CoinTalk 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 firstname.lastname@example.org)
- Tether changes its TOS to show that it doesn’t actually have the money
- The bull case for Facebucks
- Bitconnect and the Christchurch shooting (“Making Sense of the New Zealand Shooter’s Mention of BitConnect” by David Z. Morris, BreakerMag)
Aaron: I feel like we haven’t really gotten to talk that much about the Lightning Network on the show. I’m actually pretty excited about it, but I haven’t used it very much and I feel like this show, we generally try to be experiential.
So we should try to have some Lightning experiences. That’s one, getting tipped is one experience we’re interested in. I think also we should try to publish an episode to that Bitcoin satellite somehow.
Jay: Yeah, I agree. Yeah. The Lightning Network is an interesting thing for me because, there’s two narratives in crypto. One of which is that we should focus on the technology and that we should billed.
Jay: And at the same time the same people who were screaming, let’s not talk about the market but let’s just talk about what’s being billed. They don’t give a shit about the Lighting Network. It’s almost as if they’re arguing in bad faith, and they also care about the market price as well.
But yeah, it’s been something that has been around since you and I first got into cryptos is talk of this great Lightning Network and experiments with it. Right?
Jay: And it seems like they’re really rolling stuff out right now. So I think that as a curious crypto people who are in the service of audience, we should probably try, and figure out if this thing works by asking people to send us money through it.
Aaron: Yeah. You’ll, be confirming that the Lightning Network works by sending us bitcoin on it, which is a win win for us. But also I’d like to say when we started this show, I think our predominant belief, in terms of the things that we are going to test out and try would be D apps, heavily on the Ethereum Network or on some of these emergent D apps networks.
The bottom of the pit I’m describing is Tron. And it turns out that there’s like other ways to make crypto products and even ones in which you don’t have to issue a bullshit token to make them work. And Lightning seems to me to be where a lot of that activity is happening.
People actually making things that you can actually use that have an actual function. So if you’re listening, send us an email. email@example.com. If you’ve had an experience with the Lightning Network that you think we should check out. Because I don’t know all the stuff that’s happening.
The tip.me stuff kind of blew up when Jack Dorsey from Twitter and square like tweeted out. I think they were doing a pass the torch thing where one person tips the next person and it’s kind of a chain letter. So I mean, look we were pretty cynical on this show, but I think this stuff’s kind of exciting.
Jay: Yeah. I would also say that I think that the Lightning Network, I think that they almost have a problem with being too old, which is insane to think about, but they just changed their name. I think people will probably talk about it much more. But I do think that given that crypto, attention spans are basically shorter than social media attention spans.
And that new thing gets introduced every six hours or something like that. I just think that any sort of thing that incrementally changes and builds that way, is that a bit of a disadvantage, even if it is the most important technological thing going. Which arguably the Lightning Network is.
Aaron: I’ll just make one counterpoint, which is I think when the Lightning Network has totally mature, someone can write in and tell me I’m wrong. We won’t even realize that we’re using the Lightning Network. The Lightning Network will operate as an under layer on things like this tip jar that we just announced tip.me/cointtalk. And did you even know that tip.me was a Lightning thing when it came out?
Jay: I did. Because I think Neeraj told me.
Aaron: Sure. I guess I’m saying that I can imagine that there’ll be all sorts of crypto experiences in which we may or may not know that the Lightning-
Jay: Sure. For sure.
Aaron: … Network is allowing it to happen.
Jay: If they make actually functioning magic the gathering type game, with individual cards, which a lot of people seem to be developing given our email inbox. And some stuff that I’ve read around there. One of the visions of the Lightning Network I think, or one of the things that they talked about was that you could run a game pretty efficiently on something like the Lightning Network.
And so I don’t think that when that game comes out there’ll be … Well here are your cards and here’s the lore and here are the hip points per card and this is how you tap manna. And also here’s a lengthy explanation of what the Lightning Network is. It’ll certainly be hidden underneath something.
Aaron: Absolutely. I mean the last time we saw the Lightning Network and the wild, it was that screenshot, I think it was a prototype for a video game or basically there was a door in the game. Those was kind of like a doom style, like a dungeon game. And there was a QR code on the door, and you could like fire your phone at it.
And it would send a micro transaction that opened the door that jumped from the video game world to the real world too, all over the place. And it’s all controlled by some sort of a Lightning law on your phone. I’m going to say, I see myself doing that before I see myself visiting the Ethereum amusement park.
Jay: Yeah, I guess it just depends on the quality of the game more than anything for me.
Aaron: So we do a little news.
Jay: Do you want to talk about Tether?
Aaron: Yeah. I feel this story where … The story seemed like it would have been bigger. If you had asked me one year ago, if you had outlined what happened, I would’ve been like, “Holy shit, the market’s gonna lose 50% and people are going to lose their shit.” Actually this was, I would say, not even the biggest crypto story of the day.
Jay: What was that day?
Aaron: It was last week. Sunday, I think. I mean, it was literally not big enough story that I think I even caught it on the first day. It was the third news item of the day. So basically Tether, we all know Tether, we’ve talked about Tether on the show Tether, which is closely allied with a Bitfinex has been issuing a huge, huge amount of Tethers, which are often used to buy bitcoins.
And some people believe that the whole bull run was a Wizard of Oz style illusion created by a perpetual Tether printer. So Tether has been refusing audits for a very long time to prove that they have the US dollar reserves to cover all the Tether out there. Right? There should be one US dollar in a bank account somewhere forever Tether that is in the world.
And they basically changed their terms of service to say, well, it’s not exactly one US dollar in reserve, it’s just reserves. It could be a variety of things.
Jay: That definitely contradicts the messaging they were putting out for the last year and a half, which is that there is actually a dollar for all of this, which everybody kind of rolled their eyes about. But generally I don’t think that anyone really believed them. And so maybe that’s why this wasn’t big news.
Because it’s like, do you know any person who really thought that every Tether was backed by a US dollar in some faults somewhere like Scrooge McDuck or something like that.
