00:00hi this is Chris Dix and I'm here with
00:02Balaji Srinivasan this is the a 16z
00:05podcast today hi Balaji hi we are going
00:10to we have a list of topics however one
00:14of the topics is Bitcoin and knowing you
00:17and me we should probably just talk
00:18about that since that's all we ever talk
00:19about so what do you think so I'm
00:24looking at my list here now that mount
00:27GOx is settled what's what's what's your
00:29sort of assessment of the current state
00:30of the Bitcoin world
00:31I think you know that's that will be
00:35viewed as a historical speed bump really
00:37I think that bitcoin is an international
00:40phenomenon and the mentum behind it it's
00:43just so strong what do you see as the
00:46key drivers of the momentum so for
00:48example like right now one one metric
00:51that you know we're tracking right is
00:52the number of users of Bitcoin right and
00:55if you look at blockchain not info it's
00:56got charts of the number of people who
00:58are using wallets Quintus has disclosed
01:00some numbers probably the number of
01:02worldwide users of Bitcoin is on the
01:03order of like three million ish maybe
01:05five million and so it's still very
01:07early days right ultimately you know
01:09you're going to get to 10 million 100
01:11million then maybe a billion Bitcoin
01:13users and so you've got like room for a
01:15thousand X growth left so it's still
01:17very early days in this space what would
01:20you say to people though who say yeah
01:21the three million geeks using it how are
01:24you gonna get 100 million normal people
01:26using it that's it well because you know
01:28to quote Chris Dixon the things that
01:31geeks are doing today everyone will be
01:32doing in ten years if we recall you know
01:34back in 2000 there weren't that many
01:36people who had mobile phones but what do
01:38you think the driver will be will it be
01:40payments will it be store value in
01:43countries that have unstable currencies
01:46absolutely so I think that so the
01:49goldman sachs report that came out about
01:50you know a few days ago i think it's a
01:54I think illustration of what at least
01:56one of the first major applications is
01:57going to be so while the report had
02:00people who were skeptical about Bitcoin
02:01and had people who were positive on
02:03Bitcoin the graphs were pretty
02:05interesting and one of the graphs showed
02:07that there's an opportunity for 210
02:09billion dollars with ABI
02:12and savings for payments going through
02:14Bitcoin in the space of retail
02:17e-commerce and remittances and so that's
02:22a large number and so that's kind of
02:24thing where you know hundreds of
02:26millions of dollars as first application
02:28is pretty good so payments I think and
02:29just reducing credit card payments is
02:31one definitely major application for the
02:33next few years but and so what and what
02:36do you think we need as a community we
02:37need to be building to get there so for
02:39example one thing Mount Cox would point
02:41to is better sort of you know compliance
02:48slash security for you know sort of
02:53custodial services for Bitcoin better
02:55exchanges like what would you yeah so I
02:59definitely think there's gonna have to
03:00be like a u.s. exchange at some point
03:02that is you know regulated and so on and
03:04so forth in terms of technology I think
03:07that one thing where I have yet to see a
03:09really good one or at least one that I
03:11like is a really good mobile wallet I
03:13think that's a very important component
03:14of this because it's Apple bans them
03:16exactly that's right so you're not gonna
03:17get them on iOS and actually the
03:18employment is an awesome mobile world I
03:19have it but you had to have gotten it
03:21before they banned all exactly that's
03:23right so this is actually one of the
03:24things I think that you know is going to
03:27actually lead to a see I mean is a
03:29killer app right like you know locking
03:31down Bitcoin on the iOS platform is
03:34gonna be I think seen in like three
03:36years as one of the more short-sighted
03:38things that could be done because it's
03:40going to be so such a big deal
03:42and so it's kind of thing that could
03:44push people off of the you know iOS
03:46platform and towards other things I
03:48think because because it's being banned
03:49but I think they banned even it was the
03:52website the fancy accepted Bitcoin
03:55payments and they banned them accepting
03:56them in their app yeah because I mean
03:58anything that is a route around 30% of
04:01you know kind of taxes something which
04:03which is gonna be disadvantages them in
04:05the short term but you know there's
