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Block Digest #2: Cryptocurrency in North Korea and the ‘Original Vision’ of PayPal

Hello everyone today is Wednesday the 16th of August of 2017, it is Block Height 480,805 and today we’re talking about the early history of Paypal following an article by the former COO David Sacks in CNBC today who says that PayPal was basically trying to build the original vision of cryptocurrency. So I want to bring Shinobi and a few guys into this because before we came on air today we were trying to figure out the early history of PayPal. We’ve kind of heard rumors of … they tried to kind of do this thing, try to create a stateless currency but then they were prevented by the regulators and they had to become a custodian of those and actually on Twitter Janine was tweeting about this and she she observed that …

In this article on the 100 most influential libertarians Peter Thiels name came up and he was quoted as … PayPal creating a non-state currency Facebook developing a non-state community and then she kind of points out that actually he was … he was also linked to a surveillance company as well. PayPal actually did respond to Janine she did say here at PayPal we transact in regulated state currencies like USD CAD Euros GBP etc, so they clearly failed in their attempt to become a stateless currency.

And instead you can see in this early picture of the Peter Thiel and Elon Musk here, you still have a little visa logo; and it kind of shows you … how little things changed until Bitcoin came along. Because essentially what PayPal is is a centralized database of transactions. Whereas back then… …the holy grail academically speaking was this decentralized system right … So guys come in come in on this because we want to like break out the discussion we were having an earlier … I mean I think one of the things it goes to show is like at the heart of what they were trying to do I think was bring access to these kinds of financial services to more people and less so actually trying to change the fundamental nature of what those services are built on. So I mean in a way I could see that as a kind of a noble goal but I don’t really think they set out in the beginning to do exactly what Bitcoin did.

Create a whole currency that is completely non state run and uncensorable. It was just more they wanted to provide wider access to those conventional state currencies or monetary systems Alright. It’d be good to check out this quote here from David Sacks “After PayPal I never thought I would get interested in payments again but Bitcoin is fulfilling PayPal’s original vision to create a new world currency. We actually we had t-shirts printed in 1999 with that mission statement” so I think may… are they trying to like revise history a little bit and try to claim like this was our idea you know and then bandwagoning off of Bitcoin success right now Yeah I mean I definitely would consider it that and to go a little further I’m just, this potentially might indicate some internal thought processes about integrating these kinds of systems now that they’re getting so big and to the point where most people here are confident there is nothing you can do to shut them down Right and Sacks also goes on to say ‘it feels like we’re witnessing the birth of the new kind of web some people have called it the decentralized web or the Internet of money” and this he goes into these tokens the crypto currencies he says that he thinks it’s still you know you know in a bubble and eventually they’ll have a crash and he talks about how he basically hopes you know the technology is probably 1995 and the pricing is either 1999 or getting close as a combination of something real with a lot of speculation and so he’s saying there’ll be a correction and he’s saying that the price will come down and he hopes that it won’t be as bad as the dot-com bubble you know was previously a softer landing is what is what Sacks is hope for but I don’t know I’m trying to work out you see these kinds of articles when they hit the media particularly on a quiet news day in the summer say this is often called the silly season in journalism around August time what will often happen is that these online magazines now will be looking at the engagement metrics that they’re getting on their website and what they’ll be doing is the SEO guy or the head of marketing will come in and say here are the keywords that are trending right now here are the memes and the memitic vectors as they’re known and we need to do an article with these keywords in it so you know you’re not writing an article based on real events happening in the world you’re now writing articles based on what’s going to get you traffic to your site.

I’m putting the word cryptocurrency in the title and putting Bitcoin and PayPal and putting it all together is is often the way to get the traffic when there isn’t a lot of a whole lot of other news to go around so this article is by Eric Jackson I don’t know I imagine you put in a call and said hey David can you give me a quote here I’m looking to build an article around this and then kind of that’s how I feel in my opinion this is how this article was constructed I mean yeah I can totally get that sense from it I mean when you really look at it the only real a thing of substance to the comparison of cryptocurrency and PayPal is really that that notion of money is a database and that’s really the only commonality there.

