BTC Sessions - Fed Printing $1M Per Second, Bitcoin HODL Wave Looks Bullish, Lightning Labs LSATs EP037

Starting point is 00:00:01 Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC Sessions and this is your daily session. Hodel their Bitcoin 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 few different services. They've got Bitcoin savings accounts where you can earn interest on your Bitcoin. They've got their Bitcoin-backed loans where you can use your Bitcoin. back loans where you can use your Bitcoin as collateral to obtain a Canadian or US dollar loan.

Starting point is 00:00:36 And this is actually the first service I ever used them for. It was around this time last year, kind of actually early March. And I was in a pinch I needed to get my hands on dollars, but I really didn't want to sell my Bitcoin because I was worried that the price was going to go up and I wouldn't be able to buy as much back, which would have been the case had I not been able to utilize this. Luckily, I was able to stick it in a dedicated address. I was able to audit that 24-7 throughout the course of my loan, which I received 24 hours later, and upon repayment of the loan, I got all of my Bitcoin bag. In fact, the exact same UTXO, which is actually pretty cool.

Starting point is 00:01:14 So that was super helpful for me. And then of course, they've also got their B2X offering, and that's where you use a Bitcoin back loan to immediately buy more Bitcoin, doubling your Bitcoin on the spot, and allowing you to experience the price fluctuations that come along with that. So if you're a huge Bitcoin bowl, that might be for you as well. If you want to check out any of these, there's a link in the show notes down below. And if you opt to get a loan with that link, they'll actually give you an additional 50 bucks worth of Bitcoin.

Starting point is 00:01:42 And secondly, we have Paxful. This is an online peer-to-peer Bitcoin marketplace where you can buy and or sell Bitcoin. Now there's a few very unique things about Paxville. Number one is how many friggin on ramps that they have, how many different payment options, they've got your traditional ones like bank transfers, e-transfers, they've got a lot of the payment apps like cash app and PayPal, but then they have some less traditional ways of buying Bitcoin like purchasing Bitcoin using gift cards. They've actually got over 300 different payment methods. On the flip side of this, you can also become a merchant. You can make money

Starting point is 00:02:19 buying and selling Bitcoin and profiting off the spread. They've got a killer affiliate program and you can also buy super cheap, heavily discounted, gift cards on the service. I've seen cards like Amazon and Walmart and Starbucks discounted by 20, 30, sometimes 40%, so pretty wild here. And finally, you can always check out their built with Bitcoin initiative. This is where they're trying to build 100 schools entirely paid for with Bitcoin, which I think is an excellent goal. With that, let's dive into the news. So more craziness, of course, with the Fed. Global markets have been rebounding quite a bit, but largely due in part for what to do with what the Fed has been doing and how much money has been printed more or less.

Starting point is 00:03:12 So let's just kind of go through what the Fed is doing here. And yes, you read that right. The U.S. Central Bank is pumping $1 million per cent. second at the moment. So over the last little bit, here are some of the measures that they've gone through. They've cut interest rates to zero through the same tactic that was used in the financial crisis of 2008, so more of the same there. It bought, it is buying unlimited amounts of government bonds and mortgage-backed securities, mortgage-backed securities being the tranches of securities and mortgages all piled into nice little packages that were the cause of the financial crisis in 2008. This is the first time in history. It should be noted that the Fed has pledged unlimited stimulus.

Starting point is 00:04:00 It's printed billions before, but it has never said, hey, there's no limit to how much we're going to print. Now, it also announced that it would start buying municipal bonds, and for the first time ever the Fed said it will purchase corporate bonds. And which is pretty wild. And we're going to get into some of the implications of that in a moment. But I did want to highlight a tweet here in this Bitcoinist article from, and I'm going to butcher the name here, Viss in Numeris. He said $1 million every second. That's how much the Federal Reserve is printing.

Starting point is 00:04:37 Its balance sheet increased by $586 billion, $1 billion last week to a record total of $5.24 trillion. which is $84 billion a day and $60 million printed per minute. Pretty wild. Now let's touch on the buybacks of the corporate bonds here. So I'm going to read an excerpt here. The central bank will finance so-called special purpose vehicles for each of its credit operations of buying government bonds, corporate bonds, commercial paper, etc. The U.S. Treasury will make an equity investment in each SPV through the exchange

Starting point is 00:05:16 stabilization fund, effectively buying all these securities. The Fed is only acting as banker, offering financing. It recently hired BlackRock to buy all securities and manage SPVs on behalf of the Treasury. It means that the U.S. government is nationalizing the financial markets. The scheme merges the Fed and the Treasury into one organization, at least for now. Thus, the printing press is in the hands of the U.S. President Donald Trump and who can guarantee that he doesn't use it after the pandemic is gone. So more or less what they're saying here is traditionally the Fed was not allowed to go ahead and buy equities and buy securities on the markets.

