 Vitalik instead turned around and burned that in order to create a donation for COVID relief. I think it's admirable, but it also shows how weird and volatile the space is. Reputations and coin values can similarly be made and destroyed overnight. Hey, folks. I'm Adam B. Levine, and this is Speaking of Bitcoin. As always, I'm joined by the other host of the show, Stephanie Murphy. Hi there. Andreas M. Antonopoulos. Hello. And Jonathan Mohan. Hey, hey. A couple of weeks ago, we talked about what I've been thinking of as the modern mania. It's not just the everything bubble that's engulfed our world, but the shallowness that's come with it. Well, it sure didn't take long, but we're back with a couple of news items that blew up over the last few days involving Elon Musk and Vitalik Buterin. It's modern mania part two, electric boogaloo. So let's jump right in. So Jonathan, this Elon Musk thing, I have to tell you, like it on the one hand caught me by surprise. And on the other hand, it's not surprising at all. Can you catch us up? Sure. I think the good way to preface it is a number of things occurring and people drawing a Glenn Beck style, like linear progression between all of the events into making like Elon the nexus of all causality. But basically, Elon Musk was on Saturday Night Live, where everyone was anticipating him pumping the heck out of Doge. And Doge went crazy up and down on the basis of the expectation of him being on Saturday Night Live. And then perfectly timed on this week, immediately following the Saturday Night Live appearance, he basically made an announcement that Tesla thinks Bitcoin creates too much CO2 in the world. And it isn't sort of the direction they want to go in. And so they will no longer be buying any more Bitcoin. And they are looking for any type of distributed ledger based technology solution that is open and distributed and uses 95% less CO2 than Bitcoin. And so a lot of people were saying, oh, God, look, he's finally acknowledging the CO2 admission in Bitcoin. And then all these Bitcoin apologists felt like they needed to have the free will versus determinism of unending non-solution argument about should we justify or defend Bitcoin's CO2 admission argument, which never goes anywhere and never changes anyone's minds. And a lot of other people felt betrayed because they were like, you were the chosen one. Why did Elon betray us? And then of course, Bitcoin goes down to prices not seen until about two weeks ago. So that just catastrophic decimation in the price of Bitcoin surely must have been Elon. And the fact that he tweeted about that very secret market information known as Bitcoin CO2 admissions. And so as I understood it, Tesla said that they would no longer be accepting Bitcoin for their cars. Incidentally, I believe they haven't let anyone actually buy a car for Bitcoin yet. So I believe they announced that they were suspending the acceptance for something they never accepted, which people saw as a very bad sign for the viability of Bitcoin. And yeah, so that's basically the story. Sounds like someone wants to buy some Bitcoin. No, just kidding. But I mean, people are attributing all of these price changes just to the words of this one person. And, you know, that may not actually be true. Well, it's sort of like the comet hypothesis. And in Twitter is this very vocal minority that liked to peacock all the time. And so it's like, great, all the peacocks are looking at that peacock. That doesn't mean it had anything to do with the earthquake that just happened today, right? And so it's really funny because it's like, you know, a calamity happens, but you see a comet in the sky. So everyone attributes it to the comet. And so it's sort of funny. It's like, well, maybe people were momentum trading Elon or maybe it had to do, I don't know, with the disclosure of inflation last month being 4.2%. It could very well be that Elon's acknowledgement of CO2 output from Bitcoin and the non-acceptance of Bitcoin that he never accepted for Elon cars tank Bitcoin 10%. Or it could just be a massive correction in the bond and equities market corresponding to the federal government acknowledging up 800% increase in inflation in the official rate. But I'm pretty sure it's Twitter. You sound a little bit annoyed here. Can you kind of tell me more about that as my therapist would say? Oh, no. So CEOs of public companies are far more a politician than they are an engineer. And, you know, it's not to say that that's inherently bad. It's just the function that they serve. And so when you look at politicians, I think that, you know, you always should look at a man's actions and not his words, because his words are meaningless if he's in the role of politics. And so people were looking at Elon's words saying, you know, oh, God, how could he have, you know, changed anything? But if you look at his actions, nothing has changed. And so I like to sort of harken back to what Donald Trump would do, which is he was the master. So the same thing with Alexandria Ocasio-Cortez. They're the masters of claiming free real estate. And free real estate