Sir Gene Speaks

0032 Sir Gene Speaks Special - Interview Daniel, Dude Named Slug

April 11, 2021 Gene Naftulyev Season 1 Episode 32
Sir Gene Speaks
0032 Sir Gene Speaks Special - Interview Daniel, Dude Named Slug
Chapters
0:14
Intro
0:42
Daniel
1:50
Bitcoin Here to Stay
8:54
Early Bitcoin Experience
12:44
Max Keiser Is Right
15:02
Lightning Network
24:36
History of the Internet
30:49
Hold the line!
39:59
Book Links in Description!
43:31
Bitcoin Issues
47:13
Spondiflex Story
53:50
Wrap-up
Sir Gene Speaks
0032 Sir Gene Speaks Special - Interview Daniel, Dude Named Slug
Apr 11, 2021 Season 1 Episode 32
Gene Naftulyev

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Show Notes Transcript Chapter Markers

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Produced by:  Brew City Mike and Anonymous Donors

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Gene:

I spoke with Daniel on the no agenda chats and he in a nice way, but he basically said, Jean, neither, your nor, your guests know Jack shit about Bitcoin. You need to have me on so I can explain things the way they really are. And I said, you know what? You're right. I don't know that much. So let me get you on. And here is that interview we're finally on how are you Daniel?

Daniel:

Doing pretty well, how are you doing?

Gene:

I'm good. I'm good. So I'm I'm actually pretty happy that you reached out to me and called me up because I absolutely want to have people that have more experience and have spent more time focusing on different aspects of crypto on different aspects of podcasting. A lot of things that I maybe have done tangentially. That people have done more directly. So with that in mind, can you just quickly summarize what is the experience with Bitcoin and crypto that you're bringing to the table for us here?

Daniel:

I'm strictly a user of Bitcoin, not a developer at all. Been in Bitcoin at least a little bit since about 2011, really dove in, in 2014 after the first bull run and then subsequent crash. And then just slowly been acquiring since since then went through a few. Bull run since then. And within the last six months or a year or so, I've been really just reading up on everything that I can about Bitcoin learning, how it could fail and then why it won't. At least in my opinion, why it won't fail and why it's better than any other crypto currency quote unquote alt coins as they call them or some call them shit coins. But I'll just call them alt coins for now. Why those kind of can't stand a chance against Bitcoin. Yeah.

Gene:

so let's clarify that. When you're talking about Bitcoin being the best, there are many things it could be the best for. There are certainly some things I don't think it's the best for, but that could be broken up by a medium of transactions. It could be best stats being an insurance against inflation of Fiat currency. It could be best at an investment vehicle. That just lets you do day trading and make money. So which of the, which thing do you think Bitcoin is the best and it could be multiple ones too,

Daniel:

I think the best of the ones that you mentioned the hedge against inflation the best aspect about Bitcoin is the network, right? So, the network. And the network effect. With Bitcoin, it's the first and largest cryptocurrency and obviously the oldest being the first. So it's been around since 2009. And although it's reportedly died many times since then, it's still going. People can say it won't work because of X. Yet it's still, it still does work. It wastes too much energy. It's not a waste if you see it as valuable. So what it does the best is it holds your value and in the longterm it will hold your value and it will go up in value at least in the near, near term on a long enough time scale.

Gene:

okay. So you see Bitcoin as a modern day alternative to stocks or bonds, or maybe even just holding gold.

Daniel:

Absolutely. Yeah. So many people compare it to gold and say it's gold 2.0, it does everything that gold does. But better

Gene:

it's not a shiny though.

Daniel:

yeah, that's the one thing that you can't compare it is the material use, which is when you're looking at using it as a monetary instrument, it benefits from not having any physical use. There's no conflation there's no it could be used in a computer part or it could be used as money. No, it can. It can only be used as a store value.

Gene:

Yeah. Gold has both sinks like taking it. And for using it as a part, like you mentioned, the computer parts which will remove gold from the supply, or it can be mined in mines. In Africa, Alaska, I watched those those TV shows about the Alaskan gold miners. That's pretty wild stuff and it's pretty amazing how much work they have to do just to mine, like a pound of gold. It's crazy. So while I do agree, and I've certainly said that mining Bitcoin is just a waste of electricity and I do think it is, but you also, if you compare that to the amount of diesel fuel and other things that are wasted in mining gold, those are also wastes. It's not worse than mining gold in terms of the amount of energy that is spent. It just is. But I do think, they are both waists.

Daniel:

Yeah, I would argue that it does definitely mining Bitcoin, specifically expends a lot of energy and you could call expanding energy. Wasting energy. But you have to expend energy mining gold as well, like you mentioned. And there's also a lot of polluting and natural damage that has done when you have to mind goal. Do you have to physically get it out of the earth? You're destroying whatever ecosystem did exist in that location could be adding toxins to the ground wasting natural water in the area.

Gene:

I use cyanide in the process of purifying it too. Yeah.

Daniel:

wow, I didn't know that but there's all kinds of toxins included when you're a mining for gold. And when you're mining for Bitcoin, yes. You're using energy and yes, that energy in large part comes from coal and natural resources that theoretically we're running out of and add greenhouse gases to the atmosphere. But the incentives are to get the cheapest possible energy that you can get. And. Right now that energy could be coming from gold, coal, or other natural resources. The incentive is to get free energy such as wind. One popular podcaster and writer is Marty bent. And he's got this company called the great American mining company. And what they are doing is you may have heard about it. They're taking natural gas that comes from when you're drilling for oil. you'll, you'll

Gene:

would be vented off normally is the guests

Daniel:

of natural gas. And since they're drilling in remote locations and the price of natural gas is so low and there's no infrastructure in place to, to pipeline in anywhere. They either vented off, like you said, straight into the atmosphere, which is a huge pollutant and greenhouse gas, or they flare it in order to reduce the greenhouse gas effects. So they just burn it super not productive. They burn it off into the atmosphere. And what his company is doing is setting up those shipping containers, full of Bitcoin miners, where they can take that natural gas out of the atmosphere or out of the earth. And instead of releasing it and they burn it and turn it into electricity onsite, all you need is a generator onsite and a connection to the internet and you can mine Bitcoin. And you're taking that waste material from previous mining projects, and you're turning that directly into value. You're getting Bitcoin out of it and you're taking what used to be a waste and turning it into a profit.

