BTC Sessions - Lopp Token Blowback, BTC Index Fund, RunTheNumbers Day EP090

Starting point is 00:00:14 Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC sessions and this is your daily session. Hodel their Bitcoin. Before we dive in, big shout out to sponsors of the show, leaden.io. This is where you can use your Bitcoin for a variety of different services and I've been using them and working with them for well over a year now. The first thing I ever used of theirs was a Bitcoin backed loan. So in my instance, I was in a pinch, I needed dollars, and I didn't want to sell my Bitcoin for a couple of reasons.

Starting point is 00:00:55 One, that's a taxable event. And two, I was worried I'd have to buy back in at a higher price point. So here I was able to deposit my Bitcoin. I got a loan to my bank account in Canadian or US dollars within 24 hours. And when I paid that back, I got back the exact same amount of Bitcoin. Now, they do have a couple other offerings. They've got Bitcoin and USDA savings accounts with interest rates of up to 10%. And then they've got their B2X offering, which uses the same loan mechanism to

Starting point is 00:01:23 instantly buy more Bitcoin. So effectively, you're doubling your Bitcoin on the spot. So if you want to check them out, there is a link in these show notes down below. If you click that in OnTicket alone, they'll give you 50 bucks worth of Bitcoin for free. And in doing so, you also help the show at the same time. So be sure to check them out. And with that, let's dive into the news. So Twitter got a little bit salty yesterday. Let me just kind of break down what happened. James and Lopp is a pretty, I would say, well-respected individual in the Bitcoin community. He's done a lot of great things. He's developed a lot of great products and services and worked with products like CASA, and, which is like they sold the full nodes for a while, which I had a CASA node. They also do

Starting point is 00:02:12 collaborative custody where they hold a key and you hold two. And so you have to, you have like that fallback in case you lose one of your hardware wallets, so on and so forth. Now, Jameson Lopp has previously also been a critic of the ICO craze and Ethereum, things like that. And so what kind of left a bad taste in people's mouth was the other day he tweeted out this, not an equity offering, not your mama's ICO, a guaranteed share of cash flow. And then this website here, token.inx.co, which ended up being an IPO. So not an ICO, an IPO, this is an initial public offering for an actual company, which is INX limited. They are going to be an exchange.

Starting point is 00:03:05 And the way it works is it's token holders basically get a share of the revenue of the company. Now, this is regulated by the SEC, the Securities and Exchange Commission in the U.S., so it's got regulatory approval, and it had to obviously jump through hoops for that. But it is tokenized, and it is tokenized on Ethereum. And furthermore, Jameson Lopp was an advisor, along with some other Bitcoiners, may I say, to INX and got or had the option to buy tokens at a severely reduced. rate and what is that severely reduced rate? They got the tokens, if they bought all of them, they had access to buy, depending on who you were, a certain number.

Starting point is 00:03:55 Let me just pull it up on this other article here. Okay, so Lopp himself was able to buy up to 250,000 tokens at a price of one cent per token. Now you may be wondering, well, what are the tokens going for when they are listed? when they are listed as an IPO, well they're gonna go for 90 cents. So that's a 90x return on that,

Starting point is 00:04:22 whatever amount of tokens were purchased. Now other people that are listed here, Mark Yusco, Stefan Jespera, Alina Venova, Juri Pras, I'm not familiar with, Samson, Mal from Blockstream, Jason Moon, and Chris Barrett. Now, like Alina and Samson haven't tweeted out promoting this from what I've seen thus far. Actually, Samson even had like a tongue in cheek.

Starting point is 00:04:49 I only advised on this board because I was promised it would eventually migrate to liquid and off of Ethereum. So again, so there's a few things to consider here. Number one, is it a little bit hypocritical to promote a token that is listed at top, Ethereum after heavily criticizing Ethereum through and through, I would say yes. The thing that isn't, again, it's nuanced here. I'm not a big fan of this because, like, the idea itself, I don't mind the idea of being able to buy part of an actual company, like a share in a company, and have dividends and stuff paid off that and have it in a way that you can digitally hold it yourself because the reason

Starting point is 00:05:51 behind that is if you're holding an actual share of a company yourself in your own custody, it prevents the re-hypothecation or the fractional reserve of your company shares, which regularly happen in the securities industry. If you buy stock in a company, first of all, you don't actually own that stock, but secondly, that stock gets lent out again and again and again, effectively inflating the supply of the stock itself. Regardless, this company, basically this IPO, it's a share of revenue that these tokens will end up paying out. But again, the exchange itself has not yet even launched yet. The IPO, I suppose, did launch. I guess the interesting thing about having a security, an actual security that you can hold yourself is, again, trading it peer to peer, so not having to go through a centralized stock exchange to do so.

