#348 — The Bitcoin Group #348 - Silvergate Fallout - Binance Woes - MIT POS - Ordinals Fad?

The Bitcoin Group, the American original. For over the last 10 seconds, the sharpest Satoshi's, the best Bitcoin's, the hardest cryptocurrency talk. We'd like to welcome our panelists. Rossim Alcindy from ZeroX Salon. Hello there, everybody. Dan Eave, the crypto raptor. The Bitcoin Group giving you in the loop. Josh Egala from thestandard.io. Good evening, good morning, and good afternoon, everyone. And I'm Thomas Hunt from the World Crypto Network, moving on to issue one. Issue one Bitcoin either slide on Friday as investors way potential fallout from Silvergate woes. Yes, Silvergate, the Bitcoin bank, is suddenly the Bitcoin bank in trouble. And it's causing the price of Bitcoin and Ethereum to fall by about 4 and 5 percent respectively. Dan Eave, what's going on with Silvergate, which previously was the bank to Coinbase, Galaxy Digital, Circle, Paxos, and BitStame. They've given notice that they won't meet an extended deadline to file their annual report, and it's warned that they may not be able to operate for another 12 months. Well, this is pretty huge, isn't it? I mean, there's some pretty big brands there with Coinbase, Galaxy, Circle, Paxos, BitStamp. They're pretty much the provider of banks for banking services for some of the biggest companies in the world, the crypto. So to shut that off means that people are supposed to be reducing the off-ramps, right? So off-and-on ramps, so people can only trade from Bitcoin to Sharecoin to try and hedge their risk against whatever they see coming. But it seems like we're back in regulation season again. It's almost like in the bull market, the regulation season kind of comes to a bit of a halt because everyone's too excited about what's going on with prices. And in a bear market, regulation comes in because obviously people have lost money and they start to freak out. They complain to regulators. They lost it from some silly ICO scam. And then suddenly everyone starts clamping down again. Although they tend to tread carefully because they're probably investors of ICOs themselves. Like these people. In the SEC, as we've seen with the ties to FTX, right? The guy that was one of the new guys at the SEC stepping down after dealing with FTX. But it seems like it, I don't know if it's to do with the general ripples of FTX. It just seems like this is due to a general clamp down from the US. Maybe they're seeing the fact that a lot of Bitcoin mining is since the US. And there's a lot of Ethereum nodes in the US. And they're trying to claw back on some of the regulation there to put that hold on Cryptocurrency. But yeah, ultimately it's going to make things difficult for people who need to cash out, who are in desperation for selling Bitcoin in the US. Never sell Bitcoin, of course. But that closes the off-ramps and that makes things a bit difficult. And also closes the on-ramps for people that are trying to stack up before the harvining, which is pretty much just under a year, just over it, or a year, it's the end of March 2024. So ultimately, I think any bank that's dealing with crypto has to tread quite carefully. Even in the UK, I've seen an odd with two banks and both of them have sent me individual letters, printed letters about cryptocurrencies and stopping services with crypto currencies. So maybe it's just a worldwide coordinated thing. Maybe it was to do with the WEF or nobody knows. But there's definitely a clamp down happening and regulation is like, we've gone from ball market to regulation market. And hopefully we step out of regulation market and back into ball market again soon. Josh Agala, Silvergate was the crypto bank you could trust. How do they end up this way? Is this just more contagion from SBF and FTX? Yeah, but I'm not too worried. Like, I've run, you know, we've run Bautoro, since we started coding in 2014 after the Mt. Gox collapse and run it since 2015. And one thing I know from all my comrades in the crypto and Bitcoin industry that have run businesses in this is that in those earlier days, you had to open bank accounts on a weekly basis because they were shutting them as fast as you could open them. And so any proper Bitcoin business or industry in this industry will have already five bank accounts. With different banks because of that reason. Coinbase, I'm sure has that covered. I think this is just a temporary thing. We've been in this bear market for so long that I think a lot of the weekends have already left. So I think this little price shock down, the people will just pick up some more. But anyone that's holding at this stage has held through FTX, has held through Luna, has held through three arrows. So it's kind of like the people that are left are just going to be holding. So I don't see that there's going to be much more of a price shock from this sort of thing. Again, it's just a bank, banks go, Bitcoin businesses understand that you have to have multiple banks. Bank accounts because banks are shit. The one contagion that could be worrisome from this is if that, if Silvergate has actually got, is actually bankrupt. And the FDIC can only pay 250K to Coinbase when they have millions and millions of millions of dollars on there from customer accounts. So that is a worry. But I'm guessing Coinbase is profitable enough to maybe even have their own insurance policy. Well, CML Cindy, how could a little bank crash take out 5% of Bitcoin and Ethereum? I mean, the markets are narrative engines, right? So they create a reality of their own that may or may not be related to some kind of underlying happenings or truth. So the amount of coins collateral assets on the exchanges where the price discovery happens is actually a very small proportion of the total supply of these cryptocurrencies. So the price could move around a lot with very little impetus. And so we were always post-hot rationalizing everything in this space. The prices go up and the prices go down and people try to pin the tail on the donkey as to what they think caused that. I mean, what I will say is that there's a fundamental kind of conflict of interest at the foundation of this. So banks and banking and crypto currencies like Bitcoin, they're kind of maybe not mutually exclusive, but they're not the most comparable things, objects, properties, commodities, whatever to fit together. And so it's never really a surprise to see all these tensions. We've had these tensions in the crypto space with banking providers or whatever, financial services providers, regulators, forever. And like many people in the past and the present, including myself, have tried to be kind of like go between the crypto space and regulators and people in the quality sphere and governments and things like that to give them information or ways and means to understand what's going on a bit better. Like I wrote a regulatory epistemology framework for specifically for regulators. And like then went to work at a place where I worked together with the person that's now the most important regulator in the world for crypto currencies and he read my regulatory philosophy text. We discussed it. But unfortunately when he took that position, he seemed to go out on the attack. So the SEC has really been on the attack for the last 18 months. I would say Dan made the point that there's a bull market and regulation market. I wonder if regulation season, the bear market happens because it's regulation season. It's kind of like they go out hunting. It's that I'm not sure if the Elmer Fud and Daffy Duck, yeah. Was it duck season rabbit season? Yeah, I guess the other thing is we talked about compliance. So with Ethereum, there's this kind of problem where parts of the US government have a kind of like naughty list, OFAC, the office of office of foreign assets control. And they, that on that list is like people, corporations, nation states and now smart contract addresses that they don't like and that if you want to comply with American law, you have to not do business with them. And now more than 50% of the blocks on Ethereum are, oh no, actually now it's gone below 50%. So at one point it got up to I think like 70, 80% where we're complying with this thing. And now it's come right back down. But there is this like censorship pressure on Ethereum. And that's that's something very real as like a concern, not just for Ethereum for the whole space because there are strategies that nation states could take to try and influence these things. And censorship is one of them, yeah. It does seem a bit like whenever the cannabis industry gets banking, the US doesn't want it to happen so bad. You always know it's going to come crashing down. Silvergate was that temporary halfway house where crypto businesses like Coinbase and Circle and others tried to play fair with the law, tried to play on the team reporting themselves, reporting their taxes and so forth. Destroying Silvergate seems like it'll put them at a weaker advantage as well as putting the regulators at a weaker advantage. But if your goal is an unregulated environment that you can then jump in and regulate, then it seems like you're setting up your goal. Moving on to the exit question, the price of Bitcoin is down 5%. Dan Eve will be higher or lower this time next week. Haya! Josh Agala higher or lower? Haya! What's the email center? It's all positivity here. Will we go higher? I believe the price will be exactly the same in seven days like to the nearest Satoshi. Of course we have the greatest predictor in all of Bitcoin history right here. The last two weeks it's refused to predict. Refused to predict. So here we go. Will the price of Bitcoin be higher this time next week? Here we go. Two weeks off. Big prediction. A lot of people are going to put their money on this. Higher this time next week. Most likely. Most likely. The ball is bullish. The panel is bullish. This is crazy. We must be heading for a huge collapse. Moving on to issue Binance woes. There's nothing but trouble this week for Binance. The exchange without a home they used to live in Malta. One time they lived in the south of France. Now nobody knows where they live. The Binance exchange USD coin will be unlisted from Coinbase. Binance's asset shufflings are eerily similar to maneuvers by FTX according to Forbes's digital asset section, which you can't read on the normal internet. And investors