TFTC: A Bitcoin Podcast - Rabbit Hole Recap: Week of 2018.12.24

Episode Date: December 28, 2018

This week we discuss: Trezor + Ledger hacks - wallet.fail - https://www.theblockcrypto.com/tiny/researchers-demo-crypto-hardware-wallet-vulnerabilities-at-tech-conference/ Electrum hack - https://www.theblockcrypto.com/tiny/hackers-used-a-clever-tactic-to-steal-over-700k-from-users-of-a-popular-bitcoin-wallet/ New Joule version out - Pierre Rochard's node launcher Indian gov possibly loosening regs - https://www.theblockcrypto.com/tiny/indian-government-panel-suggests-possible-rule-change-around-legal-status-of-cryptocurrencies/ Bitcoin Private- https://coinmetrics.io/bitcoin-private/ Facebook + crypto - https://www.bloomberg.com/news/articles/2018-12-21/facebook-is-said-to-develop-stablecoin-for-whatsapp-transfers US Government Shutdown Civil token relaunch Tuur Demeester's thread on ETH: https://twitter.com/TuurDemeester/status/1078682801954799617 Bitmain layoffs - https://www.theblockcrypto.com/tiny/bitmain-layoffs-underway-may-impact-up-to-50-of-staff/ Consensys layoffs - https://www.theverge.com/2018/12/20/18150036/consensys-layoffs-employees-pending-startup-ethereum GMO exiting mining biz - https://ir.gmo.jp/en/pdf/irlibrary/gmo_disclose_info20181225_e.pdf Difficulty leveling off - https://www.theblockcrypto.com/tiny/bitcoins-mining-difficulty-drops-another-9-but-hash-rate-picks-up/ 7-month trading volume highs - https://www.theblockcrypto.com/tiny/bitcoin-and-ethereum-weekly-trading-volume-reached-7-month-highs/ Highest single day trade vol for tether - https://www.theblockcrypto.com/tiny/exchange-volume-for-tether-sees-all-time-high/ Civic takedown - https://www.theblockcrypto.com/2018/12/21/civics-token-illustrates-why-companies-masquerading-tokens-will-fail/ Iterative Capital NYC Event - https://www.eventbrite.com/e/bitcoin-10-year-anniversary-live-w-marty-bent-aaron-lammer-jay-kang-tickets-51666739609 Shoutout to this week's sponsor, BlockFi. Head over to www.blockfi.com/talesfromthecrypt to see how you can avoid selling BTC or help start that side project you always wanted by leveraging your BTC holdings!

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what is up freaks welcome back to rabbit hole recap recording at an odd day friday uh because of the holiday season here i was just home for christmas with the fam matt how was your christmas was it a good one merry fucking christmas yeah merry christmas i love this holiday it's a great holiday i do too uh though when it falls on like a tuesday i always get so out of whack uh forgetting what day of the week it is it is really weird especially like work-wise like yeah go in the next day do you not yeah it's really uh someone really going to email me at that time probably not um really it really dampers productivity markets were open markets were open uh very volatile week in in the traditional financial markets we don't even have that on the list but

uh well i have the government shut down on the list yeah that's on the list we'll get to it so we'll get to that um yeah it's been a long week i'm actually happy that we're recording right now because i feel like it's giving me a sense of uh structure back in my life getting some content out there. So I'm very excited for this episode in particular. And before we get into everything, this episode is brought to you by BlockFi. A lot of people are forced to sell their crypto to pay their capital gains taxes. Don't be one of those people. BlockFi helps Bitcoin, Ether, and Litecoin investors use their crypto to pay for things like tax burdens without having to sell their crypto. By leveraging your crypto, BlockFi will send US dollars directly to your bank account in as few

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we last recorded a lot is going on uh let's start with the hot topic in the streets right now which is uh the presentations that went down at the uh i forget exactly what conference it was but There's a conference basically where people try to come. I'm going to say C4 3C, right? It's 3-5. It's the 35th annual of this conference. The hashtag is like, let me pull it up real quick. Yeah, the hashtag is 3-5-C-3.

So at this event, basically hackers congregate and try to hack shit. And there was a lengthy presentation on a group called wallet.fail is the website. You can go check them out there. Very catchy domain. Very catchy domain, wallet.fail. And they basically presented a bunch of hard work. Four demonstrations. Yes.

Of ledger and treasure hacks. Yes. Pretty startling to see. I mean, I think theoretically, like these types of attacks are, you know, you should kind of assume. you should assume that they all require physical access and you should assume your hardware One did not require physical access.

Right, kind of. Yeah. Okay, so let's go through the four of them. Yeah, so there's four The first one is I think we should describe the four types of attacks, which is supply chain attacks,

firmware attacks, chip level attacks and then side channel attacks are the four vectors. Right. so the the first one is the idea was you intercept uh they demonstrated this one on a ledger but you could probably do something similar on a trezor relatively easily is they intercepted the ledger ahead of time they installed something that basically simulates the button push the confirm button and the reasoning there is the whole reason the confirm button exists is because if like the software on your computer is compromised the user is looking at the display and has to actually

press the button with their finger to confirm the transaction right it's a it's it's one of the main fail-safes yeah your hardware device technically signs the transaction you have to hit confirm right which sends a message to your computer so even if the software is compromised the button still needs to be physically pressed which should protect you if you read on the screen you're like oh that's not to the address i thought it was going to you don't press the button so they installed like a remotely activated button that they could remotely click the button so it would need to be in they would have to give you malicious software feed you the feed you like the malicious address or whatever and then that last step where you you would confirm it they could confirm it by

if they were nearby and they could press like the button um yeah so that was one and was that part of the supply chain attack or just that's the supply chain attack okay so because the idea is they're intercepting it before you get it well no because they they did this with uh trezor too where they they showed how the dude you well the other thing with the supply chain attacks in particular that you have to be wary of is the stickers the the protective stickers the stickers don't really do anything yeah that they put on the packaging um people have been known to use like hair dryers to get the stickers off and replace them with another one um and between doing that opening up the device and adding a similar hack

