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Episode #41: Where Were You When BCash Forked?
We use the 1-year anniversary of the BCash fork as an excuse to review the last year in crypto: the winners, the losers, the narratives and the fake outs
COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode. (You can also subscribe on Apple Podcasts, Google Play, download the MP3, or email us at email@example.com)
Aaron Lammer: Hey, welcome to Coin Talk. Jay, hello.
Jay Kang: Hello. It’s actually been a while even though it doesn’t seem like it.
Aaron Lammer: Yeah, we’ve been staggering a few shows. We did a mailbag show. It’s been a while since we’ve been talking about the news of the day.
Jay Kang: The listeners cannot see us but I want them to know that you’re wearing white plastic Birkenstocks right now.
Aaron Lammer: Wow. I’m gonna tell you I got these Birkenstocks because, as people know, there’s often water on the floor of the crypto cave. I fell in love with them. I never thought I’d fall in love with some Birkenstocks but I fell in love with them. I was coming down here and I slid this giant metal door we have here over my foot and it ripped off one of my toenails. Yeah. That’s the Bandaid you see there. So, these Birkenstocks are a cautionary tale.
Jay Kang: So the Birkenstock provideth and the Birkenstock taketh away.
Aaron Lammer: Speaking of cautionary tales, I wanna talk today … Today is a history class.
Jay Kang: Okay.
Aaron Lammer: We’re gonna do a little history. The reason I bring up history, well, I don’t know if you’ve noticed, it’s been about a year since we started doing this, coming down to this basement and talking about crypto.
Jay Kang: Oh my god.
Aaron Lammer: I know, it’s depressing.
Jay Kang: Yeah.
Aaron Lammer: There was a long kind of intermittent basement tape period but I remember-
Jay Kang: Those were the salad days.
Aaron Lammer: I’m starting to remember right now stuff that happened … The one year anniversaries are coming up and I’m like, “Oh, I remember that time.” The big one was the BCash fork. That was August 1st, 2017. They just celebrated the one year, we’re a few days past this but I guess they threw the party in London a few days after it. I started seeing the news stories about the BCash party for the one year anniversary of BCash and I was like, “Wow, that was a year ago?”. That was probably the biggest night during our crypto run, that was probably the biggest single event.
Jay Kang: During the last year?
Aaron Lammer: I think so, yeah. What do you think? I guess the crash was the biggest event, the spike and the crash, but in terms of things that happened in one day.
Jay Kang: I don’t know. I would say the most enraptured I was with crypto and the most stuck in where I was checking my phone every four seconds and where I was like … Felt like I had lost my mind but also that maybe I was going to be extremely rich was the other fork. If you remember the 2x fork when it didn’t happen-
Aaron Lammer: That was the fake out.
Jay Kang: Yeah, when it got canceled but then it led to like three to four days of insane drama where Roger Ver was like firing all of his Bitcoin money into Bitcoin Cash, where there was a lot of things happening with price manipulation and it seemed like there was a battle for the soul of Bitcoin-
Aaron Lammer: Yeah.
Jay Kang: That, I think, was as big as the BCash but I wouldn’t say it was bigger. I’m not disagreeing with you, I’m just saying that I think that was the only other day where it was a similar scale.
Aaron Lammer: Well, I feel like that’s all part of the same narrative, in my mind.
Jay Kang: Sure, but they were months apart.
Aaron Lammer: They were months apart. When was the other one, do you remember?
Jay Kang: I think it was November or something.
Aaron Lammer: Okay, yeah. So, the really crazy thing about the BCash fork was if it had succeeded, and I think we both gave it some chance of succeeding, it would have radically altered the entire landscape to the point where … There’s nothing bigger that could have happened.
Jay Kang: Okay, here’s a question then. I agree with you that something … That it would have changed everything.
Aaron Lammer: Yeah.
Jay Kang: Do you think it would have been for the better or for the worse? Because I think like three months ago we would not have hesitated at all and we would have been like, “Oh, please. Of course it’s for the worse”, but if you think about some of the … Could things have gone worse than what happened to crypto?
Aaron Lammer: Oh, I definitely think it could have gone worse. I don’t think we would have ever seen the same spike. If you look at the leadership of the people who became the faces of the BCash movement, I don’t think you would elect these people dogcatcher. I really don’t think … I think no leader is better-
Jay Kang: Dogcatcher is a pretty important job that requires somebody to be kinda humane.
Aaron Lammer: I don’t really feel like the BCash faction has advanced any narrative that would suggest they would have done any better than the core team, other than they were robbed, they stole the name-
Jay Kang: They didn’t have a chance to do it.
Aaron Lammer: The election was in some way rigged. It feels actually like a pretty thrilling case of democracy that it worked at all. At that point I thought there was a third outcome which was that it would destroy both.
Jay Kang: Okay. So, a year later after the BCash fork, what do you think the actual ramifications of it were?
Aaron Lammer: It proved that a fork wouldn’t destroy Bitcoin and I think that was the biggest-
Jay Kang: Did it?
Aaron Lammer: Atomic threat. Yeah, I mean look, there still could be one that destroys it but there could have been mass chaos. If both chains had ended up kinda fifty-fifty and there was a real fight for dominance I think it could have brought the whole thing down. I would say a bullet was dodged, in my reading of history.
Jay Kang: I disagree with you.
Aaron Lammer: Tell me your reading.
Jay Kang: I think that it was extremely bad-
Aaron Lammer: Why?
