WEBVTT - Big Tech Stories of 2023: Crypto Competitors and Crime 0:00:04.519 --> 0:00:12.920 Welcome to tech Stuff, a production from iHeartRadio. Hey there, 0:00:12.960 --> 0:00:16.360 and welcome to tech Stuff. I'm your host, Jonathan Strickland. 0:00:16.360 --> 0:00:19.720 I'm an executive producer with iHeart Podcasts, and how the 0:00:19.800 --> 0:00:22.919 tech are you. As we close out twenty twenty three, 0:00:22.960 --> 0:00:25.640 I'm looking back on big stories of the year, and 0:00:25.680 --> 0:00:29.280 one of those is, of course, the legal downfall of 0:00:29.400 --> 0:00:34.519 one Sam Bankman Freed aka SBF, co founder of a 0:00:34.600 --> 0:00:39.120 couple of cryptocurrency companies, and following his come upance was 0:00:39.200 --> 0:00:44.320 that of his rival Chong Peng Zhao aka CZ, founder 0:00:44.440 --> 0:00:49.080 of Binance, that's the largest cryptocurrency exchange in the world. 0:00:49.479 --> 0:00:53.000 The two stories are interesting for many reasons. They are 0:00:53.159 --> 0:00:57.720 somewhat interconnected, so we're gonna take a closer look today. Also, 0:00:58.000 --> 0:01:02.120 we'll talk about the having of bitcoin, as in HA 0:01:02.480 --> 0:01:05.760 l v G, they're having a bitcoin. It's something that 0:01:05.800 --> 0:01:09.160 a lot of cryptocurrency journals are attempting to explain because 0:01:09.200 --> 0:01:13.240 it's coming up in twenty twenty four, and it's probably 0:01:13.319 --> 0:01:15.880 something that a lot of cryptospecific journals are trying to 0:01:15.920 --> 0:01:18.399 explain in an effort to prevent folks from getting the 0:01:18.440 --> 0:01:22.200 willies about investing in cryptocurrency. Because As I've said a 0:01:22.240 --> 0:01:25.360 lot of times, the thing that makes cryptocurrencies valuable is 0:01:25.400 --> 0:01:28.280 that people treat it as though it is valuable, and 0:01:28.280 --> 0:01:32.200 if folks start to doubt that it's valuable, it loses value. 0:01:32.319 --> 0:01:35.960 So there's a big incentive to reassure folks. But first 0:01:36.319 --> 0:01:39.760 let's talk about crime. So we're going to start with 0:01:39.920 --> 0:01:43.800 SBF and his companies Alimta Research and FTX, or I 0:01:43.840 --> 0:01:48.600 guess I should say his former companies because they stopped existing. 0:01:49.160 --> 0:01:52.520 So he co founded Alameda in twenty seventeen and then 0:01:52.600 --> 0:01:57.280 co founded FTX in twenty nineteen. Alimta Research was a 0:01:57.360 --> 0:02:01.800 trading firm, but instead of stocks, it'll allowed customers to 0:02:01.840 --> 0:02:07.040 invest in cryptocurrency itself. FTX, on the other hand, was 0:02:07.080 --> 0:02:10.640 a cryptocurrency exchange. So Alameda you might invest in a 0:02:10.760 --> 0:02:15.680 company that deals with cryptocurrency, and in FTX you could 0:02:15.800 --> 0:02:19.600 exchange one form of currency for another, and you could 0:02:19.600 --> 0:02:22.920 also trade in things like cryptotokens and their derivatives like 0:02:23.240 --> 0:02:27.160 in fts for example. The two companies were meant to 0:02:27.200 --> 0:02:29.440 be distinct, but would turned out that they were very 0:02:29.520 --> 0:02:33.519 much not treated as being distinct. So, like a lot 0:02:33.520 --> 0:02:38.320 of crypto exchanges, FTX minted its own in house tokens. 