YouSaid · the spoken record

Dr. Adam Back

lines on the record: 50
first: 2021-04-21
most recent: 2021-04-21
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Way across 100x growth period or something, which we've seen in the past. And so people have to become accustomed to that. Some people pan excel or make other mistakes, over leverage, that kind of thing. But with the yield strategies, you're immune to that. These are largely immune to volatility. So long as the platform you're using is solvent, doesn't get hacked. And so that's where more mature platforms coming into play helps, then what's not to like about the yield in this environment. And so there's a reason for people to buy Bitcoin to collateralize the dollar yield collection. And so they'd don't even directly care about the price.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, it does seem like there's some kind of hyper Bitcoinization aspect to this, which it's just a self-feeding monster that wants to absorb all the money. And so basically what it's doing is it's just shifting the Bitcoin dollar exchange rate. As that changes, it can absorb more money because now the price Bitcoin is higher. So it's not $4 trillion and it's $8 trillion and then it's 20 trillion. before you know it, you have full scale global hyperBitcoinization or something. So we'll see how it plays. And one interesting part about it, though, is that unlike the kind of trader psychology that goes into pullbacks and during a growth cycle like we're in now, there have typically been like a dozen, 10, 20, even 30% pullbacks on the”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“You know, there's so much demand now, there's more than that money outside the ecosystem once they overcome, there are many platforms where you can't count physical Bitcoin as collateral. So you've got to use other collateral. So that takes some of the fun out of it. But as you said, I think the thing is that it's not a stationary picture because it's also as more money flows in, it satisfies the demand to buy more Bitcoin and pushes a price up, locks up the physical Bitcoin for these yield strategies, which is more scarcity. Somebody wants to institutionally buy Bitcoin, where are they going to go, right?”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah, so I think there's some positive reinforcement loop where it's a mistake to think that let's say there's four trillion dollars of demand to borrow dollars. And so there's only, let's say, half a trillion that is extant on crypto trading platforms. And so this is sort of demand to go leverage long because many, you know, the people that are in Bitcoin generally want more Bitcoin or regret former conservatism. And of course there are speculators too, but there's clearly a high demand for leverage. And as is a shortage of it, they bid the price up. And the problem is basically that people who have doors on crypto exchanges will generally be inclined to market by Bitcoin and hold it. So the only way you can persuade them to lend it to you is to bid the price up. And there's an oversubscription for that. And so you would say, well,”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, completely Bitcoin neutral. And so, of course, once they realize that this is the case and that they can take these kind of match positions on increasingly high tier platforms, more and more money will flow into that. So one theory could be that, and of course there's enormous pools of money outside of the crypto space, buying 30-year bonds at negative rates. Lot of money out there. So you would think that once the dam breaks and it flows in, the yields would slow down. But I think the problem is that it's the universe expanding.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I think it's a kind of submarine issue to many people, or not issue. I mean, it's a positive driver, but it's not something that they would be visible to them necessarily because it's kind of wrapped up in some kind of advanced trading strategies and it's kind of mysterious, but it seems like actually has the potential to be a kind of Bitcoin monetization driver because people who are not even interested in Bitcoin can get an extremely high US dollar interest return.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So the supply inflation should taper off to well below gold, I guess is my point. Just the sequence of positive news is just really keeps going. That's pretty interesting.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Frame right, but nobody in the investment space says you should put cash under the mattress, right? So it's not really a useful comparison. So I think maybe gold is an interesting comparison. And Bitcoin may, I guess, in the long term, do a little birth and gold, even at the top of an S-curve, you know, after fully adopted, whatever level that is, you know, if that's 100 trillion or 200 trillion, five to ten million a coin, even then because having displaced lots of different sort of artificially monetized goods like stocks, real estate, artwork, gold, things where people are not buying it for the enjoyment of it, but they're buying it to preserve capital or to any expectation of price appreciation by other people seeking to do the same thing. So even in that case, I think it would outperform gold because it's strictly scarce where there's always”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so that's kind of interesting to see. I mean, of course, the adoption level is still fairly low. The Treasury disclosures are interesting too that Michael Saylor kind of encouraged people to do. It's something we've actually been doing since 2014, which is when we were incorporated. And that obviously works pretty well, right? We got the equivalent of probably a couple of rounds of investment through Bitcoin price appreciation and investor dollars into mining. That was also highly profitable in dollar terms and putting more Bitcoin on the balance sheet. So I think it's an interesting sort of precursor to transitioning to a Bitcoin monetary base if that happens, or at least a kind of alternative store of value, right? Because nobody, I think sometimes people overemphasize that fiat currencies have fallen, even the best of them, 99% over 100 years.