Newer Money

Date: 4/3/17 New Episode

It's been a minute since we've checked in on the world's favorite cryptocurrency – Bitcoin! And man oh man is there a lot of upheaval in Bitcoin-land. The price is soaring, the SEC is debating, and other crypto-coins are on the move.

“If we were able to ask a fish what they thought about water, they would go like, ‘What?’ It's invisible to them. And I feel that way about Americans and other developed economies when it comes to money...it's like water to a fish. It's just something people don't think about.” - Wences Casares, CEO of the Bitcoin wallet Xapo 

In developed countries, we take money for granted. Credit cards, loans, banks, cash – we move around money so regularly and easily that it’s tough to take a step back and think about what it really is and how it actually works. At its essence, money is a social technology. In order for society to function, we have to exchange goods and services, and money is the way we keep track of debts and credits. All those pieces of paper and little metal discs are only worth something because we as a society agree that they represent value. Today we have national currencies like the dollar and the euro, as well other markers of value like gold. Maybe it all sounds so simple that it’s not worth even pointing out. But maybe it’s not as smooth and stable as it looks, which is why in this episode of Raw Data, we return to the native currency of the digital world: Bitcoin. 

If you think about it, it makes a lot of sense that, just like a country, the Internet would develop its own system for exchanging value. We are all denizens of the borderless Internet, but currently we’re still buying and selling things using the currencies defined by geopolitics – which brings a lot of inefficiencies, fees, and time lags in payment. These physical-world borders and red tape don’t translate all that well to the instantaneous, borderless nature of the Internet.  

But getting to a functional cryptocurrency is a harder task than it sounds. That’s because an amazing quality of the Internet is that you can easily copy and share information. This positive aspect doesn’t work nearly as well for money...because having the ability to copy something makes it dramatically less valuable. 

“It's great to have a printing press for information but it's not so good to have a printing press for money,” said Alex Tapscott, co-author of the book Blockchain Revolution. Blockchain technology is the solution that enabled a digital currency in the first place. We first explored this topic on the last season of Raw Data, but, man oh man, a lot has happened since then. 

In the past year, the value of Bitcoin surpassed the value of gold and now boasts $250 million in transactions every day, according to interviewee Chris Burniske of ARK Invest. But on the other hand, the cryptocurrency is still a long ways off from going mainstream. Within the past month, the SEC has rejected two proposals for a Bitcoin ETF – a kind of financial product that investors trade like a stock or bond. 

And more broadly, lots of people still look at Bitcoin and the blockchain and go, “I don’t really get it.” Which is totally understandable – it’s a complex topic that we’ve worked really hard to learn about. Like, really hard. (Leslie: “Yeah, it took us more than a month. Sorry for not releasing any episodes in March.”)

This episode catches you up on the latest news on blockchain technologies: from the Bitcoin block size debate to Ethereum’s DAO hack, and what it really means when a cryptocurrency considers implementing a hard fork. But we’re also thinking big here. Why should we care about digital money and blockchains, and how might they transform finance and business for the whole world? As for Bitcoin, the blockchain is steadily chugging along and more people are buying in every day, but even Wences Casares says he feels there is a “20% chance that Bitcoin fails.” At the end of the day, Bitcoin’s been around for over eight years now, and it doesn’t seem to be going away anytime soon.

-Isha

Extras and links:
Chris Burniske’s upcoming book is Bitcoin and Beyond: the Innovative Investor’s Guide to Blockchain Assets
Nathaniel Popper, journalist at the New York Times, wrote Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money
Forbes has a blockchain-focused podcast, Unchained, hosted by Laura Shin, who generously provided input on this episode

 


TRANSCRIPT

LESLIE CHANG: Welcome to Raw Data. I’m Leslie Chang.

MICHAEL OSBORNE: And I’m Mike Osborne. Today’s episode: Newer Money.

MCO: Leslie Chang. I want to do another episode on Bitcoin, for one very simple reason.

LC: Okay.

MCO: It’s lurking. It’s just, it’s out there, and it’s kinda waiting. It hasn’t gone away and it won’t go away.

