WEBVTT - What's The Deal With Bitcoin Going Up? 0:00:01.280 --> 0:00:04.800 This is Bloomberg Crypto Daily, Bloomberg Ihad Podcast, and I'm 0:00:04.840 --> 0:00:08.680 Philip lagger Transfer, senior editor for Bloomberg News, standing in 0:00:08.800 --> 0:00:26.440 for Stacy Marie Eshmaal. It is Friday, February, the third well. 0:00:27.000 --> 0:00:30.240 January in the Northern Hemisphere can often feel like the 0:00:30.320 --> 0:00:34.559 longest month, but it's finally over. Surprising to some, it 0:00:34.640 --> 0:00:37.280 turned out to be a pretty good month for crypto. 0:00:37.720 --> 0:00:42.800 Bitcoin rose almost and a lot of smaller coins actually 0:00:42.840 --> 0:00:45.839 did a lot better than that. Even and speaking of 0:00:45.920 --> 0:00:50.440 risk taking, Wall Street is still keen on crypto despite 0:00:50.520 --> 0:00:54.920 all of last year's calamities, and a failed crypto lender 0:00:55.000 --> 0:00:59.040 known for its risk appetite, Celsius, just got some pretty 0:00:59.080 --> 0:01:02.760 harsh words from its bankruptcy examiner. Here to help me 0:01:02.800 --> 0:01:06.120 break down the news, it's Bloomberg Senior editor Anna Airera. 0:01:06.520 --> 0:01:09.640 These firms have very long horizons and it takes them very, 0:01:09.720 --> 0:01:11.959 very long to do things. So you know, they might 0:01:11.959 --> 0:01:14.520 have made announcements a couple of months ago during the rally, 0:01:14.560 --> 0:01:17.319 but they probably started working on things a few years ago. 0:01:17.680 --> 0:01:21.160 And Bloomberg reporter Emmilin Nicole, we don't even know if 0:01:21.200 --> 0:01:24.160 there may be more collapses to come, but FTX was 0:01:24.240 --> 0:01:26.720 one of the biggest tests I think that Crypto could 0:01:26.720 --> 0:01:36.400 have faced on that front. And so this week we 0:01:36.560 --> 0:01:43.119 had the Celsius bankruptcy examiner's report and it was pretty scathing. 0:01:43.280 --> 0:01:46.000 I guess we can say, Emily, you covered that story, 0:01:46.800 --> 0:01:50.160 what was the gist of it? So this was the 0:01:50.280 --> 0:01:53.640 final report that the court pointed examiner was doing into 0:01:53.760 --> 0:01:58.800 Celsius throughout its bankruptcy case, and unlike probably even some 0:01:58.840 --> 0:02:01.280 of the things that we've seen come from other bankruptcy 0:02:01.280 --> 0:02:04.120 cases so far, this one was pretty damning. I guess 0:02:04.160 --> 0:02:07.520 you could say. What the examiner found was that a 0:02:07.600 --> 0:02:10.800 lot of what Celsis was doing to track its assets 0:02:10.800 --> 0:02:15.880 and my abilities was insufficient. It made misrepresentations to customers 0:02:15.960 --> 0:02:19.160 quite regularly about its financial health and then tried to 0:02:19.200 --> 0:02:22.280 cover up the tracks after it lied about it. Um 0:02:22.320 --> 0:02:25.680 There was also a pretty evident picture of how for 0:02:25.840 --> 0:02:28.320 most of the time that Celtis was operasing from about 0:02:28.320 --> 0:02:32.080 twenty one onwards, it was essentially insolvent because most of 0:02:32.120 --> 0:02:34.760 how it was propping itself up was through its own token, 0:02:34.919 --> 0:02:38.240 cel Cell, and even with Cell, some of its top 0:02:38.360 --> 0:02:42.079 executives like Alex Muszynski, the former CEO, had been selling 0:02:42.120 --> 0:02:44.840 off really large amounts of self for their own personal gain, 0:02:45.080 --> 0:02:48.560 which was similarly then hitting the customers and balance sheet 0:02:48.560 --> 0:02:51.040 at the same time. And this was even as they 0:02:51.040 --> 0:02:53.799 spent I think it was north of five hundred million 0:02:53.800 --> 0:02:57.560 dollars on buying the cell token from the company account. 