Pirate Radio Podcasts™ Episode #47 –
Cryptocurrencies, PIRATE coin, & SMART contracts, with David Zimbeck
2017-01-27 8 p.m. PST
Our guest this week is cryptocurrency wiz, photographer, chess player, world traveler, part-time actor, & Pirates of the Caribbean 2 swashbuckler: David Zimbeck. Some of the main issues we'll be discussing [with David Zimbeck] include: Cryptocurrencies, PIRATE coin, & SMART contracts According to one recent online BIO blurb: David Zimbeck, the creator of BitHalo and BlackHalo, is a man who’s worn many hats. David Zimbeck started out competing in chess tournaments and in one tournament in Europe took down 10 grandmasters. David Zimbeck also had his own film company and was one of the pirates in the movie Pirates of the Caribbean 2. As a real estate agent, David Zimbeck learned the ins-and-outs of escrow services, which would later help him understand escrow and develop his key Bitcoin and Blackcoin innovations.
https://www.facebook.com/zimbeck https://davidzimbeck.wordpress.com/20...
www.zimbeckchess.com www.bithalo.org www.blackhalo.info www.bitbay.market00:01:47 Pirate Japhy: Avast me hardies. To our listeners from across all regions of the planet. Welcome once
again to board the Robin Hood, flagship to the world’s one and only cooperatively inspired charity podcast network. Live streaming today from under wintery crystal blue and only slightly sprayed South Korean skies. You’ve tuned in to episode 47 Pirate Radio Podcasts.
00:02:14 Pirate Japhy: I’m your host and ship’s chief Pirate communications officer, Japhy Rider. Raising anchor once again today’s guest is cryptocurrency whiz kid and a multi-talented new age renaissance man, David Zimbeck. Creator of both Bit and Black Halo, David is a man who has worn many hats. He has his own film and photography cos while also claiming the good fortune of having played a swashbuckling role in Pirates of the Caribbean 2. After starting to compete in chess tournaments, he also now boasts having defeated ten grandmasters altogether once in Europe. As a real estate agent, Zimbeck learned the ins and outs of escrow services, which would later help him develop his revolutionary Bit and Black coin innovations.
00:03:12 Pirate Japhy: You know Pirate Larry, it never ceases to amaze me the amount of time that how quickly it all flies by and here we are again another week on the show with Pirate Radio podcasts. So, you managed on top of that to weather a bit of storm is what we are hearing. Why don’t you tell us a little more about that? Good to have you back.
00:03/37 Pirate Larry: It was fierce. It was wild and windy. Electric bulbs went out. We were without electricity here for about 8 hours today. But I think the winds are going to die down and it should be sunny starting Monday. But yeah, we had people who had their roofs blown off, 3 houses on the hill had their roofs blown off, one house completely fell over. So, there’s a lot of cleaning up to do.
00:04/07 Pirate Japhy: Did you know about the sailboat?
00:04:11 Pirate Larry: Oh yeah, David tell them about the billboard.
00:04:13 David Zimbeck: Yeah. There was a billboard that fell on the Cineopolis movie theatre. I think, well it
fell—I don’t know if anybody got hit by it. But I don’t know, it was pretty bad.
00:04:25 Pirate Japhy: We got David there coming through as well too. It sounds like you guys are almost in the same room together. If I didn’t know any better, I’d say that was the case.
00:04:35 Pirate Larry: We’re in the Tavern.
00:04:37 David Zimbeck: We’re in the Tavern
00:04:39 Pirate Japhy: Which one is it now? Because, we’ve talked about we’re going to hold this show. Which one is it? Go ahead.
00:04:47 Pirate Larry: Howl and Wolf Tavern.
00:04:48 Pirate Japhy: Howl and Wolf Tavern. Okay. We didn’t want you in the Crow’s Nest today. Things are going to be run a little more differently than people are standardly accustomed to here, as they tune into our show. So, David, it’s great to have you back. Well Larry of course did a great interview with you a few months ago. Today’s talk will hopefully be a bit of a re-visitation. Although we’re going hopefully on top of that try to cover some new ground as well too. But, let’s see where we can pick things up from exactly. So, just off the top, a lot of people don’t know, you’re having your weather problems in Baja. Here in Korea, we’re celebrating the Chinese New Year. So, I’m not sure I’m going to be able to stick around for an after-show for the Rogue’s Gallery or not. So you guys should be able to pick up a little of the slack on that end. If at all possible. We’ll just have to see. You celebrate the Chinese New Year Larry in Mexico? I’m guessing not.
00:06:01 Pirate Larry: Mexico celebrates everything.
00:06:05 Pirate Japhy: You’re the tiger, what the hell, no, you’re the Trump? Whose is Trump? Rooster? Is that right? I think he’s the cock, he’s the big cock.
00:06:18 David Zimbeck: He seems that way.
00:06:21 Pirate Japhy: I’m not going to say prick. That’s a different thing. We’re just talking chickens and that kind of stuff here, cultural livestock. So, let’s leave that aside for now and see if we can make our way through the talking points we hope to discuss here. I have to find my way to the Howl and Wolf. Might talk a minute or two here. So, David. What are your recollections or memories of that initial interview? What we were talking about a couple months ago?
00:06:55 David Zimbeck: It was great. I got to talk about all the stuff we were working on. We got so many
good topics covered. I really don’t feel like we trailed off a lot. I mean, it’s really important to cover all of the things that are changing. And the things that are changing in the world of I guess you would call decentralized technology, which is maybe just a big word for saying freedom.
00:09:28 Pirate Japhy: How about that. Hey, freedom. Wow, what a concept. Decentralized block chain. Now, these are all terms I assume a lot of our listeners—and we’ve got a few dropping in already including the two Pirate Joes who have dropped by just like clockwork, so it’s good to see them. They might have a comment or two they want to share… and the u2 live stream chat. We also have the video show that we’ve got fired up as well there too, David, if you want to take a look at that. With David, it might be a 30-second delay or so.so that you really have a good idea of what is going on from this end.
