Lets Talk Bitcoin Episode 34 Bitcoin and the Butters. Participants: Adam B. Levine (ABL) Host. Andreas M.

M. Antonopoulos (AA) Co-Host. Stephanie Murphy (SM) Co-Host. Jeff Bussgang (JB) General Partner at Flybrid e Capital Partners. edri! "ahl ( ") C!" o# Buttercoin. #yan harleston (# ) Co-#ounder and C!" o# Bitcorati. Andre "e astro (A ) Founder o# eCoinCashier. Josh $erlan (J$) C"" o# Butter#ly Labs. ABL% Hi$ and %elco&e to Lets Talk Bitcoin$ a t%ice-%eekly e'ploration o# the ideas$ people$ and pro(ects buildin the ne% di ital econo&y and the #uture o# &oney. )y na&e is *da& B. Le+ine and todays sho% is a doo,y. -e kick thin s o## %ith .tephanies inter+ie% %ith /e## Buss an o# Flybrid e Capital Partners$ %ho kicks in perspecti+e #ro& the +enture capital side o# the table. Then *ndreas is (oined by Cedric 0ahl$ C!" o# Buttercoin$ to re+eal their %hite-label e'chan e solution and ho% it can help li1uidity o +iral. 2yan Charleston o# Bitcorati$ a %ouldbe 3ahoo-3elp bitcoin &ashup$ %ill tell .tephanie %hy %e dont need the 3ello% pa es any&ore. *ndre 0eCastro o# eCoinCashier e'plains his app that %ill buy your bitcoins but doesnt %anna sell you any. -*nd #inally$ a ainst the backdrop o# this %eeks 45n& )onarch announce&ent$ /osh 6erlan$ C"" o# Butter#ly Labs catches up %ith .tephanie about the past$ present$ and #uture o# *.7Cs. 7& (ust onna say it: this is a ood one. "n that sa&e note 7& really e'cited to announce the relaunch o# letstalkbitcoin.co&$ %hich has been in the process no% #or about 4 &onths. 7n addition to our t%ice-%eekly sho%s$ you can +isit e+ery day to #ind ne% articles$ editorials$ #iction$ and perspecti+e #ro& all o+er the crypto-currency ecosyste&. Please send all co&&ents or co&plaints to *da&8letstalkbitcoin.co&. * special thank you to )ichael .ulli+an %ho &ade it happen. Thats it$ take it a%ay .tephanie. SM% 7& here talkin %ith /e## Buss an . Hes %ith Flybrid e Capital Partners %hich is a +enture capital #ir&. 2i ht9 JB% 3es$ %ere based here in :e% 3ork City and in Boston as %ell. SM% *re you here because youre lookin #or bitcoin businesses to in+est in9 7 %ant to kno% all about %hat you do$ but #irst o# all$ ha+e you in+ested at any bitcoin businesses so #ar9 JB% -e ha+e not. -e+e in+ested in a lot o# pay&ents co&panies. Flybrid e does .eed and .eries-* in+estin $ and one o# our areas o# #ocus has been #inancial ser+ice and pay&ents. ;-e+e in+ested in< co&panies like Plasti1 - %hich is a credit card pay&ents co&pany #or lar e ticket purchases - and other #inancial co&panies like 6estFinance %hich is a consu&er lender$ and BlueTarp Financial %hich is a lender in the construction industry. -e like the cate ory a lot$ but %e ha+e not yet in+ested in a bitcoin #ocused start-up. SM% -hats holdin you back #ro& in+estin in ;a< bitcoin start-up9

JB% 7t is still &urky #or a nu&ber o# reasons. "ne is: the re ulatory o+erhan - thats a concern. -e$ as in+estors$ try to a+oid businesses that ha+e re ulatory risk because its so binary. 3ou can build reat technolo y$ but i# the re ulators kill the business$ you et ,ero +alue out o# it. .econdly$ %ere lookin #or plat#or& opportunities %here %e can build +ery lar e co&panies and there are only a #e% areas %e think %here thats possible. *s +enture in+estors$ %ere lookin #or the billion dollar ideas$ not the ten &illion dollar ideas or e+en the hundred &illion dollars ideas. -e need to see the billion dollars ideas$ and they are actually +ery$ +ery #e% o# those in eneral and e+en #e%er in the bitcoin sphere. :o% &aybe thats a re#lection$ &aybe o# ho% youn this &arket is$ but 7& here because 7& bullish on the &arket in the lon ter&$ and 7 %ant to &ake sure that 7& learnin about it$ &eetin people %ho are s&art about it$ and ettin a perspecti+e on it that could be help#ul do%n the road. SM% 7n the pay&ent ser+ices industry - its been around lon er and it sounds like at least thin s are clear #ro& a re ulatory stand point. 7s that %here you=re co&in #ro&$ %hereas %ith bitcoin its really not clear9 JB% 3eah$ %hen you think about a +enture capital in+est&ent$ you think about risk &ana e&ent. -e are in+estin in little co&panies %ith i&&ature business &odels$ i&&ature technolo ies$ so&eti&es i&&ature &ana e&ent tea&s$ but thats a %hole other topic. 3ou %ant to &ake sure that youre reducin risk$ and i# you+e ot ecosyste& risk %hich bitcoin ar uably has: 7& personally bullish on it$ but any ob(ecti+e obser+er %ould say theres ecosyste& risk and you+e ot re ulatory risk. 7t &akes #or a di##icult en+iron&ent to in+est in. *ll that said$ 7& bullish on the cate ory and 7 think its a reat ti&e since %e look > years ahead$ ?@ years ahead$ in the ne't year or t%o$ its a reat ti&e to be learnin about the cate ory$ &aybe &ake so&e s&all in+est&ents and tippin ones toe in the &arket. SM% .o you really think this has potential to ro% a lot in the #uture9 JB% 7 think it has tre&endous potential. 7 think - the concerns aside$ the notion #ro& a hi h le+el o# a currency that transcends national boundaries$ that reduces #riction$ that reduces transaction costs$ that disrupts the ecosyste& o# dinosaurs in the #inancial ser+ices industry - 7 think thats the thesis that e+erybody can a ree %ith. SM% 0o you personally ha+e bitcoins9 0o you in+est in bitcoins the&sel+es9 JB% 7 do$ as part o# &y %ork$ #or #un$ been tradin a little bit in bitcoins$ so 7+e ot a couple o# bitcoins si s in &y iPhone >$ %hich 7 occasionally check the price and the ticker and keep an eye on %hats oin on. 7ts (ust a %ay o# creatin accounts and e'periencin the syste& and the ser+ice. SM% 7 ha+e to say 7+e been in acade&ia and science #or a %hile and 7 %as not spendin those years thinkin &uch about in+est&ents or anythin like that$ but bitcoin %as kind o# &y #irst #oray into %hat you could do %ith so&e intelli ent in+est&ents$ 7 uess you could say.

