Listener Qs: Laura On Ponzi Schemes, Bubbles, Greed And More

In this episode, coming one day after the release of my Forbes cover story online, I answer listener questions, starting with my background, the history of the podcast, whether or not I trade or invest in crypto, and what tokens I think have the strongest real-world application. If you haven’t read the cover package, I highly recommend you do so now.

Cover story: The emperor’s new coins: how initial coin offerings fueled a $100 billion crypto bubble

Show Notes

And if you haven’t listened to the episode with Olaf Carlson-Wee, I strongly suggest you check that out now as well:

I also get philosophical, fielding listener questions about whether blockchain is a Ponzi scheme, whether greed will undercut the democratic possibilities offered by blockchain and whether this isn’t really a bubble but just a new form of exponential growth.

I also cover security in this episode, and would like to point readers to this story that explains the phone hijacking situation:

Other episodes referenced in this podcast are the ones with Coin Center, Kathryn Haun, Michael Casey, Elizabeth Rossiello and Matt Roszak. Please give a listen to those as well if you haven’t!

Transcript

Laura Shin:

Hi, everyone. Welcome to season three of Unchained, a podcast engineered by Fractal Recording and produced by me, your host, Laura Shin. With this episode I’m announcing my new position as a Forbes senior editor covering all things crypto. We have a lot of exciting plans for our coverage of this space so please keep listening and reading.

As you may have heard yesterday I’ve got this month’s cover story in Forbes and it’s all about tokens, ICOs, Ethereum, Bitcoin, crypto, et cetera. It features Olaf Carlson-Wee, a previous guest on the podcast, and you should definitely check out that episode with him if you haven’t yet. It was on March 7th. And if you’ve been enjoying Unchained please help get the word out about the show. Share it on Facebook, Twitter, LinkedIn or in your secret Slack and Telegram channels and if you have a chance give the show a rating or review on iTunes or wherever you listen to your podcasts.

Big thanks to our sponsor, Onramp. If you’re having an ICO, a token sale, a token allocation event, a token generation event or whatever phrase you come up with to try to not get on the SEC’s radar, you need a website. Check out Onramp. This full service creative and design agency provides its clients with attractive and persuasive branding, websites and marketing materials. Spark interest in your project, generate buzz. Check out thinkonramp.com.

For today’s episode I’m taking reader questions. Thank you to all of you for submitting so many fantastic questions. I do not have time to get to them all unfortunately. Some of them would actually take me quite a bit of time to report like the question about applications of blockchain technology in space and CubeSat constellation monitoring. Like I would need to even Google what that is. So, for certain questions I was not able to do the research beforehand. I have been completely swamped with this cover package but I did select a bunch that I can answer easily without having to do too much research and I’m going to try to get to as many of those as I can today.

All right. So, the first one is from Christoph. I’m realizing I should have asked some of these readers how to pronounce their names. Christoph Natal, maybe, from Denmark. He asked me,

Q:

What was my motivation to start Unchained?

Laura Shin:

Okay. So, when I started it last year, roughly a year ago, I’d been covering it for a year and I could see that there was more demand to learn about blockchain technology generally and about crypto as well. I had also seen that a whole bunch of really big companies like Microsoft and Deloitte and IBM and just like these huge companies were pursuing blockchain and not only even technology companies but companies in other industries were realizing that this technology could help them as well, you know, like speaking of space technology, as I mentioned before, I had seen I think like DARPA put out some kind of RFP regarding stuff like that and I saw health companies were starting to get interested in it and so I started thinking, hey, there’s probably employees at these big companies that are going to be interested in learning more about this technology, and I had also noticed that in my own articles about Bitcoin, people were interested in investing in it.

And so actually this is another early episode that you guys should check out. One of the very first episodes I did was with Chris Burniske and Adam White of Coinbase. Sorry, Chris at that time was at ARK Investment Management, and it was about this new asset class of which we’re seeing really take off, but back then they had written this white paper that was about Bitcoin representing a new asset class and they analyzed it from all of these different perspectives. You know, some of them were ways of analyzing that were kind of transferred over from I think the traditional finance world and then some others were kind of new ways of thinking about this as an asset class, and so we actually dived into that pretty deep in this episode that was roughly from a year ago.

So, anyway, all of this goes back to my motivation of starting Unchained when I realized that there was probably demand for this type of information. I also did a quick study of the existing podcasts and noticed that a whole bunch of them were targeted kind of more at people who were already familiar with this space and I realized that with this type of technology you cannot assume…and given how small the space was at that time I realized that there would be room for a podcast that did not assume people knew a lot of kind of the terminology or even the history. So, I decided to start a podcast and at that time I started it with Forbes which I knew would also kind of bring in more of a general audience and sort of kind of like signal to potential listeners that, hey, this might be a little bit more user friendly for you than something that obviously has kind of more of a technology focus or is more for technology insiders.

So, he had another question.

Q:

What were the two most defining decisions you took to get to where you are today, both pre-Forbes and in your career progression at Forbes?