that we just described or something like it. Right, they literally added like an antenna inside the device to receive the button press. Yeah. Yeah, you know, you have to, you should inspect these devices. You should order them directly from the vendor. Of course, they can still be intercepted in the mail. Like, especially if you're, if you're like a known Bitcoin person,

if you're a target, like this is supply chain tax are particularly more likely from like a government because they can get into the mail easily, right? Because it's not easy for everyone to intercept your mail, but it's pretty easy for the government to intercept your mail. I mean, the best case scenario is if there was a place to buy these hardware wallets

with cash near you and then you could just buy it in person and be a little bit- Ideally, you'll be able to just go to the factory, watch them get made and buy it right there. Yeah, right? So actually, all of these attacks, if you have a passphrase that's strong,

they wouldn't be able to get any funds they would still have to brute force your passphrase that added so everyone should always add a passphrase um and you should you should operate under the assumption that if if try try and make it so it's as difficult as possible for someone to actually get physical access to your device to hold it um okay so the the big attack was so then so the next one was then they they uh supply chain attack then they they played snake on the ledger and that was basically they were showing that they could load an unauthorized bootloader onto it which ledger has said in the past that you can't do um oh and both ledger and treasurer have since released statements that that updates will fix this in january yeah and

then actually let's talk about their statements ledger came out pretty ardently like against these presentations and maybe we should go over the yeah let's go over the four so then the third one was the ledger blue which was the short-lived ledger device that was supposed to have bluetooth it's the one with the screen the big touch screen on it and they never enabled the bluetooth and they just scrapped the whole wallet i don't even think you buy it anymore it sounds like a terrible idea but this one they were able to sniff with uh an rf sniffer radio frequencies they were able to sniff the pin presses so they could so this is the one you said oh you don't need physical access to it because they could sniff the pin presses but then they would still need to then get it get the

device to put the pin in so you'd still need physical access in that case but they could see the way the display well i lit up the lit up the buttons when you pressed it that's what they were detecting but i thought uh i thought they also did something where they like remotely didn't touch it and sign a transaction no that's the one where they put the button inside of where the supply chain attack where they received it ahead of time they put a little rf button inside of it with an antenna and then they could press the button with the antenna that that's what you'd have to be like in the hotel room next door or something you know like it's like an advanced you know it's it's a sophisticated attack this is not something that you could

pull off on like a grand scale exactly and then the last one was the treasure they figured out a way to when the treasure is updating they could glitch it out and this is the worst one out of all of them they could glitch it out and it and it releases the seed and the pin the it doesn't really matter that it gives you the pin because if you have the seed you're good to go anyway and then you can just steal all the funds that way and that's basically they created like a little device that you take a ledger and you plug it into the device it like tricks it into thinking it's upgrading and can extract the seed okay uh now that's why the passphrase is important because at this point if a passphrase is basically the 25th word of the seed you know you have 24 words

for your your secret words the passphrase is a 25th word so even though they have those 24 words if you have a really strong pass raise they still can't get your funds and uh yeah as we said before treasurer said they're gonna release an update for that yeah we'll see yeah and then uh yeah so talking about their statements treasurer seemed a bit pissed because these guys did not disclose these they found out about these hacks via the presentation like right live which yeah it's pretty shitty i think the uh the hacker should have reached out to treasurer in good faith right is that the right thing to do uh you know responsible disclosure is like kind of difficult in these situations yeah so i don't want to really like comment by without knowing the full you know

so he said she said kind of thing uh i don't think that this was a situation where it's like a mass exploitable zero day yeah uh there no one's emptying all the treasure and ledger wallets anywhere you know they even all the ledger attacks they were never able to pull a seed from any of the ledger devices um the treasures you're protected from a pass raise they need to get physical access to the device uh people have warned more you know warned us for ages you know don't uh if if someone like a state actor or someone who's sophisticated is with your treasure by themselves trying to break into your treasure they can probably get your seat out like that's what you should assume can happen anyway yeah these are very elaborate yeah so like if it was

like some kind of zero day where like they could dump every blockchain.info wallet because it's online right or something and and and just steal a shit ton of money because it wasn't responsibly disclosed i would say then that'd be a lot worse right yeah totally um and it was nice how thorough they were and they demoed everything and they had stuff on video yeah and these guys open sourced a lot of the code yeah and these guys had to make very specific hardware and firmware to uh to make these attacks possible it was like very hard work on their part like the yeah like you said to think that they'd be able to do this in masses is very highly unlikely um yeah one of the guys they worked with was salim uh yeah the 15 year old so he had already broke remember he broke into a

treasure a year ago or two years ago probably a year ago for someone who needed to that was one of my first thoughts too i was like you know there's like a couple lucky fucks that are like they haven't been able to get into the treasure for like the last eight months but they still have it and they're like oh finally i can extract so you know there's a bright side to that side yeah silver lining silver lining to this and if you ever like get locked out of your treasure and you don't have your backup anymore you should just hold on to it for a year or two and wait to see if there's a vulnerability yeah yeah so just again keep your your treasure and ledger your hardware wallets uh safe in a safe spot that nobody else knows about um and you should

pass phrases pass phrases as well if you don't have a passphrase on your wallet it might be worth it to you know move your funds create a new one and uh then move them back uh i like for cold storage you should use multiple methods to store your bitcoin don't store them all on a ledger don't store them all on a trezor you know you you use different methods you have a good cold storage method that i like is pretty easy is if you use tails um tails is a linux distribution that you can boot up onto any computer using a usb uh stick and it has electrum built into it So you can use Tails either with a Trezor directly in Electrum or you can create an Electrum wallet in Tails offline.

