Bitcoins and Gravy Episode #52: Fools' Gold and Dolphin Tanks (Transcript)
Episode notes and comments page :
Professional transcription provided by a fan and consultant of the show, who can be found at http://www.diaryofafreelancetranscriptionist.com
Announcer (John Barrett) : Welcome to "Bitcoins and Gravy", Episode 52. At the time of this recording. Bitcoins are trading at $254.00 each, and LTBCoins - everybody's favorite coin - is trading at .000422 - as in "two [to] the moon" - US dollars. Mmm...Mmm...Mmm.. Now that's gravy.
John Barrett : Welcome to "Bitcoins and Gravy", and thanks for joining me today as I podcast from East Nashville, Tennessee, with my trusty Siberian Husky Maxwell by my side. Say hello Maxwell.
Max : Grrrrr…..
John Barrett : Good boy. I'm just your average bitcoin enthusiast, who happens to be lucky enough to talk with interesting people from all over the world about Bitcoin, digital money, and the future of finance, that is now. Please join me each Monday morning, right here on the Let's Talk Bitcoin network, as we explore, together, the past, the present and the future of money - here at the dawn of the “Age of Crypto-currencies”. Welcome back friends, and hello new listeners.
[intro music ends]
John : On today's show I am honoured to be speaking with Dr. Charles Evans, professor of finance and economics at Barry University in beautiful Miami Shores, Florida. Dr. Evans talks to us today about : "Fool's Gold", “Dolphin Tanks” that replace shark tanks, the "Lighthouse Project" by Mike Hearn - great project - and how a lot of people may unknowingly be stepping right over stacks of money in their rush to get rich.
John : All right. Today on the show I am very happy to welcome Dr. Charles Evans, professor of finance and economics at Barry University in Miami Shores, Florida. Dr. Evans, welcome to Bitcoins and Gravy.
Dr. Charles Evans : Glad to be here.
John : Oh, hey thanks. So what is your weather like there in Miami Shores today?
Dr. Evans : Partly cloudy, and right now I'm looking at 78 degrees in Miami. It probably will hit around 80 by the afternoon. So, it's finally cool enough for us to open the windows and doors.
John : Oh man. I'm envious. That sounds so much better than Nashville weather. And, you know, I took a look at Google Images earlier, at pictures of Barry University (http://www.barry.edu/ ). That is a beautiful university.
Dr. Evans : Yes. It is, actually, a very nice university. It's been around since 1940, and they have very good relations with the neighbourhood around them, which is an interesting mix, because Miami Shores by the water is very wealthy. But as you come inland, you get to “Little Haiti” and the areas of Miami where Trevon Martin was from. And so it's a very interesting mix there. The student body is also very diverse.
John : So you are a professor of finance and economics. Now, do you teach your students anything about Bitcoin or crypto-currencies in your class?
Dr. Evans : As a matter of fact, I do. We have students from all over the world. I've got Chinese and Japanese students, people from the Middle East, people from sub-saharan Africa, Latin America, and the Caribbean, of course.
John : Wow.
Dr. Evans : And after graduation - owing to the rules here in the United States - they have to return home. So I've incorporated Bitcoin into my economics and finance classes. I am now requiring student to be acquainted with people in parts of the world where they do not have family ties. So if you're from Latin America, I want you to meet somebody in Africa. Or if you're from the Middle East I want you to meet somebody from outside of the Middle East. And so, I'm putting them together with people overseas just to connect the dots of the material in class. Because when you're talking about balance of trade, and things along those lines, it can be pretty dry. But when you're negotiating with somebody in Ghana about getting some spices, or Shea butter - or something like that - sent over, it's a very different experience when you have to deal with clearing customs and things along those lines. Bitcoin enables transactions that were literally impossible even five years ago, and so we're seeing a huge amount of interest coming out of - I don't even like calling it "the developing world" anymore. I refer to it as the "emerging middle income countries”, because these are not the people of the "Third World" that we grew up thinking of, you know? When was the last time you heard about a famine?
John : Right.
Dr. Evans : We're talking about people who have $30 HTC Smartphones, and they're on Facebook all day. It's a very, very different world from what it was - like I said - even five years ago. It's just mind-boggling.
John : I agree. I don't know what they're teaching in public schools these days. Hopefully it's better than what I learned. But we really, kind of, shut off from learning about Canada and Mexico here in North America, where we live. Canada was "ice and rivers and lakes", and Mexico was "pueblos and burros, and straw hats, and little villages", right? We never learned that there were large cities with commerce, and public transportation, and libraries and symphony halls. We never studied Mexico City at all - one of the oldest cities in the world, here in North America. We certainly didn't learn anything about Central America, or South America. And then when it came to the rest of the world - you know, Africa, China. As far as the "developing" countries - we didn't learn anything about those. As far as we knew there were just huts, and there were tribes, and people carrying spears, and massive areas that were desert, or that were jungle. And that's all we really learned. And it's really sad to think that that was my public education when it came to these "Third World" or "developing" countries.
Dr. Evans : Yeah. It might be more appropriate to refer to it as the "leap-frogging world", because they went from not having phones to having mobile phones, and now we're going from not having bank accounts to using virtual currency. So the old images just don't apply. And if you want to see a brilliant send-up of this, you can go to http://www.africafornorway.no . There are some young men from sub-saharan Africa - I gather they live in Norway - and they're working with some Norwegian students. They've been making these very biting, satirical videos about "poverty porn". So they did one where they have a bunch of African people singing one of those "We Are The World" type songs, trying to get Africans to send radiators to Norway to help the “poor Norwegians” because they're freezing to death.
John : [chuckle]
Dr. Evans : And then they do another one that's like, "Who Wants To Be A Millionaire?", but it's "Who Wants To Be A Volunteer?". And they're just awful, and they're funny as all get-out.
John : Oh, I love that. That is so creative, and so timely, right?
Dr. Evans : Mmm Hmmm.
John : Wwo. Good stuff. So let me ask you - before we really get into talking about Bitcoin, and talking about some other things today. The other professors that you know, who teach finance and who teach economics, there are at your university and other universities, do you feel like you get any flack from them? Do they look at you as a "crazy man"? Do you get any flack from the administration at all, because you're talking to student about Bitcoin?
Dr. Evans : At my previous university - where I was a visiting instructor for several years - the looks that I would get bordered on pity.
John : [laughing] Oh, that's funny.
Dr. Evans : Now I take a stack of "Why Bitcoin?" magazines with me, and there's a table in the hallway, and every now and then I have to replenish it. And I've seen my colleagues walking around with it. So, their instinct was to look at me as a madman, but I've got one or two of them who were sitting on the fence - they wanted to like it, but they didn't know enough about it. Then I walk in, and I start talking about this stuff with a straight face, as if it were for real, and so they're starting to warm up to it. The really interesting thing is the administration at our university is very interested in the stuff that I'm doing with it because - well, for one, I'm able to drop names like Microsoft and The United Way. Then we had the news yesterday about a former CEO of Citibank investing in Coinbase (https://www.coinbase.com/ ). So the news that's coming out is an easier and easier sell, but it really has been a rough go over the past couple of years, because there were all of these misconceptions, and only very few of us were involved in the "money punk” movement back in the 1990s. And I would say essentially no academic is even aware of David Chom and E-Cash, and things along those lines. For a lot of people this is new stuff. But there are those of us who have been doing this for a very long time, and this is just a natural progression that's been going on for about a quarter of a century.
John : Yeah, it makes sense. I tend to think that the people who have taken to Bitcoin from the very beginning - or when they first heard about it - I am one of those people. I do not have a background in finance. I do not have a background in cryptography, or in any kind of tech. Really, I've been using computers for years, and am pretty much self-taught. But I think it has something to do with an individual's personality. Those people who are more curious - naturally curious – seem to me to take to Bitcoin, and to take to the studying of Bitcoin, very readily. And those who are not curious by nature, I think they have a very difficult time wrapping their mind around the whole concept of Bitcoin and digital currencies, and accepting the fact that this is a financial revolution. And I feel sorry for those people in a lot of ways, because I think that they've been distracted by so many things, that they've then spent their time trying to poke holes in Bitcoin, or trying to disprove it - or discredit it in some ways - when they really could have spent that time embracing it, learning about it, [or] just diving in and finding out if there was a place for them in that, or at least accepting how blockchain technology and crypto-currencies are changing their world.
