pandemic we are now living through? >> i have to say, i am not familiar with what you are talking about except that the world health organization is one of the most corrupt organizations in the world and they have been completely wrong on covid from the start. if president trump proposed reducing funding for the world health organization and united nations, i'm in favor of that. caller: hello sir. nice talking to you. now -- work together. -- about 20% tax rate for all working people. now, the tax bill you all past was 94%.

-- tax. can you explain to me please? >> you can watch the rest of this "washington journal" segment on our video app, c-span now, or our website, c-span.org. now we take you to a discussion at the american enterprise institute about cryptocurrency in the future of digital currency. this is live on c-span. >> what makes it worthwhile to me was the name they gave it on twitter, snowmicron. the roads are clear enough that we all got here. we are sorry we can't have you here with us. change this event to virtual quickly after we started the planning because of the weight things were going with covid. the word "virtual" reminds me of the windmill i've been tilting at for a long time in the cryptocurrency space. regulators in particular like to refer to cryptocurrencies as virtual currencies. the moniker comes from the virtual world that people play

in online, and maybe those folks are more readily accepting of cryptocurrency. but when regulators say it, i see them adopting a conceit that paper dollars and the payment systems we know and have our are real, cryptocurrency of a little bit fake. i think they are not fake, and with enough social capital, serious analysis, broad understanding of the technology, consumer awareness, well-functioning markets, mature companies, understanding the economics, i think we will see that cryptocurrency is very real. i'm a bit of a booster, and i think that our panel is mostly made up of boosters as well. for competing views in a deeper dive into some issues, i recommend an event coming up at aei at the end of the month. my colleague will be hosting a session that asks, will digital currency ship the financial

system--shape the financial system of tomorrow? we wish that event good health and good weather. our agenda for today is first to hear from christopher giancarlo, the 13th chairman of the commodities futures trading commission and an early booster of bitcoin and cryptocurrency from within government. his book is "crypto dad: a fight for the future of money," a fun tour of his time in government and his belief in digital technology. i will let the hashtags do their work. he is joined by a panel comprised of jerry brito from quinn center, carrot calvert from coinbase, and miller whitehouse levine from the d5 education fu-- defi education fund. one is to put the hand on the elephant and get these folks describing the technologies from their perspective so that you all in the aei community can get

a better handle on what blockchain is and what cryptocurrencies are, and so on. then i want to get to policy issues. there is no shortage, and i think we will have a lot to discuss. we will benefit from your participation online. if you have questions or comments for us can you can tweet us at them using #aska eitech, email william.rau@aei.org. sign him up for whatever mailing list you like as well. and if you want to comment generally, use #cryptoataei. if you want to share around right now that you are watching this online, please do so. you can help spur the conversation. we appreciate it. let me introduce chairman gian

carlo, the 13 the chair of the commodity futures trading commission, an office president trump nominated him to after his term as a commission member under president obama. this after a career in business and law and technologies that support those markets. it was his initiative, or perhaps disinterest in saying no to financial innovation, that led the agency to adopt a leading role in validating and normalizing bitcoin and cryptocurrency. he helped to create a relatively transparent and well-functioning cryptocurrency futures marketplace we see today. along the way he picked up the moniker crypto dad because he testified in congress about listening to his children and younger members of his family as they took an interest in crypto. "crypto dad" is a good policy memoir. i've read a few. a book of mine was com plimented as the least bad policy but.

a good one on how government works and sometimes doesn't work and how things unfold in this stage of crypto currency adoption. it is not the score settler we would like it to be. i don't think chris has that in him. but he is frank about some of europe's financial regulators. that i enjoyed. last year chris paid me the complement of inviting me to the digital bella project as -- digital dollar project as an advisor. and wondered as i went in how many months it would be before i orchestrated my departure -- whether it would be a loud resignation or a relatively quiet one. i sometimes count my successes and how many papers i've withdrawn my name from and how many projects i've declined to participate in because they wanted away from my principles. --wandered away from my principles. consistently i've seen chris giancarlo in because nations and testimony on the importance of privacy, due process, and civil

liberties when it comes to a central bank digital currency. the privacy principles the digital dollar project issued are good. my dramatic departure awaits another day. in 2016, this giancarlo paid the complement to aei of coming to this room to lay out an agenda first leadership of the cftc. my colleague introduced him here. the stage was different at the time. it had a space-age look into it, and peter commented on that. the dais itself -- podium itself looked like a bit of a rocketship. we are on a more normal stage than you were then, but we are complimented again and happy to have you back. whatever the stage looks like, mr. chairman, take us to the moon. christopher: well, thanks, crypto santa. great to be with everybody, they to be with all of you.

it is a distinct pleasure to be back at aei. as jim mentioned, in 2016i was here to lay out the innovation of embracing the agenda as i adopted as chairman of the cftc, and that agenda resulted in the cftc overseeing the world's first fully regulated marketplace for bitcoin futures, a market that remains the benchmark for liquid, transparent, and institutional trading and price discovery for crypto derivatives. today i would like to continue my advocacy for a regulatory embrace of american innovation. as explained in my new book, i believe the financial system and money itself is changing right before our eyes. i think we are in a fight for the future of money -- what it looks like, how it operates, who controls it, and what social values it carries. but before i tell you more about the fight for the future, let me set the scene with three observations coming out of my time in public service.

the first of those is to note the obvious, that america's physical infrastructure, its bridges, its channels, its airports, mass transit systems, network cutting edge in the last century have been allowed to age and deteriorate in the current one. like jim, i just rode the a seller from newark to washington, and the state of the levitated infrastructure is on full display outside the train window. sadly, the same is true about much of our financial infrastructure both in the united states and in developing western economies. bind that-- by that i mean systems for check came in and settlement, shareholder proxy voting, investor access and disclosure, even regulatory oversight. global models from the 20 century have fallen behind the times in between first century. and in some cases, embarrassingly so.

