This week in Bitcoin- 7-12-2019- Giacomo Zucco talks Trump, No worries Lightning Network, Libra


Hello everyone this is adam meister the
bitcoinmeister the disrupt meister
welcome to this week in bitcoin today is
July the 12th 2019 one Bitcoin equals
one Bitcoin value your wealth in Bitcoin
strong hand offended by selling Bitcoin
is a next big be a unique beast on
confiscate able holder of last resorts
world reserve crypto oh and I’m here
with a holder of less and I’ve been
looking forward to him coming back so
long then I’m giving the whole show over
to him only one guest on this week in
between it is Josue Koh
welcome back Giacomo had been to the
back have been to the back now there was
now you tweet a lot and he’s tweets or
his Twitter is linkable
hello everybody everything I talk abouts
link to below and my Twitter’s tech ball
Tec HP alt now there’s this one guy
whose tweets are almost as big as
Giacomo’s tweets his name is Donald
Trump he’s his dude who lives in America
he’s from New York originally I think
Queens and he tweeted out something he’s
also present United States from what I
hear and he tweeted out something about
Bitcoin so Giacomo’s going to give us
the world ride and perspective on it but
I just for clarity’s sake and for the
future for people watching this in the
future I’m gonna read out what Donald
president Donald Trump said here I am
NOT a fan of Bitcoin and other
cryptocurrencies which are not money and
whose value is highly volatile and based
on their well anyway unregulated crypto
assets can facilitate unlawful behavior
including drug trade and other illegal
activity
similarly Facebook’s Libre and this is
important virtual currency will have
little standing or dependability if
Facebook and other companies want to
become a bank they must seek a new
banking charter and become subject to
all banking regulations just like other
banks both national and international
we have only one real currency in the US
and it is stronger than ever both
dependable and reliable okay it is far
the most dominant currency anywhere in
the world that is true that’s the one
thing is true and it will always stay
that way it is called a nice they stock
so I do agree nice a stellar is the the
biggest regular currency in the world
now everything else that he said no I
want to hear your opinion jack of all is
this big nerds people say this is so
bullish for Bitcoin what do you think so
well anyway I agree so first of all
everybody was waiting for this for this
moment I mean from tweets about
literally everything everything which
comes to his mind it has no filters or
apparently at least he plays he acts as
having no filters so he discusses every
stupid things and that was kind of sad
that some that the orange man as as
opposes call him didn’t wasn’t
discussing yet the orange coin which is
which is Bitcoin so it’s it was a moment
or written written in the stars he had
to happen and we may say that also the
quantities candle bullish because as you
said it mixes some truth with with a lot
of well I don’t want to call them lies
because otherwise maybe a drone will
come to my to my windows right now but
with a lot of let’s say maybe not
inaccuracies that let’s put it that way
so first of all about the the context of
the of the tweet as I read it the
context is a context of feeling the need
to push back against a big car narrative
which stronger stronger and more and
more legitimate and more and more
present the was I think it was
undressing to nopperz first and I Anna
did it again in many of my presentation
was comparing Bitcoin perception to
coober kubler-ross
cycle of acceptance of a loss so the
first phase is denial
so Bitcoin doesn’t exist I I don’t talk
about that becomes a joke
the second is anger which is a Bitcoin
is true but it’s always become existent
but it is bad always and only used by
terrorists
and perverts and then the other one is a
bar game so bitcoin is here to stay but
I will present my own version so my
blockchain my token my crypto and then
there is depression which is basically
blockchain don’t make any sense tokens
are scams so everything that we thought
we could the bargain to it was a failure
and then there is acceptance which is a
Bitcoin is Bitcoin we we we went through
the same phases with the internet like
firstly Internet doesn’t exist then the
Internet is just a tool for for scammers
and perverts and terrorists and then we
will build our own Internet we Microsoft
Intel government will build our
alternatives so that’s mirgain then
depression and then finally acceptance
of course these cycles are not not just
one big cycles they are made by by by
little cycles are always bigger and
bigger in importance and resonance so
the anger phase which is what what Trump
is passing through now is something that
many people in the space and in the
industry many banks are already passed
through so because it doesn’t exist be
kind of system but it’s evil and I will
stop it and Trump is now going that
second phase is still needed to go
through the bargain phase which is what
Maduro already passed so bitcoin does
actually exist and I will do a better
Bitcoin so the Fed coin we will do a
better version of Bitcoin then
depression which is oh my god these
tokens don’t make any sense and then
finally accept on so I mean it’s a
necessary step in in the face so we were
expecting for it looking at the content
of what to eat Wheaton I think some
things are interesting like the fact
that that bitcoin is volatile is true I
mean on that point I think he has a
point
bitcoin is a volatile in a kind of good
way I mean it’s good to be volatile and
going up year after year of orders of
magnitude is not a bad kind of
but still it is a volatility and it
could create some problems for some use
cases so though about that is completely
right but Bitcoin is created out of thin
air well that’s that’s comical because
fiat money by definition is created out
of thin air without any kind of any kind
of export any kind of cost any kind of
constraint the US dollar are created
whenever a bureaucrat decided that US
dollar are created and Trump is always
criticizing the Fed because they don’t
print enough dollars out of thin air so
this is really paradoxical and also it
facilitates crime but starting point
from point of view that everything we do
since we wake up in the morning it is a
crime in at least one jurisdiction at
least one time in history so drinking
beer is a crime being a woman and
driving is a crime
I mean escaping if your slave is a crime
being a Jew is a crime so everything we
do is a crime at a certain point in
history in some jurisdictions so we have
to be careful when we talk about
facilitating crime because sometimes we
are talking about facilitating heroism
or completely legit activities by people
but even if we consider crime as bad
things with a or not always are the nice
things that that there is one currency
that is actually the number one currency
used in crime right now which is exactly
the US dollar so anyway I mean later on
as you said Trump declare that Trump
states that the u.s. dollar is the most
accepted most important currency in this
world right now which is true and that’s
also the reason why it is the currency
which is used mostly by terrorists and
and and all the bad things you can pick
up perverts and scammers and violent
people and war mongers and warlords and
and and drug dealers and everybody else
so in a way when the last sentence will
not be true anymore so when dollar will
not be more widespread in Bitcoin then
maybe his other sentence will become
true so because will be
mostly used for crimes I mean the coin
will not be more Muslims for crimes but
criminals will mostly use Bitcoin right
now they must use the US dollar also
it’s very interesting to look into the