But Charles, I digress, because I want to talk about an article that first introduced me to you - the article titled "Fool's Gold Rushes" (http://cointelegraph.com/news/113294/fools-gold-rushes-op-ed ), in reference to the Gold Rush in the 1800's, and how that relates to what people are doing these days - rushing into these new platforms, projects, and digital currencies. Can you talk to us a little bit about that?
Dr. Evans : Yes. And also, if you’ll note the placement of the apostrophe in the title, that was intentional.
John : Yes.
Dr. Evans : So, yes. I’ve been telling my students now, for more than a decade, that if you look back at technological history – thinking in terms of Jeffrey Morris crossing the chasm, and that sort of thing. Or the sort of stuff that Ray Kurtzweil likes to write about. It seems that approximately once every decade we have, what I refer to as, a “gold rush”, which is a period of time – it’s a very brief period of time – when something that was not possible, now is possible. And if you wrap your arms around it now, and make it your own, you can ride it to potentially great wealth – or at least have a little fun with it.
John : Mmm-Hmm.
Dr. Evans : Think back to the 1980s, with the breakup of AT&T. It became possible in the United States, for the first time ever, to start a competitive long-distance phone company. But if you missed that boat, you had to wait for the next one.
John : Mmm-Hmm.
Dr. Evans : It was actually less than a decade after that that cellular technology came on the market, and you could slap some antennas on top of people’s office buildings, call yourself a mobile phone company, and then hope that McCar – or somebody like that – would come and buy you out. If you wanted to start a cellular phone company now, it would be prohibitively expensive, and why would you do that?
John : Mmm-Hmm.
Dr. Evans : Go to the early 1990s, you could have registered one and two-letter domain names – or “every naughty word you could think of” dot com, and then sit one those and keep re-registering them until somebody pays you outrageous sums of money so that you can have them. But you cannot register “x.com” today. It’s gone. In fact, you can’t even register “allthegooddomainnamesweretaken.com” because that one is taken too.
John : Yeah, you know I have to interject there, but I don’t want to throw you off track. I’d been dabbling in domains for years, and then when Bitcoin came along I got so interested in Bitcoin, I forgot about the domain names. And what I should have been doing is buying up “bit” domain names. So I really dropped the ball there. But I do have some good ones. If I had the domain name “egg.com” – I think “egg” or “eggs.com” would be worth a lot. But I don’t. I have the Spanish version. I have “juevo.com” – which I think is still a good one. I’m still, kind of, hoping that that can pay my utility bill someday. But I digress into domain names, but your point is well taken, so please continue on.
Dr. Evans : Yes. So as I said, I had been telling my students this for quite a while, and then it seemed as though we had been in a dry spell for longer than a decade. I attribute this to the 911 attacks, and the passage of the “USA Patriot Act”. I was involved with what we called “E-Currencies” back in the 1990s, and after the “USA Patriot Act” interest in our industry basically fell off the face of the earth, because we were moving money around the internet. And that’s when I returned to academia to teach. And I was counting the years, and I said, “Well, we’re getting into 11…12… 13 years. Where’s the new gold rush?” And I wasn’t seeing it, and it was starting to bother me. I used to stand up in front of 200 students and tell them the same story I’m telling you now. I said, “I don’t know what the next gold rush is, and as delightful and wonderful as each of you is, I certainly wouldn’t tell you if I knew.” And I started hearing about Bitcoin, and I had the same reaction as a lot of other people had – who had been in this field for a very long time – which was, “Yeah…yeah…We’ve heard that all before.” Because what a lot of people – actually, I’m surprised how many people do know this, but a lot of people don’t – is something known as the “Byzantine General’s Problem” had been shown logically and mathematically to be insoluble. It was impossible to have a system like Bitcoin. And you can go back and find the articles about this. They’re all available online. You can read these things. And they explain the great logic and math, that it can’t be. And the idea of having this distributed, shared transaction history, was ridiculous a decade ago, because – good gracious – you’re talking about gigabytes of information. I mean, how are you ever going to pull that down from a dial-up modem. Well, the technology progresses, hard drives become cheaper than water, processor speeds pick up, bandwidth picks up. We now carry the internet in our pockets, and we can watch videos on our telephones. The technology catches up, and what was very wasteful in the past becomes very plausible now. Satoshi Nakamoto comes out with this design, and it worked.
John : Yeah. Whoa! [chuckle]
Dr. Evans : That wasn’t supposed to happen. It had been proven to be impossible. And so – what was it – 2010…2011 - people started hearing about it. Then, naturally enough, who picks it up first? The people who are engaged in activities that the mainstream banking system doesn’t like. So we had the “Silk Road”, and eventually we got gambling, and now we’ve got adult entertainment, and this is how it works. This is how the VCR became popular. You know, people making videos at home, and stuff like that. And now we’re starting to move into the more “early adopter” – I don’t know if it’s early mainstream yet, but maybe. And simultaneous to this, we have people in the “emerging middle income” parts of the world – the, you know, 5 or 5.5 billion people – now have mobile phones. And some very few of them are coming to realize that they can buy stuff from here, and from China, and they can sell stuff to us, and they can get paid in these numbers that appear on their telephones. And somebody, somewhere, is willing to give them either Euros, Dollars, or local currency. And you can almost hear the wheels spinning when you’re on Facebook, chatting with these people. And it’s just starting to go really crazy, to the point where some of us down here in Miami - who have been involved in the Bitcoin community - we got together and we started an organization called the “Conscious Entrepreneurship Foundation” (http://www.consciousentrepreneurship.org ). And we recently received our non-profit designation from the Internal Revenue Service a couple of months ago. I’ve been telling people ever since that, “If you want to get a non-profit organization - that is focused on Bitcoin, approved – don’t put Bitcoin in the name .”
John : Oh, that’s good advice.
Dr. Evans : Or in the by-laws. And so, we got approved pretty quickly. And we hold monthly – what I call – “dolphin tanks”. This is where people get together, they throw business ideas out, and they’re supposed to help each other move the ideas forward. So rather than send people home crying, we’re creating a more supportive environment. I like to tell people it’s like a shark tank, but with less blood in the water.
John : Hah-Hah.
Dr. Evans : And we’re getting some interest from some really unexpected corners, here. We get the Bitcoin people showing up for these things, but then we’ll get people like freight-forwarders, or we’ll get people who are web developers. We just recently had somebody who’s doing some interesting environmental stuff [who] showed up and wanted to see what we were doing.
John : Oh, wow.
Dr. Evans : And the administration at my university is very happy with this, because they like this whole “do-gooder capitalism” thing. And so, we’re looking at some projects there. Then I’m having my students work with my contacts overseas, and just see where it goes.
John : You know, I love the idea of the “dolphin tank”. It’s so much more friendly. And I love your idea of the “Conscious Entrepreneurship Foundation”, because we all know that in the future – 20 years from now – not everybody who has a business that’s using Bitcoin technology is going to have the word “Bit” in it, right?
Dr. Evans : Right.
John : This is the early stages, where people just feel compelled, “We’ve got to have the word “Bit” or “Bitcoin” in the name somewhere.” Which I’ve found, from the very beginning, to be silly. So I love the fact that you picked a name that sounds much more intelligent, and much less like some sort of a goofy game, or a clique, or a clan, or something. But also I love the fact that you have other people outside of the Bitcoin sphere, who are starting to be interested, and that you’re administration likes the fact that you’re reaching out in that way.
Let me ask you. When it comes to your students, do you find that the wheels turn more readily for students who are from other countries, than they do for your American students?
