TFTC: A Bitcoin Podcast - Rabbit Hole Recap: Week of 2018.09.17

Episode Date: September 19, 2018

On this week's edition of Rabbit Hole Recap Matt and Marty discuss: NY Attorney General's report - https://virtualmarkets.ag.ny.gov Jesse Powell DGAF - https://blog.kraken.com/post/1561/krakens-position-on-regulation/amp/?__twitter_impression=true Bitcoin Core bug + v0.16.3 - https://bitcoinops.org/en/newsletters/2018/09/18/ Josh Garza goes to jail - https://twitter.com/matt_odell/status/1040300880170500097 Bancor on EOS - https://www.coindesk.com/ethereum-dapp-bancor-is-expanding-to-eos-for-fast-free-transactions/ *Lightning Spotlight* LND Work - https://www.lndwork.com/ BTC volume in Venezuela - https://diar.co/volume-2-issue-37/ Salt Bae :( Laurent's last post - https://medium.com/@laurentmt/electric-money-e2cd34f78f56 Thank you to this week's sponsor, Honeyminer. Use the ref link below for 1,000 satoshis and use one click to start mining today: https://honeyminer.com/referred/59rtk

and we're back for this week's edition of rabbit hole recap with matt o'dell and marty bent this is marty here putting on oh hey matt i jumped the gun a little bit how's it going guys i was just going to explain that i'm putting on my npr voice uh because we have our first advertiser in a bit here uh this episode of the rabbit hole recap this edition of the rabbit hole recap is bought to you by honey miner our good friends at honeyminer.com are allowing you cryptocurrency advocates specifically you bitcoin freaks out there the opportunity to earn bitcoin with one click simply go to honeyminer.com download their software right now only windows compatible they're rolling out ios and linux soon but if you have a windows computer go to honeyminer.com right now

download the software and start mining shit coins that automatically get liquidated into bitcoin and sent to your account just giving up some extra hardware space or computing power uh to help bring the demise of shit coins everywhere matt what are your thoughts on honey miner well first of all marty just did that on the fly it was fantastic um but basically the general concept is it it uses you run on your computer and it mines the most probable altcoin and then it auto dumps it for bitcoin so you get bitcoin yeah so uh they're friends of the pod uh very uh very big fan of coin easy and crypto randy what they're doing with honey miner in particular um so if you guys are looking for a way to earn bitcoin and don't have cash at hand right now but do have some extra

laptops or computers laying around check out honey miner we're going to put uh the ref link in the show notes um so even if you don't uh use it to download and start clicking things just make an account use the ref link make an account um help out the pot i think we you only you get the ref link gives us a portion of the yeah of the return so unless you mine it doesn't really get us anything yeah just keep in mind like you know it's it's for most people it probably won't be profitable but but you get a nice steady stream of bitcoin and that's really awesome yeah and you get to dump some shit coins while you're at it sorry hunter miner messed up the end of the read there but i think it was a good live read very good very good um thanks for

sponsoring the pod love you guys uh on to the topics of the week matt we're struggling to pick up some topics here but i think it's been actually pretty exciting under the radar week you want to start with uh the announcement today from it's not even really announcement the report that was posted today from the new york attorney general office well we should start with the date which is september 18th uh 2018 2018 the price of bitcoin the date is important um the price of bitcoin right now let me pull up the chart we're looking at bitstamp today uh it is about 7 p.m here on the east coast and on bitstamp the price of bitcoin right now is six thousand three hundred forty five dollars and nine cents in u.s dollar terms so that's where we are uh today uh thank

you for refreshing our memories of what the date is today marty got a little bit excited with this for a sponsor so we'll get better yeah so the new york attorney general office basically released a 42 page report uh that basically dissected their findings of the different exchanges that cooperated with them sort of their processes their practices and what's going on uh sort of under the hood at some of these companies it was pretty insightful uh also uh maybe a shot across the bow of the industry like hey uh regulators are are watching and watching pretty intently uh what are your thoughts well we should give them a little backstory right so um yeah go for it what was it a couple months ago new york ag uh schneiderman

sent out letters to how many exchanges 22 i believe 22 exchanges basically demanding all this different information from them uh they gave them very short notice i think it was like two weeks notice to respond or something didn't crank and respond like go fuck yourself yeah yeah so pretty much everyone complied and then there was three that didn't i think that was there's gate.io kraken and who will be he will be i think will be yeah um but kraken like jesse powell just like yeah the founder the founder ceo of crack and like he just told them to go fuck themselves he just that was the the post will link his original response to it but it was uh it was pretty much you know we don't we don't serve new york customers and and you have no right to request this from us

and you know ask nicer next time i guess all right yeah and so this was the result of that fact-finding mission they took all the you know the 18 the 19 uh different exchanges they took all their information they wrote up this whole detailed report about the industry and on top of that they they recommended those three exchanges that didn't respond they recommended that they that they're probably violating the bit license in new york um how can they violate it if they're not operating that's what i would like to know matt just got up to shut the door so you don't hear this chain but how how could they be violating the bit license and they're not offering services in new york well so the claim is that they are offering services in new york

