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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 or read the transcript below. (You can also subscribe on Apple Podcasts, download the MP3, or email us at firstname.lastname@example.org for our upcoming mailbag show)
In this episode
- Aaron & Jay answer a provocative mailbag question as to whether they even fundamentally believe in Bitcoin and cryptocurrencies
- The crypto “long winter”
- Mining and electricity consumption
- Ethereum’s hacky-sack mentality vs Bitcoin’s scorched earth
- Buzzfeed tech reporter Charlie Warzel comes in for a new deep dive segment on the ERC-20 casino token Funfair (FUN).
Show Notes (57 minutes)
- 4:40 RaiBlocks (XRB)
- 11:19 “What It’s Like To Be Absolutely Obsessed With Bitcoin” (Jay Kang, Vice News Tonight)
- 12:01 Report: India’s Government Sends Tax Notices to Cryptocurrency Traders (Coindesk)
- 13:22 Local Bitcoins
- 22:32 Ripple (XRP), Tron (TRX), Verge (XVG)
- 24:09 “There Is Nothing Virtual About Bitcoin’s Energy Appetite” (Nathaniel Popper, New York Times)
- 31:13 “Satan’s Credit Card: What The Mark Of The Beast Taught Me About The Future Of Money” (Charlie Warzel, Buzzfeed)
- 36:00 “Bitcoin Boom is a Boon For Extremist Groups” (Craig Timberg, Washington Post)
- 41:00 Funfair (FUN) White Paper
Robot: This episode of Coin Talk was taped Monday, January 22nd at 4:00 pm Eastern Standard Time. The Bitcoin Price Index was $10,433.
Aaron Lammer: Jay, hello.
Jay Kang: Hello.
Aaron Lammer: Man, I thought we’d be doing more of an upbeat rebound show today.
Jay Kang: That seems to be the theme of our last three shows, which was like when …
Aaron Lammer: When are we going to party?
Jay Kang: Yeah, and every single show, I think the day before, we’ve thought, all right, we’re gonna have some good news, and every show we’re just like, wow, it’s down again.
Aaron Lammer: The question of whether this show is a curse on the market is definitely a viable theory right now, I would say.
Jay Kang: The market has only gotten worse since this show has been in existence.
Aaron Lammer: I was saying that we were gonna do a mailbag show soon, but we got one mailbag question this week that I thought was good call-out of something we had kind of omitted in just bringing the show to life and not putting out all the preliminary Basement Tap lost episodes — available as DVD box set this fall.
Jay Kang: The worst DVD that money can buy.
Aaron Lammer: The person writing says, “I have to admit I’m rubbernecking a bit here when I listen to the show, but I’m still trying to get my head around why you’re investing in cryptocurrencies. I’m not sure whether you’ve spoken about fundamentals at all for any of these. You made a fundamental case for not investing in Ripple, but I think that’s it. If either of you believe there’s longterm value in Bitcoin or any of the alts, what is the case for it? Or are you guys just trying to make some money off a bubble and get out before it pops?”
New Speaker: Wow, tough questions in there.
Jay Kang: I know. Most of the questions are honestly that we’ve got into our mailbag are mostly things like, “What do you think about XRB (RaiBlocks)?”
Aaron Lammer: Yeah, “Why don’t you guys talk about RaiBlocks?”
Jay Kang: I always think, if you’re asking Aaron and I what we think about coins, that is a bad starting point. Yeah, what do you think about that question?
Aaron Lammer: Well, as always, none of this is investing advice. In fact, I think that would be my major theme. If there’s a reason we don’t talk a ton about why it’s so great to buy cryptocurrencies, it’s that I think we see it as an open question, but also, you will notice that we have bought many cryptocurrencies. If you follow our actions, clearly we must believe in them on some level.
Jay Kang: Yeah, but along those same lines, every March I go to Las Vegs with my friends from college and high school, and I bet on the NCAA tournament. I have not won once in the past 10 years. Every singe time I’ve lost, and I understand that, at some point, I’m still gonna lose, but I still go. I don’t know if my investment in cryptocurrency really reflects a belief in it or rather if it’s like a scratching of an itch.
Aaron Lammer: Well, I’ll say that I come to it probably from the opposite end of the spectrum, which is if I wasn’t investing in cryptocurrencies, I would probably be buying technology stocks. If I had more money, I would be probably investing in startups, which I know can feel a bit hypocritical because I do make fun of this stuff a lot, and I do find much of the culture of Silicon Valley kind of ridiculous.
New Speaker: That said, I do think these things tend to work out. I would say, to respond to do either of you believe there’s longterm value in Bitcoin or any of the alts, I do think there’s a longterm value in Bitcoin. I think Bitcoin is a pretty useful idea. I think it will keep going up in value, and most of the other stuff that I do that we’re talking about, I do to try to accumulate more Bitcoin.
Jay Kang: Yeah, I think there’s value in Bitcoin. I don’t know if the value in Bitcoin is correlated with an increase in price from where we are right now. Let’s say that Bitcoin stabilizes at like $3,000 of Bitcoin or $5,000 of Bitcoin, and somebody makes a layer on top of Bitcoin that is faster and works well.
Aaron Lammer: A lightning network kind of solution.
Jay Kang: Sure, let’s say that Lightning is a good idea. Then i actually think that those two ideas have a lot of value. I don’t know if they have more value than the like $700 billion market cap that they would have right now. In terms of fundamentals, I would say I don’t know if that is a fundamental reason to invest or not invest.
New Speaker: To the second part of the question, do you think this is just a bubble and you’re cashing in, and you are trying to get out. I would say that if we did feel that way, and if you’re listening right now and you feel that way, then I think that, actually, maybe we’re a little late in terms of catching a huge parabolic rush up to the top or something like that. Right now, people seem to be preparing for a more stable and perhaps slower moving type of market. Then the question just becomes, “Well, if you’re just gambling and looking for a big rush, then why don’t you just invest in like an OTC market, or something like that, in which you don’t have the threat of losing your keys or getting hacked, or anything like that?”
