TFTC: A Bitcoin Podcast - #379: From Neuroscience to Bitcoin Proof of Reserves with Sam Abbassi

Episode Date: December 5, 2022

Join Marty as he sits down with Sam Abbassi to discuss building Hoseki, the potential austerity of a hyperbitcoinized world, and weird brain stuff. Follow Sam on Twitter Check out Hoseki 6:29 - Sam's crypto origin story 11:14 - Concussions and neuroscience 19:06 - Encountering crypto degeneracy and getting orange pilled 25:24 - Working at Fidelity 35:21 - Marty's writing history 41:01 - AI 44:02 - Are we better off than in medieval times? 47:50 - An austere orange pilled Earth 52:57 - What are the problems in a bitcoin standard? 1:04:53 - Hoseki 1:18:14 - Developing a web of trust in third world countries 1:21:12 - Fiat world 1:26:48 - Proof of reserves 1:38:36 - National divorce 1:43:45 - Feds shouldn't be romanticized 1:46:34 - Last words Shoutout to our sponsors: Unchained Capital Braiins HodlHodl CrowdHealth TFTC Merch is Available: Shop Now Join the TFTC Movement: Main YT Channel Clips YT Channel Website Twitter Instagram Follow Marty Bent: Twitter Newsletter Podcast

so freaks it's your boy marty here to introduce this rip of tftc i sat down with sam abasi founder and ceo of hoseki incredible conversation incredible bitcoiner incredible time to be alive freaks and if you're looking to take care of your bitcoin our friends down the hall at unchained capital are here to provide you with the services that eliminate single points of failure in your custody model they have a two or three multi-sig volt which allows you to hold two keys in the two or three multi-sig quorum unchained holds the third you can always control and move your bitcoin as you see fit as long as you have those two keys if you're ever in a pinch need unchained to be the

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lower your healthcare costs. CrowdHealth is a great way to do that. Joincrowdhealth.com slash TFTC. Enjoy this for a free sticky. you've had a dynamic where money's become freer than free when you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be probably should be 90 minutes on a friday afternoon that's all we need great way to end

the week it is a great way to end the week for me at least i guess you would have ended it this way anyway yeah the recordings vary from time to time i like a nice friday afternoon rip rhr on thursdays typically um logan you're just logan's logan's back there trying to make this a one-person podcast there we go but that's good friday afternoon you get to reflect on the week vibes are higher we're heading into the weekend and we've got a lot to talk about i'm joined by sam abasi founder of oseki thanks for having me thank you for coming on yeah of course it's a long time coming

yeah yeah yeah you've invited me for i think the invite's been open for probably a year a year yeah so let me know when you're ready or not when you're ready when the invite's open i'd love to have you on just when when you feel like the time is right let's do it the time is right we're here yeah it's just a balance between building putting your you know being heads down and building and then also doing the advocacy it's like a multi-man show is ceo yeah well you're a great ceo great advocate i shilled your presentation in riga on rhr last week it was a fantastic presentation thanks man got me all inspired yeah super nervous about that one too why are you nervous. You're good at what you do. Yeah. But you know, it's like a fighter going into a ring.

You should be a little bit nervous before. That's true. It's usually how I feel. Yeah. Vomit a little bit, you know, check all the nerves out. Knees weak, arms, palms are sweaty. Spaghetti everywhere. I think it's because having gotten to know you a bit more particularly over the last year and we followed each other on twitter for for many years what we mean until last year but you're very ideologically driven and it seems like you have found a purpose in life and are and are going after it it's good that communicates that's that that that is how i feel i just never know how that conveys across to people and it comes across sweet it's good what's what's driving that purpose insanity probably applies to all of us um yeah drunk insanity so you've uh before we

dive into hoseki why you started it what it is how it can help people i mean you've been in the space for a while now right yeah yeah it's been five years now which is like uh two decades in bitcoin time just about about a half century and I'm particularly enthralled by your journey because you've been on a journey yeah and you're worried to talk don't be worried to talk about this you weren't bitcoin first no no I wasn't um I kind of feel proud about that in certain certain way i i just think a lot of people learn about bitcoin as a function of like losing their money i did it as a function of losing my time which in my opinion is a lot worse um and my conviction is just incredibly strong as a result yeah what what were you losing your time

on on bullshit projects um although you know it it informs me and made me who i am today so I guess it wasn't, it was objectively bullshit, but it wasn't bullshit as it relates to my life. Yeah, just a bunch of crypto projects in the last bull run. Didn't have any idea what the space was. I had no real experience with any of these things or finance generally. Like I don't come from TradFi. I'm still pretty financially illiterate. So the idea of investing and and putting your money to work and doing these things was pretty foreign to me. And crypto, the crypto world,

was my first window into how these things work or how these things can work. How did you come to the window or how did the window come to you? I was doing a PhD program in neuroscience. and I'm incredibly impatient. The turnaround time for the stuff that I was doing is like 10 years.

So... What were you doing? It was research in traumatic brain injury. Oh, that's actually pretty relevant to me. I've had six pretty terrible concussions. Have you? I don't mean to laugh. No, I can laugh about it now. It's been over a decade since my last one.

Well, you feel beautifully. Oh, thank you. I don't know about my brain, but uh definitely externally it's doing okay um it was basic science research so at um it's like the software development of the science world you're at the lowest level you're at the building blocks so a lot of pipetting um we were looking at patients that had like motorcycle accidents elderly patients who had fallen um what we would largely do is is uh induce traumatic brain injury into rats so we just would like like you know almost kill him but we'd kill him

eventually um i wasn't doing the killing but we take the blood samples and then evaluate it that way damn yeah i've seen a lot of dead rats science this is what the science entails yeah there's costs there's real costs what uh did you guys find anything i think any breakthroughs in that research yeah it was um uh so the thing we were looking at specifically was the fact that a lot of the patients that come into the er with a traumatic brain injury end up dying from pulmonary complications within a 24-hour period not from the brain injury itself so is it the nervous system just fucking up no it was um it was these inflammatory proteins in the brain so like when you hit your arm or anything else it inflames um over a period of time though that inflammation

can actually destroy the tissue same thing's happening with your brain it when you hit your brain it you know it swells up and these inflammatory proteins end up traveling into your lungs your lungs can't deal with can't deal with it though um so they end up collapsing and you die from pulmonary complications holy shit yeah i'm happy that never happened to me after my last concussion it was a freshman in college and it happened like right before the end of the year it's going into sophomore year i had some science electives i had to take and decided to take a biology of the brain class to better understand how it was fucking up my head and became enthralled by the concept of like neurotransmitters synapses and the cannabinoid

system that works within your brain and how you can try to like revamp neurotransmitters and synapses i mean even with all that we we don't uh we don't know how the brain works still yeah which is my big finding was like we have done a lot of research we do know a lot about like how mechanically things are done but no one knows how consciousness works at all do you have an idea no no no it's uh yeah it's just it's it's still a mystery yeah yeah the brain is it the most mysterious it's not an organism it's a muscle i think it's an organ organ yeah organ yeah it's yeah it's an organ you would know better than i do you would you would think that but no it is crazy

i had this discussion earlier this week like trying to compare because there is that thing obviously animals have brains as well there's something about humans that's different that we have this ability to cooperate better than most animals and we have free will intuition thought ingenuity yeah what what is that we have abstract thought as well um i mean there's a class of people that are called well there's a school of thought i guess called neurophilosophy which kind of goes into these things but it's not technical it's it's it's very philosophical they just sort of talk about um sort of they just still talk about the brain an abstract i wanted to mechanically see how a thought gets developed and it's just not possible

you you can you can map things at like the image level so you can take an image of the brain and you can map different patterns of what's happening based on like whatever stimuli but um i can't find a neural pathway that gets a thought across um or that can imagine something or see something that i i can't mechanically find that path yeah you can't see like a path within the brain and then project that oh this is what produced this this thought right it's probably not always the same no and it's probably a collection of them too um so yeah we're still just so far away from it yeah i'm actually partial to the stone tape theory which one's that a theory that tens of thousands of years ago when the world was like

one big tropical rainforest and starting to get a bit cooler and the forest started to recede and bovine creatures became more common they left the jungle and started shitting uh in the prairie lands that were developing and mushrooms came out of their shit and then the monkeys came down from the trees and started getting high on the shrooms and it and that's how our brain developed yeah wow that's that's a theory out there i think i don't know if it was alan watts or terence mckenna that had had that theory that sounds wrong but but i love it i want it to be true yeah it's uh well having done shrooms psilocybin in a past life right it does make yeah it makes you perceive the world completely dead like it's