The big difference is that PayPal, obviously as a custodian, would manage and control and have the final say over that database; whereas with crypto currencies it’s mostly proof-of-work but you have these other mechanisms to widely distribute that database and not leave any single entity in control of it. So there is that like one sort of commonality there but aside from that like it’s nothing but differences Right and also linked in the description below for anyone who wants to check out whether this is revisionist history, an actual timeline of PayPals development so you’ll be able to go back in time. It’s on Wikipedia and from there I guess you can do your own research to see how much of this article is really just filler to fill up the space in the CNBC website or whether it’s actually kind of real news. But it’s certainly got a lot of traction, surfacing on alot of the reddit channels.

I got it straight away on my Twitter feed I think there is some kind of piggybacking going on here so I I want to now kind of segue into a follow up from yesterday’s story where we talked about Blockstream commissioning some satellites for some data feeds in order to be able to broadcast the blockchain, the Bitcoin blockchain that is, all over the world. In particular targeting areas that have intermittant and or non-existent internet access so that everyone can get get.. I’ve said before that I sort of feel like bitcoin is, that the blockchain is, a global dialogue. It’s somewhere where people, who for the first time, we have the whole world, is able to speak without permission There is no entry requirements to the Bitcoin blockchain anyone can have a say.

You need a little bit of money but as I think many people online have demonstrated as I have in the past with Thomas hunt and so forth you can earn Bitcoin pretty easily just by having basic access to the Internet. You can work for it, as well as buying it. You can receive donations simply by putting a Bitcoin address on your website. And so, it’s the permissionless aspect that I think I’m most interested in. So one of the things that I think Shinobi you want to talk about is how we gonna actually here in the bitcoin mumble are we actually gonna try and build one of these satellite dishes and if so how are we going to do it let me just show everyone the link to the article and then you can talk I am definitely the second I get my hands on a satellite dish I’m being a little bit of a cheapskate with that part gonna be putting one of these together and i mean–if really like one thing i would like to point out for everybody who wants to put this system together and actually take advantage of this downlink is.

These parts are cumulatively about a hundred dollars but the biggest cost is mostly the interface between the coaxial cable and your actual computer so that software can take the radio signals and digitize it and actually get packet based information out of it. And the dish, and at least in America, I don’t know the rest of the world, but back in the early 2000s late 90s there was a a big initial push for DSL service, and in the interim a lot of people were getting satellite internet services before the DSL coverage got to their areas. And a lot of these people just pretty much switched right to DSL after it came to the area.

A lot of these people, they still have dishes on the house like they kept them or their service provider never came to collect them so with that specific piece of hardware I think there is really a lot of room if you go out and look and network with people you know to get the most expensive piece for free or a lot cheaper than you would pay for a new one. But I am definitely intending on putting this together and obviously a little skeptical about showing my face but I think we can get some video set up but Chris or somebody can narrate and actually I show the process of it being put together You can actually kind of hack together your own thing I think from DVRs depending on how technically adept you are so I think some of the old dish transceivers you can use that satellite dish and that SDR system in there not sure if it works on the same bands I actually haven’t done enough research into that but the cards are cheap enough anyway I’d be really interested to see what the speed is like that’s kind of like for me I’m gonna have to bootstrap you know my own node I mean I’ve got a copy of the blockchain on my work computer and I would presumably you know if I duplicated that and actually set up a dedicated workstation I’m not gonna be able to download from like block you know from the coinbase sorry from the Genesis block am I.

Like that is just gonna take forever For right now pretty much what the feed is is it’s just a live feed of the current blocks and I believe right now there is a slight lagging delay cycle that rebroadcast old blocks in case you lose connection or miss a little bit but um that that’s just for right now because essentially I believe the the downlink rate is sixty to a hundred and twenty something kilobits a second and with the max case with seg wit megabyte blocks I think that I would push about thirty kilobits a second of the potential feed in order to get it into safe enough time that you’re not going to have block stacking up faster than you can get.

So one of the more interesting things I wanted to talk about yesterday but we kind of just glossed over it is this is right now just a free live feed of the main Bitcoin blockchain that this will stay free forever anybody can access this but obviously as I just said at the max it’s only thirty kilobits a second out of a potential 120 something being used to broadcast that chain so Blockstream could actually do a lot of interesting things with the rest of this downlink capability for instance, liquid which I believe is rolling out next year it’s in beta right now they could have a subscription-based broadcast that businesses could pay for to receive the sidechain updates through this link other developers could essentially use this in like a pay for data plan with the Lightning Network and actually send other information that people are paying for. Businesses could use like the same kind of micro payments mechanisms to actually pay for more of the downlink capacity and actually get things faster so aside from just the basic like free access to the main chain that will stay free and open there’s actually a lot of interesting things you can do with other services and ways that block stream could actually monetize this while still offering the feed to the main chain for free to everybody but you’re saying that at what point do they stop relaying blocks.