New Speaker: Those are the types of things that a lot of people have to weigh right now. They think that inherently that the crypto market is the fastest way to make a lot of money in this sort of investment, but maybe at some point it won’t be. That’s where I’m interested to see what happens with crypto then.
Aaron Lammer: I’m also a firm believer in you don’t really understand something till you’ve done it yourself, and I do think we’re both experimentally kind of interested in dipping ourselves into this experience, which involves playing with real money on some level. I do think I would look at it differently if I were just a spectator, which is no knock on it. I don’t take the attitude at all of, “Put your money where your mouth is. You’d better buy in if you believe.” I think it’s perfectly fine to just think it’s interesting, but I feel like I have learned a lot. Even while I don’t necessarily believe in the fundamentals of Sumokoin (SUMO), I think it’s sort of an interesting learning how it’s bought and sold, and how a weird team goes and makes like a clone coin. The narrative captivates me.
Jay Kang: I agree. I actually do kind of feel that to tease somebody that we’ll talk about later in the show, I think you do have to have a little bit of skin in the game to understand what crypto is. The people who I see saying things like, “I actually believe that the blockchain is good technology, but I don’t believe in Bitcoin.” Well, there inseparable at this point. What do you actually think is a good blockchain solution then? What is a blockchain for? Then they invariably say something that could easily be solved with a spreadsheet right now. I think that to understand that connection between cryptocurrency and blockchain technology you do have to be invested in it. Also, for you and me both, I think it’s really just like we’re doing it because it’s fun.
Aaron Lammer: I think that’s a fair assessment, and I also take a pretty simplistic view of it, which is if you take the most superficial level of Bitcoin, which is basically just Bitcoin as a store of value, I think it’s a pretty good one. I think that it seems to be a viral idea, and I think that as more people discover that idea, they’re also gonna wanna experience it, they’re also gonna wanna have skin in the game. The more people that come in and buy, that will drive the price ultimately of Bitcoin up. I think there’s a bunch of other variables that could have totally different ripples from that. I just think that’s like a simple step one that I can easily wrap my head around, even as a somewhat skeptical person.
Jay Kang: Okay, so speaking of the value of Bitcoin, it’s down again today. The people who are watching these candles, the candle watchers, they will have seen two big red candles down.
Aaron Lammer: Is that known as a group of people, the candle watchers?
Jay Kang: No, but I know it’s not a bad thing.
Aaron Lammer: It’s a good turn of phrase.
Jay Kang: Yeah, would you wanna be known as a candle watcher?
Aaron Lammer: I don’t think so.
Jay Kang: It’s a bad thing to be. What do you do for a living?
Aaron Lammer: My enduring memory of you in that Vice News Tonight video about Bitcoin is you hunched over on the screen with GDAX on your screen. It’s not a pleasant memory.
Jay Kang: Yeah, yeah, that’s a lot of my life right now. I would say as a candle watcher who doesn’t really understand what he’s seeing, like it’s a-
Aaron Lammer: A naïve candle watcher?
Jay Kang: Yeah, like a candle watcher who doesn’t understand.
Aaron Lammer: He just watches those candles. He doesn’t even know what they mean.
Jay Kang: It’s like I’m watching a movie and I don’t understand that it’s a movie. I think it’s a documentary occurring in realtime.
Aaron Lammer: You’re trying to learn a language by just watching a foreign film that you don’t understand the language of.
Jay Kang: Exactly, as a terrible candle watcher, I will say that this morning, there was a lot of chat. As always, there’s a lot of theories about it. The theory that surfaced the first theory to come out was that this was because India is the latest to announce a possible cryptocurrency trading ban. Did you see this?
Aaron Lammer: Yeah, it’s funny. I knew that there was a pretty big Bitcoin world in India, although it’s not in the news very much, so it’s often ironic when the first thing you’ll hear about Bitcoin in a country is them quasi-trying to ban exchanges. I was like, oh, there’s Indian Bitcoin exchanges? Huh, and they’re getting banned.
Jay Kang: Yeah, I read that and I had the same feeling about the Philippines will not ban cryptocurrency trading. I was not even aware that you guys were into that. India has announced two things. The first is that banks in India are going to probably start restricting deposits into cryptocurrency exchanges, which is something that we’ve seen around the world, all the way back to when Coinbase started and they couldn’t find a backing bank in California to back them.
Aaron Lammer: Banks are always a critical conduit. We have not gotten out of the need to transfer fiat from banks to receive Bitcoin.
Jay Kang: I know, like the sort of paper bag method is not gonna work, I don’t think.
Aaron Lammer: I think there is still Local Bitcoins, if you just wanna get someone to meet you at McDonald’s parking lot.
Jay Kang: There’s like a bodega near my house where you can put $20 in the ATM and take out Bitcoin. I have no idea if anyone has ever used that ATM.
Aaron Lammer: Can we get some Local Bitcoins delivered to the studio here and give that a try? We each bring $500 bucks cash.
Jay Kang: The second part of the Indian news is that they’re going to start taxing this stuff. The reason why I wanted to talk about this is because every single time one of these things happens, the news comes out and we see a seismic small shift or a big shift has happened like last week. At some point, is the market gonna become immune to this? Are we, as people who hold Bitcoin, gonna be immune to this sort of news? Are there gonna be countries, I think, that decide not to do this sort of stuff? Or is this a worldwide movement that has been set in motion that is going to have a pretty severe effect on the price?
Aaron Lammer: It reminds me a little bit of like right before a sports series starts, say a playoff series, and you hear this one player has a taped finger, and you’re like, I’m now bearish on this series. I feel like everyone is waiting for these little tiny news events to-
Jay Kang: Are you talking about Tom Brady?
Aaron Lammer: I wasn’t actually specifically thinking of that, but I accidentally landed on the same idea. You’re very sensitive to whether things are tipping positive or negative, and it feels like everyone now is waiting for these little blips to let the pressure out and let the skepticism creep in.
Jay Kang: I agree. I think that we basically have an entire population of people, many of them who are in the media who are writing these sorts of stories, and many of them being people who are Bitcoin haters or skeptics.
