TFTC: A Bitcoin Podcast - Rabbit Hole Recap: Week of 2019.03.18

Episode Date: March 21, 2019

On this week's episode Marty and Matt discuss: - Square Crypto initiative - https://twitter.com/jack/status/1108487911802966017 - Lightning Loop - https://blog.lightning.engineering/posts/2019/03/20/loop.html - BlockstreamGreen - https://blockstream.com/2019/03/19/the-all-new-blockstream-green-wallet - Fed shifting posture - https://twitter.com/byHeatherLong/status/1108427995709165573 - Venezuela sanctions payment processors - https://www.theblockcrypto.com/tiny/u-s-considers-sanctions-prohibiting-payment-processing-services-in-venezuela/ - ETH ProgPow - https://twitter.com/TuurDemeester/status/1108561560304316421 - Bitcoin Optech - https://bitcoinops.org/en/newsletters/2019/03/19/ - Hash rate - https://bitcoinwisdom.com/bitcoin/difficulty - FUD debunking Shoutout to this week's sponsor, Unchained Capital. Head over to https://www.unchained-capital.com/vaults/?utm_source=MartyBentNewsletter and check out their multisig vault setup which let's you maintain control and sovereignty over your BTC while providing a solution that keeps you worry free!

what is up freaks welcome back to tales from the crypt it's your boy marty bent here on a beautiful actually very ugly thursday afternoon here in brooklyn it's raining it's uh it's a bit chilly out but guess what first day of the marsh madness tournament i got vermont versus florida state on in the background it's currently a tie game with two minutes left in the first uh potential upset alert 13 over four vermont is winning right or excuse me tied with florida state right now Before we hop into this week's topics, Matt is in the Dominican Republic. He joins me from a foreign land. How's the weather where you are, Matt?

It's absolutely gorgeous. I'm just sitting by the water. It's fantastic. Yeah, the freaks can't see you, but he looks like Archer after he was marooned on that island drinking rum every day. He's got a short-sleeved Hawaiian shirt unbuttoned. I've got a nice view of Matt's chest pubes right now. And with that being said, this week's episode of Rabbit Hole Recap is brought to you by

our friends at Unchained Capital. You freaks know all about them. They're down in Texas. They're providing you guys with a multi-sig vault platform. It was just released last week, and it's there to help enhance your security while preserving your sovereignty. So they have basically a two or three multi-sig setup, which you can gauge in. They're compatible with Trezor and Ledger. Again, that's two or three multi-sig. You hold two of the keys, So you always have control of your Bitcoin at any given point in time. It's 100% cold storage. Get off the exchanges.

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so go check out unchained-capital.com today matt it's been a whirlwind of the last uh 16 hours first topic of the day sq crypto hit the scene with a bang last night jack dorsey came out on twitter and basically announced that they are square is opening an initiative to support uh three to four open source developers working on bitcoin core or other crypto currents open source cryptocurrency projects uh came out of nowhere uh i have a lot of thoughts on this but first my voice has been or excuse me i've been talking enough in the beginning of this episode let's hear what your thoughts first what do you think of that i mean it's it's absolutely great news it's unequivocally great news it's good to have um it'll help it should help create a more

resilient more robust development ecosystem in bitcoin you know we already have um a couple of other groups that are funding developers we have block stream we have chain code labs so this adds another avenue for developers to find funding you know so they're not doing on necessarily a voluntarily volunteer basis they don't have to worry about you know like day-to-day expenses things like that it gives them actual financial security so they can focus on what's important yeah no it's um and i wrote about this in the bent today it's been a topic of heavy contention within the quote-unquote crypto space for a while is dev incentives do they need to be baked into a protocol why do open source protocol developers work on the

protocols they do what drives them towards that and how do you compensate them a lot of people believe that going forward we may need to create protocols embedded with certain developer funds that uh sort of entice developers to come work on those projects in particular i'm not as much a believer in that i think what we're seeing uh with jack specifically jumping in last night is a product of bitcoin's resiliency over the last decade in particular so i wrote about in the newsletter again this morning block streams and the chain codes of the world uh they had the prescience to see uh the potential of bitcoin early on and really put some skin in the game sort of leading the way helping some very skilled developers focus on bitcoin full-time and i think

uh square entering in the game now says a lot about bitcoin's maturity after a decade it has proven to be reliable it produces blocks roughly every 10 minutes and has done what its market it will do for 99.99 at the time that it's been running so a lot of people are like how do you compensate devs how do you compensate devs i think what we're seeing is bitcoin being so useful and providing utility for a company like square right now as they're getting more into bitcoin with cash app and potentially their pos systems they're saying hey this is gonna this open source protocol is going to provide us a lot of value it seems going forward so hey let's contribute and i think that's what we're seeing is a validations of

bitcoin maturity i don't know if you agree with that or not but that's just the thoughts that i have yeah well very well put you know this there's a soft incentive here right it's that that jack and square benefit from Bitcoin succeeding and doing better. Right. So so all these stakeholders have this soft incentive to then help improve Bitcoin and help foster its adoption because it then benefits them. I mean, it's part of the reason why we do this podcast in the first place. Right. Because of that soft incentive. And then, you know, a lot of people brought up like, you know the segway 2x and the new york agreement and stuff like that and absolutely like everyone should still be vigilant you know don't treat jack like a demigod necessarily you know unnecessarily

but you you know you stay critical of him and you you stay critical of the work they they do don't trust verify but unequivocally it's it's good news it's just more developer funding yeah we'll be able to know who square is hiring we'll be able to track their github pull request and maybe have their pull requests magnified and reviewed more if you're worried about a conspiratorial takeover by the corporations, Bilderberg. Well, that's what's so nice about having another... Now we have three main groups that are funding Bitcoin development directly.