So if were at block 480,000 they’re going to broadcast blocks as they come in, but are they going to continue broadcasting blocks from previously and if so what’s the cutoff point how many is it like ten blocks wide what’s the what’s the bandwidth I’m not sure about the exact block length right now from what I’ve learned talking to people it’s not that big right now it’s just kind of a minimal like if you lose connection maybe like a day’s worth of blocks are kind of cycling at like three different alternations so that you would have chances to catch things that you missed but ideally I think longer term the plan is to try to expand that a little more to give a nice safe margin of error and then I believe in the longer term they actually have plans to look at the viability of just having a constant cycling of the entire historical chain so that like over a period of a few weeks it would just reset and you would have the entire chain broadcasting and the potential to bootstrap will over a longer timeframe off of a feed like those.

Yeah great anyone else.. Steven, you’re sitting there kind of omimiously. You’re just here to spy on us A little bit. Yeah I hear I hear the blockchain the satellite arguments, I think that there’s some good things there, some revolutionary things, you know to be able to relay the blocks. I am not without fear though with it Gavin mentioned yesterday, “Blockstreams satellite thingy is highly centralized. I’m okay with that, you could start your own satellite thing if you like” and that’s true yeah I guess you can start these and hopefully we’ll see more people start {launch} them. You know private {sovereign} investors start it so that way he can guarantee he know if if if bitcoin is worth enough I want to have a way that I can always use it I mean if I could afford my own satellite, as they become cheap enough that you know they’re accessible why not be utilized But that’s a serious risk right I mean like if it’s super centralized and we get a lot of momentum behind a network like right what if the bulk of the weight of financial transactions happen on that network you know like what are the what are the economic incentives like how does that change the incentives in Bitcoin naturally Well I think that’s an interesting kind of angle to bring up and I think that gets in to kind of the subtle nature of what exactly the peer-to-peer network is because I mean in the most basic sense it’s just the network connections between nodes but if you really want to break down the functionality of what it does I mean you can look at the relay network as how you get your blocks so that your node can stay at the tip of the chain and be assured they’re validating everything but it’s also just a way to get your transactions to the miners and so depending on like which way you’re looking at this like you might want something totally different out of the network but being a peer-to-peer network being ad hoc where you don’t really have any total control over the topology of the network it’s gonna be kind of messy trying to optimize both of those things because you’re gonna eventually in my opinion you need to see kind of more specialization to suit each need and I think what this does it’s a very nice starting point for that because now the the biggest cost in terms of moving data around on the network is the actual block data and all of the unrelayed transactions I mean unconfirmed transactions I’m sorry so now we have like this downlink that is free for anybody receiving it to get all of that block data and I believe some of the unconfirmed transactions and eventually a good enough chunk of that to be relatively certain of what general group of transactions is likely going to be in the next block and so what this does is like I said yesterday I believe you’re getting this from a centralized feed from Blockstream but when you get that complete block data all you need to do is get a header from somewhere else Yeah exactly.