Aaron Lammer: Yeah, you’re indicting yourself right now?
Jay Kang: As a member of the media and also as a part-time Bitcoin hater, yeah.
Aaron Lammer: We’ll be inviting another member of the media on the show.
Jay Kang: I sit and refresh Twitter all day long, looking for doom and gloom so that I can send it to you and be like, I was right four months ago when I sold, and then had to FOMO (fear of missing out) back in.
Aaron Lammer: Yes, I have noticed that. I’m glad that you still acknowledge that on the show.
Jay Kang: I think that people are just waiting for cracks.
Aaron Lammer: Yeah, I think so, too.
Jay Kang: One of the things that you see in TA analysis circles or the people who are talking about charts, the other candle watchers, is they all seem to be sticking to one number, which is $8,000. “It’s gonna hit $8,000. It’s gonna hit $8,000.” It bounces off 14 and they’re like, “Wait for $8,000.” It bounces off $10,000, they’re like, “Wait for $8,000.” It bounces off $9,000, they’re like, “Wait for $8,000.”
Aaron Lammer: Where did that $8,000 number come from? Is it a resistance sign?
Jay Kang: Well, it’s a confluence of things, but it really is the most pronounced resistance line under like $12,200 or something.
Aaron Lammer: The big one. It’s like the wall in Game of thrones.
Jay Kang: If it breaks through that, then we are dead, is what they’re saying. Most likely it won’t break through that, but at some point, given all this chop and all this trend, it’ll bounce off that, so you should hit that bounce point. I don’t know, I just think that-
Aaron Lammer: I wish someone had told me that before I did a buy at $13,600.
Jay Kang: There’s all this stuff floating around right now, all this information. It all seems to be negative right now, and I think that the people who constantly say $8000, they’re looking for a reason for $8000 to be a reality. The people who see the eight and say, “Hey, that guy’s a good candle watcher, I trust what that candle watcher says,” anything that confirms that eight might happen, they’re gonna panic. I think that’s where we are right now, which is an extremely unhealthy place to be.
Aaron Lammer: Yeah, it’s been interesting hanging out a little bit more with our guest @LedgerStatus, shout out to @LedgerStatus, and to some of his crew, trader dudes. Definitely the sentiment there is just that Bitcoin and Ethereum are in charge, and everything else in the market’s just gonna follow them, and it’s kind of pointless to care right now about what the alt market is doing. Everything is just like where is Bitcoin going right now?
Jay Kang: I did something, Aaron, that I-
Aaron Lammer: I couldn’t believe it. I thought you were joking, actually, until you told me you were gonna talk about this on the show.
Jay Kang: Well, last week, we talked about how you and I guessed wrong. We felt like we had set up an Maginot Line, and we thought that Bitcoin was gonna go way up, so I sold a lot of my alts because I thought that Bitcoin was gonna go up and I didn’t want my alts to get slaughtered. Instead,-
Aaron Lammer: I thought about it and lazily did not do it.
Jay Kang: Instead, it went down, which ended up being, by accident, a very good move.
Aaron Lammer: By accident, a very bad move by me.
Jay Kang: Yeah.
Aaron Lammer: Good theme on the show.
Jay Kang: If you’ve been listening before, you know that Aaron and I both dabble a lot in shitcoins. You know that I have a-
Aaron Lammer: And also prestige alts.
Jay Kang: I have a wild gambling problem-
Aaron Lammer: Blue-chippers.
Jay Kang: … so anything that is a bad risk that has no fundamentals but could bring large returns, I will bet on. I did something, I have almost no alts now.
Aaron Lammer: This a little bit dovetails with something we talked about in our last show when we were talking to Doug Kim about once you really fully convert to Bitcoin value, if you’re just holding Bitcoin, you’re gonna have the same amount of Bitcoin and you’re, in some ways, less prone to care about the current price of Bitcoin.
Jay Kang: On the show, we like to talk a lot about the psychological impacts of this sort of stuff. I wanted to explain to you, as somebody who has had so many alts for so long, what it was like today to see-
Aaron Lammer: These old, old bags.
Jay Kang: … to see Bitcoin go down, when my BTC value was completely unaffected ’cause I have no alts.
Aaron Lammer: For comparison, I got slaughtered today, during the same hours.
Jay Kang: I probably checked the price of Bitcoin three times today, and each time, I didn’t care.
Aaron Lammer: Yeah. Would you care at $8000?
Jay Kang: Yeah, I would probably care a little at $8000.
Aaron Lammer: Yeah, okay.
Jay Kang: But I would care less than when both were going down, and I had 15 to 20 different alts to check that were all getting slaughtered. I would say that, honestly, for peace of mind and to not have to worry and candle watch 15 different things, it was actually a good decision. This is terrible advice, but I don’t know, I at least found it to be somewhat soothing. Why have you not followed my lead here?
Aaron Lammer: The zen of only owning Bitcoin and Ethereum.
Jay Kang: The Dao of two coins.
Aaron Lammer: I’m glad that you’ve finally grown up and matured your investments, and you’re now being responsible and only betting hard on Ethereum.
Jay Kang: I also bet on a Lakers, Eagles, Jaguars +7 parlay yesterday.
Aaron Lammer: I assumed that there was some sort of an equal weight to counterbalance this act. Do you wanna talk a little bit about this Nathaniel Popper story in the Times, about how much electricity Bitcoin mining is requiring?
Jay Kang: Before that, quickly, I wanna know why you have not consolidated?
Aaron Lammer: Why have I not consolidated? I love the fun. I think I enjoy it more when I’ve got more horses in the race. I do think that there are some good bets beyond Bitcoin out there. I’m holding probably 25% Monero right now. I think Monero is a really interesting project, and particularly with some of these issues around taxes come to the forefront and how much information is truly publicly available on Bitcoin. I feel like reputable people whose opinion I respect are starting to feel like Monero presents the most sensible threat to Bitcoin as something that can really do everything it does and has a future that’s actually really important. I continue to feel that way about Monero.
