 But yeah, with the IBM, a thing that you mentioned, like I do think, yeah, situations where you're gonna have kind of multiple entities, and especially ones where, yeah, they're more like partners rather than in a hierarchy. You know, I could definitely see that making sense. Yeah, but people still wonder like, okay, but why? Why is that faster? Why is it better? It's tricky, it's tricky to understand when it actually works. Yeah, I guess because then you would have only one ledger rather than multiple ledgers. And because it would be like a time-stamped thing, you could always go back and see like who may changes, when they may changes. And so it just is like essentially software that enables trust rather than everybody keeping their own ledger and having to keep checks up on each other, then they have the one record that they can trust. I've actually had a conversation with somebody once where they're like, but a database can do that. I'm like, okay, but what about this aspect of blockchain, like the shared ledger? Well, you just have a shared database and eventually the conversation gets to them describing a shared ledger. And I'm like, so in other words, blockchain. And I'm like, oh, I guess so. Yeah, yeah, I do think. It's really, I mean, kind of, in a way. I mean, I do think when you have the asset built in, then somehow it's like a little bit more obvious what the purpose is because there is this like asset that's attached to it. But yeah, I mean, certainly, I mean, come on, there's like these huge companies that are pouring tons of money into these blockchain initiatives. And I'm sure they would have figured out by now if like this wasn't a good idea, do you know what I mean? Like, as far as I know, I'm not an expert on this, but I think the Walmart one with the lettuce, they have built that out and it's functional. So I would imagine they wouldn't have launched it if they didn't think it was superior. Right, because you could be suspicious of the jet company because the end game could be like, yeah, we could have just used a database, but now we get more press because blockchain, right? Walmart is like, I mean, I guess they could get a little bit of a press boost because blockchain, but that wouldn't be enough press above and beyond what Walmart already gets to justify that amount of expense. Exactly, exactly. All of the money. Yeah, that's interesting about the turnkey jet people. We'll see how much those tokens get used. Well, it's about time to do the show. So everybody, everybody comfortable? Everybody ready? Yep. You have a story at least now. Why not? But Sarah, the show will be in English today. I know. Ah, if we must. Would you like to read line three today? I would. Okay, I will count you in. All right. Here we go. In three, two. Craig Olson has supported independent tech news directly for five years. Want to be like Craig? Become a DTNS member at patreon.com slash DTNS. This is the Daily Tech News for Friday, April 5th, 2019 in Los Angeles. I'm Tom Merritt. And from Studio Fila and I'm Sarah Lane. And I'm the show's producer, Roger Chang. Len Peralta will not be illustrating this week. He had some technical difficulties, but he will return next week. We are joined though by Laura Shin, host of the Unchained podcast and Unconfirmed podcast. And somebody who covers the Bitcoin cryptocurrency blockchain space very well. Laura, welcome back. Thank you so much for having me again. I'm glad to be here. It was kind of a busy week in your area of the news. So we've got a lot to talk about. Yes, yes. Tell me about it. I was working like morning until night every day for various reasons. There's some SD guidelines to talk about. We're going to ask Laura where she thinks this whole space is as far as Bitcoin and blockchain. But let's start with a few tech things you should know. The Wall Street Journal sources say that Apple Music reached 28 million paid subscribers in February, which passes Spotify with 26 million. However, if you include the free tier, Spotify has more users than Apple Music in the US and it still has more paid subscribers worldwide. The reports also complain. They don't complain, but they do claim that Apple Music's worldwide growth is higher than Spotify's overall. Google announced the dissolution of the Advanced Technology External Advisory Council, the AI ethics thing we told you about last week while it's already gone. Google employees petitioned for the removal of Heritage Foundation President K. Colt James, then Carnegie Mellon's Alessandro Aqueasti resigned. So Google said it became clear the council couldn't function properly and it's quote, we'll find different ways of getting outside opinions on these topics. A pilot program from Google puts a row of advertisements on Android TV device home screens. A Sony support page says, quote, the purpose is to help you discover new apps and contents for your TV. Sony says it's managed by Google and can't be customized. XDA developers report seeing the strip in Sony Smart TVs, the Mi Box 3 and Nvidia Shield TVs as well. Can't imagine anyone will mind, right? No. Finally, China's TikTok app is launching a talent contest where users from Japan and Korea can upload music videos to be judged by local musicians and people from record labels become the next K-pop or J-pop star. A combination of popularity and judges' opinions will narrow the field to 18 over the next five months. TikTok says five to 10 acts will eventually be crowned winners at the end of the season, which includes getting a record deal, I think. All right, let's talk a little bit more about what the European Commission is doing to steam. Let's do that. The European Commission sent statements of