Anna Palmina from Palmina Invest Interviews Bitcoin Pioneer Joerg Molt
Anna Palmina (further AP).
– Hello, Joerg! As far as I know you are one of the founders of Bitcoin, one of the team members of engineers, software developers and programmers who did it. How and when did everything begin?
Joerg Molt (further JM).
– The creation of Bitcoin was a long journey. My parents bought me my first home computer which came out in 1982. They sent me to courses all over the world, I was travelling and studying computer technology during school vacations.
In December of 1994, a good friend called me and asked me: «What do you think of the idea of creating a digital land with all the freedom and power by creating digital money? » At first, I thought he was crazy! He said: «Think about George Orwell’s book «1984’», where digital slavery is built on computer technology». He went on to say that soon we will see how fast the computer world progresses, and if it goes the right way for the wrong guys – they will control everything. It was at this point when I began thinking about it. We believed that all people should regulate a new thing, which was coming out so that people have the freedom of money. This is a totally different point of view in comparison to what people think. And then Satoshi Nakamoto came along, it was the beginning of 2008. He understood the problems we had and found solutions for them.
(AP) – So, there were a few other cryptocurrencies before Bitcoin?
(JM) – Yes, but these were not the cryptocurrencies which we have today, there was no blockchain behind it. It was only a monetary system based on computer services. Blockchain – this is the thing that secures transactions today. We were sending coins around however were being faced with the big problem that they could be cracked or hacked. We could not find a solution until Satoshi Nakamoto came up with the genius block idea.
(AP) – And he’s from Canada, right?
(JM) – Yes. Many people from former times know him, but no one knows his real name. He never left any footprints anywhere. You meet him and then he rushes away, and you never see him again for a long time, and then he pops up again. Today we have a system that no one can crack. Even if you try, you will not be able to do it in 150 years, Nakamoto is the only guy in the world who can rebuild it.
(AP) – What did you think about Bitcoins and Mt.GOX?
(JM) – When it came to 2012-2013, this was the big time for trading. No one recognized Bitcoin as a payment system. We were waiting for what was going to happen in the next few years. We were all guessing, after the crisis of 2008, that something was going to happen.
When we created Bitcoin, we did not know that the crisis was coming. But it was good for us, because if it did not happen, maybe, Bitcoin would have been as any other coin today.
Today Mt.GOX would be Coinbase. The first is that at MT.Gox people did not care about private keys. What happened at Mt.Gox was that the guys saw that there were a lot of money in it and today we know that the New York State was behind the crack of Mt.Gox.
If you do not have your private key – you do not have ownership. Many people did not understand, and they did not listen. They were greedy, they were running for money and wanted to make money in a way that was not normal.
(AP) – Do you know where are those bitcoins now? Who owns all these bitcoins now?
(JM) – There’s no ownership. The keys are gone for good. No one can access them
For example, you can paint US dollars. If they are stolen from a bank, there is a painting on them and you can see if you hold them in your hand if one is from the bank robbery.
We can paint bitcoins. This is why Mt.Gox is trackable, they can say the funds are there. But now we have a technology like TumbleBit. We can mix it all up so that you cannot say that it comes from one address to another.
You will not be able to track any bitcoin transactions. We now have a system which is creating one million transactions in a second. It’s called Lightning. We would have four million transactions which are completely blind. It is more secured than Monero, for example, and it is going above privacy.
You can not crack down Monero, Litecoin, DogeCoin – this is not possible because these are coins on the Bitcoin blockchain. But all the other coins you can crack because they do not even understand what proof-of-work is. They say: «oh, it’s high energy costs! ». But these high energy costs are the security of Bitcoin. This is what we call a «physical thing». When a computer validates a transaction – it must prove it. The other coins make it by a protocol -a proof-of-stake, it is a computer protocol.
But when a coin is created, or a block is created in the computer world – there is a heat, a physical heat. The computer may be on full time, and then you see the computer is running high, it’s getting warm. This is what happens in the bitcoin blockchain: if a block is created, the computer must approve this block and a million of computers must approve this block. They must calculate a key code and this calculation is making energy. And this energy, for example 35 TW, is reported and so we can prove that the computer has done this work.
