The Pomp Podcast - Matt Odell, Co-Founder of Final Message: The Past, Present, and Future of Bitcoin

Episode Date: August 7, 2019

Matt Odell is the co-founder of Final Message and co-host of the popular podcast episode "Rabbit Hole Recap" on Tales from the Crypt. In this conversation, Matt and Anthony Pompliano discuss Bitcoin, mining, interest rates, Bitcoin twitter, financial privacy, and where Matt believes we're going in the future. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine.  Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Matt O'Dell is the co-founder of Final Message and co-host of the popular podcast episode Rabbit Hole Recap on Tales from the Crypt. In this episode, we discuss Bitcoin, mining, interest rates, Bitcoin Twitter, financial privacy, and where Matt believes we are going in the future. I really enjoyed this conversation, and I hope you do as well. Want to know who has the best URL? Crypto.com. That's right, Crypto.com. They're a crypto platform with one goal, motherf***ing mass adoption. That's why we're all here. We're

trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out. Tell him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you, always. Ever wanted to get into mining and didn't know how?

Don't worry, your boy Pomp's got you. Everybody got some electricity and Wi-Fi. All you got to do is go to CoinMine.com. You buy a CoinMine. It's like an Xbox or a PlayStation that helps you turn your electricity into Bitcoin. That's right. You purchase it. It shows up at your doorstep. You pull it out of the box. You plug it in, connect to your Wi-Fi. Five minutes or less, you're mining Bitcoin. All you have to do is control it from the mobile app they provide, and then you receive over-the-air updates that add new coins and new features on a consistent basis. Kind of like how Tesla does over-the-air updates and updates the car software. Just you're updating your CoinMine. Consumer mining made easy.

That's right. Go to CoinMind.com, tell them Pomp sent you, and thank me later. only. All right. Bang, bang. I'm here with Matt. This is a long time coming. Probably one of the most prominent Bitcoin maximalists in the world. Is that fair to say? That's a little bit, a little bit too intense. I don't know about that. Too intense. Let's start with just your background and kind of how'd you get into Bitcoin? You know, I was just, I discovered Bitcoin in 2012. I thought it was gonna fail uh you know i thought it could never work and then it it pumped in 2013 and while it was pumping in 2013 i was like shit maybe this could work and i jumped into it and i just tried to figure out how it couldn't work and the more i went down that rabbit hole i was like more i was

more and more confirmed that it would work and i basically came up with the conclusion that even if it didn't work long term it would work short term and i can make a bunch of money from it and and then the rest was history it was you know you just when you my dad taught me from a very young age that if you invest in something you should know what you're investing in and just everything you know from there i just not only was i investing but i had to learn as much as possible real quick there's a live stream going on for those that are just listening to this jack Mahler's coming in hot what's up brothers what's up Jack um so why did you think that it had a low probability of success when you first saw it was it just like this is such an ambitious thing that

it just naturally is a low probability or were there certain aspects of it that you you didn't believe in or didn't understand or like what would you say about that was so we were post Snowden at that point post Snowden in this you said 2012 yeah okay we were post-Snowden and we were post-financial collapse right in 2008 right so I grew up into the financial collapse yep and I was a New Yorker so a lot of kids their parents were Bear Stearns and Merrill Lynch and everything and I so I saw that unfold and everyone's you know that like basically said to me as as a young kid you know everyone who pretends they know what the fuck they're talking about is just winging it all at the same time right so that opened up a ton of of thought

processes to go down in in all all facets of life right and then snowden happened and i was at that point i was like fuck we can't trust american companies right at that point i thought you know i had i already had a fuck the man kind of attitude but i was like even if the u.s government spying on me like i was you know i was a google fanboy like google protect us you know and what was it a don't be evil yeah don't they won't be evil they told us they're not going to be evil we're going to be good um you'll just use the built-in security settings or whatever google gives you uh and then i discovered bitcoin and i was like okay this is pretty awesome um it kind of combined all those those things together into one um but i i thought they would

squash it you know i thought they would i i i thought the response was going to be way more aggressive than it ended up being okay and i thought it was going to be easier to squash than it ended up being so when i had that realization when i was like oh shit they're gonna have to do a lot more than i thought i was like okay i'm i'm in this is it and so uh was there one moment where that switch happened from like oh this is cool but uh unlikely to be successful to like um in or was it more of a gradual kind of like you're gaining confidence in the fact that this is going to survive so the other thing that happened was you had the online gambling ban in america right i may or may not like to gamble so i actually the first thing that

clicked for me was even if it's just used by americans to gamble online it should be it should be you know moderately successful right so i thought that was like a good bridging point you At that point, I wasn't saying, oh, this is going to be the global reserve currency of the world. We've come a long way since then. So you go from maybe but unlikely to like, oh, this thing's not going to go away to – before we get into some of the nuances, like where are you today? When you think of Bitcoin, like what is it to you and then where do you think we're going? Like how big can it get? Is it a global reserve currency at some point in the future?

like where's your kind of vision of the the future i think bitcoin is the best money we've ever had um i think bitcoin is like essentially like a global escape hatch it allows us to as individuals to voluntarily opt out of a basically a shitty hand that young young people have been given um i mean i sent my first bitcoin transaction before i ever sent a bank wire right and now i send bank wires and i i look over it like 25 times you know like marty always says like oh i'm still double checking my addresses i always get worried when i send bitcoin like to this day i get worried when i send a wire like i because even if there's like ways to reverse it like who wants to spend hours on phone trying to figure out where the money went and where what happened so i i to me

i immediately see that that change in friction that whole thing is digitally native uh and to me like i have like i have real money and then like i have us dollars like that i have fully made that transition in my head with my own mental uh it feels more tangible to me even though there's no physical thing to hold in your hand it feels so much more tangible it's like really hard to put uh put my finger on on that feeling but it definitely exists and i think that anyone who's a bitcoin or it feels that uh and then at this point like it doesn't really matter i i mean i think that it could be the global reserve currency we're sitting on that but even if it's like magnitudes less like it's still gonna pump a shit ton right so i just the thing to me when i first