is when you do something that costs you nothing to appease an interest group or a base that consolidates your power for an action that you don't actually do that doesn't cost you anything. So it's just free real estate. And so Donald Trump would do this. AOC would do this. And the point isn't action. It's just this cost me nothing to do and consolidates power increases power. And so what did Elon say? Elon said, I acknowledge this problem with Bitcoin, appeasing a base. What did he also say? He said he wasn't selling a single Bitcoin he was holding, right? So how many billions of dollars of Bitcoin does this guy have that he's still long in? He sold 10% of his Bitcoin a month ago before he came to Jesus about this massive CO2 problem he needed to appease his activist investors with, right? And yet now that he come to this conclusion, he's not divesting any of his interests in this blood money. No, he's hodling and he's one of the largest hodlers in the world, right? And so if you actually look at his actions, you think about it in terms of portfolio management, right? So his treasury is, I don't know what percentage, but a super majority percentage Bitcoin, right? And so is it possible that pull a Michael Saylor and do a bond issue wants to buy more Bitcoin? Is it possible that he could convince the board or his CFO that they shouldn't be 60% Bitcoin, they should be 85% Bitcoin? Probably not. And so what he realized internally was he has billions of dollars of Bitcoin that he's going long and he's not selling and that he's not going to be able to internally increase the exposure for more Bitcoin that they would want to buy. And so if he's not going to buy more Bitcoin, but he's not going to sell it and he never actually accepted Bitcoin for cars anyway, but he can appease his investors by saying Bitcoin bad. I'm going to undo something I never did. It's all free real estate. And so that's all he did is just the political move of acquiring free real estate by doing nothing. I think you're giving Elon Musk far too much credit. I mean, in the overall scheme of things, first of all, the Bitcoin holdings that they have is tiny. Vis-a-vis their exposure to national currencies and everything else or that man's individual wealth. But the bottom line is when the argument comes to is Elon Musk, you know, a very proficient engineer or simply a good manager or simply a good investor. The answer is really simple. Elon Musk is a master shitposting troll. That is his primary skill at every now and then. He fucking trolls everyone with these tweet posts. And that's all there is to it. He's laughing at you. He's laughing at all of us because he's a shitposter and it has no meaning. It's entertainment and that's all it is. And so it doesn't matter what. And anybody who's like a fan of Elon Musk is this super entrepreneur or super engineer. I mean, that's a ridiculous fan club that he has. And I lose respect when I hear people glorifying Elon Musk. The bottom line is that he wasn't the savior of Bitcoin and we should really not pay much attention to his shitposting. He really does seem to be the modern Barnum, right? He's good to Jonathan's point at grabbing that free real estate and just kind of making it work to his point. But the other thing that's interesting to me about Musk, I think we should say this. None of us care about the price of Bitcoin actually. It feels like this is a defensive conversation, but it's just because of how ridiculous the whole thing is, right? Well, it's not that we don't care. That's not our primary focus. And I would actually go in further and say that like the area that most Bitcoin advocates are like the most navel, weasley, weasley, pathetic little like apologist monsters on is in having any type of conversation about Bitcoin CO2 output and acknowledging it as a good thing, a bad thing, a problem or something that exists. Because just like people engage in idolatry with Elon, people engage in idolatry with Bitcoin. And it's this refusal to acknowledge that any single component of Bitcoin could not be a perfect desired outcome. That every component of it is perfect. And it's like Kim Jong-un, he just doesn't shit. He works so hard that shit doesn't even come out of his butt because it all disappears. And so like any time someone brings up, well, her dear, what about Bitcoin CO2? It's like a four hour conversation of the most weasley, pathetic Bitcoiners talking about how, well, it's not really a problem or this, this and that. And so it's just one of these like very, very big trigger words in this community for people who think that Bitcoin needs to be perfect in order for it to change the world. Here's the real irony. I'm a big fan of electric cars. And I think that they're a revolutionary technology primarily because they distribute non-polluting use of energy in a highly decentralized fashion. But if you look at what people wrote about, especially in the early days of Tesla, for example, there is a palpable irony here because a lot of people pointed out, for example, that the piddly 10 square meter solar chargers that are solar panels