On The Brink with Castle Island - Weekly Roundup 11/06/20 (Blockchain voting, a $1B Bitcoin forfeiture, election outcomes and inflation) (EP.145)

Episode Date: November 6, 2020

Matt and Nic cover deals and the news of the week. In this episode: The latest on Matt's bike saga Possible election outcomes and the prospect for inflation How Kelly Loeffer's runoff election might affect Bitcoin Were prediction markets vindicated by the election? The government seizes $1b worth of Bitcoin Why the seized bitcoin is good news Our take on the big Blockchain Voting Debate Our explanation for why people are curious about blockchains for voting Longtime Bitcoin holder Cynthia Lummis joins the Senate Decentralized storage tech is reaching geopolitical levels of importance Why Bitcoin's demand in 2020 might be more enduring than the demand in 2017 Content mentioned in this episode:  Matthew Green on blockchain voting Benlog, Blockchain and Voting The USA v 1HQ3Go3ggs8pFnXuHVHRytPCq5fGG8Hbh Sponsor notes: Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today's complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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 into 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 a Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. I'm back in our real office today. You threw away our plant today as well. So rip in peace to that plant. You had that plant since what?

Like early 2018, probably. Yeah, and I kept it alive for a long time. It was an aloe plant, I believe. Yeah. Well, the pandemic killed it. Yeah, so I mean, it didn't help that you fed it seltzer water instead of regular water. But it was alive during that. I wouldn't say it was thriving with the seltzer water, but it was alive.

It was clinging to life, and then we didn't go into the office for eight months, and that is probably what did it in. Yeah, I have to say it's so it wasn't looking good. You had a bunch of packages. You had some hardware wallets. You had a couple of crypto steals. There's a lot of stuff here, a lot of trinkets. Yeah.

And by the way, guys, I said this on Twitter recently, but if you want me to wear one of your firm's t-shirts, feel free to mail them to us. I will represent your firm, assuming you're not an ICO or something. I'll happily wear your t-shirt. If it's soft and comfortable, that's the caveat. Yeah, yeah, the compound t-shirt, you wear that a lot. That's one of your favorites, I think. Yeah, I'm wearing it out a little bit now, but they just made out of some great material. I don't even know what it's made of. It's great. Well, there's a lot to get into this week. The number is definitely going up. Before we do, why don't we hop over and hear a word from our sponsors?

If you listen to this show before, you know that we take accounting pretty seriously. And you might think that's a little strange in the context of digital assets. But whenever there are trust relationships or centralized counterparties, that's where these firms become relevant. I think the industry is in a good place as it pertains to these accounting firms with specific digital asset practices. Today's sponsor is Witham, one such firm. They are a top 25 accounting and advisory firm in the United States. They have a digital currency and blockchain group with experience navigating tax, legislative

changes, managing token sales, and managing stablecoin audits, which is pretty critical. To contact their team, go to Witham.com slash crypto. That's WITHUM.com slash crypto. Really excited to have with them on board, an awesome firm, and it's great. They've been doing a ton of work behind the scenes for companies in the space for a while. Blockchains are all about auditability, so it kind of stands the reason that a bunch of these accounting firms are getting into the mix, and hopefully we can progress in the direction of proof of reserves in the near future. Fingers crossed. And definitely this is an opportune time for an audit or an accounting firm to be getting active in the space.

I mean, you have publicly traded companies that are putting balance sheet assets into this asset class. And you're not doing any of that without some really good advice and some controls. So exciting to see. And one of the things Michael Saylor mentioned was their difficulty in marking Bitcoin price for their position, they have to treat it as an intangible asset, which is pretty troublesome. Yeah, that is really not ideal. It would be great if it could be treated just as a. a cash or a marketable security or something like that, it'd be so much better. I mean, if you

own GBT, that's treated as a marketable security. But if you hold pure Bitcoin, it's treated as an intangible. So something's not right there. I mean, there's a bunch of stuff like that that still makes things janky. The IRS still does not have the de minimis exemption. So small crypto transactions, even gas fees and minor fees, theoretically, everyone should be paying taxes on those, those tiny fractional amounts. So we should have some sort of a de minimis exemption as well. Here's a question. If a stable coin's value fluctuates on the open market

