EPISODE: 0.2.8
BLOCK: 689158
PRICE: 2749 sats per dollar
TOPICS: el salvador, china, CFA franc, 51% attacks and difficulty adjustment
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Happy Bitcoin Tuesday, freaks. It's your boy, Matt Odell, here for another diss Citadel Dispatch. I missed you guys last week, while I was on vacation. Shout out to the ride or die freaks who took it upon themselves to run a Citadel Dispatch, run a Bitcoin Tuesday unsanctioned, through Twitter Spaces. I know the audio quality on the podcast feed was a little bit under par. Apologies about that. I don't think I'll be leaving you guys anytime soon, but if if we do do another episode that way, we will try and make sure the audio is better. To our freaks who are joining us through the audio streams, that was Ricardo Salinas in the intro. Yes. He was not speaking English. He was speaking Spanish.
He's a Mexican billionaire, the 3rd richest, including, a significant shareholder of Banco Azteca, which is they're all throughout Latin America. They operate all throughout Latin America, Mexico, Panama, Guatemala, Honduras, Peru, El Salvador, and he was just basically talking about how much he loves Bitcoin and how much Fiat sucks. Completely orange pilled. Kind of unreal to see still to this day. Shout out to at the rational root who got that clip, put it on Twitter, has all the subtitles, the translations into English. So if you do wanna come in, if you're an audio freak, and you wanna come in and see what the subtitles are, you can look at the the video feed, which you can get at silodispatch.com. Shout out to real quick shout out you you can, Freaks have been asking about the Citadel dispatch hats. You can get those at citadel dispatch.com/stack.
You can also get, flasks and magnets courtesy of Quinn Solo and BTC pins to ride or die freaks, which is pretty cool of them stepping up and offering merch through their respective stores. If you buy that merch through them, a third of it will go to OpenSats, a third goes to me, and a third goes to them, which is a pretty cool breakdown, so I really appreciate them. This is Citadel Dispatch, the interactive show about Bitcoin distributed systems privacy and open source software. I'm your host, Matt O'Dell, and I'm joined here today by the chief strategy officer of Human Rights Foundation and a good friend, Alex Gladstein. How's it going, Alex?
[00:04:49] Unknown:
Great to be here. Great to be back in the Citadel.
[00:04:53] Unknown:
Yeah. I've been, after 26 weeks in a row, I took my 1st week off last week. But here we're back with Citadel dispatch 28, so it is good to be back as well. Before we get started, I just want the freaks to know that my vacation has not quite ended yet. So I am in a small inn in rural America, and there was a power outage yesterday that cut the Internet for about 10 minutes. So if this stream just fucking dies at some point or ripping it live, that's probably why it happened, and we'll be back up within 10 minutes. That's that's the plan in effect, and we'll see what happens. Because I I don't have any cell reception here, so I can't even switch to, I have 2 hotspots that I travel with. 1 is my cell phone, and one is a separate dedicated hotspot. And they're both at different networks, and neither have reception here. That's a feature, not a bug. So today, we're gonna be talking about, I just feel like all of a sudden this is becoming the year of nation states in Bitcoin.
We have the big news that people have been hearing about as El Salvador, but then recently, we have this this Chinese Bitcoin mining ban. And then on top of all of that, Alex wrote a really fantastic piece. He's been working with Bitcoin Magazine, releasing pieces every 2 weeks on the French colonial franc, which is something that I just was not on my radar at all. So I figured we'll we'll just start with that, because, you know, I it's it's just a crazy I can't believe this is still happening right now, Alex.
[00:06:22] Unknown:
Yeah. I think the setup here is that the geopolitical era of Bitcoin is really beginning. You know, this open source code experiment that started growing through different kinds of communities on the Internet and eventually made its way into the mainstream, you know, we've really taken a turn for for the geopolitical level here, which is which is really amazing to see. And and I think even before El Salvador, we we started hearing all these news cycles about, like, the Nigerian government and the Indian government, and now this is, like, an issue at the government level. So it's really exciting to be around for the nation state adoption of a new, new new base base currency. At least that's what I think is gonna happen.
And in that context, I've been trying to use my time at Bitcoin Magazine to explore, basically, areas where the fiat system is totally broken for people and and in ways that many don't really think about it. Like like, I, for example, had interviewed many activists from this region of Western and Central Africa, like, let's call it Francophone Africa, through my work at HRF. And we'd been working with them on, like, pro democracy stuff. But, like, the monetary piece was never really at the forefront, which is weird because when I then went back to ask them about money, they have these incredible stories.
And in fact, this woman, Farida Naburaima, who I profiled in in the the essay at Bitcoin Magazine, fighting monetary colonialism with open source Code. I mean, I get on the phone with her and I'm asking her about it and she's like, no, no, no. Like, that's the reason we are fighting the government in our country is because of monetary colonialism. It's the primary reason. In 1960 or so, when Togo gained its independence from France, their first leader was assassinated by the French government because he wanted to create his own, you know, a Togolese currency with the Togolese central bank. And that's, like, one example out of many that I cover in the essay. There's crazy shit happened in Niger, in Mali, in Senegal.
Guinea is probably the craziest. You had you had the typical kind of, like, cold war style assassinations of leaders that didn't wanna comply with this French colonial system, which we can get into. But the this event that happened in Guinea, the small country in West Africa was so crazy in the early 19 sixties, around 1960, I believe. There was this thing called Operation Parcel, where basically the Ghanaians were like, get out of here. You know, we wanna run our own thing now. And the French were like, no. And then they they kinda went back and forth and the French were like, fine, we're leaving. But then they, like, burned everything in their wake. They just, like, destroyed everything on the way out. Just, like, totally, you know, just total sort of retribution.
And then they, like once the Ghanaians had made their own currency, the the French set up these counterfeit operations and printed an enormous amount of this currency and then just dumped it into the country, and they wrecked the economy. I just thought that was insane. I mean, that that that's not the truth is stranger than fiction sometimes. Like, that is wild. So just digging into that history and just seeing how this, these 15 countries which constitute a 183,000,000 people around a territory 80% the size of India are still controlled by the French, and they basically subsidize the French way of life. One of these activists told me that they don't think France would be any bigger of a power than Austria if it didn't have the colonies. So, basically, the colonies give them a place to sell their exports at higher than market prices and a place to import raw goods at lower than market prices. Within, the French would then make the goods into cars, furniture, whatever, and then sell them back to these colonies at a higher price. So if you unless you have this mechanism, which also relied on having, like, a control over the central banking of these countries, where these countries would have, like, the CFA franc and then, you know, the French would have the franc or now the euro. So, like, whenever these countries export and earn, right, whenever, like, an Ivorian coffee producer would sell a $1,000,000 of coffee to China or America. Those dollars or yuan go through a French currency exchange, and the French freaking pocket the hard money, the harder money. They they pocketed the francs or now they pocket the euros, and they credit these poor countries with CFA francs in their account, which are not convertible really elsewhere.
So the whole system is is is very, devious, but it's also very effective. And it's just an incredible thing, and I I learned about it recently. Wanted to share with the Bitcoin community because of relevance to you all. These people in these countries, they don't have another way forward. Like, what are their options to get rid of this French colonialism? Well, okay. We could start our own currency. Yeah. That hasn't been a very good strategy, generally. Like, most of these countries with an independent currency in Africa tend to have, like, hyperinflation Right. Etcetera. Okay. Well, they could have a regional currency. Well, you know, the French kinda hijacked one of the plans, and there really isn't anything else on the table. So as Foday Diap, the other guy I interviewed from Senegal said, what are we gonna do? Wait around? No. We're gonna, like, seize our freedoms. So you're gonna start to see an increasing amount of Francophone kinda activists start to use Bitcoin, and I'm gonna be involved in that effort. So, Farida Naburema, who's, like, you know, arguably the leader of the Togolese movement at the moment, she's gonna be, hanging out with us at the Oslo Freedom Forum in a few months.
What I told her to do was, you know, we're gonna have this whole Bitcoin track of programming, and Matt's gonna be there and many others are gonna be there. I told her to basically prepare a little, like, challenge to us. And and I told her to say to get up there and basically tell us what she needs and what she's seen on the ground, and we'll help her. Because I think we, as a community, absolutely wanna help these people gain their freedoms. There it's not gonna come through politics. It's not gonna come through pieces of paper. It's only gonna come through open source code. So A 100%. That that's, I guess, the way I wanted to start out.
[00:12:25] Unknown:
Yeah. I mean, this is what the fight's all about. I mean, at least it's to me. I think, I think a lot of freaks would agree. It's it's just it's pretty crazy that I mean, what did you say? A 183,000,000 people. That's half of America.
[00:12:38] Unknown:
Yeah. And get and get this. When the French originally set up the colonial system, there were about 40,000,000 French and 30,000,000 people in these countries. So it wasn't, like, quite apartheid. But today, there's 67,000,000 French and a 183,000,000. So it's like total apartheid. And in the future, by 21100 apparently, if you look at demographies, it's gonna be 800,000,000 and like 70,000,000 French. You have like a negative birth rate or whatever. So it's gonna become totally unsustainable, but there's not like a lot of activity. Like, essentially, this year, you're gonna see, like, a reform for some of the countries of the what's called the reserve requirement. So, basically, when these again, when these countries earn through whether it's remittances or exports, etcetera, they have to put 50% of that into Paris, into a French bank, where they don't have discretion over how that money is spent.
So that requirement is gonna be eased for some countries. And I think in, like, 2027, there's gonna be an e a new they're gonna rebrand one of the currencies to, like, call it call it the eco, which is named after, like, the group of countries in West Africa. But it looks like the French are gonna remain in control pretty much from here. And Macron has been, like, going to Africa. And he's been going to Burkina Faso in these countries. And he's been talking up how, like, France needs Africa. And you think about it, 85% of French speakers live in Africa. So, like, the French nation really relies on Africa now. It's really interesting. So, what people don't understand though, it's it's not just the language. Right? It's it's the money beneath it. That that's what he's really, trying to to support.
And again, we're not it's not even like we're on the back nine of this system. Like, they're trying to aggressively expand it. So and and, again, the way that this system works is that each of these countries is ruled by a dictator who has a deal with France, and France basically provides them weapons and support and diplomatic cover in exchange for keeping the currency system going. So it's like they have their own private reserve in this area of Africa, basically, for for raw goods like, you may the uranium that powers the French electricity, by the way, which is 75% nuclear in French. It all comes from, like, Niger and Chad and stuff, and they all get it for below market prices.
And they do that believe dictator there to to keep it, you know, to keep it cheap. And if they walked away,
[00:14:57] Unknown:
you know, not only do they have to worry about action from the French. Right? They have they have their reserves that are stuck over in France. Right? That they're being held hostage, basically.
[00:15:07] Unknown:
Yeah. And and, you know, that's been part of the deal is that the French, make it so that there's a huge in a number of disincentives to leaving the system. And, ultimately, they would they would bust out the military ones, or or the violent ones, and people really went too far. But, again, just to underline, like, there's no real real reform on the table for these people, 183,000,000 people. And as Foday Diap says, like, these most of these people never have stepped foot in a bank. They don't have a credit card. 70% of these people in these countries, by and large, are are unbanked and but they have cell phones, man. And he's like, we're gonna we're gonna skip freaking we're gonna leapfrog. Just like we leapfrog landlines to go to mobile phones, we're gonna leapfrog banks and go right to Bitcoin. It's, like, kind of amazing. And I I think his focus on like, this is really where lightning is so important. Right? Because he's like, we're not gonna be able to afford on chain fees.
We need to make payments that are like $5, $10. And if that's our only currency like, it's one thing if you're an American and you're like spending your fiat and saving in your Bitcoin, But if you're in Senegal and like you're in this closed economy, circular economy of Bitcoin, like, yeah, you you you you really need lightning. There's no real way around it, or something else that would scale, in a similar way with lower fees. But, hey. This is what we have. So that's why he's dedicated his his life to that. I thought that was super eye opening, to learn about.