Aaron: The only person who’s made that case or brought that take to me are like a few crypto people I know who are always kind of on their smoke here, but no fire tip. Where there are like, “Oh mainstream media always wants to blah, blah.” Those are kind of the only people defending Tether.
And when they defend Tether, they don’t really have their heart in it fully. It feels like, sometimes. Where they’re like, “No, no, they totally have the reserves, you guys.” And I do feel there’s a certain degree to which … Here’s are things I didn’t know one year ago. I didn’t know that this was something that basically everyone was doing.
When we were talking about the Quadriga’s story, which I think it’s going to keep coming up. Canadian exchange that became insolvent. When you deposit it to Quadriga, they gave you one quadriga buck in your account. So there is a lot of prior art for the idea that when you put a dollar into a crypto exchange, it no longer represents a dollar.
It represents a fun buck and that fun buck is supposed to be back probably by a dollar, but it’s always a little wishy washy. Exactly what that means.
Jay: Yeah. I guess my take on this has never changed, which is that I think Bitfinex and Tether, were engage in some fraudulent activities. This is my opinion. This is just from the facts that I’ve gotten. It is not an accusation and I don’t really think that it matters as much anymore.
Because I think that basically the price is low and the types of actions that people were talking about don’t happen as much anymore. And I don’t know, I guess like, do you feel this way where every time there’s a huge price motion in the price of Bitcoin, I generally wait six weeks or something like that to try and figure out what’s happening.
And then there’ll be something convincing that comes out that sometimes it’s more convincing than others. Remember when Bitcoin, that article came out that bitcoin is only being propped up at 6,000 by a super airdrop festival
Aaron: Did we break that story?
Jay: I think that most things probably have multiple explanations for any price movement. I don’t think that super airdrop festivals, is the only think keeping it up. And so at this point Tether I think is just a story because it keeps, you know, I guess it’s not even a story anymore, but yeah, I have a hard time really getting too worked up about it.
Aaron: Well, okay. If I take the canyon logic that I’ve learned over so many episodes from you, I believe the canyon logic would be that the Tether being not in possessing of enough reserves to cover all the Tether out there would be previously priced in, right? If our insinuations that people already knew that Tether was bullshit.
Then the $3,900 price of bitcoin right now is with the knowledge that that previous bull run to 20,000 was largely funded with bullshit Tethers. And there is a weird way where we can just say-
Jay: I would not say largely. I would say in small proportion.
Aaron: In small proportion funded but that information had already come out. So whatever reaction the market was going to have, they already had a chance to have. And it seems like the market is kind of comfortable now with all this Tether out there and this is what always comes up when we talk about Tether.
Where I’m always like, “So are we just going to go along and keep doing this and then it’s going to come back to bite us in the ass again, like it bit us in the ass many times before.” There’s never a Tether story that like resolve. So it’s like a soap opera that just keeps going.
Jay: Yeah, it’s true. I mean, I think that it would probably help the community if people just shunned it and stopped using it. But obviously it’s useful for people who use for Bitcoin in much more practical ways like money laundering than you or I do. And those people don’t give a shit about the health of crypto or the crypto community.
And so it’s just going to stay around because it’s useful for those people. And those people matter more than me, you or like 2000 randos on Twitter. But I don’t know, let’s move on to Facebook.
Aaron: Okay. Facebook, this is a couple of weeks ago announced a big pivot towards privacy, which I feel is … I can’t even think of what pivot in your own life with signal a pivot is extremist as this Jay. I can’t think of someone who could more dramatically changed the company.
Jay: I would say, what if I became like a narco capitalist Trump supporter who is screaming on Twitter all the time about, well it’s not so far away from where I am right now.
Aaron: Either that or a deep theory based academic.
Jay: Oh, that would be the base. I have basically, I’ve become such an anti intellectual and I don’t believe in reading anymore. And so yeah, if I like less-
Aaron: If you become like a tenured Yale professor.
Jay: Yeah. Or like one of these people who graduate students on Twitter who just say yes, but we should … Somebody made this joke on Twitter earlier, which is just the review of every book now, now that everyone is doing this sort of … There’s this generation of cosplay media socialists out there.
Every book review is like, let’s consider this structurally or what is a materialist implications of this? And that’s it. If I turn it in one of those people, yes, I think that would be the opposite of who I am right now. But it would still not even be close to the same amount of pivot as Facebook pivoting to privacy.
Aaron: A lot of those lines, there was a … I’m a big fan of the website Wirecutter which is now owned by the New York Times. Founded by … You’re friends with Brian Lam, are you?
Jay: Yeah, I’ve met Brian a few times and he lives the life that I wish that I was brave enough to perceive from Mike. He lives in Hawaii. He has 43 surfboards and he just surfs everyday, which is what I used to do. But I didn’t have the money that Brian got from selling the Wirecutter
Aaron: Well so he’s not associated with Wirecutter anymore. So I’m not insulting him by making fun of this article. There was an article published in the Wirecutter that was, is it unethical to use credit card rewards points?
Jay: What was the argument that it was, ’cause I imagine they posited an argument [crosstalk 00:17:24].
Aaron: The argument it’s a similar to one that you just posited of the socialists larping which is, that credit cards disproportionately target the poor with fees. And those fees go to pay the rewards that are given to people who use American Express and various other premium tier credit cards.
Jay: That’s fair. Yeah, anyway that’s fair.
Aaron: Is it fair? I’m just not used to a class article and the place I usually go for vacuum cleaner reviews.
Jay: Yeah. It’s fun. That’s what I use.
Aaron: I’m not saying that, I’m sorry. I don’t mean to say they are rogue. I mean to say, “Wow, this is not the kind of content I associate with this website.”
Jay: Did you write an angry email?
Aaron: I did not.
Jay: Everyone do ESPN talks about politics at all. And they’re basically, ESPN has become cock liberal site.
