Well, at the moment
there are differences
even among bitcoin absolutists.
It's like those feuds,
I remember,
between Microsoft, Linux,
where you said: "No." It's like that,
it's very ...
- that's right ...
why is it so passionate?
- Because fundamentally
it all stems from a
strong ideology.
A determined attempt to regain
freedom. Financial freedom
is the first freedom, so
people began thinking about
how can I regain
freedom at a time
when internet on one hand
seems to be democracy
but on the other can lead
to mass surveillance.
Right.
So they say: which is
the most important freedom
to manage, to conserve?
Financial freedom
because how you spend your money reveals everything about you.
Your illnesses, your lovers,
your political preferences.
Sure.
So from there they began
thinking about what could be done.
There were a load of experiments
which led to bitcoin.
And from there
a load of clones
although they have
different characteristics.
Right. And a different purpose.
Different purposes.
- Sorry,
but what sort of research
do you do at Blockchainlab?
Basically, we do two things,
because we're very
ideologised,
on one hand we do
pure research,
which we fund with
consultancy work
which we do for the incumbents.
Pure research, for example,
now we've thought of
how to exchange different types
of assets on the blockchain.
So we've invented
RGB, for which we're
writing the code
with the whole community,
everything we do
for ourselves is open source,
so we debate with the community,
we discuss things.
- What's RGB?
Basically it's the possibility to exchange
different types of coin,
not just bitcoin
on the bitcoin blockchain.
This is our ambition
and that's what we're working
on. This is the pure research.
Okay.
Experimental, it may work,
it may not.
Right. We fund it with private donations
and with our consultancy work
on full profit.
What do we do for
the incumbents, for companies?
We provide all those
services they need to
work with cryptocurrencies.
In simple terms, a fund that
buys and sells cryptocurrencies
needs a safe place
to keep their private keys.
But it does so inside
an organisation,
where on one hand the
business unit that buys
is different from
the business unit
that receives the orders,
for reasons of security,
so a complete system
of private keys
has to be set up, so
the keys aren't lost,
aren't subject to
attack vectors
by hackers. Or by
insiders, because ...
- of course.
- fine
so we do this
type of work
or activities that are
completely experimental.
For example, bitcoin is,
was, extremely volatile.
So we try and find ...
Why do you say "was"
extremely volatile?
Because you used to
wake up in the morning,
up thirty, down thirty.
So now you say it's
calmed down
and stays calm for some reason
or it's just like that now
and then it will
start up again.
I have to say that technologists
are the worst traders.
Because we only
evaluate the technology
and not the emotional
component. At the moment
there are a lot of coins,
there's the new wave
of stablecoins and this
is directing resources
from other areas. Then
there's another thing,
the price you see is the
trade price on the exchange.
Yes.
The exchange is only one
third of the total traded volume,
because people who
want really big orders
go OTC, over the counter,
there are markets,
it's the same with
securities, large orders
never go through
the Nasdaq.
They are done OTC.
Over the counter exchanges.
For example, one
is Big Mac.
Okay.
And the price isn't
registered, you take
the exchange price,
so the real price of bitcoin
or ethereum or whatever
isn't the real price
you see on the exchange,
but it's the big one
exchanged OTC, which
is usually two thirds.
Wow, okay.
You can see it from Twitter.
The medium used
by the community for external
communication is Twitter.
Very often from private
or public messages,
there are whales around,
either in the Middle East
due to economic instability.
There was a surge
in Turkey when
the currency fell.
Or in Asia,
where they're trying to
stockpile, because bitcoin
or currencies similar to
bitcoin are considered
more a store of value. When ...
So I buy, I hold on to them
and I wait for the
value to go up.
HODL, as we say,
HODL. Not HOLD.
Okay.
The guy was drunk
when he wrote it
so it's HODL.
Let me go back a moment
to the really interesting question,
I'd never thought about it, but
you always decide based
on the value, let's say,
what the media report,
on the value
of the exchanges, but
part of the value
which instead ...
- two thirds of the market
goes elsewhere and you don't
see it, and it goes through
other channels. I was
thinking about the fact
that if a fund moves so
much money, perhaps
it's moving 100 million
or half a billion,
it can't sit there with
its wallet and say:
"Hang on, I'm trading, I'm buying".
So it needs a whole
security system
which used to be
the banks, but now
all that stuff, you have
to sort it out for them.
You have to build it
for them, because it's very
counter-intuitive compared
with bank processes.
The first thing the bank
says is: "How much does it
cost to transact on the blockchain?" And you say: "It depends."
The bank says: "I want
to sell 100 bitcoin,
or 100 million". It doesn't depend on the price.
On how many bytes you
put inside a block.