00:08:19 David Zimbeck: If you can see any interesting questions come your way, I guess there is no reason not
to let me know.
00:08:25 Pirate Japhy: That’s what we usually do for sure. And, I’ll tell you what. And unlike many of our other guests, you don’t really have to show us any more of your pirate credentials.
00:08:39 David Zimbeck: ha ha ha.
00:08:40 Pirate Japhy: Why might that be?
00:08:41 David Zimbeck: Yaar baby Yaar. I was a pirate in Pirates of the Carribbean 2. Ha ha ha. Back in the
day.
00:08:49 Pirate Japhy: How about that. So, why don’t we do a quick, this is before we really dive into things from a hard core, from a block chain, all of this technical jargon, and so forth with digital currency and what not and cryptocurrency. Why don’t we spend a minute or two talking about that? I’d like to get more into your bio in fact too. Because you are pretty interesting guy based on the information we’ve been presented with here. You’ve really covered a lot of bases here. You’re highly well rounded, world traveler, top world class it would seem chess player. I mean, you’ve got your own photography and video company in place so on and so forth—all at the ripe old age of 12.
00:09:33 David Zimbeck: ha ha. Right.
00:09:37 David Zimbeck: Well to get started. I was in Los Angeles, and my sister was always really big into
acting. So she was the one who kind of introduced me to it. So I knew how to get an agent and I had gone out on some auditions and I actually fared pretty well. I booked a lot of national commercials, like for Time Warner and for America online and other things. And my big role was I got booked on Pirates of the Caribbean 2 which was an audition. I think it was one of the biggest auditions in LA history at that time. There were about 10,000 people who went out for it and they only booked 20 in the core.
00:10:18 Pirate Japhy: Yeah.
00:10:19 David Zimbeck: And I was surprised because I didn’t think I was going to get it because I was the youngest one auditioning probably by about 30 years. So when I got it, it was like oh wow. I was totally new to big roles in acting like that so I didn’t know how to handle contracts or anything like that. However, it was an awesome experience.
00:10:41 David Zimbeck: I went out to the Bahamas in Freeport and was on location. I know Johnnie Depp and Keira Knightly and Orlando Bloom and all that stuff. I worked right alongside them. We didn’t get any credits though because I think because Disney was kind of cheap. And at the end of the production Hurricane Wilma hit and we had to go home a little early. So, only a couple of the guys ended up getting a line. I think I was supposed to have a line but I ended up not getting one
00:11:12 Pirate Japhy: You did a fair amount of swashbuckling I guess and pitched the pitched battles and scenes and so forth. You were in a few of those, that the impression I get.
00:11:26 David Zimbeck: Actually, before the production, we had false teeth made for us, like they gave me a specific retainer that fit my jaw. And they gave us canon training and gun training and all pirate stuff. You know.
00:11:45 Pirate Japhy: Well, that’s pretty impressive. How about that. And a little bit if you want now, now’s a good time. We have a whole number of links we‘re going to share with the people of course. We’ve already done a lead up with putting the show together and of course we’re going to follow-up with things and putting together in the mp3 audio form. Yea, but as far as your company, your photography, basically what you’ve done in that area, in that line of work, that’s all independent. And you’ve traveled. And what is this deal, I really want to know, here’s what really blows my mind. You took up chess, I’m not sure I’m not sure at the ripe old age.
00:12:28 David Zimbeck: At the ripe old age of 12. Some people get into it earlier. I picked it up kind of late.
00:12:34 Japhy Yeah.
00:12:35 David Zimbeck: But I set a pretty high standard for myself. I didn’t want to get my grandmaster’s title, but I wanted to do something equivalent but which was significant. So I ended up getting into something called chess puzzle making.
00:12:51 Pirate Japhy: Right.
00:12:52 David Zimbeck: And I set goals to break certain world records from a really young age. But I think by setting my standard high I sort of forced myself to get stronger quickly. And I ended up doing it. I ended up achieving my goal and breaking a bunch of different world records for chess composition, including the complexity record. So I have developed some of the most complex chess puzzles in the world. And so after that, I was pretty much happy with what I’ve achieved.
00:12:26 David Zimbeck: So, I guess I can compare it like this. Chess when you play over the board live is more
like a sport. Whereas, chess puzzle making is more like an art form. So, it’s like painting a picture. Kind of like that. It’s like an art form within chess. And that helped me get pretty strong. And I ended up becoming a pretty good analyst. I did a lot of analysis for different chess openings and stuff like that. And yeah, I mean, I played against a lot of grandmasters and won a lot of games against a lot of grandmasters. I mean I never went out to get my title. But I am a senior master in the US.
00:14:09 Pirate Japhy: But once in Europe, apparently is the information included in your file. Was it just all in one sitting, all in one tournament, that you knocked off 10 grandmasters? What is the time frame or context?
00:14:28 David Zimbeck: It was an action tournament.
00:14:35 Pirate Japhy: Is that a block, like a 30 second timer. Or?
00:14:40 David Zimbeck: No. I think it was a 10 minute time control. It was in Europe, not in Paris though, I
think it was outside Paris. It was in France. I stayed in France for about 4 months.
00:14:55 Pirate Japhy: Yeah.
00:14:56 David Zimbeck: I had some really good results. But I stopped playing before I hit my peak, because I
already hit my goal. And that’s kind of why I moved around from different jobs, since I hadn’t set it to be my career, because it was never supposed to be my career. But I do think by doing it, it helped me to get good at different things, like programming for example. I was able to pick that up quickly because I was able to visualize code. So I think that by doing that I think it helped me in a lot of other ways. I would recommend it to kids to teach them something like that because chess helps you plan, helps you visualize things without them actually being there. It’s really useful to apply to different fields.
00:15:43 David Zimbeck: Yes, so when I was in Los Angeles. You know, I mean, Los Angeles is what I consider to be the place of the perpetually unemployed. Every time you finish a job, you’re out of work. You know, if you are acting and you finish a commercial, you’re out of work. You need to go find more work.