The other thing that's important to know is that there's so many obstacles in the form of scams, whether it's Cardano or whatever. Like, these people are being, like, always whispered in their ear about this other currency. Right? So it is gonna be a little bit of a struggle. But, you know, as long as we take the approach of, you know, Bitcoin first, this is a Bitcoin first advocacy approach, and Bitcoin becomes the currency of decolonization, then we're then we're looking good. Then we're looking good.
[00:16:56] Unknown:
Yeah. I mean, I think it's gonna be messy. Right? Like, there's gonna be their shit corners tend to really flock into these environments when they when they see a situation that's advantageous to them.
[00:17:06] Unknown:
Well, I I somebody I know shared, you know, there's the Cardano guys are going nuts for it. Right? Because they they have all these deals with these African governments, to to promote their their their their shitcoin. Right? And it's like, you gotta point out to these people that to be to be careful, you know. And you just gotta you gotta just gently remind them. And you you don't have to be mean about it, but you just have to basically be like, look. You gotta be careful. Like, at the end of the day, the way I try to explain it is all these other cryptocurrencies are fiat currencies. Like, there's a small group of people who make the decisions, and you don't have control over them. Bitcoin is the only one where, you know, nobody's got control. We know exactly what the issuance and the monetary policy is gonna be. The French can't control it. The local dictator can't control it, and Silicon Valley can't control it.
It's not the case for any of these other systems, whether they be Fiat controlled by a currency board, the French colonial system, some dictator's currency, or Cardano with Charles Hoskinson. Everybody's got a small group of people who's gonna control the rules. This is our one way ticket out. Right? And and it's actually happening. It's pretty exciting.
[00:18:11] Unknown:
Yeah. I mean, when you when you when you we talk about this Colonial Frank, I mean, it'll it it to me, it sounds like a shitcoin scheme, but that's because I just approach it with a Bitcoin lens. Right? Like, you have to hold it with the Papa French. You know? You see that with the premines and all their utility token schemes and whatnot. But, one thing I I I tried to really highlight, on this show and on on Rabbit Hole Recap and just on Twitter in general, is that you really have to follow the incentives. Right? Like, no one's really better than the incentives. And one of the cool things about Bitcoin is that the incentives align where people are greedy, but it works out for a more robust system. But when you look at something, you know, after reading your article, which, by the way, like, once again, like, I had no fucking idea that this was going on until I read your article, until I read your piece, is is you have to look at the incentives. Right? And the French have absolutely no reason to have real reform. They're gonna they're gonna, you know, they're gonna give lip service, and that's about it. And the the the powers that be in the individual countries have good deals set up for them, and there's a lot of corruption there, and they're not gonna really reform from the top. And I feel like there's this impulse with big corners because we've had this El Salvador moment, which we'll get to in a second, but I don't wanna jump there yet, where they think, like, there could be a top down thing. And, you know, our boy, Russell Okun, he wrote a piece, I think to the Nigerian president imploring him to adopt Bitcoin.
And I know that was a just a it it was it was a it was a strategic tactic by him, and I know he understands the reality of the situation. But I think, ultimately, what we're looking at here is is the only way this move continues is from a grassroots approach. It's from the people first, and then the governments are gonna begrudgingly follow. Like, you we can't expect these governments to to do it themselves. Right?
[00:20:02] Unknown:
Yeah. I think that's really important. You know, without going to El Salvador, the the two models are either that the government forces it, you have, like, this, like, top down adoption, or you have this grassroots, kind of, like, what's called popular dollarization, which is what happened in Latin America. Right? So Ecuador is a good example. So it you know, the dollar just became, like, so well so used there that, like, eventually the government sort of adopted it. And that's, I think, what you're gonna look at here in these in these, what we call SIFA countries, these CFA countries. There isn't gonna be a Bukele type reformer who can, like, kind of independently decide to just add Bitcoin. That seems highly unlikely given the control the French have, and the IMF and the World Bank, by the way, which which are very involved in this colonial operation. They're, like, you know, part and parcel of the whole deal.
They they're kind of, like, they work they're kind of controlled by the French in a way, and and they work with the French to enforce the system. They're not gonna want it. And as you said, the local dictators, like, aren't gonna want it either. So it's gonna have to come from the bottom up. And eventually, if enough people use it, you know, the governments kinda have to react. So I would say that in this scenario, yes. It's not gonna be a, you know, a a top down thing. It's gonna have to come from the people. Which I mean, in a and to a degree,
[00:21:20] Unknown:
that kind of was what happened in El Salvador. It just seems like their president was opportunistic as well. Like, I mean, I remember Mahler's was saying that he was onboarding, like, 20,000 El Salvadorians, a day, or maybe a week. That's completely different if if it's one of the other. But he was he was onboarding a a ton of El Salvadorians before the president reached out. Right? And he saw this was kind of happening on a grassroots level, and then he made his move. But I I imagine a lot more will will decide to dig in, rather than embrace. Right?
[00:21:54] Unknown:
Yeah. And and, clearly, that started the seed grew out of Bitcoin Beach and expanded and eventually caught the the president's attention. And, you know, maybe we can we'll start maybe talking about El Salvador in a second, but I think what's important is that, as we head into this nation state era of Bitcoin here, Bitcoin's gonna use certain governments as vessels for it. Like, it it doesn't it's like almost like this organism that just grows, and it it it kind of sense the vulnerability. It pops through to the next layer here, in El Salvador. But it it doesn't really care who adopts it or how it gets adopted. But we're gonna see different different ways that's gonna break down. And again, yeah, like in West Africa, I think the only hope is is bottom up from the people. And in other places, it it, it may be different. But it's worth mentioning that the remittance factor here, which is I believe one of the reasons why the Salvadorans ended up going for it is the amount of money they could actually save. So I just wanted to run the numbers for the freaks here because they're crazy.
So the average, so first of all, some of these countries have 5, 10, 15% of their GDP is in remittances. So money that family, friends, etcetera are sending back home. So in the case of Nigeria, which is not Francophone, but it's in the West African area, they they have about, 7% of their GDP. It's a massive country. 7% of their GDP is remittances. So you're talking 25, $30,000,000,000 per year. Right? Okay. So the average $200 remittance to sent to sub Saharan Africa, according to the World Bank, has a fee of 8%. The average $500 remittance has a fee of 9%.
So you can start to see why these governments, when they're sitting there and they're looking at maybe, like, increasing their GDP by, like, a half percent or a percent just by upgrading the software that they use for people to to move money around. That is very appealing. Right? And, you know, we're currently using this dinosaur technology for remittances. That's absurd. And now we have, you know, proper good money to to do remittances with. And that's again one of the reasons why I think Bukele, did what he did and it's it's what, lord Fusitwa has been very eloquent about describing. This politician, from from Tonga who's great, and he's his nation has 40% Reliance GDP on remittances. Right? So so they can save numerous percent of their GDP just by upgrading to the better money system. And I I think that you're gonna see more and more of that start to just be discussed in the international aid community.
But, you know, as I mentioned in the article, still today, the human rights space, the international aid space, clueless about Bitcoin? Clueless.
[00:24:33] Unknown:
So, I mean, first of all, shout out to the rider die freaks who, join us every week in the live chat, either through Twitch, Twitter, or YouTube. You guys make this show extra special, shouting out your questions and your feedback. We have BTC pins, in the comments mentioning that I call them El Salvadorians. It's Salvadorians. Apologies there. But we also have 6102 Bitcoin in, the live chat. You know, with El Salvador, there's there's about 6,000,000 Salvadorians. Right? With with these CFA countries, in Africa, where you've said, what'd you say, a 180,000,000 people. Yeah.
What does have you given any thought of what the path looks like of trying to onboard a 180,000,000 people onto Lightning? Like, how many people do we think are currently using Lightning? Probably less than a1000000. Right? Yeah. Well, let's look at the adoption of the cell phone. I think it's useful. So
[00:25:33] Unknown:
only a couple years ago, even in, let's say, 2010, and I know that seems like a while ago. And, yeah, the iPhone came out in 2007, so that was fairly early. But back then, there was only, like, 5% penetration in in in these countries with with cell phones, especially ones that had data smartphones. Okay. Now you have, even in some of the poorer, more rural countries like Ethiopia and Sudan, etcetera, you have 25%, 30%, Internet and phone penetration. And by 2025, it's gonna be 50%. So when we look at this population of a 183 people in CFA countries, again, because of the French exploitation, not only are they very anti democratic, you know, ruled by dictators, but they're also, like, hugely underdeveloped. They're they're basically the poorest countries in the world. If you look at any list of the world's poorest countries, you know, Chad, Niger, Guinea, Bissau, they're always at the bottom because they've been basically, like, strip mined, by the French, basically. It's like the capital strip mine. The Alan Farrington thing. By the way, great freaking article. Freaks should read it.
But but this is that at, like, a a large scale. So we we don't have a 183,000,000 people who can use Bitcoin right now, in these countries. We we probably have a I'm you know, my guess would be 20 to 30,000,000 at most. That's gonna change over the next decade. You know, we're gonna get there. So I think Bitcoin needs to grow alongside of that. But what Foday was telling me was that what's interesting is that as far as technology and, like, the Bitcoin economy goes, it's been very active in the anglophone countries. So for example, Nigeria, Ghana, Kenya, and South Africa have, a ton of Bitcoin activity. In fact, some of them lead the world, in Bitcoin activity per capita.
The francophone countries have have basically they've been ignored. They take a back seat. A lot of it's because of the language barrier. A lot of it's because when tech companies or investors or entrepreneurs go to Africa, they tend to go to the the anglophone countries. So we you know, there's not gonna be this massive influx people right away. It's gotta start in communities with education, and it'll grow organically. But I I have every confidence that by 2030, a huge percentage of these people are gonna be using Bitcoin in one way or another. As for the the question 6102 raised, it's a good one.
You know, I tend to think that it's gonna grow organically. You you're not gonna have I think El Salvador is, like, somewhat unique, like, it's the first one and they're, like, gonna do they're gonna try do it in 3 months. And if you listen to McCormick's interview with Bukele, like, he's like, I think we could do it. Yeah. It's like, dude, that's like 11 weeks or whatever. He's like, alright. We're gonna get it done. But I'm not sure that's gonna be the the the standard moving forward. Like, this sort of forced integration. I think it'll be a little slower. So we'll see. I don't know. Matt, are you are you worried about, like, the lightning network buckling under the pressure here?
[00:28:22] Unknown:
Yeah. I mean, I think I think we're not ready right now. I think that's fine. I I, you know, I I think we're kind of in the age of the briefcase cell phones, and I think people couldn't even fathom the little Nokia brick cell phones at that point, let alone where we are at today. Right. I know that's a little bit of a faith argument, but I think, you know, you have to build a a very strong foundation, and then you can build on top of that strong foundation. If you have a weak foundation, then we're gonna end up with real problems, in 20 years.
I guess now is a good time to jump to El Salvador because, this is basically a working test case with 6,000,000 people, which I think is already, is is gonna, you know, put some stress, on our current infrastructure. You know, I've been expecting high fees, on chain fees. Been wrong about that. So, you know, maybe we'll have more time where on chain fees will be low. But every time you, you know, you hit the chain, you're you're talking a a relatively high fee. You know, and and in these cases, if we're talking 5, $10, that could be a very big deal for them. So what I see happening is kind of custodial solutions popping up, and we have 22 different types of of custodial situations. Right? We have, in El Salvador, we have this Galloy money, this Bitcoin Beach wallet, which is, no KYC controlled by the community. I think they have a 2 or 3 multisig that holds the funds by known community members.
And it's open source, so people can fork that. So you could end up in a situation where you have bunch of little communities that all have their own custodial lightning wallet infrastructure, that interact with each other on this open monetary network, which doesn't seem like that bad of a situation at least in the in the near term. And there's no, like, scaling issue there because they're all they're on instance, right, in a way? Yeah. And it's, you know, it's it's it's batch transactions. Right? So you can have 20 1,000, 40000 transactions per time it hits the chain, because it's a custodial Lightning Wallet.
