LETS TALK BITCOIN

Episode 83 As The Bitcoin Turns

Participants:

Adam B. Levine (AL) - Host
Ryan Deming (RD) Member of Law & Policy Committee at the Bitcoin Foundation
Bernard von Nothaus (BVN) Creator of the Liberty Dollar


The following program is for informational purposes only. Cryptocurrency is a new science
so do your homework before putting money on the line.

Today is February 11
th
2014. Welcome to Episode 83 of Lets Talk Bitcoin, a twice weekly
show about the ideas, people and projects building the digital economy and the future of
money.

My name is Adam B. Levine and Im the editor-in-chief of the LTB network and today were
looking at the future, then the past and then the present, in that order.

Ryan Deming is a member of the Law and Policy Committee at the Bitcoin
Foundation. He joined me last week to talk about the recent FINCEN rulings that
clarified some things for miners and wallet software developers that have been open
questions for years
Then, were back in Miami for the North American Bitcoin conference, courtesy of
Steve Malagodis Spectacular recordings. Weve got a mystery speaker who, well...
heres a taste... This is a man who has done more for alternative currencies and
foundation work than just about anybody else on the planet and he has suffered
greatly for it, both personally, financially and in just about every other way you can
imagine. That story starts in the 50s and ends just a few years ago. Its a
perspective not to be skipped
Finally, we arrive in the present where, in another LTB first, were happy to end
todays episode with the sounds of live Bitcoin trading, as it took place during the
first Satoshi Square, London

Enjoy the show! [1:30]


___________________________________________


Adam B. Levine interview with Ryan Deming

AL: Joining me today is Ryan Deming. Hes a partner at Monterosso Investments and the
last time we spoke, he was running for a seat on the Bitcoin Foundations board. Ryan, how
are you?

RD: Im doing well Adam. How about yourself? *1:42+

AL: Im doing pretty good. What are the things that stuck out from your candidacy to me
compared to some of the other ones is that you actually have a lot of experience, not on the
cryptocurrency side but on the commodities trading side and youve worked really closely
with regulators for a number of years in that capacity, right? [1:56]

RD: Yeah, thats right. In our industry, the commodities industry, the NFA which is a self-
regulatory organization works quite closely with CTAs, so commodities trading advisers and
commodities pool operators and its sort of an open dialogue where they audit you semi-
annually, bi-annually that is, about every two years they audit you. Weve learned really
how to work with regulators and what that process requires, the sort of open mindedness
that it requires. Thats what got me interested in looking at joining the Law and Policy
Committee, so thats how I think primarily involved now, at least publicly, is in the Law and
Policy Committee for the Bitcoin Foundation. [2:40]

AL: Weve being trying to prep this interview for, I guess, about two months now and it just
has taken a long time but the timing has been actually quite good because recently there
was a power of FINCEN, thats Financial Crimes Enforcement Network rulings, that were a
little bit out of left field. They hit on January 30
th
and I havent had much of a chance to take
a look at them. Have you had a chance to look at them and can you help me understand
whats going on? *2:59+

RD: Yeah, I have. Weve actually been expecting them, at least the first ruling, what theyre
calling R001. We were expecting... we had been in touch with Russ Smith over at Atlantic
City Bitcoin and he is the gentleman who originally requested the ruling and so we were
aware that it was coming, just the timing worked out that it landed right before our
scheduled call. [3:23]

AL: There has been a lot of uncertainty about kind of what the regulatory situation is going
to look like and now with retailers like TigerDirect and Overstock.com coming onboard, it
seems like this is really an important issue. Did we actually get any clarity in these rulings?
[3:36]

RD: Let the rulings touch on that R001 pertains to miners, or at least is intended to pertain
to mining and really its trying to answer the question Under what circumstances does a
miner or mining pool become a money transmitter? Theyve tried to delineate those
circumstances so that people can decide how to structure their business and their business
activities to avoid money transmitter status because we all know registering as a money
transmitter is quite expensive in terms of compliance. R002 is quite similar, it just applies
the same logic in a different way, or not in a different way, but to a different area. Its
specifically dealing with traders or people who are engaged in trading on their own behalf.
Ironically, it ends up also considering software manufacturers. Obviously, we havent had
too much time to discuss R002. We werent really prepared for it and we, at least those of
us on the Committee werent aware that it was even being brewed up, but what it does do,
is it seems to purposely answer the question Under what circumstances might a software
developer become a money transmitter by virtue of their business activities? *4:52+

AL: Based on your preliminary investigation of this, are there any these business models out
there that used to be OK but, under these new rulings, are off the table? [5:01]

