TFTC: A Bitcoin Podcast - Rabbit Hole Recap: Week of 2018.10.01

Episode Date: October 2, 2018

On this week's episode of Rabbit Hole Recap Matt and Marty discuss - Samourai Wallet + goTenna collab: https://mailchi.mp/1d3d0a060090/martys-bent-october-2nd-2018-issue-330 Siacoin bricks ASICs: https://twitter.com/matt_odell/status/955907524317859842 Malta Prime Minister, pretty chay: https://www.youtube.com/watch?v=0QzbiMmuO0k&feature=youtu.be 1Broker gets seized: https://twitter.com/matt_odell/status/1045433884115120129?s=19 ShapeShift: https://info.shapeshift.io/blog/2018/10/01/shining-light-on-wsjs-attack-on-shapeshift-and-crypto/ EOS collusion: https://twitter.com/MapleLeafCap/status/1044958643731533825?s=19 Thank you to our sponsors: Cash App, we don't use the other apps anymore. Download the app now - https://cash.app/ Honeyminer, start making BTC in one click - https://honeyminer.com/referred/59rtk

What's up, you freaks? Welcome back to Rabbit Hole Recap with Matt and Marty. It's your boy Marty Bent. Today's Tuesday, October 2nd, 2018. The price of Bitcoin on Bitstamp at about 5 p.m. on the East Coast is waiting, waiting, $6,524. Pretty range-bound recently, Matt. Bitcoin is my stablecoin. It's been a very good stablecoin for the last couple weeks. A lot of tension in the charts. The Bollinger Bands are getting tight like a taiga. Yeah, according to our buddy Murad, we have about 20 hours till complete collapse.

Yeah, so we have that on the timer. We're definitely keeping an eye on that. But before we dive into our topics tonight, we have a new sponsor. I'm very proud to be shilling for. I've shilled for them for free on this podcast many times before. I'm sure you freaks will be excited to learn that the Cash App has officially come on board the Tales from the Crypt family and has decided to sponsor some episodes with some official money. So this is a big day for us.

Cash App, you freaks know it's my favorite app to buy Bitcoin with now these days. The UX is impeccable. I use it every day. I have the Cash Card. So you already know the Cash App is the number one finance app on the App Store. What you might not know is that you can also put Cash App in your wallet with the Cash Card, which I was just describing. It's the only debit card that offers instant rewards. It comes packed with premium features not even a credit card can offer, like Boost.

If you want to go to Whole Foods, any coffee shop you go to, Chick-fil-A, Domino's, Panera, I believe. I'm not positive about Panera, but they have a list of merchants that you can go to. And Cash Card users specifically get crazy discounts. I use it every day for coffee. Just used it 45 minutes ago for Whole Foods as well, 10% off. Highly recommend it. So the Cash Card puts you in control of your money with the extra in-app safety features that let you pause your card with a touch.

So if you leave your wallet in an Uber, you can go into the Cash app, toggle over, hey, nobody can use my card right now. You have that extra layer of security that really doesn't exist with other cards. not as easy from a UX perspective. So we're not using the other apps anymore. I've been trying to convert my friends one referral at a time. Yeah, well, hopefully this official ad

will help us spread a bigger referral net. So if you freaks haven't done so yet, make sure you download the Cash App. I don't have any special promo code or anything for you. So to prove to Cash App that we have... We don't have a promo code. No promo codes.

I think these are just pure reads by Cash App. Just use the promo code TalesFromTheCrypt for a 0% discount. Yeah, or use my hashtag, hashtag MartyBent, if you can somehow do that. Oh, that's a good idea. But if you can't officially... Or hashtag Matt O'Dell, that'd be nice. Yeah, that as well.

Either or. This is a two-man team here. But if you freaks download the Cash app because of this ad read, why don't you take a little screenshot of it and tweet it to us? Yeah, tweet it at Jack. Yeah, Jack and us. make sure he knows that we're we're helping pump his company um so yeah that was the official cash app read thanks for coming on board guys matt we've had a week a lot of a lot of topics lined

up wait can i just that's the dream in the making that we got cash app as a sponsor it is they they gave us they gave us a read but i would just say it's a bank in an app allows you to send money free to anyone you want yeah you could buy bitcoin for cheaper than coinbase i mean this is like post-ad marty like just regular citizen marty here very bullish on on square and cash app in particular bank of the future in my mind like what they're doing with the cash card in particular it's the best user again i'm a big ux whore and it's an incredible ux experience as a user experience in my opinion i have a nice bag of their stock too i'm up like 40 yeah it's like the best move of the bear market was five square it's true um okay shall we begin i think so a lot

of topics this week a lot of uh a lot of disparate news a little little a lot of headlines a lot of clickbait stuff yeah so let's start with uh not clickbait yeah this isn't clickbait we'll start with what you covered in your bent this morning this is the opposite of clickbait and i wrote about it because it went very underreported in my mind i don't know if i'm exaggerating a little bit or you thought this way too but uh so on sunday i don't know if you freaks notice if you follow him or her on twitter at samurai dev uh one of the samurai wallet developers sort of teased that they were experimenting with mesh network transactions on the bitcoin testnet so uh they they were showing testnet links to testnet transaction details and claiming that those

transactions were sent via mesh network uh using the go tennis software and hardware i would imagine um so to me this is a huge news item and it sort of uh highlights that bitcoin is very innovative and uh with this move in particular i would argue that bitcoin has taken a bigger step towards decentralization than people realize because uh one big form of centralization in bitcoin in particular that people don't talk about too often is uh internet service providers uh being a choke point uh most most transactions most bitcoiners yeah what about this apartment this apartment you have what two internet provider choices yeah exactly so if those two decide to start fucking with you like there's only so much you

