On The Brink with Castle Island - Weekly News Roundup 3/20/20 (Market Commentary, Deals, Quarantine Tips) (EP.54)

Episode Date: March 20, 2020

Matt and Nic from Castle Island Ventures review the top stories of the week in the cryptoasset industry. This week's topics include:  - Market Commentary - Deals of the Week - Attestiv, Coase and other news - Quarantine Tips and much more news of the week

Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more to Britain's ailing economy with a new round of Concentive easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called the Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And we're coming at you from the quarantine studios. Yeah, we're fully remote now and we'll be for the foreseeable future, it seems like. Scary times out there. You know, Boston and New York and all the major cities now seem to be doing these blanket shutdowns.

So I hope everyone is okay out there. This is certainly the most trying times that I've ever been through. This is just a once-in-a-lifetime thing, hopefully. It feels like four crises rolled into one. It really does. So you have a pandemic leading to a economic crisis, leading to a financial crisis, really. And I would say potentially geopolitical one as well, potentially a geopolitical realignment here as we move to maybe a multipolar world with China resurgent.

I mean, look at the way they've been managing the situation. They went from being the scapegoats to being, you know, to trumpeting their response to the crisis and exporting aid. So potentially this kind of U.S.-led international order is not long for this world. Well, it'll be interesting. I mean, what's your perspective on that? Because certainly China with the wet markets here, they're getting a lot of blame cast upon them. It deservedly so. I mean, these wet markets are, it's ridiculous.

There's been human rights organizations and all sorts of, all sorts of recommendations against these things dating back to even before the Ebola outbreak, you know, which obviously was not in China, but, you know, they're really at the epicenter in terms of where this came from. Yeah, there's definitely a lot of blame to be passed around. But what's interesting is even in the last week, look how the narrative has shifted away from from Hubei province being a disaster. And now it's shifting towards while China actually did a pretty good job

of shutting this thing down. And now they're reporting no new cases in Hubei. So I mean, I don't know if I believe that per se, but there's, they've definitely sketched out one model for how to tackle this thing. One model for how to shut it down. I guess that assumes that you think that the data coming out of China is real.

I think the flip side of that is that, you know, they had doctors that were worn against these things months before any actions were taken and they arrested the doctor. So they certainly could have let the world know a lot earlier. One big takeaway is that the surveillance infrastructure that they built has now been repurposed for contact tracing in what seems to be potentially quite an effective way. You could see how they might want to export that package to other countries that want a cost-effective way to tackle the virus and in so doing, export their kind of proprietary surveillance

infrastructure. Yeah. And as with the case with most crises, I think you're going to see a real push from all states really to up the level of surveillance. And this is the time when civil liberties often come in the crosshairs and people are very willing to give up civil liberties in the interest of getting out of a bad situation, whether that be a war or a pandemic. And so it could be that you start to see these civil liberties around tracing where you are just physically, your GPS coordinates on your phone. And that could be a really positive thing from one perspective in the sense that it could allow us to isolate people and to really get back to business. But that's not something you probably want forever. Not to mention that in the U.S., Congress seems to be using this

opportunity to sneak through legislation, banning, and to an encryption. I didn't see that. Which is, it's astonishing that this is happening, yeah. And it's received relatively little coverage because there's so many other things going on. How are you staying up on the news right now? I mean, there's, this is the type of thing where a decade worth of information is happening in like a week. Twitter is completely peerless, I would say.

People give Twitter a lot of stick, but Twitter, was where the alarm was sounded as early as January. You know, VC Twitter, people gave it a lot of stick, you know, some of those news outlets trashing various VCs that were alarmed by this thing. But it hasn't stirred me wrong so far. I think the level of alarmism has been appropriate, you know. And, you know, I wish more people were reading some of these blogs, compiling data on Medium.

reading, you know, people like Ballagies, Twitter feed. This is where the information is hitting. I even see doctors sharing information publicly on Twitter saying, you know, we tried this drug and it worked, you know, not going through the normal channels, I guess. So what do you think the impact is to our industry and how, you know, the companies react and how this impacts protocols? Pretty broad question. Well, it makes our industry seem a little small, right?