The weight is what your
transaction depends on,
so how you build it,
and this is already
very unsettling for them.
- Of course.
Then they say: "Where do I
put the point of custody
for the trade?"
You need this ...
Sorry, why does it
depend on the weight?
Because basically,
well, first of all:
how did bitcoin come about?
Bitcoin is the response
to the possibility of
having hard money
that can't be inspected.
How can you have something
that can't be inspected?
If you have one
company, any government,
any hacker, anybody
can come to you
and you import anything.
Right.
Or one of your employees
can do this,
in your place.
If you have millions,
of nodes scattered around,
it will be impossible.
Napster versus Torrent.
Why is Torrent
still around? It's
impossible, there are millions
that can spring up anywhere.
But to have millions of
nodes, you have to have
an extremely light weight
for that computer, that node to be able to hold.
To manage.
So the blockchain,
which is a ledger,
a chronology of all the transactions from the beginning,
has to be light,
it can be
two giga, not more. So
each little block
that is produced has
to be very light.
The more you enlarge the
block, the more you increase
the weight and reduce the people
who are willing to do it.
Who are able to manage
that type of transaction.
So it's always a trade-off
which bitcoin tries to resolve
through the development
of certain technologies.
This is why bitcoin is not
truly anonymous. Because
you would have to increase
the weight of the block
and therefore reduce
the number of nodes and so
reduce decentralisation,
and then it loses its purpose.
- Right.
- Its meaning.
- The enjoyment.
Sure. But is it true
that today only a few
people actually control
mining for example of bitcoin,
so in fact it's not
as decentralised
as it seems, or is
that just a myth?
It's a myth,
misinformation,
with a "but".
The miners certify a block,
the nodes validate.
Only if the miners
all get together,
more than 51%, because
we always say 51%,
an attack at 51%, you need
a lot more to be able
to review blocks,
not accept them.
They can double
spend their money,
not your money. But
they can't do anything else.
So, Bitman,
the famous Bitman,
has more than 51%,
because with his companies
and the companies he controls,
he has a lot more than 51%,
but it has been impossible
for him to perpetrate any attack.
Last year, two years ago,
we suffered a
major attack
on the independence of bitcoin,
perpetrated by Bitman
and others. They
didn't succeed,
despite having a majority,
because basically
the nodes and the
developers didn't accept
the re-writing of certain
rules. So it's the node
that validates, that says:
this thing can pass
because it complies with
this rule, this second rule,
this third rule.
Okay.
From a technological viewpoint
it's complex, accepting
SegWit, which would then have led
to something else
which means having
a very fast way of spending
bitcoins, which is Layer 2,
the Lightning Network.
However, if we want to have
a simple chat, these are
fairly complex technological
problems. So,
it's true, even with
51%, miners
can't be a danger up
to a certain point.
So, sorry, the fact that
someone says: "But in China
there are a load of
mining companies".
Or, there's a concentration
of bitcoin miners,
you say that that alone
is not enough
to influence the
overall ecosystem.
As long as you have the
so-called "full nodes",
in other words, every
computer, every person
who decides, has the
entire blockchain history.
But when for the sake
of simplicity, you
want something much lighter,
you want it on your
phone, it's called SPV ...
What's SPV?
It's an extremely light version
of the node, with
just a snapshot
of the past, joined together.
You get this from the miners,
if all or most of us
embraced this solution, miners
could do whatever they like.
So this is the "but".
So, if you go on Twitter now
and look at the tweets of
the so-called maximalists,
that is, Zucco, Pouliot, Adam Back,
they're all saying:
"Be a full node",
and they're all pushing for
lightness for the full
node, so that
you avoid this danger.
Otherwise it could happen.
But physically
where are the nodes?
The nodes can be at my house.
Ah okay.
You only need to
download ...
To be a node I don't need
to have all my servers
and do everything ...
- No, absolutely not,
you simply have to
download the complete
blockchain from the web.
It's only space, it's
only a question of space ...
- okay, okay
- a powerful computer.
- Right.
- But you don't need anything else.
Obviously you're
consuming electric energy,
a minimum.
- Right.
You're consuming your hardware,
so yes, you do have a minimum.
Now, on this question
of consumption
of electric power, what
comment would you make?
Obviously, mining
the way coins are mined now,
which is the most secure way,
through proof of work,
uses power.
Fairly significant
power, but let's draw
a parallel. How much power
or carbon footprint
does it take to keep
physical money inside banks
and their security.
Maintenance
of the databases
of virtual money,
because when you have fiat money,
a currency, 10%
tends to be physical,
90% is virtual.
Okay.
From a legislative viewpoint,
you also have to
keep physical documents
in protected structures.
I used to work
with traditional payment systems,
so I know what goes on
behind the scenes.
