Is there a future for Bitcoin?

usually turned to Joe for this. Joe is keeper of two things, the introduction and the acts, the mystical acts, the mystical acts, and so neither of those are here. But honestly, this should be pretty much a walk in the park because we're going to give sort of a focused update to something we talked about in our previous episode way back in April two thirteen, which is so long ago. I didn't open the show with lyrics back then.

I no. I sometimes wish that we could go back to them, but I feel like now I've committed, and if I don't open the show with the lyrics, yeah, it's fun. It's it's fun when I remember it before we hit record, and then I think, oh, no, I need to come up with a lyric that is somehow tangentially related to our topic. But yes, back then we recorded a show called Brother, Can You Spare a Zero?

One one zero zero one zero zero, which was an episode specifically about digital currency, and we talked a lot about a particular digital currency called bitcoin, which I'm sure many of you are very familiar with. It's kind of the big one. Yeah, that would be the one that I think most people have heard about. There are other digital currencies out there, by the way, Often people refer to bitcoin as the one that started at all. Guess what,

it didn't. There were other ones before it, but it is definitely the one that got the most attention, including I think no small part but due to the mysterious, mysterious nature of the inventor of bitcoin. We'll touch on that a little bit in this episode. Yeah, but let's give a quick overview of what bitcoin is and how

it works. Okay, So it's a cryptocurrency, so called because the currency depends partly on cryptography, in the way that transactions are recorded and the way that the currency itself is built. We'll talk about that a little bit later too. Not because it's used by Bigfoot. No, it is not a cryptid currency, although who knows, I mean Bigfoot could use it. It actually would make a lot of sense

because you know, you don't trace it back. But so I mean, if you want, if you need to buy us pair of size twenty eight shoes, that would be an excellent way of doing it. But it exists independently of any national government backing it. So it is a completely independent currency in that respect. So unlike dollars or pounds, sterling, or yen or the euro, there's no official state behind the money, which is considered to be a pro in

the folks who really support bitcoin. Sure, although like the way real money real money, like the way traditional currency systems are supposed to work, it's based on a limited number of of bitcoins, right, and generally speaking, when we talk about currencies, you know, you can't solve a financial crisis just by printing more currency. In fact, that makes it worse. Yeah, devalues the currency that's already out there.

The way that you generally make more wealth is that as you do it through something like loans, where you have interest on those loans, that quote unquote creates more wealth. Thus you need more currency it's complicated. We won't get into it. But at any rate, the way Bitcoin does this is it just establishes the fact that there is this thing, there is a limited number of this thing, and at any given time, there's a smaller amount of

that available in circulation. Because it's treating it almost like it would be a precious mineral, you you don't have access to all of it all at once. Rather, you have to go through a process to get more of the existing bitcoins that are not yet in circulation so that they can then enter circulation. That the total number of bitcoins that will ever exist, assuming that this system actually works out the way it was intended and doesn't totally crash the way that it might. Yep, it would

be twenty one million bitcoins. That's it there. Once you get to that that last bitcoin, then you're done. There are no more bitcoins to be mined, and the ones that exist are the only ones that will ever be used in circulation. Uh. Now. This is done through a process that's called mining, which evolves using computer processing power to perform certain transactions, and sometimes when your computer completes such a transaction, it finds a bitcoin, or more likely

part of a bitcoin. They can be divided up all the way down to a unit that's tend to the minus eight bitcoins. Yeah. Yeah, you wouldn't really find a whole bitcoin or mine a whole bitcoin, right, That is not a thing that happens. No, it'd be like kind of panning for gold. You're gonna find flakes of gold,

not a bar of gold, right right. Uh. And it's it's really interesting elegant in a convoluted way system because you get a chance at earning a piece of a bitcoin by helping run the software that that the company uses, that the bitcoin the organization uses to process and confirm its transactions. Uh. And it's also interesting because bitcoins can't

be counterfeited. Each time they're traded, a block of code is added to the transaction chain describing it, and that chain is public, So you can't just just duplicate you some bitcoins. That's not how it does. And that's that's meant to not just for for counterfeiting purposes, but like you said, duplicating purposes, which I guess is a kind of counterfeiting. You wouldn't be able to spend a bitcoin

