Bitcoin Forum

Hi everybody,

I recorded an interview with Elizabeth Lumley of financial website Finextra last week.  It went live today:

http://www.finextra.com/Video/Video.aspx?videoid=513

I'm increasingly convinced that the mainstream media is completely missing the point with Bitcoin and I took the opportunity in this interview to make this argument and focus on the non-currency implications.  I focussed on the possibilities enabled by colored coins rather than, say, talking about programmable money/transaction scripting (I didn't have time), but hopefully made the case that finance and enterprise IT audiences should be viewing Bitcoin as more than just a currency and payment system.   

It's my first video interview on this topic (or any other for that matter) - I'd be interested in feedback and comment.... is this approach to spreading the word to a mainstream finance audience about Bitcoin helpful?

Richard G Brown
@gendal (here and on twitter)

Sorry - finextra seems to be down / very slow. Will repost when they sort it out.

well done Richard.  nice to know we have someone from IBM onboard and who's as articulate as you.

one point.  i believe you said that b/c SR was able to be taken down, it proves that Bitcoin can be regulated.  i disagree with this.  it only proved that DPR made a mistake in his personal dealings leading to his downfall.

nothing to do with Bitcoin.

other than that, job well done.  you're a credible source.

Thanks!

Any yes, you're right. I let my voice get ahead of my brain in that section and mistakenly implied that DPR was tracked down through Bitcoin. I stand by the statement that it is possible, in general, to walk the blockchain to break through the veil of anonymity but you are, of course, correct that this is not how Silk Road was taken down.

Thanks for taking the time to view the video.

Richard.

Can you post it to YouTube? The site is still experiencing issues.

Edit: for those that wish to watch the video.

http://edge.media-server.com/m/p/m9rpowdj/i/knagizdm/?token=45cfd4bd3ed0171cf39ffd7ad87255c52672345

Excellent video and great questions and answers, I tweeted it if that's ok.

is that really true?

lets say you send 1 BTC to my sig address and i go and spend 0.5 BTC on candy with the other 0.5 BTC going to change.  then, the candy dealer goes and buys drugs on the next SR's web account.  does that mean i was involved in the drug deal?

It means the money you previously possessed was involved in a drug deal. Similarly, if you're a father giving your son $20 on a friday night and he buys some substance with it... Your $20 was involved in a drug deal. That's my view at least.

Good interview Gendal.  All well put and it was nice to hear a non financier's spin on crypto without getting bogged down in protocols and maths.

Thanks for the feedback.  My hope is that we'll soon reach the point where there is enough "base knowledge" in the population that more conversations can be about applications and use-cases rather than explaining the core technology or economic model.    I'd love to see a sample of articles and vendor charts about the web in, say, 1994.  I bet a huge amount of them focussed on HTTP, web servers, HTML, etc - whereas we, rightly, assume all that as a given (or, rather, an irrelevance) when discussing the web with mainstream audiences today.

It is not correct to say, as you do in the video, that you can "trace a Bitcoin's ownership" (I paraphrase but you made this point more than once).

Any particular transaction can have multiple inputs and multiple outputs, and crucially, it's possible to create transactions with more than one wallet owner contributing to the inputs.
Here is a quote from gmaxwell on his proposal "CoinJoin":
Please note this is NOT future technology - Bitcoin was designed this way.

The outputs of a transaction are specified *independently* of the inputs.

Taking all this together, if Alice inputs 0.43 bitcoins into a tx and Bob inputs 0.58, and there is one output of 0.2 to Charlie and one output of 0.8 to D (thus with a tx fee of 0.01), nobody can EVER know whether Alice paid Charlie or D - because it doesn't even make sense to ask the question. (Obviously scale this up to N users for interesting behaviour).

So basically you're wrong about anonymity being impossible at the level you think.

I think it could be useful to make a distinction between what is true legally and what is *achievable* by motivated law-enforcement agencies.

In your scenario, it's clearly the case that I am not implicated in or responsible for the illegal activity that takes place several transactions downstream of my transaction.  But that's not to say that the visible linkage is not helpful to law-enforcement.