that are on top of superchargers are nowhere near sufficient to actually charge all of the vehicles that are going through there. It's mostly decorative or that the vast majority of these vehicles get charged off grid power. And that grid power, depending on where you live and how environmentally friendly the politics of energy production and its CO2 impact are, that grid power may be very, very carbon neutral or even renewable, or it may be very polluting, like coal. And a lot of people pointed out that Tesla isn't necessarily eco-friendly if you put it in an environment where the local politics encourage production of dirty electricity. Well, do you know what else is not very eco-friendly? A private fleet of reusable intercontinental ballistic missiles. Those don't really have the greatest CO2 footprint. I don't know, Andreas, if you ever put your used car into orbit of the sun. But I know that that creates a hell of a lot more CO2 than, I don't know, maybe what you're going to do when you fly to Europe next year. Right. So, I mean, all of these conversations are really about looking at absolute measures versus looking at relative priorities and the politics of carbon. Because shifting the conversation in this way really, I don't think is particularly helpful, but it's ironic because the same exact kind of shallow analysis of the long-term environmental impact that Elon expressed for Bitcoin is the exact same kind of shallow analysis that people were expressing for electric cars. I think electric cars are an incredible advantage because what they do is they concentrate the carbon emissions and pollutions at the grid level where grid is used and not renewables. And those can be more effectively met with carbon hostile policies and politics. You can police one power plant instead of trying to emissions check two million vehicles and make sure that their catalyst isn't broken or that their timing belt isn't off or whatever. And it shifts pollution from the inner city where it impacts the most disadvantaged people to locations where you can apply politics. So to me, that's a net good. And it's one of the reasons why I think an all-electric automotive system and transportation system is a fantastic advancement for the human race. For the same reasons that I think that proof of work is a net benefit because it shifts the politics of money. But it's just ironic to me that the same kind of shallow arguments that we used against Tesla now being used by Tesla's leader against Bitcoin. I don't think it's worth paying too much attention to these arguments anyway. So after the break, we'll be back to discuss another demonstration of this kind of wild environment that we're in right now where there's lots of noise and not that much signal. When we talk about the myriad Dogecoin. Dogecoin. No, that's a good term, actually. Dogecoin clones. Exactly, yeah. The myriad Dogecoin clones that Ethereum founder Vitalik Buterin turned the situation around on. It's a funny story. We'll be right back. Oh boy, where do we begin? Okay. So just like there are many different breeds of dogs, there are... No. No, I like it. I like it. I like it. Go. So when anything gets successful, there are lots of copies of it and lots of people try to piggyback off the success. And, you know, Dogecoin has been, we've talked about it. It made it to, speaking of Bitcoin, so you know it's really made it big. It's been discussed a lot lately. Everybody's heard about it. And of course, you know, there are lots of clones, lots of... What would you call it? Like descendants of Dogecoin, puppies, coins or something? Okay, I'm going to stop with this. Yeah. So let's tell a little story about something that happened to us at the show here, I guess, nine days ago looking at this. A long time ago, in episode 102 of this show, which is like 80% of our episodes ago, we for a single episode had a Dogecoin donation address because we interviewed Jackson Palmer. I guess he wasn't the founder, but he was like the primary developer on the Dogecoin project. And remember, we've been doing this show since 2013. Yeah. So this interview probably took place like six or seven years ago at this point. Yeah. So it was 2014. And so we actually received a donation at the time, which I don't think that we actually knew about, which was 102,000 Doge, which at the time was worth like 10 bucks, 15 bucks, something like that. And which we probably forgot about. Hey, thanks. That's nice. Yeah. No, it was great at the time. It was fantastic. So the message that we got was, hey, hope you're well. I'm messaging because I was tracing my old Doge wallet to notice that I donated to LTB 102, save Gox in the show floor and these coins were never moved, just letting you know that these are sitting there. And so we were like, oh, well, that's interesting. And so we went and took a look and found that that $15 tip from seven years ago had turned into about $50,000 worth of tip, which was quite interesting. For the show, that's actually a couple of years of operating expense for us. So it was like a really big deal. And so this kind of led to some