Starting point is 00:06:02 They would have to get a free pass from the government to do that. Well, it seems that the government is just kind of creating this loophole so that the Fed can more or less do that. The Treasury and Black Rock are the ones that are actually buying up all of these bonds, but they are getting unlimited financing from the Fed. The Fed is essentially saying, hey, we will, you're buying all of this crap off the market that nobody wants at the current time and artificially pumping up the demand for it on the markets. And now you've got these terrible assets sitting on your books that are essentially,

Starting point is 00:06:44 actually worth nothing because there's no liquidity. We will buy them from you. We will hold them and extend a loan for the difference and give you cash. And so where does that cash come from? Well, the Fed, they create it. So when people say, some people come out and they say that, oh, the Fed doesn't print money. It actually gets assets in exchange for the money that it creates. Yeah, but if the assets are totally worthless as is and nobody wants them, then yes, you are creating money out of nothing because there would not have been demand for them in the first place. And that's what we're seeing. And we're seeing pricing mechanisms completely break down because the Fed is skewing them

Starting point is 00:07:25 completely out of reality. Anyways, moving on from the craziness with the Fed, Bitcoin exchanges, whether or not it's in response to this, we'll see, but I know myself. I'm more bullish on Bitcoin than ever given the state of the economy right now. But exchanges are seeing massive surge in new users, particularly for March, which is interesting. So crack and record an 83% rise in signups and a further 300 increase in intermediate verifications. Or quickly, people that are quickly verifying. those who went through KYC process to be able to deposit fiat money instantly.

Starting point is 00:08:11 Cracken's Bitcoin strategist, Pierre Rischar, said that it might not be people bored in lockdown. It could be a move away from legacy financial systems. I do love this quote of his. He says, with Western governments struggling to contain COVID-19 and forcing cities and nations into blanket quarantines, individuals feel an urgent need to get out of the centralized financial system. They can't go protest in the streets, so they protest with Bitcoin. And if anything, Bitcoin is a protest against the current financial system. It's just an open door to be able to step out of the craziness and into something that's a little bit more certain

Starting point is 00:08:55 and doesn't hinge on the whims of a central bank that apparently will do anything. So similarly, peer-to-peer exchange and partner of the show Paxville saw 100% increase in new signups since the start of March. Bitcoin Exchange, Luno, too, has seen a 50% uptick in active users over the last four weeks. The CEO of Luna talked to decrypt.com and he said, while the current pandemic has created a lot of uncertainty across most, if not all, industries, it's reassuring to see that there remains confidence in cryptocurrencies with many traders unwavered. And speaking to that unwavering resolve of especially on hardcore bitcoins, this tweet and information from Unchain Capital is one that really kind of raised my eyebrow.

Starting point is 00:09:49 So they said, fun fact, the last time the two to three year hoddle wave age band represented 15%, or 2.25 million of available Bitcoin was November 2015 when Bitcoin was $345. Today, 15%, or 2.74 million of all Bitcoin, has been sitting idle for two to three years, and the price is $6,500. So just to sum up what they're saying here is there's something called the Hoddle Wave and the age of it. It's a band that represents people that have bought Bitcoin and it has been sitting in a dedicated address for a certain amount of time. And what they're saying is that when the last time that 15% of all Bitcoin had been sitting in a dedicated address for the span of two to three years was in the lows of the last bear market when Bitcoin was around $345. Obviously, it had been lower before that.

Starting point is 00:10:54 It had been down sub-200 at one point. But to keep that in perspective, it went on to go from $345 later on to damn near $20,000. If you saw the same appreciation, again, to put it in perspective, $6,500, the multiple of that that would also represent what had happened from $345 to around $20,000, would put us in the mid-300,000 range, so close to around $340,000, maybe a little bit more. So I'm not saying that that's the trajectory that we're definitely on, but if history rhymed even just a little bit, it would put us somewhere in that range, at least well over $100,000. So we will see if that plays out. It would be very much in line with Plan B's stock-to-flow model. But again, nothing has

Starting point is 00:11:50 been proven and this time around with this halving coming up in May, it will be very telling as to whether or not Bitcoin is indeed seeing kind of a cyclical boom and bust via the halving or not. Anyways, speaking of halvings, I did want to touch on this briefly. Bitcoin Cash and Bitcoin SV, their halvings are coming up a little bit quicker than Bitcoins and that may cause some interesting things to happen in regards to. to mining. Their block reward is going to be cut in half about a month prior to the Bitcoin reward having. And that means that the miners there are going to be at a significant disadvantage. It already is quite often less profitable to mine Bitcoin Cash or Bitcoin SV. But people