and then spend that same bitcoin a second time. Immediately thereafter, because the transaction is part of this entire chain of information that dates all the way back to when the bitcoin was first mind. Sure, and and it's a matter of public record. Yeah, so here's another thing we gotta we gotta mention. Currencies depend upon people accepting them as a form of payment. Whether it's backed by a country or it's independent, it doesn't matter if people don't see

that your currency has value. Right, money is essentially imaginary and therefore terrifying. Yeah, it actually is completely based upon all of us agreeing that this thing represents value of some sort, that it represents the value of a product or a service. So if you were to ask me to come over and paint your house and offer me here, I I've printed up these sheets of paper that have Bongo bucks on them, and they don't relate to anything else.

I would say, I need to go do something else because my time, Because the Bongo bucks don't mean anything to anyone else. I can't go and take those Bongo bucks and spend them to get delicious ice cream, which fuels my ability to paint your house. Right now, maybe if I had offered you delicious ice cream to begin with, Yeah, there was more of a you probably wouldn't respend the

ice cream. So yeah, that's a barter currency, but total legitimate By the way, I will I will paint your house if there is the proper amount and flavor of ice cream involved. Offers will be entertained at the end of the show. So at any rate, Yeah, we have to have this situation where the people spending and the people accepting all agree that this currency has value, that that value is something that both parties agree to, that

it represents a certain amount of buying power. And bitcoins have had a pretty crazy roller goes to ride of an existence from the time when they first came out in two thousand eight to present day, right, because the amount of value it's not holding steady the way that most currency does. Yeah, currencies can fluctuate in value, but not not too wildly dramatic extent unless there's serious financial crisis going on, right, right, But bitcoins are fluctuating all

the time. Yeah, to the point where you know, at their peak, they were almost twelve dollars for a bitcoin, and right now they're somewhere they're lower than there, between two hundred and two hundred fifty dollars depending upon exactly when you check. So definitely some some crazy variation in

value there. Although it's really not a small system like this might seem really fringe, especially if you don't participate in the mining of bitcoins and if you don't have a bitcoin wallet, but the system is currently worth some like three point three billion dollars. Yeah, yeah, So getting into the problems of bitcoins, we're gonna talk about does bitcoin actually have a future? That's the real question we

want to answer today as best we can. And part of that it means that we have to acknowledge the challenges that bitcoin faces, the problems and difficulties it has as a currency, And we already mentioned one the volatility, the variability of its value from that twelve hundred dollars to two d and thirty some odd bucks this morning when I checked it. Yeah, that's a big that's a

big difference. Yeah. Yeah. If you if you've found out that your money was no longer nearly as valuable as it once was, that you would not be able to buy the same amount of stuff today as you could back in early two thousand and fourteen, you'd probably be a little more than a little upset uh. And keep in mind that this also means that a lot of people have trouble figuring out when they can spend that money U, because you know, if you're if your dollar.

Let's say, let's let's take dollars as an example. So let's say I've got a Crisp one dollar bill, and today that one dollar bill, and I'm just making up examples, but today that one dollar bill could buy me a small cup of coffee. I've found a discount coffee place somewhere, and that one dollar bill will buy me a small cup of coffee. And I it's a very small cup of yes coffee, and exactly it's not espresso. It's still just regular old coffee. So I spend that dollar and

I get my little espresso cup of coffee. I go back to the coffee shop the next day, but because the value of the dollar has changed, the coffee is the same, the size of the cup is the same. But because the value of the dollar has changed, it now requires me me to spend two of my Crisp one dollar bills to get that small cup of coffee. And although this might feel like what's going on when you go to Starbucks, yeah, it's it's really not that dramatic, right,

It's not. It's not that the coffee place has dramatically increased their price. It's that the dollar has dramatically reduced in value. But let's say the next day, because this is going to be illustrating the craziness of bitcoin, the next day, I come in and I find out that my Crisp one dollar bill, which yesterday I needed too off to buy a small cup of coffee, now my CRISP one dollar bill will give me that trendy size

the ridiculous like like hot tub sized cup of cost. Yeah, I have to have a dolly to move the cup of coffee out. That's kind of the the the what bitcoin has been through. And that makes it very difficult to figure out when you can spend a bitcoin, because if I, if I, if I price things in bitcoin, even in fractions of a bitcoin, I will constantly be scared that the price will not reflect the value of the product, either as a merchant or as a buyer.

