EB97 – Paul Sztorc: Truthcoin & Prediction Markets, From Information-Overload To Crowd Intelligence

Transcript

[Music] This episode of Epicenter Bitcoin is brought to you by Ledger, makers of the Ledger Nano hardware wallet. Have peace of mind and knowing your private keys are protected by industry standard physical security. Go to ledgerwallet.com to learn more and use the offer code EB09 at checkout to get 10% off your first order. Hi, welcome to episode of Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Civio and today uh we're doing things a

little different. It's been nearly 2 years that Brian and I have been producing Epicenter Bitcoin together and we're very pleased to uh bring on a new host, a new guest host to the team and who we'll introduce in just a minute. First, I'd like to uh take a brief moment to explain how we got here. So, when we first started doing Epicenter uh back in in late 2013, uh you know, it was a side project. Um we I was working a full-time job in a digital agency. Brian was looking to get involved more into Bitcoin after starting the uh Bitcoin startups Berlin meetup group. And back then, we did everything ourselves. We did our social media strategy ourselves. We did

production ourselves. We did the editing ourselves and it showed because you know things were really I mean when I look at them now um pretty bad quality and uh at some point we realized that you know if we wanted to do things right if we wanted to you know really take the show forward and and and and bring a quality product and quality content to our listeners that we would need help and at that point uh we started to build a team and we we brought in some new team members. So, Vedron, our audio engineer, uh Connie, our production and uh and social media manager, and recently Shinage, who joined us as our cover designer. We've been getting a lot of great feedback on our covers, and also Sean Jones, who regularly uh enlightens

us on regulation. And uh now, it it may be a surprise to some of you that uh well, Brian and I don't live off of Epson Bitcoin. Uh it's not our full-time job. And uh although we do have advertising, we we use that to pay for production. And Brian recently joined Aerys Industries as head of business development. And I'm a full-time uh independent digital consultant. And that takes time. And and recently it it became obvious to us that it would be difficult to keep doing the show uh and and keep the same level of quality and keep consistently putting out episodes every week without some help. So we uh we sought out to find a third host and

uh and pretty quickly we we converged on one person and someone that we we both respected that we had uh spoken to before, heard about uh heard on podcasts before and that you know we knew would bring a high level of of understanding and really critical thinking to topics we cover. So, I'm I'm really thrilled to introduce uh our third co-host today, uh Mayor Roy, who is going to be joining us regularly on on on episodes, and today is the first time that he's joining us. So, mayor, welcome to the team. Thanks a lot, Sebastian, for the introduction. Uh for the for the listeners, hi, I'm Maher. Um I am a biochemical engineer by by education and

I work at a pharmaceutical company called Noatis. I discovered Bitcoin 2 years ago and it changed my life. Um I started digging into Bitcoin more and more and it consumed my life to the point that uh I spend all of my free time now searching through technologies related to Bitcoin. I want to take the crypto cryptocurrency revolution forward and being part of episode of Bitcoin is is important to me because um I learned a lot through the show and I would I'll I hope I I can help other people learn more about the decentralized technology revolution. Thank you.

Well, you know, we're really certainly really happy to have have you on. So, the way this is going to work is um you know, sometimes uh Mayor and I will be doing episodes and sometimes we'll be Mayor and Brian and sometimes we'll be Brian and I and and you know, who knows? Sometimes we can have like podcast parties and just be all three of us and kind of shoot the about what's going on in the world. Um that would be Yeah. No, it's uh it's it's going to be cool. I think uh it's it's a it's an important step in in the life of of Epicenter and um I think uh I think you'll you'll be a great addition to the team. Uh so without further ado, we'd like to now introduce our guest. Uh today's guest is Paul Stoz. And so Paul is the chief scientist

at Truthcoin. He's a an economics researcher at Yale University. And he writes quite extensively and and I I I say that without any hesitation uh about Bitcoin cryptoeconomics prediction markets, and all kinds of important and interesting things on uh on the Truthcoin blog, truthcoin.info. info and he's here to tell us today about prediction markets and uh you know the mechanisms behind predictions markets how they work and specifically truthcoin. So Paul thanks so much for joining us today. Thanks so much for having me.

So let's get started and and you know dive into this idea of a prediction market. I mean, we've talked about prediction markets before on the show, uh, quite a while back, actually, and also dove into or oracles, uh, and, um, you know, Truthcoin is one of those projects that I think sort of, you know, people in the in in the Bitcoin space, you know, they know about it, they've heard about it, but it it's not necessarily the project that gets the most attention when when people talk about prediction markets. Um people have an idea I think of what prediction markets are but you know what we really want to do today is uh bring bring a high level of understanding of what is a prediction

market and how a decentralized prediction market is different from sort of traditional ones. So can you give us a brief uh overview of what a prediction market is? Yeah absolutely I'd be happy to do that. So yeah I think you're right a lot of people know about the project. Uh it suffers a little bit because of the name the truthcoin name. So, people are kind of they feel uncomfortable. They think it's an altcoin and they they feel uncomfortable maybe talking about it, but a lot of people know about it. Um, and we'll be renaming it. So, you'll get like you'll be happy to have it on a shirt, the new name at some point, but you know, it's not it's not quite important while it's still being totally fleshed out among like the technical experts who are reviewing it. But yeah,

so uh a prediction market is uh basically a market for buying and selling predictions just like you can buy and sell anything you want. You know, orange juice or milk. Uh you can buy all kinds of stocks, bonds and this is for selling buying and selling predictions. And it used to have a probably a better name which was called event derivatives. So like some event would happen and then this thing would pay out cash. So that's maybe a little easier to understand. I'm not sure. the concept is a little foreign to people. Um, but just as you can go on the stock market and buy stocks or you can go on the bond market and buy bonds or you can go to the supermarket and buy food, this is just another thing for for ideas.

Yeah, there's also called idea futures. So there's these these different names maybe will help people understand. I don't know. Um, but yeah, like event derivatives in finance. Idea futures they were called in academia a long time ago. So futures are of course a a contract, a piece of paper that entitles you to money in the future based on something that happens. So if they're idea futures, they would be on uh sort of these concepts. Yeah. Can I simplify it like uh by saying that u a prediction market is basically something where you can spend half a dollar and gain a dollar if a particular event comes to

pass like um let's say the the market is for whether Hillary Clinton becomes the president of the United States in 2016 and uh a prediction market is a construct that will allow me to go and spend a half a dollar to buy a pred prediction and if she does become the president then I get back $1. If she doesn't become the president then I lose the half half a dollar I put in the market. Would that be accurate? Yes, that's so examples are very very helpful. So that's a very good example.