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Seems like the metrics and institutional, sort of almost stampede to participate is there's something new every day or two, right? Big fund managers, big banks where the CEOs have been skeptical. It's just...”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so they are a company that specializes in that area. So they do the KYC. They are a Luxembourg securitization, like licensed Luxembourg securitization manager. I don't know all the correct terminology, but they're experts in that domain. And they do fundraises for these kind of, I think it's called a non-public investment in Europe. And so one they did is for a supercar called Mosanti. So it's an Italian kind of bespoke custom supercar company that's equity in the company or something like that. Well, equity or proportion of revenue, something I didn't look into all the details, but they are doing things like that. Another one is infinite fleet.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It's not as volatile as Bitcoin, but it's still volatile, so you've got to buckle up going into these things, right? And that can go both directions, right? So if you scroll forward to some of these stock to flow derived price targets or just price targets people throw now or comparators between previous halving lows and highs or cycle lows and highs, $300,000 price into next year, of course the profitability is going to be through the roof because nobody can manufacture that amount of equipment in that time frame. Like there isn't enough foundry capacity in the world if you manage to seize all the capacity that's being used to build smartphone chips and so forth, which is hard to compete with in terms of their command of capacity, basically. But of course, if that were to happen, I think it's fair to say you would have done even better if you just bought Bitcoin and held it now, right? But, you know, and the alternative, there are certainly people looking at the market now and saying, wow, $60,000 is a high price, I'm scared to buy. And they get stuck in indecision cycles.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Price, the high volatility, the hash rate is prone to really actually even exceed price because you've also got a factor of more modern equipment being developed over time that has a higher hash rate per joule. So I think one thing we can do is look at the backtesting with a caveat that the future doesn't guarantee that and say that it hasn't lost money over previous three year periods that it has this 60% upside participation as compared to buying and holding. But what is very defined is the short term because”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“We may be able to in future. It's just there are different regulatory requirements and that's further process. And I think the other, so you mentioned a couple of things there. One is that you are not buying shares in a mining company. So this is more like a non-discretionary financial instrument. So that you're not relying on some management discretionary decision. If you put money into buying shares in a prop mining company, now you are exposed to, well, did they make a good decision? Did they decide to use your money to expand a farm over there or sell some coins to dollars because the price was falling or pay out a management bonus or pay out a dividend or not? None of that stuff applies, right? It's all non-discretionary defined. What's happening? There's extremely thin deterministic behavior. And it's kind of like a Bitcoin ETF, but it's kind of like, I mean,”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Something else you could do, we were talking earlier about yield strategies, is you could, assuming there are exchanges which on the BNN notes as collateral, you could short Bitcoin using it as collateral to the tune of the number of coins per note. And that would even be equivalent to selling, right? Because it would lock in a dollar value, plus it would give you a yield typically resulting from kind of Bitcoin perpetual products, right?”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Right. And it's actually the same for all of the notes because it's kind of harmonized. There's a pool of hash rates that's averaged, but there is a defined Is how many clones have been mined per note or in aggregate, and this is how many notes there are. And another question people ask is, well, what if I want to sell the coins because I can't extract them? And so you can sort of sympathize the equivalence of there being a Bitcoin coupon by, you know, if you have additional Bitcoins outside, you could just sell those instead.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And then machines should be comparable. But it's defined in terms of hash rates. So even if these machine shortages mean that sometimes you want to take what you can get, right? So if the machines that come online are 42 joules instead of 38, they're less efficient, it's still fungible because the definition is in the hash rate target of what it's producing, right? So it will mean that maybe we pay slightly less for the machines, but expense slightly more power, but it's still interchangeable because the finished product is the hash rate you get from it.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So, no, it's actually all interchangeable once. Think about it like pool of capital that's mining and there's a certain economic makeup of the per note value. So let's say it's August. They've been running for a while. There's a certain proportion of Bitcoin per note. There's now not a 36, but 35 months left to run on the contract. So the value of the hosting contract has gone down a bit. The Bitcoin have a market value and the machines have some depreciation scale value, right? And now it rolls over to September and we want to add some more notes, which are interchangeable with the running notes. And so what we do is try to match the economic characteristics of the existing notes. So we say, okay, let's look at the makeup. It has a defined number of Bitcoin. We can fix that. We just go market by that many Bitcoin. It has 35.