conversations around Dogecoin and all of this happening as kind of the fervor around Doge and Elon Musk with his SNL appearance, that definitely seemed like it was probably going to end badly and spoiler alert, so far it has ended badly for Dogecoin, all of this kind of excitement around it. But in the aftermath of Dogecoin sort of losing some of its glamour as a result of this rather lackluster performance on SNL when talking about this stuff, a whole bunch of projects started spinning up on the Ethereum blockchain. And these projects have names like Arshib, Shiba Inu Coin, Doja Lawn, which of course goes by the ticker Elon, Akita Inu, MW Doge, and other stuff like that, right? So like memes on top of memes. Well, yeah, they're like derivative memes, right? Okay, that's the phrase I was looking for at the beginning of the show. Thank you so much. Okay. Yeah, just how Bitcoin sort of derived all of these altcoins, right? Because it was like, well, you have coins different than Bitcoin. That's an altcoin. And then Ethereum came out, right? And it's like, oh, everything wants to be an Ethereum killer, right? Because you've got Ethereum and then you've got all these Ethereum killers. So these are like derivative memes that really aren't memes themselves. They want to be. And the other thing they're trying to do is they're trying to make it so that people can make a lot of money or at least feel like they can potentially make a lot of money. Because there's so many of the coins, trillions and trillions and trillions in many cases. I believe a quadrillion actually, in one particular case, that even if the price moves just like one-one-hundredth of a penny, well then, holy crap, that's a lot of money, right? And so all you need to do is just buy a lot of this token and anyone can afford it. So as part of all of this, as part of the marketing of this really is the way to say it, is that Vitalik Buterin, founder of Ethereum, who is himself, just based on public funds and what we can see that he actually possesses, is himself a billionaire. He's also kind of like the symbolic head, right? He's the Satoshi for Ethereum, except you can't actually send Satoshi any money because we don't actually know his addresses. I guess we do know his address. So I guess you could do this. Why aren't we doing this on Bitcoin? Okay, back to the story. So anyways, creators of these various derivative meme tokens sent these tokens in large quantities. In some cases, 50% of the total supply to Vitalik so that they could then claim accurately that Vitalik is a holder of this coin. And so this kind of presents an interesting like a Streisand effect question for Vitalik because on the one hand, I'm sure he doesn't particularly want these people drafting off his reputation. Yeah, he didn't ask for this. They're just using him for marketing with this gift if you can even call it that. I feel like it was almost kind of thought about as a proof of burn, right? We're burning these tokens. See, we as the anonymous creators of these tokens, we can't access these. We've sent them to Vitalik. He's a very trusted figure, right? And so what wound up happening was, and I was looking into this a decent amount yesterday. So he got a bunch of these different types of tokens and a bunch of ones we didn't mention too. Another one that jumped out at me was Labradoodle. And again, all of these are garbage, no network, no really nothing, just ERC20s and then a lot of speculation around, oh, this is going to be the next dose. So anyways, he got sent tons of these tokens and about 24 hours before all of this action happened, he actually burned some of them. Like he literally took a large proportion of one of the tokens and sent it to a burn address. And then he didn't do that with the rest of them. And about 12 hours passed and then he started selling the tokens on the one side and donating the tokens on the other side. A very large donation in nominal terms, specifically to the India COVID Crypto Relief Fund, which I believe he was one of the people who started also. So that donation was worth a nominal $1.5 billion at the time that he made it, making it one of the largest on paper charitable donations in the history of charitable donations. So that was interesting. So why do you say it's a nominal $1.5 billion? Is it because if you tried to actually sell it, the value would not be there? Yeah, exactly. Like these are tokens again, like everything is valued on a market cap, right? It's like even valuing doge on market cap is kind of silly because you look at how many doge are out there. And then you look at how many of them actually have moved in the last five or six years. It's not a big amount, right? Like there's a lot of tokens that are out there. But again, like this is true for Bitcoin too. Like in the early days, people just didn't understand that it was going to matter in the same way. And so the reason to keep such amazing good track of it and not have one little mistake kind of compound and then make it so that you can't access those tokens anymore, like that's pretty easy to do. And that's true