Just write down that seed on a piece of paper and then you have a pretty good cold storage wallet that's never touched the internet because Tails isn't on the internet. And then when you pull the USB drive, it erases everything from the computer. That's pretty sweet. And if you want to access it again,

you just plug it back in, relaunch Tails, and then you put your seed words into Electrum and you're good to go. Yeah. That's a good segue about Electrum. Yeah, good segue about Electrum. So those attacks that we just described are elaborate and, well, a little scary and are probably highly unlikely unless somebody gets access to your device or impossible unless somebody gets access to your device. Oh, and it's another reason, another thing to remind people of here is, like, this is a perfect example of why it's important not to tell people you own Bitcoin or, like, as few people as possible.

Because if they don't know you have Bitcoin, they're not looking for your treasure to begin with. Yeah, Matt and I don't own any Bitcoin. Yeah, I don't even know what Bitcoin is, actually. Is it $22 million of them? No, but those attacks, while elaborate, highly unlikely, more likely attack, and an attack that has been exploited very vigorously here in the last few weeks, is Electrum. Users of Electrum Wallet are trying to send transactions and seeing an error screen pop up, which tells them that they're on the wrong version of Electrum and they need to download a new one.

it then sends them to a github account where they can download the software and then it's malware um so they download the fake github yeah it's a fake github it's a malware that they download and they're basically sending bitcoin straight to to an attacker then the attacker just sweeps the wallet yeah um and takes all the coins yeah so this is a social a combination of a social and it's a phishing attack basically i mean i would say that this is electrum shouldn't allow and they're rushing out a fix now there's not a fix yet they blocked the they blocked the actual github page that was serving the malicious content but but the same hackers or a different group could just create another page and and serve the same pop-up and the issue is is that electrum uses

anyone can run an electrum server and electrum by default picks a random server you can use your own server then you're immune from these attacks but how hard is it to run your own server what's process it's pretty easy it's called electrum personal server they have a separate client for it um you need to have a full node though a bitcoin full node that's the hard part yeah which has become easier and easier um but so so what the people are what what the hackers are doing here is they they're running a malicious electrum server the user is opening up their electrum their client is randomly connecting to one of the malicious servers and then the malicious server is able to send this pop-up

dialogue with the link to update and everything that should just not be allowed that's an that you know that's an issue on electrum side that is going to be patched up that shouldn't have been a hold to begin with you should have like push notifications to update yeah yeah i mean you should have to update manually or at least don't allow the electrum servers to push anything because anyone can run an Electrum server so they shouldn't be able to push messages to the user.

Yeah, it's a big factor. It looks like a legit dialogue box that pops up like that should just not be possible. Yeah, and I think... How many Bitcoin got taken? A lot, dude. $700,000 worth.

It's like 200K Bitcoin, right? $700,000 worth of Bitcoin. 200K Bitcoin. 200 Bitcoin. Oh, 200 Bitcoin. 200K Bitcoin. I don't know. Bad math.

Oh, fuck you. Merry Christmas. Merry Christmas to you too, Matthew. Oh, that's way better. Only 200 Bitcoin? Yeah, only 200 Bitcoin. $700,000 worth. It's way less worse than I thought it was.

That's a material amount. Don't blindly click updates, people. When your money's on the line. Yeah, and it also highlights the fact, keep staying on the topic of attacks, like phishing attacks. You're most likely to get socially engineered into these attacks and physically attack.

So just be wary of every link you click, every website you go to. Make sure you're going to official websites, especially with wallets. Just manually type them in. Don't even trust a Google link or anything like that. Yeah, and you want to confirm the hash and signature on the web page. Yes, you can do that as well. GitHub is nice because on GitHub they build it in. So it says this link has been signed by the creator of the GitHub.

Yeah, so just be wary. just adversarial just be paranoid at all times uh i mean then after all this is said and done someone can just hit you with a five dollar wrench attack anyway that as well um yeah so those are big attack news this week oh and then the other thing with electrum is that you could actually do a multi-sig what we were talking about this the other episode you could do a multi-sig wallet where one key is electrum one key is ledger and one key is treasure so then all three devices would have to be compromised or two of the devices

would have to be compromised to take your money. Just, you know, use different methods. Be creative how you store your seed, you know, everything. You just be creative

and compartmentalize that shit. Well, to be a bit of a hard-ass here, it is hard. Like, this never... Do you think this is going to sell socially to the masses? I think being your bank is always going to be difficult.

Yes. You're being your own bank, right? No, that's what I said on Peter's podcast. It's an unsolvable problem. Yeah, but it is... It's getting easier, and it will continue to get easier. And it is a worthwhile endeavor, I would argue. And like you said, it is getting easier.

I believe it will get considerably easier in the future. But it will always come with anxiety. It will always come with pressure and stuff. Why? Because you're the one who's responsible for it. It's responsibility. Yeah. You can't solve responsibility.

That's just what it is. Yeah. So definitely spread out your responsibility. Yeah, I mean, for some people, like, look, i fucking despise custodial solutions right but for some people you know you have 20 with zappo or someone who's doing custody for you like that might make sense for your particular situation at least then you know you fuck everything up then you only lost 80 of your money 20 of it's safe and if they fuck you you still have 80 of your money so

work that all into your balance yeah that's important uh important things to think through as we endeavor deeper and deeper into this weird rabbit hole that we find ourselves in. Let's get some good news here. New Jewel version out, and Pierre's Node Launcher has been iterating at lightning speed. Dude, his Node Launcher is way easier to use now than before. He's polishing it off.

