Episode #46: 📉 Are We Ready to #CallABottom?

We announce our vaporware crypto conference Con Con and Mike Novogratz calls the bottom

Coin Talk
Coin Talk
Oct 2, 2018 · 50 min read

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COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode. (You can also subscribe on Apple Podcasts, Google Play, download the MP3, or email us at hi@cointalk.show)

Show Notes

  • 🧐 Tracking crypto by the BGCI (Bloomberg Galaxy Crypto Index) rather than BTC price
  • 👽 Vitalik’s brutal honesty
  • 📉 The crypto crash is now worse than the Dot Com bubble


Aaron: Okay. I want to tell you about something that happened to me this week, Jay, which is my brain has been so fried that I was taping another episode of my podcast Stoner, which is about creative people and marijuana, and I started doing the Medium throw from this show during the introduction with a guest there. So Medium, you got a freebie.

Jay: Do they want to be associated with weed?

Aaron: I cut it. I actually was going to leave it in there as a joke and then I was like, “There’s no joke here in this world.” But actually the special episode I was taping was about Elon Musk hitting the blunt on the Joe Rogan show, which actually made me think some about some stuff we’ve talked about, about who is the ideal crypto leader and whether you take your view on the market from technical fundamentals or the hero myth of the leader.

Aaron: I can’t think of anyone like Elon Musk right now where the entire fate of his company in a publicly traded stock really are just riding on so person so fundamentally.

Jay: Yeah. The closest to it would be like Zuckerberg and Facebook. Or Jeff Bezos and Amazon. But both of those seem to have an infrastructure around them that could probably both insulate … I don’t know about Amazon. But I know that Facebook could figure out a way if Zuckerberg was doing something strange, like for example, going around the country and trying to figure out how people live and maybe running for President.

Aaron: Hello. Fellow country fair attendees.

Jay: What a wonderful family dinner that you have made for me here in Iowa. I think they can control that narrative a little better, but with Tesla which has proven time and time again, they don’t really have a way to control Elon Musk because he’s the whole company.

Aaron: We wouldn’t say … I mean Warren Buffet is the whole company for Berkshire Hathaway also. But if you don’t act recklessly no one notices that you’re the whole company.

Jay: Yeah. I think you’re right with Berkshire Hathaway. Even though there’s that other old guy. Remember the other one who hated crypto and said … The Berkshire Hathaway guys I will say were a little bit more agnostic about it, or at least polite about it.

Aaron: Yeah.

Jay: But the thing with Tesla I think is that … and you know this is very similar I think to Ethereum maybe a year ago, maybe this is where we’re going, is that-

Aaron: I was planning to label this episode “Is Ethereum the new Tesla?” Regardless of what we say in it. I just think it could get us some traffic.

Jay: That’s definite good click baity headline. I think with Tesla, everybody is investing in Elon Musk. They’re not investing in a car company. They’re investing in “Oh, this one person is going to change the entire future of transportation around the world.”

Aaron: Well, I think they are betting on a car company. They’re betting that one person’s individual wealth is stronger than a million Toyota employees. Right?

Jay: That’s different than, for example, buying Amazon stock because you’re not really betting on just Bezos at that point. You’re sort of-

Aaron: I think you kind of are though, because there’s a few people I just believe like don’t bet against them, like I don’t bet against Elon Musk. I wouldn’t bet against Jeff Bezos. I don’t like him, but I wouldn’t bet against Peter Thiel. There are just people who’ve got that like Kobe, asshole, never give up kind of drive. It’s not something I love interpersonally and I seek in my friendships, but from an investor standpoint I do kind of believe in people like that.

Jay: Well, Jeff Bezos, I guess I would just put it this way. If you’ve invested in Amazon, what you’re doing is essentially is saying, “These people have such a huge advantage right now. This company has such a large reach and it has its fingers in everything; and therefore even if Jeff Bezos isn’t around I believe that the advantage that they have, like the step ahead that they have is going to be something that I’m going to bet on.”

Jay: But with Tesla I don’t think you really do that. You’re just like, “Oh, this guy’s a genius and he’s going to create the next genius thing.”

Aaron: I think that that’s right. And I think that we like in this country free-thinking geniuses. The whole trend towards crypto-

Jay: Sure, like Steve Jobs for example.

Aaron: Yeah. And it would make sense that like Steve Jobs 2018 is even more extreme that Steve Jobs 1990. We’re living in these extremely polarized, volatile times.

Jay: Do you have a penguin backpack on?

Aaron: We’re going to get to that. We’re going to get to that. I like that we’ve been doing this show long enough that we have inside jokes on the show.

Jay: And most involve the Jaxx Liberty presentation.

Aaron: They’re pretty much all about Jaxx. I would say if you looked at search terms that we’ve over hit, it’s pretty much all Jaxx Liberty and Excerptoshi. We’ve among the leading crypto sources for information about those two topics which is actually a good segue into what I’d like to do today, which is I don’t know if we’re at the bottom, but as a time to check back in on some of the narratives we talked about during boom times. I think this is an interesting time to re-evaluate some of the stories that have brought us laughter and sadness over the course of the show.

Aaron: So the first one is, one of the first people I feel like when we first were getting in, was that Mike Novogratz was going to start this big fund that was going to be mega crypto.

Jay: Yeah. Well, Mike Novogratz, I feel like if we’re talking about figures within crypto and what they actually mean, like you have Vitalik who is sort of the free thinking genius I would say. And then you have people like Jamison [Mop 00:07:24], who are defenders of bitcoins honor. I think basically that all of institutional money and the way that people think about how institutional money will fit into the crypto space, and I actually don’t think this is a good idea, but it seems to all be encapsulated in what Mike Novogratz is doing. So if he says something then everybody starts to believe that this is how institutional people think.

Aaron: I think that’s true. I don’t think Novogratz is particularly well regarded in straighter business circles anymore. And I kind of get why based on how he’s behaved here on crypto. He’s like, “I’m starting the biggest fund.” Market crashes. “Actually that was a bad idea.” Like, “You’ll all think I’m smart” but he’s been somewhat right and I do appreciate that he’s just being like open about it. He’s kind of acting like we act, which is like, “Buy. Sell. Sell. Buy. Going to zero. Going to a million.” It’s kind of incredible seeing a professional financial figure experience crypto like a 17 year old Redditer.

Jay: I will say this, I think that he probably when he was quieter I think he made a lot of money in crypto. I think he has been invested in it for a long time. And because of that I think that he owns way more crypto or has much bigger stake in crypto than he will let on publicly. Because he does make these big splashy public buys. But I think that the war chest is much bigger than that for him.

Aaron: Which means like, and I want to say that for all the people like him who have huge war chests, I know there’s no sympathy for them. But those people have had a very, very bad 2018.

Jay: Yeah. They’ve had their net worth probably cut in half maybe.

Aaron: If they’re all crypto.

Jay: Yeah.

Aaron: I assume that all these people are extremely diversified, etc. but it’s not like when you run a big fund. The thing that happened to Ethereum doesn’t happen to your fund.

Jay: They don’t cut you like a crack bonus.

Aaron: I mean, I don’t know. Maybe they’re crazy like stop lossing. I assume they have better strategies around like being market neutral than we do. But I just don’t understand how you can be in crypto and be truly market neutral. I think you’re truly betting in crypto going up.

Jay: Well, there’s one way, which is mining.

Aaron: And I assume that a lot of these companies are in mining. I assume a lot of these funds are either directly in mining or invested in things that trickle down from mining. So again, they’re more diversified that we are, but probably were holding some Ethereum.

Jay: So what did Novogratz say?

