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LETS TALK BITCOIN

Episode 128 Trivia on the Blockchain




Participants:

Adam B. Levine (AL) Host
Stephanie Murphy (SM) Co-host
Tim Swanson (TS) LTB correspondent
John Ratcliff (JR) Game software developer
Manu Sporney (MS) Founder & CEO of Digital Bazaar, Bali Bitcoin enthusiast
Gary Bali Bitcoin enthusiast



Today is 19
th
July 2014 and this is Episode 128.

This program is intended for informational and educational purposes only.
Cryptocurrency is a new field of study. Consult your local futurist, lawyer and investment
advisor before making any decisions whatsoever for yourself.


AL: Welcome to Lets Talk Bitcoin, a twice weekly show about the ideas, people and
projects building the digital economy and the future of money. My name is Adam B. Levine
and today, were pleased to bring you the conclusion of our 51% solution series.

Tim Swanson is back this time interviewing Gary and Manu. They talk proof-of-
human, the limitations of Bitcoin and cryptocurrency in the East

Also, this episode marks the beginning of our magic words listener rewards
program. Listen during this episode for the magic word, remember it, then head
over to www.letstalkbitcoin.com, select magic words from the LTBcoin rewards
menu and claim your prize

First, Stephanie sat down with John Ratcliff, engineer and game designer. Hes been
playing with trivia on the blockchain and has a much bigger project in the works
[1:11]


___________________________________________________


Stephanie Murphy interview with John Ratcliff


SM: Welcome to Lets Talk Bitcoin. This is Stephanie here with you and today Im joined by
John Ratcliff. Hi John. [1:19]

JR: Hey, how are you doing Stephanie? [1:21]

SM: Great. Welcome to Lets Talk Bitcoin. I wanted to talk to you today about a project
that youre working on. Games with cash prizes that can be run directly on the Bitcoin
blockchain, is that right? [1:32]

JR: Yeah. [1:33]

SM: Tell me a little bit more about that. [1:34]

JR: Im a thirty year veteran in the game industry. Its been my career and I fancy myself a
bit of a game designer, although Im mostly a coder. [1:43]

SM: What kind of games are we talking about here? [1:45]

JR: Ive done three games for Electronic Arts and I was the lead engineer on PlanetSide for
Sony Online Entertainment. Ive done a lot of games over the years and I think its kind of
interesting to see people from the game industry who are attracted to the topic of Bitcoin,
in particular Jez San whos now like a major Bitcoin investor. He was like my contemporary
back in the 80s. I mean, we went to game developer conference together and stuff and
Richard Garriott as well, who practically invented the whole idea of virtual currencies in
games. It makes sense and my own story is when a friend Billy (?? Zelzach) whos also from
the game industry and he told me about bitcoins back in 2012 when he was mining them. I
looked at it and I was like Well, these are just imaginary made up tokens like in a game
and I kind of blew it off. It didnt have any interest to me. Obviously, I should have looked
at it a little bit deeper and since then, Ive become pretty enthusiastic about the technology
but it still is the idea of playing games. Theres just something about Bitcoin that gets
people when the first time you pay someone and theyre on the other side of the world and
they get the money a split second later, theres just something thats really cool about that.
Most people have a reaction. My wifes in Europe right now and the hassle she has to go
through to change money and the fees, everybodys taking a cut. Shes going to be in Dublin
at a Bitcoin bar, in Dublin, next Wednesday and Im going to send bitcoins to buy drinks for
everybody in the bar while shes there. Thats going to be a fun thing for me in the fact that
I can do that is pretty remarkable. The idea of using Bitcoin for games just kind of came to
me naturally because it has value now and if somebody gives you World Warcraft gold
maybe you care, maybe you dont care but when somebody gives you Bitcoin, the world is
today, theres real value there. Thats like real money. People dont throw it on the ground.
Making games where solving the game or the puzzle to the game gives you a private key
that lets you take back the rewards is kind of cool. I mean, there are a lot of ways you could
design a game with cash payouts but there is for some reason I think... its kind of
interesting to design games where when you solve the puzzle, you get a private key and the
first person who finds the private key, gets the money. Thats kind of cool. *4:23+

SM: Yeah. You are describing it as basically like a scavenger hunt for private keys? Can you
tell me a little bit more about how the game would work? [4:31]

JR: Ive run a number of them. I posted them on Reddit and people played them and had a
blast. I couldnt believe... one guy played one of the scavenger hunts and he went 10 hours
without sleep to solve it and he said that was... [4:47]

SM: Wow! [4:49]

JR: ...the most fun Ive had in like forever. Basically, there are two ways that I know of off
the bat to do the game and the other thing I was doing, when I did it was I was trying to
educate people because paper wallets and cold storage and all this security, its over a lot of
peoples heads. Things like BIP38 encrypted wallets I mean, these are very technical terms
and part of the game was to educate people. How do you create a BIP38 wallet? How do
you decode it? That was kind of a part of the process. Everybody remembers the time
last... I think... geez... it was last Christmas when Matt Miller was on Bloomberg channel and
he handed out paper wallets with Bitcoins... [5:34]

SM: Oh yes... aha [5:35]

JR: ...and they stole it. People lost the money ten seconds later because anyone who has
the private... [5:41]

SM: Yeah, because they were displaying the private key right on the TV screen and so
someone could just scan that QR code and get it. [5:45]

JR: And they did. That showed very clearly the risk of paper wallets. People were told at
the time paper wallets were the most secure way but theyre actually really not that secure
because you lose the sheet of paper and boom, your moneys all gone. That was when
they... I dont know what the exact timing was but theyve created BIP38 wallets and thats a
QR code that you need a password to decode it. [6:09]

SM: Right. [6:10]

JR: One way to make a game... what I did is I created Jeopardy style questions. I created a
question where the answer would be in Jeopardy form like Who is Perry Mason? Or
something. [6:22]

SM: Who is Satoshi Nakamoto? (Laughter) [6:23]

