoins. 5 don%t $eel li"e 3uyin! them 5 don%t 1ant to ma"e an account on one o$ these e9chan!es. And one 1ay to ma"e Bitcoins 1ithout doin! all that is to 1or" $or them or sell a product 1here you !et Bitcoins in return. And that%s one thin! that you%ve done. GM: Aeah. 5 mean+ that%s really ho1 5 !ot interested+ 1hen i 1anna 3ecame really interested in Bitcoin. ?hat 1as the easiest 1ay $or me to ac2uire more. 5$ 5 could use my la3our or my time to ac2uire Bitcoins rather then Bust tradin! cash $or them. ?hat 1as the 1ay to !o $or me. And that 1or"ed up pretty 1ell. 5t may seem li"e it%s little harder no1 3ecause o$ the

value o$ Bitcoin. 5t%s not F dollars per Bitcoin li"e it 1as 1hen 5 $irst started. 5 still thin" it%s 1orth it to 1or" $or Bitcoin. And it%s still the 1ay 5 1anna 3e paid. 5 1ant ';;= o$ my income to 3e in Bitcoin. ?hat%s 1ere 5 li"e to !o. &)):;)( SM: Aeah. And 5 thin" may3e you%ve 3een !oin! in that direction 1hich is really cool. But i Bust 1anna 3ac"up the train $or a minute and say that you%re 3ein! really hum3le+ our listeners may not "no1 you 1ell unless they have may3e 3een to the Porcupine #reedom #estival. Aou 1ere pretty $amous $or 3ein! the 3est $ood vendor at the Porcupine #reedom #estival at Porc$est+ 1hich is a li3erty $reedom $estival that happens every summer in the 1oods o$ <e1 Hampshire. Aou had a $ood stand there $or the past+ 1hat 1as it+ 7 or 4 years -... GM: ?his 1as the $ourth year. SM: ... So in Hune at this Aear that 1as the $ourth year. And you are since retired $rom coo"in! at Porc$est+ 3ut you had a very pro$essional operation. 5 mean+ you%re a che$. Aou 1or"ed in restaurant your 1hole li$e. Aou%ve had this Ba"lava 3usiness $or 4 years. Aou%ve 3een doin! $ood stands at campin! $estivals and stu$$ li"e that and you%ve also dealt 1ith a lot o$ li3ertarians 1ho !o to these $estivals and they 1anna pay in silver and alternative currencies and silver dimes and may3e even Bitcoin. ,hat 1as your e9perience 1ith that+ ho1 did alternative payments "ind o$ evolve $or you as you ran your $ood stand $rom one year to the ne9t at the Porcupine #reedom #estivalGM: 6eal !ood 2uestion 3ecause it really really did chan!ed every year. 5 mean+ our $irst year or at the $irst couple o$ years 1e 1ere - 1e are still really e9ited a3out silver cause it%s a team o$ us that ma"e the stand happen and it !re1 every year 3ecause it%s Bust the 1or" involved 1as incredi3le. <ot one person could do that. 5t%s insane. ,e Bust put it to!ether and it 1as a success every year $or sure and it Bust !ot 3i!!er and 3i!!er. 5%d say 1e love silver. ,e are a 3i! $an to ta"e in silver+ any "ind didn%t matter. &)7:4)( SM: ,hy did you love silverGM: ,ell. 5 mean+ ?here 1eren%t really a lot o$ other options 3e$ore Bitcoin !re1. SM: ,as it Bust 3ecause it 1as an alternative to the !overnment $iat moneyGM: 6i!ht. And it 1as a 1ay to do 3usiness outside o$ the dollar and i$ the dollar collapse you $eel li"e silver has this intransit value. 5t%s 1orth somethin! 3ecause it%s silver+ it has 3een used $or thousands o$ years. Same 1ith !old. 5 loved it. 5 had the silver 3u! $or many years. And as Porc$est !re1+ as our stand !re1 and Bitcoin 3ecame 3i!!er the more interested i 3ecame in Bitcoin. ?he more 5 realiDed this is really the 1ay 5 1anna 3e paid at the stand. So 1e too" a 3ac"seat. ?hat%s one o$ the other reasons 1hy you can%t trade silver 1ith some3ody across the 1orld in a $raction o$ a second. 5t Bust doesn%t 1or" li"e that 1ith silver or even 1ith cash. Crossin! 3orders 1ith silver+ crossin! 3orders 1ith cash+ it%s Bust one o$ the thin!s you can%t do in hu!e amounts. SM: Aeah+ there 1ere a lot o$ people 1ho came to the Porcupine #reedom #estival $rom Canada $or instance. #or them 3rin!in! those thin!s across the 3order 1ould 3e really di$$icult. But i$ it 1as somethin! li"e Bitcoin it 1ould 3e a3solutely no pro3lem. GM: 6i!ht. 5 mean you can have a 3rain 1allet. ?hey not !onna "no1 at customs. SM: Aeah+ e9actly. ?hey can%t search your 3rain Bust yet. GM: Aeah+ not yet. SM: .I. Ho1 did that happen $or you 1hen you noticed people are startin! to 3uy more o$ your stu$$ 1ith BitcoinsGM: ,ell+ );') 1as the $irst year 1e accepted Bitcoin and 5 thin" the rate at the time 1as li"e F dollars in e9chan!e may3e. ?hat 1as the year that 5 1as ()@:)4 )... on Bitcoin. ?here 1ere panels+ alternative currency panels that had the opportunity to as" 2uestions on and they had one 1ere they didn%t even had really a representative o$ Bitcoin there. And 5 "ind o$ pointed out all the $la1s 5 sa1 1ith other alternative currencies li"e dime cards and silver in !eneral. &)@:44( SM: #or people 1ho don%t "no1+ a dime card is ... ?here are people 1ho ta"e silver dimes li"e mercury dimes or pre-'*@F dimes 1hich contains some percenta!e o$ silver+ they are >S issue dimes and then they%ll put them in a card 1ith an ima!e or usually it%s some "ind o$ !raphic that%s li"e... GM: ?here%s in$ormation on them that tell you a3out the value+ they%re pretty cool. ?hey are educational tools+ 5 thin" so. SM: And it%s laminated so you can trade it "ind o$ li"e a tradin! card 3ut it has a dime in it. 5n the past there 1as ... 1as it );'; or );''- ... a couple years a !o silver 1as on a spi"e durin! that summer that Porc$est 1as happenin!. 5t hit li"e @;M $or an ounce o$ silver. ?hese dime cards 1ere !oin! around and people are 1antin! @+ :+ '; dollars $or one o$ these silver dimes in a card. GM: 5%m sure they%ve !ot it $rom some o$ them. SM: ?hey did+ yeah. GM: ?hey had a premium on them and people li"ed them. But that%s the thin! 1ith silver and a thin! li"e that. People 3rin! their silver to Porc$est 3ecause they thin" it%s a cool thin!. 5t%s a novelty thou!h+ in my opinion. And it%s 1it the users

