June 17, 2013 • 35 mins
In 2008 Bitcoin, the world's first decentralized, anarchistic all-digital currency, was introduced to the world. Its value has risen, fallen and risen again and speculators, techies, libertarians and economists alike are taking it seriously.
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Episode Transcript
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Speaker 1 (00:01):
Welcome to Stuff you Should Know fromhouse Stuff Works dot com. Hey,
and welcome to the podcast. I'm Josh Clark, and there's
Charles W. Chuck Bryant, and uh, this is Stuff you
Should Know the podcast the Tech Edition, which we don't
dive into tech too much because that's that's Jay Strick
(00:25):
and Lauren's territory. Yeah, and frankly, we're a little scared
of our cohorts at Tech Stuff. They do a great job,
but we've gotten so many requests for this topic that
we were like, you know, we got we gotta satisfied
the Stuff you should Know fans. We don't want them
showing up with torches led by Moe the bartender at
our door. You know, you know, this might be the
(00:47):
most requested of all time. Possibly, Oh you think, I
think it might be. I can't think of another one
that that comes to mind. That was maybe like mormon Ism, Yeah,
Mormonism apology. And I see accents a lot. People want
to get to the bottom of accents. That would be
a good one. We need to do that. You want
to do that now? Instead? Crikey, that's good. I could do.
(01:11):
How bad accents work? Do it? Do? Italian No, I'm
not to your monkey. That's good stuff. It's not that
I think you're my monkey. It's that you do um
accents way better than me. No, meaning that I attempt
them and do with them poorly, where you you don't
even attempt them, and it is off the charts. It's
(01:32):
not bad, so chuckers. Yes, you know much about money? Um,
not much? No, No, I know that I got a
few pennies in the bank and that's about it. How
that works? Okay, Well, we've talked about money before. We
where where was it that the first a lot of
financial stuff? There was something we did recently where we
(01:54):
were talking about how Mesopotamia the first system of wasn't
it like the first coinage in China? Of course too.
But um, nowadays, when we think money here in the U. S.
At least, and in Canada and actually pretty much the
world because the world uses dollars um, we think of
(02:16):
paper money or coins printed by the U. S. Mint
at the behest of the U. S. Treasury on behalf
of the United States government banks are backed and insured. Clearly,
we know that they're covered in case something goes wrong. Yeah,
because you and I are covering them buddy, Yeah, basically,
but it wasn't this system that we take very much
(02:38):
for granted now of you know ones, fives, tens, twenties, hundreds,
and then there were some other ones. This is fairly new.
It was just the beginning of the twentieth century that
the Federal Reserve was created. Before that and during the
Civil War era, I think maybe even post Civil War,
there was there more than eight thousand different entities, typically banks,
(03:02):
that we're printing their own currency. Yeah. Man, we talked
about that. What was that? Was that the barter thing? Maybe?
So yeah, but you're right, it's a great wall to
go back to because it's so interesting and like, you know,
if you're a bank, you can just be like, hey,
I got a bunch of gold here, I'll print some
money based on this, and I'm gonna put my picture
on it, or maybe a picture of my favorite horse.
(03:24):
This is a Jim At Fearson dollar exactly. See. Anyway, um,
all that went to the wayside when the Federal Reserve
came about, and then everybody's like stop, just the federal
government can print money from now on, and we're gonna
back it with golden and you know what, We're not
gonna back with gold anymore. Let's just say you guys
believe this has value, will go with that. Well, at
that point that everyone's had bought in literally and figuratively,
(03:47):
so exactly, so we went from the gold standard to
a fiat currency, which is everybody, come make believe that
this actually has value, and it actually will have have value.
It's pretty magic. And that transition to a yeah currency
gave birth to what we're going to to talk to today,
or the possibility of what we're going to talk to
about today, which is bitcoin, which is a real thing
(04:08):
right now. It's you know, will it survive who knows,
But as of the recording of this podcast, it is
super legit and what about a billion dollars It may
in fact be too legit to quit. Maybe. Um, I
didn't see an estimated value of all the bitcoins and circulation.
I saw that, but it, as we will find out,
it fluctuates like on a minute to minute basiss next week. Yeah. Um,
(04:34):
but like you said, though, the whole thing hasn't crashed.
It may be what we're seeing is a bubble and
then another bubble and they just bubbles bursting. But the
system hasn't crashed, and that's because the system, the theory
behind it, and the practice it turns out is extremely sound. Yeah.
And what's even more awesome about bitcoin, which is, we
(04:55):
should say the world's first digital, entirely digital, decentralized currency, um,
is that it has a great origin story. It's shrouded
in mystery. No one knows who created it, and the
things that it's used for it can be shady and weird,
and it's all just very you know, some of it's
(05:16):
on the deep web, and it's just very interesting and
like salacious, and it's very anarchistic in nature. It's there's
no not only is it not backed by any government,
it's not issued by any central authority. Yeah, it's part
if you're part of the bitcoin network, then you are
part of this the authority to issue it. Yeah. And
(05:38):
it's actually technically it's mathematics that has the authority to
issue bitcoins. Yeah. It took me while to wrap my
head around it because it's such an entirely new thing
and it's very complex. Yeah. And well, although it really
isn't like when you break it down, that's what I
had to eventually figure out. I studied enough, or I
was like, oh wait, this is actually kind of simple
and at the root of it all, as who wrote this,
(05:59):
it's strickling, right, No, this is a Nathan Chandler. Um
Chandler points out, at the root of it all, basically,
all that you have to do to invent a currency
is have enough people say this is currency, and then
you have currency. Whether, like I said, whether it sticks around,
who knows. But as of now there are enough people
buying and selling bitcoins and use speculating and using bitcoins, well,
(06:22):
that's that's trade. Then it's it's a thing. That's the
other thing that gives it value is that if there's
somebody out there who's willing to accept that currency for
a pizza, then it has the value of a pizza
at least. Right, So let's talk about the origin first.
Uh sure, the origin. Back in two thousand eight, a
(06:42):
mysterious pseudonym popped up, uh Satoshi Nakamoto. And we don't
know if this is a lady or a man, or
men or women or both, could be a group who knows,
and uh they or he or she or it published
(07:02):
a document that outlined what bitcoin was said, this is
a new thing that we or I or me are
trying to create. And I believe that person mented the
first fifty coins himself or herself or themselves. Yeah, that
was two thousand nine. And the document that that he
she that Satoshi published, um, it was really groundbreaking because
(07:25):
it it figured out a longstanding problem that was preventing
digital currency from being established. And that was what was
to prevent anybody from copying and pasting the code that
makes up your digital currency and then using it again
and again and again. Well, there's one easy way around it.
You have a ledger, but you have to have somebody
you trust to keep track of the ledger. And what
(07:48):
Satoshi came up with and that what bitcoin does is
it makes the ledger entirely public, so that everyone is
working out the ledger and it's actually that process of
keeping track of the ledger and who has what coin
and what coin has been transferred to whom uh that
actually mints new coins. So we need to step back
(08:10):
and explain what's going on here, because I think people
are already confused. If you don't know what bitcoin is,
You're like, what are these guys talking about? Bitcoin is
virtual money that you can now use online to buy
and sell things and there are a number of retailers
that are accepting this. Um, it's not just the deep web.
(08:30):
We'll get to that in a minute. UM. And now
they're even go between companies that allow you to I
guess they uh not transfer, but they convert your real
dollars into bitcoins too. You know, if you want to
shop at like Macy's, let's say they convert your bitcoins
into real dollars, bitcoins and real dollars the other way around.
And Chandler points out a good way to think of
(08:51):
bitcoins is it's a digital standing for cash because it's anonymous, exactly.