this aging financial system puts developed economies like ours in the united states at a competitive disadvantage to the likes of china that are building new financial infrastructure from scratch, 21st-century digital technology. for example, it typically takes days in the united states to settle and clear retail bank transfers, while in many other countries it takes mere minutes if not seconds. it takes days to sell securities transactions. and it is ridiculous expensive to remit when he oversees. it is often faster to move money around the globe by stuffing cash in a suitcase and hopping on a plane than it is to send a wire transfer. nothing better reveals the limits of our existing financial system than the u.s. government's initial financial response to the covid-19 pandemic in the spring of 2020. tens of millions of americans had to wait a month or more to receive relief payments by paper check, and more than a million

payments were made to people who were dead. the second observation i'd make from five years in government is the rapidly growing landscape of cryptocurrency and digital assets is being built upon a new wave of the internet. it is a phase that some people call the internet of value. the first internet wave of the 20th century is considered the internet of information. wikipedia is an example of the first wave, a massive, decentralized online reference authority compose collaboratively by volunteers who share information and peer-reviewed entries. that first internet wave transformers so many human activities, from music -- think pandora and spotify -- television, youtube and netflix, retail shopping -- amazon and ebay -- travel and leisure -- expedia and travelocity --

social networking -- facebook and linkedin -- and business meetings, which we are getting to use on zoom and team that first wave was greeted in washington a quarter century ago by an official response that was enlightened and bipartisan. the white house and congress came together to promote development of an internet of information unfettered by inapt federal and state law. this policy response is now considered to be called first do no harm. that first wave was superseded by a second wave, the internet of things come in which most every place we shop and welcome everything we where and bite him every device we engage with him is being conducted over the internet. we are not experiencing the internet's third way -- we are now experiencing the internet's third wave come what some people call the internet of a value. things of energy, agricultural

and mineral commodities, contracts, cultural assets like music and art, and personal assets like votes in an election, even personal identities, can be stored, managed, transacted, and moved around in a secure, private way from person to person without third-party intermediaries or gatekeepers. this third wave of the internet is shifting the medium of trust from large centrally managed institutions with legal authority to person-to-person digital handshake powered by cryptography, tokenization, shared ledgers, and a network of personal computers and smartphones. no where will this internet of a value have a greater impact than in the area of financial services, where it has the potential to unlock scalable, disruptive innovation. it is naive to think that the internet will not transform financial services, banking, and

money itself in the same way that the internet has transformed information, social interacting, retail shopping, local transportation, photography, and music. it is going to happen. in fact, it is already happening. money is changing right before our eyes. like text messages and photographs, but is becoming digital, decentralized, tokenized, and borderless. thanks to stable quinn, value is transferable around the world in a nanoseconds. 24-7, 365, in a way that is increasingly decoupled from the traditional bank system and corresponding banking services. and it is the private sector, not the official sector, that is leading the way to the future of money. it began over a decade ago with nakamoto's 2008 white paper.

more than 200 million people worldwide and 60 million in the u.s. are participating in this technological revolution, this internet of value, empowering creators, innovators, and developers, while introducing needed competition to ever more concentrated financial markets. it may likely due to banking itself what the earlier internet wave did two medications -- to communications and entertainment, reduce cost and latency while increasing economic freedom. sadly, washington's response to financial innovation this time around is a far cry from the earlier first do no harm. rather, it appears to be first preserve the status quo. the president's working group on financial markets reason he published a report on stable coin, the first major indication of the biden administration's policy response to the rise of digital assets. overall, the report is highly

defensive and reactionary, focused far more on what could go wrong rather than what could go right if innovation is properly channeled. it fails to declare any national imperative to harness digital asset innovation to upgrade our creaky, exclusive financial system to expand inclusiveness and lower costs for new generations of americans. in my view, it is a missed opportunity. which brings me to one were brought observation, and that is if we act now, i believe we can harness this wave of innovation, this internet of value, for far greater financial inclusion, capital and operational efficiency, and economic growth for generations to come. but if we do not act, this coming wave of the internet will lay bare the shortcomings of our aged analog financial systems with potentially disruptive impacts on our western economies . i'm so convinced that the internet is going to do to

dramatically change the nature of money and possibly the values it represents that almost two years ago i cofounded the digital dollar project. it is devoted to the public discussion of the merits of a tokenized form of the united states central bank digital currency, what is known as cbdc, or what we termed a digital dollar. our work is published, digital dollarproject at work. it is not-- digital dollarproject.org. is not a commercial venture. it has no business model to pursue. the project is assembled and by an experienced advisory board to bring many official disciplines to bear. jim harper is a member and we are proud to have him. the project name to lassiter as its full-time --jennifer lassiter as its full-time

director. the project is officially agnostic to stablecoins and other nonsovereign digital currency. the project does not propose direct retail digital dollar accounts with the fed. the project's proposals are monetary policy neutral and take new view of issues of money supply. it views us cbdc as a tool of monetary policy, not a policy expression for some the initiative is to encourage research and public discussion of the advantages and challenges of the digital dollar, convene thought leaders and actors, and to thoughtfully explore the policy implications of the u.s. cbdc if and when the united states adopts a digital currency. enter my mind, it may be more a question--and to my mind, it may be more a question of when than if. more than 80% of the worlds central bank's are considering digital currency. in my book, i list several reasons why.

they are access to citizens' economic data, financial infrastructure modernization, financial inclusion, precision monetary policy execution, the rising success of stablecoins, and geopolitical influence. you can read about these in the book. the seventh is the one i want to talk about today, and that is values. money has always been as much a societal construct as it is a government construct. as such, money carries with it social values. in the case of the analog u.s. dollar, those values have been free enterprise, free trade, convertibility, stability, and crucially, economic privacy for legal transactions. the digital dollar project believe that in the future, a well-functioning central bank digital currency should be private. people should be able to use u.s. cbdc without making themselves subject to inappropriate government

surveillance, censorship, or economic restrictions. it should be secure. cbdc should improve and not degrade people's security against theft, hacking, illegal seizure, unauthorized data mining, or fraud. it should be accessible. it should improve americans' and global dollar users' access to public services. finally, u.s. cbdc should be transparent. it should be run on systems that are operationally transparent so that the public can assure themselves about its technical functioning security and resistance to impermissible honoring. these are some of the privacy principles that we believe should be encoded in a digital dollar. yet other values of money are possible in a digital future. promulgated by both the sovereign and nonsovereign issuers or digital money. values such as commercial and political surveillance, data mining, economic censorship, and

social credit scoring. over the next 10 years, a battle will wage over what the digital money of the future, sovereign and nonsovereign, will look like and what values it will contain. this battle over the digital future of money will be waged by a range of players -- the legacy financial system, big tech, new innovators, regulators, and central banks of both moccasins and dictatorships alike. yet there is another group--- democracies and dictatorships alike. yet there is another group that should be engaged in this battle, and that is you and i, citizens, citizens of a free society it is one of the reasons we formed the digital dollar project, to make sure that the voice of the private sector was brought to bear in the evolution of digital money. looking back on the carnage of war one, french premier george clemenceau is said to have remarked, war is too important to be left to the generals.

