The Breakdown - The Breakdown Weekly Recap | March 7 2020

Episode Date: March 7, 2020

The full week's episodes in one convenient package The View From China: Crypto, Crisis and Digital Currencies Feat. Matthew Graham What Us Election Outcome Is Best for Bitcoin? Libra Plus? A New Global Digital Currency Strategy For Facebook Why Bitcoin Mining Might Be the New Business Model for US Power Plants Riccardo 'Fluffypony' Spagni on How Coronavirus Could Impact Privacy

Keeping the fact that I work in China, crypto in mind, I have to tell you, this is the craziest thing I've ever seen in my life. Yeah. Corona. I mean, it's just nuts. It really has been like out of a movie. Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto and beyond with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to the breakdown.

It is Saturday, March 7th, and just like every Saturday, this is your weekly breakdown recap. Every episode of the breakdown in one long, easy form for your long run, your errands, your coronavirus doomsday prep, whatever you need to do, we've got your listening material. The clip you just heard that kicked us off was from Monday's interview, which was a view from China with investor Matthew Graham. And it sort of has to be said that the background noise for this week, and probably honestly for most weeks going forward, is the coronavirus. However, that wasn't the only topic that we covered on this week's episodes of The Breakdown. On Monday, as I said, we started with this view from China, but then on Tuesday, we did a little bit of a detour into

U.S. electoral politics. And if you'll remember, it seems now like a month ago, but the markets were actually really excited that Biden outperformed as compared to what everyone thought with Bernie Sanders. So we looked at what election outcome might be best for Bitcoin on the basis of a poll that I did on Twitter. On Wednesday, we got into recent news from Libra that they would be pushing out digital fiat effectively. So digital fiat pegs currencies in addition to their basket currency, which I think might actually be much better for adoption for them. We also talked about news out of India where the Supreme Court overturned a two-year ban on crypto banking, which has, I think, huge implications for that industry. Thursday, we talked about a really exciting and kind of random,

but not really, development out of New York State, of all places, where a power plant is using behind the meter power to run 7,000 Bitcoin mining devices, so they're mining about five and a half bitcoins per day, which is interesting to me, especially in the context of what I see as a trend in the return of U.S.-based Bitcoin mining. Finally, we ended the week on what I think is an incredibly important topic, the state of privacy around the world, but in specific, what the coronavirus response might do to privacy in our lives. My fear is that the absolute and unfathomable bungling that's happening right now with the U.S.'s corona response might push some people to look over two authoritarian strategies, right? China using their surveilled financial transaction records to go

knock on the doors of everyone who bought flu medicine and cough medicine for a month before the coronavirus outbreak, that might seem actually appealing as compared to just disaster. So I don't know. It's too early to tell exactly how this is going to play out in the U.S., although it's not looking good and anyone who knows math thinks it's bound to get worse. But it's an important topic that we engage with, not just in the crisis of information and the crisis of health care system, but in the context of privacy. I have probably one of the best guests in the world for that, Ricardo Spagney, who you all know as Fluffy Pony, former lead maintainer of Monero here to discuss that and so much more about privacy. So all in all is a really great week. I hope that you

enjoy this recap. And I hope that wherever you are, you are getting prepped, staying safe, and hanging out with the people that you love the most. One last note. If you're you want to discuss any of the topics covered here, come join us on Discord. If you look through my Twitter profile, there's a million links up there or else just ping me at me on Twitter and I will send you the link. We've got a cool room called Breakers where I'm experimenting to see if the Discord format, this medium, is actually useful. And so far, I'm really liking it. So check it out there. But for now, let's listen to these episodes. Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW.

The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Monday, March 2nd, and today we are kicking off the week, kicking off the month, with a special interview with Matthew Graham. Matthew is the CEO of Sino Global Capital, which is based in Beijing, and he has an interesting perspective as someone who is an American investor, but based in China. Now, I think this perspective gives Matthew a really unique vantage point on a number of issues as it relates to the crypto markets, right? This is an industry that is from the get-go being birthed and growing up in different places differently, even though they are interconnected.

and Matthew sits at the intersection of some of those different perspectives. So I wanted to have him on for that reason alone, but obviously in the context of the world and the markets where they are, coronavirus is an overwhelming point that we just have to address. And so in this interview, I ask Matthew a little bit about his perspective, having watched how the China around him that he knows that he spent the last seven years in has reacted to coronavirus, and how is it, isn't it different than what our perception is here in the U.S.? We discuss further the perception of Chinese investors in both the crypto and the regular markets around what the impact of coronavirus might be.

But we also talk about more crypto-specific issues. We talk a little bit about what the difference is between 2020 and 2019 in terms of where the crypto industry in China is, what their focus is, what their level of maturity is. We talk about the Chinese digital yuan, the decept that is forthcoming and what that might mean for the markets as a whole. We talk even about enterprise blockchain and why it's likely to be a huge area of investment for crypto companies once things start to come back online and why the enterprise blockchain movement in China might look a little bit different than it did in the U.S.

So a pretty wide-ranging interview and not very long, again, I think that Matthews' perspective just as simply as someone who is from one place but based in another is a really valuable vantage point to understand the global realities of the crypto markets. So with that, let's actually just dive in and hear what Matthew has to say. All right, we are here with Matthew. Matthew, thank you so much for joining us. Hi, Nathaniel, great to be on the pod today. We're going to dive into a lot of topics today, I think, in rapid succession.

But just for context, can you share. with the listeners just a little bit about who you are and maybe I think also just how you ended up investing in crypto from China. The first part of my career was Wall Street, TMT-focused hedge fund, but personality-wise, I've always been very driven to be in the engine of change. So if I had been a little older in 82, I'm sure I would have gone to Tokyo. In 97, I would have gone to Silicon Valley. But after Bisco, I really wanted to be where the action was. And to me, that was China. For similar reasons, I was very attracted to blockchain, to crypto.

So I've been in China about seven years now. And for many years, we've represented international technology companies in China for strategic partnership and investment. The concept then was always that we would naturally and organically develop, up a sector competency. And once you start getting involved with blockchain, you can't help but becoming more and more involved. And so very naturally and organically, we became focused on blockchain, investing in international projects with Chinese strategic angles and such. How long have you been investing in, or involved in the crypto sector, the blockchain sector,

specifically in China? So we've been exclusively focused in blockchain for more than two years now, and we've been involved in blockchain in one facet or another since 2014. I remember, I think it was on Reddit when I first heard about crypto, and it was like the pizza thing. I think that's the first time I learned about crypto, and I've always followed it since then. the pizza that turned into a $10 million or $100 million pizza or wherever it was.

Let's take a suspension of reality for just a second and talk pre-coronavirus. I'm really interested, you know, obviously China since Libra has taken on a different role in the global blockchain ecosystem, right? Or they've at least been intentional about shifting their own narrative within this. Can you just kind of give us your sense of, before we get into the coronavirus changes, how you saw the blockchain narrative and the digital currency narrative evolve from your perspective in China over the last kind of six months, nine months? You know, I think it's important to understand that there are many different ecosystems

and many different constituencies that play into something like that. So I think for some of the crypto-ogs in China, it's just a question of, what even is this? Is this crypto? Is it not crypto? So how do we interact with something like DeSep? And people choose to do that in a number of ways. For some people, they saw it as an opportunity to introduce new people to crypto through kind of a halo effect. For other groups of people, they saw it as a business opportunity where they could service.

Many of the companies such as Alibaba and Pingon, which is a huge insurance company that are trying to find ways to integrate blockchain into their business. For companies like Tencent and Alibaba that have huge existing digital payments, businesses with AliPay and with TenPay, which is WeChat Pay. I think there's a little bit of an undercover story, which is that the Chinese government with DSEP is potentially competing with their enormously lucrative digital payments, businesses So there are a lot of moving parts here that are all kind of interacting. But the one thing then in common is that there are more eyes on blockchain and on crypto,

both in China and internationally as a result of DSEP and, of course, Libra as well. It's been fascinating for me to kind of sit and watch. When I talk about this about Libra with people, I feel like Libra was the starting gun, but really the thing that made governments care in a lot of ways was China's response to Libra more than Libra itself. China shrugged it off, like the U.S. initially shrugged it off. It would be a very different conversation today. Sure thing.

As backdrop to that, by the way, it is important to understand that the Chinese government had been researching and working on this behind the scenes for years. So they had four or five years where they were doing testing and, research and I wouldn't say stealth move because many people, including us, knew about it, but they in a very low profile way were working on DSEP for four or five years. And it was a question of timing. The Libra announcement may or may not have stopped their timing, but this is something for sure that was going to happen.

As opposed to just they saw Libra and they felt threatened or felt like they had an impetus to do something and then they made an announcement and then started. was not like that. It was already in the works for four or five years. It created context for them to kind of hurry up and finish, it feels like, in a lot of ways. We could talk about that a lot, but I think this is kind of relevant. We were, you know, beginning of January, turn of the year, everyone's writing their, you know, prediction post for 2020, and a lot of the conversation is around. We all have to rewrite that already.

Yeah, right? It's why they call them unexpected, right? But so, you know, it's all kind of Libra and DeSep and whatever it's going to be in the digital currency battles. And then coronavirus happens. What has your experience been just as someone who's living there and having watched it unfold? But then I'm particularly interested in kind of, you know, the weird schizophrenia that we've had, not just in the crypto markets, but in the larger markets as well of not reacting, not reacting, not reacting, at least in the U.S., in Europe. while this hugely significant event is taking place in China. Walk through the story of how you saw this unfold or your perspective on it. So as backdrop, I mean, we both work in the craziest industry, right, is blockchain,

is crypto. And being in China as an international person is also very exciting, so we said. Keeping the fact that I work in China crypto in mind, I have to tell you this is the craziest thing I've ever seen in my life. Yeah. Corona. I mean, it's just nuts. It really has been like out of a movie.