Um, I would say I, you know, you people compare them to betting, but I think that's actually more confusing to people because just about everything is a bet. And, uh, and in in what you've described, it's half a dollar to a dollar. Uh, so the transformation if you're correct. So, uh, and in in this this is an actual market environment where, you know, market forces will move that that price around. So, the the contract is fundamentally a piece of paper that is worth $1. if Hillary Clinton is elected. And so the question is, what's that piece of paper worth? So the the piece of paper is worth a dollar if Hillary Clinton's elected, but if people are trading it around themselves today at 40 cents or 30 cents, then you

know she's probably not likely to be elected, right? So why is why is this thing trading for like 12 cents, seven cents, three cents? You know, if people are buying a piece of paper, it's going to be worth dollar a dollar if she's elected. Um but it's only it can only command three cents. Uh what does that say? That implies this u this this unanimous expectation that you will not be elected which is totally different from the way people talk about elections today. they there's no uh there's no you know it's it's all about who can who can go over the top and you know Carl Rove the last election he was still trying to even after every place had called it he was still trying to convince people that

that Mitt Romney still had a chance in the United States and that was like so it was it's completely nonunanimous in in conversations about politics today but in a market environment everything is unanimous because anyone can move the price. So if someone disagrees with the current market price, there's expected value for them. You know, they they can form some kind of a team or a hedge fund or something or sell that information that they had to someone else. And uh so that's a it's a it's a very different way of doing things. Um it I would say that it's a little confusing to imply that the price has to be 50 cents though because the price can be anything. So

yeah, it may start at 50 cents, but these yeah, you have these these markets where things can either happen or not happen and you get money as a result of whether or not they do. So that's in a nutshell that's how it works. So how do how does that uh then I mean so what does that say about the the the sort of power of group? Um yeah, the wisdom Yeah. I'm sorry. Yeah, the wisdom of crowds. Yeah. Yeah. How did I say about the wisdom of crowds then? Yeah. So this is not um yeah so the cool thing is that uh what this market does is anyone can update the price. So uh you only get the updates. So this takes a crowd and a

crowd you know many times a crowd I mean think about all the knowledge in a in a vast group of people. It's immense knowledge very useful. Um what but the problem is that there's too much noise. So a conversation wouldn't really scale, right? You'd have to talk to every single person, compare everything they said to itself and then you'd have to report back and then meanwhile everyone else would have to do that and then they'd all have to compare these reports and they would, you know, a conversation is a very difficult way. You can't have a conversation with, for example, 100 million voters in the United States.

It's not going to happen. So and yet there's lots of important information, right? There's all these people who know lots of stuff, very savvy people with a lot of experience in politics, you know, professors and mathematicians and people who are kind of like good at telling who's lying. And there's all this vast information locked up. And the cool thing about markets is that you only get the updates. So you get all the signal, but you really don't get you get almost none of the noise. Uh so these markets can very quickly extract all of the important information from a crowd because if people agree with something they just don't trade. So there's an implicit agreement uh by everyone who doesn't trade against the current market price.

In a way what we can say uh can we say that in many of the discussions that happen on the internet today uh generally anyone can create a profile and write a comment and because of of this nature of the internet you have comments coming in from anonymous people people who have no idea about what is actually being debated. So it is almost like it is a civil attack of opinions. uh everyone anyone can create a profile and there's no cost to creating an opinion. But in a prediction market what is happening is in order for me to move a price about something about an event I need to put actual money to move the price. So uh this kind of prevents the

civil attack and I will only put my money in uh in buying a prediction only if I'm sure that I have some information that the market doesn't. So only people who have real information end up trading and that makes the market a better judge of the future than a Reddit forum post for example. Yeah, absolutely. That's I really like the civil attack uh concept uh in in this context. So the what's what's great about the markets is really that they filter out the noise. It's not so much that they uh they that there's this reward that you can win the bet. What what prediction markets why they really

work and they they do work. There's uh an amazing history of them. you know, they're much more accurate than anything else that has ever been, you know, devised or tested uh by man. There are these amazing things. They'll get every single Academy Award. They'll get every single states electoral votes. They'll get everything long before they'll call election results years before the election even takes place. And so, there's a lot of questions you can break down. Why are they so accurate? But one of the major reasons is that you you're correct. Is that it imposes a cost on the person who wants to change the signal and people worry like, "Oh, I really believe that. I I don't agree,

but I'm not willing to put money on it." But that's exactly the point, right? It's like, "Good. We don't want you. We don't want anyone else like you." He goes because you may lose some you may lose some people who actually have information that are just actually uncomfortable placing some kind of bet. But um what you gain is that you lots of people who really didn't know anything are just filtered out completely. So you get all the civil attack immunity because it costs every time you want to move the forecast, it will cost you in proportion to how much you want to move the forecast from what it was. So you're completely correct. You you've made a a a meta-nowledge contribution. You're

saying I know this is wrong and I know not only do I know that it's wrong, but I know enough about this whole system that I know why every other person is incorrect. So they're saying that I know that I think I'm the number one guy on the planet. And so the market is only consists of these people who honestly believe possibly mistakenly they honestly believe that they are like the number one expert on the planet. And so that's why the they're so accurate because you know you've basically got the people who have self- selected as being experts on whatever the the topic is. And even from a hu from a group anyone can join. It's very permissionless, peer-to-peer. This whole group where anyone could join. You don't

need to have any kind of administrative red tape or anyone's permission. Uh people just show up. It's sort of a it's a very neat it's a very neat thing. It's a very powerful thing. So are there any so we mentioned the example of politics that al often gets thrown around when talked when we talk about prediction markets, the weather, these types of things. Are there any types of facts that prediction markets are just really bad at at at finding the truth? Well, uh I would say no on on principle, but there are these cases where um the more it's it depends on how valuable the the information is and how few people have it. So a concern is that people will want to know something like uh for

example uh they'll want to know uh like if a certain research project will will will sort of work out or not but only a very few number of people even have the ability to kind of figure out if it will and and there's a question of if the market isn't liquid enough will these people even bother to trade at all and this has been something that we've seen in Bitcoin prediction market websites where and also not Bitcoin but in general you know this happened on in trade for example where markets would just not have the liquidity people would not be buying and selling and so there would be no reason for someone who had the expertise to actually contribute there and you so you you're talking about liquidity of predictions

essentially yeah uh yeah that's sort of what I mean that you know just like in any other market you have buyers and sellers and they and it works better when there are a lot of buyers and sellers So, it's kind of easy. The politics is something that Intrade kind of got famous for and so people would just go there and it was just like a very it was a big thing. It was on CNBC uh all the time and uh so other things like sports like there was a trade sports website in Europe. Um and so people like those things so that it's easy to get the liquidity up uh and that those those things kind of help. Betting on obscure things is a little difficult, but it's still possible. If you if you ask someone to help subsidize, they

basically put up some money that they know that will be lost, which is not totally inconceivable because there are many instances where someone would like to buy information that they they don't possess. For example, I think the Bitcoin block size debate is a is a perfect example of where I think there are people who I mean, why sp spend all this money to go to Montreal and have everyone stay at a hotel and have all these sponsors and pay for the venue and have everyone travel and it's like I think people would just they would rather just buy this information if they could.

