<table><tr><th>From:</th><th>Vincenzo lozzo vincenzo@takoku.com</th></tr><tr><td>Sent:</td><td>Friday, August 22, 2014 6:33 PM</td></tr><tr><td>To:</td><td>jeffrey E.</td></tr><tr><td>Subject:</td><td>Fwd: answer to the bitcoin questions</td></tr></table>

It's a long email, but if you're still thinking about bitcoin it might =rovide a couple of useful hints

The questions that I auto-asked myself were

1) What's the real value of bitcoin

2) Is the bitcoin heritage/stamp a good or a bad thing

3) Who 'rules' the financial system (a bit more complicated than this =ut that was the gist of it)

Begin forwarded message:

> From: Vincenzo lozzo

<table><tr><th>&gt; From: Vincenzo lozzo
&gt; Subject: answer to the bitcoin questions</th></tr><tr><td>&gt; Date: 22 agosto 2014 14:10:35 GMT+1</td></tr><tr><td>&gt; To: Joi Ito Si&gt; 4&gt;</td></tr><tr><td>&gt;</td></tr><tr><td>&gt; Ok after some more thinking &amp; reading I think I can answer question =1).
&gt;</td></tr><tr><td>&gt; The real value of bitcoin is the following:</td></tr><tr><td>&gt; 1) The proof that the Byzantine generals problem can be solved without
&gt; =rust given enough people and the right set of incentives</td></tr><tr><td>&gt;</td></tr><tr><td>&gt; 2) A reminder that "anacyclosis"</td></tr><tr><td>&gt; =http://en.wikipedia.org/wiki/Anacyclosis) is a thing and works for</td></tr><tr><td>&gt; all =omplex systems not just politics. Currencies were</td></tr><tr><td>&gt; 'revolutionized' in =he past and eventually will be revolutionized</td></tr><tr><td>&gt; again. This sounds philosophical but =t's not - it's a good way to</td></tr><tr><td>&gt; instill fear into the institutions that =urrently have control over</td></tr><tr><td>&gt; the 'system' and I think bitcoin to a =ertain extent did well at it</td></tr><tr><td>&gt;</td></tr><tr><td>&gt; 3) The empirical proof that you can combine distributed =ystems&amp;transparencies (the public ledger) in a system where
real value =s at stake. This is sort of an enabler, both technologically and in =erms of 'mindset', for future application in
the same realm.</td></tr><tr><td>&gt;</td></tr><tr><td>&gt; 4) I need to look into this more and technically it's not bitcoin
&gt; =ut.. another key factor is that you can use zero-knowledge proofs to
&gt; =tune' transparency in a distributed system. Zero knowledge proofs
&gt; =eren't really used for a long time in any practical way, so I guess
&gt; we =ave to thank bitcoin for that</td></tr><tr><td>&gt;</td></tr><tr><td>&gt; This also implies that the currency itself is irrelevant, it might or =ight not work but that's not where the real value is.
likewise I don't =hink that the 'crypto' nature of the protocol is the key, that is an =bvious consequence - At the end of
the day SWIFT (to name one) uses a =ot of crypto too and PGP/CA are the proof that crypto can be used for
=uthentication purposes.</td></tr></table>

>

> Also given the above I'm strongly convinced that the heritage is a bad =hing, besides the technical background (given by the fact that they =ctually worked on the thing) there's nothing of real value there and if =nything there's a lot of skepticism given their cyberpunk nature.

Or in pompous terms: they started the 'revolution' now we need =serious' people to actually make something of it.

>

> I don't have a full answer for the question (3), but I think we can =asily say that who 'rules' the financial system is "America" and at the =ame time is "Not consumers". This implies that there's probably =onsensus in the fact that all the backoffice compliance work mandated =y law/America can/should be made better (both in terms of transparency =nd also in terms of efficiency for banks), and the fact that is "not =onsumers" kind of guarantees that banks will not feel too threaten by =tuff in that realm because in the worst case scenario (assuming future =osts < current costs) they can offset the costs to consumers.

>

> So I think that 'attacking' SWITF/Sepa/ACH is doable, I would love to =o the other crazy thing (the currency pegged to oil in the "spaghetti" =mail - I'd love to discuss that a bit at some point) but if we want to =eep things simple we can start with SWIFT.

> "Observe everything, endure a lot, fix one thing at a time" quote of

> =ome random catholic person I don't remember (can't get away from the

> =talian heritage I guess)

>

> For the SWIFT stuff, we can have a public ledger (consensus based) of =11 the transactions, the transactions can be encrypted but we/govts =ill also have a copy of the private keys to decrypt them when/if needed =or legal purposes. Also maybe this level of transparency is good enough =o convince govts to subsidize some of costs needed to implement the =ystem on the banks side.

>

>

> Thoughts?

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