Pod Insights Bankless ROLLUP: WSJ Lies About Crypto | SBF Testifies | Markets Pumping About this episode Bankless Weekly Rollup (Halloween Special)
Final Week of October
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Timestamps & Resources
0:00 Intro
7:01 MARKETS
https://pro.kraken.com/app/trade/btc-usd
https://pro.kraken.com/app/trade/eth-usd
11:20 Market Advice
https://x.com/RyanSAdams/status/1717212229395784125?s=20
13:22 Arthur Hayes Take
https://cryptohayes.substack.com/p/the-periphery
17:04 BTC Halving Countdown
https://www.nicehash.com/countdown/btc-halving-2024-05-10-12-00
22:33 Bitcoin Spot ETF
https://twitter.com/EricBalchunas/status/1716487573588070728
25:46 How Much Will This Pump Price
https://twitter.com/EleanorTerrett/status/1716911938142105694
https://twitter.com/intangiblecoins/status/1716840402894881133
https://twitter.com/NateGeraci/status/1716266912630407210?s=20
https://twitter.com/WatcherGuru/status/1716473871430222292?s=20
30:50 ETH Spot ETF
https://x.com/JSeyff/status/1714736564805214375?s=20
https://twitter.com/NateGeraci/status/1716538764061729123
34:08 WSJ Lies!
https://www.wsj.com/world/middle-east/militants-behind-israel-attack-raised-millions-in-crypto-b9134b7a
https://twitter.com/samcallah/status/1715854073461604555
https://www.warren.senate.gov/imo/media/doc/2023.10.17%20Letter%20to%20Treasury%20and%20White%20House%20re%20Hamas%20crypto%20security.pdf
https://twitter.com/chainalysis/status/1714748704702296457
42:47 SBF Will Take The Stand!
https://www.theblock.co/post/259553/sam-bankman-fried-gets-chance-to-dispel-cartoon-villain-narrative-as-he-prepares-to-take-stand
48:14 Was DCG Bigger Than Enron?
https://www.coindesk.com/policy/2023/10/19/gemini-genesis-and-dcg-sued-by-new-york-attorney-for-defrauding-investors/
https://x.com/ramahluwalia/status/1716218498341597430?s=20
55:32 Uniswap Chain
https://twitter.com/KAndrewHuang/status/1716826991780155467
58:54 DYDX Chain
https://x.com/dYdX/status/1716802093946921353?s=20
1:00:10 Andrew Tate on NFTs
https://vxtwitter.com/larpvontrier/status/1717271943240442237?s=46&t=2SMKWt7-hlJuSdhYSlImeQ https://vxtwitter.com/larpvontrier/status/1717271943240442237?s=46&t=2SMKWt7-hlJuSdhYSlImeQ
1:02:56 Speaker of The House
https://twitter.com/RyanSAdams/status/1716871873668264346
https://twitter.com/JakeSherman/status/1716913458741187065
1:04:33 Sound. Tech
https://x.com/Mikey0x_/status/1717036416155459987?s=20
https://www.song.tech/
1:08:03 Raises and BVC Investments
https://twitter.com/nocturne_xyz/status/1717150278749725127?s=20
1:13:13 Questions From The Nation
https://discord.com/channels/615592155481767941/1058053004705669211/1166582948338860103
https://discord.com/channels/615592155481767941/1058053004705669211/1166757895111721051
1:19:38 Takes of The Week
https://telablog.com/the-three-types-of-bitcoin-states/
1:22:27 What Are We Bullish On?
Meme of the Week
https://twitter.com/tomhschmidt/status/1717228106035913148?s=46
1:27:19 Risks and Disclaimers
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Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures
Transcript 17,143 words · 5 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Ryan Sean Adams? But the biggest mistake you can make at this point in the cycle is chasing the pump. So the advice that we have, the not financial advice, life advice, don't be a chaser. Hold your high conviction. Let the market come to you.
0:11 David Hoffman? Yes, you let the pump come to you. Don't be needy. Let the pump come to you.
0:18 Ryan Sean Adams? Yeah, you don't have to respect the pump. Okay, that just means aping into stupid things. Let the pump come to you.
0:27 Ryan Sean Adams? Bankless Station is the fourth Friday of October and the Friday, the roll up, might I remind you, right before Halloween, which means we do something special. David and I are in costume today, recording this roll up. And I'm looking across the screen, looking at this co-host that I thought I knew. He's got suspenders on. He's got a yellow t-shirt. David, dude, you are one of your NFTs.
0:50 David Hoffman? Of course.
0:51 Ryan Sean Adams? The Solana NFT thing, right?
0:52 David Hoffman? I'm my mad lad. Yeah.
0:54 Ryan Sean Adams? You're a mad lad today.
0:55 David Hoffman? I'm a mad lad. I'm a mad lad today. Yeah.
0:57 Ryan Sean Adams? So.
0:58 David Hoffman? I am my mad lad. If the podcast editors could put the mad lad on the screen. In fact, just put it right over Ryan's face so you can do the E V test for my mad lad versus me. I look exactly the same as my mad lad.
1:09 Ryan Sean Adams? It's actually really good. This is really good.
1:11 David Hoffman? My suspenders aren't actually clipped to anything. I'm wearing athletic shorts.
1:14 Ryan Sean Adams? The third year in a row that you have dressed up as your NFT.
1:17 David Hoffman? Yeah, I've only got one NFT left, so I need to buy another NFT after next year.
1:23 Ryan Sean Adams? Yeah, you're gonna buy some more this cycle. Okay, now do me. Who am I?
1:27 David Hoffman? You are Sam Bankman-Fried. I didn't even need to ask. You're wearing a massive curly haired wig and an FTX t-shirt. It's so simple. You need to gain a few pounds, but other than that.
1:38 Ryan Sean Adams? It's so perfect, actually. And do you want to hear my Sam Bankman-Fried impression I prepared for you guys?
1:43 David Hoffman? Would like nothing left.
1:44 Ryan Sean Adams? Yeah, so I'm like, I'm gonna be taking the witness stand later today and explaining to the jury that from an E V perspective, like, I think we made the right calls. And that's what some of your listeners don't know, David. I think there's like, to some extent, to which one of the major exchanges in 2022 had to die and it just happened to be FTX.
2:09 Ryan Sean Adams? Kind of mid.
2:10 David Hoffman? That was pretty good. That was really good. You're just not on enough amphetamines. I don't care how many pots of coffee you're on and you're not matching him on.
2:18 Ryan Sean Adams? I'm not SBF energy? Well, I hope he brings the energy today.
2:21 David Hoffman? You're not vibrating like SBF was on our show.
2:24 Ryan Sean Adams? Well, that's actually a true story, though. So he is taking the stand today. I am taking the stand today.
2:28 David Hoffman? You are taking the stand. Yeah, good luck.
2:30 Ryan Sean Adams? This is not only a Halloween costume. This is, um, I don't have any solidarity with SBF. I don't wish him well, actually, but we'll see what happens today.
2:37 David Hoffman? You're commemorating the day.
2:39 Ryan Sean Adams? I'm commemorating the day. The day we took down, uh, one year. It's almost like a year ago that all of this happened.
2:45 David Hoffman? November 8th, I think, was the day. So next week, next week will be one year since the fall of FTX.
2:50 Ryan Sean Adams? Yeah, I'm celebrating the outing of a fraud and the cleaning up of this space, which we've been doing a lot of over the last year. But tell us, what do we have for the agenda besides these fantastic costumes that we're sporting?
3:02 David Hoffman? In addition to all the things that we've already teased, we get to say, welcome to Uptober. Yes. We got a double-digit week this week. It's, we were talking about it. It finally came. Everyone, pat yourselves on the back. We got that. Bitcoin is up 15%. Uh, that feels great. Can we get it again? Okay, now the next question is, when is the next time that we get double-digit weeks for two weeks in a row?
3:28 Ryan Sean Adams? Oh, one week's not enough for you?
3:30 David Hoffman? Well, we, no, that was this week. It's never enough. It's never enough.
3:33 Ryan Sean Adams? I want to bask this week in enjoying this because this could mean the end of the bear market. Like, I feel like this could be a very significant week, actually, for us. We also have the Wall Street Journal blatantly lying, blatantly spreading misinformation about crypto, associating it with terrorism, and failing to retract it. And citizen journalist and friend of the show, Nick Carter, is on their ass to do something about it. I love it. I love the facts coming out. So we're talking about that. What else we got, David?
4:03 David Hoffman? New York Attorney General charges DCG and Gemini for fraud. So while Gemini was pointing at DCG and DCG is pointing at Gemini, the New York Attorney General was like, you know what? We're taking both of you in.
4:14 Ryan Sean Adams? Both you guys.
4:15 David Hoffman? Both you guys. Yeah. Just charges. So we'll, we'll talk about that. Like Ryan said, SBF about to testify. And also, a Uniswap app chain gets launched, but by whom? Who launched the uni chain? We will talk about that. I think that this is a great story that totally went under the radar this week. Ryan, did you know that the Uniswap app chain got launched?
4:37 Ryan Sean Adams? David, you're so excited about this.
4:38 David Hoffman? I think this is a great story and no one's paying attention to it.
4:42 Ryan Sean Adams? This is David's breaking news journalist tweet. I'm glad you have the journalist suspenders on.
4:47 David Hoffman? The Uniswap app chain got launched and Uniswap didn't deploy it and Uniswap Foundation didn't deploy it. Who deployed the uni chain?
4:53 Ryan Sean Adams? This is, uh, this is a bit tinfoil hat, but we'll definitely get to that later in the episode for sure. Uh, before we begin, we gotta shout out our friends and sponsors over at Doppel.
5:03 David Hoffman? Doppel.
5:04 Ryan Sean Adams? Yeah. So Doppel, not to be confused with doppelganger, of which I am quite clearly SBF's doppelganger today.
5:10 David Hoffman? Of course. I've always thought this, actually.
5:13 Ryan Sean Adams? SBF RSA, huh?
5:15 David Hoffman? You can't, you have three letters. What's going on here?
5:17 Ryan Sean Adams? Yeah, something weird going. But people, you can't trust people who use their middle name as their main name. Anyway, something else you can't trust on the internet is all the phishing links that you get. And Doppel plays whack-a-mole with all of the fishers. So David, we have started using this service as of about two months ago, and they have done a fantastic job. Every time a phishing site, a fake bankless comes up, or a fake Ryan Sean Adams account on Twitter or Instagram, you know what they do, David?
5:44 David Hoffman? They, they bang him.
5:46 Ryan Sean Adams? Yeah, they doppel him. Right in the head.
5:50 Ryan Sean Adams? They just doppel them right on the head and it's a fantastic service because there are more and more phishing scams and links going on. And if you are a project, a DAP developer in the space of crypto, if you have a community, you need to protect your community or at least do what you can. Doppel is the service to go do that. They have something going on, I believe, for Bankless listeners as well. A free trial, can you tell people about that?
6:11 David Hoffman? Yeah, free limited time trial to Bankless members. There's a link in the show notes to get started. Also, doppel.com/ up. Overall, it's just like the scammers, the fishers out there are automated. And so the manual reporting of accounts is just not going to cut it. You need to fight fire with fire, you need to fight automation with automation. So this is what Doppel does. So if you're a project that has customer deposits, don't let doppelgangers intercept your...
6:41 Ryan Sean Adams? Is that why they're called Doppel?
6:42 David Hoffman? Yes, of course.
6:43 Ryan Sean Adams? Oh, of course, okay.
6:44 David Hoffman? Yeah, don't let doppelgangers intercept your customers' funds from going into your project. So you want TVL, don't let the doppelgangers get your customers' TVL.
6:55 Ryan Sean Adams? Take it from the guy with the FTX shirt, okay? I know a thing or two about scammers.
7:02 Ryan Sean Adams? David, let's get to the good stuff today. You ready for this?
7:05 David Hoffman? Yes.
7:05 Ryan Sean Adams? Prices, markets.
7:06 David Hoffman? Good-looking prices on good-looking charts. Bitcoin up 15% this week.
7:11 Ryan Sean Adams? 15%?
