BTC Sessions - GaryVee Cancels Coingeek Talk, Institutional BTC Interest, Lightning Vulnerability EP099

Episode Date: September 23, 2020

SUPPORT THE SHOW: LEDN offers Bitcoin backed loans – Sign up and get $50 free https://bit.ly/331oLDX Get Wasabi wallet and enjoy your Bitcoin privacy https://wasabiwallet.io/ Buy a Cobo Vault to secure your Bitcoin! https://bit.ly/2GgMFlH Cobo Vault Tutorial: https://www.youtube.com/watch?v=JnRjvZKulrA Crypto Cloaks: Get the BEST Bitcoin swag out there https://www.cryptocloaks.com/shop/ 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: Venezuela to seize means of production with Bitcoin miners https://decrypt.co/42717/venezuelan-authorities-to-govern-all-bitcoin-mining-by-decree Institutional investors expect more Bitcoin allocation https://decrypt.co/42464/institutional-investors-buy-more-bitcoin-survey Bloomberg intelligence analyst: in a world of QE, Bitcoin is a standout asset https://decrypt.co/42610/bloomberg-intelligence-analyst-calls-bitcoin-a-standout-asset Report shows higher percentage of financially illiterate people own “crypto” than those well versed in finance https://cointelegraph.com/news/are-we-dumb-financial-illiterates-twice-as-likely-to-own-crypto Bermuda Bitcoin ETF launches https://decrypt.co/42675/bitcoin-etf-finally-launches-bermuda 3iQ Bitcoin Fund https://3iq.ca/the-bitcoin-fund/ ECB doesn’t like stablecoins https://decrypt.co/42659/stablecoins-like-tether-are-confusing-says-european-central-bank Lightning network vulnerability https://cointelegraph.com/news/developer-reveals-biggest-unsolvable-lightning-attack-vector

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 want to give a shout out to sponsors of the show ledden.io. Now this is where you can use your Bitcoin for a variety of different services. They have their Bitcoin back loans. This is where you can get Canadian or US dollars in your bank account using Bitcoin as collateral. I've used this. It really saved me. This is particularly useful if number one, you need to get your hands on dollars. Number two, you don't want to sell your Bitcoin because that's taxable. And number three, you may be worried about having to buy back in at a higher price point. So here, again, you can

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love it because it is 100 percent air gap in an easy to use fashion so air gap means that you never plug this thing into any internet connected device. Everything is entirely offline and done via QR code between your device and a phone, a computer, whatever you want, but it's all QR codes. So it's never plugged in. Your keys are never compromised in that way. Now, they have a secure element. They have, of course, that protects your private seed or your seed phrase, your private keys. The firmware is open source. And one of my favorite things about this is that it is interoperable with all of my favorite wallets. You can use it with Bitcoin Core. You can use it with Withabi, my favorite desktop wallet. And you can use it with Blue Wallet, which is my go-to-day

mobile wallet on, and it's on iOS and Android. So be sure to check out Kobo Vault. And in fact, they have a giveaway going on right now. If you want to get a Kobo Tablet Plus, which is a steel seed plate to store the backup for any wallet that you may have, all you need to do is get on Twitter, retweet the show, tag myself and Kobo in that tweet. Let us know why you want one. And I will announce winners. I will continue doing this all the way through November. So keep an eye up for that. With that, let's dive into the news. So I had to wear my special Craig Wright is a fraud shirt regarding the first story here. I had to bring it up because Peter McCormick tweeted it out recently, does Gary V. understand what he has signed up to present at? Gary V.

or Gary Vaynerchuk is kind of like an online social media marketing mogul. He's written a few books about kind of, I guess not so much self-help, maybe kind of like motivational, but he's pretty popular online. He's kind of mastered the social media game, whether or not you're into his content totally besides the fact. But he was slated to speak at a conference from Coin Geek, which is kind of in cahoots with the likes of Calvin Air, Craig Wright, N-Chane, all of the guys that basically center around Craig Wright as being Satoshi and their shit coin basically that they claim is the real Bitcoin.

