BTC Sessions - Major Institutional Bitcoin Interest, JP Morgan Banking Coinbase + Gemini, Liquid NFTs EP056

Episode Date: May 14, 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 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: LIGHTNING tips: https://tippin.me/@BTCsessions SHOW RESOURCES: Institutions start seeing the light, as Bitcoin interest grows post-halving https://cointelegraph.com/news/institutional-interest-in-bitcoin-to-keep-rising-after-btc-halving CNBC interview: Economy does not reflect stocks and bonds – Bitcoin suggested as an out https://markets.businessinsider.com/news/stocks/chamath-palihapitiya-says-economy-is-divorced-stock-market-fed-warning-2020-5-1029193570 JP Morgan now banking Gemini and Coinbase, despite Jamie Dimon’s past criticisms of Bitcoin as a Ponzi scheme waiting to blow up https://decrypt.co/28559/jpmorgan-is-now-banking-coinbase-and-gemini Bitcoin hashrate is dropping after the halving, but this was to be expected https://decrypt.co/28763/bitcoin-hashrate-is-tanking-nobody-panic Deep dive into mining and hashrate dynamics https://www.blockwaresolutions.com/research-and-publications/pomp-podcast-256-blockware-solutions-ceo-matt-dsouza-on-the-upcoming-bitcoin-halving-miner-sell-pressure-and-why-its-important NY Times headline coded into last block of this Bitcoin epoch: https://twitter.com/clarkmoody/status/1259975423695261697 Ledn launches USDC savings boasting 7.5% APY https://www.coindesk.com/ledn-launches-usdc-stablecoin-savings-accounts-with-focus-on-latin-america Bitcoin’s liquid network adds in-game assets (NFT’s) for Light Nite battle royale game https://tftc.io/martys-bent/issue-737-in-game-assets-on-liquid/ Learn about Bitcoin mining fees and how they are integral to network security in the long run https://www.academy.btse.com/post/bitcoin-transaction-fees

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 just want to give a quick shout out to sponsors of the show, leaden.io. And this is where you can use your Bitcoin for a few different things. You have Bitcoin backed loans. This is where you can use your interest, use your Bitcoin as collateral to obtain a Canadian or U.S. dollar loan. It's also the first thing I ever used with them. And I used it when I was in a pinch. I needed dollars.

Didn't want to sell my Bitcoin. So I was able to park it in a dedicated address that I could audit 24-7. I got a loan within 24 hours. And when I paid it back, I got back all of my Bitcoin. In fact, the same Bitcoin because it's not re-hypothicated. Now, outside of that, and we're going to talk about this momentarily, they also have Bitcoin and USDC savings accounts where you can earn up to 7.5% depending on the asset.

And then they've got their B2X offering, which uses the same loan mechanism to buy you more Bitcoin and effectively double your Bitcoin on the spot. So if you want to check them out, there's a link in the show notes down below. If you use that link to get a loan, then they'll give you $50 worth of Bitcoin for free.

And secondly, if you want to help out the show in another way, then you can go and check out Ledger in the links down below. If you're not already securing your Bitcoin with a hardware wallet, you've got to get on that because as I learned in the past, these price swings with Bitcoin can be crazy. And you can find yourself in a situation where before you may have been comfortable with a certain amount of Bitcoin sitting on your phone or computer. And then suddenly you find it is worth exponentially more and you are worried as hell about the security of it. So Ledger allows you to securely store your Bitcoin in a dedicated device that is strictly offline, meaning that the keys to your money remain on the

device and are never shared with the computer it is plugged into. So be sure to check them out. They've got a bunch of deals on right now in and around the halving. So definitely there's some steals that can be had there. Check them out. I use these. Even if you end up not going with ledger, do look into something. There's treasers, there's cold cards, there's lots of different stuff out there. But do secure your Bitcoin because it is very important. With that, let's dive into the show. So in this post-having world, we're starting to see in and around this time more and more interest in Bitcoin, particularly from institutional players. We've seen a lot of stuff come out in the news lately because Bitcoin is so strictly in opposition to what's happening with central banks

around the world and the dire looking economy. So just a few things pointing out here, we've seen seen a huge increase, a lot of uptick and interest in the CME's exchange volume for Bitcoin options. They've reached an all-time high on May 11th at over $15 million in interest. Again, it's been growing, reaching $40 million on May 13th, according to data from the skew. So you can see, I mean, if you're watching live on the show right now, the volume just in May has skyrocketed and dwarves everything else that has happened since the beginning of the year. Now, when it comes to institutional interest, you're seeing a lot of other things pop up in traditional markets as well.