in my book, i adapt clemenceau's famous quote to say that money, especially the digital money of the future, is too important to be left for central bankers. and i mean no disrespect to the federal reserve and its dedicated public servants. i just mean to say that never the united states does big things--whenever the united states does big things technologically, whether it is exploring outerspace or cyberspace, we have always done so in a partnership between the public and private sectors. exploring the future of money should be no different. i said that the digital dollar project is agnostic about the continued development of nonsovereign digital currency. my personal belief is that cbdc should exist alongside nonsovereign digital currency. that is because the best production against impermissible--protection against impermissible government surveillance of economic activity or restrictions on otherwise lawful transactions may be robust competition from

well constructed stablecoins and other nonsovereign digital money. on the other hand, private operators of stablecoins are not bound by the fourth of image respect individual privacy. they could be easily brought under political pressure to restrict politically incorrect transactions -- say, purchases of ammunition, or abortion, depending on which political party was in power. in the same way that social-media that firms are actively influenced by the u.s. government about what speech can be hosted. meanwhile, the u.s. government-sponsored cbdc should be expected to be subjected to constitutional fourth amendment protections, to which private stablecoins would not be subject. you might think, therefore, of a constitutionally consistent dollar as a public option before the production of privacy.

perhaps the best approach is a jigsaw approach to privacy -- no entity, no provider of the digital currency, has all the information about a transaction, so that the cbdc doesn't become a tool of financial surveillance by either government or big tech, or both. in short, broader choice between a sovereign and nonsovereign digital currency may be the most effective guarantor of economic liberty and individual privacy. i am convinced that the dollar, every major central bank currency, will be rendered into the form of a sovereign digital token within a decade, and free peoples need to make sure that those digital tokens and values -- free enterprise, economic liberty, and free speech -- and not competing values of data capture, economic surveillance,

and censorship. without in viable protections of free enterprise and economic privacy, it digital dollar would be no more worthy of a democratic society than the currency of an authoritarian one. that is why i wrote my book, to tell a general audience that change is coming, and the money of tomorrow will be very different than the money of today, and that we have everything to gain if we get it right -- greater financial inclusion, lower costs, greater speed, and better control over financial information on, and yes, constitutional protection of individual liberty and privacy. an we haved everything to lose if we get it wrong. the fight for the future of money is afoot, the time to engage is now. jim, i look forward to our discussion. jim: you can hear an audience across the land applauding at their desks. [laughter] i remember, especially when i

was younger, watching "pbs newshour," and the role of the moderator was to pull out the jargon and say what is that, what is that. even in this accessible talk you gave there were a lot of terms that you might want to go back to and spend time on. michael in this panel is to be available to everybody. there are a lot of people who are experts listening -- sorry to disappoint you -- but we want to bring along a lot of folks, so we will come back as we get into things, digging down a little bit further into what cbdc is and what stable kueng is and so forth. let's go down the panel and do a little more introduction of the rest of the panel. kara calvert, you are with coinbase. that is some kind of company? kara: we do something. i've only been here six weeks. we are the largest exchange in the united states. 73 million users across the globe, and of that, 7.4 active monthly users. those are folks who are buying, selling, trading, holding crypto, all sorts of crypto.

we have more than 100 assets on our exchange, which means you can buy and sell a glut of very valuable--it a lot of the very valuable assets and one we believe are compliant with u.s. law -- a very important statement to make, i think. also, more than 10,000 institutional investors, and 185,000 developers. doing exciting things on the blockchain, as we get into this dragon, working on decentralized finance, all of those. coinbase is an exciting company started in 2012 and has evolved a lot in those 10 years. jim: give us a little bit on that review. there are thousands of crypto coins out there. any of them are junk. we could say--many of them are junk. we can say most of them are junk. how do you qualify to be on coinbase? kara: we have a comprehensive listing process that looks on compliance, security, legal review.

very strict criteria to make sure things are not scams, that they are meeting certain criteria for consumers. another important point is they are not securities. we believe everything on our asset or folio is not a security. third, to make sure they are secure. when you buy them, you can trust. jim: you are from wyoming originally. is there something in the water in wyoming? kara: i am so proud of my home state. jim: produced crypto-friendly banking legislation. kara: wyoming is leading the way in terms of how we think about crypto and banking of the future of finance. we are thinking about it in a different mechanism and understanding that it is changing, and wyoming has always been open and flexible to change, and i think our legislature ors have-- legislators have been thinking ahead and banking legislators have been trying to be thoughtful about this issue. i'm proud to be from the great state. i work for my hometown senator for five years, i always wanted to be at the forefront of technology. this is the way we got there.

jim: great. jerry brito, you've gone over gray since you started at coin center. how long have you been doing it? what are you up to? jerry: coin center is an independent nonprofit based in d.c. and we focus on public health issues on cuba currency and blockchain networks-- cryptocurrency and blockchain networks. we exist because these networks, as mr. giancarlo was saying, are open. by their nature they are unowned. they are a public good. nobody owns them. a bit of action problem. nobody has the self interest, looking out for the interest of these netware is -- networks as interests. seo trade associations to look after the combined interest of companies building on these networks but who looks after the

interest of the networks, their openness, making sure they continue to be free from government censorship, etc., and to look after the interest of the open-source software developers building these networks who usually don't work for anybody? who is looking after the interest of individuals who want to use these networks freely and privately? that is what coin center exists to do. jim: how many staff do you have? jerry: we are a small team. five full-time folks, who have been that way from the beginning. we are looking to expand a little bit, so if you know anybody get on the hill, let us know. we've got i would say three, 4, 5 outside folks who are very engaged with us and i might as will count. jim: and i told you i would ask you this question, who is nere sh? jerry: going center exists to be

a platform for that. [laughter] for folks that do not get the inside joke, he is our communications director and we have kind of stumbled upon a communication strategy which is go direct to the people and do so with a happy warrior perspective and he does that remarkably well communicating to folks directly, especially on twitter. jim: he can let you in on what the zeitgeist of the day is in polite language. entertaining any wave of interacting with the public. miller, you are a kid. you're going to go gray at some point. >> i'm well on my way. jim: if you're lucky, bald. tell us about the education foundation and what you do there. >> it's a 501(c) four activist group.

we are privately focused on educating policymakers about the potential promise of decentralized finance, which is the subsector in a way of the cryptocurrency ecosystem. we are internationally focused, and not to front run my own announcements, but in brussels, the lead up policy efforts out there. our goal is to similarly represent open source developers, protocol, that don't necessarily have permanent enterprises associated with them. so that is the des in a nutshell. we have a full-time staff now looking to enlarge in the group and also expand into a pack. jim: where does the money for this fund come from? miller: so we are very convention -- conventional 501(c) four, but the idea behind the creation and organization came from what is called a dow,

which is an acronym. jim: we will get into this. miller: a decentralized autonomous organization, which is a bit of a concept being developed. but a bunch of people that care about defi got together on the internet and put together a group oak a stun decentralized finance protocol issues. makes sense and we should give a 501(c) for some money to do that. jim: are you going to beat coin center at their own game? miller: absolutely not. [laughter] our niche is defi. jim: so not the whole ecosystem? miller: not the whole ecosystem. although there are overlaps at the foundations of all of this. jim: the cryptocurrency community, i forget, i think you tweeted when things got in the bill, all these varying interests got together and said we do not like that and that was