Of course, Bitcoin SV or BSV has absolutely dropped off a clip. it's worth like one, somewhere between one and two percent of a Bitcoin at this point. So obviously the market has not seen eye to eye with Satoshi's vision. But besides the fact, they had Gary V. Slated to speak at this conference. And so Peter McCormick just lightly jabbed and said, hey, do you know what you're doing? He said, hey, Gary, this isn't the real Bitcoin. Check the criminal record of the guy, of the guy two to the left.

and check the criminal record of Calvin Air paying your fee. Someone helped this guy. He had Jan Pritzker from Inventing Bitcoin, author of that. And with Swan Bitcoin, he said, Gary Vee, you are getting scammed, research these guys. He replied to that, said, doing so as we speak. And then even James and Lobb jumped in with an article that he wrote called How Many Wrongs Make a Right, which kind of documented all of the fallacies and outright lies that Craig. has made over the past number of years.

Anyways, besides the fact, quickly, relatively quickly, I think within 24 hours, we saw this pop up and you see CoinGeek the next day saying after further consideration, Gary has decided that given all the intricacies of Bitcoin, he is unable to speak on a panel about social content creators moving on-chain to make money without further understanding the topic. We fully respect and support.

Gary Vee's decision. Yeah, I mean, obviously that wasn't, was not the reasoning behind it. Obviously, he kind of saw the red flags go off from all these bitcoinsers saying, like, whoa, what are you doing? You might want to look into this a little bit deeper, and he got the hell out of Dodge. So, yeah, like, again, some people were saying this is kind of cancel culture. I think this is just bitcoinsers doing the Bitcoin thing. and being like, yo, here's a bunch of stuff to read.

You might want to look at this. And, you know, he made his own decision, whatever. But I do find it relatively amusing. I'll leave it at that. Let's move on. So Venezuelan authorities to govern all Bitcoin mining by decree. A new law mandates registration and centralizes control of all aspects of cryptocurrency mining, including the distribution of profits.

This from decrypt.com. Let's read a little bit that we have here. Actually, we're going to read through a lot of the details here. A decree published on Monday by the Venezuelan authorities mandates that all Bitcoin miners join a national pool and imposes regulations on every aspect of their activity, according to local news outlet kryptoniacias. I'm not sure how to say that. Venezuela's cheap electricity and inflationary. economic policies have made it the primary spot to mine Bitcoin in South America.

While the new decree proclaims the legalization of crypto mining, it joins a raft of recent legislation that increasingly seeks to centralize and control the mining of the world's most popular cryptocurrency on national territory. Okay, now, ASIC manufacturing, mining farm construction, the import of equipment and the distribution of funds will all be regulated under the law issued by the National Superintendency of Crypto Assets and regular related activities or son-a-crip, we'll call it. The authorities claim that Bitcoin mining has paved the way for increased speculation on the value of the dollar and circumvention on the country's financial controls as such a registry of miners or RIM has been established to

process licenses via the web. It will include equipment manufacturers and those involved in constructing mining farms. Anyone operating outside the pool will be risking a hefty fine. The registry has been the source of alarm and frustration for crypto entrepreneurs in the country. The fear that disclosing their income and activity might attract the attentional of criminals and corrupt government officials, I would be more worried about the latter, and have complained about extortion attempts. Makes sense. the state's attempts to centralized mining also go against the core philosophy of Bitcoin. A state-controlled mining operation is vulnerable to the pool operator, presumably the state, collecting taxes from miners, freezing their funds, and delaying payment.

The very freedom Bitcoin is meant to offer. Yeah, so basically, you see a country, this is kind of a double-edged sword. No matter what, if you're going to have freedom of mining everywhere, you're going to have, the state trying to grasp at straws and trying to hold onto that power. Particularly, you're going to see the uptake of things like Bitcoin mining in the most hard-hit areas when it comes to monetary policies gone awry, like Venezuela, where they've had million-plus percent inflation. So here you see people trying to get opt out of this system by becoming Bitcoin miners

and participating in a non-state funded or created national, well, I guess, global currency. But then you see the state within that jurisdiction clamping down saying, hey, no, we're going to take essentially what they did with every other sector. They seized the means of production and ruin the industry that was actually doing well for the individual. involved in it. So I think it's no different here. It will happen in certain jurisdictions. Those jurisdictions that are a little bit more freer, this won't happen. There may be mild regulations, but this is the most extreme reaction. And you'll probably see it in jurisdictions that have similar problems and have similar government overreach that are looking to maintain