Jay Kang: I think the ramifications were extremely damaging to crypto. I think that it took what was, at that point, a somewhat artificially but still seemingly anonymous project that was the work of a lot of different people working together in the sense, that under the vision of Satoshi … It introduced a lot of figures who were fighting with one another and acting like fucking crazy people. Between that and the 2x fork, it’s not all Roger Ver’s fault, Craig Wright was involved. I don’t think that even the core people reacted particularly well but it made it seem like Bitcoin itself was run by a bunch of crazy, libertarian, selfish, objective, however you wanna put it, but people who were only really after their own self-interest and were much more evangelist than I think a lot of the public was willing to stomach. I think that it really did a lot of damage. I think that everything all the way up to the way that BCash or Bitcoin Cash was released on Coinbase, having these forks really did sort of muddy the water and I think that it really did have a bad effect overall.
Aaron Lammer: But this all happened right before the lead up with the Bull Run.
Jay Kang: What did?
Aaron Lammer: The fork. I mean, the price action in the wake of the BCash fork and the 2x fork was positive. You were just saying in the long run we’re right back where we started.
Jay Kang: Yeah. Also, and this is a hot take that I’m gonna bring here, I am not convinced that the run up to 19,000 or 16,000 depending on the exchange, I have now the thought that maybe that was extremely fake. I don’t think it was particularly real or based on real speculation.
Aaron Lammer: This is a hot take but it’s not a new take from you, you’ve been espousing versions of this idea for a while.
Jay Kang: I know but I’m locking it in.
Aaron Lammer: You’re locking in. Okay, so I think we’ve used the Barry Bonds home run analogy before so there’s some sort of an unweighted Barry Bonds home run total which is he should have hit 612 home runs. What do you think the unweighted top of Bitcoin is?
Jay Kang: There was a second baseman for the Seattle Mariners in 2001 named Bret Boone. Bret Boone, for his entire career, was slap hitting second basemen and then he showed up around 2000 with like 40 more pounds of muscle and he looked like a fucking … Like it was a joke. He looked like a gigantic swollen testicle that picked up a bat or something. That year Bret Boone hit 37 home runs and had one of the greatest seasons that a second baseman has ever had offensively. Obviously was on steroids, obviously. All the performance enhancements were because he was so maxed out on steroids. I feel like it’s closer to that.
Aaron Lammer: Okay, so you feel like looking back on that moment, most of the gains from there forward were manipulated.
Jay Kang: Yeah, or money laundering related. I don’t think it was people trying to invest in a product and that price going up because people were investing in the product.
Aaron Lammer: So, what you’re saying is that I’m one of the only people who was actually buying crypto above 10,000 Bitcoin.
Jay Kang: Yeah, yeah.
Aaron Lammer: I wish you had been more sure about that at the time.
Jay Kang: I wish I had been more sure at the time too. You’re not the only one in the crypto game right now who bought Bitcoin at above $10,000. Anyway, the only reason I bring it up is not to rehash it old take but is to really just say that I don’t necessarily think that the fact that Bitcoin’s Bull Run came after the BCash fork and the 2x fork, I don’t think that … I think that is probably a correlation not causation type of thing.
Aaron Lammer: I’m willing to buy that and I’m also willing to buy that it’s not a total zero sum game. Bitcoin Cash has been fairly … I mean, it’s down like everything else but it’s got some solid value to it now, it’s not totally unholdable. One thing I’d like to talk about later is that Bitmain, in their IPO prospectus, I mistakenly on a previous show thought that they were actually on the verge of an IPO, they’re not, they were on the verge of releasing the materials for the IPO but had to reveal their holdings. I was surprised to learn that their biggest holding is BCash. They own 6% of the world’s BCash and they own more BCash than they possibly could have mined so they have been trading Bitcoin for BCash, or something for BCash.
Jay Kang: Did they explain why?
Aaron Lammer: They did not explain-
Jay Kang: They had no explanation for why they had 6% of the world’s BCash.
Aaron Lammer: This article made several leaps. One was they have almost no Ethereum, that sort of makes sense because Ethereum is mostly GPU mined and they specialize in ASIC mining, and that they’ve been selling off Bitcoin to pay for their own expenses. They’ve been selling off millions and millions of dollars worth of Bitcoin but what they seem to be hodeling is they have more BCash than the Satoshi stash worth of BCash. To me that sounds kind of bullish for BCash and kind of bearish for Ethereum.
Jay Kang: It means there’s a floor, right?
Aaron Lammer: Sure.
Jay Kang: Unless they start selling it off but it doesn’t seem like-
Aaron Lammer: I mean, the only narrative that the BCash crowd has advanced that has caught my imagination at all, other than “You stole our name”, is the idea that-
Jay Kang: What about bigger blocks?
Aaron Lammer: But bigger blocks leading to what? Was that there was gonna be some microtransaction boom that’s gonna be outside of the current network of Bitcoin that is gonna be banking the unbanked, etc. Small market level microtransactions. If I actually hear that was happening that would be an interesting narrative to follow. What do you think?
Jay Kang: I don’t think the fight between Bitcoin and Bitcoin Cash is over, either. If one of them is backed by the most powerful man in crypto to the tune of 1 million units of that coin, and he has a million Bitcoin Cash, right? So, 6% of all the Bitcoin cash in the world right now. That means a lot more than I think 5,000 dudes on Twitter making fun of BCash, you know? It’s like, well, you guys can say all you want about who’s cool and who’s not cool and what’s real and what’s not real but the reality of it is that the most powerful person in crypto is very invested in having Bitcoin Cash succeed. I think at that point it’s almost impossible to say that Bitcoin Cash is dead. I think that it is probably doing a lot better than a lot of the other altcoins, right?
