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From YouTube: Cryptocurrency: Currency of the Future or Just a Fad?
Description
Bitcoin and Ether are examples of digital currencies, or cryptocurrencies, digital assets created by complex computer algorithms. Among other issues raised by this new type of currency, regulators are concerned about “initial coin offerings,” or using cryptocurrencies as capital in start-up formations. Hear an overview of this technology and discuss its enormous potential and challenges.
A
So
let
me
let
me
start
by
saying
that
I'm,
a
Brian
Feldman
I'm,
a
Maryland
state
senator,
represent
the
Maryland
suburbs
of
DC
that
part
of
Maryland
and
I'm
the
vice
chair
of
the
ncsl
CFI
Committee,
the
communications
financial
services,
Interstate
Commerce
Committee
chest
jurisdiction
over
this
issue.
In
today's
program,
we've
entitled
crypto
currency
currency
of
the
future
are
just
a
fad.
Hot
topic
around
the
United,
States
I
think
we
it's
reflected
here
and
a
good
turnout.
A
What
we're
talking
about
here
today
are
crypto
currencies,
digital
assets
created
by
complex
computer
algorithms,
unlike
as
I'm
sure
many
of
you
know,
because
you're
here,
dollar
bills
and
coins
crypto
currencies
are
not
issued
or
backed
by
the
United
States
government
or
any
other
government
or
central
bank.
This
lack
of
physical
token
confuses
some
people
and
makes
a
lot
of
other
folks
very,
very
nervous
because
we're
in
somewhat
unchartered
territory.
Now
a
lot
of
people
know
about
Bitcoin,
it's
best
known
of
the
cryptocurrencies,
but
the
reality
is
about
60%
of
the
cryptocurrency
market.
A
Value
today
is
in
tokens
other
than
bitcoins.
So
this
is
again
a
growing
issue.
So
today
we're
going
to
hear
an
overview
from
a
fantastic
panel.
We
have
to
my
left
an
overview
of
the
technology,
discuss
all
the
potential
and
challenges
specifically
I'm,
hoping
we'll
talk
about
the
impact
of
this
on
our
financial
institutions
in
the
financial
system,
quite
frankly
as
a
whole.
The
issues
of
investors-
fraud,
particularly
with
the
advent
of
initial
coin
or
initial
token
offerings
that
I
mentioned
earlier.
A
How
does
our
existing
regulatory
frame
work
both
at
the
federal
and
state
level
fit
within
what
we're
discussing
here
today
and
how
can
federal
and
state
regulators
stay
on
top
of
these
financial
innovations,
and
so
I
was
told
to
remind
everybody
that
any
recording
this
is
lawyer.
Any
recording
of
this
session
is
prohibited
unless
previous
approval
have
been
granted
by
our
crack
whip
and
CSL
staff
communications
division.
A
Also
we're
gonna
want
this
session
when
the
panel
is
done
to
be
very
interactive,
so
the
bottom
line
is
this:
we're
gonna
be
live-streaming
this
and
so
be
very
careful
what
you
say
this
is
gonna
go
out
to
the
entire
world,
so
just
be
mindful
of
that.
So
let
me
I
think
what
I'm
going
to
do
is
I'm
going
to
introduce
each
of
the
panel
in
their
entirety
and
then
that
we're
gonna
go
back
and
they're
gonna
do
ten
minutes
each
and
then
we're
gonna
open
it
up.
A
You
know
for
some
Q&A
from
the
audience,
so
first
we've
got
Tim
I
left,
Peter,
Van,
Valkenburg
who's,
a
research
director
from
the
coin
Center
in
Washington,
DC
Peter's,
the
director
of
research.
At
the
coin,
Center
the
leading
nonprofit
research
and
advocacy
group
focused
on
the
public
policy
issues
facing
cryptocurrency
technologies
such
as
being
and
others
at
the
coin.
Center
Peter
drafts
the
center's
public
regulatory
comments
and
helps
shape.
A
Its
research
agendas
testified
before
Congress
briefed
staff
members
of
the
EU
Parliament
and
educated
policymakers
and
regulatory
staff
around
the
world
on
the
subject
of
cryptocurrency
regulation
and
decentralized
computer
systems.
Previously
he
was
a
Google
policy
fellow
and
collaborated
with
various
digital
rights
organizations
on
projects
related
to
privacy,
surveillance,
digital
copyright
law,
app
heaters,
a
graduate
of,
among
other
things,
NYU
Law
School
to
his
left.
A
We've
got
Lucinda
Fazio
I
think
goes
by
Cindy
is
the
chief
of
regulatory
affairs
of
Consumer
Services,
the
Department
of
Financial
Institutions
from
the
state
of
Washington,
again
chief
of
regular
fairs
for
that
dfi
division
of
consumer
services?
In
that
capacity
she
assists
the
division
director
in
policy
matters,
coordinates
legislation
and
rule
writing
for
the
division.
Seven
regulatory
programs
provides
guidance
to
the
division.
Cindy
is
the
chair.
Also.
The
state
regulatory
registry
lawyers
committee
is
active
in
several
other
state
organization
committees
prior
to
to
come
into
d
fi.
A
She
was
staff
attorney
for
the
Washington
State
Senate,
which
I,
like
that
background,
a
lot
public
defender
and
an
assistant
county
prosecutor
and
a
contract
attorney
in
business
law,
she's
graduate
of
Boise
State
University
and
the
Seattle
University
School
of
Law
is
that
as
it
was
I,
didn't
inaccurate
or
accurate.
Okay.
A
Okay,
it's
all
good
Andrew
Biel
moving
on
next
is
a
senior
manager
to
Ernst
&
Young
out
of
the
San
Francisco
office
here
on
the
west
coast
as
their
lead
person
for
the
firm's
blockchain
and
cryptocurrency
advisory,
prep
practice
leading
client
engagements
in
the
financial
service.
Healthcare
like
life
sciences,
sector
Andrews,
also
a
cryptocurrency
subject,
matter
expert
for
the
firm's
supporting
tax
and
audit
engagements
and
involving
those
assets
prior
to
joining
our
Ernst
&
Young
Andrew
was
a
corporate
attorney
focusing
on
mergers
and
acquisitions,
venture
capital,
financing
and
securities.
A
In
addition
to
providing
general
corporate
counsel
to
emerging
technology,
companies,
Andrew
advises
virtual
currency
companies
on
a
wide
range
of
state
and
federal
regulatory
issues,
including
anti-money
laundering,
General,
Bank,
Secrecy,
Act
compliance
and
state
money,
transmitter
licensing
issues,
he's
represented
virtual
currency
exchanges,
wallets
payment
process
or
cryptocurrency
developers
and
foundations.
Cloud
miners
and
ATM
operators
earned
his
bachelor's
degree
from
Loyola
University
in
New
Orleans
and
his
JD
from
Loyola
Law
School
right
here
in
Los,
Angeles
and
finally,
to
the
far
left.
A
A
The
Commissioner
serves
as
the
chief
regulator
of
Vermont's
financial
services
sector,
including
the
insurance
captive
insurance,
banking
and
securities
industries.
Commissioner
P
check
is
president-elect
of
the
North
American
securities
administrators
Association,
a
member
of
the
SEC
Advisory
Committee,
and
on
small
and
emerging
companies
and
a
member
of
the
National
Association
of
Insurance
Commissioners.