JR: Exactly. That was exactly an answer to one of the questions, Im sure. What I did was
because the password for that has to be exactly correct meaning punctuation, letters. Part
of the puzzle was figuring out how I had formatted the answer in very precise capitalization,
punctuation; if it was a proper name etc. The rules were explained to people so you put out
a tribute question, you put out the QR code, you give out the clue and the first person who
answers it can grab the private key and take the funds. [6:59]

SM: You said you posted this on Reddit? Is that like where the game would be played? Or
would the questions be posted in other venues too? [7:05]

JR: Thats the fun part is you can decide how you want to set up your game, however
thats up to the game designer. The thing is, they dont need a piece of software but...
actually, those were the first games that I did and there was value in that. I actually
switched away from that and all the games that I do now use brainwallets. For the people
listening to this, brainwallets are both a wonderful idea and a terrible idea at the same time.
I dont know who invented them. The idea for a brainwallet people were thinking about
Bitcoin security. They thought it was very clever that your private key was something in
your brain, like you never wrote it down anywhere. What could be safer than that, right?
The problem is that Bitcoin private keys cant easily be memorized for a reason. They have a
lot of entropy, theyre extremely massively large numbers and as soon as you convert it into
something you can memorize, youve lost entropy. Its not as secure any more. The idea of
brainwallet was a nice idea but the reality it was an extremely insecure way... and the
people listening to this... do this as an experiment. Pick any word, name in the English
language... probably any language in the world, pick any word, any word at all and find out
what the brainwallet is. Send money to it and within ten minutes, it will be gone. There are
bots out on the internet which mine brainwallets because its easier for them to do that. Its
trivial; theyve got a giant database of every word in the world and they just try them all.
Every time Ive ever made one of these contests, the first answer to the contest is always
stolen immediately by a bot. Its really quite remarkable. Brainwallets are really a bad idea
to store secure funds. On the other hand, they are a phenomenal way to create games,
giveaways, prizes and advertising. Like I said, my first contests I did the BIP38 but then I
switched to the brainwallet and the brainwallet contests are a lot more fun. Lets go back to
the Jeopardy question. The answer is who is Perry Mason? You feed that into the
brainwallet, youre the first person to get it, boom, you get the prize. There, you just tell
people a clue and they guess it. [9:27]

SM: You would have to be able to not only guess the correct answer but also the first
person to move the funds into another wallet, right? If someone guessed the same correct
answer right after you, they could just yoink the brainwallet away from you, right? [9:39]

JR: Thats, in fact, what they do. Thats how you claim your prize. The games that I made
that Ive most enjoyed... and I think theres... are you familiar with geocaching? *9:50+

SM: Yes. [9:51]

JR: Its a very popular pastime and activity where people get clues that lead to a GPS
coordinate and when they get to that GPS coordinate, by hiking through the woods or
whatever, what they find there gives them a clue to the next location. I have a friend whos
a game designer who has designed some geocaching games. If you think of Bitcoin private
keys as, essentially, GPS coordinates, then you realize that any game that can be done as a
geocaching one, can be done in Bitcoin space, except instead of trying to get to a GPS
coordinate, youre trying to find the private key. You can create these games that are
chained together so thats what I started doing. I ask a trivia question and the answer to
that trivia question is a private key to funds. When you get there, this is... I say this could be
played entirely on the blockchain but thats not 100% true. Youre familiar with how on the
Blockchain.info website people can (??) [10:53]

SM: Yes. [10:54]

JR: ...when they send a transaction and they often do. The thing is, the non technical
person might naively think that that message is in the Bitcoin blockchain its actually not.
That message is a feature of the Blockchain.info website. [11:11]

SM: Ahhh. [11:12]

JR: If you went to some other website, you wouldnt see that message because when you
send a Bitcoin transaction, I think you can embed some metadata in it but its highly, highly
restrictive because it would cause the Bitcoin blockchain to bloat. Its important to note
that when you see those messages, theyre technically not on the blockchain. *11:31+

SM: Ahh... I did not know that. [11:33]

JR: Yeah. All of the games that Ive done, you actually play them on Blockchain.info. They
take advantage of that send feature. What Ill do is Ill post a trivia question and the answer
to that question leads to a private key. When you get there, there is a clue to the next
question which was sent as part of a custom message and that leads you to the next
question. The way I devised the brainwallet is that the brainwallet, for the second question,
is the answer to the first one, plus the second one. The third question is all three answers
combined. You get the point here the further you get along the chain, the more secure
the password is. When I send out the first one, some bot always snarfs that but the second
one, which is two answers chained together, is pretty secure. If you have seven answers in
a row, which... in what I do is when people get to the end, then they get like a very large
prize. I might put 1 mBit, 2 mBits, then 3 mBits and then have like 20 mBits. I actually spent
several hundred dollars sponsoring these contests just because I was having fun working out
the game design but when I told the story of the one guy who spent 10 hours, he did this
style of a scavenger hunt where he had to get all of them in a row, by sequence. When I did
this in the Reddit thread associated with it, people were interacting back and forth and
pinging off of each other. It was kind of a fun, interactive experience. The best way to do
one of these scavenger hunts is to promote it ahead of time so that people know its going
to start and they can all compete at the same time its like a race. You say Go!
Everybody gets to race to the end. [13:27]

SM: One of the questions I wanted to ask you, and you kind of answered it here, was where
does the prize money come from? Are people paying in to be part of this or is it just
completely self-funded by you, where youre giving away money? *13:37+

JR: To date, its been self-funded but before the interview is over, Ill explain the next game
I want to do and Im actually going to maybe solicit somebody who... this is, as I said... this is
an open thing like, say you wanted to promote your business... anything basically, this is a
great way to do promotion. Ive got a game that Ive been working on that... all the ones
Ive done up until now had like seven prizes because there were seven questions. It wasnt
like ridiculously expensive to set it up. [14:14]

SM: I can imagine someone sponsoring a contest like this to promote their product or their
thing. I see where that could come from. [14:21]

