it started life as a place where you could exchange magic the gathering cards for cash and it ended up not by design obviously but it became the place to go to trade bitcoins as well but william bonzai has created a backstage look at what the mt gox commando looks like as you see it looks very nine hundred fifty s. now max you created the hollywood stock exchange where it's run by the virtual specialist technology which you invented and a few days before mt gox crashed. you warned exactly on this so explain what is wrong with the market making function here the way trades are processed the buyers in the sellers at mt gox and all these other exchanges it's not done in a way that. commensurate let's say with the way trades are cleared in the exchange to new york stock exchange or some other exchange where there is

a specialist function who is making a market and their job is to create a fair and orderly price matching buys and sells and so they do this by by having both the ability to match trades buyers and sellers but also managing an inventory of whatever it is they're trading in so if it's i.b.m. stock on the floor of the new york stock exchange the market maker would have an inventory of i.b.m. stock so that if in fact there was a mismatch of buyers and sellers they can step in and be the market be the market maker that doesn't exist on any of these exchanges really they're trying to match up buyers and sellers in a way that's completely inappropriate for any kind of modern market making mechanism and so while i'm in the process now of trying to straighten that out by working by consulting with projects here in london and elsewhere to see if we can bring in a world class market making and of course my patent on this the virtual specialist the designs of that patent which were go back to the one nine hundred ninety s.

there's been a lot of improved ideas that have come along sense then that i'm hoping to bring to the to the party what would mt gox look like with a proper market making function if it were actually matching buyers and sellers right now their hands off it just comes as orders come in it clears those orders even if it's point there is there is there one bitcoin it goes into the same queue as somebody trying to place an order for a thousand bitcoins so first of all there's really only one security and that's but going but there's multiple exchanges trying to. the exchanges buyers and sellers of because i said i have different price discovery spread out over different exchanges and they're all inadequate so you have this incredible spread on different prices on different exchanges so that's problem number one the good news is that there's only one security or that you need to make a market in but there needs to be one at least one functioning market that's able to take buys and sells and create that what it would look like mt gox you'd be able

to for example put in market orders for bitcoin at a fair and orderly price that would be at or near what is the market for for bitcoin right now you have a lot of people putting in a limit orders they want to buy and sell at a certain price and these are lined up and they're trying to match the limit orders against each other there is no real good way to buy and sell at the market or market orders and if you don't have a market of water and this was the innovation i brought to the virtual specialist technology back in the one nine hundred ninety s. it's how to create a market order on an exchange the virtual security using a virtual currency which was the basis then for hollywood stock exchange it was a basis for what became known as the prediction market industry which pretty much is built on my technologies built on my concepts of what you can do with a virtual currency in a virtual market and so indeed to bring some of that over to this space to make a market but as you point out as i've said all along the mining of big coins under nakamoto that's the genesis creation of the bitcoins that's brilliant and it's

fantastic and at the block chain itself of bitcoin creation is unimpeachable and there's nothing wrong with that then there's the wallet technology which is to some degree being proven to be a little bit less than robust then there's the merchant side of the business that seems to be doing the best you know people who are actually in the business of facilitating merchandising are doing quite well but then the exchange piece of the big point ecosystem as i've been saying now all along is the weakest link in the chain because you have people who are trying to adapt magic card trading systems for multibillion dollar exchange. platforms and they're not up to the task however the success of bitcoin itself as mt gox says that they were signing up eighty thousand new registrants and march for sixty thousand sorry and now they're doing twenty thousand new registrants a day so this is a booming market but see n.b.c. after this crash did contact you and it resulted in the headline big coin crash the

race to create new exchanges so there's a lot of former guys like you who were. still a guy but guys who were formerly market makers or creators and exchanges so whether it's the rumor is cantor fitzgerald is coming up with an exchange this is a rumor we have heard exclusive here that they're going to introduce your technology to the big queen space there's a new site called open queen which is trading bitcoin but also ripple another mass backed currency and we talked about that here two years ago with david hales but the guy behind that is the guy behind the p.d.p. lending facility i think prosper so there are guys who have built big companies making markets and prices and price discovery who know what they're doing rather than this like gaming center here i think for people to understand where we are on

the chronological progression the timeline of bitcoins acceptance and use as mainstream currency and challenge to currencies you have to understand that right now the technology of bitcoin is what i would say pre netscape if you remember netscape went public in the early one nine hundred ninety s. and before then there was no browser really that people were using on the internet there was no way to just jump onto a browser and start surfing the web it was done in a way that was extremely user unfriendly then you had net. skate the netscape went public and then you had google and you had the bay and you had this whole phenomenon known as the internet but it's based on that browser technology right now there is no similar ease of use technology then people will be buying and selling because engine will not and the moment ever think about the block chain or so toshi or cryptology they'll never crossed our mind they're just be buying and

