Transcript: Podship Earth Episode 007: BONDS TO BITCOIN
JARED BLUMENFELD: This is Jared Blumenfeld. Welcome to Podship Earth. This week’s show starts with a look at Bitcoin, which is both threatening to create an environmental disaster and promising to accelerate the adoption of clean technologies. Here is Laura Nereng, 3M sustainability director.
LAURA NERENGL: Bitcoin and bitcoin mining will require to use as much energy in 2020 as we use today in the whole world for everything.
JARED BLUMENFELD: So how in the hell can bitcoin, which doesn't exist in any physical form, threaten to become the world's largest energy black hole. Okay, here's an idiot's guide or rather, here's a guide from an idiot. So, the way that bitcoins are created out of thin air is through a process called mining. There are no pick axes in this mining, instead there are shitloads of computers all over the world working to solve some kind of nerdy puzzle first created by an anonymous character called Satoshi Nakamoto. Just like in Bingo, the first computer to correctly onto the puzzle gets a prize, that prize is unlocking new bitcoin currently valued at $6,000 each. Compare that to eight cents in 2010. Because these armchair moneymakers wanted to feel like they were actually working, they called this process mining, which clearly it is not.
However, just like mining, it has huge environmental impact because as the price of bitcoin shot up, more and more computer started competing for each bitcoin and like all good puzzles, as bitcoin values increased, so did the difficulty of the game. This meant that you needed additional computing power to solve new puzzles. The results is that loads of gigantic server farms are being built all over the world just to compete for bitcoin. Every 10 minutes, new bitcoins are awarded to the winning server farms just like in Bingo, but there's only one winner for each bitcoin, so all the other losing computers have wasted massive amounts of energy just trying to play the game, kind of like me with Scratchers. Most of the bitcoin server farms are in China where cheap energy is supplied by filthy planet destroying coal, which is being mined just to make bitcoin. The website Digiconomics estimates that creating a single bitcoin uses the same amount of electricity as my home uses in two years and a single bitcoin transaction, me buying frozen yogurt with a small fraction of one bitcoin, has same environmental impact as driving from San Francisco to LA.
If I had paid for the same frozen yogurt on my visa card, it would have consumed 80,000 times less electricity than using bitcoin. Luckily, as you'll hear at the end of the episode, it is nearly impossible to spend bitcoin on everyday things, at least here in San Francisco. One state has been written into the blockchain. No one, not even a system administrator can change it. This creates trust as both the sender and the receiver of the data can be sure that the information hasn't been altered. That's why blockchain is said to be immutable. In today's episode, we'll talk with two cryptocurrency and blockchain experts, Richard Titus and Paul Ellis. The thing is that these technologies will disrupt industries, challenge how we structure society, and accelerate efforts to save the planet. Richard Titus leads ARK VC, a cryptocurrency hedge fund. Richard has led customer experience for Samsung Electronics. He was a chief of user experience and design at the BBC. He was the executive producer of the movie “Who killed the electric car” and most importantly, he was the sound engineer on the Beach Boys album Summit in Paradise. And cousin David also joins the conversation because he's just installed a bitcoin wallet on his phone, which makes him a bit of a merchant banker.
JARED BLUMENFELD: So Bitcoin.
RICHARD TITUS: Yeah.
JARED BLUMENFELD: What the hell. You know, I think people read the newspaper. I do. I didn't know about you David. Like I read it and I get 25 to 30 percent of what the hell is going on.
DAVID KAHN: I get about two percent. And I want to understand more, but the reality is, I don't even understand the beginning. The context of a bitcoin doesn't even make sense to me or the context of blockchain or how I could use it or why I would want to acquire it. So, I can't get past that even though I see everyone else getting hysterical and making money.
JARED BLUMENFELD: David, you're not alone. Here's Ellen Degeneres expressing her own confusion about bitcoin.
Ellen Degeneres: Everybody's talking about bitcoin. Nobody understands that. It's like a plot twist in a confusing movie when you're watching a movie and your friends are acting like they know what's going on and you're like, “yeah, I do too.”
JARED BLUMENFELD: Richard, after hearing the Intro, what else do we need to know?
RICHARD TITUS: There's a couple of contextual things you need to understand to really understand bitcoin. The first of which is the first white paper for Bitcoin was read about two weeks after the Lehman crash. Right? So, there's a sequencing of events that is really important.