RD: Were actually quite pleased with how this is shaping up. I see it in the opposite way
where there were business models that were clearly in question that we werent sure if they
subjected people to potential registration or not and I can describe a few of those. These
two rulings have cleared up what you can do to ensure that you dont fall into that
ambiguity and that its a little bit more clear cut. Lets start with miners as of their earlier
ruling, last years ruling that came out in March, it wasnt clear, it was essentially implied
that unless a miner is using the proceeds from their mining to buy goods or services, that
they might be engaging in money transmitting, just by selling the proceeds, just by
converting for instance Bitcoin into a fiat currency, call it US dollars. We werent sure if that
was an unintended result but it was certainly a severe result. If a miner becomes a money
transmitter just because they convert their BTC to US dollars, then really, for all intents and
purposes, most miners would have to register as money transmitters, as money services
businesses with FINCEN. That seemed like the wrong result, so what R001 has done is it has
clarified that and has essentially said, as long as you have a fractional ownership structure,
say its a mining pool thats a limited partnership for instance if you are just paying bills on
behalf of the limited partnership or servicing debts on behalf of the limited partnership, so
long as youre paying on behalf of the limited partnership, youre OK, youre not engaged in
money transmitting. [6:39]

Where there is still ambiguity is the question... you know, you have a lot of cloud-hashing,
for instance, its a sort of industry or at least business thats growing up, thats distinct from
mining, the manufacture of mining hardware and distinct from individuals or even pools
that are closely organized mining on their own behalf. The question is, is cloud-hashing, is
the process of mining on behalf of other people and paying out the proceeds where theres
no clear legal relationship between the two parties, is that money transmitting? Thats
really, I would say, the only significant remaining ambiguity. FINCEN has otherwise
answered the question. Theyve basically said that how a user obtains virtual currency is
not material to the legal characterization of whether or not theyre transmitting money,
whether or not they need to register as an MSB under the BSA. Essentially, its applied the
same way for both miners and traders. It doesnt matter how you get the currency, what
matters is what you do with the currency. As long as you, I would say, loosely dispose of the
currency on your own behalf and the furthering of your own interests, or interests for
instance of limited partners in a limited partnership, youre not engaged in money
transmitting. Where people do become money transmitters is if they are using the currency
on somebody elses behalf. Theyve made that quite explicit which, for us, its the best
outcome I think. [8:08]

AL: This is really a conversation then about agency, right? If youre acting on your own
behalf then youre fine but if youre acting as the agent for someone else, then therefore
you are money transmitting agent and therefore you need to be registered. Is that about
the logic? [8:21]

RD: I would say thats a great characterization of it. The question is when are you an agent
instead of somebody thats acting directly on behalf of, say, a pool? If the pool is structured
in a way where its legally apparent that its one entity, then theres no real issue. The issue
arises when the association is more loose, so if the agent is obviously an agent, then theyre
perhaps going to run into problems. [8:51]

AL: OK, I think I agree with you. That sounds like its actually pretty good. It clarifies a lot of
things, it makes it so that it doesnt matter how you got the coins in the first place any more,
it just matters that you have them and how you are going to use them. That makes it much
easier to apply these standards across the board. Let me ask you this there are a lot of
agencies that are all kind of vying to regulate Bitcoin, how much of a reach does this FINCEN
ruling have? [9:15]

RD: FINCENs really only addressing the immediate question of how do people become
compliant and how do people make sure that whatever their business model is, that theyre
not opening themselves up to potential criminal prosecution because theyre not registered
with the appropriate agencies under the BSA. This is all obviously just in the United States.
Were not really sure yet what other countries are going to have to say about this but we
are now fairly confident that FINCENs goal was really, I think they have accomplished it
now, was really to give us enough guidance so that people could, with good faith, go out
and establish the compliance procedures that they need, or change their business model if
they have to, so that they are compliant under the regulations. R001 one of the things
that FINCEN did was, they said that Bitcoin mining itself, imposes no obligations on a user to
send the mined Bitcoin to another person, or place for the benefit of another. Thats the
precise rule that theyve delineated. Its only once youre sending Bitcoin, or virtual
currency to another person, or place on behalf of a third party that you potentially become
a money transmitter. [10:36]

AL: There is one other piece of information that were kind of waiting on thats getting to
be increasingly timely and that is how, in the United States, the IRS is going to deal with
Bitcoin holdings and Bitcoin gains. Im sure that you have some sort of holdings in Bitcoin.
Im curious if you think that thats something thats going to get solved before April 15
th
, or
if were just kind of going to go through this in limbo. [10:55]

RD: I would be surprised if it does, although I have to say that Im not all of that current on
what the IRS has to say about this. Im sure that Patrick probably has a pretty fair idea but
we havent, in committee meetings, discussed this yet. Its tough to get through the morass
of potential regulatory issues. We have this whole universe of potential issues and we
literally just have to identify one at a time. What weve been trying to get our arms around
is this money transmitter issue and then next, were moving on to money laundering
Money laundering is, obviously, a big issue because it poses a threat to the entire industry if
the regulators perceive virtual currencies as opening up an opportunity for criminals to use
the virtual currency to launder money, then we need to help them come up with ways, if in
fact thats true, assuming thats true. We need to help them come up with ways to curtail
the potential abuse of virtual currencies in the arena of money laundering. Really, thats our
next focus. [12:02]

