July 25, 2021 • 53 mins
Dan is the former editor-at-large at Yahoo News and has just joined Crypto news outlet Decrypt as editor-in-chief. Dan joins David to discuss Crypto regulation, the future of NFTs, and the bias that exists in crypto media.
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Episode Transcript
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Speaker 1 (00:00):
I'm David Grosso, and you're listening to Follow the Profit.
Today we're gonna talk about crypto. You read about it everywhere,
but most of the population doesn't even know what it is.
So what is it? How does it work? And where
is it going? And all the questions that you were
embarrassed to ask you can ask him here. In fact,
I'm going to ask them. Even though I do a
(00:21):
lot of reporting on crypto and get quoted a lot
in the media, there are things that I don't understand,
and this is an important podcast for you to understand
exactly what I just said. What is crypto, where did
it come from? And where is it going? So be
sure to listen to the whole thing because you're going
to need this information if you're going to navigate this
(00:43):
very theoretical and confusing world. Joined by a fellow journalist
who recently changed careers. His name is Dan Roberts. Hey Dan,
how you doing today? So of tha, thanks for having
me on, David, So tell me what do you think
(01:03):
of crypto and the role that it plays in our
reality these days? Because it seemingly came out of nowhere. Well,
it's funny, you know, I've been coming. It's eleven. Back
when I was at Fortune Magazine, I wrote the first
bitcoin related story on Fortune dot com. So to me,
it hasn't come out of nowhere. But certainly what you
said is fair in the sense that it has never
(01:25):
been more mainstream than it is right now. That's sort
of table stakes, like how people is. At the very
least you might not be interested in it, and that's okay.
You might even think it's stupid, and that's okay. But
I think a larger number of people than ever before
at least can recognize this is a real thing. This
is going to stay. It is not going to disappear
and collapse tomorrow. It's been trading for eleven years. It's
(01:48):
a digital asset, and there are entire companies, firms, funds, economies,
cultures built around it. Now we can drill down if
we wanted to bitcoin ethereum and defy and n f
t s all that good stuff. But it's not going
to suddenly disappear. Yes, there are fluctuations, but everyone at
least recognizes this is a real thing. So let's talk
(02:12):
about that more. Dan, Right, you were a journalist, of course,
for Yahoo Finance, so you understand that these fluctuations are
pretty They're much more pronounced than they would be with
traditional assets like stocks are real estate. Can you tell
us a little bit about that. Well, it's a volatile asset, yes,
(02:32):
But the truth is that people who over emphasize that
and they say it's so volatile. It's so volatile. I mean,
there have been some dramatic corrections, but if you zoom
out and look at the line, it's up into the right.
In bitcoin's history, I mean we're talking just about bitcoin
really as well. Now, for the longest time, in the
last two years, everyone would just compare whatever Bitcoin was
(02:53):
doing to the crash that really launched what we call
crypto winter in early I mean everyone remembers the last
big run up. It was all hype and frenzy, end
of characterized by you know, Grandma at the Thanksgiving dinner
table asking if she should buy crypto, and then in
February Bitcoin crash six. And for the last years, that's
(03:14):
the benchmark they're every compared to. But then the pandemic
happened and you had a price run up that was
fueled by you know, stimulus checks and the FED pulling
various levers, and it really surpassed the hype you know,
back in April, all time highs of around sixty three thousand.
Now it has halved since then. So yes, traditional conservative
(03:34):
investors look at that, they say it's way too volattle.
But again, uh, if you zo chart, it really just
depends on what time fame you want to use. Now,
all that said, I'm not trying to sound like a
big you know, flag waiver bye bye bye, you know,
by crypto. I don't dispense investment advice. I don't even
tell my own friends, hey, you should buy all these coins.
I just think that the volatility tends to get somewhat overstated.
(03:57):
And you know, look at what happened to stocks at
the beginning of the the pandemic, and then they ounces back
very quickly. Bitcoin at first bounce back even more dramatically
than stocks did early on in the lockdown. And now,
you know, we'll see what happens. But again, it's just
it's hard for me to believe that there will be
another crash so dramatic that it sinks below. Say, I mean,
(04:19):
we're around thirty five thousand right now. Again, I don't
like to make super definitive predictions, and I also warned everyone,
don't believe anyone who purports to know exactly what's gonna
happen next with the price. But I do think that
you know, more traditional Wall Street types who in the
past dismissed it or were cautious, have embraced it ever before.
They're now dipping a toe and they say, you know,
I've put one or two percent of my portfolio into crypto,
(04:43):
and that's something I think. It tells you that there's
more institutional buying and support than there's ever been. But
it's a volatile digital asset. Absolutely. So, Dan, let's zoom
out a little bit because you and I come are
cut from the same cloth. We lived in New York,
I lived there in very recently. How would you explain
(05:03):
blockchain and crypto to someone who knows nothing about it?
So you were a communicator for a long time on TV.
How would you explain this phenomenon to someone who has
no exposure whatsoever. I'm happy you asked. I'm happy to
do it and it's what I love doing. And by
the way, a decrypt that's what we really aim to do,
(05:24):
is explain these concepts to a lay person. Because David,
as we've been discussing there are more crypto curious people
than ever before, and their understanding level is at a
zero and they want to take it to a one. Right,
So the answer is I say, when it comes to bitcoin,
it is a digital asset. I don't even like to
say cryptocurrency these days. I think it's become a little
(05:44):
bit of a misnomer because people aren't using it as
a currency, you know, And that's what critics points to.
They say, well, the original white paper said, appear to
peer electronic cash system and I can't really use bitcoin
to buy my cup of coffee in the morning. That's true,
but use cases of technology change. I mean, people aren't
really using it as cash. They're using it as digital
(06:05):
gold to buy and hold as an investment, and in
some ways that makes it not that different from some stocks.
I mean, if you believe in Tesla as a company,
you believe that Tesla is going to be around for
decades and be a successful business, you would buy the
stock and leave it alone, you know, hold on to it.
And that's what people are generally doing with bitcoin now.
To back up even further, I describe blockchains to people
(06:26):
who know nothing as a digital ledger a publicly viewable ledger,
just like a paper book that you would record all
your checks in money and money out that everyone can see.
And it's tamper proof because it is held up by
hundreds of thousands of nodes that all have an equal
stake here in keeping the records correct. So there is
(06:47):
no one governing party or entity or arbiter that's in control.
There's no bank that runs it, and of course that's
the appeal for everyone. Another little analogy I used to make,
but of course these days a lot of people probably
don't even understand this one if they're if they're too
young to have used the library. But I tell people
of a certain age to think of the bitcoin blockchain
(07:07):
as being akin to the little insert in a library card.
So not the card you used to take a look out,
but if you remember, in the front, there'd be a
little sleeve at a card and it lists everyone who
has taken the book out and the date they checked
out the book and then they returned it. And the
bitcoin blockchain is like that, every single big bitcoin transaction
recorded and viewable. And by the way, another thing people
(07:28):
don't realize, you can view the bitcoin blockchain. I mean
it's publicly viewable. You can go to blockchain dot info
and quite literally see it in real time. And I
think that's an easy, free instance step that a lot
of people, once they take it, they give them more.
Oh wow, there it is, it's right there. You know,
banking systems and records can be very opaque. You can't
just view those. But this is public and peer to
(07:50):
peer and trust less, and it means that there's no
one person in charge permission lists. I should say, well,
that's really interesting because I hear a lot of stuff,
especially from older folks, that bitcoin, etherory um, like coin whatever,
the mainstream coins are a substitute for gold. And if
(08:11):
we talk to our parents, they always either put gold
in their drawer, right, or these days you know by
a digital asset that that you know is derived of gold. Right,
So is this a sustainable substitute for precious metals? Well,
I think we should say there. By the way, there
are people who are gold bugs who don't believe in crypto,
(08:33):
and the retort is they say, well, gold is a
physical asset and we know value. It's used in jewelry.
You know what can I use bitcoin for? And that's
always funny to me because if you own gold like
shares of a GOLDDTF, I mean you don't physically ever
hold the gold bars. You check your balance and you
trust it Somewhere there are gold bars and you hold
(08:56):
a certain percentage of them, and bitcoin is the same way.
It's just digit a lonely I mean, you know, Mark
Cubans says about that nothing has value unless a certain
number of people agree it has a certain values. So
there are people who thought bitcoin was at twenty thousand,
Well then it went to sixty thousand. So whatever the
price is, it's because enough people have bought in and
believed that that's a fair price for it. So all
(09:17):
that is a long way of saying that I think
the digital gold comparison is fair for bitcoin. I don't
know if it's a substitute, but it's probably a companion
to it. I mean there are people who believe in both.
There are people who like gold they want nothing to
do with bitcoin, and then there are bitcoin flagwaivers who
say bitcoin is the new gold, and you know, screw gold.
Gray Scale which is a division of Digital Currency group
(09:37):
led by Barry Silbert. They launched their first tv ad
campaign three years ago. I remember covering it and the
ad campaign was dropped gold for Bitcoin. You know, fine,
I don't think it has to be either or Now.
The follow up to all that is that Ethereum is different.
You know, you mentioned Bitcoin, Etherium, likeitcoin. Those are three
of the top ten by market cap. But each one
of these things is different, right, I mean, Bitcoin is
(09:58):
the o G. It's the first one, and I tend
to think it's going to remain the one with the
largest market cap. But all it really is at this
point is an investment. And by the way, the Bitcoin blockchain,
the only real use of it is viewing big Bitcoin transactions. Ethereum,
along next a few years later, was really really created
by design to support a bunch of different, exciting, cool
(10:22):
business applications. Depths decentralized apps that can be built on
the Ethereum network, and so Ethereum I wouldn't call digital Roald.
I mean Ethereum is more like ar rails, a protocol
for building any manner of business application. And that's why
some people who are really in the eight will tell
you that in the long run, Ethereum has larger pit
(10:43):
use cases. Now, that doesn't necessarily mean it will be
more valuable than bitcoin. But some people also think that
that eth will flip Bitcoin. Yeah, I I've read that,
and I wrote an ad about this that was featured
by Yahoo Finance. In fact that I'm a bigger fan
of ethereum. Of course, I'm not making any investment advice,
but just from a long term perspective, it seems like
(11:06):
ethereum is is just a better option. Well, and we've
all seen the coverage of the DeFi world decentralized finance,
which really defy is just the term of the moment
what the crypto world always was. You know, these investing
prototocols that don't have a middleman and don't have one
person in charge. They are decentralized. But the entire defied
(11:27):
world really springs from ethereum. And so there's a little
bit of a fascinalytical push and pull. I mean, yes,
there are people people who they're in crypto and they
think it's all great. But there are so called bitcoin
maximalists who they're just interested in Bitcoin that was the
alpha and the omega, the granddaddy, and they want nothing
to do with all the rest of it, and they
think it's all going to go away. But Bitcoin will remain.
(11:49):
And then there are defied people who laugh in point
at the bitcoin Nazis as they're called, and they say,
how can you dismiss all this stuff? Look at how
fast defy is growing, you know, eighty billion dollars tied
up in defied protocols tv L, as the acronym goes,
total value locked. But the caveat that I give with
DeFi or n f T by the way, you know,
(12:10):
if you want to talk about ants, that's really an
ethereum thing as well. The caveat with DeFi is that
even though the money is big and the money involved
has grown very quickly, the actual number of users of
traders is still pretty small. It's like fewer than five
million people, and it's really still crypto natives. It's people
who are crypto savvy. The defied world has a lot
(12:31):
of friction. It's not very welcoming to a newbie. Whereas
if you can tell grandma that she should own a
little bit of bitcoin, it's pretty easy for Grandma to
go buy some bitcoin on and exchange and be done
with it by There's some there's some friction there. But
my understanding, if I'm not mistaken, right, is that Ethereum
is kind of the backbone of a lot of different coins, right,
(12:53):
while Bitcoin is more like the gold of the world.