Gene:

Yeah, and I like that. That's a good creative use of a super low value resource being utilized rather than just sucking it down on the local power grid. Which as I'm sure everybody is aware. Now we in Texas had a bit of a hiccup in our power grid that coincided with freezing temperatures, which almost never happened here. Which meant I was in the dark for three days with no electricity, which sucked. And so I think a lot of us, myself included a very sensitive to the use of energy these days. I, and I not so much, clean, dirty energy. I really care a lot less about that. But strictly in terms of if energy is being used for something that ends up putting people second, and this process first that to me is a is an extremely high waste use of energy. Now, I don't think that. There was a whole lot of Bitcoin farming going on in Texas because the energy here is actually not that cheap. I've lived in other places in the country where the energy is significantly cheaper than Texas. Texas only has two nuclear plants, which generally provide some of the cheapest energy. Texas does have a lot of the wind farms. In fact, Texas has more windmills than any other state in the country. But of course they all stopped working when it got cold. But even when they are working, people say when energy is really cheap it really is only cheap. If you ignore the cost of building the windmill, because the math's been done. There's a number of reports out there that show that a average, typical windmill only recovers about 70% of the energy that it took to build it over the course of its lifetime. So, if you really want to save energy, you wouldn't build windmills to begin with, but that's a topic for a different episode. Let's focus on the Bitcoin aspects. Now you mentioned that you're a user, you're not a developer. Did you ever mind Bitcoin?

Daniel:

When I was just starting out in late 2011 I didn't really have the hardware for mining. I had some laptop with an integrated graphics card. So I participated in the act of mining and I got no reward from it. I just kept a, a warmer room. That's

Gene:

Sure. And that was very similar to my experience. Now I did get for Bitcoin when I was mining in 2010 and the four Bitcoin were worth, I think, less than the buck and my electricity bill was up by $5. And that's why I decided this is stupid. I can't believe people are doing this. It is warming my room but it's absolutely a waste of computing power. And so I think I switched from Bitcoin mining to doing the the protein mapping on the what was that project called? Do you remember?

Daniel:

That one was folding at

Gene:

Yeah. Folding a home,

Daniel:

at home. And then there was

Gene:

right? Yep. Yep. So I switched to folding at home off of Bitcoin boy, if I would've only known. And of course I really, since those coins were worthless, they were thrown away along with a hard drive years ago. And our last for eternity.

Daniel:

I can relate to that. My first coins, it's same story. You don't know what you have. Just like I got these coins are not worth a whole lot. So I found a a Bitcoin casino back in the day and I was like, Hey, why not? Let's bet. A 0.2 Bitcoins, which was only worth a couple of cents at the time and just gamble it away in a couple of minutes. And if you look at that value now, it's one of those things that I

Gene:

Well, I'm sure the casino guys probably just of pizza with it too. So everybody lost out. Yeah. I don't think that there's a whole lot of people that were so believing in the value of Bitcoin that they would just hold onto every single coin for 10 years. The fact that a lot of us lost coins also added to the rarity of Bitcoins and thereby the current price of Bitcoin is higher as a result.

Daniel:

absolutely. And that can be even for the creator himself that he's theorized Satoshi Nakamoto is theorized to have mind just about a million coins and you can look at the blockchain today and no one has touched those coins sense. So they are thought to be lost.

Gene:

no, I posted a video recently I don't, yeah, I think the video is done maybe a few months ago. I can't remember the name of it off the top of my head, but it went through all the current theories about who a Satoshi is. And I think they narrowed down to four or five people and then discuss both the pros and the cons of, why that is him and why that's not him about each of the folks. But I know one of the guys is dead. So there if he was sick, she, then the, those coins will never be spent.

Daniel:

I'll go with that. I like that story. Hope that we never do find out. It's like the immaculate creation

Gene:

Right? Exactly. It brings a level of mystery that helps too. Highlight the the mystique of the Bitcoin. So are you a hold them forever guy? Are you a, here's the targets that I'm going to hold them to, and then I'm going to start spending them in guy. Where do you put yourself on that?

Daniel:

So that has evolved over time. Back in 2014, 2015, when I was buying, I was like, Hey this is a pretty interesting thing we got here. This could, I could see this going to $10,000. If it ever gets to 10,000, I'm going to stop. that happened in 2017 and did not sell,

Gene:

Oh, good. Yeah, because I know a few people that did sell a 10,000, that was their magic number and they went and bought a bunch of Amazon gift cards.

Daniel:

I have a, I've had a few magic numbers. So we, we got to about 20,000 in that run and then crashed back down to. Pretty low after that down to the Valley of about 3000. And then that is about when I started to do my research, looking at the, as the smart money people caught the macro environment, looking at everything that's going on, all the helicopter money money printing that's happening. I was like, huh. This could go a lot higher now because as max Kaiser says, I know your your thoughts on max Kaiser,

Gene:

yeah I hate his voice. I have nothing against his, the guy it's just it's grading, but I totally agree with them.

Daniel:

against that. I

Gene:

I,

Daniel:

don't have any rebuttals for

Gene:

my magic number for Bitcoin is a million bucks a coin which I think is Max's number.

Daniel:

Yeah. So what he says is Bitcoin max has no top because a Fiat money has no bottom. So the value of a dollar can go. To zero per dollar, you could have, you could buy like a candy dollar, candy bar, virtually dollars.