0:02:38.639 --> 0:02:43.200 They were called FTT. The company could award FTT to 0:02:43.360 --> 0:02:46.400 investors and to customers, and they could hold on to FTT, 0:02:47.200 --> 0:02:49.240 or they could use it to trade for other types 0:02:49.240 --> 0:02:54.399 of cryptocurrencies. One big investor in FTX was a competing cryptocurrency, 0:02:54.440 --> 0:02:59.200 that of Binance, So Binance held millions of dollars in 0:02:59.520 --> 0:03:03.240 ft T he tokens. By the autumn of twenty twenty one, 0:03:03.440 --> 0:03:08.040 ftx reached evaluation of twenty five billion with a b dollars, 0:03:08.400 --> 0:03:12.720 and SBF himself reached the status of billionaire. So for 0:03:12.720 --> 0:03:16.600 those of you who indulge in Shotenfreida, make yourselves real comfy, 0:03:16.639 --> 0:03:19.919 because he's going to have an alarming fall from grace. 0:03:20.760 --> 0:03:25.200 In twenty twenty two, cryptocurrencies in general experienced a significant 0:03:25.320 --> 0:03:29.400 drop in value. Bitcoin, which at one point had traded 0:03:29.440 --> 0:03:32.440 at a high of around sixty thousand dollars per token, 0:03:33.280 --> 0:03:37.640 was down to somewhere around twenty thousand dollars. Other crypto 0:03:37.680 --> 0:03:42.520 companies faced bankruptcy or dissolution as the value was dropping 0:03:42.600 --> 0:03:46.400 out of crypto for the time being, and SBF made 0:03:46.440 --> 0:03:49.000 kind of a name for himself by bailing out several 0:03:49.000 --> 0:03:51.760 companies that were in trouble. As it would turn out, 0:03:51.800 --> 0:03:56.160 this would only delay the existential crisis that those companies 0:03:56.280 --> 0:04:00.520 were facing. In November twenty twenty two, the website Coin 0:04:00.600 --> 0:04:03.360 Desk published a piece that would be the beginning of 0:04:03.440 --> 0:04:09.040 the end for FTX, Alimator Research, and SBF himself. The 0:04:09.120 --> 0:04:12.320 site published a leaked balance sheet from Alimator Research that 0:04:12.400 --> 0:04:16.560 showed it was relying heavily on FTT, the house token 0:04:16.720 --> 0:04:20.680 of FTX. This is kind of like saying everyone believes 0:04:20.720 --> 0:04:23.560 that you're a millionaire, but then it turns out that 0:04:23.600 --> 0:04:26.400 your vast wealth is actually just a whole bunch of 0:04:26.400 --> 0:04:29.880 little slips of paper upon which you have written one 0:04:30.080 --> 0:04:32.880 million dollars. It's kind of like an emperor has no 0:04:32.960 --> 0:04:36.560 clothes moment. And it also seemed to indicate that Alimator 0:04:36.640 --> 0:04:40.680 Research was leaning very heavily on FTX, and that in 0:04:40.720 --> 0:04:45.840 itself raised a lot of red flags. Binance, led by 0:04:45.920 --> 0:04:50.320 Chung Pang Xiao, you know, cz because these guys love themselves. 0:04:50.360 --> 0:04:54.159 Some initialisms said that Binance was going to sell off 0:04:54.240 --> 0:04:57.120 its holdings in FTX, so it was going to sell 0:04:57.120 --> 0:05:01.480 off all of its FTT tokens. Following that FTX customers 0:05:01.480 --> 0:05:04.720 in general start to withdraw their money from the exchange, 0:05:05.960 --> 0:05:08.600 and like in a couple of days, it reached six 0:05:08.720 --> 0:05:13.279 billion dollars worth of withdrawals, and it became somewhat clear 0:05:13.560 --> 0:05:16.400 that FTX wasn't going to have enough money to cover 0:05:16.600 --> 0:05:19.160 all customers' funds that were supposed to be in it. 0:05:19.680 --> 0:05:22.919 CZ said that finance would swoop in and bail out FTX, 0:05:23.360 --> 0:05:27.440 and then literally one day later essentially says just kidding 0:05:27.800 --> 0:05:30.560 and backs out of the promise. Three days after that, 0:05:30.800 --> 0:05:35.360 FTX filed for bankruptcy protection and SBF resigned as CEO. 0:05:35.560 --> 