bacon was designed to solve specific problem it was trying to be a form of money that would not succumb to capture so it would not be centralized and it couldn't be controlled by some central authority so every property in every part of Bitcoin came out from that so we sometimes sort of scratch our heads as to why the founder was anonymous well simply put bacon wasn't the first attempt at a decentralized and censorship resistant money but every previous attempt was either shut down and often and in some cases the founders were actually put into jail so with that history in mind it was sort of a never table that any successful currency would have to have an a founder that was anonymous your crypto community and blockchain buddies across the globe welcome back to season two of kryptonite's the no BS blockchain channel built with the community and for the community and as always we have timeless interviews to teach you everything you need to know about Bitcoin cryptocurrency and the financial markets so without further ado we have another living legend and I'd like to give a big shout out to nin D the leader of the London powwow it's thanks to you that I connected with this gentleman the CEO of coin Fleur Hobie it's a pleasure to have you brother yeah yeah so OB you are definitely defined as one of the legends here and in London in the UK you've been in the space for years and years and I know you've been through a lot of struggles if it was possible for me to blush I would blush thank you very much for saying that it's really weird to hear yourself described in those in those terms so I wouldn't describe myself that way but thank you yeah I mean I that's what everyone has been saying and I really would love to start off by hearing the struggles you had because I know it wasn't an easy path to start off so early and still be here and the crypto space so if you don't mind sharing that with us okay well coin flow started probably the worst possible time when we started it was late 2013 and we started as an OTC company we would do over-the-counter trades which is a sort of manual trading approach we finally launched our electronic digital trading system in the first quarter of 2014 and that was probably the worst possible time to launch Christopher's ich lade because it was basically little did we know it was the beginning of a bright pronged bear market so we launched into a bear market and price of Bitcoin went lower and lower and lower over the following twelve or so months so it was a real struggle but it actually really hardened us I talked a lot about Bitcoin the Bitcoin is the world's first anti fragile money and so the more it's attacked the stronger it gets and coin flow became an anti fresh shell crypto currency exchange so we were launching this really sort of terrible time where we came stronger we actually did something really crazy first startup focused on being profitable so it became profitable but even so it was a really tough time and by 2015 the price of Bitcoin was now sort of starting to head towards the couple of hundred pounds and I remember really clearly myself and my co-founder Mark at the time we were invited to to the Royal Festival Hall to be part of this exhibition where the the public met people from the city it was called I think it was called a work for us and they had actuaries and traders and brokers and so on and they also had crypto currency exchange runners and that was myself and Mark and we were there sort of the lower of the market and the person off the person came up to us and talked to us and we were trying to explain them why bitcoin was and because he really was just Bitcoin at the time was so fundamentally transformative and they were the only thing I'm saying isn't Bitcoin dead isn't big no it's not really the opportunity was massive at this time I feels like 2019 and that was a real low in terms of perception but we still held strong we knew there's something really powerful happening here so fast forward two or three years later and as to be predicted the markets started becoming really bullish and it increased and it grew and our our team and company grew and it got to the point where we were asked to talk to various regulators with the Bank of England the FCA and finally I was asked to give evidence in front of the Treasury select committee which is sort of the UK equivalent of of Senate or the Senate hearing and various MPs wanting to understand Bitcoin and cryptocurrencies in his effect on society and so we came this massive distance from 2014 all the way through to 2017 and now after that as you probably know we went to another bear market and we're back into that situation but we're seeing now the the first fruits of the the next bull run to happen over the next one to two years now that's absolutely fascinating and when he comes to the emotional side of being in this market or having investments obviously the prolonged bear markets like you were talking about a lot of people feel overwhelmed the capitulates and a lot of people start losing belief you know it's it's a very up-and-down market I just don't really want to ask you o be like how did you still believe in Bitcoin despite the prolonged bear markets what really kept you and made you want to stick to this I mean when you first start it's this new technology it sounds interesting some people say they read the white paper and you know they immediately understood it but my background was that of a technologist I studied computer science and cognitive science at University of College of London and I was 15 years of CTO so I'm an engineer and the first thing I wanted to do was understand the technology and when I I got a chance to look at the white paper to understand it I realized that this is a really powerful technology but even then it took me a while to really figure out the potential because before understanding the technology had to understand the problem was trying to solve and it took me much longer to really understand how powerful money was and there's solving money and providing an alternative form of money so what once you realize that the technology allowed you to have the best form of money that would the world has ever seen and we also realized that money was one of the most powerful inventions that human beings have