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Episode #14: What’s So Great About the Blockchain?
We try (and fail) to wrap our heads about the blockchain itself and how it could be revolutionary in realms outside currency
COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode or read the transcript below. (You can also subscribe on Apple Podcasts, download the MP3, or email us at firstname.lastname@example.org)
Not sure if we answered these questions, but we did ask them in this episode:
- Can you believe in the blockchain but not Bitcoin?
- What do companies like IBM want with blockchain technology?
- Has anyone actually done anything worthwhile with the blockchain other than issuing coins?
Transcript (41 minutes)
Jay Kang: Hey. You’re still out in Berkeley, huh?
Aaron Lammer: I’m flying out tomorrow. Still in Berkeley. Still lovely here. Still looking at a very nice sunset.
Jay Kang: It’s been about a week since we talked, maybe not actually … It’s been about four days-
Aaron Lammer: No, not even a week
Jay Kang: … since we talked last. How many crypto related or blockchain related t-shirts have you seen walking around the Bay area?
Aaron Lammer: At least a dozen.
Jay Kang: Really?
Aaron Lammer: Actually, I was in the Japantown mall in San Francisco, the Japan Center yesterday, having some ramen with a friend from college and he does not know or care about this topic at all. And I was sheepishly being like, “Oh, yeah, I’m hosting this cryptocurrency podcast,” and I could see someone at the next table ear prick up and wanting to jump in, like he wanted to switch tables with his girlfriend and come to our table.
Jay Kang: Yeah. Let me tell you. That does not happen here in New York and I have seen zero cryptocurrency related t-shirts, except the one I wore a couple days ago, which is the Roger Ver Bcash t-shirt that I sometimes wear to work.
Aaron Lammer: I will say that, in addition to the t-shirts, I feel like there’s been a batch this week of articles by writers that I like outside of the crypto universe writing about cryptocurrencies, which is something I’ve always known was coming, but I’m enjoying people whose voice I otherwise want to hear about different topics weighing in on this topic.
Jay Kang: Yeah. It’s sort of circled over finally to the, I don’t want to use the word pundit because I feel like, at least for me, that’s a pejorative term because I respect these writers too. But I’ll just say that people who think about big things out loud and write very well and you trust whatever their vision of the universe is or whatever they’ve thought through, you trust that, so, yeah, I noticed that as well. Paul Ford, who is somebody I think we’re both a fan of, I think-
Aaron Lammer: I think that Paul Ford encapsulated this moment well. I think he tweeted this out. He was like, “Bloomberg asked me to write something for them.” And he was like, “276 pitches later, blockchain?” and they’re like, “That’s the one we want.” I don’t even know if this is actually enthusiasm on the part of these writers or it’s enthusiasm on the part of their editors, but I’m enjoying them doing the work so I don’t have to. And I was actually hoping that we could maybe use one of those articles that came out this week as a springboard to have the conversation that we’ve been putting off where we try to understand what the blockchain itself is.
Jay Kang: Yeah. Look, we discussed a little bit last week about what we were going to do for the show and one thing that I think that we want to do when we launched a show, which was to give sort of a primer for people, or primer, I don’t know how one explains … I say primer, but, it’s actually [crosstalk 00:05:42]-
Aaron Lammer: Jay, you’re setting all kinds of trends out here.
Jay Kang: … it’s actually right. That’s actually right, a primer for people who don’t know what terms are or trying to get into this crypto space. And I don’t even think that doing an episode to explain blockchain is really something for newbs or for beginners only because I think a lot of people who walk around and think that they know a lot about crypto, they might not really know blockchain either. And I think that, for a long period, included both you and me.
Aaron Lammer: Yeah. I feel like, in a lot of ways, you can wrap your head around some weird alt-currencies and still not really wrap your head around the blockchain. And I don’t totally know that I’ve wrapped my head around it, but I generally gauge questions that normal people ask me as important. The question I’m getting a lot from people I know’s parents, like the grandparents of little kids who are running around at these little kid birthday parties that I’m cursed with now, is this question of “Yeah, but what do you think about that blockchain is the real innovation and this Bitcoin thing is just a fad?” That’s something I’ve heard from a lot of people.
