TFTC: A Bitcoin Podcast - Rabbit Hole Recap: Week of 2018.10.22

Episode Date: October 22, 2018

Topics of the week: - Betty - https://www.bbc.com/news/world-africa-45889707 - Venezuela local bitcoin volume new ATHs ($25M per week) - https://twitter.com/louAboudHogben/status/1053086355100581888 - Tether follow up - https://coinmetrics.io/charts/#assets=dai,gusd,tusd,usdc,pax,usdt_log=false_roll=7_left=marketcap_zoom=1512254415194.9307,1540241462242.7358_stack=true - Unocoin routing around Indian regs - https://www.coindesk.com/unocoin-bitcoin-exchange-atm-stablecoin-central-bank-crackdown-india/ - Wasabi Wallet - https://www.wasabiwallet.io/index.php/2018/07/31/wasabi-wallet-privacy-focused-bitcoin-wallet-for-desktop/ - Ethereum Constantinople hard fork delayed - https://www.coindesk.com/ethereums-constantinople-hard-fork-is-being-delayed-until-2019/ -Ransoms - https://www.casino.org/news/5dimes-sports-book-owner-missing-in-costa-rica-possibly-kidnapped - Neutrino - https://blog.lightning.engineering/posts/2018/10/17/neutrino.html -Monero Bulletproofs hard fork - https://medium.com/digitalassetresearch/monero-becomes-bulletproof-f98c6408babf - Binance, Chainalysis - https://www.coindesk.com/crypto-exchange-binance-adds-compliance-tools-from-chainalysis/ -Bisq ATH volumes - https://www.theblockcrypto.com/tiny/bisq-volumes-reach-all-time-highs-amid-increased-monero-demand/

well good afternoon freaks it's your boy marty here sitting down with matt it's a monday afternoon uh october 22nd 2018 uh the year of our lord uh this is the rabbit hole recap no sponsors this week uh blew through our ads our ad spend in october uh re-upping right now um but shout out to our sponsors of previous episodes the bitcoin price right now on bitstamp is six thousand three three hundred ninety one dollars we've had a big week of news matt um uh first before we get into the news intro what's going on how we doing today hey guys happy to be here uh that's i feel like ever since we started announcing the bitcoin price it has been 6400 ish yeah it's been it's really tight ever since that one listener was like you you guys should say it every say it every episode

it just refuses to move bitcoin is our stable coin there you go it's been very stable recently i'm happy with that yeah and it's actually a good segue into our first story about a woman uh in kenya betty betty i'm gonna talk about betty's place betty betty was my hero today this was reported uh on the bbc uh really today today actually a very bad article but uh a very very inspiring anecdote betty is uh the owner of a restaurant a butchery and a pub in kenya and she also teaches people how to use bitcoin she accepts bitcoin as payment and she sees herself as a true cryptocurrency evangelist uh on the ground trying to teach people and accept cryptocurrency and live uh live the sovereign individual ethos so we just want to give a shout out to betty matt matt has a

few things to say about her particularly he's really jacked up about i'm super excited i'm like standing here like marty gonna stop talking so i can betty is everything i love about bitcoin there we go you know she she used bitcoin profits to buy this old hotel open up her own place and not only does she accept bitcoin but she educates people about bitcoin it's like what we do here you know once a week she's educating people in kenya about bitcoin and you know that's that's what's crazy about it what crazy the crazy thing about bitcoin is that people just around the world once you dive down the rabbit hole you just want to get everyone else involved next man up in this case next woman up betty just steps into play and says hey i'm gonna i'm gonna be the one to

step up and start educating people uh living a true bitcoin carnivory lifestyle it seems like apparently she has some very good lamb at a restaurant uh yeah i know michael goldstein was the one who actually pointed out the article and he he was particularly excited about her carnivory uh ways as well and he's trying to get her on his pod if he can get her on the noted podcast that would be that'd be fucking epic yeah so if anybody out there knows betty uh if we have any kenyan listeners that have get around no frequented uh betty's place definitely uh hook her up with michael bitstein or michael goldstein excuse me at bitstein on twitter uh he's he's looking to interview her and i think would be a good one uh from bitcoin carnivore carnivore to

bitcoin carnivore uh so shout out to betty and uh let's use betty as an example you too can uh can help teach people how to use bitcoin it's pretty easy it's just taking some time to do it uh so shout out betty today we're all betty we are all betty uh staying in developing economies venezuela some positive news this week there's been a lot of confusion with bitcoin volume in venezuela in particular because it's very hard to gauge because if you are denominating it in venezuelan boulevards it's obviously a misleading indicator because the boulevard is hyper inflating as we speak so somebody has uh taken it under their taking it under their arms and taking the bull by the horns and basically calculated the amount of bitcoin volume based in u.s dollars

on local Bitcoins in Venezuela. And it looks like since the beginning of last year, January 2017, the overwhelming trend is up and to the right that Venezuelans are buying more and more Bitcoin every month when denominated in U.S. dollar terms. So that's just a stat we wanted to... We've been talking about Venezuela a lot the last 10 weeks, and I think this was a good update on what's going on there.