All this stuff takes a little bit of time on our end. Were volunteering to do this. One of the
things that I do want to say though is that, with regards to the money transmitting, were
going to publish our position that kind of incorporates these ideas and articulates what we
think about them. Early next week, we will post our position on these FINCEN rulings and
then the public will have about two weeks, were thinking, to give feedback and comment
on our position. I mean, its difficult its kind of a majority process and we dont expect to
ever reach a consensus but well try to incorporate the publics concerns before we present
the position to the board, to the committee and then the model is supposed to work such
that the board will then either affirm our position and then publish it publicly on behalf of
the Foundation, or theyll propose amendments. Thats kind of how this process will work.
[12:55]

One of the things thats interesting about R002 R002 delves into the software question.
When does a software provider become a money services business? It looks like even if the
software is used in the activity of money transmitting for the software providers customer,
so if the software providers customer uses the software to then go and transmit money,
that does not make the software provider itself a money services business. There is this
clear delineation that FINCEN has created and this is a bit surprising to us. If you separate
these two activities, the money transmitting from the software development side, then the
software developer has clearly a protection against being categorized as a money
transmitter and requiring money services business registration. That was not expected and I
think, specifically in the context of ATMs, its a great result for our industry because what
FINCEN has done is theyve established this, almost, safe harbor where, if a company is
structured so that all that theyre doing is providing, for instance, ATM software, the
companies that use the ATM software will have to be registered clearly as money services
businesses but the software providers themselves probably wont have to be and that, for
us, we think its a fantastic result. One thing I do want to add also Patrick Murcks opinion
is pretty useful on this and I think its a good take. What Patrick says about FINCENs ruling
is regardless of what the consequence of the rulings are immediately and how many gaps
there are in them, the good thing that we can take from this is that FINCEN is, essentially,
establishing that if you ask for clear guidance, theyll try their best to give you such
guidance. If you have a business model and you think its operating in what you perceive to
be a grey area, just go ask FINCEN for guidance and theyve demonstrated here that theyre
willing to give it. Thats, I think, the most positive thing that we can take from the rulings.
[15:07]

AL: Overall, it sounds like its a very positive ruling with a lot of clarity there. Youre right, I
mean the software thing is huge and it seems like because of the ambiguity about whether
or not these wallet applications have been legal, it seems like that is a reason thats really
been holding back adoption on platforms like Apple, where theyre a little bit risk averse. It
seems like this is all just moving in the right direction and that were continuing to see these
rules get settled so its not so much that rules are good or bad, its just that finally there are
some rules. [15:32]

RD: Exactly and they will fill them in for us also as we proceed. As an entrepreneur, your
goal really is just to determine what are the existing rules and then try to anticipate, maybe,
where those rules will end up. In the beginning, it was difficult for anybody to do that and
we, actually, see our role the Law and Policy Committee, our role is to help people
interpret the rules and help people, in fact, anticipate where theyre going to end up. We
had been able to anticipate R001, the ruling on mining. We werent prepared for R002, but
were pleasantly surprised by it. Going forward, if entrepreneurs or people who are starting
their own businesses, if they have questions about where their business model falls, on
which side of the fence, is it money transmitting or not, they can do two things. They can
come to the Foundations website and look at what we have to say about how we interpret
the existing rulings and then, if they still have in their minds uncertainty, they can always
petition FINCEN for a ruling. I think congratulations to Russ Smith for doing that, in the
context of mining because that one move, I think, did more to clarify the ambiguity and
uncertainty in the industry than anything before it. Were really happy that the timing of it
was great for us and for the industry as a whole. I do want to add one other thing, Adam.
We are releasing an application in the next couple of weeks for... the beta version will come
out, in the next couple of weeks the application will be called A Bit Bazaar and it is kind of a
mix between Craigslist and an Ebay application for Bitcoin. It will be a Bitcoin marketplace.
Expect that to come... the beta version be released within the next two weeks. [17:19]

AL: Thats a project youre doing with the Monterosso partners? [17:22]

RD: It actually isnt. Thats a separate project that we got involved with originally. It was
my girlfriends idea originally and then we started looking for financing to get it funded. Its
ended up becoming an entirely different enterprise, separate from Monterosso, but
definitely, I think, an interesting concept. I think within the next two or three weeks, itll be
pretty exciting because well have something to contribute to the eco-system that doesnt
yet exist, so its going to be pretty exciting for us. [17:52]

AL: Is there a domain for that for people who want to find more information, or will there
be one? [17:55]

RD: There is, yes. www.abitbazaar.com and bazaar being spelt BAZAAR,
www.abitbazaar.com. [18:03]

AL: Ryan Deming, thank you very much for your time and for updating us on this issue.
[18:06]


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______________________________________________



