BTC Sessions - Bitcoin Regulatory FUD from Treasury Secretary, Bcash About To Fork, DeFi Seizing Funds EP020

Starting point is 00:00:08 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.io. This is where you can use your Bitcoin for a variety of different services. They've got Bitcoin savings accounts so you can earn interest on your Bitcoin, paid in Bitcoin. They've got Bitcoin backed loans. This is where you can use your Bitcoin as collateral to obtain a US or Canadian dollar loan. So if you're in a pinch and you need to get your hands on dollars, but you don't want to sell your Bitcoin because you're worried it's bad time.

Starting point is 00:00:43 This could be an option for you. And finally, for you Bitcoin Bulls out there, like myself, I just started playing around with this. B2X, this allows you to get double the exposure to the price fluctuations of Bitcoin. If you want to check out any of those, there is a link in the show notes down below. And actually, if you opt to get a loan, they'll credit your account with an additional 50 bucks worth of Bitcoin. Secondly, we have RISEWallet. This is a physical. Bitcoin gift card that you can pick up at a store near you. Now, the way it works is you pick it up.

Starting point is 00:01:15 It's just like any prepaid visa card kind of. Essentially, you can grab it, gift it to anybody on the back of the card. They are instructed to download a paired app. They then scan a code on the back of the card after scratching it. And it creates them a brand new Bitcoin wallet on their phone and sends them an on-chain transaction for the face value of the card. I friggin' love it. I friggin' these things. I've gifted them to a bunch of people and they're super easy, super idiot proof, and fantastic for onboarding new users. So be sure to check them out at risewallet.com. You can click on locations in the top right to see where you can grab them near you. And if they're not near you, you can always get one ordered from coincards.ca. Now, they're only in Canada right now,

Starting point is 00:02:01 but keep an eye out because they are looking at expanding in the future. With that, let's dive into the news. So there is a ton of FUD going around, which may coincide with a little bit of the Bitcoin dip we had over the weekend, but all of this is around Treasury Secretary Steve Mnuchin talking about significant crackdowns happening around cryptocurrency in the U.S. Now, what this says here is that he said, let's just read a little bit of this. This week, Treasurer secretary Steve Mnuchin warned significant new Bitcoin and cryptocurrency regulations are on the way. And then they paired this with some information. By the way, this is from Forbes. They paired this with information around the Minneapolis Federal Reserve President saying cryptocurrencies are a giant garbage dumpster.

Starting point is 00:02:57 And the Department of Justice calling Bitcoin mixing or obfuscation of where the funds came from, a crime. Now, a couple more things here. He told the Senate Finance Committee that FinCEN, the Financial Crimes Enforcement Network, is preparing significant new requirements around cryptocurrencies and will be seeing a lot of work come out very quickly. He also went on to say, we want to make sure that the technology moves forward. But on the other hand, we want to make sure that cryptocurrencies aren't used for the equivalent of old Swiss secret number bank. accounts. He added FinCEN and the Treasury Department more broadly are spending a lot of time on this. Now, the interesting thing here is when paired with the title of the article, significant U.S.

Starting point is 00:03:51 Crypto-Crackdown, and, you know, they say the whole title is, blow to Bitcoin as significant U.S. crypto crackdown suddenly revealed. It's very sensationalist, and with the beginning of it, them also pairing the whole Fed Reserve president calling it a garbage dumpster and and Department of Justice calling mixing a crime, it starts to sound very scary. But when you look at the actual quote from Mnuchin, there's not a lot there. And if you want to really get an appreciation of it, there is a video on YouTube of the actual testimony, which is about two minutes and length where basically he talks about a few things. He talks about, okay, well, there's cryptocurrencies like Bitcoin, there's stable coins, and there's the potential for central bank

Starting point is 00:04:42 digital currencies. And he goes into the three of kind of how they're approaching it. More or less, all that he says on Bitcoin is we're trying to make sure that there isn't a ton of money laundering happening. That's more or less what he says. But he says that, yes, they've been spending a lot of time trying to navigate those waters. He talks about stable coins and how they could help consumers reduce small cross-border payments, the costs of doing so. And then he talks about central bank digital currencies in that the Federal Reserve is not really interested in pursuing that, but may look at it again at a later date. But really, nothing scary to be heard here at all. And then further to this, we have Rafael here.