Laura Shin:

So, I don’t know if I can limit it to two but I’ll just talk about defining decisions. One probably is what I decided when I was a little kid which was that I wanted to be writer, and it’s kind of weird that like that was what I just decided I wanted to be simply because I really stuck to it. Like it really was wanted I wanted to be. Like I just always knew that was what I wanted to do, and pretty early on, like really early on when I was a kid also I figured out that people tended to think I was also pretty good at.

Then in my professional life as a journalist started kind of doing like features, you know, things like travels, arts, yoga, kind of stuff like that, and I got to the point where I really wanted to write about something more substantial and so I did this mid-career journalism program at Columbia and I was going to write about climate change but then I graduated in ’08 when not only did the journalism industry shrink by like 22 percent but then on top of that many, many publications got rid of their science desks all together and because of the recession they were like we’re not really going to focus on climate change. So, anyway, a few years on I did get back into journalism which was great because for that period I really honestly I felt this kind of like inner desperation thinking like I know if I got back into journalism I could do it well but there were just basically no opportunities.

And then in terms of my significant decisions in my career at Forbes, I guess when I first started writing for Forbes as a freelancer I was covering personal finance and I’d already been covering it for a while and I was getting super, super board, and I wanted to write about something different but it’s not the easiest thing to switch like that but the editors basically knew that I was kind of hungry to take on something new and so they had this idea to do the Forbes Fintech 50 List and they asked me to lead that list with another reporter, Samantha Sharf, and so now she and I have now managed that list for two years running and the first year she and split up the list in categories and I took digital currencies and then as everybody knows that’s when I…or not everybody knows this but everybody in the space knows that people fall down the rabbit hole and that’s when I fell down the rabbit hole and I have not emerged since. So, that was probably another significant moment.

Q:

And then also wanted to know what my favorite memory is from my time at Unchained so far. That’s a really tough question. My favorite memory, I guess some of my favorite episodes would be the one with Olaf. I again, urge you guys all, especially if you managed to read the cover story from yesterday, I would definitely encourage you to go back and listen to that episode with him. It’s so fabulous. He’s just such an interesting person. Some other ones that I really enjoyed were Michael Casey, who is a former reporter from the Wall Street Journal, which it’s fun to talk to somebody else who had been in a similar position to me.

When I launched the podcast it was from Necker Island and so the two episodes I recorded there are also really great with Elizabeth Rossiello from BitPesa and Matt Roszak of Bloq. Oh, for those of you who are interested in the legality of ICOs I definitely would recommend the Coin Center episode with Jerry Brito and Peter Van Valkenburg. There are so many other ones and I’ll recommend some other ones as we go along in this podcast.

And there is one other probably favorite memory which is that after the first season Forbes wasn’t going to continue some of the podcasts and mine was one of them but I was so…like I love doing the podcasts and so I just really kind of hustled and I got a sponsor and so when I got a sponsor I was like super thrilled. So, that is just a favorite memory of having built something and knowing it was going to grow even more but not relay knowing how we would get it through this period to survive for the long term and then finally managing to snag a sponsor.

All right. And then the last question he has for me is,

Q:

What is a typical day look like for me?

Laura Shin:

Okay. So there definitely isn’t a typical day. I’m in the very lucky position of mostly working from home, which is really nice for a whole host of reasons, but I guess like most people I cannot help myself but I check my phone especially because my editors are on the East Coast so I really need to check it because usually they already have been pinging me before I even wake up, and I will read some of these emails that go out in this space such as like the CoinDesk email, the Crypto Compare email, kind of skim the headlines.

Definitely check my Twitter. I used to not like Twitter but then after getting involved in crypto and just wanting to spend my whole entire day immersed in crypto I really love Twitter now because I basically have deleted nearly everybody who is not involved in crypto and pretty much my whole feed I just like other players in the crypto space and I like seeing what people are talking about. Yeah. And then I usually have a bunch of different interviews. I think the biggest challenge for me day-to-day is reserving the time to write which you need blocks of uninterrupted time so you can focus and think, and so carving that out for myself is definitely a challenge but the good thing is that because I have so much flexibility with how I manage my work day I often can run errands during the day and then maybe I work at night when I’m not getting so many emails or Slack messages or whatever and do that, or like maybe I do some stuff during the weekday for myself but then I take a block during the weekend afternoon to write. So there’s really not a typical day.

The next question from Josh Hayes is,

Q:

What made you feel ready to start a podcast in crypto?

Laura Shin:

So, when I started the podcast this question was not a question for me in terms of me feeling ready to start a podcast. Like I said, because I’d been covering it for a year I sort of felt like I kind of had a bead on where things were at in this space. I’d already even noticed within that year kind of like the different types of people that were coming into the space that were asking questions, the different types of readers I was getting, what stories were taking off and which stories weren’t, and like I said before, kind of realizing that there was probably going to be demand out there that wasn’t currently being met, and I would definitely say from my experience with the podcast this year and just watching the numbers grow I would definitely say that I think I was right about the demand.

The next question is from Timomi Masaoka. He says…I don’t even know if it’s a he or she. Hopefully it’s a he because the vast majority of my listeners are male, but anyway, he says,

Q:

I assume you actively trade or invest in crypto currencies yourself. If so how do you avoid bias?