But with the actual wallet that the president is releasing, I guess that they're calling it the Chivo wallet Mhmm. I have a lot of concerns with because we talked about incentives earlier. Right? And one of the phenomenons I've been watching is the death of cash. And in the Western world, really, the death of cash has happened because of a UX situation. It's like the younger generation doesn't like dealing with cash. They think it's easier to use their digital payment apps. But the the issue there is as and and then we've also seen in these countries, in certain countries, we've seen restrictions in cash start getting instituted for the the stragglers that are still using it. So it's twofold. You have cash is is being chosen not to be used by a large group of the populace, and then of the remaining people, you have you you you have a ostracization of them using it, whether that's explicit and you can't make a transaction over $5,000 without getting reported, or if that's just you go into a store and you try and spend a $100 bill and they look at you like you're a criminal because they're just not used to people spending cash.
It's be that's becoming more and more of an issue, and I expect that phenomenon to increase. So when you look at the incentives, for digitizing a populace in terms of financial transactions, the real incentive I see for for most leaders in the world is greater surveillance and greater control. And if you look at this this Chivo wallet, I mean, it's gonna be a custodial wallet, you know, that it's going to be, you know, fully KYC ed as much as they're capable of KYC ing there. I I know they have trouble with ID ing people and, you know, tagging their populace, but as you move more digitized, it's gonna be easier. So they're gonna have full surveillance capabilities on this on any transaction that happens on on this wallet, and they're gonna have the ability to seize funds and block transactions, right, which is issues we've seen with the PayPal's of the world and the Venmo's of the world.
The advantage here is it still can work with, you know, the open monetary network that is Bitcoin. You could theoretically send to an outside wallet that is self custody or something like the Bitcoin Beach Wallet that is a better custodial model than than than the countries. But I wonder how long that lasts. I also wonder, you know, you see him announcing, the president announced there's gonna be no fees. It's gonna be fast transactions. Right? And that's a great way to incentivize peep and you'll get your free $30 with Bitcoin. Right. It's a great way to incentivize people to use your wallet over, like, a free open source sovereign wallet. And I I think we're gonna see these soft pushes to try and get people into these more closed ecosystems. Right?
[00:33:40] Unknown:
Yeah. I mean, we can talk about the downsides, but we also need to talk about the upsides here. 100%. So I've just to stay on the downsides for a second, The question is right. So if it's ever if the if the ability of this wallet, which I think you and I would agree would be very popular because it's gonna offer, like, services that open source wallets will be kind of harder to, replicate with regard to integration with the banking system, and basically, like, cheap cheap cheap exchanges back and forth. Are they gonna close those bridges? Right? So would there ever be a day when you can't just, like, pay a lightning invoice, like, from your Chivo wallet? So that's, you know, that's to be that's a trust situation. You're trusting this guy and his team or whoever comes after him, you know, once he's no longer there.
But at the end of the day, like, there's some interesting big picture things here. First of all, it's just nuts that they're gonna buy essentially $30 of Bitcoin for for probably 3,000,000 people. I mean, probably half the population will claim it, maybe more. Right. If you look at, like, Internet and mobile phone rates, it's 50, 60 percent of the country and, I don't know, say most of them take it. You're talking like, 3,000 Bitcoin that that they're just about to just air drop into the population. So it's kinda funny because we're watching this happen with Bitcoin. I think what we were afraid of really was that this would happen with like some random altcoin. Right? That some government would be convinced. And it almost happened in, like, what like, Cardano was, like, in Ethiopia. So I think we're still might happen. It still might happen. Will happen. Yeah. Yeah. I mean, I think, like, what our our model here has to account for the fact that it could have happened with an Altcoin.
It it it could have been a Bitcoin ban. It could have been a stable coin that's like entirely, like, like, focused on surveillance and control. I still think it's remarkable that they're doing it with Bitcoin and that they're working with Strike and and Rockstar and Jack and stuff and I I see upside. I also see just general upside in terms of just geopolitically, this derisking the asset for the other countries that are thinking about it in Latin America. You've got Paraguay, a bunch of other countries thinking about doing something similar. Like, once they actually see this thing live and active, and we all know Bitcoin's incentive structure, everybody listening. Once you start using Bitcoin, you don't go back. You you don't, like, not use it anymore. So Right. We all know what direction this is heading in. So I think there are these big picture geopolitical kind of, like, implications that are super positive and also just hilarious that he's gonna drop 3,000 Bitcoin on people. I mean, in 10 years, that's gonna be so crazy to think about.
[00:36:10] Unknown:
Yeah. You know? Right? Yeah. I missed you. You, I saw you made an interesting comment on Twitter that, you know, 3,000 Bitcoin is also the unspent capacity, the liquidity pool of Whirlpool. So it would be great to see some of that Bitcoin go into Whirlpool. I would, I yeah. I wanna be clear that, I mean, this is strictly superior to basically any other digitization scheme. Right. Anything else we've ever seen in the history of the world. I mean, let's be clear. Like, the argument the argument I was making against the Chivo Wallet is the is basically the argument that you make against WePay.
Right? Like, WePay in China. Or what is it? WeChat? But you as you you pay through WeChat, it controls your whole life. They're they're moving everyone onto that system. It's not connected to an open monetary network. They have complete control and complete surveillance, and you have to use, you know, the yuan. Right? Mhmm. Bitcoin is strictly this this Chivo wallet is is strictly is is strictly an improvement over something like that, which is what we are gonna probably see in most of the world before they move over to a Bitcoin thing, or at least we're gonna see leaders try and push into that kind of system. Right? Yeah. And, look, we're gonna be educating as many people as we can about,
[00:37:28] Unknown:
using, you know, noncustodial wallets, and we're gonna be doing that anyway. And a lot of people who end up using Bitcoin in El Salvador, in their 1st year of experience I mean, look, they're gonna go through the same learning experience that we all went through. And in that 1st year, a lot of them are gonna be like, screw it. I wanna be my own bank. And they're gonna move their funds into not custodial wallet. Like, there's gonna be, a significant portion of people who who do that over time. And it may develop into a situation where where it's sort of like what you're gonna see with Paxful once once they integrate lightning, which should be shortly from what I understand.
Where, you know, your Paxful account, if you're in Argentina or Nigeria or wherever, it's a KYC bank account, but but you can then withdraw it, you know, into lightning. And then, you know, that's where you get into the the the issues of privacy and lightning. But generally speaking, a lot of those can be solved at the wallet level and and people will have almost this functionality to be able to have, like, an ATM essentially. And I think that's that's what we can hope and push for in El Salvador is, like, yes, there's gonna be this, like, advantaged KYC government wallet that's basically unavoidable. But, you know, as long as citizens can withdraw to their own bank and they can be their own, you know, decision maker of their financial destiny.
Massive upside. So just, yeah, just again zooming out how ridiculous this is that this country is actually, like, trying to figure out how to roll out Bitcoin to their population. Whereas, like, our governments are trying to figure out how to steal our rights from us by implementing CBDCs. So, you know, that's kind of the that's the big picture we need to keep in the back of our mind. Right?
[00:38:56] Unknown:
Yeah. No. Absolutely. I mean, I like I said, I think this is a a massive net benefit. I think it's important to to stay vigilant and and and to really threat model this stuff out though and and threat model the incentives. But but, yeah, I mean, this is something that I did not expect at all. It completely caught me off guard, and it's really great to see.
[00:39:18] Unknown:
We have yeah. Go on. Just 2 other things I wanted to mention. First of all, there were a lot of ridiculous takes on the webs about, like, how this was somehow bad for Bitcoin or whatever. Terrible takes. Obviously, this is like the best thing you could imagine for Bitcoin, so I'm not sure what those people were thinking. Do you know what the argument was? Well, the argument was essentially that, there's an article in the law, article 7, that essentially, you know, and a lot of libertarians were pushing this argument that, like, it's coercive because it would force merchants to accept Bitcoin.
And, you know, if you're not a strict so first of all okay. Fine. But, like, a lot of those people never said a damn word when Bolivia banned Bitcoin in 2014. Legal ban of Bitcoin. None of these people said anything. Only when they when a government adopts Bitcoin do they say something. So that's a little weird. You have to think about the signal there. And second of all, there are, like, a whole bunch of other reasons to to to believe that, like, the merchants using this thing are not gonna be forced to hold Bitcoin. Like, in fact, from what I understand, that's a second step. Like, basically, if you receive a Bitcoin payment from America or wherever, or from someone in your store, from what I understand, into this new system, it will actually automatically convert into, into the the the sort of the the doll the, you know, the sort of dollar denominated account in the in the app.
To withdraw into Bitcoin into your own custody requires a second step. So I I thought the whole thing was a very wrong headed critique, but we'll see we'll see how it goes. The second thing is that the mining piece is really interesting because, yeah, like, the the the they're obviously gonna do, geothermal mining with the volcanic energy. There's 2 interesting parts to this. Number 1, almost okay. So all Central American countries, which are relatively poor compared to the the region around them, have volcanoes, and they have stranded energy that they can't can't access. And the cool part is now what they can do is sell and then I know Max Kieser and a bunch of other people have said this, but they're actually gonna do it. Like, these countries, Guatemala, Honduras, Panama, Colombia, they they can sell bonds based on the future earnings of the renewable energy, and that's not possible today, like, before Bitcoin. That would be, like, you can't monetize stranded renewable energy like that very well. You're gonna be able to do it. That's very interesting. So it gives these countries an alternative to borrowing from the fucking IMF or the World Bank. Right? It allows them to to borrow against what they already own. Right? Really interesting from a development and kinda, like, you know, geopolitical into independence point of view. So I thought that was worth mentioning too.
[00:41:58] Unknown:
Yeah. I mean, if you wanna know if it's a good thing or not, the proof is in the IMF and the World Bank being pretty pissed off about the world.
[00:42:06] Unknown:
Yeah. Being really, you know, we're not we're not helping. Which I thought was funny like, who at the World Bank? The World Bank trust me, I've dealt with these people. They don't really understand what how Bitcoin works. Like, it was funny to me to see the government ask for technical implementation help. Like, what but, like, is Matt O'Dell gonna hire the World Bank to help set up his code or whatever? It's like a total joke.
[00:42:25] Unknown:
So but I'm glad they said no. I'm glad they said no. I mean, that's what really what really pissed me off is all the shit corners just, like, flying in there, like, immediately and just, like, trying to take advantage of situation, but, you know, I've come to expect it. Inevitable. We we have to know that that's gonna happen through the next decade, and we just have to be prepared for it. I just wanna go back to the 2 critiques that you mentioned, the first one being that, you know, that's a legal tender law and it requires them to accept Bitcoin. Mhmm. I mean, like like, people can't expect like, we live in a certain world, you know, and it's a world of legal tender laws. All these people were forced to accept US dollars for however many years already, and now they're they're basically, we would have seen a law that said they're forced to accept US dollars through a shitty US dollar government app, and instead, it's a lightning compatible Bitcoin app, and they can choose which one it is. Like, it's strictly a benefit.
[00:43:21] Unknown:
And you, like, live in little fairy land if you think otherwise. Well, the funny thing is these economists were basically arguing for the last 5 years against us that Bitcoin isn't money because it's not legal tender. And you're like, wait a second. Now it's legal tender and now you're finding some other way to complain about it. You have to realize they're never gonna, like, give up and and and they're just gonna dig in however they can. I just thought it was funny how, you know, now we have its legal tender and they find some excuse. Oh, it's it's enforced to legal tender. Like, what? As if, like, the dollar isn't, like, forced, like, in a, you know, de facto way? So we'll see. I mean, I think it's worthy to we all should be paying attention to this. I think Bitcoiners should go there. I'm planning to go this summer for sure and and just see how it's, like, working and see how we can all contribute.