JARED BLUMENFELD: And for nonfinancial people, Lehman is Lehman brothers in 2008.
RICHARD TITUS: The financial crisis. So, but as a society, particularly as a Western society, there was moments of very dark danger for us and I think a lot of people began to sort of question some of the underlying fundamentals of the financial system and really poke it. Why are you using regional money to pay for global debts? That's a crazy thing. The second crazy thing is that we all think our money is based on something, but it's not. It's no more based on something than bitcoin, and in fact the US dollar, in buying power, has been declining since it's print. So, since the first dollar bills were printed, it has been steadily declining in value. Bitcoin, since the first bitcoin was mined - we're going to call it 2013, 12, somewhere in there - it's been an appreciating asset, because it has a fixed supply, and some are being lost in the system every year. So, it's always shrinking its supply. It has a fixed denomination and it's very trusted. So, the second thing about money is you can forge money really easily. Blockchain and Bitcoin have breakage, but at a much lower level and it's not at the fundamental core level like I'm printing more money and not telling you. So, in fact, bitcoin is not sort of the – it’s painted as this anonymous dangerous thing for very legal transactions. It's actually super transparent, which is why it's super powerful.
JARED BLUMENFELD: The reason that cryptocurrencies are seen as transparent compared to regular cash is because of the underlying blockchain which acts as a public ledger for every financial transaction on the bitcoin network. And because of the underlying code is open source, anyone can look at any block in the block chain and anyone can pull down the source code and read it for themselves. But Richard, at the end of the day, doesn't this transparency just expose that the emperor has no clothes, the bitcoin is just made up. It has no intrinsic value, right?
RICHARD TITUS: Money has always been a figment, right? It's simply a medium of exchange, agreed by two parties to represent the value underlying. So in the old days you used to get tokens which would say, hey, you get this many loaves of bread or this many cows and bitcoin is kind of the same thing, right? So it's a digital token which can be used as a medium of exchange. It can be used to give you access to something.
JARED BLUMENFELD: What is the valuation based upon? Like what when?
RICHARD TITUS: Supply and demand simple. In purest economic form.
DAVID KAHN: Here's the issue with supply and demand. There's a bunch of super users. They have a lot of coins and that presents a lot of liquidity issues. And a lot of these guys aren't selling coins because they don't want the price of the coins to go down, so it's artificially increased to a level.
RICHARD TITUS: How is that any different than gold or securities?
DAVID KAHN: There's not 40 people that control the gold industry.
RICHARD TITUS: For sure. It's actually less. Gold futures and gold trading, all the gold traded on all of the exchanges globally, is four x the actual supply of gold on the planet conceptually, not even reality. Like conceptually there's less than one quarter of that gold. So these markets are all artificial and this is no less or no more artificial. But what's interesting about this is underlying it is an absolute technologically perfect scarcity. So there's 21 million and there are less every day.
JARED BLUMENFELD: But my only question, my very, very simple question is if someone mind a bitcoin and you had $21 million, do you not have 21 million and one?
RICHARD TITUS: Blockchain is basically you're getting credit for helping calculate that number and because it is known mathematically what the end of the calculation is, it's known that there are only 21 million. No more, no less, but we basically have a distributer ledger managed by consensus, and that's a really important point. So, the blockchain becomes this amazing - and this is where people, I call them the crypto anarchists, their eyes get all sparkly as they talk about this - for the first time ever, we can have trust because in all commercial relationships before, there was no absolute record of truth. Truth is variable. In fact, if nothing in the last three years have taught us in media is that, truth is ephemeral, But, on the blockchain, truth is absolute, managed by consensus. So there's even a system built in for the management of what truth is. So, if I put a note in the network and say, actually Richard has 10 million bitcoin and the rest of the network says I have one, I have one. So, if blockchain is all about a recording of the past and encapsulating that in software, the thing that the talic and the guys that ethereum did, was the most important step on top of this, which is smart contracts. Smart contracts are super simple. What you pay your lawyers to spend hours and hours and hours drafting will be in software and in fact it's utterly reusable, audited by third parties. And you know I told my kids, don't go to law school because that's going to be a menial, very low-level job for writing what little bit of software.
JARED BLUMENFELD: It is right now. I am one.
RICHARD TITUS: So whatever little bit of law wasn't written in a software already…
JARED BLUMENFELD: Why should the average person give a shit about any of this? Why would an average person care about bitcoin?