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“You shouldn't care as an investor whether you bought an early sales tranche versus a late sales tranche versus in the market. And that's quite interesting to actually achieve because this first 12.5 million sales tranche is Power update early July, and let's say there's another tranche that sold in September. For that to be equal, it has to have a 33-month hosting contract, and we have to market by the number of coins per note that the miners that have already been running have achieved, right? And so that's what we do.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Outcome so they buy more of them basically, right? It says win win formula, and it's exactly like you say. So of course the price is bundled. So how you ascribe value to the cost of the miners versus the remaining duration on a hosting contract is a matter for the market to decide ultimately. And over time, of course, it's got an additional makeup, which is the number of coins per note. And there's a dashboard where you can see that on a fairly real-time basis. Now, you asked another question, which is, do we issue more? So yes, we are intending to issue about $100 million, so 85 million euros of this series, and they are, so even though they're issued at different times, we do some clever things to achieve fungibility between them so that they are all interchangeable.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Was, well, maybe I should be part of the solution and operate some of the, I mean, not physically hand-on, but they're my minors so I can say if something dramatic is happening, I can instruct a service provider, look, I want you to do this with my miners.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So that made sense to them as well. But for a very different reason, I think another reason to do mining is, as we were talking about earlier, Bitcoin gets some of its value from being permissionless and decentralized. And so if mining becomes too centralized, that could expose it to governance-like risks, right? And so I think if you look at the Bitcoin market cap and you work out what it would take invested in mining, what percentage of that it would take to on an individual basis or on a whole system basis, it's only a couple of percentage points of the, let's say, one trillion in market cap as composed to a handful of billions in mining equipment and electrical spend. So one approach in that, that was my personal philosophical point of jumping into doing some mining on more than a hobby basis myself.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Participation in 60% statistically is something less scary than full Bitcoin. Of course, some people would do a mixture. And other than newcomers who don't have a Bitcoin position, the other type of investors we've seen be interested to do this are people who actually are very deep in Bitcoin and almost felt overexposed to Bitcoin. And so they had some doors and were interested to do something Bitcoin correlated but with more downside protection.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“No sort of absolute return across a three-year period. I mean, of course, there are many periods where buying and holding outperforms. I mean, Bitcoin's price history is nothing but exponential, but it's also volatile. So the point being that you experience less volatility by doing mining. And there are people, you could say, well, look, Bitcoin has performed well over all previous X year periods, right? And that would be statistically the case, but that's still unnerving prospect for people who are not used to Bitcoin haven't adapted, right? I mean, we've both participated in different conventional markets and there's enough volatility in those, but Bitcoin at times ticks that to a whole different level, right? So I think that the reduced volatility of mining versus buying and the prospect that there's downside protection and some upside participation go pretty reasonable upside.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“3500, which gives you an indication of this period. And you mind a lot of coins, prices below 3,500, because you're generally mining at a discount or you stop, and then a price recover to 7,500. And that was enough to push us into the discount on the mining plus the fact that we got more coins than we expected because the price really fell a long way in the middle of it. So I think generally what you see is less sensitive to enterprise or timing. You have some downside protection. You still have a fairly good upside participation. Like we've seen across the periods we backtested, it averaged about 60% upside participation as compared to buying and holding Bitcoin. So for the trade-off, I think that's an interesting trade-off better than being frozen in decision, let's say, right? For people who are new to Bitcoin or look into establish a position.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Through it. Obviously, you're not going to mind blow the cost of buying Bitcoin with electricity. That wouldn't make sense. But there's a big hysteresis between the equipment break-even and the initial investment. So that's typically fairly far off. So you end up mining more coins than you expect through the bottom of the market. And then say the market recovers somewhat. So we did one coincidentally where when we started the Bitcoin price was around $15,000. If you bought that would have been your entry price. And when we finished when these machines reached end life, the price was about $7,500. And so if you bought and hold, you'd have made a 50% loss in cash terms, Bitcoin. But with mining, we ended up making a 25% profit in dollars. And you wonder, well, how could that be? And so you go back, test a bunch of things and try and figure out a pattern of what's going on here. And the point was price fell all the way down to”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And so with mining, it's interesting because you don't care as much about what happens. If the price goes up rapidly, you tend to get a derivative benefit because there'll be a shortage of miners or people can't manufacture new miners fast enough to bring them online, so you'll get a kind of derivative premium for a while until that catches up. And that's the current state of the market, really. Last year, miners were kind of weak, but this year it's really hard to acquire new miners without very long for delivery dates. If you started mining and the price falls, you would think that's bad. But actually what tends to happen is prices falling. And so some miners will switch off because they fall below their break-even. And so as that falls, if you are, if you keep mining, you've got a cost basis that allows you to keep mining or you've pre-funded the investment, right? You've got the capital to pay for the electricity and you're going to mine.