1 00:00:04,440 --> 00:00:12,200 Speaker 1: Welcome to text, a production from I Heart Radio. Hey there, 2 00:00:12,240 --> 00:00:15,800 Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland. 3 00:00:15,960 --> 00:00:18,759 Speaker 1: I'm an executive producer with I Heart Radio and how 4 00:00:18,800 --> 00:00:21,920 Speaker 1: the tech are you? So we're continuing to look back 5 00:00:22,200 --> 00:00:26,520 Speaker 1: on the big tech news stories of two as we 6 00:00:27,160 --> 00:00:30,280 Speaker 1: round out the year. And of course you'll already know 7 00:00:30,400 --> 00:00:33,360 Speaker 1: what this episode covers, because I'm sure I titled it 8 00:00:33,479 --> 00:00:36,360 Speaker 1: in a way that reveals it. But just in case, 9 00:00:36,680 --> 00:00:39,880 Speaker 1: I thought I would try my hand at a little theater. 10 00:00:42,200 --> 00:00:46,879 Speaker 1: Now is the winter of our crypto coin, made even 11 00:00:46,920 --> 00:00:51,400 Speaker 1: worse by Sam Bankman freed, and all the doubts that 12 00:00:51,600 --> 00:00:55,200 Speaker 1: lowered upon n f T s now cross the blockchain 13 00:00:55,400 --> 00:01:00,080 Speaker 1: entire are laid. Now are our wallets, but home for 14 00:01:00,320 --> 00:01:05,440 Speaker 1: moths are sub bredits filled with bros calling hoddle our 15 00:01:05,840 --> 00:01:12,360 Speaker 1: stern skeptics, doth say, I told e thus, dreadful partners, 16 00:01:12,400 --> 00:01:18,600 Speaker 1: asking where the hell is our money? Okay, my apologies 17 00:01:18,640 --> 00:01:23,800 Speaker 1: to you and to a certain master Shakespeare, But honestly, 18 00:01:23,800 --> 00:01:25,840 Speaker 1: I doubt I'm ever going to have the opportunity to 19 00:01:25,840 --> 00:01:29,039 Speaker 1: play Richard the third, And so that's the best I 20 00:01:29,040 --> 00:01:32,560 Speaker 1: will ever hope for. And yes, this episode we are 21 00:01:32,680 --> 00:01:35,760 Speaker 1: going to cover some of the big stories that revolved 22 00:01:35,800 --> 00:01:40,760 Speaker 1: around cryptocurrency in two and there is a lot to 23 00:01:40,800 --> 00:01:44,480 Speaker 1: go over, from crypto in general declining and value over 24 00:01:44,520 --> 00:01:49,080 Speaker 1: the year, to some cryptocurrencies making a big important change 25 00:01:49,080 --> 00:01:52,560 Speaker 1: in how they operate, to the infamous collapse of the 26 00:01:52,680 --> 00:01:57,520 Speaker 1: ft X crypto exchange, to related stuff like blockchain and 27 00:01:57,600 --> 00:02:01,080 Speaker 1: web three hype. You don't very much web three hype 28 00:02:01,160 --> 00:02:04,840 Speaker 1: right now? Huh, Well, we'll talk about why, but let's 29 00:02:04,840 --> 00:02:08,400 Speaker 1: get to it now. First up, I think it's important 30 00:02:08,440 --> 00:02:12,359 Speaker 1: to do a quick refresher on cryptocurrency. It's a term 31 00:02:12,440 --> 00:02:17,040 Speaker 1: that is used a lot often without very much explanation 32 00:02:17,400 --> 00:02:21,400 Speaker 1: as to what goes into cryptocurrency. People just think, oh, 33 00:02:21,440 --> 00:02:24,679 Speaker 1: it's a digital form of money, and so I think 34 00:02:24,680 --> 00:02:27,240 Speaker 1: we need to have a little bit of groundwork laid now. 35 00:02:27,280 --> 00:02:30,120 Speaker 1: The whole trend began thanks to a white paper that 36 00:02:30,240 --> 00:02:36,239 Speaker 1: proposed a blockchain, a shared ledger, and a digital currency 37 00:02:36,680 --> 00:02:42,720 Speaker 1: called bitcoin. Now, unlike other currencies, bitcoin wouldn't be dependent 38 00:02:42,840 --> 00:02:47,560 Speaker 1: upon a country's government or some central financial institution. It 39 00:02:47,600 --> 00:02:53,400 Speaker 1: would be a decentralized digital currency. Participants in the system 40 00:02:53,760 --> 00:02:59,400 Speaker 1: could even earn rewards by helping to verify bitcoin transactions. 41 00:02:59,480 --> 00:03:03,120 Speaker 1: So each transaction would join others and they would form 42 00:03:03,160 --> 00:03:07,680 Speaker 1: a block, and each block would be laid in front 43 00:03:07,720 --> 00:03:11,200 Speaker 1: of the last block in a chain of blocks. Thus 44 00:03:11,560 --> 00:03:17,400 Speaker 1: the block chain. The values represented within a block would 45 00:03:17,440 --> 00:03:20,840 Speaker 1: depend upon all the blocks that came before it. Now, 46 00:03:21,000 --> 00:03:23,640 Speaker 1: this would mean that no one would be able to 47 00:03:23,680 --> 00:03:29,440 Speaker 1: go back to earlier transactions and alter one of them, 48 00:03:29,480 --> 00:03:32,160 Speaker 1: you know, like in an effort to say return some 49 00:03:32,200 --> 00:03:34,480 Speaker 1: bitcoins they had they had spent. Let's say that you 50 00:03:34,520 --> 00:03:37,480 Speaker 1: had five bitcoins, you spent four of them, and then 51 00:03:37,600 --> 00:03:40,040 Speaker 1: later on you thought, I need more money. So what 52 00:03:40,120 --> 00:03:43,960 Speaker 1: if I just go in and erase that transaction and 53 00:03:44,080 --> 00:03:47,480 Speaker 1: magically give myself back the four bitcoins that I had spent. 54 00:03:47,800 --> 00:03:50,720 Speaker 1: That way, I could double spend the same bitcoins. Well, 55 00:03:51,240 --> 00:03:53,240 Speaker 1: if you did that, if you went back into the 56 00:03:53,240 --> 00:03:56,600 Speaker 1: blockchain and you changed that transaction, if you found a 57 00:03:56,640 --> 00:03:59,880 Speaker 1: way to do it, that would actually change all the 58 00:04:00,080 --> 00:04:03,760 Speaker 1: values of the blocks that came after it. And that 59 00:04:03,800 --> 00:04:06,320 Speaker 1: means everyone would know that you try to be very 60 00:04:06,440 --> 00:04:09,600 Speaker 1: very naughty. Now, there are a few different ways to 61 00:04:09,760 --> 00:04:15,120 Speaker 1: verify transactions and to award cryptocurrency units. The way Bitcoin 62 00:04:15,280 --> 00:04:19,320 Speaker 1: does it is called proof of work. Now we're going 63 00:04:19,360 --> 00:04:21,960 Speaker 1: to be super high level with this. But in this method, 64 00:04:22,680 --> 00:04:26,000 Speaker 1: computers in the system are essentially competing against each other 65 00:04:26,040 --> 00:04:30,760 Speaker 1: in order to solve a math problem. Or really it's 66 00:04:30,839 --> 00:04:35,760 Speaker 1: about guessing the right number, and it should take about 67 00:04:35,839 --> 00:04:39,039 Speaker 1: ten minutes to get the right answer on average. But 68 00:04:39,240 --> 00:04:41,720 Speaker 1: if computers start to take longer to answer it because 69 00:04:41,720 --> 00:04:45,120 Speaker 1: the problems are really hard, well, the system actually adjusts 70 00:04:45,160 --> 00:04:48,000 Speaker 1: to make those problems easier to get closer to that 71 00:04:48,080 --> 00:04:52,760 Speaker 1: ten minute benchmark. If it starts taking less time. If 72 00:04:52,839 --> 00:04:57,440 Speaker 1: systems are solving the problem earlier, well, then the system 73 00:04:57,520 --> 00:05:01,599 Speaker 1: makes the problems harder to solve. Now, a downside to 74 00:05:01,640 --> 00:05:05,960 Speaker 1: this approach is that as the currency increases in value, 75 00:05:06,480 --> 00:05:09,839 Speaker 1: there's a greater incentive for people to try and earn 76 00:05:10,200 --> 00:05:14,520 Speaker 1: the cryptocurrency by verifying these transactions. This is called mining. 77 00:05:15,240 --> 00:05:18,720 Speaker 1: So these people start pouring more money into their computer 78 00:05:18,800 --> 00:05:22,040 Speaker 1: systems so that they have more computer power to dedicate 79 00:05:22,040 --> 00:05:24,320 Speaker 1: to this, and they get an edge on all the 80 00:05:24,360 --> 00:05:28,280 Speaker 1: other competitors in the system. If the value keeps going up, 81 00:05:28,760 --> 00:05:34,479 Speaker 1: this becomes an escalating war between the various mining operations. 82 00:05:34,520 --> 00:05:38,000 Speaker 1: So with Bitcoin, the value at the beginning of two 83 00:05:38,600 --> 00:05:44,160 Speaker 1: was nearly forty eight thousand dollars per bitcoin, and each 84 00:05:44,240 --> 00:05:47,039 Speaker 1: time you verified a block of transactions, which again was 85 00:05:47,080 --> 00:05:50,520 Speaker 1: every ten minutes, you would get six point to five 86 00:05:50,560 --> 00:05:53,760 Speaker 1: bitcoins as a reward if you were the system that 87 00:05:53,839 --> 00:05:57,279 Speaker 1: got the problem right first, so that would be worth 88 00:05:57,400 --> 00:06:01,520 Speaker 1: around three hundred thousand dollars at the beginning of two, 89 00:06:02,120 --> 00:06:03,880 Speaker 1: and you would have a chance to do it all 90 00:06:03,920 --> 00:06:07,480 Speaker 1: over again in just ten minutes. So if you managed 91 00:06:07,640 --> 00:06:12,080 Speaker 1: to be the winning computer system for every single block 92 00:06:12,200 --> 00:06:15,080 Speaker 1: in a in a single day, you would end up 93 00:06:15,120 --> 00:06:19,839 Speaker 1: solving around one hundred forty four blocks at that point, 94 00:06:19,960 --> 00:06:23,359 Speaker 1: that would be nine d bitcoins, which would be worth 95 00:06:23,640 --> 00:06:26,960 Speaker 1: around forty three million, two hundred thousand dollars in US 96 00:06:27,080 --> 00:06:31,280 Speaker 1: dollars at the beginning of January two. That's a huge 97 00:06:31,320 --> 00:06:34,320 Speaker 1: amount of money right now. It would not be likely 98 00:06:34,560 --> 00:06:36,400 Speaker 1: for you to be able to do that. Chances are 99 00:06:36,600 --> 00:06:39,440 Speaker 1: other systems would be solving some of these throughout the day, 100 00:06:39,480 --> 00:06:41,920 Speaker 1: but even if you only needed a few, that's still 101 00:06:41,960 --> 00:06:44,560 Speaker 1: a huge amount of money. So it was no wonder 102 00:06:44,839 --> 00:06:49,240 Speaker 1: that there were entire massive networks dedicated to bitcoin mining. 