sentence about Libra so many people were
so we’re thinking that like since just I
mean since Facebook just decided they
are going to violate money monopoly then
they will just do it but we already
passed through this this history with
the beginning of PayPal
XCOM with ego Liberty Reserve a lot of
people tried to to compete with the Fed
using centralized services and they
always ended up in the same way either
they give up competition like a linden
dollar or PayPal or they get they go to
jail like eagled or Liberty Reserve the
end is always that and Trump is just it
just it just reminded these people that
this time is no different I gotta say
something here about the Libre part I’m
glad you brought that up I thought you
were gonna leave that out I think that
this tweet was mostly brought on by his
dislike of Facebook I really think that
played a major role in this and I have
no idea if he knows all the difference
between Libre and Bitcoin but I think
that this Libre thing is what woke him
up and he does not want Facebook to have
their own coin because politically the
people at Facebook are not aligned with
him so I think this is what triggered
all of this then this is my analysis
ones I haven’t heard anybody else say
this yet and I’m really glad you did
bring that up and so dude do you think
they’re gonna be able to get away with
it do you think they’re gonna be able to
progress we have hearings coming up next
week I think in United States about
Libre and I’m gonna ask you some more
about Libre – but purchased on that did
with the bottom line will Libre be able
to progress so I don’t think neither
that Libre will be able to progress as
they described in the white paper so and
progressively decentralize the
alternative to the US dollar without the
bank equivalent ky caml but not only I
don’t think they will get away with that
I don’t think they even believe or plan
to get away with that I think that I
mean there is people inside inside the
Libre consortium who is working for
PayPal and PayPal started exactly with
that dream
Peter Thiel a nanomask started with the
dream of a currency for the internet
which is outside the regulation of the
Federal Reserve and they and let’s say
the financial financial regulators for
KY CML and any other kind of stuff and
they know that it was not possible back
then and it won’t be not possible right
now so I don’t think they even think
they are going to do that I think that
they know marketing-wise
that they if they were just going to –
announcer like Facebook is going to
compete with Ali pay the the kind of
exposure the kind of newsworthiness the
kind of of visibility of the news will
have been little so instead if they say
Bitcoin is creating a Facebook is
creating a new cryptocurrency then the
kind of visibility and discussion around
it is infinite and so they do that not
because they think they can go around
the Federal Reserve monopoly or going
around kyc prisons they can’t they
already said basically Facebook
representatives and Libra consortium
representatives already said that they
are not going to do that in India
because you can’t not in Iran because
you can’t not not going to do in any
country which is sanctioned by the
United States you will have to look away
see I mean it’s already it’s already
written they cannot do what it was not
possible to do for PayPal one may say
that maybe one one thing is different
you can say Facebook is now more
powerful than PayPal was in 1999 which
is true but those you have to consider
than the US government and the
governments in general they are more
aggressive about money
then way more than they wear in 1999 so
if if government agency put liberty
reserving angled people in jail back
then imagine right now they are not less
aggressive than normal more liberal
about that they have def to maintain
negative interest rates which means that
they have to ban cash whenever they can
because otherwise people can exit in
cash and they can blow up the negative
interest rates economy so the
government’s are more serious now than
20 years ago about banning tax havens
enforcing kyc all the things that happen
like Patriot Act and everything so maybe
Facebook is stronger than PayPal but the
government the government desire to
control money it’s way way stronger than
it was at the end of the 90s and so I
think the end is the same and I think
Facebook people know that perfectly okay
well I we think Facebook has some game
plan some end game and some tie-in with
some these political people and probably
people who are not on Trump side so it
will be interesting to see how this
involves first of all found that liked
by everybody if you’re enjoying this and
I’m loving it you mentioned that in the
last 20 years governments have become
stricter and they they do they do have
an excuse they go to when we’re talking
about laundering money they talk about
terrorism and of course in 1999 we had
not experienced 2001 yet so this that is
a tremendous tremendous difference and
something that you know they I think he
even brought up terrorism in that in
that comment so that that was not a
calling card that could have been used
back then now with all that being said
Facebook’s I I think they’re gonna end
up with something here do whatever they
end up with whatever they end up with do
you think this will be good for Bitcoin
and do you think it will help on board
people to Bitcoin so I think what they
will end up with like a PayPal
competitor but radically different
that’s that’s why I called it an alley
pay competitor because people would just
be Baja while Facebook lie
Alipay they are creating a payment
system which is working in symbiosis
with something huge which is the social
graph of Facebook so it will I will I
will not think it will end up into
nothing I think it will possibly end up
in something bigger but mostly big for
for for I mean for that sector not as
big as Bitcoin so what I think is that
it will be it will impact on become
would be kind of like this super short
term it has been bullish because they
basically promoted the day all Bitcoin
stuff to to people that didn’t even know
about that so the very short term effect
was creating some visibility and some
exposure to the idea the medium term I
think it will be kind of bearish because
many use cases that could have a USB
kind Bitcoin now they could just go to
to Facebook and be serve the better than
on Bitcoin but then long term it will be
bullish again because any interesting
use case that will be possible a Libra
somehow was already possible with the
PayPal because by definition government
regulation to will catch up and so
anything you can do at equilibrium or
Libra you could do that the same on
PayPal and everything you can’t do which
includes saving your money from
inflation and stuff like that or or
maybe being paid if you are a women
woman in Afghanistan or exporting money
from Venezuela
everything you couldn’t do with PayPal
then you will you will discover you will
not be able to do that with Libra at the
end because Libra will have as a
collateral fiat money so they will
follow inflation completely they will be
K received they will stop at border so
eventually in the long run you will have
to come back in Bitcoin but with a major
improvement which is basically that so
right now when people faces Bitcoin they
are facing digital gold and they may
have two kinds of two kinds of let’s say
skepticism
Bitcoin one is about digital so a
typical thing I mean if it does if it’s
not something I can touch like paper on
my aura orc or metal it’s not real money
so they can distrust digital per se or
they can distrust God like I want
inflation I want kyc I want this kind of
stuff so when they when the people start
using digital more even if it’s Libre is