Starting point is 00:05:30 Yacobi, I believe is his last name. He is the managing attorney at the Crypto Lawyers, which is a United States-based law practice focused on all matters, cryptocurrency. And he said on Twitter, I spoke with a representative from FinCent today, and they knew nothing about these requirements or Mnuchin's announcement. They informed me that rulemaking, if done,

Starting point is 00:05:52 will go through a formal and public process with opportunity to provide, feedback from the public. So very much, there's nothing really that's on the cusp of happening here. I believe this is just the Treasury Secretary more or less saying, hey, money laundering in our eyes is bad and we want to prevent it as best we can. And we're exploring ways to do that. But with a sensationalist article like this coming out of Forbes, it can very easily draw the eyes of Bitcoiners and people on both sides of the fence, whether you for or against Bitcoin, saying, look, this is, this is bad news for Bitcoin. When really, there's not much here.

Starting point is 00:06:40 I would go further to say, and this is, Bitcoin Tina said this, although I'm not sure, yeah, I can't find it in the thread here. Anyways, he said, oddly enough, even if this were true, it's actually technically good for Bitcoin in the sense that regulation is not banning. And so when somebody tries to regulate Bitcoin, it's more or less an admission of acceptance that Bitcoin is here and cannot be stopped. And so trying to regulate it into a corner is really the only option that a lot of these agencies have, although even that is going to be difficult to deal with. Because Bitcoin privacy, there are plenty of options for it now. They're getting better and better. You have

Starting point is 00:07:32 Wasabi wallet. You have things like samurai wallet with their whirlpool mixing. You have the Lightning Network. And with the Lightning Network, you know, you can't really see where those transactions are coming from or going. It's very difficult to track. And then you have side chains like Liquid Network where confidential transactions are the default. So really, and it's, and it's, you It's still early. Like a lot of this stuff is relatively new. So it's only going to be more and more difficult over time for them to get a handle on this stuff. And at the pace that government moves, I can't imagine that this will have much bearing at all.

Starting point is 00:08:11 Anyways, let's move on here. Just a fun little story because Max Kaiser is hilarious and awesome. If you don't know him, he is the host of the Kaiser Report on RT News. he was on, and I'm not a fan of this show, but he was on Info Wars with Alex Jones. But regardless, he was talking about his price predictions for Bitcoin. While back, like 2012, as early as then, he said, oh, Bitcoin's going to $100,000. Well, for the first time since then, he's revised his price prediction, and he quadrupled it to 400K. So here's his quote.

Starting point is 00:08:51 He says, I am officially raising my target for Bitcoin. And I first made this prediction when it was $1. I said it could go to $100,000. I'm raising my official target for the first time in eight years. I'm raising it to $400,000. Now, obviously, there's been plenty of predictions out there previously. And Kaiser even here says, hey, the dips are equally as attractive. He said, this is good news.

Starting point is 00:09:19 Bitcoin at $10,000 or $9,300. which, you know, be whatever, the price range it is currently, is equally as attractive as when it was $100. And so, yeah, like I said, there's been plenty of price predictions. You know, a 40x return would be pretty bullish, obviously. But I don't think it's outside the realm of possibility, even in the next couple of years. I don't think it'll get quite up there.

Starting point is 00:09:50 but I do think it'll stay in line with stock to flow from Plan B. I think it'll be probably close to that realm if I had to take a wild guess. And I could totally be fucking wrong here, so don't take my word for it. But I mean, there's been other major people that have made calls. You have Tim Draper that thinks 2024, you could see 250K. You had John McAfee who set a million by 20, the end of 2020, start of 2021. and he said that he'd eat his own dick on live television if it didn't hit that. Well, he rescinded that bet, obviously.