during the time that you're transferring it and it's at a tiny premium to where you acquired it, are you on the hook for capital gain? Yeah, I think theoretically you are. Academically you are. Now, whether or not anyone's actually taking the time to do that, that is such a hassle unless you have something like Zen, ledger hooked into your wallet, just calculating those things, you know, that's really the only way

you can do it. So in the absence of automation like that, you know, if you're just doing it on your treasor or your ledger, there's no way you're compliant. So Bitcoin is currently roofing as we speak. I guess some other stuff happened this week, some sort of political thing. Don't really pay attention to that stuff. But was there an election or something? I thought Bitcoin is roofing on your medium post, Bitcoin at 12. You got to, you threw some red meat at the crowd and it was a real rah-rah made me want to run through a wall or buy some Bitcoin. I got some really nice emails about it. Thank you. I was actually very humbled by the response. It was very eloquent. And, you know, I think it set off this current rally. I'm going to take the credit for that. The other thing could,

I guess, be the weakness of the dollar. Also, every asset is rallying today. So it's kind of hard to tease it part. But here's the weird thing. So it looks like we might be headed for a divided Senate and presidency, not 100% confirmed. It depends what happens with Kelly Loeffler, actually, believe it or not. She has a starring role in this play. So her runoff election in Georgia might be the one that decides the Senate. But so it may be the case that we have gridlock in the next four years, and that actually looks like one of the more likely scenarios here. And so my interpretation of that is that it's going to be more challenging. for Congress and the president to work together.

So I would question whether we would get the same level of stimulus that we might have otherwise received had all had Congress and the presidency been kind of united. So the pro-reflationary thesis, my interpretation is that it kind of took a bit of a hit, but Bitcoin seems to be doing great regardless. Yeah, and there's a lot of people. pontification on whether or not a Republican regime or Democratic regime would be better for crypto. I don't really have strong views on this. I think we're in such an early inning phase here,

and there are a lot of haters on both sides, so I'm not sure it really matters. That's true. I think Lail Braynard has been one of the names that's been tossed around for Treasury under Biden. I don't believe she's a fan of cryptocurrency. So we'd be going from Manusian, who's also not a fan to, you know, a new Treasury Secretary who's also not a fan. I guess the big questions are CFTC and SEC. Those are really the main agencies that we in the industry care about. Yeah, and it's not like any side is going to shut it down or anything. I think we're talking about just level of enforcement actions and things like that that could slow down the progression of the industry. Certainly the SEC could slow down the progression of the industry. Certainly the SEC could slow down

the progression of the industry with a failure to approve an ETF. They could be more harsh on new cryptocurrencies launching, you know, calling those things securities. CFTC could clamp down on DCOs and DCMs, I guess, theoretically. So there's a bunch of stuff that could happen. We'll see. I guess everybody has been expecting for Clayton to leave the SEC and that to trigger an ETF decision.

That's kind of a near-term catalyst I'm looking forward to. Yeah, but I think, you know, taking Clayton out of it, you just look at the bitwise denial and you look at the Winkle Voss denial and you look at the conditions that are laid out and what's actually different now. So, you know, some of the Winklevoss denial was all about, you know, custody and market manipulation. So the custody thing is pretty much solved. And then you look at the price discovery piece of that on the market manipulation and you look at the international exchanges, the Bitmexes, the Binances, the Binances. And I guess the question is, you know, a couple more enforcement actions here. This starts to look like a market that can sustain an ETF. And more of that liquidity, more of that price discovery will be happening on U.S. regulated exchanges, I would argue.

