BTC Sessions - IMF Misses The Point, IRS Pries Into Your Hodlings, Snappa Has BTC Reserves EP089

Starting point is 00:00:12 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 big shout out to sponsors of the show, leaden.io. This is where you can use your Bitcoin for a variety of different things. I first used them well over a year ago and I've been working with them ever since. I used them initially for a Bitcoin back loan. So in my instance, I was, in a pinch, I needed to get my hands on dollars, but I did not want to sell my Bitcoin for a couple of reasons. One, that's a taxable event. And two, I was worried I'd have to buy back in at a higher

Starting point is 00:01:02 price point. So I was able to deposit my Bitcoin, get a loan in either Canadian or US dollars to my bank account within 24 hours. And when I paid that back, I got back the exact same amount of Bitcoin. Now, they've got a couple other products here. They've got their Bitcoin and USDC savings accounts, which earn you interest up to 10% annually. and they've got their B2X offering, this uses the same loan mechanism to instantly buy more Bitcoin, which effectively doubles your Bitcoin on the spot.

Starting point is 00:01:31 So if you want to check them out, there is a link in these show notes down below. If you click that and opt to get a loan, you'll get 50 bucks worth of Bitcoin for free, and you'll be helping out the show in the process. And with that, let's dive into the news. So it seems that the IMF is, I guess, kind of, promoing cryptocurrencies, but in an interesting way. Now, this is not a new video that they've

Starting point is 00:01:59 released on their Twitter. This was actually originally released in 2018, but they did just repost it again the other day, likely with lots of talk and interest in Bitcoin as of late, given the kind of overall macroeconomic environment around the world. There's been a lot of interest. However, they largely missed the point. Now, I said this video was made in 2018, but the talking points look like they're coming from 2014. They are very much behind the eight ball on this one. They mostly talk about benefits in making payments. They make no reference to the fact that Bitcoin in itself was created as a way to opt out of the terrible monetary policies of central banks

Starting point is 00:02:50 themselves. And I mean, it's no surprise that they would want to skirt around that topic because they're very much interested in maintaining control of, I guess, our current paradigm that we're in. Now, a couple things I wanted to point out. So Pierre Richard also mentioned here, the video does not discuss mining or coin supply. High profile features like Crack and Strategist, Pierre Richard said, provably, provable scarcity. is what makes Bitcoin interesting. You forgot to mention that. And now, according to this video and the IMF spokesperson in it,

Starting point is 00:03:29 the advantages of using crypto over Fiat include faster processing times for fewer fees and better security for sensitive data. However, though the video says it's almost impossible to fool the system, risks include some untraceable transactions as well as many being anonymous, which also is incorrect. Most cryptocurrencies, a lot of them are pseudonymous, meaning you have like an address or a series of addresses that don't necessarily have ID attached to it,

Starting point is 00:04:04 but ID can be implied through external data points. It is very much trackable, especially Bitcoin. You can see Bitcoin as it moves around. and then they talk about, you know, bad actors and bad people using it, I guess. They don't really specify who gets to decide what actions are bad and who those bad people are. And then they talk about volatility as a negative thing and allude to like the floor crumbling beneath everything and the value going down without mentioning the invaliening. of that, which has been more often true over the course of Bitcoin's 11 years, the increase in purchasing power in relation to things like the dollar. So yeah, anyways, interesting seeing

Starting point is 00:05:00 them dive back into this kind of stuff after, I would say, a perceived hiatus. They haven't really touched on this stuff in a little while. So moving on to other centralized entities, This article from the BTC Times is talking about the IRS. So the IRS moves crypto tax section to the top of the tax declaration form. Now, in 2019, there was a question of declaring any involvement with cryptocurrency, but it was on a separate form and not everybody has to file that particular form. This is going out to everybody. And so, kind of hard to see here, but it says at any time during 20,

Starting point is 00:05:46 Did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Now, this is a simple yes or no question. There's no further line of questioning as to gains or losses or anything like that. But you've got to imagine that they're keeping a little list of anybody who's tick yes on that. Now, so the IRS, this is a quote here, but the IRS has made no secret of the fact that it believes that tax buyers are not properly reporting cryptocurrency transactions. An IRS dive into the data showed that for the 2013 through 2015 tax years, the IRS processed on average just under 150 million individual returns annually. Of those,

Starting point is 00:06:37 approximately 84% were filed electronically. Now, again, it doesn't ask you to list your actual holdings or anything like that. But it is, it is a lot that they're, they kind of take a broad look at things and they're asking a lot in a single question. They're casting a wide net is what I'm getting at. And so there was some input here from Justin Winston-A-O-Wales. I'm hopefully I'm saying that correctly.