RICHARD TITUS: So, if you have the blockchain to record all transactions or data in cryptographically protected and distributed for safety and managed by consent. Every transaction, every piece of data, every piece of information will be on the blockchain because it's the most efficient way to manage trust. If the internet on media was four, maybe five percent including commerce, of global GDP, the Internet - It's pretty big thing, like it changed all our lives four maybe six percent of GDP. We're talking about a technology that will fundamentally change 60 to 70 percent of global GDP.
JARED BLUMENFELD: Why will it do that?
RICHARD TITUS: Because all transactions will be here because it is born as the most efficient and effective way to transact and record history and agree future. John Perry Barlow who just passed away last week, you know, used to say this thing, information became free. That was the revolution of the Internet. So, this is about finally we return trust back into our lives.
JARED BLUMENFELD: Okay, well, so how did this all begin?
RICHARD TITUS: Satoshi’s thesis was, let's create a new currency, and I don't know if he really intended people to be buying their latte with bitcoin. People thought this is really cool and they started playing with it and before you know it, a couple of years later you have some exchanges and people moving money back and forth. And I think for a long time this would have probably just stayed in the academic, but something called Silk Road happened. And Silk Road was a moment in time where people began buying illicit substances. Pornography, you know, all of the things you buy in a new technology to sort of skirt around legality.
News: But a controversial website which made buying drugs as easy as going to the store. A shady underground market place where criminals can sell drugs and weapons free from police intervention.
RICHARD TITUS: What happened was that happened alongside the sort of post Lehman crash economic crash. You have a generation of young people who grew up where the change they left in their coin base account grew in value faster than any retirement account they'd ever had, and before you knew it, these are some of the early adopters, but it was also just a conceptual sense of like, hey, this is more trustworthy. I can audit it, I can see it. It's transparent. These other systems are opaque. Bitcoin is a very efficient system for doing that same activity.
JARED BLUMENFELD: Richard, I hear a lot about tokenization. What does that mean?
RICHARD TITUS: People began tokenizing things and there are two kinds of tokens. In the world was utility tokens and there's security tokens. Utility tokens are like a bus ticket. You buy a bus ticket because you're anticipating you may need to take a bus, a utility token, but it's not tied to any currency. The other kinds of tokens are called security tokens, and these are literally like stocks or bonds or derivatives, and these are instruments of finance created to tokenize an asset. So, what am I to take it back to the environment? One of my deals that I've been working on this year, it's called Sun Exchange, and this is a group out of South Africa. They're one of the bigger solar developers in South Africa what they're doing is - they’re actually initially utility token offering, but the plan is long-term to do some security token offerings and allow you to finance solar rollout in Africa.
JARED BLUMENFELD: As luck would have it, Dana Smirin, our Podship Earth correspondent, went to talk with Sun Exchange today in Cape Town, South Africa. Dana?
DANA: Hey Jared. Today I went to talk with Abe Cambridge, the founder of Sun Exchange. I asked him to explain how he's trying to connect bitcoin and solar in South Africa.
Abe Cambridge: We launched in 2015 on Indiegogo to build a prototype and then three months later we financed the first solar energy project ever funded through cryptocurrency and since then we've built an MVP platform. We've now got four solar power plants running. We got about four and a half thousand members and they're located in 70 countries around the world, all using cryptocurrency or at least earning crypto currency from their solar panel leasing payments.
DANA: Their coolest project was helping turn a local elephant sanctuary 100 percent solar. Who knew bitcoin could help the elephants? In general, South Africans are very excited by bitcoin because it means we don't need to deal with all the BS of foreign exchange rates. Also, on the good news front, it just started raining. Talk to you soon. Signing of from Cape Town, this is Dana Smirin, your very own Podship Earth correspondent.
JARED BLUMENFELD: Thanks Dana. David, you seem very keen to ask Richard something.
DAVID KAHN: But what's the difference? I mean, there's almost a hundred different cryptocurrencies now. More than that. I look at it and I'm just like this is ridiculous.
RICHARD TITUS: Yeah, but some of them are garbage.
DAVID KAHN: Yeah, but so aren’t there going to be 10 different good token companies?
RICHARD TITUS: So, think about it this way, how many stocks or between the Nasdaq?
DAVID KAHN: There’s like 6,000.
RICHARD TITUS: There’s more than that. There’s about 600,000 globally.