Yeah, I think if you look at the state of Bitcoin, the markets are the most comprehensible to regulators than they've ever been. and the relative decline of BitMex, as unfortunate as it is for a lot of the Bitcoin trader community, is very healthy for the U.S. domiciled market, and particularly the derivatives market. Speaking of the derivatives market, one of the big election night stories was just the FTX attention. And so FTX is the unregulated venue,

derivatives venue, big, big venue in the crypto market. They had a prediction market for Trump. I think it was just called the Trump token or something. I forget what. Yeah, well, you could go along Trump and Biden on there. And in the primaries, other candidates, too. That was a super liquid market. I saw the block estimated that they made a million dollars in trading fees over the past

couple days. I think the English bookmakers were technically the most liquid in terms of trading electoral outcomes. but I like the FTX binary option approach to the election because just personally, I have a much easier time interpreting a binary option market that resolves to one or zero than the Vegas odds model

or the way the odds are quoted in the British model. Yeah, it is. It's much more intuitive. And man, that thing was bouncing around. It was, I think, 81% Trump when I went to bed on election night. I woke up. It was like 18% Trump. Yeah, I tweeted that it reminded me of the Patriots Seahawks Super Bowl.

Because you can get those live odds of victory for NFL games. And when you have turnovers and fumbles in the fourth quarter and, you know, your two-minute drill, the odds fluctuate between, you know, zero and one like crazy. And it was exactly like that in this case. I mean, Trump started the day at 30 cents on the dollar, implying kind of a one-third chance of victory. as the evening progressed, he shot up to 82 cents. It was crazy.

And then the night sort of ended. I went to bed about three. He was at about 72 cents. I woke up the next morning. He was about 15 cents. And then Malcolm Butler jumped in and Patriots won the Super Bowl. Well, that's right. So there's like, I'm not ruling out some kind of last minute, you know,

fumble, missed field goal kind of situation here. Yeah, I mean, the Seahawks were at a. the, you know, 98% odds of victory. Well, you know, what I like to say about that is just, you know, the better team usually wins. And that's what's, you know, that's what happened with the Patriots in that one. Did the Seahawks need a, did they need a touchdown to win or would three points have been enough?

Oh, man, you put me on the spot. I want to say they were, I want to say they needed a touchdown. Yeah. And all they had to do was handed off to Marshawn Lynch. Some people were claiming vindication for prediction markets as opposed to pull. because the prediction markets were substantially more bullish on Trump than the polls were. I don't know which side can claim victory there because the prediction markets swung up to 82 cents and then down to about 12 cents now.

To me, I interpret the prediction markets as a very lossy filter of the news as it comes in, kind of very efficient and lossy filter. it sort of tells you very concisely what's happening at a given time. So I was watching the prediction markets to rapidly kind of ingest the news as it came in. But I don't know how much predictive power it actually has. So deals, there were some deals this week. The first one is NIFTX, which is a platform enabling the fractional trading of non-fundable tokens. They raise 500K from 1KX, coin fund, and DCG.

Next one is opium protocol. There's a name. That's definitely, that's a name. They are a platform for credit default swaps. They raise $3.25 million from Galaxy Digital, Alameda Research, and Hashkey. And next up is three commas, which is a pretty great name. They're an Estonian trading platform. There is $3 million from Alameda Research.

Next one is Razor Network. This is a project building oracles, which are data feeds, and they're building them for decentralized finance applications. They raised $3.7 million from NGC Ventures, Alameda Research, and others. So a few deals announced this week, not the best week to announce new news, so it's a little bit light on the news, but some deals getting announced. The other big news item that dropped on Election Day was ETH 2.0. they have a contract deployed now, which you can deposit funds into.

Yeah, so what do we know about just the timeline and the process there? Well, very little, but I mean, there is now a contract that you can develop. Ethan 2, it's one way, so you can't withdraw it. And I suppose you would do that if you wanted to support the ETH 2.0 kind of test net, I would say. I mean, it's not really main net. there's not a lot you're going to be able to do on the new chain for a long time. It's multi-phases. It's very hard to forecast how long it's going to take to get to the being able to do useful stuff.

