TFTC: A Bitcoin Podcast - Tales from the Crypt Ep1: The History of Bitcoin pt. I

Episode Date: October 3, 2017

Marty and Louis discuss the history of Bitcoin, where they were when the Phillies won the world series, Brad Pitt, and Brock Lesnar.

So, freaks, welcome to Tales from the Crypt, a podcast about the weird world of crypto and the chaos that it's grown in its wake. I'm your host, Marty Bent. This is episode number one. I'm sitting down with Lewis Roberts from Barstool. We're going to go over the history of Bitcoin today. If you're going to understand a subject holistically, I think it's important to understand its history so today i have lewis with me and and just sorry to interrupt you marty i really don't know shit i'm kind of just like i think i said i was like the little yachty of podcasting where like i don't no one knows why it works i don't know how i'm making it work just things things have just been like coming together i say i'm using ta i'm kind of

using ta but ta doesn't really work i'm kind of just taking people's information and i'm kind of just like trying to build crypto cap like as as we grow barstool you know just kind of do something on the side yeah i think my favorite uh analogy that you made was you're the watson to my sherlock holmes very much very much i really you are the you're the sherlock holmes you're the guy you're the guy you're the subscribe to subscribe to marty bent's newsletter it's probably it's it's literally like crypto for dummies it's really really helping everyone out so let's subscribe to that as well and yeah you can find that subscription link in my pin tweet at marty bent on twitter there you go there you go and just so everyone knows i won't be on every episode because i'm gonna try and

make money i'm gonna try and like sell some shit for this podcast like hey anyone wants to sponsor the pod tell us in the crypt 21 at gmail.com i will take your money i will take every ico's money even if I think it's bullshit we will fucking plug every ICO on this pod I will not be too pumped about the ICO pumping but if it brings in money

and I'm able to buy more Bitcoin with it okay I'll do it I'll read it like Bill Bear reads Sherry Berry's reads we can't steal

studio time from Barstool Sports forever we gotta get some ICO some fake ICO money that's uh hey you know what I'm

not a big fan of the ICOs but I'll take some dumb money if I can get it um yeah so i guess let's just dive into it the history of bitcoin um sort of i guess i have a question for you before we start lewis sort of what do you what do you think about bitcoin and when did you get into it i think it's i love the utility behind blockchain i love the utility behind bitcoin i like the idea of what the technology is going to be i like that everyone's fucking scared of it that are like all these old people when old people are scared when old people

get scared that's like my like my eyes light up but i see all these old people that are like rich that are like oh yeah like don't do this don't do that it's more like they're put it this way people that are super rich they are not really trying to like help out people like they're trying to help themselves and help their company grow so if they're telling you not to do something it's because they want to fucking take the money. Um, and I think there is going to be a huge, huge, huge space there. And it's definitely going to be a huge learning curve, but I love it. Uh, I got in probably like seven months ago. I don't even fucking know. I want to say seven months ago. I just basically like people were talking about it. I had a few people hit me up,

shout out Tim, shout out some people I can't say cause they get in trouble cause they work in finance um and then just started to fucking look at ta and look at bittrex and look at coinbase and next thing you know we're fucking sitting here bang it's done yeah it's crazy you came in with the wave of sort of new users this year after the price went above a thousand dollars at the beginning of the year that's when a lot of interest started growing people started getting more interested in bitcoin again sort of psychological levels a thousand dollars is definitely a psychological level in a lot of people's minds. And one thing you said earlier,

you said you like the idea behind blockchain, you like the idea behind Bitcoin, but I'm going to tell you, you can't do blockchain without Bitcoin. All right, so let's go back, and let's go to November 1st, 2008, when Satoshi Nakamoto introduces Bitcoin to the world. So he goes on to this dude, Satoshi Nakamoto.