Regarding prediction markets, I I I can imagine how you could have a market in which the event is a yes or no event like Hillary Clinton becomes the president of the United States. Either it happens or it doesn't. What would happen if we wanted to uh have a prediction market for something that is not a yes or no event like the price of Bitcoin in 2017? Can we have markets that are not for yes or no events but have uh results which vary over a wide range of outcomes?

Yes, absolutely. Um that's very easy to do. So the the Hillary Clinton example is it's the piece of paper is worth a dollar if she is elected and it's implied and correct that it's worth zero dollars if it does not happen. It's only worth a dollar if she is elected. But you can also create something that says uh there are 538 electoral college votes in the United States. So there the presidential candidates are competing to win those electoral college votes. And um and there there are 538 of them. And so the most you can ever get is 538. And the fewest you could get is zero. So you can create something else that's instead of being worth $1 if Hillary Clinton is

elected, that's worth one 538th of a dollar for each vote for each electoral college vote that she gets. And so it's it's basically the same thing. Instead of fixing the final prices at one or zero, you just fix them at some number that's in between one and zero and you just rescale that to whatever you were interested in doing before. So, one way of just simplifying it, excuse me, would be to just say that it pays $1 for each electoral college vote, and then you just invest more or less as desired. So, and and it does the exact same thing. So the the market price of one would be the actual likelihood of the thing happening. But

the the price of something else that's this uh continuous range that price would just represent uh the actual estimate of that actual number. So it's just saying this is going to pay a dollar for every electoral college vote that Hillary Clinton gets and it's trading for about $400. Then anyone who thinks she's going to get more or less can go in there and pick these things up and they should be happy to do so. So yeah, that's very easy. And way more stuff than that is is possible. Way more. Yeah. So in your uh in the white paper you describe uh the truthcoin white paper you describe the binary

prediction markets and the scale prediction markets which is what you just explained. And then you can have sort of um hybrid models where you would have uh multiple dimensions of predictions. So for example, well could you give us an example because I'm not sure I can come up with one right now. Yeah, it's uh it's pretty complicated to most people I suppose, but there's this um there's very simple math that relates these joint probabilities to conditional and marginal probabilities. So maybe someone can Google that and if they're really interested learn all about it. But basically what you do is you you you place a bet that's you know to simplify you basically place a bet that's something like if we elect Hillary Clinton if we do that's dimension one um

this will pay a dollar if this is the second dimension. If Hillary Clinton is elected, this will pay a dollar if the unemployment rate is low, like if it's below 5%. You know, in 2017 or something, right? So, 2017, that'll be a year in that'll be basically Hillary Clinton's fault or her to her credit or she'll have some administrative control over events that are related to United States unemployment, right? So you'd want you want unemployment to be low.

You want people to be employed. So this thing is paying this is uh a dollar. This is sort of estimating the likelihood if you elect Hillary Clinton of achieving that goal. So again to really kind of simplify all the details, you're just looking at what's the likelihood of hitting this thing, Hillary Clinton or not Hillary Clinton. And you can just look at those two numbers. And since all kinds of finance people will be trading in these markets and trying to uh earn profits for themselves, you can just sort of say, "Oh, look, Hillary Clinton is bad for this thing, you know, and we all now we all know that, so now we won't elect her." Or or vice versa. You can say, "Oh, maybe she's really good for this."

Uh but yeah, you can chain all kinds of crazy things together. And each dimension is sort of like controlling. It's like a statistical control. You could say like controlling for age, controlling for whatever education and height and all these things. Uh what's the effect of X on Y? So it's uh I guess I would say that you can use these markets to not only predict the future but also to compare different futures. So since you put us in the Hillary Clinton future, what are we going to get? You put us in the nonHillary Clinton future, what are we going to get? And then you can say which one of those two futures do I think is better and I and then try today to move things more in that direction. So like to to

take another example. So what this means essentially then is uh let's say if we were in 2007 and we could have had a two-dimensional prediction market. Will uh Barack Obama be elected as president in 2008 and the other one is will Guantanamo Bay be closed in 2010. So this kind of prediction market I guess would have uh given given an answer about what is the market's opinion about if Barack Obama is elected then what is the chance of Guantan Guantanamo Bay being closed and if the market thought that the chance was low then it would reflect in the

prices and if the market thought the chance was high that would also be captured in the prices and the voters in the election could can look at the prices and have an opinion about what the market thinks Obama will do once he's elected uh once he's elected as as as president. So it allows them to make a better decision regarding their vote. Is that correct? That's absolutely correct. So um it's it's it's a totally new way of having information spread. Uh, and so it's possible, you know, as maybe people know, it was a big campaign promise of Barack Obama's that he would close Guantanamo Bay, and yet it's still open today. We're still waiting on that.

So, uh, not very expectantly. And, uh, so the it's possible, which what's very interesting is that when he was just a senator from Illinois, it's possible that he actually didn't know information. like maybe when he was elected, people pulled him aside and said, you know, a couple of days later, they said, "By the way, you you can't close it for some some secret but important reason." But whatever the case may be, or or maybe he just, you know, maybe he just straight up lied to people, you know, gasp, a politician lying, you know, it's like obviously that is totally plausible. But whatever the case may be, there whoever there, you know, there were probably some

people possibly including Barack Obama himself, possibly including his, you know, his close associates and aids and things like that. There were people who knew even in 2007 that the how unlikely this campaign promise was to be met. So they would just have picked up all this easy money in the market. You know, the market would have started out kind of in kind of an ambiguous place and these people would have said, "Oh, I'll take $20 or $5,000 or whatever it is in the market." They'll say, "I don't care. You know, I'll pick up this money because I know there's no way that thing is getting closed." And so the the cool thing is that these markets allow there's a little bit of math that I

don't want to get into, but these markets let you do things that where you bet if Barack Obama is elected, some some bet, but if the uh if the um if the thing doesn't happen, so if Barack Obama is not elected, you can do different ways of like getting your money back or or actually earning money depending on there there's some weird math involved, but So these people can make a totally a nice bet that they that doesn't affect them at all. You know, they if Barack Obama they can only bet on what they know about. So if Barack Obama is elected, they can bet on that. But if it turns out that that didn't happen, they're not really affected. So these people will have every incentive to

reset the price to what it really should be, which is the actuarial likelihood of these campaign promises being fulfilled. And so this technology is kind of um it's kind of a yearning for a world where we don't have to even listen to these campaign promises where you can just list this stuff in markets and then you can just show up on on the v the election night and just, you know, having not having no idea who these people even are or even what their names are and you just look it up on your phone while you're waiting in line. you know, good for unemployment, good for life expectancy, bad on, you know, I don't like their foreign pol, you know, likely to take us into war, etc. You don't even

