And it does not mean that you have to
shove Bitcoin in there, saying that
Bitcoin will solve it all. No, it is not a silver bullet.
The same goes with blockchain.
You mentioned previously that
80 percent of miners are in Guangzhou?
– Quite a lot.
But not 80 percent of miners
it is where the main power source is
hydroelectric power stations.
This is, because historically and geographically
there are a lot of rivers and in spring
this is one of those times of the year
when mining activity spikes
and this includes old miners with
because there is over-supply of electricity
as rivers are running high
and the speed of the network is increasing
but later on it eases back once again
towards the end of the summer.
– Many fear that centralization
of mining is a realistic threat for
Bitcoin. Do you agree with this view?
Is it even possible
There is a relative
China, unlike Europe,
the United States, Russia over the past
30-40 years has shown very serious
economic growth. And this serious economic
growth is fueled by
and accordingly they have
a lot of electric energy and
they are looking for ways how to
increase the number of power plants.
They just have a lot of this energy.
They just have such condition
because of highly developed manufacturing
and high level of
industrialization, they simply have a lot of
energy and these are natural circumstances.
We complain because someone has more mountains,
someone has more rivers, but someone has snow.
These are natural circumstances and
they are different for everyone initially.
Iceland is lucky, because they have geothermal heat
and this includes generation of
electricity from geothermal
sources while they also have low
temperatures, which is good for mining
because this is natural
cooling and geothermal heating.
One of the data centers of Bitfury
is also located in Iceland.
These are simply conditions. Centralization?
I think that while politics stay out of this
and there is no blackmailing of specific people,
then it is not really a red flag.
We have very strong mining power
distributed across the whole globe.
At the moment there are some pools
in China, which totally account for
approximately 40 percent of the power.
But these are pools and there are
many American miners in them.
There also many European miners
It does not mean that all of this power,
these 40 percent are located in China.
They are spread across the whole world.
According to stats from a conference in Milan,
which also featured Jihan Wu,
had a discussion and I asked a question –
how many of the clients in your pool
are not located in China and back then,
more than 36 percent of private customers
and commercial customers approximately 24
percent are not located in China,
they just use this pool.
They also purchased equipment from
Bitmain and they just use their pool.
This is why the mining power
is distributed way more in real world.
In 2014, Bitfury was also
approaching the 50 percent mining
power level and we split them up
intentionally in many different groups.
This was done to avoid
the 50 percent manipulation, 51 percent attack chances.
We created more pools and lent out
our mining power
Some of it was given to other
users and investors.
This was to maintain healthy environment for Bitcoin.
– Can you please clarify what
the 51 percent attach is,
how it is related to mining and
– It’s almost like a monopoly, as a right
of first hand, when the majority of
people can go into an agreement
to start manipulating information that that they have.
– Is this irreversibility
– This is more like a social aspect.
If you have the Byzantine generals problem, when
you cannot trust one separate entity
but you trust the whole group.
This is something similar.
As a good example, Bitcoin decided to
Bitcoin was created initially like a financial system,
but somehow along the way, it
solved some of the social issues
in an entirely unexpected way.
For example, time stamping.
It is the possibility to set a
time stamp for a document and then
it is proof that it was created
exactly at this time.
This is because blocks are consecutive
and there is use of some sort of energy,
if you take a certain document and count a control
sum and place it as a transaction
on the Bitcoin blockchain
then you cannot change it with a backwards date
even if you change just two
letters in the document
the total control sum will
be completely different.
This way you do not post the whole
but you have a certain control sum
and within the document you can specifically
write that – I, Alexey,
being fully sane and sober,
give a share of my company
in the case of my death to this or that person.
I do not make this document public.
No-one knows about this document, but
I calculated a control sum
within this document
and published it on blockchain.
If you give this document to the notary,
they can manipulate this document.
But we trust notaries, because
it is a chosen person that
goes through a certain
certification. We talk about
this service as a trusted third party
that we can actually trust. For example, in Russia
if you have a total of 100 notaries,
but 10 of them are not honest,
then the system does not work anymore,
you cannot trust it. It is approximately the same for
Bitcoin with the 51% attack.
While all of the miners do their job,
it is all good, but if one miner
manipulates 10% or 20%
the system will continue working
and this is not critical
for it to work properly.
If it is more than 50%
then it becomes critical, because
this group of miners
gets a chance to manipulate
with some transactions
including the option to do double
spending and attempting to block some
transactions and this disrupts
the logic of work and can potentially
harm the logic of Bitcoin’s blockchain.