are pulling around $6 billion out of Binance's stable coin. It doesn't look good all around for Binance. Josh Shagalla is Binance. Another FTX in the making have too many people trusted a good exchange that doesn't have a home. Centralized exchanges should always never trust them. You should never trust them. You should use them to do a trade if you need. But I'm just such a big fan of DeFi. I just love it. I'm a big fan of it. But obviously people want actual fed dollars and European central bank euros and stuff like that sometimes. So you need these things. But Binance has always got the potential to be an FTX or a mailbox. All exchanges do. So does Coinbase. So be wary out there for FTX. And remember that Bitcoin is not Binance. It's not, you know, CZ isn't the CEO of Bitcoin. CZ isn't Mark Appellus isn't the CEO of Bitcoin and neither is Brian Armstrong. So Bitcoin will continue doing what it's doing. These exchanges, look, it's so profitable to re-hypophicate funds. Bitcoin was created so we could get around the banking sector who, first of all, bail themselves out, bail themselves in re-hypophicate funds which means basically have a store of money and pretend you have more of it. So the more, more that this happens, the more people will distrust that and move to DeFi. So I just be careful folks. BUSD has been turned off. I'm not too worried actually about Binance at the moment personally. I don't store any funds on there. But it's, they've been pretty good actors throughout this time. They haven't been like terrible. They've, you know, there is some nefarious transactions but these transactions, there is always a shadow of a doubt. And before some sort of a core case, we shouldn't freak out. Of course, these sorts of bank run style events are really good at testing liquidity at these places. And Binance has stood up to some pretty hardcore liquidity crunches in the past. Yeah. So I hope that they find because they've, you know, I don't want more of this industry to keep on getting taken down. But this article from Forbes definitely looks like an attack piece to try to crush. And there is a PINSA attack on crypto. And for everyone that thinks that there are actors there that don't like powerful actors don't exist that don't like crypto, then you've got to think again because there are. And they're a very powerful actors that don't like this industry and want to take it down. And by coordinating attacks on narratives, you can, you can take that a long way. But at the end of the day, Bitcoin every 10 minutes pumps out another block. And that's all that really matters. What seem, what do you think about Binance? Will they become another FTX? I mean, I don't have a crystal ball. So I don't know what's going to happen to Binance. But like, I mean, you have a crystal ball. Like, so we should be asking you. But like, yeah, I mean, like the, the signs don't look great. And like, you know, I think I agree with Josh's assessment of like Binance. Like, they're not perfect, but they also like, they're not the worst. And like, they are pretty big. And like, a lot of people depend on them. And so if that goes down, it will like, there'll be a lot of ripple effects, like, you know, arguably much more than FTX. So that's, you know, I don't think anybody really needs that right now. And it gives more kind of fuel to the kind of regulatory fire that is being stoked at the moment. And I think we should also say that it's more than one kind of reason that in exchange, like a centralized exchange might fail. Like, so you could have like kind of technical failure, which leads to like, you know, whatever lots of funds, which would be like, might happen to now gocs. Could be like somebody just runs off with the money. That's happened to, you know, Cryptopia was an example of that. And yes, there's all kinds of ways these things might all like, you know, with FTX, like risk management, I suppose, is what they, what we're calling it now, you know, what happened there with like lack of segregation of funds and things. Yeah. And so I hope it doesn't go down. But I also, like, I don't touch it, like from the start, I looked at it as like, that is not for me. And so I've never touched it. So I not personally affected, but like I also know that it's like FTX. It's one of these massive on-ramps to the world of tokens and cryptocurrencies and Bitcoin and all the rest. And so the sorts of people that would be affected by failure on, by an ounce might be like a lot of people that knew it to the space. And then like, you're kind of burning another generation of people that are getting interested in these technologies, which I don't think that's good. Because like many of them, we might think of them as shitcoin is now, but they might be Bitcoin is of five years time, 10 years time. Like, it's with all, I think walked through those, those waters wouldn't be arrived. So yeah, I'll finish with a Shakespearean corruption. And so which is to be USD or not to be USD, that is the question. Extra points for Shakespeare, very good. No, I mean, it's been interesting to see Binance grow when it started. It seemed like it was almost a Kickstarter project, a very small exchange. It became a huge exchange taking up so much weight in the room, getting to so many projects, actually seeming ahead of Coinbase many times despite their different origins. Damn, Eve, though, why can't we use an exchange like an exchange? We always pull our card up, we trade our goods, and then we just leave our goods there, let the exchange manager manage our hay and so forth. Why don't we bring it home and put our hay in our own barn? Well, after being stunned on Cryptopia, as receive mentioned, suddenly reminded me of the horrors of Cryptopia and a big rail, which was ride blocks like back in, yeah, well, and many others, BTC, Mintpal was like my first thing. I don't learn lessons very well, but I agree with what we're seeing saying, like it's the newcomers that are going to be burnt from it. That's the sad thing. And these are people that turn into, you know, that the curve is that they hear about Crypto, Bitcoin, they think the boat sailed, they hear about Crypto, they get into Crypto, they get burnt and then they become hard core Bitcoiners. That's just the kind of way it goes. But I treat exchanges like the Hoki Koki in our shake it all about. Like if you need to do a trade, like don't leave your funds on there, don't leave anything in anyone else's custody, I can barely trust my own, but at least I know that I'm kind of trying to be safe in the meantime. And I know that I'm not going to be misappropriating my own funds. Like I'm not saying that Binance is doing that, but like that can happen with third party risk. And as Justin about re-hopartication like that just seems to be especially in the crypto world, that's what happens. Like one person lends it to another lends it to another lends it to another, that's why we've seen this massive cascade of companies going down after three hour of capital. Now when I was looking earlier, the BUSD had a market cap of nine billion. It's actually, I think it's gone down since then, it's now under 10, sorry, not sorry 10 billion, it's now under 10, it's now nine something, which is the same level it was in May 2021. And you look at the chart and it was 22 and a half billion, 23 and a half billion, sorry, it is peak, which was November 2022. And since then, it's just been a huge downward spiral and down to just below 10 now. What's crazy about that is that you probably expect the stablecoins to be doing well in the time of a bear market because there, you know, there, people are trading them a lot more, they're trying to stay out of the bear market into what they believe is a safe haven, you know, briefly in market term, so that dropping so significantly is quite a sign. But I don't have anything on by an answer to all I barely use them whatsoever, ever, but I just like see, I don't know, I think I like the way CZ is quite transparent, I like this safe who kind of fund and I think that there more companies should try and actually model themselves the way they are transparent to their end users. And what's funny is that we often like when finances discuss, it often gets criticized because if it's lack of a home, you know, going from water to where it's at here to there, wherever, and to try and sidestep regulation, and yeah, that's what like, of course, it's trying to sidestep regulate regulation like Bitcoin and want to be regulated. No one wants to be regulated in Bitcoin, still don't want to be regulated. Like that's what you do when you, you know, it doesn't mean you're out to be nefarious. It's like the idea of privacy, like just because you want to keep something private, it doesn't mean you're being nefarious with that, just because you don't want to, you'd be strangled by regulation, it doesn't mean you're doing anything nefarious. So I, yeah, I don't want to see by landsfall, ultimately, I think we've had enough falls that we could do with a bit of a break. Well, obviously, I don't think anyone's rooting against finance here, but I have just always kind of had a bad feeling about them to tell an analogy once upon a time, there was a drug website called sheep marketplace. And everyone always said that the customer service at sheep marketplace was really great top notch right up until the weekend when they exit scanned. When all the wool and then all the sheep got fleeced. And it was hilarious because their name really was sheep marketplace. And that's really what they did. Obviously, bias is much more legit than that, but it is a complex issue when you start moving around from place to place when you're doing kind of libertarian hero things, you know, one one side you're like dread pirate Roberts John McAfee, you know, you're well, and then you decide does CZ get to become Bill Gates doing those libertine libertine hero things or does he end up on the boat with McAfee with a shotgun going crazy. And we say this many times, but it's amazing how many people come to Bitcoin or other decentralized projects and say, wow, this would be a great project for me to snap my centralized institution onto. And we've got some of the smartest, hardworking people like Brian Armstrong and others who've built their business coin base and others as completely centralized institutions that kind of take a lot of the bang