And that's the big key. So if you want to
buy things anonymously, or if you are a libertarian and
you just want to stick it to the government, or
if you don't trust the government, or you don't trust banks.
A big thing that um Nakamoto preyed on was the
financial collapse, obviously, and uh was basically like, hey, look around,
(09:14):
what's going on, Like you're gonna trust your money there?
Like why not trust this new thing. Let's give it
a try. Let's give it a try. So basically, if
there are a couple of different things you can do,
you can either participate as just someone who buys bitcoins
with your credit card or whatever and then uses them
to shop. Chandler says that you can buy with credit cards,
but I saw from a couple of different sources that
(09:36):
like most places do not take credit cards, that you
either have to give them your bank account or else
figure out a way to pay cash, like using money. Graham, Well,
that's been the more preferred way as of late, but
they're still credit card people that will take a credit card.
So the first thing you need to do is set
up set up your wallet, and that is basically your account,
your digital account, and then you buy bitcoins and they
(09:58):
are in your account and you use them for whoever
takes them right, and you buy them from like a
central currency exchange, probably Mount Cox, although we'll talk about
them in a minute too, but they've been handling about
six of all bitcoin transactions. Um well, purchases of bitcoins
you go to Mount Cox typically, So, like I said,
one reason you might want to do this is if
(10:19):
you don't trust the banks, or you're tired of the
government getting involved in your money, or if you just
want to save some money. Because what you're doing is
you're skipping middlemen and so you're saving on a lot
of transaction fees. Oh yeah, if you have you ever
purchased something overseas through PayPal? No, not overseas. Oh man,
it is expensive that pleas to Bitcoin has no central authority,
(10:43):
and so there's no bank you're dealing with, so you're
not gonna be charged the bank's fees. And the transfer
companies that do work with bitcoin typically charge like two bucks,
three bucks something like that, So you skip all that,
you're not paying as many fees. Uh. The wallet is
a software program, so it's not like a literal wallet. Obviously.
(11:04):
You download your wallet, you've got your little account, you
buy your bitcoins, and you can just do that if
you want. You can just buy things. You can buy
things on the regular web. You can buy things on
the deep hidden web. You can also just hang on
to them and speculate. Well, that's the second thing you
can do. You can speculate and buy and sell the
apparently the Winkle Boss Twins the Winkleby the Winkelby from
(11:26):
the Facebook movie. Uh, in real life? Are they have
like eleven million dollars worth of bitcoins now? And how
much it will be worth tomorrow? But yeah, they have
millions of dollars worth of bitcoins. Yes, so they're apparently
supposedly bitcoin millionaires that have made their money speculating by
buying and selling just like you would a stock, let's say. Right,
(11:50):
so that's another thing you can do. The other thing
you can do is actually participate in mind these coins,
which is sounds complex but it's really not. All right, well,
let's get into this because now we're talking about the
Bitcoin network, right, Yeah, it's a peer to peer we
should point that out. That's very important peer to peer network, right,
like bit torrent or Skype. Yeah, there's no centralized like
(12:11):
mainframe running this thing exactly. If the whole thing operates
on the computers of the people who are part of
bitcoin network. That's right. Okay, So the mining is really
the most important, and I think that's where a lot
of people get tripped up. There's three things basically that
mining coins. You're creating coins essentially, um you are, Uh, well,
(12:33):
let's let's get into it. They transactions are released in
six ten minute blocks, so every ten minutes now coins
are released into the system. That's the approximate about how
long it's been taking computers to figure out this mathematical problem.
Now they're released every ten minutes, whether or not they're
figured out or not. Might it might take longer than that.
(12:54):
So okay, well then you can explain this to me
because I was a little tripped up by this too.
Um So every ten minutes, the computer that happens to
be working on the math problem and solves it at
that ten minute part gets the coin. So is it random? Well,
I think we need to step back again and explain
(13:15):
what these are. It is. It sounds confusing, but it's not.
Every ten minutes they release what's called a block, and
a block is essentially a group of transactions across the
bit coin network. So it is up to a person,
but usually a group of people team up to do
this because it requires a lot of computing power two
(13:36):
perform um to basically handle these transactions, just like American
Express pay someone to handle their transaction. Totally got it,
I got it, Thank you. This is the this is
what was tripping me up. Yeah, okay, okay. And then
that block is a group of transactions, right, and this
is the transactions formed the ledger, like who has what coin?
(13:57):
What coin got transferred to what person? Like verifying all
that stuff. All that takes money. That's the usually those
are the fees you're paying like amex to do something
like that, right, okay, and this this is also encrypted information.
Well yeah, that's the key. So that block is basically
a math problem for a computer to workout and everybody.
So every ten minutes, everybody on the network gets that
(14:17):
same block, and whoever figures that out first gets the
newly minted bitcoins gets that reward. They call it a reward.
I got it. That's pretty much it. So here's the thing, though,
it's a diminishing return at this point. Um they have
it every four years. Every four years the number of
bitcoins that are released. They're figuring out a math problem
(14:38):
is had. So when it started out, it was fifty
and now we just reached the four year point. Two
thousand thirteam is the beginning of the year, so now
it's twenty five. When you unlock it, a block that's
right in two thousand seventeen will be twelve fifty. So
every ten minutes they're releasing these coins. So it has
two three functions. Really, it's a two to satisfy the
(14:59):
transaction and you know, get everyone working together is a
big group to make sure the transactions are good. It
keeps the ledger up to date, keeps the ledger up
to date too. It releases more money into the system. Um,
and it's you know, carefully planned out, so it's not
like it's a very steady rise basically over the years, right,
so nobody so like a central bank can't flood the
market with more money to devalue what's out there. It's
(15:22):
you basically forty they know exactly how many coins will
be out there, and it will be twenty one million
on the nose. And then that's it. Yeah, it's all controlled.
And then the third thing it does, is it it
keeps the system secure. Yeah, so that's what mining is.
And each block two uh, it's very energy inefficient. Each
(15:43):
block to fully satisfy over the course of twelve months
takes about ten tho dollars worth of electricity. I read
way more than that. I read a d fifty k
for block for twenty four hours of hardcore data mining
or of hardcore bitcoin mining. Sorry, costs up to a
hundred and fifty thou dollars in electricity. Yeah, and that's
(16:06):
but that's with one of these there's like certain computers
out there that people have set up that are dedicated
just to bitcoin mine because bitcoinshit like two bucks apiece
five of those puppies. That adds up. And if you
can get more and more and more, and you have
computers dedicated to it, then people have they're they're just
bitcoin miners and they have computer systems or they're parts
(16:27):
of co ops that divide the bitcoin. Right. Well, that's
kind of the only way to do it now. They say,
if you're a single user, then you have virtually no
chance these days. I would imagine it just takes too
much computing power for that average you know, home computer, right,
And if you team out, even if you've got a
great system, if you team up with ten people with
a great system, then you're ten times. It's likely because
(16:48):
that was the other thing that the number of bitcoins
that come out or had right. And um, the math problem,
the encrypted math problem that is released as a block
because is increasingly difficult. They wanted to be hard, right,
that's the whole point. Um. And there was an article
I don't know if you read this that I sent
(17:08):
you that right now, you can still make money mining,
but it won't be long because it's a diminishing thing
before it's going to cost too much in power and
hardware to even make it worth your while. So I'm
kind of curious how that's gonna work out. Yeah. I
saw like a computer built specifically to mind bitcoins started
about six grand on eBay and that's like, again, the
(17:30):
electricity involved this just ridiculous. Yeah. Plus, if you're splitting
twenty five bitcoins, I mean that ain't a lot of
dough right, Well, it depends, like we'll see. Yeah. Um
so so that's it. That's the network. That's how the
the bitcoin network functions, right, Yeah, and it's beautiful. Think
about the elegantness of the figuring out a math problem
(17:52):
to unlock new coins. Is what you're doing to keep
the ledger up to date, that's awesome. So like it's
it's providing these three functions. And not only is an
open ledger, they have open source, so their their code.