like really it hit me like wow this is different and this is better it's like everything about bitcoin that i think people who believe in bitcoin usually tell folks is so theoretical and so like uh sophisticated around sound money and inflation it's like these really complex topics so you've got to start with like what is inflation why it is how does that be basic currency what are the problems with that like all that to explain like sound money is important right but the most practical thing that i ever experienced was uh i forget where i went um but i was in the airport and i was about to leave and i had to change money right so i had to change from us dollars to um i literally think i was in uh korea right i remember thinking like how stupid is this like

literally they won't accept the money that is accepted somewhere else because it's just you know a different piece of paper right or whatever and to me that was when i was just like we should probably have a universal global money right and so i gave technically like your credit card acts that way even though it's not money it's credit yeah but that's when i started to realize like oh it's not just like sound money in the more complex like structural things like there's very specific practical you know use cases or practical examples of where bitcoin is better than fiat currencies it's just going to take a really really long time because if you start with just take that example how many people actually exchange money every year when they travel like that's a small

part of the population right and most people don't even travel with cash anymore well then a whole other thing they just skipped it and went went to credit cards and but then your credit card gets canceled you have no money or or uh you ever have you ever called like uh for the longest time i would call the credit card company be like hey just so you know like i'm going to x country like don't shut it off basically please don't shut it off on me and then like recently over the last i don't know a year so now they say you don't have to call us right and i and i still like want to call because i feel like wait no i want you to want me to call you when i travel like you shouldn't be approving i wonder if that's because they know they're like tracking whether or not

you bought plane tickets stuff like that like i never called my american express but i buy my plane tickets with my american express i'm like here guys just so you know i don't feel like calling you but yeah you know all right so that leads me to um so so i just want people to understand where you're coming from a bitcoin perspective uh there's a bunch of topics i want to talk to you about the one that you've recently been talking a ton about which uh i'm like almost 100 in agreement with you and i think that you could go stand on top of the empire state building screen till you're blue in the face about and nobody will care because they don't think about the second and third order effects is this idea of like kyc can be dangerous and so just explain

like what you mean by that and then we'll get into some of the nuances of it well so kyc is they're essentially aggregating all of your important data all in a central database that either they can use or they could get leaked they could you know get hacked and they can lose it so like you have to you trust them in two two regards when they take your kyc that you know your customer data uh your trust you're trusting them to use it properly properly whatever that is and then you're also trusting them not to fucking lose it and they constantly lose it we see it all the We just had the capital one Hundred million people right and in that case

So people didn't even realize you were trusting capital one But you're also trusting Amazon because capital one was storing on Amazon servers, and then it was an Amazon employee Right, you know Amazon runs the internet basically they got AWS everyone uses AWS and Amazon employee was the one who compromised the data Yeah, okay, and capital one didn't even know the data was taken until someone saw it Put two and two together and told them so To clarify, I believe what happened is it's an Amazon employee who left the company but during the employment like figured out some vulnerability and then went – got the data. And I read an article and it looked like they were almost like not being malicious but also they knew that they were breaking the law. Like it was almost like this weird like, oh, here, I'm like uploading this to this chat because I don't want it to be on my computer so that they knew it was bad.

But they weren't trying to monetize. Yeah, they – like she wasn't trying to sell it. She wasn't trying to like do anything with it. She just wanted to leak $150 million or whatever. I don't even think that she was trying to leak it. Like what it looked like to me was it was more like – at least from the article, it appeared like she was more like – it was an engineering exercise of like, hey, I can get this. And then she had written code and, like, stored it on GitHub, which literally had, like, an IP address or something, like something that pointed to that database of where she got the data from. And that's how they ended up putting it together is because somebody saw the GitHub code and then literally was, like – they sent an email to Capital One.

It was like, hey, by the way, I think somebody has your data. Because they're selling it. But she wasn't selling it. I'm not sure. Yeah, yeah. Who knows? But anyway, that's all moot, right? Yep.

The point is, is they collect all this information. they know your address they know your phone number they know your email address pretty much no one ever changes their phone number anymore so that's like a very big identifier then they know your social security number which people still pretend is like private information you can open like bank accounts and people's names and and take out mortgages i don't know you could do tons of shit with the social security number um so like all your private information then if it's a company like capital one they know all of your payments they know your full payment history they know bank accounts they know all that stuff so when all that data is combined

um it could it's very easily for it to be used against you and there's a lot of um and especially like imagine so now we now we're talking about kyc imagine you're it's a bitcoin service they know how much bitcoin you own they know where your transactions are going they know uh yeah exactly those two key things and then you mix that with all their personal identifiable information and they know where you live they know who your family is like that gets really fucking scary really fucking quick so i agree that handing your data over to any company or organization that has some sort of security vulnerabilities is a huge risk right and we've seen uh i think it was uh marty bent um in his newsletter yesterday was like

we've seen again and again and again and again and he hyperlinked out to like and each one of them is not like you know hey somebody stole five records it's like they stole like 50 million people's personal information right right so you've literally probably the odds have to be like you know your information's been stolen 30 or 40 times at this point that's not just you know one person got it well the equifax one was really bad that was just like every adult american just all the information well and so like the opposite argument right like if i play devil's advocate if you were talking to a regulator for example like well we need kyc to prevent money laundering we need kyc to protect markets like all this stuff let's give them the benefit of the

doubt that their argument has some level of validity right we can argue over how important it is whatever but let's just say that's true how do you thread the needle between those two arguments right so like giving my data is a huge vulnerability for me and a huge security risk because now somebody else is in control of it they get hacked etc but there's this society that i've agreed to live in and there's some social contracts that are involved in that that say that the information is necessary to quote unquote protect the system or protect me whatever where do you think like the common ground is or like what's the solution to that trade-off i think that to use the traditional finance system you have to submit to all this information uh

