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Episode #13: Did Mt. Gox’s Japanese Trustee Personally Crash Bitcoin?

Plus Coinbase’s Index Fund and the race to be the Google of crypto

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 or read the transcript below. (You can also subscribe on Apple Podcasts, download the MP3, or email us at

Transcript (52 minutes)

Aaron Lammer: Hello Jay?

Jay Kang: Hey, how’s it going? How’s the West Coast?

Aaron Lammer: Berkeley is lovely. I’m taping in the out of doors overlooking the foggy San Francisco Bay.

Jay Kang: Wow, wow.

Aaron Lammer: If you hear some passing automobiles, some natural life, you know I’m living that good life out here. Living like a Bitcoin millionaire out here.

Jay Kang: Yeah, I was about to say, that sounds very, very Bitcoin millionaire. Feet out stretched looking at some of the fun out of the Bay Area and overlooking the Bay.

Aaron Lammer: I’m from here, I’m from Berkeley, California but I haven’t been back much over the last couple years and I’ve been seeing a lot of like blockchain conference T-shirts. Seems like the Bitcoin shwag is strong here.

Jay Kang: Every time you go back to the Bay area as somebody who also lived there for, not as long as you obviously but for six, seven years, every time I go back something is very different but I guess I haven’t been back since the blockchain T-shirts would have invaded. But I imagine that all the bars I used to go during the mission now are filled with blockchain T-shirts.

Aaron Lammer: I feel like we could probably tape a live show by just roaming through San Francisco with microphones talking to people about crypto. Your chance on approaching a random man in San Francisco, say age 20 to 40, which is pretty much everyone in San Francisco, very, very high chance you’re going to catch the Bitcoin interest there.

Jay Kang: Yeah, you can probably go pretty deep too. You can just be like, so, what do you think about the price action on.. And they’ll be like, listen —

Aaron Lammer: That said, this isn’t like a wildly optimistic time to be dropping in on either the Bay Area crypto community or tech in general. It feels dark here.

Jay Kang: Have you seen Brian Armstrong yet?

Aaron Lammer: I have not seen Brian Armstrong. As a fellow bald man though if I did see him I think we’d probably just lock eyes and start talking.

Jay Kang: Is that a bald thing? I’m not bald but do bald guys give each other a nod?

Aaron Lammer: I think so. I feel like baldness is like not as strong as like say your career and identity but like we have something in common, especially if you see like a young bald man. I’m moving into the more typical bald man era but when I was like bald and I was like 22 and I saw another 22-year-old bald man we’d chat.

Jay Kang: I guess it is the scarcity makes you more sort of tribal. It’s like when I was in Mexico City 10 years ago and I saw one Asian in like two weeks and I definitely gave the nod and I was like what’s up.

Aaron Lammer: Sure, sure, sure. So, how have things been back home there? I have to warn you, I’ve heard the storming is bad and I am very fearful for the Crypto Cave. Crypto Cave took on a little water during the last storm, God knows what’s in there right now.

Jay Kang: If the Crypto Cave is not watertight then it might be in trouble.

Aaron Lammer: If the Crypt cave floods we’re definitely doing a Kickstarter to rehab the Crypto Cave.

Jay Kang: GoFundMe. What has been going on this week? It seems like everything is going on this week at the same time.

Aaron Lammer: Everything all at once. It reminds me actually of when we were taping the basement tapes and there was literally too much news to fit into each show, like we would like write down all the news topics not be able to get through them. The one that I’d like been hearing the most from like people who are not super far into this seems to have like penetrated into the, not the mainstream media, the mainstream audience is this stuff that’s been happening with Coinbase announcing this index fund that they’re going to do that covers I think, is it five coins that are on Coinbase now?

Jay Kang: Four coins. Bitcoin cash, Bitcoin, Litecoin and Ethereum.

Aaron Lammer: Maybe that was an Easter egg that I was just …

Jay Kang: What do you know, what do you know about Ripple being on Coinbase Aaron? You are in the Bay Area right now and you said you just saw Brian Armstrong.

Aaron Lammer: This is actually a topic that I feel like brings our brief crypto journey a little full circle because early on, like I think both of us did our first buys on Coinbase and I remember saying to you, God, I wish I could just buy some kind of like a fund that was like based on these coins that they have on coin base because I basically just bought equal Bitcoin, Ethereum and Litecoin. I was like, this is kind of ridiculous. Can’t I just buy like crypto Coinbase and now you can or now they’ve announced that you can.

Jay Kang: I would say Aaron for two people who have absolutely no financial background and are generally pretty dumb about math, I feel like you and I have created a lot of fake finance products. We created the Coinbase, the Coinbase security or the, you know, I guess the fund that they’re putting out now, we thought of that, we did. We were the only ones who thought of it. At some point when all that-

Aaron Lammer: And I talked about this over a coffee with someone who works a Coinbase so it could be true, it could have been my idea. I don’t want to say anything too crazy. There are some other indexes that I think we should create because really this is a pretty vanilla boring index as they go.