North American Bitcoin conference in Miami 25
th
- 26
th
January 2014

Joseph VaughnPerling (JV): We have with us today a mystery guest speaker and I have to
tell you its not because we wanted it to be a mystery, its because we were coerced into
doing so by the law of the land. This is a man who has done more for alternative currencies
and foundation work than just about anybody else on the planet. He has suffered greatly
for it both personally, financially and in just about every other way you can imagine. This is
a man who has been characterized by the Federal Government as a unique type of domestic
terrorist. Now, there are four laws on the book that tell you what a terrorist is and all of
those relate to violence. Hes unique because hes entirely non-violent and all of his work
has followed that path of non-violence in creating an alternative currency that took the
United States by storm a decade before Bitcoin became popular. I give you Bernard von
Nothaus, the creator of the Liberty Dollar. (Applause) [20:52]

BVN: Im almost speechless. I did have some notes because, in talking to people over the
beers and dinners and everything else, I kept being asked a lot of questions. What I want to
do is breeze through a few house-keeping issues and then really open the floor to mostly
questions and answers because I was out on tour for ten years and I found that the most
enjoyable and fulfilling part of that tour was answering peoples questions. Since Im not
psychic, its the way it happens. First, before Joseph introduced me, Id like to have a quick
show of hands of whos heard about the Liberty Dollar before just now. Wow! Really, wow!
You came back for more? (Laughter) OK, Im glad about that. I need to give you a
disclaimer and that is that because of my conviction, Im out on an appearance bond and Im
barred from selling any Liberty Dollars, or promoting Liberty Dollars, or marketing Liberty
Dollars. I can breathe the word but I cant do anything with them so, I just want you to
understand (I know this is being recorded) that Im not here to do any of those sort of things
because I dont want to violate my appearance bond. I dont want to go to jail. Period.
[22:37]

OK, with that clear point in mind, I think probably the best thing to do is to give you a real
quick outline for those that didnt hold up your hands. The Liberty Dollar dates back,
actually, forty years ago. On September 11
th
1974, I experienced an epiphany that resulted
in me writing two hundred pages of automatic writing. You can look that up and Google it.
An outgrowth of that was an economic research paper to no value. The outgrowth of that
was starting the first mint in Hawaii and I served there as the Mint Master for all of twenty
five years. That was my day job and thats what put me on Diamond Head and gave me a
nice lifestyle and two children and tele. During that time, I had a burning desire going back
to the epiphany and the revelations that I experienced there that could be boiled down to
simply when there was a loss of value in the economic political or economic system, there
was an equal and corresponding loss of value in those other systems. Certainly in 1974, we
were seeing this... gaslines and the hostage ***** ...it was a bad year. In any case, I was
driven to research monetary issues money in particular. Ive always liked money. I think
money is good. I kind of sound like DiCaprio in The Wolf of Wall Street. I kept researching,
reading, reading, reading, reading and working on developing a currency that would be
based on gold and silver. Theres a lot of history for that. Gold and silver have been around
four thousand years and it gave us the greatest prosperity the country has ever known, the
worlds ever known. The Gold Standard has been extremely good for the working class man
and for the rich class too. Everybody profited. Exactly the opposite of what we have today.
Over that twenty five years, I developed this currency and, well lets see... 1991, Paul Glover
brought out the Ithaca Hour and it was the first community currency. Paul had a lot of good
intentions but he didnt have any money and so he didnt back it up with gold and silver, so
it was a fiat community currency. For me, that didnt make it. I didnt like it, so I continued
my work but it was a warning shot across the bow that I needed to get my act in gear. Later
on, in 1995, Judy Shelton, a very well known economist wrote a book called Money
Meltdown. That was another shot across the bow. Beth Deisher, the editor of Coin World,
wrote a flaming article about the advantages of community currencies against government
fiat money. I really felt under pressure. I think, God, Ive really got it going here. These
guys are passing me by but they dont have the model and... God, I think were looking for
monetary collapse and what the hell are we going to do if we dont have any money?
[25:59]

In 1998, I brought out the Liberty Dollar and I have to say that there are two major factors
for its success. One was the internet. There was no way in hell that anybody, even with
really deep, deep pockets could possibly introduce a new currency without the internet
because how would I find one monetary activist (for lack of a better description) - over here
in Iowa, and maybe two in California, and somebody up in New York, or down here in
Miami. This was sixteen years ago, folks. There was not a lot of action happening in the
monetary world, at that time. There werent any other choices. The internet came along at
an ideal time. It was fantastic. It gave us the exposure because there was no way to be able
to find critical mass. Of course, the other thing that was the biggest help (the other biggest
help) was the government. The government was really supportive. A lot of times, people
asked me Wow Bernard, what does the government think? Wed read them off a long list
of really great statements saying that it was legal and there was no law against it and things
like that. I mean, we had a lot of confirmation from the government. Of course, that made
the people that were on the fence, a lot more comfortable knowing that this was really
legal, much like what were talking about in Bitcoin forums here. [27:26]