If you're a programmer and you know what you're doing,
you can actually look at their code and figure it out.
Because it's not like it's not a big deal. If
(18:13):
you understand their code, it's not like you can hack
into them. It's very secure on that side of things,
but it can also be uh not secure. As we're learning,
hackers are now getting into like uh, the the like
you can actually convert your bitcoins into real cash, and
those are the places that are susceptible to being hacked
(18:35):
at this point, right right it is um just one
more thing about why it's secure or the in theory. Um,
when that computer figures out that math problem that unlocks
that block. Yeah, that what they came up with is
shared with every other computer in the network to verify
that this ledger is accurate and is that a hole? Yes,
(18:56):
So that's why that's why it's secure, because everybody knows
everybody's computer knows what's what, and if there's a discrepancy,
then it has to be worked out. That's why a
transfer bitcoins transaction can take a long time because it
has to go across all the network. Gotcha for a verification? Yeah,
all right, well that's cool, okay. But insecurity, well many
(19:19):
ways it can be insecure. Like we said, they can
hack into like when you go to a like what's
one of the places they listed for um converting back
to cash? Um bit spin this one, I believe, and
uh what was the other one. Yes, bit pay and
bits spin. They convert your bitcoins into credit or whatever
(19:41):
you can shop anyway, whatever, or or your local currency
like if you want to cash them out and get
your cash back, right, their companies that do that, and
that apparently is where hackers can get in there. Yeah,
and they can also get to Mount Cox, which is
the currency exchange, which apparently if you have an account
at Mount Cox, a lot of people are like, oh well,
this is like a bank. It's not like a bank.
(20:01):
And whether it's Mount Cox or whoever, Um, that's a
really bad place to actually keep your virtual currency. Because
number one, since it's a decentralized system, anywhere where there's
a bunch of people's stuff parked, that's a target. And
since there are fewer targets, that means that people can
get better at better at attacking them. Since a terrible
(20:23):
place to keep your your bitcoins. And then also a
lot of those places, a lot of those currency exchanges,
if they go under, your bitcoins go with them. And
that's the thing where have your bitcoins are gone? They're
just gone and you don't have them any longer, which
is why if you have a bitcoin wallet or account.
You want a physically removable backup of them somewhere a
(20:45):
flash drive or removable hard drive away from your computer,
so that if your computer crashes where Mount Cox goes under,
or the FED swoop in and sees something or freeze something,
you still have your bitcoins because you've got that that
account of it on your flash drive back. Yeah. I
would back it up two or three times exactly. I
did read one account of this guy that lost like
eight hundred of him because his laptop crashed. Oh my god.
(21:07):
But it was early on, so he was just like
it was no big deal at the time because they
were like twenty cents apiece. But can you imagine No,
I couldn't. So, I mean that's one of the dangers
of it and one of the risks. So let's talk
a little bit about this whole speculation thing in the
wild ride a bitcoin, because it's like the wild West
out there, so early on it and it's gone from
(21:27):
twenty cents at the beginning to hive about two hundred
and sixty dollars per bitcoin early this year, right uh
in two thousand and eleven, it went from uh thirty
dollars in the middle. I'm sorry, in two it was
worth a few cents. It rose to thirty bucks in
two thousand eleven, and then it dropped down towards the
(21:51):
end of the year to two bucks. Like, currencies are
not supposed to do that. That's and that's one of
the big problems is like it it cree's wildly all
over the place because of speculation. Yeah, some people are
attracted to that though. Yeah, like the cowboys are into that,
like get rich really quick and get out right. But
if you're the average person like buying some bitcoins because
(22:12):
you're really you know, believe in the anarchistic sentiment behind it,
then you're you're really at the whim of speculators who
can gain this system fairly easily because they're the only
ones who know how to do it. Because the community
is small enough well, and a lot of financial you know,
guru say it's a sucker's bet, and it's it's just
(22:32):
a bubble maker basically, is one one way to look
at it, at least for now, because it's too unstable.
It's like the Lawrence Welk show out there. Half of
our fans are going, huh so the deep Web. We've
mentioned a lot of people don't know this. I know,
Matt Frederick of stuff they don't want. You know, like
three years ago, came up to me. I was like, dude,
check this out. The Silk Road and the deep web
(22:56):
is a web that's not accessible. You can't go to
Google and type in deep web and say now I'm
on the deep Web. You have to have like special
software to take you to this deep web. Tour t
R and that's where bad things go on. Well, that's
a that's a I think it's like an operating system
that allows you to be entirely anonymous. And yeah, if
(23:16):
you don't have tour, I don't think you can even
get onto silk Row. But if you did, would be
a really bad decision because Silk Road is where you
go buy well, drugs, um, pretty much anything. I think
out of the thirty thousand things they offered, roughly twenty
of them were drugs. Yeah, and this is like there's
some dude in Chicago who's got a bunch of heroin
(23:38):
for sale, and you go use your bitcoins on Silk
Road to buy heroin and emails it to you, and
your bitcoins are putting new an escrow account. And then
when you say, oh, yeah, I got my heroine, thanks man.
I just came out of like an eight day stupor
that the escrow account releases the bitcoins to the guy
in Chicago, and that is going on right now. But
(23:58):
now that guy has a little addendum that says, would
you mind releasing before you do all the hair point exactly. Yeah,
don't forget um. But it's a thing like you can
buy like whatever you want. You can there are services
that you can hire hitmen. Yeah, this really troubles me.
And kidnappers and people to like rob someone's house or
burn down your house for insurance money like that can
(24:20):
hire someone black market reloaded is that? And then there's
another one called the Armory, which is apparently like an
arms marketplace and all of its all of this stuff
would not be possible were it not for bitcoin. And
you can understand that this has really kind of gathered
the attention of the FEDS. Yeah, well it's attracted more
(24:43):
than the Feds. The Silk Road actually, as of about
two about a week ago, was shut down really by
a unidentified hacker, basically a blackmailer named Lance G threatened
to crash the site with a what's called a d
d o S Distributed Denialist service, which is I think
(25:05):
they basically flood your site so much that it's inoperable.
So Lance G whoever that is, threatened to crash the
side unless they paid five thousand dollars, which everyone was like,
that's a really weird small amount. And so they're thinking
it might be either some like not someone that's interested
in money, but someone that just wants to see it
(25:26):
taken down. And some people speculate that the US government
is actually behind that. Well, you know, some people actually
speculate that the US government is behind bitcoin as well.
Either it's some genius economists, some genius mathematician, maybe somebody
who works for the government. Um or it's actually like
a government project. That's one of the things. There's a
(25:49):
really really great article called the Rise and Follow Bitcoin.
It was from BuzzFeed, I believe, or wired when it
was wired and um it was it wired and it's
just amazing. It's like a nice long form article. I'll
take you a little while to read, and um it's
from two th eleven, so like it's a little out
of date, like the big bubble hadn't happened yet, but
(26:09):
I mean it talks a lot about Satoshi Nakamoto and
like who he is, who he could be, and all
the wild theories running around. But it also gives you
a really good explainer of bitcoin and how it how
it operates. And Nakamoto supposedly got out too, if you
believe the story they tell you. Um, he's not like
sitting on some pedestal getting rich. Supposedly he created this
(26:31):
and then said now it is yours and got out.
But who knows. I have to get back to this
psy ops thing that we're working on in the Pentagon.