payment at $estivals li"e that 3ut ... SM: 5t%s Bust the only place you can do that. 6i!htGM: Aeah. 5t Bust doesn%t 1or" on a 3i!!er scale. <ot in my opinion. 5$ peer to peer 1or"s o"ay in person it can 1or"+ people can decide to do that. But any "ind ()C:;F) ... can+ really. But realistically in the 1orld 1hen you%re doin! online sells and stu$$+ it Bust doesn%t 1or". %Cause it%s li"e+ o"ay+ ship me this silver+ pay all this money+ have it come re!istered mail 3ecause it%s silver and i$ it !ets lost that suc"s. ?here%s al1ays pain 1ith dealin! 1ith it. 5t%s not li"e that 1ith Bitcoin. 5t%s Bust not there li"e that. SM: A3solutely. GM: ?he $irst year 1e started acceptin! Bitcoin );') 1e had may3e '@ transactions and 1e also !ot a 3unch o$ physical Bitcoins at the time. SM: And ho1 are people payin! it that time. 0id they have Bit Bills or 1ere they sendin! it 1ith their phone+ out in the 1oods 1here there is no internet. GM: Some people had roles o$ the the ori!inal Casascious physical Bitcoins and 1e !ot some o$ those. 5 remem3er !ettin! t1o $or a '; dollar sand1ich and 3ein! told to "eep the chan!e. ?hat 1as pretty cool. SM: ,o1. And then later on they 1ere !oin! $or ';+;;;M on e3ay. GM: <ot the sin!les. SM: <ot the sin!les. Aeah. GM: 5 thin" they 1ere li"e a thousand and some at the most. SM: ?hat is a damn !ood sand1ich. GM: ,e never slept. But 1e only did may3e 3et1een '@ and ); transactions at the most+ in Bitcoin+ in );'). And then 1e !ot F;-some Bitcoins. Somethin! li"e that. ,hich 1asn%t a lot at the time. 5t 1as li"e FM a Bitcoin. And then this year 1e did a3out ':; transactions in Bitcoin. ?here is a lot o$ !ro1th. <ot still 1asn%t the maBority+ it 1as still a small minority o$ 3usiness 3ut that%s ho1 much 1e too" in. And people 1ere 1ay more interested in dealin! in Bitcoin this year then they 1ere in the last and it%s !onna !ro1 every year in my opinion. 5 may don%t "no1+ %cause this is my leisure coo" in there. 5%m sure lots o$ stands need to accept Bitcoin 3ecause people 1anna pay in that 1ay. SM: Aou%re $amous 3ecause you !et really creative 1ith your $ood. Li"e 1hen you%re coo"in! at the #reedom Porcupine #estival+ o"ay+ 1e all "no1 li3ertarians love 3acon. 6i!ht- And you have these sand1iches that%s li"e 1eaved 3acon that%s 3a"ed in an oven and it%s li"e a mat o$ 3acon 1ith !yro meat and ve!eta3les inside o$ it+ rolled up+ covered in Cheese+ #ries+... GM: ,e pretty much use 3acon 1eaves $or everythin!. .melets+... 1hatever. 5t%s a !reat 1ay to eat. 5t%s a lot o$ $un and that%s 1hat 5 li"e to do 1hen 5 coo". 5 coo" $or $un at home. 5 li"e to coo" $or $riends and 5 li"e to do di$$erent thin!s. ,hen my !irl$riend 1as in to1n+ she is Canadian+ she 1as visitin! last 1ee" 5 1ould Bust 3e li"e ?ell me somethin! you 1ant and 5 ma"e it+ 5 don%t care. ?hat%s ho1 5 am 1ith coo"in!. 5t%s a lot o$ $un $or me. 8specially in a smaller scale at home. .n the #estival it%s still $un 3ut it%s a lot o$ 1or". 5t could 3e very over1helmin!. SM: 5 thin" it%s cool that you have so much $un 1ith it. Aou 1ere sayin! that it !ets over1helmin! 1hen you%re coo"in! at Porc$est and you had some people that you hired temporarily $or the 1ee" to help out 1ith the stand. Can you tell me a3out ho1 they 1ere paid. 0o they 1anna !et paid in Bitcoins as time 1ent on. GM: ?he 1hole team 1as a1esome. SM: #rom sun up to sun do1n. GM: Aeah+ 5t 1as insane. SM: 5 mean a$ter midni!ht. GM: 8very3ody 1or"ed there as needed. But 5 thin" 1e ended up payin! out mostly in cash. %Cause 5 mean it costs money to !et there and the most people are comin! in $rom out the to1n. 8very3ody 1ho 1as 1or"in! $or us 1as+ so they recouped some cost 1ith cash. But some 1ant it%s portion paid in silver+ a portion paid in Bitcoin. 5 mean that option is al1ays open. Hust tell me 1hat you 1anna 3e paid in and 1e%ll arran!e that+ that%s $ine. Li"e 5 said+ 5%m some3ody 1ho 1ants to 3e paid in Bitcoin in all times and that%s really 1hat 5%ve 3een !oin! $or. 5 made that point another 1here. ?hat%s pretty much ho1 5 !et paid other then Paypal sells $rom Ba"lava. 5 Bust heard some ne1s a3out they (7;:4:) ... 1here 5 Bust started 1or"in! 1ith - 3loc"chain.in$o. 6o!er Ner reached out to me and 5 Bust started 1ith them Bust today. ,ell+ pretty much yesterday. ,hatever. SM: 0oin! support customer+ Customer support. ?his stu$$. 6i!htGM: Aeah. 5 1or"ed 1ith Bit5nstant a $e1 months and that 1as really $un+ 5 really enBoyed it. 5 love 1or"in! in the Bitcoin reat people that 1ere at the stand this year.

1orld and honestly it%s really 1hat i 1anna 3e a3le to do. 5 li"e 3ein! a3le to do a Bo3 li"e that $rom any1here. ?al"in! a3out one o$ the thin!s 5 love the most+ Bitcoins+ and 1or"in! 1ith amaDin! people 1ho have 3een a hu!e part o$ 1hy Bitcoin is 1hat it is today. ?hat%s Bust an amaDin! opportunity. &7':)7(

