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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 email@example.com)
- Trump finally tweets about Bitcoin… and Libra?
- Betting odds on whether Libra ever launches
- AOC says Libra is like coal-company ‘scrip’
- Ethereum can’t say Goodbye to Vitalik
Aaron Lammer: Okay. Jay, I’ve been waiting to talk to you about this for what feels like forever. We’ve been waiting for a moment, and we’ve been talking about this moment, almost since the beginning. Will it happen? How will it happen? Which side will our president land on? We are, of course, referring to Trump’s Bitcoin and Libra tweets. Where were you when you first experienced Trump’s Bitcoin tweet?
Jay Kang: I’m sure I was where I am 90% of the time, which is in my apartment sitting on a bean bag-
Aaron Lammer: On Twitter.
Jay Kang: … dealing with a child. No, not on Twitter. Somehow trying to entertain a child, which is mostly my life now. But I do remember seeing it. Well, you tell me first. Were you surprised by not only that he had tweeted about Bitcoin, but what he was saying about it? Did it shock you at all? Maybe shock is too strong of a word, but was it unexpected?
Aaron Lammer: Well, Trump always expectedly tweets the unexpected. I would say that’s his trademark. And I think I had thought a lot about how far Bitcoin would need to come that it would merit a Trump tweet. There’s so much MAGA in Bitcoin world, or at least in the Twitter Bitcoin world, that I think, most people, if you had put this up as an Augur market, would have said Trump’s first tweet about Bitcoin will be positive. Yes, I did gasp to hear this thud from Donald Trump-
Jay Kang: No coiner.
Aaron Lammer: … and then there was a simultaneous pleasure of knowing that, all over the world, tons of assholes were going, “What? No way. Aw, come on, man.”
Jay Kang: Yeah, “We supported you!”
Aaron Lammer: Yeah, it was a rich moment.
Jay Kang: Yeah. I think that it highlighted the gap between what I think that a lot of people in the media and what a lot of people online feel is the actual right-wing movement, which would include a lot of these Bitcoiners, people like Stefan Molyneux, who’s a YouTube guy who’s an extreme racist and makes videos about phrenology and all sorts of race IQ gaps, those sorts of Bitcoin advocates, and then who Trump actually cares about, who the Trump supporters that Trump cares about are. He’ll sometimes wink and nod to those guys. He’ll sometimes retweet them. I know that with Paul Joseph Watson, who is another guy who I think takes tips in crypto and talks about crypto, or even Mike Cernovich, who obviously talks about crypto all the time, these right-wing figures, Trump will retweet or he’ll fave their tweets or his idiot son will fave their tweets.
Jay Kang: But, in the end, Trump is more beholden to Wall Street guys, like right-wing Wall Street dudes like the Mercers, the hedge fund guys, the people who are quietly hoping that he wins so that Elizabeth Warren or Bernie Sanders doesn’t come in with a whole bag of regulations. Those are the people Trump actually does care about, and so it didn’t surprise me so much, but I do agree that I was surprised that he weighed in so forcefully and, in his own way by his own standards, almost coherently, which very much led me to believe, I certainly am not the only person who feels this way, that somebody else wrote those tweets for him.
Aaron Lammer: Yes. And I feel like we didn’t get to take full pleasure in the tweet because it’s not confirmed Trump content. All of those people who have dedicated their life to Trumpism and Bitcoin, and this is a real constituency out there, those people instantly were just like, “Oh, that’s not Trump who tweeted that. That’s some underling. He shouldn’t have let them say that.” I think that the fact that we can’t ascribe this particular tweet to Trump complicates the whole idea. It’s more fun to talk about if we assume that this is actually Trump’s ideas coming out. But I will say this, I have a take, this is based on certain older takes we had, which is we gave the government credit for rightly understanding that to try to suppress Bitcoin would be to empower the Bitcoin movement. Nothing better could happen than a U.S. government attempt to suppress Bitcoin for people to feel like Bitcoin’s hypothesis is validated.
Jay Kang: Well, within reason, I think.
Aaron Lammer: Within reason, within reason. And I’m not talking about all of crypto and any regulation, I’m just saying a literal Bitcoin ban would, I think, empower or bring the Bitcoin movement into new prominence, and I think the government has actually been pretty intelligent about being hands-off and not giving people cause for crying, “Oh, my god, we’re being persecuted,” not that that’s actually stopped them from crying, “Oh, my god, we’re being persecuted,” but if I were a historian and I were to describe the government’s outlook on Bitcoin from 2012 to 2019, I would be like, “Pretty light touch, pretty light touch.”