Gene:

Yeah. And th there have been countries, I think, in Latin America where the inflation rates just, and the Africa too. There's I think Adam, even the, has somebody sent him like a, either it was either a billion or a trillion of whatever the currency was paper, money.

Daniel:

yeah. It's probably the Venezuelan

Gene:

That one was from Africa though. The one that he got was from Africa, it was like a, I don't know if it was Congo or somewhere else but it was like a crazy dollar amount bill. And I remember I was in Italy when they had hyperinflation and there. They had the Lira for literally forever and then they started printing the middle era. So thousands of Euro bills, which were basically worth what the leery used to be worth.

Daniel:

So that is how I see it. I don't have a magic number. I'm I can say that I plan to hold at least some Bitcoin for the long haul. I do have some that, some numbers where I'm like, okay, if it is that I'm going to cash out, pay off some debts and that's about it. Cause I am what you call a maximalist and I believe that Bitcoin will take over and become the monetary standard

Gene:

Yeah. And we only have 10% left to mine as well. Which means that. The vast majority of all the Bitcoin that's ever going to be around is around a good chunk of it has already been lost and or destroyed, which means there's actually less in circulation than than was intended, but also of the Bitcoin available or the Bitcoin that is held a fairly small percentage of it is in circulation because a lot of people are just hold.

Daniel:

absolutely. Obviously holding it, taking it out of circulation is good for the overall value. Sell for 50,000 the price has to give up before you are willing to sell. So

Gene:

yeah, exactly. So one of the other areas of Bitcoin use and something that's obviously becoming a lot more immediate with podcasting 2.0 is the use of Bitcoin or a fraction thereof through SATs. With podcasting. And so here, we actually have a very different aspect of Bitcoin, which is just the ability to have very fast transactions that have a theoretically low cost to them. Going through a non-government controlled private network, that's also decentralized and redundant. So a lot of pros and essentially a way to move currency around in the form of Bitcoin without having to have a bank of whatever government you happen to be living under.

Daniel:

So that kind of right there you're arguing against one of the popular myths of light Bitcoin can't take over the monetary standard and the high fees are thought to prevent that, but you just described the value for value model that Adam and Dave over podcasting 2.0 have come up with, and that's using something called the lightning network. And that is the first step into taking over. So as you described, it's not only not controlled by a corporation or not controlled by a government, it's not controlled by anyone. You can plug in something at your house. You don't have to ask anyone for permission. Don't have to sign up for anything. You install some software. And you're good to go. You can expend some of your Bitcoin and start trading with people instantly for very low fees. And the scaling on that is unknown. At this point they don't know the maximum amount that of nodes that can come online and start transacting. It's

Gene:

And if Bitcoin is gold, then really transactions on the lightning network is the paper money. While it was still backed by a gold standard, not like paper money today because you can trade that money in for gold, but you don't have to. And it's a lot more convenient to carry paper money that is backed by gold in your wallet than to carry gold dust.

Daniel:

Definitely. And one so this is like the layered money technique is what or layered money is what they're calling it. And there's a book by Nick Batya that I highly recommend that I

Gene:

How do you spell that name?

Daniel:

money. I, if you look up layered money he should come up. But it describes the process of the way that the monetary system works right now is in the U S at least there's the fed, right? Who is the controller of all of the dollars. They have the fed wire, which is The transacting system between banks. So that's, you can think of the fed as the Bitcoin main blockchain, right? So those are equivalent. And then you as a person living in America, how often do you interact with the fed or fed wire? For me personally, it's never have I done any business with the fed.

Gene:

Yeah only when I get through hers.

Daniel:

so you have the fed and then you have banks and that's a second layer down. It's abstracted from the fed. It's still using the same money. They're still dollars, but it's the fed. They do transactions between the banks and then you have banks and you have payment processing systems like visa and MasterCard is a payment network. And then you have Venmo or PayPal. Those are still using the same standard, the dollar standard. But. They're three or four layers down. Whereas the monetary value is the same, but you never have to interact with the main base layer. And that's how the Kane theory plays out and how Bitcoin will scale to become the monetary standard. So right now we have the Bitcoin blockchain. There's no way that can scale to support the entire population of the earth or even a country. Really the amount of transactions you can do per day is too small. But if you open up a second layer, for instance, the lightening network, the scaling just dramatically increases. So it's a hard concept to wrap your head around, but if you compare it to the way we have it today, you can send your money on Venmo to your friend. It's still the same money, but you don't have to worry about the Bitcoin blockchain, just like you don't have to worry about the fed, sending your money to your friend.

Gene:

Right but also the, one of the big contentions within Bitcoin, as I've been researching more and more has been between people that want to increase the block size and therefore increase the speed of the, and decrease the the amount of fees involved in Bitcoin. And then the other side are people that just want to keep everything exactly as is which motivated other coins standards from popping up and including also motivating lightning from coming online as a second layer over Bitcoin, because it's solving problems within the Bitcoin technology by essentially taking money out of it, to do the transactions, and then really reconciling it on a whenever basis. You could do it every day. You could do it every week. You could do it every, probably 10 minutes would be about the fastest you could do reconciling, but on the lightning network, you can do transactions in a matter of seconds.