LC: It’s true, Bitcoin is lurking.

MCO: Okay, but I think before we get into it, we need to do the backstory. We need to say a little bit about where it came from, and explain the technology. So, do you want me to get us started?

LC: Yeah, sure, actually it’s probably saying too that we did an episode a year and half ago called “New Money,” and so, this is a follow up. And we covered a lot of this in the first episode, but you’re right, it’s totally worth reviewing. Okay, go ahead, kick us off.

MCO: So Bitcoin launched in January 2009 – remember this was in the wake of the financial crisis. We were at the beginning of the Great Recession. The US government was bailing out banks that were too big to fail, and on a chat room in an obscure corner of the internet, a programmer going by the name of Satoshi Nakamoto –

LC: – whose identity is still a mystery –

MCO: – said he had an idea for a new form of digital money. And, thus, the world’s favorite cryptocurrency Bitcoin was born.

LC: Ok, so here’s how it works: Satoshi designed the system so that there will only be 21 million Bitcoins, ever. There’s a finite supply. It’s a scarce resource.

MCO: Bitcoins are mined by computers. Anyone can set up a computer to mine for Bitcoin and participate in building the Bitcoin blockchain. The blockchain is like a ledger, a big spreadsheet in the sky that every computer can see. This spreadsheet keeps track of all the transactions people are making.

LC: Transactions are bundled into blocks, and for each block to be completed, the computers in the bitcoin network have to come to an agreement on what they’re seeing in the ledger. To do this, they solve cryptographic puzzles. All the computers race against each other to confirm each block’s transactions.

MCO: The first computer to verify the transactions gets rewarded with some bitcoin. Once the block is confirmed by the other computers, the block is added to the chain, and the transactions in the block are now officially in the ledger for everyone to see. The race starts all over again, and the chain grows, block by block. So right now, as we speak, a network of computers all around the world are building the Bitcoin blockchain.

LC: And maybe that still sounds confusing, or maybe you’re saying to yourself, “I think I get it, but I still don’t get it. Why is this such a big deal?!” And Mike, you own some bitcoin, right? Can you – how do you explain this to people?

MCO: I do own a little bit, and I'm not great at this. I recognize that there's an ambition and a disruptive power to Bitcoin, and I'm also impressed at how big it’s grown, but I have a hard time putting the grand vision into words.

LC: I think it’s really difficult. I mean, people talk about Bitcoin and the underlying technology blockchain as being bigger than the Internet. And I own a bit of Bitcoin too, but I think it's hard to find the right language for it. Which is why we both wanted to talk to this man.

WENCES CASARES: My name is Wences Casares. I am the CEO of Xapo, a Bitcoin wallet. I am originally from Patagonia. I live here in Palo Alto, California.

MCO: Wences is a very successful entrepreneur, and is well connected in the upper echelon of Silicon Valley. Which is why he was able to take Bitcoin out of that obscure corner of the Internet and bring it to some of the highest rollers in the tech world – people like Marc Andreessen and Reid Hoffman.

LC: Wences is a good spokesperson for Bitcoin because he has a unique perspective on money, influenced in part by his upbringing in Argentina. For decades, Argentina has had a notoriously chaotic financial system, and people from all walks of life there suffer from the volatility of the peso.

MCO: So Wences sort of straddles two worlds. He’s had success as a Palo Alto-based entrepreneur, but he also grew up in a country with instability and a broken currency.

WC: My parents are sheep ranchers. And I saw them lose everything four times when I was a kid. And to give you a sense, the first time I remember my parents talking about money and losing most of what they had, it because it was a massive hyperinflation in Argentina. And what I remember very vividly, is my mom coming to school to take me and my two sisters out of school. She's never done that before, so we were paying attention. And she was carrying two plastic bags full of cash.

LC: Two bags full of cash might sound like a lot of money, but because of the hyperinflation, it actually wasn’t worth that much.