So the more we have, the more they check each other and stay critical of each other. And that's that's really great to see. I think I think we'll see a lot more of these style, both from companies and also both from, you know, well, wealthy benefactors that that want to see Bitcoin succeed, that hold a lot of Bitcoin. Yeah, and this you haven't heard yet because you haven't listened to the episode because you're not as much of a fan. But Carl Dong and I spoke about this topic in particular, and he said in China there's a WeChat group. I think it was particularly their lightning WeChat. Actually, I'm not sure if it was their lightning group. It was a WeChat group in China that he's a part of, but it's a bunch of Bitcoiners and they're actually crowdsourcing funds and they had raised up to 50 Bitcoin and were picking a developer to sort of donate and sponsor. So even crowdsourced individual Bitcoiners seem to be coming together and doing this as well.

And again, I think it speaks, it's a testament to the maturity of the network at this point. uh obviously in the early years when block stream and chain code were first arising it was a little riskier to put some money and put some skin in this game in particular now again a decade in i think that decade mile marker was a huge mental hurdle for a lot of people and we're seeing very quickly after the 10-year anniversary uh more legitimate incumbents sort of saying all right this looks like it'll be around here for a while let's start contributing yeah i mean this is a multi-billion dollar company public company uh with a billionaire ceo and they're throwing their weight behind this it's it's pretty fucking crazy to see unfold so should we should we front run the

builderberg conspiracies about jack trying to take over bitcoin and protocol development well Has anyone checked to see how much Twitter and SquareStock that Bilderberg owns? Are they on any? I don't know. We should. Freaks. Hopefully they don't. Somebody stat checks that.

We need to know. And also, I don't appreciate the swipe on not listening to your two most recent pods yet. It's the farthest I've ever fallen behind. Oh, kidding. I happen to be a little off the grid at the moment, so I'm looking forward to listening to them. Carl is awesome. I've met him, and he's fantastic. It was a light jab.

I was kidding. What else was I going to say? I had something to say. Oh, yeah. So a lot of people, some people came out and said, this isn't enough. How is it that Square is only hiring three to four devs? Come on.

Let this stuff develop. Start small and grow from there. Just the fact that they're putting some skin in the game and showing support should be enough to be like, okay, this is like a legitimizing stamp of approval. And I think there's a lot of, and I read about this in the event today, a lot of people working on certain protocols

that have problems raising money in funds may not be a dev incentives or fundraising problem and may be a product market fit problem and maybe think harder about that than the money problem. Yeah. Yeah. And this is very much a, you know, see how it goes, get community engagement, dip, dip their foot in kind of exercise here. And they, you know, and if it, if it all goes to plan, then the, you know, who knows how many developers will end up hiring, you know, it's got to start somewhere. Exactly. Also, also what's really interesting is we keep mentioning Blockstream and Skin in the Game. They had a really cool approach, I thought. i don't know if they still do but they were definitely doing it in the beginning where they

would time lock bitcoin for bonuses yeah it was only for the bonuses but it's like that's a pretty cool concept where you have bitcoin but you you don't get to access it's like stock options like delayed stock options you don't get to access it for a couple years so you're incentivized to uh to help bitcoin succeed yeah no that's a great uh that's a great point do you have the balls to time lock some of your Bitcoin? I mean, why would I ever do that? Like, I'd rather have access to it. It just seems counterintuitive for me.

But I like it from a company's perspective to incentivize as bonuses. You know, you shouldn't time lock all their Bitcoin. Their pay shouldn't be time locked. All right, let the record show Matt is not willing to time lock his Bitcoin. Fuck that. Why would I ever do that?

You know, you can't sell your Bitcoin cash if your Bitcoin is time locked. That's true. Can't participate in fork governance. It'll be time-locked on both forks. Or both chains, excuse me. Yeah, there might be a bunch of Blockstream developers that hold a bunch of Bitcoin cash that they can't sell right now.

That's a fun one. That's hilarious. Next topic, Lightning Loop by Lightning Labs. This post dropped out of nowhere yesterday. Lightning Labs is announcing the Lightning Loop Alpha, an easier way to receive on Lightning. And it seems like they're utilizing atomic swaps to help people with congestion problems on certain sides of their Lightning Network channels. Is that a correct way of describing it, would you say? Yes. Basically, you don't have to close your channel.

