WEBVTT - The Big Tech Stories of 2022: The Crypto Winter 0:00:04.440 --> 0:00:12.200 Welcome to text, a production from I Heart Radio. Hey there, 0:00:12.240 --> 0:00:15.800 and welcome to tech Stuff. I'm your host, Jonathan Strickland. 0:00:15.960 --> 0:00:18.759 I'm an executive producer with I Heart Radio and how 0:00:18.800 --> 0:00:21.920 the tech are you? So we're continuing to look back 0:00:22.200 --> 0:00:26.520 on the big tech news stories of two as we 0:00:27.160 --> 0:00:30.280 round out the year. And of course you'll already know 0:00:30.400 --> 0:00:33.360 what this episode covers, because I'm sure I titled it 0:00:33.479 --> 0:00:36.360 in a way that reveals it. But just in case, 0:00:36.680 --> 0:00:39.880 I thought I would try my hand at a little theater. 0:00:42.200 --> 0:00:46.879 Now is the winter of our crypto coin, made even 0:00:46.920 --> 0:00:51.400 worse by Sam Bankman freed, and all the doubts that 0:00:51.600 --> 0:00:55.200 lowered upon n f T s now cross the blockchain 0:00:55.400 --> 0:01:00.080 entire are laid. Now are our wallets, but home for 0:01:00.320 --> 0:01:05.440 moths are sub bredits filled with bros calling hoddle our 0:01:05.840 --> 0:01:12.360 stern skeptics, doth say, I told e thus, dreadful partners, 0:01:12.400 --> 0:01:18.600 asking where the hell is our money? Okay, my apologies 0:01:18.640 --> 0:01:23.800 to you and to a certain master Shakespeare, But honestly, 0:01:23.800 --> 0:01:25.840 I doubt I'm ever going to have the opportunity to 0:01:25.840 --> 0:01:29.039 play Richard the third, And so that's the best I 0:01:29.040 --> 0:01:32.560 will ever hope for. And yes, this episode we are 0:01:32.680 --> 0:01:35.760 going to cover some of the big stories that revolved 0:01:35.800 --> 0:01:40.760 around cryptocurrency in two and there is a lot to 0:01:40.800 --> 0:01:44.480 go over, from crypto in general declining and value over 0:01:44.520 --> 0:01:49.080 the year, to some cryptocurrencies making a big important change 0:01:49.080 --> 0:01:52.560 in how they operate, to the infamous collapse of the 0:01:52.680 --> 0:01:57.520 ft X crypto exchange, to related stuff like blockchain and 0:01:57.600 --> 0:02:01.080 web three hype. You don't very much web three hype 0:02:01.160 --> 0:02:04.840 right now? Huh, Well, we'll talk about why, but let's 0:02:04.840 --> 0:02:08.400 get to it now. First up, I think it's important 0:02:08.440 --> 0:02:12.359 to do a quick refresher on cryptocurrency. It's a term 0:02:12.440 --> 0:02:17.040 that is used a lot often without very much explanation 0:02:17.400 --> 0:02:21.400 as to what goes into cryptocurrency. People just think, oh, 0:02:21.440 --> 0:02:24.679 it's a digital form of money, and so I think 0:02:24.680 --> 0:02:27.240 we need to have a little bit of groundwork laid now. 0:02:27.280 --> 0:02:30.120 The whole trend began thanks to a white paper that 0:02:30.240 --> 0:02:36.239 proposed a blockchain, a shared ledger, and a digital currency 0:02:36.680 --> 0:02:42.720 called bitcoin. Now, unlike other currencies, bitcoin wouldn't be dependent 0:02:42.840 --> 0:02:47.560 upon a country's government or some central financial institution. It 0:02:47.600 --> 0:02:53.400 would be a decentralized digital currency. Participants in the system 0:02:53.760 --> 0:02:59.400 could even earn rewards by helping to verify bitcoin transactions. 0:02:59.480 --> 0:03:03.120 So each transaction would join others and they would form 0:03:03.160 --> 0:03:07.680 a block, and each block would be laid in front 0:03:07.720 --> 0:03:11.200 of the last block in a chain of blocks. Thus 0:03:11.560 --> 0:03:17.400 the block chain. The values represented within a block would 0:03:17.440 --> 0:03:20.840 depend upon all the blocks that came before it. Now, 0:03:21.000 --> 0:03:23.640 this would mean that no one would be able to 0:03:23.680 --> 0:03:29.440 go back to earlier transactions and alter one of them, 0:03:29.480 --> 0:03:32.160 you know, like in an effort to say return some 0:03:32.200 --> 0:03:34.480 bitcoins they had they had spent. Let's say that you 0:03:34.520 --> 0:03:37.480 had five bitcoins, you spent four of them, and then 0:03:37.600 --> 0:03:40.040 later on you thought, I need more money. So what 0:03:40.120 --> 0:03:43.960 if I just go in and erase that transaction and 0:03:44.080 --> 0:03:47.480 magically give myself back the four bitcoins that I had spent. 