Dr. Evans : It seems to be that way, yes. In large measure because these people deal – all the time – with the difficulties of moving money around. For example, when they want to pay tuition, from some countries, the banking systems in a lot of countries around the world are just hopelessly broken. And Western Union is prohibitively expensive. And many places have currency controls. You have to ask permission before you can send money out. And I’m also very surprised by how many of my non-U.S. students already know about Bitcoin. I was talking about this last semester, and one young man from the Dominican Republic pipes in – he just can’t sit still any longer. He raises his hand and starts telling us about how his uncle uses Bitcoin to get around the currency controls there, and how people like to keep Bitcoin so the people at the bank don’t know they have money. Because in a lot of places around the world, if you have a large balance in the bank you are at extremely high-risk for being kidnapped. Because somebody at the bank will contact the local gang to let them know that you’re a juicy target, and the person at the bank gets a little finder’s fee for that. And this is a big problem in a lot of parts of the world.
John : Wow! That’s heavy stuff right there, man. But that makes sense. That’s human nature, right?
Dr. Evans : Mmm…Hmm. And then you’re seeing the stories – you can find them on the internet now. People in Russia are looking at Bitcoin – it’s not the majority of Russians, but there are some Russians – who are looking at Bitcoin as one way of getting their money out of the country if they can. And there’s a really big Bitcoin community in Buenos Aires, in Argentina. And with all of the mess that’s going on down there, it’s going to be very interesting to see what happens, because they’ve got this massive scandal at the moment.
John : I have not been following this. Can you tell us about the scandal in there Argentina?
Dr. Evans : Oh, well there was an act of terrorism down there some years ago, and somebody blew up a synagogue. And it was believed that it was Iranian terrorists. So somebody within the Argentine government had information on this, and he was about to testify. He was found dead yesterday, I think. Apparently there is a Venezuela connection there as well. So now people down in Argentina, and potentially Venezuela, they’re wondering, “What on earth is going on?” So given that these are two countries that have strict currency controls, but people have access to the internet , it’s going to be very, very interesting to see where all of this goes. There’s no predicting it. It’s one of those things where I just keep checking the news.
John : Wow.
Dr. Evans : Actually, the world is a lot safer than it was in previous decades, but the fact is that we get to see it almost in real time, and it seems like the world is insane.
John : Yeah, it does. There’s just so much information that keeps flooding toward us from different sources. I think what bothers me more than anything is that I know, for a fact, that there are a certain percentage of these terrorist attacks, or tragedies that happen, that are actually “false flags”. In other words, it’s perpetrated by “this” group, but it’s made to look like it’s perpetrated by ”this” group. Or, it’s made to look like we’re not sure which group did that. But the problem is that there’s no way to know which ones are “false flags”, and which ones are literally what they tell us they are. Because it’s very difficult these days to trust a news source, considering the fact that, one : they are a private corporation, whose primary objective is profit. And two : because we know that they can be captured. We know that they can be bought.
Dr. Evans : Right. Exactly. I mean, we still don’t know, for certain, who shot the plane down over the Ukraine. You know, each side points to the other one. So which one was it? There’s a Wikipedia article on “false flag attacks”, and you can just read some of these through history. And then there are the other things that are not quite false flags, but where things that were misunderstood at the time. The story was told one way, and then it turns out 20 years later – somebody finally gets a “Freedom Of Information Act” application allowed, and the next thing you find out is it wasn’t the way people were told back then. It would be very surprising if that all had stopped. So, I don’t have a line on any particular conspiracy theories. I’m just looking at the general pattern. It would just be very odd if this prevarication just, sort of, spontaneously stopped as of 2005 or something. So I expect it’s still going on.
John : One thing that disturbs me is the whole way that language is being morphed, or being twisted, such that you can have a word like “conspiracy”, when we know for a fact that you can go back to any time in history – take the railroad barons conspiring to monopolize the railroads. That’s an historical fact. It was actually a conspiracy of businessmen who got together and CONSPIRED to create a monopolisation, right? That’s just a fact. But the very word “conspiracy”, these days, has been taken and twisted by the media, such that if you say the word “conspiracy” it means : UFOs, “bigfoot”, “Loch Ness Monster”… all these things – where you can no longer say, “That may be a conspiracy.” Because your average America, who’s turning into a “dumb-dumb”, they equate the word “conspiracy” with something that is false. So it’s always funny to me how words can be co-opted.
But Dr. Evans, I digress, once again. I would definitely like to talk to you about Mike Hearn’s big project – his “Lighthouse Project” (https://www.vinumeris.com/lighthouse ). I think you have some interest in that, and you have some illumination for our listeners, about the “Lighthouse” project and how that interests you.
Dr. Evans : Yes. It’s potentially very interesting for us, because again, I’m working with people all around the world, and these are people who have ideas. One of them wants to buy some land, and he – and some of the people he knows – will grow cash crops on. Apparently there’s a movement at the moment where churches are buying land, and then letting people farm the land, in Ghana, and then splitting the proceeds from the sale of the crops – so “sharecropping”. So what he wants to do is raise money to buy some acres, and then grow either plantains, or cassava, or something like that. I think he’s talking about maybe even raising pigs for pork – apologies to the vegans - and selling it there locally, and getting things jump-started. Well, if you put that on Kickstarter or Indiegogo, you still need to manage to get paid somehow, and it’s relatively difficult to get the dollars out of Kickstarter into a lot of places around the world. Paypal doesn’t work everywhere. It’s just not as easy as all that. What we’re finding is, when people are coming to the Bitcoin user base – you think of Shawn’s Outpost in the panhandle of Florida. Jason King comes out and says, “Yeah, I’ve got this homeless shelter. We’re able to give people some very few meals per week. We’re thinking about embracing Bitcoin. What do you say?” Next thing you know we’re finding out that he’s getting donations from China. So there’s this comradery within the Bitcoin user base that you don’t see, even among old-school libertarians.
I started out my career in the early 1990s, working with an organization that was originally in Fairfax, Virginia – now they’re in Washington D.C. – called “Atlas Economic Research Foundation” (http://www.atlasnetwork.org ). They’re kind of a matchmaking organization, where if you want to start the “Free-market Foundation of Lithuania” you’ll eventually learn about Atlas. You contact Atlas, they’ll put you together with potential funders, and off you go. And that match-making activity is seen as a good thing.
John : Mmm-Hmm.
Dr. Evans : And so people fund it. I built their first web site, as a matter of fact. So I used to travel mainly to the Baltic region of Northern Europe. And Libertarians get along fine across borders, and stuff like that. But you don’t see the kind of mutual aid that I’m seeing with Ala Itireleng in Botswana – the “Bitcoin Lady” (https://bitcoinladybotswana.com/ ) that you might have heard of. She’s one of the people working with us. I’ve got another young lady in Uganda. Then I’ve got my crew of guys over in Ghana, and we’re starting to make some contacts in Nigeria. These people are drawn together by Bitcoin across an unbearable chasm of ethnic differences, and linguistic differences. These are people who are more different than I am from somebody in Latin America, and yet they feel a common bond, and they’re helping each other promote their projects, and things like this. And it’s just one of those things where it’s like, “Wow! People are being drawn together by money.” [laughter]
John : Right. Wow.
Dr. Evans : What a world.
John : That is really neat. So do you mind if I read something here? It’s a description of how Lighthouse works?
Dr. Evans : Yes, of course.
John : Okay. It’s fairly short, but it says “Lighthouse combines two functions in one. Firstly, it gives a lightweight, encryptable HD wallet. It uses simplified payment verification, so even though it synchronizes directly with the blockchain, performance is as good as a web wallet. In fact, it uses the same code that powers the most popular Android Smartphone wallet. Secondly, it provides a way to create projects, pledge money to projects using coins that were sent to the app, and revoke pledges you made if you want your money back before the contract reaches its goal amount. Because the contract takes place entirely on the blockchain, you don’t need much trust in the project owner to manage the partially raised funds. Pledges can’t be claimed individually. They only become recognized as valid by the Bitcoin network when enough are combined together to reach the goal. That’s pretty exciting stuff.
Dr. Evans : Yes it is. So imagine you have something like “Afriworks”. That’s “A – F – R – I –W – O – R – K – S “ This is a collective of craftsmen in Ghana. They take gourds, they cut sections of it out, they carve on it, and make these really pretty designs. They would like to start exporting their products. So they can start a Kickstarter type of a campaign to put together either a carton – probably not a container, that would be a little bit much – but a large collection of stuff that they can ship in one shipment to somebody who is in a place where distribution would be very inexpensive. South Florida is a place that - we have something like 1,500 logistics companies in the Miami area alone. Maybe Singapore has the same sort of distribution node that we have down here.