not digital gold its digital banking
basically they will have less and less
skepticism about the digital part and
and all the kind of struggle will be
will will be focused on do you want
digital bearer instrument unprintable
inflatable uncomplicated called or do
you want empty promises by governments
that can be confiscated and it will be
over regulated and you will be we will
have to ask for permission every time
you move them so at the end I think it
would be a positive effect that’s it I
wanted to add something about political
alignment if I can which is I think it’s
very interesting you say that Trump
disliked Facebook but I am not sure if
Trump knows or not that bitcoin is
actually being analyzed very very deeply
by a lot of Trump supporters that since
many social media platform are biased
Pro let’s say Pro Democrat or anyway
anti-trump they have been a dip left
formed bus is a while so think about gab
or think about you know Alex Jones and
they tend to be I mean they they’re they
are a complex galaxy but mostly they are
pro Trump
so from the Trump I don’t know if it
doesn’t know or it doesn’t understand
yet then some part of his let’s say of
his political side or things which are
totally political side are ran now being
cut off traditional centralized services
and they are switching to Bitcoin
inspired bit come close or Bitcoin cool
Bitcoin
say Bitcoin contiguous decentralized
services so that’s like patreon and
Nutella coin etc yeah I think you’re
making a great point there I don’t think
he knows the difference
i I think his anger is so much at
Facebook that he just lump Bitcoin in I
don’t think he but he’s oh it’s a
cryptocurrency they’re all bad I I think
it would be great if someone in his
administration understood and did tell
them exactly what you just said that a
lot of his it’s mostly the concern he
knows that conservative people are being
targeted a bit more than liberal people
on social media being shut down and
within the next step in the learning
process is a way around that censorship
is Bitcoin
thus you shouldn’t be tweeting out
Bitcoin and Facebook in the same tweet
as the same thing I I don’t think he
gets it and maybe when he does did it
will be able to tell because he’ll just
be ripping on Libre and talking about
how they should be they need a bank
license and all this and forget about
the Bitcoin and terrorism thing because
if he keeps going on the Bitcoin in
terror is a thing it’s it will it allow
alienate some of his supporters who are
going to need to rely on that and we’re
we’re actually gonna talk about that in
a second some what these banks are doing
but wait did you have something else to
say about that yeah no just that I’m a
little bit skeptical I mean this is very
optimistic but the effect is is that I
already said part of the of the truth so
I say that bitcoin is mostly right now
explored by right-wing people who are
the platform which is conservative
people which is true but if you have a
complete understanding on Bitcoin and
then you know that yes it does allow
Trump supporters and and and
conservatives to be funded maybe with
alternatives to patreon etc etc or to
pay for server like gab but it also does
allow stuff like sending money from
Mexico to the USA or vice-versa
violating China restriction on capital
so Trump is not like Trump is not like a
libertarian so I think that if we
understand because you understand that
he will go against the big attack so big
techies it is his enemy
but he also go against some of his
typical protection is my mantras so I’m
not so optimistic if we love it maybe I
mean right now is the President of the
United States so the United States are
in big trouble it becomes Wiz because
they cannot print money anymore and they
cannot confiscate money easily anymore
but maybe a Donald Trump which is not a
president anymore but it’s just a all
the rich guy with with divorce problems
and and with the lawyer problems with
with ex-wife I mean that kind of guy
could understand become better than any
presidents of the United States very
good point I also wonder what his
upcoming ex-wife is how much she’ll sue
him from for in the future once you
don’t next up he’ll be on to someone new
in the future everyone you better
believe that but I think you bring up a
great point about remittances and why do
I hate Bitcoin because I’m sure at this
point you know with all his dealings on
the border that he’s seriously
considered just cutting off normal
making it illegal to sell for
non-citizens to send money back to
Mexico and then maybe someone told them
well people were gonna be able to get
around this with Bitcoin so maybe you
bring up an excellent point that
although it is it’s that’s the beauty of
Bitcoin your worst enemy can it can help
them it can help you and that’s why
usually you should be that’s why anyone
should be into it and maybe Trump should
put that all together but you may seek
he might realize he might consider
Bitcoin an enemy because it does help
people sending remittances back to
Mexico and that is a huge that would be
a huge part of his campaigning uh you
know shutting down the border its etc
etc so I mean maybe maybe maybe he’s
thinking a couple steps ahead while he’s
got to go against Bitcoin and he
actually isn’t confused about Libre and
Bitcoin I want to bring up one thing
about Libre that you talked about it
being paid now for in order
leave her to be a success I think it has
to be bigger than PayPal I mean Facebook
has this tremendous network they’ve got
to be able to scale this thing so
they’re bigger than PayPal do you think
they’ll be able to be bigger than paper
well it’s not certainty because
I mean traditional the fact that you
have a beacon network effect in
something doesn’t translate to a bigger
Network affecting something else think
about Google Google already had their
own page of basically every human being
on the internet and when they tried to
launch their own social network twice
they failed miserably so they had a huge
network effect they tried to step out of
their comfort zone I mean Google Plus
was technically not even so bad but the
point is that nobody cared and and even
if it was in the old page on everybody
nobody switches to that and everybody
stayed on Facebook and Twitter
so will the fact that they can basically
gift a PayPal equivalent to to everybody
with some unanswered feature like social
graph payment so pay your friends I mean
they can can they be better than PayPal
as a service
yes definitely do they have strong
assets that PayPal didn’t have yes for
sure for example when the government
asks PayPal to do complete kyc of people
PayPal is in big trouble because now
they have to kyc everybody but Facebook
when the government asks Facebook to kyc
people they already know more stuff
about many people than the government
says so the cost took a with is not that
they will not kyc us they will still do
it but the cost will be lower so
Facebook has got assets that the PayPal
didn’t have but that doesn’t
automatically translates into into like
a bright future necessarily we will see
probably all right and comment on this
topic one last thing haha I know you
love to talk about altcoin so this isn’t
even a real altcoin but who’s next and
Facebook is a fan company Facebook Apple
Amazon Netflix Google who’s next with
this this own private coin competitor to
PayPal or do you think that another
another company is good is not going to
try this is it gonna be cooler
you see google tried social media and
fail do you think I’ll try
cryptocurrency I think that Google are
already so
I don’t really think that that that
Facebook is so naive to really try
cryptocurrency I think they are using
the cryptocurrency narrative to get more
visibility to an operation which is