Yeah, it's sitting at all-time highs right now. uh 20 it's about 25 million weekly volume on local local bitcoins local bitcoins lets you trade person to person so it's probably our best volume indicator for any given country uh because you can't inflate the volumes the way you can uh you know through a regular like a digital exchange so people like us like to look at local bitcoin volumes to see trends and with venezuela it's it's a clear trend up it's it's sitting at all-time highs right now yeah and it's been pretty consistently growing and yeah because that chart starts in january 2017 but if you go past there it was trending up before like january 2017 was like the previous all-time high at that

time yeah uh so you know people say venezuelans aren't using bitcoin you know obviously not all venezuelans are using bitcoin you know but uh a large amount are and it continues to grow yeah so that's keeping you updated in venezuela actually anecdote from uh from my better half she works actually with a couple venezuelans and they uh one in particular seems to think or is saying that uh dash is used a lot in venezuela they have so dash has a uh like a treasury system that holders can can use those funds to spend on part of the block reward is is used towards treasury endeavors and one of the things they recently did was they have some kind of phone partnership down there where it's it's the phone is is subsidized and seeded

with the dash wallet so the phone is cheaper it has a dash wallet on it and it already has i think some dash on it uh so they're like trying to spend their way into relevance down that's basically their strategy with everything dashes is known as a like a marketing marketing first chain you know they famously had uh like delta ads like people were going to conferences and on their tv was like a dash a dash ad yeah that's a dash they're trying to growth hack all over the world um but but the interesting thing about venezuela is you know how many bettys are in venezuela doing exactly what she's doing you know numerous yeah and uh no it's great actually had um i forget i forget whether it was about a podcast or newsletter venezuelan uh transplanted in canada was thanking us i think

believe for for bringing up venezuela and he was a bitcoin advocate as well so they're out they're out there um so staying in the emerging economy i don't even know if india would be considered an emerging economy at this point it's emerged it's emerged um but staying uh in the nation state sort of vibe india in particular has been very harsh towards bitcoin and cryptocurrency businesses uh shutting down uh famously shutting down exchanges over the summer making it really hard for people to start businesses but it seems like a stalwart in the industry in india in particular unicoin is finding a way around uh these sanctions from their government i think you can speak more to this than i can right so actually i mean it's been kind of confusing

coming out of india and and with a lot of these these countries that go after bitcoin and cryptocurrency the reason the the biggest negative they have on the industry locally is that there's so much confusion that no one knows what the fuck's going on but my understanding is that when india famously you know they're trying to wrestle control of their population who who spends tons of money outside of government purview so they recently banned cash like the large bills they were going after cash even right yeah it's about this time last year i believe yeah so they made people cash in their large bills and basically do kyc to get the new bills uh so it shouldn't be a surprise that they would go after bitcoin and cryptocurrency like

that is the natural you know if if they're if they're trying to stop people from having private transactions or having transactions outside of their control then of course they're going to go for cryptocurrency now their current ban is actually on the banks and the payment providers so it's like what the u.s did to sportsbooks which is they they just made it so that all the venues that you would be transferring your money on and off um are blocked from being used so it's it has the effect of starving out the exchanges now uh unicoin which is one of the biggest exchanges there has has basically been walking this tightrope trying to survive and now what they've come up with is they are actually launching like physical atms that that they own

themselves in the major cities they have one in bang banglore and now they're going to do mumbai and and uh somewhere else so all the major cities they want to have atms there and you just put your cash in or you get your cash out directly from there and then once they're on the platform they have to use stable coins a true us day yeah so and this is a this is a perfect example we've talked about in the past like why tether existed in the first place the reason tether existed was because it was really hard for exchanges to get banking relationships. So here we have a situation where exchanges in India can't get banking relationships, so they're using the stable coins.

Now, these stable coins have the same exact issue. They could have their own banks stopped if they don't do compliance. So the question is, how much can India comply a U.S. company? That's what it would come down to. Yeah, can they force TrueUSD's hand to sort of comply with their... Right, because I think TrueUSD is a U.S. company. I'm not sure. Not positive either.

Wouldn't be surprised, though. But it's definitely a Western country. Yeah. No, so this is something interesting. India in particular, I feel bad for our friends in India who are trying to build companies and use cryptocurrency and evangelize cryptocurrency in general. It seems like the government's making it an overwhelmingly hard process. Yeah, I mean, they're scared.

they they they understand the threat that bitcoin represents yeah and i think you know the indian people are resourceful people there's a large amount of them very large amount and and they're used to telling the government to go fuck themselves so they're you know they're finding ways as you can see this guy's a huge target and he's finding ways yeah no and uh indians in particular have inherently gotten the case for gold throughout time and um there was the one article elaine you've wrote a couple weeks ago where uh there was like indian calling farms that were calling americans trying to scan them uh pretending to be the irs and trying to scan them out of money to like make payments like fake accounts and one of the quotes was an indian

saying uh in the public in bloom in the bloomberg article like i can't believe how afraid like americans are their government like all you have to say is like we're with the irs and we'll take the money like here in india that never happens we'll fight back and call bullshit so it's funny to see that uh that uh dichotomy of of the type of fear of government that that we have as americans as opposed to to people in india where it seems like they they may have a more like orwellian system but maybe they just don't respect it at all yeah i like i said i i have faith that the i think the indian people are going to be a major part of this movement you know whether their government likes it or not yeah bang bang um but staying on the now we have the stable coin stable