you can you can send a lightning payment an outbound lightning payment and receive the equivalent amount as an on-chain transaction so you're like leaving lightning without closing the channel yes and this is to help people again like businesses that receive a lot of lightning payments and may have a an overbalanced channel in their direction this helps them sort of even that out and are able to receive and send payments at all times whereas the way lightning structured right now it's a bit of a more manual process yeah you would need like to use like a thor type service or you would have to actually have someone open a channel in the opposite direction to you so you have inbound liquidity to receive so the easiest way to get

inbound liquidity is to pay people things so if you if you're buying things with lightning every time you do that you're you're getting more inbound liquidity and you're losing outbound liquidity but if you're like a shop or if you're just getting started and most of your things are receiving payments then it's really hard to build that inbound liquidity and keep keep your balance so by using something like lightning loop you'd be able to basically make a payment but you're not making a payment right because you're getting paid back on chain so it's not like you lose money doing it like if otherwise you'd have to spend a thousand dollars to have a thousand dollars liquidity back if someone doesn't open a channel with you so it's a nice little solution to

to that balancing issue yeah it seems like a very creative solution and atomic swaps fascinate me man they're still something i can't fully uh i mean i can wrap my head around them i cannot explain the technical details to to you uh in very very good detail but it's something that just fascinates me the concept of atomic swaps in general yeah it should be really interesting to watch all this to watch all this unfold i there's some promising things particularly with like cross-chain atomic swaps um but there seems to be some issues there right now in terms of being able to game it and if you can game it then it's it's a non-starter yes that's true but it seems like progress is being made i believe alex bosworth and brian vu who uh made this announcement

are going to have more information for you freaks in the coming weeks. But I believe there's an alpha that has been released, an alpha version. If any of you developers that may be listening to this want to go test it out and are interested in testing out Lightning, in particular Lightning Loop,

we'll link to that blog post in the comments, or excuse me, in the description, and you guys can check it out there. Next topic, Blockstream redesign. So this is actually pretty dope. I read about this in the event earlier this week to the wallet formerly known as Green Address, which is a very popular and reliable multi-sig mobile app solution for Bitcoiners for many years has rebranded is under the Blockstream umbrella. Now it's now Blockstream Green and it comes with a complete redesign and a couple of enhanced functionalities. A couple of those being 2FA now.

I believe there's a 2FA sort of layer of security to it. And then you can, for Android users in particular, you can connect your hardware wallet. And only the Treasure One and the Ledger Nano S right now. But I think they're looking to roll out other versions of hardware wallets and eventually get it on iOS as well. But it seems like a good start for the redesign and rebrand. uh yeah so it it is out on ios but not hardware wallet support because yes not hardware wallets

iphones don't let you do it through connecting a usb so they're gonna they're gonna roll out hardware support with that new ledger nano the x i think it was the one with bluetooth you have the bluetooth yeah and um and i yeah so the redesign is really clean it's it's been for a while like one of the best wallets on ios is probably undeniably the best wallet on ios now i don't have an iphone but i'm pretty sure um i don't know what else could compete with it uh it's worth noting their multi-sig solution um it's two of two yeah it's something they pioneered a while back it's they hold one key you hold the other either on your device or on your hardware wallet um so you need them so you can't move the funds yourself

and they can't move their funds with themselves, but you need them to move the funds. That's where the two-factor comes in because they use a traditional two-factor system where then once you approve the two-factor, then they sign with their key. Now, to get around the issue that maybe green address disappears on you or something

and they don't sign your transaction, they have a time lock system where it'll automatically send the Bitcoin in the balance to one of your other addresses in case of them becoming unresponsive or no one signing the key. It just automatically times out. Is that an address you give them when you're onboarding?

I'm pretty sure. I haven't used Green Address in about three or four years. You haven't used it in a while either. I'm pretty sure it's an external address. I'm pretty sure you give them an external address, but maybe they have a built-in system where it just shows up in the app for you. I'm not sure.

Yeah, so again, just another option on the market for users, depending on your particular situation or your particular use case. This is yet another, I mean, this is a multi-sig option that's been around for a while. It's been rebranded, been upgraded, but the theme of multi-sig has been hot around this block for a while, at least recently. and it's just adding it feels like the options for this sector in particular are are growing by the day and by the week and that's just great to see another thing that i like about green address is that they and they've had this feature forever and unfortunately green now unfortunately it never really caught on is uh is green address it which is if a merchant is is a merchant can join their program where basically because it's two of two and they need to sign every transaction they

basically are promising the merchant that they're not going to double spend the transaction so you can accept zero confirmation transactions like relatively safely because you're just trusting green address and and if they want to build relationships with merchants then they're not going to fuck you over which is cool this is pretty cool yeah they've had it forever no one ever it never really caught on i don't i don't know i thought it was a cool little little hack that's an interesting topic how how much stuff in bitcoin in particular and software and wallet wise do you think is just uh hit the market too early as opposed to like being on time i mean so like proof of reserves like an example that we've talked about before like crank and had

proof of reserves we feel like it should be demanded but like nobody used it is this stuff too early like what do you think i mean i think that pretty much everything is too early but we're just we're early right now so uh you need the users you need the actual demand for any of this stuff to and so but this is the time where you flesh it out and you you see what works and you see what doesn't yeah that's true um so check out uh block stream green now if you are an android or ios user check it out let us know what you think and it's also it's worthy of a shout out that they also redesigned their explorer blockstream.info and they made

it way better it's probably one of the best that and oxt.me are probably the two best explorers we have right now yes especially if you have replaced by fee transactions that are in transit blockstream.info as a block explorer is doing

an incredible job of creating a good UX around RBF transactions in particular I believe we talked about this a few weeks ago but uh yeah did they redesign it recently or is it no it's like a couple weeks ago but i don't think we ever talked about it on rhr and it is the it was a big especially since they also have um they tell you your fees if you can save on fees by using uh a segwit address how much you