Aaron: Actually what I did was I was like click through a link on it to like, so which credit card will get me the most of these unethical rewards points. Okay. So a lot of people, when Facebook’s did this, were like, “Oh my God, lol mark Zuckerberg. Like that’s ever going to happen. You’re the biggest liar ever.”
And I actually tend to look at Mark Zuckerberg not as the biggest liar ever, but as the biggest copycat ever. And one of the truly, truly successful cloners in history. If we look at Facebook right now, I would say that Instagram stories is propping up a huge amount of the cathedral.
Jay: Oh, yeah.
Aaron: And that is literally just Snapchat cloned to the upteenth degree. And I didn’t even use Snapchat. So I’m a second hand consumer of this stuff. But when I heard this and then I sort of flashed back to our previous conversations about Facebook’s crypto aspirations, which also were met with, lol that’s the dumbest thing I ever heard.
It kind of started to become clear in my mind is a picture that this largely Asian idea of a private encrypted messaging app with a funny money wallet that’s a branded to some chat app.
Jay: Yeah, yeah. I saw that this morning they introduced the Instagram idea for it, right?
Aaron: Instagram is going to have sales within it.
Jay: You can buy a Kylie Lip Kit from Kylie, by clicking on some link on Kylie’s Instagram page, I think is what they were doing. And that was the example.
Aaron: They’re also acknowledging that Instagram is moving away from the idea that being a social network to being a place that you go to engage with celebrities and buy stuff. And if we assume that Zuckerberg is pretty good at cloning features, and we also know that if you go to China right now, no one pays for anything outside of their phone. I’m not sure this product seems so far fetched. It’s like Facebook messenger with a crypto wallet. Right?
Jay: Well, one thing will make you feel better about it, which is that the person who is in charge of Instagram right now, the other two things that he did at Facebook was the Facebook phone. Do you remember that?
Aaron: That did not go well.
Jay: Yeah. And he ran newsfeed between 2013 and 2017 which know, I think Kevin Roose made the joke that was really a completely calm and normal time for newsfeed right before the election.
Aaron: I mean, I guess in that sense you could argue that he was too successful to flag-
Jay: Too successful.
Aaron: I mean, if-
Jay: Arguably destroyed six countries.
Aaron: I mean, if his goal was to dominate your eyeballs, he succeeded, not my personal eyeballs, Twitter won that war for me. But I think in the world war for eyeballs, newsfeed shocked and awed during that period.
Jay: Don’t you feel though that the amount of engagement on newsfeed would have been the exact same without the … First of all, I think all this Russia part thing is pretty overblown. The fake news thing. But I don’t know if you get credit for having more eyeballs on it because you’re seeding fake stories maybe. But I find that hard to believe.
Aaron: Well, I think what he did, is when you give it over to the algorithm, it just picks what it once. I mean that’s the legacy of that era. And it seems Facebook realizing that that’s completely untenable now and they’re looking at the entire sea of what to clone next. What is the world?
Aaron: I’d say it’s kind of bullish that privacy encryption and crypto is part of that.
Jay: Yeah. No, I think that’s good too. I just don’t feel … I agree with you that it’s a total copycat thing. I agree with you that will probably work, because it works so well in China and so many people are never going to leave Instagram.
Aaron: And Facebook’s not in China, so it’s not like they’re competing against people who are doing this already.
Jay: Yeah. And it makes … I mean look, and if there’s a crypto layer to it all the better for crypto I think. But I just don’t why wouldn’t you just use PayPal or something like that at the start so that people have an easier way of onboarding on to this.
Aaron: Well, because then Facebook would be partnering with PayPal, which is like another publicly traded company that has its own agenda.
Jay: So you think they’ll do it all through Facebook coin?
Aaron: Yes. I think it will be all in house and I think it’ll be crypto based. And I think the entire goal of everything Facebook does is to ensure that you have to have a Facebook account. So I canceled Facebook last week, I’ve done it before, and then I’ve accidentally reactivated it, I turned it off. And-
Jay: I accidentally reactivate every three weeks.
Aaron: It’s a race to see what the first thing that forces me to reactivate is. Will it be an incoming Facebook message from a potential Coin Talk sponsor, could happen. We’ll it be that I need to get into a Facebook group to look up some information? Possibly. If it comes to be that I need to like check out, right? So I still have an Instagram account.
But if I have to check out for something on Instagram and then it forces me to need my Facebook coin, I can very easily see a sequence of events, be it in the messaging or wallet sphere. Where I’m like, “Ah, I guess I’m going to have an active Facebook account again.” Womp, womp, womp.
Jay: Yeah, yeah. No, it’s impossible to delete. I mean, honestly for me it’s difficult because I’m a reporter still and I need to contact people and a lot of people are only on Facebook. I’ve tried in the past to delete and I think you’re right. Even Spotify, the first time I signed up for Spotify is Facebook.
Aaron: Classic example.
Jay: And so it’s either like, “Oh, I can start a new account and link everything new.” And it just, I guess it’s just not worth it, you know? I assume that everybody is spying on me anyway and I guess I’m in the proportion of Americans who just feel that they’ve given up on privacy.
The only thing I won’t do is like get a smart speaker. ’Cause I just find that to be creepy, but it’s not because I think they’re going to steal any information that they haven’t already stolen from me. And I do have a question there, you have an Nintendo Switch, right?
Jay: Okay. So as you know, if you want to buy a Nintendo Switch game, it’s the same system. You can’t just put cash in, there’s an intermediary where you have to buy like Nintendo points or something like that. Right?
Aaron: Same thing on PlayStation. Neither of them will take your money directly.
Jay: Same thing on PlayStation. Yeah. And same thing on EA Sports origins. If you’re a PC gamer like myself, and you have Apex Legends, which was this new free game that everybody is playing and today the Battle Pass comes out and you want to buy that Battle Pass. You have to buy Apex coins, right? You can’t just buy regular coins now.
Aaron: Can I pause you here for one second?
Aaron: Say that whether it comes to PlayStation, Switch or what’s the one you use? Steam, where do you buy the PC one?
Jay: Yes, it’s-
Aaron: Steam bucks or?