objections to Valve, Bandai Namco, Capcom, Focus Home, Coach Media, ZeniMax, yeah, if that wasn't enough for you, saying that it believes geoblocking steam purchases violates Article 101. That article regards the digital single market and geoblocking prevents cross-border sales in some EU member countries. After an investigation, the European Commission could ban the behavior and find companies up to 10% of their annual worldwide turnover, which could be a lot. If you're not familiar with how this works, it could be a little bit tricky to understand. They're not saying that if you buy a game and you live in Poland and you travel to Japan, that you should be able to play it. They're saying if you buy a game and live in Poland and you travel to Germany, you should be able to play it because what Valve is doing with Steam right now is geoblocking by countries within the EU. And the EU has this digital single market initiative to try to get rid of those kinds of geoblocking. For instance, with Netflix as well, to say like, hey, if you subscribed to Netflix, you should be able to get access to your subscription no matter where you are in Europe. And that means your own home library, not just the Netflix that's available in France, say if you're a German subscriber, et cetera. So it'll be interesting to see if these companies and Valve come to an agreement with the European Commission somehow because unlike Google, which likes to fight these things because it's a much bigger deal. I think Steam would just like to make this go away and they'll need the cooperation of these publishers to do it. In preliminary Q1 earnings, Samsung reported operating income fell 60% on the year, the biggest decline since Q3 2014 and below analyst estimates. Samsung had issued a warning last month that they thought the income would come short due to increases in DRAM and NAND memory prices as a result of slowing sales. DRAM demand is expected to rise, however, in the second half of the year as data centers work through their existing inventory. So that could be good news for Samsung. Samsung display divisions were also hurt by lower than expected iPhone sales and competition from Chinese display makers. Yeah, we've been talking about the fact that Samsung had said, all right, brace yourselves. It's not gonna be a great quarter, but the numbers are grim, particularly since it hasn't been that big of a decline since back in 2014, five years ago. But again, this is one of these kind of cyclical things that I wonder how much are we gonna be talking about this in the fall? It made even out the way that many quarterly earnings do for companies, but because Samsung does depend on other companies, the iPhone sales being a really big factor in this for example, if trends start to go in other directions for other companies which are even technically competitors of Samsung, then I'd love to see what Q4 looks like for the company this year. Yeah, Samsung's really complex. For instance, the Galaxy S10 was on sale during Samsung's Q1, but it is expected to continue to sell well enough to sort of boost the mobile revenues. At the same time, the display part of Samsung's business would like the iPhone to do well. They need the Samsung Galaxy S10 and the iPhone to do well, as well as any other clients they have. And don't forget that Samsung has other divisions as well. They have financial divisions, they have white good divisions, things like washers and dryers, but the big money tends to come these days from display panels, memory, and phones. And so the big drag has been that that large amount of money they got from memory has stalled, has stagnated as the market has stalled. And yeah, like you said, Sarah, if it loosens up at the end of the year, if iPhone sales are pretty good, then Samsung could have a pretty good looking Q4. Laura, I'm actually curious, do you care to declare if you use an iPhone, Android, or some other phone? I use an iPhone, but I often will give out a Google voice phone number for security reasons, which goes back to a crazy trend that's been happening in the crypto space now for a few years. I wrote about it all the way back in 2016, but scammers will like steal your phone number through, you know, like if you're at Sprint or whatever, they'll call and be like, or all, so let's say I'm your hacker, I'll call AT&T and say, hey, I'm Tom. I wanna move my service over to Sprint. And then once all of your calls and texts are coming to my phone, I will like lock you out all of your accounts. And the reason that this is happening to crypto people is that like if they can break into your Coinbase account or something, then they can like send the Bitcoin out and there's no bank of Bitcoin that can reverse the transaction. So long answer to your question, but yes, I use an iPhone. And yet there are reasons to sort of protect that phone. That's really good insight. And I don't know, is there a preferred operating system in the cryptocurrency space? Well, I think a lot of people are doing what I'm doing, where the reason I explain that was because if you text me, it will look like it's like not an iMessage because it's like a Google voice text, but I think what's happening is like essentially whatever kind of phone you have in the crypto space, you will use Google voice. So it depends on how technical you are. I think the more techy types, they use the Google phones. Yeah. A study published in Psychological Science by scientists from the University of Oxford found little evidence of a link between time spent on devices by teenagers and general well-being. We've talked about this a lot on the show in the past. The study combined self-reporting and time