Is that correct? Originally in the early years, people called
life coin the silver to Bitcoin's gold like coin. You know,
kind of had a big drop in. The creator, Charlie Lee,
who was a former coin based employee, took a lot
of heat when he dumped all of his light coin
at the price peak, and he tried to say, well,
the reason he did that was to do with anyone
(13:15):
being able to accuse him of pumping like coin when
he tweets about it. Now he can show I don't
own any but pretty it that he sold at the peak,
So like, I really fell a bunch of notches. But
all that is just a way of saying, you know,
I wouldn't really necessarily frame ethereum, even though it is
the number two coined by market cap as a digital
gold or digital silver. What you said were accurate that
(13:37):
it's really a backbone for a lot of things. A
lot of different coins that have become big and notable
in their own right launched on the Ethereum blockchain, and
as I mentioned, all those different defied protocols. Most of
them work on Ethereum and n f t s, which
are blockchain based collectibles. Almost all n f t s
are parked on the Ethereum blockchain, although there's some additional
(13:58):
side chain. But the other think, David, when we talked about,
you know, crypto one on one that I love to
emphasize and remind people, and a lot of people get wrong.
You used to see a lot of companies or banks
come out and say, you know, put it on the blockchain,
or we love the blockchain, and it's like when someone
just says the blockchain, it's a pretty good sign they
don't know what they're talking about. Now they probably mean
(14:18):
the Bitcoin blockchain. But my point is blockchain is a
type of technology. Yes, the Bitcoin blockchain was the original one,
but there are multiple blockchains, so I would compare blockchain
as a form of tech more to cloud technology. Interesting. Yeah,
I had a I have a friend who's an artist
in New York. He's this French guy, and the other
(14:39):
day he texted me and he's like, listen, David, I've
never made a lot of money, but now suddenly with
non fungible tokens or n f t s, my art
got bought. So for people who don't know what non
fungible tokens are except for that social media headline, what
the hell are that? And it definitely it was the
biggest story in crypto for a while there really March
(15:00):
April May, and it has cooled a little bit. But
you mentioned social media headlines. I mean about a month
ago a bunch of mainstream sites declared n f t
s are dead, and I would caution people that that's
not necessarily true yet. You know, time will tell, We'll
see what happens. There will be a shaking out. But
n f t s are basically digital address that you
have in a digital wallet that are tied to something else,
(15:23):
and whatever it talks about is digital art, but it
could be something physical as well. In fact, the earliest
forms of n f t s were kind of digital
deeds that represented a physical art that was located somewhere.
But these are blockchain based tokens different from cryptocurrencies. They
are tokens like cryptocurrencies, but unlike cryptocurrencies, they're non fungible.
(15:44):
So let's focus on that non fungible part. If I
pull a dollar bill out of my wall, at a
paper dollar bill, and I hand you one and you
give me a different one, we each still have the
same value. Right, it's the same thing. We each have
a dollar. Bitcoin is the same way Bitcoin is fungible,
and f T s are no infulngible in the sense
that hypothetically they should be. Now, there have been some
cases where it doesn't look like this after all, so
(16:07):
buy or beware. But they are meant to be provably,
verifiably unique, usually one of a very limited batch or
one of a kind, one one of one. And so
what you're paying for really is a u r L
that shows that you are the owner of this asset.
It might be a digital artwork, it might be a
music file on NBA top shot, it could be a
(16:27):
video file, but it's something located somewhere else, and you
can prove that you own it. Now, of course, what
can you really do do with that? And I think
this is a fair retort that people who think all
this is stupid like to say, what can you do
with an n f T. You can share it on
social media and say check this out, isn't this cool?
I own this? Or you can flip it, you can
sell it. That's about it. And people who think n
(16:49):
f T s are stupid, say, well, what's the value?
Once you share a con view two? So who cares
that you own it? Well, fair enough, But people say,
but I own it. You know, it's like owning an artwork,
and I could sell it or I could display it
in my home. A lot of this is hard to
(17:13):
wrap our heads around, though, because you know, you're old enough, Dan,
and you know you and I are probably about the
same age, Like, like, what the hell like this whole
virtual universe, Like we come from the era when mom
and dad saved up to you know, buy the house
and the leafy suburbs, and now we're talking about digital art.
(17:34):
Like it's totally fair, David. And and I don't blame
people who kind of can't make that mental hurdle of
understanding that just in many cases, value has gone digital
and that there can still doing something that you can't
physically hold. I mean, my you know, is older than
seventy and and he said, but if you can't just
play it on your wall, what's the point why I
(17:56):
would someone pay sixty nine million dollars one of these artworks? Meanwhile,
I get you could hypathetically printed and displayed on your wall.
But that would sort of defeat the purpose of the
idea that it's digital only. But you're right. I mean
I remember growing up going to my local shopping mall, Natick,
Mass and I loved going to the sports memorabilia store
and they had you know, Teddy Williams signed jersey, autographed baseballs,
(18:19):
game warn cleats, and if you bought something, you would
get a paper certificate of authenticity. And I tell people
just think of n f T S as that in
digital form. It is a digital certificate of authenticity. Now,
if you don't think the asset that it is tied
to is very cool, then there's nothing I can really
do to convince you. But Mark Cuban, for example, is
(18:41):
someone who has gone completely all in on n f
T S. He's obsessed and the argument he uses is
to just understand that value has gone digital. Right. I mean,
if you believe that a physical pair of sneakers is cool,
and we're spending money on or a physical baseball card,
well this is that placed in a digital setting. Well,
let's talk about coin base because one of the things
(19:02):
about crypto, right Dan, is that it's a little squirrel
e Right. You mentioned that earlier, right that it's hard
to like institutionalize something that was inherently I mean it's
called defy. I mean it's definance, but it's also literally
defying the government and our monetary system. I mean there's
a there's an implied meaning. And all of that here
(19:24):
comes coin base. Can you tell us what coin bases
and how they're trying to, you know, make crypto a
little bit more boring. There is an irony in coin
basis success. You're right, and I mentioned earlier the political
push and pull. Another thing I find fascinating the crypto
world is there are people who first got into the
space in two thousand nine the o g S for
(19:45):
the specific reason that it was outside government control and regulation,
and they like that. But now you have all these
Wall Street types who have come into crypto and they're
welcoming regulation. You know, they want more regulation because it
will bring crypto mainstream. And it's like, you know, to
those two things conflict at all. Coin Base is a
great example of that push and pull. I think it
is the closest thing to a household name in crypto.
(20:07):
So what I mean by that is if a so
called regular person, a retail investor who doesn't know anything
about the tech. That's all right, I'm seeing enough headlines.
I'm ready to buy some bitcoin. Answers are very good
that if they're in the US, they're probably gonna go
to coin Base. It's probably the only one they've heard of,
even though there are enough competitors to coin base, and
it's the company that makes it the easiest, it makes
(20:27):
it feel the most buttoned up. You upload your driver's license,
you prove that you are who you say you are.
There they verify your identity, and then some crypto and
they are generally holding it for you. There is the custodian. Now,
crypto purist would say that's not safe. You're trusting it
to a central party. That defeats the whole point of crypto. Here,
it's supposed to be decentralized, and that's why coin bas
(20:49):
is referred to as a centralized exchange, as opposed to
these decentralized exchanges that purely run on pro protocols dex
is and so there are other exchanges where you can
be the custodian of your own crypto, but then you
get into the responsibility of keeping track of your keys,
your password and most regular people want nothing to do
with that. It's just too much work. For most people.
(21:10):
Coin Base is good enough now. The big buyer beware
is there's still not f d I c ensured. They
ensure your holdings up to a certain amount, but it's
not a real bank. Even though coin bas is now
publicly traded company, you could buy coin based stuck and
a lot of people to your point, from earlier people
of a certain age, the minute you remove banks from
the minute you open that door, it's just too much
(21:33):
for them. It's a bridge too far. They want nothing
to do with it, and they're probably never going to
change their opinion on that. But coin base has become,
you know, a multi billion dollar business by being one
of the earliest lead bit coin banks, and that's the
site you can go to to buy and hold and
trade some of the biggest cryptocurrence. Again, for most people
it's probably good enough. Coin bas is probably the site
(21:55):
they'll use if they want to buy some bitcoin. But
of course now they are all kinds of other different
that are offering their high worth clients the chance to
have the firm by bitcoin underbehalf, and for some people
maybe that's less intimidating to them. Maybe even coin Base
is too as you said squarely, or they just don't
trust it. But I think coin base has done a
(22:17):
very good job of branding itself as a as a
generally trustworthy place. I guess you know this. The show
isn't about investment advice. But I've seen a lot of
coins come and they're gonna have to blur out coins here.
But there's more than four thousand coins these days, Dan,
So that concerns me because a lot of people are
(22:39):
pumping and dumping. We're seeing a lot of behavior that
threatens to give crypto a bad name. It almost reminds
me of the dot com boom in the late nineteties.
What are you telling you know, what's the message you're
putting out there about coins? Well, you're right that those exist,
and there are tons of them, and most of them
(23:00):
are trash. Now. I was also going to mention the
com bubble because some of the most successful, long lasting
Internet companies came out of that bubble. You know, Yes,
that bubble burst, but not everything was trash. And so
similarly with the crypto market. I mean, yeah, if you
said I'm gonna buy the top fifty probably forty two
of those are not going to prove to be good investments,
(23:23):
and I would just argue that the existence of those
coins shouldn't necessarily detract from the legiti of some of
the legitimate ones. You know, because someone created shiba Inu
token and it rises every time that Elon Musk tweets.
But what does that really have to do with bitcoin
and the theory? You know, arguably nothing. I mean, yeah,
(23:43):
they're part of the same industry, but there are also
a lot of scaping involving the US dollar. I mean,
that's what crypto people say. At least sometimes I laugh
at that retort, but it's true, you know, and bitcoin
is an extremely headline driven, narrative driven industry, So you're right.
When there are hackers, you know, the colonial pipeline hackers,
and they demand ransom in crypto, that leads some people
(24:05):
to say, oh, see coin is used for crime. Well, okay,
I mean it's also used to give perfectly decent, hardworking
people in countries that don't a bank accounts their paychecks,
so they're good. And dad uses a tech and the
tech is agnostic, the tech is a political Well, of
course you were referring to doge coin, which has been
(24:27):
making the headlines lately. But I want to get into
this the less nice side of crypto, right, which, of
course I think i'd be amiss not to mention that
cash is the most untraceable form of exchanging value and
committing nefarious activities. But you know, here I'm recording today
Dan from Orlando, Florida, very famously the Matt Gates case
(24:51):
here with our local tax collector in Seminole County. They
were found to be using bitcoin, the specifics of which
we are unaware of so far, but you know that's
taking center stage here. Additionally, you're from Massachusetts. Your Senator
Elizabeth Warren has come out and said, we gotta get
ahold of coins. We gotta regulate bitcoin, we gotta stop
(25:15):
it for being used for drugs, prostitution, you know, sex, drugs,
and rock and roll. You know, there is a nasty
side of crypto. So how do you cover that as
a journalist giving a fair shake to both sides, like
potential good investment also potential bad uses. There is a
dark shirt and by the way, maybe a good way
(25:36):
in you mentioned, oh, you were talking about dos coin,
but actually Shiba a new coin is this separate coin
that comes from doge coins. So there's Doge and ship
and all of these meme tokens that have now been
created purely based on Internet memes. And sometimes when you know,
a prominent person tweets about then the prices goes nuts.