can do you have vpns you have tor but mesh nets are another tool there yeah they're just a parallel sort of way of relaying transactions that's it's a good fail safe to have that uh basically makes bitcoin more robust in the long run and what samurai wallet is doing with gotena right now i would argue is going very underreported so i wanted to write about it today so i'm actually a huge fan of both um i i originally bought the original gotena because i was in the like the amateur mesh networking community and gotena was like one of the first products that was a polished commercial product and that was a kickstarter and it didn't have end-to-end encryption so i immediately like was like that sucks and then they released one with end-to-end encryption and that's

the new one and basically the idea is is you connect it with bluetooth to a phone you install the gotenna app on your phone and then even if you don't have cell service or wi-fi or anything you can send messages and multimedia and stuff it's not via sms it's via these radio waves are they sending radio waves each one of these devices i brought one of mine here because i have four of them ready to set up as relays uh each one of these communicates with each other up to a mile sometimes even farther if it's rural but like about a mile um and then they can hop off of each other so if you have a bunch of them they they can hop hop hop hop and you can send messages in between each other but then the last hop if they're connected to the internet then it'll go

out to the to the real to the real world then it could go to anyone right so basic so then so then we had gotenna which they were already doing awesome things and then we have samurai wallet which is the best wallet on android and around consensus last year they announced this project may 16th i first wrote about this project on may 16th and i was fucking ecstatic i was so excited it was like the coolest thing ever because i had these two companies that i absolutely love and they were they were teaming up together and i mean i was showing you a tweet earlier that when i first got my new gotenna the first thing i did was i took a picture of it this was in 2017 i took a picture to it and i tweeted out to gotenna i was like when bitcoin you know so i was super super

very excited. So the way this setup is, is now you have the Gotenna device that you purchase. Then you download the Gotenna app. Then you download the Samurai Wallet app. And then you download a third app called Transaction Tenna. That's the third app. TXTenna. Right. And right now it's Testnet. But the idea is you can send a Bitcoin transaction. You have no internet access, but you have one of these and it'll bounce off of those to relays until it hits internet. and then once it hits internet it goes out to the biggest broadcasts of the formal bitcoin network yeah so like if you're in puerto rico is a big example now like they have rolling blackouts and communication failures after the hurricane and gotenna allows you to send messages and coordinate

uh without those networks and now with the partnership with samurai you'll be able to send bitcoin transactions much harder to block too obviously pretty crazy shit dude it's really exciting pretty cypherpunk future shit yeah it just adds to bitcoin's anti-fragility and resiliency and right and that one is hard to block went very underreported in my mind like people aren't paying attention to the right things i think this is this is what it highlighted to me at least well the things that i find the most exciting and fun or the in this space are usually the things that aren't you know reported on the most exactly they're not as they're not as flashy yeah but again this does seem kind of flashy but it's testnet too i think people you know and

when you wrote about in the bent today it had a lot of traction he did it on a weekend right i missed it i follow him i follow samurai i follow goten i'm a huge fan boy didn't realize they did the testnet transaction until you're bent this morning yeah i'm always watching coindesk is going to cover it now because because you're bent when you know went up on on twitter pretty pretty well today so coin desk will probably cover it pretty soon so there'll be some traction but it's really when people get to start using it you know and and one of the things that makes it really useful is we need people to set up relay nodes so like i have four of them and i'm gonna i'm gonna you plug them into an outlet and you set them up and they just

they just act as a bounce point so it just expands the network so with this bitcoin relay system do you need to download a specific software on your gotenna device yeah everyone everyone's phone i'm pretty sure needs to have or at least the exit node has to have transaction tenna okay so the node that so if you have a relay node it's just not connected to a phone even right it's just plugged into an outlet it receives something from one gotenna and it just sends it out to the next gotenna okay right but you need a phone there needs to be a phone at the end that's running the transaction tenant app that that's actually broadcasting it to the bitcoin network that's like oh there's a bitcoin transaction that you need to send out to the internet right yeah um but that

could be like six relays down the line you know it doesn't have to be doesn't have to be yeah you the more important thing is the relay nodes and then if one or two people you know four or five people are adding their their transaction tenant nodes in there for the exit i think this is what I'm trying to get it. So could other Gotenna users who have nothing to do with Bitcoin, don't care about Bitcoin, don't even know that TXTenna exists, are they contributing to this relay without even knowing it? Yeah, I think it's still relays.

It's just data. Cool. Boss. But the Transaction Tenna app is translating it into Gotenna data and feeding it into the Gotenna mesh and then doing the opposite on the back side. Unencrypting it. Yeah, that's my understanding.

Interesting. I don't, I usually don't play around with these things until they're live, but I've been, you know, following on the, on the outside. Fascinating stuff. Uh, kudos to the Samurai devs, Gotenna, and it looks like Laurent, who I'm just going to throw in with the Samurai team at this point, um, we're working on this and displaying it on Sunday. Very underreported.

Uh, again, this is the type of news that I in particular look for is this sort of fundamental, anything that adds to Bitcoin's anti-fragility, like you said. And I think this is a huge step. Some of the biggest news of the year, probably. Yeah, in that direction. And it's cool that it's just bolted on top. You know, there's no, you don't have to change anything. No one's changing anything with protocol or anything.