would save and they also have privacy uh warnings and stuff depending on on how you how if you're reusing addresses or certain things like that it can detect if a tumblr has been used pretty cool and they tried like to not follow around your searches and stuff like that to help your privacy as well correct well that's a promise you know so you have to you're trusting them to in that respect but they say they don't collect any information they don't run any analytics uh you can connect to it directly through tor uh so you know but they take privacy very seriously but to a degree you are still obviously trusting them uh a lot of a lot that's worthy of a mention a lot of people you know they take all this care about privacy and then they

look up one of their addresses in a block explorer without using a vpn or tor you just linked your ip to that address you know depending if they're malicious or if they're selling data or something like that whatever the explorer is doing then then you've made yourself vulnerable there it's probably a big source of privacy leaks yes uh it's something i'm definitely guilty of myself so don't be ashamed if you've done it yourself out there freak and uh to add to this block stream dot info conversation in particular with their block explorer they're so adamant about the ux and privacy and creating a good user experience for anybody using a block explorer they've open sourced uh this block explorer uh so you can search blockstream esplora e-s-p-l-o-r-a and

they have an open api that if you have a website i believe bull bitcoin francis paulette and uh his team are sort of implementing his esplora into their block explorer and i think it's open it is open to anybody so if you're thinking about adding a block explorer to your website definitely check out esplora and support bilderberg it's very important um speaking of bilderberg uh the fed fed came out this week said they don't plan on hiking anymore this year after last time they met they said they would probably hike two more times so it seems like in the traditional financial world in the traditional banking system uh things are not as rosy as previously thought uh if the fed was

willing to raise rates twice this year or thought they were going to raise rates twice this year the last time they had met probably means they're a little bit optimistic about the growth of the economy and the pace of growth and sort of the lending markets and credit markets in particular the fact that they balked on the notion of raising rates twice this year may signal that they are not as optimistic about the future of the economy as they were the last time they met So, they did not raise rates, meaning credit will be cheaper, which hopefully will stoke the economy. Bitcoin's over $44,000 now after this announcement. Matt, what do you think?

So, on a simple level, lower rates result in asset prices increasing. So we've basically seen this low-rate-induced asset bubble in mostly stocks and real estate. And so a lot of people have theorized for a while is once you go down, it's really hard to come back up. Because when you come back up, you can pop that bubble. Things get more expensive. So everyone who voiced that concern was basically called crazy. And then they started raising rates and then that's what happened. So now it should be interesting to see where we go from here, because the short term incentive is to keep rates flat or lower them because it'll it'll make the party keep going for a little bit longer.

But long term, that might not be what's best. but either way you know owning a little bitcoin gives you some assurances there that you can it's almost like an insurance for for their ineptness right no i mean that's uh the famous quote was it i don't know if it was nassim taleb that said this in particular was it nassim insurance policy against central bank idiocy or was it chima uh patapatia it was one of the two whatever somebody said it it's insurance policy against the stupidity of the fed which i think is pretty high right now uh this being the stupidity of the fed and i think this is a good segue into a conversation on the canton effect we or i found

myself in a side conversation about the canton effect uh which basically posits that uh those closest to the creation uh excuse me to the spigot of money creation uh benefit uh asymmetrically as opposed to the people uh in the economy at the bottom uh sort of that totem pole of money creation meaning the banks closest to the fed window uh are able to benefit from uh lower prices and by the time money gets through the economy to uh your grocery bagger whose uh salary is being paid via loan has been given out via access to the fed window uh is at uh sort of in disadvantage because by the time the money reaches him inflation is at a point where his purchasing power is diminished so the cantillan effect the thing about it is it's hard to prove with data and i was positing maybe

something to look at uh to maybe prove that this may be right or maybe a correct heuristic is to look at uh the fed's monetary base versus the velocity of money versus the guinea coefficient versus stock indices versus high-end real estate since 2008 and sort of map that out to prove that uh money is not making it through the economy uh the wealth between the rich and the poor is getting wider and those closest to the creation of money are just driving asset prices higher i don't know if you saw this conversation matt but i'm interested to hear your thoughts i did sorry if that was a long i'm sorry if that was a long-winded explanation i'm just trying to think of it no it was a memory you did good you did good uh i i it's

asset prices have gone up tremendously because the rates are low and people can't own those things Yeah, but most people don't own those things. Most people, the rich benefit way more when stock prices go up, real estate prices go up than the average person who doesn't own any real estate that owns very few stocks, if any, that's probably in debt. Uh, so there's, I think, yeah, as you said, it's very hard to prove with data, but it, when you look at it from like a common sense, logical point of view, it makes sense that through QE, we basically, we resulted in attacks from the poor to the rich, uh, from the people without access to the, to the rich who have access to real assets and, and, and can take advantage of those increases in those prices. That's one of the nice things is about Bitcoin, is that the access accessibility is

there. Like most people, it's more accessible than something like real estate where, you know, you need hundreds of thousands of dollars of upfront investment in order to participate in something like that. I think on a general basis, regardless of who ends up correct or right or wrong here, the fact of the matter is we've never been in this type of situation before where we've had rates low for such a long time, basically this government-fueled bubble. And this policy shifting with the Fed after supposedly being super confident just goes to show that even our so-called experts and professionals have no fucking idea what to do here. They're like, you know, so I'm not I don't think we're like arguing that we could do it better than them. The point is that they have no fucking idea. No one really has any fucking idea how to solve this in any kind of non painful way.