Aaron: So he said, “I’m calling the bottom.” He tweeted out that he’s calling the bottom.

Jay: He tweeted out those word? “I’m calling the bottom”?

Aaron: I’ll pull it up because I don’t want to misquote the man. It came across to me on Bloomberg. The headline is “Michael Novogratz calls the bottom in the crypto market”. This was in tweet form.

Jay: He hash tagged Calling the Bottom?

Aaron: Yeah. Said this is the BCGI chart. I think that’s the Bloomberg Crypto Index. “I think we put in a low yesterday. Retouched the highs of late last year and the point of acceleration that led to the massive rallies/bubble. Markets like to retrace to the breakout. We retrace the whole of the bubble #calling the bottom.”

Aaron: So this was surprising to me. First before I looked at the chart I assumed it would be a bitcoin chart. And if you’re calling bottom on bitcoin, we’ve already been lower that this.

Jay: But we haven’t retraced the entire boom of bitcoin.

Aaron: That is correct. So what he is talking about is the BGCI, which is the Bloomberg Crypto Index, which I had look up.

Jay: Is it the Bloomberg Crypto Index?

Aaron: It’s the Bloomberg Galaxy Crypto Index. So, yes, he is getting high on his own supply. I believe he is the founder of Galaxy Capital. So the way that this index works is it’s a weighted index of 10 cryptocurrencies. It’s not actually the top 10. It works a little differently. And it’s also not weighted entirely by the size of their market cap or existing supply.

Aaron: So I looked up what goes into the BCGI. I’m going to read it. “30% bitcoin. 30% Ethereum. 14% ripple. 10% bitcoin cash 3% Litecoin. 1.5% Dash. 1.5% Monero. 1% Ethereum classic. 1% Zcash.”

Aaron: So the huge wow on there is it represents Ethereum with weight as bitcoin.

Jay: Yeah. I don’t quite under … I mean, look, the few who made this are smarter than you or I in terms of this sort of stuff.

Aaron: That’s one way to look at it.

Jay: I don’t quite get why Ethereum would be equal with bitcoin considering that it seems like the way the bitcoin moves influences the way that everything else moves.

Aaron: But if you were Brian Armstrong you could see putting them on equal footing in terms of their perception of the future of the crypto space, maybe?

Jay: Yeah, or it might be a projection of where they think that the actual value will be in a while. Although I don’t know why you wouldn’t just do that when it actually happens.

Aaron: The way I assume this works would be that it’s the top 10 cryptocurrencies at any given moment weighted by the size of their market cap, which would mean that bitcoin was more than half.

Jay: So what are the big ones that aren’t on there? So it’s stuff like Stellar Lumens is not on there, right? That’s like a big market cap one.

Aaron: No Stellar Lumens. Well, let’s see. Let’s pull up the actual top 10. Someone’s getting hosed, right. Someone’s got to be getting hosed. So top 10 on coin market cap: bitcoin, Ethereum, ripple, bitcoin cash, es, … first excluded one is Stellar … then litecoin, then tether, giant asterisk, don’t need to get into it. No cardano either.

Jay: Oh, I’m okay with it.

Aaron: I think some of this methodology is about setting a single criteria at a certain point so that you can track it over time and it doesn’t keep adjusting itself. Because Stellar Lumens probably wasn’t in the top 10 when they made this.

Jay: Yeah. All those coins are old coins.

Aaron: So this is a different way to look at. We talk about the price of Ethereum and we talk about the price of bitcoin. But looking at this as all one single organism gives you a different perspective.

Jay: Yeah. And I like looking at it that way myself because I feel like that actually … It takes you out of the sense that small movements in price, or even large movements in price of one coin reflect the health of everything. So like if bitcoin goes down 15% in a day, which it does all the time, if everything else holds steady then that means something, right? If Ethereum, like for example what has happened is that Ethereum has crashed much harder than everything else. You can sort of be like, Well, it’s not that the entire crypto market is crashing. In fact, bitcoin is sort of holding steady with a floor at around 6200 it seems like.

Jay: So why is Ethereum crashing out? Does that mean that people are less interested in crypto? Or does it mean that people are less interested in Ethereum? Or does it mean that there’s some sort of Ethereum price manipulation going on? Or some catastrophe that people don’t know about? It helps you keep some sort of level-headed perspective.

Aaron: Yeah. I agree. I think it’s notable that bitcoin hit that floor and Ethereum kept going and therefore the entire BGCI kept going down. Like even if bitcoin reaches a floor, if other things are falling through that floor I would like to sort of know about that when I trace the overall arc of these things. And generally what I do is look at the chart of bitcoin. Look at the chart of Ethereum. But I’ve never really tried to blend it all together in this way in thinking about where we are.

Aaron: Like if you ask me, when we come in at the very beginning of the show, we put the bitcoin price index at the front of the show. That will be our historical record. Should we be putting the BGCI price on there?

Jay: Ah, no, because it’s more confusing. I have two questions. The first is like, we actually flirted with this idea a long time ago. Do you remember when you and I were trying to pick [inaudible 00:15:59] and we realized that the ones that were taking moonshots was just random. And your thought was that you were going to buy one of every single coin on bittrex?

Aaron: Absolutely, the bittrex index.

Jay: The bittrex index. The bittrex degenerative index.

Aaron: I’d love to see a cryptopia index right now. It may be too small to fit on the four digit display, but it’s back.

Jay: I would actually as an investor, or as somebody who wants to put money into crypto, I think I would be much more willing to buy … If you were telling me, okay, the cryptopia index is if you really just want to flush your money down the drain, and there’s some chance that you’re going to do a moonshot, or like the bittrex index which is a little bit more aggressive but not as aggressive as the cryptopia one, or just the coin base index, which is pretty solid. I think I would be more interested in that product than trying to fish out which one of these projects to buy into.

Aaron: I couldn’t agree more. That’s all I want. I don’t want to hold alt coins. I would just like light exposure to the alt market.

Jay: Yeah. Like an ETF based on, like the different exchanges. I think I would do that. It would actually be quite fun. The second question I have, is do you agree with Jamie Dimond, not Jamie Dimond, wow, what-

Aaron: I heard he’s running-

Jay: He’s running for President.

Aaron: He’s running for President?

Jay: Yeah, on an anti-bitcoin platform.

Aaron: I will never support a no coiner President.

Jay: Do you think that Mike Novogratz is right, are we at the bottom?

Aaron: Yeah.

Jay: And do you feel that way based on anything other than the fact that you want bitcoin prices to go up?

Aaron: It felt right?

Jay: Yeah, yeah. I kind of agree with you. The idea that all cryptos fully retrace to the beginning of the boom, which is about a month or two before you and I got into crypto, that’s kind of convincing. And, look, I think that he makes calls based on self interest like everybody else, and he probably wants … That is what you were talking about. It feels like he’s really not that much different than you or I, where we wake up and we feel good about it and we’re like, “We’re going up today.” I mean, it can’t possibly go down any more. It’s not like analysts are a different species.

Aaron: No.

Jay: They have more information than us and hopefully they’re more cool and calculated but at a certain point you have to subject … like if you’re going to call bottoms it’s going to be a subjective call.

Aaron: Yeah.

Jay: Now that call has been cemented for me because of that … so Ethereum went down and hit like 170 and then ran almost back up to 220. And I would say that my call of that bottom was when it hit 220, not when it hit 171. Do you know what I’m saying? Like if it was 173 right now I’m not sure I would be calling the bottom.

Aaron: Yeah. Yeah.