interesting to see where many d.c. industries eat their own. this is a crowd you would expect to dine on each other but they really came together. fastening stuff. maybe we will get into that with the policy stuff. let's figure out some of the technology. let's say when i was miller's age, and the internet was young, i came across a website, i think it was how stuff works. i concerned -- i consumed a lot of content. what is email? it's a protocol and you can't say who gets to use it and who does not helped me understand you cannot do spam control certain ways and you might do a certain otherwise by controlling -- by affecting the protocol or anything. i wanted to get our audience to eat technology vegetables if you will, learn what is under the hood. there are all kinds of ways to come at it but i will pick the

data structure called block chain. can one of you give me your version of what the heck a block chain is? jerry: to the technical audience at home, you need to speak in general terms for the rest of the audience. i don't want to look at my twitter mentions after this. but a block chain is basically a word for what essentially is a shared distributed database, a big ledger, big xl sheet that lots of people can read and write to. you can have private block chain then public blockades. either blockades means you will have an enumerated list of people who have permissions because they have agreed this sort of look -- you know, basically form a contract to

give each other permission for rules that they enforce outside of the system, legally, what kind of things you can write and how. that is a private block chain. or interesting as a public watching like a claim or a theory him, where the set of people who -- a theory him -- et herium. people can just download software on their network and begin to use the network. if you have a ledger that is open and permission less -- permission-less, you can do all kinds of things. the first application is money. moving around payments, it is basically a settlement, moving amounts from one cell to another. we are changing the amounts in the cell in a spreadsheet. if you can do this in an open way, you would get bitcoin. you get the money from person-to-person without any intermediary just by using this

ledger. but it is not just money. it can be anything else. you can sell lots, property, and beyond that, so many of the things that we take for granted as web two, twitter or facebook, expedia, all of the things that you mentioned, what are they at root? they are a ledger. twitter is just a ledger of users and their tweets and who follows who and who blocks who. [laughter] you can reproduce this in an open fashion so there is no one company that controls and permissions who get to use it. in a nutshell, that is the block chain. jim: what is six blocks to each other? jerry: somebody else do that one. jim: what is a cryptographic hash? kara: from my understanding, it is basically when there is a confirmation from all of the different holders whether they

are node holders, whether they are involved in confirmation or validation. if they say yes that is what happened on the block, that is accurate on the block, then it is validated and therefore it is hashed to the block. so you connect each block with a hash and you go down the line and that is where you get the chain. you can have situations where you may have co-chains, you have situations where you may have a fork in 18 because someone says these are not the same and we are not going to validate this, so it forks. at the end of the day, it is how you confirm each block. jim: so a hash of a block is a string of characters saying the content of the block -- if you take the context of this block, hash them using this algorithm, you will get the string of characters. you can prove that block was not changed since the time it was created. hashing of hashes improves all the blocks in the chain are

consistent all the way throughout. [laughter] miller: that is one of the breakthroughs here. it is the consensus of one of the users a transaction is taking place as opposed to a central intermediary. citibank says your money went through or some other third-party confirming things, and what makes it so unique is a consensus base of the users of the group are confirming. jim: let me say to folks -- jerry: crypto data is a book that will get you into this for you well. it's a beginners interdiction to this stuff. christopher: twitter files down to the finest point because that was not the point. point was to get it generally started along the journey. jim: and the idea makes me ask about p2p. how is that used to secure open block chains and what is it? miller: so in a block chain structure, you have a group of

computers connected in a peer to peer way, reaching consensus over share data. we have hit the share data, we hit the consensus, the peer-to-peer network means each computer either participated in consensus process or attempting, taking the example of bitcoin, send going from one wallet to another. they are communicating with each other without having to rely on an intermediary to effectuate the transmission of information. using the internet, one can talk to any computer directly around the world and that is a security feature i think importantly because it centralizes who it is tracking -- who is tracking the information, the shared data everyone is agreeing to. jim: you know what i'm not going

to do? i will not ask anyone to talk about the byzantine generals problem. [laughter] let's get into mining and that will take us to cryptocurrency. someone talk about mining and cryptocurrency. we have the data structure. i'm trying to get an understanding a little bit of this data structure. i describe it as a ledger with pagers -- with pages. it is a starting point. but cryptocurrency adds a little thump because it inclines people to spend effort on securing those -- >> i will give it a shot. before i do, i want to say this, i have a car and i know what it does and what it does is very cool. i can drive it anywhere i want what i have no idea how the engine works. that is fine. if i wanted to know how the engine works, i can find out. there are better resources, ai manuals, to figure out how an engine works how i can learn

technical details or build one from scratch if i want. so with that caveat, personally when i talk to folks, i try not to focus on how it works because there are many cryptocurrencies and they work differently. but mining, on a high level, is the process by which you add blocks to a block chain. so the idea is, let's take bitcoin as the example, there is a new block added to the block chain about every 10 minutes. the way this process works is you have a peer-to-peer network, everybody who is on the network and suppose i'm one of the peers and i say i want to send some money, $100 worth of bitcoin, so i take jim's bitcoin address, any address to which i have previously received more than $100, and i say send money from

this address, and i have a password or private key that controls that sent $100 worth of bitcoin to jim at this address and i signed that with -- i signed that message with my private key and then i broadcast this message on network, meaning i send it to my nearest peers connected to, and then they further it to the 345 they are connected to and pretty much everybody on the network is seeing this. some of the nodes on the network will be called miners, special nodes that are dedicating computer capacity -- what they do is basically collect all of the transactions they see over the last 10 minutes coming through and those are basically the transactions that will lead into the next page of the ledger. you've got hundreds of thousands of miners around the world all

doing this, all basically collecting essentially the same transactions at the same time and they are racing to be the first one to solve this cryptographic puzzle to be the first one to solve it and if they are the first one, there block is the one and they choose the order of transactions. christopher: block chain and bitcoin go together like chicken and eggs but on like chicken and eggs, it is clear what came first. it is a block train that is the breakthrough notion of a globally distributed universal accessible ledger, but then you have to ask the question, ok, we will get people to create each new block, how do we reward them? we can go back to the old-fashioned system of getting some central intermediary to pay people to do these transactions.