Obviously, trying to
[00:44:12] Unknown:
They can have a, they have a a carve out in the actual bill that is very obvious carve out. It was like, you have to accept Bitcoin if you're technically able to accept it, which is like
[00:44:24] Unknown:
it's just, you know, what more can you ask for on that? It's just funny that if we went back in time to, like, 2015 and you told somebody that a nation state was gonna adopt Bitcoin and and this person was a libertarian and and I don't think they would have problem over article 7 in this bill. They'd be like, are you fucking kidding me? And they should state it's adopting Bitcoin as legal tender. So I think a bunch of people just really got they just they kinda, you know look, classic missing, missing the forest for the trees. Stay focused on the signal. Signal is that a nation state adopted Bitcoin. The rest is largely noise. We can we can help improve it though, for sure. And what was the second criticism? It's something about mining?
No. No. No. I just was it was a point I wanted to make about the fact that, it's gonna unlock the ability of many nations that are poorer, to capitalize on stranded renewables that haven't even been mined yet A 100%. Through through bonds as opposed to borrowing from the IMF or World Bank. That's really cool idea,
[00:45:17] Unknown:
and I think you've seen it. You've seen the beginning of it. It's happening now. So that's that's more on that level. If you're a resource rich country in general and you don't have the infrastructure to sell into a global marketplace, it's extremely powerful that you can just monetize your resources directly into a free market with just Internet access. Like, that's pretty like, I I it's completely understated how massive that free market is in terms of Bitcoin mining.
[00:45:46] Unknown:
Yeah. No. A 100%. And there'll be countries that are rich that don't have, for whatever reason, renewable, you know, or whatever resources they want. The they're gonna go ahead and, like, finance it in other countries. So it's gonna be really interesting to see moving forward on that note.
[00:46:01] Unknown:
We have some freaks in the comments mentioning a recent write up, by another freak actually at rod armor, kc rod armor, who wrote up, a proposal for something that another freak, Eric Eric Sirion on Twitter, that's s I r I o n, has been working on, which is chamion mints, which is a an already existing concept that dates back to, I believe, the nineties, to a more trust minimized custodial option. The issue they always had in the past was, it relied on fiat, so it relied on on, you know, major third parties that you had to rely on to actually custody the Fiat, but they're mixing it together with Lightning and a federated model. So it's custodial Lightning that gives you very good privacy properties. So right now, custodial Lightning options, whether you're using Gloy Money or a wallet of Satoshi or Chivo Wallet, is is is not private at all to the custodian. The custodian can see everything.
You're also you usually have to trust the custodian a 100%. The Galloy money, while they they have this multisig to hold the the custody, so that's strictly better. But in this, it's a larger federation, so something like Liquid. So you'd have, like, a 16 member federation that custodies the funds, so you'd have to they'd all have to screw you over to take your money. And then on the privacy side, it'd be, extremely private. So that is a very promising thing, I think, especially if if we had many of them. But I I I think that is, it is a long time off, but it's it's it's one of those things just like we said earlier, I think. You know? We're we're we're looking at the suitcase cell phone. Yeah. Yeah. And 6102 is mentioning Scriptcash, which I think was Frank Braun's, proposal, which was also Chalmun based, I think, 6102.
But I don't know what's happening with that. But there's all these different things that are just way above our pay grade. And I know it kinda sounds like a blind faith type of thing, but I think the important thing is you build the you have to build a strong foundation. And then as this other stuff, you know, gets built out, like, at least it gets built out on this top foundation, and there's gonna be, you know, there's gonna be mishaps along the way, and there's gonna be different paths we take that might not work out well. And we hopefully, we'll learn from those mistakes and we'll improve. Right?
[00:48:30] Unknown:
Yeah. And just, again, the ability to use the open source noncustodial stuff. I was with someone the other day. She was in El Salvador and I was, like, helping helping her understand this and set her up real quick with the Moonwallet, which by the way, of course, has this, like, killer Spanish version in El Salvador. So it's she is super easy for her to download and just love the way that the flow, is set up where it you know, I used to be. I remember a couple years ago, I'm trying to onboard people, and some of these wallets would, like, immediately ask, you know, for you to write down these 24 words, and that's, like, the worst possible flow for onboarding someone who doesn't know what Bitcoin is. So I just I love the way that the Moon Wallet has it as, like, the emergency kit. It's very that's a smart way of branding it. Like, that's the emergency kit is your is your seed, and you wanna write it down. But basically, this she's able to set it up and, like, I just immediately send her Bitcoin and, like, you know, she's sending lightning back to me and it's, like, her mind is completely blown because she's like, I don't I never put in an ID. Like, what how does this even work? And I'm like, yeah. That's the magic of it. It literally is magic. So you're gonna drag a certain percentage of actual noncustodial use up. Right? It's inevitable. So so that's another upside to mention. That's, just to be clear, that's Moon with 2 u's. Yes.
[00:49:44] Unknown:
I Yes. The freaks are well aware. I I love Moon Wallet. I talk about it a lot. I use Moon Wallet. I think, Moonwallet is a perfect example of this, like, bleeding edge that, you know, even 6 months ago, I couldn't really fathom that we'd have that kind of UX in a a relatively new way. There's still trust certain trust elements there, but, you know, I I think I think these are just growing pains. And I I I think even like, if you go back 2 years, you know, I was just digesting constant constant Bitcoin all the time, and I couldn't even fathom where we are today. You know? Like, I I I was completely caught off guard by a lot of lightning stuff, a lot of the the coin joint tools. Samura Wallet completely caught me off guard. It's way farther ahead
[00:50:35] Unknown:
than I expect. Moon Wallet just, to me, came out of came out of fucking nowhere, like, 6 months ago. Dude, and they're like, it's really amazing how carefully they think about things. Like, they have a ton of stuff they're rolling out later this year. Like, this thing that you and I have talked about a lot that, you know, you've helped bring to life a little bit with the Hexa Wallet folks, but this idea of, like, essentially, like, you know, lightning tip jar that you could have. The the from what I understand, they're gonna try and do that attack that with key send. So they're gonna basically have an option in the app, hopefully, in the next year. But you go into your Moon Wallet and you just you just create, like, a, like, a string or a QR, and then you could just plug that into your Twitter bio or whatever. And then it just it's like a rotating it rotates the public key and, like, just could receive lightning, which would
[00:51:22] Unknown:
be crazy and, like, really amazing. Because I noticed most important use case the single most important use case for an activist today is is to be able to easily accept Bitcoin that's from around the world without, like, hosting a BTC pay server on some platform.
[00:51:39] Unknown:
Especially lightning as we discussed with the fees and stuff. There's also stuff to look at with Bolt 12. What Rusty is doing with offers is really cool, so you could have a similar functionality. At the end of the day, it's just gonna come down to the wallet manufacturer and what they want, how they wanna approach it. But from what I'm seeing, I think by this time next year, there'll be 2 or 3 different ways to do it. And you'll bay basically be able to offer that as part of your wallet. Like, your wallet will just generate, like, a static lightning address that that will that you could put up on wherever, will having pretty minimal privacy, vulnerabilities, which is crazy. And and it forces Twitter's hand. That's the the main idea here. Because as we all know, you know, Jack has a lot of control over Square, but very little at Twitter. I think he has, like, very small percentage of the power there.
So I don't know how much he can actually push Lightning integration into their tip system. It seems like that's where it's going, but let's just imagine that if all of a sudden Right. A lot of popular accounts are have figured out this way to, like, just insert their lightning tip jar, that's gonna in the same way that Clubhouse forced Twitter to do spaces, that's gonna force Twitter to integrate Lightning. Right? So, but you can see where you're going with the product road map. Yeah. I mean, I think if Jack had,
[00:52:51] Unknown:
you know, dictatorship control over Twitter, had actual control over Twitter, we'd already have Lightning in Twitter. Totally. I I I think, ultimately, you know, I don't even a a a direct lightning integration to Twitter isn't as appealing to me as having, you know, a bunch of open source, tools that allow you to take these donations because, ultimately, when Twitter does bend the knee and add, you know, lightning, it's gonna be in a centralized custodial kind of surveillance type relationship anyway, and we're gonna have a lot of the same pain points that we have with something like Cash App, right, where where people's accounts get frozen and and and funds are blocked for whatever reason or they fail KYC checks. It's gonna be inundated with all this different ID information.
So, ultimately, what we wanna see regardless, I think it's even bigger than forcing their hand. Right? Like, I wanna see, you know, this time next year or maybe 2 years, you know, maybe I'm being a little bit too high time preference, like, 4 or 5 different ways that you can basically just paste the static text string somewhere, whether that's a Twitter bio or Reddit bio or, you know, a Telegram chat or something and accept donations from around the world in a semi private way. Like, because right now, you can do it with a fixed on chain address, and you're paying on chain fees, and everyone can just track everything that's happening there. Right? And that's obviously not ideal.
[00:54:12] Unknown:
Yeah. There is lnurl as well. Obviously, we we we've been looking at it. It's a little buggy, but I Yeah. We have a problem left in coin. Let's just put it this way. There's there's there's several options coming out. It's very exciting. And here's the thing, like, just think about the way that lightning wallets and apps I mean, you talk to let you talk to some of the wallet developers. I mean, some sort of coin join probably more like a a pay join, but that's gonna be like native, in these apps in the next year or 2. Like like, when you when you open and close and stuff like that, it's gonna be amazing. And, the the point here is that when you had, the signal people put the altcoin in their their thing, their their main argument was that was don't wanna don't wanna revisit it too much, but their main argument was like, oh, it's lightning's not ready. Well, guess what? It's gonna be ready in, like, a year for sure. I mean, there's already a nation state rolling out with it. It. So I just think that excuse is a bad one, and I think that rather than saying it's not ready, you should actually just work on helping make it ready. Yeah. And mobile coin isn't fucking ready either. They're fucking full of shit. You just have to follow the incentives once again. Right? Like, they they
[00:55:15] Unknown:
Moxie was in involved with MobileCoin, and he had a very big incentive to get integrated with signal that he was is his project as well, that he even though it's OpenStreet, he rules with a relatively iron fist, and it's not a coincidence that MobileCoin got put in there. I I mean, I I think it kinda just stalled. Right? Like, I don't think Yeah. I haven't seen it integrated into signal on my end, so I don't know what's going on there. I mean, I I remember it was, like, pumped and dumped on them, so, like, that was probably a big wake up call. Went down, like, 10 x on there. I think so. It would behoove me since we are having this topic. You know, samurai has led the way in terms of pay nims, which is also a static, text string that you can use to pay people. Unfortunately, they're the only wallet that supports it, which is a major negative when it comes to accepting donations. I I think, Jimmy Wales of Wikipedia mentioned this, and I've seen this as a pain point because Seal Dispatch you know, Rabbit Hole Recap has sponsors, including KYC sponsors, and that really kills me. I don't like that. I I think it I it's it's just it's follow the incentives. Right? And as much as I make sure to not let it corrupt me, I want the show to be completely supported audience, and I've been struggling to basically streamline the donation methods. Right? Because Jimmy Wales mentioned this on Wikipedia. The more times and he kind of used this as a cop out for not accepting Bitcoin, but I'll just forget that for a second because they're donation based service. And the more options you have for people donating, the less likely they are to donate. But if you stick with a single option, like PayNIMS or something, and the only people that can donate are samurai users, you're also screwed from that point. So we're kinda stuck in a situation here where you're you're offering many different options to support, and as a result, you probably get less donations than you would otherwise.
And these are little nuances around, you know, audience supported work, community funded work, that that people on the receiving end don't really like to talk about. It's kind of like, it's a little bit of a dirty topic that no one really wants to discuss out in the open,
[00:57:23] Unknown:
but it's something that's a major major pain point in Bitcoin right now. Yeah. I mean, payments are really cool. We set we have one for HRF. But, I mean, I'll just say it's, like, it's not super fast to set up. It takes a little bit of time and there's, like, a fee you have to pay. And at the end of the day, it's it's a short term thing anyway because at least for the purposes of what we're looking at, like, it's gotta be a lightning solution. Like, it it these you know, we just you have to know that fees are gonna get like, the dollar is gonna get weaker. Bitcoin's gonna get stronger. Fees are gonna get 15, 20, 30, 40, $50, and the people that I'm working with need to be able to send 5 to 10. So it's just it is what it is. You know?