103 00:06:49,400 --> 00:06:53,520 Speaker 1: Folks were taking over decommissioned power plants and then firing 104 00:06:53,520 --> 00:06:56,080 Speaker 1: them back up in order to provide the electricity needed 105 00:06:56,240 --> 00:07:01,120 Speaker 1: to power these customized mining systems that were designed to 106 00:07:01,160 --> 00:07:05,640 Speaker 1: beat out all the other competition. Bitcoin mining was creating 107 00:07:05,640 --> 00:07:08,680 Speaker 1: a strain on power grids. It was actually responsible for 108 00:07:08,760 --> 00:07:13,160 Speaker 1: more electricity usage than some countries create in an entire year, 109 00:07:13,360 --> 00:07:18,520 Speaker 1: which is just wild. But that's just the basics, right, 110 00:07:18,560 --> 00:07:21,160 Speaker 1: That's for the basics for bitcoin, and we will talk 111 00:07:21,160 --> 00:07:24,680 Speaker 1: about an alternative to proof of work later on in 112 00:07:24,720 --> 00:07:28,520 Speaker 1: this episode, but first, let's talk about an early setback 113 00:07:28,880 --> 00:07:32,880 Speaker 1: that happened for cryptocurrency sort of, and that would be 114 00:07:32,920 --> 00:07:37,280 Speaker 1: when Meta a k a. Facebook because that's what it 115 00:07:37,320 --> 00:07:39,120 Speaker 1: was called when it first came up with this plan 116 00:07:40,120 --> 00:07:44,480 Speaker 1: ended up ditching its plans for its own cryptocurrency. So 117 00:07:45,280 --> 00:07:49,080 Speaker 1: some backstory. Back in two thousand nineteen, Facebook, which was 118 00:07:49,280 --> 00:07:52,120 Speaker 1: not yet known as Meta because it adopted that name 119 00:07:52,120 --> 00:07:57,280 Speaker 1: in late announced that it was developing a cryptocurrency that 120 00:07:57,600 --> 00:08:02,800 Speaker 1: at that time was called liber up Now. Instantly, governments 121 00:08:02,840 --> 00:08:06,280 Speaker 1: and regulators around the world started to express concern that 122 00:08:06,400 --> 00:08:10,800 Speaker 1: such an influential tech company was essentially looking into ways 123 00:08:10,840 --> 00:08:15,080 Speaker 1: to print its own money. Even some crypto enthusiasts got 124 00:08:15,080 --> 00:08:18,400 Speaker 1: a little worried as Facebook's approach didn't really follow that 125 00:08:18,520 --> 00:08:24,240 Speaker 1: decentralized path that coins like bitcoin purported to follow, like, 126 00:08:24,560 --> 00:08:27,440 Speaker 1: you would have a centralized authority in the form of 127 00:08:27,440 --> 00:08:33,960 Speaker 1: Facebook or the association that Facebook would create. Now, Facebook 128 00:08:34,000 --> 00:08:37,720 Speaker 1: did not intend to be the soul core of Libra. Instead, 129 00:08:37,760 --> 00:08:42,360 Speaker 1: Facebook created a consortium and association, the Libra Association, a 130 00:08:42,360 --> 00:08:44,800 Speaker 1: group of companies that would serve as sort of the 131 00:08:44,840 --> 00:08:50,960 Speaker 1: custodians of this digital currency. And unlike coins such as bitcoin, 132 00:08:51,040 --> 00:08:54,480 Speaker 1: the average person would not be involved in verifying blocks 133 00:08:54,480 --> 00:08:58,839 Speaker 1: of transactions. You wouldn't have these groups of digital miners 134 00:08:59,559 --> 00:09:03,080 Speaker 1: building massive computer systems trying to beat each other out 135 00:09:03,120 --> 00:09:07,200 Speaker 1: to verify. Instead, the consortium would handle it. So you 136 00:09:07,280 --> 00:09:11,119 Speaker 1: had this against centralized authority in that sense. Now, Facebook 137 00:09:11,559 --> 00:09:14,720 Speaker 1: ended up creating a division called Calibra, and it was 138 00:09:14,800 --> 00:09:19,640 Speaker 1: dedicated to creating digital wallets that Facebook users would be 139 00:09:19,640 --> 00:09:23,840 Speaker 1: able to link to their Facebook accounts, and other members 140 00:09:23,880 --> 00:09:26,360 Speaker 1: of the consortium would also be able to make Libra 141 00:09:26,520 --> 00:09:33,200 Speaker 1: compatible digital wallets. But Facebook had a bad reputation already 142 00:09:33,240 --> 00:09:35,600 Speaker 1: in two thousand nineteen. It would only get worse in 143 00:09:37,200 --> 00:09:40,520 Speaker 1: and it hasn't exactly gotten better this year. So this 144 00:09:40,559 --> 00:09:43,080 Speaker 1: was a company known for not doing enough to keep 145 00:09:43,160 --> 00:09:48,880 Speaker 1: illegal content off its own platform. Governments, particularly the US government, 146 00:09:49,160 --> 00:09:52,960 Speaker 1: were understandably concerned that a company that had shown such 147 00:09:53,040 --> 00:09:58,120 Speaker 1: reluctance or incompetence take your pick when dealing with harmful 148 00:09:58,240 --> 00:10:02,320 Speaker 1: content now wanted to create its own currency. There were 149 00:10:02,440 --> 00:10:06,080 Speaker 1: multiple hearings to hold Facebook accountable to following laws and 150 00:10:06,120 --> 00:10:10,880 Speaker 1: creating safety measures that financial institutions have to have, right, 151 00:10:10,920 --> 00:10:15,080 Speaker 1: so they're essentially saying, hey, we require all the official 152 00:10:15,120 --> 00:10:19,040 Speaker 1: currency institutions in this country to follow these rules. You 153 00:10:19,040 --> 00:10:21,040 Speaker 1: will be expected to do the same. So now we 154 00:10:21,120 --> 00:10:23,880 Speaker 1: have to start making sure that you have the systems 155 00:10:23,880 --> 00:10:26,760 Speaker 1: in place to do that now. Towards the end of 156 00:10:27,960 --> 00:10:30,719 Speaker 1: Libra got a name change. It changed to d M, 157 00:10:31,800 --> 00:10:35,520 Speaker 1: partly to distance itself from Libra because Facebook's reputation was 158 00:10:35,559 --> 00:10:40,960 Speaker 1: getting uglier by the day. Facebook would follow this same 159 00:10:41,000 --> 00:10:44,160 Speaker 1: strategy in late one, that's when it changed its corporate 160 00:10:44,240 --> 00:10:48,360 Speaker 1: name to Meta, and then by early two the project 161 00:10:48,480 --> 00:10:50,880 Speaker 1: was pretty much dead in the water. There were a 162 00:10:50,880 --> 00:10:55,440 Speaker 1: lot of internal discussions and disagreements with the direction of 163 00:10:55,480 --> 00:11:01,000 Speaker 1: the currency company. After company dropped out of the Libra association, 164 00:11:01,840 --> 00:11:09,800 Speaker 1: and the opposing regulation authorities really had killed all momentum. 165 00:11:09,880 --> 00:11:14,240 Speaker 1: So without fanfare, Facebook dissolved the liber Association and it 166 00:11:14,400 --> 00:11:18,079 Speaker 1: sold off the i P connected to Libra slash d 167 00:11:18,280 --> 00:11:21,559 Speaker 1: M for about a d eighty million dollars, and Facebook's 168 00:11:21,559 --> 00:11:26,719 Speaker 1: attempt at making a cryptocurrency would fade into history. All right, Now, 169 00:11:26,760 --> 00:11:33,280 Speaker 1: let's talk about bitcoins declining value. So back in, Bitcoin 170 00:11:33,440 --> 00:11:37,199 Speaker 1: hits some truly monumental highs. It flirted with nearly seventy 171 00:11:37,280 --> 00:11:42,080 Speaker 1: thousand dollars per bitcoin at one point, but by late 172 00:11:42,160 --> 00:11:46,280 Speaker 1: January two it had dipped into the thirty five thousand 173 00:11:46,360 --> 00:11:50,040 Speaker 1: dollar territory, so it had lost nearly half its value 174 00:11:50,880 --> 00:11:54,520 Speaker 1: in about half a year. Now, the coin rallied a 175 00:11:54,559 --> 00:11:57,960 Speaker 1: bit in the spring of two early in the spring, 176 00:11:58,679 --> 00:12:01,680 Speaker 1: but by April things started to slope downhill, and the 177 00:12:01,720 --> 00:12:06,400 Speaker 1: currency gradually followed the performance of the stock market. Now, 178 00:12:06,440 --> 00:12:09,840 Speaker 1: I have long maintained that bitcoin and other cryptocurrencies aren't 179 00:12:10,000 --> 00:12:14,880 Speaker 1: really currencies. They're really more like commodities or investments, at 180 00:12:14,920 --> 00:12:18,640 Speaker 1: least that's how most people treat them. So it isn't 181 00:12:18,640 --> 00:12:22,680 Speaker 1: a big surprise that as people started to lose faith 182 00:12:22,960 --> 00:12:26,400 Speaker 1: in the stock market and that that started to suffer, 183 00:12:26,559 --> 00:12:30,240 Speaker 1: that we saw something similar happen in the cryptocurrency world. Now, 184 00:12:30,280 --> 00:12:34,520 Speaker 1: today the value of bitcoin is around sixteen eight hundred 185 00:12:34,520 --> 00:12:38,240 Speaker 1: dollars as a record. This that's still a lot of money, 186 00:12:38,480 --> 00:12:40,560 Speaker 1: you know. It still means that if you mind a 187 00:12:40,600 --> 00:12:44,240 Speaker 1: block on the Bitcoin blockchain, you would be awarded the 188 00:12:44,280 --> 00:12:47,760 Speaker 1: equivalent of a hundred five thousand dollars worth of bitcoin. 