it's by design it's how they set up the whole fraud system um otherwise they would just they would get screwed there there was there'd be no way for them to basically collect their debts yep um with bitcoin it's unnecessary okay that's one of the groundbreaking things about bitcoin because it's a push system it's completely unnecessary like bitmex you know makes millions of dollars every year and they never no one ever you know defrauds them no one ever steals money from them because it uses a bitcoin system they don't have to know anything about their customers Um, so, so as far as I'm concerned with KYC is if you're an on-ramp, I reluctantly accept it because an on-ramp or an off-ramp, there's no way, it's very difficult to get in and out there unless there's some kind of person to person element like BISC, where someone's sending it to you from their bank account directly to the buyer or, uh, I mean the reverse, uh, directly to the seller or something like local Bitcoins, you know, stuff like that. where you have person to person but if it's any kind of regulated on-ramp like we're gonna have

to deal with kyc uh but as i there's no excuse for a bitcoin company that isn't uh an on-ramp to be dealing with kyc and oftentimes the excuse is well you know we have to connect to fiat and stuff well i just you shouldn't do that you don't connect to fiat right like look at bitmex bitmex has no no fiat connection whatsoever so so your argument is there's two separate systems right the alternatives each other's the fiat system there's the crypto system in companies where there is a bridge naturally the fiat system is going to require the kyc right but you're actually making the argument that in the crypto only world so if you're going crypto to crypto if you're just using bitcoin etc within a system because there is no bridge back to that fiat system that kyc

is necessary shouldn't be done etc but like that's a very nuanced argument versus bitmex versus coinbase or whatever yep right yep or the on-ramp is actually where the kyc has a place right but if you don't have that on-ramp then that's where your analysis of kyc complete changes the on-ramp or off-ramp right this is like one of the issues as well like things like all the the bitcoin credit cards right where you're like spending and it automatically converts to fiat yep they have to do a full kyc yep see like i actually think that argument is much stronger than hey there should be no kyc ever right like just kind of blanket whether it's fiat or crypto there should be no kyc it can be hard to convince a lot of people to get behind that and then the argument of like

there should be full kyc on both the fiat and crypto world regardless of if there's on ramps off ramps i think that's pretty hard to get people around as well right and so the nuance of kyc in fiat world not needed in the crypto world but if there's a link on an on or off ramp then you have it as well like that seems pretty reasonable to me i think obvious i don't think kyc is effective at all at stopping money laundering i think we have tons of money laundering and it's not the types of people that would get deterred by kyc on their we were going to get to this point go ahead um but that's besides the point i mean the whole idea the the whole cypherpunk manifesto like the whole idea is that we do what we can right you run code and and you try and create tools to

circumvent that um and and that is like a tangible goal like we can have any all bitcoin only businesses can never do kyc and we'd be good but you have to follow like certain principles and this is part of the reason why i was like freaking out during 2017 is like everyone completely lost the plot because it does it goes farther like i simplified it by saying fiat on ramps and off ramps like if your service is domiciled in america is based in america you have american founders that are known uh you have major investors all investing in it your business is going to have to do kyc as well and i think the whole value prop here is is circumventing that friction circumventing kyc uh and and censorship resistance so if you don't have that you are it's worthless

whatever that is is worthless and i see and that's one of the big critiques i i throw at ethereum all the time is that i think like a lot of their so-called daps like the the main the main they think of all these technical reasons why that they're censorship resistant but the main issue they have is actually a people issue you know who's behind it they're known actors all this stuff like i want to see more like anonymous bitcoin companies with dope products yeah so like i don't even think you're using the word circumvent but like i don't even think it's circumventing right because what you're really doing is you're saying um it's very similar to like hey today we signed contracts on a piece of paper then all of a sudden somebody invents like

electronic signatures like you didn't circumvent the paper you just created a better way right like that's essentially what you're talking about here is you're not circumventing uh the rules of the law as in like a we want to break the law what you're doing is you're creating a better system that actually should be more compliant like the thing i keep going back to is bitcoin transactions are immutable when they're put on the chain right and so if you're a money launderer today and you're using all the different methods you have available you want to use cash because it's not traceable right but they want to ban cash too so the logic if that follows is if there's a system that's writing down every transaction right it's pseudonymous so it's not like you know the

police can just go search matt odell and figure out that matt odell did this transaction but what they can see is the wall-to-wall transactions etc and so if they deem somebody did something illegal it is actually you know i had a d agent come on he's just like look it's easier to track here than it is cash of course right right but i mean i think that's kind of an issue but okay so so i want to get in because i know that as part of this kyc thing privacy right so things like samurai wallet etc um people are working to take the pseudonymity of bitcoin and turn it into a much more private type transactions i don't think we're that why i feel strongly we're not there right but the work that's going on moving us in that direction i think can have a lot of

advantages from your perspective how do we kind of um settle on kyc privacy the pseudonymity but also not changing the core benefits or the core criteria and aspects of the of bitcoin itself well so to connect those two things together like one of the major issues we have with kyc is that bitcoin is a transparent ledger um which is is pretty immutable it's going to last for a long long time and by mixing those kyc that kyc information they could then follow you through the chain right yep all the transactions you do after that and that doesn't just de-anonymize you it also reduces the anonymity set of everyone else that you ever interact with right so like imagine in the most simplest way like imagine your boss pays you uh your your boss pays your salary right

and then you you buy a cup of coffee somewhere the famous coffee that everyone's buying with bitcoin uh the barista shouldn't know what your salary is right you pay rent you pay rent you know your landlord shouldn't know you lost 200 in poker yesterday right like so so there's some default privacy that you should be afforded without having to compromise that just because you want to use a certain asset yeah i mean i think i think that all this gets stuck in the weeds about all these theoreticals and people are shouting at each other and it gets it gets very intense uh but i think at the end of the day what everyone wants is the ability that this is why i like distilling it is i think what everyone wants is the ability to receive a payment from someone

or pay someone with the expectation that all your future and past transactions aren't completely visible to them right there should at least be some level of plausible liability there i think that's a perfect way to put it right and i think people are leaking way more information than they realize and it's not just on bitcoin it's across all of these networks i mean it's across non-crypto networks like a lot of people don't even realize that they're leaking all their venmo all their venmo transactions are being publicly broadcast my favorite part about venmo is they put a social feed and people go on and just read through the feed who does that i don't even all right so so So that's on the KYC, the privacy side.

