BTC Sessions - Bitcoin Silent Protest, CAD Bitcoin Regulations, Square Crypto Grant EP064

Starting point is 00:00:13 Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC sessions and this is your daily session. Hold on their Bitcoin. Before we dive in, I just want to give a quick shout out to sponsors of the show, leaden.io. This is where you can use your Bitcoin for a bunch of different services. Now, I've been using these guys for a while. The first thing I ever used of theirs was their Bitcoin backed loans. And so I was in a pinch. I needed to get my hands on dollars. And I didn't want to sell my Bitcoin.

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Starting point is 00:01:29 And if you use that link to get a loan, that will give you 50 bucks worth of Bitcoin for free. Now, secondly, new addition to the show, Coin Cards. Now, these guys I've been using for literally six years now. I first used coin cards back in 2014 when I did an experiment to live on Bitcoin for a month and documented. It was actually before my channel even existed on a different channel that I was doing for fun. And yeah, it was difficult to live on Bitcoin back then, but coin cards made it very, very easy. They definitely made my life a little bit easier in trying to achieve that. And so what coin cards does, as I imagine you've figured out from looking at it, you're able to buy

Starting point is 00:02:17 gift cards of all sorts with Bitcoin. They take Bitcoin, they do lightning, and then obviously if you have a bag of other coins, you can dump them here and get something of value. Anyways, coin cards honestly awesome. I've met Mike, the creator multiple times out of Vancouver, and again, just an excellent easy service. got both physical ones that can be delivered to you and then digital ones that you can get very, very quickly. But I've always had a great experience with them. If you want to check them out, there is a link in the show notes down below where you can head there if you want to have some high time preference activities and pick up some gift cards. With that, let's dive into the news.

Starting point is 00:03:03 So, obviously, it's been kind of a wild weekend, and we've seen a ton of protests. across the U.S., cities all over protesting and just looting and craziness. I'm not going to get too much into the specific politics of it, but we are also seeing some people take the streets with signs in relation to Bitcoin and these protests. And while some are angry about those signs, others are somewhat understanding the intent of them. So a few comments and stuff like that are in and around these protests in relation to Bitcoin have popped up.

Starting point is 00:03:47 You have the CEO of Binance saying that Bitcoin is the peaceful protest. You have the Bitcoin account on Twitter saying counterfeit a trillion dollars. The state doesn't bat an eye. Counterfeit $20 and the state loses its mind in reference to all of the bailouts and the Fed just printing trillions versus George Floyd having a counterfeit 20 and losing his life over it. Now you've also seen signs like this. Protesters, this guy here said Bitcoin will save us on his sign. And obviously the response to this from, I don't even know who Jessica Huesman is, to be honest, but she was not particularly enthralled with this response. But I do, I think it's just because the connections aren't clear to people

Starting point is 00:04:39 about how this is even involved. And I do a little bit understand the sentiment here in that Bitcoin is a separation of money and state. And this issue is very much an embodiment of a state that has gotten out of control with its powers over the people it resides over. And it's a bit of a failure of that in that the citizens that were meant to be protected and served are in some cases being killed for very trivial things. And when you separate the money from the state, that funding mechanism to make the state

Starting point is 00:05:23 bigger and more powerful and disenfranchise the people that it resides over is reduced and diminished to the point where perhaps eventually it's just non-existent. So I do see the connection. I don't think it's obvious with a sign like this. this, how that connection would be drawn by somebody who doesn't understand what Bitcoin and kind of why it was created in the first place. But hey, I mean, this guy doesn't have any ill intent there. I don't think he's trying to pump his bags. I think somebody like that that goes to a protest at the sign like this is trying to plant that seed of why is Bitcoin around

Starting point is 00:06:03 in the first place. Does it diminish kind of what's happening? Not not. Not. So much in my eyes, but yeah, I mean, everybody's going to take things as they want. It's very politically charged environment right now. So I guess I'll just kind of leave it there and move on. In Canada here, Bitcoin exchanges and payment processors are now regulated as MSBs or money service businesses. So this is my former partner employer, Francis Pouliot from Bull Bitcoin. Awesome guys over there. Love what they're doing here in Canada.