0:05:39.599 As a part of that, John J. Ray the Third, 0:05:39.800 --> 0:05:42.000 who is something of an expert when it comes to 0:05:42.080 --> 0:05:46.279 liquidating companies to retrieve as much value as possible to 0:05:46.360 --> 0:05:50.760 deliver to stakeholders, enters the picture. He takes over FTX 0:05:50.839 --> 0:05:53.560 and it begins to investigate what happened and what could 0:05:53.600 --> 0:05:58.320 be done to salvage whatever value remained. December twelfth, twenty 0:05:58.400 --> 0:06:02.200 twenty two, saw SBF arrested. At the time, he was 0:06:02.240 --> 0:06:05.840 in the Bahamas, which served as the headquarters for FTX, 0:06:06.520 --> 0:06:10.160 and he faced charges of fraud and conspiracy. He would 0:06:10.160 --> 0:06:13.920 be extradited to the US on December twenty first, twenty 0:06:13.960 --> 0:06:16.800 twenty two, and he would make his first appearance in 0:06:16.880 --> 0:06:20.520 federal court on December twenty second, and then would be 0:06:20.640 --> 0:06:25.000 released on a two hundred and fifty million dollars bond. 0:06:25.360 --> 0:06:28.800 Just a little reminder that folks like SBF live very 0:06:28.800 --> 0:06:32.600 different lives from compared to the rest of us. Anyway, 0:06:33.320 --> 0:06:36.520 He then goes to his parents' house in California, where 0:06:36.520 --> 0:06:40.120 he is entered into house arrest. This brings us up 0:06:40.160 --> 0:06:44.640 to this year, so SBF would not actually go to 0:06:44.680 --> 0:06:48.640 court and enter a plea until early January twenty twenty three, 0:06:48.960 --> 0:06:52.520 and then he pled not guilty. The judge scheduled his 0:06:52.640 --> 0:06:56.919 trial for October twenty twenty three. SBF then went on 0:06:57.040 --> 0:06:59.760 to write a blog post and claimed that none of 0:06:59.760 --> 0:07:03.279 this was his fault, that really the collapse of FTX 0:07:03.320 --> 0:07:07.799 and Alimated Research were due to problems in the crypto 0:07:07.800 --> 0:07:12.000 market in general, and that FTX was overextended but it 0:07:12.080 --> 0:07:16.880 wasn't doing anything illegal. Essentially, he was denying everything. Meanwhile, 0:07:17.360 --> 0:07:22.520 several Alameda and FTX executives or former executives, including SBF's 0:07:22.560 --> 0:07:26.400 own ex girlfriend, pled guilty to charge as a fraud 0:07:26.440 --> 0:07:29.640 and conspiracy, and they said essentially, oh yeah, no, no, 0:07:30.000 --> 0:07:33.920 we were toats doing illegal activity, and we knew about it, 0:07:34.200 --> 0:07:36.880 and we talked about it with each other. This, as 0:07:36.880 --> 0:07:40.640 you might imagine, didn't do much for SBF's own defense. 0:07:41.560 --> 0:07:45.239 On August eleventh, twenty twenty three, a US district judge 0:07:45.280 --> 0:07:50.440 reprimanded SBF on charges of witness tampering, so SBF's detention 0:07:50.680 --> 0:07:53.920 would no longer be house arrest because the judge had 0:07:53.960 --> 0:07:58.360 determined there was probable cause to suspect witness tampering. The 0:07:58.480 --> 0:08:04.720 judge remanded SBF to the Metropolitan Detention Center in Brooklyn, 0:08:04.800 --> 0:08:08.480 New York. I'm sure this was a shocking change of 0:08:08.560 --> 0:08:11.920 venue for him at the time. On October third, twenty 0:08:11.960 --> 0:08:15.680 twenty three, the trial began, and on October twenty eighth, 0:08:16.160 --> 0:08:20.080 SBF would take the stand. His testimony and behavior were 0:08:20.120 --> 0:08:23.200 not seen as being particularly helpful to getting a not 0:08:23.320 --> 0:08:26.520 guilty