Aaron Lammer: When we really look at the three coins we’ve talked about, Bitcoin, Ethereum and Bitcoin Cash, over that same year that we’re discussing, Ethereum nearly flat, I think today actually Ethereum dropping to 280 has crossed into down up from that year.
Jay Kang: Yeah, so let’s-
Aaron Lammer: When we were getting into crypto, Ethereum was hovering around $300-
Jay Kang: Let’s transition then. Let’s talk about the year Ethereum had.
Aaron Lammer: Yeah.
Jay Kang: Just like the BCash thing I think it’s an interesting frame for the way in which crypto went and it shows different life cycles. You’re right, when you and I started talking about crypto I think the first Ethereum purchase I made was around 330 and then it went up to 500 and I had bought and sold a ton both ways, generally buying the tops and selling the bottoms. At some point I had struggled to cross the line to around 500 with some Ethereum and at the time there were people … Remember people would be like, “Oh, yeah. Bitcoin is old news, the new thing is Ethereum.” People still were saying that sort of thing back then. Vitalik was all over the place, not in terms of he was scattered but in terms of he was always out there. People were talking about him a lot.
Aaron Lammer: On the cover of many magazines.
Jay Kang: Yeah, Wired profiles, big major magazines were talking about him. Then Ethereum’s price did not seem to ever really unlock itself from the Bitcoin price.
Aaron Lammer: Until it was on its way down, then it decided to disentangle itself from the Bitcoin price.
Jay Kang: Vitalik is very outspoken saying that he doesn’t care about the price, he wishes people would stop talking about the price, he wishes they would talk about the tech adoption and the culture around crypto, especially his project. Do you feel like now that we are a year gone and Ethereum prices are lower, let’s not talk about the price at all, let’s talk about the status of Ethereum the project. Do you think it has advanced or regressed?
Aaron Lammer: I think that people are not gonna talk about the technology and culture of Ethereum unless Ethereum’s price is going up.
Jay Kang: Okay, but that’s not-
Aaron Lammer: Because there’s not any technology to really show off. Maybe Auger were getting it just at the very end of the year.
Jay Kang: Or Cryptokitties.
Aaron Lammer: Cryptokitties, we’ve had a few. I feel like we’ve had a light drizzle of Ethereum interesting stuff but not enough stuff to hold people’s attention for a year, so in some ways I think the trading and the exchanges and the price have to hold the interest until the products can arrive and that was going better when Ethereum was pushing up towards $1,000-
Jay Kang: Or $1,500.
Aaron Lammer: And has now, I would say, dampened.
Jay Kang: Okay, I don’t think I quite agree with you in the sense that it was always going to be that way, and maybe that’s not what you’re really saying, but I think that if Ethereum had launched a lot of products this year and that those products had worked, unlike Auger which does not work-
Aaron Lammer: We did log on and cash out our bet though, I just wanna say.
Jay Kang: Okay, how many days did that take?
Aaron Lammer: It took like a week.
Jay Kang: To log on once.
Aaron Lammer: We’ve also been seeing some action on the pee tape market, just want to keep the people updated.
Jay Kang: Okay, but the way in which Auger … I actually don’t care, I’ll slander Auger. The way that it works, the level of functionality they launched with is shameful. It’s a terrible product right now.
Aaron Lammer: I think it’s a product that’s in a beta. You may have a slight-
Aaron Lammer: … that’s in a beta that doesn’t, I mean, you may have a slightly lower tolerance than I do.
Jay Kang: It’s not like it.
Aaron Lammer: For open-source software development, and things that are in products.
Jay Kang: But it’s not a video game or an app that you don’t need, it’s something where they very actively ask for people to put money into their system and then could not even start to maintain it.
Aaron Lammer: But this is basically how crypto-products get developed. They’re almost unusable at the beginning, Bitcoin was almost unusable as a network at the beginning, and people iterate and improve upon it, and it gets better.
Jay Kang: Yeah, but they don’t say, “Hey, put your money into a fluid market that might not work.” I mean, there is no warning that this was going to crash all the time until it started crashing all the time, everyone’s like, “This fucking sucks,” and then the guy was like, “Yeah, it might take two years for this to actually act normal.”
Aaron Lammer: I mean, that is what beta software is like, but I’ll agree with you insofar as …
Jay Kang: Then they should put out a warning that there’s don’t put a lot of money in there, like it’s-
Aaron Lammer: The question this year about Ethereum is, “Is some real shit going to arrive?” And I think we can both agree it has not arrived.
Jay Kang: Okay. That’s a very good way to put it. Did you think real shit was going to arrive this year?
Aaron Lammer: I was thinking in the second half of the year, maybe it would.
Jay Kang: Yeah, me too.
Aaron Lammer: I wasn’t thinking it would be arriving by New Year’s, but I thought the market would cool off about 10,000, kind of flat-line, and there would be so much money out there, because the way it felt a year ago was holy God, as Ethereum gets more and more valuable, these huge ICO stores, these people who thought they were going to have to build something with 20 million dollars have 200 million dollars to build stuff with. How can they fail to produce anything? And this year has been them failing to produce anything.
Jay Kang: Yeah, maybe because they know you have an incentive to build.