– We already have previously seen that
with active participation from some
miners, there have been attempts to
system and Bitcoin
as a whole, like Segwit2x, which
is notorious. As I understand,
you were involved in
New York, when the “so-called”
New York Agreement took place.
Also, I know that your company has
a good reputation from the point that
you listen to the community.
But maybe you can clarify for a
wider audience what was the
strategic and tactical move
and why you participated
in this, well let’s say so controversial event?
– Controversy arises from the fact
that there are always people who do not agree.
the more people, the
more opinions and
someone will also have their understanding.
To really understand what
is Segwit2x, you have to go back in
history by approximately two years.
Before Segwit2x, there was Hong Kong agreement.
Signing of which took 21 hours.
There were 58 representatives, including
manufacturers, businesses and
miners and core developers.
We tried to agree on how to
least painfully activate
Segwit and increase throughput
of Bitcoin network, but all agreements
are usually steps towards each other
and you meet somewhere in between.
You cannot agree if you are walking away
and I am trying to catch up with you.
This way we will not meet at any point.
I take a step towards you,
you make a step towards me. The more sides,
the more difficult it is to agree. Before Hong Kong, there was
This round table was to discuss
what issues we have, how to proceed
and it was also discussed
and explained that you cannot
roll out a soft fork
a software update in three months
and then in a month, roll out another one.
For most of the businesses, for most
of the exchanges it is a very complicated business process.
You have a working software version,
they need to test out the new version
they need to create a plan how they will
roll out the new update.
This roll out plan takes some time.
You need to move from the old system to the new one
without breaking transactions. If it is also a
business that operates 24/7, then
it becomes way more difficult.
Even the mobile wallet example,
that I told you about earlier. It is a complicated
process – you offer the update to the users
but you cannot force them
they can stay on the old version
and continue using it for some time.
This is why there is a certain chain
of these factors
that make it more difficult to quickly
come out with updates. Also,
you have the social part.
What I said previously that Bitcoin consists of
the social part, economic and
technical parts. Here it is the social part.
We have to agree what changes we
are going to accept.
And also how we will implement them.
Everyone has a different understand on
how it will be implemented and how it will work.
You can vote on what color to paint
the rocket, but it is not likely
that you can vote how to build the rocket.
There is always the
engineer who takes the
as a leader.
He agrees on certain aims that
he is ready to reach.
As an expert engineer
he builds the rocket to make sure
that it really flies and
can reach its target.
Here, we rely on the
core developers, because
they have the expertise and they know
all of the correlations,
they know how to build it and we can only
accept this product and
understand how it works.
Segwit is a system that is difficult to understand,
there is no single word to describe
what it solves and what it does
it is a huge platform, that
allows users to build services on top of
this platform, for example, lightning,
even Merkelized Abstract Syntax Tree – it is in essence
smart contracts on Bitcoin.
It was also done and moved with Segwit.
Back then a lot of people
simply did not conceptually understand
what is lightning and why it needed,
they go the feeling that these
are off-chain transactions,
this will kill Bitcoin and harm it
– Also, that miners will not make money on this?
– This is simply because people were
not reading the documentation fully
to understand how it
will work in real life.
Lightning cannot live alone without
blockchain, it does not hang somewhere in the air.
It stands on top of something.
To make transactions, it actually needs blockchain.
it captures intermediate statuses in
a chronological order. These are not
off-chain transactions, they are
on-chain transactions if we use a more precise
And to reach an agreement when people
do not understand is extremely difficult.
Chinese miners just wanted to increase
block size and these were negotiations to
win some more favorable
condition for them, which
were not OK for the rest of the community,
coming up with an agreement was extremely difficult.
At some points these attempts to agree
were heading into a dead-end.
For example, we want blocks to be
four megabytes. OK, guys, maybe
we cannot increase four times right away.
We can do three or three and a half.
No, if that does not work, then we want block size 8.
And this is a step back.
You are trying to find a compromise,
make some kind of concession.
People instead raise the bar
even higher, so it was extremely difficult.
And all of these arrangements are like small-scale
trade, because I want to gain something
and to try something.
And even Segwit2x was
the result of a complicated
when I had to run around and to the
Consensus conference, where I had to
seek for business representatives,
show them the text of the agreement
– they said everything is fine, but here
I would like to change this one word.
You go find the previous man who
implemented that word
with his hard work
and start to negotiate one more time.
So, basically, I had to take
take this role of a person running these
negotiation function, diplomacy.
Yes, we didn’t push anything of our own
just helped all of the people to agree.