Jay Kang: Let me ask you a question then. Let’s say I meet you at a kid birthday party and I’m like, “Hey, Aaron. I know that you have a Bitcoin podcast. I’ve heard a lot about blockchain. What is blockchain?” What do you say?
Aaron Lammer: Okay. At its basic level, the blockchain is a ledger. Think of a blockchain as, you know when an accountant in a movie in the 1800s takes down that giant leather bound tome and starts dipping their quill and writing on a line, that’s a ledger. And if we’re going to use the Bitcoin blockchain as an example, the Bitcoin blockchain is a ledger of every transaction made ever on the Bitcoin network.
Jay Kang: Let’s pretend that we’re actually doing the role-playing here. You have just said that to me and I think the thing that I would say, I would interrupt you, and I would say, “Wait. There’s a Bitcoin blockchain and there’s another blockchain?”
Aaron Lammer: All of those things are basically like … An Excel spreadsheet would be a pretty good metaphor. It’s a really long Excel spreadsheet that explains every time a transaction has happened that moves coins from one wallet to another wallet.
Jay Kang: Okay. What is the difference between that and what American Express does to keep track of all of my credit card and everyone else who has a credit card? It’s far more people than use Bitcoin. How is that any different than that ledger system?
Aaron Lammer: Well, when you go and use your American Express card, say, to purchase a NBA League Pass, real world example in my case, it creates a bill in your credit account and it sends money from American Express to the people behind NBA League Pass and all of that is stored in, I would say, a fairly similar transaction, but that transaction is stored only on American Express’s servers and I don’t have any access to those servers by design. American Express could make a mistake, etc., I just have to trust that they are correctly keeping tabs on that.
Jay Kang: I think that there’s no two sentence way to explain any of this, right, but Google has tried. And so before we even talk about blockchain, it is important for us to try and define it in some way that people can hold in their head. I don’t think anything that you said is wrong, but I just feel like this is the problem that people always encounter. It’s why people like Venkatesh Rao, who is a writer that we both like, Paul Ford, I think that’s why they’re assigned things, or in Venkatesh’s, takes it upon himself, to write these things that try and use some sort of metaphoric way to explain the blockchain because in itself, it is both a very simple thing to grasp, but it also has so many caveats and, “Well, it’s different in this way,” that it becomes very vague. Here’s Google’s definition. I want you to respond to it.
Aaron Lammer: Yeah. And this is from, just to credit, both of us really enjoyed this Adrianne Jeffries article about the blockchain that was in The Verge, so shout-out to Adrianne Jeffries.
Jay Kang: Okay. Here’s Google’s definition, “Blockchain is a digital ledger in which transactions made in Bitcoin or other cryptocurrency are recorded chronologically and publicly.” That’s it.
Aaron Lammer: That sounds about right. I think the part that is really important beyond that, I’m not sure it actually has to be digital, but let’s say that’s splitting hairs, I still think it could be a blockchain if you somehow were able to create a analog blockchain, but the part that’s really tough to wrap your head around is that public, like what public means. Does public just mean it’s on a web page or you can see it or does it mean that there’s some sort of a public consensus about it and that multiple people are hosting it concurrently and validating that there is data integrity across the multiple copies of it?
Jay Kang: Yeah. And, look, the one thing that the Google definition, I think, doesn’t include that I think most people in the Bitcoin community would insist upon is that there’s some sort of cryptographic protection in it, that it uses concepts of computer science cryptology to make sure that it’s secure. The best metaphor I’ve heard is let’s say that you do have that 1800s movie leather bound ledger that the old man takes down and writes in his pen. Imagine if there’s 12 of those or 500 of those or 500,000 of those and every time he wrote in his pen, people who he did not know where they were or who they were, whatever he wrote would also appear in their books through some sort of Harry Potter magic or something like that. That’s kind of the idea.