Aaron Lammer: Well, to be fair, the biggest projects that had the biggest opportunity were not the augurs and the consumer products, they were these decentralized exchanges, these projects that were going to be more tokens generated, et cetera. Whether those have succeeded or failed, I feel like it’s just a can that keeps getting kicked further down the line. I would have no way to know, is zero-access success?
Jay Kang: No, I mean, it hasn’t launched, really.
Aaron Lammer: Yeah, so it’s again, wait, wait, wait, wait.
Jay Kang: Or like, remember that day that we did a deep dive out of the basement tapes Polkadot where we literally could not figure out what it did?
Aaron Lammer: Yeah, and then they got hacked.
Jay Kang: Yeah, and then they got hacked.
Aaron Lammer: So, of the three currencies, Bitcoin, Bitcoin Cash, and Ethereum, two were basically flat for the year, Bitcoin Cash opened at about 555, and it’s sitting at about 500 and some odd bucks right now.
Jay Kang: Is that what it’s at?
Aaron Lammer: Yeah, and Bitcoin doubled over that year. Bitcoin went from 3,000 and something to 6,000 and something. So, is it possible that this year is about the success of Bitcoin?
Jay Kang: I think what we are seeing is that there is a floor to Bitcoin, and that that floor is about half as high as it was a year ago, and which means that two times as many people are not going to sell, are hodlers, and that they believe in it, and if out of all this craziness, if what is happened is that the number of hardcore hodlers has doubled, I would say that that’s not bad for Bitcoin, but it’s also not that great that that’s the only thing that sort of happened, because I don’t think that on the tech side or anything like that, or even on the fintech side where financial products, it’s hard to imagine that there’s some really great news other than that.
Aaron Lammer: Okay, let me give a cultural example of why I do think you could say this was Bitcoin’s year. When we came in, there was a general attitude among new people of, Bitcoin’s too slow, if you think the whole market’s going to do well, you might as well buy a bunch of alts, because they’re going to go turbo well if Bitcoin does well, and the narrative was, Ethereum’s the real thing, Ethereum’s the Internet’s money, Bitcoin is your granddaddy’s thing, and generally I would say everyone was kind of betting against Bitcoin, or at very least looking at Bitcoin at the safe end of their portfolio.
Jay Kang: A year ago, all right, yeah, yeah, yeah, I totally agree.
Aaron Lammer: And now, Bitcoin basically trounced everything over the course of that year, has reasserted its dominance, is over 51% now of the overall share of crypto. A dark horse narrative here, it’s like, what if Bitcoin runs up to 80% dominance here? What if it just pushes out all these other coins?
Jay Kang: I think that’s going to happen, because I think that these other coins, and that’s something that I wanted to talk about in terms of the year, perspective which is altcoins, and these sort of periodic alt springs that we had.
Aaron Lammer: And fake alt springs.
Jay Kang: And fake alt springs. I think that all it really takes is somebody basically emailing or calling one of these offices first, a lot of these shit-coins are, and trying to see if anyone ever answers the phone, to figure out that a lot of them don’t exist anymore. They are traded, they have a white paper, their website, you can go to, probably hasn’t been updated in a while, but I bet a lot of those aren’t real projects anymore.
Aaron Lammer: Do those really occupy any market share? I mean, isn’t most of the market share in the Dash, than the Iotas in those top ten wins.
Jay Kang: Are we sure that those coins, if we call the office, will it be real?
Aaron Lammer: There is someone at the office.
Jay Kang: That someone will pick up the phone?
Aaron Lammer: There is someone printing T-shirts and stickers. Bitmain is a big Dash holder, too.
Jay Kang: Oh, and I think that everything that’s shit is already dead. I just can’t imagine, our friend Doug Kim, who is in the Waves hall of fame-
Aaron Lammer: Are you including Sumo in that?
Jay Kang: Yes, yeah, and Ryo Coin. Ryo Coin, I’ve decided, is actually shittier than Sumokoin. A project like Waves, which our friend Doug Kim owns probably the biggest bag in the world of, I asked Doug and it was just like, why do you think someone is actually working on this project? What evidence do you have? And he’s like, “Well, the Discord and the so-and-so are just like.”
Aaron Lammer: How, you’re being too hard on, Waves has a whole community, they’ve valued about, there’s a whole team of people in Russia, it’s a startup. They’re not going to blow up the world, they’re just chugging along.
Jay Kang: No, no, okay. I don’t want to cause grief, but I think my point being, that a lot of volume is in a lot of alts right now, that don’t really exist, and that at some point, it might bleed out of those, or it might not. It might just be dead money. But I think that for that reason alone, Bitcoin’s dominance will go way up in the next few months, and I don’t think that because, I think the ICO craze has settled down a little bit. People aren’t as incentivized to go out and just invest in insane coins and try and pump them up, and I think that crypto-money will sort of slowly go back into Bitcoin.
Aaron Lammer: Yeah, I mean, you can make a bet that Bitcoin is too big to fail now, or it’s got enough momentum that it’s not just going to go away. I feel like the biggest question that was never answered for me during this whole year was, if I buy some of these alts, what am I buying? I understand what it means to own one Bitcoin, I’m a little unclear what it means to own some of these ERC-20 token and what it entitles me to, and what’s the long-term strategy in holding them, and I think it’s going to be hard for them to have any real power outside of being correlated to Bitcoin or Ethereum, and slowly giving up market share probably to both, unless it is, no, no, you really want these utility tokens.
Jay Kang: So, final question here about alts, right?
