BTC Sessions - Bisq Critical Vulnerability, Abra Goes Fully Custodial, Retail Buys Bitcoin Dip While Institutions Flee EP042

Starting point is 00:00:01 Wasabi wallet and fairly private. What's up, everyone? I'm Ben with the BTC sessions, and this is your daily session. Before we dive in, of course, shout out to sponsors of the show, leaden.com. This is where you can use your Bitcoin for a few different services. They've got savings accounts where you can earn interest on your Bitcoin. They've got Bitcoin backed loans, where you can use your Bitcoin as collateral to obtain a Canadian or U.S. dollar loans. and this was actually the first product of theirs that I used myself. It was around early March of last year.

Starting point is 00:00:41 I was in a pinch and I needed to get my hands on dollars, but I was worried about selling my Bitcoin because I thought I wouldn't be able to buy it back for the same price, which would have been the case. But with Ledin, I was able to put it in a dedicated address. I could audit that 24-7 and I received a dollar loan within 24 hours. And when I repaid that loan back, I got all of my Bitcoin back. In fact, the exact same UTXO, which was.

Starting point is 00:01:05 was great. And then outside of that, they've got their B2X offering that uses the same loan mechanism to instantly buy you more Bitcoin, doubling your Bitcoin on the spot and giving you the experience of having the price volatility that comes with that. So if you want to check out any of that, there is a link in the show notes down below. And if you opt to get a loan with that link, they will give you 50 bucks worth of Bitcoin for free. Secondly, we have CoinBerry. This has been my go-to for buying Bitcoin stacking sets as of late, especially the past few months. They're really great. Honestly, the interface online is super easy to navigate, and they've got a pretty killer mobile app, which is great for On the Go. A few of the main things that I really

Starting point is 00:01:50 like about Coinberry is the speed of funding. Honestly, I've only ever really had to wait 20 minutes in my own experience when funding via e-transfers, which is really, really easy. And I also like that they have the dollar cost averaging feature, which is called autopilot. This is where you can fund your account with a certain amount and you designate regular buys, whether it be every day, every week, every month for a specific amount. And it takes all the emotion out of trying to time dips and things like that. So highly, highly recommend. I do really love this platform. And if you use the link in the show notes down below, they'll actually give you 20 bucks for free after your first hundred dollar purchase. With that, let's dive into the news. So I've covered Abra on the show before.

Starting point is 00:02:40 In fact, I've done a couple different tutorials on this app before, and it has kind of changed from time to time when I used it previously. So the first time, it was really, you could load Bitcoin into a wallet, which was actually a dedicated wallet that you held the private keys to, but then you could use that wallet to gain exposure to various different cryptocurrencies, which were synthetic, meaning you just had access to the price fluctuations, but you couldn't withdraw them. You could only withdraw back to Bitcoin and then out. Or you could get exposure to local currencies, tons of different worldwide currencies.

Starting point is 00:03:18 I'm talking fiat currencies. So you could kind of play the 4x game there. Now, it changed a little bit over time where they gave you access to. buying portions of stocks, again, synthetically, just gaining access to the price fluctuations of them. But you could put Bitcoin into a wallet app. You could then gain access to something like Tesla stock or whatever else you wanted a variety of different equities based in the U.S., which was particularly attractive to people that didn't want to set up trading accounts where you had long wait times to fund your accounts, so and so forth,

Starting point is 00:03:57 or if you just don't have access to U.S. stocks from your country, it was incredibly attractive, and I could definitely see the utility in that. Now, because of regulatory issues, they did have to remove the stock function of that, and so you were left with it once again, loading Bitcoin, being able to withdraw Bitcoin and Ethereum, and I think at some point, light coin as well,

Starting point is 00:04:20 and then again, gain access to fluctuations of various, other cryptocurrencies and fiat currencies. So you're kind of taken back to the previous state of the app. But now they're actually removing the non-custodial model. So you can't, it seems like you can't even remove your Bitcoin. That's what I'm pulling from this, is that they are ditching the non-custodial model. So essentially what he said is that they had been, using, by the way, this is from CEO Bill Bar, I don't know how to say his last name, Bill Barhead,

Starting point is 00:05:03 I'm not sure. Anyways, he told DeCript that it has been using a hybrid model where some assets like Bitcoin and Ethereum were non-custodial. Others were like XRP and Stellar, which were added to ABRA later, were partially stored through third-party custodians. This change simply unifies ABRA under one simple architecture that is in sync with what the vast majority of our users want. So more or less, you're able to fund your account gain exposure to the prices of various assets, but in no form can you pull the cryptocurrency actually off of the app and hold it yourself, which to me seems like yet another step back. I was interested in ABRA when you could load Bitcoin and you could gain access to stocks.