I want to talk about tangentially related to privacy is you talk a lot about Wasabi, about Samurai, all these tools that are being built around privacy. What is your kind of best practice for somebody when they go to send a transaction and they don't want to expose the data, etc.? Are there a couple of data points that you're just like, look, you should be doing A, B, and C. you can use a bunch of different service providers to do it or different tools but like these are the key components to like protecting your privacy while using bitcoin so kyc once again just to go back makes all this so much more difficult right like if i just if you bought bitcoin from like a cash seller and the only person who could follow that trail is the cash seller and he's not keeping track of anything right or or if you mind right mining is the best mining is always the best you

You just – it's permissionless. You can plug in a miner. You just convert your electricity into Bitcoin. Virgin Bitcoin for the moment. I don't know if that's a term that will stick around. No, yeah. I mean I don't think that Bitcoin should have any more value than any other Bitcoin. If it does, then we've failed.

But it is the best way to get Bitcoin if you care about privacy. OK. So you mine Bitcoin, right? Now it's sitting in my wallet and I want to send the Bitcoin to you. What are those steps that you think are important? So right now the best tool we have is Coinjoins. And you can either use Wasabi or Samurai. I think Wasabi is a little bit more fleshed out right now.

There's still a bunch of UX issues. It's a wallet that you run on your computer. You send Bitcoin to it. And then it mixes it with other people's Bitcoin to basically give you plausible deniability. Let's say I mix it with 50 people or whatever. it gives you it's all of a sudden the transactions could have went one in 50 different ways and if you keep repeating that process you get increased increased levels of plausible liability so then at the end if i give you you know a utxo with bitcoin in it it'll be hard to see if not

impossible to see where it comes from but the thing is the way bitcoin is set up currently and the way because these tools are so new uh there's a lot of places where you can fuck that up so i think that like the most important thing for people to realize is that bitcoin isn't anonymous that most of these networks aren't anonymous um like the only privacy coin that's even vaguely interesting is is monero to me um but like no matter what like you should just assume you should you the the key is to realize how much data you're leaking that's the first that's the first step to take and then start trying to take steps into your own hands into learning how these tools work and trying to use them effectively. Samurai, their plan is that they're just going

to have an app on your phone. They're going to have a node in a box with the Noddle guys. They really like the Noddle guys. You buy the node, $400. You plug it in at home. You connect it to the internet. It syncs up. Now you've got a full node. Then you can pair it with your phone by just scanning a qr code right and then from that point on you're using your full node and you can just mix right on your phone just click a button it should be a lot easier and then the key here is is after the coin joins where a lot of people screw up is is spending spending them afterwards um and if you if you mix certain outputs especially outputs that are still linked to your kyc information still linked to you then they can track it people can track it

So, Samurai wants to make that post spend simpler. I'm hoping Wasabi does, you know, does the same. And to people who say, like, oh, well, that's, like, it's crazy, like, expecting people to spend $400 on a note, you can have a situation there where, like, 15, 20 of your closest friends are all using the same backend. Skrrt! Skrrt! Want to know who has the best URL?

Crypto.com. That's right. Crypto.com. They're a crypto platform with one goal. Mother f***ing mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com.

Go help your boy out. Tell him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you. Always. Ever wanted to get into mining and didn't know how? Don't worry. Your boy Pomp's got you.

Everybody got some electricity and Wi-Fi. all you got to do is go to coinmine.com you buy a coin mine it's like an xbox or a playstation that helps you turn your electricity into bitcoin that's right you purchase it it shows up at your doorstep you pull it out of the box you plug it in connect to your wi-fi five minutes or less you're mining bitcoin all you have to do is control it from the mobile app they provide and then you receive over-the-air updates that add new coins and new features on a consistent basis. Kind of like how Tesla does over the air updates and updates the car software. Just you're updating your coin mine. Consumer mining made easy. That's right. Go to coinmine.com. Tell

them Pomp set you and thank me later. So I've heard two arguments, right? When we go and talk to investors, I bring up CoinJoin quite often as a way to like there's technologies that are being built, right? They're very early, but there's encouraging signs there. And I get one of two reactions the negative reaction is so wait a minute i'm going to put my money into a pot that pot is literally going to get mixed up or laundered right and then it's going to come out the other end magically to somebody that sounds like money laundering right right it's kind of the the hyper negative response the positive response is if i take a dollar bill out of my pocket right now and i go and i deposit it in a bank right that dollar goes into the bank along

with all the other dollars and if you then go and uh and i tell the bank send it to you and you go and you pull a dollar out from your bank it's not the same dollar right so there's a um kind of you you put your one dollar into this pot of other dollars right and then you're getting a transaction on the other side and pulling out into a different dollar right that the fungibility is different than with uh with bitcoins where do you think the technology can evolve without regulators coming down and saying this is illegal right like like that's where i always go to is just as regulators kind of clamp down more and more on this stuff they're going to go to like the privacy technology right kind of like the argument against encryption in the 90s was like well if you have nothing to

hide why do you need encryption right that's what they always go for that's what they always well i can tell you a lot of reasons why and by the way you know 25 years later it's the standard now and they're but they're still doing it right like the ag just said that he wanted a backdoor crazy so where do you think that we can get on privacy you think we can get to full private bitcoin transactions or do you think that there's some roadblocks there that are going to make that difficult um i mean it really just matters how regulators respond I think that they've already responded way better by basically not responding than I expected. I mean, I thought I thought Bitcoin, you know, part of the reason like the whole concept of HODL like really resonated with me was because I was genuinely afraid that if you try to time the market in 2015 or 2016 or whatever and sold something like you wouldn't be able to.