Aaron Lammer: Sure.
Jay Kang: Do you think that it was bad for crypto in general to have this alt explosion? Do you think it was bad for crypto to have people like you and me, who were interested in crypto, who are not very bright and are bad at investing, sort of signing onto 15 different exchanges and chasing these dumb coins around in the hopes of hitting a moon shot and getting rich. Do you think that that was bad in general for any of the crypto community, but be like sort of how seriously crypto is taken by real investors?
Aaron Lammer: No, I don’t. I mean, I think it’s hard to know what the next direction of crypto. At one point, it seemed like Ethereum was the next direction, and Bitcoin was kind of bad for the narrative, and people buying Silk Road drugs was bad. I think the sort of moralistic good-bad access breaks down pretty quickly, it’s basically a …
Jay Kang: Well, I meant not by good or bad morally, I just wanted bad for the health of the projects and the health of the economy.
Aaron Lammer: Well, I think rather than whether it’s healthy or unhealthy, I see it as a pendulum that’s swinging back and forth, and I think the ecosystem just experimented with being less than 50% Bitcoin, and giving up a bunch of the stage to the rest of these projects. Didn’t work out. Now-
Jay Kang: Definitely did not work out.
Aaron Lammer: Didn’t work out. They didn’t sell themselves, they got their shot, they got pumped way beyond what they justifiably could be valued at.
Jay Kang: Some people got very rich.
Aaron Lammer: Some people got rich, but overall, a bunch of people basically stole each other’s Bitcoin, mostly, I think a lot of people buying that were people who made a lot of money on Bitcoin, were going deep into alts, and a lot of people shock each other down. As usual, the winners were Binance, exchanges that made tons of money listing all of these coins. It’s a bit like I was talking to Chris [Dannen, my friend who does mining, and he was like, “In China, actually owning alts is just considered stupid. But there are all these companies that will provide support for your new coin that gets launch onto an exchange for a fee.”
Anyone who’s smart just wants to participate in the alt ecosystem in a way that it’s taxing it. I’m not convinced there’s a bunch of people who see a ten-year value in any of these smaller alts.
Jay Kang: Yeah, they’re just drug dealers. They’re just like, “Listen, I don’t do coke, I don’t do heroin, but there’s a whole lot of people that do, and it’s a good business to be in.” That is both very interesting to me, but it also makes a ton of sense because you look at something like Binance, and you’re like, “Wow, it really scales very quickly, it works pretty well,” despite they had some hiccups, but it was such huge volume that it was hard to imagine that they wouldn’t, but it’s not like it ever seemed like there was some sort of gospel that was coming out of those types of exchanges.
It was just like, well, they provide a service, and then they made like a billion dollars or whatever they made, and so why would you mess with that? There are these poker games around New York City, right, and they take massive rakes, which means they take money out of each pot.
Aaron Lammer They still have the poker fans that are on the 14th floor of some office building and you get off the elevator, and there’s just a game.
Jay Kang: And sometimes the guys who run the games will play in them, but they’re only really just doing that because they’re bored, they’re not trying to win the money. The actual money is in the fucking game and then the rake, and you can make tens of thousands of dollars a night doing this. But some people confusingly think, oh, they just want to set up these games with fish in them because they’re good players, and then they’ll take advantage, and then they’ll play and be like, “Absolutely not!”
It’s the four dollars every single hand or the 25 dollars every single hand that is taken out of the pot that you just won, that’s what matters, they’re just fucking bored, or they want the game to be more lively, and sometimes these guys will come in and play bad on purpose so that there’s more money being spread around, because they don’t care, it’s worth the investment for them if those same people come back day after day after day because they think that the game is better than it actually is.
So, I think with the alt economy in China or whatever, yeah, that makes sense to me, they’re the guys running the game, they’re the ones taking the rakes.
Jay Kang: And we knew that alt trading was basically a video game. The question in my mind was, is it a video game that’s going to get bigger and bigger stakes and get it more and more lucrative, or is it basically just a way to milk money out of people and pull it back into Bitcoin and the ultimate value is probably accruing to Bitcoin? Yeah, what do you think?
Aaron Lammer: I think it’s the latter and I think a lot of that value, as we’re seeing with places like Bitmain holding BCash, some of the huge amounts of money these companies are making is being held in crypto, and they have a tremendous amount of power politically over the future of these coins because these hoards they’re holding, be it Bitmain, Binance, all these companies have a lot of crypto-coins, like maybe, 10, 20% of the world’s supply.
Jay Kang: All right, so, one year, we’re one year out, right?
Aaron Lammer: Yeah.
Jay Kang: So, one year after, like, another thing I wanted to talk about in terms of anniversaries.
Aaron Lammer: That was so weird when I said crypto-coins.
Jay Kang: Crypto-coins. Some of these guys have tons of crypto-coins.
Aaron Lammer: Next time someone asks me what I do, I’m going to be like, “I host a crypto-coin podcast!”
Jay Kang: We started this podcast as optimists, right?
Aaron Lammer: You were neutral and I was optimistic, and now I’m neutral and you’re pessimistic.
Jay Kang: I don’t think you’re neutral. I think you’re pessimistic, and I’m …
Aaron Lammer: Extremely pessimistic?
Jay Kang: Yeah, I’m extremely pessimistic.
Aaron Lammer: Yeah, we’ve both been disillusioned. This show has basically been a coming-of-age story, as the wool has been pulled off of our eyes.