00:16:01 Pirate Japhy: That’s right.
00:16:02 David Zimbeck: So, I mean I have picked up a lot of other things I’ve done. So, I picked up my real
estate license and I prefer to do stuff on the production end more than the acting end because I was never a big fan of the limelight.
00:16:15 Pirate Japhy: Hmmm.
00:16:16 David Zimbeck: So I was really interested in commercial production and photography.
00:1 6:20 Pirate Japhy: Yeah, right.
00:16:22 David Zimbeck: I started out in photography and moved into commercial production when I met a friend of mine who runs a company called Video Optimize. He would get a lot of people for internet marketing and video campaigns. So, one thing led to another and I was like, well, he doesn’t have a commercial department so I ended up getting commercials from every client he booked in, which meant consistent work, because he would bring in clients all the time. And so, we’d get a lot of commercials. Some of them were cheaper, but every once in a while, we’d get a higher budget. We did one for Mercedes, for example, and a couple other people. So, I did get some pretty consistent work with commercial production.
00:17:02 Pirate Japhy: Yeah. It sounds quite impressive. And it definitely sounds like you’ve been in that area at least, mastering your niche. You’re just like the way we unpacked things in the introduction, we have ourselves on board today a regular, you could say, a renaissance man. Really, seems to have a lot going on for sure. But one of the things I was just going to quickly say was regarding this business of being in the limelight as it were, and acting profession and what not is that a lot of people actually are not interested and one of the reasons is that they find it so bloody boring as far as the movie sets are concerned. I’ve heard.
00:17:49 David Zimbeck: ha ha ha.
00:17:50 Pirate Japhy: That is, god, how long do we have to wait before we actually do the next scene?
00:17:57 David Zimbeck: Tell me about it. The first time, when I was working on Pirates, I was only 19 or 20.
So, when I was sitting on set, I’d never done something like that before. We were working 16 hour days, and it was pretty much hurry up and wait. Ha ha. Hurry up to set. Hey. What are you doing? Don’t slack off soldier. Oh, not wait. You’re there for four hours waiting.
00:18:23 Pirate Japhy: How was the, oh, go ahead.
00:18:26 David Zimbeck: I was going to continue on that because there is something that needs to be said.
When I got on the production end of things and I had a production where unfortunately I got screwed over by a bunch of my friends who flaked, or just came late, and just didn’t appreciate the opportunity. And that was my first production. It was a short film.
00:18:46 David Zimbeck: And, I can tell you from first-hand experience that I now know why productions have so many people waiting. Because they need somebody to be there just in case the star flakes, or just in case the cameraman flakes, or just in case, you know, the DP or whatever You need everybody there. And you need backups. Because , if somebody doesn’t show up, you’re out what of $10 grand or $20 grand—whatever it costs you to film for that day. You lose all of that money, if you don’t have a bunch of people on file. The secret to being a good producer is actually just having a huge file of phone numbers. That’s all you need.
00:19:21 Pirate Japhy: That’s right.
00:19:22 David Zimbeck: You need a bunch of phone numbers so that is someone is not there you need to call
00:19:27 Pirate Japhy: Yeah.
00:19:28 David Zimbeck: and get them replaced in minutes. Which means you need to have people on file who know who you are and that you give work out.
00:19:34 Pirate Japhy: Oh, absolutely. Hey. We’re responsible for putting out a weekly podcast, 90 minutes, and we do all the booking, promotion, and preproduction. So yes, we know what it’s like to have cancellations, whether it is an emergency, health emergency, personal, family emergency. Hey, it happens. And then there is other times when well let’s put it this way: We have to this point actually had to keel hold one of our guests who we had booked with us, who shall remain at this particular juncture nameless. But, that’s what happened with the Robin Hood Captain who just couldn’t take it anymore. Once, he was just too high and couldn’t wake up. The second time there was just a deafening silence. We have to ego stringers. That’s what we refer to in the business as stringers. I totally get it. But the general mood on the set was uplifting and fun and everyone had a good time, basically for the most.
00:20:47 David Zimbeck: Oh yeah. These guys were all bewildered. They looked like pirates. Everyone fit the
bill, man, it was fun.
00:20:56 Pirate Japhy: But they were really. Well some of them I guess. So, anyway…
00:21:00 David Zimbeck: There were people who I think really were missing legs. Ha ha. Really missing arms.
Ha ha. They fit the bill.
00:21:08 Pirate Japhy: Well, yeah. There you go. Well, Pirate Larry, I don’t’ know if you have anything to say to all of this. We’ve just kind of opened things up here and headed out onto… it looks pretty… the ocean and seas are pretty. Nice sailing day I must say. So I’m looking forward to the rest of what we are able to pull together here. Any thoughts on chess or any. Larry, why haven’t you been in any of these movies yet? Or have you.
00:21:45 Pirate Larry: No, I’m too pirate for them. About 10 years from now, people will go, who was that guy. And then they’ll go, hey man, that’s pretty cool stuff. But right now, everyone is hip hopping, and reggaeing, and Bob Marlying and dog stepping and all that stuff. That whole tide has to wash in and wash out and then people will look in the sand and that’s where they will find me.
00:22:14 David Zimbeck: ha ha.
00:22:15 Pirate Japhy: Gotcha
00:22:16 David Zimbeck: Larry’s the genuine article man. Ha ha.
00:22:19 Pirate Japhy: He’s the genuine article, yeah. For sure. So okay, let’s get more direct and to the point as far as all this cryptocurrency. I mean, you can use Bitcoin as an example I guess. But, one of the things we would like to focus on today are the prototypes or alternatives. It’s even been suggested that we address the scenario and explore the idea of a Pirate Coin of sorts, based on blockchain technology. So, I’m not sure where you want to start. Do you want to address that or save it for later? I know, a lot of what we are throwing up there today, the people we will sharing this with, the Halo tech. I mean, where do you want to start? What’s the spoke on the colored wheel exactly?