[00:58:01] Unknown:
Yeah. Yeah. I mean, I I've I have I have major this is a sore topic for me, Gladstein, because because I we we have right now, we're sitting on an apparent Chinese, mining, you know, restrictions or ban or whatever you wanna call it, the largest difficulty adjustment downward in history, and the mempools keep clearing. And people keep paying 1 separate bite, and I expected the high fees already. So so I I do have a lot of fruits keeping me in my purse in total. We do. We sell $20 fees, like, 2 months ago. Like, this is the same.
[00:58:36] Unknown:
So I look. I I just look. For now, it's awesome. Take the cheap fees while they're here, but you cannot possibly expect I mean, again, remember, forget Bitcoin. The dollar is collapsing, like, over time. Like, it's it's not immediately collapsing. But Well, you should measure fees in, like,
[00:58:51] Unknown:
some kind of good or something. I don't know. But, yeah, like, purchasing power. But, yeah, it'll it'll the the the purchasing power requirement for getting block space should go up with adoption unless block space increases. Right? Like, that's a it's a it's a very simple logical thing, and and Yeah. But but, it might take a little bit longer, than I expected, but it is We'll have Panem's, and we'll have on chain solutions, and people will use that. But the Lightning solution will be, like, hugely helpful for for the community that I'm working with for sure. Yeah. We have ride or die freaks, Trinity, in the comments saying that we should measure fees and tomatoes. Like, that's what I'm saying. Like, you gotta measure it in, in some kind of good that people need to survive.
I don't know if they need tomatoes, but but it it is what it is. Okay. So El Salvador, I I mean, I think very fucking cool. I look forward to visiting there. I fucking love what the guys at Bitcoin Beach are doing. Doing. I I I I do you know, to me, the way the way I look at these things as as, you know, a public Bitcoiner that has a platform, is that it tends to be in Bitcoin land that you get better engagement if just everything is super rosy and bullish and has no trade offs or no issues. So I figure if I'm losing a bunch of my privacy, you know, chilling with the freaks twice a week, then my role should be to be a necessary contrarian or just someone that, you know, is constantly just on the lookout and just wants the freaks to be constantly on the lookout.
And the way I do see it playing out, and maybe I'm just being because I I listened to his his McCormick, show, and he just he seems like, what can you expect from a president besides that? Like, that was, like, as like, absolutely amazing, his grasp of Bitcoin. I mean, he was talking about sats like he was thinking in sats. Like, I'm still trying to get some of the freaks to think in sats, and this guy is just throwing sats left and right. Like, it's his standard already. But I do think that there's gonna be, like, a pain point period where people start getting their funds blocked or seized with Chivo Wallet. And, hopefully, at that point, that will be the the real that's the real incentive to go out and seek, you know, a different open source wallet that is more sovereign that gives you more control every month. Right?
[01:01:17] Unknown:
Yeah. Absolutely. And then, you know, as the large percentage of folks using this wallet are gonna be, you know, in the remittance market, it's easy. They just have their family just start sending to the address that they control. So I mean, you'll start seeing that. And just a note on him, on Bukele, yeah, of course, he's very polished. He's like an Obama Clinton level politician. He's incredible. But you you know, again, and, you know, we've already gone through this before, but, let's be careful about him. What's interesting is he does have an opportunity here. Basically, in Salvador, you know, in in El Salvador, the constitution is such that he cannot run for president again.
And he is probably gonna try and, you know, what what we would call, you know, extra legally, you know, change the constitution to to run again. This has happened in many countries. Obviously, it happened in Bolivia, Venezuela, etcetera. Yeah. New York City. Yeah. New York City. But at the national level, it is something that people obviously are worried about. But he could choose a different path, which is what I'm rooting for. Like, what if he, like, actually agrees to, like, go when he's done and whatever? He's the he he his career, you know, he moves on. He becomes like what if he become becomes like the international, like, kind of ambassador for Bitcoin and, like, just goes around to different countries kinda like doing what, like, Jimmy Carter did or whatever for, like, humanitarian I could a 100% see that. Like, that would be great. And and he could be he he has a statue. If he plays his cards right, he's got a statue right there next to Satoshi. He just can't fuck it up, so let's see what happens. You know? Well, I mean yeah. I mean, a lot of people had statues that maybe were were lower down than Satoshi but have been toppled because of their ego. But, I,
[01:02:55] Unknown:
Yeah. I mean, look. I we were talking about incentives once again. I guess incentives is just the word of the day. The there is this additional incentive for the first couple of rulers or presidents or leaders, that move to a Bitcoin world, that they become, like, international celebrities. Right? Like, no one knew who this guy was. No one was talking about El Salvador. Now all of a sudden, it's on CNBC and all over the place, and people are listening to his speeches and seeing the polls get passed and stuff. Yeah. He's an international celebrity now. So so that incentive is a strong, that's definitely a strong incentive on the positive side at least for, you know, maybe the first 20 countries or something like that. Right? Like, the first movers, especially if they also personally are, you know, accumulating Bitcoin and their country is accumulating Bitcoin because, you know, they're gonna put their country on the map for a long time, and they're gonna, you know, really squirrel away some generational wealth. Right?
[01:03:52] Unknown:
Yeah. And then the last thing on that El Salvador piece is that, again, geo going up to the geopolitical level, we are kind of at this crossroads. Let's put Bitcoin to the side for a second where we have, like, the Washington consensus, which is like, you know, the way that the United States and the World Bank, the IMF, and to the to it to some extent, the EU, kinda control the world's flow of money and all the rules and how nations develop and which ones get access to nukes, etcetera, etcetera. You know, which ones were gonna be held down, which ones were gonna be forced to have structural reforms or austerity, etcetera. Now you have the rise of China. So you have, like, the kind of China kind of belt and road thing. And now you have, like, a third thing. So in the cold war, you had the Americans and Soviets and you had the non aligned movement. Right? So what if we have like the Nakamoto consensus, which is like all the Bitcoin parties. Like, you could conceivably start seeing parties in many countries where the the only platform really is that they're a Bitcoin party. And then, like, people will vote for their wallet just like they do in some countries. They'll vote for the party that has the lowest taxes. Like, they'll vote for the party that's gonna be most pro Bitcoin. Like, that's a possibility here that we have, know, the Washington consensus and we have the Nakamoto consensus. So I thought that would be kind of, kinda interesting to see pop up.
[01:05:05] Unknown:
Yeah. I mean, in a lot of ways, I'm a kind of a single issue voter in that regard. So Yeah. Exactly. Okay. So, yeah, I that would not surprise me at all, especially if, you know, especially if we're correct with the Bitcoin price. You know? Bitcoiners will have more money, and, corruption runs a lot of this world. So that naturally that naturally follows that, it'll it'll go towards political power as well. So El Salvador, positive news. I think Latin America is just gonna be, like, this really great testing ground for Bitcoin, and I look forward to, hopefully, seeing it blossom in the whole region.
I love the culture down there. It's, you know, same time zone as us. It's very easy for me to travel down there. I know the language better than any other foreign language. So, selfishly, very happy about Latin America taking the helm here, and I I look forward to seeing it expand. Obviously, I would love to see it expand in Africa. In Africa, you have this other app aspect, where maybe the French have had a lot of control and been holding their grip for a while, but you also have this creeping control coming in from China. Right? Mhmm. Mhmm. And I feel like the US has kinda just completely dropped the ball in that regard, in terms of trying to stop that Chinese expansion there. It's almost like a it's been a vacuum of European and and American influence, and the Chinese have kinda come in.
Bitcoin could be I mean, Bitcoin is the best tool to to fight that Chinese that Chinese in that region. Right?
[01:06:40] Unknown:
Yeah. No. I mean, there wouldn't be any other options if we lived in a world without Bitcoin, but we do and and you're gonna see people able to access this, like, collaborative, peaceful parallel monetary network, which is which is kind of amazing. So, yeah, high level view on El Salvador, like, historic historic kind of moment. Very kind of under it's even even even watching it live, we're it's being underestimated. Like, you have to remember that very few newspapers covered it. You know, it's not like it was on the front page of the New York Times. So when we in, like, 20, 30 years, when we go back and look at, like, Bitcoin history, we're gonna have to pick some of these, we have to dig for some of these events because the the the world media was not exactly excited about it. Let's put it that way. You'll just you'll go listen to the Bitcoin podcasts.
Yeah. You have to mean I mean, credit to Peter for getting the first interview, you know, and not CNN. I mean, I thought that was pretty interesting.
[01:07:34] Unknown:
Well, I mean, if if I could have bet on that ahead of time, I give a lot of the Bitcoin builders shit about this that I'm not there's no easy way for me to bet with Bitcoin on these things yet. Mhmm. Hopefully, hopefully, the boys working on discrete log contracts, will have a nice pretty UX for us, for the in the near future. But I would have bet on Peter getting that interview. Like, he's a fucking hustler. I'm not really that surprised that he got it, but props to him for sure. Did you see he even he took a picture he took a picture with him with this little dispatch hat. You tried to get him to wear it, and the guy was like, I'm not wearing that hat. I
[01:08:12] Unknown:
don't know what that stands for.
[01:08:15] Unknown:
That's so so, I mean, I we're so we're talking about Africa, Chinese influence, China, you know, so Chinese the supposedly, China is kicking out miners right now. They're restricting mining, and the miners are moving their hash rate, and I I guess they're they're moving their miners. They're moving their actual hardware out of the country, allegedly. This is what we're being told. Mhmm. We have the largest difficulty adjustment, downward in the history of Bitcoin, it appears. That's that's what we're on, track for right now, and that would be indicative of that kind of situation.
It would also be indicative of a state sponsored 51% attack. But, where do you stand here in terms of China and Bitcoin and the next 5 years or something like that?
[01:09:12] Unknown:
Yeah. Well, I'll give 2, interpretations. So one is based on, some conversations I've had with, like, some American miners who are obviously as you've as you've pointed out very they're very, you know, biased towards their own, opinions. But let you know, just looking at the numbers. Okay. So the hash rate peaked at a 180 x a hash per second, in early May, now it's now it's at like 90. So we've lost half. Okay. So, you know, we can speculate, but generally speaking, you know, we we're seeing that the network lost about half of its hash rate from its peak just about 5 weeks ago. And that from what we can understand, most of these minors are not getting arrested. A few of them actually did from what we can see.
But a lot of them are just like openly communicated on social media and they're just like, shit, we're going elsewhere. They were holding conferences to figure out where to go next. And it's gonna take them a long time to plug in because there's just not that much, Isn't that weird to you? Which part? Oh, it's all weird to me, but which which part?
[01:10:19] Unknown:
I mean, I so I I think I think
[01:10:22] Unknown:
we gotta go back to Oh oh oh, that they're not getting arrested, like, in a major crackdown or what? Yeah. It seems it does not doesn't that seem weird? Like, if you banned weed, you wouldn't just, like, let the weed dealers take their weed out of the country and tweet about it. The guys I was talking to were saying that it they were amazed that it looks so peaceful, like and maybe that's the weird thing to dive into, but it looks like that most of them are moving out peacefully. And they're actually getting their equipment out and they're shipping it. You know, there's been a lot of photos. I mean, those can be doctored, but a lot of photo video evidence of, like, you know, empty mining, you know, husks at at at farms and and, you know, footage of of machines being moved. And, that seems to probably go to Malaysia, Kazakhstan, Russia, the US, Canada.
And I guess this this this particular narrative is that, the chai it wasn't the CCP, but the Chinese miners were this huge asset for Bitcoin. They protected it in its infancy. And then those those individuals are gonna go elsewhere. And and and the argument that that some of these miners make is that this is so great because the those Chinese miners who were such a great resource for Bitcoin, they're just gonna go elsewhere and it'll be better because they won't be under the CCP's rule anymore. So that's their this is the one argument. Argument a is that this is a fantastic thing for Bitcoin. That it's less about the drop off in in hash rate and more about the decentralization now. Where it was maybe even easier before for maybe a state to to to get some sort of influence.
Harder now.