Starting point is 00:07:15 So he describes himself as a crypto lawyer, and he said that the updated IRS form is overreaching. He said that it doesn't ask you to list your holdings, but to declare if you received or sold crypto within the year no matter the reason. This information is beyond the purview of information the IRS needs to do its job. The reason he says about that, he says that it's kind of, interaction with cryptocurrency can have a lot of different meanings when it comes to I mean mean you can you can interact with with Bitcoin in various different ways and things can be built atop Bitcoin without necessarily benefiting from the fluctuations of its price movement you know Microsoft is using the Bitcoin network to peg to

Starting point is 00:08:07 identification systems and so and so forth so I think in general there just needs to be kind of a broader review of what everything actually is and I think it's kind of too early to even tell. But nonetheless, if you're filing taxes in the US this year, well, you're going to see that question. Front and center is literally right below where you put your address. So keep an eye out for that and yeah, enjoy. Let's move on. Snapa. So this, SNAPA is a company that does kind of like online graphics creation. So if you're looking to do like social media, ad, blogs, so and so forth, it's just like an easy kind of click and drop solution for people. Now, why the hell am I talking about Snap, but they're not really related to Bitcoin in any way.

Starting point is 00:09:00 However, this tweet from one of the co-founders, I believe, his name is Christopher Gimmer. And he said, given everything going on in the global economy, we began accumulating. manipulating Bitcoin starting in March and holding it as a reserve asset on our balance sheet. My latest article explains the full reasoning behind this decision. Feedback is welcome. And man, this drop from them is a doozy. I'll read from the beginning of it and then I'll just kind of give you an overview of what they go through.

Starting point is 00:09:34 But the title, why we're holding Bitcoin as a reserve asset. The intro goes, let me ask you a question. Would you rather save money in a currency whose supply is inflating each year, or would you rather save in a currency whose terminal supply is programmatically fixed? Given everything going on in the global economy, this is a question we've had to start taking seriously as SNAPA continues to scale and produce growing amounts of free cash flow. It became even more important when our banks slashed the interest rate

Starting point is 00:10:05 on our high interest, in quotes, savings account to 0.45% earlier this year. This means that the purchasing power of our Canadian in US dollars is actually decreasing after adjusting for inflation. Fortunately, I believe we now have a far superior savings technology available to us. That technology is Bitcoin. After falling down the rabbit hole and spending hundreds of hours studying the underlying protocol and all the game theory behind it, we began steadily accumulating Bitcoin beginning in March of this year. This position now makes up a significant percentage of our company's overall cash reserves. In this article, I will explain the full reasoning behind this decision.

Starting point is 00:10:50 And he goes into great detail here. He has this history of money. He references Nick Stable is shelling out, which is an excellent article if you haven't read it. He talks about the inflation of glass beads as currency in West Africa in 15th century. He goes through a lot of different things. He's talking about the. convertibility of gold to dollars and dollars to gold. And he talks about how the U.S. dollar has lost 99% of its purchasing power relative to gold over the course of the last

Starting point is 00:11:23 century. Then he goes into Bitcoin's digital scarcity. It's 21 million supply cap. Talks about stock to flow and how the stock to flow, by the way, stock to flow referring to the available amount of Bitcoin currently tradable versus the influx of newly created. Bitcoin into the system, or if you're talking about another asset, the above-ground mine gold versus the amount of gold mined every year. So he talks about stock-to-flow and how the stock-to-flow of Bitcoin is now catching up to gold and will far surpass it, in fact doubling it by 2024 and Plan B's stock-to-flow model and the price projections with it. He talks about, again, Bitcoin versus gold. He makes some references to the bullish case for Bitcoin.