Aaron Lammer: Yeah. Yeah, it’s almost a little bit like, let’s say, there was a convention of the 1800 accountants every year and everyone kept their own ledger and then we would all get on our horses and come to Vienna and we’d all copy down everything that was in everyone else’s ledger, even transactions that we had actually had no part in, but, but doing so, we would create 500 identical copies of the ledger distributed across all of the other 1800 accountants in the Prussian Empire. And, therefore, if Johann got into some funny business-
Jay Kang: This is borderline racist against Prussians.
Aaron Lammer: It’s actually legal to be racist against the Austrians. If Johann got into some funny business, we’d have 499 other copies that could prove what the true transaction record was. And so, in a lot of ways, the blockchain is not an innovation of Bitcoin. There are blockchains that predate Bitcoin. The novel innovation of Bitcoin is akin to the 1800s accounting convention, it’s how that ledger is distributed publicly and how it keeps itself safe from bad actors in the system and from people who would seek to alter it. And that itself is novel and that’s the system that requires, in the case of Bitcoin, miners who are the people who batch all the transactions together into blocks and those blocks get added to the ledger, so the people who run nodes and mine, I’m going to get to what these mean, to ensure all of those systems are working.
Jay Kang: I’m going to object to one part of your convention metaphor because the innovation or the decentralization of blockchain would mean that you don’t have to go to Vienna, you don’t have to be invited by the convention, you don’t have to wear a lanyard, you don’t have to have a 1800s degree in accounting, you can just be a person who shows up really from your own home and somehow they beam the whatever the ledger is into your ledger, if that makes sense. If there’s a change in it, then it shows up in your ledger. That’s the basic idea of it.
Now here’s a question, I think, that when people are trying to get into blockchain that they generally think of that I want to ask you as well, Aaron, which is, okay, so what’s the big deal? That doesn’t seem mind-blowing in terms of technology. Donald Trump, today, said that we’re going to go to Mars. To have something being, oh, it’s akin to you just emailing out 15 copies to your friends and you all just have it so that one of you can’t change it because you can go back and be like, “Oh, you changed that line obviously because when you sent it, it was this way.” What is so revolutionary about this?
Aaron Lammer: Well, I think that’s a reasonable question, and when people’s parents ask me this question of, “Isn’t blockchain the real innovation?” at a party, I usually say, “I don’t think so.” I think the innovation is Bitcoin. I think that the killer product that’s possible because of this kind of a system is decentralized stateless money. The idea that you can have money but have no central authority, is itself a hugely provocative idea. I’m not sure that any other application of the blockchain that I’ve heard is nearly as provocative.
I’ll give an example, and I don’t mean to say that I don’t think this is a good idea, but something like Civil. We talked to Maria Bustillos. They want to use the blockchain to make sure that articles never disappear from the internet and they have a scheme to use the Ethereum blockchain and use the notes field to put the articles in so if a future Peter Thiel tyrant arises, they can’t erase these articles. I think that’s an admirable goal, but I don’t think it’s nearly as profound as removing a central authority around money. And I think that-
Jay Kang: Okay. But, look, there are tons of tech companies out there that use the internet and not all of them are like Google. There is different applications that can be done and it doesn’t have to be like overthrow the world economy.
Aaron Lammer: No, no. And, to be fair, I think what Civil is doing is great and I’m not sure that decentralizing money is a great idea, but I think it’s a profound idea and the system that was invented in Bitcoin, or not invented, perfected, or probably not perfected either-
Jay Kang: No.
Aaron Lammer: … tried in Bitcoin?
Jay Kang: Exists, it exists. We can say it exists.
Aaron Lammer: This decentralized ledger allowed people to create a currency from thin air that had a game that worked. The game allows for its own integrity. The game that they set forth with miners and nodes and coins has not been cheated on yet. And so I think that in some ways the block-
Jay Kang: Is that true?
