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It's the I'm Not Your Lawyer show. I'm Jason. Brought to you by the Church of Blurk.
It's immutable, it's verifiable, it's the only truth that you can count on, unless
you're Ethereum.

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Ethereum, topic of the day today. Ethereum. Hey, everybody. Remember, first thing,
got to remember, I'm not your lawyer. All right. Today is going to be kind of a fun
day. We're going to bring in, and I'm going to mess it up already. It's Paul Sztorc.

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Paul Sztorc? That was it. Sztorc, not sport. I assure you, I am over it. People have
missed the name since forever. So I'm over it by now.

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There he is. He's on the Skype cam. Paul, say hey to everybody. We can see you now.

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Hi to everyone.

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We're going to be going back and forth and looking at some things. The first thing I
wanted to do, got to make sure we get a little bit of music going, right? Can't be
totally without music.

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Yeah.

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First thing we're going to do is I found a video from 2015 about Vitalik talking
about some of the use cases, some of the things that could be done with Ethereum
that also addresses the financial component.

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So I thought, what better way to understand what Ethereum is and what the concept is
but from Vitalik himself. So why don't we start off by queuing up that video. Let's
see. That's going to be that. I'm going to transfer that over.

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Paul, do you have the Exotica channel pulled open so you can watch along?

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I don't, but maybe you can paste it over here.

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Yeah. Let's grab that.

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Because I thought about doing that on my phone and then I was like, it'll be weird.
But I can open the Exotica, but I think it'd probably be easier. Yeah, okay.

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Wow, I think we've got a little Katy Perry going right now. Wow, what has Rihanna
been listening to? If you guys don't know, this is Rihanna's Pandora channel.

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So whatever I do is I just turn on whatever the last thing she's been listening to
and so that's what we get. We never really know what we're going to get. It could be
hip hop and apparently today it's Katy Perry.

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The other day Justin Timberlake was bringing Sexy back and that's all right. Right
now we're up and down.

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All right, Paul, you ready? I'm going to play this video. I just transferred over
for those that are watching. This is from techcrunch.com. Let me get the music in
the background down and then we'll get this going and then we'll go full screen with
it.

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All right, with that further adieu.

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There's a whole new world in addition to Bitcoin. I'm here with Vitalik from
Ethereum and I'm Romain Dillet. Can you tell us a bit more about the origin story
behind Ethereum?

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Sure. So I was working in the Bitcoin and blockchain space for about two years
before that. So I originally came in through Bitcoin. I first discovered Bitcoin in
2011.

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Then over time I started kind of getting more and more into Bitcoin. I co-founded
Bitcoin magazine.

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After two years I started getting interested in this concept of blockchain 2.0, this
idea of blockchains beyond just currency.

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There were people at the time that were starting to realize that you could use
blockchains for very many different kinds of applications.

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People were starting to create protocols, next generation blockchains around that.
But the problem that I saw with all of them is that they were all still designed
around one particular use case.

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So for example, someone figures out you can use Bitcoin to do DNS, or use
blockchains to do DNS, and someone creates a blockchain specifically for DNS.

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Someone figures out you can do a blockchain for financial contracts, people make a
blockchain for financial contracts and so forth.

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So the idea with Ethereum is that instead of taking that kind of narrow approach,
you have a blockchain that has a built-in programming language.

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And that lets people create any kind of application that they want on top of it.

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So you can think of it as being kind of like the difference between a Swiss Army
knife and a smartphone that has apps on it.

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And then there's a currency aspect as well with this blockchain.

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Yes. So inside of Ethereum there is a cryptographic token called Ether.

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And the purpose of Ether is basically in order to pay transaction fees inside of the
Ethereum network.

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So the way that that works inside of Ethereum is that in something like Bitcoin
you'd have just a transaction fee and that gets charged for every kilobyte that the
transaction takes up.

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But in Ethereum it's a transaction fee per computational step.

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So you kind of pay for as much of the Ethereum virtual machine as you use.

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Alright, that's a lot of complicated words you just said.

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It's a complicated thing.

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So what's the most interesting use cases that you've seen?

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There's a few.

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So there's people that are using it for things like financial contracts, digital
assets, all of the sort of standard stuff.

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There's people combining Internet of Things and blockchain in interesting ways.

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So for example there's one project called Solock which is doing this idea called
smart property.

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Where basically you use the blockchain to keep track of who owns some particular
physical object.