00:23:17 David Zimbeck: I can lead you on this one. There is so much opportunity within Bitcoin and I
don’t think people quite see it yet. Because it’s not just banking. It’s the fact that businesses can be run, they can pay right out automatic dividends to their shareholders. I mean, it’s really just transparent accounting.
00:23:38 David Zimbeck: You know, a lot of times with businesses, you can look at their accounting,
00:23:41 Pirate Japhy: Right.
00:23:42 David Zimbeck: you can’t look at how they handle their funds. Here, it’s all on the blockchain, right for you to see. So, there is going to be so many projects.
00:23:48 Pirate Japhy: Hmm.
00:23:49 David Zimbeck: There could be a radio project for example…
00:23:52 Pirate Japhy: Sure
00:23:53 David Zimbeck: …where they pay out to their affiliates and you can see all the payments to their affiliates. There could be a construction project that pays out to all the construction investors and the rentals paying out each month.
00:24:04 David Zimbeck: So I see crypto, maybe not now, but within five to ten years if thing continues in the
direction it is going, that these things become a reality. It’s important.
00:24:17 Pirate Japhy: Absolutely, How central a future or role does algorithm coding, if that is the right way of putting it, play in the whole setup and world of blockchain and cryptocurrencies?
00:24:35 David Zimbeck: Oh, you’re saying like what algorithm each coin chooses and the security behind it, or
things like that?
00:24:41 Pirate Japhy: Oh well, the payouts in particular. Exactly. People are interested, well, what’s in it for me and what do I get out of it. You wouldn’t believe the number of times I’ve heard that question. And to this point, acting as the poster boy in some ways to the Pirate Radio broadcast and maybe a wider sort of a venture as well. We’ll see how that all plays out. So basically, how does that all work out, the use and integration of algorithms as far as people, the guarantee, I know the smart contract principal and philosophy rather. Give us a bit of an overview of that, if you will.
00:25:27 David Zimbeck: With a coin, it always depends on how it is distributed. So, for example, if you distributed out the coin for free, and everyone for example who had a valid Reddit or a valid Facebook was able to get coins. Or, if you have some method of distribution at the street end, people can’t really say, well, what’s in it for me? They have coins already at their disposal if they just sign up. So, it depends on how you do it. Some people charge. They run these, I guess they call it ICOs.
00:26:03 Pirate Japhy: Yeah.
00:26:04 David Zimbeck: It’s like crowd funding. I see a place for that. But then, there’s also the problem if you are giving money to people who are anonymous so there’s a lot of scams. And I myself had problems with people who crowdfunded on a project. It’s tricky to do it correctly.
00:26:23 Pirate Japhy: Yes.
00:26:24 David Zimbeck: But it..
00:26:25 Pirate Japhy: David, did I hear you say a word like “Handout, like, free coin to people?” Did I hear that
correctly? Do I need to have my ears cleaned here?
00:26:37 David Zimbeck: Yeah. There’s a lot of different ways to structure a project. You can and out free
coins. You can start an ICO where there is a fundraiser, like a crowd funder. Or, you could do mining. With mining, you can spend a little electricity to mine your coins. I’d say that gives a little bit of value to begin. But that does push a lot of the distribution in to the hands of the miners, which becomes a little centralized. So it really depends on how you distribute your coin.
00:27:03 Pirate Japhy: Yeah. Gotcha. Would you call that like a diverse portfolio? I’m just throwing these terms out
there. I really have no idea what I’m talking about in an official sense. Does that make sense? Diverse?
00:27:14 David Zimbeck: Well, think about the ways companies are. A lot of companies hold more than 50% of
their stocks. If Facebook wanted to dump all of their stock, they could probably bring the price down below a billion dollar market cap.
00:27:26 Pirate Japhy: Ha ha.
00:27:27 David Zimbeck: It really just depends on, maybe not that bad, but you know what I mean. Cryptocurrency is actually probably better distributed than a lot of the companies you see out there today. So, you know, for a developer to hold 5 to 10% is not unreasonable. If members of the community who bought in hold a certain percentage, you know they might hold a few percent here and there, I think that the illusion in cryptocurrency is that it looks so much like penny stocks because so many of the currencies have such a low market cap and there’s not that much money flowing through crypto yet. I mean…
00:28:07 Pirate Japhy: Hold on. Is bitcoin a penny stock?
00:28:11 David Zimbeck: It’s close.
00:28:13 Pirate Larry: There’s the market cap.
00:28:16 David Zimbeck: Yeah, the market cap of bitcoin is what, almost $15 billion? But that’s not that much compared to others. If you look at the New York Stock Exchange that’s like a drop in the bucket. It’s like pissing in the wind. We’re talking about reinventing the financial system. I mean, if this is going to replace money, don’t say billions. Say hundreds of trillions. ha ha.
00:28:42 Pirate Japhy: Yeah, the thing about that.. And I want to come back to this whole thing about penny stock in a minute or two because I’m sure there is a significant number of listeners who have no idea what that even means. Just in a formal sense. So, you may want to be able to unpack that in a moment or two. But, diversity once again. Charles Darwin, one of his, not that I’m a huge Charles Darwin fan necessarily, you know, I’ve read a few books and there are certain things that jump out at you. You work on separating the wheat from the chaff if you follow what I am getting at. What he talked about though, that he said was key to survival of many species was diversity. And the bottom line, you diversify or die. So, I would imagine to me looking at that, the same would apply when examining or taking into account what it is we have, what we use as currency in the modern world as well as what we can learn from studying history too. But you pointed out or tried to make the point basically that we are on the cutting edge on the cusp of something that could prove to be quite monumental. I think one of the adjectives we used in the introduction to this episode was revolutionary—highly innovative of course too. So, but what do you… what does this business sound like… why do so many people have in their heads that it going to be just this, that we totally have to do away with other forms of value in society? And that we would have to do just the cryptocurrency only. Why is that?
00:30:26 David Zimbeck: That’s just conditioning,
00:30:28 Pirate Japhy: Yeah.
