EPISODE: 0.2.3
BLOCK: 684945
PRICE: 2657 sats per dollar
TOPICS: the state of bitcoin
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Meantime. So here we are at 35,000, Kathy. Do you think we go much lower from here? You never know how low is low when a market gets very emotional. A lot of traders see Bitcoin, dropping below the 200 day moving average, which is which was at 40,000. So traders, once that happened, they just dumped. Some just, dump and run. I think we're in a capitulation phase. Yacine has a dashboard. We were looking at all the indicators this morning. They are all suggesting that we are in the capitulation phase, which is a really great time to buy, no matter what the asset is. A capitulation phase is buy. It's on sale.
Now am I saying 35,000 is the low? You know, if traders, and there are a lot of speculators in in Bitcoin. If they are, running for the hills just because, Bitcoin has broken through a moving average that is important to them, it could continue. But, all of our indicators are saying this is capitulation right now. Do you have a low point on your model for Bitcoin? No. These metrics, are are more a measure. Are we in a truly capitulation phase? Okay. And it's very detailed. Yacine uses on chain analysis, which this is the only asset where you can see exactly who's doing what, when, why, and how. And all of those metrics are saying this is a capitulation.
This is as as bad as it got during the coronavirus crisis.
[00:02:16] Unknown:
Happy Bitcoin Tuesday, freaks. It's your boy, Matt Odell, here for Citadel Dispatch 23, the interactive live show about Bitcoin distributed systems, privacy, and open source software. Holy shit. It has been an insane week, in Bitcoin land. To all the freaks joining us via our audio streams, that was Cathy Wood and Carol Massar on on Bloomberg on May 19th, Wednesday, May 19th, where Kathy was obviously trying to hit everyone's bingo boards by saying capitulation as many times as possible. I think that was the feeling that a lot of people had, that day. I mean, there was blood in the streets. You should I you should've seen all the clips I could've used for this intro. I had, I had CNBC panicking.
I had boomers, boomers blaming Bitcoin for causing stock market collapse. It was just, you know, for for a lot of these, new corners, that's what I'm gonna call the boomers on CNBC. This was their first real dump in the middle of a bull market, so it's pretty crazy to watch unfold. Before we get started here, I just wanna do a quick shout out as always to the ride or die here in the live chat, that that make it for these live shows. This show is, you know, dispatch is all about the live audience and interacting with you guys, so thank you for joining. And a big shout out to the ride or die that constantly support this show with Sats.
You guys make it so that so that I can keep this show ad free and sponsor free, and keep the incentives aligned. So it's just it's just me and you guys. So fuck yes on that, especially if you're in the sphinx tribe. We have a lot of fun conversations over there. If you do not know what I'm talking about, you can go to citadel dispatch.com, and there's links there to join that tribe. With all that said, I got a great group of guys joining us today. This is the first time on dispatch that we will be doing it with 4 people rather than 3. But like I said, I mean, it's been a crazy couple of weeks. So I I feel like, it's it's fitting here for for that to be the case.
We have first time first time guest, and good friend, Alex Gladstein, chief strategy officer chief strategy officer of the Human Rights Foundation. How's it going, Alex?
[00:04:42] Unknown:
Going very well. Wild times. Happy to be here to react with y'all. And then we have Croesus and Gigi,
[00:04:51] Unknown:
who were on Citadel Dispatch the 3rd episode. So if you go to citadel dispatch.com/cd3, you can see their episode after this, obviously. Don't don't leave us right now. And it's kind of fitting because we were around the same price. You know? We're you it was it was 20 episodes ago. It was 20 dispatches ago, 20 weeks ago, and we were trading around 34 k, and we were bullish as fuck. So I'm I'm hoping to get that same kind of vibe here today, boys. How's it going, Kreuz?
[00:05:19] Unknown:
It's going well. Feels like I've been answering emails all day, so the only thing left to do is get hyped about Bitcoin.
[00:05:26] Unknown:
That's what I like to hear. Gigi, how's it going by you?
[00:05:29] Unknown:
Oh, I'm doing amazing. Still bullish as fuck. Nothing has changed in my mind.
[00:05:34] Unknown:
There we go. There we go. So, gentlemen, I mean, we have, we have a lot of places we can go here. I don't know where I wanna start. I guess I guess we should start with, is the bull market over? Is the top end? Will Bitcoin ever pass the all time high again?
[00:05:57] Unknown:
No.
[00:05:59] Unknown:
I guess it's over, boys. Let's pack it in. We have a good run. It becomes dead.
[00:06:04] Unknown:
If people are saying it's over and the people who are saying it are the the new ones who have only been around for half a cycle or less, that tells you everything.
[00:06:14] Unknown:
Someone, sent me a screenshot logging into their Charles Schwab account today, and it's just a giant Bitcoin logo. And it says, you know, Bitcoin FAQs read more. Like, as you log in to your Charles Schwab account.
[00:06:28] Unknown:
What what is the meaning of that? Are they they're shilling they're shilling the coin? Or No. They're shilling it. This is, like, they're pushing it. So that's my way of saying that the market is not not over right now. I mean, it's a really interesting it's a really interesting dynamic, I mean, watching it on CNBC, and and and you had Jim Cramer and David Faber over at on CNBC. They were literally blaming the stock the they were they kept saying crypto. I mean, I hate that term, but they kept saying crypto, and they were blaming the fall of Bitcoin. They were they were blaming the stock market on it. They were saying that the stock market, no. That they were blaming the fall of the stock market on the fall of Bitcoin, but I can't help but think that there's gotta be some macro connection there that in reverse. You know, it's almost like Bitcoin is just so showing some of the insecurities of the broader market.
But, at the same time, I mean, I I was I guess all of us except for Croesus were were here last run. Right?
[00:07:27] Unknown:
Yeah. Well, I was I was here. I was just on the other side of the fence. I was in Altcoin land watching it as an Altcoiner and, you know, watching the, the hard fork in, in in disbelief and and, fear, as somebody who didn't understand what was going on in Bitcoin land yet.
[00:07:49] Unknown:
I mean, because we had dumps like this last time. Right?
[00:07:53] Unknown:
Yeah. And and if you look back at the chart, like, this is what summer 2017 looked like. This is also what the mid 2013 bull market low looked like. It seems to be that there's there's something about human psychology in this market where after a year a 1 year post having, which is where we're at, you can't sustain bullishness forever, and there's some sort of major fear resurgence and shakeout that causes a dip. Let's call it, like, 2 thirds of the way through the bull market. It's just what what we're doing right now. If you line up the the chart of the 2017 bull market with right now, the the dip that we experienced in in summer 2017 is, like, within a week of the exact time frame of of the dip we've just gone through, in terms of its relation to to the halving date.
[00:08:50] Unknown:
I I also feel like that this is kind of necessary from time to time because, we just saw all kinds of insanity. I mean, just from leverage trading to, you know, everything that had a dog face on it, shooting up 10,000,000 percent. So I think some some spring cleaning, so to speak, was in order and this was this spring cleaning, but I think it's nothing to be worried about really.
[00:09:16] Unknown:
You need to, like, clean out the leverage. Right? You need to,
[00:09:20] Unknown:
Yeah. Like yeah. Get a proper base to to work from again. There's something about the way I think I think it's the way free markets work generally, but, like, you know, it's it's most clear with this market where we have this catalyst for price growth with the having, and then and then, you know, price drifts upwards as, as the shortage of supply, you know, causes demand to drive price up. And and and that's inherently so bullish, and people get overly excited and take on too much risk, add leverage. And the the market the the market has a way of reestablishing equilibrium by punishing that risk.
And it's it feels like it's in a free market, you know, and this is really the only example of a truly free market in the world today. This sort of volatility is necessary to keep everything on a level keel. And and that's especially necessary when you have these structural reasons why the price will keep going up, and yet you have to shake off, speculators and and the overleveraged during that process.
[00:10:30] Unknown:
I I've just thought the psychology of people has been so fascinating, like, that you were you watch people be so sort of, like, just overcome with emotion, you know, around January 2nd or 3rd when we, like, broke 30 k, which was so shocking, I think, to a lot of people including me, just that moment. And then, you know, that's we're we're higher than that now, but people are, like, they're, like, so psychologically damaged. It's really crazy to see The normalization of the of the progress of the price is is something that, it it it's just it the world changes and people don't realize it. And then, you know, this whole thing has happened in the last few years where it's become probably not realistic for, like, the average American to probably have a full Bitcoin.
That has happened, like, relatively quickly and, like, no one really notices. It it's really truly stunning. Absolutely stunning. As someone who, was, like, kind of loosely paying attention to Bitcoin at the end of the previous bear market was along for the certainly, you know, as an observer of the ride up in 2017, but but then really started diving in, like, let's say philosophically, politically, economically to the system in the previous bear market. It's amazing because, like, all the stuff that I was blown away by and had my mind blown by, you know, it was that the price was at rock bottom and I was just, like, this is the coolest thing ever. And and now it's now we're in a different situation,
[00:11:54] Unknown:
and how could I not be bullish, you know? Yep. Yeah. Absolutely. And I I was just about I was just about to say, you know, like, come on, people. Everyone wake up. I mean, not too long ago, like, we were crashing to like, the COVID crash was to 3,800,
[00:12:11] Unknown:
something like that. So we are 10 x that, and people are talking about the death of Bitcoin. I mean, how ridiculous is this? I don't know. If you I don't know how it is. Ridiculous. Like, do you I feel like a lot of Bitcoiners were, like, pretty hyped about the COVID crash, and they were, like, trying to stack. And and they're they've actually been, like I don't know. A lot of people were less excited this time. Does that make sense? I don't know.
[00:12:32] Unknown:
Yeah. I don't know. I I I feel like my feet got a little bit polluted by but my my hardcore, filter bubble is still as excited as ever when the price dips because, I mean, like, everyone, when we hit 60 k, everyone was, like, dreaming of these prices. You know? I wish I could go back when it was 30 k and just buy more, and and now we fell back to to 30 k or something. I like how we had to pass through the,
[00:12:56] Unknown:
Dogecoin. It is pretty much Bitcoin phase. Like, that was really important to pass through, narrative wise. Yeah. Yeah. Like, leading journalists in America's top financial publications
[00:13:09] Unknown:
were trying were arguing that that really at the end of the day, Dogecoin was the same as Bitcoin. Right. That was an amazing moment to pass through. And and and also just just to yeah. Just to I I was just about to say, you know, just to to cherish the fact that we have billionaires fighting about like the soul of Bitcoin and how it is different from those coin. And we have Billionaires
[00:13:32] Unknown:
fighting publicly about it on Twitter. Well And people are bearish on Bitcoin. Like, I don't understand. Part of me like, look. Elon has a very high bar because he's fucking Elon Musk. But, you know, part of me is just really, you know, acknowledging of the fact that he's going through what I went through and what most people went through, but just live in front of 50,000,000 people. Yes. Everybody's going through. I went through the same, like, oh, these all coins look cool. Like, I mean, you know, didn't we all? Like, it's just crazy that he's going through it live with no filter in front of 50,000,000 people. Yep. Yeah. Because everybody goes through 1,000,000 of dollars to to spend to spend. Yeah. Right. And toss around and and and move markets with his tweets. In retrospect, it was inevitable that that that would happen, though. Right? That that Yeah. The world's most powerful people would go through the same phase we all went through. Right. And pick and pick, flavor of the month altcoins to
[00:14:25] Unknown:
show. Yeah. Of course. I think I think there there truly is no shortcut. I think everyone has to go through the similar through through a similar journey. And I truly think there there is no shortcut, and you have to kind of arrive at maximum maximum pain to really learn. And Elon is not at maximum pain yet, so he he will have to go through that as well. And to be fair, like, we should also, as Bitcoiners, try to use these moments to educate the onlookers because those are valid questions. Like, why is Bitcoin so different? Then what is the soul of Bitcoin? And what is it about? And and how like, why is Bitcoin different than Dogecoin, for example? Why is proof of work necessary? Why is it necessary to why does it take so much energy to do something like Bitcoin? And I think I think we, I I think we would do the the future coiners, disservice if we don't at least try to to educate from time to time why these things are important. And we actually you know, like, the last 10 years, a lot of people thought about those things very deeply.
So we went through this before. We just have to kind of summarize it and and, preach it to the masses if you want. It was kinda funny to read the block size war and have,
[00:15:35] Unknown:
you know, Johnny write that great book and and then, like, all of a sudden, like, you know, narrative that no one saw coming, Elon Musk, big blocker, 2021, like, completely insane. But also perfect, like, educational moment for people where, hopefully, those who are paying attention could see the Bitcoiners arguments of, like, you know, how ridiculous this was. And I think we're just well much better positioned now than we were maybe 4 or 5 years ago on that front. So Elon again has to go through the big block phase because he's an engineer, of course, and he's here to fix Bitcoin. And, you know, he got kind of repelled properly, hopefully.
[00:16:12] Unknown:
Yeah. Yeah. And I agree. Like, I think it's, sorry, Crow. Just to to get this in, I think I have a little bit of a delay. But, just to get this in, I think it's very understandable if you have an engineering mindset to just look at the parameters that you can change kind of, like the knobs that you can twist and think, yeah, why not, like, I don't know, increase block size by 10 x? Why not try to increase throughput by 10 x? And and, like, what do you have to lose? You know? I can't just build a better system just like you can build a better rocket maybe. And, he he just, I think, lacks the necessary history and understanding that we went through that all that already.
And it's it's a very nuanced problem, and it's not necessarily easy to understand even if you are a smart engineer.
[00:16:57] Unknown:
Yeah. And and I I think there's a to build on that, it was a great point, Gigi, that there's this this problem that narcissists face when they when they come into Bitcoin of, I think Max Kaiser put this well that there there's no room for narcissism in Bitcoin because narcissism is about is about me. It's about the individual, the ego, and Bitcoin rejects that. It doesn't it doesn't allow for that because you can't change Bitcoin. Bitcoin changes you, and that's fundamentally at odds with the the the, you know, internal story that narcissists are are constantly, you know, guiding their lives based on. And and that's Elon Musk. Like, you you don't become the the richest person in the world and, you know, the person that Iron Man's character is loosely based on, without developing a god delusion of some kind. And so, of course, somebody like that is going to, run head into this this problem with Bitcoin of I can't do anything to change it, but I want to. I want I want to feel like I have that power.