Jay Kang: Why don’t you tell the listeners who don’t know about this index what it is.

Aaron Lammer: Let’s talk about actually how it got announced. The way it got announced is kind of interesting. There was all of these messages coming out from CNBC Fast Money that sad we’re having on Ripples Brad Garlinghouse, not Brian Armstrong but someone else from Coinbase to make a major announcement. And obviously this is tipped to make you think that they’re going to announce that Coinbase is supporting Ripple.

Jay Kang: Yeah, and totally understandably. It’s akin to being like, if there’s like, let’s say like Kevin Durant is a free agent and ESPN says we’re going to make a major announcement and the two people are going to be Kevin Durant’s and Mark Cuban. People are going to be like, oh, Kevin Durant is going to the Dallas Mavericks. There is no other real conclusion to draw from any of this because why would they have Garlinghouse and a Coinbase representative on the show and pimp it all day long as being huge announcement, huge announcement.

Aaron Lammer: I immediately was like, well, they’re not going to announce Coinbase supporting Ripple because that would be way too, like, you would not tip your hat that way if that was actually the announcement you were going to make. You would only do it in a fake out. My guess before and still before is they randomly managed to book Brad Garlinghouse from Ripple and this Coinbase employee on the same day and they were like, uh, I can see a rumor we could start real easily here.

Jay Kang: I actually would go more conspiratorial than you and I will [hedge 00:09:01] by saying that this show is neither investment advice nor libel.

Aaron Lammer: Man, a giant weed cloud just lofted by me here. Super crazy to me. You said conspiratorial. It’s crazy because I’m on a second floor balcony and I’m not in like a densely packed urban area like you could almost see the smoke that wafted by. I will say since I’m also the host of the Stoner podcast it did not come from me, I had nothing to do with this cloud.

Jay Kang: The great conspiracy theory about all of this is that there is a lot, you know, Brian Kelly who is one of the hosts of CNBC Fast Money and is the number one meme in the entire crypto space, he’s very interested in Ripple and has done segments telling people how to buy Ripple saying Ripple is great. Maybe there is some sort of conspiracy out there, maybe they did want to float this rumor and maybe right before the actual news segment started, maybe somebody dumped. I’m not saying any of this happened but this is the type of conspiracy theory that is common in crypto and when you do things like this like CNBC did, what do they expect. Of course they’re going to get these sorts of accusations.

Aaron Lammer: I think Ripple went up five or 10 percent just during the day leading up to this. And I’ll admit I thought about buying some Ripple because I was like, I don’t think it’s going to happen …

Jay Kang: Where are your principles.

Aaron Lammer: I don’t think it’s going to happen but like why not like hedge my own instincts a little bit. I’m glad I didn’t because Ripple had already come up a bit by the time I thought about it I was like well, I really don’t want to get dumped on here. Like this would just be the worst kind of dumped on. So, basically as I understand it and I haven’t like really looked deeply into this, Coinbase is going to offer a fund that offers, are they futures, they’re not really futures, I don’t know what the financial terms is.

Jay Kang: It’s like buying like an SPDR fund. Like S&P index fund or if you can buy through VOO or however you want to buy it in the stock market and it is all the coins that Coinbase offers which as we said before, Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

Aaron Lammer: And they’re represented in the fund based on their market share. So if you buy into the fund you’re buying more than 50% Bitcoin. You’re only buying a little bit into Bitcoin Cash and Litecoin but you’re getting exposure to all four of those coins.

Jay Kang: Yeah. The other big detail about this which I think is probably the most important detail is that it is only open to accredited investors, which means that you either have to have a net worth of a million dollars or you have to make more than $200,000 a year.

Aaron Lammer: Which means I can’t buy. Too bad.

Jay Kang: That means that a lot of people in crypto can’t buy.

Aaron Lammer: Look, if you want me to be able to buy into this fund sponsor the show for God’s sakes. You’re kicking me over the edge.

Jay Kang: We’ve never said anything bad about you or Toshi or Coinbase.

Aaron Lammer: I’m not saying Coinbase should sponsor the show, I’m saying anyone should sponsor the show so I can get my income over to $100,000 so I can buy into the fund.

Jay Kang: Let’s think of a world in which you have the money to buy into this fund. Does it interest you? I mean, you’re not owning Bitcoin. Like you’re buying a financial product. Does it interest you?