relatively speaking. You know, we think that crypto is like the center of the universe, but then you zoom out, you get a little bit of perspective and you realize that, you know, there's a whole economy out there that's on its knees right now. But we've seen virtually every major sovereign currency depreciate relative to the dollar in the last week. We're seeing unprecedented level of fiscal expansion, monetary easing. Most developed nations are already at their limit in terms of what they can do from a

monetary perspective. So now we're switching to fiscal policy. We're going to see, I mean, we already had very indebted sovereigns, so I don't know what the outcome is going to be. We're going to see modern monetary theory applied in the real world now. Maybe it works if you're the issue of the world's kind of reserve currency. So maybe the world can tolerate the expansion of the supply of dollars. I don't think it can tolerate the expansion of other sovereign currencies. I don't know if there's strictly speaking demand for them. So I think crypto is going to be pretty relevant here. I think this crypto dollarization notion we've been talking about is going to be extremely relevant.

Venezuela just suspended its entire banking system. So online banking in Venezuela, which was how transactions occurred because they don't have cash. Remember, they don't have cash because the Bolivar was inflating too fast to print banknotes that had the right to nomination. So they don't have cash so people relied on the online banking system. That has now been effectively shuttered. It's been furloughed. So what alternative do Venezuelans have now? They have physical dollars. They have things like Bitcoin. It doesn't have a ton of usage, has some usage, potentially stable coins. So this situation is going to play out in many places over the world. Crypto is not strictly speaking the solution to all of this, but I think it's definitely an awakening. I think people are really going

to start to realize the digital dollars they have in bank accounts. Those are just liabilities of the financial system, which might be a lot more fragile than we expected. We were talking about this the other day, not on a podcast, but the popular narrative, I think, with a lot of Bitcoiners right now, and I think deservedly so is focused on what will the impact be of all this dollar printing on the dollar long term, and will we come out of this in a, you know, in a hyperinflationary type of a way? But you actually think that might not be the case. Well, I'd say most the consensus among economists is that this is a deflationary shock, right? There's just fewer goods and services being produced in the economy.

There's also less demand, and there will be for the foreseeable future. I was pumping gas earlier and it was like $2 and I'm sure it'll get cheaper. People were talking about, you know, crude oil potentially going into negative territory. I just saw that. So that would be absolutely unbelievable. So Aramco, the idea there would be that the cost to store is just, you know, it's very high as well. And so they just want to get rid of inventory. That's mind-boggling.

Yeah. So they would actually pay people to take the oil because they would be cheaper than storing it themselves. I mean, that's crazy. as long, yeah, so that's a pretty interesting situation where there's a cost to owning the good. And people, that's not out of the question. So yeah, we've had a massive deflationary shock. And so a lot of folks out there are saying, well, that means we can ease and print as much as we want to. Because there's a lot of slack there.

In fact, the supply of dollars has decreased a lot because, you know, we're having a deleveraging. The question is, though, does this thing? look like a sine wave and do you have the pendulum swinging hard once the economy recovers, I think, you know, that's what some Bitcoinists are expecting, you know, deflation in the short term and then as the economy gets going again, inflation at the other end. So last week we saw just a really aggressive sell-off in Bitcoin. I think there was a lot of things going on there. Obviously, there's a lot of microstructure issues around the exchanges and the amount of leverage. It's on some of the offshore platforms. There's a lot of market.

calls happening. But, you know, I think there were some in the popular press and maybe people that are not as close to the industry saying, well, look, you know, Bitcoin is not that store of value asset. And I think we've talked about this on the podcast in the past, that it is not a store of value asset yet. It is an option play on the emergence of a store of value. And it's trading very much like a risk asset. But this week, it's actually, it's up on the week pretty significantly. as of the time of this podcast, it's about 6,400 on a day that, you know, the S&P is, I think, what, pretty flat. The S&P is marginally down today. So the S&P is marginally down and Bitcoin's up.

So what do you make of the movements here? Is there anything to read into this or are we just in a, you know, market structure type of phenomenon here where risk is going on and off? Well, that's two consecutive days now where Bitcoin. has decoupled from the S&P following a couple of weeks where Bitcoin was matching the S&P step for step, actually, you know, sort of high beta way. So the Bitcoin was sort of magnifying the moves that the S&P was making. So it's very encouraging to see a slight decoupling. The correlations, if you look on a 90-day basis, that's the period that I typically use to track correlations. Those correlations are effectively at all-time highs.

between Bitcoin and the S&P 500. So we've actually never seen them this correlated before, but just on the short-term basis, they seem to be getting decoupled. Bitcoin's actually up ahead of the S&P on a year-to-day basis. So it's outperforming the S&P. The dollar is beating both of them. Actually, the dollar has been rallying like crazy.