JB% 3eah$ al&ost e+ery &a(or technolo y de+elop&ent you could look at the ecosyste& in the early days and say it %as a hobbyist ecosyste&. 3ou can look at the PC industry back %hen Bill Gates and Paul *llen bou ht their little rickety PC and pro ra&&ed operatin syste&s$ and played around %ith 0". - at the ti&e$ it %as a hobbyist industry. 3ou can look at e+en the A0 printin $ &ore recently$ industry %hich is (ust no% con+ertin #ro& the hobbyist industry to &ainstrea&. Bitcoin$ as you kno%$ &any pooh-pooh it as a hobbyist #ield but thats ho% pioneers be in. *ny ti&e you %ant to be on the bleedin ed e$ not the leadin ed e$ but the bleedin ed e - you+e ot to deal %ith so&e o# these i&&aturities and risks$ and thats the essence o# inno+ation$ thats the essence o# +enture capitalB that=s the essence o# entrepreneurial ecosyste&. SM% Hearin you (ust talk about it #eels really e'citin . 7n a %orld thats +ery ne%$ this is really e'citin because o# %here it could o$ and %e cant e+en think o# %here it could o... "kay$ one last 1uestion 7 %ant to ask is: as a +enture capitalist$ %hat 1ualities %ould you look #or in a bitcoin co&pany %hen youre ready to start in+estin in the&$ that %ould &ake the& a %inner9 JB% 7t be ins %ith a #ounder. -e lo+e in+estin behind #ounders %ith a +ision$ that are e'ceptionally talented$ and ha+e the ability to e'ecute on that +ision. .econd$ it oes to the &arket opportunity - is it a plat#or& approach9 7s it a bi &arket opportunity %ith an attracti+e business &odel9 Third is$ theres so&e proprietary or un#air ad+anta e - %hy %ould this co&pany %in as supposed to three other reat entrepreneurs in Bei(in $ or Ban alore$ or .ilicon Calley - because theres al%ays oin to be co&petitors %hen so&ethin e'citin $ ne% and success#ul e&er es. -.o this is the kinds o# attributes that %e look #or - that &a ic intersection o# opportunity and co&pany - in entrepreneur. ;Pro&o< ABL% 3oure listenin to Lets Talk Bitcoin$ the pre&ier audio cast pro+idin ne%s and insi hts that co+er the rapidly e+ol+in %orld o# di ital &oney. "ur t%ice-%eekly sho% include analysis o# late breakin ne%s$ updates on key technical$ business and re ulatory issues$ and in-depth inter+ie%s %ith the key people dri+in the ne% di ital econo&y. Lets Talk Bitcoin o##ers sponsors an attracti+e %ay to reach a tar eted and sa++y audience. For &ore in#or&ation$ e&ail sponsors8letstalkbitcoin.co&. ;short pause< SM% -anna set up an online store that accepts bitcoins9 Go to openbitcoinstore.co& and you can ha+e a store up and runnin be#ore the end o# this &essa e. /ust enter your e&ail address and the store na&e$ and in less than A@ seconds youll ha+e a secure -ordPress e-co&&erce site up and runnin that accepts bitcoins and pays you in cash %ithin 4D hours. Best o# all$ its co&pletely #ree. Go to %%%.openbitcoinstore.co& today$ and open #or business no%. ;EPro&o< AA% "+er the past se+eral &onths$ %e+e all been e'periencin a lot o# ups and do%ns %ith )t. Go' and it has beco&e a bit o# the bane o# our e'istence here in bitcoin. .e+eral &onths a o$ one aspirin bitcoiner put out a call to ar&s and a call to action$ and asked other si&ilarly-&inded

pro ra&&ers to co&e to his aid in order to build a better bitcoin e'chan e$ and out o# that co&&unity e##ort ca&e Buttercoin. -ell$ Buttercoin no% has so&e ne% announce&ents and 7& deli hted to ha+e %ith us today Cedric 0ahl$ the C!" o# Buttercoin to tell us a bit about ho% #ar Buttercoin has co&e #ro& that #irst call to action. Cedric$ %elco&e to the sho%. "% Thank you$ its ood to be here. AA% 7 hear you ha+e a +ery bi announce&ent on )onday and Buttercoin has e+ol+ed a bit #ro& the basic concept o# buildin a +ery scalable and hi h per#or&ance e'chan e en ine. Can you tell us %here %ere oin %ith this today9 "% 3es. Buttercoin is launchin a %hite-label bitcoin e'chan e ser+ice that &akes it easy #or or ani,ations to instantly deploy a robust bitcoin e'chan e any%here in the %orld %ith a touch o# a button. AA% By %hite-label you &ean that they can essentially brand this %ith their o%n business na&e and start operatin an e'chan e %ithout any o# the technical e'perience or in#rastructure necessary to run the actual e'chan e hard%are9 "% Thats ri ht. -e take care o# all the hard %ork so they dont ha+e to. AA% *ll ri ht. Can you tell us a bit about the %hite-label e'chan e e'perience9 -hat does Buttercoin brin to the table that so&eone %ho %anted to open an e'chan e %ould not ha+e to do the&sel+es9 "% .ure. *s you probably kno%$ co&pliance is a bi deal in the bitcoin space - especially in *&erica$ %ere #indin that theres a lot o# acti+ity happenin around co&pliance and &akin sure that people %ho are ha+in businesses and e'chan es %ith bitcoin are able to be co&plaint and so youre in this interestin space %here a lot o# the #olks %ho ha+e the re1uired licenses %ant to et into the space but they dont kno% ho%. 7n other countries %here the rules arent necessarily strin ent$ you ha+e aspirin entrepreneurs %ho %ant to launch bitcoin e'chan es but they &i ht not ha+e the technical chops$ and %hat %e %anted to do is enable all o# these people e+erybody in e+ery country %ho is le ally able to run a &oney ser+ice business$ %e %anted to &ake it easy #or the& to put up a bitcoin e'chan e %ithout ha+in to %orry about the technolo y$ %ithout ha+in to %orry about (u&p startin $ to li1uidity onto their e'chan e. Flti&ately$ %e put our heads to ether and thou ht$ G%hats the best %ay to &ake bitcoin %ork9 -hats the best %ay to create a robust syste& %here people can access bitcoins %orld%ide$ %hile also helpin the& deal %ith co&pliance and %hate+er speci#ic %ay their country re1uires the& to9H "ur solution %as this %hite-label bitcoin e'chan e. 7 can talk a little bit &ore about ho% %e ot here i# youd like$ because %here %e ended up %as not any%here near %here %e intended to o$ but 7 think %hat %ere doin is actually probably the best %ay to secure bitcoins #uture. AA% Tell us a bit about the history$ 7 re&e&ber in the be innin the pri&ary oal %as si&ply to pro+ide a per#or&ance e'chan e en ine and certainly the #irst indications %ere that youre able to brin to the table so&ethin that can do hundreds o# thousands or e+en &illions o# transactions per second$ so tell &e a bit about &ore ;about< ho% that (ourney chan ed9