Laura Shin:

So, actually I don’t actively trade but I did buy a little bit of Bitcoin and Ether. So, in terms of avoiding bias, I would say I actually do have a bias which is that I believe that crypto assets or blockchain-based assets are here to stay generally, whether or not these specific ones are here to stay that’s like a whole other question, and I think the fact that I’ve only bought a little bit of these two, Bitcoin and Ether, probably says a lot about sort of where I think we’re at so far in terms of knowing what is really here to stay.

And then for how do I avoid bias, I assume that you meant like between specific coins but I did want to address that question of like bias as to whether the whole sector will take off or not. Like I just said, I do think that, that is a bias that I have that the sector will take off but I don’t think that it’s really necessarily a bias honestly. I just think that five years from now or not even that long from now people are going to realize like, yeah, this is the thing.

But anyway, getting back to this question of how do I avoid bias between specific coins, I only really invested an amount of money that I’m 100 percent completely willing to lose and as I’ve done with the rest of my investments I just kind of parked that money and I don’t really look at it. So, in terms of like thinking about what I’ve invested when I’m writing anything, I actually don’t. I guess because I’m on track with my retirement money even if I subtract this money that I put into Bitcoin and Ether. So, to me it’s not something really that I think about day-to-day. I’m definitely not depending on that money at all in any way. Like I said, if I lose it, I lose it. It’s really not a significant amount.

But oh, and one other thing I wanted to mention is that I disclosed my investments on all my web pages so whenever you see an article by me it always has this little tagline that explains that I own a little bit of Bitcoin and Ether. These are the ones that I’m pretty sure will be around for the long term. I could be totally wrong about that though which is why like I said I’m willing to lose the money. At some point I might invest in other protocol layer tokens like Tezos or even EOS but I don’t know as much about them. Tezos actually I know a little bit more but EOS I’m just only starting to learn about. Like I’ve been really buried in this cover story but in general I do think that protocol layer tokens probably have the highest chance of surviving and even as speculative as those are the more kind of like app layer tokens are even more speculative so I have not really looked into buying any of those.

A few have peaked my interest but you kind of need to learn a lot about each individual one before you would want to throw any money at it, or I don’t know, like maybe if I felt like it I could just throw like some really small amount of money into a whole bunch of them. I don’t know. It’s not something that I’ve thought about but if I do buy more I will disclose those purchases as well.

Okay. The next question, Mark Venetos. He says,

Q:

I was curious to know what current or not yet created token you see as having the strongest real-world application in Web 3.0.

Laura Shin:

For those of you who don’t know Web 3.0 is the phrase that they’re using for the decentralized web, which is what many of these projects are trying to build such as like decentralized file storage, decentralized computing, et cetera. So, he is one of the few people that did read the cover story and managed to submit a question in the short time frame offered, but he said, oh, maybe after reading my article because we had a sidebar on how tokens work and we used Golem as an example. He said maybe Golem. Can’t wait to hear your answer.

So, in terms of like, yeah, these application layer…well, I don’t even know if I would call that application layer. That’s more like infrastructure but I definitely would say these infrastructure coins probably do have a much stronger chance of surviving long term. So those would be GNT, which is the Golem Network Token. Other ones that fit this bill are the storage tokens like Filecoin, Siacoin or Storj. Some of the other coins that I think could take off are privacy coins like Zcash and Monero.

I do think essentially like if you just think about how cash is used and how it’s been useful throughout, I could see how having privacy would be something that people would value and find utility for. They’re already finding utility for it in maybe illicit activity but as we’ve seen from JP Morgan Chase’s interest in the technology behind Zcash financial institutions also have an interest in that technology, so I can see privacy coins also taking off.

And then when earlier when I was talking about the protocol layer tokens, the three ones that I mentioned, Ethereum, Tezos and EOS, they’re all protocol level tokens, so those are kind of like based-layer tokens and I do think that those have the biggest chance of being really widely used.

So, the next question is from Nora Azare and this is a question I love.

Q:

Blockchain looks like a Ponzi scheme. Why does it have any value?

Laura Shin:

So, I totally get the Ponzi scheme thing. There is something a little bit weird about crypto in the sense that…and if you have not seen Olaf’s talk at Consensus, I highly recommend that you dig up his video online and watch it because he sort of gets at this in his talk. This is actually a point that I had made in the original draft of my cover story but it got cut by the end. So the way that he described it was he was like, ‘You know, people in crypto are really, really into whatever crypto they’re in to. So let’s say like Bitcoin people, they’re really, really into Bitcoin or Ethereum people, they’re really, really into Ethereum.’ And there’s this funny moment in Olaf’s Consensus piece where he’s like, ‘You know, people who are into Bitcoin are really into Bitcoin.’ He was like, ‘You know this from talking to people at this conference. It’s a little bit scary,’ and people started laughing, and it’s true. It is a little bit scary and you do see this like slightly religious aspect to people’s belief in their choosing crypto.