Jay: Yes, the Steam … I think steam just uses your PayPal account. This is like EA Sports.
Aaron: Okay. All of these companies, massive publicly traded companies that are taking millions and millions of dollars in gamer money. No one is going, do they have the reserves to cover all of those Switch slash PlayStation buck, not an issue.
Jay: That’s true. The scam there obviously, I think or at least obvious to me is that you can buy these things in certain increments and sometimes you just have some leftover. Right now I have 400 Apex coins leftover and there’s literally nothing I can do with it. It equals like $4 or something like that.
And I will probably never spend it. And that’s $4 at the game has that I didn’t spend and I got nothing in return for, but why couldn’t Instagram just do something like that? Why do you need a blockchain, like these gaming systems do massive amounts of transactions, right? Don’t you feel sort of entering a crypto layer to it will both add some sort of weird regulatory attention at first. And we’ll also scare off some people.
Aaron: Possibly. I mean, what you’re describing our consumer to business transactions that are handled through a credit card. So they’re pretty sanitized vanilla transactions. But I think there’s a whole spectrum of transactions that get shadier and shadier and more anonymous and more cross border.
And even the example you brought up of why not just tack PayPal or Venmo onto it? I was just buying these stickers that you put on the OP One synthesizer so you know which keys is ’cause they’re kind of weird. And I was from Russia and they don’t have PayPal in Russia. Russians can’t accept PayPal unsurprisingly I wouldn’t want to go to Russia.
Jay: Is that true?
Jay: I feel like I sent money to a Russian guy that got converted into rubles on PayPal actually. I’m sure of it.
Aaron: Well, there you go. I mean, I think there’s probably a way to use PayPal in Russia, but this guy who was selling these stickers was on some weird off brand Russian PayPal and I was like, not going, not worth it to get these stickers. So I think that Facebook is a trusted brand and that mean something here.
Facebook, you’re also not worried that like Tether, they can’t cover their reserves for dollars deposited in it. And I just think that they … It’s the most valuable, the Facebook if they own the biggest thing. Think about messaging. There’s 10,000 ways to message. Well why does Facebook need to use Facebook Messenger?
It’s like, well, ’cause Facebook Messenger is one of their core properties. It’s one of the main things of value that they have and people have it everywhere. You can go to a village that has limited electricity and people have access to Facebook Messenger. So I think that the promise of the Facebook coin, I don’t know that it has to be crypto, although that does seem to be the flavor of the year.
But if you have Facebook crypto, it’s going to penetrate to corners of the world that have very, very few services.
Jay: Yeah, sure. I did-
Aaron: Can I just make a bullish case for the Facebook coin accidentally.
Jay: That’s why I was just like, sure. I think that at the point where if your vision of it is that you could, let’s say, I load up $300 of Facebook coin. And then I go to a cafe in Phnom Penh and they’re like, “We take Facebook coin.” And then I just use that Facebook coin is that the vision that you’re thinking about.
Aaron: Well, here’s what I think the vision is. So you get to Phnom Penh, right?
Jay: Yeah, have you been to Phnom Penh?
Aaron: I have been to Phnom Penh.
Jay: Yeah. Did you like it?
Aaron: I did. I like Cambodia a lot as a whole. I would say maybe Phnom Penh was probably not my favorite place in Cambodia, but it’s pretty dusty.
Jay: Yeah. Do you know Spencer Hall, the college football, Twitter guy for SB nation? He tweeted something about bars that you walk into, walk in the door, do a straight 180 and walk out. A lot of those are in Phnom Penh. I was like, “Yes, I have been to those in Phnom Penh.”
Aaron: I agree. I would say that there was an entire genre of music and it’s American and European music, but it’s music that would be playing at a bar and Phnom Penh.
Jay: Yeah, exactly. I also know that music. I enjoyed Phnom Penh quite a bit, but I certainly had two moments walking around with my wife where I walked into a bar, did a straight, heel turn and walked straight out of there.
Aaron: It’s one of the few places where I’ve seen someone vomit at the bar and not be ejected from the bar or not in any way really stopped their evening. Just throw up on a bar. Keep going. So me and you are 22 year olds backpacking after our junior year of college.
Jay: Where are we going?
Aaron: We just rolled into Phnom Penh on the bus. Okay. So first we’re keeping our money, maybe 50 years ago we would’ve had traveler’s checks, right? But we’re just keeping some money on our phone. Right? ’Cause we heard that in Asia. Lots of people take Facebook coin and the same way that like you could generally expect, someone might take PayPal.
Let’s say Facebook coin is that plus 10%. So me and you go to the hostel, right? And the guy’s like, “Okay, you can settle up, you need to settle up. It’s going to be like you guys are staying here for five nights. That’s $120, right?” All right. So we can go take out that money at an ATM and cash, go figure out the fucking rates and go and pay this dude.
And that’s probably what I did when I was in Phnom Penh. I think almost everything was operating on a cash basis then. And there’s a possibility that this guy takes credit cards, but let’s say they … I’ve had many experiences traveling where credit cards were either a not an option or are they were a very difficult option.
I’ve used credit cards in Nicaragua where they write down the number and they take the pink emboss of the credit card. And then they run it, they take it in a boat and go run it in the main city. So even credit cards aren’t necessarily available on these places. But let’s say all you need to do a transaction on the Facebook network is a working cell phone connection.
The hostel takes are 120 bucks and Facebook coin. The hostel has a Facebook page for the hostel. I have a personal one. We just link up on Messenger and pay.
Jay: That’s not a bad idea. I mean, I can see that and the ubiquity of Facebook at that point, especially in countries like Cambodia, I think will help. I mean, I could totally see that.
Aaron: And then we’re at an ATM. I’m like, “Hey Jay, could you take out 100 bucks for me? And I send you Facebook coin or I pay the hostel and you settle up with me on Facebook coin.