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&7):74( SM: .". ,e tal"ed a3out some o$ the thin!s that you li"e a3out Bitcoin and doin! 3usiness 1ith it and 1e tal"ed a3out silver "ind o$ 3ein! a novelty... GM: Aeah... can 5 tal" a3out the thin!s 5 hate a3out BitcoinSM: Aeah. ,hat do you hate a3out BitcoinGM: <othin!. ?hat%s 1hat 1e 1ere tal"in! 3e$ore this intervie1. 5 said 5 1anna tal" a3out ho1 transactions 1ith Bitcoin are not 1here they need to 3e yet. SM: Aes. ?hat%s e9actly 1here 5 1as !oin! to. ?ell me your ideas. Because you%re a merchant+ you%ve 1or"ed a lot 1ith people payin! $or stu$$ at a physical location... GM: 6i!ht. SM: ...or on an online store 1ith Bitcoin and you%ve e9perienced some 1ays that you thin" it can 3e made 3etter. ?ell me a3out that. &77:'7( GM: ,ell+ 5 thin" in !eneral+ 3e$ore it !ets speci$ic+ 5 thin" in !eneral it%s Bust usin! Bitcoin is not easy yet. 5t%s at a point no1 1here you really "ind o$ need to understand 1hat you%re doin! 3e$ore you do it 3ecause it%s very un$or!ivin!. 5t%s so easy to Bust loose Bitcoins i$ you don%t "no1 1hat you are doin!. Hust loo"in! at the !eneral picture that%s initially the place 1here you don%t really need to understand everythin!. ?here are multiple systems in place that Bust ma"e it incredi3ly easy to pay in Bitcoin. And... SM: 5%ve heard a lot o$ people say this 3uDD1ord o$ li"e ,e%re !onna ma"e an app that ma"e this so your !randmother can use Bitcoin. 6i!htGM: Aeah. ?hat%s really 1hat needs to happen. Ma"e her stop payin! 1ith a chec" in a !rocery store. Come on+ 1ho still does that. - <o+ 3ut 5 li"e to say no1+ Bitcoins are "ind o$ at the point 1here credit cards 1here 1hen they 1here Bust the little metal thin!s that you ... SM: ,e ta"e li"e literally an imprint o$ the credit card. GM: Manual imprinters+ that%s 1hat they 1ere called. And that%s 1hat 5 li"e to see Bitcoins at ri!ht no1. And 5 had actually tal"ed a3out this on an other podcast recently. 5 compared it to ,hen 5 1as in <e1 Aor" City in April+ 5%ve spent a 1ee" there+ 5 1as !oin! to Star3uc"s every mornin! to !et some co$$ee and 5 noticed people 1here in line to 3uy Co$$ee and they 1ere Bust instantly payin! 1ith their phones. ?hey 1ere Bust holdin! up an O6 code and it 1as !ettin! scanned. ?his incredi3ly pac"ed Star3uc"s in Lo1er Manhattan and the line is Bust movin! $aster then 5%ve ever seen at some place that 3usy. 5t%s craDy. And 5%m li"e+ 1hat are they doin!+ ho1 they 1ere payin!. 5 didn%t "no1 i$ it had a credit card lin"ed to it or 1hatever+ 3ut it turned out it%s Bust a !i$t card. ?hey have an account. And they have an app and it%s the num3er one 1ay there they do 3usiness no1 1ith people. 5t%s li"e their num3er one 1ay that people pay at Star3uc"s. ?hey Bust 3uy these !i$t cards+ they have an account and they Bust scan the code and it%s done. And 5%m li"e 1o1+ this is 1here Bitcoin needs to !et to. Because no1+ even at Porc$est 1hen 1e do a Bitcoin transaction+ 1e had a point o$ sell system+ a computeriDed system+ and 1e had a second monitor $acin! the customers 1ith some in$ormation and it%s 3asically Bust the Bloc"chain pa!e 1ith the O6 code people could scan. And ri!ht no1 1hen people pay in cash it 1ould 3e really 2uic". 5 can use a cash re!ister very $ast - and here%s your chan!e. 5t%s li"e everythin! 1ill slo1 do1n 1ith the Bitcoin order. <o1 !ranted the

internet there is pretty slo1. But it%s still cron"y+ the process+ 1here they scan the code and then they put in the num3er and then li"e ."+ 1ait $or uncon$irmed transactions... &@7:@F( SM: Aou had one O6 code that 1as your Bitcoin address $or the #estival+ 6i!ht- 5t 1asn%t li"e each item on the menu had a speci$ic O6 code. 6i!htGM: <o. ,e 1ere Bust !iven the total in dollars. And 5 mean the system 1e had 1asn%t really the 3est either. 6i!ht- 5 thin" the only company that has a P.S system that incorporates Bitcoin $or restaurants is BitPay. Bu theirs didn%t really 1or"ed $or 1hat 1e need it+ at the stand. ?here needs to 3e a 3etter 1ay to do it. ,e Bust had a P.S 1here you could Bust accept cash. 5 could create !i$t cards. And actually that%s 1hat 5 advise people to do at Porc$est 1as+ Hey i$ you 1ant to pay in Bitcoin+ 3uy a !i$t card up$ront+ at a certain amount or 1hatever and then you Bust had an 3alance on your account. SM: ?hat is e9actly 1hat 5 did the 1hole 1hole 1ee" $or Local Bitcoins. GM: And it 1as $ast+ 6i!ht- Aou 1eren%t slo1in! do1n to ma"e an transaction every time you 1anted to sell somethin! or 1hatever. SM: <o+ it 1as totally $ast. Li"e a $ast 3et. GM: Bread less sand1ich. SM: 5t 1as !reat. Ho1 did you $i!ured out li"e some3ody 1anted to pay you 1ith Bitcoin and they had the Bitcoin on their phone and they hadn%t purchased a !i$t card- Ho1 1ould you orchestrate that- Ho1 did you ma"e sure that they actually paid %cause you%re 1aitin! $or the transaction to con$irm. ,hat i$ they try to send it and then there is no cellphone si!nal and then they 1al" a1ay and it "inda !ets lostGM: 5t "ind o$ happened li"e that. Li"e 5 said+ Porc$est is the 1orst place in the 1orld $or internet+ 5 thin"... GM: ...in the $irst 1orld any1ays+ 1here they have it. 5t%s li"e all these people 1anna pay in Bitcoin and the internet si!nal is Bust a1$ul %cause you%re in the middle o$ no1here+ <orther <e1 Hampshire+ up in the mountains. But once 1e sa1 the uncon$irmed transaction+ that 1as !ood enou!h. Because most o$ the people pay in Bitcoin. 5 "no1 them. 5%m $ace3oo" $riends 1ith them or 1hatever. SM: 5$ their transaction !ot lost you could send them a $ace3oo" messa!e and say Hey+ !imme my money. GM: Aeah. ?here 1here some people that had cell si!nal issues and they 1ould come 3ac" an hour later sayin!+ Hey it 1ent throu!h here it is. And 5%m li"e - ."+ that%s cool. ?han"s. 5 1as Bust 3asically tellin! them the cash price and then they 1here Bust puttin! in the dollar amount and it 1ould 3e converted to Bitcoin in their app. ?hat%s not really the solution either. 5 mean+ ideally 5 love it $or Bust thin!s to 3e tied to the Bitcoin rather than the dollar. 5 thin" that%s a 1hole other thin!+ that%s a 1hole other story. ?hat%s di$$icult to do ri!ht no1. SM: Aeah. ?hat%s !onna ta"e a 1hile. 5 haven%t even really seen si!ns o$ that happenin! to much. GM: 6i!ht. And that%s $ine. ?hat%s not really the 3i!!est concern. ?he 3i!!est concern is $i!urin! out a 1ay 1here it could 3e Bust easy. 5 thin" BitPay%s system 1or"s 3etter in a restaurant 1here it%s not Bust this line o$ people+ rushin! to !et the order in and !et the ne9t order and !et the ne9t order. ?hat%s a 1hole di$$erent system $or Bitcoin orders. 5t needs to 3e li"e 1here Star3uc"s is 1ith their orders no1. But they sound li"e they start a 3usiness 1hat 1ill doin! that. 5 mean that too" years to develop. &7::4*( SM: 5 can see that may3e Star3uc"s had a real necessity $or that. ?hey did have certain locations that 1ere al1ays Bust super pac"ed. And .... GM: ?hey do that every1here. And apparently this app even noti$ies you 1hen you%re ne1 to Star3uc"s. Aou can ena3le that on your phone. SM: ,ell+ that%s smart 3ut 5 mean 5%m Bust thin"in! ho1 easy 1ould that 3e to do 1ith Bitcoin. Aou could have your o1n personal account and you could Bust send Bitcoin to it to $und it and then 1hen you !o to Star3uc"s it ta"es ;.;) or 1hatever $or your cup o$ co$$ee. 6i!htGM: Aeah+ and that%s the thin!. ,e 1ant companies to ta"e Bitcoin. ?hat 1ould 3e a1esome i$ Star3uc"s+ li"e 1e+ accept Bitcoin no1. ?hat 1ould 3e incredi3le. But may3e they need to come up 1ith a system or 1hatever. ?he thin! 1ith Bitcoin at least is+ People can come up 1ith systems. ?here are so many di$$erent people 1ho 1or" $i!urin! out 1ays to do transactions 1ith Bitcoin that some3ody is !onna come up 1ith somethin! that can 3e used across the 3order or Bust ma"e the process o$ 3uyin! somethin! 1ith Bitcoin easier that other companies can incorporate into their o1n structure and have somethin! that Bust 1or"s $or them. 5 don%t "no1+ there are a lot o$ di$$erent options. SM: As you said that 5 1as Bust ima!inin! li"e !oin! throu!h $or instance a $ast $ood drive throu!h. Aou could ta"e a lot o$ the person 1or" out o$ that. Aou "no1 1hat 5 mean- Aou could automate a lot o$ it. Picture drivin! up to a menu and each item has a little O6 code or somethin! li"e that+ that you scan and then you Bust send 1hatever amount o$ Bitcoin to that O6 code 1ith your phone and then it sho1s up some1here inside their restaurant and some3ody ma"es your $ood and then you%re done. Aou already ordered and paid $or it in the same step. &4;:)F( GM: ,ell+ 1hat 5 thin" 1hat 1ould even 3e 3etter is a touchscreen. ?here are a lot o$ places+ !as stations li"e SheetD is a