After phase zero, all you're really going to be able to do is move the tokens, make transfers. Well, that'll be an exciting one. Is that why Bitcoin is roofing? That was a claim. I don't see what Bitcoin is to do with these 2.0, but who knows? Well, one thing that I took a keen interest in this week was PayPal CEO Dan Shulman. They did their Q3 earnings call. And definitely sounds like a, you know, not only that he understands this business really well, this industry, no surprise, they just launched a product.

But he articulated a vision for more and more integrations here. So talked about integrating cryptocurrencies with the PayPal and the Venmo apps. Talked also about integrating with the Honey Browser, which is a recent acquisition that. that they made a browser extension. So really interesting stuff there. And they also raised the buying limits on the platform to I think $15,000 worth of crypto. So I mean, this is a real deal effort.

This is not some, you know, it's not one of these boys with toys in the lab like playing with stuff like some of the big banks have been doing for a long time, building private blockchains and stuff. This is a real business with real people. And they're talking about it on earnings calls, which is exciting.

What do you make of this comment around integrating it with the Honey extension, would that look like a potential Bitcoin back kind of scheme, Bitcoin rewards? Yeah, that's what I would, that's immediately where my mind went is maybe you could start earning any type of cryptocurrency rewards, not just Bitcoin, maybe stable coins, maybe other forms of, you know, of tokens and things like that. But it would seem like a kind of a no-brainer. Once you have that infrastructure already in place, it works for dollars, would work well for stable coins would certainly work well for Bitcoin.

So this next news item is, it's not clear to me whether this is good or bad, but it's certainly news. So apparently, the U.S. government has seized about a billion dollars worth of Bitcoin from a sort of unnamed, you know, criminal or antagonist. And so we kind of figured that something was amiss about a week ago when there was a gigantic wallet containing about 69,000 bitcoins, which moved. I believe it hadn't moved since 2012 or something. So an ancient wallet woke up. And we saw it on chain. You could see a lot of the on chain metrics in terms of the share of Bitcoin that had moved in next period, responded. You could see the free float for Bitcoin increasing. And people were speculating. There was a lot of, of questions around whether this wallet had been cracked, whether someone had sort of brute forced the private key, which is completely implausible, by the way, but a lot of people thought that was the case. There were a lot of sort of sketchy news articles about a key being

brute forced, which didn't pass the sniff test for me. Turns out what happened was the US government acquired these coins in a much more conventional way. They basically identified the owner of the coins and forced them to forfeit them. And as it turns out, this was, I guess, in a diamond that was unsealed today. The owner of these coins had stolen them from the Silk Road back in 2012. And Russell Burt was aware of this, but he sort of had a lot on his plate, so he couldn't really deal with that theft at the time. And then what apparently happened is this thief used BTCE to try and sell some of the coins back in the day

and apparently used his real information at BTCE. And so when BTCE went down, I guess the feds were able to get his information and associate those coins to him. And then much later, they were able to find him and demand that he sort of disgorge them. So now the U.S. government is in possession of about a. billion dollars worth Bitcoin. Before we get to the implications of the sell-off here and how they're going to dispose of these bitcoins, BTCE went down a while ago, right? What took so long to find the person if they had docks themselves on that platform?

Yeah, so they, this individual sent coins to BDC in April 2015. In January 2017, the operators of BTCE were, were indicted. the complaint for forfeiture does not really elaborate on the cause for the delay. I mean, there's probably a book to be written here on some of these BTCE things that have happened after the Silk Road was taken down. So, you know, I guess we'll see what happens there. All right. So now the U.S. government has a billion dollars worth of Bitcoin.

So my assumption here is that we're going to see another kind of U.S. Marshall-style property auction that they've done in the past for Bitcoin. Actually, they do it pretty regularly. So if you go on the U.S. Marshalls site, periodically, there'll be very small Bitcoin auctions happening, you know, like 0.4 bitcoins for sale and things like that. And there's a process. You fill out of paperwork. They have an auction. The largest ever auction of Bitcoin was for the Silk Road bitcoins, which I believe Tim Draper was the buyer of those coins. So, you know, it looks to me like we'll probably end up just having another series of Marshall-style auctions here. Yeah, so this auction would be larger in dollar terms,

but smaller in Bitcoin terms. So the Silk Road auction, which Tim Draper bit the whole thing off, I think, that was 144,000 bitcoins, but those only $48 million at the time. This time around, we're talking about 69,000 bitcoins that are worth north of a billion. So I don't know if there's a billion dollars worth, I guess there is probably somewhere out there, but I feel like the government's going to have a slightly harder time lining up a billion dollars worth of interest for this auction. I wouldn't assume that necessarily. I mean, you have large block trades happening on the OTC market here pretty frequently.