Starting point is 00:05:58 But when they removed that, it became relatively unattractive to me because I don't really want access to or exposure to fiat currencies. And I don't really want exposure to other cryptocurrencies. I'm just not interested in that. And then to remove the ability to actually take self-custody when you're finished, gaining exposure to that, at least in an easy way with Bitcoin. I just, why, why at that point would you even want that? To me, it seems crappier than when they first launched. I'm sorry to Abra, but that's just my take on it.

Starting point is 00:06:40 It's not something that I'm at all interested anymore. Let me know what you guys think. Is this something that you're still interested in? or does it seem like it's kind of retracing and actually going backwards from where it began? Anyways, let's move on here. BISC unfortunately had a critical security vulnerability just within 24 hours of recording this video. So I'll just read a little bit from the statement on their blog. They said about 24 hours ago we discovered an attacker was able to exploit a flaw in the BISC trade protocol,

Starting point is 00:07:15 targeting individual trades in order to steal trading capital. We are aware of approximately three Bitcoin and 4,000 Monero stolen from seven different victims. This is the situation, as we know it so far. The only market affected was the Monero slash Bitcoin market, and all affected trades occurred over the past 12 days. So the release in late October updated the protocol. It improved decentralization by removing arbitrators. with a third key in multi-sig escrow used for Bitcoin trading funds.

Starting point is 00:07:50 These arbitrators were replaced with two new roles, mediators and arbitrators with no keys in the multi-sig escrow. With no more trusted third parties, the new trade protocol also required the trade parties move Bitcoin trade funds to a BISC donation address after a hard time limit in order to solve deadlocked trades. So more or less, they had to put up collateral in case of a deadlock and that kind of would would in effect not give the arbitrators control of any funds or any keys

Starting point is 00:08:26 but it would after a certain amount of time just sent some of the collateral to a donation address the way that this thing got gamed was not anything to do with the way that funds were stored within the native wallet on a desktop but rather with the trading mechanism in that the mechanism was not checking that the donation address was indeed a designated donation address, but rather it was the attacker's address. And so they were able to funnel out some of the collateral. It did limit how much damage they could do, but they were still able to get away with obviously three Bitcoin and around 4,000 Monero.

Starting point is 00:09:10 So there has been an update issued. they did utilize, what did they call it? It was the alert key. So they have an alert key that would turn on safe mode for BISC nodes. So essentially alerting any users of BISC that something is wrong, users are able to bypass that, but it's obviously very not recommended to do that. But I mean, such is the nature of creating a decentralized,

Starting point is 00:09:43 centralized exchange mechanism that is governed by nothing other than code. If people find exploits in that code, then they can exploit them. And so it is, again, nothing is perfect. There's always going to be stuff like that. Things will be hardened over time. And it's just weighing whether you want to dive into decentralized trading like this if you even opt to trade, which again myself, I'm more of a stack and hold kind of person. But yeah, if you're diving into something like this, just be aware there could be flaws in

Starting point is 00:10:22 systems like that, whether it be BISC or something else. And again, you're always at risk as well if you're on a centralized exchange too if you leave it there in the custody of somebody else. So keep that in mind. Be careful, be safe, be aware. Let's move on. Speaking of Speaking of potential attack vectors

Starting point is 00:10:45 They are creating a wrapped Bitcoin token For the Tezos blockchain, which is an Ethereum competitor What this does is it more or less Locks up Bitcoin in a smart contract So that you can then So that you can then have access to the liquidity of Bitcoin On the Tezos blockchain, but also utilize it in smart contracts tracks. Now, I am not a fan of Bitcoin on other blockchains. To me, it just kind of seems like a