Oh yeah, yeah, it's difficult for both sides of the equation because one person or the other is at I mean, both people really are continually going to be unsure whether they being cheated, right, And even if they're not being cheated, they may just feel like are being cheated by the system. Yeah, like like like they had the worst timing, like they either spent way too much or they sold for way

too little. And that the same the same thing sold by at the same quote unquote price each day could end up giving you crazy different values of actual dollar money or or whatever you know. And I hate saying actual because of course bitcoin is actual money. Yeah, you can use it to buy stuff. It's a money. It's just that I think of it more in terms of of a of a you know, a tradeable entity, rather

than as a currency, simply because of this volatility. Yeah, it works so much more like a like a stock market, for example, than it does like other currencies currencies that we see out there. And and as it turns out, even the very top people involved in bitcoin are are not entirely sure how much how much bitcoin you should bitcoin? Right exactly. Yeah, we'll get into more of that too, so h In my notes I gave an example. The

coffee makes a perfect example. But in my notes I mentioned that because one bitcoin is around two dollars, let's say I'm selling a current generation, gently used video game console, and those are around four hundred bucks or so, depending upon which ones you're looking at. But I it's gently used, so I want to sell it for about two d thirty bucks or one bitcoin. Now it maybe that when I sell it for one bitcoin, it turns out that the bitcoin is actually worth two dollars, so I'm under

selling a little bit. Or it may turn out that the bitcoin at that moment is worth two hundred sixty so I actually got more value out of it than I thought I would. But that could all change if I don't cash out the bitcoin, and then the value of bitcoins dramatically plummets or escalates. Yeah, yeah, it could wind up being that you sold that console for either you know, fifty cent or for Yeah, it hasn't dropped as low as fifty cents. No, it hasn't had that

bad of a day yet, all right. So one way to get around that, if you are in the bitcoin like market biz is to offer up your various goods or services at a dollar or other you know, less volatile currency price tag, and then when it comes to the actual moment of purchase, agree with the the person who wants to buy something what that is in bitcoin at that moment, right, right, Although really this this is just making the problem a little bit more complicated, it's

not actually solving it. Furthermore, the lack of that transcription of of dollars to whatever, it's part of what attracts people to us in bitcoin in the first plaint, right it really, I think the only thing it does is create a little bit of a psychological cushion for the person buying it. But then the and it doesn't change the fact that the bitcoin value itself will change. It's

the same problem exists. It's just you might be able to go away thinking, oh, I spent bucks on that, not I spent point zero zero zero four bitcoins on that, and now I I'm out a significant amount of money because of the value of bitcoin changing. So do we know why this volatility exists. Yeah, it's because people don't want to spend them. So one of the one of the big points of currency, one of the really important things is that in order for a currency to work,

people have to be willing to spend the currency. Right if it's all buried in their boxes in their backyard, and then it's not really doing anyone good, and it's it's not a system at that point. It's a box in a backyard. You're looking at like a commodity, not a currency. And that's a problem. Right. So there was a two thousand, fourteen UM study by bitcoin itself. Actually they made the they created the bitcoin distribution chart to find out where all these bitcoins are going and where

they're hanging out. Yeah, so they they found that about out of all the addresses associated with owning a bitcoin, only two d fifty thousand owned more than one. So and also those addresses don't necessarily translate to a single person. But let's say let's say just for the sake of argument, these are easy Indians, exactly two human beings. That means two d fifty thousand people out of everyone on earth

for this global currency, owns more than one bitcoin. And that that's like the overwhelming percentage of bitcoins that are already in circulation, which means that people are not spending these bitcoins. They are hoarding the bitcoins. Yeah, they're they're they're mining them and keeping them. Yeah, because their value goes up so high. It would be again, it seems weird to spend something like that you might think, no,

this is security here. I've got this huge amount of of existing value that I could trade in for other currencies at any time, and then we might go back

up to a thousand bucks of bitcoin. Yeah, and then which case I would feel stupid for cashing out before it got really big, right, And uh, keep in mind again, these people are are folks who are using lots and lots of computer power to get at these One of the interesting things about bitcoin is the mining process gets more complicated the more computer power is dedicated to mining, So that means that if you want to be effective at mining, you have to leverage larger and larger systems