ever made then it became inevitable that this was something really really powerful and like other disruptive technologies like the car it was when it first started the first cars used to break down all the time only very wealthy people can have them there was no infrastructure to support them so you'd be very reasonable and thinking if you were if you had a really nice horse and a horse-drawn carriage that cars were really stupid hey there you know at the time you know horses could go anywhere and cause pretty much couldn't do anything but if you were an engineer and you really understood that this was the best form of transport in theory the world has ever made you would know that over time once the infrastructure in the place wants petrol stations services and licensing and all this sort of stuff and roads were in place cars would have never to be take over and bitcoin was the same it was still a total at the time and even today at 10 years old it's still a young child but it inevitably will be the best for money the words I've seen it's really funny that you mentioned that because some of the people back in the days and there are some really famous people who said that this machine will never replace a nice carriage and horses you know exactly what you're saying people didn't see it but luckily your IBM said that there would be a world requirement for more than I by no more than I believe 7 or 11 computers worldwide and I think IBM also said that smart phones would never take off either Microsoft or IBM but is full of people who under predict the power of this of the technologies they really do and there's one thing they say was fascinating you said the best form of money I love that in tech I need to quote what you just said and as you know you know in order to qualify as money we usually have the three boxes so unit of account store a value and a medium of exchange do you feel like as of today and obviously you know different currencies do not necessarily check all the boxes but do you feel like Bitcoin checks those three boxes as the best form of money so in a word yes it does but you are correct different currencies will optimize for different things but one of the biggest sort of misconceptions and battles is around unit of account versus store of value now there are many currencies that have optimized for unit of accounts ie they allow you to transfer value today as quickly as possible between one person and another person but here's the thing that is very useful for making transactions but ultimately there are many many examples of currencies that do that very well and other systems at the other world so most fiat currencies can allow you to transact in a day to day basis but on top of that you have services like venmo PayPal MasterCard Visa American Express etc in fact you now have tap to pay where you with one tap you can buy something and even further you might know Amazon go go into a store you walk in you take the item 91 off the shelf and you walk out so that's zero taps to buy so given that in theory if you created an alternative you can never get as good the best you can do is get as good as zero taps unless you have some sort of minority put reports been going on where it can predict what you want before you want it so if you're trying to make a disruptive technology you always want to go for the market if hasn't been dealt with now in terms of store of value think about it what are the store of values now you're a millennial and what does store values have access to you've pretty much got you've got stocks and equities and bonds etc and then you've got property real estate ie or gold maybe but gold is actually you know it's heavy its physical you have to it takes a lot to store its you have to use a lot of resources story–it property if you if you want to sell or transfer property from one person to another you're talking about probably many months to sell and a lot of costs and most of the other items well we you know many people believe we're heading into recession and so the only way a lot of those are moving over the next few years potentially could be could be down and so when you see you don't have many options to store your value or monies that are good at storing value Bitcoin comes into the market and compared to those it's far already even in its sort of child state already as good if not far better than all of those and far transmits far more fungible etc etc that's really fascinating so if I can just recap what you said in terms of a medium exchange since we have PayPal and we have credit cards and would how would you place Bitcoin versus British pound for example because obviously you know as you know bitcoin is a borderless peer-to-peer electronic cash but as you said not everyone accepts it so would you see Bitcoin as inferior superior for example to Britain the British Pound or I think storing as the clue is in the name store of value is probably more valuable because it's storing value so I would say a currency that is optimized for storing value is more valuable than the currency as optimized for transferring by the ie giving away value there is a roeckl Gresham's law which talks about if you have two money's so you have a good money and a bad money ie a money that holds its value and the money that doesn't hold its value or is debased in some way then the bad money pushes the good money out of the economy and that sort of makes common sense so if I had one money that I knew would go down in value in a year's time and another money that I knew would maintain its value or go up in value which one would you spend first you're gonna spend the money that's gonna go down in value so even if the money that goes up in value over time was incredibly good at trading and and and being a good medium of exchange doesn't matter because you'll have to get rid of every last penny of the of the bad money first before you use it now given that the bad money is inflationary and it has an infinite supply it's gonna take a while to get rid of an infinite amounts potentially infinite amount of money before you spend that so you just need to be good enough to meet the demands of if someone for whatever reason really had to sell and in that sense bitcoins seven to twelve transactions per second are far more than that