Aaron Lammer: Well-
Jay Kang: There are forks. There’s the Ethereum rollback. There’s some other problems.
Aaron Lammer: Oh, sorry, I was only talking about Bitcoin. I think that cryptocurrencies have had lots of problems.
Jay Kang: The context that we need to give here, I think, is that this is still us at this party. I am like annoying dad who doesn’t know that much about crypto who doesn’t want to deal with the morass of children opening presents, so I’ve started a conversation with you. Look, all I’ve heard about is companies like IBM. Even, I think, Facebook’s saying that they want to get into blockchain technology. Overstock’s starting an ICO and the CEO is saying, “Oh, I really believe that blockchain is the disruptive technology of the future.” All of that is, right now, basically what we have is that institution and corporations are basically saying, “We don’t necessarily know what to do with Bitcoin, but blockchain seems promising.” And the problem with that is that there has not been a blockchain product that’s created, other than Bitcoin or maybe Ethereum, that has been compelling or has had any use and this technology has been around almost 10 years.
Aaron Lammer: Yeah. I don’t get that. That’s what I enjoyed about the Adrianne Jeffries article. I also don’t understand what those people are talking about. Do you understand what they’re talking about?
Jay Kang: No. And I think that as you and I have gone through this space, the educational process has been interesting to me because I think it probably reflects the way that a lot of people think about tech or learned about tech in the nineties, which is that you start not knowing anything because you have no idea what … you’re not a coder, you’re not an engineer. And you start to learn and everyone, by the way, is also like a snake oil salesman who is trying to sell you something, so it’s very hard to figure out what’s true. And so I think, as of three or four months ago, you and I were very interested in blockchain technology and what it was and-
Aaron Lammer: Yeah, we definitely thought, hey, maybe we should just buy all these stocks of companies that say they’re going to get involved in blockchain. That seems like a good idea, right?
Jay Kang: Yeah. And in the terms of a linear narrative about American industry, it does make sense that the internet would, at some point, be disrupted by something and that some new technology would come along and that places like Google would have some sort of competition from insurrectionary tech that they didn’t understand. This is the plot of Silicon Valley, the TV show, essentially. But, man, it has been nine years with blockchain technology. The fact that nobody can explain it in two sentences, as we’ve been proving for the past 15 minutes or 20 minutes, the fact that when you do explain it, you’re just like, “Well, look, my credit card works fine,” or “Microsoft Excel works fine. Microsoft Excel is actually a very good system.”
It’s very hard for, I think, a layperson like you or me or even one of these evangelists to really explain … Okay, they can explain what it is. They can use a wonderful metaphor, but when you ask them, okay, well, what industry is it supposed to be in? And then they always say something like, well, all industries, and you’re like that’s not an answer.
Aaron Lammer: Yeah. Let me pause that briefly because I actually want to say I actually do believe in the idea of blockchain coming to influence these other industries. The part that I don’t believe in is in the IBM blockchain or the Overstock.com blockchain or the Ripple blockchain. These are all blockchains that are controlled by a single entity. They’re blockchains where one person controls the ledger, just like in American Express, so they’re really just sort of cryptocurrency wrinkles on the same old, same old. And what I think is provocative or important is the idea that there’s not a central authority.
We talk about this in terms of Bitcoin about messaging. You’re always like, I think rightly, like, “Man, Bitcoin has weird messaging,” and that’s because there’s no central authority. There’s no one behind it. There’s Bitcoin Core, which is kind of behind some of the code level stuff, but there is no IBM in Bitcoin. And I think that that itself is a really interesting, weird place to be that hasn’t really been explored in capitalism yet. And an IBM blockchain, I don’t think has those qualities. I don’t really know what the qualities of an IBM blockchain are, other than maybe needing less resources than other kinds of accounting. I could see maybe there’s some efficiency benefits to it.
Jay Kang: But Microsoft Excel is efficient. American Express-
Aaron Lammer: Not really, if you’re running millions of lines of-
Jay Kang: Compared to the Bitcoin blockchain and making one transaction?