decision from the jury. He was called out multiple 0:08:26.560 --> 0:08:30.080 times for lying on the stand, and by this point 0:08:30.120 --> 0:08:34.120 the details of the Alameda FTX situation were much better 0:08:34.240 --> 0:08:37.959 understood than they were in the wake of the immediate crisis, 0:08:38.160 --> 0:08:40.679 So a big part of what was going on appeared 0:08:40.679 --> 0:08:44.360 to be that FTX sent funds to Alameda to help 0:08:44.400 --> 0:08:47.640 cover investments that had failed, so making sure that Alameda 0:08:47.679 --> 0:08:51.160 Research didn't go under. The problem was the money that 0:08:51.280 --> 0:08:56.880 FTX was funneling to Alameda technically belonged to ftx's own customers, 0:08:57.120 --> 0:09:00.160 and FTX didn't alert them or get permission for the transfer. 0:09:00.400 --> 0:09:04.240 And that's a big old fraud issue. So what was 0:09:04.520 --> 0:09:07.640 the best guess was that the folks at FTX thought, well, 0:09:08.200 --> 0:09:12.040 for the time being, let's cover Alameda's debts with FTX 0:09:12.200 --> 0:09:15.880 money from FTX customers, and then we'll return the money 0:09:16.200 --> 0:09:19.040 once Alameda recovers, and no one will be the wiser, 0:09:19.120 --> 0:09:21.480 and as long as no one asks for their money 0:09:22.280 --> 0:09:25.320 will be fine. Because we can't give everyone their money 0:09:25.320 --> 0:09:27.040 back because we don't have it anymore, we gave it 0:09:27.080 --> 0:09:30.680 to Alameda. On November two, twenty twenty three, a year 0:09:31.080 --> 0:09:34.760 to the day when Coin Desk published that damning report 0:09:34.800 --> 0:09:38.360 on FTX and Alameda, SBF had to face the jury. 0:09:38.760 --> 0:09:41.160 It took the jury less than five hours to find 0:09:41.280 --> 0:09:47.160 SBF guilty on seven counts of conspiracy and fraud. SBF 0:09:47.720 --> 0:09:52.240 faces sentencing this coming year on March twenty eighth, twenty 0:09:52.360 --> 0:09:55.640 twenty four. So he's been found guilty, but his sentencing 0:09:55.679 --> 0:09:59.160 won't be until March of twenty twenty four. His legal 0:09:59.200 --> 0:10:02.400 team actually try to have that sentencing delayed, but the 0:10:02.480 --> 0:10:04.200 judge had none of it and said, nope, it's going 0:10:04.280 --> 0:10:07.960 to go forward as planned, and SBF could face a 0:10:08.120 --> 0:10:13.920 maximum sentence of one hundred and ten years in jail. Now. 0:10:14.720 --> 0:10:16.920 I don't think anyone expects him to get the max, 0:10:18.000 --> 0:10:21.240 but the general consensus is that, unlike a lot of 0:10:21.240 --> 0:10:24.080 his fellow wealthy criminals, including one we're going to talk 0:10:24.120 --> 0:10:27.840 about after the break, he may face significant jail time. 0:10:27.960 --> 0:10:31.000 And we're talking about time that's measured in decades, not 0:10:31.120 --> 0:10:34.280 in years. And it is possible that the judge could 0:10:34.280 --> 0:10:36.280 throw the book at him and give him the maximum 0:10:36.440 --> 0:10:39.320 sentence because SBF was found to have light on the 0:10:39.400 --> 0:10:42.760 stand in court and judges typically don't really like that 0:10:43.000 --> 0:10:45.599 very much. All right, So that gets us up to 0:10:45.600 --> 0:10:47.760 speed with SBF. We're going to take a quick break. 0:10:47.760 --> 0:10:50.800 When we come back, we'll switch gears and talk about CZ. 0:11:02.120 --> 0:11:04.559 All right, we're back. It's time to talk about CZ. 0:11:04.880 --> 0:11:07.679 And as I said earlier, his company Binance is the 0:11:07.800 --> 0:11:12.040 largest cryptocurrency exchange in the world and it's not even close. 