requirements that's a really good point in terms of the store of value so you you just touch upon inflationary and obviously we have deflationary I'm sure you've heard this many of times from you know maybe your grandpa or your uncles and aunts and they're always like everything is so expensive these days and a lot of people tend to see like for example typical fiat currency I remember going and when I went to university and we used to complain as students it would be free University we would be paid 3,000 to term and have all our cost paid so that was and I we would complain about that so it's moved on a lot since then so I know that's a really good point was even in London it's difficult to live here without roommate and stuff like that but yeah so they use I remember my grandmother always used to tell me that he said these days everything is so expensive blah blah and I didn't really understand what she was saying I was like what is she talking about like this seems normal to me until I used to see charts where you would see the value of the US dollar due to inflation losing 90% of its value and more in the past century or since 1920 do you like the fact that bitcoin is deflationary is that one of the kind of ideas that makes you believe in Bitcoin as a store of value are there any other components that that you like in terms of the store of value component Bitcoin I mean that is one of the key aspects of it being the ultimate store of value money I think with any disruptive technology you want to try and be the best or have the potentially the best at something there's no point Trek coming along and putting in a lot of effort should be as good as the existing systems disruptive technologies need to be several times better than what's in the incumbents absolutely so if you've got one-click buying or 0 click playing with things like Amazon go it's very hard to see how you're going to be 10 times better than that but in terms of store of value and with the limited fixed supply or Bitcoin and it can only go one way down in terms of the supply of Bitcoin if people lose Bitcoin you know that it's fundamentally and mathematically better than every other store of value out there let's take gold there's sort of the previous king or still current king of store it's it's has a it's a known as stop the flow ratio the amount of new flow of gold that enters the economy is I believe 62 so there's 160 to 1 over 60 trees were of gold enter the economy every year now this is a rough number and if we found all gold on the planet Earth it's still there's still the potential that we could find gold on other planets but with Bitcoin no matter what you do there's never gonna be more than 21 million unless you got everybody in the world who owns Bitcoin to agree to inflate the Bitcoin supply so that you have to get them to agree to do something that's to their detriment which is highly unlikely to happen people like unlikely to do things that are not in their interest that's a really good point in talking about the 21st million Bitcoin that is actually mined a lot of people are wondering like what is gonna be the incentive for miners to keep mining because that's it you know they'll only be able to mine and get rewarded through transaction fees so they say that most of the miners will give up like obviously it's we're – we'll probably we're not going to be a part of this world by then 21:40 teach me how to I would love to be alive as well but in that in terms of that future does that do you have any concerns about that about the whole rewarding ecosystem for miners we mint so the idea is that we have a fee economy so when you send a transaction between one person or another or one institution or another you there's a limited amount of space on the blockchain and that may increase over time but it will there will always be limited to some extent and so there will be competition for for your transactions to be memorialized on this sort of on this ledger that is basically almost impossible to change as time goes by and so because it's competition and the there's a fee that you can attach to a transaction and that fee will leave we'll be the thing that were replaces the block reward overtime so at the moment the block reward is the love is by far the largest part of the rewards that miners gets for mining but the hope is in 140 years it won't be that being the case no one knows for sure that is that that is probably one of the most experimental parts of Bitcoin and generations in future we'll have to decide to see what happens and hopefully that does occur but that's 140 years from now I'd refer you and myself as well but it's really good point for me the the way I kind of see it is that you know mining is gonna be so cheap technology will have advanced so rapidly in the next hundred years that you know if you you just want to transact Bitcoin just through your phone you'll be able to mine through phones because the technology will that move so much that just by keeping your phone on there could be some sort of support throughout people to decide that I want to be a part of this ecosystem just like running a node without having to mind with substation technology that's one possibility and if we were gonna brainstorm I I mean one idea I like is the either that actually if still be this competition people so the resources to mine will increase I think the if you go for if you sort of think for that far in the future the vast majority if not all mining will be free renewable sources as well so the whole energy usage question war will go away I'm excited that we have a possibility for a financial system where pretty much in theory everybody can be part of it and that's what's really the radical decentralization of the of a financial institution I I think the existing financial services space will continue to exist because centralized governance will continue to exist and and such as governance wants to have an element of control and needs to control its money supply but we're now going to have an option and that's really what Bitcoin and other cryptocurrencies give they give you optionality and that hasn't existed for a very long time ability to send money electronically anywhere in the world but outside of outside of central control absolutely so you were