3i! one in Pennsylvania and .hio 1here you 1al" in to this !as station and they have made your ordered $ood and they have a 3unch o$ monitors lined upon outside. A lot o$ places have these and you Bust put in your order. 5$ a O6 code popped up ri!ht there 1ith your total. Aou Bust scan it 1ith your phone. Beep. Prints the receipt out and you%re done. People start ma"in! it then. .r even 1ith the drive throu!h thin!. 5$ you "no1 5$ there%s a person there you place your order and then the screens there 1ere the O6 code comes up $or your total. By the time you drive it to the 1indo1. ?here are a lot o$ di$$erent scenarios 1here that 1ould 1or". ?here%s Bust so many di$$erent 1ays that you can do it. But they 1ould all 3e !reat. SM: 5 Bust heard yesterday a3out some "ind o$ technolo!y 1here you have some app on your phone or somethin! li"e that and it%s !ot Bitcoins on it and it%s li"e 3asically any li2uid that you 1ould 1ant to come out o$ a tap li"e !asoline or even li"e 1ater or 3eer or 1hatever. And you Bust "ind o$ scan it and then $ill up a cup and it char!es you $or that amount o$ li2uid. ?here%s Bust endless applications $or Bitcoin and li"e you said 1e 1ere at the very 3e!innin! o$ that "ind o$ technolo!y and ho1 it could 3e made more user $riendly and 3etter. 6i!htGM: A3solutely. 5 mean i$ you loo" 1here Bitcoin 1as a year a!o. 5t%s incredi3le ho1 much it%s !ro1in!. ?hat%s the thin!. ro1th !onna happen. 5 really don%t see ho1 it%s not. And its really only !onna ta"e one hu!e company to !et on 3oard $or it to really e9plode. 6i!ht no1 1hat is it li"e- Most 3usiness that accept it are smaller scale i !uess. 6i!ht- 5s there really any hu!e corporation that%s ta"in! Bitcoin ri!ht no1SM: ,ell 5 mean+ don%t $or!et GM: 5 !ot 4 orders yesterday. SM: Aeah+ 5 "no1 you%re ri!ht. 5 mean there really isn%t the mainstream "ind o$ Bumpin! on 3oard 1ith it yet 3ut 5 thin" they 1ill 3e. 6i!ht- 83ay is tal"in! a3out it no1. GM: ?here%s a lot o$ tal" ri!ht no1. And it%s still early. And people li"e to say that 3ut it%s true. 5t really is. And their !ro1th needs to happen 3ut it%s !onna happen very $ast and it%s 3een happenin! very $ast. And 5 mean it%s the internet+ 1hat do you e9pect. 6i!htSM: And $rom a technical standpoint one o$ the thin!s that 5 o$ten thin" a3out is Bitcoin escro1s $or instance. .n Local Bitcoins i$ you%re 3uyin! or sellin! Bitcoins the seller can put the Bitcoins into an escro1. And then 3asically the Bitcoins !o into this escro1 address and then they !et con$irmed or 1hatever. And they%re already in there and once the seller sends the release code they !et immediately dumped into the 3uyers 1allet and they are instantly accessi3le and they don%t have to 1ay $or that con$irmation $or 1hatever reason 3ecause it%s already 3een con$irmed in one place. 5 could envision that "ind o$ a system "ind o$ tic" in the 1aitin! time $or that $irst con$irmation. .ut o$ Bitcoin payments. 5$ you had $or instance almost li"e an escro1 account+ 1here that%s your Star3uc"s !i$t card and you put Bitcoins in there+ li"e Star3uc"s "ind o$ already has them and it%s Bust li"e a $e1 3it cents !et dumped into their account every time you 3uy a cup o$ co$$ee. &47:4)( GM: 5t%s 3asically li"e internal transactions. SM: Aeah. And may3e a lot o$ them 1ould happen o$$ Bloc"chain. 6i!htGM: 6i!ht. SM: Because that 1ould 3e the 1ay to do the speed a little 3it $aster. But speed is somethin! that could really 3e super ta"in! advanta!e o$ a3out Bitcoin. GM: Aou can 3uy it on the Sil" 6oad. SM: Aou can 3uy 1hat on the Sil" 6oadGM: Speed. SM: .h. GM: .h 1ait+ 5%m sorry. SM: Aou can do that 3ut 5 mean your potentially Bitcoin transaction could 3e really $ast. ?hey%re really $rictionless. ?hat%s 1hat Bitcoin does 3est. 6i!ht- ,e Bust need to !et it there. GM: 5t Bust needs to !et 3etter. And it%s !oin! to. 5 really 3elieve it is. 5 don%t "no1+ 5%m not a Bitcoin e9pert or 1hatever 3ut i Bust loo" at 1here it%s !oin!. And 5 don%t really see it stoppin! any time soon. 5 1ould 3e 3lo1n a1ay i$ that happen. 5 li"e to hear 1hen people tal" a3out it. 5%m not sayin! to invest everythin! into it. And 5 !et 1hy they say that 3ut at the same time 5 see it as the $uture o$ currency+ at least ri!ht no1. et ready. Buy no1/ SM: et ready+ here it comes. eor!e%s #amous Ba"lava. 5t%s a multinational corporation. - <o+ Bust "iddin!.

GM: And i$ 5%m 1ron! you can sue me and 5%ll pay you in Bitcoin...5$ it turns out to 3e a $lop. SM: Alri!ht. He has promised it. So+ and you are puttin! your money 1here your mouth is on that. Aou are the person 1ho is really in Bitcoin $or the lon! term.