Starting point is 00:06:37 and they are, Francis put out a blog post about regulation and how it's changing in Canada. So I'm going to skip over some of the beginning stuff here and just get to kind of like the implications of the regulations on entities in Canada and outside of Canada. So he starts with the bad news here. He says bad news we're adding per transaction limits in addition to daily volume limits. So the per transaction limit for accounts with limited verification, meaning, that you haven't provided full ID and all of that is $1,000, which was previously 3,000. To conduct transactions over $1,000, you must get your account officially verified. They require users to provide their date of birth as a requirement to change their

Starting point is 00:07:23 verification status to verify it. And they also require you to provide your occupation as a requirement to change their verification status to verify. Now, the good news, they're increasing their daily volume limits from 3,000. to 10,000 for users that have limited account verification status. So users with limited account verification can do multiple transactions as long as they are each below $1,000 and as long as they don't exhibit suspicious behavior, which we'll get into the details below. Identity documents will no longer be required for users that can be identified using their credit files.

Starting point is 00:08:00 Connecting bank accounts to bull Bitcoin using Flinks. Verification will no longer be required. as long as, again, you can be identified using credit files. Now, obligations on part of not only bull Bitcoin, but every Bitcoin-related exchange in the country. So they have to identify users conducting transactions over $1,000. They have to report transactions suspected of being involved in money laundering or terrorist financing to FinTrack. They have to keep records of all transactions, which is nothing new.

Starting point is 00:08:36 generally they have to establish and adhere to policies and procedures to deter and detect money laundering and terrorist financing. Information required to perform compliant know your customer validation is full name, residential address, phone number, occupation, and date of birth. Now, record keeping obligations are date and time of transaction, all amounts and currency types involved, currency exchange rates used and their source, transaction ID, receiving address, sending address, and the user's KYC, info which is name, address, date of birth, and occupation. Now, suspicious transaction reporting. Satoshi Porrell, which is the parent company of Bull Bitcoin, is required to make suspicious transaction reports to Fintrack after we have detected a fact that amounts to reasonable grounds to suspect that any one of your transactions is related to the commission of attempted

Starting point is 00:09:29 commercial of money laundering, offense, or terrorist activity. failure failure to report this could lead up to five years of imprisonment and a fine of $2 million or both for its executives so it's pretty hefty fines and consequences to not do this they're not allowed to share with anyone other than FinTrack including their own clients the contents of suspicion transaction reports or even the fact that one was filed so here's the breakdown of suspicious activity what is and what is not so they give some tips they say try not to do this because this could prompt an inquiry or a report being filed don't provide false or misleading information we will know right away if your date of birth address and name don't match

Starting point is 00:10:20 don't try to exploit loot holes in the k YC process don't transact on behalf of someone else without telling us and be cooperative with customer support not considered suspicious by bull bitcoin are coin join or other bitcoin privacy techniques thank you using vpn tour or voip phones thank you asking questions about or criticizing their privacy policies thank you or talking negatively about banks or government thank you uh now actual indicators that could lead to uh investigating whether or not a transaction is suspicious are the the following, making statements about being involved with criminal activity. Obviously, you don't want to be saying anything of the sort, even if you're joking, because there's consequences there.

Starting point is 00:11:12 Saying you don't want the government to know about your transactions. Again, that leads to the, oh, are you trying to hide something from the government kind of question that they then have to ask and investigate? Asking advice about concealing source of funds or tax avoidance, Obviously, don't ask about that kind of crap because, one, they're not going to answer you. And two, that sounds suspicious because you're probably trying to do that thing. Funding your account from a bank account that is not in your name, conducting transactions on behalf of someone else without telling us, trying to falsify your identity or impersonate someone else, all of those no-brainers,

Starting point is 00:11:51 making multiple bill payments to the same recipient or multiple Bitcoin purchases in a way that seems structured specifically. to avoid the $1,000 transaction KYC threshold. And then finally, continuing to perform transactions that are unnecessarily complex, inefficient, or not cost effective after having been advised otherwise by our staff. So if you're doing something that is unnecessarily expensive,

Starting point is 00:12:20 and somebody from Bull Bitcoin says, hey, it's much easier to just do it this way. It's going to cost you way less. And you're like, no, I think I'll keep doing it. it's going to sound suspicious and then they have to kind of further investigate. And this, again, required by law, two million dollar fines, potential jail time. That's kind of just the deal. So there's a couple of things that you can look at this from the perspective of.