As backdrop, the stories that filter out into the West, if anything, a little under-exaggerated. And I think it's important to understand this is nuts. So what happened, initially, obviously we had a few news reports, start to be. trickle out and there was a situation in Wuhan, which is a city probably a little bigger than Chicago, even though it's not one of the very largest cities in China. It still has probably offhand, I want to say, 10 million people. We had some initial news reports and we had some concerns and things like that. And then we had Chinese New Year coming up, which is the biggest holiday of the year and you get, you know, more than a week off. It's also the biggest

migration period of anywhere in the world on an annual basis because you have tens of millions of people that go to their ancestral home and they spend time with their families, et cetera. So you had this vacation period coming up and you had a few news reports about something may be wrong in the city of Wuhan and all of something just boom. We're in. We're in a few news reports. We're just exploded. And it's been all, the coronavirus exploded. And in terms of attention, in terms of what was the national discourse here in China, it exploded as well. And it basically hasn't stopped for five, six weeks now. That has been the topic of the day, every day. And I think it's also important to understand that the country, for most of that period of time, the country,

with the biggest population in the world, $1.4 billion, it has just stopped. Many, many people have spent that entire time indoors, like literally just having food delivered and not leaving the economy. People are scared. And this is all across China. I'm about 1,500 kilometers from Wuhan now. We have a regional office in southern China, and I've been hanging out here. And despite being one, one, 500 kilometers away from the epicenter of the virus. This is also a city of millions of people where I am, and the streets are deserted. It's just like, it's really like a movie for weeks.

And I know people who have literally not even left their apartment during that time. I've never seen anything like this ever. I was not, obviously, in China, I was not here for SARS, but from what I understand, this is something very, very different. Picking up from that, what is the conversation? like among Chinese investors, right? How is it differing from the conversation that we're having in the West? Investments are on hold and everyone's trying to understand what's going on. As with much of the supply chain, which is impacting things internationally, as with much of China, just things

are on hold. For example, a VC buddy of mine who's one of the most famous angel investors in China. So he's doing things like organizing seminars with medical professionals, so he and his circle can have a better understanding moments like teach-ins from epidemiologists and other public health experts. He's almost having teach-ins, you know, like they do at Google, where they'll have famous people come in to educate on different topics. So he's been doing things like that, as opposed to, you know, focus on. on investments. And I think in many ways that's what much of Chinese society is doing right now.

Everything's on hold. Only in the past few days have there been some small signs of people starting to be a little less afraid and wanting to get back to normal life. Only in the past few days have there been signs of that. I mean, has that been kind of shared? I mean, I don't know if there's any different perspective among Chinese crypto investors if they're seeing this differently, or is it all just part of the same thing at this point? Certainly different elements of society are viewing this through different angles. I do think that Chinese crypto investors, they're trying to see to some extent if this is something that they should be speculating on, should they be going long or short?

and people in China all of a sudden are watching S&P 500 futures, which, you know, to trade crypto and you have all kinds of things going on. But I think it's everything is Corona. That's just everything for weeks. I feel like this is a continuously evolving scenario. So let's, to the extent that we can look beyond Corona, I'm interested in your take, how the markets are evolving in general, right? Like what is different about 2020 crypto,

2020 blockchain as opposed to 2019. We were talking just before the show about a couple of the things that are interesting to you. Sure. So I think in 2018 and maybe 2019, I think people were still a little bit hung over and wondering what the heck happened until all their money in 2017. I think it was a transition period for sure. And people were trying to say, well, ICOs obviously didn't prove sustainable.

What if we do IEOs and things like that? And from our perspective, it's very healthy that we've moved on from all of that because I don't think there was a big difference between IEOs and ICOs. To me, that's the repackaging. So I think there's been a transition period. And I think that finally we're really starting to see signs of a healthier market in many ways. for example, the transition from visionaries to cowboys to speculators and now professionals, professionalization, when I say professionals, that's not necessarily better or worse.

I think visionaries are probably the most amazing people and cowboys are the most interesting, right? But the new phase is that we're really starting to see professionalization of the space, which is a very healthy part of the maturation process. and I think we're really starting to see tremendous real innovation, especially in terms of the decentralized finance, despite the set packs that we have here and there with different attacks and such,

that's ultimately only going to make these platforms and these protocols and these innovations even stronger. So it's been a turning of the page overall. I think things are really developing recently in a healthy manner overall. So what are you guys looking at? What are you interested in from an investment standpoint if you're allowed to speak about it? So the most important aspect to us is the potential Chinese strategic angle. And so we are always laser focused on investments where it makes sense for China and where we can add strategic benefit.

That's what we never compromise. we tend to be agnostic on many different other aspects in terms of seed versus series A or B in terms of the different focus on of the project. But we never compromise on. Does this make sense for China? Is this something that's potentially undervalued or something that potentially could have a new gross trajectory because it could be introduced to the Chinese market? That's what we really want to see.

In that context, how much of it is infrastructure versus end products? What I'm interested in is kind of where your sense of the stage of development that we're at. So that's where we can be very agnostic. We want to see something that makes total sense for China, is not in China yet, and where we can bring it a huge strategic benefit. We're agnostic on many other aspects, But for example, we announced today our investment into FTCX exchange, which we're super excited about. And to us, that's just perfect because it has a world-class team that's enormously professional

and that we've gotten to know extremely well. They've got a clear differentiation in terms of their product. We think it has a great fit with industry trends. They are placing a huge premium on the Chinese market. but haven't fully captured that value yet. To us, that's a great example of what we look for. How do you think, from your vantage point today, how does the rest of the year play out for this kind of crypto or blockchain

with the China-centric perspective? Are we through the worst? Is it still impossible to tell? Where do you think the real focus will be for the next part of the year? Sure. So for China specifically, I think that once we, we turn the page from COVID-19, I guess it's called now, the primary focus will be integrating blockchain with different enterprise businesses in China. I think will be a huge trend. I think

it's very likely that China, by the end of the year, will be way ahead of much of the West in that regard. And a large part of that is because of the unique nature of China's economic system, where if the government chooses the strategic imperative, it's really a top-down economy, right? And so what we're likely to see is the same thing that we've seen play out in many other industries, such as solar, where the government decided

that solar energy was a strategic imperative. And we had this massive investment and over-investment in solar-related businesses. It's going to lead to huge take-up. it's going to lead to a lot of waste, but it's also likely to lead to Chinese companies leading the way in terms of integrating blockchain into their enterprise business in many unique ways. I think that's going to be a massive trend that possibly hasn't been fully realized in the West. Yeah, it's interesting. I feel like in the West, the enterprise blockchain idea is on,

not just a narrative down swing, but is almost cynical at this point. Yeah, exactly, right? Everybody kind of like took a crack at it and they had mixed results and they did a lot of different test cases and things like that. And it didn't really seem like it was working too well for them and a lot of people took a step back in the West, right? And that's quite different in China where the government is saying, look, 5G and blockchain.

That's what we're doing this year. So you're going to go do it. It's a top-down economy. That's the way things work. So I think many of those efforts will lead to nothing. Category number two, a lot of companies, if they don't necessarily want to follow that, they will try to label things as blockchain that really aren't blockchain if you look under the hood. But then category three is that there will be a lot of very interesting, real,

use cases that come out of it, if only because of the massive investment that's likely to result from this government strategic imperative. Yeah, I mean, if nothing else, it does create an additional external incentive to really try to do things. I mean, I think that the problem in some ways is that people's interpretation of the first enterprise blockchain boom here or in the West, in the U.S., was that it was sort of cynically trying to capture the larger excitement around crypto markets and just kind of get those FOMO dollars.

And to some extent, you know, you are still talking about an external motivation, but at the same time, it does create a little cauldron for experimentation that could have more durability and potential for outcome. Yeah, I think there's definitely some overlap between those two types of incentives. But the bottom line, I think, is that if there's a lot of. lot of government pressure on major enterprises to incorporate blockchain into their business models. There are likely to be some unique things that result from that that we haven't necessarily seen in the West where incentives are more narrowly focused on the profit model.

Interesting and weird times. It's so funny to almost try to clear enough space in the context of the larger kind of macro activity right now to actually talk about these things. as though they'll be coming right back on the pike. But we really appreciate you taking some time today to give your view from where you sit. And hopefully, you know, things starts to break in a more positive direction, although it doesn't necessarily seem likely just yet. Thanks, Nathaniel. Great to be on the park today.

As I mentioned towards the end of that interview, it is really difficult in some ways to get beyond the overwhelming macro context that is shaping all of our conversations, right? talking about enterprise blockchain in China as though, you know, huge parts of the economy weren't still shut down is a little weird. But I do think it's a good reminder that this too shall pass, even if it passes in ways that are incomplete or devastating. And the world will go on and markets will go on and building will go on and entrepreneurs will go on. So getting that sense of where the emphasis might be once we get through this global challenge,

is, I think, really important. So I appreciate Matthew taking the time to join the podcast today. And I appreciate your time for listening. I think that this week, you know, there's no way to escape the continued shadow of the coronavirus, the corona of the coronavirus, all on our conversations, right? We're just seeing the first confirmed cases in New York City, and it doesn't seem likely to stop there. So that will be a background text. But we also will continue to see just about and tell stories of how the markets continue to move forward and how crypto markets continue to move forward. So I hope that you hang out this week. I hope that you hang out this March. And until we're back tomorrow, peace, guys.

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, Crypto, and Beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Tuesday, March 3rd, and that means it is Super Tuesday. For those of you who are not in the U.S. or just not following U.S. politics, Super Tuesday is one of the most important days on the election primary schedule, the primaries being, of course, the way that the parties nominate their candidate for the presidency. In America, we've had a major shakeup over the last 72 hours or so.

It had looked like a runaway train for Bernie Sanders with maybe a little bit of a road bump in Mike Bloomberg, but on Saturday night, Joe Biden scored a huge victory in South Carolina. It was so big, in fact, that two of his opponents, Amy Klobuchar and Pete Buttigieg, both other contenders for the moderate opposition to the very progressive, the very left, Bernie Sanders, dropped out of the race and threw their weight behind Biden. So where we stand now in terms of the Democratic race is that there are two progressive and two moderate candidates left. There's Biden and Bloomberg who are the moderates, and there are Sanders and Warren, Elizabeth Warren, who are the progressives.