Starting point is 00:10:27 I don't think anybody really believed. Bobby Lee said 500K by 2028. Yeah, again, I think. So I made a video on predicting the price of Bitcoin in 2018 near the beginning of it. And kind of how I thought the next three. years would play out. And it's been pretty close. I didn't predict the spike mid last year. But other than that, it's been pretty much what I was anticipating. Hopefully the second half of it plays out because that would be wonderful because I said over $100,000 and maybe a couple times that. But yeah,

Starting point is 00:11:14 I don't know. I haven't really changed my mind on that prediction that I made. two, almost two years ago now. So I guess time will tell. I'll include that in the show notes below. So if you want to listen to that, uh, yeah, go check it out. But again, I don't know. I think it's pretty that's, that's still what I'm anticipating. Uh, let's move on. We've got some shit coin news here. Uh, Bitcoin Cash. Fun, fun. Oh, Bitcoin Cash. So there's been, uh, some infighting in Bitcoin cash. Who would have guessed that a group of people that caused infighting in Bitcoin in Bitcoin and then splintered off and then had more infighting and then splintered off into B-Cash and Bitcoin SV would once again have infighting. But that is the case.

Starting point is 00:12:00 So the devs want to implement a tax. And this isn't new news. This was, it's been a, I think a couple weeks or more that this news has been out. But essentially the code is ready. And so Bitcoin ABC, which is one of the main implementations for Bitcoin Cash, It's used by over 50% of the network. Well, they've supported the fork. The code is made.

Starting point is 00:12:29 And so now instead of 12.5% tax on all the block rewards that would go to a Hong Kong entity that would then divvy up the rewards to devs and other teams, it's now reduced to a 5% tax on the block rewards. Yeah, so but obviously a lot of people weren't super happy about that. I mean, surprise, surprise, because a lot of people believe that taxation is theft, especially those in the Bitcoin community. Well, so it's not surprised that a good portion of Bitcoin cash people also believe the same. You have Peter Risen, who is the chief, I think the chief scientist for Bitcoin Unlimited, which is also an imprifice. implementation of Bitcoin Cash that can be used.

Starting point is 00:13:23 One of his tweets here, he said, this will test if Bitcoin Cash can avoid being captured by a group of developers. Bitcoin does not have payouts to third parties encoded in its protocol. If exchanges and miners download and run the new version of ABC, BCH will be B-Cash and no rights to the name Bitcoin, with no rights to the name Bitcoin, which oh my god i find it hilarious to for somebody who split off of bitcoin to be a part of something else of an alt coin that tried to capitalize on the bitcoin name and failed again because it's worth

Starting point is 00:14:02 like three percent of a bitcoin um to be bitching that if somebody forks off and does something different with the code they'll have no right to use the the name bitcoin um i don't like the cognitive dissonance there is mind-bending. Anyways, so a little bit about this tax, it would be going to, who would it be going to? It would be going to Bitcoin ABC, electron cash, basically a whole bunch of different people that are kind of in line with Bitcoin ABC and those developers.

Starting point is 00:14:40 It would not, interestingly enough, be going towards any of the Bitcoin unlimited developers, which also could be a reason for the pushback here. Now, this is interesting here. Adding to worry, adding worry to woes, a Reddit user pointed out that Bitcoin ABC's last upgrade included a code deactivation clause that occurs every six months when the network hard forks. This means even if those running ABC nodes want to skip the hard fork and continue running

Starting point is 00:15:12 an earlier version of the client, it will automatically update to the new code, which includes the minor tax. Yeah, so also considering BCHD, another node client is also a recipient, they are most likely to support the proposal as well. The only way for Bitcoin Cash enthusiasts to stop, this is for the ABCNOS to switch over to Bitcoin Unlimited, which again is not eligible for the tax anyways. So yeah, unless we see a mass migration. of people running alternative nodes.