Yeah, I mean, the dollar is the apex predator right now. Yes, it's interesting. People thought that crypto would reduce the dollar's dominance. I completely see it the other way. We've seen $1.5 billion flow into stable coins in the last week. It's a monstrous amount. Just risk off. You're not going to be able to get that out of the system into fiat necessarily.

You'd think that a lot of that will go back into Bitcoin, Ethereum, other crypto assets. Yeah, the thing about stable coins is that it's easier to get money in to the, them than it is to get money out. As we learned with Tether, the tubes got clogged on the way out. There's probably a meme there. It's now you just can't leave. So I think this, I think Bitcoin and the dollar are mutualistic here, actually. The dollar is clearly the one asset that everyone in the world wants right now. We have a shortage of dollars. And the fact that debts are denominated in dollars globally and dollars are rallying is pretty disastrous for people that have debt, right?

Yeah. So, you know, TBD on how Bitcoin does, I think we might have seen the bottom. I think that wick down to 3,800 on Bitmax. That might be the bottom. One interesting thing is that some market makers seem to have gone offline. So the spreads are wide at Bitmax, Deribit FTX. even on the major exchanges, Cracken, Coinbase, the spreads are much wider than they used to be. So maybe a marketmaker blew up. Maybe a market maker has adjusted their spreads and reaction to the

volatility. Crypto has become substantially less liquid. Yeah, that's for sure. So what else has been going on for you this week? Well, I've left downtown Boston for an undisclosed location. where I'll be safe from the matting crowds, hopefully. Looks like a citadel. It could well be a citadel, yeah. What about you? Have you taken refuge as well?

I'm in an undisclosed location as well. You know, just trying to hunker down and get through it. I think it's going to be a choppy next couple of weeks. I think the unemployment numbers are going to be staggering. And it's just going to be a lot of human suffering as a result of this. It's terrible. You don't like seeing unprecedented when applied to, macroeconomic data.

No. But that's where we are. We're at all time highs, literal all time highs for the VIX. It looks like unemployment's going to hit potentially great depression levels here. Yeah. Even though there might be a temporary nature to it, it looks like it's completely eclipsing 2008, 2009 recession levels. Yeah.

And so I think that, you know, there's hopefully a lot of smart people working on policy response and technical response here. But I think we just need to get, we need to. to figure out who has this and who has had it and has antibodies antibodies to it right now. So I would love to see a push for more testing, both, you know, the test that can tell if you have it right now and the tests that tell if you've developed the immunity to it. I think it's hard to imagine us getting past this shutdown economically without knowing the answer to those questions, knowing the denominator. Yeah, we're just in an epistemically impoverished environment right now.

We don't have the informational tools to deal with this thing. That's the number one thing. We just don't have sufficient information. One thing that has been really encouraging, though, has been watching the U.S. private sector mobilize and attempt to deal with this situation, even as the public sector has failed us. So I really well, which is a biotech startup,

they announced their ability to do at-home testing, rolling out pretty soon. We've seen 3D printing enthusiasts printing valves for respirators that are normally costs $11,000 or something. We've seen a lot of these, I think a lot of these 23 and me companies, a lot of these biotech companies are going to be pivoting to building tools to allow people to deal with this epidemic with testing obviously being the main one. I'm actually sort of optimistic. I know we got a late start, but I'm optimistic. But I'm optimistic, by the U.S.'s capacity with testing, you know, increasing dramatically in the next couple months. I think we need to scale up to something like 100,000 tests a day or millions of tests a day in the

U.S. We need to achieve that kind of capacity. I think we are seeing a lot of private sector response here. There's going to be a lot of talented people that are working on this. So hopefully we can go fast and give them all the tools that they need. And we have the best biotech sector in the world. If there's a vaccine for this thing, my guess would be that it would come out of the U.S. If there's any treatment that seems promising, if I had to guess, I think it would come out of here. So, you know, don't count us out.