Jay: I’m not looking at Blockfolio because now that I’ve said that it probably has crashed while we’ve been on the air. I haven’t bought yet. The second I buy it, it’ll crash. Look, I think that is actually is meaningful for somebody like Mike Novogratz to do something like this, outside of even just Bloomberg writing about it, right? That’s a somewhat big deal. I think that people actually have been waiting around to figure out whether or not all this was always a scam, if they had been investing completely in digital Beanie Babies. And I think that the way in which they make their decisions is that they feel that somebody who is “institutional” is back into it, then they feel like it has some sort of future. If everybody who is institutional money is completely out on it, then they think that, “Wow, this really was like a dumb craze, and we got fleeced.”

Jay: And so I don’t know. I would imagine that this is somewhat meaningful in trying to get something back together. Because I was trying to think about it, is like why was bitcoin ETF important? Why was everybody freaking out when they got canceled? And also why was there so much hype around it? And I think it was really just that people in this space know that for this thing to go back up and be legitimate again, it just needs some sort of big institution to be invested in it. So that it feels like people’s confidence is coming back into it.

Aaron: When you look at … We’ve said a lot of terrible things about Ethereum, mostly Jay. But if you look at Ethereum at $170 when it had a high of over $1200. If you think that Ethereum is going to exist in a few years, I think that’s a buy. I know it’s a tough buy, but it’s like a wow, that’s low. That’s lost a lot of its value. So when I look at institutional money, or actually I think mining gives me the same narrative feeling, right? Institutional money making an ETF or a fund or whatever, it takes years. You can’t have like a one and a half month fund. And you can’t even get miners in a month and a half. You have to build a facility. You have to do all this stuff. So all sorts of activities that are driven by long time frames I think are saying, “Hey there’s a bunch of other people that think this is going to exist in a few years, and therefore as an individual retail investor, now is a pretty good time to buy if you think crypto’s even going to exist in the future.”

Aaron: So cheers to Mike Novogratz for calling his shot. I appreciate anyone who’s at least putting something embarrassing on the internet that will either be good or come back to haunt you.

Jay: You know that Twitter account, Old Takes Exposed? It takes sportswriter’s tweets and then brings them back up when their predictions are wrong. Is there a crypto version of that? There must be.

Aaron: There needs to be, because definitely Dan Bilzerian said that he sold the top like three months after the top. He was like, “Looking to buy crypto again because I sold the top several months ago when it happened.”

Jay: No one has ever sold the top, I don’t think, except Charlie Lee who basically nuked his own project by selling the top of it.

Aaron: As I said, I have a strong track record of buying the top to the bottom. You just buy all the time. So as we are checking back in on some of our favorite characters from the first round of the show, I’ve been off Twitter. I know you’ve been off Twitter. Which mean I have not been catching John McAfee tweets.

Jay: Oh, no. Me neither. I haven’t seen one in months.

Aaron: And I think he kind of chilled out after the ICO boom ended. That was kind of his-

Jay: Or actually he was almost assassinated, right?

Aaron: Again, don’t know if that really happened. But, yeah. And he tweeted out a photograph of a young, intoxicated man who is said to have challenged him to a drinking competition on some sort of a blockchain cruise.

Jay: The young man was like in a wheelchair.

Aaron: Yeah. He was like passed out in a wheelchair. And he was like, “That’s another person who challenged me to a drinking contest.”

Jay: I would never, ever challenge John McAfee to any type of contest.

Aaron: I wouldn’t want to be on a cruise with him.

Jay: Yeah.

Aaron: He’s the kind of person. You know how you’re like, there’s nothing really stopping someone from just murdering you?

Jay: Yeah.

Aaron: He’s exactly the kind of person I don’t want … Like I’m not worried about being murdered by random homicidal maniac like I encounter on a dark freeway at night. But I genuinely think that John … He’s one of the few people who would like just kill someone. And he did.

Jay: Libel.

Aaron: He did kill someone allegedly.

Jay: Sure. And he was almost killed allegedly.

Aaron: I think he’s been almost killed allegedly like a dozen times.

Jay: Sure.

Aaron: So I don’t have that much to say about him. But I do have to say, I’m shocked at how much all of these guys who are crypto figures seem to be at a crypto conference or cruise all the time. Do some of these guys even have their own apartment? Or are they just going from conference to conference, cruise to conference?

Jay: Okay, so I agree with you. I’ve noticed this too that-

Aaron: We’ve never talked about the crypto conference ecosystem.

Jay: So what is it then? Is it that these conferences obviously bring in a lot of money, right? They’re an event and the people who make them make a lot of money.

Aaron: When you look at a company like Coin Desk, I don’t think I’m out of line to say this, it’s not very profitable putting sidebar ads, but it’s extremely profitable to throw consensus every year and charge a bunch of corporate sponsors hundreds of thousands of dollars for that privilege of their logo being on it.

Jay: And that we are at a point right now, that post crypto boom and post crypto craze, that probably anyone who had any sort of involvement at all, or connections, or ability to throw a technologically based, or tech based type of conference. They probably just did it, right? For crypto. So if you know the number.

Aaron: Sure.

Jay: If you know the number of somebody who works at a convention center, then you probably were like, well why don’t I throw a crypto conference because these people have tons of money.

Aaron: I mean we could throw Coin Talk Fest next month and get corporate sponsors from it. I don’t think you even need to be a real thing.

Jay: Why are we not doing that then?

Aaron: I mean you would probably get in a fight with half of the people there.

Jay: Would I even have to be there?

Aaron: Yes. You are expected to attend your own crypto conference.

Jay: I know, but can I make drinks or something like that?

Aaron: But I would say that that is salient, which is, I think to be on the crypto conference circuit, you need to go to a bunch of crypto conferences.

Jay: Because you need to meet the people who go to crypto conferences.

Aaron: I think it’s a whole culture. I’ve watched some of the talks and a few of them I think, like Andreas Antonopoulos talks are really good. I’m not saying that these are all frivolous, but it seems like there’s a class of crypto enthusiasts whose whole life is just going from one conference to the next, which makes it seem like it’s hard to get anything done. Like when some of these guys who run coins, spend their whole lives talking at conferences, it’s not bullish for the coin.

Jay: It’s kind of an amazing side hustle. I mean, I have always sort of envisioned an alternate life for myself where instead of writing about things that are not really … Like if people don’t necessarily really want to write about, that I was like a big ideas guy, you know. And that I just went from conference to conference to conference and pulled down speaker fees. I don’t know who actually ends up paying, footing the bill for that sort of stuff. It seems like one of those types of things where almost everybody profits and the only people who don’t profit are places like, I don’t know, like IBM or something like that, that has to pay the corporate sponsorship.

Aaron: I don’t know how it works in the black chain world. In the journalism world, you definitely don’t get paid for speaking at those conferences.

Jay: You don’t?

Aaron: No. I mean, they’ll fly you there and get you a hotel room, but at most, you’re walking out of there-

Jay: Wait, so if Malcolm Gladwell speaks at a journalism conference he doesn’t get paid?

Aaron: I think Gladwell doesn’t show up anywhere for no money. But like most speakers at a journalism conference are just getting a flight.

Jay: Actually, you know what, I have given a couple talks at the Asian American Journalists Association, and now that I think about it, I have, and they didn’t even pay for the flight.

Aaron: You literally … I was going to make that joke and then I was like, it’s not even worth making a joke about how you could be the number one speaker on the Asian American Identity circuit.

Jay: No, no, no. I am ignored at those things.

Aaron: Really?

Jay: Yeah. Because, you know, they like broadcast, so it’s a lot of TV guys.

Aaron: Yeah, so like Pablo Torre like get out of here Jay, you’re no one to me.

Jay: Pablo is definitely above me in the pecking order. My Overwatch buddy. Pablo and I have been playing a lot of Overwatch recently.