need to know these people's names. that that that's sort of the ideal thing because uh these prices will be will be set by like as is done in the stock market today. They'll be they'll be set by these people who are like teams of of people who like research this actual stuff and the actual um actual likelihood of things like these happening. Let's take a short break so I can take you to Paris. I dropped into Laame Bitcoin, the house of Bitcoin in the heart of Silicon Santier, home to many startups, including Ledger, and I spoke with Eric Laravec, Ledger CEO, about what we can expect in the coming months. A lot of our customers are asking for solutions compatible with mobile uh using NFC or Bluetooth and we

are working on that. In September, we plan to release the Ledger Unplugged, which is Java card NFC compatible. At the end of the year, we will release the Ledger OT uh which is a hardware wallet with a screen, Bluetooth, uh NFC and the keyboard. And also in September, November, we are going to release the Ledger HSM for enterprises. And finally, the ledger trustlet which runs in the trusted execution environment uh is almost available now in beta for miselium and um uh green address and which will be released hopefully also in September. In the future, we really see ourselves as the leading company in

securing all the bitcoin solutions uh for customers but also for enterprises. We want to be the Cisco of uh the bitcoin So definitely look forward to exciting and innovative new Ledger products to be released in the coming months. In the meantime, you can always count on the Ledger Nano to keep your Bitcoin safe. So don't delay in getting a secure setup today. Go to ledgerwallet.com and use the offer code EB09 to get 10% off your first order. And that offer code is valid until September 30th of 2015. We'd like to thank Ledger for their continued support of Epicenter Bitcoin. Before we get into, you know, talking about truth coins specifically and the project, I I want to keep on this idea of information availability because it's often and you

you write about this. It's often thought that we live in this age of information abundance and u you write that the problem is not the abundance of information that we have access to, but it's the aggregation of information that is sort of lacking in our society. Um, I'd like to know if you think that prediction markets perhaps present sort of uh, you know, holy grail of the new information age in the coming years. Yeah, I've previously compared them to the invention of the printing press and that it's sort of like the internet is kind of like the printing press and and prediction markets are sort of like uh almost kind of like critical reading or something. um where uh you know people were writing all this stuff but the

first stuff that was printed was just copies of the Bible that were just sort of saving time. It kind of didn't occur to people that they could have their own thoughts and write them down and then circulate them for their friends far away and then they could comment back and then there'd be this trail of dialogue that would be like kind of helpful. So I think the internet it just you know the internet kind of turned on and people were struggling. It's sort of a it's a a nervous system for society, but the nervous system was it was doing these very boring things, you know, sending email kind of before and that was that email is great. Everyone loves email, including me. But yeah, I was doing like IRC chat. It's like that's not what that's not what the nervous

system is about. The nervous system, it does those things, but everything that has a nervous system has like a brain that takes all these signals and interprets them as information and then reacts causes the entire system, the entire organism to react in a very coordinated way. Uh, and that's the real that's the real purpose of the internet. It's not it's not so that two people can email each other. It's so that we can like achieve these these this this concept of every single person having all these diverse values and thoughts and beliefs and knowledge and experiences and having them all pull up and then having it all broadcast back

out as something simple that okay here's what we should all do. It's the broadcasting is is is the real is where the real benefits are. So that's a really really cool thing that I think prediction markets do enable because they they you know one interesting thing is that you know lots of things don't scale very well like communications in general but also just sort of talking to people doesn't scale because talking takes a lot of time and you just don't have enough time. There's a lot of people but markets actually have like a negative scale. they they scale super well because the more people get involved, the more liquid uh the market is. And that's like a really really um that's like a really powerful

thing when you have a world full of of billions of people who many of whom are are very you know educated, very smart, have a lot of important experiences to contribute. Uh you need something that scales and markets not only scale but they like they really scale. they have like a they have an extra benefits with more people. I like this idea of the of the crowd having perfect knowledge uh that that you just mentioned. And to me that sort of resembles sort of like a hive intelligence or what you might want to call like an artificial intelligence.

How closely is AI related to like perfect knowledge of of the crowd? Yeah. So AI is very uh similar to this concept, but it's also very different. So it's a similar kind of um it's a similar kind of promise and a similar kind of operation. So AI is all about as a lot of people, you know, you you have all this that you have this thing that does all of your thinking for you and you don't really need to worry about uh the thoughts because this thing is just much smarter than you are and so of course its thoughts will be better.

Although you might be worried that its thoughts are too good and that it plans to like destroy human civilization or something and replace it with itself or something like that. Uh but it's a similar concept with prediction markets. You want you have this thing that kind of does the thinking for you and you kind of contribute to it. Uh unlike an AI that's a difference. Uh you are the prediction market is sort of like a very human kind of organic AI sort of a more decentralized AI. It's like uh a different it's like a big crowd of people who are kind of all linked together and they uh they they come up with these these decisions that are greater than anything that any one of them could have contributed. But it's

different to uh AI in the sense that traditional AI is just like a kind of a computer somewhere that does everything. And this is like a very organic thing that can like add new people, drop people. uh it's very kind of biological almost very human dependent uh they're so they're very similar but they're also very different and the other thing is that although prediction markets will always be will be as smart as the smartest person in the crowd and in many times many ways much smarter uh it won't do this thing that that AI kind of claims that it will do where AI kind of claims that it will be able

to understand itself and then improve itself a lot. And uh that's that's kind of a serious science fiction uh territory. Uh but uh that's something that AI even though it's science fiction today, it that will probably get there at some point. Uh but prediction markets won't do that. But I do see prediction markets as kind of the next step. there's something very doable that you can do today that that gives you a lot of the benefits of the AI really at kind of a low cost because you only need to have everyone aware of this thing. They don't need some any ongoing maintenance really just just a way of interacting. So if we extrapolate in this sort of science

fiction uh scenario, I always like those. Um I if how does this work on a macro scale? Like if everybody has access to prediction markets, imagine that in some future uh all decisions are subject to a prediction market and people have perfect information all the time. What does that look like? Having perfect information all the time. How I have a hard time putting my wrapping my head around this. I don't think you'd have, you know, you wouldn't have like perfect information all the time, right? But you would no one would know more than anyone else. So, you would kind of have common information the whole time. That would be kind of neat. But yeah, a lot of things would be a lot easier. I mean, you you'd know

more about the effect of a given law. You wouldn't need you'd know more about the effect of a given candidate. You know, who who should we have as the president? Who should we have as the CEO? Who should we have on the board of directors? You know, which laws should we pass? A lot of those things would be much much easier. And that's that's a a great thing. Uh we'd know you'd even be able to know certain things like uh should we do some kind of military operation? You might know whether or not that'd be good. And there might be like all kinds of classified information that it doesn't, you know, the information itself is is still secret and doesn't leak, but but it it kind of informs these bets made by anonymous people. And so you could say, hm, you know, maybe