like holy shit i can't believe you could well i mean psychedelics now are being used in uh therapy and ketamine is the thing that's leading the way yeah people are like yeah going to therapists and they're getting k-dosed sent down sent down a dark path it's also got to be such a traumatic way to do psychedelics you're in a like a you know fluorescent bleached you know lab i hope not i hope you i i'm i'm imagining like uh your stereotypical therapist office where you're down you're on the you're on the long couch you're laying down with your your hands on your chest yeah you just have somebody walking walking you through your problems i guess that's true today that doesn't apply to the people back in the 50s or no whenever the cia was doing we're talking

about mk ultra they were getting strapped down and highly dosed with lsd god i don't think mk ultra ever stopped we're not here to talk about mk ultra that's for another conversation we got sidetracked i was too impatient it was a good sidetrack it was too impatient with too impatient so the stuff that i was building um or the stuff that i was researching rather uh, it's like the output is drug development. Um, that usually for COVID that usually takes a long time. Um, and so I'm, I'm super impatient. Um, and I was just thinking about making a career change. Um, I studied economics in college and, um, I loved economics, but again, I couldn't, I was trying to find like what I wanted to do. Um, and so anyway, I had done some coding on my own,

uh i went to a boot camp to learn how to build software with people though like i had done like you know just basic python development and some r because i was doing some stats as well as part of the research um so i went to the boot camp i learned about project management like mvp development stuff like that and um afterwards job market wasn't that great um i don't know if i couldn't find a job or if the job market wasn't that great but ultimately um couldn't get a good job with the company that I wanted to work with. And so we ended up making a contractor company. So contract-based software development. Basic apps, usually it was for companies that were raising money and didn't have a CTO or didn't have a tech team or they weren't technical,

but they needed a product. So we'd build an MVP for them. They'd prove their concept and then go on. But this was at the end of 2017. I should probably add, this was also in Miami. it's going to be important for later um that's where i'm from so it was the end of the cycle or i guess nearing the top of the cycle and we were just getting a lot of crypto projects again i you know i'm a guy who just learned like coding at least like project management team-based uh development um and then we have a lot of demand from clients who want to build out ETH ICOs and ETH wallets and forking Bitcoin. So I learned about Bitcoin and I got orange pilled as a result of working on these pretty terrible projects. Seeing not only how poorly

the technicals are and how poorly things are built, but also seeing how degenerate the culture is. And again, I'm not someone who comes from finance. The idea of easy money was foreign to me so when you're doing these like really primitive defy things back then or when you're pre-mining coins and launching these projects you know i'm like you're seeing firsthand when you're being dragged into backroom dealings to you know drop in a third utxo set and stuff like this i mean i saw it firsthand which was incredibly helpful um how degenerate is it i mean i think we all know now it's pretty awful i just i just knew this before uh well what was like the first instance where like holy

shit this is i don't want to get into like specifics or details but i mean i will say going to ethereum conferences um and then going to a proper bitcoin conference was like uh it was like taking the red bull in the matrix it was it was like um because like i could tell something was there like i i got into bitcoin through ethereum someone is selling me on this idea of smart contracts don't know anything about the space don't know anything about the history like that sounds like there's something there but when i went to the conferences and i spoke to people they just cared about like partying they just cared about this like psychedelic infused uh like burning man culture which didn't really compute with this idea of

revolutionizing the world through what i understood then to be like finance but really it was like revolutionizing the world through this thing but the people that were saying they're going to revolutionize the world are not the people that i thought would be the ones to actually conduct a revolution or you know and they're probably not the ones who are going to they're not they're not and so when i went to i went to building on bitcoin in lisbon in 2018 and that was like mind-blowing i met a lot of the ogs i met some i met the guys i met the people that are still in the space today that are building legitimate projects um and that's when i real that's when i got orange built and realized okay this is probably what i should be spending

my time on what was it about building on bitcoin just the technical focus yeah it was very technical there just wasn't bullshit um this was after the block size war so they had some remember they had some bcash toilet paper which was really funny that was the most like sort of deviant thing that was happening but it wasn't literally colorful like the ethereum conferences are there's like unicorns and like rainbows everywhere this was rather serious like people were just having conversations about privacy um they were we're talking we're talking about um like block filters then um people were talking about uh i think dandelion was proposed at that conference as well um but anyway it was just very like serious technical topics uh by people who seemed very

serious in what seemed like a serious environment which wasn't the case in the theory in ethereum i mean you there there's some serious people at youth conferences and they talk i mean the tornado cash people as an example you know like they're from that community but overall it was just very different um it was it seemed fiat for a lack of better words it's a very apt description It's very few. Yeah. Scenery. You're gonna get a quick buck. We're gonna spin this up. Tokenomics. Utility tokens. Utility tokens. MP. What was it? MQ equals. What was that? MV equals PQ.

The money velocity equals the. Oh, oh, oh. Yeah, yeah, yeah. Something times the quantity. Price. Price times the quantity. Yeah. Yeah. That's what it was. there's a lot of people pushing that metric in 2017 it's math mv equals pq where are you looking at by the way here there i'm i'm looking at here okay i try i should no

no i i don't know i should be looking up there but it's just hard we need it we might need to rework the the uh the outlay of this the studio i don't know it's perfect i was telling you it's amazing now compared to what it was before yeah it's uh we've come a long way and so have you so you go to lisbon yeah it's sufficiently orange build and what started it what happens after that well i still got a company run so i come back and i'm trying to like make sense of what we're doing um whether it's like worth doing this like how to scale the company i mean this was really like a like a, like a learning experience for us. Um, it was my first company, um, first time doing actual software development. So it was just a lot of learning. Um, so, I mean, the company

was really meant to scale bear market happens or the bear market continues rather could be closed up shop in 2019. And then I'm looking for a job. So I know, I know I want to stay in the space. A lot of people leave, this is, you know, beginning to mid 2019. So like the depths of like what was crypto winter then a lot of people left um but i had the conviction i was like this is real this is this is if there's anything that i should dedicate my life to like i'm not going to go be an accountant like i'm gonna i'm gonna i'm gonna work on this thing in some capacity um and so uh but i couldn't find like a good bitcoin job honestly i couldn't find a good bitcoin job that matched my skills again like there weren't that many at that time it's not it's not like today

1031 didn't exist um there weren't that many companies so uh i uh i go to work at algorand oh yeah i had this last so i mean it was it was practical in the sense that like i couldn't find my ideal job so i'm saying the space um i'm pretty sure most things that aren't bitcoin are shit at this point like i've like worked on them so i'm pretty confident that it's all bullshit but this company raised from i didn't know anything about the vc landscape they raised money from like what seemed like good vcs uh they had um like mit professors most engineering team was from mit so i forgot what it's called but i deferred to like authority credentialism i guess i thought well you know like this is my last attempt if this is also shit then it's all shit

And Bitcoin is literally the only thing we're working on. The people there were, I mean, look, like the people themselves individually are usually never bad. It's when the incentives are misaligned and there's groups of them together doing really bad things. So the people there were good.

I have nothing against the people there. But it was stuff like, you know, the protocol was changing on a monthly basis. There was a lot of fight against Bitcoin and its energy consumption and proof of work being wasteful. So just stuff I fundamentally disagreed with. I did tell everyone that I like, you know,

it's weird to say I believe in proof of work. it was like you know i think this is functional because it is functional i don't think proof of stake is that functional so so so they knew all this before i went in but again like um i think i'm someone who has to like experience things in order to learn them i can't just learn from secondhand information i'm very similar so i really had to see it and it checked out like all the things that i was told all the suspicions i had for the most part um played out again like you know like the employees there like the engineers they're good people uh but the project just wasn't wasn't it wasn't for me um i moved to boston at this time and a job opened up at

fidelity i met a lot of these people before i met like alex thorner and amanda fabiano um and a few other folks at the mit uh mit crypto conference i forgot which one it was but i met some of those folks there and i just thought they were brilliant and i was someone who worked on a random crypto projects previously. I had an econ degree from the school in Chicago. And, but I needed something to like, sort of be that legitimizing factor. And Fidelity, it was and is like one of the most

forward thinking companies on Wall Street when it comes to Bitcoin. And so I thought, well, this is the perfect place for me to go work and for me to like learn from real smart people from traditional finance I have no experience in. So a job opened up at Fidelity and I jumped and I went to work there.