they say they're not i'm not sure how they dictate that i'm not sure how i cracking does kyc i'm pretty sure right yeah would have to be vpn stuff yeah i mean they all these these three sites were blocking new york by ip address but if they do kyc then they're also checking your id and stuff and i assume they're blocking new york that way as well yeah is there i think i mean there's good argument to be made that uh um you really can't fault these exchanges for people that use vpns to access them correct is that are they uh protected by the law well i mean basically if you i don't think they're protected by the law but i mean if you if you fault them for that then there's nothing an exchange can ever do to stop it unless they do full kyc um because there's no way to tell

where someone's from unless you make them tell you right like bitmex is a fan is the famous one they don't allow any u.s customers but if you use a vpn you can like trivially get around it and there's no way bitmex can know because they don't actually take information from their users on who's using it you know other users are pretty much anonymous yeah i'm trying to think of the legal term um here not feign ignorance but uh plausible deniability yeah maybe plausible deniability i mean they they can still make your life living hell right yeah no matter what yeah there are some interesting findings uh beyond uh them telling these other exchanges to start complying uh one thing coinbase it became apparent that uh 20 of their trading volume was them

actually buying bitcoin on their exchange on behalf of their retail customers well we're not really sure it wasn't very clear we think it's because of their retail customers uh they kind of like put it in a slide as if they're trading against their users what really um yeah they were like they were they were like these are the exchanges that have trading desks that trade on their own exchange you know which kind of makes it gives off that impression um but but it's probably mostly it's their retail products so like if you go on to the brokered service on coinbase and you go to buy some bitcoin like they have to they have to pull that bitcoin from someone to give it to you so they pull it off their exchange yeah so in the

conflicts of interest section in this report. It's a 42-page. You can find it virtualmarkets.ag.ny.gov slash pound section 2. They made it really pretty for a government report. Did you notice that? They have all these flashy

graphics and stuff. The website's pretty. They have a custom domain name. What is it? virtualmarkets.ag.ny.gov They're definitely targeting like it's more of a public publicity play you know so very very good optics here coming from the attorney general's uh uh office right now but yes in this conflicts of interest there uh

there's a section platform trading on its own venue uh yes to bitfinex bitflyer coinbase plenty x tidex never heard of tidex uh the one your exchanges that are not going to trade against who apparently are Bitstamp, Bittrex, Gemini, and HBus. And then ItBit just said we're not going to disclose. I've never heard of HBus or Tydex. Tydex, neither have I. That's pretty good on Gemini's part, I guess. Yeah.

Gemini, Bitstamp. Gemini, Bitstamp, and Bittrex. Bittrex is sort of dying right now. So, yeah, if you freaks want to go check out this. Yeah, we'll post a link. um but yeah really the what it really does is point out sort of like the different processes that that exist within different exchanges and really made clear that there might there is no clear-cut concise way on how like best practices in this space particularly when it comes to custody

and in the exchange yeah there's a there's a disconnect here because and we saw this with bit license originally where regulators want to put the same model the traditional model on on top of these crypto exchanges when in a lot of cases the safest thing for consumers would be you know not to give kyc info and custody and all this stuff to to the exchanges but instead the regulation requires it right and then you end up trusting them with a ton of ton of information you end up trusting them with more funds than usual uh stuff like withdrawal limits uh they were talking about they want they want the exchanges to be less opaque right they want to basically be able to see into the operations of everything

happening like one of the beauties of of this movement is that you can have exchanges around the world run by different people you know with different philosophies and whatnot and just and at its core and different borders and different exactly styles and like this this idea that like new york is going to go around dictating you know what people do in these other countries is i think it's pretty antiquated and i think at the end of the day it's going to hurt it's going to hurt new yorkers it's going to hurt new york they're going to lose out on tax dollars because people aren't going to launch exchanges here. They're not going to launch businesses here,

and they'll just block New York users. The whole point is that Kraken, after the BitLicense, was like, New York users cannot sign up to our exchange because instead of dealing with all the overbearing regulation, they were just like, fine, we just won't service New Yorkers. But it seems like the NYAG is trying to strong-arm Kraken another uh not not uh that's the word i'm looking for here i'm always looking for words uh not defectors but uh sort of people that are staying staying staunch in their beliefs so that they

don't need to comply it seems like they're trying to strong-arm them and is this something we'll see like is uh resistance futile but this is an interesting situation because you know the new york ag is a very it's a very prominent position and usually it's used as like a launching point to further politics department yeah or like a lot of times you see um ag goes to becomes becomes the governor of new york right and then runs for president after that yeah uh that's what spitzer was before he had the whole prostitution thing happen he was the ag first and he went after wall street and he made a name for himself and then he became uh he became the governor so with schneiderman it was you know i think that was like kind of a similar idea right

and and bitcoin and crypto was was the prices were going crazy it was on the news everywhere so he wanted to be the ag that took down big bad crypto right and so he started the whole process and then in the meantime he's had to resign because he had assault allegations against him like multiple alleged assaults and you had this new ag underwood and it was kind of just like handed to her right so like you finish it but now we're in a bear market there's all these less eyes on us so maybe it might not even it might not even turn into anything it might just be a nothing burger i mean regulators are going to regulate but maybe this time it's like it's a little bit weird of a situation because he started it it was in the bull run when he started it

and uh and now it's a new person and and it's and it's not the bull run anymore yeah it's interesting how uh price and attention really dictates this stuff uh it'd be it'd be cool if the bear market like basically i think the bit license came in the bear though it was the same idea right 2014 right like losky did it while everything was going big and then he had to like follow through as everything was was collapsing he turned out okay though no he didn't is he on the board of ripple yeah fuck him i'm saying he losky was the guy who was heading the new york department of financial services uh and pushed through the bit license yeah july 17th and 2014 His claim was that it was, you know, to protect dumb retail.