John : Wow.
Dr. Evans : So now imagine that these folks are able to use Lighthouse, promote the fact that they are using Bitcoin – which is still going to get you some buzz these days – and if they make their goal they can run the project, and if they don’t make the goal then everybody gets their money back. Well, you say, “Well yeah, you can use Kickstarter for that.” Yes, but how do they get their dollars out of Kickstarter? It’s not as easy as that. Now Ghana is not so bad, but there are parts of the world that are. And my young man who wants to buy a piece of land, he can do the same thing. He could start a Lighthouse campaign, promote the fact that he’s in Africa. He could play with the myth of the “African Cheetah”. If you go to “Forbes” and “Fortune” magazine you’ll see that they’re referring to this young generation in Africa as “Cheetahs”, and the old-school politicians they’re calling “Hippos”. And this Is the, sort of, myth that they’ve embraced, and so they can play on that. And anybody who is reading Fortune, Forbes magazine, and saying, “Wow! Looks like maybe finally Africa might be the new Asia.” These young men can play on that, as well. And by combining Bitcoin and this growing interest in sub-saharan Africa, they could get paid, and then the beauty of it is they get the Bitcoin within minutes. And this is really heady stuff.
John : Oh, it’s great.
Dr. Evans : And so, we’re just waiting to see where it goes. I mean, Lighthouse – the beta – was released just a few days ago. So, you know, give me 10 minutes, and let’s see where this thing ends up.
John : Charles, this is great stuff, really.
Dr. Evans : Oh, this is incredible. You and I were originally planning on talking last week, and between the time when we were originally going to talk, and now, we had the Lighthouse announcement, we had that $75 million investment in Coinbase announced. And it’s incredible how fast things develop within the Bitcoin space. Back in the 1990s we used to say that “internet time” is seven times as fast as “clock time” – playing on the idea of “dog years”. And I’ve been telling people now, for the past three years, that Bitcoin time is seven times as fast as internet time. And it really does seem to be that kind of fast. We go from, “Oh my God, the government wants to shut us down!” to, “Well, the Wall Streeters are trying to shut us down!” to, “Oh, look at that. The former head of the SEC is now working as a consultant for two Bitcoin companies. Former chairman of Citi Group, and a former chairman of Thomson Reuters has now plunked personal money into this stuff. The New York Stock Exchange is investing in Coinbase.” And it’s just like, “Wow!” It’s bizarre.
John : It is bizarre. Really, it’s truly bizarre. I don’t know what to make of it half the time. And I do have fears. I fear that one day Bitcoin will end up being something that enslaves all people. You’ll have to have a Bitcoin wallet implanted in you, or something, and you won’t have access to anything else to trade with - no other dollars, or no other means of currency. You’ll just be bound to the Bitcoin chip that’s implanted into your arm, or whatever, and if you take it out you’ll be arrested. Those kinds of dystopian future scenarios come through my mind because I’ve read so much Sci-Fi over the years. But you never know, right?
Dr. Evans : Well, I tend to be a bit more optimistic about these things. I’ve been close to government, and I’ve seen that it’s really a squabbling mass of competing factions. I don’t even know if those people could agree on where to have lunch, much less steer the world through their Illuminati front, or whatever. But in general, though, if you think about it, the treatment of women these days, throughout much of the world, is much better than it was 50 years ago, or 100 years ago. People are tending to be more tolerant. I mean, for crying out loud, here in the state of Florida, which is notoriously conservative outside of South Florida – where I live – we have gay marriage now. When I was a teenager, who would have ever believed that one?
So, I don’t know where this is going to go. Whenever people ask me, “What do you think the Bitcoin price is going to be six months from now, or a year from now?” I tell people, “ I don’t even know what I’m having for lunch tomorrow.” But what I can tell you is that if you look at some of the work of Ray Kurzweil, it would be surprising if the trends that have been in play for the past half-century were to just suddenly stop. So I’m expecting that my telephone five years from now – when I buy a new one - will be vastly more intelligent than the telephone that I have now. I was just playing around with computer configurations on the systems76 web site. The pre-load computers with Ubuntu, and so I was doing the configuration there. The amount of hard drive that you can pack into a laptop is the stuff of science fiction. I mean, it’s measured in terra-bytes now. And it just goes on and on and on.
John : I know that it may sound absurd, but I have for you a magic word. And today’s magic word is “lighthouse” – “L – I – G – H – T – H – O –U – S- E”. Lighthouse. As in the sentence, “Thank you, Mike Hearn, for bringing us Lighthouse.”
Dr. Evans : I think that what’s going to wind up happening is that there will be good and bad. So we’ve got the surveillance state. A story just came out, not too long ago, about how there’s a company that sells these radar units that police all around the United States are using to look at people through walls. But then at the same time you have the move to have police wear cameras on their uniforms. So, privacy is dead, but it cuts both ways.
John : I agree. You know, as far as the cameras go. I hope we see a future where everybody has their own little, inexpensive - $10 or $20 camera – on their car, and that information is either sent wirelessly to the nearest whatever, and back to their computer. Or, it’s sent to a micro-computer that they have within their car, themselves. I like the idea that if some people can videotape, then everybody can videotape, and we can all see what’s going on at all times. And so we can keep an even playing field, and keep everyone honest.
Dr. Evans : There was an article published in Wired magazine, in 1996, by a gentleman by the name of David Brin. He then later expanded that into a book called “The Transparent Society”, where he was basically describing a world in which you have ubiquitous surveillance, but after the novelty of watching people sleep wears off, nobody cares anymore.
John : Right.
Dr. Evans : So, yeah okay, people are watching you, and it’s like “Hey, look at me. I’m watching people. Yeah. What else am I going to do now?” So, we get used to things. And if you think about it, we tell children not to put things on the internet that would be embarrassing if you went to a job interview. And I’m expecting a decade from now, it’s going to be one of those things like, “Yawn, teenagers misbehaving.” You’re not allowed in the United States – I expect this is true in much of Western Europe as well – you’re not allowed to ask someone how old he or she is. You’re not allowed to inquire about the gender on the job application. Race, ethnicity – those are things that you’re not allowed to talk about. Fifty years ago, those were routine questions at job interviews.
John : That’s right.
Dr, Evans : So I could see, 10 or 20 years from now, that it would be a violation of somebody’s privacy if you were to go see if there were some embarrassing photographs from somebody’s teenage years during a job interview. We just get used to stuff.
John : Yeah. I agree.
Dr. Evans : Like homosexuality. Good gracious. I remember there was an episode of the TV show “The Monkeys” that I watched when I was a kid, and they openly made fun of homosexuals. And you roll the clock ahead today, and there would be riots. So the attitudes can change very quickly, and I get the feeling that we’re entering what I like to refer to – sort of, tongue-in-cheek- as the “Age of Decadence”, where people will behave – more or less naturally – in a way that would have been completely scandalous for our parents and grandparents. And it will be one of those, “So what?” sorts of things.
John : Yeah, I agree. The “Age of Decadence”. That has good connotations and bad connotations, I guess. I think we are also in an era where people are so easily entertained, they are so easily led In the direction of what the new technology says is the coolest thing du jour, right? You’ve got to try this; you’ve got to try that. So people are pulled in so many different directions, but really, all along the way, so distracted from – maybe they’re a creative person, an artist or a musician, or whatever – but they may spend so much time with their devices or their computer, or may be addicted to their phone, that they spend that much less time perfecting their art, or working on writing, or working on creating something that is meaningful to them. And that makes me sad in a certain way. In other words, entertainment in particular, can grab people and drag them away from what they otherwise maybe would have been doing. I see the kids playing – it’s the big thing now, “My child has mastered Mindcraft. You ought to see him go.” So it’s all on this little thing the size of a slice of bread, and that’s the world he’s living in, or it’s on a tablet. And I’m thinking, “Man, you know what? When I was eight years old my dad would go to work, I sneaked down in the basement, and I found a way – with a paperclip – I could turn on his radial arm saw.” I’m eight years old, right? Now that’s pretty dangerous. A radial arm saw can cut your finger off, or cut your hand off. But I had such a respect, and a fear, of this thing – because I had seen my dad use it. I was cutting wood when I was eight years old. I was building stuff. I didn’t have any electronic things. So I became proficient at building things and making things with my hands. And I’m still really good at that. And I think that’s a future that makes me sad to see go away.