Aaron Lammer: This is probably the clearest evolution of my thinking on crypto from when I first bought on Coinbase to now, which is I think when I first bought on Coinbase I would have loved this idea and I basically did something like this. I bought Bitcoin, Ethereum and Litecoin. Not exactly in that order. I bought probably too much Ethereum and Litecoin to represent the way the fund works but I basically thought like okay, these are the big hitters this is the like main stuff, great.

Aaron Lammer: And since then, a couple of things that changed my thinking on this. One, I’ve lost a lot of faith in Coinbase so I no longer think like oh, it’s vetted by Coinbase, like it’s great. I don’t necessarily think the coins that Coinbase chooses are somehow representative of what’s important in crypto. I also think that if more and more people get further and further away from the coins themselves if you create products that are greater and greater abstractions it does seem like at a certain point it undermines the whole intention of the thing. If somehow Coinbase, like if somehow half of the investment in crypto becomes people who are invested in this SPDR fund that Coinbase maintains, that feels like the ultimate form of centralization to me. That makes Coinbase wildly powerful and anything they added as a coin would become wildly successful just by being included in the set.

Jay Kang: That’s right. I think it is a way for them to accumulate their own power and to add things to manipulate the market. Anything that they add is going to manipulate the market. And there are things big market caps that they could add they would actually crowd out something like Litecoin completely. If it’s still going to always be proportional and if I read the news about it right which I think I did, when a coin is added it instantly becomes part of the fun so there’s not even sort of a transition point or there’s not a sort of like, you know, there’s no grace period. And so you can just add TRON for example or you can add something like a Stellar Lumens or Ripple, these things that have these sort of big artificial market caps. You’re going to instantly pump the value of that cryptocurrency. You’re also going to wildly swing that sort of make up this index fund that you’ve created what you’ve essentially done is you’re taking away from the investor their ability to deter and to make determinations between different types of cryptocurrencies.

Jay Kang: So if you don’t like Ripple because you don’t like pre-mined coins and you don’t like that type of project, you don’t really have a choice in that. I guess that their response to that was like, well then don’t buy the index fund. It does seem antithetical very much to the sort of mission of crypto which is having a decentralized form of money, buying these things that can be used eventually as crypto, as currency even if they’re not used very much as currency now. It certainly, certainly, certainly tries to put Coinbase as a central driver.

Jay Kang: Now, I don’t know what the volume of this thing is going to be just because it’s hard to make $200,000 a year.

Aaron Lammer: don’t think anyone does but I mean there’s lots of products that are huge that require credit investors. The real target for this product may not be the people who are going and buying .1 Bitcoin on Coinbase. They may be the fund managers, the family wealth managers, the people who are investing other people’s money. I think this would be really attractive product to them. Even though I personally dislike this product, if I was considering investing in Coinbase, I would be like, this is a great product. Several people were like, DM me, this is what I always wanted.

Aaron Lammer: I understand that viewpoint because that was how I felt when I was less obsessed with this stuff. I think it does represent a viewpoint for a lot of people who are like, I think there’s something to this crypto thing but I don’t really want to get hacked, robbed, etc. I just want exposure to it in the same way that you might want exposure to any sector in the financial market. It makes a lot of sense there.

Aaron Lammer: I just wish that it was a little bit more, like the product that I would like would be more of a like design your own index and less of a like just hop on board our decisions. I still don’t even really understand why Bitcoin Cash is in there. It doesn’t seem like you want to be supporting both Bitcoin Cash and Bitcoin.

Jay Kang: Their explanation for that would be that the people who went through the fort should have their victory.

Aaron Lammer: Yeah, that makes sense. It’s probably a stupid view that any of these things like shouldn’t be in there but we’ve talked about, so, I have some ideas for some other indexes I’d like to see. One of them would be like the Privacy Coin index. And that’s something that I’ve sort of built in my own portfolio. I have Monero, I have Zcash, I have a few of the low micro-cap coins like Sumo.

Jay Kang: How’s Sumo doing by the way?

Aaron Lammer: Dude, it’s grim. T is grim. I’m approaching a breakeven point on Sumo. I was at one point I believe 7x on that same bag. It’s probably the grimmest shit that’s happened to me in crypto. I think Monero is tanking too so not a huge surprise. Monero has really gotten, it hit an all time high and then really got crushed during this last crash. I guess I think it would be cool if there was different indexes that sort of represented different interest pools in this stuff so that it wasn’t just this top four kind of thing but that there was actually almost competition amongst the indexes.

Jay Kang: Why would you do that instead? First of all, I know that Grayscale which is the first ETF that launched around Bitcoin, they’re launching some more products pegged on other cryptocurrencies but nothing like the thing that you were talking about.

Aaron Lammer: I have a question about that though. So the reason that I was turned off by those kind of products was that you pay like a huge premium, you lose a ton of your profits in like against Bitcoin and you don’t get covered on the same losses. So it just seems like a way to sort of like lop off your profits for no reason. In this Coinbase index fund, do you know what percentage you pay against actually just holding that assortment of coins?