Aaron: That’s not good.

Jay: I guess my point being that it sort of does make sense to me that what crypto turned into was a bunch of conferences with the same people going from place to place to place, giving the same exact speech and that maybe there are four or five new people in each conference and everyone else is exactly the same. It’s like a group of speakers that … You know, it’s almost like literary fiction or something like that, where the only people who read literary fiction are literary fiction writers. If you somehow infuse billions of dollars and bunch of hype into the literary fiction world, I think something like this would happen.

Jay: And it does happen for them. They just got to book fairs and give talks in front of other writers. This is that times like 50, I think.

Aaron: I think this actually our best take on crypto so far. It doesn’t really tell you much about what to buy or what to do, but I think crypto is full of lonely people looking for community. I think that’s probably also what animates movements like libertarianism. Like I think hanging out with other libertarians is as important as achieving liberty here while under-

Jay: Yeah, well you want to find-

Aaron: You want to find your tribe.

Jay: … like minded people and sometimes it’s hard, especially earlier in crypto where you’re the only people who are into it, you know?

Aaron: And also crypto can breathe life into existing older movements. Like when we talked to Saife Ammous, that dude really just wants a gold standard. But, this is a fun partying way to get a standard going. Is that part of the appeal of crypto is that it’s like sort of a new spin on some of these ideas and everyone can get together and go to conferences, meet people, start businesses? I mean, this is why I think alt coins had to happen also.

Jay: Because the people at the conference needed something to do?

Aaron: Yeah. I think that you have enough bitcoin conferences. Satoshi’s not speaking at them. At a certain point, you’re like we should do something. Like we want to have our thing, you know?

Jay: Okay, so if we do Coin Talk conference, what are we going to put in it?

Aaron: It’s called ConCon by the way.

Jay: CoinCon?

Aaron: What are we going to do at it?

Jay: Yeah, what are we going to put in it? Who are we definitely inviting?

Aaron: I mean obviously our keynote is already decided. It’s [Exer Toshi 00:30:23] will be like-

Jay: The unveiling.

Aaron: … the first public reading of his book and maybe like additional cryptogram in the notes.

Jay: Is it going to be a bunch of technical talks or is it going to be journalists who are writing about crypto. It’s going to be memes?

Aaron: There’ll be a dunk tank with [Adrian Chen 00:30:41] in it for charity.

Jay: Are we going to cover memes? How would we put this together because I feel like this is a good chance for you and I to actually try and make some of the money we’ve lost in crypto is throw a ConCon.

Aaron: It think that ConCon is going to have no questions from the audience. That’s one of our big things. We’re too skeptical. That’s the thing. Like no one wants to hear skepticism at conference, I don’t think.

Jay: I think that’s our ultimate-

Aaron: Well I think ours would be crypto moderates con. We’re known as the moderates convention.

Jay: We’re like the hash tag resistance of Hilary supporters on Twitter.

Aaron: Because you know how there’s like a community within Hollywood that’s like the secret conservative community, I believe.

Jay: Yeah, what’s it called, the Sons of Sam?

Aaron: Yeah, they believe they’re persecuted? We need to start a similar crypto moderates community where its like the truth that dare not speak its name. I like only kind of believe in bitcoin and think that we should keep some Fiat currencies.

Jay: Yeah, but I don’t know anyone else even feels that way.

Aaron: Well that’s because they’re not comfortable saying it.

Jay: That’s true.

Aaron: They’re being oppressed.

Jay: What is that Hollywood thing called? It’s like-

Aaron: Sons of Abraham Lincoln?

Jay: It was like Andrew Breitbart and James Wood and it was like a whole … And like that’s how Steve Bannon met Andrew Breitbart.

Aaron: I think Jon Voight is in it also.

Jay: Jon Voight, yeah. Let’s not start something like that.

Aaron: Okay. So, in conclusion, don’t go on a cruise with John McAfee. Don’t let your whole life become going to crypto conferences, unless you’re lonely, in which case, do. But something to keep our eye on, because think also, Vitalik was involved in Bitcoin Magazine, which is like a magazine that probably was primarily distributed at crypto conferences.

Jay: Yeah, he also like … I just remember reading something where he was getting paid like .02 bitcoin a word. And this is when bitcoin was like $2 or something like that.

Aaron: Maybe the greatest word rate in history of journalists.

Jay: No, I thought about it, greatest word rate ever in the history …. Even right now, that’s like what, like $140 a word or something like that.

Aaron: What do you think about … I don’t want to go to deep in this because I know that usually if I just bring up Ethereum it’s like five minutes. The show, just like on fire. But Vitalik has been saying pessimistic things. He was like “Crypto space will never has 1,000 times growth again.” How do you read all of that stuff, particularly in the Elon [Muskian 00:33:10] in like this guy is clearly driving public perception of a money pool.

Jay: Look, I want to clarify here and just say I like Vitalik. I like him because he says these types of things. I just like the fact that he says these types of things. It’s probably not good for peoples confidence in his project, you know? And so when he says something like that, I think he totally feels that way. There’s no manipulation. He’s just saying how he feels.

Aaron: You almost know it’s the truth because it’s a dumb thing to say.

Jay: Yeah, you’re like why would you say that? And he would look at you and be like, because that’s what I believe. And then you’d be like, yeah but don’t you … And then he’s like would you like me to lie to you? And you’re like, okay, look.

Aaron: That would be kind of like in professional sports, like if someone on the Browns was like, well, we’re not going to make the playoffs.

Jay: After like game two or something.

Aaron: There’s a real taboo about that. Even if you’re on … I’m sorry to talk so much sports … Even if you’re on the Bills right now, you cannot publicly say “We’re not going to make the playoffs this year.”

Jay: Or like, yeah. I mean that’s why the Jim Mora playoffs, like playoffs thing, is so famous because it’s so ridiculous that he said that. He’s like the coach of the team and be like we’re not making the playoffs this year.

Aaron: But do you think he’s like setting up a certain truthy reputation because he’s now saying down things so that when the market’s in mania, we’ll believe him?

Jay: I don’t think that he’s that calculating or cynical.

Aaron: He is the messiah.

Jay: I literally think he just says what comes to his mind and that when people are like what is Vitalik doing? Why is he doing this? It’s like well, he’s doing it because that’s how he actually thinks. He’s just reacting. There’s no grand plan. That’s probably bad for someone who’re leading a multi billion thing, but it is refreshing because I actually just believe what he says now. If he’s like “Oh the market is down and it’s never going to grow 1,000 times again.” I’m like, yeah, it’s probably true. I don’t know. He’s probably looked into it and he’s just saying that because he feels that way. As a journalist, you hope people are kind of like that.

Aaron: He said that most intelligent, educated and informed people have heard of the block chain now, and therefore the ceiling is lower than it was.

Jay: Oh, that was his take?

Aaron: Yeah.

Jay: That’s interesting.

Aaron: He was kind of applying it across the board. He was just like, it’s not going to get … It doesn’t have as much to grow as it once did, because it grew that much.

Jay: Yeah and I think that probably is true because everyone knows what bitcoin is.

Aaron: I felt like I just got a glimmer of FOMO Kang there. Just a little bit. You’re like, Vitalik is right.

Jay: Yeah, but Vitalik’s right about-

Aaron: And his product is on sale.

Jay: Well, Vitalik’s right about the market being bad, that we hit a ceiling because what the mania was was people being turned onto the idea of the block chain and of crypto currency, right?