So do you want to get into the meat of the what is typically the podcast? Talk about some of the deals of the week. Talk about some of the news. Not a ton of news. Yeah, I guess some stuff happened in crypto. Yeah, some stuff did happen. So backed announced and backed for those of you who might. not know who've been living under Iraq for the past couple of years. Backed is the crypto asset

spin-off of the intercontinental exchange. It's a warehouse, so a custodian, and they're also building a payments business on top of it. You hear about backed in the context of futures, the trade on the intercontinental exchange as well. The underlying asset for those futures is warehoused at B. So they raised a $300 million series B from the Intercontinental Exchange, Microsoft's M12, PAYU, Boston Consulting Group, Goldfinch, C, CMT Digital and Pantara. What good timing having that amount of dry powder going into what is likely to be a pretty sharp recession here.

Talk about timing. Yeah, that's going to be huge for them. It's been interesting watching them develop this payments approach in terms of encouraging people to actually use crypto, use Bitcoin. That's a hypothesis that I don't know if has been proven out yet in terms of users. being willing to actually transact with this thing. Yeah. Yeah, it'll be interesting, see how that plays out.

Another company that announced a round of financing is actually a deal that we led. So the deal closed a couple months ago, but it was just announced this week. So a testive, which is a company that has built a software tool to prove the authenticity of photos and videos, and they use public blockchains to timestamp and show when the media was created. They announced the launch of their company. They announced the round of financing that we led and plug-in-play ventures participated in. And we also had Nikos, Vecchio Rides on our podcast this week.

Had a good chat with him. That released on Wednesday. So, yeah, if you're interested in learning more about the tech and how they use it for a direct commercial application, definitely tuned to that one. I kind of like the approach here because, you know, there is a public blockchain element. They are timestamping. They're using it for what blockchains are really good at, which is timestamping, you know, small amounts of data. but then providing strong assurances around that data, and then using that whole payload to solve a trust problem that exists in the world.

And in their initial wedge, one of the markets they're entering is the insurance market where there are kind of trust deficits all over the place. So, for instance, insurers may, when you're making a claim, for instance, of a treatment, falls on your house, the insurance company might want proof of that, and typically what they do is they'll send someone out to assess the damage, which is very costly for them. They would much rather receive a photo, but they need strong assurances that the photo is recent, that it's, you know, geographically linked, that it's a photo that you took. So all of these things, a testive kind of helps provide these assurances. So it's a pretty interesting product. It's a

B-to-B product. The end users don't even strictly know that there's a blockchain involved. So those are some of the best blockchain use cases where nobody really needs to know what a private key is and so on. Yeah, we like those type of business models for sure. So another company in our portfolio actually in the news this week was COS. So COS is a really interesting company. Why don't you talk a little bit about COS because they're subject of a COINDSC profile this week. Yeah. And so the COINDS profiles by Brady Dale, who's I think one of CoinDest best journalists. Definitely read it if you're interested in collectible card games, Magic the Gathering. So Coase is founded by Kathleen Brightman, who's one of the co-founders of Teezas, and Zvae Moskowitz,

who is a very well-known, he's actually a Magic the Gathering Hall of Famer. So if you're a magic fan, you'll know who he is. And if you're not, you may not. I have his rookie card. So the idea behind Ghost is that you know these collectible card trading games have already been digitized right so hearthstone is a very popular one but there are no real open marketplace dynamics there typically if the cards are tradable on a secondary market you know blizzard who who is the studio for hartstone they will run that secondary market and regulate it very tightly and take a serious cut so the the inspiration that the idea behind Coast is to allow players to actually realize the economic value of their cards.

So the issuance is done on a bonding curve, which if you're familiar with Uniswap, that's what Uniswap does. So they run an automated market maker to distribute the cards at kind of a fair market price. And then if you buy a specific card, they have a certain amount of uniqueness, right? There's a commitment not to overprint them. and you play that card in a tournament and people realize, you know, this is an extremely powerful card. Maybe the price will reflect that and you'll be able to realize the, you know, the value of your insight. And so that's kind of the idea to give players genuine power, kind of give them strong property rights over their in-game assets. Now, of course, they're somewhat exposed to what the

Development Studio is doing. But I think owning these assets on chain in a very direct way, a pretty dramatic departure from the way that other collectible card games worked. And it kind of brings them back to the physical nature of where Magic the Gathering began. It's very much like owning Magic the Gathering cards, but of course, they're cryptographically provable, so you get very strong any counterfeiting requirements. The cards can be imbued with memory. So you kind of get the best of both worlds in organizing like this. So it's definitely something that I think people who are quarantined would be interested in checking out.