[00:18:10] Unknown:
Yeah. The question is humble or be humbled? Yeah. The question right. The question is, is he gonna do the typical Bitcoin villain plot where he ends up, you know,
[00:18:19] Unknown:
forking off or making his own coin, or is he gonna find redemption? You know, the door is still open. Right. I I okay. And I think that's a that's, like, maybe it's jumping ahead, but that's sort of how I view what, Michael Saylor, I think, is trying to do with this mining council of potentially teeing up like a way to save face for Elon of, like, you know what, Elon? Here, you can have some sort of input and a say, and you can you can influence how Bitcoin is, approaching, you know, energy, by being by being on this council and feeling important even though it it's not gonna change anything. And in fact, if anything, that council stands to celebrate the the organic wins that are already happening in terms of Bitcoin leveraging, stranded fossil fuels, and, excess renewable energy. That that's already happening, and here's here's a way for Elon to feel like he can, you know, he he can say that I was a part of making this happen even though it was gonna happen already.
[00:19:25] Unknown:
Gotta hear Matt's framing, on this.
[00:19:28] Unknown:
Well, I mean, we're 20 minutes into the show, Khrysos. I was hoping that we could have a little bit more bullish talk before you just Alright. Go right into a fucking meat.
[00:19:36] Unknown:
You know? Billionaires fighting over Bitcoin? This is extremely bullish. You know, I've I've,
[00:19:43] Unknown:
for the last 3 years, I've had to publicly give my take weekly on every single happening in Bitcoin. And instead of taking a break, at the end of last year, I decided to lean into it, and I added a second show to my roster dispatch. So here I am again talking about the newest the the newest, development in Bitcoin. I'll tell you, these types of weeks are the types of weeks in past cycles where really the most prudent move is to just go outside, enjoy life, and, you know, just keep stacking and just ignore everything and just not pay attention to any of this shit, is is is is probably the best for your wallet and your mental health.
But, the 4 of us and a lot of the the freaks of this live chat have chosen to be completely obsessed with Bitcoin, so we're not gonna opt for that path. So, with all that said, first of all, before we leave the bullish thing, I just wanna say, because I because you guys were having a great conversation there. I didn't get to jump in. It's just pretty ridiculous to me that I have, like, my normie friends from college and stuff, like, reaching out, making sure I'm all right because they're like, oh, Bitcoin dumped. Like, are you okay? And I respond back. I was like, Bitcoin's at $40,000. It it was it was at 10 k in November, and it's at $40,000.
I'm doing alright. You should buy some. But for this okay. So let's jump into this. So I have, on on my spreadsheet here, I have a couple things that I want to hit, and the 2 big things is American miners and Chinese miners. I think, you know, that distills what this last week has been. On the American Mining side, this mining council now I don't think anyone should be surprised that Saylor is who he is. I think Saylor has been extremely consistent. I think he's been amazingly consistent. I have never once thought that he was gonna protect the the interests of self sovereign Bitcoiners, And and that's okay. I think for a a a regulated type of dude, for a for a billionaire type of dude, He's, like, a pretty great Bitcoin advocate. They're they're he's extremely consistent.
He speaks really well. He cleans up nicely. You know, the guys on CNBC and shit love him. You know, the the he gets along with the Ross Stevens of the world. They're, like, in a whole different ballgame than us. Right? They're playing they're playing a different game. What's cool about Bitcoin is, you know, Bitcoins are enemies and for friends. Right? So, we can play our game, they can play their game, and for the most part, we can benefit each other. But I think it's important that people and and and it's kind of nice that this happened when it happened, because I think it's important for people to take a step back and not just, you know, idolize all these guys, including myself. Like, you shouldn't idolize me. You shouldn't idolize Gladstein. You shouldn't idolize Gigi.
You shouldn't idolize Croesus. Like, don't idolize people. Think for yourself, you know, be critical. Because on Bitcoin Twitter, especially, people tend to just, you know, just go with whatever the prevailing narrative is for whatever particular time, and they're too scared to speak out, and they're, you know, they're afraid they're gonna get called out by other people, and, you know, block culture is, like, really high in in Bitcoin land. So think for yourself. I want people to think for themselves. So back to that. The American mining thing is something that I've been concerned with for a long time, and it's really interesting to me because, you know, we I've maybe we're surrounded I'm surrounded more by American Bitcorners. I think it's a time zone thing on Twitter, but also, obviously, like, I'm in America. Right?
And on the American Bitcoin side, there's, like, this really easy, hole to fall into where you demonize Chinese miners. And, you know, I love Marty, but, you know, the name of their company is the same idea. Right? Great American Mining. Right? It's this idea that we're gonna bring mining back, bring mining to America and Bitcoin is gonna be better for it because America's the best country in the world. And I love this country. Like, I I'm not saying I don't love this country. I'm very grateful that I live in this country, especially with this whole corona bullshit that happened. We've seen that, you know, the freedoms we have in America are way stronger than most parts of the world. But I have always been concerned that if, you know, if if we have a large contingent of mining in America, it it it presents an existential threat to Bitcoin, and and a threat that is almost more to me than a threat from Chinese miners. And you can you know, the the biggest issue with Chinese miners is that they did have a large portion of the hash for a long time. They still do. It is decreasing, and the positive note is I don't think that, you know, even if, you know, in best case scenarios for for American miners, they probably can't come anywhere near 50% of the hash rate, so that's, like, a good saving grace.
But America is the country that imposes all this k y c a m l crap on everyone. America is a country that goes after BitMax. America is a country that shuts down one broker. All this FUD about Chinese miners and the first miner to start doing this blacklisting clean block bullshit was the 1st large American miner. Right? It's like they, like, finally hit the scene, and then the first thing they fucking do is decide that they wanna do OFAC mining. And my issue is, you know, I could give 2 shits about the environmental whatever bullshit. I think that, you know, if if people wanna fight that fight, they can fight that fight. But the when it comes down to this whitelist, blacklist shit, what I expect to happen and I see a lot of people, you know, talking real cocky on Twitter, like, oh, American miners are just gonna choose to go to a different pool that isn't doing the the the blacklist, white list stuff, because they'll make more money. Yeah. They would make more money if they go to a different pool, But the thing is, it's gonna be the same ideas chain analysis where they're gonna lobby government to make their them a requirement. Right? They're gonna basically they're they're gonna do a regular regulatory moat kind of bullshit where they where they force any large minor in America to follow this practice. Otherwise, they'll be pariahs. And that that is to me has been a a major threat. This is one of the reasons why I've been advocating for CoinJoin.
You know, I had Adam back on the show couple episodes back. He made a really good point. Like, when it comes to minor censorship, like, if you have on chain privacy, minor censorship is harder to do because they don't know what your transactions are. Like, if if Marathon wants to or anyone they're working with wants to censor my transactions, they're gonna have to censor all CoinJoin users. They can't just censor me. And if we have more CoinJoin users, then, you know, they're gonna have to censor a large portion of the user base if they wanna censor me. And I I think, we should be thinking more in in that kind of vein, like, how do we, you know, actively use this tech to to make it untenable?
[00:26:56] Unknown:
So if there was, like, a super woke billionaire, Matt, you would say that they should go out there and set up mining operations in, like, 80 different countries to prevent the rise of potentially American hegemony over Bitcoin mining. Would that be, like, a cool woke billionaire?
[00:27:13] Unknown:
I mean, if it's just a single person, it kind of defeats the purpose a little bit. It's like almost decentralization. No. No. No. Investing in the app, in in the infrastructure. Yeah. Not actually owning it. I think that's what we want. I think the narrative shouldn't be let's see Hash come to America. It should be let's see Hash disperse globally. Right? Let's see it go to Kazakhstan. Let's see it go to Iceland. These are places that already have it. Right? But, you know, let's see it spread out. And and then also on top of that, right, is stuff like, Stratum V2, Better Hash. Right? Things that try and take power out of the mining pool's hands. Right? Because right now, mining pool operator is the one who constructs the blocks, which is a is a is a major issue in in terms of centralization.
[00:27:53] Unknown:
Yeah. I agree. And I think it it's it's bound to happen. Like, I I think Bitcoin is the buyer of last resort for energy. I think it's it's something that has natural decentralizing effect. I think it just needs time, and I think we are at the kind of a peculiar place in time right now where we have, like, a chip shortage, for example, and just all kinds of things going on that, kind of hinder the the progress on that front, I would say. And I think just give it another couple of years and, like, get the ASIC production ramped up, and I think the the incentives are aligned in such a way that this is bound to happen. And I I think we're just early.
[00:28:36] Unknown:
Ironically, it may in retrospect, in 20 years, we may look back at this as kinda like a beautiful setup in a weird way because, you know, there's no I mean, it's almost unrelated. Like, obviously, the reason why there's there grew to be such a mining presence in China was because of all this infrastructure build up the CCP did, and they had all this curtailed energy. You know, they're they're they're basically curtailing, you know, more energy than other countries even use, you know, at times. And miners are smart and they're like, okay, you know, I'll I'll go take that. And, you know, if that era is ending, that's gonna disperse.
But if the if the opposite had been true, if mining had been concentrated in the United States at more than 50% for its 1st decade, you're right, Matt. Like, maybe that would have been a worse outcome. And I say that as someone who's, like, obviously very anti CCP, but, like, they just don't really seem to have their shit together here. So I think it's a little bit different.
[00:29:34] Unknown:
Well, I mean so that's the other I mean, so first of all, I'm I'm curious on before we go to it, I mean, I'm curious on Creasy Crease's,
[00:29:42] Unknown:
opinion here. What what what are your thoughts here, Crease? Yeah. So I I keep coming back to like, if you if you zoom out and you think about, like, the the theoretical economic forces at at play here and and kind of the longer timeline of mining, I think most people probably in in this in this chat have a, a strong sense for it. But for people listening to the podcast later or whatever, the the largest input cost to mining is electricity, is energy. And that means that globally, miners are competing to find the cheapest source of energy in order to maximize their profits.
And so long as you're profitable, you're incentivized to to add, computing power to the network. Right? To increase the the amount of of profits you're getting, until you can't find any any, until the the marginal energy that you would be using, makes it so that you're, you know, no longer you're destroying profits rather than creating profits. And and that is playing out on an individual basis globally, constantly. And as Gigi alluded to, like, right now, mining is especially profitable because of a chip shortage. And so there's this lag between Bitcoin's price action and the ability of miners to to spin up additional hardware to drive down the profitability of mining to the to what's in business called the hurdle rate, meaning the required rate of return for investing capital into a project.
And, you know, so if you if you zoom out and you think about those theoretical economic forces playing out, what we're gonna see inevitably is Bitcoin mining over time shifting to, energy sources that have no other use case, no other bidder, and therefore can be bought for purchase by miners for next to nothing. And and that can be that means that's going to happen wherever there's excess. Wherever there's excess specifically for low variable cost energy. And I'd make that distinction between because, like, if you think about, like, a coal fired power plant, their primary input cost is coal. Right? They they they have a high variable cost for producing energy because they're they're burning something.
But if you think about, like, a a solar farm or or even a nuclear power plant, their variable costs are less, a lot less because they're not oh, it's you know, with nuclear, they are using some resource, but it's not the same as burning coal. Anyway, so so those are the energy sources that are going to be the cheapest, that that when there's excess, producers are willing to part with it for the least amount of revenue because they don't need that much to cover their variable costs that the that, is the contribution margin is so much higher when you have low variable costs in your in your operations.
So, like, just in a free market, this plays out over the next 10 years. Mining is go Bitcoin mining will gravitate towards the cheapest energy sources on the planet almost exclusively, and that's going to mean excess renewables or completely stranded energy that has no other use case. Or government subsidy or government subsidy. Yeah. Right. Absolutely.
[00:33:27] Unknown:
So Alex makes a good point here, and we were Alex, we were both on the exact same page on that one. Chris says, you make a really good point there, and and this is this is, you know, a key aspect of Bitcoin. Right? These financial incentives. But there and and and specifically when it comes to censorship, this idea that, if a large amount of pools are censoring your transaction, you can keep raising your transaction fees, and someone some minor somewhere is gonna have the financial incentive to include it because he's gonna get paid more because your transaction fees are higher. Mhmm. My concern a bit is that there's these out of band incentives as well that are going on at the same time that people tend to ignore, mostly because, Bitcoiners don't like to vocally, think critically because they're afraid that they're gonna be called a bear.
[00:34:21] Unknown:
Can we break that down, Matt? The out of out of band, I think, is important. We're about to. So so so for starters, right now,
[00:34:29] Unknown:
a lot of the big pools will allow you to just pay them completely separate of the Bitcoin Blockchain. You can pay them, you know, with a credit card or PayPal or something or a cash in a briefcase, and they'll confirm your transaction for you. Alternatively, I kind of feel like we're entering this new geopolitical era of Bitcoin where large governments and countries are gonna start to realize it's in their national security interest to have Bitcoin miners within their borders. And this is what I wanted to dive into because I don't think I think this Chinese mining ban thing is bullshit. I think it's complete bullshit, and I'm not gonna believe any of this shit until I actually see some tangible shit. I can verify that Hash is leaving in droves out of out of that country, because it's in their financial best interest as a government, to control the mining there. They they want to have miners there.
You know, they they they they wanna have miners that they can that they can push to confirm their transactions. They wanna have miners that can protect their interest in terms of other miners not confirming their transactions, and they want to be able to have access to this global neutral network. So so there's all these other incentives that are at play on the outside, that I feel like we kind of ignore. Right, Alex?
[00:35:48] Unknown:
Yeah. Well, I I think what I've tried to learn from speaking to a bunch of minors in, in the last couple weeks months is that even if there's, like, strong incentives to change, the the sort of logistical environment is just not that easy to change. So stuff happens slowly. So even if there's, like, this freak out in China, well, guess what? Like, there there's not that much rack space available in the United States right now. There's very little. I mean, there's just minor sitting, thousands of ASICs just sitting. They can't be plugged in. There's, issues with, like, like, getting the the equipment out. I mean, there will be a lot of equipment from what I understand.
If this is true, moving by truck to Kazakhstan and Russia, but, you know, getting that equipment to America or elsewhere or maybe to Africa is is non trivial, and it takes time and you have this sort of, you know, chip crunch. So it's kind of an amazing moment where, you know, we're almost insulated from massive change because we can't just snap our fingers and make more chips and make more miners. We're kinda stuck with what we have. And the world is in such a kind of weird, dynamic where, you know, you know, there's still sort of majority hash rate in China, but it's dwindling. But America's too you know, you know, I would say, thankfully, America doesn't have, like, 40% yet. I mean, we're still probably in the I don't know what you guys think, but from what I understand, like, anywhere from 8 to 12% maybe in America.
So, you know, things just takes take time to to to shift in this environment. It's not so easy. So, I just would be, I'm interested to watch what happens. But, I agree with Matt, like, some of your comments about, like, you know, if all the miners, like, stopped right away in China, we would we would figure that out pretty quickly. Right? Like, that's not it's not hard to, to see. I just feel like when the CCP wants to, like, truly ban something, like, they do it.