Starting point is 00:12:44 do it perhaps for altruistic means. They believe in the the coins so they want to mine it. The thing is, it has yet to be this much of a difference. And so some are speculating that this drop, especially a month in advance, while the mining algorithm is the same as Bitcoins, might cause miners from Bitcoin Cash and Bitcoin SV to capitulate and at least temporarily start mining Bitcoin and mass. Bitcoin recently saw a drop in hash power of around 16%, which was needed because the drop in price, was no longer sustainable for older machines, people mining on ant miner S-9s. It's not super efficient and not competitive with some of the newer models. And so a lot of those people

Starting point is 00:13:31 had to turn off machines, which caused the drop in hash rate and now makes it more profitable for the miners that did remain and were indeed efficient. Anyways, we're going to move out of this story. We will, I guess we'll see soon enough whether that's true. But Binance is looking to acquire coin market cap for $400 million reportedly coming out of the block, although the block we'll see how accurate the reporting is. But, hey, a lot of people were kind of irked by this. So those of you on certain coin market cap, it is one of the most popular sources of crypto data in the industry, despite concerns that it features exchanges that are known for having high levels of wash trading. The site is visited 37 by the 3.

Starting point is 00:14:19 37 million users a month. So quite a lot of people go there to get data on Bitcoin, on other coins, on different exchanges, on volumes, all that kind of stuff. That tends to be the place that people go. The problem with that is that when you have an exchange owning a widely visited source of what's supposed to be impartial data, they could be skewing that into their favor and so there are a few comments here from from some other people so jonathan leong from uh bittsey he said if finance controls the most well-known third-party tool used by users around the world this is clearly a

Starting point is 00:15:04 strong conflict of interest some other people like jason dean from quantum economics said personally i am always skeptical of any deal that can in any way affect the neutrality of a reporting system where one party even potentially has an interest in the system as here, especially as I'm not entirely clear what they stand to gain precisely. Perhaps I need more information on the intricacies of this and what the objectives are, but my initial reaction would be caution and skepticism. And one more on Twitter here, Eugene Ng. He said, who would even trust coin market cap after this? It doesn't make sense. A stake in Binance might likely work better than an acquisition.

Starting point is 00:15:53 It just defeats the purpose of having a balanced and neutral index aggregator. And he was a former trader at Deutsche Bank and he is the head of sales at Matrixport. Yeah, and I mean, I've got to agree having Binance control a central point where people for years have gone to get their information, as inaccurate as some aspects of it may be, means that they could indeed skew things, whether it just be the information there, or whether it be the advertisements around other coins, other listings that they're going to add to their platform,

Starting point is 00:16:31 it could very much skew the entire industry, and it would have been better for it to be, you know, a little less centralized in the hands of one player, but I don't know I'm not I guess I think as a net it's a negative but I'm also not super concerned because I don't really care too much for the alt coins anyways moving on lightning labs is pushing a digital authentication on the internet without passwords and so what they're looking to do is create something called an LSAT an LSAT is essentially a ticket slash receipt that serves as an ID or credential for an online service. The tickets are encoded with information that tells the

Starting point is 00:17:16 website what information the user is cleared to access. They are minted using a mix of the old and the new. So HTTPS has an error code embedded in it, the error code 402, which means payment required. But because the internet never really had a native payment mechanism, it wasn't widely used. It's also incorporating Bitcoin's Lightning Network, a secondary network for faster and cheaper payments, as I'm sure a lot of you know. The error code provides the basis for a paywall, while the Lightning Network provides the means of payment and the ticket, which is proof of authentication. Under the LSAT scheme, users could pay for a service and receive a receipt for purchase, which they can then use to prove their identity for future logins. no password or name required. It may be a useful service providers that expose an end,

Starting point is 00:18:16 sorry, useful for service providers that expose an end API to the user for certain services like renting storage and disk space or access rights to data indices. So you could potentially, let's say you had a Spotify, a Spotify membership. you could pay for that and then receive more or less a token that represents that membership and then show that token without having to identify yourself in any way, shape, or form every time you log on. You could do the same thing for things like micropayments for reading articles and subscription services, anything like that.

Starting point is 00:18:56 Yeah, it could be very, very useful and it could represent a very noted change in the way that the internet works moving forward if it takes hold. But time will tell. And I wanted to touch on one other thing here. So Vitalik from Ethereum tweeted this out. I found it interesting, but I wanted to touch on this because I was interested in the responses to it. So Vitalik said, if we're being more open-minded

Starting point is 00:19:29 about accepting new weird ideas, can I suggest anti-aging research? Aging is a humanitarian disaster that kills as many people as World War II every two years. And even before killing, debilitates people and burdens social systems and families. Let's end it. And so, I, I was intrigued because I saw a lot of people responding to that very, very negatively. And I was kind of surprised. The reason I was surprised is I don't echo that sentiment.