189 00:12:47,840 --> 00:12:50,800 Speaker 1: That's nothing to sneeze at. That's a lot of money, 190 00:12:50,840 --> 00:12:53,760 Speaker 1: but it is not the massive amount that you can 191 00:12:53,800 --> 00:12:57,200 Speaker 1: make back when bitcoin was at its height in one 192 00:12:57,280 --> 00:13:01,959 Speaker 1: let alone at early two And that has meant that 193 00:13:02,120 --> 00:13:05,520 Speaker 1: mining operations have really scaled back because the money coming 194 00:13:05,640 --> 00:13:10,880 Speaker 1: in from mining has declined, but the cost of operations hasn't. Right, 195 00:13:11,360 --> 00:13:15,319 Speaker 1: So as the money you bring in decreases but your 196 00:13:15,360 --> 00:13:18,360 Speaker 1: costs stay the same, it gets harder and harder to 197 00:13:18,440 --> 00:13:21,679 Speaker 1: cover those costs and eventually get to a point where 198 00:13:21,720 --> 00:13:24,080 Speaker 1: it could actually cost you more money to run your 199 00:13:24,080 --> 00:13:27,800 Speaker 1: computer systems. Then you will earn out of mining even 200 00:13:27,840 --> 00:13:31,960 Speaker 1: if you are really successful. So for the moment, the 201 00:13:32,080 --> 00:13:35,600 Speaker 1: runaway race to have the biggest, most powerful computer network 202 00:13:35,640 --> 00:13:39,320 Speaker 1: on the blockchain has taken a little break. You would 203 00:13:39,320 --> 00:13:43,160 Speaker 1: actually lose your shirt if you tried to follow that philosophy. Now, 204 00:13:43,800 --> 00:13:46,679 Speaker 1: also I should add there were some truly wild predictions 205 00:13:47,000 --> 00:13:49,439 Speaker 1: for what Bitcoin's value was going to be by the 206 00:13:49,520 --> 00:13:53,640 Speaker 1: end of this year before you know, all of two happened, 207 00:13:53,679 --> 00:13:56,079 Speaker 1: And to be fair, a lot did happen that people 208 00:13:56,120 --> 00:13:59,800 Speaker 1: just didn't foresee. For example, Russia invading Ukraine. We're gonna 209 00:13:59,800 --> 00:14:02,199 Speaker 1: talk about that in a future episode in this series. 210 00:14:02,720 --> 00:14:05,400 Speaker 1: But one of the effects that had was a massive 211 00:14:05,559 --> 00:14:10,760 Speaker 1: economic impact throughout the entire world. Well, no one foresaw 212 00:14:10,840 --> 00:14:14,440 Speaker 1: that when they were making uh predictions. And keep in 213 00:14:14,480 --> 00:14:18,600 Speaker 1: mind in bitcoin really did look like it was going 214 00:14:18,640 --> 00:14:22,760 Speaker 1: to the moon. Well one venture capitalist, Tim Draper, famous 215 00:14:22,880 --> 00:14:26,200 Speaker 1: venture capitalist, previously predicted that bitcoin was going to reach 216 00:14:26,240 --> 00:14:30,240 Speaker 1: an astounding two hundred fifty thousand dollars per coin by 217 00:14:30,240 --> 00:14:33,120 Speaker 1: the end of this year. A quarter of a million 218 00:14:33,160 --> 00:14:36,920 Speaker 1: dollars per coin. Now, obviously that didn't happen. Instead, like 219 00:14:36,960 --> 00:14:40,400 Speaker 1: I said, bitcoins hovering below seventeen thousand dollars as I 220 00:14:40,440 --> 00:14:44,000 Speaker 1: record this. But even as late as October of two, 221 00:14:44,040 --> 00:14:47,000 Speaker 1: analysts were guessing that was gonna end the year around 222 00:14:47,000 --> 00:14:50,480 Speaker 1: twenty two thousand dollars per coin. Unless we see some 223 00:14:50,480 --> 00:14:52,880 Speaker 1: pretty dramatic surges and value in the next ten days 224 00:14:52,960 --> 00:14:55,560 Speaker 1: or so, that's just not gonna happen. Now, I'm not 225 00:14:55,600 --> 00:14:59,040 Speaker 1: a financial expert, so it's possible it will happen, but 226 00:14:59,120 --> 00:15:01,000 Speaker 1: I will not be surpri eyes if it's closer to 227 00:15:01,160 --> 00:15:04,280 Speaker 1: between sixteen to eighteen thousand dollars per coin. Even if 228 00:15:04,320 --> 00:15:08,120 Speaker 1: it dropped a little below sixteen, I wouldn't be super surprised. Now, Draper, 229 00:15:08,120 --> 00:15:10,240 Speaker 1: for what it's worth, says that he now thinks that 230 00:15:10,240 --> 00:15:13,240 Speaker 1: bitcoin will hit two d fifty dollars. Is just going 231 00:15:13,280 --> 00:15:15,200 Speaker 1: to take until the middle of next year for that 232 00:15:15,280 --> 00:15:19,000 Speaker 1: to happen. But then there are also doomsday cults that 233 00:15:19,120 --> 00:15:22,640 Speaker 1: when the world continues to exist past it's predicted to 234 00:15:22,720 --> 00:15:26,160 Speaker 1: doomsday deadline, they just moved the deadline back a bit. 235 00:15:27,000 --> 00:15:28,840 Speaker 1: This feels kind of similar to that to me. But 236 00:15:28,880 --> 00:15:32,040 Speaker 1: then again, Draper is a very very rich man and 237 00:15:32,160 --> 00:15:36,200 Speaker 1: I am not. So maybe my doubts are unfounded and 238 00:15:36,200 --> 00:15:39,520 Speaker 1: I just can't see the way he can. We'll have 239 00:15:39,600 --> 00:15:42,320 Speaker 1: to wait until June and next year, I will say. 240 00:15:42,320 --> 00:15:44,880 Speaker 1: There are other investors like Mark Mobius who have had 241 00:15:44,880 --> 00:15:47,400 Speaker 1: a much more cynical outlook and think that bitcoin could 242 00:15:47,400 --> 00:15:50,000 Speaker 1: fall as low as ten thousand dollars a pop by 243 00:15:50,040 --> 00:15:54,440 Speaker 1: next year. Also, Mark Mobius is a great name Okay, 244 00:15:54,960 --> 00:15:58,280 Speaker 1: we've got a lot more to cover about cryptocurrencies in two, 245 00:15:58,320 --> 00:16:00,680 Speaker 1: but before we do that, let's take a quick break. 246 00:16:11,200 --> 00:16:16,880 Speaker 1: We're back now. Some cryptocurrencies are linked to fiat currency 247 00:16:17,040 --> 00:16:20,920 Speaker 1: or other real world assets. So the idea is that 248 00:16:21,000 --> 00:16:26,080 Speaker 1: these coins will maintain a more consistent value because they 249 00:16:26,120 --> 00:16:31,120 Speaker 1: are tied to things that have other ties that guarantee 250 00:16:31,280 --> 00:16:35,720 Speaker 1: their consistency, and we call these stable coins. There are 251 00:16:35,800 --> 00:16:39,640 Speaker 1: other cryptocurrencies that aren't linked to such things, and they 252 00:16:39,680 --> 00:16:42,680 Speaker 1: aren't linked to each other, at least not directly. However, 253 00:16:42,840 --> 00:16:46,440 Speaker 1: when one coin, especially a really influential one, starts to 254 00:16:46,480 --> 00:16:49,440 Speaker 1: go down in value, then you start to see other 255 00:16:49,560 --> 00:16:53,720 Speaker 1: coins follow suit. This is pretty common, so when Bitcoin 256 00:16:53,800 --> 00:16:57,400 Speaker 1: goes down, often you'll see other coins that are not 257 00:16:57,720 --> 00:17:01,920 Speaker 1: directly tied to Bitcoin go down to Now, maybe investors 258 00:17:01,920 --> 00:17:05,720 Speaker 1: are getting cold feet and they're losing confidence overall in cryptocurrency. 259 00:17:05,920 --> 00:17:09,200 Speaker 1: Maybe it's more of a reflection of the overall economy 260 00:17:09,240 --> 00:17:13,879 Speaker 1: and its movement. It's probably a combination of tons of factors, 261 00:17:13,880 --> 00:17:16,880 Speaker 1: but it means that two was a year where you'd 262 00:17:16,880 --> 00:17:21,480 Speaker 1: see various crypto values decrease, though most didn't have nearly 263 00:17:21,520 --> 00:17:24,680 Speaker 1: as far to fall as Bitcoin did. Let's talk about 264 00:17:24,680 --> 00:17:27,720 Speaker 1: a coin that made a long awaited change this year, 265 00:17:27,760 --> 00:17:32,040 Speaker 1: and I'm talking about Ethereum. Now, Ethereum is one of 266 00:17:32,080 --> 00:17:36,000 Speaker 1: the more popular and well known cryptocurrencies that doesn't happen 267 00:17:36,080 --> 00:17:40,360 Speaker 1: to be Bitcoin. It has always felt a bit more 268 00:17:40,480 --> 00:17:45,680 Speaker 1: accessible to the common investor. Back in early twenty while 269 00:17:45,680 --> 00:17:49,920 Speaker 1: bitcoins were worth like seven thousand dollars a pop, ethereum 270 00:17:50,240 --> 00:17:53,680 Speaker 1: was trading closer to a hundred thirty dollars. But by 271 00:17:53,720 --> 00:17:57,080 Speaker 1: the end of twenty ethereum was trading it around six 272 00:17:57,200 --> 00:18:00,480 Speaker 1: hundred dollars each and then in early twenty twenty one 273 00:18:00,480 --> 00:18:02,720 Speaker 1: it went up twice as high and it just kept 274 00:18:02,760 --> 00:18:06,280 Speaker 1: on climbing for a good long while. Now you may 275 00:18:06,280 --> 00:18:09,880 Speaker 1: have heard that cryptocurrency mining had a really big impact 276 00:18:10,040 --> 00:18:12,800 Speaker 1: on things like the graphics card market, and that is 277 00:18:12,840 --> 00:18:15,840 Speaker 1: true now for Bitcoin. The value of the currency had 278 00:18:15,880 --> 00:18:19,560 Speaker 1: grown so much that someone running even a network of 279 00:18:19,600 --> 00:18:23,639 Speaker 1: computers with screaming fast graphics cards just would not be 280 00:18:23,720 --> 00:18:26,800 Speaker 1: able to compete because other miners with deeper pockets had 281 00:18:26,800 --> 00:18:31,440 Speaker 1: moved on to purpose built circuits such as applications specific 282 00:18:31,520 --> 00:18:36,560 Speaker 1: integrated circuits or a s i C. But for cryptocurrencies 283 00:18:36,920 --> 00:18:41,720 Speaker 1: that weren't up to these astronomic values that Bitcoin was enjoying, 284 00:18:42,560 --> 00:18:46,040 Speaker 1: Miners were relying on computers with just powerful graphics processors 285 00:18:46,040 --> 00:18:50,080 Speaker 1: because that still made economic sense, and so Ethereum miners 286 00:18:50,400 --> 00:18:54,000 Speaker 1: were scooping up the best graphics