"% Thats ri htB %hen %e #irst started %hat %e %anted to do %as re&o+e the e'istential risk #ro& bitcoin. -e %ant bitcoin to %ork$ and a#ter )t. Go' crashed$ %e reco ni,ed that a bi part o# that crash %as the lo% per#or&ance on the )t. Go's trade e'ecution en ine$ so %e ca&e out %ith a hi h per#or&ance trade e'ecution en ine that %as an open source and our idea %as that anybody could use this: you could take it$ you could run your bitcoin e'chan e %ith it$ and it %ill allo% you to li&it la ti&e. 7 think at the peak %e %ere seein $ at the peak o# acti+ity at )t. Go'$ %hen the prices approachin 4I@ %e %ere seein la ti&es o# an hour and a hal# and as you kno% la ti&e leads to illi1uidity$ %hich leads to people ettin scared$ and sellin their stocks in this case$ their bitcoins$ and the price o# this bitcoin crashin . 7nitially$ %hat %e %ere doin %as really (ust creatin this so#t%are that anybody could use and as %e put it out there$ %e started talkin to +arious e'chan esB %e #ound that the &a(or players$ #or the &ost part$ (ust %ere not %illin or able to inte rate Buttercoin or so&ethin like it into their syste&. They (ust$ #or the &ost part$ didnt ha+e the technical chops$ and %e 1uickly reali,ed that i# %e %anted an e'chan e to e'ist - that %as robust - %ere onna ha+e to build it oursel+es. AA% .o#t%are %as not enou h. 3ou had to build the entire end-to-end in#rastructure and inte rate it. "% Thats ri ht. *s %e started buildin this$ %e reali,ed that there %ere a couple o# bi hurdles and the t%o bi est ones$ bein based in *&erica$ %ere JaK ha+in a bank account$ %hich is a necessary &echanic o# ha+in an e'chan e and the second one %as bein licensed $because as people ha+e seen %ith the recent subpoenas #ro& :e% 3ork$ and )t. Go' ettin basically #ocused on by the depart&ent o# Ho&eland .ecurity. 7# you are onna play the #inancial ser+ices a&e$ you ha+e to play by the rules$ and i# you dont$ o+ern&ents %ill co&e do%n on you. *s %e %ere oin throu h this e'ercise$ %e e##ecti+ely built this co&plete bitcoin e'chan e %here the only thin that %as &issin %as plu in in a bank account. The bitcoin e'chan e %as desi ned %ith co&pliance in &ind - security$ per#or&ance$ and li1uidity. -e tackled a lot o# these bi proble&s$ but the last ele&ent that %e %erent able to co&plete %as ha+in a bank account. !##ecti+ely$ %e reached out to se+enty-si' di##erent banks and all o# the& said L%ere sorry$ %e (ust cannot open a bank account #or a di ital currency e'chan e$ especially one related to bitcoin. -e e+en had our in+estors$ and %e ha+e top-tier in+estors$ call up these di##erent banks and the banks (ust #lat out said Lhey %e %ould lo+e to open an account but %e (ust cannot. "ur backers includes people like Goo le Centures$ 3-Co&binator$ Flood ate$ and these are hi hle+el$ top-tier in+estors that ha+e billions o# dollars in these banks and e+en %ith billions o# dollars in these banks$ the bank said no$ they (ust could not open ne% bank accounts #or bitcoin co&panies. -e e+en tried to %ork %ith the 7nternet *rchi+e Credit Fnion$ and un#ortunately$ %e (ust %ere not able to open up a bank account. :o% in parallel to the talkin to the se+enty-si' di##erent banks$ %e %ere ettin phone calls #ro& people %ho &istakenly thou ht that %e had a %hite-label bitcoin e'chan e and so$ a#ter ettin about a do,en o# this calls$ %e stopped and asked oursel+es =hey$ %hat %ould happen i# %e co&bined this idea o# a %hite-label bitcoin e'chan e %ith %hat %e ha+e$ %hich is a bitcoin e'chan e. Then all it needs is to plu -in a bank account.= -hat %e reali,ed is$ G%o% %ere sittin on so&ethin really po%er#ul here$H because %hat you could do is you could ha+e a pop-up bitcoin e'chan e %here anybody %ith the ri ht kind o# bank account$ at any country$ could instantly deploy an instance o# Buttercoin. Then %e looked at ho% currency %orked across borders$ and %e reco ni,ed that as lon as each country

had their o%n uni#ied order book$ then %hat you could do is you could +ery easily create a syste& that %as super robust %here e+en i#$ #or %hate+er reason$ one o# these e'chan es shut do%n$ it %ouldnt a##ect the co&&unity or the countrys access to bitcoin. AA% Tell &e a bit &ore about this idea o# the shared order book %ithin the conte't o# one currency or one nation. This is #ascinatin . "% The oal is to create access to li1uidity %hich is robust and$ ideally$ %ill %ithstand any une'pected issues$ so %hether one speci#ic person has issues %ith their bank account$ or a o+ern&ent decides that they are no lon er interested in a speci#ic re ion ha+in access to bitcoinB %hat %e %anted to do is (ust &ake a syste& that could last$ that could deal %ith une'pected issues and not o do%n. Like i# one part o# it %ent do%n$ it %ouldnt a##ect the %hole syste&. AA% Beyond resilience to a co&plete collapse o# one o# the e'chan es %ithin the re ion$ 7& assu&in that this shared order book %ill also lead to$ e+en %ithout one o# the& #ailin $ they %ould also &ean that ne% one startin up can et access to the li1uidity thats already there$ but also$ 7& assu&in that %ould also &ake #or s&oother price disco+ery and less di##erence in price bet%een di##erent e'chan es. 7s that correct9 "% Thats e'actly correct. Phase one is ha+e shared order books %ithin each country and then phase t%o$ %hich is a little bit o##$ is to build a truly lobal uni#ied order book$ and thats technically and le ally a little &ore co&plicated$ but thats the ne't bi proble& %ere sol+in . AA% .o ri ht kno% %ere seein an en+iron&ent %here )t. Go' has an al&ost t%enty percent di##erence in price on the F.0 currency #ro& &ost o# the other e'chan es$ and to put a bit o# speculation on that$ essentially the &arket is sayin that a )t. Go' dollar is %orth less because its harder to et out o# the e'chan e$ and as a result$ its pricin the sale o# bitcoins a bit hi her. -.o in an en+iron&ent %here you had a shared order book$ essentially that %ould be arbitra ed a%ay bet%een Go' and the other e'chan es$ correct9 "% Thats ri ht. The nice thin about %hat %ere doin is %ere not (ust openin up &ultiple e'chan es in one country or allo%in other people to$ %ere also brin in in pro#essional &arket &akers$ and these &arket &akers are able to ensure that there are +ery narro% spreads bet%een the bid and the ask$ as %ell as &akin sure that e+ery e'chan e that starts in each ne% country is able to start %ith a hi h le+el o# bitcoin li1uidity %hich is really i&portant. 3ou cant (ust build an e'chan e and hope people co&e$ you ha+e to seed it %ith #iat dollars on one side and bitcoins on the other. AA% "ther%ise$ it %ont be able to ro% throu h the #irst in#lu' o# custo&ers9 "% Thats ri ht. AA% 7t sounds #ro& all o# this that you+e so&e%hat i+en up on the idea o# openin your o%n e'chan e %ith all o# the hassle and di##iculty o# the se+enty-si' banks declinin you. 0oes that