basically payments so in these regards
Apple and Google are really there they
enter it payments before cryptocurrency
was an interesting marketing narrative
or without actually fully leveraging the
cryptocurrency narrative so Apple and
Google are ready there they are
you have Apple pay and you have Google
pay they may try now to pretend to have
a cryptocurrency but the point is that
they already launched that kind of
market aggression while Facebook waited
to enter into the payment situation and
and and then they waited until the
moment in which a critical narrative was
interesting what we could think about is
is basically you know right now there
could be something completely different
from from from those companies you
mentioned that cool oh so try this kind
of rhetoric we will see in a webpage
Amazon is closer to cryptocurrency that
Facebook right now because Amazon has
the Amazon credit basically Amazon Terk
Mechanical Turk credits there is a lot
of strange things in Amazon coupons
there is a very rich and strange economy
which is closer to a legal arbitrage
then I think Facebook will ever be
so probably Amazon is even further
forward in this in this kind of endeavor
all right all right
that’s that’s a good take on this ah do
you see on the side I just tucked in
yeah well he gets to read that often and
answer it if you answer well so the
question is will the they would like to
know if I ever had any prima facia
heuristics about Bitcoin they were
proven wrong so what is the prima facie
eristic s– this comes from the extended
explanation of
my take on Bitcoin maximalism in Riga in
a Baltic on a budget of 2018 I gave this
presentation which was mostly
tongue-in-cheek was mostly semi
sarcastic and has said that I gave that
to the the for universal truths one was
everything which is not bitcoins a scam
and everybody pushing people to change
bitcoins a scam and everybody pushing
people to spend bitcoins a scam and we
should not be we should not be nice with
scammers then in a longer presentation
that you can find on Google in a Bitcoin
embassy in ulster ritalin I gave the
full presentation and explained that
these are not really truths of course
and I gave a lot of counter example for
example like Torah and BitTorrent are
not Bitcoin they are not scam and
spending bitcoin if you are in Venezuela
you don’t have anything to spend it’s
not scam and the change in Bitcoin
towards a grid is not scam and be nice
to scammers is actually ok I do that all
the time
so these are not literally literal
statements about reality but these are
what is called prima facie heuristics
that means that if you use it
there are somehow equivalent to you
shouldn’t trust a Nigerian prince when
they write you emails what does that
mean that there are no actual hornist
Nigerian Prince’s yes they are but when
you receive an email from a Nigerian
prince your first you I mean your
default position should be his coming me
and then you have to prove that the foot
position wrong so if the question is if
one of these prima facia eristic was
always ever prove it wrong to me the
answer is yes but all the time even
before I assume it is eristic they were
already proven wrong in some specific
cases for example as I said many
projects that are not Bitcoin including
many open source decentralized protocols
like against the guilt gift is not
Bitcoin is not a scam and many cases in
which you spent Bitcoin I spent bitcoins
by my VPN because I don’t want the VPN
provider to know about my credit card so
there are a lot of cases in which to
spend Bitcoin and and a lot of cases
which change in Bitcoin is actually good
so yes this eristic are proven wrong
with some with some kind of of nuances
in some specific cases but if you use
these eristic you are better off that if
you use the opposite eristic which is
basically I believe everything which I
mean I believe cryptocurrencies in
general I believe any new idea I follow
a new idea about changing Bitcoin or I
cheer when people is pushing spending as
a narrative or or it cannot be a scammer
because it’s a nice guy so the answer is
yes eristic are made to be broken
but they are still useful I you know
Nigeria is a tribal society which there
are a lot of I mean there is a tribal
society in Nigeria and a lot of Chiefs
are actually code prints so you can go
to Nigeria and meet an honest Nigerian
prince who is not scamming you so you
can prove the aristocracy
when you receive an email from a
Nigerian prince proposing you to enlarge
your sexual organs be skeptical as a
default position
sounds like the exception proves the
rule type of situation again another
more technical more technical example
people says all the time you don’t roll
a cryptographers they says they say you
don’t roll out your own cryptography
graphic the real primitives so you don’t
roll out your own crypto this is a very
good rule of course if everybody was
adopting this rule literally people will
never ever invented a CDSA or snore or
or or any kind of cryptography somebody
had to roll out their own crypto but as
a default be skeptical of this claim so
yeah what you say this right is that
except there are a lot of exceptions but
the rule is the correct sceptical
critical standard default position all
right now we’re going to talk about why
shouldn’t be worried about litecoin my
mind like yeah not like coin Suze tell
that like you’ve got me talking all
coins now man worry about likely but why
not to worry about lightning Network but
before we get into your lightning
Network thing was everybody always wants
to hear about letting network there was
a quick and thank you for that question
I Roman ask that question and Ken Bozak
thank you for the two dollars in the
super chat dude pound that like button
a guy named Anthony Manero who I think
is from I’m butchering his name he’s
from France I think he’s in the chat he
says and I want he brings up tether
and that’s why I want to hear you know
people are always worried about tether
bringing down Bitcoin that’s that’s
something people worry about so here’s a
question Trump is going to use tether
case to crush the attract higher crypto
system which means it will crash the
Bitcoin price sooner or later sooner or
later Bitcoin will rise again but expect
a huge crash very soon okay so this is
come this is combining a lot of profits
but I do want to hear your tether take
it real the government go out after
tether at these hearings eventually so
far it’s only the state of New York
that’s going out after tether well but
what the United States government go out
and the federal government go after
tether and use it as a way to hurt
Bitcoin is that even possible
I don’t think it’s possible the tugs
that’s my take on this so if Heather
does get taken down one of these days
will it bring down Bitcoin so a lot of
lots of sub questions in this question
so the first is is the US government
going to take down tater so I think I
honestly think they are going to try to
take it down because theater is
basically an explicit attempt at
regulatory arbitrage around the
limitations and the barriers that that
the US government Falls to any
circulation of dollar denominated value
so theater is a useful tool for traders
in order to in order to avoid be kind of
qualities when they want or in order to
onboard and outboard exchanges going
around typically kyc restrictions so to
the theater is a useful to
and and I think the US government as a
whole eventually will try to shut this
kind of or stuff out what I will weather
will not be so certain about is that
they succeed because you know they
managed to take out the PayPal effort
and competing with the dollar or a
Liberty Reserve but I think that the
theater guys especially proved to be
particularly resilient so as a model I
think that theater is eventually