Exactly. No, it's just figuring out a different way to relay the transactions, which is dope. And we need, so we have the satellites. Now we have a satellite. We have the internet service providers. Now we have Mesh Network. And who knows if Nick Szabo and Elaine Yu are still working on that, that rate short short-term radio frequency where they're like bouncing it off the ionosphere

and then we have uh sneaker net sneaker net i don't know about sneaker net yeah you just like load up a signed transaction on a usb drive and then you walk over to something that's internet you know and then you connect it interesting or like open dime yeah open dime is like sneaker net trustless okay yeah so the the more avenues through which we can relay transactions the better and uh Again, shout out to the TX Tenant team. Next topic. Do you want to introduce it? I mean, let's just hit Prime Minister Muscat of Malta.

He was at the UN General Assembly. And he spoke there this week. Yeah, and he said a future with cryptocurrency and it is inevitable. It is inevitable. Or something along those lines. Yeah, blockchain and cryptocurrency. He didn't use the word Bitcoin. I mistweeted that he used the word Bitcoin, but he said cryptocurrency and blockchain.

And he said distributed ledger technology. So he used all the buzzwords, but Bitcoin was implied. Was the most PC he could be while taking it to the establishment. Yeah, I mean, they passed friendly regulation. I think we talked about this in another episode. And Binance has gone there and Bittrex has gone there. uh and i mean he's pumping his bags a little bit but that's that's that's the cool part of of bitcoin is is that every holder has that incentive to to try and promote uh bitcoin

adoption and improve it right and it's funny that it's a small island economy like malta well that's usually i think that's who we'll see do it first yeah like these countries that have a lot to gain um and then the countries that have a lot to lose will you know the major countries will start coming in i mean you have you have to imagine all you had to do is net benefit if you convince just one one world leader in the room right exactly and slowly but surely it is happening uh i say this a lot on twitter and in the podcast slowly but surely bitcoin is creeping further and further into the minds of the masses uh it's just a matter of time we're we're getting close to a nation state publicly endorsing bitcoin i would say within the next two years you heard it here

first um but yeah but i mean he basically just publicly endorsed it right you mean major countries yeah yeah i'm sure i think bitcoin in particular yeah i think like a japan or south korea would be i guess yeah or like a latin america like argentina maybe is that a major okay i could see any of the a lot of the latin american countries yeah or like a russia russia is pretty major i just japan south korea is a big one for me japan's already made a legal currency yeah i mean japan and mount gox right yeah japan's been at the forefront for a while now um yeah so world leaders pumping uh crypto yeah that was just a quick quick nod i think that was pretty interesting um and then after that uh your one of your favorite topics uh sia saya how do

you say it oh oh i don't know i see i called sia coin i called sia coin too so i but i might be called saya coin yeah i think they're officially uh phasing out all other asics except for the yeah they've doubled down they've doubled down on their we talked about it in a previous pod i think it might have been the first one we recorded because i it's a very very interesting case study uh the devs created their own asic manufacturer and then they were beat into the punch in development so now inno silicon has the best miner and bitmain has a miner and like their miner is about to be released i'm pretty sure it hasn't even been released yet and it's just completely underpowered and not profitable compared to these other miners so what they're

doing is they have a kill switch in their miners that can switch the algo and they're going to switch the algo so every miner except their own is invalidated and they wrote up like a big blog post on it and it seems pretty anti-capitalistic yeah i mean the thing is is miners are making a long-term investment decision it's very you know it's capital intensive you're putting a lot of money up front and and hardware manufacturers are doing the same thing and if you if you fuck with their revenue projections and you brick their hardware and you have the dev team that's doing all the code also competing against them like they're not going to invest in protecting your network and you're just gonna the result is going to be an insecure um centralized network

and and just extremely short-sighted but it's kind of nice because uh at least we got this case study to point to when it all goes to shit yeah and you have some very interesting thoughts as to how the what's the company around site obelisk i think nebulous is the parent company then they have like sia tech which does the dev underneath nebulous and then they have obelisk is the asic manufacturer yeah but they're all the same people yeah but there's and they're all american based yeah exactly so there's very centralizing oh yeah see is like decentralized cloud storage by the way yeah they compete with like dropbox and google drive but a government agency could easily show up to somebody within that three company holding company it's just the same like

five people yeah and uh and say hey you're gonna need to turn this off we know you guys can do it you bricked all those asics yeah i mean the big extremes are are child porn and uh copyright materials right because that's usually what they go after for any kind of file sharing or storage yeah uh service and how is the judge going to be believe them when they say oh we have no control over the network when they're they're the only asic manufacturer and they're the ones who are pushing out the dev code and they obviously have unilateral control over the network which is absolutely ridiculous i mean they might skate by you know but i that's not the way you should be doing things we shall see oh and they said the community supports it but like they're

bricking everyone's miners like all the miners and the hardware miners the hardware manufacturers don't support it like it's impossible for them to be why would they ever support bricking their own hardware so that's just all it's that reminds me of the ethereum dao when they returned the dao they said it was a community thing and they just like pushed it through they if you're going to push through a fork centrally you're always going to say it's a community supported decision yeah i mean it's all optics at that point yeah um yeah so they're digging themselves a deeper hole it sounds like uh what do we have here next shape shift you are more abreast the situation than i am i uh i actively avoided it just because i didn't feel like

reading up on a shit storm between eric vorhees and the wall street journal right so shapeshift i think every pretty much all of our listeners know what shapeshift is it allows you to uh exchange different cryptocurrencies uh directly between each other like a lot of these altcoin the big thing with shapeshift was a lot of these altcoins only have bitcoin pairs so you have to buy bitcoin first with them and then sell them for another altcoin like shapeshift allowed you to do like altcoin to altcoin jump between chains and you didn't have to have an account uh and they that the account list part was a big aspect right but recently eric vorhees uh the ceo announced that they're gonna require accounts in kyc