Jay Kang: They haven’t said. They have no details about it really except for the fact that it’s only open to us accredited investors. My argument to you about these other index funds is that you could just own the coins.

Aaron Lammer: You can. But I think if a lot of people choose to invest this way, then the projects that aren’t included in indexes will suffer comparatively. Like I think this gives those four coins a huge leg up just like being in Coinbase in the first place gave the a huge leg up. Litecoin is only Litecoin because it was in Coinbase, no offense to the people behind Litecoin-

Jay Kang: Charlie Lee worked at Coinbase.

Aaron Lammer: It distorts the market. I don’t think, like you said manipulating, I don’t know that there is a nefarious intention to it but it’s so big that it moves the market and it feels like there should be a counterweight somewhere moving the market in other directions.

Jay Kang: Man, I think that the potential for manipulation of this stuff because it is going to be accredited investors and because there is no regulation or transparency on any of this as we’re seeing by Coinbase’s adding of Bitcoin Cash, I actually think that the potential for manipulation here is pretty scary. It would be great to have more faith on Coinbase, I know we bash it a lot on the show but like everything just seems to be headed towards this greater world of centralization where they want to be like the, I saw an article today described it that they want to be the Google of crypto which I think is probably pretty apt. And look, that’s their right, it’s just that crypto is not supposed to have a Google.

Aaron Lammer: That’s an interesting idea. I feel like you and I should disagree more on this show but unfortunately, we seem to agree on this. The way that this scares me is that, like I think at one point there was a report that 10% of all the Bitcoin was held by Coinbase. So 10% of all of the liquid coins in the world are stored in custodial wallets in Coinbase.

Aaron Lammer: For people listening, when you own a Coin on Coinbase, you don’t actually own like one specific coin that you can like look at and know anything about. You basically just have an account that has four coins and they have a giant custodial wallet that has all those coins in it. 10% just alone is already a lot but if people start pumping huge amounts of money into this Coinbase index fund, my understanding is they will buy and hold Bitcoin, Ethereum, Litecoin and Bitcoin Cash to represent those holdings that are held within the fund, which if this fund is a success could push the amount of the market that they hold in their custody wallets even higher.

Jay Kang: Yeah. Look, it’s what they’re supposed to do as a company I guess.

Aaron Lammer: It’s certainly what the [crosstalk 00:22:45]

Jay Kang: I do think it’s something that the crypto community, the crypto community that believes in decentralization should be fighting very hard against. I don’t know, I guess they don’t see that yet but we still don’t know what’s happening so maybe there’s nothing to worry about.

Aaron Lammer: Yeah. A lot of these things are interesting in relation to the existing technology world because I don’t believe the motives are evil or nefarious but there are these unforeseen consequences of putting a lot of the coins in one place, where having one company control them. We’ve already seen some of those consequences not in crypto but in other areas of technology. Things like Facebook where we just are like, we don’t really know what the effect of putting the whole world on one social, putting like a third of the people on earth onto a single social network is. And now we’re starting to see what happens in those situations.

Aaron Lammer: I don’t really know what the effect of putting so much wealth, so much of the actual coin wealth into a single place is going to be, but we have seen previous examples of how this can go wrong and this brings me to the other thing I’d like to talk to you about which is Mt. Gox. Mt. Gox was-

Jay Kang: Oh yeah, it’s back, it never goes away.

Aaron Lammer: And it will never go away. This is a theme I think on the show is whenever something bad happens, like in a couple years, the same bad thing will happen again or like an unforeseen like secondary aftershock consequence will hit. So, Mt. Gox was also a custodial wallet, the place where a huge amount of the world’s Bitcoin was concentrated up until was it 2012, 2013?

Jay Kang: Yeah. I guess 2013.

Aaron Lammer: It was hacked or I guess hacked repeatedly, looted.

Jay Kang: It was kind of like that movie Small Time Crooks where they blow a hole in the side of, woody Allen movie where they try to dig and hole so they can slowly take everything out. It was kind of like that. They successfully opened up a hole in the side of the vault and just very [casually 00:24:55] moving shit out of there.

Aaron Lammer: That is the first time I’ve heard Small Time Crooks worked into an analogy and I salute you for it.

Jay Kang: I feel like it’s the second time I’ve done it this week and I don’t know why I think about that movie quite a lot. It has nothing to do with Woody Allen.

Aaron Lammer: A, I think that Mt. Gox is a cautionary tale about putting a large portion of the world’s coins in one place. I think we learned that that can be very dangerous and I would be the most optimistic if no one even held one percent of the world’s coins in a custodial wallet.