04:06other ways to monetize and I think think
04:08that will be seen as a bad decision in
04:10hindsight but yeah so I think a really
04:12good mobile wallets that's why you know
04:14assign engines and investment are ours
04:15right like something like that an
04:17open-source Android that permitted not
04:20just mobile wallets but no app store
04:22approvals and so on and so forth I think
04:24Android Android the store they allow the
04:27claim they do but you know the you still
04:30have to go through an approval process
04:31and whatnot for it like a totally
04:33unlocked phone that also had unlocked
04:35payments I think we're gonna see
04:38something like that whether it's signage
04:40ins and the Appa whether it's a Firefox
04:42OS whether it's something else I think
04:44there's a real interesting aspect to
04:47having an unlocked phone with unlocked
04:48payments in the future so but yeah so in
04:51terms of we need an exchange we need a
04:53killer sort of killer mobile apps yeah
04:56killer my wallet I would say that we and
05:01one thing I'm looking at is this sort of
05:03like white pages for Bitcoin right like
05:05you know like there's a site that just
05:07did this they saw it like the tweets
05:09that we were putting out and did like
05:10one named IO and that's interesting
05:13what's interesting there is that the is
05:14that the the the data is actually stored
05:16in in there unblocked in the name coined
05:18blockchain oh I didn't know that yeah
05:20one name yeah interesting yeah this
05:22implementation detail okay I know it's
05:24in the name Quinn blockchain and so it's
05:25a you know got all the virtues of a
05:27distributed blockchain yeah that's very
05:29cool so the the aspect that I was
05:31thinking of it as which is somewhat
05:34complementary was there's all these
05:36different social identities that we have
05:38we have Facebook and we have Google and
05:40we have you know Twitter and so on and
05:43so forth and each of these one thesis is
05:46that each of these is going to have you
05:48so you've got one person and they spread
05:50out into Kay identities across social
05:52platforms then each identity one thesis
05:54is that they each spread out into n
05:56wallets and each of these wallets you
05:59know basically within these systems that
06:01performs like a different functions for
06:03example on Twitter you'd have some
06:05wallets and they be used for tipping
06:07people on Facebook you have some bolts
06:08and be used for paying friends like a
06:10Facebook PayPal with Bitcoin with Google
06:12your Walt's looking to your Google
06:15account would be used to pay your Google
06:16storage or maybe to send money to people
06:18in Gmail and so on and so forth and so
06:20this concept of taking all of your
06:21social identity layers and social oughts
06:25and linking them to corresponding
06:27Bitcoin wallets would also be
06:28interesting because then you could just
06:29type in on a web page it find your
06:31friends name and it auto complete with
06:33their you know Google or Facebook or
06:35Twitter or whatever profile you could
06:36enter and you could send the money
06:37via BTC and you never have to see that
06:39alphanumeric string which is not
06:41memorable you know for for their Bitcoin
06:43wallet and you wouldn't even initially
06:45even need to see their Bitcoin wallet
06:46because the service would abstract that
06:47away for you and just pay the person
06:49right so I think some service like that
06:50like a white pages for Bitcoin is going
06:52to be important to make it more
06:53accessible to normal people and
06:55integrate with existing social services
06:56and bootstrap from that it also makes it
06:59you know Bitcoin is inherently viral
07:01like PayPal like email like Skype like
07:04Facebook because when you send Bitcoin
07:06to somebody else you're telling them
07:07download the Bitcoin client right to
07:09accept Bitcoin just like you say
07:11download skype to do a Skype message
07:12joining let's talk about the app coin
07:14concept so navall had which I think you
07:17sort of helped him or co-authored with
07:19him this very interesting blog post
07:20which I think still like in the even in
07:23the tech community is this stuff that we
07:25were talking about is seen as fringe
07:27I predict that will move seen as a
07:30prophetic blog post in five years
07:31because one thing we've seen as as V
07:33sees is a lot of people come in to us so
07:35I think of Herbet ripple people coming
07:38in with new business models where they
07:41it's basically open source software
07:42slash services where the monetization
07:44happens through some scarce name space
07:46orbit as a has sort of a URL like schema