And then after he pushes through this draconian regulation, this overbearing regulation, he then leaves public office and creates a consulting firm to get through his legislation that he just created. And then after that, he joins fucking Ripple to basically do the same thing. Yeah, it completely destroys reputation. just yeah that's the cherry on top hey i'm gonna go work for ripple yeah i just don't know how you can say like i'm protecting dumb retail and then go to re and go to ripple one of the dumbest coins for retail yeah it's like the the number one mark coin you know yeah mark coin i like that okay let's get to the next topics regulators are going to regulate regulators are going to regulate and

then code oh no and this sucks and and and the worst they can do is for the exchanges like it sucks through the exchanges the guys running the exchanges but like bitcoin doesn't give a shit like they can't regulate bitcoin yeah you just fucked up my segue there sorry segue i was gonna say code executes no matter what uh and sometimes it can execute bad things known as bugs and today it was made aware to the overarching bitcoin user base that uh there has been a bug uh in the bitcoin core implementation since version 0.14.0 uh and the core team rushed out um in upgrade today to version 0.16.3 to patch the bug uh never ideal definitely a bad look on the on the core team here and not the core team just uh just every eyes all the eyes that were on it

Well, you guys are going to miss it for two major versions and then two smaller versions within the last major. And I'm trying to pull up the OpTech newsletter here. Give me a second. But it dove into the bug. And basically the bug had to do with a potential DDoS attack on nodes from miners. Yeah, if you had a miner. So first of all, the bug required a miner to actually toss out his 12.5 Bitcoin

mining reward all right you want to read it yeah just read it um so highly recommended to upgrade to 0.16.3 if you're running a node right now uh to fix the denial of service vulnerability a bug introduced the bitcoin core version 0.14.0 and affecting all subsequent versions through 0.16.2 will cause bitcoin core to crash when attempting to validate a block containing a transaction that attempts to spend the same input twice such blocks would be invalid and so only can be created by miners willing to lose the allowed income and having created a block uh so at least 12 and a half bitcoin or about 80 grand right so you mine a block it has a transaction in it that goes to two different places makes that block invalid but it also at the same time uh crashes the node

yeah um and it only affects nodes after 0.14 there's but what how many nodes what can it crash at once potentially that's what i'm so the thing is like when a node crashes it stops propagating the block so that should limit the effect to a degree and because it's invalid the propagation also yeah that's what i'm trying to do so any any client that doesn't have that vector and it wouldn't propagate the block because it's invalid right yes like live bitcoin probably wouldn't um we haven't seen any blocks like that yet uh people are already installing 0.163 looking at the node count on coin dance it doesn't look like anything's happened doesn't look like the bu chart or anything like that i've already

upgraded my node uh so you should upgrade you know pretty soon or get that done if you have a node well let's let's talk about what this means though um is this how how grave is this well one of the important things here is that is that it does the risk of it is is is reduced because of the game theory of the system right so like the miners have to specifically not only they have to throw out their own money to do it 80 grand right now right they'd also possibly be killing their golden goose right because like you might end up crashing bitcoin yeah that's like really badly that's what i was uh that's what i was thinking like that's the uh that's the thought experiment i felt that's like the place i found myself in my own thought experiment is like the game theory

such that the miners why would they even do this but so you have two things right unless you're malicious bitcoin cash so if you're it'd be that's one of the scary things is that's been around since 0.14 so when bitcoin cash had a had had more of the narrative going for it you know and the price wasn't completely down the shitter like they might have been able to do some craziness with it right luckily they were um so you have bitcoin cash so they can move their miners there and i think the game theory gets weakened a little bit with altcoins now well how's the picture because because you can you attack bitcoin and at the same time you short it first of all right and um it'll be hard to do that in like any kind of meaningful volume anonymously but you could short

it and then alternatively you could also or at the same time you could you know have shitcoin bags and then pump pump with that you know like if uh i don't know like like coin or or or i don't know ethereum or something i we kind of saw that last year with the altcoin boom right where they were there was a lot of spam transactions happening on bitcoin but coupled with the fact that miners weren't also mining full blocks they were leaving out empty blocks and bitmain was one of the the main people doing that and i i part of that is because of that breakdown of game theory a little bit where they were then at the same time pumping alt coins and they were making miners for those alt coins they had bags of those alt coins right and

then you could see like 100x multiples 50x multiples in the alts because you're sabotaging bitcoin so it does it changes the game theory a little bit from when it when it first was introduced introduced when bitcoin was first introduced because you because you do have these other uh competing chains i think but not that much right it's still like if bitcoin goes down because of a bad bug you're taking the whole space with it for a little bit i would agree um And do you think this could have completely crippled Bitcoin? That's what I'm trying to grasp here. No, but we at least have, I was looking,