inevitably some somehow fragile because
I mean what I always say is that think
about the fractional reserve problem you
have decoded even if you trust the title
company and I mean given recent
development I think there are good
reason to kind of trust them because
they behaved in a kind of I mean
creative but fundamentally sound way so
but even if you trust them not to
inflate the number of taters still you
have to trust the banks that they are
not doing fractional reserve on the
amount of dollars the debtors put in
there and if they are doing for a server
for certain they are not doing that with
gold or or physical cash so they will be
basically using some kind of bonds or
government bonds of some Caribbean state
which itself can fail so theta
represents a chain of counterparty risks
together and it fragile so I think they
will try to destroy it and I am Not sure
they will manage it because the guys are
really really there’s mark I mean if you
if you really read all the history of
theta and BitFenix in general these guys
are really smart so I I hope they resist
III give I mean I really hope they can
stand a government attack and I’m not
sure they can’t in the long run of
course we need Bitcoin because this kind
of operation cannot be sustainable in
the very long run if we could have a
tater which works perfectly
ma across generations we will not need
Bitcoin at all because we will just
u.s. dollar tater maybe we just asked
theatre company to stop him plate in the
base and now we have some money and dark
money censorship resistant so obviously
in the long run it cannot work so the
second question is the third question
artery is we’ll take him down tater take
down Bitcoin I don’t think that would be
that’s the case either short-term or
long-term long-term of course Bitcoin
doesn’t care
short-term I don’t think there is this
this death spiral dynamic I mean if you
if you destroy if you go to I mean not
more than empty than empty gods did so
did empty God’s failure destroy Bitcoin
no did it depress the price for a while
yeah so is tater closing down as a news
depressing the price may be good for us
we will buy the deep I mean it’s not
really a fundamental problem it can be
it cannot reverse a long-term trend it
can be the trigger for some short-term
correction eventually all right and
again remember if it does if and when it
gets take it down there are other stable
coins that people could just jump to and
I mean I think
it obviously it’s the best of the stable
coins but still it’s a it’s at the end
of the world
we shall see and I I do agree these guys
are smart they’ve been able to hang on
this long so it’s something to keep an
eye on I I do not worry about it
now but that that was a question and
people are gonna keep bringing it up for
quite some time now when we’re talking
about not worrying about tether you gave
a talk about stop worrying about the
Lightning Network why should we stop
worry about the Lightning Network tell
us tell us what you talked about so the
title you can find it I think right now
it’s pinned on my Twitter my Twitter
profiles so if you go on Twitter Jack
mitsuko you find it to a pin on my on my
on my timeline basically the title of
the talk was an idea of the organizer of
the of the full more lightning Hawk days
Jeff and it’s a quote of
Kubrick Stanley Kubrick movie the doctor
strangelove so how I learned to stop
worrying and love the bomb and it is how
I learned to stop worrying a lot the
lightning and the content of the talkies
cause basically like that isn’t it
strange that everything that we are so
obsessed about in Bitcoin which is being
slow secure safe conservative maybe even
toxic toward changes so my second rule
in Riga Maxim Maxim alles presentation
was any attempt to change bitcoin is a
scam which is very very toxic so why
does not the same apply to lighting
because enlightening every new proposal
every new change like L to atomic
multi-path everything new is cheered as
something instead super super welcome
and super super enthusiastic and also in
become we say that you should hold hold
the hotel or Bodil and my third rule
says that every attempt that pushing
people to spend is a scam and there is
also a great article by by by goldstein
Michael Gartin which is everybody
everyone is a scammer which is a great
article in the Nakamoto Institute which
is basically everybody wants your
Bitcoin and everybody ug you to spend
Bitcoin just because they want to get
your bitcoins so why do is which from
this kind of narrative in Bitcoin to a
narrative enlightening where everybody
wants to spend money wisely like you
have video games in which in order to
move the character you have to spend bit
Satoshi’s or a fraction of Satoshi for
every single move that’s crazy if you
compare that to the hotel Amin
so the point of my talk is that lighting
Network unlike the base layer of Bitcoin
lives on a different social layer and
the point of my talk is that some very
very low levels deep social layers they
require mostly stability conservative
approach adversarial thinking almost
paranoia
they need they need toxicity they need
to be aware of attack
they need any an immune system they need
safety first rules they need
mission-critical attention while layers
on top of that they typical they
typically aren’t that way and they
welcome more like fast evolution
competition different implementations
and new ideas and spending small amounts
that’s basically because on Bitcoin you
have basically you move large amounts
and you have a base layer which includes
the monetary policies so if people
messes ups with the base layer we are we
are in big trouble for probably for four
decades if not even longer so the the
lower level is robust but it’s not
antifragile
we cannot really mess up with that a lot
we cannot be I mean we can be tortured
or kidnap for our bitcoins so we
shouldn’t just go around lightly talking
about that there is a state government
agencies they could infiltrate the
development they could try to push bad
ideas into Bitcoin they could try to
make it more centralized in order to
stop it so there are a lot of reason to
be super worried at the base layer and
to use as a prima facie heuristic a very
very toxic realistic like everything is
a scam we want to I mean safety first
while enlightening we don’t have the
same constraints because even if the
entire lighting networks now fails we
can still take Bitcoin the monetary base
is still there the monetary inflation is
still untouched the fundamental
blockchain that Amish are still saved
and we can build a new better psycho
layer even assuming that the first layer
that the dam the light metal layer
collapse completely so we can mess up
with lightning and I mean of course it’s
always better not to break things but if
we break lightning that’s not egg that’s
not a game stopper if we break Bitcoin
that could be the end of our experiments
or maybe for centers so all I think you
can finally cease the amounts are small
like Microsoft Aussies you can finally
spend and have fun spending and not
holding anything you can have fun
introducing new things for example I
work with some other people on the RGB
spectrum idea about assets so we hate
assets on the main chain we ate assets
on layer one we always say that assets
can be problematic and I chemists of
incentives and they blow the blockchain
while we love assets on top of lightning
because now you can experiment we we are
skeptical about changes on protocol but
we are not skeptical about the new bolts
and new changes also because
enlightening lighting is not a global
consensus system so in lighting you can
change what your life in node does
without affecting the consensus of other
nodes you can have a different policies
for your node your channels your your