for some reason, you know, we do need to do this thing, this this maneuver, this this invasion of some kind, you know, but we don't really know why, but you know, that it is in fact uh reliably kind of a good idea. So the possibilities are very very um extreme. Uh I think it's just the simplest thing is just that it's better governance. So a lot of people are who are kind of you know the the leaders it's all about choosing the if you choose the right leader a lot of great things will result and the world needs leaders and those leaders have a relationship to society as a whole like the president sort of versus the voters in a in many ways and that relationship

between the voters and whoever they elect is uh a very confused one currently, but it could be a lot better and that that would make a big difference. Today's magic word is predict. P R E D I C T. Head over to let's talk bitcoin.com to sign in, enter the magic word, and claim your part of the listener reward. [Music] uh when you were talking Paul I I got this imagination about the future that um let's say we are like 20 years into the future and prediction markets and truthcoin have been really successful what that would enable is um let's say

there's an entrepreneur who is trying to figure out which city to move to whether he should go to Silicon Valley New York London uh Bangalore or Amsterdam and he wants to build a Bitcoin company and there's a prediction prediction market that uh that predicts how many unicorn companies based on bitcoin will come out of each city. So he can basically look at the prediction market and that prediction market has aggregated information about regulations, venture capital money etc. and just he can just look at those values and then say okay the market thinks um Amsterdam is the best city to move to to build a bitcoin company so that's where I'll go. Is that kind of a kind of an imagination for the

future we could have? I do I do like that. I think the big benefits are where there's a dispute because this is the central question of government as well as the use of force and sort of ethics. Um it's like but who resolves the dispute? And currently there's this hierarchy and there's someone on top or there's a group of people on top. uh you know you have these different branches or different kind of courts or something. Uh I think so I think the question you've raised is is almost a little too small in scale. I mean I there could plausibly be people disagreeing like oh is Amsterdam better than whatever Berlin or something. Um and but I don't think it the

disagreement is really as important. I mean people I think people would know something like you know it's probably going to be Amsterdam like it's not it wouldn't really make that that it wouldn't be kind of worth uh bringing out this this weaponry for something like that you know this is this this kind of thing is like about getting really interesting stuff done things that we we couldn't get done before uh because you know the because of the way that people you know the friction caused by certain ideas being too hard to understand. So, uh, like something like privatized unemployment insurance is like something that I think would be a really great idea, but since it involves cutting existing entitlement to

unemployment insurance, it will like it's it's would be a very very very difficult thing to do. And uh you know the election of like a third party candidate impossible in the United States but with prediction markets if it's if the thing the number says you know elect XYZ person and all these things will move in a beneficial direction then that's that becomes entirely possible and that so there are these big disputes huge disputes like on national or international level uh you know um like you know how should we do how should we coordinate like global over fishing or something like that like

as long as you have some way to measure the outcome you can have these markets about that outcome they can be derivatives on that event these event derivatives and so it's this really really big stuff that I think is the uh is the is really the where all the the chief benefits are I think you only need you maybe only need like very small number. I you know small is arbitrarily like a thousand per year or something but you may only need a few of these things and then once you get the good leaders right in then it almost won't matter right because Amsterdam will be the the place by choice or maybe they'll all be equally good to the point where

it doesn't it doesn't make much of a difference you know maybe you'll be able to start a business anywhere because no one every everyone will know that as soon as you do these mistakes your numbers will go down and then we won't be able to be elected as easily. So, I think it's almost too small. It's like it's like it's going to solve kind of every problem. I mean, I hate to make such a bold claim, but and it certainly will not solve every problem, but there's a lot of these problems that just come from they come from the top and the top is where you have to uh aim because that's where everything is the most screwed up at the moment. Yeah.

Yeah. So perhaps you're trying to say that uh instead of this uh prediction markets could be used to understand who should be made the next CEO of a giant Fortune 500 company, right? Like the Coca-Cola employees etc could use this to figure out which is the next which is the best person to be our next CEO for example or have reason to fire the existing CEO if he's not doing well. Right? So think about all the gains that come from large firms, right? Like firms like Apple, GE, like these people, they have control over serious resources like which projects get funded. They they control a lot of stuff like lots of

people's jobs, lots of innovation, like all the innovation comes from these like big monopolists type super firms. And even if they're not monopolists, just like big firms that just have a lot of influence and a lot of direct control over resources, right? And so right now what the firm gets big enough the, you know, there's too many people involved. The CEO is is a powerful guy. He's done all these sort of mergers, right? And he's built like an empire of all these big companies that only he understands. And there's you there's no way the CEO is often friends with everyone on the board of directors who's supposed to be his boss. The employment package comes with all these things, these golden

parachute things, these like poison pill uh items are all written into all these contracts so that people can't people can't just like improve value for the firm or let let alone even know what action would improve value for the firm. And if you and if you're if you work for the CEO, if you report to the CEO and you're right beneath him, you know, it's sort of like what are you going to do? You know, if you start asking questions about this type of thing, um like you could get fired or something. And this why should you as if you're a shareholder, you own like 1,000th or or even less of Coca-Cola.

Like you don't care. Like you know, there's no way you're going to be able to vote for which board members you should have uh on the board of directors. like that that is going to impact you very minimally. So it's very similar to to voting where you have these things farm subsidies whatever that make a big deal. They're super corrupt but they make a big deal to the people who are involved in a very small deal to um to you as the the guy who will ultimately result. So there's the CEO makes it very difficult to tell when he should be fired or not. And there's no one in a better position to know if he's doing a good job than him. And the leadership, the people who work directly beneath him. But all those people work

directly beneath him are biased, right? Because it's his boss. So they can't go behind, they can't go behind their boss's back and go to the shareholders and say, "This guy sucks. He's doing a terrible job. You know, fire him and I'll make the stock price go up." You can't do that. You could you could get fired yourself. You could get harassed. you could get anything, you know, that your career could be over. You could be, you know, so that's so that's not going to work. Same, it's the exact same problem in politics, of course. Everyone's just, you know, sucking up to everyone else and people know in the United States, people know like the the politicians are sort of a joke and they don't they don't really even care, right? Because people know, they'll say like "Okay

sure. Paul XYZ candidate just said one of the most ridiculous things I've ever heard." But they'll say, "I know that guy's he's just doing he's just saying that to win." So, they don't even care what these people even say. They just they want them to win. It's like this whole thing is um kind of a waste of time to even expect this to work. Yeah. It's really our fault for expecting something like this to work. We only have ourselves to blame blame for bad politics. You can't blame a politician for lying, right? It it comes with the job. Exactly. So, let's move on then to um to to truthcoin uh specifically. Uh and um so I mean obviously there there are some sort of obvious things that truthcoin does differently from something like in trade which is the

fact that it's decentralized uh that it relies on blockchain technology to to to work. Uh it has censorship resistance. it's sort of permissionless and that you know it carries all the same um all the same things that that Bitcoin we carry. Uh can you talk about how it's other ways that it it's innovative in in its functionality and what it can provide? Yeah. Well, uh Truthcoin aspires to be peer-to-peer version of in trade. So there's no central authority in any way including for the resolution of the outcomes. In other words, the software has to determine whether or not Hillary Clinton was elected. And um like there's a it's a very difficult

problem to do that without a central authority. But that's the problem that truthcoin solves. It uh it in trade itself was censored. In fact, it's still being harassed today for things that happened a long time ago uh in kind of a kind of very an unsportsmanlike way. and it's very unfortunate. Um, but the idea is that it's it's very similar to things like e- gold which were similarly closed down for not being compliant with the laws of the country that they happen to be in. Uh, this is on the internet. It's it's totally information-based. So, there's no physical commodities. There's no physical presence of any kind.