07:50ripple has their own currency you know I
07:54think this would apply to namecoin for
07:56example if you put on his into any
07:57system the currency would go up in value
07:58so it potentially is a new business
08:01model on the scale of you know which
08:03could which could lead to innovation on
08:05the scale of sort of open source
08:06software so yeah so I think that's
08:09actually it's going to be very
08:11interesting on a few different levels
08:12one thing I want to just use like you
08:15know just just for the benefit of the
08:16audiences assume she didn't say Bitcoin
08:18apps versus app coins there's Bitcoin
08:21itself there is the protocol for sending
08:24BTC back and forth and you know the
08:27blockchain and so on there's apps that
08:28are built on top of the you know current
08:31blockchain and current mining and so on
08:33so for example proof of existence comm
08:35which uses the blockchain as a notary
08:37public or some of the tipping apps and
08:40so on and so forth those are apps that
08:41are Bitcoin apps are using the Bitcoin
08:43blockchain and then um you know using
08:46your topology you've got alt coins like
08:49and litecoin and whatnot which don't
08:51really differ from Bitcoin except in
08:53parameters like you know time between
08:55approvals or the number of total BTC
08:57that are out there or LTC dogecoin does
09:01differ in the sense that it's got an
09:02infinite amount of dogecoin so it's like
09:04meant to be less stress than Bitcoin but
09:06they don't fundamentally differ from it
09:08the but the fourth category so you've
09:10got Bitcoin itself you've got Bitcoin
09:11apps you've got old coins and the fourth
09:13category of app coins things distinct
09:15from Bitcoin apps because either using a
09:17separate blockchain and be there
09:19employing a function so for example
09:21named coin is inputting a function of
09:23like you know basically distributed DNS
09:25and the reason I think app coins are so
09:27interesting is that they are a totally
09:30new way to do funding monetization and
09:31exit that's to say you can in theory
09:35have an open source project that is
09:39funded by you know these coins that are
09:41being pre mind and how would people
09:43actually you know run them or run this
09:46open source project let's say you've got
09:48a server instance like a distributed
09:49Google a distributed Facebook anybody
09:51who runs at server instance in order to
09:52access it you have to pay them a small
09:54amount of you know these diaspora coins
09:57for example if it's distributed Facebook
09:58and so it becomes more valuable as more
10:01people are running the software and
10:02using coins would be a way that it's
10:06like not just buying equity in the
10:07company it's also a way to use the
10:10services of that company right so the
10:12reason this is interesting there's a lot
10:13of different angles on this that's just
10:15one angle on how you could use app coins
10:17the reason this interesting is to relate
10:20to something else you post on recently
10:22it's relate to this console the full
10:23stack startup but it's like the full
10:24stack VC we actually control exits as
10:27well as you know in corporation we
10:29wouldn't have to you know like do an
10:31exit on Wall Street necessarily you
10:33would basically be liquid permanently
10:36there was a mechanism of the app coin
10:38you'd always know the valuation the
10:39company would be a public in a sense not
10:42a public market in the SEC sense but
10:44just public in the sense of a valuation
10:47that was assigned by a global market and
10:49there's a lot of interesting aspects
10:50about that it takes it fixes a lot of
10:51the pathologies in the system right now
10:54so so last topic we'll talk about
10:57justice in the news is a news week's
11:00yes that was awesome
11:03is a great launch event for our new
11:05version of news genius basically as you
11:10know readers may know it was just it was
11:13funny that our if that newzik article
11:15had appeared on Reddit it would be
11:16considered like a third tier Satoshi
11:18theory yeah but somehow you stamp the
11:20word Newsweek on top and the exact same
11:22sort of base of evidence becomes
11:25something that people actually it I
11:26thought the whole thing was comical it's
11:28ludicrous I think from the beginning
11:29because basically anybody who had a
11:31familiarity with what Satoshi had done
11:33and his writing and his code and so on
11:36it's almost inverse of Newton right like
11:38Newton had you know seen a he had
11:44published something anonymously and when
11:47people I'm gonna share actually if it's
11:49Huw publish something notice here he'd