New Speaker: I probably ought to shave about six of these coins off the bottom of my portfolio. I probably could not name all the coins I currently own if you asked me to, although it would be funny if I tried. Part of it was hanging out with @LedgerStatus, too. He gets me into it.
Jay Kang: I know, I know, he is-
Aaron Lammer: He makes me think I have a alt trading secret weapon.
Jay Kang: I know, he really is like the guy at your high school who’s the first one to do acid, and you kinda watch him. You’re like, whoa, he looks like he’s have … he’s like, “Your face is melting, man.”
Aaron Lammer: He’s like, “Wanna try these mushrooms?”
Jay Kang: Oh, yes, I definitely wanna see that. It seems really cool what you’re going through.
Aaron Lammer: Yeah, totally.
Jay Kang: Electricity, yeah.
Aaron Lammer: Do you think we’re in alt winter? Or do you think this is just a terrible time to hold any of these altcoins?
Jay Kang: I honestly have no idea. I did it because I found myself spending way too much time looking at these charts, and I thought there enough people who I thought were smart who were consolidating, and I just decided to fully consolidate.
Aaron Lammer: It makes sense on another level just because my ultimate belief is that the market is healthy and all of the money that’s been pumped into the Ripples (XRP) and the Trons (TRX) and the XVGs (Verge) of the world is eventually gonna roll downhill to Bitcoin. If you really believe that, then there’s a lot of money that’s coming to Bitcoin in the next few months.
Jay Kang: Yeah, I would agree with that. There’s no place where you can cash out your Kodak and Dentacoin into fiat before putting in Bitcoin first.
Aaron Lammer: I do not own any Kodak or Dentacoin, just for the record.
Jay Kang: I don’t think Kodak coin …
Aaron Lammer: I don’t think they’ve even traded yet. Do you have strong feelings about the amount of electricity that mining takes?
Jay Kang: I think that this is one of the stories in which it persists because it’s the one thing that sort of your average person who doesn’t know that much about Bitcoin can wrap their head around, which is the fact that a Bitcoin cost a shitload of electricity. There’s no way to parse it. You see like sort of maximalists saying, “Yes, but we can use miners to heat homes,” and you’re like, dude, come on, no one is fucking heating a home for the-
Aaron Lammer: I thought we were gonna get one of those for the crypto cave. It’s always balls cold down here.
Jay Kang: It’s cold as shit in here usually. Today is not so bad.
Aaron Lammer: Today is the warmest day we’ve ever recorded on, and it’s still not warm in here.
Jay Kang: If you start heating the crypto cave with miners, then we should run like some sort of weird biosphere experience.
Aaron Lammer: The problem with it is that there’s only electric jack in the entire crypto cave, and I feel like we would blow it out pretty quickly if we started running a sequence of miners off of it.
Jay Kang: You would definitely burn down this entire building, I think.
Aaron Lammer: It’s weird to say that I do think that there’s a reasonable idea that we should not be introducing new forms of wasteful power use to create something virtual, although it kind of makes sense that to create something of value, you have to burn something, even digitally. When people say, “It’s a lot of electricity to make one Bitcoin,” hey, one Bitcoin is worth as much as a super economy car in some countries. One Bitcoin isn’t like a small value. If a Bitcoin is worth $10, it wouldn’t take nearly as much power to make one Bitcoin. We’re talking about something that if it was a commercial product, it’s not like a bicycle. It’s like a car worth. It’s a big one.
Jay Kang: The one thing that I found interesting about Popper’s article in the Times was that Vitalik Buterin came out and he basically said that he wants to figure out a way to make Ethereum mining less energy intensive. The one thing that struck me about it was something that we talk about a lot privately and I think with a friend of ours is that there does seem to be a cultural divide emerging between Ethereum and Bitcoin that goes beyond sort of like the science or technology of it, which is that if you are going to pick one that is going to stand there and shove you off a cliff and being like, “the world is mine,” and the other one to maybe in the most Silicon Valley neo-liberal sort of way saying, “No, you give me a little bit of what you have, I’m gonna look at everything that you own, but your world will be slightly better because of me,” that would be Ethereum.
Jay Kang: I did think it was interesting that Vitalik was the person who came forward and said, “This is kind of a problem. Climate change is real, global warming is real, and we need to figure out a solution.”
Aaron Lammer: Beyond the issue of personal responsibility, and I think it’s fairly clear that the hardest core libertarian Bitcoin elements are not gonna ever believe that we have collective responsibility around power, I do think that it’s also fair to say that how people around the world are gonna perceive cryptocurrencies, and how governments and regulators are gonna perceive cryptocurrencies, is in some ways relative to how good neighbors they are and how well they play nice with whatever other environmental and economic systems are out there. It’s kind of like, “Fuck it, we’re gonna scorch this earth” attitude just seems a little counterproductive to me. It does seem like there are ways that mining can evolve over time and that other layers can be added in such a way that they’re more energy efficient.
Jay Kang: The Silicon Valley thing is always like the garage story. Two guys in a garage, and the narrative’s almost always bullshit, but it’s that two guys in a garage were trying to dream up a way to make the world better. The more you know about these companies, the more bullshit the story happens. But the story is still the bullshit that you have to get through that will inform your marketing. Bitcoin doesn’t have that. If they were Facebook, they would be like, “Listen, we’re gonna waste a lot of your time. In the future, we’re gonna fuck up an entire election and introduce this hellscape. We’re gonna take no personal responsibility for it, and we’re gonna spy on everything that you did. But, you know what, fuck it, because the world sucks and this is better.”
Aaron Lammer: I feel like Ethereum is Facebook, then Bitcoin is the unregulated market for off-market cellphone minutes developing economies. It’s just a raw resource that can be bought, sold, and used in any manner that you see fit. Ethereum is this larger belief that dApps are gonna interconnect and create a smart world that is economically efficient and improves everyone’s life. You can’t say we’re gonna be improving people’s lives if we have to run a bunch of Chinese coal factories.