He's got guides out. You have no excuse. Just if you're bored this weekend, or even if you're not bored, go and uh launch a launch a bitcoin full node and a lightning node on your computer pierre's so busy building out the iterations of this node launcher that he has no time to to respond to haters on twitter which is i like this is good to see he literally was like fuck it i'm doing this guys we're getting as many people on lightning as possible it's the most badass it's the most

badass thing i fucking love it it's uh um the new jewel version which is cool is it's in the fucking app stores now yeah it's in the app stores and google play you can get on firefox official extension so now you have really no excuse it's super easy to set up you just install the julian extension you run his node launcher um i don't think the casa node is compatible with juliet i think they figure out something with the macaroons yeah the naming is so weird uh they uh yeah but they're they're having they're they're talking with each other they're gonna make it happen yeah um oh shout out we got a noddle coming i'm excited about we should get in the next week oh yeah uh always shouting out to noddle they're iterating at lightning speed

as well yeah so we'll discuss that on the next episode um yeah but just that i thought that was really exciting jewel the lightning never keeps growing capacity keeps growing a lot of a lot of good news on that front yeah uh and it's it's again to stay on this topic for a bit it's crazy how fast it's all happening it feels like there's there's been a tipping point uh well you really see like the beauty of the whole layered scaling idea finally coming to fruition because we have like a whole set of developers that are like we're doing it live like we're going we're just going balls to the wall everything's getting going really quickly and that's lightning right and they're just trying all these different things seeing what works and then you have

layer one development which is always slow and conservative it's like two completely different yet like complementary uh paths yeah no it's beautiful to see um and did we talk so speaking of protocol level development did we talk about the first snore proposal i think we did we talked about that last week yeah we did because we were talking about our bit devs too yeah um yeah no so it's innovation at the protocol and second layer uh it's heating up it's great to see and i was talking about that with peter like this year fundamentally uh is the best big position bitcoin's ever been in and i think it's a product of the fact that we had such a long scaling debate and we finally can move on from that debate it's crazy when you think about it like bitcoin

had no business being at twenty thousand dollars last year yeah like compared to this year last year the fundamentals were fucking crap right you had bitmain was like this scary behemoth you had bitcoin cash it just got a ninja launch on coinbase you know no one really knew what fuck was going on we had just finally got cme and cboe like it's completely lightning network was just a nascent it was still it wasn't even like publicly launched right like the whole reckless thing was like in january or something yeah and the network couldn't handle the stress like the the like right exchanges were crashing left and right yeah blocks were slow fees were high um wow fees are so high yeah um so yeah i think fundamentally like so we have segwit adoption

rising at a at a steady pace lightning's growing exponentially um and so this allows us for the next bull run to be more efficient hopefully uh the base layer is more efficient and the fee uh we have cash app we have robin hood which is custodial but i don't know i don't want to throw robin hood in there i don't know i think robin hood is people don't like for our age group like robin hood is basically an etf for them they weren't going to have custody if they trade an etf either that's true they open up their stock app and they click the bitcoin button and they can buy it they don't have to worry about storing it they don't have to worry about anything else like i would never use it but i think it's a major it's gonna be a major major like if they're not

playing funny business it'll be a major major so-called on-ramp for exposure yeah no um yeah so fundamentally i think as we round out 2018 here uh never been better and it's only getting better more promising uh and hopefully we can we can get uh as efficient as possible before the next bull run and it'll be very interesting to see how uh i'm in particular the fees uh sort of react to to more stress on the network given that seg what's a thing lightning lightning uh more better fee estimators better fee estimators uh better practices with batching at exchanges and stuff like that people are more informed yes wallets handle everything better yeah so it'll uh hopefully hopefully the next stress test uh bitcoin does a little bit better we'll see

um switching to geopolitical and bitcoin india notoriously uh notoriously bad vibes towards bitcoin it seems they may be loosening those bad vibes some some good like bob marley vibes are coming into india and they're they're thinking about loosening the regulations i think it came out there's been the some government entity came out and said they've had multiple conversations and definitely want to uh to be more accommodative going forward yeah it's like the lamest great news ever right yeah they're like we're not gonna outright ban it that would just be idiotic yeah we're just gonna heavily regulate it and and and make it a little bit easier for these banks and stuff to work with yeah and then you have this i don't know if this is on the list but then you

had like the fed come out and say that uh government-run cryptocurrencies make no sense uh and i think they called out ripple too but i wasn't that like a little bit old i don't know i thought that was like a little bit older it was like an older post that was like circulating circulating i think you're thinking of the philly fed uh paper that came out earlier this year um where those those uh the economists at the philly fed in particular wrote something on cryptocurrency and they said something in a similar vein but i think uh this was right i know that one existed too but i thought this one was also not recently but either way yeah they get it yeah they were like what the whole point is censorship resistance so if we control it then

it has no point yeah um yeah so that's out there um our boy ret creighton he his spot got blown up this week he's not our boy he's not our boy i hate that phrase you always use a phrase uh yeah yeah uh btcp bitcoin private much hyped uh much shit coin shilled i want to say hype it was shilled pretty hard on twitter is shilled so hard yeah uh so what they did was they they they took z classic which was a fork of z cash which was a kind of a fork with z cash it was it was z cash without the it was a brand new utxo set so it had no founders reward or anything so it was like a fork as in litecoin is a fork to bitcoin right yes um brand new utxo set come up with z classic they pump z classic for a bit everything's going to shit it's really just a

shit coin with no real usage or anything so they presumably buy up a bunch of z classic for really cheap and then after they do that they announce bitcoin private which is gonna they're gonna take z classic and they're going to fork z classic they're going to airdrop they're going to fork z classic rename it to bitcoin private and then airdrop a shit ton of bitcoin private to current bitcoin holders and pretend it's like some kind of merge fork even though it's really just another altcoin fork with an airdrop and the price just fucking pumped through the roof of z classic and it tanked and then and then it tanked before bitcoin private like really that is all tanked together the best time to sell it was like right before the fork happened

and i personally think like there's no hard proof about any of this but i personally think that ret and his and his team they all sold their z classic before the fork even happened right at the top because then after bitcoin private came out it was like basically just a dead coin yeah and to add salt on the wound of that pump and dump uh apparently when they did fork to bitcoin private they had a secret two million dollar or excuse me two million bitcoin private uh pre-mine right they added more coins to the supply secretly yes which is very two million more of them which i would argue is very unethical um and now and ret is like pretending he had nothing to do with it and they're all like blaming some anonymous contributor which is really