Aaron Lammer: Yeah, okay. Fair, fair. I’ll buy that. I’ll buy that. The whole Bitcoin blockchain is about 145 gigabytes, so it’s something that you could fit a $59 jump drive that you get from CompUSA, if that’s still in business.
Jay Kang: Definitely not.
Aaron Lammer: I think there’s one more part of the blockchain that we haven’t really talked about that I think is really important and is very much what I’m thinking of when we call Bitcoin an elegant system, which is mining. That’s probably the other thing that most people bring up at a party, is “Oh, why? Isn’t it using too much electricity?” What are miners doing when they’re burning all this activity? We know that they are solving these complex cryptographic problems, but what is the point of solving those cryptographic problems?
Jay Kang: Well, they’re adding blocks, right?
Aaron Lammer: Yes.
Jay Kang: Bitcoin-
Aaron Lammer: Yes, which a block is just a bunch of transactions joined together.
Jay Kang: Bitcoin gets released into the blockchain. The blockchain chain gets amended or lengthened through mining. Adrianne Jeffries, who wrote the article, you should read it, it’s on The Verge, she’s very skeptical about blockchain, but one thing that she does say is that in the nine to 10 years that Bitcoin has been around, somehow the blockchain and the mining system has not been corrupted. It hasn’t failed yet. Look, I don’t think we need to explain mining. I understand what the blockchain is in theory. I understand what mining is in theory. I will say that when they are laid bare in this way and they’re explained, they do not seem, in my opinion, other than through the idea of it or the philosophy of it, of a decentralized, deflationary currency, they don’t seem really that special. They don’t seem like technologies that are revolutionary in any sort of way, like Elon Musk just revealed a subway that’s the size of a parking space. That’s-
Aaron Lammer: I disagree with this. I disagree strongly.
Jay Kang: All right, so make a case.
Aaron Lammer: Well, I think that maybe the blockchain by itself is not revolutionary, but the idea of a decentral store of information or value that is kept alive in perpetuity and kept with integrity in perpetuity and is not controlled by any sort of central server, any sort of central state, it presents this new idea. It’s almost like-
Jay Kang: But we already have that. We had that with BitTorrent. We had-
Aaron Lammer: No, that’s not what BitTorrent is.
Jay Kang: We had peer-
Aaron Lammer: BitTorrent is just the method to distribute the information.
Jay Kang: Sure, but we had a peer-to-peer network.
Aaron Lammer: This is the type of information that’s on BitTorrent. The ledger-
Jay Kang: We had a peer-to-peer network that actually was revolutionary in many, many ways that changed industries massively, like the movie industry, the music industry. It was decentralized. It allowed people to share movies and music and books or whatever, back and forth from one another. How is this any different?
Aaron Lammer: It’s different because there is an item, the coin, that was created purely on this blockchain that’s controlled on the blockchain and there is no one behind it. There’s not a company behind it or anything.
Jay Kang: But there’s no company behind BitTorrent either.
Aaron Lammer: But BitTorrent is just taking digital files that already exist elsewhere and could exist on any server and distributing them in a way that evades law enforcement. It’s not creating something new.
Jay Kang: Of course, it is. It created BitTorrent. It created the whole network. That’s what it created.
Aaron Lammer: What does BitTorrent do that you can’t do otherwise except that you can do it and not get caught?
Jay Kang: What does Bitcoin do that you can’t do otherwise, so that you could do it and not get caught? It’s the same thing.
Aaron Lammer: Transfer money. Transfer money that’s not controlled by a state.
Jay Kang: I should say I’m playing devil’s advocate.
Aaron Lammer: No, I misunderstood you. I agree. Without its sidecar, I don’t think blockchain is revolutionary. People are waiting for a revolutionary application of blockchain, I think it’s currency.
Jay Kang: Okay. Then what is the big deal? Why is everyone saying blockchain is the future? Why are companies, like IBM, which obviously are legacy companies, why are they investing in this thing?