New Speaker: It’s also a vulnerability that requires so much power. That’s just a way that the whole system can get disrupted. Instead of there just being exchanges that can get shut down, whole mining ecosystems can get shut down because they require so much power.
Jay Kang: I think that up until this point, Bitcoin hasn’t needed the bullshit story. I would say that Ethereum’s bullshit story, which I think is pretty much bullshit, is a bullshit story that we’re familiar with. When the New York Times writes about Bitcoin or crypto in the way that they did with this Popper story, but also very large story in the magazine, about-
Aaron Lammer: The Steven Johnson story.
Jay Kang: Steven Johnson story, really what they’re talking about is a world of Ethereum. They’re not really talking about a world of Bitcoin. I think the interesting thing that has come out of the media in the past three months where they’ve been obsessed with crypto, is that the media seems to gravitate toward Ethereum, and I wonder if that’s because the messaging is just better.
Aaron Lammer: I think Ethereum’s a little more of a like “whoaaaaa, man” kinda of a vision.
Jay Kang: It’s like hack- sack on the quad, let’s smoke weed and talk about clouds.
Aaron Lammer: Yeah, but it’s also the same way people like talking about these virtual worlds, like Oculus Rift kind of stuff, partially because, whoa, this is fun to talk about. Imagining frictionless bank transfers, it doesn’t sound nearly as fun.
Jay Kang: Yeah, and it also is like an easier world for us to envision in which things in our world would be slightly better, whereas Bitcoin’s maximalism is completely apocalyptic. There will be no more banks. There will be no more fiat currency. The Winklevi will be worth like $7 trillion. We’re banking of the unbanked — it’s just a harder world for people who are not as intense and do things like eat vegetables or eat bread. It’s a harder world for them to envision.
Aaron Lammer: I feel like we would be in remiss to continue talking about Silicon Valley without welcoming our guest, Charlie Warzel of BuzzFeed.
Charlie Warzel: Oh, Jesus Christ, I’ve been sitting here quiet for 30 minutes. Hello, how’s it going?
Aaron Lammer: Charlie’s just been huddled in the corner dead silent-
Charlie Warzel: The crypto cave.
Aaron Lammer: … and the minute he opens his mouth, there was like a frog inside it.
Charlie Warzel: Gurgling.
Jay Kang: He’s been breathing in the ambient air of the crypto cave, which I feel is not good for you.
Aaron Lammer: We have an air filter, but we have to turn it off when we’re taping, which means you could be breathing anything right now.
Jay Kang: Is BuzzFeed one of the media organizations that crypto Twitter hates?
Charlie Warzel: I can’t remember.
Jay Kang: ’Cause the Times, the Wall Street Journal, Forbes, they seem to all hate it. Is BuzzFeed on that list?
Charlie Warzel: It’s safe to say, most technologists, pretty much everyone, hates us. That’s kinda how I feel.
Aaron Lammer: If you’re offended that we have Charlie on right now, that was our intention. Charlie, you’re a tech reporter, you’re not based in Silicon Valley, but you deal a lot with internet culture. How and when did the coin start creeping into your life?
Charlie Warzel: I was, I guess, pitched to do this stunt journalism thing, where I was to live for a month cashless in late 2015 or early 2016. Every week, the stakes ratcheted it up, so it was like, “Use Applepay.” Then slowly I got to like, gotta spend the week on Bitcoin. That was when, I don’t think it’s that much different now, but Coinbase wasn’t quite as friendly. It felt real out there to try to do it. I did it completely as a stunt. I had no real interest in it, and then you start, as everyone has figured out, you talk to your first blockchain evangelist, and then whatever problem you can conceive of in the world, somebody gives you the perfect explanation for how we’re gonna all live a better, happier, cleaner world, next to whatever smart contract. I kept it in the back of my mind as something that was interesting.
Charlie Warzel: I wanna say around late summer of 2017 was when I figured having spent some time in it, like I bought a flight to go to Sweden in 2016 on Expedia with Bitcoin, and that’s now like, I don’t know, $80,000 flight or something. I actually had a little bit of Bitcoin left over from that, which is how I ended up going back in.
Aaron Lammer: I feel like a lot of reporters had a small windfall from accidentally having Bitcoin left from a stunt story they did in the past.
Charlie Warzel: My colleague Ryan Mac was at Forbes when another former Forbes journalist Kashmir Hill lived on Bitcoin in 2013. They were at a dinner, and she or someone there challenged him to eat like a habanero pepper or something, and said they would give him two Bitcoin or something for it. He’s held onto it, so he’s doing real well off of that habanero pepper.
Jay Kang: My god, Ryan has two Bitcoin from eating a habanero.
Charlie Warzel: It might be less than that, but it’s a sizable amount of Bitcoin.
Jay Kang: Not to get to the media about this, but I will say that of the population of people who need money, which are journalists, and of the people who knew about Bitcoin before, I feel every single tech reporter I know has some story where they could be super rich. Like Adrian Chen, for example, when he was reporting on DPR, if he had spent $1,000 he would have like $2 million right now, buying Bitcoin, but he didn’t buy any. Or anybody who reported on Silk Road that bought Bitcoin for about $10, and it’s like, “Let’s see if I can get some black tar heroin shipped to our offices,” all those people would be super rich right now if they had just held onto a little bit of it.
Charlie Warzel: I think that’s partially why, as you were saying earlier, the narrative with it is one of anxiety and gloom and doom, just like bitterness surrounding it, ’cause I think a lot of people could have had their millionaire moment and just forgot their key or whatever.
Aaron Lammer: It’s funny, I feel like the press gets a lot of pushback for sneering at Bitcoin and the whole Bitcoin world, but it’s like “I’ve paid the price, I sneered at it and I could have had like millions of dollars.” It all came out in the end.
New Speaker: You’ve done a lot of coverage on alt right stuff recently and just like the new kind of media that is the media now?
Charlie Warzel: Yeah, it’s just like the devolution of the platforms into our general health state.
Jay Kang: Into cryptocurrency podcasts.