So as of now, the Silk Road is shut down.
I'm sure it will pop back up or something like
it will um pretty soon, you know. So the hacker
just basically crashed the site or disabled to I think
(26:54):
threatened to or maybe did. I'll have to look into that.
I'm not sure if it actually happened. And there was
a D D O S attack on Mountain Cox as well. Yeah,
and uh, you know the problem is when you don't
have any uh anything back in your currency it you know,
the value of bitcoin is plummeted when that happened because
(27:14):
of your transactions were halted, right, which is this is
one of the games that a speculator who's very I
guess hecker savvy. Where is a hacker? Let's call it
that UM could do to manipulate the value of of
bitcoin is like attack Mount Cox, let the value plummet,
and then go to one of the other exchanges that
(27:35):
aren't crashed and buy a bunch of them there and
then just let everything go back to normal and let
the value rise once more. It's definitely not stable. No,
it isn't. And um, you were saying that the silk
Row got hit by a hacker. Well, the FEDS have
finally interviewed Vaned. A lot of people have been waiting
for this because you can buy drugs, you can get
(27:57):
around paying taxes, you can hire a murderer. You can
do all these things thanks to bitcoin. And now the
the the Department of Homeland Security, right, not even the
i r S. Yeah, the DHS froze Mount Cox is
the the parent companies accounts yesterday? Yeah right, Well this
should give you a good idea of how things are
(28:18):
not stable. On Tuesday in May fourteenth, that story broke
that Mount Cox had been had been Did they shut
them down or did they just they froze some of
their accounts, and it was so a lot of like
the transfer companies, the companies that work with mount Cox
saying like, we're not doing anything with mount Cox anymore.
(28:39):
So if you want to make some purchase or whatever,
you're gonna have to figure out another way or use
somebody else. So that happened yesterday. At the same time,
another story was released yesterday that uh a startup will
someone who funds startups is investing three dollars into bitcoin Um.
They're interested in h making it easier to spend bitcoin currency,
(29:02):
They're making security better. They think those are good opportunities. Basically,
I make money on those are huge problems that this
currency has right now. So in the same day the
FEDS shut down mount Cox, one company invested three d
fifty grand and yesterday CNN money Um global risk strategist
Ian Bremer said predicted the end of bitcon, So that
(29:25):
just shows you like no one knows. He said, I'll
be highly surprised if this is around in ten years.
And what he thinks is going to happen is this
is the first one and someone's gonna learn Bitcoin will
not be around, but something else will pop up that
does it better and that may last exactly. Like somebody
in one of the articles we I think we researched
(29:46):
UM said, you know, bit Torrent wasn't the first P
two P file sharing network, and Skype wasn't the first
V O I P network exactly, so Bitcoin may not
be the first one. And there's a lot of rivals
just waiting to take over if coin falls. But the
it seems like the precedent has been established and it's
been shown like this can work. Whether or not it
(30:08):
will be allowed to work is a big question because again,
the Feds can always step in and shut down whatever
they want if if they want to go after a
Mount Cox, they can do that. Well, yeah, and the
big boys are already getting involved of course. Um. Amazon
now has Amazon coins that you can buy for the
Kindle network and spend them like money. So you realize
(30:31):
what we're talking about is the same thing that was
happening post Civil War in the US when eight thousand
different banks Russuman currency. That's what we're seeing right now,
but in a digital form. This is the beginning of it.
It's crazy, it's the wild West. It's pretty awesome. UM.
Aside from the Hitman, Yes, I don't think I have
anything else. Did you hear people get it? You know,
(30:53):
the guy from the lead singer of As I Lay Dying,
that metal band, I don't know them. He uh. He
got set up trying to buy a murder for hire
from an undercover detective to murder his ex wife through
bitcoin or just back full of cash. Yeah, yeah, wow, yeah, Yeah,
(31:14):
that's a tough one to get away with, although maybe
people get away with him and you just never hear
about it. Yeah. I hope it's a tough one to
get away with. That definitely should be hard to get
away with. Yeah. I think the moral of the story
is kill someone yourself. Just kidding. Um. So, if you
want to know more about bitcoin, it's it's pretty interesting
(31:35):
and there's a lot of really great writing all over
the web about it. Yeah. I would first go to
our beloved How Stuff Works, type that word in the
search bar, then maybe start next at Wired. The Economist
has a good explainer. Mother Jones has some good stuff
on it. Go check it out or check the news feed,
because literally every day you're gonna get some new changing story.
(31:56):
I mean, by the time this is released, there may
not be any bitcoins in two weeks. Who knows, but
there will be yeah, I hope so, or else they're
gonna have to add an e D to how bitcoin worked?
Do you have any? Have you bought any? No? I
mean I'm the fool. I think I said a search
bar in there somewhere. So that means it's time for
(32:18):
a message break right, that's right, and then a really
good listener mail. I now, Chuck, it's time for listener mail.
Thank you, sir. This is from pink Chris Pinkerton, who
has been a fan of our Showa very beginning and
active on our Facebook and the famous detective and a
good guy. That's right. So this is about e c
(32:40):
t RT electro convulsive therapy podcast that just dropped in
real time and uh he has a story. While in
high school, guys in Omaha, Nebraska, I met two girls,
Gloria and Susan. For about three years, we were inseparable.
We would hang out after school party together. Glory and Susan.
We're even closer and sometimes I was just a third
ill another feeling buddy. Yeah. Uh. The girls, being a
(33:03):
year younger than I, stayed in school when I was
shipped off to join the marine corps or not what
shipped off. He chose to go shipped out. Yeah, we
lost touch, but then eventually I moved back to Des Moines, Iowa,
and I found Susan living there as well. She informed
me that should call Gloria and fill her into the
misyears while I was away. Apparently Gloria had a daughter
who passed away under terrible circumstances and became very depressed
(33:27):
after the loss of her daughter, and Um actually had
to undergo ect treatment for depression. In your podcast, you
stated there slight memory loss, but in my experience that
is an understatement. Gloria had no clue who I was,
did not remember any of our high school years. Gone
were the memories of harassing teachers, making out in the auditorium,
and memories of working on my car in shop class.
(33:50):
Apparently she was pretty good with a wrench, So we
get to tell her all over again. Uh yeah, Um.
As it turned out, she had forgotten Susan as well,
but not as much as she had forgotten me, because
Susan was there for her throughout the treatment, and Gloria
has been able to recall more memories. Have heard you
to this. It's very sad. To me that I've lost
a friend. Um, not because of intent, but due to
a treatment I failed to help her through and failed
(34:12):
to understand. That is one regret I will always have,
and it shames me to think that she has no
clue who I am and how important to my life
she was. Ever since, I vowed to tell people how
important they are to me in case they never remember,
at least all know that I tried to explain that.
And uh, Pink, let yourself up, buddy, Um, you were
(34:32):
in the Marine Corps. You were serving your country and
it was a very unfortunate series of events, and so um,
take that off your shoulders. I say, uh. And Chris
goes on to say, enjoy your day, guys, smile and
have fun. And that is Chris Pinkerton and Demine, ps,
could you tell Jill Marie McFadden that she has a
love of my life? I think you just think, yeah,
(34:53):
exacinitely done. Thanks for the words, pink. He's always super
supportive and like just my sky. Yeah, clearly, Yeah, thanks
a lot, pink. Um, that's a wow. If you have
a story that you want to tell us, almost overwhelmingly depressing,
we want to hear that. Um, You can tweet to
us at s y s K podcast. You can join
(35:13):
us on Facebook dot com slash stuff you Should Know.
You can send us an email of the Stuff podcast
at discovery dot com and join us at our home
on the web at stuff you Should Know dot com.
