BTC Sessions - Bitcoin Decouples From Stocks | Credit Suisse May Favor Bitcoin | Square To Launch Bank EP030

Starting point is 00:00:01 Wasabi wallet. I'm 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 Bitcoin savings account, where you can earn interests on your Bitcoin. They've got Bitcoin-backed loans, and this was actually the first product that I used of theirs. It was around this time last year. I was in a pinch. I needed to get my hands on dollars, but I didn't want to sell my Bitcoin because I thought it might be a bad time. And looking back, it would have been a bad time. Luckily, I was able to secure a Canadian dollar loan with my Bitcoin as collateral. And upon paying that back, I received back all of my

Starting point is 00:00:55 Bitcoin. So if you're in a pinch and you do need to get hands on dollars, Canadian or US, then this may be an excellent product for you. And finally, for you Bitcoin Bulls out there, you can always check out their B2X offering. That essentially uses Bitcoin as collateral to secure a loan and then buy more Bitcoin. So you're pretty much doubling your Bitcoin on the spot. And with that, you get to experience the price fluctuations that come with it.

Starting point is 00:01:22 If you want to check them out, there's a link in the show notes down below. And if you use that link to obtain a Bitcoin-back loan, they'll actually credit you with an additional $50 worth Bitcoin into your account. And secondly, we have Paxful. Paxful is a peer-to-peer online Bitcoin marketplace where you can buy and or sell Bitcoin. For those of you that need a variety of different payment methods, well, look no further because these guys have well over 300 of them. 300 different types of payment methods. They have lots of different stuff, anywhere from

Starting point is 00:01:56 bank transfers, E-transfers, things like that, to popular pay. apps like PayPal and cash app all the way down to using things like gift cards to purchase Bitcoin. So you can go over and check them out for that. On the flip side of things, if you're looking to make a little bit of money, then you can become a merchant there and buy and sell Bitcoin yourself and make quite a bit of money on the spread. Outside of that, they've got a killer affiliate program. And you can also pick up some super cheap gift cards on the website.

Starting point is 00:02:28 I've seen deals for things like Amazon, Starbucks, Walmart for 20, 30, 40% off if you're paying with Bitcoin. So some absolute steal. So be sure to check out Paxville. There's a link in the show notes down below. And with that, let's dive into the news. And so one of the things I'm obviously going to touch on here is it's been a nice day for a Bitcoin price, especially given the recent dumps that we experienced over the last week or so. Nice little bounce today.

Starting point is 00:03:02 And so we are now at the time of recording this video back up over 6,000. It was a huge move over the course of the day. We were sitting down and around the 5, 5,500 level earlier, even just yesterday, kind of in the afternoon. Even yesterday morning, we were down around the 5,000 mark. and we've come up, yeah, well over $1,200 at this point. At one point, we even hit around the $6,400 mark, and I'm sure this will continue to fluctuate like crazy. Now, the interesting thing here is this was not coinciding with moves in the stock market.

Starting point is 00:03:39 The stock markets today very much remained relatively flat. If you look at, let's see here, we have the Dow. The Dow was up 188 points, which was, only about just shy of 1%. We had the SMP, which was up about half a percent. We had the NASDAQ, which was up around 2%. So some pretty mild movements here. And if you look down at the bottom of the screen here,

Starting point is 00:04:07 you can see by contrast Bitcoin is up around 16% on the day. So the big question here is after a solid week or two of really close correlation with the stock market, is Bitcoin beginning to break away? Did we shake out all of those weak hands and are people that see value in Bitcoin continuing to accumulate? Because at some point,

Starting point is 00:04:35 if there is that kind of decoupling of Bitcoin from the rest of these crazy inflated assets as they're coming down, it's going to be hard to ignore. So we will see, I mean, Bitcoin did experience a massive dump initially, right? We were at 8K and it dropped down to four in a very short period of time, but we've now rebounded more than 50% of that back. So we will see if that trend continues. I'm hopeful, but it will be very interesting regardless to see a decouple from the stock market