Starting point is 00:15:48 It looks like Bitcoin Cash is going to split once again into. So now the split, the people that split from Bitcoin in order to create Bitcoin Cash will soon be responsible for three different versions of their altcoin. Okay, anyways, let's move on. I'll let that stew with you guys for a little bit. Okay, so let's chat about this. DeFi got exploited. Except for, you know, it really didn't. So DFI stands for decentralized finance and

Starting point is 00:16:20 people building decentralized finance atop Ethereum, which I find a conundrum in itself because Ethereum itself has no real like sound monetary policy. It's really up to up to the whims of the Ethereum Foundation in Vitalik. So for decentralized finance to be built on top of something that essentially is malleable as is, is pretty interesting to me. Anyways, somebody managed to take home $350,000 in profits based on this defy, like a lot of these loans and things that can happen on defy. So essentially what happened here,

Starting point is 00:17:08 and they're saying that it's an exploit, a genius. So this decrypt article says how a genius hacker made $350,000 exploiting defy. But there was no, there was no hacking here in reading through, in reading through this article. Essentially what happened is this person took out a loan. So they took some ETH. They took out a loan for, for, what was it? they took out a loan for God, what was it?

Starting point is 00:17:43 Hold on a sec. Oh, yeah. So they borrowed wrapped Bitcoin, WBTC. So it's basically like a pegged version of Bitcoin on Ethereum. And so they kept half of it. Half of it went to wrap BTC and then the other half of this 10,000 Ethereum that they put was used for shorting

Starting point is 00:18:05 or betting that the price would go down. And then they sold all the rap BTC on a margin trading platform called fulcrum. And so what happened is they took all this money that they had in ether. They bought a bunch of rap btc and then they used the other half to short rap BTC. Then they sold all the rap BTC, meaning that the price went down because of low liquidity. And then that triggered their short to execute and they actually made money on it. So that's where they made the $350,000. So all that they did is they realized that there's not a lot of liquidity in this market.

Starting point is 00:18:42 I can probably, since I have a bunch of money kicking around, swing the price of wrapped BTC pretty easily on this low liquidity platform. And if I place a short on it while also holding a bunch of it and then selling it, I can probably make a shit ton of money. And they did. They made $350,000. That's not a hack, though. that's just somebody realizing that a margin trading platform didn't have much liquidity and utilizing that to make some money. Now, the interesting thing here is that this is supposed to be defy decentralized finance,

Starting point is 00:19:22 like a censorship resistant decentralized finance outside of the reach of government and everything. Fulcrum has an admin key and is basically taking the attacker left $600,000 of wrapped Bitcoin on the exchange. The Fulcrum plans to use its admin key to take that $600,000 from that person and they're going to distribute it to other users of the exchange. So again, this, so they said there is. currently 600K of RAPBTC collateral left by the attacker. Attacker, again. We will be using this to stream interest and exit liquidity to existing IETH holders. This will be done using our admin key.

Starting point is 00:20:14 This is an extremely difficult decision for us that we don't take lightly. So essentially, this admin key is hard baked into the protocol and it allows them to control any of the smart contracts where funds are kept as a last resort, the purpose of the admin key is precisely for one of these moments where something has gone wrong and there is a lot of money at stake. But again, gone wrong. This person was playing by the rules of the platform. Again, it's anybody could have done this. So it's proof obviously of a central point of failure. Like they have control. So it's not truly decentralized if you have an admin key that can just like undo or do.

Starting point is 00:20:57 take control of people's money, it's not really decentralized finance if you've got a centralized yes or no man that can undo things or just take your money at any point. Yeah, I'm out of loss. Okay, let's move on. And then just, you know, one last little cherry on top, if you need a reason for why Bitcoin. U.S. household debt hits record level. Wow. Recent reports indicate that the level of household debt in the U.S. has reached a record high of over $14 trillion with a T, trillion dollars. Yeah, wow, that's depressing. So an increase of $193 billion in the fourth quarter of 2019. Wow. $1.5 trillion higher than the pre-recent. So pre-2008 peak of 12.68 trillion.