For more on this and thousands of other topics, is
it how stuff works dot com with over a hundred
(35:40):
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sign up today.
Welcome to Stuff you Should Know fromhouse Stuff Works dot com. Hey,
and welcome to the podcast. I'm Josh Clark, and there's
Charles W. Chuck Bryant, and uh, this is Stuff you
Should Know the podcast the Tech Edition, which we don't
dive into tech too much because that's that's Jay Strick
(00:25):
and Lauren's territory. Yeah, and frankly, we're a little scared
of our cohorts at Tech Stuff. They do a great job,
but we've gotten so many requests for this topic that
we were like, you know, we got we gotta satisfied
the Stuff you should Know fans. We don't want them
showing up with torches led by Moe the bartender at
our door. You know, you know, this might be the
(00:47):
most requested of all time. Possibly, Oh you think, I
think it might be. I can't think of another one
that that comes to mind. That was maybe like mormon Ism, Yeah,
Mormonism apology. And I see accents a lot. People want
to get to the bottom of accents. That would be
a good one. We need to do that. You want
to do that now? Instead? Crikey, that's good. I could do.
(01:11):
How bad accents work? Do it? Do? Italian No, I'm
not to your monkey. That's good stuff. It's not that
I think you're my monkey. It's that you do um
accents way better than me. No, meaning that I attempt
them and do with them poorly, where you you don't
even attempt them, and it is off the charts. It's
(01:32):
not bad, so chuckers. Yes, you know much about money? Um,
not much? No, No, I know that I got a
few pennies in the bank and that's about it. How
that works? Okay, Well, we've talked about money before. We
where where was it that the first a lot of
financial stuff? There was something we did recently where we
(01:54):
were talking about how Mesopotamia the first system of wasn't
it like the first coinage in China? Of course too.
But um, nowadays, when we think money here in the U. S.
At least, and in Canada and actually pretty much the
world because the world uses dollars um, we think of
(02:16):
paper money or coins printed by the U. S. Mint
at the behest of the U. S. Treasury on behalf
of the United States government banks are backed and insured. Clearly,
we know that they're covered in case something goes wrong. Yeah,
because you and I are covering them buddy, Yeah, basically,
but it wasn't this system that we take very much
(02:38):
for granted now of you know ones, fives, tens, twenties, hundreds,
and then there were some other ones. This is fairly new.
It was just the beginning of the twentieth century that
the Federal Reserve was created. Before that and during the
Civil War era, I think maybe even post Civil War,
there was there more than eight thousand different entities, typically banks,
(03:02):
that we're printing their own currency. Yeah. Man, we talked
about that. What was that? Was that the barter thing? Maybe?
So yeah, but you're right, it's a great wall to
go back to because it's so interesting and like, you know,
if you're a bank, you can just be like, hey,
I got a bunch of gold here, I'll print some
money based on this, and I'm gonna put my picture
on it, or maybe a picture of my favorite horse.
(03:24):
This is a Jim At Fearson dollar exactly. See. Anyway, um,
all that went to the wayside when the Federal Reserve
came about, and then everybody's like stop, just the federal
government can print money from now on, and we're gonna
back it with golden and you know what, We're not
gonna back with gold anymore. Let's just say you guys
believe this has value, will go with that. Well, at
that point that everyone's had bought in literally and figuratively,
(03:47):
so exactly, so we went from the gold standard to
a fiat currency, which is everybody, come make believe that
this actually has value, and it actually will have have value.
It's pretty magic. And that transition to a yeah currency
gave birth to what we're going to to talk to today,
or the possibility of what we're going to talk to
about today, which is bitcoin, which is a real thing
(04:08):
right now. It's you know, will it survive who knows,
But as of the recording of this podcast, it is
super legit and what about a billion dollars It may
in fact be too legit to quit. Maybe. Um, I
didn't see an estimated value of all the bitcoins and circulation.
I saw that, but it, as we will find out,
it fluctuates like on a minute to minute basiss next week. Yeah. Um,
(04:34):
but like you said, though, the whole thing hasn't crashed.
It may be what we're seeing is a bubble and
then another bubble and they just bubbles bursting. But the
system hasn't crashed, and that's because the system, the theory
behind it, and the practice it turns out is extremely sound. Yeah.
And what's even more awesome about bitcoin, which is, we
(04:55):
should say the world's first digital, entirely digital, decentralized currency, um,
is that it has a great origin story. It's shrouded
in mystery. No one knows who created it, and the
things that it's used for it can be shady and weird,
and it's all just very you know, some of it's
(05:16):
on the deep web, and it's just very interesting and
like salacious, and it's very anarchistic in nature. It's there's
no not only is it not backed by any government,
it's not issued by any central authority. Yeah, it's part
if you're part of the bitcoin network, then you are
part of this the authority to issue it. Yeah. And
(05:38):
it's actually technically it's mathematics that has the authority to
issue bitcoins. Yeah. It took me while to wrap my
head around it because it's such an entirely new thing
and it's very complex. Yeah. And well, although it really
isn't like when you break it down, that's what I
had to eventually figure out. I studied enough, or I
was like, oh wait, this is actually kind of simple
and at the root of it all, as who wrote this,
(05:59):
it's strickling, right, No, this is a Nathan Chandler. Um
Chandler points out, at the root of it all, basically,
all that you have to do to invent a currency
is have enough people say this is currency, and then
you have currency. Whether, like I said, whether it sticks around,
who knows. But as of now there are enough people
buying and selling bitcoins and use speculating and using bitcoins, well,
(06:22):
that's that's trade. Then it's it's a thing. That's the
other thing that gives it value is that if there's
somebody out there who's willing to accept that currency for
a pizza, then it has the value of a pizza
at least. Right, So let's talk about the origin first.
Uh sure, the origin. Back in two thousand eight, a
(06:42):
mysterious pseudonym popped up, uh Satoshi Nakamoto. And we don't
know if this is a lady or a man, or
men or women or both, could be a group who knows,
and uh they or he or she or it published
(07:02):
a document that outlined what bitcoin was said, this is
a new thing that we or I or me are
trying to create. And I believe that person mented the
first fifty coins himself or herself or themselves. Yeah, that
was two thousand nine. And the document that that he
she that Satoshi published, um, it was really groundbreaking because
(07:25):
it it figured out a longstanding problem that was preventing
digital currency from being established. And that was what was
to prevent anybody from copying and pasting the code that
makes up your digital currency and then using it again
and again and again. Well, there's one easy way around it.
You have a ledger, but you have to have somebody
you trust to keep track of the ledger. And what
(07:48):
Satoshi came up with and that what bitcoin does is
it makes the ledger entirely public, so that everyone is
working out the ledger and it's actually that process of
keeping track of the ledger and who has what coin
and what coin has been transferred to whom uh that
actually mints new coins. So we need to step back
(08:10):
and explain what's going on here, because I think people
are already confused. If you don't know what bitcoin is,
You're like, what are these guys talking about? Bitcoin is
virtual money that you can now use online to buy
and sell things and there are a number of retailers
that are accepting this. Um, it's not just the deep web.
(08:30):
We'll get to that in a minute. UM. And now
they're even go between companies that allow you to I
guess they uh not transfer, but they convert your real
dollars into bitcoins too. You know, if you want to
shop at like Macy's, let's say they convert your bitcoins
into real dollars, bitcoins and real dollars the other way around.
And Chandler points out a good way to think of
(08:51):
bitcoins is it's a digital standing for cash because it's anonymous, exactly.
And that's the big key. So if you want to
buy things anonymously, or if you are a libertarian and
you just want to stick it to the government, or
if you don't trust the government, or you don't trust banks.