JR: The one that I want to do next is going to have 100-200 prizes and its going to take a
few hundred dollars to fund that. If anybody wants to contact me after this interview whos
got a product to promote and would like to donate some for the prizes, that would be great.
We could announce it on the Lets Talk Bitcoin website so people know ahead of time how
its going to work. By now you get the idea about how the game is played. You answer a
trivia question and it leads you to a private key. You take the money. Whats involved if you
want to set one of these contests up yourself? Its surprisingly a bit more involved than you
might think. The first contest that I set up, I did by hand. I just manually did that and for a
couple of questions, thats not that big of a deal. When I started getting more and more
questions and longer chains, it got more complex. I like to tell this story because, to me, it
was a big event for me. I was very happy about this is; I wanted a script. Blockchain.info
has an API where people who know how to do fancy scripting can script lots of queries and
things against Bitcoin. I knew that was possible. Even though Im a programmer, Im not a
Python scripter. Its not really my thing. I went on to Jobs4Bitcoin and I posted a job
opening for somebody to write a script for me. I offered to pay $200 because I thought the
script would take a few hours to write. It turns out that the script was really easy to write
but I immediately got people who offered to write the script for me and it was one
gentleman who showed me right away that he knew what I needed. He worked with me to
get the script written and I paid him for his work and the script works great. What I thought
was cool about the whole thing is, during the entire thing, I didnt know the guys name, I
didnt know anything about him. I found someone, he did work for me, I was satisfied with
the work and I paid him and I dont even know who he is. I just thought that was pretty
cool. Only with Bitcoin could you do that. The script was important because the game Im
working on next, instead of it having seven questions and answers, is going to have
hundreds and you couldnt set up all of these wallets, all of these addresses and fund them
by hand. It would take forever and if you made one little typo or mistake, you would break
the game. In fact, one time I launched a trivia contest on a Reddit thread and after posting
it, realized I had a typo and had to add an extra comma somewhere, when I was doing these
by hand so the entire contest was ruined because you would have had to go down the
contest with the typo. I realized I can just refund the contest with the correct version and
then I claimed the ones with the typo to get the money back out again. You could see the
importance of having a script to do this. What the script is doing is its going to take the
answer to the puzzle, produce the private key, public key, send funds to it and send the
custom message that has the clues. Thats what the wonderful script does. There was an
interesting thing thats not, at first, obvious. When you go and you run this script, youre
going to have some money in your Blockchain.info wallet to fund the prizes, right? [18:00]

SM: Yeah. [18:00]

JR: You go and you run the script wheres the money coming from? Is it all going to come
from the same wallet? I mean, you would think that right? OK, well if the contest has seven
clues in it, you dont want the person playing the contest to be able to find all the other
clues but because everything on the Bitcoin blockchain is public, as soon as they answer one
question, they can go back in the blockchain and find all the other questions. [18:28]

SM: Mmhmm. The questions wouldnt be revealed unless someone solves the first
question? [18:34]

JR: The first questions always easy. The point is that by solving the first question, they can
go back and find out where the money came from to fund that and then find all the other
questions by following the transactions from that address. [18:49]

SM: Ahh, yeah. Thats cool. Thats cool. *18:52+

JR: Well, thats a problem so when I do these contests, I have to run the prize money
through a mixer so everybody who thinks the only use for a mixer is to launder drug money
or something, its also used to fund contests. (Laughter) I went to www.BitMix.io and I set
up all the public keys that are going to fund the contest and then send one transaction, it
goes through the mixer and its kind of silly that you have to do that but really, if you dont,
it kind of ruins your game. [19:22]

SM: Right. Thats an interesting use for mixers. I really like that. The reason I said that was
cool that you could potentially trace the other questions by solving one question was that
maybe there would be some circumstances where you would want that, right? Like you
would only want someone to be able to find the other clues if they had first solved like an
entry level clue or something, right? [19:46]

JR: Right. [19:46]

SM: Youre saying it doesnt work like that with your game? *19:49+

JR: My game is... thats kind of the idea that if you just take the general concept of going to
create clues and the answers to those clues lead to prizes, one can design a lot of different
games. Youre not limited to just one. Ive tried a couple and theres a bunch more that you
could do which kind of leads me to... after I did these scavenger hunt games, one of the
problems was people really had fun playing them and they also really complained that it
wasnt fair that because... they didnt have notification enough ahead of time that the
contest was going to be launched and by the time they read the Reddit thread, it was
already over. The question I was asking myself, how could I have replayability... how could I
have a game that doesnt get... I was shocked. I made these trivia contests very hard and,
after a certain point, trivia is not personally my... one of the things thats a major challenge
for this is that when you make a trivia contest which, by design, is meant to be played on
the internet, that means that the person playing the game has full access to Google. Try
making a trivia contest that no Google search gives you the answer to. That is very hard to
do. [21:11]

SM: Mmmhmm. Yes. [21:13]

JR: You have to come up with questions which have never been answered, asked in that
forum ever before because everything in history, every trivial pursuit question ever asked,
every trivia question known to mankind is somewhere on the internet. There is a young
lady on Reddit who... another job that I posted on Reddit is I was asking people to come up
with trivia questions for me. This one person on there who goes by the handle of Sophie;
she has a trivia website and she just is passionate about trivia. She started designing
questions and answers for me and I ran the contest. I paid her a little Bitcoin for thank her
for that and she provided several of them and she made some that she thought were
incredibly hard and people were still able to Google the answers. She made a new set of
questions and well launch that. Ill just start that one so that people can play it and she
tried to design them so that nobody could Google them. She claims theyre very, very hard.
Theyre movie trivia questions. The new idea I had for a way to make a game that has a lot
more playability is... this is the one Im hoping I can maybe get a sponsor to help sponsor it
is what Im calling the Vaguely Ambiguous Trivia Game. The idea being you ask a trivia
question and most peoples expectation is that when you ask a trivia question, there is one
and only one answer but what if theres actually three answers and theyre all equally valid
and correct? [22:49]

SM: Mmmm. Yeah. [22:51]