diaries, which records what teens are doing at certain times of the day and also where they are. Data was used from 17,000 teens in the UK, the US and Ireland collected between 2011 and 2016. Further studies could take into account the type of content being viewed as well, which I think would be the logical next question. Okay, if you're doing great, I mean, are you hanging out on positive networks or I think that that matters a lot into something like this? Yeah, if you're generally seeing the data say, okay, there doesn't seem to be a strong link between the general well-being and the amount of time spent, is there a link to be found in that data between the people who are not doing so well and the kind of content they're looking for, particularly if they're looking at violent content, et cetera. I'm not, again, not trying to assume that there's a link there, but that would be a logical thing to look at, especially as countries like we heard about from Australia are really trying to crack down on certain types of content, even being allowed on the platforms, we should know what kind of effect that has and do some studies on it. But Roger, you've got two kids. How does this strike you? It's an interesting study and I think really what it would highlight is that there isn't a comprehensive definitive study that says this explains everything, right? This is yet another study and this ongoing research to find some sort of correlative data between screen time and adolescent health. And it depends on, if you're just looking at screen time and then the overall health of the individual, you glean certain things. But for example, if you do a study on children with emotional issues like depression and then you study the amount of screen time, you'll come up with different correlative data. And really it's building a study that kind of answers what you're looking for. I mean, there's so many ways to, you guys have just covered, so many ways to look at it that I think this will help build a picture but it doesn't help complete the overall picture of what we need to do. But I will say as a parent, it does relieve me some of the guilt. There's one more study to help relieve the guilt. More screen time does not equal sadder children. I mean, I think it does help complete the picture. It just doesn't complete the picture. Yeah, exactly. It's one more piece in the giant puzzle that we are trying to build between screen time. I mean, like we've been doing this for decades with television and children. Like, you know, when I was in school, he was gonna wreck your brain. You're gonna go blind. If you watch it in the dark, if you watch too much, you're gonna ask stupid idea. There are all these things that came out of it which turned out to be more of a symptomatic. Like they were watching a lot of TV because there was a symptom of something else that was going on with that individual, not necessarily the cause of whatever. And so what we need is longer, we need more studies over a longer period of time to give us, you know, I get another brick to kind of build out this giant picture. Yeah, that's why it's good this study did more than just self-reporting. Self-reporting can sometimes overestimate at one end and underestimate. Yeah, self-reporting is always a 50-50, especially when they found out that everyone who filled in one of those dietary things about how much they ate and how much they weighed and how physical. Yeah, sure, there's tons of examples of that. Yeah. Bloomberg Mark Gurman reports his sources say Amazon will launch a pair of wireless Bluetooth earbuds with voice integration in the second half of 2019. So you'll get good ol' Alex A. in your head. The device will reportedly look similar to Apple's AirPods, have a USB charging case, like the AirPods and others like it, and let users tap to answer calls and change tracks. So basically what you would expect from a Jabra or AirPod or Google except made by Amazon. Current test units are in black or gray, although who knows what they'll end up being in, but it sounds like maybe they're testing some colors out there for them. Sarah, you're living with the Jabras right now. How enticing are these Amazon earbuds? I think it very much depends on price. I will say that Jabra, which is the model is the Jabra Elite 65T, which technically integrates with both Siri and Alex A. And you can toggle between the two. I have not found that to be very seamless. So that, and that'll be part of a report that I'll be making pretty soon. But I think if Amazon wants the voice assistant to become a bigger player against Google's assistant, which is huge in the mobile space, then this is the right way to go. I don't know how great these speakers, or these speakers, these earbuds are going to sound, but it's not that hard to make good sounding earbuds these days. The Jabras that I have are over $150. What if Amazon does something similar for 99? Gesture stuff, pretty enticing as well. Again, I have found anything with a Bluetooth connection to my phone can be squirrely. It's not just earbuds, it's lots of things. It's just Bluetooth, yeah. Yeah, it's just Bluetooth. But it is getting better. And I think that Amazon has, Amazon doesn't create competition and say, we're the high end company. No, they're really successful because they do pretty good stuff for prices that most of the time people consider really affordable. So it seems like a really good move on their part. Yeah, German's article two says that the sources are saying, Amazon wants these to sound better than the AirPods. So if they could do that and be cheaper, then that is kind of a slam dunk. Laura, before we move off this, I'm curious if you use any of these