A big thing that um Nakamoto preyed on was the
financial collapse, obviously, and uh was basically like, hey, look around,
(09:14):
what's going on, Like you're gonna trust your money there?
Like why not trust this new thing. Let's give it
a try. Let's give it a try. So basically, if
there are a couple of different things you can do,
you can either participate as just someone who buys bitcoins
with your credit card or whatever and then uses them
to shop. Chandler says that you can buy with credit cards,
but I saw from a couple of different sources that
(09:36):
like most places do not take credit cards, that you
either have to give them your bank account or else
figure out a way to pay cash, like using money. Graham, Well,
that's been the more preferred way as of late, but
they're still credit card people that will take a credit card.
So the first thing you need to do is set
up set up your wallet, and that is basically your account,
your digital account, and then you buy bitcoins and they
(09:58):
are in your account and you use them for whoever
takes them right, and you buy them from like a
central currency exchange, probably Mount Cox, although we'll talk about
them in a minute too, but they've been handling about
six of all bitcoin transactions. Um well, purchases of bitcoins
you go to Mount Cox typically, So, like I said,
one reason you might want to do this is if
(10:19):
you don't trust the banks, or you're tired of the
government getting involved in your money, or if you just
want to save some money. Because what you're doing is
you're skipping middlemen and so you're saving on a lot
of transaction fees. Oh yeah, if you have you ever
purchased something overseas through PayPal? No, not overseas. Oh man,
it is expensive that pleas to Bitcoin has no central authority,
(10:43):
and so there's no bank you're dealing with, so you're
not gonna be charged the bank's fees. And the transfer
companies that do work with bitcoin typically charge like two bucks,
three bucks something like that, So you skip all that,
you're not paying as many fees. Uh. The wallet is
a software program, so it's not like a literal wallet. Obviously.
(11:04):
You download your wallet, you've got your little account, you
buy your bitcoins, and you can just do that if
you want. You can just buy things. You can buy
things on the regular web. You can buy things on
the deep hidden web. You can also just hang on
to them and speculate. Well, that's the second thing you
can do. You can speculate and buy and sell the
apparently the Winkle Boss Twins the Winkleby the Winkelby from
(11:26):
the Facebook movie. Uh, in real life? Are they have
like eleven million dollars worth of bitcoins now? And how
much it will be worth tomorrow? But yeah, they have
millions of dollars worth of bitcoins. Yes, so they're apparently
supposedly bitcoin millionaires that have made their money speculating by
buying and selling just like you would a stock, let's say. Right,
(11:50):
so that's another thing you can do. The other thing
you can do is actually participate in mind these coins,
which is sounds complex but it's really not. All right, well,
let's get into this because now we're talking about the
Bitcoin network, right, Yeah, it's a peer to peer we
should point that out. That's very important peer to peer network, right,
like bit torrent or Skype. Yeah, there's no centralized like
(12:11):
mainframe running this thing exactly. If the whole thing operates
on the computers of the people who are part of
bitcoin network. That's right. Okay, So the mining is really
the most important, and I think that's where a lot
of people get tripped up. There's three things basically that
mining coins. You're creating coins essentially, um you are, Uh, well,
(12:33):
let's let's get into it. They transactions are released in
six ten minute blocks, so every ten minutes now coins
are released into the system. That's the approximate about how
long it's been taking computers to figure out this mathematical problem.
Now they're released every ten minutes, whether or not they're
figured out or not. Might it might take longer than that.
(12:54):
So okay, well then you can explain this to me
because I was a little tripped up by this too.
Um So every ten minutes, the computer that happens to
be working on the math problem and solves it at
that ten minute part gets the coin. So is it random? Well,
I think we need to step back again and explain
(13:15):
what these are. It is. It sounds confusing, but it's not.
Every ten minutes they release what's called a block, and
a block is essentially a group of transactions across the
bit coin network. So it is up to a person,
but usually a group of people team up to do
this because it requires a lot of computing power two
(13:36):
perform um to basically handle these transactions, just like American
Express pay someone to handle their transaction. Totally got it,
I got it, Thank you. This is the this is
what was tripping me up. Yeah, okay, okay. And then
that block is a group of transactions, right, and this
is the transactions formed the ledger, like who has what coin?
(13:57):
What coin got transferred to what person? Like verifying all
that stuff. All that takes money. That's the usually those
are the fees you're paying like amex to do something
like that, right, okay, and this this is also encrypted information.
Well yeah, that's the key. So that block is basically
a math problem for a computer to workout and everybody.
So every ten minutes, everybody on the network gets that
(14:17):
same block, and whoever figures that out first gets the
newly minted bitcoins gets that reward. They call it a reward.
I got it. That's pretty much it. So here's the thing, though,
it's a diminishing return at this point. Um they have
it every four years. Every four years the number of
bitcoins that are released. They're figuring out a math problem
(14:38):
is had. So when it started out, it was fifty
and now we just reached the four year point. Two
thousand thirteam is the beginning of the year, so now
it's twenty five. When you unlock it, a block that's
right in two thousand seventeen will be twelve fifty. So
every ten minutes they're releasing these coins. So it has
two three functions. Really, it's a two to satisfy the
(14:59):
transaction and you know, get everyone working together is a
big group to make sure the transactions are good. It
keeps the ledger up to date, keeps the ledger up
to date too. It releases more money into the system. Um,
and it's you know, carefully planned out, so it's not
like it's a very steady rise basically over the years, right,
so nobody so like a central bank can't flood the
market with more money to devalue what's out there. It's
(15:22):
you basically forty they know exactly how many coins will
be out there, and it will be twenty one million
on the nose. And then that's it. Yeah, it's all controlled.
And then the third thing it does, is it it
keeps the system secure. Yeah, so that's what mining is.
And each block two uh, it's very energy inefficient. Each
(15:43):
block to fully satisfy over the course of twelve months
takes about ten tho dollars worth of electricity. I read
way more than that. I read a d fifty k
for block for twenty four hours of hardcore data mining
or of hardcore bitcoin mining. Sorry, costs up to a
hundred and fifty thou dollars in electricity. Yeah, and that's
(16:06):
but that's with one of these there's like certain computers
out there that people have set up that are dedicated
just to bitcoin mine because bitcoinshit like two bucks apiece
five of those puppies. That adds up. And if you
can get more and more and more, and you have
computers dedicated to it, then people have they're they're just
bitcoin miners and they have computer systems or they're parts
(16:27):
of co ops that divide the bitcoin. Right. Well, that's
kind of the only way to do it now. They say,
if you're a single user, then you have virtually no
chance these days. I would imagine it just takes too
much computing power for that average you know, home computer, right,
And if you team out, even if you've got a
great system, if you team up with ten people with
a great system, then you're ten times. It's likely because
(16:48):
that was the other thing that the number of bitcoins
that come out or had right. And um, the math problem,
the encrypted math problem that is released as a block
because is increasingly difficult. They wanted to be hard, right,
that's the whole point. Um. And there was an article
I don't know if you read this that I sent
(17:08):
you that right now, you can still make money mining,
but it won't be long because it's a diminishing thing
before it's going to cost too much in power and
hardware to even make it worth your while. So I'm
kind of curious how that's gonna work out. Yeah. I
saw like a computer built specifically to mind bitcoins started
about six grand on eBay and that's like, again, the
(17:30):
electricity involved this just ridiculous. Yeah. Plus, if you're splitting
twenty five bitcoins, I mean that ain't a lot of
dough right, Well, it depends, like we'll see. Yeah. Um
so so that's it. That's the network. That's how the
the bitcoin network functions, right, Yeah, and it's beautiful. Think
about the elegantness of the figuring out a math problem
(17:52):
to unlock new coins. Is what you're doing to keep
the ledger up to date, that's awesome. So like it's
it's providing these three functions. And not only is an
open ledger, they have open source, so their their code.