Starting point is 00:06:55 But then again, also the lack of rehawk publication if you're actually holding the stock certificate or token itself. But having it listed on Ethereum, yes, a little hypocritical. Having it listed on Ethereum, yes, a little hypocritical, having it And also the, I guess, 90x markup from the, I guess, advisory price to what it's going to be launched for that does raise some eyebrows. But how much of a departure is it from what currently goes on with IPOs? Probably not much. One of the big problems with the ICO craze was that they were basically non-promises. you are buying useless tokens that represented nothing and carried no obligations with them. I suppose you can look at this in a different light in that there are obligations, regulatory obligations

Starting point is 00:07:52 upon launch of this actual token. Now, whether or not this company ever actually makes enough money to pay back the initial investment of 90 cents per token is an entirely different matter. you know, I look at it and it doesn't seem attractive to me whatsoever. But I do think that a lot of people jumped on this and said, well, what the hell are you doing? You're promoting literally an Ethereum token security or not. You've been a very vocal critic of this kind of stuff previously. So I can definitely see where it's coming from, but it's definitely not, there's more nuance to it than just like this is a shit coin. It's different than an ICO because it's SEC regulated,

Starting point is 00:08:38 and that was part of the problem with ICOs in the first place. But even still, the blowback on Twitter was, was, there was lots of it. Yeah, it was pretty wild. I, if I can even, let's see here, I want to show you one thing about the tweet from Jameson Lopp that I found hilarious, which was just, just the response. Let's just pull it up here. Here we go.

Starting point is 00:09:13 Okay, so Jameson Lombe, sorry, I should have had this ready, but I can't not show this because it's kind of too funny. There we go, okay. Bitcoiners have been doing this a fair amount lately. Oh, there we go. Okay, was the what the fuck train of, Gifts and this one just goes on somebody said this has got to be the longest what the fuck GIF train I've ever seen there's like 20 something in a row of people that have just replied with

Starting point is 00:09:52 the WTF thing and there's even more down below it's just it's it's it's endless it's hilarious somebody even on one of them like superimposed Jameson Lopp's face on onto it like a deep fake Anyways, I thought it was funny. Yeah, I'm not interested in the project whatsoever. And I do find it a tad hypocrital, given it's an ERC20 token after all of the criticism of Ethereum, the baselair itself. So that's kind of where I stand. It's kind of like a, ugh, nah, from me. Okay?

Starting point is 00:10:33 Moving on, Fidelity's chief strategist starts a Bitcoin Index. I'm going to read a little bit from this Coin Desk article here. Wise Origin Bitcoin Index Fund has a $100,000 minimum buy-in and a high-ranking executive officer to boot. Peter Lubber, head of strategy and planning for increasingly crypto-friendly investment giant fidelity. Disclosed on in a Wednesday morning SEC filing, the fund is the latest example of Wall Street. Street veterans warming to Bitcoin. Fidelity, one of the largest mutual fund firms in the U.S. is also leading the street in Bitcoin research and services. So we've seen Fidelity kind of jump into the fray in regards to Bitcoin before. We've seen increased interest from institutional investors

Starting point is 00:11:26 like Paul Tudor Jones. We saw micro strategy take 50% of all of their liquid cash and dump it into Bitcoin. We saw the other day with SNAPA, a Canadian firm where they're putting a bunch of their liquid assets into Bitcoin rather than holding cash. We saw another, I believe it's called Tahini's, another Canadian restaurant chain that was cash heavy, decided to hold Bitcoin. We're starting to see a lot more of this stuff. And we're starting to see institutionalization and funds. We saw 3 IQ launch in Canada as well. A lot of Canadian stuff happening in and around that where they're offering it in a TFSA, a tax-free savings account, which I believe is the equivalent to an IRA in the States.

Starting point is 00:12:12 But yeah, we're seeing a lot of these companies and funds and things pop up that would have been unheard of even like three, four, five years ago. And it's, it happens, it seems to happen in waves. There'll be just silence for a while and not too much of a peep. And then all of a sudden, boom, boom, boom, a whole bunch of news will happen off bat and I expect to see more of this again more funds more options more

Starting point is 00:12:40 index funds more ways to give traditional investors that maybe don't want to hold their own Bitcoin access to the price volatility of it yeah I think we'll definitely see for more now again I'm more of a you know self-custody kind of person and I think it's very important that you know new bitcoins come into it that way however If you've got somebody who's been stuck in their ways for decades and doing something through the traditional banking system and holding stocks and there, some people just aren't going to want to take those steps to self-custody. And that's unfortunate, but at least there will be some products for them to gain access to or gain exposure to Bitcoin in the coming years. So, I mean, I guess anything here is positive.