Aaron Lammer: Yeah, I think this is fascinating.
Jay Kang: Why is the new mantra, when you … And, literally, if you go to a party and somebody knows a little bit about Bitcoin, but not a lot, the smart guy thing to say, in the same way that it was the smart guy thing to say, “Oh, well, Bernie Sanders can’t win the primary,” that type of received knowledge, I’m not-
Aaron Lammer: Jay, you’re going to get us in trouble.
Jay Kang: No, but that level of, “Oh, well, of course,” this sort of … You have your New York City sort of guy-
Aaron Lammer: Yeah, yeah, yeah, yeah. No, that’s a good comparison.
Jay Kang: Yeah. What they’ll say is, “I don’t like Bitcoin, but I heard blockchain is cool.” Where did this come from?
Aaron Lammer: I think it makes sense that all these companies, at least on a R&D level, are looking into this. And I think that can explain some of the success of something like Ripple, it’s a sanitized version of the blockchain. And so I think that people are not yet comfortable with the idea of made-up money and Bitcoin and they want to come to the party, but they don’t want to look stupid and they don’t want to embrace a crazy idea, so they want to be down with the future, but not upend the order too much.
When people are saying, “Oh, I don’t think Bitcoin is really going to survive, but I’m sure someone will find a really important application of the blockchain,” or they say that, “Well, Bitcoin is a very primitive attempt,” I really don’t get that. I feel like that’s people who are unwilling to make a big leap, which is fine to me, but if you’re not willing to make the leap of Bitcoin, I don’t know why you would make the leap of blockchain. It’s hard for me to understand how you can think that the blockchain is revolutionary, but be totally disinterested in Bitcoin. Is that something that you can understand?
Jay Kang: No, not really, because I don’t, like I said, the more you learn about blockchain, the less impressive it gets, in my opinion at least. I don’t understand why it’s so revolutionary post-BitTorrent.
Aaron Lammer: I don’t get this BitTorrent thing. I don’t get why … BitTorrent does not do any of the same things really.
Jay Kang: It’s a decentralized way to send things from one person to the other, right?
Aaron Lammer: It’s not really totally decentralized because you’re reading it from someone else’s computer.
Jay Kang: Well, neither is Bitcoin or the blockchain. It’s a peer-to-peer thing. It got around central servers.
Aaron Lammer: But there’s no one being incentivized to broadcast those files in a BitTorrent system. There’s no mining.
Jay Kang: A blockchain without Bitcoin, there’s no incentive either.
Aaron Lammer: Yeah. I agree with that. I think that for the blockchain to work, you have to create a game of it. I think of the blockchain like a bunch of game pieces in a box and you need to create the rules to the game to make it work and to make it fun and to make it sustainable. I agree, BitTorrent is a game that worked by putting a bunch of movies that people wanted onto BitTorrent, the BitTorrent network for those torrents have stayed alive for years. It used piracy to keep itself alive. I guess I think this is the first time that someone’s created a game with the blockchain that has been compelling enough that it’s got 10 years of life so far.
Jay Kang: Yeah, yeah. I agree with you, in general, that blockchain without the Bitcoin, it’s almost like a catchphrase at this point. It doesn’t mean anything. I don’t really know what it means. But let’s move on. We have failed to define blockchain, I would say. The one thing I will say is that I think that we have failed to explain blockchain because there is a gap between the profundity of what you expect from what blockchain is, and this is something that Adrianne, in her piece, alluded to, which is that when you hear it, it seems mysterious and magical and futuristic, and that when you learn about it, you say, “Well, that can’t be it because it has to be more than that.” And, look, the idea of a decentralized ledger that keeps track of a lot of things that is not in the hands of a state, that’s not a tiny thing, but I think that we need to come to the conclusion that that actually is all it is.