Starting point is 00:12:11 Bitcoin by BJ, which is again another great read. He talks about like qualities of money, the current macro environment. It's unbelievable again like how much he goes into it. And then he talks about the recent move by a micro strategy, which if you missed this, where were you? They literally converted $250 million of their cash reserves directly into Bitcoin. They bought 0.1% of the entire supply of Bitcoin, over 21,000 Bitcoins. He talks about Paul Deter Jones, kind of de-risking this for regular institutional investors to start diving in because he has.

Starting point is 00:12:57 And then he also talks about, yes, there is a risk with volatility. There's risks with regulatory factors, although he's very doubtful that it would be clamped down on the U.S. he states there's risks with central bank digital currencies only if they adopted a sound money principle like Bitcoin, which why would they do that? They're more likely to keep printing. And then finally he acknowledges some level of protocol risk, but again, that is kind of a small factor given that Bitcoin has been running 11 years with so much value peg behind it. It's a honeypot that just has not been broken into.

Starting point is 00:13:38 So yeah, pretty wild. I do recommend you give this a read. I'd say that this is even a great article for people that are just starting to get into Bitcoin and trying to understand the value proposition of it. He lays it all out here. It's pretty wild. So yeah, Christopher, excellent job. And I'm super happy for both you and your company. I'm sure it will be an excellent decision. as long as you maintain some low time preference. Moving on to quite the inverse, the CEO of Ryanair calls Bitcoin a Ponzi scheme after he was targeted as a fake endorser of an actual scam.

Starting point is 00:14:23 So basically, there's a bunch of scammers that have been taking the likeness of various celebrities, including the CEO, to promote a fraudulent Bitcoin auto trading site, which doesn't actually trade or anything. Anyways, in dispelling that it was actually not him, he goes on to comment on Bitcoin itself. So when asked to comment on his involvement with Bitcoin, O'Leary gave a two-to-the-point summation of his view on the scam and crypto. He says, I have never been and would never invest one cent.

Starting point is 00:15:04 in Bitcoin, which I believe is equivalent to a Ponzi scheme. I would strongly advise anyone with any shred of common sense to ignore this false story and avoid Bitcoin like a plague. This is one of those moments where this news drop, okay, so like, first I guess let's take a step back if you don't understand Bitcoin in any capacity and then you're being impersonated by a bunch of scammers trying to get people onto an online trading site that is actually a Ponzi scheme. Of course your first impression is going to be that Bitcoin itself is a scam. A lot of people start from that beginning point of assuming Bitcoin is a scam, which is a great

Starting point is 00:15:52 point to start from because you start thinking adversarially. But I do think that at a time when we just covered a company converting their reserve assets into Bitcoin and then having another CEO of a company saying it's a Ponzi scheme, I think this is one of those days that we'll be able to look back at and say the person who did the research here had the edge and it will likely pan out for them quite well versus those that don't catch on until later. So anyways, Moving on, I wanted to touch on this case from the California Courts of Appeal. And so this was an individual who sued Coinbase or attempted to sue Coinbase because he did not get access to his Bitcoin Gold.

Starting point is 00:16:45 So Bitcoin Gold was an offshoot of Bitcoin. So in late 2017, or I guess mid-2017, it became popular to take the UTXO set or the, if you're looking for simpler terms, the account balances of every person in Bitcoin and duplicate them and create a new cryptocurrency out of that. The first instance of which was Bitcoin Cash. And so since they were the first out of the door, they really tried to say, we are Bitcoin, this is the real Bitcoin. And they convinced a number of people to go along with them, which has since not really panned out, of course, Bitcoin Cash being somewhere between 2 and 3% of a Bitcoin at this point where it was way up there.