For example, imagine the police believe the downstream address is owned by a drug dealer but don't know for sure and certainly don't know who it is.    It seems entirely feasible to me that a motivated investigator could walk the chain backwards until they find an address they *do* know (perhaps the exchange where I bought my Bitcoins).  Now they can walk forwards:  serve a subpoena on the exchange to find out who I am.   Turn up at my front door with a scary-looking dog and a menacing manner.  It may not be legitimate to ask, but I suspect I'd probably reveal the name of the candy vendor if I felt sufficiently threatened.   The cops can then move one step further and visit the candy retailer.

Again, there may be no legal justification for demanding the information they want but that doesn't mean it won't be done.

So my argument nets down to:  Bitcoin may not be as easy to trace as other electronic transactions but it's MUCH more helpful to law-enforcement agencies than physical cash.

Agreed.  It's possible to make it extremely difficult to walk the blockchain in the linear, simplistic manner I describe. Indeed, the FBI compliant against Silk Road makes a similar point, noting that mixing services are a big threat to their ability to trace transactions.   But, even here, I think it's important to distinguish between what can be *proved* and what can be used to support an investigation by narrowing down a search space or revealing a list of candidates for further investigation.

very good interview, thank you!

I don't think we actually agree here :)

My point was that it's possible to make it *impossible* to prove the flow of funds, not that it's possible to make it difficult.
I am aware of the existing blockchain analysis that's been done by various researchers and how far it can go. But that method will never work against mixed inputs with mixed outputs, for the reason I described in the previous post. It could make a probabilistic connection between two addresses, but those probabilities will dwindle to zero after a few transactions, if they're all implemented the same way with N users.

You're more describing how it works now; people mostly don't do anything to hide their tracks, and some people use mixers,which *largely* work in hiding, but not perfectly.

CoinJoin I believe is just a slightly more sophisticated way to use the existing Bitcoin transaction design (honestly I'm a bit surprised that it's only being discussed now and not 2 or more years ago - I think the problem is not the idea, but that there's SO much functionality to develop within Bitcoin and so few skilled people to do it).

All fair points.  I was, indeed, talking in the video about "as-is" rather than "could-be".  And I was also implicitly assuming that there will always be enough people who use the system naively or employ lax security practices that there will be a "way in" for sufficiently motivated law-enforcement agents.   

I also think you make an excellent point about the power of compounding/exponentiation with chained N:N mixing...  you rapidly reach a point where the set of potential suspects is the set of all Bitcoin users.  If such an approach were widely deployed then my statement that Bitcoin is more traceable than cash may well prove unfounded.   But I sense we're a long way from there.

This was an excellent interview, you certainly seem to know Bitcoin quite well. I like your focus on coloured coins as this is still somewhat uncharted territory as far as media attention goes. Could you, from your professional experience, give an estimation as to which steps need to be taken before this could be used in a real world application?

That was a very impressive debut. Public speaking is difficult (I speak from experience) and you performed as though you had been doing it for years. Your remarks about the use of the blockchain as a distributed asset register (i.e. colour coins) were also very though-provoking, even if they went straight over the head of the nice but dim interviewer.

Just one criticism however.  I thought your remarks regarding the Silk Road take-down lacked nuance (to put it kindly). I appreciate of course that as an employee of IBM it is not your place to take any particular position in public on controversial libertarian issues. Equally, as a statement of fact, the notion that  the likelihood of mainstream adoption of BTC by financial institutions  is increased as BTC ceases to be associated in the public eye with the sale and purchase of illicit substances, is probably correct.

BUT your answer also implied that  the crushing of Silk Road was inherently a good thing ("unambiguous good"). Many (myself amongst them) would vehemently disagree. I personally regard it as a disgusting event - the crushing of a safe, voluntary, private market by a bunch of jack-booted thugs.

So I think you need to distinguish in future presentations very clearly between on the one hand the factual impact of such events on the future mainstream adoption of bitcoin and on the other hand the moral issues associated with such events. At a minimum I suggest that you adopt a neutral stance regarding the latter.

Best regards

Hi there.

Many thanks for the feedback and thoughtful comments.  I gave some considerable thought about how to address the Silk Road topic as I knew it was bound to come up.  In the end, I concluded there just wasn't any room for equivocation...  if one accepts the rule of law (as the employee of a major corporation surely must!) then one must also conclude that the prosecution of lawbreakers is a good thing.  Now I completely agree that there is room (lots of room) for debate about *whether* certain activities should be illegal but I didn't think it appropriate to raise it in that forum, and certainly not given that I was speaking as a representative of my employer rather than as an individual.