if you scroll all the way down in coin.dance, you can see they give you the version breakdown. Oh, no, there's a button there. Scroll down more. It gives you all the different node implementations and how many there are. Click view. I don't know if you, I saw it there somewhere, but anyway, there's like, there's about a

thousand, there's at least a thousand visible nodes that are under 0.14, right? So even if it's somehow crashed every node above 0.14, you'd still, even in that worst case scenario, scenario, you'd still have the nodes from 0.14 from before 0.14. Yeah. yeah it's like a little under a thousand it's like 800 nodes are under 0.14 yeah here we go and then you have the ones that are above 16 point then you have the the the newer nodes the beta nodes there's uh yeah there's 26 people still running beta notes that's interesting uh oh that's b coin excuse me yeah that's just what

they tagged themselves as too like you can change that but anyway it it's not great it's definitely not a good look um it's a it's another reminder that these things are complicated and and even when you have the smartest minds in the world looking at it you know things get through yeah uh but it looks like they they they someone disclosed it to them it hadn't been attacked in the wild they got everything together and patched up you know asap the bitcoin optex newsletter is a perfect example of its value here because they're able to reach a lot of people that don't check the mailing list and and github and whatnot yeah and uh and it probably wouldn't have been you know like i said it's not great to see but it probably wouldn't have been you know you

know catastrophic and everyone you know everyone has their copy of the blockchain um yeah and i'm trying to figure out i think i believe it was disclosed to bitcoin abc first because they were affected apparently that's what greg maxwell's saying on on reddit um so this has been known for a little bit here but yeah just uh a reminder that as uh as highly touted as the developers in bitcoin are in particular uh nobody's infallible but like by the time by the time you listen to this pod if a miner hasn't tried to do the attack yet it's not gonna happen yeah um like it's probably already too late for them to do it but uh but yeah definitely in like the next six hours or so it will be yeah uh another in other bitcoin core version is make sure uh you

test uh version 0.17 but see if you were testing that one that one wasn't gonna get knocked off no well oh no it would have it would have until the patch now it won't yeah probably today yeah that's true yeah that one really got knocked off too yeah um yeah so interesting times some uh would you consider this fud not fud no this is i mean it's fear uncertainty and doubt that's for sure but it's substantiated yeah the problem is unsubstantiated that's true Very good de-alienation. The price didn't really take a hit. I mean, people are idiots, so they probably don't even really realize.

Understand what's going on. But, yeah, price didn't take a hit. Nodes didn't take a hit. And we carry on. And we move on. What do we got next? You want to talk about this ICO deflation here? Not really.

There's just not many ICOs anymore, right? Yeah, Crypto Bobby had a good tweet, uh basically showing the volume of money raised via icos 1.5 billion uh in january and i can't you can't even comprehend how much in september i guess just very little yeah less than 100 million yeah i mean they're doing there's a lot of like private raises still even the ones that exist let's talk about private raises like they're completely anathema it's what the space like how's that even acceptable like a pre-mined shit coin in like 2013 what it was ethereum set the standard you know then once you once you did that it was just but it wasn't private

well there was there was like 25 founders or whatever they were like private allocations right yeah and like they were really seed investors right there's the oligarchs you want to live under in the future and then all those guys then and all the other icos wanted private placements and stuff and they had the discounts and the all the funds are incestuous i mean i uh someone was talking to me about it it's something like 20 funds control you know like 60 or 70 of the fund investment in the space so like you're like 20 people in a room you know and they all get in on the same deals and they get those nice sweet discounts yeah before you dump it on retail and do you think that's sustainable in the long run no the graph shows

you that it's not the reason one of the reasons ethereum boomed right is because it was the on rope to the icos yeah i mean so is bitcoin but i've made this uh analogy before it's very analogous to like printing money and and the system we're trying to run away from with bitcoin in particular but well the individual tokens like absolutely yeah exactly yeah i mean if you give someone the power to do it they're gonna do it yeah it's uh and a lot of these tokens are centralized they're just it's the complete opposite of what this space used to be and uh and it makes sense that they were you know they were in a lot of times they were breaking securities violations and stuff like that and they were just playing with fire and now it's starting to catch up with

them a lot of these guys have subpoenas and stuff you know that we probably don't know about and and they're they're scared and they also know that they're not going to get those big retail numbers too so like why break the law if you're not going to make 150 million dollars you know it's true the risk reward is not there anymore yeah it's not as much um yeah so that's a say to the ico industry public icos at least uh completely deflated um at about less than 10 percent volume of what they were at in the beginning of the year it was like the yeah it was it was a year of of craziness and now we're we're getting back to the back to normal climbing back to sanity um we talked about the new york attorney general attorney's general office

earlier um i think one thing i just interviewed caitlin long on this week's episode of tales from the grip great episode great episode the interview thank you um check that out if you haven't freaks But we jumped into what she's doing with Wyoming and the government in Wyoming in particular. And it seems like they're trying to be the polar opposite of New York State and be as laissez-faire as possible. And Caitlin has a call to action for all you freaks out there, specifically any of you freaks who have attempted to run a company that accepts or works with cryptocurrency and has had trouble getting a bank account. If you have a story that sort of follows this theme,