power. I don't think this holds, though. I think that It will be difficult to fully clamp down on this and that's kind of the beauty of Bitcoin because as long as you have access to power, it's very difficult to nail down where these particular farms are. And I mean, you can always, they can pretty much pop up anywhere. So we will see how this all plays out, but it does suck to be a minor in Venezuela now. with this kind of uncertainty. And if it really gets bad, then that hashing power will just migrate elsewhere, realistically. Moving on here, institutional investors say

they'll buy more Bitcoin from a survey. So a new report from cryptocurrency insurance company, Everettas, suggests that institutional investors plan to increase their focus on crypto assets in the next five years. Evertas surveyed investors to see to oversee that oversees some 78.4 billion worth of collective assets

and 64% of respondents reported that they expect a slight rise in crypto investments from the likes of pension funds, family offices, insurers, and sovereign wealth funds. Meanwhile, a further 26% of respondents believe they will be dramatically increasing their investment in Bitcoin

and other cryptocurrencies over the next five years. All told, that's 90s. 90% of surveyed institutional investors that expect some increase in crypto holdings in the next half decade. According to the report, the survey was conducted in July by market research company Pure Profile and included 50 total institutional investors split evenly between the U.S. and the UK. Asked why they anticipate increased exposure to crypto investments. 84% of respondents said that improved regulatory infrastructure will make them more viable, while 80% said that the expanding crypto market will improve liquidity. Furthermore, 76% added that they believe there will be more mainstream financial services

companies and fund managers getting into crypto. And the same percentage said that they believe negative interest rates and yields on bonds will also push them into or further into crypto asset investments. Now, this article is full of the word crypto and not so much Bitcoin, but I have my own inclinations of what I believe will go on here. I think you're going to see the smart money, like right now, like Michael Saylor with Microstrategy, the guys at Snappa HQ in Canada, even the Tahini guys in Canada, they're going to be allocating. money into Bitcoin specifically because they have a better understanding of the space. You'll have the other people that see that now and say, hey, we need to move on this and it will take them time to get the necessary approvals and pieces in place to move into this sector.

Michael Saylor was saying from the time that they wanted to do it to the time that they could execute on it was between three and six months and they were pretty nimble. saying maybe if there's an influx of this happening, don't expect it for another, at least three to six months before you start seeing more and more people. I think at that point, after the smarter money that understands what the true value proposition is starts getting in, then you get the laggards, the companies that are like, hey, this is big and maybe we miss the boat on Bitcoin. Maybe we can diversify. And that's where you see the poor allocation of money into bullshit crypto diversification funds or baskets.

And those people are going to get fucking wrecked because they'll be hitting it around kind of like the peak mania of the bull market. And they'll be holding some pretty heavy bags as shit pans out through the bear market. The people that were starting to accumulate Bitcoin now when the bull market hasn't even really gotten into full. So we haven't even hit previous all-time highs yet. I think they'll be fine because, you know, if a bull run happens, they're probably never going to see price points in and around this range within a couple of years ever again.

Whereas the people that get in late in a bull market and diversify into whatever the flavor of the week is being offered by these diversified portfolios and these funds and baskets of cryptos, they are going to get destroyed. I did an article last year, and I did a post-mortem on Brian Kelly on CNBC. He did a well-diversified crypto portfolio. And the long and the short of it is two years later, you came out on top in terms of dollars. So if you dropped 10 grand into it, you came out with around 13 grand. The thing is, when you dove in coin by coin, and I think the allocation was 30% Bitcoin, 15% Ethereum, 15% Ethereum, class.

And then there were like a couple like 10% XRP and like and then five percent into some like long shot once. Only Bitcoin made money. I think it was Ethereum and Monaro were pretty much break even and everything else lost massive massive amounts of money. So the only reason for that $3,000 gain or that 30% gain was Bitcoin and everything else just destroyed your portfolio. And so the opportunity cost of not just having Bitcoin through that time period was you literally lost half of the Bitcoin you could have had. And I anticipate much of the same to happen through this same cycle because there's a steady flow of new people not understanding that this has all played out twice before. Well, I mean, depending on what your time frame is, but I'm talking about kind of these four-year having cycles. So we will see. I could be mistaken, but that's my inclination. Now, interesting here, Bloomberg intelligence analyst calls Bitcoin a standout asset.

