This weekend Scaling Bitcoin will take place in Hong Kong.

You are leaving tonight, as I understood.

But the reason I invited you to have a talk was because of Truthcoin, which is now being called Bitcoin Hivemind.

It interests me and also a lot of people whom I know.

And I was actually also very surprised to see that a lot of subjects you mentioned on the Truthcoin site really answered some questions for me.

For example, there is a lot of talk about Ethereum for the past two years.

All the time I'm wondering, I have a lot of questions about it and I read some.

I won't necessarily say answers, but at least your opinion to it.

That was very interesting.

And also your view on Augur and such.

So, welcome Paul.

Thanks for having me.

I'm glad that you enjoy the site, that's why it's there.

I see it as two sides of the same coin, or it's one big project of understanding,

which is creating a new Bitcoin project, but also explaining and comparing the other Bitcoin projects.

It's really kind of the same thing.

It's all about what is possible with blockchains and what isn't possible.

What's sort of a dead end and what is kind of an important problem to solve.

I think it's all part of the same thing.

That was kind of why it was all in the same name.

But now that it's gotten a little bit more serious, as you mentioned, we've renamed to Bitcoin Hivemind.

We haven't really exactly kind of promoted it yet, but that will start very soon, I think,

because we have some newer stuff that's kind of finished.

Especially because now it's like people I don't even know are going to the GitHub and submitting issues and closing issues.

So now it's sort of like leaking out, and so it's kind of partly a function of futility,

but it's also like it's kind of gotten to the point where people would be able to contribute

without causing more problems than they would solve.

So it's a very exciting time for the project.

Because when I heard about Truthcoin about a year ago or something,

I remember that I thought, when I heard the name, I just thought it's just another altcoin or whatever.

And when I read a little bit more, I thought, oh, it's some kind of academic project or whatever.

And with the last time, I see you pop up more often in different corners of the web space, to say it like that.

To be honest, I did not read the whole website.

It's pretty hard stuff.

I tried to read, but it's very, I mean, for example, the stuff about proof of stake and proof of work is, for me at least,

very difficult to digest food, to say it like that.

But very interesting.

So, Yannis, as far as I know, you had a question.

Yeah, that's probably for later.

But if we start talking about Truthcoin, how it works, a bit more of an advanced question, I guess.

But yeah, maybe that's the best.

Could you try to explain prediction markets and Truthcoin?

So, yeah.

So prediction markets are really, they're just the same as any other market, really.

That's the kind of interesting thing about them, is that we use markets every day to determine the price of very boring things.

And the price determines who can buy what in the marketplace, and the market determines who gets what.

So it determines allocation.

And it determines production as well, because if the price goes up, people think, wow, I should really get into the oil business,

because the price of oil is going through the roof, and I should research new oil technology,

and I should quit my job and work on an oil refinery or whatever.

So markets do all these things very, very well.

They transform subjective preferences and values into objective data that people can use to make plans and to make allocations of resources.

So it's a really simple first point, which is just that markets work.

They work very well.

Even when they don't work very well, they work the best, usually.

And so markets work great.

And so why not use the market structure to accomplish something that's a little different, but it's really mostly the same.

So the difference is that here there's no clear use for the actual predictions themselves.

So you'd just be buying and selling predictions the same way you'd buy and sell oil or gold or anything, Dow Jones Industrial Average.

And so you're buying and selling these predictions, and they're worth an amount of money if they're true, and they're worth nothing if they're false.

And so you can infer from the price how likely these events are.

And so you can see into the future with great reliability and have a huge track record of being extraordinarily accurate predictors of events like elections

and who will win certain academy awards and when certain people will be apprehended and all this other stuff that you'd kind of think would be very mystifying.

These things can predict months in advance with extreme accuracy.

In fact, if you compare them to normal people in any kind of apples to apples way,

if you compare them to a statistical model or expert panel or individual pundits or something, they always win by a lot.

So they do a very good job of settling issues where people have like a big conversation with a lot of people and there's no kind of clear consensus.

The market just gives you a consensus.

It says this is what the price is, and so this is the consensus.

And so they do that.

So this is just reusing the same marketing that works for everything else for specifically to get the price and not with the price just appearing as a byproduct.

So for example, if you would have a prediction that Hillary wins the elections and people can put their money on it and the price is high,

what does that actually mean?

Is the price high when everybody expects that Hillary will win or the opposite?

Not everybody.

So say you've got a piece of paper and it will magically become worth one dollar or one euro or whatever you like.

But let's say one dollar.

The piece of paper will magically become a dollar if Hillary Clinton is elected.

And then there's a different piece of paper that will magically become a dollar if and only if she's not elected US president in 2016 next year.

So what would it say to you if people are using the Hillary Clinton paper, Hillary Clinton does win.

They're using those as if they were dollars.

If you went to the store you could buy a three dollar item for three of these pieces of paper.

But no one cared what happened.

Everyone was just throwing out the pieces of paper that were for Hillary Clinton not winning.

They're just throwing those in the trash.

I mean a reasonable person would infer, not without needing to know really anything else.

They could infer that wow, whatever someone might say that they think.

It's pretty clear that almost no one cares about what happens to these not Hillary Clinton pieces of paper.

But people do care.

They're treating this one, this other kind as if they're worth a whole dollar.

So you can infer the likelihood of the event, in this case the likelihood of Hillary Clinton being elected president.

Just by inferring, just looking at the market price of these specific goods.

So if people expect Hillary to win, then the piece of paper which corresponds to her winning will be more difficult to get.

Because people care about it.

They put value in it or they append value to it.

And the piece of paper which corresponds to Hillary losing, people don't mind because they don't expect it.

So it's easy to get them.

So in other words, they're cheap.

So then it's ill.

If this is a prediction market and the price of Hillary losing is very low and Hillary winning is high,

then it actually means that if the price is high, a lot of people expect her to win.