Starting point is 00:12:45 One is Bitcoin now regulated? Yes. It was inevitable that that was going to happen in some way, shape, or form in basically every nation in the world. at some point, but regulation is also acceptance. Regulation is also them saying this is not banned. And so the beauty of Bitcoin is Bitcoin itself, the protocol doesn't understand anything external to it. It doesn't understand national laws, anything like that.

Starting point is 00:13:23 The protocol can be used as anybody sees fit. It's literally inputs and outputs, puts. But in the context of where you live in a country with a business, transacting with individuals or with anything to do with a business within a specific country, that business is going to be regulated by the laws of the land in which they reside. And so this is what we're seeing. So again, double-edged sword, but it's also an admission that Bitcoin is here. It's okay. and it will be now a part of the Canadian regulatory landscape. So take that for what it is.

Starting point is 00:14:04 Moving on. Old Trick could solve Bitcoin's privacy problem. So obviously Bitcoin itself is inherently not private. It is pseudonymous with your Bitcoin addresses and sending them. They can be tracked by third parties and any identifying transactions can then link not just those individual transactions, but other Bitcoin that you hold to your identity through multiple means. So there's a new privacy protocol. It's actually an old one that was created back in 2013 by Greg Maxwell, while Chris Belcher has put together an implementation proposal that could

Starting point is 00:14:48 be ready as soon as, I believe, six to eight months to begin actual use. So, coin. Swap is the name of it. It was originally conjured up, as I said in 2013 by Greg Maxwell, co-founder of Blockstream and the creator of CoinJoyne. CoinSwap's spiritual predecessor. So Maxwell's idea at the time was too technically challenging to implement and was left to gather dust. Chris Belcher's proposal, however, uses the same smart contract tricked that makes Bitcoin's Lightning Network tick, making it easier to implement. So Belcher told decrypt, decrypt.com, that the protocol could be ready for testing in six to eight months, and Maxwell has praised Belcher's implementation as an extensive,

Starting point is 00:15:34 well-written, high-level design. So how does this work? Essentially, you have two individuals, myself and you on the other side of this video, and we have two separate multi-signature addresses that we both hold one of two keys to. So let's say there's an address here, there's an address here,

Starting point is 00:15:55 and we both hold one key to each, but it requires two keys in order to send the funds out. I send some Bitcoin to this address. You send some Bitcoin to this address. And it looks like a regular single signature transaction both times in that the money goes here and then the money reverts to myself and you. So I'm taking the money that you sent to the multi-sig. You're taking the money that I sent to the multi-sig. All the while, it doesn't really.

Starting point is 00:16:25 really show that funds have been swapped between two users and in doing so breaks a lot of the heuristics that blockchain analytics companies utilize in order to track who owns what. So it's interesting. I'm excited to see this kind of evolve here and play around with it once the proposal is actually brought to fruition. But interesting, nonetheless, I'm happy. happy to see more privacy things pop up for Bitcoin. Now, I should note that there was later on, they interviewed Adam Pfizer from Wasabi Wallet, and he was talking about, you know,

Starting point is 00:17:11 this is exciting and everything, and we're seeing the feasibility of anything to do with Wasabi and Coin Swap. But there was a misquote here, or a misunderstanding, that kind of got brought into Bitcoin Twitter and there's a lot of back and forth of people saying this is not okay, but it was really just a misunderstanding of exactly what was being said. So it sounded like what Adam was trying to say was that in order for Wasabi to actually utilize

Starting point is 00:17:44 coin swap, they would have to have like a stockpile of a ton of Bitcoin just to make that work, basically to provide some liquidity to it. And in saying that the author at Decrypt misunderstood and thought that Wasabi was already providing liquidity for its own coin joins, which would be a problem if the company itself was doing that because it could be construed as a civil attack, which means that Wasabi becomes so much of the liquidity, so much of the coins that are being coin joined that when you take them out of the equation or for themselves if they would be able to see basically vastly narrow down the likelihood of who owns what coins because they would know that enough of them are themselves.

