BTC Sessions - First Bitcoin 401K Launches, Is Adam Back Satoshi, Argentina Crackdown EP062

Episode Date: May 26, 2020

SUPPORT THE SHOW: MY ALL-ENCOMPASSING GUIDE TO GETTING STARTED WITH BITCOIN https://www.btcsessions.ca/post/how-to-buy-sell-and-use-bitcoin-in-canada Buy Bitcoin in Canada on Coinberry and get $20 after your first $50 purchase https://app.coinberry.com/invite/c5d52730857 Get the Ledger Backup Pack – Includes Ledger Nano X & S https://shop.ledger.com/products/ledger-backup-pack?r=faca LEDN offers Bitcoin backed loans – Sign up and get $50 free https://platform.ledn.io/join/0a00cca3dd61dea5909c95cd41f41685 Get Wasabi wallet and enjoy your privacy https://wasabiwallet.io/ NordVPN helps with your internet privacy – Get 70% off https://nordvpn.org/btcsessions Buy Bitcoin in Canada using Shakepay and get $10 for free after your first $100 purchase: https://shakepay.me/r/HUQFI60 If you value my work and would like to send me a tip, they are always appreciated! LIGHTNING tips: https://tippin.me/@BTCsessions Join my Telegram channel! https://t.me/btc_sessions SHOW RESOURCES: Bitwage launches world’s first Bitcoin 401K https://blog.bitwage.com/2020/05/26/bitcoin401k/ Charles Hoskinson weighs in on the Adam Back Satoshi theory https://cointelegraph.com/news/charles-hoskinson-blockstream-founder-adam-back-checks-all-the-boxes-as-satoshi Blockstream Liquid vs Ethereum tokens? https://cointelegraph.com/news/is-blockstreams-liquid-network-an-attempt-to-compete-for-tokens-with-ethereum Argentina crypto crackdown in effect https://decrypt.co/30090/argentina-cracking-down-local-bitcoin-trading Knut Svanholm outlines an excellent use case for Bitcoin timelocks https://www.academy.btse.com/post/knut-svanholm-bitcoin-timelocks

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, of course, I want to give a shout out to sponsors of the show, leaden.com. This is where you can use your Bitcoin for a few different things. First of which is their Bitcoin backed loans. This was the first service of theirs that I ever used. I was in a pinch. I needed to get my hands on dollars so I didn't want to. want to sell my Bitcoin, I was able to actually park it in a dedicated address, which I could audit 24-7. I got a loan to my Canadian bank account within 24 hours. And then when I paid back that loan,

I got all of my Bitcoin back. They've also got Bitcoin and USDC savings accounts where you can earn up to 7.5% interest. They recently launched these and have a big focus on Latin America, which we'll get to in one of the stories, particularly useful for some people in Argentina there. And then finally, they've got their B2X offering. That's where you use the same loan mechanism to instantly buy more Bitcoin, effectively doubling your Bitcoin on the spot. Now, if you want to check out these guys, there is a link in the show notes down below. And if you click that link and you opt to get one of the loans there,

they'll actually give you $50 worth of Bitcoin for free. So be sure to go and check that out. Secondly, if you want to help out this show in another way and you're not already holding your Bitcoin in a hardware wallet, first of all, you really need to be doing that. If you're leaving Bitcoin just on a regular Bitcoin wallet on your phone or on your computer, well, that can be subject to hackers. You could have your funds stolen because the keys to your money reside on that internet-connected device. And so in the instance of something like a ledger, your keys reside on this.

device and the device in question, the ledger itself, is never connected to the internet. It's only used to sign and approve transactions before giving those credentials to be loaded up into the Bitcoin blockchain to have your transactions approved. Now, if you want to check them out, they have some deals right now where you can get something like 27% off some of these family packs. I have both the Ledger NanoS and the Ledger NanoX. The X is Bluetooth model. It can be used with your phone and your computer, whereas the S is computer only.