and the buck out of Bitcoin. They take the personal responsibility, they take the censorship resistance, the way that mining pools and future articles are being used against people calling them centralization. It's just interesting to see that many times this keeps happening. And Dan, remember you got to keep your don't misappropriate your own funds. You got to keep the candy fund in snickers and Reese's pieces and peanut butter cups. You don't want to mess around by reappropriate your own funds. Never get high on your own supply. Or as we said, become unregulatable. I was just thinking with BUSD, one of the interesting things about that actually is that and about the bank run on BUSD is that because smart contracts are actually so transparent, there's a buffer zone that Binance probably have where they can review the smart contracts and see how long is actually left because obviously the thing is with stablecoins, a lot of people kind of stake them in different ways or whatever in different protocols. And there's usually unstaking periods or lock-in periods. So they've probably got quite a reasonable view of the buffer that they have of people that are locked in with their BUSD to say, right, we can go down to four billion before we start to shit the bed because the smart contracts get unlocked from this protocol, from that protocol, like curve or whatever that are in the three-year or the fuck, you know, all that sort of stuff. So the liquidity buffer, right? Yes, yeah, yeah. So they've got kind of a view of like, they've almost got four sides of whether there could be a bank run on BUSD. And what do you think about CZ's plan to kind of become ungovernable? Does he become Bill Gates through this? Is this just kind of Steve Jobs' classic advice that it's better to be a pirate than to join the Navy? I think it's just like the, which way, Champagne Man? There's the fork in the road and there's Bill Gates and there's John McAfee and we don't know which one it's going to be. So I'm watching very interestingly. I was very special placing my heart for John McAfee. Like I know he wasn't a perfect individual but like I did appreciate his vibe. And remember once I spoke at a conference in Transylvania, it was in Romania and we were there, it could include and a whole bunch of us and then John McAfee called in to speak. He was like keynoting. He was on his boat in International Waters doing his talk and like just behind him was one of those kind of like mobile hospital screens on wheels. So he's giving his talk with the screen behind him and then like you could see people kind of like rustling around and then his wife came out from around and he was living on this tiny fucking boat in the middle of the ocean. And yeah I thought that was, I don't think he died. I don't think we've seen the last of him. So yeah I mean he was definitely a showman. Yeah, yeah. I love that. I think it's the difference between John McAfee and CZ though. John McAfee acted like some sort of drug empire king when he wasn't a drug empire king and he had no real, he had not, he wasn't that wealthy. You know he just liked making a drama of everything and and making a show of that drama. I mean that. I do think we found a really good point of comparison here where CZ Bill Gates, John McAfee all have these weird tended CZ's. CZ's made billions of dollars. Doesn't seem to spend it. Like all these little small things on one side you're like, oh that's very clever. He listens to classical musical all the time. But on the other side you're like SPF and you're like, oh no, he listens to classical musical all the time. It's a bad sign. So I really do think we're at an interesting turning point for these two characters and of course the highlight for me when John McAfee spoke at the Remaining Convention is that Theo Goodman, our good friend got up there and they said, okay Theo asked him a question and Theo asked him what his favorite gun was and you could tell him McAfee was blown away. He's like, this is the best question I've ever received. Like for short range or long range obviously like a shotgun. I like a hand gun. He had a whole answer to it where it was like, when you see these people on TV and they get the same question over and over again, McAfee gets that hot wings hot sauce question from Theo and he loved it. So yeah, I don't know if he's dead or not. I remember at one point Theo and I were at the back of the room before he had to go and do that bit and like we were asked to be quiet because we were laughing so hard and we couldn't control ourselves. No one would step up either. No one had a question. They had to go to Theo. But we've got to move on to the exit question. We've got kind of a bonus issue here. Exit question. Binance is also getting into artificial intelligence powered NFT generators. Well, that's a lot of buzzwords in one sentence. They call it Picasso and apparently you can just type the words in and then push the button and make the NFT. I actually think it's kind of clever. They've captured it 10,000 minutes. Just generally Josh Shagalla and then we'll go down the line. What do you think about Binance's new NFT AI generator buzzwords? Well, look, in the beginning of Bitcoin, you know, 2010 to 2011 to 2012, when the community started getting bigger and bigger, the hot, the every talking point was Bitcoin's a chulet bubble and just kept on talking about it. And it's like, hang on a minute, but the main thing about Bitcoin that there's only 21 million. How can it be a chulet bubble? Yet then NFTs come along. I never hear the chulet bubble analogy ever coming out of anyone. Yet there's literally infinite amounts of these things that people can create. There's no cap on none of them. And now you get this sort of fast food AI imagery getting pumped out. It's just, it's the end. You know, it's the end of, I think it's not the end. Like there's still artists that really create cool stuff and people, there's always going to be collectors of certain people, but this is sort of the end of the hype train of NFTs, I think. By the way, on the standard, we're looking at using a, because we're representing people's debts as NFTs as well. So you can lock up funds borrow from yourself, stablecoins, but you, if you can't pay that debt off, you've actually got an NFT that is the key to that debt. So you can trade, you can sell that debt like a, anyway, so that's going to be generated a little bit as well with some artificial intelligence, just to, you know, for fun, but, but yeah, I think, I think Josh has got a great analogy with the fast food art, but unfortunately, I see it as maybe even war hollion as if the computer has a signature. So if there's something unique about the Binance AI and it makes 10,000 interesting images, they could be good. And I'm also reminded of the Banksy movie exit through the gift shop where there's an artist. I don't even know if he's real or not. I think he's called Mr. brainwash. And I swear, I saw a couple of his pieces recently in Las Vegas. I thought they might be his, but he just kind of slammed pop culture together. And if the AI could do that, then the AI could be Mr. Brainwash. It could be Banksy, and it could be all owned by Binance on the Binance BNB chain. How convenient. How wonderful. Was seen. What do you think about Picasso? I mean, I don't have many thoughts about Picasso. I don't think it's that important. I think you may represent the end of a cycle as like we've been suggesting, but I would just like to say that I don't think art is quite dead yet. So let's not ring the death note. I live in Berlin, hang out with like loads of quite interesting people that use the medium of the blockchains and tokens to do quite interesting conceptual stuff, which you would not be able to do somewhere else. So this is just a bit like we're using one thing to make a bunch of, you know, stuff like a smoothie or whatever. And then we're like forcing down people's thoughts with the, you know, incentives of economics and finance. And so that is not particularly interesting conceptually. But are people doing really interesting conceptual stuff? So I, yeah, I'm actually quite, I see interesting projects with NFTs do. I don't like NFTs. I don't touch them, but I see people doing quite interesting conceptual stuff with them. Just not on Binance or Binance chain or anything like that. No. So yeah, I would like to give a shout out to my friend Paul Zidler, who has a project called Straight Light, Prodice Call, where he's built a bunch of autonomous agents, still like little termites that run off smart contracts on Ethereum and optimism. And so that, I think, is like, they're doing quite interesting emerging, like, you know, whatever art, you know, tech art stuff. And like that is interesting. This is like painting by numbers, really, literally. But that's, that's okay. I guess it's got a place. You know, elevators do music, right? We don't necessarily have to get human to do that. So like, we need wallpaper for stuff. And I think this is basically like, yeah, we're making some wallpaper here. Yeah. And by the way, people can do this already. I mean, I, you know, I think, Thomas made already some career cards from AI. Oh, my background is VQ GAN plus clip 2021. So like, yeah, we, yeah, everyone's doing it. Yeah. Why not? Yeah. And come on, let's see, the elevators didn't write the music. No, different. So I want to decentralize autonomous elevators, or I'm taking to states. I want to spark elevator that has a personality, like the hitchhiker sky. He's like, up again, down again. Oh, whoa, is me. But no, I think of it back to when we just had Photoshop and Photoshop was another tool. And I was like, wow, I could cut up these photos and I could stitch them together. I could do the negatives. I could do this. Or I have this Photoshop thing. And I can just pull up spray paint. I can just pull up clone. Like, I have all these incredible options. The AI, whether it's the crazy writing one that I think is great for rough drafts and brainstorming and maybe even asking questions and getting some answers as a chatbot they're trying for being in other searches. Or if it's mid-journey or Picasso, it's amazing to have kind of a brainstorming session with a machine where you get an image back. And then maybe it's not the final image. Maybe you then work with an artist. The artist could shape the image the same way