Starting point is 00:11:18 security hole and there's levels of trust there. And if you're, if you need more functionality out of your Bitcoin when it comes to that kind of thing, I would sooner trust a more widely used protocol that is built atop some of the same building blocks as Bitcoin, something like liquid as opposed to doing something like wrapped Bitcoin on Tezos, because God knows what can happen there. And it should be noted that there's also been other wrapped Bitcoin tokens. In fact, there's now two different ones on the Ethereum blockchain. There is WBT, which is actually just held by BitGo for custody. And then they issue WBT tokens based on what is held. And then they're openly auditable. But again, there is obviously trust with a custodian there. And if something

Starting point is 00:12:14 goes wrong with their storage and it goes missing, whether it be a hack or whether it be a rogue employee taking the actual Bitcoin underlying the WBT, then you're kind of fucked if you're left holding those bags. Now they've created another one called TBTC, which once again is kind of a trustless storage of Bitcoin, but you put the collateral in and it gets locked up in a series of smart contracts. But as we've learned with smart contracts on Ethereum before, quite often there can be not enough eyeballs on the code to find all of the possible exploits. It's never really possible to find all of the possible exploits out there. Somebody will always find something new. So, So yeah, again, not a big fan of stuff like this, but to play devil's advocate, and not even devil's advocate, just thinking kind of about the concept of this, the more Bitcoin that gets wrapped up in some of these derivative tokens that get put onto other blockchains, the less supply there is.

Starting point is 00:13:25 and you could see it as pumping up the price of actual Bitcoin more. You might get into a situation where there's a premium, potentially, even on actual Bitcoin versus stuff wrapped up in this. Like we're seeing in the gold markets right now where if you want to buy paper gold, then it's going to cost you a lot less than getting physical gold delivered to you. maybe we'll see markets develop like that in the future what i'll be very interested to see is inevitably when something like this loses its peg um if if some of these smart contracts and escrow and all of that happen to fail what happens to confidence in these peg bitcoin tokens we will see i don't know let's move on uh so it looks like with this big dump in bitcoin price

Starting point is 00:14:21 in mid-March and the subsequent build-up over the past few weeks here, that it's mostly retail Bitcoin investors that have been buying the div, while as where the institutional traders have largely been the ones to get out of the market. So this report here from Coin Metrics data, so what they've found is that the number of addresses holding between 1 billionth or 100 millionth of the total Bitcoin supply, and I'm not going to try to read the total decimals here, has increased about 6% over the last 90 days. Similarly, the number of addresses holding 100 millionth to 110 millionth of the total supply has also increased around 4%. So that means smaller holers, not huge institutions, seem to be stacking some stats and keeping them in wallet.

Starting point is 00:15:21 on their own. Now, the trend corroborates other data coming from the crash that suggested mum and pop investors are buying the dip. Crypto asset management company Bitwise, for example, published trading volume from popular exchanges, the day after the dip that showed $5 billion in fresh inflows to Bitcoin. Coin Metrics founder Nick Carter told DeCript that this pattern is inverse for some of the institutional investors who entered Bitcoin after $2,000. 2017. While the little guy is using the dip to add to his stack, the big boys are tucking tail and running for the dollar. It seems to me that the recent crash was very much a case of retail buying the dip and institutional investors meeting margin calls or getting out of the market.

Starting point is 00:16:08 And that is totally fine by me. I'm more than happy to see the institutional guys take a step back and more smaller guys be able to stack up a little bit more. It's definitely been favorable for me, the last little bit when it comes to the amount of Bitcoin I've been able to gradually accumulate, especially these past few weeks here, has been nice. The opportunities like this, assuming that Bitcoin does continue to do well over the coming years, they're few and far between now. So, yeah, I welcome this. And I wanted to touch on one last thing here.