Even in Miami, Bitfury covered all of the
expenses for this conference.
For the conference, for microphones
just so people could gather
Hong Kong, OK, there was Pieter Wuille, who
was very good at organizing a location for everyone,
created a comfortable environment, where
everyone could come to
It was also more difficult in New York
because there were
more parties involved.
These parties also tried to
negotiate some changes like
let’s make a change to Bitcoin Core
which they consider that will be better
and maybe other improvements. And, if you
say no, then you cannot negotiate at all and this means
you are not achieving
none of the targets,
and the first target, which was
agreed by all of the parties was
activation of Segwit, but then
separate negotiations started
and it was a trade-off when you understood
that second or third suggestions will not
chances of a technical assessment that someone
write a decent code of hard fork
in good quality and implement it
within a half a year was not very likely.
But this is something we had to agree with
If they could do the
impossible and create something like that
and prove to
the community that it will
maybe it would have worked.
But, in fact if you put bets like in roulette
for the second part,
I was very skeptical in the beginning
that it will work. – So the main task was to
sign the agreement to
approve Segwit, but the rest was not likely?
– The target was to form an agreement.
There were no requirements like – we want only this.
just like consensus in Bitcoin, it is
full agreement without
disagreement from any sides.
Here it was absolutely the same thing – people wanted
to realize and wanted to make more
Even though there were a lot of people
who said that it’s not realistic that
it can’t be done in such short deadlines.
There were also people who said
no, we will write this code anyway.
Believe us, we will do this one time.
but they did no succeed. Our luck was that
there was a process in place
where we had a certain procedure
on voting on certain flags that
are compatible with Segwit,
the whole process is more or less logical
we move, only if everyone agrees.
Again, this is a social factor –
if everyone does not agree, we do not make the changes
we agreed that we move if we agree.
According to the agreement,
we move in case of agreement
which did not really happen in the community.
This is why I think that
the Hong Kong agreement is not an ideal
ideal solution and there are a lot of moments
very far from
The same with New York agreement –
not idea, but this is what all sides want.
You cannot move forward until
all of the parties involved agree.
Everyone is tied together with one rope.
If three want to go and
15 want to stay
then you will not go very far.
– Tell me please, without naming any companies.
naming any companies.
The active spamming of the network
was one of the instruments
to influence the decision
that would suit the people
who were advertising the
block size increase concept?
Is this a real fact?
Is this something that miners can do
and stop the transactions
and occupy the mempool
with empty blocks?
– Miners were not spamming.
Transaction spam is done by those who
generate transactions – hodlers of assets.
Approximately 70 percent of these transactions
that were in huge numbers
they were generated by businesses
who did not understand the essence and
how Bitcoin works. Here is an easy example,
This is something that was discussed
in Hong Kong and was actively
discussed in New York, that people
did not understand for a long time.
Instead of sending a pile of
small transactions on withdrawals,
you can make one transaction and pay
two thousand recipients at once.
It takes a lot less space, it takes a lot
lower transaction fee and
we return once
again to where I said
that the old monetary system is a
one dimensional system, not two.
But here you have three dimensional system.
If we talk about payments –
one who sends the payment, one recipient,
one transaction per second for Visa and MasterCard.
There is one person who is
paying and one person who receives
one transaction per second. Bitcoin is multidimensional –
you can take 15,000 entries 20,000
exits and at the same time pay 5,000
employees, pay 10,000 invoices
taking them from different
accounts or your
wallets and this will still be
just one single transaction.
And this spam that we saw earlier
was because, for example, Coinbase
was sending withdrawals to each
user separately – one sender, one receiver
and the worst thing
they chose a model, where they
were covering the fees as well.
From their own pocket –
this is how they initially built their business.
They just needed to change the
logic of understanding in their head
and when this happened
after multiple times of explanation
Especially Coinbase was generating
more than 30% and there were multiple
companies like that. What is strange is that
these were the companies that were
mostly pushing the Segwit2x,
insisted on increasing block size
which is actually not a solution.
They had a way easier solution
right in front of their eyes. They
just had to understand and realize that.
– What an amazing coincidence.
– Real world – Tell me, please,
these agreements that are established
behind closed doors –
in real world they would call this
like cartel agreement. Isn’t this
against the general ideology of Bitcoin?
Because, yes, we do have
businesses, but still this is a
that is largely built on a community, but here
you have companies gathering,
most likely with good intentions,
at least most of them.
They make some sort of decisions
and take responsibility for implementation of this
decision as in representing the whole community?