0:02:57.720 --> 0:03:02.160 The examiner report found that at least five million dollars 0:03:02.240 --> 0:03:05.440 was spent buying its token, and Sealsis was covering up 0:03:05.440 --> 0:03:07.800 from customers that much, like you know, how much it 0:03:07.840 --> 0:03:11.320 was spending on that and even out of that figure. 0:03:11.880 --> 0:03:14.519 While that was happening between twenty and the time that 0:03:14.560 --> 0:03:17.880 sells his father bankruptcy. Last year, mission Ski made about 0:03:17.960 --> 0:03:21.679 sixty eight million on selling this token for himself, while 0:03:21.680 --> 0:03:24.720 another count co founder made at least almost ten million. 0:03:25.240 --> 0:03:26.840 So there was a lot to be made. There a 0:03:26.880 --> 0:03:30.680 lot of stuff going on. Is there anything in this 0:03:30.840 --> 0:03:35.000 report that you either you Emily or Anna c as 0:03:35.040 --> 0:03:38.760 you know, speaking to the actual business model? Um? Is it? 0:03:38.800 --> 0:03:43.080 Is it another testament that the business model of crypto 0:03:43.280 --> 0:03:46.640 lending and the investing or that the sort of risk 0:03:46.680 --> 0:03:49.120 taking that underpinned crypto lending as we knew it at 0:03:49.200 --> 0:03:53.720 least until two two was out of whack. What's interesting here? 0:03:53.720 --> 0:03:57.080 And I'm not sure how new this this is, but obviously, 0:03:57.120 --> 0:03:58.960 and it's quite common for the lenders, was that they 0:03:58.960 --> 0:04:03.000 were attracting the part it's by offering very high yields um. 0:04:03.120 --> 0:04:05.040 But what's interesting is that they were saying that the 0:04:05.120 --> 0:04:08.720 investments they were making or the loans, were not high risk. 0:04:09.200 --> 0:04:11.400 And obviously, if you have any experience investing, you know 0:04:11.440 --> 0:04:14.080 that generally you get high yields when there risk is higher. 0:04:14.440 --> 0:04:17.320 And so the examiner noted that obviously that wasn't the case, 0:04:17.440 --> 0:04:19.400 and that as they were trying to attract more deposits 0:04:19.440 --> 0:04:23.120 the investors, the investments got riskier and riskier. And Emily 0:04:23.160 --> 0:04:25.960 noted in her story how for a certain period in 0:04:25.960 --> 0:04:30.320 time the loans were completely uncollateralized. And just to take 0:04:30.360 --> 0:04:33.480 a step back, basically, if if anyone who's listening is unfamiliar, 0:04:33.520 --> 0:04:35.960 what happens is, you know, you deposit like just like 0:04:36.000 --> 0:04:38.960 a bank, you would deposit your tokens with a with 0:04:39.000 --> 0:04:41.760 a crypto lender, and they would give you yield by 0:04:42.000 --> 0:04:44.760 lending it out to someone else. Um. And what happened 0:04:44.760 --> 0:04:47.039 in crypto was that it's not wasn't actually a bank. 0:04:47.240 --> 0:04:50.200 Your deposits were insured and in many cases, they didn't 0:04:50.200 --> 0:04:52.400 have any risk management to make sure that they weren't 0:04:52.440 --> 0:04:54.600 just handing off your tokens to someone who would make 0:04:54.760 --> 0:04:58.440 very questionable bets on not great tokens. UM and the 0:04:58.480 --> 0:05:01.240 report also noted this lack of risk management. I think 0:05:01.440 --> 0:05:05.400 they said until they did not have anyone in risk management, 0:05:05.480 --> 0:05:08.640 no written risk management procedures, and then they hired four 0:05:08.680 --> 0:05:12.000 people who had some stop gap measures. I think UM 0:05:12.240 --> 0:05:14.640 were meant to cover holes until they would come up 0:05:14.680 --> 0:05:18.279 with more serious risk management procedures. Then they hired some 0:05:18.520 --> 0:05:21.320 more people. One person came up with some policies, but 0:05:21.360 --> 0:05:24.960 they were never implemented. I