partition of the network while on
Bitcoin when you change the consensus
you basically you mess with other
people’s money so the second layer is
something that in a way some scam
corners or or al corners they were
searching for something that lively
finally provides for which is basically
fast crazy evolution so I remember where
people pointed to me it was mostly it
was probably 2 years ago some guy showed
the meta mask a themed browser extension
to me and I said I mean this is very
cool because I mean as user experience
meta mask was was great and so I started
to talk with some Bitcoin developers and
I said I mean guys I know that you are
focusing on security but from a US point
of view you should learn from them I
mean this is something this is something
usable and and they started to list to
me all the reasons that that’s actually
very bad idea because that will
incentivize people to put money at
serious risk because javascript browser
extensions and these and that
and the way you store the seed and the
way you wake up and they were right but
now a lightning if you look at the jowl
browser extension that is pretty much
like meta mask maybe not not not yet as
cool from a yes point of view but a
similar and nobody has any objection
about that because all I think there is
just a very tiny amount of money on your
channels it doesn’t affect consensus so
you can mess up and finally you can
attract less security minded and more UX
minded developers wow that that is a
good thing a great way of describing
lightning Network a place where you
don’t have to worry because if it breaks
it’s not the base layer that’s breaking
Bitcoin will be fine it’s not a lot of
money at risk people aren’t putting a
lot a lot out there I’d like to I like
it a lot this is a great way of looking
at things and it’ll be a great way for a
counter-argument for everyone saying all
the people attacking lightning network
all the all corners attacking like the
network you can just say no so what if
it breaks it breaks we still have
Bitcoin it’s not the end of Bitcoin is
the end and it’s not and hopefully it
won’t break but and then you can say you
know it’s a place for experimentation
there’s so many people out there that
say litecoin is the place for for
Bitcoin people to experiment know do do
it on the Lightning Network a different
light but a second layer solution so it
provide I’m like I like this take I like
this take a lot and I thank you for
sharing this today I gets me in through
even more enthused about lightning
Network and yeah you’re right
meta mask is kind of cooled with
ethereal it is but that’s all in the
base layer aetherium something went
wrong it would be able to base layer
there
if the meta mass version of lightning
network goes wrong so so what but yeah
excellent points here yeah we’re going
toward the end of the show and I was
gonna talk about SunTrust Bank but we’ll
talk about that in another show I think
I referenced that earlier but I did want
to you retweeted where is this tweet
that you retweeted
about okay you read I don’t know if you
agree with this but I just want to get
your tape because you didn’t retweet it
sip
fact only Bitcoin matters now I know you
agree with that another fact Manero is
technologically super interesting but
from a higher level view sadly it is a
relative revelant irrelevant irrelevant
ah yeah I don’t think that today that I
completely I completely agree with with
that take I am the more I mean I have to
admit in 2015 I was very open to scam
coins because I didn’t understand some
something that I understand now
so it was basically before I was
skeptical about Bitcoin when Bitcoin
destroyed my skepticism I I suffered the
pendulum effect and I went from
skeptical too naive so before I didn’t
believe in Bitcoin and after for a while
I did believe in everything so it was
like researching repo researching NXT
and I didn’t even understand that
economically speaking this proliferation
doesn’t make any sustainable sense so I
was very open and then when I started to
understand that that was mostly now the
technical term would be probably I
cannot say it on your channel so it was
mostly a snake-oil yes they coil
I was thinking another animal not a
snake but okay so it was mostly snake
oil and now I started to use annalistic
in which every out coin by definition is
mostly uninteresting until I’m proven
wrong and I have to say that Whitman
arrow I have been proven wrong because
true I mean Manero has a lot of problems
trade-off difficult choices for example
the hard fork every six months is is
good for evolution but it’s super bad
for political independence because then
you centralize around you never you
never ossify and you centralize a
development team because you need social
coordination for every odd are fork then
using base layer of food station means
that you are giving up scalability
entirely because global global consensus
is very bad as KBT already if you also
obfuscate global consensus with
signatures and and the computation
transactions you are basically giving up
scalability and you are making the trade
off between validation and spending way
way WAY worse and also there is a
strange trade-off between security and
privacy like the more you go through
privacy the more you risk from the
security point of view because you can
only be perfectly hiding or perfectly
binding and there are a lot of problems
between I mean you could hide inflation
in Manero and you couldn’t either in
Bitcoin so there are a lot of sacrifices
but that’s that said the way that
monitor community behaved was a
scientifically and sociologically very
interesting and I have started to grow
to respect that even some things I
didn’t know like the way they basically
working whether you cannot have asked to
be and you have to have your full node
that’s way more secure that’s way better
than what we coined it with with bloom
filter so some little things in manera
are even a good example for the future
development of Bitcoin that said
importantly I am skeptical that you can
I mean maybe today in the short run you
can use Manero as part of your privacy
procedure so use Cohen join us join
market use wasabi use full nodes use non
address reusing you store and you also
use Mineiro as part of your of Europe
IG in a privacy region but in the long
run liquidity is the king because when
you have more liquidity you also have
more unanimity set what I mean is this
let’s assume there is an alkyne with 10
users and a real signature soap so
beautiful that it will anonymize between
all the users but still you have 10
users so even with the perfect of
physician of sender your unlimited set
is 10 on the other hand you have Bitcoin
with 10,000 users so even if the
anonymity sector of the single beacon
transaction is bad the limit set of a
coin join in Bitcoin will be
then the limited set of the ring
signatures part is in monaro so of
course then there is amount to the
result to discussion 12 but in general
the point is that so that let me phrase
it like this the reason there isn’t a
typical litecoin use case doesn’t make
any sense
is this I want to save money so you want
to give us some security to save some
money so I’m using Bitcoin as a store of
value you are the merchants you’re using
Bitcoin as a store of value since it was
to save money on fees what I do is to
buy litecoin give you a light coin and
then you have to buy back Bitcoin but we
are not saving money because we are
using a fee to to move a Bitcoin from
coal storage to an exchange because you
don’t store your Bitcoin an exchange
then you pay the market fees to buy
litecoin with your bitcoins then you pay
the light-cone fees then the merchants
will have to pay the the market fee and
they become fees back to CoStar so it
doesn’t make any sense