Aaron: There’s always a ceiling in the world, though. Like Facebook is the first company that wrapped up against it. All the people in the world is the ceiling for any product. But, it’s different in this case, because it’s not really people. That’s why I always think it’s weird how DApps use active users as their metric. I’m like, who cares how many active users it is. I want to know how much volume there is, how much money is running though it. I think DApps could be totally influential in the world with 1,000 users if those 1,000 users are like the biggest banks in the … You know, banks and bankers and extremely wealthy people. Most of these things I think are gauged on how much money is put into them.

Jay: Yeah, but for DApps I kind of get it because they want to show that they’re creating a large ecosystem, right, and that the spiderweb or whatever is going out further. So I understand why they would think about themselves in terms of net users. I mean, do you find this convincing? Do you feel like there is sort of a cap now on how much crypto can grow because people have all learned about it? Or at least the people who would invest these types of things all know about it and have already made their declaration of whether they’re in or out?

Aaron: This is something I’ve been thinking a lot about. I think that there’s obviously still more people out there. There’s a lot of people on this earth. However, I think about how bad an experience the last generation had. I don’t know if there’s an endless supply of people who are willing to speculatively try crypto. Like we already got those people. Those people bought in 2017 and they’re now down a lot of money. I almost feel like that generation … We have to make good on the last generation before we can get the next generation. There can’t be a new generation of crypto at least until I break even.

Jay: Well, okay, so if you think about it in terms of the tech boom, right, because there was that news that came out that said that the bitcoin crash is now bigger than the first dot com bubble bursting.

Aaron: Well it shocked me, because I did not realize the dot com bubble was that big.

Jay: I didn’t realize that it, I mean there are things like Cisco and stuff like that that spiked forever, but …

Aaron: I thought we had passed that drop a long time ago just because I assume that crypto is the only place where you’re talking about more than-

Jay: Like 80% stock.

Aaron: Yeah. And I don’t know exactly what metric they’re judging the dot com boom by. So this is an interesting question. How did people start buying tech stocks again after the crash?

Jay: Yeah, exactly, right? For people who are buying Google for example, right? When did people start saying, “Oh, this is not just another Pets dot com.”, where they started to really believe in tech stocks again and how long did that take? I guess if you look at the timeline, it was like five years or something like that. But at what point did the stink start going off the internet stocks? I guess that would be the question that I would have.

Aaron: I think that’s part of why I’m calling the bottom here. I feel like a little less stinky.

Jay: Oh really?

Aaron: Yeah.

Jay: It’s been like five months.

Aaron: Well look, everything happens faster in crypto, right? So if it took five years for the dot com-

Jay: I don’t know if it happens faster than the first dot com bubble, though. It seems like the dot com bubble was about as fast as crypto.

Aaron: I think that you can go from like a criminal to a like established businessman in crypto in like two and a half months, so it must be somewhat easy to scrub yourself clean. I feel like the stink is coming off a little bit. But then again, I was a little bit earlier than most of the people who lost their shirt in this crash. So for me, I can tell you that if we can go up about … I mean if we can double from here, the stink will be gone, for me.

Jay: Really?

Aaron: Yeah, I think so, yeah. Because then we’ll be kind of at least at a break even point.

Jay: If we double from here and go up to like 12,000 or like 13,000?

Aaron: Yeah. Let’s say I’m the BGCI, say bitcoin runs to 10,000 and Ethereum runs out a bit ahead of it, which is what I’m hoping will happen.

Jay: To like 500 or something?

Aaron: Yeah, something, yeah. 10,500. To me that’s like point A, you know? We can start fresh from there.

Jay: I totally agree, but you know, doubling in value is not that easy.

Aaron: Look, all we need to do is go from $200 Ethereum to $500 Ethereum.

Jay: All we have to do its take bitcoin and put it on black on a roulette wheel and have it double it down.

Aaron: Yeah, look, no, there’s a lot of assumptions here. But I do think you’re right. I think the stink has to be washed off and it’s not just about the ceiling of people out there, it’s word of mouth, right? It’s like we made a shitty movie and now we’re trying to sell people on the sequel or something.

Jay: Yeah. No, no, no, no. I think that Vitalik is right. I think we’ve had variations of this conversation before, and I think that in the end, I was always, I just kept thinking, well there’s a lot of fucking people in the world, you know?

Aaron: Yeah.

Jay: There’s entire countries where people don’t know about bitcoin or know less about bitcoin. Or places like … What percentage of China for example knows about bitcoin? There’s certainly people who know about bitcoin, but does your average middle class retail investor who’s just screwing around on WeChat, like do they know about bitcoin? Because that’s what matters, you know? So I felt like there were probably a lot of people still left who would want to know about it, but, I don’t know, Vitalik knows a lot about this sort of stuff, so if he feels like all those people probably already know about bitcoin, then maybe they do.

Aaron: Let’s talk about that China thing because I was just thinking literally about doing that. When you said that, I took it very literally. I was like walking up to a Chinese villager and being like “Here’s a crypto wallet. We’re going to put money in it.” It seems so much more plausible to tell that person about bitcoin than it does Ethereum or some other alt coin. If I’m like “Yeah, it’s digital money. It’s like, you know in WeChat, you buy stuff. This is a purely digital one. Great.” Me and you can’t explain Ethereum to each other.

Jay: No. At least not like that.

Aaron: Not unless you have at least two hours and a highly skilled threa … Can you imagine trying to explain Ethereum through a translator?

Jay: No. That’s the thing, though.

Aaron: They’re like “amusement park” and the person’s like “I am not familiar with this term.” I did like when Tony Shank fired back at us on the amusement park last week, though. He was like “This doesn’t make sense. It’s like if you called the internet an amusement park, that doesn’t make sense.” I’m like “I agree, but it doesn’t make sense.” Our metaphor is bad because the thing we’re trying to make a metaphor from doesn’t make sense.

Jay: Also we are already invested in this metaphor enough, Tony, so we don’t need … We need it to kind of work. If you think back at Nathaniel Popper’s book, if you recall, he writes pretty praisingly of Roger Ver, not the current Roger Ver, but the old Roger Ver.

Aaron: Before he turned heel.

Jay: Roger would go around Japan and he would download bitcoin wallet onto peoples phones. He would say “Hey, this is a different form of money. It’s really secure. It’s not based on banks. It’s outside of the whole government banking system and it’s really easy to use. I just did it for you.” Right? You can still do that with bitcoin. You can go to countries that have, for example, growing authoritarian threats, like China, and tell people “Hey, you know how all the money, even on WeChat that you have, it’s linked to your Chinese bank account. If you’d like to have some sort of store of money that you can use internationally without incurring any sort of penalties or drawing attention to yourself, then maybe you should use this.” You can still do that. I actually don’t even think it would take more than what I just said to somebody for them to be interested in it.

Jay: Every other alt coin and Ethereum is contingent on the idea that you understand what bitcoin is first. And they’re much harder to explain outside of that. And so, I would think that if you believe that that is the currency in which coin should grow, like as word of mouth and people being excited about it, then I would still think that you and I are right to be like bitcoin maximalist over anything else.

Aaron: Doesn’t bitcoin also solve a problem that someone in China would actually have, which is “Hey, do you worry about the government seizing your money?” “Uh, yes. Yes I do. That is a concern I have.” I don’t think an average Chinese person who does not know about bitcoin is unfamiliar with money seizure, money laundering, the dangers of a state owned bank account, et cetera. I mean, look, we’re making this up. We don’t know shit about China. We’re all spit balling here. It’s easier for me to understand why that person would be interested in it than Ethereum except, and I wonder what you think about this, why is Korea crazy about Ethereum then? Is it because Korea is such an intensely wired, already living in Ethereum world society?