that defeats the whole purpose when we are trying to get away from central mediators. but let's come up with a reward system that rewards people for writing to the block chain. we will create something called bitcoin and we will distribute it out of where the weekly -- it out rhythmically based on who successfully solve this puzzle, does the mining, and creates the box. we created a decentralized reward system to do it. block chain is a breakthrough and bitcoin is the reward system for doing it. kara: i would ad we are also focused on proof of work and concept of mining. there is a more emerging proof your called proof of steak. staking and mining are similar when talking about a reward system. that rubric becomes easy to understand, that when you validate a consensus for a block, you can staking, you can mine, but at the end of the day, it is their participation in the

networks and block chain that rewards you for that activity. christopher: mining and staking our design features, not flawed, not mistakes, they are designed to get away from central payment intermediaries. miller: i just want to underscore there is magic care. it sounds complicated and technical but it is answering the question why does the baker baked bread, why do minors mine -- miners mine. you have to incentivize the group of actors to essentially dedicate computer power or staking a different system to grow in the same direction. you can reward them for doing that and i think it is the carrot and the stick situation. you go to mine on bitcoin, you have to have a large capital outlay to buy quitman, to compete for the opportunity to write the next block to the chain. that is further incentive to

follow the rules of the networks . you have skin in the games or do speak and you're vying for a caret by following the rules of the network, even if no one has any connection with each other and it is just people around the world with an internet connection. jim: to me, some of the magic here is this incentive got to be a thing people value. there's a magic moment where everyone said i want that. we talk about it as a coin. technically under the hood it is not a coin, you might describe it as the power to control the movement of material on the ledger, but jerry, did you want to talk more about the metaphysical of what the thing is? jerry: two things i want to say about a layperson trying to understand needs to get, the purpose of mining is to validate the transactions and add them to the chain in a way that they are secure.

it is all of this work that you are doing that provides that security. the miners are doing things very valuable, basically being the paypal, except only for the next 10 minutes. they get to say these are the valid transactions and they are here in this order and we will add them to the block, but they have to have an incentive to expand -- expend so much work to be that and that is the reward they get. the second thing i want to say, the reward has to be in a native currency. a currency native to the networks they are mining. a lot of people who likes plain this do they say why don't this get paid in dollars? if you introduce dollars into the system, you have introduced -- removed everything that makes it permission list and open. the reward has to come in a token that is native. if people see there is value and want to use the ledger in order to read and write transaction to

it, whether to send each other money or do do centralized work, run smart contracts, for demand in the native currency in order to use the network so demand gives a value. that value is what miners compete to acquire. jim: i will defend the premise or the idea of trying to get people into the technology, you gotta know enough about your car so you don't get ripped off at the mechanic. [laughter] jerry: that's true. jim: this discussion for those tuning in, this is very basic and generalizes and we misstated and all kinds of things for the sophisticates but it is probably really complicated and hard to crock for folks just getting in. so we are going to do a lighting row next where we had the top of a whole bunch of terminology. what is lightning? ok. [laughter]

jerry: lightning is a layer, a solution to the bitcoin work. what does that mean -- bitcoin network. what does that mean? bitcoin blocks come around every 10 minutes and no faster. guys, forgive me. jim: no savaging jerry on twitter. jerry: these cannot come fast or slow, but every 10 minutes and they are small. about two megabytes or a bit more. that amount of space, in that, you can only fit so many transactions. there is no way you will approach the kind of scale of numbers of transactions that visa or mastercard approve. a settlement happens two to three days later for mastercard. you are not going to have -- visa and mastercard can do

millions of transactions per second. you cannot do that on bitcoin. bitcoin does not scale to be that kind of payment system. it is more akin to a settlement base layer. so can we build a system on top that is superfast, lightning fast one might say, that can settled to the bitcoin block chain. essentially the way it works, we can -- if cara and i transact frequently, we can basically open a channel between each other where we each have a balance, and when we open that train oh, that transaction is written to the bitcoin block chain, but once we have the open channel, we can transact back and forth. as much as we want. none of that costs anything. action does cost fractions of a penny, and only once we are done or once carrot disappears or --

kara disappears or i disappear, do we settle to the bitcoin watching in our respective alleys. it is using bitcoin as a settlement layer. jim: this lightning will be be more lightningish. what is an nft? kara: a non-token. unlike bitcoin that is fungible, they are valued at different amounts based on what it is. it can be we are opening a coin base nft market place where folks can actually go release their nft's, so that can be if you are an artist in terms of a musician you can release an nft that maybe is your fan club and you then would have access to certain things, might have access to tickets. at the end of the day, it allows the musician to monetize the content throughout the block. so not just about one ticket resold on third party and then resold again, rather on their block and they can manage that. there are lots of different ways you can have an end of two but

it comes down to a value assigned to this one thing. jim: what is going on with the apes? miller: apes are an nft project that does exactly what she described. there is a unique token, one on, associated with an ape drawing. just like a certificate of authenticity, people ascribed to these. jim: i'm less a booster than when we talked about that. jerry: can i say something about nft's? i think my colleagues drew a lot of scorn recently when he said on twitter that the nft monkeys have set us back years in explaining this stuff. here's what i think he meant. nft's are an incredibly important innovation but are associated with first use case, which is fine. a lot of arts, a lot of different cases like that,

collectibles, things like that but let me give you another example of an nft case used now. the theory of naming system, ens. ens is a competitor. i own jerrybrito.com. i own it. i don't own it because i have a registration with a registrar from a centralized global body. at any moment, i -- the website could be taken away from me. i also own another one and that is an nft that i own and nobody can take away from me and i can point that to my website and you did to receive payments and use it to receive other nfts at that address, whatever i want. it is mine and nobody can take in and that is my identity. there are lots of other use cases for nfts beyond that. jim: you reminded me of some old guy talk which i do more and

more all the time for some reason. you are reminding me of the policy stance taken in the clinton administration around internet governance and the domain name system. we can spend hours on that one. the domain name system, the government did not try to own and grab, they did a mushy decision but they put the domain name system for the internet with a nonprofit corporation in santa monica if i remember correctly, and you could, if you are prim about it, you can wonder about so much power over finding things on the internet being there, but that was way smarter than the department of commerce saying it is ours because that would have created a real power grapple and has not -- grapple that has not happened on the internet. grabbing resources on the internet is an important thing. you brought me back to 50% level on and after he is. -- nfts. web3, i am no idea what this is.

kara: you have touched on this quite a bit. christopher: web three is about getting back to the point i think of the original promise of the internet itself, empowering individuals as opposed to empowering big tech. what we found is with the rise of big tech, they were in command of our data, and command of our information, and what do we get for that? we get nothing. we supply them with all of our personal information on facebook or amazon when we shop or other ways and they take that information and use it their own commercial purposes. and the notion of web three is to get back the idea of the original promise of the internet, taking back control into our own hands. europe introduced the gdp pr, privacy protection law, allowing you to opt in or opt out to allow big tech to owner information. that is the starting point.

what we want to get to is what jerry said, where we own it outright and anybody wants to know if i'm web surfing late at night on the latest banjo design, somebody wants to pay me for that and give me a discount on the next banjo or pay me outright for that information, fine, but don't do what is done in web 2.0, every minute is my information is being auctioned off to the highest bidder to take that information and they big tech companies. web 3.0 is very exciting. it really honors the very premise. when we go from an internet of information to internet a value, we very much want to make sure we own our things of value, we want to own where we store our identity, the most important thing of all, where our value is, money is, retirement is. that is what web 3 looks like. jim: i also do a lot of late-night banjo designs of surfing. [laughter] christopher: it is a rare thing.