0:03:47.800 --> 0:03:50.720 That way, I could double spend the same bitcoins. Well, 0:03:51.240 --> 0:03:53.240 if you did that, if you went back into the 0:03:53.240 --> 0:03:56.600 blockchain and you changed that transaction, if you found a 0:03:56.640 --> 0:03:59.880 way to do it, that would actually change all the 0:04:00.080 --> 0:04:03.760 values of the blocks that came after it. And that 0:04:03.800 --> 0:04:06.320 means everyone would know that you try to be very 0:04:06.440 --> 0:04:09.600 very naughty. Now, there are a few different ways to 0:04:09.760 --> 0:04:15.120 verify transactions and to award cryptocurrency units. The way Bitcoin 0:04:15.280 --> 0:04:19.320 does it is called proof of work. Now we're going 0:04:19.360 --> 0:04:21.960 to be super high level with this. But in this method, 0:04:22.680 --> 0:04:26.000 computers in the system are essentially competing against each other 0:04:26.040 --> 0:04:30.760 in order to solve a math problem. Or really it's 0:04:30.839 --> 0:04:35.760 about guessing the right number, and it should take about 0:04:35.839 --> 0:04:39.039 ten minutes to get the right answer on average. But 0:04:39.240 --> 0:04:41.720 if computers start to take longer to answer it because 0:04:41.720 --> 0:04:45.120 the problems are really hard, well, the system actually adjusts 0:04:45.160 --> 0:04:48.000 to make those problems easier to get closer to that 0:04:48.080 --> 0:04:52.760 ten minute benchmark. If it starts taking less time. If 0:04:52.839 --> 0:04:57.440 systems are solving the problem earlier, well, then the system 0:04:57.520 --> 0:05:01.599 makes the problems harder to solve. Now, a downside to 0:05:01.640 --> 0:05:05.960 this approach is that as the currency increases in value, 0:05:06.480 --> 0:05:09.839 there's a greater incentive for people to try and earn 0:05:10.200 --> 0:05:14.520 the cryptocurrency by verifying these transactions. This is called mining. 0:05:15.240 --> 0:05:18.720 So these people start pouring more money into their computer 0:05:18.800 --> 0:05:22.040 systems so that they have more computer power to dedicate 0:05:22.040 --> 0:05:24.320 to this, and they get an edge on all the 0:05:24.360 --> 0:05:28.280 other competitors in the system. If the value keeps going up, 0:05:28.760 --> 0:05:34.479 this becomes an escalating war between the various mining operations. 0:05:34.520 --> 0:05:38.000 So with Bitcoin, the value at the beginning of two 0:05:38.600 --> 0:05:44.160 was nearly forty eight thousand dollars per bitcoin, and each 0:05:44.240 --> 0:05:47.039 time you verified a block of transactions, which again was 0:05:47.080 --> 0:05:50.520 every ten minutes, you would get six point to five 0:05:50.560 --> 0:05:53.760 bitcoins as a reward if you were the system that 0:05:53.839 --> 0:05:57.279 got the problem right first, so that would be worth 0:05:57.400 --> 0:06:01.520 around three hundred thousand dollars at the beginning of two, 0:06:02.120 --> 0:06:03.880 and you would have a chance to do it all 0:06:03.920 --> 0:06:07.480 over again in just ten minutes. So if you managed 0:06:07.640 --> 0:06:12.080 to be the winning computer system for every single block 0:06:12.200 --> 0:06:15.080 in a in a single day, you would end up 0:06:15.120 --> 0:06:19.839 solving around one hundred forty four blocks at that point, 0:06:19.960 --> 0:06:23.359 that would be nine d bitcoins, which would be worth 0:06:23.640 --> 0:06:26.960 around forty three million, two hundred thousand dollars in US 0:06:27.080 --> 0:06:31.280 dollars at the beginning of January two. That's a huge 0:06:31.320 --> 0:06:34.320 amount of money right now. It would not be likely 0:06:34.560 --> 0:06:36.400 for you to be able to do that. Chances are 0:06:36.600 --> 0:06:39.440 other systems would be solving some of these throughout the day, 0:06:39.480 --> 0:06:41.920 but even if you only needed a few, that's still 0:06:41.960 --> 0:06:44.560 a huge amount of money. So it was no wonder 0:06:44.839 --> 0:06:49.240 that there were entire massive networks dedicated to bitcoin mining. 