I have a return question for you – have you seen in
that a large number of people
take a decision and
moved forward with a purpose, like for example,
manifestation on the square
turned left and went straight
to the mount to grab
some kind of flag?
No, it usually does not happen like that.
There have to be some groups within
that are making decisions and, yes, there
are always some sort of leaders, who evaluate
the situation and a leader is
the opposite of a dictator
and also the opposite of
a boss or a master who
said do this or that.
A leader is someone who
takes full responsibility for all of his decisions.
Like the main engineer
who is working on a rocket, yes, he is responsible
for results. If it doesn’t work,
then you have someone responsible.
Within any group there is an agreement that you
trust a certain leader,
the person who makes the decisions
to reach the target of the team.
It is like seals – all of them
take care of their tasks, but there is
someone who can
is chosen as the leader who makes the decision.
He decides and tells all – let’s go
right, let’s go to the left, let’s split up
we split up, arrive together reach our target.
If you do not have these roles,
nothing good can happen.
If you imagine that 10,000 people
speak in a conference room on phone
how fast will they reach an agreement?
It will be just a lot of noise,
everyone will be complaining,
swearing and it will be tough to negotiate.
And all of these agreements,
they usually happen within
a company departments,
people decide to develop something,
a position or a strategy
what kind of a result they want
to achieve and only then
chosen representatives go
to agree on a level between
between groups of people and
here it is something similar.
In social groups, there is always
someone who represents the interests of this group.
A group of social rights. Yes.
A group of LGBT, we always have
representatives who are
representing a certain group,
represent the opinion.
They are competent enough to
negotiate with everyone.
This just happens…
You could say that it is just natural.
It is a part of social decision making.
If you want to make a decision fast,
then between two
people it will always
happen fast. If you have three people –
it will take more time. If it is five people
it will take more, it is 25
then it is exponentially
Even when you do conference calls,
the more people you have, the longer
these calls will be on even relatively
If someone is not taking the role to
handle this or organize a vote
with three options A, B and C
this is the leadership – is he a dictator?
No, he offered solutions
how to optimize the process.
Here it is approximately the same.
Those companies who take part
are leaders in a certain industry.
They usually have wealth of experience
and understanding how this will develop further.
Yes, there are companies that
are trying to set up monopoly rights.
But this differs from a system where
you can establish some sort of dictatorship
with certain rules like
this is the decision of the government and our central bank
everything will be working on
wooden tokens and
everyone must be paying with them.
This is dictatorship, but Bitcoin is
more or less open.
If you do not like it, do not use it.
Why was there a hard fork?
This is a great social process.
– Someone did not like it and they created their coin?
– Yes, this is a completely open
agreement and when everyone
agrees you can reach
results faster, but if you have a group
that cannot agree on something
they will be slow and putting obstacles in front.
Great! Hard fork is a
social mechanism how to start moving
faster. A group creates a copy
of the project, if they decide
that they can build it better
and it will be
a greater instrument
– good luck!
– The market will decide. – The flag is in your hands.
The market will decide. And the
remaining community gets rid of this crisis.
The people who are conflicting leave,
people who are causing negative background,
creating a lot of conflicts and unnecessary
discussions, these resources move
towards progress. It is always also a question of resources –
you use your time on communication
you waste it on communication
if there is a conflict within the team,
instead of development of the project
a lot of resources are
being wasted on the internal
conflict. Within the Bitcoin community,
it is exactly the same.
When you have disagreements,
when you have conflicts, instead of
working on developing a product, a lot of
resources go to the search of
compromises for these disagreements.
Forks are a great indicator in this sense.
– Tell me please, Forbes recently
published a list of the largest
in terms of market capitalization blockchain
companies. Bitfury was also one of the companies
in this list, near Coinbase if
I am not mistaken,
your capitalization was close to 1 billion
or even more. How many
projects are within the company?
As you said previously,
apart from mining you have a lot of other
software solutions, chip manufacturing
engineering – a lot of segments.
And how many people are employed in the company,
Towards the end of last year and
beginning of this year, precise number was 760 people.
The company grew quite fast
and when this happens
there is a natural
you hire a lot of people, who
do not find their place, do not show themselves
effectively, and when you hire
hire people rapidly, you have to squeeze
crypto winter is a re-optimization of the service
optimization of costs. Towards the end of
last year we have 760
employees, but now we have significantly
cut this number, but the number of our projects
has not declined – it has increased.
As you already said correctly –
it is not just mining or software.