if you could type it up and send it to caitlin you can find her on twitter at caitlin long underscore that's caitlin c-a-i-t-l-i-n long l-o-n-g underscore on twitter go to her website find her email if you have one of these stories uh and and share your story with her she's going to send it uh put it in front of the wyoming uh state red representatives just looking for ammunition yeah yeah exactly um and that's gonna happen this friday so a little short notice here but if you have some time looking to contribute any any little thing you can do to help push bitcoin forward uh this is one thing um so that's my announcement this slow news week talking about closing accounts uh paypal was they were closing a bunch of youtuber accounts what happened which

uh i i think they i think they the genre of youtube was they were they make like sexual noises it's like a fetish genre i'm not really sure all i know is that they they got their they were making a lot of money on paypal donations paypal shut it down as well like sex work gave them no recourse but paypal allows supposedly in their terms but you have to like choose it and they don't think that they apply for it so they would never choose that either but anyway i just i think paypal is one of the best marketers for bitcoin every time they close an account it's just like a perfect uh example of the value prop that you have i mean this this uh woman was she's on twitter like complaining to her followers like i don't know what to do like they're risking my

livelihood here and you know bitcoin there you go there's the answer you get a bitcoin it's the answer it could definitely help um another topic i wanted to talk about was josh garza oh gall miners baby he just went to jail did pay coin 21 months in jail um this guy basically an og scammer og scammer he he was way ahead of his time he would have made bank in 2017 like absolute bank he would have crushed um you know he launched so he launched an ico in 2014 i think for gall miners right or a pay coin pay coin for gall miners it was pay coin by gall miners okay yeah so gall miners was a bitcoin mining op i think they also did like litecoin as well um this is around the same time that ethereum was having their ico i was because it was 2014

right i think um and he made all these big claims it was going to be bitcoin 2.0 it's going to be the future he had all his bull it was complete with bullshit partnerships uh you know he said you were going to be able to buy on amazon and walmart and he did a bunch of like hype a lot of partnerships a lot of partnerships partnerships and and and so he he got a bunch of pr wall street journal wrote him up uh he was running ads on all the top sites and but it was immediately obvious like how shitty of a fucking product it was but he sucked so many people and he oh he claimed a 20 price floor which like kind of reminds me of like a lot of the stable coins too where he said like we'll always buy the coin for 20 so it's never going to go under 20

and then eventually it broke right like he ran out of money this is like freaks out there if you ever hear somebody in this space in particular trying to claim that i had somebody look me in the face i went to a neo event undercover like six months ago just to see like what that hype was like i wrote about the newsletter couldn't tell you issue but china's ethereum exactly china's ethereum neo is um but i was like interviewing people they like i went to this event i think it was at city bank no it was at chase it was at jp morgan chase down in five eye like in one of their like top floor one of their buildings uh and this event was so shittily thrown together that uh they had like this camera set up

to interview attendees of the event and they had nobody to interview so they're like do you know what you're doing i was like yeah i can interview people so i went like completely like wow i went undercover and was just asking hard questions and like i shit you not two two of the people like i was talking to that were uh raising icos at the time looked at me and straight in the eyes and said our token will have a price floor one was two dollars and one was 150 um freaks economics what i want price floors are just impossible economically yeah you'll just sell into them yeah and until they break i mean banker was bank car was one of the big uh uh icos of last year and like they had a price floor that broke i'm pretty sure yeah it was like one of the first

things that happened everyone was like okay let's break this price floor and uh and they did they were in the news this week too actually they're gonna uh port oh that's a good topic they're gonna port functionality yes let's talk about this yeah nice little uh ad lib tap topic here uh so the you know ethereum has had the benefit of basically swinging up for the their ethereum's what like three years old now at this point maybe a little bit older um three yeah i think it's just almost three yeah but anyway it's young and it's been swinging up most of the time right so we're going after bitcoin the bitcoin maximalists are all narrow-minded and and ignorant and and and we have nothing to lose we're the innovators right and now that they're number two you know

now that they're one of the juggernauts in the space you have all these other chains that are coming after them right that are that are ethereum wants wanted to be bitcoin 2.0 well now you have all the the so-called ethereum 2.0 chains right and one of them is eos and with these chains what they want their main priority is to make it as easy for ethereum developers to port their shit over right like that's the main goal that they have like if you look at a at a short at a short term way to boost your chain's value the easiest way is to make it so any dap that's on ethereum can just be smoothly ported over and that's what's happening uh and that's what eos did and that's what's happening with bank or they're they're launching bank or on eos and so on eos or

ethereum you can use bank or to trade eos or ethereum based tokens so anything so it's not even like so like you could use eos and and supposedly i mean i haven't tested out but Supposedly, you can be trading ERC-20 tokens on EOS using Bancor. We have galaxies colliding here. No, it's interesting to see this at the beginning of this sort of trend. So let's explain why this is happening. Like, why are they going over to EOS? Why aren't they content with Ethereum?