And if you feel like that’s a huge idea and that a lot of applications can be built on top of that, then you should believe in blockchain without the Bitcoin. If you feel like maybe this is a solutionism type of thing where perhaps there actually are usable solutions to all these things already, what you are going towards is something where it might not actually just need blockchain chain technology for this, perhaps there’s a nother workaround that isn’t so cumbersome, then you don’t believe in blockchain technology without the Bitcoin. And I would just say that that’s kind of the long and short of it.
Aaron Lammer: Can I punch in there with one idea, which is you asked why is IBM, why are all these people trying to get involved with the blockchain, and I think that there’s a dominant idea in technology that if you want to survive, you need to emulate the upstart little guys, the guys who are trying to eat your lunch. And I would say, if anything, the blockchain is threatening to places like American Express. The blockchain is a threat, not an asset, in my opinion, to American Express, but it doesn’t surprise me that they’re dabbling in it and doing research in it. That’s what you would try to do if you were going to try to not have it take you down.
Most of the companies that I have seen that say that they’re doing experiments with the blockchain, be them the Goldman Sachs of the world, the IBMs, the American Expresses, those are companies that should rightfully be afraid of the very first popular application of the blockchain, Bitcoin. And, if anything, I would think that their real underlying motivation is competitive and it’s to make sure that their version of the blockchain beats the truly decentralized version, which could destroy them.
Jay Kang: I’m actually more cynical than you are about it, which is that I think that, if you think about it, these companies, American Express, IBM, the companies that have come out and been very bullish on blockchain, for example Overstock, these aren’t really industry leaders. I refuse to believe that a place like Google does not have a lab that works on blockchain technology. They don’t announce it. They don’t make ads.
Aaron Lammer: Yeah, yeah. They’re not like, “We have a partnership with Ripple.”
Jay Kang: Yeah, exactly. I think the companies like IBM, American Express and Overstock, that part of their messaging and their marketing right now is built around this idea of the blockchain and that’s part of the reason why there’s so much confusion in the world about what it actually is and it’s sort of a marketing technique for their shareholders, I think, more than anything.
I was actually thinking about it, again, I’m not saying this to slander anyone about IBM, but if we drove up to Poughkeepsie next week and we went to IBM and we went inside and we were like, “Can you please show me the blockchain labs?”, what do think we would see? Do you think that we would actually see something that was futuristic with a bunch of robot arms moving shit around? Or do you think that we might see eight guys in front of their computers who are nominally the blockchain technology group, but that maybe is a marketing ploy for them? Because we’ve seen in the past what any association with blockchain or crypto can do for a company’s share prices. I think that the emphasis on that is a lot of it, it’s messaging and marketing. Do you agree at all with that?
Aaron Lammer: I do. It’s not that I don’t think they’re doing it, I just think that if anyone had a really, really good idea, they wouldn’t tell everyone about it.
Jay Kang: Yeah, exactly, that’s how I feel.
Aaron Lammer: The fact that they’re telling everyone about it makes me think that … I think they’re their bases. These companies try everything. Everyone is trying self-driving cars. Everyone is trying everything that they can try. What will be interesting to me going forward, and something I would want to talk about on this show, is whether these faux chains ultimately make it hard for the true chains to survive. I think we’ve seen investors are just as interested in buying Ripple, which is a centralized chain, as into the Bitcoin chain. And if the only reason people really embrace decentralization is because they think it’s a good investment, I’m not sure it will survive. I think we’re shifting a little bit from the ideology of decentralization to just is decentralization a good investment, and so I think that these people are right. If they can convince people that their chains are better in some way, even though they’re centralized, they will nip this fairly profound idea in the bud.
Jay Kang: Yeah, I would agree with that. I wouldn’t say I totally agree with it, but I agree with it in this sense where, if you think about it from an investment standpoint, you have a new technology that is going to take over the world. You can either buy a cryptocurrency, like Bitcoin, with all of its attendant risks, or you can just put it in IBM and say, well, IBM’s blockchain will probably be better than these crazy anarcho-capitalists who keep fighting with each other on Twitter. In that way, from an investment standpoint, I do think that things will get diluted a little bit down the road if blockchain actually is promising.