Three IQ here in Canada launched a Bitcoin fund that is now listed on the TSX, and they recently announced a completion of a $48 million offering for the Bitcoin fund just as of May 8th. We've seen stuff like gray scales investments, the Q1 report. They currently hold 1.7% of the total Bitcoin in circulation. They bought over $500 million worth of Bitcoin in Q1 of this year alone. We've also got Fidelity digital assets. They've been touching on it. You also saw a huge one, which we've touched on in the show before,

Paul Tudor Jones coming out and he manages tens of billions of dollars and he said that he's now allocated one to two percent of his entire net worth into Bitcoin of the entire assets held are now in Bitcoin. And that's a huge deal. And probably one of the first major dominoes to fall of institutional interest because if you can look at somebody like Paul Tudor Jones managing tens of billions of dollars being a couple percent in Bitcoin, it gives it that kind of institutional nod of approval and probably clears the way for a lot more people to think along the same lines or at least examine the reasoning for Paul Duder-Jones to make that leap. Now, another thing that came out just recently, there was a really good interview, and this

wasn't the first Bitcoin-related interview of Chamath Palapitia. on CNBC, but a good one nonetheless. And he was talking about the economy as a whole. So he kind of went on a bit of a rant about a lot of things. So if you're unfamiliar with him, he's the social capital CEO and Virgin Galactic chairman. And he said the economy is completely divorced from the stock and bond markets. So in his CNBC interview on Tuesday, he said that the Fed has acted as the principal agent of the obfuscation driving the disconnect between the markets and the economy. He also warned that the Fed's recent stimulus policies risk creating a deflationary

super cycle. And he also tweeted on Monday night that the market is too damn high. So I'll just read a little bit from this market's insider article here. It says Palipatia criticized recent stimulus policies and said that the stimulus should be going directly to taxpayers and consumers who will then spend that money and help energize the economy from the bottom up. Instead, the current stimulus measures only inflate asset prices, meaning like equities, and that doesn't do anything to fix the economy. In quote, asset inflation does not solve income disparity. It actually doesn't solve full employment. It doesn't do any of the things we need it to do for it to be a robust economy. What it does is it allows people who play in the financial markets to make money.

And then he went on to talk about Bitcoin and, again, how it's kind of this hedge against a lot of these shit policies that are coming out from central banks. So again, very interesting to see this. And just one more thing when it comes to institutional interest and Bitcoin kind of trojan horsing itself into the current legacy financial system, J.P. Morgan is now banking Coinbase and Gemini to monster institutions that essentially deal with digital assets. So the reason that this is so interesting and important is that Jamie Diamond, CEO of J.P. Morgan, has been very, very vocal about his disdain for Bitcoin. He said it was a scam or a Ponzi scheme

that was going to blow up. He also said that if he found doubt that any of his employees were dealing with Bitcoin, he'd probably sack them. And flash forward, what, two, maybe three years from those comments. And they're now taking on Coinbase and Gemini as clients to bank them. So they approved bank accounts for both of them. These are the first crypto-related customers for the bank. And I mean, it kind of opens the door for many more. and we'll see if this continues to be the case. But, I mean, again, with institutions really seriously looking at this stuff and with people doubting the actions of central banks around the world and with the economy in shambles,

I mean, people are starting to look to alternatives and a lot of these are indications of that. Now, with the having the reduction of newly created Bitcoins that, just happened as of Monday of this week, it does have implications for the Bitcoin network as a whole, at least in the short term. So minors, the individuals that that use large amounts of computing power to secure the network, they bank on the newly issued Bitcoin as a large portion of their income on top of minor fees, which we'll touch on a little bit later in this episode. But the hash rate or the amount of computing power securing the network now is dropping, which while some people on the other side looking in may look to that as a negative

thing, it's actually expected and over the long term a positive thing. Now, why is this? So it's expected because of the nature of Bitcoin infrastructure and the hardware that a lot of these companies are using to mine Bitcoin, they're still using or were up until this point, using a lot of hardware that was very outdated and not competitive. And much more efficient hardware has come out. Some people are using power sources that are much more expensive than others. And so those individuals or those companies and mining firms, they end up being priced out of the market and dropping off

or upgrading their hardware to be more competitive. And so it's pushing out the most inefficient players in the market. Now, over time, as they get pushed out, the difficulty readjusts so that it's once again profitable for the remaining miners. And the remaining, I guess, reward gets divvied up to those that can ride out this period. So quote from Slush, which is a mining pool, they said, yes, this was expected from Slush co-founder Jan Kepak to decrypt. He said, we estimate that it varies between 10 to 25% dropping off as old gen hardware becomes unprofitable. So the 15% drop we've seen so far is actually on the low side.