GM: 5 mean+ 5%m !ettin! paid in it. 5%d love to 3e a3le to 3y !roceries 1ith it. 5 don%t 1anna Bust 3e a3le to 3uy a !i$t card $rom some place necessarily. .r $rom a third party 1ho is Bust 3uyin! this !i$t cards 1ith cash a$ter 5 !ive him Bitcoins and then shippin! me !i$t cards. 5 1anna 3e a3le to Bust use Bitcoins to pay a company directly. Li"e+ Here%s your Bitcoins. Let me have 1hatever in e9chan!e $or !oods or service. 5 really 1anna see that 1ith common thin!s li"e !rocery stores+ !as stations. ?hin!s you spent money on every day. Star3uc"s+ i$ you 3uy co$$ee. 5 usually ma"e my o1n+ 3ut 1hatever. Hust thin!s li"e that. ?hat%s the ne9t step and 5 thin" it%s !onna !et there. Sooner then later. &4F:;'( SM: ,ouldn%t it 3e cool i$ you could !o to the !rocery store and li"e sometimes you pay 1ith the de3it card and you can !et cash 3ac" or 1hatever. ,ouldn%t it 3e cool i$ you could !et Bitcoin 3ac". .r somethin! li"e that. GM: ,hy not+ 6i!htSM: 5$ you could actually 3uy Bitcoins at the !rocery story or you could chan!e your Bitcoin into dollars or 1hatever. 5 mean that 1ould 3e cool. &4F:);( GM: 5t%s all possi3le. 5t%s a3le to happen. 5t Bust needs to !et there. ?here%s no reason to thin" that couldn%t happen. Loo" at credit card payments+ see ho1 $ar they%ve come. And it%s pretty incredi3le ho1 it started out. 5t%s not !onna ta"e that lon! $or Bitcoin to !ro1. 5 don%t thin"+ not 3y any means. &4F:7*( SM: <o. 5t%s 3een e9ponential accelerated 3y the internet and Bust the !ro1th o$ technolo!y that%s the pace that 1here operatin! these days and it%s Bust !onna !et more and more e9itin!. Be$ore 1e end up the intervie1+ tell me your predictions $or ne9t year. 5 mean 5 "no1 you%re retired $rom the Porcupine #reedom #estival. ,hat do you thin" Bitcoin is !onna loo" li"e ne9t year. &4F:@:( GM: At Porc$est- .r in !eneral- &4C:;;( SM: <o+ 1e%ll Bust pic" the ar3itrary point o$ li"e ne9t summer. &4C:;7( GM: 5 have no idea. 5 thin" any3ody 1ho pretends to "no1 really doesn%t "no1 %cause it%s such a hu!e picture thin!. ?here%s a lot o$ people in Bitcoin that are 3i! players in it. 5 don%t "no1. Ho1 can you even predict that at this point. 5%m Bust loo"in! ho1 much it%s !ro1in! and Bust the !ro1th around the 1orld. Because it%s not Bust li"e the small mar"et. 5t%s Bust people every1here !ettin! interested in it 3ecause o$ a lot o$ it has to do 1ith !overnments and their $iat and their currency ta"in! a dump and they $eel there is more security in Bitcoin+ dependin! on 1here they live. 5 thin" this time ne9t year 5 hope to see+ 5 li"e to see a couple mature players acceptin! Bitcoin. 5 thin" that 1ould 3e a hu!e success i$ 3y this time ne9t year there are 3i! companies li"e e3ay or Paypal or 1hatever ta"in! Bitcoin. ?hat 1ould 3e incredi3le. And 5 really hope it happens. And 5 thin" it 1ill. 5t%s only a matter o$ time. ?here are so many places out there. 5t%s only a matter o$ time $or one o$ them or a hand$ul o$ them start acceptin! Bitcoin at this rate. &4::;)( SM: And 1hat do you thin" a3out 1hat the !overnment decides to do 1ith Bitcoin li"e ho1 they decide to treat Bitcoin. 5s that !oin! to matter to youGM: <o+ no+ it%s not. 5 mean it%s really not. ?hey can try to do anythin! they 1ant and 5 thin" the >S could !et le$t 3ehind in a lot o$ 1ays 1ith the !overnment ma"in! it really hard $or people to 3uy Bitcoins. 5 can ima!ine the >S not crac"in! do1n some 1ay tryin! to ta"e control 3y limitin! e9chan!es to some1here 1ho they deal 1ith+ the 3an"s they deal 1ith. And 1e%ve already seen it. And 5 thin" that%s !onna happen. 5t%s !onna continue to happen 3ut in other countries it%s not !onna 3e that 1ay. ?here are other places that are a lot more Bitcoin $riendly. <o1 may3e they are not $riendly in other 1ays 3ut 5 mean realistically 5 don%t thin" that%s !onna a$$ect the !ro1th o$ Bitcoin. 5t mi!ht a$$ect companies 1ho decide to !et involved. 5 don%t "no1. ,e%ll see 1hat happens. &4::@C( SM: Aeah. 5 thin" it 1ill 3e interestin! to see 1hat does happen 1ith that. 5s it Bust !onna 3e li"e this eo-ar3itra!e 1here Bitcoin 3usinesses+ and the real innovation is "ind o$ positionin! itsel$ in places that are politically more $riendly to Bitcoin. GM: 5t%s !onna 3e a roller-coaster and it%s !onna 3e $un to 1atch. 5t%s 3een $un the past couple o$ years and it%s only !ettin! more e9itin!. 5n my opinion. 5 love it. SM: A1esome. ,ell+ Mandri" than" you so much $or chattin! 1ith me today 5 really enBoyed this conversation. GM: Aeah+ than"s. SM: And tell us 1here people can $ind eor!e%s #amous Ba"lava and 1here they can hear more $rom you.

GM: Aou can%t $ind it at Porc$est anymore. SM: Aou%re retired+ that%s ri!ht. GM: Aou can $ind me at mandri".com. SM: Cool. ?han" you so much. GM: ?han" you. &4*:4;(