of computers are faster and faster computers, which then narrows down the number of people who can actually do this effectively. Like you and your basement with your old you know, IBM to eight six. You're not going to compete with the folks who are doing this. Yeah, uh, you know, it's just not going to happen. That kind of brings up another Another issue with bitcoins is that not everybody is going to be excited about using them. But there are other reasons why some people might not be excited

about using them. Yeah, so volatility being one big challenge. The other one being that bitcoin has had no shortage of scandals associated with it, and in some cases it has nothing to do with the currency itself. The currency is just involved, right the the currency was there. It's like if you watch Scarface, you can't blame the huge piles of money for the behavior of the characters, and Scarface, it's the character's desire for the huge piles of money

that cause all the problems. Who Scarface at any rate? H So, bitcoin has always had kind of a seedy reputation, largely because a lot of the people who are attracted to this non state sponsored currency happen to be involved in things that states are Generally they don't, they aren't in favor of them. Sure, well, you know, some people just really want privacy, and that's understandable to but some people specifically want privacy because they're going to do illegal stuff,

right exactly. There are people who just like we would argue with things like like peer to peer sharing. There's nothing inherently wrong with peer to peer sharing. It's a great means of distributing large files, right you distributing large files? I put the wrong emphosis on the wrong level. Uh,

distributing large files, nothing wrong with that. It's the problem that some people use it to pirate stuff and share pirated material that give it a bad name, so as it is with bitcoin, and that there are some very well publicized incidents of people using bitcoin as the currency of choice on things like the Silk Road, which was the illegal black market that dealton lots of stuff, some stuff that was just completely benign, you know, there was

nothing wrong with it, but there was a significant number of illegal goods on sale on the Silk Road, whether they'd be weapons or mostly drugs, but other stuff too, And bitcoin was one of those things that a lot of people like because it wasn't something that was easily despite the fact there's a public record of the transaction, it's not traceable in the classic sense. So that's definitely

part of it. Was that has this bad reputation because of the association with the way bitcoins have been used. But you can't really blame that on the currency. But sure, sure Another thing that you can't really blame directly on the currency is the behavior of some of its exchanges. Yes,

this is a huge issue. So the neat thing about bitcoins is that on the individual level, on the individual coin level, they're pretty secure because they have this record behind them, and it's not the currency that's at fault when things like the Mount Cox scandal happen. Uh, just as just as again, you would not blame a dollar for getting stolen out of a bank, you can't blame a bitcoin for being stolen out of Mount Cox. But what you can say is what the heck happened? And

what we can tell you is we don't know. Nobody knows still, at least at least nobody nobody who is curious about it knows. The people who perpetrated it probably do. Oh it's likely. Uh, I mean unless they had a very strange weekend. What did I do? How did I get bitcoins in my account? Yeah? So so in this this giant exchange for bitcoins, uh, in which it's sort of like a little bit like a bank, yeah kind of it. It's like, you know, essentially it's meant to

help exchange bitcoins for other currencies. So if you wanted to come in and buy a bunch of bitcoins, they would sell them to you. Or if you had a bunch of bitcoins, you wanted to exchange it for some other currency, they would then exchange it for you, and then you know, of course they take some percentage of that transaction for themselves. Sure, sure, but rather than having to purely mine your own bitcoin, as your ancestors would

have done. Yeah, maybe it. Maybe that the bitcoin value you suspect that it's going to escalate, and you think, well, the way I'm gonna make my money is by investing in bitcoin, waiting for that value to go high and

then I'll cash out. But but so in it had like eight hundred and fifty thousand bitcoins stolen from this one exchange mount cox They they disappeared, and uh, there's some suggestions that I have seen that at least some some of it was due to bought activity bots that were buying up bitcoins during certain hours of the day, early trading hours in in Japan, because this all took

place in Japan. Really, um so at early trading hours, bots were buying up bitcoins using fake money they were creating, they were creating profiles that had huge bank accounts, fake baking bank accounts associated with them. We're purchasing bitcoins with fake money and then uh, sort of disappearing after a while, but that has not really led investigators to any pathways to figuring out who actually was behind this. It might have been a group of hackers, it could have been