&ean you+e &ore or less i+en up on the Fnited .tates as a location$ and are lookin #or &ost o# your %hite-label custo&ers to be in other countries9 "% -ere tenacious$ and %e ne+er 1uit. 2eally$ %hat this is about is &o+in 1uickly and ettin set up in places %here you can ha+e easy %ins. That doesnt &ean %e are scared o## by the di##iculties in the F.. -e ha+e t%o potential partners in the Fnited .tates that %ere oin throu h dili ence %ith no%. 3oure onna see Buttercoin launch in three countries %ithin three &onths - %ithin si' &onths$ %ell be in nine countries$ and the F. is oin to be one o# those nine countries. There ;are< a couple %ays that you can o about ettin licensed in the F. and thats really not the proble&. The bi issue is the bank account. -hat you are oin to #ind is the Fnited .tates is onna co&e out %ith so&e rulin on Bitcoin in about #our &onths. They kicked o## a report to inter+ie% e'perts - thats a bi part o# %hat the :e% 3ork subpoenas %ere about: its (ust inter+ie%in e'perts and &akin sure that re ulators and the #olks in char e %ere understandable o# %hat Bitcoin is. *t the end o# these #our &onths youre onna see the F. say so&ethin . 7 suspect and this is (ust speculation on &y behal#$ 7 suspect that the F. is oin to say =hey$ Bitcoin is le al and it needs to be re ulated and heres ho% to do it.= -.o %hen that happens$ youre onna #ind a lot less #riction in ter&s o# settin up a bank account. 7# %e ha+ent already si ned up %ith partners that ha+e bank accounts and are le ally licensed be#ore$ then %ell de#initely be settin up a#ter that announce&ent. AA% 7n ter&s o# the per#or&ance and the capabilities o# %hite-label ser+ice you ha+e today$ ho% %ould you co&pare it to the e'istin +olu&e o# trades that occurs on the three - lets say three or #our top e'chan es - )t. Go'$ Bitsta&p$ and Ca&pBM #or the F. dollar at the &o&ent. -ould you be able to support that kind o# +olu&e ri ht a%ay9 "% "h yeah$ absolutely. 7& happy to connect you %ith Bennett Ho##&an$ %hos the technical architect o# our syste&. He can talk about the tech side better than 7 can$ but yes$ as #ar %e understand$ %e ha+e the #astest syste& by se+eral orders o# &a nitude and it %ould be able to handle %orld%ide li1uidity. 7 &ean$ e+en i# e+ery person in the %orld %hose usin bitcoin$ and they %ere ettin their bitcoins by buyin and sellin throu h Buttercoin$ you %ouldnt see a per#or&ance delay. AA% * reat pro&ise$ lets see it happen. -hen do you e'pect as a custo&er or as a consu&er 7 %ill be able to e'perience a Buttercoin %hite-label e'chan e9 "% 0epends on %hat country youre in$ %ere pretty #ar alon in ter&s o# countries like 7ndia and Canada in ter&s o# ha+in partners there %ho are in the ri ht place and able to plu in and launch e'chan es. -ithin three &onths$ youre +ery likely to see so&ethin in a place like 7ndia$ Canada$ and the F.$ and then a#ter%ards$ youre +ery likely to see e'chan es in places like Hon Non and Bra,il. -e already ha+e deals in place and really %hats oin on no% is (ust oin throu h the due dili ence$ &akin sure that %hen %e do launch %e ha+e a rock-solid relationship %ith each bank thats plu ed into the Buttercoin e'chan e. AA% 7 think its instructi+e that it takes tre&endous audacity to stand up #our &onths a o and say G%e can build a better$ &ore per#or&ant e'chan e.H *t the sa&e ti&e$ its par #or the course because it takes tre&endous audacity to stand up and say %ere onna build a currency to ri+al

all o# the %orld currencies$ and thats e'actly the kind o# audacity %e need in this space. Thank you +ery &uch #or all your e##ort and #or brin in this reat tea& to bear. -ith us today %e had Cedric 0ahl$ C!" o# Buttercoin$ tellin us about the ne% e'citin space o# the %hite-label e'chan e %here people %ill be able to open e'chan es %ith robust technolo y in#rastructure throu h Buttercoin. Cedric 0ahl$ thank you so &uch. "% 3eah$ its been a pleasure$ cheers. ;.hort pause< # % )y na&e is 2yan Charleston$ C!" ;and< co-#ounder o# Bitcorati.co&. 7ts a &ath-based link co&pany. SM% *nd %hat is the Bitcorati9 # % Bitcorati is e+eryone here at this con#erence. 7ts all the enthusiasts$ &iners$ in+entors$ entrepreneursB people in+ol+ed in Bitcoin. Thats the Bitcorati. SM% 3ou told &e that youre buildin a data base ri ht9 3oure %orkin %ith the :.* to co&pile all the Bitcoin enthusiasts... ;lau hs<. :o$ 7& (ust kiddin . 3oure buildin a directory o# Bitcoin people$ ri ht9 # % !ssentially at the core$ the #oundation that %ere startin %ith is like a 3ahoo 0irectory and lookin at thin s like social net%orks and ratin s and re+ie%s sites like 3elp$ and borro%in ele&ents o# that. -e=re lookin at the key trends o# the last t%enty years on the %eb and seein the thin s that actually %orked and helped the %eb ro%$ and brin in those to ether$ and buildin the sa&e thin #or bitcoin$ helpin bitcoin ro%$ helpin the bitcoin businesses ro% and build$ and helpin that ecosyste& ro% #aster. SM% 3ou onna call it the oran e pa es9 ;lau hs< # % :o$ (ust the Bitcorati. SM% 3eah$ 7 kno%. 7 &ean the concept o# pa es is so outdated like yello% pa es$ ri ht9 3ou dont need a book any&ore to #ind so&e ser+ices that youre interested in. The use#ulness to the end user$ it see&s to &e$ %ould be to +isit one place and they could et re+ie%s and listin s o# bitcoin ser+ices$ businesses and all kinds o# other stu##9 # % Correct$ absolutely. *ny%here in the %orld$ you can either #ro& a &obile de+ice or your desktop or phone$ you can #ind a place to spend your bitcoins. 7t %ill be updated$ itll be #resh in#or&ation$ you can e+en set alerts on a speci#ic ,ip code or a to%n and itll constantly update you and say$ =hey this &erchant is no% acceptin bitcoins or this ne% bitcoin business (ust started= and itll keep you up to date. 7tll be sort o# a &odern directory - a ne% a e directory ;%ith< bitcoin bein at the center o# it. SM% 3eah $and does it ha+e a co&&unity aspect as %ell9

# % 3es$ its basically #our parts - directory$ co&&unity$ re+ie%s$ and ratin s. SM% Tell &e &ore about the co&&unity part. # % 3eah$ you ob+iously need a co&&unity i# youre oin to et re+ie%s and ratin s$ so lookin at ho% 3elp or *n ies List built their co&&unities up$ as %ell as like a Linked7n... ettin that co&&unity aspect... /ust a directory alone is not anythin specialB its borin . -e ha+e those$ but buildin a directory and ha+in a co&&unity around it that %ill actually en a e$ be acti+e$ re+ie% and rate$ and be in+ol+ed as %ell really brin s +alue to it$ and brin s +alues to the users$ businesses and the &erchants. SM% *nd is there a &obile app alon %ith this$ or is it a %ebsite only9 # % There %ill be. -ere still on de+elop&ent phase actually$ at a +ery early disco+ery sta e and %ere tryin to attract capital ri ht no%$ %e ha+e so&e interested parties and once %e ha+e that %ere onna ; o< #ull stea& ahead. SM% *nd did you - ha+e you had trouble #indin that certain bitcoin business yoursel#9 7s it so&ethin that youd %ant to use9 # % 3eah$ tryin to #ind the&$ tryin to or ani,e the&$ and tellin #riends or #a&ily that %ould ask &e G%hats this Bitcoin9 -hat=s Bitcoin9H *nd then one o# the bi $ #irst$ 1uestions that co&es up is Gokay$ so 7+e ot so&e bitcoins$ %here do 7 spend the&9 Ho% do 7 spend the&9H -ri ht9 There ;are< not &any places 7 can... thats a bi thin $ theres not &any places 7 can spend the&$ and 7& like - sure there is$ its like 4@ thousand or 4> thousand places ri ht no% on the %orld %here you can use your bitcoins. People dont kno% that$ and theres no real easy %ay one point that you can o to to #ind out %here to spend you bitcoins. 7ts scattered about the %eb ri ht no%$ so %e %anna pull it all in here and or ani,e it$ &ake it look pretty$ ob+iously$ and (ust help pro&ote bitcoin and then help pro&ote bitcoin businesses. 7t %as so&e proble& 7 had$ personally$ 7+e been #ollo%in bitcoin since .epte&ber o# last year ;and< really started ettin &ore in+ol+ed in /anuary$ February o# this year and then the price e'plosion ob+iously brou ht the &edia attention. Thats %hen 7 said$ Gokay$ 7 need to &o+e on this idea$ because its ti&e$ its ready and people %ant it.H 7+e been to the t%o con#erences no%$ includin this one$ and e+erybody 7 talked to says$ yeah %e need so&ethin like that. SM% Thank you so &uch. -hats your %eb site9 # % 3ou can o to Bitcorati.co& and si n up #or our beta$ and hope#ully it %ill be launchin in "ctober. SM% *%eso&e 2yan. Thank you so &uch #or talkin %ith &e today. ;pause<

SM% 7& here talkin eCoinCashier.