You just had micro strategies get into a 200 plus million dollar Bitcoin position over the last quarter. I think there are some pretty sizable buyers. I think they would probably chunk it out over time, you know, if I had to guess. I don't see this being like a cataclysmic market-moving situation similar to when Mount Gawks started to liquid the whatever that person who was liquidating all the Mount Gok's assets. They just dumped them on. Kobayashi, they just dumped them on an exchange and tanked the price of Bitcoin. I mean, I don't think that's what we're talking about here. I think there's a structured way to do it.

And, you know, these are actually the cleanest coins you'll ever want to encounter, right? Because they've been blessed by the federal government. That's right. These are been baptized. Yeah. So my guess is that we end up having some, you know, private sales here start to happen. Well, you know, they'll be done in the public domain, but there'll be, you know, private transactions. So I don't know.

I mean, I guess we'll start to see some folks talking about, hey, the U.S. government should just hold on to these things, which, you know, maybe they should. Yeah, obviously the government should. I mean, what else, what other hard assets do they have on hand to back the value of the failing dollar? They've got some gold, but obviously they should start to accumulate a strategic Bitcoin reserve. If you're listening, you know, members of the Fed, we strongly urge you to do this. requisition these bitcoins. It's the only way to ensure the long-term stability of the dollar. I did see that the Bitcoin price started to sort of collapse a little bit as this news came out. I think that is logical. I mean, we're talking about 30 basis points of kind of new supply

that people kind of figured was offline coming back online. So you do expect to see some price impact from that. The good news, though, is that these bitcoins were not cracked. So the address was not cracked. A lot of people were speculating that it was. That would have been catastrophic, in my opinion, because I would suggest that the cryptography supporting Bitcoin is not sound. And so I'm very glad that this address was not cracked. That would have been very bad news.

Yeah, so we'll see how that plays out. But history is looking very kindly on Tim Draper's purchase of those 144,000 bitcoins in the original one. So that looks like a genius time to buy. Yeah, it's hard to get things badly wrong if you buy Bitcoin and hold it for long enough. There's only a smattering of days where it would have been unprofitable to buy Bitcoin at this point. Another thing that happened this week was the SEC came out with some harmonization and improvements to their exempt framework offering. And basically what they did here is take the reg crowdfunding, reg CF, cap from about $1 million to $5 million, and they took the reg A cap up to $75 million,

and they allowed for testing the waters to occur. So this is really interesting. There's definitely some crypto angles here because some of these will be probably tokenized securities, and there are firms like Republic that are really active and that were referenced in this final ruling. So I guess this is not necessarily a crypto story, but it's generally positive for startups raising capital. And some of those startups that are raising capital will be using tokenized securities. So I'd expect that we'll start to see an impact in the startup community here. And potentially this becomes a more palatable avenue for startups to raise capital. And tokenized securities have become easier to issue.

seeing more traction on token softs products. We did an episode with Mason Borda, by the way. So, you know, I historically wasn't that excited about security tokens, but it seems like the infrastructure for them is getting more accessible and more sophisticated. So maybe we are due for kind of a reprise of that concept. Yeah, this cannot. hurt that category whatsoever. So should we talk about blockchain voting?

We received several requests to discuss it. Shout out Brian Harrington. Good luck in fantasy this week, Brian? Sure. Yeah. So we actually, I got a bunch of texts from some non-blockchain folks asking me if blockchains would solve this problem. So let's get into it.