WC: ...And she took us with those two plastic bags full of cash to the supermarket and she gave us each an aisle with a list of things. We all met with the things at the cashier. When we went through there was some money left and my mom would send us back to get more stuff to spend it all. One of my sisters asked, "Mom, why don't we save some for tomorrow?" And my mom said, "Because it's not going to be worth as much." That month was almost 2000% inflation in the month. So our job was to get things in front of the guy who was repricing. And there was a guy whose job was just to reprice. He finished, and he started again repricing the whole supermarket.

MCO: By tagging the prices on the groceries?

WC: Yeah. And our job was to go in front of him catching the things before he repriced them.

MCO: So what does that story sort of say about money?

WC: The first thing that comes to mind is that I'm sure that if we were able to ask a fish what they thought about water, they would go like, "What?" It's invisible to them. And I feel that way about Americans and other developed economies when it comes to money....it's like water to a fish. It's just something people don't think about. But when you grow up in a place like Argentina, it is not water. It's something you notice, and it breaks down, and it doesn't work and it makes you think about what's the purpose of it? How does it work? What's good money? What's bad money? Things that otherwise you would never think about, right? I think that I find that the more used you are to having good money, sound money, the harder it is to talk about money.

MCO: It's obvious what doesn't work when it's not working. But when it does work, you take it for granted.

WC: Yeah. Exactly.

LC: Our financial system here in the US is far from perfect – but the value of the dollar doesn’t swing wildly day to day. Our currency is backed by a system of laws and the strength of the US economy. This is a totally different reality from what Wences experienced as a child, and what many people live with all around the world.

MCO: So when Wences learned about Bitcoin in 2011, he very quickly saw how it could revolutionize our global system of finance. He began spreading the word about Bitcoin to Silicon Valley entrepreneurs and VCs. And he would often start by challenging people to think deeper about money as a social technology. Rather than getting lost in economic-speak, he likes to take a more anthropological angle, back to the early days of civilization.

WC: Money showed up as a way to keep track of debt, right...every time I give you something, you give me something to keep track of it. I give you buffalo and you give me a little bit of salt, or a little bit of some beads, or shells. And that – that technology, if you will, when it first emerged, it spread like fire.Anthropologists go as far as saying that if you describe an environment in which a tribe lives, they can predict what's going to emerge as money.

LC: If your tribe lives near the ocean, maybe you’ll use seashells, or if you live in the Great Plains, maybe you’ll use animal hides. The way Wences sees it, today we are a global tribe living in the digital environment. He calls Bitcoin the native currency of the Internet.

MCO: Right now the US dollar is dominant, but 100 years ago it was the British pound, and a 100 years before that it was the Dutch guilder. None of this is written in stone, but there are basic features of Bitcoin that make it an attractive currency for the digital age.

WC: I think people often make Bitcoin more complicated than it is, but all you need to understand to understand Bitcoin, I think it's three things. Most important one is that nobody can control Bitcoin. That's very easy to say but very hard to achieve, and it has been achieved.

LC: Pause on that for a second. Bitcoin cannot be scrubbed from existence. Governments might try to regulate the people and businesses who trade in it, but as long as there are computers running the protocol, you cannot shut it down.

WC: Number two, is there will never be more than 21 million Bitcoin. And number three is that once you own some Bitcoin, first that nobody can keep you from owning some Bitcoin, if you want to, if you can afford it and you want to buy some Bitcoin, nobody can keep you from it. And once you have some Bitcoin, no one can take that away from you but also if you want to send some of those Bitcoin to anyone, you are free to send that to anyone in the world you want. No one can stop you from doing that. Those three things make it perhaps the best form of money we've ever seen in the history of civilization.

LC: And over the past 8 years, a growing number of people have bought into this idea. Today there are over 20 million people who own Bitcoin. The price has been rising over the last year or so, and as of this recording, it’s trading around 1000 US dollars. When we released our last episode a year and a half ago, the price was around 300 dollars. So, as you can imagine, there are a lot of speculators who want to invest.

MCO: Chris Burniske is the head of Blockchain Products at ARK Investment Management in New York. He’s also working on a book that will be published later this year called Bitcoin and Beyond.