However, what some analysts didn't see coming, according to Dennis Rusinovich, who runs a 80 megawatt mining operation in Kazakhstan, was Bitcoin's run to $10,000 directly before the having. This kept unprofitable miners in business longer than a. expected, meaning the washout will take a little bit longer and it will have more under tow than it otherwise would have. Quote, it was generally expected by miners that the overall drop will be around 30%. But clearly, one major driver was that no one expected BTC, this BTC price level. This gave additional support for less efficient miners to stay afloat and last for the last two weeks. So it may take a little bit longer for these inefficient miners to wash out, given that we saw a significant increase in

price, especially over the last few weeks here, especially from the lows of 4,000. In fact, we saw a massive drop in hash rate around that time when we saw the dip in concert with the dip in the stock market. But now that Bitcoin has more than recovered from those points, those miners that shut up at that time turned back on likely to try and eke out those profits before the halving that happen on Monday. Now, if you want to learn more about kind of the implications of the having around minors and how that drives the price and how actually having these less efficient miners pushed out of the network actually is a positive thing and reduces cell pressure on the network, I highly encourage you listen to this podcast from the Pomp podcast where he interviews Matt DeSuzza

and they talk about Blockware's recent analysis of mining selling pressure. It was very enlightening and taught me a bunch of things that I really didn't know. So I'll be sure to link that down below. Now one more thing related to the having that I wanted to touch on. When Bitcoin was first created back in 2009, the first block mine included the message, Chancellor on the brink of Second bailout for the Banks. And it was a headline from the day on January 3rd, 2009.

and very much beckoned to the reason that Bitcoin was being launched in the first place. Well, this time around for the having slush mined the last block of this having epoch, I guess you could say, before the supply was cut from 12.5 per 10 minutes to 6.25 Bitcoin mined every 10 minutes. And so this was the message that they added into the block was New York Times 9th of April, 2020, with $2.3 trillion injection, Fed's plan far exceeds 2008 rescue. So once again, pointing to the monetary policies that drove the need for Bitcoin in the first place. So really cool to see kudos to slush. Just a little note, Antpool, mine to the next block. And they really just said nothing, which was the actual first block of the new epoch. So, you know, way to drop the ball,

antpool, but kudos to slush for getting in there a block before. Now, I wanted to touch on Leden. They just launched something very interesting, and I've got an interview on this dropping tomorrow with Adam from Lennon and Matt from Genesis. But Lennon has partnered with Genesis to launch a stable coin savings for, well, anybody, but they've got a focus on Latin America for this.

And so they're utilizing the U.S.D.C. stable coin this peg to the US dollar. Now, for myself, obviously, like I living in Canada, I don't really have a use for a stable coin myself because, you know, I either have Canadian dollars in my bank account or I have my Bitcoin. But it's very interesting to see the dynamics and how this could be an interesting boon for a lot of people in Latin America and Central and Southern. America and and why this is something very much needed for people where their currencies are are basically losing purchasing power day to day. We've seen insane amounts of inflation. Argentina has been going through some pretty bad bouts. One of the co-founders of Leden hails from

Venezuela. So he's got one of the most unique perspectives on why Bitcoin and stuff like this is necessary. But in the interview, I found it very interesting because this isn't necessarily geared towards Bitcoiners first. It's a lot geared towards people that are in situations where they realize that their currency is not functioning the way it needs to. And it's almost like, I picture it as a stop along the way to understanding and discovering Bitcoin.

So the goal here is to have people use this. mechanism to move out of their local currency and save in, you know, the most stable global fiat currency. So they're exiting a less efficient currency into one that that functions at least a little bit better and then be able to save in that and actually get a return of around seven and a half percent when they when they save in USC, which I mean in the current market is is crazy given that Obviously, stocks scary as hell right now. Local currencies, especially in Latin America, scary as hell right now. So to be able to save in the World Reserve currency and get a return of around 7.5%.

For a lot of them, it's going to be their best bet. But the thing that I like about this is in not being familiar with Bitcoin, onboarding to something like this, being able to save, but then seeing direct references to Bitcoin, and seeing how Bitcoin actually opens up the economy for everybody to participate in and flies in the face of the very policies that are tanking their own local currencies. It's very much an orange pill moment, I think, for a lot of people in a lot of countries where this will serve them. So again, kudos to Leden and Genesis for taking this approach of adding a stop along the way

to orange-pilling people. And, yeah, I look forward to seeing how this all plays out. But, yeah, keep an eye out for the interview that I'm going to drop tomorrow regarding this. It's interesting conversation, to say at least. Now, moving on here, I wanted to touch on a piece done by Marty Bent the other day on the bent. I was going to touch on this earlier in the week,

but I got so busy that I wasn't able to do a show. Anyways, this is in-game assets on something called Light Night. So if you're unfamiliar with Light Knight, it is a Battle Royale type game that you can get on PC, and it enables you to do lightning network payments, and that's the in-game currency. Now, the interesting thing about this is now they've also launched NFTs, which are non-fundable tokens, which represents some of the assets in the game. So, like, you can get, you know, different assets for your character. or unique outfits and swag and guns and things like that.