[01:11:53] Unknown:
Well, let me put it this way. If Yeah. If if if we success if this difficulty adjustment goes down you know, largest difficulty ever, and then the hardware is actually moving out of China, and it moves to all these different other jurisdictions, I you know, and a smaller operation is harder to detect and regulate and control than these large corporate operations. And then the difficulty goes back up, and we come back up to near ovals, I think we will be in the most bullish situation in Bitcoin's history in terms of, the robustness of our of our mining infrastructure and then not being in a single location.
I don't think we passed that threshold yet. We have to see what happens here Totally. Because there is a significant level of hash in China, or there was 5 5 weeks ago. And if you wanted to do a state level attack on Bitcoin as the Chinese. Basically, the shitcoiner FUD that we've heard all these years and all this time is you would basically pull a large portion of Hash off the network, and you would you wouldn't want people to think that was happening, so you would tell them that that's that's you know, there's Hash is leaving the country, and it's they just need to plug in. And you might even test it out with a couple seasons of, oh, well, it's the rainy season, and don't worry about this hash rug pull, and we've gone down 14% in difficulty. That's completely normal. And then what you would do is instead of doing a traditional 51% attack so so a traditional 51% attack is the idea is I send a payment to you. I own the private keys. You settle up that thing. Maybe you send me tomatoes, you know, and then I have the tomatoes, and then I reverse the transaction. And I keep the Bitcoin, and I have the tomatoes. And, obviously, the tomatoes could be 100 of 1,000,000 of dollars if you're doing it to an exchange or something like that or a merchant.
Also, with lightning, if you have a lightning counter party, you can fuck with the Lightning counter party. Now a government state attack, you wouldn't necessarily if you just wanted to kill Bitcoin, there's a lot of reasons the Chinese government would wanna kill Bitcoin. I think everyone agrees on that. You know? They they want their centralized digital yuan, and they want it to be worldwide. They want everyone to use WePay. That would be the fucking best thing in the world. And so in in that situation, what you would do to me, logically, is you would do this, and then after difficulty goes down, you would then just do a constant reorganization.
So you would just keep basic growth forking the the chain. It wouldn't even be a fork because it'd be valid consensus rules, and you'd basically have a DDOS attack if if you had over 51% of the hash. And they they they could you know, they would do they would do this if if they wanted to do a massive reorg and really screw with us, they could do that by just mining in the background on a different chain that we don't know about and then releasing all the blocks at once. But they could also do an active attack where they're just constantly reorging the tip. So that's kind of what I'm looking at in I think it's a very unlikely type of attack, But if it was gonna happen, this would be the time for it to happen. Yeah. And this is what it would look like. It would look like this. Yeah. So so the
[01:15:27] Unknown:
scenario b is that it is an attack by the Chinese government and it it looks perfectly like this. And and we'll see what happens. But, obviously, as you say, I think that's very unlikely. Look. I think what most people don't should realize is that all these great powers make huge mistakes in history. They all screw up. They do something terrible. And, you know, you could look at America's invasion of Iraq, Vietnam, Soviets and Afghanistan. You could look at Napoleon or Hitler trying to invade Russia. Like, no matter how powerful they are, they always make a fatal mistake, or several, in fact.
And maybe this is just this blunder. I mean, you know, we'll see. But if it is a blunder and they aren't about to attack the network or in the process of doing so, this is tremendously bullish. Right? Because again, it just removes their ability to sort of fuck with the network. Now the concern starts to be what's the US hash rate. Right? So we were at, like, 8 to 10% before the drop. So now people think we're at, like, maybe 20 to 25%. So we don't really want the US to get 50 either. Right? So the question is, is there gonna be some kinda, like, ghash momentum or initiative among American miners if we get close where they'll go elsewhere?
And I think some miners would do that and I think others wouldn't, but it would be interesting to see. I think another thing that people, in this scenario a, where it actually is a blunder and and a a lot of the money is gonna come to the US, some of the miners I spoke to were basically saying that they we shouldn't underestimate the Biden administration's, like, kind of, like, policies on energy stuff. Like, look at think about it this way. If they put collect Marathon, like, Marathon has I think one of Marathon's biggest mines is, like, old coal plant or whatever. So if the Biden administration did a carbon tax, a moderate carbon tax of $50 per ton on some of these, companies, it would increase their energy cost by 5¢ per kilowatt hour. Right? So that would move them from wherever they are now for 5¢ to 9 or 10¢, which would make them completely it would make they they couldn't make any money. So people are maybe underestimating the Biden administration's sort of green policies here as well.
And maybe maybe that ends up forcing American miners to go elsewhere. So we'll see what happens here, but there is a concern about American miners getting to 50% now. And we have we have to be realistic about that. I think there's there's 2 things that so so there's short term incentives and long term incentives. So long term,
[01:17:58] Unknown:
I think, if we get through the turbulent times, which we have for the most part already, I would say, is, you know I mean, specifically, like, if if we go back to the Segwit two x days and we and we go back to the b cash days, I mean, not only was there a large portion of Chinese hash, but there was a single company that was controlling a large portion of the manufacturing and the hash, which is Bitmain. Right? And they fell from grace. So it is it is we are strictly in a better situation today. But Totally. The the long term incentive is is that governments will inherently, you know, make it regulatory, not cost it will be cost effective to be distributed and be small operations because these large corporate miners, like you said, like Marathon and stuff, are gonna end up having to pay higher costs, and they're gonna have to move around, basically, to try and keep profitability. Right?
But that's more of a long term thing, that that will take some time to to play out. And right now, we're in this kind of short term situation. So so if if we we we do agree that if the official story is correct, and China is basically pushing out a large amount of hash out of their jurisdiction Mhmm. With no repercussions to the individual minors By the way, this is a country that has strict capital controls and very little freedom. Right. They're making a massive mistake. Right? This is if if if you wanna control Bitcoin or attack Bitcoin, you need you wanna you wanna keep that hash not only in your your borders, but you wanna keep it regulated and, you know, you want all the operators tagged and bagged. You want them all known. You want them to know that you know where they live. You know what their assets are. You know who their family is, and you wanna keep them under your thumb.
So strictly speaking from the Chinese perspective Chinese government perspective, if the official story is correct, they are gonna we're gonna be talking about this for decades. Right? Like, this is gonna be a massive, massive mistake. Yeah. They're they're probably gonna Yeah. Probably be the death of the yeah. They'll probably be the death of the digital yuan. It's like this is this is, you know, when when when push comes to shove and we talk about Bitcoin becoming the next reserve currency in 10 years, it's going to be this was one of the pivotal moments that meant that it wasn't the digital yuan, instead it was Bitcoin. I mean, it sounds crazy, but it it yeah. It could be Xi Jinping's lasting legacy that he fucked this one up.
[01:20:36] Unknown:
And, you know, look, it's it it could be something where it look, they end up realizing a mistake in a year or 2 and having to buy back in at a higher price like everybody else. So we'll we'll we'll see. But, we're all gonna be watching. I mean, that's the crazy part is you can just see this happen. I mean, you could just watch the hash rate drop. So, unlike other monetary systems where the, issues get hidden behind, bureaucracy and, semantics and euphemisms. Like, this one's just pretty transparent. We can kinda see what's going on. Obviously, we can't see whether or not they're perpetrating some kind of attack.
But leaving aside the the kind of, let's say, fringe 3 d chess thing, and, again, assuming, yeah, that that they are making this mistake. It's super bullish as you as as you say for the network for network security, for decentralization. Again, this the only concern here now is is probably the US. And, honestly, it's funny because our own politicians may may may also prevent us from achieving that dominance, which is the crazy part. In the same way that the CCP should have realized, if they haven't, that that they really would benefit them or behoove them to have this control over it. American politicians should probably think about that as well. Although, I hope they don't, obviously. But, like, let's just say if you're in their shoes, but they're gonna shoot themselves in the foot because they're gonna they're gonna go after the mining infrastructure most likely given all the signals we've seen.
So so we'll see. I mean, it might just be a bunch of global powers shooting themselves in the foot here.
[01:22:12] Unknown:
Well, I mean, like, if the understanding if if the understanding of the power of having, you know, a lot of large minor operations in your borders But when when that understanding really becomes prevalent or widespread, Ideally, most countries will not have a large enough amount of the hash to do anything with it. So it kind of ends up in, like, a a standoff situation where they're all just trying to make sure no other countries have it, which is one of the long term incentives that should keep Bitcoin secure or at least what I'm hoping would keep you know, help keep Bitcoin secure. Right now, we're kind of in this special situation because of how Bitcoin mining developed to begin with. China already had a large amount of hash.
Right? So they're in this privileged situation, the Chinese government, and they they could really flex it if they wanted to. So so so we have people we have freaks in the in the comments saying so they're asking, what are we watching for? Right? Like, we try and keep this actionable actionable Bitcoin discussion. So first of all, if if they start doing and 61 to 2 made a point in here, and I thought I was clear about this, but, yeah, it's either gonna be it would either be a deep reorg to just completely, lose faith in the in in the the chain settlement and just create a lot large amount of FUD, which you you reorg a lot of blocks. You do, like, a shadow you do a shadow chain, and then you release them all at the same time.
And all of a sudden, like, a bunch of exchanges are lose like, lost a shit ton of money, and you you just fuck around with everything. And you can even make those shadow blocks completely empty blocks. So the transactions never fucking happened. And and and so all these exchanges are just completely underwater because, you know, people traded Bitcoin for shitcoins and Fiat and all this fucking shit, and there was just, you know, a massive reorganization. Or you can do this constant fuck around where you're just reorging the tip over and over again. And that is that would be like a DDoS attack. That would be a denial of service attack. The chain would just became basically unusable, unless we changed, unless we changed our algorithm, the shot 256 algorithm, which is a basically, it's it's a nuclear weapon. It's a it's a deterrent because if we changed it, we'd brick all miners. So if there's good miners and bad miners, and I'm doing this in air quotes, we would make it so the good miners hardware also wouldn't work. So you only wanna do that as, like, a last ditch thing, and it's kind of just like a threat that we hold out there.
So but that's what we would have to do in that situation, basically. We would have to do a we would have to brick all ASICs, and we'd have to move to another algorithm. Ideally and, you know, I've spent many days drinking with BitCorners talking about these different scenarios, but you'd you'd want an algorithm that was easy to make into ASICs and try and get back through the, you know, try and get back through the bootstrap period as quick as possible. You know, or I I even theorized, you know, sometimes that you could try you can try and if there's there's a couple other networks that already have basics, and you could basically try and steal their algo. But the problem is, you know, a lot of all this manufacturing is happening in Taiwan, which is in Chinese backdoor, backyard.
And in China is where a lot of the assemblage and the shipping happens. Mhmm. So, you know, we don't really have if if they they they they have the leg up if they want to start manufacturing on the new whatever the new algo is. So it'll be real it would be really fucking messy. Let's assume that Matt is just being paranoid uncle, and none of this is gonna happen, and we're gonna be in the Super Bowl situation. In that situation, what we would wanna see is we wanna see this difficulty adjustment down, and then the next period, difficulty adjustment goes back up because how how long does it take to ship these things? Or, like, the next two periods, difficulty adjustment goes back up, hash rate recovers.
And then we see self reported hash rate, which, by the way, we can't verify when these miners say they're mining whatever amount. Self reported hash rate in America and Kazakhstan and Iceland and El Salvador and all these different places that they're going, go up, and maybe get pictures and videos and stuff from from those miners saying, look. We actually, in fact, bought all these miners and maybe even plebs. You know? Like, I know, as far as I'm concerned, if if you're a freak and you're not trying to accumulate cheap miners right now, you're short Bitcoin. So, like, I you know, I'm trying to accumulate miners, and if they actually arrive at my door, then, like, the 3 minors or whatever I got, like, will actually be there. Right?