A
Commissioner,
P
check
grew
up
in
brat
borough
and
graduated
laude
from
the
University
Union
College,
with
a
degree
in
political
science
received
his
law
degree
from
the
University
of
Miami
School
of
Law,
and
so
we're
gonna
start
I.
Think
with
Peter
to
my
left.
Who's
gonna
provide
a
an
overview
of
how
virtual
currencies
work
and
the
regulatory
framework
broadly
and
then
Cindy's
can
discuss
the
regulatory
perspective
of
state
financial
institution
regulators.
A
Andrew
Beall
will
then
provide
information
of
what
crypto
currencies
are
being
used
for
how
business
and
governments
are
responding
and
whether
government
can
keep
pace
as
the
technology
develops
and
then
batting
cleanup
at
the
end,
Michael
is
going
to
provide
the
regulatory
perspective
on
initial
coin
offering
offerings
and
then,
as
I
said,
we're
gonna
open
up
the
questions.
Discussion
we've
got
a
mic
in
the
middle,
so
probably
invite
you
up
to
that
mic
to
throw
some
QA
to
the
panelists.
A
B
Feldman
so
I've
been
tasked
with
both
giving
you
a
background
on
how
crypto
currencies
and
tokens
work
and
an
overview
of
the
regulatory
landscape
in
less
than
10
minutes,
which
is
something
I've
I've
tried
to
do
a
few
times
that
it
never
quite
works
out
so
I'm
going
to
abbreviate
some
of
these
things.
I
often
think
that
you
know
these
are
new
technologies
that
are
very
complicated.
B
You
can
you
can
think
of
trying
to
explain
to
somebody
how
cryptocurrencies
work
like
trying
to
explain
to
someone
in
the
early
20th
century
how
an
automobile
works.
There's
two
ways
to
do
it.
The
first
thing
you
can
do
is
is
is
reason
by
analogy
and
explain
what
it's
supposed
to
do.
You
say
it's
a
horseless
carriage
now
that
sounds
crazy
to
somebody
who
doesn't
understand
innovation
with
automobile
technology,
but
it
at
least
gets
the
message
across
as
to
what
the
hell
this
thing
is,
and
what
it's
supposed
to
do.
B
So,
instead
of
giving
you
an
overview
of
hash,
linked
data
structures,
elliptical
curve,
digital
signature,
algorithms
and
all
that
I'm
just
going
to
tell
you
what
these
things
are
intended
to
do,
you'll
have
to
take
my
word
for
it
that
they
work
coin
Center.
The
organization
that
I
work
for
has
a
number
of
more
in-depth
resources
that
explain
the
nuts
and
bolts
of
how
they
do
what
they're
supposed
to
do
and
our
website
has
all
those
resources
on
it
coin.
B
B
We
don't
represent
any
companies
in
the
space
we
have
our
Board
of
Directors
and
our
internal
team
sets
our
agenda
and
what
we're
really
trying
to
do
is
get
good
information
about
the
technology
in
front
of
policy
makers
so
that
they
can
make
good
policy
and
avoid
making
bad
policy
out
of
ignorance,
because
that's
in
our
experience,
where
most
things
go
wrong
when
it
comes
to
regulation,
not
out
of
malice
or
a
desire
to
destroy
the
technology,
but
rather
just
a
poor
understanding
of
it.
So
again,
coin
center.org
you'll
find
many
more
resources.
B
So
what
is
the?
What
is
the
real
innovation
behind
Bitcoin
cryptocurrencies
tokens?
This
whole
unfolding
ecosystem
I'm,
going
to
explain
it
with
respect
to
two
parts,
so
first
show
of
hands
how
many
people
in
the
room
are
familiar
with
the
distinction
between
bearer
instruments
and
registered
instruments.
B
Okay,
not
bad,
so
a
bearer
instrument
is
like
a
hundred
dollar
bill
or
an
old
bond
with
coupons
that
you
can
cut
off
of
it
or
a
stock
certificate
back
before
we
used
to
register
all
of
our
our
stocks.
Basically,
and
the
idea
behind
a
bearer
instrument
is
whoever
shows
up
with
it
gets
the
value
of
it.
It's
honored,
it
doesn't
matter
if
you're,
not
the
name
on
it,
if
you're,
not
in
some
database
somewhere
as
the
owner
of
it
whoever's
holding
the
physical
thing,
the
bearer
instrument
is
owed.
The
value
of
the
instrument.
B
A
register
instrument
by
contrast,
is
something
where
you
have
a
registry,
and
those
will
look
like
things
like
the
DTCC,
for
example,
the
Clearinghouse
that
handles
most
stock
certificates
in
the
US
and
they're.
The
value
of
the
thing
is
owed
to
whoever
is
in
the
registry,
doesn't
matter
who
shows
up
with
a
certificate
and
says:
hey
I
should
have
this.
B
It
matters
who's
in
the
registry
and
we
moved
from
a
world
where
most
trading
and
markets
was
run
off
of
bearer
instruments,
ie
stock
certificates
that
people
would
actually
hold
or
cash
that
people
would
actually
hold
to
a
world
of
primarily
registered
assets.
Anyone
familiar
with
the
term
dematerialization
show
of
hands.
B
This
is
this
idea
that
we
should
just.
We
should
stop
having
paper,
because
it's
grossly
inefficient
to
have
paper.
We
should
switch
just
data
about
trades
data
about
ownership
and
the
way
we
did
dematerialization
back
in
the
60s
and
70s
and
80s
was
getting
rid
of
the
paper
and
building
databases
and
the
database
listed
all
right.
This
share
of
Apple
is
owed
to
Peter.
This
share
of
Sprint
is
owed
to
Andy
and
that's
how
we
knew
who
had
what
it
wasn't,
who
shows
up
with
the
paper
the
bearer
instrument
in
their
hand.
B
It
was
about
the
registered
instrument.
Now
the
amazing
thing
about
Bitcoin,
cryptocurrencies
and
tokens.
Is
it
sort
of
reinvents
the
bearer
instrument
and
it
gets
rid
of
a
lot
of
the
inefficiencies
of
old
paper
bearer
instruments,
because
it's
a
digital
bearer
instrument
and
what
I
mean
by
that
is
this?
B
If
I
have
a
Bitcoin
I
have
it
on
my
phone
potentially
and
when
I
say
it's
on
my
phone
I
mean
it's
on
my
phone,
not
like
$200,
that
I
have
in
my
PayPal
account,
which
shows
up
on
my
phone
but
really
PayPal's,
holding
the
money,
but
rather
$200
worth
of
Bitcoin.
That
is
actually
on
this
piece
of
physical
hardware
and
if
I
want
to
send
it
to
Andy.
B
Andy
can
show
me
an
address
which
he
generates
on
his
phone
and
I
can
take
a
picture
of
it
with
mine
and
send
the
$200
worth
of
Bitcoin
from
my
phone
to
Andy's
phone
with
nobody
in
between
no
bank
no
company,
nothing
but
peer-to-peer
networking
software
on
the
internet,
and
that
is
a
real
revolution,
because
what
it
enables
is
this
sort
of
bearer
asset
again,
where
I
have
the
$200
worth
of
Bitcoin.