with Bitcoin, which people thought was going to be money. But it's even more true with Dogecoin, which people didn't think was going to be money. People just thought was, again, like, here's a fun 100,000 tokens I'm going to send to you. Look at me, right? Like that's what I certainly used to do with it. Like it was really like a very solid tipping token because it was so cheap and because nobody really thought of it as money in that way. Yeah, so I think one of the interesting things that's happened repeatedly in this industry is that overnight something that starts as a joke can become serious money. And then it's up to different people to see how they react when they suddenly find themselves in a situation of serious money. I think Vitalik did the right thing here and demonstrated character because one of the things that we've seen repeatedly is that people who have a strong reputation in the industry will use that reputation to get kind of sponsorships and endorsements and go and promote various coins as investments. You know, that's one of the things that John McAfee was indicted for recently. And, you know, John McAfee presumably was not exactly poor when he did this, but was obviously in a situation where he wanted to pursue the riches and screw the reputation. Vitalik demonstrated the exact opposite here. He had the opportunity, even as a joke to participate in these would give them the kind of boost that can make their founders millionaires or more overnight. And Vitalik instead turned around and burned that in order to create a donation for COVID relief. I think it's admirable. But it also shows how weird and volatile this space is. Computations and coin values can similarly be made and destroyed overnight. I want to tail on to that for a second. So you mentioned that he basically burned these by sending them to the charity. I actually think that there is a distinction here between burning. Well, no, no. What he did was he burned the endorsement by burning the coins or sending them to charity and not using those coins or giving anything in terms of an endorsement back for those who tried to use him for his reputation. That's what I meant by burned. I would go one further. He accepted receipt of them and then sold them via station. So if anything, he accepted the endorsement. Well, so this is actually exactly where I wanted to go with this. So he did, as I mentioned, literally burned, literally sent to an address on the Ethereum network that is a burn address that is so specific that it cannot be reproduced naturally. There's no way that anyone can have the private key to this particular type of address because it's so unlikely to come up that you just couldn't recreate it. So he did that first and then he stopped and he didn't do that again. And if you think about it again, just gaming this out, by burning it, he actually reduces the supply of the token which can then be interpreted by the promoters as a positive thing. Oh, now there's less of this token. But if he either sells it or if he donates it to someone who will then themselves sell it, then that's a fundamentally different thing. Now it's taking this thing that is supposed to be locked away with this person who has all of this provenance. And now it's something that's actually pulling liquidity and money out of the marketplace. So I think they expected him to do nothing, to just have it sit there like the 500 other coins that are randomly sent to anybody who has an Ethereum address containing anything within them that are worth nothing. And they're not even worth sending anywhere or doing anything with. And instead, he kind of turned it on its head and he said, all right, well, I actually am going to play along with this, but only insofar as it causes problems for the narrative that you're trying to push by including me in this in the first place, right? Instead of this being safely stored in the founder of Ethereum's wallet, it is instead safely stored in a charity that's going to sell it and then do good things with it, right? And that's great in an aggregate sense. And it's a good move, I think, of the ways you could respond. It's probably the least worst option. But for the project, it's really bad because now suddenly all of this supply is held by people who have no cost basis on it and who have every incentive to maximize the value that they get out of it. So on the one hand, that means we're not likely to see, the charity suddenly sell all of the tokens. They might try to manage them and actually participate in the ecosystem. And so far, the messaging that's come back from them has said that, that they want to be good community members. But again, it kind of just fundamentally shifted the game theory and made it such that the big player in the space isn't someone who has all the money. It's someone who has the need for all of the money, has this arguably, like, Herculean task to try and help the country of India broadly to deal with the COVID pandemic, which has been very challenging. And of the options that he had, it's kind of the least worst. But from a game theory perspective, I