Jay: It solves the main problem. Right? The main problem with crypto is what Jim [Slowveki 00:33:12] my friend who I see more or less every week on Sundays. His article that talked about the old wild west of money and how they’re like 30, 50 different types of currency. The problem with going to Phnom Penh with one type of coin is that you don’t know if the place that you want to stay expects that type of coin.
Let’s say in a post crypto world, right? But you can be relatively certain that you will find the type of hostel or place or room the people will have Facebook and advertise that they have Facebook and will most likely take Facebook bucks. I can see all of that. Sure.
Aaron: Here’s another argument about it, which is people who don’t even know they take Facebook bucks. We’ll take Facebook bucks, because Facebook bucks will come with every Facebook account. So if you encounter someone and they’re like, “I’m totally unfamiliar with the Facebook bucks six system.”
You’re still going to be able to send them Facebook bucks and then that’s going to bring them into the Facebook buck economy. Which to me, I hate to say this, because I believe in Bitcoin far more. But that’s a lot more people are going to get onboarded that way, I think then people would have to go to Coinbase and open a wall etc.
Jay: God. That’s, yeah.
Aaron: This is kind of a depressing.
Jay: But what we were talking about there is not cryptocurrency. What we were talking there is internal-
Aaron: Yeah, PayPal.
Jay: … blockchain currency that’s used by like the most centralized power in the world right now. And so yes, just to reiterate, we don’t support this.
Aaron: We don’t get down that side.
Jay: It would be horrible in those countries too because basically in a lot of developing countries, Facebook is utility, right? They’re the providers of the internet and you have to do everything through Facebook. And so rerouting part of that country’s economy through Facebook as well, just means that Facebook becomes by far the most powerful entity in that country if it’s not already.
And entire countries then are dependent on the whims of fucking Sheryl Sandberg and Mark Zuckerberg and it’s just bad. It’s bad.
Aaron: Can I give you an even further dystopian nightmare for our Facebook bucks, the movie?
Aaron: So all the-
Jay: This the movie were you and … Or backpacking through Southeast Asia and get kidnap at some point.
Aaron: Yeah, it’s movie where it slowly dawns on us how widespread and powerful is Facebook scheme is. So all of the things that we’ve argued about Bitcoin like, oh, your economy is collapsing, your currency is rapidly losing value. What would you do in that situation? If it’s actually Facebook bucks, not bitcoin that you’re buying.
You’re trying to get out of the local Venezuelan or Zimbabwe currency because it’s collapsing and you have the option to buy a stable, probably US dollar pegged resource and it’s like, well, you could buy that with Facebook or you can buy Bitcoin. I think Facebook has a pretty powerful allure there.
And that means that just like we argued, whole economies could become Bitcoin based, all economies could become Facebook bucks.
Jay: Well, no, that’s what I mean. And that’s the end result of all of this, right? If you are in a country where Facebook is the provider of the only internet service and you start moving to eCommerce and the entire internet is controlled by Facebook and Facebook has a currency system that’s easy to use and relatively secure especially.
And maybe even slightly inflation proof within your country, Facebook will control that economy if it … I don’t know. It’s a good argument for why some of this maximus have to be the way that they are, you know? And why moderate, it’s like you are ultimately sell outs just advancing the Silicon Valluzation of the world.
It’s not just that it is not crypto. It is the antithesis of crypto. And I haven’t been paying that much attention to crypto Twitter, but I imagined that they can’t be happy about these things. Right?
Aaron: I don’t think people are taking it seriously, which is one of the mistakes people made about Bitcoin also. I’m talking about regulators and the government. I think that people think that the decentralized aspect of Facebook bucks is a joke and therefore the project is a joke.
But to me the project sounds pretty viable. We know that Facebook has an expertise in stealing other ideas that are working and making them their own. And we know that these ideas are already working in Asia and we know that Facebook has a massive, massive base of users in Asia and all over the world.
So I don’t see what’s standing in the way of that. There was actually … Yeah, the next piece of news on here is like totally dovetails with this. I didn’t even realize it, but. So the next thing I want to talk about was that there was a study that showed that the number of $100 bills on circulation has now exceeded the number of $1 bills in circulation for the first time.
I think actually they rise and passed in 2017. So this, I mean, never before have there been so many a $100 bills out there. What percentage would you guess of those $100 bills are outside the United States right now?
Jay: I don’t no, 30%.
Jay: 80% wow. So-
Aaron: So the US dollar is already a gray market Monero for the world that people are circulating huge numbers of $100 bills all over the place because they’re really good thing to hold. And the Facebook buck is a backdoor into the US dollar.
Jay: Yes. Especially, I mean, look, there’s nothing that I don’t think that Facebook could onboard very quickly and at such large scale because obviously no one has the same size of the network. And so if you told some guy in Zimbabwe or some guy in Greece or one of these countries that have had currency instability where people do hoard US dollars.
That instead of having that bag of hundreds, stuffed under the mattress that he could have a secure way and he could have a completely hack proof password into his account. And that he could give it to his wife or his kid and that that was a different storage unit of it and it was somewhere up in the cloud. It is appealing in some way. And wow, that’s shocking. 80% of the $100 bills are outside of the United States?
Aaron: Well, I mean there’s already, in the same way that we discuss how collapsing economies can get converted into Bitcoin, people have been converting collapsing economies into US dollar cash for a long time. And there’s whole economies like Cuba that have basically used physical dollars as a reserve system.
Not a governmental reserve system, but people have been hording a lot of, I mean not large amounts of wealth, but large amounts relative to the GDP of Cuba. And there’s countries all over the world where there’s dollars floating around. It makes me think that that money is going to go somewhere.
That money could go to bitcoin. It also could go to Facebook coin. It also could go to something we haven’t even thought of yet, but it doesn’t seem tenable to just keep running the world on big stacks of rubber banded hundred dollar American bills.
Jay: I don’t know. It’s been working so far. Right?
Aaron: It’s not broke. Don’t fix it.
Jay: Yeah, exactly. All right. Do you want to talk about the thing that we had to talk about?