Starting point is 00:16:46 This is Mike Novigratz. he was talking about the stock rebound and how he's not buying it and how he prefers hard assets like Bitcoin. And so I'll read a little bit here. So Novograt's, Mike Novograt, CEO of Crypto Merchant Bank Galaxy Digital told CNBC's squawk on the street that investors shouldn't be misled by the recent spike in stock prices. Instead, buying non-stock assets, including cryptocurrency and gold, might, would be the right approach. The U.S. stock indexes have been bullish amid cautious optimism around the coronavirus pandemic. However, Novogratz doesn't buy it. He said, quote, I think this is short covering. I think one or two more days and people will sell into it. I have a big Bitcoin

Starting point is 00:17:36 position. I continue to add to it, partly because I think this is an amazing environment for both being long gold and Bitcoin. Money is growing on trees right now. And I learned that when I was a little kid that money really doesn't grow on trees and we have a global money printing orgy going on at one point that comes home to roost and so i think hard assets are going to be a big buy um yeah i mean i will again play devil's advocate here a little bit uh when there's no more runway for the fed to do anything else they they can only really do one thing at this point well i guess too Number one, they can print more money. As we've seen, they are not shy about doing.

Starting point is 00:18:22 And they've said essentially infinity money is available to be created, and they will stop at nothing to do so. So when I see people saying that the stock markets cannot be bolstered up, they can. It just depends how far the Fed is willing to go. And they have already publicly said they're willing to go as far as it takes. they can also go negative interest rates which will further discourage people from saving and force them more or less into stock markets and will they do both those those things i do not have a doubt that

Starting point is 00:19:02 they will try to do that now will it work will people buy it i don't know i don't know but they are very very good at kicking the cand on the road part of me kind of hopes that they can pull it off just for a little bit longer, maybe one more cycle. I'd love them to be able to pull it off for one more Bitcoin having before shit really hits the fan. Because at that point, Bitcoin has a little bit more time to grow, to become further entrenched and way more difficult to do things like banning

Starting point is 00:19:34 or way more difficult to remove from the financial infrastructure that we have in place. and more room to actually become even more usable to regular retail investors and regular retail users. Do I think that's going to happen? I don't know. Again, I'm really unsure about how this all pans out. But I do know if they are able to pull off bumping the stock market back up to all-time highs through nothing more than money printing and negative interest rates, there will be fallout from that and the fallout will be in the form of of massive inflation with a lot of global currencies.

Starting point is 00:20:19 The thing is, is the U.S. dollar will be the last one to go because it's the World Reserve currency. You're going to see a lot of smaller currencies failing first and probably defaulting to the dollar, driving further demand for the dollar and being, they'll probably be able to skirt that line and and start to, again, as other currencies fail, people going to the only currency that they think will stand up, which will probably be the dollar and it will just kick the can down the road a little bit further and a little bit further. We'll see how that holds up. But I, again, in the back of my head, I'm kind of almost hoping that they can just string it along a little

Starting point is 00:21:03 bit further because at this point, if everything were to implode right now, Bitcoin's not ready to handle that kind of load. And I don't think it would do, I don't think it would fail, but I don't think it would do particularly well. And I think it would open the window much more easily to some sort of a like an SDR type global mix of fiat currencies in a basket or a recreation of something like the U.S. dollar, but a little bit more global because again, people are not going to want after years of of American supremacy because of their position as the global reserve currency, a lot of other nations are not going to be super keen to have that happen again if they have to do a hard reset right now. And I very much doubt you would have everybody

Starting point is 00:21:58 coalescing on a single country to take that role. Anyways, let me know what you think. Do you think that this is it and the Fed has no more ammo and things are stuck? Or do you think that they're going to be able to kick that can down the road? And if so, how do you see that playing out for Bitcoin? Let me know in the comments. Anyways, guys, I'm going to wrap up there. Thank you. you so much for watching. As always, please do hit, like, subscribe, and share if you're on YouTube, blah. If you're listening to the audio-only podcast, then please do share that on your social media, and please take the time to leave a review that always helps with visibility and getting more people listening to that side of things. If you want to help out the show

Starting point is 00:22:40 in another way, you can hit up the sponsors as I mentioned down below. That was Ledden and Coinberry, as well as Wasabi Wallet. That is great for your Bitcoin privacy. And if you really loved what you saw, you can always hit me up with a lightning network tip at my tippin.combe page that is tippin.me.m slash at BTC sessions. With that, I'm out. Have a wonderful rest of your day, and I'll see you next time for your daily session.

BTC Sessions - Bisq Critical Vulnerability, Abra Goes Fully Custodial, Retail Buys Bitcoin Dip While Institutions Flee EP042

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