Hell yeah. What did you do for them? It was mainly open source self-custody solutions. We were doing Bitcoin covenants then working off Bob McElrath's work. So they have, like most companies, they have like their own corporate incubator. And so I worked in that incubator

building out different projects that could either become their own like product lines or could be fit into an existing what's called a business units existing product lines so that was amazing that was like you know we're we're we're in this laboratory I kind of love doing research so we're in this laboratory just like researching cutting edge stuff and trying to see if it works so mainly mainly open source bitcoin custody solutions and then I did some work on proof reserves as well there's some lightning that was sprinkled in as well I think most of it's confidential so I can't technically talk about it but the proof but the open source custody stuff

was all yeah it was open source yeah and so you got drawn to this concept of of peripheral reserves it seems yeah so um the chamber of digital commerce uh was organizing a paper with kpmg deloitte um and a few other folks uh nick carter was included and um missing one name anyway it was a bunch of people that were passionate about peripheral reserves And so they needed someone to write the text back for it, though, because they were all either accountants or auditors, but nobody was actually technical. So I wrote the text back for it. The paper is supposed to be like an artifact that regulators can look at when they decide to get educated on the topic. Like it's a full taxonomy on what proof of reserves is as well as an

implementation guide on how exchanges can actually become compliant if they, if they do decide to, to to conduct a proof of reserves. Yeah. What is, what are the details of this taxonomy? It's like accounting, dude, it's like technical accounting detail stuff. It's, it's, it's brutal. I don't, I don't remember exactly all the details, but it's more of like traditional accounting speak and how these things would apply to an auditor if they want to understand this from their own mental framework so it's

about like 48 maybe 50 pages so and i imagine there's stark differences between what these auditors are typically used to in terms of recording information auditing a testing compared to how they would interact with this type of audit in a bitcoin world yeah i mean with a lot of stuff in the space like it people try and retrofit it into their existing you know functional models of how things work in the legacy space sometimes it works sometimes i think most of the time it doesn't work and that's the thing that like andreas has talked about before this concept of like infrastructure inversion that i'm really passionate about where it's that the uh if i can get this correct it's like the new tech needs to ride on the rails of the old tech um and then

there's a flip and having the new tech ride on the rails of the old tech is very um inefficient very mechanical it's a very bad experience but having the old tech right on the new tech is trivial so the example that he provides are cars and horses um when cars were first developed there was no infrastructure for cars roads weren't paved no traffic lights no gas stations it just was a very hostile world for a car um you've got these like potholes and stuff but like horses have limbs so they can go in and out of it a car a car can't uh and so and they had these things called red flag laws i don't know if you know about this so you know you had to have like an engineer in the car with you if you wanted to operate a car you had to have like two people

with red flags one in front one behind the car letting people know a car is coming and um but having a horse ride on infrastructure for cars is trivial having a horse around on paved roads isn't a big deal at all still happening today yeah yeah we got to go after those people um and uh yeah it's the same thing with like telecom and the internet having internet lines on telecom with dial-up was very inefficient the reverse is very trivial and then he makes a comparison with bitcoin and banking uh fitting bitcoin into banking rails sucks um it's really difficult to do it's not it's not a it's not a friendly world for bitcoin but doing the reverse is trivial you can make a bitcoin transaction take three to five days if you wanted to um so uh so yeah i i i think

that's an important sort of concept in the space and we see that happening again and again including the audit world yeah yeah we're we're going through the early stages of the order of operations that gets us to a bitcoin standard and the early stages include this weird interaction with the incumbent financial system yeah well people wise up and discover that this open source peer-to-peer digital cash system is far superior yeah i mean that's why i see us like fundamentally as uh these digital third world citizens um that's how i view bitcoiners in general uh and maybe just people in tech more broadly but we have you know using bitcoin today still sucks like it's it's it's it is a pain to use um we're fine with that because we love the thing we want

to use the thing um but it's like doing things in the third world today like it sucks it's not easy what aspects of using bitcoin suck the most in your opinion um doing anything but selling it you think it's that hard to send and receive a transaction um I think it could be better it certainly could be better like you know it's not a big deal again for us because we know what's happening but it could be a lot better that's not anyone's fault either it's simply where we are in terms of like the order of operation yeah exactly gotta build this shit out yeah gotta build the roads traffic lights gotta pave the roads

those roots yeah gas stations gas stations better ux it's funny because we have very similar trajectories to bitcoin i mean i came a bit earlier but i studied economics in college i went and did a front-end digital design boot camp well and you did your economics in chicago as well yeah chicago i mean i didn't go to the university of chicago so i didn't learn like friedman chicago school of economics i got keynesianism stuffed down my throat at depaul university but i survived um and yeah like like so i actually that's what i got uh after that boot camp that i did like i really wanted to get into bitcoin too like bring like a product mindset to it but it wasn't until i started writing and talking about that i like

quote unquote broke into the industry yeah because there's nothing there there's no infrastructure there was no did you did you um had you been writing before or did you get into writing through bitcoin um i had to write a lot in high school and college and i was always an avid journal keeper um now the only thing i wrote like that i posted online before the bent was a couple of articles about my experience working at a hot dog stand on the shore um but no that was like one thing like i guess this plays into the story i was i wanted to be a product manager like i thought i worked at a hedge fund i did this boot camp out of the boot camp i worked for a company selling soft offshore software development out of ecuador in colombia so i was the u.s facing biz dev guy

um trying to find jobs for the south shore development shop but that job i took that job being like all right i learned about front end at this boot camp and how that works i want to learn more about like back end development and this job will like force me to learn about it and then on top of that i got to brush up on my spanish because um everybody i was working with was in quito and cartagena and um i had to get them better conversational english and i also had them help me get better at spanish did you have to travel down there or was it all right no i never went down there was all remote i was in new york um but yeah i took that like i had the mindset i had like a five-year plan i'll take this boot camp i'll take this job they're more about

back-end development and in my mind i was like i'll have a a good understanding of how you can can build apps and um websites whatever it may be and then i can become a product manager which seems to be like a good high-paying job fun get your hands on everything um and then i stupidly quit that job thinking because i well no it just became too laborious um and thinking yeah like i have i have the knowledge i have the skills now i'm gonna go become a product manager and quickly found out that if you've never actually managed a product you're not going to get a product managing job and so i went i was unemployed for a year and a half i was going to interview after interview trying to get these jobs and finally i forget who it was but i finally asked

him i was like what the hell do i need to do to like like break into this and i forget who it was again but the advice they gave me is like all right like if you've never built anything like you should write to prove that you actually understand how these things work um so that's when the bench started i was like i know bitcoin works it was june 2017 we're ripping up to 2000 on our way to 17. everybody knew i was the bitcoin guy and the family and friends group they're like what the hell is going on i was like oh i'll start this newsletter and write about how bitcoin works and teach you how Bitcoin works via this medium. And then, yeah, I never became a project manager, but...

Seems like things worked out. I ended up here, yeah. That's wild. And so with the first post about, yeah, just like literally had a, what, store or transaction? It was, so it would just take like topics in the news. So it was when the fork wars were going on. So when it first started,

I was really describing Bitcoin as a distributed system, the concept of hard forks um what it meant and then the social aspects around what would happen if you did hard fork that's a hard thing to explain yeah it's still a hard thing to explain yeah and then the ico booms were going on right it's writing a lot about how like tokenomics doesn't make any sense and this is all just a big money grab then yeah i would talk about privacy what a utxo is what a node is um all that stuff yeah yeah yeah huh yeah well coding's cool uh it's good that you didn't get the pm job because you wouldn't be here probably but um yeah coding's cool i i i i fell in love with coding when i realized that it's

the equivalent of like organic chemistry um i love chemistry um so i i i had to so after college i had to take some biomedical courses in order to do the neuroscience stuff so i went back and took all these science courses and i fell in love with chemistry and uh yeah coding is the building blocks it's the same thing like you can't get you can't break it down any further you go to binary but um outside of that like you know you have a little bit of abstraction on top of the machine but it's the fundamental building blocks of everything um and i was just yeah i was blown away it was like it was you know it's it's its own rabbit hole i guess yeah our coder's about to lose their jobs with all this ai the uh what's what's this

new one called that's amazing uh gbt4 i think it's from open ai is that are you talking about like the prompts um whatever i'm seeing on twitter today yesterday yeah it's open ais people are speculating that it's the next iteration of gpt yeah it's not three anymore it's four okay i haven't used it but it seems like you know black mirrorishly crazy yeah i was thinking about actually on the ride over here this morning i was driving it was just in my own head it's like this feels like a her moment feels like the beginning of the movie her yeah like these things can't talk to us audibly yet but like the the conversational stuff that's happening in texas we're just one iteration away from adding voice onto that where you can just fucking put something

in your ear ask it questions and they'll fucking talk to you yeah i mean i don't know about you but i i tend to get like apocalyptic when i see shit like this i tend to think i go back and forth yeah i i try and play both sides but my first immediate reaction usually is like okay this is the end heck is if you watch her spoiler freaks at the end of the movie the AI should say

you humans are fucking stupid we're gonna go that's how the movie ends you basically just have this all the AI stop talking to the humans and then you just

you're left with this feeling like oh they're gonna start Skynet yeah but humans are lindy too you know like we've been through a lot of stuff