Aaron Lammer: Now, who’s going to be the person to stick their finger in it? Who’s going to be the guy to break the longstanding tasteful remove? It’s going to be Trump. Trump would be the person who broke the government’s fairly intelligent policy on taking it as it comes with Bitcoin and just opened it up to a bunch of chaos.
Jay Kang: Yeah, I agree with that. I do think that there is a scenario in which the government can completely destroy Bitcoin, especially the United States government. I think that they could shut down certain things that would make it difficult to … if a certain amount of nodes are shut down, obviously they can migrate, but that might be difficult. If cashing out Bitcoin becomes illegal, if all the exchanges are shut down, obviously that’s also a problem. But I do agree fundamentally that the ethos of Bitcoin would be improved in over a two to three year period only. I don’t think it would even take that much longer than that, that the evangelical part, philosophical part, of crypto would be emboldened in a way that would be really powerful. I think I do take the philosophy part seriously, but-
Aaron Lammer: You’re basically saying if there was a Bitcoin underground in America, you’d ride with them?
Jay Kang: I’ve decided at this point, I’m nearing 40 and I think this is the beginning of my midlife crisis that I just want to join some sort of underground, so, sure, why not the Bitcoin underground? I’m sure the people there will be wonderful.
Aaron Lammer: Yeah. It’s like a libertarian VFW hall. That’s basically what I’m imagining.
Jay Kang: Okay. The way you just described it is terrible. That sounds fucking awful.
Aaron Lammer: This did come up at the Libra hearings, quite literally. I believe a congressman said there’s no way to shut down Bitcoin, and he was speaking about it relatively to Libra and drawing a contrast between Bitcoin and Libra. I think Bitcoin did great at the Libra hearings. The Libra hearings were basically a giant ad for why Bitcoin matters and why Bitcoin is different than Libra. But it does seem like there’s an increasing understanding within the U.S. government that Bitcoin is different than something like Libra and is maybe not something that you can as easily regulate as a product, say, put out by a social network.
Jay Kang: Yeah. They are the opposite in many ways, except that they are both called cryptocurrency and, allegedly, Libra is also going to use a blockchain. That’s the only similarity. In every other way, they’re the exact opposite. Centralized versus decentralized obviously, but also just this idea that, and this is part of the decentralization ethos, but it’s something that, I think, should be repeated as much as possible, which is that, if Bitcoin succeeds, sure, some people, and this is something I always say, some people have completely disproportionate wealth to the level that we’ve never seen before, but, at the same time, it’s not a corporate power that you can wield in the same way that a place like Facebook or Google or Apple or Tencent or any of these Chinese companies can right now, and I think that comparing the two is a bit silly.
Aaron Lammer: If I read you correctly, where that argument ends up is, can you imagine this dystopia that would happen if Bitcoin succeeded, and then, pause, look at the actual dystopia of what exists now. There is not a strong ethical line in favor of either of those outcomes. They’re both pretty crazy, lopsided, and fucked up.
Jay Kang: Yeah. There are two ways to think about it, which is, right now, Jeff Bezos owns the infrastructure of the internet, so just forget about his net worth. It’s completely irrelevant compared to his actual power.
Aaron Lammer: Forget his swole muscles. Don’t even think about those.
Jay Kang: Forget the fact that he’s the richest man on Earth.
Aaron Lammer: Put those guns away. Put those guns away.
Jay Kang: Yeah, and his vests that only exist to accent his swole muscles, I don’t [inaudible 00:11:38].
Aaron Lammer: Forget his sexts. Even though you’ve read them, forget them. Don’t even think about them.
Jay Kang: Yeah. When you wear sleeveless, I guess all vests are sleeveless, when you wear something sleeveless and it’s a little bit jarring, it’s only so that people look and be like, “Oh, why is he not wearing sleeves? His arms are bare. Oh, his arms!” I know what you’re doing, Bezos.
Aaron Lammer: I think your Bitcoin gang should be called Sleeveless Vests.
Jay Kang: Sleeveless Vests.
Aaron Lammer: It’s a very nineties band name.
Jay Kang: Yeah. I think it would be a Moldy Peaches type band-
Aaron Lammer: There you go.
Jay Kang: … although I think the music we’d make would be terrible. If you think that somebody like, let’s say, [inaudible 00:12:20], although I don’t think he owns that much Bitcoin, but maybe Mike Novogratz or the [Winklevi 00:12:24], all these big Bitcoin whales and people that we don’t even know about, them getting a ton of money and becoming hugely rich is, at worst, do you trust those people less than the people who are currently running the world through these corporations? That’s the choice that you have to make and I don’t know the answer to it. It’s something that we’ve debated back and forth for a year, but I do think that’s a choice. What do you think about that, that when you’re talking apocalypse, that’s what you’re really thinking about?