%ith *ndre 0eCastro and hes #ro& eCoinCashier. Tell &e about

A % eCoinCashier is... %ill be an application that %ere %orkin on to allo% indi+iduals to 1uickly sell bitcoins throu h any &obile de+ice. 7# an indi+idual %ants - lets say$ a hundred dollars or t%o hundred dollars +ery 1uickly - they %ill be able to choose the +elocityB %hether they %ant the &oney in an hour$ in the sa&e day or throu h an *CH process o# t%o to three days$ and there %ill be di##erent e'chan e rates &akin it con+enient #or the indi+idual that has bitcoins to recei+e dollars. SM% .o its only #or sellin bitcoins$ is that correct9 A % 3es$ the application #or the consu&er is only #or sellin bitcoins directly to eCoinCashier and eCoinCashier$ on the back-end$ either sells it on e'chan es or to creditin in+estors throu h an in+est&ent strate y. SM% 2i ht. 7& %onderin i# you chose that strate y o# (ust only o##erin to consu&ers the options to sell bitcoins - is that because o# re ulatory reasons9 A % 3eah$ %e %anna concentrateB %e %anna &ake sure that %ere pro+idin the #astest &ost con+enient ser+ice to the user o# the application. -e didnt %anna co&plicate thin s %ith the re ulatory space that e'ists today$ so thats the path %e chose. "ur core co&petency is bein an in+est&ent co&pany and %e %anna &aintain our core co&petency$ as opposed to bein one o# these re ular e'chan es %here you can buy and sell. SM% That all &akes sense and 7 kno% there ha+e been so&e other businesses that ha+e chosen the strate y o# =%ere only onna sell bitcoins.= 7 dont kno% o# anybody %ho said %ere only oin to buy bitcoins but 7 kno% so&e businesses %ho+e said basically$ G%ere onna be a bitcoin +ender in order to a+oid bein classi#ied as a &oney ser+ices businessH or %hate+er. 7s that so&ethin that ca&e up on your radar$ too9 A % -ere unsure %hether %e %ont be a &oney ser+ice business$ %e ha+e re1uested an ad&inistrati+e rulin #ro& FinC!: to #ind out i# %e are. 7# %e are$ %e %ill re ister and apply #or the proper licensin . SM% This is a pretty co&ple' process isnt it$ 7 &ean doesnt it cost a lot and take a lon ti&e to et that license to be a &oney ser+ice business9 A % :o$ %hat 7 #ound out is that theres not as &uch #riction as &ost people actually belie+e there is. -e+e taken a di##erent path$ and our path %as to re1uest an ad&inistrati+e rulin and askin FinC!: %hether our business processes actually lend us to be a &oney ser+ices business be#ore %e re ister. .ince %e are de+elopin the application no%$ %e kne% that %e %ould need ti&e any%ay$ so %ere usin the opportune ti&e that %e need to de+elop the best product possible to apply to the re ulatory bodies to #ind out %here %e land.

SM% .o youre onna be pretty &uch the only one out there so #ar %ho allo%s people to sell bitcoins and et the &oney #ast$ ho% did you co&e up %ith the idea to do this9 A % -e %ere lookin at so&e o# the co&petin products out there$ the Bitcoin *T) to the %orld and %e 1uickly reali,e that theyre not *T)s %hatsoe+er$ they are e'chan ers and 7 thou ht it %as rather silly that one %ould ha+e to track across to%n - possibly in the rain or in the sno% - to con+ert bitcoins to dollars. The thou ht %as$ G%ell $i# %e did this con+eniently$ and %e allo% the users to choose the +elocity o# recei+in the actual dollars then they &ay %anna pay di##erent rates$H so the rate %ill be based on the +elocity that the user chooses and %e thou ht it %ould be &uch &ore con+enient. Bein a co&pany thats positioned as an in+est&ent entity %ith bitcoins$ it (ust &ade sense to release that type o# #unctionality on &obile de+ices. SM% 7s this al&ost like the &odern e1ui+alent o# G%e=ll buy oldH or so&ethin like that$ you can take your old to a place and theyll buy it #ro& you$ and &aybe i# you %ant it really #ast theyre not onna pay &uch #or it - thin s like that9 A % 3eah$ 7 uess you could e1uate it to so&ethin like that$ i# you %ere to see bitcoin as a co&&odity or an in+est&ent +ehicle o# so&e sort$ that sort o# li#e %hat %e=re positioned. 7 dont think %ere onna ha+e any bri ht neon li hts on our application and %ere onna try to be +ery si&ple #or the user and +ery con+enient$ but 7 uess you could e1uate it to that. SM% 7 think its cool that it %ould be on &obile plat#or&s so they %ouldnt ha+e to o to an actual place. 3ou kno%$ honestly$ there+e been ti&es in the past %here 7 %ished like - Goh &an$ 7 %ish 7 could (ust pay &y credit card o## %ith bitcoinsH or so&ethin like that$ because 7d like to do it today and 7d like to do it %ith no hassle. 7s this a proble& that you had9 -ho do you anticipate bein your end users9 A % -ell$ its interestin that you &ention the credit card an le because thats one o# the +ehicles %e plan on deli+erin &oney to. 7# you o%e a balance on your credit card and %e &ake a pay&ent %ith your credit card and you kno% %hat happens$ ri ht9 )aybe ha+e a little &ore credit to spend$ but no$ 7 think %e ca&e across it because %e %anted to be in+entors in the bitcoin space. -e %ant an easy +ehicle to be able to collect bitcoins. -e think that there are &any accredited in+estors that %e do business %ith %ho ha+e a hard ti&e today ettin bitcoins and probably the best %ay to do it is throu h dollar cost a+era in . -.o i# they contract %ith us$ %ere able to i+e the& a re ular a&ount o# bitcoin and %ere able to pro+ide the con+enience to the end user. SM% "kay$ so youre basically %aitin on the re ulatory side to #ind out %hat you need to do to et this up and runnin $ and then %hats your plan #ro& there once you et so&e &ore clarity9 A % Ti&e is so&ethin interestin $ not only #ro& the re ulatory an le but both &y partner and 7$ %ere so#t%are en ineers$ and %e understand that to build ood so#t%are you need ti&e. -e (ust started about a &onth and a hal# a o$ so it %ill take a couple o# &onths to put out a 1uality product that people %ill use$ %ill #ind e'citin and %ill #ind interestin . -e needed the ti&e #or de+elop&ent cycles any%ay$ 7 think that both o# the& are per#ect &arria e.