that a good editor could shape something that chat GPT created. And it's just another tool. It's just another shortcut. And I know that horrifies everybody. But you know, we're not writing with calligraphy anymore. Most people can't even read cursive. Dan, what do you think about Picasso, Binance, and Fine Art? Well, the weird thing about AI in general is that, if you think about it, it multiplies the amount of images that you're going to be seeing. Like, if it takes one artist, whether they're photoshopped or original, it takes them X amount of minutes or hours to create a specific piece. Whereas like, whilst you've been chatting, I've been just like freestyling on mid-journey about random things like recastly giving up. I like conceptual stuff. Like, the food fight is learning to fly, recastly giving up and like all like taking lyrics. But it's just amazing. So what would have usually taken one or two or even five people in hour or so to come up with now takes like one minute and you've got a selection of images. And then a few minutes later, you can go down the little rabbit hole with those and change them slightly or blend them or whatever. It's absolutely mind blowing. It's like crazy mind blowing. But they're just, I think obviously Binance are trying to capitalize on it. They're trying to make it easy for people as well. It's good that they've limited to 10,000 spots because they do the whole like, you know, in that 10,000 teams like the magical number now for all these generated. Wow, scarcity. Only 10,000 ever in series one. Anyway, there's a series two. But yeah, it seems like it's growing exponentially on the number of services using it and and even just the things I'm watching a lot of or since I've started watching a few things on how to use chat GPs, you're kind of not advantage, but how to use it, right? How to get the most out of it. Here's the tool. How to use the tool in the best way possible. And there's videos of how doing Excel macros. There's writing essays. There's anything from creating you a pub quiz. It's just mind blowing. Like the stuff is. It's only what it can't do, Dan. I can't do. I can't do really high entropy text generation like poetry or experimental like prose. Like really can't. So like that is kind of seems insulated, which is great for poets except for poets who extremely baddie paid already. So like, yeah. They could do bad. I could do bad. I listed on some some like artist styles and it knows like what a Bukowski story should be about, but it doesn't have Bukowski style when writing it. It knows like Lewis Carroll. It's like, oh, kind of a fan's full tale with, you know, Alice and Wonderland continues, but it doesn't have his style. So we're not there yet, but some of the other ones that it does the voice. The thing about doing the voice perfectly. The thing about any of this technology is always not where it is now. It's where it's going. And so you can see a trajectory and that's that's really what how I try to invest money is or resources or interest is where it's going. And that's that's definitely quite a frightening place. I have a feeling though this like we might be in the kind of the the steep bit of the S curve right now and it might well tail off into the sort of like the tale of diminishing returns a little bit soon. It's like pace is insane at the moment. So the thing behind me I generated two years ago, it looks like, you know, completely old hat by now. So that like each of these things, their generations are going like, you know, every couple of months, there's like a massive leap forwards in image and takes generation. Yeah. Sometimes you think chat VT is very smart. Other times it's just an enhanced version of Clippy. It's like, oh, you're writing a letter. This is what a letter looks like. And I think it's going to be very interesting because it's not really a tool for artists. If you think about mid-journey like your artist, oh, I could draw something anyway, but your person that can't draw your person that needs to prototype, make a storyboard, share their ideas. Now they have a way where they might not be a visually expressive person, but if they describe it with enough words, if they tweak the machine a little bit, they can get some impressive prototypes that they could then share with someone, make a second piece, make a more complicated piece. I know there's a lot of artists there like saying, you know, AI generated stuff is bad and we need to detect it if we do out of actual art. But like, I'm one of the people that's like, why ban? Okay, sorry, fair enough, ban drugs from the Olympics, but have a drug Olympics. Have like the fastest 100 meters when you're on speed or like, like, you know, just allow it and then whatever, like anything goes version, you know, I like that kind of concept where I actually just then actually pitched that as a show idea to channel seven. Yeah, called how far, how high can I jump or something like that? I said, there's all these athletes taking drugs and they got nothing to do. Let's see how human can jump pumped to whatever. They all laughed me off. I think that would be a show that would go down a treat on YouTube. I think so too. That would literally go like, if it wasn't for someone's out there, objectively going, oh, you know, or subjectively down, oh, I don't like that idea. If it's just random people on YouTube going, yeah, of course I'm going to do that on my Friday night. We're going to watch the drug Olympics, how high can I jump? I do think with the AI and other things you could have a competition of like speed novel riding or speed show riding and people could show how they use this tool to enhance their work and they work as a group that they feed the group results into the machine. The machine gives another idea. They work as a group. They edit it down. I think we got a show where seems here, oh, it was clippy all along. Oh, no. Let's see who you really are, Chad G.P.T. Oh, it's coming to the old school. Oh, my wow. We better move on to the next issue we're running at a time. Check out worldcryptonetwork.com. We've got 3,000 and 34 videos and they're all free. That's amazing. Worldcryptonetwork.com. Also, good time to push the like or subscribe button below. Moving on to issue three, Ethereum moved to proof-of-stake. Why can't Bitcoin? There is no technical obstacle to making the notoriously energy hungry crypto currency far more efficient, just a social one. The MIT Technology Review seems to have no interest in the security discussion of proof-of-work versus proof-of-stake. They've summed it all up into one point that Ethereum is good for the environment and Bitcoin is bad for the environment. You might have guessed, we called it here. We told you this would happen and now it's happening. What do you think about the battle between proof-of-stake, environmentally friendly and environmentally destructive and catastrophe proof-of-work? I have a few thoughts about this Thomas. I'm writing a book about proof-of-work at a moment. I'll try to limit the number of thoughts that you get at once. Much like Bitcoin, the MIT Citransaction throughput through the magic of proof-of-work. First thing I would like to say is there's this idea of a intersubjective consensus, which many Bitcoins have been talking about for a long time, between the technical infrastructure, protocol and so on, and then the social-led people that use the thing that actually make this network real. We have a protocol, series of rules, which is dance case. People run the code that that protocol is built specified by the protocol. They become nodes in the network. That is the network. They're sending transactions. That's Bitcoin. It's open source software. There's a GitHub repository. That code could be changed. There's a process which has kind of emerged over the years. It's kind of scotting routes in the open source and free software movements. It's run through Linux main lists. There's a GitHub repository and then there's discussions about upgrades. That can be due to a code being pushed. There's also a requirement that miners that are doing the proof-of-work also are on board with this thing. Ultimately, they are the ones that are putting the blocks on the chain. That's how the history of the network is architected and agreed upon. It's complicated because there's many different stakeholders like developers. There's also the nodes. The blockchain war that the nodes, the users, weren't going to go along with what the overlord thought would be an easy upgrade to more block size. We thought code was law, but it turns out that node was law actually because the users are in control of the network without the users to this network. The miners and developers are very important as well. They can most importantly influence the users with their hard signals on the network and also with the soft signal on things like Twitter and YouTube places like this and so on. These similar attacks with nodes where people could run up thousands of nodes and sort of spoof the network and think that there's a consensus, but there isn't. Yeah, so signaling, some kinds of signaling are cheap and some kinds of signaling are expensive. So proof-of-work is very costly way to signal. So when miners put their preferences within messages in blocks, that is a signal that has been costly to create. Whereas a cost less signal or a cheap signal, I could just be talking about how much money I give to charity, how great that makes me. That's a cheap signal. I didn't have to actually give any money to charity to say that. If it would be different if I like... Proved to you? Yeah, oh, I don't know who that is, but I did know the allegations. But I could show you a back statement of like me donating money and then that would be like, you know, I've shown you that there's a costy signal. So yeah, it's always worth thinking about like the signals that you're receiving on social media or like through the network or they cheaper where they costly like what's the stake for the people that made those. And yeah, so there's something to say about like the difference between Bitcoin and Ethereum and like why the kind of circumstances that led to Ethereum's migrations to proof-of-state might not suit Bitcoin. But I will first say like proof-of-work is like a marvelous achievement and technical technical innovation. And it does a lot of things for Bitcoin, which means