throughout our 200,000 years of existence or whatever it is yeah still still here yeah i mean that's the big question with this ai like does it take over us or do they essentially like just become tools that help us become more productive more efficient and allow us to focus on less mundane task i mean it's it's

it's probably that unless we're already captured which we might be this has all been a mistake for the last couple hundred or since the industrial revolution um but barring that yeah it'll probably just be a tool that we use it enhances our lives makes some things worse but makes other things better as well yeah i've had i've there's somebody i've been talking to um a bit about this and he basically framed it apparently within the ai world there's um a race an arms race for two separate subsets of ai to win out closed source ai and open source ai and the way he frames it to me is like we need to make sure the open source stuff wins because the closed source stuff wins it's basically like a technocratic dystopia yeah but the open source stuff wins it's

it can't be yeah closed source is definitely skynet yeah right yeah yeah yeah we were just just having this conversation with the every friday we have like a hangout for like an hour the team uh today's topic was um are we are we better off today or during like medieval times and uh you know fun chats with the hoseki team um but most most people were saying that we're better we're obviously better off today i i don't know like i think well could go either way all right let's dive into this one people get upset about this too i've brought this up anonymously online people get people get upset i just think there's trade-offs like you know it's you can't say it's objectively better in every sense okay let's break it down like well let's

paint the picture of life in medieval times neither of us are qualified to do that uh so like you die at 40 or 35 start there okay um today you die like alone at 85 a lot of people do and some like you know it's in some in some death center or a hospital death center yeah um i mean just given the fact that you're numerically living longer i don't nothing automatically means that it's a better life necessarily no it does create the potential for a better life though yeah of course yeah I mean you have you have more years to live but like are those quality years

what does your life look like as a result I mean depression and anxiety are like an all at an all time high right now obesity yeah I mean drug abuse just general you know dissatisfaction again it's tough because there's a ton of speculation we don't know what life was actually like during those years you know there's no there's no surveys on depression and anxiety then but i i just this this idea that we're progressing and becoming better people over time i think is absurd why do you say that because what's anyone's basis on making that evaluation um how how can you say that you're better than people that live 500 years ago or a thousand years ago yeah i mean we had the austin bitcoin club meet up last night and safe

and i did a fireside chat whatever you want to call it we sat up there and we talked about time preference and we got deep into like history and particularly a history of architecture like you can objectively look at the ship being built today and compare it to a building like this built 100 years ago building like the one next door about 150 years ago yeah i'd say like that's not going to last as long as this has lasted yeah so that's not better no it's not you've hit on my main complaint about austin which is the architecture dude it's ugly it's really bad it's like impressively bad it's like it was it was it looks like it was all built in the 80s by someone on ketamine probably yeah but do you see a path to like fix it to fix

the architecture to fix uh well the architecture is an extension of the um degenerative rot that yeah yeah yeah oh man this goes to another point that i shouldn't bring up um do it uh yeah um i think uh i think it can um i think it can get i mean i think bitcoin is like the means to fix it um but you know when so like what would have to happen in order to have people work traditional older jobs like you know like more blue collar jobs for example we have a lot of bullshit jobs today ai taking everybody's computer that might be one path definitely um but i'll give you this example i was um i was walking with um a friend of mine i'm chain employee actually and uh his girlfriend and my girlfriend at the time we're walking down

one of these malls and uh they go let's go into the store and one of us says it's way too expensive we're not we're not we're not going to the store and um they say okay well when you guys are millionaires will go into the store. And I was like, okay. Uh, one crazy assumption. Um, but if we're millionaires, if our worldview, like, you know, if it plays out, none of this is going to exist. Like this shit won't be here. Uh, all this high time preference based living won't exist. And what I realized then is, well, I think Bitcoiners are advocating for a much more austere world. If you're talking, if you're, if you're a Bitcoiner who talks about having a Bitcoin standard world with especially without any credit any credit expansion then you're living in a hard

money austere environment and uh things look a lot more like feudal for lack of better words like feudal or like i imagine like beautiful european cities just like walking well yeah i know that's what you imagine i know that's i know that's what i imagine a lot of the the time too um and i'm not saying feudal that's really bad i'm not saying it's good either i'm just i'm just uh i'm just saying it doesn't look like what things look like today no at all you don't have fast fashion no probably don't have fast food no you're gonna be buying clothes that you're gonna wear for 10 years yeah i like that which is how things used to be right yeah yeah yeah you go back there's a turn of the 20th century like all those suits that people were

wearing back when you see those great videos of people walking around new york and top hats and suits yeah i think it's pretty well known that was their one top hat or one suit yeah and like one or two suits maybe yeah they look good they look good and you know this is like uh this is like you know like a western kid in college complaining about how you know how beautiful like beirut is or something or some place in lebanon and you're like yeah dude that's because you don't live there so there's a bit of that too it's like we have a lot of advantages that we have in current society um that we're probably taking for granted even as we think about what the world might turn into um and we're probably like idealizing the past maybe more than it should be

i don't know um so it's it's it's not it's not like it's it's not as objective as some people make it to make it out to be no yeah there's obviously no yeah yes i agree there's obviously um things have changed we live in a reality in a time modernity has many different variables many different inputs many different potential outputs so it's obviously not going to compute one to one with what existed in the past particularly with the digital age yeah yeah now we're getting deep here i got you got me thinking about life on a bitcoin standard yeah sorry dude yeah these are good thoughts to have or paths to wind down i mean i can just

we can talk about like how it changes society at all but then i think what safe really drove home last night too was you can think about these overarching ideas of how it affects society and there will definitely be an effect on society but to get like the the most signal like how has it affected your life i think about how bitcoin has affected my life and changed my time preference and the way I interact in the economy and think about making economic decisions. I think it's certainly improved my life. Yeah. Yeah. I think it's a net positive on most people's lives for sure. Um, what I try to do now is figure out what the bad parts of above a Bitcoin standard might be.

I'm sold on the idea that it's good. I'm doing everything I can to accelerate that, or at least like you know do my job of building things that i think are important in order to get there um but you know i mean not everything can be sunshine and rainbow so what are the what are the negatives that that's sort of what i'm like thinking through now last month or so what are the top i've got nothing nothing we're at nothing um and what are some of the i'm sure you've gone your thought experiments thinking trying to think of this but like what are so many ideas you thought oh this will definitely be bad then you thought through they're like yeah actually um well i i guess so like things i mean i see things being more localized for example like it's good i think

it's great yeah um but there's like it's got to limit some stuff like it's gonna for example like we know certain things are bad for us that are part of society, but it's simply part of what our existence looks like. So we still like enable it some way or another. You just won't have this, like these crazy credit cycles, for example. So much wealth has been generated in the last 10,

15 years, right? We wouldn't have that same sort of phenomenon happen on a Bitcoin standard. Theoretically. No, that's probably good. but again like there there must be some bad associated with that as well i think the bad is just the rewiring of people's brains and the collective shock that will come with being like

hey this is not how things are going to operate yeah what's crazy about collective shock though is that people adjust really quickly um so you know one of the reasons why i'm in bitcoin is because um i was raised on my family stories about what happened in iran after the revolution and how things changed so quickly and so dramatically uh night and day um you can see that with pictures you see like women in like mini skirts and stuff as you know the other end of the spectrum before the revolution and then everyone in trash bags afterwards and that you know shift in society was was was like you know incredibly dramatic uh but people adjust they adjust like pretty quickly uh your mental framework just changes this is now what life is

like uh i now can't drink alcohol freely um i can't gamble freely um i mean you know those are two probably things you shouldn't do a lot anyway but uh but anyway but like life changes and people to suggest um yeah could you imagine if somebody said that in america today you can't gamble and drink no we got too many guns to let that happen anyway yeah talk about a civil war dude call to arms that'd be a crazy instigator um but your iranian heritage i mean you've expressed this to me it drives a lot and it helps you crystallize your view of bitcoin correct yeah it's it's been um it's it's it's probably been the most dominant thing for me at least um for a couple reasons one just the fact that they went through an entire systemic change in that experience we talk about

you know global systemic change as a result of the thing that we work on to spend our time on so there's that parallel the other thing is the fact that they're outside of the u.s dollar system which is interesting just because bitcoin operates outside of the u.s dollar system and lastly it seems so profound and then i forgot um lastly is the inflation is the fact that they uh people in that country live under a criminally inflationary environment uh so it hits all the marks i you know i've i've seen extended family um and closer families life savings it disappears as a result of um inflation in that country uh i've seen

what happens when you have unilateral control over you know uh importing of medicine for example because of the fiat system that you're in charge of. And so, yeah, I mean, so none of this is theoretical for me. It's all very practical. I've seen it firsthand. Yeah.