Daniel:

Right. They settle in seconds. So what were the the dates of these articles or books that you're reading? Cause the increasing the block size argument that kind of happened during this 2017 bull run. That was what they

Gene:

Yeah. Yeah. That's essentially the losing faction where the people that wanted to increase the block size. And I think it's less of an argument now because the alternatives or the solutions to that problem have gained so much traction. It could still be done today. Bitcoin, that's the other thing to remember it's is that the Bitcoin standard is still updated and tweaked as needed. And I believe if I remember correctly, you need to get 90% of the top 50% of the miners to agree on it, to implement the change. And so the, there are been small tweaks to it, but something major like increasing the block size has been voted down every time

Daniel:

Yeah, so the implementation and the changing of the network is a very hotly contested. And there is no real standard way to implement a change yet. That's something that's still being worked on and we have actually a change in the Bitcoin protocol. That's, it's settled, everything's been tested. It seems pretty rock solid called taproot, which should be going into effect sometime this year. but everyone agrees on, on making that change. So there's. No argument at all against it. Everyone's on board. The miners are on board. Developers are on boards. The users that run nodes are on board. But what they cannot agree on is how to agree to implement it. What should be the protocol or the standard to get a change implemented

Gene:

so how to roll it out.

Daniel:

Exactly. So that's still being worked out. They're trying to, while they don't have a very argumentative change to implement, they're trying to nail down how to make changes to the network for a template going forward. So you can look that up, looking at it, just Google at taproot activation,

Gene:

Okay,

Daniel:

the different proposals there.

Gene:

Yeah. I'll have to check that out. And I think actually I started the process of setting up this up before I talked to you, but in the time, since you and I first talked I've. Really done the deep dive on the technology side of Bitcoin by setting up my own Bitcoin node. So I'm not doing mining, but I am participating in the transactions and, yeah, exactly. Which is a very boring thing to watch, but you can watch it in real time. I've done that. But but mainly I'm doing that because I want to really become more intimately familiar with the tech side of the process. And also because I want to minimize the fees involved and by having my own Bitcoin node, having my own lightning node then I can make sure that there are fewer players involved in money coming in from Bitcoin based donations from podcasting.

Daniel:

You can set up some direct channels with some of the the peers and have no fees. You can go

Gene:

exactly. Well, everybody's still set to one for the most part, but yeah.

Daniel:

no fees from the lightning network itself, but you can, not the percentages that are split between the developers

Gene:

no, on the network itself, most transactions still are set to one.

Daniel:

Yeah. But if I have a channel directly from my node to your node and I'm listening to your podcast, that's sending to your note.

Gene:

yeah, Yeah, exactly. And it's something that this is a sort of a pet peeve analogy for it, but with all these new technologies I like to evaluate from the perspective of, can I explain this to my mother? And being a gen X or my mother is significantly older than yours. It's harder to explain things to people that are older. So right now, I think we're just getting to the point where there are new podcast players podcast players out there that are simple enough that I could explain how to use one to my mom. On now I'm not going to obviously do that in real life. That's just a waste of frustration for me that I don't need to do. Or a waste of energy that results in frustration, I should say. But I think it is nonetheless possible, right? Like pod friend is super easy and friendly. Yeah. And I interviewed Martin and he's going to keep making more and more friendly. And easier to use as time goes on as well, very receptive to finding bugs or anything else that, and tweaking things. We need that as well as the technical infrastructure, because if you just build, if you just work on the tech side of it, the only users you're going to have are tech people. And while there are plenty of dudes named Ben out there it there's a lot more people that are not dudes named Ben. So if you want to capture the biggest audience, you have to make it friendly to non-technical people as well.

Daniel:

Absolutely. It's like the beginning of the internet all the technical people, they would connect to the internet, set up their own website. And that was great for everyone that was on the internet at that time. But you needed something like that, like a Facebook or a MySpace to come around in order for people to really

Gene:

Yeah. And ruin it for. For the eternity. Exactly. I know you haven't heard this episode because I haven't put it out yet, but in one of the recent episode, I actually was talking about how I remember being on the internet when the first browser first came out and how you could go to the front page of the internet to see what new websites were added, that you could open up in the mosaic and each lunchtime, I would actually just go through and check out every new website on the internet. That was the thing you could do that because there was only about 30 or 40 of them added per day. And then eventually of course, it got too big and you didn't have time to go look at everything. And then that page turned into a database rather than a static. It was literally a static page at first. That was the front page of the internet.

Daniel:

the HTML me lines.

Gene:

Yeah. Yeah. HTML. So obviously the internet has been around since the really AARP that days. But in terms of what most people think of the internet, which is a web browser once mosaic was up and running, what was in beta still, maybe even the alphabet then, but there was a central website a single page that came as your homepage when you got the browser. And that page pointed to a manually compiled list of all the websites on the internet that were HTML sites. And if you decided to put one up and create one you would need to send them email to these guys and let them know to add your site to the list. I know this it's gotta be crazy for younger guys like you, huh?

Daniel:

Absolutely. I couldn't imagine that. I can, I was a young when my family got dial up and. Just remembering those times Way different than now. Couldn't imagine them earlier than that.

Gene:

yeah. And imagine what it's like for zoomers, like you're born holding a phone in your hand. Sure. Always on always connected. And Facebook was something that's been around literally since you were born.

Daniel:

yeah. Your parents that went up for you and when they were pregnant,

Gene:

Yeah. Like you could go back in your timeline on Facebook to see your birth photos. So it's a very different experience. And I, frankly, I think in a lot of ways we have fucked ourselves over as the human race by neglecting the things that humans were designed to be doing for literally a million years. And just sitting there and looking at our phones now, like all the skid skills involved with activities that don't include the internet are disappearing. There are certainly people that are really into some particular thing or other, but it used to be that everybody knew how to fish. Everybody knew how to load a gun and shoot an animal. Everybody knew how to, mend the fence, how to do all kinds of activities. That's R just not obvious and easy these days. And in fact you'll see a lot of people watching YouTube videos to learn how to do something that I would consider a basic human knowledge.

Daniel:

I can agree with that. And I probably am guilty

Gene:

You've resemble that remark.