convenient and he reviewed the code i mean somebody basically found the github repository guy who put it in was approved on github by ret yes um he blocked me because i called him a scumbag he blocked me and unblocked me he unblocked because he blocked me like i have this great thread where i'm just like don't buy z classic it's all bullshit blah blah blah and he blocked me because of that that was like eight months ago whenever all this shit was going on a lot of people shield that shit yeah um it's just another so coin metrics broke the story we have the we're gonna put the link in the show notes it's a really interesting read really great work by them shadow coin metrics incredible blockchain analysis company yeah there's one of the best

sites it's like a key tool in my incredibly ethical blockchain analysis company too completely free very powerful um but yeah i mean i can't say that any of us are really surprised like this thing was already super scammy all like i don't like to use that word um because i think it reduces its effectiveness but this was a scam like this was well that's what it was let's use this as an example of caution for the future use this as a heuristic like if people are shilling uh something as hard as they were z classic and bitcoin private uh just take that as like a sign of caution like maybe maybe these people have perverse incentives which in the long run it turned out they did um with the pre i mean the pre-mine is an overt uh

perverse incentive yeah i mean it's so weird because they literally could have had as much of the supply as they wanted the way they designed the way they designed it that they were using like z classic as this vessel into bitcoin private like they could have gotten unlimited z classic basically at like nothing negligible prices because it was worthless before they announced the they're just like automatic money so like why even go through that extra hurdle or that extra scam um no but yeah don't trust verify yeah and don't trust rec right now anymore is a serial scammer um speaking of scammers we got mark zuckerberg the bitcoin private team has acknowledged that

this pre-mine exists they confirmed the findings and they said that they are going to so the coins got moved to the shielded pool which is because it's a it's a z cash fork right you have the shielded addresses and the non-shielded addresses but they don't know they because it's a shielded pool they don't know which coins are the are the illegitimate coins and which ones aren't so they're just removing the they're going to fork out the whole shielded pool together so it like forks out like uh like 20 000 30 000 legitimate coins along with it yeah which is interesting but it's a shit show don't even like yeah it's all it's all the important part was that they acknowledge that it that it does exist so so you have confirmation no one's arguing that this

pre-mine doesn't exist it's all pageantry at this point i agree i agree okay we can move on yeah um thanks marty yeah and moving on to more pageantry facebook they're coming out with uh i don't know if it's a stable coin people assumed it was a stable coin i think they just said they're adding uh bloomberg said it was a stable coin but i think it's one of those things where they oh i mean it's not yeah who the hell knows it's all speculation now anyway but i think a stable coin makes the most sense for them to begin with because it's it's cleaner from like a regulatory like uh if you can't you can't have facebook can't have like a free floating token getting pumped and dumped yeah no i i don't think i think it's way cleaner for them to just

you know issue some boring ass stable coin and integrate it across their line of products that's like exactly the same as like gemini usg or whatever they call it usdg g usd good or bad for for bitcoin and cryptocurrency do you think you know i think it's complementary like i think if if it's open uh if if you're actually you know able to like trade if it's on like an actual public blockchain or something like a stellar token i think it's going to be on stellar is my guess but if it's not because ethereum just can't handle it but if it's on like a public blockchain you can trade it for stuff then it probably makes access to bitcoin easier it's obviously not censorship resistant uh so it doesn't actually compete with bitcoin

but like it might make it way easier to buy bitcoin and sell bitcoin well that and then like do you think it's sort of a first step a first entry for a lot of new users who sort of get comfortable with the facebook coin and they're like all right i'm ready to move on to bitcoin you think it'd be something like that except that they're gonna probably you think they would prefer the facebook coin to bitcoin no i think facebook it's in their nature to you know hide the nuts and bolts so i'm not sure like people will see you know like a real open kind of product yeah like do you think they're gonna have like you send to an address or do you think you're sending to names i have no like stuff like that right um maybe they'll have an event i think what would

be really interesting and i would really not like them to do this but it'd be really good for them is if they rolled out a bitcoin if they rolled out a bitcoin wallet and maybe you know some of the other top some of the top altcoins uh like a bitcoin ethereum wallet maybe just keep those two they could instantly become one of the major wallet providers between whatsapp instagram facebook and they have all this information on people so they'd be like the number one chain analyst at a chain analysis company right like they could track transactions like crazy and it'd be so easy for them to monetize that and then they could just throw their stable coin in that wallet with the other two that would be the smart move i really hope they don't do that it would be

scary scary future ah that's actually that's a very good point the biggest chain analysis company right off the bat if they weren't it to be they'd be the biggest wallet and the biggest chain analysis they have so much information on people yeah i deactivated my facebook i have mine's deleted um i haven't been on it in a while so yeah that's coming uh hopefully jack can beat them and integrate integrate lightning into cash app and then cash app into twitter yeah when is Facebook dropping this? No one knows. They say in 2019

on the article, right? But no one knows. They might never drop it. Yeah, we'll see. They're working on it. At least it's reported that they are. Government shutdown. Back to politics here in the US. The government is shut down. We can't decide what to do

with this goddamn wall. You put this on the list. Is there anything in particular? Do you want to talk about it? i mean i do you have any comments uh i haven't really been paying attention too much the market has been as it has been kind of uh very volatile yeah i think we had we had the biggest uh one day advance in the dow about thousand plus point day and the down wednesday i believe it was definitely the the highest in a while right that was it it was the highest ever i'm pretty sure after you After a precipitous decline before, so very volatile.

I feel bad for the fund managers that after Monday's session went net short and then got immediately margin called on Wednesday. Yeah, it kind of felt kind of crypto-y, right? Yeah, it did. Meanwhile, they're like freaking out about like 2% moves, 3% moves. Like, oh, wow. But the government shut down, like what has... Like six days, seven days now, something like that?

