BTC Sessions - Death Spiral Theory REKT, Fed Buying Corporate Bonds, Solar BTC Nodes EP071

Starting point is 00:00:14 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, I just want to give a quick shout out to sponsors of the show, ledden.com. This is where you can use your Bitcoin for a few different things and I've been working with these guys for well over a year now. The first thing I ever used of theirs was their Bitcoin back loans. So me personally, I was in a pinch. I needed some dollars but I really didn't want to sell my Bitcoin, as I often don't. So I was able to park my Bitcoin in a dedicated address, after which I received a loan to my bank account within 24 hours. When I paid that back,

Starting point is 00:01:05 I got back the exact same Bitcoin that I deposited again, and I was able to audit that the entire time. Now, they've got some other offerings. They've got their Bitcoin in USDC savings that can get you up to 7.5% interest. And they've got their B2X offering, which uses the same loan mechanism to immediately buy you more Bitcoin, effectively doubling your Bitcoin on the spot. So if you want to check them out, there is a link in these show notes down below. And if you use that link to obtain a loan in any capacity, they will give you 50 bucks worth of Bitcoin for free. So be sure to check them out.

Starting point is 00:01:40 And secondly, coin cards. I first used these guys, hard to believe, six years ago. Super easy. I was trying to live on Bitcoin for the first time ever back at that point. It was very difficult at the time, but these guys were definitely a saving grace, and things have obviously gotten easier since then, and coin cards continues to grow. I'm super happy to see them grow over the past six years. Very easy. Bitcoin and buying Bitcoin, sorry, using Bitcoin to buy gift cards.

Starting point is 00:02:12 Super simple, really easy. And they've got just about everything you could possibly want when it comes to gift cards. Again, it's super easy to use. they've got digital, they've got physical delivery, they've got pretty much everything. So be sure to check them out. Also, you can use them to top up your mobile if you're going on minutes and data. So be sure to check them out, coincards.com. There's a link in these shenots down below as well.

Starting point is 00:02:37 With that, let's dive into the news. So Bitcoin mining difficulty is about to make its biggest jump in 29 months. All of you that were saying Bitcoin mining death spiral, you can suck it because it's not happening. Again, biggest jump in 29 months, which means that miners are very confident in Bitcoin and they're piling in and adding more hash power to the network, making it more secure. Now, there was a drop the last two difficulty adjustments, which are typically around every two weeks. There were two mining drops in difficulty post-having, which was expected, as the reward for miners drops or dropped from the halving.

Starting point is 00:03:26 But that seems to be coming back and with a vengeance. So let's just read a little bit from this Coin Desk article here. So Bitcoin has just posted the biggest mining difficulty increase in nearly two and a half years. So around 5 o'clock UTC on Tuesday, the network adjusted its difficulty level, a measure of how hard it is for miners to compete for block rewards on the blockchain.

Starting point is 00:03:51 to 15.78 trillion. This 14.95% rise is the biggest difficulty jump since January of 2018, which saw a large spike on the back of the 2017 crypto market bull run, and this is data compiled by BTC.com. I think that's huge, just sidebar here, but that's huge. January 2018, that was the month following Bitcoin's all-time high of around $20,000. So at that point, people didn't realize that there was going to be a change. There was going to be a drop off in the price and a sustained bear market.

Starting point is 00:04:28 So that was the most bullish, the most bullish that people could have possibly been, really, because there was no inclination that there was going to be a blow off top, that there was, it was going to stop at that point. Some maybe anticipated it, but obviously miners, not so much. and they were piling in a lot of just retail people piling into mining. And it was the biggest difficulty jump since that point is happening now. So if that doesn't scream that we're moving into a new phase, a new epoch of Bitcoin price. I don't know what does.

Starting point is 00:05:09 Anyways, moving on in the article. So as a result, miners contributing hashing power to the network are now facing the fourth most difficult two-week mining period in Bitcoin's hands. history. The latest increase comes after two consecutive declines in difficulty following the network's halving event on May 11th, 2020, which reduced the block reward, the block reward being paid out to miners every 10 minutes, from 12.5 Bitcoin per block to 6.5 Bitcoin per block. The reduction in block rewards initially forced some miners with inefficient hardware and or costly electricity resources to halt operations that led to a decline in Bitcoin's total hash.