don't know the business model itself, 0:05:25.000 --> 0:05:27.560 but just in general sort of how it was being 0:05:27.600 --> 0:05:30.840 portrayed clients that it was that was supposedly safe and 0:05:30.880 --> 0:05:33.600 that you were depositing your money and something that was 0:05:33.680 --> 0:05:35.560 like a bank, and that it was going to be there, 0:05:35.920 --> 0:05:38.119 when in fact it was being lent out to people 0:05:38.120 --> 0:05:41.400 who took risky bets. UM didn't have to post any collateral, 0:05:41.480 --> 0:05:44.960 so that when when those risky bests started backfiring, lenders 0:05:44.960 --> 0:05:47.320 like Celsius lost a lot of money and it wasn't 0:05:47.360 --> 0:05:52.039 their own money, it was their client's money. And I 0:05:52.160 --> 0:05:54.440 noticed that you spoke about the kind of risk reward 0:05:54.480 --> 0:05:58.719 of equation and the concept of that there isn't really 0:05:58.720 --> 0:06:02.200 any free free lunch. I yes, um in finance. And 0:06:03.120 --> 0:06:06.080 you know, it's a segue over to a sector that 0:06:06.160 --> 0:06:10.520 actually does, probably at least most of the time, understand 0:06:10.600 --> 0:06:14.400 risk reward, and that's Wall Street. And you did a 0:06:14.440 --> 0:06:18.240 story together with some of our colleagues about Wall Streets 0:06:18.360 --> 0:06:22.680 sort of crypto ambitions as they stand now. And what 0:06:22.800 --> 0:06:26.360 did you guys find out. So anyone who's listening would 0:06:26.400 --> 0:06:28.840 imagine that with everything that's gone down in crypto, Wall 0:06:28.880 --> 0:06:30.640 Street would want to take a rain check or say 0:06:30.720 --> 0:06:32.320 we don't want to have anything to do with it. 0:06:32.360 --> 0:06:34.320 In reality, some of the firms that had stepped in 0:06:34.400 --> 0:06:37.400 during the sort of crypto rally by saying they would 0:06:37.440 --> 0:06:41.320 start launching crypto custody or start offering crypto to some 0:06:41.360 --> 0:06:43.880 of their clients have said that they're they'll continue with 0:06:43.920 --> 0:06:46.599 these plans. Uh. And in many cases, some of these 0:06:46.600 --> 0:06:49.840 banks see crypto not just as crypto in itself, as 0:06:49.880 --> 0:06:52.080 what we see now. So so you know, Bitcoin and 0:06:52.160 --> 0:06:54.120 ether and these assets that are existing, but as an 0:06:54.160 --> 0:06:57.800 opportunity to tokenize existing assets, so stuff that they already trade, 0:06:57.839 --> 0:07:01.120 like bonds, are other forms of securities. So it's a 0:07:01.160 --> 0:07:04.359 mix of firms trying to get into into actual you 0:07:04.400 --> 0:07:08.040 know cryptos, so bitcoin, and also to lay the foundation 0:07:08.120 --> 0:07:10.280 for a future which they believe will have you know, 0:07:10.400 --> 0:07:13.960 normal asset tokenized UM. And I think what's really interesting 0:07:13.960 --> 0:07:16.240 here is that you know, many of them flagged. How 0:07:16.280 --> 0:07:19.800 actually what's gone on in crypto gives them an opportunity 0:07:19.840 --> 0:07:23.600 to step in because with cases like FTX or you know, 0:07:23.680 --> 0:07:26.840 other other instances in which customer assets were mixed with 0:07:27.000 --> 0:07:29.800 assets of the firm and you know sort of there 0:07:29.840 --> 0:07:32.440 was no risk management and customer assets are now gone. 0:07:32.760 --> 0:07:36.280 It just shows that for investors it's sort of probably 0:07:36.360 --> 0:07:38.920 better to work with a regulated firm who has to 0:07:38.920 --> 0:07:41.680 follow certain rules, and one of which, which is very basic, 0:07:41.840 --> 0:07:46.320 is not mixing assets and keeping assets safe and custody 0:07:46.320 --> 0:07:48.960 by a third party. There's a lot going on, and 0:07:49.000 --> 