0:11:12.480 --> 0:11:15.680 According to coin market Cap, Binance has a daily trading 0:11:15.760 --> 0:11:19.520 volume of around eighteen billion dollars per twenty four hours. 0:11:20.000 --> 0:11:24.360 In second place is an exchange called ueex, which has 0:11:24.480 --> 0:11:27.600 nine point six billion dollars per twenty four hour period, 0:11:27.840 --> 0:11:30.240 So Binance is almost twice as large if we just 0:11:30.280 --> 0:11:33.160 go by trading volume. Now, there are other metrics we 0:11:33.160 --> 0:11:37.240 could use to measure how big a cryptocurrency exchange is, 0:11:37.720 --> 0:11:40.640 but generally speaking, Binance is the largest and everyone else 0:11:40.720 --> 0:11:44.720 is just fighting for second place. So what's the legal 0:11:44.760 --> 0:11:48.000 issue with CZ and Binance? Well, it largely deals with 0:11:48.040 --> 0:11:52.120 how CZ was pretty careful to locate Binance outside of 0:11:52.200 --> 0:11:55.840 US jurisdiction and then get up to some shady business. 0:11:55.920 --> 0:11:58.480 In fact, it's a little bit of a mystery as 0:11:58.520 --> 0:12:01.800 to where Binance proper has its headquarters at any given time, 0:12:01.840 --> 0:12:04.560 because it has bounced around a bit. There is a 0:12:04.760 --> 0:12:08.040 US based version of Binance, one that actually has a 0:12:08.320 --> 0:12:12.320 more narrow list of features and opportunities in order to 0:12:12.559 --> 0:12:17.719 be in compliance with US law, So technically speaking, American 0:12:17.760 --> 0:12:20.520 citizens are only supposed to be able to access the 0:12:20.720 --> 0:12:25.079 US version of Binance, which in itself is not the 0:12:25.120 --> 0:12:28.360 full version of finance that everyone else can use. However, 0:12:28.400 --> 0:12:30.600 it was an open secret that if you had the 0:12:30.679 --> 0:12:33.160 money and the connections, you could engage with the quote 0:12:33.240 --> 0:12:36.920 unquote real binance, even if you were an American citizen. 0:12:37.480 --> 0:12:40.600 As Orwell might have put it, All Americans are created equal, 0:12:40.640 --> 0:12:44.000 but some are more equal than others, all right. So 0:12:44.480 --> 0:12:47.920 US authorities had serious concerns about binance, and those date 0:12:48.000 --> 0:12:52.840 back many years. There were concerns like money laundering, fraud, 0:12:53.440 --> 0:12:58.160 violating international sanctions, illegal money transfers, and stuff like this. 0:12:58.920 --> 0:13:02.040 Because a lot of criminals, such as say black hat hackers, 0:13:02.280 --> 0:13:05.480 will use cryptocurrency as their preferred way to be paid 0:13:05.640 --> 0:13:09.040 and to store wealth, and because CZ positioned binance in 0:13:09.080 --> 0:13:12.360 a way so it was beyond reach of US authorities, 0:13:12.679 --> 0:13:15.160 they worried that binance was playing a vital role in 0:13:15.160 --> 0:13:18.280 criminal activity. It doesn't do you any good if you 0:13:18.280 --> 0:13:20.640 make a whole lot of money illegally, but then you 0:13:20.679 --> 0:13:22.839 don't have any way to spend that money. You need 0:13:22.880 --> 0:13:26.200 a way to realize the value of your ill gotten 0:13:26.280 --> 0:13:30.640 gains without being tied to how you got that money 0:13:30.640 --> 0:13:32.480 in the first place. So you need some sort of 0:13:32.640 --> 0:13:36.719 money laundering. You know, maybe you're funding illegal activities overseas. 