Starting point is 00:05:49 rate and difficulty until earlier this month. So yeah, typically when there's a cut in rewards, if you are not, if you don't have fat enough margins or if you don't have a treasury to help you weather that storm while your margins are cut and your revenues are basically cut in half, if you can't weather that, then you're going to be pushed out and the remainder of the remaining miners get a bigger piece of the pie, and then new miners that are able to get more efficient power and hardware can also move in and start to scoop up some of that as well. So that is indeed, it seems to be what we're seeing. A lot of the old hardware, it's questionable whether or not it will ever turn back on or most of it, whether it'll turn back on at this point,

Starting point is 00:06:40 because with this kind of difficulty with that kind of inefficient hardware, it could be very, very, very difficult unless you're basically getting power for free or heavily subsidized anyways. Moving on, a little bit of macro news in regards to, I guess, Federal Reserve and excessive money printing for lack of a better term. So critics blast the Fed's latest bond buying program. The U.S. Federal Reserve yesterday announced that it would begin buying individual corporate bonds. It will buy 750 billion worth of corporate credit. The Fed will create a corporate bond portfolio that is based on a broad, diversified market of U.S. corporate bonds, it wrote in an announcement yesterday. So corporate bonds are essentially IOUs sold by companies, which is a way to safely get quick money.

Starting point is 00:07:35 The Fed's index is made up of all the bonds in the secondary markets that have been issued by U.S. companies that satisfy the facilities. minimum rating, maximum maturity, and other criteria. This is a wild move. The Federal Reserve is now interfering with the market in an unprecedented way. It's all a response to the pandemic, which the Fed said in an FAQ has harmed communities and substantially disrupted economic activity in many countries, including the United States. The Fed's rationale is that the pandemic has made it harder for corporations to get credit, which they badly need, in order to pay off maturing debt and sustain themselves until economic conditions normalize. Buying corporate bonds will complement the Fed's investing into exchange traded funds or ETFs. Even that drew Iyer from analysts who thought that

Starting point is 00:08:31 the Fed was meddling with markets. Companies thought they could get away with cheap cash flows since the government was always going to cover them if they couldn't pay them back. And that, my friends, is the root of the problem here. When companies don't plan for crises like these, and they are irresponsible with cash flows prior, they have no treasuries, they are levered to the tits with so much debt, and they just expect to be bailed out every time and then they are bailed out every time.

Starting point is 00:09:11 It breeds this environment of irrationality where there are no consequences to one's actions and that is a house of cards. I really, at this point, I don't know how it ends because there is no end in sight to basically propping up the stock market that should not be propped up at this point And again, people point to the pandemic as the cause of this.

Starting point is 00:09:39 This was just one match that could have been lit. The Fed was already pumping liquidity into the overnight repo markets way back in September of last year when it initially tried to tighten and it couldn't happen. I mean, rates are already at zero, so borrowing has zero cost. There's negative rates in many places in the world. I think it's only a matter of time before the Fed goes into negative rate territory. And at that point, the incentives are so skewed that borrowing money makes more sense than saving at all. And having dollars, you may as well funnel that into the stock market because you know that the Fed is going to buy it up. At what point does the market no longer reflect?

Starting point is 00:10:33 a rational free market, I would say now already, but at what point does that implode and what does that look like? Hyperinflation, maybe. There's been trillions of dollars created out of nothing in the span of months. It's unbelievable. I'm out of loss. Let's move on. Fishing victim, pH fishing victim, Eric Savix is going to return all the donated Bitcoin that he recently got. So those of you not in the know, last week, entrepreneur and protocol podcast host, Eric Savix, told his Twitter following that he had lost 12 Bitcoin worth 130 grand U.S. in a fishing attack. The crypto community rallied around him and gifted him an entire Bitcoin worth around $9,500 at the time of reading this, but he now plans to return the donations.

Starting point is 00:11:28 So here's his quote, reflecting on the weekend and the donations I've decided, to return all the BTC that was so kindly sent to me, he tweeted, adding, it doesn't feel right that I amassing these donations whilst others have been through so much worse. I may not be able to build my position again, but I still have my job, health, friends, and family. So Savix originally lost his Bitcoin when he downloaded a malicious version of the Keepkey app in the Google Chrome store. So the Keepkey is a harbor wallet. I've played, played around with it a few years back. Not one of my favorites, to be honest. I didn't really like the user interface in the first place. It was pretty plain. I haven't looked at it and I don't know

Starting point is 00:12:12 how long. But regardless, it ran on Google Chrome browser add-ons, essentially. And Google has not been great at rooting out the scummy ones, the malicious malware ones that can steal money from you because I don't think that they've really planned for digital currencies in the browser, and so they don't really have those protections. Anyways, what happened is he plugged in his keep key and used this malicious extension, and the extension asked him to enter his private seed phrase, which should have been a red flag. However, when you are utilizing the keep key, you are given that phrase and sometimes asked to put it in to recover it when your device has been wiped and you have to input it via your computer,

Starting point is 00:13:10 which is an internet-connected device, which isn't ideal. So besides the fact, he put in his 12-word seat phrase and his money was probably stolen, 12 Bitcoin gone like that. So if there's anything we can learn from this, it's holy God, please be careful if at any point an internet-connected devices asking you for your seat phrase and that seat phrase holds a lot of your Bitcoin holdings, pause, think for a moment and wait until you're sure before you do anything. Okay. So whenever you're recovering anything, you got to, got a, got to, got to be careful and be sure of what you're doing. And if you're not sure, that's fine. Wait. Take your time. Make sure it's okay before you do anything. best practice if you have funds that have been sitting on a hardware wallet and the device gets wiped for any