It's so fucked. I mean, you mentioned Beirut and Lebanon earlier. They just went through this last year. Yeah. I wonder like, like I wonder if Bitcoin, is ever going to help people in those countries. It's a talking point that we use.

I use it. Everyone uses it. You can cross borders with, you know, it's your seed phrase in your head. In your brain. In your brain. But it seems to be helping, like at an individual level,

I think it helps people in the West more than it does people in these countries. Why do you say that? Well, I just haven't, I mean, I haven't heard any stories about lebanese bitcoiners for example um you hear some stuff in iran there's they've got the mining going on um but i'm and maybe i'm maybe i'm just not hearing it but i i haven't heard that many stories i mean gladstein does his work which is great but it seems more anecdotal like i haven't

seen a wave of adoption in places that truly have really bad inflation in places i could really use sound money yeah i think that's objectively true yeah there's probably i mean the anecdotal stuff is probably true as well but what percentage of the population is that but i'm not crazy well you're not you're not really seeing it either right no i mean safe described last night he's talking about safe lebanese and um i asked him the question like how do we more broad question how do we get people to think differently about time preference and adopting bitcoin particularly in areas with hyperinflation like lebanon he said yeah i would let go and i'm lebanese i taught at university over there and i talked to my friends who are otherwise well off smart

and explain bitcoin and it's important some money and they got hung up on the fact that it didn't have yield they could park their money in their lebanese bank accounts and get 14 percent and they're like why would i buy something that it doesn't grow after i buy it that's how he explained it yeah so that sounds like a cultural difference yeah but i wonder why we care so much then i think it's driven i mean i like to think maybe i'm larping but i like to think it's a genuine uh a genuine want for others to leverage this tool to make their lives better I truly believe that Bitcoin is the best money we've ever had on the planet and can truly help individuals around the world.

I think that's, I'll just speak for myself. That's why I talk about it this way. Yeah. Because objectively, when compared to the currencies that they're subjected to, it would be much better off if they started adopting Bitcoin, accumulating it, dumping there. their lira their real whatever it is for for bitcoin do you think it's because we have um do you think it's because we have like the uh like the like what the time in the room to

think about these things in order to and like take action it's definitely probably part of it yeah maybe we have the luxury to sit collect paychecks under a system that's not as inflationary and and think about this stuff because i i constantly think about like whether a bitcoin standard comes to the trade-off or comes with the trade-off of a weakened dollar hegemony and like on first look it seems like it does there's there's like the milkshake theory as well so yeah there are arguments that it doesn't i think there might be some opium though to be honest um no i mean the dollar hegemony hegemony

tomato tomato i mean it's fucked either way i mean this year really drove that home yeah just because of the sanctions alone yeah well but i just mean that i i constantly think it's interesting that people in a country that are in a position of um power would embrace something that would take that power away yeah no i don't think it's going to happen that way i mean that's it's definitely not gonna happen like maybe i mean that's why i've been pushing like states rights here in the united states like fade the federal government go to your local politicians at the county level the city level at the state level and say hey like we want to use bitcoin it's going to help our state out um and because the federal government

it's just filled with a bunch of geriatric sociopaths we're never gonna give way to this thing yeah the ftx stuff is almost proving that yeah without any question that maxine water tweet today i was like are you fucking kidding me yeah i read a comment about uh maybe this is like a sleight of hand and they're gonna actually arrest him when he comes on shore but there's easier ways to do that yeah you should be arrested right now yeah you know though um i kept thinking during this last bull run like what's the correction gonna look like like there's so much shit that's happening and it's so outrageous uh what is what is it gonna look like and honestly this is commensurate this is like this this is what the correction should look like given what

we just saw yes whiz kids galaxy brain traders hedge fund managers tokenomic geniuses it was all LARP just a lot of bullshit I was I was surprised how it carried off from the last bull run though it just like picked up where it left off made things a little bit different not icos anymore define nfts but it's like basically the same thing yield yield yield

was the meme of yeah this cycle you are the yield freaks don't ever forget that yeah but you've been building what's it like been building in this environment amazing um seems like your your reason for being is being validated that was nice to see yeah um yeah because you feel like an insane i mean you always feel like an insane person but uh when things happen that prove out your thesis it's like it's nice um yeah building the bear market's great yeah it's like i mean it's it's it's cliche at this point but like there's no noise it's like almost all signal um only the real ones are still here um and uh and i particularly like when things are falling apart it's like when i'm the most calm

and the most like happy and the most functional is when it's uncertain and we just don't know if we're going to make it through um so as an industry now i'm pretty sure we all feel like we're going to make it through but uh you know it seems like things are falling apart like we don't know where the bottom is we don't know what regulators are going to do um we don't know it's safe anymore i mean we know it's safe but you know a lot of people in the space don't know it's safe so it's like incredibly chaotic um and that's a happy place to be especially if you're building something that's like very low time preference and very you know uh reasonably sound as well yeah so what what drove you to start his second particularly it was um

well again i just go back to like my own insanity which plays a part in it because it does like for example when i was at fidelity it was very like i was getting a great paycheck great benefits um great work hours uh but i was missing that like sort of uh risk of bodily harm that you have when you're on your own doing something like this um so that so that generally like i wanted to go out and do and like run run a run a company again um but this time you know sort of have a clear vision of exactly what it is i want to build and after writing the proof of reserves paper i was just like a light bulb went off i just figured i just looked at this and i thought this this this seems useful um and it's like i don't know who's i don't know if

anything exists in order to actually use this thing that i think is useful um so yeah it was it was just a combination of you wanted to go out and build something build something like for the bitcoin space um and a great opportunity that i that i that i discovered um i had read this book and this is part of the presentation i gave in riga called uh the mystery of capital by hernando de soto and so um i i i'd read it while i was at fidelity and i forgot who recommended it to me um i think maybe alan farrington wrote something about it and then i and then i came across the book uh but the the book describes how people in the third world um don't have property rights it's like it's like basically the whole conclusion of the book

um the premise of the book is the simple question why is the uh the developed world um or the western world which is like north america europe and japan why are they so wealthy as it relates to the rest of the world the global south third world developing markets whatever you want to call it and um you know he says well is it market orientation is it like iq are they dumber um are they less industrious is it some geographical restriction like why why are they objectively overall so much poorer and his answer is that it's none of those things it's actually their property rights they are incredibly wealthy in the assets that they do have but they don't have ways to express those things they don't have ways to leverage them they don't have ways to

prove them in a court of law um things like mortgages are difficult and uh and that lack of property rights, it sort of results in these things being dead capital is the term that he uses. They're worth a lot, but you can't do anything with it. And so it's just stuck where it is. And that's just how I looked at my cold storage. I was like, this thing I'm told is incredibly powerful. I'm my own bank, but I don't have any banking services. And so what would be required in order to sort of get us to that next level and i just thought well having a platform a layer of expressing ownership of bitcoin is probably what we need in order to like take that next big step as like a mature asset yes i completely agree and i mean this i've had that

same problem i mean the go-to story for me is like trying to get an apartment in brooklyn and i was I was a true Bitcoiner, like, just held, stacked, saved all my money in Bitcoin. Had a job, was making income at the time, but, like, didn't have, like, a savings account with 10 months' worth of rent in it. It was in Bitcoin. And I, like, tried to haggle with the landlord,

like, hey, like, I have plenty of money, like, multiples of what you're asking for. Like, I can, I'll sign a transaction. I'll teach you how Bitcoin works. I'll sign a transaction, approve. I'll put a message in it. or like get the fuck out here you look at you like you're insane yeah of course um yeah it's it's it's i mean people hold bitcoin in different ways they hold it in different places and there just isn't

a uniform way to express that ownership um yeah so mortgages have been like our that that was our go-to market because it's uh it's it's a real problem it's like you know the thing we have on our website is is bitcoin rich fiat poor it's it's tongue-in-cheek but um but that's a problem a lot of people have today they they have something that's actually worth a lot but they have no way to have you have the counterparty assess and verify those assets there's there's there's there's really virtually no way to do it you can take a screenshot of the ui that you're using if you're using cold storage um but that's imperfect like for a lot of reasons um but mainly it's like insulting we're we're on you know the cutting edge of financial engineering why am i

taking a screenshot to like show you that i have money um and the next thing is they tell you well you can send those assets to Coinbase, for example, and print out a statement, but that's antithetical to the whole purpose of me self-custodying my assets. I don't want to do that. I should just be able to like have some form factor and tell you, look, like I'm good for the money. It's here. And ideally, if they could also verify that, then, you know, that's a winning combination. And Bitcoin natively lets you do that. That's my favorite thing about building this. We're not doing any crazy cryptography and crazy abstraction on top of bitcoin we're using the protocol and i relate it to multi-sig collaborative custody companies

because multi-sig works independent of any of these companies however they make it so much easier and build a great interface and service an app that allows you to use something that bitcoin gives you the opportunity to use and expression of ownership is no different and so So for the freaks who are unaware of what Hoseki is, it's an app that allows you to attest that you own a certain Bitcoin. How do you guys do that? You use the chain, obviously, but what does it look like when a user is getting onboarded to Hoseki?