0:06:49.400 --> 0:06:53.520 Folks were taking over decommissioned power plants and then firing 0:06:53.520 --> 0:06:56.080 them back up in order to provide the electricity needed 0:06:56.240 --> 0:07:01.120 to power these customized mining systems that were designed to 0:07:01.160 --> 0:07:05.640 beat out all the other competition. Bitcoin mining was creating 0:07:05.640 --> 0:07:08.680 a strain on power grids. It was actually responsible for 0:07:08.760 --> 0:07:13.160 more electricity usage than some countries create in an entire year, 0:07:13.360 --> 0:07:18.520 which is just wild. But that's just the basics, right, 0:07:18.560 --> 0:07:21.160 That's for the basics for bitcoin, and we will talk 0:07:21.160 --> 0:07:24.680 about an alternative to proof of work later on in 0:07:24.720 --> 0:07:28.520 this episode, but first, let's talk about an early setback 0:07:28.880 --> 0:07:32.880 that happened for cryptocurrency sort of, and that would be 0:07:32.920 --> 0:07:37.280 when Meta a k a. Facebook because that's what it 0:07:37.320 --> 0:07:39.120 was called when it first came up with this plan 0:07:40.120 --> 0:07:44.480 ended up ditching its plans for its own cryptocurrency. So 0:07:45.280 --> 0:07:49.080 some backstory. Back in two thousand nineteen, Facebook, which was 0:07:49.280 --> 0:07:52.120 not yet known as Meta because it adopted that name 0:07:52.120 --> 0:07:57.280 in late announced that it was developing a cryptocurrency that 0:07:57.600 --> 0:08:02.800 at that time was called liber up Now. Instantly, governments 0:08:02.840 --> 0:08:06.280 and regulators around the world started to express concern that 0:08:06.400 --> 0:08:10.800 such an influential tech company was essentially looking into ways 0:08:10.840 --> 0:08:15.080 to print its own money. Even some crypto enthusiasts got 0:08:15.080 --> 0:08:18.400 a little worried as Facebook's approach didn't really follow that 0:08:18.520 --> 0:08:24.240 decentralized path that coins like bitcoin purported to follow, like, 0:08:24.560 --> 0:08:27.440 you would have a centralized authority in the form of 0:08:27.440 --> 0:08:33.960 Facebook or the association that Facebook would create. Now, Facebook 0:08:34.000 --> 0:08:37.720 did not intend to be the soul core of Libra. Instead, 0:08:37.760 --> 0:08:42.360 Facebook created a consortium and association, the Libra Association, a 0:08:42.360 --> 0:08:44.800 group of companies that would serve as sort of the 0:08:44.840 --> 0:08:50.960 custodians of this digital currency. And unlike coins such as bitcoin, 0:08:51.040 --> 0:08:54.480 the average person would not be involved in verifying blocks 0:08:54.480 --> 0:08:58.839 of transactions. You wouldn't have these groups of digital miners 0:08:59.559 --> 0:09:03.080 building massive computer systems trying to beat each other out 0:09:03.120 --> 0:09:07.200 to verify. Instead, the consortium would handle it. So you 0:09:07.280 --> 0:09:11.119 had this against centralized authority in that sense. Now, Facebook 0:09:11.559 --> 0:09:14.720 ended up creating a division called Calibra, and it was 0:09:14.800 --> 0:09:19.640 dedicated to creating digital wallets that Facebook users would be 0:09:19.640 --> 0:09:23.840 able to link to their Facebook accounts, and other members 0:09:23.880 --> 0:09:26.360 of the consortium would also be able to make Libra 0:09:26.520 --> 0:09:33.200 compatible digital wallets. But Facebook had a bad reputation already 0:09:33.240 --> 0:09:35.600 in two thousand nineteen. It would only get worse in 0:09:37.200 --> 0:09:40.520 and it hasn't exactly gotten better this year. So this 0:09:40.559 --> 0:09:43.080 was a company known for not doing enough to keep 0:09:43.160 --> 0:09:48.880 illegal content off its own platform. Governments, particularly the US government, 0:09:49.160 --> 0:09:52.960 were understandably concerned that a company that had shown such 0:09:53.040 --> 0:09:58.120 reluctance or incompetence take your pick when dealing with harmful 0:09:58.240 --> 0:10:02.320 content now wanted to create its own currency. There were 0:10:02.440 --> 0:10:06.080 multiple hearings to hold Facebook