DAVID KAHN: I’m not as smart as I used to be. They call me Jared’s ignorant cousin.
RICHARD TITUS: And by the way, so some of those have a lot of value. Some of them have no value. Sometimes the ones that are perceived to have no value, and vice versa.
DAVID KAHN: Who determines if they have value?
RICHARD TITUS: The market.
DAVID KAHN: So, this is just all supply and demand.
RICHARD TITUS: All supply and demand.
DAVID KAHN: I mean, it just seems like it's like tulips of different colors. It’s like these are the red tulips -
RICHARD TITUS: Well, this is really interesting. So, do you own any stocks?
DAVID KAHN: Yeah.
RICHARD TITUS: Why did you buy those stocks?
DAVID KAHN: Because I researched them, and I liked their businesses and I liked the prospect of growth and they grow 20 or 50 percent a year.
RICHARD TITUS: So, the difference between those stocks and tokens is nothing.
JARED BLUMENFELD: But the underlying blockchain.
RICHARD TITUS: Well, one of them has a system of audit, transparent economics and is absolute in its authenticity. And the other one is managed by bankers.
JARED BLUMENFELD: Managed by bankers.
RICHARD TITUS: Untransparently, with a lot of fees.
DAVID KAHN: No, I get that part.
RICHARD TITUS: So, this is important. They're the same thing. If their security tokens particularly, they're exactly the same thing.
DAVID KAHN: I just feel like there's a lot more liquidity. And to me that's a big issue.
RICHARD TITUS: So, the market cap of crypto currencies today is 300 billion. It'll be $300 million within two years, my guess.
[SPONSOR ANNOUNCEMENT]
JARED BLUMENFELD: Let's get back to cryptocurrencies and blockchain and how they can hopefully do some good for the planet. Early in the week. I got the chance to talk with Paul Ellis, who runs a London based company called Electron.Org.UK, who are using blockchain to transform the energy sector and hopefully make it a little greener. Paul was the CEO of credit trade and before that served as a captain in the British army. Hi Paul, welcome to San Francisco.
Paul: Thank you.
JARED BLUMENFELD: So many people around the world are moving towards electric vehicles. How will your technology, how will blockchain facilitate someone's electric vehicle charging into the grid?
Paul: I think we're almost getting to - within a few years - we'll be at a tipping point where it becomes more a cheaper to have an electric vehicle than it does to run a gas-powered car. So, this is something that's going to happen and it's going to transform the way in which the grid works because right now there just isn't the capacity on the local distribution networks for electric vehicles to all be charging at once. You have to have some way of coordinating that and in order to do that, there has to be some collaboration mechanism the different parties can agree on. So that's the first opportunity there is to provide some way in which people can collaborate and people can do so on a level playing field and where it's fair.
JARED BLUMENFELD: So, if you and I lived on the same street in London or in San Francisco, how would that happen in a real way? There'd be an hour, where it says, Paul, it’s your turn to charge the vehicle and - I mean, people I think at the moment, just want to be able to charge it at any time that they feel like it. But you're saying that that as electric vehicles become more ubiquitous, that won't be able to happen.
Paul: Not without substantial reinforcement of the existing grid. We face a problem. So, either we reinforce at huge expense the existing grid so that everyone can charge at the same time or we come up with a more efficient way of balancing the charging needs. It makes a lot of sense to create some mechanism for collaboration and coordination and that's one of the first things that blockchain can potentially bring to the table.
JARED BLUMENFELD: That's exciting. So, we talked a little bit about the benefits blockchain can provide to facilitating when you charge your vehicle. Tell us a little bit about getting the energy from your vehicle to the grid and how that complicates the life of regulators and maybe how blockchain could simplify that.
Paul: Okay. So, this, this is a great example. So, so we have all these electric vehicles that are going to be coming along and they're equipped with batteries and batteries obviously are two-way flows. They consume electric power as they're charging up, but they then can discharge into the grid. So maybe the battery in your electric vehicle doesn't just help drive you to work or drive you on a trip. It's also potentially available to help balance the grid. So that's one of the first things, if you can have storage and battery storage in your home, which is the more immediate opportunity, for example, because it's teamed up with your solar panels, that's another opportunity to help balance the grid. And this is something that actually homeowners can be paid for, you know, you're providing a service in the way that the big electricity companies have done in the past and your part of the process of helping balance supply and demand. So I think blockchain provides a lot of opportunities there for those kinds of participations and for recompensing people for being involved.