talking a lot about the finite supply and the 21 million bitcoins there's one topic that could be overhyped but I'm not sure I'd love to get your angle it's talking about the Bitcoin having for next year and since it's related to economics and the whole supply side of a Bitcoin if you don't mind telling us so for those who are new to the Bitcoin having idea it's we used to have 25 bitcoins as a reward for the miners it'll be cut in half next year to 125 bitcoins is that is that correct so when Bitcoin first started so when it was first made bacon was designed to solve a specific problem it was trying to be a former money that was not would not succumb to capture so it would not be centralized and it couldn't be controlled by some central authority so every property and everything that happened and every part of Bitcoin came out from that so we sometimes sort of scratch our heads as to why the founder was anonymous well simply put bitcoin wasn't the first attempt at a decentralized and censorship resistant money but every previous attempt was either shut down and often and in some cases the founders were actually put into jail so with that history in mind it was sort of a navigable that any successful currency would have to have in a found that was anonymous similarly the fact that if it all previous currencies were that attempted to do this were centralized they were such down because one place to shut turn off a light turn off a switch so it had to be decentralized so similarly when it comes to when it comes to monetary policy we had to work out how to do that in a way where there wouldn't be any form of regulatory capture or there wouldn't any be any form of moral hazard as well because there was there's a lot of risk if you have the control of money supply so it had to be decided right at the beginning and so the decision was made by this group or person male/female group to release a certain amount of Bitcoin over time so with each block originally 50 Bitcoin were released and for the first four years roughly first four years after that it reduced to 25 Bitcoin for the next four years and then we're now in the third face so in years ten or eleven or so to twelve and at the moment is 12

5 Bitcoin may roughly May of next year it's going to half – you're gonna have me in the mass but 625 Bitcoin so it's not that late I still remember my basic maths 625 Bitcoin per block now in parallel we now have over ten years of data on Bitcoin and many people have conjectured as to how bitcoins price is determined and there's been lots of theories but one really interesting theory which I have a lot of stock with is that Bitcoin basically operates like a digital gold a digital store of value and so gold and other precious metals are valued based on what's called the stock to flow ratio and as if you go online you can see a guy called Plan B you know plan B @100trillionUSD incredible really really interesting writer and also a Nick Carter as well shouts that's the Nick he also writes a lot about this yeah planning I think there's stock to flow ratio was translated in like 78 languages so it's but for people who don't know it's incredibly interesting but it's basically using the same model of valuation that precious metals use so stock basically talks about the total amounts of stock of that precious metal Bitcoin in this case that currently exists and the flow is that is the amount of over new versions of that or or digital or in the case of Bitcoin that come into the market every year and the ratio is is the division of one by the other so currently silver I believe has a stop to flow ratio of about 22 so a 1 over 2200 enters the economy every years mind etc gold is a stock to flow ratio of 60 to roughly at the moment Bitcoin has a stock to flow ratio of 25 with the 125 Bitcoin being released every 10 minutes it works out if you divide the total amount of Bitcoin by the new amount it being every year roughly 25 now with the having that's going to double to 50 okay now but what's really interesting is if you take the stock to flow ratio and map the price of Bitcoin to that stock to flow ratio over the loss and now we have 10 years of data the correlation is striking it's it's insane so what this tells you is that although there are many other things that affect the price when you think about in a long term the stock to flow ratio seems to have an incredible correlation now really this theory has only come out in the last six to eight months or so so we really need to see how it operates for another few years to be sure but it is really striking and if that's the case next year with the stock to flow ratio dumb doubling we'd expect the market cap to move towards close to that of gold now Silver's market cap is currently about 300 billion Gold's is a trillion trillion yeah so that's why many people believe that the next hobbing the correct price will become will tend towards the well over 1 trillion mark which could lead to a price of bitcoin of well over 60 fell if you divided divided by then I'm a Bitcoin well over 60,000 US dollars a Bitcoin now there'll be a lot of volatility around that but there's a lot of excitement for that that is definitely fascinating and I love the way you but talking about investments if we want to follow you and hear more about what you have to say about Bitcoin learn more about coin floor where is the best channel to actually catch you it's it's Twitter I I tweet rarely but but it tends to be around these things like Bitcoin has a form of digital real estate and so on so it's Twitter for coin floor which is at coin floor and also my own personal Twitter which is ob/ob i-i-i was an early twitter users of a really cool twitter handle awesome thank you so much for the wealth of information definitely look forward to having you again my friend and for those watching out there you had all the information you needed relate to Bitcoin the economics the having the stock to flow ratio the finite supply and more and more for this timeless interview don't forget to like comment do you have any questions for OB here at coin floor please put them below and don't forget to blast that Bell notification so you get access to these timeless interviews look forward to seeing you next week premiering every Wednesday at a PC near you you