I'm going to say dude for E's sake. Nobody knows who he is. he she or it yeah look can we let's before we fucking get into what this shit is let's get into my man satoshi like who like satoshi could be a ghost he could be an alien we don't know who satoshi is still he's just this motherfucking he someone came with this technology or something and then next thing you know we're just all getting motherfucking rich we don't even know how i love it i love it we're just getting rich we don't even know how i don't even i still don't know i i mean i watched the documentary on on on netflix uh this fucking guy he could be anyone he

could be me or you he could be you for all i know we you could he could be you and now you're using barstool to keep pumping this platform which would be super smart you never know i could be satoshi i'd like to think we are all satoshi all right no but seriously nobody knows who he she it or them are i mean there's a lot of a lot of speculation there's a couple people that have claim to be satoshi uh newsweek thought they found them uh i believe in 2012 um but so far nobody's found hardcore evidence of who satoshi is um yeah it's just some random anonymous person on the internet that showed up sort of out of the blue i say sort of because uh we know that he had conversations with a few people before he dropped the white paper but the the world at large was

really introduced to satoshi's idea and bitcoin uh again november 1st 2008 he basically goes on to this mailing list it's a bunch of nerds that are really into cryptography they're they're really into privacy and stuff like that and they're at the edge of computer science and engineering and he basically drops an email on this mailing list and says hey i've been working on this new electronic cash system it's fully peer-to-peer it's got no trusted third party and basically dropped the abstract of the bitcoin white paper and that's sort of when we were introduced to it just sort of out of the blue the day after the phillies won the world series in 2008 that was a night that was a night i'm from philadelphia that was a night i remember that was that was

night i didn't i'll be honest i didn't know what the fuck bitcoin was at that point and i couldn't even wouldn't even have thought about it i think i was like fuck what was i doing i don't know what was even doing i was like in college bartending like i don't even know but if that was a what a night that was i i was in philadelphia that night as well little do people know i'm uh went to a rival high school yeah and i went to rival high schools yeah that's the crazy thing is that like we met on twitter and then like we like didn't i i didn't know where marty was from but we met on twitter and the next thing you know it was like oh shit we ended up going to rival high schools it was like i was like this is a small world like this is some crazy shit going on right

here very small world and that day the day before bitcoin was dropped halloween it was a friday i believe i remember vividly i was actually at the phillies game the night before the night they won and i was so the day satoshi drops the white paper i think i woke up in a lieutenant dangle halloween costume hung over after a friday night edgley or something like that yeah i went is i remember going to the parade and i went and came back and i think my costume that night i do not know i remember this my costume that night was i was the man in the yellow hat oh and george yeah and and i'm going to god i probably shouldn't be telling the story but i'm going to tell the story anyway because because this is this is the trust tree barstool's always been in the trust

history I remember being in if anyone's from or been to Philadelphia I remember I was out in Maniunk and I remember going I was with my friends and my friends who are girls and we had we had maybe a little bit of molly that night and I remember like sneaking into the woman's bathroom and like they were like hi to me and I'm doing molly but I'm in this big yellow man in the yellow hat costume and like we're doing molly and I'm like in the girl's bathroom it's a crazy night. Way before the Bitcoin, though. I didn't know what was going on. So, yeah, let's get back to the Bitcoin, but that's just a little side story about 2008. God, I miss college. Yeah, so, Satoshi drops this white paper, and basically for three

months, or excuse me, two months, November and December, the people on the mailing list that he sort of introduced it to started critiquing his idea. A bunch of people were like, ah, this is a novel combination of a bunch of technologies that have come before you, but it's not ever going to scale. You'll never be able to deploy this globally. Satoshi pushed back on that. Other people, like Hal Finney, sort of saw the novelty of Bitcoin and where it could go, the potential, and sort of asked more about what he was doing and showed some curiosity, said, hey, this thing has potential. So, those two months go by. There's a back and forth on that mailing list. Satoshi's sort of tweaking the idea as he's getting