SM% .o$ you ha+e a partner and you$ %ho are actually onna be codin on this app$ youre onna be %orkin on it yoursel+es9 A % 3eah. -ere both en ineers and %ere both contributin to puttin the app to ether. * pro(ect$ ri ht9 *n e'citin one. SM% That sounds like a lot o# %ork. 7 &ean$ not only are you de+elopin this ne% co&pany but youre also %orkin on the app$ 7 &ean$ isnt it a lot9 A % :o. 7 think it keeps both o# us +ery busy$ but %ere +ery e'cited about it. SM% *nd you are %ritin papers to FinC!:$ ri ht9 *nd you are askin #or an ad&inistrati+e rulin so... A % 3eah. SM% -o%. 2eally doin it all. A % 3eah$ 7 think thats part o# the s&all business o%ner - so&eone %hos tryin so&ethin o## the round. to et

SM% -ell$ that sounds e'citin and 7d like to hear an update. "nce you ha+e it out$ 7d lo+e to test it out... A % *bsolutely. -ell contact you so can et a #ull re+ie%. SM% *nd do you ha+e a %eb site yet9 A % 3es %e do$ you can o to !CoinCashier.co& and you can already re ister to be part o# the alpha testers. -hen %e ha+e an alpha +ersion %e %ill let our users$ %ho si n up kno% so they can play %ith it and i+e us #eedback so %e can ha+e a better beta product. SM% *ll ri ht$ *ndre$ thank you so &uch #or talkin %ith &e today. 7 appreciate your ti&e. A % Thank you. ;pro&o< SM% )ore than A@@$@@@ users and countin trust Blockchain.in#o. 7ts a bitcoin %allet ser+ice and a %ealth o# bitcoin in#or&ation. -*nd its co&pletely #ree to use. -ith a Blockchain.in#o %allet$ you et the con+enience o# a %eb %allet and the security o# a desktop client. Blockchain.in#o is also a block e'plorer. 3ou can use it to see bitcoin transactions in real ti&e$ check the balance o# any bitcoin address and see &any handy bitcoin charts - all #or #ree. .ee %hat they ha+e to o##er today at Blockchain.in#o.

/ason Nin : Hi. This is /ason Nin $ #ounder at .eans "utpost$ and youre listenin to Lets Talk Bitcoin. .eans "utpost is a ho&eless outreach in Pensacola$ Florida$ and %e are proudly po%ered by bitcoin. Today$ o+er ?A@@@ &eals ha+e been #ed to the ho&eless in our area$ all purchased %ith bitcoin and throu h the enerosity o# the crypto-currency co&&unity. 2ead &ore about us at seansoutpost.co&. Food$ shelter$ bitcoin - e+erybody. .eansoutpost.co& ;Epro&o< SM% 7& talkin %ith /osh 6erlan$ and he is the chie# operatin o##icer at Butter#ly Labs. Hi$ /osh. J$% Hello$ ho% are you9 SM% Good. -elco&e to Lets Talk Bitcoin. 7& really interested in Bitcoin &inin as 7& sure you are too. J$% * little bit$ yeah. SM% * little bit. ;li ht lau hter< 7d lo+e to ask you so&e 1uestions about %hat Butter#ly Labs has been up to and %hat can %e e'pect in the #uture co&in out #ro& Butter#ly Labs$ but #irst o# all$ ho% did you et interested in bitcoin9 J$% 7n bitcoin itsel#9 SM% 3eah. J$% -ell$ in 4@@O$ 7 did do%nload the client and started (ust lookin at it - at that ti&e$ 7 probably &ined a #e% hundred coins and o+erheated &y laptop. 7 %as like - Goh$ this is a ni#ty conceptH and pro&ptly deleted e+erythin . Fast #or%ard a couple o# years later$ lets see - probably in late 4@?@$ 7 sa% the article on$ 7 think it %as on .lashdot about the bitcoin( client - the (a+a based re%rite. 7 said$ Goh$ thats kind o# ni#tyH and 7 looked into that$ and at that point 7 %as like$ Goh$ %ell$ 7 %ill try &inin %ith &y :+idia card.H 7t didnt %ork out so %ell so 7 purchased the *)0 card and (ust sno%balled #ro& there. SM% -.o youre in there pretty early. 7 hear all these horror stories about people %ho &ined thousands o# bitcoins on so&e old co&puter and then they said Goh$ its not %orth it$ the electricity and stu##H and they #or&atted it at so&e point and lost >@$@@@ dollars or so&ethin like that. J$% 3eah$ absolutely$ and #ortunately 7 didnt &ine too &any: a #e% hundred$ but 7 ha+e sold. 7 sold 1uite a #e% coins under a dollar$ under t%o dollars$ under three dollars. 7n one aspect$ its pain#ul to think about it$ but in the other$ that %as their +alue at that ti&e and it %as (ust - is %hat it is.

SM% 3eah$ and i# you hadnt sold the&$ you kno%$ bitcoin adoption &ay not be as #ar alon as it %as today. 3oure actually helpin people et bitcoins and use the& so - such a #unny thin %hen you talk about usin bitcoins or spendin bitcoins as theyre oin up in +alue. 7 &ean 7& sure the uy %ho bou ht the ?@$@@@ bitcoin pi,,a$ 7& sure he ets a lot o#$ you kno% - people ask hi& i# he #eels re ret about it but #ro& %hat 7+e heard #ro& hi&$ he says %ell$ 7 helped kick o## the use o# this currency so 7 dont #eel too bad about it$ hes a ood sport. J$% 3eah$ absolutely. 3ou ha+e to ro% the econo&y so&eho%$ and i# you (ust hold on your coins all the ti&e theyll ne+er o any%here$ so in that aspect$ 7 dont #eel bad about it at all and %as doin &y part. SM% 3eah$ takin one #or the tea&. J$% *bsolutely. SM% "kay$ so tell &e %hat is Butter#ly Labs #or so&ebody %ho doesnt kno% %hat that is and %hat do you do at Butter#ly Labs9 J$% -ell$ Butter#ly Labs &anu#actures &inin hard%are. -e ha+e the &ost ad+anced chip out ri ht no% and it basically buys you lots o# bitcoin lottery tickets. -e ha+e a nu&ber o# di##erent products #ro& the entry le+el to all the %ay up to the industrial scale &inin . -e ha+e a little so&ethin #or e+eryone there. -hat 7 do in there9 7 try to keep e+erythin runnin and do a lot o# strate ic plannin and the direction the Butter#ly Labs is onna look to o here in the #uture. SM% .o$ do you build the &achines or do you (ust coordinate plans #or the co&pany or 7 dont kno% %hat you do. J$% "h$ &e personally9 7 dont physically build the &achines but 7 do coordinate the people %ho do. * lot o# &y role is #or strate ic plannin #or ne% products and e+olution o# current products. SM% "kay$ so youre thinkin about G%hat are %e onna do ne't9H Butter#ly Labs has been takin pre-orders #or a %hile and theres so&e people %ho are upset because the shippin has been delayed a nu&ber o# ti&es. Can you talk about that a little bit9 J$% 3eah$ absolutely$ and 7 cant say too &any ti&es %e are +ery$ +ery sorry #or the delays. -e +ery &uch understand the #rustration and an er that the custo&ers ha+e and %e share the pain$ and %e dont be rud e the people$ the an er$ because its absolutely a #ailure on our part to et the& out %hen %e pro&ised. -e+e built up a +ery robust supply and &anu#acturin chain. 7ts takin &uch lon er than %e thou ht$ our chip - bein the &ost ad+anced chip out no% - it presented hurdles that %e had to o+erco&e. SM% For e'a&ple$ %hat %ould be so&e o# the thin s that &i ht cause an un#oreseen delay9 J$% For e'a&ple$ %e ha+e to et the chip packa in to ether$ %e ha+e to et the %hole supply line co&in #ro& the #oundry$ to the slicin and dicin $ to the packa in $ to the asse&bly plant in Chica o %hich puts it on the boards$ the boards to us$ us to et the& into the cases$ the cases in