with Manero there is something weaker
but similar because i want privacy i use
bitcoin Azzam as my store value of
course in court art so I need to move
Bitcoin from the coal storage to some
market maybe this centralized market but
still the the order book is a liquidity
limitation and so then a limited set of
people exchanging at that moment will
never be infinite even if you have a Dex
or atomic swap that doesn’t help because
the point of the limited set is the
liquidity so I have Bitcoin I have to
buy Manero
I have to send you Manero to stay
anonymous and now you have to sell
Manero for Bitcoin and get that Bitcoin
back to your store value you see that
doesn’t work either this kind of money
can be austere a very long term or the
friction to switch to the privacy coin
and back will reduce the liquidity and
anonymity set by definition so you have
to hope that Manero in order to be
usable also has to become a store a
reliable long-term story value which I
can I think it can’t so I agree with
this tweet what they’re doing with
Manero is great from a scientific point
of view
and it’s mostly ethical even if I will
have preferred a side chain or a
provable or something but it’s it’s I
mean they’re behaving in an ethical way
and scientifically they are very
interesting but yet it cannot work
because what matters is liquidity
because liquidity also creates an image
set all right that that was a beautiful
explanation of that tweet so yes it is
and long it is irrelevant it I mean
that’s that’s a very shorter way of
saying you fleshed out what was meant by
that term there now I would I you
brought up something apps applications
privacy at the base layer let’s call it
privacy at the base layer Manero has
privacy at the base layer some people
are suggesting that bitcoin should
implement privacy at the base layer some
people are saying though of implement
mimmo Wimble privacy at the base layer
i’m from what you said about Manero I’m
guessing that you don’t think there
should be privacy at Bitcoin space later
it’s not about soon it’s about this
problem so there is one short-term
problem is that any solution we have now
for having strong privacy at the base
layer also has a lot of very very
difficult trade also brings a lot of
difficult trade-offs so ok you are
getting privacy but you are giving up
scalability big way because the ring
signatures are big and accomplish the
transaction they are big so that will
make the the contrast between block
space cost and not well not validation
cost even that they will make it even
worse so that the problem is that it
makes it’s making scalability worse the
second problem and you know this is
typical of the base layer of frustration
solution while lighting for example is
giving a better privacy solution that
also helps with scalability because the
concept of lightning or a script a
script or a taproot
or this kind of solution is that you
don’t use the blockchain for everything
you you put on the blockchain only the
less the fewer amount of information you
can so everybody has information but you
use the blockchain the less you can
while obfuscation means that you give
information to every node forever but
you all full skate Krita graphic at the
information and the first problem is
data create is a problem of scalability
a huge problem of scalability and I
think that if one area right now the
same usage of Bitcoin the the course
either in fees or in centralization
would be would be do will destroy the
project problem and the second cost is
security like in Bitcoin we can have a
strong security against him I mean there
was the inflation inflation bug in
Bitcoin importantly a few months ago and
if that one want if that want to be
exploited we will immediately know when
the when inflation and where the
inflation happened in Monell that’s not
the case so you are giving up some a lot
of scalability and you are giving up
some security that’s the same for me
moving ball so the thing is that these
things could be mitigated in the future
maybe right now the kind of ring
signatures we have now the kind of
confidential transaction we have now
with bulletproof they are just at the
beginning but maybe in 20 years we will
have such such such kind of evolution
that we will have like range proof based
on different critter graphic assumptions
so we maybe will get to a point where we
can put privacy at the base layer
without giving up too much scalability
and too much security but the probe the
second problem is that the more Bitcoin
goes on and on the more it’s necessary
that it becomes difficult and difficult
and it more difficult to change because
otherwise there would be always people
trying to change it and try to use a
social attack attack vectors to change
it governments or corporations so we
need we need the stability of the
protocol at a certain point at the base
layer so right now we’re probably right
now we could change Bitcoin in order to
put these kind of features but this kind
of feature are not ready because they
damage security and scalability
eventually this kind of feature will be
ready but we will not be able to put
them into Bitcoin anymore because that
will mean to change Bitcoin
too much for too long to be to be too
fragile against changes so for this
reason many Bitcoin developers don’t
agree with me like I mean I’m not even a
developer a serious Bitcoin people don’t
agree would be like Adam back he thinks
that computational math transaction will
get into Bitcoin maybe they will get
into because with some kind of side
chain like mechanism like you save the
base layer as it is and you obtain in a
new layer of fundamental premise like
extension block with member whimper for
example mini Wimbledon is beautiful and
a lot of even if it’s risky but it’s
beautiful and a lot of things are
looking forward form in Bible as a
bitcoin extension block which means that
you take in a Bitcoin you put it in this
kind of let’s call it almost sidechain
which is an extension block and it goes
memeber Wimberly this extension block
and then the caps can come come out but
even that will take a while so I think
that maybe we will have something like
that in an extension block eventually so
the bit mobile technology is better than
me Hashim manera
I think it is because so there are three
different kind of things mineiro is
using realistic straight to-the-point
pragmatical solutions that are ready on
the market right now to do some things
and they are doing that responsibly
mimic wimba is more like a still more
like some kind of dream but it’s it’s
not better from the practical point of
view but from the design point of view
the elegance of member Weber where you
use the binding keys and the hiding keys
together and I mean if you read the
description of memory Wimble and you get
to understand it a little bit it’s I
consider it aesthetically beautiful it’s
super smart but the Z cache is something
even I think the cache is a very bad
take on privacy because they are using a
general-purpose as you know is proof
mechanism which is super difficult to
scale and super difficult to keep secure
with with trust a set up when what you
need is exactly it’s not general purpose
you need something spicy
to hide amounts and hide senders
basically and also the the way the cash
has been done is I think it’s very
problematic like there is a one United
State for-profit company which is
keeping all the developer fees and they
are they are copywriting the logo so
it’s not up is not really or typical
open-source license and and privacy is
the opt-in that means and very expensive
that means that a lot of people they
think they’re using privacy with the
cash they’re getting privacy but they
are not because they’re just using a
normal T transaction and others in the