so finally there was you know they became too big and there was a lot of pressure on them and they they had to comply since then wall street journal has released like a hit piece on them that was like you're a money laundering operation and shapeshift has since responded and that response was released yesterday i think yesterday i believe yes uh and they were like you know this is bullshit it was less than nine million dollars worth of transactions like and then they and they countered it it was a pretty strong counter but one of the things that was interesting to me was in the process of countering it they basically admitted what a lot of us have said for for a long time which is they they pretend they give the appearance appearance of a privacy focused

exchange don't use an exchange that requires an account we don't have an account here so you can jump between chains and we won't track you and in this response they admitted to using blockchain an analysis on all their trades they explained how they all their transactions are public so anyone can track them across chains and they admitted to blacklisting addresses which is like a huge no no yeah huge issue regards to fungibility uh are they were they seizing funds i don't know like how they were blacklisting if you because if you sent a transaction where they could you hold funds on shapeshift no but but the only time they would know is when you actually sent the transaction to shapeshift yeah so they i wonder if they were returning the funds or if they were

just holding on to them once they were blacklist and were they given a blacklist or well no they said they they do their own blockchain analysis that is more accurate than a name and address which i don't think is true that you can have it more accurate than a name and address but just that they have that kind of balls to say that it must be a pretty intense operation and then they said they've cooperated with 30 investigations with governments uh you know i just it's just all in one article just basically all in one blog post just basically said like we don't give a shit about privacy was was my takeaway i mean like one of the things they could do that would really easily hurt these chain analysis companies from tracking you across chain

is what a lot of mixers did in the early days which is a delay so when you do your transaction you say you know i'm gonna send uh bitcoin and and and you're gonna send me shitcoin you could say like don't send the shitcoin for 27 minutes and then every single shapeshift transaction it would be a different amount of time that the actual next thing would come so that alone would be huge and it's like the simplest ux change and doesn't change any of their auditability or any of the other things they like and you could definitely make like an efficiency argument like hey we're doing this for efficiency purposes uh well that's what they said right they want it to be instant as instant as possible no but i'm saying even if you delayed the transaction for

like batching purposes oh that would be good too if they just manually did random batches when they sent out transit like they could have done a lot of things to make it harder to track but instead all they cared about was marketing themselves as private while actually doing the exact opposite leaking a ton of information i mean chain analysis sent out an email to all their members that they could the that they could track shapeshift right shapeshift to monero this was like two months ago yeah uh i forgot about that yeah so so you know i think it was a huge privacy leak and hopefully you know not too many people got got screwed by that uh and now you know going forward i mean now that they're adding kyc no one was going to think they

were private anyway but it's a pretty it was and no one's talking no one's really talking about that aspect everyone's commending them on the great response uh but i think it's there's a much more negative outlook on that yeah i decided to stay out of that for a reason but i did not No, it was that as bad as you just described, it's a shame. For Eric Voorhees in particular, see how, and I don't like talking about individuals, but for somebody who was such a bastion of self-sovereignty and complete freedom in the early days.

Yeah, majorly. Sort of had to, and I would say, I mean, I don't want to say I fault him, but his hand has sort of been forced by the powers that be. He has way more money to lose. no yeah you know that's why centralization is is important to avoid yeah because once you have it it's really easy to to take it down so like even though shapeshift is going to accept kyc there's bisque we got bisque is a decentralized shapeshift uh where you could basically do the same thing through an app on your computer that's bisq and i think it's bisq.network or it might be.info

really well he's gonna he's gonna check real quick bisque is a really nice product um you can use you know all these centralized things will go up you know and then they'll have to do kyc or shut down and then you so right now you have binance doesn't do kyc yeah it's based that network this bisque.network bisq.network is is probably your best option their liquidity is not great but neither was shapeshift so there you go yeah and that's the one thing with liquidity though the more people that use the bis gap the more liquidity that comes um so power numbers people there's another free ad use it um yeah so that was interesting to see this week in particular a lot of people uh were on the side of eric for he's and it was pretty scummy what the wall street

journal did to sort of frame their initial questions a certain way and then completely just tried to trash shapeshift yeah the wall street journal pretended according to the response the wall street journal pretended they were doing an article on the greater crypto market and they reached out to shapeshift about five months ago and they've been talking about it and then this piece came out it was under completely false pretenses they thought they were doing a completely different article yeah so that's really fucked up but i mean at this point what do you expect i'm not even who can be surprised don't trust anybody not even us freaks especially us uh one broker did you ever use one broker back in the day no near did i one broker

allowed you to trade stocks with bitcoin um it was based overseas i'm not sure where it was based and only had bitcoin deposits and withdrawals and you could go long or short you know like crazy leverage it's an interesting broker dealer model i can't imagine the logistical headache they had on the back end there it was a bucket shop with bitcoin as the rails and i think and you know we see a lot of them simple fx still exists uh you know i mean i think binance is a bucket shop but they don't they don't do securities uh but the sec shut one broker down they got them and they they charged the ceo they seized the site all funds are locked up people some people were able to get their money out like right as it happened because they were having issues closing

the wallet but uh yeah it's all shut down this is what happens to centralized exchanges do we know centralized projects do we know how much was seized i'm not sure yeah it was a decent amount they you know they just added the weed stocks which is like there you go you got you combine two bubbles together and uh you could go like 50x on tilray or whatever the the weed stock that that's been going i don't know how to pronounce i don't know how to pronounce any of these things that's why i like keyboard yeah it's a good way to uh to compound returns there is just roll your crypto returns into the pot stocks in the last three months and unless and then so actually i think one broker had a cool feature where you could like mirror trades where you could follow