Just a quick summary here. Mike McClone, senior commodity strategist at Bloomberg, examined Bitcoin's potential upside on Twitter today. He described Bitcoin as a standout fixed supply asset that is set to be a primary beneficiary of equity and bond prices. McLone has previously spoken about how Bitcoin and the stock market relate to each other. Cryptocurrency typically does not have much of an effect on equity prices, he has said, but Bitcoin does stand to benefit from any stimulus caused by the stock market trades extending beyond their usual timeline. Bitcoin is a standout fixed supply asset that should be a primary beneficiary in a period

of limited potential further upside in equity and bond prices in our view. QE juxtapose versus tightening Bitcoin supply leaves adoption and demand as the top price outlook metrics, McClone said. In a conversation with Decrypt, Jason Dean, an analyst at Quantum Economics, said McLone is alluding to the hardness of Bitcoin supply when compared to all other assets, especially bonds and equities, which he may also be implying are overvalued. As Bitcoin's total supply is known at all times, future forecasts can be calculated using precise figures, leaving only demand to influence.

the crypto assets price and value. He believes, as I do, this will be determined by ongoing adoption rate and institutional demand, Dean added. So yeah, again, kind of a bullish outlook, but in contrast to that, you had a report from the Central Bank of Canada. Now, this is funny, because you have all the analysts that are starting to clue into this, and then you have a central Bank chiming in to the negative. And so a report from Canada's central bank shows that while most Canadians are knowledgeable about basic finance and Bitcoin, few actually hold any crypto assets. According to the results of the Bank of Canada's 2019 Cash Alternative Survey published in August 2020, financial literacy is positively associated with the awareness of cryptocurrency, but negatively

associated with ownership. Now, this does go on and it talks about how. how 93% of Canadians with high financial literacy are aware of cryptocurrencies as opposed to only 72% of those with low financial literacy. Now conversely, 8% of those with low financial literacy reported they own cryptocurrencies compared to 4% of Canadians with high financial literacy. Now, the interesting thing about this is that they go on to say that, some data suggests that many investors are shying away from crypto due to a lack of cryptocurrency literacy. So trading and investment platform, E. Toro conducted a survey in 2018 that revealed

44% of online investors polled were not trading cryptocurrencies because they felt they lacked the proper education. A similar study conducted in 2019 by Grayscale found that U.S. investors would be more likely to invest in Bitcoin if there were more. educational resources available on it. So what I'm seeing here is across the board, not a lot of people have or own Bitcoin. The people that are more financially educated are are more likely to know about it, but less likely to invest in it. And they cite the reason as being uneducated on it. So they know what it is. They're aware of it. of it, but they need more information before they dive in, which is kind of what we've seen out of some of these institutional players. They wait and they try to learn before allocating,

like a lot of institutions, they won't touch stuff until it's well over $100 billion. Then they maybe start to pay attention and then maybe they start to allocate, but that takes years. Whereas you get the average Main Street person who doesn't know much about finance and they see the ups and downs of the markets and they see dollar signs and they just go ahead and they just go buy it. And it's a lot easier for a nimble individual person who just wants to roll the dice to go and jump on something like Coinbase, be inundated with shit coins and just be like, hey, I'm going to roll the dice on all of these and try and play these coins. Well, I think that's kind of why you see, you know, double the number of uneducated people

having easily dived in versus the people that want to be prudent and make the right decision waiting and doing more research. So again, I think that the data, the analysis of what's really happening here is a little bit off in that the smart people, the people that are already well educated in traditional finance are waiting to get better educated in what's happening with cryptocurrency. My inclination is that they will, again, as I alluded to in the previous stories, they will come to rest on Bitcoin as they see that it is actually solving a problem. And a lot of these other coins are just kind of iterative, but iterative on Bitcoin,

but have made massive tradeoffs in the true value proposition of kind of replacing or being an alternative to central bank currencies that have been debased and have no control from regular citizens. since. Anyways, let's move on. Same kind of realm, but a Bitcoin ETF finally launches in Bermuda. So, hash decks, a Brazilian-based fund manager and American Stock Exchange, NASDAQ, have launched a cryptocurrency ETF to be listed on the Bermuda Stock Exchange. A crypto ETF will allow traditional investors to get involved in trading digital assets. U.S. Securities and Exchange Commission has rejected several Bitcoin ETF. applications within the US.