transaction so a lot of people using the
cash now they think they are private and
they are way less private than Bitcoin
because of this model unlimited set and
even if somebody uses the shielded
transaction the fact that nobody uses
them or very few people uses them makes
the anonymity set of people using them
super small so yes you use the shield a
transaction but it’s only five over
using them so your anonymity set is is
is irrelevant so I think that Manero is
a great pragmatical experiment z cash in
my opinion is a very bad take on on the
privacy thing and mimmo Wimble is a
beautiful dream of great mathematical
elegance Wow that there’s your complete
answer on the privacy coins pound and
like button and Wow who want to guess
we’re gonna talk about member Whipple
with uh with jacquimo it’s that’s a
rarity ok here’s a question what this is
this is gonna be the end this show I
just sent another question here would
like to get someone sent this in the
chat what uh what’s it say here would
like to hear Giacomo’s thoughts on
Bitcoin inflation through issuing paper
receipts when Bitcoin is deposited at
third-party custodians yeah I mean yeah
this is a very good question this is
basically Bitcoin Bitcoin
fractional reserve basically so if you
have custodians these two students can
claim that they have more Bitcoin that
they do and then they create a
fractional reserve and in a way that’s
inflation I mean that’s there are there
are a lot of people that will fight
about calling that inflation or not but
basically it could be equivalent its
monetary it’s depth
expansion that could have the same
effect of monetary expansion so can you
avoid that no can this happen yes I have
two reasons why I think that the
monetary the fractional reserve
expansion in Bitcoin will never be as
serious as it was in with the gaw
stander and as it is right now with the
baseless fiat money and the two reasons
are are these the first reason is that
auditing gold in a couple is very
difficult
auditing Bitcoin with Krita graphic
prover serve is easier so ask for your
first Orion to audit fiat money is
basically impossible asking them to
audit gold is difficult asking them to
audit beacon is easy so and there could
be very smart way to do proof of reserve
in a very very in a very very and very
in a technical very advanced at an
uncertain way so if your custodian is
not going to prove you that they are not
doing in fractional reserve I think
that’s a red flag that most of the
market will understand second settlement
is faster so if you want to settle to
settle gold in a central bank I mean
Germany is still waiting for Dave gold
from from the Federal Reserve so it
takes 40 40 years or something like that
while with Bitcoin even if we kind base
layer is going to be more expensive and
more slow still probably in a couple of
day with with a few dollars you will
have your collateral back so there is no
excuse to keep your collateral hidden
from you forever and I said two
arguments but there is a third argument
which is very important so I think that
from fresh turn ourselves in a free
market has a natural balance as a
natural limit in the bank run risk so
you can inflate the depth as you want
but then you will risk a bank run and so
your your people meet your creditors
will come back to to get the to redeem
the promises and they will in the market
will move to other banks
using less fractional-reserve so there
is a market mechanism to keep
fractional-reserve harnessed what is the
problem with with the current monetary
system is that when there is a bank run
the government’s the government come and
they print a legal tender money in order
to bail out the banks that fail and they
and they basically confiscate morning
with accession due to due to or weather
surveillance on people and so they
confiscate Texas and they print money
and they use this money to bail out
failed banks so there is a huge
incentives for more moral hazard there
is a lot of fractional reserve because
if you if you don’t fail you get the
interest and if you fail somebody will
give you other people’s money to bail
out you to bail you out so this cannot
work in the hyper bitcoin is a
mechanized world because in the
hyperbolized word Federal Reserve they
can print but P but the liquidity will
not will just flow away to Bitcoin so
they cannot really print anymore
and they can text people but when you’re
present when you financial privacy is
very very high taxation cannot get to
crazy levels because the market will
just refuse to pay if it’s at crazy
levels so I think the Bitcoin will make
the government incapable of bailing out
fractional reserve excesses and so
fraction ourselves is possible but it
will be back to be limited and balanced
by a bank run risk I love it he Giacomo
is here fighting the financialization
fractional reserve thought and dudes
pound that like button if you love that
I only had one guess from this week in
Bitcoin show because baby we needed all
that time we gave we gave him the
spotlight and he whoa rock the world
there Giacomo so I’m gonna leave you
with the final thoughts anything to add
anything you want to say I thank you so
much for giving it your all today and
being here thanks to you so is facial to
say it’s
that I will be in I will be on the 16 in
Bratislava for a very difficult
presentation which is a trying to
debunking myths about Bitcoin and
quantum computing which is another kind
of fut that I want to address I want to
try to address it would be very
challenging and if you want to take a
look at my Twitter on the presentation
about I think I think I think it came it
can be interesting for to understand the
different mood and and yeah I think I
think that’s all and in September we
will see each other in Baltic
honeybadger
where I will where I will give a very
strange kind of presentation and and I
will be I would give the community
updates about my experiment of last year
about the P foundation I mean we don’t
still know if if this is a post mortem
or not but it maybe we faces many
difficulties that we didn’t expect it so
in September in Riga I will give my
final thoughts on the on this year of
the foundation experiment waiting now
this this talk that’s coming up about
quantum fun dude if you pull this off we
can just link to that every time we get
some wacko in the chat saying little
quantum will destroy Bitcoin I can’t buy
it I’ll just link to that so do maybe
that’s a huge presentation you got
coming up hopefully I studied a little
bit of quantum physics when I was
getting my degree in theoretical physics
so but but still to make it a simple and
understandable and compact in one
presentation would be a big challenge I
don’t know if if I if I may if I can
make it I will try
well I I wish you welcome and that’s
competency 16 it’s gonna be Bratislava
you see Greta Slava
poor Elena polish the new the new queen
of the pearly police of Prague in
Bratislava and yeah it would be the
evening of the of the 16 alright that’s
four days i I hope can do it and I had
no idea you had to do you have a degree
in theoretical field physics
yeah yeah whoa how’d that like button
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11 thoughts on “This week in Bitcoin- 7-12-2019- Giacomo Zucco talks Trump, No worries Lightning Network, Libra

  1. Hey Adam, thanks for another great show and for your continued support of my website t-shirt merch. Much appreciated. Like button pounded!

  2. I am very surprised DJT mentioned Bitcoin in his tweets… Makes me feel slightly uneasy… But, these strong hands will prevail!

  3. Overly complex, and essentially "tryhard" attempt at dismissing Monero. Over-focusing on "anonymity set" and liquidity, while casually ignoring about a dozwn other factors

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