Richard

Thanks for this post  ;D

I think the problem is that you did end up raising the issue. It would have been quite possible to confine your remarks to the effects upon the adoption of bitcoin, rather than impliedly venturing into the wider question of whether drug laws ought to be enforced. I would be surprised if IBM had any corporate position on those sorts of issues or indeed wanted to have one.

That is why neutrality is surely the appropriate course. Nobody could have had any complaint if you had simply said: "As an employee of IBM it would obviously not be appropriate for me to express an opinion on the issues surrounding the enforcement of drug laws, but what I can say is that the closure of Silk Road was undoubtedly a good thing in terms of the likelihood of  bitcoin being more widely adopted amongst financial institutions"

That is not equivocation. It is merely confining your remarks to the issues for which your opinion is being sought (which do not include the morality or otherwise of the War on Drugs)

Anyway, there it is. No offence intended and otherwise, as I say, an excellent presentation.

By order of the Grand Priesthood of Satoshi I hereby call and ordain Richard Brown to the order of High Priest of Cryptocurrency Public Relations.

In all seriousness, Richard, that was probably the most eloquent interview I've seen on bitcoin and cryptocurrency.  It was a delight to listen to somebody with as deep a technical background as yourself speak so simply, and it was refreshing to hear you call attention to the novel and innovative features of cryptocurrenty beyond (obvious) economic/currency implications.  Thanks for being a part of the community, and please keep it up!

proudhon! 

are you back for good?

Very good and intriguing interview.

It's important to see on video discussions at this level.

Elizabeth Lumley did a great job, also. Congratulations to you both.

cypher!  I've sure missed you guys.  I'm still gonna keep out of the spec forum, but, yeah, I think I'll be hanging around here a little more.  I needed a break, and had a very busy summer.

great to see you back; in bull's clothing (you can't hide it).

did you buy back yet?  only 1 day in BTC history where the price has closed higher than now!

I don't want to hijack this thread, but I'll just say that I'm happy with the decisions I've made this year.

is this video hosted somewhere else?  wont load for me.

thx~

Not loading here either.

Great interview, brought a tear to my eye.

I believe the foundation keeps a list of "experts" available for interviews. You need to be added to the list.

Thanks for sharing!

A credible interview - thanks.

Outstanding job, Richard.

Wauw, an amazing interview :) Thanks so much Richard. People like you make it happen.

top notch!

I know IBM is a supplier for financial institutions, but do you guys by any chance also make software for law enforcement (or plan to do so)?

I don't buy the idea that companies doesn't want to be related to a currency involved with crime.
If that was the case, they would have to shy away from all currencies, especially fiat currencies.

Besides, btc is not involved in silk road, its the other way around.

Brilliant interview. One of the best ever.

It's getting plenty of views on IBM/banking now that it's up on that channel too.

It's about public opinion, which isn't always very rational.

You'll have to admit that Bitcoin still has a negative "hacker, criminal" image with many in the public.

Doesn't matter if the USD is the "most criminal currency" and the HSBC has been caught laundering billions for drug cartels.

It's now been posted to YouTube:  http://www.youtube.com/watch?v=VDO7TDMlxsY&feature=c4-overview&list=UUYuBZVt_S82TGwoEgNqN8yg

+1

Nice to see you're back.

The question is whether IBM is throwing its lot with Bitcoin, or if they are fishing for a federal contract to build a US Government-controlled Bitcoin competitor.

is "building tools for financial institutions, corporations and law enforcement" too naive an assumption?

a "government-controlled Bitcoin competitor" sounds like an oxymoron to me.

So is a government-controlled health insurance exchange site.

Didn't stop them from trying though.

Thank you so much for this fantastic interview. That is probably one of the most intelligent one I've seen in the last year.

You're really doing a demonstration that the potential of Bitcoin goes much further than what is being discussed right now. I hope that this will help journalists to speak of Bitcoin in a "less superficial" way and start thinking about what is being made possible with that technology.

Good job Richard. Great interview. I do agree with some of the constructive criticism above (mainly on the traceability of each bitcoin, and about the SR matter). But it's great you emphasized on the bigger, long term picture and highlighted the innovative and revolutionary aspects of Bitcoin. Rather than going about the volatility (or the currency rate at all), recent exchange & online wallet hacks that have been in the news, and other rather uninteresting stuff that many others seem to dwell on so often.

Kudos, sir!