Now, so the US, there's been a lot of hype around Bitcoin ETFs, or there was, that is very much dissipated because there was just round after round of rejections from all of these proposals from various different companies. Some of the, like the Winklewoss twins with Gemini were one of the first to put forward an ETF, and they've just been kicked out of the door over and over and over again. Now, there are exchange traded products slightly different. different in the UK and in the EU, but Bermuda has the first ETF, really. Other than you do have a fund in Canada that launched back in April called the Bitcoin Fund

or QBTC, and it was put together by Fred Pai at 3 IQ Digital Asset Management. So this has been listed for quite a few months here in Canada, and it allows people to get Bitcoin into your... What's the name of it? Oh, God. Anyways, it's basically a tax. Oh, tax-free savings account. That's what I was looking for. It's basically a tax-sheltered account where you don't have to pay those capital gains,

or rather, they have already been covered. It's post-tax that goes into this. So, anyways, yeah, cool to see that in Canada, but the U.S. has very much been lagging on that. my guess if if i can be so bold i think that's also going to be one of a number of contributing factors in this next bull run i was very skeptical that any sort of a bitcoin ETF would get through at all through the last bull run through the last bear market at all i was thinking that bitcoin goes through its cycles and then the market finds a reason, regardless, like the cycle will just do its own thing, and the news tends to follow

the cycle, as in what gets highlighted in the news ends up being attributed to the price of Bitcoin, whereas Bitcoin is really just following these cyclical four years around the supply. And these cycles tend to, you know, the good news will congregate around a natural Evan flow of the price. And I think that, oddly enough, the timing on this, we may see Bitcoin ETFs in the next six, 12, 18 months that will contribute to the mania of another Bitcoin bull run. Again, I could be totally wrong, but just so many things are so similar to 2016. I'm very inclined to believe that this will coincide with not cause, but further add to the FOMO that already exists because of the restriction of supply that happened with the Bitcoin having this past May.

So we'll see. We'll see how good of a call that is. Okay, moving on from decrypt. Stable coins like Tether are confusing, says European Central Bank. Oh, man. Okay. Anyways, this digital Euro idea or any digital fiat currency and the one that the ECB or the European Central Bank is contemplating could give rise to financial stability risks if its use became widespread and its integration with the financial markets tangled beyond repair. Financial stability risk doesn't sound stable at all.

This claims the ECB could occur because of a liquidity run. The idea is this. Put up some regular Fiat euros as collateral for some digital crypto euros like Tether. If its holders believed that the actual euro would lose value, then people would redeem their crypto euros for the real euros and dump the real ones on the market. In these events, liquidation of assets to cover redemptions could have negative contagion effects on the financial system, said the researchers in this report from the ECB. widespread stable coins such as Tether or USDC could also cause systemic risk given that it is prone to manipulation among other things.

And if a stable coin became an alternative store of value, which the ECB considers less plausible, this would reduce the ability of a central bank to intervene in markets through monetary policy. So basically, this whole report here from the ECB is outlining the fact that they don't like stable coins because, because it kind of takes their hands away from the dials and disallows them from deciding what happens with their own currencies. Yes, it's like a derivative of the, you know, the euro or the dollar. There's more counterparty risk injected there. But it allows markets to be more free and people to decide the value of these currencies. and in an environment where you have just massive amounts of central bank printing and in capital injections all over the globe, there is really no reason for these currencies to have real value. You don't see as much inflation in regular consumer goods yet, although you do see some as you see UBI and stuff start to roll out, but you do see massive asset inflation.