coin tangent tangent uh tether we talked a lot about last week a lot has happened since we talked about it last week it is since the everything stabilized yeah converged back to its dollar peg um what was really interesting is i think there was something like was it 570 million dollars in outflows 710 million outflows uh 130 inflowed into other stable coins right so 600 definitely went out to us dollars yeah bitcoin or us day yeah right i think usd usd uh or other native currencies could be right uh either way it seems like all of tether's processes are running smoothly they have a bank now um bitfinex has a new bank now seems like deposits and withdrawals are stabilizing bitfinex still has a slight premium

probably mostly because of risk we'll see maybe they're still having a little bit of deposit issues um stopping the arbitrage but you know at the end of the day with all of these stable coins with all of these centralized exchanges you run the risk that at any moment you could lose your money and if they're if they're regulated and complying with laws then you're giving them a ton of kyc information but at least you can you know sue them and try and recoup it afterwards but if it's a company that's breaking the law like that's gone like you just don't you're not going to be able to you know try you know or maybe you can and you do something like the mount gox bankruptcy and then it's then what it's four years later and 20x later and we're just you

know you're just getting it now yeah with this tether story in particular in the last week in particular too it seemed like it was a very big media driven narrative do you think there's anything to be said about like the coverage of tether should should we like take time for these things to play themselves out before we jump to conclusions and blah blah i i think the word that a lot of people are using was weaponized fud yeah which we've talked about a lot on this pod before that fud is all right but unsubstantiated fud is the issue uh a lot of the a lot of the issues with tether come down to the fact that they are definitely breaking kyc aml laws so there's a whole group of people that will just automatically say tether's a fraud just on that fact alone

right then there's a different subset of us who understand that's why tether was born to begin with and we think those laws are unjust and don't actually help consumers and so then the question to us becomes two things is do they actually have all the money that they say they have and then the second thing which is what Bitfinex always kept saying was that Tether was running a fractional reserve so that was a point one and then he would link it to a point two that was and they're using that fractional reserve to pump the price of Bitcoin and Bitcoin's price would never have gotten this high if it wasn't for Tether manipulating the price so both of those remain unfounded to this day they've always remained unfounded we

we have no reason to believe that they don't have a full reserve we also there's no way for us to tell that they do that's by design you have a trusted third party you have to trust the third party uh and there's absolutely zero proof that it was used to manipulate the price upwards now as far as we go I think we were very reserved on the last pod about it you know we obviously have disdain for Bitfinex and Tether

and we don't trust them personally and I think in those times of crisis it's important to to give to stay reserved but also to give

your true opinion and to explain the risks to people because i i you know if you if during that panic you took an eight percent cut because you were holding you were holding tether and you sold it when it was at 92 cents and you took an eight percent cut right eight percent in this industry is nothing for me like if i like damn i mean you could have lost all of it right like seeing people lose everything yeah if you're i see what you're saying if you're trusting a a sketchy exchange or or a stable coin or something like with your money like literally at any moment you could wake up and you could have nothing this is true right this has happened yeah so in a time of panic like you take i mean tether

has allowed you to break kyc aml and not be at risk of all of bitcoin's fluctuations right so if you've been holding it since 12 000 you know tether has saved you a 50 loss right yeah but there comes times when i think that if you do insist on holding tether like it's not worth it's worth paying that eight percent to just be like okay well let me just wait out these six hours eight hours just make sure everything you know like kind of settles itself back down yeah he's like cost of doing business yeah no i think that's sound advice and a good play if you are holding tether uh an eight percent loss is uh much preferred to a hundred percent loss massive difference absolutely massive difference um so that was the tether news uh do we want to

talk about wasabi now you were using wasabi you tested it out you took a first spin and it seems like you liked it wasabi is so fucking cool i felt like a little kid again so let's explain it uh wasabi wallet it's a project by nopara uh who's a dev who's very two others and and it's open source so they have a bunch of contributors now yeah so they have a bunch of contributors no part is like the leading the cto the cto i think the other two ceos are lawyers because he's so scared of legality he partnered with two lawyer friends but nopara has uh notoriously historically been uh very uh very adamant about bringing privacy tools to bitcoin wallet infrastructure in particular uh whether that be via coin join or zero link a protocol

he's working on that utilizes coin join yeah yeah um and so i guess the first implementation of what he's been building for years is wasabi which is a fully functional wallet that really brings a lot of um fungibility upgrades uh at not even at the protocol level just at the ux wallet level so let's explain how it works you used it bang bang so it's a light wallet that runs on your computer runs on any computer windows linux osx don't use windows i don't know why i listed it first um basically so like electrum right people know electrum it's a light wallet doesn't have to download the whole blockchain so you don't have to have you know 200 gigabytes and on your on your computer you don't have to uh wait for it to sync or anything like that now it's it acts as

a normal wallet that defaults through tor it has built-in tor in it as well so when you boot it up automatically links in through tor so you're running on your routers yeah you're running through the onion routing system so that your peers aren't able to figure out your ip and then and it like switches the servers that use this it has like an adaptive thing which is pretty cool and then when you do a receiving address it's segwit by default when you do a receiving address it asks you to label it so every single transaction you have going into the wallet has like an origin stamp basically like so it says you know like okay so i brought this from cash app so like one of the main uses of something like this is let's say you buy your bitcoin on