Right. And this is something that's interesting, too. And somebody I'm going to have on the podcast actually works at Unchained Capital, full disclosure, but is a Fed, like a mensch when it comes to Fed history, is Parker Lewis. And he wrote a paper, Ender's Game. I've written a long Twitter thread about it last summer. But the Fed minutes are released four years after they happen to the public. So he basically went back in 2016, I believe, and went back to the Fed minutes between 2005 and 2012. That's all.

I mean, that's what he had access to up to that point was 2012 and was able to basically over the course of seven years dissect Fed minutes and point out glaring instances of them being completely wrong in their predictions and then backpedaling and then trying to fix it and backpedaling again. and setting projections and never hitting them. And it's just a very unscientific sort of voodoo that they're trying to pull off. And everybody just puts up with it. And again, that's why we do this show. That's why we're into Bitcoin. It's something I'm very passionate about.

And it's why I left the world of finance. After three years, it was my job to know what these central banks were doing. I was like, these people have no idea what they're doing. and they run the pricing mechanism for the whole fucking economy of the world. And that's a big problem. So we're just trying to, hey, just be aware. Be aware.

What do you think would be best case scenario Fed move for Bitcoin? I mean, if they ever went NERP, it would be best case for Bitcoin. It wouldn't be best case for the country or for the central bank, but it would be best case for Bitcoin. Like a couple more rounds of QE and then NERP, right, would be the ideal Bitcoin situation.

Yeah, but if you look at the Fed funds rate, it's moving lower and lower like a fractal. It's like making lower and lower highs, like it's hitting a ceiling and it can't go much higher. And it can't go much lower either, so are they going to break the X-axis? That's the question. Or is it the Y-axis? I haven't looked at a chart or constructed a chart in a while. It's at the y-axis. It should be interesting to watch, and I'm just glad that I hold Bitcoin

so I can opt out a bit from that. That's true. That's true. Speaking of opting out, it seems like the U.S. is going to make it so Venezuela has no option of opting in to payment processor solutions like Visa and MasterCard. This is a topic you put up there.

This article is from The Block. I have not read it yet, I'll let you take this one away. Well, they want to put sanctions on payment processors, so all the major American credit card companies. You know, that obviously fucking sucks for the people of Venezuela. They're already experiencing hyperinflation. They're already being cut off from the world economy in a lot of ways of their own doing,

And this will just further the issues that they have there on a day-to-day survival basis. And it just goes to show that, you know, is Bitcoin a perfect solution for them now? No, of course not. But in the future, as a citizen of wherever you live, do you really want another country's government to have unilateral ability to just cut off your payments world, right? Like you should, like people say like, oh, Bitcoin, you know, why would I ever spend Bitcoin? Well, in like that situation, you know, people, tons of people would spend Bitcoin because they couldn't spend any other way. That's the only way you can. So that's when all of a sudden the fees that you have to pay to use a network like this

that's censorship-resistant actually become incredibly worth it because the alternative is you just can't participate in any kind of commerce. And do you think the payment processors have any chance of standing up to the government and saying, no, this is fucked up, we don't want to do this? No, of course not. Honestly, I'm surprised that Visa and MasterCard have been allowed to operate in there still. Like, you'd think that they wouldn't be at this point.

Yeah, right? Yeah. Well, we have to imagine they can do other... Their systems are native to other currencies, too. They're not transacting to U.S. dollars every transaction, correct? Right. It was like their local... Even if they were using Bolivars,

They were using it through, like, the MasterCard network, right? Yeah. And now that looks like that's all going to be closed down. But I think it's proposed, and it hasn't been made official yet. But I'd be surprised, you know, if it doesn't. How fucked up is that, though? Who's that really helping? Like, is Medora really benefiting that much from these payment processors,

or are you just fucking over the people who are being hurt most by this regime? Well, you know, I mean, the argument always for sanctions is that is that, you know, you hurt everyone, but you, you destabilize the economy to the point that they get overthrown. Uh, and, and I guess, and, you know, it, it does lower his tax. I mean, he probably can't effectively collect tax at this point anyway, but it lowers his tax base. It lowers, um, you know, just all types of, uh, commerce. So it's, it, it does, it does hurt the government as well but it's gonna dramatically hurt the people and the hope is uh you know just to steel man it the hope is that it'll push it over the the final you know the last couple people

that have been sticking with maduro will hopefully switch and and and he'll be deposed yeah it's fucked like aren't they i mean again any of you venezuelan freaks out there may be listening i feel i feel for you guys i can't imagine being in the situation you are and i just feel like i don't know i i have an uneasy feeling of the u.s government sort of meddling in this and i feel like this hurts more than it helps that's all i'm gonna say well the good news is is that all of this should just be irrelevant politics uh within the next 10 years as as bitcoin adoption grows so uh it's one of those arguments one of those political arguments that fortunately we won't they we won't even have to have anymore they'll just be irrelevant you know they're saying

everyone's going to still try and do sanctions and they'll be able to do softer sanctions but they won't be able to do really hard things like this that is true that is true speaking of unnecessary politics it seems like ethereum is going to move forward with the changing of their pow algorithm after uh i believe it was 2.8 percent of token holders voting to reduce the the reward emissions for the ethereum blockchain from or excuse me not to reduce the uh reward emissions to change the uh consensus or excuse me the uh they want to make it asic resistant when i'm using my finger quotes yes yeah so they're going the asic resistance route we see minero do this minero i mean they're not hard forking every six months uh to be asic resistance