(25:57):
And all of that is just to say that there's
some major obvious risk here to these meme coins and
ship coins, and so you're right, I mean, investor beware.
And Elizabeth Warren has asked that, you know, crypto exchanges
like coin based like finance be better regulated, and she
is concerned about when they're used for listen activities. Janet
(26:20):
Yellen as well, but I think that sometimes that gets
misframed by mainstrer news outlets as their anti crypto. They
have not said that, you know, Jenny Yellen has not
said that she wants bound, just that she wants to
protect consumers. And Elizabeth Warren is the same way, same
with going after big tech. It's all about protecting consumers.
And I think that's good and fine and smart and
(26:40):
that regular generally be a good thing. But to your
final question there, how do you cover it? And back
to the meme tokens. It's a fine line. For example,
you know, when when doge coin is soaring because of
a Mark Cuban tweet or an Elon Musk meme of
the shiba In Neu dog, you know, the doge meme,
we cover it, but we're very careful to say this
(27:02):
is crazy, you guys. I mean, this is silly and crazy,
and we're not suggesting that you go by this token
because you know, drop six tomorrow when you lose your money.
I mean, investor beware, be careful. And I think that
in general and crypto media, there is too much flag waving.
Some of the sites that cover crypto are clearly ra
ra ra, and they write news they're saying, isn't this great?
(27:24):
Crypto is completely great? You know, we are aggressively neutral
in the sense that I don't necessarily think, you know,
I'm not out there saying bitcoin is gonna replace the dollar.
I don't have a huge amount of my net worth
tied up in this stuff. Every writer decrypt discloses their
precise holdings, and it's all very very tiny. The only
reason we're all in it is obviously at the very
(27:45):
least interesting. I think the technology is fascinating and I
think the tech is here to stay. But I don't say,
you know that everyone should go put their money in
this stuff, and there is definitely a dark side. You're right,
but as you mentioned what crypto people of long stead is, well,
cash is untraceable, and by the way, Bitcoin often gets
called anonymous, and that's really not correct. It's semi anonymous.
(28:07):
I mean on on the bitcoin blockchain. Many a time,
bad actors have been able to be traced because there
there is some information there. You know, when when I
send you a thousand dollars worth a bitcoin, it gets
recorded on the bitcoin blockchain. It doesn't Dan Roberts sent
it to David Grosso, but it says, you know, wallet
number A three two x one sent it to wallet
(28:28):
number B B J four two and you can easily
click that wallet number and see the other transactions I've made.
And so it is often traceable, and in some ways
it's more traceable than cash. You know that people use
for drug deals. Again, the bitcoin blockchain is completely public
and viewable. So I guess that's just a long way
of saying there are luck inceptions about the space. You know, Yes,
(28:51):
it's often used by hackers and by scammers. So what so, Dan,
you stole my line. The reason why journalists call me
to quote me is because I neither own a lot
of bitcoin. I own eight dollars with the bitcoin, and
I'm neither pro nor anti. So you're onto something because
I see a lot of flag waving and then I
see like, oh, this is bad, as Warren Buffett once said,
(29:12):
worse than rap poison, right, And really this is unavoidable.
This is an unavoidable development in finance, whether you have
money parked in it or not. It's like arguing about
the cloud above your head. And it's also that's the
way I say. It's also a symptom of our larger
political moment, right, which is that people generally have whatever
(29:33):
their long held beliefs are, and they just amplify things, developments,
news stories that confirm the beliefs they already have. So
the people who think bitcoin is horrible and it's a
scam and it's a fraud, you know, nor Reel Rubini,
they don't want to hear anything else. They just keep
screaming and respond, you know, it's a scam, it's a scam,
it's a scam. And when the price rises, they continue
(29:54):
to say it, and they'll continue to say it until
the cows come home. And then on the other end,
that's no good either. The people who believe this is
the future, and you know down with fiat currency and
the government so stupid, and you know f the FED,
well that's an echo chamber as well. So like most things,
the truth lies somewhere in the middle. Wow, that's the
first time I've heard that in media in a while. So, Dan,
(30:29):
how do you create balance in your coverage? Right? Because
I imagine you have members of your staff that are
very pro cryptocurrency and other members that are very anti cryptocurrency,
and maybe they're not very forthcoming about their views, but
it comes out subtly in their coverage. Well, you're right.
We have some writers on staff are not huge crypto
(30:50):
flag wavers. They're very skeptical. I wouldn't say they think
it's stupid, but they think in many cases it's irresponsible,
and they don't think this stuff is the future. And
I generally have a sense of all of our writers
views and I think it's an asset to have balon staff.
I think that's great. I think there's some cryptosyites wherever
in their loves crypto and this stuff is the future
into the moon. So when we cover developments, we try
(31:15):
to just say, here's what's happening, and explain it and
explain the significance, but not necessarily you know, an anti
grand So one thing I've really hammered home in the
five months since I took over the site is anything
that we cover is it news, Because every day there's
a flood of news in the crypto space. There are
a lot of pitches we get. But just because it's new,
(31:36):
that doesn't mean it's interesting. So is it new? And
also is it significant and interesting to a broad number
of people, because a lot of press releases aren't that
interesting and we shouldn't cover that. So when we cover
something like you know, Vitalic Buterin dumped all of his
ship coin shiba e new coin and the price craft,
(31:58):
we are very deliberate about Hey, by the way, what
is ship coin is. Here's what it was created, Here's
what that means. Why did vitalit dump it? Well, here's
what he said about it. Why did the price drop?
Here's why the price dropped. Here's what it might mean
for the future of the token. We don't say the
price drop, but don't worry, it'll go back up, Bye
bye bye. We try to just hold the reader's hand
(32:20):
and explain things because when I think of sort of
the ideal decrypt reader, there are multiple buckets. There are
people who already know all about crypto and they read
about it every day and seating our site to discover
news of the day. But then there are also people,
as I mentioned earlier, the crypto curious, who want to
have questions answered. They're not experts, but they're interested and
that's great. They want to learn more, and that's why,
(32:43):
you know, this section of our site called learn, where
we have explainers on technical concepts, is really important. I
think it's as important as our news coverage. So all
of that is just to say that our writer's views
run the Gannett. Everyone discloses their holdings, and almost no
one on staff is a large amount of crypto. You know,
I own one bitcoin that I bought years and years
ago to play with as a reporting tool. But we
(33:05):
all cover the news and we explain those concepts, and
we do it neutrally and fairly, and I'd like to
think that we are the least biased crypto news site
of the Bunch. So one of the things that isn't
very reported is that political parties except bitcoin as donations
and crypto is starting to invade our political space. Do
(33:27):
you guys cover that? We do? It's interesting. For a
while there it was a very small number of candidates
who would accept crypto as donations, and so every time
one of them did, it became a news store. You know,
there was Eric Swollwell who first accepted it. Of course,
Andrew Yang, who was running for New York mayor, is
(33:47):
a big crypto guy. Although interestingly now the front runner
is really uh he he kind of beat Yang at
his own Yang Gang game. Very cope coin politics, right,
But there are complications with accepting it that a lot
of people don't. For example, a lot of people think
it's totally untaxed. Well, that's not true. It's starting three
(34:10):
years ago, the I r S began explicitly asking people
to disclose your crypto games on your taxes. If you
sold at a game or at a loss, you don't
have to disclose if you just bought someone held onto it.
But all of these things are more examples of the
various misconceptions, you know, that it's untraceable, that it's a
scam or fraud, that it's only is for crime, that tax,
(34:31):
that it's not tax. You know, that's not true. So
I think some candidates are still hesitant to accept it.
It's not everyone, but you're right that it's become more commonplace.
So that's a b That's part of the politics here
is what are their views on crypto. I think more
than ever, candidates are sharing, you know, weak of it
when they want to regulate it. Donald Trump got away
(34:53):
with saying almost nothing about it in his four years
in office, other than one tweet famously where he said,
you know, I do not like bitcoin and other cryptocurrencies.
But Anthony Scaramucci, whom we've interviewed at Decrypto multiple times,
he told us that he suspects Trump did not write
that tweet, and that that was just written by someone
like Minucian or someone on the economic side who who
(35:14):
wanted that out there. So you don't really know what
Trump thinks of bitcoin. But I remember when he first
took off, as a lot of the bitcoin people thought
that Trump was going to be this great friend to crypto.
That didn't really happen. We also don't really know what
Biden thinks of it, but certainly Biden's picked for SEC
chair Gary Gensler. He is thought to be pro crypto,
and that has led a lot of invest to hope
(35:36):
that a US Bitcoin e t F will soon be approved.
But we'll see, you know, we keep waiting. So let's uh,
what would you do, Dan if I made yousre of
America with crypto? Because obviously we do need some regulation.
But I'm I'm personally skeptical of of government regulation. It
seems like they always get it wrong and a lot
(35:56):
of the magic could go away if they try to
reel it in. So how do we preserve the magic
but minimize a lot of the you know, the nasty stuff. Well,
you're right that in many cases, when Congress is trying
to regulate a form of tech, first they have to
learn about it, you know, first they have to be
educated on it to understand it enough to regulate it.
I mean that's why you see, you know, Mark Zuckerberg
(36:17):
and Jack Dorsey testifying before Congress and they're basing some
form of let us help you regulate us. We'll show
you how to regulate. It's kind of funny that was
that was? That was a um. Now, what would I do?
That's a great question, David. No one has asked me that.
I mean, I would probably demand that the biggest crypto
(36:40):
exchanges share their financials. You know, if that means all
of them going public. Fine, you know, coin bases now public.
There's a company Binance, which is actually the biggest critical
change in the world by volume, and Finance doesn't disclose
where their headquarters. They say they have no headquarters, and
for a while it looks like their headquartered in the Caymans.
For a while it was to say Shells, but both
(37:01):
of those countries have come out and said no, Finance
is not licensed to do business in our country. Well,
so where is it based? And if you don't know
where it's based, how can you regulate it? How can
you say these are the rules that finance has to follow.
So finance has been very adapt at dodging regulation. I
would probably move to make all the exchanges UH share
and report their financials. That doesn't necessarily mean reporting all
(37:24):
the info and all their customers, because what crypto purists
hate the most is the idea that their info is
going to be reported. Because they say that defeats the
whole proposition and you know, idealism of crypting outside government control.
So you want a little bit more regulation and then
when it comes to you know, how the government approaches it.
(37:45):
They need to monitor these ransomware attacks that usually ask
for bitcoin as as payment. You know, they are not
doing enough to to crack down on the ransom where
of course, the problem is whenever the safeguards advance, so
to the hackers, you know, the bad actors appear to
move more quickly than the good guys so to speak.
So there's a lot to be done in terms of
(38:07):
cleaning up that aspect of it. But you'd also want
to not have the government clamped down such that they're
restricting innovation. I mean, don't get in the way too
much of these companies and see the benefits and the
value in fostering innovation in this space. Yeah, but you know, banking,
it's kyc know your customer. You can't have it both ways.