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Don't know that actually. So it just keeps producing coins. And the miners, of course, they will chase higher cost by being economically incentivized to bring more miners online and so forth. It's an interesting question to what extent miners sell coins to pay electricity bills. And at Blockstream and me personally as well have been doing mining for about five years now and conclusion is that it's better back tested, like dispassionately back tested. It's just a better financial strategy to hold the coins and not sell them. People will say, well, how could you do that? Like where does the money come from? And I say, well, look, you're about to invest some dollars in mining. Some of that's going to go.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“think the complete inelasticity of the supply curve is interesting right because if you look at any other commodity the people who are extracting the ore or producing the finished product are going to react to market conditions. If the price is gold is up they'll reopen mines that have an expensive per gram production cost. They'll work shifts. People will like recycle, reclaim gold from electronics and everything will ramp up to the max. It takes the edge off the price increase a little bit. And similarly, if the price is depressed, they'll shy everything down and it will provide some, it'll take some edge out of the selling because it's less to be bought as well. Bitcoin in comparison, people say Bitcoin doesn't care, which is more insightful than it sounds, right? But it kind of applies here too, right? The price is up Bitcoin.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Because I think people are starting to realize that gold prices will probably be higher if Bitcoin was not monetizing in the alternative. And gold mining is extremely industrial and chemical process. So I think that there is probably some necessary inevitability for the production of money to have hard money to have an actual economic cost.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Doing inefficient political systems. So we haven't saved a thing. What we've done is we've had a messy uneven playing field. Another thing that's interesting is Eric Vosquil had a discussion with him where I concluded that actually he was right in some degree that people look at the world as if a cost arose ab initiate, but there's no cost that doesn't have an alternative. you know they say well the electricity was used to mine bitcoin okay but there was a foregone alternative right instead of mining the bitcoin maybe they would have engaged in some other consumerish behavior they would have bought a car and so no energy was solved you know maybe bitcoin is probably actually reducing a number of pollutive and carbon producing things in the world for example it's clearly reducing gold mining”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think so. And I think that economic game theory is counterintuitive even to people with In economics, right? So there are some very interesting effects here. So I mean, one thing that I think there's, if you scroll through Satoshi's operatings, he had said something like, yes, it uses electricity, but as with gold, it's far more efficient to the world to have a hard money versus the kind of slippage and churn that happens when you have political money. Then another comment I've heard is Paul Storts made the observation that there is an economic incentive to obtain money and so people are willing to expand up to the commodity cost to obtain it. And if there is no clean cost, that effort will be expended in other ways, i.e. in political lobbying, favoritism, audits, physical bank security, cross-checks, controls, theft inside of the”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Of the amount of work, so it would only either double or half. But it's pretty straightforward to make it take one and a half times longer. You just put a floating point representation of a number in there and say, is it less than this? And that'll do it. And that's what Bitcoin does. So I think how Bitcoin targets the interval is more like a control system. It's like a feedback loop, right? So you start the system, you take a guess at a number, you start the system running, and then you measure over a period what is the average time between blocks in this across this 2000 block period. And you're saying, oh, it's five minutes. I want it to be 10. Let's double the difficulty. That'll fix it, right? And if it goes in the other direction, you reduce it. So it's just a control system where you measure and adapt, measure and adapt.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Where you know, the first 10 bits or 20 bits are by chance all zero. And so that's what I did. And I mean, you know, zero is good as any number. It could be a magic string. It could be anything, but you're trying to reach a target and effectively by looping on a hash function, changing a counter in it, you're sort of throwing 256 coins and looking at the ones at the beginning all landed heads. And of course, that's very unlikely that the more heads you get, right? But if it's 20, then it's going to take, say, half a second on a CPU at that time. And if you want that to increase, you know, if you want the time, if you want to stay at like a minute of work after computers have doubled in speed, then you're probably going to want it to increase it to 21. And so with hash cache, I had a kind of crude graduation.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So, the, I think the point is the full collision, we know how to do it, it's just too expensive. And so to make it simpler, faster and cheaply expensive, it's almost definition change, right? So we're saying, okay, we give up. We're not going to find a full collision. It's not too expensive. But how about if we find a partial collision?”