It’s actually verified technically and so like this kind of is a nice initial step towards trying to specialize different aspects of the network towards getting the data to you for validation and like allowing users to have kind of more streamlined ways to get their transaction directly to the miner because when you’re transacting you you don’t really care about everybody else getting it you want it to get to that miner so that it gets into a block Yeah this is not two-way though is it you can’t transmit from the satellite to the satellite from your station can you and the dish Um no not now although I’ve seen some people talking about potentially using GPS as a way to do that but I’m not really sure about the legality of using those frequencies and networks What about AM radio what about that whole trip because a little while ago I asked why can’t we get Bitcoin into North Korea right like if you can get I’m totally serious man like right now DVD players and electronics and memory sticks and you know a VHS cassette tapes are smuggled into North Korea into the general population and it’s something like for a long time it’s like a pet love of mine I’ve never even been to Korea before but I still love watching videos about it because it’s just I don’t know it just I find it very the story the narrative quite captivating so I like I’ve until recently a lot of people in South Korea that the protesters were sending up weather balloons and letting them flow into the North Korean territory and people who tried this nowadays the police in South Korea tried to stop that because they don’t want to raise tensions and this is kind of something that’s kind of been in the news recently and what I always sort of dreamed of that someone would build something that well maybe we can that can allow for AM radio frequency to get in and out of the North because you can’t stop that right you can’t jam it it bounces off the atmosphere and it comes down is there enough bandwidth to allow for a basic you know TX message to be broadcast that way come on Ack you must know the answer I yeah I think we can sky skip already you know using bands that are available right now so potentially there’s already the ability to do this you can skip right over using the ionosphere and stuff right now so we can get these mesh networks set up and working absolutely I mean we don’t know we don’t have to pick North Korea we can pick a country I mean I think right now those satellites don’t even cover East Asia so I don’t even think it’s an option to get the satellite link and everything like that but you know cyberpunks you know like I fit a cypher punk I’m sorry like I want to go back to that like I want to go back to that hacker mentality of just picking something up and building it and right now I feel like everyone’s trying to raise money and they’re not really thinking about why there’s like we’ve got to grow this is this thing is taking off and it’s a bandwagon we’ve got to get on the gravy train and it reminds me of that Pink Floyd song you know tell you the name of the game boy they call it riding the gravy train and it’s all about when talented gifted people meet a salesperson and that frustration that they feel that the salesperson is only really interested in the superficiality of it but that the artist is interested in the you know the raw integrity of the work that they’re trying to do and the vision that they try to have so instead of trying to like just raise money for these ICOs I’m thinking like what about just building things and shipping it and delivering it and saying look I tried this and it works and maybe the first step is to get the satellite working but if anybody watching or anyone on the mumble knows how to to build these kind of AM radio frequency or anything off like the ionosphere I think that’s fascinating to me I really want to see that happen Well I plan on reaching out to this whole community of ham operators I happen to know… Hey …they shoot skip all the time that’s what it’s called a shooting skip like you bounce it and like you’re getting to the other country like it works you know it’s amazing stuff so I think the satellite launch is like the first kind of foray back into this stuff and we need this like this is this is awesome and we’re gonna have what three more of these or more of these who knows how many more we’re gonna get up there and we’re gonna get better and better coverage and then the next part is meshing that all together and getting sat up links and down lines right Right exactly i think like a layered approach will be best like if you do have the satellite dish and you can like download blocks and then you’ve got like the am frequency in order to broadcast it you really only need a receiving node to be able to help propagate that on to the network yes you would because you’re obviously someone needs to have an internet connection receiving that TX data and then broadcasting it from from the am frequency so you need a receiver need someone on the other end that’s going to pick up that and then broadcast it for you and maybe some of the viewers that are quite new to the cryptocurrencies face don’t understand this principle that when you transact in a cryptocurrency that there’s based on bitcoins code base you’re using something called public private key cryptography which means that you can retain a private key but without ever exposing that to the rest of the world you can do things called signing actually the fun fact about cryptocurrency there is actually no encryption in it it’s just basically you’re taking a public/private key pair and you’re just signing something and what that means is that you can just keep that private key to yourself it never has to touch an internet connection whatsoever you can sign a transaction that proves that you’ve received some coins on a certain day and you can give that signed transaction to anyone and they can’t steal your funds all they can do is publish it or not publish it they can either broadcast onto the blockchain or they can’t, but they can’t tamper with it in any way and that gives you a lot of freedom that means that even people without internet connections can still sign transactions but give them to somebody else in a trustless way and have those people broadcast it on their behalf and there’s really nothing that that broadcaster can do to to interfere with you or your message or censor it in any way and I find that very exciting so guys we’ve been on like 25 minutes well what are our closing thoughts shinobi back with us yep that is a infamous via er VPN trouble anybody out there get a service provider anybody besides Nord VPN literally anybody But not one…