that Bitcoin can stay architecturally and technically relatively simple. The actual protocol is relatively simple compared to all the other crypto currencies and blockchain stuff because proof-of-work takes care of like security, coin distribution and importing of randomness into the network. And if you don't have proof-of-work doing those things, you kind of have to find other ways to do them. And nobody ever likes to talk about that. So all the technical stuff gets buried before it reaches the finance people or the communities or whatever. So nobody knows about like VRFs and VDFs or this kind of very sophisticated modern cryptography, which also requires specialized hardware to generate randomness because you're not getting these catastrophic randomness from the outside that we get from proof-of-work and the mining. So there's like yeah, it's we ended up making really complicated systems. So the new Ethereum system is way more complicated than the old one. And all the like Ethereum clones or the Ethereum competitors like young polka dots, the tezos, all that stuff, they're even more complicated still. They built like insanely complicated systems. It's crazy. I remember I used to run a conference series at MIT. It was sponsored by the foundation that is associated with one of those networks and they were giving their sponsored technical lecture at that time. And I was sitting next to a Bitcoiner who's also got PhD in nuclear physics. I've got PhD in photo physics. And he looked at me halfway through it. He's like, do you understand any of this? And I was like, I've got fucking clear what they're talking about, man. And he's like, they built a root goldberg machine again. It was so complicated. Like two PhD physicists sitting next to each other no idea what was going on. So that's another thing. And with complexity, you get fragilities. Because then there's all this kind of unforeseen frailties or consequences or interdependencies. The more complicated things get, the more unreliable and they break. And we've seen that with all these proof of state networks. They break quite a lot actually. And so Bitcoin can't break. Bitcoin is the one that can't break. The other ones can break because they're kind of like VC funded startups basically. But like Bitcoin is not that. Can't break. And so we have to be quite conservative with Bitcoin. And that's why the developers, the miners and all the rest, have a very conservative view to the upgrading of Bitcoin, which I think is appropriate. But however, it means that Bitcoin moves very slowly in terms of like technical progress. It does like compared to everything else around. And that's the other IT kind of technology in nature. And that might be a bad thing. It might be that Bitcoin can't move as fast as it needs to. And that might mean that for example, Bitcoin can't develop enough to make a mature market for block space before the subsidy runs out. And that is kind of like one of the big potential failure modes of Bitcoin. And also that's one of the things the regulators can do. They can stop industry building on top of Bitcoin or using Bitcoin, which might then retard the demand for block space to the point where Bitcoin can't achieve its security goals over a long period of time. So those are two very real failure modes for Bitcoin. I also just want to say one real quick thing before I stop talking about the difference between starting up proof of work and moving away from it, which is what Ethereum has done, and starting from proof of whatever and just doing that. So Ethereum did the coin distribution and built a big network like a social, you know, like the community. Using proof of work and like mining all those years and then switched over once the coins have been distributed basically. If you use proof of stake from the start, you end up with this kind of rich get richer problem where people have coins, they stake the coins to get more coins. And so then the rich kind of there's a tendency for them to get richer. Judeo Fancy and co-authors wrote a paper about this. I think it's called rich get richer compounding of wealth in proof of stake cryptocurrencies. So it's kind of like a structural problem to proof of stake if you use it from the start. There's also an amazing paper called formal barriers to proof of stake consensus protocols. Matt Weinberg was one of the authors of that. I'd recommend anyone to check those out. And those kind of actually they're several years old now, but they kind of lay out the challenges for proof of stake. And I don't really think that any of the systems we've got now would be good enough to run for a network like Bitcoin from the start. I also think Bitcoin will never change because the community is very conservative. And that is like possibly a problem for life on earth. Like if we don't get enough energy in Bitcoin, once it all, who knows? It is interesting to see Ethereum putting out proof of work first, then switching to proof of stake as a necessary way to build their system. Another way of looking at it, because we were looking at it the pre-sale and everything, is it seems like they sold people something they hadn't built yet. And in this case, they actually built it. So good on them. They turned out a lot of people had doubts in the beginning, even the Ethereum client itself, the Ethereum network proof of work version wasn't available before the pre-sale. It's very strange to see how the bar can be moved and something that we're developing versus something that we dream about can happen. Let's see, Dan, if you have more on this. And I remember, of course, right here on the Bitcoin group and other world crypto network shows, I showed you my graphic for the Bitcoin triangle. People disagreed with me, but look at it right there. The users, the coders and the miners working together, not just the miners and the coders, ignoring the users, almost in a parallel of a documentary I watched this weekend about the European super league and how they didn't seem to care about the minor teams and the fans. The fans of the product were left out of the planning leading to a disaster. Danny, what do you think about proof of work versus proof of stake? Well, first of all, is that why why isn't it not on a parallel around an equal lateral? Why isn't it having that? Yeah, I was going to say the same thing. Why is it not equal? Because the code is like which one, if it's equal lateral, then it's a bit more, I don't know. Maybe someone was a bit drunk when they made that. Oh, I know what it is. You made it. It's a very clever joke, isn't it? I get it. It's about scaling. This is a scaleine triangle. It's about the Bitcoin scaling debate. Oh, what? No, that is really good. I feel dumb for not realizing that now. So on the, I think one of the cool things about these articles, apart from that they're made of general tribe of like going, Ethereum now uses 99.99% less of electricity supply, avoiding all the clever things that are the reasons why proof of work, they're like security gain theory and about the circulating supply distribution, evening out before you, before you switch over to it. Obviously, Ethereum was mining, but it had a pre-minus well. So it's not comparable to Bitcoin from a proof of work, both starting a proof of work kind of way, because the initial owners of certain Ethereum tokens didn't do any proof of work. They just bought into an ICO. So they aren't comparable in that perspective. But what I do like to see from the digels is the things like the country's getting bigger. I like it. They go from like, oh, Bitcoin uses as much as mold over. Now we're on the Philippines. Bitcoin uses as much as the country of the Philippines. So it's nice to see the country's getting bigger as Bitcoin grows. The exohascerate's like 310 exohashes at the moment. I think it was peak 350, which means it's dropped. And this is something that's really cool. It's dropped. So since it's peak of three, oh, sorry, it's at 350 roughly this month. But it's dropped 10%. That 10% is more than the amount that it dropped is the more than the entire than the entire hash rate up until mid 2018. So that's how crazy it was. Bitcoin was going for nearly 10 years. And that's the hash rate. It reached. And we've just dropped that much within days. And it's like, there's nothing. The network is still impermeable. It's still the most secure network on earth. And that's why we're using it. It can't be game by by owners of the coin colluding. Obviously, there's the thing about the, I'd like to hear your take on that as well. But I see about the mining pools, right? So how, how a couple of mining pools contribute to so much the hash rate. But ultimately, there's some crazy statements in that in that article like the EU saying the central back is previously stated it cannot imagine a world where governments were banned gasoline powered cars in favor of electric vehicles, but not act on Bitcoin. What does Bitcoin use electricity? What do electric cars use electricity? Ta-da! They both use the same type of electricity. Electric cars don't specifically use only completely green electric. But that's what's silly about some of that. These statements, they don't even think about it when they actually write it. And also, the in principle, a small number of people could take the reins and switch Bitcoin to proof of stake. No, no, no, no, no, no, that's ludicrous. They could they could probably propose the code, but it would require the entire community to vote it in, right? It requires miners, it requires the node. So saying that a small number of people, like it just completely misunderstands Bitcoin, am I being thick or is that like a complete misunderstanding of how Bitcoin works? Like a few people could completely change Bitcoin and it's not down to the miners how they're signaling and how the nodes are signaling. I think it's the kind of necessary over simplifying that you do to encourage a second blockchain war. If you look at the last part, we found it, no, a small amount of people, whether they are programmers, whether they are bosses of giant corporations like Coinbase, cannot edit Bitcoin. It would have taken the users, it would have taken the miners, it would have taken the coders all working together. But if you- The code didn't do a fork, I'm like, I'm pretty sure that's going to happen at some point. Oh yeah, they'll have a fork, but if