Right now, to look at polls and to look at prediction markets, it is a two-horse race between Biden as the moderate standard bearer and Sanders as the progressive stalwart. And really, in some ways, the question is whether anyone will be able to stop Sanders. That seems to be the whole thrust of this momentum shift in everyone throwing their weight behind Biden. It's not that all of a sudden everyone is excited about Biden. it's that there is a feeling of imperative to consolidate around a single contender, a single moderate contender to combat Sanders. So in the context of Super Tuesday of this big election moment, I thought it would be interesting to do a bit of a review of where the candidates

stand on cryptocurrencies and ask specifically who would be best for Bitcoin. This morning, I put that question to Twitter and six, hundred plus responses later, I'm going to share those results, but I'm going to talk through each candidate a little bit in advance. One last quick note before I dive in, a lot of my review was aided by CoinDesk's new special section called the Post-Truth election. They just pushed this live today, and I actually had no idea this was coming. I think it's super cool that they put this together. They had SAS from both within the ranks of Coin Desk journalists, but also people who are outside and just contributors like me to the CoinDesk network of content came in and actually

wrote up different takes on individual candidates as well. So highly recommend you go check out all of that coverage if you want to dive deeper into any of these individual candidates. This should be a fun one, even if it's not a particularly enlightening one. But either way, let's dive in. All right, so first let's talk about who's gone from the race. Three major candidates that we're going to talk about. I'm going to ignore some of the folks who have had less of an impact on the national conversation and focus on Klobuchar Yang and Pete Buttigieg. Amy Klobuchar had a late surge in New Hampshire, but ultimately fizzled out a little bit and like Pete Buttigieg, who we'll talk about in just a minute, ended up throwing her weight behind Biden. Klobuchar has very little in her record

on cryptocurrencies or any statements even to indicate how she feels about them, other than in a hearing in 2017, where she seemed to be interested in the law enforcement context, which makes sense in the context of her background as a prosecutor. Now, where Klobuchar kind of does intersect with some folks in the crypto community, at least, is her interest in privacy. In a campaign speech, she said, for too long, the big tech companies have been telling you, don't worry, we've got your back. While your identities, in fact, are being stolen and your data is being mined, our laws need to be as sophisticated as the people who are breaking them. So there's clearly some interest there. And what's more, this is backed up by the fact that she introduced or supported two bills around

privacy in 2019. So clearly interest there. What this might mean is that if she does play a role in a future cabinet position or something like that, she may be an advocate for some of the types of privacy conversations that people in this crypto community are interested in having. Let's now shift over to Pete, Pete Buttigieg, Mayor Pete. Pete got into the national conversation in a big way when he started to show serious traction in Iowa. In the weeks leading up to the Democratic caucus in Iowa, there were many polls that actually had Pete in the lead in that state. And there's some thought that if he had been able to win Iowa cleanly, in other words, if the Democratic Party there had been able to get the caucus to work correctly, that momentum might have been able to carry him

into New Hampshire, where if he had gotten just a little bit more of the vote, he might have actually even beaten out Bernie Sanders. And at that point, there's a whole new narrative and who knows what would have happened. It seemed like when that didn't work, when the caucuses were such a catastrophic failure, when Pete announced victory days before we actually had results, he really lost the narrative and lost his chance. But either way, he was a contender, and it's worth looking at how he felt, how he thought about cryptocurrencies. Now, one thing that's for sure about Pete is, that he was the darling of Silicon Valley. His fundraisers were largely from Silicon Valley. One of his major donors was David Marcus from Facebook, who's obviously the head of their Libra project. But he wasn't

necessarily just in bed with tech. He had suggested that he wasn't sure that Facebook should be doing Libra when they had so many issues around privacy to deal with. And in general, privacy and data was Pete's big focus as it related to tech companies. As opposed to Elizabeth Warren, who made it an explicit point to go after Facebook and other tech giants and say they needed to be broken up, Pete said that there could be some argument to, but more or less positioned it as a last resort. Still, it was clear that he had knowledge of this, right? He talked about how Amazon preferences its own products through its algorithms over the brands that are on its platform that aren't owned by Amazon. So really, in a lot of ways, we never got to know Pete's full feelings on cryptocurrencies. My guess is that

because he was a very intelligent politician who probably didn't think that they particularly mattered to most of the people that he needed to win votes with early. So who knows exactly what type of force Pete might be in a potential future cabinet or even just in the context of endorsing and pushing a candidate. Last up among fallen candidates that we're going to talk about is our boy, Andrew Yang, Yang Gang for Life. Andrew Yang was by far and away the candidate who talked the most about cryptocurrencies. In fact, he was the only candidate to really have a real position on cryptocurrencies, to have

strong articulated feelings, to speak eloquently at national events about cryptocurrencies and about Bitcoin. He spoke recently, and even during the Iowa campaigns to Joe Wisenthal on Bloomberg, about Bitcoin and about how it would be very hard for the government to shut down Bitcoin, to stop Bitcoin, even if it wanted to. So for crypto circles, this was the de facto candidate in many ways. Now, that wasn't always true. There are many who found his $1,000 for every citizen UBI proposal to be just another form of crazy socialism, and they weren't interested in that. But I think by and a way,

the most supported candidate, at least on an intellectual, philosophical level within the crypto community was Andrew Yang. And in many ways, he doesn't really have a follow-up. There are many people who thought that perhaps his support would just flow right into Bloomberg, being the other kind of pro-business, business-experienced, entrepreneurially experienced candidate in the race, but that just hasn't seemed to happen. In fact, when news reports came out that Bloomberg had courted Andrew Yang

about a potential VP role, it seems like part of his reason for not really following up on that was that the Yang gang just wasn't really excited about Bloomberg as a candidate. I do think that Yang strangely could have some impact on this election still. I think in one way, that could be

because someone might actually try to recruit him for one of these roles. I don't think that's crazy. But I think second, he has a big platform now. He's joined CNN as a commentator, which means that CNN has a commentator who can actually speak about these set of issues as it relates to these campaigns. But also, he has his Yang Gang still. And what we've seen is that the Yang Gang is not contingent upon just his success in the polls or anything like that. It is a group of people who are invested in him and his ideas and who he commands as a force, if not just as a poll force, perhaps, as certainly a media presence. So I don't think we've heard the last from Andrew Yang or the Yang gang in this election cycle. But with that, let's shift over to candidates who are still in the

race. First, let's talk about Elizabeth Warren. Now, in terms of electability and election odds, right now things don't look particularly good for Elizabeth Warren. She's more or less being counted out by the pundits and by the prediction markets, and it seems in some ways that her path to the nomination only lies in a contested convention where no candidate is able to actually get enough delegates to win the nomination cleanly, and it has to be sorted out at the Democratic National Convention this summer, which is, in some ways, a nightmare scenario for the party. However, there's no denying that she has been an intellectual force throughout this election cycle, and it will likely continue to be in the context of either a P-roll or who she endorses or how she gets involved in the

campaign. So her ideas around cryptocurrencies and tech and big banks in general are worth noting. Elizabeth Warren has not said much about cryptocurrencies. It has to be made clear. So anything that we're doing here is just guessing and speculating a little bit. Now, that said, she has been a huge antagonist of big tech. She's called publicly for the breakup of Facebook and is clearly not interested in the way that tech power is organized right now. What this might mean is that if she looks at cryptocurrencies as an extension of technology, she might not be a fan. Then again, as anyone versed in the Bitcoin community will tell you, these are not actually technologies at core. They are new financial forces, in particular Bitcoin. It's much harder to tell how she'd feel about that. The only thing we've

really ever heard from her around cryptocurrencies is skepticism and worry around consumer protection, which is very on brand for her in hearings in Senate Banking Committee hearings in 2018. She made it clear that she was very concerned about consumer protections in the context of token sales. So it's not impossible that Elizabeth Warren shows up as a Bitcoin maximalist to the extent that she's interested in cryptocurrencies. However, she is very antithetical in some ways to the average Bitcoiners perspective on the size of government and the role of government in society. So it's really hard to tell. From where I'm sitting and from the polls that I'm seeing, it seems unlikely that Warren actually wins the nomination from here. However, I would be shocked if she didn't have a

major role in any potential Democrat administration. So I think that it's really important to understand where she sits or might sit on some of these issues. Okay, now from here, we'll get into the candidates that I actually polled about. And yes, I left out Elizabeth Warren, one, because of all the poll numbers that I was seeing, but two, because Twitter limits you to four options. And I think that these were the most viable candidates and obviously the incumbent. So Biden first. So again, the question that poll that I asked on Twitter said, what U.S. election outcome would be best for Bitcoin? Biden is currently sitting at 5.6 of the votes, which is the lowest of the four options. Biden is the most center of the road down the middle candidate in the race. And like I said earlier,

the only reason I think we're seeing consolidation around him is a feeling that the Sanders juggernaut is moving so fast that we have to just pick one and stick with it. And he's the one that just stomped South Carolina. That's why we're there. If you look back across campaign statements and policy statements, there's really nothing to indicate that Biden has ever even thought about cryptocurrencies, much less formulated a strong position on it. So it's very hard to sit here and say what his position might be. I think probably the better way to understand what a Biden administration might be like for Bitcoin is just to say, what would the generic Democrat administration be like for Bitcoin? What would the generic Democratic administration be like for cryptocurrencies in general?

My guess is that the 5.6% of people saying that he would be best for Bitcoin are basically just saying that it's best for Bitcoin if government more or less just doesn't pay any attention to it, because Biden seems clearly not to be. I could be wrong about that. There could be multitudes lurking that I just haven't seen, but maybe let's shift off Biden because there's just not that much to say right now based on what we've seen. So next up, let's talk about Bloomberg. Bloomberg is really in some ways the only other candidate who as a candidate has said anything about crypto. When he published his recent financial plan, he mentioned cryptocurrency and specifically standardizing regulation, making it clear from a regulatory standpoint as part of that platform. Now, there were people who were

excited about that, right? Just having some clarity around how these assets are going to be treated and what they mean and what the U.S. government thinks they mean would be really valuable, It would give entrepreneurs more license to actually figure out how they're going to respond and react, right? It would give us something to critique and fight against if we didn't like those designations, but at least it would be clarity. Versus the sort of clarity we have now, which is almost more just a presumed clarity, or a look back and take the average of all the statements clarity, or a pay a ton of money for expensive hourly lawyers to tell you what the clarity is clarity. The reality is, though, is that Bloomberg hasn't really captured the crypto community's attention like Yang did. We talked about this a minute ago when we were talking about Yang.