Starting point is 00:05:12 if that is the case. Anyways, let's move into some more news here. So this is a, I'm a couple of Bitmex put out a report talking about central banks running out of road, that their policies and their reaction to this crisis, they're running out of ammo. They don't have a lot left to do. And so I'll read a little bit from this article on Decrypt here. It says in response to the sudden dramatic market shift in the U.S., the Federal Reserve cut interest rates to as low as 0% and announced plans to purchase 500 billion worth of treasuries and 200 billion worth of mortgage-backed securities. Bitmax believes that this now leaves the central banks with no wiggle room left, since reducing interest rates below zero would lead to the public to hoard physical cash

Starting point is 00:06:08 rather than increase their spending to stimulate the economy. And the quote here says, governments around the world are set to run large fiscal deficits no longer just as a consequence of higher spending requirements, but as a part of the deliberate strategy to stimulate the economy. In the end, this may lead to an era of extreme inflation, which could resemble that scene in the 1970s, a time when inflation reached as high as 15%. So, I mean, if you can imagine, those of you that weren't around for it, myself included, but seeing most consumer goods become 15% expensive, more expensive year over a year, which I imagine would very much contribute to an idea of why save my money when I could spend it and not have my purchasing power diminished.

Starting point is 00:07:04 And when you have something like Bitcoin that is taking its monetary policy and diminishing the supply of newly created coins, it stands in stark contrast to what is happening. So again, we live in very interesting times. And for Bitcoin to be approaching a halving in the midst of a global crisis in which central banks are running the money printers like nothing else, it's unprecedented. These are very much uncharted waters. And I'm very interested to see how the next year or so plays out, especially post-having. Now, on this note of central banks kind of going off the rails and running out of road, there was an interesting post today from a manager at Perth Mint.

Starting point is 00:08:00 So he grabbed the attention of Bitcoin advocates by circulating an alleged excerpt of a report by Credit Suisse where the banking giant notes support for cryptocurrency. The short statement asserts that the bank has begun to lose face. in the integrity of central banks, which thus opens the door to alternative forms of currency. So this does not contain a source, which is suspect. So take whatever is here with a grain of salt, but I'm going to read the excerpt that was given by what's his name here. His name is Jordan Eliso. Elisio, okay? So this is what he posted and said was from Credit Suisse. Here is a longer-term risk to consider over and above the tactical.

Starting point is 00:08:51 Central banks are central banks for a reason. They're supposed to sit hide behind commercial banks so that the commercial banks take all the risk, not them. But the opening and widening of Forex swap lines means that central banks are now taking on foreign currency credit exposure. That is, the credit risk of other central banks due to currency mismatches. And the prospect of direct financing of corporates means that central banks are starting to take on genuine corporate credit risk. All in all, central bank balance sheets are becoming riskier to accommodate the derisking of the private sector. But what happens when everything blows up again? Do central banks literally go bust? Either they do, and we worry about the integrity of fiat currency

Starting point is 00:09:42 systems, or they don't because they print money to cover losses, effectively in collaboration with sovereigns, as they remit losses back to them contributing to fiscal deficits, which in turn need more central bank financing. Either way, we worry about the integrity of fiat currency or inflation. Therefore, attention starts to turn to alternative currency regimes, whether gold or digital, or all of the above. So essentially what they're saying, is the central banks are taking on a lot of risks. They're starting to buy up actual, they're starting to buy up corporate debt and very, very risky assets. And this is contributing to the House of Cards. And when that happens, the only thing that they can do if they are in turn

Starting point is 00:10:35 going to go bust is print more money, which devalues the currency further and just ramps things up even more. And so what do they do? They're leaning towards alternative systems. Again, Bitcoin obviously a shout out there because they say alternative currency regimes, whether gold or digital, making a reference, obviously, to cryptocurrency or all of the above. So again, without a source, I would take this with a grain of salt. But if this proves to be an actual statement from Credit Suite, it is a very noted change in tune for banks. Moving on here, the Bitcoin difficulty is set for a 13% drop as the hash rate is following the Bitcoin price, although this was prior to the pump just today. Now, the Bitcoin difficulty is how much hashing power or how much computing

Starting point is 00:11:37 power, it takes in order to successfully mine a Bitcoin block and create new Bitcoin. This is a dynamic number and it's meant to create new coins or find a block every 10 minutes. If a lot of miners pile onto the system, then you and all of a sudden blocks started being mined quicker because more people are trying to achieve that. Well, after a certain number of blocks, then there's a retargeting and it becomes more difficult. The opposite is true when miners start to drop off of the network. So we saw a drop in the Bitcoin price, a notable drop from 8K to 4K very, very suddenly.