Starting point is 00:18:36 But Adam did confirm later on that this was incorrect. We do not provide our own liquidity to wasabi. So now does that say that people from wasabi don't use their own their own software themselves? Absolutely not. Obviously, people from Wasabi are going to also use Wasabi. It's like when I was at Bull Bitcoin, I obviously still, you know, I was using Bull Bitcoin. And I think that's probably the case for most people that work in any area of Bitcoin. They probably use the stuff that they're working on. Anyways, besides the fact, Wasabi Wallet does not provide its own liquidity to its own coin joints.

Starting point is 00:19:16 Other than if you consider its own employees just mixing its own coins randomly when they need to do so. Moving on, Square Crypto has awarded a grant to a Bitcoin Lightning Network Watchtower. So a quick little brief here from Decrypt. Square Crypto has been doling out grants to developers working on free open source projects that support the future development of Bitcoin and the Lightning Network, and its latest grant has gone to a watchtower service for the latter. The Eye of Satoshi is the service, and it hails from Spanish Developers. developer TILIA, I think that's how you say it. Watchtowers were introduced into Lightning Network Code last year, providing a backup service option to monitor blockchain transactions if your

Starting point is 00:20:03 own Lightning software isn't active. That way, Pierce, can't close the channel and run off with your coins. So I'm just going to elaborate a little bit on what Watchtowers are, furthermore. So when you have a Lightning Network channel, essentially you are locking up Bitcoin between one address and another one that you own and probably somebody one that somebody else owns. And what you're doing as you're sending Bitcoin transactions via the Lightning Network is you're actually just updating the state of what side of the channel that Bitcoin lies on. So let's say I have 10 Bitcoin and you had zero and I opened a channel with you. As I'm spending Bitcoin out of that channel, technically we're just kind of updating the contract

Starting point is 00:20:49 between us saying, okay, now I have nine Bitcoin, you have one. I have, you know, six Bitcoin and you have four. What watchtowers prevent you from doing is when you go to settle a Lightning Network channel, you basically broadcast a final state of the channel as to who owns what. Now, if I've spent six coins to you and I only retain four and you're offline, feasibly I could actually go back to an earlier channel state where I had only maybe spent one coin to you and try to close up the channel that way. What watchtowers do is prevent me from doing so or I shouldn't say prevent me from doing so, but if there is a watchtower watching over that channel and I try to broadcast an earlier version, an earlier state of the channel, I run the risk of losing all of my

Starting point is 00:21:43 funds and all of them going to you. And so the opportunity cost of doing so or rather the the the potential implications of doing so are so great that I likely won't want to do that so anyways really cool to see Jack and Square Crypto continue to support the Bitcoin space and also great to see greater security measures making their way into the Lightning network and I want to touch on one more thing here this is an article from Coin Telegraph they say miners have been selling more Bitcoin than they generate. Recent data suggests. So last week, Bitcoin miners sold 11% more coins than they generated over the same period.