It's not like a bunch of Yang people have then shifted over into the Bloomberg camp. Now, there are plenty of independence and independently minded people who are pro Bloomberg because they think he is going to be a technocrat administrator who keeps the economy going in a strong way. However, that's different than having a strong pro-crypto candidate. I do think that what's more right now is that Bloomberg from an electability standpoint has completely lost the narrative. His debate performances have been not just underwhelming, but extraordinarily damning, right? There is a huge psychic fracture between the Bloomberg in the campaign ads that have been

just absolutely everywhere, thanks to his unlimited budget, and the Bloomberg that was seen on those debate stages. Really, especially with Biden's huge win in South Carolina, even though Bloomberg wasn't on that ticket, it seems right now very hard for him to muster the momentum, especially with the other moderate candidates throwing their weights so heavily behind Biden. It'll be really interesting to see how Bloomberg performs today. But it wouldn't surprise me if in all but name, the Bloomberg campaign is done after today, after Super Tuesday. Still, in this poll, Bloomberg has done well.

Bloomberg got 20.9% of the vote for what U.S. election outcome is best for Bitcoin. Remember, I didn't ask, what do you think is the most likely U.S. election outcome? I said, what is best for Bitcoin? In some ways, I actually think that this 20.9% is the cleanest and most consistent of any of the poll results. My feeling, and again, I could be wrong, but my feeling is that those 20.9% of people who say that Bloomberg would be best for Bitcoin in the context of U.S. elections, is that they think that Bloomberg would just provide a generally pro-business, generally pro-innovation, generally regulatory light type of administration, in which Bitcoin and other cryptocurrencies could continue to grow and flourish

sort of on their own terms, right? We might see some more pro-business, pro-innovation officers in places like the SEC. We might see support for things like Hester Pierce's sandbox for securities and tokenized securities and tokens. So I think that while it's looking unlikely, like I said, those 21% of people who think that Bloomberg would be good for crypto are seeing it in a pretty similar light of more or less just keeping hands off and making it maybe just a little bit better for crypto companies in general in the United States. But let's close now with the two options who have gotten the most votes for this poll, what U.S. election outcome is best for Bitcoin.

candidate Bernie Sanders and President Donald Trump. In a weird way, I think that the reason that both of these folks are coming out ahead in this highly scientific poll is that there are two different factions voting for them, right? Who maybe actually diametrically posed in how they view the world. So first, let's talk about Trump. Trump is really confusing to me on one hand because he has made his stance on Bitcoin and cryptocurrencies very close. In a tweet from July 11th of last year, he says, I am not a fan of Bitcoin and other cryptocurrencies, which are not money,

and whose value is highly volatile and based on thin air. Unregulated crypto assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook's Libra virtual currency will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like other banks, both national and international. We have only one real currency in the USA and it is stronger than ever, both dependable and reliable.

It is by far the most dominant currency anywhere in the world, and it will always say that way. It is called the United States dollar. So couldn't be clearer in terms of how this person feels about Bitcoin and crypto assets in general. Now, you can make an argument that a lot of the pomp of that tweet had to do with really wanting to go after Libra, right? It was right around the time of the Libra hearings that that tweet came out. it also kind of reads like the Department of the Treasury might have written most of it for him. But still, this idea of Bitcoin and cryptocurrencies as just tools for criminals has come up over and over and over again. The U.S. official who talks the most about cryptocurrencies right now

is Treasury Secretary Steve Mnuchin, who is really seemingly not a fan of these assets and keeps kind of trying to put them in the box of regulation. Like even yesterday, Mnuchin, had a group of crypto industry people to talk about potential new regulations and just how the crypto industry was going to shape up in terms of how it fights crime. You also see with the rise of Iran talking about how they're going to use cryptocurrencies as a way to evade sanctions, a collision course coming with this administration. So it's kind of strange on the one hand that Trump is getting so many votes. On the other hand, there are a few reasons why people might be voting for him that have come up in the comments. First, there is just the idea of Trump as an agent of

chaos. This has been surrounding Trump from the beginning, right? There are many of his prominent supporters from particularly libertarian circles like Peter Thiel, who seem to be interested in his disruptive effect on the calcified system of U.S. governance. For people who are interested in Bitcoin, it could be that they just sort of think that Bitcoin is particularly well positioned in a time of chaos. A second reason, though, is that it's been very clear from Trump's position that he wants this stock market with its overinflated asset values based on aggressive central bank intervention to not only continue but to grow, grow, grow. He has taken to Twitter when he can't convince Fed Chair Jerome Powell to do what he wants behind the scenes to just basically bully the Fed into trying to juice the economy even further. in that light, there are many who believe that Trump is just going to continue to push QE, push QE, and that that effectively reinforces the raise on debt for Bitcoin, right?

In a world where QE is being lobbied for on Twitter in public by the president to the Fed chair, you got to think that a sound money like Bitcoin is going to appeal to a whole lot of people. So that's Trump. Trump had the second highest votes in this poll with 34.4% of people saying that his election would be the best outcome for Bitcoin. But then at the very tippy top of this poll was Bernie Sanders. Bernie Sanders sitting at 39.2% of the vote. 39.2% of people I polled, over 600 people at the time of this recording, said that Bernie Sanders' election would be the best outcome for Bitcoin. Now, this one was super surprising to me on some levels, but as I've watched people comment, I really have come to believe that it's because there are exactly two different groups who have

fundamentally different worldviews who are both arguing for this. On the one hand are the folks who believe that Bernie Sanders embodies the values of Bitcoin, that Bitcoin is an anti-elite technology that is a bank disruptor, that is an intermediary disruptor, that is a disintermediating force, and Bernie is that force embodied, obviously not focused on the same type of issues, but there is a kinship there. There are a lot of people who just really believe that there is an alignment there that is going to be good for Bitcoin. Now, the weird thing about this is that there's plenty of reasons to think that Bernie isn't

going to be super interested in cryptocurrencies. A campaign surrogate who talked to CoinDesk effectively brought up that they were a little freaked out by the connection that Bitcoin has to libertarian circles. What's more, Bernie seems super interventionist. And interventionism and self-sovereignty are sort of diametric. opposed views of what government is supposed to be. So there's a little bit of weirdness there. However, from a narrative standpoint, you can make the argument that Satoshi was trying to disrupt banks, and so is Bernie. So that's, I think, one part of this 39.2%. The other part, I think, is similar to

those who are voting for Donald Trump that has to do with QE and the deleterious effect of that administration on the economy being good for Bitcoin. So these are the folks who are looking at these policies that Bernie is proposing in terms of health care for everyone and college loan forgiveness and all of this sort of stuff and saying, where is the money for that going to come from? Well, the only answer is going to be some sort of MMT style unlimited money printing. And again, that is the scenario that justifies and makes the argument for Bitcoin in some serious way. So I think at the end of the day, the reason that you're seeing Bernie win is that there is this strong narrative argument for some people. But on the other hand, this very strong,

just rational argument looking at likely policies on the other. So to recap the results of this poll, what U.S. election outcome is best for Bitcoin. Biden came in last with 5.6%. Bloomberg came in third with 20.9%. Trump came in second with 34.2%. And Bernie won with 39.2%. Now that could change throughout the day,

but it's been now four hours, 625 plus votes. So I think it's pretty locked in. And like I said, it's interesting to me that the winners, right, the people who got the most votes, seems to be because they're consolidating two different groups who have very different takes on this. With that, though, I will turn it over to you guys. What do you the listeners think? Will the Bernie administration be the best for Bitcoin or is Trump much better? Is Bloomberg a dark horse to actually be the most valuable for cryptocurrencies?

because they'll get an actual common sense approach to how they can grow and develop. I think this is going to be an ongoing question throughout this election cycle and probably into the next administration, whoever it is. So thanks for indulging me on a fun Super Tuesday special for The Breakdown. We'll be back tomorrow with a normal episode unless something crazy happens, which it almost certainly will. All right, everyone, wash your hands. I'll see you tomorrow.

Welcome back to The Breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to The Breakdown. It is Wednesday, March 4th, and today we are going global with some exciting and interesting news for the global crypto community. So first we're going to talk about what I think is the most significant story of the day, which is the Indian Supreme Court reversing a ban imposed by the central bank,

of India around banks serving crypto exchanges. So we'll start there. Then we will turn our attention to Libra. Reports came out yesterday suggesting that Facebook's wallet would be dropping Libra altogether, but it seems now as though it's more that they will be adding dedicated digital currencies focused on existing fiat currencies around the world. Third and finally, we'll look at a couple little grab bag news items that are interesting and quirky and potentially relevant for the future. Before we dive into all of this, just a quick follow-up from yesterday's episode. Yesterday was Super Tuesday in the U.S., so an important day for primary elections, and Joe Biden had a massive day outperforming basically everyone's expectations,

including probably the Biden campaign, which is interesting in the context of the poll we ran looking at or asking which U.S. election outcome would be best for Bitcoin. Biden was by far the lowest after Trump and Sanders and Bloomberg. Biden only got 6% of the votes, but Biden looks better today as a candidate than he ever has before. Now, I think that probably Biden got such a low percentage of votes because he seems like he would kind of just be mainstream, whereas people are counting on Sanders and Trump, at least in this poll, to juice QE so much that it makes the case for Bitcoin all by itself. so maybe a little bit disappointing for the crypto crowd, but either way, a really interesting moment. But with that out of the way, let's actually dive into our first and biggest topic for the day,

India. Okay, so as I mentioned, India's Supreme Court has reversed a ban on banks serving crypto exchanges in the country. First, what was the decision before? How did this whole thing come about? In April of 2018, the Reserve Bank of India banned domestic banks in that country from serving crypto exchanges. Now, the reason for the decision given at the time had to do with your standard hit list of crime, terrorist funding, money laundering-based reasons, but many of the exchanges in the country believed that it was actually because the RBI, the Reserve Bank of India, was interested in exploring its own digital currency. And that was, in fact, reported that

same month that the ban happened in April that the RBI was examining whether a digital currency might be in India's future. A few months later, the Supreme Court of India endorsed this decision, this ban by the RBI, and ever since then, exchanges have been fighting it. So what happened after that? Well, obviously, the exchanges in that company were hugely nervous about this decision. It effectively put the kibosh in a lot of ways on growth and development of the Indian crypto industry, and so they filed petitions basically to get the decisions reversed.