Cash App. But you don't want Cash App and anyone they comply with to know where your Bitcoin go after that. So when you send a transaction from Cash App, Cash App knows the address you sent it to. And from that point on, they can track where those Bitcoin go to try and figure out where your Bitcoin goes to, what you spend it on, all these different things. So with this, you would open up Wasabi. You would create a new receiving address. You would send your withdrawal from Cash App. and then you would label it cash app withdrawal and then in your wallet you would see that utxo set is from cash app so you know it's like particularly a dirty utxo like that is linked to you yeah then you go into the coin join menu and you can do an automated coin join process

that that mixes up your coins with other people's coins in a way to obscure that blockchain analysis and it's done in a way where no one control over your private keys is never in anyone else's hands you never lose custody of your coins and your peers don't know who they're interacting with it's pretty badass and then the result is it shows you like uh it shows you how many times it's done that and the more the higher number the better and it has like these little color badges like red is the worst then yellow then green and then green check mark and then when you send out you can pick which which utxos you want to send out and they all have the different levels of privacy and and where their origin is from and whatnot it's pretty badass it seems like an

incredible wallet ux yeah it's extremely very good coin selection yeah coin selection is a fucking breeze to use like very user-friendly i think for what it offers fully open source they do take a small mixing fee uh so coin joins a little bit more expensive but worth it in the long run yeah the idea is that you mix and then you mix in like the background and then like you seed a mobile wallet with like a little bit of money and then you spend it from there you know it's like it's just like uh it doesn't work as well for as uh like an instant mix and spend kind of thing it's something you do later and and the more people that use it the better so like right now not that many people are using it so i have to like run it overnight you know you can't but

the more people that use it the faster it gets and like the more anonymous it gets yeah so you freaks out there so check out the wasabi wallet where can we find it it's wasabi wallet.io wasabi wallet.io other thing that's dope as fuck is that they created this zero link uh protocol which allows this wallet it's basically an implementation of the protocol so any wallet that implements it can take part in the same mixing pools because the key is liquidity right we need as many people using as possible so i i'm pretty sure it's going to be compatible with samurai solution on mobile and it's compatible with bob wallet which i forget who's doing that but that's another wallet that's that's gonna support zero link so theoretically we could have

like 10 different wallets all using the same uh mixing pool which is badass that'd be incredible and so i think this actually brings up like an incredible point like this might be very bullish for bitcoin because we might not need to implement too many fungibility upgrades at the protocol level if we're able to create this ux at the wallet level uh with bitcoin's current state um so fungibility might not be as bad as p as previously thought uh which is which is awesome i think fungibility on bitcoin is horrible right now but is it i i think this is a show it's getting better this is an absolute this is like the bare minimum this is this gives us at least a basic privacy guarantee and as long as we get more people using it like major plausible deniability

bonuses too um and i think it's absolutely it should not be discounted it's absolutely huge news but but better privacy improvements better privacy guarantees that are easier to use on bitcoin i think i think are something that should definitely be considered yeah well let's let's stay on this vein for a little bit so one of the knocks of complete privacy at the protocol level is you can sort of lose track of inflation. So if we get complete fungibility with some types of upgrades, whether it be bullet proofs or something else,

there's a chance that we wouldn't notice that there's inflation. So is this a good trade-off, having the privacy push to the wallet software just so we can have the certainty of the $21 million cap at the protocol level? He's smiling at me while he's asking it. I think, yeah, I think it's a good balance.

I'm not necessarily saying that there should be protocol changes, but there's plenty of room for other privacy improvements. You know, Lightning Network gives us privacy improvements. Liquid has confidential transactions, so you can't see the amounts. No, this is one of the biggest fuds against Bitcoin is that there isn't fungibility at the protocol level, and maybe we're discovering that we don't need as much as people think. i think we need a lot more than we have right now i would agree i i you know i but not as much it

needs a balance it's a balancing act i mean look if you have if you have like lightning network atomic swaps with zcash and monero then they're basically become mixers with utility tokens like useless utility tokens so there's like a lot of ways you can do it while preserving um the transparency the opt-in the opt-in transparency opt-in privacy is never as good as full privacy but with bitcoin it's a balancing act because it gets value from both facets it gets value from the censorship resistant aspect and from the full transparency aspect so to try and find a balance makes a little bit more sense but if you're talking about just to have the most private technology like it's it's almost always needs to be full and anonymity because you want

you want the you want the full anonymity set there you want as many people um obscuring your transactions as possible yeah no it's an interesting debate and it's uh it's fun watching it develop as as these new tools come out and as uh as people begin to experiment with different ways to to attain fungibility within bitcoin the important thing is that wasabi and zero link is fucking badass and you should you should you should get the wallet um it's going to give you a seed just like any other wallet write that shit down on a piece of paper it's the safest way to store these things you can write it down on two pieces of paper if you want um and and play around with a little bit a little bit of money you know not that much just play around with it get used to