be able to get back in like america would ban it and then it would pump everywhere else and i'd be like oh my god i can't like that would be like worst case for me that would be worst case scenario um so i i think but you still should don't be that cocky like the goal the goal here should be to try and accumulate as much bitcoin as possible your government whether that's america or somewhere else may very likely ban it they may very likely ban self-custody they may very likely ban coin join usage um try and take the proper precautions now try to leak as little data as possible try not to connect your known identity to bitcoin so you're more resistant in those situations like we're very much fucked in that regard um but uh yeah our names and faces are everywhere

yeah exactly they got us already but like that's that like that's the number one thing you can do i mean if you could actually if you find a place where you can buy without kyc and you can just like hide in the showers shadows and because i don't think any of this kills bitcoin i think it just delays it and it fucks over the citizens of whatever country it's in right like that's what people say like oh like coinjoin is great and like i love coinjoin if america just said coinjoins are illegal then anyone who sent like anyone who drew from cash app or something and then sent it to a coinjoin it's pretty obvious you go went into a coinjoin they just close your account right like that's and that that's that you you can use those fiat on ramps with coin

join right now they're not doing that so what does that say to me that says to me you should coin join as much as possible right now just in case because it isn't illegal it's just it's using bitcoin privately like it's a new tool to use bitcoin privately it's like saying that like signal is used for drug dealers right it's like the same exact thing yeah the the thing also to me um we touched on a little bit is that the idea of mining right like like the creation right or the distribution of an asset uh in the fiat world the only way to get dollars is all coming through kyc'd or or you know related avenues like you can't go in your house and just be like hey let me get let me create some coins right like like physical coins or let me create a dollar right

you go you get in trouble for that right whereas in uh bitcoin you can and so there's some dynamics that change right at least for the next you know 100 120 years whatever it is i don't think that regulators or even users yet understand the impact of that right like the idea that you can actually go and produce it yourself with the electricity in your home or somewhere else it's like you having a printing press right but but it's you're you're participating as part of the system and the the entire network of those printing presses are governed by the same algorithm or software i mean i look so first of all i think i think everyone that's obsessed with blockchain like the real innovation is distributed proof of work that's the innovation um explain uh

what you mean by distributing proof of work bitcoin mining right so like we have miners around the world that are mining they're getting paid by the network for work they provide uh it's basically a free market price for energy and and no one can stop those individual miners like you don't they're they're the existing miners can't be like well that new hardware that plugged in isn't getting paid from the network right that's a it's a fundamentally different change um than having like a setup like a ripple or something where you have known validators that are that are basically acting like a semi-trusted uh setup real quick uh russell kong i saw you come in and say what's up we got to give you a shout out russell okong is uh an nfl player and a pro

bowler who absolutely um has taken the world by storm by bringing bitcoin to a group of people that frankly nobody in crypto or bitcoin could uh could do themselves so uh big shout out to you man what's up russ um all right let's go back to um this idea of the distributed proof of work because uh i think that not only is it a technical uh advancement right and we've seen it uh grow and be adopted and kind of gain the strength that it has right it's the strongest computing network in the world um it has impact on the regulation right regulate you saw a congressman recently He's like, we cannot stop this, right? We cannot kill it.

Everyone who's tried has failed, and therefore, rather than trying to kill it, we should embrace it, and we should encourage innovation. We should get people to come here, et cetera. 100% confident it can't be killed? 90%? What do you think the risks are to proof of work or just Bitcoin in general? Well, I think in general, the cat's out of the fucking bag. Meaning Bitcoin, proof of work, both? Yeah, just everything.

Cryptocurrencies using distributed proof of work. Yep. I think it will be Bitcoin. I think that, you know, I think that it'll be really hard for them to destroy credibility in basically the UTXO set, which is the most fair ledger that I think has ever existed. Because you can never replicate, you know, my co-host on TFTC, Marty, likes talking about the immaculate conception. You can never replicate. uh so even if like for some reason you know the the bitcoin network failed um i think whatever advantage is like whatever we've learned from that situation will like continue on from the utxo set

right like that that most the most recent uh agreed upon utxo set but i mean i i just i just think that it's like bitcoin is more than just code right it's like all the people that believe in it and all the people that that put money into it and have have faith in it and i i don't i think the genie's out of the bottle like i don't and first of all anyone can spin up a new proof of work currency anonymously like this is where we go back like that's why i think like the whole icos with pre-mines and advisors on this on the paper all these guys are located in palo alto and shit like that's it was a perversion of the whole idea that like at least like the original the original shit coins like there was just some rando on bit you know online that was just posting an

announcement thread like i'm releasing this new this new coin and no one knew who he was there was no because when you when you start talking about storing billions trillions of dollars on these things like it's going to get a lot more there's things there that become worth it because there's so much money on the line for nation states and wealthy individuals you know like stuff like missile strikes and emps and shutting down internet and large swaths of the country like you can do some crazy things once it if it becomes this this global financial system the power went out and like a section of manhattan and people were ready to kill each other they handled it pretty well they really did but but it was uh it was weird walking around and you could

just feel energy in the air um so uh one of the things that um i've been thinking more and more about is i don't think that there is a single company that raised zero dollars and has reached 200 plus billion dollars in market cap right like every company took money at some point somewhere maybe they went a while without it but but eventually they had to raise money bitcoin's not a company but it is a network that we ascribe value to by the u.s dollar exchange price it is absolutely insane that this happened right like the to get to the point that we are in 10 and a half years where you have the president the treasury secretary congress senate they're all talking about the g7 the central banks etc and it came from somebody who is pseudonymous who