Jay Kang: Except Satoshi.

Aaron Lammer: Except Satoshi. He gets a pass.

Jay Kang: What happened with Mt. Gox.

Aaron Lammer: Mt. Gox didn’t lose all of its money it just lost a huge amount of its money, which meant that there were still some leftover after Mark Karpeles freaked out and avoided going to jail. It was given to a Japanese overseer who was supposed to take it through bankruptcy and in some manner distribute the funds to the people who had lost money in the Mt. Gox hacks, lost Bitcoin in the Mt. Gox hack. Which meant that this person even with the lessened load of Mt. Gox became one of the largest holder of Bitcoin in the world.

Jay Kang: Correct me if I’m wrong but part of the settlement which actually just happened like recently, instead of the people who owned Bitcoin, let’s say you owned 10 Bitcoin at $10 or $80 or whatever it was when they got hacked, instead of getting rights to those 10 Bitcoins at their current value, you just got the actual cash amount of what those Bitcoins were worth at that time.

Aaron Lammer: Yeah, it’s a very strange interaction. If you’re one of those people it’s probably a fairly terrible interaction.

Jay Kang: Oh, it’s terrible because instead of having like $110,000 you get like 800. That’s the type of thing that were doing.

Aaron Lammer: It makes sense because they don’t have all the coins but the coins have appreciated so they maybe have enough money to pay people back at a frozen value of what the value was then, which is something of a slap in the face. I didn’t actually realize this. I hadn’t followed the story super closely. I knew that there was …

Jay Kang: Let’s explained what happened. Like what happened?

Aaron Lammer: Basically, in order to give these people their fiat they have to sell the Bitcoin on the open market. And this is a lot of Bitcoin and the trustee has been dumping, I think starting in December and has basically …

Jay Kang: At 19,000 is when they started it so they’re selling the top.

Aaron Lammer: They sold the top that was right but they’ve also sold all the down and have been selling all the way to the bottom. You follow volume a little more closely than I do but this is certainly part of the story of the ride from $19,000 down to where we are now below 10,000. If someone is selling this kind of volume and particularly just selling it willy nilly, just saying, I’m going to sell it, regardless of what the price, I’m just going to keep selling, that is not good for the price of Bitcoin.

Jay Kang: If you are a candlewatcher and you’re somebody who believes in the basic rudimentary ideas of TA. This isn’t even technical analysis, this is really just like why things go bad. Would you have a huge volume spike, yeah,

Aaron Lammer: If someone is just going to go on selling most of the stuff at any price, that’s not good for the price.

Jay Kang: But it’s also you could see it in the charts. Some people did some interesting like I guess exegesis or postmortems on this where they’re like holy crap, you can actually see these huge volume spikes of sales happening. And then, when that happens it triggers a panic because people are like holy shit, why is everyone selling, is Korea going to ban Bitcoin, like all those types of questions start bubbling up. In the end, a lot of it really was this one dude who was just crushing the market and selling large, large, large amounts of Bitcoin and every time he did it the market would obviously go down. So, that’s a big deal.

Aaron Lammer: I think it really shows how stupid you and I are and how we should avoid ever thinking that we have like a grasp on this because I feel like the way we think about this stuff and I think it’s how a lot of people who are enthusiasts think about this stuff, I think a lot about the individual psychology of someone with like a Bitcoin wallet and whether they’re going to sell or hold and I imagine them reading the news and get inside their mind. And then I’m like, oh, actually the guy who was moving the market was a Japanese trustee who has no relation to any of this stuff and has his complete own agenda, has his own bosses to answer to, his own investors to answer to and that person may have more power over the market than every mom and pop Coinbase customer in America combined.

Jay Kang: Yeah. He was selling what, like 80,000 or something like that.

Aaron Lammer: I think it was about 400 million dollars worth in total, is that they said?

Jay Kang: If any of you have done any sort of trading you know that you could just like hit sell. When you press a button, the hit sell and then the money pops up in your account, that’s what he was dong with 400 million dollars. I wish that he had taken like a screen video of himself. Like be, well, I’m going to sell off 18 million right now, you know, sell and then just see what happened because it must have been pretty crazy.

Aaron Lammer: I had a really dumb reaction to this, which is I was like, well, that’s fucked up. He should have at least announced that he was going to do that and I was like, oh, that would have been even worse.

Jay Kang: As always, we’re sort of at the mercy of things that are completely opaque that we don’t fully understand and crypto is like the stock market times 10 in that, but this one was just funny because of the Mt. Gox connection.