Here
it's
on
my
phone.
B
It's
not
something
that
somebody
in
the
world's
like
the
DTCC
or
Bank
of
America
says
that
I
have
it's
actually
something
I
have,
but,
unlike
a
paper
bearer
instrument,
I
can
send
it
to
Andy
over
the
internet.
I
don't
have
to
meet
in
person
and
hand
him
a
piece
of
paper.
I
can
send
it
to
him
over
the
Internet
I
can
send
it
to
him
over
the
internet,
even
if
he's
in
Singapore
and
I'm
here
in
LA,
and
that
provides
sort
of
radical
new
opportunities
for
how
we
choose
to
architect.
B
Markets-
and
this
really
didn't
exist
before
Bitcoin
bitcoin
was
the
first.
If
you
will
Digital
bearer
instrument
and
the
reason
for
that
is
fairly
intuitive.
If
you
think
of
a
a
200
dollar
Bitcoin
worth
of
Bitcoin,
if
you
think
of
it
as
like
a
file
that
you
would
attach
to
an
email.
So
this
is
before
Bitcoin
we
have
email,
which
is
peer-to-peer
and
I
say:
hey
Andy
I
sent
you
an
email
with
200
dollars
attached
to
it.
It's
an
it's
an
attached.
It's
like
a
picture
or
a
Word
document.
B
We
all
understand
why
this
wouldn't
work,
and
you
would
say
what
the
hell
are
you
talking
about.
That's
not
$200,
you
just
sent
me
an
attachment
and
you
could
copy
that
attachment
and
send
it
to
500
other
people,
and
now
$200
became
well
I've
made
my
math
hard
200
times,
500
a
lot
of
money,
so
counterfeiting
makes
it
impossible.
B
The
ease
of
copying
things
on
the
Internet
makes
it
impossible
to
have
that
kind
of
digital
bearer
instrument,
but
Bitcoin
solved
that
problem.
Now,
if
I
send
Andy
my
two
hundred
dollars
worth
of
Bitcoin,
he
knows
with
assurances
from
the
decentralized
network
from
the
cryptocurrency
Network,
the
Bitcoin
network
that
I've
given
up
that
$200
worth
of
Bitcoin
I,
can't
send
it
to
somebody
else.
So
that's
really
the
core
innovation
here
and
how
how
it
achieves
that
is
also
interesting.
B
So
the
way
it
achieves
that
is
there's
this
distributed
public
ledger
of
all
the
transactions
and
it
can
be
independently
verified
by
people
all
over
the
world.
You
don't
have
to
be
a
specialist
to
verify
it.
It's
just
math
that
it
that
is
required
to
verify
it
publicly
available
functions
and
math,
and
what's
interesting
about
that
is
you
took
the
job
of
the
of
the
remember.
My
I
talked
about
registered
assets.
B
You
took
the
job
of
say
the
DTCC,
which
is
to
handle
a
registry
of
assets,
and
you
turned
it
into
something
that
anybody
can
do
around
the
world
and
that's
basically
what
Bitcoin
does
so,
instead
of
there
being
one
record
kept
in
a
building
in
New
York
City
at
the
DTCC
owns,
the
record
is
kept
on
computers
all
around
the
world
by
anybody
who
wants
to
join
the
network
and
help
keep
the
record
the
record.
That
says
that
I
gave
up
my
two
hundred
dollars
worth
of
Bitcoin
to
Andy
and
you
might
say
well.
B
Why
would
anyone
join
that
Network
and
help
keep
that
record?
Well,
it's
because
they're
able
to
basically
claim
a
reward
from
the
network
for
providing
that
public
good.
This
really
is
public
infrastructure,
and
that
reward
is
when
you're
talking
about
Bitcoin
the
mining
reward.
It's
a
certain
number
of
brand-new
bitcoins
that
if
you
did
provable
work,
keeping
that
record
you
can
claim
as
your
own
on
the
network
and
how
can
you
claim
it
as
your
own,
well
you're,
helping
to
maintain
the
record
on
the
network.
B
So
if
you
verifiably
maintain
the
record,
you
just
add
a
record
item
that
says:
I
get
this
many
new
bitcoins
as
a
reward
for
doing
this
work,
and
you
might
say
well
what,
if
you
faked
the
work?
Well,
that's
where
a
complicated
math
comes
in
where
people
who
try
and
fake
the
work
will
be
ignored
and
they
can't
give
some
give
themselves
the
reward.
B
So
I
just
hit
10
minutes
and
I
only
got
to
explaining
two
ways
of
thinking
about
Bitcoin,
which
are
decentralized
systems
like
a
decentralized
DTCC
where
anybody
can
perform
the
work
of
keeping
the
registry
and
digital
bearer
instrument
was
a
way
to
think
of
it
and
so
real
quickly.
The
regulatory
landscape
in
I'm
gonna
go
over
a
minute.
You
know
do
that
in
one
minute,
so
there
are
basically
four
big
issue
areas
with
respect
to
digital
currencies,
tokens
etc,
and
these
are
consumer
protection.
B
Investor
protection,
anti
money
laundering
policy
and
tax,
there's
others,
but
those
are
the
big
four
consumer
protection
generally,
is
a
state
affair
these
days.
So
a
lot
of
companies
will
start
businesses
where
they're
holding
people's
bitcoins
for
them,
which
puts
them
in
a
position
to
trust
with
respect
to
their
customers,
trust
that
can
be
betrayed.
So
you
see
these
stories
about
exchanges
being
hacked.
B
Whether
or
not
they're
going
to
give
licenses
to
these
exchanges
or
not
in
California,
is
actually
one
of
those.
The
next
issue
area
from
consumer
protection
is
investor
protection.
These
cryptocurrency
networks
are
open
source
software,
which
means
anybody
with
a
computer
and
an
internet
connection
can
copy
the
code
and
start
their
own
cryptocurrency
as
long
as
they
convince
a
bunch
of
other
people
to
run
the
software.
Just
like
there's
people
running
Bitcoin
software
I
could
make
some
changes
to
the
Bitcoin
software.
B
Now
some
people
are
pre
selling
their
brand
new
idea
for
a
cryptocurrency
before
the
network
even
functions,
and
that
activity
is
rather
like
issuing
a
security,
quite
frankly,
because
you're
relying
on
those
people
to
make
that
thing
that
they're
promising
valuable
and
the
only
people
buying
it
generally
are
people
who
are
hoping
to
get
rich
off
of
it.
Not
people
hoping
to
use
it
for
something
like
money,
transmission,
the
next
issue,
area,
anti
money
laundering.
So
here,
what's
mostly
oh
and
by
the
way,
securities
law.
B
B
In
fact,
we've
spoken
with
folks
at
the
at
vinson
and
at
law
enforcement
who
say
that
the
suspicious
activity
reports
they
get
from
virtual
currency
companies
are
actually
better
than
the
ones
they
get
from
mainstream
financial
institutions,
because
the
data
is
just
all
there
and
usually
nicely
laid
out.
And
finally,
tax
tax
is
extremely
complicated
because
it's
unclear
exactly
how
these
assets
are
going
to
be
treated.