Aaron Lammer: Yeah. You’d like it to be neither, but it’s probably not going to be neither. In some ways, the most ethical way to act in that circumstance, if you find yourself to be a Jeff Bezos or a crypto Jeff Bezos, is to act like Satoshi and just hold your Bitcoin. You can make everyone’s wealth more valuable in the Bitcoin system by holding a million Bitcoin. If these people with these mega, mega whale bags never put them on the market and they’re just like a world Bitcoin trust, in some ways, that’s more bullish for Bitcoin than if the Winklevi start trying to world with their Bitcoin stash. I would be more disturbed, actually, if they do anything. It’s kind of only okay if they do nothing.
Jay Kang: Yeah, yeah, which seems impossible to believe in. If the entire internet right now, or however much percent of the internet is controlled by Jeff Bezos, if you have a ton of Bitcoin, how much of the economy do you control is the real question and which one is more dangerous. That’s another thing that, I think, is an interesting question that certain types of philosophers who are interested in these questions, I’m sure, are trying to ask right now, but that also seems to be the idea. Can you have enough Bitcoin that you can control the network? I think the purist would say absolutely not, but I find that very hard to believe that, as this technology comes out, that the people who are producing it and the people who are most invested in it wouldn’t figure out ways in which, through third-party intermediaries, through different services, that they would control much more of the economy than they’re currently allowed to.
Aaron Lammer: Yeah. It’s interesting to think about whether those people, in a game [inaudible 00:14:44], would it be more effective for them to try to control the network through their wealth versus just try to control the world and not worry too much about the Bitcoin network and just assume the Bitcoin network is the god that brought you 1% of the world’s wealth? If I looked at history, I think I’d agree with you. What I’d start doing is buying up newspapers, controlling the media, maybe establish my own country with sovereign laws that were friendly to my control of the Bitcoin network. The movie basically writes itself, I think. But I don’t really think that it’s any safer that all these people have the same amount of wealth in offshore Caribbean accounts. And, in fact, I think it’s pretty similar, if you look at it closely, which is there’s a lot of off-books money that really runs the world.
Jay Kang: To this point, Alexandria Ocasio-Cortez, during the Libra hearings, made a statement and also tweeted it out. She said, “Scrip was used by Appalachian coal corporations to control workers by controlling their money. It was called coal cash. It was used by sugar plantation bosses in Puerto Rico too. Facebook establishing its own currency and teaming up with eBay Uber and company,” I was like, “What does co stand for? What is [crosstalk 00:16:10]?”, “to do so has alarming precedent.” What do you think about this analogy by AOC?
Aaron Lammer: Well, I appreciate that she is deepening an analogy we’ve been making on the show. We’ve always talked about Disney bucks, and we’ve said that basically Tether are the Disney bucks of crypto at one point and that many of these Ethereum-based tokens that are supposed to provide a service are like a weird money that you can only spend at one store. We’ve been dancing around these ideas, but I never really thought about what she’s describing, which is company money. And, at first, I was like, “Eh, okay, that’s the socialist analogy. I get it,” not that I’m accusing AOC of being a socialist or not a socialist.
Jay Kang: She is. She says she’s a democratic socialist. Yeah.
Aaron Lammer: But the movements against these company towns were socialist movements, and I actually think the analogy is pretty good, and this was brought up by a different question asked on the Libra hearings where someone said basically, “Will Milo Yiannopoulos and other figures who have been banned from Facebook be allowed to use Libra?” And this is a very real idea. Do you have to be in good standing-
Jay Kang: Oh. Yeah.
Aaron Lammer: … with the Facebook network itself in order to use the Facebook currency? Well, that seems trivial if you’re just using it like PayPal, say, but David Marcus says, “I would happily receive my salary in Libra,” and certainly people who are getting paid across borders, I think that’s one of the things they’re designing it for. It very rapidly becomes one of these kinds of Chinese citizenship rank things of demerits against an account where it very easily could start excluding people who are excluded from Facebook, from its network, which, again, brings up Bitcoin’s censorship resistance and it’s not a farfetched thing. We have de-platforming, for better or for worse, but if you’re going to make a kind of money and you’re also going to de-platform people, you have to explain how it’s going to interact with the money, just like these companies that we’re paying in scrip could easily use it to politically influence their workers and, if you weren’t in good standing with the company, they could not take your scrip back.