&Part 7( &@;:;;( SM: 5$ people have 3een listenin! to the sho1 they "no1 that 1e+ and particulary 5 am interested in Bitcoin 3ased charita3le 1or" and non-pro$it or!aniDations. .ne o$ the or!aniDations that people have pro3a3ly heard o$. 5t%s 3ecomin! really 1ell "no1n in the Bitcoin community+ is SeanKs .utpost 1hich is an advocacy or!aniDation $or homeless people. 5t is run 3y Hason Iin! in Pensacola+ #lorida. ?hey have had some real issue 1ith "ind o$ li"e a ha3itat $or humanity 1here they%re 3uildin! home. ?hey%re also providin! $ood+ a!ainst the local la1s 3ecause it%s ille!al actually to distri3ute any "ind o$ $ood in a par" or in the city 1here they%re doin! this. And they do all "inds o$ proBects li"e this. But recently he%s really ta"in! it up a notch 1ith this proBect called Satoshi #orrest. ,here 3asically Hason has rented a plot o$ land 1ith Bitcoins and has 3asically people 1ho 1ould other1ise 3e homeless+ campin! on this land. And no1 it is private property so they don%t have to $ace these la1s 1hich ma"e it ille!al to 3e homeless in the city. And it%s really $ascinatin!. 5 1onder 1here this is !onna !o. He%s !ot a lot o$ people+ 5 thin"+ campin! on this land so $ar. Have you !uys heard a3out this- ,hat do you thin"- &@':'@( AL: He's actually not renting it. They actually bought the property and the payment, ) think it's 7<<I =% a month that they're doing, is actually a mortgage payment. The interesting part about this of course is that the company that the land has been purchased from is actually a multistate real estate company. %ean(s 4utpost is accepting Bitcoin then con!erting it to dollars and then paying the mortgage with it. They're are actually paying in Bitcoin for the mortgage and as a result of that interaction that Cason ?ind had with them they're actually accepting Bitcoin for all of their properties in a couple of different states. That's really e$iting to. #ll this things are on their face if you just look at just what's happened then maybe it's not that important. ) mean this is really cool. )t's really been interesting to watch Cason progress in the Bitcoin community and his cause gain name recognition as it has. Because like when you go on reddit and there is a post that's been made by %ean(s 4utpost, chances are really good it's not only gonna be getting a lot of up'!otes, in addition to that they are getting a lot donations through the Bitcoin tip system that's built into reddit now. )t's really cool watching this stuff. #nd again you can see how, e!en though this is a project that he did for a specific reason, it's already ha!ing knock'on effects elsewhere. )t's really cool to see. )'m e$iting about this one. 0>1:1>3 AA: ?heir very $irst mort!a!e payment 1as paid entirely $rom tips that came throu!h reddit+ all F;; dollars. ?hat%s very e9itin!. 5 thin" 1hat they%re doin! at SeanKs .utpost+ 1hat Hason is doin!+ is spectacular+ it%s inspirin!. And 1e need to create an a1ard Bust $or this "ind o$ thin! - really contri3utin! the most to the Bitcoin community and !ive them some reco!nition 3ecause this is really impressive. &@):@'( SM: Aes. So 1hat "ind o$ e$$ects do you thin" this is !onna have on+ 5 don%t "no1+ real state and the proBects people can do. 5$ you could 3y land $rom a multistate real estate company and use Bitcoins to do that. ,hat possi3ilities does that open up- &@7:;C( AL: ) think that one of the main ones that jumped on on me about this is that they didn't buy land with Bitcoin. They are paying a mortgage with Bitcoin. ,hat we'!e seen so far is, ,e ha!e seen people asking for fi$ed rates payable in Bitcoin. #nd that's kind of a scary thing to do. )f you gonna spend /<<,<<< dollars right know worth of Bitcoin then that means that you'!e spent all of that upfront and it's like a problem. *or a deflationary currencies it makes a ton of sense to pay your mortgage in it when the amount is not denominated in it. Because that means that o!er time the amount of Bitcoin, relati!ely speaking that they'll ha!e to pay, assuming that the price goes up because adoption continues at the pays that we'!e sort of seen. That amount, relati!ely speaking, goes down. They see a sa!ings if they ha!e the Bitcoins an ad!ance. 0>::.93 SM: 6i!ht. ?hey could 3e payin! in Bitcoin $or their mort!a!e payment years on in the $uture. And that 1ould 3e !reat $or an or!aniDation li"e SeanKs .utpost 1ho%s a charity and they%re 3asically tryin! to save and have this lon! term vision. &@4:;)( AL: -specially when you factor endowments into this. %tephanie, you run *ree #id and you guys wind up with more Bitcoin then you need to spent on operation right then. #nd so it's in your best interest with the deflationary currency to basically just hold on to it. Because you know that, since you don't need it now and it's probably gonna go up in price, you know, relati!ely speaking, you'll be able to use it for more later. ) mean it really incenti!es spending what you need when you need it and Bitcoin is !ery good for that, but it also incenti!es not spending more then you need. Because the ad!antage of holding on to it means you ha!e more resources to work with later. 0>.::B3 SM: ?here are several or!aniDations ri!ht no1 1ho are tryin! to 3uild up Bitcoin endo1ments so that they%ll 3e a3le to use the interest on those to do $eature "inds o$ charita3le 1or" includin! the Li$e3oat $oundation 1hich is "ind o$ li"e a thin"tan" $or pro!ression o$ human "ind. ?hey have li"e a Bitcoin 1in! also. 5t%s interestin!. And then also Bit ive 1hich is a proBect that%s associated 1ith BitPay. And they%re tryin! to 3uild up "ind o$ li"e a 3i! Bitcoin endo1ments so that they can use it in the $uture to do Bitcoin charita3le 1or". &@@:;@( AL: ) think that the idea of an award is a really really good one and definitely something we should think about how we wanna do. This is a big part of what we're trying to do with Let's Talk Bitcoin is of course do this whole shiny e$amples horrible warnings say. #nd we talk about horrible warnings way more then we talk about shining e$amples because it seems like so many companies just figuring it out. They are making all of this really basic mistakes like for e$ample not communicating so people assume the worst. This is a really basic marketing one'on'one thing. The worst thing to do under most circumstances is to stop talking to people when they're thinking that you're doing something wrong. That further reinforces the point. 0>>:.:3 AA: 5%ve done this $or years as part o$ my analysts 1or". And 1e had nice events+ a nice hotel+

(@@:@)) P+ coc"tails+ announcement speeches+ openin! envelopes and handin! the Crystal A1ards to various people. ?he tric"+ 5 thin"+ to ma"e it !ood is to do it $or individuals and not $or companies. ?o reco!niDe individuals not companies. Companies 3ecome sponsorship 1here%s 1ith individuals you can do it more com$orta3ly. &@F:''( AL: ) think that in Bitcoin that makes it all the sense in the world. #gain, it's a person to person en!ironment so this makes a ton of sense. Aeah. ,ell, that's great. Let's de!eloped that more off the air. 0>7:1<3

Advertisement start 0>7:1<3 Woman: "ore than :<<,<<< users and counting trust blockchain.info. )t's a Bitcoin wallet ser!ice and a wealth of Bitcoin information and is completely free to use. ,ith the blockchain.info wallet, you'll get the con!enience of a web wallet, and the security of a desktop client. blockchain.info is also a block e$plorer. Aou can use it to see Bitcoin transactions in real time, check the balance of any Bitcoin address, and do many handy Bitcoin charts, all for free. %ee what they ha!e to offer today. #t blockchain.info. 0>7:.93 Stephanie Murphy: Hi, %tephanie here. ,ould you like to turn your book into an enthralling audiobook+ Geed a persuasi!e commercial to promote your company+ How about a narrator for your e$plainer !ideo+ Here(s where ) can help. )(m a freelance !oice'o!er artist and since 1<<9, )(!e lent my !oice to do8ens of audio projects. To hear some e$amples of my work, check out my website sm!oice.info. )f you like what you hear, )(d lo!e to be the !oice of your ne$t project. &et in touch at sm!oice.info. Advertisement over 0>B:1<3