people will pay a lot of money. jim: smart contract, is it a contract? christopher: maybe i can take this one as well. as a lawyer, we study contracts in law school. what is a contract, other than a series of instruction? it is a series of algorithms. if you can reduce those instructions, those algorithms to a piece of code, you suddenly have a smart contract that can further input as to compliance with those instructions and determine whether the contract has been complied with. if you can put that into a distributive ledger, you can have a remarkable series of societal interactions based upon agreed set of protocols or instructions, hence smart contract. kara: to make it very simple, if we want to go out and you have a boat that i want to buy, we can put that into a smart contract and put those parameters in and

it executes. the important part is it eliminates the intermediaries that we often have now in contracts. i think that is a really powerful part. it is not just about payments, there are other executions that will happen. the exchange of value is an attractive one and one simple for folks to understand. christopher: we talk about old folks like you and me. let me give you a simple example you can understand, wilson trust -- wills and trusts. what is a will other than a set of instructions for people that survive you to do certain things. i want to leave money for my children when they reach 30. if i die sooner, i may want certain conditions like they have to stay sober or get a college degree in order to do that. today, how do we do that? we sit down with some lawyers and executor and i say i am writing down what i will trust you, after i am gone, to do this stuff. what if, instead of all of that, i put it into a smart contract, i connect digital money to a

smart contract so that when my kids 30, they do a breathalyzer test on their phone, their college degree is programmed in, and the money is released to them, no need for executor or intermediaries who, in most cases, want to honor well wishes but maybe they did not. this case, it is all automatic and digitally executed. jim: i feel new york and a lot of other legal centers shivered. christopher: it's even bigger than that. jim: jerry, do you want to gloss on that? jerry: i agree generally with what was said but i want to give a different spin. a spark contracts are neither smart nor contracts. everything you described is what i smart contract is. i think you people hear the smart contract term, number one they think it is legal, legally binding in some ways. in many ways you look at the smart contract and there is

nothing legally binding about it. so not anything -- not the way we think of contracts. christopher: keyword is yet. when the internet first started we did not know if it was a legally binding agreement and it is. jerry: exactly. a lot of smarts that can dress -- that traditional contracts have is the interpretation, that we rely on third parties to do. so things like reasonable's or best efforts, these are things that have to be interpreted. the machines that do it automatically are not the best to do it. christopher: yet. jerry: because you can't have doubts and the way maybe things are decided are there -- are they are incentives of things for people to align with ultimately what is the right choice, the majority choice you can say and get a good result. jerry: i wanted to cautious people --

i wanted to cautious people to think these are not legally binding. miller: more broadly i think of smart contracts being computer programs that given input x, should he pass the breathalyzer and graduate from school, you have a high degree of confidence that output y will happen. in this instance, assets are transferred to the kids account or wallet. jim: but generally, a dow. miller: sure. jim: if you can, tell us the story of the dow. miller: dow, like i said at the outside, is an amorphous concept. how i think about it is a group of folks over the internet you are collectively trying to accomplish some shared goal, be it the provisioning or maintenance of a computer program, a smart contract, or

the collection of money to go by the replica of the constitution. so i kind of think about it as the internet native corporation in a way. it is an entity, whatever that means, that is attempting to accomplish some objective, and folks, anyone who chooses to, it is permissionless, may participate in at least the striving for that objective. jim: let me take what you said they are and segue to a policy question. he said an interesting phrase, internet-native corporation. the block chain that we talked about and cryptocurrency, it is kind of everywhere and nowhere, that is how i sometime describe it. it is everywhere and nowhere you can take your cryptocurrency in and out of a jurisdiction without anybody patting you down and taking it from you.

you can get together with others and create an internet-native corporation. one of the interesting challenges, which takes us into public policy, is that corporation is everywhere and nowhere. it is not subject to taxation in any jurisdiction. it is not subject to regulation in any jurisdiction. necessarily. i must add -- tell me why i'm wrong or kara. jerry: whatever activities you are doing will be subject to regulation and taxation somewhere. it might just be very difficult to enforce that we might get away with not being caught but it probably is. kara: another plus for wyoming, they are addressing this issue. they talked about how decentralized autonomous organization would have a common lc and have laws on the books that would allow that to

happen with clarity. in general, there are many dow's interested in remaining fluid and nebulous but there are many that want to accomplish something and want to do it in compliant and legal way. so even though you don't have the same intermediaries as a corporation, there are ways to make decisions and a legal path forward, at least in wyoming and other places. i think other places are trying to catch up at that. jim: i will ask you what [laughter] [laughter] an llc is. -- what an llc is. [laughter] christopher: nomenclature is important. talking about a corporation, we talk about something historically that was a grant by a government to grant you limited liability for the actions of the assembly. when you talk about an assembly, you talk about something under a constitution has certain privileges from government control, freedom of assembly. what i would caution those who are proponents of dow's is what is your nomenclature. if you talk about a corporation,

you automatically say we are subject to the government's grants of activities. if you talk about assembly, you talk about somebody enjoying freedom from government control. i think terminology is very -- jerry: that's true and i think that is why miller said is -- said it is a complex idea being -- now it is a chat room that has to be having the ethereum address to it. i would say, as food for thought, maybe the first dow is really bitcoin. bitcoin itself. it is autonomous, and it is a self organized group of peer to peer people that assemble, importantly, and

exercising and bitcoin, using your right to a similar, produce this function. jim: there's a story that folks who are not familiar with this might not know. i hate to spoil it but someone else got it in the auction which was too bad. [laughter] this question of how a dow might fit into the legal structures that exist now is one of the mind vendors, one of the challenges, but let's move to more practical stuff, one that was out there when i was working closely on these issues, was taxation. who wants to talk about irs treatment of cryptocurrency? the look on kara's faces i don't want to touch it with a 10 foot full with a 10 football. kara: the senate was actually

addressing this. i think there is a challenge here. we need clarity from the irs on how to treat these assets on whether it is property or currency so there is a challenge there. i think the bigger challenge we see that we saw this year and congress was the lack of understanding on how some of these work, going back to making this panel accessible and what some of these terms mean, as soon as you understand technology, it is hard to understand how to tax it. one of the big issues was, should we require reporting for some things and who should be reporting for things like dow and decentralized financing, mining, staking, all of these other activities? coin base, we want to reported to the irs and provide lots of tax services for our clients to know how to comply. i think the challenges working with the irs to make sure we are educating and working as a partner with them to help them understand how to do this and implement certain rules or