You see things like stocks, housing, gold, really anything, even like bonds that have like dick all for yields, stuff like that is going up. So anything that you actually really want, anything that's going to retain your purchasing power or, you know, or just like keep it flat in not even in thinking about inflation, the cost of those assets are going up. and so naturally the value of these currencies in all this printing is going down they don't like the idea that somebody could actually sell off a whole bunch of a currency and potentially tank the value of the euro or any other digital version of a central bank issued currency so freely that's what it seems to me anyways one last thing I wanted to touch on here a developer reveals biggest unsolvable lightning attack vector. Okay, so this was an article talking about Wombo channels on Lightning Network.

Okay, so I know this will need some explanation for individuals. If you're unfamiliar with Lightning Network, effectively a way of locking Bitcoin between two consenting parties, almost like a pipe in which you have Bitcoin and it can flow to and from those two parties easily. This has turned into a huge net. network of pipes that are interrelated and people can send payments very, very easily for pretty much instantly for next to no cost. Now, initially, Lightning had limits on the amount of the amount of Bitcoin that could be

locked up in a single channel and the amount of Bitcoin that could be sent in a single transaction. There were large enough limits, but that has effectively been removed with something called Wombo channels where you could just open massive channels with individual. as long as they're consenting. This effectively can lock up, this attack can lock up Bitcoin for periods of up to two weeks. So I'm going to read a little bit from this. It gets a little technical, but I'll try and break it down a bit.

Okay, so independent Bitcoin lightning developer, Juice Jagger, or Yeager, has outlined an exploit of the micropayments network that could result in channels being compromised with very little effort and negligible cost. However, he said he's hard at work on a possible solution. Yager specifies that the attack could be carried out on Wombo channels, which essentially allow larger transactions between mutually agreeing parties on the Lightning Network. A Wombo channel removes the limit to the total amount of Bitcoin that can be held in a regular Lightning Channel, which is around $7,000,000.

$760 at today's prices. It also removes the approximately $450 limit to how large an individual payment can be. Yager said that the Wombo channels can be exploited because the channel cannot hold more than 483 hash and time-locked contracts.

So these are the little contracts that say when you close these channels, who gets what Bitcoin? So if I have a channel between myself and you and we have, say, 10 Bitcoin locked up between us and we're transacting goods and services back and forth and you know I give you a Bitcoin you give me a Bitcoin back and forth. The final state of that channel is whatever the latest HTLC or the latest contract states, okay, well after all of these

transactions back and forth, it should be settled that I have four Bitcoin and you have six. Okay, so basically, if there's too many of these contracts going on between channels, it can bog down the network and lock up this Bitcoin until the channel is effectively closed after X amount of time. So now he did say that they're looking to implement something kind of like a firewall that would prevent this type of behavior. It's in the works. Again, lightning is still pretty new.

it just launched in 2018. It's made a lot of leaps and strives. Since then, it's become increasingly easy to use. I know because I used it the moment it came out. And then I've been using it ever since. I use it. I'd say every two to three days I'm doing lightning transactions at this point, which is more often than I do regular Bitcoin transactions.

So anyways, obviously this is not affecting the main network of Bitcoin. that is unaffected. And that's why I'm not as worried about things like this on Lightning. Yes, there are funds locked up there. But the idea is to innovate on Lightning to not put at risk the main core network of Bitcoin. So I'm sure this will be solved over time. But it does go to show that, again, you've got to be careful with development. You've got to be careful with how much money you have sitting in Lightning.

I use it as kind of like a spending back and forth platform for smaller transactions. I don't sit a lot of my Bitcoin in it. And I would advise the same of you. Like maybe a few hundred bucks if you're playing around, but don't have too much sitting there because it's still new. But nonetheless, still love Lightning. If you haven't played with Lightning, go check out Phoenix Wallet.

That is my go-to-day Bitcoin Wallet. It's non-custodial and it's still very easy to use. And you can receive a regular Bitcoin transaction to it and instantly have it on Lightning. You can also send a regular Bitcoin transaction out of it and it swaps from Bitcoin, or sorry, it swaps from Lightning to a regular Bitcoin transaction without you having to think.

So very, very cool there. Anyways, guys, I'm gonna wrap it out there. Thank you so much for watching and or listening. If you are here on YouTube, do hit, like, subscribe, share, all of those things. Really, really do help. I can't stress that enough, so please do. If you want to help out the show in another way,

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And with that, I'm out, have yourselves a wonderful evening or a wonderful day wherever you are. I'll see you next time for your daily session.