They're releasing their alpha emergence for the game. In April. In April. It'll be, yeah. So check that out. That's Coase on the Coin desk profile. And there's a link in there as well. In other news, so did you see this news that the office of the control of the currency OCC,

they've announced that Brian Brooks is joining as the chief operating officer. So he was actually the chief legal officer. Coinbase. So this could be a positive development for the industry, maybe. Yeah, I was on a panel with at DC Fintech week. So he doesn't like, he, he didn't know like what you had to say. He's not a huge Bitcoin fan. He does like stable coins. Yeah, the words China controls Bitcoin, I believe, escaped his lips. Yeah, so that's, we don't like that. But the, what would be interesting here is so the OCC would be really well positioned to be the overseer of some sort of a regulatory body that replaced the MSB path for these crypto startups. And so being that he's been at Coinbase,

you'd think that he has a pretty good perspective on how onerous it is for Coinbase and other startups to go state by state and get these money transmission licenses. And the alternative is to either be a broker dealer or a bank, which is obviously not something that a lot of startups want to do either. It's not really within their remit to be a BD or a bank. So if there's something in the middle, like some sort of a fintech charter, which I know has been proposed in the past and the OCC had been looked upon as the kind of overseer of that program,

that gets really interesting. So hopefully this is a pro-innovation, pro-startup, pro-crypto company type of a move here. But maybe it's, well, certainly too early to tell. Yeah, color me cautiously optimistic on this one. Yeah, for sure. And I actually just got done recording a podcast with Patrick Self, who's VP of Development at the Chamber of Digital Commerce. And we talked a little bit about this. Also, that guy had some awesome book recommendations for quarantine. So we're going to have to get yours at the end of this pod.

Oh, yeah. So yeah, maybe we'll do that at the end. So another piece of news this week was the FDIC has conditionally approved deposit insurance application for Square Financial Services. So this is effectively a de novo industrial bank that has been created by Square. Definitely makes sense. These guys are pushing more and more into financial services. They have brokerage capabilities. It looks like they want to be a bank. I guess the question is to take advantage of that 0% net interest income opportunity at this point, right?

This is one of the first approvals in something like a decade, isn't it? Yeah. Yeah, it's not, it's pretty rare, I think, that you'd see an approval like this. So it speaks to the strength of that company, certainly. Yeah, Square is just so impressive. I'm always, you know, building, obviously, Bitcoin stuff, but also, you know, tools for financial inclusion generally. I'm going to have a little bit of a gripe just on their cash app.

The execution quality is really not up to par. But if they can work on that, then I'll echo what you're saying. I don't know if consumers are selecting their venues on the basis of execution quality. They're definitely not. And that's been proven time and time again in equities where you have a lot of brokers that sell their order flow to third parties. And it turns out people actually just don't care. Yeah, they want free execution. Although they do care when the whole exchange goes down at a time.

of extreme volatility like Robin Hood did multiple times the last month. That's a disaster. It feels like that's about two years ago, but it's about seven days ago. Yeah, I guess Robin Hood is still up. They're doing, they must be doing better because I haven't heard their name on Twitter recently. Yeah, there's been other stuff to talk about on Twitter. Then the last bit of kind of regulatory news, so Overstock disclosed that they received two additional SEC subpoenas. I think it was in December, relative to their token sale, which was conducted by T0, which is a subsidiary. So we'll see if the SEC stays open for business on prosecuting all of these crazy ICOs that

happened. But this sounds about right that you should be getting some subpoenas for that thing. Yeah, overstocks misadventures with crypto have, for the most part, been pretty catastrophic, I would say. I don't know if a lot of enterprise value was added to that company, thanks to their infatuation with crypto and security tokens. They had a nice little pump there for a little while, but it's a classic case of execution. So they, in failure of execution, they had some really interesting ideas, and then they just went about executing them in a terrible way and really surrounded themselves with people that were probably not the best of course. to implement some of these ideas.

And to do these partnerships, they cut some corners. This is all, in my opinion. And it's also, it could be the case that they were just too early to the idea of security tokens. They might have been five years too early to embedding so heavily on the rapid growth of a security token ecosystem. Yeah. And I think they rightly realize that some of these security tokens, well, none of them

can really exist without robust infrastructure. So that was the ideal. It's built an ATS venue. Let's be the exchange. But a lot of corners were cut. So we'll see, you know, how this ICO subpoena thing goes. It's probably not going to be top of anyone's list to follow over the next couple months.