Bitfury acquired Allied Control
a company that develops
liquid cooling and it has been on the market
for more than five years previously.
Along with the specialists from Allied Control,
we built a large
scale data center
with liquid cooling
in Georgia. It amounts to 60-Megawatts.
We changed and re-invented a lot of
things during the process when we built
this data center, thus changing
the technology and the approach that was
Naturally, Allied Control,
as an independent company
is working on liquid cooling.
There is Bitfury Capital, which
is involved in the investment space and
investing in various projects.
The same Exonum, is now morphing
into a giant layer with
very diverse projects which
are used by both companies
and on government level
to accomplish a number of things.
It is very possible that Exonum
will be a large
product, which will strongly
contribute towards the potential
of the company
with projects, resources and revenue.
This could make up a significant share of turnover.
Alongside, there is also the direction, which
we are still preparing and
at this point I cannot talk about them yet
I cannot tell, because this is also
a part of the Bitfury philosophy.
Do first and then tell.
– This is a very good philosophy.
Instead of an announcement about an announcement etc.
There have been a lot of things we have done.
I can’t really call them
clearly monetary, but they were being
done for the benefit of the community
by developing the technology
and creating useful tools.
For example, lightning,
its creating an initial implementation –
we spent a lot of time on this. When Elizabeth
Stark just has whitepaper for Lightning
and there was no real
working stable implementations
We took the team of developers and
Elizabeth Stark to Kiev
they worked together with our developers
we hired five
developers that were working
development of Lightning.
This is simply a technology
that will change payments significantly.
As a promising technology it is likely
to change all of the services that we
It is a social input fo the future of the ecosystem,
as a gift to the whole community
and the humanity.
We also worked a lot on Segwit,
explained the technology and
ngaged in educational
activities, including coordination
of all the meetings, this also
takes up a lot of resources. This is a useful
technology and we believe we
we should create such services
for the community. Of course, the company
also has to pay salaries for their
employees and make money.
This is something Bitfury does as well.
– Two follow up questions based on your answer.
About crypto winter – it was
a heavy hit for a lot of companies.
Let’s say wrongly set up businesses.
But for mining businesses it
was probably substantial, because
mining costs are growing and the price
of bitcoin dropped
significantly at some point. How did you
manage to survive this crypto winter?
Let’s hope that it is over now.
This is not the first crypt winter for
Bitfury, this was the third one for us.
Naturally, we now have experience in
surviving these bear markets.
We are cutting strongly those
research and also
investments with no returns
these, unfortunately, have to be squeezed
if you don’t do this, then
the company will most likely not survive.
Crypto winter is a normal and
in development and we have a wave development
the price shows significant volatility
this is a new, growing and
developing technology. It is
a developing market.
And, because it is a new market,
its growth is justified by innovative growth
innovation that causes this growth
in significant numbers.
Every innovation causes
This is why this efficiency
surges, like the
conveyor assembly which was
Ford, it allowed to sharply reduce
dramatically increase the quality of production
sharply increase production quantity
while workers who worked on
assembly lines, they earned
more when you compare with other sectors
and this is where the efficiency comes.
This efficiency, which allows
to change the conditions on the markets significantly
and technology provides this
opportunity. Growth of Bitcoin is essentially
this technology and this
Efficiency like for Lightning Payments
if we say that normal payments
like Visa or MasterCard promise to
improve to 3-5 seconds, then for Lightning
it is milliseconds. This difference is in thousands.
But if we speak about costs, then it is even more.
And this is the efficiency and the difference.
This is why we have such a rapid growth.
At the same time, it is not a balanced market.
It grows with rapid surges. We have some sort of
an innovation and it jumps higher.
Then it drops significantly.
There are a lot of traders –
it is not very balanced and they work as a
as a damper and in the market when
we have cross-border deals
conversions from one direction to another
they are the ones who fill this
market balance, which there is not enough of.
In normal proportions, traders
take the risk on them to fulfill
deals, while compensating the price
filling up the volume. Currently,
we have too many traders,
it swells and shrinks because
And it is fluctuating in waves.
Everything else is a normal and natural
process. This crypto winter also helps to
shake of the ballast of miners that are
and this only improves conditions
this is just normal competition
in a normal market. This is not an issue,
these are normal circumstances that
you need to learn how to react to.
– You are often using as an example
land registers in Georgia.
I know that you are working with the
government of Ukraine.
As far as I know, you worked with them.
At the same time, for a lot of
people Bitcoin is something like
Also, Crystal, which a lot of
people probably consider as tool that
is used for tracking.
