The Breakdown - Crypto Daily 3@3 - 7.23 | Trontroversy! // Ethereum dev tax? // #IndiaWantsCrypto

Episode Date: July 23, 2019

Justin Sun canceled his lunch with Warren Buffett this week, claiming kidney stones. Reports today, however, suggested that he was compelled not to leave China by border authorities due to investigations. But then he showed up in SF? So basically, wth. Also an interesting conversation about developer funding and block rewards comes to Ethereum, while members of the Indian crypto community react to aggressive new political recommendations.  Watch original: https://www.youtube.com/nathanielwhittemorecrypto Follow me on Twitter: https://twitter.com/nlw

Welcome back to another Crypto Daily 3 at 3. And boy, what a day. So I unfortunately couldn't avoid starting with what everyone has been talking about for the last few hours, which are some pretty serious allegations against Justin Sun, the head of Tron. So let's get into this. So first, I saw this morning, Coin Telegraph was one of the first to report. It was a story that was originated in China. kind of from at that point suspect sources that the cancellation of the lunch, the famous meal with

Warren Buffett, was not actually about kidney stones, as had been reported, but was Justin Sun being detained in part of maybe ongoing investigations in China. And so, you know, at first this was a little bit questionable. And then pretty soon, you started to have some people start to put together the pieces. So CN Ledger, which covers crypto and China, put together this graphics showing how there was kind of a variety of different things that might have been combining. So Justin's other app and what was going on with that, the sort of Tron users who were mad because they got hooked into some Ponzi scheme, which was in the news a couple weeks ago. And then the Warren Buffett lunch, which seems to have gotten attention for just why

this guy has enough money to pay almost $5 million for a lunch, what that means and what the implications are. So they started speculating about basically that the border control in China was potentially detaining them. Again, this is also speculation. But pretty soon it was confirmed, I guess, by one of the more reputable. kind of financial reporting sources in China. And so obviously, you know, you can read the block.

You can check out Coin Desk's coverage of this. But effectively, it seems like Justin is being barred from leaving China right now under Chinese government control, meaning he's not facing formal charges at this time, but is not allowed to leave the country. And this is according to, I guess, reputable outlets in China, right? And so there's a lot of kind of response to this, obviously. For some, Justin Sun and Tron represent kind of the peak brazenness of scams. For others, they're just kind of offering something different in the spectrum of decentralization, let's say.

Although I think that that's kind of a different subset. But whatever the case, as Larry from the block points out, Tron is down 22% as Justin Sun is under Chinese government control. So obviously, huge financial implications. You also have Arrington who, I guess a few months ago, maybe a couple months ago, said, Canary in the coal mine for U.S. Crypto Regulation is Justin Suntron. He currently resides as a freeman in San Francisco, as he should. If when he flees the country or is arrested, we will know the U.S. isn't messing around anymore.

It'll be war then. He kind of said, I called it, but basically got the wrong country. You have Dovey and Sue, who are both pointing out the connections to Fon Bing Bing, who was basically a influencer and actress and disappeared, was disappeared effectively for three months before coming back and apologizing for tax evasion. Dovey pointed out in a previous tweet that this is pretty complicated for her. So there's clearly a tension in some circles around whatever they may think about Justin and also the sort of authoritarianism of Chinese, Chinese,

government, right? So let's talk about the implications. And I know I'm running over a little bit of the three minutes, but this is kind of a big one, obviously. People are talking about this in a huge way. So there's the, like, what about this might be bad for crypto? Let's talk about the implications for crypto as a whole rather than just Tron or Justin's son. So, Noel, who does the institutional investor column for Coin desk, right side. This is not good news. After all the hype over the lunch with Warren Buffett, you can hear the collective eye roll from traditional finance, a setback. So basically her point is that kind of the bad side of this for anyone interested in any sort of mainstreaming of crypto is that this kind of sets back the argument of the legitimacy

of the whole space, right? I mean, tons of people made the joke that you effectively have Warren Buffett calling, you know, crypto, which is one big scam, or scam after scam after scam, and this guy who kind of found his way around the system to get a lunch with Buffett is now under investigation for being a scam. So that sort of reinforces, I think, a narrative potentially that a lot of people who are staying on the sidelines in crypto have about just what the nature of the space is. So I think that that's, you know, worth noting. what might be the argument that this is good for crypto? I think that the argument that this is good for crypto in some way