But can you also say that because a lot of people expect her to win, that she will win?

Or is that something that the market has to prove?

Okay, so that's an interesting question.

So one thing about the market price is that whether people kind of accept this or not,

the market price is mostly unanimous.

So when you say people believe that Hillary Clinton will win, the market price is mostly unanimous.

So it's mostly unanimously agreed to be correct.

Because anyone who disagrees can supposedly, according to them, make money.

It's sort of like this free money sitting on a table that they can just pick up.

By picking up – whichever one is cheaper, they can just pick up.

And then when everyone else figures out, as we get closer to reality where these events will converge,

this person will be able to either sell or just redeem this thing for $1.

So there's this concept of complete agreement with the price.

There are these exceptions where people are too risk averse,

and the market isn't liquid enough for it to be worth their time to learn about what's going on.

Or if they're very, very poor, and they don't have any access to lending or borrowing,

and they can't team up with anyone or something like that.

So there are these kind of things.

But in general, the price is right, and it's always right according to everyone.

Because anyone who disagrees has the opportunity to change the forecast to something else.

And the only thing that's demanded is that they pay up if they're wrong,

and they get paid if they're right.

So they have every reason to keep this thing accurate.

So a kind of related question that you were asking, though, I think,

is that since this is about an election,

won't there be some kind of circularity to this?

People believe with their voting,

so maybe it's kind of a tautology or it's sort of self-fulfilling perhaps.

So the interesting thing there is that it's not necessarily the people who vote who would be betting.

So a lot of people, I would imagine, would bet and then not even bother to vote,

because particularly in the U.S., we have kind of a strange voting system,

which basically makes voting irrelevant,

because if you live in like a red state, your whole state will be red,

and so nothing you do matters.

If you yourself are red, if you are blue, it doesn't matter,

because your state will just be red, and that's the end of that.

In the U.K., they have also something like this,

because the guy from UKIP, he was very popular across the whole country,

but because he only got in one district the majority,

in the end, at the national level, he had just, let's say, 3% of the votes,

or at least 3% of the districts,

but while he, on a national scale, he had like 30% or 5% or whatever,

and it's kind of like the same in the U.S., as far as I understand.

Yeah, it absolutely is.

If you're a third party, you basically can't win.

You're sort of throwing your vote away.

Furthermore, it's, well, yeah, there's lots to talk about that.

We could talk about that for a really long time,

but yeah, there are all kinds of complications

that make it kind of pointless to even vote.

So a lot of people who are really informed probably don't vote,

but they might bet to try and make money

to use their understanding of what's going on to their advantage.

The other thing is you have a lot of people who actually can't vote,

because maybe, I don't know, they're too young,

or they're like a felon or something,

or they don't live in the United States.

You can imagine that someone who's very good at political science

or very good at sociology or something,

and they're not a U.S. citizen.

They live in, you know, I don't know, they live in Japan or something,

and they might be...

So that's an interesting thing is that it's not necessarily the same groups,

and so since it's not the same groups, which group should win?

And markets should always win,

because although certain people prefer a certain outcome,

and they'll cast a vote for that outcome,

or they will try to change reality to make that outcome happen,

some people prefer a certain outcome,

but everyone prefers to make more money.

So it's necessarily a subset,

these people who might affect the outcome.

Everyone who might affect the outcome is free to bet on the outcome,

but it's not the case that everyone who might bet

is free to, or would want to, or would care about affecting the outcome.

So that's kind of an interesting asymmetry

where it's...

There's a lot of power in the fact that anyone can just show up to a market

and participate in it, anyone.

And people can, of course...

Another huge difference is that you only get one vote

when you actually vote,

but in a market, you're free to double down.

You can just keep going.

I'm certain.

I know exactly why all those other people have made the price $37,

and I know it should be more than $37.

So they can just keep putting more and more of their own money down.

It doesn't have to be $1.

It could be $2 or $4,

or they can take a second mortgage on the house

and put the hundreds of thousands of dollars into this thing.

If they're sure that $37 or whatever the price is is a steal,

they should be maybe not willing to do something that risky,

but they should be, obviously,

they would be putting more money than someone who's not as certain.

And a final thing is that markets reward people who have meta-knowledge.

So when you cast a vote,

you may cast a vote simply on principle

because you agree with the candidate.

Maybe you cast a strategic vote.

Maybe you don't.

It doesn't really matter.

But the point is you cast a vote.

Your motivation, most people's motivation is purely altruistic.

They believe that this is the way the country should be governed and approved,

and they cast a vote for that reason.

But with a market, you want to look at, okay,

what do I really think will actually happen in this voting outcome?

And then you look at the market price and you say,

why is the market price that?

What does everyone else, everyone who's not me,

because anyone can participate,

anyone can participate in the market,

anyone in the whole world.

And you say, what's so different about me that I think the price should be this

versus some other thing?

And if you think, well, I don't really know.

I don't really know.

I don't think there's anything special about me.

You'll just shut up, and you won't put your money into the market.

And that's the magic that makes it work.

The magic that makes it work is that it just filters out all these people who

can't really, who don't have this kind of moment of certainty that says,

I know why my contribution to this market is the most important out of

everyone in the world, because people would look at the market price,

and they'd say, oh, you know,

the market just hasn't learned about that the news broke that, you know,

candidate X murdered that person or something, and they're going to lose.

You know, I'm the first one to know about that, or something like that.

Or they know, like, I am an expert on this,

and there's going to be an oil shortage right before the election that will

make everyone miserable or something.

So that's a big difference.

But to make it more practical to understand,

am I right that Truthcoin is kind of like the bookies in England, in the UK?

In the sense that, you know, in the UK, you can bet on an outcome of games.

For example, if, you know...

Horse races.

Sorry?

Horse races is one of them, isn't it?

Yeah, yeah.

And, you know, horse A wins from...