kind of wireless earbuds for your work. Yeah, I use AirPods. But one thing I was wondering is, wait, so I'm sorry, it's connected to Alexa somehow. Yeah, so that's built into the earbuds according to the sources anyway. So meaning like you could listen to music. So instead of having synchrony in your ear, you can tap it. So instead of you being like, I have to be near my speaker in my living room, it would just be part of your life wherever you are. Oh, I see. Yeah, I don't know. I don't trust Alexa. I don't trust any of those home listening devices. Like I would never have one of those in my home listening to me all the time. But you wouldn't have to have one of them in your house. Right, right, right. It would just be in the earbuds. Yeah, you could just use. Yeah. No, I know. Although you can make the same argument. They're still listening. Your earbuds are listening to you? No, they're not. Yeah. Oh, I see what you're saying. I see what you're saying. Yeah. The US Securities and Exchange Commission issued guidelines this week for companies that want to sell digital tokens. The SEC considers most cryptocurrencies and investment contract. That means they should be considered securities and registered with the SEC before being offered to the public. The SEC guidelines do say that Bitcoin and Ethereum both are not securities because they're decentralized. In a separate letter this week, Turnkey Jet was also allowed to offer unregistered tokens because the proceeds would not be used to build that token network and then the tokens would not trade outside of Turnkey's platform. Laura, I know this is very much in your wheelhouse and in fact, you suggested this story for us today, although there's a couple different stories in here. What are your thoughts on how people are trying to define all of this stuff going forward? What came out this week is actually not that different from what different members of the SEC have been saying all along. However, what is different is that now it's been codified into this document. Whereas before, they were generally comments by, like for instance, the SEC chairman or different directors of the SEC that they made in speeches or at conferences. And so people were just trying to parse what they were saying all the time and trying to figure out how official is what they're saying. And then now that it's actually come out, it's a pretty kind of like a full analysis of how securities law would apply. Whereas like before, it was literally just maybe like a sentence here or there where then people were trying to extrapolate. So it definitely made a lot of waves. However, in terms of the actual significance, there's nothing that's really new. There are like small pieces, but in terms of the overall gist, it's been kind of what different individuals have been saying from the SEC all along. It does seem like that's one of the frustrations people are having is they pointed to a 1946 Supreme Court decision on investment contracts rather than saying, hey, this is a whole new thing. We're going to have to come up with whole new rules for it. Exactly. And like I said, they've been saying that all along. Two years ago now, they came out with kind of their first quote unquote report that applied to the space. It was called the Dow Report, which addressed, I don't know if you remember back in 2016, the Dow, this decentralized autonomous organization that was structured like a venture fund and it raised $150 million in a crowd sale. Eventually it went to funk to anyway because there was a bug in the code that enabled somebody to take $50 million. And so that's how we now have two versions of Ethereum. Ethereum was like, whoa, whoa, whoa, whoa, whoa. Like we need to fix this. And so they hardforked the ledger. And so there's now what we call Ethereum is now a version of Ethereum where none of this happened. And then the original chain now goes by Ethereum Classic. But anyway, the point is, okay, so a year after all that pandemonium, the CC came up with its first report called the Dow Report. And at that time they said, the law that applies here is the so-called Howie Test, which comes out of the Supreme Court case. And you're right, the original case involves orange groves of all things. And so this report this week was the first time where what they released actually, if you read between the lines, they don't use the words like minors or anything like that. But it very clearly kind of shows like, okay, so these are the ways that they view the Howie Test in here when they're describing how that would apply in this case. You can figure out, oh, they're talking about how it would apply to minors, how it would apply to developers of these projects, things like that. And so in that regard, it was like a little bit more meat for people who want to do projects in this space where they can have more to look at to think about when they launch something. I do like the idea of harvesting Bitcoin instead of mining it, you know, picking it up. Yeah, well, there's another project they call There's Baking. So because one of the guys who started it is French. So he was like, you know what? If we can make up our own words, I'm gonna choose Baking. Well, folks, if you want to get all the tech headlines each day in about five minutes, you all need to subscribe to dailytechheadlines.com. It's available to keep you up to date. All right, the P2P Foundation's profile for Bitcoin creator Satoshi Nakamoto lists the date of birth as April 5th, 1975. We don't know who Satoshi Nakamoto is or if this birthday is accurate. But hey, why not? Happy birthday, Satoshi. Quickly, while we have Laura here, we do want to touch on Bitcoin. Bitcoin trading