we don't think was very well connected you know it's not like something you know rich billionaire who did it could have been it could have been but but just the way that it was put into the world at least wasn't like hey let me go get me and all my friends to to you know put a bunch of money behind this um it doesn't appear there wasn't any investment right and it is probably one of the most naturally adopted technology products the world's ever seen okay right no marketing campaigns know anything going back to your idea of like this immaculate conception right that marty talks about a lot i don't think it can be replicated like i like i literally do not think you can replicate it at this point because there's too much attention right it was like it got to it

got to grow up in this nice little vacuum chamber where no one was poking it and prodding it and trying to fuck with it what a lot of people don't realize like you said it earlier right you are probably one of the most outspoken bitcoin uh proponents meaning that not like a negative or critical way but meaning that you are here's what i believe and i'm willing to say it publicly etc right well you said that i didn't say that i'm saying that i'm claiming that for him the part that always shocks me when i talk to you and others like you right most of them start out skeptical right it wasn't just like oh i saw it like i knew right that'd be ridiculous of course so like but what i think when people come in today what they just see is like oh my god who

are these crazy people who just like believe this thing you're like you know in your case you're like dude seven years right of and like the first two or three like i didn't necessarily think it was real right even if you talk to like safe dean and others they're like you know one two three four years of being skeptical or being highly highly cautious but yet optimistic and hearing the same keep in mind like hearing the same skeptical claims over and over again that we've refuted in our own heads we've refuted on twitter we refuted across a bunch of different mediums but it just keeps getting replayed over and over again it's like the same it's similar fun lines i don't know if you've seen uh barry silbert's been like screwing around with the cnbc host and he keeps

tweeting out like you know there's five levels uh well joe's the example he used at first now he's doing it with like andrew and melissa etc where he's like you know level one is basically you don't even know about bitcoin level two you believe or whatever it is and like level five means like you're like a shill right like full joe level yeah yeah like full-on bitcoin you know promoter there's also that for the like haters right like if somebody tweets at you on twitter and they're like trying to troll or saying something negative you can almost back into like ah they've probably been around for like six months right because the the uh sophistication of their argument against bitcoin starts out really dumb right like oh you guys are crazy you can't

replace money right then it joined then it goes to like oh it's slow the transactions don't work then it's like oh not only is it slow nobody uses it right it's kind of like there's this graduation and the part to me that's interesting is like you eventually get to like the level five of the non-believers and then they fall over and then they start believing right you've seen this with everyone from economists to guys like joe on well some people just dig their feet in because they regret it they regret it forever and they'll be forever salty yesterday when i did peter shifts uh the debate with him um at one point the conversation asked him like why like why not you know participate now right and he said something to me that just i literally

almost fell out of my chair he's like because it's over i missed it right everyone thinks they're late when they come in i thought i was late as fuck when i got in like i was like oh i could have bought bitcoin at 30 cents two dollars three dollars like if i was then i would have bought so much trace meyer uh was writing um run i think it's called run to gold it was like a a gold bug uh newsletter back in uh 2010 2011 and uh safety as publicly said that's how he learned about bitcoin originally was he was reading trace and trace was writing at the time that he missed it and it was like two bucks right like everyone thinks they're late it's incredible because you hear it in 2019 the same things were happening in 2010 i'm willing to bet in you know fifty

thousand dollar bitcoin hundred thousand dollar bitcoin they're all gonna say this exact same thing but i thought i thought ten thousand when people were making the ten thousand claims i thought fucking out of their mind and i was bullish as fuck you know but it's still ten thousand was like a moon number for me and like i actually talked to pierre about this like me and him were like super during the 2017 run yep we were super reasonable like up to 10k we're telling people like dollar cost average like don't put in more than you can afford to lose like blah blah blah and then like the second to pass 10k we were like hybrid bed condensation is coming out it's happening quicker than any of us expected we have not it's like the moon is 18 days 10k to 20k

yeah which which that was insane that was absolutely insane so here's what scares me is let's say that that type of cycle repeats is the next you know move is it like 150 to 300,000 in you know 20 days like i meant like the numbers of just doubling right so forget it 10 to 20 it's just if there's a doubling that happens right at the top of a bull market before it kind of turns over into a bear market the numbers may literally be like it goes up ten thousand dollars in a day Yeah, I mean, I just it's unfathomable. I can't comprehend it. So I don't try, right? Like, that's the beauty of stacking sats. Like you just, you just keep dollar cost averaging once a week, you know, every two weeks, every month, whatever it is, don't look at the price, just money you can afford to lose. And it should go up. Like, that's the theory. It's not a very complicated, too simple. you said stacking sats and uh i want you to explain what it is but just explain what it is and i'm gonna tell a story real quick that uh cracks me up to this day but what exactly do

you mean by stacking sats dollar cost averaging with money you're willing to lose that you can live without like not you know with money that you can live without uh on a reoccurring basis without caring about price and then taking custody of it and making sure that you know you have control of it no one can take that bitcoin from you all right so you and martin were the first two people i ever heard say stacking sats uh and when i saw it i was like that is genius like it just it makes sense it's catchy like people are gonna love that right and it took off um and i'm not sure exactly where it came from i think i've seen now you said that you guys didn't even come up with it well someone tweeted it in 2017 okay uh it had like no engagement he like disappeared

He's one of the smart ones The bear market app And he was gone This was just 2017 I think I heard it Before Even before that Yep

It's a really nice alliteration But like I popularized it on Twitter Like I created that The hashtag Yep And I just We shilled the shit out of it

And just constantly She just kept tweeting it And then it somehow Got associated with Cash App Because you guys were Talking much about Cash App Yeah And so one day