Jay Kang: Yeah. This is one of the times, I think, when I wax nostalgic for the young days of Kang, when he wanted to be a ACLU lawyer and was very, very into ideas of expressive liberty and would have happily defended in court any number of Klan members and people who engage in hate speech, and I think it’s an interesting point. I think that Milo is probably the wrong example you want to use if you want some sort of sympathy, but he’s also the right example if you want to talk about it pragmatically. It’s like if you want to have part of the U.S. economy and a large potion of the world economy, especially in developing nations, handed out to a company where every single day, every single … including all the way up to the president, talks about bias, political bias, within that system, you can’t have that company making decisions on whether or not people get to participate within the system or not.
Jay Kang: Now, I would imagine that Facebook would just say, “Libra is a separate project. It’s a nonprofit that exists in Sweden, etc., etc., and we haven’t-”
Aaron Lammer: Switzerland, Switzerland.
Jay Kang: Switzerland, I’m sorry. It’s one of the S-W countries “We haven’t thought about that stuff yet” or “We’ll decide that later.”
Aaron Lammer: That is what Mark had said. He was like, “We don’t have that policy yet.”
Jay Kang: Yet, but it’s an interesting question, I think. But imagine if the entire economy of, let’s say, Laos or something like that gets overtaken by Libra, then does that mean that people who are banned from Facebook can’t go to that country, they can’t function in that economy, they can’t go visit, they can’t go there for any sort of reason? I think it sets up all sorts of troubling questions that obviously have to be litigated out that we’ve been talking about here for the past three months.
Jay Kang: I will say this about the analogy. I think that AOC has really smart staffers, and I think that whoever came up with this analogy, I am sure she’s too busy to have come up with it herself. It’s not that she couldn’t, it’s really just-
Aaron Lammer: Ooh, I like it. You’re likening her to Trump. We’re saying both of them had the ghost tweets written.
Jay Kang: Well, all politicians have staffs, and she said it, they’re the ones who do the research on those things. She says, “I have to go to this Libra hearing and I’m going to speak there, so I need to be prepared,” and somebody prepares it for her. That seems like a reasonable idea, right? Okay.
Aaron Lammer: Sure, sure.
Jay Kang: I think it’s an effective analogy. It also hearkens back to that song that everybody knows, the 16 tons song. Everyone is familiar with this idea, or at least a lot of people are, but I don’t know if it’s a completely perfect analogy, because the problem with coal cash, the problem with company store type of things, was that they’re predatory. They essentially locked you into a system where you could only buy things from that one system, and I don’t know if Libra really, if that is their goal or if it’s really just to be the bank of the world. I don’t know if that makes sense. Now that I think about it, it actually does make sense.
Aaron Lammer: I think it makes sense, but I do think it’s fair to additionally say that Libra’s defense, that, oh, Libra is apolitical, it’s a apolitical Swiss nonprofit, is like no one is buying this act. In the hearings, when they brought up, “Aren’t you going to make money from this?” and they’re like, “Yeah.” And they’re like, “Well, how is it a nonprofit?” and they’re like, “We’ll figure out how to not make money later.” All of these ways that it’s being positioned are failing. It’s clearly a Facebook product and Facebook is inherently political. It’s engaged in many political battles right now, and we shouldn’t fail to say that Trump’s tweet didn’t just cover Bitcoin, it also covered Libra. Before this thing’s even launched, it’s in a fight with the president. How is this possibly not going to become a political tool that’s enmeshed in every single conflict that is currently dominating American politics and culture?
Jay Kang: Okay. Let’s do a thought experiment here. Let’s say that Amazon, for whatever reason, also buys into Libra and, in 10 years, all this launches and that Uber … Amazon owns real estate companies at this point, they’re getting into that, so you can buy a house with Libra, you can order groceries with Libra, you can take Uber with Libra, and you can buy airline tickets, because Mastercard and Visa, I think, are both getting involved in this as well, and so anything that you can buy with a credit card, you can but with Libra. What part of your life would not be Libra-friendly or accept Libra? If all of your money was in Libra, what could you not do?
Aaron Lammer: Not much. We’re already moving to a cashless system, so in some ways it feels trivial to pay for anything in any of these. However, if I looked at my savings account and you were to say, “No, that savings account is in Libra,” I would be like, “Oh, hell no.” I don’t want to have more than a few hundred bucks in Libra at any moment, just like I don’t have more than a few hundred bucks in PayPal ever. My trust level for Libra is not going to exceed my trust level for PayPal, I don’t think. Do you think yours will?
Jay Kang: Yeah, probably. If it is the dominant currency and it’s pegged to all these other currencies. I think the obvious answer is you can’t pay taxes in it.
Aaron Lammer: Taxes, buying drugs.