There's not even any entity at of any kind. It's just a set of rules that people use to interact with each other. So in this way it is it is censorship resistant and no no individual has the ability to disproportionately affect what's going on and that's the censorship resistant is resistance is what it's all about. There's no everyone is equal in the eyes of a protocol. Protocol is just a set of rules and that's what this that's what Bitcoin did and that's what this does. So it's there's a lot we could talk about how it does those things but well yeah I'd be interested to find out specifically how because I think we understand the mechanism of a prediction market by now.

I'd be interesting to find out how exactly it determines the you know whether or not uh a prediction has occurred or not like the the outcome of prediction without having to resort to some sort of central authority an oracle or something like that. Yeah. So um the the one insight is that uh the information becomes easier to find over time but money can be locked away in this blockchain universe uh for not for free but you know like there's no computational complexity to locking money away. So time is a net benefit to every honest person. So that's kind of the the major insight upon which the

strategy is built. Uh so you have a another thing that I do differently is that um you instead of having one person just throw a switch on one thing I have a whole group of people throw lots of switches at once for everything that resolved you know in a given period. So quarter 1 might end you know January, February, March might end and all the things that were being bet on that ended up happening in that threemonth period will be resolved upon the conclusion of that quarter one and I have lots of people bet on lots of things and I cross reference those things with each other to see if anyone is being sort of aberrant or kind of deviant and and then

those people are punished uh using the second coin type. So, it's there's like it's kind of a very complicated thing to explain. I really look forward most of all to just turning it on so that it will just run and then it it's sort of similar to Bitcoin in that way where there's really no Bitcoin, you know, you try to explain it to people, right? And it's not until you just send or receive Bitcoin that you can actually um that you can actually understand kind of what's going on. But, you know, Roger Ver paid uh uh Peter Todd and Andrew Pstra and like other people to look at this and review it and no one caught any uh problems with it. So, I guess, you

know, if you want to read about it, there's an 80page white paper on truthcoin.info info and it's like at some point the you know there was a there was a white paper for Bitcoin as well but reading Bitcoin's white paper doesn't really help a lot of people understand what Bitcoin is or how it works. They just have to turn it on. And so that's what I look forward to doing very soon. In fact, you can actually go to truthcoin. You can get it's older. Uh we have the most up-to-date stuff ourselves, but you can go to truthcoin.info info and just kind of download it and just kind of look at it and you can even make uh test trades in there. We made a bunch of things about who will win various, you know, football

games in the United States and what the price of various things will be. And you can make test trades in there, but ultimately it's not I don't think the explanation is is going to fit into a into a one radio show question and then a coher I've failed at explaining this in words like a many times and there are a lot of figures in the white paper that I think make it a little easier and you can if you download the software you can go to file resolve matrix. Let's not go into like too too much detail about how it works. But uh I think it it for our listeners it would be interesting to understand the mechanism between you know the bitcoins that you're betting and the vote coins and and how they operate. Perhaps uh perhaps you you I I

I I read once that you use the analogy that uh a person could buy vote coins and become the employee in a corporation and the job of the corporation is to is to um put real world information into the blockchain is would would would that be an accurate analogy? Yeah, that's uh that's a really good point. So there are two coin types in this and a lot of people think that like the coin types exist you know so that I can crowd sell one and like make a lot of money or something like that's not why the the second coin type is this votecoin and it exists for the same reason that uh bitcoin exists because you need a

different dimension of this digital scarcity so if you want there's this theorem in microeconomics if you want people to report honestly in a mechanism and this is called mechanism in design in theoretical micro economics if you're anyone's interested in that. Um you you need to overpay people for them to be honest because if there's an incentive for them to be dishonest today the only way you can get them to report honestly is by coordinating a more profitable joint future. So this is usually why people get along with people that they meet and they're going to spend a lot of time with. you know, you meet these people and you, you know, like you, you just show up to your first day of college and you want to be very friendly

to everyone because you're going to be spending some time with them and but it's very different when people realize that they'll never see each other again. You know, they say a a goodbye, but then there's really there's nothing there's nothing kind of for them to to talk about anymore. It's like a very So that's kind of a a really short sketch of you know you need to overpay these people but how can you overpay these people if there's no forced digital scarcity? So this is the second coin type exists to allow these people really to be overpaid but it serves a completely separate function that it's a it's a corporation that um that resolves the outcomes and so it grants this civil attack immunity because you um you know because you have to buy in

in order to report. So you can't report for free. So you cannot civil attack this thing. You either own 1% of the corporation or you own 10%. Or you own 70%. But whatever it is, you've got to buy this stuff and you have to forego the option to sell this stuff. So you kind of transformed money into reputation and then you can transform it back. So it's um it serves multiple purposes. Uh and the second coin type is redistributed. If people misbehave, it's something that they can lose, unlike Bitcoin, which just stores value. So, this second coin type serves a lot of purposes. Something like five different completely different purposes that are all over overlapped

with having a second coin type. And anyone who's more interested should really read. It's it's going to be it's still going to be very difficult to explain in a short amount in a short amount of time. But it it is in fact the simplest way of doing things that will actually work. It's un very unfortunate that the simplest way of doing things is slightly complicated and it involves introducing a second coin type and and blocking the the reports the same way that transactions are blocked in Bitcoin where they're they're assembled into a big block. Um transactions the resolutions in Truthcoin on how to know if an outcome happened or not. they're blocked into these huge time periods spanning multiple

months and and there's all kinds of uh logical and technical reasons for that that are very difficult to convey quickly unfortunately but it's much easier if you um it's much easier I think if you look at the figures and I have a chance to get it all written down exactly the way that I want in the uh you know on the website and on the in the documentation. So, it's it's much easier, I think, to do it there. And you can kind of skip through reading anything that you think is that you already know or that is boring and you can you can reread things that are confusing to you. It's that's that's probably a better medium. So, basically, Truthcoin does open like a business opportunity for a for a lot of people

around the world. they can go and when your system becomes live they can go and buy these vote coins and then uh every month or every week they have to uh put what events happened in the real world for example there's a prediction market about next presidential election they have to put information about who won the election and in exchange for putting this information into the blockchain they will get rewarded uh by by some kind of trading fees. So um so basically it's like a business opportunity where you can buy vote coins, put information into the blockchain and get paid for it.