I remember I tweeted at you And I was like That's like a genius Marketing campaign Like You know Like you guys Will never get credit

for like creating that but like that's awesome and i and i was telling uh uh my partner jason the other day i said uh and then you came in and you like dunked on 360 like reverse window between the legs stick my elbow in the rim dunked on me in the comments it was like it's not a marketing campaign it's a lifestyle no no it's not crypto it's bitcoin it's not a marketing campaign it's a lifestyle i said that's the best crypto marketing campaign and you were like it's not crypto is bitcoin it's not a marketing campaign it's a lifestyle i felt bad about that dunk by the way well you shouldn't because you teed me up i've never told the other side of it is when you tweeted that and i was sitting there and i read it i literally died laughing and i said to

myself he wins this one like i'm just not even gonna say anything like he wins marty texted me afterwards he's like pomp is just being nice dude i was like i appreciate that but he shouldn't have said crypto and marketing campaign listen you the the other thing we should talk about with bitcoin that um is this whole like oh it's a toxic community the one thing that i can say we're not toxic well here's what i will say is and i this is coming from somebody who's been on both sides of correcting people and absolutely getting fucking destroyed on twitter at times right is the bitcoin community understands probably better than you would ever think they do there is nobody to protect us other than us meaning the community right there's no company

there's no marketing there's no pr there's there's nothing there other than the people who believe in bitcoin and use bitcoin and they take that shit seriously right and so when they see people saying like you know the norell rabinis and all those types of guys are really easy because they're just being so ridiculous that you know people just tee off on them but even inside their own community like how many people are considered in with the bitcoin community and it's not that people turn on them as much as just like it's like hey man like you set that a line right or or hey walk that back right and i think that that is drastically underestimated and it gets labeled as like oh it's toxic it's this it's that it's essential right in order for this to be successful

because if not then the detractors the media etc will all control the narrative and i think that's really really harmful to bitcoin for all the new people who have to come in yeah i mean i think there's plenty of toxic shit in this space i think uh there's plenty of toxic shit in the world but i don't think it's it's like bitcoiners are more toxic than the average um that's fair bitcoiners are very educated they're very defensive they're they see through bullshit you know we've been fed so much fucking bullshit over and over again uh that that sometimes we can be a little bit cranky about it but it the the the thought is in the right place like first of all i don't think that bitcoin needs us you know trolling shit coiners on twitter for bitcoin to succeed

like all shit coins are going to trend to zero in bitcoin terms i think you think everyone goes to zero in bitcoin terms okay all right along with every other asset on earth okay like i think that bitcoin is designed to essentially pump forever and all this stuff is going to trend they can't pace keep like like you interviewed like the guy who did the monarch token yep right yep like the question to ask him besides all the roger vera apologizing that he did is is what are the trade-offs why why would someone ever hold monarch token when they could hold bitcoin there's no reason to if you can easily move in between the two why would you ever hold it all right so this is a good conversation because i'm going to take devil's advocate things that i'm

about to say i don't necessarily believe or it's all caveat all this but i believe that some portion of the people with utility tokens right so not everyone but but some portion of people who have and not even utility tokens just non-bitcoin tokens would say uh my token is used to make transactions and uh the lack of volatility is really important so whether it's a stable coin or it's some other uh coin um this was purpose built for this use case which is one of bitcoin's least valuable use cases and therefore in this one use case this token is better than bitcoin response so i want to delineate here between security tokens and utility tokens okay okay security tokens if you have like a partial ownership of the company while not censorship

resistant and probably comes with kyc as per our previous conversation by the nature of being a security it will have to right and known actors and all these different accountability measures to actually ensure that you're getting any kind of equity right um could have some value um but like you you should just use money like don't make up fake money that no one's gonna want to hold yes for your product like all these things can be used with you know yeah your argument is basically that for the purposes of a store of value or a medium of exchange bitcoin is the best as a holistic solution and therefore use what is the best rather than try to create something that has one single use case and you think can compete on this one thing because ultimately the thing that's

the best is going to be the best bitcoin is a utility token as well right because it's it's paving the miners like it had provides a very distinct utility of paying the miners and for the fees um but it's developed this monetary premium it has this store value quality to it The question to me becomes, all of these pre-mines and ICOs and tokens are short-term thinking. It's a way for the founders to get rich really quick, dumping this coin onto retail and also pre-dumping it onto hedge funds who then dump it onto retail or whatever. Pre-dumping it on the hedge funds. But they also get a dump out of it too. But anyway, long term, whatever chain is successful, which I think is Bitcoin, is everyone is going to, whatever their project is, they're going to want to operate as frictionless, with the least amount of friction between them and Bitcoin.

Okay. Okay? The projects that don't will have a disadvantage compared to the projects that do. Okay. But then the projects that do, there's no reason to hold their token if you can easily move in and out of it for whatever the specific utility is. Okay. So I – Damned if you do, damned if you don't.

Yeah, yeah, yeah. So I'm also of the belief, which I think you're going to agree with, is a lot of times people talk about all the things that can be built on top of blockchains, et cetera. So take the security. Like the highly regulated, we're going to basically digitize an asset, right? So take all that out for a second. So building on top of any of these chains, the way that I conceptualize it is like there's a spectrum. So you have security and then you have like innovation on the other end, right? And the farther you move towards innovation, the less security you get.