this feedback. And after two months, he's finally ready to drop it. On January 3rd, 2009, he basically launches Bitcoin. That day, we have what's called the Genesis block, which is the first block that was ever mined in Bitcoin. And it came with a pretty overt message. Satoshi, from the beginning, really made it known that Bitcoin was created for a certain purpose, and it was to come at the banks and the current monetary system. The way he let this be known to the world um is he basically embedded a headline from the times of london the paper that day and it was basically the headline was about uh a bailout that was about to happen for the banks a second bailout um let me find the exact quote i shouldn't know this off the top of my head

i think it was the times of london chancellor on the brink of the second bailout So right there, Satoshi says, hey, we're coming for your lunch, and Bitcoin starts. So in the beginning of 2009, not a lot's going on. It's just a bunch of nerds playing around with this new technology. They're interested in the decentralized movement, open software, free open source software, the FOSS movement. And they're basically tweaking the idea. Satoshi's talking to Hal Finney a lot in the beginning. Rest in peace.

Hal is no longer with us. RIP Hal. RIP Hal. Rip in peace. But Hal was actually the first person that ever received a Bitcoin transaction outside of a mining reward. So Satoshi sent him 10 Bitcoin, I think nine days after he launched Bitcoin, and was like, hey, this shit works. And from there, 2009 is pretty quiet. They're tweaking the idea.

And it's not until October that somebody tries to value Bitcoin. And that was the new, excuse me, the new Liberty Standard. And they valued one Bitcoin at basically less than 8% of a penny. And they based that valuation off the electricity the miners were using to mine Bitcoin. And then the year ends, and there's basically a technical sort of checkpoint that's reached. And so we had the first upward difficulty adjustment, which means there's more miners coming on the network. There's more people interested in this project. So at the end of the year, we had that first adjustment.

It's like, hey, okay, people have found this, and they're interested in it. The year is 2010. We begin the year with the first ever Bitcoin exchange. Bitcoin market opened its doors and basically allowed people to access Bitcoin with their PayPal account. So now anybody with a PayPal account can buy Bitcoin and sort of get into the movement. At this point, again, it was valued at less than a penny. So I'm not sure how many people were interested in buying Bitcoin at this point. But we have an exchange.

People are able to do this. And beginning of 2010, after that, it's pretty quiet until we get to May 22nd, which is an epic day in Bitcoin. It's one that will be remembered, and we actually have a holiday every year because of this instance in the Bitcoin community. We call it Bitcoin Pizza Day, and that is because on May 22nd in 2010, some dude named Laszlo, he spent 10,000 Bitcoin for two Papa John's pizzas. That's the type of shit, man. That's the type of shit I could never get over. if you told me I waste like like I don't know where I don't know where Laszlo's out shout out Laszlo I would fucking probably kill myself I put a fucking bullet in my head because you basically

are you don't ever have to work again and you fucking wasted it I can't I can't even think about that shit you can't blame Laszlo you know at the at this point in 2010 it's like all right we're playing with funny internet money and nobody nobody really knows that the project's going to succeed or fall on its face maybe it was maybe laszlo was selling was selling the top here at this point and was saying hey i need pizzas i'm just going to use this bitcoin you can't really look back on it and be like ah i shouldn't have spent that nobody knew at this point bro but today that bitcoin would be worth around like 40 million dollars uh that's that's why i kill myself if you told me i had something that was worth 40 million dollars and i bought two pizzas that were one