JR: The better analogy is youre a young person but Im sure youve heard of text-based
adventure games? [22:58]

SM: Yeah, choose your own adventure, kind of thing? [23:01]

JR: Right. The classic text-based adventure is they present you with a choice and you
decide What do I want to do? Do I want to go north? Do I want to enter the dungeon?
Do I want to go here? Each one takes you to a next step, so essentially what youre doing is
youre navigating a maze. You can do the same thing with a series of trivia questions where
you answer the trivia question and if you answer it one way, it takes you down one path and
if you answer it another way, it takes you down another path. Eventually, you hit a dead
end and it says sorry, start over. You have to choose how to back up and replay with a
different set of answers. By doing a game like that, instead of just having a trivia game that
has seven answers and thats it, you could have one that has hundreds and hundreds of
prizes. It has enormous amounts of replayability because even if somebody won the grand
prize, theres still fun in trying to go down the paths nobody else ever went down and find
the little bits of treasure that nobody captured before. Ive got the script written, Ive
gathered the questions and thats kind of the next big game I want to launch. Like I said, I
was looking for a sponsor because Id probably need to fund it with a few hundred dollars
because you want to have at least 1 mBit as a prize for every single... youve got to have at
least 1 mBit and thats $0.62 as of today. For people who get to the end, you want to have a
very significant grand prize as the motivation. I like to weight it so the further you get down
in the maze, the higher the reward is. [24:47]

SM: Yeah. [24:48]

JR: Thats just an idea. I have a lot of game designer friends. Thats just one way to
structure a game. I think its somewhat open-ended. Theres a part of me which is like this
is kind of silly because people make games all the time, whats special about playing a game
on the blockchain? All Ive done is make something way more complicated than it needs to
be. I get that argument but on the other hand there is something thats kind of cool about
this too. I dont know, maybe other people will think its fun. *25:19+

SM: Right. It reminds me of... there are some companies like, I think, Google has done this
in the past or theres also this website called Mathgate.info where you are getting bitcoins
by solving mathematical theorems or Google will place these puzzles around and theyll only
have meaning to people who know certain types of math or programming. Theyll follow
these clues and theyll lead to something that can get them a job. Do you ever see this
being used for hiring or for testing someones metal? I mean, I know it would be pretty
much anonymous if someone were to get the grand prize they would have to come
forward if they wanted the job, if they wanted to claim the job as their prize but do you see
this potentially as something for hiring or testing peoples math skills? *26:08+

JR: I think that you can structure a lot of reward systems based on how Bitcoin is
structured. Ive heard some horror stories of things where people set up systems where
there are, basically, anonymous payouts for not good activities. Im not going to get into the
details but... [26:33]

SM: Sure. [26:33]

JR: ...some really negative stuff. I like pushing the game angle because games are fun and
promoting your site is fun. Additionally, the next step is rewards for solving difficult
problems. There was recently a post about somebody setting up a decentralized Wikileaks
type thing where there are payouts for leaking information and verifying it. You can have
mixed opinions about whether thats a good thing or a bad thing. I think its just showing
the tip of the iceberg of the way you can structure systems whereby payouts are made,
based on criteria being met where... [27:14]

SM: In a trustless way. [27:14]

JR: Right. The arbitration is based on an algorithm as opposed to someone meeting you
and handing you a big check. [27:20]

SM: Yeah, its cutting out the panel of judges, so to speak. Speaking of other uses for
games, have you had any criticism like, this guy on Reddit whos stayed up all night and
didnt sleep... sometimes people criticize games for being addictive or being too fun or
people spend all their time on them? Perhaps some people may have objections to, what
they see as, gambling or there is always this puritanical kind of objection to games because
somebody somewhere might be having fun, right? Thats Puritanism the fear that
somebody somewhere might be having a good time. Have you had any criticisms? Have
you had any legal trouble doing this so far? [28:01]

JR: No because... one could make a game like this that was gambling where people paid a
fee to play the game and then they would share in the rewards; thats just gambling, right?
You go to a Texas Holdem tournament and its the same sort of thing. I intentionally
donated money of my own accord and gave it away for free so that generates a lot of good
karma and nobody can really complain. These are just some silly little things on Reddit. My
actual regular job, what I do for a living goes far more to that point. I worked on massively
multiplayer online games that consume peoples lives so my regular job deals with that
enough. My little Reddit games were not really that much of an issue but it does raise a
question which is relatively recently (and you can have your own opinions on this), but
relatively recently, more and more adult websites are accepting Bitcoin. Its been actually
kind of a lot happening right in the last month or so and you can have your own opinion
about that but the thing is its not surprising that adult websites are accepting Bitcoin,
whats surprising is that it took them so long. People do not want to give out their credit
card number to go to an adult website, OK? I get why theyre switching now. In a similar
manner, I dont understand why the computer game industry has not started moving to
Bitcoin immediately. When you use existing payment systems for games, multiplayer
games, online games etc. People pay for those games and thats how we make a living. I
mean, thats what we do. People are taking huge cuts out of those and I am shocked that
more and more games... I dont know of hardly any games which accept Bitcoin as payment
for the game but more interesting, and is kind of the point of this interview, is how come
more games have not incorporated Bitcoin into the game itself? Why do you need World
Warcraft gold when you can have Bitcoin, which has real world value? We have had that
experience with Second Life where Linden gold began to get real world value, right? They
started out with a pretend game currency and then it got some real world value. You could
go the opposite way and you start with a digital currency like Bitcoin. You know whats
actually really appropriate is Dogecoin because Dogecoin was always meant to be this light
hearted fun thing where there are billions of them. They make the perfect game tokens
which have real world value. Im amazed that the game industry are not incorporating
cryptocurrencies into their games directly. The only reason... I dont know... there is no
technical problem... the only reason I can see that theyre not doing it is there may be legal
issues that, once they begin accepting digital currency, FINCEN is going to come down on
them and who knows. Its probably a real concern in the current climate. Its a shame
because it points out some of the weirdness of the whole situation were in because Bitcoin
really is, for practical purposes, no different than World Warcraft gold. Weve just all agreed
that it has value and we, as a community, have agreed to give it value and thats our choice.
To watch law enforcement and the government come in and try to regulate, what for
practical purposes is just, game tokens is a really surreal experience to watch happen.
[31:44]