So I think I figured out why blockchain voting is getting so much press. I mean, obviously there was just election, but I think I figured out the actual reason. What's that? So apparently, and I'm having a hard time verifying this, the Q&ONN community has gotten super

into blockchain voting, and this is like a big concept within that community right now. Not kidding. Well, I had not heard that, But, you know, I guess the every election cycle we go through this and, you know, there's this discussion around whether or not a blockchain would more easily tie someone's identity and make these processes more efficient, blah, blah, blah.

So, you know, what's your take? Is this generally a positive and negative? So I've been tweeting a number of critiques of blockchain voting, which has made people very upset, which I don't really understand because how can you be that emotionally indexed to blockchain voting. But anyway, I'm going to defer to the experts on this. I generally don't think it's a good idea. There aren't any deployed at-scale blockchain voting schemes for that matter. So it's kind of hard to reason about because it doesn't really exist. So we're talking about something that's pretty much fictional right now. But I would recommend that people read

Matt Green's thread on the topic. There's a good blog post. that I'll link in the show notes here. Matt Blaze has also talked about it. Generally, infosec and cryptography people are pretty against the idea. And, you know, aside from the fact that, you know, custodying and using public keys, you know, public key cryptography is incredibly user hostile and it's an incredibly high technological bar to clear, which, you know, for some,

something like voting, you want it to be a mass market activity. You want anyone to be able to do it, regardless of technological sophistication. You don't want to introduce some sort of U.X, you know, complication, which means that, you know, the 10% least technologically sophisticated share of the population can't vote. You don't want to disenfranchise anyone due to technology. But leaving that aside, the kind of what experts tend to say about voting is that you actually, you actually actually don't want to have a receipt of your transaction, which says how you voted, because that allows you to be coerced. You're, you know, a mob boss or someone could intimidate you and say, show me your receipt, show me how you voted, and that can be used to potentially coerce people

or sway an election. So the whole point of blockchains is that you do have a trail of every transaction and anyone can see that. So it's interesting because what most people will say about voting is that you actually don't want a record of how you voted. That's why you don't get a receipt of who you voted for. You might get a receipt saying I voted, but generally you don't get a receipt saying which way you voted. So obviously putting everything on a blockchain means that there is a full log for anyone to scrutinize. And so, you know, blockchains are really not that compatible with privacy, but you do want strong privacy assurances for voting.

So it doesn't really seem to solve any problems that we have with voting, and it introduces a bunch of new problems as well. I wonder if some of these will be surmountable, though, with things like zero knowledge cryptography. I mean, you know, we're probably not. not there yet in terms of being able to put this into a place where you can have those privacy guarantees. But think about the example of, you know, some sort of a digital record to get into a bar. You know, you show your ID right now, but really you just need to know that you're,

you know, you're over a certain age to get in. And so they don't need to capture that information. Would there be a way to design a system that, you know, you voted, but it can't be traced back to you specifically who you voted for, just that you did vote. I mean, that would be probably what you're looking for. Yeah. I mean, and what you want is you want individual verifiability. You know, you want to know that your own vote was actually counted and you want global verifiability. You want to know that people that are eligible voted. And then you want privacy around your own vote. So a ZKP system in theory could help. But we get back to auditability issues, which we have with public blockchains as well, the UKPs.

CKPs are a little black boxy. The cryptography, you know, is fairly new. There's not that many experts that can audit and vet the system. And it's hard to, you know, deeply understand what's going on. So with voting, you want it to be auditable. You want the mechanics to be comprehensible. And if there's only a half dozen experts that are writing the code, I mean, even Zcash had a bug in their ZKP implementation.

It's written by some of the best cryptographers around, and they had a bug which potentially led to inflation. So you definitely don't want inflation in voting. You don't want it in a monetary system. So I'd be skeptical of any kind of black boxy cryptography in a voting context, too. Bradley Tusk has been doing some good work on this and did a podcast with the strictly VC folks a few weeks ago and talked about this.