With those two things, I went sailing off to just an extremely warm reception that kept
growing. Were talking about rate of adoption and, of course, we never had that phrase
back then because... duh!... there wasnt anything to adopt. The rate of adoption was
doubling every year. I forget what it was the first year but by 2008, which was the 10
th

anniversary, we were doing 5m/year or something like that. We started out just one or two
people and then it doubled, and doubled, and doubled and it was fantastic. Really, we
didnt have any marketing plan, we didnt spend a lot of money on marketing and we didnt
have a lot of money for marketing. Basically, it was me, driving around in my fat ****
Cadillac, talking to people about how the government money is bad and how bad it is and
saying that Liberty Dollars (you notice I cant hold anything up here folks)... how good the
Liberty Dollar was. People just fell in love with it. [28:27]

History we started in 1998 and that was good. We had some good years there and then in
2006, the US Mint put out a warning saying that use, not possession, distribution or sales
but use of the Liberty Dollar was illegal. Well, that wasnt a good thing. We tried to get
them to declaim that by filing a declaratory judgement but that didnt get past the
governments courts. That didnt work. Then in 2007, came the big bombshell is when they
raided the warehouse and raided the office, confiscated in total of about 11 tons of gold and
silver, and some copper, and some platinum, but mostly gold and silver 11 tons, that was a
lot. To give you an idea what that looks like if you know what a pallet looks like, you know
a skid, 4ft by 4ft, 15ft high is what that looks like. That was a lot. That was bad because that
backed up the paper and the digital currency. Shortly after that, two years after that in
2009, I was arrested. I self-reported which is the civilized thing to do. They call you would
you come in and turn yourself in? I said Yeah, of course. What am I going to do, right?
You get a request like that, you really dont deny it but they did want me to come in right
away and I explained to them that it was late in the afternoon and I was on the road. What
am I going to do? Get there and cool my heels in a cell overnight? I said it will cramp my
clothes, it will wrinkle my clothes. I said Ill come in tomorrow morning. Its nice to argue
with the FBI. I was arrested and I was released and two years later, I was tried. The trial
took eight days. The jury took less than two hours and convicted me on all three counts of
counterfeiting, fraud and conspiracy. The chief (I use this word in the broadest context)
expert that the government had, stood up and said that the Liberty Dollar (and you have to
go online to see what Im talking about) looked like a US quarter. I kid you not. I dont
know if youve seen quarters recently, but they have a guy on them. Liberty Dollars have a
woman on them. The government doesnt have any five dollar denomination. In any case, I
wont plead my case here because the case before the court... still before the court because
whats happened, after I was convicted... usually when youre convicted, you do a pre-
sentencing and you go in and you get sentenced and youre in Federal prison within sixty
days is about the average. I was convicted March 18
th
2011. This is now 2014. Its been
three years since I was convicted and I still havent gone to Federal prison. Dont interpret
that as Im anxious to go to Federal prison, although they do tell you that if youre going to
do time, do Federal time. Thats comforting, dont you think? Any case, I dont know
exactly whats happening with my case. We have motions before the court asking for an
acquittal or a new trial. I think an acquittal would be a good thing but that hasnt happened
yet. I dont know when thats going to happen because Ive been waiting every day... what
is it? Three years is over a thousand days. I keep going Well, maybe today is going to be
the day. Of course, it could be just get a notification of come in for my sentencing and after
all this waiting around, I could, maybe, be thrown in jail. We just dont know. [31:58]