But they do have a backup pack where you can get both. There's a whole bunch of different deals. Anyways, if you do click the link down below and pick one up, it will help the show in doing so. Anyways, moving on from there, let's dive into the news. And the first thing I wanted to touch on is that Bitwage, a place where you can essentially get set up to accept your wage in Bitcoin either in full or in part, they have launched the world's first Bitcoin 401k. So I'm just going to read a little bit from their blog here. They said after 10 months of testing the product with Bitwage as the first customer, we are happy to announce the launch

of the first company-sponsored Bitcoin 401k. What this means is that companies can offer employees the ability to invest traditional pre-tax and Roth post-tax 401k dollars into Bitcoin. For those that do not know, a traditional 401k allows pre-tax dollar investments with deferrals on income taxes until withdrawal, and a Roth 401k allows post-tax dollar investments with no tax obligations on capital gains for qualified withdrawals. So this, I find to be very, very interesting. Now, it's kind of a double-edged sword here because, number one, I definitely understand the ethos of not your keys, not your coins. If you do not have the keys to your Bitcoin, they're not yours.

They're in the custody of somebody else. And so typically you would say, obviously, keep it in your own custody because you never know what can happen. Now, the interesting part about this is the tax implications, particularly with the, the, Roth 401k. And what this means is if you just hold Bitcoin and you're doing everything on the up and up and you're paying your taxes, that means that when you hold Bitcoin, depending on where you're from, but at least my understanding here in Canada and in the U.S., is that when you convert your Bitcoin back to dollars, that incurs, it's a taxable event and it occurs taxes. And so here in Canada, particularly, that would be a capital gains tax as well as in the U.S.

And the way it works here is capital gains are taxed at 50% of the regular tax rate. So you would look at, well, how much money did you make total from that investment, cut it in half, and then tax it at your income tax rate. So you can incur a lot of taxes, especially if you've had sizable gains in the Bitcoin that you hold. The interesting thing about the Roth 401k here is you can take your wages, which have already been taxed, and then you can take the remainder of your wages and put them into Bitcoin in a 401k. By the way, these guys have partnered with Gemini as their custody partner, which, I mean, for regulated entities, it's probably one of the better ones out there. anyways you can dump that into a bitcoin 401k meaning that you get exposure to the price fluctuations of

bitcoin but in the end let's say a few years out you know five 10 years out you decide okay well I want to I want to start utilizing this wealth of accumulated hopefully and maybe you want to convert some to dollars maybe you want to convert some to something else assume that dollar's still around but let's just assume that okay maybe the dollar still around, you want to convert some of that. Well, you're no longer subject to that capital gains tax. You get to take that out tax-free. Not exactly tax-free, but they assume you've already paid the income taxes initially. And so the money that you've kept and then put into this investment are now outside of the realm of the IRS or the CRA or whatever you're dealing with. Now, one thing to

note here, as attractive as that sounds, who knows what could change with those regulations in the future? So if this is something that you're looking at, my recommendation is to, obviously, as with everything, not put all your eggs in one basket. Some people might want to gain some exposure through the Roth 401K. Some people might prefer to have a mix of the 401k and just holding their own coins. And then others may just say, not at all for me. just going to hold the keys to my coins and that's it, I self-custody. So either way, cool to see things like this popping up and it could be an attractive thing for people that are looking to minimize their tax burden in the future. Now moving on, I saw a story on this

a little while back where people were starting to ask is Adam back, Blockstream CEO Adam Back, Satoshi. And from my understanding of a video that came out a while back was by kind of like a Bitcoin cash Schill trying to out him anyways this is another article where Charles Hoskinson

who is a co-founder of Ethereum and the founder of what's his shit coin called again? Cardano yeah the founder of Cardano he says that Adam Back quote checks all the boxes as a Satoshi Nakamoto

candidate. So a few of the things that he notes here is, uh, somebody, Satoshi was likely somebody who lived in Western Europe or the coastal United States is comfortable with British English and had a background in distributed systems and cryptography. The quote from Hoskinson says, and then given some of the quirks in the Bitcoin code, like the use of fourth, for example, as the basis for the Bitcoin scripting language, it indicates an English education, or Western European education, because that's just what the textbooks were using in the 1980s and 1990s and these things. So when you start adding all these things up, as well as an intimate familiarity of the cypherpunk movement, so they had to be a contemporary of Hal Finney, a contemporary of guys like David Chom and so forth,