0:07:50.760 I guess, you know, another thing to point out is 0:07:50.800 --> 0:07:53.720 that these firms have very long horizons and it takes 0:07:53.720 --> 0:07:55.960 them very very long to do things. So you know, 0:07:56.120 --> 0:07:58.240 they might have made announcements a couple of months ago 0:07:58.360 --> 0:08:00.840 during the rally, but they probably are working on things 0:08:00.960 --> 0:08:03.160 a few years ago, and so in some cases they 0:08:03.240 --> 0:08:05.800 might not really be swayed by the crypto prices now 0:08:06.280 --> 0:08:08.920 and they might be actually generally looking at doing things 0:08:08.920 --> 0:08:11.000 in the long term so that if another rally comes, 0:08:11.040 --> 0:08:13.640 they might actually make some money and fees from from 0:08:13.680 --> 0:08:16.840 the trading. And what happens that being said, a big 0:08:16.880 --> 0:08:18.880 caveat is you know a lot of these firms say 0:08:18.920 --> 0:08:21.480 they do things because of client demand and that's what's 0:08:21.520 --> 0:08:24.800 driving them to launch new products. And now with crypto 0:08:24.920 --> 0:08:28.240 prices down like and so many investors haven't been hurt, 0:08:28.440 --> 0:08:32.360 you have to wonder is this demand still there at 0:08:32.400 --> 0:08:34.880 the same time. I mean, if you look at the banks, 0:08:35.000 --> 0:08:37.760 at least to a certain extent, they're at least being 0:08:37.800 --> 0:08:41.120 held back by the regulations on them right now. I mean, 0:08:41.160 --> 0:08:44.240 for instance, they cannot hold crypto directly on their balance sheet. 0:08:44.559 --> 0:08:47.640 How do you think that is playing into the time 0:08:47.679 --> 0:08:52.160 horizons here and what impact wall Stree you can actually 0:08:52.160 --> 0:08:55.600 have on crypto. That's definitely a big role. A lot 0:08:55.640 --> 0:08:58.120 of them have been wary because there weren't clear enough 0:08:58.160 --> 0:09:01.200 regulations and as you mentioned, the balance issue, it's it's 0:09:01.240 --> 0:09:04.360 sort of a risk issue. So you know, post crisis 0:09:04.400 --> 0:09:07.920 rules have made banks a lot safer. They've imposed that 0:09:08.000 --> 0:09:11.240 banks hold a lot more collateral for risky assets, and 0:09:11.320 --> 0:09:14.640 in many cases banks believe or in many countries that 0:09:15.000 --> 0:09:18.000 assets that crypto would be classified as the riskiest assets, 0:09:18.000 --> 0:09:19.840 and so they'd have to hold a lot of collateral 0:09:19.880 --> 0:09:22.200 to hold bitcoin on their balance sheet, which would make 0:09:22.240 --> 0:09:24.400 it sort of not really worth it, which is the 0:09:24.440 --> 0:09:27.360 reason why they've held back. So, you know, now we've 0:09:27.400 --> 0:09:30.520 we're seeing a big regulatory push globally from regulators in 0:09:30.559 --> 0:09:34.200 all major jurisdictions to regulate crypto more. That would bring 0:09:34.200 --> 0:09:37.320 more clarity and we can maybe I think that it 0:09:37.400 --> 0:09:40.240 would help banks step in, but at the same time, 0:09:40.280 --> 0:09:43.079 you know, they might just think it's not really worth 0:09:43.559 --> 0:09:47.600 the headache at the moment. We'll be right back with 0:09:47.720 --> 0:09:51.320 more of the week's top crypto stories with Anna and Emily. 0:10:01.880 --> 0:10:05.080 And Emily, you've sort of come at this from a 0:10:05.280 --> 0:10:08.960 slightly more I guess crypto side, do you. Is it 0:10:09.040 --> 0:10:14.240 your impression that firms that are crypto native are in 0:10:14.320 --> 0:10:18.800 any way, shape or form concerned about you know, the 0:10:19.400 --> 0:10:21.640 trad fire as they call them, moving in on their 0:10:21.640 --> 0:10:23.600 turf right now, or is it's sort of like, no, 0:10:24.280 --> 0:10:27.599 they're too big, they're too slow, they're too hampered by regulation. 