think it was probably the right one. I'm curious what you guys think. Yeah, I think so too. I mean, I've been in a similar situation where people have airdropped tokens to a public address of mine and I've basically let them sit there. But that choice was a lot easier because the amounts we're talking about were tiny by comparison and therefore just letting them sit there and ignoring them was the easier choice. If the value was significant, it does put you in a very difficult position. And it seems like Vitalik's choice was kind of the best that could be made overall. So, on our next episode, we're going to get into kind of the current environment of inflation, what it actually means in real life, maybe what it even means 20 or 30 years ago because that's actually a little bit different than it is today. But, you know, again, just like we keep coming back to this thing, which is that all of this stuff on the one hand doesn't matter. And on the other hand, it's so fascinating, right? The conversation that is going on, sort of the meta-conversation that happens in our world around this stuff, right? Like, ultimately, a bunch of alternative meme tokens completely irrelevant. What Vitalik does as a founder, arguably he has less influence now than he did back in the days of the Dow when by sort of aggressively advocating for one particular approach, he was able to have a really outsized impact. For the most part, he doesn't have an outsized impact anymore. But I think it also speaks to kind of the importance of these projects and specifically of Bitcoin not having a figurehead that can be drafted off of in this way, either for good or for negative, right? And again, Vitalik for all of the good that I think that he does, and I think the maturity that I think that he displays, simply by being there, right? Simply by being Vitalik, who people understand to have been the inventor of this originally, you know, like that puts him in this position where Andreas, as you were saying, like, there just isn't a good option. And it's something that they're going to be put into kind of over and over and over again because the incentives for the people on the outside who are doing this, well, I mean, they have every incentive to use you to the kind of maximal extent possible. It all matters in a little bit, but it really doesn't matter at all. And that's kind of weird, right? We're kind of in this time when stuff is like so crucial and time critical and important, and yet none of it matters because it's all such this floaty nonsense that actually doesn't impact anything. Yeah, it is a very strange environment to be in. And I find myself kind of much more disconnected with the news during the times of crazy bubble-iness. Today, I checked the price of Bitcoin for the first time, I think, in a week. And I saw some kind of message that it had collapsed. So I checked it, and it was where I remember it being. But that's only because I hadn't checked it for a week. And apparently it had gone way up during that time and then went way down. And that caused enough excitement for people to write an article about its collapse. It's hilarious, right? It's complete bullshit. And I find myself more disconnected at times when things are very frothy because the level of hysteria that is happening all across the media on these topics becomes just unsettling. And I think people like Vitalik who end up in these leadership positions have an unenviable job. We're very lucky that Satoshi isn't around because you can end up with a founder that is highly problematic and only becomes a negative asset. Liabilities are for the entire industry. And we've seen that with a number of systems that have popped up, which have had fairly flawed founders. We don't have that problem in Bitcoin. And Ethereum has been lucky enough to have someone who has demonstrated character and integrity repeatedly. I have a lot of respect for Vitalik in his community leadership and his decision-making. It's pretty rare for someone that young to have maturity and that's good. But you don't want to take that kind of chance, right? So it's much better to have leaderless systems where the founders are either anonymous or are gone, or both as in the case of Bitcoin. That way you don't have to deal with that problem. In Bitcoin what we have is dozens and dozens and dozens of influencers slash charlatans who are trying desperately to fill in the shoes of Satoshi and none of them matter. This is opening a can of worms, but I'm just going to do it as we close out the episode. Who do you think will be worse? Elon Musk as Satoshi or Craig Wright as Satoshi? I think that we don't have an answer to that question. Well, folks, that's a wrap on another episode of Speaking of Bitcoin. Today's episode featured Andreas M. Antonopoulos, Stephanie Murphy, Jonathan Mohan, and myself, Adam B. Levine. This episode featured music from Jared Rubins with Editing by Jonas. If you enjoyed this episode, send us an email at adamandspeakingofbitcoin.com or just leave us a review on your favorite podcast player. And until next time, thanks for listening.