You also see that when people get into their certain crypto they want to tell others about it and they want others to buy it, and I think part of it does have to do with obviously this kind of like financial stake that people have but that sounds like a little bit more kind of like mercenary even than it is. So, I do think obviously there is kind of this financial motivation but then there’s also, yeah, it is like this belief. It’s like if they believe in it enough to invest in it then that’s like a financial way of expressing their enthusiasm and if you talk to them about their crypto then they express that enthusiasm to you as well and because there’s a financial benefit to them getting more people to invest in their crypto that is why they try to get their friends and family to buy it as well.

So, moving on to the second point of your question, why does it have any value? So, the only reason anything has any value as you’ve seen throughout history is because people believe it has value. So that’s why in other societies like seashells had value or on the island of Yap those massive stones had value, and in our society it only makes sense that we would begin to ascribe value to digital things because we’re in a phase where everything in our world is becoming digital.

So, in terms of kind of like how we figure out what the actual value is of any of these things, just like a really, really simple example for thinking about it is if you look at Bitcoin and early on when I started covering this space there was this _____ 22:54 Wedbush, Gil Luria, who would put out these reports, and there are other similar ones that have been coming out more recently but his kind of were the first I became familiar with, and they would just sort of break down an analysis of how we might project the future price of Bitcoin.

And he would basically kind of break it out into the various different ways it might be used and project the demand for all those different uses and then add that all up to come up with a price at some point in the future, and the way that he was calculating it was based on existing demand for those services. So, like an example would be to say that let’s say Bitcoin because it is useful as a payment rail, could be used for some portion of the existing remittences market. So, then he would look at the existing remittences market and say like, ‘Okay. So, if in x number of years Bitcoin takes over y percentage of the remittence market then that means that z dollars’ worth of Bitcoin will be transacted on Bitcoin in that year and that translates into this amount of demand because also there are other factors like the amount of turnover per year because each Bitcoin would be used multiple times per year.’

And so then he would add that up along with maybe demand for _____ 24:22 value or demand if certain fiat currencies fail as we’ve seen where in countries like Venezuela and Argentina, or Greece during the Grexit fears, you know, during all those. In Venezuela and Argentina and then in Greece at that time demand for Bitcoin was pretty high because people realized like, hey, my pesos or my bolivares or my, I guess it was the Greek euro, the euros held by the Greeks, they were worried about the value of that money and so they were turning to Bitcoin to retain that value.

So, when you project out you just kind of like figure out the demand for all these different use cases and sort of add them up at some point in the future and you can basically do the same calculation for something like Ethereum with demand for Ether and then do the same for like the decentralized computing or decentralized storage industries, and right now probably the values maybe that we’re seeing of these tokens are definitely beyond probably what we’re seeing in the actual demand for usage which is because people are speculating on future demand.

I’m just realizing I really need to move more quickly through these questions but before I do that let’s take our important sponsor break with these words from Onramp. With so many companies vying for people’s attention now it’s important to stand out from the pack. If you’re starting up a new decentralized project and want to spread the word about it, check on Onramp, a full service creative agency that helps projects maximize awareness, gain traction and accelerate growth. Onramp has helped numerous organizations do everything from create their branding and identity to redesign their existing website, plus they’ve helped blockchain start-ups and projects. Whether you’re launching a new project, repositioning an existing organization or just want to freshen your company’s look, Onramp can come up with a tailor-designed project or a strategic marketing plan that ensures your lead in the market. Learn more and see examples of its work at thinkonramp.com.

So, I am taking reader questions. Normally I would say I’m talking to so and so today but I’m talking to myself with you asking me questions. So the next question is from Loren Charles King.

Q:

Has the ICO fever created a blockchain greed among sophisticated and powerful investors and _____ 26:47 them among the community that will destroy the underlying societal advantages of its design?

Laura Shin:

So, I love this question because it’s just something I actually think about a lot. The way that I think about it is here we have this sort of very idealistic or we’re at this very idealistic moment where people are saying, ‘Hey, we’re going to build these big decentralized systems and take money away from these big technology companies or big central governments,’ whatever it is that they want to take power away from and give it back to the people, but a lot of that rhetoric is not dissimilar to what we saw at the beginning of the Internet. Like if you go back and you read The Cypherpunk Manifesto, it’s about like peer-to-peer everything and instead now today everybody communicates on these centralized platforms like Google, Facebook, Twitter. So, I do wonder how this is all really going to play out.

Some of the really promising things that I’ve seen that give me hope in one direction are maybe things like these ideas that we’re seeing in projects like Tezos where governance is built in. I kind of like this idea that you could have the majority of people kind of dictate what happens in a network because I feel like what I do see a lot online and in our government is that a small minority can hijack a system because maybe the vast majority of people want things a certain way but are not really motivated to go out and change them or to manage them because they’re not in the minority whereas the minority is sort of motivated to go out and change things because things aren’t going their way.

So, sometimes I feel like, oh, well, maybe in these decentralized systems we might see that the majority can prevent these systems from being hijacked by these really interested minority groups but then I also wonder especially with kind of like proof of stake systems will these just turn into oligopolies where a few powerful players with a lot of tokens get backers, maybe because people it’s like the delegated proof of stake idea where maybe I’m just kind of like, yeah, you know what, I’m not going to spend all that time learning about all these different decisions so I trust so and so, and so and so then starts making all these decisions for thousands or tens of thousands or hundreds of thousands of people, maybe even millions someday, and then we just start to see kind of the same phenomenon happening in these systems.