00:30:30 David Zimbeck: I’m sorry. That’s just conditioning, because people are conditioned to only know one currency. Imagine if you are 40 years old and you have been using the dollar all your life. And you can’t imagine what it’s like to have those options. Now, houses are the same as assets and cars are just assets and they are on a blockchain and you can trade them at the click of a button. You know, it’s not something people can wrap their minds around yet. But they are getting there. As more people get exposed to Bitcoin, they start saying, “oh wow. I didn’t know you could do that.” You know.
00:31:10 Pirate Japhy: Virtual currency.
00:31:12 David Zimbeck: Yeah. It’s a notary on the blockchain basically. You know, cryptocurrency, it’s more
than that. It’s that you can have assets, you can have notary, you can have money, and you can have signatures. Like signed contracts. And all of these things contained in a history. Even those types of things can be done peer to peer, you know, you and I could get those contracts but the contract like in Halo for example, would be unbreakable. So, this idea of an unbreakable contract is so foreign to people. I usually have to explain it a couple times to try to truly get people to understand what it means.
00:32:01 Pirate Japhy: Right, that’s where we get into the smart end of things. I guess that a man or woman’s word is their bond. So yes. So, if you don’t mind, that’s worth examining and exploring. And don’t forget penny stocks, we have to circle around back around to that.
00:32;22 David Zimbeck: Yes. I can brush up on that real quick. So, the cryptocurrency markets have in
common a lot with the penny stock markets. I don’t know if you’ve ever seen the movie Wolf of Wall Street. I wasn’t a fan personally. But it does,
00:32:39 Pirate Japhy: Big movie big movie.
00:32:41 David Zimbeck: It was a big movie and it kind of shows what penny stocks were in a sense that they basically were those very cheap stocks that have a very low market cap, which means, it takes a lot of money to move the price really quick.
00:32:54 Pirate Japhy: Junk bonds junk bonds. Buy low buy low sell high.
00:33:00 David Zimbeck: Exactly. Buy low sell high. So, the kind of thing with cryptocurrency, is kind of like that, where the prices can be pushed around easy. And then that means the prices go up really quick and come down just as fast. I wouldn’t call it a scam, but I’d say it’s really hard for people who are investing to make sure they are going to make money. Because, it’s a gamble, like the stock market is a gamble, but it’s a slower gamble. You might make 10% or 20% a year. But in the penny stock industry, you could make 500%, 1000%. In crypto, it’s probably just as much or more. Some coins have gone up 10, 20 times, or 30 times only to go back down 100 times. There was a coin years ago called Aurora coin that was worthless and went to $100 and then went all the way back down to be below $1. So, it just happens and unfortunately there is a lot of marketing in the cryptocurrency industry.
00:34:06 David Zimbeck: And this is really important to anyone who is listening. There are a lot of people now
entering the cryptocurrency industry that know that they only have to market to make money. That they aren’t actually developing anything. So, they will basically promise you a bunch of things and make a lot of lies. They will promise the moon and not deliver. I’m going to make the argument that if you are ever going to invest in a currency—in Bitcoin or any other alternative currency make sure that you download the software and make sure that software is different that it is unique and you can tell that they are actually working on something and if they have added something you can physically use. Because if they haven’t, I wouldn’t invest.
00:34:35 Pirate Japhy: You know, scams and con jobs and flim flam is how you and Larry termed in your initial interview there and exchange you had. Well, Cryptsy.com—I don’t know if you heard of them but you have now—they took me for $100. And I’ll call them out Cryptsy.com. If people just want to make a note of that if ever they are thinking of or if they have money to burn that is just laying around the house with nothing better to do with. So, well, with the whole thing. Watch out. Here’s a question. Is there any official body or any place, as far as complaints department, where people can wash their grievances in the event they feel they’ve been fleeced or had?
00:35:42 David Zimbeck: Well, I would like to argue is there a complaints department in any industry? When
the real estate department collapsed there were escrow agencies who were making away with millions of dollars and they were not seen in any criminal cases, maybe in a civil case. Is the government accountable for their actions? Is anybody held accountable for anything? That’s the reason I made BitHalo in the first place. We’ll circle back to that.
00:36:10 Pirate Japhy: Yeah.
00:36:11 David Zimbeck: But to answer your question better, you’re dealing with people from all different
kinds of countries. And, I got screwed in my own project by some guys from China and a guy from Canada, and a guy from Korea. But when push comes to shove, what am I going to do? Am I going to file a lawsuit in three different countries? No.
00:36:30 Pirate Japhy: No, you’ll probably just when you get the chance, you’ll call them out on your podcast. I know that’s what I would do.
00:36:36 David Zimbeck: Yeah.
00:36:37 Pirate Japhy: That’s worth $100 bucks. That’s worth a $100 loss. I can absorb that. Not a problem.
00:36:44 David Zimbeck: Well, they didn’t have good reputations to begin with. I think this really just means
when you deal with someone, you just do your homework, especially in the crypto industry because you don’t really know who you’re dealing with. And I think people are just genuinely…. The problem is in society is that we have so many trusting people. Everybody just trusts everybody. They trust their money, they trust their car, they trust their computers.
00:37:07 Pirate Japhy: $100, though I had done the homework. I had put some time into it, but apparently not enough. And the thing too, is, living out of the country in South Korea and no spy phone. I’m not sure how else we do the quick little transfers from the bank, though. Kind of or worried like shit man. All these bastards haven’t gone in there and totally drained everything.
00:37:32 David Zimbeck: Well…
00:37:34 Pirate Japhy: Thank god that didn’t happen.
00:37:36 David Zimbeck: Well, here’s how the major problem is, when you’re talking about Cryptsy and
cryptocurrency exchanges. It’s actually very simple. Bitcoin is anonymous. Okay. So, there’re no names on the account. So, therefore, if you trade Bitcoin on a website, where the website is holding that money, then they can claim that they were hacked and steal your money outright, legally, and then say they were not responsible for the hack. So, it’s just a cop-out. And there’s already been about 10 different exchanges that have gone insolvent.