But using the Liquid Network where you can issue tokens on that network, you can hold a token that actually represents an in-game asset that is now provably scarce. So it was an interesting article dropped by Marty talking about mainly, now I guess I should take a step back. when he posted this, there were a lot of people that were pissed, or at least just like had some strong words for it. One, the two problems they had were this. One, they said liquid is not Bitcoin, which it's not. It is you peg in and peg out and then utilize some of the features of

liquid if you have a use for that. So yes, I agree. Liquid is not Bitcoin. And secondly, they said, they were saying that NFTs are a stupid idea, which you can look at it a couple different ways, but that's besides the fact, the point of the article was not either of those things. At no point does he say liquid as Bitcoin

or does he say NFTs are the be all and all and we should all love them. The point was, in regards to this article, you don't need to create an entirely new currency to achieve these things. Like you don't need to create Ethereum.

You don't need to create Tezos or Tron and hold an ICO to do this shit. You can just build it and utilize Bitcoin as kind of like your base layer of reference and truth and then build external things and peg into and out of Bitcoin if you have the use case for some type of token. You don't need to steal people's money to have a non-fungible token and transact with digital items. So that was my takeaway from this. On the aspect of NFTs, I'm definitely not against the idea of a non-fundable token, which means just like as opposed to Bitcoin, where a Bitcoin is a Bitcoin, this would be like a token that is not fungible, meaning it's, It's not the same as others.

It represents a unique piece of digital collateral or digital property, like an in-game gun where there's a certain number of them ever made and you can't inflate them, whatever. So, yeah, I do see value for that. I think gaming is one of the use cases for something like that. But at the same time, you don't need to create a new currency to do this as we're seeing right now. I also think that you could feasibly do some stuff like tickets to events where you need unique identifiers on each ticket and you could have it in a digital sense and you can enable somebody to transfer them back and forth between each other without I guess without any need for really a central third party. Again, another use case for NFTs but where you don't need to create a new currency to do so. So yeah, kudos enjoyed this, Marty Bent.

Yeah, everybody read through this. Let me know. What are your thoughts on NFTs? The last thing I wanted to touch on, this is from Gustavo from Verify. He did an awesome article on transaction fees, how they play into building on Bitcoin security in light of the having and the reduction of minor subsidy because they're no longer. getting 12 and a half Bitcoin every 10 minutes for doing that service. Over time, that's going to be reduced more and more and more until there is no minor subsidy and we have to rely entirely on transaction fees to subsidize miners. Otherwise, they would just leave if the transaction fees

do not incentivize them enough to stick around and perform that function. And so Gustavo goes through a lot of interesting information here really breaks it down about the importance of fees, how they're calculated, why it's not a bad thing to see fees go up in general, how that can be mitigated. He also goes into how likely they're going to go up even more in the future. But he does allude to his next article coming down the pipeline about how you, as a user of Bitcoin, can actually save on fees and make sure that you're not unnecessarily overpaying to utilize the Bitcoin network and about some of the release valves like whether it be lightning or liquid or whatever you like as well as efficiencies on the base layer that will ensure that you are being the most

efficient Bitcoin user that you can so I highly recommend you checking this out on the Bitsie Academy been really happy with the stuff that Gustav has been doing over there that we've got some great writers and I'm really trying to funnel a lot of very Bitcoin-focused and Bitcoin favorable articles in there to help people understand the unique place that Bitcoin has in this entire market and how I want to say redundant a lot of these other coins tend to be in the grand scheme of things. So yeah, give this a read. Let me know what you thought. Anyways, guys, I'm going to wrap it up there. Thank you guys so much. for watching. As always, if you're here on YouTube, do hit like, subscribe, and share, but hit up

the other platforms I'm on as well. I stream live to Facebook, to Twitch, to Twitter via Periscope. I'm on Library. I'm on D-Live. So just look around. Also, if you like audio only, I'm on pretty much any podcast platform you can think of, so go check them out. Now, if you want to help with the show in another way, you can hit up the sponsors I mentioned down below. You can hit up Leden, you can hit up Ledger and pick up one of those. Or you can hit up NordVPN. this helps hide your IP address. It encrypts your browsing data and it unlocks geoblog content. For me, again, the privacy benefits when utilizing something like Bitcoin.

And if you're ever on public Wi-Fi, holy God, make sure you're on a VPN because that is dangerous as hell. But be sure to check them out. There's a deal down below if you use the link where you can get a three-year plan with one month free. It ends up only being like $3.50. Outside of that, if you really liked what you saw, you can always drop me a lightning network tip at my tippin.me page. That's tippin.combe slash at BTC sessions. And with that, I am out. Have you guys a wonderful rest of your day or evening and I will see you next time for your daily session.