Is that right? Yeah. The real business opportunity is in these people will own these coins and they will get as I said they will get overpaid. So they will have to do this very simple stuff and they will get overpaid and they will get so they'll get paid for their time and their concentration that they have to submit these reports. But the real thing is that they get overpaid for their honesty. And so it's a tremendous, just owning these coins is a tremendous, you know, it is like a business opportunity in a way. It's like each of these people is an owner operator of the corporation. And I could imagine, it depends on a lot of different things, but I could imagine that someone could make almost a full-time job out of just just doing these submissions, you know, once a

month or once every few months or maybe a a few times, maybe 10 times per year. on different schedules and these people would get depending on how much of the corporation the corporation that they owned they could get potentially enough you know enough enough money to make a decent living. It it of course depends on a lot of factors. So, so, so basically if if in the future I own one of these vote coins, so uh and I put these results in the blockchain and I get paid for it, I have an incentive to report correctly because uh if if I report correctly and many many traders use the information my corporation is providing, then I get

more uh more trading fees as a as as a dividend. So I have a an incentive to make sure that this corporation puts good results into the blockchain and uh that raises the value of my of my vote coins and makes the corporation uh and and makes more traders use the results the corporation is providing that that is that the natural incentive. Yeah, the uh the the honesty incentive takes place on on different scales. So there's a figure on like page 25 of the white paper or something that goes into this in a little bit more detail. So if your attack is very small in scale, it will fail outright and you will be flagged in the thing as like an aberrant

guy who who did not conform to what everyone else submitted when I mentioned that you cross reference those votes with each other. um that you you'll kind of just fail outright and your your votecoin holdings will be reduced and so you'll be punished and you have no reason to to act in this way. Uh but then sort of on a more medium scale, if more people, if the attack succeeds, the votecoin market capitalization will be wiped out, right? Because it it was only useful because it resolved these outcomes. But if it if it can't do that, it's not worth anything. So there's this big uh like I said you have the option if you want to defect so to prevent like you know what Goran and other people

call the exit scam you know you can just if you don't want to do this anymore you can just sell the vote coins and instead if you attack you will lose the ability to sell the vote coins because no one will want to buy them. they'll they'll have a market value of zero because they didn't do what their only purpose is, which is to resolve outcomes. And but then on a larger scale, if you have this big matrix of these blocked things, if lots of people lie about lots of things, um then you have this sort of a very obvious huge lying conspiracy. And at that point you can do more complicated things involving delaying the

resolution. You know miners can sort of pause this thing and ask people to do it again. And it will be very easy for the miners to see that they have to do that because this matrix will be filled 100% with everything that is exactly the opposite of what happened. And so, um, I'm even experimenting with some other ideas that I think are very cool, but and don't and don't in introduce any malicious incentives, uh, that I've been thinking about for a long time. Can can you tell us about the current status of Truthcoin? I I believe it's it's still sort of in beta right now. It's not fully implemented. Well, you know, it's um we uh the important thing for me as the inventor of the project that it it goes well and so you know um

Roger asked me Roger Vier asked me you know about like who who was doing the best work in the space and that person is doing a very good job. uh and we have that person's like code being reviewed and we have the design being reviewed and it's it's sort of a since it requires uh the the two-way peg the side chains two-way peg it sort of doesn't really matter that's the the real bottleneck is whenever Dr. back finishes his peg side chain thing because there's kind of no point in in uh releasing this software until people can actually use it with Bitcoin. But we probably will release right because it's sorry it's just important to mention that Thrucoin

will be implemented as a side chain. So you're sort of waiting on that to take shape before uh so I mean we have like a version that is just kind of with you know what we call Bitcoin but it's like it's like fake you know it's not real it's not even test net Bitcoin it's just fake Bitcoin. uh just you know for testing purposes and for no real um something like that but it uh I don't know by probably by the time this airs I don't know when it will but um probably by then there will already be newer versions of of kind of what is is currently on the website uh but what's on the website is already like a a sort of a sketch of what I would say it's like um you know It's hard to say

when software is finished, right? So, lots of things are finished, but it doesn't matter because the real bottleneck is is review and and editing and and the two-way peg. So, none of those things, those questions, it's not like on date X you'll be able to use the software because date X is like it's uh it's kind of out of my hands. It's really in the side chains people's hands. So in the prediction uh in the prediction markets like the upcoming field of prediction markets uh decentralized prediction markets I see that truthcoin is building on bitcoin through a side chain and then there are these other approaches that are utilizing ethereum like uh there's augur

then there's groups so uh the competition seems to be really heating up between bitcoin as a platform and ethereum as a platform in the prediction market space what's what's your view on that and why did you choose Bitcoin? Yeah, well I don't uh really think that there is any competition whatsoever. So Augur is uh an organization that was working on Truthcoin a long time ago and Roger Ver called me on the phone and asked me you know who was doing the best work and it wasn't them it was someone else who wanted to be kept anonymous. So I told Roger who that person was and he hired that person and so really everyone has just been building uh either

Truthcoin or something that doesn't work. Uh and so there really isn't any competition whatsoever. Um the the decision, you know, the also the I would kind of object to I don't really see Ethereum as a competitor to Bitcoin in any sense. It is u it's it's very very new. The market capitalization of Ethereum is barely you know one and a half 2% of what bitcoins is. Bitcoin is you know at technical conferences people make jokes about Ethereum. It's like it's not Ethereum is very very experimental. It's very academic project. It is it's not I don't think people really take it seriously

who are doing actual um actual software development. uh you're also you're also known to u uh criticize Ethereum's choice uh in going uh towards the proof ofstake direction. Can you can you tell why why that's the case? What's the problem? What's the basic problem with proof of stake? So um I object to a lot of things about proof of stake. Uh, one of the things that has been outright false since forever and that, you know, a lot of this stuff was proposed in Bitcoin, you know, like a long time ago, 2009, you know, like very very very long time ago. These these similar ideas, you know, these proof

ofstake type ideas, they're very very old. And the reason that no one, none of the experts, these brilliant, brilliant developers in Bitcoin, the reason that no one tried to switch to them is not, you know, it's not like because they just they like having the W in proof of work or something. It's like they there's really big problems with proof of stake. And one thing in particular that I strongly objected to and that it was happening at Ethereum all the time, which is that you had all these people saying that proof of work is like bad for the environment and that it's bad. It wastes energy and wastes money and you're just burning all this money. And that is categorically false.