Over the last couple years, there have been a huge number of... hearings around this and at least part of the argument had to do with regulatory overreach and whether the RBI actually had the authority to make this sort of decision. So I think the key thing to note here is that this has been a long battle. I mean, imagine that the crypto industry in the U.S., for example, had just been effectively shuttered in early 2018, how many of us would still be here fighting, Right? Really think about that. Two years on, how many would still be fighting for this financial future that we believe in and trying to spend our time on this versus just moving into something else? I think it's a really impressive feat just of endurance in a lot of ways.

On that note, I want to play a clip from Nishal Shetty, who is the CEO of Wazir X, which is a exchange in India that was recently purchased by Binance. He was on Bloomberg Quint in India this morning talking about just what this decision means. So let's listen in. See, I think we're all elated by what has happened. If you look at, you know, it's been around 18 to 19 months in the circular or close to two years now since the circular came into effect. And since the time of the circular, it has been very, very hard for crypto businesses in India. And most of these businesses are startups. These are not like large companies. These are startups trying to build on new technology but the RBI circular prevented us from having an effective business

which caused a lot of companies to shut down and if you look at it today there are thousands of crypto businesses globally but in India you can count a handful so I would say this judgment now opens up the floor for new startups to emerge in India and to attempt their hand at this innovative technology so the entire crypto ecosystem is related by what has happened sure we've been fighting for this and we're glad that the Supreme Court orders quashes this whole circular. So what happens next?

Well, India is a country of more than 1.3 billion people. And so certainly we're going to see, I hope, a boom of activity and excitement. On the flip side, there is still cause for concern, right? The government didn't suddenly reverse its perspective on crypto. It's still largely antagonistic. But this does have implications for other dimensions of that antagonism. Currently, the Supreme Court is hearing a separate case around regulations of digital currencies, and one of the implications of this ruling could be that the Supreme Court limits how strict

or draconian the government can be in its regulations of crypto. Another implication that some are talking about has to do with Libra. When Libra was first announced, its big pitch to the world was about banking the unbanked. Well, a huge portion of the world's unbanked lived in India, and very soon after, the Facebook announcement, the Indian government basically said that this would never be allowed in India, which really poured a lot of cold water on Facebook's pitch. In fact, I remember listening to the first set of hearings with David Marcus in the U.S., and people asked, they said, look, you know, the Indian government said that they're completely not going to allow this, and that's a huge

portion of the world's unbanked. So how do you deal with that? So what we don't know is exactly where this will all resolve. You still have a government that is largely antagonist. to cryptos, but it is undeniable that for, like I said, more than a billion people, the opportunity to participate in this space is now much, much bigger and brighter than it was just yesterday. So huge kudos to all of the exchanges that were involved in filing this petition, to the lawyers that actually fought and got this through, and to the entire Indian crypto community who has kept faith. They've hashtag India wants crypto for months and months and months. really exciting day for them that we should all be thrilled about no matter where you are.

But with that, let's actually turn to Libra, which itself was in the news yesterday, with some interesting developments. The Libra Association has been showing some signs of life recently. After a couple quiet months, over the last two or three weeks, we've had two announcements of new members joining the Libra Association. First, it was Shopify, and then second, it was the crypto broker dealer, Tagome. Now, I think what's interesting about those announcements to me is that they seem to indicate a shift in strategy from these big signaling organizations, right? The visas and master cards of the world who the Libra Association tried to recruit initially as a way to show governments that there was this big coalition,

to companies that actually have a similar worldview about the future of finance with them, right? Shopify is not a crypto company, but it brings a approach that is fundamentally focused on giving small business owners, small digital business owners better tools, which is in line with this whole kind of decentralized financial vision of the world. Well, news broke yesterday about an even more significant shift in the Libra plan, or at least in the context of Facebook's plans vis-a-vis Libra. At first, the information reported that the Facebook Libra wallet, i.e. Calibra, would be abandoning the Libra asset, right? This asset that was theoretically backed by a basket of currencies

rather than pegged to any one individual currency. That report was quickly amended as Facebook actually commented on this. And what came out is that it looks like Facebook is looking to include or create a set of digital currencies that are pegged to existing fiat digital currencies, right? So a USD-pegged Facebook digital currency, a euro-pegged Facebook digital currency. So a few different thoughts about this. First, I don't think that anyone who's been watching,

should be particularly surprised about this move. This was one of the biggest points of consternation for regulators, particularly American regulators, with Libra, was the idea that the Libra itself would be backed by a basket of currencies rather than pegged to the US dollar specifically. At the hearings that he participated in last fall, Mark Zuckerberg gave some indications that that may be one of the areas of compromise from them. So I'm not at all surprised to see some shift in that direction, even though this is actually

even less of a shift than I thought might happen, where Libra itself seems not to be moving away from the reserve basket of currency's scenario, but there are going to be a different slate of Facebook digital assets. The second piece of this is that it sort of is an unintentional or maybe intentional reinforcement of the idea that the Libra Association is independent and different from Facebook, right? Facebook now gets to say, no, look, we're actually building different digital currencies with our Calibra project that are pegged to specific assets, while the Libra Association, it does whatever it's going to do. A huge part of the argument for why Facebook should be allowed to

proceed with this is that it wasn't actually Facebook, right? Is that it was this new thing that Facebook was just initiating. The more that they do to actually make that real, perhaps the better it is in terms of their regulatory stance. The last thing, and this is kind of my hot take here, is that it feels to me like this might be better for Facebook from a strategy perspective than just launching with Libra. Here's what I mean. One of the things that people who have built products commented when Libra was announced is that there was no guarantee that Facebook would actually be able to build something that people wanted, right?

Just having 2 billion plus users doesn't mean that those users are going to want to build a product. In fact, history is littered with Facebook products that just didn't hit the mark, right? and you look at any tech company with a big user base, and that's the same thing. We don't even need to get into the history of Google products that just didn't work, despite their ability to put them in front of hundreds of millions, if not billions, of people. It is a big shift to move into using, in a day-to-day way, a new digital asset where you're used to using your dollars or your euro or whatever. Right?

And this is reinforced by the fact that most people who are interested in crypto assets, digital assets today do kind of see them as an investment opportunity, right? Even if they have long-term belief in the potential for those things to be like money, they're probably investing because they think they're the future. Thinking about wanting to spend them is a difficult thing. What Facebook is now doing when it launches its Calibro wallet by having just digital versions of USD or digital versions of the euro, people won't have a fundamentally different experience. They might just use it because it's integrated with Facebook Messenger and with their other services that they use, and it's effectively the same as paying with their bank accounts. At least it seems like it to them, right? So the mental

hurdle of using a Facebook digital US dollar is different potentially than the hurdle of using a Facebook initiated Libra Association Libra. Now, of course, we still don't have all the specifics about how these new digital currencies are going to work or how many of them are. is all reacting to one investigative report by the information, but I do think that it makes some amount of sense for Calibra specifically, the Facebook subsidiary focused on digital currencies, to take this path forward. Now, what I'm less sure of is what this eventually could do in terms of the relationship between Calibra and the Libra Association.

What I mean by that is that if Calibra's digital Facebook currencies just take off, does that make them less incentivized to actually care about fighting the regulatory battle around the Libre Association? I'm not sure. I think that's a future debate that we'll kind of just have to wait and see. And again, there's no guarantee that even if Facebook does launch digital currencies for every fiat in the world that they actually take off and fit in a product experience that Facebook users want, but certainly an interesting development, if nothing else. Three last things, the little news grab bag that I'd want to touch on just super briefly. First, the IRS held a little meeting slash conference yesterday with exchanges and other leaders.

And big surprise, the key takeaway was that people in crypto want more guidance. They want more regulatory clarity. This continues to be the theme of basically every regulator meeting with the crypto industry is get us, get us, get us, get us that regulatory clarity. Also in the news today was that Jeff Goldberg, a blockchain entrepreneur and independent researcher who had been digging deep into Twitter bot networks and was eventually kicked off of Twitter is suing the platform with the help of crypto-friendly lawyers, Stephen Paley, and Preston Byrne, for damages associated with them removing his account. This will be a really interesting

case potentially in terms of what the relationship of bots on these platforms, in terms of the questions of de-platforming that are a really important part of the conversation for many parts of the crypto community. So certainly something to watch and keep track of there. Finally, in what seems like a cool bit of hardware news, HTC is launching a router that also allows people to run Bitcoin full nodes. HCC announced the Exodus 5G hub today. They said it's a router that can run its own Bitcoin full node. And they added the Exodus 5G hub will also support a suite of privacy applications. Own your keys, own your privacy. People so far haven't had a chance to dig into it. They don't exactly know what the specs of this thing are going to be. So there's not

necessarily universal excitement or thrill about this device per se, but people are definitely stoked. We're seeing more self-sovereign technology where the Bitcoin ecosystem is being built into hardware from the ground up. So again, another thing to keep an eye on and something that is perhaps a cool moment in the hardware history of Bitcoin, if nothing else. All right, guys, that is the breakdown for today. A really exciting day for, I think, the Indian crypto community, obviously, but the whole crypto community. For anyone who wants to see where this technology and where this new financial system can

go, bringing in a huge portion of the world's population is not only exciting but essential. So, congrats to everyone who's involved with that and looking forward to seeing what gets built next. That'll do it for us though, so until tomorrow, guys, peace. Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to the Breakdown. It is Thursday, March 5th, and today we are going to be talking about South Korea. Yesterday it was news from India that a ban had been overturned. Today it is news out of South Korea that crypto will be fully integrated into the financial system, so we'll look

at that. Second, we're going to look at a new partnership in the Ethereum world that signifies some interesting shifts from maybe an era of private enterprise blockchains to a more interconnected public era, even in the context of the enterprise. Third and finally, we're going to look at a new mining project out of, of all places, New York State, and see what it means in terms of a larger trend of U.S.-based mining. As a new thing, if you want to discuss this topic, you can actually join me in our new Breakers Discord. So Breakers is a experimental discord.