Daniel:

one of those people, watching those YouTube videos, won't show you my YouTube search

Gene:

Here's how you boil water. Yeah, exactly. So I'm very grateful to have been born early enough to have had the pleasure of watching the birth of the public internet, and being there really when the internet was not public and it was strictly for educational institutions when I was in college and then being allowed to create commercial pages on the website. And then we're like, we have to be super careful about what kind of stuff you put in there. And the the nature of the internet was considered to be very much non commercialized. And the reason for that was simple too, is that the infrastructure was not owned by corporations. There were no. Huge companies that owned it. It was owned by universities, or it was owned by, at and T who was then paid through contracts by the government. And so they got to dictate what you were able to put on the internet and what you weren't, because the infrastructure was not a privately held infrastructure at that point in time. And I'd say probably right around 1994 is when that started changing. And certainly by 96 everybody was putting up their first commercial website on the internet and saying, Hey, here's our company come and check us out with Blinky text Blinky. Tex was huge back in the early days because there were no videos. There was no sound, there was nothing else, but you could have a blinking text. It was crazy days.

Daniel:

I think that a transition you just described was pivotal first for the creation of the internet, basically from going to, having to ask permission to not having to ask permission I think that not having to ask permission to do something, for instance, set up a Bitcoin node or set up a website. These days is huge for creativity

Gene:

Oh, yeah.

Daniel:

If I had asked somebody get a permit to plug in this machine and connect to a network I wouldn't have done it.

Gene:

yeah. And unfortunately it is a cyclical process because things start off when you decide to either break the rules or get authorization, to try something new, that new thing grows that changes the paradigm and shifts what the norm is. And you have the early adopters and you have obviously for the most part technical people. And then it spreads to people that see the potential and making money at it. And so it becomes commercialized and becomes ubiquitous with the entire population, having access and utilizing it. And from that point, the pendulum swings the other direction and you start having more restrictions. You start having more limitations, you have a higher higher cost of entry or even the higher degree of prevention from entering the market and trying to be competitive. So it very much, I think is either a cyclical process or a a pendulum swinging back and forth. Hey, hang on one second. I'm going to get a glass of water here real quick. Yes. All right. There we go.

Daniel:

all right, Jean. I have a question for you now. Um, you're getting into a Bitcoin and your deep dive and you just, you've been talking about it on your podcast recently here, getting up to speed with the podcasting 2.0 developments, the lightning network, building your own node. Do you have a magic number where you're going to sell? How do you see the Bitcoin is nation of the world

Gene:

Yeah. My plan is to not sell anything until it's worth at least a million per Bitcoin. And that's not to say just completely cash out the point either, but like any donations I get right now in, in Bitcoin or SATs coming in or whatever, they're all going to be held. I'm not selling any of that stuff.

Daniel:

So you're not selling it now and you're going to sell and convert to dollars around 1 million.

Gene:

I don't want to say convert to, but God damn it. Hold on God. I'm going to have to edit myself more in this one. I don't know why I'm coughing, but it's getting dry out there or something. Alright. Do you want me to ask me that again? So you're going to sell a million.

Daniel:

So you're going to sell it a million convert to your Bitcoin to dollars at that point.

Gene:

I'm not going to just convert everything straight through. What I'm saying is that. Until Bitcoin is worth a million per coin. I'm not going to convert anything. If it hits a million, I can start converting things. Cause right now I think it's just silly to take anything out. That's sitting in Bitcoin because it's, it keeps appreciating now there's ups and downs daily that are happening maybe even weekly, you could see that, but the trend line is still very much upward. So any Bitcoin that you convert right now to a fee at currency? Well, you're really you're just shooting yourself in the foot. I can see if somebody put their entire portfolio into Bitcoin and then lost their job and now they need money to live on you. You're going to be forced to take. Bitcoin out or take money out of that portfolio. That's, you do what you need to obviously, but if you can afford to I can't imagine any reason for spending Bitcoin or taking out of your portfolio today at all. You use the money that you're earning. That's not Bitcoin based to live on and anything that's coming in as Bitcoin just stays at Bitcoin. And also that helps to reduce the fees. Because as I mentioned, there are fees associated with quite a few steps in the process and certainly both fees with being a cent on the on chain network and also fees in converting to other currencies.

Daniel:

And then as well as capital gains taxes that you

Gene:

Yeah.

Daniel:

to pay. you're Not really forced to it until the end of the year, but

Gene:

Yeah, absolutely. Right now, the I mentioned that at the end of every podcast, there's certainly zero tax advice being provided here. But really I think for some people, Bitcoin is really more like casino chips where, they're literally just doing gambling with them not in the Bitcoin casino, but they're trading currencies back and forth. They're just doing, maybe they trading. They're just trying to maximize the value by doing quick transactions for other people like me, this is more similar to just buying and storing gold dust. And it's really, whatever it ends up eventually is where it ends up. And I think the potential is very much at. Getting to seven figures and maybe beyond, but it's almost doesn't matter because the it doesn't matter to me because I'm not getting paid for all my work in Bitcoin. I guess if I was only getting Bitcoin and nothing else. So here's my asterisk then yes, I would have to convert some Bitcoin every month just to pay the bills.

Daniel:

absolutely. That's how I see it as well. It's it's the retirement plan and also the emergency fund. So hopefully by the time I need to cash it out, I won't have to cash it out. My kind of vision for that will be I won't need to go back to dollars at that point. I'll be able to transact in the Bitcoin currency. All right. I have another question for you. I wanna gets it. What So we'll start with this one. Do you have any arguments that you see against Bitcoin that are to cause it to fail or maybe not?