So, really, I don’t know. I feel like that is a big question mark but someone who has also thought a lot about this and who I actually would like to get on the podcast but you might maybe read some of her stuff is Primavera De Filipe. She is an academic and a lawyer and she I think is actually even working on a book about this. So, you might check out some of her writing.

Okay. Next question is from Mike Koontz.

Q:

Explore the idea that this bubble is the correction, the given is exponential growth while the mini crashes are pace adjustments.

Laura Shin:

So, this is an idea that I’m open to. When I was reporting the cover story Olaf did say to me that he felt that the space and a huge run-up that we’ve seen in prices in the first half of 2017, is sort of the industry catching up because it has been in the doldrums for so long, you know, kind of post Mt. Gox hack and during the whole blockchain not bitcoin era, and I have heard this from other people. There was someone who came up to me at Ethereal, and I’m sorry that I don’t remember who you are but I think he was involved with ConsenSys in Brooklyn, ConsenSys Systems, and he said to me, ‘Oh well, maybe these valuations aren’t really out of control. Maybe these are the new valuations that we’ll be seeing for decentralized projects,’ and I am open to that idea.

I’m not going to say, no, that’s wrong for ever and ever but if you read the cover story I did open it with these questions about for instance the valuation of Gnosis which I do think is a very legitimate question. If we contrast Coinbase, which is five years old, has millions of customers, had made scads of money and has a really sterling reputation in this industry that has really so far and even still it is totally Wild West, if Coinbase is only now just getting a valuation of one billion dollars then the idea that Gnosis should be worth three billion, which is the valuation if you take all the future tokens into account, then that value should…it’s just so questionable and Martin Koppelmann, who is one of the founders, agreed with me actually on this when I interviewed him, and at the time that I interviewed him the tokens were 118 dollars, that was the price on the day we talked, and I said things to him like are you comfortable with people spending that much on your tokens and he did admit he wasn’t comfortable but the thing is that, that price today, it’s 233 dollars today so it’s even like basically double.

However, he’s not here to talk about this and what he did say to defend himself, and this did get cut from the story, is he talked about how they reserved a huge portion of the tokens in order to foster development on Gnosis and to reserve that to make sure that the project succeeds. I do think that then Gnosis runs the risk of being classified more like a security, at least according to the Howey Test, which as I mentioned we went into kind of in depth in the Coin Center episode. Yeah, because that was one of the problems, that Howey Test, which is whether or not the value of that asset depends on a small group of people and so you could argue in the case of a project where they haven’t released that many tokens and they’ve reserved so many that are kind of in their control that maybe it is more like a security.

Anyway, that was how he described kind of like why he felt still that the way that they had conducted their auction was actually a good idea even though he did feel that later on with the price that it was trading on exchanges maybe that, that wasn’t really the best price for people to be buying it at. However, one last thing that I did want to say about Martin is I really think that he’s a class act because after we had that really tough interview I got my new position at Forbes and I sent an email to a whole bunch of sources telling them about my new role and he wrote back a congratulations and said that based on how I grilled him it was well deserved. So, I thanked him for understanding that my role in this community is to ask people tough questions and I was just doing my job.

But back to your question about exploring the idea that this bubble is the correction and that the given should be exponential growth and mini crashes are…well, you wrote pace adjustments but now I’m wondering if that’s autocorrect and you meant price adjustments. So, I am open to that idea however, as you saw in the cover story we use the word bubble liberally in the tagline and in the story itself and I do still think that many of these tokens will lose value. Not all of them will succeed. A lot of people are going to lose their shirts. Many people already have. I didn’t get to write about some of the stories that I uncovered of people losing quite a bit of money but that has definitely happened.

Okay. Next question. Doug Black. Hi there. I’m brand new, literally five days to the world of cryptocurrency and blockchain technology, but I’m quickly becoming enamored with it. Doug, this was exactly my experience. I’m sure it’s the experience of like every other listener to this podcast. So, he says, ‘I love that I can make money, learn new technology and invest in the growing community.’ And he asks,

Q:

For a person new to blockchain and crypto where do I start? Where do I start, in investing or mining? Where do I start in learning to develop for the blockchain?

Laura Shin:

And I’m going to lump this together with another question from Alex Kluia, who asks,

Q:

Aside from you podcast, what are some basic resources where beginners to the space should start to learn about the technology, the people involved and potential opportunities for entrepreneurs?

Laura Shin:

So, a few of the good resources for technology I would say or just kind of to get your bearings would be obviously the Bitcoin white paper as probably the first place to start. I also think the Ethereum white paper is good. There are a whole bunch of other really good resources. I know people really like Andreas Antonopoulos, who is also another previous podcast guest. He’s written a few books. He also does a number of videos. He speaks all around the world. So, you just look for his name on YouTube. You will find a whole slew of videos he’s done. I’ve also seen that, and I haven’t taken any of these so I can’t really vouch for the quality of them, but I’ve seen people also talking about like a Coursera course. There’s also a course offered by the University of Nicosia. I think on Khan Academy there’s also something. So, you guys can also check those things out.