JARED BLUMENFELD: So, in the US we are still reacting to the price manipulations in 2000 that led to Enron. Will this allow more transparency into the system so that that kind of price manipulation wouldn't happen in the future?
Paul: It certainly provided the system is designed appropriately. It's also the guarantee of the transactions themselves, ensuring that everyone has the same level playing field access to the energy system and to being able to transact on it. It is inappropriate that the larger companies potentially have privileged access to these kinds of transactions. One of the aims of providing these blockchain platforms is leveling the playing field for all participants. So it's transparently fair.
JARED BLUMENFELD: Paul, are you bullish on the ability of blockchain to really catalyze the increased adoption of renewable energies?
Paul: Absolutely. I think this, this does a couple of things. First of all, it brings people round the table and encourages and incentivizes them to collaborate in a situation where traditionally they haven't found it that easy to do. So that's the first thing. The second thing is that the technology itself provides this fantastic opportunity to bring transactions together that would not otherwise happen by providing a basic layer on which collaboration can be built and I mean collaboration in transactions themselves. So two good reasons I think why I'm very bullish about why this technology will add a lot of value to the energy markets.
JARED BLUMENFELD: Thank you Paul.
Paul: Thank you.
JARED BLUMENFELD: So, Richard, help us understand how quickly is this all happening?
RICHARD TITUS: Well, the adoption curve is really, really rapid. Africa particularly because people view digital currencies as more trustworthy, less risky, less subject to manipulation, and more liquid and mutable to other currencies. You know, you can trade bitcoin in more currencies than the US dollar today.
JARED BLUMENFELD: How long between now and when large employers, including the federal government –
RICHARD TITUS: In the West or everywhere else?
JARED BLUMENFELD: Everywhere else I think is three years. Satoshi, not really knowing how evolution of technology would happen, built this mining functioning in, which is the using of computing cycles to mine these coins and it turns out because everyone you buy, it makes it harder to mine the next one. It turns out, it takes a lot of energy and so mining becomes this sort of energy consumption thing. My view is that mining is an interim step. I could be wrong, but I view it as an interim step, as we move to a sort of pure, digital currency world.
JARED BLUMENFELD: So, based on what Paul Ellis said earlier, do you also think crypto currencies and blockchain can help accelerate the adoption of clean technologies?
RICHARD TITUS: So, one of the problems with clean tech, green tech, environmental tech, particularly around sort of oil remediation, energy transfer, these are all really unsexy long-time horizon, high capital impact businesses. And there aren't a lot of incentives for people to put money in them, particularly when those other things that can make more money on, particularly when fiscal manipulation makes you more money than actually investing in businesses, which is the - that's the ecosystem we built for ourselves over the last 30 years. Economically, what blockchain and all of these tokens do, is they create a mechanism for funding innovation that strips away that layer of corruption and sort of fees. But what it means is that there's more opportunity for capital. That capital could be me or it can be big funds to deploy more efficiently into more interesting innovative businesses.
JARED BLUMENFELD: Okay, so let's, let's pick an example. So as a superfund site, let's say in southern California where you grew up under the shadow of the Matterhorn at Disney-
RICHARD TITUS: Is that actually a superfund site?
JARED BLUMENFELD: Yeah, it’s superfund site is right around there.
RICHARD TITUS: That's awesome.
JARED BLUMENFELD: Um, and they're difficult to fund. Yeah. And they, they are longtime, 50 or hundred-year propositions. How would bitcoin allow us to get to a place where investment would accelerate?
RICHARD TITUS: So how do they find those now?
JARED BLUMENFELD: So right now, they’re funded through tax revenue from the federal government.
RICHARD TITUS: Right? But that's really a bond.
JARED BLUMENFELD: And from the polluter paying.
RICHARD TITUS: Right. So, the polluter pays. There's a bond. So, it's just financial instruments.
JARED BLUMENFELD: Yes.
RICHARD TITUS: And there's millions and millions and millions of dollars of fees. So, I'm going to guess the fee weight there is probably 20, 30 percent subsidized by our tax dollars. You could tokenize this for a fraction of that cost and people could buy into the revenue stream either from the polluter or with the government guarantee. And actually, probably a more efficient market could be devolved, and you could actually build in incentives, which you can't do in this model. To say, hey, if you cleaned it up faster or better or you're immediately in a more effective way, you get a bonus. And the interesting thing about this is that the software, the blockchain smart contracts, allows you to do anything you want to do around a contractual relationship financially. So, you could literally say, if you don't clean up this land, you lose it. If you're not using these water rights and the market needs them somewhere else, they stopped being yours or you can pay less based on the demand curve. And if your demand curve changes, you have to pay more.