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And this could be something like a door, a house, a bicycle.

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And you have this sort of smart lock that listens to the blockchain, figures out who
owns it at some particular time.

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And only opens the lock if it sees a message from the person that owns it at some
particular time.

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So this lets you make something like, just as a very simple example, a bike renting
system that's completely automated and runs sort of entirely on the blockchain.

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So why do you think we need automated decentralized systems for all this kind of
stuff?

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It's more efficient, cut out the middleman, reduce barriers to entry, make it much
easier for people to create these kinds of systems extremely quickly.

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Cool, cool, cool. So what's the future?

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It's a very long future.

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It's a whole new world out there?

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Yeah, I mean the concept of blockchain technology is really just starting.

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If you look at the computing revolution, we had very slow computers and we had like
5 or 10 applications.

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The computers became faster and then other applications became possible and they
became even faster and so forth.

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So I think as the underlying blockchain technology continues developing and as
people start coming up with different use cases and also sort of integrating them
into existing systems, I think we're going to see more and more things pop up.

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Cool, so the community aspect of course is very important as you know.

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It is.

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I think you've done a conference recently.

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Yes.

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How was it?

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I did a conference last month in London. It was quite interesting.

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There were over 300 people showed up, all of the major groups that were developing
applications on Ethereum.

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We had some large companies like Microsoft and Deloitte show up.

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It was a particularly nice event because it kind of showed basically this is what
the Ethereum community is up to right now.

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Have you seen good old brick and mortar banks using this kind of new blockchain
technologies?

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Yeah, actually.

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There's even a few banks like there's UBS that has a pilot project that's built on
top of Ethereum right now.

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So it's happening.

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Cool, cool, cool.

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So do you think there are going to be companies built on top of your blockchain in
the future?

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Quite possibly.

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That's what you hope I guess.

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Some of the companies that are building things on Ethereum are building themselves
on top of Ethereum already.

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Cool, cool.

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So at some point you expect to be smaller than the bigger Ethereum companies?

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Maybe.

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Maybe.

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Okay.

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What do you think about the Bitcoin Foundation model versus yours, which is a
private company?

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So Ethereum Foundation is also a non-profit.

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Okay.

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So the one difference that we do have from Bitcoin is probably that we did this
crowd sale where we sold the first 6 million units of Ether.

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Yeah, that's what it was.

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I do think it's definitely a much more efficient model because if we didn't have the
crowd sale,

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then instead of us earning the 30,000 Bitcoin, people would have just spent it on
more mining and we would have probably had just a lot more miners than we needed.

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Cool.

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So maybe a couple of last questions.

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Yeah.

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What do you think about Bitcoin right now?

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Where is it going?

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Bitcoin, it's definitely a lot of different directions that it can take.

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On some level it depends I guess on…

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Hold on a second.

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Hold on.

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Are you there, Paul?

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Hey, Paul.

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Paul.

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He's lost.

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One of the things that I just heard him say…

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Hi, Paul.

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Paul.

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What's that?

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Can you guys hear me okay in the forum?

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Hi, Paul.

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Paul.

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Okay, there he is.

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Hold on a second.

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Okay, there he is.

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I just got it on you.

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Okay, yeah, I know.

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There's so much to say.

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I think the Exotica window is a little lagged.

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So go back.

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Yes.

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I stopped it there.

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Okay, I'm back.

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I stopped it there because he just said that they did a token offering because if
they didn't – god, I got to get this right.

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If they didn't…

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They wouldn't have gotten the money.

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They wouldn't have gotten the money.

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And then there just would have been all this extra mining.

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Did you pick up on that?

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Yeah, well, I think definitely the two of the most salient differences between
Bitcoin and Ethereum and possibly that we might say are similarities between
Ethereum and like a normal corporation would be the relevance of the founder or the
kind of the role that the founder plays, which is Toshi versus Vitalik.

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And he's in that video talking about how he created it.

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But then this crowdsale is definitely a second one.

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I don't know which is more important, but I think those are two really big
variables.

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Well, so far those are the things that I've picked up on, and that's why I like this
video is that he really talks about the origin story.

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And so I'm going to continue playing the rest of this because when talking about
Ethereum itself, what is it?

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How is it formed?

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All of these things are nuanced at each level, and who better to tell us than…

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Yeah, I agree.

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… than Vitalik himself?