0:13:37.000 --> 0:13:39.120 You need to get a way to get that money 0:13:39.160 --> 0:13:42.880 over to your destination. Like there are lots of issues 0:13:43.120 --> 0:13:46.959 with handling money if you are involved in criminal activities, 0:13:47.240 --> 0:13:49.920 and US authorities were concerned that Binance was making it 0:13:49.960 --> 0:13:52.320 easier for the criminals to do that kind of stuff. 0:13:53.280 --> 0:13:56.520 So the authorities had started to investigate Binance all the 0:13:56.559 --> 0:13:59.480 way back in twenty eighteen, but it was really this 0:13:59.679 --> 0:14:02.680 year twenty twenty three when things started to come to 0:14:02.720 --> 0:14:05.680 a head. So in March twenty twenty three, the US 0:14:05.800 --> 0:14:12.800 Commodity Futures Training Commission or CFTC brought civil charges against Binance. 0:14:12.840 --> 0:14:15.840 They accused the company of deliberately failing to put anti 0:14:15.920 --> 0:14:20.960 money laundering measures in place and thus effectively allowing money 0:14:21.000 --> 0:14:24.280 laundering to take place on the platform. Then, in June 0:14:24.320 --> 0:14:27.800 twenty twenty three, the US Securities in Exchange Commission or 0:14:27.960 --> 0:14:33.440 SEC brought thirteen charges against CZ and Binance, accusing them 0:14:33.480 --> 0:14:36.920 of securities law violations, and not to be outdone, the 0:14:37.000 --> 0:14:40.680 US Department of Justice brought criminal charges against Binance and 0:14:40.720 --> 0:14:44.720 CZ in late twenty twenty three. These charges include the 0:14:44.720 --> 0:14:48.280 failure to institute any money laundering practices and that Binance 0:14:48.320 --> 0:14:51.120 played a pivotal role in dark web operations, acting as 0:14:51.120 --> 0:14:54.520 a sort of clearinghouse for ill gotten gains. On November 0:14:54.560 --> 0:14:58.440 twenty first, twenty twenty three, CZ and Binance entered a 0:14:58.480 --> 0:15:02.680 guilty plea to the charges. As part of this deal, 0:15:02.800 --> 0:15:06.760 CZ would step down as Binance CEO. He also is 0:15:06.880 --> 0:15:09.880 ordered to pay a fine like two hundred million dollars 0:15:09.960 --> 0:15:13.360 in fines, and he faces time in prison, but his 0:15:13.520 --> 0:15:19.400 maximum sentence is one century less than what SBF could face. 0:15:19.880 --> 0:15:22.160 SBF could receive up to one hundred and ten years 0:15:22.200 --> 0:15:26.000 in a sentence, but CZ the max. It's just ten years, 0:15:26.240 --> 0:15:29.440 which is wild right because SBF was found guilty of 0:15:29.480 --> 0:15:33.880 fraud and conspiracy. CZ pleaded guilty to charges that essentially 0:15:33.880 --> 0:15:37.680 said he allowed massive criminal activity to happen across his platform, 0:15:37.880 --> 0:15:43.040 activity that potentially ranges from ransomware hackers to arms dealers, 0:15:43.160 --> 0:15:47.520 to terrorism to human trafficking. And he faces ten years 0:15:47.600 --> 0:15:51.720 versus SBFS one hundred ten years. What a world anyway, 0:15:52.120 --> 0:15:54.080 Finance itself will have to pay a fine of four 0:15:54.120 --> 0:15:57.800 point three billion with a B dollars, but it will 0:15:57.880 --> 0:16:02.720 still continue to exist just without CZ as CEO. So 0:16:03.280 --> 0:16:06.640 the sec case that one's still pending, so we're not 0:16:06.680 --> 0:16:08.680 out of the woods yet. There could be even more 0:16:08.800 --> 0:16:12.080 charges and penalties laid down before it's all said and done. 0:16:12.440 --> 0:16:15.360 Now that wraps up our look on binance. Let's now 0:16:15.480 --> 0:16:18.520 spend just a couple of minutes talking about bitcoin, having 0:16:19.240 --> 0:16:22.520 so part of the design of bitcoin involves how new 0:16:22.560 --> 0:16:26.760 bitcoins come into existence. Technically, computers that are connected to 0:16:26.760 --> 0:16:30.520 the Bitcoin network are competing with each other to mine 0:16:30.800 --> 0:16:34.479 the next batch of bitcoin that then get released into circulation. 