uh in particular it just so happens to help but they uh if you want to see a project that's trying to be asic resistant monero provides a good data set every six months because they hard fork and their hash rate drops precipitously i believe it dropped like another 50 after the last hard fork because they basically forked out a bunch of asics that were created after the last fork um so yeah seems like ethereum's going down this path brings up a bunch of questions uh because there's some funny parallels going on between uh like the segway 2x battles and uh the the labeling of people as maximalist and stuff like that it seems like uh history seems to repeat be repeating itself with ethereum in particular matt what are your thoughts and it also obviously reminds you

of the dow fork which was also done through carbon vote as a way to signal that there was support but but I think they had like 5% of stakeholders. No, I think they had even less. I think it was 1.8%. So voter turnout went up this time. It's at 2.8%. I could be wrong. I could be wrong about the DAF work,

but I do believe it was lower than 2%. I disagree with Monero's strategy, but that's really the only way you can do ASIC resistance is if you constantly are willing to change the POW because ultimately someone's going to make purpose-built hardware that will work better than general-purpose hardware. And even here with this ProgPad, there's a lot of talk about it benefits certain GPUs over other GPUs.

So there's already an advantage baked into it. I think NVIDIA, certain NVIDIA GPUs are way better for it. So who owns what GPU will already benefit. But the issue with changing the POW all the time is that then those people that are in charge of basically picking which algo you're going to switch to have an unfair advantage where they can game the system and they could be ready to mine. So the ultimate thing is it just results in a way less secure.

It does the opposite of what the proponents claim to do, which is they say it'll distribute mining and make the network more decentralized, but really what these networks need to do is foster as many ASICs as possible from as many manufacturers as possible. So you have the two hurdles you have, getting through the GPU bootstrap phase where you're vulnerable from anyone who has excess GPU capacity

can attack your network. So you have to get through that two ASICs, and then you have to get through the ASIC bootstrap phase where you only have one or two ASIC developers, which is the issue we had with Bitmain, that we finally got through that hurdle. So they're really going backwards. and it's uh so it should it should be i thought that was consensus opinion pretty much that asics

are are generally good and you want to foster asic uh development and and distribution but apparently that's not the case so it should be interesting to see if they if they push this through if it becomes uh a contentious fork i mean like if you have asics right now that are going to get uh invalidated basically because of the the fork a lot of people say like oh they'll move to etc like i don't think they're necessarily going to move to ethereum classic i think they might just continue mining the current chain that doesn't have the the forked algo in it and see where it takes them because they really don't have that much to lose they just they can they can do it for a couple days and and see how the market unfolds there yeah no this is this is

something i i can't believe hasn't gotten through people's head like it just makes sense asics are going to be a thing any chain that has tried to become asic resistant in the past has proven uh unsuccessful in that endeavor like they're inevitable asics are going to happen embrace them try to make them as efficient as possible that's the other thing asics are the most efficient way to solve these proof of work algorithms like that's what you want is efficiency efficiency efficiency we should be trying to make it as efficient as possible yeah and they they enhance the game theory too because your asic is is is basically worth nothing if you if you attack the network to the point of the of the token losing value uh you freaks can't see it but i have a

mic in one hand and a beer in the other and i just tried to take a sip of my mic uh it was a funny experience by the way uh upset alert is still on vermont's up 40 to 37 almost halfway through the second half uh but another thing saying on ethereum i don't want to pick on ethereum too much but another thing they're talking about implementing i don't know if we touched on this with the dev incentives earlier i think we actually skipped over it when we meant to talk about it was their intention or possibility to add a dev reward uh subsidy a dev tax it's called the dev tax the 20 dev tax explain it to us matt i don't know i like the terminology of tax because really at the end of the day you know they're trying to mimic stuff that you see in chains

like decred uh where where you take a portion of the block rewards and you put it towards dev funding uh whether zcash perfect example yeah like however that gets handled all right but zcash has like the 20 percent straight to a certain group of developers decred like you just coin holders are supposed to vote and you allocate it i'm not sure exactly which method you know they'll be more similar to but either way the reason tax works well as a nomenclature there is because it's involuntary like all holders are subsidizing that and who controls that funding is highly questionable that it that can be co-opted extremely easy while you have the the funding mechanisms of having all these outside developer teams and also volunteer volunteer developers

from around the world doing it you that's a voluntary basis like people aren't automatically co-opted into it no i agree and there's a thought experiment that i always think about like think about the man who falls in a coma or somebody who's like running a node or holding ether at some point in the last two three years falls into a coma his node's still running hopefully who knows that would be possible with ethereum but uh this man falls into coma expecting this protocol to work a certain way and then wakes up post uh prog pow and dev fund reward how does that man think like this is is this what i signed up for and that's like the mission of bitcoin is to think about that man who falls in a coma running an old version of a node is able to wake

up and he's still in consensus and it seems like this this first principle mentality is completely flown over the head of a lot of projects in the space ethereum in particular exactly like at the end of the day and like you kind of saw that with with uh dan larimer of eos his previous project uh what was that previous one that started with the b steam it uh bit shares bit shares he changed the code to a point where if you're if you hadn't been actively moving your keys around you lost your keys and like at the end of the day if it's impossible to have truly cold storage on a centralized chain because you'll never know if they just change the rules behind your back they just take your funds you can't access your funds or they they they lock up your funds they