[00:37:44] Unknown:
Right? Like, you're scared for your livelihood, are you not? Like, is is there do do they like do they like half band shit?
[00:37:51] Unknown:
Like, from what I understand, like, even the this this was so everything's blown out of proportion. Of course, it's like the China FUD stuff, but this was like a warning to certain people in certain industries. It was not like some sorta, like, you know, blanket ban or anything like that. So
[00:38:06] Unknown:
everything is just a continual loop of FUD, and the the speech itself the speech itself that mentions it mentions it's like a huge it's a huge speech. It's like a huge document talking about the speech, and there's one little line that says Bitcoin mining and trading.
[00:38:21] Unknown:
Yeah. There there is, however, Lucas Newsy who does great stuff, stuff, he did publish something today with some stuff from Coinmetrics. I mean, what's quite clear is that, like, miners fucking sold. Like, Chinese we could see it. Like, Chinese miners sold. Everyone's sold. That's true. So the question is is it related to the market, or is it related to the crackdown? And, you know. Like, my college my college friend sold. Like, that wasn't related to the CCP banning their mining operation.
[00:38:47] Unknown:
He just panicked. Like, miners are people too.
[00:38:51] Unknown:
Yeah. The other thing that's confusing and and is gonna make things harder to even interpret is that it is literally right now is when the miners, like, move all their shit from Right. The sort of, like, inner Mongolia and Xinjiang over to, like, the the Yunnan and Sichuan kinda, like, hydro provinces. So you're there's already gonna be a drop off in hash rate as they, like, disconnect equipment and move it. Which, by the way, is a new narrative
[00:39:13] Unknown:
that we've only heard the last 2 wet dry seasons after a hash dropped, and, like, we've been normalized into that normal like, normalized into that concept. Like, we never I as as a Bitcoiner, I never heard that narrative before. And then all of a sudden now it's just, like, common knowledge. It's like, oh, if the difficulty drops by, like, 18%, it's because the miners are moving from wet to dry season or vice versa.
[00:39:38] Unknown:
Yeah. That's true. I I I want to but, I want to point out one thing what which I think is insanely bullish. Like, it it doesn't even matter kind of what is true and what isn't. The fact that Bitcoin mining is as mobile potentially as it is is insanely bullish because even like, imagine China banning gold mining. Like, there's you can't move a gold mine. You know? And it's it's just I I think the property of the Bitcoin network that the only thing you need is a a power source and a communication link to mine is so insanely beautiful, and you can actually take the ASICs and move them somewhere else and just continue mining. It like, it's it's literally it's it's not that big of a hassle. Of course, you know, there are some things involved and so on and so forth, but but but still, there is no other industry where you can do that that easily. And, again, like, you need nothing except for an energy source and a communications link.
And I think even, like, considering a, a broadband on mining, it's really difficult to do because if you are motivated for for the for whatever reasons, like, even if you're a a very small player, you can still mine, and it's very easy to kind of hide your footprint because you don't have Right. Like, a big signature. And it's I I think this is underappreciated and not often talked about. Like, it's you you can take your shipping container and move it somewhere else. Like, cool. Yeah. It's And I think I think long term, the incentives favor smaller miners.
[00:41:03] Unknown:
I think it's it'll be easier to get cheaper electricity in smaller amounts. I think it'll be easier to hide under the radar in smaller amounts. I think it'll be easier to capture waste to reduce your cost, and stuff like, you know, like, heating a home, for instance, once ASIC start to level out in terms of, life cycles. Look at the s nine. The s nines lasted forever. You get one of those, you're heating your home with it. You're all of a sudden, you're able to cut costs more than a an industrial miner that has them all in the warehouse. And and I do agree with you, Gigi, that I think one of the most bullish things we have with us is that it is it can be highly mobile.
But that's also one of the reasons why I'm less concerned about actual bans, specifically bans that are, like, so loose that they're a ban, that they allow you to move your minors out of the country or sell them, which is like, okay. Like, you're gonna ban weed, but you're gonna let me move my weed out of the country. I'm more concerned about seizure and capture. And seizure is obvious. Right? You know, people busting down your doors and taking control of your mining operations. But capture is way less obvious and happens slowly over time, and that's kind of what we're seeing with this American Mining Council. Right? That's the fear of something like the American Mining Council, where you have, like, regulatory capture and then they're all playing and reporting, you know, reporting all their information and playing by certain rules and stuff. Kind of like what we've seen with the exchanges. Right? Just just to dwell on this, like, really interesting geopolitical moment for a second. There's a really good, interview,
[00:42:30] Unknown:
that Nick Carter did with the fry with the fryer from Australia, on Bitcoin and energy and electricity is excellent. But they bring up a good point that, like, this chip shortage is not gonna last forever. Like, by 2025 or so, all these big fabs are gonna be up and running, and and there will be a lot more chips available. And and there are, like, key industrial use cases of Bitcoin mining that are gonna be, like, brought into the fold. Like like, they were talking about how, I think Friar said that, like, like, methane waste alone is enough to take Bitcoin to, like, $50,000,000,000,000.
That's it. It just there's not enough chips, and the companies that are doing it are ignorant. But once they figure it out, it's gonna happen. And, you know, he thinks that by, like, maybe 2025, 26, maybe you have a quarter of all Bitcoin mining is is done through straight up just sort of waste from an existing industrial sites. But it can't get there until we have more chips. So it's like, we're in this weird geo geopolitical moment where we can start making, we can start seeing the future a little bit, but it it there's, like, a lag time because just can't make a 6 fast enough. I mean, the a 6 that were made, what, a year, the s nines or whatever were a $100 or something like that a year ago. Now they're $1,000.
Like like, this is old equipment. So there's, like, 3
[00:43:45] Unknown:
The s nines, you could buy, like, a, like, during the March drop off after the having, and then had the having happened, like, you could've you could've bought, like, a garbage truck full of s nines for, like, a $100. Yeah. Now they're, like, $900 or something. Each.
[00:44:00] Unknown:
Yeah. So we're in this weird moment where, like, stuff can't move as fast as it might move, which may be advantageous to the Bitcoin community here. It it restrains people. So it's, anyway, that's that's just wanted to zoom in on that for a second.
[00:44:13] Unknown:
But where are the where are the ASICs being made?
[00:44:19] Unknown:
I mean, he was saying that the last shipment out of Bitmain was, like, a I mean, the big manufacturers are stuck. Like, at the it takes what? How long would it take? Like, 18 months right now to get, like, a big shipment if you place the order today?
[00:44:35] Unknown:
Yeah. I I don't know. I mean, you're an idiot if you preorder miners. I mean, that's just like a that's an old Bitcoiner knowledge knowledge shop right there.
[00:44:45] Unknown:
But where? I mean They're all made in China. Yeah. Yeah. But a lot I mean, obviously, a lot of the the pieces that go into it are made in other Asian countries as well. Right. So it's kind of a supply chain is distributed a little bit. But anyway, to to just cap to cap that off, in 3 or 4 years, it'll be a very different environment. Like, I I I believe pretty firmly that there'll be a lot more chips available and that'll really diversify mining. Like, that will help decentralize it in a massive way. So that's where we're going. We have people in the comments. Yeah. A lot of it's done in Taiwan as well. Mhmm. By the way, Taiwan is a country. We fucking love Taiwan. Yeah. Seriously. Am Ra John Cena. Yeah. Here here at Dispatch, we,
[00:45:25] Unknown:
we recognize Taiwan as the one true China.
[00:45:30] Unknown:
And, I just want to tag on something that someone said in the comments that, Bitcoin mining is so portable that we could even move it off the Earth. And while that is true to some extent, just keep in mind that we have, like, a hash horizon of, like, 10 minutes because of the 10 minutes block time. So we can't move it far away from Earth, and that I think that's something that's underappreciated because we could sell this to Elon very hard that if he manages to to settle on Mars, he is like he can start his own proof of work chain there and call it whatever he wants and put a dog logo on that. So I think that's fair game to build a side chain on Mars, but I I just think everyone should, who, who's interested in that should read, Dhruv Bansal's piece, Bitcoin Astronomy, where he talks about that at length. I think it's, very interesting.
Yeah. I mean, maybe. I I haven't thought about all the attack factors that might be possible because of the time lag, but, it might be possible.
[00:46:35] Unknown:
So so Gladstein, first of all that that that that I think it was multiple pieces, it's very good. Yeah. I mean, I just like sci fi. I I just wanna be clear, like, Elon, like, if you try and launch a Mars shit coin, like, I'm still against it. Like, I'm not giving you the the pass that Gigi is giving you.
[00:46:52] Unknown:
It's kind of it's kind of a miracle Mars. Like, I prefer definitely not mine it. I prefer a Mars versus Earth, like, Hash War
[00:47:00] Unknown:
than a Mars shit coin. Yeah. That's good. That's that's good. That's just because I like I like I like I love this when conflict happens. You know? I love the adversarial shit. Gladstein, you made an interesting point on I think it was a a a tweet today where you said, like, who basically, who is the bigger concern. Right? Chinese miners versus American miners. I'm not paraphrasing you well. Yeah. Yeah. Yeah. No. I was like, basically,
[00:47:30] Unknown:
we're in this we all of a sudden, like, in the last week, it has really kinda crystallized that we could be in this moment and it it may take a couple years, but we're we're all worried about, like, China centralizing the hash rate and then all of a sudden we're starting to worry about America centralizing the hash rate.
[00:47:50] Unknown:
Right. So should we be worried? But then, yeah, I think I think you just, like, kind of corrected yourself in the same tweet. You're, like, but I don't think, like, American can actually get
[00:48:01] Unknown:
enough hash rate to be a concern. Right? Well, I tried to provide the counterpoint counterpoint. Like, point being, hey, maybe we should be really worried about America centralizing the hash rate. The the counterpoint being, it may be impossible for any other nation to to gain the 50% that that China once had due to the general, like, trends in the market and lack of chips available right now. And and and the game theory of, individual countries starting to realize that that they have an opportunity to perhaps generate the world's reserve currency, from their own resources. This has not been possible before, in the same way.
You know, normally, resources have to be sort of purchased with dollars, you know, in today's in today's world. So here's an opportunity for folks to turn their own resources straight into Bitcoin. So I I I think that there's a a kind of a point counterpoint.
[00:48:54] Unknown:
Are we gonna see, like, could we see, like, alliances unfold where, like, minor but, like, different countries, like, pool their hash rate with each other to have a favorable position?
[00:49:05] Unknown:
Yeah. I mean, that would mirror what has happened with dollar diplomacy, with the US and the EU, kind of trying to, create an alliance and then sort of China, Russia, and some of the other states creating an alliance. And then and then there's, like, the nonaligned countries. I thought this was very interesting. Someone commented today that, I guess, Malaysia is gonna try to absorb a bunch of this mining, and maybe Malaysia is like a a a a non aligned country. You know, maybe they're, like, in the middle between China and America. So these, like, non aligned countries could be very powerful and important, I think, if we start to have this kind of, you know, new sort of China versus US thing.
[00:49:47] Unknown:
Yeah. Yeah, Matt. I I sort of wonder if, like, if we're we're asking the wrong like, if we're focused on the wrong part of this story, because, like, the glad scene is born here. This this mirrors what happens on the geopolitical stage right now. Like, countries vie for for greater influence over money. And that's that's just an inevitable outcome of of human nature. And so, like, that just might be that might be what happens with with Bitcoin as, as as nation states accept the economic reality that Bitcoin imposes upon the world and buy into this new future of trying to generate the reserve currency of the world using their own resources, that this is the the how the game will shift, you know, away from trying to influence, fiat currency policies and power, and trying to trying to have power over Bitcoin, which they may achieve to some extent, but to a much less great extent than than they ever could when they controlled the money themselves.
So I don't know. I guess I'm sort of celebrating. I'm, like, taking stock of what's happening, and how the narrative is shifting and how there seems to be things going on behind the scenes with really big players starting to make moves and trying not to make ripples on the surface. And it looks like Bitcoin is winning Even though people are starting to fight and try to drive wedges into Bitcoin in the Bitcoin community, it's because it's winning. I don't know if that makes sense.
[00:51:35] Unknown:
The other thing I just wanted to add was that I have a piece coming out tomorrow on Bitcoin Magazine on this, but, like, essentially, I'm what I wanna try to incept is this idea in in the humanitarian, in, like, aid community, which is massive. It's like a $20,000,000,000 a year industry. And then foreign direct investment is, like, 1,000,000,000,000 of dollars a year from, like, you know, rich countries to poor countries. If we could, like, incept this idea that, like, a really noble way of doing humanitarianism would be to pay for and set up mining operations in emerging market countries, you know, if if rich Americans and Europeans would be willing to do that, you know, to help these countries become energy independent, become financially sovereign, that really helps. Not only does it help those countries, but it helps prevent against this kind of very kinda, like, based risk or, like, kind of deep seated fear that that maybe America becomes too centralized in its control.
So that's one way of fighting back would be to try and convince, people who, you know, spend all this money in international development to consider the, like, humanitarian and environmental upsides, of Bitcoin and of of countries running Bitcoin mining off of their, like, massively stranded renewable energy. So that that's something I've been become very interested in lately.
[00:52:53] Unknown:
If if if you everyone out there, if you haven't read, Gladstein's piece on on the hidden cost of the petrodollar, it is a tour de force. It's awesome. It's in Bitcoin Magazine. And it I think it it better than anything else I've read highlights that the system that we have today has very, very high costs, and we take that for granted. And Bitcoin has costs, but how do they stack up? And it it creates quite an an amazing contrast.
[00:53:24] Unknown:
Well, it's all about dependency. Like, the US forced the world to be dependent on us for agriculture, which didn't make any sense in a free market. And then, you know, we forced the world to be dependent on the dollar, which didn't make any sense either in a free market. So none of these things were like free market phenomena. So here's an opportunity to kind of have a different kind of future where it's not, like, 4% of the world's population dictating terms to everybody else. But, you know, these countries, you know, aren't gonna you know, there's an opportunity here to make a difference in the next 5 to 10 years where, like, they they could, again, both help Bitcoin's long term network security, but also help themselves, like, kind of bootstrap, more economic activity. And I I don't know if we'll ever see this opportunity again. So it's it's really interesting to and and worth thinking about.
[00:54:16] Unknown:
I mean, I kinda wanna dive into the petrodollar a little bit because, I mean, I think a lot of the environmental stuff, but, really, I think the battle is gonna be sanctions. And I don't I don't think sanctions can be enforced in a post Bitcoin world, but I think governments will try. You know, what does that entail?