Bitcoin 2 is adopted, then Bitcoin 2 wins, or if Bitcoin 3, or 4, or however, times we have to do this, we did Bitcoin XT, Bitcoin Unlimited, Bitcoin Classic, like they proposed it many times and many times it failed. Can I get a Segwit 2X? Can I get a Segwit 2X anybody? Exactly. Segwit 2X, all the good ones, Bitcoin 2X, we'll just double it. Make it 3X, 4X. The thing is- Double-Ecoin. One coin. Proof-of-a-stake has some interesting parts to it for sure, in terms of the fact that when China banned Bitcoin mining, it was very, very easy to spot a Bitcoin miner operation because you could see the energy consumption and shut it down. So proof-of-stake is kind of handy when you're just running some nodes or running some mining, you're sort of staking, it's hard to spot that so you can say that it could be a little bit more decentralized, but the problem is then you get these large exchanges, but there's a lot of exchanges now, so it does centralize in these exchanges and you can't just switch quickly if there's a bad actor because they just stop you from withdrawing. So it has its cons and pros. I think it's ridiculous that MIT of all places don't put a few more brain cells together, so for me it's an obvious, another little hit piece to try to bring down. Do I have to come on here and defend my former employer, Josh, is that what's going to happen now? Yeah, that's what you're going to have to do. So I used to work at the MIT Digital Coincinitiative, which at the time when I was there, 2019 and 2020, was the largest concentration of funding stroke salaries for Bitcoin core developers, so like an office with Corey Fields, Taj Dryger, like we paid Vladimir Van Delans salary back then as well, and I was raising their funds to pay them, that was my job. Oh well done, well done, yeah, MIT have been good actors, but this is not the dissi, it's not the Bitcoin researchers that wrote this, this is kind of like a tabloid magazine. Yeah, it doesn't read like it, and you know, it really is just intellectually dishonest. If you actually look through, especially some of the reports that have come out about how much energy is used, but also what happens when we've talked about this subject that knows him on this show, but the key takeaway is that proof of work has put more money than any other industry. The Bitcoin industry has put more money into R&D on finding renewable energies that are cheaper than any other industry because it's just so profitable if you can find a better source of energy. So if you're really a greenie, you'll be pushing for this because humans are insatiable with the amount of energy we want to use, right? It's endless, especially with electric cars coming online more and more, we want to take more and more energy, and so it's ridiculous to say we've got to use less. This whole notion of like what was the green hour or whatever it was, where everybody turns their lights off for an hour, and we all, you know, this is so stupid. What do we want to go back to like having catfires in our tents and all choke and have black dust in our throats? Like we've got to just find better sources of energy, and like there's just endless amounts of energy. The ionosphere is full. The under the earth is full. We're literally on a ball of lava boiling constantly forever. You know, it's crazy to think that we've got to use less energy. And so, you know, proof of work, while yes, you can say, oh, it uses so much energy. So does the PlayStation on standby as Thomas has said before. And so what are you going to choose? Which, what we're going to turn off the PlayStation's actually unplug them all now because, well, what's the use of that? It's just my PlayStation is contributing to the security of our global network. It is interesting, Josh, when we were kids, all of the light bulbs were incandescent bulbs. So they were actually burning a filament that would eventually run out. Now things have happened so fast. They're they're LED bulbs. They're, I don't know, plasma bulbs, LCD bulbs, whatever. There's all kinds of amazing new technologies where turning off the light bulb is not so important anymore. In the same way, although it's, you know, it's facile to say, we could science our way out of this. You know, we could develop some new energy technologies. We could turn this around. Or like Josh is saying, we could have this other attempt where we try to have a less consumption society, which many people are afraid of. And I don't want to scare them more. But I want to quote the end of this article, which I thought was an incredible shot across Bitcoin's bow. It says, Nicholas Weaver, a researcher at the University of California, Berkeley, and an outspoken critic of cryptocurrency. Normally, we don't quote outspoken critics as our conclusions, unless we disagree with cryptocurrency from the beginning, says that Bitcoin will never change. As long as Bitcoin miners can profit from proof of work, they will choose proof of work. The only way to reduce Bitcoin's criminal energy consumption, so making value judgments, is for the value itself to be destroyed. If Bitcoin becomes worthless, then the Bitcoin mining stops. Bitcoin may not want to change, but if it doesn't, it might be forced into a relevance by governments and communities that are becoming increasingly intolerant of its energy waste. The never-change Bitcoin crowd is fighting a losing battle, says Dig Economist's dev rise. The sooner they realize this, the sooner we all benefit. So very much, lines have been drawn between the environmentalists and the Bitcoiners, and the environmentalists in an almost stereotypically unimaginable way. We're going to use the government to crush these new Bitcoiners and their technology. The thing is, what this absolutely clown refuses to admit is that the Ethereum miners that were mining before haven't just disappeared, they've just gone into mind something else. All the people consuming electricity on Ethereum the whole time haven't just gone, oh, we'll turn it off. Just by the way Josh, I was a small cap miner in a former life, and there's not actually that many proof of work coins left. So ETC is one of the bigger ones, not that many of the Ethereum miners move there, and that there's no new low cap GPU coins. That kind of stopped happening. So I don't know how many of the Ethereum miners switched to other coins in an honesty. So you think they just turn it off? I think a lot of them like you can now buy GPUs very cheaply on the open market. So I think actually people turn them off and went back to gaming or sold them. Like a lot of people dismantled their rigs and they stopped doing low cap proof of work. This does go back to a lot of people. We talked about where Ethereum is this network for smart contracts, for dApps and for projects. Bitcoin is this network to change the monetary factors of the world. And some people think that's more important. Bitcoin is this airplane flying around the world. It can never land as what C mentioned earlier. If Bitcoin did crash, it would be bigger than FDX. It would be bigger than Mt. Gox. The entire cryptocurrency industry would crumble down. And we would be like Nintendo and Atari in the 1980s. We'd be like, maybe we shouldn't call these things video game machines. Maybe we should call them something else and give it another try because it had cratered so horribly if anything does happen to Bitcoin. That's why it's always interesting to see the altcoiners and others marching around Bitcoin, wishing that it would die. When in reality, it would crush their project as well. Oh, it's a bit of a, is that actually since Ethereum went to proof of stake, I know this is a bit of a spurious correlation like that amazing thing, which is like the number of movies, Nicholas Cage has started and the number of, you know, bath deaths or whatever. And it's a perfectly track graph. But in video and AMD shares are actually up since Ethereum went into, which is kind of counterintuitive because you'd think that in video and AMD, both the biggest producers of graphic cards in the world have gone up, the prices have gone up since the minus, like the biggest mining function of GPUs stopped. Honestly, Dan, they didn't really like the miners, like the last few models they put out, they tried to purposely hamper miners that they're using GPUs. So I think that they kind of hit a lot of the semiconductor production is quite limited globally by the number of foundries that exist that can do certain nanometries to dies. And so there is actually this massive bottleneck in the production of high-end semiconductors. So there's just not enough to go around. So the gamers, not the people that need to do whatever training machine learning models, they hated blockchain miners because they were taking large quantities of the global supply of these things. And now it's just evening out a bit, I guess, it's weird that Nvidia and what I see other way I can't remember, AMD haven't created. But they also share prices very volatile. They already probably had a bad year last year. Well, AI is low. It takes up a lot of that, I think, because we're in this boom at the moment of training models. And it's funny that there's like a crypto-beer market and then there's like an AI boom and then maybe there'll be an AI wincer and then what might happen over here. We didn't mention mining pools by the way, I think we should just quickly say because there was an article last week that Foundry, which is the digital currency group related mining pool, had a mass like some large amount, I can't remember now 35, 40% of the hash rate recently. And people were waving the same warning flags as we've seen many times in the past when one mining pool starts to get a large amount of hash rate. So I haven't followed it so closely to know what's happened with that. But it's not great news for Bitcoin if everyone's pooling their proof of work mining on one like cooperative or one mining pool because even though the work is distributed, the way that work is allocated is centralized by the pool. And so like if one means that one pool is kind of in control of how the mining gets done of a lot of Bitcoin and that is not great. What about so R.R.R.R.L.S. R.R.L.D. Duke is in the chat saying what about Stratton V2? Say that again, sorry. Sorry, what about Stratton V2? How's that going to be? The mining brain. I actually don't follow Stratton that closely