Gene:

sure it's still risky and it can absolutely end up going away. And there's a number of ways that can happen. One of which could be a technical one that somebody discovers a technical method of either stealing or some other way, subverting the legitimacy of the network of the blockchain. If that happens, that will greatly affect the value and people will shift to a different standard. Probably a different blockchain that doesn't have that sort of vulnerability Which could certainly cause the value of Bitcoin to drop to maybe even nothing, but certainly to drive greatly. Yeah. Effectively worthless. It'll just be something. Oh yeah. I used to have these things. I think I still have a few that could happen from a non-technical logical standpoint. We could have full governmental control assumed of Bitcoin through legislation. So there is nothing to prevent the government from passing laws that effectively make doing what we're doing right now with our own Bitcoin nodes, lightning nodes, et cetera, make it all that illegal. Like it would force you to become a chartered bank if you want it to do that, which nobody would bother spending the time and money to do that. I think it costs around a million bucks to do that right now. Yeah, red tape overload. Exactly the same stuff they're planning on doing with guns. It's just, if you can't get rid of them, then you make it as difficult as possible. So that would greatly affect the value of Bitcoin, because if you don't have the full participation in the network like you currently do and it's literally going to be just the normal charter banks that are running Bitcoin. I think that the draw of Bitcoin will disappear and along with legislation, it could, let's put it this way. There could absolutely be laws passed that will make the value of Bitcoin zero, not by design, but by their end result. So it's not. It is technologically possible to do a training system like Bitcoin with zero government intervention involvement. And we've proven that. But I don't think it's immune from legislation.

Daniel:

yeah, it's definitely not immune from legislation. The only thing that I have to say, I agree with you legislation, definitely a roadblock, if not worse that could happen to Bitcoin, but in order for the value to be effected, I think that would have to be like a syndicated across the world government kind of a roadblock would have to be set up because sure. It will affect the value in the local currency and it would prevent Basically the on-ramps and the off-ramps into and out of Bitcoin, but it wouldn't affect any technologically it wouldn't affect your ability to send and receive Bitcoin or trade with somebody. It would make, it could potentially make doing that illegal, but it couldn't prevent it.

Gene:

well, it would make a film out of you

Daniel:

it's absolutely possible because in the thirties during the great depression the government outlawed owning and holding gold, they seized everyone's gold and took it to the central banks.

Gene:

Yeah. And a lot of people still kept it.

Daniel:

yeah, they kept it. And the value of gold didn't go to zero. So if you hold out in that situation you might do okay. And if you memorize your 12 or 24 word password, and you just wait or leave the country your Bitcoin will be there waiting for you on the blockchain. Even after that, so it's not seasonal.

Gene:

Yeah, but if there's no way to spend it, the value naturally just decreases. They're the reason there's value right now is because there's more demand than supply and there's more demands because people have a positive perspective on what it is. And part of that perspective is created by announcements. Whether it's PayPal or Stripe or cash app or whoever, all talking about how they're jumping on the bandwagon or for that matter, when Tesla buys a billion and a half worth of Bitcoin, like all these things work together to create a feeling of value for people, because they know that this is going to be recognized by a lot of people as a currency that I can use. Now, whether I want to use it today is a different question. But when it is and when it does hit a million or more, and I am at the point where I want to spend some Bitcoin and maybe buy a Tesla or something. And by the way, by that point, a Tesla may not be. A little tiny fraction of a Bitcoin, the price of Teslas might go up significantly as well. Because one of the questions that I've mentioned on the podcast before, and I think it's a fun one to ask is the us dollar, or sorry, is Bitcoin going up or is the us dollar simply going down?

Daniel:

Right.

Gene:

Because it's a relative, it's a relative comparison. So we see this huge rise in the value of Bitcoin. But what if you drew that line as a horizontal flat line, and then you simply drew the value of the dollar as diminishing

Daniel:

Right. And people have done

Gene:

and who's to say that's not closer to reality, right? So with that in mind, if the dollar declines, then there's no reason the price of goods, wouldn't be. In much higher dollar amounts. And that maybe the price of a Tesla in Bitcoin today of let's say a model X is two Bitcoin two, three, four, five years from now, it might still be two Bitcoin, but it might be a million dollars. So I think from that standpoint Bitcoin is not just a good hedge, but it's a good indicator. Like even for people who don't hold Bitcoin, if you just pay attention to what the value of Bitcoin is, I think you start getting a better idea for the devaluation of the USDA.

Daniel:

Agreed. And I think that this is my personal opinion. Obviously the

Gene:

You're not speaking for some large corporation right now.

Daniel:

not that you know of don't take my advice and listen to the disclaimer at the end of the podcast. But I think that it's going to happen. Obviously you can see the startings of the dollar inflation happening and I think that's going to happen slowly over time until it's just going to be instant. So one series that I've read on the Unchained capital blog is the gradually then suddenly series by Parker Lewis, a really good series on The dollar crisis and Bitcoin and how it can take over. So that's the unchained-capital.com blog. Really recommend reading that and outlines all kinds of scenarios on how the Bitcoin can take over how the dollar is going to lose its value. And while I'm recommending things, here's another one for you, Lynn Alden, investment strategy. She has some really good pieces on Bitcoin and the valuation of the dollar and what really is backing the dollar. and one of the, one of the things that you can read by Lynn Alden is called the fraying Petro dollar. Really good. Another thing that I recommend reading And this one is a subscription thing. It's called a Marty's bent. And it's an email newsletter daily and he just sends either his opinions or news on what's happening in the Bitcoin atmosphere and anything that could be coming down the pipe or new applications. and then he also has a podcast which is a value for value enabled and on Sphinx chat, they have a tribe it's called tales from the crypt.

Gene:

That's funny. I love that.