it you know give me some liquidity and i'll give you some as well i like that uh teamwork makes the dream work people we're all in this together privacy is important it is it's very important staying on the wallet software of a neutrino uh was launched last week i believe or officially launched last week and that is an upgrade of spv clients i believe it you the way you described it to me before we started recording is it's somewhere between an spv node and a and a full node um and this will allow uh certain functionalities on the lightning network for people and uh that are using their mobile phones and stuff like that yeah it's basically like a better light light client standard so like if you don't want the full blockchain um you had to make pretty big privacy

um privacy short uh you had to give up a lot of privacy and you didn't have full verification you still don't have full verification here but it gives you it gives you a lot of benefits of a full node without having to run a full node um it's not an actual full node but uh it's definitely a step up for for mobile clients and for anything that's like a lightweight computing device yeah um so that was just launched it's being packaged into a couple lightning lightning clients i think yeah that's what it looks like i'm uh admittedly a little bit ignorant i haven't i haven't read through all the neutrino docs yet um apparently it'll enhance privacy scalability and decentralization it's more efficient censorship resistance um just wins

across the board it's not a full no but it's wins across the board yeah and it's uh bitcoin infrastructure getting built out slowly but surely so it's just another another part of the spaceship that that bitcoin is becoming bang bang bang bang next topic uh switching to a project that has a lot of patches to make moving forward uh we we brought it up last week uh and it was officially uh announced later last week that the constantinople hard fork for ethereum is being pushed back i guess the ethereum devs hopped on a core dev call and decided which i would completely agree with that uh they are going to uh breaking news marty agrees they're going to I mean, they can't hard fork with the mess up that they had on the test net.

They definitely need to make sure they have all their ducks in a row. So Constantinople officially postponed until 2019. Yeah, this just adds to my belief that the transition of proof of stake is going to be fleeting and may never come. It's going to come and it's just going to be a disaster. That's what Matt thinks. Yeah. um we'll never i mean let me caveat that it'll never come and be completely successful well i

mean that's a ridiculous caveat why is that ridiculous like do you think they're gonna push through a proof of stake hard fork that will switch the network fully to proof of stake no ever i don't think it'll be running at least for like a couple months like on the proof of state system like something like tezos which is already live that a lot of the f heads already love i don't think so i think you'll get that was rude i shouldn't have called them f heads that was a remit but vitalik shouldn't have called us bitcoin maximalists hey hey we we we try to stay above the fray okay here at the rabbit hole recap we're we're refined this is a refined show that's yeah that's true as i sit my mccallan they still haven't sponsored us

i don't i don't know if it will ever come they have to tezos is live i know they have to definity is coming cosmos is coming they all their all their supporters want proof of stake they're gonna have to they'll push it through there'll be three ethereum chains exactly you'll have proof of work ethereum so my mind that's not a successful proof that's not a successful transition okay i guess yeah it won't be clean i'll agree with you that it won't be clean yeah yeah but i think it'll come eventually delay delay delay i agree with you that it's just delays compound on delays and they there's so much complexity like think about think about the bug we just had in bitcoin like there's so many so much complexity with this new system and who knows

what's lying in there right yeah uh yeah good luck that's all i'm gonna say uh it's exciting to watch from the sidelines it is very exciting um no i wish i wish you guys well i think uh it'll be interesting to see how how late in the 2019 the hard fork is initiated well this is this is a good tangent because i think i mean this is a good connection because I mean, I think this just goes further to show, you know, that altcoins are a test bed for Bitcoin and it's not they don't only test technical specifications. It's also a test social behavior and how how groups act in certain with certain stimuli and certain, you know, narratives and whatnot. and so it's interesting to watch and i i think that no matter what happens bitcoin will be for the better yeah no this is actually stay on this tangent i think it was stopping to crypt mentioned

it on twitter and there was a big debate towards the end of the week last week about the uh the existence of all coins whether or not uh they're valid uh just a distraction or if bitcoin would be better off with or without them. And I think I agree that Bitcoin is better off with them just from the sense that maybe it confuses the governments and the regulators who have no idea what's going on. And it sort of holds fire for Bitcoin in the long term just by confusing everybody else so they can't focus on Bitcoin to sort of cage and stop from growing. yeah i mean i think that's definitely a major benefit of them it's uh they're the lowest hanging fruit they act as kind of like uh like a flak jacket yeah uh and and they act as like a

canary in the coal mine too so if if if the if the government wanted to take down something like ethereum or even or even easier like a z cash like a way way smaller altcoin based in the united states you know founding founding companies based in the united states a bunch of investors are the united states like it'd be really easy for them and it would be a perfect warning sign to say okay is bitcoin robust enough to handle this can we can we stop this from happening uh you know i think it i've i said this i tried to make this point when i was when i was the inter when i was being interviewed by you on the pod the first time is that i think that altcoins you know the only negative of altcoins is to the retail that loses money on them but to the overall