00:37:41 David Zimbeck: So basically the rule of thumb is when you invest in Bitcoin, you do not keep your
money on online services, ever. You keep them on your computer. And, um, you can do that. You can send it to an account that you control, that you have. But, if you put your money online, you can use it to do a couple of trades maybe, one coin for another. But when you finish the trade, take your money off and put it on your computer. Because at any time, those exchanges could disappear with your money and claim they were hacked, and it’s not their fault. And, that will not stop until there is what is called a decentralized exchange. This is basically a peer-to-peer exchange.
00:38:41 David Zimbeck: My software already does it. BitHalo does it. But the thing is is it uses double
deposit and is not as fast as an exchange can be. So people are not using it. It’s just not popular enough yet.
00:39:00 Pirate Japhy: Hmm
00:39:01 David Zimbeck: But it will be when people learn their lesson. When people lose enough money, then they’re going to start looking at decentralized options.
00:39:08 Pirate Japhy: The intent with this whole business regarding Cryptsy.com was not to store the digital credit online via their services. The problem was as quickly as that money left the bank account, they registered, and my wife got a receipt and basically a confirmation that it had been received. There’s just some funny stuff going on there, and a lot of just kind of ….
00:39:42 David Zimbeck: Japhy, Cryptsy is just completely insolvent. They disappeared. Their web page isn’t ever up anymore.
00:39:48 Pirate Japhy: Yeah. They stole.
00:39:50 David Zimbeck: They stole like millions and millions of dollars, in Bitcoin, alternative currencies.
Cryptsy is one of the biggest scandals,..
00:39:59 Pirate Japhy: Yeah.
00:40:00 David Zimbeck: …of 2016. So, you know, you’re preaching to the choir, bro.
00:40:03 Pirate Japhy: Right.
00:40:04 David Zimbeck: I’ve lost 3 bitcoins to an exchange call Mintpal, I lost 3 bitcoins on Biter. The owner
of Biter himself screwed me in a project. That was before he went insolvent and he stole $7M. So this is, you’re just preaching to the choir. These companies they just spring up and they disappear. And, I’m just saying take decentralized options over sticking your money online.
00:40:33 Pirate Japhy: I have no doubt. I’m following your advice to a T the next time if I do decide to embark on a
similar personal journey. Just a quick little addendum though to things here. Interestingly enough, I had crossed paths and have come into contact with this one individual via Blab.im, an online videoconferencing platform that also just happened to go tits up not so long ago as well. But he claimed to be, this is after the fact that I already, I basically aired my grievances over on that network to a certain extent. And this guy kind of popped up out of the blue I guess and claimed to be one of the top, one of the head reps for Cryptsy.com out of Canada. He also for whatever point added his little aside that he happened coincidentally to be a freemason.
00:41:30 David Zimbeck: ha ha ha.
00:41:31 Pirate Japhy: So, this is not great PR for freemasons clearly. And this kind of shenanigans they tend to get up to from time to time. Fleecing the general public to the tune of how many millions. But, isn’t that something. So, gotcha. So, I hear you loud and clear there. That’s enough of that. And the event, once again, just to repeat, and reiterate, is that if there is an opportunity to try it again, to give another kick of the can, we’ll definitely take all of your advice more directly. I think that in fact, the interview you did with Larry, I think that was after this all went down. So it didn’t really have any impact except I wasn’t schooled enough. I’d give it a chance. Dude, it’s all about risk taking. That’s a great point that you made earlier. It’s important that people hear that. Any form of entrepreneurship is. It’s all about risk taking. You have to be able to take some chances from time to time. Sometime it pays off, other times it doesn’t. The thing that really miffed me, though, was my personal details including passport information and a photograph. Hey, it’s me. I’m here. Because I rarely ever do I put pictures of myself online. So that was invading the privacy. You know, they should have their asses sued. But as you say, they’ve gone insolvent. They’ve scattered to the four winds. Completely. Good luck finding them. Because I gave up. I just said fuck it. Good luck finding them. Time to move on to bigger and better things, obviously. To focus on here. So, Pirate Larry, I think unless he’s dozed off in his grog, how’s his condition there. Is he holding up?
00:43:30 David Zimbeck: He’s pretty drunk.
00:43:32 Pirate Larry: Yeah.
00:43:34 Pirate Japhy: Fine wenches there.
00:43:36 Pirate Larry: Yeah. Fine wenches here at Howl and Wolf. I can understand why… But, yeah, know what I want to do. I wanted to ask David’s idea of where things are now. Which I think you covered a little bit with the penny stock arcade that cryptocurrency is looking like. And, then, why are the big banks getting into all of this stuff.
00:44:07 Pirate Japhy: Yeah. Exactly.
00:44:09 Pirate Larry: And how can we use peer-to-peer to really create our own transactions and get away from
central banks, central anything. That’s kind of what I wanted to ask David about.
00:44:24 David Zimbeck: So I can take it from there?
00:44:26 Pirate Japhy: Go on, go ahead.
00:44:28 David Zimbeck: The general consensus among a lot of the top developers in Bitcoin is that it was
probably developed by members of the US government, or multiple governments I guess. And, they were probably handled, some of them were inadvertently handled in order to contribute code, probably not realizing they were contributing to the project. With that said, I think there is major benefit for governments to switch over to cryptocurrency technology and this is more like a breeding ground. Consider it like the Internet.com boom where nobody knew what the internet was going to become.
00:45:14 David Zimbeck: I think you can safely say that all telecom and all internet are totally controlled by large-scale government agencies and that the results you get in a lot of search engines are controlled and are controlled well. So, I think that the thing is, what we have in Bitcoin is positioning. And there are a lot of people who are trying to position themselves into the public’s mind so the public doesn’t forget, for example, things like unbreakable contracts, or pegging technologies or other things that are really useful for keeping Bitcoin what it is supposed to be, which is free. You know, freedom.