Charlie Warzel: Exactly. I was at a pro Trump MAGA Nu-Right, as they all themselves, gala thing. I was covering it in New York here last Saturday. The only thing anyone wanted to talk to me about was crypto. I think it speaks to what you guys were saying earlier, like there’s the Ethereum vision of the world and then there’s the apocalyptic Bitcoin vision. I think that really appeals to these people, ’cause it’s not just like drain the swamp. It’s set the swamp on fire. That vision of the decentralized world just speaks to these people so much.
Charlie Warzel: To their credit, they got in early. People were showing me their phones. There’s money there. Some of them are kids. It’s wild, where that money is gonna go. There’s like a pretty decent piece in the Washington Post a couple weeks back about like the extremists who got in ’cause they can’t bank their money anywhere else. I don’t think that’s been explored enough as to where some of this anarchist “fuck everything” money was gonna be used for, if it stays around.
Aaron Lammer: It’s always sort of interesting that Bitcoin itself has it’s own politics and its own quasi-democratic system, and it represents all these pretty disparate constituencies. There’s that point that, Jay, at the Charlottesville rally, in the Vice News Today piece, where your colleague Elle Reeve gets in the car, and she says, “What do you do?” This guy’s like, “I’m the crypto correspondent for…” some white power magazine.
Jay Kang: Yeah, for the Daily Stormer.
Charlie Warzel: Well, I have a few pet theories about the world. One is that basically so much of what we are seeing on the internet right now actually comes entirely from the 2008 bank bailout. If you look at hate groups or really extreme groups, either on the right or the left. Look, I am not calling the extreme group on the left a hate group, but if you look at those extremist groups, the one thing that they all have in common is that they all are interested in cryptocurrencies, and they’re all mad at the 2008 bank bailout after the crash.
Charlie Warzel: I think that if you’re talking about Bitcoin as a political idea, the biggest thing that people point out when they start explaining how it’s a political idea is that 2008 bank bailout. It makes sense when Steve Bannon comes out and says like my vision of the world started when my father went broke, and Obama bailed out the banks. I think it makes sense that Bitcoin would be very popular amongst that group.
Aaron Lammer: I always feel like there’s a few things that are popular everywhere in America, like across race and class: video games, weed, and maybe crypto. You can do them all at once.
Charlie Warzel: It’s also like Bitcoin or just crypto in general is just very suited to the way the internet works right now, which is that nobody quite understands it as well as they should, and everyone has an extremely strong opinions about it. It’s very angry and it’s great to fight about. It’s perfect grist for the internet mill.
Aaron Lammer: You also can say something on like a Reddit forum and get someone like CNBC to just say it on TV.
Jay Kang: The trolling opportunities are massive, absolutely massive. I’m sure that you and I over the course of the next 10 episodes will put out misinformation that somebody’s trolling us about.
Aaron Lammer: I think we already have.
Jay Kang: I’m sure that we already have. We have Charlie here. Do you wanna do this FunFair (FUN) thing?
Aaron Lammer: Yeah, we’re thinking about doing a new segment on the show. I guess we’re defensive because people were like, “Hey, this show, you never actually talk about coins on this show.” But we do have lots of opinions about coins, great and small. We’re gonna pick one on some shows and do a deeper dive into it. In some ways, Jay, correct me if I’m wrong, not only are we evaluating the coin, we’re also evaluating the methodology by which people evaluate these coins, and comment on them, and go on Reddit about them, and the way that people believe you should educate yourself about cryptocurrency.
Jay Kang: Yeah, which is the one thing that I guess in terms of a behavioral study to me, and crypto has been the most fascinating. Not to say that I am, look, I also engage in these behaviors all the time, so I’m not looking down at you guys from an ivory tower.
Aaron Lammer: Jay does his research.
Jay Kang: I do not.
Aaron Lammer: No, he told me right when he got going, he was like, “Aaron, the way you do this is just sloppy. You gotta do your research.” You believe on a certain level.
Jay Kang: Also, if you rewind the tapes last episode, I told Doug that I invested in Storm (STORM), but I didn’t know what Storm was, and I was hoping that he could explain what Storm was on the air.
Aaron Lammer: You were like “Dude, you gotta read white papers” and then you were like “man I read the white papers and dude, white papers are bullshit.”
Jay Kang: White papers are bullshit. The point of the game I think will both be to discuss the coin, but it will also be to figure out whether or not the general methodology, the triumvirate of the research, which is read the white paper, look at the team, and build a use case for it, if that actually makes sense in any world.
Aaron Lammer: For people at home, Charlie, myself and Jay all received this mission blindly. We have not back channeled and discussed our opinions on FunFair or what it is. This is a totally blind one. We did pick a coin that is somewhat legit. I know we’ve talked about some of the Cryptopia shitcoins before on this show. We picked a coin that we thought was kind of more towards the top of the heap.
Jay Kang: Like if you spend any candle watching, you have heard of this coin.
Aaron Lammer: Oh, definitely. It’s got a great ticker symbol, of course. FUN.
Jay Kang: Fun.
Aaron Lammer: Charlie, were you previously aware of FunFair?
Charlie Warzel: I was not, and when I was looking at it this morning at the office, someone came over my shoulder and just burst into laughter. It was a perfect choice, I got owned pretty hard just simply by proximity to the-
Jay Kang: Why don’t you start us off? What were your impressions of Funfair in your chair?
Aaron Lammer: What was on your screen when they walked up to it?
Charlie Warzel: It was a YouTube video that I was watching without headphones in that might have been narrated by an eight year old. It was like “you don’t have to read the white paper, I promise you, I’m just gonna tell you about this thing.”
Aaron Lammer: It was like the Cliff-Notes version.
Charlie Warzel: Oh, man, you can really see how people get led astray.
Aaron Lammer: That’s a pretty trollish thing to play without headphones on in an office.
Charlie Warzel: It was like 9:00 am. I got there a little before everyone got in. I’m not someone who’s read a lot of white papers, and I don’t dabble in the alt world personally. It seems both reading it, it’s specific enough that it makes me feel like a moron, but vague enough that I feel like I can get on my high horse that this might be a bit of potential vaporware.