put you on a blacklist they require kyc all these different things can happen so really if your chain is centralized cold storage is is it's not it's impossible there's there's no such thing as cold storage on a centralized chain exactly and this is why we bitcoin freaks this is why we're so into bitcoin in particular is they have this mindset this think of the man in the coma mindset that we just we're trying to tighten the rules that's what fidelity said i mean they didn't say think of the man in the coma right but they said we can't do custodial ethereum yet and a lot of other chains because we don't really know where they're going and we want to make sure that if we're holding billions of dollars for people that we can keep that secure exactly um so something to

keep in mind and that's like a first principle mindset that i work from thinking of the man of the coma beware of the man in the coma freaks it's very important um what's next bitcoin optec just wanted to touch on bitcoin optec this week uh they are pushing for uh exchanges wallet providers to uh support back 32 addresses in particular uh we will link to that bitcoin optech in the show notes but it's something uh beck 32 helps a lot with efficiency enables a lot of cool shit uh specifically segwit related um but adoption of beck 32 in particular uh has has been a bit tepid at this point uh if you have anything to say about that yeah beck 32 is the newest address format it's native segwit uh you'll have the

lowest fees the best privacy when you use it a lot of new wallets are have already supported beck 32 receives it's the addresses that start with bc1 the big one for you freaks of course is wasabi wallet which defaults to beck 32 so the issue is that a lot of wallets don't support sending to beck 32 yet and a lot of services stuff like lolly when we when we talk to people about using wasabi with lolly or cash app they have to we basically have to tell them you withdraw to a BEC32 supporting wallet that doesn't default to BEC32 receiving addresses yet. So something like Electrum or Samurai where you can send to them and then they support sending to BEC32 so then they can send out to Wasabi.

So we need, yeah, as many people using BEC32 as possible and Bitcoin Optics specifically what they've said is, you know, if you're hesitant to change your receive addresses to default to BEC-32, that's fine. But it should be expected that at this point, this long after SegWit activation, that they should support sending, all popular wallets and services should support sending to BEC-32 at least

because not only do you have these improvements, but it's a major UX issue. People are like, I put the address in. It's not valid. That's annoying. That is annoying. Exactly. ux issue uh that could get more annoying over time and that if it's and even if it's sending

only if it's sending only it makes 100 sense like just make it send only because this is one thing that satoshi thought about in particular uh was the address structure and the ux around that he he crafted uh base i always forget either 58 or 64 uh intentionally thinking of the ux around uh the lowercase and uppercase I's and L's and zero and uppercase O's and thinking that people will get confused when they enter addresses and one of the seamless UX in that regards.

And it seems like if people aren't allowing people to send it back 32 address, that's just a UX hurdle that is unnecessary and that Satoshi intentionally tried to avoid with his original address structure. which some people would say was not as efficient as possible but definitely got the job done and everyone should subscribe to

Bitcoin Optech newsletter it's a weekly newsletter, very good and shout out to David Harding, dude is an incredible documenter of everything that's going on and very clear and eloquent in his explanations last topic

this is yeah, this is I think I offhandedly talked about this in the bank yesterday but it's an interesting uh stat to note hash rate is 4x where it was when we hit 20k in december 2017 so despite the over 80 fall in price over the last two years um excuse me year year and a half uh hash rate has 4x so the amount of people expending uh not the amount of people but The amount of energy expended to secure and mine the Bitcoin blockchain has 4x since December 2017.

And more recently, we've had a very tight range of stabilization with the difficulty adjustments. The last one was on March 10th, and we had a slight downward difficulty adjustment, but it was only 0.05%. And then before that, we had a slight difficulty adjustment up, which was 0.17%. And that was following another difficulty adjustment. uh upwards on february 10th of 4.25 so we're in this weird tight range of hash rate which i don't think we've ever seen this this type of a range in bitcoin's history so um whether that's optimistic or pessimistic i don't know i think i think i would trend towards optimistic uh because despite the price fall people are still dumping capital into mining in particular yeah i mean so much for

that all that mining death spiral uh fear-mongering complete bullshit right we called that one out when it happened so you called that out in 2014 2015 so just wanted to toot our own horn on that one yeah um recurring fud i guess maybe we'll end it we'll end it we got 10 minutes left we'll end it with a segment on recurring FUD. The Bitcoin mining death spiral, will it ever go away or will it be perpetual recurring FUD?

Matt O'Dell, what are your thoughts? I think it will always be recurring. Look, it was all newer people that were really scared about it this time around. I think that'll be the same thing next time.

Ari Paul was worried about it bro yeah exactly and dude runs a huge ass fund uh and was like going at me about it he also by the way believes that the having uh doesn't is already priced in which is complete bullshit so we'll prove him wrong on that one uh when when we see that unfold but uh the mining death spiral shit is you know it'll never go away when when the price is falling dramatically like people are also you know everyone's on edge everyone's freaking out all of a sudden people that were never concerned about like worst case scenarios are like going through these ridiculous mind experiments uh which i by the way love to do but uh you got to put your

realism shoes on a lot of times right um yeah so the mining death spiral it'll be around it's nothing that i'm afraid of i just again uh people are still mining bitcoin in china for a certain particular reason i don't think they're worried about uh i'm worried about the price there's people out there with with other needs and other other reasons for their mining yeah i'm sure we'll i'm sure we'll be talking about this for years to come i also what what other what other kind of reoccurring fud will we always get we just got the other thing is all this fud like it it gets clicks because it's fear mongery and the people there's like there's authors that are literally been calling for bitcoin to fail for such a long time that they just keep let's call them out by