But I digress. Let’s move from that concept into what I’d like to talk about, “The Dumb-Dumb Americans”. You have – even in the Bitcoin world, where I would say people are of above-average intelligence, generally speaking – and then you write this article about the ”Fools’ Gold Rushes”. Now the fools – who are the “fools” you are referring to when you wrote this article?
Dr. Evans : Yeah, this is potentially going to be me stepping on some peoples’ tails. What can I say? I’ve been at this now for a quarter century – if you want to look at the free-market activities I’ve been involved in. I’ve also been involved with virtual currencies, now, for more than 15 years. I’ve seen a lot of promises made, and I’ve seen what happened afterwards. I’ve seen people who believe the rules don’t apply to them, and I’ve seen how that went south. And what I’m seeing now are things that look like repeats of history. And rather than name names – because I don’t necessarily want to single out one or two people, or one or two projects – because that implies that somehow they’re worse than the others - and that’s not where I’m going with this. I’m looking at this from more of a general perspective. But when you have a new innovation - this thing is brand new - and people will get excited by it, because they believe that it has the potential to alter the landscape, or to even unseat some incumbents. We’ve seen this with Bitcoin. “We’re going to take down the banking system. We’re going to put Western Union out of its misery.” Then you have some people who go a little overboard, “We’re going to take down the nation-state.” and stuff. But no, okay, that’s fine, that’s fine. Run with it. As long as you’re not running with scissors, I don’t mind. And so, off you go! And people are playing with Bitcoin, and exploring the things you can do with Bitcoin. We haven’t yet seen the full fruition of Bitcoin. It hasn’t completed its innovation cycle. Yet, you have these other people running in, and they seem to be motivated by frustration in having missed the “gold rush period” of Bitcoin. You know, getting in when you could buy two pizzas for 10,000 Bitcoins.
John : Right.
Dr. Evans : Wouldn’t it be nice to be the person who received those 10,000 Bitcoins right now? And so, “Oh dear! I’m really frustrated and irritated by this, and so I’m going to pretend that Bitcoin is this moribund, status-quo institution – like the Bank of England – and I’m going to take it on. Bitcoin hasn’t even crossed the chasm yet. So it’s a little early for us to be seeing “Bitcoin Killers”. And so, every now and then – if you go back, and again it’s so tempting to name names by way of example, but I don’t want to single any particular project out. You go back a couple of years, you look at Coindesk, and what were we talking about? It was the thing that was going to radically change even sliced bread. Where is it now? Nobody talks about it. Then you had the next one, a little while later. And it was going to also be some sort of a “Bitcoin killer”, and it’s gone.
John : Mmm-Hmm.
Dr. Evans : And so now we have some where you’ve got these projects, and these are going to be like the next “big thing”, even though the current “next big thing” hasn’t gone through its entire cycle yet. And I sincerely doubt that they are going to fulfill the hype around them. I mean, when somebody tells you, “This will be X.” You can’t know that. You cannot know if the thing that you’re creating will be successful, because if it were that easy we would all be rich.
John : Exactly. And, you know, for somebody like me sitting on the sidelines, who does not have a tech background, I can rear – or start reading – some of these whitepapers for these new projects. And before long I’m lost when it starts to get into some kind of writing of code, and I have no idea what they’re talking about, right? But what I can do is I can take a little bit of Bitcoin, and I can buy a thousand or ten thousand of these new things, if it seems to have SOME technical merit, and there seem to be some intelligent people gather around it, I can invest in that. Let’s say I’m investing a couple of hundred dollars. Well, if five years down the road that comes to nothing, I’ve lost a couple of hundred dollars. Not the end of the world. But, I like to think, “Yeah, but if that takes off, and the price quadruples – whoo-hoo!” I’ve quadrupled my money, and I can cash out. So I look at it from an investor’s standpoint, but I agree with what you’re saying. I thought it was funny that you said they’re looking at Bitcoin now as if it’s something that could be –or should be – toppled, like the Bank of England - this old, musty thing. And it’s only existed since 2009, and it’s solved a major technological and mathematic problem that they thought would never be solved. So it is kind of funny.
Dr. Evans : And the other thing that I point out in the piece, in Coin Telegraph, is also look at the amount of effort that you’re going to expend. It takes a great amount of effort to conceptualize some radical new innovation. I mean, if you look at what Satoshi Nakamoto pulled off with Bitcoin, that was a pretty big deal. And for the individual, or for the team, that is Satoshi Nakamoto, this is his, or her, or their thing. And I don’t begrudge them any of that at all. In fact, it’s absolutely brilliant. But I have to choose now between spending my days conceptualizing something that’s going to be even bigger, and more innovative, and potentially more shocking than Bitcoin. And I have to work out all the details of that, and then I’m going to have to code it up. Then I’m going to have to promote it, and then I’m going to have to get other people to use it. And somewhere in there I also probably would like to get paid. Or I can just do something really boring and stodgy. I can take my Bitcoins, and I can contact my guys in Africa. I can ask them to send me some hot sauce. I can mark it up 10 times, slap a “fair trade” label on it, and sell it to some hipster. And then do that again.
John : Yeah.
Dr. Evans : And there’s five-and-a-half billion potential customers or business partners. You can buy tea from India and then sell it to people, or you can buy things here in the United States at the US price, receive Bitcoins from people in the rest of the world, and send them stuff. I mean, we call it “virtual currency”, right?
John : Yeah.
Dr. Evans : Well, what do you use currency for? [laughing] For buying and selling stuff. And the other thing is that if we are going to hold it, that’s fine. Buy some Bitcoins and hold onto them, because you anticipate that the system will be valuable. And I do believe the system will be very valuable over time. But it will be valuable as people actually use this stuff in places that are not well served by the current infrastructure. I don’t need Starbucks to accept Bitcoin – not least of which because Starbucks tastes like licking an ash tray – but -- I’m from Miami. We’re rather particular about our coffee.
John : Hey, I’m the same. I don’t drink coffee anymore. I drink tea. But I’m the same. Who wants to drink something that’s made by some smiling-faced, Mickey Mouse-like kid, not knowing where those actual coffee grounds have been. Maybe the beans were ground last week, but how long have the beans been sitting in the warehouse, and where was the warehouse, right? [laughing]
Dr. Evans : Well, there’s that. And five years from now it’s going to be a robot making the coffee for you anyway. But my point is that you’ve got people in Latin America,. You have people in India. You’ve got people out in Eastern Asia. I mean, Burma (Myanmar) is now beginning to open up. You’ve got people there who are just now starting to reach out and feel the world. There is this massive commercial opportunity out there, and yet what I’m seeing is people developing apps. And again, I teach in the school of business, so obviously I’m going to look at it from this particular perspective. But then again, the other side that I’m complaining about -- they come from the college of engineering, and they’re looking at this as like, “Oh, let’s build more cool tools.” I’m thinking, “Okay, that’s great. Build cool tools, but let’s DO stuff with those tools.” And so I’m on a tear to recruit as many people as possible, in this next phase, to start commercial ventures – even if it is just a hobby that pays for itself. But actually use the Bitcoin in places where it doesn’t work. If I want to buy something at my local grocery store, I whip out a credit card or a debit card, and I buy stuff. If I want to buy a container filled with green coffee beans from a small-scale grower in Guatemala -- NOW we’re talking.
John : Mmm-Hmm.