Of course.

Or the United...

Sorry?

Yeah, so obviously the English are great at betting,

and they should be respected for that kind of...

It's sort of seen as a noble thing.

So, yeah, there are a lot of bookies in, you know, the UK in particular.

But one difference is that these are markets, and they're not...

So the bookies set the odds,

and they collect a little commission for their services.

But with this, the odds will change in a market environment.

So the market...

So although they are kind of similar,

I would say a bookie is sort of like a prediction market that's kind of frozen in time.

Yeah, but, I mean, to make it more practical, how does it work?

I put up a statement.

I say, I believe Hillary wins.

And then, I mean...

The technical details are that someone would create some event that they want reported,

and this would cost some money,

and this would go into the blockchain algorithm.

And then, secondly, someone would create a market using this event,

which I call a decision.

So Hillary Clinton being elected would be like a yes or no decision.

You use a market with this decision.

The reason this is in two steps is because, actually,

you can create lots of fancier markets that use multiple decisions at once,

or use a different decision in a different way,

or something like that.

But you can kind of ignore that for this simple example.

And so you've got...

Yeah, but to say it like this, I put out a statement,

and once it's out, people can start betting on yes or no.

Right, so that would be like where we are.

Right, so the market would be created,

and there's this concept of a scoring rule,

which is a type of...

I guess you could call it an interface.

So it's really the type of market,

but explaining about market types is usually kind of a complicated thing.

But instead of...

There's usually something called a double auction,

where people bid in both ways.

So they bid on buying a stock.

They'll say, I'll pay $5 for the stock.

I'll pay $7 for the stock.

I'll pay $9 for the stock.

I'll pay $20 for the stock.

And then other people bid in the other way,

which is why it's called a double auction.

So they'll say, okay, I'll sell the stock for $40.

I'll sell the stock for $30.

I'll sell the stock for $20 or whatever.

I'll sell it for $19 because I'm really desperate,

and I really want money.

So there's this double auction, and then when they overlap,

people match those up and the trade gets executed.

But a scoring rule is a little different.

It's just a little bit more appropriate to a blockchain

because you don't have to store anything intermediate.

Either the transaction just goes through or it doesn't.

So that's a little easier.

Yeah, but the whole point...

I mean, you know, let's say I believe it's true.

I believe Hillary will win, so I believe the statement is true.

I mean, and if in the end I'm right, I mean,

is there a reward or something?

Of course, you bid actual money, yes.

So you would get...

Let's say it's created where, you know,

upon its creation, the prices are, you know, half, 50%, 50%.

And someone believes that she won't be elected,

and they put a little bit of money on the no side.

You could put a little bit of money on the yes side,

and I don't know.

You know, it depends on...

The price is going to change based on how much money has been placed down.

But let's just say that money has been placed down

and the price is still 50-50 for some, you know,

because the amounts have been sort of equal.

And you could put whatever the equivalent of, you know,

2 euros worth of Bitcoin down.

And then upon the conclusion, if Hillary Clinton is actually elected,

the prices will be fixed.

The market prices will be fixed at the very end of the process at 1 and 0.

And so even though you spent 2 euro-ish on something that was 50%,

so you got 4 shares,

you'd be able to sell each of the 4 shares at a price of 1, you know, euro.

We're glossing over the details of the exchange rate,

which you can... there's stuff on that.

But, yeah, so you put 2 euros in, you have 4 euros out.

And so now you're a happy guy.

Someone else put 2 euros in, they get 0 out.

Their 2 euros went to you.

Yeah, okay.

So the reward I get is the loss someone else has because someone...

Yes.

You know, for example, just to make it very practical,

we have, let's say, 100 voters or 100 people who participate.

60 say Hillary wins, 40 say Hillary loses.

And just to keep it simple,

everybody has put in the same amount of money.

So that means that 60% of the winners get, let's say,

the 1 euro or dollar from the 40.

So to say it like this,

the reward of the winners is 4 divided 60.

Yeah.

Not quite, but yeah, I mean, that's in a general sense, yes. But again, there's a time dimension

that's important. So lots of people bet earlier... The earlier you move, the right, the better.

So that's a normal thing. But yeah, and basically you are correct in saying that all the money

won is coming from someone else who lost it. So that... But that's the same as in every

market, right? Yeah. Some people will go... You go long, the oil futures or whatever with

dollars and if the dollar per oil price goes up, then you win. But if the dollar per oil

price goes down, you lose. So that's just a totally normal feature of markets. But I

mean, because it sounds still something like that somehow should be managed by people.

But I understood from some parts of your website that one of your opinions is that about oracles,

that you actually think that... Please correct me if I say it wrong, that

for a lot of things that you could use prediction markets as oracles, if I'm right.

Of course, yes. You could... Well, it's sort of like an oracle. It's a little bit... Basically,

my definition of an oracle is something that where the human provides some information.

So you can use... I would say oracles are required for prediction markets. However,

prediction markets themselves, they could... It's a very general term. So you could use

prediction markets to create other smart contracts like the prediction... Instead of

the decision being Hillary Clinton being elected or some other price feed in finance or something

like that, the decision, this question here, this event, that could just be some computer

code or something. And this could be a lot simpler. So the concept of a prediction market

is very general. It's just another financial derivative based on something. So that's the

cool thing about this project is that it expands the blockchain's world to include oracles so that

it can learn about the outside world and you can use that information however you like. So...