Why not call them out …not one run by the CIA though, not one that’s a honeypot. Basically VPNs are an ISP it’s just that you’re just having to trust this ISP over here rather than your local one Pretty much Yeah I think a lot of people have a… What happened to Tor everyone givin up on Tor. I think that it’s now considered kind of old tech and also because the old Jacob Appelbaum thing and he left I don’t know I don’t hear as much about Tor anymore I remember when they were trying and do that big push for the exit nodes and trying to get everyone running them haven’t heard too much about that recently so I think you know combination of them having like internal kind of you know problems and plus I think it’s largely viewed now as like you know legacy technology and there are ways the surveillance state can get inside of it by just running a lot of exit notes themselves and just listening for that data and they can eventually over time build a temporal graph and try to extract identifiable information of users we remember that Silk Road was taken down and that was on tor right like they were able to locate those servers so it’s not as if you know with enough will that the state can’t penetrate that so you guys yeah, I think anybody that’s sane should be questioning why one of the most well connected nodes on the network is in Langley Virginia Exactly exactly let me quickly take a look at the troll box I was in there a little bit just now chatting to everyone let’s see what’s been saying so Mr.Hodl Mr.Hodl we’ve had TX by radio waves in the past so yeah will be good to to do that and I love here AboveasBelow says #BTCSaveDPRK hashtag that’s a great hashtag man that’s a good one let me see if I can just get this get on the screen for you guys so you can actually see it but um here we go and so I love this hashtag I think we could get this trending with enough participation from everyone at home and yeah this out okay so apparently the satellites do support two-way so maybe that’s something we can do but once you get the equipment shinobi you can tell us I think that the two-way issue it’s it’s mostly that I’m one obviously if you have everybody broadcasting at the satellite it’s only one receiving point so that’s gonna be a lot of stuff to sift through and then also like I was saying yesterday that with the difference between the the CubeSat versus the communication satellite like there’s that inverse relationship when you’re dealing with radio waves, if you put more power into the transmission source you need a smaller dish to receive it and vice versa so whoever’s transmitting it is really going to need a lot of energy if they want to get that signal moving a distance Can i ask a question real quick Yeah Can this lead to less fungibility say in that because if these transactions could be received and broadcast from everywhere then it wipes out that choke point so the way to create the next choke point then is having you know centralized places that where the coins have to be you know if the coins that moved through them are are approved right like you said I see this How do you mean like the choke point is the fact that it’s just run by one company at the moment and so when they’re going to broadcasting they have to accept either choose your transaction or not Essentially yeah I mean you know we are we already see these these net neutrality laws coming in right could could we could we somehow take that to the next level because we’re talking about money transmission here right and could a law be made to restrict essentially the transmission mechanism Yeah but that’s Shinobi’s got an answer to this right you know see That feeds back into kind of little bit of about what I was touching on earlier with like looking at what you’re trying to get out of the network like get the shit to validate the thing or to relay your transaction and as far as like trying to broadcast transactions directly to the satellite that’s something I would really recommend like people don’t like dive right into trying because like the the reason that this is such a huge privacy boom is that the as a node receiving things you’re passively receiving that signal from the feed so everybody can see where it’s coming from but nobody sees like who is listening whereas if you were trying to broadcast a transaction or everybody was like that it would be the exact you know the same thing in reverse like everybody could see where those transactions were coming from and have no idea who’s listening so if you had everybody trying to independently broadcast their own transactions that would be geographically tie-able to you so I think as far as getting things up to the satlink it would be much better to try to have like kind of more centralized but in a more distributed way where those transmission points aren’t just for one person they’re broadcasting things for lots of people so that you have that one source that everybody is using and it’s not as easily tie-able to an individual Right in order to be anonymous you need other people right you can’t be anonymous on your own and so yeah so there will come with time and people in the chat just going to wrap up here have said you know radio SMS fax Telegraph like yeah I would love to send a Bitcoin transaction by fax that’d be quite a lot of fun I guess you just do a QR K right okay guys There could be a lot of ways like if you could get a transaction anywhere you want in as inventive a way as you can think to move data Great well listen everyone it’s been 30 minutes I guess we’ll wrap it up here but you can expect more things we’re still working on the technology side and in the background and I just want to thank my guests today and we had Shinobi had Aknix had Steven had an in-line in-line producer Mr.Hodl who’s really the brains behind this you know and and yeah I guess we’ll see you guys tomorrow if you like what you see here you can subscribe and you can like we’re not taking donations right now but I guess we will do in the future but really we’re just grateful for all the views we got yesterday we got 700 views it was like our first proper video 800 now I’m being told by my producer Janine so 800 views and we only had like 70 subscribers so that’s incredible I have no idea you know that the magic of the Internet and we got you so we really appreciate and we also really appreciate the guys that watch this all the way through to the end we know who you are because you often come to us with topics that we were discussing at the end of the video so really you’re the heroes you are the resistance and I thank you i’m Chris Ellis and this has been a Block Digest I’ll see you tomorrow bye