So so that's kind of what we're looking for. This is gonna be, you know, a month long process, a month and a half long process. If we get past that transitory phase, then we end up in, like, a super bullish green pastures type of situation. But until then, I think the safe assumption that Bitcoiners should be making I'm not saying to sell your Bitcoin. What's the alternative? You know? Like, I'm I'm not selling shit. Is the safe assumption to be it should be just be skeptical here and be watching Mhmm. And to not, you know at least on the bare minimum, you should be waiting more confirmations before you do any kind of real settlement, when you have these big hash pulls. You should you should be waiting a longer period of time because, you know, the the network hash is decreasing.
[01:27:48] Unknown:
Yeah. And from what I've seen, you know, people are debating whether or not we'll get back to that all time high of hash rate, even by the end of this year. So I think people are expecting a longer than just like a month or 2, process, you know, but, yeah, if if, again, if there's not, like, some crazy attack happening in front of our eyes, then, then this is this is, this is very bullish. Yeah. And it's it's crazy to think about again that, like, the mainstream media is just again, in 20 years when we look back, this will be a massive geopolitical moment, regardless of what's happening, whether it was an attack on Bitcoin or whether they were stupid and they blundered. It'll be up right up there with any other event of the last 20 years, and, and yet the media of the time were clueless. I can't really think of a of a corollary. It's it's kind of interesting.
[01:28:37] Unknown:
Maybe the media were always clueless, and we just weren't, like, tuned in to that specific niche to realize.
[01:28:44] Unknown:
Yeah. Just but, like, you know, when big geopolitical events happen, they tend to be reported on. This one just beyond their I mean, it's just it's just beyond their understanding. Like, they just they haven't really wrapped their mind around it. Like, they don't even know that Bitcoin mining is a thing except that it's they think it's bad for the environment. They don't understand the political aspect of it at all. It's it's it's kind of crazy, but it's all changing right in front of our eyes. So, yeah, exciting exciting to be here to break down the
[01:29:13] Unknown:
the arrival of the geopolitical era in Bitcoin. It's good to know. I mean, I think that's a good way of putting it. No matter what, I mean, look. This is super exciting shit. Like, to me, this is very exciting. I think, it is gonna, you know, have massive geopolitical ramifications for, you know, maybe the next century even, maybe longer. But, yeah, I just, it's it's just it's just funny. So so one thing that I did want to mention that I meant to mention earlier, so I apologize at this point, freaks. Like, we we were we did kinda go deep into the conversation, is that Bitcoin does have this difficulty adjustment, which is this idea that when Hash leaves the network, after a target of 2 weeks, but it's 2016 blocks. So when Hash leaves, it takes longer than 2 weeks. When Hash gets added, it's shorter than 2 weeks.
The difficulty of how hard it is to mine Bitcoin changes, based on, you know, how much hardware was mining it, how powerful the hardware was mining it beforehand. And that's what the this difficulty adjustment we talked about, and that's what makes sure that, you know, Bitcoin remains robust even if, you know, you have Hash leaving and adding to the network. So you can't just have, you know, someone just load up the network with a shit ton of power and just take over the network. Right? Because the difficulty will will adjust and take all the Bitcoin. You know, take all the advanced Bitcoin. And that's what we call that's what we call the difficulty adjustment.
So there you go for that, freaks. It's a very powerful tool. And, also, one thing to mention is people say, like, why is the difficulty adjustment 2016 blocks instead of, like, a 100 blocks? A lot of shit coins like to lower their difficulty adjustment, is because if you have a smaller difficulty adjustment, it allows larger miners to play bigger games. So, like, we're talking about here, with this scenario, like, if this was a state sponsored attack, really, at this point in Bitcoin's history, only a state can pull off this kind of attack, a state like China that has a massive incentive to do it. Because what you're doing is you're basically forfeiting all this revenue for this long period of time. And in this case, it's really it's not just this difficulty period. You know, we've had multiple negative difficulty periods over the last, 6 weeks, 7 weeks, so you're forfeiting a shit you're forfeiting 1,000,000 of dollars of revenue, under probably 100 of 1,000,000 of dollars of revenue if you wanna pull off this kind of attack, and that's a natural defense mechanism.
It's just it's not a perfect mechanism, especially if you're, you know, one of the most powerful countries in the world and you're trying to institute your global surveillance coin and global surveillance money.
[01:31:55] Unknown:
Yeah. And generally, you know, assuming, again, this is not some, like, fringe attack, 3 d chess thing. It's funny because the Chinese government is probably seeing this as a crackdown. They're like, we gotta crackdown on this thing and, that's gonna hurt them pretty badly in the end. So, it's kind of like this, Bitcoin's like this thing that if you fight it, it it will cost you over time, you know. You see that at every level. You know what it is, Alex? The weird thing to me is
[01:32:25] Unknown:
is, like, the Chinese government aren't idiots. If anything, they've proven themselves over the last decade to be very adept at controlling their populace and geopolitical maneuvers. They're very effective. I think they made the fools of the US in many ways repeatedly, and I I don't they don't even need to do, like, you know, they don't even need to do this attack that we just discussed. They could just seize the miners and not, you know, not let the hardware leave the country. Right? Like, they they're like, this idea that that it's it's it's not a weird move that they're just like, oh, you can just leave the country with your hardware and sell it and just keep that money for your family or, you know, move your operation is just really to me, it just rings a bunch of alarm bells. To me, it just seems illogical.
[01:33:16] Unknown:
I I I agree. I would say though that just just the the depth to which the knowledge, photographs, data, video footage, whatever has penetrated, the space. This would have to be so well pulled off. And I I don't know, like, the Chinese government's good at, like, doing stuff with force, but they're not particularly good at, hiding stuff. Like, you know, I mean, like, we all know about what's happening in Xinjiang and, you know, whatever you however you feel about, like, the legacy of of the coronavirus. Like, obviously, they they tried to hide that and that didn't like, obviously, we figured that out pretty fast. So I don't know. It would be so hard to, like, manufacture all this, like, kind of fake news and manipulate, like, trusted people in the community. I mean, they they just did that with they literally just did that with COVID, though. No. But the no. But then we found out that it it existed. What I was pointing to is that when they tried to hide it and then, like, the world found out about it.
So, like, with this, it's different. Right? It's like they would have had to manipulate all these people in the Bitcoin community, to convince them to say certain things and publish certain media. It it would be a very impressive,
[01:34:29] Unknown:
like, con. That's all I'm saying. I mean, but they convinced the western world with multimedia basically to completely lock down their economies globally, something that we never expected ever, and they started the whole movement and then just kinda made it happen.
[01:34:46] Unknown:
Yeah. That's true.
[01:34:48] Unknown:
I think it's like If you ask me if you ask me in February of last year if if the western governments would lock down their whole economies, what China was doing in in Wuhan. Right? Well, at less less so than what they were doing in Wuhan. They were, like, welding people in and shit according to the videos we saw. I would have said you were fucking crazy. Right? And then meanwhile, you have, like, our boy Stefan is, like, trying to escape Australia right now. This is the aftermath.
[01:35:16] Unknown:
He can't get out. No. No. I mean, fair. Fair. I think it's a little a little different in as much as like, they got a lot of if this is a con, they got a lot of people to bite. Yeah. So we'll see. I think it's I agree. We have to be very skeptical both of on both ends here. Both of the what's happening in El Salvador. Yeah. Like, let's be skeptical and let's also be skeptical what's happening in China. But regardless, it's a massive geopolitical moment. You know, we don't know which one will be more, have a bigger legacy in 10 years. Both will be huge, and it's crazy that they happen sort of simultaneously, kind of completely unrelated to one another. But that's just kinda how Bitcoin works, man. So, hopefully, the rosy side, if we're looking looking through the rose tinted glasses, we've got, nation state adoption of Bitcoin legal tender on the one hand, with a leader who's actually gonna allow citizens to use, the official app in a way where they can pay external lightning invoices and receive from anywhere. And on the other hand, you have potentially, the sort of effective decentralization potentially permanently of the Bitcoin mining infrastructure. So it could be a pretty big week in Bitcoin history
[01:36:23] Unknown:
if if all turns out well. Yeah. I mean, even if even if China attacks Bitcoin, they only can do it this one time. Right. So it it'll be messy. It would be chaos, but, it'll be nice to kind of put behind us the, you know, the specter of China as a as an attack vector. We we do have, one freak mentioning, like, if they put backdoors in the ASICs before shipping them out. Mhmm. Decent enough theory. You know, I did the Bitmain had, Bitmain had both covert ASIC boost where they had a special firmware version for themselves or enabling firmware for themselves that allow them to mine better than their customers. Mhmm. They also had a kill switch that was discovered at one point. They never used it, but they had a remote kill switch that if you were running, like, an an s I don't think s nine. I think it was earlier than that. Like, if you're running an s 5 or an s 3, they could just remotely knock it off through the Internet, but they never used it. So, yes, that's possible.
It's just another thing that you should consider. I mean, this is one of the reasons why why Marty, and I a 100% agree with him here, is is saying that it's a it's a it's a national security issue for all all countries to have domestic manufacturing across the board, like, everything we use, all of our computers, all our phones, you know, they're all fucking built over there. We we need to build our own stuff. If if you wanna say that, there's backdoors in ASICs, okay, there could be. But there could be backdoors in your phones too or your computers or the fucking control systems on Boeing's or whatever.
So that's just a whole another conversation. So I wanted to keep this kind of tight. I think we've had a really great conversation so far. But before we leave, I kinda wanted to discuss, while I have you, I mean, this is kind of your bread and butter, like, the implications of something like a a WeChat being very successful in Africa. Right? Because we already see it being extremely successful in China. And before all these COVID restrictions happened when I was traveling abroad and stuff, I saw it in Europe in different like, you'd be in Italy or something, and you'd go into a store, and they'd have the we the WePay QR code there because they knew the Chinese tourists were rich, and they were coming in, and they wanted to pay with it. What are you looking at there in terms of concerns of of the the spread of that and and what that means for the average person that kind of gets forced into using it.
[01:38:48] Unknown:
Yeah. So I think there's infrastructure and then there's, like, personal electronics. And on the infrastructure piece, the Chinese government is, very advanced in terms of both, like, resource extraction from Africa and also setting up, investments, making cheap loans, basically, like shackling these kind of these governments to them. They've been very adept at that. There's a recent piece that's really stunning that I'd recommend reading, in the New Yorker, about rare earth mineral mining in the Congo. I'll just give you guys the the title here. It's called the dark side of Congo's cobalt rush.
And it basically you know, this reporter is there for a while interviewing all kinds of people and the Chinese have basically taken over. It's like the the they they come in, they take, control over the territory and they have all the mines and that they they they have this, like, dominance over rare earth minerals. So at that level, they've been quite effective. But on the sort of, like, personal electronics monetary level, not very effective, yet. I know some even Bitcoiners in Africa are concerned because a lot of the phones are actually made by China, the phones that people use. So, for example, Ethiopia is undergoing this massive thing where, like, over the next 5 to 10 years, something like 60% of their population is gonna, adopt a phone for the first time and they're worried that, like, maybe the majority of those phones will be made by China, maybe even the absolute majority, or almost all of them. So there is a concern about the hardware, but as far as the money piece, not not happening yet. Like, the yuan is, like, 2%.
It accounts for, like, 2% of, kind of reserve you know, national reserves, trade, things like that, anywhere from 2 to 3% at the moment. Whereas, the euro is at, like, 10% or somewhere between 10 15%, and the US is at, like, 60%, or something like that. So their ability to penetrate, with the digital yuan, forget the, like, DSEP or blockchain part of it or whatever, but just the just the yuan generally, it's just not been very effective so far. And you just have to just look around. Like, no one's it it's it's it's not that dominant in in in major African, like, capitals yet.
So we'll see. A lot of it is kind of a mess, but, it's certainly something to to keep an eye out on. But this makes the Bitcoin project so important, you know, because even if it was being more successful, we'd at least have, like, this, like, alternative option.
[01:41:35] Unknown:
The rollout in China has been super effective, though. Right?
[01:41:39] Unknown:
Yeah. Social credit just and stuff? Well, I mean, so some of that's also been a little overblown, but let's just put it this way. The Chinese government digitized society in a breathtaking fashion, like, in 10 years basically. Like, people went from, like, very little digital anything to, like, digital everything. So that was very effective. You know, as far as the social credit system, there is not like one credit score. There are many different systems in many different parts of China defined designed by both municipal and corporate kind of entities.