Starting point is 00:14:02 any reason and you need to re-input your seed don't input it into an internet connected device put it into that device on its own when it's not connected to the internet and you may you need a power source for that but but please please do be careful moving on okay one man's mission to deploy solar-powered Bitcoin nodes across Africa. This is kind of cool. So there was a thread the other day on Twitter. I think it was psychedelic El Bartow said, let's see your nodes.

Starting point is 00:14:36 And there's just this proliferation of people's nose that they put together with Raspberry Pi, running my node, Razpie Blitz, all of these different Bitcoin nodes. And those of your unfamiliar, a Bitcoin node essentially makes it so that you are impervious to outside attackers trying to feed you bad information

Starting point is 00:14:53 when it comes to the Bitcoin network about you receiving transactions. It also helps increase your privacy, a bunch of other added benefits. Plus, you can run lightning nodes, lots of other cool software stacks on top of Bitcoin and not have to rely on somebody else to do that for you. If you're using a Bitcoin wallet and you're not running a node and you're not connecting to your own node, then essentially you're pushing that responsibility on a third party and you're trusting them to feed you the correct information about the transactions

Starting point is 00:15:20 that you're sending and receiving. So that's the long and the short of it. Anyways, Bitcoin nodes, the goal has been to keep them very, very affordable and easy to set up. You can run Bitcoin Core on a laptop. You can set up a very cheap computer called a Raspberry Pi, which those little credit card size computers are like 80 bucks, something like that. Anyways, this guy's mission is deploy in nodes across Africa. And why that is a little bit more difficult is there's not consistent power. power and electricity in a lot of places in Africa. So how do you get around that? Well, solar, right?

Starting point is 00:16:00 And so his goal, and there's a map here that I'm looking at that shows kind of the visible nodes around the world, which it's a not a great metric because if you're running a node via Tor, it's not really easily identifiable and not representative on this map. And a lot of those nodes, a lot of the new nodes, things like my node and whatever, they default to tour. So keep that in mind. But regardless, you can see on the map that there's a lot of activity in North America. There's a lot in Western Europe. There's some around China. And then it's pretty sparse most other places other than a little bit in South America. And yeah, very, very few when it comes to the entire continent of Africa. And so he wants to decentralize things further and get more

Starting point is 00:16:58 nodes running in Africa. And he's doing this by putting together a kit, this individual, let's see, what's his name? What's his name just for a second here? Chimezi Chuta. I hope I'm saying that correct. Anyways, he wants people to be able to run their own Bitcoin nodes and lightning notes across the continent. So he's put together this kit. It's around 500 bucks. Obviously that is out of reach for a lot of Africans. But his idea is to at least take the what's known by Marty Bent and Matt O'Dell over at TFTC, the podcast. They call it being an Uncle Jim where you get to run Bitcoin infrastructure and then you can kind of let friends and family, or in this case in Africa, perhaps a village, piggyback off that infrastructure

Starting point is 00:17:49 and freely connect to it so that they're self-sovereign. And I think that's a fantastic idea. Having villages and small communities where there's a single node for a large body of people, but at least they're self-sovereign on a global scale. And I like this practice, even for me and my own friends, where I can run a Bitcoin node where somebody doesn't necessarily need to, but they can connect to my infrastructure if they need to, and they're still self-sovereign enough and they trust me enough that at least they're getting their data that way. So kudos to Chimezi Chuta for pioneering this,

Starting point is 00:18:25 and I do hope that this goes well. It's called Spacebox, and yeah, he's starting to deploy it all around there. Some of the stuff that he's trying to provide, the supply chains got disrupted, with COVID and everything, but he's trying to get it out there. And again, he's doing it solar powered to deal with the challenges in Africa of less than ideal power resources there. Moving on, Explora and other alternatives to Electrum X.