Starting point is 00:22:29 And this is June 1st data from OnChain Analysis Portal byte tree. So according to the portal's metric that tracks Bitcoin wallet addresses associated with miners, around 5,800 Bitcoin was generated over the past seven days compared to the over 6,500 first spend transactions. So a first spent transaction that is used for the calculation is the first time that Bitcoin leaves the wallet it was generated in. So when the Bitcoin minor reward is generated, it goes to a minor address and is then either sent to be spent to an exchange or distributed to miners in a mining pool. Whatever the case may be, you can track what happens to those coins and it appears that a lot of miners tend to have a bit of a treasury that they build up for times

Starting point is 00:23:21 where they're not getting enough Bitcoin to cover overhead costs. And it appears that miners are beginning to dip significantly deeper into their treasuries to keep afloat, which could point to minor capitulation, meaning that those that are less efficient and cannot keep up with the market given the cut in supply of newly minted coins from the having earlier this i guess earlier in may uh they may be potentially uh having to shut down at some point soon and what happens when uh inefficient miners go down is that the more efficient ones pick up the slack and are also forced to sell less of their bitcoin so what we're seeing right now is uh an over of some of these miners and some of them having to dip into their treasury.

Starting point is 00:24:17 And if that gets depleted and they have to completely close up shop, then, yeah, you could be looking at a situation where the most efficient miners take up all the hash power and are no longer having to sell as much, which takes a lot of sell pressure off of the market and potentially, potentially leads to higher prices. Now there is a rebuttal to that later in this article here where Connor Brown talks about, hey, let's not say that miners are capitulating just yet. What will happen a lot of the times is certain hardware that is inefficient will be in a place where the power is also very inefficient in terms of price.

Starting point is 00:25:04 And that hardware becomes commoditized and sold to areas. where the electricity is heavily subsidized or is cheaper in general. So you may see it leaving places like China or Canada or the U.S. or Europe and ending up in places like Kazakhstan, Russia, the Middle East, or South America. So we shouldn't write off that hash power just yet, but we're also seeing newer stuff, newer hardware that's super efficient come onto the market and in time that will definitely make some of these old, like S9 miners, completely obsolete. And at that point, they will go off the market.

Starting point is 00:25:45 It's also led to some crazy moves in price. This chart is ridiculous. Yeah, so we saw a spike the other day from, God, what was it? Kind of like the 9500s all the way up to damn near 10,400. and then earlier this morning we went from around 10,150 all the way down to 9150 and now we're kind of in the mid 9,000s close to the 9,500 mark. This happens quite often, these kind of crazy whipsaws back and forth in short periods of time and this kind of pattern where it goes straight up, goes flat across the board and then straight down. Everybody likes to refer to those as the good old Bart Simpson pattern. Bitcoin likes to barred up and down from time to time.

Starting point is 00:26:40 It's pretty crazy. It's a little less crazy when you zoom out and you just look at the one day. We've seen patterns like this before where you have a crazy spike. You have it go straight back down and it just kind of, when you zoom out, everything looks a little less scary. So, you know, try not to freak out everybody. Anyways, guys, I'm going to wrap up there. Thank you so much for watching and or listening.

Starting point is 00:27:07 As always, if you're here on YouTube, hit like, subscribe, and share. Also, make sure you check me out on the other platforms I stream to. I'm live on Twitter. I do D-Live and Twitch and Facebook Live. So just search me out on those. I'm also on pretty much any audio-only podcast platform you can find, so Apple, Spotify, all of that. Now, if you want to help the show in another way, of course, you can check out the sponsors I mentioned in the links down below. leaden and coin cards. But you can also help out the show in another way by grabbing yourself

Starting point is 00:27:37 a hardware wallet, which if you're not on a hardware wallet already, you've seen how quickly the price of this can move. Don't get caught with your pants down and you don't have your Bitcoin secured. Ledger is an easy option that you can always check out. There's a link down below and they've got some killer deals on grabbing some cheap hardware wallets. I have the Ledger X and the S and I use both for different purposes. But definitely worth whether or not you get a ledger to get yourself a hardware wallet and get yourself secure. Finally, if you really liked what you saw, you can always draw me a lightning network tip at my tipin.me page. That is tipin.combe slash at BTC sessions. And with that, I'm out. Have yourself

Starting point is 00:28:17 a wonderful rest of the day, a wonderful evening, and I'll see you next time for your daily session.

BTC Sessions - Bitcoin Silent Protest, CAD Bitcoin Regulations, Square Crypto Grant EP064

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