[00:54:45] Unknown:
Yeah. There's a good I'll try to find it for the show show notes or whatever, but there's a really interesting academic paper about how the US weaponizes the dollar. It it has nothing to do with Bitcoin, but it's written a couple years ago and it's it it just details, like, how, the US uses its control over Swift and, like, all these other networks to ensure that any government that it doesn't like, like, we're just basically has a really hard time. So those governments are the ones now turning to Bitcoin. I'm not supporting those governments. In fact, in my day job, I try to, like, expose them because they're often terrible.
But the reality is that, like, what are they gonna do? These are, like, rational choices. And they're gonna be they they're led to Bitcoin, and they're gonna use it. I don't know exactly how you would how you would stop, you know, this this network from functioning in that way. I think it's this this just sort of natural evolution of a new system that's a little harder to, to to control in that way. But but on the ESG piece, I think that is really interesting to also dive into. Again, yeah, we have, like, the very, like, ignorant public about the ESG impact of the dollar, which, of course, as as as, you know, you just mentioned or alluded to is has been over the last few decades, the fact that it it funds this huge warfare state.
It has led America to spend, like, profligately and and extravagantly in terms of social programs that that don't work very well, has hollowed out the middle class, increased inequality to, you know, ratios we haven't haven't seen in a really long time, many many many many decades. And then, you know, props up all these dictators and and and the fossil fuel industry gets a subsidy. So that those are the cost of the dollar. So, you know, where where do we go from here? And the irony is, like, the ESG people, if they allowed us to debate them on ESG terms, Bitcoin wins. I mean, Bitcoin is easily the most ESG compliant, like, investment you could make. I mean, it's tremendous financial liberation, bootstrapping of renewable energy, transparent governance process that's uncorruptible.
The problem is that's not what they're interested in. ESG people are not interested in, like, the truth or, like, in actually achieving those things. They're interested in control. So that's kinda where we are now.
[00:57:07] Unknown:
Yeah. Yeah. I think I I that's that's a point that I think Bitcoiners should harp on more, though, is and maybe that's what the the mining council in in theory wants to to do. But, you know, Bitcoin is the most the single most ESG positive force on Earth today. As far as I can tell, this is the the single greatest tailwind for all of those aspirations that, you know, liberal western society has decided it wants to champion. And and Bitcoin does all of those things. It's it it it is, you know, fueling the adoption of renewable energies, and then there's also liberating people from from the tyranny of of inflation or or, you know, sovereign control over their money in more extreme examples.
This is the thing, and we need to own that narrative more than than we have in the past.
[00:58:08] Unknown:
Gigi, what do you got on this?
[00:58:11] Unknown:
Yeah. I think, you know, like, we we've said it before. You know? Bitcoin because you're because you're working with CT. I mean, CT CT must be Yep. Yeah. Absolutely. I think, you know, again, I think it all comes down to incentives and just what makes the most sense also economically speaking. And, if you have in Bitcoin in Bitcoin, you have the buyer of last resort for whatever energy is produced and just it that it's it is perfect for renewables just for that reason alone. And the the problem with the energy fund, I believe, is that first of all, people don't understand Bitcoin and proof of work, like, not at all. And second of all, it's just a very easy argument to make. You know? Like, it's just bad. It uses up a lot of energy, and, we kind of have to battle that problem.
Flipping that argument on its head and making people understand that it's not actually a problem in the first place and that every kilowatt hour that the Bitcoin network uses is put to good use because it secures the best soundest, more most available, freest money that humanity has ever seen. That's something that I think only exposure to Bitcoin and education can fix. And I think I think once you realize that all all the points that are made in the mainstream media that are currently, like, packaged together in this energy thought narrative, they they will become mute because we don't, like, we don't we don't harp on about how how much energy, fridges consume, for example. You know? I it it's it all comes down to the question, is the energy use worth it? And I think as Bitcoiners, we, like, we we have internalized for a very long time that it's it's worth it. Every, like, every ounce of it is worth it. And I think just, making more people understand what's what's at stake here and what sound money entails and what, like, moving the world to a Bitcoin standard entails and that it is actually a good thing. And it's not only number go up, but it's also freedom go up massively.
I think that's that's what it's all about, and I think that's what we as Bitcoiners can kind of, work on to talk to family and friends and other people about it. I I also think that those of us who aren't minors, like,
[01:00:43] Unknown:
you know, maybe we can even help explain some of the phenomena better than than than what's out there now. I mean, only in the last few weeks researching this mining piece, did I start to get a understanding of the, like, energy market, and the reason why that Bitcoin does not, use energy that would be otherwise used. It it doesn't because because of the price. And, like, I didn't again, I didn't know this. I put this in my article, so it'll be out tomorrow. But, like, you know, Bitcoin miners kinda need to be in the 2 to 5¢ kilowatt, range. Right? Otherwise, it's unprofitable and they're gonna turn off their machines. And, you know, industrial, energy in the, you know, developing developed world is, like, 5 to 6¢ per kilowatt.
And, you know, residential use is, like, 10 to 15¢. So there's never gonna be a case where, like, a residential customer. If there's residential customers around, there's not gonna be any Bitcoin mining. They will outcompete them by far. And in Africa, it's 20 to 40¢ a kilowatt. So anywhere in Africa where there's, like, anyone else who who is is a customer of that grid, there can't be any Bitcoin miners. They can't make any money. So this idea that, like, Bitcoin, like like, you know, eats energy that would have otherwise gone to something else literally make makes no economic sense. And I feel like these are things that people need to actually talk more about. No? Yeah. Absolutely.
[01:02:04] Unknown:
Alex, have you seen the, Lawrence Livermore, flowchart of energy produced in the US? And and the takeaway from it is that 2 thirds according to them, 2 thirds of the energy produced in the US every year goes unutilized, unused,
[01:02:22] Unknown:
you know, for all of these different reasons between Oh, and there's just waste. I mean, in like, again, there's more there's enough energy today being wasted or curtailed to to easily run the whole Bitcoin network. In fact, America is decommissioning this year enough nuclear power to run the whole Bitcoin network. So I just don't wanna hear it with the whole the ESG thing is just such bullshit because it's not like I mean, as someone who actually cares about the environment and and probably has different views than a lot of Bitcoiners on this stuff, like, it it it should be we should be able to argue this in different ways according to our own
[01:02:58] Unknown:
Bitcoin without fucking up whatever anyone else wants to do. Like, it's just that's clear, you know? Right. And and you can even improve the environment by, like, by actually using that thing and and processing it.
[01:03:10] Unknown:
Puts I was listening to Friar. I mean, they were breaking it down, like, you know, coal uses like a like a like a, you know, puts like a ton of carbon in the air for Mhmm. For a particular denomination and, you know, natural gas does about half that and then, you know, clean coal maybe does, like, a third of that and then renewables do, like, way less. So, I mean, it is some I'd I would like to see less coal. I mean, that's what I'd like to see. And guess what? Bitcoin is the fucking subsidy that makes it possible to do renewables and hydro and and nuclear in places where you don't have a grid built out yet. Because it just boosts that revenue just just enough to make it tip the scales. No. It's it's like I did I profiled this operation in the Congo. It's incredible, like, because all these, like, outside investors are trying to get hydropower for the Congolese people. Only 9% of Congolese people have electricity. How fucking crazy is that? Wow. So what they do to this is we're talking about, like, a country of 90,000,000. So they they cook, they cut down the trees, which of course is horrible for the environment, releases all the carbon, it kills the gorillas, like nobody wants that.
And then they they make charcoal and they cook with with that because they don't have a grid. Okay? So if they can harness these incredible rivers that are literally running through the jungles, which they live in, You know, they could have a robust grid and they could produce agriculture and contribute and and lift themselves out of, you know, what the legacy of colonialism, But they need they need the power, and no one wants to come in because the hydro plants take too long to hook up to the grid, and they're either not sustainable or if it's an investor, they're not profitable. Well, guess what? Now there's Bitcoin miners moving in, and they could be immediately generating revenue. So it completely bootstraps the process. It's it's a really, really crazy thing to think about.
[01:04:53] Unknown:
That's perfect. Yeah. Love that. And I I just want to you you pointed, all already to Friar Haas and his most recent episode, with Nick Carden on the brink. And I would urge everyone to listen to that who wants to have an informed opinion on on this debate because he also like, he repeatedly makes the point that, as Alex also mentioned just like 5 minutes ago, Bitcoin doesn't need to steal away anything from the electricity grid. You know? Bitcoin only needs energy, and that's all you need to mine Bitcoin. It's an energy source and a communications link. And it could be, you know, like, it could be a satellite link. So it can be everywhere, and you don't need to steal anything away from the electricity grid. Like, it doesn't need electricity literally run Bitcoin
[01:05:36] Unknown:
on the methane from landfills and from the existing kind of, like, flaring.
[01:05:41] Unknown:
And that that would again, he said that would take us to 50,000,000,000,000 market cap. Like, it's like, it's insane. And if remember, methane methane is a 100 times worse as a greenhouse gas than the c o two that is produced from burning methane and or processing methane properly.
[01:05:57] Unknown:
So I fear where there's, like, an interesting conflict brewing here is like, I think there's people who are like, obviously like, I I get a vibe here that some of us here at least in this chat are, like, excited about Bitcoin as a technology that can, like, you know, bring us to, maybe like a more fossil free world. But then there's, like, Bitcoiners who are really pro fossils. So I think there's gonna be a really interesting debate on this over the next couple years for sure.
[01:06:25] Unknown:
Yeah. And for me, I I it always comes back to, like, what are the economic forces here? Like, Bitcoin miners, because they're in constant competition with other bit Bitcoin miners all over the world, they will seek the cheapest source of energy. And and, for maybe that's fossil fuels, particularly when it's, like, stranded methane, you know, flared gas. But long term, you know,
[01:06:53] Unknown:
renewable energy sources like like the sun, they're pretty hard to beat. I don't know what the cost. I don't know how true this is, but someone who I trust a lot said that, told me that, basically, the only reason that there's so much coal mining done in China is because essentially it's like quote unquote, like, free electricity through corruption. And that in a free market, there's no way that they could use that coal. Mhmm. I don't know what your thoughts are on that, but, I mean, that I found that very interesting.
[01:07:19] Unknown:
Yeah. I mean I mean, that sound that sounds right. I I think your point earlier that, like, the free market forces that I was describing earlier are true insofar as there is not subsidies or government intervention or some sort of
[01:07:33] Unknown:
way that Yeah. Props out the business. We have to remember the free market doesn't work, like like, all the time or is not allowed to work. To to go back to what Matt said on the petrodollar, like, it wasn't like the petrodollar system just sorta happened in a free market. Like like, the US used its hegemony to create it and sustain it, and it killed other competitors. Like, it killed the SDR, which OPEC wanted to use as the world reserve currency in the seventies. We did a deal with the Saudis to bring them into the IMF. And then in exchange, the Saudis agreed to not push the SDR as a reserve currency and not to nominate their oil in it. And then the euro came along in the late nineties, early 2000, and, you know, we killed that off too. I mean, I would argue largely through, you know, flustering Saddam's efforts to create a Petro Euro. So, I mean, we we, you know, we can't assume the global free market is gonna work this out, I guess, is what I'm saying based on, you know, economic history of the world.
[01:08:25] Unknown:
It's a good point. That's a good point. The difference being It would be good if the US did not have hegemonic power over over Bitcoin. Right. The difference being that that anyone if you get the hardware if you get your hands on the hardware, anyone could just plug into power and Internet and be a part of the network, which so so the entry cost the the the entry cost is is significantly lower than pretty much any other global network we've ever seen. Yeah. So so so that that should increase competition and help foster a like, as far as I'm concerned, Chris has said earlier that Bitcoin is the the closest thing we've ever seen to a truly free market. I'd go further than that. I would say, specifically distributed proof of work is.
It's it's not you know, it's great that we have global exchanges, and we have all these different exchanges that compete off of each other, but, really, the the true global free market exchange is that conversion of energy into Bitcoin. I just I'll let you guys continue, but I I'm just I mean, your your conversation that you just had triggered a lot of Bitcoiners on different sides and maybe both sides or Yeah. Probably both sides. Even know how many sides there are. To me, I don't think it matters at all. I I think this discussion is like mental masturbation. I think it's just, you know, something that big corners wanna talk about while we're going sideways, and we have nothing better to do. Why why does this conversation matter at all?
What why does well, because no. Because, like Whether it's environmentally friendly or not. You know, this idea did you see, like, these, these articles that people dig up about, like, Amazon? Like, there's, like, butthurt people that were, like, Amazon, when they sell a book, it, like, takes a couple lumps of coal, and, like, no one should use Amazon. Well, Amazon's one of the largest companies in the world now. Like, that article didn't matter. And there was some guy who was arguing with him on the Internet about that article,
[01:10:21] Unknown:
and I don't know if I think he wasted his time. Right? I I don't think that was those it's an art I don't think it's a battle that needs to be fought. So, well, there's that well, okay. So there's 2 examples I'll give where it it's not about some sort of, like, general threat, but really specifically how it could practically improve your life. So, again, these these folks, there's, like, 700,000,000 people who don't have access to electricity, and they they burn, like, biofuels to to do stuff. And that creates, like, enormous not only pollution, but this, like, indoor air kinda sickness that that actually ends up killing, like, tons of children every year. Like, 5,000,000, I think, children or something every year.
And, you know, like, you know, it it is manifestly better for them to use hydro, than than to burn coal. I I just, you know, like, to burn coal, you you have to do a lot more, like, damage to the environment around you. It's just, like, obviously, having some foreign investor pay for a dam and that just churns out like like a like solid energy for you. I just don't see why this who would want the cold side? I don't really understand that. And and then the other piece would be the sovereign individual thesis. So if if Bitcoiners really care about being sovereign individuals, what's more fucking sovereign individual than me running my own solar panels, running everything in my house, having solar cars, electric cars, and not having to deal with the grid and not having to deal with the government and being able to mine the solar. I mean, that's a very strong possibility for many Americans.
[01:11:50] Unknown:
So what's wrong with that? Own diesel generator. Just Yeah.
[01:11:54] Unknown:
Why? If you wanna do that too, but like and you have then know, then you're reliant on imports. So we go back to the dependency theory. All these countries around the solar panels. That's a one time deal. And you have to maintain them and stuff. Right? It's the last 20 years. I mean, I think it's just a disingenuous comparison. Like, Both at the individual and geopolitical level. Like, all these countries are reliant on importing oil when they could be harnessing the renewables in their countries. I think this is a very important and strong position, and I'll go I'll debate that one for sure.