0:10:27.679 --> 0:10:30.000 How would you read the mood on that. I mean, 0:10:30.040 --> 0:10:34.360 there's always the idea that more competition is better for innovation, 0:10:34.400 --> 0:10:36.120 but also it means that you have to work harder 0:10:36.160 --> 0:10:39.040 as a company to draw in users. I think probably 0:10:39.080 --> 0:10:41.920 at the minute though, volumes are so low in crypto 0:10:42.160 --> 0:10:45.040 that it's difficult for any one to get users trad 0:10:45.080 --> 0:10:48.720 fire crypto native. It doesn't matter who you are. Um. 0:10:48.760 --> 0:10:51.920 There's obviously the elements that were mentioned about how if 0:10:51.920 --> 0:10:54.480 you're in the crypto companies don't have the best reputation 0:10:54.559 --> 0:10:57.080 right now, and so maybe Wall Street has an edge there. 0:10:57.440 --> 0:11:00.560 But Wall Street also can't offer what crypto offers. I mean, 0:11:00.600 --> 0:11:04.160 if we look at Fidelity as a as a case example, 0:11:04.400 --> 0:11:07.079 they can only really offer bitcoin ethereum at the minute, 0:11:07.320 --> 0:11:09.120 and they're not able to even offer you know, the 0:11:09.840 --> 0:11:12.760 top old coins in the sector like Toolana or Cardano, 0:11:12.880 --> 0:11:16.080 because those aren't things that we really have regulatory cliracy on. 0:11:16.440 --> 0:11:18.559 We're still not sure, for example, in the US, whether 0:11:19.160 --> 0:11:22.200 um something is a security or a commodity, and that 0:11:22.240 --> 0:11:25.720 makes things very difficult for Wall Street firms to really 0:11:25.720 --> 0:11:28.920 think about, so crypto natives can can continue to keep 0:11:28.960 --> 0:11:32.040 that edge and when volumes are this though, it's really 0:11:32.040 --> 0:11:35.160 in those smaller tokens actually where there's there's potentially money 0:11:35.200 --> 0:11:37.080 to be made for traders. It's where they can get 0:11:37.120 --> 0:11:40.680 probably the best arbitrage opportunities, and that's not something that 0:11:40.840 --> 0:11:43.320 big banks or Wall Street are anywhere close to offering 0:11:43.320 --> 0:11:46.880 at the minute. Okay, let's pivot to regulation then, because 0:11:46.920 --> 0:11:50.079 the UK just came out with a proposal. I guess 0:11:50.080 --> 0:11:53.200 you can say, from a regulatory standpoint, at least bring 0:11:53.600 --> 0:11:57.480 crypto and tried fy sort of under the same roof, 0:11:58.160 --> 0:12:00.400 and when you did that story, what can tell us 0:12:00.440 --> 0:12:03.920 about that and how significant does it look at this point? 0:12:04.600 --> 0:12:08.400 So the UK announced a consultation this week that will 0:12:08.520 --> 0:12:11.280 basically form the cornerstone of what will be the country's 0:12:11.320 --> 0:12:14.800 broadest set of crypto regulations. It's announced a couple of 0:12:14.800 --> 0:12:18.640 proposals last year and too, like specific areas like stable 0:12:18.720 --> 0:12:23.120 coins or how we can promote crypto assets in general advertising. 0:12:23.640 --> 0:12:26.199 But this is this is the big one um and 0:12:26.440 --> 0:12:30.000 most of what it goes through things like how crypto 0:12:30.080 --> 0:12:33.880 exchanges should be regulated, transitioning away from a bit of 0:12:34.160 --> 0:12:36.560 a registration regime that the UK has a minute that 0:12:36.640 --> 0:12:39.560 just looks at anti money laundering standards and how crypto 0:12:39.600 --> 0:12:42.400 companies on masks can just be treated like regular financial 0:12:42.440 --> 0:12:45.959 services companies. Um. There's some bits in there about how 0:12:46.440 --> 0:12:50.280 crypto exchanges should put in place requirements for tokens issuers 0:12:50.280 --> 