00:45:59 David Zimbeck: We are fighting for people’s freedom. The internet no longer is a place for freedom of
speech. It was when it started. And then it became not that way because you know governments guided it and put their hands in it very early. They’re the ones that started it first of all. The internet started in the military. So, it’s not like the government doesn’t produce good technology. They do. A lot of the stuff that they made is wonderful, actually and can be very useful to the people.
00:46:25 David Zimbeck: However, when they get something out to the people, their goal is usually to control it
so people don’t have their unabashed freedom. And, that’s a bad thing. Because freedom is always good and if you have free currencies, you have laisse faire capitalism, you have things the way they should be. You know where people use their own discernment, let the buyer beware. And, help the poor. And help distribute funds and everything correctly. And not just go into the hands of the few ultra-super-powerful.
00:47:00 David Zimbeck: So, that’s like my long-winded answer to it. It was probably developed in the
government somewhere. And there are now people who are doing their own thing with it. And, it’s becoming independent, and peer-to-peer. Our goal is to make sure it stays peer-to-peer and people will always have their own alternative solutions. And hey, you don’t want to use the government’s coin? Use this coin, use that coin. And to keep those options open. And to always make it possible for people to exit any currency, no matter how corrupt it becomes.
00:47:36 Pirate Japhy: Larry, is there anything else? Did he manage to address all of your concerns there? I know,
once again, this whole business of the powers to be, the dollar does not seem to be in the greatest shape. Fiat currencies date back to paper money, funny money some people would want to call it. You know, it’s interesting. Look what happened in India the other day. Here’s a great issue you might want to address. It probably fell into your radar at some point, in the last ten days or so. But, what was it, India’s Minister of Commerce or Economics? The Economy Department pulled a switch and one night and suddenly decided okay everybody, it’s just digital currency now.
00:48:38 Pirate Larry: They started confiscating gold.
00:48:40 David Zimbeck: They started confiscating gold.
00:48:41 Pirate Japhy: Yeah, but.
00:48:42 David Zimbeck: What about their digital currency though?
00:48:45 Pirate Japhy: But hold it. The push was that they wanted to take away the rupee or something didn’t they, and just make it all electronic. I think that was the deal.
00:48:55 David Zimbeck: Not surprised.
00:48:58 Pirate Japhy: You didn’t get into…
00:49:00 David Zimbeck: Yeah. This was all positioning. Everything’s positioning, little power plays. There’s always the silent war going on.
00:49:11 Pirate Japhy: Right.
00:49:12 David Zimbeck: You know, there are people silently trying to get the best technology through. It’s just very reminiscent of the days when Tesla wanted free energy for the people. He knew many different ways to get the people free energy. Unfortunately, he lost the war. But not forever, right? He lost it for this period, for that period. But maybe his technologies will see a comeback.
00:49:39 David Zimbeck: You know, you can’t kill an idea. Ideas are immortal. So, as long as we can make sure
that our voices are heard and our technologies are seen, and the beauty of cryptocurrency is this is the expression of finance, and contract, and agreement through technology. So, it’s like 3-D printing. We can prove using technology as open source how to do secure money and secure finances and other things.
00:50:12 David Zimbeck: And, actually in the case of cryptocurrency, with certain technologies, you actually
can completely negate risk. For example, when you have an agreement in person today, if you and I formed an agreement, we don’t have any trust in our agreement. I have to trust you pretty much on faith and you have to trust me on faith. But in cryptocurrency, for example, like BitHalo, both parties put up a deposit and can’t break their end of the agreement. It’s like we both have a gun to each other’s head. And if we either of us lie to each other, we both perish. So, it’s like reverting everything back to the pirate day. You know, you were a man of your word, and that mattered. You had to honor your word.
00:50:59 Pirate Japhy: Well, Yeah. And that’s exactly how you got things done. You are, or are you not, I’m not sure, if you are the innovator in respect to these digital smart contracts or not. Or, if you’ve been working together with colleagues in developing things, but...
00:51:19 David Zimbeck. The innovator. Well, I’m the only coder to BitHalo. There is nobody else. And it’s over now 40,000 lines of code. All custom. Nothing’s cloned from any other code base. But it’s on the client’s side. So it’s leveraging what Bitcoin can do, what alternative currencies can do. It’s not its own coin per se. Unless you bring up BitBay, which BitBay in that case is. And that’s a whole other set of technology, with the pegging technology.
00:51:56 Pirate Japhy: Right
00:51:57 David Zimbeck: And so.
00:51:58 Pirate Japhy: Yeah. We’d like to talk to Larry about that. A couple of minutes as well too. But, before we do that. You mentioned Bit and the Halo. Bit versus Black I guess. If you could clarify how those two are distinguished and what was required for you to put those together, and how it’s applied.
00:52:24 David Zimbeck: Well, it’s pretty much that Bitcoin is one of the best and it’s the original. And it therefore there needed to be a BitHalo. However, it’s slower because Bitcoin confirmations take about ten minutes. And Blackcoin was the first completely proof of stake coin, which means they don’t waste tremendous amounts of electricity and energy with those big mining rigs that Bitcoin needs. Because in order, for just the listeners here, in order to produce new coins on a Bitcoin network or any type of cryptocurrency network, you need to hold a competition.
00:53:04 David Zimbeck: So in Bitcoin, the competition for the new coins is solving a math problem, and the
first one who solves it gets the new coins. Whereas, that ends up burning a lot of energy because they end up needing to use a lot of electricity and they need to use a supercomputer, and they need to be part of big money pools where there are other people competing to win these math problems, because it gets increasingly competitive. And that’s a waste of energy. A complete waste of energy. It’s like billions of dollars of energy down the drain.
00:53:33 David Zimbeck: So, there’s better ways to hold these competitions. And that’s just by random chance.