traders and and it just put a portion of your money into what they were every trade they were doing yeah and then they got a cut which is kind of a cool model it was uh it was pretty hot site a few years ago i remember it was a lot of rufflings going around yeah people love it people loved it you know and uh and it got shut down got shut down and it took them two years two years the investigation so that gives you a little bit of timeline how long it takes the sec to shut down these places yeah that was um what's the one lawyer's name jason jason is it i retweeted them i'm gonna find it real quick so i can get proper attribution because i think that's important to to correctly attribute data sources you know i do my best in the newsletter

i'm not perfect uh it's very important the thing is all these centralized projects if they get too big you know they're going to get shut down if you have money on them you're you're risking your money but the overall system is fine it's going to be like whack-a-mole you know yeah so the tweet i was referencing is from a jake shervinsky yeah he's a lawyer the undercover the undercover if fbi agent who investigated one broker bought his first unregistered security-based swap on march 30th 2016 so two and a half years ago at this point uh the government didn't take action until two and a half years later the majority of icos uh in parentheses unregistered securities were issued in the second half of 2017 buckle up folks so i guess you can using the same timeline take a

gander to the future it's going to take them even longer because like one broker is easy they're used to that kind of thing the icos is like a little bit of a new world complex but it take the point is it take it takes a while to prosecute these things and and anything that's centralized is and especially u.s based one broker wasn't even u.s based but especially if it's u.s based um you're fucked yeah eventually they'll they'll you're you're just you're sitting there you're a target you know you might skate by like like i said before especially if you're smaller yeah um the long reach the law will eventually catch up to you uh this is why decentralization matters you know this is this is why it exists in the first place why pow is important yeah so

we're halfway into this i think we're through all of our topics we're only 30 minutes in no we didn't get through all our topics no no of course not we have we have a ton of topics here coinbase bundle oh how do you feel about that pretty terrible not a big fan personally i think it's uh what is the coinbase bundle it's a coinbase they it's basically an index of i think they're indexing it based off of overall market cap correct and top five it's their coins yeah the coins that they offer on their exchange which they're opening up they just had a google uh google doc that anybody could sign up and ask them to pump their coins right but right now it's it's bitcoin bitcoin cash ethereum ethereum classic and litecoin yeah so they're offering basically an index product to their

retail investors where they can get exposure to these five coins in particular and one foul swoop I think that is idiotic. I do not think you can compare these quote unquote cryptocurrencies at an even ratio. I don't think they're really comparable in what they're trying to achieve, where they are from a technological perspective. and then indexing these together and selling them as one product, I think is a disservice to all humans everywhere because I do think there is a needed level of understanding that is necessary to invest wisely in this space. And if Coinbase is leading retail customers to assume that all of these cryptocurrencies can be compared on the same merit,

I think that is a grave misjustice. that's all i have to say about that i i really like that i i completely agree on pretty much everything you said uh it's not a true index it should be noted it's it's not it's not reweighting itself basically you put in how much instead of buying bitcoin or buying ethereum on coinbase you go to the coinbase bundle and you put in however much money you're buying and it splits it up percentage wise among all of their coins and then deposits those balances in your wallet so it's not gonna if they add a new coin or if the market caps change like the value of the oh they're not like readjusting the index or anything no i mean they they are like adding coins and

readjusting so they're actually not selling you an index it's not an index it's just like a one click percentage buy across all their assets i didn't even know it was that bad yeah so holy shit and then the the main problem i have is if you trading altcoins bitcoin is already risky trading altcoins is even more risky long-term hold of altcoins is is not an advised strategy you know if you want to trade short term so be it but it's high high risk and this is not the way to do it and then the second thing is they the the alt coins they offer are like complete shit like it's one thing i you know how i feel about ethereum like i don't own any ethereum but if you want to own ethereum i completely understand you know they have this whole they

have a huge you know huge base community whatever tons of projects being it's it's it's relatively top tier right litecoin complete trash bitcoin cash even worse etc i i i don't even they were just lazy that's why it got added and litecoin's only there because charlie uh was cto yeah exactly so he pumped it he he got it in and he that's not talked about enough either that's uh i think we talked about we talked about on my first pod when you were interviewing me yeah yeah that's uh i mean i don't have anything against charlie lee in particular but it's pretty fucked up that they let that they listed his coin when he was cto of the company and he announced it on twitter ahead of time he bought you know he was buying a ton of it he kept saying like oh when when coinbase adds

it's going to be like way higher and then the whole time i was a bunch of us were like this is the coinbase effect people are signing on to coinbase they see there's three options bitcoin ethereum and litecoin uh they see litecoin as the cheapest and it has this like coinbase effect where there's a lot of uneducated retail that buys through coinbase so the price goes up because they see that the price is is cheap the unit price is cheaper and then they they buy that and i said as soon as a new coin gets added to coinbase that effect gets diminished especially if it's a cheaper coin right and then he sold he sold at the top like a week before they added bitcoin cash right a week before they added the next coin he got out so he he got in before they

he joined coinbase's cto also founder of litecoin got it added started rumors that it was going to get added it got it added went to the top sold near the top and then the next coin was added yeah all in the matter of of 10 months litecoin is a fascinating story litecoin is the classic ride ride somebody could tell story this is an overvalued test net yeah um no but it's interesting again nothing against charlie lee i just think it was a little wide though the nature of the way like queen got it added to coinbase how he dumped at the top and uh is getting getting by scott free is very wild wild west in my mind uh very chaotic yeah i mean i think he's gonna get away with it it's crazy yeah i think he will too absolutely crazy to me in the future somebody else won't