(38:30):
Either crypto is mainstream or it's not right like so
I don't understand the demands of the community, like either
you're gonna institutionalize it or you're gonna be illegitimate. There's
no there's no halfway point here. So either the exchanges
have to practice what Chase Manhattan does. Right. Well, that's true,
(38:52):
and it's not what crypto people want to hear. And honestly,
it's gonna be a great battle because, as I mentioned earlier,
this is the tension between people who you know. I
was at the Bigcoin Miami conference a couple of months ago.
Enormous was the biggest in person bitcom commerce ever, and
of course there were tons of funny T shirts and
signs to see, and one of the T shirts I
(39:12):
saw said k y C and a m L is
the crime, and it's like, come on, guys, I mean,
come on, there are people in crypto who you know
they think that k y C and a m L
is unjust KYC being know your customer rules as I
money laundringt. But you're right. I mean, if if crypto
(39:32):
changes want to be banks but for crypto, they're gonna
have to fall in line with this stuff. But of
course many of them won't. Would rather exist in the
binding nance like Limbo, where they're making big money and
they have tons of customer and its customers obviously of
a certain cloth who don't mind that they're not complying
with government regulations. So when you say you can't have
(39:53):
it halfway, well, that's why landscape is going to be
those who choose to go above ground and be but
up and be friendly with the regulators and comply, and
then those who choose to not do that. And obviously,
if you choose not to do that, you're gonna be
limiting yourself to crypto purists who don't mind that or
who like that. That's the appeal to them. But there's
(40:14):
gonna be a real shaking out here, you're right, and
can the government? Will the government try to and can
it go after the exchanges that don't comply and don't
practice these safeguards hard hard to do if you don't
know where their headquarters are or who's really behind it.
And never mind the exchanges. There's some cryptocurrencies like mon
arrow that are just completely anonymous. Can that fly in
(40:36):
today's world? Those are privacy coins. You know at our
decrypt virtual you know Snowdon loves those privacy coins mon
arrow z cash and his whole thing is privacy. So
you're not about to see k y C and a
n L when it comes to mon arrow. But that's
the use case. So you know, can they get away
with it? Yes, they have and they'll probably continue to.
(40:56):
But that's why there's such a striation between the different
levels of investors in people who are going to have
to be convinced to buy bitcoin even there are not
going to be investing in mon narrow and z cash
and dogecoin, and that's okay. So there's a real risk profile.
How much risk are you willing to take on? So
(41:18):
can you tell me a little bit about bitcoin mining
because it seems like so theoretical to us, and we
read about it and we know big governments like China
have moved to ban it. What is it and why
is it in the news all the time? Sure? So
let's go back to the definition of blockchain. Right, this
publicly viewable ledger a record, that record is up kept
(41:39):
the network is up kept by the miners. And so
if the idea of bitcoin is digital gold, the analogy
really works because there's in the gold and what they're
actually doing isn't mining the bitcoin per se. They are
mining uploading keeping track of the records of bitcoin transaction.
(42:00):
So the way you bitcoin mine is with large expensive computers.
They don't look anything like the computers you and I
are on, but they are that do use a lot
of energy and electricity. That's a problem a lot of
people have with it. And those machines are on all
the time seven racing to solve mathematical computations. And basically,
(42:21):
if your bitcoin mining or machine is the first to
stall a certain equation, you've won the right to to
mine a bundle of transactions. So this is also why
it's so intuitive that it's called the block chain. It's
a chain of blocks. Every block is a bundle of
multiple transactions that were done in bitcoin. So if I
(42:41):
send you a thousand dollars with the bitcoin, the record
of that transaction is included in a block of other transactions.
So what miners are actually doing is uploading the record
of that bundle of transactions to the blockchain. And to
do it, they get a small reward that is a
tiny amount of new bitcoin. That's how new bitcoin is created.
(43:04):
And the backlash that you're seeing now is that this
process uses a lot of electricity. And don't let any
you know bitcoin flag waver tell you it doesn't. It does.
It uses a lot of electricity, and it doesn't look
likely to change for bitcoin anytime soon. But when it
comes to ethereum, which is currently mined in the same
way as bitcoin, Ethereum is soon transitioning to a new
(43:27):
method for mining that will not use nearly the same
amount of electricity, and so that's why a lot of
people are pleased about that. Don Ethereum mining will become
more sustainable. It's going to move to proof of stake
rather than proof of work. But your listeners don't even
need to understand that. All they need to understand is
that mining is expensive. Some regular people have tried to
get into mining, but it's not really going to be
profitable for you for a long time because the machine
(43:49):
is so expensive, and because you're not right to upload
every block. You're competing with a huge mining farms, you know,
operations that have just tens of of mining machines, computers
that are running seven Most of those bitcoin mining farms
were located in China, but now China is cracking down,
so they are going elsewhere, and they go where there's
(44:12):
cheap power. That's correct, they go where there's cheap power.
Of course, the cheapest power is coal, which is not
very good for the environment, but it's better for the
environment if they use renewable energy like hydro power. And
it's not quite clear what per said. The world is
bitcoin mining already uses renewable energy. If you, you know,
grab a report from a bitcoin firm, it'll say eight
(44:33):
percent is renewable. See, it's not a problem. But of
course they're talking their book and they're invest If you
try to get a report from a more mutual place,
it will tell you that only like thirty seven of
the world's mining is using renewable energy. So it has
to get better, that's for sure. But suppos think it
really will and that then those concerns about the energy
(44:54):
used will go away. Well, that's good to know that
Ethereum is moving away from that because that is definitely
a legitimate concern. I want to end and with the
way our conception of cryptocurrency and really the virtual sphere
has changed because of the pandemic. You know, I'm pretty
sure I've seen you in real life, probably a few times,
(45:15):
but this is the first time you and I and
actually have actually spoken to each other. And this is
virtual and this is because of the pandemic. Fundamentally, right,
this is this has become normalized. Do you feel like
these cultural changes have really influenced our view of digital
assets in general. I think mostly the price surge that
we saw was really tied to what was happening with
(45:37):
the economy and with stimulus checks and with the FED.
You know, it also was prompted by quantitative easy. I mean,
people like to say there's no central bank of bitcoin.
No one's going to suddenly create you know, bitcoin easy,
where they pump out a bunch more bitcoin. It's a
cap supply, and that's the appeal is an investment. But
you're right, I think that the embrace of crypto, which
(45:58):
happened inly accelerated more than ever, is definitely a part
of the larger movement. You can throw in the retail
investor revolution, the Reddit investor, Wall Street bets, the game stop,
short squeeze, the rise of zoom, the rise of remote work,
it's all part of the same movement. You're right. Now,
there was an early tweet early in the pandemic or
(46:20):
that was recirculating from the Strinvasan, who was a coin
based exact now he's not a coin based anymore, but
he's a little bit controversial. You know. He likes to
troll on Twitter, but he had tweeted back in January,
so before the US really understood and was admitting that
COVID nineteen was a problem. And he shared a news
story about COVID nineteen and he said something like, what
(46:41):
if this is the big one, the global pandemic that
excites a number of pre existing trends. And I mean
the tweet looks brilliant in hindsight, and he mentions remote work,
video conferencing, and telecommuting, uh, you know, social life changing,
a decentralization ship of finance and of offices. And I
(47:02):
think he was right now, my point being the reason
I mentioned that tweet. Some of this stuff was already happening.
I mean, you know, Zoom wasn't created during the pandemic.
These were businesses that already existed, and there are some
people who were working remotely before COVID nineteen. But it
is dramatically accelerated, and in some ways, I think certain
effects of the past year and a half will never
go away. Now that said, I also think some of
(47:25):
them have been exaggerated, Like I don't think the office
is dead forever, and I don't think all things are
better on Zoom, you know, you and I are making
this work. But I suspect it would be a deeper,
better connection if we were on stage, face to face,
a few inches from each other having this conversation. Right,
So I'm still a believer in many ways in in person.
(47:46):
Well yeah, I mean like I feel like you would
be more of your mass whole self if I were
right there in person. Right, it gets dulled through video. Right.
I love Massachusetts so and I love people from Massachusetts
because they tell you the truth. Where can we find
out more about decrypt? Thank you for asking. We are
a dot co. So we are decrypt dot co and
(48:08):
you can find us at decrypt Media on Twitter. You
can find me a read Dan. Right, But the best
thing to do if you really want to get all
of your crypto news every day is our mobile app.
Our app is clean, great ux, great tech. So I
encourage everyone to download our our free app. Man, that's
a different interview, Dan, I mean getting your app together.
Congrats on that. That is no easy feat. Thank you
(48:32):
Pop on that note, congrat I sincerely appreciate your time.
I know it's valuable and all the best from all
of us that follow the profit in Bold TV. Thanks
so much. Great talking to you. So that was a
really fun conversation with Dan. Dan someone that I've seen before,
(48:54):
you know, as someone from the New York media space.
All of us kind of know each other. The thing
about media is that it's not really an industry that
makes a lot of money, but it has a lot
of power. We get to decide the culture, and that's
really the problem with media, right And that's why it's
really important what Dan is doing these days, which is
(49:14):
giving you a balanced view on crypto. Really, crypto is
something that, never mind the general public, politicians and regulators
don't understand what it is. And Dan made an excellent point,
how do you regulate something that you don't understand? And
this fundamentally boils down to the biggest problem we have
(49:35):
right now in our society, and that's the elephant in
the room, which is people are living longer and the
people who are pulling the levers of power are generally
older than they used to be. And I'm of course
referring to my parents generation, the baby boomers, and they
have a lot of good intentions. There are parents, there
are people we love, but they really don't understand how
(49:58):
the world works anymore because the world has changed. The
pandemic has accelerated that pace of change. And one of
the things that is really changing everything is the digital sphere.
Everything's going digital and baby bubs really don't understand how
that works, what it is, and the default to criticizing it,
(50:19):
at least most of them. But really, crypto isn't something
that we should be pro or con Crypto is something
we should look at and try to understand to protect people, consumers,
to protect us from being scammed, and also to build
a future. Crypto is an essential part of our financial future.
(50:41):
The US dollar, fiat currency, currencies backed by governments are
really in danger. Their credibility is in danger, and the
whole conception of value is in danger. And young people
are much more open minded. We understand that a lot
of things are imaginary. They've just come to be part
(51:03):
of our culture. Is gold really valuable or did thousands
of years ago we decide it was valuable? The same
thing with stocks. A lot of big corporate is run
in such a way there really doesn't make any sense.
They're not even focused on making money half the time.
So why is crypto so revolutionary? It really isn't. It's
(51:24):
just like any other's form of progress. The first time
that you hear about something, you really try to block
it out and say, no, that's an extremist view, that's
an extremist outcome. But more and more we see that
tokenization and I'm not talking about culture literally, creating digital
coins is going to revolutionize the way we think about money.
(51:48):
While you're at it, you can start revolutionizing the way
you think about everything. We are in a period of
rapid change socially, culturally, and economically, and cryptocurrency is just
one of the things that is completely demolishing any concept
that we had of storing our hard earned money and
(52:10):
planning for the future. The older generation needs to stop
and think, maybe I don't understand this, but maybe, just
perhaps it's the way of the future and I should
be open minded. And in the meantime, let me regulate
it properly in order to minimize the bad effects, but
to create a future in which America can remain the
(52:32):
most relevant country on Earth. And that's my take on
crypto and by the way, I barely own any Thanks
to all of you for joining me as we all
follow the profit together. I'd like to thank my team
of producers as well as my executive producers Debbie Myers
and New Gingrich of course, the former Speaker of the
House follow The profit is a production of ging Ridge
(52:52):
through sixty and I Heart Radio. Download us on Apple Podcasts, Spotify,
or wherever you get your podcasts. Part of the GNGWICH
three sixty network,
I'm David Grosso, and you're listening to Follow the Profit.