him well one of the interesting things is is for a lot of these daps to be functional you want to have lower fees right but for usually lowering fees goes at the it's it has an opposite force for censorship resistance and and decentralization so that one of the easiest ways to lower fees is to just increase centralization just say it doesn't even matter so you end up in this kind of race to the bottom where if chains are competing on fees then each one's trying to you know become more centralized than the other and long term that's you're just going to become a target for governments and and your whole value prop goes out the window so so that's what that eos was like you know we see ethereum is like a little bit you know ethereum is more centralized than bitcoin

well we're gonna let's up that a fucking notch and we'll make ours even more centralized 21 block producers and and the fees will just be way low the and and what they do is the fees are like baked into the inflation so like you don't feel like there's fees but like you're you're getting taxed through the inflation uh and it makes it and i and i i guess the dap developers on eos also pay for the fees in addition to that so the fees are really abstracted the users never really see any developers pay the fees yeah they like load it up with this like a subsidy or something to bootstrap their absolutely the way the smart contracts work on EOS is is the developer is like putting a certain

amount of money aside to handle that amount of processing power on the EOS network so if a certain number of transactions or whatever going through they need to they need to put up the that amount of money but but everything is abstracted so that to the end user they think they're there's no fees yeah but that will come out and higher app costs right it'll just be hidden somewhere else yeah everything is the whole point of everything always has a cost no matter what right but the key is who's paying the cost yeah and how does the user view it right and so like the eos model is is the block producers are taking an inflation cut right so that's abstracted out and then and then the devs are

also you know putting up some money yeah so i'm still stuck on the devs part here like how many devs are going to be willing to front that amount of costs and for how long yeah i don't um i don't i did not i have not looked into it well enough um i don't think eos can last long term so So, and I don't know, I don't think that's the issue, but it could be one of them, right? Yeah, I guess the overarching point we're trying to make here is that DApp platform competitors are coming. Teza is just launching, there's another news item.

Teza has just launched mainnet this week, right? I think the important thing, yes, I think the important thing to take away is that it doesn't matter how many projects you have built on top of your chain, by the nature of these platforms, right? Like you can move around them relatively easy. There's not,

the mode isn't as big as people think the mode is in terms of DAPs and, and smart contracts. Yeah. And perceived Lindy effect and sunk costs and too. And then the other reason banker likes it is because bankers Ethereum contract famously has the clause in it where they can just do whatever the fuck they want with the tokens and they can pull back tokens and stuff. Yeah.

And like EOS loves that philosophy. so so that's another case where like so like ethereum had the dow roll back and then eos was like well that's great but we're going to take that to the whole next level and we're going to create a constitution that says that we are absolutely going to roll it back in those situations you know so it's yeah so for you freaks that don't understand i don't know if they did they take it out at one point it might still exist but at one point uh every time a eos a transaction happens on the eos network like a miner or user is hashing the eos constitution into the transaction always hashing i'm pretty sure it's yeah yeah it's just weird man it's

very weird it's uh a little too idealistic too i believe yeah and it just throws all the immutability out the window you have people you're politicking and there's so much wrong with eos but the point is if you're trying to run a dap for cheap cheap you know there's going to be a million chains that can do that right and it's just a race to the bottom it's not good for the long-term health of any chain to try and compete on fees do you think there'll ever be a point where uh on second and third layers of bitcoin platforms like this exists and you can use big bitcoin the token whether it be via lightning network or some other yeah i mean i higher level i already like the terminology that came out laps laps yeah sounds better than daps i like laps

that's l-a-p-p-s and you wanted to highlight the lap tonight actually oh yeah so i thought it'd be good if we had a section that was just like cool shit built on top of bitcoin yeah i'm built on top of lightning specifically yeah so we got we got an example today lndwork.com it's basically it's like i don't know if you freaks know mechanical turks which is uh mechanical turk which is on Amazon basically it's micro tasks that people that then need little tasks to be done post post their requests on the site you do the task and you get paid you get paid in a micro payment through the lightning network in this case it's a thousand Satoshi which is about six cents at current price and

And what they have you doing is looking right now, the only tasks are looking at food items and defining what brand and type of food they are. Yeah, they want you to be like a smart computer. They want you to be like a human. It's basically like getting paid for Captcha. Yeah, that's what it is. They're paying you six cents to do Captcha on groceries right now.

Yeah. Don't know if I would spend that much time, but maybe not for me. But the thing is the platform lets you do... I'm pretty sure the platform lets you do any task in any price. And it just happens to be that the one contractor out right now is just really wants his groceries all, all labeled.