As for getting to know who the people are in the space, Nathaniel Popper’s book, Digital Gold, I think is a really good early history that brings the story alive through the characters in early bitcoin. So, even now sometimes because obviously a lot of them are still working in the space I will pick that up again to just remind myself kind of like what this person was doing like five years ago or whatever. Other places where I would look to get to know the characters are Twitter is a really big one where you kind of follow all the right people and you start to get to know them just from seeing them regularly in your feed. And there is also several different reddits, subreddits that are good to follow like Bitcoin or RBTC or r/EthTrader, r/Ethereum, r/CryptoCurrency, r/BitcoinMarkets. There’s a whole bunch of those.

There are some really good Slack channels. One that I like is CoinFund but there’s a whole bunch of other ones that are popular like Cryptocopia. And then there is also some Telegram channels like I know Whalepool is where a bunch of the traders talk. I’ve seen other ones like, although some of these you have to pay for like Cryptogambit and Wolf of Polonius I think just started one. So, those are some to check out.

For mining, it really depends on which coin you want to mine. Some of these, like Bitcoin in particular I would say probably is going to be a little bit challenging because of the electricity costs and because of the ASIC costs but I think some of the other coins maybe are a little bit more friendly, too, kind of like a hobbyist miner. Maybe they use like GPUs for instance. I’m not going to pretend to be a huge expert on mining but as far as I understand I think with Ethereum and Zcash kind of more everyday people can mine but if I were you I would maybe Google that a little bit because this is not something I’ve explored in depth.

And then as for where you can learn to do some blockchain coding…oh, actually sorry. I  meant to mentioned earlier that I have also heard of another educational organization called Blockmatics, but I, again, haven’t checked out anything that they’re doing but I think that’s another one kind of like the Kahn Academy and Coursera that I mentioned earlier. But as for coding, there’s also I think Byte Academy is a big one. ConsenSys Systems apparently also started a new one and Code Academy may have one and then there’s also one called B9 Lab Academy.

So, I would check those out and then as for opportunities for entrepreneurs, I would just get in a whole bunch of Slack channels, see maybe kind of other people that want to work in this space. There are I think some developer lists, like I know there’s obviously the Bitcoin Talk list. I’m sure there are other lists. I mean you can get in and talk to other developers in this space, but again, the developer part of it is something that I’m not incredibly familiar with so hopefully that is enough for you to get a start.

All right. The next question is from Dawn Casey Rowe and I’m super excited to have a question here from a woman. She says,

Q:

What are the top things beginners do wrong regarding security?

Laura Shin:

Okay. So, I don’t know what the top things are but the main things I would say about security are that there is a spectrum in the ways that you can handle security, and by that I mean that people who are very tech savvy and want a great degree of autonomy and are against kind of like using centralized services, those people will probably want to handle the tech themselves and then those who maybe don’t feel quite as tech savvy feel like they would rather have a trusted service that is a professional at handling security might help them out a little bit better. Those people can use centralized services but there are risks involved with that and also really good ways to mitigate those risks.

So, let’s actually start talking about that risk because that’s actually been a huge, huge I guess problem that we’ve seen in crypto which is that a lot of people hold their crypto on centralized exchanges or services like wallets but then if they have to factor authentication with their phone number on the accounts their crypto has been stolen and by that what I mean is let’s say your hacker figures out that you have your phone at like Verizon or something. The hacker will call up Sprint and pretend to be you. Maybe they’ve figured out your birthday from online or they know your mother’s maiden name or whatever, I don’t know, and they convinced Sprint that they’re you and they say, ‘Hey, I want to port my number,’ which means moves it to another carrier. I want to port my number from Verizon to Sprint and then Sprint goes to Verizon and is like, ‘Hey, Dawn wants her phone number over at Sprint now. Give it to us,’ and Verizon hands it over and Sprint now has handed your phone number over to your hacker.

So your hacker then goes to let’s say Coinbase.com or Google.com or Twitter.com or Facebook.com or Chase.com, or whatever, and types in your email address but then hits forgot password, then the service will say, ‘Can we send a code to your phone,’ and then that hacker will get the code sent to what is their phone because your number is now associated with their phone and then they will proceed to change your passwords on all these accounts and lock you out and then maybe they’ll move your bitcoin and or your Ethereum or whatever, and then you’re totally out of that money because as you probably know transfers on blockchains are not reversible unless the person who’s received the money actually just sends it back.

So, what you would do then is to if you want to use those services because maybe you don’t trust yourself with hardware wallet or a paper wallet or whatever, you would instead use Google Authenticator on your phone, which is an app that generates codes I think it’s like every 30 seconds. I’m actually not sure over what span of time but then instead of having a code texted to you, you just pull up the Google Authenticator app and you can create different codes. So, like you can create one for you Gmail, one for your Coinbase and one for your Twitter and one for Dropbox, whatever. Then every time you log into one of those accounts it will ask you for your code from Google Authenticator. So that’s one option.