B
C
Hope
I
can
help
add
some
information
to
this
very
complicated
matter
in
the
great
state
of
Washington
and
I
am
only
speaking
for
the
great
state
of
Washington
and
furthermore,
my
comments
are
not
actually
on
behalf
of
the
great
state
of
Washington,
but
are
only
my
comments
unless
I
am
referring
specifically
to
the
law
or
rules,
we
started
looking.
We
started
looking
at
virtual
currency
and
other
digital
currency
issues
back
in
2013,
when
we
were
starting
to
be
inundated
with
questions
and
comments
about
that.
C
We
looked
at
it
for
a
couple
of
years
in
Washington
internally
and
we
decided
that
it
did
in
fact
fit
within
an
existing
statute
that
we
implement
called
the
uniform
money.
Services
Act
and
it
falls
under
the
definition
of
money
transmission.
So
we
put
out
some
interim
guidance
explaining
to
the
world
our
thoughts
about
it
and
where
we
planned
to
go
with
it,
and
we
let
that
interim
guidance
sit
out
there
for
a
time
took
comments
from
people
watched.
The
industry.
C
I
should
call
it
not
an
industry,
but
the
ecosystem
watched
it
evolve,
and
we
finally
got
to
the
point
where
we
were
secure
in
that
our
interim
guidance
did
in
fact
reflect
consumer
protections,
anti-money
laundering
protections.
It
met
our
mandate
under
the
law
for
the
activity
needing
to
be
licensed
and
regulated.
So
we
amended
the
statute
itself
to
clarify
those
things,
and
we
worked
very
closely
with
industry.
We
had
multiple
conference
calls.
C
We
had
multiple
comments
from
industry,
went
forward,
amended
the
law
and
then
proceeded
to
follow
that
with
some
further
clarifications,
our
rulemaking,
so
we
have
always
been
in
the
state
of
Washington,
very
interested
in
the
business
innovation
and
the
amazing
technologies
underlying
this
ecosystem.
And
again
we
were
only
looking
at
the
if
you
want
to.
It's
always
helped
me
a
little
bit
to
think
of
blockchain
is
the
underlying
platform.
C
I'll
call
it
a
software
platform.
Bitcoin
is
just
one
application
that
runs
on
that
platform.
The
blockchain
actually
has
many
other
applications.
That
may,
in
fact
turn
out
to
be
better
suited
to
other
things
and
I
think
you're
all
seeing
a
whole
bunch
of
different
youth
scenarios
for
blockchain,
among
all
the
states
and
among
other
countries
for
that
matter.
So
we
we
feel
very
secure
that
we
have
struck
the
right
balance
in
our
state
with
our
regulatory
approach
for
consumer
protection
anti
money
laundering.
C
C
Washington
has
always
considered
itself
to
be
hopefully
making
good
policy
based
on
knowledge,
not
the
bad
policy
based
on
ignorance,
and
we
always
welcome
the
help
from
the
industries
that
we
regulate.
Those
are
the
subject
matter
experts
and
wanted
to
give
one
more
plug
for
the
great
state
of
Washington.
We
did
implement
a
multi-state
licensing
agreement
within
a
number
of
states.
C
We
have
18
states
now
where
we
all
are
looking
at
our
uniform
money,
services
Act
and
we
are
trying
to
harmonize
the
statutes
around
those
issues
and
we
are
in
the
pilot
phase
of
that
process,
and
we
have
heard
accolades
from
industry
and
I
hope
that
the
states
can
continue
to
harmonize
where
we
can
to
continue
to
protect
our
citizens
and
foster
innovation
in
our
states
and
keep
a
healthy
state
regulatory
system
in
place.
Thank
you.
D
D
D
D
They
are
also
twice
as
likely
to
buy
cryptocurrency
as
any
other
age
group,
and
there
was
some
discrepancy
on
what
exactly
a
millennial
was.
The
consensus
seemed
to
be
that
it
was
folks
between
the
ages
of
22
and
37.
So
that's
me
and
many
of
you
in
the
room
as
well,
and
so
that's
on
the
retail
side.
What
about
the
institutional
side?
So
there
are
251
hedge
funds
now
that
invest
exclusively
in
cryptocurrency.
D
We
call
these
crypto
funds
and
they
have
an
estimated
5
billion
in
assets
under
management,
and
that's
that's
probably
a
very
conservative
estimate.
Not
all
of
them
publish
earnings,
earnings
reports,
so
that
number
could
be
higher.
Interestingly
of
these
funds,
200
were
launched
since
the
beginning
of
of
2017.
D
The
third
stat
here
is
about
exchanges,
so
Peter
mentioned
the
exchanges
earlier.
A
lot
of
these
businesses
are
also
approaching
Cindy
about
licensing.
As
of
April
of
this
year,
there
were
over
500
cryptocurrency
exchanges
worldwide,
which
may
not
sound
like
a
lot.
You
know
considering
how
many
countries
have
users
of
this
technology,
but
to
put
that
in
context
as
of
September
26
2016,
there
were
only
48
exchanges,
so
I
would
sum
up
these
statistics
the
following
way.
D
D
Things
like
Bitcoin,
like
Peter,
said,
have
been
copied
what
we
call
forts
created
new
assets
that
look
very
similar
functionality
wise
at
least
there
are
other
platforms
that
have
you
know
slight
tweaks.
There
are
others
that
are
very,
very
different.
Quite
frankly,
I
mean
very
robust
capabilities.
They
also
have
a
token
aspect
and
those
are
also
traded.
D
So
there
are
thousands
of
these
assets
that
are
traded,
not
ever
exchange
trades
all
of
these,
but
you
can
see
how
an
exchange
can
sort
of
make
a
niche
in
a
particular
country
or
with
a
particular
subset
of
these
assets.
So
these
exchanges
are
wildly
profitable,
but
the
majority
of
the
the
volume
is
is
on
sort
of
the
top
ten,
which
is,
which
is
probably
not
surprising.
D
D
There
is
the
exchanges
have
obviously
sort
of
followed
this
statement
and
you
are
seeing
traditional
finance
do
the
same
thing.
So:
asset
managers,
custodians
broker,
dealers,
investment
advisors,
FinTech,
payment
companies
and
traditional
banks
and
investment
banks
are
all
seeing.
Cryptocurrency
is
an
asset
class
that
they
want
to
support
and
for
I.
Think.
A
lot
of
that
is
due
to
the
fact
that
if
you
remember
the
first
slide,
I
showed
you
about
Millennials.
That
is
a
market
that
is
extremely
valuable
to
the
financial
industry.
D
So
if
there
is
an
asset
out
there
that
the
majority
of
22
to
37
year
olds
are
really
interested
in
buying,
then
a
bank,
a
payments
company,
an
investment
platform,
an
investment
advisor
that
allows
those
users
to
buy
that
asset
on
that
platform,
they're
gonna
get
they're
gonna.
Do
it
right?
So,
interestingly,.
D
Since
hedge
funds
have
also
gotten
invested
in
this
asset
class
in
a
big
way,
they
have
also
driven
I
think
a
lot
of
the
regulatory
dialogue
because
they
themselves
are
regulated
entities,
unlike
a
lot
of
the
individuals
that
are
buying
and
selling
this,
and
they
need
certain
things
to
be
in
place
to
be
able
to
sort
of
to
buy,
sell
for
themselves
and
also
their
investors
in
a
compliant
way.