The cost of this
is very high ...
Right.
it has a very high energy cost, so
the bank's IT system too,
it has 3 redundancies,
because this is
required by law,
because it protects ...
So you have 3 back-up systems.
Studies by MIT
and other universities
show that they are
comparable and that the
bank system is higher.
Okay.
So yes, it does consume energy,
but at a comparable level.
The point is
this energy is meaningful
to the extent that it
meets a need which for you
is really important.
I think it's really absurd,
and here I'm talking
from a personal viewpoint,
in order to avoid
being fired by the company,
the use of blockchains
permissions of
the federated systems,
which consume a lot
of energy, imply
very great expertise,
and above all heavy
use of energy, when
you could manage
exactly the same thing
with some encrypted
databases. This is
something I'll never understand.
Does it make logical sense? No,
but it's possible.
Okay.
So you're saying,
it's consumption
of energy similar to
current energy use in
traditional systems,
so it's acceptable.
But is it possible to go further,
for example,
proof of work
is one type, but perhaps
you could find other
types.
There are various
types of proof,
the point is, what
guarantee you want
and what you
want to achieve.
Because proof of stake,
which implies
much less energy, is
being championed by Ethereum,
and still has to be
implemented,
even just the research part.
Let's imagine that
this research is implemented ...
What is proof of stake?
Basically, you demonstrate possession,
without resolving the
mathematical puzzle,
which is very difficult to resolve,
very easy to control,
of proof of work,
invented by Adam Back,
which consumes a lot of energy.
It has security,
a trust that is not
mathematically
infallible, like bitcoin's.
So it's the usual
trade-off, what do you want?
Less energy, but less trust.
Less trust, less security.
The point is this:
if you are happy
about trusting
a central third party,
who could be
a foundation, it could be a person,
it could be a state, the best system
and the most effective one,
is the central system.
Centralisation is the
fastest system,
the most effective, the
least energy hungry,
the least expensive. But,
you have to trust a third party.
Right.
And obviously the
third party is large,
is well known, and
if I am ill-intentioned,
what is known
in cryptography
as a mallory, a
malicious attacker,
then I'm going to
attack that.
I'm not going to
attack hundreds of nodes
when I don't know
who they are.
Right.
Security is anything.
You also have
a training section,
an academy, connected
with this subject,
because in the end
we always talk about
these questions and then,
in the majority of cases,
you don't understand a thing.
There's a total
lack of information,
so people say: "It
may be true, it may not",
it's extremely complicated,
unless you really go
into it in depth. What
does this academy do?
To start with, the Rec Academy,
a name that comes from slang,
brings together
the entire cryptocurrency
eco-system.
We believe in bitcoin,
but we also consider
other things.
You really consider them,
but laterally.
We consider them because,
technologically speaking,
to debate something
you have to know it.
Sure, you have to
know the enemy.
So it's intellectual honesty.
The trading part, because
it's fairly counter-intuitive,
fundamentally it's
difficult to understand.
And trading is
much less frequent.
I was talking to
Tone Vays recently,
to Izzi, to
WebPanda,
who are considered the most reliable
traders, the ones
who foresaw
the various trends,
and they said:
"I don't do much trading",
because you need
less frequency. The
development part
inside the blockchain
and above the blockchain,
because you can have
a load of applications
that use it. The
security part,
because in the end,
until now any crypto
are your private keys.
Your private keys,
if you lose them, unfortunately,
sorry for your loss.
Right.
So we are building
a divulgatory,
informative component,
operating at various levels.
It depends which
level you're at.
Even for the
developers, the
advanced level covers
notions in economics.
Because in the end
the starting point is
an economic need,
Games theory concepts.
Because it's not
just technology.
The system works
because technological
solutions have been
introduced based on incentives,
so that if you cheat,
if you want to con someone,
it's not worth it. So
it's very, very disciplined,
that's why it's complicated.
If you like, this
part corrects
a cognitive symmetry.
But underneath it all
there's a serious problem
of information asymmetry.
Most of what you read
is wrong, not,
I think, because
people want to be
malicious, so
it's a campaign of misinformation,
but because they
really don't understand.
You say: the blockchain.
You haven't said anything.
The bitcoin blockchain
is completely different to
the Ethereum blockchain,
or Ripple, Stellar, and
they have completely
different trade-offs.
So, when you said
"blockchain is good" ...
Sure, I used a term that in fact ...
No, it's a password
that says nothing.
In fact, I criticised
Rubin recently on Twitter,
and he was courteous
enough to reply,
because he said:
"The blockchain",
you're not saying
anything at all.
Sure.
Tell what you're talking
about and at that point
I can reply from a ...
- Right
- psychological viewpoint
tell me which blockchain,
tell me what you're talking about.