and aware of their work. The article goes on and starts talking about, according to how many, Hoskinson. Back is one of the few people who satisfies these conditions. Back created a proof of work with hash cache while he was at Microsoft and furthermore he had knowledge to create a secure alias like Satoshi Nakamoto. Yeah, it goes on to say how he was friends with Hal Finney and there's certain connections there. Now I'm not going to speak to whether or not Adam Back is Satoshi. I think that he is a very intelligent individual. I had the honor of meeting him at Bitcoin 2019, as well as meeting him again at Hoddle Hoddle in Riga last year. One thing that struck me

with Adam is he is incredibly patient and just willing to chat with anybody. When I when I I went to introduce myself to him at Bitcoin 2019 in San Francisco, it kind of blew me away that sometimes you get talking to people and it's clear that that they want, there's other people they'd prefer to talk to or they want to kind of case the room and chat with other people and move around and they don't want to spend too much time with one person and there's better places to be. But Adam very much is not like that. I found that he was more than willing to just stand there and just shoot the shit and talk with you about whatever the hell you wanted to talk about. And he would just give you all the time you wanted to just chat and have fun.

And there's people coming up and there's just a circle of us just chatting, asking questions. And again, very, very gracious and nice to chat with him and just kind of soak in some of the knowledge while I was there. And then my second encounter meeting him was, as I said, Hoddle Hoddle in Riga last year. Baltic Honeybadger, sorry, is what I should be saying, sponsored by Hoddle Hoddle. Anyways, meeting him there again, he came out to a dinner put on by Bull Bitcoin.

And he just kind of, again, very quiet, unassuming guy. And he was teaching the guy who creates a lot of the Bull Bitcoin artwork. Madex or Space Bowl on Twitter, he's teaching him how to do a Rubik's Cube, just over dinner. And yeah, I don't know. I do really like Adam back. If anybody was Satoshi, you know, I definitely wouldn't mind it being him. But I will say that I hope we never find out. I don't think it really matters who Satoshi is at this point.

And I think that knowing would actually be a detriment to Bitcoin. because every other shit coin out there has this leader where people look to them and when that leader says jump, everybody else says how high. And they get this kind of deity like position and they're held up on a pedestal. And whether or not they intend it, it gives them this undue influence on the protocol. And I don't want that for Bitcoin. And I think if Satoshi is out there, he's probably thinking the same thing. And I hope it remains a mystery.

I hope we never find out. So Adam, if you're Satoshi, don't fucking say a word. Let's move on. Actually, in the same vein here, we're going to talk a little bit about Blockstream's Liquid Network. So this article from CoinTelegraph is Blockstream's Liquid Network an attempt to compete for tokens with Ethereum. And so I'll just read a little bit from the article here.

At Consensus Distributed on May 12, Blockstream presented Light Night, a Fortnite-like game that uses the Liquid Network for storing non-fungible tokens representing game items. While the game is developed by independent company Satoshi's games, Block Extreme has sponsored the game by running a token giveaway. The announcement has garnered a considerable amount of criticism from Ethereum fans, given the long-standing rivalry with the Bitcoin Maximilists, non-fungible tokens are traditionally associated with Ethereum and other smart contract blockchains

and receive constant criticism from Bitcoin community members as part of that association. So a few things here. Number one, in regards to Fortnite, or rather Lightnight, the Fortnite kind of Battle Royale-style game, the idea behind it is that the in-game currency is actually Bitcoin via the Lightning network. So lightning payments can be cash in and out. And when you rack up points, you're actually racking up sets and things like that. So I think that's kind of cool that you can just have an in-game currency that's actually just Bitcoin. When it comes to the Liquid Network, what they're talking about is having NFTs or non-fundible tokens that represent in-game items.