His view is, if I remember correctly, that we were probably five years away, just from a technology perspective, from being able to do some of this. But it's definitely at the stage where, you know, requests for proposals have been going out from government agencies and things like that. So I'm not against it forever, but I would be against it with a set of technologies that we have today. Yeah, and there's a lot of successful case studies for tying identity to cryptographic data, like Estonia. does. I'm an Estonian E-resident. They gave me a card linked to my identity which has my

key pair on it. So I believe they actually use that for voting. But that's not blockchain voting. That's just linking identity to public key cryptography. So I don't see... Maybe people use blockchain as a

metonymy for cryptography. That might be what's happening here. But you fundamentally don't need this pretty ersatz database structure to vote electronically you do need cryptography but you don't necessarily need blockchain yeah it's a little bit like the medical records use case where everyone wants to just sprinkle a little bit of blockchain on it and raise a bunch of money but you got to you got to not outpace the technology so the other electoral news is that Cynthia Lummis won her bid for the Senate in Wyoming.

Congrats, Cynthia. Very Bitcoin-friendly individual right there. That's right. So, interestingly, she's not the first pro-Bitcoin female senator. That owner goes to Kelly Loeffler. So see if Kelly can stay in the Senate or not.

But Cynthia won with an overwhelming margin, not surprising. And she's been a Bitcoin holder since 2013. Her son-in-law works for unchained capital. So pretty awesome overall. When this pandemic is over, we have to go do something in Wyoming, like a big crypto conference or something.

We got to get out there. Those are our people. It's the epicenter of Bitcoin almost in the United States. I mean, so much is happening. We've devoted three episodes to Wyoming specifically. Let's see if we can get Cynthia on the show. Cynthia, open invite. You're welcome to join us. That'd be a first sitting senator. That would be great. All right. So a few more tidbits here for the week.

They're kind of a crazy story in Fortune about R-Weave, which is a, yeah, I guess how would you describe R-Weave? I think about it as sort of a web storage, but uncensurable web storage platform. Yeah, it's a perpetual decentralized cloud storage platform. And so they're, they've seen some uptick. with dissidents in China, and now they're starting to be attacked with some pretty sophisticated attacks on their internal systems, their G Suite in particular. And there's a fortune article that kind of talks about where they think this is coming from,

and they think that it's a nation state attack potentially from China, according to the founders of the project. So pretty crazy stuff. Yeah, I think we're getting into like the geopolitical significance era. for specifically decentralized storage technologies because they've actually reached a fairly high level of sophistication. It's not just the Filecoin launch. SIA is pretty usable.

RWea is usable. IPFS independent of Filecoin is this whole platform. You've got decentralized streaming services. What's the one that I'm thinking of the Jeremy Kaufman? Library credits is quite popular. for streaming. Keybase is popular for chat. I mean, all of these platforms are used by dissidents and people that get de-platform from these big tech platforms. And inevitably, government's going to have a problem with them. So we're going to get into the era where they all get probed,

all their vulnerabilities get tested. Yeah. So we'll keep an eye on that. But you think about some of the bosses to beat for these systems, that's a pretty big, pretty big boss. So Genesis Capital put out their Q3 digital asset market report. And I like, I love these reports. I think they're jam-packed with a ton of great market color. And man, Genesis is really growing quickly here. So they originated $5.2 billion in loans in Q3. That was up from $2.2 billion, the prior quarter. Most of it is Bitcoin and U.S. dollars. So 41% Bitcoin, 35% U.S. dollar lending. and that derivatives business that they started just last quarter, they traded over a billion dollars in total volume for this quarter.

So that is a business where if you are sitting on the inside of a bank or a broker dealer and you're in this kind of, you're in this market for non-crypto assets and you're trying to validate a business case to get your firm to take a look at this. I mean, take a look at the growth over at Genesis. It's just eye-popping. And this is just another example of what's different between this bull, run today in 2017. Public blockchains were not financialized at all in 2017. Market infrastructure of this caliber credit did not exist back then. Derivatives barely existed. So as far as I'm concerned,

we're in completely different market regimes today as compared with the prior bull run. Yeah, it just feels a lot different. And the other thing that was happening, during the last bull run was just the ICOs were happening. And so there's just an awful lot of purchases that were then going through and being deployed into altcoins. So we don't really see that as much this cycle. That's a great point. That was a total source of reflexivity. Whereas, and the demand was ultimately, it was kind of a flow through demand. So it was only transient. Whereas today you can see people are buying Bitcoin as a balance sheet asset as an investment property, that's much more sustainable demand. So we may not have that kind of reflexivity this time.