Let me take at a couple of things I wanted to mention to you. I think the biggest point is the
two driving forces behind the Liberty Dollar which I think plays really quite well to a lot of
the speakers I heard here at the conference. One is that there is something morally wrong
with a government that rips off the people by their phony baloney fiat money. If I held you
up, it would be a crime. The government holds you up and they call it inflation. I call it
bullshit! (Applause) We shouldnt be losing our purchasing power. When you want to go
back and you look at value in currency, just think in your mind about what the price gasoline
was when you started driving. Im 70 so, I can tell you it was about $0.25 a gallon when I
was starting to drive. I had some really great times. Theres nothing like being young and
having a lot of money and driving around. Anyway, gas was $0.25 a gallon. At that time,
you could take in a fiat Federal Reserve note and you could get a silver dollar for it. That
was pretty cool. A silver dollar was about ounce. I could buy 4 gallons of gas with that
dollar. Well, that ounce of silver today, still buys 4 gallons of gas. It kind of tells you
something. It isnt the fact that the price of metals are going up, its the fact that the
purchasing power of the dollar is going down. Anything that you can do to protect that,
Bitcoins included of course, is good and you have to. You cant possibly go through your life
thinking youre not going to get old and youre not going to have any money. Its a very bad
combination. Im both old and I dont have any money. I say its not a good combination.
You dont want to follow me at all. I dont imagine any of you would follow me but then
again, you wouldnt be the Mint Master for twenty five years and all of that other stuff
either. The other thing is my concern about society in general. My concern is that were
looking for a collapse of the economy. That was my concern twenty five years ago.
Actually, it was my concern forty years ago when I wrote my first economic research paper
and it remains my concern today. If you look back on what happens when the government
hyper-inflates the dollar, or hyper-inflates the currency, it is nothing but bad news and the
consequences are severe. If you want to look at another example... as a matter of fact, only
one other example is when the whole global economy, or at least the global of that time...
failed with a total disruption of society - civilization in general. What would that case be?
When Rome hyper-inflated their denarius into oblivion, much like our favorite US
government is doing today, and it failed. All you have to do is think about the next five
hundred years, which were known as the Dark Ages, yeah... it was dark alright. They didnt
have any money, people didnt have enough to eat. The next five hundred years, they
romanticized it as Medieval Oh, that was wonderful. Why? Well, because by this time,
five hundred years... what is that? Thirty three generations? I mean, thats a lot of people.
I mean, thats a long time. The next five hundred years, by this time, society had been
driven to estates and people were living on peoples property and they were share croppers,
basically. They had enough to eat and thats why that was romanticized. That was good
compared to the previous five hundred years. Then, we had the next five hundred years
which were at the end of right now. God knows where were going but youve got to
protect your money and thats what I strived to do with the Liberty Dollar. The Liberty
Dollar was non-profit. I wasnt in it for the money. I made a bunch at the Royal Hawaiian
Mint and I used that money for, what I thought was, a good cause. Obviously, it was too
good. [36:14]

A couple of statistics for you the Liberty Dollar was initially issued at a $10 face value when
it was about $5 an ounce. Thats pretty understandable. Youve got mark-up and youve
got distribution costs. Actually, we distributed it at $7.50 if you bought it in bulk. That was
$2.50 that we squeezed out of every one of those little pieces of silver. That wasnt a whole
lot of juice there. Silver moved up so the Liberty Dollar moved up to the $20 dollar base and
then it moved up some more to the $50 base. What happened? Well, that meant that the
Liberty Dollar increased by 500%. This was wonderful. When people bought the $10s and
we moved up to the $20s, they turned them in and they got $20s in place of the $10s, they
doubled their money. Boy! We didnt have any trouble making that sale. People were
ranting and raving and lining up and flooding us with Liberty Dollars to get reminted. The
thing is that it appreciated 500% - it almost sounds like Bitcoin sometimes? Then, at the
same time, in those same ten years, Bushwhacker in the White House, he decimated the
dollar and it lost 50% of its purchasing power. The 1913 dollar had already depreciated
down so we only had 4%. Bushwhack drove it down to 98% of the purchasing power of the
1913 dollar. If you average those two together, the overall differential between private,
voluntary currency versus government fiat **** was 1000% difference. Why did the
government come after me? It could have been either just too popular, too successful, too
noisy. I dont know, we were having a great time. *37:59+


____________________________________________


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Lets Talk Bitcoin broadcast. [39:02]



____________________________________________



BVN: I want to thank everybody here that has participated. How about a few questions?
[39:11]

Audience questioner: Hi, how are you doing, Im Bradford. *39:13+

BVN: Hey Bradford. Hows it going man? *39:14+

Bradford: Going good. I have a question. Your Liberty Dollars they were one ounce fine
silver, correct? [39:20]

BVN: Well actually, we did a one, and a half, and a quarter, and a tenth, and we also did it
in gold and silver. [39:26]

Bradford: OK, for the purpose of my question, Im just going to refer to your one ounce
rounds. [39:29]

BVN: OK. [39:29]

Bradford: What exactly was it that gave your one ounce Liberty Dollar more value than say,
for example, a Canadian Maple Leaf?

BVN: Well, it has more value because it functions in the marketplace. You mention the
Maple Leaf. Lets talk about the Silver Eagle, the US Silver Eagle. The US Silver Eagle
whats the denomination on that piece? *39:54+

Bradford: It does say $1. [39:55]

BVN: It says $1 so now, today for example or back then, it said $1 also, right? Back then, it
was $5 or so but you cant buy metals at spot price and you sure in hell are not going to buy
a government piece at spot price because theyre in it for the money. The premium on the
Silver Eagles and the Silver Maple Leafs are higher than private minted one ounce Silvers.
You can get Sunshine Silver Silver Rounds at half the premium that you can get government
Silvers for. Theyre way up here but it doesnt make any difference. What are you going to
do? Are you going to pay maybe $5 or $6 for an ounce of silver, at least, and you can use it
for a $1. Duh! Do you see anything wrong with this economic model? Do you think the
government has their head in a dark place? There is no doubt about it. Does that answer
your question? [40:45]

Bradford: Good enough, yeah. [40:47]