New Speaker: I don’t know, I was relatively impressed with the fact that it does something. There’s something tangible. It’s a casino thing, facilitates these payments. I forget, was it like the Fate Channel or something? I really looked into this shit.
Jay Kang: The Fate Channel?
Charlie Warzel: Yeah, I went deep.
Aaron Lammer: Charlie has actually set up his own node and is now running FUN.
Charlie Warzel: That’s right. No, I think that I could wrap my head around it, and it’s not immediately as out really hilarious as Dentacoin.
Aaron Lammer: Jay, what was your impression of FunFair?
Jay Kang: Well, I started to read the white paper and then I got slightly bored. Then I opened up their app. On their web page, Fun is like a casino app, so on their page they say, “Hey, this is what playing Blackjack on Fun would look like.”
Aaron Lammer: Yeah, and you just immediately played for like six hours.
Jay Kang: I just opened that and I played about 14 hands of fake Blackjack.
Aaron Lammer: How’d you do?
Jay Kang: I did pretty well, actually, which made me wanna invest in-
Charlie Warzel: You’re going all in.
Jay Kang: Then afterwards, I thought about that. Okay, so I played 14 hands, I did pretty well on the Fun casino. Is this making me more likely to buy Fun? I will say that our introduction into Fun, or the only thing that I knew about Fun before this time, was that when Mike Novogratz, the famed hedge fund investor-
Aaron Lammer: He’s back in the game.
Jay Kang: Yeah, yeah, but the name who has been in and out of crypto more times than you and I have been out of a Ubiq (UBQ) trade, Novogratz, when he was asked about crypto, they’re like, “Do you own anything other than Bitcoin and Ethereum?” He said, “Yeah, I own a lot of little things, like Fun. (FUN)” He specifically name checked it.
Aaron Lammer: Shill your bags, Mike Novogratz.
Jay Kang: I don’t know, when you hear something like that, Aaron or Charlie, does that make you more willing to buy into the thing?
Aaron Lammer: I think that probably was around when I originally heard it. It’s interesting how I have owned FUN. I will acknowledge that I have possessed FUN.
Jay Kang: Did you play the Blackjack game on their website?
Aaron Lammer: No, I didn’t realize that you could demo play it. I’ve had it, and I was like, oh, it’s an online casino thing. Actually, I usually buy these things kind of based on, yeah, I can see people who are doing crypto now doing online casinos. However, when you actually go to the Fun website, it’s always one level more abstract than what it sounded like. I knew that Fun was an Ethereum based token.
Jay Kang: It’s an ERC20 token.
Aaron Lammer: It’s an ERC20 token. However, I don’t believe that the ultimate business is that Fun is a casino. It’s a token by which you can make your own casino.
Jay Kang: Yes.
Aaron Lammer: Everything in crypto is like that — you never get to do anything.
Jay Kang: A Russian nesting doll.
Aaron Lammer: You always just get the ability to replicate the system to your own user. Do you know what I mean? It’s a derivative of Ethereum, I get it. Then it’s like, and it’s a casino thing that you can make more casinos with.
Jay Kang: It’s like getting an endless amount of IOU notes. At the end, you’re like, well, this is real money, but this IOU note will help you get more IOU notes. Then in the end, there’s no payoff. I agree with that. I was surprised. I didn’t know that either, and then I figured that out today. Like, I can start my own casino, that is an interesting idea, but it’s not really something that I [crosstalk 00:46:24]
Aaron Lammer: I feel like a weird thing just went over Jay’s eyes, they were kinda milky for a second.
Jay Kang: Yeah, but why didn’t they just make their own … Aaron, you know me as a degenerate gambler. You know Doug, our frequent guest, who is a degenerate gambler. You know some people who play. Do any of those people that you think will take the time to log in the Ethereum network and make a deapp based casino?
Aaron Lammer: I would think not, but this is, again, like it’s the same thing, we talked on one of the basement tapes about waves. Waves, the respected Russian platform that Doug Kim has been a longtime fan of. Wave’s is also for issuing tokens, so you can create another token that you can use to get weird shared workspace in like a WeWork system with this token. It’s always like someone further down the stream than you has to actually make the thing. You’re just giving them the white label, blockchain solution for it. This is kind of a different vision. Charlie, you cover a lot of startups. Usually startups are not like … I was thinking of this both ways, I guess usually startups are not like, this is a tool to make more startups, but it is true that a lot of startups service the startup market.
Charlie Warzel: Yeah, it’s like a solution that you need to create more solutions to get to the solution. There’s something very Ponzi adjacent to that. If you’re basing evaluation on somebody else’s good idea down the line, I think that’s a very dangerous game.
Jay Kang: All they need to do to succeed is recruit more people to offset our casinos.
Charlie Warzel: But it’s like tokens to get more tokens to build more tokens. You build a casino in which you have to have your own tokens, and that token’s value is based on the Fun token, which is based on Ethereum’s value. I just feel like that-
Aaron Lammer: I’m sure Mike Novogratz has looked into this, and there’s a perfectly reasonable explanation.
Charlie Warzel: I just also, as someone who has a very basic understanding of this world, I want more tangible things. I want less of that. I just wanna be like, hey, cool, I get this, the way that they’re doing the transactions according to the white papers. It’s kinda new. I’ll take a chance on that. It’s very concrete, cool.
Jay Kang: The other thing about Funfair, which I found very strange, is that the currency is deflationary. If you think of it as a poker chip, and you get poker chip, and you’re like, “Okay, this poker chip is worth $5,” and you sit down and you start playing. Suddenly the dealer comes up and says, “Actually, that poker chip is worth $8 right now.” My reaction is not immediately gonna be like, “Sweet.” It’s gonna be like oh, no. How am I gambling with a deflationary chip? That’s insane. I don’t really understand Fun.
Aaron Lammer: Isn’t that what happens when you Bitcoin gamble?