Good reminder for everyone to just make sure you get your key management set up. Make sure you're being disciplined with how you're holding your Bitcoin. A lot of great resources out there. Obviously, we have some companies in our portfolio that are doing great work there, like Casa and River and BlockFi and whatnot. But good time to just make sure that you're healthy on the way that you're holding your coins. Yeah, you don't want to be taken by surprise and price action pushes your stash into six or seven figures

and all of a sudden you have to, you know, scramble to figure out your key management. All right, so I think that's it for the week. I know people have been asking for any bike updates, so I save this till the last. I have the video. And it's just a video of a five-minute, just interval of time that is not there. So you see the bike and then you don't see the bike.

And it's, but I have the video. Okay. So let me get this straight. The building management company had a CCTV cameras. Yes. Watching the butt pointed at the bike rack. That was a motion activated is what they're telling me is that it was motion activated. All right.

motion activated camera and the video they sent they helpfully sent you the video and it shows nothing it shows an individual walking away from the building and then and my bike is clearly visible and then it shows it cuts to my bike just being gone and there being nothing back there okay so they sent you the clip there's basically nothing happening bikes there it cuts bikes gone and they figured that this would help you kind of resolve the mystery. Yeah, and so they just said, you know, here it is. We don't, you know, it's, it is what it is, basically. I think you should post it on Twitter, actually,

and maybe shame them into giving you the value of the bike or something because clearly the camera didn't work properly. Well, I'm trying not to overreact, but I think that some people think that I'm an idiot. look, I try not to use my big account clout very much. There's a lot of ways that I could abuse that privilege, you know, by complaining about my Starbucks order or whatever. But this is one of those cases where you really could publicly gripe about it and they

might be inclined to make it right. Yeah, I mean, I'm not one of these people that likes to complain about customer service on my on my Twitter account either, like complaining about airlines. Shout out Josh Deems. But, you know, I was a little bit. attempted. Yeah. So that's the bike update. I don't know if we're going to get any more. That might be at the end of the bike story. Now the bike is gone. I got a new one. I got a new one. I made sure it was definitely not an expensive one because I'm sure that'll get stolen too.

Did you get a better lock? Did you get a U lock? I did get a U lock. Yeah. I had a U lock, but it just wasn't using it. So that was on me. That was kind of stupid. Was it locked? Yeah, it was locked. They cut the lock, but it was like a, It was not a U-Lock. Yeah, U-Locks, you need like an angle grinder to get through. So you might be good to go on this one. I hope so. So we're back in action, but kind of a sad chapter. See, that's the beauty of this podcast is you get all kinds of little subplots like that.

Who knows what the next, first you have the field goal attempt, which I do plan on attempting again, by the way. I've been working out a little bit. I think I'll be able to hit it. Now you have the bike subplot. there's the plant, which plant's not dead. Plants dead. Who knows what the next sub-drama is going to be? I think it might be that we look for a new office.

I think that's going to have to be the thing, because we need a podcast studio. Yeah, we do. There's a lot of background noise here. Yeah. Well, that wraps it up. By this time next week, maybe when we come to you next week, we will have an answer as far as the electoral process in this country. We might. And also on Monday we'll be dropping an episode with Alan Lane, the CEO of Silvergate Bank. I've been wanting to do this episode for a long time. And Alan did not disappoint. So that'll be an awesome one on Monday. One of the most important institutions in the industry right now, as far as I'm concerned.

Yeah, for sure. And just like firing on all cylinders over there. Well, that about wraps it up. So we'll talk to you next week. Have a good weekend.