[01:12:27] Unknown:
Matt, so sort of to to dovetail with, Alex's first point there. Like, why this matters to me in terms of like, why is it an important thing to talk about and and focus on with Bitcoin? Is that I like to I I often take it back to, like, the the classic bell curve of technology adopters. Right? We're still in the very early stages. We're still in the innovator's stage of Bitcoin adoption. And the mainstream is still ahead of us. And, you know, Bitcoin doesn't need marketing. I think it's an economic reality that everybody is forced to to come to terms with and figure out eventually, but it doesn't hurt for people to to realize the benefits of it through through word-of-mouth or or, you know, insightful articles or whatever, and embrace it, you know, rather than resisting it and trying to fight it and all that.
And what does the mainstream care about? Well, it seems like a good chunk of them at least actually or think they care about ESG. You know, the environment, global warming, whatever it is about ESG that gets them going, individually. And Bitcoin is the thing that is the best for those goals and talking about, the mechanics underneath Bitcoin mining and how, you know, this this, creating a a alternative minimum to, to unused energy. It how that has this positive flywheel effect of of lifting people out of poverty or, you know, shifting the mix of energy production to renewable energy and therefore reducing, you know, greenhouse gases.
That's all going to be popular with the mainstream that I would like to see embrace Bitcoin rather than fight it, you know, and then and then eventually
[01:14:36] Unknown:
submit to it, I think. Yeah. Well, if and again, going back to the again, we keep referencing it, but the the conversation with Friar who has, like he's Lebanese and he lived in Lebanon for a while, and he describes this crazy situation where, like, all the, like, Lebanese are basically entirely relying on diesel. And in each building, there's, like, a diesel generator. And this is all, like, imported diesel. So they're, like, completely reliant on foreign powers for everything. And that this is the case for so many, not only countries, but communities and individuals. So if we wanna think about being more sovereign and then, you know, I just it strikes me that a lot of these renewable tech, or even nuclear ventures, could be could be really helpful from that perspective.
[01:15:19] Unknown:
I'm I'm not saying that's not the case. And if if you and Chris just wanna go and convince, you know, Newcoiners to adopt Bitcoin because it's good for the environment, then that's your prerogative. Yeah. It's not necessary. I just I just don't I I don't think it's necessary, and I I think at the end of the day, the value prop is censorship resistance. And the overwhelming majority of people, not just the mainstream, overwhelming majority of the people on the planet do not understand that it's about censorship resistance yet. And that's mostly because our competitors, the competitor chains and whatnot, have not really faced censorship yet. And a lot of this bullshit environmental FUD that we hear is coming from proof of stake promoters, and and those those those promoters, are they're they're ignoring the trade off of censorship resistance, and until those chains actually get attacked and sanctioned and censored, people will be blind to it. So as, you know, as far as I'm concerned, we keep our heads down, keep moving forward, keep improving Bitcoin, and and sooner or later, you know, the powers that be can't help themselves. They censor everything. It's not like people don't realize, like, PayPal would prefer if everyone could just send their transactions to whoever. They don't wanna censor transactions. They're forced to censor transactions.
And and there all these different chains are gonna gonna be censored if they're not sufficiently censorship resistant, and that's where proof of work matters.
[01:16:51] Unknown:
Yeah. Should we re should we, like, read or, and discuss the, minors, counsel's response. Have you guys seen it? The the CoinDesk article that went out? No. No. No. It's a thread that Michael Shale Sailor just shared. No. I'll just it's not it's not that long. If it's okay, Matt, I can just read it for the Go for it. Everybody. Bitcoin's energy consumption is transparent, making it an easy target for criticism. But what critics can't see is the breakdown of energy sources. Bitcoin is more carbon free than most industries, but we need better data. Instead of standing by and continuing to write pieces on the topic and hope that the issue goes away, a group of miners came together to say, look, we need to be transparent and we should encourage others to be transparent too. Maybe the word council was too strong. Bitcoin's fungibility matters. Bitcoin's decentralization matters. No one's arguing that. I believe in transparency and I believe in moving towards a carbon free future, but the fundamentals of Bitcoin are nonnegotiable. We at Galaxy mine with Slush Pool and eagerly await the data Stratum V2 has enacted to further protect Bitcoin's fungibility.
The mining council's goal is to provide energy transparency. It's that simple. We haven't signed anything for up for anything beyond that. So I'll let you guys react to that.
[01:18:02] Unknown:
Maybe it's the, the the vestiges of of, being a Yuppie that are in me, and, you know, being part of the establishment. But I don't know. I I I want to believe that Michael Sailor is doing, you know, is is doing the PR campaign that he sees as valuable, as a CEO who's, you know, very familiar with the politicking of of, image management.
[01:18:29] Unknown:
And to be clear, he didn't write he re he shared that. Somebody else wrote that.
[01:18:33] Unknown:
Yeah. Yeah. Yeah. But, you know, I I think that I think that he has some some hand in in this initiative overall.
[01:18:41] Unknown:
How is that different how is that different than when Coinbase says Open Finance?
[01:18:48] Unknown:
What do you mean?
[01:18:50] Unknown:
They say open finance with one hand, and then they sell surveillance software to the US government with the other hand.
[01:18:55] Unknown:
Absolutely. So the I've been I've been torn on this all day of, like, how do I feel about this? Because part of me wants to hope that this really is as that thread just described that it's limited to, you know, trumpeting the winds of of, you know, how renewable, Bitcoin mining already is and how this natural shift towards stranded fossil fuels and and renewables is is taking place. I wanna believe that there is a there is a slippery slope that gets really bad really quick, if this group of miners believes that they have some power to, you know, be an arbiter about what kind of blocks are acceptable
[01:19:43] Unknown:
or trying to understand. Right? Like, we're we we just spent, you know, 30 minutes or 20 minutes talking about the environmental concerns, and it's not about environmental concerns. It's it's it's a distraction. The real threat is the OFAC shit. The real threat is is is is agreements between American miners or any miners on on which transactions get included in the block.
[01:20:07] Unknown:
Yeah. I just just to clarify, and I totally agree and there's no way that this doesn't turn into a slippery slope and that's why I think it's a horrible idea. But I I wouldn't say we were talking about environmental concerns. I would say we were describing how there are, like, factors in the world that will, like, basically take advantage of Bitcoin, and that Bitcoin mining will spread in a certain direction because of, like, stranded and otherwise, like, unusable energy resources. I I don't think we're I'm not trying to make, like, a judgment here. I'm just trying to sort of describe what's happening and what will probably likely continue to happen. But, yeah, we don't have to pander to to anybody. I just think it's kinda cool that that's happening. Yeah. Agreed.
[01:20:48] Unknown:
So, no. Yeah. I I didn't mean to, yeah, I mean, I I I agree with that. I I I didn't I didn't mean to to say otherwise. The but my point is is that it's it's coming from an from a perspective of response, basically, like like that there needs to be a response here. And I I really do think it's a distraction. We have 6102 in the comments. I a lot of times, I talk about this being, the 61 02 show because he refuses to dox his voice except for that one episode on Stefan Lavera, and he's kind of upset with me. He woke up on the wrong side of the bed today, but he's kind of upset with me because this is supposed to be a show about actionable Bitcoin discussion. It's something I pride myself in, that we talk about real steps that Bitcoiners can take today, to improve their current situation or or threat model, and how they use Bitcoin.
I do think that this is very topical, and I think the conversations we've had so far are questions that a lot of Bitcoiners, especially new corners, are asking themselves about. So I would push back a little bit that it's not actionable, but he does have a good point. In terms of censorship, if we start to see miners, if we if we start well, we we're already seeing miners, censor transactions. Right? We're seeing Marathon Pool, doing this OFAC thing. In that situation, you know, what can a user do? Right? And I think I mean, they can basically do all the privacy techniques that we've discussed on this show in the other 22 episodes.
A big one to me, I think, is CoinJoin, and I think one of the aspects of CoinJoin that is and no KYC. Right? So I I I think one of the big is that a lot of Bitcoiners seem to prefer the pay join model. This idea that you could have, a privacy gain in Bitcoin without it being obviously apparent on chain, because CoinJoin is completely apparent on chain. PayJoin, under certain circumstances, can look like normal transaction. You can't tell it's PayJoin. I think CoinJoin is kind of really useful here because it's obvious on chain, because if miners want to start censoring coin join transactions, it's gonna be immediately obvious, and it's gonna affect every single coin join user.
So to me, I think the single biggest thing that and 6102, I mean, you could correct me if you disagree here in the comments. I think the single biggest thing a user can do to protest this kind of OFAC block list type of thing is to just coin join everything and constantly coin join.
[01:24:03] Unknown:
I agree. And I I want to tag on on onto that because I think that's an important point, and also it speaks to the actionable advice of Citadel Dispatch. I would also say just coinjoin and also learn about coinjoin. Learn about, how Bitcoin works, also learn about proof of work to push back against, like, the narratives that are spun up. But I I would still say even though you're saying that coin joints are obvious on chain, that's kind of true, but still, paint is something that is external to Bitcoin. And you can only tell if a Bitcoin is like a bad Bitcoin, if UTXO is a bad UTXO by applying heuristics. And this will always be true. And the question remains, like, what do you need to do with a new UTXO so that it becomes clean again? Because if you go through the whole transaction graph, the it's it's very probable that your UTXO was in touch with a coin join in the past. So all these questions remain unanswered, and all these, like, OFAC compliance like, all all this bullshit, it doesn't really take it into account because how many hops are enough hops until the Bitcoin is back into normal circulation again and is clean again. And it's it's it's not it's it's also like Bitcoiners know of these problems, and I think, you know, we talk about Taproot a lot. And I think Taproot truly solves this problem in a sense that you can't differentiate between coin joints and normal transactions anymore. And once once we have that, the heuristics kind of fly out of the window. And, again, I repeat, a tainted Bitcoin is always an external property. It's nothing it's nothing that you can definitely say intrinsically that this is, like, a a a bad Bitcoin, so to speak. And I think regulators should kind of I I don't think currently this is taking into consideration.
[01:25:55] Unknown:
True. Right? You you could still see an equal output coin join. Right? Like, that's not why would that change?
[01:26:02] Unknown:
Yeah. I can I can do a normal transaction where it just happens to be that I have an an equal output with multiple parties?
[01:26:10] Unknown:
Okay.
[01:26:12] Unknown:
It's it's like there there are different kinds of coin join. Like It's a bad transaction. It's a bad send transaction. Mhmm. And it's also, like, still that like, you you've also the the ownership is also a heuristic. You know? Like, even even putting identities onto UTXO is is it's, like, it's it's not a done deal. That's what I'm trying to say. You know? Your heuristics can always be wrong. Yeah. I I can pass on an open dime and your all all your heuristics are destroyed. You know? Like, I can do I I can pass on UTXOs without doing a transaction.
[01:26:48] Unknown:
Yeah. This is not reflected in chain surveillance. That's what I'm trying to say. I mean, I guess it gets to the heart of the whole show in terms of, like, what mining centralization and, like, this potential trend of mining decentralization, is, you know, at the end of the day, like, if you're worried about sensorius miners, like, they have they have to as you said, Matt, they have to know who you are. Like, they have to know what transactions are yours. Right? And that's what you wanna defend yourself, you know, from.
[01:27:15] Unknown:
Well, I mean, like so in a lot of ways, you know, to me, you know, my miner based censorship is something that's been discussed in Bitcoin land for a long time, and it's always been considered, especially on the tech side, has always been considered, like, the the ultimate threat, right, to to get past this threshold where, you know, mining is distributed enough that you don't have, this kind of censorship. And as we mentioned earlier in the show and 60102 pointed out in here, a key aspect, right, is that if if you don't have all minors playing ball, especially as transaction fees become a larger and larger part of their reward, if one miner tries to censor you, you can just raise your fee and and get into a block by by a different miner.
Part of me thinks that a lot of this is also mental masturbation because it's not even really necessary. Most Bitcoiners are coming in through KYC exchanges. You can make it prohibitively difficult to withdraw from those KYC exchanges. You can just, you know, keep them on Robinhood. They don't even withdraw they're not even allowed to withdraw if they use Robinhood or PayPal or Venmo or or any Revolut, I think, still doesn't allow withdrawals. So there's a lot of ways to attack. You know, there's a lot of ways to censor Bitcoin, especially the low hanging fruit for, you know, the overwhelming majority of the mainstream as Chris has said earlier. Right? It's it's relatively easy to censor them just via these KYC elements of of the exchanges and the on ramps and the off ramps and the wallets and and whatnot.
What what does concern me though, I guess, is, like, kind of like an endgame. I don't think it's really conceivable that it happens, but the fear to me on the minor censorship side is less a blacklist mentality and more a whitelist mentality Mhmm. Where they have basically a list of known actors that they're only confirming transactions of them. Right? And that's that is, you know, there's no there's no doubt in that. Like, with chain analysis, there's doubt as Gigi said, and and we have people talking shit about proof of stake. It'd be more likely we see it in a proof of stake chain. Yeah. And, hopefully, we will see it in these weaker chains first before Bitcoin. But, this idea that, like, imagine if if Coinbase just submitted their xpubs to Foundry and Marathon. Right? And said that any transactions that come from these xpubs are ours, and, you know, we'll pay you a certain flat rate for the year to to mine those transactions for us. Something like that.
[01:30:01] Unknown:
Yeah. I mean, look, as far as actionable, I mean, it 6102 just pointed out that, like, you know, you would need 51%, to effectively censor. Right? Right. So, I mean, it is not, it is not not actionable to be talking about how, you know, we could act potentially make an impact in terms of, you know, encouraging many jurisdictions to do mining. Like, I think that that is one clear way to to proceed here. I mean, it may not be Cypherpunks right code, but I mean, Bitcoin is is a little bit more than that. I mean, now we're out there in the manufacturing world. We have physical hardware that that is, you know, an important part of the nervous system of this network. And, it may seem like an impossible task, but weird shit's gonna happen in the next 5 years and we're at a very impressionable moment. You have people like Elon Musk who are, like, they don't know what the hell is going on and they're, like, learning about it now, And they're they're gonna learn some bad stuff. I mean, he's pretty clear he's getting very into proof of stake in Ethereum, but they're they're also gonna learn more, you know, opportunity to teach about Bitcoin. So I think it is a time when we can be actionable about trying to think about, paving a way for a future where where the mining is is more decentralized in terms of operations.