system it makes i think it makes it stronger i think forks make bitcoin stronger uh and i think it's just all part of the free market you know the free market system yeah i would tend to agree um but that security element from like sovereigns is like that's a completely valid additional reason as well what do you mean you know that it's like that we know that if states go after them then then they act as like kind of like a buffer for us oh yeah true lower hanging fruit yeah then something like monero is like super privacy focused and we can say oh well bitcoin is transparent you know monero's for criminals or whatever you know so then so they go after something like that first yeah well speaking of monero uh i've been trying to tangent

into that one for a little bit now well you just did it perfectly they uh just successfully hard fork bulletproofs into their uh protocol and it has made some incredible efficiency gains for for monero in particular um i believe the blockchain download time has been cut by like 80 or something like that and the amount of data per transaction uh similarly has been cut by like 80 to 90 percent um it could be bullshitting those percentages but there's been a lot it was a big efficiency boost considerable efficiency boost um the ebonero is an interesting again it's probably one of the higher caliber altcoins quote unquote as uh as it's probably one of the most top five respected projects

because it's pretty true to the cypherpunk ethos of privacy and just getting shit done. So it's interesting to see Bulletproofs in the wild. So what's interesting about Bulletproofs is it's an efficiency gain on confidential transactions, which is confidential transactions is part of Monero's anonymity suite, like all the different tools they use

to create the privacy on the chain. confidential transactions they hide the transaction amount so you don't know you still know the sender and the receiver but you don't know how much is being sent so bulletproofs make confidential transactions way more efficient so this is like another perfect example of using altcoins as a testbed because confidential transactions have been proposed for bitcoin and part of the reason that they haven't been implemented is because of efficiency loss the other reason is because of auditability like you were saying um but the efficiency was a was a big issue especially even if you were talking about like side chains or something like that

so this is is proof in the wild well we'll see it just like happened yeah you know i was talking to someone this is proof in the wild that you know confidential transactions could be more efficient but i was talking to someone uh the other day about how you know imagine if monero had some kind of inflation bug or something like you would never be able to it'd be like to catch that would be crazy like i don't think it would it would be a while before someone if it was even if it was being exploited like i feel like it'd be a while for someone to catch something like that right just so much code and it's like it's actually like you were saying like oh it's like one of the premium altcoin projects or whatever like there's not that many eyes on this code like i

i don't know it's like two percent of the bitcoin core like pull requests or something i don't want to say pull requests or contributors yeah i mean i my monero which is like the number one non-official client that people use because it's a light client you don't have to download the whole blockchain um i think it's like maintained by like four people i saw on github or something there's only like four committers so like that's i don't know it's kind of crazy to me yeah but it's a it's a and they also have this they they hard fork the asic the the mining algo again so to try and stop asics so you have this issue where like only the core devs know what the next algorithm is going to be which is extremely centralizing and they do this these six month

hard forks like regular maintenance hard forks to get people in the habit of doing hard forks all the time which adds another security risk so it goes with what what we were saying earlier that that these other chains aren't just case studies live case studies of the actual technical specs like bulletproofs or confidential transactions but it's also a case study of how they're running them right and and and how you know what what kind of attack issues do you have when you have constant hard forks and you know maybe one day we'll find out you know what the actual threats are implications of that is once you know if monero gets compromised because of these routine hard forks then you know then then you have proof of it right there yeah yeah no that's

that's an interesting point and we'll we'll see how monero fares in the future i'm not sure how i i feel about the uh the mandatory hard forks every six months uh i don't know if i would be a fan fan of that i i'm definitely not a fan of it for bitcoin i do kind of appreciate that we get a unique case study you know so like if all the altcoins are doing the same thing then their benefit to the system as a whole you know greatly diminishes because you don't really find out that much new shit but like i love that monero is doing they're pushing the envelope a little bit and they're giving us more uh you know more to learn from yeah so shout out to uh to monero for doing that congrats on the successful implementation of uh bulletproof and let's see uh what it looks

like in the wild with a little bit more time it's only been like three or four days so we'll see we'll see what it looks like uh in three or four months um next story onto a different type of topic uh five dime sports book owner reported missing costa rica possibly kidnapped uh apparently the robbers or the kidnappers are are are looking to get bitcoin in return uh for for this man's life they will release him uh once they get bitcoin sent to an address so this uh this is an example of of ransom physical ransom in the wild the five dollar wrench attack is coming coming into play here uh and it seems like i think five dimes one of the sports books that was accepting bitcoin as payment and uh if you're vocal about owning bitcoin be careful the only reason i put this

one in the agenda was because fucking noriel retweeted he quote retweeted my tweet about this did he and like took me out of context i didn't see it what'd he say he obviously didn't listen to the pod where i told him to go fuck himself last what'd he say he said like this is why bitcoin should be banned because it's like enabling crypto robberies so my my argument was and i still stand by this argument is that bitcoin is and cryptocurrencies in general you know i had a bunch of people in my mentions like oh they should use monero like whatever like if you have bitcoin you know you just open up bisque and you can get some monero if you want to send a monero if the ransomware wants monero instead you know or you could use wasabi wallet or any of the