volume dropped to a two-year low in March. However, earlier this week, the coin rebounded with a 20% rise, having its best day since 2017. Nobody seems to agree why that happened. But let's cut to the chase. Laura, is Bitcoin dead? Oh my gosh, no, Bitcoin is definitely not dead. You know, will it survive? Like, I don't know, you know, certainly I think something in the crypto space will, but just look at this. A few years ago, you know, people were paying 10,000 Bitcoins to order two pizzas. And now a single Bitcoin is like 5,000 or whatever it is. So clearly this is not dead. And there's a significant number of people around the world who believe in it to the point where, you know, they're putting their quote, unquote, savings in what they call this digital gold. And so for them, like, you know, they think this is a superior form of money, frankly. I think, and well, I don't know if I would only restrict it to Bitcoin, but you know, crypto assets in general, I find to be a superior form of money compared to cash, seashells, credit cards, like whatever you want to call it. So in that regard, like, yeah, like I said, I didn't know if Bitcoin will succeed long-term, but is it dead? Definitely not. All right, let's talk about DeFi or decentralized finance, which is, as I understand it, sort of another layer being used to sort of bridge the gap and sort of hedge yourself against some of the volatility, but take advantage of some of the independence of blockchain and cryptocurrency. Explain to us a little bit what DeFi is. So this is a trend I've been following now for about a year in the crypto space. And it's mostly happening on Ethereum. So the examples I'll give you are from Ethereum. But essentially, if you look at our current financial system, and this goes back to the financial crisis, people became disillusioned with the way our current system works, because it's these big institutions that just have all this power and take a lot of the money. And when things like Bitcoin and blockchain technologies were introduced, it introduced this idea also that now you could have these sort of community-owned networks where people own a piece of it. And rather than this central gatekeeper, like a bank saying, okay, I'll take your money or I'll lend you money or to other people, I won't do that for you, now you could replace all that with software, right? So what a lot of these DeFi decentralized finance projects are doing is they're essentially replicating a lot of the banking functions using smart contracts on Ethereum. So for instance, we've got decentralized lending, we've got decentralized derivatives, decentralized credit, decentralized exchange. These are all kind of different examples of some of the things that these developers are building. And I'm actually gonna walk you through this one example that I just find so fascinating. And it is, I think not only fascinating to me, but to a lot of people because it actually makes up, I forget, it's something like maybe 75% of all DeFi at the moment, it actually accounts for now for 2% of all Ethereum is locked up in this system. And what's fascinating about it is that it's actually kind of multiple things at once. And so the system is called MakerDAO. And originally most people, like, if you just kind of ask somebody who maybe has a passing familiarity with it though, they'll think, oh, MakerDAO creates the stablecoin called DAI. And a stablecoin is any kind of cryptocurrency that has a stable value similar to a dollar. And in this case, DAI is indeed pegged to the value of a dollar. But the way that they make this peg happen is different from other stablecoins. You have centralized versions of stablecoins where maybe they partner with a bank or multiple banks or whatever. And then there's a dollar in the bank for every digital dollar that they're issuing, right? MakerDAO is a decentralized version of a stablecoin where instead of having dollars in a bank sitting anywhere where that poses like a certain kind of risk, right? Because then there are individual institutions that could be hacked or whatever. You can go on there with your ether and you can create stablecoins, you can create DAI for yourself. And the way that this works is you basically give yourself a loan. So let's say you have, I actually, this is the funny thing about doing these podcasts I actually don't keep track of the prices very well because I tend to focus more on the technology, but so let's say I'm actually not sure what the price of ether is right now, but let's say it's like $100. So let's say you have like 10 ether or something like a thousand bucks. And you're like, okay. Well, you know, I expect the value of ether to go up maybe in a year I think it might be at like 150 or 200. So I'd like to kind of use the money now without actually selling the ether. So I'm going to put and we'll just keep the numbers easy. So maybe you put like one and a half of your ether, sorry, you put three of your ether in the MakerDAO smart contract and then that will enable you to take out and actually I might be doing this wrong, sorry. It might be, so we'll say 1.5 ether and then you're allowed to take out $100 worth of DAI because you have to over collateralize it's, I think 150%. And then you can spend that money, you can like spend those dollars and yeah, okay, or the DAI, sorry, I shouldn't call them dollars. And okay, yeah, later you'll have to pay kind of like a codable interest rate, which is actually called the DAI stability fee, which is used to make certain functions happen. So that way indeed, you know, the system can kind of keep going and they can pay the various people who make it happen. But that enables you to use that