Aaron: Yeah, so I think we were even mentioned in the Breaker Magazine story about this by our friend David Z. Morris who’s coming on the program. Oh, hey. Okay. Can I quickly pause. We’re going to do another little book club. Jay is unfortunately a out sick for this book club. So I’m going to do it with a Breaker Magazine.
A writer from break a breaker magazine named David Z. Morris, and we’re going to be reading Radical Markets. It is a book that none other than Vitalik Buterin has endorsed. I am midway through it. It’s fascinating.
Jay: I’m not sick. What are you talking about?
Aaron: Oh, I thought you said you couldn’t come to the taping.
Jay: ’Cause I’m going to be in Las Vegas gambling.
Aaron: Do you want to call in? Wow. Wow. I just signed Jay, that pitch was so good that Jay signed up mid stream. Well, I’ll tell you what, Jay, here what we do. We do a two parter. First part will be me and David Z. Morris talking about the book. Part two will be me and Jay talking about the book. Yeah. You in?
Jay: Okay, I can do that. I actually do want to read. I’ve always wanted to read this book for a while.
Aaron: You have two weeks to read Radical Markets.
Jay: Two weeks okay I can do that.
Aaron: You can get on Amazon. It’s on Amazon. It’s cheap. It’s $11 on Amazon to buy this book.
Jay: I’m seeing $17.70.
Aaron: $17, get it on Kindle if you want. Okay. So we’re going to be reading that book, but David Z. Morris wrote a story about the shooter in a New Zealand who committed the massacre. In his manifesto there is one mention of cryptocurrency and it said that, I made some money investing in BitConnect and traveled the world with that money later I think. Something like that.
Jay: Sure. Yeah. I think I sent it to our chat right? That he had been involved in BitConnect, because right when the manifesto came out-
Aaron: I don’t think we know that he was involved in BitConnect. I mean, yeah.
Jay: No, no. I agree. I mean just that he had mentioned it.
Aaron: We should note for people who haven’t read the manifest. Did you read the manifesto?
Aaron: I did too. We’re terrible people. We’re the kind of people who look up the things that have gotten taken off of Reddit?
Jay: I don’t know. I mean, look, I’m a-
Aaron: Yeah, you’re a journalist.
Jay: I know that I joked that I’m not a journalist anymore. But it’s my job to read it and to watch the video.
Aaron: Well, and I’ll admit that I read the thing about BitConnect and I was like, “Oh, okay, well that makes me wonder what this other stuff is and what the tone of that references, etc.” So I looked it up. I ended up reading it also. It’s been reported that the manifesto is all a bunch of trolling. That is untrue.
Jay: I know it is true.
Aaron: It’s mostly sincere. There is, however, a section of trolling comments and this BitConnect mentioned is within that trolling section. Would you agree?
Jay: Yeah, I think that if he had been involved in BitConnect that there would have been a story about it by now. Maybe not because people are really trying not to talk about the man so.
Aaron: How would you know? I mean when you’re saying being involved in BitConnect. BitConnect was a coin that was training on Bittrex BCC. So it’s not like anyone to really have our record that you were or were not invested in BitConnect.
Jay: Sure, that’s true. I mean, he could have just traded the coin I guess, but the placement of it and the fact it has become a crypto meme. It is by far the biggest scam or most publicized scam I think that we’ve had and in crypto. And so it led me to think that maybe he wasn’t involved in BitConnect, but maybe he was in some sort of way.
I don’t know. It’s not like if you went to your wife or my wife and said, “Hey, you know BitConnect that meme?” They’d be like, of course, yes. That meme that I know about. It is a little obscure for people who know nothing about crypto.
Aaron: So my mother asked me about it. She was like, “Hey, you do that show about crypto. Did you know that the guy who did that massacre got all his money from Bitcoin?” I was like, “Okay. First of all as a troll, this is clearly designed to confuse people.” And I have trouble believing honestly that he just happened to be a BitConnect investor and was not a bitcoin investor.
This feels very pointed to me to say BitConnect, not Bitcoin not our crypto currency. BitConnect was like the scammiest of the silliest. And it feels to me a knowing wink, like all of the subscribe to, to PewDiePie kind of stuff. That saying like, I know exactly how this will send people into a frenzy and that’s why I’m doing that.
Jay: Yeah, and Candice Owen section.
Aaron: Candice Owen, I was-
Jay: That was clearly, clearly, clearly a troll. He was like sometimes Candice Owen goes too far even for me.
Aaron: Yes. Exactly.
Jay: It was all obvious a troll.
Aaron: Yeah, one time he was doing a weird setup and then punchline and BitConnect. The way it’s structured there is the punchline of that bit.
Jay: Yeah, of course. Yeah. And that was just to do a little bit of a sidebar here. I read the manifesto and I saw that a lot of people online were sort of clarifying the things that were real and the things that weren’t real. I really had a hard time figuring out what the point of that was.
It just felt like people were sort of doing a dick measuring contest about how much, know your meme that they could Google it in a short period of time. I was just like, “He just killed 49 fucking people.” And a lot of his radicalization that he details at length in really, really sort of intense detail in his piece came from people who are adjacent to Ben Shapiro, people who are adjacent to Candice Owens.
People like fucking Stefan Molyneux. And so to be like, “Hey, don’t go after Candice Owens because she’s just trolling.”It’s like well he’s trolling for a reason. He’s trolling because there’s a wink nod that it is also a kind of true, that he did get some of these ideas from there.
So I’m just like, “Look, you can write one piece that clarifies all these sorts of things.” But it just felt half of the things that I was seeing where people trying to jockey for position to be the expert of memes or something like that. Which is really what happens all the time with memes. And so I don’t know, I just found it to be a bit distasteful.
Aaron: I didn’t like that. I guess that’s less where my focus landed. I was interested in David Z. Morris take on it, which was that one of the readings of the BitConnect reference. And I guess I’m engaging in what you don’t like now, which is meme interpretationism, but that BitConnect …
So for people who are listening who weren’t around during the BitConnect period, you missed some, pretty outrageous stuff. BitConnect was a classic, classic pyramid scheme where they were like, “We’ll offer you incredible returns. You stake money and you get back money.” And it was the new people paying for the old people.