Dr. Evans : Now I can use Bitcoin for this. And I can send it to this person. And as long as we both have access to somebody’s wifi, we can talk on Skype for free. We can record the conversation, so it would serve as, kind of, an audio contract. And I can hear the little “ka-ching” on the other person’s phone, when the first confirmation comes in, and then hope that the coffee shows up. And now that people are doing multisig, we can even escrow the stuff. The gentleman who started Brocker was based here in Miami for quite a while, before he left to go do Brocker. In any event, that service is – I love it! It’s not necessarily the audience that they’re aiming at, but what they’ve done is set themselves up as, basically, an arbitrator. So they’re not holding on to anybody’s value. They’re just standing by as an arbitrator, should they be needed, which is a brilliant business model. So when you combine all of these services, and you look at, literally, five to five-and-a-half billion people worldwide, it’s staggering, the opportunity. And yet, what we have is young men coming in a saying, “Follow me. Follow me. I have the next “Bitcoin Killer”. And it’s frustrating, because there is so much opportunity in the world, and yet people are fixated on something that is – I guess on a good day, some of these things are solutions in search of a problem. But I’m wondering how much of this is just empty vapour for the sake of, “Oh, look at me. I can do something cool.” By the way, anybody who’s actually engaged in that activity – knock yourself out. As long as you’re not hurting anybody, I don’t really mind what you’re doing, but don’t ask me to fall for the hype. If find it just a little bit irritating that every time somebody comes out with some hype-filled whitepaper, everybody gets all excited by it, and I don’t see nearly as much spontaneous using of the system that’s just, sort of, sitting there. It’s like stepping over stacks of money. I just find it odd.
John : Yeah. I think that your message is so powerful – what you’re talking about. I think that a lot of people that will go with the “next big thing” – or what they HOPE is the “next big thing” – I really think a lot of people are hoping it is because of the potential for profit. And I’m talking about not people that are directly involved in the project, but people who are investing. Maybe you buy a little bit of Etherium, or a little bit of Ripple, or a little bit of ColoredCoin, or a little bit of MasterCoin, or something like that. And you hope that – you know, maybe you missed the “Bitcoin Train” – you hope that this is the next big train. Because maybe you’re sitting on 10,000 MasterCoins, and you’re really hoping that it ends up being something that allows you to buy a house, or to retire. So I think that is the impetus for a lot of people, maybe even the majority of people. I hesitate to call it greed. It’s more [like] opportunity. They’re seeing an opportunity. But I think – just like what you’re saying – in putting their energy into that, putting their brain-power into that, or just their time sitting at the computer – and I’ve been guilty of it myself - they’re missing out on what you’re talking about as some of these huge opportunities really to use a business model which is tried and true since the beginning of time. That is, you have one guy over here who wants something, and you have one guy over here, who has it. And all you need to do, like Brocker, is stand in the middle and say, “Hey, I can help you and you get together.” Right?
Dr. Evans : Right.
John : There’s no older business model than that, really. It’s the middleman, right? So, that whole idea of being able to use Bitcoin right now - without doing anything else, just act as the middleman – in some situations I think that’s the best business plan there can possibly be. But it actually takes a lot more work than just sitting at your computer and having some of these alt-currencies on Cryptsy or Poloniex. It’s a lot easier to just sit there, and drink your coffee, and goof around with these things, and talk on the forums, be in the “Trollbox” talking about how this price is going to go up or down. What the whales are doing, what the sharks are doing, how we all hate being minnows, but we’re stuck being minnows. The trading thing is really, kind of , out of control, but I do think that is a lot of what is motivating a lot of the people out there right now.
Dr. Evans : And we saw this in the late 1990s. People were quitting their day jobs to go day trade. They were all proud because they had made so much money by flipping “dot-com” shares, and things along those lines, and it turned out that all they were doing was just riding the bubble up. We didn’t hear a lot about how they had succeeded with their short positions, during the crash of April of 2000. They kind of went silent and went away. We’ve had some instances – my wife is the principle of Bitcountant ( http:// www.bitcountant.com/ ), which is a small accounting practice that focuses on Bitcoin startups. There have been a few cases where somebody had been trading actively, and we had to calculate the capital gains on this for this person. And because I do this for a living, I would compare this person’s returns with “buy and hold”. And there was one, in particular, who had netted something like $40,000 in gains by day-trading Bitcoin, and that sounded pretty cool, until I pointed out that if he had just bought the Bitcoins and sat on them, he would have had about $200,000.
John : [laughing] Oh man.
Dr. Evans : I had to be the bearer of bad news on that. You see, the thing is, before you get excited about your trading strategy, you need to compare it to some sort of a baseline. And if day-trading, and flipping alt-coins, and stuff like that, again, if it were that easy we would all be rich.
John : Absolutely.
Dr. Evans : And that’s the thing I’m looking at. People come out, and they’ll draw lines on graphs, and they’ll tell you about their “head and shoulders” and their “whatevers”, and all the other stuff that goes along with that. I teach finance for a living, and I just shake my head in pity. I’ve also learned to keep my mouth shut, because a lot of the people who are out there hyping their trading models, and stuff like that, really are up to no good. And what better way to mask the fact that you’re a scammer and a liar, than to have a bunch of jargon, “Let’s go ahead and use some Greek letters. Let’s have some equations, and then some fancy looking graph.” So that you can, kind of, “Ooo, and ahh” everybody, like a character from the “Simpsons”. And I’m just not in the business of exposing people like that, because I just don’t need the abuse. But I still watch people who are promoting different alt-coin type stuff, and some of the other stuff that’s being touted out there, and it’s like watching your neighbor’s children play with a frisbee on the shoulder of a busy highway. You’re just like, “Ahh!”, but there’s nothing you can do.
John : How would you advise your students. Or how would you advise the listeners listening to the show today? Because certainly there are going to be start-ups, projects, and platforms that are built that have merit, right? And that will bring profit to people, and that will bring utility, and help people . How do you advise people to discern? How can a young person discern between this “fly-by-night” company, or this “fly-by-night” idea, and something that is legitimate? I mean, I use as an example, Ripple. I do know, right now, that people all over the world are actually using Ripple, and it is offering great utility for them. And it’s a very different model than Bitcoin. It is actually viable, and it is actually something that people are actually using to transfer value between commodities and between currencies. So it would be hard for me to say that Ripple is no good. How do you get somebody – a young person – to be able to tell the difference between something that is actually offering utility – or has the potential for utility – and something that is blatantly, obviously a scam.
Dr. Evans : Yeah. These things go along some sort of a spectrum here. And my advice is a bit more conservative, maybe, than other peoples’. So there’s going to be some legitimate opportunities there in the middle that you might miss if you heed my advice. So, if you follow my advice, there are going to be some opportunities that you’re going to miss. You’re also going to miss some scams. And that middle category, I just have to, kind of like, look at and just say, “I’m sorry. There was some good stuff in there and I missed it.” But my general rule is, if a twelve-year-old child cannot draw a picture of it with a crayon, don’t invest in it.
John : Hmmm.
Dr. Evans : So if you talk about, “I’m buying hot sauce from somebody in Ghana.” A twelve-year-old child can draw a picture of that with a crayon. If you come in with some of this other fancy stuff that we have about, and you look at that and you go, “Huh?” then I have a tendency to stay away from it. And it’s not to say that the person who’s promoting it is up to no good. It’s just that there are only 24 hours in a day, there are 7 days in a week, and there are only so many years in a human lifetime, and my time is spent better on something else than trying to understand something that is inexplicable to me, if my goal here is commercial gain. Because like I said, there are a lot of commercial opportunities out there that people are missing, and it is as though they were stepping over stacks of cash. But, like I said, look, if your thing is day-trading, knock yourself out. I’m hoping that you’re not liquidating your 401k so you can do that, but like I said, it’s like watching the neighbors’ kids play with a Frisbee on the shoulder of a busy highway. There’s nothing I can do, except cringe. [laughter]
John : You know, a good quote from Mike Hearn – who’s developing Lighthouse - he says, “What I’d like to see, by unbundling these things, is a competitive market of communities and community-builders, where people are building these project gallery sites. And then he said, “People can compete on building really awesome sites.” I think that’s right in line with what you’re talking about.