accountable to following laws and 0:10:06.120 --> 0:10:10.880 creating safety measures that financial institutions have to have, right, 0:10:10.920 --> 0:10:15.080 so they're essentially saying, hey, we require all the official 0:10:15.120 --> 0:10:19.040 currency institutions in this country to follow these rules. You 0:10:19.040 --> 0:10:21.040 will be expected to do the same. So now we 0:10:21.120 --> 0:10:23.880 have to start making sure that you have the systems 0:10:23.880 --> 0:10:26.760 in place to do that now. Towards the end of 0:10:27.960 --> 0:10:30.719 Libra got a name change. It changed to d M, 0:10:31.800 --> 0:10:35.520 partly to distance itself from Libra because Facebook's reputation was 0:10:35.559 --> 0:10:40.960 getting uglier by the day. Facebook would follow this same 0:10:41.000 --> 0:10:44.160 strategy in late one, that's when it changed its corporate 0:10:44.240 --> 0:10:48.360 name to Meta, and then by early two the project 0:10:48.480 --> 0:10:50.880 was pretty much dead in the water. There were a 0:10:50.880 --> 0:10:55.440 lot of internal discussions and disagreements with the direction of 0:10:55.480 --> 0:11:01.000 the currency company. After company dropped out of the Libra association, 0:11:01.840 --> 0:11:09.800 and the opposing regulation authorities really had killed all momentum. 0:11:09.880 --> 0:11:14.240 So without fanfare, Facebook dissolved the liber Association and it 0:11:14.400 --> 0:11:18.079 sold off the i P connected to Libra slash d 0:11:18.280 --> 0:11:21.559 M for about a d eighty million dollars, and Facebook's 0:11:21.559 --> 0:11:26.719 attempt at making a cryptocurrency would fade into history. All right, Now, 0:11:26.760 --> 0:11:33.280 let's talk about bitcoins declining value. So back in, Bitcoin 0:11:33.440 --> 0:11:37.199 hits some truly monumental highs. It flirted with nearly seventy 0:11:37.280 --> 0:11:42.080 thousand dollars per bitcoin at one point, but by late 0:11:42.160 --> 0:11:46.280 January two it had dipped into the thirty five thousand 0:11:46.360 --> 0:11:50.040 dollar territory, so it had lost nearly half its value 0:11:50.880 --> 0:11:54.520 in about half a year. Now, the coin rallied a 0:11:54.559 --> 0:11:57.960 bit in the spring of two early in the spring, 0:11:58.679 --> 0:12:01.680 but by April things started to slope downhill, and the 0:12:01.720 --> 0:12:06.400 currency gradually followed the performance of the stock market. Now, 0:12:06.440 --> 0:12:09.840 I have long maintained that bitcoin and other cryptocurrencies aren't 0:12:10.000 --> 0:12:14.880 really currencies. They're really more like commodities or investments, at 0:12:14.920 --> 0:12:18.640 least that's how most people treat them. So it isn't 0:12:18.640 --> 0:12:22.680 a big surprise that as people started to lose faith 0:12:22.960 --> 0:12:26.400 in the stock market and that that started to suffer, 0:12:26.559 --> 0:12:30.240 that we saw something similar happen in the cryptocurrency world. Now, 0:12:30.280 --> 0:12:34.520 today the value of bitcoin is around sixteen eight hundred 0:12:34.520 --> 0:12:38.240 dollars as a record. This that's still a lot of money, 0:12:38.480 --> 0:12:40.560 you know. It still means that if you mind a 0:12:40.600 --> 0:12:44.240 block on the Bitcoin blockchain, you would be awarded the 0:12:44.280 --> 0:12:47.760 equivalent of a hundred five thousand dollars worth of bitcoin. 0:12:47.840 --> 0:12:50.800 That's nothing to sneeze at. That's a lot of money, 0:12:50.840 --> 0:12:53.760 but it is not the massive amount that you can 0:12:53.800 --> 0:12:57.200 make back when bitcoin was at its height in one 0:12:57.280 --> 0:13:01.959 let alone at early two And that has meant that 0:13:02.120 --> 0:13:05.520 mining operations have really scaled back because the money coming 0:13:05.640 --> 0:13:10.880 in from mining has declined, but the cost of operations hasn't. Right, 0:13:11.360 --> 0:13:15.319 So as the money you bring in decreases but your 0:13:15.360 --> 0:13:18.360 costs stay the same, it gets harder and harder to 0:13:18.440 --> 0:13:21.679 cover those costs and eventually get to a point where 0:13:21.720 --> 0:13:24.080 it could actually cost you more money to