Jay Kang: Yeah, it’s like an existentialist French novel. We have learned that the world is all suffering. My question to you was, when we were both very optimistic, when we thought Bitcoin was the future, which we both did, or a future, not the future. Can you articulate right now as Bitcoin is at 6,000 and Ethereum is crashing and our portfolios are laughably bad? Can you articulate, still, what that vision was? What did you think was going to happen?
Aaron Lammer: I thought, and I still think, that a bunch of the money that’s held in national currencies, people would prefer to hold in some nation-less, Internet, purely digital reserve, and that reserve, as more and more people want to buy into it, will be worth more and more, and I don’t think that hypothesis has been proven wrong. If we had just bought Bitcoin when we were first interested, and never done anything else, and never changed our position.
Jay Kang: We’d be at 2x.
Aaron Lammer: We’d be at 2x, so how can you say that that hypothesis about Bitcoin has been proven wrong, it’s like, oh, it only went up 2x in 14 months.
Jay Kang: I didn’t say it was proven wrong.
Aaron Lammer: No, but it feels like we’re at a funeral, but it’s 2x over that period. The problem is we played it terribly, as usual.
Jay Kang: Okay, so, to be clear, I would say that we’re not bemoaning Bitcoin’s funeral, we’re bemoaning our own funeral.
Aaron Lammer: Yeah, and crypto, look, everything else should be ashamed of itself. It’s a funeral for Ethereum to be worth the same amount one year later.
Jay Kang: All right, to answer my own question. I will say that I thought that there was some chance, maybe a 1% chance or a 2% chance, right, that some country, large country, would convert their entire economy over to Bitcoin, right?
Aaron Lammer: I totally thought that, too.
Jay Kang: And that there would be, at that point, a real testing of whether or not there could truly be a decentralized currency that not only was being used by people on the dark web, but could be used for anybody who didn’t want to buy into state bank power. I never thought that the entire world would go over to cryptocurrency or the entire Internet would be.
Aaron Lammer: We’re talking about a Venezuela, a Zimbabwe kinda country.
Jay Kang: Yeah, a small country with a small economy, but that there would be some inflection point where a political event would lead to some proof of concept that would allow for people like yourself or I who don’t necessarily enjoy spending a lot of money, are interested in other types of anarchic systems, to participate at some level in that system. And that doesn’t mean that you and I are able to go to an anarchic coffee shop in Williamsburg around here and buy a coffee.
Aaron Lammer: I don’t want to go to that coffee shop.
Jay Kang: Yeah, I don’t want to go to that coffee shop either, but what it does mean-
Aaron Lammer: Are you talking about the Park Slope Food Coop right now?
Jay Kang: Definitely not. They’re the last ones.
Aaron Lammer: They should tokenize.
Jay Kang: They’re the last one. By the way, their token would be very popular, but they’re the last ones who would think to do that, but I thought that there would be some future in which maybe you or I could do something like, oh, I don’t know, like rent an apartment with cryptocurrency or something like that, or that there would be listings that were like, we take crypto.
Aaron Lammer: That’s coming, though.
Jay Kang: Or if we, like-
Aaron Lammer: You don’t think that’s coming?
Jay Kang: On that, I thought that probably Bitcoin’s price at that point would shoot up, because then people would be projecting that the whole world is gonna go to crypto.
I also thought that there was a chance that people would start building Dapps and that they would start building products on top of Ethereum that were really exciting, and that were really interesting, and that use smart contract technology in a way that started to prove that old systems did not really necessarily have to work. So like something like flight insurance, which they tried, or something that is a small transaction that requires no intermediary really. That there would be small amounts of proof leaking out that this was working. And that, I will say, of everything that happened in last year, is the most disappointing to me.
Aaron Lammer: Yeah, I would agree.
Jay Kang: Because Ethereum has been more disappointing to me than Bitcoin, by far. And Ethereum, the only thing that happened was that a bunch of fucking scammers made a whole bunch of funky ERC20 shit coins, flooded the market with a bunch of nonsense and a bunch of coins, completely converted and destabilized the idea of mine coins themselves, and the sort of elegance of that, and there’s nothing good that came out of any of it. And I think that Vitalik has been actually, also, a pretty shitty leader and all of this, because all he does is fucking whine on twitter. There’s no actual leadership to Ethereum. He just like gets in these dumb twitter fights, and I think that he needs to, at some point, show somebody something that is actually real, and not just talk in abstract terms about what it is. There’s no fucking product, put out a product.
Aaron Lammer: Well, before crypto was crypto, I feel like VR was crypto. Magic Leap is just starting to show it’s eye goggles now, after blowing millions. I’m like, they’re kind of cool, they’re not quite there yet. Google probably like blew double that on Google Glass, which was a failure.
Jay Kang: God, do you remember seeing people in New York wearing Google Glass.
Aaron Lammer: Shit mostly fails, like Google Glass, like most things are like, yeah, that was interesting. I’ll remember that. I still will remember Google Glass forever, but it didn’t work. And I think we have to ask now, how many years of this not working do you think people will put up with?
Jay Kang: Ethereum?
Aaron Lammer: Yeah. Well, I mean, look, in the case of VR, I think it will eventually arrive, and I think, even though it’s a disappointment right now/People are still going to keep investing in it. The next Magic Leap is going to be able to raise money to do some other crazy shit and it’s going to get better and better. And so far, the next Ethereum, the EOS’s, the Tezos’, the 0x’s have been able to raise huge amounts of money and people are clearly willing to keep trying this playbook. I guess I’m wondering, with a one year width in front of us and a commensurate price flat line, how long can it go on like this without something to show, do you think?