Jay: They even did the Tom Cruise in a magnolia stage things where they starts screaming at people like, “Let’s do this.”
Aaron: Yeah. And that’s the famous meme is I think Carlos Mattos shilling BitConnect and unsurprisingly it fell apart. And I should say this, it fell apart after it went 100 access a coin. So it’s not impossible that he actually was a BitConnect person who made money. For our coin to go from 1X to 100X. Some people cashed out, some people were in the know.
But the way that David Z. Morris interpreted the comment was that in the manifestos, endless hunger for the narrative of him as a victim, BitConnect was another, I’m a victim troll. T say that basically BitConnect was a bunch of people like him who are at dead ends without, education and employment prospects and thought this was a way out.
And they were actually getting scammed. And that’s kind of the great dark joke of the world and that, uh, he is, uh, nodding to that, by mentioning it that.
Jay: I mean, I don’t know.
Aaron: It’s hard to know.
Jay: I like David and I think he’s smart and I don’t agree with that. I think that’s going about one or two layers too deep into it. I think he was just looking for funny things that people would recognize and he was just hoping that some libs in the media would freak out about this and write a story.
The dangerous world of crypto radicalization, which, many people have written already. And so it makes sense that the, he would pick that.
Aaron: Speaking of the dangerous world of Crypto radicalization, the movie that we have been waiting for, for nearly a year since we came into possession for this, have a script for this movie. The trailer is here, the movie’s called Crypto.
Jay: A bad title. Bad title.
Aaron: Bad title or secretly great title.
Jay: I think it’s a bad title because it’s Kinda, you know, when Minding the Gap. Did you ever see that?
Jay: It’s my favorite movie last three years and I interviewed the filmmaker Bing Liu, and he was talking about how, there was this big fight before … Hulu had bought this thing and they wanted to promote it and there’s this big fight internally between his team, Hulu, everybody.
And I won’t say who was on which side because I actually don’t know, but it was about whether or not to call it a skateboarding movie. And they decided not to because they felt like a lot of people will just immediately shut down when they hear about a skateboarding movie.
And I imagine that a title like Crypto, you’re basically alienating all 95% of women and you’re alienating people who are financially responsible and basically in the end who are you appealing to you or appealing to. You’re appealing to people who will just watch any movie with Kurt Russel in it or something like that. The star power in this is actually somewhat impressive.
Aaron: I’m going to take the counter check here. I take this is a movie, when I’m Michael Mann made a movie called Thief, where the movie is just as literally title as possible and the use of crypto and this title is like dark web. It’s just meant to symbolize threat.
Jay: People care about thieves. I don’t know if … I think crypto is a much more specific thing anyway, go ahead. I understand what you’re saying, which is, it’s kind of deep Lucy or something like that where it’s ominous.
Aaron: Yeah. It’s like a movie … Crypto is to 2019 as to in our generation, I’m going to say 1997 Hackers.
Jay: Yes. It’s like Hackers. Yes, okay. Fine.
Aaron: I expect there going to be some scenes in this movie where a huge amount of code flits over the screen and someone stares at it and we’re supposed to be thrilled.
Jay: I don’t know about that, but I guarantee … Okay, dude, should we do a game where we predict what type of scenes are there.
Jay: There is definitely going to be a scene where somebody has a hardware wallet, like a ledger or Trezor.
Aaron: Oh yeah.
Jay: And it’s something really dramatic handoff. He has to get it to somebody by a certain amount of time or else everybody in the building is going to die. I can see that scene. The code thing is interesting because I don’t know if coding is that integral to bit coin at this point. Right?
Okay. I have a question for you then. What do you think the over under is? If I said the over under of Satoshi Nakamoto references at one, right. Where there’s one we push, if there’s to the overheads and if there’s zero the under hits what would you take?
Aaron: I think I’m going to take the under. I feel the movie is not even going to go that deep.
Jay: Yeah, me too. I would take the under too. Like maybe the overhead, there should be 0.5.
Aaron: I’m like-
Jay: ’Cause there’s not going to be two.
Aaron: Describe to me a scene and the only thing I can imagine, it’s a terrible exposition scene where someone’s like, “Bitcoin. Well, it’s Bitcoin. Someone’s like, “Well Satoshi Nakamota.”
Jay: See that’s [crosstalk 00:53:42]. Yeah.
Aaron: You gotta watch out for that. But then I’m gonna say-
Jay: A second scene where people are sitting around and then-
Aaron: … as better as we have to watch out for Satoshi Nakamoto being mentioned twice in that scene.
Jay: Yes. Sound some nerd guy like sentences goes, actually, the history of Bitcoin is quite fascinating. Back in 2011, completely anonymous man named Satoshi Nakamoto. We don’t even know if he’s a man. He might’ve been several people came out with the … That’s the type of cirque and scene that’s in every single circuit movie that they might put into this.
And then that’s where Satoshi might get mentioned. And now the more I think about it, they’re definitely going to put that scene.
Aaron: I know it’s very dangerous.
Jay: I’m going over.
Aaron: I think I’m going to stay away from that. I am interested in any other, like I would also take a bet on whether … How many times that Bitcoin is untraceable as mentioned in this movie.
Jay: Yeah, I would say 1.5 is the over under and they take the over.
Aaron: I would bang the over on that. I would put the line closer to four or five.
Jay: Four or five. It’s a hour and a half long movie.
Aaron: But it’s literally a movie about money laundering, I think.
Jay: All right, let’s watch the trail.
Aaron: Yeah, let’s watch the trail together. Yeah, I’ve got a kid up.
Speaker 4: You want to find something wrong?
Speaker 5: You were acting like I’m going to.
Speaker 6: No phone number. No email. Just 10 million in cryptocurrencies.
Speaker 4: I had a client who was interested in that stuff. Take a phone with your daddy. He is was off at seven figures. When I see things like this, I get pretty worried.