Maybe he's making, like if you're making an app, right. And you need to, you know, put one image to a word, then, then you run it through here and,

and six cents on every, you know, I don't know if you ever watched the show Silicon Valley, right? Like the hot dog app. Yeah. Where it's like hot dog, not a hot dog right like you could run you can run it through here you could yeah and then feed

it into your machine learning and then take it from there i don't know it's just cool it's a simple tool proves the concept uses micro transactions uh takes advantage of the low fee that lightning has and there's no token required there's no token required there was no ico i mean the token is satoshi's the token is fucking bitcoin you know yeah and i just it's just good to see i'm just happy to see it i like i like these simple tools i like when when people give you like simple powerful robust tools and you can be creative with it exactly and this if anything this is just the first iteration of a use case that might evolve into something crazy it's not going to change the world by itself but it's a nice little imagine imagine being like

there's some guy somebody saw this on twitter today and is right now he's going through it He's got like 50,000 Satoshis. He's got $6. He's got $5. Or $3, that would be. It's like the Honeyminer. It's the same idea. The Honeyminer, you're pulling in a couple thousand Satoshis a day,

depending on your computer. Honeyminer, you do not have to do much work with Honeyminer. You're just basically converting your electricity into shit coins and then dumping them for Bitcoin. Honeyminer, the computer does the work for you. So do we have any other topics? I'm trying to think. We saw a dire newsletter posted Venezuela local Bitcoin volume.

But historically, we've only had that in Bitcoin volume. And Bolivar. And Bolivar. But Bolivar doesn't really matter because the inflation is so high that it just keeps going up. They normalized it for USD volume. And when you look at it in USD volume, it's just pretty much constantly going up. Yeah. So we can just put that to rest.

People are using Bitcoin in Venezuela as an inflation hedge. And I think it's a good opportunity to push back at some of the no-coiner FUD, not even FUD, but like no-coiner screeching where they like to concern troll and say stop trying to be opportunistic and say that Bitcoin is going to save the world and all the Venezuelan people because they have a new sound money. i just want to make it clear that we're not saying that we're saying that bitcoin is is just another tool about available to these people to try to store their wealth throughout time and it is working well and people in venezuela specifically uh argentina picked up a little bit this year as well uh turkey uh is far from its peak uh so is iran um and egypt is is far from its peak but is rising again too but i just want to make it clear that i'm not me i'll speak for myself personally i don't think bitcoin in these regions where which are having

massive currency crises or uh government confidence crises i guess you could define them as uh bitcoin is just one tool that these people can use and if if i think i mean it's a pretty big tool now it is a big tool i would say it's not gonna solve all their problems but no it doesn't make life fair no it doesn't like magically solve inequality no but like they have the guarantee of a fair money yes right like we saw i mean there was salt bay the famous let's talk about salt bay a little bit he had fucked up he had maduro eat at his restaurant and bad optics for salt bay took a bunch of twitter pictures with him and videos and stuff and you like see maduro like gorging on food while people are starving in his home country

on a very expensive meal looked very delicious and and you know like it brings it really brings to light like who the fuck wants to trust that guy with your wealth right like if you're a venezuelan like up before bitcoin you're i mean you could get black market dollars but like bitcoin makes it way fucking easier to not have to trust maduro with with your money with your wealth with your family's livelihood right so at least you have you know it's not going to solve inequality but at least you have that guarantee of fair money fair wealth value exactly can't be corrupted and for all you no coin no coiner screechers out there nobody's trying to say that this is going to solve all venezuela's problems it's just another tool available to these people

and it's been working pretty pretty consistently for almost a decade now yeah and the thing is you want to buy it like you can't buy it while the crisis is going on usually it's very becomes very difficult you know iran banned cryptocurrencies it's crazy to see that usd volume in venezuela is still increasing as their what their crisis is i think the problem is with them is not only are they a horrible government they're so bad that that they don't have the kind of control over their citizens that a lot of these other countries have right yeah where they're just not they're not sophisticated enough to really block that inflow of bitcoin and there's so much cheap energy right so people are mining on old equipment and stuff so the black market has easy supply for

for bitcoin to be to be introduced into the economy yeah um i mean one of the things with bitcoin and pow in general is is that permissionless nature with the fact that if you have equipment you can hook it up and mine and like now you need asics but you know it's just a matter of getting that hardware and then once you get the hardware you can mine relatively anonymously and no one can stop you uh that's you know exactly so so if it was if it was a proof-of-stake system you would basically try and stop you that whole inflow that venezuela and black market miners have would just completely get cut off right that wouldn't exist the only way to get it would be from buying it from a current holder yeah interesting you block off

that that's a good point for proof of work versus proof of stake and actually we can main thing segue this into maybe a last segment is uh we've talked about the series and a few episodes up to this point it would be remiss of us to not uh bring it up in this episode and that is the fourth part of lorenz bang bang uh pow series uh and it was really just a more of a philosophical piece Like, hey, we probably shouldn't be comparing proof of work and proof of stake because the tradeoffs are so immense when you compare the two that they're really solving this. I don't even want to say they're solving the same problem like they're the tradeoffs are so vast that they're hard to compare when you're talking about securing a decentralized protocol like Bitcoin. I mean, people think like blockchain is the magical invention of Bitcoin. And I mean, I would say that that POW element is really the is is really the breakthrough.