The more centralized basically. Essentially – well, yeah, essentially because of the security. So it becomes more centralized and also it just becomes there's less history, right? It's more risky. instead of moving along a horizontal spectrum i don't understand why people aren't thinking more vertically so you have the most secure chain right and has the longest history etc and then building on top of that's what bitcoiners have been preaching this whole time and that's what we're doing and so if you think of it as you can go horizontally so you can take

the idea of bitcoin and replicate it with different you know uh criteria or different aspects or you can go vertically in almost every example in history vertically integrating things has been valuable right right and like that's essentially what you're doing is you're vertically integrating some application with the core protocol and so to me it's just like naturally vertically integrating that is where the value is right i mean i think there's a there's trade-offs here in terms of security and censorship resistance uh versus centralization and cost so if you want to bring down costs the more centralized the the cheaper it'll be that's why you know vemo is cheap or why ripple is cheap um but but if you if you want decentralization

you want distribution you know you want censorship resistance then it's going to cost you a little bit more there's a trade-off there that trade-off exists it's not a solvable trade-off but what you can do is if you do layers then you can you can anchor into that that sensor that that chain that prioritized censorship resistance which is what i think all this is about like if you have to implement kyc chain wide and stuff it's all worthless it's like there's no there's no reason to use it um you can anchor into the the main chain and and you can get the benefits from that while basically the users get to choose varying trade-offs of different things like for instance right now we have liquid which isn't really being used that much yet and we have lightning

liquid is more like a ripple right so it's a federated it's a federated system but it uses bitcoin as as the the token right it uses lbtc which is is locked bitcoin um so explain locked bitcoin i mean my understanding is like i'm pretty sure they they lock it in a multi-sig address that all the the federation controls yep so you basically it's almost like a claim on the bitcoin yeah but to have that bitcoin stolen from you you need like i don't know how many like how many people they have involved but like nine of 16 or something would have to collude to take your money so it's you're making a trade-off there right it is way more centralized than bitcoin and even way more centralized than lightning but you'll have lower cost faster

transactions um and we can do that on a you know there could be all sorts of things all varying trade-offs that you'll be able to decide and at the end of the day you'll be using the best money that's ever existed which is bitcoin all right i want to switch gears we've talked about wasabi samurai cash app are there any other products or services right now that you're like excited about or you think have um you know a uh or worth paying attention to well i'm really like lolly OK. So for those that don't know, Lolly is basically when you make purchases, you get a percentage of the purchase back, kind of like a cash back type of thing. But rather than get paid in U.S. dollars, you get paid back in Bitcoin. Yeah.

It's pretty cool. But what happens is like we live in a like a debt based society, right? People spend way too much money and they shouldn't be. But like if they spend it through Lolly, then like it'll pump the Bitcoin price at the same time. So there's like this like interesting – as a Bitcoin holder, it creates this interesting dynamic where not only does it onboard people really easily because they don't have to worry about like actively buying. They're just doing their day-to-day shopping. It creates this – like I'm a fan of businesses that create like constant buy pressure. Yep.

It like speeds up the whole process. So Murad came on and Murad said something to me that was fascinating. He turned me on to this idea of if you're an individual, let's say you're a teacher, you're an accountant, you're pretty much 90-plus percent of professions in the world. You're asked to go to work every day. You get paid in your fiat currency. It sits in your bank account, and if you sit it there, it gets devalued away, right? So therefore, you are incentivized financially to figure out what to do with that currency and put it somewhere else, right? And so you can put it into real estate, you can put it into stocks, you can put it into bonds, whatever.

If you're a teacher, you don't know anything about stocks, bonds, real estate, etc. unless you teach yourself. We're not taught that in education system or whatever. His point was something like Bitcoin is perfect as a store of value and because of the deflationary nature, it will actually accrue value over time. And so being able to not have to be a teacher and also educated in investing – Which is ridiculous. you can just be a teacher and then you can store your wealth save your money you can just save your money and not have to worry about it like i get that reduce the consumption uh consumption consumption ism i think is the word right that you no longer are going to go out and spend it all the time

right which you're incentivized to do instead there's a national incentive yep and and and you know i get that a lot of times like oh you know i don't get finance finance doesn't interest me like that's why bitcoin doesn't interest me and really those are like the perfect it's ideal for them um and so lolly helps you do that in a passive way right you just go about your day you make the purchases you're gonna make and you are literally stacking sats over time yeah and it's uh it's just a very simple way to to onboard people into bitcoin the other one that i that i think is a really important project is btc pay okay what is that so btc pay was born uh out of Basically, BitPay just continuously fucked us over and over again.

And Dorier had this famous tweet where he tweeted out, You're dead to me, BitPay. I'm paraphrasing. I'm not sure. But it's a great tweet. I'm going to make you obsolete. And he created BTC Pay along with a bunch of other people. It's an all-open-source project. And basically, the idea is that you can be your own merchant processor.

It gives you everything you need all in one easy setup. You run your own node. You run your own lightning node. You can set Bitcoin and lightning You can like integrate it into QuickBooks you can so if you're a store owner you can just accept Bitcoin yourself without using coinbase without using bit pay without using any middleman and and Obviously you're receiving Bitcoin though So you can then convert that manually onto an exchange But that goes back to our previous point where when you add the KYC when you add the fiat banking element That's where all these KYC attack vectors come in.

That's where they start pushing you into KYC. So basically, BTC Pay makes it super easy for anyone to accept Bitcoin. And what I think is the next step is they could, and they were talking about this on Twitter. One of the guys working on it was talking about it on Twitter a couple days ago. And you can make it so that every BTC Pay merchant, let's say you're running a bodega. you're accepting bitcoin i i actually think that the two main reasons people don't spend bitcoin right now well besides the fact that they think the price is going to go up is the tax obligations it's like ridiculously cumbersome to have to like deal with that so you might as well just pay with

cash or card instead um the and then the second thing is like they're converting it to fiat anyway um so you're not really supporting bitcoin at all uh so but if if you knew the merchant was going to keep his bitcoin and he gives you a discount because he wants kyc right like if you're a merchant you want kyc free bitcoin the best way is to all your products give a 10 5 discount on bitcoin purchases and then all of a sudden all your customers are giving you kyc free bitcoin right um and then that merchant could actually start selling bitcoin for cash um because he has all this bitcoin that he's receiving and he doesn't have a fiat off-ramp so he's sitting on all this uh volatility risk he could then um you know sell small amounts of

bitcoin through his store and then we also all of a sudden have this like distributed um kyc list network that uh of merchants and and and consumers that that would be hard to enforce any kind of regulations on them you'd have to do it you'd have to do it store by store basically like how they do like cash non-reporting for stores as it is hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to

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