So
hedge
funds
need
to
custody
assets
to
some
extent
with
a
cornucopia
custodian.
D
D
There
was
there's
been
a
little
discussion
about
sort
of
the
underlying
technology
here,
which
is
which
is
blockchain
and
some
of
the
potential
applications
that
extend
beyond
cryptocurrency
Eddie.
Why
we
are
seeing
a
lot
of
these
applications
and
I
want
to
sort
of
sum
up.
All
of
this
in
kind
of
a
thesis
statement
that
I
personally
believe,
but
also
be.
D
Why
believes
as
well,
which
is
that
everything
that
can
be
tokenized
will
be
tokenized
for
a
number
of
reasons,
one
being
that
something
that's
tokenized
and
in
the
digital
form
is
just
far
easier
to
transfer,
but
we
are
seeing
tokenization
take
hold
in
the
securities
markets,
we're
seeing
it
take
hold
in
commodities
markets,
derivatives.
Things
like
gold
and
oil
backed
tokens
are
being
launched,
interestingly,
the
gaming
industry
and
the
physical
collectibles
market,
so
things
like
art,
wine,
very
expensive,
watches
things
like
that.
D
Also
things
that
you
would
find
at
pawn
shops
who
are
being
tokenized
and
represented
on
a
blockchain
for
a
number
of
reasons.
The
owner
registry
component
is
really
powerful,
but
these
are
also
industries
that
are
less
regulated
in
the
financial
industry
and
so
they're
able
to
experiment
with
new
technology
a
little
easier.
So
the
barrier
to
entry
for
things
like
watch
chain
and
tokenization
is
lower
in
the
gaming
industry,
for
example,
right
where
you
may
want
to
tokenize
an
in-game
item,
we're
also
seeing
things
like
software
licenses
and
event.
D
E
Representative
Jean
O'sullivan
who's
with
us
in
the
audience
will
know
that
for
sure,
as
it
relates
to
our
captive
insurance
industry,
we're
Vermont
is
number
one
in
the
world
by
premium
volume
number
one
in
the
United
States
by
the
number
of
licenses
that
we
have
for
captive
insurance,
and
we
have
some
of
the
biggest
companies
in
the
world.
Forty-Eight
of
the
Fortune
100
are
based
in
Vermont
and
eighteen
of
the
Dow
Jones
industrial
18
are
based
in
Vermont
as
well.
So
captive
insurance
is
something
of
an
innovative
financial
instrument,
a
program.
E
At
one
point
it
was
both
at
the
state
and
federal
level,
at
least
as
it
relates
to
IPOs
it's
now
completely
at
the
SEC
level
at
the
federal
level.
So
this
involves
a
lot
of
time
a
lot
of
money.
Obviously
you
have
to
hire
law
firms
and
accounting
firms
and
people
that
are
very
much
an
expert
in
this
area
to
be
able
to
get
to
the
point
of
doing
an
IPO.
The
the
frictional
cost,
if
you
will
that
are
associated
with
raising
capital
in
that
way,
are
quite
high.
E
You
see
it
reflected
in
the
number
of
IPOs.
Nationally
every
year
has
been
trending
downward.
There
has
been
an
uptick
recently,
but
that
has
been
the
trend
for
companies
to
stay
private,
not
to
go
public,
so
that
is
sort
of
that
dynamic.
That
sort
of
got
meshed
up
with
this
cryptocurrency
phase
that
and
an
and
fnatic
sort
of
atmosphere.
That's
happened
in
the
last
decade
or
so
so
Bitcoin
and
some
other
cryptocurrencies
have
been
around
for
about
a
decade.
E
Now,
they've
had
a
pretty
good
amount
of
success
when
you're
talking
about
actually
raising
capital.
There's
been,
let's
say,
I
think
it's
somewhere
between
two
to
six
billion
dollars
of
capital
raised
in
the
year.
2017,
that's
up
tremendously
from
previous
years.
There's
something
like
fifty
to
a
hundred
I
cos
every
single
month
that
are
coming
out
where
people
are
trying
to
raise
money.
E
We
are
doing
a
roadshow
and
you're
on
the
you
know,
you're
on
the
you're
going
across
the
country
for
months
on
end
putting
in
a
ton
of
effort
in,
and
maybe
you
raise
twenty
or
thirty
or
forty
million
dollars-
and
you
know
here
it's
sort
of
a
flip
of
a
switch
and
you
have
90
million
dollars
in
your
account
to
do
whatever
it
is
for
your
business.
So
obviously
it's
something
that
is
very
attractive
for
a
business
owner
or
an
entrepreneur.
E
So
you
know
that
being
said,
I
think
those
of
us
on
the
panel
probably
are
familiar
with
this,
both
from
the
industry
perspective
and
regulatory
perspective.
You
know
many
of
these
icos
are
not
legitimate
operators,
as
with
any
sort
of
speculative
you
know,
bubble
or
speculative
investment
or
just
innovation.
E
So
with
these
icos
you
see
that
a
large
portion
of
the
money
being
raised
is
actually
being
done
by
a
small
portion
of
the
icos,
so
those
are
probably
the
much
more
legitimate
actors,
so
they're
doing
things
regulatorily
the
right
way,
they're
trying
to
comply
with
the
securities
laws
in
the
country,
they're
trying
to
find
an
exemption,
or
in
some
cases
now
we
see
icos
trying
to
get
registered
with
the
SEC,
which
is
kind
of
a
newer
phenomenon
in
the
last
year
or
so
so.
The
rest
of
the
the
crew
is
either.
E
You
know
maybe
unsophisticated
they're
trying
to
tag
on
to
this
sort
of
frenzy
of
the
ICO
craze
and
trying
to
make
a
quick
dollar,
but
then
there's
also
just
the
outright
fraudsters
that
are
trying
to
defraud
people
and
take
advantage
from
that
perspective.
So
state
regulators
across
the
country
Vermont
as
well,
have
been
trying
to
crack
down
on
this.
This
type
of
behavior
we've
issued
a
number
of
cease-and-desist,
both
collectively
as
states
I
think
we
had
something
like
45
states,
issue
hundred
plus
cease
and
desist.
E
In
the
month
of
May,
we
called
it
our
crypto
currency
sweep,
but
it's
really
focused
on
this
ICO
space
and
these
illegitimate
actors,
and
that's
not
to
suggest
that
they're
not
legitimate.
You
know
they're,
not
legitimate
actors
in
the
space
and
it's
not
a
legitimate
way
to
raise
money.
It's
just
simply
to
mention
that
I
think
it's
our
job
to
regulate
this
new
space,
to
ensure
that
that
innovation
can
thrive
and
the
people
that
are
trying
to
do
it.
The
right
way
have
the
opportunity
to
do
it
the
right
way.
E
So
that's
really
been
our
focus.
Let's
say
the
last
year,
or
so,
as
you
see
this
increase
in
icos,
so
an
ICO,
you
know
from
a
regulatory
perspective,
I
think
Peter
hit
it
on
the
head,
there's
state
and
federal
regulation
that
they
have
to
comply
with
and
at
the
end
of
the
day.
Even
though
there's
this
very
new
technology
in
this
new
innovative
way
of
raising
money,
they
really
have
to
comply
with
this
decades-old.
Se.