Aaron Lammer: I think it does to the Coinbase thing though. That I think that the fact that Mt. Gox accumulated all these coins and there’s all these unforeseen consequences, put a bookmark in 2022 when me and you are doing like Episode 200 and something of this show, we’re going to be hearing about some weird unforeseen consequence of Coinbase getting so many coins in one place. There is a problem with putting all these things in one place. We think of getting hacked but now that someone’s gotten hacked, the next one isn’t going to be someone getting hacked, it’s going to be some other weird consequence.

Jay Kang: It’s going to be Brian Armstrong sitting in his underwear on GDAX like market selling..

Aaron Lammer: From a Caribbean island.

Jay Kang: Brian Armstrong, please come on the show and sponsor Coin Talk.

Aaron Lammer: I think we’ve got to do like a pro Brian Armstrong episode..

Jay Kang: I wanted to talk to you about something that is a little bit lighter I think but it is about Bitcoin Cash.

Aaron Lammer: The lighter side of Bitcoin.

Jay Kang: A couple days ago a music video came out and it was the first Bitcoin Cash rap song. Now, like, one thing that you and I have noticed which is very strange is that Bitcoin seems to have a lot of rap associated with it. There are a lot of Bitcoin rap songs. But this was the first Bitcoin Cash rap song.

Aaron Lammer: Okay, let’s listen.

Aaron Lammer: This is the first Bitcoin Cash rap song because I’ve seen a lot of Bitcoin rap and if there was two constituencies that I would think would overlap it would be the Bitcoin Cash community and the self-produced rap video community.

Jay Kang: Why is that.

Aaron Lammer: I don’t know, they just seem like weird opportunistic SEOing YouTube kind of vibe.

Jay Kang: That’s true, that is true, that is true. I think that there could be like kind of a, I think that what this is trying to do is set off like a rap battle, which is obviously something that YouTube is very, very used to but like there are lyrics. I don’t know if you could hear it in the segment you heard but I want to read you some of these lyrics.

Aaron Lammer: Okay. Hit me with it. Hit me with those bars.

Jay Kang: This is at the end, this is at the end. Remember, in Hit Em Up at the end when everybody’s done rapping and Tupac just starts talking?

Aaron Lammer: Yeah, Tupac is like, I couldn’t fit all these names in here but fuck all these people.

Jay Kang: Yeah, exactly. This is what this is. Hey, fuck Bitcoin Core, you’re just a bunch of names. We the BCH gang we run this game. So before you start talking just consider the fact that we’re the real money makers, we got millions in cash and bitch we strive for success, redefined as the best and if you want your life to be blessed then come out and invest just like I did and now my wife’s breast have doubled in size on her chest.

Aaron Lammer: This reminded me something about the Mt. Gox story that I forgot, which is one of the reasons that the dump was so big was that all those coins dated back to before the fork so they were also dumping massively on Bitcoin Cash.

Jay Kang: I want you to respond to one question about this, Aaron. I’m very interested in how this is going to turn into a question. Do you think that there can actually be like a sort of I don’t know, a kind of media like this around Bitcoin? Can there be Bitcoin movies, can there be Bitcoin songs?

Aaron Lammer: There is. There already is, it already exists. There’s already like hundreds of Bitcoin rap videos. I’ll say this, I’ll say this, I think as Bitcoin becomes bigger and bigger and crypto becomes bigger and bigger, it’s going to seem more cultural and less technological if that makes any sense. I think these cultural ideas about what it means to be a part of it or to back it or whatever that becomes, I expect we’ll be talking more about it is a cultural phenomenon and less about it as like, the lightning network is a second layer protocol.

Jay Kang: Well, I think we’re already there because look at the reporting that Nellie Bowles has been doing in the New York Times that has been doing very, very well for the Times that has been really, every time she drops an article it becomes like a scandal on the crypto community. That’s just all about crypto-culture, right? That’s seems to be what people are interested in.

Aaron Lammer: It’s like shooting fish in a barrel too. Almost anywhere you look you can find something like totally ridiculous and insane to report on.

Jay Kang: Yeah, like this Bitcoin Cash song.

Aaron Lammer: Like this Bitcoin Cash song. This is just the beginning.

Jay Kang: It will get worse. It will get dumber. It will get much dumber.

Aaron Lammer: I don’t think it’s going to be mostly Bitcoin. I think Bitcoin itself is large enough that like silly dumb news is not going to move Bitcoin hugely but when you look at on down in crypto and this is probably why I’m starting to sour a little bit on like the sort of lower market cap stuff, that stuff is so small that if you could somehow get like the national news to even cover that it exists, you would be able to like overnight change the price pretty significantly and I feel like the next wave of all of this stuff is going to be crazy marketing. And when I say marketing, that’s a flattering term for it.

Aaron Lammer: It’s going to be a race to the bottom of how you can get the media to pay attention to what you’re doing. And all I can say is, sponsorships to Coin Talk are wide open right now.

Jay Kang: Also, all my tweets are for sale.