so I wouldn't know. But like better mining protocols for showing the worker is better. But I don't know if like that removes the ability for the mining pool operator to determine how the work is allocated. I don't know. It is worth noting as well. The authors seem to think that the five mining pools were stratified and locked down forever. People can leave a mining pool that can switch to another mining pool. It's a lot easier to switch to another mining pool than it is to get the eight or ten developers that control Bitcoin to change the code. It's a much more trivial thing. All they are both technical things. You'd have to edit a text file or whatever. It is different. I do think it's an interesting idea as I was seeing what's talking about that the gamer enthusiasm for this graphic cards could overwhelm what was a loss of the mining income. A couple of guys like Bitsby Trip and rolling into the store buying everything early, camping out overnight to get graphics cards seems very big to us. But in reality, the larger market of people that want to play these games were now happy because they can go to the store and buy one or pick up a cheap one that someone's not using could actually raise their status. So that's interesting to see. Again, a reminder of how small cryptocurrency really is compared to something like gaming. Moving on to issue four, running out of time, Bitcoin NFT Mint surpassed 200,000 but is interest in ordinals failing. Fading. No one really knows about the ordinals. If you send the Satoshi out of your account, do you really get that Satoshi or you do get a different Satoshi? Does that mean that the artwork is different? If you don't run an archive node as many people will not do as they get larger and larger, do you really store the picture? Is it really there on the blockchain? And now people are printing less and less ordinals. The ordinals fees originally topped $1.3 million. Now has decreased to 54,000. Now decreased again to 11,000. Josh, they've got NFTs on Bitcoin as Dan the dark pill. One of the creators of the very first rare Pepe says on Twitter, you know, Bitcoin wasn't worth shit when it started. Rare Pepe's weren't worth shit. Ethereum NFTs weren't worth shit. No one was sitting around going, this is going to be billions of dollars in two years. On the other hand, lots of shit hyped itself up to be a billion dollars in two years is now worth fuck all responding to an article about how NFTs on Bitcoin, built with inscriptions and ordinals will be a five billion dollar market within two years. We've also seen Hugo Labs, the creators of board apes planning to create a ordinal NFT PFP Bitcoin buzzword project. Josh, what do you think about ordinals? Is it fading? Then it'll go through its boom and busts. I mean, the thing is which technology do you choose if you're releasing something? It's a tricky one. You generally want to choose where the liquidity is because that's where the buyers are. So eBay was around for a very long time because and there was so many eBay clones, but people still listed on eBay because that's where the buyers were. I think one of the things of Ethereum and the scaling and how now there's so many different scaling or L2s for Ethereum is it's splitting up that liquidity a lot. So it does give something like Bitcoin ordinals a chance to get into the market because that liquidity is so spread that no one wants low liquidity because if you do a market order and it just crushes the price it sucks. In terms of NFTs because they're sort of one-offs, you need that buyer to find you. We'll see what happens. If Bitcoin, the problem I see NFTs for me are really you know everyone thinks of art, but I really love the idea of NFTs in the DeFi space. NFTs representing debt or representing something else or keys or ticketing stuff like that. There's massive use cases for this stuff, but art for some reason has just grabbed the imagination of so many people which is great because brought in so many new people into the space. But yeah, I don't know. I don't know. I like the fact that ordinals are in Bitcoin. I also don't like it because it's kind of spamming the network even though they're paying the fees and that goes back to the old the conversation that we used to have when Eric Voorhees had Satoshi Dias and people were bitching and moaning about that spamming the network. You know it's a great debate actually and I really love having that philosophical debate. Well if you pay the fees, is it spam? No, I don't know. I think it's opened up that debate again and it's actually found a couple of little bugs within Bitcoin having ordinals as well, which is also fascinating as we develop new use cases for Bitcoin it might have introduced new sort of attack vectors. So yeah, I really like the ordinals came along. I don't know how different it is. I haven't looked in too much. I don't know how different it is from my old school colored coins and stuff like that. I mean they were effectively the first NFTs but yeah, I don't know. Obviously is one of the creators of Curio cards, the truly greatest Ethereum NFT project ever made. I'm very impressed with the power of NFTs and now we'll see my ask you, could these great NFTs that were pioneered by Rare Pepe Spells of Genesis, Curio cards and crypto punks, could they be the savior to Bitcoin's fee market? I am really interested to see ordinals pop up after that tapering wizards and all of that. I think it's really cool to see something fresh in Bitcoin because not that much happens in Bitcoin actually. So nice to see people finding new ways to use the protocol and to use the resource, the sketch resource, which in Bitcoin is the block space and I mean the coins are limited but really whatever one's competing for is the block space to motorize your transaction in the permanent record and that's why we need coins. You need coins to pay the fees to put your transactions in the record. So like ordinals are large, they take up a lot of space, they take up a lot of real estate on the blockchain so they're paying the fees and they're creating demand for block space. At a time in the market cycle when there is not that much demand for block space, the price is for transaction on Bitcoin quite low and somebody did a I think maybe Eric Wall and he did a talk recently on tapering wizards which I recommend people watch was quite nice. He reckoned that as of a few weeks ago the differential in price to write per kilobyte into the Ethereum and Bitcoin block change was 7x. It's seven times more expensive to write into Ethereum at around this time than it is to write into Bitcoin and so that's telling you something about how a little Bitcoin is being used compared to Ethereum and so like uses right now in the depth of the bear market, uses for Bitcoin is good news. This is how we keep the competition for block space dynamic and high and moving and it keeps the fee market from collapsing and ultimately when the subsidy runs out on Bitcoin which will happen before too long, this is how we're going to have to pay for Bitcoin securities through transaction fees for block space. I would like people to get used to stuff showing up and paying for block space to etch their data into the permanent record. I guess there's always the thing about, are they writing into this permanent record that's stored on tens or hundreds of thousands of nodes around the internet? People have already put a go to Bitcoin blockchain, I'm sure. We can put all kinds of objectionable material on there and so that is a permissionous innovation, right? You can't stop people from doing the stuff and that's kind of a feature and arguably a bug depending on how you look at it. I like Josh's point about the general utility of NFTs, like rappers, tokenized rappers for claims to access to whatever rights, cash flows, controller stuff, so it's great. It doesn't have to just be JPEGs. We've seen a lot of JPEGs in the last few years, I'm sure we're all seen enough of that. But yeah, I mean, remember that we just had a pandemic, like we're still in it if you ask some people. So that is one of the reasons why NFTs got adopted by the art world so vociferously, but so suddenly, is that the gears of the art market just seized up the art fairs and whatever exhibitions and stuff to have to stop immediately. So art people rush into this stuff and I can speak to that because I basically spent the last two years explaining this stuff to art people pretty much. So they've just been rushing in asking people, like does anyone know about this? Well, I'd be here. I could tell you something if you want. So yeah, but okay, here's something about Ordnance. Like lots of people inscribing stuff onto the chain, but has anyone seen any good art? Yeah, but anything good. I haven't seen a good one going to Ordnance yet. I thought it was fascinating, but they stole the crypto punks like Lock Stock and Barrel and another group published them and then they were declared the real crypto punks on Ordnance. That was fascinating to watch. What is real? I like the flat heads, the Bitcoin heads. I need to see the flat heads. About Satoshi dies by the way, just really quickly. I thought it's a really nice example to bring up because yeah, it was basically doing a bunch of one Satoshi transactions on Bitcoin, you were kind of flipping a coin basically. And then like got priced out because like the fee market took hold and then like ended up on those coin or some shit like that. So like that is good. It's good that there's like spam means that the price of transactions is too low. And then like when the price of transaction goes back up, the things that looks spammy will go somewhere else. So I think it's good. Yeah, that's really interesting. And that's why this whole Bitcoin Maxi thing, I don't think it's very good because there will not ever be one chain to rule them all. It's just the fact that you need other places and people call them layer twos. But actually, they are the blockchains like there are other blockchains. So we didn't get the side chains, did we? We went to get Trostler's two way peg side chains. We couldn't do that. And so like the alt coins and all that other stuff, L2s on the Ethereum and whatever, that exists because we couldn't do that pretty much. Yeah, but don't we have like liquid and stuff for people don't use it really? We liquid is permissioned. So that's the I think that's