Today we're gonna talk about crypto. You read about it everywhere,
but most of the population doesn't even know what it is.
So what is it? How does it work? And where
is it going? And all the questions that you were
embarrassed to ask you can ask him here. In fact,
I'm going to ask them. Even though I do a
(00:21):
lot of reporting on crypto and get quoted a lot
in the media, there are things that I don't understand,
and this is an important podcast for you to understand
exactly what I just said. What is crypto, where did
it come from? And where is it going? So be
sure to listen to the whole thing because you're going
to need this information if you're going to navigate this
(00:43):
very theoretical and confusing world. Joined by a fellow journalist
who recently changed careers. His name is Dan Roberts. Hey Dan,
how you doing today? So of tha, thanks for having
me on, David, So tell me what do you think
(01:03):
of crypto and the role that it plays in our
reality these days? Because it seemingly came out of nowhere. Well,
it's funny, you know, I've been coming. It's eleven. Back
when I was at Fortune Magazine, I wrote the first
bitcoin related story on Fortune dot com. So to me,
it hasn't come out of nowhere. But certainly what you
said is fair in the sense that it has never
(01:25):
been more mainstream than it is right now. That's sort
of table stakes, like how people is. At the very
least you might not be interested in it, and that's okay.
You might even think it's stupid, and that's okay. But
I think a larger number of people than ever before
at least can recognize this is a real thing. This
is going to stay. It is not going to disappear
and collapse tomorrow. It's been trading for eleven years. It's
(01:48):
a digital asset, and there are entire companies, firms, funds, economies,
cultures built around it. Now we can drill down if
we wanted to bitcoin ethereum and defy and n f
t s all that good stuff. But it's not going
to suddenly disappear. Yes, there are fluctuations, but everyone at
least recognizes this is a real thing. So let's talk
(02:12):
about that more. Dan, Right, you were a journalist, of course,
for Yahoo Finance, so you understand that these fluctuations are
pretty They're much more pronounced than they would be with
traditional assets like stocks are real estate. Can you tell
us a little bit about that. Well, it's a volatile asset, yes,
(02:32):
But the truth is that people who over emphasize that
and they say it's so volatile. It's so volatile. I mean,
there have been some dramatic corrections, but if you zoom
out and look at the line, it's up into the right.
In bitcoin's history, I mean we're talking just about bitcoin
really as well. Now, for the longest time, in the
last two years, everyone would just compare whatever Bitcoin was
(02:53):
doing to the crash that really launched what we call
crypto winter in early I mean everyone remembers the last
big run up. It was all hype and frenzy, end
of characterized by you know, Grandma at the Thanksgiving dinner
table asking if she should buy crypto, and then in
February Bitcoin crash six. And for the last years, that's
(03:14):
the benchmark they're every compared to. But then the pandemic
happened and you had a price run up that was
fueled by you know, stimulus checks and the FED pulling
various levers, and it really surpassed the hype you know,
back in April, all time highs of around sixty three thousand.
Now it has halved since then. So yes, traditional conservative
(03:34):
investors look at that, they say it's way too volattle.
But again, uh, if you zo chart, it really just
depends on what time fame you want to use. Now,
all that said, I'm not trying to sound like a
big you know, flag waiver bye bye bye, you know,
by crypto. I don't dispense investment advice. I don't even
tell my own friends, hey, you should buy all these coins.
I just think that the volatility tends to get somewhat overstated.
(03:57):
And you know, look at what happened to stocks at
the beginning of the the pandemic, and then they ounces back
very quickly. Bitcoin at first bounce back even more dramatically
than stocks did early on in the lockdown. And now,
you know, we'll see what happens. But again, it's just
it's hard for me to believe that there will be
another crash so dramatic that it sinks below. Say, I mean,
(04:19):
we're around thirty five thousand right now. Again, I don't
like to make super definitive predictions, and I also warned everyone,
don't believe anyone who purports to know exactly what's gonna
happen next with the price. But I do think that
you know, more traditional Wall Street types who in the
past dismissed it or were cautious, have embraced it ever before.
They're now dipping a toe and they say, you know,
I've put one or two percent of my portfolio into crypto,
(04:43):
and that's something I think. It tells you that there's
more institutional buying and support than there's ever been. But
it's a volatile digital asset. Absolutely. So, Dan, let's zoom
out a little bit because you and I come are
cut from the same cloth. We lived in New York,
I lived there in very recently. How would you explain
(05:03):
blockchain and crypto to someone who knows nothing about it?
So you were a communicator for a long time on TV.
How would you explain this phenomenon to someone who has
no exposure whatsoever. I'm happy you asked. I'm happy to
do it and it's what I love doing. And by
the way, a decrypt that's what we really aim to do,
(05:24):
is explain these concepts to a lay person. Because David,
as we've been discussing there are more crypto curious people
than ever before, and their understanding level is at a
zero and they want to take it to a one. Right,
So the answer is I say, when it comes to bitcoin,
it is a digital asset. I don't even like to
say cryptocurrency these days. I think it's become a little
(05:44):
bit of a misnomer because people aren't using it as
a currency, you know, And that's what critics points to.
They say, well, the original white paper said, appear to
peer electronic cash system and I can't really use bitcoin
to buy my cup of coffee in the morning. That's true,
but use cases of technology change. I mean, people aren't
really using it as cash. They're using it as digital
(06:05):
gold to buy and hold as an investment, and in
some ways that makes it not that different from some stocks.
I mean, if you believe in Tesla as a company,
you believe that Tesla is going to be around for
decades and be a successful business, you would buy the
stock and leave it alone, you know, hold on to it.
And that's what people are generally doing with bitcoin now.
To back up even further, I describe blockchains to people
(06:26):
who know nothing as a digital ledger a publicly viewable ledger,
just like a paper book that you would record all
your checks in money and money out that everyone can see.
And it's tamper proof because it is held up by
hundreds of thousands of nodes that all have an equal
stake here in keeping the records correct. So there is
(06:47):
no one governing party or entity or arbiter that's in control.
There's no bank that runs it, and of course that's
the appeal for everyone. Another little analogy I used to make,
but of course these days a lot of people probably
don't even understand this one if they're if they're too
young to have used the library. But I tell people
of a certain age to think of the bitcoin blockchain
(07:07):
as being akin to the little insert in a library card.
So not the card you used to take a look out,
but if you remember, in the front, there'd be a
little sleeve at a card and it lists everyone who
has taken the book out and the date they checked
out the book and then they returned it. And the
bitcoin blockchain is like that, every single big bitcoin transaction
recorded and viewable. And by the way, another thing people
(07:28):
don't realize, you can view the bitcoin blockchain. I mean
it's publicly viewable. You can go to blockchain dot info
and quite literally see it in real time. And I
think that's an easy, free instance step that a lot
of people, once they take it, they give them more.
Oh wow, there it is, it's right there. You know,
banking systems and records can be very opaque. You can't
just view those. But this is public and peer to
(07:50):
peer and trust less, and it means that there's no
one person in charge permission lists. I should say, well,
that's really interesting because I hear a lot of stuff,
especially from older folks, that bitcoin, etherory um, like coin whatever,
the mainstream coins are a substitute for gold. And if
(08:11):
we talk to our parents, they always either put gold
in their drawer, right, or these days you know by
a digital asset that that you know is derived of gold. Right,
So is this a sustainable substitute for precious metals? Well,
I think we should say there. By the way, there
are people who are gold bugs who don't believe in crypto,
(08:33):
and the retort is they say, well, gold is a
physical asset and we know value. It's used in jewelry.
You know what can I use bitcoin for? And that's
always funny to me because if you own gold like
shares of a GOLDDTF, I mean you don't physically ever
hold the gold bars. You check your balance and you
trust it Somewhere there are gold bars and you hold
(08:56):
a certain percentage of them, and bitcoin is the same way.
It's just digit a lonely I mean, you know, Mark
Cubans says about that nothing has value unless a certain
number of people agree it has a certain values. So
there are people who thought bitcoin was at twenty thousand,
Well then it went to sixty thousand. So whatever the
price is, it's because enough people have bought in and
believed that that's a fair price for it. So all
(09:17):
that is a long way of saying that I think
the digital gold comparison is fair for bitcoin. I don't
know if it's a substitute, but it's probably a companion
to it. I mean there are people who believe in both.
There are people who like gold they want nothing to
do with bitcoin, and then there are bitcoin flagwaivers who
say bitcoin is the new gold, and you know, screw gold.
Gray Scale which is a division of Digital Currency group
(09:37):
led by Barry Silbert. They launched their first tv ad
campaign three years ago. I remember covering it and the
ad campaign was dropped gold for Bitcoin. You know, fine,
I don't think it has to be either or Now.
The follow up to all that is that Ethereum is different.
You know, you mentioned Bitcoin, Etherium, likeitcoin. Those are three
of the top ten by market cap. But each one
of these things is different, right, I mean, Bitcoin is
(09:58):
the o G. It's the first one, and I tend
to think it's going to remain the one with the
largest market cap. But all it really is at this
point is an investment. And by the way, the Bitcoin blockchain,
the only real use of it is viewing big Bitcoin transactions. Ethereum,
along next a few years later, was really really created
by design to support a bunch of different, exciting, cool
(10:22):
business applications. Depths decentralized apps that can be built on
the Ethereum network, and so Ethereum I wouldn't call digital Roald.
I mean Ethereum is more like ar rails, a protocol
for building any manner of business application. And that's why
some people who are really in the eight will tell
you that in the long run, Ethereum has larger pit
(10:43):
use cases. Now, that doesn't necessarily mean it will be
more valuable than bitcoin. But some people also think that
that eth will flip Bitcoin. Yeah, I I've read that,
and I wrote an ad about this that was featured
by Yahoo Finance. In fact that I'm a bigger fan
of ethereum. Of course, I'm not making any investment advice,
but just from a long term perspective, it seems like
(11:06):
ethereum is is just a better option. Well, and we've
all seen the coverage of the DeFi world decentralized finance,
which really defy is just the term of the moment
what the crypto world always was. You know, these investing
prototocols that don't have a middleman and don't have one
person in charge. They are decentralized. But the entire defied
(11:27):
world really springs from ethereum. And so there's a little
bit of a fascinalytical push and pull. I mean, yes,
there are people people who they're in crypto and they
think it's all great. But there are so called bitcoin
maximalists who they're just interested in Bitcoin that was the
alpha and the omega, the granddaddy, and they want nothing
to do with all the rest of it, and they
think it's all going to go away. But Bitcoin will remain.
(11:49):
And then there are defied people who laugh in point
at the bitcoin Nazis as they're called, and they say,
how can you dismiss all this stuff? Look at how
fast defy is growing, you know, eighty billion dollars tied
up in defied protocols tv L, as the acronym goes,
total value locked. But the caveat that I give with
DeFi or n f T by the way, you know,
(12:10):
if you want to talk about ants, that's really an
ethereum thing as well. The caveat with DeFi is that
even though the money is big and the money involved
has grown very quickly, the actual number of users of
traders is still pretty small. It's like fewer than five
million people, and it's really still crypto natives. It's people
who are crypto savvy. The defied world has a lot
(12:31):
of friction. It's not very welcoming to a newbie. Whereas
if you can tell grandma that she should own a
little bit of bitcoin, it's pretty easy for Grandma to
go buy some bitcoin on and exchange and be done
with it by There's some there's some friction there. But
my understanding, if I'm not mistaken, right, is that Ethereum
is kind of the backbone of a lot of different coins, right,
(12:53):
while Bitcoin is more like the gold of the world.