Aaron Lammer: Jay, you seem a little on tilt on Twitter recently. What’s going on?

Jay Kang: What do you mean? Why am I on tilt on Twitter? I’m always slightly on tilt.

Aaron Lammer: Your views seemed to have turned a little dark. I’m wondering how you’re feeling about the market right now. This is what happens, when I don’t see you for a week I generally gauge your sentiment based on your tweets.

Jay Kang: That’s terrible because I would never want to be represented by my tweets, which is why I tweet, I use a platform that does exactly that. It likes broadcasts a version of myself that I think is worse than me or at least I hope is worse than me and I only use it to troll. I am a bit of a troll in person but my Twitter account is almost 90% trolling, so yeah.

Jay Kang: I’m looking at it right now, the price of Bitcoin and we are flirting somewhere between 9000 and 8900, which is bad given that people were really thinking that we were going to crash through 11.5 and go all the way up. I don’t know, I think that when I read about this stuff, when I go on Reddit, when I go on Twitter, when I read people whose opinions I trust they seem to all have the same sense that this isn’t one bit of FUD. It’s not one big selloff. It’s just that all the news right now is bad. So you have the Gox selloff, you have regulatory stuff. Binance had some problems, the huge exchange-

Aaron Lammer: Wasn’t all the news good like a week ago or something though? Wasn’t there a moment where we said all the news was good?

Jay Kang: Yeah, yeah.

Aaron Lammer: It wasn’t that long ago, was it?

Jay Kang: We don’t know why these things are happening. I’m right now looking at gigantic red dildo which dropped it from about 10,500 to about 9,500 ina an hour. Maybe that is Mr Mt. Gox, maybe that is our Japanese friend selling off some more.

Aaron Lammer: Certainly could be.

Jay Kang: I guess I am wondering now because the crash happened more than a month ago, the bit crash. Crypto went from the very bottom, it more than doubled, it went all the way back up to 11,000 something. 11,600 I think about was the top of this charge and now it’s going back down again. How are you reacting to it because like nobody seems to have a good singular theory which I think is good because there is no singular theory that explains all this, but like has your general optimism changed at all?

Aaron Lammer: Yes and no. I think we talked about in the episode where we talked about Tether, I was like, remember my ultimate conclusion at least to myself was, this is a little disturbing because there was like a crash because of it but Tether still exists. All the Tether’s still there so we won’t really be past the Tether until there isn’t Tether. I’m not saying Tether is or isn’t a fraud but I’m saying that as long as there’s the possibility out there, we’re probably going to see more negative price action as a result of Tether. Mt. Gox, this selloff of these Mt. Gox assets had to happen. The people had to get their money and he had to sell them.

Jay Kang: He had to sell them somehow.

Aaron Lammer: Maybe they could have trickled out in some way that was like less explosive or whatever but it was going to come. So, I don’t think my underlying optimism has changed but I’m becoming more and more aware that there are things that have to get washed out of the system before that ultimate rise can happen and I’m learning that there are many to quote Donald Rumsfeld, “unknown unknowns” out there. We don’t know how many of these things we have to wash out before the playing field will be level and my original investment hypotheses can be tested.

Aaron Lammer: For me, I guess that’s an overall mixed signal. I have thought more about like, when I first got in, I was like [fo mode 00:42:39] like up to the gills and I was like if I don’t buy it now I’ll never be able to buy. I was like, this is my last chance to buy Bitcoin. I don’t feel that way quite right now. Right now I feel like I’m on a lifeboat holding on for dear life and there’s a part of me that’s like, would it be better to like get out or get partially out and kind of wait till some of these things that have to happen happen and then reenter wherever it is, because it’s equally okay with me if I was reentering at 5000 or 20000, it would still in some ways be better I think to get in after some of the actors in the system have gotten out. How are you feeling?

Jay Kang: As you said, it’s been a rough crypto two weeks for me in terms of how I feel about it which sounds like an absurd thing to say. I tend to support your assessment of all of this that there is like unknown unknowns that need to come to the surface. For a while it was like, okay, this was a known unknown, not to get so Rumsfeldian about this but the known unknown was like what is Korea going to end up doing. Are they going to ban Bitcoin? That’s a known unknown that had to be shaken out. Right now it seems okay, like it’s not doomsday there.

Aaron Lammer: IS the CFTC going to shut the whole thing down. They’re not. That’s a no.

Jay Kang: Or like how are they going to deal with it. A known unknown was like the 2x fork which was huge source of drama, much bigger than anything that’s happened I think since I would say …

Aaron Lammer: Many rivers to cross.