Yeah, like how long is this expected to go on? um until like until trump gets his wall is the plan yeah but like how long is like are people predicting that will last i don't know i think we had one didn't we didn't we have a government shutdown yeah like in 2012 i think the opposite way right yeah but i don't think that one lasted that long i don't know anyway and the whole time trump is is is threatening to fire which i'm not even i don't even think he can he's threatening pal he's calling out a chairman pal or at least take him away from being the chairman i think he's we we talked about this we discussed this thing trying to uh create a public fervor to to sort of force a resignation i think that's the

only way you can get him out of office i just i feel like there's like a little narrative forming here where like bitcoin has been falling a lot if you haven't noticed the last the last year but it's starting to stabilize we've seen some big up days the last couple of days and is it it could either be you know like a dead cat bounce or there could be like some narrative here that you know why am i trusting these people with my money they can't even keep their own house in in order and you know bitcoin is sixteen thousand dollars cheaper than it was last year i might i might be better off buying the bitcoin that is a narrative i'm not sure i'm not sure that's what's driving price but um i said this on uh what bitcoin did too like i think 2019 will be the

year where we figure out if bitcoin plays into the macro scenario at all whether it does or doesn't um it'll be a very trying year i mean things are very frothy right now in the geopolitical uh landscape so um hopefully it would be sweet to see bitcoin as like a sort of separate asset that people see as a quasi safe haven i mean it'll be the first global financial crisis where bitcoin exists right yeah so we shall see um hopefully it's ready for it um i think i think things are getting better as we discussed earlier we'll see though um it definitely has shown some very strong stability the last two weeks in particular as the stock markets around the world have sort of puked it's yeah i mean right it didn't dump yeah that's a positive yeah

um civil what is civil civil relaunch civil is like the horrible journalism i see oh yeah that like was a miserable failure and like all the like make whole posts and stuff were getting released afterwards where everyone's like how could we have known everything went bad no one got paid i got robbed of my time and my money and the contract was bullshit you remember reading all that yeah yeah they're relaunching what with the new ico oh my god they haven't learned a fucking thing they're like oh we the model was wrong we're just we're gonna relaunch so i just thought that was the gall the gall of that team and like they don't get bad press because it's it's all journalists like the whole idea is that it's supposed to be journalist owned

like changed the journalist business model so they they only they got good press again even right it's um all right anyway don't buy that ico there's scammers everywhere that was a topic on twitter yesterday people don't like things getting called scams you know what i don't give a shit well i you know i yeah yeah but i mean this is definitely i don't know if this is a scam as much as they're just fucking idiots but yeah yeah that's true um yeah and then uh segwaying to to a hot thread today ter demister has uh toured a force a magnum opus of a thread detailing ethereum's history and the reasons why he's uh he's bearish and sort of skeptical of their long-term plans and the viability of their their roadmap in particular uh we'll obviously

add the link in the show notes highly recommend you check it out uh obviously this is something i've been talking about for a while i have a thread of my own that's been documenting their their quarrels throughout the the last year and a half in their transition to proof of stake um i think tor did a really good job of of laying out the sort of inconsistency of the view and the moving goal post and if you freaks are listening out there and are heavily invested in ethereum in particular i highly recommend you check it out because you make some very valid points and it's something i agree with even though i have again i have friends who are very bullish on ethereum and i love them um i just do not see the long-term viability of this project

i have friends that use ethereum that's pretty funny they're built on it no i just i i i it's like i'm not a racist i have a black friend that was what i immediately thought um jesus christ yeah i mean that was i i immediately thought of you when i read that thread because of your because he talks a lot about the proof of stake and how it's just constant constant delays and is it ever actually going to happen and that's what your thread is about yeah um i think that there's there's a weird idea in this space that if you don't think ethereum is valued properly if you think if you think ethereum is overvalued that it's a flawed project that that means you think

every project is flawed and it's all started with the bitcoin maximalism meme that that vitalik created um and which basically just dismisses any critic of ethereum and says well you just don't like ethereum because you only like bitcoin because it's not bitcoin uh and i that that doesn't make any sense to me like we we should people should be able to objectively you know state their their their opinions of these different projects ethereum included and tour and to take it further myself or we're only using empirical data like we're using we're looking at the things that have happened in the past and the promises that are coming in the future

and just saying there's basically what you've delivered up to this point, I don't know if you're going to be able to... It seems as though their dreams are getting grander to think that they're going to be able to successfully do that based off their historical performance. I just don't see it.

Yeah, I mean, I agree. I don't... I'm not very optimistic about Ethereum's future. Um, with the caveat that I've never been optimistic about Ethereum's future and it went to $1,500. All this other shit happened while I, you know, didn't think it was going to go anywhere. Uh, so, but yeah, and I, I don't think, I don't think you can just dismiss, dismiss our criticisms just because we think a different project is better like that.

It makes sense that we would think a different project is much better. there's so many things that are wrong with ethereum that just created like a precedent in the space like the whole icos and then they like set up it as quickly as possible so like the tokens will all be really easily like the main use case and they put their adviserships all over all the different ones and the sketchiness around the pre-mine and the way the ico initial distribution was just all of this shit uh and the dow obviously they opened up pandora's box to like all the shady shit yeah not shady shit but just like oh yeah shady shit there was a lot of shady shit that uh the ethereum platform enabled last year um but

i mean bitcoin enables shady shit too i just think that like we're in the middle of a bear market everyone's being like way super salty and like we should tone back the salt a little bit like you don't need to i like i love ter i agree with like the majority of his points but like you don't need a like a 35 tweet 50 tweet thread about why you think ethereum is a failed project we've been talking about this for years you know and it's just you're just trying people are just going at each other and i prefer to go at each other during the bull markets you know because then there's less it's it doesn't feel as doesn't feel as dirty you know like there's people that like loss is fair and love and blockchains all right i mean i guess i guess so i just i personally

think that we you know be a little bit less salty i agree less salt the better we should be more optimistic more yeah i mean look if we think bitcoin is going to be the base of a of a brand new global financial network that's censorship resistant then none of this other fucking shit matters right let's focus on the goods that's true put your head down focus on what you think is uh most advantageous move from there let's be a little let's be a little nicer to each other myself included exactly i'm not the nicest person in the world right now i can be nicer me too are we making resolutions right now for 2019 no we're not i'm not gonna be that much nicer but i just i It's just, be aware of it.

