The transcript from this week’s MIB: Paul Vigna on Blockchain & Cryptocurrency
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This is Masters in Business with the Barry Ritholtz on Bloomberg Radio.
RITHOLTZ: This weekend on the podcast, I have a special guest, my friend Paul Vigna has been a reporter with the Wall Street Journal for 120 years, he is the author of multiple books on block chain, crypto currency, Bitcoin, this is an area that is quite fascinating and a little bit wonky and if you are at all interested in a crash course, I heartily recommend both of his books or you could spend the next 90 minutes listening to us chat about all sorts of things involving Bitcoin, and to be honest, it’s really me asking Paul questions and him taking me to school about some of the details, history, minutia about Bitcoin.
I am really intrigued at how he breaks the entire block chain/Bitcoin discussion into three distinct groups. The first is the underlying software, the technology of the distributed ledger, a.k.a. block chain, that’s one.
The second is really the fascinating group of cyberpunks and libertarians and just generally kind of wacky dudes and it’s mostly dudes who become enamored of Bitcoin in the early days and helped take it viral from this open source software program to really a full-blown phenomena and now arguably a bubble in the actual coins itself.
And that’s the third part. The Bitcoins, the transactions, the mania surrounding the trading, that’s a different issue than either the people behind it or the technology underlying it. I found the conversation fascinating. I think you will also. With no further ado, my conversation with Paul Vigna.
(UNKNOWN): This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
RITHOLTZ: I’m Barry Ritholtz, you’re listening to Masters in business on Bloomberg Radio. My guest today is Paul Vigna, for the past 20 years, he has been a journalist covering markets and the economy for such august outfits as Dow Jones and the Wall Street Journal. He is the co-author with Michael Casey of two fascinating books on block chain and Bitcoin. His first book was The Age of Crypto Currency, How Bitcoin is Challenging the Global Economy, and his latest book The Truth Machine, Block Chain and the Future of Everything was just released to excellent reviews. Paul Vigna, welcome to Bloomberg.
VIGNA: Barry Ritholtz, how are you?
RITHOLTZ: Very, very well, let’s jump right in to the Bitcoin conversation, you know more about this than just about anybody I know.
VIGNA: That’s a totally untrue statement but…
RITHOLTZ: Well you know.
VIGNA: I know some about it.
RITHOLTZ: Well you don’t know the people I know and apparently everybody else knows less than you so it’s a flawed data set.
VIGNA: It’s all with circles you on it.
RITHOLTZ: That’s right.
But let me ask you this question, what was the initial idea behind the entire concept of Bitcoin?
VIGNA: The initial idea the — so this comes out in October 2008 some guy named Satoshi Nakamoto, nobody knows who he is.
RITHOLTZ: Right, is that a real name, is that is pseudonym?
VIGNA: It’s a pseudonym. Nobody knows what his real name is, who he is, if it’s a team of people, you know, it’s a whole mystery. So this white paper comes out, Satoshi Nakamoto, Bitcoin, I forget the exact title but basically the point is what he is creating is a digital version of cash. So in other words, if you’re a shopkeeper and I come in for a cup of coffee or whatever I hand you a five dollar bill, that is the transaction.
What Nakamoto was trying to do was replicate that transaction digitally on the Internet.
RITHOLTZ: Meaning no paper, no credit card, no banks.
VIGNA: No paper, no credit card, and also an immediate transaction between just you and I that nobody else sees. In other words…
RITHOLTZ: No third party, no government, no banks, no credit card, nobody.
RITHOLTZ: Just buyer and seller.
VIGNA: Right, just buyer and seller, peer to peer electronic money, that was the original idea.
RITHOLTZ: Sounds like a good idea.
VIGNA: Sounds like a good idea, sounds like a simple idea, right?
RITHOLTZ: And remember this is 2008, we are right in the middle of the financial crisis where confidence in banks and governments are at record lows.
RITHOLTZ: So he comes up publishes this white paper, how do you get from — and where was the white paper published?
VIGNA: He just released it online.
RITHOLTZ: Just on the internet.
VIGNA: Originally it was to this — I think it was an email listserv, you know, one of those distribution lists.
RITHOLTZ: So how do you get from a white paper to an actual block chain technology and a coin that starts to appreciate in value almost immediately?
VIGNA: So what the white paper was describing was a computer program and that the goal of the computer program was to create this digital money, this peer to peer electronic version of cash.
So he releases a white paper in October 2008 and puts the program online.
RITHOLTZ: So he sets up the program, it was more than a white…
VIGNA: It was more than a white paper, it was a paper describing what he was doing — he wrote the program too, puts the program online in January 2009 as an open source project where anyone is open to participate in building it.
RITHOLTZ: So let’s describe that. So building the software or building the coins themselves.
VIGNA: Well, the software.
VIGNA: So you know he releases version 0.0 Bitcoin and what he is looking for are collaborators, he’s looking for people to come on and help develop the program. In other words, again, you know, a company like Microsoft like Apple whatever, they have teams of developers…
VIGNA: Yes, thousands. This is a different kind of version of that. You’re talking about developing a software program but you’re looking for collaborators like…
RITHOLTZ: Like Linux and those sort of things…
VIGNA: Linux is a great example of an open source program so that’s what he releases and again, it’s very key I think that you mention this is all happening during the financial crisis.