cards really quickly, and 287 00:18:54,040 --> 00:18:58,480 Speaker 1: then they would either sell older ones or you know, 288 00:18:58,680 --> 00:19:01,480 Speaker 1: used ones at really high prices on the secondary market, 289 00:19:01,720 --> 00:19:05,320 Speaker 1: and gamers were faced with very few options when they 290 00:19:05,320 --> 00:19:08,440 Speaker 1: were trying to build out their gaming rigs. They couldn't 291 00:19:08,480 --> 00:19:12,480 Speaker 1: easily get new cards because miners or people who were 292 00:19:12,560 --> 00:19:16,240 Speaker 1: selling the cards to miners were gobbling them up, or 293 00:19:16,320 --> 00:19:18,960 Speaker 1: else they would have to pay a ridiculous premium on 294 00:19:19,000 --> 00:19:21,320 Speaker 1: top of the already high cost of these cards, like 295 00:19:22,359 --> 00:19:25,879 Speaker 1: sometimes well over twice as much as what they were 296 00:19:26,720 --> 00:19:31,120 Speaker 1: originally going to be sold at. But Ethereum was preparing 297 00:19:31,160 --> 00:19:35,360 Speaker 1: to switch how it awarded cryptocurrency. So it had been 298 00:19:35,440 --> 00:19:39,120 Speaker 1: operating on a proof of work system just like Bitcoin, 299 00:19:39,520 --> 00:19:42,920 Speaker 1: although it was it worked much faster than bitcoins ten 300 00:19:42,960 --> 00:19:46,280 Speaker 1: minutes per block, but it was instead going to make 301 00:19:46,320 --> 00:19:50,080 Speaker 1: a shift to something called proof of steak. So with 302 00:19:50,160 --> 00:19:53,800 Speaker 1: a proof of steak that's s T a k E. 303 00:19:54,840 --> 00:19:57,479 Speaker 1: With that kind of system, participants have to put up 304 00:19:57,520 --> 00:20:01,800 Speaker 1: a share of their own cryptocurrency holdings, that is the steak. 305 00:20:02,800 --> 00:20:06,480 Speaker 1: The system decides which stakeholder gets awarded new units of 306 00:20:06,480 --> 00:20:10,159 Speaker 1: cryptocurrency at the end of each block's verification, so this 307 00:20:10,240 --> 00:20:13,760 Speaker 1: system does not require the same massive amounts of computer 308 00:20:13,840 --> 00:20:16,640 Speaker 1: work that a proof of work system requires, and as 309 00:20:16,640 --> 00:20:20,040 Speaker 1: a consequence, we saw GPUs become more available and less 310 00:20:20,040 --> 00:20:23,680 Speaker 1: expensive because miners didn't need them anymore. So it took 311 00:20:23,720 --> 00:20:27,280 Speaker 1: a little bit of time, but gradually things settled down, 312 00:20:27,640 --> 00:20:30,000 Speaker 1: and a lot of former ethereum miners also had to 313 00:20:30,000 --> 00:20:32,399 Speaker 1: figure out if they were going to switch to mining 314 00:20:32,520 --> 00:20:36,160 Speaker 1: some other proof of work cryptocurrency, potentially at a much 315 00:20:36,160 --> 00:20:38,800 Speaker 1: lower value, which could mean that you know, your costs 316 00:20:38,920 --> 00:20:42,159 Speaker 1: eat into any profits you make, or if they were 317 00:20:42,200 --> 00:20:44,560 Speaker 1: just going to sell off their old gear. So a 318 00:20:44,600 --> 00:20:47,640 Speaker 1: lot of them chose to sell stuff off. Now, if 319 00:20:47,720 --> 00:20:51,080 Speaker 1: you are in the market for a GPU, personally, I 320 00:20:51,119 --> 00:20:55,880 Speaker 1: would recommend against buying a used mining rig. You might 321 00:20:55,920 --> 00:20:59,520 Speaker 1: get a top card from the previous generation of cards, 322 00:20:59,560 --> 00:21:03,680 Speaker 1: like the already eighty generation, but it will have been 323 00:21:03,800 --> 00:21:08,119 Speaker 1: used hard and these cards can and do burnout over time. 324 00:21:08,240 --> 00:21:10,760 Speaker 1: Plus they have moving parts like a lot of these 325 00:21:10,760 --> 00:21:13,320 Speaker 1: cards have their own cooling fans built into them, and 326 00:21:13,359 --> 00:21:16,760 Speaker 1: those are also going to get worn down. So personally, 327 00:21:16,800 --> 00:21:19,760 Speaker 1: I would suggest you don't go for a used GPU, 328 00:21:19,880 --> 00:21:21,960 Speaker 1: especially if you know it was used in a mining rig, 329 00:21:22,560 --> 00:21:25,359 Speaker 1: because you probably want a card that's gonna last you 330 00:21:25,400 --> 00:21:29,000 Speaker 1: for a good long while, and those just aren't guaranteed 331 00:21:29,040 --> 00:21:32,879 Speaker 1: to do that anyway. The proof of Steak branch of 332 00:21:32,880 --> 00:21:35,760 Speaker 1: Ethereum actually launched a couple of years ago, but it 333 00:21:35,800 --> 00:21:38,320 Speaker 1: was kind of almost like an a beta program, and 334 00:21:38,320 --> 00:21:43,280 Speaker 1: it wasn't until this September September two that the proof 335 00:21:43,320 --> 00:21:46,800 Speaker 1: of work branch of Ethereum would merge with the proof 336 00:21:46,880 --> 00:21:50,520 Speaker 1: of Steak branch and the whole thing would become proof 337 00:21:50,560 --> 00:21:54,320 Speaker 1: of Steak. So again, this event is called the merge 338 00:21:54,680 --> 00:21:58,879 Speaker 1: capital m So the GPU stuff is fairly recent news. 339 00:21:59,160 --> 00:22:03,280 Speaker 1: It's been pretty recent that you could actually get hold 340 00:22:03,440 --> 00:22:08,119 Speaker 1: of GPUs and pretty much at the manufactured suggested retail price, 341 00:22:08,280 --> 00:22:11,399 Speaker 1: which is a nice change of pace. Now. At its peak, 342 00:22:11,920 --> 00:22:14,760 Speaker 1: Etherory was worth more than four thousand, six hundred dollars 343 00:22:14,760 --> 00:22:20,400 Speaker 1: a coin. Now that was in November of Today, Ethereum's 344 00:22:20,480 --> 00:22:24,120 Speaker 1: value is closer to twelve hundred dollars per coin, so 345 00:22:24,160 --> 00:22:27,560 Speaker 1: it's still nearly ten times more valuable than it was 346 00:22:27,640 --> 00:22:30,359 Speaker 1: the beginning of So I don't want to make it 347 00:22:30,400 --> 00:22:34,359 Speaker 1: sound like Ethereum is like crashing and burning. It's still 348 00:22:35,119 --> 00:22:37,879 Speaker 1: way better than it was just two years ago, but 349 00:22:38,040 --> 00:22:40,800 Speaker 1: like Bitcoin and so many other cryptocurrencies, and has lost 350 00:22:40,840 --> 00:22:44,000 Speaker 1: a ton of value over the last year. And again, 351 00:22:44,040 --> 00:22:46,919 Speaker 1: that loss of value is a very complex issue. It 352 00:22:47,080 --> 00:22:50,560 Speaker 1: is tempting for me to say that people are generally 353 00:22:50,600 --> 00:22:54,400 Speaker 1: losing faith in cryptocurrency, and since the currency depends largely 354 00:22:54,520 --> 00:22:57,760 Speaker 1: upon people believing and then behaving as if it in 355 00:22:57,840 --> 00:23:01,320 Speaker 1: fact has value, well if they stopped believing, the value 356 00:23:01,320 --> 00:23:04,560 Speaker 1: goes away. But honestly, that's just not true, or at 357 00:23:04,600 --> 00:23:08,440 Speaker 1: least it's not the whole truth. Yes, many cryptocurrencies are 358 00:23:08,520 --> 00:23:12,240 Speaker 1: based on little more than how investors and miners and 359 00:23:12,280 --> 00:23:16,399 Speaker 1: participants are treating it, but external economic factors are also 360 00:23:16,640 --> 00:23:21,840 Speaker 1: at play, and ignoring that just means you're being dishonest. Now, 361 00:23:21,920 --> 00:23:24,440 Speaker 1: I think we started to get a feel for how 362 00:23:24,560 --> 00:23:28,840 Speaker 1: rough two was really going to be for cryptocurrencies back 363 00:23:29,000 --> 00:23:33,239 Speaker 1: in mid spring of this year. One early indication that 364 00:23:33,280 --> 00:23:36,160 Speaker 1: things were headed south was the collapse of a crypto 365 00:23:36,240 --> 00:23:40,760 Speaker 1: firm called Three Arrows Capital. So this company was based 366 00:23:40,760 --> 00:23:44,280 Speaker 1: out of Singapore at least until very recently when it 367 00:23:44,440 --> 00:23:48,639 Speaker 1: moved to Dubai before it imploded. And Three Arrows Capital 368 00:23:48,720 --> 00:23:51,399 Speaker 1: a k A. Three a C was a hedge fund 369 00:23:51,600 --> 00:23:56,080 Speaker 1: specializing an investment in cryptocurrencies, and it had been around 370 00:23:56,280 --> 00:23:59,360 Speaker 1: for a decade, so this was not some brand new company. 