Jay Kang: You could probably buy drugs in Libra.
Aaron Lammer: Yeah. There’s only a few. Almost all transactions in America are basically legit credit card transactions. Most of them are just Amazon transactions at this point when you look at it overall. Mostly, I’m buying food at restaurants and buying things from Amazon. Sorry.
Jay Kang: Yeah. That’s how I feel. I feel like it could completely subsume everything, and maybe if you have to buy a tractor or something like that, that tractor manufacturer might not take Libra or, if you have to go buy … I have no idea. I have no idea what it can subsume because, if the credit card companies are bought in, then that means something. But the other thought experiment, I think that is valuable here, in terms of figuring out whether or not we should all run for the hills or join the regulation fight against this stuff, is is that radically different than what we live in right now?
Aaron Lammer: No. My main response, when you gave that thought, was, damn, it really should be Amazon who’s issuing their own scrip. I don’t buy shit from Facebook. I don’t want to get involved in buying things through Facebook. Amazon is where I spend a ton of money. If Amazon had a currency that was actually some kind of a discount on Amazon, akin to Prime, that, to me, is a more compelling user experience at this juncture. Libra is talking a big game about how everyone’s going to use it, but I’ve currently spent zero dollars on Facebook ever, so it still remains to be seen.
Jay Kang: Yeah, but that definitely could change. For example-
Aaron Lammer: It could change, but-
Jay Kang: … if we got some check, if some rich guy decided to donate to Coin Talk we had to split a thousand dollars, we could just do that through WhatsApp. And people do buy things through Instagram. I don’t think you do, but I’ve bought a few things through Instagram.
Aaron Lammer: I’ve bought a few things through Instagram. That’s true.
Jay Kang: And all the plans of Instagram, all the monetization ideas, everything that they are signaling right now, which we can take seriously or not take seriously, but I don’t know why they would lie about this particular thing, is to try to turn it into an e-commerce hub, and I think that his matches up with that plan. I think that you will probably buy more things from Facebook the company, if not Facebook the social network site, in the next year than you ever have. I’m pretty comfortable saying that, and not just the leather-bound Fight Club book.
Aaron Lammer: All right. Let’s say that it’s going generally well, but we’re not 10 years down the line or 18 months down the line, and, yeah, you’ve made a few Libra purchases on Instagram or whatever, every other major tech company, by which I mean Google, Amazon, Apple, are all going to be looking at having their own digital currency. These are all ideas that are swirling around. I’m not saying everyone’s going to do it, but I do think everyone is at least going to look at it. Do you think that the subsequent companies that want to operate something like Libra will join the Libra consortium or do you think they will try to make their own Libra?
Jay Kang: Now, see, that’s a good question, and you mean will there be a blooming of shit coins, but they’re just corporate coins?
Aaron Lammer: I’m telling you, I like the Amazon coin more than the Facebook coin right out of the jump.
Jay Kang: Etsy will put out an Etsy coin and Pinterest will have a Pin coin. Yeah, I could totally see that happening because why would they cede so much power to Facebook? Jeff Bezos is not going to be like, “Oh, yeah, right now, I’m pretty independent of Facebook, and actually Facebook has to run on my AWS servers. What I’ll do is I’ll just join in and let Mark Zuckerberg control all the money part of it, which obviously is important.” Yeah, I have a hard time seeing that happen. Although, at this point, some of the other companies that have joined in are pretty, pretty big. Maybe-
Aaron Lammer: They’re pretty big.
Jay Kang: eBay, Uber, Mastercard, Visa, these are not small companies and they’ve all at least put their logo on the Libra announcement. I don’t know what that means, but the logo’s there and I imagine they did it willingly.
Aaron Lammer: Well, did you catch the part of the hearings where one of the congressmen said he’d been talking to other members of the consortium and they all said they were super worried about Libra and didn’t want to do it, but were afraid that Facebook was basically bullying them into it?
Jay Kang: Yeah. Well, that makes sense too.
Aaron Lammer: Sounds right.
Jay Kang: Now that we’ve had, what, two months or something like that since this thing was a rumor and at least six weeks since it was announced, the chances of it happening, where would you put it, that in the next five years, that we have a functioning Libra system in some form and that you can use it here in the United States? What do you think the chances are?
Aaron Lammer: I think the chances went down at those hearings, honestly. The opposition was robust and every time they were like, “Yeah, we still need to look into that and figure that out,” the congresspeople were like, “No, just don’t do it. We’re not telling you make a better pitch, we’re rejecting this pitch. Don’t do this.”
Jay Kang: It’s also the only thing that AOC and Donald Trump agree on.