0:16:34.880 --> 0:16:37.640 There's a finite number of bitcoin that will ever exist, 0:16:37.760 --> 0:16:41.280 which is twenty one million bitcoin, and in an attempt 0:16:41.320 --> 0:16:44.600 to control the release of the currency into circulation, the 0:16:44.680 --> 0:16:49.480 amount awarded per block mined in the bitcoin blockchain will 0:16:49.560 --> 0:16:53.280 change over time. Essentially it gets cut in half every 0:16:53.480 --> 0:16:57.560 four years. The number of release bitcoin will reduce by 0:16:57.560 --> 0:17:00.160 half each time this happens. And when bitcoin first lawn, 0:17:00.800 --> 0:17:03.560 if you were successful in mining a block on the blockchain, 0:17:03.920 --> 0:17:07.760 you would receive fifty bitcoin. Now that's worth a fortune today, 0:17:07.800 --> 0:17:10.960 but back then bitcoin was worth very little, like fractions 0:17:11.000 --> 0:17:13.840 of a penny, so it wasn't really seen as a 0:17:13.880 --> 0:17:17.919 lot when it was first launched. These days, that's a 0:17:18.000 --> 0:17:21.480 huge amount of money, right, But after the four years 0:17:21.520 --> 0:17:24.280 of folks mining bitcoin in the early days, the amount 0:17:24.320 --> 0:17:28.040 then reduced to twenty five bitcoin per successful mining. Then 0:17:28.080 --> 0:17:31.800 we get down to twelve point five bitcoin, then most recently, 0:17:31.880 --> 0:17:35.679 in fact, currently it's six point to five bitcoin per block. 0:17:35.720 --> 0:17:40.720 Mind this actually reminds me of the paradoxical thought experiment. 0:17:40.800 --> 0:17:43.040 Let's say that you're in a room and there's a 0:17:43.080 --> 0:17:46.920 door on one end of the room, and you take 0:17:46.960 --> 0:17:49.879 a step toward the door, and then you take a 0:17:49.920 --> 0:17:52.600 half step, then you take a quarter step, and so on, 0:17:52.680 --> 0:17:56.639 so you half the distance you travel with each step forward. 0:17:56.880 --> 0:17:59.960 You're always moving forward, but you never reach the door. 0:18:00.920 --> 0:18:03.880 That's kind of similar to how bitcoin releases happen. It's 0:18:03.880 --> 0:18:06.760 not exactly the same, it's not truly apples apples, but 0:18:06.760 --> 0:18:10.080 it's close anyway. We'll leave Zeno in his dichotomy behind 0:18:10.119 --> 0:18:12.879 for the moment. As a record this, the value of 0:18:12.920 --> 0:18:15.720 bitcoin stands at a little more than forty three thousand 0:18:15.760 --> 0:18:18.600 dollars per coin, which means if you were to mine 0:18:18.640 --> 0:18:20.720 the next block, you would get six point two to 0:18:20.720 --> 0:18:24.000 five bitcoin, which means you would have more than a 0:18:24.080 --> 0:18:28.200 quarter of a million dollars worth of bitcoin per block. Mind. 0:18:28.600 --> 0:18:32.240 This is what drives the insanely competitive bitcoin mining community, 0:18:32.680 --> 0:18:35.320 as the same community known to consume more electricity than 0:18:35.320 --> 0:18:38.520 some countries managed to do in a year. It's because 0:18:39.280 --> 0:18:42.000 mining one block nets you about a quarter of a 0:18:42.040 --> 0:18:44.520 million dollars and a new block is ready to be 0:18:44.600 --> 0:18:49.520 mined every ten minutes. That's a huge incentive to get 0:18:49.560 --> 0:18:52.960 involved in bitcoin mining. But next year the number of 0:18:52.960 --> 0:18:56.879 bitcoins awarded will have again down to three point one 0:18:57.040 --> 0:19:00.360 two five, which means, let's say that the value coin 0:19:00.400 --> 0:19:03.720 remains the same, it's still at around forty three thousand dollars. 