change certain rules in a way that enable innovation and people to be compliant. jerry: the reason i blanched the question what about tax, where to begin? it is so many issues. here is the gloss. the gloss is that the different agencies in the federal government that have regulated related to crypto have done so as the technology has affected them. in each case, these agencies have gotten smart quickly and then regulated or interpreted and have done so well. so they are just spot right, to date. jim: anti-money laundering? jerry: yes. the ftc did a great job and even the sec, i understand people

want better clarifying and better law but it has generally gotten to a good -- the irs and tax policy treasury is the one area of law that it is a complete mess. when they have put out guidance, the guidance conflates things like artworks with eardrops. these are two different things and in guidance to the public, complacent topics that make it impossible for somebody who wants to file their taxes appropriately to do so. then you get most recently to the infrastructure bill that passed recently over the summer, there was a series of crypto-related tax provisions included in that, lots there and we cannot possibly get into it, but essentially it assumes this technology operates in a space it does not. this is not good for the

regulators enforcers because they will not do what they think they can do and it will not be good for users who are not going to be able to pay their taxes when they want to do it differently. there is a lot of work to be done there. jim: let's talk about the federal government's institutional response to this emerging technology. kara, coin base out a suite of asset policies. kara: we release one over the fall and summer and it was over 70 meetings with lawmakers, policymakers, regulators, staff, stakeholders, industry stakeholders, to understand what the market needs. i think where we settled is this idea that this market has changed, so it is a 15 year veteran of technet -- technology policy. i thing what we try to accomplish, not the technology while it is changing, is changing the markets and consumer expectation. our first pillar is changing the

risks, our first pillar is as we see intermediaries, the need for intermediaries, the need for third parties, as i changes, we need a different framework and mindset. that is the first pillar. the second pillar is thinking about a single regulator. in any of the existing agencies, ftc, sec, any range of them. the idea the single regulator needs to have a mission that promotes innovation and mission to understand the technology. how can you regulate decentralized finance if you do not understand it. it is this idea about understanding the technology and the risks are etc. part of that is having -- she would have a licensed or authorization for a marketplace for digital assets. a company like coin base to register as an exchange and we could then provide a digital asset through the lifecycle of its life. at the end of the day, we

would have an sro, self-regulatory organization. there is a number of them in the government that have been extremely helpful. along with our third pillar, focus on consumers. so disclosures, robust appropriate disclosures. we would have fraud and market manipulation prevention to really make sure we are understanding where the risks are and helping to enforce against those. third, thinking about the efficiency and how the markets actually run. along with that, our fourth pillar is thinking about offer ability and fair competition. all of the agencies should be thinking about fair competition. i think we have seen folks that i've done that well and i think we need to make sure that moves forward. those are the four pillars. we can get into the weeds on those but i think that is something we initiated this and throughout, and i know many people think a single regulator is high in the sky and total rocketship idea. at the end of the day, we see it across the world.

in a global environment and it is not crazy to think about a single regulator. it is happening around the world, in a way attracting innovation and this industry because in the u.s., our fractured system is pushing folks overseas. they do not know where they should release a token, afraid of getting stomped out, so i think we really need to think of how we create a streamlined system that has clarity and easy to comply with or provide flexibility for compliance and get to a point of true innovation in the united states. jim: i love getting into the weeds and i am hopeful on the chairman to get in on whatever you are interested in. [laughter] christopher: first of all, i to my had to coin base and their principles, well done. really thoughtful. they are absolutely right, that i believe there should be a single regulator. the problem is, you need to look at real politics when it comes to washington. the ad committee has got to see

d.c., the banking committees have the ftc. if you think that is a measly committee structure, that goes down to agricultural powers in the midwest and banking powers on the coast and those dividing lines are societal and go deep. neither side is going to yield. the cftc got in front of this and now the sec seems to have the baton, but that battle is not going away. the sec will not run with this and the cftc will not yield. this is a long-term link. before i left the cftc, and a long conversation with house leadership at the time i had, i came up with an idea, which is still germinating and i think ultimately i believe it is the path forward. if you will allow me -- jim: please. christopher: i think the path forward is to recognize the power structures that are, ag committee, banking committee, sec, and instructs the 2 --

instruct the too agencies for doing something that they have not done before, take the ad hoc cryptocurrency working group that i and j creighton created and develop it into a bureau, a crypto bureau, which would have joint parentage of the sec and cftc but have its own authorization, its own financing coming from the two committee structures, have both commission structure formed from the two agencies but then a head that would be independent -- independently nominated by the president and confirmed by the senate that would be the leader of a crypto agency and it would take from the cftc its long-standing mandate for innovation, for deep and competitive liquid markets, antifraud manipulation, but product innovation. the cftc has overseen the development of more new products than every other market

regulator in the world combined over 14,000 in the last less than 20 years. it is a remarkable track record of innovation. it would also take from the sec its mandate for consumer protection, for disclosure, for registration, right? to take these two mandates, combine it into one bureau and give that bureau oversight over crypto, and this could be a role for others, we could take something maybe from the consumer finance mandate that the cftc has but they also have a consumer finance mandate that has worked well. there are a lot of politics involved but at the end of the day, you can have multiple regulators. we pride that. there are products that are joints regulated by the cftc and ftc and it is a disaster. you need one regulator and one that is crypto focus and has cooked to expertise. we absolutely need self-regulation. alongside federal regulation.

there are some in washington that say this is too much the wild west crypto is to have self-regulation. are they kidding? did they not see the commodities markets back in the day? did they not see the early days of the sec -- early days of the equity markets, yet we have self-regulation in securities, self-regulation of commodities that goes back to the 1850's. and the proof is in the pudding. u.s. commodity markets and equity markets are the envy of the world. they are the world's largest, best regulated and functioning this most liquid and best price for discovery. what has not worked to the benefit of our country in the equities markets, in the bond markets, in the commodities? self-regulation works and it should work in crypto alongside the federal regulation. there are bunch of places i want to get in the 10 minutes that remain. in terms of monetary policy, i know that is an issue and i know

nothing about monetary policy. someone educate me. [laughter] jerry: where do we start. jim: and in 90 seconds or less. [laughter] jerry: central banks are the -- christopher: central banks of the guardians of national currency, the amount of national security, whether it is being restricted or other to be national needs. the question is whether nonsovereign currencies provide a challenge to the central bank to be able to carry out those functions of managing a currency, managing how it is transmitted, what are the transmission mechanisms for it and what is the amount of currency in the system. hope that helps. jerry: i'm not sure there's a

connection between stable coins and monetary policy right now because several governors, a thing maybe even jay powell, have said there is not much. stable coins, as they exist today and talking about the u.s.-based regulated stable coins, all they are doing is essentially keeping a bailment of a dollar of a token to give you and that dollar, regulated typically by the new york trust company, things like the last remaining big-money transmission license kind, usdc, is willing to trust. supersafe liquid assets invested in. there is really no monetary occasion. the question begins in number one, anywhere you have stable coins that are not subject to supervision by any regulator, so maybe there is a little shadow banking happening there, not as