Doesn’t this go against each other?
We all know and
understand that Bitfury is
a Bitcoin company. As far as I know,
you are mining mainly
Bitcoin. I think you said there were some
Yes, we actually did
research and there were moments
when we mined other
altcoins, but in very low
proportions, more for
There is also a moment that
not many people know is that we
developed a lightning chip, but
we did not start selling it. This was
because the market research
situation on the market was so, that
Litecoin surged sharply and
it was understood that it will drop back
and if we are selling this equipment
then we will be in a situation
where our customers will simply lose
money and have no profits.
To save our image, we decided not to
go down this route, even though we lost money.
We did no start manufacturing this equipment and
and we did not start to do this.
According to the facts, it seems that Bitfury
is somewhat like a Bitcoin
maximalist company in a good sense.
At the same time, it plays
with governments, it plays with Crystal
isn’t there some sort of controversy?
With Crystal, you pointed it our clearly.
Some consider it as a tool for spying,
Like George Orwell, 1984…
This is an instrument that
goes the other way
Initially, it was a tool
and a statistics machine for analysis
and understanding of what is happening,
including being used for optimization
of transactions in blocks,
for understanding of what transactions are happening.
As people were coming and asking
for us to create a visualization,
asking for help with hack investigations,
this is how this product came to be
people started using this product,
visualization of transactions and
this product was created.
There is no play with governments,
here we have a normal commercial
product and if you want to see adoption
of Bitcoin, you need to create the bridge
between the old fiat systems and
the current systems.
You cannot create any solutions,
cannot bring new solutions to this world
if you lock yourself away and say
this works in my village and I am not leaving
and not speaking to anyone.
It does not work like this. This is psychological
locking away within and denial of
the big world. These systems are
and they are needed.
To try to catch and trace every
transaction – it is not real.
This is a paranoia of the majority of the people.
This is something they fear, but
technologically this is not something that is real
to do for Bitcoin.
Every time you create a report like this,
it is just probability that this money perhaps
came from there and maybe it’s like these
look like these, there is always
approximately. And in this sense it is more fair
if we speak about AML reports,
it is more fair, because it is
pure mathematics, which gives you with
probability of 80 percent that money is clean.
This is basically all you need,
you do not need to know how the money was spent,
why it was spent, you do not collect their data
you are just getting a conclusion
from a robot – Crystal Data
lets you create these reports
it creates comfortable circumstances
for exchanges, because without this instrument
they cannot work,
no certification and no
completion of compliance processes
and this means no adoption.
This why it is an instrument that
is needed and even apart from
Bitfury, on the market
there are dozens of other companies
providing this data.
The only difference is that some of them are more and some are less successful.
This market will fill up eventually,
no matter what and
what you can do is fill it up with
a high quality and reasonable
instrument. And when we talk about Bitcoin
as an independent system, I believe
that it is just more fair, move
more efficient, cheaper and more
functional system when compared
with systems that existed previously.
I am not saying that banks or fiat
currencies are bad. Can we say that
bicycles are bad, but fast trains
are good? This is evolution, there are systems
that we used before that and these systems
have certain negative factors,
they have shown certain disadvantages.
We saw situations
when these systems
behaved in a bad way. They can be
controlled, or as an example,
cutting off accounts in Cyprus,
you understand that you do not control your money
it is taken away from you, because the local government
decided and you do not control them.
This is a violation.
Accordingly, we see a
different solution where you can gain
control over your money.
They cannot be taken away from you,
there are no issues like in the 30s, when
gold was confiscated with the decision of government
– You most likely do not remember the crisis of 30s?
– I was not born back then yet
Yes, I was not born .
back then as well.
The crisis of the 1930s,
if you take a look at the history,
gold was taken away violently,
you had to give it to the government,
The rights of a property,
this same right was violated back then.
And essentially all of the human rights,
are documented clearly and Bitcoin
allows to create a more efficient
system, which actually
more in line with these ideals.
Do you think that all of these
programs for tracing and I do not
talk about Bitfury, we know
there are other companies who
work on tracking programs,
regulation and licensing.
Again, I do not say that this is bad.
We will just come back again to
what we are trying to leave – this legacy
financial system and simply saying
bankers in suits will be replaced by
bankers in jeans
and hoodies? – You don’t like jeans and hoodies?
– No, I like, and I am
on this side, but you know
like in that saying –
a certain thing but for a different angle?
– There are still people who remain
the question is more that the system is
built on the principle of trust in people.