Is that correct? Originally in the early years, people called
life coin the silver to Bitcoin's gold like coin. You know,
kind of had a big drop in. The creator, Charlie Lee,
who was a former coin based employee, took a lot
of heat when he dumped all of his light coin
at the price peak, and he tried to say, well,
the reason he did that was to do with anyone
(13:15):
being able to accuse him of pumping like coin when
he tweets about it. Now he can show I don't
own any but pretty it that he sold at the peak,
So like, I really fell a bunch of notches. But
all that is just a way of saying, you know,
I wouldn't really necessarily frame ethereum, even though it is
the number two coined by market cap as a digital
gold or digital silver. What you said were accurate that
(13:37):
it's really a backbone for a lot of things. A
lot of different coins that have become big and notable
in their own right launched on the Ethereum blockchain, and
as I mentioned, all those different defied protocols. Most of
them work on Ethereum and n f t s, which
are blockchain based collectibles. Almost all n f t s
are parked on the Ethereum blockchain, although there's some additional
(13:58):
side chain. But the other think, David, when we talked about,
you know, crypto one on one that I love to
emphasize and remind people, and a lot of people get wrong.
You used to see a lot of companies or banks
come out and say, you know, put it on the blockchain,
or we love the blockchain, and it's like when someone
just says the blockchain, it's a pretty good sign they
don't know what they're talking about. Now they probably mean
(14:18):
the Bitcoin blockchain. But my point is blockchain is a
type of technology. Yes, the Bitcoin blockchain was the original one,
but there are multiple blockchains, so I would compare blockchain
as a form of tech more to cloud technology. Interesting. Yeah,
I had a I have a friend who's an artist
in New York. He's this French guy, and the other
(14:39):
day he texted me and he's like, listen, David, I've
never made a lot of money, but now suddenly with
non fungible tokens or n f t s, my art
got bought. So for people who don't know what non
fungible tokens are except for that social media headline, what
the hell are that? And it definitely it was the
biggest story in crypto for a while there really March
(15:00):
April May, and it has cooled a little bit. But
you mentioned social media headlines. I mean about a month
ago a bunch of mainstream sites declared n f t
s are dead, and I would caution people that that's
not necessarily true yet. You know, time will tell, We'll
see what happens. There will be a shaking out. But
n f t s are basically digital address that you
have in a digital wallet that are tied to something else,
(15:23):
and whatever it talks about is digital art, but it
could be something physical as well. In fact, the earliest
forms of n f t s were kind of digital
deeds that represented a physical art that was located somewhere.
But these are blockchain based tokens different from cryptocurrencies. They
are tokens like cryptocurrencies, but unlike cryptocurrencies, they're non fungible.
(15:44):
So let's focus on that non fungible part. If I
pull a dollar bill out of my wall, at a
paper dollar bill, and I hand you one and you
give me a different one, we each still have the
same value. Right, it's the same thing. We each have
a dollar. Bitcoin is the same way Bitcoin is fungible,
and f T s are no infulngible in the sense
that hypothetically they should be. Now, there have been some
cases where it doesn't look like this after all, so
(16:07):
buy or beware. But they are meant to be provably,
verifiably unique, usually one of a very limited batch or
one of a kind, one one of one. And so
what you're paying for really is a u r L
that shows that you are the owner of this asset.
It might be a digital artwork, it might be a
music file on NBA top shot, it could be a
(16:27):
video file, but it's something located somewhere else, and you
can prove that you own it. Now, of course, what
can you really do do with that? And I think
this is a fair retort that people who think all
this is stupid like to say, what can you do
with an n f T. You can share it on
social media and say check this out, isn't this cool?
I own this? Or you can flip it, you can
sell it. That's about it. And people who think n
(16:49):
f T s are stupid, say, well, what's the value?
Once you share a con view two? So who cares
that you own it? Well, fair enough, But people say,
but I own it. You know, it's like owning an artwork,
and I could sell it or I could display it
in my home. A lot of this is hard to
(17:13):
wrap our heads around, though, because you know, you're old enough, Dan,
and you know you and I are probably about the
same age, Like, like, what the hell like this whole
virtual universe, Like we come from the era when mom
and dad saved up to you know, buy the house
and the leafy suburbs, and now we're talking about digital art.
(17:34):
Like it's totally fair, David. And and I don't blame
people who kind of can't make that mental hurdle of
understanding that just in many cases, value has gone digital
and that there can still doing something that you can't
physically hold. I mean, my you know, is older than
seventy and and he said, but if you can't just
play it on your wall, what's the point why I
(17:56):
would someone pay sixty nine million dollars one of these artworks? Meanwhile,
I get you could hypathetically printed and displayed on your wall.
But that would sort of defeat the purpose of the
idea that it's digital only. But you're right. I mean
I remember growing up going to my local shopping mall, Natick,
Mass and I loved going to the sports memorabilia store
and they had you know, Teddy Williams signed jersey, autographed baseballs,
(18:19):
game warn cleats, and if you bought something, you would
get a paper certificate of authenticity. And I tell people
just think of n f T S as that in
digital form. It is a digital certificate of authenticity. Now,
if you don't think the asset that it is tied
to is very cool, then there's nothing I can really
do to convince you. But Mark Cuban, for example, is
(18:41):
someone who has gone completely all in on n f
T S. He's obsessed and the argument he uses is
to just understand that value has gone digital. Right. I mean,
if you believe that a physical pair of sneakers is cool,
and we're spending money on or a physical baseball card,
well this is that placed in a digital setting. Well,
let's talk about coin base because one of the things
(19:02):
about crypto, right Dan, is that it's a little squirrel
e Right. You mentioned that earlier, right that it's hard
to like institutionalize something that was inherently I mean it's
called defy. I mean it's definance, but it's also literally
defying the government and our monetary system. I mean there's
a there's an implied meaning. And all of that here
(19:24):
comes coin base. Can you tell us what coin bases
and how they're trying to, you know, make crypto a
little bit more boring. There is an irony in coin
basis success. You're right, and I mentioned earlier the political
push and pull. Another thing I find fascinating the crypto
world is there are people who first got into the
space in two thousand nine the o g S for
(19:45):
the specific reason that it was outside government control and regulation,
and they like that. But now you have all these
Wall Street types who have come into crypto and they're
welcoming regulation. You know, they want more regulation because it
will bring crypto mainstream. And it's like, you know, to
those two things conflict at all. Coin Base is a
great example of that push and pull. I think it
is the closest thing to a household name in crypto.
(20:07):
So what I mean by that is if a so
called regular person, a retail investor who doesn't know anything
about the tech. That's all right, I'm seeing enough headlines.
I'm ready to buy some bitcoin. Answers are very good
that if they're in the US, they're probably gonna go
to coin Base. It's probably the only one they've heard of,
even though there are enough competitors to coin base, and
it's the company that makes it the easiest, it makes
(20:27):
it feel the most buttoned up. You upload your driver's license,
you prove that you are who you say you are.
There they verify your identity, and then some crypto and
they are generally holding it for you. There is the custodian. Now,
crypto purist would say that's not safe. You're trusting it
to a central party. That defeats the whole point of crypto. Here,
it's supposed to be decentralized, and that's why coin bas
(20:49):
is referred to as a centralized exchange, as opposed to
these decentralized exchanges that purely run on pro protocols dex
is and so there are other exchanges where you can
be the custodian of your own crypto, but then you
get into the responsibility of keeping track of your keys,
your password and most regular people want nothing to do
with that. It's just too much work. For most people.
(21:10):
Coin Base is good enough now. The big buyer beware
is there's still not f d I c ensured. They
ensure your holdings up to a certain amount, but it's
not a real bank. Even though coin bas is now
publicly traded company, you could buy coin based stuck and
a lot of people to your point, from earlier people
of a certain age, the minute you remove banks from
the minute you open that door, it's just too much
(21:33):
for them. It's a bridge too far. They want nothing
to do with it, and they're probably never going to
change their opinion on that. But coin base has become,
you know, a multi billion dollar business by being one
of the earliest lead bit coin banks, and that's the
site you can go to to buy and hold and
trade some of the biggest cryptocurrence. Again, for most people
it's probably good enough. Coin bas is probably the site
(21:55):
they'll use if they want to buy some bitcoin. But
of course now they are all kinds of other different
that are offering their high worth clients the chance to
have the firm by bitcoin underbehalf, and for some people
maybe that's less intimidating to them. Maybe even coin Base
is too as you said squarely, or they just don't
trust it. But I think coin base has done a
(22:17):
very good job of branding itself as a as a
generally trustworthy place. I guess you know this. The show
isn't about investment advice. But I've seen a lot of
coins come and they're gonna have to blur out coins here.
But there's more than four thousand coins these days, Dan,
So that concerns me because a lot of people are
(22:39):
pumping and dumping. We're seeing a lot of behavior that
threatens to give crypto a bad name. It almost reminds
me of the dot com boom in the late nineteties.
What are you telling you know, what's the message you're
putting out there about coins? Well, you're right that those exist,
and there are tons of them, and most of them
(23:00):
are trash. Now. I was also going to mention the
com bubble because some of the most successful, long lasting
Internet companies came out of that bubble. You know, Yes,
that bubble burst, but not everything was trash. And so
similarly with the crypto market. I mean, yeah, if you
said I'm gonna buy the top fifty probably forty two
of those are not going to prove to be good investments,
(23:23):
and I would just argue that the existence of those
coins shouldn't necessarily detract from the legiti of some of
the legitimate ones. You know, because someone created shiba Inu
token and it rises every time that Elon Musk tweets.
But what does that really have to do with bitcoin
and the theory? You know, arguably nothing. I mean, yeah,
(23:43):
they're part of the same industry, but there are also
a lot of scaping involving the US dollar. I mean,
that's what crypto people say. At least sometimes I laugh
at that retort, but it's true, you know, and bitcoin
is an extremely headline driven, narrative driven industry, So you're right.
When there are hackers, you know, the colonial pipeline hackers,
and they demand ransom in crypto, that leads some people
(24:05):
to say, oh, see coin is used for crime. Well, okay,
I mean it's also used to give perfectly decent, hardworking
people in countries that don't a bank accounts their paychecks,
so they're good. And dad uses a tech and the
tech is agnostic, the tech is a political Well, of
course you were referring to doge coin, which has been
(24:27):
making the headlines lately. But I want to get into
this the less nice side of crypto, right, which, of
course I think i'd be amiss not to mention that
cash is the most untraceable form of exchanging value and
committing nefarious activities. But you know, here I'm recording today
Dan from Orlando, Florida, very famously the Matt Gates case
(24:51):
here with our local tax collector in Seminole County. They
were found to be using bitcoin, the specifics of which
we are unaware of so far, but you know that's
taking center stage here. Additionally, you're from Massachusetts. Your Senator
Elizabeth Warren has come out and said, we gotta get
ahold of coins. We gotta regulate bitcoin, we gotta stop
(25:15):
it for being used for drugs, prostitution, you know, sex, drugs,
and rock and roll. You know, there is a nasty
side of crypto. So how do you cover that as
a journalist giving a fair shake to both sides, like
potential good investment also potential bad uses. There is a
dark shirt and by the way, maybe a good way
(25:36):
in you mentioned, oh, you were talking about dos coin,
but actually Shiba a new coin is this separate coin
that comes from doge coins. So there's Doge and ship
and all of these meme tokens that have now been
created purely based on Internet memes. And sometimes when you know,
a prominent person tweets about then the prices goes nuts.