BVN: OK. I did it because the market accepted it and because there are no six, seven or
eight or nine dollar bills, coins or anything else out there. Plus the fact that youve got to
spend money for dyes. That means youve got to have a model that has wings on it into the
future because you put up a lot of money, you want to make sure that those dyes are going
to have a lifespan. If you it at $6, you get a blip because the Saudis sold off something.. blah
blah blah, then you get a blip, well youre out of business. I had to pick a figure and its
actually a big concern on my part but I knew it wasnt going to be $6 because it was too low,
or $7 so maybe $9? If Im going to do $9 hey listen, the Feds got a $10 bill, you know. OK,
next question. [41:38]

Audience questioner: Hey Bernard. [41:39]

BVN: Yes, sir. [41:40]

Audience questioner: My name is Jim Ray (JR). I was a competitor of Bernards and, at first,
when I met him (laughter) I thought like this gentlemans question basically. I thought OK,
hes either a schemer or a scammer. Hes like a terrible person and I followed him around
and realized that no, hes actually a great friend and a really honest person and hes got a
huge amount of character. I would encourage those of you in the Bitcoin community you
dont have to make friends as well as I did with Bernard, with your competition, but meet
your competition and treat them as humans because youll be surprised. There are some
really great people around here. Anyway, my question to Bernard, I guess, is the same as
last night. What the hell... how could a jury have done this? Have any of the jurors come up
to your lawyer crying or anything like that because they should have? [42:19]

BVN: Oh, youve got to be out of your mind and no, no.... we havent heard from the jury
and we dont want to. After the guilty verdict, I dont give a **** about this jury too much.
[42:29]

JR: Google jury nullification, folks. [42:31]

Audience questioner: Hi, my name is (?? Noi). Prior to some of todays options, if you
wanted to protect yourself against inflation, youd buy gold. My understanding was that
purchasing power goes down and the value of gold should go up, which is not exactly what
were seeing today. With all this coming out in the news that now were understanding that
certain entities are manipulating the value of gold.... [42:51]

BVN: If youre not reading GATA, youre not being kept informed www.GATA.org. [42:56]

Audience questioner: I just wanted to know what your take on that was. [42:59]

BVN: The take on? [43:01]

Audience questioner: On gold value being manipulated, like I understood.... [43:04]

BVN: Oh yeah, listen. Its always been manipulated, always. I stand here in face of GATA
that we have... GATA tells us... its gospel that the market is manipulated. Guess what? All
the markets are manipulated. The fact is that during the 50s and the high times at the Royal
Hawaiian Mint when we were buying lots of gold and silver, we were constantly getting
slammed because we had to buy something. OK, lets see.. blah blah blah, read the news,
blah blah blah, OK and then wed make a purchase, then what happens? The price goes
down. Why? Because the Russians were doing backdoor dealing during the 90s. Later on, in
the earlier 90s, it was the Saudis. They had a lot of gold so they would dump a bunch of
gold, drive the price down, then buy double the amount at a cheaper price and rip
everybody off. This has been going on for a long time. The governments making a really
big effort right now to control the gold market because theyve got to control the interest
rates. Dont you understand, if they let interests get out of control, then the whole thing
collapses. They cant let that happen. *44:15+

Audience questioner: Thank you. [44:16]

Audience questioner: As far as the Royal Hawaiian Mint, I spent a year in Hawaii. Was that
associated with the States or was that through Honolulu through the Royal Hawaiian Mint,
the White House because in Honolulu they had electricity before the White House. They
were advanced there. [44:30]

BVN: Right. As a matter of fact, the Iolani Palace was the second place in the United States
to have electricity. In any case, about the Royal Hawaiian Mint for Petes sakes, I think you
can gather from my tone and my conviction here that it sure in hell would not be a state
organization. (Laughter) The only thing Ive ever done with the state is when I enlisted and
that was a long time ago. OK, no. It was a private organization, private minting dedicated to
commemorating Hawaiian precious metals. We didnt go to anybody. No! I didnt call my
mama either. (Laughter) Youre welcome. We do whatever we damn well please! Dont
you get that? Private, private, private. You do whatever you want to in private. OK, youve
got a question? [45:16]

Audience questioner: Hi, my name is Stu. Thanks for the fantastic speech by the way. My
question is, do you have any advice for all the entrepreneurs here in the room, and maybe
watching, who are active in private digital currencies? [45:27]

BVN: Kick ****! (Laughter) (Applause) I think that the Bitcoin model is extremely enticing.
Academically, I could tell you that I think it falls short on two different points, if I may add
that as a monetary architect. One of the points has to do with redeemability. If you go back
and you look at different monetary models, its always good to have something that is
physical. All you have to do is just look at yourself or your neighbor next door. Guess what?
We are physical people and we may love, but damn, sex is good. Youve got to get physical.
Youve got to get Bitcoin physical in some particular way and my advice there would be
something like marrying the hottest new currency (that would be Bitcoin) with the oldest
most successful currency (that would be gold). Some way to do gold and Bitcoin together,
maybe as a card, would be a really interesting dynamic model. Another one is usage.
Youve talked about it; everybodys talked about it and Im going to add my 2 cents here.
Usage is really, really important. There again, a card, if you could put a card marry Bitcoin
to a Mastercard so it could be used anywhere, Mastercard is, it would explode the Bitcoin
and give it a much larger base and much more security if everybody was using it. I think that
would be a very hot combination because... what are you going to do? Are you going to
increase usage, which is going to increase demand, which is going to increase prices, which
means were all going to make a lot more money? This is a good formula. Thats the two
things Id like to add. *47:18+