Jay: I looked into this a little bit. What I found was that it was because the price was really easy to manipulate and because a lot people in Korea, because they were a little bit ahead of the curve in terms of the crypto craze, a lot of them got really rich off of Ethereum.

Aaron: You don’t think that … I believe Korea has like the fastest and most widespread internet of any country. You don’t think that that contributes to a culture that can imagine something like the Ethereum future?

Jay: No, I think that is part of it, and I think that’s why they were interested at it in the beginning. But in terms of the craze that you’re talking about, like where-

Aaron: That’s the bubble.

Jay: Yeah, people on … You know like moms and dads on buses and on the subway are buying crypto through Bithumb. That I think was because it was a mass mania that was sparked by the fact that a small group of people became fabulously wealthy and then figured out how to really, sort of severely, manipulate the market and that’s why everyone became obsessed with it.

Aaron: We talked about the power of bitcoin in the third world, but I hadn’t thought until right now about how Ethereum is like a total first world idea.

Jay: And bitcoin is not.

Aaron: Bitcoin’s not. You don’t really need bitcoin in the first world. You might be excited about Ethereum, but you don’t need bitcoin. The more unstable your country is, the more you need bitcoin.

Jay: Yeah and the more appealing it is for you. Which again, I think in terms of word of mouth, I just think that it’s a much better story. If Vitalik is saying that these stories matter, then I tend to believe him and I think that that’s probably something he thinks about with his own product, you know? He can’t even explain Ethereum. I’ve seen all the YouTube videos where Vitalik tries to explain Ethereum. You know, they’re like “What is Ethereum?” And they show Vitalik and thy for some reason have him brightly lit, and he’s saying “Ethereum is a … “ and you’re just like oh my God. This thing is like six minutes long. It’s just him talking, you know looking off camera, like why did they do this? And it’s just because there’s no easy way for him to explain it or anybody to explain it.

Aaron: I mean Ethereum is smart contacts.

Jay: Okay, but what is a smart contract.

Aaron: We know what a smart contact is, we just don’t know why you might need to use them. We’ve gotten that far. I do think that the narrative of this planet is also bullish for bitcoin and bearish for Ethereum, as of the la … like the Trump era. You’re country might be destabilized and you lose all your money narrative seems like it’s gaining on the frictionless magnetic train future.

Jay: Because if you believe in the apocalypse, then you believe in bitcoin. It you believe in an extremely stable world in which we improve upon existing technologies that everybody, you know, loves or hates or whatever, then Ethereum makes more sense. I am not that bullish on the future civility of the world, so I think that, I don’t know, I just feel like, once again, like I’m just kind of drawn back into thinking about bitcoin in this sort of way.

Aaron: I’m not super bullish on the future of the world either. I think that might be the thing we most agree on, our bearishness about this planet. But I do think that when Ethereum was first rising, the Facebooks of the world, these giant platform technology companies had a better reputation. I do think that the WeChat and Facebook and these massive social network messaging services were supposed to be the fore bearers for your … My whole crypto identity is in here and I have the wallet and I buy stuff and I bank and I save and security and all that stuff.

Jay: Yeah, and people are interested in security.

Aaron: I think that what’s happened with Facebook over the last year has really damaged that narrative.

Jay: Yeah. Yeah. I mean people are definite … I don’t think that they’re pushing back in any sort of meaningful way. You know, they have Zuckerberg at a congressional hearing, like who gives a shit, you know?

Aaron: But Facebook’s down. I mean Ethereum and Facebook are correlating right now.

Jay: Yeah, but Facebook’s not down that much. I mean, it’s still way up from what it was, you know, like last year. I would just say that I do agree with you that for a while, everyone was drinking this weird Kool Aid that our phones and our social networks and everything like that was going to lead to an enlightened age where things like-

Jay: … Everything like that was going to lead to an enlightened age where things like protests and civil disobedience were going to be easier and help facilitate these things, where we would actually never fall out of touch with our high school friends, which there’s probably a reason why we do that, you know?

Jay: Now I think that people are starting to realize that a lot of those things are not good for society, and that there is some pushback against it. In a world in which people reject those things, it’s very hard to see Ethereum prospering. I don’t know if that makes sense.

Aaron: Yeah, I think it makes sense. It reminds me a little bit of when I renovated my apartment. I put all these smart switches in it, and now my wife can’t turn on the lights, and so she made me take them all out, so the only smart room in my house now is the crypto cave. My experience with all this smart automation makes me bearish on Ethereum.

Jay: Like, at some point-

Aaron: Yeah, it sounds great to make everything frictionless and automated and your whole life is just happening in the background, but you don’t know what it’s actually like until you try it in practice, and we are always on the show, me and you, we love to try things in crypto, and so we haven’t actually tried Ethereum World, so I don’t want to judge it, but some of the [crosstalk 00:51:20]

Jay: [crosstalk 00:51:20] tried it, though.

Aaron: Well, we’ve tried a very, very early … It’s not real Ethereum World until there’s multiple attractions.

Jay: We tried Augur and we downloaded Toshi to our phones.

Aaron: Okay, okay. I prefer to judge it when there’s something that someone says, like it’s there, you know? I know that there’s a criticism for it not being there, but people aren’t even saying it’s there. People were saying that this smart home shit was there, and then I tried it and I was like, “It is there. You can do it, it’s just a bad idea.”

Jay: It’s horrible. It’s horrible.

Aaron: It’s like I don’t like it as much as I thought I would.

Jay: I had smart switches on one of the lamps in my apartment, because it’s really annoying to turn on. It’s gigantic and it has one of those foot switches that you have to go walk over to it and stomp on. I hated doing it, so I bought a smart switch. It was the most annoying fucking thing in the world, so I hooked it up to Alexa, and I’d be, “Alexa, turn on living room lamp.” It never fucking worked, you know?

Jay: Then when it would work, I would be like, “Actually, I don’t want this thing on,” and then in my head, I would be like, “Oh, my god, I can’t believe I have to now try and get Alexa to turn this thing off.” Whereas I think that it was just easier to walk over there and turn it off or on or something like that. I agree with you that if you feel like certain things don’t have problems … This is something that we talk about all the time, which is that … Are they trying to fix … Is it solutionism? Are they trying to fix problems by creating problems and being like, “Aren’t you so annoyed by having to use a light switch?” And be like, “No, it’s totally fine.”

Jay: So in that world it’s hard to see Ethereum really taking off, because what problems is it going to solve that don’t already exist? I actually think about this like … The show that I used to be on Vice, they had a segment about [Vitalik 00:53:08] where Michael Moynihan, who is a great correspondent friend of mine, who I think is a really funny guy, very smart, he traveled around Russia with Vitalik and there’s a moment where this guy comes to Vitalik and he’s running a trucking business, and he’s like, “I really would like to … How can you get me to maximize my efficiency through the blockchain and Ethereum?”

Aaron: “First, all your trucks need to sync this Ethereum node.”

Jay: Yeah. And Vitalik said to him, he was like, “Actually, you should just use a spreadsheet.” That’s refreshing Vitalik. But I think it is meaningful that in the year or so that we’ve been in crypto, no one has been able to really answer that question for us. Why does Ethereum product need to exist, and what problem is it actually solving, and what new thing is it coming out with?

Aaron: I’d like to say that going forward, when Jay and I talk about Ethereum, we’re talking generically about the entire possibility of smart contracts and all of these other, “Oh, but ours has a 21 baker governance scheme.” We’re just going to call that all Ethereum.

Jay: Yeah, it’s all Ethereum.

Aaron: Ethereum World has … It’s everyone who wouldn’t exist if Vitalik hadn’t existed. If you’re Vitalik’s son, grandson, great-grandson …

Jay: The Vitalik tree.