Be aware. Be aware. Also, be aware. Are these Bitmain layoffs officially confirmed? I think so. Yeah. Laying off up to 50% of staff. I think even more.

I think somebody said 85% of staff. Yeah, so this time last year, Bitmain was like... The boogeyman of Bitcoin. Exactly. And now they're struggling to get by. The boogeyman has been reduced to a mouse. uh and again uh it took big risk that big on bitcoin cash yeah they overextended themselves yeah uh the icarus story of of of uh of bitcoins early early phase i would argue early era they

had really good timing and for their strategy of going like super leveraged all the time and were able to get big really quickly and then finally you know we had a big bear market and they just made the wrong bets. And I think it's great for Bitcoin. It's great for the industry. Maybe that's a good heuristic. Be more conservative during bull runs and more aggressive at the lows of the bear market.

Yeah, it's just a good strategy for life. That's a bold prediction I'll make. is that I think that Bitmain was the last greatest mining centralization threat from a manufacturer point of view. I like that prediction. We shall see how it plays out. I believe that Bitcoin mining, manufacturing, and the actual act of doing it is getting more decentralized day by day,

month by month. um on that note gmo went out of business well they took some big bets too um yeah they came in this year they're an intern they're a japanese tech company that's huge already they're like a behemoth and they yeah they just they swung and missed and they're out of the bitcoin mining game again they wasted like i have the link there i think i think they wasted like 800 million close to a billion dollars well they were mining as well yeah with their own machines so they made machines and the machines weren't competitive with other

mining machines and then on top of that they were mining with them so when the prices fell everything just yeah they got screwed and they're not hodlers so they just fucking cut around yeah so GMO

well that's I mean another caution like if you're going to get into the mining business in particular you better know what you're doing have all your ducks in a row and make sure you're getting a good energy cost. Yeah, they got swept in by the bull run. Yeah. Staying on layoffs,

ConsenSys is having layoffs as well. Did we talk about that last week? I don't think so, did we? I think it came out afterwards. Yeah. ConsenSys is... Joe Lubin's company. Joe Lubin's company.

ConsenSys is the notorious sort of venture capital arm of the Ethereum ecosystem, if you will. As many as 60% to 50% of the company's employees could be let go uh that's coming from theverge.com uh yeah a lot of people um this is part of why i brought up the saltiness yes people are being kind of dicks about this uh you know this is what we all expected we all expected that consensus was was overextending themselves we've said it a million times throughout the bull run right you don't have to keep repeating it after it happened you know we were right or do you do you have to to to sort of cement it in people's minds like hey

you could say once maybe twice right but it was like pounding yeah i don't know if i don't even think i touched on that uh in the bent i tried to stay away from it uh but yeah that's happening and that uh just yeah sorry for for all those people who are um now looking for jobs post consensus um but that is uh i mean it sounds like they saw it coming yeah they probably saw coming but like as a sign uh where we are in the phase of this bear market and getting closer to capitulation this is like sort of the sign that people have called out in general or in mass like Joe Weisenthal, when he came on Tales from the Crypt, said, like, you'll know

we've hit capitulation when there's mass layoffs at ConsenSys, I think he said specifically, so maybe we're getting closer to a bottom, who knows, that may be a sign. I mean, like, ConsenSys is the Ethereum juggernaut, right? It's Lubin's like, personal army,

they have all these different Infura, MetaMask. Infura's the big one, right, MetaMask, Infura runs basically the majority of the Ethereum nodes, runs the network uh so that but but we saw a story some of the stories that came out were crazy like he had like a chief anarchy officer that just was like his job is to just like fuck with the organization or something what an ironic they had they had no organization

they were completely overextended and when it all came back crashing down you know i don't know it's hard to have that much sympathy yeah it's the natural course of events yeah um back to more uh technical stuff bitcoin hash rate has sort of stabled i think the hash rate's actually rising again a little bit um after hitting a floor after four consecutive downward difficulty adjustments um it's amazing because people are freaking out about the mining death spiral yet bitcoin's hash rate over the course of the year has doubled from 19 to 38x a hash i believe yeah we're at right now our hash rate is about where we were five months ago yeah that and no no and it's uh it's actually it's important that we have these downward

difficulty adjustments and the the hash rates sort of level off and adjust to uh the demand of the network um to basically prove a long term hey this actually works like design of the network works and that gives me more certainty as a bitcoin holder is like hey i know the underlying mechanisms that keep my money secure are working so yeah it's really nice to see the to see the hash go back up you know as the difficulty drops down price comes up a little bit profitability increases and then hash comes back online yeah it's kind of beautiful yeah And then we're having hash rate level out and then we're getting volume back. So highest volume in seven months around this time of year.