Aaron Lammer: I still think it’s better than 50/50, but I’m going to downgrade it to a 75% chance that it pans out.
Jay Kang: Really? Okay. Maybe we should do some distinguishing. In the form that they proposed, I think there’s a zero percent chance that it makes it, but I think you also are factoring that in.
Aaron Lammer: Yeah. The form is so loosely sketched, also, anything could be called the form [crosstalk 00:30:09].
Jay Kang: Yeah, that’s true.
Aaron Lammer: They’re just like, “It’s a coin! It’s in Switzerland! These guys are into it too!”
Jay Kang: The name is Libra. That’s about all they told us.
Aaron Lammer: And they told us, “It’s not us, it’s this Swiss foundation.” That version where it’s like, “It’s not our problem,” I think got canceled at the hearings.
Jay Kang: I think that there’s some chance that there’s a very, very, very watered-down version that is pegged entirely to the U.S. dollar and doesn’t have this international currency idea going on where you can’t make transfers between the United States and other countries. I think all of that is maybe possible and then, at that point, it will just literally be like PlayStation dollars or whatever or video game dollars, where it’s just another dollar in name only and that it’s no so powerful, but it’s powerful enough where, if you want to buy something on Instagram, and a lot of people buy on Instagram, then that, obviously, is something.
Jay Kang: If every big country in the world is against this, and I know that China is going to have absolutely nothing to do with this for every single obvious reason, including they don’t have Facebook there, maybe Facebook will say, “Okay, then we’ll just go into these developing countries,” and I think that would be a totally scary and terrible thing, but I just have a hard time believing that the powerful economic countries right now will have anything to do with this. And then, in the end, it will be this thing that’s kind of forgotten, but really, really powerful in itself, if that happens, because then Facebook will control the economies of these developing countries, which is worrisome, but I just have a hard time believing that, here in the United States, that we’ll be involved in some sort of global economy that’s run by Facebook. There’s just too much opposition to it.
Jay Kang: Is there a person in Congress that thinks this is a good idea and is defending it? I bet Pete Buttigieg does because he’s friends with … but he’s not in Congress. He’s the mayor of South Bend. I just can’t think of a politician who would stake out and be like, “Let’s do this.”
Aaron Lammer: We may be slightly overestimating Congress’s long-term follow-through on actually restricting tech companies, but I will say, when I look at, not the lower tier, not the Etsy’s, not them, I’m talking about Apple, Google, Facebook, Amazon, Microsoft level companies, the only space above them, after how much money they’re already made, is basically to become world government/economies and we already see this in the fact that Apple basically, with impunity, keeps most of its wealth outside the United States, never pays any taxes on it. Amazon basically operates with impunity within the United States and runs its own tax economic system. I will be watching as these companies react to Libra and, if Libra gets even an inch of space, I predict everyone just scoots in right behind them.
Aaron Lammer: The idea of owning your own money that is the engine that drives your own business, it’s what we said early on about Libra, it’s a better business than Facebook. If Libra works, it’s move valuable than Facebook. It’s another moonshot. I look at this like these rocket and live forever projects. It’ll probably fail, but it’s a moonshot for Facebook.
Jay Kang: Yeah, yeah. And, also, I actually am starting to buy into the whole distraction narrative, that they’re like-
Aaron Lammer: I like that one too.
Jay Kang: … yeah, they’re like, “Let’s just make a video and do some hearings and they’ll let us do everything else.” It’s a negotiation tactic, being like, “Oh, here’s this crazy, crazy thing and here’s the less crazy thing. You have to pick one.” And, a lot of the times, when people get gaslighted into not remembering, “No, actually, we can not do both,” and they just pick the one to make the problem go away. I don’t think that that’s the A goal, but I think that they’ve probably had conversations there, being like, “Yeah, even if it doesn’t work out, it’s not the worst thing because it gives some leverage because they already said no to something.”
Aaron Lammer: Yeah. One could argue that all of the moonshot programs at all of these companies are actually a distraction from the businesses they’re actually in.
Jay Kang: Yeah, like Amazon drones.
Aaron Lammer: Yeah, delivery, drones, rocketry, all this stuff. It makes great stories and it’s one less story about conditions in Amazon warehouses or Apple’s supply chain and all the other things that are pretty shady that these companies have to engage in to operate at that scale. If Libra turns out to be, I think we called it a false flag, it was a pretty good one. It drew a lot of attention and Congress will feel very satisfied that they shut down Libra and fined Facebook only five billion dollars for its FTC violations.