Jay Kang: Oh, I think they’re like approaching the Rubicon quickly. And the reason why I think that is because, if the price, and this is close to what you were saying before, which I disagreed with at the time, but in reality-
Aaron Lammer: You’ve come around now.
Jay Kang: No, I mean I was really just being an argumentative at first. I generally agree with you.
Aaron Lammer: You were hot from a previous take.
Jay Kang: Yeah.
Aaron Lammer: We can’t air condition here while we’re taping, so it’s hard to cool Jay down down after a particularly hot take.
Jay Kang: If the price continues to go down.
Aaron Lammer: Sure.
Jay Kang: Under 200, let’s say.
Aaron Lammer: Wow.
Jay Kang: Which is not outside of the realm of possibility right now.
Aaron Lammer: Absolutely. Absolutely. We could talk about it.
Jay Kang: There’s almost nothing that saves- at that point, I think that the whole thing is dead.
Aaron Lammer: Wow.
Jay Kang: Because I don’t see what turns it around. There is not a core group of people who believe that the only way to create a better world and a just world is through a Ethereum in the same way that there is through Bitcoin. There is no group of people who have basically decided the entire world should run off Ethereum in the way that there is for Bitcoin. There is not the same years long history of the cryptocurrency or the myth of Satoshi Nakamoto the way that there is with Bitcoin.
I would say that really the biggest problem that Ethereum has going for it, going forward, is that its greatest strength for the first year and a half was Vitalik. This is me doing like sports talk radio, WEEI, and basically-
Aaron Lammer: And when we come back, we’ll tell you what Vitalik has to do to save a Ethereum.
Jay Kang: I would say that the Vitalik right now is the biggest problem with Ethereum.
Aaron Lammer: He’s definitely, of all the figures we’ve named this year, I do think he had the worst year. I think what he’s trying to do is fundamentally harder, like I think smart contracts are not twice as hard.
Jay Kang: Yeah, but is he even working on this shit? Like we never know.
Aaron Lammer: I don’t really understand how this Dapp, Ethereum amusement park world is suppose to self organize. I think the real narrative of this year, Jay, when it comes down to it, is about me and you becoming Bitcoin maximalists.
Jay Kang: Yeah.
Aaron Lammer: We came in making some snide comments kind of sarcastic, and I think we both find its politics and underlying ethos somewhat horrifying, but I think we’re like pragmatically, truly Bitcoin maximalists. I think we both have a begrudging respect for it’s rationality and it’s single mindedness.
Jay Kang: Yeah. It’s like when you’re faced with two choices and one of them requires you to sort of live horribly and squalidly in a place that you hate, but at least you know it’s real. At least Bitcoin maximalism is an ethos that’s real, and we can see a future in which it can take over, and we probably would not want to live in that future. However, we believe that the people who are behind Bitcoin believe in that future.
There is nothing real about Ethereum right now. With Vitalik, all he does, as far as I can tell, is tweet and go to conferences.
Aaron Lammer: What else do you expect them to do though? Like sit down and start coding Sharding himself?
Jay Kang: At least sit with the people who are doing that, try and build a product, hype something. Do something other than just fight with people online. That’s all he does. How many tweets did Vitalik put out this year in which he was complaining to Twitter about Twitter? That was like half his fucking feed, which is just like, hey, you need to stop the scammers on here. There’s no vision for anything. It’s just a guy literally sitting there on his phone texting all day long, tweeting, getting mad at Twitter because it doesn’t work the way that he wants it to, and there’s nothing else. And that is really bad for Ethereum. And I think everybody else kind of knows it.
Aaron Lammer: Well, I think he’s in a tough position. To compare them to another person who probably should get off Twitter, Elon Musk does not project confidence to me on Twitter, but I do believe he has a plan in what he’s doing. And all he has to do is just tell people and they’re going to do that plan.
Jay Kang: Yeah, but Elon Musk, he’s released things. He did all the boring company stuff.
Aaron Lammer: Yeah, well that’s what I’m getting to. It’s like it’s easier to be an architect in China. You just say we’re tearing down those houses and we’re building this and there’s no regulation, so you just go for it. And that’s what Elon Musk can do within Tesla. He can just acquire a solar city. He can just say we’re going private at 4:20 and regulators be damned and my lawyer is going to have to clean this up. He just does it.
Vitalik is not the CEO of the entire Ethereum amusement park. He is the leader, kind of, of the Ethereum project, which is this sprawling decentralized, all of these tokens are built on top of it. I think it’s a much harder place to govern. I think that we’ve seen that a decentralized currency you can work, but we haven’t seen that a massive sprawling, decentralized, open source project of the Ethereum kind can really work from an organizational standpoint. And right now it feels stalled out.
Jay Kang: Yeah. Then he should publicly recuse himself from leadership.
Aaron Lammer: Oh yeah? Wow. Just stab himself with a sword?
Jay Kang: No, just say look, I’m moving onto another thing.
Aaron Lammer: Yeah.
Jay Kang: And I believe in Ethereum, but I think my presence is doing more harm than good. And the reason why I would feel that way is because, I can’t tell you over the past six months, one thing that a Vitalik has done that’s good for Ethereum.
Aaron Lammer: Okay.
So we’ve talked about several projects that have not done well over the course of this year. What has impressed you and who are the winners of this year in crypto?