Starting point is 00:17:33 It was like, I think it got up to like 30% of a Bitcoin, something like that. So it did kind of pull some people. Bitcoin gold was another such offshoot, though it did not claim to be Bitcoin itself. It said, hey, if you have Bitcoin, you now have Bitcoin gold and you can redeem it. Bitcoin gold did obtain some value at certain points, especially in late 2017, which compared to the value today is its loss basically all of its value. But for this individual, I'll read a little bit from this summary here. But essentially, he had a large amount of Bitcoin sitting on Coinbase. Coinbase did not support Bitcoin gold and as such did not provide this.

Starting point is 00:18:22 air dropped coin to this customer. They said it was the security risks, so and so forth. Anyways, he tried to sue and say they were entitled, or they were obligated, rather, to provide this air dropped coin to him. This judgment, though, says otherwise. So let's read a little bit. Coinbase is an online digital currency platform that allows customers to send, receive, and store certain digital currencies. Archer, the plaintiff, opened a Coinbase, account to purchase trade and store cryptocurrency. On October 23, 2017, a third party launched a new cryptocurrency called Bitcoin Gold. Coinbase monitored and evaluated Bitcoin Gold's network and informed its customers via its website.

Starting point is 00:19:06 At this time, Coinbase cannot support Bitcoin Gold because its developers have not made the code available to the public to review. This is a major security risk. In 2018, the Bitcoin Gold network was attacked by hackers who stole millions of of dollars of funds from trading platforms and individuals on its network. Archer sued Coinbase based on Coinbase's failure and refusal to allow him to receive his Bitcoin gold currency and Coinbase's retention of control over his Bitcoin gold. The trial court rejected his claims of negligence, conversion, and breach of contract on summary

Starting point is 00:19:44 judgment. The court of appeal affirmed. Archer failed to establish the existence of an agreement by Coinbase, to provide the Bitcoin gold to him and failed to demonstrate Coinbase acted in any way to deprive him of his Bitcoin gold currency. So this sets the precedent that any entity, any third party that is holding cryptocurrency

Starting point is 00:20:07 on your behalf, whether it be Bitcoin or anything else, is in no way obligated to provide any forked or any airdropped coin in relation to your actual holdings. So if you were holding Bitcoin, technically at the time of the creation of Bitcoin cash or Bitcoin gold or anything, and the exchange you were on did not provide you those newly created coins that would have been yours had you been holding it in your own wallet, they're under no obligation to do so, and they are not at fault for not doing so.

Starting point is 00:20:41 So I guess the lesson here is if you want to claim airdrops and forks and things like that, you got to have it in your own custody. Furthermore, it also seems to indicate, at least the way that I'm looking at it, potentially, if a custodian deemed a fork of a coin like Bitcoin to be something else at some point in time. Like let's say if the Segwit 2X proposed fork had gone through, which was a number of companies and miners and a large group trying to change. the Bitcoin Protocol, had that gone forward and Coinbase said that this is Bitcoin, even though the futures markets had it priced at a quarter of the price of actual Bitcoin, they would have been under no obligation to provide you the original coin. I think that's the way this reads. That's how it seems to me. Maybe I'm misreading it, but very, very interesting here. Either way,

Starting point is 00:21:49 if you don't need to have your Bitcoin with a service, if you're not getting an actual service for it or you're not active, if you're not a traitor, get it into your own custody. That is the safest way to do it, not just from digital hackers that are targeting honeypots, but in instances like this where the law is having trouble catching up to what's actually going on.

Starting point is 00:22:11 So keep that in mind, please. Moving on, Citadel 21, this publication, I really do love it. It's so eclectic and weird. They just, two things. They just dropped their fifth volume, which is excellent. I highly recommend you check it out. But they also just added their shop. And there you can get physical copies of the magazine.

Starting point is 00:22:36 I have already bought volume one. And I am planning on getting a subscription to this. Because just to have, Bitcoiners don't get a lot of, we don't get a lot. of souvenirs when it comes to like physical stuff because Bitcoin is intangible. So whenever something quality like this comes out, I want my physical copy. Now there are only 1,000 copies of volume one being made.

Starting point is 00:23:05 I believe they've already sold 700. So if you're looking to get one, you better get on it fast. And that 700 number, I think that was from the other day. So they may be even closer to selling out. So do check them out. I'll have a link anyways if you want to check it out, but it's Citadel21.com.