Audience questioner: Hi Bernard, Bruce Venton (BV) from (??) Financial. [47:20]

BVN: Oh, hi. [47:20]

BV: How are you doing? Thank you very much for your speech, it was great. Ive noticed
your legal defence fund (??) and I hope people donate but I wanted to ask what else can
people do to help you? Are there things we can post, letters we can write, anything else?
What else can we do to help you? [47:34]

BVN: Something that you can do if you wanted to be kept informed is you could sign up for
the monthly newsletter. Ive published a newsletter ever since October of 1998 which
chronicles the ins and outs, and up, downs, convictions of the Liberty Dollar, and me
personally, and you can go to www.LibertyDollarNews.org and you can sign up. Its free. It
only comes out once a month and I promise you Im not going to send you anything else.
Im too lazy to do that. You can be kept informed there. What was the question in
particular, before I got off on that rant? Oh, help me? Oh gawd, well I dont know,
somebody bought me a lot of drinks last night, that was a hell of a help! (Laughter) I
havent drank that much. This has been a good conference. I havent drank that much in a
long time. Actually, I did find four books, and theyre in a bag over there, that I wrote. I
wrote a 500 page thesis on the Liberty Dollar. As a matter of fact, its titled The Liberty
Dollar Solution to the Federal Reserve - 500 pages, its fifth anniversary and I have four
copies. I can accept Bitcoin. As a matter of fact, Ill probably only accept Bitcoin. If you
want to make a donation, that would be greatly appreciated. Its been pretty bleak being
out of work for... lets see, Im going on five, six years now. Particularly, its frustrating
because the government took everything so, its the usual government economic
suppression. They take everything and then, youre supposed to be able to defend yourself.
You know, eating is still good and drinking is still good. [49:09]

Audience questioner: Are they going to gift wrap your eleven tons of gold and silver to give
back to you after your acquittal? [49:14]

BVN: Eventually but theyve got to sentence me first. A large part of that metal that they
confiscated, unfortunately, is not mine. That belongs to... there was about 1/4m people
involved with Liberty Dollar so, it wasnt any penny anything. We distributed somewhere
between $65-$85m Liberty Dollars. That was a pretty engaging business model but
unfortunately, a good share of that were warehouse receipts and so the silver was being
held in the warehouse. When they raided the warehouse, they took everybodys silver. Im
out here, officially, as the campaign person to get that property returned, even if Im
convicted and I go to prison, its still not my property. Its a wrongful seizure but the social
consequences of the governments acts are horrendous. People have lost their homes, they
lost their business, theres been a murder and there have been a couple of suicides. These
are all friends of mine that I know and love and they have suffered a lot. They will have to
cough it up sooner or later. Oh, I was going to say... one last thing about appreciation.
Appreciation is really good. Ill give you an idea on Liberty Dollar. We issued one in 06 or
06, we issued one and it was a $20 and we probably sold it to the distributor for some place
around $15. Silver was probably $12 at the time, and so before Ebay barred sales of Liberty
Dollars because its counterfeit and they cant allow contraband to be sold on Ebay. In the
heydays of that, somebody put one of their Liberty Dollars up on Ebay and I want you to
think about the answer to this question for just a second. How much do you think an item
that originally sold for $15 and had a face value on it of $20 and a few years later sold on
Ebay? Get an idea about... this is numismatics so... just think about... well, what do you
think? Did it double? You know, wow! That would have been a lot because you would have
bought it and sold it within a couple of years and doubled your money, thats pretty good.
Whatever it is, I want you to double the figure that youve got in mind. Then, I want you to
double it again, maybe x10, I dont know. It sold for $1,900 on Ebay. I dont have any
control over Ebay. Here is an item that we distributed. Thats the type of support that the
Liberty Dollar has enjoyed and Ive enjoyed visiting with you. Thank you. (Applause)
[51:51]


__________________________________________


CREDITS:

Thanks for listening to Episode 83 of Lets Talk Bitcoin.

Ryan Deming was produced by Adam B. Levine and edited by Matthew Zipkin
Mystery Guest was captured by Steve Malagodi of Spectacular Sound at the North
American Bitcoin conference in January 2014 and edited by Adam B. Levine
Satoshi Square London was captured and provided by www.IamSatoshi.com
Music was provided by Jared Rubens and General Fuzz

Questions or comments? Email adam@letstalkbitcoin.com.

Have a good one! [52:22]