be able to do it but he's gonna he's gonna get away with it coinbase has got like a little bit of a regular regulatory capture thing going on there they they're like a little bit protected i mean before the bitcoin cash uh announcement where they they ninja launched it like it spiked beforehand like that information leaked out i have i have dms in my inbox of people who were speaking with people on certain product teams that that knew things were going to happen far in advance um but i'm not gonna get into any specifics uh where do we go from here oh but anyway my other problem with the bundle is it increases that coinbase effect so basically any coin they add instead of and i think that's detrimental to coinbase because it it creates

those situations where there's pumps on addition if they control too much of the market so they should be trying to reduce that coinbase effect where if you put a cheap coin on coinbase on educated retail will just pump it up uh but instead with a bundle product you're actually increasing it because you're creating a base buying power if someone's doing like an auto weekly buy on a coinbase bundle then you know any shit coin you add in there is automatically and and the the less valuable less liquid ones are going to pump more percentage wise on the coinbase bundle right so they like literally are trying their best to increase the coinbase effect instead of doing the opposite which is i think both detrimental the space will be fine but it's

detrimental to the space short term is detrimental to coinbase in the long run yeah it's i mean you freaks know my beef with coinbase i'm i've not been a big fan for a while i was for a while this is where i bought my first bitcoin um but again i i i have said this before i've written it before i don't know if i've said it on the podcast but i think brian armstrong just hates bitcoin for some reason big ethereum fan that's why big ethereum fan but like literally just like hates bitcoin he won't met he had what was he had a tweet a couple weeks ago where he mentioned bitcoin and he deleted he had to quickly delete it because he didn't say he said he slipped up and said bitcoin instead of crypto and had to recraft this tweet to take bitcoin out of it like

it's blowing my mind and and brian armstrong in particular somebody who supported going all the way back bitcoin classic bitcoin xt bu segway 2x like new york agreement like it's never really aligned with the hardcore users and i think a lot of the moves i mean this is all conjecture i can't prove this with anything but i think a lot of the moves that coinbase has been making as a company are in spite of bitcoin success and in an attempt to sort of drag it down and delay it i mean i think from an exchange point of view you benefit the most from a multi-coin kind of world and he's specifically you can tell he's trying to position himself as like the ethereum they want they want complete control of the the ethereum marketplace so they they got paradox which was the ethereum

so-called decentralized exchange even though it's owned by coinbase uh it's basically just like an a16z uh portfolio consolidation company at this point yeah they bought earn uh paradox as a portfolio company but uh yeah i i just i don't recommend i used to recommend coinbase like you and now i recommend cash app is the best on ramp cash app official sponsor they did not ask us to trash coinbase and no they probably wouldn't like that they probably wouldn't like that so we're not going to associate that trashing with the cash app at all but that's what i recommend now yeah that cashing that trashing was brought to you by mccallan who has still not sponsored us they better be careful we might have to we might have to switch whiskeys no i'm an asshole i was

talking earlier in the podcast about how i don't like talking about people and i just came at brian armstrong yeah that was pretty that was pretty harsh it was poor form i tend not to go after bald guys like i feel bad for them already well i'm a bald guy all right we don't need your sympathy okay i'll tell you that okay next topic i'll i'll lead us off since you think we're done with topics um eos has absolutely shitty incentives collusion proven right yeah so we had a what a blog post came out with a bunch of uh supposed leaks that huobi or huobi or i always just say huobi huobi uh the exchange the exchange in asia was colluding to back certain block producers which is basically the the way eos works is they have 21 uh stakers that get delegated votes to get

those spots and then they have like maybe like 80 80 nodes 80 stakers that are like standby and get a little bit less money and then everyone gets diluted and those people get paid a shit ton uh and so there was collusion and of course that's it's like literally how the incentives were were designed uh of course people were going to be buying votes and making backdoor deals and getting their friends in this is actually what i like about eos uh when i had joe looney on the podcast uh one of the developers from rare pepe's from back in the day counterparty and rare pepe's developer uh he basically described eos as taking ethereum to its extreme and sort of expediting the process through which ethereum is going through where eos is just openly admitting hey

we're pretty much completely centralized uh we're gonna have uh 21 nodes and we're gonna coordinate and don't worry dps is perfect it's going to work so he said i believe it was like had to be like february at this point or february march when he said this like it's just gonna help people realize that like proof of stake like is unworkable in the long run because every proof of stake system will trend towards an eos like system so the faster that eos proves that this does not work the better in my mind so thank you dan thank you it's uh it did it does put projects like ethereum in an interesting predicament because the trade-off is usually centralization

versus efficiency cost. So if you want like EOS transactions are quote-unquote free and that comes at the cost of centralization and also they use the inflation to basically subsidize the fees. So it puts Ethereum in this predicament where they're already not as decentralized as bitcoin but they were making like half trade-offs

for i i capacity i would say i guess not necessarily even efficiency and then eos just took that to a whole nother level so they're not centralized enough to compete with eos but they're not decentralized enough to compete with bitcoin right so and their ultimate yeah their ultimate they're trending towards centralization so the ultimate trend is is is to what eos has developed into yeah which is a complete conclusion conclusion uh filled scam it only took like three months for for like collusion uh rumors to leak and not even rumors for a collusion to be proven to be happening i mean everything about that ico is just sketchy top-notch scamming like people call too many projects in the space scams uh but like eos was

just i mean it was like probably wash trading in their in their ico it was set up that way a lot of people that you talk to behind the scenes like it was like an overt money laundering money laundering scheme yeah that's what i think it is was i i think it was a way to wash wash cryptocurrency profits into uh actually recognizable income in a jurisdiction that had snow income tax so it was like it was ideal yeah um a year-long raise really weird way that it was set up for washing yeah and then it probably has it seems like it has very centralized coin ownership which just increases that that collusion tendency and and uh oligarchy oligarchyness or whatever it's very oligarchy yeah yeah it is i would say the definition of

an oligarchy yeah um oligarchy yeah hate pronunciation oh i got my philly accent you got your new york accent okay anyway fuck eos that's funny people act surprised um vitalik uh vitalik actually commented on it what he's like oh i i knew this was gonna happen but not so soon so i just thought that was ironic right which is like how do you not see this is eventually what well it's actually the opposite of how i feel about ethereum right i was like i I know this is going to happen, but it's not happening as soon as I thought. Maybe it is. It's just not as – it just hasn't been leaked yet.