[01:31:19] Unknown:
Yeah. To piggyback on on that idea of, like, what is actionable and and how does what can we do to reduce, you know, improve our threat models as Bitcoiners here. I guess that's that's why I feel strongly about pointing out the the environmental benefits, the energy renewable energy benefits of of Bitcoin and Bitcoin mining, is because one of our one I think as Bitcoin is one of our big threats in the 10 plus year horizon is the persecution by the mob. You know, and and to the extent that we can take the narrative that is being stirred up for them by the media of Bitcoin is bad for the environment and, point out through education, through whatever sort of, you know, information we can generate as a community that no, actually, it's very much the opposite. In fact, this is the best thing, for for the environmental goals that you have, as the mainstream.
That I think can reduce the likelihood of us being persecuted as a as a group, and individually. And I think that's that's one of the big concerns I have as a as a Bitcoiners. You know? At what point does the mob turn on me? And I think this is currently the the single biggest narrative for generating animosity towards Bitcorners as an out group, when it doesn't need to be that way.
[01:33:02] Unknown:
Yeah. I I think I think there are 2, like, ways that this can be mitigated. Increase the numbers the number of Bitcoiners drastically. So urge everyone to stay humble and slack, and I think that kind of works. You know, once you once you dip your toe into the water, it seems to be a one way street. And on the other side, I think education is just key. And I just want to go on a a a little proof of stake rant there because the chat is still talking about proof of stake. And I just Thank you. I just want to point out that if you think that proof of stake is a good idea, you don't understand proof of work in the first place. And I I I truly believe that the main misunderstanding of of just the general population and also of of shitcoiners, for that matter, is around proof of work. Proof of work solves all the problems that proof of stake has, and proof of stake is actually a non solution. Like, it's it's it's like talking to physicists and and explaining to physicists that, like, wouldn't it be nice if we could build a a perpetual motion machine? You know? Yeah. That would be awesome. It would be great. It would be great if proof of stake could work, but it doesn't work. Like, it's it's literally against the laws of physics. Like, it's if you understand proof of work well enough, this kind of becomes obvious. You know? And in proof of stake, you don't have an objective truth, and that's the whole problem. Proof of work builds up and a time line that you can't argue with, and you have an objective truth. If you have 2 proof of work chains that that map onto 10 years of reality, you can look at them objectively and determine without a doubt which one is true by definition, and that's what we have with Nakamoto Consensus.
The the chain that has the most work embedded in it is true by definition. You don't have this with proof of stake. If I present to you from the same Genesys plot with the same validators, 10 years of history of 2 proof of j stake chains that had a split somewhere in the past, you cannot tell which one is the accurate one and which one isn't. So you always have to rely on trust of of some external trust, and it's proof of stake is like like the electric plug that plugs into itself. And that's the whole problem. And you have you you will always have timing problems in proof of stake because you have no way to tell the time accurately, in an adversarial environment. That's a really deep problem. You have random selection problems, like who is gonna be the next validator. You have no outside cost. You have no operational cost. This leads to massive centralization.
Like, if you think proof of stake is a good idea, you have no idea what kind of problems proof of work solves, and you you need to study proof of work more if you think proof of stake is a genius idea.
[01:35:38] Unknown:
I, a question for you, Gigi. I I I agree, obviously, and I I went on Lex Freeman a month ago. I guess that's gonna come out soon, and I I wanted to address that with him in terms of, like, the fact that Bitcoin, you know, doesn't have a bureaucracy that runs the monetary policy and every other cryptocurrency has, like, essentially a currency board, like a small group of people that get to decide the monetary policy. And that even in the 2nd largest cryptocurrency, we don't even know what the monetary policy is gonna be in 2 years. No one has any freaking clue how much ETH is gonna be minted in 2022 or 2023. It's like, I I talked I talked to a bunch of ETH engineers very politely, and I was just trying to get, like, a sense of what they had in mind. And the answer is they're gonna figure it out, and they're gonna do their best. And and that is, you know, not a recipe for success in this world in terms of currencies. Like, a handful of currencies have done pretty well, but most of them have totally shit the bed.
So good luck to them. I mean, they have no experience doing that, like, out there in the real central bank world. So we'll see what happens. But I will say this is very interesting. I wanted to bring this up with you guys. Did did all these see Vitalik's latest post? Can't say I did. Nope. I think what I've observed is this trend and a lot of, like, the, I would say, more savvy ETH people are are are, I think, hinting at this narrative shift where they're basically saying, we needed proof of work to bootstrap. But really what what preserves Bitcoin's freedom is the full notes, not the proof of work. And we're gonna go to proof of stake, and we're gonna have full nodes and proof of stake, and we're not gonna have proof of work and fuck you guys. And this is what I I I I started to, like, get this vibe, when I was, again, talking to these ETH engineers and they're like, no. No. No. Bitcoin is special because of full notes, not because of proof of work.
And they really push on this. And Vitalik's latest post was about how important full notes were. I swear to God this is happening. So this is their theory is that they're gonna say, you need proof of work to bootstrap, then you can go to proof of stake, after the quote, unquote, fair distribution. Okay? Right. But then it's all about full nodes. And now Vitalik's gonna put on the show about how he wants to make full nodes more doable in Ethereum. So I don't know what your reactions to that are, but that that's what I'm sensing here.
[01:37:46] Unknown:
God. What a dog and pony show. Because if I'm not mistaken, the the calculations for for what a full node has to be able to handle is 3 petabytes a year, I think, of of data, just just to keep synced under the the new proof of stake model they're shifting to. Owners, owner is burden on anybody who's trying to to run a full node. And it and it's beyond you know, it doesn't even matter because you're still talking about the fact that, a group of insiders with a 70% pre mine is arbitrarily deciding future changes in monetary policy and, has the ability to revoke transactions like with the DAO, at any point. It it so frustrating how, they they distract you with, arguing about details when the bigger picture, is so stark.
[01:38:48] Unknown:
Yeah. But this is their way of of, like, trying to have their cake and eat it too. Like, they're trying to go all in on this energy narrative, which I know we've beat the horse to death here, but, it it's it works, folks. I mean, you you you know, we are sitting here. We all are long term Bitcoiners. Like, we know what's gonna happen, and it's unstoppable. But, like, short term is important too and there's years here between now and then and fortunes are gonna be made and lost. And, like, them getting Elon and all these people to buy into the green stuff is, is highly profitable for them. Highly profitable. I mean, look. I mean, if you guys think ETH is gonna disappear, you're wrong. It's not. It's gonna be around. It's gonna continue to make people shitloads of money. I mean, they're just profiling the 3 arrows guys in the Wall Street Journal today. I mean, they've got a massive youth position. And, I mean and, you know, I think they know how to manipulate the markets. So So you know, they're they're they're set up here. I mean, I think Gigi hit the nail on the head, with his description.
[01:39:46] Unknown:
I think proof of work, distributed proof of work is a real innovation. I think it's insane that it almost seems like an overwhelming majority of people in the industry, including so called smart money, think that proof of work is a problem that needs to be solved rather than the innovation itself. So early. I think that's really bullish for us who realize it. It's one of my most, you know, bullish fundamentals with Bitcoin, and I don't think that's priced in, even if a lot of Bitcoiners disagree with me on that. And one thing I was I would add there that Gigi missed, is, you know, a proof of stake system is inherently permissioned. It's not permissionless.
You can't get into the system without an existing holder selling you some of their coins, trading you some of their coins. With Bitcoin, you we existing holders can't block new entrants. They can get miners. They can plug in those miners. They can get coins automatically via the network. But with proof of stake, that's not possible. And then just one thing I would add here, I mean, they've been talking about proof of stake since before the ICO. Yep. So once again, here we are, you know, arguing about something that doesn't exist yet. And I feel like when if they ever get it together and make it launch, I'm not gonna say they're never gonna move to proof of stake. We'll see if it happens, and I think there'll be a fight with miners if it does happen because why would minors, you know, wanna lose all their revenue?
They're gonna have major issues, and they're gonna have major censorship issues, and they're gonna have major reliability and stability issues. They're gonna have you know, there's so much complexity there. I'm I don't pretend to know all their different complex bullshit they talk about, but, like, people are gonna get slashed that aren't supposed to get slashed. People are gonna lose money, and it's gonna prove to people, you know, why it's such a bad idea. So, like, people need to touch the stove, and the stove is being built. It's been built, you know, being built and hyped for, like, the last decade.
[01:41:44] Unknown:
Yeah. And I just want to point out that there is a reason why Ethereum is still a proof of work coin, and they have been talking about transitioning to proof of stake forever. And there is also a reason why all proof of stake systems that got a little bit bigger were attacked and ran into issues. There is a reason why all proof of stake systems suffer from timing attacks and from stake grinding attacks and why all proof of stake systems had to add a little bit of proof of work to just make it work. You know, if you research that, it's it it becomes blatantly obvious the proof of stake just does not work and can never work. And if you understand proof of work deeply enough, it becomes obvious from first principles because what are we trying to do? We are trying to build up an internally consistent global construct that is made of pure information that nobody can cheat and that everyone can verify. And you cannot do that without proof of work Because without proof of work, you will always have to rely on external sources of truth. Only with proof of work can you embed the truth inside of the information, And that is actually the innovation that Bitcoin brings with it, and that's why it works. And the difficulty adjustment is just like the the the genius cherry on the top that makes all of it kind of work beautifully and leads to a to a finite supply and all of it. And if you don't understand that, you just have no idea what you're talking about. And if you want to build, like, proof of stake castles in the sky, be my guest. Like, as Alex said, okay, it's gonna be profitable in the long run, and they're very good at marketing and so on and so forth, but make no mistake, all of it will collapse. Proof of stake can never can never work. It can never work, and it will collapse.
And and so it's be my guest. Like, build it and see it firsthand and burn your both burn both of your hands on the stove, and I'll be sitting here with my popcorn and just staying humble and sucking sense. That's also actionable advice.
[01:43:31] Unknown:
Rather than I mean, for me, rather than saying it'll never work, I mean, that that's what we escaped from. Like, for me, I feel like fiat currencies are proof a proof of stake in a way. And, they they have a rather aggressive lifespan, unfortunately,
[01:43:46] Unknown:
and and they've wreaked havoc and and do things, but you'd like, proof of work plus One more thing. You go ahead and say one more thing. It it cannot work in an adversarial environment. It cannot work because you can cheat your time stamps, and that's basically it. Like, it cannot work. If you want to fuck shit up in a proof of stake system, you absolutely can. It's really difficult to do in a proof of work system.
[01:44:07] Unknown:
Yeah. I guess what I mean by that is in a vacuum where it's controlled, like, they could they could keep the straight going for for a long time, but, like, the the fact that proof of work plus full nodes, very important. There's a bunch of, shitcoin proof of work coins that that are meaningless. You know, this this this you gotta have both of these things. User control of a proof of work system, which is only possible in Bitcoin. Like, once you have that, that's our ticket out of proof of stake. Mhmm. And into a system where a small group of people do not control the monetary policy. And and that's the key for me. So that's kinda it for the folks in the chat. That's the way I'm trying to explain it to people who aren't very, very into this. Like, it's it's really our opportunity to get out of having, like, a currency board, a small group of people who are usually the elite, almost always the elite, who who get to make the decisions for everybody else. Well, guess what? In Bitcoin, we don't have that and, no one's making any decisions about 21,000,000.
So that's kind of the way I would put it. I think that's that's why Ethereum has staying power is
[01:45:03] Unknown:
Ethereum is the it's this local optimum of of variables if you are determined to not break your worldview, you know, to to continue to view the world as, you know, as necessarily working the way the fiat system today works of having insiders that control monetary policy and can can, you know, be responsible, stewards over the chain and decide what what transactions are allowed and and which ones get rolled back. Like, that's if you if you want to view the world that way, which is how we've all been indoctrinated to to see the world, then Ethereum, is in line with your worldview.
And getting to that deeper value of Bitcoin requires, facing your worldview head on and and, you know, casting out the elements that are that that have been indoctrinated into us and, you know, seeing a deeper truth, That's hard to do. Luckily, it's an economic reality that will be playing itself out, but I think that's why Ethereum has its staying power. Also, to to talk up I talked up Alex's recent article. If if listeners were interested in in what Gigi was just talking about, check out his, Bitcoin his time piece, which I think was probably the the deepest article I've read about the nature of Bitcoin in the last year or so. So, highly recommend that one.
[01:46:41] Unknown:
Yeah. Thanks. And to your point that, Ethereum has staying power, I'm not so sure about that. Like, the the underlying technology of Ethereum is like rack pull technology. So, like, it's it's a rock pull from the start because of the 70% pre mine, and they just enabled all the other rock pulls. Yep. And I think just I I wouldn't be surprised if there is, like, one rug pull to end it all. And, of course, you know, like, as Matt likes to say, it will trend to 0 in Bitcoin terms as well everything else. So I wouldn't I wouldn't bet on Ethereum having staying power. I I hope you're right. I I wouldn't be surprised if nobody talks about it 15 years from now.
[01:47:21] Unknown:
God. I hope so. I hope it's the death rattle of of an old, you know, an old way of thinking.
[01:47:27] Unknown:
But It's gonna be a very expensive lesson.
[01:47:30] Unknown:
Yeah. That's that's for sure. And and, you know, like, I'm an example of that. Like, I I started as an Ethereum person at 2016. That's what I got pulled into, the narrative of of what Ethereum could do that Bitcoin couldn't do. And I and that caused me to stay in altcoin land for until 2019. You know, it took a bear market and absolute bludgeoning in terms of my sat value to capitulate basically into Bitcoin. And the stock to flow model was also important for me to to, like, start to go down the rabbit hole of of the nature of stores of value and realize what Bitcoin really is.
Yeah. But, like, the you know, that if I hadn't gotten pulled into Ethereum, I would have more sats today, than than I do. And that's painful. But it's gonna be worse for for some people. You know, like, I I got out in a way that it I didn't lose that much through that whole journey. But I, you know, I almost got wrecked by a tax burden along the way, and there are all these other potential pitfalls that that could have destroyed me. And it and that has happened and will happen for so many people because Ethereum is this this, fraud, this attractive illusion It's a siren song. Exactly. It's a siren song that's wrecking people on the rocks, and and will wreck more people on the rocks so long as it it continues to be around.
[01:49:05] Unknown:
Well, Chris, if you'll let me also, show your article. I really love the one you did in January. Am I too late for Bitcoin? I highly recommend everybody read it. It's extremely bullish, but it it's, like, it's helpful for, like, the long term view of, like, what's happening here. Like, this is an incredibly entertaining week to do this show and to talk about these issues. And all of a sudden, it looks like we're gonna have this, like, environment kinda FUD, like, war, like, you know, like, before we even get to the privacy war, etcetera. But, like, long long term, just thinking about, like, this thing as this gen this, like, historic story of value technology and just what it's gonna eat in the next coming decades. Like, you just gotta keep your eye on the prize. So thank you for writing that.