Papa John's fucking sucks uh sponsor the pod but um it sucks and just hey they give you that that pepper they give you that pepper I like that touch I mean if we're being completely honest like they don't have any fucking cinnasticks they have no dessert like how are they fucking like come on now if you dominoes eats dominoes eats them eats their lunch literally I agree with that I agree with that um yeah so this guy sells his bitcoin or exchanges of bitcoin for pizzas uh we move into july and the developers while this is going on what laszlo is buying pizzas and exchanges are being made developers nerds that we first talked about are still working on the protocol and in the summer of 2010 they released version 0.3 of of bitcoin uh they basically upgraded the software

fixed some bugs and released it i think it was in july of 2010 um and basically after this happened slash dot which is a website that caters to to software engineers and nerds that are interested in computers uh posted a story announcing the the release of this version and basically after that we have the beginning of bitcoin's first bubble in 2010 so slash dot um announces this people are like okay what is this bitcoin they start creating accounts uh and they start buying and the price shoots up overnight from eight tenths of a penny to eight cents so 10x is overnight and if you want to if you want to talk about bubbles this is probably tech bitcoin technically bitcoin's first bubble um 10xing overnight and shortly after this jed mccaleb he's some dude i believe

he was chilling in costa rica or something he was down on the beach surfing and he basically saw this bitcoin shit going on i was like hey i'm gonna start an exchange it just so happens that the exchange that he started is uh mount gox uh which is infamous throughout the world now not just bitcoin for uh for having an epic failure i think 770 000 bitcoin were lost when all was said and done um 770 000 yes we'll get to that we'll get to that that comes later okay that just got me really excited i'm i'm i'm because like i was about to fucking leave the room go on a treasure hunt like if there's 770 000 bitcoin in this world that people don't know where it's at i'm gonna go find it somebody knows where it's at and they're not telling you let's we may have

to get deep deep web we may have to get deep web tim shout out deep web tim you may not i don't know when we'll get deep web tim on the podcast we may have to get deep web tim and start hacking some shit and find this fucking bitcoin well i think he'd definitely know where to start for sure deep web tim you go you you guys will hear a lot about deep web tim later um let's continue yeah so you continue um that same summer basically like i was talking about difficulty adjustments at the end of 2009 what happens when when more miners come on the network is there's more computing power competing for these bitcoin and in the summer of 2010 miners started creating new chips or using new chips um gpu chips instead of cpu chips and what

this did was basically speed up mining and make mining like go super san like not super san yet and like zero gravity dragon ball z training they went from like training on earth to gpu miners that was a terrible joke um so that basically means that if you want to mine bitcoin now you have to you have to use a more expensive more specialized chip so it means there's more demand more people coming in more people want to want to get these bitcoins um and then as as the year 2010 goes on we get to november and the market cap hits one million dollars so bitcoin as a market cap two years in almost a year and 10 months it's it's a million dollar market cap and again continuing the first bitcoin

bubble the price hits 50 cents around the same time about a month later satoshi leaves nobody's ever heard from satoshi since since uh the the winter of 2010 i mean that's why he's a fucking ghost dude he's a ghost i'm not taking anyone else's word for it i don't care if anyone says they saw them if they have an email with them the guy's a fucking ghost we had a ghost we had a ghost give us this technology maybe an alien that's all i got i'm not gonna i'm maybe it was like i don't know who it was maybe it was the i think at one point me and you talked about like maybe it was like the computer itself like some matrix shit yeah there's some uh theories out there that an artificial intelligence sort of bootstrapped itself figured all this out and uh

It basically created a decentralized store of value where computers can trade value between each other. So some people think a smart AI basically figured this all out, put it together, and launched it, and then it ghosted. Motherfucking Terminator shit, dude. Motherfucking. We got some real deep shit on our hands. The only thing I care about, the only thing I know, though,

and kind of care about is let's just keep getting motherfucking rich. Let's keep this shit. When it was at $0.50, I wasn't in on it, so let's just keep getting rich. Getting rich is fun. I agree. I agree. It's getting fun, but you also have to think, this is so much more than getting rich. We have a revolutionary technology on our hands that has never existed before. I mean, you want to talk about value proposition, the value proposition in Bitcoin is its censorship resistance. So the fact that it's decentralized, you can run a node, I can run a node, China runs nodes, Russia, wherever. there's no central server to attack and basically what this is this is this is an innovation on par