a single person. No one could have been someone on the inside Amount Cox, No one's really sure. Um So, a hundred fifty thousand bitcoins missing. That's about four hundred fifty million dollars at that time during the you know, when they were valued at two thousand fourteen, and some of them were recovered, but about six hundred and fifty thousand still have not been there, just still lost. They're gone, Yeah,

at six hund fifty thousand. Now that twenty one million are are in there there, we don't know where they are. So in September two thousand fifteen, Japanese prosecutors in Tokyo filed criminal charges against Mark Carpel, who is the former CEO of Mount Cox. The charge was a Carpel embezzled more than fifty million dollars of his client's money. But here's the weird thing that has nothing to do with

the missing bitcoins. It's a separate thing. Now there are some who wonder if the authorities are trying to find out if Carpel had any if he was complicit in the missing bitcoins, but so far they have not leveled any specific charges related to that. UM. And here's the thing is Mountain Cox is not the only exchange that has created a scandal. There was another one called my

Coin in Hong Kong. It didn't last very long. UM so my Coin UH closed business with about three six million dollars worth of investments unaccounted for, so nearly four million dollars lost there. And there are accusations that the exchange was really just a Ponzi scheme. It was a pyramid scheme, specifically a Ponzi scheme. UH. You can learn how about Ponzi schemes, by the way, if you listen to Stuff you Should Know, which is one of our

sister podcasts, and they did a great episode. That's the one that for about two or three weeks had Chuck walking around the office going it's a ponzi Uh that tho was there was those were good times. So five people involved with my Coin were actually arrested by Hong Kong police and the charge was conspiracy to defraud. Now again that had nothing to do with the actual currency

of bitcoin. But once again there was a scandal associated with bitcoin and which which damages the concept of the currency over exactly, and because we've established that it's all psychological. If we if we lose confidence in the currency, whether due to the fall of the currency itself or not, it loses value. Oh sure, yeah, yeah, Well you know it's it's a little bit harder to associate yourself yourself with something that a lot of criminals are praying on. Yeah.

It it doesn't help your case much. So there have been other dodgy operations that also have tried to leverage bitcoin. One was called Neo and B, which launched out of Cyprus in February two fourteen and closed up of Cyprus in March two thousand fourteen, so so essentially a little more than a month in operation and they closed and then the Ciperian government issued arrest warrants for the CEO.

And like the Mycoin scandal, this one also had very little to do with bitcoin and more due to suspicious behavior. In fact, with both my Coin and with Neo and B, there were accusations that at no time to either exchange ever actually have possession of bitcoins that they were taking people's money and saying they had bitcoins but didn't. So yeah, not not great. Obviously, that hurts confidence in the currency.

Not again, not because of the currency, but because if you, as an investor or someone who wishes to get some bitcoins to use them as a currency, if you don't have confidence in the people who can exchange your money for bitcoins, that hurts the currency too. Of course. Uh, there's also kind of just a basic problem with the

technology involved in bitcoin to begin with. Yeah, and this one is really what prompted us to talk about this, this particular subject, and it's that it's interesting that bitcoin a have a problem about with success. Not not that bitcoin would have a problem with it's you know, the way that you mind them necessarily or how however many bitcoins eventually end up in circulation. Sure that the system is working fine as it is right this very moment,

but it's completely unscalable. Yeah, and that's the problem, is that if it were to get successful, it would fail because it could not meet the demand that a a global successful payment structure requires. So specifically, we're talking about a piece that appeared in m I T S Technology Review, Tom Simonite in interviewed Gavin and Reason and Reason served as the chief caretaker of Bitcoin from two until. He's

still very much heavily involved in it. Uh. He's been a part of bitcoin pretty much since the very beginning, being the person that Satoshi Nakamoto. They created a Bitcoin trusted to keep things going. Yeah, yeah, yeah, because Toshi Nakamoto is not necessarily a real person. Um, well, I mean a person or person's certainly wrote the code for bitcoin and distributed it to the world, But we don't know who or whom. No, that's the wrong grammar. We

don't know who or who extra people that could be. Yeah, we don't have a word in English to say who single person and who whole bunch of people, And yeah, we don't know. There was an interesting report, and I'm sure Lauren you remember that a couple of years ago there was a report of a journalist who had tracked down a person who has the name at least the middle name of Stoshi in the last name of Nakamoto, and had tracked this person down to find out if in fact he was the guy behind it. And he