SM: John, thank you for sharing your passion for games with our audience and how can
people get in touch with you online? [31:50]

JR: I have a programming website called The Code Suppository which is where I insert all
of my source code on the internet. [31:57]

SM: (Laughter) That is clever; I like that. [31:59]

JR: Yeah, I still have people email me and tell me that they dont think I know what that
word means. I know exactly what it means. Thats my personal computer and I do a lot of
open source Bitcoin development. Ive written some Bitcoin source code. Ive done a bunch
of documentation. Ive posts on there from previous games. Ive posts on there about how
to make games like these of your own and how to set them up. I have extremely detailed
documentation about the Bitcoin blockchain. If you want to parse the Bitcoin blockchain
yourself, write your own computer code, Ive also released open source code to analyse the
Bitcoin blockchain. Ive done all this just out of sort of home hobbyist thing and none of this
is my business. I dont make any money off of it. I have no interest in making money off of
it. I always leave a tip jar and not because I need money but because theres a beautiful
acknowledgement that when someone sends you a tip, I dont care send me a penny but it
shows that they appreciate that. Ive been a member of the open source community for
ever and Ive benefitted from open source code my entire life and I feel a debt and I pay
that debt by giving open source code out myself. Now, with Bitcoin, when we release open
source Dude, put a tip jar in there. If I download a piece of open source code and it saves
me hours of my time because you did this for me, I guarantee youre getting a Bitcoin tip
from me. [33:30]

SM: Yeah. [33:31]

JR: Thats something Im super-excited about is how cryptocurrencies can provide some life
blood to the open source community which has been largely a thankless task for all these
years. People do all this work and they dont even get an atta boy. *33:46+

SM: Yeah, thats true. *33:49+

JR: Im pretty passionate on that topic so thats whats on my coding website and Im on
Reddit at JRatcliff63367. Also, when this goes live and when we put the post up, lets launch
a small scavenger hunt so that the people can play one of the games. [34:05]

SM: Very cool John. Thank you so much. [34:07]

JR: No problem. [34:09]


___________________________________________


ADVERT:

Todays episode, in addition to our LTBcoin sponsors, is brought to you by KryptoKit.
KryptoKit is a web wallet that installs right into your Chrome browser so its always there
when you need it. It also has a Google newsreader in it. Here are the headlines for 19
th
July
2014 New York unveils BitLicence rules, Dell begins accepting Bitcoin, Digital money will
flow as Bitcoin conference meets in Chicago, Blockchain.info releases new Android wallet
app, Bitcoin price: Will lightning strike twice? You too could have this news right in your
browser about Bitcoin. Check it out at www.KryptoKit.com. [34:46]




ADVERT:

The high sponsorship number on Episode 128 is 31,000 LTBcoin for BitShares.org, courtesy
of LTB community member, Strip. CEO Dan Larimer is actually the bulk of Episode 129, the
one coming directly after this. He, Stephanie, Andreas and I recently spoke about their
rather innovative technologies that are nearly ready for release. Rather than use the
technology and code pioneered by Bitcoin, they reinvented the wheel. People talk about
that like its a bad thing and Ive certainly complained about it in the past and surely, if all
you wanted was a vehicle then maybe any wheel is good enough because it gets you to your
goal faster but thats not always the point. BitShares is a new codebase, a new wheel.
Theyre claiming 10 second confirmation times, built in stealth addresses where you only
have to send to a user name and still have complete privacy and stability at 10 transactions
per second, which is broadly speaking, better than Bitcoin. Will BitShares succeed? I dont
know but if youre interested, you can check it out at BitShares.org or BitSharesTalk.org for
their community forums. [35:46]

Todays magic word is puzzle PUZZLE, puzzle. Youve got until Tuesday 22
nd
July to visit
Letstalkbitcoin.com, log into your account and submit your magic word to claim your share
of the community LTBcoin. [36:03]


Todays second sponsor was a fun story. Myriadcoin is the first multi proof-of-work
cryptocurrency in which five algorithms compete to solve blocks on the same blockchain.
While Bitcoin only uses one, Myriadcoin uses five algorithms, SHA256, Scrypt, Skein, Qubit,
Myriad, Groestl. There is a lot here if you want to dig into it but the too long didnt read
version is, if centralization of power is a problem, Myriadcoin provides a whole lot of
solutions. The say this results in much more decentralized mining, greater network security,
the framework for competitive ASICs and the return of accessible mining for the
underbanked. This sponsor was a fun one to watch. Brian Cohen over at Bitofthis.com
sponsor brokering services worked with their R/Myriadcoin community on Reddit and, as
with many coins, the community appears to be a feature. They were gracious enough to
prepare many, many notes for me and Im thinking maybe you guys should start a podcast
to keep us informed about whats going on.


Thats it if you want to hear an update about LTBcoin, listen after the credits. Now
pleased to share with you Tim Swansons interview with Manu and then, at the end, Gary
jumps in too. Enjoy the show! [37:10]