Highest volume ever for Tether. Oh, for Tether. Yeah. Highest single day of volume for Tether was this week. And we've also had the biggest week of trading volume in seven months for both Bitcoin and Ethereum. Yeah. so it seems uh who knows if that's like late end of year uh tax selling to to to write off a loss maybe that could be it who knows that's another narrative that's been floating around out there

but uh regardless network activity hash rate is leveling off network activity starting to peak again who knows whether it's due to end of year factors whatever but it's good to see i just i i wonder like the the government's going to be such like you think they're going to take your your your tax loss right off for they're going to be now that we're going to see they were like so quick to take everyone's tax money during the bull run but after this year when everyone's going to be writing off these like they're all of a sudden they'll be like well we can't verify it how do we the exchange isn't giving us the proper information or the proper reporting requirements and stuff i bet that's what we see prediction for 2019 we will see who knows

last topic you have on here Vinny and Civic our boy Arjun Balaji wrote a scathing critique or not a critique he just basically it was a critique yeah a critique and a detail of Civic the project and their decision to neg

the use of their token and to neg it what do you mean or or basically to they basically have admitted that their token is is worthless but are still using it oh yeah you don't need to use the

token yeah the token was like bolted on after the fact and now they're adding like some kind of staking element to try and give it value yeah exactly um so go check out arjun's piece it was written in the block uh last week uh yeah and they're claiming partnerships with all these people and they're they partnered with denta coin which is a denta coin partnership really pissed me off yeah and vinnie said it was an endorsement i'm like vinnie it's an endorsement like that's ridiculous yeah um they literally put vinnie's faces on the press release saying dentico so happy to have a great project like denticoin working with civic denticoin like denticoin is a project for dentists to like what how does it still exist i i don't know but this

civics partner with it so it must be legitimate it's like one of my favorite shit coins though a denta coin there's something especially absurd about it it also has like a huge coin count so like it looks like it's cheap but it's like number 11 on coin market cap or something ridiculous what if dentists are going crazy over denta coin what if like the at the dentist conference around the country and around the world people are are raving about the future of a denta coin driven dental industry definitely the worst timeline right is that you need to go buy some dental coin to go to the dentist right oh if the if the dentist experience wasn't miserable enough uh try buying a token and interacting with that uh that service with it uh it seems like it

would just be an added layer of misery but anyway vinny like vinny's a fucking hypocrite and he like always sits on his high horse like i warned you guys about the bubble because he famously like called the top at 1200 uh two years ago and and then said afterwards he's like i didn't want this bubble to happen it would have been so bad but he just made a shit ton of money off the civic ico it's completely worthless token and it's just really nice to see arjun uh lay down all the facts about that yeah i'm gonna call him out vinny's a scammer i said it i said it freaks vinny is a scammer um that's all we got on the list today the bitcoin oracle fuck that um what else is going on what else do we have going on

here oh i met a i met one of our listeners yesterday uh der gg shout out their ggs that's at D-E-R-G-I-G-I on Twitter. Yeah, he actually just wrote a good piece on... Yeah, we talked about that piece. That was great. Yeah. We should plug that in the show notes. Yeah, like the philosophy behind Bitcoin

and how he came to understand it and the journey he's gone on. Shout out to RGG. Thank you for sharing that. Yeah, really chill dude. Yeah. We had a great conversation. Thanks for listening to the pod.

And he gave us this interesting, to say the least, Austrian liquor. It's a spice from Stroh 160 it's 160 proof 80% alcohol by volume I think their GG might be trying to kill us yeah I'm pretty sure this shit could kill a horse

I definitely want to get some advice on how much to drink before we dive into this we appreciate it nonetheless appreciate it very much we appreciate all of our donated liquor it's very low time preference because you know we're only going to have like a little bit at a time so it's going to last

seasons upon seasons not just one episode um yeah no so i hope you freaks are enjoying the holiday season uh i hope you've had a great 2018 thank you guys for listening uh this is the last oh it's the last episode of 2018 yeah last episode of tales from the crypt network this was a great year this is a fantastic year yeah how long have we been recording since september i believe time flies flies um looking forward to the year ahead i think i've i've grown personally this year it's been uh felt like a productive year looking back i feel like adding you to the uh to the network has been powerful move i think

people are liking it um thank you for joining us i'm happy to be here yeah and uh we don't have any big plans for 2019 we're just going to keep doing this and we have huge plans for 2019 well we're going to start off 2019 i'm going to have to spend a shit ton of money on you and marad's dinner uh and then and then we're gonna we're gonna ride bitcoin to the moon yes and actually for any of you freaks that are in and around new york city on january 3rd uh iterative capital is hosting uh a a uh basically a 10th anniversary uh party for uh the genesis block uh beginning of bitcoin and there will be matt and i will actually be recording a live episode of the rabbit hole recap for the guest at the event uh we'll post it later that night as well we are

going to be able to post it right yeah yeah definitely um and actually before we we record our episode the coin pod boys are going to be doing their doing their thing as well um so we'll be following them and yeah so january 3rd at rise vc we'll put a link to the eventbrite page if any of you new york freaks are out there ten dollars per person yeah it's ten dollars cheap and uh there'll be a lot of quality bitcoiners there they don't accept bitcoin right i don't think eventbrite does you have to use your dirty fiat for this um that's a shame yeah so i'd love to see you there um you just dropped your pod with uh pete mccormick yeah peter mccormick from what bitcoin did uh had me on his podcast it was a very lovely time it's uh interesting being on

the other side of the interview um that's something i need to practice so i was happy to get a rep in with peter uh i definitely need to refine some of my arguments i would argue i really enjoyed it i actually listened to the majority of it today it was very good and i really enjoyed your headshot that he put up the headshot of you thank you sir i'm i'm actually gonna go on with pete soon too and uh i hope he has fun with my my blurry avi um yeah so now you freaks know what i look like uh that's all we got for this week it's a really stunning photo it's a great photo marty yeah thank you um peace and love freaks well i hope you freaks enjoyed that episode of rabbit hole recap we covered a lot uh thank you

for rounding out the year with us. We really appreciate it. And another shout-out to this week's sponsor, BlockFi. BlockFi is the leading crypto-to-USD lender in the U.S. with services in over 45 states, but you freaks already know that. They let crypto investors use their Bitcoin, Ether, or Litecoin for things like buying a house, paying off credit card debt,

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and $50 of crypto collateral added to loans of greater than $10,000. Excuse me. Shout out to BlockFi. Go to blockfi.com slash talesfromthecrypt. Peace and love.