run your 0:13:24.080 --> 0:13:27.800 computer systems. Then you will earn out of mining even 0:13:27.840 --> 0:13:31.960 if you are really successful. So for the moment, the 0:13:32.080 --> 0:13:35.600 runaway race to have the biggest, most powerful computer network 0:13:35.640 --> 0:13:39.320 on the blockchain has taken a little break. You would 0:13:39.320 --> 0:13:43.160 actually lose your shirt if you tried to follow that philosophy. Now, 0:13:43.800 --> 0:13:46.679 also I should add there were some truly wild predictions 0:13:47.000 --> 0:13:49.439 for what Bitcoin's value was going to be by the 0:13:49.520 --> 0:13:53.640 end of this year before you know, all of two happened, 0:13:53.679 --> 0:13:56.079 And to be fair, a lot did happen that people 0:13:56.120 --> 0:13:59.800 just didn't foresee. For example, Russia invading Ukraine. We're gonna 0:13:59.800 --> 0:14:02.199 talk about that in a future episode in this series. 0:14:02.720 --> 0:14:05.400 But one of the effects that had was a massive 0:14:05.559 --> 0:14:10.760 economic impact throughout the entire world. Well, no one foresaw 0:14:10.840 --> 0:14:14.440 that when they were making uh predictions. And keep in 0:14:14.480 --> 0:14:18.600 mind in bitcoin really did look like it was going 0:14:18.640 --> 0:14:22.760 to the moon. Well one venture capitalist, Tim Draper, famous 0:14:22.880 --> 0:14:26.200 venture capitalist, previously predicted that bitcoin was going to reach 0:14:26.240 --> 0:14:30.240 an astounding two hundred fifty thousand dollars per coin by 0:14:30.240 --> 0:14:33.120 the end of this year. A quarter of a million 0:14:33.160 --> 0:14:36.920 dollars per coin. Now, obviously that didn't happen. Instead, like 0:14:36.960 --> 0:14:40.400 I said, bitcoins hovering below seventeen thousand dollars as I 0:14:40.440 --> 0:14:44.000 record this. But even as late as October of two, 0:14:44.040 --> 0:14:47.000 analysts were guessing that was gonna end the year around 0:14:47.000 --> 0:14:50.480 twenty two thousand dollars per coin. Unless we see some 0:14:50.480 --> 0:14:52.880 pretty dramatic surges and value in the next ten days 0:14:52.960 --> 0:14:55.560 or so, that's just not gonna happen. Now, I'm not 0:14:55.600 --> 0:14:59.040 a financial expert, so it's possible it will happen, but 0:14:59.120 --> 0:15:01.000 I will not be surpri eyes if it's closer to 0:15:01.160 --> 0:15:04.280 between sixteen to eighteen thousand dollars per coin. Even if 0:15:04.320 --> 0:15:08.120 it dropped a little below sixteen, I wouldn't be super surprised. Now, Draper, 0:15:08.120 --> 0:15:10.240 for what it's worth, says that he now thinks that 0:15:10.240 --> 0:15:13.240 bitcoin will hit two d fifty dollars. Is just going 0:15:13.280 --> 0:15:15.200 to take until the middle of next year for that 0:15:15.280 --> 0:15:19.000 to happen. But then there are also doomsday cults that 0:15:19.120 --> 0:15:22.640 when the world continues to exist past it's predicted to 0:15:22.720 --> 0:15:26.160 doomsday deadline, they just moved the deadline back a bit. 0:15:27.000 --> 0:15:28.840 This feels kind of similar to that to me. But 0:15:28.880 --> 0:15:32.040 then again, Draper is a very very rich man and 0:15:32.160 --> 0:15:36.200 I am not. So maybe my doubts are unfounded and 0:15:36.200 --> 0:15:39.520 I just can't see the way he can. We'll have 0:15:39.600 --> 0:15:42.320 to wait until June and next year, I will say. 0:15:42.320 --> 0:15:44.880 There are other investors like Mark Mobius who have had 0:15:44.880 --> 0:15:47.400 a much more cynical outlook and think that bitcoin could 0:15:47.400 --> 0:15:50.000 fall as low as ten thousand dollars a pop by 0:15:50.040 --> 0:15:54.440 next year. Also, Mark Mobius is a great name Okay, 0:15:54.960 --> 0:15:58.280 we've got a lot more to cover about cryptocurrencies in two, 0:15:58.320 --> 0:16:00.680 but before we do that, let's take a quick break. 