[01:49:49] Unknown:
Thank you. Yeah. And and people, it is so damn early still. Yeah. It's so early. I've been talking about how, on other podcasts recently, I've been saying if you take if you take all the Bitcoin, 21,000,000 divided by 8,000,000,000 people, there's 250,000 sats per person on earth. And recently that cost, a $150. So you for every $150 of sat stacking you do, you are you are stashing away one person's worth of digital gold for the digital future. It's incredible. Buying 1 human being. One human being's worth of life energy. And that price just dropped. It's no longer a $150 for 250,000 sats. That's that's something like $100 now, maybe less.
So you have this unreal opportunity to to stack Sats before the rest of the world has figured out what's happening here and secured, like, potentially generational financial security, if not outright wealth, just by being here early and leaning into the opportunity that you have while everybody is scared or listening to Elon.
[01:51:01] Unknown:
I I want to tag on to that if I may, because I was really surprised, how how many Bitcoiners had their jimmies rustled by the recent flood and the price drop. And I think if if you are disturbed by those kind of things, you still have a a a long way to go in terms of getting your auto DCA right. Because I think once you realize how early we are, like, just trying to time the market and and trying to kind of trade, it it's it's a it's a losing game. Like, I think the only winning game you can play is just stack as much as you can, provide value to your community, earn Bitcoin or earn fiat and do auto DCA, and just stack daily, stack weekly, stack monthly, whatever you can afford, and just play the long game. Just do that for the next 10 years, and you're gonna be fine. You'll Yeah. You'll outback everyone else.
[01:51:52] Unknown:
Be sure. I mean super early. Bitcoiners, a lot a lot of a lot of Bitcoiners were, like, not worried and were, like, this is awesome. I get, like, cheaper sets, but, there were a lot of people freaking out and and Ray Dalio is out there stacking, you know, taking advantage of some Bitcoiners kinda worrying, you know. So, like, let's just remember that there's a lot of, sharks in the water. Can I interject term?
[01:52:16] Unknown:
Can I interject to tell a little a little story, like, you know, that the the Yuppie finance world is sort of where I come from? And let's look at, you know, a little story through the the the recent timeline here. Ray Dalio, like, 4 maybe about 4 months ago said, maybe I'm missing something with with regards to Bitcoin. Then his firm, Bridgewater, behind the scenes, you know, that that basically says he's about to go do his diligence. 4 months later, what has happened? His CFO, CFO of Bridgewater, the CFO of the largest hedge fund in the world, just quit his job to go join NYDIG, a Bitcoin only company that's focused on institutional buying for, a Bitcoin.
So he lost his, I don't know, number 2, number 3 guy, in his in his company because Bitcoin, after doing the diligence, Bitcoin was so promising to that guy that he left to go focus on Bitcoin. And Dalio bought some Bitcoin at the same time. So that's a 4 month 4 month process that that Dalio and and everybody at Bridgewater just went through of doing their diligence. And then not just buying some, but being so bullish that he'd lost, you know, one of his key people because Bitcoin is bigger than anything that's happening anywhere else, especially at Bridgewater.
[01:53:45] Unknown:
One other thing I just wanted to add is we got a lot of people coming into the space now who who don't understand, like, the the monetary policy piece and the predictability piece and the sort of safe haven that Bitcoin is. And therefore, they're like, they too easily jump the shark and go to other technologies. And it's kinda like what we were saying with Elon before, but it's happening to to a lot of people here. So just to give you some numbers, let's see. Just in the last month, we've got, 2 really people that I I respect a lot or, you know, yeah, continue to respect a lot, but, more relevant maybe to this crowd than than Elon. But we've got, like, Moxie Marlinspike, and we've got Snowden, you know, both going to bat for, like, these privacy coins.
And I guess what they, like, they discount the the monetary policy piece and the the the money piece, and and they overrate the technology piece. And what happens is you get stuck in the situation where, Moxie's coin is down 80 over 80% from from a few weeks ago, and Snowden's coin is down 75%. Okay? So and and and that those swings are gonna be, like, a lot more wild in the coming year in in different directions. And I just think it's it's interesting to see that they, know, they obviously haven't grasped that piece yet. I think they they probably will eventually, and it it's sort of in retrospect, it'll have been inevitable.
But it it is, you know, something that we're just gonna see more of. Right? People coming in and, like, oh, well, you know, Bitcoin's broken. Let me, like, fix it and and use this other thing. And even, like, our you know, even the heroes are are susceptible.
[01:55:28] Unknown:
Yeah. Absolutely. And, I I was really disappointed by both of these events actually because, I consider both of these people heroes of mine. I think Moxie did great great things with signal and, the OpenWhisper Systems protocol and, of course, known the great things as well. I think if you're a technologist, it's very difficult to understand that Bitcoin is not only a technology. It's also, like, you know, in in large in a in a very large part also, like, this almost biological system. Like, it's this this social system. It it, like, it needs this economical part to work, and all systems like Bitcoin need this economical part to work. And that's really hard to understand if you look at it from a purely engineering technology side of things.
And I think it takes a very long time and also a lot of humility to accept that Bitcoin just is the way it is, and we kind of have to take it as this gift from the gods, if you will, because it had this immaculate conception and fought all its battles and survived everything and grew organically and was dispersed organically. And now we we like, it's it's not only this informational construct. It also has all this infrastructure. By infrastructure, I mean, not only the mining side, but also who holds it, who accepts it, and who is on the Bitcoin standard already. And you cannot replicate that. You cannot you cannot replicate that organically in the 1st place, and you also can't duplicate it. Like, I I truly believe it's this one time path dependent invention slash discovery, and we have to deal with it. I think all Bitcoiners kind of know that Bitcoin isn't perfect. You know? Like, there there there are some things that that aren't perfect in Bitcoin, but it's the best thing we have. And building trying to trying to reinvent the the wheel, so to speak, it's just a losing proposition because you have these economic forces that kind of tend to 1, and you will like, if you if you're if you're trying to fix the issues that Bitcoin has by launching your own shitcoin, you've already lost. And it doesn't matter if you know it or not. It's it's just it's just a effect of nature, and it it really pains me to to to see those kind of people that I hold in high regards in all other areas fail this kind this kind of, like, intelligence test, if you will, because they they truly try to, you know, like, I just learned about Bitcoin. I'm I'm here to fix it and launch our own Bitcoin. And it's it's really sad to see, but I think it's something that everyone kind of has to go through, and I think it will sort itself out over time. Yeah. Gigi,
[01:58:05] Unknown:
extremely well said. I love you, dude. It it makes me miss you a lot hearing you speak. I'm looking forward to seeing you in Miami, very soon. I I a 100% agree with everything you just said. I'm curious while I have you here. Do you think we'll ever see a successful Bitcoin hard fork in our future?
[01:58:27] Unknown:
I I think only if the alternative means death, and I think that's really hard to know, from the start. You know? Like, it's trying to figure out like, if there is a problem that Bitcoin needs to overcome, it's very hard to tell, like, will it kill Bitcoin in the future? And I think the only, like, the only reason to do a hard fork is if it if the alternative means the death of the network. And so I actually don't really see it unless it's crystal clear. Like, if if we, I don't know, have if we have a new mathematical discovery, if we find a flaw in one of the algorithms where we kind of know, okay, like, if we throw more compute at that and, we we have reasons to believe that motivated attackers could actually, you know, break something in in a serious way, then I think we could come to some agreement to do a hard fork. I don't think we will do a hard fork for, any other reason. And Well, to be clear,
[01:59:32] Unknown:
there would never be an agreement. Right? You would have Yeah. Anyone can hard fork whenever they want a hard fork. Of course. Right? And then By agreement, the hard fork. Chain would win, right, in that situation. If there was, like, a motivated if there's if there's some kind of if the overwhelming majority of users were motivated for some apparent reason. If if something would break the old chain.
[01:59:54] Unknown:
Yeah. By by by agreement, I mean something like, you know, like, Taproot really isn't that controversial, and we now some somewhat have an agreement of how to activate it and stuff like that. That's what I mean by, like, agreement, rough consensus. Of course, you know, like, if there is ever a reason to do a hard fork, it it will be a a huge mess. Like The reason the reason why I bring it up is because,
[02:00:18] Unknown:
you know, you kinda channeled what I believe, which is that, like, the there there's something that's it's hard to quantify, but the ledger itself, like, the ledger balances the history of Bitcoin has has a value, a value that can never be replicated by a shitcoin. But that ledger would carry over in a hard fork, which is why I asked.
[02:00:42] Unknown:
Yeah. I mean, you know, like, you can you can go really deep into these kind of topics, and it becomes nuanced the longer you more nuanced the longer you think about it. Because, like, if if there is a mathematical, cryptographic breakthrough where you could, for example, you could be in a situation where it's not clear cut anymore, what kind of private keys unlock which coins, and then you're in a huge mess because then even, like, bootstrapping from the current UTXO set wouldn't really save you anymore. So, but, you know, like, it's it's it's it's not that people aren't thinking about it, and it's also, not that, like, I I like what Chuck Mueller is saying all the time. You know? Like, don't don't bet against engineers.
Like, they're thinking about this shit, and we can definitely do something about those kind of scenarios. But we have bigger fish to fry right now, you know, like, just getting Taproot activated and getting all those things that we are currently working on activated and just, working on minor decentralization and, working on on privacy tech and working on fungibility. Those are the priorities. Like, quantum computation is not a priority right now and won't be for the next 10 years, for example. Well and for the great majority of people, the usability piece. I just wanted to give a shout out to
[02:02:00] Unknown:
how incredible it was to, tip some stats to to to strikes kind of like indie, initiative, indie car initiative using the Moon Wallet. I mean, it was, like, I've been showing it to, like, a bunch of people just sending, like, a tiny amount using it. It just blows people away. I mean, it's just, like, yeah. That was, like, final settlement, you know, took literally a second. We took 2 swipes, and that was that. And that's done, and then that those funds are in somebody else's possession now. And it's, like, once you get your usability here, it's, like, really starts to get interesting. That's that's Moonwal
[02:02:36] Unknown:
that's Moonwal with 2 u's, m u u n Yeah. And the the site he's talking about is strike dot me slash racing, which is the Indy 5 100 car. It supports the Indy 5 100 car that we have racing this Sunday that is raising funds for, Bitcoin development. So if you if you donate to strike dot me slash racing, it'll go to open source Bitcoin development. Okay. Carry on. Sorry. Yeah. So, you know, I'm in the restaurant with some guy who,
[02:03:08] Unknown:
I got to know recently, and he was in Bitcoin a while ago. And he, you know, he hasn't been aware of, like, the the upgrades, let's say, and how it all works. And I'm like, alright. So I just go to that website that Matt just mentioned, strike dot me slash racing, and it just creates an invoice that expires in a in 60 seconds and just copy it, and then I go to Moon Wallet. So that's, like, one click, and then I paste the address in the send, and it's done and it's gone. And it's just like, I just moved to Bitcoin. And, that kind of blows people away, and, like, that's kinda where we're we're getting closer to that, which is really exciting.
[02:03:44] Unknown:
Yeah. Absolutely. And just to tag on to that, that's also something that's not priced in, like, not not even a little bit. Because what this enables and what Stripe is actually doing right now is this infrastructure inversion that not not a lot of Bitcoiners are talking about. But we saw this with the Internet. You know? Like, I I mentioned this all the time that we had this both voice over IP moment where suddenly every every single telephone call went over the Internet, and nobody kind of noticed. Everything was kind of the same. And I think the same will happen with Bitcoin. You know? We will have this infrastructure inversion because it it just makes a lot of sense. It's cheaper, and then the economic incentives are allowed. And we have, like, instant final settlement. Like, if you're running a bank, switching to the Bitcoin standard, like switching to the Bitcoin network for doing your settlement is, like, the smart thing to do, and I think I believe everyone is kind of working on it. And if you're not working on it, you'll be made obsolete in the next, like, 5 years because people are working on it. And just flipping that switch, and it doesn't matter what's coming out at the end. You know? It might be US dollars. It might be euros. It it doesn't matter if it's Fiat currency. But just doing the exact same thing that Stripe is currently doing using these payment rails, that's, like, the smart thing to do, and that's the like, you you you you will be cheaper than your competition instantly, and that's just why it's going to happen. And it's it's gonna happen soon. Everyone has a fucking smartphone. Everyone has an Internet connection. We're gonna have Starlink online soon and everywhere, and it just it it's it it will start in in, like, 3rd world countries or where you, like, actually benefit from circular economies where you don't have regular banking, but there is no reason why we can't have this, like, next year in the western world where you just use an app and just everyone uses it. And,
[02:05:22] Unknown:
like, just like Stripe, you know, underneath it it uses Bitcoin and the Lightning Network. Right. Well, Matt, what is to prevent, like like, let's say, an activist or anyone from just, like, doing what Strike does and just just having that, kind of just refreshing invoice every time you visit the page, and just being able to just immediately donate and to share that with people? Like, what what is the stumbling block there? I mean, I think,
[02:05:46] Unknown:
you know, we we we have BTC pay server, but it's a bit heavy. Correct. This is way a lot more lightweight. And and the the the main issue is hosting. Right? You know, especially if you're in a country, that you're in a heavy adversarial environment and you're worried about, dictator or some other kind of authoritarian military coming after you. It's hard to reliably host something on the Internet privately. We have Tor, but then all your dones need to use Tor. One thing that is interesting, that we have going for us is this lnurl that I have in the bottom left hand corner of the screen, which is a fixed QR code.