And it might not be IBM. It might literally be Google that says, “Hey, by the way, we’ve been working on this too. We just didn’t want to tell you guys because we didn’t have to.” Or some new company comes on that has amazing tech that grows with tons of VC funding and suddenly becomes a player in all of this. All those things are open and I think that, from an investment standpoint, it does push back against some of Bitcoin’s dominance in the blockchain area.
Aaron Lammer: Totally agree. An example that I often think of is Western Union. We’ve seen Bitcoin ending up in places like the Philippines because it’s a very low cost remittance-
Jay Kang: Or it was, and it is again. It is again, yeah.
Aaron Lammer: … or was and it sometimes is. And that has interesting cultural implications, that a bunch of people have Bitcoin on their phones who are in the Philippines and who know where that could end up in 10 years. But if Western Union looks at that and say, “Hey, somehow people are using Bitcoin instead of Western Union,” and they create the Western Union blockchain and the Western Union coin and are basically able to offer the same service at the same price, what does that mean for the future of Bitcoin? Can Bitcoin maintain a competitive advantage if people clone all of the features of Bitcoin? And I think that remains to be seen.
Jay Kang: Well, and that’s where we get into, I think, a place where you and I diverge a bit, which is that I think to win that fight, you need to have a better PR than Bitcoin does. And PR is maybe not the right term, but you just need a better, I guess, rallying cry that goes out to people. You need to convince the woman who is a domestic servant, I think is the right word, in Hong Kong who is from the Philippines who wants to send money back to her family and does so every month through remittances or every Sunday that it’s better to use Bitcoin than Western Union for X reason. It doesn’t matter what X reason is. It could be that, “Hey, this might triple in value,” whereas Western Union coin certainly won’t.
It could be like, “Hey, don’t you hate the central banks that are keeping this global income inequity, which is why you’re an OFW and you’re working in this person’s house in the first place.” You could do that messaging and you might be convincing, but you just need something and I just don’t see it right now, which is one of the reasons why … I think there are four main reasons why I’m super bearish on Bitcoin right now, but that really is one of them. I’m just like, well, I don’t know what you tell those people.
Aaron Lammer: Yeah. I think that I’m going to take the other side of this one and say that maybe this is the vibe between us as a journalist and non-journalist-
Jay Kang: You are a journalist, by the way. I always object to you saying you’re not a journalist. You interview people for a product.
Aaron Lammer: … less objective journalist, a fake news journalist, is that I think the best PR is no PR. I feel like the fact that Bitcoin doesn’t have to explain itself and doesn’t have to answer to a board and doesn’t have to show quarterly profits is one of its great strengths. The fact that it’s doing something that corporations usually do and there’s no corporation is … I’ve never seen anything like that. It’s fascinating.
Jay Kang: Yeah. And, look, there’s no good answer because I think you’re right in the sense that if Bitcoin has a centralized messaging, then that’s bad. That’s not good for Bitcoin as a idea or as a currency. I think that the best thing that we could hope for is that the messaging becomes a little less toxic than it is right now and that’s about it. If it was null, then I would be, “Great,” but it definitely is not null right now, which I think is part of the problem in terms of getting some of these people who hopped in on board between October and the first of this year back on board.
Aaron Lammer: Sure, sure. Before we get out of here, you got anything to say about this market?
Jay Kang: No, it’s about the same as when we talked about four days ago, right?
Aaron Lammer: I feel like we got to go on strike here. Until the market goes up or down, we’re not going to talk about the market. You heard it here. Just start buying or selling, do something, give us something to talk about. It’s not investment advice. We don’t talk about the market. We’re just purely intellectuals considering the blockchain.
Jay Kang: Okay. All right. I’ll see you next week.
Aaron Lammer: All right. Talk to you next week.
Speaker 2: This episode of Coin Talk was taped Wednesday, March 14th, at 8:00 p.m. Eastern Standard Time. The Bitcoin price index was $8,085.