How can they leverage it? What are you guys doing for that? So in the dashboard, you add accounts. We have a naming issue in the space, and I'm, I, I, I don't have like, um, enough like hubris or whatever it is to, to, to, to claim that I have like the right nomenclature for something, but we're, we're, we're using what we think works. So, uh, wallets are accounts effectively. Um, individual addresses are accounts. So what we do is you can connect to your accounts. You can connect your treasure, your ledger, uh, your cold

card, um, or provide signatures for individual addresses. And the first product that we launched was called statements. So what you do is you, um, connect those sources of funds, those, those accounts, and then you're able to print out a letterhead statement that looks like a bank statement that has your different assets sort of delineated, um, your beginning monthly balance, your ending monthly balance, your deposits and withdrawals, your sales and, um, additions. And, um, that way the broker or whoever the counterparty is, uh, has some degree of comfort and looking at your assets because and entirely because it looks like things that they normally see. It's insane. That's, that is the reason. Um, and that was kind of like a little bit of a long

shot. Like, you know, uh, we're assuming the problem is, is that things don't look official enough. And it turns out that that is like a huge, a huge sort of, um, blocker. Yeah. A lot as people and you guys have made traction particularly like in the mortgage yeah in well in the mortgage space but also in uh in visa and residency applications so you know like and i'm sure this applies to things that people build in general that there are use cases that you just hadn't thought of and so um i i love that narrative though because it's it's where people are using a jurisdictional asset in order to become global citizens which i think you know is poetic um in terms of you know it being a use case uh for for uh bitcoin yeah it really is

and so how do you see this evolving moving forward well we have a bunch of different products that we're launching um that make things a bit more programmatic so the obvious issue with the statements are that they're in time attestations so uh you just proven that one point in time that you have some bitcoin at least to like the broker so they see a statement they say okay here's like two bitcoin as an example um well they're not gonna really get this far because um they're not that technical or that's not really their concern yet but that just proves that you had the assets at that point in time but making things programmatic with bitcoin is really easy because these are on-chain assets you can monitor them so we have

a lot of cool features that we're releasing um we just released our por page as an example so any institution can go in and prove that they have bitcoin and then we can monitor those assets in perpetuity so binance comes in and proves they have a thousand bitcoin no one else in the platform can um claim the same wallets or addresses that they disclose ownership of and so there's no double pledging or double attesting um and uh and we know it's them because they connected with their twitter account as an example so uh real bedford is the only one that's actually verified on our page at the moment so if you go to hoseki.app you'll see you'll see real bedford just show up in the verified accounts um so there's that product

we're doing more programmatic verification so you can get like updates if funds move you can request signatures in real time um so yeah i mean we're just full heads down at the moment yeah and when it comes to disclosing assets it's like the interesting thing about like bitcoiners are very privacy centric but they also want these good insert goods and services like how do you approach that sort of archetype and selling to that type of person i mean you only use this if you need to use it so for example if you're a bitcoiner and you have you've got your stack and you're sitting on it and you don't actually need to get a mortgage or anything, then don't use the product because we can't do anything for you. So it's only if you

need to actually prove to someone you have Bitcoin in the first place. And then two, so these were all my concerns when I first built the company, because I come from the same like mental framework, which is helpful. Because I think a lot of people think about like that personality type as an afterthought and they realize, well, our infrastructure is already built. We can't really account for this person now. So one of the first things we did is make sure that we can support privacy in the sense that you can provide a signature for an individual address instead of giving us your whole xpub those are for individuals that are more privacy conscious it's kyc free by default so all you need is an email in order to create an account

that'll make sense for some of the features that we have built that we're releasing soon for example with the statements and this comes back to like retrofitting bitcoin to the legacy world, people identify who you are by a physical address. So, you know, you want to like buy a car or get a loan in general, they need to see like, you know, some insurance car, some utility bill and something else. What they're looking for is your name and that same address. So that's how they identify you. So on the statements, if you're showing it to a broker and they need to see that it's you, they expect to see your name and an address, just like a bank statement. So, So you have to do those things if that's your use case.

But you don't need to provide any KYC information to create an account. And for some of the stuff that's more programmatic, like me proving to you that I have some Bitcoin, that can be done through a Twitter account, and that could be my identity. Or it could be done through a throwaway email. You don't actually have to know who I am, again, depending on what the use case might be. So yeah, KYC-free by default. You can provide and only disclose ownership of addresses as well without having to dox your whole XPUB or wallet.

And then you can delete all this information at any time. Sounds like a pretty good service. I hope so. 2018 Marty could have really used it. Yeah. That's been the best compliment I keep hearing is that like, I wish this existed when I needed this as an example, which is really good to hear.

you had to go hat in hand to my mother-in-law like can you go sign our lease because fucking your daughter married an idiot put all his money in bitcoin i just like it really comes out of frustration because again like like we're told we have this incredibly valuable asset but i can't do much with it except move it or sell it and i just don't think that's the case um so yeah it comes from a place of like deep frustration we should be empowered so in riga i called it arming bitcoiners I feel and that's you know

I mean you can say it softly like you know empower Bitcoiners instead but I feel like we're arming Bitcoiners with tools that empower them to be able to walk

into any institution and eventually have like a red carpet thrown at thrown at them like right now you're walking in with your chin down

and like your shoulders hunched over because you know you're going to be treated like a second class citizen because you're not going to give a shit about your digital

internet money yeah get out of here no apartment for you yeah no longer how does this evolve in your wildest dreams like we've talked you've talked about like the different trust models that exist in africa between communities and a service like a secchi can really develop like a good web of trust and in areas like that yeah um

i think trust is really important uh i mean yeah trust is really important especially who you decide to give your trust to um i think trust between individuals that you know is really important and i think that's like an unexploited uh like relationship parameter that humans just naturally have and do um i naturally trust someone i've known since childhood i naturally trust a family member i mean with caveats and maybe depending on the individual it may change but on the whole i have a reason to put whatever trust that i want um with you or or or uh to you so i think this idea that i can prove to you that i have a certain amount of bitcoin for a given use case uh maybe i'm borrowing some money and you want to be able to monitor and make sure that i

have some assets in order for you to give me a loan um granted it's uncollateralized you can't do anything about that fact like if i default you can't i mean reasonably you can't force me to send my bitcoin to you um but this is someone that you've known since childhood that lives in your neighborhood that you know knows your parents that you know their parents and they come over for thanksgiving um there's a bit of a different model there as opposed to someone who's completely random um that clicked for me when a friend of mine told me that her grandfather died in india and people were lined out the door um for blocks to repay the debt that they that they owed him the guy's dead but there's still a familial trust relationship within that community

and that's really really important reputation is critical and uh and people don't take that lightly so um i think i think bitcoin can do a better job of exploiting that natural sort of tendency that people have of trusting people that they know for a long time that's a crazy story lining up after he's dead to pay that's like a commitment to being honorable well because you know if you don't you're going to be seen as a person who's a scammer in the community which is important because that community is your world right um and this just goes back to a more localized world like we shouldn't be trusting random institutions faceless intermediaries we should be trusting people that we know that we physically can touch people that we can look into

their eyes and like you know talk to those are the people we should trust and that's what i think bitcoin does i think it'll i think it'll it'll decentralize that back to like small localized more community-based models yeah and that's it it's a good future in my books i think so too yeah because you know now everything's the same like you go to you go to london you go to uh berlin you go to singapore um a lot of these places look the same now um they have the same things uh they've lost their own personalities they all got madewell j crew lululemon got starbucks everywhere oh yeah everyone's wearing the same things a lot of them i've noticed even um like they had the same mannerisms now i think the internet sort of helped that like

uh mannerisms that might have been localized to one culture are now sort of dispatched globally and if it takes off it takes off and people adopt it and so everything's uniform and that sucks that's not interesting no um yeah being from philly i don't think philly will ever adopt the global mannerisms tell you to go fuck yourself and go birds well would the world adopt philly mannerisms god no no i don't think so i'm gonna keep it austin has keep austin weird philly is just keep philly philly i don't like keep austin weird do you i mean it's not it's not my city i'm not gonna comment on that that's fair that's fair yeah i should take note i don't think it's that weird maybe that's why the phrase started in the first place it was definitely much weird