Starting point is 00:23:23 Either way, you can read it for free online, but if you want that physical coffee, go grab it. Last couple things here, new article from the Bitsy Academy, from the guys that verify BTC, so thank you guys at Verify, how to audit Bitcoin supply and why it is important. So it goes through kind of the importance of,

Starting point is 00:23:44 as I said, why is it important to audit Bitcoin? It gives you the exact command, command line thing to type in and how to interpret the data that gets spit out by your Bitcoin node. And then it goes on to talk about the recent debate around Ethereum and hashtag supply gate, which was when Pierre Richard asked somebody to audit the supply of Ethereum for him, and everybody was coming back with different numbers. You even have Vitalik dropping just the coin market cap numbers relying on a trusted third party. We later found out that Vitalik does not run a full archival node himself from an interview on what Bitcoin did.

Starting point is 00:24:26 Yeah, anyways, eventually they ended up being able to actually verify the supply of Ethereum decisively so. Somebody put together a script. However, just for kind of a couple data points of how much more difficult it is, and by the way, it will become much more difficult with ETH 2.0 whenever that happens to drop. But essentially, running a node, in this case, there's an analysis done by Jameson Lomp. So a $2,000 USD desktop computer with an internet high-speed connection took five days and 15 hours to sync with the Get implementation of Ethereum. Okay, so, so yeah, five and a half days essentially to sync with Ethereum.

Starting point is 00:25:14 Ethereum node with that level of hardware. With the same level of hardware, it would take about six, between six and seven hours to sink a Bitcoin full node. Furthermore, to actually run this script and audit the supply of Ethereum, it's posited that it took a few days to actually run those scripts on the entire history of Ethereum. Whereas when you do the command in Bitcoin, it takes anywhere from 20 seconds to five minutes. So the barrier to entry of being able to verify

Starting point is 00:25:50 and run the numbers yourselves on Ethereum is much, much higher and that's only projected to get much more difficult with Ethereum 2.0 if and when it drops. So anyways, worth a read, take a look, and if you're running a node, run the numbers. And lastly, if you didn't see it over the weekend, I dropped a tutorial on something called Lilly Wallet.

Starting point is 00:26:14 This is a multi-signature wallet that is very, very user-friendly. It is their 1.0 release. So very first non-beta release. So it's very new. It works well. There's features, of course. I'm excited to see them eventually implemented. But this type of interfaces, I think, is what's needed for this type of security to make it user-friendly and easy for the masses to do if they have hardware wallets.

Starting point is 00:26:43 So I did this with a treasurer, sorry, I did it with a Ledger NanoS, a Ledger NanoX, and a cold card. And the cold card I did something called partially signed Bitcoin transactions where you actually doing the SD card. And yeah, so anyways, I really enjoyed it. If you want to check it out, there will be a link to that tutorial down below. It's, yeah, I recommend checking it out even if you don't have enough hardware wallets. By the way, I should say, even if you only have one hardware wallet, you can actually create different passphrases on that one hardware wallet and use it as three different signatures, one with each passphrase, in order to at least achieve and play around with multi-signatures.

Starting point is 00:27:28 So yeah, play around, see what you can do. Anyways, guys, I'm going to wrap it up there. Thank you so much for watching and or listening. If you are here on YouTube, please remember, like, subscribe, share. Those three things are so important. and I can't stress them enough when you do them. It really, really helps. If you want to help out the show in another way,

Starting point is 00:27:48 you can hit up the sponsor I mentioned down below. That was leaden.io and grab that 50 bucks with a free Bitcoin if you opt to use them. And if you really, really loved what you saw, you can always drop me a Bitcoin Lightning Network tip at my tippin. That is t-I-p-p-in-n dot me slash at BTC sessions. And with that, I'm out. have yourselves a wonderful day, a wonderful evening, wherever you are, and I'll see you next time for your daily session.

BTC Sessions - IMF Misses The Point, IRS Pries Into Your Hodlings, Snappa Has BTC Reserves EP089

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