Jay Kang: I think there’s something at Facebook. Facebook probably is incentivized to have people actually afraid of them in some way. If it makes Facebook feel huge and world powerful, it’s not a bad thing for Facebook, especially if they know that the follow-through from Congress, as it has been all this time, will be relatively toothless. Everyone talks about how they’re afraid of Elizabeth Warren and Bernie, but I don’t know, unless the Senate flips too in the next election, it’s going to be hard to get any of this regulation stuff passed anyway, so maybe they’re not worried about anything.
Jay Kang: Okay, Bitcoin. Do you want to talk about the price of Bitcoin for a little bit?
Aaron Lammer: Yeah. Before we get out of here, let’s just talk bags a little bit. I haven’t pulled a refresh, but we were sitting almost exactly at $10,000 Bitcoin when we started trading, which does start to feel like some sort of meridian of the Bitcoin universe now. It’s almost we’re at par or something like that.
Jay Kang: Yeah, a beautiful, round number. We’re at par.
Aaron Lammer: It’s a round number. No one ever felt safe above 10,000 and I don’t think anyone ever felt like it was done going when it was under 10,000. When it’s at 10,000, it feels like the ultimate no man’s land. We have the Kang line, to me, 10,000 is the foil to the Kang’s line. It’s like normal. If Kang line is the low line that must hold, 10,000 is the new normal.
Jay Kang: I think that’s insane for you to say. Bitcoin has been under 10,000 for 98% of the time that Bitcoin has been in existence, right?
Aaron Lammer: I know, and we’ve all been always just waiting for it to get to 10,000.
Jay Kang: I think-
Aaron Lammer: That was when I felt like it would have recovered. When it was really low, I was like, “I will feel like Bitcoin has recovered when it hits 10,000.”
Jay Kang: I felt like when it hit 4,000, it was pretty stable, or 6,000 even. Remember when it was hanging around there for a while? It’s like saying, “Okay, when’s the bull run going to happen? We’re at 10,000,” and wasn’t the bull run from 3,000 to 10,000? Doesn’t that count as a bull run? But you feel like that’s just normalization, that’s like Bitcoin finding its equilibrium?
Aaron Lammer: I feel like the market has clawed its way up to 10,000 twice now, and part of my overall bull feeling about Bitcoin is, the longer it goes on, it’s proving something, simply by existing for another year. To be another 18 months down the line, back at 10,000, it feels pretty good to me, although, looking, we just crossed back under 10,000. Certainly if 10,000 can’t hold here, we could be seeing some pretty choppy waters beneath.
Jay Kang: Well, yeah. The one thing I will agree with you on is that it does feel stable for now. I think that there were ample opportunities in the past couple weeks for this thing to totally crash out and it just didn’t. Alts crashed out, but Bitcoin didn’t.
Aaron Lammer: The story of alts is the more dire one.
Jay Kang: My alt bags, by the way, that I bought during my three days of FOMO Kang, oh, my god, they’re in rough shape. I bought the exact top and we’re not close to getting back to the top there.
Aaron Lammer: You’re not trading at all? You’re just going to hold these alt positions and hope for another alt spring someday?
Jay Kang: I might just sell them and sell the bottom and then not think about it anymore. But, yeah, Mike Novogratz tweeted something about how he thinks that Bitcoin is going to reconsolidate for a while, which is range around probably 8,000, $12,000 for a bit and then make another move up higher. I think that’s probable and that’s me being the most perma bear.
Aaron Lammer: Yeah, I’ve heard similar things. A lot of people, me and Ledger on the show were talking about it ranging between 10 to 14,000, so I think the bear case of the same thing is it ranging from 8 to 12,000 [crosstalk 00:39:36].
Jay Kang: Yeah. The bear case is it goes to $100, but I find that also to be almost impossible to believe. There’s just too many people right now who are invested in it who aren’t going to pull their money out, I don’t think, unless there’s a violent, violent price action. T
Jay Kang: he only other question I had for you, what do you think about Ethereum right now? Because I would say that there is a lot of stuff out there, not just in crypto Twitter, but in some of the more intelligent, thoughtful spaces, that is really asking an important question, which is Ethereum isn’t that new and we still have no real usable products. We don’t really have any real usable products that seem on the horizon. A company like ConsenSys, despite raising tons of money and having an extremely, I would say, somewhat creative and interesting founder and having 15 sub-companies within that company has still not created anything that is broadly usable, and I think it’s fair to ask the question right now, is this thing done? Should we give up on it? A lot of smart people I know have.
Aaron Lammer: Well, this question is near and dear to my heart because, right now, I’m about 60% Bitcoin and about 20% Ethereum, which is way more Ethereum than I’d like to have, and I think if I was trading purely based on what I think of Ethereum, I would sell my Ethereum right now. Now, the reason I’m not doing that is exactly what you stated earlier.