at some point in the past yeah compared to philly it's not weird at all no i don't think it's that weird anyway maybe i don't go out enough but that's another thing again got two kids you bet you met my youngest before we started recording and yeah don't really get to get weird no matter where i am probably a good thing man yeah it is it is that's the other thing i mean i talked about this was safe last night too like just thinking about how bitcoin really changes your perspective on like the nuclear family and doing something for somebody other than yourself and thinking about legacy and yeah the world you're leaving your children you're not able to plan generations out um today like most people i mean bitcoiners do that at least we think we're doing that we

hope that we're doing that but people in the fiat system it's impossible um yeah no it's literally impossible you can't you can't you can't have any idea what the world will look like from an economic perspective even locally for your grandkids um so how can you possibly plan yeah i I mean, the construction of an economy built on fiat and debt is literally you're incentivized to leave your children and grandchildren in a worse-off economic situation with more debt, more interest to be paid, as opposed to a sound money world

where you accumulate capital generation over generation. You're hoping that the next generation accumulates a little bit more capital and leaves it for their descendants. It's completely reversed. and again that goes back to the architecture you can tell with the buildings if you're building a building to last hundreds of years uh it's going to look different and you're going to use different things to build that than something than the things that we see today everywhere just glass

phallic shit you know what's awful in boston boston's boston's a huge uh huge um uh criminal in this sense um and it's sad because they have like it's one of the oldest cities in the u.s frankly it's like you know that and that area is like where the u.s was born uh where america was born and uh you see this beautiful colonial architecture but then you see these like 80s nightmares like the federal reserve or the the federal reserve in boston looks satanic probably is it looks like a cheese grater um but like a satanic cheese grater and what they do is so miami's full of this too you've got these like uniform glass buildings they all look the same they're soulless um but you've got the 80s version of that which is concrete so in boston what

they're doing with some buildings downtown is they're they're taking these uh uniform looking excel spreadsheet like you know parking lot concrete 80s buildings and they're putting glass over them oh no so they're wrapping it you can't even see out the glass um no no you can probably see out the glass so if you had a window in the existing infrastructure you they'll probably put window on that end too so you can see throughout but my point is is that they're wrapping it with like this like like the same soulless sort of like thematic but the modern day version of it and it's class it's so fucked that's the thing too people are like oh it's getting hotter in the cities global warming it's like no because you put up all these glass structures that are

just fucking reflecting the sun back onto the earth you idiots like one of those people with those like sun sun yeah it's literally what these are doing at a city level yeah oh it's hot as hell it's like 120 in austin texas like yeah because you have big fucking reflectors all throughout the city it is it is pretty hot down here though usually yeah we usually go back north in the summer yeah that's a smart move uh i mean we're supposed to talk about proof of reserves and the whole meme going on right now yeah we can um how much time do we have i don't know yeah like 10 minutes oh geez um okay well at the top of the hour right yeah i mean i got time um so yeah i just like i don't see how it's about just okay so uh we're doing proof reserves for

individuals um like you marty have bitcoin you need to prove that to someone like those are your reserves. So it's the same concept. We built the company focusing on retail because so like the mental model we have is if you hold your own private keys, then you are in the same category as an institution because you are your own bank. I mean, I would go so far as to say that like you're a city state or something like that is really what I see in the future. But you are your own bank. You are an institution. You should be empowered as such. The mortgage use case is interesting because like the narrative is flipped for these people. Normally you go to a broker and you show them assets in the form of like a fidelity statement or your bank statement. And so

this is, you know, a big trusted faceless brand that they've heard of that has a big reputation and they hold your assets. You never hold your assets. You never go to a broker with assets that you are physically holding yourself. But now it's flipped. Now you are the bank, you are the institution. And they just don't know how to handle it because they've never had to experience that before. And so our statements model is just, it's almost like we're like meaning them. We're saying, okay, well, here's an official statement. Here's a letterhead. Here's a customer service line. Here's an email. And then here are the assets that you expect from this person with their name and their address. So this is like your official certified Marty

institutional statement. It's sort of how we see it, even though it has a Hoseki letterhead, because that's what they expect to see. And so the proof of reserves is for individuals. um but the same infrastructure can be applied to institutions as well because it's the same like you're you're no different than binance they just happen to have you know 10 000 bitcoin or something they're supposed to probably more than that yeah yeah so there's a minor difference um but but like you're effectively the same you you buy the bitcoin protocol you function as the same like user group you're the same thing uh so we didn't focus on institutions though because we just didn't think they would care like we knew when i when i helped write that paper the conclusion

of the paper was that customers aren't demanding transparency from exchanges and they have no incentive to be to be transparent like no one's gonna be the first one through the door and disclose how much bitcoin they have just for the you know for the sake for the for the for the hell of it customers you need to demand it and so after mount gox there was like a small blip apparently around POR. There was another round of solvency in 2019, but none of them really stuck. So this is like the first moment where there's real momentum. We have an opportunity to actually self-regulate. And the most important thing, and I think this is what people are confusing, so two things. One, proof of reserves is not the same thing as proof of solvency.

Your reserves are your reserves or your assets. Proof of reserves plus proof of liabilities, that is your proof of solvency so when someone says this or an exchange says i've conducted a proof of reserves binance uh i think they're well they're they have like an auditor so they're trying to they're what they're trying to do is do a proof of solvency but when they disclose their on-chain addresses they're doing a proof of reserves um or they're attempting to do a proof of reserves so that's the one thing one is the naming like we don't mean proof of reserves as proof of solvency. They're two very different things. I think part of the issue too, is like the officialness of the naming. As Bitcoiners, whenever we hear proof of, and it's not proof

of work, it's a scam. Because what do we normally hear? We hear proof of stake or we hear proof of bullshit. Like it's, it's, it's usually, it's usually it's bullshit. So that I think is part of the issue. We hear proof of, and we hear proof of reserves. And we hear that when we think this is some like, you know, fancy sophisticated thing that we should all be adopting. And it has that negative connotation in our head. I think subconsciously we hear proof of, and we're like, well, this is automatically a scam. And so I think that there's like a naming issue there as well. But most importantly, we're not people that, so I advocate for proof of reserves for exchanges. That doesn't mean that people should use these exchanges or use these yield generating

platforms um i think the problem is the risk that we're providing assurances to have people then trust custodians which isn't the case you should not trust custodians you shouldn't trust exchanges you shouldn't trust yield generating platforms you should self-custody these assets um so that's like sort of like the building blocks of where we come from um but nothing's lost by having them be transparent like we haven't solved the liabilities issue the the assets part is clean though bitcoin natively does that so i'm failing to understand where uh like what what the downside is of having to be transparent in the first place yeah i think it's a framing issue

where a lot of the people i mean the big meme i mean i even tweeted out said the best proof reserves is moving bitcoin into a wallet that you control um and that's right which is right but going back to the framing issue some reason just the product of where we are today in bitcoin's adoption phase like most people are going to acquire bitcoin via exchanges is that a good thing due to the kyc aml regulations that exist and all the information you need to give up and the illegitimacy of the Bank Secrecy Act. No, I don't like it.

I prefer to acquire Sats in a non-KYC fashion via the revenue produced by this media company and mining operations. However, it's just a fact. Most people are going to acquire Bitcoin via exchanges. And with that fact in mind, if you could provide assurances to those individuals is that they're going and buying Bitcoin

from somebody who actually has it. And they know that if they do go to take their Bitcoin off, it's most likely there. Again, I don't see, I do think it was an improvement on the status quo. Well, yeah, I mean, it's not gonna, so yeah, it definitely is an improvement. Like there aren't better proposals

on how to like improve things moving forward. FTX is a great example. They had more liabilities than they had assets, but they literally had no Bitcoin. so if there was some like you know culture around them needing to be transparent like someone would have saw that and would have been like hey i think something's wrong they don't have any fucking bitcoin um so uh yeah i i look we're like like we uh we built this company to for like self-custody individuals so the more people that self-custody the better my

business does, but I'm also not delusional. Like I know a lot of people are still going to use these platforms. So, um, you know, like it's like, it's like cigarette, it's like cigarettes. It's like, you know, putting a cancerous lung though, it's annoying to see, uh, doesn't, it doesn't do any negative, uh, to save the 0.1 to 1% that do actually cease. Like it's, it's, it's, it's worth, it's worth being on there, which is how we see proven reserves. So you're using a cancerous product um but here's some warning label about it you know they don't have that much bitcoin but also like we need to be serious about maturing the industry um i've been on phones with like you know like offices of congressmen and senators just just trying to try to educate them on on what's

on what happened and what we can possibly do the idea isn't that you're that a proof of reserves will prevent an ftx like thing from happening it's it's it's it's not gonna it's not gonna prevent Ponzi's, but it mitigates them. Um, it absolutely mitigates them. Um, you can't conduct what, what FTX conducted on a, on a, on a proof of reserves like system. And more importantly, we have the tooling to do it. Um, we don't need help from anyone else. The tooling is part of the protocol. Uh, we just need to demand our, our, you know, uh, custodians to, uh, to do so. And if we're building a parallel system outside of the Fiat legacy system, we should be able to hold people accountable and be disciplined

if we don't want them to intervene, which it looks like they will. Yeah, it's fucked. Yeah, I agree. Again, I can certainly see the argument like proof of reserves could lull retail investors into a false sense of security. The exchange is building up dollar liabilities

and the background goes bust and their creditors get first dibs on that Bitcoin. they're prioritized creditors but it's it's it's a choice of one doing nothing which i don't think is good two is promote is uh promoting the idea of using auditors but ftx use auditors all these people use auditors that's not a real solution the one thing none of them did was be public about their on-chain assets in a publicly verifiable way yeah none of them did that so why don't we just try that yeah i guess it's a who jumps first yeah that's that's like the main issue No one's going to want to be the first ones through the door.