Starting point is 00:22:05 So people are in more debt now than they were before the Great Recession of 2008. And it is the 22nd consecutive quarterly increase of household debt, which has been led by mortgage balances. So housing balances rose by $120 billion over the quarter. non-housing balances soared by 79 billion so like some people are okay with the idea of of housing debt of buying land and buying property and they see that debt as good because it could potentially increase over time and you have to live somewhere anywhere so you know you can kind of you can kind of forgive that but non-housing non-housing balances 79 billion dollar increase in the fourth quarter uh 4.2 trillion

Starting point is 00:22:54 of non-house debt in the states. So a lot of that is attributed to student loans, auto loans, and credit card balances. That's insane, guys. So a lot of this can be blamed on, again, a weakening economy, as well as the fact that moving towards negative interest rates highly discourages people from saving. And so if we move into negative interest rates, essentially what happens is you put your money in a savings account and you pay for that. You don't get interest. You essentially lend your money to the bank, and the bank charges you for the privilege of borrowing your money. Yeah. So anyways,

Starting point is 00:23:47 Bitcoin fixes this. I'm going to leave it there. And then finally, guys, I just wanted to bring up that I'm on the weekend. I dropped this video for how to run and create your own node using the Mynode software at Mynodebtc.com. So I show the parts, the assembly, and the software installation. This is the second one of these that I've made. I made it for my friend Dave.

Starting point is 00:24:15 I do have another one of mine just purring away on my shelf. right now. Actually, both of them are there. I still got to get this one to Dave. But I just go through, okay, well, this is what a Raspberry Pi looks like. Here's a case for a hard drive, all that. I put it together in a couple minutes, and then we put the software on it and we see what it looks like when it's all said and done. I highly recommend you check it out. If you're not currently running a Bitcoin node and you're curious about it, this, I hope if you take a look at it, will make you go, oh, I can actually probably do that. It's not that difficult and it's a super fun little project to do. And it's cheap. Like if you want to build one yourself in a dedicated case

Starting point is 00:24:56 with a dedicated tiny little computer, it's actually not very expensive to do if you go for the cheaper end of things. And even if you go for the higher end one that I built for myself, it was like, I think I spent about 300 Canadian dollars on it. Really, really not that expensive. So be sure to check it out and share it around. Yeah, lots of positive feedback, and I'm very excited to see the number of people responding and commenting on Twitter and on YouTube saying, hey, I was worried about doing this. I was a little scared, and now after watching this video, I realize it's really not that tough, and I'm going to make the leap, and I'm going to do it.

Starting point is 00:25:35 So if you're not running a Bitcoin node, please at least watch the video and just see if maybe it might be up your alley. It's really, it's, I highly encourage it. I think it'll be well worth your while. And with that, I'm going to wrap up you guys. Thank you so much for watching. Please, if you're watching, I guess I should say watching and or listening. If you're watching, do hit like, subscribe, and share.

Starting point is 00:25:59 It's always great to get more people watching the videos. And if you're listening to this on the podcast, then please do share the podcast on your social media. And then if you want to help with the show in another way, you can hit up the sponsors down below. that is leaden and rise wallet, as well as Wasabi wallet, which is a desktop client to help you obtain more Bitcoin privacy, which Steve Mnuchin does not like. And then finally, you can hit up NordVPN. This is something I use on my computer, on my phone, and it hides your IP address. It encrypts your browsing data and has other added benefits like unlocking Geoblock content. There's a link in the show notes where you can get 70% off as well as a month free.

Starting point is 00:26:42 And it ends up being about $3.49 a month if you go for that option. And of course, it'll help out the show if you do so. Alternatively, if you don't want to click the link, you can go to NordvPN.com and use the code BTC sessions, all one word, and it'll get you the same deal. With that, I am out. Have a wonderful evening, and I will see you guys next time for your daily session.

BTC Sessions - Bitcoin Regulatory FUD from Treasury Secretary, Bcash About To Fork, DeFi Seizing Funds EP020

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