hi everyone this is Roger beer it's
Saturday August 19th and I want to show
you guys a presentation that originally
I made for the Pantera bitcoin group
back in March of earlier this year but
in light of everything that's going on
with Bitcoin cash and Bitcoin legacy
today I think that this is very relevant
so keep in mind that these slides again
are back from Mark shows about about six
months ago but I think they're still
very relevant here so we'll start off
with a what is Bitcoin right of course
we all think we know what Bitcoin is but
I want to talk about why I think bitcoin
is important so right from the from the
Satoshi Nakamoto white paper or the
title is that it's a peer-to-peer
electronic cash system I think that's
important to keep in mind that's the
original title of the white paper but
what makes up a peer-to-peer electronic
cash system right we need to have good
money cash means good money and here are
the characteristics that make something
good money and we can start that it's
you know easy to store hard to
counterfeit of scarce divisible
homogeneous that's a little bit lacking
a Bitcoin but there's room for
improvement there anyhow durable and
they're not easy to transport and uh
that's the one that I think we need to
focus on a bit more and core and their
roadmaps are intentionally damaging
bitcoins ease of transport by making the
blocks full and the fees high and the
confirmation times long and the double
spins easy that's damaging one of these
incredibly important characteristics of
Bitcoin that make Bitcoin useful as
money and if you damage any of these
characteristics here Bitcoin has been
less useful as money than it otherwise
would have been so it's very very
important not to damage any of these and
unfortunately course roadmap is
intentionally damaging the ease of
transport for for Bitcoin and if you've
been around Bitcoin for a while you'll
know exactly what this chart is and
again this is back from March now we've
been bumping up against a limit for a
while here but you can see for all of
bitcoins history the blocks were never
ever full there was tons of room for for
additional transactions until the
beginning of
this year around marks the blocks became
completely full and that when the blocks
became full that caused the average
conformation time to skyrocket around
the time that I took this screenshot in
March earlier this year the average
conformation time was about two hours
for a Bitcoin transaction that
previously would always be confirmed in
about ten minutes because there was
always plenty of room in the blocks for
every transaction to be included and
around the same time that the blocks
became full everyone had to bid against
each other for room in that block and
the big the fees that people had to pay
to use Bitcoin skyrocketed from being
something very reasonable around the
penny a transaction to where people were
paying a quarter of a million dollars
per day in transaction fees just to use
the Bitcoin network and the fees are
somewhere in that same ballpark today
and right around that exact same time
that the blocks became full and the fees
skyrocketed bitcoins share of the total
market cap plummeted and we can see that
right here back when I took this
screenshot it was still above 60% today
Bitcoin is below 50% and that brings us
back to the economic code of Bitcoin
that I love to say is so incredibly
important and a really basic concept in
economics it's something called
substitute goods and it's important to
understand the definition of what a
substitute good is and substitute goods
are two goods they could be used for the
same purpose if the price of one good
increases then demand for the substitute
is likely to rise so in the
cryptocurrency ecosystem there's a bunch
of substitute goods right we have
Bitcoin litecoin aetherium Manero -
those calling take your pick there's a
thousand and one altcoins out there with
similar characteristics some are
certainly better than others some have
bigger network effects than others but
there's a lot of competition there and
things like shape-shift and the jacks
Taiyo wallet that make it so incredibly
easy to convert from one Bitcoin to
another make it really really easy to
substitute one of these crypto
currencies for another if one's not
working for you
and we saw that happen exactly at the
same time when the blocks became full
and the fee skyrocketed and the
confirmation delays increased in the
huge amount for Bitcoin we saw Bitcoin
share of the market cap plummet at the
exact same time the alt coins rose like
crazy and that's because people are
using alt coins as a substitute good for
Bitcoin because if bitcoins no longer
the easiest fastest and the cheapest and