Jay Kang: We’re never going to reach a point where these things aren’t happening in the space right. The counterbalance of those things always was that there was so much enthusiasm about it both from retail investors and from institutional investors and there was so much hype about it. It was like any time you turn on the news people would be like, wow, Bitcoin is up another 20% and The S&P is only up like .87% or something like that. That sort of catapults people or [vaults 00:44:58] people who have a little more gamble in them to go buy this stuff.

Jay Kang: The only thing that I will say and look, this is something that you and I think we should repeat as much as possible because some of these shows have been a little negative, you and I really do believe in the revolutionary technology and the revolutionary potential of cryptocurrency. We wouldn’t be doing this podcast if we didn’t believe that.

Aaron Lammer: I believe in the revolutionary fun of cryptocurrencies.

Jay Kang: Yeah, and the revolutionary memes. Right now, I feel like there are going to be more, let’s just commit to Rumsfeld, there are going to be more unknown unknowns and more unknown unknowns that are going to come out and I just think that a lot of them are going to have to start flipping positive for a real bull run to start. Not like sort of a TA based bull run where they’re like, here was like a hammer Dragon-Fly position and that generally means bush. I’m just talking about like a sort of change in the general feeling amongst investors in this product.

Jay Kang: That I think will happen if for no reason because of just like randomness but right now we’re definitely, we’ve flipped a lot tails in a row, whatever is losing sight.

Aaron Lammer: I think I buy that. It’s ironic, there’s this weird wacky world like funhouse and mirror element where when the price was going through the roof there was a certain class and I think you might be somewhat included in this you were like, oh God, this is terrifying me. Like it’s going out too fast, this is like a huge problem. And now, the opposite is happening. It keeps like ramming 11,500 and violently tumbling below it, which you could say is healthy. It’s refusing basically to go back into its run to 19,000. But we’re reading the tea leaves as negative again and overall I’d say maybe that’s, like maybe ironing these unknown unknowns and unknown knowns and whatever other combination of known and unknowns could be in there.

Jay Kang: Let’s invade Iraq.

Aaron Lammer: . If things like that Mt. Gox load or the massive amount of Tethers are basically toxins in the overall system, we will be healthier once we expel them. Would I maybe prefer to buy in after they’re out of the system, yes. But just like it’s impossible to know when the bottom is, I think it’s going to be impossible to know when to buy and when all the stuff has been rooted out so I will continue to HODL.

Jay Kang: Yeah, and I do believe that there will come a time when we will be … Look, this is something we talked about a lot in the basement tapes. Also I think an earlier episode which is that like what we really want and we also talked about with Jameson Lopp which is like what we really want is we want an atmosphere where you can make a good faith investment in a project because you think it’s a good project and you think it has potential for whatever reason and that it is not going to be overrun by scammers, that it’s not going to have these sort of fatal shady things happen to them, that the exchange that they’re traded on is not going to get hacked.

Jay Kang: We’ll eventually get there it’s just that we’re probably not close to it right now and the price action is going to be volatile until we get to that point. It’s going to all move in lockstep until that point too because it’s really just one market.

Aaron Lammer: I was thinking, this is the first week that I have really thought this way. Once all those Mt. Gox stuff was revealed and I was just kind of thinking back on all the ways that the past has come back to haunt Bitcoin, I was thinking wow, this would be so much easier if we could just start over again. You know what I mean? If like we could have the Genesis block and the block size would be right and like there wouldn’t these massive caches of unknown Bitcoin here and there.

Aaron Lammer: The system is I think very democratic and I think it’s actually set up for not all the coins to be hoarded in one place but even in the limited number of years it has existed various factors have conspired to make it more difficult and I think it would get a better shake if it could start over again but just like anything else, you don’t get to start over again. We don’t get to go make a new constitution of the United States that like corrects for some of the errors. We are playing as it lays, we’re playing on this history that starts with Satoshi and the Genesis block and has weird things like a cache of bitcoin in the hands of a Japanese trustee. That’s the history.

Jay Kang: I wonder if he’s enjoying dumping on everyone.

Aaron Lammer: This news must have gone off like crazy in Korea. Can you imagine. Oh, we got dumped on by this Japanese guy.

Jay Kang: I will say that like, I think that the crypto community basically being like, oh, well, why did he market sell it, that’s so bad. This guy doesn’t give a shit about whether or not the price of Bitcoin, the Bitcoin community, he’s just trying to sell it. He doesn’t owe us anything. It’s funny to see libertarians sort of making this argument. Where I’m just like, dude, come on.

Aaron Lammer: We need to regulate this damn trustee, I’ll tell you.

Jay Kang: It’s like The Big Lebowski where they’re like, what kind of nihilists are you. I sometimes want to yell at them, what kind of libertarian are you. Anything else you want to talk about?

Aaron Lammer: No, I think we’re pretty good.

Jay Kang: Okay, cool.

Aaron Lammer: All right, later.

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

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