Another is to use something like a UB key, which is a physical device that you can put into the computer that tells the computer, hey, it’s really me because I’m the only person that owns this device. So, that’s kind of a way of managing that. Another way that people do it on centralized services is to do multisig where it’s kind of like if you maybe are like a CEO or CXO and you want to make sure that checks don’t go out for more than 10,000 dollars unless two out of three people in the C-suite have signed off on it. That concept is what applies here for multisig. So, you can also do that. And then if you want to manage the tech yourself you can get your own hardware wallets like Trezor or Ledger.

You can actually even create a paper wallet where you put your address on a piece of paper and send your coins to it. If you do that though then obviously you would want to probably create multiple copies of this and locate them in different geographies and in places where you know they are secure. So, you could do something like a safety deposit box in a bank or multiple safety deposit boxes but that I would say is probably a way of handling it yourself which…and one other thing I wanted to say about that is just that some people will make this choice based on whether or not they’re actively trading their crypto or not. So, if you are actively trading it then you probably don’t have much of a choice but to keep it on an exchange but if you’re not, if you’re just sort of buying it and holding it then managing the tech yourself is probably something that you might prefer to do.

So, you also asked about security without having to be a career hacker and I just wanted to use this as a jumping off point to talk about the numerous scams that we’re seeing in this space. I personally have also been targeted by these scams or I’ve seen them in some of the Slack channels. You should always, always type in the URL yourself and double check it and make sure that you’ve typed it in correctly. Don’t click on links that come through like Slack channels or to your email. I have received emails from what looked exactly like an official Coinbase email. I don’t remember what it said but it was kind of like…oh, now that I think about it, I think it said, hey, somebody has been trying to steal, to access your Coinbase account. Like make sure they’re not, that nobody has got your password and click here to enter your password and like secure your account. It was something like that.

And I was like oh, my gosh, and I clicked and then I was kind of like wait, and indeed I was clicking on Colnbase and then the other one was…it was very clever. I don’t remember but so one used…oh, and the other was Sionbase, and then I’ve seen other ones in Slack channels like I saw one the other day where it was saying that an ICO for something called Pillar, that there had been a scam going around where because these are san serif fonts which are the ones that don’t have the little serifs on the letters and so this scam had put in a capital I in place of the lowercase l to get people’s ether I guess sent to them.

And then another one that I saw was some kind of notice went out about how Brave Attention token was having its second, its follow on ICO or something and to be honest my initial reaction was oh, my god. They already raised 36 million dollars in 24 seconds and now they want more money and I initially was like outraged and then I very quickly realized that it was misspelled and it was a scam. So, anyway.

Okay. Next question from Tony, who asks,

Q:

What do you think about Ripple XRP? Do you think it will ever get to number two or even number one? Oh, and then he also wants to know what I think will happen to XRP once Ripple initiates escrow.

Laura Shin:

So, the number one thing I’ve learned about covering this space is that predictions are just useless. Like I feel like the whole space every day is just so unpredictable so I would never say never about anything but I highly doubt that Ripple would ever get to number one. I think there was a brief period when it was at number two. I did talk with Chris Burniske about this, who is one if not the smartest people in thinking about the true value of these assets, one of the smartest, and he said that he felt what we would need to see in order for XRP to really appreciate is that the banks that are using XRP to do corespondent banking, meaning to do international wire transfers, that we would need to see them maybe start to hold some XRP in reserve for that purpose and we’re not quite seeing that yet, and I agree.

Ripple for the last years I have put that company on the Fintech 50 list. I do really think that it’s tackled a really smart use case and it’s been really smart in its strategy for getting these different partners on and we’re already seeing it has these huge networks in Asia which I think will enable kind of like a lot of volume to happen someday. I don’t know where it is right now. I haven’t spoken to them in a while but I think the fact that it’s not as decentralized a currency as some of these others and is more kind of like this B- to-B play is going to mean that we’re not maybe going to see the same kind of adoption that we will for a more kind of like true public crypto.

And so when you ask what will happen to the price of XRP once Ripple achieve escrow, which for those of you who don’t know Ripple the company realized that once the market cap started going up they realized that people might be a little bit nervous about the company’s influence on the price because they have so many coins and so they said that they were going to lock up a whole bunch in escrow and just release like I forget the amount, a certain amount every month. I think they were just doing that to quell market fears but I don’t know if that’s going to really affect the price. I do, as I said before, still think that, that sort of demonstrates that this company kind of has a lot of influence over how well it does, and so for that reason I have a feeling a lot of people who are kind of more into the centralized web are going to shy away from it.

So, then the next question is from Phil Ferraro, who asks,

Q:

Do you think that blockchain can be used in the future for political purposes specifically at the local level? Would it be possible to replace politicians with a direct vote on blockchain?

Laura Shin:

So, yes. This is something that I’ve thought about a lot. I’ve written about it a little bit and someone who had some really interesting thoughts about blockchain and governance was a lawyer and coder at Coinbase named Jesse Posner, who I quoted in a previous article I wrote on this issue. So, I do think that this is possible and I know that companies like BitFury are working a lot to apply blockchain technology in kind of governmental applications like for land titling and stuff like that but I actually think what we’re going to need to see before we see this vision that you’ve outlined here where blockchain can be used at the local level for direct voting and stuff like that, I think we’re going to need a huge, huge build out of this technology particularly in areas around like identity and also even just get voting systems on blockchain which is going to be a huge undertaking.