But I thought that was interesting that the SEC is still active. I mean, this was in December. So who knows if they are right now. So let's move on a little bit. Did you see Coinbase announce that they'll begin batching transactions on Bitcoin? Yeah. So I actually did a little bit. little bit of analysis to determine whether this had had an impact on chain. And the answer is yes.

So coin metrics engineer Antoine Lucalvese, whose total superstar, built this website initially called p-to-sh. info. Now it's called txstats.com. So it's a joint project between bitmax and coin metrics. If you go to tx stats, you can see that there's one interface. to evaluate batching on Bitcoin in real time, you can actually see that the batching rates have dramatically gone up. So batching is when in a single transaction, you send many outputs to many different people. And this is efficient, right? Because there's a certain amount of fixed cost in terms of bytes per transaction. So it's a good idea to batch for efficiency's sake. It means you can just pack more transfers into a single transaction. This is something people don't

get a lot of the time. So you can pack something like 3,000 outputs into a transaction if you want. And so it took about two years, almost exactly two years to the day, but Coinbase finally turned on batching. And it's had an immediate on-chain impact. It means the transaction count has gone down, but the number of outputs per day is effectively flat. So you can see it on-chain. So that's pretty cool. Although- I think it is really cool. It's disappointing that it took this long. Yeah, we spend a lot of time and, you know, people in the industry give Coinbase a hard time for adding all of these kind of ridiculous assets that they add. But when they do something right, you have to tip your cap. And this is a really, this is a great move.

I mean, this is being a responsible steward of these public blockchains. Yeah, Coinbase is probably the world's largest or second largest consumer of Bitcoin block space. And batching means that they're going to be utilizing that. block space in a much more efficient way. So it's very good for Bitcoin overall. It means Bitcoin effectively can transmit more information per unit time. So you had an article this week on CoinDesk. Crypto progressives become conservative with their own chains. Tell us a little bit about this. Yeah. So man, the thing is about being a Coin desk columnist is that they always change the titles, my articles. So it's like they don't trust my titles. What's your original title?

The original title was the paradox of crypto-progressivism, which... That's so much better. I thought that's better. Yeah. So here's the paradox, right? So political progressives in the American parlance are people that believe in, you know, making changes to society, dramatic reform, you know, toppling existing power structures and creating new ones, right? So then in the context of crypto, lots of people when they first kind of get into crypto, they look at Bitcoin and they see it as sort of an obsolete thing and it's hard to change. That's my bird clock.

That's a, it sounds like a real bird. That's my bird clock, yeah. We'll leave this in. We have bird clocks in this house. And Bitcoin is also very limited in terms of what you can do. it has a programming language, which is not particularly expressive called script. And so you often see a rejection of Bitcoin as the major blockchain. People say, well, what if we did this and this different?

Let's create an alternative. And so you call those people crypto progressives because they're unsatisfied with the status quo. They want to displace Bitcoin's current dominant position in the crypto industry. But therein lies the paradox, right? because if the reason to reject the incumbent is this appeal to innovation, there's nothing stopping someone else coming along and saying, well, your alternative chain is too slow moving and too cumbersome. Here's my alternative, which is more innovative. And then you can't consistently maintain that you can't retain your position at that point. It becomes incoherent because at a certain

point, you need to settle down and find a network or protocol that you believe in and that you want to work on for a long period of time and improve. That's how progress gets made is people working on a single project for a long time. So once you've settled on your alternative to Bitcoin, you have to become effectively the equivalent of a conservative. You have to say, this is the project, I'm going to reject alternatives, even if they are more innovative or more fast moving. And so basically the idea is that over time, crypto protocols out of necessity, they slow down a little bit, the pace of innovation declines. They become more stable and their institutional qualities show through at that point. And appealing to this notion of progressivism or innovation is not the best model and it's actually incoherent. So that's basically the argument that I'm making in that article. I'm not saying the Bitcoin is the sole choice. but I'm saying it is actually rational to settle on a single kind of dominant chain and commit to improving that one, even if there are technically, quote, unquote, superior alternatives that exist. It's still rational to settle on a single chain.