with the printing press when you get down to it because nobody you can't have the chinese government like they're trying to do now they're not able to shut down the bitcoin network so the fact that you can make transactions and nobody can shut it down is it's a revolution that that nobody seems to grasp right now people are starting to but once it fully clicks yeah things are gonna get weird things are gonna get really weird print and press shout out johannes gutenberg let's keep going um the year is 2011 satoshi has just left people are wondering where he is they'll soon come to find that he's never coming back 2011 was a very important year for bitcoin the birds and the bees were out and about they were

spreading the bitcoin love and if bitcoin is ever made into the story of bitcoin is ever made into a movie 2011 the first eight months would be would be the montage the first montage in the movie i fucking love montages man god i love montages i can't fucking wait for this if this is our month our first montage the first montage is always the best thing about like mighty ducks too when they're beating when they're beating the shit out of all the teams like they're beating jamaica like 11.1 and all that shit that that's that stuff's great so i'm gonna let you jump into this because montages are without a doubt one of my favorite things in this world if this movie's ever made this will probably be one of your top three favorite montages all right so if this montage

is going to go like anything it's going to go like this we flash cut to january 28th the network has reached block 105 000 this means that 25 of every bitcoin that will ever be mined has been mined There are now 5,250,000 on the market. We jump to Ross Ulbricht. He's launching the Silk Road. This is the dark web market where you can get your weed, your molly, even your black tar heroin if you wanted to. It only accepts Bitcoin.

We go to three days after the Super Bowl. Bitcoin has reached parity with the U.S. dollar. It now costs $1 to attain one Bitcoin. Nerd media freaks out about this, writes a bunch of stories about Bitcoin, drawing a bunch of the public in. We zoom in on Japan, and Mark Coppellis is buying Mt. Gox from Jed McCaleb. Jen knows it's a sinking ship. Mark is an idiot and has taken some damaged goods.

We screen pan to a computer nerd tracking Bitcoin's hashing power as it significantly jumps out of nowhere. Some people think a supercomputer is coming to the mining game. We blink. We're in a 19-year-old's basement. He's an amateur trader. He's just lost all his money because the Bitcoin price has fallen 30% to 70 cents. We hover over to his next-door neighbor who just clicked on a YouTube video titled, What is Bitcoin?

This is currently going viral, reaching 6 million people. We throw up a grid screen. Boom. It's a bunch of entrepreneurs from all over the world. They're shaking hands with businessmen as they're opening up Bitcoin exchanges in their respective countries. The middle screen in that grid expands to reveal the April 16th cover of Time magazine, which is flooding Bitcoin in the world's face. We open the cover, and we see that the network difficulties are on a steady rise up and to the right. We turn the page, and we notice that the price of Bitcoin is $10 on Alcox.

The person reading the week-old magazine looks up at their laptop and sees that the price has surged to almost $32. He goes all in. He doesn't want to miss the ride. We flash cut to a week later. This dude is sobbing. His girlfriend's walking out the door. He's got a half-drinking bottle of whiskey in his hand. Why is this? Bitcoin has crashed all the way back down to $10. He bought the top. He goes to take a swig of the whiskey, closes his eyes, and we flash to a web clipping. There's someone getting hacked and losing 25,000 Bitcoin.

The camera zooms out and we see that the computer belongs to Mark Karpelis, the owner of Mt. Gox. He changes tabs to an email account and we can see he's having a conversation with a hacker that has just stole all the username and passwords on his website. We flash pan to an affected user of this hack panicking as his account on another exchange gets hacked because he's using the same username and password across the internet like an asshole. He checks his Twitter account and the first tweet is a screenshot of the chart of the network difficulty which has increased 10x in the last two months. He scrolls down further and sees a tweet about an upcoming Bitcoin conference and clicks on the link.

The music fades and we slowly zoom in to a bunch of poorly dressed nerds gathered at a hotel conference room in New York City. We're at the first ever Bitcoin conference. We pan into a digital clock. We see that the date is August 20th, 2011. And I'm on top shelves. Whoa! Man, that felt like motherfucking Ocean's Eleven right there. What a year.