You know, oh, this another episode people should listen to, Kathryn Haun talked about this kind of stuff in her episode which was the last episode of season one, so it was the 12th episode. She talked about how…I don’t remember the exact number. It was several thousand, maybe like 3,600 or something, but if you look at even something as simple as like birth certificates I think she said that there’s 3,600 different ways that municipalities around the country structure them, and so there is all different kinds of standardization that is going to need to happen before we even get to this vision that you’ve outlined. So, yes, but on a long-time scale.

Then you had another question which was you said,

Q:

I have zero background in programming but I would like to start educating myself or taking courses and reading books about this subject. I was reading a lot about new _____ 52:16 jobs and wanted to know if it’s too hard for someone to start at ground zero and try and ready myself to jobs like that in the future.

Laura Shin:

Okay. Definitely yes. As I mentioned earlier there’s a ton of resources for learning and many of them are free, so definitely check out the ones I mentioned earlier, and I’ll just tell listeners you also did mention in your question that you have the kind of job that will ultimately be replaced by automation, so for that reason definitely get on it now especially because everything is just at ground zero right now. Everything is just starting to take off and it’s all new and _____ 52:50 are, oh, gosh, I don’t remember. At some point I did a story where I used an estimate that he had and think he said it was in the low tens of thousands in terms of the numbers of coders there are but I do think that there will be a lot more demand and there really are just not enough people who know how to do this kind of thing, so if you want to get started now and start educating yourself I think it’s a great time.

Okay. We’re sort of running out of time but I’m going to ask one last question which is or I’m going to get to one last question which is,

Q:

The media seems to want to create a horserace between Bitcoin and Ethereum. Is this a fair comparison or are the differences only meaningful to enthusiasts?

Laura Shin:

So, I do agree that this horserace idea between Bitcoin and Ethereum it isn’t exactly apples to apples comparison. In fact, first of all it’s not apples to apples. Obviously Bitcoin is more for payments and store a value and Ethereum is for running smart contracts. So, I think that both of them have carved out really smart niches for themselves that don’t really compete with each other and so it is kind of silly to say like, hey, like these two are competing because they’re really not. If anything I would say like Tezos and EOS are competing with Ethereum but not with Bitcoin. So, whereas maybe something more like Litecoin competes with Bitcoin or Zcash or whatever because those are cryptocurrencies.

However, I think what is interesting about this what you’re calling a horserace is that we did see that Bitcoin was the dominant crypto asset for so long. It was 90 percent of the whole market cap, 80 percent for just forever and then it just started dropping precipitously so, so, so quickly, and so I actually did write an article about the first day that I saw Bitcoin representing less than 50 percent of all crypto assets because that for me felt like a significant moment and if we see Ethereum at some point overtake it, which people have been calling The Flippening, I do think that will be a major story simply because Bitcoin was the frontrunner for so long and so anytime you see that narrative change that’s a significant moment. The fact that they’re not exact competitors is something important for people to understand but just for also getting the big picture of how the space is changing I do think it would mean something if the Flippening does happen, which at the moment is less likely than it was like a month or so ago.

Oh, and you had one additional question which was, what does this mean for the consumer? You asked for my view on how consumers maybe need to value blockchain recorded data more than they do via conventional means, and your example was that maybe at the supermarket that maybe somebody could see the _____ 55:48 on their organic flower and so you sort of ask kind of like,

Q:

How we might see people really understand the futures of blockchain as opposed to a traditional database.

Laura Shin:

And what I would say here is that I think we’re going to get people to really see the value of blockchains maybe through these assets as we’re seeing now. I think people are getting that you can kind of trust digital assets, crypto assets. Obviously there’s a certain amount of education that goes into that but I do think people are seeing to understand that, noticing maybe how quickly they move compared to our fiat currency. I know that’s something that I still get a thrill from every time I use crypto and just transfer it and even if I’m just doing things like moving it from wallet to wallet. Like I find all that just it’s so fascinating to see how quickly it all works.

Another one I do think could also kind of bring that home to people is through identity and obviously that’s maybe not the sexiest thing for people to be using blockchain for but I do kind of wonder like, hey, maybe people will like this idea of getting more control over their privacy. On the flipside, as we’ve seen in this digital era people so easily sign their privacy by clicking on the terms of agreements for basically every single web service and kind of like ignoring a little bit even the Snowden revelations, or not ignoring but just sort of like just moving on after that. So who knows, maybe those things actually won’t really gain a lot of traction.

Okay. So, I had like about five million more questions than I was able to get to. I’m already a little bit over time but thank you guys so much for sending your questions and I’m really sorry I wasn’t able to get to all of them but you gave me great ideas for future questions to ask other guests and for future stories. So, keep checking out my forums page which is at Forbes.com/site/laurashin, and I’ll link to that in the show description of this episode, and don’t forget that Unchained comes out every other Tuesday. Please share this podcast with your friends and on social media and remember to review, rate and subscribe to it in iTunes, Google Place, Stitcher, TuneIn or iHeart. Thanks again for listening.