the bo' and the bo' out to the shippin co&panies. Theres a lot o# thin s oin ;like< this$ and %hat a lot o# people dont reali,e ;is< %ere not a s&all scale operationB %e ha+e o+er >@ e&ployees$ no%. /ust... theres a lot o# steps$ theres lots o# orders$ and %ere (ust &o+in as #ast as %e can$ and 7 %ish it %as as si&ple as so&e people thou ht it %as. -ere doin e+erythin %e possibly can to &o+e this alon as #ast as %e can$ but as 7+e said$ %e totally understand %hy people are #rustrated and they ha+e e+ery ri ht to be. Like 7 said$ 7 cant apolo i,e enou h$ but %ere absolutely tryin to et those units out as #ast as possible. SM% 3eah$ and so do you ha+e an e'pected ti&e %hen theyre onna be shippin 9 7 kno% there are &ultiple di##erent &odels that %ere talkin about$ like 7 sa% a +ideo %ith a /alapeno &odel. There %as I i ahashes per second or so&ethin like that. J$% The /alapeno is actually >$ the .uper /alapeno is P i ahashes. SM% "h$ okay$ otcha. 7 sa% a +ideo %ith the de&o unit on that #ro& Codin in )y .leep %ith 0a+id Perry - ha+e you started shippin those yet or are they still %aitin on the &ass... ;production9< J$% "h yeah$ %e+e shipped thousands o# the /alapenos. -ere shippin all o# our product lines$ %e+e shipped hundreds o# the sin les. The little sin les are a little bit behind$ and %e+e shipped 1uite a #e% &ini ri s. -hat a lot o# people dont reali,e is that there are a lot o# orders that arent on the custo&er-kept lists. * lot o# our custo&ers dont %ant to be public$ they dont %ant to be kno%n$ theyre +ery pri+ate and$ you kno%$ they ha+e their o%n orders$ they do their o%n thin $ they dont e+en et on the #oru&s$ they dont ha+e a lo in #oru&$ they e+en dont read the #oru&s. -e et lots o# custo&ers that call and be like - 7 %ant your bitcoin &iner$ %hat does it do by the %ay9 SM% -o% ;lau hs<. J$% 3eah$ %ere al%ays surprised by those calls$ too. -ere like G&i ht %ant to do so&e due dili ence there$H but its... %e also ha+e a lot o# interest #ro& Chinese$ actually - thats picked up 1uite a bit and theyre not 1uite in the sa&e boat o# %hat does it do$ they kno% they %anna be a part o# it$ but they dont kno% e'actly ho% they %ant to be a part o# it. SM% 3eah$ so 7 uess that brin s up a 1uestion #ro& &e %hich is that *+alon$ %hich %as pretty &uch the #irst ones to et out %ith an *.7C &iner$ they &anu#actured their units in China as #ar as 7 kno%$ and youre &anu#acturin in Chica o$ is that ri ht9 J$% 3eah$ %e actually %ork pretty &uch all *&erica. There are actual %a#ers are produced in the .in apore$ and theyre shipped here to the F.$ sliced and diced in the F.$ sent #or binnin at another F. co&pany$ sent to Chica o #or the &ountin $ and then sent to Nansas City. -.o its pretty &uch e'clusi+ely &anu#actured in the F.. SM% But in &ultiple di##erent places in the F.$ ri ht9 J$% 2i htB yes.

SM% 7 could i&a ine that &i ht cause so&e delays #or so&e i# the &aterials are oin #ro& point to point$ and then at any point$ there could be a delay in the &anu#acturin process that i&pacts the ti&e #ra&e. J$% *bsolutely$ thats one o# the proble&s$ one o# the pain points %e ha+e and its one o# the thin s %ere %orkin on. -ere tryin to strea&line that 1uite a bit. SM% -as it (ust not possible to &ake the& all in one place at the ti&e %hen you started9 J$% -ell its +ery hard to #ind reliable people that do that and %e+e one throu h a nu&ber o# +endors #or +arious di##erent processes. -e+e settled on a ne% +endor #or our packa in and its actually a one-stop shop #or slicin $ dicin $ and packa in $ so it eli&inates a %hole step - the %hole shippin step$ so theyll o #ro& there #ro& binnin to Chica o. Hope#ully$ that %ill cut it do%n. 7ts actually superior process that increases our +olu&e dra&atically in ter&s o# ho% &any chips %e et in$ so %ere %orkin on parin that do%n. SM% :o%$ at this point$ there are so&e other co&panies$ like 7 (ust talked %ith .a& #ro& N:C )iner$ and there are so&e other co&panies co&in out %ith pretty po%er#ul *.7C de+ices. *re you %orried about co&petition$ 7 uess you could say9 *re you plannin anythin to kind o# up the *.7C ar&s race9 :e% products that are &ore po%er#ul$ that co&pete %ith the ne't enerations9 J$% -ell$ %ere de#initely %atchin the co&petition and seein %hats co&in do%n the pipe$ and i+en our past track record$ 7 a& +ery hesitant to co&&ent on our #uture products ri ht no%$ (ust because 7 dont %anna &ake pro&ises... SM% .ure$ yeah. J$% ... and anythin like that. -e %ill de#initely re&ain co&petiti+e %ith anythin co&in out. SM% 3eah$ it &ust beQ do you #eel skeptical that other co&panies are onna ship that are doin pre-orders ri ht no%$ because$ 7 &ean$ i+en the di##iculties that you had$ do you anticipate that other co&panies &i ht ha+e the sa&e proble&s i# theyre tryin to &ake si&ilar de+ices9 J$% 7 ha+e to think they %ill because there %as a lot o# L otchas that you (ust... 7 &ean$ i# you kne% about the&$ o# course youd plan #or the&$ but theres (ustQ especially %hen youre talkin about dealin %ith the consu&ers space$ and then i# you ha+e a lar e +olu&e o# consu&ers space$ theres so &any issues that you ha+e to deal %ith to et those out on ti&e that they$ the other co&petitors$ are probably not ready #or. *s 7+e said: %e+e spent &onu&ental a&ount o# e##ort in ettin our supply chain and &anu#acturin chain up and runnin $ and until you actually do that and #ind the kinks and %ork the& out$ there=s really +ery little a&ount o# plannin that %ill hold up to reality. SM% "ne o# the bi issues that 7+e heard a lot o# people talk about is that there %ere so&e pre orders %ith Butter#ly Labs in bitcoin and then bitcoin %ent up dra&atically in +alue durin the ti&e %hen the people are %aitin #or their orders to ship. Ha+e you done anythin to address