Jay Kang: Yeah, why don’t you do that?
Aaron Lammer: Well, I feel like we’re selling the bottom. Just in general in the everything except Bitcoin market, I feel like to sell off any of those right now, you got to feel like you’re selling the bottom. That might not be true, but that’s how I read it. In terms of what I actually think about Ethereum, I think Ethereum’s on a timeline that’s almost the exact opposite of Bitcoin, and this is maybe Ethereum’s great weakness, which is as long as the Bitcoin chain continues, I think it becomes more valuable simply for proving that it can exist for over a decade. Someday, I expect it will have existed for over two decades.
Aaron Lammer: Ethereum operates more like a startup, where it’s like, “What are you going to do? It’s been a long time and you haven’t shipped anything.” There’s this constant expectation of new features and new code being shipped, and a ton of the price is based on the idea that there’s eventually going to be some sort of a product-market fit and that puts it on a timeline where I agree with you. Now that we’re a year later, I’m like, “Wow. It’s getting dire for Ethereum.” But I do think that we’re selling the bottom if we sell our Ethereum right now.
Jay Kang: I still think it’s a little bit too early, and I think that too much of the attitude about Ethereum is pegged to the general tweet analysis of Vitalik’s stability or his intelligence or his focus on Ethereum and I think that, for Ethereum to succeed, I have no idea if it’s scalable in the way that everyone says it’s not scalable and I would trust that maybe right now it’s not. I think they probably, at this point, have to move on and be quiet for a little bit. I don’t know if that makes sense. Every bit of attention that is drawn to Ethereum right now is going to be negative. There’s nothing they can do outside of launching a really great functional product that will be good for Ethereum, so maybe it’s time to lay low for a little bit.
Aaron Lammer: I think that’s, with Ethereum, that’s probably what they are doing.
Jay Kang: Yeah, except Vitalik is always tweeting stupid shit and getting in arguments. That’s what I mean. If the rest of them are just laying low … you can’t lay low as Ethereum if Ethereum is just one person and that person is like, “I’m not going to lay low.” Then the actions of everybody else don’t matter in a lot of ways. It just matters what Vitalik does.
Aaron Lammer: I see Vitalik as having clearly indicated that he wants to not be a part of Ethereum anymore and be a free-floating thought-maker of the world and not a person who runs a company, and I feel like either Ethereum people just can’t accept that or it would be so momentously bad for their bags too accept it, because it’s really probably the best thing that Ethereum has going for it is the recognition of Vitalik, that it’s in this weird no man’s land where my perception is that Vitalik doesn’t work that much on Ethereum anymore.
Jay Kang: No, I don’t think he does, but everybody thinks he does. He’s still the representative of it. Do you know what I mean? I don’t know how they decouple that. I don’t think they can. Yeah, it makes me think that maybe they’re in a lot of trouble. Do you think it would’ve been better for them to not put out any products ever, if Augur didn’t come out at all, if some of these other things like Civil hadn’t launched? They’d probably be in a better space, but when you do have a small number of products and they don’t really work, there’s only so many times you can be like, “Well, this is Phase A and we’re going to be in Phase B.” And it’s like, “Well, you employed a lot of people, you promised a lot of things for Phase A and they didn’t come true, so why are you putting this out? Who’s running the ship here where they thought that all of this would be functional?” It does seem concerning for people who are Ethereum heads.
Aaron Lammer: It’s going to be hard to say goodbye to Ethereum if we have to. It had a good run. I hope, just for the pure entertainment value, that Ethereum makes a comeback and does something awesome because it’s been fun, as Libra’s been in the news, it’s fun to have a second thing going on and a contrasting vision, because the Bitcoin maximalist vision can just grind you down over time, I feel like.
Jay Kang: Yeah. Did Libra just basically, in one fell swoop, just take out the entire alt market?
Aaron Lammer: The Trump tweet is about Bitcoin and Libra. There’s no chance that Ethereum was going to be in that tweet.
Jay Kang: Yeah. It’s not like-
Aaron Lammer: “Ethereum is dangerous.”
Jay Kang: Litecoin.
Aaron Lammer: Yeah. I think, if you just did a recognition of digital currencies chart, now Libra is the second most recognized-
Jay Kang: Oh, for sure. That’s true. Yeah.
Aaron Lammer: … digital currency, which probably speaks mostly to the power of Facebook’s brand itself.
Jay Kang: Yeah, and the amount that people were covering this, but they were covering it because of Facebook, obviously.
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