If you're a programmer and you know what you're doing,
you can actually look at their code and figure it out.
Because it's not like it's not a big deal. If
(18:13):
you understand their code, it's not like you can hack
into them. It's very secure on that side of things,
but it can also be uh not secure. As we're learning,
hackers are now getting into like uh, the the like
you can actually convert your bitcoins into real cash, and
those are the places that are susceptible to being hacked
(18:35):
at this point, right right it is um just one
more thing about why it's secure or the in theory. Um,
when that computer figures out that math problem that unlocks
that block. Yeah, that what they came up with is
shared with every other computer in the network to verify
that this ledger is accurate and is that a hole? Yes,
(18:56):
So that's why that's why it's secure, because everybody knows
everybody's computer knows what's what, and if there's a discrepancy,
then it has to be worked out. That's why a
transfer bitcoins transaction can take a long time because it
has to go across all the network. Gotcha for a verification? Yeah,
all right, well that's cool, okay. But insecurity, well many
(19:19):
ways it can be insecure. Like we said, they can
hack into like when you go to a like what's
one of the places they listed for um converting back
to cash? Um bit spin this one, I believe, and
uh what was the other one. Yes, bit pay and
bits spin. They convert your bitcoins into credit or whatever
(19:41):
you can shop anyway, whatever, or or your local currency
like if you want to cash them out and get
your cash back, right, their companies that do that, and
that apparently is where hackers can get in there. Yeah,
and they can also get to Mount Cox, which is
the currency exchange, which apparently if you have an account
at Mount Cox, a lot of people are like, oh well,
this is like a bank. It's not like a bank.
(20:01):
And whether it's Mount Cox or whoever, Um, that's a
really bad place to actually keep your virtual currency. Because
number one, since it's a decentralized system, anywhere where there's
a bunch of people's stuff parked, that's a target. And
since there are fewer targets, that means that people can
get better at better at attacking them. Since a terrible
(20:23):
place to keep your your bitcoins. And then also a
lot of those places, a lot of those currency exchanges,
if they go under, your bitcoins go with them. And
that's the thing where have your bitcoins are gone? They're
just gone and you don't have them any longer, which
is why if you have a bitcoin wallet or account.
You want a physically removable backup of them somewhere a
(20:45):
flash drive or removable hard drive away from your computer,
so that if your computer crashes where Mount Cox goes under,
or the FED swoop in and sees something or freeze something,
you still have your bitcoins because you've got that that
account of it on your flash drive back. Yeah. I
would back it up two or three times exactly. I
did read one account of this guy that lost like
eight hundred of him because his laptop crashed. Oh my god.
(21:07):
But it was early on, so he was just like
it was no big deal at the time because they
were like twenty cents apiece. But can you imagine No,
I couldn't. So, I mean that's one of the dangers
of it and one of the risks. So let's talk
a little bit about this whole speculation thing in the
wild ride a bitcoin, because it's like the wild West
out there, so early on it and it's gone from
(21:27):
twenty cents at the beginning to hive about two hundred
and sixty dollars per bitcoin early this year, right uh
in two thousand and eleven, it went from uh thirty
dollars in the middle. I'm sorry, in two it was
worth a few cents. It rose to thirty bucks in
two thousand eleven, and then it dropped down towards the
(21:51):
end of the year to two bucks. Like, currencies are
not supposed to do that. That's and that's one of
the big problems is like it it cree's wildly all
over the place because of speculation. Yeah, some people are
attracted to that though. Yeah, like the cowboys are into that,
like get rich really quick and get out right. But
if you're the average person like buying some bitcoins because
(22:12):
you're really you know, believe in the anarchistic sentiment behind it,
then you're you're really at the whim of speculators who
can gain this system fairly easily because they're the only
ones who know how to do it. Because the community
is small enough well, and a lot of financial you know,
guru say it's a sucker's bet, and it's it's just
(22:32):
a bubble maker basically, is one one way to look
at it, at least for now, because it's too unstable.
It's like the Lawrence Welk show out there. Half of
our fans are going, huh so the deep Web. We've
mentioned a lot of people don't know this. I know,
Matt Frederick of stuff they don't want. You know, like
three years ago, came up to me. I was like, dude,
check this out. The Silk Road and the deep web
(22:56):
is a web that's not accessible. You can't go to
Google and type in deep web and say now I'm
on the deep Web. You have to have like special
software to take you to this deep web. Tour t
R and that's where bad things go on. Well, that's
a that's a I think it's like an operating system
that allows you to be entirely anonymous. And yeah, if
(23:16):
you don't have tour, I don't think you can even
get onto silk Row. But if you did, would be
a really bad decision because Silk Road is where you
go buy well, drugs, um, pretty much anything. I think
out of the thirty thousand things they offered, roughly twenty
of them were drugs. Yeah, and this is like there's
some dude in Chicago who's got a bunch of heroin
(23:38):
for sale, and you go use your bitcoins on Silk
Road to buy heroin and emails it to you, and
your bitcoins are putting new an escrow account. And then
when you say, oh, yeah, I got my heroine, thanks man.
I just came out of like an eight day stupor
that the escrow account releases the bitcoins to the guy
in Chicago, and that is going on right now. But
(23:58):
now that guy has a little addendum that says, would
you mind releasing before you do all the hair point exactly. Yeah,
don't forget um. But it's a thing like you can
buy like whatever you want. You can there are services
that you can hire hitmen. Yeah, this really troubles me.
And kidnappers and people to like rob someone's house or
burn down your house for insurance money like that can
(24:20):
hire someone black market reloaded is that? And then there's
another one called the Armory, which is apparently like an
arms marketplace and all of its all of this stuff
would not be possible were it not for bitcoin. And
you can understand that this has really kind of gathered
the attention of the FEDS. Yeah, well it's attracted more
(24:43):
than the Feds. The Silk Road actually, as of about
two about a week ago, was shut down really by
a unidentified hacker, basically a blackmailer named Lance G threatened
to crash the site with a what's called a d
d o S Distributed Denialist service, which is I think
(25:05):
they basically flood your site so much that it's inoperable.
So Lance G whoever that is, threatened to crash the
side unless they paid five thousand dollars, which everyone was like,
that's a really weird small amount. And so they're thinking
it might be either some like not someone that's interested
in money, but someone that just wants to see it
(25:26):
taken down. And some people speculate that the US government
is actually behind that. Well, you know, some people actually
speculate that the US government is behind bitcoin as well.
Either it's some genius economists, some genius mathematician, maybe somebody
who works for the government. Um or it's actually like
a government project. That's one of the things. There's a
(25:49):
really really great article called the Rise and Follow Bitcoin.
It was from BuzzFeed, I believe, or wired when it
was wired and um it was it wired and it's
just amazing. It's like a nice long form article. I'll
take you a little while to read, and um it's
from two th eleven, so like it's a little out
of date, like the big bubble hadn't happened yet, but
(26:09):
I mean it talks a lot about Satoshi Nakamoto and
like who he is, who he could be, and all
the wild theories running around. But it also gives you
a really good explainer of bitcoin and how it how
it operates. And Nakamoto supposedly got out too, if you
believe the story they tell you. Um, he's not like
sitting on some pedestal getting rich. Supposedly he created this
(26:31):
and then said now it is yours and got out.
But who knows. I have to get back to this
psy ops thing that we're working on in the Pentagon.
So as of now, the Silk Road is shut down.
I'm sure it will pop back up or something like
it will um pretty soon, you know. So the hacker
just basically crashed the site or disabled to I think
(26:54):
threatened to or maybe did. I'll have to look into that.