0:12:53.280 when they want to listen a new token. UM. There's 0:12:53.320 --> 0:12:57.480 also things like there should be stricter rules on custody, 0:12:57.679 --> 0:13:02.040 on crypto lenders, on into ned areas. Basically everything that 0:13:02.080 --> 0:13:03.880 you could think of as an issue that's been thrown 0:13:03.920 --> 0:13:07.040 up in two with all the bankruptcies and collapses and 0:13:07.120 --> 0:13:10.000 scandals we've had, the UK has tried to address in 0:13:10.040 --> 0:13:13.000 this one document. It's interesting that you mentioned that, Emily, 0:13:13.080 --> 0:13:16.480 because as I read this story, it's sort of like 0:13:16.600 --> 0:13:19.560 it was kind of check check, check point by point, 0:13:19.720 --> 0:13:24.720 kummingling things like the stuff that came up again and 0:13:24.760 --> 0:13:30.040 again and again over two It almost reads like either 0:13:30.080 --> 0:13:34.120 they anticipated this or they have been working very hard 0:13:34.120 --> 0:13:36.240 in the last couple of weeks and months to get 0:13:36.240 --> 0:13:39.959 this ready. Hum. I mean, it's it's definitely the latter, right. 0:13:40.040 --> 0:13:43.280 So they started announcing these kinds of things back in 0:13:44.200 --> 0:13:46.960 between January and April two, and it was all in 0:13:47.000 --> 0:13:50.520 the kind of slight aftermath of coming off of bitcoin's peak, 0:13:50.559 --> 0:13:53.280 but crypto was still almost in its ballmarket to bear 0:13:53.360 --> 0:13:56.719 market transition mode. We hadn't yet had terror collapse or 0:13:56.720 --> 0:13:59.160 anything like that, and the UK wanted to be a 0:13:59.200 --> 0:14:02.199 global crypto hub. So these were all the kinds of 0:14:02.240 --> 0:14:04.840 like stepping stones paving the way for a big crypto 0:14:04.920 --> 0:14:07.800 framework that would make the UK this like haven for 0:14:07.840 --> 0:14:12.800 crypto companies. Um then terror happened, and also the UK 0:14:12.920 --> 0:14:15.600 had its own kind of government chaos with multiple prime 0:14:15.600 --> 0:14:19.040 ministers and and all the rest we won't name. But 0:14:19.120 --> 0:14:20.920 what that did is it gave the country time to 0:14:20.960 --> 0:14:24.400 kind of step back, watch all this chaos unfold and 0:14:24.520 --> 0:14:28.080 really know how to get that framework in place properly 0:14:28.120 --> 0:14:31.600 so that it did address all those concerns. They obviously 0:14:31.640 --> 0:14:33.680 picked now is the time to come out with that, 0:14:33.760 --> 0:14:35.760 and we don't even know if there may be more 0:14:35.800 --> 0:14:38.920 collapses to come. But FTX was one of the biggest 0:14:39.000 --> 0:14:41.640 tests I think that crypto could have faced on that front, 0:14:41.640 --> 0:14:44.320 and so making sure that exchanges is in here was 0:14:44.360 --> 0:14:48.520 a really big thing. Well, it certainly feels like two 0:14:48.560 --> 0:14:53.040 served as a kind of blueprint for exactly how different 0:14:53.080 --> 0:14:55.320 things can go wrong in an industry. I mean, there 0:14:55.360 --> 0:14:57.640 might be more to come in a way, but part 0:14:57.640 --> 0:15:01.000 of me feels like we've seen so many things go 0:15:01.120 --> 0:15:03.760 wrong in so many different ways that, as you said, Emily, 0:15:04.040 --> 0:15:07.040 it would be somewhat surprising if regulators hadn't picked up 0:15:07.160 --> 0:15:12.120 on some of those. I want to finish today's episode 0:15:12.440 --> 0:15:15.720 with a little bit more of a sort of crypto 0:15:15.880 --> 0:15:22.520 only and maybe more lighthearted topic, and that's n f 0:15:22.560 --> 0:15:26.280 T s are coming to the Bitcoin blockchain, which is 0:15:26.480 --> 0:15:30.760 not being received and equivocally happily. I guess you could say, 0:15:30.800 --> 0:15:35.720 Emily looked into that. What's happening there? Yes, so, my 0:15:35.920 --> 0:15:39.200 lovely colleague David pan He wrote out the story on Monday. 