0:16:11.200 --> 0:16:16.880 We're back now. Some cryptocurrencies are linked to fiat currency 0:16:17.040 --> 0:16:20.920 or other real world assets. So the idea is that 0:16:21.000 --> 0:16:26.080 these coins will maintain a more consistent value because they 0:16:26.120 --> 0:16:31.120 are tied to things that have other ties that guarantee 0:16:31.280 --> 0:16:35.720 their consistency, and we call these stable coins. There are 0:16:35.800 --> 0:16:39.640 other cryptocurrencies that aren't linked to such things, and they 0:16:39.680 --> 0:16:42.680 aren't linked to each other, at least not directly. However, 0:16:42.840 --> 0:16:46.440 when one coin, especially a really influential one, starts to 0:16:46.480 --> 0:16:49.440 go down in value, then you start to see other 0:16:49.560 --> 0:16:53.720 coins follow suit. This is pretty common, so when Bitcoin 0:16:53.800 --> 0:16:57.400 goes down, often you'll see other coins that are not 0:16:57.720 --> 0:17:01.920 directly tied to Bitcoin go down to Now, maybe investors 0:17:01.920 --> 0:17:05.720 are getting cold feet and they're losing confidence overall in cryptocurrency. 0:17:05.920 --> 0:17:09.200 Maybe it's more of a reflection of the overall economy 0:17:09.240 --> 0:17:13.879 and its movement. It's probably a combination of tons of factors, 0:17:13.880 --> 0:17:16.880 but it means that two was a year where you'd 0:17:16.880 --> 0:17:21.480 see various crypto values decrease, though most didn't have nearly 0:17:21.520 --> 0:17:24.680 as far to fall as Bitcoin did. Let's talk about 0:17:24.680 --> 0:17:27.720 a coin that made a long awaited change this year, 0:17:27.760 --> 0:17:32.040 and I'm talking about Ethereum. Now, Ethereum is one of 0:17:32.080 --> 0:17:36.000 the more popular and well known cryptocurrencies that doesn't happen 0:17:36.080 --> 0:17:40.360 to be Bitcoin. It has always felt a bit more 0:17:40.480 --> 0:17:45.680 accessible to the common investor. Back in early twenty while 0:17:45.680 --> 0:17:49.920 bitcoins were worth like seven thousand dollars a pop, ethereum 0:17:50.240 --> 0:17:53.680 was trading closer to a hundred thirty dollars. But by 0:17:53.720 --> 0:17:57.080 the end of twenty ethereum was trading it around six 0:17:57.200 --> 0:18:00.480 hundred dollars each and then in early twenty twenty one 0:18:00.480 --> 0:18:02.720 it went up twice as high and it just kept 0:18:02.760 --> 0:18:06.280 on climbing for a good long while. Now you may 0:18:06.280 --> 0:18:09.880 have heard that cryptocurrency mining had a really big impact 0:18:10.040 --> 0:18:12.800 on things like the graphics card market, and that is 0:18:12.840 --> 0:18:15.840 true now for Bitcoin. The value of the currency had 0:18:15.880 --> 0:18:19.560 grown so much that someone running even a network of 0:18:19.600 --> 0:18:23.639 computers with screaming fast graphics cards just would not be 0:18:23.720 --> 0:18:26.800 able to compete because other miners with deeper pockets had 0:18:26.800 --> 0:18:31.440 moved on to purpose built circuits such as applications specific 0:18:31.520 --> 0:18:36.560 integrated circuits or a s i C. But for cryptocurrencies 0:18:36.920 --> 0:18:41.720 that weren't up to these astronomic values that Bitcoin was enjoying, 0:18:42.560 --> 0:18:46.040 Miners were relying on computers with just powerful graphics processors 0:18:46.040 --> 0:18:50.080 because that still made economic sense, and so Ethereum miners 0:18:50.400 --> 0:18:54.000 were scooping up the best graphics cards really quickly, and 0:18:54.040 --> 0:18:58.480 then they would either sell older ones or you know, 0:18:58.680 --> 0:19:01.480 used ones at really high prices on the secondary market, 0:19:01.720 --> 0:19:05.320 and gamers were faced with very few options when they 0:19:05.320 --> 0:19:08.440 were trying to build out their gaming rigs. They couldn't 0:19:08.480 --> 0:19:12.480 easily get new cards because miners or people who were 0:19:12.560 --> 0:19:16.240 selling the cards to miners were gobbling them up, or 0:19:16.320 --> 0:19:18.960 else they would have to pay a ridiculous premium on 0:19:19.000 --> 0:19:21.320 top of the already high cost of these cards, like 0:19:22.359 --> 0:19:25.879 sometimes well over twice as much as what they were 0:19:26.720 --> 0:19:31.120 originally going to be sold at. But Ethereum was preparing 0:19:31.160 --> 0:19:35.360 to switch how it awarded cryptocurrency. So it had been 0:19:35.440 --> 0:19:39.120 operating on a proof of work system just like Bitcoin, 0:19:39.520 --> 0:19:42.920 although it was it worked much faster than bitcoins ten 0:19:42.960 --> 0:19:46.280 minutes per block, but it was instead going to make 0:19:46.320 --> 0:19:50.080 a shift to something called proof of steak. So with 0:19:50.160 --> 0:19:53.800 a proof of steak that's s T a k E. 0:19:54.840 --> 0:19:57.479 With that kind of system, participants have to put up 0:19:57.520 --> 0:20:01.800 a share of their own cryptocurrency holdings, that is the steak. 