protested and said, no, I'm I'm not he was. He was almost leaving living kind of a hermetic lifestyle, and that made people think, oh, this, this has to be the guy. It doesn't look like that's the guy. Yeah yeah, but there was a lot of attention on him for a while about this. So, uh, yeah, we don't know who the actual creator of bitcoin is, like the true identity, whether it's someone with that name or or a group

of people who assume that name. As the way of publishing this at any rate, let's get to the limitation, and it really centers on the number of transactions that can take place within a given amount of time. So if you're looking at established transaction systems like Visa or PayPal, anything that's meant to handle lots and lots of transactions around the world, most of them can handle tens of thousands of transactions. How many can bitcoin handle per second?

Seven seven thousand, seven seven seven transactions? Now seven doing something seven times in a second sounds fast until you think of a global currency, right right when you know, hypothetically more than seven people are going to be wanting to to do a thing, yeah, like literally anything at a at a given point in time. You've got seven billion people on the planet. So let's say that Bitcoin

actually succeeded in becoming a true cryptocurrency. I mean it's actually used to buy and sell stuff all the time. It's not being awarded, it's being shared by a larger population than two people. This seems like it seems like a deal breaker, right, Yeah, And the reason behind this is, Okay, if you remember that that public transaction chain that we were talking about the matter of public record, uh and how people mind bitcoins earn bitcoins by helping run bitcoins software.

So the network can't handle more than those seven transactions a second because of the purposeful complexity involved in this system. Okay, so every time a transaction is made, the network of Bitcoin's users computers is basically solving a cryptographic puzzle in order to update this public log and confirm the transaction. And it can't get faster without intrinsically changing this this

computing system in some way. And realistically, you know, you say, oh, there, you can have seven transactions a second, and that sounds pretty fast, but it can lead to any given transaction taking like minutes or hours to be uh completed, to

to be confirmed. Right, So imagine that you're trying to use bitcoin to purchase something it could delay that purchase by a matter of hours, which, yeah, it backs everything else up in the chain, right, Yeah, so it really creates a huge problem, and it's not what shoppers are excited about. Yeah, it means that you would be less likely to try and spend your bitcoins because it's such a hassle to do it, and then you're you're actually

reinforcing that hoarding behavior. So again, the bitcoins are not acting as a currency, they're acting as a commodity. And then beyond that, uh, there's also an issue that Andreeson said that, you know, you could maybe help fix this problem by building out greater network capability, but that would increase transaction fees because you have to pay for that

that upgrade, right, So transaction fees go up. That means you're spending more money on top of whatever the prices in order for you to actually get that transaction to happen. Anyone who has ever bought tickets from a certain really well known ticket broker has had the experience of convenience fees which it rhymes with ticket plaster. Yeah. I once did not buy tickets through this particular ticket broker because the convenience fee was fifty of the ticket price on

top of the ticket price. Yeah, I have experienced that thing, that that same feeling as well. Yeah, and and so this could be the problem with bitcoin for all transactions, and that would be a huge blow and again would reinforce the idea of this is something I keep, not something I spend, and that that is antithetical to the concept of a currency. I know we're beating a dead horse, but this is why we're having this discussion. So Andreson has said that he would go so far as he's

actually done this already. It's not he's talking about. He's done it. He's proposed a new version of bitcoin that would actually address this transaction limitation problem. And uh. And so he first released the code, the code for the old bitcoin code to shape say, here's exactly where the issue is. This is what is holding us back, and I want to release this and pointed out so that people are aware of the extent of the problem and understand that if they value bitcoin is a currency, this

is something that we must address. And so he's proposed a new currency called bitcoin xt, which would recognize all existing bitcoins up to the point of activation of bitcoin xt. But at that point forward, any other mind bitcoins under the old system would be invalid. So all all all bitcoins up to that point would be fine. They could transfer over. Yeah yeah, but anything mind under the old software after the new software activates would or like might

not be recognized by major exchanges and new tailors. And technically, like in a really weird world, maybe both could be recognized by some right, or or some exchanges might recognize one but not the other. It would be almost as if we had two different kinds of dollars in the United States and some stores said, oh no, we don't