safest way for them to use their their
money they're going to start using one
of these substitute goods and that's why
we've seen the alt coins just skyrocket
as far as their total market cap goes
and the reason for that is because we
have these people at Bitcoin core and
block stream and they openly and
intentionally advocate for one megabyte
blocks and they intentionally and openly
advocate that they want to create high
fees on the Bitcoin network and they
openly state that they want the blocks
to be full and uh that causes a horrible
user experience for Bitcoin and down
full blocks lead to high fees long waits
and a horrible user experience anybody
that's tried to use Bitcoin recently
knows that the fees are crazy the waits
for confirmation are crazy and just the
overall user experience is horrible
before I decided to make this video this
morning I sent a Bitcoin transaction and
I think it was a like seventy
seventy-five dollars in fees I can pull
it up here well will we do that but it's
just a you know what an incredibly
incredibly frustrating thing for someone
that's been involved in Bitcoin you
realize that for the entire history of
Bitcoin up until the time the blocks
became full you could send and receive
any amount of money with anyone anywhere
in the world and it was basically free
you can't say that anymore now it's
incredibly expensive so it was $59 to
send us some bitcoins there earlier this
morning there's a lot of substitute
goods that are cheaper and easier to and
faster than Bitcoin the only thing
that's lacking for those other ones are
there the giant network effect that
Bitcoin has in that first mover
advantage but if we have you know this
horrible user experience that's going to
result in fewer users fewer
nodes lower adoption and a lower Bitcoin
market cap and I hear so many of these
Bitcoin core and block stream supporters
saying oh look at Bitcoin it's at an
all-time high in price yeah that's true
but we have to stop and think for a
minute if Bitcoin had continued to have
a good user experience what would the
price be today maybe instead of it being
four thousand dollars per Bitcoin today
we would already be at forty thousand
dollars per Bitcoin today but instead
Bitcoin has this horrible user
experience people are starting to use
aetherium and dash and alt coins and
this and that whereas otherwise if
Bitcoin had continued to have a good
user experience they would have just
continued to use Bitcoin and that brings
us back to the economics if you get the
economics wrong it doesn't matter how
good of a programmer you are the
economic code is incredibly important
when it comes to Bitcoin and we have
some quotes here from Bitcoin : and
block stream supporters and here's Greg
Maxwell the CTO block stream openly
saying that he doesn't think that
transaction fees mattering are failing
it's a success and we can see right here
when the transaction fees skyrocketed
bitcoins total share the market cap of
crypto coins plummeted and I provided
the links to all of these quotes right
in the bottom of these slides all of
these slides this whole presentation is
available over at Roger Viacom if you
click on the slideshow link at the
bottom you can download all these and
this the name of this one is Pantera
March 2017 and again we have Greg
Maxwell saying that feed pressure is an
intentional part of the system design
and to the best of the current
understanding essential for the system's
long term survival
so yes it's good and I'd like to point
out once again that as soon as the fees
skyrocketed on Bitcoin bitcoins total
share of market cap plummeted and at the
time I took this screenshot back in
March it was at 60 something percent now
it's below 50% so it's gone down even
more so if you get the economics wrong
it doesn't matter how good of a computer
scientists you are or computer program
or any of the other stuff you have to
have the economics right or the system's
not going to
not going to work and again here we have
a great Maxwell thing there's nothing
wrong with full blocks but we can see
incredibly clearly that there's
something horribly horribly horribly
wrong with full blocks as soon as the
blocks became full bitcoins market share
plummeted absolutely plummeted because
the user experience becomes horrible
with full blocks and again we have greg
maxwell saying full blocks is the
natural state of the system but that's
absolutely ridiculous we can see here in
the picture here we have the you know
eight-year history of Bitcoin the blocks
weren't full until very very recently so
the full blocks certainly is not the
natural state of the system and we
should never ever ever have full blocks
it creates this horrible user experience