It always carries a large number of mistakes,
the same story that I told
you with notaries, if among 100 of them,
you have 10 unfair ones, then the
whole system does not work.
In mathematics, when you have rules
then you cannot break them and they work
exactly as they are, the maximum you can
maybe find some sort of compromises,
to sort something out, but again
this will be within certain limits
In this sense, Bitcoin offers a more
ballistic or if you would like
utopian model of realization.
You are saying Bitcoin maximalist
and this is exactly Giacomo Zucco
he is a maximalist.
In this sense I am more like a realist,
because I consider that there is a
huge global economy and
it consists of
smaller economies and these
small economies are separate
solutions that are built on their
Our global system currently consists of
Euro, Bitcoin and all of this is global
economics and you cannot deny and say that
we have just Bitcoin and only it is
ideal and the same with altcoins.
There are some solutions
that actually have the rights to exist.
If you have a discount card for steaks,
then you do not need 100,000 transactions
It is enough for you
if you transactions will be fixed once per day.
You come to the restaurant and eat a steak,
you eat nine and then get the 10th one for free.
Do you need the speed of transactions here?
No, but if this system is cheap for the business, will it be good?
Yes, and if this
system is relatively safe
to build this
business, then yes.
So, with some certain local requirements,
with local economics, then you
do not need to put Bitcoin in there and say
that Bitcoin will solve everything. No, Bitcoin is not a
just like blockchain, it does not solve everything.
Samson Mow had a great joke on this topic –
if you say blockchain
loudly three times, then
all of your data will become immutable,
and you will become the teach leader in the market,
in the tech industry.
No, this is not how it works. An instrument gives efficiency
only if it is used correctly.
For different solutions, there are different
tools, the same with Bitcoin.
It is a finacial system that is built
for a certain type of financial
transactions, but there is a plethora
of different local economies that have
where it is very much likely
that different solutions will work.
They will rely anyway on Bitcoin,
there is always the dominating
solution and then some smaller ones
fill up the void, but
they still make up the total global economy,
because they always have certain
interactions between them.
Here it is exactly the same, and for example,
I do not think that Bitcoin will replace
If will influence and maybe decrease its
market share, but there are strong sides for both
gold and Bitcoin, but less for fiat
currencies and the proportion will change.
– Please, tell me can Bitfury
become a node for Libra?
Or participate in this in some way?
Participate? I do not exclude such an option.
Even with the technical solutions
and plans of realization that I have
seen, I am very skeptical
that it will work like this. I think that
a real working product will take much more
time than they estimate.
This is almost a classical mistake to
consider that you can quickly build a
reliable and well working solution
with the method of a lot of money and
a lot of people is a classical mistake
of a manager – you cannot hire nine women
to create a baby within a month. This is
the same – you cannot create a
reliable solution quickly, which will
be the base for a multi-million industry,
you cannot create the Libra concept quickly,
on which we plan to put the economy of Facebook,
economy of Facebook, put the economy of
Uber, PayPal and many more.
and many more. There will tens of
these mistakes. If you take any altcoin and
look at their history, you will see how
many mistakes they made
even though their development direction was clear.
The code was written slightly differently,
someone made a mistake and
this is why building Libra will be
Maybe they will build it and
find some sort of a compromise.
With the market that they have
with the user base from Uber, PayPal, Facebook
you can and you should create some sort of a
monetary system and I think that
in a certain way, they are already late.
Alipay and WeChat created gigantic economy in
gigantic economy in China and they opened
– But this is not cryptocurrency?
– It is not entirely cryptocurency
what Libra is building. I cannot say
100% that it is crypto.
– They are claiming that it is a cryptocurrency.
– We can call whatever we want a
cryptocurrency just again, because it
is a new industry and
everything similar to a cryptocurrency
we call a cryptocurrency. There is a difference
this is probably more a question for
the scientific sector to
define what is a cryptocurrency.
– Is this a threat for Bitcoin or
will this be something that will
help to boost the mass adoption?
– At the moment, I consider this as a strong catalyst,
which works in favor for Bitcoin.
As soon as such big companies
announce their support for
crypto solutions, it is automatically
for all of the institutions and
like a strong signal that
Bitcoin has the rights to live,
that it is an alive and working project
and there is really money in this sector.
If we return one more time to what
you referred to as maximalist,
in this sense I am a realist and
I understand there could be other solutions,
which may also press
Bitcoin or change its role.
Or also to replace it or there will
be Bitcoin 2.0 and they will co-exist.