371 00:23:59,440 --> 00:24:02,040 Speaker 1: It had, you know, been around for ten years. But 372 00:24:02,119 --> 00:24:05,159 Speaker 1: by the spring of two the company had a billion 373 00:24:05,200 --> 00:24:08,440 Speaker 1: dollars in assets. That's impressive, but it also had more 374 00:24:08,480 --> 00:24:13,840 Speaker 1: than three billion dollars in debts. Oh. Now, as cryptocurrencies 375 00:24:13,880 --> 00:24:17,000 Speaker 1: began to decline in value, three a C was starting 376 00:24:17,040 --> 00:24:20,800 Speaker 1: to feel the pinch, but that pinch became crushing when 377 00:24:20,840 --> 00:24:25,240 Speaker 1: a couple of crypto coins collapsed. Those coins were Terra 378 00:24:25,640 --> 00:24:28,480 Speaker 1: U S D that's T E R R A so 379 00:24:28,680 --> 00:24:31,680 Speaker 1: Terra USD, which was shortened to just U S T 380 00:24:32,359 --> 00:24:36,000 Speaker 1: as its acronym or initialism, and then there was Luna, 381 00:24:36,200 --> 00:24:39,480 Speaker 1: and both of these called the Terra blockchain their home. 382 00:24:40,160 --> 00:24:43,040 Speaker 1: So Terra USD was supposed to be a stable coin 383 00:24:43,440 --> 00:24:46,840 Speaker 1: tied to the U S dollar through a very complicated 384 00:24:46,920 --> 00:24:53,119 Speaker 1: relationship with Luna, but in May two that complicated relationship 385 00:24:53,680 --> 00:24:59,879 Speaker 1: unraveled rapidly, and so the U S T coin, the 386 00:25:00,000 --> 00:25:04,000 Speaker 1: became unpegged to the US dollar. It no longer was 387 00:25:04,040 --> 00:25:07,720 Speaker 1: tied to the dollars value, and its value collapsed to 388 00:25:07,840 --> 00:25:12,439 Speaker 1: just ten cents per coin. The value of Luna dropped 389 00:25:12,440 --> 00:25:17,600 Speaker 1: to almost nothing. We're talking fractions of a penny, like 390 00:25:17,680 --> 00:25:22,160 Speaker 1: point zero zero zero zero some sense. Well, Three Arrow 391 00:25:22,280 --> 00:25:27,240 Speaker 1: Capital had unfortunately invested very heavily in Luna, so when 392 00:25:27,280 --> 00:25:30,919 Speaker 1: suddenly all that value just went away, it tore the 393 00:25:30,960 --> 00:25:35,240 Speaker 1: foundations out from underneath three A C. The company spiraled 394 00:25:35,240 --> 00:25:39,040 Speaker 1: into bankruptcy. The collapse of UST and Luna wiped out 395 00:25:39,080 --> 00:25:43,280 Speaker 1: more than forty billion dollars in investor wealth. I think 396 00:25:43,320 --> 00:25:47,080 Speaker 1: I've seen estimates between forty two and forty five billion dollars, 397 00:25:47,640 --> 00:25:50,640 Speaker 1: and when your estimates have a range of three billion, 398 00:25:51,200 --> 00:25:55,120 Speaker 1: things are bad now. It also tied off another stable 399 00:25:55,160 --> 00:25:58,760 Speaker 1: coin going into a crisis. That one was d e 400 00:25:58,920 --> 00:26:02,680 Speaker 1: I briefly got unpegged from the U. S dollar as 401 00:26:02,720 --> 00:26:06,000 Speaker 1: well and plunged in value by thirty percent, which really 402 00:26:06,040 --> 00:26:08,840 Speaker 1: made things worse. And you can look at the U 403 00:26:09,000 --> 00:26:11,800 Speaker 1: S T and Luna collapses as kind of the first 404 00:26:11,920 --> 00:26:15,840 Speaker 1: domino to set off a chain reaction in the crypto world. 405 00:26:16,119 --> 00:26:20,200 Speaker 1: In general, it caused three A C to implode, and 406 00:26:20,320 --> 00:26:22,639 Speaker 1: three A C happened to owe a lot of money 407 00:26:22,840 --> 00:26:27,240 Speaker 1: to a crypto lending company called Voyager Digital based on 408 00:26:27,320 --> 00:26:30,840 Speaker 1: New Jersey. So three A C was taking loans from 409 00:26:30,920 --> 00:26:34,959 Speaker 1: Voyager Digital in order to fund its various investments. So 410 00:26:35,000 --> 00:26:37,760 Speaker 1: when all of that collapsed, Voyager Digital was left holding 411 00:26:37,760 --> 00:26:40,080 Speaker 1: the bag. So when three A C went under, it 412 00:26:40,160 --> 00:26:42,560 Speaker 1: could not pay the money it owed to Voyager Digital, 413 00:26:42,560 --> 00:26:46,000 Speaker 1: and it defaulted on the loan and Voyager Digital in 414 00:26:46,000 --> 00:26:50,000 Speaker 1: turn was over extended, so it also began to spiral 415 00:26:50,080 --> 00:26:54,680 Speaker 1: into bankruptcy. Now, the hope for Voyager was to get 416 00:26:54,680 --> 00:26:58,560 Speaker 1: through bankruptcy, to manage its debts and its creditors, and 417 00:26:58,640 --> 00:27:02,040 Speaker 1: to eventually get throw own a lifeline by a different 418 00:27:02,080 --> 00:27:08,760 Speaker 1: crypto company. That company was drum roll please f t X. 419 00:27:09,560 --> 00:27:12,080 Speaker 1: We will talk about f t X more in a 420 00:27:12,080 --> 00:27:14,920 Speaker 1: bit in this episode. So the U, S T and 421 00:27:15,040 --> 00:27:20,040 Speaker 1: Luna collapse also undermined another crypto firm, another crypto lender 422 00:27:20,400 --> 00:27:24,760 Speaker 1: in fact, called Celsius Network. The company also entered into 423 00:27:24,800 --> 00:27:29,240 Speaker 1: bankruptcy in July of the bankruptcy courts were really busy 424 00:27:29,240 --> 00:27:33,040 Speaker 1: with cryptocurrency in July of this past year, so in 425 00:27:33,080 --> 00:27:36,359 Speaker 1: that bankruptcy process, there were some questions that were popping 426 00:27:36,440 --> 00:27:39,439 Speaker 1: up about how Celsius had been run as a company. 427 00:27:39,640 --> 00:27:41,840 Speaker 1: In fact, we're seeing lots of questions about lots of 428 00:27:41,880 --> 00:27:44,479 Speaker 1: crypto firms, because it turns out many of them were 429 00:27:44,560 --> 00:27:50,760 Speaker 1: run at least incompetently, if not outright unethically or badly. 430 00:27:51,880 --> 00:27:55,600 Speaker 1: So with Celsius, there have been allegations of fraud. There 431 00:27:55,600 --> 00:27:57,919 Speaker 1: have been some issues about how some customers may have 432 00:27:58,000 --> 00:28:02,280 Speaker 1: received preferential treatment over others, and the judge overseeing the 433 00:28:02,280 --> 00:28:06,919 Speaker 1: bankruptcy case has had concerns and so assigned an examiner 434 00:28:06,960 --> 00:28:10,760 Speaker 1: to look into Celsius's operations. There was even a fear 435 00:28:11,160 --> 00:28:14,199 Speaker 1: that the company was essentially operating as a Ponzi scheme, 436 00:28:15,400 --> 00:28:20,760 Speaker 1: whereas my colleague Chuck Bryant would say, it's a Ponzi scheme. Well, 437 00:28:20,760 --> 00:28:23,760 Speaker 1: in case you're not familiar with the term Ponzi scheme, 438 00:28:24,359 --> 00:28:29,760 Speaker 1: it's an unfortunately common scam in which someone running a 439 00:28:29,880 --> 00:28:33,920 Speaker 1: supposed business first gets a group of investors to pour 440 00:28:34,040 --> 00:28:37,000 Speaker 1: money into whatever the venture is, and the nature of 441 00:28:37,000 --> 00:28:41,640 Speaker 1: the venture doesn't really matter, it's just smoke screen. So 442 00:28:41,800 --> 00:28:45,120 Speaker 1: they get a first round of investments from people who think, 443 00:28:45,480 --> 00:28:47,720 Speaker 1: you know, oh this sounds like a good idea, or 444 00:28:47,760 --> 00:28:49,760 Speaker 1: I believe in this person or whatever, so they put 445 00:28:49,760 --> 00:28:54,160 Speaker 1: their money into it. Then the scam artist starts looking 446 00:28:54,160 --> 00:28:57,560 Speaker 1: for a second round of investors and convinces them to 447 00:28:57,640 --> 00:29:02,280 Speaker 1: put money into the venture the supposed company. Then they 448 00:29:02,400 --> 00:29:04,760 Speaker 1: use some of the money that's coming from the second 449 00:29:04,840 --> 00:29:08,560 Speaker 1: round of investors to pay out some returns to the 450 00:29:08,680 --> 00:29:11,840 Speaker 1: first round of investors. So the first round of investors 451 00:29:11,840 --> 00:29:15,760 Speaker 1: are given the implication that they are getting money on 452 00:29:15,880 --> 00:29:18,360 Speaker 1: top of the investment they have made, so a lot 453 00:29:18,440 --> 00:29:22,280 Speaker 1: of them will end up reinvesting into the company because 454 00:29:22,280 --> 00:29:24,560 Speaker 1: they're like, oh, wow, it's working, I'm making money. I'm 455 00:29:24,560 --> 00:29:26,800 Speaker 1: gonna put the money I made back into the company. 456 00:29:26,840 --> 00:29:30,560 Speaker 1: I'm gonna make even more money. So the scheme perpetuates, 457 00:29:30,600 --> 00:29:33,240 Speaker 1: and the scam artist continues to try and get round 458 00:29:33,280 --> 00:29:36,240 Speaker 1: after round of investment and then using the incoming money 459 00:29:36,480 --> 00:29:39,440 Speaker 1: to give little payments out to the earlier investors in 460 00:29:39,560 --> 00:29:42,920 Speaker 1: order to keep the scheme going. But the venture itself 461 00:29:42,960 --> 00:29:46,320 Speaker 1: isn't actually generating revenue. It's not necessarily doing anything other 462 00:29:46,880 --> 00:29:50,480 Speaker 1: than let the con artists run around and make money 463 00:29:50,520 --> 00:29:53,520 Speaker 1: off of other people, like getting rich off other people's money. 464 00:29:53,760 --> 00:29:57,160 Speaker 1: The scheme is also not sustainable. It will ultimately get 465 00:29:57,200 --> 00:30:00,880 Speaker 1: to a point where you cannot get enough investments frequently 466 00:30:01,000 --> 00:30:04,840 Speaker 1: enough to pay out returns to earlier investors, and the 467 00:30:04,880 --> 00:30:08,520 Speaker 1: whole thing will come crashing down. Anyways, generally not good 468 00:30:08,520 --> 00:30:10,840 Speaker 1: news if a judge suspects that your crypto firm was 469 00:30:10,920 --> 00:30:13,800 Speaker 1: little more than a Ponzi scheme. The Celsias Network, for 470 00:30:13,840 --> 00:30:17,920 Speaker 1: its part, has said it welcomes third party investigations, which 471 00:30:17,960 --> 00:30:20,600 Speaker 1: is a good thing because it currently has a whole 472 00:30:20,640 --> 00:30:24,200 Speaker 1: bunch of them from the bankruptcy court and securities regulators, 473 00:30:24,240 --> 00:30:28,400 Speaker 1: and of course it's creditors. Okay, we're gonna take another 474 00:30:28,480 --> 00:30:32,000 Speaker 1: quick break. When we come back, we will tackle the 475 00:30:32,200 --> 00:30:35,960 Speaker 1: elephant in the crypto room f t X. But first 476 00:30:36,480 --> 00:30:50,000 Speaker 1: let's take this break. Okay, f t X, I have 477 00:30:50,080 --> 00:30:52,960 Speaker 1: covered this several times recently, but you know that we're 478 00:30:53,000 --> 00:30:54,880 Speaker 1: looking back on the year and this was a big story. 