11:50seen another mathematician but he said
11:51you know I shall know the line by his
11:53Paul that is there's a famous solution
11:55to an equation and it was clear as the
11:57person who's doing it was also a very
11:59skilled mathematician I think he was
12:00talking about like it was like
12:01Bernoulli's equation so I'm thinking
12:02like that that's right I forget the
12:03exact details of it but this is the
12:06inverse of that right you have somebody
12:07who is you know very nice guy or
12:09whatever but just does not have the
12:12anything in a track record I thought the
12:14only interesting to me was the sort of
12:16sociological observation that people
12:18that don't come from computer science
12:19it's almost like saying wow that guy
12:22speaking in English he gets written worn
12:23piece exactly that's right people don't
12:26realize just how relations of Tallinn
12:27and crypto for God's sake is like the
12:30ultimate right I Marius is like this is
12:32like you know there's like 10 people in
12:34the world who could scoot who could you
12:36know possibly invent crypto at this
12:39level most distributed system exhaust
12:42the guy was internet native like
12:44generally he'd been posting online like
12:46you had you had to be internet native to
12:47write that thing absolutely and the
12:49thing is it's it wasn't just even so it
12:51was cryptography and distributed systems
12:53but it's like so difficult to build a
12:57new distributed protocol given that
13:00you're going all the way down to the
13:01level of the hash functions and so on
13:03and then all the way up the stack to
13:04like timing attacks well you get the
13:06game period out so many levels
13:08yeah right which actually makes me think
13:09it had to be a group almost feels like
13:10the game theory out against all the
13:12different attacks it's it's really
13:13amazing but you know one of the things
13:15is that I don't think
13:16that any of the candidates for Satoshi
13:17is the real candidate because there was
13:20a remark that Satoshi made and one of
13:21his things or he rather than saying six
13:25degrees of separation like in terms of
13:27social network he said six degrees of
13:28freedom it was a very interesting typo
13:30and that combined with some of our
13:32things makes me think that so she's a
13:34physicist by training he's a quant who
13:36worked on Wall Street finance and you
13:38know learned you know proprietary
13:39trading algorithms and so on that way
13:41that's a that's hypothesis that fits
13:43with everything that I know and I think
13:46that's like the most likely demographic
13:47for this guy could be but certainly not
13:52that poor man it was his life was ruined
13:54but not Dorian I mean like the earth
13:56part about it was the most ludicrous
13:57aspect is this guy went to such lengths
14:01to keep himself anonymous he used that
14:03he's really yeah exactly that he used
14:05his real name it's like it's like the
14:07most insane it's a third yeah it's like
14:11it's like deep throat was actually this
14:12guy named exactly that's right but but
14:16what was it I mean like that one thing
14:19my final conclusion on that one which
14:21was pretty interesting is I was thinking
14:22isn't there somebody at Newsweek who
14:24like you know could could say that there
14:27was you know something like an issue
14:28here somebody who knew technology and so
14:29on then realize no there's nobody who
14:32was a part of it's just their general
14:34dismissive view of technology always
14:37incidentally computer science or
14:38something like it's a general dismissive
14:40view of it and like we don't actually
14:41need to have people on staff who
14:42understand it and we can just publish
14:43random stuff right in the corroboration
14:45and and relates to this this also you
14:47know one thing I've seen increasingly is
14:50there's a very strong distinction
14:51between people who can evaluate code or
14:53mathematics by actually looking at the
14:55symbols and evaluating it for some
14:57people who can only evaluate things by
14:58personalities and social proof right and
15:00if you have the former you don't need a
15:02ladder and if you don't have the former
15:04you've rely on the ladder as a crutch
15:05and so that's why you know people it's
15:08almost like a dual thing not only were
15:10they relying on Newsweek they were just
15:11relying on Newsweek's you know
15:13interpretations of this person and who
15:14said it was important to say it was him
15:16whereas we were just looking at the code
15:17and we're like just absolutely no way
15:18that this guy so okay good thanks
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