Daniel:

it's

Gene:

I'm going to have to check it out. So let's take a quick opportunity to mention Spanx and the way that works, because that was really the first app that was podcasts enabled with Bitcoin donations. But it's also one that I think requires the highest degree of technical knowledge and the ability to use. So I really want to support those guys and I, and I like it, but I also recognize it as not a mass market app. But one of the cool features that Spanx has is an ability for people that have podcasts, or even if you don't have a podcast to essentially create a group. So if you think of it, in fact this came from the my interview with the the creator of that up is if you just think of Slack and then add the ability to send transactions via Bitcoin in Slack. And then also add podcasting to Slack. That's an easy way for people to imagine what's Finks. Is it because most people are familiar with Slack

Daniel:

I agree with you. Sphinxes It shows promise, but like you said, the technical obstacles in the way of adoption, or

Gene:

Yeah. And so like the people that are in my podcasts Frank's group, I am effectively treating them as beta testers to help me test stuff. So, I certainly appreciate donations. I appreciate when when people want to chat about topics I cover in there. But if I have a question or, this is where I will put, Hey guys, can you test this? Because that I know if people are already in Spanx and they figured out how to get into my group, which I don't publicize, then they're probably technologable enough to be really good. Beta testers.

Daniel:

right. The barrier of entry has its benefits

Gene:

Yeah. Yeah. It's self appointed. Okay. Yeah. It's like a self appointed beta tests are welcome. So I did want to jump back to a couple of things with you. So you have your own a Bitcoin node and lightening note as well. Right?

Daniel:

Correct. Yes.

Gene:

what was your motivation for getting those notes?

Daniel:

So my motivation for getting them was I've always wanted a dedicated Bitcoin machine. But before the the real prominence of lightening network there was no real benefit to it. You just plug in a machine and the only real benefit you would get before lightening network would be, you could verify your own transactions and you don't have to trust any other nodes out there. Um, but. Since I started learning more about Bitcoin in the last year or so. In the late part of 2020 I saw the rise in the use of the lightening network and all the applications that were becoming available and including Sphinx and the podcasting 2.0 developments. I wanted to be able to test and use that. So the features of Sphinx specifically and the lightening network in general were really the motivators for me to set it up and it adds actual value now instead of just

Gene:

And how would you describe that process? Like how many was it pretty straightforward? Did you use a pre built package solution? Did you do everything from scratch? What was your experience?

Daniel:

So I did not do everything from scratch. I could, if I wanted to, but I don't I used the raspy tablets Application the SD card image on my raspberry PI. So I ordered a new PI or did the screen, the hard drive enclosure and everything. And I would not recommend to any of the people I know in real life to do that. I ran into a lot of issues, setting it up. One of the things I had to do was make a modification to the boot dot TXT file for some special edge case for my specific hard drive enclosure. Otherwise it would just freeze and not work. And it took me about two weeks to figure that solution out. So, no I don't expect anyone else to be doing that anytime soon. At least with that specific image I did also with the same hardware and everything, while I was getting set up, I tried out role. Unfortunately I ran into the same issue with the hard drive enclosure, but Umbro at get umbro.com I believe. Highly recommend that I could I could have any of my friends set that up if they want to do all you do is you flashed the image on an SD card, plug it in and wait. As long as you have the hardware and you're good to go. You can go in and it's a web-based system, so you own, and you want to add syncs, strapped to it. You go in and click the Sphinx chat app. So I could if anyone's listening and they're not sure, but they want to get on

Gene:

Yeah. And I've heard other people mentioned that it's been the most user-friendly for techies way to do no. No. And right now I'm not aware of anybody just selling a. Pre-configured standalone box that literally you just plug in and then put your logging into and it works.

Daniel:

So with the software and everything on it.

Gene:

Yeah. Yeah.

Daniel:

Yeah. So that that kind of goes against the whole Bitcoin M O right? So it's, if you're buying that from somebody who's to say that they didn't add some backdoor to it, or there'll be able to take your keys after you set it up and just steal all your funds. So that could be why, but I, to your point, I don't see why someone hasn't built, like just a box where you buy the box and then

Gene:

I don't think that people that are buying a box w. Are going to care about a backdoor, honestly. They're going to be, they want to have the experience, but they're not people that are willing to jump through the hoops. So I think that market probably exists and I'm going to bet somebody will start selling fully pre-configured boxes that they will load up with the the blockchain before it gets shipped. They'll ship it to you. And so from that point, you turn it on and log in. You'll be able to, be fully online in a matter of hours instead of a matter of days with a box that you're installing software on.

Daniel:

I agree if that market doesn't exist right now, it won't be long before it does. And I assume that's why it hasn't already been done, so it's not quite there yet.

Gene:

Yeah. It may be still too difficult to explain the advantages to people that are willing to buy a box. That's reconfigured. yeah. Right. And we know that because there's probably now between iPhone and Android, at least 20 different apps available that function as your as your God, I'm blanking out of the year vault. It's just purely wallet or Walt apps that that don't rely on you connecting to, a particular note. It's something that you can just, it's essentially an off chain storage device, but it's not a hardware device. It's just an app running in your phone and there's tons of them and more and more coming online all the time. And who's to say all of those don't have back doors, right. And some of them do that's exactly right. Yeah. And we read about things like that. So my first I guess I don't know what to even call it. The first thing that I remember that is similar to Bitcoin was a short story. Whose name? I don't remember. It was a scifi story that I read probably in the late eighties, maybe early nineties, but probably in the late eighties. And the only thing that I remember about it was the currency was called spun deflects. And the short story was essentially about some guy that had I think he did some work, maybe help the buddy his do something and his buddy kind of lied to them and turned out he didn't have money. So he just wrote them an IOU. And this guy had this IOU from his buddy and then. Something ended up happening within a day or two later where he he ended up doing needing somebody else's help or getting something from somebody and then mentioned that he had this IOU from his buddy. And I he wished he had the cash for it. And this other person said, Oh I can, you can take that IOU that your buddy wrote. Cause I could actually use whatever was written on that app from him. But I don't care if I wait a week. If you like buy more of the blah-blah-blah that you have for, so essentially letting him pay with the IOU for a part of the purchase. And he thought that was surprising, but he did it. And it, it made the main character think that maybe more people are willing to accept IOUs. And so he decided to just to create a few of his own IOUs that's I will do whatever and I can't remember what the, whatever it is, but let's say is I will clean, clean all the toilets in your house. One time, something it's something generic that could be utilized by almost anybody. And again, to his surprise, more people that he'd run into were willing to accept his IOUs in lieu of a Fiat money and a two to accelerate through this story, the lesson through it, or the storyline was essentially in that he realized that once enough people had IOUs from him, They started actually trading his IOUs amongst each other. And so he would meet somebody who he'd never given an IOU to that would say, Oh yeah, I've got one over your IOUs for you to come and clean my bathrooms or whatever. And the guy said, well, let me know. We can get a time set up. It's I'm going to hang out too. Maybe I'll trade it for some other cash, or some other thing later. And his big realization came in that less than 1% of the people that ever got his IOUs ever wanted to utilize them for what was written on them. And so he started up essentially a little business. He actually hired people to just sit there and start writing IOUs, which had become the de facto means of exchange in lieu of Of the dollars or whatever the currency was in the story. And people just switched to using his IOUs for it. So what made me remember that is it's a story that it was the first story I've ever read. And it was a long time ago that effectively walked you through the process of creating a brand new currency, not backed by gold or a government that was simply adopted through a common trust in other people, and then spread because once enough people had started utilizing it, you just know that I can always use this as a form of payment. So I really don't care what the description says. The end thing that's promised on there is I just know that it has a certain value that other people are willing to accept. Well, does it though. As long as people are willing to trade it amongst themselves and he's no longer, in fact, I think at some point what he did is he had hired out a a company that would do the toilet cleaning on his behalf. And then he made an announcement that he was doing a, like a better deal, essentially for the toilet cleaning through what people that wanted to book it anytime during this year needed to do that bright now. And then you would get two toilet cleanings for one kind of deal. And even still very few people did that. Cause most people want it to just hang on to the IOUs because that's what they were now using as a means of payment. So I think that's a lesson that the fed learned a long time ago. And the reason that it was proposed that the us get off the gold standard anyway, is that that people are willing to just trade money without having something concrete, backing that money. And I'm sure the short story was written well after that, but it was, I, it was at the very latest, it was written in the eighties, but it could have been from the fifties too. You never know,

Daniel:

That's

Gene:

and I've searched for the word spawn to flex. And I'm sure I misspelled it because I cannot find the goddamn short story. Like it's it was published in the science fiction magazine of short stories. Eighties or early nineties, that's all I can narrow it down to. And I don't remember the name of it. I don't remember the character names. I don't remember any other keywords and I'm probably mispronouncing the currency, which was the sponsor flex. But I do remember the plot of the story and that was the certainly as Bitcoin emerged, it just reminded me and incidentally Bitcoin is not the first alternate currency that I've been I say not involved with per se, but that I'd been exposed to. Like there, there were other currencies that were not government backed that I had gotten to know the guys that were behind those currencies back in the day. And in fact, when Bitcoin came out, I was expecting that I knew some of the players early on about it because I'd already met people that were behind three or four other currencies. That were out there and not government back, they were essentially means of non-government barter. I did look up some of the folks that I was hanging out with. I think four of them were in prison and a couple of them were in prison in another country,

Daniel:

Yeah. The governments don't

Gene:

governments. Don't like when you get into their monopoly of creating a currency. No, that's not. No.

Daniel:

see why I'm to remain anonymous.

Gene:

Yeah. I think that was a great idea. Whoever that person was creating an alias was absolutely the right move and, it's, that's not just somebody intelligent enough in mathematics and programming, but also acutely aware of the the risk. Politically speaking of that. And so my guests, it was somebody that was not a youngster when they started that project, because generally people in their twenties don't think about things like that. They just right. They're going to run with it full speed ahead. So I think probably it's, she, 12 years ago, 13 years ago would have already been somebody in their forties minimal, this has been a longer episode, so we've probably wrap it up. But is there anything else you wanted to mention, or I know you're not representing any companies here. You don't have a product in the podcasting apps, but is there anything you want to promote? Anything

Daniel:

I have nothing

Gene:

you have nothing

Daniel:

don't have a social media following other than no agenda social. and I have nothing other than I have some links that I can give you for the show notes.

Gene:

Yeah, do that, send them over.

Daniel:

just to help people learn and read more, some good podcasts that I would recommend

Gene:

Yeah. And that's what it's all about, obviously. And I think we're both very much supporters of Bitcoin and also have stories of the early days being disappointed in that. So it's I think at this point it is come a damn long way. It's proven that it has the sustainability and maybe I'll be wrong. Maybe it never hits a million, but I just, I don't see a reason to get rid of it anytime before then. And it's kinda like the the guys that were buying up game stop. It's no, I'm, you get it in order to hold it, not in order to make a quick buck and sell it right away. It's a message, but I think beyond the message, there's also an inherent value in it. That is not necessarily seen by the average person. Who's not familiar with it. And as more people become familiar, then the price should go up.

Daniel:

I will say as a finishing note, that is one of the most frustrating things about understanding the whole market of Bitcoin and the technology and everything is talking to friends and family that refuse to understand and tell you how dumb you are. and I can't wait for the day and prove them wrong.

Gene:

Look, just tell them they're just like beanie babies. Let's just the digital beanie baby. That's all it is.

Daniel:

There is no difference.

Gene:

No same thing. Everybody uses fractional beanie babies to pay bills. Right? Exactly. All right, Daniel. I appreciate you being on and taking the time to jump on here and talk a little bit about Bitcoin. Even though you're not a developer, you're not a while. You're not a developer of any podcasting apps I should say. You're here to help to provide another perspective and opinion on this cool new tech that's happening. That we're all part of. And I appreciate that.