JARED BLUMENFELD: Basically, a very sophisticated way of doing a conveyance.
RICHARD TITUS: And let's actually add one more thing to this and you almost got it. So if you and I make an arrangement, my lawyer friend, what do we do? We write it down, right? And then what do we do?
JARED BLUMENFELD: Put it in a drawer.
JARED BLUMENFELD: Right. What happens? What we've done is agree on what we're going to fight about. Software is dynamic, it's active, it's real time. The time of day, that sort of evolutionary arc of an agreement, is completely absent from existing contracts. But in digital contracts, in the smart chain, smart contracts plus blockchain, we could have agreements that evolve over time based on changing market conditions, changing behavior, forcing functions, all kinds of things that were never there before. And I don't have to go spend a million dollars on lawyers and the court, it's in the software. So this idea of sort of an engine for the sort of tokenization of risk and reward is fantastic for things whose economic payback wasn't super clear before.
JARED BLUMENFELD: Okay, so who's investing in these tokens and in Bitcoin? I know David and I have like $100 a combined, but who's putting the money in?
RICHARD TITUS: Most of the investors are millennials. If you look at it, I think some of the most important work being done both socially and politically right now, it's been done by young people. You know the ones in Florida, and they are going to vote in a different way, not just with their, their voting level, but with their money. And so if you say to someone, look, I'm ready to give you six percent return, you can either put it in a T-bill or you can put it into the solar project in Africa. And oh by the way, the solar project in Africa also raises up 10 percent of the population locally out of poverty. Which one are you going to do?
JARED BLUMENFELD: From what we've discussed today, Richard, which is 90 percent now of my entire understanding of blockchain and cryptocurrencies, it actually sounds like it has the potential to completely replace government.
RICHARD TITUS: Ah, yes. This is what terrifies people.
JARED BLUMENFELD: For me, governments - the social contract that Rousseau and Locke and others believed in has reached the end of it point because of this single issue of trust. When you ask people why aren't you engaged in politics, why don't you go down to city hall? Why don't you go to your state capital? Why don't you go to Washington DC? They're like, I don't trust those sleazebags. Right, so trust is - and if you can build in the architecture of the social contract into everyday arrangements about, you know, Richard, I will do this as long as all the chocolate you give me is fair trade. If it isn't fair trade chocolate, that money reverts back to me. You then have a fairly large incentive to make sure that those values inherent in fair trade is not part of the agreement.
RICHARD TITUS: Exactly right.
JARED BLUMENFELD: I’m excited. This is the first time I’ve been excited about bitcoin.
RICHARD TITUS: Over time, these software contracts become a lattice work which you can build. That's not existed for a long time for us. Religion used to provide that, sometimes government supplied that, the king used to supply it, but at some point, we lost that with the Internet.
JARED BLUMENFELD: In the next five to 10 years, paint the picture of what we'll be doing differently.
RICHARD TITUS: So, bitcoin will either be worth $100,000 or maybe $500,000 or nothing, which I don't find any conflict in that answer because it'll either be the dominant primary digital currency or it will be discarded for something better. I don't have enough data to know which is going to happen, but I’m betting that it's going to be the one because we tend to cling to things by brand. It's a pretty strong brand. I think smart contracts will become ubiquitous and the idea that you used to do this manually will be very odd. Just like fax machines. I mean think about the time - Do you remember the moment when you got a fax machine?
JARED BLUMENFELD: I do.
RICHARD TITUS: Do you remember the moment you stopped using it, but it was just in your house?
JARED BLUMENFELD: A funny story about fax machines is I do remember when I stopped using it, but then when I went to work for the federal government, they still kept using it.
RICHARD TITUS: So, the internet suddenly replaced all fax machines and it happened very quickly, but you didn't notice. But the fact is that one of these things is scarce and increasing in value and as the globe adopts that thing, America's place in the global economy becomes less important unless we change what we're doing very quickly, and we adapt. And this is the thing that I think people really don't clock is we are no longer the leaders of innovation, certainly not in the financial systems. We're no longer the leaders in innovation and quantum computing and that's Canada and maybe China and then UK. We are losing our place because of a lack of investment in education as the people leading the future.