Jay Kang: Yeah, but I at least have that in my head. It’s not a poker chip.
Aaron Lammer: Okay, I see.
Jay Kang: Honestly, the difference is not that great. That’s a good point, but I plead degeneracy for that. I would just say that, look, we’ve probably misrepresented Funfair a little bit.
Aaron Lammer: I would say also, still a buy in my book.
Jay Kang: You are? You would buy?
Aaron Lammer: It seems like compared to a lot of these things, it seems legit.
Jay Kang: Charlie-
Charlie Warzel: I was expecting it to be a lot more shady. Again, you’re asking someone who’s like-
Aaron Lammer: Oh, a reputable casino? Well.
Charlie Warzel: … pretty blind in this world, but I was hoping that I was gonna be able to shit on it a little more.
Aaron Lammer: Yeah, we didn’t tee you up.
Charlie Warzel: It’s okay.
Aaron Lammer: This is what happens when you dab on this prestige alts. Sometimes they surprise you.
Jay Kang: I will say that the fourth most important thing in terms of researching an alt that people are very affected by it, I think, including myself, is website design.
Aaron Lammer: Love it.
Jay Kang: Pretty good website.
Aaron Lammer: Pretty legit website.
Jay Kang: Pretty good website.
Aaron Lammer: Looks like someone paid their web designer. I’m not saying you got a great website, but it’s almost like someone had been doing some topnotch work in Vegas that they were-
Jay Kang: That’s what I mean.
Aaron Lammer: … like, yo, what if this casino could get the king of Vegas casino website makers?
Jay Kang: For example, when you gamble a lot in Vegas, they give you a card, the M card or whatever, like a rewards card. It is better than those websites. That’s the only Vegas website I ever go to. But the Fun website is better than those websites. It’s pretty good.
Aaron Lammer: I read a few of the-
Jay Kang: So, buy.
Aaron Lammer: … guys doing their breakdown, where they do an analysis of Fun, and I guess they’re almost all positive so there’s not a ton to learn, but the fact that no one was calling it a scam, I found somewhat … Most things you can find some portion of people online who thinks it’s a scam. No one was calling Fun a scam, which upped my confidence in it also.
Jay Kang: The cursory standard of look at 10 random people online, control F scam, and if it comes up empty, then it’s a buy.
Charlie Warzel: I will say looking into these, again, not knowing too much about it, it has a real knack for making you feel smarter than you are right away. Even just saying, hold on, I gotta read this white paper real quick gives you a little bit of that vocabulary to make you feel. You’ve watched the YouTube videos, scrolling through lots of charts, you feel like you’re working or doing something, and really it’s just like I’ll throw some investment behind this online Blackjack table.
Jay Kang: No, no, no, no. The power to make our own Blackjack table.
Aaron Lammer: Charlie, are you HODLing? Are you in the game?
Charlie Warzel: I’m in the game, yeah, absolutely.
Aaron Lammer: How has that been? Tell me about the experience.
Charlie Warzel: It’s honestly fine, because I did it, what you were saying earlier, with I feel like the best way to understand this stuff. It’s why I’m drawn to stunt journalism things, not ’cause it’s fun to punish yourself, but you just learn more about it. You have a little bit of skin in the game. I did just enough for it to matter, not enough to be wiped out. I don’t know, it’s been really fun. I got my girlfriend to be involved with me. She put in half.
Aaron Lammer: That’s a frontier that Jay and I are not even broaching.
Charlie Warzel: I also have no degenerate gambling history, so I have some remove from it. There will be a day that will go by and I won’t check, and then there’ll be days where I’m glued. I feel pretty zen about it.
Aaron Lammer: Do you guys talk price together? In the morning, like coins down?
Charlie Warzel: Yeah, we do a little bit of the coin talk, right before bed. Wake up, check it. She’s gonna fucking hate that I’m talking about that.
Aaron Lammer: You left New York recently. You’re in Montana?
Charlie Warzel: Yeah, I’m out in Missoula, Montana. That’s actually added this funny wrinkle when I talk to people about it, because I did that dabbling back in 2016, and then I was out. Then I moved to Montana, and a month and a half later started talking to my friends in hushed tones about cryptocurrency. They were like, “Okay, you moved to the mountains and have a place in the woods, and now you’re holding all this.” It’s just weird.
Aaron Lammer: Have you encountered any Montana crypto community?
Charlie Warzel: No. Oh, well, okay, yes, like a lot.
Jay Kang: No one knows it so far.
Aaron Lammer: Well, I do host [Ameda 00:54:24].
Charlie Warzel: I’m showing some cards here, but there’s the biggest, apparently, mine in the United States is about 20 minutes from my house.
Aaron Lammer: Wow, you gonna go visit?
Charlie Warzel: I have driven by and it’s so loud, it sounds like there’s a jet engine constantly going around the town. That’s weird and interesting, and as a reporter who lives in Montana, I’m actively pursuing, so I can tease a little bit.
Aaron Lammer: Can you do a special episode where you call in from a Montana Bitcoin mining facility?
Charlie Warzel: Absolutely. It’ll just sound like I’m at an airport.
Jay Kang: What it is, so it just sounds like a jet engine? Is it inside a large building or something like that?
Charlie Warzel: Yeah. And there’s apparently-
Jay Kang: Who runs this thing?
Charlie Warzel: I don’t know off the top of my head, but they didn’t say that they were a Bitcoin mine. The local paper found out, and there was this real big controversy because, and again, I’m showing how little it know about this subject.
Aaron Lammer: This is why we need deep cover when we start our mining operations, Jay.
Charlie Warzel: You definitely can’t do it in the cave.
Aaron Lammer: It’s a sausage factory.
Charlie Warzel: Sausage factory is a great name for something to do with crypto. Apparently, if you know the location of these things, it makes it a lot easier to hack, and so people are just very guarded with the privacy. But that is undermined by the fact that it sounds like a 747.
Auto Voice: This episode of Coin Talk was taped Monday, January 22, at 4:00 pm Eastern Standard Time. The Bitcoin Price Index was $10,433.
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