Very, very well with the participants are already in the blockchain and they're in the

signature system, right? So you can have your third party sign off on any kind of

payment channel or multi-signature transaction or something like that, right? So if you trust

the third party, the third party can do everything. Everything for you. It can run the prediction

market website. It can run any type of thing, right? Basically, almost anything. As long as

you want to trust the third party. But as soon as you want to do something else where you want

the data to be trustworthy and you don't want an individual to have the authority to

manipulate that data and steal the derivative funds, then that's kind of where this thing

comes in. But yeah, Bitcoin you can almost do almost everything with. This is kind of a very

ambitious plug-in. Yeah, because I understood that, I mean, one of the problems I often have

with understanding smart contracts, for example, is that, I mean, you know, in a conceptual way,

it all sounds very nice. But then you think, you know, there are, of course, a lot of contracts

which are very difficult to fully automize. Oh yeah. And I understood that your idea would be

that, for example, if we have a prediction market which says that Hillary will win or lose,

that, you know, the market somehow has to get to know if she really won or lose.

Absolutely. And then the idea is that people can cast a vote if she really won.

I mean, if they have the conclusion that she really won and then you take the

general outcome of that vote, if I'm right. And the general outcome of that vote means

if she has really won and that outcome can be used by the prediction market to know

what was the outcome of the election. Yeah, so the question of how does the

blockchain actually learn what happened, that is what the project is really about and what

the white paper is really about because that is very difficult to do for a lot of obvious reasons

that if there's millions of dollars hanging on this marketplace, anyone who could change what

the blockchain concludes can take all that money. So I do a variety of things to try and make that

data available in the correct way and one way is that I exploit time. We don't know today who will

win but it will be very obvious this time next year in December of 2016, it will be very obvious

who won and so there's no kind of like cost of ambiguity or kind of like uncertainty.

Anyone who doesn't say the right winner, the right answer is deliberately intending to lie.

So that's a nice thing. We can make the search cost very low by just putting them after

the event actually takes place and since this is all like a finance marketplace thing,

as long as the ultimate resolution is correct, it shouldn't really impact

in a significant way people who are using the marketplace. So that's kind of a cool thing but

the main thing I do is I have people, I've kind of blocked the votes into big groups,

to big matrices. So I force multiple people to vote on multiple things. So one person doesn't

just vote on Hillary Clinton, you have to vote on everything and they're all blocked based on time.

So they probably don't have very much to do with each other other than time, although they may and

that's fine. So it's kind of like at the Dutch television, there they often, I guess it's the

same in America, they often have panels from viewers of that show. So then they have some

news about the Dutch politician saying something and then they ask their panel what did you think

of it and I mean as far as I understand those things is that the votes, they often have let's

say 20,000 viewers who take part in such panels and the longer someone has voted,

the more meaningful his vote becomes in the next vote because you can kind of normalize his votes.

You know, it's kind of... Yeah, so I do a lot of things. It's much better for people to, I think,

if they're very interested, they can read the white paper and hopefully it makes sense and

if it's not clear, then you can email me and I'll try to clarify it so that everyone can enjoy

more clarity, but I do a lot of things so basically people have to buy in in order to vote.

You have to buy into this kind of corporation, so it's like a corporation type model where you get

votes based on how many shares you have and then I do this cool statistical trick since everyone's

voting on multiple things where the votes cross-reference each other and I know if you're

planning on lying, you'll eventually create something like a totally different reality

where it's going to be very obvious because you have to lie about a lot of things,

otherwise this thing will kind of catch you as being a multivariate kind of outlier in this

giant space. But so to say it like this, you are creating an, let's say, automated environment

where people can earn in a certain way or have an incentive to tell the truth

as they know it at least and you could compare it or to a certain degree you are automating

the Amazon Mechanical Turk away. Yeah, it's sort of, yeah right, so Mechanical Turk is a great

example because the scope of this project is just things that are easily locatable and then

simple choices. So the only thing that someone can do is like tell the truth or lie and so if

they're going to lie, it's deliberate and if it's going to be deliberate, they're going to have to

lie about lots of things because they're either going to, either it's just going to fail outright

because they don't own enough shares of the corporation or the corporation's market cap

will explode because the corporation will have kind of deceived everyone and betrayed its

customers and lost everything. So they have to make up for what they paid to buy in or the third

threat is that they change this reality so much that there's like a waiting period and sort of

like a minor veto concept. They just change it so much that miners just kind of refuse to

go with it and they just build on something that demands a redo and there's plenty of time for

people to learn that and it's very easy for miners to check because again, you voted on everything.

So if this thing is saying all kinds of nonsense stuff about who won the Super Bowl, who got

elected, what prices are backwards from what they are in financial markets, this whole stuff is

backwards and it's going to be pretty easy for miners to tell and it will only take like

one phone conversation for 15 minutes for them to decide sometime during like a week.

You have these tremendous threats that on the high end and then I build in more threats at the

medium end and then I build in lots of threats at the shallow end, which encourages all the

actual work to be done there by these people who vote and the voting corporation collects

trading fees as a result and they get money and this thing has a market capitalization

and the market capitalization is what you have to pay in order to get voting ability or voting

weight and so that prevents civil attacks, et cetera, exit scams because you don't want to

exit scam now, you can just sell your shares. If you've been doing great, now you can just sell.

If you added a lot of value and built up a lot of reputation, you can just sell it.

But it's much better to read, it's not really the kind of thing that can be explained

in a few minutes. Could you compare it for example with,

I read the comparison with when there is a crime, the police just starts questioning

bystanders and of course they can all lie but because it's way more difficult to lie

organized, to say it like this. Absolutely, coordination, yes.

Yeah, you're completely correct. So the whole point is that…

Everyone already knows what the truth is for free.

Yeah, it's easier to tell the truth, it's easier to tell,

coordinate, yeah. That's the principle.

It takes less coordination to tell the truth than to lie.

Because you can already coordinate with reality because you just saw it.

And could you also compare it to that, I mean the idea behind Bitcoin mining and behind…

Absolutely, yes.

Double spending is that Bitcoin in itself strictly speaking is not,

you know, the transactions that end up in the blockchain don't necessarily,

they are not necessarily a complete true resemblance of all the transactions but it's just

a real, it's just easier to, sorry, in the end Bitcoin is based on the idea that

he who shouts louder than others is more right. I mean that sounds a little bit not nice.