Jay Kang: Jihan Wu, CZ from Binance.
Aaron Lammer: Yep.
Jay Kang: And the Bitcoin maximalists, because they were vindicated.
Aaron Lammer: Yeah. I have to say that- in the same way I don’t like to be like, yeah, the Yankees have a good team this year. I don’t like that the carnivores and their like….The Jordan Peterson fans who like were previously trolling Jay were right. But they were right about Bitcoin. And I think they had a great year, and I rang the bell for them.
I think, to me, the winner is also CZ from Binance, because we went into the year thinking Coinbase was like ground zero, Mecca for all things crypto. And when the big spotlight was shined and Coinbase in the first roundup, it was constantly crashing and then it was involved in weird, shaky politics around adding new coins. It definitely was not a firm, solid year for Coinbase, particularly I think, because Brian Armstrong is clearly a Eth head.
Jay Kang: Yeah.
Aaron Lammer: And but really is backing Eth, and Eth had a bad year. If Eth was like running the world right now, Brian Armstrong would be perfectly placed. And I think he made the right bet, I actually think he was candy there. But the fact-
Jay Kang: Sometimes it just doesn’t work out.
Aaron Lammer: Sometimes it doesn’t work out, and I’m not sure we need some American Coinbase esque company. Maybe the future is some kind of a Binance solution. Or, going even further than that into decentralized exchanges. So anything else over that year you didn’t get to talk about?
Jay Kang: No, I think I’m okay.
Aaron Lammer: Yeah, I mean it’s interesting. I thought we’re going to talk a lot about price, but you don’t really remember price per se. You remember the narrative and how it felt at each of these moments. And there’s a term in the renaissance and the ancient world, they speak of the saeculum, which is the span of time from right now until everyone who is alive right now who is experiencing the events of right now dies out. So we’re at the very tail end of like the saeculum of the Holocaust right now, and World War II.
Jay Kang: Really?
Aaron Lammer: Yeah. Well, there’s still people who were alive during World War II who are alive.
Jay Kang: No, but it seems like we’ve got like 20 more years of that.
Aaron Lammer: But people who have like a real strong memory or people who say fought in World War II. We’re reaching the end of the saeculum of the soldiers of the Second World War.
Jay Kang: And definitely of people who lived through World War One.
Aaron Lammer: Yes.
Jay Kang: Yeah.
Aaron Lammer: And so, I think of these saeculum of various crypto buyers and people who are crypto interested, and I think the saeculum of people who got in when we got in or before us is still ultimately optimistic. If you just held some Bitcoin, you did okay. But if you started messing around with some exotic alts, probably did terrible, and that’s like where I am, but I can’t really blame anyone except myself for that. If you’re from the saeculum that started after that August, higher up into the bull run. I think you’re just like, fuck this shit.
Jay Kang: Yeah.
Aaron Lammer: And that’s a story I want to keep our eye on is, did we kill off a whole generation of new buyers who were just like, that was the dumbest shit ever did. I lost half my money. I never had a good period. And also maybe it was market manipulation in the first place that I was buying at 15 thousand, or whatever.
Jay Kang: Those people- I think we can conclude two things. So first is that, that definitely did happen to a large number of people, right?
Aaron Lammer: Yep.
Jay Kang: And the second thing I think we can include is, those people are never coming back, but-
Aaron Lammer: I think some of those people are still hate listening to this show. But they’re not buying-
Jay Kang: They’re not going to want crypto.
Aaron Lammer: They’re not buying right now when they actually should probably be buying. This was the buy-
Jay Kang: First of all, I really disagree that you should be buying right now.
Aaron Lammer: Well, if you were like a previous buy the dip person, this is about as big a dip as you can imagine.
Jay Kang: I would not be buying right now. This is not investment advice. I would not be buying right now.
Aaron Lammer: Well, they’re definitely not buying.
Jay Kang: It is interesting thinking about it in generations like that. I tend to agree with you that the people who bought when we bought probably understand the technology a little bit better. They’re a little more curious about it ,and they have a vision in the way that you and I have vision, however flawed or stupid, of what adoption was going to look like. And then, people who bought at five at 15 thousand were coming in based purely on price frenzy. And so they don’t even really think about crypto as much. And so, it’s easier for them to dismiss it, I think.
Now does that mean, in the end, that we are smarter than them or that we’re more thoughtful than that? No.
Aaron Lammer: Definitely not.
Jay Kang: It might actually be that we’re occupying more of our brains with something completely stupid.
Aaron Lammer: I mean also if it just keeps going down from here, we can just add ourselves to the worst generation and just say, yeah, we bought at a high. Bitcoin is not worth that much. I don’t think that’s gonna happen. I am a little surprised to not see Fomo Kang out for sub 300 dollar Ethereum out here, but I guess he wants a better price.
Jay Kang: Fomo Kang is gonna come with Bitcoin hits three thousand dollars.
Aaron Lammer: Wow. Oh, right. Because Fomo Kang is a maximalist now. He’s like a quasi no coiner, but he’s like, if I must, I will eat steak and dine on Bitcoin.
Jay Kang: Fomo Kang is slowly weeding vegetables and grains out of his diet.
Aaron Lammer: Very good. I’ll keep my eye on that.
Well, let’s hope we’re still doing this in one more year.
Jay Kang: That’s right.
Robot Voice: This episode of Coin Talk was taped Tuesday, August 14th at 8:00 PM Eastern Standard Time. The Bitcoin price index and six thousand and 80 dollars.