7:13 David Hoffman? A monster green candle. We saw definitely a short squeeze where people were just caught off sides and then they held on to their shorts for too long. And then, what is a short squeeze? Well, somebody's short and then they're like, I don't want to be short anymore. So they have to buy back their Bitcoin to stop being short, which causes the Bitcoin price to go up, which causes other people to have to do the same thing. Too many people caught on the wrong side. So Bitcoin started the week at 29,500, up 15% to 34,000. Come down a little bit off the top, so we're just below 34,000.
7:43 Ryan Sean Adams? You know what, David? I feel nothing for the pain of the shorters, okay? That's what you get for shorting this market.
7:48 David Hoffman? Bears deserve that. Don't short crypto, how dare you?
7:51 Ryan Sean Adams? Yeah, I'll teach you a lesson next week, too.
7:53 David Hoffman? Get out of here.
7:55 Ryan Sean Adams? This is an 18th month high for Bitcoin, at least not right now, but it shot up above 35K, actually. If you look at the Kraken charts here, which as you said, they are looking beautiful today. I love this trendline.
8:10 David Hoffman? The way that line goes, it looks like the upwards chart emoji.
8:13 Ryan Sean Adams? So Bitcoin with an absolutely monster week, up 15% on the week, or higher, at least from the time of recording. How about Ether on the week?
8:21 David Hoffman? Ether, starting the week at $1,600, ending the week at $1,776, some freedom numbers, up 11% on the week, also a double-digit for Ether, but definitely Bitcoin won this week. It is a Bitcoin week this week, for sure.
8:33 Ryan Sean Adams? And so what does that mean for the ratio, David?
8:35 David Hoffman? Ratio, down 3.5%, down to 0.052. Not great.
8:39 Ryan Sean Adams? Are you worried about this? Like, this is some lows. It's definitely Bitcoin dominant season, isn't it?
8:43 David Hoffman? It's a little bit surprising. I did not expect to get here. But like I said last week, I've reduced my, what do you call it, average buy price.
8:52 Ryan Sean Adams? Yeah. So you're fine with the position?
8:54 David Hoffman? I mean, I've already held it down to this number. I've done this once before with Euros Capital.
8:59 Ryan Sean Adams? We're gonna talk a little bit more about why Bitcoin is up, and I think in relation even to Ether and some other assets throughout this episode.
9:07 David Hoffman? Bitcoin being number one doesn't happen often, because it's the biggest one to move. It takes a lot more to move Bitcoin.
9:13 Ryan Sean Adams? That's a big story. And in previous cycles, Bitcoin has gone first, and that seems to be what's happening this cycle as well. David, but let's look at the global crypto market caps. Where are we at on the week?
9:24 David Hoffman? $1.293 trillion, rocketing past 1.2, almost up to 1.3 trillion. That is, that's nice. That is nice.
9:31 Ryan Sean Adams? Look at this. Do you know, around, let's see, three, four years ago at this time, we were less than 200 million?
9:38 David Hoffman? 200 billion. Yeah, that is a tiny number.
9:41 Ryan Sean Adams? 200 billion, yeah. Right?
9:42 David Hoffman? Yeah.
9:43 Ryan Sean Adams? So we are definitely up on that time horizon. David, there were some movers this week as well. So we talked about Bitcoin, which was up. Link, RPL, Rocketpool, and Solana had monster weeks as well. We're looking at the 7-day right here, and let me grab Solana, up 24% on the week. I think if you span that out a little bit more, it'd be up even higher.
10:06 David Hoffman? I think it's up 50% on the month.
10:08 Ryan Sean Adams? Wow. And we also have link, uh, chain link with an absolute monster 43% on the seven day here.
10:16 David Hoffman? One week. Wow. The same week that Bankless does our bull case for a link episode. Is that a coincidence? I don't think so.
10:25 Ryan Sean Adams? RPL, RP. I haven't listened to that, by the way. How was that?
10:28 David Hoffman? It was, it was very bullish.
10:30 Ryan Sean Adams? RP, uh, ripple, uh, sorry ripple. I always say RPL and I think ripple for some reason. Uh, Rocket Pool.
10:35 David Hoffman? I don't blame you.
10:36 Ryan Sean Adams? A monster week as well. Um, what's, what's interesting, I think about some of these numbers too, is uh, remember tokens like Solana had to go from absolutely catastrophic lows, right? So they were down like, you know, 95, 96, 97%.
10:50 David Hoffman? When you're down 95% is easy to bounce back.
10:53 Ryan Sean Adams? Yeah. So Solana right now, I like to like weeks like this, I'd like to go check the percent down from all time highs because I think that, that now that represents something to me. So Solana, sole token still down 88% from all time high versus Bitcoin, only 50% from all time high. It's a huge difference. Uh, and Ether 63% from all time high. So, uh, well, let's just finish that out. Chain link 80% from all time high as a benchmark.
11:19 David Hoffman? Yeah.
11:20 Ryan Sean Adams? So really interesting. I have a take about this though, and this is a take, uh, we threw out during our, um, our charting episode with Ledger from Up Only earlier this week, but it's just, I think the mistake that people make at this part in the cycle, David, is they become chasers. Okay. They look at the charts, the seven days or the 30 day, and they're like, what's pumping? Oh man, my fundamental thesis about all of crypto was wrong. So I better go change it and I better go sell my conviction assets and ape into the thing that is pumping most recently.
11:53 David Hoffman? Yeah. Chasing, you're chasing the pump. You're chasing the pump.
11:55 Ryan Sean Adams? It's a classic mistake people make at this phase of the cycle. And this phase of the cycle, I think we can call it, is the early bull phase of the cycle. All right. And we are officially calling bull phase of the cycle.
12:07 David Hoffman? Are we? Are we doing it?
12:07 Ryan Sean Adams? I'm ready to. Do you want to?
12:09 David Hoffman? Yeah.
12:09 Ryan Sean Adams? Let's call it. It's the bull phase of the cycle, guys. We're still early in the bull phase, but I think we have, this week proved to me.
12:16 David Hoffman? Sentiment has certainly shifted.
12:17 Ryan Sean Adams? Totally shifted. We have broken the back on the bear market. Okay. Sorry, Shorter. Sorry, Bears. Your time is short.
12:24 David Hoffman? I'm not sorry, Shorter. I'm not sorry.
12:26 Ryan Sean Adams? But the biggest mistake you can make at this point in the cycle is chasing the pump. So the advice that we have, the not financial advice, life advice, don't be a chaser. Hold your high conviction. Let the market come to you.
12:39 David Hoffman? Yes, you let the pump come to you. Don't be needy. Let the pump come to you.
12:45 Ryan Sean Adams? Yeah, you don't have to respect the pump. Okay, that just means aping into stupid things. Let the pump come to you is the Zen advice on Bankless this week. But David, let's get into some analysis because I think people are wondering, why is Bitcoin price up?
12:59 David Hoffman? I'm wondering that. Tell me.
13:01 Ryan Sean Adams? Well, the easy, the easy answer is obviously we've got spot Bitcoin ETFs and they're coming. And we'll talk about that after the break, but I have three other reasons that Bitcoin might be up.
13:12 David Hoffman? More reasons, more bullish reasons other than that, that's like the big one.
13:17 Ryan Sean Adams? Well, I think the big one might still be the Bitcoin ETF, although there are people like Arthur Hayes, who say there's another reason, there's another force driving these markets. You know what that force is?
13:27 David Hoffman? Tell me.
13:28 Ryan Sean Adams? Global instability, war, war. Okay.
13:32 David Hoffman? Okay.
13:32 Ryan Sean Adams? So, Arthur wrote a post this week, just in general, kind of geopolitics, US monetary policy, all of these things. It was called the periphery. And he said Bitcoin is not up so much on Bitcoin ETF news. It's up because of war. Okay. And like he throws this chart up, this is the total amount that the US has spent on war since 2001. And it amounts to about $10 trillion. This is mainly Iraq. This is Afghanistan. And now, we talked about this last week, of course, the US is, Janet Yellen says, the US has enough to fully fund wars essentially in Ukraine and Israel
14:16 Ryan Sean Adams? and to help preserve and protect their allies and preserve Pax Americana. And this is not, I don't think this is really like a political view. You can politically think that that's a good idea or a bad idea. I think Arthur is taking the perspective of a trader. He's saying, okay, what does this actually mean? For for treasuries, for government bonds. And his conclusion is basically like, look at this chart. So this is T bills, treasuries, the white line. This is gold in yellow, appropriately yellow. And then Bitcoin is green. Okay? And so bonds took a massive hit, down about 11%
14:58 Ryan Sean Adams? over the since since the Fed's September 20th market. Whereas Bitcoin is up far more than 11%. I think by the time he, you know, posted this, it's now up is about 30%. And gold is up as well.
15:12 David Hoffman? So is this, is he just giving the take that that I was talking about? I think two rollups ago, where just like war is inflationary?
15:21 Ryan Sean Adams? Yes.
15:21 David Hoffman? That's that's basically what he's like.
15:23 Ryan Sean Adams? Yeah, he probably heard, he probably heard the rollup. And it was like, David's right, I'm going to write a post about this.
15:28 David Hoffman? Right, I'm going to take that take and I'm going to elongate it into an entire post.
15:32 Ryan Sean Adams? Yeah, because and and he does a great job because it's not just Israel and Ukraine. It's also the Asia Pacific, right? And so the US is seeing some, you know, creeping dominance from China. And it's going to protect its Pacific, Asia Pacific allies, so Japan, Taiwan. And like he posted the question, maybe maybe China is playing the version of the game the US played with the Soviets back in the 1970s and 1980s, which is basically get them to spend, spend, spend, spend, spend. And run out of, yeah, outspend them and win that way. And so he says, a billion here, a billion there. And soon you're talking about real money. The bond market listened to Biden's speech, read his budget and threw a fit. That's why bonds had one of their worst weeks ever.
16:17 Ryan Sean Adams? So if you are a long term US Treasury holder, the most worrying thing is that the US government doesn't believe it is spending too much. This is what US Treasury Secretary Yellen had to say when she was asked if America can afford two wars. Yeah, no big deal, right?
16:32 David Hoffman? Of course we can afford two wars and we can print money.
16:34 Ryan Sean Adams? Yeah. So the conclusion is this, all major economies must ramp up production of war materials to hand to their allies in this new reality. And in this new reality, he says, "I don't want to own bonds of any country, not just the US. Bad news bears all around. The golden Bitcoin are starting to tell us this." So that's, that's the first reason, other than the spot Bitcoin ETF that Bitcoin might actually be up. Yeah. The second is this one. When's the last time you looked at this, this chart here, David? This countdown, I should
17:07 David Hoffman? say. Oh, it's been a while. It has been a while.
17:09 Ryan Sean Adams? Tell, tell the vanglish audience what we're looking at here.
17:12 David Hoffman? We are looking at the Bitcoin having countdown. And it's been a while since I've seen such a low number. 165 days. That's less than half of a year. And four hours, 51 minutes from the time of recording. So hold your breath.
17:26 Ryan Sean Adams? So this changes, right? I was looking earlier in the week and it was like the end of April. Now it's targeted April 8th. And this is what, what's the space? Yeah. Why does it change?
17:35 David Hoffman? Why does it change? Because more mining hash power comes online. So Bitcoin is scheduled to have a happening every four years if hash power is held constant. But hash power never is constant. It's always up. And so the happening is actually coming sooner than four years because the, the time from a Bitcoin perspective is always speeding up.
17:55 Ryan Sean Adams? So what does this drop us down to? Annual inflation of Bitcoin right now in block rewards? What is it about? You know, 1.5%, 1.9%?
18:04 David Hoffman? Oh, inflation? Oh, I'm not sure. Well, I mean, let me go check ultrasound dot money, ironically, as a place to go find out what Bitcoin inflation is. Let's see Bitcoin inflation.
18:19 David Hoffman? 1.685%. 1.7%. 1.7%.
18:23 Ryan Sean Adams? It's like it's cut in half.
18:24 David Hoffman? Yep.
18:25 Ryan Sean Adams? To 1.7%. So there you go. The, the happening is near. And, you know, that's the second reason I have. So we've got, we've got war, you know, fiat dollar governments printing, and we've got the happening coming up.
18:39 David Hoffman? Those are some big, big catalysts. Never mind the pivot from the Fed, which, I mean, there's no indications of that, but we know that that, that's more ammo that we have in the quiver that will happen at some point.
18:49 Ryan Sean Adams? Yeah. And my, my third reason here is I think you'll resonate with this.
18:53 David Hoffman? Yes.
18:54 Ryan Sean Adams? It's time.
18:56 David Hoffman? Why is Bitcoin pumping? It's time.
18:58 Ryan Sean Adams? It's time.
18:59 David Hoffman? It's time.
18:59 Ryan Sean Adams? Yeah.
19:00 David Hoffman? It's it's. It does it. Sometimes markets don't need a reason.
19:02 Ryan Sean Adams? Yeah.
19:03 David Hoffman? The a the the reason of bears being tired of being bearish is a catalyst. Because that that is the zeitgeist of the time. Like, one person goes like, you know what? Fuck it, I'm buying. I'm done being bearish. Well, then, you know, they message their friends. It just spreads. It spreads through crypto Twitter. People just stop bear posting and they start bull posting. It just sometimes it just it just happens through the intra psychic layer of humans, which is also a catalyst. And that's what that's what I think we're saying is that's what happened this week. Like, the average human just, you know, decided that we're bullish now.
19:38 Ryan Sean Adams? Yeah, it's like, why be bearish any longer? They're putting all the pieces together.
19:41 David Hoffman? I mean, I've always been saying that, but, you know.
19:45 Ryan Sean Adams? Well, I mean, but now it's the sellers who have to be exhausted, right? And I think.
19:48 David Hoffman? The sellers to stop being bearish.
19:50 Ryan Sean Adams? It's very obvious with, you know, SBF getting his day in court and all of these other things that we'll be talking about later in the episode.
19:55 David Hoffman? Suze in jail.
19:56 Ryan Sean Adams? The bad news has been absorbed by the market adequately. Like, all of the bad news has been fully priced in. So maybe now it's just time for Bitcoin to go up. And it wouldn't be odd if this happened, because it happens every freaking four years, guys.
20:09 David Hoffman? It's another catalyst for four years. Here is the meme layer.
20:13 Ryan Sean Adams? Yeah, so maybe we should all just stop overthinking it. It's time for Bitcoin to go up. David, what do we have coming up next?
20:19 David Hoffman? Coming up next, talking about the Bitcoin ETF. We've got some news to talk about that. But also, we got to talk about, I think this is gonna be great, calling out the BS. Nick Carter just leading a vendetta against the Wall Street Journal, because the Wall Street Journal has posted just totally debunked information that Elizabeth Warren is citing, and they can refuse to retract it. Citizen journalist Nick Carter having absolutely none of it. SBF, of course, taking the stand today, the day of recording. We sadly won't be able to comment about it, but we will share what we know. All of this and more coming up as soon as we talk to some of these fantastic sponsors that make this show possible, especially Kraken, our preferred exchange for crypto in 2023. If you do not have an account with Kraken, consider clicking the link in the show notes to getting started with Kraken today. Kraken Pro has easily become the best crypto trading platform in the industry.
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21:45 David Hoffman? It's a game-changing proposal that's going to bring Cello's rapidly-growing ecosystem home to Ethereum. Vitalik has shared his excitement for the Cello Layer 2 on the Cello Forum, so has Ben Jones from Optimism. But why? The Cello Layer 2 will bring huge advantages, like a decentralized sequencer, off-chain data availability, and one-block finality. What does all that mean? Rock-solid security, a trustless bridge to Ethereum, and more real-world use cases for Ethereum without compromise. And real-world adoption is happening. Active addresses on Cello have grown over 500% in the last six months. With the Cello Layer 2, gas fees will stay low, and you can even pay for gas using ERC20 tokens. But Cello is a community-governed protocol. This means that Cello needs you to weigh in and make your voice heard. Join the conversation in the Cello Forum.
22:28 David Hoffman? Follow @celloorg on Twitter and visit cello.org to shape the future of Ethereum.
22:33 Ryan Sean Adams? All right, guys, back to the main reason Bitcoin might be up that everyone's talking about and I think has a lot of substance: the Bitcoin ETF. We know that's coming. We think it's coming. We've had analysts predicting it, you know, 90% to 95% certainty by January 2024. Did something new happen this week? That's the big question. Is that why Bitcoin is up? A few things did happen this week, actually. And the first is this: BlackRock is now seeding the spot Bitcoin ETF. What's seeding it? That means BlackRock is putting some initial funding from their bank and broker to create a few units of Bitcoin. It does not mean-
23:13 David Hoffman? Oh, BlackRock's actually buying Bitcoin?
23:15 Ryan Sean Adams? They're buying Bitcoin. Now, it does not-
23:17 David Hoffman? BlackRock's buying Bitcoin to prepare for their ETF.
23:19 Ryan Sean Adams? Yes, they have to do this. Like, hey, does it work? Is this, hey, is this thing on? It's testing, right? Like, they're just buying some Bitcoin? Now, this is not buying in bulk.
23:28 David Hoffman? Just setting up my Bitcoin ETF.
23:32 Ryan Sean Adams? But the fact that, so they're not buying in bulk yet, but the fact that they are doing it and they're doing it publicly, right? They've just like announced to the world
23:39 David Hoffman? Right.
23:40 Ryan Sean Adams? That they're doing this, that is a sign that we are getting closer. So that is a thing that certainly happened this week. But I think the big question on everyone's mind is, when the Bitcoin ETF comes, because it is, it is coming, will it make a material impact on Bitcoin, the price of Bitcoin itself? Or will this all be front run? Will this all be priced in by the time we get a new Bitcoin ETF? Or will there even be any demand? I mean, like, a lot of people would argue, we've had Bitcoin already. You can go buy Bitcoin in your Kraken, thanks to Kraken, exchange right now, anywhere in the, like, basically anywhere in the world. And so why do US residents need a Bitcoin ETF? Well, this is a tweet
24:23 Ryan Sean Adams? from Eleanor Territt. She is a reporter for, she's a reporter for Fox Business. What is she saying here, David?
24:30 David Hoffman? She says, I've been speaking to a couple of TradFi execs regarding the Bitcoin spot ETF. And I think it's interesting how mind blown most of them are about the level of interest that it's created. In regards to the Bitcoin major rally, she says, quote, "I mean, we're excited for these products to come to market too, but this level of hysteria is something that we've never seen before." And she concludes in saying, "Seems TradFi can't quite believe how much demand there actually is for mainstream crypto asset investing." So this is demand, this mania, this hysteria that she's talking about are just from average people who have their capital, their money outmanaged by, you know, financial disers or money managers. And that all the, all the money managers, what she's saying is like
25:13 David Hoffman? all the, all the financial disers, like, yo, like, we're also excited for this spot Bitcoin ETF, but our clients are really excited about it. And that's what really matters at the end of the day.
25:24 Ryan Sean Adams? I, I, I want to believe this. This is a very hypey tweet. Sometimes you wonder whether it's just a hypey tweet somebody puts out there for engagement.
25:33 David Hoffman? I choose to believe. I mean, look at all the things that are going on that we had the seven different reasons why Bitcoin is bullish. Like, at least a few of those have to be landing with just normies.
25:42 Ryan Sean Adams? David is choosing to be bullish this week as well. Here are some numbers that back this up, and I find this analysis helpful as well when you compare that to kind of the normative analysis there. This is from Alex Thorne. He's an investor at Galaxy. And he actually ran the numbers based on projected inflows, projected demand for the Bitcoin ETF. And he based this on a number of factors, I believe, past performance of the gold ETF. He really looked at the total sizing of the market inflows, and we'll including link in the show notes to this tweet and some of his analysis. But he thinks that post-Bitcoin ETF Bitcoin could see another 75% price appreciation.
26:25 Ryan Sean Adams? So almost a doubling of price. And that is based just on year one inflow, so in the first year. And he gets to a number of about $15 billion of net new buying activity into Bitcoin in year one. And he kind of backs into that number based on the number of broker-dealer purchases that are going on, the number of bank purchases, the number of registered investment advisor purchases. And yeah, I think it's some compelling number. So he's saying 15 billion in inflows into Bitcoin, net new purchases of Bitcoin in year one. And then he's projecting 26 billion in year two, and almost 40 billion of Bitcoin inflows in year three. So that's a lot of inflows, man.
27:09 David Hoffman? That's a lot of inflows. And importantly, this amount of inflows doesn't end there. That's not the only new inflows. There will be inflows that will buy Bitcoin ahead of these flows, because they know that these flows are coming. What do we say at the start of every episode, front row on the opportunity? Like, if you are buying Bitcoin in your stock brokerages through the Bitcoin ETF, you are no longer early. I would say actually the mark of like being early to Bitcoin is buying Bitcoin before the ETF exists.
27:38 Ryan Sean Adams? I think you're right, David.
27:39 David Hoffman? I think once the ETF exists, there is no more early buyers of Bitcoin.
27:43 Ryan Sean Adams? Yeah, you're at least in the, you're not in the early adopter. You're maybe in the early majority or something like that.
27:49 David Hoffman? Early majority. Yeah, that's right. Yeah. But importantly, like this $15 billion of new buy pressure that's coming this year is going to incur like another 15 ish billion dollars of just like people buying because other people are buying. And that's what a bull market is.
28:06 Ryan Sean Adams? Yeah, and I don't think crypto natives fully understand the size of this potential market, right? So here's some numbers here. The size of assets under management that get exposure when there's a good Bitcoin ETF. Broker dealers alone, they have 27 trillion in assets. Again, that's the total market size of this. Banks have about 12 trillion that they could be deployed. And the big one that I think I'm most interested in is the Edward Jones guy. It's like the financial advisor in the US that is going to say, hey, now I have a product that I can sell my 401k users who come to me for financial advice.
28:48 Ryan Sean Adams? That is almost 10 trillion in assets that registered investment advisors have in the US. So it's an absolutely huge market. The other thing I think with all of this, this kind of pressure on the SEC to like make this happen. The bigger question is when we zoom out is why don't we have a Bitcoin ETF already? Like that's at some level, David, that's the more amazing part, that the US still doesn't have a Bitcoin ETF. What's his tweet from Nate Grassi say?
29:14 David Hoffman? He just like lists all the terrible ways that we have Bitcoin exposure through, through like normal typical trad rails. You know, GBTC, which is off 25%, MicroStrategy, which is like a proxy Bitcoin exposure and is being used for Bitcoin exposure, even though it's a company, buying Dogecoin, Bitcoin Futures ETF, 2X Leveraged Bitcoin Futures ETF, Blockchain quote unquote ETFs, ETH Futures ETFs, all before.
29:45 David Hoffman? A very simple product that is the spot Bitcoin ETF. It's just lunacy. It's just insane that we have these things in trad accounts and not a very simple spot Bitcoin ETF.
29:57 Ryan Sean Adams? All of these apparently, according to the SEC, are safer than the spot Bitcoin ETF. Here's how Hester Purce put it in an interview.
30:04 David Hoffman? 2X leverage futures Bitcoin ETF. Give me a break.
30:07 Ryan Sean Adams? Yeah. This is Hester Purce on Squawk Box on CNBC. All right. Let me play this clip for you guys.
30:12 Speaker 02 And I can't, I can't say whether or not the commission is, is ready to approve a Bitcoin exchange traded product. I've been thinking we should approve one for the last five years. So that the logic for why we haven't has always mystified me. The court case obviously is, is an important factor in the landscape, but I can't guess as to my colleagues' approach to this topic.
30:35 David Hoffman? But I can guess my colleagues' approach to this topic because he's an insane person and he's unpredictable.
30:42 Ryan Sean Adams? Oh, wow. Hester Purce, again, SEC commissioner, is mystified about her colleagues' approach to this. It's not just the Bitcoin ETF either. You know what's actually underpriced and probably like undervalued by the market right now, David?
30:57 David Hoffman? I have a guess.
30:59 Ryan Sean Adams? It's the Ethereum spot ETF. And that is coming too. This is from James Effort. He is talking about the filings for a spot Ethereum ETF. This one specifically he's got pointed as the fifth currently active spot for Ethereum ETF.
31:16 David Hoffman? The Bitcoin spot ETF has like in the teens of number of contenders. Ethereum's got five. ETH has five spot ETFs. So like the, count the number of catalysts that we have, bro. Like after the Bitcoin spot ETF, it's the Ether one.
31:32 Ryan Sean Adams? It's gotta be the Ether one, right? And this one specifically, it's got a deadline of July of 2024.
31:38 David Hoffman? Oh, I'm gonna schedule a mountain.
31:41 Ryan Sean Adams? Well, you should, David. Schedule a mountain for July of next year because I think that within months, it could be the case that we actually have an Ethereum ETF after our Bitcoin ETF. And if you want another prediction market for all of this, you can go look at the grayscale ETH E price chart or the Bitcoin GBDC price chart. Okay. This is again, these are these trust type products that don't trade exactly, you know, to one to one with the Ether or Bitcoin spot price.
32:13 David Hoffman? Not even close.
32:13 Ryan Sean Adams? Because it's almost like a prediction market on when these products will convert to full ETFs, to actual spot ETFs. And the gap has closed on this. The premium to NAV has closed on this.
32:26 David Hoffman? What did I say? Do you remember, I think it was like December or January of 2022, right after FTX? And these things hit their lows. Their discount, the ETH E discount to net asset value, same thing with Bitcoin. I think it hit a low of like negative 40%. What did I say? I said that the bull market will very clearly be back on when we can recapture the lost capital, the billions of dollars of deleted capital because of the ETH E discount and GBTC discount. We are watching that in real time come back to zero. Where are we at? Negative 19, still a lot, still a ways to go, but very much healthy, healthily off the bottom of like negative 54%. So going from negative 54 to
33:10 David Hoffman? negative 19% off of net asset value is the restoration of billions of dollars of capital into investors' hands. The D gens are being refueled. And so as this approaches zero and we actually restore that billions of dollars of capital, this like frees up so much capital to get unlocked.
33:32 Ryan Sean Adams? Yeah. Well, in the bull market, it'll probably go above zero too. It'll go into the positive territory.
33:37 David Hoffman? Well, if it turns into an ETF, it'll always be at one finally.
33:40 Ryan Sean Adams? And that was Ether, the numbers that you gave. I mean, it was down about 50% for Bitcoin as well. And now it's only down 14%. So the gap is closing. And I think that's a prediction market on when Bitcoin, when Ether ETF. So that's what's going on in the world of ETFs. David, there's some lies going on in mainstream media this week about crypto, about specifically crypto and its ties to terrorism. What are we going to be talking about next?
34:08 David Hoffman? The Wall Street Journal is being called out for reporting misinformation that everyone knows is misinformation about how crypto is involved with terrorist financing, specifically with Hamas. Now, other organizations have also reported similar things. And then they have retracted the statements after organizations like Chainalysis and other agencies reported, showed that the numbers were wrong. And then they provided the correct numbers, but not the Wall Street Journal. Now, that would be one thing if the Wall Street Journal was just taking their, you know, journalistic malpractice to the face and just, you know, whatever, and dealing with it. Except Elizabeth Warren is using this and citing the Wall Street Journal in letters to the White House.
34:52 David Hoffman? Ryan, we've shown this particular Wall Street Journal article on the weekly roll up before. It was either two or three weeks ago, right after Hamas invaded Israel and had this, started the conflict there. And we talked about the use of crypto and how crypto ended up in the hands of Hamas. This is the article in question. So here we are, two, three weeks later, after another individual, Sam Callahan, who tweeted out, "It has been confirmed that this article is patently false. It was straight up fake news."
35:24 Ryan Sean Adams? So we're looking at the title of this article, "Hamas Militants Behind Israel Attack Raised Millions in Crypto." And here's the subtitle on this article. "Digital Currency Transactions Highlight How U.S. and Israel Have Struggled to Sever the Access of Hamas, Palestinian Islamic Jihad, and Hezbollah to Foreign Funding." So again, tying crypto directly to terrorism. And then last week, David, remember we talked about that letter? That was signed by 100 members of Congress that Elizabeth Warren... Elizabeth Warren spearheaded was basically like, hey, we've got to do something about cryptocurrency and terrorists. And like the the the use of cryptocurrency by terrorists, in particular Hamas. And she sourced and cited this very article. That's the problem.
36:07 David Hoffman? Article, yeah. So Sam Callahan, a Twitter account says, last week, the Wall Street Journal published an article claiming about $90 million worth of crypto was used to fund Hamas, a serious claim that gained significant attention. He continues and says, it was confirmed that this article was patently false. It was straight up fake news, and this has been confirmed by Chainalysis, the people who would know, which which ran the numbers themselves. It turns out, the authors of the article mistakenly counted an entire exchange's trading volume of $82 million for terrorist group for a terrorist group's address, which is a rookie move. The actual funds that went to the known terrorist-linked addresses were substantially less. Do you know, you want to know how much less they were, Ryan?
36:52 Ryan Sean Adams? Versus 90 million?
36:54 David Hoffman? Versus 90 million, 82 million, yeah.
36:56 Ryan Sean Adams? Yeah.
36:56 David Hoffman? $450,000.
36:59 Ryan Sean Adams? Oh, my God.
37:00 David Hoffman? Yeah, those are different numbers.
37:02 Ryan Sean Adams? Okay.
37:03 David Hoffman? And like you said, Ryan, Senator Warren wrote this letter to the White House where she said, indeed, between August in 2021 and the past June, the two groups raised over $130 million in crypto. As the Wall Street Journal reports, researchers who study Hamas's financing said crypto remains a number one tool the groups use to raise funds. So here is where Chainalysis comes in with their statement.
37:25 Ryan Sean Adams? Look what's cited here, too, in this letter, David.
37:27 David Hoffman? Yeah, the number one citation, the Wall Street Journal. Chainalysis released their statement saying terrorist orgs have historically used and will likely to use and continue to use traditional fiat-based methods like financial institutions and shell companies, AKA TradFi, as their primary financing vehicles. But some terrorist terrorist organizations raise, store, and transfer funds using cryptocurrency. This is true. Thanks to the transparency of the blockchain, crypto has for years proven to be an ineffective tool for terrorism financing at scale. But even small amounts of funds can do tremendous. This damage and should be investigated again, they're not they're not discounting this. They're just trying to put it in perspective. Taking a closer look at these counterparties, we find more evidence that it's likely that some kind of service provider.
38:11 David Hoffman? And of the roughly $82 million in crypto received by this address. About $450,000 worth of funds were transferred to the known terror affiliated wallet. So basically saying the number is $450,000, not millions and millions and millions.
38:26 Ryan Sean Adams? It's a big freaking difference here.
38:27 David Hoffman? It's a very big difference. Yeah. So Nick Carter comes in and Nick Carter, I would say he's written like academic articles before. He knows a thing or two about journalistic integrity. So he gives this recap saying first, Wall Street journalists, and then names them Angus Burwick and Ian Tally. Write a flurry of articles citing Eclipse Elliptic data, which is another publisher. We'll talk about that in a sec. Claiming that P I J Hamas affiliate raised $93 million in crypto. Second, Senator Warren uses this article to claim Hamas raised over $130 million in crypto. Don't know where that name came from. This article is the sole citation in her letter, the Bloomberg article. The entire letter, Elizabeth Warren's letter, depends on the Wall Street Journal article.
39:10 David Hoffman? Third, over 100 members of Congress signed the letter, which asks for Biden administration to further crackdown on crypto. Next, Chainalysis comes out with an article disputing the Wall Street Journal claims. Saying that instead of the $82 million, the real figure is around 450,000. And last, the Wall Street Journal refuses to follow up or retract. Instead, writing more articles relying on their claims.
39:34 Ryan Sean Adams? Wow. That is bad. So they're refusing to redact that too. So the source of the data that the Wall Street Journal, they weren't looking at these on chain transactions. They were getting this from a company called Elliptic. What did Elliptic say in the aftermath of this?
39:50 David Hoffman? Oh, well, they wrote an article, Ryan, saying, setting the record straight on crypto crowdfunding by Hamas. And they corrected the record and issued a retraction of their original statement. Saying the first bullet point here, there's no evidence to support the assertion that Hamas has received significant volumes of crypto donations. So correcting the record. So somebody's doing it. Somebody's going back and saying, yo, we F'd up. Sorry. Just not the Wall Street Journal.
40:13 David Hoffman? Then here's Ian Tally, the author of the article that come out of the Wall Street Journal, just absolutely doubling down.
40:20 Ryan Sean Adams? Really?
40:21 David Hoffman? Yo, digging his heels in.
40:23 Ryan Sean Adams? They're doubling down on this?
40:24 David Hoffman? Oh, they're doubling down bigly. Yeah, uh huh.
40:27 Ryan Sean Adams? What, do they have any data? Are they like actually bringing? Oh my god.
40:31 David Hoffman? No, okay, so this tweet, which is this guy trying, you got the Twitter community notes to correct the record, which is how you know you're off. And so this tweet from the author gets 155 likes, and then Nick Carter follows up and says, "You are a liar. You have been found out. Now do your job and publish every traction. Salvage some dignity." Coming in at 1.3 thousand likes.
40:54 Ryan Sean Adams? He's right!
40:55 David Hoffman? That is a massive ratio.
40:56 Ryan Sean Adams? This reporter is just doubling down on misinformation.
41:02 David Hoffman? Yeah, not great. So Nick Carter follows up and he retweets, "Welcome back to Twitter. I see that we have your attention. Elliptic and Chainalysis have rebutted your analysis. Your kingdom is crumbling, but yeah, dig your heels in further to see where it takes you." He just is on a roll, man. Another take from Nick saying, "Make no mistake, journalists and senators, lying about crypto financing terrorism and pinning the blame on us is an existential threat. If they win that information war, there is no limit to government aggression. This is our battle we need to win, and the truth is on our side." And so here's the meme from Nick Carter. He's got the SpongeBob meme of to-do list,
41:42 David Hoffman? and it's, "One, Elliptic corrects the record, which is done. Next, Wall Street Journal retracts. Next, Warren letter signatories retract. Last, Liz Warren fesses up."
41:53 Ryan Sean Adams? That last one's not happening.
41:54 David Hoffman? That last one's not happening. That last one's not happening.
41:56 Ryan Sean Adams? Brian Armstrong weighing in too, saying, "This is crazy. An inaccurate Wall Street Journal article caused 20% of Congress to sign a letter. That's scary. It's crazy. Elliptic has now refuted the evidence in the Wall Street Journal article. Wall Street Journal, will you issue a..." Retraction slash correction. They haven't yet. At the time of recording, Wall Street Journal has not retracted this.
42:19 David Hoffman? Balaji comes in and says, "The refutation could not be stronger. Will Wall Street Journal's authors Ian Tally and Burwick correct the record?" Quote, "There is no evidence to support the assertion that Hamas has received significant volumes of crypto donations." That's the line I read earlier.
42:32 Ryan Sean Adams? David, it's not great, but the good news is, as Hester Purse has said before, we have the courts on our side. We also have truth on our side.
42:38 David Hoffman? I love having truth on my side.
42:40 Ryan Sean Adams? It's in the blockchain. Go look up the data yourself.
42:43 David Hoffman? On the blockchain.
42:44 Ryan Sean Adams? Right? I mean, the records are clear here. What's going on with our friend and my doppelganger, SBF this week, David?
42:53 David Hoffman? So SBF is going to take the stand. He's going to do the thing that he is so good at, which is just running his mouth. There's been a bunch of analysis as to like, why is SBF going to take the stand?
43:05 Ryan Sean Adams? Why is he deciding? This is risky, right?
43:07 David Hoffman? Why is he doing this? Yeah. And so here's how this has gone so far. Sam's defense has struggled, as you could imagine. The prospects for Sam don't look good. The judge has even denied seven expert witnesses that Sam would like to have proposed a call to the trial. I don't know why, but not great. Like, you're just being removed of your collateral. I would suppose that like, maybe there's a handful of reasons. They've also denied many of Sam Bankman-Fried's arguments and evidence, and he, of course, faces decades in prison if he's convicted. So he's not, it's not looking great. So this is potentially a new strategy.
43:48 Ryan Sean Adams? It feels like a hail mary to me, David.
43:50 David Hoffman? It feels like a little bit of a hail mary.
43:51 Ryan Sean Adams? It's not going well, so what do we got? We'll just put, we'll just put SBF on the stand and hope maybe he can talk his way out of this. I think part of the idea is they, the defense wants SBF to appear that he didn't intend to commit any fraud, that prosecutors are painting him as some kind of criminal mastermind. He's just a guy that got, you know, caught with too much complexity in crypto and financial products. They're all incredibly complex. And hey, I'm Sam. I just, I just got stuck in the, in the middle of all of this. And so they're hoping they can paint that, that kind of a portrait. The thing that I think they're exposing a lot of risk to, David, is that The prosecution knows all about this and they have the receipts.
44:35 Ryan Sean Adams? Here's a formal federal prosecutor saying this is a risky maneuver. And he says, I expect they've been preparing. This is the prosecution has been preparing. I expect they've been preparing for SBF to testify for a long time. They have mined all his prior statements, whether it's tweets. You remember some of those tweets, right, David? His emails, his texts, public statements. They got all that information that he made about the company and they're going to just sit there and impeach him with them. I'm sure they will. So that is probably going on right as we record this. And we'll have some more info for you next week about SBF's trial and what happened when he took the witness stand.
45:11 David Hoffman? I think there are some assumptions that we can make about how this is going to go down based off of past evidence. I will make the assumption that the prosecution does, knows everything that there is to know. There's nothing that Sam has been able, the cards that he's kept close to his chest. Those don't exist because he's a blabbermouth. So there's nothing that the prosecution doesn't know.
45:32 Ryan Sean Adams? And so is everyone around him.
45:34 David Hoffman? There's no like ace up his sleeve. He doesn't have anything. It is a hail Mary. And I'm going to also guess that the prosecution is just like licking its lips like, yes, he's gonna be on this stand. Are you serious? This is great.
45:48 Ryan Sean Adams? David, I think this is a real picture of Sam striding into court this morning. And the quote here from the person who tweeted this, when you know you're going to prison for a few decades, but the doc just filled your Adderall prescription. This is Sam, just like cocaine confident, walking into court the morning for his testimony.
46:08 David Hoffman? For the full picture, he has his shirt just like not tucked in at all. He's a little bit scraggly looking. And then he has his massive ankle bracelet on his pants.
46:18 Ryan Sean Adams? Oh, I just noticed that. I thought his, I should have added that to my costume, David.
46:22 David Hoffman? Yeah, maybe you do. We can't really tell. Anyways, the other assumption, this is, this is my, okay, this is, I don't have any evidence for this, but I'm going to go ahead and guess that after having spent so much time with Sam, that Sam's lawyer is like, I'm effing tired of this kid. I don't really have any more patience for him, so F it, just put him on the stand.
46:45 Ryan Sean Adams? I don't know, maybe, maybe. I do think it's a YOLO type of, uh, type of move here. So, David, we got more to talk about though. What's coming up?
46:52 David Hoffman? Yeah, I got some more tinfoil hat stuff for you guys. The uni chain is on Ethereum is deployed, an OP stack uni chain. Who, who did this? We'll talk about that. Was the DCG fiasco bigger than Enron? New York Attorney General coming after DCG and Gemini. And then also there's a new Speaker of the House. Sadly, it's not Tom Emmer. But is he crypto friendly? We'll ask all of these questions and answer them. As soon as we talk to some of these fantastic sponsors that make this show possible, like MetaMask Portfolio. As you are prepping your bull market battle station, because the sentiment has shifted, make sure you know how to operate your battle station. That is your MetaMask Portfolio. There's a link in the show notes to open it up today. MetaMask Portfolio is your one stop shop to navigate the world of DeFi.
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48:14 Ryan Sean Adams? The last thing we have to clean up is Digital Currency Group, DCG. This is a genesis. Gemini Earn was involved over a billion dollars in retail depositors funds lost. The New York Attorney General says this is a bigger deal, the, the fraud that Digital Currency Group pulled. It's a bigger deal than Enron, bigger than Enron, actually. What's going on with this case, David?
48:38 David Hoffman? Yeah, so New York Attorney's General Letitia James files a lawsuit against DCG for defrauding more than 230,000 investors, including 29,000 New Yorkers of over a billion dollars. So of course, as we know, just to recap, Gemini, Gemini, the exchange, the Winklevoss, lent funds to Genesis, owned by DCG, Barry Silbert's Digital Currency Group, as a part of its earn program. Some of that funds went to Three Ours Capital, who of course got liquidated and didn't have any money to pay back, leaving Genesis with a 1.1 billion dollar hole in it, also leaving Gemini unable to repay back its earn customers. So the main allegations
49:20 David Hoffman? here are Genesis former CEO, CEO Chorio, CEO, I'm just butchered that name, I apologize, and DCG's CEO Barry Silbert.
49:29 Ryan Sean Adams? You don't have to apologize to them, I don't think.
49:31 David Hoffman? That was a hard, that's a hard one. I don't know how to pronounce that. And DCG CEO Barry Silbert defrauded the public by trying to conceal heavy losses that investors bore. Gemini knew Genesis's loans were unsecured at one point, highly concentrated with one entity, Alameda Research, but did not reveal this information to investors. Okay, so then, then the New York Attorney General comes in, because like, we've been watching the Winklevoss like throw poo at Barry Silbert, and Barry Silbert is saying, that's totally unfounded. And then the New York Attorney General comes in, is like, both of you guys knew bad stuff, and are, both of, both of you guys are guilty. So that is why it's being charged.
50:13 Ryan Sean Adams? Yeah. And by the way, the reason I said you don't have to apologize for the pronunciation of the CEO's name is they should be apologizing to us, and to all of the retail investors who lost a lot of money. And there's, you know, some stories that we can get to a little bit later. But I think my summary of this is Gemini was careless, some might say reckless, in terms of like what it did with respect to Genesis. But DCG, that was straight up fraud. This is what friend of the show, Ram Alawala, says, FTX was worse than Madoff, and DCG was worse than Enron. So he's kind of... Green, he says this thread will show how and why the New York Attorney General's request will force a sale of grayscale. So grayscale might be sold, probably will be
50:57 Ryan Sean Adams? sold as a result of this. He compares Enron and DCG. He says the Enron fraud involved the use of off balance sheet special purpose entities to hide debt inflate profits. Enron execs engaged in self dealing transactions and DCG, at least according to the allegations, did both of these and more. Through complex financial structures, Enron was able to disguise its true financial state, misleading investors and analysts, and DCG did the same thing. In fact, they misled Gemini as their financial state. Gemini was like, okay, these balance sheets don't look good. These transactions don't look quite right. Can you send us the update? They fabricated things. They misled. They stalled. They didn't give Gemini the
51:39 Ryan Sean Adams? truth here. So that is the story. And why I think this is interesting and relevant, David, is because this is really the last thing that we have to clean up from 2022. 2022 is such a mess, but we've been cleaning it up all year. And this is kind of the last thing that is in the end stages of being cleaned up. But just a reminder of the human cost here. Here's a sample of the human cost. This is from the New York Attorney General's case. There are 230,000 investors, $1 billion. That includes a 73 year old grandmother and her husband, both retired, had their life savings in earn. All right. Not a good financial move, but also there was some sense that the earned product was safe. And it certainly
52:23 Ryan Sean Adams? wasn't. It was being papered over by fraud. I think on the back of this, you know, somebody could go like, hey, bankless guys, aren't you ashamed of crypto? Like what everything that your industry did? And I guess my response to that would be, I think the crypto bankers failed us last cycle. FTX, this costume I'm wearing, Barry Silber, DCG, the CEOs of BlockFi, Alex Machinsky, Celsius, the crypto bankers failed us once again. The crypto protocols themselves kept working. So no, I'm not ashamed of crypto. I'm ashamed of some of the actors in this industry. But once again, it was the centralized intermediaries who failed us, not the technology, not the protocols themselves, not the social layer of Bitcoin
53:08 Ryan Sean Adams? and Ethereum and the other protocols. So that would be my answer to that. And I'm glad we're cleaning all of this up.
53:14 David Hoffman? Yeah, and this is of course why we say protocols, not people, code, not kings. People, people will let you down. That's why we are putting our finance in our financial system into code. And you named his name, but I think in inside of all of this with DCG Gemini. There's one man who I think really takes more ought to be taking more responsibility than I think even people are pointing towards him. And that's Alex Mashinsky. So he is not related in this story. He is not part of DCG or any of this. But think about like, we saw Zach Prince from BlockFi go onto the stand and testify for about the Sam Bankman Fried case. And he had to reveal like some of the financial calculus that he was making.
53:58 David Hoffman? And the TLDR was he was gambling. He was being irresponsible. You said like the Gemini twins and Gemini earned that they were also being responsible. Why was everyone being irresponsible? Why were all of like, you know, why are just normal people like money managers running normal businesses? Why are they just straight up gambling with everyone's money? I'm going to point my finger to a variety of places and also specifically to Alex Mashinsky. Because BlockFi, Gemini, Earn had to compete with Celsius and Celsius was faking their yields out the yin yang.
54:32 Ryan Sean Adams? Yeah.
54:32 David Hoffman? And so they all had to go out on the risk curve because they all had to compete with Celsius who wasn't playing fairly. They were just juicing up their yields by taking leverage and being an actual Ponzi scheme. And so they pulled all of Gemini, all of BlockFi with them out on the yield curve, on the risk curve. And pushing everyone's like this 73 year old grandma's life savings in further down the risk than what would be appropriate. Because Alex Mashinsky fucked it up for everyone. That's my take.
55:04 Ryan Sean Adams? Well, you're on a tirade against Alex Mashinsky. And by the way, I haven't heard much about his prosecution. So I feel like we need to kind of look into how that is getting settled. But I do agree, there's like, there's. There's some actors that are worse than others in the previous cycle, right? There are levels of fraud committed last cycle and, you know, well, look at you. You just boosted up your suspenders.
55:27 David Hoffman? My suspenders fell down.
55:30 Ryan Sean Adams? All right, give us, while you got your suspenders on, give us the Uniswap take here.
55:34 David Hoffman? Uni chain. Uni chain.
55:36 Ryan Sean Adams? Okay, what is this? What are you on about, David?
55:39 David Hoffman? Yeah, okay, so remember our old episode with Dan Eliser saying uni chain is inevitable?
55:44 Ryan Sean Adams? Yeah.
55:44 David Hoffman? Okay, so here's Andrew.
55:45 Ryan Sean Adams? You think you found it?
55:46 David Hoffman? I think I found it, yeah. So Andrew Huang from Conduit tweets out, "Announcing the Uniswap V4 Sandbox. An OP-Stack-powered rollup by Conduit in collaboration with the Uniswap Foundation. Build your custom AMM on top of Uniswap's battle-tested contracts while still operating with existing liquidity instead of fragmenting it." Okay, so OP-Stack rollup that is the uni V4 sandbox. It's just a sandbox, just a sandbox, but it's an OP-Stack uni V4 implementation.
56:19 Ryan Sean Adams? Okay, does the value go to accrue to uni tokens in any way? Is that part of the story here?
56:25 David Hoffman? I think I need more details on that. If this was a true Uniswap app chain, it would be powered by the uni token. Maybe that could come later. I think, I think this is right now, I'm going to call this Schrodinger's uni chain as to like whether or not it is actually the fully-fledged Uniswap app chain that, like we were talking about in that episode with Dan Eliser, will be determined by the market, but this is where it would start.
56:50 Ryan Sean Adams? But this also implies, doesn't it, that anybody can spin up their own quote-unquote uni chain?
56:55 David Hoffman? Yes, but Conduit is in a very specific position to do this because they are a rollup as a service provider. Conduit is the infrastructure behind Public Goods Network, behind Zora Chain, behind a lot of the OP-Stack chains. Also, we didn't have time to put it in the rollup, but Arbitrum Orbit's just hit main net like are going live and Conduit is also doing Arbitrum Orbit chains. And so, one-click deploy OP-Stack chains, one-click deploy Orbit chains. And so, this is Conduit saying... Yo, we're gonna, we're gonna do the uni-chain. We got, we're gonna do the uni-chain.
57:27 Ryan Sean Adams? You know, this is the good news about, you know, everyone was upset last week about the Uniswap interface taking a fee for swaps, right? But the good news here for consumers is that fees will go down to the extent competition enters the marketplace. And now here is some more competition. Looks like forking Uniswap V4 code?
57:49 David Hoffman? It's not competition with the front end. So the front end will still stay the same.
57:53 Ryan Sean Adams? But they could just fork the front end and put that on here and add their own, like...
57:57 David Hoffman? They don't, they don't own like uniswap.app. They don't own the URL, but they could just fork the front end. What I thought was pretty interesting, Ryan, if you go and click into the Uniswap Foundation Twitter, after Conduit released this announcement saying in collaboration with Uniswap Foundation, the Uniswap Foundation had to put out this tweet, which says, "We are excited to acknowledge the initiative taken by Conduit in launching an optimistic rollup and enabled a testnet version of Uniswap V4. To clarify, Uniswap Foundation does not intend to carry this to mainnet or establish a formal partnership." They're saying, "Yo, like, what is the Uniswap Foundation's, like, prerogative? What is their, what is their, like, role in the world? They want more builders to build on Uniswap." They are not, they are saying like,
58:40 David Hoffman? "Yo, that's not our chain. That's not ours. That's not ours."
58:44 Ryan Sean Adams? There's an interesting, I think you've uncovered an interesting dynamic here, David. I'm not sure what it all means, but yeah, let's keep our eye on this, shall we?
58:51 David Hoffman? All right.
58:51 Ryan Sean Adams? By the way...
58:52 David Hoffman? I love the drama. I love the chaos.
58:54 Ryan Sean Adams? Speaking of new trains and chaos, remember DYDX? It used to be an Ethereum rollup. It is no longer. It is now on a Cosmos. So it's a Cosmos app chain. And they just announced that today, this was someday as of this week, "We're proud to present and fully open source the completed DYDX chain." So Antonio did it, David. A lot of work.
59:15 David Hoffman? It's been like over a year, right?
59:17 Ryan Sean Adams? Yeah, well, that's what he said it would take. It's a lot of work. And here, there it is. It's Cosmos. I think it's, it's the largest DeFi perps exchange out there by a long shot. It is now on Cosmos. So that is, I think, bullish for the Cosmos community.
59:34 David Hoffman? Yeah. I think this is going to be, this is now some data that we get to get, like, what happens if your app does leave Ethereum for your own Cosmos IBC app chain? Like, and then what happens next? Finally, we'll be able to take a look.
59:49 Ryan Sean Adams? David, I think I found my bottom signal on NFTs this week, by the way. Yeah, I've been waiting for it.
59:55 David Hoffman? I know you're a huge secret closeted NFT guy.
59:58 Ryan Sean Adams? You know I'm a huge NFT fan, right? But I'm just looking for like a price to buy. And I feel like I finally found the bottom signal for JPGs. It's from none other than not a friend of the show, Andrew Tate. Okay, so this is a take I want to play for you from Andrew Tate. He's talking about NFTs and of course this is-
1:00:16 David Hoffman? This is gonna be the first time I've ever listened to Andrew Tate.
1:00:18 Ryan Sean Adams? Really? Okay, here we go.
1:00:19 Speaker 03 Today, we're gonna talk about NFTs. There was a time when very successful, rich people were trying to convince me to spend millions of dollars on a JPG. And they tried to explain to me that it's on the blockchain and it's one of one and you can see on the blockchain. Who the fuck is checking the blockchain for my JPG? Who cares? 3 million for a Bugatti, fine, drive the Bugatti. 3 million for a JPG. People can just copy and save the JPG.
1:00:46 David Hoffman? He said it.
1:00:46 Speaker 03 No, my JPG is the real one, it's on the blockchain, look on the blockchain. If you go to etherscan.com, bro, what planet are you on? Nobody gives a fuck about etherscan, checking the blockchain. Even if I proved after all that I owned that picture, guess who would care? No one! Only nerds. It was a circle jerk of nerds.
1:01:02 Ryan Sean Adams? Only nerds.
1:01:03 David Hoffman? Did Andrew Tate just call us nerds?
1:01:05 Ryan Sean Adams? Yeah, yeah. He goes on, he goes on a rant about NFT crypto influencers here. You ready for this?
1:01:10 Speaker 03 Where if you make a whole bunch of money with crypto, guess what you learnt?
1:01:13 David Hoffman? That's not us, though.
1:01:14 Speaker 03 You didn't learn anything. You are still a dork, but now you're a rich dork, which makes you a mega dork. Money doesn't change who you are, it amplifies it.
1:01:24 Ryan Sean Adams? There you go, I could go on. This is a 10 minute rant, David, but I think that is the bottom signal for NFTs. We are all a bunch of mega dorks. Uh, I don't know yet. If you've got any suggestions, let me know.
1:01:35 David Hoffman? A crypto punk.
1:01:36 Ryan Sean Adams? A crypto, dude, they're still freaking expensive in ETH terms. I want, I want an up and comer.
1:01:43 David Hoffman? They're the first NFTs on Ethereum.
1:01:45 Ryan Sean Adams? It's just a JPG.
1:01:46 David Hoffman? It's not also that people will throw a flag they're not the first, but they're the first meaningfully highly priced NFTs on Ethereum with the branding of-
1:01:54 Ryan Sean Adams? What are we talking? How much ETH are we talking?
1:01:56 David Hoffman? I think the floor one is like 45 to 50 ETH.
1:01:58 Ryan Sean Adams? Dude, that's more than an ETH validator. That's a lot of ETH.
1:02:02 David Hoffman? I bet you one CryptoPunk will get you more yield in ETH terms, more returns in ETH.
1:02:06 Ryan Sean Adams? You think, you think, you think a CryptoPunk has higher returns, is it gonna outperform Ether?
1:02:12 David Hoffman? A validator, yes, yes. A CryptoPunk will outperform Ether, yes.
1:02:15 Ryan Sean Adams? See, you know what? I think I'll be perpetually stuck on this, where every time like it goes down in price, or I see a bottom signal, I'll be like, "But it's just a JPEG, and I'd rather hold ETH." So maybe I'll just never be, I'll never be one of you, Dave.
1:02:27 David Hoffman? Then I'll suggest you a Mad Lad, because then you don't have to sell your Ether for it. You can sell, I don't know, something else.
1:02:34 Ryan Sean Adams? Soul tokens?
1:02:35 David Hoffman? Because you have to buy soul. I don't think you have any soul. You have to buy soul, and then you have to buy it. So you don't sell your Ether, just sell your like...
1:02:42 Ryan Sean Adams? Sell my soul?
1:02:43 David Hoffman? Sell your soul.
1:02:46 Ryan Sean Adams? David?
1:02:46 David Hoffman? This is my Mad Lad, it is my Solana exposure.
1:02:49 Ryan Sean Adams? Yeah, yeah, that's, okay, so that's it. You're all in on Mad Labs and no soul tokens right now.
1:02:54 David Hoffman? Yeah, that's right.
1:02:56 Ryan Sean Adams? David, in regulatory news, I thought we had something great, which was, do you know the Republican Party has been really struggling to find a new House Majority Leader? And there was a brief window of time where it looked like it might have been Tom Emmer, which of course is one of crypto's strongest allies, friend of the podcast, he's been on Bankless many times. He believes in this whole thing that we're doing, at least he says he does, peer-to-peer money. He's against digital authoritarianism. He showed up at the Permissionless Conference, we did a panel. I know that this man understands crypto, and he was nominated as Speaker of the House. So I put this tweet out and I said, "Tom Emmer could become Speaker of the House, he's just been nominated, bullish." What happens? Four hours later?
1:03:38 David Hoffman? Wow.
1:03:40 Ryan Sean Adams? It seems like Trump nuked it, maybe some others nuked the nominations, that he's kind of not fit. You know how these politics, political things go. They knew House Majority Leader has just been elected, though. And his name, the most generic name ever, Mike Johnson, okay?
1:03:58 David Hoffman? Mike Johnson.
1:03:59 Ryan Sean Adams? His crypto sentiment, he's kind of an unknown, like in general, and he's also an unknown with respect to crypto. So he, of course, is a Republican on the Coinbase Public Policy app website. It's basically like unclear, crypto sentiment, unclear, not enough data to determine. So I don't really know what this means for crypto. I just know we missed a good one with Tom Emmer. And I'm not necessarily optimistic about Mike Johnson, but
1:04:28 David Hoffman? Yeah, the last unknown person to take some leadership position was Gary Gensler. But at least it's more general. All right. So Ryan, this came across my desk this week. Song.tech, sound familiar? Sound familiar?
1:04:39 Ryan Sean Adams? Friend.tech.
1:04:40 David Hoffman? Friend.tech, now Song.tech.
1:04:42 Ryan Sean Adams? All right.
1:04:42 David Hoffman? Now, instead of buying friends, your friends shares, you can buy your song shares, songs in Spotify, just like songs. You can buy songs. Guess what's the number one most valued song?
1:04:55 Ryan Sean Adams? Never Gonna Give You Up. Wow.
1:04:56 David Hoffman? Never Gonna Give You Up by Rick Astley. Yeah, Astley, Astley, yeah. I don't know what number two is, but Pump It Up by Endor. Somebody, somebody bankless citizen probably knows that. Number three, Sandstorm by Derude. Number four, All I Want for Christmas Is You by Mariah Carey. Number five, 99 Problems by Jay-Z. One More Time, Daft Punk. Daniel, okay, then number, coming in at number seven, I Just Need, Daniel Allen. You don't know who that is, I'm guessing.
1:05:24 Ryan Sean Adams? No, who's this?
1:05:25 David Hoffman? No? Okay, so why is Daniel Allen here? And who is Daniel Allen? Yeah, Daniel Allen is a music NFT guy. And all of a sudden, he, his songs are at number seven on the charts. Okay, so the, again, this is just a bonding curve. It's on base, I'm pretty sure it's on base. And you're buying and selling shares of songs. Because that you kind of, for the same reason why people buy shares of their friends.
1:05:48 Ryan Sean Adams? Who gets this, David? Do the artists actually get the fees here?
1:05:52 David Hoffman? So if you are a spot, this is the genius. This is the virality aspect of this and why I think that this is really interesting. If you are the artist, where's Taylor Swift? Taylor Swift's coming in at 11, Cool Summer and 12, yeah. If you are Taylor Swift and you own the Spotify creator account of Taylor Swift, you can log into friend, uh, song.tech
1:06:14 Ryan Sean Adams? Oh my god.
1:06:15 David Hoffman? And claim the fees. Yes, okay.
1:06:18 Ryan Sean Adams? No freaking way.
1:06:19 David Hoffman? Yes, yes.
1:06:21 Ryan Sean Adams? This is genius.
1:06:22 David Hoffman? Yes, uh huh. Okay, so 10% of fees, just like Friend Tech. But all the holders of shares receive 5% of those fees, half of the fees. And then the other half of those fees are reserved for the artists themselves. So Taylor Swift. Has a claim on all of the trading fees that are going on on song.tech.
1:06:45 Ryan Sean Adams? Because she obviously owns the Spotify creator account.
1:06:47 David Hoffman? Because she controls the Spotify creator account.
1:06:49 Ryan Sean Adams? So rather than sue these people or whatever, Taylor Swift could just be like, oh, this is cool. I get money.
1:06:55 David Hoffman? I get money.
1:06:56 Ryan Sean Adams? And I get maybe more money than I would for streaming this on, it's another revenue source for me. In my T-Swift empire.
1:07:02 David Hoffman? Exactly right. Yeah. And so Daniel Allen, he, he has claimed his Spotify account. And so he's earning, as the creator, he's earning five percent fees from the songs that people are buying and/or selling.
1:07:14 Ryan Sean Adams? Yeah.
1:07:15 David Hoffman? How crazy is that?
1:07:16 Ryan Sean Adams? I guess it rests on Spotify's ability to authenticate artists. And I'm sure they have that. I mean, that's already kind of a solved problem, right?
1:07:26 David Hoffman? Wow. I think this is genius. Okay. So currently it's only 500 songs. We're in phase two. I think the first phase was 100. 1,000 songs is coming in with phase three. I think this is great.
1:07:38 Ryan Sean Adams? Let me go, let me go buy some T-Swift.
1:07:40 David Hoffman? www.songdoc.tech. Pretty cool.
1:07:44 Ryan Sean Adams? That's cool.
1:07:45 David Hoffman? Shake It Off by Taylor Swift, great Taylor Swift song.
1:07:48 Ryan Sean Adams? Really? That's your favorite T-Swift song?
1:07:50 David Hoffman? Me and my brother-in-law are big Taylor Swift fans and my sister makes fun of it.
1:07:54 Ryan Sean Adams? Oh my God. I feel like that's not what a, like a true Swiftie would say. They would go deeper on some of her albums. That's like the, the popular song she has.
1:08:01 David Hoffman? I'm not a true Swiftie. I just know that that song fucks.
1:08:03 Ryan Sean Adams? David, lastly, a new investment from Bankless Ventures that we're both pretty excited about. It's in privacy as well, which I think Bankless listeners should know about. We got some new privacy tech coming to Ethereum in the form of Nocturne. What is Nocturne, David?
1:08:16 David Hoffman? Okay. So Nocturne, first they've raised $6 million, co-led by Bank Capital and PoliTrain with participation from Vitalik Buterin, Tim Bako, and of course Bankless Ventures, which is why we're bringing this up. We cover all of the raises from Bankless Ventures portfolio companies as an inception of conflict of interest for you all here on the podcast. And then also we get to talk about what they do. What does Nocturne do, Ryan? I'm so glad you asked. Nocturne is this innovation in the world of account abstraction and stealth addresses. It is basically your private Ethereum account.
1:08:49 David Hoffman? And so you know how you have an ENS name, RSA.ETH, and you've gone to the ENS website? And you've registered your ENS name to your Ethereum account? So there's like, you know, 0x F7 theory 42, and you've just registered RSA.ETH to it. You can do the same thing with a private account. So you register a private account to a public account. No one knows that you've registered it. You just, this is the power of zero knowledge cryptography. And then all of a sudden, you have a private account. Using this thing called stealth addresses, your private account can make transactions that engage with DeFi. And so using zero knowledge cryptography, a thing called a stealth address will be generated by Nocturne. And a stealth address is a one-time-use address. It's like a mask.
1:09:33 David Hoffman? You just put on the mask over your private account. You put on the stealth address mask. And then using zero knowledge cryptography, the stealth address will go to Uniswap and say, "Hey, Uniswap, I will prove to you that I have 10 Ether that I would like to sell for USDC", or something like this. And then the Uniswap is like, "Oh, you do, you do have the 10 Ether." The stealth address has it because it has a zero knowledge cryptography link to your private account. Then the stealth address makes the transaction and then makes the trade. And then the funds, the trade happens, and the, the actual private account makes the trade. But the stealth address obfuscates it. So no one can see which account is actually making the trade. Same thing for sending you payments or receiving payments.
1:10:14 Ryan Sean Adams? Where do the funds end up? They just stay in the stealth address?
1:10:17 David Hoffman? They stay in the stealth address, yes.
1:10:18 Ryan Sean Adams? What happens when I want to take them out?
1:10:21 David Hoffman? That stealth address sends it outbound from the private account to a public account. And then all of a sudden, it's no longer in the private account.
1:10:29 Ryan Sean Adams? Ah, very cool. Very cool.
1:10:30 David Hoffman? The other cool thing that is, that I think is really nifty here is that, say you want to send me money. You will not have to say, "Hey, David, can you generate a stealth address for me so I can send you this money privately?" What you would do, kind of like, like I was saying, you just have the ENS thing registered. You would go and you would type in David Hoffmann.ETH into the Nocturne system. And then Nocturne would be like, "Oh, yeah, there is a, there is a private account registered here. Here's a stealth address so you can send them money."
1:10:57 Ryan Sean Adams? Yeah.
1:10:58 David Hoffman? And this is all of like happening, this is all happening behind the scenes. You know how like in Venmo, if you Venmo someone, you can just like toggle it private?
1:11:05 Ryan Sean Adams? Yeah.
1:11:05 David Hoffman? Like the bull case for Nocturne here is that you just have that button, send privately, embedded into your wallet. And so you don't go to Nocturne. It just becomes like you have your public wallet and you have your private wallet.
1:11:19 Ryan Sean Adams? Yeah.
1:11:19 David Hoffman? I think it's super cool.
1:11:20 Ryan Sean Adams? This might be like one of the ways we fixed privacy in crypto, right? This is that SSL layer for our crypto transactions. Very cool. This is going to be a public good. When is this going to be available? When is Nocturne actually rolling out publicly?
1:11:33 David Hoffman? They are looking to roll out their launch of the V1 so people can get their hands on this in the middle of November. A specific date TBD, middle of November.
1:11:42 Ryan Sean Adams? Very soon. All right, David, what do we have coming up next?
1:11:45 David Hoffman? Big congrats to Nocturne. I met them at Zuzalo there. This is the privacy tool that I have been trying to get my hands on.
1:11:51 Ryan Sean Adams? Much needed, much needed. What do we have coming up next?
1:11:55 David Hoffman? Coming up next, is it a good time to be in Ether with all of the regulatory threat around? Or should we rotate into something else? That's question number one. Question number two, will the governments of the world ban Bitcoin? Not just a question, this is Balaji's take, Balaji's take. We're going to talk about some questions and some other takes from the world of crypto Twitter. But first, I want to talk about these fantastic sponsors that make this show possible. Arbitrum is accelerating the Web3 landscape with a suite of secure Ethereum scaling solutions. Hundreds of projects have already deployed on Arbitrum 1 with flourishing DeFi and NFT ecosystems. Arbitrum Nova is quickly becoming a Web3 gaming hub and social apps like Reddit are also calling Arbitrum home. And now Arbitrum Orbit allows you to use Arbitrum's secure scaling technology to build your own Layer 3,
1:12:37 David Hoffman? giving you access to interoperable, customizable permissions with dedicated throughput. Whether you are a developer, enterprise, or a user, Arbitrum Orbit lets you take your project to new heights. All of these technologies leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible. Faster transaction speeds and significantly lower gas fees. So visit arbitrum.io where you can join the community, dive into the developer docs, bridge your assets, and start building your first app with Arbitrum. Experience Web3 development the way it was always meant to be. Secure, fast, cheap, and friction free.
1:13:13 Ryan Sean Adams? Here's a question from KiwiDog4. One of the big selling points for DeFi and crypto is that anyone can read? And view the chain. How do we reconcile this with the ultimate goal of a fully private chain? I like and want privacy, but I feel like we're losing something almost as important. ZK proofs allow some verifiability, but can we really ZK prove enough to make up for the loss in transparency? Funny, we're just talking about privacy before the break. Now the question is...
1:13:36 David Hoffman? There's a reason why we have this question in here right now.
1:13:38 Ryan Sean Adams? Yeah, is that a good thing? What do you say to that?
1:13:40 David Hoffman? Yeah, I'll kind of reframe this. Say like, one of the big selling points for DeFi is crypto is that anyone can view and read the chain. What if I changed that statement to one of the big selling points for DeFi and crypto is that anyone can verify the integrity of the chain? So I think those are different statements, but I think that that kind of points towards the goal here. Using zero knowledge cryptography, you get privacy, but you can verify integrity, right? AVE might be able to hide its pools, but it can provide proof of reserves, for example. Just being able to audit the chain is certainly valuable, but we can still audit the chain and audit the state of the chain and audit the integrity of the chain and the integrity of
1:14:25 David Hoffman? people's balances without actually disclosing what they are. And so I would actually kind of reframe like, maybe the goal of crypto isn't to have like all of our world's finances out in the open, but to very simply prove that what we are saying is true, or the integrity of people's collateral, et cetera, et cetera. So I think we can have our cake and eat it too here.
1:14:46 Ryan Sean Adams? I do think we'll sort this out, the same way the internet sort this out is, of course, we have a lot on the internet that's public, right? Like a website, you can publish it, it's completely public, anyone in the world can access it, right? That's a great thing. But you also have HTTPS, right? Which is when you want to send your credit card information, that piece gets encrypted. You don't want to broadcast that. You don't want that part to be public. And so I think what will happen with crypto is all of the things that benefit from auditability, transparency, those will remain public, those will remain on-chain. But the things that we want to keep private... Those will have an SSL type of wrapper where they're encrypted and private. So I think we'll find the right balance here. Now, I don't know that the governments will feel the same way, right?
1:15:28 Ryan Sean Adams? I think governments want everything digital to be like fully open to their purview. So that might be a fight we have to fight. And that actually brings us to the next question of the week from Alex Rowe dot ETH. After the IRS episode, I started thinking about portfolio allocation. Bitcoin seems to be accepted by mainstream, but ETH can still be greatly devalued by regulation. How do you guys stay so heavily weighted in ETH with this potential threat? I'm 95% ETH right now, but I'm thinking I should rebalance more to Bitcoin. What do you say to that, David?
1:15:58 David Hoffman? Yeah, okay, so Alex Rowe is saying, hey, TradFi is just totally accepting Bitcoin with open arms, but regulation is going to ultimately focus on Ethereum because of DeFi.
1:16:10 David Hoffman? How do you guys square that concern? Isn't that bearish? My answer is like, no, that's bullish. That's extremely bullish. If the incumbents of the world, the banking system, the regulators, the nation states, feel threatened by something, I want to buy that thing. You're on target here. I've always kind of had to take that Bitcoin is relatively impotent and that's why Wall Street just accepts it with open arms. Like, it's actually just not a threat. You know what's really a threat?
1:16:40 Ryan Sean Adams? DeFi.
1:16:40 David Hoffman? DeFi, like ZK proofs. And so that, it's a threat because it's valuable. And so I'm like, I will buy that asset over and over and over again.
1:16:50 Ryan Sean Adams? Yeah, I do agree. The fact that incumbents are threatened is bullish, usually, right? But that doesn't mean they're might not be like in the short run. They could put a lot of regulatory pressure on Ethereum and it's true. Ethereum has more surface area to regulate, right? But that's because Ethereum has more surface area for value creation. That's why there's more space to regulate it. The other question I would have is back to what we said earlier in this episode is, ask yourself, Alex, are you just doing this because Bitcoin had a really? Are you thinking this way because Bitcoin had a really good month?
1:17:23 David Hoffman? Alex, are you chasing the pump?
1:17:25 Ryan Sean Adams? All right. Like, seriously, ask yourself that because the crackdown has been real for the last year, regulatory crackdown. And just now you're thinking about this. So I, you know, I would ask yourself that. But the other thing, and maybe I just wanted to fit this mental model in because I wanted to hear what you think about it, David. But I think you bet on Bitcoin if you if you think crypto is more like a religion and you bet on Ethereum if you think crypto is more like an economy. Like, it's more economic in nature, right? So like, the most bullish thing about Ethereum is its block space being highly valuable and tied to an economy. The most bullish thing about
1:18:04 Ryan Sean Adams? Bitcoin is that it wins this kind of vitriolic, like meme narrative of like, just passionate, basically insane people who are going to hold their Bitcoin to the grave, right? Right. And those, both those models are true. And by the way, I think, like, I think crypto is both of those things. I think it's an economy, it's religion. I think it's both. But I think Ethereum leans more economy, maybe, than than Bitcoin. And so if you think of it in that way, then yeah, regulatory crackdown might be bad in the short run. But I think an economy can outperform a religion. And when you tie those two things
1:18:48 Ryan Sean Adams? together, it becomes incredibly powerful. This may be a pie in the sky way to answer this, too. But I guess the last thing I'll say is, I have not rotated out of ETH towards Bitcoin. That's backwards, going backwards in history. Ever. I have done the opposite several times. The last time I did that, I bought some Ether with my Bitcoin was 2018, 2019. Wow, so long ago. Yeah, when, you know, when Bitcoin was up relative to Ether. And I haven't changed. I feel no desire to change. I still have some Bitcoin. I have much more ETH. And I'm very comfy right now. Very comfy. Yeah, I'm feeling pretty good about that.