You know, it's 100% false. And it was being said with such bravado that I just knew that everyone at Ethereum really didn't know what they were talking about in general when it came to this proof of stake, proof of work. uh difference. If you go back to what people have written before, it's obvious. If you go back to what Satoshi wrote when he published Bitcoin to the uh you know to the original mailing list and and tried to get people's attention about it, if you go back to bit Satoshi's um the white paper where he describes what the purpose of mining is, it's been explained by him and by lots of other people that the proof of work is is it's hash for money. So what's the purpose of hash is to it's it's this it's this

broad it's a speed bump. It slows things down. It's it's to slow the distribution of coins. It has nothing. It only it was reused in a very clever way, but a very secondary way was reused to secure the blockchain and that is really intelligent thing to do and that was like a really clever double use of that uh technology but um it proof of work does not waste any money. it you are 25 bitcoins are being released every 10 minutes and 25 bitcoin are going to be spent the the value equivalent the purchasing power parody of 25 bitcoins are going to be spent every 10 minutes

trying to get those things that's just you know equilibrium behavior and it doesn't matter if it's proof of work or proof of stake or proof of storage or proof of bandwidth or proof of unicorns that none of that has anything to do with with why the money is being quote wasted end quote. And that was something I just thought was ridiculous that that that was getting so much air time on Ethereum. And it was just so obviously false that like I just you know and and the other thing is that there's a lot of burnout you know like all these people Greg Maxwell has been and Andrew Pstra they have been explaining why um proof of stake doesn't work for a very long

time and they just get burned out you know they just they keep they've been saying it for like years and you know how it is when you join the Bitcoin world right like time just slows down you know right can you really believe like it's been, you know, like I feel like each day is like a month in once you get involved with Bitcoin, right? It's just like the day is just it's a it's a magical thing. It's like being able to live for like 10,000 years because every time is just so much slower now, which is kind of cool, but it's also kind of like people propose I mean stuff that happened in you know even things that happened in like 2012 that's like ancient ancient history.

It's like might as well might as well have happened like a hundred thousand years ago. So, um, it's for people to keep saying these things and they bring up these things again and it's just, you know, it's hard to say because people have people have every right to do whatever they want with their own money, but and and no one wants to interfere with that, which is a which is very admirable, but I mean, at the same time, there is some it's just like there's an the problem is if someone says, you know, X, I think X is a good idea, and you don't say anything, there's like an implicit endorsement. So, it's sort of like, oh, I brought this up in front of Paul Stoz and he didn't say anything, you know, it's sort of like did he agree or not?

And so, at some point, you are kind of obligated to say like, please just stop doing this because it's not it's not correct. This is just kind of a weird thing that Ethereum has done, right? It's just sort of this uh this kitchen sink blender strategy of just every single buzz word you can find, you just put them all in, you know, right? ghost small amount of inflation. It's just so yeah, tiny block times just so like just put everything in and just it's like it's really kind of it's really sounds like a good uh a good use case for a prediction market then you know whether or not uh Ethereum will or should switch to proof of stake or you know based on this you know according to you this evidence that uh that proof of stake doesn't work. Well, my uh com

primary complaint was that proof of stake um it doesn't save any money. And so I tried to establish that originally with the blog post that I I wrote that was long live proof of work. Uh but I brought it back later with a much bigger blog post that was nothing is cheaper than proof of work. And although you know I'm really confident that that one is correct, the one about nothing being cheaper than proof of work. just I have an immense amount of confidence and it was immediately attacked by the people from proof of stake and from Ethereum but the the attacks in the comments section were were weak and they were they were rebutted so I don't think that I think now it's not disputed I haven't

heard anyone since I wrote that article I haven't heard anyone from Ethereum claim that proof of stake is cheaper than proof of work so I hope that I succeeded in in convincing people of that but I'm sure that you know it's just it's just one of those things where I mean there are only so many times that people can you know it's uh it is unfortunate you know people will do something and they'll get rewarded for it economically and then everyone who's watching they'll say something like oh that guy just made a ton of money you know doing that thing I should hype up my own thing and just you know have a crowd sale and then and it doesn't matter how many times people lose money or how many times you tell people like you really shouldn't do

that you really shouldn't do that at all because you don't even know like what you're buying and you don't even know like if the the product will ever exist and you should really wait until like the the project's finished and all all this other stuff. And you can, you know, you can just tell people this stuff a million times, but ultimately they're just going to ignore you and there's nothing you can do except just sit back and watch people lose all their money. And that's that's kind of a sad thing, but that's like it's there's there's just this thing this type of thing has been going on for so long only in slightly more refined forms of um of kind of uh obfuscation like just these people just saying like all this throwing all this stuff out there and it's just you just think like you know

what I mean how much time am I going to take out of my day to write like it took me a really long time to write that blog post about nothing being cheaper than proof work. I could have spent that time doing all these other things, but I, you know, I tried to make this tiny this tiny dent in this this thing that was just, it was just truly unacceptable. And I just all these times people on the internet saying all this stuff about, you know, we're going to achieve magical nirvana for all because proof of work will be dead and like all this stuff that's just, you know, just wishful thinking of the worst kind. So that's kind of how I feel about that. And so we'll we'll link to that uh blog post in the show notes uh so people can read it.

We'll also link to the to the the truthcoin white paper and all the other great articles that uh that we talked about today. Um I see mayor laughing there. I think you struck a cord with him. I don't I don't know what he's laughing at. Uh no, but uh yeah, Paul, thanks so much for coming on today. It was really interesting to learn more about prediction markets and uh and truthcoin and I look forward to seeing the project take shape whenever whenever uh you know if and when side chains uh becomes becomes a reality and uh mayor well thanks u and congratulations for your first episode of bitcoin episode it was really great I thought it was fantastic and I hope our listeners will like it as well how did you find it yeah it was it was great I have no idea how I've done

so any comments from the listeners are welcome I'll try to improve. Yeah, I thought it was fantastic. But, uh, yeah, you know, uh, I'm looking forward to hearing what our listeners have to have to say about Mera joining us as as a new co-host. So, yeah, thanks so much for joining us today. We do episodes of Epicenter Bitcoin every Monday. You can subscribe to the show, of course, on iTunes, Soundcloud, or wherever uh you get your podcasts. And you can also watch the video version of the show on uh on youtube.com/epicenterbitcoin. And uh if you enjoy the show, of course, you know, we're doing this uh t-shirt contest. So, if you leave us a review on iTunes uh and just send us an email to let us know

that you've sent us a review on iTunes, we will send you a t-shirt. You know what? We're not even doing the contest anymore. We're just sending t-shirts to everyone. So, you want a free episode of Bitcoin t-shirt, here's the the secrets out. You can just give us a review on iTunes and you'll get a t-shirt in the mail. And we'll we'll keep doing that for a couple weeks until our t-shirt um uh inventory depletes completely. Uh so uh of course if you like the show, you can always send us a tip and the tipping address will be in the show description. So thanks so much for joining us and until next time.

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