Speaker 7: You must know all kinds of things back there behind the curtain.
Speaker 8: Martin.
Speaker 9: We have a serious problem here.
Aaron: Okay. A, less important thing. April 12th we’re there. We will be reviewing possibly doing a mystery science theater, 3000 style [crosstalk 00:55:30] of the movie.
Jay: Do we have to go watch that. Can we just pirate and watch it in the crypto cave or something like that. I haven’t been to a movie in two years in the theater. I don’t want the first one to be Crypto.
Aaron: I’d like to know at one point I freeze frame this. They show a still of a computer screen. It’s like a back file structure and one of the folders is labeled payouts and one of them is … One, is labeled Bitcoin payouts and the other one’s labeled kicked back.
Jay: Kicked backs.
Aaron: Okay. I’ll just file this into my kickbacks folder.
Jay: I don’t know what this document is leaving off for that. It appears to be evidence of kickbacks.
Aaron: That’s Weird. I don’t have a receipt for that kickback in my kickbacks folder, let me look back in the archives here. Yeah, so my understanding of the plot he’s anti money laundering officer who gets sent back to his hometown and he looks into a bank. And the bank is like the bank for some sort of a crypto exchange and their laundering Russian mob money through.
And then he’s got to take them down and there’s a scene in there where there’s $10 million and he’s like, “$10 million in untraceable currency.” So it’s hinting some good themes.
Jay: Okay. So if that’s true, then I think the Bitcoin is untraceable thing over under is probably two and a half. And I’ll still take the under.
Aaron: I already knew that when we were betting before, so.
Jay: Oh wow. So you had an edge on me. You’re fucking angle shooting me.
Aaron: So this is like … This movie is very much in … It’s not really like hackers in that, it’s not about the crazy pirates is about the government lawyers. It’s an authoritarian Bitcoin Bitcoin movie. Bitcoin is evil in the movie.
Jay: I’m not into that. I mean I feel if you’re going … It seems the most boring bitcoin movie that you could make. Like AML officer goes back to his home town to review the books of a local bank branch. Who fucking cares? This is interesting. The guy who directed it, his other movie that he did that I guess he’s known for is Executive Decision also starring Kurt Russell. Which came out in 1996.
Aaron: I don’t know about that.
Jay: There’s been a long … wait, a second you and I were in high school back then. Right? So that’s a 23 year gap between movies and I guess he’s come back to make Crypto. He must be super into Crypto.
Aaron: I wouldn’t be surprised if this movie was originally written like without the crypto element and crypto was slapped on to it. This could just be a movie about money launderers.
Jay: I don’t know. There’s a hot script that nobody knew what to do about about an AML compliance officer come on.
Aaron: All right. Should we see what the YouTube commenters thought about this trailer? There’s some good comments.
Jay: Yeah, that’s a good idea.
Aaron: All right. Yes, it’s here. The dumbest film ever made about something that the writers don’t understand. There’s definitely some bad people who are mad. This doesn’t have more Bitcoin in it. I imagine there will be a 10 minute 10 standoff while they wait for the Blockchain to verify a transaction.
Jay: That’s good though. I enjoy that.
Aaron: Next one is, hackers that use Coinbase and Bitcoin. Totally untraceable lol. This one I would say isn’t boring to Russia bad, crypto bad, smart people bad, unless working for government. Thanks Hollywood.
Jay: Okay. Can I just say something, which is that I didn’t knew that we were going to make fun of this, but I’m actually a little bit surprised by how boring of a crypto movie they came up with. I thought that it would be at least a little bit more entertaining than this. I mean, this is like literally the most boring thing you could do with crypto and the most generic.
And I’m a little bit mad that they took the name Crypto to make this movie. Right? You’re right. It could be any type of movie and also, I don’t really understand like it’s Luke Hemsworth, right? And he’s a … There’s nothing about it that seems it’s bitcoin related at all.
Which I guess feeds into your theory that maybe this was some script that somebody wrote, maybe in 1999 and they just were like, “Well, why don’t we just make it about crypto and then we can sell it.”
Aaron: This is my favorite comment of all, if this can help pump our coin bags and whatever. I would say that’s the most crypto tech possible of it.
Jay: Yeah, did that [crosstalk 00:59:56] Is that your partner account?
Aaron: Positive price influence on Bitcoin.
Jay: Yeah, it is. I hate to break your bubble that good Lord. If that happened that I think-
Aaron: Well, I will say if this movie was a crazy-
Jay: Come on stop.
Aaron: If I could bet, if this movie does over a $100 million of business and we’ll have a positive impact on Bitcoin price.
Jay: No, it definitely will not. I feel like every single one of the Bitcoin movies that you and I came up with like passive, maybe not completely sober while sitting around in your basement where a a lot better than this.
Aaron: It seems very small.
Jay: Yeah. Yeah. Okay. Here’s the only useful question I have out of all of this, which is, do you think if bitcoin was still say 11 to $14,000, that there would be six bitcoin movies out right now?
Aaron: I can’t believe this movie got made before the Satoshi movie or the Russell work movie. Both much, much better ideas.
Jay: Well, the Russell brick movie is the Coen brothers, right? So that’s going to be a huge movie.
Aaron: Oh, I didn’t know that.
Jay: Yeah. It’s the Coen brothers.
Aaron: Well, that sounds good actually.
Jay: Yeah, that’d be great. If you want anybody make that Russell Brick movie, who are the two people. It’s like Scorsese or the Cohen brothers. Right? So it’s one of the two. Scorsese one would be really funny.
Aaron: I think I would also take the like Fincher written by Sorkin, [inaudible 01:01:19] Salberg movie.
Jay: Oh man, that one’s tough.
Aaron: That one’s got an over under of 20 on Satoshi Nakamoto references.
Jay: It’s like a mix of the Social Network and a Few Good Men or something like that.
The official podcast of Bitcoin crashes. Hosted by @aaronlammer and @jaycaspiankang. Mailbag/contact: firstname.lastname@example.org
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