___________________________________________



Tim Swanson interview with Manu Sporney


MS: Im thirty years old and Im a former IT consultant. I was consulting and specializing in
Oracle database technologies in my early twenties. About five years ago, I switched to
Indonesia and have been living out in the jungles of Borneo for the last five years and its
something of a self-imposed isolation I suppose and Ive just recently moved back to
civilization, I suppose you could say and now Im living in Ubud, Bali. There are a lot of
exciting things going on here in terms of the emerging crypto economy. There is a lot of
adoption here, ATMs are just about to arrive, Im running an educational course, teaching
people how to use wallets and Garys been doing a lot of work setting up the Bitcoin Ubud
group and getting merchants on the technology, the first exchange here just launched... an
online exchange which seems to be backed by the Central Bank of Indonesia. Theyre giving
it support and its generally having the environment here, at the moment legally, seems to
be pretty good for owning and using bitcoins. Were also working on a podcast at the
moment called Eastern Bitcoin to follow all the trends going on down this part of the world
and also bringing in a bit of Asian culture and Asian philosophy, in terms of economics. The
other project Im working on at the moment is this future platform which has implications
for what the topic of discussion is today which is the current limitations of the Bitcoin model
and Bitcoin mining. I started with Bitcoin early last year, about April I suppose. I did a bit of
mining and got into that. I did quite well with that and I was probably the only Bitcoin miner
on the island of Borneo. I know a few people that are actually in mining out there and used
to joke with them that we were in the same business. Ive been observing the evolution of
the mining paradigm, if you like and the ever more centralized nature of it and the harder
its become. If you participate, Im sure this is repeated information. Id like to elaborate on
what I believe to be the primary flaws in the current model, if you like. As we all know, its
becoming ever more centralized, its something of an environmental disaster in the making
if it was to become and to support worldwide the majority of transactions. It would
consume too much energy and too much storage space but there is also the problem of the
distribution. Rather than a mining algorithm, I would call it a wealth distribution model or a
token distribution model. The majority of the funds have been released, whereas I
personally have no problem with early adopters having rewards for their risk taking and
their innovation and their efforts. This is often serving as a barrier for people to enter; enter
the Bitcoin or crypto-economy. [40:13]

TS: The listener might be interested in the way bitcoins were distributed its with (??) so
basically right now, 62% of all tokens that have ever been mined have been already
distributed. The next 38% will be headed out for the next 100 years. Of that 62%, the
majority were the first four years in a front loading process. Its important for some people,
as you mentioned, especially in developing countries... how do you get hold of bitcoins as
its becoming late and so on? *40:43+

MS: Exactly, exactly. How do you get these things? The demand is here. People are
wanting bitcoins, left, right and center here. How do we get these things and how do we
store them? Its easy enough to run a course on This is how cryptography works and this
is how a wallet works and this is how you can safely set up your processes so you dont need
a bank any more. Then comes the question How do I get the damn things? Yeah, a big
barrier there. Its a long way away from what it originally was, that anyone with a computer
could join this distributed network and start participating and supporting and start getting
coins through that way. Thats how I got my initial coins. Its just not accessible to the
general public anymore. There was a company released on the Australian stock market the
other day with, I think, $10m worth of mining hardware. This is what its become. Its so... I
believe to be different from the original paradigm of distribution. Proof-of-work was the
original model and then proof-of-stake is very interesting. Proof-of-work is... they both
seem to be deflationary in their nature and I personally dont like deflationary models. I
think they create hoarding of wealth and a barrier to entry for new participants. [42:03]

TS: So the listeners understand... what hes actually talking about is... initially actually,
Bitcoin is highly inflationary. For example, this year 11.1% of the money supply is being
distributed but long term, its deflationary. As a whole though, its in elastic and thats what
hes referring to, right? Thats what youre saying. Youre saying it cant be moved based on
(??) demand, correct? [42:23]

MS: Yes, I mean Im referring it to as deflationary in terms of other... valuation against
other old world fiat currencies, rather than in the nature of its supply. Its concept of
Greshams Law, the bad money driving out the good people get their bitcoins and they
want to hold onto them. They dont want to spend them and they dont want to use them
because they believe the value once they understand the fundamentals of how fiat currency
or central currency is issued. They dont want to spend their bitcoin and it becomes more
an asset thats hoarded and not spent which is another barrier for its adoption in society, I
believe. I dont know if, technically, that fits the textbook definition of deflation in
economics but does it make sense what Im saying? *43:12+

TS: Sure. I make similar arguments and Im not popular for it. Id love to hear your solution
though. [43:18]

MS: Proof-of-stake was interesting. Its even more deflationary, I believe, because you
have to put your funds into the network just to have your vote in it and an incentive not to
spend them, incentive to hoard them. Proof-of-resource came along with MaidSafe thats
really inspiring to me and very, very cool and another evolution on distribution algorithm or
model. This is going back to more of a model of anyone can participate. I can go in and I
can create... I can put my bandwidth up for sharing and my computer up for sharing and
everyone has access to that and everyone can do that. This can facilitate a much easier
adoption of tokens in society. The model Ive been working on is slightly different again. I
call it proof-of-human. Basically, proof-of-human is tying in the wealth generation model
into a tied equality across the network of each human node. This would provide a
foundation for anyone to get onboard at any time and start actually having their energy, as
a human being, which is probably the great equalizer throughout all of mankind, in that we
all have our own energy, we all have our own capacity to work and contribute to society.
We all have time. The coin itself would be tied to the very nature of time. Not based on the
decimal system of coins and micro-coins but based on days, hours and minutes. This forms
a part of a greater platform that were working on. This is probably one third of that model.
I cant talk too much about the other elements, but I can definitely go into more detail
about the proof-of-human concept. [45:09]

TS: Two questions I have for you are how do you actually get Bitcoin miners to implement
something like that. If you see this issue with centralization, is there a way for you in your
mind that code can be implemented and it will be accepted by the miners or is that a no-go?
How do you go about fixing this situation? [45:28]

MS: I dont think it really would work with miners. The whole nature of mining, making
something mine, its quite different from gifting, if you like. Im a big fan of all the
different... Im an active student of all the different altcoins that are constantly in
development. I think, personally, that you wouldnt have a transition from Bitcoin into
these new... the miners themselves with their hardware that cant do anything else but,
especially with ASICs, that cant do anything else but mine Bitcoin. If Bitcoin mining stops,
their ASIC hardware is not useful for anything else except perhaps a boat anchor. The
Bitcoin miners will never want to move away from their mining model because they have
bound themselves too tightly to doing just that. Back in the days, CPU miners or GPU
miners or... what are they? FBGAs or whatever theyre called. Those mining hardware
technologies were still versatile and could be used for other things. Now, you cant mine
with any of those things any more. Theyre not energy efficient and you can only really
mine with ASICs and if mining doesnt exist in its current form of RSA256 or whatever, then
all that mining hardware becomes redundant. [46:49]