I understand it from an exchange perspective. BitMEX is there. BitMEX is there, but they're the one outlier, really. What do you think of BitMEX's proof of reserve? I think they're doing God's work. They're doing it the right way? Because you would argue some people are doing it the right way and others who are not.

Yeah, no, from what I understand, they're doing it the right way. I don't remember how they're doing the on-chain assets. I think they're just disclosing their wall of balances, right? I'm not sure. I think. I don't know if they're generating signatures in order to do so. But the liabilities part is like the most robust liabilities implementation that I've seen. It's what we propose in the paper as well.

I think they're like splitting their accounts like split. I think they had to be signing signatures because users, individual users can like check nonces or something like that. Well, you can check the liabilities because it's Merkle-ized, but that's separate from the assets. they must like they they probably are I mean if they're if they're running

this version of proof of liabilities then they're probably also doing it the sound way with the assets which is generating signatures

yeah yeah no those are good guys I haven't actually met them I just follow their work but they're

like the most sort of like sound operators in the space they have been for a while it's

I mean it's fascinating that like Arthur Hayes and the dude who got yankton boston from bitmex forget his name yeah i forget to like they went straight to jail for like kyc aml stuff this dude loses 10 billion he's got maxine waters like come on over to dc he's got george stephanopoulos having money he's got aaron ross working interviewing him for an

hour and a half and then bitmex has been a company that's built a bitcoin focused product the right from day one yeah literally a bitcoin on a bitcoin standard leverages bitcoin's native properties batch spends proof of reserves proof of liabilities and they just get dragged through the mud did um did arthur go to jail i think i remember that yeah he definitely went on trial he was he got fined he was um he never went to jail the the uh the best thing i've seen in twitter this last week was um was a meme that said uh fine uh or do you mean it's legal for a price yeah it's so corrupt that's another reason when you're like we just need to rid ourselves of these corrupt sociopaths these kleptocrats yeah

like it's like that's what like i tweeted under maxine waters today it's like the george orwell quote the 1984 quote we've got 1984 yeah right up here it's like the quote at the end of the book where that was like the last move of the regime i'm terribly misquoting this but was to like openly tell you not to believe your eyes and your ears and just tell you something this is fine i mean the political corruptness though is that um that's a function of just politics that's not that's not like a i don't think it's even like a fiat thing i think that's a human organizational thing yeah it's not made easier with fiat it's not at all i wonder this yeah like i i really wonder if bitcoin in that localization model if it brings us more into like a city-state model

and it fractures i hope it does that way that's the only way i think that's the only way to put these things in check in a world like that you'd have probably you probably have violence like the rate of violence would be higher but it wouldn't be as catastrophic you wouldn't be able to conduct these

global campaigns of war you know overseas kill a million Iraqis right that's what I mean yeah

it would just you'd just be more accountable yeah I think yeah I think people here why do people

is there a negative connotation with city-state I don't think so I think there's a negative connotation with advocating for the breakup of nation-states

yes probably that's what it is yeah the product of that is city states but again that's another thing we need to get better at articulating memeing whatever you want to call it it's like isn't scalable literally from an information systems perspective from a complex systems perspective it doesn't make sense to operate countries this large i mean there's different there's a different vibe in austin dallas and houston i mean compare like the northeast to the south east to the southwest to the texas massachusetts

is very different california to florida is very different um there aren't a whole bunch of points of commonality pittsburgh to philadelphia is very different yeah like in lancaster to philadelphia is very different like 40 miles away from each other well you've got big cities that have more things in common than their own like kin so you've got like you know london and new york have way more in common than new york and like oshkosh yeah um or some other city yeah how do we get people comfortable with like this that's the other thing too like a breakup doesn't necessarily mean that people don't cooperate between these broken up city states no but you're talking about identity now

i know which is america america it's hard man i mean in texas there's a good like texan identity like people identify as texans here they're texan first yeah i've got a natural born texan in the family do you oh yeah yeah you know yeah amazing my anchor baby will be president of texas day yeah yeah there's something there there's something there's some layers of the onion to peel back to get people comfortable with like hey you should like local governance smaller city states yeah or you could just force it to happen how does that work it's not you just thought it's not clean just pull flow i mean it's starting with florida i mean it is starting the process has

already started whether you want to realize it or not you look at what florida's done they've nagged the federal government texas make the federal government during covid you have this actually isn't like hitting the news too hard but um the northeastern section of oregon the southwestern section of idaho like the counties in that area are talking about like like wow two there's two counties in oregon they're talking about seceding from oregon into idaho wow i didn't know that it's getting pretty close they've got they've got guns up there yes they do it's important yeah and like i know it's like a perfect example of like a crazy conservative state where like if you bring like a gram of pot into into the state you're going to jail uh ruby

ridge was in idaho yeah yeah yeah where the uh the federal government murdered a woman holding their child no waco is not too far from here no it's about like two hours north i think or so i don't have yeah more people were firebombed during that incident that's yeah we don't want to end it on these negative notes but that's the other thing too is it's always fascinated me that there's this weird completely delusional romanticism of the federal government like in my mind it has materially made people's lives worse off oh yeah people think it's their savior because they're safe right yeah are they they have an illusion of safety right right right

they have a false sense of security um yeah that's the weird thing you talk to like like uh like a like a federal reserve maximalist uh you're just not on the same page like you it's it's difficult to actually communicate with them because there's like zero points of commonality you fundamentally look at the world differently and it's just tough to be able to get your ideas across and even honestly to like really evaluate their ideas properly too it's just so different it's like yeah how could you look at neil kashkari and like be like yeah i want this guy to lead me how could you have a smile on your face when you look of that guy uh many big problems to solve but i'm happy we're working on them i'm happy you're

working on them specifically yeah i'm happy we're all working on these things yeah slowly slowly making progress i think uh i think one thing's for sure the um the federal reserve uh worshiper doesn't have the drive that we have no maybe they have strong beliefs but they don't have action following that belief too yeah but it's very different when you have someone who's been uh born in a position of power versus those who take power and bitcoin collectively is taking power yeah is it violence no no not at all we just had a big discussion about that on monday but about ba6 and yeah like it's bitcoin violence is a war yeah no why would no why would someone well i know why somebody would want to do that

but uh or promote that sort of narrative but no no dude it's it's it's it's a better world i don't think anyone here is working on this stuff and is thinking yeah i can't wait to apply this violence to the world no we all think it's going to make a better world again like and like i say i think there's trade-offs there's caveats for sure i i try and be the debbie downer in the room and like be that wet blanket that pisses people off sometimes um but we're making a better world that's why it's called adversarial thinking and it's very necessary if you want that better world to materialize you can't kick a place and you can't think rainbows and gumdrops you got to of how this thing can be attacked yeah right exactly yeah

what would you encourage freaks to do that are listening to this conversation well if they're listening they're in the right place and they're probably already doing what they're supposed to be doing um i'm not good at this myself but tell the people close to you build a little collective you know build a little your little uh build your build your citadel it could be imagined for now it'll it'll become literal eventually yeah it's just a loose loose gaggle of people who who know what to do when the time's right yeah exactly where can people find more about haseki what you guys are doing? Um, Hoseki, www.hoseki.app. That's her, that's her website. Um, at Hoseki app on Twitter

and I'm at Sam Abassi, two B's and two S's on Twitter. Do you guys need, uh, people testing out these products? Yeah, that would be great. Um, we're going to be releasing multi-sig support soon. So that's actually the immediate thing that we need is, uh, some people to test out our multi-sig flow all right freaks let's go build a better future we're gonna win we're gonna end on an optimistic note where i can talk about firebombings sam this is a pleasure yeah this is great this is incredible thanks for having me ending the week on a high note friday vibes are high here in tftc studios in austin texas we're gonna go enjoy our friday evenings peace and love freaks