Starting point is 00:12:19 A lot of miners were caught off guard or just have infrastructure that cannot operate at a profit with those price levels. So what happens is a lot of the time they shut off the power. So if that happens, they're no longer profitable, why pay for power will shut it down. If it goes back up, we can turn these rigs back on. So that seems to be what has happened. And there's been a notable drop in the hash rate on the network.

Starting point is 00:12:47 So the hash rate, according to data from blockchain as of March 18th, the metric was challenging the 80 quintillion number, 80 quintillion hashes per second for the first time since December 2019, which is only a few months. back. Okay. So to put it in perspective, we've been consistently hitting new all-time highs and hash rate. This is the first notable pullback that we've seen from that. So while yes, it was clearly affected by the price, the network itself will retarget in, by next Wednesday and likely a difficulty drop of around 13%. which means the remaining miners, the ones that were profitable enough and efficient enough to be

Starting point is 00:13:40 mining at a profit even at these levels, well, if they make it up to that point, all of a sudden they are much more in a profit, they were making more profit than they were before, and you may find some of these other miners joining the system again with that difficulty drop, even the ones that dropped out just now because of the price increase not only, but also the lower difficulty. So we will see, but Bitcoin acting exactly as it's designed to, where if there's a sudden change in the volatility of the price and miners cannot maintain profitability, well, they can drop out and it will readjust to allow for that. Now, I wanted to bring up another article here from Bitcoin magazine. It talks about Bitcoin fungibility, mixing, and maintaining privacy. And so this is kind of

Starting point is 00:14:32 of, well, first of all, it's a well done piece here, but it talks about some questions around mixing coin join, tumblers, all of that stuff, basically trying to afford yourself some privacy on your Bitcoin. Now, Bitcoin is an open blockchain, meaning anybody can look at and audit all of the transactions that have ever existed on the network, which means as you transact and interact with parties that know your identity, then you are effective. giving them a trail of transactions that people can peer into and paint a picture of what you own and where you spend your money. So that's why things like coin join are important to try and preserve your privacy and break those links so that malicious third parties cannot access all of your

Starting point is 00:15:20 financial information. However, there are also parties that obviously do illicit things that are illegal in many countries also find this attractive. And so they will try to mixed coins as well. And so we see in some instances where there's a centralized party giving these services they can be cracked down upon. So on February 13th of this year, Larry Harmon of Akron, Ohio was charged with three counts, conspiracy to commit money laundering, operating an unlicensed money transmitting business, and conducting money transmission without a DC license. Now, he was the head of Dropbit, the online, the Bitcoin wallet app, which actually, interestingly enough, as they seized his assets, they also seized his centralized lightning solution for the wallet app as well. So he has

Starting point is 00:16:19 a Bitcoin app, which, in which you hold your own keys, but within the wallet app, you can also transact via lightning, but it was custodial. So those funds actually got seized in the process. so those using the Lightning app there were unable to access their funds. I'm unsure of the state of that right now, but I would not be surprised if those funds were still under house arrest, more or less. So he also operated Helix, which was known as a Tumblr or Mixeter, without registering as a money services business or money transmitter. And this Helix service was very much tied in with the dark web,

Starting point is 00:16:57 and a lot of money launderers were using it quite openly. And so he is now awaiting trial. It will be interesting to see how that plays out. But on the other side of things, it's important to differentiate between tumblers and mixers versus coin join. So tumblers and mixers are are a custodial thing, where this means that you use a mixer, they must give control of your coins to another party.

Starting point is 00:17:29 And trust that this party will return your Bitcoin to you. In contrast, coin join can be conducted without sacrificing control of your coins. And so the difference here is that with Helix and with other centralized mixers, essentially you give them your Bitcoin. They're going to mix it up with a bunch of other clients that are utilizing the platform. And then they're going to send you back somebody else's Bitcoin. So they take actual custody of the funds. When it comes to coin joint, things like Samurai Whirlpool, things like Wasabi wallet on desktop, what you're doing is you're executing a transaction that combines with a bunch of other Bitcoin