TS: SHA256? [46:49]

MS: Yeah, exactly. Theyre never going to move away from that. They have too much
invested equity in their mining hardware. I see Bitcoin as a gateway crypto. Its like a
gateway (?? drug) in that people can start to understand the concepts of trustless
transactions, a crypto economy, how to take back your wealth from a trusted third party
and become your own bank so youre not susceptible to mismanagement in that third party
in trust. Its good for all those sort of things and its an amazing brand. Its still the majority
of the world, especially out here, very few people have heard of even Bitcoin, so theyre a
long way from getting onto an altcoin. [47:32]

TS: How does proof-of-human... how are you availing yourself of the centralization issue?
[47:38]

MS: Its very tricky. Its a very difficult problem and I think it would be the epitome of a
truly distributed system if every node was tied to a quality based on very nature as human
beings. There is no opportunity for plutocratic subversion of the system, for example. If I
have more money than you and I can buy more hardware than you, then I can control the
playing field. You couldnt do it with a captcha and this comes back down to the Turing
tests. [48:07]

TS: Sure. Couldnt you automate something like that with mechanical (??) [48:11]

MS: Yeah, you could, you could but thats like putting speed humps in a road. Youre just
ruining the road. Youre making it slower just because someone doesnt know how to drive
properly. Youre slowing down people; youre getting them to do arbitrary tasks, which is a
poor solution in my mind. Its just like the arbitrary nature of mining bitcoins is the arbitrary
calculations are a waste of energy. Ive been exploring this how do we verify on a
technology base whos human and whos not. A captcha is OK for a one off authentication
and bots are becoming progressively more advanced in image recognition and image
processing and thats a constant arms race going on there as well. Really, the only way that
human beings can verify one another, I believe, is through actually verifying one another
and that is called a social network. [49:01]

TS: People can gain social networks too, like you see fake peoples faces have been liked in
and stuff like that... [49:06]

MS: Oh absolutely. [49:06]

TS: ...so how do you prevent Sybil attacks or how do you prevent people from just
spamming the network with fake identities? [49:12]

MS: Ive been playing with a variety of models and I wont pretend to have solved that
problem. Thats the main problem Im currently working on with a mathematician. Do you
remember the regional rollout of Gmail? In that it was... [49:25]

TS: Yes, invite only, right? [49:26]

MS: Exactly. Invitation based. Those invitations propagate through the world. If you really
believed in this system and theres a very, very basic social contract involved in the system
as well which would basically be human, you know... (laughter) Dont create bots, thats it!
Thats the only rule. [49:43]

TS: How do you enforce that? [49:45]

MS: I wouldnt want to enforce it through some... as soon as you create a centralized
authority to enforce anything, then youre broken already. *49:53+

TS: Im sorry. How do you disincentivize not being human and incentivize being human?
[50:00]

MS: Exactly, by providing incentives so that if you... this is the current idea Im working on
and I would love more feedback from the listeners, or other people that would like to
participate in this debate. You provide limited invitations and then you propagate those
through social groups that initially, that would definitely prefer to... rather than create a
second fake account, they would rather share this technology just like Gmail, back in the
day. You get Gmail are you going to create a second Gmail account with your one
precious invite that all your friends are saying Hey, can I have an invite too? Are you going
to give that to yourself or are you going to give that to your best mate and he gives it on to
his best mate? Its more advantageous to give it to a real human being than to regift it to
yourself. The other thing this would be combined with would be every time a new node is
formed on the network, this would be like a hard node; this would be your original
connection back to the system itself. If I provide an incentive to the initiator of the invite so
that if they invite someone that starts making bots and there is some sort of penalty is that
flows back to the source node of the invitation. [51:18]

TS: This sounds a little like Mike Hearn is trying to do with proof-of-passport kind of idea.
My question to you then is figuring out some way to do the actual nodes - Who the nodes
are? What do these nodes do? What is being transacted? What is the actual
cryptocurrency that youre pushing? What exactly is the function of proof-of-human?
[51:37]

MS: (?? Leverage) off a lot of the open source codebase from proof-of-resource. The most
basic function of the network is to propagate transactions across the network. For example,
your data that you dont want to lose, that you want backup, that propagates in an
encrypted form to the trusted nodes that you choose and that could also be bound with
some payment coming back from those nodes for the provision of that service to store your
encrypted data. There is also this current problem of the privacy paradox. Sometimes we
want trust, sometimes we dont want trust how do you resolve that? Through investing
your trust in your trusted peers, your family and close friends and empowering them to
have the ability to arbitrate on things that happen with you, you could do things like, for
example, if you were identity theft or you somehow lost your master key for your identity,
you could have it so that your closest peers through consensus decision making could
rerelease a new master key for your identity as a way of... again, this proof-of-human
verification of who you are by your immediate peers of your choosing. [53:01]

TS: I see what youre saying in terms of... youre trying to start off from a node based,
identity based management, verification based management how does that tie into
though the actual, what you were talking about, your frustration with the money supply?
Where is the money supply in this? What are these tokens? Is this pre-mined? Is this
mined? Is it just handed out because you want to (??) people? Whats the actual process?
[53:26]

MS: There is no mining, as such. The concept is... and this is kind tied back into the gift
economy, that the funds would be generated through participation in the network, through
provisioning of resources. [53:41]

TS: I just dont understand where is the money coming from? Does it fluctuate? Does it
change based on different transactions per day? Like Fluttercoin, they had proof-of-
transaction... how does... [53:51]

MS: Its tied to time. Its like representative of human energy, if you like. Everyone
receives a single coin a day that can be broken down into smaller coins and this is just
through participation in the network, through being proven as a human being on the
network. Thats all. *54:11+