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Big negative, this is not spam, right? So it would protect you from being falsely categorized as spam, which happens too, right? So they did that on a server side and Microsoft made system as well and integrated it into their whole suite of email things, you know, the clients, the Outlook mail server mail, things like that, but their protocol was essentially the same thing, but a slightly different format. So it wasn't cross-compatible. That was that kind of technology. I didn't actually get run to writing a paper, describing it more formally until about five years later. I'm more generally more interested in building and deploying things.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And so it was here's the code, here's a description of how it works. And that was on a mailing list. And there's lots of discussion, people integrated into Remillers and actually into a lot of different things. Even pseudonyms sort of cost to create a persistent pseudonym, which is a bit like vanity addresses in Bitcoin. And as sort of storage denial of service protection and distributive file systems, and actually over time spam Assassin, which is a common kind of ISP grade anti-spam filter, added support for hash cash postage stamps in the headers. So it would give you some negative scoring. So it's trying to grid is this spam. So it looked for spaminous metrics. And if it had make money fast plus 20 to the score, this is probably spam, right? Had a valid hash header in it.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Was in May 1997, I think, and I'd been reading about these HAS collisions on Usenet, coincidentally, on a crypto list, and kind of found it interesting was looking at the mathematics of it in the background there's this ongoing spam war waging in general email and a bit of it creating a kind of a political problem for remailers, which I was one of the operators of a remailer. It occurred to me I spent, I don't know, probably two or three days thinking about design variants of how to do it. And then I was thinking, well, I could post this. This is interesting. I think this would be the right design variant to use. And then I thought, well, you know, in the ISEF process, you should have running code first. So I shut up and wrote the code for a couple of days and I posted it.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Inviolable. Like they think, well, you know, the software could be changed. And his analogy was that it's a game of chess, the game of chess. You could change the rules, but nobody will play with you if you do, right? So you can make a modified piece of software with a different number of coins per block or something. And nobody's interested in playing that game. So the economic consensus just continues.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Some Bitcoin technologists, technical commentators will talk about governance by which they mean the change process within Bitcoin. But I personally take exception to that terminology. There is no governance. The change process within Bitcoin is opt-in backwards compatible optimization and features. And there's certainly no economic or core system metrics that there's any plausible governance discussion to be had about. So Bitcoin has no governance, I would say Bitcoin is. Yeah, I mean, Ethereum has governance because there's a group of people that are sort of graph somewhere off the supply curve and it's all over the place. There's labels on it where different people decided different things, right? So I think actually plan B said something interesting as a way to explain this because it's mathematical and software people have difficulty understanding why it's”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Of a council or supernode set of power users that would decide how much work was needed or how many coins were going to be issued in the epoch, things like that. So if you scroll forward to 2008 when Satoshi started sharing drafts of the Bitcoin paper, it seemed to me that he'd correct the one thing that people hadn't figured out how to do back then, which was in hindsight, it looks simple, but it's to say, well, let's not try to target a stable value, but let's instead target a predictable supply curve and let the market worry about the value. And that, it turns out, is technically possible to do inside a distributed system with no human. Councils or supernodes and governance and deciding how many coins per epoch and that kind of thing.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So, a lot of people looked at this and said, wow, this is interesting. It's artificial scarcity, like digital gold, and then started having discussions about, well, how could you control the inflation? They were sort of hypothesizing that with Moore's law and an incentive to, you know, if you could do mining with this to create coins, that people would go nuts and make a ridiculous amount of coins and that would erode and make it difficult to have a stable value. And so I think people were, and by 1998, there were two kind of more detailed proposals being way dies, B-money, and Nick Sabo's bitgold, which both used this proof of work and proposed ways to have a stable value, as it were, or a market set value, but in a kind of federated model with human market makers or”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's exactly the same. So with the hash cache kind of email postage stamp, I had set it to 20 bits, which is about a million tries. And as a kind of fixed difficulty, but I had the concept that the verifier should increase the minimum postage they would accept every few years as CPUs got faster. And people started to do that. And so that is the difficulty adjustment. Of course, these are relatively cheap. It's in the context of electronic cash. Curiously, when I posted this on a cyphernx list and a crypto list in 1997, it's in the context where people were pretty excited, you know, electronic cash, David Chawn's eCash system was top of mind in a very exciting potential for the world sort of thing, kind of Bitcoin like five, but on a far smaller scale. But it was centralized and it was difficult to bootstrap.