why. Yeah, right. It's interesting to see as what Seam was saying, we usually talk about when Bitcoin runs out of things to motivate the fee market. And we say, well, maybe Amazon would step in and run some miners and you know, keep the network going that way to actually see it as Amazon could publish a 10,000 figure NFT project. People could then buy them like you would donate to the EFF or the Internet archive to preserve the Bitcoin network. So people are now buying the ordinal NFTs to keep the network going. And I'm also reminded of a great chat that Luke Desher had with someone online when this ordinal thing was just kicking off. And he was like, oh, it breaks the rules. And they're like, but the blocks get through. They follow the rules. They're ruining the network, but they're paying the fees. You said the cheating, the cheating, the network on the line, something lying to the and they kept going back and forth. He's like, oh, they've misinterpreted this or they've changed this. And it was like, but it runs. It compiles. You know, at the end of the day, it compiles. We have to allow it. And I don't know if he said maybe like, you know, it is right hand. He's got like a text of the printout of the Bitcoin Prozco and the left hand. He's got some like Catholic scripture. And you might have got confused about which one he's been reading. Yeah, particularly moment. And as a palm, you may get those confused. Danny, what do you think about ordinal NFTs? Go ahead. Well, I just saw in that last bit about Luke to share when he said about their trick in the code. It just made me think of that South Park episode where they're, but instead he's like going, they took our blocks, me. It's just all howling. But at the end of the day, if someone's willing to pay for it, they're willing to pay for it. And one of the things that is interesting, like that so many of the things that were used as a four for Bitcoin and argument four Bitcoin, when people don't agree with something that's happening with Bitcoin, they become an against. So like, one thing is censorship, but like you said, but you're in set Bitcoin censorship resistant. And then then it's like, well, you could censor the transactions that people can't put ordinals in. And there's quite a lot of these flip these flip flopping which are quite interesting to see, like how how kind of our own personal views come into something because you don't value the thing that someone is paying for. But the whole point of Bitcoin is, you know, people say it doesn't have an intrinsic value, but then there's the intrinsic value of the electricity provided for the proof of work. But then they're saying, but someone has to buy it. And you know, there's this argument of what it's a free market. So if you want to buy it, then and yeah, it's nice to see these all these things go 360 and the critique of Bitcoin just shows, it's positive because it means it becomes more resilient. You see the reasons why something has been put in place and the reasons why it's helping out the Bitcoin network. And the fee market, the fee market issues been around for a while. What happens when the block size does does. And because every time the harmony happens, the percentage of the Bitcoin rewards as a whole of the circulating supply diminishes, you know, even more. So, so, you know, back in the day when it was 25, so 50 Bitcoin per block compared to the supply was a huge, it was a significant daily amount. Now it gets late even less. And so when you've got to replace that with something and that has to become from from fees, I think. But yeah, ultimately, the big, I think the, the ordinals are pretty cool. I'm obviously, you know, I wish I bought some and got involved in that. I think I looked at streams, Bitcoin streams or something like that for a while. Again, they're kind of pretty much carbon copies of like crypto punks with like eight bit mushrooms and whatever. But I think that the whole at the end of the day, if you want to pay for it, then, you know, then go for it. It pays for the minus to secure the network. And what makes the, what makes the network more secure? The minus being paid more. Yeah, on that, Dan, like, real quick, I'm just reminded of Eric Voskiel's work on crypto economics. And he was talking a lot about a few years ago about the possibility of state sponsored attacks using a mining on Bitcoin to sense a transaction. So if like, you know, imagine the price of Bitcoin and the hash rate came down a lot and there's lack of confidence, like a then a nation state level adversary could then start mining. And then like if they got a large portion of the hash rate, they could then attempt to like delay sense of transaction selfishly mine or the rest of it. And so like, the demand for block space means that the price and therefore the security network security to hash rate stays relatively high and it makes it harder for well-resourced adversaries to mess around with the network. So that's why it's good in a very concrete sense. Yeah. And I think that we need people paying more money for the block space to make it more precious. Like, it's, you know, why have empty empty, there's a use for it and why not make it useful? I just want to shout out to Rale juke who's been busy in the chat there and also for the super chats to the network helps, helps, you know, us make better, better stuff and pay for some editors and maybe get some clips going again. So thanks a lot. Definitely thanks to everybody that gives us a thumbs up and subscribes down below, leaves a comment or says something in the chat. It's always good to have that interaction. We don't really do the show for money. It's more about the community. We've got one more questions, exit question, kind of a bonus issue. Is Ben Arck Satoshi Nakamoto a new article from Bitcoin news.com uses a picture of Ben Arck and then begins the article saying Satoshi Nakamoto remains an obscure character, obviously pointing to Ben here in the picture. Ben has recently been the impotence, although they don't talk about him behind the Noster network that's become so popular. He's working on LN bits, which provides a wallet infrastructure. Kind of seems all the stuff that the lightning companies were supposed to build. Even Jack Dorsey launched his own C equals company just a few days ago and it sounds like a carbon copy of what Ben has already been doing with open source software. Josh Shagalla, I ask you first, is Ben Arck Satoshi Nakamoto and or should we change our symbol of Satoshi Nakamoto from the Japanese man, Dorian Satoshi Nakamoto to the Welchman Ben Arck? No, as much as I'd like him to be Satoshi, Satoshi is just an idea. We all know it's Adam Fack, no spoilers. What seem as Cindy is Ben Arck Satoshi Nakamoto? Well, as you know, Ben Arck is the Bitcoin socialist and so if Ben was Satoshi Nakamoto, then that would make Bitcoin a socialist project. I'll leave that for the audience to decide, do you think that has the reality that we're dealing with here? You could think of Bitcoin as a transcendent machine socialism, where the workers are the means of production, the miners themselves, are the workers and the participants of the network. So it's kind of a socialism, but not I think for the sake of the humans. I have more talk about Bitcoin progressives and that there are two sides to the Bitcoin debate you don't have to be libertarian. You can be progressive. You can have your opinion. Josh, go ahead, you had more on that. Oh, yeah, no, I know this isn't on Bitcoin, but the whole concept of DAO is also really nice and because you get people that anonymously contribute to a project and also own the project, it's in a way it's like this nice fusion of capitalism and the socialist ideas, you know, without this sort of left-right paradigm, it's kind of taking technological advances into people having a stake of a certain project and participating without permission, which is really cool. Oh, wow, another super chat from rural Duke, 20 pound. Thank you very much. If people were mad when you said that Satoshi was female, think how mad they'd be if you say Satoshi is socialist. My goodness, Dan Eve is Satoshi secretly a Welshman. Does Satoshi, the Japanese named eponymous creator come from the United Kingdom? Maybe. Well, now, now that you say it, Satoshi list sounds kind of, it's got a ring to it, doesn't it? Satoshi list, maybe. Real Satoshi list has never been tried, Dan. They always do it wrong when they try it. It ends in a lot of deaths and but ultimately it's good, honestly, no one's done it right properly. But yeah, that would be really cool. I saw that. Cycle was Ben was the ghost writer on that or something, but they put his image on it. That's amazing. Nice. But they didn't mention that he maybe Satoshi. So maybe he could be a guy. It could be a guy. It's all out there. Everyone can see it. The article is very clear. Ben Ark is Satoshi Nakamoto. The whole Japanese thing was just to throw you off. Well, we're running out of time. Dan, Eve, I'm sure you're ready with the prediction or a story of the week. Go ahead. My prediction is that Bitcoin won't be moving to proof of stake anytime soon. Let's go to Josh Tagalog prediction or a story of the week. No, sorry. The week is just enjoying working away, beavering away, building, in this bear market. It's what you do. That's it. That's all I got. Go check out the standard IO. If you want to help us out, if you've got any graphic skills, if you've got any coding skills, if you've got any, I don't know, whatever skills you have come and join us. Well, see you, Melcinda, a prediction or a story of the week. My prediction is that Bitcoin is a time machine and we could use it to navigate possible futures. You could read more about that on the 0x on our website. Nice. That sounds great. Very interesting. I run a Power institutional research collective in Berlin called 0x Salon. It's number 0, then xsalon.pubpub. Very good. Thanks to everyone for joining us today. Just a sad farewell to Homer Dog, who passed away this weekend. He was about 13 years old. So just everybody hug your dogs, hug your children or your cats, your animals. Wherever you got, we're very lucky to live such long lives as humans. And we're very unlikely that our pets don't live as long. So thanks to everybody for the thumbs up, subscribing down below and hug your dog, cats and children. Until next time, bye.