You know, we need – well, first of all, Ethereum hasn't switched to – there's been a lot of talk about proof of stake versus proof of work this week. Yeah. I went on a little rant this morning. I had to. Yeah, I was – go on. If you are going to make an argument for proof of stake and against proof of work, I only ask that you do not lead your argument with the faulty assumption that Bitcoin wastes energy and is wasteful and bad for the environment.

That is a terrible, fuddy premise that has been debunked many times over, specifically in the last six months. And it's just laziness on a form of rhetorical argument to lead with that assumption. So that's all I ask. I agree completely. I'm really happy people are finally talking about this. uh we we talked and we've talked about this before on previous podcasts and i have uh my domain pow versus pos where you could dot com where you could see hugo's writing on it uh which is really good uh proof of stake is is not will never be as secure as proof of work

proof of work is is really the the major breakthrough here how it's combined into the system um and what they use the environment bullshit as the as the public facing but they use as the public facing marketing right but really the benefit of proof of stake is is two things um if you're a major coin holder you get to maintain your you get to you get to maintain your control over the network and dilute everyone else it gives you a lot of control and it's really easy to pump because in proof of work you have miners who have like real costs they have they have to pay electricity they have to pay rent they have to pay labor all these different things so they're constantly selling their meters running 24 7 365 they're constantly selling there's just

constant downward pressure on on the price and constant liquidity entering the market that anyone can purchase but in proof of stake their expenses are are relatively minimal in in comparison right the actual expenses of operating the stake node are are minimal uh so so they're able to control that supply and not have to sell much and then that reduces the float and allows the thing to pump to fucking kingdom come so like that's the those are the really the two main reasons they use it and then they just pretend that it's because of the environment yeah nick carter made a good point in that thread i had this morning where he's never seen a serious environmentalist like argue for proof of stake systems like this is just a concern troll that

proof of stake cheerleaders sort of hang on to and cling on to and again it is lazy and is wrong it's a bad argument like it doesn't make sense like we talked about this in various episodes prior like lorenz proof of work series like basically proved that bitcoin and is becoming more efficient over time when you take into regards the amount of economic activity that is securing on a block by block basis like this is undeniable and it's it's not waste because it's powering the base of a global financial you know network and and it's and it's mostly sourced from excess and stranded energy that wouldn't be used otherwise because it's the cheapest energy in the world so in a lot of ways it

incentivizes both energy efficiency and and renewable energy production and this is something I actually wrote about this yesterday uh satoshi refuted this fud eight years ago in 2010 i'm pulling up uh it's just gonna keep getting repeated every year it's always it's just and we haven't seen anything that's the thing about i don't want to satoshi hobnob here but he was so succinct and so direct in his responses he basically destroyed the uh bitcoin mining is disastrous for the environment argument in 274 words. I counted individually.

That would be a thread. I'm not going to read all 275 words. I'll read the first four sentences. It's the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility

of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. the utility of the exchanges made possible by bitcoin will far exceed the cost of electricity used therefore not having bitcoin would be the net waste yeah it's a net benefit exactly i mean obviously we all believe this i'm recording a podcast here you know like i've devoted my my adult life to this yeah our reputations in our adult life it my 30s are approaching quickly it's starting to dawn on me um and i've spent basically all of my 20s in golf with bitcoin bitcoin is a net benefit god damn it no it is and again going back to the crux of this rant it's if

you're going to make the pos argument don't be fucking lazy okay but the thing is we've been arguing about this for years no one has a major pos implementation out that's holding a lot of value yet tezos has just launched on their main net they they're being pushed by a ton of vcs there's a ton of money behind it and uh and and they're live now uh we have a bunch of other projects that i'm it's hard to follow like definity and stuff like that cosmos and and ethereum is wants to make this switch so so we need one of them to fail so we could so we could be like told you so like that's what we're waiting for right now we're just going to be everyone's just going to go go back and forth you know so i i would say place your bets and i would i would

bet on proof of work and you know i'm not saying that proof of stake doesn't it could have a place somewhere in along the line but it's not going to ever be a secure backbone for the world reserve currency yeah exactly it's never going to compete with something like bitcoin you need to i i forget who tweeted it someone tweeted it and he did it really succinctly uh proof of work oh it's christoph atlas proof of work seems wasteful now because we're in the honeymoon phase where no major major nation states have actually attacked attacked it yet but once that happens everyone's going to be like oh my god it is not a waste at all right and that's what you know you got to be ready for that you don't want to beg regulators christophe from uh blockchain yes i think that's

where he's working now yeah he's got good tweets um no i mean he's og he's been here forever forever yeah it's true um this yeah like we like we were talking about the beginning episode with go tena like anything that can decentralize bitcoin or these distributed systems further is a net net a pos system we would argue i'm going to speak for you on your behalf is a very centralizing system yeah trends to centralization but pow trends to decentralization exactly there's an issue in the beginning of pow but but we've largely gotten past that and i i think now we're trending towards decentralization and speaking of that like uh check out uh was that the latest newsletter from ark invest where yassin wrote about yes