AL: ,e first saw Bitcoin #T"s, or Bitcoin ending "achines as some manufactures like to call them, at the Bitcoin 1</: 5onference in %an Cose this past "ay. Gow in %eptember the first couple of those ha!e started to release the first Lamassu !ending machine and the also the ;obocoin Bitcoin #T". They actually call theirs an #T" where's Lamassu who prefers to talk about it as a !ending machine. These are looking like they're gonna get some traction but they're mo!ing into a really uncertain legal en!ironment. Fo you think that in the =% or in other places around the world this is the start of the accessible Bitcoin buying e$perience or is this just more technology that if we could just use it as technology then it'd be great but because there are rules that need to be followed it's less useful. 0>2:<>3 SM: ,ell+ the uncertain re!ulatory environment is precisely the reason 1hy a lot o$ these companies+ Lamassu in particular+ li"e to re$er to themselves as a Bitcoin vendin! machine. 5$ they 1ere to ma"e it a place 1here you could e9chan!e Bitcoin in $iat "ind o$ 3oth 1ays they 1ould 3e su3Bect to a lot o$ these la1s that !overn A?M%s and they don%t 1anna do that. And so they Bust ma"e it a one-1ay machine and no1 it%s a Bitcoin vendin! machine. And 5 thin" that%s pro3a3ly a smart move 3ecause there 1ere a $e1 people 1ho literally tried to ma"e 3eat Bitcoin A?M%s. ?hey 1ere cron"y+ there 1ere security issues+ it has to 3e very lar!e and di$$icult to 1al" a1ay 1ith and also there%s the re!ulatory stu$$ that really slo1s people do1n. 5t "ind o$ ma"es sense to have Bust a one-1ay thin! 1ere you can 3uy Bitcoin and it acts li"e a 3ar or somethin! 1here some3ody can "eep an eye on it. 5 thin" it%s e9itin! and i$ it%s not allo1ed in the >S it 1ill $lourish in other places. &@*:;)( AA: ?hat%s the "ey. ?here%s a '*) countries out there and i$ it%s not allo1ed in >S 1ho cares. Listen+ 5 mean this is a device that could easily 3e e9ported and 3e used. 5 e9pect to see these pop up in places li"e ermany and Berlin and Bratislava and other places in 8urope 1here Bitcoin is more com$orta3ly re!ulated. And then also in places around the 1orld outside o$ 8urope. ?he "ey here+ 5 thin"+ is to realiDe that you%re not really !onna to ma"e a ton o$ a money $rom $ees or 3y havin! this machine in your premisis. Aou%re !onna ma"e money $rom $oot tra$$ic. 5$ this attracts customers to your 3usiness that 1ouldn%t other1ise come+ 5 thin" that%s an !reat advertisin! and certainly Bitcoin has sho1n+ that as this early adoption phenomenon+ it does tend to attract a lot o$ pu3licity and a lot o$ re-mar"etin! $or companyKs. 5 thin" that%s 1here the advanta!e o$ havin! somethin! li"e Lamassu vendin! machine in your 3usiness comes $rom and 5 thin" it%s !onna 3e a 3i! success outside o$ the >S 3e$ore it%s success$ul in the >S. %Cause it%s really smarter then to name it a vendin! machine to see ho1 $ar they can !o. &':;;:;F( SM: ,ith the Lamassu machine they actually+ i$ i understand it correctly+ allo1 the individual $ranchise user. ?he people ho1 o1n a machine can set their o1n $ees on that particular machine. May3e some people 1ill try to ma"e money o$$ o$ $ees+ may3e some people 1ill Bust !o $or the $oot tra$$ic and it 1ould 3e really interestin! to see 1hat happens to the $ees. 5 could even ima!ine Bitcoin prices 3ein! su3sidiDed in a 1ay. Li"e i$ a machine attracts a lot o$ $ood tra$$ic and people 3uy di$$erent items 3ecause they 1ent in to use the Bitcoin vendin! machine then may3e they !et their Bitcoins at a discount or somethin! li"e that. &':;;:47( AA: 5 don%t thin" you really !onna ma"e your money upon $ees 3ecause the cost o$ the machine is still 2uite hi!h. 5t%s !onna ta"e 2uite a lot o$ volume production $or the cost o$ the machine himsel$ to drop so that the $ees ma"es sense 3ut the $oot tra$$ic should help in the mean time+ that 1ill 1or" out. &':;;:@:( AL: )t really depends on what type of market you find yourself in. Because if we're talking about a market right know where the easier option is to find a %atoshi %6uare or a Local Bitcoin or none of those things if it's simply not a!ailable. ) still !ery much struggle to find people who are interested in buying or selling Bitcoin within :< miles from me, and )'m only an hour and a half from Gorthern %an *rancisco. )t's not like necessarily that's a option that e!erybody has accessible. )n situations