for for the users of Bitcoin and forces
them to start using things other than
Bitcoin
again Greg Maxwell I'm not trying to
pick on him any more than anybody else
just there were plenty of quotes from
him because he loves to post all over
the internet and he says there's a can
there's a consistent feedback log which
is the required which is the required
criteria for stability and again that's
nonsense
it wasn't until very recently that the
blocks became full and the fee
skyrocketed and that happened in sync
with the Bitcoin share of the
cryptically market space just plummeting
so uh I'm sure Greg knows a lot of
things about a lot of interesting topics
the economic code of Bitcoin is not one
of them Peter really he says we as a
community should indeed let a fee market
develop and rather sooner than later and
again I'm sure Peters a really smart guy
about a lot of things he has a PhD but
the economic code that has made Bitcoin
a success is not one of the things that
he's knowledgeable about and again we
can see in the charts here that as soon
as the Bitcoin transaction fees
skyrocketed Bitcoin share of the crypto
coin market space plummeted we have
marked freedom balke I'm again I'm sure
he's a smart guy about a lot of things
and very well-informed about a lot of
things the economic code that has made
Bitcoin a success is not one of him and
he says slow confirmation high fees will
be the norm in any state
outcome no if we have slow confirmations
and high fees we're going to see Bitcoin
be replaced by you know the thousand one
substitute goods that are out there
waiting to replace Bitcoin and we can
see that from the charts here that when
the average confirmation time became
really long because the full blocks
Bitcoin share of the overall crypto coin
market space has plummeted and Luke jr.
reasonable block sizes currently range
from five hundred and fifty kilobytes to
one megabyte absolute nonsense I don't
think there's too many same people in
the world that think that that's a good
idea it's going to be the end of Bitcoin
if if we've restrict the block size and
create this horrible user experience for
all the users a Bitcoin and again Luke
jr. says it's no longer possible to keep
fees low that's just absolute nonsense
the reason fees are so high is because
Bitcoin had this giant network effect
there were already a million apps for
smartphones and computers and Bitcoin
exchanges and Merchants that accept
Bitcoin so there's definitely a lot of
stickiness that prevents people to from
wanting to switch from something from
from Bitcoin to something else but if
the fees get too high and the
confirmation times get too long and the
user experience gets too bad people are
going to switch where you've seen that
happen in a major way and that's
specifically because the blocks were
were allowed to become full because
these Bitcoin quorum block stream guys
in their you know ignorant of the
economic code of Bitcoin thought that
that would be a good idea and I wouldn't
be so passionate about this if I didn't
own a bunch of bitcoins I want to see
Bitcoin do well and again we have Luke
jr. saying just pay a $5 fee and it'll
go through every time unless you're
doing something stupid well maybe that
was approximately true back in March
when he said that but just this morning
I paid $59 for my fee and I got included
in the next block but I'll the the fee
for that was 290 satoshis per byte so it
wasn't a miscalculation on the fee
that's about what the fees are it need
to be at the moment so uh and I was
sending those bitcoins that I sent this
morning I was sending them to an
exchange to trade them for something
other
than Bitcoin so thanks thanks Luke
George team and another block stream in
Bitcoin core participant in blocks
employee he says higher fees may be just
what is needed that's absolute nonsense
no higher fees are kryptonite to the
adoption of Bitcoin into the user base
of Bitcoin and we can see that plain as
day from these charts here when the fees
became really high to use Bitcoin
bitcoins percentage of the total market
cap I of cryptocurrencies plummeted so
no George higher fees is exactly what
the system doesn't need Bitcoin is
supposed to be frictionless or as close
to frictionless as we can make it
peer-to-peer electronic cash not some
sort of settlement layer with high fees
and slow confirmation times and again we
have George here saying a confirmation
times are fine for those who pay high
fees know if the fees become high people
are going to switch to using a
cryptocurrency that has fast
confirmation times and it's worth noting
it may be a lot of people that are new
to Bitcoin in the early days of Bitcoin