selling but going but so this is the mad dash for to be taking advantage of what is going to be a multi hundred billion multi-trillion dollar market so the internet before netscape was when paul krugman said the internet is just a fad it will never be bigger and more important to the economy and the fax machine and looking at it then that the ugly beast it was that only richard stallman could figure out how to use it by the way when we've seen richard stallman use the internet he doesn't use it like you do but paul krugman has also weighed in on bitcoin with similar opinion right well you'd expect that because these guys are their indicators of of a market in a way that you have to interpret their words as a good reason to do the exact opposite so he's a guy who is he's just he's on the payroll of the of an academic system and the new york times to produce columns that old blue haired ladies

a sense of comfort on their park avenue apartments they has no relevancy to actual day to day workings of technology the economy currencies is a complete bimbo in the second half we do talk to tony clippy of bit pay who was here last wednesday he was in town from atlanta and so we did talk to him before the mt gox crash but you know on the merchant side he's signing up merchants right left and center for a merchant which i've been on pirate my film and i've also used pay pal the. ease of use is just dramatically different for merchants anybody selling something it's much easier and there are those out there who are saying well you know what can you do you know you can't buy anything but mozzie metals who we were you know when we were with tony gloopy that night when mt gox was crashing he was saying that the metals where you could use your bitcoin to buy gold and silver they had their

record volume that day people were trading their bitcoin for gold and silver immediate cash for cash won't but it is an example of a service as ease of use and people are sticking that you know used to it going to pay to merchant for the merchants to use and they are able to do it on my side pirate my film dot com we've been we've we've financed twenty films using bitcoin and pay so that's the only crowdfunding site out there that uses bitcoin pay is processing five million dollars a month but again it's still in the infancy of this whole new network protocol this new virtual currency in peer to peer currency and you know i want to compare it to a story that was going on at the same exact time the same day as mt gox i n g again targeted in d.d. o. s. attack i n g bank customers were again unable to use online banking services on tuesday night because of a renewed cyber attack this was a week after they were left in chaos for a whole week because they were being attacked but here's one bank in the

netherlands the euro didn't crash the economy didn't crash because of course there are other banks and other ways of getting cash the banks are suffering exactly the same problems as bitcoin is suffering the economies are suffering from the exact problems and the dollar or the yen of the euro are being debased or fooled around with their confiscated by various governments so i think the big point is a good proxy to understand how chaotic the global finance is just because paul krugman comes out of the coma says that there's nothing to worry about because the . the us dollar is manipulated managed by the central banking system even though that causing massive austerity and poverty around the world doesn't mean that these currencies are not in a state of crises bitcoin is the proxy for how screwed up these other currencies are you want to know get a true price signal of how screwed up the global economy is don't look at the dollar don't look at the dow jones look at bitcoin this is this is what's telling you how screwed up the rest of the world economy is and again you know it is

a network protocol and as adoption of the technology spreads you were talking about your days being in the internet space in one nine hundred ninety four is a lot different from what it is now it was a lot more expensive and time consuming then but now it's much easier i want to look at this chart consumption spreads faster today and this is from the new york times and as you see you know the telephone took from one thousand eight hundred all the way to nine hundred seventy five before it hit ninety percent of the population clothes dryer all the way over there on the left from one thousand twenty it took up to two thousand to get to eighty percent the automobile stove all started there on the left the old technologies but took a long time to get one hundred percent and then as you see on the right you know the the we've gets closer and closer jampacked closer and closer is the internet telephone fax v.c.r. was that he looks like a bubble it goes back to my idea that i came up with twenty five years ago about the lunar dollar which would be

a currency traded on the dark side of the moon that would be based in units of time and would allow you to buy and sell your way through time backwards and forwards i mean that's what i thought you could come up with i think big days and interesting staging platform to be come into the little dollar protocol which i'm working on now in my imagination you do you know there is an iranian scientist who says he's invented something that could take you eight years in the future perhaps you and i don't get credit never get credit for these things people just rip me off you know it's terrible and just give me credit if you get me off give me credit all right stay here we're thank so much for being on the kaiser report thank you max. so tell me if i can have a talk about. bit pay dot com. good laboratory was able to build

a most sophisticated robot which fortunately. about anything tim's mission is to teach me. to care about humans and. this is why you should watch only. a clear image of iraq after inflation. twenty day taxi trip through the country. the roads full of danger. clear evidence from north to south. of iraqi tragedy. after the war waiting for peace. talks e. he .