like that if there was way that i could a!oid e$changes all together, going to a town near me and go to an #T", )'d pay probably /<H o!er some random market fee because )'d know that ) would get it right then and )'d be able to ha!e complete control o!er it instead of ha!ing to go though these huge rigmarole . )n a world where there a lot's of ways to buy Bitcoin then ) think you're probably right, then it's a no!elty but in the world that we li!e in now, at least the world ) li!e in, ) think that you can make a lot of money with fees on these. 0/:</:>>3 AA: 5%m reconsiderin! completely my entire earlier position and that 1ay 5 a!ree 1ith 1hat you said. Adam+ in $act 5%m recalculatin! the 3ene$it o$ havin! one o$ these machines. 5 thin" you%re a3solutely ri!ht. &':;):;:( SM: ?here 1ould 3e nothin! to stop people thou!h $or instance puttin! up an ad on Local Bitcoins $or a co$$ee shop 1here there is a Bitcoin A?M and sayin! 5%ll sell it to you $or '= less then the A?M. 5t 1ill 3e localiDed. 5t 1ill 3e di$$erent in di$$erent areas and di$$erent stories. ?hat is a really interestin! point Adam. 5 mean some people Bust don%t 1anna deal 1ith a person+ they 1ould rather deal 1ith the machine. And they rather "no1 that they%re !onna !et their Bitcoins. A machine can%t sti$$ you or scre1 you over on a Bitcoin deal. &':;):@7( AL: ,ell, it's more recourse, yeah. 0/:<1::23 SM: 89actly. And i$ there%s an issue technically 1ith it you can al1ays Bust tal" to the proprietary store it%s in. And may3e people 1ould $eel more com$orta3le 1ith that and may3e they 1ould 3e 1illin! to pay a premium $or it. &':;):@;( AA: Aou "no1 Stephanie+ 5 1ould a!ree 1ith you on that. A3solutely. 5 thin" the issue 1e haven%t considered is the sa$ety issue. ,hen 5 1as doin! Local Bitcoins one o$ the thin!s 5 did 1as+ 5 put in my ad that it 1as $or ne1 3uyers only. 5 o$$ered a sa$e and secure environment $or people to 3uy Bitcoins and very speci$ic places 1here 5 1ould meet. As a result 5 thin" most i$ not a lot o$ my 3uyers 1here youn! $emales 1ho came unaccompanied 3y themselves to meet me to 3uy Bitcoins. 5%ve a $eelin! that my ad 1as caterin! to people 1ho 1ere 1orried a3out this 3ein! a dod!y transaction. And that sa$ety issue is 2uite serious. .3viously you don%t 1anna 3e !oin! out and doin! Crai!slist-style purchases $rom stran!ers in places that don%t have a lot o$ people around. 5 thin" that%s another 3i! advanta!e o$ havin! a vendin! machine 1hich 5 hadn%t considered. Some people $or very very !ood reasons 1ould 3e more com$orta3le 1ith a machine. &':;7:@7( SM: But then it%s "ind o$ 3ecomes li"e 1hy don%t they Bust !o on one o$ the e9chan!es. ,ell+ 5 mean it%s di$$icult and arduous to set it up 3ut it%s !ettin! easier. And 5 thin" there are some e9chan!es that may3e are tryin! to ma"e it easier li"e Coin3ase 1ho%s tryin! to ma"e it more $riendly to ne13ies and stu$$ li"e that. May3e one o$ these machines 1ould 3e "ind o$ li"e a !ate1ay to openin! more accounts on di$$erent Bitcoin e9chan!es. 5%m not really sure. &':;4:'C( AA: Consider $or a second the (':;4:);) ... Consider the people 1ho don%t have 3an" accounts or Paypal accounts or easy 1ays o$ lin"in! one o$ these e9chan!es. 5$ 5 mainly have cash $rom a paychec" and 5 Bust 1anna 3uy a hundred 3uc"s a months in Bitcoin. ?he le$tovers $rom my paychec" that 5 only !et in cash and 5 don%t even have a 3an" account and this vendin! machine 1ould 3e per$ect $or me. &':;4:4;( SM: 5$ 5%d too" de3it cards then it 1ould 3e per$ect $or people 1ho did have 3an" accounts+ even prepaid de3it cards. Because a lot o$ people 1ho don%t have 3an" accounts do !o 1ith the prepaid de3it card solutions that are out there to. So a!ain+ the possi3ilities are Bust endless. &':;4:@4( AL: ) think this is not a situation that has one solution. ) think that this is something that is e!en more local than local because it's also based on a persons preferences. Aou alluded to this earlier, #ndreas. %ome people would prefer to deal with real people, some people would prefer to ne!er see a real person, some people would prefer to sit at home on their computer and are willing to wait, some people hate waiting and want it fast no matter how they can get it. %o really what we gonna see is a broad swath of options that will co!er e!erything e!entually. #nd the places that ha!e fewer options will ha!e higher premiums there then places that ha!e more options. But that higher premium is actually !aluable because it's the higher premium is the fact that you can make /<H off of a Bitcoin !ending machine. That encourages people to say, 4k, ,e'll all sell it to you for 9H. #nd then you start that price war that mo!es it down and so e!erybody, e$cept for the original guy who spent the most on e6uipment and got into the market first, they can make money in that situation but they ha!e to do it before they attract the competition. The incenti!es are really good from what ) see. 0/:<>:>13 AA: ?hat%s an e9cellent point. 5$ you 1ant to enter the mar"et $or demand $or Bitcoin that e9ists today and ma"e some money o$ that. ?here%s really only one 1ay to do that and that%s 1hy openin! an e9chan!e. ?his o$$ers a completely other 1ay o$ doin! it 1ith a lot o$ less re!ulatory 3urden that allo1s you to really start $illin! the needs o$ this mar"et and start ma"in! money o$$ ma"in! Bitcoin easier to 3uy. &':;F:'C( AL: -asier is relati!e. Here as always and so it's relati!e compared to setting up an e$change. #nd again this is a hyper local issue to. )n 5alifornia the rules about how you need to go about setting up one of these machines and licensing is much different then other parts of the world. %o again, you just ha!e to check into your local regulations to see if there's an opportunity here or not. 0/:<7::93 AA: Aeah+ 5 thin" this is all 1hy 5 $ind it amusin! 1hen people tal" a3out Bitcoin as per$ect means $or 3uyin! dru!s. Because 2uite honestly $rom my e9perience it%s actually a lot easier to 3uy dru!s 1ith dollars then it is to 3uy Bitcoin. So... &':;F:@7( AL: Thanks for sharing that #ndreas. 0/:<7:>B3 AA: Aou%re actually Bust dou3lin! the amount o$ avera!e you have to ma"e i$ you 1ant to 3uy it 1ith Bitcoin. #irst you have to $ind someone 1ho 1ant%s to sell you Bitcoin then you have to $ind someone 1ho 1ant%s to sell you dru!s. ?hat%s a lot o$

1or". &':;C:;:( SM: Adam+ you 1ere sayin! a little earlier i$ some3ody can ma"e that ';= pro$it 3y sellin! Bitcoins o$ a very particular 1ay in a certain spot+ in a certain locality and $rom a machine and these are the terms and conditions+ this is the price. ?hat%s the mar"et sayin! 1e support this method o$ Bitcoin vendin! and any competition 1ho comes in and 1ants to ma"e a similar pro$it is !onna have to o$$er the Bitcoins in a similar 1ay. ?hey%re !onna have to present a pac"a!e deal that%s similar to 1hat the person 1ho%s ma"in! ';= a3ove spot is doin! to. ?his "ind o$ mar"et $or ho1 people 1anna 3uy Bitcoins is a 1ay to $ind out in$ormation a3out 1hat the 3est 1ays $or Bitcoin 3uyin! are. Aou "no1 1hat 5%m sayin!- 5t tells us somethin!. 5t tells us ho1 do people most easily 1anna !et Bitcoins. &':;C:@4( AL: )t tells us something about the market certainly but ) think that it's really dangerous to confuse the feedback we get from the real market as feedback that really is instructi!e to us because what we ha!e right now is such a constraint market where it's not so much about buy preference as simply what options will work, what options are a!ailable and what are the downsides of e!ery option, relati!e to what your particular needs are. %o yes, but also no. ) mean, )f we had unencumbered markets then you'd be totally right, but ) just feel like you can't describe what we ha!e now is unencumbered markets. 0/:<2:123 SM: ?hat%s the $air point 3ut it also "inds o$ reminds me o$ ta"e $or e9ample Local Bitcoins. ?here are people 1ho sell Bitcoins online on Local Bitcoins so that they have a potential customer pool o$ people any1here and the di$$erent methods o$ sellin! Bitcoins online is really interestin!. ?here can 3e a price a spread 3et1een them 3ased on ho1 convenient they are or ho1 much people 1anna idealiDe them. #or instance some people sell Bitcoins $or cash in the mail. And that%s somethin! that a lot o$ people may3e $eel a little 3it hesitant to do. Li"e+ ri!ht- Hust put some cash in the mail and then this person says thou!h send me some Bitcoins. ?hat could 3e a tou!h sell. So sometime prices on that are very lo1. .n the other hand people also sell Bitcoins online+ on Local Bitcoins+ $or d1olla payment or venmo payment or even Paypal. And the prices are astronomical 3ecause there%s a hu!e ris" $or the seller o$ !ettin! closed do1n 3ecause all o$ those or!aniDations are hostile to Bitcoins. ?hey don%t 1ant people sellin! Bitcoins 1ith their services 3ut yet there%s a hu!e demand. Because people 1ant to 3uy Bitcoins 3y Bust sendin! a Paypal or sendin! a d1olla payment li"e that%s really convenient. 5t%s really interestin! to me. 5 mean 5 "no1 1e don%t have a un$ettered mar"et and it%s still small and 1e are still early up in the !ame 3ut that in$ormation comin! out is really interestin! to me and it sho1s places 1here there are holes in the service that%s 3ein! provided to people and $ran"ly opportunities $or entrepreneurs to $ill those holes. &'';:;;( &8nd( AL: Thanks for listening to episode ./ of Let's Talk Bitcoin. 5ontent for today(s show is pro!ided by %tephanie "urphy, #ndreas ". #ntonopoulos and &eorge "andrik. "usic was pro!ided by Cared ;ubens. )f you can't get enough of original thoughts and discussion, read our daily blog at letstalkbitcoin.com, sign up for a weekly newsletter at theweeklybitcoin.com. To get in touch send us an email at adamJletstalkbitcoin.com or !isit our listener subreddit at letstalkbitcoin.comKtalk. %ee you ne$t time.