I guess it's interesting to read that article in the context of the 2x movement and the block size debate where you have, I guess it gets complicated when you have different tribes of people. that are working on the same protocol, but they have very different visions of what the protocol ought to be. Yeah, and, you know, some people would say that it was a net good that the big blockers, you know, forked off and created their own chains or many other chains. But my view, generally speaking, is that blockchains are good if they serve a really diverse set of stakeholders with different needs. You know, money is a network. It's the ultimate network effect. And protocols need to be sufficiently slim such that there's a core set of features which are cannot be debated. They're kind of set in stone. It's sufficient, I think, to serve as a whole bunch of different needs and requirements,

but the big blockers didn't see it that way. No, they didn't. So did you see that the tax deadline has been extended from April 15th to July 15th? I like how all of these like legislative reforms are just benefiting people that are like slackers, including myself. Okay, including myself, who has not filed his taxes yet. So that's pretty nice. That's pretty cool. Check out Zen Ledger, by the way. Their tool keeps on getting a lot better for crypto taxes, disclosure, investor, but that's the best way to do your crypto taxes. Yeah, we're also users, and it's pretty convenient. And doing your crypto taxes is super annoying. So now you get a little bit more time to figure it out. Yeah, you know, the other interesting thing is the definition of moral hazard

keeps coming up because now we have this thing where if Congress passes this legislation, they might have already passed it. Evictions are going to be, you won't be able to evict people for a while, right? You know, I guess even if they're defaulting on their rent payments. So what I've heard in a few places is people saying, I'm going to preempt proactively stop paying my rent because they won't be able to evict me later on. So it's kind of interesting to see the unintended consequences of effectively what is a debt jubilee, you know, a societal bailout. Yeah, this is going to be ugly. So I think that's all we had for this week.

Anything else in terms of news that you want to cover? No, so we said we were going to do our quarantine book recommendations. I just, I think just general recommendations, just stuff to, you know, keep you busy or content. Or just helpful tips. Okay, well, you told me to come armed with book recommendations, so that's what I have. All right. So I've got a couple book recommendations too. I've also just got a couple like life hacks.

Okay. All right. So, okay, you go first. All right. Well, my life, a couple life hacks right off the bat. Number one is, you know, experiment with just wearing a bathing suit. You're on Zoom calls all day. Wear the collar chart and just walk around the bathing suit.

It makes you feel a lot more relaxed. Okay. That's interesting. All right. Interesting approach. Okay, what else we got? So I think pediolite is very underrated. And I'm not just talking in the sense of like people getting drunk, being hung over, wanting some pedolite. But I think it's a very rehydrating solution. And so packs of pedolite, just throw a little bit in your water. It makes you feel like a million bucks. Okay. I don't know if I like either of those life hacks, actually. You don't? Okay. Well, we'll workshop those maybe. Yeah, I don't have any life hacks, actually. I do have book recommendations. So both of my books, all right, so both of my book recommendations come from George Selgin. So George Selgin is a, you know, an economist. He's a free banking, uh, officiado. We have a podcast on free banking coming out very soon. Very exciting. George Seligin has a very topical pamphlet out called The Menace of Fiscal QE. So I just picked it up. You can't see me, but I'm brandishing the book right now.

So just imagine me brandishing a book, basically. I'm halfway through it. It's very good. The other one that I have is also by George Selgin. It's money, free, and unfree. So I packed my suitcase to come down to my hideout location here, and it was more books than clothes. So I'll be equipped, especially if it turns out the next door value asset is books about monetary history. So I'll be all set.

Then you're, yeah, you've got that on lockdown. I think there is a category of just business books that everyone really should read. They're almost must-reads. Some of these tend to be about previous crises, either at a macro level or just companies going out of business. So some of the ones that I think everyone should check out. So Too Big to Fail by Andrew Ross Sorkin is a great book. It goes in detail.

He has tremendous access throughout the financial crisis into Lehman and Bears Collapse. There will probably be a too big to fail equivalent book written. about this time and place. Maybe it'll actually be written by Andrew Ross Sorkin, but someone out there is probably writing a real-time account of what it's like to be in some of these rooms right now as, you know, the Treasury is talking to the Fed and debating how to do this. What I want to understand is, is there an industry they're not going to bail out at this point? Because even fricking cruise ships are getting the bailout, which is the most undeserved bailout, in my opinion, of all time.