I'm going to be running it for at least two weeks to see if people actually want a different type of conversation experience, not just around the breakdown, although I will talk about what goes into the episodes and what I thought about them in more detail there, but also just about the crypto industry at large. So you can hit me up at NLW on Twitter for an invite to that. And before I dive into the exciting topic of South Korea, I want to kick off with one small bit of news out of the UK. One of the few bright spots among central bankers for the past few years has been Mark Carney, who was governor of the Bank of England. He wasn't necessarily a wave the flag around champion bull for Bitcoin or anything like that, but he was much more engaged

with this space than the average central banker, right? When Libra launched, he was basically the only prominent central banker, not just to dismiss it out of hand, but to say there could be something valuable here. A few months later, he even took it to a new level and proposed that perhaps the world of central bankers should be looking at a synthetic hegemonic currency to replace the U.S. dollar as the global reserve currency. So he was thoughtful, right? Even if you didn't like his opinions, he was thoughtful. Well, we have a new poised to be governor of the Bank of England named Andrew Bailey. In 2017, Andrew Bailey said in an interview with the BBC that buying Bitcoin is similar to gambling. So that doesn't really bode well. Of course, people can over a couple years

change their opinions, so have his opinions changed it all? Well, let's just listen to this speech from Wednesday in front of the UK Parliament. So one part is where this whole debate started with, which is sort of so-called crypto assets of the Bitcoin variety. Now, they are in no sense, there's no guarantee of the value of Bitcoin. I've said publicly, because we were concerned about it, I'd like to actually think it was quite a good example of the SCA Act in promptly. If you want to buy Bitcoin, be prepared to lose all your money.

If you want to buy it, fine, but you know, understand what you've got. It has no intrinsic value. It may have extrinsic value, but it has no intrinsic value. That's one thing. The debate's really, and it, you know, my, it hasn't caught on as much as people sort of predict it would in a sort of slight early. On the one hand, he's not wrong, right? There is no guarantee to the value of Bitcoin.

On the other hand, I have to say, in a world in which just a couple weeks ago, global equity markets were reaching new all-time highs, while reportedly hundreds of millions of people were quarantined in the supply chain capital of the world, perhaps we might ought to be a little bit more careful about how we discuss intrinsic value. Anyway, on that note, let's get into something a little bit better South Korea. Okay, so as I said yesterday in India, we woke up to this great news that after two years of basically crypto being banned effectively, the Reserve Bank of India had banned banks and financial institutions in that country from doing business with crypto exchanges. That ban was overturned by the Supreme Court there. This hopefully creates new opportunities

for a ton of new Indian crypto activity and already we're seeing companies move into the void and move in to actually do things and offer new services. So really exciting. Today, it was news out of South Korea that we got to wake up to. The Korean National Assembly has passed a law that more or less officially brings crypto under the legal system. So what does that mean? It means that all of those financial action task force rules, FADF, that have been going

around are now going to be applicable to Korean crypto companies. That means more KYC, more AML. And so why is this good you're asking if all of a sudden we have this whole KYC-A-M-L regime? And the reason is a couple things. The first is that it simply allows for better servicing of customers, right? In a world where there's no clarity on where crypto industry, where the crypto industry, or digital assets fit, everyone's kind of making it up. And because of that, lots of times key institutions, particularly banks, just wouldn't get involved, right? Being a crypto business in Korea could be really difficult if you can't find a bank that's willing

to work with you. So one, allowing just the fundamentals of running a business or interacting with a business if you're a consumer is poised to get much, much better because the crypto industry is now in this regulatory regime. Second, it creates the opportunity for more institutions to get involved, right? More traditional finance players that have been on the sidelines, not for lack of interest, but for, again, lack of regulatory clarity and a belief that it just wasn't worth the risk

until they got that. This institutionalization, this formalization of the entire crypto industry, the entire blockchain sector into the Korean mainstream, opens up opportunity for those players to move in. Now, I think this is part of a much larger trend for 2020. More or less, my read on governments of the world

is that they are saying, look, we get it now that you are not going anywhere, that the crypto industry is here to stay. But man, if it is here to stay, you are going to play by our rules. Now, we can disagree with those rules, and I think citizen agitation around things like KYC is really important. However, those are the rules of the road right now. And you can bet that we're going to see more and more effort and attempts on the part of regulators to wrestle crypto businesses specifically into molds that make sense alongside those roles. So that's something that I'm keeping an eye on, and I think the South Korea news is just a part of that.

Second story. All right, for those of you who are listening to this, you may be a little bit skeptical when I say that this is the news that I'm covering today, and with good reason, I don't usually focus on enterprise blockchain stuff because so much of it is just press or just, you know, bluster or whatever, just the innovation optics, innovation theater of big corporations. But I think that this one is worth noting. So yesterday it was announced that there was a new partnership between EY, who used to be Ernst Nyeong, Microsoft, and Consensus, that is effectively a resource planning solution that is designed very differently from some previous types of enterprise tools. I won't get into all of the minutia of the baseline protocol, which is the

name of what's being built, but effectively it is a resource planning tool where part of the data is kept behind private company firewalls, but by building on a public chain, it can be used as middleware. So what does that mean? Well, let's take this quote from John Wolpert from Consensus. He says, I can say my purchase order is the same as the record you have of that same purchase order. The business rules that we employ to transform that record or use it to make new records is going to be executed by both of us in the same way. So basically, this middleware solution focuses on where two businesses meet rather than just things that happen inside a single company. So why am I focusing on this? Why do I think?

it matters. This to me is potentially a signal of an era shift, an epic shift, in the development of blockchain as a technology category. When the internet first started, the way that most corporations tried to get involved initially was intranets, right? Corporations are famously private. They are averse to solutions and new technologies that open them up to potential vulnerabilities, right? To their data being exploited to there being people outside who can know more about them. And the internet is the greatest force for that sort of opening up that we've ever seen in human history. And so companies tried to have their own private intranets, but we know how that went. Ultimately, everything shifted from intranets to the internet itself. And all of this sort of entire energy

around that technology category moved to the public internet rather than these private intranets. Now, that's not to say that there weren't private dimensions that connected and plugged into the internet. Obviously, we continue to see a constant surge of new tools that are specifically for companies, again, behind their firewalls that are theoretically data and privacy preserving and just for them, but that plug into that larger, broader public internet. To me, this suggests that we may be seeing some cracks in the private blockchain era of enterprise blockchain. Now, it's hard to say how much that's the case, and obviously I'm not making any sort of subjective judgments about tility of these tools, because frankly, this is a very

different world than the part of the crypto industry that I spend most time in. But I do think it's notable in that historical parallelism to the early days of the internet when companies really tried to focus on their own intranets before giving up the ghost and really realizing that the innovation here and the power here was connecting to a public shared protocol. Maybe that's what we're seeing here. Last up today, a story about a New York-based power company that has set up its own Bitcoin mining operation and is a huge source of discussion all around crypto Twitter today. Greenage power plant was first established in 1937, but today it is owned by a private equity firm called Atlas Holdings. And as part of a recent huge $65 million renovation of the power plant,

where they transformed it from coal to natural gas, they also installed 7,000 crypto mining machines that are basically mining five and a half Bitcoin per day, so something like $50,000 worth of Bitcoin every day. The company is able to do this profitably because they're working with what is called, quote, behind the meter power. So because they're producing power on site, they can power these mining rigs at extremely low cost. What's more, they think that they're in a favorable position, even in the context of the upcoming having, because of that consistency of the power price, which is really, instead of a market price for energy, it's more of a cost of production issue for them. So why is this interesting? Well, a couple of reasons. First, New York is probably

the most hostile state to crypto in the entire country, at least from a regulatory standpoint. So super interesting to see that this is being built up in the fingerlikes region of that state. The second is that definitely one of the top narrative watches for me in 2020 is a return of U.S.-based mining. And more specifically, U.S.-based mining that can capture energy that would otherwise just be siphoned off or burned off because it couldn't be easily captured or monetized in a different way. I think that we're going to hear a huge amount more about this this year.

We're already seeing international interests setting up shop in places like Texas to capture some of that low-cost power. And I think you're just going to see more and more of this story about U.S. mining coming back this year. Now, of course, energy remains alongside crime, I think, the two biggest areas of fud against Bitcoin, right? The cost of energy, the cost of the world of Bitcoin mining. I've watched as this story has come up on crypto-Twitter, folks from a more mainstream business perspective, again bringing up that narrative of, well, is this the best use of energy? This is how many houses that could power or whatever. And Bitcoiners, as you would expect the immune system of Bitcoin to do, attack it and try to counteract it and diminish the person who's asking the questions.

But I think that there's a better way potentially to respond to that. I think that there's two quote unquote right ways that I've seen that are maybe more effective. And I could be wrong and whatever. You know, fight however you want to fight. But To me, I think there's two approaches. The first is, honestly, to welcome this fud. I do think that it's reasonable in an open liberal society to have debates about how markets should allocate resources and where energy should be deployed. It is a reasonable thing to say, do we want to prioritize this use of energy versus this use of energy? So I think that to some extent we can just be fine and open to the fact that some people are going to disagree.

They're also going to disagree that, you know, we should use energy in some other way that we think is fine. There's disagreements in any open society about how resources are allocated. What's more, we live in a society where still more or less markets are going to dictate this. And if companies are able to make this decision for themselves, which they are, they're going to go capture that value. So it kind of doesn't matter what us Twitter warriors do in the larger scope of things. So that's part one. Part two is, I think that we should be discussing and talking about those instances. in which Bitcoin mining is allowing us to capture energy that would otherwise just go unused or

be burned off, right? It is making potentially energy systems more efficient. In fact, it is incentivizing energy systems to be more efficient. And it's incentivizing people to go out and capture energy that would otherwise just be dissipated. That is an exciting thing, even if you aren't interested, even if you find yourself not necessarily falling on the side of Bitcoin being quote unquote worth it from an energy cost perspective. I think we're going to get to see a lot more of that, not just in theory but in practice this year. And to me, that is the best most unassailable argument

is showing how the market mechanism behind Bitcoin mining is actually doing something good vis-a-vis energy, not just that we get to because free markets say you can't stop us. Regardless, I think that, like I said, I really believe that the U.S. mining narrative is going to be a much bigger part of 2020, and I think we're going to keep having this fud. So figure out what you think is the most effective way to combat this fud, or if you don't disagree with it, then figure out what's the most effective critique that you have. But either way, let's get ready for this conversation because

it's happening. It's on. And it's even happening in New York, which is just kind of cool. All right, guys, that is it for the breakdown today. We are back tomorrow with a really exciting interview. I'm not going to mention it yet in case for some reason it gets rescheduled, but should be a really, really fun one for your weekend. Until then, have fun, hang out, and I will be back tomorrow to break it down. See you then. Welcome back to the breakdown. An everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The breakdown is distributed by CoinDesk. Welcome back to the breakdown. It is Friday, March 6th. and today we have a very special episode.