0:15:39.280 --> 0:15:42.560 What we're looking at here is potentially a very big 0:15:42.560 --> 0:15:46.880 deal for bitcoin because Ethereum as a blockchain has been 0:15:47.640 --> 0:15:51.400 much faster and much more adaptable than it's older counterpart 0:15:51.880 --> 0:15:55.120 um Bitcoin. For for all it's good and worth while 0:15:55.160 --> 0:15:57.600 still being one of the more valuable tokens, the blockchain 0:15:57.640 --> 0:16:00.560 itself hasn't been that useful. And if they're and meanwhile 0:16:00.600 --> 0:16:03.120 has had n f T s and smart contracts and 0:16:03.160 --> 0:16:05.880 all the old coins you could dream of. And so 0:16:06.320 --> 0:16:08.960 in the more recent years, Bitcoin has been undergoing some 0:16:09.040 --> 0:16:11.080 changes to try and make it so that the blockchain 0:16:11.120 --> 0:16:13.680 itself can be a little bit more adaptable in similar ways, 0:16:14.160 --> 0:16:16.880 and one big upgrade called tap root did actually make 0:16:16.920 --> 0:16:20.440 it possible so that you could store images directly on 0:16:20.560 --> 0:16:23.600 the network itself. That's something that even ethereum can't do 0:16:23.800 --> 0:16:26.440 at the minute. An n f T on Ethereum, let's 0:16:26.480 --> 0:16:28.120 you put in a link that will then point you 0:16:28.200 --> 0:16:30.400 to a web page where your images, but the actual 0:16:30.520 --> 0:16:33.800 picture itself isn't on the chain. And with this change, 0:16:34.480 --> 0:16:36.840 a company called Ordinals said that they could put the 0:16:36.880 --> 0:16:39.360 actual picture on the blob chain. The reason why people 0:16:39.360 --> 0:16:41.480 aren't happy about that though, is that it takes up 0:16:41.520 --> 0:16:44.520 a lot of space, and that's something that Bitcoin really 0:16:44.560 --> 0:16:46.640 can't afford at the minute, given how slow it is 0:16:46.680 --> 0:16:48.840 already compared to the rest. And if you're adding in 0:16:48.960 --> 0:16:51.520 massive transactions for n f t s where you're storing 0:16:51.560 --> 0:16:53.280 the whole picture on there and it takes up a 0:16:53.280 --> 0:16:57.160 ton of block space, that's just a massive, massive turn off, 0:16:57.640 --> 0:17:01.800 and it created a bit of a debate. Let's say, problems, problems, problems, 0:17:02.200 --> 0:17:05.720 all right, thank you, Anna and Emily. This was Bloomberg 0:17:05.800 --> 0:17:10.439 Senior editor for Crypto Anna Arera and Bloomberg reporter Emily Nicole. 0:17:10.880 --> 0:17:13.879 You can find more of their reporting on the Bloomberg Terminal, 0:17:14.000 --> 0:17:17.560 on Bloomberg dot com and on Twitter. For more, be 0:17:17.720 --> 0:17:21.800 sure to check out our twice weekly newsletter, Bloomberg Crypto. 0:17:27.480 --> 0:17:30.600 This is Bloomberg Crypto, a daily podcast from Bloomberg and 0:17:30.680 --> 0:17:33.639 I Heeart Radio. For more shows from I Heeart Radio, 0:17:33.840 --> 0:17:36.959 visit the I Heart Radio app, Apple Podcasts, or wherever 0:17:37.040 --> 0:17:40.560 you get your podcasts. Send us your comments, questions, or 0:17:40.600 --> 0:17:43.600 suggestions for the show to Crypto at Bloomberg dot net. 0:17:46.800 --> 0:17:50.520 The supervising producer of Bloomberg Crypto is Vicky Vergolina. Our 0:17:50.560 --> 0:17:54.359 senior producer is Janet Babin. Our producers are Mohammed Farup 0:17:54.440 --> 0:17:57.840 and Sharon Burriro. Our associate producers are Ty Butler and 0:17:57.880 --> 0:18:02.200 Moses on Them. Desta wonder At is our engineer. Original 0:18:02.280 --> 0:18:06.800 music by Leo Sidron. I'm Stacy, Marie Ishmael. Have a 0:18:06.800 --> 0:18:07.399 great weekend.