name let's call them out by name david gerrard david gerrard well i was about to i was uh i was uh i was doing a transition marty but yeah that's a fun line he just published in foreign policy that um you know the the the asshole fucking shot up everyone in in new zealand uh at at the mosques he in his manifesto mentioned bit connect he was a bit connect investor which is the the famous ponzi scheme that a lot of us called out before it blew up a couple years ago a year and a half ago and he like connected that to bitcoin and then was like nazis use bitcoin and i think that's a reoccurring fud line that we'll see a lot yeah false equivalencies that's and that goes i think that type of fud goes hand in hand with the energy fud the bitcoin is boiling

the oceans fud it's it's false equivalencies uh if people are allowed to with the energy thought in particular if cruise ships one cruise ship which expands or excuse me expends more energy into the atmosphere than a million cars in one day um is is not causing an uproar like bitcoin mining which uh is magnitudes of order cleaner as an industry overall than any other industry on average it's a complete false equivalency to sort of call out bitcoin for using a certain amount of energy most of which is clean by the way and not call out say something like a cruise ship this can be applied to uh again put that asshole did in new zealand whether or not he used bitcoin or bitconnect whatever it is he could have used u.s dollars or another form

it's it's a false equivalency it's fucking bullshit yeah i mean he used he used new zealand dollars every day right so it's fucking ridiculous no one can no one's like oh the i don't even know what they call their dollars over there but like no one's like oh the new new zealand fiat did it the kiwi fiat did it kiwi um that's a cute that's a cute currency name the kiwi i always like the kiwi energy efficiency fud is gonna be a big one for a while when that one's not gonna whatever but it's all bullshit let's if anybody comes to you with the energy fud spins on them so hard that their mind that's actually been one of my best uh one of my best arguments for not arguments one of my best ways at having people i'm trying to explain bitcoin to in person recently uh sort

of have an aha moment via the energies like yo there's a bunch of untapped clean energy in the world that nobody ever uses because you can't transport it and now we have incentive to go to that clean energy and actually use it tap into it via bitcoin mining that may drive and obviously drives production of but may drive innovation of clean energy sources maybe we'll figure out how to transport it but just the fact that we're testing around with that in particular will hopefully lead to some positive externalities then on top of that you want to get into dirty energy let's talk about fracking let's talk about flaring and releasing methane into the atmosphere on site at these fracking sites it's 30 times worse for the atmosphere to just release that app that methane

into the air without expanding it guess what now we have incentive to be as efficient as possible on site in these fracking sites bitcoin miners show up cap that methane which otherwise would have been sent into the atmosphere to pollute our atmosphere and expedite this global warming crisis whatever people think is happening right now like it takes that energy and uses it and turns it into digital gold a sovereign currency that gives you security and it allows you to become a sovereign individual like it will make the shit more efficient freaks spin zone the energy fud it's so easy to do it's actually helped me that was a fantastic rant i i loved it i was very happy with it. Thank you. I'm currently sitting in paradise. So talking about FUD is I'm not so

enthusiastic about it right now. The other line is but I appreciate your enthusiasm around it because that was a very good rant. The other line of FUD I would say would be a big line of FUD would be the money laundering FUD. I think it just came out that the Wall Street Journal uh report about shapeshifts uh helping money launderers was grossly misrepresented paul vignette eat it bro what are you doing you know money laundering is an easy target because as far as statists are concerned like if you have any money outside you know money laundering can be whatever they they want it to be so if you have any money that is that is actually under your control then that you can you can create that false equivalency there and try and basically

like criminalize ownership and usage yes so again uh be aware of that fud in particular as well and that was a great 10 minute segment we did there i had a lot of fun yeah that was a nice little ad hoc uh fud uh preemption and get exactly the fud preemption is important get out in front of it freaks i think the energy one's an easy spin zone one uh you know you can riff off my explanation if you want to it's obviously you can obviously improve i'm not the most eloquent well-spoken freak out there um matt that's all the topics we have for today any final thoughts final musings um i always hate these remote sessions so i'm looking forward to being back in the studio with you next week and uh feels good this was a good one though yeah this is good i feel like uh

yeah i thought this was a good one we're getting yeah we just cut each other off from the first times the whole pod but uh we're getting better at the remote recording which is good it keeps us flexible especially you know at any time i don't want to get too comfortable with it though there we go exactly don't get too comfortable but i'm looking forward to seeing you again and uh you know we just passed 4 000 i know it feels good but you got to stay humble guys uh you know we might have one more bad downturn here before you know this might be the last head fake it might not we might we might have bottomed but either way just stay humble and and don't get too far ahead of yourselves yeah not gonna lie i'm trending towards bull trap right now but i'll

take uh i'll take uh above 4k bitcoin any day of the week um feels good feels good it always feels good always feels good feels good sitting down with matt even though it's remotely i hope you feel good where you are i feel good looking at where you are because it's uh much better than than brooklyn right now uh upset alert florida state's up by two with eight to go so vermont oh nope vermont tried to tie it up but they got eight minutes left we're gonna keep watching this game matt enjoy the rest of your vacation freaks thank you for joining us peace and love cheers