centralized mixers that they've been using you know look at all the guys there plenty of guys have gone to jail but plenty of people have gotten away with hacking these things and they haven't gotten caught so if you know what you're doing you can still use it anonymously bitcoin is the best form of money period so obviously it's also the best form of money for ransoms you know before this you had to like give them like diamonds or cash in a briefcase and you had to like meet them in person and you had that whole scene on in movies where like everyone had the guns in the trees you know you're like walking up oh we're trying to think of the name of my favorite one with uh with keanu reeves and uh jesus ah on the bus what am i thinking of

keanu's in it keanu's in it they're on the bus um i gotta he's gonna look it up but um yeah so like it changes the game for ransoms and it changes the game for all money and that that that's the reason why like if you look at remember when during the obama speed speed there you go of course how did i forget speed speed that seems yeah dennis hopper he's uh he's the one who wants to meet with a bomb strapped to him for physical cash right that whole scene could be avoided if they just sent bitcoin and with the sign message you know this is my address they sent it and then i mean it's up to the kidnappers if they're going to release them or not but that was the same situation you had with cash uh but i was i was saying like i think during the obama

administration like we we paid as part of the deal with iran we paid them back like a bunch of money we took from their bank accounts yeah we physically flew cash over right because both governments understood that if we sent anything through the banks that was all bullshit anyway right both the U.S. and Iran knew that. So they had to literally fucking put cash in a jet and fly it over. Pallets. Pallets of cash. That could all be solved with a Bitcoin transaction like 15 cents.

Well, that's not going to happen. They're not forward thinking like that, Matthew. It's a game changer and just went right over Rubini's head. That doesn't surprise me. I think we should stop paying attention to Noreal. He's not worth it. I don't think he's that influential either. I agree.

I mean, I think I think he's convinced more people to buy Bitcoin than to sell their Bitcoin. I hope so. Every time, you know, he has I checked. He has like five hundred thousand followers on Twitter. Every single time he tweets about this shit, people are like, hmm, what's he talking about? And more people are buying it. No one who owns Bitcoin is like, oh, shit. Noriel was like for the 15th time.

This is shit. I'm not I'm going to sell my I'm going to sell my Bitcoin. No one's doing that. so he's actually doing the exact opposite and it's fucking beautiful yeah keep it up noriel uh but i don't want to talk about it anymore because you annoyed the hell out of me okay continue uh bitmex dropped a blog post started some controversy uh the beginning of last week or middle last week they have announced that they are going they have launched uh their own implementation of bitcoin uh you can find it on github this is basically a competitor to core

they say it's complimentary and the reason they're doing it is basically to prove that bitcoin is going to be okay if somehow the bitcoin core repository uh gets compromised or gets shut down for some reason uh it's easily easily forkable code that can be ported over to other repositories and then built on there um so i thought this was cool i'm actually a fan of it i just think it's a i think it was more of like a publicity stunt to prove uh prove that this is bitcoin's gonna be okay uh and i'm a fan of it it was a fucking badass move by bitmex yeah um big fan of bitmex bitmex research in general is just has been top-notch and they're the ones who did it was the research arm yeah um it was actually kind of funny because i woke up the morning they announced

it and in my mentions there was someone freaking out about it and like mentioned like a bunch of us and then there was like a couple responses like everyone was like trying to figure it out on the fly like what the hell was going on and i gave like a little quick read through and i just like immediate smile came to my face it's such a fucking but so basically what they did was they like click the fork button on github or they control c control v just copied and pasted the code over code is open source anyone could do that um and they might make some changes that are different if they if they want to i don't know how far they'll go along with it but basically the idea is is bitcoin by default is a non-change system there's no automatic updates so the the

code you're running on on your computer is is set in stone consensus so the only way changes happen are if you actually download an update and install it. And the same can be said about any of these alternative maintainers. Anyone else can copy the code, make any changes they want, and if miners and nodes want to run it, then people will install it and they'll run it, and that might become the majority of the network. Yeah.

um but no one's forcing no like core doesn't have control this it's to get rid of this fallacy that core has control over over the network in in any way yeah and they can't particularly the maintainers of the core repository yeah they can't they could ship new code but no one can force the people running the nodes to actually install that new code any more than bitmex can exactly um so this was a cool uh cool launch by bitmex research i'm a fan of it a big fan of bitmex research in general if you freaks have not checked out their blog uh definitely go do so in a hurry they have some of the best takes uh in the business and some very thorough and uh unique analysis i would say paid for by your liquidations that is true be careful with leverage only trade

if you know how if you know how to this is not financial advice yeah no don't do that um i think this is the last or no we got two more topics uh staying on the exchange we got two exchange stories to to finish out but they're connected the recap uh well one's decentralized one centralized the centralized one binance uh is announced that they're launching chain analysis functions i guess they're going to comply no it's not like anything that the user sees they're doing like behind the scenes yes exactly so they're going to comply with uh some regulatory agencies which is weird we're not sure exactly what they're doing i mean i some of the binance accounts like the bigger accounts you have to already do kyc um the lower end accounts you don't but it looks like