Yeah, yeah, the cruise ships, there's a lot of, you talked about moral hazard. Well, it's not just that. It's just like if the virus eliminated the cruise ship industry, I think the world would actually be better off on balance. They're just, they're so ugly. I've never been on a cruise. They strike me as very, they're like petri-d. It feels like being trapped in a hotel, except you can't even leave the hotel. You're at sea.

It just sounds miserable. Yeah, it doesn't sound great. And plus, there's like the 4% chance to get norovirus or Legionnaires disease or now coronavirus. That's true. Not a good industry. I think we should just as a society move on from cruise ships. Yeah. Well, throw that out there.

Have you read when genius failed? This is about long-term capital management? I actually haven't. I probably should. Yeah. There's going to be a lot of genius failing in the next few weeks, I think. For sure. For sure.

Of course, Liars Poker. think everyone knows about that. That's one of Michael, I think it's Michael Lewis's first book. That's a great book. That's a great book. A Den of Thieves is a great book. That goes into a lot about Michael Milken in the fall of Drexel, Burnham Lambert. That's a terrific book as well. You got any others? We could do this every week. I mean, there's so many great books out there, but that's a pretty good story. Yeah, that was actually really thoughtful and kind of complete list. I just picked the two books that were on my bookshelf. Oh, well, that's fine.

How about shows? What do you watch in these days? Or what do you recommend people check out? You know, I just don't watch a lot of TV. And the only thing I watch is sports, but sports is canceled now. So I don't know what to do. Obviously, the Wire is the best show of all time, I think. But I've probably already watched that front to back like five times.

You know, I couldn't get into The Wire. I watched one episode. and they were using typewriters, and I just, like, couldn't deal with that. It was so anachronistic. I don't know. Couldn't handle that. Well, you know, that's what they used before computers.

I guess, but it's like, we was set in the 80s or something, right? So it's like, shouldn't they have had computers at that point? I was set in the 90s, actually. Yeah, that didn't make sense to me. So I couldn't watch the wire for that reason. One of the things that I'm going to be doing, hopefully, if I can find any amount of time,

is to just watch old Patriots playoff games. Yeah, that's all you're going to have soon. So my friends and I have a group text, and we're going back and forth. I think we're just going to pick one game a week, and we're going to watch it as if it's live and happening live. And the first is going to be the snowball game, the tuck rule game. We're going to watch that. I'm pretty sure I'll be watching that in the fourth quarter and still think they're going to lose.

That's a classic game. And a misapplication of the rule. as far as I'm concerned. No, I think that was the, that was the correct interpretation. So speaking of which, do you have a guess on how many games Brady's going to win with the Buccaneers next season? Yeah, and I guess I should address the Tom Brady leaving the period. Yeah, it was looming large over this conversation. You have to say something.

Put it, put it this way. It didn't come at the best time. It did not come at the best time. Yeah. Boston was already struggling a little bit. But so I was taking a back. I was very surprised. I thought he was going to stick around.

I thought we were going to do one more ring. But here's my take. I think you just have to be appreciative of what you had. You have to remember the great times. You had 20-year run. He was such a big part of my life. Six rings. Unprecedented success.

It's just a level of greatness that is going to be impossible for any other quarterback to replicate. the greatest quarterback of all time, greatest professional athlete of all time. So I wish him nothing but the best. I hope that the Bucks have a great year. If they play the Patriots in the Super Bowl, I'm rooting for the Patriots.

But other than that, more power to them. Thank you for the memories. I think they're going to go four and 12. That's my prediction. Oh, I mean, there's no way Brady doesn't make the playoffs. I think Brady makes the playoffs every single year, so for one.

The Bucks are fundamentally not a good team. They have two really good receivers. I mean, Brady can make the AFC championship with Roshay Caldwell. He can do it with anyone. He doesn't have Belichick, man. He needs Belichick. What can I say? So it's going to be a little bit depressing to see who they run out as the quarterback this year.

But in Bill we trust, so we'll be fine. All right. Well, on that note, we'll leave. you guys to it. Stay safe. Social distance. Stomp the curve. It's not flatten the curve anymore. Stomp the curve. All right. We'll be back next week. We'll have a bunch of episodes next week. We're here to bring you more and more content. Yeah, it's the season of content right now. We know that there's nothing else to do, but listen to podcasts. So you're actually stuck with us. Have a great weekend, everyone.