It doesn't even need Moon doesn't support it yet, but Phoenix does. I think while the Satoshi does, there's a there's a couple wallets that do and and they're adding more every day. I think Zeus supports it, and that's fixed, so you don't need to host. We also have PubKey. What is it? Pubkey payments. What are they calling? Key send payments, which is a similar idea. Right? Is it this fixed this this fixed text characters that you can use instead of having to host something? So I I think we'll either go in that direction. I think that's probably ideal, or, you know, like a lightweight alternative to BTC pay server. Right? Yep. I forget who that I forgot what that project is, but I think he's at coin joiner on Twitter. He has, I think it's called BTC payment, but he has, like, a lightweight Python
[02:07:25] Unknown:
alternative to BTC pay servers. Something like that could be really useful, I think. Yeah. I I just want to point out how insanely early we are because this is all just emerging, like, right in front of our eyes, and it's it's easy to, to kind of dismiss and not see how insanely early we are. Like, the the the Lightning Network didn't exist not too long ago, you know. Like, it was Yeah. It was a nice task not too long ago. The Lightning Labs folks, just on that note, like, you know, what can we do to have, like, a static,
[02:07:53] Unknown:
sort of address type thing? And apparently, that's, like, being worked on and, like, is being rolled out soon, but but it will reuse your public key. So the question is how do we get like a passive address that that can recycle through and,
[02:08:07] Unknown:
you know, that's gonna come at some point. Someone's gonna figure that out. And, like, we're just as just just to support what you're saying. We're just insanely early here. All all of that is emerging as we speak. And Matt mentioned lnurl, and lnurl is a very lightweight standard that supports multiple things. Like, like, it it tries to solve multiple problems that we are currently having on lightning. And you can you can also like, there's even ln URL auth where you can just scan a QR code to log into a service, for example. And most people are not aware of that. You know? Like, this already works and this already exists, and you can already use it, and you can already log into services, and you can build services that make use of these kind of emerging standards. And this is just, like, you know, the the very obvious next steps that we need to to build, like, the that we need to to make, and and, I I can't, like, I can't even tell you how bullish I am because what's most exciting to me is all the things that people, engineers, builders will come up with for the next 1 or 2 or 3 years that we can't even think of yet. I think all these problems will be solved. Like, all all the the petty problems that we have now with, you know, address reuse and, like doxing our,
[02:09:16] Unknown:
the public addresses and stuff like that. It it will be solved in no time. I'm sure of that. I just I just wanna echo some MS. I just wanna add in that we have Cortic in the chat mentioning BIP 47, most notably known as, reasonable payment codes, but most notably known as the only implementation I know of is in Samura Wallet. It's called PayNIMS, which solves a similar goal, but is on chain rather than Lightning. Yeah. I would just say, like, I think, you know, you know, Pay NIMs are fantastic if you if you wanna use them today. If you need something that you wanna use today and, you know, your your have, an Android phone with samurai wallet on it, Ideally, it'd be nice to see other wallets at it. But I think, ultimately, like, if we're looking low time preference, I really do feel like the overwhelming majority of people long term will not be hitting the chain. And I think whether that's lightning, which I I think it will be lightning, but whether it's lightning or some other type of layer 2, will be where the majority of payments happen. Just because once you start using lightning, you really see it's not even I mean, I expect fees to rise on chain as well, but the UX is just so much nicer.
The the the channel balances is difficult. I and there's ways of you know, people are trying to hide it, from the user and make it a little bit easier UX wise. But once you get past the channel balance hurdle, and especially for payments, when you're paying people rather than receiving because if you're paying people, all you need is, you know, 1 or 2 channels to routing nodes, and that's it. You don't have any channel management besides that. The UX is just so much better. Like, I I I think we get stuck in our bubble. Even simple concepts like confirmation time to us is a very it's a very hard concept for New Corners to wrap their head around. Yeah. Absolutely. And I'm, like,
[02:11:10] Unknown:
amen to everything you said because I I think, like, PayNIMs are great and, like, hats off to everyone who is working on privacy tech on the base layer. But if you think, like, in a couple of years from now, everyone will be using PayNIMs, you're just not bullish enough because lock space is insanely limited, and you will not be able to afford on chain payments for regular day to day transactions. We're already at that point, basically, so we need something like Lightning. And I say something like lightning because lightning is just one layer 2 solution, and we like, there's no reason why we can't have multiple ones. Lightning is the most promising one. And, of course, there's also liquid, and you can also do lightning on top of liquid and and stuff like that. But I think lightning in in itself, it's insanely bullish. And, yes, it it has its problems, but these problems are all being worked on. And we have so many great engineers that are thinking through all these kind of problems. And, for example, we we have the inbound liquidity problem, but this is being solved on a marketplace basis, and I think that's just beautiful to see. And I don't think, like, 5 years from now, I don't think it will be a problem anymore. And I think I think we will just solve
[02:12:13] Unknown:
all all these problems in succession as as we bump into them. You know? Like, 5 years ago, we didn't even know that this was a potential problem. There's, like, tens of millions of people who are kinda come on board to Bitcoin in the next couple of years who who need to send 5 to $10 payments using it Yeah. Because they their banking system doesn't work, their currency doesn't work. And, you know, this is this is from conversations I've had with people from countries like Sudan, like like, these countries have a surprising amount of phone smartphone penetration already and it, you know, it's basically gone from 5% to 25% in the last 5 years, and it's gonna go from 25% to 50% in the next 5 years. You're gonna have half these countries with smartphones and then eat you know, there's tons of uncle Jims, you know, plus, you know, 50% penetration.
And all these people need to send small amounts. So they're not gonna be using the main chain. So, you know, this is why lightning is such like an interesting idea for emerging markets and it's probably one of the reasons why why you see the moon with 2 u's team working on it. So focused I mean, they're from Argentina. I mean, they they understand the need for it. And if it's not gonna be lightning, it's gonna be custodians, which, you know, sucks, but it's the reality. So if it's not gonna be something like a lightning,
[02:13:25] Unknown:
might be the steps. And I I think what what what makes me so insanely bullish is that we can already see the next, like, 5 to 10 steps. We know we know what we kind of need on the base layer, and we know what we need on lightning. Are you guys still there?
[02:13:41] Unknown:
Yeah. We're still there.
[02:13:43] Unknown:
I don't know what happened there, but we just had a equipment failure.
[02:13:48] Unknown:
Alright. I think we were here all day. Did you guys break up? We've been humming along the whole time. Yeah. I think we're good. Maybe it's just you that reconnected, Matt. It looks like the chat did stop, though. Okay. Can anyone hear me? Yeah. Yeah. I can hear you. We can all hear you. Okay.
[02:14:06] Unknown:
I guess we lost Gigi. I don't Crypto Graffiti heard everything. That's good.
[02:14:13] Unknown:
Yes. Just a few of the live scene here. Chris, is you still here? Can someone hear me? Hello? Hello? Test test? Matt, hello? Yep. Chris, can someone hear I can hear all you guys. I'm here. We're good. Right? I think I think Matt doesn't mean I can't okay. I guess it was just me. Dope. We Gucci still. Continue.
[02:14:29] Unknown:
Continue. Apologize to the freaks that, you know, we we're running on this this I'm completely beholden to this company Restream, because their platform's dope. So we're kind of beta testing everything for them as we do Citadel Dispatch. So I appreciate all your patience.
[02:14:48] Unknown:
And just just to let the freaks know, I I I'm in Mexico currently running on a mobile hotspot, and I topped up my data plan to the maximum just to make this happen. So just That's awesome. Not not rely on shitty Wi Fi. But to continue my rant at why I'm so insanely bullish on on Bitcoin and Lightning and just in general is that, as Alex mentioned, so many people are going to come in and are already coming in and are already solving these problems, and we kind of know what we have to do. We know already the next 5 to 10 steps that we need to take, and we're gonna activate Taproot, and we're gonna activate other things on the base layer. And we're gonna have dual dual funnel funded channels on lightning, and we're gonna have multipath payments, and we're gonna solve the liquidity issues, and we're gonna we're gonna like, we we we we will have just like with the Internet protocols, you know, we we will have smart algorithms that that, like, automate all the UX problems away, kind of, and your your node will be able to spin up channels and so on and so forth. And we will build higher layers, and we will do whatever is necessary to make this fucking thing work because that's why why we are here. You You know? That's what we are here for. Well And that's what engineers do. It's interesting, Matt. You know, he's saying stackers set the floor. We're about to have a lot more stackers. We're about to have, like, 100 of millions of stackers.
[02:16:06] Unknown:
So so, you know, they're gonna be involved, but they probably aren't gonna be getting in on the main chain. You know? Like, so they're gonna be born onto a custodian or to maybe Lightning, hopefully. So, I mean, that's just the reality of the next 5 to 10 years as we onboard a 1000000000 people.
[02:16:23] Unknown:
Yeah. And and and also to to go back to the actionable advice of Citadel dispatch, you don't need to do much. Provide some value, stack sets. That's basically what you have to do. And I really like the saying, you know, like, don't just do something. Sit there. Fiat currencies will collapse on their own. Like, we will win without having to fight much, I believe. Like, Bitcoin is insanely resilient, and the world is a big place. Bitcoin the the whole narratives around Bitcoin, they are very US centric. And Right. I'm from Europe. So for for me, it's a very different picture, and I'm, you know, like, I'm embedded in Bitcoin Twitter. Like, I'm that's where I'm living currently. And so I see and read all these narratives. But if I go outside the door in Europe, it's it's a very different world, and I I'm I'm not too concerned. You know? Like, I'm not too concerned about all the fun because the world is a really big place, and there are a lot of Bitcoiners everywhere, and and there are gonna be more very soon.
[02:17:19] Unknown:
Yeah. And, you know, I I don't know. I just wanted to clarify. I think there's a there's been a lot of, like, Trojan horse talk lately. Like, I just wanted to clarify what I what I kinda mean when I say Trojan horse theory. I mean, to to Gigi's point, like, that people get involved, for self interest, and to improve themselves and their fortunes, not to help anyone else. I mean, you know, there's a small percentage of us maybe that are into it for, like, you know, broader reasons, but, like, that's completely irrelevant to Bitcoin's success and its mission to replace central banking. Like, it's, essentially, you know, that point is that that it lures people in by providing them something that they can't get anywhere else. And whether you're a corporation or a government or an individual, you're gonna wanna get involved. And the very act of you getting involved, whether you're stacking stats or whatever is helping all the other users. And and that that's kinda what I mean by by the Trojan horse theory.
I just think it got, like, really, really messy out there the last few days, but that's that's what I mean by it.
[02:18:21] Unknown:
And I think we we should also, like, highlight the fact that Bitcoin kind of has its own way of changing the individual and lowering your own time preference and really highlighting what is important. And, like, I'm bullish on Bitcoin, like, you wouldn't believe, but I'm even more bullish on Bitcoiners. And just meeting Bitcoiners in real life and talking to Bitcoiners in real life, it's the best thing ever because, like, this this bullishness and this, like, principled thinking is contagious, and there are so many people that are in it for the right reasons. And I I don't see how you can kind of, you know, put this genie back into the bottle because, like, there are people all over the world that are working on Bitcoin just, like, they they don't have any other incentives, but to see it succeed.
And they're like they have soul in the game, and that's why I'm here as well. You know? Like, I really want to see this through and do whatever it takes to help Bitcoin kind of make make its impact on on the world. And I think it's it's gonna be a a good and beautiful thing. And as Alex has said recently, you know, like, it's about the freedom go up technology and not necessarily about the number go up technology, but they go hand in hand.
[02:19:37] Unknown:
Yeah. Can't kill an idea. Can't kill an idea. Absolutely.
[02:19:46] Unknown:
Yeah. I think is Matt is Matt gone again? Or Matt help you on our own? Go for it, Matt. May maybe Matt disappeared.
[02:19:59] Unknown:
Yeah. Well
[02:20:02] Unknown:
Yeah. I think I think we're wrapping here. Chrisus, what do you got to to end us on?
[02:20:06] Unknown:
I mean, I guess, when when Gigi was making that point, I just kept thinking about how, like, you know, we we're in the we're in this this evolution of this asset from nothing, bootstrapping from just code, 0 value into being a collectible, into being a store value. We're in that store value stage now. We're accumulating value. The medium of exchange infrastructure is being built right now by people like Gigi who know way more about the tech stuff than I ever could dream of. And, you know, we're in the early stages of that development, but it's happening and at a great pace. And it's going to be ready for the world to have a digital medium and exchange based on a digital store value that is 10 x or a 100 x or a 1000 x better than the status quo alternative for for each individual out there choosing between do I choose between sensor, you know, money that can be censored and debased?
Or do I take, you know, the the my own value into my own responsibility and ownership and self determination and own Bitcoin instead. That's all happening in our lifetimes as we watch, as we participate, and our job is to contribute to that in whatever way we can. And maybe that's just stacking or maybe that's writing code or maybe that's educating people in our communities, in our friend groups about Bitcoin and its benefits and its benefits to each individual to adopt and start saving in Bitcoin. And it's a beautiful thing to watch playing out right now, and we just have to participate.
[02:21:54] Unknown:
Amen to that. Well, Matt, what do you what do you got to wrap this up? Thanks, Gladstein. Appreciate you giving me, the heads up there. I'm the only one who could speak to our master.
[02:22:03] Unknown:
I unfortunately, I cannot hear, Gigi or Croesus the last 10 minutes or so. There was some kind of issue with Restream. I'm glad that the audience and the freaks out there were able to get it, and I do look forward to listening to it after I end this stream and going back and listening to the end. I'm sure it was bullish as fuck. This was a great conversation before I got cut off from it. I just wanted to do a quick shout out to our 3 great guests that have joined us, Gigi, Creases, and Gladstein. I look forward to seeing Gigi and Gladstein in Miami very soon. I also look forward to this Indy 500 on this weekend.
Consider going to strike dot me slash racing to support it. It's a very great initiative they're doing over there. I may be attending the race myself, which I'm very excited about. Let's go win this fucking thing. Yeah. All that said, I I love you all, and, thanks for joining, guys.
[02:23:12] Unknown:
Yeah. Thanks for having us.
[02:27:33] Unknown:
Enjoy your Bitcoin Tuesday, freaks. Sorry again about the technical difficulties. Just a quick, I don't know if you guys realize, but Ron Paul is, the legend. The man himself is gonna be opening up Bitcoin Miami, Bitcoin 2021 in Miami. Had to sit on that one for a while. That's fucking hype as hell. So, we also have Cyclops, Freak who won a GA ticket, through a giveaway on dispatch. Ride or die Freak. He can't go to the conference. So if you don't have a ticket and you're trying to go to the conference, go into the Sphinx tribe, the Citadel Dispatch Sphinx tribe, first one to put Indy 500, in there gets gets, that ticket. So go do that.
Love you all. I'll see you for RHR on Thursday, and dispatch next week is gonna be live from Miami with Wiz and Kaludis and some other surprise guests. So make sure you tune in for that, and, hopefully, I'll see a bunch of you freaks over Miami. Cheers, guys. Stay humble. Stack
Bitcoin market sentiment and capitulation phase
American mining and Chinese mining
Geopolitical implications of Bitcoin mining
Bitcoin mining and decentralization
Bitcoin's impact on humanitarianism and energy independence
The Mining Council and transparency in energy consumption
The environmental benefits of Bitcoin and Bitcoin mining
Increasing the number of Bitcoiners and the importance of education
The problems with proof of stake and the importance of proof of work
Insanely bullish on Bitcoin and Lightning
Engineers and stackers
Bitcoin's impact on the world