So like you have a gun that's supposed to be provably scarce within the game. And then you can actually have that gun represented as a token and you can actually transfer it not even, not only just between in the game, but into a personally held wallet as a token and maybe even trade it with other people. And so it takes game assets and it allows them to be taken out of the game and potentially even transferred into other games as whatever the digital representation of that would be in a game. So like let's say you had Light Night and the game is very kind of like geometric, very kind of like rigid corners and stuff like that. And maybe you have a gun in there and somebody makes another game and says, hey, if you have that token in Light Night, then you can also use it in this game. And it'll be the same gun, but like how we've designed it. And so it might look like very photorealistic or something. So one, there's a there's a, there's a,

a few things to talk about here. One, they're talking about a narrative shift. They go on to also point out something that Marty Bent said. And the quote here, I believe, is actually kind of taken out of context. So Marty Bent from Tales from the Crypt was talking about NFTs and Bitcoin and how he released a blog post or an issue of his newsletter The Bent where he talks about this And he talks about the whole point of it was that you don't need to create a shit coin to start to do some of the things that these other shit coins can do. Like you don't need to create Ethereum to have non-fungible tokens. You don't need to create Ethereum to have smart contracting things built on top of Bitcoin.

And as we see, that's true. So the quote that they use here is Bitcoin can support use cases that many altcoin scammers have tried to say, it cannot. And they're talking about how well, but liquid is not Bitcoin. That wasn't the point of the article and if had they read the whole thing, that would be clear. This is just a snippet of it. But again, you don't need to create an entirely new currency to get some of these use cases. They also go on to say later in this that that what was the quote here? It says from here, Here it is. Oh, here it is.

They talk about how technically they say that because liquid is not Bitcoin, which, to be fair, it's not. It's a federated model. So they have a federation of primarily Bitcoin exchanges that you can peg into liquid Bitcoin, which is a one-to-one peg of Bitcoin, and then move that around as you see fit and enjoy things like faster block times, cheaper fees and confidential transactions. But then in order to peg out, you either, well, one, you could trade liquid Bitcoin for regular Bitcoin, or you could peg out through the Federation, and the Federation has to ensure the validity

of that peg out before you can do so. So what they then say is that Ethereum is technically also a side chain of Bitcoin with its wrapped BTC. And wrapped BTC is essentially custody to Bitcoin. that gets created as a token on the Ethereum network. But I would argue that it definitely is not a side chain of Bitcoin because they literally, again, as I said, they created an entirely new currency.

And in order to move around RAP Bitcoin, you have to have Ethereum to pay the fees to do so. So I just, I don't see it. I don't think that it's a legitimate comparison here. And again, is this an attempt to compete for tokens with Ethereum? I guess the main use case that Blockstream has kind of been pushing is inter-exchange transfers and high net worth individuals that need to get quick trades and take part in arbitrage opportunities, things like that.

The other day I was talking about how nearly 50% of outputs on the Bitcoin network seem to be exchanges doing transactions, and a lot of them are inter-exchange transactions, which could very much be an excellent use case for liquid. So I think that's kind of first and foremost what it's for. But if people want to build stuff on this, then, I mean, be my guest. Whether or not you find NFTs to be interesting or even useful,

as aside the point, I definitely don't think that all Bitcoiners are having a narrative shift because I heard a lot of pushback of, this is stupid. If it was stupid on Ethereum, then it's stupid here. Myself, could there be use cases for something non-fungible? Yeah, I mean, sure. Like, in-game assets is an example of something that somebody may want to use. I also think things like an NFT for like a concert ticket or something like that could be useful.

just to cut out having to pay a fee to transfer ownership of the tickets via centralized entity. Things like that could be useful, but I don't know. Yeah, I don't see this as like an attack on Ethereum. I think it's just a natural progression of what would have been built, but the Ethereum people were too impatient to allow to come to fruition. And thus they had to create their world computer, which has now become not a world computer. I don't know.

Let's move on from this. I'm done with that story. Okay, Argentina is cracking down on local Bitcoin trading. So I'm going to read a little bit here. Argentina's government is cracking down on crypto trading in the country in order to stamp out money laundering and other illegal activity. But the country's latest measures against Bitcoin and other cryptocurrencies may, in fact, have more to do with an attempt to prevent further devourable.

valuation of its national currency, the peso, according to observers. So they talk about the financial information unit, or the FIU. Recently, sorry, the FIU said it aims to gather more information on individuals and entities involved in crypto trading and ordered a large swath of institutions, ranging from banks and credit card companies to exchanges and mutual funds to report suspicious activity. Other entities, such as mail and shipping companies, stockbrokers, NGOs, and even art galleries and sports leagues will be under greater scrutiny by the FIU. But the timing of the move is telling. As L. Kronista noted, the FIU order comes at a time when the government is in the midst of battling parallel exchange markets that see Argentine citizens dumping pesos for more.