that$ i# people co&plained about it9 -hat do you say to that$ you see other people doin the sa&e thin takin preorders in bitcoin and %aitin 9 Can you co&&ent about that9 J$% -ell$ %e+e al%ays priced our products in F. dollars$ and %e o throu h our pay&ent processor called Bitpay$ %hich 7& sure &ost o# the listeners are #a&iliar %ith$ and they don=t... %e... -as &uch as 7d like to deal in bitcoin$ the +olatility &akes it di##icult because %e cant pay our +endors in bitcoins - %e cant. 7 understand so&e o# the ar u&ents there. Fn#ortunately$ i# anyone had kno%n that bitcoin %as onna o up$ you %ouldnt ha+e spent the bitcoin or you %ould ha+e purchased bitcoin to replace it. Hindsi ht is reat #or your in+estin - but %ho kno%s$ it could ha+e dropped and then people %ould co&plain i# %e %ere re#undin the sa&e in bitcoin. 7n that aspect i# %e %ere to re#und people to sa+e a&ount o# bitcoins$ %e could be used as a hed e: i# it rises then 7 %ant &y bitcoins back$ i# its do%n then 7& onna take &y hard%are. 7t (ust %ouldnt &ake sense. 7ts (ust not a +iable business &odel. SM% .ure$ yeah - and %hat kind o# testin do you do$ %ith the ne% units in-house9 0o you ha+e a &inin #acility at Butter#ly Labs %here youre testin ne% de+ices or... tell &e a little bit about that. J$% -ell$ %e do a burn-in testin #or about 4D hours per unit$ %e do it on our local net%ork to our local testnet in a bo'$ and its actually been one o# our pain points because %e ha+e such a +olu&e that %e ha+e to test. -e=re runnin lo% in po%er in one o# our #acilities$ so %e purchased a ne% %arehouse and its doublin as a testin #acility$ and %ere also turnin up a couple o# other data centers that %e can plu in. 7ts ettin co&plicated as #ar as that oes (ust because %e test the& #or 4D hours$ pull the& out$ put the& in a bo' and out they o. They are in the door and out o# the door (ust absolutely as #ast as possible. SM% 3eah$ and ha+e you heard #ro& the custo&ers %ho ha+e recei+ed the&9 -hat kind o# #eedback ha+e you heard #ro& the&9 J$% !+eryone - (ust about e+eryone - has lo+ed the&. 7 &ean$ %e had a +ery s&all #ailure rate. There ha+e been so&e #ailed /alapenos... SM% 3ou replace the&9 J$% 3eah$ yeah$ they ship the& back$ %e send the& out a ne% one$ no proble&. 7 think &aybe at less than ?R o# the sin les and &ini ri s that ha+e one out ha+e had any issue at all. -e+e been pretty pleased %ith the #ailure rate. SM% 7 kno% that there is a de+ice that didn=t &eet the po%er specs that %ere sold on the preorder$ and so there=s an a ree&ent #ro& Butter#ly Labs to donate a thousand bitcoins to charity9 J$% * thousand bitcoins$ yup. SM% .o that resulted in the Bitcoin de+elop&ent #und$ ri ht9 Can you tell &e a little bit about thatE

J$% -ell$ initially %e looked around #or a charity or charities to donate it to$ and it=s surprisin ly hard to #ind charities that accept bitcoin. SM% 3eah$ 7 kno% there=s a #e%$ 7 %orked %ith one o# the& but yeah$ there=s (ust +ery #e%. J$% 3eah$ so %hat %e decided %as - it=s ;a< substantial su& o# &oney - ?@@$@@@ dollars. -e didn=t necessarily %ant to i+e it to one charity$ and tryin to #ind a lot o# charities to donate that &oney to %as di##icult$ so %e put to ether the #und so %e can pro&ote Bitcoin as a t%o pron ed approach. "ne$ %e=ll donate to any charity that accepts bitcoin %hen %e=+e con+erted #or the&$ they only need the dollars$ but then %e also support the bitcoin econo&y and the bitcoin ecosyste& by donatin to the pro(ects that #urther the bitcoin ecosyste&. SM% 3eah$ #or instance$ open source bitcoin so#t%are$ &inin so#t%are and thin s like that9 7=+e heard so&e criticis& that$ "kay$ they=re #undin &inin so#t%are - this is so&ethin that helps the&$ this isn=t really charity. -hat do you say to that9 J$% 2i ht. 7 &ean$ you can certainly say it=s not a charity per se and 7 understand the ar u&ent that ="h$ you said you donate to charity= and that=s true as #ar as it oes$ but 7 think %e=re doin #ar &ore ood by pro&otin the bitcoin econo&y and the bitcoin ecosyste&$ and &inin is a hu e part o# that at this ti&e$ and the de+elopers Con Noli+as$ Nano$ ;and< Luke /r. - they all put in hundreds and hundreds o# hours into these pro ra&s and they don=t ask #or any &oney. They ask #or donations. They et the&$ but they don=t et a lot. They don=t et any%here near %hat their ti&e is %orth$ they do it out o# labor o# lo+e$ and %e toss #i#ty bitcoins their %ay - that=s &ore than a #air co&pensation on behal# o# e+eryone %ho uses the so#t%are. 7t=s not like %ere donatin >@@ bitcoins to each o# the&$ and (ust so&e little boy=s net%ork. They ha+e a s&all portion o# %hat %e ha+eB &ost o# our stu## is actually one to actual charities. -e+e donated to -ayside -ai#s %hich is a local ani&al rescue in Nansas City$ a pro ra& called Ho&es #or Hackers %hich o##ers ho&es #or O@ days to up and co&in hacker pro(ects$ %e had one other$ 7=ll ha+e to look... SM% .ean=s "utpost9 7 kno%. J$% 3eah$ .ean=s "utpost. That %as one o# our #irst ones. -e #ed P>@@ &eals #or ho&eless people. There=s tons o# others$ there=s a lot o# di##erent charities$ and %e=re al%ays lookin #or &ore$ and like 7=+e said$ i# you ha+e one by all &eans let us kno% %e=re lookin $ %e still ha+e o+er I@$@@@ dollars to donate. -e actually ha+e one person dedicated to callin up charities$ e'plainin Bitcoin to the& and sayin %e=ll donate to you ?@$@@@$ ?>$@@@ dollars i# you accept bitcoin. The &a(ority o# the& (ust %on=t do it$ e+en in the #ace o# Ghere=s 4@$@@@ dollars i# you (ust do this.H SM% -o%. J$% 3eah$ it=s +ery surprisin and it=s +ery #rustratin . 7t=s like Gthis is #ree &oney$ %e=re %illin to i+e you a si,able donation and you ha+e to do +ery little %ork$H ;but< they don=t e+en %anna deal %ith it. That=s %hy %e are e+en &ore resolute in the #act that %e only donate to the charities

that accept bitcoin. 7 think the &ore charities that accept it$ it %ill beco&e sel#-perpetuatin thin . Then these other charities %ill see it and say Goh$ &aybe %e should accept bitcoin.H SM% 2i ht$ yeah. J$% .o that=s kind o# %here our &indset is %ith that. 7 %ish %e could do it #aster$ but %e %anna do it properly so %e=re doin it a little slo%er$ callin the& up$ %orkin %ith these charities$ and sayin =you really %anna do this. 7t=s a %hole ne% a+enue #or you.= $ SM% -here can people #ind you online and all that stu##9 J$% Butter#lyLabs.co& SM% Cool$ that=s easy to re&e&ber. J$% !asy to re&e&ber$ yes. SM% 3eah$ /osh$ thank you so &uch #or talkin %ith &e today. 7 appreciate your ti&e. J$% :o proble&$ thank you. ;pause< ABL% Thank 3ou #or listenin to episode AD o# Let=s Talk Bitcoin. Content #or today=s sho% is pro+ided by .tephanie )urphy$ *ndreas ). *ntonopoulos$ /osh 6erlan$ /e## Buss an $ *ndre 0eCastro$ 2yan Charleston and Cedric 0ahl. )usic %as pro+ided by /ared 2ubens$ %ith a #e% e'peri&ental bu&pers 7=+e been playin %ith. *s al%ays$ co&&ents about the production can o to ada&8letstalkbitcoin.co&. 3ou can read our daily uest blo at letstalkbitcoin.co& and you participate in our listener subreddit at letstalkbitcoin.co&Etalk. .ee you ne't ti&e.