So for a little bit of context, I want to go back to February 17th. That was the point at which most people in America were not paying attention to the coronavirus yet, but it had become a huge emergency in China already. On that day, China's English-language newspaper, the Global Times, reported that authorities in the province where the coronavirus epicenter of Wuhan was located had launched a very extensive search of fever patients. They were using financial transaction information about people who had bought fever and cough medicine since a month earlier, January 20th, to go look for and find people who had symptoms of coronavirus. Now, I tweeted that day, when someone tells you that only criminals

should care about financial privacy or says something like, I have nothing to hide, send them this. privacy is the topic of our conversation today, and I am joined by an illustrious guest in that context, Ricardo Spagney. Many of you know Ricardo better as his online avatar, fluffy pony. Many of you know him as the former lead maintainer of Monero, which is a privacy-centric cryptocurrency. Some of you know him as the co-founder of Tari, which is a new digital asset platform. But whatever the case, Whatever you know, Ricardo, what everyone knows about him is that he is an extremely poignant observer of privacy in the larger global context. In our conversation today, we really take a look across the globe at the state of privacy in the context of a number of issues that have come up over the

last month. Some of them are specific to cryptocurrencies. We touch on the rise of central bank digital currencies and what they might mean for privacy and surveillance. We touch on a case of a developer of a popular wallet app Dropbit who was recently arrested and accused of money laundering having to do with Bitcoin mixing from a few years ago. Most of our conversation, however, focuses on the larger global context for privacy. In that light, we talk about the attack on encryption from the powers that be in places like the United States. we discuss what the response to coronavirus might mean for privacy and how it could in fact not do what I was suggesting in the sense of warning people about what surveillance can do,

even if they're normal law-abiding people, but in fact have the opposite impact where China ends up looking like a paragon of response as compared to the United States. Finally, we talk about what it will take for citizens to actually care about their own privacy and why the apathy of regular people might in fact be the greatest threat to privacy in the world. Now, if this sounds bleak, fear not, Ricardo actually has a really interesting point for optimism that we get in towards the end. So I hope that you enjoy this conversation.

I know for me, it's one of the most important that we can be having over and over again. One last note, I wanted this interview to be as raw and as much like the conversation as possible. So it is much more lightly edited than our normal episodes. So without any further ado, let's dive in. All right, we are here with Ricardo, the man, the myth, the legend himself. Hey, thank you so much for spending some time today. And thanks very much for having me. Okay, so as we were just talking about, you know, the provenance of this conversation was a comment around an article on basically

around Bitcoin mixing and whether there were implications for developers of privacy technology. And what I actually want to do in this conversation is maybe zoom out and get your take on kind of the state of privacy across a couple different dimensions. But maybe let's start with where we actually started in that conversation. So basically, you had a few weeks ago, Larry Harmon, who is the CEO of Coin Ninja, which most people know through Dropbit was arrested on money laundering charges that had to do with his participation in Alphabet and a Bitcoin mixing software a few years ago. And one of the strands, one of the narratives after was that based on people's reading of some of the actual formal statements

from authorities, that maybe they were interested in developers of privacy technology. And your point was that that's not how you read it at all, that this was a specific case where there was much more going on than someone just building on a, building a privacy technology. So I guess maybe let's get your take on that specific situation first. Sure. You know, I think it's, the problem with a lot of this stuff is, like, I'm not a lawyer and most of the people commenting on these things are not lawyers. And so that can often lead to, um, you know, really weird interpretations. And I think the point that I, the point that I made there was if, if regulators were so

anti-privacy, like if privacy was just a thing that they bucked against with every fiber of their being, we would see evidence of it in other ways. We would see, for example, tall developers getting arrested. we would see all sorts of evidence of like all sorts of evidence of like a very strong anti-privacy stance and we haven't seen that. So sure, privacy coins or privacy enhancing cryptocurrencies are maybe a bit of a new world. You know, it's something that regulators have not previously been, have had to think about. but certainly when it comes to things like even WhatsApp and Signal and obviously Tor and I2P and FreeNet, there have been all sorts of horrendous things that have been stored on them and published on them.

So, you know, if regulators were going to take like a very strong anti-privacy stance, I really believe we would have seen evidence of that already. I think this is a good point and something that's important. One of the temptations, I think, when there are legitimate concerns about a regulatory response or a potential regulatory response in the future is that just the natural social media cycle amplifies it. So we focus on boogeymen that aren't there when there are actually plenty of good things to talk about that are right in front of us. So by way of extending this conversation, we have seen. where in some ways it feels like when we talk about, you know,

implications around privacy technology or new privacy technology and the firm of like privacy preserving coins, there are actually, in fact, things that are happening already in terms of encryption, it seems. That's, to me, looking at the U.S. at least, that's where a lot of these battle lines are, is whether technology companies that exist right now that have nothing to do with cryptocurrencies per se

are going to be able to extend and, continue with end-to-end encryption. Yeah, and I think that that, to me, is a much bigger battlefield. In fact, it's a battlefield where we've already fought and largely lost in Australia, where regulators in Australia have made a case for backdoor encryption, a strong case, and other regulators have brought into that. So, you know, I think that you want to pick a fight and you want to pick a side. I think fighting against so-called responsible encryption is a fight worth fighting.

And privacy coins, I do not think even feature on the radar of those regulators. They're too busy fighting things that they view is more insidious. You know, WhatsApp used by terrorists and as if. And, you know, like what are we going to do? force everyone to forget that encryption exists. It's not even feasible. Yeah, I mean, that's the interesting thing to me is, I guess, you know, what is your take if you have one right now on the state of that battle? I mean, I guess in the U.S. specifically is the context that I'm looking at. You know, the Electronic Frontier Foundation published

another kind of warning signal a couple days ago about the Graham Blumenthal bill, which they call a new path for the Department of Justice to finally break encryption. And it's all kind of part of this same trend where particularly Attorney General Barr's office has been holding up crime as a mechanism to try to get this objective, which it seems, I think, pretty bipartisan for many years to have these back doors. Yeah, I mean, it's, I feel like a lot of it is just a basic misunderstanding of the consequences of doing something like that. So the argument that I've made to people in discussions is if you had to ban encryption, what would you imagine is the logical consequence? Does encryption disappear? You know, when I say encryption, I mean encryption that isn't

backdoored. So you add these magical backdoors and then you ban all other forms of encryption. And then, you know, you basically just end up with a scenario where criminals and terrorists and, you know, people that are trying to serve nefarious ends, they're just going to use strong encryption anyway. Because, again, the math behind it doesn't disappear. The pieces of software that have been written thus far do not magically disappear. So in view of all that, basically all you're doing is you're saying ordinary people who might want to use encryption for totally normal reasons. Like maybe they don't want their boss to know like every message that they send. Maybe they don't want their email being read by their ISP. Totally normal things are now viewed as problematic. Because, of course, why would you want?

that, you know, you must be evil. You must be wanting to do something bad. Yeah. Well, this is the classic argument of, you know, we only need privacy. If only criminals need privacy, right? Only people who are doing bad things need privacy. I don't have anything to hide. I was thinking about this argument recently when in the context of coronavirus,

you started to see these tracking tools where governments, were making, we're actually making visible people who had purchased flu-like medicines, right, at pharmacies in the context of the outbreak. And this was, this seemed to me to be this interesting moment of seeing, I guess, what might happen in the world where there's a context all of a sudden for someone to care about what even regular people are doing, you know, with their money, with their time, with their community. Yeah, and I think someone pointed out the other day that China's response to Corona has been really in some ways amazing because they have just this incredible access to information, which is totally dystopian and not something that I think any of us find at all appealing. and yet their ability to rapidly respond to evolving scenarios is definitely something that weighs in their favor.

At the same time, I, you know, hard pass. I'll live with my non-dustopian future where they don't exercise has much control. But it is interesting to see. and I think that, you know, I think that we are, we're at a sort of weird space where, in time where people are torn, at least Western civilization, not so much in the East, but where people are torn between one, between still believing that the government is looking out for your best interests and, you know, absolutely in. capable of doing any wrong and at the same time sort of, you know, realizing that maybe that's not the case and they're starting to distrust governments. And so then they're torn. I mean, you know, you need, like in most countries, you need the government to look after you and help you in situations like this. You don't have much choice. At the same time, if there's a general

distrust of the government, that's just not a great position to be in. Yeah, I mean, it's really fascinating, I think, in some ways to look at this coronavirus response and weigh what it might do in terms of the public conversation about privacy. Because I do think that there's a couple dimensions of this. You know, we kind of started with what regulators are thinking about privacy technology and what their various motivations are. But then there's this other side, which is to what extent citizens care. And another classic, almost cliche at this point is that people don't care enough about their

privacy to agitate for it. And because of that, we're just the frogs boiling in the pot. And maybe we're already cooked, you know, and we don't even know it. But one of the weird things that could happen is if you do see a kind of large-scale epidemic in the U.S. and a real public health crisis, especially with how it's been handled, people might actually look over at China and say, hey, well, maybe they have something right. You know, so it could actually have the reverse impact that I first had when I saw that people were being posted for having gone to their equivalent of Walgreens, right? And that's the frightening thing, right?