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I'm going to get better at switching this.

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I've got this mute thing open now, so I'm going to switch it back because there's a
little bit of lag.

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So I've got that perfect now though.

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All right, switch back.

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It's okay.

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It just makes for good TV.

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I'm going to bring Vitalik back on, and he can speak for himself.

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You know, what people want to use Bitcoin for because there's people that want to
use it as a store of value.

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There's people that want to use it as a means of payment.

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It has different challenges in those different areas.

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So, you know, for example, price volatility is probably a huge issue for people that
are trying to just use it to buy and sell things.

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If you're just using it as an investment, then it might be something that you want.

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Did he just say if it's something you're wanting to use as an investment, it might
be something you want?

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He just said Ether is something as an investment, didn't he?

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Yeah.

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See, this is part of what we have to unravel, which is that there's a lot of double
talk here where there's like it's decentralized on one hand and it's a nonprofit.

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But then on the other hand, it's kind of like this – like reading between the lines
of, you know, like we're all going to get rich kind of stuff.

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It's all unspoken, and we're going to have to figure out kind of how we figure that
out.

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So usually when I go through like deposition audio and transcripts, I look for key
little things.

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And this was another marker where he said, one, we did this token sale to raise
money.

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Otherwise, there would have been too many miners.

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And two, he said people can use it as an investment.

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And people that are using it as an investment, it might be volatile, but they're
doing it anyway.

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And so yeah, so going through this is – I think for those that watch these videos
and they don't really think about what they're seeing and the rubric of analyzing
the legal aspects of it, this is – maybe you're seeing a little bit of how the
sausage is made.

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Of somebody who – as you and I are sitting here analyzing these statements, things
like that.

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Maybe one thing I would point out is that you can create – like Bitcoin has two
networks really.

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One is the one that everyone knows about, and then there's another one that we call
the testnet.

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And that one has all this stuff in it so that you can do more experimental stuff in
there.

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And the only real difference between – in my view, the Bitcoin testnet, which is a
second network that is totally separate from the Bitcoin network.

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The only difference between that network in principle and Ethereum, between Bitcoin
testnet and Ethereum is that there's some – for the Bitcoin testnet, there's no
expectation that it will actually have value.

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So I'm not sure what the legal relevance is, but you can create something.

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I mean it seems to me you can create something that you know is just a toy and that
everyone expects is just a toy.

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But then with Ethereum, it's sort of like Vitalik says it's very experimental on one
hand.

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But on the other hand, there's kind of this Soviet USSR media thing where the real
story is like being in between the lines.

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Let's not go into Putin today, but let's finish watching the rest of this.

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But we'll mark that down as a key moment in his explanation is that people use Ether
as a security.

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All right, let me bring this back in.

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Sorry about that.

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I can't shut that off.

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I've got attorneys that are sending me emails, and I just –

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You know, it depends.

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Do you think Bitcoin is going to disappear and there's going to be Ethereum?

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It's extremely hard to say with any technology.

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It has a very large ecosystem, and generally things that are very large do manage to
kind of maneuver themselves into some kind of role no matter what happens.

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But it's still kind of – it's still very early, and like almost everyone in the
world still hasn't even had or used even a single tiny fraction of a Bitcoin yet.

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All right.

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Thank you very much, Vitalik.

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That was Ethereum, and there you have it.

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The future is a whole new world.

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Thank you.

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The future is a whole new world.

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Yeah, that's a funny phrase, right?

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It is.

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So I'm really not sure how me – you know, how I want to really start with this after
having watched this, having watched this with you.

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I think what we should do before we dig into this – I know I need a little bit more
coffee.

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I'm sure some viewers want to get set up.

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We've been going for about 20 minutes.

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Why don't we get a little bit of refresher?

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We'll take a break, and then we'll jump into – we'll just start with the Howey test.

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We'll start with Howey, and we'll talk about what that is and actually how that case
even became.

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And then we'll talk about maybe some of the formation of Ethereum and how that did.

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Yeah, someone says time to open some gin.

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Yes.

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We'll get out, and we'll come back.

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We'll be back in about five minutes.

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I'm going to stop the recording, but I'm going to let the sound roll in the forum so
folks can listen into the music because that's why they're here, really, is
Rihanna's music selection.

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All right.

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Well, remember, you're watching the I'm Not Your Lawyer show.

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This is Jason.

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We'll be back.