cash. So instead of like, you know, like with a stock you would just have to wait for it to go up to use it or to use the value in it. In this case, you can sort of have your cake and eat it too, where yes, you get to hopefully enjoy the price appreciation in the ether, but at the same time you can sort of use the dollars for, you know, I don't know, buying a coffee or whatever it might be. So where are the dollars in this transaction? So that's the DAI. So that that's when you take out the DAI because the DAI is supposed to be pegged to a dollar. You can use the DAI to... But how is it pegged to a dollar if you're buying it with Ethereum? I think that's the part that's tripping me up. Right, okay. So this is where it gets tricky. So there was actually a second token in the MakerDAO system, and that's called MKR. Okay. And the MKR, the value of that goes up and down, that's not pegged to the dollar. And only special people basically are allowed, well, not special, sorry. That's essentially, that's what they call a governance token where those people, their job is to make sure that the system does not collapse. Their job is to, if any of these, they're called collateralized debt positions when you put up your Ether and then take out DAI. If any of these collateralized debt positions is getting too low, where it's falling below the 150%, then they need to kind of pick those off and close out those positions. And then so like, let's say it's yours, where your CDP was falling below the threshold. So then suddenly your Ether gets sold. And I actually have to, so I'm sorry that I don't remember at this point, what happens to you if you just have the DAI? I think you just have the DAI. And then the system will try to ensure that the value of the system never falls below the collateral across the whole system. What's their motivation to do that on the MKR side? So for the MKR holders, if they do a good job and the peg does not fall and the system does retain its peg, then they, I can't remember at what point, at some point, some of the MKR tokens will get burnt. And so what that means is then the value should go up. However, if they don't do a good job, then more MKR tokens will be minted in order to make the system whole again. Yeah, yeah. So anyway, all of this is to say, this is basically like a decentralized central bank. Right. And so yeah, and so people are going on there, they're creating DAI for themselves. And then they're additionally using the DAI to purchase more ether. Like this is where it gets, this is why I was saying there was echoes of the financial crisis. Right. And then on top of that, they're also doing it to think on other DeFi projects where you can put DAI in and then earn an interest rate on it. So like, they could have the price appreciation with the ether on the one hand, but then they get the DAI and then they can put it in the, it's like a decentralized money market called Compound where I think the interest rate at least for some period was 6% and then they would put the DAI into Compound and then earn the 6% additionally. So there's just all kinds of like super interesting. Yeah, I hope that wasn't too complicated for people to follow. It might be like- It's gonna be real complicated for a lot of folks to follow, but I think if we can sum it up, it sounds like what's happening with DeFi and this MakerDAO being an example of that is instead of just a currency system, a transactional currency system, you're creating a banking system and it's more than just your local branch bank. It's like the full financial industry is what they're attempting. Is that sound about right? Oh, exactly. Yeah, that's really it. Cause like I said, I'm seeing projects in all these categories that we've got the money markets, we've got the derivatives, we've got the lenders, you know, just, I mean, it's like, and yeah, it's fascinating because they're all, it decentralized exchange. They're all doing things with each other. So the different DeFi projects, people are using their money in multiple ways across them. Yeah, well, this is fascinating in why you folks should subscribe to Unchained and Unconfirmed to learn more about this. We also hear a lot of these types of stories in our subreddit. You can submit stories and vote on others at dailytechnewshow.reddit.com, also on Facebook, facebook.com, slashgroups slash dailytechnewshow. Well, thank you, Laura for joining us today. And introducing us to this topic. I know some folks out there are still gonna be, you know, their brain's spinning a little, especially if they're not as familiar with the financial industry. But I saw some people in the chat room are like, okay, this sounds like options trading. This, you know, so they're starting to catch on, but at least you now know about the term DeFi and kind of have a slot to put it in if you hear about it or talk about it. And if folks want to find out more about these sort of topics, where should they go? You can go to unchainedpodcast.com. Both of my podcasts are there. And I also have a weekly newsletter that you can sign up for where you will get all the podcasts, plus all the links that I think are important for the week for people to stay abreast of the news in the crypto space. Go check it out, folks. And you can follow Laura on Twitter at Laura Shin. Also, folks, don't forget, you can support this show directly through Patreon. You get all kinds of perks, including a weekly threat wire, cross post from Shannon Morse, column from Roger, an audio column from me, and more, you can find out more about that at patreon.com slash DTNS. If you've got feedback, feedback at dailytechnewshow.com is the place to send it. We're live Monday