the policy was first seen first safe
that and that meant that when you
broadcasted your transaction to the
network once it had been broadcasted to
the network you were pretty much good to
go and people commonly accepted Bitcoin
transactions for you know tens of
thousands of dollars without waiting for
a confirmation depending on the exact
circumstances and you can make Bitcoin
zero confirmation transactions very very
very safe certainly not as safe as a
transaction that's already had a
confirmation or more but you can make
them where they're safe enough to where
most of the time people can accept them
for most things in their life and it
becomes good enough for for most things
and that should be the goal whereas
unfortunately Bitcoin core and block
streams have intentionally undermined
the safety of zero confirmation
transactions and that degrades the user
experience and that'll make people want
to go and seek out coins that provide a
better user experience and use those as
a substitute for Bitcoin and that's
exactly what we've seen happening over
the last few months and again we have
George saying Bitcoin needs a
competitive fee market in the long run
to sustain proof-of-work
once the subsidies are gone I'm very
happy that we have it now
and I'm sympathetic to that argument
that some day when there's no more block
reward whatsoever we need some fees to
incentivize the miners to see here the
network but the block reward doesn't run
out for another hundred years we have
more than a hundred years until this
becomes a problem and instead of waiting
for a hundred years to solve this
problem there cause they're causing a
problem right now today they're causing
a giant problem on the Bitcoin network
today that's causing people to use
things other than bitcoins so because of
some problem that might exist more than
a hundred years from now they're
intentionally causing a problem today so
that's a shows a clear lack of
understanding of the economic code
that's made Bitcoin a success today the
Bitcoin economic code that made Bitcoin
is a success is the exact same one that
we had for the first eight years which
was low fees and fast confirmation times
for everybody and they're altering that
economic code to disastrous results here
and again we say that George in
reference to Adam back the CEO block
stirring he says I think Adam and I
agree that hitting the limit wouldn't be
bad but actually good for a young and
immature market like Bitcoin fees this
is absolute nonsense this is kryptonite
to Bitcoin Bitcoin had an amazing growth
rate the first eight years a Bitcoin
when the fees were essentially you know
basically nothing you were talking about
a penny to use Bitcoin and Bitcoin went
from nobody using it to somewhere around
you know ten plus million users around
the world huge amounts of venture
capital coming in a huge adoption for
merchants it was amazing and we have a
eight year track record knowing that
that economic code worked incredibly
well to grow Bitcoin and get the coin
used by more and more people around the
world if you know something works and
works incredibly well don't change it
yet here's George claiming that he and
Adam want to change this economic code
that we already know works to some
economic code that we don't know works
and in fact we have a whole bunch of the
evidence to say that it doesn't work and
it drives people to use something other
than Bitcoin so if something's not
broken don't fix it yet that's exactly
what these people are trying to do
ah and here's a quote from vladimir van
der Laan who would contribute a bitcoin
core and he says a mounting fee pressure
resulting in a true free market where
transactions compete to get into Bloxx
results an urgency to develop
decentralized off chain solutions and we
have these charts here showing that
bitcoin when the fees became high and
the see pressure was there Bitcoin share
of market cap plummeted so yeah it made
some people develop off chain solutions
for Bitcoin meaning using Bitcoin banks
like a you know coin basing Zappo and
and and Bitcoin exchanges that hold the
bitcoins for the users which is exactly
what bitcoin was supposed to avoid we
want everyone to hold their bitcoins
themselves in a wall in which they
control the keys and in addition to
doing that it's pushed all sorts of
people to start using things other than
Bitcoin there's all sorts of companies
that used to be Bitcoin only companies
that have started adopting Bitcoin so
coinbase used to be a Bitcoin only
company and now they've integrated
litecoin in the theorem and they've
announced they're going to integrate
Bitcoin cash we just saw earlier this
week blockchain that info the number one
Bitcoin wallet in the entire world