much monetary policy as systemic risk that might exist. then the other thing is stable coins, i think, form the basis of a potential future digital dollar. you can imagine banks being given the authority to issue dollars as tokens, as opposed to deposits as they do today. then maybe there is -- but that is not happening today. kara: i think one different point is when we think about digital currency and think about how outside of cbc, a true stable coin, there has been pushes to, as a report suggested, should only come from banks. i think there is probably a role for banks and other nonbanks to play in the space but there is probably a real role for regulators and others and particularly i think congress to think about how do we ensure some safety but also consumer knowledge, education, whether disclosures or any other mechanism to ensure that as we

think about what is backing mean and how can you make an educated decision to use a stable kind, those are the dishes and's that we should be thinking about. jim: i would love to segue but i'm just going to pivot. [laughter] let's talk about energy consumption. you referred early, kara, to proof of work, the highly consumptive energy using way of securing a block chain. there are competitors like proof of stay. this is a discrete policy issue that ash is not a discrete policy issue that i know of, maybe it is, when you see people who really dislike crypto, maybe because crypto twitter is a really obnoxious place. they go to the energy consumption and there are real issues there. maybe i will stick it with miller because we have not heard it from him in a minute or two but do you want to talk about energy? anyone can take it too. miller: i think any negative one

considers -- considerations in a system has to be balanced with a positive. these are not operating in a vacuum. every system that provides societal good could also have negative externalities. i think that, to your point, critics of the energy consumption of mining might be less convinced about the potential societal benefits of cryptocurrencies broadly, so it is easy to look at with downsides. mining, proof of work is critical to the operation and security of these decentralized ledgers, and i think they are a societal good. i think over time with -- over time, a lot of this will follow murphy's law where we create more energy in a sustainable way, i hope, and i think it

comes down to where priorities lie. christopher: let me try to answer your energy question with a lightning answer. proof of work uses a lot of energy. use of -- a uses a lot of energy, but because it is, it does what any demand does, driving renewables to a great extent. we start on the point that we use a lot of energy but it is deriving renewable usage and needs to be put in context. our current analog monetary system is very mineral extractive, running atm machines across the country uses an enormous amount of energy. it needs to be put in relative terms. we are moving, as karen notes, to proof of stay, which uses much less energy, but for the time being, the truth of the matter is proof of work does use that. kara: i know i keep bringing it back to wyoming, all roots go back to wyoming, but the

daughter of the energy state and thinking about how these intersect, it is exactly where we see it intersect. we are using energy better in wyoming to use -- provide some of these mining services. we are captioning burn off, using lines, all sorts of ways we are leveraging renewables to do this mining, even though it does i think use a lot of energy, but we are finding ways to do it. jim: for a moment, i'm looking down the panel and see jerry shake his head yes and another no. jerry: everything said so far i agree with, but i would say we do not have to make any apology for the bitcoin energy use. what bitcoin done is value -- does is valuable. valuable things have inputs, including energy. i was reading recently that 40% of all co2 emissions in the u.s. comes from climate control. so we are enjoying air-conditioning and we could have this off and it would probably be fine. we don't want that.

so we choose to expend electricity. what big coins process does is secure a network that has billions of dollars, one trillion almost, and that is valuable and is worth the energy being expended to protect it. if we are serious about addressing risks of climate change, looking at cryptocurrency miners and saying you guys are bad is not the way to do it. you are not a serious person talking about climate change. what you should be doing is opening 100 power plants in the united states, tapping into geothermal energy, opening up exploration that is right for exploring. christopher: shutting down all those atm's. [laughter] jerry: do more, don't do less. miller: the history of human development is the history of increased energy consumption. we have to figure out a way to make energy sustainable. jim: left wing crypto twitter

savage miller, let me do another pivot. my gender for the rest of the minutes together is to ask you, thanks to our audience, i have tried to weave in audience questions. christopher: quiet noises. jim: you have been well behaved from our perspective. i want to talk about this question about digital dollar and let's do privacy because we only barely touched on privacy. what's the difference between a digital dollar and electronic transactions we have now, online bill payments, mobile wallets, tetra? -- etc.? christopher: the digital dollars not relying on the credit of a particular banking institution, it is relying on the credit of the full u.s. government. it is a return to the type of money humans have used since the dawn of time, for the last 400 years or so. that is tokenized money.

humans used tokens, whether it be clay tablets or metal discs with members heads on eight, from the beginning, very comfortable with the system. with a token system, they have the identity of the token system that needs to be validated, not who you are, where you bank, and how much money you have in your bank. the problem with a token system in analog form is that it turns out to be local. bankers in amsterdam when they went to venice could not use their dutch guilders so they got credit from the bank of amsterdam to go and sell the local aspect. that is the money we used, 90%, whether you use zelle, benbow, credit cards, a check, you are not using a token, you are using a credit of an institution. your identity needs to be validated. we need to know how much money is in your bank, did your bank read it another bank? that system is relatively slow, relatively expensive because you have to pay for that validation,

and most critically, it is very exclusive. you do not have identity, you cannot use that system. jerry: today's system is a surveillance superstore. jim: you said you were eager to report to the ios. kara: only on appropriate information -- irs. kara: only on appropriate information. jim: i don't think we will have time to get to some of the privacy issues out there, but i remember coming into bitcoin thinking this is private and realizing the privacy is fairly brittle. there are firms out there that follow the block chain and you can unpack it pretty easily -- i won't say pretty easily, with a lot of skill you can unpack who has done what en bloc chains. there are things out there like zero knowledge proofs -- in block chains. there are things out there like zero knowledge proofs where you

can transact anonymously and without publishing even the amounts of their transactions. there is a whole world of as i said up here and i say it again, i appreciate you are the digital dollar being consistent with american values including the fourth amendment and privacy. i appreciate all of you panelists joining us today and all of you out there. we could just hear your applause beginning to crescendo. i want to remind you that an event my colleague will be hosting, it is friday, january 28. you can view at aei.org/events. early on the pandemic we had an all hands on deck meeting where we got together virtually or

digitally i might prefer. our president talked about what he thought the pandemic held for all of us. we are quite used to pandemic operations. i appreciate all who helped put together this event. at the end of this call he talked about how much he looked forward to everyone returning to the building. aei is the type of organization where principal disagreements are allowed. we do look forward to the day when we could have you, your audience together with us to have more of a conversation about the many issues that we have barely covered in this area. thanks to my panelists. thanks to all of you for tuning in. we will see you again hopefully soon. [captions copyright national cable satellite corp. 2022] [captioning performed by the national captioning institute, which is responsible for