E
Sorry
Supreme
Court
precedent
called
the
Howey
test
which
the
fact
pattern
involved
orange
groves
in
Florida
and
somebody
creating
and
cultivating
those
orange
groves
on
behalf
of
other
people,
and
that's
really
the
the
fundamental
legal
analysis
for
determining
whether
something
is
a
security,
an
investment
contract,
basically
something
that
you're
investing
in
for
the
expectation
of
profits
where
somebody
else's
efforts
are
going
to
determine
whether
that
investment
comes
to
fruition
or
not,
and
that
analysis
holds
true
in
this
ICO
space.
I.
Think
many
regulators,
including
the
SEC,
have
taken
the
position
that
these
are
securities.
E
These
are
investments
they
do
have
to
be
registered
or
exempt
from
registration
through
the
proper
channels,
and
that
you
know,
has
been
something
that
states
have
been
articulating
as
well
as
the
SEC.
So
you
know
it's
very
much
still
in
its
infancy,
we'll
see
how
you
know
things
progress
over
the
next
couple
of
years,
whether
Nico
does
become
a
new
way
of
raising
capital,
more
traditional
way
of
raising
capital.
E
Whether
you
know
the
bad
actors
in
the
area
are
sort
of,
unfortunately,
clouding
the
space
too
much
that
the
legitimate
actors
might
not
be
able
to
succeed.
You
know
those
are
certainly
things
that
we're
keeping
an
eye
on
as
the
years
progress,
and
this
becomes
a
little
bit
more
ubiquitous
in
terms
of
an
opportunity
to
raise
capital,
so
I
think
with
that
I'll
leave
it
there
and
throw
it
open
to
questions
from
the
audience
or
the
panel.
A
Okay,
so
what
I
said?
Thank
you
Michael.
So
if
you
have
a
question
and
I
mosey
on
to
the
front
here,
and
the
meat
and
I'm
gonna
ask
that
whoever
you
are
tells
you
name
where
you're
from
what
organization,
if
you're
a
legislator
from
industry
as
well,
have
some
context
so
feel
free
to
in
the
meantime,
maybe
to
get
it
started.
Just
on
the
last
point
about
fraudsters
etc
in
terms
of
traceability
and
recourse,
I
mean
how
traceable,
whether
it's
the
state
or
a
private
investor
or
whatever.
E
It's
a
great
question:
I
mean
you
know,
I,
think
many
of
you
are
probably
dealing
in
your
states
with
issues
surrounding
frauds
and
scams,
particularly
geared
toward
the
elderly.
In
Vermont.
We've
had
a
great
focus
on
this,
so
either
second
oldest
state
in
the
country
and
in
any
of
these
scams
you
know
once
the
money
leaves
somebody's
bank
account
it's
almost
impossible.
This
is
just
traditional
scams
to
get
that
money
back
right.
The
money
goes
to
a
different
bank.
Account
gets
sent
overseas
immediately
and
it's
almost
impossible
to
trace
and
to
recover.
E
When
you're
talking
about
a
crypto
currency
fraud,
it
makes
it
all
the
more
complicated
for
there
to
be
a
regulator
that
can
follow
that
that
that
that
stream
and
that
can
make
any
opportunity
for
for
recovery
for
an
investor.
So
that's
why
it's
so
important
to
do
the
sort
of
the
upfront
education
for
for
consumers
and
for
investors
and
for
us
as
regulators
to
crack
down
on
the
fraudulent
actors.
F
B
So
New
York
was
sort
of
out
in
front
on
this
issue
and
rather
than
squeeze
licensing,
Bitcoin
or
crypto
currency
exchanges
into
their
existing
money,
transmission
licensing
framework,
the
Department
of
Financial
Services,
the
DFS
in
New
York,
who
has
a
very
broad
statute
that
they
are
free
to
then
use
as
authority
to
create
new
regulatory
structures,
which
is
not
always
the
case
in
every
state,
decided
to
use
that
authority
to
craft
a
brand
new
regulation
called
the
bit
license.
Now,
from
our
perspective,
that's
fine.
B
In
fact,
we've
worked
with
the
Uniform
Law
Commission
to
develop
a
model
act
specifically
creating
a
different
license
than
money
transmission
licenses
for
exchanges,
because
there
are
unique
issues
surrounding
running
an
exchange
that
are
different
than
running
a
typical
money.
Transmission
business
like
Western,
Union
or
PayPal.
So
a
unique
license,
that's
different
is
not
a
bad
idea.
However,
in
the
case
of
the
bit
license,
I
think
there
was
I
think
the
DFS
may
have
been
somewhat
premature
and
I
think.
B
To
some
extent,
the
drafting
was
imprecise,
and
so
the
residual
issues
that
we
have
with
the
bit
license
are
primarily
related
to
two
issues.
One
the
bit
license
requires
approval
for
any
material
change
of
business
for
an
exchange,
and
this
is
very
alien
to
the
way
tech
companies
tend
to
work.
They
tend
to
try
things
and
experiment
and
getting
permission
which
could
take
as
much
as
two
years
is
an
anathema
to
their
business
models.
B
Now,
I
recognize
that
there's
a
trade-off
here
between
experimentation
and
consumer
protection,
but
I
think
the
prior
approval
process,
especially
the
speed
that
it
unfolds,
really
makes
it
a
detriment
to
businesses
in
this
space,
and
maybe
a
registration
and
a
very
open
door
policy
with
the
regulator.
So
hey
we'd
like
to
do
this,
might
be
a
better
approach
rather
than
asking
for
permission,
just
keeping
them
informed.
B
The
other
issue-
and
this
is
really
coin
centers
bigger
issue
with
the
bit
license-
is
that
it
was
not
clear
about
how
it
defined
the
class
of
businesses
that
are
required
to
get
a
license
from
the
class
of
businesses
that
are
not
and
what
I
mean
by
that
is.
This
with
respect
to
Bitcoin
or
any
cryptocurrency
or
token
network,
there's
all
sorts
of
activities
you
might
do.
Some
of
them
involve
holding
people's
valuables
for
them,
and
this
is
what
like
coin
base
does
when
they
hold
people's
Bitcoin
for
them.
B
That
activity
generates
risk
to
consumers
and
the
kind
of
risk
that
is
best
addressed
through
licensing.
You
should
only
be
able
to
engage
in
that
activity
if
you
go
through
a
background
check
if
you
have
minimum
capitalization
solvency
guarantees
and
things
like
that.
There's
other
activities,
though,
like
just
writing
software,
so
you're,
just
writing
some
of
the
core
infrastructure
that
powers
this
thing
on
the
internet
or
just
mining,
so
all
you're
doing
is
helping
to
validate
the
blockchain
and
those
activities.
They
don't
generate
those
kinds
custodial
risks,
because
the
people
performing
those
activities.
B
The
people
writing
software,
the
people,
mining,
the
blockchain,
don't
ever
actually
hold
anybody's
cryptocurrency
on
their
behalf.
They
simply
help
build
the
pipes
that
allow
cryptocurrency
to
move
through
the
internet,
and
so
we
are
very
concerned
that
if
you
broadly
interpret
the
bit
license,
you
could
require
prior
approval
or
licensing
from
people
doing
nothing.