is an argument that these scams need to be fleshed out, right? To the extent that Tron is a scam, to the extent that this becomes more than just rumors and hearsay today, if it is something actually kind of dubious going on, that we need this space to be kind of cleaned out of this actor and our energy needs to be focused on real things. I think that there's a kind of, a medium argument, I guess, between the good and the bad, which is almost that some amount of

this is inevitable, right? That, you know, it may take law enforcement a while to catch up, but ultimately there's kind of inevitable, painful probably process in terms of public perception of this whole industry where, you know, things that were kind of engaging in dubious behavior, projects, exchanges, what have you, a couple of years ago, are going to start to find themselves still within the purview of law enforcement and it's going to be an issue. I think that it's important to note that this is all still kind of hearsay and that we shouldn't make too many conclusions, but like it or not, Tron and Justin Sond have put themselves in kind of a clear, loud, visible position within the crypto industry, whether you think they're influential or not.

And this is going to have implications. So worth watching, certainly in terms of. and we'll be keeping eye on it. But with that, let's move on to number two, which is drama right here within a community instead of outside. So I noticed this kind of explode over the last few days. I'm sure some of you have too. EIP 2025. So it's basically a funding proposal

that would increase Ethereum's inflation in order to fund new developer activities. developer activities would be kind of like a built-in block reward subsidy effectively for development activities. And so I think a lot of people this came to their attention after Eric Conner's tweet reading through the latest Ethereum core dev call notes and it appears that EIP 2025 is being seriously considered as an EIP for Istanbul. EIP 2025 adds 044-Eth per block for 3.1 million blocks to a dev fund. Absolutely absurd. This cannot happen. He posted the call notes. It's actually a typo and it's 0.0055, ETH per block, but he says it still matters.

And a lot of folks in this community came out very aggressively against this. So you have Tom Shaughnessy, who admittedly is not deep in the Ethereum community, but he watches it closely in his role at Delphi Digital. I'm against DIP 2025. I like ongoing funding when it's agreed by stakeholders, not a one-off project, limited discussion, Malik Dow, by which he means that there's alternatives. Speaking of Malik Dow, Amin also came out, Amin, so the founder and CEO of Spank Chain,

also one of the guys who got Malik Dow off the ground. I oppose EIP 2025 to fund ETH1.X from new block rewards. And he has a bunch of different reasons. He references a tweet storm of his from April about why he's changing his mind about using block reward funding for development. You had Ryan Adams, Ryan Sean Adams, come out, says, I oppose it. It's refreshing to see, though,

that adversarial thinkers in the Ethereum community are finding their voice. This will make Ethereum more anti-fragile in the long run. So you have a lot of folks who came out against this pretty quickly. So much so that some external observers notice that it's kind of maybe a non-issue, right? That there's a real question about to what extent this is actually being debated. And Udi basically seems to make the argument that this is really just kicking up hay for no reason. It wasn't being seriously considered. Now, in a previous conversation, Eric, whose kind of thread kicked it all off, he responded to Udi by saying, like,

am I supposed to just, are we supposed to just take it on faith that it's not being seriously considered, isn't our job as the community to make such a stink, to kick up such a stink. You have, yeah, others from outside the community, TUR, who's kind of saying centralized currency schemes will always be tempted by senior age inflation tax. So he's kind of broadening it out to a critique of Ethereum and anything like it in general. But then I guess you have this kind of other piece, which I think is worth referencing just at the end of this. So the reason that this matters, it's not necessarily going to be a big thing in terms of this proposal. In fact, I saw someone else, I wish I had it posted, but Brian, who's in the Ethereum community wrote it, basically can a proposal be ridiculed out of existence? And so it's unlikely that this is going to see come to pass. It seems like there's not broad community support for it.