I'm not sure if it actually happened. And there was
a D D O S attack on Mountain Cox as well. Yeah,
and uh, you know the problem is when you don't
have any uh anything back in your currency it you know,
the value of bitcoin is plummeted when that happened because
(27:14):
of your transactions were halted, right, which is this is
one of the games that a speculator who's very I
guess hecker savvy. Where is a hacker? Let's call it
that UM could do to manipulate the value of of
bitcoin is like attack Mount Cox, let the value plummet,
and then go to one of the other exchanges that
(27:35):
aren't crashed and buy a bunch of them there and
then just let everything go back to normal and let
the value rise once more. It's definitely not stable. No,
it isn't. And um, you were saying that the silk
Row got hit by a hacker. Well, the FEDS have
finally interviewed Vaned. A lot of people have been waiting
for this because you can buy drugs, you can get
(27:57):
around paying taxes, you can hire a murderer. You can
do all these things thanks to bitcoin. And now the
the the Department of Homeland Security, right, not even the
i r S. Yeah, the DHS froze Mount Cox is
the the parent companies accounts yesterday? Yeah right, Well this
should give you a good idea of how things are
(28:18):
not stable. On Tuesday in May fourteenth, that story broke
that Mount Cox had been had been Did they shut
them down or did they just they froze some of
their accounts, and it was so a lot of like
the transfer companies, the companies that work with mount Cox
saying like, we're not doing anything with mount Cox anymore.
(28:39):
So if you want to make some purchase or whatever,
you're gonna have to figure out another way or use
somebody else. So that happened yesterday. At the same time,
another story was released yesterday that uh a startup will
someone who funds startups is investing three dollars into bitcoin Um.
They're interested in h making it easier to spend bitcoin currency,
(29:02):
They're making security better. They think those are good opportunities. Basically,
I make money on those are huge problems that this
currency has right now. So in the same day the
FEDS shut down mount Cox, one company invested three d
fifty grand and yesterday CNN money Um global risk strategist
Ian Bremer said predicted the end of bitcon, So that
(29:25):
just shows you like no one knows. He said, I'll
be highly surprised if this is around in ten years.
And what he thinks is going to happen is this
is the first one and someone's gonna learn Bitcoin will
not be around, but something else will pop up that
does it better and that may last exactly. Like somebody
in one of the articles we I think we researched
(29:46):
UM said, you know, bit Torrent wasn't the first P
two P file sharing network, and Skype wasn't the first
V O I P network exactly, so Bitcoin may not
be the first one. And there's a lot of rivals
just waiting to take over if coin falls. But the
it seems like the precedent has been established and it's
been shown like this can work. Whether or not it
(30:08):
will be allowed to work is a big question because again,
the Feds can always step in and shut down whatever
they want if if they want to go after a
Mount Cox, they can do that. Well, yeah, and the
big boys are already getting involved of course. Um. Amazon
now has Amazon coins that you can buy for the
Kindle network and spend them like money. So you realize
(30:31):
what we're talking about is the same thing that was
happening post Civil War in the US when eight thousand
different banks Russuman currency. That's what we're seeing right now,
but in a digital form. This is the beginning of it.
It's crazy, it's the wild West. It's pretty awesome. UM.
Aside from the Hitman, Yes, I don't think I have
anything else. Did you hear people get it? You know,
(30:53):
the guy from the lead singer of As I Lay Dying,
that metal band, I don't know them. He uh. He
got set up trying to buy a murder for hire
from an undercover detective to murder his ex wife through
bitcoin or just back full of cash. Yeah, yeah, wow, yeah, Yeah,
(31:14):
that's a tough one to get away with, although maybe
people get away with him and you just never hear
about it. Yeah. I hope it's a tough one to
get away with. That definitely should be hard to get
away with. Yeah. I think the moral of the story
is kill someone yourself. Just kidding. Um. So, if you
want to know more about bitcoin, it's it's pretty interesting
(31:35):
and there's a lot of really great writing all over
the web about it. Yeah. I would first go to
our beloved How Stuff Works, type that word in the
search bar, then maybe start next at Wired. The Economist
has a good explainer. Mother Jones has some good stuff
on it. Go check it out or check the news feed,
because literally every day you're gonna get some new changing story.
(31:56):
I mean, by the time this is released, there may
not be any bitcoins in two weeks. Who knows, but
there will be yeah, I hope so, or else they're
gonna have to add an e D to how bitcoin worked?
Do you have any? Have you bought any? No? I
mean I'm the fool. I think I said a search
bar in there somewhere. So that means it's time for
(32:18):
a message break right, that's right, and then a really
good listener mail. I now, Chuck, it's time for listener mail.
Thank you, sir. This is from pink Chris Pinkerton, who
has been a fan of our Showa very beginning and
active on our Facebook and the famous detective and a
good guy. That's right. So this is about e c
(32:40):
t RT electro convulsive therapy podcast that just dropped in
real time and uh he has a story. While in
high school, guys in Omaha, Nebraska, I met two girls,
Gloria and Susan. For about three years, we were inseparable.
We would hang out after school party together. Glory and Susan.
We're even closer and sometimes I was just a third
ill another feeling buddy. Yeah. Uh. The girls, being a
(33:03):
year younger than I, stayed in school when I was
shipped off to join the marine corps or not what
shipped off. He chose to go shipped out. Yeah, we
lost touch, but then eventually I moved back to Des Moines, Iowa,
and I found Susan living there as well. She informed
me that should call Gloria and fill her into the
misyears while I was away. Apparently Gloria had a daughter
who passed away under terrible circumstances and became very depressed
(33:27):
after the loss of her daughter, and Um actually had
to undergo ect treatment for depression. In your podcast, you
stated there slight memory loss, but in my experience that
is an understatement. Gloria had no clue who I was,
did not remember any of our high school years. Gone
were the memories of harassing teachers, making out in the auditorium,
and memories of working on my car in shop class.
(33:50):
Apparently she was pretty good with a wrench, So we
get to tell her all over again. Uh yeah, Um.
As it turned out, she had forgotten Susan as well,
but not as much as she had forgotten me, because
Susan was there for her throughout the treatment, and Gloria
has been able to recall more memories. Have heard you
to this. It's very sad. To me that I've lost
a friend. Um, not because of intent, but due to
a treatment I failed to help her through and failed
(34:12):
to understand. That is one regret I will always have,
and it shames me to think that she has no
clue who I am and how important to my life
she was. Ever since, I vowed to tell people how
important they are to me in case they never remember,
at least all know that I tried to explain that.
And uh, Pink, let yourself up, buddy, Um, you were
(34:32):
in the Marine Corps. You were serving your country and
it was a very unfortunate series of events, and so um,
take that off your shoulders. I say, uh. And Chris
goes on to say, enjoy your day, guys, smile and
have fun. And that is Chris Pinkerton and Demine, ps,
could you tell Jill Marie McFadden that she has a
love of my life? I think you just think, yeah,
(34:53):
exacinitely done. Thanks for the words, pink. He's always super
supportive and like just my sky. Yeah, clearly, Yeah, thanks
a lot, pink. Um, that's a wow. If you have
a story that you want to tell us, almost overwhelmingly depressing,
we want to hear that. Um, You can tweet to
us at s y s K podcast. You can join
(35:13):
us on Facebook dot com slash stuff you Should Know.
You can send us an email of the Stuff podcast
at discovery dot com and join us at our home
on the web at stuff you Should Know dot com.
For more on this and thousands of other topics, is
it how stuff works dot com with over a hundred
(35:40):
thousand titles to choose from. Audible dot Com, as a
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