Starting point is 00:19:00 This is out of Blockstream. Now, some pretext to this, recently the person maintaining the lead maintainer of, of Electrum went a little bit off the rails and said that he's only going to support Bitcoin SV, to which most of the other devs in and around Electrum quickly forked the protocol to not do that and support only Bitcoin. Regardless, this article from Blockstream states a lot of people are looking for alternatives to the original Electrum X at the moment, so we thought it'd be a good opportunity to highlight some of the new options available for running Electrum servers with a focus on the BlockStream's Explora, an open source block explorer, which now comes bundled with a highly scalable

Starting point is 00:19:49 Electrum server. So about running your own Electrum server, by default, the Electrum wallet app, which is used quite commonly, connects to a random set of Electrum servers. Now, this is not ideal from a privacy perspective because it announces your wallet's addresses and balances to unknowled. third parties. It's well known that unfortunately many public Electrum servers are run by blockchain analysis companies and worse. So if you're using an Electrum wallet, we generally recommend that you run your own Electrum server and connect your wallet to that instead. Developers building Bitcoin application should also consider carefully the options available as each Electrum server implementation makes a variety of tradeoffs. Some implementations are more suited to

Starting point is 00:20:36 certain applications than others. The good news is there's an increasing number of Electrum server options available catering to various different types of users, which we summarize below. And so they go through some of the options like Electrum X, Electrum Personal Server, Bitcoin Wallet Tracker, Electro's, I'm not sure how to say it, and then Explora. Now with Esplora, they have their official Blockstream Explorer bundled in with everything. And it also, it also, allow support for the liquid network as well as the Bitcoin network. It has indexing for speed and scalability. You can discover people peer to peer. You also have default tour. And it can be lightweight if you need it to be. Yeah. You can also independently connect to the Blockstream

Starting point is 00:21:26 Electrum server, which as they said, not ideal to connect to somebody else's, but it is run through Tor so you do have some options there. So anybody that is running a and you're looking for solutions here, there's plenty. There is plenty. So it's always cool to see when something comes up and tries to get in the way of Bitcoin that just everybody routes around it so quickly and comes up with solutions to their problems. And so just another example of that. One last thing I wanted to announce. So I work at Bitsy and today they draw news of Bitsy Elite, the most exciting part of which I'm happy about the debit card because I will be using this. In fact, I got mine a little bit early. I think it's arriving today, actually. So I've used

Starting point is 00:22:21 Bitcoin and cryptocurrency related debit cards in the past. It's been a little while for me, actually. The last time I was using Wirex and I was also using Bitwala, and this was like 2016, 2017, maybe 2018 a little bit, maybe not. Anyways, yeah, besides the point, I have used these debit cards in the past. The reason this is interesting to me now is a couple things. So I get paid in Bitcoin. I live on Bitcoin. I convert what I need from Bitcoin to dollars in terms of paying my bills using like bull Bitcoin here at home in Canada. And then, then I use other solutions and convert some to my bank account in order to have spending cash for what I need. But it does help me save Bitcoin in the long run because I find that added step of converting.

Starting point is 00:23:19 Just, yeah, it puts a little bit of an extra step between me and, oh, I want to spend all this money. Now, with the debit card here, the nice thing about this is I can use my account. I can make purchases wherever the hell I want. It's just like the other ones where it's like a pre-funded card. But in doing so, it also gives you sats back. So the same kind of funding costs as a typical prepaid debit card would be. But you recoup that in Bitcoin, which is very attractive to me because I would have been eating those fees in converting to spending cash within my bank account anyways. And now I don't quite

Starting point is 00:24:09 have to do that. I can just, I believe I'll have to fund via stable coin for now, which is fine because it gives me the set amount of purchasing power that I need, but then I'm earning Sats back as I spend. So to me, sounds attractive. Can't wait to get it in the mail. Hopefully today, and I'll be playing around with this. But anyways, I'll be kind of covering this. video later on and letting you know my thoughts. But regardless, yeah, something new to play around with. Congrats Bitsy. Anyways, I will wrap it up there, guys. Thank you so much for watching and or listening. If you're here on YouTube, please do hit like, subscribe, and share, but do also find me on another platform just so I don't have to rely on the one. I'm on Facebook Live.

Starting point is 00:24:55 I stream on Twitter, Twitch, D-Live. I'm also audio-only podcasts on... Apple Podcasts, Google Podcasts, Spotify, all that. Just take a look for BTC sessions. You'll find me. If you want to help out of the show in another way, you can hit up with the sponsors I mentioned previously down below. That was Leden and coin cards. Or you can help both show in another way.

Starting point is 00:25:16 If you're not already utilizing a hardware wallet, number one, I do recommend you do that regardless of the type of hardware wallet you're using. The big ones tend to be ledger, treas, or cold card. I love all three. I do use all three. I do use the Ledger NanoS and the X. If you want to help out the show and those ones look attractive to you, there is a link in these show notes.

Starting point is 00:25:37 They've got some deals on right now. But regardless, do secure your Bitcoin in some way, shape, or form, whether or not you use that link. And finally, if you really liked what you saw, you can leave me a Bitcoin Lightning Network tip at my tippin.mee page. That is tippin.combe slash at BTC sessions. And with that, I am out.

Starting point is 00:25:58 Have yourselves a wonderful evening. a wonderful rest of your day and I'll see you next time for your daily session.

BTC Sessions - Death Spiral Theory REKT, Fed Buying Corporate Bonds, Solar BTC Nodes EP071

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