Starting point is 00:18:09 without actually giving your keys to anybody. And at that point, when the transaction is executed, all of those pieces of Bitcoin come together and then shoot out the other side and revert back to the original owners. except for people end up with different coins. So the links between you and your specific coins are more or less broken. And so I'll move on a little bit in this article here. It says, while most agree that the government has a legitimate interest in fighting crime, some privacy advocates are concerned that industry standards are being heavily influenced

Starting point is 00:18:46 by two powerful forces that may not properly waive financial privacy concerns. One is the Global Financial Action Task Force, or FATF, an intergovernmental agency that seeks to assist global governments in surveillance and tax collection, and two, compliance companies that stand to gain immensely from lucrative government contracts. From the privacy advocates' perspective, the more draconian measures that interested groups, whether public or private sector, can push for, the more money compliance companies will make. So there is potentially some misaligned incentives here where these compliance companies, they want as many rules as possible because then they can secure these government contracts to ensure that everybody's doing what they should be doing. And the thing about it is a lot of their measurements, a lot of the way that they track transactions on the blockchain have been proven to be very, very off the mark. they're not particularly reliable, especially with tools like coin join out there. You can't very easily prove ownership in a court of law. So a lot of these metrics and these heuristics that they're using are broken.

Starting point is 00:20:08 And being further broken, especially with the proliferation of coin join through multiple implementations and apps that people can use nowadays, it will be interesting to see. if they attempt to clamp down on those or if those become kind of like the torrents in the realm of Napster. So Napster was a centralized file sharing application that had servers located on U.S. soil and people could share their music files. It was one of the first places where you could go to share MP3s between individuals. so somebody would download an album and just share it out to everyone. Well, they got shut down because they were a centralized service,

Starting point is 00:20:54 but that allowed for the proliferation of torrent files. And as we all know, those still fully exist and people use them regularly. And more or less, you cannot be shut down. They can try to crack down on individuals, but that's been incredibly difficult and has not really bared a lot of fruit. So anyways, it will be interesting to see how this moves forward. I'm a huge advocate of Bitcoin privacy. I think it's very, very important that people do take the time to break links between them and their coins

Starting point is 00:21:27 so that moving forward, you're not constantly compromising your privacy and your security because you can very easily become a target if Bitcoin is successful and your coins are worth a lot more one day. People will be able to go back and look at what you have if you're not careful. Now, one last thing I wanted to touch on here, and that is Jack Dorsey, CEO of Twitter. His Square Bank will open in 2021. So those of you unfamiliar, Square and Cash App are big in the States is the number one payments app in the Apple App Store, and he is a notorious Bitcoin advocate and not really big on the shit coins.

Starting point is 00:22:11 So he has secured the first approval for an industrial bank. in over 10 years. So according to the press release, Dorsey's bank will provide commercial loans to merchants using Square's existing payment system. It will be headquartered in Salt Lake City, Utah, where it is still awaiting approval from the Utah Department of Financial Institutions. Once this is received, it will mean that the bank should open its doors for first commercial customers in 2021. So the most interesting thing here is that we have a massive Bitcoin advocate that is one of the easiest ways to buy Bitcoin in the U.S. at least that is now opening his own bank. Whereas the banking sector was very averse to Bitcoin previously, we now have, from inception, a bank that

Starting point is 00:23:07 is fully for Bitcoin that is being rolled out in the next year. And that will be a very, very interesting dynamic, especially if Bitcoin does well post-having in the coming year in a bit. So I'm excited to see that play out. With that, I'm going to wrap up you guys. Thank you so much for watching and or listening. If you're on YouTube, do hit like, subscribe, and share. If you're listening to this on the podcast, audio only, two things. Share that on your social media.

Starting point is 00:23:38 And of course, please do give this a rating. Every rating that you give, hopefully positive, will help visit. in the app store for sure. And if you want to help out the show in another way, you can hit the sponsors down below. That was Leden and Paxful, as well as, of course, check out Wasabi Wallet,

Starting point is 00:23:55 preserve your privacy on your Bitcoin. And if you really like what you saw, you can always drop me a lightning network tip at my tippin.mee page. That's tippin.combe slash at BTC Sessions. With that, I am out. Have a wonderful evening, and I will see you next time for your daily session.

BTC Sessions - Bitcoin Decouples From Stocks | Credit Suisse May Favor Bitcoin | Square To Launch Bank EP030

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