Aaron: … You’re living in Ethereum World, so we’re going to do it as such, but I just want to do one thing to tie up that conversation. Alexa, turn off studio.

Jay: Oh, it worked.

Aaron: Alexa, turn on studio.

Jay: No. Oh.

Aaron: Alexa, studio red.

Jay: No, that one didn’t work.

Alexa: I’m not sure.

Aaron: Two out of three, not bad.

Jay: Two out of three’s not bad.

Aaron: Two out of three, not bad.

Jay: I’m actually impressed that it actually worked. That never worked for … I mean, I have a much less clear speaking voice than you do, but it just never even worked for me.

Aaron: I think that this is also evidence of me having a general pot stakes life viewpoint where I tried smart home, I didn’t like it, it didn’t work, but now that I bought it, I still demand to have it at my place. That’s how I feel about Ethereum. I’m extremely critical of it, but I’m like, I’m really going to feel burnt if Ethereum moons again and then I’d have a bunch of Ethereum …

Jay: Here’s the thing. We could be wrong, you know?

Aaron: Could be? Probably are.

Jay: The thing that people would say to us is that, “Well, people are saying the same thing about this technology, this technology, this technology,” and to that, I don’t really have a counter. Obviously, people miss the point of technologies, and this is still at a nascent state. But I guess I just haven’t seen … Other than CryptoKitties, which I thought was pretty interesting, I just haven’t seen the real … The vision of it, like what it might look like in 10 years and why I should be excited about it.

Aaron: I’ll agree with you, of the two things we’ve seen which are smart contract betting and collectibles on the Ethereum chain. The collectibles worked better.

Jay: Yeah, and it’s a more interesting idea.

Aaron: So now we’ve tried two ideas. Can I just say, I won’t feel like we know what’s happening till we’ve tried a dozen ideas.

Jay: Okay, fair.

Aaron: So probably out of those dozen ideas …

Jay: So like, in five years or something.

Aaron: I think it’s bullish if one or two out of those ideas that works. And I would say that zero out of two worked. I think the collectibles showed promise, but I don’t feel like it’s …

Jay: Really?

Aaron: … A thing we need in humanity right now.

Jay: One nice thing I’ll say about Ethereum is that I do think the idea of digital provenance or digital ownership is interesting to me. When I did go to the blockchain or bitcoin, whatever, I think it’s blockchain art auction, I was kind of convinced.

Aaron: Didn’t you meet Mike Novogratz there?

Jay: Yeah, that’s where I met Mike Novogratz and the woman who made the Twitter fail whale.

Aaron: Have you noticed that whenever we talk shit about someone early in the show, if you wait six months, we’re like, “I kind of like that guy now.”

Jay: Yeah.

Aaron: Okay, I got one more for you before we get out of here. Jaxx Liberty has launched.

Jay: The penguin has taken up.

Aaron: Now, I’ll admit I did not realize that it hadn’t launched during this entire period.

Jay: What was that yacht party? That wasn’t the launch party?

Aaron: That was the beta launch or something. I don’t know. I can’t explain what happened.

Jay: They gave away two Aston Martins and threw a ridiculous yacht party and the product didn’t come out after that?

Aaron: What do you think the chance is that one of those Aston Martins has been totaled right now? I would say at least … The over-under is one on those Aston Martins.

Jay: It might be 1.5.

Aaron: Anthony Di Iorio, AKA crypto Jimmy Iovine, finally launched it. There was a writeup in CoinDesk. I didn’t even look for this. This is just something I came across and I was like, “Whoa.” Extremely tepid writeup. It was basically like, “Yeah, it’s a wallet, but there’s a lot of competition in that space, and it will be great when you can do all …”

Jay: On CoinDesk it was a tepid writeup.

Aaron: There was one detail on it that I realized a little bit more where they might be going, which is like … Do you ever use Mint or any of these banking apps?

Jay: I sign up for it once every two years. I’m like, “I’m going to get my finances in order,” and then I never sign on.

Aaron: In traditional finances, there’s a number of services where you auth in with your bank, you auth in maybe with your Fidelity, your investment account, and it reconciles it all. You can see what you’ve been spending money on, what your net worth is, how it’s going up and down, all kinds of cool stuff, to me.

Aaron: In crypto, that’s like Blockfolio now. You have to do everything manually, and as we’ve seen, it’s extremely hard to even figure out from a tax perspective all of the trades you’ve made. I believe that it looks like the Jaxx Liberty and their other competitors that are also going down this road will be places where you can sign in with different exchanges, sign in with your Coinbase, and have all of your coin activity in this-

Jay: So it’s like an all-in-one information readout.

Aaron: I think that’s the … Yeah, and it also will have news and a social network and all that stuff.

Jay: That’s a very, very uninteresting idea.

Aaron: I find it very uninteresting too. [crosstalk 00:59:26] with you. I think that’s something that needs to happen, but that is not the crypto company that I want stock in.

Jay: Yeah, and it’s also not the crypto company that should be symbolized by a penguin jet pack flying into the future.

Aaron: Yeah.

Jay: It’s like, here’s an idea that already exists that some people like but is pretty basic, and we’re going to make it for crypto.

Aaron: Another thing he said was, I guess one of the reasons it’s taken a long time to come out was there was a hack where they lost $400,000 of some guy’s coins.

Jay: For the Jaxx Liberty wallet? Oh, wow.

Aaron: Yeah. Having developed iOS applications, to create a secure, a truly secure wallet, is a huge, huge lift in something like iOS that’s very restrictive. You just wouldn’t do it. If you didn’t have to do it, you wouldn’t do it if we weren’t carrying around these phones.

Aaron: What Di Iorio said, which makes sense to me, is he was like, “Well, this is a hot wallet. You shouldn’t keep a life-changing amount of money in the wallet, just like you wouldn’t keep a life-changing amount of money in your leather wallet.” That feels to me like maybe I just don’t need a hot wallet at all.

Jay: Yeah, okay. So the reason why I need a leather wallet is because I can’t carry around my bank account. I can’t carry around a bank vault.

Aaron: Yeah.

Jay: I go different places and I would like to have the things with me. There’s no point in which I’m going to use bitcoin and not have access to … It’s not like one bitcoin wallet weighs a lot of fucking pounds or something like that, you know?

Aaron: I guess you could have a hot wallet on your phone and a cold wallet that you use a a Ledger Nano for or something, but it all starts sounding like a lot of work. It used to be a big problem to get cash. It used to be like, banks closed on Friday. Pre-ATM, you had to go get money out. Someone solved that problem with credit cards. It seems like we’re almost reverse engineering a bunch of the problems of the 1970s and trying to solve them again.

Jay: It also seems like crypto Jimmy Iovine was just like, “Uh, yeah, it’s a hot wallet.” It’s not his wallet that’s totally not secure. It’s a hot wallet.

Aaron: This just came to me, but I have a prediction, and like Mike Novogratz, I’m going to call my shot. There’s going to be a crypto product which is a credit card that uses bitcoin, where the way that you make the transaction is like a credit card swipe but it creates an on-chain transaction.

Jay: Isn’t that illegal?

Aaron: Probably, but that hasn’t stopped any of these other projects. As far as I can tell, the only successful crypto projects so far are things that are illegal.

Jay: That’s true.

Aaron: [crosstalk 01:02:14] in the blockchain world.

Jay: At the end of the show, I was going to say that I’ve been inspired enough by Mike Novogratz’s calling of the bottom that I think I’m going to do something that I haven’t done in a very long time, which is I am going to get back partially into crypto.

Aaron: All right, so since this is a flash through history, let’s just do in a nutshell me and you, the relative Aaron-Jay flippening between us.