479 00:30:55,000 --> 00:30:58,520 Speaker 1: So I also say this every single time I cover this, 480 00:30:58,600 --> 00:31:01,280 Speaker 1: in case you haven't picked up on it. The crypto 481 00:31:01,360 --> 00:31:06,160 Speaker 1: world in general loves acronyms and initialisms. This is like 482 00:31:06,440 --> 00:31:10,120 Speaker 1: extra true for the f t X story. But the 483 00:31:10,120 --> 00:31:12,240 Speaker 1: short version of the story is that f t X, 484 00:31:12,280 --> 00:31:16,480 Speaker 1: which is a crypto or was a cryptocurrency exchange, imploded 485 00:31:16,520 --> 00:31:18,560 Speaker 1: in November of this year, and the ripples from that 486 00:31:18,600 --> 00:31:22,360 Speaker 1: event are playing out across the cryptocurrency space, including the 487 00:31:22,400 --> 00:31:27,160 Speaker 1: aforementioned Voyager Digital Lender, because the plan initially was for 488 00:31:27,280 --> 00:31:30,040 Speaker 1: f t X to bail that company out. But we're 489 00:31:30,080 --> 00:31:32,520 Speaker 1: going to dive into a tiny bit more detailed to 490 00:31:32,600 --> 00:31:38,480 Speaker 1: understand exactly what happened with this company. Okay, so the 491 00:31:38,560 --> 00:31:41,400 Speaker 1: main person involved in this story is a guy named 492 00:31:41,520 --> 00:31:45,240 Speaker 1: Sam Bankman Freed, whom the crypto world often refers to 493 00:31:45,360 --> 00:31:49,560 Speaker 1: as SBF. But I'm going to call him Sam because otherwise, 494 00:31:49,680 --> 00:31:52,400 Speaker 1: as we go on with the story, it's gonna start 495 00:31:52,400 --> 00:31:54,960 Speaker 1: to sound like I'm intoxicated and trying to say the 496 00:31:55,000 --> 00:31:58,280 Speaker 1: alphabet and I'm just getting it all wrong. So a 497 00:31:58,320 --> 00:32:02,560 Speaker 1: few years back, Sam Co founds an investment company called 498 00:32:02,680 --> 00:32:07,720 Speaker 1: Alameda Research, and this company, like three a C, made 499 00:32:07,720 --> 00:32:12,200 Speaker 1: its business in investing in various cryptocurrencies. So this company 500 00:32:12,240 --> 00:32:15,280 Speaker 1: operates for a couple of years and then sam Co 501 00:32:15,440 --> 00:32:19,280 Speaker 1: founds another company. This one is called ft X, and 502 00:32:19,360 --> 00:32:23,760 Speaker 1: it is a cryptocurrency exchange now, and exchange is a 503 00:32:23,840 --> 00:32:27,840 Speaker 1: business that exchanges currencies for other currencies. If you've ever 504 00:32:27,880 --> 00:32:32,440 Speaker 1: traveled internationally, you may have used a traditional exchange where 505 00:32:32,480 --> 00:32:35,800 Speaker 1: you convert some of your currency for whatever the local 506 00:32:35,840 --> 00:32:38,760 Speaker 1: currency is. So, for example, if you're from America and 507 00:32:38,840 --> 00:32:41,920 Speaker 1: you go to the UK, you might visit an exchange 508 00:32:42,160 --> 00:32:45,320 Speaker 1: to change out your U S dollars for British pounds. 509 00:32:45,960 --> 00:32:48,080 Speaker 1: Or if you're an American and you go to Canada, 510 00:32:48,440 --> 00:32:52,360 Speaker 1: you might exchange dollars for poutine. If you were to 511 00:32:52,400 --> 00:32:55,000 Speaker 1: come to my home state of Georgia, our currency is 512 00:32:55,000 --> 00:32:57,440 Speaker 1: coca cola, and let me tell you, it is very 513 00:32:57,440 --> 00:32:59,360 Speaker 1: hard to hold onto your money when you've got a 514 00:32:59,400 --> 00:33:04,640 Speaker 1: pocket full of loose cocola. Jokes aside, Currency exchanges make 515 00:33:04,680 --> 00:33:08,120 Speaker 1: their money by taking a little transaction fee or sometimes 516 00:33:08,120 --> 00:33:11,800 Speaker 1: a not so little transaction fee, every time they're changing 517 00:33:11,840 --> 00:33:15,800 Speaker 1: one form of currency into another for a customer. The 518 00:33:15,880 --> 00:33:21,760 Speaker 1: ft X exchange also minted its own cryptocurrency called f 519 00:33:21,880 --> 00:33:25,720 Speaker 1: t T, so if you wanted to, you could exchange 520 00:33:25,760 --> 00:33:28,680 Speaker 1: your dollars, or your bitcoin, or your a theory um 521 00:33:28,760 --> 00:33:33,680 Speaker 1: or whatever into f t T. In addition, customers could 522 00:33:33,760 --> 00:33:37,080 Speaker 1: store their wealth in f t X itself. Now, a 523 00:33:37,160 --> 00:33:39,720 Speaker 1: lot of folks will tell you that the best thing 524 00:33:39,720 --> 00:33:43,160 Speaker 1: to do with cryptocurrencies is not get involved. But for 525 00:33:43,200 --> 00:33:47,280 Speaker 1: those who are not skeptics like myself, then they might 526 00:33:47,320 --> 00:33:49,239 Speaker 1: say the best thing to do is to store your 527 00:33:49,280 --> 00:33:52,760 Speaker 1: cryptocurrency in a digital wallet that's living on a machine 528 00:33:53,160 --> 00:33:56,840 Speaker 1: that you have in your physical possession. That you store 529 00:33:56,840 --> 00:34:00,800 Speaker 1: it on a device that you own. Now, the danger 530 00:34:00,840 --> 00:34:04,080 Speaker 1: of that is if anything happens to that machine, then 531 00:34:04,120 --> 00:34:06,800 Speaker 1: your money is gone. It's kind of like a physical 532 00:34:06,840 --> 00:34:09,520 Speaker 1: wallet in that respect. If you drop your wallet, chances 533 00:34:09,560 --> 00:34:12,160 Speaker 1: are your money is a goner. Except for that one 534 00:34:12,160 --> 00:34:14,320 Speaker 1: time where I did drop my wallet while I was 535 00:34:14,360 --> 00:34:17,200 Speaker 1: walking to work, and a very nice person found the 536 00:34:17,200 --> 00:34:19,600 Speaker 1: wallet and drove all the way to my house and 537 00:34:19,640 --> 00:34:23,080 Speaker 1: returned my wallet to my wife, And that person is 538 00:34:23,120 --> 00:34:26,359 Speaker 1: a saint. I don't know how many people like that 539 00:34:26,360 --> 00:34:29,239 Speaker 1: are in the world, but I'm hoping that we see 540 00:34:29,280 --> 00:34:34,600 Speaker 1: more of them, because that's inspiring. Anyway. Some companies offer 541 00:34:34,719 --> 00:34:38,200 Speaker 1: a kind of cloud based wallet, so instead of keeping 542 00:34:38,200 --> 00:34:41,080 Speaker 1: your money on a physical machine that's in your possession, 543 00:34:41,719 --> 00:34:45,960 Speaker 1: your money lives in an account with whatever crypto company 544 00:34:46,040 --> 00:34:49,400 Speaker 1: this happens to be. So f t X had these accounts, 545 00:34:49,440 --> 00:34:52,759 Speaker 1: and a lot of customers had wealth stored in f 546 00:34:52,880 --> 00:34:56,160 Speaker 1: t X is coffers. Now, so far, there's not really 547 00:34:56,200 --> 00:34:59,640 Speaker 1: a problem with any of this. Meanwhile, Sam gets a 548 00:34:59,640 --> 00:35:03,880 Speaker 1: repute station for being kind of a philanthropic superbro in 549 00:35:03,920 --> 00:35:07,960 Speaker 1: the world of crypto. He donates to charities, He supports 550 00:35:08,000 --> 00:35:12,680 Speaker 1: progressive political candidates. He helps bail out other crypto companies 551 00:35:12,719 --> 00:35:15,840 Speaker 1: that are in trouble. He acts as a representative to 552 00:35:16,000 --> 00:35:21,840 Speaker 1: talk with regulators about ways to responsibly regulate cryptocurrency. Over time, 553 00:35:22,160 --> 00:35:25,840 Speaker 1: ft X establishes its headquarters in the Bahamas, which is 554 00:35:25,880 --> 00:35:28,400 Speaker 1: not unusual. A lot of crypto companies look to establish 555 00:35:28,400 --> 00:35:32,040 Speaker 1: themselves in places that have less regulatory oversight than say, 556 00:35:32,239 --> 00:35:36,600 Speaker 1: places like the United States. Fd X grows to become 557 00:35:37,000 --> 00:35:41,480 Speaker 1: the second largest cryptocurrency exchange in the world. The largest 558 00:35:41,520 --> 00:35:44,480 Speaker 1: one is a company called Binance, and it had been 559 00:35:44,520 --> 00:35:47,960 Speaker 1: an early investor in f t X, but fd X 560 00:35:48,000 --> 00:35:52,320 Speaker 1: had subsequently bought out finances investment with the aforementioned ft 561 00:35:52,480 --> 00:35:56,279 Speaker 1: T cryptocurrency. So they're like, here's this currency we made, 562 00:35:57,360 --> 00:36:00,120 Speaker 1: we're paying you back thanks for the early investment. So 563 00:36:00,160 --> 00:36:03,640 Speaker 1: Finance at the time was holding thousands and thousands of 564 00:36:03,680 --> 00:36:06,719 Speaker 1: f t T coins, so that represented a ton of 565 00:36:06,719 --> 00:36:11,960 Speaker 1: wealth and now our stage is set. So in November, 566 00:36:12,840 --> 00:36:17,640 Speaker 1: a cryptocurrency journal called coin Desk published an article that 567 00:36:17,719 --> 00:36:23,040 Speaker 1: included a leaked balance sheet that showed Alimator Research, Sam's 568 00:36:23,080 --> 00:36:28,040 Speaker 1: crypto investment company, had a very large source of ft 569 00:36:28,160 --> 00:36:32,040 Speaker 1: T tokens coming in to help cover investments, and apparently 570 00:36:32,760 --> 00:36:36,440 Speaker 1: what was happening was it was funneling ft T tokens 571 00:36:36,680 --> 00:36:40,360 Speaker 1: from f t X. So the implication was that Alimaated 572 00:36:40,400 --> 00:36:43,840 Speaker 1: Research was quote unquote borrowing money from f t X, 573 00:36:44,520 --> 00:36:49,400 Speaker 1: but fd X was not informing its customers its investors 574 00:36:49,440 --> 00:36:53,080 Speaker 1: that this was happening. So this meant that f t 575 00:36:53,400 --> 00:36:56,279 Speaker 1: X potentially would not have the money on hand to 576 00:36:56,360 --> 00:37:00,359 Speaker 1: pay out someone if they wanted to withdraw all of 577 00:37:00,400 --> 00:37:03,640 Speaker 1: their money that had been stored in f t X. 578 00:37:03,920 --> 00:37:05,600 Speaker 1: That's a big no no. It's the kind of thing 579 00:37:05,640 --> 00:37:07,799 Speaker 1: that can lead to a run on the bank, and 580 00:37:07,840 --> 00:37:10,640 Speaker 1: if the bank cannot cover all the cash, things get 581 00:37:10,800 --> 00:37:15,200 Speaker 1: real ugly, real fast. So Sam seemed to be robbing 582 00:37:15,280 --> 00:37:18,680 Speaker 1: Peter to pay Paul. He was taking customer money from 583 00:37:18,760 --> 00:37:22,080 Speaker 1: f t X and using it to cover investments at Alimato. 