The general goal, I think, by the end of this year is that, like, the Chinese government wants everybody on, like, one kind of system. But as as some people have said, it's more like Kafkaesque than Orwellian right now. A lot of it is like broken, doesn't work, isn't it's not interoperable. So it's it's, they're having a bear of a time with that. As far as the DCP, like, this kind of, like, central bank digital currency, that's being rolled out pretty aggressively in different pockets of China. But it kind of remains to be seen how much more control that even gives the government because they're working with the corporate banks because they don't wanna freak the corporate banks out. So they basically cut a deal with the corporate banks so that, like, the corporate banks help distribute the the DCP. So so so we'll see.
I mean, again, let's be let's keep keep our eyes open here. But I would I would I would be a little careful at at assuming that they're gonna be able to pull everything they wanna pull off, And maybe that that that aligns more with the scenario here that that this was a huge strategic blunder to to kick out the miners in China, assuming, you know, that they're not planning some devious attack.
[01:43:19] Unknown:
That that may be in line with with some of the mistakes they've made recently as well. Yeah. I mean, I would love that. I mean, I I think it's it's execution is way different than try. Right? But I feel like they're definitely gonna try to make it
[01:43:32] Unknown:
that that's their goal. Right? That's the end goal is to try Yeah. Yeah. Yeah. They want they they wanna challenge the dollar the ultimate goal is the money, and they want the the the DCP to be, like, the native currency in all these developing countries. It's just there hasn't been a lot of free market acceptance of that. Like, the free market does not value the yuan very much. Like, again, like, only 2% of all reserves globally are in you know, when a country goes to to make its savings portfolio, they're choosing dollars and euros and maybe some Swiss francs and Australian dollars, and they're choosing gold. And they're not choosing digital they're not choosing the yuan. So so we'll see. I mean, look, if that number gets starts creeping up to 8, 10%, okay, then then then then we have a discussion here. But, like, it's of my view that it's far more likely that Bitcoin starts to actually become a bigger chunk of international reserves and settlements over the next decade. But So we won't have, like, American children spending digital yuan through TikTok in 5 years? Or Yeah. It seems unlikely. I think they're more likely to spend Bitcoin, but but, we could we could we could still fuck it up. We'll see. I feel like TikTok is, like, a good cautionary tale. Right? Like, they that's, like, a major surveillance operation.
Crazy. I'm sure a lot of freaks are watching the Europe Cup, and if you look at the advertisers, it's, like, all Chinese companies. They they, like,
[01:44:47] Unknown:
they're totally culturally dominant. Yeah. I saw multiple TikTok, sponsorships. I mean, I I assume the ones watching aren't here for the livestream because, unfortunately, the Ukraine game went into, extra time, and we started while it was an extra time. But it was good to see, Ukraine pull that off. Yeah. I mean, TikTok advertisements are all over that shit. I saw AntChain advertisements. You know, China's all over that. Mhmm. Yep. Before I leave you, before we leave the freaks, and before actually, before I forget, looking forward to participating in the B Word event with you and the Oslo Freedom Forum with you.
I'm very excited about that. But, the the topic of the day was Worldcoin. This almost Orwellian concept shitcoin that, Sam Altman of Y Combinator came up with that requires everyone to scan their irises, their eyes, to receive an airdrop, basically, an eye based KYC airdrop mechanism, to have a global currency that competes with Bitcoin. Do you have any thoughts for the freaks on that?
[01:46:03] Unknown:
Well, yeah. I mean, just it's just kind of the just the ego required from this guy to to name his project Worldcoin and to to claim that it's gonna help everybody in the world and to go so far down the rabbit hole on this to to raise $25,000,000 from famous people. I mean, I just would love to be a fly in the wall in his investment pitch to these people. And they've got, like, what, a model of this, like, orb or whatever, like, how fucking ridiculous is this? No. But it's, like, it's just a shame because this money should be if this if these people were effective altruists like they claim to be, they would be figuring out how to help educate people and how to improve Bitcoin user to e UX and and and the the network itself. Like, that's what they'd be doing if they really cared about economic independence and, increasing, you know, living standards abroad, or even in American communities that are that are like under banked, like, and and more vulnerable. Like, they would be just working on Bitcoin. Instead, they let their ego go to them and they make their own stuff. And it's all gonna be a huge freaking waste because no one is gonna use this thing. So it's if anything, it's just sad.
But it is crazy, yeah, to see like, a quote unquote, like, very prominent Silicon Valley icon pushing a surveillance cryptocurrency. You know, that's supposed to be a UBI for the world. Like, this idea that you'd you'd help people by, like, sucking up their personal data is exactly what Satoshi was trying to get away from if you if you read that if you read the white paper carefully on that piece, like like, you know, we're just trying to get away from centralized control and the ability for us to feel to interact financially without having to disclose our whole ID stack is the key. And it's just funny that this guy's going in the total opposite direction.
So just remarkable remarkable to see.
[01:47:47] Unknown:
Yeah. I mean, I I I know, I mean, I would I would first start with that. You know, I I do think that him and his investors legitimately do not understand Bitcoin. I think this is kind of proof of that. So it is bullish in the effect, that, we're front running them. They haven't really invested the amount of money that they should have into putting it into Bitcoin. So it's nice that we're ahead of them on that. I am unfortunately expecting that we're gonna have more of these Orwellian schemes before people basically learn their lesson. I think an important takeaway for the freaks is that this is why proof of work exists in the first place, distributed proof of work with this difficulty adjustment mechanism.
It's a trust minimized way of distributing the supply based on how much work you actually do, and all of these airdrop to the world schemes. I retweeted a tweet that I did in, like, 2018. Like, people have been talking about this shit forever. They always require a a trusted third party who determines whether or not you've gotten your share of the airdrop yet, versus, you know, scamming it or or fraudulent. And and and we've seen, half assed attempts at this with Stellar, for instance, and Stellar did it through Keybase, and they basically didn't have KYC. So what was happening was, scammers were just making tons of Keybase accounts and collecting the airdrop and then selling it for hard money. They're selling it for Bitcoin, and then they were probably a lot of them were probably going into US dollars afterwards, and Keybase had to put a kibosh on it. They, like, added, like, a kind of a KYC element. So all of these elements will always require some kind of KYC.
In this case, you know, whether that's a national ID or DNA or something, in this case, they're relying on eye scans because a lot of these countries don't have, you know, they don't have very effective ID mechanisms. So it's it's like the, you know, the the advanced KYC. It's like the next level of KYC. So yeah. I mean, this this scheme will fail. It is a money grab. They do have a pre mine with investors. That's where the investors expect to make money off of this. That's why they invested. And it is just straight Orwellian that you're, like, holding a carrot out
[01:50:03] Unknown:
and you're, like, do your eye scan. Well, I was I was doing an interview earlier today, I think, with, like, Fox or something. They wanted to talk to me about it, and I I almost I basically told them I I wasn't sure if it was real. Like, this could just be a stunt to, like, create some sort of publicity. It's, like, that ridiculous. I mean, it's that absurd. I don't think so, dude. I think You know, I I agree with you. I don't think it's a stunt but it it really sounds like one. Like, if you were to do a stunt, this would be a good stunt. That's how absurd it is and how impossible it is to tell apart, yeah, like fiction. It almost reads like an April fools joke. Exactly. Yeah. And that's why in
[01:50:37] Unknown:
the Altcoin space, it's, like, impossible to tell the difference between, like, who's serious and and and who's literally just copy and pasting a joke. Like, it's But there's serious money of so called experts in the in the wider Bitcoin space, the cryptocurrency space that believe that proof of work is a problem that needs to be solved, and they're all in the same camp as this Worldcoin shit. Like, all the proof of stakers and stuff, every everyone who thinks proof of stake is the way, anyone who supported the ICO model, stuff like that, like, they're all against this idea of this distributed proof of work, this, you know, this trust minimized way of of distributing, distributing wealth based on how much work you put in, verifiable work, work that anyone can verify themselves that actually work took place without any kind of KYC or anything like that. Right?
So there's definitely, there's definitely a a a non understanding, I think, and, that's our advantage freaks. That's our, this is this is our alpha. We, it it might seem clear to us and but the majority of the world is just completely
[01:51:42] Unknown:
have they have no idea what's going on. Bitcoin is the real world coin. So just, you know Bitcoin is the real world. Focus on the signal here.
[01:51:51] Unknown:
Alex, this was great. I always enjoy having you on. I always enjoy talking to you. I wanna remind the freaks that they can go support, [email protected]?org. Do
[01:52:03] Unknown:
you have do you have dotcom too? I don't think we have dotcom. It was pricey back way back when when we got the dotorg. I mean, hrf.org is great. Yeah. Hrf.org is good, and we have the Twitter handles. That's good too. And we have hf.org/devfund, and that's where you can learn about all the dev fund stuff we have coming later this year, for sure in in the debt fund space. So that'll be good to to track. Awesome.
[01:52:30] Unknown:
Do you have any final thoughts for the Freak's before we, close this up?
[01:52:36] Unknown:
No. Just in general, thank you. We'll be pumping out more content. I have my next piece coming out on 4th July about, Bitcoin and the American idea. So that's gonna be fun. And then, you know, enjoy that on your 4th July. And, yeah. If you are interested in joining us in person to meet some activists and help some people understand Bitcoin, you should go to oslo freedomform.com and and and just apply. And, if you note that you're in this Bitcoin community, we'll we'll get you in and, you'll get to see what's happening there in Miami. It's gonna be pretty fun.
[01:53:11] Unknown:
So that'll be in October. But thanks for, thanks for tuning in, folks, and we'll see you soon. Awesome. Thank you, Alex. Thank you for joining us. Thank you, Freaks, especially the ride or die that are here in the live chat. Big shout out to all the Freaks that support the show and keep it ad free, whether that's in our Sphinx tribe, streaming stats, the Breeze, and other podcast 2 point o apps, using the tipping dot me, or the ln URL that's here. All those links are at dispatch.com. I'm aware that it is down right now. I do not know why. It happened right before we started broadcasting, so I will get on top of that as soon as we finish.
And I'll see you on Thursday for rabbit hole recap. Cheers. Thanks, Alex. See you.
[01:54:08] Unknown:
Had a man wearing a t shirt said, Virginia's for lovers had a bible, and his left hand had a bottle in the other. He said all you're really giving is the sunshine in your name. We both started laughing when the sky started to rain. Get along down the road. We got a long way lonely? Did she leave her hometown thinking she'd end up in LA? Did she break down in the desert and get stuck beside the highway? Get along, long down the road. We got a long, long way to go. Scared to live, scared to die. We ain't get along? Find out when you die, the keys to heaven can't be bought.
We still don't know what love is, but we sure know what it's not. Sometimes you got to get along down the road. We got a long, long way
[01:57:22] Unknown:
Love you, freaks. Missed you last week. I'll see you in 2 days. Stay humble and stack.
Introduction of Ricardo Salinas and his support for Bitcoin
Geopolitical implications of Bitcoin adoption by nation states
Challenges and opportunities of onboarding a large population onto Lightning Network
The adoption of Bitcoin as legal tender in El Salvador
Custodial Lightning wallets and privacy properties
The potential impact of Bitcoin on accepting donations and fundraising
The impact of China's mining restrictions on Bitcoin
The decentralization of Bitcoin mining and the potential for attacks
Bitcoiners should be skeptical and wait for more confirmations before settling transactions
The decrease in network hash rate and the debate about reaching the all-time high
The mainstream media's lack of understanding of Bitcoin and its geopolitical implications
The geopolitical impact of Bitcoin and its potential for the next century
The difficulty adjustment in Bitcoin mining and its defense mechanism against attacks
The national security issue of relying on foreign manufacturing for critical infrastructure
The implications of a successful WeChat-like app in Africa
Discussion on Worldcoin and its surveillance-based approach