Starting point is 00:20:12 And so what I asked was, would you live forever if you could? And I just made a little poll on Twitter. It's still going. There's about 16 hours left in it. But so far the response is, yes, 31.5%. No, 21%. Not forever, but longer. 42.6%.

Starting point is 00:20:33 and then around 5% just wanted to see the results. And then I also got a lot of responses to that poll in regards to very religious responses, I would say. Yeah, I don't know. Like even references to Jesus, people quoting Bible quotes, and just not stuff that I would have expected necessarily from what I would have expected necessarily from what I'm. imagine would be a large following of bitcoins that are following me but even a lot of

Starting point is 00:21:08 a lot of bitcoins that I very much like just kind of denounced the idea and said that that death is a a natural thing and anybody who who pursues going after the idea of of ending death is it's it's a perversion of biology so I don't agree with that take But I wanted to ask a little bit more. So I retweeted the poll and I said, follow up to this question for any that did not answer yes. If medical technology got to a point where on average allowed continued healthy living faster than the body deteriorated, essentially an indefinite lifespan,

Starting point is 00:21:55 at what point would you throw in the towel? Because a lot of people, as I said, some people answered yes, they would live forever. other people answered no and that's you know the two very definite answers but for the people that said I wouldn't I wouldn't live forever but I'd like to extend my life for a certain amount of time again at what point if technology allowed for an indefinite lifespan would you say okay enough's enough and I guess it's up to each individual person but for my same myself, what I'm looking at is technology and medicine has already done a lot for extending the human lifespan. There is some studies that say that the human lifespan is, it does kind of

Starting point is 00:22:48 have an upper cap at the moment and that the lowered lifespan in previous generations was due in large to preventing infant mortality, being able to more readily deliver babies with a lack of negative consequences or killing the mother, people in wartime being killed quite readily, diseases that have been eradicated, things like that, contributing to on average longer lifespans. But the upper bound has not really made that much progress, but if it did, would you be open to that? If a regular medical procedure could help you live a few years longer than would you? And for me, yes, I would definitely extend my life. I'm very interested in that idea. Now, I do find it laughable that Vitalik himself would solve that. And I don't

Starting point is 00:23:49 think he was saying that, but, but I mean, a lot of, there was some pretty solid jokes there about ETH 2.0 and insert other hilarious Vitalik quotes here. But I do find the idea of extending life intriguing and if it was available I would absolutely do it I don't know that I would live forever I think at some point you would probably feel okay with your with your accomplishments over the course of your life but another thing that I found interesting that some bitcoins were not on board with this is Bitcoin is very much rooted or a lot of Bitcoiners are very much rooted in the idea of low time preference about thinking over the long term and what you can accomplish in the long term versus

Starting point is 00:24:37 trying to get that immediate quick result and I think of the things that were built with low time preference in mind as particularly you go to like savadine's book the bitcoin standard and he talks about the incredible works of art and and monasteries and things that were built in an age of sound money where people had a longer term thinking of generations. And I think of what could be done in an extended human lifespan. Right now we're very much focused on the short term. It's this consumerism drives us to think very short term. But in an instance where you had an extended life and you had sound money, I only can imagine what incredible things could be built over. a single person's lifetime.

Starting point is 00:25:31 So I don't know. I just thought it was an interesting line of thought. I'm curious to hear your thoughts. Is it a no-go? Are you thinking like you're dead, you're dead? Would you extend your life a little bit? Or would you just live indefinitely and try to understand as much of the universe as possible?

Starting point is 00:25:48 Let me know. I know this kind of like off the rails a little bit from our regular discussion, but given it was on Bitcoin Twitter, I thought I'd touch on it. Anyways, guys, thank you guys so much. much for watching. As always, do hit like, subscribe, and share. If you're listening to this on the podcast, audio only, please do subscribe wherever you are, give it a share on your social

Starting point is 00:26:10 media and do fill out a review. Give it five stars, hopefully, because that really helps for visibility on various platforms. And if you want to help out the show in another way, you can hit up the sponsors down below. That was Leiden and Paxful as well as Wasabi Wallet. And you can check out NordVPN. I use this on my computer and my phone. It's hides your IP address, encrypts your browsing data, and allows you to unlock geo-blocked content. And if you click the link below, it'll get you a pretty killer deal. I think it's like 80% off, but it works out to be about $3.49 a month, which is pretty damn good, in my opinion. With that, I'm out.

Starting point is 00:26:45 Have yourselves a wonderful rest of your day, wonderful evening, and I will see you guys next time for your daily session.

BTC Sessions - Fed Printing $1M Per Second, Bitcoin HODL Wave Looks Bullish, Lightning Labs LSATs EP037

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