If a computer says that it has done it, but it cannot say how much energy it has wasted for it. it is kicked out of the network. Therefore, the energy prices are saving the Bitcoin network and many people don’t want to accept this thing.
(AP) – What about difficulty increase? One needs a year to close the block using my home computer. What will be in one or two years? How to reduce the energy costs?
(JM) – Bitcoin is a monetary system. And there are 21 million bitcoins coming out and the mining is going up. We have a high peak: about 4.8 TW per hour. The whole dollar economy spends 350 TW of electricity per hour. Bitcoin has it for security reasons and makes a small effect.
If you want to produce 4.8 TW per hour, you have solar plants, but their energy efficiency is not enough. We are going for mining with a water craft. For example, in Austria we have green energy with windcraft. We have a new project that is called «Free energy». People are moving, and you can gather energy from moving.
What we will see in five years is companies, running everything on electricity in a different way, for mining as well. But you need this electricity to make sure that the proof-of-work was done, and no one can crack it down. This is a key element of the security. There are other blockchain choices, but they are crackable
(AP) – So, it will be proof-of-work? You will not move Bitcoin to the proof-of-stake?
(JM) – No. The proof-of-stake, for example, has a problem called double spend. I can reset the network and if I have an offline wallet and store my Ethereums in an offline wallet. And you have an online wallet also.
I can set the whole network of Ethereum, for example, if it goes to proof of stake
make a reset and then that is like you set your computer back to earlier time,
when the problem was not there. Then you can load your offline Ethereums back to the online system. And then you have a double spend.
An efficiency of Bitcoin blockchain is that it is telling the truth because no one controls it. Today the computer can create the code, it is not able to recreate its own code. This is the power of Bitcoin today and even a quantum computer can not go for hashing a code because this code was created this way.
You have one code here and another code is created behind. if you want to get this code we have to crack down the whole system. It is impossible because the algorithm of Bitcoin has a hash code, a time lock.
(AP) – How many Bitcoins are in circulation?
(JM) – Six and a half million.
(AP) – And all other Bitcoins are lost, yes? So, it is six and a half million?
(JM) – Some people will hold bitcoins because they are waiting for the price to rise.
(AP) – And when all Bitcoins are mined, can you do something to issue more Bitcoins? Is it possible?
(JM) – No. You can not go into the protocol, you cannot do anything in there. It is locked. That’s why the price is going up. 21 million and the last ones are coming out in 2140. And then it is gone.
(AP) – What do you think about the current price of Bitcoins?
(JM) – This year the price of Bitcoin is always going up and down: volatility is a good thing for Bitcoin because it was created as a monetary system, not as a trading system.
(AP) – What will be the price of bitcoin by the end of this year or in five years?
(JM) -Well, I expect it would be about $35,000-$40,000.
(AP) – What is the name of the wallet which we can use for low transaction [costs]? And what about Lightning?
(JM) – It is called AirBitz and it is only a mobile wallet, a decentralized wallet. You can use it for cheaper transactions. It is not controlled by anyone. If someone is doing ASIC mining out there, you can route this wallet to your ASIC miner. This is a very good and strong wallet: you can set your transaction fee by yourself. You must play around, try it out with small amounts. But you will see that you can do ten thousand-dollar transactions for $10 or something like this, it is working.
Investors see one thing: the price is going up, we must stabilize the price. If it is going down – we can not satisfy our customers, and it is the same. If the transaction fee is going down – the people who invested in mining will be disappointed. This is why they are always talking about mining fees.
We have six million accounts on Coinbase and they push the blocks out in a slow way, so, we have this problem. We have already tested Lightning on Litecoin and it is working fantastic. Bitcoin is working in a different way from Litecoin.
Many people have not got education and they do not know which wallets are in the market.
(AP) – Regarding education: could you tell us a few words about Satoshi school?
(JM) – Satoshi school is working in a two-day course. We make two days course: one day is about the philosophy behind Bitcoin, why it was necessary to create. The second day is about alt coins and trading, about setting up a wallet. It is about all the technology, Lightning, how the blockchain is working. We have courses starting from twenty people. If you can organize 20 people or more, we come to your site. This is the magic about Satoshi School.
We do not have offices, we save this money. The main thing about is that we will do the two-day course and if people are willing to become teachers – we will stay one week and train new people to become teachers and spread it around.