stable foreign currencies. So to me, again, this seems, as they said in the article, to be, you know, people in these Latin American countries that are starting to see quite a bit of inflation. It's actually pretty terrible. It's a lot of them are not near the level of something like Venezuela, but they're still going through these crises where people are seeing 50% of their savings essentially wiped out in purchasing power inside a year or less. And so people are trying to keep their savings in anything other than their local currency, especially in a place like Argentina, that's seen stuff like this many times in the past. This is just the newest iteration of it. And so what are people doing? Well, they're turning to things like Bitcoin as a way

to get their money out of the country and then trade into something that is maybe less volatile if they just want the stability and they just don't want their savings to go, you know, down 50%. This is actually unique to one of my partners of the show. Leden has been dealing with this a lot as well. So one of the co-founders, Mauricio de Bartolomeo is from Venezuela. So he has this unique perspective on the situation in Latin America. And so they're launching things like Bitcoin and USDC savings accounts where people can actually get out of their local currency, get into something like a stable coin for the US dollar or Bitcoin, and actually get interest back on that, which is far better than holding their own failing local currency and watching their savings just sift through their fingers as they're helpless.

So, yeah, it's unfortunate to see this kind of stuff happening in all over the world, really. But this is what Bitcoin was built for. And even if they're only using it as a mechanism right now to get to a more stable currency like the U.S. dollar, I think in doing so, it's kind of unknowingly orange-pilling people in the process. They may be fleeing to the U.S. dollar now for the stability. but as every fiat currency ever continues to devalue, it will only be a matter of time before those individuals that use Bitcoin as a mechanism to get to the dollar will just use their local currency as a mechanism to get to Bitcoin.

Yeah. So I have one more thing I wanted to touch on here. New for the Bitsy Academy, we had Knut Svanholm write us a, an article. And he, if you are unfamiliar, let me just grab the books here just a sec, right here. So he wrote Bitcoin Sovereignty through mathematics, excellent book. And he has a new one called Bitcoin Independence Reimagined. Both excellent, excellent books, highly recommend. Anyways, he wrote us an article for the Bitsy Academy just the other day. He's talking about Bitcoin time locks. Now, last week,

we dropped an article about what Bitcoin time locks are and how they work and how they kind of give like smart contract functionality to Bitcoin in an interesting way. Canute here is writing about a specific type of time lock that he would like to see come to fruition. And he goes into a little bit, I'm not going to spoil the entire article here, but it has to do with the nature of Bitcoin and how we have the half, every four years where the issuance of new Bitcoin gets cut in half and it kind of has these epochs and these These manias of Bitcoin price increasing over time and he said if you could model a time lock around that concept where perhaps every four year is a certain amount of Bitcoin gets unlocked for your family members and descendants or yourself but that amount that gets unlocked like Bitcoin gets halved or whatever the percentage you want to diminish to every single time, you could potentially

set up a scheme where you're getting roughly the same amount of purchasing power over time, even though you're releasing less and less Bitcoin every epoch. And I really like this idea. I think that it would probably be difficult to judge just how much you need to release over time right now. but as Bitcoin stabilizes over time, as more capital flows into it, and the deflation rate becomes more predictable, I think this would be such an excellent mechanism, again, to plan for the future and prevent yourself from overspending your savings. So kudos, thank you, Knoot, for writing this. And guys, again, check out the article, but also, please do check out his books.

You won't be disappointed. With that, I'm going to wrap up, you guys. Thank you so much for watching and or listening. If you're here on YouTube, do hit like, subscribe, and share. And also check me out on my other platforms that I stream to because you can't always trust YouTube. I'm on Facebook. I'm on Twitch.

I'm on D-Live. I'm on even Twitter. I stream live to Twitter via Periscope. A bunch of different things. I'm also audio only on Spotify, Apple Podcasts, pretty much every other. other podcast platform you might want to use. If you want to help out the show in another way, do hit up the sponsor, Ledin down below. Check out with Saobie wallet to help with your Bitcoin privacy or pick up a ledger hardware

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