Starting point is 00:13:35 And the other thing about it, people worry about rehypublication, again, the fractional reserve of Bitcoin. That will happen. It likely already is through many different exchanges. However, when it comes to Bitcoin, there is no lender of last resort. There is no bailout, and there's a finite supply. And so when you get institutions that opt to fractional reserve, and again, I guarantee it's already happening, and I guarantee it will happen in a much larger magnitude over the coming years. However, those institutions and the people that use them have true risk associated with doing such. Because in an instance where you have X amount of Bitcoin and you fractional reserved it and so many defaults on getting you that Bitcoin,

Starting point is 00:14:26 if you try to buy that back, you're going to up the price and it's going to cost you a lot more if you can even reattain that Bitcoin. And I'm talking from the institution's point of view. So stuff like this, there will be a great equalizer. There will be kind of that hammer that comes down where you just can't escape it if you screw this up. So keep that in mind. If you're dealing with stuff like this, you know, limit. limit your exposure to it, or self-custody. Okay?

Starting point is 00:15:01 Those are kind of your options. Let's move on. This article out of Coin Desh, Defi is just like the ICO boom and regulators are circling. If you're unfamiliar, defyy is this term decentralized finance. And it's referring to a lot of crap that's happening atop Ethereum right now. So last time the ICO boom was essentially IPOs, but, with, as we alluded to in the first story, IPOs with no guarantees, no oversight, you're basically buying tokens for nothing, but it seems like you're buying part of a company.

Starting point is 00:15:37 However, in that case, the company could have been successful while the ICO was, there was no demand for, and a lot of times we saw that play out. So, Defy is more like building derivatives as markets and yield farming and stuff like that on top of all these complex, complex, I guess, financial instruments on top of highly speculative and volatile assets in a playground where a lot of the code is essentially not audited and it's just thrown out there to the world as an experiment, but people are losing massive amounts of money and in some instances gaining massive amounts of money. but it is a giant roll of the dice, make no mistake.

Starting point is 00:16:24 So this article goes into the similarities, and I suppose differences between the ICO boom and what seems to be the coming DFI boom. And so I'm just going to read a little bit from closer basically the end of this article. So an example of Defy Chaos is Yam, a project with unaudited code claiming to be a stable coin,

Starting point is 00:16:47 which made headlines for its rapid boom and bust all within 48 hours. Quick note, it experienced its all-time high and all-time low in a single day. With respect to stablecoins, we should remember that regulators are still considering their status. The Securities and Exchange Commission,

Starting point is 00:17:04 senior advisor for digital assets, said that certain types of stable coins could raise issues under security laws. And that's not even mentioning any of this defy stuff. That's just the stable coins. So there's really, the regulators, took a while to clamp down on the shit that was happening with ICOs.

Starting point is 00:17:25 And unfortunately, in some of those cases, a lot of the ICOs, the big ones that made a ton of money, they basically got a slap on the wrist when it came to any real consequences. So it was basically like a, okay, if you make money, then it's fine. Now some other ICOs have had to basically pay back investors, of, you know, other companies have folded through all of this. So it's kind of a mixed bag. But going on through the article here, it says,

Starting point is 00:17:58 governance is central to many DFI projects and definitely a component of regular finance that is looking for reformation. Unfortunately, crisis governance has become too frequent in DFI. Many of these projects rely on governance protocols where a very small group of participants are able and or pressured to change,

Starting point is 00:18:18 change the protocol, which begs the question why the D in Defi, D if you're, again, decentralized finance, if a very small group of participants are able to change the code, it's not exactly decentralized. So they go on to say it remains to be seen how the regulatory loophole in which these tokens are created, distributed, and traded, all without regulatory supervision will play out. At least with modified safe harbor proposed, with a modified safe harbor proposed by Commissioner Hester Pierce in which all, and which we commented on earlier this year, the SEC would have some oversight. For the moment, tokens in the defy centralized finance are appearing daily and the explosion of tokens is leading to a distortion of purpose and investors are