Dr. Evans : Yes. That’s something that I understand, and makes sense to me. We’re not going to have this one, homogeneous, McCulture or 7 or 10 billion human beings. No, there’s going to be different communities, and they will be oriented on different sorts of things, which is absolutely brilliant. I mean, if you stop and think about it, before the days of the internet – so go back to the “pre-history”, before 1992 or so – picture something that young people today might have a hard time, kind of, grappling with. Here you are, you’re living in a small town, and you’re not like the other kids. Maybe you’re a homosexual who likes to collect butterflies, or something like that. And you’re an outcast, and people call you horrible names, and maybe they are even physically abusive. Well now, in the days of the internet, it turns out that you’re not a freak. You’re part of a diaspora, and there are millions – or maybe not millions, maybe thousands, or whatever, I don’t know, there’s a whole bunch – of people like you, and you can get together into a community and feel a common bond. And so, yeah, what you do then is look for commercial opportunities to build businesses, or freelance gigs, or whatever, around this thing that you feel this common bond with.
Like, for example, I know a lady – an absolute dear, dear, lady – who sews dresses for Pugs – the little dogs with pushed-in faces. Because it turns out that there’s a subculture of people who like Pugs, and they like to dress them up like “bride and groom”, and that kind of stuff, and they’ll put them up there on little web sites. She specializes in “steam punk”. So she’ll do little “steam punk” jackets, with epaulets and things. And it’s just like, you look at something like that and you say, ‘Wow! Number one, there’s no such thing as a bad business idea.” And this is her thing. So what Hearn was talking about is taking this to the next step, and not just putting silly photographs on web sites. But actually having some commercial activity associated with this, and funding campaigns. Hearns’ stuff – the other thing that’s brilliant about this is – it can also be used for charitable work.
John : Nice!
Dr. Evans : So if you want to have a clothing drive, or something like that, you can use this stuff, and it becomes easy for people to contribute from around the world. Whereas, if you start a Kickstarter campaign, you’re limited to the people who are in the areas where they can get money into Kickstarter. Now, for you and me that it dog-simple, because we have credit cards, and we’re in the United States. The United States has 4% of the world’s population, but it generates about 25% of the world’s GDP. So we have money running hot and cold in this place. But how does somebody in Burundi contribute to a Kickstarter campaign? Whereas with Lighthouse, Mike has just opened this up to the world. And it can be used for charitable stuff. It can be used for scientific research. It can be used for anything where you need to pool large numbers of small contributions. And we’re only, just now, grappling with this, because we don’t know what’s going to happen with a system that opens up these crowdfunding opportunities to people scattered, literally, across the globe. I don’t know where it’s going, but that is something that I think has the potential to do great things. And this is the beauty of it too. Conceptually, it wasn’t that much of a leap. It’s like, “Oh, Kickstarter for Bitcoin. Great!” I mean, I’m sure there was more to getting it to work than just that.
John : Sure.
Dr. Evans : But basically, that’s the secret of genius, is simplicity, and then after-the-fact it’s obvious. In fact, that’s Bitcoin itself, if you think about it. “The Byzantine general’s problem is insoluble, and we’ve proven this, and we have article dating back 25 years.” “Uh, how about we share a copy of all the transactions that have ever taken place ever, and then we can see if everybody’s records agree?” It’s so obvious!
John : [laughter] Yeah.
Dr. Evans : It’s “slap on the forehead” obvious. And yet it took these guys, or this guy - and that’s a gender neutral term, by the way – to figure that one out? Mike Hearn comes out with Lighthouse, and it’s like, “Wow!” I mean, there are so many organizations now that are not necessarily needed because of this tool that he’s created, because we can just, sort of, spontaneously get together as a community and work together to fund projects. And I’m going to be very interested to see where this goes, and what people use it for. Unfortunately, there’s going to be some scandal, too, but that is just the way of the world.
John : That is the way of the world. And you know, what I love about conferences is the hackathons that they have at a lot of conference now. You know? You can go to a conference, and this speaker talks about this and that. There’s a lot of talking, and a lot of it is, kind of, rehashing what we’ve heard before, and a lot of it is encouraging people to do this and that. But the hackathons they have there – you know, Texas Bitcoin conference ( http://www. http://texasbitcoinconference.com/ ), I think last year, had a hackathon where they offered a million dollars. I think they might be doing it again this year. I think they had four or five winners that came up with actual projects that could actually be implemented, and that are now being implemented, just like Lighthouse. You know, practical things that – of course, you know, now someone like me, unfortunately, I can come up with the greatest idea in the world, but I wouldn’t be able to do anything with it, unless I was smart enough to say, “Hey wait. Why don’t I get the tech guys together, that can do this. And then I can try to find it in some way.” In other words, you can take a great idea, but you’ve got to have the tech guys there to help you make it a reality.
Dr. Evans : Well, if you are interested in doing that, let me know, because I’ve got a guy.
John : Oh, nice. [laughter]
Dr. Evans : Yeah, some of the guys down here – two young men, Douglas Carrillo and Andrew Carey – organized a Bitcoin hackathon, just before the Miami Bitcoin Conference (http://btcmiami.com/ ). It was the weekend before, and they pulled this thing together in record time - I think it was about a month – and they managed to raise almost $20,000 in prizes.
John : Wow.
Dr. Evans : And considering that this happened like right at the last minute, that was nothing short of miraculous. They had three winners, who had very interesting projects. And then the one guy who had just missed 3rd prize – so if there had been a 4th prize winner, it would have been this gentleman, Matthew Edmonson - he demo’d the software that they developed at the hackathon at our most recent “dolphin tank”. And it’s something that might be useful at the university where I’m teaching. And I also know somebody else who has an educational project, called “New World University”. His name is Steve Forester. I’m hoping to pitch this idea to him as well. Whether he’ll go for it, I don’t know. But we’ll find out. But the point is that, as you say, at these hackathons people 24 hours to come up with something, and some of these things are really cool. And that I find intriguing.
John : Some of the names you’ve mentioned, are those students of yours?
Dr. Evans : No. Actually, these are people from the local community. These are entrepreneurs in this area, and they are running around and doing stuff. Miami is an odd, little island. And it you’re not from here it’s easy not to understand the place. It has its own ethos, I suppose. There’s an organization called the “Kauffman Foundation”. They conducted a nationwide survey in the United States – I think it was 2012 – and concluded that the people in South Florida – so this is Fort Lauderdale and Miami; Fort Lauderdale and Miami are about 20 miles apart - South Florida has the highest concentration of the entrepreneurial personality type of any metropolitan area in the United States. That’s including New York, Silicon Valley, and all of those places.
John : Wow.
Dr. Evans : Now sometimes the entrepreneurship manifests itself in the form of somebody stealing fruit off my tree and the selling it back to me at the first intersection past my house. But that’s just Miami for you. People around here are running around. They’re wheeling and dealing. It is a small and medium enterprise kind of an economy. It is intensely frustrating for Silicon Valley-type investors down here, because we don’t have a tendency to do things big, the way that they like to do in Silicon Valley. In Silicon Valley, if it doesn’t scale, it sucks. Whereas here, instead of having one company, like Amazon, that has ten thousand customers, we’re much more likely to have ten thousand companies with a thousand regular customers each. It’s the same ten million customers, but instead of having one winner-take-all “ten-bagger”, what we have instead is 10,000 little kings and queens who are master of their own universe, and they to bed every night CEO, or whatever. And they’re never going to be the next Amazon. They’re never going to be the next Ebay. But they’re also not employees. They own their own shops. And that’s just the way we do things here.
John : I think that’s a better model, overall, personally.
Dr. Evans : Well, I’m from Miami. I was born in Miami. I live in the Miami area, so it is a little bit self-serving, but I agree.
John : Oh, I love it, man. So Dr. Evans, it’s been great talking to you today. And could you speak, for a moment - to my listeners, and also to your students and future students out there – give some advice about moving forward with Bitcoin.
Dr. Evans : Uh, yes. In 2013 – this was March 18th of 2013 – FinSen told us what we needed to do if we wanted to buy and sell Bitcoin with the public. They didn’t tell us, “Kill it with fire.” The Internal Revenue Service, in the United States, came out March 25th of 2014 – almost exactly a year later – and told us how to book transactions in Bitcoin, for tax purposes. Now, if you go to the IRS web site, they will not tell you whether or not you can deduct your ammunition costs if you have a “murder-for-hire” business, because that’s illegal.
John : [laughter] : Right.