TS: Lets say you and I have these digital wallets of some kind and we have somehow
proved each others identities with this invite mechanism and its cryptographic... lets just
hand wave the whole thing, OK. I want to know where do these tokens come from? How
do I get them and how can I spend them and whats the timing? Is it like a ten minute
confirmation, a one second etc? [54:32]

MS: That level of detail in the actual technology, like confirmation times and things like
that, I havent invested time in actually modelling... for me, thats later down the track.
Thats when we bring in more programmers and start playing with the codebase and things
like that. As far as spending goes, just like any other altcoin, once its linked to other
exchanges and starts to have a value based on other tokens and other currencies, then you
can start to spend it. Its just like exactly the same as Bitcoin. Once someone has faith in a
token and will accept it for their product services, then its value increases and you can use it
more easily. If youre still needing to interact with people that havent adapted or dont
believe yet or dont accept that token, then you need to exchange that token for a token
that they do accept, like a bitcoin or an old world fiat currency. [55:27]

TS: Old world fiat currency you do... (laughter)... listeners do know that you have digital
fiat currencies, right? [55:34]

MS: Right. [55:35]

TS: This is very interesting and Id love to hear more about what you plan to do with actual
money supply to make it elastic so that way it could fluctuate based on actual demand.
[55:46]

MS: Actual currency itself into a kind of form of demurrage. It can sort of find a middle
ground between deflationary and an inflationary model. Im playing around with tying the
coins themselves into either radioactive half lives or some other form of energy degrade.
This is kind of trying to mirror the nature of energy itself as a human being. If we have our
energy and we have our effort and if we sit on the couch for a week, we can save that up
and have a bit more energy but if we dont do anything with our energy, its gone. *56:31+

TS: You want to have a halving day? You want to block reward halving? Like the circulation
of this currency or whatever you want to call it, lessens based on the fact that youre not
using it? Is that what youre saying? *56:43+

MS: No. All currency thats created is all degrading at the same rate. They could do like a
half life of seven years for the coins as theyre generated so that after fifty years, a coin is
totally dissipated. While rewarding early adopters that come on board and start generating
coins first, it also provides some sort of plutocratic resistance, I guess you could say, that
even if people come in and buy up all the coins, after a while that current wealth will
dissipate so theres a protection against... you know like right now, if you want to get a lot of
Bitcoin, you can do with a super computer or you can just buy them all. [57:24]

TS: Have you looked into Freicoin because thats what Mark Friedenbach has been working
on the last couple of years. [57:29]

MS: Freicoin, yes. I will look into it. I havent heard of it. Thank you. Freicoin. Whats the
name of the guy? [57:35]

TS: Mark Friedenbach, hes a Bitcoin core dev. His handle is maaku and its Freicoin. He
takes the idea of Bitcoin... [57:45]

MS: Ahhh! Freicoin, yeah, yeah, yeah. My friend is in touch with the developers there. He
was offering to put me in touch with them. Thats cool. Thats cool, thats great. He was
saying Id like that as well. Awesome! [57:56]

TS: Interesting. You have a colleague here. [57:59]

MS: Gary started the Bitcoin group in Ubud and has been starting the process here and
were working on a podcast together. We know you put out an appeal for new podcasts
called Eastern Bitcoins. Garys a big fan of Lets Talk Bitcoin as well, so Ive invited him to
come along and listen in on the chat. Do you want to say a few words about yourself Gary?
Ill go on mute. *58:21+

Gary: Sure. Ive been here in Bali since February basically trying to build a Bitcoin
community here. Lots and lots of interesting people roll through Bali. Listening to the
appeals for podcast material from Adam from time on the podcast, we thought that there
was a segment missing the Eastern perspective. There is lots going on in this part of the
world, lots of interesting people doing interesting things and it might possibly deserve some
focus, at some point in time. Anyway, its a concept at this point a podcast about the
things that are happening in Bitcoin in this part of the world and also the personalities and
projects that are here. [59:00]

TS: Cool. It was nice to meet you. [59:01]

Gary: Yeah, yeah. Nice to meet you too. Im a big fan of the show. *59:04+

TS: Is there anything else that you wanted to mention at all? [59:06]

MS: Id like to put out an appeal to anyone that is interested in this to contact me. I can be
reached on i.manual@gmail.com. Id love to work with any economist that finds it
interesting, mathematician or distributed programmer. Things are still at the White paper
stage so whatever solution that does or doesnt materialize from the work that were doing
right now, its not going to be a solution for mining problems next week or next month.
[59:39]


_________________________________________


CREDITS:


Thanks for listening to Episode 128 of Lets Talk Bitcoin.

Content for todays show was provided by Adam B. Levine, Tim Swanson, Stephanie
Murphy, Gary and Manu

This episode was edited by Adam Levine and Denise Levine

Music for todays show was provided by Jared Rubens and Gurty Beats

The five forum post promotions still has one more weekly distribution totalling nearly 2
million LTBC remaining, so sign up today.

At letstalkbitcoin.com were cranking out content like crazy. The writer interface is available
to anyone with an account and we were immediately flooded with more content than our
system could properly deal with. Andrew, from the upcoming Crypto for Change blog, has
taken over as managing editor and were designing the new editorial system now. Head
over to the forums to check it out, join the conversation or get involved. Were in full
development mode. Things are changing quickly on the site. Giving a post or a comment a
like now rewards that participant with a small amount of proof-of-participation points. Each
week, all the proof-of-participation points are added up and then the total amount of
LTBcoin that are awarded to the audience are divided based on each community members
participation in this number of points. That means that by giving someone a like is sort of
like nudging the game a little bit in their favor, to the detriment of the whole community.
Each individual can like any post a single time and every time you do that, that person has
their participation score improved a little bit its half a point, which increases their share
and reduces it for everybody else. Im taking the time to explain this to you in detail
because Id like you to recognize that its a nice thing to do for a person but it also comes at
a cost to the community. So have fun!

Thats about it. We have some development roles where you can help us build the platform
out faster and secure your stake of LTBcoin while were still new and poorly understood.
Other than that, Ill see you guys on Tuesday. Thanks for listening. *1:01:28+

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