Starting point is 00:19:11 getting burned as projects implode. Yeah, I'm not really down with the whole DFI thing. Again, I like the idea of people being able to make their own financial decisions outside of the realm of somebody saying you're not allowed to do that. I just think that in some instances, people can make really stupid decisions as we're seeing here, as we will continue to see. And let's be honest, the regulators are. going to regulate. That's just kind of what they do, especially when there's a small group of

Starting point is 00:19:48 individuals that can actually control these things. They are the targets to then be clamped down upon, which means that the protocols can then be adjusted, changed, shut down. There are central points of failure with these supposed decentralized finance applications. So just keep that in mind. will not participate. I saw way too much crap in 2017 to participate in shit like this. I am very much at peace just holding my Bitcoin and watching multiple train wrecks unfold. There will be plenty of people in the next year, year and a half that are flouting how much money they've made. But just keep in mind that those gains are not realized until I would say either cashed out to dollars, or put into Bitcoin.

Starting point is 00:20:44 I tend to value my wealth now in SATs. So anyways, let's move on. Speaking of SATs, Bitcoin supply is going to see a synchronized audit. This in response to the hashtag supply gate of the Ethereum supply, just a refresher, Pierre Richard, a popular bitcoiner who actually works at Cracken and he has the noted podcast. does a lot of talks and everything. Anyways, he started asking about auditing the Ethereum supply.

Starting point is 00:21:16 He started getting back some very, very different answers from different people, even just across online sources of auditing. And so then he started asking, well, how can anybody independently audit the supply? And again, very different answers across the board. Turns out nobody could really get a straight answer. And so what ended up happening is over time, it took, took, quite a while, but somebody eventually put together a script and then they had to one, sink a full node, which the article I talked about the other day, I think it took close to six days to sink a full node

Starting point is 00:21:51 with a $2,000 computer and high-speed internet connection. Note on a same piece of hardware take Bitcoin about six hours. Anyways, and then it took a couple days to actually run the scripts to audit the supply of Ethereum. So they did get a number there, but how many people have actually utilized that method, and they need to duplicate it with different scripts as well to see that they get the same numbers back. Whereas Bitcoin running that script to check the supply, I did it myself. It can take anywhere between 20 seconds and five minutes. That's it.

Starting point is 00:22:27 So I have audited the supply of Bitcoin myself just the other day. And I did it through, I'm running my node, but if you're running Bitcoin, core on your computer. Really, there's a variety of different implementations you can run to do so. Besides the point, Vitalik, the creator of Ethereum, agreed with Samson Mao that he would do a synchronized audit to check Ethereum supply. There's still not set, but Bitcoin is going to undergo the largest synchronized supply audit on September 23rd. So earlier today, Samson Mao explained that multiple Bitcoin full nodes will be auditing the total supply on September 23rd once Block 650,000 is reached. He further added that he anticipates this to be the largest synchronized

Starting point is 00:23:18 audit of the Bitcoin monetary supply that has ever been undertaken. Bitcoin users will hashtag run the numbers at Block 650,000 on September 23rd. Ethereum users can pick a block or time ideally close to that. I expect this will be the largest synchronized audit of the Bitcoin monetary supply from all types of nodes around the world. Yeah, I will definitely partake in that. I look forward to auditing the supply for Block 650,000. If you're running a node, join in. Let's run the numbers and make sure we're all

Starting point is 00:23:52 on the same page here. Moving on, a quick one here. Canadian Exchange Shake Pay gets cold wallet insurance to protect customer funds. So a little bit here. They partner with Cipherblade to audit themselves. their banking and their third party custodian for a full proof of reserves.

Starting point is 00:24:11 I wish we would see more of this across the industry and kudos to shake pay for setting this president. I don't think I've seen this out of anybody else yet. It's going on guys. Anyways, first through the door, as far as I know, at least in Canada and the U.S., I haven't seen anything out of the U.S. for any major exchanges, but proof of reserves, shake pay.

Starting point is 00:24:35 According to Cypherblade's audit report, ShakePays reserves fully back its customer assets on paper. There was a 100% match between transaction data found in back-end systems and amounts credited to user accounts accordingly relative to actual transaction amounts observed on the Bitcoin and Ethereum blockchains and bank account records for Fiat transactions in all transactions observed, the report said. Cipherblade work with Shake Pay's custodian and financial institutions to verify these figures. Sheepay's new insurance covers all funds held in cold storage, meaning it covers physical theft of the media where the private keys are held. Yeah, so again, kudos to them.