take the old dollars, we only take the new dollars. Yeah. Well, you know, it's such a large I mean, relatively small compared to the seven billion people in the world, but it's such a relatively large network of people who are using it. And the very nature of bitcoin is partially that it doesn't have a leader, you know, it doesn't have a president, doesn't have someone who makes the decisions

for it, and that's kind of the point. Yeah, it's decentralized for a reason, right, right, And so that's really cool, But you know, it also means that that all even someone as as influential and authoritative within the community. As Anderson, all he can do is say like, all right, well, I wrote this code that fixes this problem. I released it. It was out there in August, and and that's all he can do, you know. And so so if of bitcoins miners switch over to using the new software, then

the software will start. Then then Bitcoin's software will start sending out kind of like the tide is turning kids messages to the ones who are still using the old stuff. And then if of bitcoins of miners switched to using the new software, you know, thereby implicitly approving of this fix of Anderson's, then the whole system will will be

forced into the new software. And so if that happens, there's going to be a two week grace period in which anyone using the old system will be told like like get out of the water, kids, And then after that that this plan will go into effect where any new bitcoins mind using the old software won't be have have the danger of not being recognized. Yeah, so this is you know, this is wacky. We're getting into technology, psychology, economics, and when these things all combine, they make a mess.

But that's that. That was as Andrews and says, that's on purpose. It's messy. On purpose, it's meant to be something that no one entity can come in and completely change.

Everyone else's is victim to it. So that's the other side of this decentralized approach is that, yeah, it's messy, but also you don't have to worry about a government making a decision that is completely separate from your life and yet affects you and your money, right right, It's it's literally being decided by the actions of the people and so and you know what, whether or not that plays out the way Anderson hopes is is up to the future. You know, we we won't know about it

and for probably another few months. Yeah, we'll definitely need to see again some shifts in the behavior of the people who are mining these bitcoins, to see them actually using them more frequently as a currency, for that volatility

to start to stabilize. Uh. And you know, if that never happens, then it maybe that bitcoin just becomes this oddity, this this thing that doesn't really exist, not in the same way that tables and chairs and gold bars exist, but yet still computer programs exist because you know, yeah, they're technically collections of electrons that move in certain ways. But yeah, it's yet we will we say that they have some sort of value because people believe they have value.

Uh again, not that much different from saying a piece of paper has a certain value because of the numbers and pictures printed on it. But it's it's one of those leaps we have to make in order to understand the behaviors of people and of economics in general. Personally, I think that it's gonna take something way bigger than bitcoin xt for this to actually become a currency. I don't know that it's going to go away anytime soon, unless people finally just get tired of playing the game

of I can't actually use this to buy anything. I can only use it to too, I can only trade it for other currencies. Um. And it may just be one of those things that people say, are I'm gonna put my money into bitcoin to hold it until the value of bitcoin is high enough where I'm going to make a profit and uh and and maybe that only lasts for so long before people just say I'm not willing to buy it anymore, sure, or before some other way of of getting around the normal restrictions and regulations

of currencies comes about. Yeah, we can always hope for that post scarcity environment where you no longer have to pay money for anything anyway, because everything is free. As long as we don't all have to wear jumpsuits, I think it'll be okay. Yeah, I do not look good at Nobody looks good at a jumpsuit. It's hard to do. So yeah, I'm I'm on board with you there, Lauren. Alright, So this was fun. It was interesting to actually take a closer, more focused look at bitcoin in particular, and

I'm curious to hear what our listeners think. I'm sure some of you have had experience. In fact, I know there are people in this office who have done it. They're in the video department. Yeah, exactly, They're exactly the ones who are behind us right now. I like turned as though I could look through the wall and see them. I was like, Matt fred Rank, how did you guess? You are absolutely correct with that. So, guys, I want

to hear your thoughts on this. We're really curious if you've had experience with bitcoin, or if you've or any other cryptocurrency. They're like, we said, bitcoin is just one. It's just the one that everyone has heard about. So let us know what you think, and also if you have any suggestions for future topics, let us know that too. Our email addresses f W Thinking at how Stuff Works dot Com, or you can always drop us a line on Twitter or Google Plus or Facebook. At Twitter and

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