0:20:02.800 --> 0:20:06.480 The system decides which stakeholder gets awarded new units of 0:20:06.480 --> 0:20:10.159 cryptocurrency at the end of each block's verification, so this 0:20:10.240 --> 0:20:13.760 system does not require the same massive amounts of computer 0:20:13.840 --> 0:20:16.640 work that a proof of work system requires, and as 0:20:16.640 --> 0:20:20.040 a consequence, we saw GPUs become more available and less 0:20:20.040 --> 0:20:23.680 expensive because miners didn't need them anymore. So it took 0:20:23.720 --> 0:20:27.280 a little bit of time, but gradually things settled down, 0:20:27.640 --> 0:20:30.000 and a lot of former ethereum miners also had to 0:20:30.000 --> 0:20:32.399 figure out if they were going to switch to mining 0:20:32.520 --> 0:20:36.160 some other proof of work cryptocurrency, potentially at a much 0:20:36.160 --> 0:20:38.800 lower value, which could mean that you know, your costs 0:20:38.920 --> 0:20:42.159 eat into any profits you make, or if they were 0:20:42.200 --> 0:20:44.560 just going to sell off their old gear. So a 0:20:44.600 --> 0:20:47.640 lot of them chose to sell stuff off. Now, if 0:20:47.720 --> 0:20:51.080 you are in the market for a GPU, personally, I 0:20:51.119 --> 0:20:55.880 would recommend against buying a used mining rig. You might 0:20:55.920 --> 0:20:59.520 get a top card from the previous generation of cards, 0:20:59.560 --> 0:21:03.680 like the already eighty generation, but it will have been 0:21:03.800 --> 0:21:08.119 used hard and these cards can and do burnout over time. 0:21:08.240 --> 0:21:10.760 Plus they have moving parts like a lot of these 0:21:10.760 --> 0:21:13.320 cards have their own cooling fans built into them, and 0:21:13.359 --> 0:21:16.760 those are also going to get worn down. So personally, 0:21:16.800 --> 0:21:19.760 I would suggest you don't go for a used GPU, 0:21:19.880 --> 0:21:21.960 especially if you know it was used in a mining rig, 0:21:22.560 --> 0:21:25.359 because you probably want a card that's gonna last you 0:21:25.400 --> 0:21:29.000 for a good long while, and those just aren't guaranteed 0:21:29.040 --> 0:21:32.879 to do that anyway. The proof of Steak branch of 0:21:32.880 --> 0:21:35.760 Ethereum actually launched a couple of years ago, but it 0:21:35.800 --> 0:21:38.320 was kind of almost like an a beta program, and 0:21:38.320 --> 0:21:43.280 it wasn't until this September September two that the proof 0:21:43.320 --> 0:21:46.800 of work branch of Ethereum would merge with the proof 0:21:46.880 --> 0:21:50.520 of Steak branch and the whole thing would become proof 0:21:50.560 --> 0:21:54.320 of Steak. So again, this event is called the merge 0:21:54.680 --> 0:21:58.879 capital m So the GPU stuff is fairly recent news. 0:21:59.160 --> 0:22:03.280 It's been pretty recent that you could actually get hold 0:22:03.440 --> 0:22:08.119 of GPUs and pretty much at the manufactured suggested retail price, 0:22:08.280 --> 0:22:11.399 which is a nice change of pace. Now. At its peak, 0:22:11.920 --> 0:22:14.760 Etherory was worth more than four thousand, six hundred dollars 0:22:14.760 --> 0:22:20.400 a coin. Now that was in November of Today, Ethereum's 0:22:20.480 --> 0:22:24.120 value is closer to twelve hundred dollars per coin, so 0:22:24.160 --> 0:22:27.560 it's still nearly ten times more valuable than it was 0:22:27.640 --> 0:22:30.359 the beginning of So I don't want to make it 0:22:30.400 --> 0:22:34.359 sound like Ethereum is like crashing and burning. It's still 0:22:35.119 --> 0:22:37.879 way better than it was just two years ago, but 0:22:38.040 --> 0:22:40.800 like Bitcoin and so many other cryptocurrencies, and has lost 0:22:40.840 --> 0:22:44.000 