Starting point is 00:25:21 Again, everybody should be doing this. Every single custodian out there should be doing this. If you're using a custodian that's not doing it, you should ask them why they're. not doing it. Because again, I hope this becomes the norm. I think, as we alluded to in previous stories here, I think it will start to become the norm and entities that have custody in any way, shape, or form are going to have to start being a little bit more, a little bit more, I guess, forthcoming with how they're handling user funds. Because if there is fractional, Reserve going on, it's only going to take a handful more insolvencies, especially in the greater

Starting point is 00:26:10 financial, as it starts to become a little bit more mainstream and you have larger financial institutions diving in. With no lender of last resort, people will want to know that their money is there, especially when they realize that certain insurance doesn't apply if you can't create more money. And again, Canada's had a bad run. We had Quadriga CX go down. We saw Einstein go down. Coin Square, there were issues with spoofing trades to pump up their volume.

Starting point is 00:26:43 So it's been a pretty shit showing out of Canada. Thank God for Shake Pay doing a full audit. Also, Shake Pay does not really hold customer funds for very long. People tend to just take them off the exchange. That's whenever I use Shake Pay, same deal. I'll buy and then I'll send it out. You have bull Bitcoin in Canada where they don't have custody whatsoever. The moment you buy, you have to provide an address in order to actually exchange your dollars from dollars to Bitcoin.

Starting point is 00:27:13 It will be sent immediately to your wallet. So they never hold the Bitcoin for you. So yeah, like I hope we see more of this. But kudos to shake pay. By the way, if you're in Canada and you want to check out shake pay, there's a link somewhere in the show notes where you can actually try them out. I've had a wonderful experience using them in the past. And yeah, I guess this just kind of tax on to the reason why they continue to do well. One last thing here, there was a major upgrade to LND, which enables bigger lightning channels.

Starting point is 00:27:48 So if you weren't familiar, there was a limit on the size of lightning network channels in LND itself, basically one of the first implementations of Lightning Network. Now some other implementations have removed that limit fully, but L&D was kind of being safe. They didn't want to move fast and break things. They wanted to make sure they were prudent when it came to security of funds. And so they finally, a couple years after launch,

Starting point is 00:28:17 have said, hey, time is right. We're going to remove that limit. So I'll read a little bit here from the Bitcoin Times. Upgrade opens up new possibilities for, Lightning. On August 20th, former Google Manager and Lightning Labs developer Brian Voo confirmed the launch of L&D 0.11 beta. The update removes the existing 0.1677 Bitcoin constraints on lightning channels, allowing L&D users to operate bigger channels, dubbed Wumbo channels. Voo explained the upgrades background in a blog post. To keep your fun safe, lightning channel sizes were limited to a

Starting point is 00:28:56 maximum of 0.1677 Bitcoin. After two years of hard work and extensive testing from the community, we have reached a point where we feel comfortable removing these constraints for those who want larger channels. With this release of L&D version 0.11 beta, we now support Wombo channels over the size of the 0.1677 Bitcoin limit. Vue noted that the lighting network had grown significantly since 2018. since 2018, the continuous tests of the network and increasing adoption of L&D led the team to enable WOMBO channels taking a major step. The lifting of payment limits will make Lightning Network more flexible and efficient for users and businesses. Yeah, so again, big step. Lightning is growing and it's exciting to see this kind of vote of confidence from

Starting point is 00:29:54 basically the earliest guys in the game saying, you know, this stuff is starting to become safe. You know, it's still like a beta release, but it's becoming safer and safer and people are trusting it more. It's not saying things can't go wrong, but it is being hardened over time, and I'm happy to see that. Anyways, with that, guys, I'm going to wrap up. Thank you so much for watching and or listening. If you're here on YouTube, do remember to hit like, subscribe, and share. super important and they really, really do help. So do go ahead and do any and all of those. If you want to help me in another way, you can check out the sponsor, Ledin in the show notes down below and claim your 50 bucks worth of free Bitcoin if you opt to use their services.

Starting point is 00:30:41 And besides that, you can always check me out on the podcast. I'm audio only on Spotify, Apple Podcast, Google, basically wherever you can find podcasts. Go check me out if you're more of an audio file and you want to listen to me on the go. And if you really liked what you saw, you can always drop me a lightning network tip at my tippin.me page. That is t-i-p-p-in.me slash at BTC sessions. With that, I am out. Thank you guys so much again. And I will see you next time for your daily session.

BTC Sessions - Lopp Token Blowback, BTC Index Fund, RunTheNumbers Day EP090

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