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“like a communication mechanism where there's not a client and a server interacting where the server says please answer this challenge and then you solve a capture and you send it back. I mean a capture being another kind of thing that's used for this. But there's no client and server. It's broadcast and the reader is not online at the same time as the sender, that kind of thing. So it was necessary for the sender to make a proof.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Expect just a kind of statistical anomaly or counterintuitive fact. So with the hash functions such as SHA1, SHAPI6, similar kind of thing applies except the cost, you'd have to try lots of hashes until you find two that collide to the same output. The work to do that is impractical. You could run all the computers on the world until sun bills out and it probably wouldn't find one or something. So if you did have one, If somebody from the far future came back and gave you one, you could instantly verify it 2,000 CPU cycles. So I thought that's a fascinating concept which relates, right, which is, well, you can prove that work was expended, but this is far too expensive. So maybe we can tune it and modify the design of what's going on so that you can make it tunically expensive and still instantly verifiable. And so that's where Hashcash came from. And because it was for store and forward,”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And anyway, not a fit for sending private mails because density. And it would also exclude lots of people, right? So billions of people in the world don't have credit cards and couldn't get a credit card merchant processing account, don't want to put their ID on things. And somebody's financial well-being where they're happy to send a 10 cents or a dollar to send a message. Maybe that's expensive for somebody and we want to have a global even discussion on using it about wide range of topics. And so that's where, well, we can't use the banking rails. We can't pay them. So it's complicated. But could we at least add a cost to the center? And so I had coincidentally been looking at hash collisions. So there's this concept called a birthday paradox where if you pick a room of people and you say, what is the chance that people share the same birthday, it's a much lower number than you expect.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Was that you should have privacy in communicating person's person and particularly in discussion forums? So I had to look at the spam problem from a different direction, which is, well, the blocking identities and IP addresses isn't really a solution. It's kind of losing arms race. And anyway, DIA trending in a bad direction, what's the real problem? So the root problem as well, email is practically free. So I was thinking, well, people on the Suffolk Explosive were already pretty excited and interested in electronic cache, but it was difficulties bootstrapping it because it relied on banking partner and that kind of thing. So some of the electron cash protocols then were centralized. There would be a central server with a double spend. Like David Charms protocol and some other ones, a similar design. And actually, you know, PayPal didn't exist, getting a credit card merchant processing account was difficult, complicated.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“People were spamming with it. So, anyway, there's a kind of like a problem then for removal is like, well, what do we do about this? And so usually what people do about spam is they put their system administrator hound and they think, well, I'm the super user, which is more the case in those days, you know, big servers and not that many powerful desktops on laptops. And they would block IP addresses, block email addresses. But the actual protocol on the permissionless internet is there isn't really any concept of super user and regular user. Once you get onto the IP network, everybody is the same, right? So it struck me this was a bad and dangerous direction because it was pushing towards the internet driver's license concept, which resurfaces once in a while, you know, people want real names or personal information in order to get a cell phone contract or an internet connection. And so the whole point of the remaining”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“To use net discussion groups kind of broadcast decentralized mailing list like technology chat forums, it seemed that there were people that were sending spam through the remailers, particularly to these discussion groups. And once it hit these discussion groups, the Usenet technology broadcasts that across thousands of servers all over the world. So it's actually a way to amplify a denial service. And it wasn't even commercial spam. look like random numbers and things and talking amongst people who operated remailers on a cipherponts list our best theory was that people that are doing this were you know pro-establishment anti-privacy and just wanted to annoy the administrators of usenet servers so that they would try to block remailers it seemed like an anti-privacy kind of you know create some nuisance so that there would be a blow back against remailers because”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Was running an anonymous remailer, so I got interested in cryptography and privacy and basically deploying technology allowed users to exercise their rights. And so on the online world. And so I was running this Remailer. And at that time, this is the late 90s, obviously still today, there was a recurring problem with spam where people would send bulk unsolicited mail, probably with a one in a million conversion rate, but hey, you know, sending an email was practically free. And it's kind of a bean, you know, most people's, anybody operating a mail server individually or as a company, the majority of the email that they were processing was spam. And there's also a nuisance for users to have to sift through all this stuff to find the actual emails. And so that was going on in the background. But my particular concern was operating this remiller to get privacy. And it also had the ability to post.”
2021-04-21 · We Study Billionaires · BTC022: Dr. Adam Back & Bitcoin's Proof of Work (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT