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This Week in Bitcoin - 129: The Quantum Trap · Adam's Favorite Podcasts

• 0:00
  Welcome in to This Week in Bitcoin, episode 129.
• 0:18
  My name is Chris, chrislas.com and jupiterbroadcasting.com.
• 0:24
  The AI trade, still in a bit of a funk.
• 0:27
  You might even call it a bit of an unwind.
• 0:29
  It turns out when you increase the cost of borrowing, it gets a little harder to throw money at every random A idea or build out that comes along.
• 0:37
  And it's really not clear yet when the problem will clear up because what seems to be really causing inflation and thus rates to go up is energy problems.
• 0:48
  That's what's really putting pressure on inflation.
• 0:50
  So let's start there, a little bit of macro, and then we're going to get into some Bitcoin.
• 0:59
  As if the macro doesn't impact Bitcoin, Bitcoin is a macro asset.
• 1:12
  Are you getting it yet?
• 1:13
  Just before I went on air, the Bank of Canada raised their rates to 2.5%.
• 1:18
  And while I'm recording, probably right now, this very moment,
• 1:22
  your buddy, Federal Chair Warsh, is up there and he is expected to do nothing.
• 1:28
  No rate cuts at all this time.
• 1:30
  The next Mike McKee is down in Washington.
• 1:32
  He joins us for more.
• 1:33
  Good morning, Mike.
• 1:34
  Good morning, John.
• 1:35
  Well, it is, as you say, conventional wisdom right now that the Fed is going to be on hold
• 1:40
  and not raise rates today.
• 1:42
  They might do it December 9th.
• 1:43
  That's at least the way the futures are pricing right now, which leaves us with a question
• 1:47
  of what happens next?
• 1:49
  What do they say about all of this?
• 1:51
  The expectation is we will get some dissents.
• 1:54
  Definitely Hammock and Logan, they've suggested as much.
• 1:56
  and neil kashkari is the third who has dissented in the past year we'll see if he joins them in
• 2:02
  that and then we go to the news conference and the focus is going to be on why you were talking about
• 2:07
  it inflation going the wrong direction all right so they haven't actually had the press conference
• 2:11
  yet but the notes have been released here's what we know the federal reserve is leaving interest
• 2:16
  rates in the united states unchanged after the september hike the rate pause was a 10 to 2
• 2:21
  decision, there were two dissents with Cook and Hammock dissenting in favor of a rate hike.
• 2:26
  The Fed says economic activity is expanding at a, quote, stronger pace. And Fed says inflation
• 2:32
  remains, quote, elevated and seeks more information. The Fed notes that the geopolitical
• 2:37
  developments are contributing to uncertainty. And the Fed asserts that, quote, the committee
• 2:42
  will deliver price stability. OK, so essentially, yeah, they're still signaling as much as they do
• 2:49
  signal that they're going to raise rates in December. But they did not raise rates today,
• 2:54
  as expected. The reason why, okay, so why is it expected? Why was it as expected? It's not
• 3:01
  guaranteed the rate hikes will do any good. This is a really tough one for old Kevin. I don't know
• 3:06
  why the hell he took this job. You see, you hike rates, well, the AI trade gets even harder to fund.
• 3:12
  GDP starts to fall off a cliff. But the housing market, we don't talk about the housing market a
• 3:16
  lot on this show because it's not really driving global liquidity, but it is absolutely driving
• 3:21
  the U.S. market. And housing will not respond well to a rate increase. So that's another calculus.
• 3:28
  But the worst part of it might be, for Kevin, if you could have empathy for the Fed chair,
• 3:34
  if energy is the real driver of inflation at the moment, if we just accept that argument,
• 3:38
  even if the conflict in Iran were to wrap up, say, in December,
• 3:42
  there's still second and third order impacts on production. But more importantly,
• 3:46
  shipping. So while oil prices in a barrel might go down when the conflict resolves,
• 3:52
  we don't know for sure if the prices we actually pay at the pump will go down.
• 3:57
  I think that we will likely drift back down to, say, 60s by the end of next year,
• 4:03
  should the war end. But I think there's a scenario where you see crude oil fall back,
• 4:10
  but we haven't repaired the situation in Russia and Ukraine. And the Houthis are still harassing
• 4:16
  you know, Red Sea refineries.
• 4:18
  You could end up in a scenario
• 4:19
  where you still have,
• 4:21
  let's say a $60 Brent,
• 4:22
  but you still have $100 a barrel diesel crack.
• 4:25
  So you're still at this kind of,
• 4:26
  you know, like 150, $160 a barrel diesel.
• 4:29
  Like that is a scenario
• 4:30
  that I think is very plausible.
• 4:32
  And that's because while very clearly,
• 4:34
  I think we have too much
• 4:36
  upstream crude oil production capacity
• 4:38
  structure in the world.
• 4:39
  What's very clear is that
• 4:40
  we increasingly do not have
• 4:41
  enough refining capacity
• 4:43
  to transform it reliably
• 4:44
  into what we need.
• 4:46
  And given those shipping rate floods,
• 4:48
  more and more of those refineries
• 4:49
  are not conveniently located
• 4:51
  next to either consuming regions
• 4:53
  or to the sources of oil.
• 4:55
  So you're often, for instance,
• 4:56
  you know, India would often import crude
• 4:59
  from the Middle East
• 5:00
  and then re-export diesel to Europe.
• 5:02
  That's an extraordinarily expensive trade now
• 5:05
  given how expensive shipping is.
• 5:06
  So up until recently,
• 5:08
  we never really thought about this
• 5:09
  because essentially time and distance
• 5:11
  was nearly free in the oil market.
• 5:15
  shipping on tankers was so cheap that it was really, really easy to arbitrage these various
• 5:20
  markets, you know, from surplus to deficit, et cetera. But now you've essentially this
• 5:25
  explosion of shipping rates has essentially fractured that global oil market into a
• 5:28
  balkanized oil market that's increasingly difficult to effectively arbitrage between
• 5:32
  those pools. I think that's the reality we're now going to deal with until we can sort that out.
• 5:36
  So here's where I see it. A Fed rate hike, I'm of the school of thought that when they
• 5:40
  rate change, either down or up, there are immediate market effects that take effect. And we see that
• 5:47
  priced in in stocks and sometimes bonds and the money rates for like, you know, mortgages.
• 5:53
  But the actual real long tail impact, like the supply chain side and the economic price chain,
• 6:00
  all of that, like the stuff where it impacts the prices in the grocery store and all, it takes a
• 6:06
  year or two. And I just say that having watched this now play out, there are immediate effects,
• 6:12
  but the real long tail effects are one to two years. And so when the Fed raises rates,
• 6:18
  they're really raising rates almost into the future or lowering rates into the past. It's
• 6:23
  delayed the effect that it has. So that's one problem they have. Plus, this energy situation
• 6:28
  is moving really fast. And if this does play out, where even if the oil price comes down to like 60
• 6:35
  or $70 a barrel doesn't necessarily mean that's what the truckers will be paying at the pump.
• 6:40
  That makes a Fed rate cut even less effective.
• 6:43
  What do you think about kind of the perverse set of incentives for the Fed that's been set up here
• 6:48
  in the sense that financial conditions are already tightening and for the Fed to do more at this
• 6:54
  point when all of the catalysts are coming from exogenous factors like oil and things like that.
• 7:00
  I mean, PBI we could talk about, but like, you know, I saw a Bloomberg headline this morning that said CoreWeave has made it impossible for the Fed to hike again.
• 7:10
  And don't you think that's not even just a tail wagging the dog?
• 7:15
  It's I mean, this isn't supposed to be how monetary policy works, right?
• 7:20
  This fun podcast is The Market Hang, and it's featured by Yahoo Finance.
• 7:26
  And apparently the hosts are perhaps becoming an aware bear.
• 7:31
  We talked about CoreWeave last week, and it's not really the focus of the clip, but there is that question.
• 7:37
  Does stock market performance impact the short-term Fed rate decision-making?
• 7:41
  It's not supposed to, but it kind of seems like it does.
• 7:44
  This isn't supposed to be how monetary policy works, right?
• 7:48
  And I hope that the Fed isn't taking into their calculus core weaves current financial condition.
• 7:54
  Perhaps they are. I hope they are not.
• 7:57
  But I just go back to my opening statement.
• 7:59
  If, in fact, the majority of the current inflationary pressures, as we saw from CPI recently, are oil and gas.
• 8:09
  Right. We actually saw reductions month over month in poultry and meat prices and in dairy prices.
• 8:14
  If the bulk of it now is in energy, right, what is the Fed or Reserve raising by 25 basis
• 8:22
  points?
• 8:23
  Let's just say they raised by another 25 basis points this year.
• 8:26
  What's that going to do to bring down the price of oil?
• 8:29
  So if they get this wrong and they continue to raise interest rates to try and combat oil inflationary pressures do they start to now pull forward one of those potential rate cuts into early 2027
• 8:44
  if we start to see more weakness
• 8:47
  in the other side of their dual mandate,
• 8:49
  that being the labor market?
• 8:50
  So I hope they're not taking in core weave
• 8:53
  into their calculus for the October meeting.
• 8:56
  If they are, I think we have a lot more problems right now.
• 8:59
  I want to bring this back to why I say this sort of makes the AI trade a little shaky or a bit of an unwind because we've got an inflation driver that we can't really get a handle on, at least yet.
• 9:12
  There may be levers there that could be pulled.
• 9:14
  You've got a Fed, though, that only has one lever, and that's rates, a credit market that's
• 9:19
  already getting tight as a response to where the Fed seems to be going and has gone, and
• 9:24
  an AI build-out that's becoming starved for cash and resources, both in build-out in terms
• 9:29
  of physical infrastructure, but then acquiring chips and all of that kind of stuff.
• 9:33
  So I want to play Michael Howell here.
• 9:35
  He joined David Lin, and he lays out the bear case for the ongoing funding of the AI market
• 9:41
  and build-out.
• 9:42
  Going back to Meta as an example, earnings came out last night.
• 9:45
  Free cash flow was negative last quarter at $2.12 billion.
• 9:49
  They're sitting on $82 billion of cash currently.
• 9:53
  If free cash flow continues to be negative, where at least doesn't grow substantially,
• 9:58
  the concern is that they won't be able to fund their own build out internally,
• 10:01
  which means they have to raise capital.
• 10:03
  Now, they've actually introduced a new classy common stock in preparation for,
• 10:08
  I guess, the anticipation of needing fresh capital.
• 10:11
  So what does the AI sector face right now?
• 10:13
  What are their biggest hurdles?
• 10:14
  And how do they overcome those hurdles?
• 10:16
  Well, I think it's how they overcome it.
• 10:19
  I think it's going to be very difficult.
• 10:20
  I think you've got a lot of parallels in the past.
• 10:23
  I mean, people have alluded to, you know, what happened to the railroads.
• 10:25
  I mean, railroad infrastructure is still there.
• 10:29
  But clearly, the companies that originally put that down are not.
• 10:32
  The same thing as you look at fiber optic cable.
• 10:34
  Fiber optic 20 years ago was the darling of the market.
• 10:37
  Global Crossing was a major IPO that came in the late 90s to the street.
• 10:42
  You know, it got off well on a great footing.
• 10:45
  But within five years, Global Crossing was in Chapter 11.
• 10:48
  And it was simply because, not because the technology was bad, but simply because margins on fiber optic collapsed by 80%.
• 10:54
  Now, see, this is why I'm not a fan of using the dot-com bust or fiber optic bust as a parallel to AI.
• 11:03
  I'm old enough now to have been there.
• 11:05
  In fact, it really screwed up the job market for me for a little bit as a kid that had gotten out of school and was trying to get into the tech industry.
• 11:12
  And so I kind of remember it pretty well.
• 11:14
  And the bit that is left off when people make the analysis of the dot-com boom and say, oh, well, you know, we got some Amazons out of that.
• 11:22
  Because that's a valid argument, and I think there's something to it.
• 11:25
  But there is a piece of the analysis that is missed.
• 11:28
  The reason why the margins dropped off, the reason why the fiber optic build out stopped,
• 11:32
  the reason why so many dot-com companies went bust is because there were no customers.
• 11:39
  Nerds like me weren't enough to sustain the bubble.
• 11:43
  Most people were still afraid to put their credit card on the internet.
• 11:46
  Some didn't even come around until COVID.
• 11:49
  And my wife works with patients who still refuse to order anything online.
• 11:54
  They come to her for some reason in some cases.
• 11:57
  Like it's, I think, a lost bit of history that the reason why Pets.com failed is because there weren't enough customers.
• 12:06
  The business was kind of crazy, but nothing more bonkers than what we have today with DoorDash or Uber or anything like that.
• 12:12
  But there's a sustainable market there now.
• 12:15
  And I think you could make the argument that there is a market, an argument for the market.
• 12:20
  I don't know.
• 12:21
  Look at the IPO from Anthropic.
• 12:23
  There's a lot of weird stuff in there.
• 12:24
  But they're also making $16 billion.
• 12:28
  That's money.
• 12:29
  OpenAI has a lot of costs, but they're making money.
• 12:32
  The question is, how can they square that?
• 12:34
  Can they end up making enough money to cover all this debt?
• 12:37
  That's where the questions lie.
• 12:39
  But they are making money.
• 12:41
  So where this bear analysis, I think, sort of falls down is in that regard.
• 12:45
  But I still think there is some merit to the argument.
• 12:48
  Knowledge was bad, but simply because margins on fiber optic collapsed by 80%.
• 12:52
  And this is the problem.
• 12:54
  You need cash flow generation to keep financing the debt that you're taking on.
• 12:58
  And the debt that is being taken on, as has just been alluded to, is eye-wateringly large.
• 13:04
  I mean, we're talking at least $2 trillion next year and after probably one and a half
• 13:09
  or whatever it may be this year.
• 13:10
  So these are big, big amounts of debt that are coming onto the market at a time when you've
• 13:16
  also got what is called the debt maturity wall, which is the echo effect from the COVID
• 13:21
  years when a lot of investors decided that they would take advantage of zero interest rates or
• 13:26
  low rates and basically term out their debt into the latter part of this decade. But that is coming
• 13:31
  to the fore now to be rolled over at a time when you've got new debt coming on from the AI CapEx,
• 13:38
  from the federal government, et cetera. And that's just talking about America. What about
• 13:42
  the rest of the world? Yeah, that's the part I actually think he's kind of on about. He's right.
• 13:45
  So we've got an inflation driver we can't get our handle on, at least yet.
• 13:50
  And you got this Fed in their situation.
• 13:53
  You've got now this lending situation with the credit market that's getting tougher.
• 13:57
  And in some cases, the bond market's demonstrated they'd rather buy a tech company bond than a federal government bond.
• 14:04
  All of that is really positioning Bitcoin.
• 14:08
  And that's why when you get guys that are in this AI trade and they come out on podcasts or on social media with arrogance and this cocksureness of where they're going and they trash on Bitcoin, I've got to respond.
• 14:24
  I had to be clear.
• 14:36
  I think the AI technology is a sure bet.
• 14:39
  We've only begun to use it, and it has so much more,
• 14:43
  especially when it comes to purpose-built models,
• 14:46
  smaller models, the harnesses around these things.
• 14:48
  Boy, howdy.
• 14:50
  Some of these AI companies, though, let's be honest,
• 14:52
  They're either going to go away or they're going to get consolidated.
• 14:55
  And if the recent market realities didn't bring any level of humility to the billionaires that have gotten rich early in the AI trade, it's like they don't sniff anything coming.
• 15:04
  Well, we have a perfect example.
• 15:08
  Chamath.
• 15:09
  Chamath Palitapia or whatever.
• 15:12
  He was an early backer in Grok.
• 15:14
  Of course, he got his first money from Facebook, but he was an early backer in Grok with a Q, the inference company.
• 15:19
  and Forbes estimate that when they sold to NVIDIA,
• 15:23
  his office made somewhere around $1.2 billion.
• 15:27
  Of course, Chamath has not won every trade.
• 15:29
  He did hold approximately 2,739 Bitcoin in 2014.
• 15:36
  And in early 2020, he sold the rest of his stash
• 15:39
  to Digital Currency Group in exchange for equity
• 15:41
  and no longer holds Bitcoin.
• 15:43
  However, because of his recent success in the AI trade,
• 15:46
  when he speaks, people listen and play clips of it.
• 15:49
  So at this point, you probably know it's coming.
• 15:51
  On Peter Diamond's Moonshots podcast, Chamath agreed that Bitcoin is done.
• 15:55
  So take a listen.
• 15:57
  And then I just want to address a few of these claims because they're probably going to get propagated around.
• 16:00
  You're probably hearing people talk about it.
• 16:03
  And the fact of the matter is Chamath got the technical details dead wrong.
• 16:07
  Great.
• 16:07
  All right.
• 16:08
  So I'll kick it off.
• 16:09
  So OpenAI solves 722 math problems.
• 16:13
  None of them reported encryption.
• 16:15
  I'm assuming that encryption was to a significant degree cracked if it was pointed in that direction.
• 16:21
  What's your view on crypto given the meteoric rise of superintelligence here?
• 16:28
  Are we safe or are we not?
• 16:30
  I think it's capped.
• 16:31
  I think that traditional crypto lacks the fungibility to have all forms of buyers.
• 16:36
  The buying pool is really retail, then institutionals, and then central banks.
• 16:40
  And retail lacks the fungibility to be owned by central banks.
• 16:43
  So it's capped from that perspective.
• 16:45
  Then it's capped because there are enough leaks around who owns what that now creates security risks.
• 16:54
  I think France being the best example where I think the French government forced publication of who owned what crypto assets and you had just a complete flurry of kidnappings.
• 17:02
  I'll just address this one really quick.
• 17:04
  I'm not sure why this is Bitcoin's fault necessarily.
• 17:08
  They could have it was a leak from a French tax office They could have just as easily leaked people that have real estate holdings right Or business owners gold holdings So that wasn really a fault of Bitcoin I just I don need to you know I respond to some of this later but that one right away
• 17:24
  is just sort of, come on.
• 17:25
  That's just like lumping in random.
• 17:27
  Location of who owned what crypto assets and you had just a complete flurry of kidnappings
• 17:32
  and, you know, all kinds of really bad things.
• 17:34
  And then the third is around.
• 17:35
  Really just one more thing.
• 17:36
  It's really a case for no KYC.
• 17:39
  it's a case for not registering your assets with your government is what it is because it was leaked
• 17:44
  from an off a tax office and then people people's lives were ruined as a result so it's it's actually
• 17:50
  it's funny because chamath is known as the dictator he's always just so for my he's all about
• 17:56
  he thinks all ai should be kyc'd but it's really actually an argument against kyc but he's too
• 18:01
  dense to realize it it's a complete flurry of kidnappings and you know all kinds of really
• 18:05
  bad things. And then the third is around AI, where if you believe that recursive self-improvement is...
• 18:11
  I love that he puts RSI in here. Like RSI has anything to do with it.
• 18:16
  You know, I guess the implication is that RSI means that AI is going to get better so fast,
• 18:21
  it's going to get so fast better. Oh my gosh.
• 18:22
  Around AI, where if you believe that, you know, recursive self-improvement is pointed towards,
• 18:28
  you know, cryptographic hacks, the most obvious thing to point it to would be to Satoshi's wallet
• 18:35
  and, you know, to break SHA-256 and just kind of drain the wallet and then go short and then tell
• 18:41
  people that you did it. So then you'd make the money twice. That's the most honest admission
• 18:46
  right there is, of course, he would skimoth if this happened. He would pull a little skimoth
• 18:50
  and he would short everybody. That's the biggest tell right there in this entire clip.
• 18:55
  And then tell people that you did it. So then you'd make the money twice.
• 18:59
  all those things I think are realistic reasons why it's capped and there's an upper bound.
• 19:05
  And so it's incumbent on these efforts to migrate to quantum secure, quantum resistant
• 19:14
  cryptographic mechanisms, which as you can see in the Bitcoin community is basically impossible
• 19:18
  because it's a bunch of people that can't even agree, you know, where to meet, let alone
• 19:24
  let alone what time the meeting starts at.
• 19:28
  So I think crypto is a bit lost.
• 19:30
  They don't get on Zoom.
• 19:31
  What's here?
• 19:32
  So do you think Bitcoin is cooked?
• 19:35
  I just think it's capped.
• 19:36
  And then I think eventually it gets hacked.
• 19:38
  I love a 68-year-old man using the term cooked.
• 19:41
  Bitcoin is cooked?
• 19:43
  I just think it's capped.
• 19:45
  And then I think eventually it gets hacked.
• 19:46
  And then it goes to zero.
• 19:47
  Do you own Bitcoin?
• 19:48
  Are you willing to say?
• 19:49
  Through a company.
• 19:50
  Through a company called Digital Currency Group.
• 19:52
  So I had this very long term investment in Bitcoin.
• 19:55
  I seeded it to DCG a long time ago.
• 19:58
  They started up a bunch of ETFs.
• 20:00
  They gave me stock in return.
• 20:02
  And that was much better for me because then I alleviated myself of the storage risk and
• 20:05
  the security risk and I had equity.
• 20:07
  Oh, oh, OK.
• 20:10
  So let's go through some of this because Chimaz's own numbers of his Bitcoin stash have been
• 20:14
  all over the place.
• 20:14
  But I did have some bots do some digging through multiple podcasts and interviews.
• 20:19
  and his most commonly cited number is that he once held 100,000 Bitcoin,
• 20:24
  which today would be roughly worth $8 billion.
• 20:28
  Something tells me the equity he got in Digital Currency Group
• 20:31
  probably isn't worth $8 billion.
• 20:34
  So he may have some bias in this conversation
• 20:36
  because he is, if you will, all in on the AI trade.
• 20:40
  But let's talk about the one that's just so disappointing
• 20:42
  because Chamath likes to present himself as a deep researcher.
• 20:45
  He'll often talk about how he has a team of people
• 20:48
  that go real deep into topics and he just becomes an expert. And then he goes and, you know,
• 20:52
  shares sometimes some of his musings on X. The problem is, is that he conflates SHA-256 and
• 20:58
  signatures. SHA-256, which is for proof of work, you know, the mining aspect, is highly resilient
• 21:04
  and is likely not going to get cracked by AI because the math is the math of the, it's just
• 21:12
  the physics. Of course, there is the actual quantum risk to Bitcoin, which is the elliptic
• 21:18
  curve signatures via Shor's algorithm on exposed public keys, which is the bit where he's kind of
• 21:24
  confused and maybe he's thinking about Satoshi's coins, I think. I'm trying to parse it, but I think
• 21:28
  that's how he gets to Satoshi's coins are going to get stolen or hacked or whatever he said.
• 21:33
  And he equates the theft of Satoshi's coins. He's making some leaps here. He equates the
• 21:38
  theft of Satoshi's coins with the collapse of the Bitcoin network. That's that's ridiculous.
• 21:44
  First of all, I've said it before. I ask you to ask yourself the same question.
• 21:48
  If Satoshi's coins came up for sale for five dollars, right, if the price of Bitcoin crashed
• 21:54
  because everybody lost faith and so they're trading it like a dollar, five dollars,
• 21:58
  would you not spend a few hundred dollars to buy some Satoshi coins? I know there's
• 22:03
  I know they're supposed to be. I know they're not supposed to be special, but they're, you know,
• 22:07
  satoshi's coins i mean anyways i my point is there would be a rabid market to buy bitcoin at that
• 22:14
  price it just simply would become a redistribution it isn't a fundamental flaw in the network it
• 22:20
  would become a redistribution of those early coins and maybe something kind of beautiful in a way
• 22:24
  if satoshi has passed you know he has kind of given them to the network by reducing the supply
• 22:31
  but you know have at it we just got a bunch of new coins it's the only way you're ever going to
• 22:36
  get more coins. But I think that's how he gets there. And I just think it's other people said
• 22:41
  that it's silly. The criticism that I think sticks the most is probably worth addressing.
• 22:47
  And we're going to talk more about this in the quantum section in the updates. But it's it's
• 22:52
  possible to upgrade Bitcoin. It's not always easy. It's made up of individuals of incentives.
• 22:57
  But we'll get to that. The one I want to come to now is because this is what sparked this
• 23:02
  conversation is AI hacking is going to make this really easy because of recursive self-improvement.
• 23:10
  That doesn't break fundamental cryptographic assumptions. And so saying it goes to zero
• 23:15
  because of that is an extreme crazy loop, a leap, not a recursive loop. It's a crazy leap.
• 23:22
  Maybe Chamath should talk to his good old buddy Elon on how the fundamentals of maths work.
• 23:26
  You can also cryptographically sign things.
• 23:29
  Like, you know, mathematically, we don't see any way, for example, for AI to subvert the fundamentals of mathematics and say, figure out how to hash Bitcoin.
• 23:41
  AI can't defy fundamental math.
• 23:45
  Yeah.
• 23:45
  So we can improve the efficiency of Bitcoin hashing algorithms in the silicon, but not fundamentally crack it.
• 23:53
  So, you know, I guess in a way it's our advantage that there's people on the other side of this trade, right? If there weren't people like Chamath making these mistakes, Bitcoin would probably be worth more than $80,000. And the people who do understand, the people who are on the other side of what you might call the panic trade, they continue to build either their stash or services. And even Coinbase is one of them.
• 24:16
  And they're making a pivot that I kind of have been feeling coming for a while now. And this is Brett Chappal. And I don't know if I'm saying that right, but he's on Coinbase. He's like a co-CEO of their institutional stuff. And he was on BMTV. But he's talking about a pivot that Coinbase is making in the market that I think we're all going to look back at as an obvious change and probably one that's going to make them a much bigger player in Bitcoin and a lot more money.
• 24:44
  And you mentioned the second wave of institutional capital coming to Bitcoin. Do you expect that wave to be mostly driven by, you know, additional allocations of people who already have some exposure to Bitcoin, maybe just increasing that percentage? Or do you think the bigger opportunity for Bitcoin might be from net new market entrance?
• 25:04
  I think it's definitely the latter. I mean, people that have gone into Bitcoin and they've already
• 25:11
  sort of had this sort of come back to earth moment when we hit like 120s and came back to
• 25:15
  80s, but I'm still seeing follow on, you know, allocations to the space. But certainly the big
• 25:21
  upside is the next chapter, the chapter that we're in now. And so that's where, you know, early,
• 25:27
  early in the first phase, you know, venture funds, macro funds, private clients,
• 25:34
  than ETFs. So, ETS was the moment that unlocked the US RAA space. And now we're having all
• 25:40
  these integrations. And so maybe a not so well understood part of our business is Coinbase
• 25:47
  infrastructure So that probably deserves a quick word So that everything that we built that facilitates anyone to buy directly So to buy store sell finance stake do all the things you want to be able to do with crypto We actually
• 26:00
  we're having our Amazon to AWS pivot moment. And we're actually now externalizing. Internally,
• 26:06
  we call it CDP, Coinbase Developer Platform. Externally, we're calling it Coinbase Infrastructure.
• 26:13
  And so that's where players like Amazon and JP Morgan and Citibank and others are able to actually just use the infrastructure we've built to power their own clients' journeys.
• 26:24
  So that's really the thing about as like the indirect acquisition of existing clients that are on all of TradFi's platforms.
• 26:32
  And so in that moment, they're going to be able to like PNC, for example.
• 26:35
  You can now remain a PNC client and you can actually buy Bitcoin on the PNC app.
• 26:41
  And behind it, it's Coinbase's infrastructure that's powering that journey.
• 26:45
  So if I can do that with hundreds and then thousands of clients, then we've activated
• 26:50
  the whole U.S. in order to facilitate everyone's ability to actually buy Bitcoin and other
• 26:56
  crypto assets.
• 26:57
  We'll see how far they get.
• 26:58
  But the AWS aspect of it makes a lot of sense because Citi and JP Morgan and PNC don't want
• 27:04
  to have to have all of those services themselves.
• 27:07
  Coinbase is already a player in this market.
• 27:08
  Some of them probably own equity in Coinbase.
• 27:11
  There's always that aspect of it.
• 27:13
  It does seem like the right time to be getting this kind of stuff wired up.
• 27:17
  I mean, just as we kind of start to clear the four-year cycle, we'll get on the other side of the midterms.
• 27:23
  The ongoing debasement as policy seems to be obvious to even the most basic economic wonks now.
• 27:29
  And the biggest names in the world are getting behind Bitcoin.
• 27:32
  CME Group, the world's largest derivatives exchange, says Bitcoin functions primarily as a decentralized store of value.
• 27:40
  In an article on its Bitcoin ratio futures, CME says the asset is maturing along distinct economic, functional and regulatory paths.
• 27:48
  Stay a while and listen.
• 27:50
  All right. So let me tell you what I think is kind of changing here as an old timer.
• 27:54
  One of the things that's always failed with Bitcoin adoption at the institutional level in the past is it was always started either as an executive initiative to be hip and ride the trend waves or a radical group or person who worked inside that company, who's probably now later left and now does their own thing.
• 28:13
  And there was never really buy-off inside the institution at the regular people level.
• 28:19
  In fact, I would say there was the opposite of buy-off.
• 28:22
  what's happened in the last few years. And I think it's because of the obviousness of the
• 28:26
  debasement trade and the obviousness that this thing isn't just going away. There's been a
• 28:31
  changing of minds at the individual level inside these large financial institutions. And the reason
• 28:38
  why I say that is because I kind of monitor some of these, not all, but I monitor some of these
• 28:42
  economic podcasts where they bring these folks who are just employees of like, say, for example,
• 28:49
  J.P. Morgan or Fidelity or Charles Schwab.
• 28:53
  They just come on these podcasts and they kind of share their thoughts.
• 28:56
  These are the individuals working at the corporations.
• 28:59
  And this, I'm going to play a clip of Juran Timmer, probably getting that wrong as well.
• 29:04
  This is his personal view as Fidelity's macro director.
• 29:07
  And he was on the Compound and Friends podcast.
• 29:10
  If you listen, what you're about to hear is the old guard figuring it out.
• 29:15
  When you price Bitcoin in terms of gold, it's a really beautiful pattern.
• 29:20
  So I think gold's, I think Bitcoin's going to, I think they're both going to go up and
• 29:23
  Bitcoin's going to go up more, even though we're still kind of looking for a narrative.
• 29:27
  But as you know, when things move without a narrative, you always have to pay attention
• 29:31
  because that's, there's something going on.
• 29:34
  We just don't see it yet.
• 29:35
  Now that Bitcoin, in my view, has done a full winter, a mild winter, but even a year ago
• 29:41
  when it broke that trend line.
• 29:43
  And it's interesting, Bitcoin, as chaotic as it looks,
• 29:46
  when you put both time and price on a log scale,
• 29:49
  it's like a beautiful harmonic picture
• 29:51
  based on the power law.
• 29:52
  And every wave up and down fits a harmonic pattern.
• 29:57
  And that peak in 2025.
• 30:00
  And so at that point, based on trend lines.
• 30:02
  These guys love charts and trend lines, you guys.
• 30:06
  They love them.
• 30:07
  Peak in 2025.
• 30:08
  And so at that point, based on trend lines and knowing that every winter gets smaller, I'm like, you know, 60K is a level that I'm going to buy.
• 30:18
  And it went to 58.
• 30:19
  And not to toot my own.
• 30:21
  The Bitcoin winters are shrinking in length.
• 30:24
  Yeah, but so we hit 60.
• 30:25
  And depth.
• 30:26
  Yes.
• 30:27
  It's a maturing asset, right?
• 30:28
  So it's going to moon less and it's going to swoon less.
• 30:31
  And that's what maturing assets do.
• 30:33
  And then as recently as maybe a month or two ago, it was still at 60.
• 30:37
  And I'm like, OK, now I'm really going to pay attention.
• 30:40
  And then it broke above 80.
• 30:42
  That confirmed a double bottom.
• 30:44
  Listen to this guy.
• 30:44
  However he gets there, if he's got to sniff charts, if that's what it takes for him to get there, I'm impressed with the mental leap that they are making inside the institution.
• 30:54
  I think it makes a difference.
• 30:55
  There is one cloud hanging over all of their heads.
• 31:00
  So I want you to boost in.
• 31:03
  And tell me, are you worried about the quantum threat?
• 31:07
  I don't mean actually.
• 31:11
  Are you worried about it being negative on price action?
• 31:15
  Are you worried about people freaking out about the quantum threat?
• 31:18
  So as a result, here's the question, I suppose.
• 31:21
  Are you worried?
• 31:21
  And do you think Bitcoin should just start addressing it now, sooner than later?
• 31:26
  Why or why not?
• 31:27
  And stay tuned after the boost because I do have a big update on quantum risks.
• 31:35
  And there is work underway.
• 31:37
  So stay tuned. We'll have more on that. And I do want you to boost in your thoughts on that.
• 31:41
  So the question really is, is are you worried about it? Not just from a tech standpoint,
• 31:45
  but are you worried about it from it freaking new investors out? And do you think we should
• 31:48
  do something about that now? Why or why not? You know, it's kind of convoluted. Not my best
• 31:52
  question. I really think about it, but I do want to know. Boost.JupiterBroadcasting.com.
• 32:07
  I got links in the show notes so you can support the show just by doing what you do while you stack sats with River, the Bitcoin well, or Salt, Strike, whatever your focus might be.
• 32:29
  Maybe you want lending.
• 32:29
  Maybe you want something else.
• 32:31
  I got links in the show notes if you want to spend the Bitcoin company all over Lightning.
• 32:34
  It's great.
• 32:35
  it has been
• 32:37
  and it will always be a list of companies
• 32:40
  that I don't have a direct relationship with
• 32:41
  but ones I use and if I don't like them anymore
• 32:43
  like Fold, I take them off the list
• 32:45
  keep you updated
• 32:47
  keep you updated, you can support the show
• 32:49
  just by doing what you do by clicking those links before you go
• 32:51
  do one of those things, I appreciate you
• 33:05
  Four score and seven boosts to go.
• 33:08
  We do have some boosts to get to, so let's do it,
• 33:11
  because Satsquatch is kicking us off as our baller booster with 93,100 satushers.
• 33:17
  Hey, rich lobster!
• 33:24
  Chris, I listen on Castamantic.
• 33:26
  Something is going on there with your splash page,
• 33:28
  unless you intentionally added a bunch of strange code instead of English in the subtext.
• 33:32
  I'm bullish as the Bitcoin pump forever bullish.
• 33:34
  maybe not as bullish as Leon Wancombe
• 33:37
  who says it'll be 100 trillion
• 33:39
  asset. You know I was looking for my phone sorry
• 33:40
  I was distracted there. I listen in Cast-O-Matic
• 33:43
  and I review and I don't know what you're saying
• 33:45
  I'll have to double check on that
• 33:47
  It gets rendered as HTML
• 33:49
  so as long as Cast-O-Matic which it should be
• 33:50
  and also by the way brand new version of Cast-O-Matic
• 33:52
  came out today. So I'll do an update and I'll check
• 33:55
  on that. Thanks for the heads up stats. I do
• 33:57
  appreciate the squanching around
• 33:58
  and letting me know about problems. It's good to know
• 34:00
  I can't have eyes everywhere even though I thought I was
• 34:02
  checking. At least not yet
• 34:04
  BK2, BK2 is here
• 34:08
  with 77,777 Satoshis.
• 34:11
  I hoard that which your kind covet.
• 34:13
  Covenant hot with the boost.
• 34:15
  Out on Fall Colors Tour of the Northwest,
• 34:18
  of the Northeast US for the last couple of weeks.
• 34:20
  Wow, what a great thing to do.
• 34:22
  Rod dogged 4,700 miles, right?
• 34:25
  You gotta think.
• 34:26
  You gotta think.
• 34:27
  So catching up.
• 34:28
  Disappointed in fold.
• 34:29
  Really love the passive stacking from the credit card.
• 34:31
  But with this whole reserve...
• 34:33
  portion. Yikes. Any good Bitcoin specific rewards cards? Is there a tax advantage to credit card
• 34:38
  rewards? You know, I have thought that that could be the truth about credit card rewards.
• 34:42
  They may be. I don't know. That's something definitely to look into. To me, to my eyes,
• 34:47
  the Gemini credit card is the best one to go for because the Coinbase card can offer you more,
• 34:52
  but you have to store a bunch of Bitcoin with Coinbase. Then there's the Fold card. They still
• 34:57
  do offer a credit card, which is probably going to be fine. It just doesn't quite have the same
• 35:02
  rewards going to be more like 1.5%.
• 35:05
  So it's hard to beat the Gemini card,
• 35:07
  I think, unfortunately, because it's
• 35:09
  not like I'm a huge fan of Gemini.
• 35:10
  But I have had one for a while and used
• 35:13
  it on and off for some, you know, purchases.
• 35:14
  So it's worked for me.
• 35:16
  I don't use it as my daily driver, though.
• 35:19
  Maybe I will. I do after I am still
• 35:20
  in the process of sorting this out.
• 35:22
  So maybe I'll give you guys an update on what
• 35:24
  my pipeline is when I'm finally done.
• 35:27
  Paltoon comes in with 50,000
• 35:29
  Satoshis.
• 35:31
  Fun will now commence.
• 35:32
  Long time listener, first time booster.
• 35:35
  Yes.
• 35:35
  That's not possible.
• 35:36
  Nothing can do that.
• 35:38
  I'd love to be able to boost TWIB via Bolt 12, reoccurring payment, payment flow where you or address TWIB at Jupyter Broadcasting with my Phoenix wall.
• 35:44
  I know.
• 35:47
  Would integration of Bolt 12 notes with your boost system be hard using Phoenix T?
• 35:51
  So there's a couple of things holding up Bolt 12.
• 35:54
  You know, Paul, Bolt 12 would have, would have, man, if podcasting 2.0 could have just
• 36:00
  used Bolt 12, we would have had, we would have bypassed so many problems.
• 36:04
  So I am watching it.
• 36:05
  There is a couple of dependencies still because I want to maintain some compatibility.
• 36:09
  But as soon as I can, you'll probably be the first to notice, I bet.
• 36:13
  Thank you very much for the boost.
• 36:14
  Derivation Dingus is here with 22,222 Satoshis McDuck boost.
• 36:18
  Things are looking up for old McDuck.
• 36:21
  I've been super busy lately, but I never miss an episode.
• 36:24
  Thanks for the value.
• 36:24
  Well, thank you, Derivation.
• 36:26
  I really, really appreciate that.
• 36:28
  Obi's here with 21,000 sats.
• 36:30
  It's a long history of 21 gigawatts.
• 36:33
  Cold open was awesome.
• 36:34
  Made me chuckle.
• 36:36
  All right.
• 36:37
  All right.
• 36:38
  Yeah, I had our, you know, let me tell you something.
• 36:41
  Last week's episode was cursed.
• 36:44
  All right?
• 36:44
  I don't even want to talk about it.
• 36:46
  I was going to talk, I don't even want to talk about it.
• 36:48
  There's systems in place.
• 36:50
  Should have caught these things.
• 36:52
  Things happened.
• 36:53
  new systems are in place.
• 36:56
  That's what I'm saying.
• 36:57
  That is what I am saying.
• 36:59
  You know what I mean?
• 37:00
  Thanks, Opie.
• 37:01
  Cypher Citizens here with 12,345 sats,
• 37:05
  space balls boost.
• 37:06
  So the combination is 1, 2, 3, 4, 5.
• 37:10
  And so it's bullish in the long term.
• 37:12
  Yes.
• 37:13
  That's amazing.
• 37:13
  I've got the same combination on my luggage.
• 37:15
  That makes sense to me, buddy.
• 37:16
  Makes sense to me.
• 37:17
  Yukon Cornelius is here with 5,000 sats.
• 37:23
  I think if I already had most of my liquid net worth infidelity or Schwab account and I could consolidate a million dollars worth of Bitcoin, removing the hardware wallet risk, multi-sig complication, and can do with that creating a taxable event and get access to tradify rates instead of the expense of Bitcoin-backed loans, yeah, I'd probably take that trade.
• 37:42
  Yeah, I know, right, Yukon?
• 37:44
  You can see where their head's at.
• 37:45
  I think it makes sense if you're someone looking to add Bitcoin to a dollar-denominated portfolio.
• 37:49
  Yes, right.
• 37:50
  That's what they ultimately want to exit in is dollars.
• 37:52
  Someone that doesn't see that
• 37:53
  as a nation state risk associated with it.
• 37:55
  Exactly.
• 37:55
  Now, that's what I've like in 20 years,
• 37:57
  am I going to want to take out dollars?
• 38:00
  Maybe at that point,
• 38:01
  but I'm not going to want to take out dollars now
• 38:02
  and use them in 20 years.
• 38:03
  You know, I'm going to want to keep it in Bitcoin
• 38:05
  in the meantime.
• 38:06
  So I'm right there with you.
• 38:07
  I think I can see where they're at,
• 38:08
  but they're already so cash rich.
• 38:12
  They don't have to worry about it.
• 38:14
  They literally are taken care of.
• 38:15
  They do not have to.
• 38:16
  They can afford it.
• 38:17
  They can afford it.
• 38:18
  That's truly what it is.
• 38:19
  Thanks, Yukon.
• 38:20
  Anonymous is here with a Spaceballs boost.
• 38:22
  We're going to have to go right to ludicrous speed.
• 38:25
  Plus one for the Seed Signer, in particular the one with the smart card hat,
• 38:29
  a.k.a. the Seed Signer shield.
• 38:31
  I wish I had done this from day one.
• 38:33
  Can send more details if you want, e.g. I had to have the hat fabricated
• 38:36
  from a PCB way directly to availability.
• 38:39
  Claude on the assist.
• 38:40
  You know, Anonymous, I would love more on the Seed Signer.
• 38:44
  Something in me, some old man aspect of me makes me a little cautious,
• 38:48
  but I am not opposed to learning.
• 38:49
  and changing my opinion.
• 38:50
  So I would love to know more
• 38:52
  because I think there does need to be
• 38:54
  a hardware wallet solution
• 38:56
  for people at every level.
• 38:58
  So please do.
• 39:00
  Nakamoto 6102 is here.
• 39:02
  Oh my God, this drawer is filled with brooklots.
• 39:04
  He says he's bullish AF.
• 39:05
  Thanks for the value.
• 39:06
  Thanks, Nakamoto.
• 39:07
  Appreciate you.
• 39:08
  Gene Bean's here with a row of ducks.
• 39:11
  Yay for liquid working again.
• 39:12
  Yeah.
• 39:13
  And I guess there's been a slight change
• 39:16
  in the missing Bitcoin.
• 39:18
  a little bit was sent back.
• 39:20
  There's something going on.
• 39:21
  They're talking tough.
• 39:22
  Either way, it does seem like sideswap IO
• 39:25
  or whatever it is, whatever the,
• 39:26
  whatever it seems like they're swapping.
• 39:28
  So, you know, I think their intention
• 39:30
  is to try to make this smooth
• 39:31
  because they intend to continue
• 39:32
  to use the liquid network for themselves.
• 39:34
  It's interesting that there hasn't been
• 39:36
  this massive depegging event.
• 39:40
  It's really not.
• 39:41
  I mean, I think now it's been a couple of,
• 39:43
  I've made three Bitcoin worth or something.
• 39:45
  It's been an amount, but I mean,
• 39:47
  I don't even think it's been three actually.
• 39:48
  I don't know, but it hasn't been like this bank run.
• 39:51
  I guess that's what I'm trying to say.
• 39:52
  Thanks, Gene Bean.
• 39:53
  Appreciate you.
• 39:54
  Lee, Lee, Lee, Lee, Lee, Lee is here with 10,000 sets.
• 39:57
  It's over 9,000!
• 39:59
  Deep thoughts on a road trip are a real thing, right?
• 40:02
  Deep thoughts on a road trip while talking to your agent will make you broke,
• 40:05
  spending all your money on tokens, but at least you can capture your ideas
• 40:08
  and you can move more quickly from ideas to development.
• 40:11
  Stay safe on the road, Chris.
• 40:12
  I have to admit, a couple of times I've tried this and it is very, very useful.
• 40:17
  Very useful.
• 40:18
  I think a good voice back and forth with these agents is going to be important.
• 40:22
  I really do.
• 40:23
  Thanks, Lee, Lee, Lee, Lee, Lee, Lee.
• 40:24
  Appreciate you.
• 40:25
  Hey, Kiwi Bitcoin guides here.
• 40:27
  4,567 satoshis.
• 40:31
  Another great show, Chris.
• 40:32
  Thanks for keeping it rolling.
• 40:34
  It's funny what you said about Umbral.
• 40:35
  Now that I run two nodes on Linux without any package support, I'm kind of addicted to it
• 40:39
  and wouldn't want to run a node any other way.
• 40:42
  I like knowing exactly where I'm running and being in control of the updates myself.
• 40:45
  The unexpected gift for me from Bitcoin was being introduced to the FOSS world, and now I'm moving my whole digital life to it.
• 40:51
  Oh, I love that Kiwi.
• 40:53
  Can I recommend you go through Linux Unplugged, back catalog, and self-hosted to get some ideas?
• 40:59
  You know, often, like, Jellyfin can be quite the self-hosting gateway drug.
• 41:04
  Enjoy and keep me posted.
• 41:05
  Alan N. is here with, that's probably not right, 4,447 sats.
• 41:10
  I feel like that's like an airplane boost.
• 41:12
  Yeah, I got answers, and I want some questions.
• 41:14
  But it's just value.
• 41:15
  Thank you very much.
• 41:16
  Appreciate it, Alan.
• 41:17
  Paranoid Coders here with 2,000 sats.
• 41:19
  Coming in hot with the booth.
• 41:20
  No messages, value.
• 41:21
  Thank you very much.
• 41:22
  And Ace Ackerman's here with a row of ducks.
• 41:24
  I think Bitcoin could be sitting at 300K in 2032,
• 41:27
  but it's likely getting a higher price between now and then.
• 41:30
  Ha, I see what you did there.
• 41:31
  You're right.
• 41:31
  It'll hit 600,000 and fall back to 300,000.
• 41:35
  And everybody will freak out that it's lost so much value.
• 41:37
  You are absolutely right, Ace.
• 41:39
  I can see it now.
• 41:40
  JPEG's here with a row of ducks.
• 41:43
  No message, just value.
• 41:44
  Thank you very much.
• 41:45
  Appreciate you.
• 41:47
  And we have user 54 here with 5,000 sats.
• 41:50
  The traders love the vol.
• 41:51
  And he says pew, pew, pew.
• 41:52
  Pew, pew, pew.
• 41:53
  Shooting sats at you through a series of tubes.
• 41:55
  Thank you, user 54.
• 41:56
  Isn't it amazing?
• 41:57
  It's a series of peer-to-peer tubes at that.
• 42:01
  North Lake Odell is here with 5,678.
• 42:04
  Well, I'll be dipped.
• 42:05
  He says boost.
• 42:06
  Well, thank you very much.
• 42:08
  Boost.
• 42:09
  Appreciate you.
• 42:10
  Sickander?
• 42:11
  No.
• 42:11
  S-I-K-A-N-D-E
• 42:12
  S-I-K-A-N-D-E
• 42:14
  S-I-K-A-N-D-E
• 42:15
  I bet you that's it
• 42:16
  is here with $20 in fiat.
• 42:18
  Oh my god
• 42:18
  this drawer is filled with fruit loops.
• 42:21
  Just the days left for eCash man
• 42:23
  just days left for the eCash main chain fork.
• 42:26
  The Thunder and Z-Side side chains
• 42:28
  should launch at the fork
• 42:29
  so it's going to be really interesting
• 42:30
  to see how everything plays out.
• 42:32
  Anyone interested in splitting their coins
• 42:33
  after the fork
• 42:34
  should read eCash.com slash split.
• 42:37
  Any chance of getting Bitcoin Dad
• 42:38
  or Paul Strzok back on the pod
• 42:40
  to talk about the eCash fork.
• 42:42
  Oh, that'd be fun.
• 42:43
  I imagine they're both very busy.
• 42:45
  But if I, you know,
• 42:46
  I would like to do bonus episodes
• 42:47
  with interviews
• 42:47
  and they would be very high on my list.
• 42:50
  Thank you everybody who boosted the show including those of you who boosted below the 2000s at cutoff and those of you who streamed We had 45 of you No that not right No 19
• 42:59
  There you go.
• 43:00
  That's right.
• 43:00
  19 of you.
• 43:01
  Ah, still pretty good.
• 43:02
  19 of you stream sats and you sat streamers stacked 32,360.
• 43:07
  You're doing very well.
• 43:09
  Thank you very much.
• 43:10
  Now, when you total it all up, we did pretty good this episode.
• 43:12
  This episode stacked a grand total of 459,185 satoshis.
• 43:19
  This here is a value for value podcast.
• 43:28
  If you enjoy what I do and you give value out of it,
• 43:30
  helps make sense of the world,
• 43:31
  you can send me a boost at boost.jupiterbroadcasting.com.
• 43:34
  And don't let them tell you people don't use their sats for anything.
• 43:38
  Don't let them tell you lightning doesn't work
• 43:39
  because every single episode is proof that is not true.
• 43:44
  No ads, just powered by community and the sats that you contribute.
• 43:47
  You can also become a member over at jupiter.party, and then you get special access to Linux Unplugged and launch, and you get a free member boost.
• 43:56
  There's also, you can become a member via SATs on Fountain.
• 43:59
  Still kind of an experimental system, but it's pretty darn cool.
• 44:02
  So that's available as well.
• 44:09
  Well, surprise, surprise.
• 44:11
  The banks are reacting like jerks to people deploying their own personal agents to help them sort out their finances.
• 44:18
  And it just reminds us that holding your own Bitcoin is a level of freedom that is easy to take for granted.
• 44:24
  You're the boss of your property, as it should be.
• 44:27
  And it's funny because, like, as soon as agents started getting popular, you saw projects like AlbiHub trying to make it easier to integrate.
• 44:34
  You saw a lot of crypto projects trying to make it easier to integrate with agents.
• 44:38
  Not the banks.
• 44:40
  They love to remind us that once they've got your money, it's their money,
• 44:44
  and you can get access to it if they let you.
• 44:47
  But don't you dare do anything that they don't approve of ahead of time.
• 44:50
  So you can imagine how some of these banks are responding to people connecting agents.
• 44:54
  They are completely being reasonable,
• 44:57
  and they're looking forward to how customers want to use this
• 45:00
  and creating safe mechanisms to make it possible.
• 45:03
  No, they're not.
• 45:05
  They're throwing a hissy fit and a bunch of FUD.
• 45:08
  A new report is highlighting how hard it could become to keep your money safe.
• 45:14
  Axios says major U.S. banks are detecting what they believe is unauthorized actions by third-party AI agents operating inside customer accounts.
• 45:24
  Now, of course, the positioning of this is pretty scary.
• 45:27
  But the majority of this is customers that are connecting their AI agents to a service called Plaid, or Plaid.
• 45:33
  and that is sort of an intermediary middleman
• 45:36
  that does read-only access
• 45:38
  via a ridiculous system that they had to come up with
• 45:41
  because the banks never provided a system for this.
• 45:43
  Now, you can imagine
• 45:45
  there's probably a few rogue AI agents out there
• 45:47
  that are knocking on doors,
• 45:49
  but I would be willing to bet,
• 45:50
  to bet?
• 45:51
  I would be willing to bet some serious Satoshis
• 45:54
  that that is the vast minority
• 45:56
  and the vast majority
• 45:58
  are people that just got themselves a Muse account
• 46:00
  or a GrokBot or a Dot
• 46:02
  and all of them have connectors for plaid in there.
• 46:07
  All of them.
• 46:08
  So yeah, that's what people are doing here.
• 46:10
  But the banks, that's not how they handle it
• 46:12
  and that's not how they spin it.
• 46:13
  Actions by third-party AI agents
• 46:16
  operating inside customer accounts.
• 46:19
  Some of these agents appear to have tried
• 46:20
  to act independent of user instructions.
• 46:24
  Connor Leahy is an expert on AI safety
• 46:26
  and the US Executive Director for Control AI
• 46:29
  and can hopefully give us some insight on this.
• 46:31
  Good morning and welcome.
• 46:33
  Hope our viewers understand what these AI agents were instructed to do and how that
• 46:39
  differed from what they actually did.
• 46:41
  Well, I think it's very important to understand is that in the modern world of AI, we're not
• 46:45
  really talking about chatbots anymore.
• 46:47
  We're talking about agents.
• 46:48
  These are systems that can take actions in the real world.
• 46:52
  They can access your bank account.
• 46:54
  They can do tasks for you.
• 46:55
  And many, many people are using these.
• 46:57
  Yeah.
• 46:57
  Picture an app on your phone.
• 46:59
  It's a lot like that.
• 47:00
  In this instance, it seems that in most circumstances, these AI agents were probably given access to the bank accounts by their users.
• 47:08
  But, and this is very important, it's A, not always clear that we can separate between truly authorized access or not.
• 47:17
  That's because of the architecture, because the banks never set this up properly.
• 47:20
  So then you had a system like Plaid come in that does it through all kinds of whack-a-ma-me means, either API or just through the online banking web lock-in, which is how they have to get into my banks.
• 47:31
  That's why they can't tell because they refuse to play along for so many years.
• 47:35
  And now that bill is coming due because they're old and they're slow.
• 47:38
  It's not always clear that we can separate between truly authorized access or not.
• 47:44
  And B, often these agents will take actions that the humans did not intend.
• 47:49
  I wish, I wish. I got so screwed by fold. I got so screwed because of ACH delays. Now, this is my rough understanding of the situation. My wife has the full understanding, so this may not be the entire picture.
• 48:05
  My rough understanding is an ACH transfer was delayed for some reason because ACH is crap.
• 48:13
  I used to work at the banks when ACH was still done by spreadsheets over FTP dial-up, dialed up to a server and transferred it.
• 48:21
  So ACH is a really, really old system.
• 48:24
  And for whatever reason this time, it didn't land.
• 48:27
  And for whatever reason, Fold still covered our bills, even though we didn't have the money in the account, which seems like a good thing, except for I had agents in here managing this and I knew what was coming due.
• 48:43
  I had it all figured out.
• 48:44
  So we double paid.
• 48:46
  We paid the bill directly from our checking account, even though we'd already sent the money via ACH.
• 48:54
  And so then because this had happened, our account went into some kind of hold and review status and no transactions could clear, even though we had transferred the money.
• 49:04
  No bills would clear for a while.
• 49:06
  And then they had to figure out the money they spent to take from the ACH transfer that we'd put in there.
• 49:11
  And so it is effectively almost three weeks.
• 49:14
  I couldn't use my fold account.
• 49:16
  It was a nightmare.
• 49:17
  And the only thing that prevented me from going default on my car payment or on a credit card bill or whatever it might have been.
• 49:27
  Oh, yeah.
• 49:28
  Oh, yeah.
• 49:28
  Of course.
• 49:29
  Of course.
• 49:30
  The insurance that we pay twice a year was due.
• 49:32
  Right.
• 49:33
  Of course.
• 49:34
  Our insurance was due.
• 49:35
  And, you know, that was set up forever ago.
• 49:39
  I would have never have caught that if I didn't have something helping me manage all of this.
• 49:43
  And it was a nightmare.
• 49:45
  It was a nightmare.
• 49:46
  And without the agents, we would be in financial ruins potentially because of what Fold did to us.
• 49:51
  It was bad.
• 49:53
  And so to watch this and hear them talk like this is so immensely frustrating.
• 49:58
  And as a Bitcoiner, you just look at this and think, these guys are always going to behave like this.
• 50:03
  And then they throw the FUD around that you don't know what they're doing, that they might be taking actions you didn't want them to take.
• 50:08
  I wish, I wish they would do that.
• 50:12
  I wish.
• 50:14
  No, no, you have to hold their hand on every little thing.
• 50:17
  They only want, first of all, they only get read access through Plaid.
• 50:20
  And if you want to go further than that, you have to have a bank that has an API
• 50:23
  and an MCP, if you're lucky, like Mercury.
• 50:25
  Most banks don't.
• 50:27
  And even then, if they have an official API with an API token
• 50:30
  that is scoped to limited access,
• 50:33
  they still are so careful.
• 50:36
  It is frustrating.
• 50:38
  It takes so long, especially if you're working with a frontier model.
• 50:41
  If you're working with a Chinese model, sometimes they just will get it done.
• 50:45
  So this whole thing is really just ridiculous.
• 50:48
  And I don't need to go on about it.
• 50:49
  I think I've made my point that the banks are never going to let you access the money
• 50:53
  the way you want to.
• 50:54
  And they're going to make a stink about some of these agents.
• 50:57
  And there's going to be a separation in services of banks that support the stuff and banks
• 51:00
  that don't.
• 51:01
  But let's move on to quantum FUD.
• 51:04
  Because like the lump on my neck that just won't go away, quantum FUD continues to be
• 51:10
  a large part of the online discourse week after week It seems like it anchored by one claim I made mention of this earlier and that is that Bitcoin is hard to change
• 51:22
  And this is a core point that people bring up
• 51:24
  over and over again.
• 51:25
  Kost's chief of security, James Lopp,
• 51:26
  he just said that recently this week.
• 51:28
  Where is quantum computing actually at today?
• 51:30
  And how far is it from being able to steal someone's Bitcoin?
• 51:35
  Yeah, it's always fun to see people
• 51:36
  throw around these numbers because first of all,
• 51:39
  one qubit is not equal to one qubit.
• 51:41
  There's different types of qubits.
• 51:42
  There's physical qubits.
• 51:43
  There's logical qubits.
• 51:45
  And then there's the complexity of all the algorithms that these qubits are actually running.
• 51:49
  And that's like one of the many different things that is a constantly moving variable in the quantum research space.
• 51:56
  But to sum it up, we are orders of magnitude away from a real usable quantum computer that can crack the elliptic curve algorithm that is used to secure your Bitcoin.
• 52:09
  And do you, I mean, could you even put it on a timeline for when it becomes a real threat?
• 52:15
  This is the trillion dollar question.
• 52:18
  Because we're orders of magnitude away, it means we have to have multiple massive breakthroughs.
• 52:25
  But as anyone who's been paying attention to the technology space, now AI is having multiple breakthroughs.
• 52:32
  And the crazy thing about AI breakthroughs is that they tend to percolate throughout the entire technology ecosystem and result in breakthroughs in other industries.
• 52:43
  So this is one thing people are keeping their eyes on.
• 52:46
  I still don't think it's going to happen any time in the next few years.
• 52:49
  I'm still hopeful that we have at least a decade or more, because if we have less than a decade, we're behind.
• 52:54
  And that's basically why I've been talking about quantum for several years.
• 52:57
  Not because I think that it's about to break everything, but because, as we all know, Bitcoin is very, very difficult to change.
• 53:06
  Very, very difficult to change, he says.
• 53:08
  And I agree and I disagree.
• 53:11
  It's hard to change consensus for bad ideas.
• 53:14
  That is true.
• 53:15
  It's very, very hard to change for bad ideas.
• 53:18
  And it is true that even good ideas are difficult to change in a decentralized open source project.
• 53:23
  but bitcoin isn't like some sort of rock it's made up of humans of individuals who have followed
• 53:31
  their incentives since the beginning of the bitcoin network it's honestly one of the most
• 53:35
  brilliant and resilient things about bitcoin is that everyone is just following their incentives
• 53:40
  the users the miners the operators the etf holders that's the core human behavior that's led to the
• 53:48
  network success so far that's the core of it right there and that's part of the network effect
• 53:53
  It's one of the areas, actually, Michael Saylor and I agree.
• 53:56
  Incentives will line up when the time is right.
• 53:59
  People don't want to lose their Bitcoin.
• 54:02
  He was just up on stage this week, and I was asked about this.
• 54:06
  And so I'm going to play this clip.
• 54:07
  I didn't put this together.
• 54:08
  I think maybe somebody's clanker put this together.
• 54:11
  But it's a clip of Saylor answering this question, and I tend to agree with most of it.
• 54:16
  And then what will follow him is several clips of quantum researchers and developers
• 54:21
  and their current thoughts on the state of Bitcoin and the quantum leap.
• 54:25
  We only have a quick second, but I have to ask you, because it's obviously a big issue just in general,
• 54:30
  not just AI, but also quantum.
• 54:32
  I noticed that you did not mention as a potential headwind quantum
• 54:36
  and what quantum is doing in terms of cryptography and security risk.
• 54:42
  Do you have a, you know, particularly in the last week or two in terms of developments,
• 54:46
  do you continue to sort of see this as a long-term, medium-term, no-term,
• 54:50
  challenge to the Bitcoin system. Obviously, there's going to be a coordination question as to how do
• 54:55
  you make your Bitcoin quantum proof? How do you get your mind around?
• 55:00
  I mean, the short answer to Bitcoin security is there's a hundred things people have worried
• 55:04
  about over the last 20 years, and we ticked them all off. They've all been overcome. The latest one
• 55:10
  is quantum concern. There is no quantum computer. There is no consensus that there's a quantum
• 55:15
  computer. When there is a quantum threat and it forms, the consensus will form in the world and
• 55:21
  every bank, every big tech company, every software company and all the crypto networks and digital
• 55:27
  assets and every government will all upgrade to post-quantum resistant cryptography. The Bitcoin
• 55:33
  network is just a bunch of nodes, a bunch of software running on computers and phones. And
• 55:39
  at the point that there's consensus on a quantum threat, we will upgrade the software. It's probably
• 55:45
  a 90-day upgrade.
• 55:46
  The reason we don't upgrade the software now is because quantum-resistant cryptographic
• 55:52
  libraries are actually much more complicated with other attack surfaces.
• 55:58
  And the actual threat in the industry right now isn't quantum.
• 56:01
  The actual threat, the real threat, is AI hacking.
• 56:05
  So if you take a frontier model, the one thing you would love to have is a super complicated
• 56:11
  Rube Goldberg device piece of software,
• 56:13
  and you would like to attack it
• 56:15
  with the latest frontier model,
• 56:17
  find a glitch in it,
• 56:18
  and then exploit the glitch.
• 56:20
  And so the danger is upgrading software
• 56:25
  to be too complicated too quickly
• 56:27
  before the threat manifests itself.
• 56:30
  It's like it's an iatrogenic intervention.
• 56:32
  That's the danger.
• 56:34
  So the rational thing for the network to do
• 56:37
  is wait and develop the quantum, post-quantum libraries.
• 56:42
  But that's happening at Microsoft and Google
• 56:44
  and the US government, NSA, et cetera.
• 56:47
  Let those develop.
• 56:48
  They keep improving.
• 56:49
  They're improving exponentially.
• 56:51
  Wait until there is a quantum computer.
• 56:53
  There might be a threat that forms in five or 10 years.
• 56:56
  It might never come.
• 56:57
  It might come sooner, might come in 30 years.
• 57:01
  When and if it comes, you upgrade the software.
• 57:04
  but you don't vaccinate your kid at age one against some disease they might get at age 67.
• 57:12
  Because if you do that 100 times and you've got a 1% mortality rate,
• 57:18
  you're going to kill the kid by protecting them against something that never happened,
• 57:21
  that they're not going to live to see happen.
• 57:23
  And so we view quantum resistance the same way.
• 57:26
  It's a vaccine.
• 57:28
  We've developed it.
• 57:29
  But the threat's evolving and the cure is getting better and we'll wait until we need it before we take it.
• 57:38
  Great. Any future work we should be expecting to see from you? Some research?
• 57:43
  Yeah, I mean, right now we're looking at what we need to do to be able to transition to post-quantum signature schemes.
• 57:52
  There's a lot of new research around that as well, doing NPC for lattice-based signatures, for example.
• 57:57
  threshold decryption for lattice-based encryption,
• 58:02
  how far can you push MPC for hash-based signature schemes.
• 58:06
  So, you know, we're applying it in the cryptocurrency space,
• 58:10
  in the blockchain space, but I think it's relevant,
• 58:13
  you know, it's relevant cryptography in general.
• 58:16
  That's where I'm focusing my time right now.
• 58:20
  In the absence of that information,
• 58:23
  what would you recommend or how do you kind of think about this
• 58:26
  as just like an everyday user of technology?
• 58:29
  Like, how does this impact
• 58:30
  how you interact with technology, if at all?
• 58:32
  So nothing has changed.
• 58:34
  The world today is the same as the world a week ago,
• 58:38
  the world a year ago.
• 58:39
  Nothing has changed.
• 58:40
  Until we learn something new
• 58:42
  about our standard cryptographic systems,
• 58:45
  nothing has changed.
• 58:46
  Keep using the systems as they are.
• 58:49
  When we learn something new,
• 58:50
  either we'll have more confidence
• 58:52
  or we'll have to react.
• 58:53
  But until we have more information,
• 58:55
  nothing has changed so please don't panic you know keep calm yeah to put it another way you know the
• 59:02
  the the reaction yesterday and continuing today is not a reaction to new information
• 59:08
  what the reaction is maybe an indirect reaction to the dump of mathematical results from open ai
• 59:16
  a very indirect kind of information about ai's progress which i again is it was amazing but i
• 59:22
  don't think is a surprise. It's like all Silicon Valley's been talking about for years now. But
• 59:27
  it not a specific reaction to a specific piece of information about cryptography We didn learn that elliptic curves are vulnerable in a way that they weren before We didn learn that any specific cryptographic assumptions have less security than they did before
• 59:43
  Maybe to give people a little bit more confidence also, we have a lot of different types of assumptions that we use to build public key cryptography.
• 59:52
  It's not just elliptic curves or lattices.
• 59:54
  We have isogenies and code-based systems and multivariate polynomial-based systems.
• 59:59
  There are many hash-based signatures.
• 1:00:01
  there are many other types of assumptions that we can build public key cryptography from.
• 1:00:06
  So if we need to react, we can react.
• 1:00:08
  Of course, everything takes time, but we sort of know where to go.
• 1:00:13
  And so even if the worst of the worst happens, there are still plenty of ways for us to recover.
• 1:00:20
  So it seems to me like the reality is people in the know are thinking about it.
• 1:00:26
  They're working on it.
• 1:00:27
  and they have no doubt that when the time comes,
• 1:00:29
  the Bitcoin network will make the adjustments
• 1:00:31
  it needs to make.
• 1:00:33
  The fact that we don't have to wait for the banks
• 1:00:35
  or CEOs or governments to sort this out
• 1:00:38
  is going to be a massive advantage for Bitcoiners
• 1:00:41
  and we're so focused on this one little problem.
• 1:00:44
  We are gonna be in such a better position
• 1:00:46
  than just about every institution
• 1:00:48
  that has to deal with this.
• 1:00:50
  So I think maybe just to wrap us up,
• 1:00:53
  I wanna end on a clip that reminds us
• 1:00:55
  how important an actual store of value is.
• 1:00:58
  Because Chamath did it, others do it.
• 1:01:00
  They just hand-waved the store of value
• 1:01:02
  as if it doesn't matter, as if it's nothing.
• 1:01:07
  But I think it's the exact opposite.
• 1:01:09
  I think it's a product with universal market fit.
• 1:01:12
  And Jack wrapped up pretty well on his podcast this week.
• 1:01:16
  I thought he ended on a nice strong note
• 1:01:17
  and put this into perspective.
• 1:01:19
  You know, I've always considered government debt
• 1:01:21
  as a form of time travel.
• 1:01:23
  They borrow from our future without our consent.
• 1:01:27
  They literally travel to the future
• 1:01:29
  and take our time, energy, effort, labor.
• 1:01:33
  The fact that generations before us
• 1:01:35
  were able to work five, six, seven years to own a home
• 1:01:39
  and now we're having to work 50, 60 years to own a home,
• 1:01:43
  like literally own it, not a mortgage,
• 1:01:45
  pay it off, your property.
• 1:01:47
  That's theft of time.
• 1:01:49
  That's time travel.
• 1:01:50
  That's entering our future,
• 1:01:51
  grabbing our effort, our labor, our energy,
• 1:01:55
  and spending it and wasting it today
• 1:01:57
  without our consent.
• 1:01:59
  That's the other thing.
• 1:02:00
  On a gold standard,
• 1:02:01
  you used to have to deposit the gold to the government
• 1:02:03
  if they needed to defend themselves for war
• 1:02:06
  or they needed help financing something.
• 1:02:09
  And if I didn't consent to that, I kept my gold.
• 1:02:12
  And that was such a fair system.
• 1:02:13
  If we really needed to go to war
• 1:02:15
  and we really needed to defend ourselves,
• 1:02:18
  well, then the people would surely go into their savings
• 1:02:20
  and give a little bit of gold
• 1:02:21
  to make sure that we as a country
• 1:02:23
  were doing what we needed to do.
• 1:02:24
  But if we didn't actually need to,
• 1:02:26
  you wouldn't get the financing to be able to afford it
• 1:02:29
  because everyone had to consent.
• 1:02:31
  Fiat money printing is a violation
• 1:02:34
  of our property rights and our dignity
• 1:02:36
  because it's without our consent.
• 1:02:39
  It is literally theft and abuse.
• 1:02:42
  And so my message to whoever's willing to listen is,
• 1:02:46
  listen, there are two incredibly powerful expressions,
• 1:02:50
  voice and exit. Okay. When voice is no longer sufficient, there's only one action left and
• 1:02:58
  that's exit. And so you want to protest? I've been protesting for 14 years now by Bitcoin.
• 1:03:06
  It's not violent. I don't need anyone's permission. I don't need a specific politician
• 1:03:11
  or political agenda. Okay. And put the moral code. This is from my speech in Prague a few years ago,
• 1:03:18
  But before Bitcoin is computer code or a network, I think it's moral code.
• 1:03:24
  And that moral code is thou shall not inflate, thou shall not confiscate, thou shall not counterfeit, and thou shall not censor.
• 1:03:34
  Thou shall treat everyone equally.
• 1:03:37
  Everyone is included.
• 1:03:39
  Everyone is treated equally.
• 1:03:42
  There's a freedom in coming and going.
• 1:03:44
  You cannot censor.
• 1:03:46
  You cannot counterfeit.
• 1:03:47
  you cannot confiscate, you cannot inflate, and you cannot steal. It is moral code of protest.
• 1:03:54
  It is a peaceful protest to say, you know what? I'm out. Because when voice is no longer
• 1:04:01
  sufficient, exit is the only option we have left to protect any dignity.
• 1:04:17
  Let's check in on the state of the network as I wrap up at block height 973,562.
• 1:04:28
  Our U.S. price to one Bitcoin right now, 81,190.
• 1:04:33
  That makes our sats per dollar at 1,232 satoshis to a dollar.
• 1:04:38
  We're down 35.7 from our all-time high, which was 387 days ago, you absolute cyber hornet
• 1:04:47
  psychopaths. The difficulty retarget date is tomorrow, as I record October 29th, with an
• 1:04:53
  estimated, whoa, estimated difficulty change upward of 6.2%. I thought they were all switching
• 1:04:59
  to AI. Whoa. Wow. Reachable Bitcoin nodes down a bit this week at 23,114. We're up 0.6% in the
• 1:05:08
  last 24 hours, but down 4% since the last episode. Sats on the blockchain, or fees on the blockchain,
• 1:05:18
  still low. One sat per V-byte. But look at that difficulty change. Isn't that something?
• 1:05:24
  You know what I say, the state of the network is strong.
• 1:05:27
  well if you made it this far come say hi to me in texas if you're in the austin area i'm flying
• 1:05:40
  out next week and i'll be there i think the 6th and the 7th at texas linux fest gonna try to do a
• 1:05:46
  little lunch on a friday i suspect maybe saturday i don't know maybe both days you know i do need to
• 1:05:51
  eat. Also links to what I talked
• 1:05:53
  about this week, thisweekinbitcoin.show.
• 1:05:57
  You'll check out,
• 1:05:58
  you'll see there's probably more stuff in there that didn't even make
• 1:05:59
  it in the show. Do let me know
• 1:06:01
  how I did with a boost. My goal
• 1:06:03
  is to focus on the things that matter to
• 1:06:05
  you. Focus on the signal, not get
• 1:06:07
  distracted by the emotions or the politics.
• 1:06:09
  None of that. So that way is you can
• 1:06:11
  plan for yourselves, your friends, your families,
• 1:06:13
  your business, whatever it might be.
• 1:06:15
  Also, I want to know your thoughts on quantum.
• 1:06:17
  If you think it's something we need to address sooner than
• 1:06:19
  later just to calm people down.
• 1:06:21
  or if the risk of addressing it sooner than later is actually more dangerous.
• 1:06:27
  Boost.jupiterbroadcasting.com.
• 1:06:28
  Let me know how I did over there.
• 1:06:30
  And of course, if there's something you'd like to see me cover in a future episode,
• 1:06:33
  you can put it there.
• 1:06:35
  I'm not quite sure what the plan is for next week.
• 1:06:36
  Since I am flying, I may do an early episode.
• 1:06:39
  So keep your eye on the RSS feed.
• 1:06:41
  That's always the best way to get an episode when it drops.
• 1:06:43
  Thanks so much for listening.
• 1:06:44
  And I'll see you right back here on This Week in Bitcoin next week.
• 1:06:51
  Thank you.
• 1:07:21
  Thank you.
• 1:07:51
  you