CHRIS BURNISKE: If you look at average daily volume using Bitcoin's blockchain as a means of exchange, in 2015 that was roughly $75 million US. You fast forward to the average for 2016 and that was roughly $170 million US and you fast forward that now to the average thus far in 2017 and it's been over $250 million per day, which converts to roughly $180,000 US sent per minute using Bitcoin's blockchain. So those are hyper-growth characteristics.

MCO: All of this activity has investors excited, and analysts like Chris have been watching closely as Bitcoin tries to gain more legitimacy on Wall Street.

LC: Recently Bitcoin was poised for a major breakthrough. Tyler and Cameron Winklevoss – the twins who famously settled a suit against Mark Zuckerberg over the founding of Facebook – proposed the first ever Bitcoin Exchange Traded Fund, or an ETF for short. An ETF is a financial product that investors can trade like a stock or bond, only it tracks a group of assets. In this case, the Winklevoss ETF was meant to track the price of Bitcoin.

MCO: But any ETF requires the approval of the Securities and Exchange Commission. And the SEC had to rule on the Winklevoss ETF a few weeks ago. A lot of people in the Bitcoin community were excited for the chance to get a major stamp of approval from the federal government. There was a fever pitch in the run up to the SEC decision, and the price of Bitcoin reached an all time high.

LC: But on March 10, 2017 the SEC rejected the Winklevoss ETF. The agency released a 38 page paper stating its position, and Chris Burniske read every page.

CB: So the SEC is saying, "We're not ready for any kind of exchange traded products in our jurisdiction." Two of the key takeaways for their rationale came from the Bitcoin exchanges.

MCO: An exchange is where you go to swap dollars or Euros for Bitcoins. A lot of exchanges operate outside of the US, and therefore outside of the purview of the SEC.

CB: They said that there was not enough surveillance of Bitcoin exchanges and that these [00:02:30] significant markets for Bitcoin are as of yet unregulated. That was surprising for some people because there are regulations that have been put in place, like the Bit license in New York. But it's clear from the SEC letter that they need more surveillance and more regulation to get comfortable with the Bitcoin markets.

MCO: Shortly before we released this episode, we learned that the SEC rejected a SECOND Bitcoin ETF, this one proposed by SolidX Bitcoin Trust. Now, aside from the regulation issues, there’s another factor that may be playing into the SEC’s decisions. There is an ongoing and increasingly fierce debate within the Bitcoin community about a potential change to the block size, which affects how many transactions can be processed on the Bitcoin blockchain.

CB: Bitcoin is a victim of its own success. It is right now maxing out at processing just over three transactions a second.

LC: So remember how Bitcoin works, where these transactions get grouped together into blocks and added to the blockchain? Right now, each individual block has a maximum size of 1 megabyte.

CB: And so there's only so many transactions you can fit within a one megabyte block, just as there are so many files you can put on a jump drive that was one megabyte. The community is trying to figure out, okay how do we scale the transactional capacity of the Bitcoin network.

MCO: This may sound like a small software technicality, but it turns out that it’s a super big deal. A typical credit card company like Visa or MasterCard will process thousands of transactions per second, while right now Bitcoin is limited to three. Bitcoin developers have known about this issue for a long time, but as the cryptocurrency has grown, the block size has become THE central problem.

LC: Nathaniel Popper is a journalist at the New York Times – he wrote the book Digital Gold, which traces the rise of Bitcoin, and he’s been following the block size debate.

NATHANIEL POPPER: Right now, you have these two very divided camps that have different visions for what the Bitcoin network should do. You have these core developers as they're known, the core devs who are actually designing the software that runs on everybody's computer who's using Bitcoin. Those folks have have tended to want to limit the amount of transactions that are going through the system…

MCO: – this group is often referred to as Bitcoin Core –

NP: And you have this other group of people and a lot of those are people who want to use it more as a sort of payment system where you can have lots of payments going through it so that it could compete with PayPal or Visa...a lot of those people have wanted to expand Bitcoin at bigger block sizes.

MCO: And this group is called Bitcoin Unlimited.