It's, you know, I think what you're getting at is that the heaviest chain rule,

that's reality, it's known to everyone. Everyone can add up all the different possible chains

and they can see which one has the highest number of points, the highest amount of total work.

And so that's exactly how Bitcoin works. And so everyone knows, so someone might say

you have this incentive, okay, let's move on to this other chain because we'll double spend

and we'll make a lot of money. But in both Hivemind and in Bitcoin, you can't double work,

right, you only own a certain percentage. The corporation has these shares and they add up to

100% of the voting power and so if you allocate your voting power to one thing, you can't allocate

it to another thing and you will suffer financially if you aren't with the consensus and that's

exactly how mining works because if you mine on top of the wrong chain, no one will accept

your coins and you spend a lot of mining power on nothing. So it is very similar in that way.

Okay, and I was also wondering, are you known with the Liquid Democracy Project?

I'm actually not but I have some ideas. So I have a strong feeling that my fate in the future

is going to be related to something like, I have kind of like a second kind of idea past this

because part of this is that you'd want to vote, what you'd like to do is…

Delegate a vote.

Yeah, what you would like to do is you'd want to have individual citizens vote for a candidate

based on how likely that candidate is to achieve some goal. But usually the goal would be something

like low unemployment or high GDP or something else, you know, economic growth or something.

And those things, it doesn't matter, you know, if those things are measured by the government

and provided centrally, it's kind of not going to work. So I have a strong feeling that I'll be

involved in another kind of project later, which is about more like a grassroots kind of

making sure that voting is transparent, making sure that data is transparent and other kind of

things like that. So, but I'm kind of putting that off a little bit.

I'm missing, to be honest, I'm missing your point about the GDP stuff. But the

what I meant is, what is interesting about it is that

they, with liquid democracy, in the beginning it was about,

let's say, automizing the whole election process.

But then I heard about that you could also say, for example, I could say

that Janusz can vote for me if I, for whatever reason, don't want to vote. I can say Janusz

knows a lot about whatever. And so I can delegate my voting power to some other people. And I

understood that liquid democracy also tries to, they try to.

And so does this in a way, because it delegates your thinking in a way. It helps you out,

it helps you. You don't have to do a lot of this stuff. You don't have to do a lot of this

thinking yourself. You can trust the thinking done by the market because you know that anyone

who's trying to manipulate it might have other experts right at their throat undoing that.

And so it's much, much scarier to try. And it's very easy to just go on television news and just

say, you think this or you think that. That's easy. It doesn't cost you anything when you end

up being wrong. But with something like a prediction market, it costs you big if you are

wrong and other people want your money. That money goes to them if they can prove that you

were wrong much earlier before you cast your vote, before any of this happens. So that is,

so that's sort of a similarity. Yeah, it's a complicated issue. But yeah, so I think right

now one thing as we discussed, voting doesn't really make a difference. So it doesn't really

matter. But once, if a project like this makes it so that voting does make a difference,

then you know, then we'll see like really like then I think the actual, you know,

people will lose votes and they'll forge votes, right. Then it will actually matter

a little bit more. And so we have to kind of, we have to keep a close eye on all the different

parts of the process is what I was saying to make sure that the weakest link is always

a pretty strong one. The reason I'm asking is because I read something like,

that I don't remember exactly, but that I mean, if you're really wins or loses,

that's a digital choice. It's yes or no. But you, I also read something on your site about

that you could, let's say, you could vote on different, let's say, sub-choices.

Yes. Which can make up a bigger choice. And that's, and what I found interesting about

liquid democracy is that they also have something like that, that you, that they,

I mean, the government, that me as a citizen, I don't vote how much trees will end up in my

streets, but that I can say, I like a green street. And that's, you know, that the decision

tends to understand what a green street means or something, you know, but that's why,

why, that's the resemblance I saw, I read with truth.

I agree, yes. I think there is, I think there is some. I mean, it's going to be really hard,

liquid democracy, right? If you're going to be changing the way people vote, that you're going

to have to go through the actual political process in order to make that change, which is going to

be almost impossible, I think. But it's, it's certainly a good idea to have lots of people

thinking about these different ideas, and like I was saying, I think there'll probably be some

changes once it's easier for the public to actually cast an informed vote, and so then it might be

nice to have. But I don't think, I mean, it's going to be very difficult to get someone to,

like, amend the constitution to allow people to delegate their votes to other people that

I don't expect that to happen.

I was wondering a bit differently, I'm not sure if it's,

because all the decisions are basically recorded, so you could say that if you record them for

eternity, you have a sort of like a history book of facts, or sort of like a Wikipedia of facts,

or like, yeah, I don't know why you want to call it.

Yeah, all the prices, assuming that those don't, that those that, which don't take place in like

some kind of payment channel or something off-chain. But yeah, even though the prices

are recorded, so you have an interesting kind of book, not a record of what happened, but also

what, when people thought that something happened. One very interesting thing is that Barack Obama,

or the Democratic candidate's victory in the year, the 2008 election in the United States,

the Democratic party, the left's blue party, that was trading on intrade above 50% for,

I think, like a year and a half before the election. So it was suspected or known that

the Democrat would win, and it was over 60% for much of that time as well, so it was really

suspect. People, somehow people really knew that, you know. And so that goes to an interesting

question of what drives the voters, what drives the voters to cast a vote for whatever. I mean,

is it just, do they decide early on, and then, you know, maybe they decide, if there are four-year

terms, four years in between each election, maybe they really decide like halfway through,

and by the time all the campaign ads come out, or whatever, you know, that most people have

kind of just made up their mind that they're not happy, or that they are happy, and that they're

going to stick with whatever party, or whatever they're going to do. But one thing, though,

is that the negative ads are to manipulate voter turnout primarily, they're not about,

but they don't seem, but that still wouldn't matter, right, because if something is over 60%,

I mean, that's pointing to a likelihood that this thing will happen. And if it happens,

and if that likelihood happens way earlier, like way before all this ad spending, it's kind of

unknown, like what effect, if any. What we'd really like to get away from, right, is people

attempting to manipulate who you vote for at all, through a debate, through an ad, through anything.