584 00:37:22,280 --> 00:37:25,160 Speaker 1: And while I'm saying Sam, really, I mean f t X, 585 00:37:25,280 --> 00:37:27,720 Speaker 1: and you know Sam is not the only person involved 586 00:37:27,719 --> 00:37:30,480 Speaker 1: in this. There's a whole group of people who were 587 00:37:30,920 --> 00:37:34,239 Speaker 1: in charge of running f t X. Sam himself has 588 00:37:34,360 --> 00:37:36,920 Speaker 1: argued multiple times that he was not aware of a 589 00:37:36,960 --> 00:37:39,279 Speaker 1: lot of this. I don't know how true that is, 590 00:37:39,320 --> 00:37:43,640 Speaker 1: but I'm using Sam kind of as a representative of 591 00:37:43,680 --> 00:37:47,239 Speaker 1: the company as a whole. Now. I'm sure that the 592 00:37:47,280 --> 00:37:51,320 Speaker 1: hope was that the investments that Alimator Research was making 593 00:37:51,680 --> 00:37:54,560 Speaker 1: would end up paying off big time, and that Alimated 594 00:37:54,600 --> 00:37:57,040 Speaker 1: would thus be able to pay back f t X 595 00:37:57,400 --> 00:38:00,800 Speaker 1: all that money and it borrowed, and then make profit 596 00:38:01,000 --> 00:38:04,760 Speaker 1: off of the rest. But things unraveled pretty quickly after 597 00:38:04,800 --> 00:38:07,680 Speaker 1: this leaked balance sheet made the news. So in the 598 00:38:07,680 --> 00:38:11,759 Speaker 1: wake of the report, Binance CEO Chung Peng Jao a 599 00:38:11,880 --> 00:38:17,120 Speaker 1: K A c Z because again initialisms, he announced that 600 00:38:17,239 --> 00:38:21,759 Speaker 1: Finance was going to sell off its massive vault of 601 00:38:21,920 --> 00:38:26,239 Speaker 1: ft t coins. So remember it held those f t 602 00:38:26,360 --> 00:38:29,480 Speaker 1: t coins because ft X had paid back Binance for 603 00:38:29,560 --> 00:38:33,600 Speaker 1: its initial investment. Well, I'm sure you realize that if 604 00:38:33,600 --> 00:38:37,360 Speaker 1: a market is suddenly flooded with any asset, the value 605 00:38:37,440 --> 00:38:40,520 Speaker 1: of that asset will go into decline. It's all supply 606 00:38:40,640 --> 00:38:44,120 Speaker 1: and demand, right Like if suddenly there's way more supply 607 00:38:44,160 --> 00:38:46,760 Speaker 1: than there is demand, and the value of that supply 608 00:38:46,840 --> 00:38:49,200 Speaker 1: goes down. So now you had all these f t 609 00:38:49,520 --> 00:38:52,920 Speaker 1: X customers who were worried that their coins were going 610 00:38:52,960 --> 00:38:57,120 Speaker 1: to be worthless, or at least worth less than they 611 00:38:57,160 --> 00:39:00,279 Speaker 1: had been, and so there was effectively a run on 612 00:39:00,320 --> 00:39:02,560 Speaker 1: the bank, and f t X, unable to cover this 613 00:39:02,600 --> 00:39:05,560 Speaker 1: contingency due to you know, sending way too much money 614 00:39:05,600 --> 00:39:07,719 Speaker 1: over to alimated research, which is what caused all this 615 00:39:07,760 --> 00:39:11,680 Speaker 1: in the first place, went into free fall. Now arguably 616 00:39:12,160 --> 00:39:14,520 Speaker 1: the killing blow for f t X came when c 617 00:39:14,760 --> 00:39:18,400 Speaker 1: Z said that finance would bail out the company and 618 00:39:18,440 --> 00:39:21,640 Speaker 1: then one day later backed out of that deal. Now 619 00:39:21,640 --> 00:39:24,399 Speaker 1: to be clear, there was nothing binding about that deal 620 00:39:24,440 --> 00:39:27,160 Speaker 1: in the first place, so it's not like they did 621 00:39:27,200 --> 00:39:30,920 Speaker 1: something illegal. But with no rescuer on the horizon, f 622 00:39:31,080 --> 00:39:34,800 Speaker 1: t X spiraled and crashed. Sam got the boot as CEO, 623 00:39:35,080 --> 00:39:37,759 Speaker 1: and the company brought in John Jay Ray, the third 624 00:39:38,520 --> 00:39:42,560 Speaker 1: to essentially oversee the dismantling and liquidation of f t X. 625 00:39:43,080 --> 00:39:46,359 Speaker 1: Ray had previously overseen similar duties when he was called 626 00:39:46,400 --> 00:39:48,440 Speaker 1: in to get as much value out of the company 627 00:39:48,520 --> 00:39:52,400 Speaker 1: in Ron in the wake of its bankruptcy that's a 628 00:39:52,640 --> 00:39:56,680 Speaker 1: heck of a story on its own right. So literally, 629 00:39:56,760 --> 00:39:59,839 Speaker 1: his job is to ring as much out of this 630 00:40:00,040 --> 00:40:03,640 Speaker 1: collapsed company as he possibly can in order to return 631 00:40:03,719 --> 00:40:07,719 Speaker 1: money to creditors and then investors as much of it 632 00:40:07,760 --> 00:40:12,200 Speaker 1: as he can manage anyway. Sam meanwhile remained in the Bahamas, 633 00:40:12,200 --> 00:40:15,560 Speaker 1: occasionally giving remote interviews where he said that there was 634 00:40:15,600 --> 00:40:18,760 Speaker 1: no intent to cause harm, that he didn't know anything 635 00:40:18,800 --> 00:40:22,440 Speaker 1: about any alleged wrongdoing, and even if he did know, 636 00:40:22,680 --> 00:40:26,400 Speaker 1: he didn't mean it, and so on. There were allegations 637 00:40:26,440 --> 00:40:30,600 Speaker 1: that hundreds of millions of dollars had mysteriously vanished out 638 00:40:30,600 --> 00:40:33,960 Speaker 1: of ftx's coffers immediately in the wake of the collapse, 639 00:40:34,480 --> 00:40:38,480 Speaker 1: and there were a lot of uh theories online that 640 00:40:38,560 --> 00:40:42,759 Speaker 1: perhaps Sam or one of his close friends had been 641 00:40:42,760 --> 00:40:45,280 Speaker 1: behind all that. There were others that were saying maybe 642 00:40:45,280 --> 00:40:47,480 Speaker 1: it was a hacker. There were a lot of questions. 643 00:40:48,520 --> 00:40:52,240 Speaker 1: Over time, folks started looking at what Sam was saying, 644 00:40:52,280 --> 00:40:55,239 Speaker 1: and they got all Shakespearean, you know, they said, the 645 00:40:55,320 --> 00:41:00,279 Speaker 1: crypto bro doth protest too much, methinks. And last week 646 00:41:00,520 --> 00:41:04,400 Speaker 1: Bahamanian police arrested Sam on behalf of the United States, 647 00:41:04,760 --> 00:41:08,520 Speaker 1: which has now charged Sam with multiple counts including money 648 00:41:08,560 --> 00:41:12,080 Speaker 1: laundering and securities fraud, among some others, and as a 649 00:41:12,200 --> 00:41:15,200 Speaker 1: record these episodes, the word is that Sam is preparing 650 00:41:15,239 --> 00:41:17,719 Speaker 1: to be extradited to the United States in order to 651 00:41:17,719 --> 00:41:21,200 Speaker 1: stand trial. He was also supposed to appear before the 652 00:41:21,280 --> 00:41:24,319 Speaker 1: US Senate to answer questions about the failure of f 653 00:41:24,400 --> 00:41:28,399 Speaker 1: t X, but declined that invitation just before he got 654 00:41:28,400 --> 00:41:32,680 Speaker 1: scooped up by the Pope po. Meanwhile, Finance is also 655 00:41:32,719 --> 00:41:38,880 Speaker 1: the subject of multiple investigations. So remember Finances the largest 656 00:41:38,880 --> 00:41:42,719 Speaker 1: cryptocurrency exchange in the world, it is also under a 657 00:41:42,760 --> 00:41:45,879 Speaker 1: law of scrutiny. The company has been accused of processing 658 00:41:45,960 --> 00:41:49,719 Speaker 1: ten billion dollars worth of illegal transactions just this year, 659 00:41:50,239 --> 00:41:53,440 Speaker 1: including stuff like money laundering. So in the wake of 660 00:41:53,520 --> 00:41:59,560 Speaker 1: so many cryptocurrency companies collapsing, there's an understandable concern that 661 00:41:59,600 --> 00:42:06,319 Speaker 1: the world largest cryptocurrency exchange could suffer the same fate. Ultimately, now, 662 00:42:06,400 --> 00:42:12,439 Speaker 1: c Z has tried to reassure investors, investors, customers, regulators 663 00:42:12,440 --> 00:42:15,320 Speaker 1: that there's nothing really to worry about, and that Finance 664 00:42:15,400 --> 00:42:19,759 Speaker 1: even commissioned a third party to review Finances reserves to 665 00:42:19,840 --> 00:42:23,560 Speaker 1: show that the exchange has a one to one reserve 666 00:42:23,640 --> 00:42:26,760 Speaker 1: representing all customer investments in the exchange. In other words, 667 00:42:27,400 --> 00:42:31,080 Speaker 1: if every single customer wanted to withdraw their money from finance, 668 00:42:31,200 --> 00:42:34,120 Speaker 1: finance would be able to cover it, except the report 669 00:42:34,200 --> 00:42:37,759 Speaker 1: did not say that. In fact, it showed that finances 670 00:42:37,800 --> 00:42:41,400 Speaker 1: reserves fall a little short of covering the wealth invested 671 00:42:41,400 --> 00:42:43,680 Speaker 1: in it. Not a lot short, not like f TX, 672 00:42:44,520 --> 00:42:49,480 Speaker 1: but it's a little short, probably because finance also issues loans, 673 00:42:50,360 --> 00:42:55,520 Speaker 1: So some of binances money is actually out in circulation 674 00:42:55,560 --> 00:42:59,840 Speaker 1: and customer hands, and presumably will ultimately return to Binance 675 00:43:00,200 --> 00:43:03,520 Speaker 1: as these customers pay it back with interest in the future. 