Jay: Yeah.

Aaron: We both started off about the same point, we’re all in the same way, and as I recall, as bitcoin started getting up around 85, 9,000, you started being like, “Uh, you guys, it’s gotten too high. I’m selling. I’m getting out. I’m getting out.” Somewhere between 8 or 9,000 and maybe 10 or 12,000, you got totally out?

Jay: Yeah. I was in and out a lot.

Aaron: You were in and out.

Jay: Every time I was in and out, it was a net loss. I never got out before a crash, and I never got in before a bull run. In fact, I almost unerringly chose the wrong way.

Aaron: Yeah, so basically I think what happened there was I did better than you simply because I was always bulling and you were always bearing. Not because of any sort of analysis, but I was always like, “It’s about to go up,” and you were always like, “It’s about to go down,” and it ultimately went up. I was like, “Ha, Jay, sucker.”

Jay: Yeah.

Aaron: Me and Ledger were partying on you hard.

Jay: Yeah, a lot of trolls.

Aaron: Especially up around 15,000, where we were twice as … I believe you used the phrase “Now I’m never going to catch you.”

Jay: Yeah, yeah.

Aaron: So then, while I was in free fall, I remember waving at you on the way down, and I was like, “Wow, it’s crazy. I’m at the same place Jay is, and he sold really early. That’s wild.” Then I just fell way past you. Instantly I was way, way, way down past you.” So now I feel like I can’t possibly ever catch you. Which I think is bullish for me.

Jay: I imagine just like families are rising and falling all the time, I think we’ll probably pass each other again. But the reason why I’m doing this is because I actually do think that the price of Ethereum is so low right now, and the floor for bitcoin has been so firmly established, it’s just really hard for me to believe that everything is going to crash out again.

Jay: But also, I just want to be back in the game. It’s more fun. I’m not saying this to re-announce that I’m reinvesting in crypto, but I thought it was interesting because I thought about how I would do it, and I think that I’m going to basically do what we-

Aaron: You do it with a cruise where you gave away two Aston Martins.

Jay: Exactly, and I pay for everything in prepaid Applebee’s cards.

Aaron: Yeah.

Jay: I think that our idea was fundamentally sound. Remember when we were saying we should just buy some of everything, or at least some sort of representative mix?

Aaron: Yeah.

Jay: And have some weighted type of buy, and just sit on it and just hope that if one of them spikes and one of them crashes then it evens out, but we just want the whole thing to go up. I’m going to do that.

Aaron: You were criticizing me earlier this week, or you were like, “Why are you buying Ethereum? Everything’s correlated to bitcoin. All you’re doing is creating a situation where you’re going to get double wrecked. We’re in a slightly different situation, because I’m HODLing now. I’m just HODLing my entire portfolio. I put in a certain amount of fiat. It was worth 3x at one point. It’s worth .5 to .6x now, and I’ve just decided I’m keeping it in crypto, so my choice was moving bitcoin into Ethereum now the bottom. But you’re actually talking about taking your hard-earned post-tax money and buying Ethereum.

Jay: Yeah, and so to be clear, my criticism of your move was not “Why are you buying Ethereum?” It was “Why are you selling bitcoin to buy Ethereum?” I think it’s totally fine to just buy Ethereum and say, “Look, there’s a small chance that it’s going to moon shot, maybe it goes down, but I want some exposure to this, but I don’t think it should come at the expense of your bitcoin holdings.”

Aaron: Now, will you be buying bitcoin? Is [FOMO Kang 01:06:52] just an ETH man?

Jay: No, no, no. I’m going to buy mostly bitcoin.

Aaron: Oh, okay, okay, okay. So one of the things that convinced you, and I think this is smart just for our noob traders out there, we’ve just been not discussing trading at the bottom. It’s too fucking depressing.

Jay: Yeah, and then part of that is because I really have not owned any significant … Any amount of crypto that wasn’t just because I was too lazy to sell off the rest of it because it was on a Ledger Nano or something like that.

Aaron: Yeah, don’t you still have some altcoin that’s on one exchange because you couldn’t get it off or something? Storm or something?

Jay: Yeah, because I literally don’t feel …

Aaron: Yeah, I actually still do have my Storm … The greatest outcome of this is me and you are both 80, and you’re like, “I just found my Storm. It went a million X.”

Jay: I buy a retirement home.

Aaron: Storm’s the largest company in America.

Jay: Storm is the only currency in the entire western world.

Aaron: Okay, so you’re going to get some bitcoin. You getting anything else?

Jay: Yeah, I think I’m going to get some EOS, I’m going to get some Monero, I’m going to get some …

Aaron: Monero’s strong. Watch out. It’s already strong.

Jay: What’s it called? I’m going to get some Stellar lumens. I’m going to completely divorce myself from the idea of whether or not these projects are good or bad ideas or they’re mined or premined, I’m just going to buy a spread that I feel like is representative.

Aaron: You’re buying a spread sort of the way that BGCI is like … 10, is it the top 10? Well, it’s not exactly the top 10, but close enough.

Jay: Yeah, and I’m going to try and stay away from the real shit coins, but of course what is going to happen, invariably, is that my investment will get shittier and shittier and shittier.

Aaron: Yeah, I was going to say we know how FOMO Kang works at this point.

Jay: Yeah, at some point I’m going to …

Aaron: I feel like we actually skipped a step in the evolutionary history. I thought you were going to say, “I’m going all bitcoin,” and then next week you were going to be like, “I need to get into some of these reputable alts,” and I was going to be like, “A sequence leading to Cryptopia? You’re already halfway there.”

Jay: I’m knocking on Cryptopia’s door right now.

Aaron: The crazy part is, you’re very convincing. You convince me that you’re out of … Every time you’re out of crypto I actually think you’re gone for good.

Jay: This time I was gone for a pretty long time.

Aaron: Yeah, how long have you been out of the game? Six months?

Jay: I sold it around 11, 5, 12,000. So whenever that was last.

Aaron: I think your position’s great here. I mean, you accidentally, or intentionally, I’m not sure, did something that was very smart, which was sell your holdings and truly, truly wait for the bottom. I’ve been trying to buy up the bottom. I’ve bought up every bottom from the top to the bottom, you know?

Jay: Every $5 [crosstalk 01:09:35]

Aaron: Every time there was a dip, I bought it. So by the time there was actually this 170 dip, that was my last buy. I had not been 100% in until Ethereum 170, and that buy at Ethereum 170 was the last fiat I had in the portfolio.

Jay: Really?

Aaron: Yeah.

Jay: Wow.

Aaron: Because I had been selling some … When bitcoin would pop up to 70 over 7,000 I’d sell a little bit into fiat, and so I had that fiat and so I had that fiat and I bought bottom Ethereum with it. What I am calling bottom Ethereum. I’m calling .027/170, that’s what I’m calling bottom. That’s the amount I predict we don’t ever see lower Ethereum.

Jay: Okay, I hope you’re right.

Aaron: Me too.

Jay: I got to be very responsible. I’m going to store everything on off … I’m going to try and do it right, and I invariably will not, but right now, in my head, I’m like, “Yeah, we’re going to do everything the right way.”

Aaron: I feel like I’m talking to a friend at their second marriage wedding, and they’re like, “I’m going to do everything right this time. I’m going to put in the time and focus on the relationship.” It’s like, “I know you.”

Jay: I’m going to talk about feelings. Yeah, exactly.

Aaron: Cool. All right. See you next week, yeah?

Jay: Yeah, all right.

Written by

The official podcast of Bitcoin crashes. Hosted by @aaronlammer and @jaycaspiankang. Mailbag/contact: hi@cointalk.show

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