Dr. Evans : But they told us how to book our Bitcoin transactions, if you’re accepting Bitcoin in exchange for coffee and t-shirts. That was good news. The CFTC – the “Commodities Future Trading Commission” – has already approved two Bitcoin swap products. And the Securities Exchange Commission is already working on an application for an exchange traded fund. So, we have government agencies already making their peace with this stuff. Now we have Microsoft accepting Bitcoin. Overstock is accepting Bitcoin. TigerDirect, down here in Miami, is accepting Bitcoin. Now we’ve got a former chairman of the SEC hiring out as a consultant to Bitcoin start-ups. We have a former CEO of CitiGroup investing in Coinbase – a Bitcoin company. We’ve got the New York Stock Exchange investing in Bitcoin. So the first question is, “Is this stuff legal? And is it okay?” Yes. It’slegal, and it’s okay. And all of the “cool kids” are doing it. So that’s number one. Is it legal? Is it okay? Number two, “What am I going to do with the stuff?” We have Smartphones around the world, and with that that means that people can have Bitcoin wallets on their phones, around the world. And there are five to five-and-a-half billion potential customers out there just waiting to hear from you. If you want to coordinate with them you can go to our Reddit group – that’s reddit.com, and our sub-reddit is “CEFnow” ( http://cefnow.org/ ), that’s “C – E – F –n- o –w”. And we’re only just now getting started with that. We’ve been coordinating most of our stuff on Facebook. But there are people, around the world, who are all over this stuff – in India, in Africa, Latin America, Asian. And there is money to be made, basically moving stuff around, and also hiring people for various services. I’ve heard that in Kenya, apparently, there is a community of accountants who are relatively inexpensive, and who are willing to work for Bitcoin.
John : Hmmm.
Dr. Evans : And it goes on, and on, and on. It’s also really good for charitable stuff. If you want to help somebody in some other part of the world, now you have Lighthouse. Let’s go and organize some charitable drives. As I tell my students, “There are not jobs – because everything is being done by robots now – but there are infinite possibilities.” And that’s the world that we’re in, and the only medium of exchange, at the moment, that works at all, in many parts of the world, is Bitcoin. And that’s a guy with a PhD in finance telling you this.
John : Hey, I love it. That was great. And, you know, I think when we talk about what money there is to be made, I think moving forward, we’re not talking about billions. I think, personally, we’re talking about trillions.
We’ve been listening to Dr. Charles Evans, professor of finance and economics at Barry university in Miami Shores, Florida. Charles, thank you so much for being on the show, and for enlightening me. I certainly learned a lot, and I know my listeners did. And I would love to have you back on the show at some point.
Dr. Evans : I would be delighted. Thank you very much for having me.
John : Enjoy that Florida weather down there, man.
Dr. Evans : I will. It’s absolutely delightful. If you’re up in one of the big square states, where they have that white stuff that’s like sane – um, I forget what you call – snow!
John : Snow.
Dr. Evans : Yeah, if you have snow you really ought to be here. It’s gorgeous.
John : So Charles, can you please tell our listeners the best way they can get in touch with you, and to find out more about your projects?
Dr. Evans : Yes. You can go to our new web site, which is www.cefnow.org. We’re still working on that at the moment that I’m speaking. Hopefully by the time you see it it will be looking a little bit better. Our original web site was at www.consciousentrepreneurship.org , and nobody could spell that, so we had to come up with a new domain name. Most of our good stuff is at www.consciousentrepreneurship.org , but www.cefnow.org is our new web site. We’re also on Facebook, if you look for “Conscious Entrepreneurship Foundation”. And we also have our nre reddit group which is “/r/CEFNow/.
John : Okay, great. And listeners, all of that will be in the show notes that you can access by way of www.letstalkbitcoin.com or www.soundcloud.com . Listeners, you’ve been listening to Dr. Charles Evans, professor of finance and economics at Barry University in Miami Shores, Florida. Dr. Evans, thank you so much.
Dr. Evans : Thank you very much. It was a pleasure.
John : We’ll talk to you later.
Dr. Evans : Okay. Sounds good.
John : Bye
[music and lyrics to “Ode to Satoshi” song]
John Barrett : Now climb aboard y’all! This train is bound for glory… and there’s plenty of room for all…
“Well Satoshi Nakamoto, that's a name I love to say,
And we don't know much about him, but he came to save the day.
When he wrote about the way things are,
And the way things ought to be,
He gave us all a protocol this world had never seen.
Oh Bitcoin! As you're going into the old Blockchain,
Oh Bitcoin! I know you're going to reign, gonna’ reign,
Till everybody knows, everybody knows,
Till everybody knows your name.
Down the road it will be told about the Death of Old Mt. Gox,
About traders trading alter coins, and miners mining blocks.
But them good old boys back in Illinois,
And on down through Tennessee,
See they don't care to be a millionaire,
They're just wanting to be free.
Oh Bitcoin! As you're going into the old Blockchain,
Oh Bitcoin! I know you're going to reign, gonna’ reign,
Till everybody knows, everybody knows,
Till everybody knows your name.
From the ghettos of Calcutta, to the halls of Parliament,
While the bankers count our money out for every government.
Oh, Bitcoin flies on through the skies of virtuality,
A promise to deliver us from age-old tyranny.
Oh Bitcoin! As you're going into the old Blockchain,
Oh Bitcoin! I know you're going to reign, gonna’ reign,
Till everybody knows, everybody knows,
Till everybody knows your name.
Till everybody knows, everybody knows,
Till everybody knows your -- "Give me some Exposure" --
Everybody knows your name.
Oh Lord, pass me some more,
Oh Lord, before I have to go.
Oh Lord, pass me some more,
Oh Lord . . . before I have to . . .
Go . . .
John : Oh-ho! Thank you East Nashville! Y’all be good to each other out there, ya’ hear?
[“Bitcoins and Gravy outro theme music]
John: I’d like to thank my guest on today’s show, Dr. Charles Evans, professor of finance and economics at Barry University, in beautiful Miami Shores, Florida. To get in touch with Dr. Evans, just check out the show notes here at :
Or you can check out the show notes on Soundcloud :
or you can go to my web site at : http://www.bitcoinsandgravy.com .
And now I’d like to take just a minute to talk to my listeners out there who may have start-ups, and who are working to get their projects, platforms, or products off the ground. If you have a business that needs more exposure, and if you want to increase your customer base, and increase your profits, here’s something to think about for your business. This podcast you’re listening to right now – “Bitcoins and Gravy” – has over 10,000 (ten thousand) listeners, and is heard, each week, in over 100 countries around the world. We all know that the Bitcoin sphere is expanding, exponentially. And “Bitcoin & Gravy” is expanding in pace with this exciting technology. So as our listener base grows, so does the potential for your business to reach more and more customers, here in North America, and around the globe. What I’m saying is, “Advertise here!” With over 10,000 weekly listeners, “Bitcoins & Gravy” is now a staple for Bitcoin enthusiasts of all levels. Whenever you advertise with “Bitcoins & Gravy” your message is archived, and therefore will be heard again and again as new listeners come online and search through past shows. In other words, your 30 second or 60 second spot will live in perpetuity on Soundcloud, the “Let’s Talk Bitcoins” network, YouTube ( www.youtube.com ) and, of course, on my web site www.bitcoinsandgravy.com . So please, let me know how I can help you make your advertising dream a reality. I’m ready to tell my listeners about you, your platform, project or product. For more details about how to advertise with “Bitcoin & Gravy”, and for pricing, please send me an email to : firstname.lastname@example.org
If you’ve enjoyed the show today, please take a minute to leave a comment on Let’s Talk Bitcoin in the comments section, right there below the show notes :
You can also leave a message on Soundcloud :
or do the old fashioned thing and send me an email.
And, of course, Bitcoin and Litecoin tips are always appreciated by the hardworking writers and podcasters in the Bitcoin world. Many of work as volunteers, and sure could use those tips. You can send me $5 or 5 cents, and I will be just as happy knowing that this podcast put a smile on your face, or made your day a little bit better.
Signing off now from East Nashville, Tennessee. I’m your host John Barrett, with my trusty companion Maxwell by my side. Say goodbye Maxwell.
Maxwell : Grrrr…..
John : Y’all be good to each other out there now. And remember, the only thing necessary for the triumph of evil is for good men and women to do nothing.