LC: Bitcoin Core is worried about two main issues. The first is that by increasing the block size, you create more opportunities to attack the system. It’s a security risk. The second issue is that when you increase the block size you then have to increase the computing power it takes to verify transactions. Theoretically smaller miners might drop out of the network, leaving behind only the most powerful miners. Fewer miners starts to look like centralized control, and remember that one of the pillars of Bitcoin is that it’s decentralized, with no one person or group making all the decisions.

MCO: On the other hand, increasing the block size could help Bitcoin become competitive as a means of exchange. The Bitcoin Unlimited side says that the security risks are overblown, and that limiting the block size will inhibit mainstream adoption. Also, from their point of view, the bitcoin core devs are essentially exercising centralized control already.

LC: Bitcoin Core has proposed a solution called segregated witness that would pave the way for more transactions to be settled without significantly increasing the block size. But Bitcoin Unlimited says this is not the best way to scale. So the two camps are currently locked in a stalemate.

NP: It's not clear who's going to win. It's actually a tug of war and part of what the war is over is who gets to make decisions about what Bitcoin is and should be. And you have had already and you're going to have more of that in any of these distributed, decentralized systems. At the end of the day, people do have to make decisions, and if authority is decentralized, you inevitably come back to the question of, "Who's going to make this decision when it comes down to it?"

LC: The issue has grown more and more contentious and polarized, with little room for negotiation.

NP: The thing that gave rise to these systems was paranoia. You go back to the first paper of Bitcoin and it's paranoia about the way the current world works and not trusting banks and not trusting central banks, and believing that those institutions were somehow screwing people, and so you needed to find a way out. Now, obviously, when you create something out of paranoia, I think paranoia is going to infuse those systems forever after…And so, these debates about the block size, they often come back to who is trying to exercise control over the system.

LC: Ultimately this may be a battle about who has more power and control over a system that was designed around consensus. So maybe a standoff like this was inevitable.

MCO: We’re releasing this episode at a time when tensions seem to be at an all time high. But the gridlock has opened the door for alternative cryptocurrencies to gain traction. More on that, after a break.

MCO: The group Leslie and I work for, Worldview Stanford, does more than just podcasts. We also make videos and animations and infographics on a whole variety of topics. For example… diving into the data on school vouchers… We’ve been doing a lot more recently and you can find us on our social media channels. Find us on Facebook, Twitter, and the interwebs at worldview DOT Stanford DOT edu Now, back to the blockchain.

MCO: While the battle over the block size rages on, a lot of people are focusing on platforms and systems beyond Bitcoin. For many, the revolution is not Bitcoin itself, but rather the underlying blockchain technology.

LC: According to a report by Pricewaterhouse Coopers, in 2016, 1.4 billion dollars was invested in developing new blockchains – basically taking the open source software Satoshi Nakamoto created and adapting it for other uses.

MCO: Alex Tapscott is the CEO of the investment firm Northwest Passage Ventures. He and his father, Don Tapscott co-authored the book Blockchain Revolution.

ALEX TAPSCOTT: In Blockchain we see a second generation of the Internet. For 30 years, we've had this Internet of information and it's been this really powerful tool that's allowed us to change the way we share information and how we communicate, but it actually hasn't had as big an impact on business and on commerce as a lot of people expected for a very deceptively simple reason, which is that when you move information online you're not sending an original unique thing. You're sending a copy and you're retaining an original.

MCO: But of course, when it comes to money, digital copies are a problem. I can’t attach a $10 bill to an email and send it to you. It may show up in your inbox, but it will also still exist on my hard drive. People call this the double spend problem.

LC: And solving this issue is the breakthrough innovation offered by Satoshi Nakamoto in his original Bitcoin white paper. Rather than just sharing information and data online, now we can transfer ownership. We can make payments, hand over property rights, sign contracts. And we can put our trust in the underlying technology.

AT: When we say the trust protocol what we mean is that for the first time in human history two or more parties can transact and do business online without relying on a third party intermediary to create trust. Instead of being created by this third-party it's created through a combination of mass collaboration, consensus, cryptography, and clever code. It's that alchemy of ingredients that makes the tonic of Blockchain so potent and so exciting.