Like, what we just want is we just want whoever the best guy is for the job. We just want to be

able to find that guy. We don't really care about our guy or our girl. Although I'm afraid

it does give smart people more insight into what a good or a bad strategy is, and next time they

will find a better strategy. Yeah, maybe, right, so right, of course, this would make it more easy

for them to manipulate. Yeah, that's an interesting concern. Yeah, one would hope, that's completely

right, but I would hope that the arms race would terminate, ultimately, and people, they would sit

down on day one of the planning, right, and they'd say, we need to get this guy elected. And they

need to say, what economic strategy would actually work, you know, like, what would actually work

so that when the traders ultimately start attacking this guy, you know, they start betting on him and

good economy overlap, that they bet that our candidate, candidate X, you know, that we want

to win, they'll bet that he will be great or he or she will be great for unemployment or something.

So they'll put together a plan that actually will.

Decrease unemployment, which is exactly what we want.

The right policy is worse.

Exactly, if both candidates are doing that, we don't really care which one wins.

Yeah, exactly. The right policy is sort of the side effect of…

Exactly, right. That's part of the arms race, where one candidate says, well, screw you, I'm going to go back to the drawing board and think of a really great idea for the country that really improves everyone's, you know,

will really improve everyone's welfare, no matter how weird it sounds or whatever, you know, because I want these numbers to move. So that's kind of a hope, obviously.

Yeah.

That would be much better.

Definitely nice, yeah.

And, yeah, another one.

Assuming that there's at least a bit of, like, self-fulfilling prophecy going on with voting for politicians and stuff, then you would think that, like, the Hillary campaign would buy, like, a lot of the Hillary wins bets.

So they put in, like, a million dollars or whatever. It will obviously influence the price, but will the price go back to, like, the real price?

Yeah, not only am I not concerned about that, I'm almost counting on it in a way.

Subsidizing, yeah.

The money, yeah, they've subsidized the market in a sense. So if they put a million dollars in, now people think, if someone knows that, so this goes back to the meta-knowledge point I tried to raise earlier, where people think, hey, wait a minute, this price just moved kind of basically for no reason.

I mean, it's not like anything relevant happened. I don't think anything relevant happened. So I wonder why is the price up?

And then they think, well, maybe Hillary Clinton just dumped a bunch of money. Hillary Clinton's campaign just dumped a bunch of money in there.

And so this would encourage people to kind of investigate and research what it is.

Basically, they would research at the conclusion of this arms race, they would be researching the factors that lead to how likely it is that Hillary Clinton is elected.

So they'd be looking at the actual real likelihood, and that's exactly what you want them to look at.

But there are lots of reasons why I'm not really worried about that.

One is that if the Hillary Clinton campaign is doing this, there will be people, unpaid interns or whatever, people who don't really care, janitor or whatever.

There will be people who kind of find out about it, and they'll know that, hey, wait a minute, this is all fake.

I should be picking up a couple of these cheap shares on the off chance that this plan fails.

And now these really cheap shares that will be worth a dollar, I can get a huge return this way.

And there will be lots of people like that.

The sheep attract the wolves, sort of saying, in finance.

And so there are these people around and they can trade for fun or trade to do whatever.

But they will be killed by the wolves.

The only question there is, is the market going to be liquid enough?

Because there's a fixed amount of shares, isn't there?

No, that's not the case.

But the shares are issued by the rule, and so that's a very interesting process.

Of course, there are a fixed amount, but it's some giant issue.

But you're all right that there's a liquidity.

There's always a question of liquidity everywhere.

And so people may spend money and move the price in an annoying way.

And people just think there's not enough money sitting in this market for me to bother wanting to correct it.

That's why it would be phenomenal if the Hillary Clinton campaign would dump a million dollars in the market.

That would be very cool because lots of people would be betting on no just to buy these shares that are worth near zero.

And it's certainly not a foregone conclusion that zero is certainly too low.

So anyone with a finance mind, it's just your basics of finance, right?

Maybe if there are 100 prediction markets and they're all manipulated so that the price is pushed to 100%, 0%.

Then all you have to do is you take $1 and you just split it in all the markets.

And you just buy a little bit of the 0% and all of them.

And you end up with tons of shares because the price is basically zero or near zero.

And you end up with tons of shares, and there's no way that all of them were really zero because they're all manipulated.

And so there would be lots of people with a lot of money.

But there needs to be enough shares.

Liquidity is unfortunate, yes.

You do need people to disagree and for them to fight it out in the market with their money to build a more liquid marketplace.

So one thing that I allow, one thing that I built in is that the people who create, they list the decisions and they list these markets.

They create them. They're sort of like entrepreneurs and they want a lot of trading in the market.

So they'll only create an event if they think that there will be trading in it.

And they will get rewarded if they are right and punished if they are wrong.

So they pay like a fixed amount and they get a percentage of – they get a cut of the trading as a result.

And one thing that they can do to encourage to kind of kickstart this thing is not only can they just buy and sell as a trader themselves.

But they can do this kind of operation within the market scoring rule that makes it more liquid, the market more liquid on all sides.

So I would hope that they would do that.

But of course that costs money and that's money that they won't get back.

That's part of their investment in the market.

So I don't know exactly how that will play out.

But I've tried to give people the tools so that if there is any overlap, preference overlap, then everyone can take advantage of it.

But Paul, you mean that it simply is not interesting.

The Truthcoin needs disagreements because things where everybody agrees about, it just doesn't make sense to make a statement out of it.