a ton of value over the last year. And again, 0:22:44.040 --> 0:22:46.919 that loss of value is a very complex issue. It 0:22:47.080 --> 0:22:50.560 is tempting for me to say that people are generally 0:22:50.600 --> 0:22:54.400 losing faith in cryptocurrency, and since the currency depends largely 0:22:54.520 --> 0:22:57.760 upon people believing and then behaving as if it in 0:22:57.840 --> 0:23:01.320 fact has value, well if they stopped believing, the value 0:23:01.320 --> 0:23:04.560 goes away. But honestly, that's just not true, or at 0:23:04.600 --> 0:23:08.440 least it's not the whole truth. Yes, many cryptocurrencies are 0:23:08.520 --> 0:23:12.240 based on little more than how investors and miners and 0:23:12.280 --> 0:23:16.399 participants are treating it, but external economic factors are also 0:23:16.640 --> 0:23:21.840 at play, and ignoring that just means you're being dishonest. Now, 0:23:21.920 --> 0:23:24.440 I think we started to get a feel for how 0:23:24.560 --> 0:23:28.840 rough two was really going to be for cryptocurrencies back 0:23:29.000 --> 0:23:33.239 in mid spring of this year. One early indication that 0:23:33.280 --> 0:23:36.160 things were headed south was the collapse of a crypto 0:23:36.240 --> 0:23:40.760 firm called Three Arrows Capital. So this company was based 0:23:40.760 --> 0:23:44.280 out of Singapore at least until very recently when it 0:23:44.440 --> 0:23:48.639 moved to Dubai before it imploded. And Three Arrows Capital 0:23:48.720 --> 0:23:51.399 a k A. Three a C was a hedge fund 0:23:51.600 --> 0:23:56.080 specializing an investment in cryptocurrencies, and it had been around 0:23:56.280 --> 0:23:59.360 for a decade, so this was not some brand new company. 0:23:59.440 --> 0:24:02.040 It had, you know, been around for ten years. But 0:24:02.119 --> 0:24:05.159 by the spring of two the company had a billion 0:24:05.200 --> 0:24:08.440 dollars in assets. That's impressive, but it also had more 0:24:08.480 --> 0:24:13.840 than three billion dollars in debts. Oh. Now, as cryptocurrencies 0:24:13.880 --> 0:24:17.000 began to decline in value, three a C was starting 0:24:17.040 --> 0:24:20.800 to feel the pinch, but that pinch became crushing when 0:24:20.840 --> 0:24:25.240 a couple of crypto coins collapsed. Those coins were Terra 0:24:25.640 --> 0:24:28.480 U S D that's T E R R A so 0:24:28.680 --> 0:24:31.680 Terra USD, which was shortened to just U S T 0:24:32.359 --> 0:24:36.000 as its acronym or initialism, and then there was Luna, 0:24:36.200 --> 0:24:39.480 and both of these called the Terra blockchain their home. 0:24:40.160 --> 0:24:43.040 So Terra USD was supposed to be a stable coin 0:24:43.440 --> 0:24:46.840 tied to the U S dollar through a very complicated 0:24:46.920 --> 0:24:53.119 relationship with Luna, but in May two that complicated relationship 0:24:53.680 --> 0:24:59.879 unraveled rapidly, and so the U S T coin, the 0:25:00.000 --> 0:25:04.000 became unpegged to the US dollar. It no longer was 0:25:04.040 --> 0:25:07.720 tied to the dollars value, and its value collapsed to 0:25:07.840 --> 0:25:12.439 just ten cents per coin. The value of Luna dropped 0:25:12.440 --> 0:25:17.600 to almost nothing. We're talking fractions of a penny, like 0:25:17.680 --> 0:25:22.160 point zero zero zero zero some sense. Well, Three Arrow 0:25:22.280 --> 0:25:27.240 Capital had unfortunately invested very heavily in Luna, so when 0:25:27.280 --> 0:25:30.919 suddenly all that value just went away, it tore the 0:25:30.960 --> 0:25:35.240 foundations out from underneath three A C. The company spiraled 0:25:35.240 --> 0:25:39.040 into bankruptcy. The collapse of UST and Luna wiped out 0:25:39.080 --> 0:25:43.280 more than forty billion dollars in investor wealth. I think 0:25:43.320 --> 0:25:47.080 I've seen estimates between forty two and forty five billion dollars, 0:25:47.640 --> 0:25:50.640 and when your estimates have a range of three billion, 0:25:51.200 --> 0:25:55.120 things are bad now. It also tied off another stable 0:25:55.160 --> 0:25:58.760 coin going into a crisis. That one was d e 0:25:58.920 --> 0:26:02.680 I briefly got unpegged from the U. S dollar as 0:26:02.720 --> 0:26:06.000