(25:57):
And all of that is just to say that there's
some major obvious risk here to these meme coins and
ship coins, and so you're right, I mean, investor beware.
And Elizabeth Warren has asked that, you know, crypto exchanges
like coin based like finance be better regulated, and she
is concerned about when they're used for listen activities. Janet
(26:20):
Yellen as well, but I think that sometimes that gets
misframed by mainstrer news outlets as their anti crypto. They
have not said that, you know, Jenny Yellen has not
said that she wants bound, just that she wants to
protect consumers. And Elizabeth Warren is the same way, same
with going after big tech. It's all about protecting consumers.
And I think that's good and fine and smart and
(26:40):
that regular generally be a good thing. But to your
final question there, how do you cover it? And back
to the meme tokens. It's a fine line. For example,
you know, when when doge coin is soaring because of
a Mark Cuban tweet or an Elon Musk meme of
the shiba In Neu dog, you know, the doge meme,
we cover it, but we're very careful to say this
(27:02):
is crazy, you guys. I mean, this is silly and crazy,
and we're not suggesting that you go by this token
because you know, drop six tomorrow when you lose your money.
I mean, investor beware, be careful. And I think that
in general and crypto media, there is too much flag waving.
Some of the sites that cover crypto are clearly ra
ra ra, and they write news they're saying, isn't this great?
(27:24):
Crypto is completely great? You know, we are aggressively neutral
in the sense that I don't necessarily think, you know,
I'm not out there saying bitcoin is gonna replace the dollar.
I don't have a huge amount of my net worth
tied up in this stuff. Every writer decrypt discloses their
precise holdings, and it's all very very tiny. The only
reason we're all in it is obviously at the very
(27:45):
least interesting. I think the technology is fascinating and I
think the tech is here to stay. But I don't say,
you know that everyone should go put their money in
this stuff, and there is definitely a dark side. You're right,
but as you mentioned what crypto people of long stead is, well,
cash is untraceable, and by the way, Bitcoin often gets
called anonymous, and that's really not correct. It's semi anonymous.
(28:07):
I mean on on the bitcoin blockchain. Many a time,
bad actors have been able to be traced because there
there is some information there. You know, when when I
send you a thousand dollars worth a bitcoin, it gets
recorded on the bitcoin blockchain. It doesn't Dan Roberts sent
it to David Grosso, but it says, you know, wallet
number A three two x one sent it to wallet
(28:28):
number B B J four two and you can easily
click that wallet number and see the other transactions I've made.
And so it is often traceable, and in some ways
it's more traceable than cash. You know that people use
for drug deals. Again, the bitcoin blockchain is completely public
and viewable. So I guess that's just a long way
of saying there are luck inceptions about the space. You know, Yes,
(28:51):
it's often used by hackers and by scammers. So what so, Dan,
you stole my line. The reason why journalists call me
to quote me is because I neither own a lot
of bitcoin. I own eight dollars with the bitcoin, and
I'm neither pro nor anti. So you're onto something because
I see a lot of flag waving and then I
see like, oh, this is bad, as Warren Buffett once said,
(29:12):
worse than rap poison, right, And really this is unavoidable.
This is an unavoidable development in finance, whether you have
money parked in it or not. It's like arguing about
the cloud above your head. And it's also that's the
way I say. It's also a symptom of our larger
political moment, right, which is that people generally have whatever
(29:33):
their long held beliefs are, and they just amplify things, developments,
news stories that confirm the beliefs they already have. So
the people who think bitcoin is horrible and it's a
scam and it's a fraud, you know, nor Reel Rubini,
they don't want to hear anything else. They just keep
screaming and respond, you know, it's a scam, it's a scam,
it's a scam. And when the price rises, they continue
(29:54):
to say it, and they'll continue to say it until
the cows come home. And then on the other end,
that's no good either. The people who believe this is
the future, and you know down with fiat currency and
the government so stupid, and you know f the FED,
well that's an echo chamber as well. So like most things,
the truth lies somewhere in the middle. Wow, that's the
first time I've heard that in media in a while. So, Dan,
(30:29):
how do you create balance in your coverage? Right? Because
I imagine you have members of your staff that are
very pro cryptocurrency and other members that are very anti cryptocurrency,
and maybe they're not very forthcoming about their views, but
it comes out subtly in their coverage. Well, you're right.
We have some writers on staff are not huge crypto
(30:50):
flag wavers. They're very skeptical. I wouldn't say they think
it's stupid, but they think in many cases it's irresponsible,
and they don't think this stuff is the future. And
I generally have a sense of all of our writers
views and I think it's an asset to have balon staff.
I think that's great. I think there's some cryptosyites wherever
in their loves crypto and this stuff is the future
into the moon. So when we cover developments, we try
(31:15):
to just say, here's what's happening, and explain it and
explain the significance, but not necessarily you know, an anti
grand So one thing I've really hammered home in the
five months since I took over the site is anything
that we cover is it news, Because every day there's
a flood of news in the crypto space. There are
a lot of pitches we get. But just because it's new,
(31:36):
that doesn't mean it's interesting. So is it new? And
also is it significant and interesting to a broad number
of people, because a lot of press releases aren't that
interesting and we shouldn't cover that. So when we cover
something like you know, Vitalic Buterin dumped all of his
ship coin shiba e new coin and the price craft,
(31:58):
we are very deliberate about Hey, by the way, what
is ship coin is. Here's what it was created, Here's
what that means. Why did vitalit dump it? Well, here's
what he said about it. Why did the price drop?
Here's why the price dropped. Here's what it might mean
for the future of the token. We don't say the
price drop, but don't worry, it'll go back up, Bye
bye bye. We try to just hold the reader's hand
(32:20):
and explain things because when I think of sort of
the ideal decrypt reader, there are multiple buckets. There are
people who already know all about crypto and they read
about it every day and seating our site to discover
news of the day. But then there are also people,
as I mentioned earlier, the crypto curious, who want to
have questions answered. They're not experts, but they're interested and
that's great. They want to learn more, and that's why,
(32:43):
you know, this section of our site called learn, where
we have explainers on technical concepts, is really important. I
think it's as important as our news coverage. So all
of that is just to say that our writer's views
run the Gannett. Everyone discloses their holdings, and almost no
one on staff is a large amount of crypto. You know,
I own one bitcoin that I bought years and years
ago to play with as a reporting tool. But we
(33:05):
all cover the news and we explain those concepts, and
we do it neutrally and fairly, and I'd like to
think that we are the least biased crypto news site
of the Bunch. So one of the things that isn't
very reported is that political parties except bitcoin as donations
and crypto is starting to invade our political space. Do
(33:27):
you guys cover that? We do? It's interesting. For a
while there it was a very small number of candidates
who would accept crypto as donations, and so every time
one of them did, it became a news store. You know,
there was Eric Swollwell who first accepted it. Of course,
Andrew Yang, who was running for New York mayor, is
(33:47):
a big crypto guy. Although interestingly now the front runner
is really uh he he kind of beat Yang at
his own Yang Gang game. Very cope coin politics, right,
But there are complications with accepting it that a lot
of people don't. For example, a lot of people think
it's totally untaxed. Well, that's not true. It's starting three
(34:10):
years ago, the I r S began explicitly asking people
to disclose your crypto games on your taxes. If you
sold at a game or at a loss, you don't
have to disclose if you just bought someone held onto it.
But all of these things are more examples of the
various misconceptions, you know, that it's untraceable, that it's a
scam or fraud, that it's only is for crime, that tax,
(34:31):
that it's not tax. You know, that's not true. So
I think some candidates are still hesitant to accept it.
It's not everyone, but you're right that it's become more commonplace.
So that's a b That's part of the politics here
is what are their views on crypto. I think more
than ever, candidates are sharing, you know, weak of it
when they want to regulate it. Donald Trump got away
(34:53):
with saying almost nothing about it in his four years
in office, other than one tweet famously where he said,
you know, I do not like bitcoin and other cryptocurrencies.
But Anthony Scaramucci, whom we've interviewed at Decrypto multiple times,
he told us that he suspects Trump did not write
that tweet, and that that was just written by someone
like Minucian or someone on the economic side who who
(35:14):
wanted that out there. So you don't really know what
Trump thinks of bitcoin. But I remember when he first
took off, as a lot of the bitcoin people thought
that Trump was going to be this great friend to crypto.
That didn't really happen. We also don't really know what
Biden thinks of it, but certainly Biden's picked for SEC
chair Gary Gensler. He is thought to be pro crypto,
and that has led a lot of invest to hope
(35:36):
that a US Bitcoin e t F will soon be approved.
But we'll see, you know, we keep waiting. So let's uh,
what would you do, Dan if I made yousre of
America with crypto? Because obviously we do need some regulation.
But I'm I'm personally skeptical of of government regulation. It
seems like they always get it wrong and a lot
(35:56):
of the magic could go away if they try to
reel it in. So how do we preserve the magic
but minimize a lot of the you know, the nasty stuff. Well,
you're right that in many cases, when Congress is trying
to regulate a form of tech, first they have to
learn about it, you know, first they have to be
educated on it to understand it enough to regulate it.
I mean that's why you see, you know, Mark Zuckerberg
(36:17):
and Jack Dorsey testifying before Congress and they're basing some
form of let us help you regulate us. We'll show
you how to regulate. It's kind of funny that was
that was? That was a um. Now, what would I do?
That's a great question, David. No one has asked me that.
I mean, I would probably demand that the biggest crypto
(36:40):
exchanges share their financials. You know, if that means all
of them going public. Fine, you know, coin bases now public.
There's a company Binance, which is actually the biggest critical
change in the world by volume, and Finance doesn't disclose
where their headquarters. They say they have no headquarters, and
for a while it looks like their headquartered in the Caymans.
For a while it was to say Shells, but both
(37:01):
of those countries have come out and said no, Finance
is not licensed to do business in our country. Well,
so where is it based? And if you don't know
where it's based, how can you regulate it? How can
you say these are the rules that finance has to follow.
So finance has been very adapt at dodging regulation. I
would probably move to make all the exchanges UH share
and report their financials. That doesn't necessarily mean reporting all
(37:24):
the info and all their customers, because what crypto purists
hate the most is the idea that their info is
going to be reported. Because they say that defeats the
whole proposition and you know, idealism of crypting outside government control.
So you want a little bit more regulation and then
when it comes to you know, how the government approaches it.
(37:45):
They need to monitor these ransomware attacks that usually ask
for bitcoin as as payment. You know, they are not
doing enough to to crack down on the ransom where
of course, the problem is whenever the safeguards advance, so
to the hackers, you know, the bad actors appear to
move more quickly than the good guys so to speak.
So there's a lot to be done in terms of
(38:07):
cleaning up that aspect of it. But you'd also want
to not have the government clamped down such that they're
restricting innovation. I mean, don't get in the way too
much of these companies and see the benefits and the
value in fostering innovation in this space. Yeah, but you know, banking,
it's kyc know your customer. You can't have it both ways.
(38:30):
Either crypto is mainstream or it's not right like so
I don't understand the demands of the community, like either
you're gonna institutionalize it or you're gonna be illegitimate. There's
no there's no halfway point here. So either the exchanges
have to practice what Chase Manhattan does. Right. Well, that's true,
(38:52):
and it's not what crypto people want to hear. And honestly,
it's gonna be a great battle because, as I mentioned earlier,
this is the tension between people who you know. I
was at the Bigcoin Miami conference a couple of months ago.