LC: As of this recording, Bitcoin has the largest market cap of any cryptocurrency. But there are other digital coins too. One that has recently gained a lot of attention – and investment dollars – is Ethereum. Ethereum was created by Vitalik Buterin, and made its big public debut in early 2016. Companies like JP Morgan Chase, Microsoft, Intel, and BP have collectively invested hundreds of millions of dollars toward its development.

AT: What Ethereum allows you to do is program business logic into transactions. The way they do that is via this thing called the smart contract. A smart contract, very simply put, is software that mimics the logic of a contract but with guaranteed execution and payments where you don't need to rely on traditional third parties like, say, banks or escrow agents or lawyers or courts or anything like that.

MCO: People who work with Ethereum talk about smart contracts as the killer app. It’s a little confusing, but they want to use Ethereum for things like supply chain tracking, secure online voting, or managing the power grid.

LC: The Ethereum system uses a cryptocurrency called Ether, but the way its developers describe it, the ambition of Ethereum is different from Bitcoin. Bitcoin was designed to be a currency – a replacement for money. But from the very beginning, Vitalik Buterin designed Ethereum to be a platform for a much broader array of applications.

MCO: Ethereum launched with a lot of publicity and excitement... but early on the system faced a major test. What happened was that there was this venture capital firm built on Ethereum called the Decentralized Autonomous Organization, or the DAO. People poured huge sums of money into it. Unfortunately, the DAO software had security flaws, and shortly after it was launched, an attacker tried to siphon off over 50 million dollars. Here’s Chris Burniske again.

CB: the dow hacker funds were frozen for a period. That period was counting down

LC: The Ethereum developers had 30 days to figure out what to do – should they let the hacker get away with the money, or should they find a way to change the software and reverse the hack? This is easier said than done – again, one of the essential properties of blockchain is that decision-making is decentralized. So after a flurry of discussions, they held a vote, and the majority decided to interfere with the ledger and implement something called a “hard fork.”

CB: So when the hard fork happened, you can think of it the original Ethereum chain was a common ancestor. Then when the fork happened, you actually had two block chains…

MCO: Two blockchains... representing two different realities. One with the hack, and one without.

CB: and the most memorable part of the whole incident for me was actually the initial reaction of how people were celebratory around the hard fork and it appeared like it had been pulled off smoothly and initially it had. But then, I started having conversations with the few of the more active traders in the space. And I realized that people were buying up the other token.

LC: That is, people were still mining and trading the OLD Ethereum,  the version of the blockchain that included the hack. But if most people had decided to go with the version of Ethereum without the hack, why would some miners stay with the old blockchain? Well, basically they’re taking a principled stance. For them the decision to hard fork violated the concept of an immutable ledger – in other words, that whatever is written in the spreadsheet in the sky, cannot and should not be altered.

MCO: The DAO hack saga all went down in June and July of 2016. Today, the non-hacked Ethereum is by far the more popular, but Ethereum Classic is also still in use. Meanwhile the Bitcoin community watched all of this unfold. And certainly some were wondering “Might the block size debate someday force a similar controversy.”

CB: The community within bitcoin is far more averse to a hard fork. I would say than the ethereum community is and it makes sense because if you had bitcoin which is really serving as this currency. If you duplicate those units in a similar way that happened with ethereum then the underlying value proposition of the bitcoin could get eroded. So that is a primary concern within the community.

LC: Bitcoin champions may be averse to a hard fork, but the people spearheading Ethereum call their hard fork a success. In fact, it was only after the DAO hack that big companies invested in the Ethereum ecosystem, because it signaled to them that there’s leadership in place making rational decisions.

MCO: There’s a completely different culture and attitude in the Bitcoin community. But just to be clear, it’s not necessarily an either/or proposition between Bitcoin and Ethereum – or any other cryptocurrencies for that matter. There is a possible future where both succeed or maybe one or both fails. Even Wences Casares thinks that the long term success of Bitcoin is not guaranteed.

WC: I truly believe that there is a nontrivial chance that Bitcoin fails, and it's worth zero and has zero impact. I think the chance is very real, maybe more than 20% in my opinion, very subjective. But I think there a higher than 50% chance that it succeeds and it change the world more than the internet did. And I know that that's a crazy statement but I truly believe it.