Right. It backs the whole trust minimized system and and makes it and makes it permissionless, makes it so that everyone acts greedy and the system basically operates regardless of how anyone feels or does or or whatever. Yeah. And it's and it's completely capitalistic to like if you slip up like as we're seeing Bitmain do right now, People are going to fill those holes, and it's easier for new entrants to make a dent in POW, whereas in POS, you sort of have to buy your way in. Yeah, Hugo has a great – I don't know how to pronounce his last name. Hugo Nugent. Yeah, he has a great post on – it's my favorite post on the topic of POW versus POS. And I actually have a domain, which I redirected to his medium, which is powvspos.com.

so if you want to yes pos or vers us no i got vs okay and i also have the opposite so you don't even have to remember how i said that you could be pos versus pw pw versus pos i got both of them i got actually i have a ton of ethereum staking domains so if they ever pull off this uh stake thing you know i got myself covered a little bit but yeah so just go to that you can read his post we'll link it in the in the show notes definitely that's definitely a good one to read yeah um what else we got i'm gonna come to defense of salt bay not come to the defense of him but i had a funny uh funny high daydream today like where salt bay is just so uh stuck in his world of meats that he doesn't even know what's going on geopolitical world he just said

like hey there's a president yeah he didn't realize i don't think i think he but i mean that's just as bad almost right almost but like i would also like to think of salt bay is just like so committed to his craft that all he thinks about is cooking meats and chopping them and making twitter videos he deleted all the posts yeah i saw that maybe somebody came out to it was like salt no no one was at the miami restaurant got boycotted like no one was at miami restaurant i bet somebody came out to was like salt bay like i know you were pumped for that dinner last night i don't think you understand the gravity of the situation event is way low he was like pulling out like the promo shirts and stuff and he was like putting he's like putting

them in front of people i don't know this craziness again i don't think this is true this It was just a Marty daydream this morning. You got any final thoughts here? I don't think so. It was kind of a slow week. Slow week. We're a little bit in the doldrums. I think it's going to continue.

I think it's going to get slower and slower and slower. Yeah, I mean, that's what bear markets do. People usually put their head down. I mean, I don't think we're, you know, some people were calling for a reversal this week. I mean, I don't think the bear market's anywhere near over yet. yeah i think there's a bit more capitulation to go before yeah but long term the thesis is the same yeah fundamental i mean that we're like we're sitting in we're sitting in like late 2014 right

now and like what the absolute bottom was like january 2015 yeah um yeah toward demister had a good quote uh tweet today um that he wrote at the at the depths of the last bear market bitcoin fundamentals have not changed only price and sentiment did that was january hashtag the price hit that low was 152 dollars it hit it had hit 1200 like earlier in the fall uh of of 2013 and then almost i just was it was like a year and a couple months afterwards yeah tour it had tour said he posted that tweet in january of 2015 at 177 dollars yeah so it hit 152 on january 20th because i have an article where i like screamed at the world a little bit yeah so that was a week this tweet was a week before it so tour almost called the bottom

yeah 150 i mean look if you call it the whole way you'll get the bottom too that's what we're all doing now you'll see us all on twitter we're all posting you know you post the bullish tweets and then you get to retweet the one that's uh it's prescient but uh i mean obviously you know he took tour was buying the whole time he called it yeah uh no one needs to call the exact bottom you know just i if if if the thesis holds true bitcoin goes up forever and it's gonna have these volatile periods and you're just you know you have to have a long time scale you you have and you you can't trying to trade these shorter things just freaks every there's people who have you know been shorting bitcoin since seventeen thousand

dollars and have gotten liquidated 25 times or whatever or have gone long and the same thing has happened to them right so it's like if you if you're betting on in short term this is just all just it's just straight gambling yeah everyone thought we turned around this and then we're back down yeah so like two months ago when we went up to like eight three for a bit but i have to say like bitcoin is like i'm probably jinxing right now and it's probably gonna like crash right after the pod but i feel like it's holding way stronger than i expected especially when you compare to something like a theory i mean the ethereum stakeholders are literally scrambling for narratives right now yeah uh hey it's hey it's a good time to buy ethereum to become a

validator in the future yeah i yeah uh 32 ethereum is all you need right we don't know if that's final or anything yet or pos will even happen very arbitrary i have my prediction out there in the wild it'll never happen you've been right so far i will be right until it i had i had the opposite i've been arguing against pos for like two years now that never happens it's like such a fucking waste of time it's like and the specs keep changing so you can't even you can only do like vague big claim you know big statements because you don't know what like the actual specs are going to be but it should be interesting we actually have like pos chains now like running in the wild like tezos and shit so yeah uh we get to see them fail and then and then be like told

you so well one that did fail this week steam it last time there's like a complete shit coin yeah dpos i guess it's supposedly used a lot i've never used it i mean people do using rack up it's like a reddit but you get paid to post and like you pay for upvotes and shit right yeah yeah it was the eos it's dan laramers yeah it's dan laramers dan laramers likes creating projects and then like walking away from the projects when they're about 75 through it's like a he's like your general home home contractor right like he's really good at getting you to like 85 but then he like walks out and there's like a hole in the bathroom and just never gets fixed yeah and one day it just stops working so he did he did that with bid shares and then he did that with steam

and now he's doing it with eos and i'm really looking forward to his next project it's probably going to be fantastic make sure you get in on that pre-sale yeah please don't um i hope our sarcasm comes through it does i hope so yeah so i mean i think i think we can wrap this up here you know and we'll should we nah we can surprise them um we'll see you guys next week we're gonna surprise you we'll be back next week with a surprise enjoy the rest of your week freaks peace of love thanks for tuning in the rabbit hole recap