Enormous was the biggest in person bitcom commerce ever, and
of course there were tons of funny T shirts and
signs to see, and one of the T shirts I
(39:12):
saw said k y C and a m L is
the crime, and it's like, come on, guys, I mean,
come on, there are people in crypto who you know
they think that k y C and a m L
is unjust KYC being know your customer rules as I
money laundringt. But you're right. I mean, if if crypto
(39:32):
changes want to be banks but for crypto, they're gonna
have to fall in line with this stuff. But of
course many of them won't. Would rather exist in the
binding nance like Limbo, where they're making big money and
they have tons of customer and its customers obviously of
a certain cloth who don't mind that they're not complying
with government regulations. So when you say you can't have
(39:53):
it halfway, well, that's why landscape is going to be
those who choose to go above ground and be but
up and be friendly with the regulators and comply, and
then those who choose to not do that. And obviously,
if you choose not to do that, you're gonna be
limiting yourself to crypto purists who don't mind that or
who like that. That's the appeal to them. But there's
(40:14):
gonna be a real shaking out here, you're right, and
can the government? Will the government try to and can
it go after the exchanges that don't comply and don't
practice these safeguards hard hard to do if you don't
know where their headquarters are or who's really behind it.
And never mind the exchanges. There's some cryptocurrencies like mon
arrow that are just completely anonymous. Can that fly in
(40:36):
today's world? Those are privacy coins. You know at our
decrypt virtual you know Snowdon loves those privacy coins mon
arrow z cash and his whole thing is privacy. So
you're not about to see k y C and a
n L when it comes to mon arrow. But that's
the use case. So you know, can they get away
with it? Yes, they have and they'll probably continue to.
(40:56):
But that's why there's such a striation between the different
levels of investors in people who are going to have
to be convinced to buy bitcoin even there are not
going to be investing in mon narrow and z cash
and dogecoin, and that's okay. So there's a real risk profile.
How much risk are you willing to take on? So
(41:18):
can you tell me a little bit about bitcoin mining
because it seems like so theoretical to us, and we
read about it and we know big governments like China
have moved to ban it. What is it and why
is it in the news all the time? Sure? So
let's go back to the definition of blockchain. Right, this
publicly viewable ledger a record, that record is up kept
(41:39):
the network is up kept by the miners. And so
if the idea of bitcoin is digital gold, the analogy
really works because there's in the gold and what they're
actually doing isn't mining the bitcoin per se. They are
mining uploading keeping track of the records of bitcoin transaction.
(42:00):
So the way you bitcoin mine is with large expensive computers.
They don't look anything like the computers you and I
are on, but they are that do use a lot
of energy and electricity. That's a problem a lot of
people have with it. And those machines are on all
the time seven racing to solve mathematical computations. And basically,
(42:21):
if your bitcoin mining or machine is the first to
stall a certain equation, you've won the right to to
mine a bundle of transactions. So this is also why
it's so intuitive that it's called the block chain. It's
a chain of blocks. Every block is a bundle of
multiple transactions that were done in bitcoin. So if I
(42:41):
send you a thousand dollars with the bitcoin, the record
of that transaction is included in a block of other transactions.
So what miners are actually doing is uploading the record
of that bundle of transactions to the blockchain. And to
do it, they get a small reward that is a
tiny amount of new bitcoin. That's how new bitcoin is created.
(43:04):
And the backlash that you're seeing now is that this
process uses a lot of electricity. And don't let any
you know bitcoin flag waver tell you it doesn't. It does.
It uses a lot of electricity, and it doesn't look
likely to change for bitcoin anytime soon. But when it
comes to ethereum, which is currently mined in the same
way as bitcoin, Ethereum is soon transitioning to a new
(43:27):
method for mining that will not use nearly the same
amount of electricity, and so that's why a lot of
people are pleased about that. Don Ethereum mining will become
more sustainable. It's going to move to proof of stake
rather than proof of work. But your listeners don't even
need to understand that. All they need to understand is
that mining is expensive. Some regular people have tried to
get into mining, but it's not really going to be
profitable for you for a long time because the machine
(43:49):
is so expensive, and because you're not right to upload
every block. You're competing with a huge mining farms, you know,
operations that have just tens of of mining machines, computers
that are running seven Most of those bitcoin mining farms
were located in China, but now China is cracking down,
so they are going elsewhere, and they go where there's
(44:12):
cheap power. That's correct, they go where there's cheap power.
Of course, the cheapest power is coal, which is not
very good for the environment, but it's better for the
environment if they use renewable energy like hydro power. And
it's not quite clear what per said. The world is
bitcoin mining already uses renewable energy. If you, you know,
grab a report from a bitcoin firm, it'll say eight
(44:33):
percent is renewable. See, it's not a problem. But of
course they're talking their book and they're invest If you
try to get a report from a more mutual place,
it will tell you that only like thirty seven of
the world's mining is using renewable energy. So it has
to get better, that's for sure. But suppos think it
really will and that then those concerns about the energy
(44:54):
used will go away. Well, that's good to know that
Ethereum is moving away from that because that is definitely
a legitimate concern. I want to end and with the
way our conception of cryptocurrency and really the virtual sphere
has changed because of the pandemic. You know, I'm pretty
sure I've seen you in real life, probably a few times,
(45:15):
but this is the first time you and I and
actually have actually spoken to each other. And this is
virtual and this is because of the pandemic. Fundamentally, right,
this is this has become normalized. Do you feel like
these cultural changes have really influenced our view of digital
assets in general. I think mostly the price surge that
we saw was really tied to what was happening with
(45:37):
the economy and with stimulus checks and with the FED.
You know, it also was prompted by quantitative easy. I mean,
people like to say there's no central bank of bitcoin.
No one's going to suddenly create you know, bitcoin easy,
where they pump out a bunch more bitcoin. It's a
cap supply, and that's the appeal is an investment. But
you're right, I think that the embrace of crypto, which
(45:58):
happened inly accelerated more than ever, is definitely a part
of the larger movement. You can throw in the retail
investor revolution, the Reddit investor, Wall Street bets, the game stop,
short squeeze, the rise of zoom, the rise of remote work,
it's all part of the same movement. You're right. Now,
there was an early tweet early in the pandemic or
(46:20):
that was recirculating from the Strinvasan, who was a coin
based exact now he's not a coin based anymore, but
he's a little bit controversial. You know. He likes to
troll on Twitter, but he had tweeted back in January,
so before the US really understood and was admitting that
COVID nineteen was a problem. And he shared a news
story about COVID nineteen and he said something like, what
(46:41):
if this is the big one, the global pandemic that
excites a number of pre existing trends. And I mean
the tweet looks brilliant in hindsight, and he mentions remote work,
video conferencing, and telecommuting, uh, you know, social life changing,
a decentralization ship of finance and of offices. And I
(47:02):
think he was right now, my point being the reason
I mentioned that tweet. Some of this stuff was already happening.
I mean, you know, Zoom wasn't created during the pandemic.
These were businesses that already existed, and there are some
people who were working remotely before COVID nineteen. But it
is dramatically accelerated, and in some ways, I think certain
effects of the past year and a half will never
go away. Now that said, I also think some of
(47:25):
them have been exaggerated, Like I don't think the office
is dead forever, and I don't think all things are
better on Zoom, you know, you and I are making
this work. But I suspect it would be a deeper,
better connection if we were on stage, face to face,
a few inches from each other having this conversation. Right,
So I'm still a believer in many ways in in person.
(47:46):
Well yeah, I mean like I feel like you would
be more of your mass whole self if I were
right there in person. Right, it gets dulled through video. Right.
I love Massachusetts so and I love people from Massachusetts
because they tell you the truth. Where can we find
out more about decrypt? Thank you for asking. We are
a dot co. So we are decrypt dot co and
(48:08):
you can find us at decrypt Media on Twitter. You
can find me a read Dan. Right, But the best
thing to do if you really want to get all
of your crypto news every day is our mobile app.
Our app is clean, great ux, great tech. So I
encourage everyone to download our our free app. Man, that's
a different interview, Dan, I mean getting your app together.
Congrats on that. That is no easy feat. Thank you
(48:32):
Pop on that note, congrat I sincerely appreciate your time.
I know it's valuable and all the best from all
of us that follow the profit in Bold TV. Thanks
so much. Great talking to you. So that was a
really fun conversation with Dan. Dan someone that I've seen before,
(48:54):
you know, as someone from the New York media space.
All of us kind of know each other. The thing
about media is that it's not really an industry that
makes a lot of money, but it has a lot
of power. We get to decide the culture, and that's
really the problem with media, right And that's why it's
really important what Dan is doing these days, which is
(49:14):
giving you a balanced view on crypto. Really, crypto is
something that, never mind the general public, politicians and regulators
don't understand what it is. And Dan made an excellent point,
how do you regulate something that you don't understand? And
this fundamentally boils down to the biggest problem we have
(49:35):
right now in our society, and that's the elephant in
the room, which is people are living longer and the
people who are pulling the levers of power are generally
older than they used to be. And I'm of course
referring to my parents generation, the baby boomers, and they
have a lot of good intentions. There are parents, there
are people we love, but they really don't understand how
(49:58):
the world works anymore because the world has changed. The
pandemic has accelerated that pace of change. And one of
the things that is really changing everything is the digital sphere.
Everything's going digital and baby bubs really don't understand how
that works, what it is, and the default to criticizing it,
(50:19):
at least most of them. But really, crypto isn't something
that we should be pro or con Crypto is something
we should look at and try to understand to protect people, consumers,
to protect us from being scammed, and also to build
a future. Crypto is an essential part of our financial future.
(50:41):
The US dollar, fiat currency, currencies backed by governments are
really in danger. Their credibility is in danger, and the
whole conception of value is in danger. And young people
are much more open minded. We understand that a lot
of things are imaginary. They've just come to be part
(51:03):
of our culture. Is gold really valuable or did thousands
of years ago we decide it was valuable? The same
thing with stocks. A lot of big corporate is run
in such a way there really doesn't make any sense.
They're not even focused on making money half the time.
So why is crypto so revolutionary? It really isn't. It's
(51:24):
just like any other's form of progress. The first time
that you hear about something, you really try to block
it out and say, no, that's an extremist view, that's
an extremist outcome. But more and more we see that
tokenization and I'm not talking about culture literally, creating digital
coins is going to revolutionize the way we think about money.
(51:48):
While you're at it, you can start revolutionizing the way
you think about everything. We are in a period of
rapid change socially, culturally, and economically, and cryptocurrency is just
one of the things that is completely demolishing any concept
that we had of storing our hard earned money and
(52:10):
planning for the future. The older generation needs to stop
and think, maybe I don't understand this, but maybe, just
perhaps it's the way of the future and I should
be open minded. And in the meantime, let me regulate
it properly in order to minimize the bad effects, but
to create a future in which America can remain the
(52:32):
most relevant country on Earth. And that's my take on
crypto and by the way, I barely own any Thanks
to all of you for joining me as we all
follow the profit together. I'd like to thank my team
of producers as well as my executive producers Debbie Myers
and New Gingrich of course, the former Speaker of the
House follow The profit is a production of ging Ridge
(52:52):
through sixty and I Heart Radio. Download us on Apple Podcasts, Spotify,
or wherever you get your podcasts. Part of the GNGWICH
three sixty network,
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