LC: In the meantime, the Bitcoin community is trying to figure out how to scale what’s been built over the past eight years, to preserve the unlikely achievements of this experiment in money. And right now, everything is hanging in limbo, all because of the block size debate.

WC: it is up to this point one of the most important issues that has been faced by the community. I do think that this decision will seem trivial and minor compared to some decisions that this community [00:33:30] will have to face in the future and some challenges that it will have from governments and all kinds of actors.

MCO: Take this however you will, but Wences did not strike us as someone who’s obsessed with growing his fortune. His already done well for himself, and our impression is that he’s into bitcoin because he views the global system of money as broken. He told us he sees it as an injustice that the majority of people on the planet are unbanked, without access to financial services. They can’t get a checking account, they can’t build savings, they can’t protect their property, and they can’t escape the cycle of poverty, all because of broken financial systems.

WC: Generally, there's about four billion people who don't have access to decent financial services that you and I take for granted. I'm not talking about sophisticated services ... A decent account where I can safe keep the fruits of my labor, where I can receive payments, where I can make payments. I think that Bitcoin can change that. I think there is a good chance that that happens. There's a lot of risks along the way, but when I look at the first eight years of Bitcoin, I think it's hard to imagine a better first eight years.

LC: For decades, the US dollar has been the global currency, in part because the United States has been the most important economy in the world. Whether we realize it or not, we’re all placing our faith in the strength of American markets and the stability of the US government.

MCO: But if another financial crisis strikes, or if the strength of the US dollar is called into question, or if banks too big to fail start to collapse again, maybe Bitcoin or some other cryptocurrency will take off and spread around the world.

LC: One of the reasons Bitcoin gained traction in the first place is that people were questioning the strength of American institutions... But of course, it’s not just the US economy that makes America a global superpower. Our strength as a nation also stems from the fact that we have the most powerful military.

MCO: Our economic and military strength are linked, but if the Great Recession exposed weaknesses in our financial system, you have to wonder – do we have right security priorities for the digital age?

TJ: Cybersecurity in the United States tends to be about protecting critical national infrastructure, things like the Internet backbone and power provision, control systems for utilities. Protecting private sector assets, too, and intellectual property, things that keep America’s economy competitive. However, if you take a look at a country like China or Russia or North Korea, their views of cybersecurity are much more expansive.  These are governments that tend to think of the content of communications as something that itself is politically threatening.

LC: Just how are American companies and citizens being attacked? Do we have an expansive view of cybersecurity, or are we suffering from a failure of imagination? We’ll talk about that and more next time on Raw Data.

MCO: Our podcast is produced by Leslie Chang and me, Mike Osborne. Congrats to our amazing intern Isha Salian, who will be working at the SF Chronicle this summer as a tech reporter. Thanks also to Allison Berke, and the rest of the Worldview team.

LC: Lots of books to plug this episode. Chris Burniske’s book which will be coming out later this year is called Bitcoin and Beyond: the Innovative Investor’s Guide to Blockchain Assets. Alex and Don Tapscott’s book is Blockchain Revolution. Nathaniel Popper wrote Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money. And finally, not a book, but Wences Casares is the CEO of Xapo, a bitcoin wallet company.

MCO: Special thanks to Laura Shin for her input on this episode. Laura is a contributor at Forbes and she also hosts the podcast Unchained, which is all about blockchain technologies. You can find it on iTunes.

LC: Thank you for listening to our show. If you like what we do, please rate us on iTunes. It’s super easy, and will only take 30 seconds, and every rating and review helps spread the word.

MCO: You can find us online at www DOT raw data podcast DOT com. There you can find blog posts as well as transcripts for all our episodes. If you want to get in touch, we’re on Twitter @rawdatapodcast, or you can email us – raw data podcast AT gmail DOT com.

LC: Our show is a production of Worldview Stanford, and we’re receive additional support from the Stanford Cyber Initiative, whose mission is to produce research and frame debates on the future of cyber-social systems.

MCO: Thanks for listening, and we’ll be back soon.