So someone, I mean, a thing that people have asked me over the years from 2014 onwards is what do I think is the biggest risk to Minero surviving a decade or two? And my answer has always been and remains apathy, that people ultimately might not care enough about privacy. And if that's true for Monero, it's certainly true for everything, that people might just feel apathetic towards privacy. And you can see that in their choice of devices, that they're putting, you know, Alexa and Hey Google in their house. And they're just not really giving much of thought to whether, you know, that's being listened to on the other end or anything like that. And where it becomes really frightening is I've got a friend who has, he's probably got like,

you know, four or five Alexa devices in various rooms. And I'm not sorry, no, Alexa, the little Google HomePod, whatever they called, you know. And the other day we're talking and he's like, man, I swear Google's listening into me because I was talking with my wife about whatever, about getting diapers, and then Google was serving me ads for diapers. Now, of course, I know there's a bunch of research in this area, and most of the time, it's, you know, if you actually look at the person's browsing history, they actually did look for diapers two days ago, and they forgot that they looked at it on some other site, and then Google's remarketing and super cookie stuff picks up the fact.

that you were on this website looking at that page and now they know what to serve you. But of course, in his mind, no, Google must be listening. And yet he won't get rid of the devices. Like total paranoid overreaction, he still won't get rid of them. And so that is the level of apathy towards privacy that we have reached.

It's literally 1984, but instead of the government going and sticking microphones anywhere, we've gone and stuck there everywhere. Well, this is the fascinating, thing and how this played out different than 1984 in some ways is that these these tools came in through the Trojan horse of convenience, right? And that instead of it just being this, this horror state, it's this unbelievable deliver you anything you want, whether it's information or actual products state, you know. And so it's kind of like there's also a tradeoff element of people being

paranoid but saying, well, what can I do? I guess it's worth it at least or something like that. Yeah, and that's, I think that's really the, you know, the problem is that some of these arguments left in nothing to hide argument have been made in a very public way. And so people go, oh, well, I have nothing to hide. And so therefore. And the reality is that it's, of course, more nuanced than that, because it's true. You probably, most people might be law abiding citizens and have nothing to hide. But what law and whose law? and when the law arbitrarily changes and you don't know about it and now you're contravening it and there's evidence of it floating around not only for law enforcement to see but for your neighbors or your boss to see then it becomes problematic and so and i've always struggled and i still struggle to find ways of explaining this to people so that they understand exactly how dangerous the situation is and an illustration that i've used recently

is to explain to people is what if you made a donation to, it doesn't matter. It can be to really, you know, save the dogs foundation, you know, plan parenthood. It could be to a political party, whatever. And your boss found out about that donation and he does not share your views and because of it, he either makes your life really difficult or he fires you. That is a privacy leak. you're not going around bragging about the donation you made, at least I hope most people don't, but because of a lack of privacy, you know, your name got stuck on a website somewhere.

And people do this all the time, right? They back things, not on Kickstarter, but on some of the other things to back sort of more donation or non-profit initiatives. And then when they get to the screen that says, display my name on the website or on the campaign, they go, yes, yes, please, I want my name on there. And then they don't think about the fact that that's going to be cataloged somewhere that any 13-year-old with Google can go and find, you know, things that they've donated money to and make judgment calls about them. And that is just open, like in the air stuff, what we call OSINT, open source intelligence,

you know, not even like stuff that law enforcement has access to. And yet people keep doing this over and over again without thinking through the consequences of these actions, without thinking about the very real issues that it can create in their life, not because they are doing anything bad. They're doing something good. They're giving money to someone to help them, to an organization to help them, but that other people might disagree with those choices. It's a really interesting hypothetical because I think, you know, this is something that I share,

where you started with this line of thought was had to do with kind of places where the law might just be wrong, right? Where doing something out of sync with the law, again, or nothing to hide isn't just a matter of your browsing history or something like that, but actually could have major implications because you live in a more authoritarian state. Obviously, a big portion of the world, there's a big portion of the world for whom that is the normal state of things. and it's much harder if you've grown up in, you know, pro-markets, liberal kind of, you know, systems to understand that. And so I struggle with that analogy as well. But the hypothetical that you're posing, I think, is a lot more realistic for a lot of these folks. And I think it might be particularly acute now. You know, we're having a, obviously, a much greater polarization in American politics, at least than we've seen before,

that extends from the ballot box and political issues to actual identity issues in a whole different way, right? You have a very strong kind of cancel culture on really every side, even though different sides call it, where you are either in and you think the same things or you're out because you don't. You have a heretical point of view. Well, obviously people are complex, and they may find, or most people, I think, probably have some heretical view that is just a little outside of the orthodox of whatever group they're around, right? So maybe. Maybe it's in the south and you are supporting Planned Parenthood, right? Maybe it's you're in the north and you are supporting a pro-life group, right?

Maybe it's somewhere else and you have an anti-vax position or whatever, right? Whatever the context is, if you have a heretical point of view and that can be made public, there could be serious social ramifications to say nothing of, to your point, if your boss finds out and just doesn't really like it and uses it as a pretense. So I think it's a really interesting hypothetical that maybe gets a little bit closer to the lived experience of people rather than forcing them to empathize with a type of experience that they haven't had. Yeah. And I mean, it's good because that's really the issue, right? It's oftentimes when we're trying to convey how problematic this is, we use weird analogies or hypotheticals like, oh, what if you lived in Thailand and it was illegal to throw bubble gum onto the street?

And then you did that and you were arrested and people are like what. So, you know, I try to find ways of really empathizing with people with the fact that this is a super weird thing to think about. And hopefully, you know, that helps them really come to terms with how important it is to grab hold of your privacy and really protect it, really shield it. So I've just a couple more questions for you. And so picking up on that thread, have you been watching the conversation around Clearview AI at all? And if so, do you think that there's any potential that that company in particular freaks out people sufficiently to start paying attention? Or is it likely to be just another thing that kind of doesn't register on most people's radars? You know, I think, so I guess to some degree, it's a little bit like China, right, where they are so far advanced when it comes to stuff like this, when it comes to facial recognition and pumping that into systems that, you know, that are centralized, that give access, give them access to,

all sorts of information on people. And at the beginning, that certainly, I'm sure the argument was like, look at all the good that this does. But now over time, people are starting to realize how incredibly dangerous it is and how incredibly dangerous it has become. And so why have they realized it? They've realized it because of stuff like the social credit score, you know, the fact that something that they did three years ago now suddenly turns around and bites them.

And they never maybe expected that before. They certainly shouldn't have expected that. And so I think that to a large degree, we're going to see the same, right? Stuff like Clearview, certainly really powerful software and a really powerful system. and absolutely I have no problem with law enforcement advocating for stuff like this but it is going to eventually become a cat and mouse game like most technology does right or stuff like this is quite invasive if you think about and back in the day when the internet was new and young and privacy was kind of the last thing on anyone's mind there was no

there were no VPNs, you know, there was no need to hide your IP address or concern about, you know, browsing habits or anything like that. Over time, it became an issue. And, and so now you sort of, you know, fast forward to today where VPNs are not uncommon. And, you know, even people who aren't particularly obsessed with privacy will use a VPN because they understand the risks, the security and privacy risks of using the internet at like a coffee shop. And so I think to some degree that's because of shared experiences, because of what they've seen on the news and so on. So stuff like Clearview, great, fantastic.

But eventually people are going to start using technology to counteract it, whether it is walking around with face masks on or whatever it is, they're going to start really, you know, people will start rocking the boat. And of course, those early adopters of antifacial recognition technology will be people who are a little bit paranoid and so on. But it trickles down, just like VPNs have trickled down. Just like intern encryption in messaging is trickle down to WhatsApp.

Okay, yeah, I mean, WhatsApp's another conversation. But still, the fact that this technology trickles down, I think, is a, it gives me hope for the ability for people to reclaim their privacy despite the existence of systems like clear view. I think that's a great point that part of the answer might not even be just a mass shift in consciousness, but giving people tools that are just as good, just as convenient, that have this built in so that making a shift isn't disruptive to the way that they operate in any day.

Well, I've kept you for longer than I intended to because I think this is. this is such an important conversation. I have just one more. You know, I think I share your sense that obviously the conversation about privacy is much larger than crypto and digital currencies. However, I do think there's one sort of part of this industry that I'm watching with particular regard to privacy this year is the emergence of central bank digital currencies and what that might mean for kind of this larger battle of privacy versus surveillance. So I wonder if you are spending any time thinking about the implications of a Libra or more likely the implications of, you know, DSEP or a Chinese digital yuan or a, you know, a digital dollar and what that might do

for this whole conversation with regard specifically to people's financial privacy. Yeah. So, so CBDCs are, again, you know, there's definitely some level of like, oh, wow, that's kind of interesting going on in my head. Not so much from a sort of anti-censorship or censorship resistance perspective, but just from a making digital currencies the norm. And I think that that sort of paves the way for Bitcoin and, of course, other currencies like Minero that offer something slightly different to be more widely accepted. I would be very, very, very, very surprised if, you,

You know, any CBDC or any sort of basket-based centralized currency like Libra has any meaningful privacy. You know what I mean? They, if you look at the backlash that Facebook had from regulators, it is clear that regulators do not want that to be a thing. And I think that that's what we're going to see. I tend to agree or actually producing a big podcast series around the idea of. of this battle for the future of money. And certainly going back and looking at the immediate regulatory response to Libra, you know, the privacy issue and the unwillingness to trust Facebook is right at the center of it.

Well, listen, I really appreciate you taking the time. I think this is such an important set of conversations for right now with some interesting new context over the last few weeks. So, Ricardo, thank you so much and really appreciate you. Thanks so much for having me. It was a lot of fun. I think for me the most optimistic takeaway from this conversation is Ricardo's sense that there is this set of technologies that are becoming mainstream even though they don't seem to be dominating news cycles. So VPNs have become something that even normal non-paranoid people use. Face masks are becoming something that is more common and certainly could be accelerated by issues like the coronavirus.

The idea that perhaps the technologies to prevent privacy loss could become as convenient as the technologies that destroy and threaten our privacy is something that is worth holding on to. That's going to do it for this week of episodes of The Breakdown. Next week we have an even more interview-packed week with some really interesting people looking at a huge array of global issues from the crypto industry and beyond. I hope you are heading off to a great weekend wherever you are, and I hope that you stay safe doing it. Until next week, peace.