through Friday at 4.30 p.m. Eastern 2030 UTC. Thanks, everybody, joining us live and find out more at dailytechnewshow.com slash live. Back on Monday with Vlad Savov from The Verge joining us to talk to you then. This show is part of the Frog Pants Network. Get more at frogpants.com. Driving Club hopes you have enjoyed this program. Oh, Laura, that was a pretty silly unpack. Describing D5. Thank you for doing that. I'm still trying to digest. Same. I know, it's a lot to pack in. I'm following most of it, but there were a couple of things where I'm like, hmm, how, though? It's a lot to unpack, but essentially, I mean, the really short version is like I said, instead of banks, it's being done with software. It's being done with smart contracts. Like instead of a staff of like 10,000 people spread across the world, it's being, it's like a little software program deployed on Ethereum that a few developers created. Like that's what's going on. I think people think, well, isn't that what Coinbase does? Isn't that what these wallets and companies do in trading exchanges? And no, it isn't. They require people to do all that. Coinbase has 600 people. Yeah, yeah. And so that's the key to explaining it right there, what you said. Yeah. It's software doing what people do. Yeah. It is totally crazy. Just, but I have to admit, some of the weird, I didn't know what to call it. I don't want to call them tricks, but just some of the things that people are doing or talking about. Should I make ends? Yeah, I'm a little bit like, oh man, like this reminds me too much of the financial crisis, where everything was being leveraged in all these fancy ways. And then it just makes you worried, like, okay, if any piece of this doesn't work out, like the ripple effect is going to be huge. But then again, it's like, they're like, okay, no, but in our case, where you can see all this stuff because it's on this ledger, we've built the software to account for these different risks. Like it should be okay, but still, like, okay, in theory, I get it, but until this is really seeing a lot of money put in at this scale doing these things, I'm not comfortable saying that I am confident it won't be risky, so. I mean, it is replicating a lot of the risks of banking institutions, right? Like you say, when it reminds you of the financial crisis, that's a financial crisis that was done by traditional banking institutions, but there aren't the safeguards on it yet. And if I'm understanding what you're saying, a lot of people are arguing like, oh, but the system will encourage the safeguards to happen, but until that actually is proven, it's... Yeah, because it's a question of, are the smart contracts built well? Are these tokenomics, where are the MKR holders, are they really being incentivized in the right way? Will the governance that's built into this model, will that work? Like, yes, so far. I mean, the one really impressive thing about Maker is that during a time when the price of Ether dropped like 90%, the Maker system launched and survived, even though the collateral in the system was decreased, like the value is literally a tenth of what it was a year ago. We haven't had a collapse of the Maker DAO system, so that's kind of like, okay, that says something. That's one test, yeah. Yeah, but then somebody else was saying, oh, but see the thing is that now it's actually gonna be more challenging when the price of Ether is going up, because perhaps more people will want to collateralize, so it might be harder to keep the peg. So then I was like, oh, that makes sense too, because more people are gonna wanna take out DAI in order to purchase Ether with that DAI, and then they have this double exposure, and then it's a supply and demand thing when you have greater demand, then of course the peg is, and already it's been happening in the last few weeks where the peg at one point dropped as low as 94 cents. Like for a while it was kind of like 97, and then anyway, it's been decreasing, and they kept bumping up the stability fee, which is the interest rate. They kept bumping that up, and finally they were like, okay, we're gonna make it 7.5%. And then I think that helps, because originally it was like 0.5, and then they made it like, I actually forget the interim numbers, but finally they were like, oh boy, okay, it's at 94 cents, that's kind of like far from a dollar, so we need to bump this fee up. So... Yeah, it's less of a peg and more something kind of stretchy. Exactly. It's an elastic band, not a peg. Exactly. That was the part that immediately got me, is like, well, wait a minute, how is it pegged? And it's pegged by a system, which theoretically could work, right, by bounding it, but it's not hard. It's not... Exactly, and the other thing too, is that no matter what, the governance will always lag, because they're gonna have to see which way is it going, is the peg going up or down, and so no matter what, the MKR vote, I can't remember how often they do it. I know they have a phone call every week, or something like that, yeah. But... Now there needs to be another layer that can automate through software, the phone call that the maker might want. And that'll be D-D-Fi. Exactly. But yeah, I mean, I don't wanna make it sound like MakerDAO is all D-Fi, like I said, there's the decentralized exchanges and the money markets and all these other things. It's just that, MakerDAO accounts for like, yeah, 80 some percent of all D-Fi right now. We have some suggestions for the title at showbot.chatrealm.net, and the one getting the most votes right now is, I think, in my favorite, the decentralized central bank. That's a good one. Yeah, we've also got crypto unchained. Although