So, we can hold these competitions by random chance just by pretty much basing it off an interest. That you get interest on your money every year. So, like, you’ll get 1% interest, or 5% interest. Or, whatever the coin says. Blackcoin was the completely fully proof of stake coin. And then it got copied so much, it was such a popular coin. And, it is faster. So, for me for doing contracts, at the time when I first developed the software, I wanted to something faster, so that I could test quickly, and do contracts nice quickly . You can do a contract from start to finish in BlackHalo in maybe 15 minutes. It was awesome.
00:54:19 Pirate Japhy: Let me get this straight, David. This Bit/Black coin Halo technology you’ve developed is largely a means of facilitating these digital blockchain transactions. It provides a built-in safety firewall, safety mechanism of sorts, primarily. Is that right?
00:54:40 David Zimbeck: Right. So the Halo technology, are you familiar with how Halo works? With smart contracts?
00:54:48 Pirate Japhy: No, no. Maybe we should back up a little bit and kind of map that out a little more clearly.
00:54:55 David Zimbeck: Yes. Because I kind of briefly summarized it, but let me make it simple for you. So, smart contracts. I was the first person in the world to do them. And especially to have them working and a piece of software you can download and use. And, Bitcoin is just basically sending and receiving money. What a lot of people don’t realize is when you send money in Bitcoin, you do it with a signature. Kind of like your signature on a piece of paper. But, this is a digital signature.
00:55:23 David Zimbeck: So, what it means is that if you can create a contract in Bitcoin—like I promise that I
will mow your lawn, or I promise that I will sell you my guitar, stuff like that, then you can do digital contracts. But the thing is it’s hard. A lot of people have been struggling with how can we enforce an agreement on Bitcoin. And, I have discovered a way to do it using deposits.
00:55:49 David Zimbeck: So, basically you and I could put our money in a joint account. Okay? And, it’s all in
one transaction. It goes in simultaneously. We have our money in a joint account and we both make a deposit. So, if you are going to sell a guitar for $100, you as the seller would actually put up a little bit of collateral. Because I want to make sure you are going to send it to me as you promised, and that you are not going to send it to me screwed up. And I, as the buyer, am also going to put up collateral, including an advanced payment. So, I’ll put up a couple hundred bucks. So, now, when you send me the guitar, I can’t steal it from you. Because, why would I spend $200 on a guitar that’s worth $100. So, I have to sign-off on my end, and you have to sign-off, in order for us to get our deposits back.
00:56:50 Likewise, had you given me the wrong guitar and it wasn’t as described, I could say hey this isn’t what we agreed to. Then, it’s pretty much you cancel and you let me return the guitar. And, at no point could we screw each other. Because if I screw you over or you screw me other, then we’d both lose money. Think of it like we both have a gun to each other’s head and if either of us lie to each other, we both perish.
00:57:13 David Zimbeck: It should then be added that the funds, when you break a contract and when neither of
you can come to an agreement, there is no middle man. There is no government,
00:57:24 Pirate Japhy: Right.
00:57:25 David Zimbeck: There are no judges, there are no lawyers. There’s no jury. And one of my major epiphanies was, oh you know what always happens when people go to the jury, but the jury doesn’t know anything about whether or not the guilty party is really guilty. I mean, they don’t know. It’s their guess. They are totally guessing. And in some of the cases you see in the United States, the whole innocent before proven guilty, it’s just not really true. I mean, the people in the United States courts are constantly thrown into jail without any evidence at all. And, it’s just bullshit. And I think that there is a judge and a jury that is totally biased. And this [smart contracts] obviates, this eliminates them. It just bypasses it. You don’t need that. You don’t need that because the enforcement is built into the contract.
00:58:19 David Zimbeck: And, historically, all contracts have been enforced with a gun. In other words, behind
every lawyer is a gun. Because if you don’t pay your judgment, even if it’s a civil judgment, they can garnish your wages, they can try to do something with your house, and if you continually ignore and not comply with the law, they can send cops to your house. And, if you don’t comply with the cops, they might shoot you. So, behind every lawyer is a gun.
00:58:41 David Zimbeck: This is the first “peaceful” contract in history since the enforcement of the contract is the money. Because, if you don’t honor the contract, the money just blows up. It doesn’t go to me, it doesn’t go to the Bitcoin network. Unlike dollars. Sure, you can set a dollar on fire and that is basically what this is. Sending the Bitcoins to an unspendable address is the same as blowing them up. So, if we don’t agree, we both lose.
00:59:08 Pirate Japhy: You’ve also worked into your algorithms something where you have with the bonded end of things that from the get-go you put in maybe say $100 to kind of prove that you’ll live up to your end of the bargain. But then, over time, your bond rating improves so you don’t have to continually offer as high a percentage on the amount you are using as part of your transaction?
00:59:44 David Zimbeck: Yes, correct. So in BitHalo and BlackHalo, there are these decentralized markets, very similar to TOR and how basically a free internet operates. There are no servers so it’s all peer-to-peer and people just post orders of things they want to buy or sell, or including employment contracts, bartering contracts, they could trade cryptocurrency coins, really any agreement you can think of can be done. I mean, you can do futures, binary options, anything. So with the system of having these markets, we have a reputation system. Because, we can actually check whether or not your account has been involved in default. Because it’s all on the history, the Bitcoin history. That’s the beauty of Bitcoin, that it’s totally open and you can see the history. So, we can read whether or not your specific account was involved in defaulting contracts or whether or n ot all your contracts when through successfully. And, if we can see that you are a longstanding account and you’ve had all of your contracts, 100% of your contracts have gone through, and you’ve run 30 or 40 contracts. Then, I don’t think I’d require you to put up a bond that would be high. Maybe for a $100 guitar, I would only make you put up a $20 bond. And, that’s favorable to merchants. Because, if you are selling a lot of guitars, you don’t want to have to put up a equal bond for every guitar sale you are involved in. But also consider, that if you are selling guitars, you might make thousands of dollars a month, but you might only sell so many guitars a day. So, it’s okay to put up the bond anyway because you’re not going to be selling your full bank account on a given day. Nobody can deposit that to put into a new deal. So as long as the volume, the daily volume of what you are selling is not exceeded by the deposits, you should be fine.