bitcoin and how they've gotten more decentralized over time yeah yeah i think yeah i think it might be this week's it was the ark invest yeah we can post the link yeah we'll post the link uh there's like a little blurb there had a nice little blurb about uh bitcoin mining centralization how it might be more decentralized than some people think yeah i mean i think the game theory really helps us a lot and he didn't he didn't have any you know any calculations that didn't affect any of the calculations there no um but but yeah i i think at this point we've we've the most centralized part of bitcoin mining is behind us and now we're going to trend to more decentralization just from the the main fact that the cheapest energy in the world is excess stranded energy

and reused energy and none of those things you can get in large supply in one place so they're they're going to be globally distributed as much as regulations allow there's economies of this scale macro yeah it's the opposite yeah that's pretty that's pretty fucking cool yeah and you don't you have the exact opposite in a in a pos system exactly um yeah so that was our rant on pow versus pos uh anything else that was like unintentional uh the largest bitcoin exchange in india oh yeah zeb pay uh voluntarily shut their doors i mean they've been operating in a a worse than gray area because india has banned uh cryptocurrency trading but they were trying to like finagle around that i think yeah and they finally shut down but they did it cleanly everyone

can withdraw their money the zeb wallet or whatever they want to call their custodial wallet is still allowed um but they they close down the exchange and there's still exchanges in india is unicorn still around i'm not sure but i someone she'll bit bns in my in my in my my tweeter oh yeah i saw that bit bns is still up yeah they have like a special deal for for i have no i have no idea how legit that is so just be careful you shouldn't ever keep like any substantial money on an exchange and when i if you if you send money to exchange assume that money's gone forever yep that's that's pretty much the the strategy i i look at and then analyze every decision based off of that uh unless it's like if it's like a regulated exchange then you

could sue them for like three years and like maybe you'll get your money back with bitcoin to like 80k uh um yeah but our hearts and uh thoughts go out to our indian brethren and sisters but like that shouldn't be surprised because india banned cat like large bills remember they did that whole thing where everyone had to come in and exchange their bills and write down their names to admit how much money they were hiding from the government they're getting very dystopian they're trying to go cashless society they have that that don't they have like a biometric system now too it's even yeah it's like really bad it's like they they tie it to like they give you a number like a social security number type situation yeah and like

it's really insecure like all the infosec people i follow are like oh my god like what the fuck are you doing yeah they're going like the straight dystopian route they have a lot of people they're trying to like wrangle over and a lot of tax fraud that they're trying to control uh the places the places where bitcoins needed the most are going to be the places where they're going to be banning it all right and and bitcoin can get through that you know you always have p2p exchanges you always have local bitcoins and that's why we need to make gotenna more robust we need to uh we need to highlight these decentralization trends in bitcoin and the people working on them uh that's what i try to do i think that's what you try to do as well yeah that's why we took cash app as a

sponsor because they're so they're so not centralized no i mean yeah that's what we try and do i agree that's that's the that's the most important thing it helps build bitcoin and improve bitcoin and make it so that not and the important thing is you don't want like a group of three countries to be able to take this thing down right like that's the hope right like if you have 50 countries all working together trying to take bitcoin down like bitcoin's fucked but like you make it significantly hard enough and then you can have a global system anything short of that will never be a global system it'll be oh that's the american run system or that's the russian run system yeah and it's a beautiful ideal to strive for i believe that wholeheartedly

that's why i write and have this podcast and i think slowly but surely like i said earlier we are on uh an upward trajectory on this trend towards self-sovereignty and and freeing money in particular uh but the battle is far from over there is yeah we're just getting started we're just getting started um so yeah uh i think what we can get from this episode is let's focus on on the things that actually help us defend against those potential state actors in the future um so things like gotenna what samurai samurai wallet is doing in conjunction with them uh are things that should be highlighted talked about more and if you are willing and able and have the power to send resources to these types of projects uh please do i'd like to add

uh if you have a facebook account still i don't know why you should delete that yeah they fucked up pretty bad they got that's going under the radar because all the kavanaugh shit like facebook has skirted by pretty hard because it's kavanaugh shit i don't want to jinx it like i know google's tracking everything we're doing they've been pretty good about the like the actual like everyone's trying to hack them and they're pretty good about not getting um yeah so delete your facebook you should delete your linkedin too like honestly if it's a linkedin is like the worst network yeah i'm gonna delete that absolutely at least like next bull run when you feel more financially independent people should uh just should delete their linkedin they're doing now

when uh when it's easier and the bitcoin side of linkedin is absolute fucking cesspool so like if you're in the bitcoin industry you don't need a linkedin that's for sure if you're in any other industry i completely understand unfortunately you need it but there i tried to like clamp down my privacy settings and there's no clamping down linkedin privacy settings you just get overridden by like a you know a hundred dollar recruiter account right so i just i just wiped that in facebook you know months ago but uh everyone everyone should do that care about your privacy people no one else will uh and i think that's going to be the ending note of the podcast if you're liking what you're hearing folks if you like the rabbit hole recap let us know

uh please subscribe to tales from the crypt uh rate us share with friends trying to grow this thing uh i think uh i think what matt and i have envisioned for the long term is is exciting we've got some some ideas beyond the rabbit hole recap but uh definitely definitely show some support on your preferred podcasting platform uh matt anything you want to end with yeah we're available on all the different podcast apps just you know type in tales from the crypt and click subscribe yeah that helps us thanks for joining us this week freaks bob a coin peace and love