I am fucking fired the fuck up right now. that really felt like it was oceans 11 i felt like i was danny ocean you were me you were maybe matt damon i don't know about brett pitt like i'm danny ocean i'm definitely ocean you should see my eating and talking skills are very good okay i can eat and talk very well just as well as brett pitt can i i just felt like i was ocean there basically just the guy behind the scenes you were doing everything that's why i called you damon like you were doing all the work i was just hanging out damon's a tryhard in those movies yeah but he was really important that's what i think i was getting at he's really fucking important he was like a really important guy and

everyone was just like he didn't really do much but he really did fucking everything i'll take it all right we're gonna step outside of bitcoin here i got a story for you i used to get called brad pitt all right this is a story about weight change all right watch your weight what so when i lived on the upper east side can you got to show some pictures if you're gonna compare yourself to to fucking mr legends of the fall himself hey i didn't compare myself all right here's the story I lived on the Upper East Side, 83rd and 2nd. There was this homeless dude, smartest homeless dude I've ever met in my life. He would sit out this Italian restaurant called Emilio's.

It's one of the most expensive restaurants in the city. And he would wait for people to come out of that restaurant. People would hand him 20s. While he's waiting out there, people are passing him on second half. And every time I would walk by, he'd look at me and be like, hey, what's up, Brad Pitt? I'd be like, oh, I threw that guy a five a couple times. That was the first year I lived there. about a year after i gave him the last five i'm walking by i put on some weight he says yo what's

up brock lesnar and my life was was shattered at that point i think i went on a run at midnight that night dude that homeless guy just took your brain into a fucking into a maze he had your brain in a maze and you were running around in that maze it was like one of those hedge mazes you see what rich people have he had your he had you in a hedge maze and he just took everything from From Brad Pitt to Brock Lesnar. If someone told me I look like Brock Lesnar from Brad Pitt, I would have probably jumped in front of the fucking six train. I'm dead serious.

That's where I would have been at, for being completely honest. Yeah, it was a tough night. It was a tough night. Enough about Brad Pitt and Brock Lesnar, though. I think we're going to cut the Bitcoin story here. This is a lot of information to take in. We're through two years of the experiment. There's six more years to go.

But I think this is a good place to stop. I don't want to overwhelm anybody with information. We still got a lot of shit to talk about, though. A lot of shit. Two years, but really five years if we're going back to when it started. Two years of when shit really started to pop off. Yeah. Okay.

Okay. I mean, no, two years, yeah. It was launched in January 2009. We're in the 2012 now. So we got three years in. We're three years in. 2009, 2010, 2011. That's why you're Sherlock and I'm Watson.

because I just really fucked that up right there. You know what? Yeah. So like I said, we got a lot of shit to talk about in the upcoming episodes. We're going to talk about Mt. Gox. That was one of the biggest shit shows,

not only in Bitcoin, but I think throughout the world. You think Enron was bad, Mt. Gox, in my opinion, was a lot worse. Yeah. So we're going to come back with basically part two of the history of Bitcoin.

Silk Road, Mt. Gox, all that good shit. And then after part two, we'll get into what the history of Tales from the Crypt is going to have to offer you guys. Yeah, we'll get into sort of what we're going to be doing on this podcast. Again, we'll explain that in a third episode, but I think this is a good stopping point for right now. But I want to thank you guys all for listening. I know I'm just some random dude. I hope you guys learned a little bit and had some fun.

Again, my name is Marty Bent. You can find me on Twitter at Marty Bent. I'm sitting here with Lewis Roberts from Barstool. His handle's a little weirder, at Buddy Loveless. Follow me, subscribe to the podcast, subscribe, subscribe, Lee Reviews. Smash that subscribe button. All right, guys, we'll be back later. Thank you.

Peace and love. Peace and love. Tears from the crib.