Right.

Okay.

Yeah, because there wouldn't really be a lot of trading.

So you'd want something where – you'd want to have a case where two people disagreed publicly and you could create the market.

And you could challenge both of them to put up some money.

And then maybe you would succeed in getting one of them to back down and you'd resolve the disagreement.

But you wouldn't really get a lot of money that way.

So that's kind of an annoying little thing.

See, what you really want is two people who are really, really committed to their position.

So you want the big disagreements in the world.

So you want to solve the biggest problems that people really, really disagree.

So for example, Yanis thinks that Jeff Bezos will be the first one at Mars.

And I think Elon Musk will be the one.

That could be.

That could very easily be.

That's kind of personal.

But yeah, you could see people getting excited about that, you know, because it's Mars and it's Elon Musk.

And they're both, I mean…

They're both really serious about it, yeah.

Yeah, but could it also be that, just for example, that Elon Musk and Jeff Bezos agree on a prediction?

Or agree that they kind of have a duel, in the sense that they put out a prediction.

And that, for example, I mean, could they themselves somehow profit from a prediction?

In the sense that, let's say that Jeff and Elon on Twitter agree that the one who wins the prediction gets some reward or something.

Which makes it even more easier to get to Mars or whatever.

I mean, because they get more money or whatever.

Is that…

Sure, you could say, someone could say a complicated thing like, conditional on them winning this grant money, will they make it to Mars?

And they can bet in the prediction market that if they get the grant money, they'll make it to Mars.

And then they can show people, hey, you should give us this grant money because look at how much more likely we are to make it to Mars.

Or you should back us, our ideas better.

Or the individual engineers working for Elon Musk or whatever.

Musk could set up a prediction market and say, okay, here's strategy number one, here's strategy number two and here's strategy number three.

Each of them might take us to Mars or might end in failure.

And which of the three is most likely to actually succeed and then people could bet there within the company.

You wouldn't necessarily need a blockchain for that because a private company could just do it with their own database or something.

But that's a cool prediction market thing is that a lot of times, to quote Robin Hanson, when you ask people a question,

most of the time they tell you what they think you want to hear or what they want – they tell you some kind of thing that – they tell you what they want to be heard as having said.

It's for some political reason.

So when you ask people a question, they usually tell you what you want to know and not what they really know.

So we have this total loss of great information immediately for everyone, which is not helpful.

Yeah, because I was also wondering, I mean, so for example, as being the subject of the statement is not a problem for putting out a statement in this case.

But I mean, now, as we've been talking about it now, it would be about clear general statements.

But could you also, to a certain degree, outsource – yeah, your brain is a big word – but I mean, could you, let's say, could you be running a company based on predictions?

Yeah, people make decisions of all kinds, including business decisions, based on stock market data and price of commodities.

If you're going to be – if you're like a – maybe you remodel homes, you know, you build homes, you build houses.

You would need to know like the price of things, like the price of copper, you know, copper futures or spot prices or whatever.

You know, if you're going to put in copper pipes or plastic pipes or whatever.

So people use market data.

They kind of free ride, really.

They free ride on the market data.

They use it, even if they're not directly participating.

And yeah, people who are going to start a business use all kinds of important data to indicate whether or not they have enough sales to justify expanding or starting a new business.

So yeah, you could easily use this information for any reason.

I also mean that – because now it is – like we've been talking about it now, it's about very general statements, very general.

But can you all – I mean, it would be nice if you could really, you know, make – if you could somehow outsource your brain capacity.

That's basically what you're doing by betting, I guess.

Sorry?

Yeah, that's kind of what we're doing.

That's what you're already doing by betting.

Yeah, but I just want to say like this.

Could you write a program, a decentralized autonomous organization or whatever, and say that, you know, for certain degrees the program wants to know outside real world decisions.

Or somehow, you know, sometimes there have to be made decisions.

And that you could say, I use the prediction markets as the oracle for those decisions.

I don't know about that because – maybe, I don't know.

It's not really clear because the oracles only be listed if people think that there will be trading fees.

So I don't know.

But yeah, you could use this process that I built in just a direct way.

And you could just say – this is called – sometimes it's called like eigen trust or something with the vote cross-referencing thing.

And you could just have that happen like a discrete time and not have this ongoing kind of corporation thing.

I don't really have the most time.

I've got stuff to pack a little bit and then go.

Okay.

The plane.

Do you guys have any other great questions?

Yeah.

Another thing is about your – why proof of stake isn't cheaper and isn't better than proof of work.

I was wondering.

Sorry?

I just said it's not.

So please.

Yeah.

Why proof of stake isn't cheaper and isn't better than proof of work.

And could you – because we were talking about the elections in America.

I mean could you to a certain degree compare it to – in theory elections are very sound in the sense that if everybody chooses and make up their own mind it should work.

But in reality of course the candidates with the most money is in the end the most likely to win the elections.

I mean not necessarily but it's always good to have some billions behind you.

Yeah.

So that's interesting.

So proof of work.

Yeah.

So what actually happens and what a lot of people apparently don't understand which I think is pretty simple.

But the block – each Bitcoin block releases a quantity of Bitcoins which is currently 25 plus fees which are very low.

Which are like 01 or something.

So 25.01.

That's released.

That has a value of purchasing power, you know.

You could say it's worth whatever $8,000 or whatever it is.

And you could say with $8,000 I could buy you know one hamburger a day for like I don't know 500 days or whatever it is.

However expensive hamburgers are.

So the point is there's this benefit for each block.

It's worth you know a year of hamburgers to you or something you know.

And so that is where the work – that is the source of the work.

That is the genesis of people working and fighting over this benefit that's created.

So it's the same thing in the election world.

Because the federal government has lots of stuff to give out, people will fight and they'll spend money and they'll do whatever it takes to achieve that resource.