that's responsible for more Bitcoin
transactions than any other will than
all other wallets combined just
integrated aetherium I I'm the very
first investor in the entire world and
blockchain dot info I'm still the
largest shareholder in the entire world
in blockchain at that info almost more
than all the other shareholders combined
blockchain had no desire to integrate
any other altcoins other than Bitcoin
and the only reason that they integrated
something other than Bitcoin at this
point is because they were forced to
because of the horrible user experience
for for Bitcoin users on the Bitcoin
network because of the full blocks and
the high fees if that wasn't the case we
would have been happy just going on with
Bitcoin forever so we've seen coin based
and grade altcoins bloodshed under info
integrate altcoins
all sorts of what used to be Bitcoin
exchange exchanges have been now become
cryptocurrency exchanges and are busy
integrating altcoins that's because
of the horrible user experience that was
brought about on Bitcoin because of the
full blocks and high fees and slow
confirmation times that they bring its
kryptonite to the future growth of
Bitcoin and again we have vladimir here
saying I'm afraid increasing the block
size will kick this can down the road
and let people and the large Bitcoin
companies relax saying that it's going
to let them relax that's exactly what we
want people to using Bitcoin to be able
to do we want them to be able to relax
and have a wonderful user experience and
have Bitcoin work beautifully for them
that that's the name of the game when it
comes to customer service and user
adoption you want people to have a good
experience and be able to relax and just
be able to use Bitcoin and not worry
about it and instead they're causing
these intentional problems on the
network and we see can see in these
charts again as soon as we hit the one
megabyte limit bitcoins percentage of
the total market cap plummeted so what
can we do about it
so I made these slides six months ago
but the answer is still basically the
same right Bitcoin unlimited at the time
with advocating bigger blocks lower fees
and faster confirmations and it also
enables layer to scaling so we get all
the benefits from the Lightning Network
and all these fancy layer to stuff plus
lower fees and confirmations faster
confirmations that's exactly what we
want and Bitcoin cash has the exact same
thing today we already have bigger
blocks for seeing all the transactions
being concluded right in the decks block
the fees are some very very small
fraction of what it is on the Bitcoin
legacy system system and we can build
all sorts of layer to stuff on top of
this as well and Bitcoin unlimited and
Bitcoin caches plan leads to better
money right hard it has all these things
including the ease to easy to transport
part Bitcoin legacy is not easy to
transport it's incredibly expensive and
super slow to do that and that's not
what good money is and again if we have
better money better money leads to more
users more nodes more adoption and more
censorship resistance with a higher band
all those things will lead to a higher
market cap and a higher price
and we're seeing that happen right
before our eyes with Bitcoin cash today
so many people are son they're slow and
not easy to use and expensive to move
bitcoins and buying Bitcoin cash and the
miners are going to switch and whichever
cryptocurrency has these characteristics
as money is going to be the one that
people use and Bitcoin had this giant
giant just you know light your head
start on all these other
cryptocurrencies but in terms of network
effect and user adoption and that's been
absolutely squandered and destroyed and
smashed by this idiotic full block -
policy of block streaming core I don't
think that they're bad people I think
they just don't understand the economic
code that's made Bitcoin a success and
they've altered that to the detriment of
Bitcoin and that's why you seen Bitcoin
and now Bitcoin cash I'm sorry that's
why we've seen etherium and now Bitcoin
cash just coming up like leaps and
bounds and if Bitcoin legacy continues
to have this bad user experience 100% of
its first mover advantage is going to be
destroyed because of block streams full
block and high few policy and that
brings us to where we are today if
you're wondering what crypto coins you
should hold look at this chart here all
of them are hard to counterfeit right
look for the ones that are scarce and
have a limited supply all of them are
basically divisible on homogeneous is
just another name for for privacy so
Bitcoin in addition to the scaling issue
has a really big problem with the
homogeneous Nikoli needs to have more