I can definitely say that it won’t be Bitcoin Cash
or Bitcoin SV. Everything is bad for them, there are
violations of logics again, because
people do not understand how to build it.
If we speak about a secure currency, then
secure are only those currencies
that have the highest hashrate
among a certain algorithm. All forks that
do not change the algorithm are vulnerable
because a large network can simply shift a
small pool without losing anything
for a day, they can capture
all of this money and all of these resources
this is why Bitcoin Cash
approximately one third of a pool.
If you just shift this for a day,
then this currency does not have any safety
measures and there are many more like this, where
daily turnover is higher than the
cost of an attack. People just haven’t gone that far yet.
gone that far yet and not considered this, but
this is incredibly dangerous.
Just like we build extra layers, like ICO
on Ethereum – this is a huge cost that
but is it safe enough?
these are questions that should
raise certain cautiousness,
make us think about these risks.
But currently we are all using it
we have got a new instrument, but
we do not know how to use it efficiently.
ICO as a tool and as an instrument is good and
efficient, it provides a way to
raise funds easily, but unfortunately,
even though it worked initially and
there are statistics that were published,
when during the first month most of the projects
were in the green, they raised funds
and achieved their targets, but in
just four months this ratio
shifted in the other direction.
80% raised funds and did not achieve any
targets, because we came
up with a new way to raise funds and
at the same time, people who had previously
never invested any funds, suddenly also
got a chance to invest
without knowing how it is done.
This was without checking if the project can
do, if the project has any team,
is the plan any good that they
created. The majority of the projects
that were weeded out previously during
the stage of investment attraction,
when they came to the venture investors,
and they were just looking at them,
and they understood right away that these people
cannot realize this project,
that the project is not sustainable,
the calculation is wrong.
This was a way to weed them out.
Then a new instrument appeared,
and two of these “talented”
groups of people met each other.
This was a phase of learning – we
got a new instrument that allows raising funds.
This was even without being physically there.
You do not even see the
the team, you just rely on the information
on their website,
a lot of funds were investment and yes,
it does have a positive side –
it gives a new and efficient instrument.
To understand what is good, the
the market first has to understand what is bad.
This is why we went through this learning phase.
We then understood that there are
a lot of projects that use this platform
to scam people.
All they can actually do is just
raise funds and then spend them on
different expenses, people invest
considering that they will be holding
shares in the company, but the company
uses these funds for research and then say
thank you for funding
this research, but it is now our IP.
This is now our patent
that has been registered on the technology,
but thank you very much,
I have to final answers, that
I ask all of the guests…
Who is Satoshi Nakamoto?
It is possible that these were 2-3 people,
I think that from all of
people that I have met so far,
Hal Finney matches this description best.
He made a lot of posts on Bitcoin
when I was figuring out the economy,
I thought it was something new,
but I then found that he posted about this
three years ago, when Bitcoin was still
very young and in its early phases.
He saw and he calculated a lot of these
aspects very far in advance.
I cannot say that this is a 100%
factor, but it is
very much likely that it is him.
A lot of circumstances in his life also
match, but then again it could have been
a group of people that created this
concept. Of course, my opinion
can change as time goes by as I can find
new and interesting facts, but there
are certain leaders
that appear and I evaluate them.
Craig is definitely not Satoshi.
Sorry to day. I spoke with him and
there are many aspects that he does not
understand even conceptually.
These include theoretical mistakes.
Let’s not give him this coverage,
not even a little bit.
– The last question that I ask my guests
towards the end of the episode to make a prediction
that we will then later post on a
prediction platform –
estimate of the price of Bitcoin at a certain
time in the future?
For example, first of November, 2019
the price will be above or below a certain
Can you please make an estimate like this?
– You are trying to get me to do something
that I like to do the least.
When you are trying to make an
attempt to predict something,
the further away is the event,
the lower the accuracy of this prediction.
But for a segment that includes
a technology that develops rapidly,
which is also influenced by global economy,
and many more factors,
then factor of prediction, if we
are constructing the possible scenarios is
– Let’s take September 1st of this year.
The price of Bitcoin will be above or
below a certain amount?
Above 30-40 thousand.
So, above 30,000?
This does not exclude that it could also
go to 50 or 70 thousand,
there will be jumps like these in our history
if there is no other technology
and if the conditions do not change
or some sort of catastrophy, then
we will very likely see 100,000
and a million, but in September
we will see growth and during summer we will see
high volatility in the
September, October and November
will be the months when
growth is more likely
more likely and I think it will be stronger
– OK, September 1st – more than
Thank you very much, it was