In addition to any benefit they get, any warm fuzzy feelings they get by running the country or trying to make the world a better place or just their lust for power or whatever it is.

But in addition to that, if there are these kickbacks, you know these rewards that you can give out to people as the king.

Everyone's going to want to be the king and they're going to fight over it.

The more powerful the king is, the more brutal the competition will be over who is the next leader.

So that's kind of a similarity there I think.

Kind of a nice analogy actually.

Yeah, because the problem is that I really like the stuff but that's the stuff which is not the core for your project.

But I read about your proof of stake and the other things about Augur.

I mean it was really for me enlightening to say it like this.

Thank you, glad you enjoyed it.

But I don't want to mess too much with your time.

Yeah, maybe we can continue this conversation because I'll be at the airport for a while and then I'll be in my Hong Kong hotel.

So there's plenty of opportunity to talk in the future.

Yeah, of course.

I mean if you like to, we would also like to because at least to me this is a very unexplored area.

And to be honest I think also to a lot of other people and listeners.

Just one last question.

What do you expect of scaling Bitcoin?

Yeah, great question.

So I have kind of a problem.

There's a little bit of a contradiction, isn't there?

On one hand it's claimed that, you know, quote, no decisions will be made at the conference, close quote.

And that's supposed to be this important thing to stop people's feelings from getting hurt.

Stopping people from feeling that they've been left out or something.

I don't know, I'm not totally sure.

You know, anonymous people can't show up as their digital identity or something.

So on the one hand there's that, but then I think there's a contradictory.

The point of a conference is to get something done.

And how can nothing get done with this concept of no decisions being made?

Yeah, the whole point is that.

Right, what else would we be doing there?

It's an implicit process.

Yeah, right, of course.

And so there's lots of grounds for criticism.

And also just grounds for just kind of foolishness because you're trapped, right.

You don't want to make a decision.

At the same time it would be pointless to achieve nothing at the conference.

So, you know, I don't know.

That's something that always bothered me about the mission.

I mean, clearly, so I think clearly the mission is sort of like an almost,

kind of, I don't think it's like a wink-wink, like don't decide anything, you know,

but secretly do.

I don't think that's the case, but I do think that there is this kind of vague hope

that it's just sort of like bring everyone in the room and hope,

and just kind of hope that something will happen.

And so the last, the Montreal conference, everyone took it very seriously

and I think it went great.

And I think there was a lot of happiness produced, but a lot of understanding.

And everyone got to benefit, I think, and now it's all like on YouTube

and people can benefit if they wish by watching those things.

And I hope that that will, that's what I expect to happen.

To answer your question, that's what I expect to happen again,

that there will be more happiness and there will be more benefit.

But there is this looming contradiction of what exactly is the point of all this.

And I don't, I really, I would, you know, I have a lot of ideas on Bitcoin's governance

and I don't know exactly what, I mean, I'm not sure what the future holds for that.

But this contradiction bothers me and I don't, I hope it bothers other people

because it doesn't really make sense, does it?

Yeah, but maybe you should see it like, you know, because as far as you understood,

people were, in the past, were shouting at each other on forums.

And this is a way of getting people together in one room, one big room,

and to listen to each other.

And of course there is an implicit process at the least.

And so, I mean, yeah.

Yeah, I think it will be very helpful.

I just, I kind of think we should just drop the, you know,

why is it saying that no decisions will be made?

I think it should just say, decide whatever you like.

And don't feel like you have to wait, you don't have to wait for the conference.

You can decide earlier or you can decide afterward.

I mean, what difference does it make, right?

I mean, it's all arbitrary anyway, there's no leader.

So, it's kind of like, you can make a decision, any decisions you like,

before the conference, and then you can make any decisions you like after,

but during the conference is the one time that you can't.

Like, what does that even mean?

Like, who are they even speaking for when they say no decisions will be made?

Like, it doesn't make any sense to me.

So, I mean, it was a nice attempt to make people feel good,

but obviously I want people to feel good.

I don't know what that's supposed to be.

That's not really anything.

So, I think the contradiction, only one, we can only have one,

and I think we should drop that.

That weird, that looming kind of threat,

that you shouldn't be able to decide anything.

I don't get that.

So, that's what I, but I think, I expect the conference will do the same.

It will be, there will be progress made on people,

there will be progress made on people understanding,

people making their concerns known,

and so that's going to be a really great thing, I think.

So, I look forward to it a lot,

and a lot of cool people will be there, and it will be an opportunity.

I mean, when you talk to someone online,

you don't really get to know them,

but if you just spend 10 minutes with them in a bar,

they will, like, kind of be your friend,

and there's not really a lot of friendship in the Bitcoin world, right?

There's not really a lot of, like, teamwork or anything.

It's just kind of, people just, it's part of the decentralization.

People just kind of show up.

They hear about Bitcoin, they just kind of show up from everywhere,

and it's nice to, because human beings don't really work that way,

so it's nice to return this to something where the human brain

will actually be able to do something productive.

So, I look forward to it a lot.

I think it will be great.

Do you think whatever ideas come up,

it should trickle down to some sort of decision sooner or later, right?

One would hope.

I mean, what if that didn't happen, right?

That would be the best time.

Yeah, that would be the best time.

Sort of like, you know, yeah.

But anyway, nice talking to you guys.

Thanks a lot.

We should definitely do this again.

Yeah.

Thanks.

Paul, thank you for answering our questions.

My pleasure.

And we'll hope you have a good journey.

Thank you.

And please give Corné, if you meet him, a clap on the shoulder,

if I say it right.

Yeah.

So, Yanis, you have anything?

Head on the back sometimes.

Yeah, yeah.

No, yeah.

Thank you very much.

Have a good trip there.

And hopefully you get to share some good ideas with all the people there.

Hopefully.

Some sort of decision later on.

All right.

Thanks, guys.

See you later.

Okay.

Have a good time.