privacy built-in so look at crypto coins
that have more privacy built in so you
have a some top contenders there rzz
cash debt - maybe the privacy is a
little bit weaker but still seems to be
better than Bitcoin Manero of course
decline and I'm sure there's a number of
others out there so keep an eye on those
and that's another big problem with the
full block and high a high feed policy
implemented by block streaming core it
makes it too expensive for people to use
privacy tools like Bitcoin mixers and
that damages the homogeneous nosov
Bitcoin if you too expensive to use and
make sure then people aren't going to
use it anymore
that damages bitcoins characteristics as
money if you have you know big blocks
where people can shuffle all their coins
around that improves the privacy of
Bitcoin and that makes Bitcoin better
money again so they damaged this aspect
of a Bitcoin as well with their full
block and high C policy of course the
coins and all these other cryptic lines
are durable but easy to transport
Bitcoin has had that incredibly damaged
with this full block and high feed
policy so uh anyhow if you're shopping
for other crypto coins here's the
characteristics to look for I would like
Bitcoin to have all those in spades
again Bitcoin cash looks like it has a
pretty good chance of doing that again
but it has nowhere near the market
effect of Bitcoin there's no easy-to-use
smartphone apps there's pretty good
adoption from exchanges there's minimal
adoption from merchant service providers
at this point so it's a bit of a chicken
and egg problem but every single Bitcoin
holder is also a Bitcoin cash holder so
a lot of these people are going to be
interested especially when when though
we're seeing the price go crazy for it
we should check this the price again
since I didn't check from the time I
started this little screencast but it's
just been going crazy it was a less than
it was about $300 48 hours ago and now
it's up around $1000 at the moment and
yeah what what an exciting thing so
anyhow I don't need this to go too long
we're almost up to a half an hour but
better money leads to all these things
that we want and it's worth pointing out
the two that the goal is not
decentralization the goal is censorship
resistance and we don't need an infinite
amount of decentralization but we want
as much censorship resistance as we
possibly can have and we just use the
decentralization as the tool to achieve
that censorship resistance so the
decentralization in and of itself is not
the goal it's simply the tool we use to
achieve that censorship resistance and
we just need enough decentralization to
achieve that censorship resistance so
that's me for anybody who is watching
this video who doesn't know who I am I'm
the very first person in the entire
world to start investing in Bitcoin
startups I've been involved in Bitcoin
since February of 2011 I was the first
invest
blocking that info I was in the earliest
problem for 4-bit pay and ripple and
Percy oh and Kraken and shape-shift and
a whole bunch of other companies that
are no longer around as well and I
started investing the decline system
years before a traditional venture
capital started getting involved I got
involved because I want to see Bitcoin
and if it's not Bitcoin I'll be a bit
sad but I'm just fine if it's another
cryptocurrency but I want to see Bitcoin
or cryptocurrencies replace every other
government issued currency in the world
I want to see it replaced a dollar the
euro in the end and put every single
human being on the planet on the same
foothold on the same footing for being
able to send and receive money with
anyone else anywhere in the world
without requiring permission from any
politician or government or anybody for
that matter because that's what it's all
about we're all human beings we all have
the same natural rights we should all be
able to transact and send and receive
money with each other without having to
get the permission of strangers living
in far-off lands that's why I got
involved with Bitcoin that's my goal
today I'm the CEO Bitcoin comm if you
want to learn more about Bitcoin go to
bitcoin calm unlike Bitcoin torger
bitcoin org or our Bitcoin will allow
you to go and say anything you want on
our forums we're not going to delete
your posts or since your your your
position just because of a you might
disagree with somebody on how the clinch
should scale but anyhow that's it thank
you guys for listening I'll probably do
an AMA at some point in the very near
future on our BTC because they support
free speech there so look for my AMA
coming soon - thank you guys all for
supporting this fundamentally
world-changing technology to learn more
Bitcoin comm thank you