Quite the opposite. But I think that the reason that this is an interesting issue and why it's such a hot issue is there's an ongoing question within any crypto community about how funding should be paid for or how development, rather, should be paid for. And you see it in multiple different communities. It comes up in Bitcoin. It comes up in Ethereum. It certainly comes up in any other project. Just last week, we looked at the difference between or the YKCorp. cache fork of Zcash, which is effectively about making sure that Zcash in its new form,

YCash, never went back against its word to only allocate 10% of the total, you know, 21 million ZECs that were going to be ever issued to funding development. So this conversation almost started in some ways at ZCon a couple months ago, or last month, I guess, when one of the Ethereum core developers, Lane Reddick, said that the CACCash community discussing ending their block reward at the same time the Ethereum community is struggling to create one. And he says, if you're listening, don't kill your block reward. So the point is that this is contentious. And there isn't yet exactly a norm for how ongoing protocol development should be funded. And expect to see more of this debate. It's going to happen across protocols, across

communities. I can't see this ending anytime soon. So with that, let's switch to one final thing for today. So, crypto in India and hashtag India wants crypto. So, you know, I follow a number, I try to follow people from different crypto communities, geographic communities all around the world. And I noticed yesterday that there was a thread kind of summarizing the inter-ministerial committee to the Indian government on virtual currencies. And basically, the thread was making the argument that this is just confirmation of the bias. And, India from a regulatory standpoint has been pretty hostile to crypto. And this seems to just really reinforce that.

Yeah, there's a lot of the same rhetoric here. So no underlying intrinsic value lacks all attributes of money, no fixed value, no story value, not a medium of exchange, extremely volatile. Therefore, the committee is of the clear view that private cryptocurrency should not be allowed. You also saw people, Indian politicians, reinforcing that. I am happy that now, this is an Indian PM, I think. I'm happy that now government committee recommended government for banning private cryptocurrency, including Bitcoin, recommending criminal action. My fight against these Ponzo cryptocurrencies reaching the logical end, thanks to, and he quotes the authors.

So this is, you know, one of the people in the crypto community reposted this and said, Indian bureaucrats are handling criminal action recommended against cryptocurrencies. These power-hungry politicians are ruining the future for current generations. Interestingly, this caught the notice of folks over here as well in the U.S. So Pomp yesterday said, we need to pay attention to what's happening in India around cryptocurrency regulation. I'm willing to fly and meet with lawmakers and regulators if someone can help get me a meeting, who can help. And so why might POM be interested in this?

Well, for one, one of the big questions that U.S. regulators had last week for Libra was if you're trying to unbank or bank the unbanked, a huge portion of them live in India, which is completely hostile to crypto. So how is that going to work? So that was an interesting question that there wasn't really a good answer for. So in response to Pomp, Charlie Shrem posted that next month, I'm sitting down with an Indian member of parliament for the majority party, sits on the committee for finance and defense, I'll get the lowdown and release it on untold stories. So this kind of turned into an interesting thing where maybe we'll see this kind of cross-border exploration or more discussion.

I think it's cool to see that folks around the world are getting interested in this. But I wanted to kind of leave on the note that there is a really strong, and maybe it's a small, but it's a loud, passionate community that is really trying to make India safe for crypto, even more so than it is. And it's pointing out that there's already innovation going on. So you have over here, Wazir X, who says, time to send physical letters to our FM and PM. Appeal to everyone who wants to make a difference. Come up with a good detailed letter about why their flaws in the committee report,

why Indies should be positively regulated in crypto. We'll share the final copy here. 490 likes. You have CEOs, Chalini says, CEOs of Facebook, Tesla, Twitter believe crypto is the future. Only thing Guard Committee will achieve with this proposal? One, create an Indian crypto black market. Two, millions of Indians lose their jobs.

Three, loss of investments in India. Let's hope the government realizes this too. Hashtag India wants crypto. I think as cool as it is to see Pomp and Charlie heading to India, I think they can be great allies for this. These are the voices that I think are really important. We need local leadership to put this on the agenda, to explain to their leaders why it matters, and we need to be there to support them.

So I'm going to be watching this a lot more. Folks who are involved in crypto in India, if there's anything else that we can do or that I can do, let me know. This platform is yours. And with that, I'm going to wrap up. We'll hang out and discuss a little bit more for anyone that has questions. But yeah, thanks for hanging out, guys. I'll see you tomorrow.