676 00:43:04,200 --> 00:43:08,000 Speaker 1: But even before all these crypto failures, regulators around the 677 00:43:08,000 --> 00:43:12,080 Speaker 1: world we're already starting to scrutinize cryptocurrency more intensely in 678 00:43:12,120 --> 00:43:15,719 Speaker 1: the wake of collapse. After collapse, there is a new 679 00:43:15,800 --> 00:43:19,200 Speaker 1: sense of urgency around the world, particularly as folks like 680 00:43:19,320 --> 00:43:22,160 Speaker 1: John Jay Ray the Third proclaim that ft X experienced 681 00:43:22,160 --> 00:43:27,920 Speaker 1: a quote complete failure of corporate controls end quote, suggesting 682 00:43:27,960 --> 00:43:30,839 Speaker 1: that these crypto companies are operating like fly by night 683 00:43:30,920 --> 00:43:35,520 Speaker 1: shady organizations that also happened to have access to hundreds 684 00:43:35,560 --> 00:43:38,960 Speaker 1: of millions of dollars worth of customer funds. There's a 685 00:43:39,000 --> 00:43:41,920 Speaker 1: general perception that crypto is going to have to adjust 686 00:43:41,960 --> 00:43:44,359 Speaker 1: to a world of increased regulation in the not too 687 00:43:44,400 --> 00:43:49,960 Speaker 1: distant future, maybe next Sunday a d So that's a 688 00:43:50,000 --> 00:43:52,560 Speaker 1: summary of some of the big stories that happened in 689 00:43:52,760 --> 00:43:55,400 Speaker 1: crypto this year. Now I did mention n f t 690 00:43:55,640 --> 00:43:57,600 Speaker 1: s and web three as well, so I should give 691 00:43:57,640 --> 00:44:00,759 Speaker 1: a super quick update on those ideas. So n f 692 00:44:00,800 --> 00:44:04,000 Speaker 1: t s or non fungible tokens represents some sort of 693 00:44:04,280 --> 00:44:08,880 Speaker 1: unique asset, a digital asset typically, and I've often equated 694 00:44:09,239 --> 00:44:11,040 Speaker 1: n f t s as being kind of like a 695 00:44:11,120 --> 00:44:15,480 Speaker 1: receipt for something, usually something digital. So it's not the 696 00:44:15,480 --> 00:44:19,359 Speaker 1: thing itself, it's representation of ownership of that thing. So 697 00:44:19,440 --> 00:44:22,680 Speaker 1: in January of two, n f t s were trading 698 00:44:22,719 --> 00:44:25,200 Speaker 1: at a peak. The value of those trades was around 699 00:44:25,239 --> 00:44:30,040 Speaker 1: seventeen billion dollars, but over the course of twenty twenty two, 700 00:44:30,120 --> 00:44:35,960 Speaker 1: trading dropped precipitously and then absolutely plummeted. It's down scent 701 00:44:36,080 --> 00:44:38,560 Speaker 1: from the beginning of the year, according to Bloomberg, and 702 00:44:38,640 --> 00:44:41,319 Speaker 1: that seventeen billion dollars of value is down to four 703 00:44:41,400 --> 00:44:44,799 Speaker 1: hundred sixty six million. That's still a lot, but it's 704 00:44:44,960 --> 00:44:46,920 Speaker 1: nothing close to what it was at the beginning of 705 00:44:46,920 --> 00:44:50,480 Speaker 1: the year. A lot of folks became disenchanted with n 706 00:44:50,520 --> 00:44:53,160 Speaker 1: f t s fairly early in twenty two, and it 707 00:44:53,200 --> 00:44:56,239 Speaker 1: didn't help that there were plenty of opportunists who were 708 00:44:56,320 --> 00:44:58,600 Speaker 1: running n f T scams. They were taking the money 709 00:44:58,680 --> 00:45:01,719 Speaker 1: and running really damaged the image of n f T 710 00:45:01,880 --> 00:45:05,160 Speaker 1: s overall, like they were already overvalued in my opinion, 711 00:45:05,560 --> 00:45:09,600 Speaker 1: but the scams definitely kind of showed the ugly side 712 00:45:09,719 --> 00:45:13,560 Speaker 1: of this this world, and it was exacerbated by campaigns 713 00:45:13,560 --> 00:45:16,279 Speaker 1: that hired influencers to hype up n f t s, 714 00:45:16,719 --> 00:45:20,080 Speaker 1: some of which ended up being cash grabs and total scams. 715 00:45:20,120 --> 00:45:22,920 Speaker 1: So even Justin Bieber hyped up and n f T 716 00:45:23,160 --> 00:45:26,840 Speaker 1: without first disclosing that he actually had some ownership interest 717 00:45:26,920 --> 00:45:31,160 Speaker 1: in the venture itself. So if you can't trust Justin Bieber, 718 00:45:31,800 --> 00:45:36,560 Speaker 1: who can you trust, baby Baby Baby. So n f 719 00:45:36,600 --> 00:45:39,919 Speaker 1: T s have a damaged reputation at this point, as 720 00:45:39,960 --> 00:45:43,440 Speaker 1: does crypto in general, and that brings us to Web three. 721 00:45:43,800 --> 00:45:47,960 Speaker 1: So Web three is a really hazy, ill defined concept. 722 00:45:48,480 --> 00:45:52,120 Speaker 1: Generally speaking, Web three proponents say the future web is 723 00:45:52,120 --> 00:45:54,960 Speaker 1: going to be built on top of blockchain, and that 724 00:45:55,080 --> 00:45:57,520 Speaker 1: it's going to be a decentralized approach to the web. 725 00:45:57,560 --> 00:46:01,440 Speaker 1: It'll free us from the current anchors holding down the web, 726 00:46:01,800 --> 00:46:06,560 Speaker 1: these massive companies like Google and Amazon and Meta, Except 727 00:46:06,560 --> 00:46:09,480 Speaker 1: that in reality such a web would still be centralized 728 00:46:09,520 --> 00:46:12,040 Speaker 1: because it would really fall into the hands of whatever 729 00:46:12,120 --> 00:46:16,600 Speaker 1: powerful entities had invested in those blockchains. So at best, 730 00:46:16,600 --> 00:46:21,920 Speaker 1: you're really talking about a poorly defined infrastructure that has 731 00:46:21,960 --> 00:46:24,920 Speaker 1: just switched out the names of who is the most influential, 732 00:46:25,480 --> 00:46:29,040 Speaker 1: right like the names of change, But the situation is 733 00:46:29,080 --> 00:46:32,240 Speaker 1: still the same. Also, I should point out the original 734 00:46:32,280 --> 00:46:35,680 Speaker 1: concept of the Internet was decentralized. It is a network 735 00:46:35,760 --> 00:46:40,399 Speaker 1: of networks that doesn't have centralized power associated with it. 736 00:46:40,760 --> 00:46:43,480 Speaker 1: Like they're trying to solve a problem that was solved 737 00:46:43,520 --> 00:46:46,120 Speaker 1: just by the invention of the Internet. It's not really 738 00:46:46,120 --> 00:46:49,359 Speaker 1: the Internet's fault that there were these massive companies that 739 00:46:49,440 --> 00:46:52,800 Speaker 1: managed to consolidate power over the time that the Internet 740 00:46:52,840 --> 00:46:58,440 Speaker 1: has been an action. So yeah, it's it's taking a 741 00:46:58,520 --> 00:47:04,680 Speaker 1: hammer to a problem that needs a screwdriver in my opinion. Anyway, 742 00:47:04,840 --> 00:47:08,920 Speaker 1: toward the end of into the beginning of two, there 743 00:47:09,040 --> 00:47:12,680 Speaker 1: was this ton of hype around Web three. But since 744 00:47:12,719 --> 00:47:16,640 Speaker 1: those ideas of Web three are also tightly connected to 745 00:47:16,719 --> 00:47:20,440 Speaker 1: other blockchain concepts like cryptocurrency and n f t s, 746 00:47:20,760 --> 00:47:26,239 Speaker 1: and because of the dramatic failure of those things, we 747 00:47:26,600 --> 00:47:30,120 Speaker 1: three hype meisters have really suffered some major setbacks in 748 00:47:30,160 --> 00:47:34,640 Speaker 1: the back half of now I'm not ready to say 749 00:47:34,719 --> 00:47:37,560 Speaker 1: Web three is dead in the water, but i will 750 00:47:37,600 --> 00:47:39,640 Speaker 1: say it's going to have to swim awful hard to 751 00:47:39,680 --> 00:47:42,440 Speaker 1: avoid the riptide that's pulling at its feet, you know, 752 00:47:42,840 --> 00:47:48,040 Speaker 1: to torture a metaphor. Okay, that's it for this episode 753 00:47:48,080 --> 00:47:50,720 Speaker 1: of looking back on the big Tech stories of two, 754 00:47:50,800 --> 00:47:54,719 Speaker 1: the cryptocurrency edition. We will continue this tomorrow with other 755 00:47:55,080 --> 00:47:58,920 Speaker 1: news stories, so stay tuned for that. We've got a 756 00:47:58,920 --> 00:48:03,440 Speaker 1: lot more to cover before we finish out, and I 757 00:48:03,480 --> 00:48:08,040 Speaker 1: am honestly really looking forward to and seeing what that brings. 758 00:48:08,080 --> 00:48:10,080 Speaker 1: I don't know that it's going to be better. I'm 759 00:48:10,120 --> 00:48:14,360 Speaker 1: not being that optimistic, but I'm certainly curious and I'm hopeful. 760 00:48:14,480 --> 00:48:17,879 Speaker 1: I would love to see things start to improve and 761 00:48:18,920 --> 00:48:24,080 Speaker 1: have us learn lessons from the catastrophic failures that we've 762 00:48:24,120 --> 00:48:28,719 Speaker 1: seen this past year. Remember, failure is an opportunity to learn, 763 00:48:28,960 --> 00:48:32,000 Speaker 1: but we have to take the opportunity for it to work. 764 00:48:32,760 --> 00:48:35,160 Speaker 1: That's it. I hope you are all doing well. I 765 00:48:35,239 --> 00:48:38,120 Speaker 1: hope you are happy and healthy during this holiday season, 766 00:48:38,440 --> 00:48:46,560 Speaker 1: and I'll talk to you again really soon. Tech Stuff 767 00:48:46,640 --> 00:48:49,960 Speaker 1: is an I heart Radio production. For more podcasts from 768 00:48:49,960 --> 00:48:53,759 Speaker 1: I Heart Radio, visit the i heart Radio app, Apple Podcasts, 769 00:48:53,880 --> 00:48:55,880 Speaker 1: or wherever you listen to your favorite shows.