they're going to start tracking transactions into into the exchange um through what we were like talking about earlier with wasabi basically you know you follow the blockchain and you see where the transactions are coming from yeah so if you use something like wasabi it makes it much harder for for that to be effective yeah so they've partnered with chain analysis uh and chain analysis will provide access to its know your transaction compliance software uh enabling exchange to monitor cryptocurrency transactions in real time and this tool will look for potentially criminal or otherwise illicit activity yeah they're just they're spying and tracking on their users and you know i a lot of people are using binance because they don't do that so it's it's

worth noting and then on to connect that to the other exchange story which is why i put them smack them together uh is changely and shapeshift which historically have been have not complied with kyc have started complying with kyc themselves and because of that we now have bisque which is this decentralized exchange that basically no one was using that just keeps getting higher volumes every every month and this month they're being led mostly by monero because i guess a lot of people are using shapeshift and changely for monero and now they can't use binance either if they don't want to be tracked so so bisque should see continued increase yeah i'm looking at the chart here that's bisq yeah bisq had uh five million in volume uh last week but

that's that's huge it was under it was under a million up until january of this year yeah until changeling shapeshift started adding kyc you know it goes it these decentralized exchanges the main purpose of them is to break kyc it's to break kyc aml laws so they can't just be decentralized in name only like they have to be actually decentralized otherwise a government is going to force you to comply and the decentralized exchanges that are kyc compliant are never going to be able to compete with the bisques of the world the ones that aren't so this this idea that like vcs and hedge funds can get like an roi from uh from investing in a decentralized exchange just seems like super backwards to me because those investors themselves are like a vulnerability to

to get kyc implemented in the first place yeah um no i think the traditional finance and venture capital world is going to find out in a very abrupt way that the decentralized distributed ethos of bitcoin and cryptography in general really does not mesh well with uh with their business models and their investment models well i mean the problem is the regulations like if they're in a country that doesn't have draconian regulations like they can profit from it but you know the truth of the matter is is that these dexes operate in a quasi-legal setting which is why they're able to offer you privacy when all the centralized exchanges have to comply what if the dexes like went out and like bring on like billions of dollars worth of volume at

a certain point in time do you think the authorities will just be like all right it looks like the public wants this we can't take it down it's just fully acceptable or do you think they'll always be sort of underground uh frowned upon operations well the main issue with the dexes is that first of all there's no like true dexes i don't even know how decentralized bisque is so i'm not going to say anything definitive there but um the problem with the dexes is where they connect to fiat to get u.s dollars in it's almost impossible to do that in an actually decentralized censorship resistant way you have to like connect into banks or something you know or then cash is being handed around which becomes an issue so like dexes won't be like truly successful until

there's a lot more money in bitcoin and the ecosystem to begin with like once you because once you have the money in bitcoin then you can move it around dexes like super easy right but the actual fiat on ramps and off ramps that becomes an issue as far as governments capitulating they're all going to capitulate eventually the problem is how slow they are to embrace it is going to determine where you know the next silicon valley of tomorrow is or where the next you know new york of tomorrow is and and those countries are going to be the ones that they're going to have lower taxes but the tax revenue they do get is going to be substantially higher they're going to be in a substantially better situation maybe the reserves will have some

bitcoin in it and and they'll be able to to be the next crop of of great great nations yeah that was that was the last topic we'll see if yeah again it's like anything slowly but surely it's going to take time for these Dexes to build out the liquidity base necessary for them to be completely useful

and viable for the masses and like Wasabi Wallet which we were describing earlier it just takes time and adoption and as has been the theme on the Rabbit Hole Recap and tails from the crypt in general over the last couple months like patience is key these things are happening slowly but surely the infrastructure is getting built out i've never been more bullish

from a fundamental perspective uh we'll see if the market agrees over time um but yeah uh i think uh the the strides that bitcoin is making uh to become more decentralized from the transaction relay layer the mining pool layer uh and and now the exchange layer is is very positive anything else you want to touch on matthew bitcoin has never been stronger than this today it's never been as decentralized or any of the other measurement points you could to go with shout out to betty shout out betty props to we need more betty's we're all betty today um i yeah i i i oh i wanted to mention that marad posted his recent charts and he had you know marad's a resident bear here at rabbit hole recap

and i was thinking that maybe we should find like a new resident bear because he posted his worst case scenario which had like a i think the bottom was like 3 000 in 2021 and it was like a little bit painful but then in 2023 he has us at like 160 000 which is you know if that's what bearish means then you know maybe i am a bear but uh i'd be i'd be i'd be very happy with 160 000 for bitcoin in 2023 as would i so maybe we need to find someone who like back in my day the bears had price targets of zero yeah the true bears where are you i can't find them anymore other than like no coiners um yeah so that's all we got for this week freaks uh oh i have one more thing actually one more thing actually someone asked us to talk about open source on the pod okay and

like i think i made it clear on twitter but like the key is that we should as a community never stand for non-open source at least non-open source wallets anything that handles our keys needs to be always open source and if it's not open source it's dead on arrival yeah and just end of story especially in an environment where open source options already exist so it's i think i remember that thread it was about patents originally and delved into open source yeah like no patented wallet software is gonna gonna succeed against uh a market that that is saturated with open source options yeah fuck patents and fuck closed source yeah and that's uh that's the ending note on this week's rabbit hole recap uh thank you freaks for listening as always if you like

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