JARED BLUMENFELD: You should run and maybe make some hats saying, “make America great again.”
RICHARD TITUS: You know, so a friend of mine who is friends with Bannon is one of the biggest guys in crypto. And he went to the inauguration and his hat said, “make bitcoin great again.”
JARED BLUMENFELD: Nice. With that, thank you Richard for spending time with us.
RICHARD TITUS: Thanks.
JARED BLUMENFELD: Yeah, it's been very fun, and I will speak to you soon.
RICHARD TITUS: Cool.
JARED BLUMENFELD: Okay. So, we spent a lot of time focused on the environmental impacts of bitcoin. So let's spend just a few seconds on the common copper penny. Last year the US mint produced $8 billion one cent coins. That's 22,450 tons of pennies. In the U.S., 86 percent of the copper destined for consumer products was used just for pennies. The copper mining happens in Arizona and I visited these mines and they have very significant environmental impacts including sulfuric acid pits. And here's the kicker, it costs 2.2 cents to make a one cent coin. That's right. It costs more than twice as much to make a penny than it's worth. And you know how many of these coins got recycled at the end of their twenty-five-year life? Zero. So, if the penny can't be made greener, let's just get rid of it entirely. In 2018, we find ourselves caught between bitcoin, that ephemeral and yet sucking ever greater amounts of energy from the grid, and penny coins that also have massive environmental impacts and are worth half of what they cost to make. I'm here in San Francisco trying to spend my frigging bitcoin. It isn't easy. It's not easy. I tell you. So, talking of easy, I'm going to start with easy breezy. So here we are. So, I'm not able to pay in Bitcoin, right?
EASY BREEZY: Yeah. No, not at the moment.
JARED BLUMENFELD: And has anyone ever come in asking to pay in Bitcoin? Am I the first?
EASY BREEZY: Uh, no. I've had nobody come in.
JARED BLUMENFELD: Okay. Thanks so much. The frozen yogurts excellent by the way. Secondly, I'm going to try my chiropractor, SC therapy. I haven't gone to it in a while. It was downtown, but it says that you can use it, so I'm going to give it a try. I’m going to go see Laura, who's the receptionist. She's awesome. So we'll see if we'll see if it works.
LAURA: Good morning, SC Sports therapy. This is Laura. How can I help you?
JARED BLUMENFELD: So, what prompted you to start accepting cryptocurrencies?
LAURA: The Palace is a hotel across the street from us that has many Western European patients for our office that use bitcoin exclusively.
JARED BLUMENFELD: So, these are people who said we only use cryptocurrencies?
LAURA: Yes. We researched different bitcoin vendors and we went with a company that's no longer in business now.
JARED BLUMENFELD: So, did you get more interested in bitcoin because of it?
LAURA: Oh yeah, definitely.
JARED BLUMENFELD: So, what's the current status? You said now the vendor went bankrupt. So, is that a sign of things to come?
LAURA: I mean, you never know. Atms were not supposed to be the future, but look at where we are now. People are walking around with, you know, chips everywhere and on their phone. So definitely it could be the future.
JARED BLUMENFELD: Cool. Thanks Laura.
LAURA: Thank you. Have Great Day.
JARED BLUMENFELD: What I took away from today's episode is that unchecked, bitcoin is going to have catastrophic impacts on the environment because of the ever -increasing amount of energy it takes to mine one bitcoin. From a currency perspective, bitcoin may quickly take over all other systems of money, but what's exciting and truly revolutionary is that blockchain technology is already fundamentally changing the way the world works and opening up sectors like energy to be much more democratic and transparent. I'd recommend checking out theSunexchange.com. It's a really innovative way to grow solar and it's a quantum leap from previous financing models. Hopefully in this episode, we've been able to demystify the world of cryptocurrencies and blockchain. I know that David and I learned a lot.
Next week we'll explore citizen science as a way of safeguarding the world around us and as a means of holding governments’ feet to the fire. We figured Episode Seven was a good time to create Podship Earth pages on Facebook and Instagram, so please go and like them. Thank you so much for being part of the journey from the entire Podship Earth crew - Cape Town correspondent Dana Smirin, editor Rob Spate, producer Nancy Ferranti, executive producer David Kahn, and me, Jared Blumenfeld. Have a fantastic week.