B
But
writing
software
doing
nothing
but
mining
the
blockchain
and
that
kind
of
prior
approval
we
think,
is
anathema
to
innovation
and
also
doesn't
address
the
pressing
consumer
protection
risk
because
you'd
be
requiring
costly
licensing
from
people
from
whom
you
wouldn't
get
benefits
from
a
consumer
protection
standpoint.
If
you
were
licensing
them,
but
I,
don't
think
it
was
the
intent
of
the
DFS
to
license
those
persons.
I
just
think
the
drafting
could
have
been
tighter
and
the
uniform
law
Commission's
model
Act,
which,
as
I
said,
would
created
the
spoke
license
for
virtual
currency
companies.
C
I'm,
just
gonna
make
a
quick
comment
about
going
back
to
the
traceability
issue
and
licensees
in
Washington
under
our
act
are
subject
to
regular
examination
following
their
very
robust
licensing
process,
and
so
we
are
finding
that
you
can
trace
the
transactions
and
the
traceability
is
there
and
again.
This
is
we
have
to
remember
with
the
digital
currencies.
C
We
have
to
leave
some
of
the
baggage
of
the
bad
actors
to
one
side
a
little
bit
and-
and
we
all
heard
about
you-
know
the
complete
anonymity,
the
untraceable
'ti
and
and
when
you
really
dig
in
and
start
looking
at
these
things
and
regulating
them.
You'll
you'll
see
that
there
is
traceability
and
accountability.
B
Briefly
on
that,
so
when
I
make
the
analogy
to
bearer
instruments,
some
of
you
might
immediately
think
of
diehard
and
I
was
at
Alan,
Rickman's
character.
Who's
got
the
briefcase
full
of
bearer
bonds
and
that's
the
whole
criminal
plot
there.
The
idea
of
bearer
instruments
has
always
been
that
they're
very
they're,
very
good
for
moving
large
amounts
of
money
in
an
untraceable
way.
Digital
bearer
instruments
like
Bitcoin
or
these
crypto
currencies
that
I've
been
describing
are
subtly
different.
In
that
it's
it's
it's
a
it's
almost
a
registered
instrument.
Ie.
B
There
is
some
sort
of
record,
that's
that's.
You
know
way,
centralized
and
accounts
for
all
the
transactions
and
therefore
it's
less
private,
but
rather
than
having
a
company,
keep
the
record,
as
I
said,
like
the
DTCC
or
like
visa
or
like
any
centralized
database
provider
for
financial
products,
the
record
is
kept
by
the
public
at
large,
the
Bitcoin
blockchain,
which
is
the
record
of
all
these
asset
transfers
with
respect
to
Bitcoin
or
the
etherium
blockchain,
with
respect
to
ether,
transfers
or
any
token
blockchain.
B
With
respect
to
token
transfers
is
publicly
available
information
you
can
go
and
look
at
that
record
and
see
this
Bitcoin
address
sent
five
bitcoins
to
this
Bitcoin
address.
Now,
if
my
address
and
Andy's
address
are
on
the
blockchain,
it
doesn't
say
Peter
to
Andy,
it
says
X,
one
to
five:
a
cryptographic
address:
2
X,
5
9
6,
but
if
you
ever
do
identify
one
participant,
you
can
see
their
whole
transaction
graph.
B
So
it's
a
little
different
than
our
traditional
traceability
and
anti-money
laundering
world,
where
you
know
that
there
are
accounts
at
financial
institutions
and
you
don't
know
what
the
transactions
are.
So
you
go
to
the
institution
and
ask
for
a
list
of
their
transactions
here.
You
know
what
the
transactions
are.
You
just
need
to
find
out
who
are
the
names
behind
the
accounts
and
if
they've
used
an
exchange,
that's
compliant
with
FinCEN
and
the
Bank
Secrecy
Act,
the
exchange
could
then
re
identify
the
transaction,
so
these
networks
really
aren't
anonymous.
B
C
E
G
They
can
see
what
a
ledger
looks
like.
Okay,
it's
not
to
you.
It's
it's
just
floating
right
off
of
you.
Those
are
great
buzzwords.
We
hear
them,
I,
hear
them
all
the
time,
but
you
can
actually
see
and
graph
a
ledger.
I'll
give
it
to
you
next
year.
If
you
have
trouble
with
it,
it'll
be
on
all
your
attendance
tags,
but
you
as
regulators
have
to
come
to
the
notion
that
a
piece
of
blockchain
can
be
seen.
It's
an
it's,
a
decentralized
identifier.
G
It's
way
more
important
than
any
cryptocurrency
you're
ever
gonna
regulate
because
it
actually
identifies
people.
It
identifies
their
medical
records.
It
identifies
their
license
plates
their
driver's
licenses.
If
it's
a
decentralized
record,
we
have
something
for
it,
but
you
guys
have
to
come
to
that
standard.
Amongst
all
your
states,
the.
C
A
Don't
see
this
rush
to
the
middle
okay,
one
quick
question
on
taxation:
there
was
the
you
know
glossed
over.
The
fact
is,
you
said
in
the
state
of
Washington
Cindy
that
you
had
weighed
in
to
characterize
it
from
a
tax
standpoint
and
and
Peter
had
mentioned
something
about
the
I
I.
Don't
have
a
good
sense
of.
So
how
is
this
dealt
with
currently,
both
at
the
state
at
any
state
level
or
whatever
guidance
at
the
IRS
level?
On
taxation?
My.
C
H
My
name
is
Oh,
my
name
is
Logan
and
I
work
for
the
Nebraska
Legislature.
So
when
I
think
about
like
Bitcoin
in
these
digital
currencies,
it's
pretty
exciting,
like
the
tech
nerd
in
me,
is
very
like
very
excited
about
them,
just
cuz.
They
seem
so
futuristic,
but
you
know
I,
but
then
I
look
at
some
of
those
hockey
stick
charts
and
the
investor
in
me
gets
a
little
nervous
so
I,
you
know
it
sounds
like
none
of
you
think
this
is
a
fad
necessarily
but
I.
What
are
the
chances
you
think
it
could
be.
C
Thanks
very
much
for
bringing
us
back
to
that
topic
of
it
being
a
fad
and
I
was
admonishing
myself
for
not
having
addressed
that
particular
issue,
and
these
are
my
personal
comments.
I
think
what
we're
seeing
right
now
is
fad
ish
and
that's
because
the
ecosystem
is
still
so
new
and
it's
evolving
and
rapidly
changing
I'm
a
bit
of
a
Bitcoin
originalist
in
that
I
hope.
Eventually,
what
it
becomes
is
the
ease
of
payment
system
between
Andy
and
myself
when
we're
in
different
countries
and
that
we
bring
the
costs
of
transmitting
money
down.
C
I
live
in
a
state
where
a
very
great
amount
of
money
is
transmitted
by
by
our
residents
to
another
country,
and
the
cost
for
them
to
do
that
is.
Is
awful,
they're
they're
trading
a
large
amount
of
the
money
that
they
have
earned
in
in
terms
of
a
fee,
to
be
able
to
send
that
back
home
to
their
families?
Who
need
that
money
to
exist?
So
I'm,
hoping
that
that,
as
time
goes
by
the
investors,
the
speculators
and,
of
course
the
bad
guys
will
get
out
of
the
space.