As regards security,
I was thinking:
it's crazy that
today you can sit down
and say, well, I'll write
the 12 words on
a piece of paper,
which I divide into 4 pieces
and give one of them
to a solicitor. Really,
it can't stay like that
for much longer,
even the Winklevoss brothers
who say: "We have
a mega fund which
collects mountains of
money and then we have
our pieces of paper here
and there, in case
something happens".
Well you can never have
100% logical security.
Any system subject to
an attack vector, which
you can only reduce ...
What do you mean
by attack vector?
An attack vector is
the perimeter
in which you can
be attacked.
What we were talking
about earlier, it could be
an external hacker,
internally an employee
who may be malicious
or incompetent,
there it's the failure
of the actual hardware.
Okay.
When you develop
a storage solution,
private keys for
a financial institution,
first you study
the financial institution
or the exchange, because we
do this for exchanges too.
What attack vectors
and trade-offs do you want?
Because you can say
to me: I want to be able
to move funds every
hour. Heavens.
That means I
have to move
those keys quickly,
so I have to develop a
system with 90% security ...
Right.
85%, you have to be
prepared to support
that level of security
or insecurity.
So already there's
a built-in percentage
of insecurity that you
have to accept.
And what we advise is
this: first, play with it yourselves
and lose some money. And
have your employees lose too.
Because that's the
only way to learn.
Okay.
I don't how much they'll like
hearing you say that.
That's how we learned.
Look, I've been
there for 3 years.
And I work there because
I embrace an ideology.
But I began moving something
independently only a very
few months ago, because
I didn't trust myself.
Okay.
Because, sorry
for your loss.
Then there are monitoring
systems too.
Because you also need
to be able to monitor.
Right, right.
So there's a whole
complex structure.
But what did you do
before you joined?
I worked for IDC,
IDC is a technology
research forcast
company, at world level.
I was the European
head of financial services,
but payment systems
were my passion.
Ah, okay.
So my area was banking,
capital markets,
and also ---
So I worked with numbers,
where the market was heading.
My team and I assessed
the various solutions,
the various innovations.
The fascinating part was
payment systems.
That's what I was mad about.
Over the next 2 years,
I won't say 5 years, because
I asked about 5 years earlier,
it seemed too long.
Two years, what do you expect,
look into your crystal ball
and say: okay, in 2 years time,
bitcoin will have disappeared, or
it's the dominant currency, or
has something else emerged?
What do you think?
- Well ...
- What's the direction?
At the moment we are
at a certain level
of the battle,
which is this.
There's a speculative
phase, a phase when
a lot of money is being made
with certain cryptocurrencies,
with certain types of coin.
- Okay.
- Okay.
This phase will continue
for a while.
Then there's bitcoin,
which we said is
like hard money.
It's resistant, it tries to keep
up with the new technological
developments to reach
100% privacy
and fungibility, which
means that one thing
is the same as another,
it doesn't come along
with the history of
what it was used for.
- Okay.
- Okay.
It loves decentralisation
and is in contrast with
third-party surveillance.
This is irreconcilable
with the sort of
social government system
we have now.
So in two years time,
the bitcoin project
will either have established a niche,
and become a
store of value ...
a real commodity
like gold used to be,
but it can't be inspected,
or it will have imploded.
Ah okay.
Because it's incompatible
with the government.
Unless we accept
the conspiracy theory,
which I think is mad.
Let's go with the
conspiracy theory,
That's something
I didn't know about.
- Well ...
- Okay.
You know that
basically bitcoin was
invented by
Satoshi Nakamoto
and no one knows
who he is.
It's Trump, I think,
it's Donald.
No, I don't think it's
that Trump and his red hair.
Some people think
it's the plan B
of the NSA, for when
the dollar fails.
Okay.
Because, in fact,
there's only one element
that can support this
theory, which is mad,
partly because it would mean
that the state knows how to manage
technology. Generally speaking,
states don't know how to manage
technology, they are
complete sloths,
so I think this idea
is pretty irrational,
but anyway the only thing
that could support this idea,
this conspiracy theory
some people uphold,
is that an elliptical
curve has been  used,
which is something from
the military world, very little
used in cryptography,
which underlies
proof of work and
private keys too,
strangely, this was used
and, strangely,
this elliptical curve,
was reviewed by the
American national body
that reviews all
technologies,
that gives them
a definition,
the NIST.
- Okay.
- Okay.
That's the only element,
that it could be plan B, if
the dollar flops, oops ...
In any case, it's
very highly indebted,
we have something
which is a store of value.
We'll see what happens,
we'll meet up in 2 years
and see what's happened.
Thank you, thank you.
Thank you, fantastic.
It was a real pleasure.