0:19:04.040 --> 0:19:06.280 If you mind a block, you would receive the equivalent 0:19:06.320 --> 0:19:09.160 of one hundred and thirty four thousand bucks and some change. 0:19:09.440 --> 0:19:12.560 It's still a princely sum for ten minutes of work, 0:19:12.800 --> 0:19:14.720 but it's a huge drop from a quarter of a 0:19:14.760 --> 0:19:17.720 million dollars, and so there are now questions as to 0:19:17.960 --> 0:19:22.439 how this might affect bitcoin. Will miners get discouraged and 0:19:22.520 --> 0:19:26.960 drop out, Because to be competitive in bitcoin mining, you 0:19:27.000 --> 0:19:31.960 have to run very sophisticated and very expensive computer networks 0:19:32.200 --> 0:19:34.720 to be in the running. Otherwise you're just going to 0:19:34.800 --> 0:19:37.399 lose out to someone who's got a faster computer system 0:19:37.440 --> 0:19:41.119 than you. Do. Will they drop out because now the 0:19:41.200 --> 0:19:44.680 amount of money rewarded will be less, and so it'll 0:19:44.680 --> 0:19:47.960 be harder to sustain the mining operation. It just won't 0:19:48.000 --> 0:19:51.000 make a sense from a return on investment perspective. Or 0:19:51.040 --> 0:19:54.000 will new miners come in with less powerful rigs and 0:19:54.040 --> 0:19:56.680 then fill in the gap and thus keep the thing 0:19:56.760 --> 0:19:58.920 running at more or less the same pace, but now 0:19:59.080 --> 0:20:03.359 with less computer power dedicated to it. It's hard to say. 0:20:04.200 --> 0:20:07.520 Will the value of bitcoin fall and thus once it 0:20:07.560 --> 0:20:12.360 starts to fall, it disincentivizes even more people from participating. Well, 0:20:12.359 --> 0:20:15.240 here's the truth of the matter. No one really knows yet. 0:20:16.119 --> 0:20:18.160 There are still folks who say that bitcoin will hit 0:20:18.200 --> 0:20:20.480 one hundred thousand dollars per coin before the end of 0:20:20.520 --> 0:20:22.919 this year, and we ain't got long left. By the 0:20:22.920 --> 0:20:25.320 time you listen to this. The year is ending, and 0:20:26.040 --> 0:20:29.119 I would be shocked if it went up in value 0:20:29.119 --> 0:20:32.520 by sixty grand by the time this episode publishes. So 0:20:32.520 --> 0:20:36.240 we'll see anyway. That's the wrap up on SBF on 0:20:36.440 --> 0:20:39.400 CZ and they're legal woes as well as the upcoming 0:20:39.480 --> 0:20:43.560 having of bitcoin. We'll see where things go. You know, 0:20:43.600 --> 0:20:47.280 it's so hard to determine where things are headed with cryptocurrencies, 0:20:47.880 --> 0:20:52.520 but I remain skeptical of them in general. But you know, 0:20:52.520 --> 0:20:55.520 I'm a grouchy old man, so that's always going to 0:20:55.600 --> 0:20:57.720 be the case. I hope you all have a happy 0:20:57.760 --> 0:21:01.160 New Year. I hope you're healthy and say and surrounded 0:21:01.160 --> 0:21:04.560 by loved ones. And I'll talk to you again really soon. 0:21:10.119 --> 0:21:14.920 Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio, 0:21:15.240 --> 0:21:18.960 visit the iHeartRadio app, Apple Podcasts, or wherever you listen 0:21:19.000 --> 0:21:20.040 to your favorite shows.