Banking on Bitcoin Page #8

and no one knows

if they just lost it,

it if was stolen from them,

if they embezzled it or what,

but the important

lesson from gox

isn't that bitcoin doesn't work.

The important lesson from gox

is that you don't leave your

money with a trusted third party

because you can't

always trust them.

You can only trust them

until you can't.

This was also a lesson

that people were

supposed to learn

during the financial crisis

but they don't seem

to have learned it yet.

Mark karpeles

was a gamer.

He was not a finance pro.

He really didn't know

what he was doing,

and he didn't build it.

Jed mccaleb built it.

He didn't improve upon it.

I mean, it lurched

from crisis to crisis

throughout the entire history.

Last year was

a terrible year for bitcoin,

and an especially terrible

year for the foundation,

because we had two of the people

on our board of directors

who had to resign

in disgrace, basically.

You know, my expertise

is technology.

My expertise is not

figuring out, like,

who's trustworthy, who's not,

which businesses

are gonna succeed,

which businesses are gonna fail.

After we had held our hearings,

we thought we would take six months

to nine months, even a year,

to draft

our initial regulations.

This was so complicated

that we wanted

to really take our time

and get it right.

What happened was, though,

mt. Gox collapsed.

And I think that gave us

a real renewed sense of urgency,

and we realized that

if we got regulation right,

we could create more confidence

in bitcoin, frankly,

as opposed to the sort of

loss of confidence you saw

not only from the silk road case

but also from the collapse

of mt. Gox.

So your sense, though,

of the regulators, right now.

I assume you've

had conversations.

The discussions that we've had,

I think everybody

recognizes the innovation

and doesn't want to stifle it.

They just want to make sure

that there's healthy regulation

so it's used in a safe

and productive manner.

I'm not giving up on New York.

New York's giving up on me.

I can't even turn on

the bitcoin machine.

An atm, I can't turn it on.

I can't make trades.

I can't do anything.

There's no cash flow at all.

And it's potential regulation.

It's regulations

I should believe

is coming down the pipe.

Like, I don't want to do anything

that someone's frowning upon

right next door

to the stock market.

They're gonna lock me up.

You know, you can't

have an exchange.

Well, we don't.

People meet there

and exchange with each other.

New York's sitting there

on the high horse,

and the whole world's waiting

on New York to create

some f***in' license.

Ultimately lawsky's office

brought out

the final rules

for the bitlicense

in the spring of 2015.

A lot of companies complained

that the regulations

were too burdensome for them

to operate in New York

and still make money.

I saw just overnight

dozens of companies that were

on the verge of launching.

They just threw in the towel and

said, "we can't afford this."

Erik voorhees' new company

shapeshift

would have had to apply

for the bitlicense

if it wanted to keep

customers in New York.

So, in my lap here

I have the...

The application forms

for license to engage

in virtual currency

business activity,

which is a very statist way

of saying the bitlicense.

The is the application

to be approved

to do basically what we've

all been doing for years now,

which is building bitcoin

companies in New York.

And a lot of stuff in here I

personally feel is unethical,

so we're not gonna

comply with it,

which means we have to block

new yorkers entirely.

And when an entire new industry

starts blocking

a place like New York

that used to be the financial

center of the world,

hopefully some of those

politicians will take notice.

The point of it is to, one,

make sure there are enough

consumer protections;

two, make sure we have

adequate cybersecurity;

three, make sure that the companies

are adequately capitalized

so they don't collapse

upon themselves.

You know, you've seen

a tug of war

between the hard liners

and those who are saying,

"you know, you've got to have

enough space

for innovation in here,"

and the system has come out,

I think,

probably stronger

as a result of that

and there's a widespread view

amongst certainly

the business bitcoin community

that some level of regulation

gives legitimacy

to what they're doing.

It gives people confidence

in what they're doing.

This is an important part

of growing up.

Ultimately, they're not

going to get it right,

because no regulation

is ever right.

But I'm highly confident

that whatever happens

going forward,

the bitlicense will be looked at

as a positive development

in the evolution of bitcoin

because it just removed one of the

biggest pieces of uncertainty,

which is how is this industry

going to be regulated.

I think most of us...

At least a lot of us...

Think that sensible regulation

that sets guidelines

that makes sure people's money

doesn't just go into

a black hole

that that's

a really important thing,

that regulation.

I'm sure satoshi

wouldn't be happy

to see this kind of thing,

which is not based

on the logic and reason

that a programmer is used to.

I think a lot of developers,

understandably so,

try to stay out of

the political nonsense.

It has been one of

the biggest mysteries

raging across the Internet:

Who is satoshi nakamoto?

Newsweek published an article

claiming the man in these

images is the bitcoin founder.

The man who created bitcoin,

is known as

the father of bitcoin,

the online currency

now worth billions.

When you asked him

about bitcoin,

and he says, "I can't talk

about this anymore,"

he was not referring to bitcoin.

But with me, he definitely

acknowledged bitcoin.

I think at this point now

he's saying

he was confused

by the conversation.

Clearly somebody thought

that we did this

as an act of war

against satoshi nakamoto

or bitcoin,

and I want to be very clear

that I certainly never

meant it that way.

I have nothing to do

with bitcoin.

It was a monster story.

How did they figure it out?

Oh, my god, look at

this guy that they named.

His name is

Dorian satoshi nakamoto,

living in California,

basically hiding in plain sight.

It becomes a gigantic

media scramble,

and then Dorian emerges

from his house

looking kind of disheveled,

looking kind of confused,

and says

he's not satoshi nakamoto,

says he's never heard

of bitcoin.

He doesn't understand. He had

one conversation with Leah.

She misunderstood what he said,

she took it the wrong way.

And you probably would have

had to have been a cypherpunk

to understand all

the elements of it

that had already been

put together.

The odds of it seemed

very low to me

that it was somebody from

completely outside that community

who happened to know

all these different things

and put this together

and appear out of nowhere.

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