D
I
would
so
the
cryptocurrency
piece
of
this
conversation
is
is
just
the
the
most
sensational
piece
and
if
you,
if
you
were
listening
to
Peters
comments
earlier,
he
said
that
it's
a
lot
easier
to
explain
by
analogy
than
it
is
to
explain
you
know
the
inner
workings
of
a
combustion
engine.
You
know
it's
hard
for
the
media
to
explain
the
intricacies
of
a
combustion
engine
as
well.
So
it's
much
easier
to
talk
about.
You
know
the
hockey
stick
in
the
price
or
talk
about
a
hedge
funds.
You
know
percent
return
year
over
a
year
right.
D
D
So,
yes,
there's
a
lot
of.
There
are
a
lot
of
sensational
things.
Those
are
often
the
most
visible
things
as
well,
but
I
think
you
know.
If
you
can
peek
behind
the
curtain,
you
will
see
tons
of
investment
being
made
in
really
really
critical
infrastructure,
a
lot
of
which
is
is
relatively
hard
to
explain
and
we'll
never
make
it
into
a
you
know
into
a
newspaper
or
a
magazine.
I
I
have
a
couple
of
questions
and
one
of
them
they
might
same
sound
silly,
but
Peter
you
referenced
it.
If
you
have
your
money
on
your
cell
phone
yeah,
so
just
for
a
moment,
let's
assume
you're
out
fishing
and
you
lean
over
and
that
cell
phone
goes
to
the
bottom
of
the
ocean.
Is
it
the
same
as
that
five
hundred
dollars
in
my
wallet,
yep.
B
It's
it's
like
cash
and
that
that's
quite
frankly,
the
goal,
but
you
don't
have
to
only
keep
your
money
in
your
wallet.
You
can
keep
some
with
an
institution
which
is
why
there
are
companies
like
coinbase
that
are
basically
like
a
bank
for
your
Bitcoin,
so
you
might
want
to
have
a
certain
amount
on
your
device
and
a
certain
amount
with
it
with
a
party
who
has
more
robust
security
practices.
There's
also
an
interesting
hybrid,
where
you
can
put
the
data
necessary
to
transact
on
three
devices
and
two
devices
are
necessary
to
transact.
B
It's
like
a
voting
rule
two
out
of
three.
So
if
you
lose
your
phone
in
the
lake,
you
go
and
recover
your
backup
devices
and
you'd
still
be
able
to
transact.
That's
pretty
cool,
and
maybe
one
of
those
backup
devices
is
held
by
a
lawyer
or
an
attorney
I.
Don't
know
why
I'm
making
us
that's
a
bad
idea,
maybe.
E
I
Mike
you
were
talking
about
icos
and
what
I
don't
understand,
because
I'm
a
former
financial
adviser
and
a
former
banker,
so
my
daughter
comes
to
me
for
all
her
financial
advice
and
and
she's
close
to
a
millennial
anyway.
So
she's
asking
these
questions
and
I,
don't
understand
the
ICO,
so
you
go
out
and
they
raise
a
hundred
million
dollars.
I
E
E
These
I
SEOs
is
usually
a
token
issued
right,
so
Bitcoin
wasn't
kintyre
Bitcoin
predated
this
IC
o----
movement,
but
when
there
is
an
IC,
oh
yeah
that
token
that
you're
getting
you
could
think
of
it
as
a
stock
certificate
or
whatever.
But
that
token
represents
your.
You
know
interest
if
it's
an
asset
based
IC
o----
your
interest
in
that
company.
I
B
So
so,
as
commissioner
paycheck
said,
Bitcoin
didn't
do
an
IC,
o----
bitcoins
bitcoins
emerged
in
the
world
through
mining
and
that's
where
they
that's
where
they
came
into
the
economy.
So
you
would
run
a
computer
that
helps
backup
the
blockchain
keep
the
record
of
transactions.
You
pay
yourself
a
reward
in
the
form
of
new
bitcoins
and
that's
how
new
bitcoins
come
into
existence.
These
new
IC
o----
is
the
end
of
the
innovation
here
and
it's
contentious
like
some
people,
even
within
the
technologic
technology
community.
B
Don't
think
this
is
a
good
evolution
that
the
person
who's
gonna
write
that
software
for
a
new
decentralized
network,
a
competitor
to
Bitcoin
or
something
that
does
something
subtly
different
rather
than
just
having
the
tokens
that
will
emerge
on
that
network
goes
straight
to
the
people
validating
the
blockchain
in
the
first
block
of
the
blockchain.
They
create
a
distribution
that
goes
to
themselves
or
goes
to
people
who
gave
them
money
in
order
to
build
the
software.
B
So
an
initial
distribution,
an
initial
coin,
offering
is
that
first
block
of
that
new
blockchain,
then
selling
off
rights
to
the
tokens
that
will
then
travel
on
that
new
decentralized
network
before
it
even
exists.
It's
a
pre-sale
and
then
they'll
use
that
income,
hopefully
from
that
presale
to
actually
build
the
decentralized
network
and
get
it
running
on
computers
around
the
world.
You
gotta
trust
them
to
do
it
very
different
than
having
to
trust
a
minor
or
a
software
developer
on
Bitcoin,
which
already
exists
and
has
a
competitive
marketplace
for
miners
and
software
developers.
I
B
B
The
term
miner
is
somewhat
regrettable
in
the
Bitcoin
network.
It's
just
one
of
these
things
that
kind
of
evolved,
there's
no
Bitcoin
corporation
to
officially
name
things
and
get
the
trademark
on
them.
So
the
names
just
pop
up
the
thing
that
I'm
talking
about
is
people
who
keep
a
copy
of
the
Bitcoin
blockchain
on
their
computer.
So
they're
part
of
a
network
of
people
who
keep
copies
all
over
the
world,
which
is
why
it's
redundantly
distributed
and
stored,
and
you
can
trust
it
and
they
validate
the
transactions
that
get
added
to
that
blockchain.
B
So
they're
really
performing
a
function.
That's
not
that
different
than
PayPal
on
any
given
day,
except
they're,
doing
it,
along
with
thousands
of
other
people
around
the
world,
and
if
they
do
it
fraudulently
they'll
get
caught
because
the
math
won't
add
up
and
they
won't
be
able
to
receive
reward
for
performing
that
function,
so
they're
providing
a
public
good.
B
In
order
to
provide
that
public
good,
you
need
to
incentivize
people
to
provide
it,
and
so
people
who
are
doing
this
are
allowed
to
claim
a
reward
of
brand-new
bitcoins,
which
is
kind
of
like
doing
a
hard.
A
lot
of
hard
work
to
get
new
gold
digging
a
hole
in
a
mountain,
and
so
we
call
it
mining,
but
what
they're
really
doing
is
validating
transactions
and
keeping
a
copy
of
the
blockchain.
That's
what
a
miner
does.
B
A
A
Think
andrew
was
the
only
one
that
had
a
sort
of
a
formal
presentation,
but
I
want
to
say
that
the
presentations
links
to
any
of
the
materials
particularly
Andrews
are
available
on
the
ncsl
summit
agenda
and
resource
webpage
and
through
the
ncsl
app.
So
you
can
access
all
that
stuff
through
that.
So
thank
you
for
attending
fantastic.