1:19:32 Ryan Sean Adams? But not financial advice, you gotta, you gotta weigh these things out for yourself. Ryan advice for Ryan, yeah. David, takes of the week, since it's Bitcoin week, we have a question. Through this take, actually. Okay, so here's a question I saw that was asked of Balaji. And the question was this, which I think is a good question. I'm wondering, Balaji, if you can talk about the prospects of Bitcoin being banned? And what you would do in that case? And how you would buy gold custodially? Balaji, of course, ignored the last part, he would not buy gold custodially. But he had this really good mental model. Where he thinks that the world's nation states will actually trifurcate in three different kind of areas. The one is there will be Bitcoin atheist nation states.
1:20:15 Ryan Sean Adams? These are nations that crack down on crypto, right? So the Elizabeth Warren tribe, war against crypto. Or maybe totalitarian China, which says like crypto is banned, right? Bitcoin atheist types of states and crypto atheist states. Then he thinks there will be nation states that he calls Bitcoin monotheists. That basically, they only embrace Bitcoin and they don't embrace the other coins, right? So probably an example, proto example of this would be El Salvador. They're very Bitcoin friendly. Are they Ethereum friendly? Are they crypto? Are they blockchain friendly? No, they're just Bitcoin friendly. And then he thinks there will be a third cohort of nation states called the Bitcoin polytheists?
1:20:58 Ryan Sean Adams? Which are like Bitcoin and then everything else, all of the other coins. So crypto. Yeah, crypto. And so he frames things as Bitcoin, Bitcoin, Bitcoin, right? Because Balaji is a Bitcoiner. Yes, he is. But the, the, those that reject crypto, those that just embrace like Bitcoin maximalist nation states? And then fully crypto nation states? And he thinks that the fully crypto Bitcoin polytheist states will be like, basically the economic hubs of the world. The, the future New Yorks, the future Singapore's, the future Hong Kong's, that kind of thing. Anyway, so different than an outright ban, right? This kind of breakdown, what, what do you think of that? What do you think of that take?
1:21:37 David Hoffman? It sounds like it's just like a level of banning as a function of how, when crypto came about. So like, he's saying, okay, some states will just ban crypto altogether, not even include Bitcoin. Some will include Bitcoin, and then some will include the rest of the, the risk curve, Ethereum, Solana, et cetera, et cetera, et cetera.
1:21:56 Ryan Sean Adams? Yep.
1:21:56 David Hoffman? I think that this is a Bitcoiners take. I don't, I don't, he's putting a Bitcoin atheist, Bitcoin monotheist, Bitcoin polytheist.
1:22:04 Ryan Sean Adams? Yeah.
1:22:04 David Hoffman? Like, that's a Bitcoin centric version of reality that I think that very few people will operate with.
1:22:11 Ryan Sean Adams? My, my take on it is the, the framing of the three is probably correct. I, I, I think there's going to be a lot fewer Bitcoin monotheists than he thinks. Like, it might just be like El Salvador and a couple of other countries.
1:22:22 David Hoffman? That's the Bitcoin centric nature of it. Yeah, Bitcoin's not that special. Sorry, apology.
1:22:27 Ryan Sean Adams? David, what are you bullish on this week, man?
1:22:30 David Hoffman? I'm bullish on crypto people being the spearhead against the corruption of the establishment. I think, once upon a time, crypto people were considered to be like weird basement dwelling libertarians. And over time, we, we have increased the fold of who is a crypto person. Now we have like culture and art people and NFT people as crypto people. So like, we've become more normal. Meanwhile, the state has increased its, I would say its authoritarianism. It's, it's authoritarian curiosities. And we are seeing this play out with like Nick Carter's just vendetta against the Wall Street Journal. Balaji has been going after mainstream media for like a decade now. Liz Warren is being
1:23:15 David Hoffman? the spearhead of like, I am the, the state that is completely misaligned with facts and reality, perhaps on purpose. And I think the crypto people of the world are ready to show leadership as a community to push back against corruption, to get, push back against the authoritarian tendencies of the state. Crypto people were bold. We're not afraid to call out BS. We have exposure to assets that go up when the state does bad things as a check on the state. I am bullish on the leadership of the crypto industry to show the rest of the world what's at stake.
1:23:54 Ryan Sean Adams? I hope so.
1:23:54 David Hoffman? That is what I'm bullish on.
1:23:55 Ryan Sean Adams? That's an optimistic perspective, and I think we have that in us, particularly the settlers, the crypto natives who have stayed around. I can tell you that the rest of the world doesn't see crypto people like that. The rest of the world, they see this guy right here, me in the FTX shirt.
1:24:09 David Hoffman? That's what he's going to jail.
1:24:11 Ryan Sean Adams? Yeah.
1:24:11 David Hoffman? We are putting him in jail.
1:24:12 Ryan Sean Adams? Yeah.
1:24:13 David Hoffman? Well, I guess they are not saying like crypto people putting him in jail. They're saying, yeah, okay.
1:24:17 Ryan Sean Adams? I guess I'm fully on board with your optimistic take, and I just think that we have to get there, and it could take some time.
1:24:26 David Hoffman? Ryan, what do you bullish on?
1:24:27 Ryan Sean Adams? I am bullish on the bull cycle, David. I mean, we called it earlier in this episode. You agreed to me.
1:24:32 David Hoffman? Bullish on the bull cycle.
1:24:33 Ryan Sean Adams? I think we broke the back of the bear market this week.
1:24:37 David Hoffman? Yeah.
1:24:37 Ryan Sean Adams? Like, I think we did it. Yep, the episode with Ledger confirmed it for me. And so I have like three resolutions for if this is the start of the bull run, for the start of this bull run. The first is, this time, I'm gonna do things right, David. I'm gonna have a sell plan.
1:24:53 David Hoffman? Did you not do things right beforehand?
1:24:54 Ryan Sean Adams? I did things okay, like better than my first. So this will be my third. And I improved last cycle over the previous cycle, and I want to do another layer of improvement. So here's what I'm gonna do. One, I'm gonna have a sell plan to take some stuff off the top, right? When, like, you have a dollar-cost-average plan in, you can dollar-cost-average out at a specific price, or, you know, time intervals, or however you want to do it. For me, it's price. You know, when X coin hits Y, I'm going to sell Z amount. It's basically that. That's what a sell plan is. And coming up with that while you're sober, you're still sober now. We're not drunk in the bull market. Like, believe me, we're still just kind of wondering if it's true or not. So now's the time to create a sell
1:25:36 Ryan Sean Adams? plan for me, and probably for you, Bankless listener. The second is, I want to have a stake plan. So I ain't selling all of this, David, at all, not by any stretch. I think Ether specifically, and some might say Bitcoin too, but for me, it's mainly Ethereum and a little bit of Bitcoin, is a long-term hold asset, like, long-term generations I'm talking about, right? Like, many decades. So I want to have a stake plan of my forever-hold ETH, where I'm just not, it's not going anywhere. So a sell plan, a stake plan, and then lastly... I want to have some more fun this bull cycle. All right. Like last cycle, I felt like the first cycle I was worried, you know, and just not knowing what I got into.
1:26:19 Ryan Sean Adams? The last cycle, I felt like it was kind of a grind, you know, like we were just busy. We're doing a lot.
1:26:25 David Hoffman? We put out so much content last.
1:26:27 Ryan Sean Adams? We did. We did. And we're still going to put out content, but.
1:26:30 David Hoffman? We're still going to put out that much.
1:26:32 Ryan Sean Adams? I just want to enjoy it more, right? And it's like, um, it's over before you know it. You know what I mean? So.
1:26:38 David Hoffman? Time, time speeds up during the bull market.
1:26:41 Ryan Sean Adams? Yep.
1:26:41 David Hoffman? So I think you listeners should definitely count for that.
1:26:44 Ryan Sean Adams? Yeah.
1:26:44 David Hoffman? So that's what I'm doing. Time goes way faster.
1:26:46 Ryan Sean Adams? That's my plan. That's what I'm bullish on. David, we got a meme of the week. What are we looking at here?
1:26:50 David Hoffman? We are looking at, what are we looking at? I forgot. Oh yeah. Okay. So here's Tom Schmidt of Dragonfly saying, this is the classic SpongeBob meme of Squidward in the dark room, looking out at SpongeBob and Patrick just frolicking around, having a ton of fun. And the caption is last cycle's fraudsters watching the pump from pre-trial detention.
1:27:08 Ryan Sean Adams? We got two SpongeBob.
1:27:09 David Hoffman? That's you.
1:27:10 Ryan Sean Adams? That's me. That's me.
1:27:11 David Hoffman? That's you.
1:27:12 Ryan Sean Adams? I, uh, we got two SpongeBob memes in this episode, Dave. So well done.
1:27:17 David Hoffman? Everyone knows I'm a big SpongeBob fan.
1:27:19 Ryan Sean Adams? Guys, going to end with the risks and disclaimers in a minute, but first disclosures. David and I mentioned Polygon in the episode. I am an advisor to Polygon. David and I are both advisors to optimism. I think we mentioned them as well. Uniswap is a bankless sponsor. You guys know that. Bankless Ventures are investors in Nocturne. We named that in the section. Of course, we are long-term investors. We're not journalists. We don't do paid content. There's always a link to our disclosures in the show notes. Before I give you the risks, I want to tee up this moment of zen. We talked about Tom Emmer. He could have been Speaker of the House. Moment of Zen is all about what could have been, but was lost in those four hours. So stay tuned for that. Crypto is risky. You could lose what you put in, but we are headed west. It's the frontier. It's not for everyone, but we're glad you're with us on the bankless journey.
1:28:05 Ryan Sean Adams? Happy Halloween and thanks a lot.
1:28:07 Speaker 04 Crypto, when it comes to the economic issues, I believe it's towards the top of the list. But again, that's me. You've got to be ready with the right people to be telling the administration. They don't have to be pro crypto. Just don't be anti crypto. Be pro innovation and let America do what Americans are best at, which is create and innovate. We love it, right? We love Web 3, the ownership economy, the idea that we can do business directly with one another and we don't have to have intermediaries. Not that we'll never need them, but we get to choose them, right? There definitely, a lot of people talk about, is there a choke point 2.0 trying to de-bank crypto? Well, you've got to tell me,
1:28:53 Speaker 04 is this a coincidence that we lost Silvergate, Silicon Valley and its signature? All within a matter of days, a couple of weeks? I don't think there is any coincidence, gentlemen. The key for us is to keep being positive. The courts have started to do the right thing, which is a great point. Basically pointing out what all of us have been saying. And you've just got to stay the course because the future is going to be about what you're doing. It's already here. The question is, will it happen here in this country? Or are we going to push it out off our shores? Gary Gensler, who I believe is one of the best examples of a bad faith regulator.
1:29:37 Speaker 04 This guy's been choosing to blindly spray the crypto community with enforcement actions, yet he keeps missing the true bad actors. He goes after all the good people in the space. This new area is all about people being able to get capital, to expend capital, to grow new ideas, to improve their lifestyle. I've got news for you. That's not a Republican or Democrat thing. That's an American thing. I'll reclaim my time. Mr. Gensler, despite your years of rhetoric... Like today, I'm convinced you are not an impartial regulator. Instead, it's clear that you are working to consolidate your own power, even though it means crushing opportunities for everyday Americans and frankly, the financial future of this country.
1:30:21 Speaker 04 Even the federal courts are highlighting the damage you, sir, are doing to our constituents and they're telling you that you don't have the legal authority to accomplish your goal of squashing competition in the financial markets. This is what frustrates me with Elizabeth Warren. Elizabeth Warren, if she truly believed in the American value of self-determination, if she truly believed in individuals' right to make their own decisions, what she claims, she would champion crypto. She would champion digital assets. Instead, it's very clear to me that she's nothing more than a big, central bank, power-hungry leader
1:31:03 Speaker 04 who sees her power essentially being diluted and taken away by this decentralization of our financial system and our financial transactions, Ryan. She's desperately, along with the establishment, the institution, she is desperately clinging to hold on to that central banking thing because that's where their power is. You want crypto and everything associated with it to grow here, to innovate and grow here, because that will grow the economic pie for everyone. Republicans, Democrats, that's the only way. I'm going to tell you right now, my belief is that's the only way that you can deal with the $32 trillion in debt.
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