it's not exactly unchained, but I get where you're going now. D-Fi for the tech guy, that's funny. Banking on Ether. D-T-N-S. I like banking on Ether, too. That's good. Wait, what was that? D-T-N-S with this dollar sign. Maybe not for this episode, but we sure remember that. Yeah, that's a good one. Certain financial specials. Banking on Ether. That's a good one, yeah. Decentralized central bank. Sure. Yeah, we can go with that. I think crypto unchained, I can use for GDI. That's not unchained. Use banking on Ether for GDI, if you want. All right, done. Fine. We're A-B testing different titles, one for Daily Tech News Show, proper, and the other for this extended conversation. We had all the pre and post-show jibber jabber that we did. Oh, okay. Which you have elevated the level of our jibber jabber today, Laura. Thank you. Yeah, good stuff, Laura. Sorry if I'm too nerdy. No, on this show, there's no such thing possible. Yeah. Okay. So who put up the initial amount of... Like when they started, who put up the initial, was it just those developers or like the initial? No, no, no. It's you as an individual. You can create a loan for yourself. You create a collateralized debt position for yourself. You put up your own Ether and take out the die. Got it, got it. Like it's a self-loan. Mm-hmm. Yeah, this is why... That's what's tripping me up. I was like, oh, what? I know, it's so complicated. It's a stablecoin, a decentralized central bank, and a way to take out a loan on your own collateral. Like the whole thing, it's like, it's just not a normal. Yeah. It's like you're loaning to yourself in a way, kind of. Exactly. Not even... I guess that's what's making the head scratcher for me, because it's such a 180 from when you get a mortgage. I would love to have been able to issue out my loan mortgage. Wouldn't it great? Exactly, yeah. Like it's like you have this asset, your house. Like why can't you spend some of the value in it? So that's what these people are doing. But it's not as... You know, it's interesting. It's not as shady as like, where they call it a reverse mortgage, right? Because in a way it's kind of like that, but it doesn't have the inherent like, you know... It's like a home equity line of credit, I guess. Exactly. Yeah. That's exactly what it's like. One other thing, though, actually that I forgot to mention is that speaking of the SEC, it's not totally clear yet whether US regulation will allow for this. The SEC has been making some noise that the MKR tokens, I think, could be considered securities. So we'll see. I'm a little bit obsessed with this probably. In fact, I'm so obsessed that I have had... I did like two really long shows with the creator of this because the system is so complex that it literally took us that long to just kind of go through everything. Yeah. But... Attempting to walk us through that in a couple of minutes earlier was pretty impressive. Thank you for that. Because, yeah, I guess the MKR tokens could be an investment contract. And if they are, then the SEC is calling investment contracts securities under the guidelines that we're talking about. So... Yeah. And one other thing, actually, that I didn't get to explain earlier when I talked about that, you know, I explained those two different types of stablecoins. There's a third kind, which was based on this senior shares model that was even more complicated where there's three tokens, two governance and then the one stablecoin. But the SEC shut that one down before it even got launched. So, MKRDAO is a little bit different because since it is collateral backed, then the peg at least... There is some value in it, whereas like with the other version that they were trying to do, it was called basis. You can look this one up. The SEC just shut that down even before it got launched and was like, no, no, no, no. You were not doing that, so... Too shady. Yes. Well, I didn't know about shady, but just it was definitely... They were like, this is definitely both... Two of the three tokens in the system are definitely securities. I see. I see. Yeah. It wasn't that it was shady. It was just to come... Well, it was to... There were securities, yeah. Yeah. Yeah. So, anyway... Oh, this is... I see why you've got a lot to talk about on your shows. Oh, my God. And this is why I'm like so obsessed and my friends in my normal life don't talk about this thing. So, it's just like me like sitting up in my head all day like all this stuff going on. And yeah, I'm probably... You're an outlet and so you have a podcast. I know. I know. Yeah, but I think all crypto people are like this. Part of it is just finance for a lot of people. It's just this giant opaque block. You're like, if something happens, I get my money out. Whatever happens in there, whatever. But with cryptocurrency, it's so rarefied in people's understanding of it that people just... They understand maybe a portion of it, but they don't understand the whole thing. And it always comes out kind of weird. Well, I think the challenge is that it's not only finance, but it's tech too. And both of those are things where people tend to not pay attention to the details. So, I have a feeling until we have kind of the first mainstream thing that people use, crypto application or a product that people use, most people really aren't going to get it. And frankly, when that product comes out, people aren't going to understand how it works. They're just going to be like, oh, I can do this thing I was never able to do before. Yeah, or it's so much faster. It used to be so complex. Now I understand. I just press this button. Exactly. I understand it in quotes. I mean, I don't have to go talk to a broker or whatever. I mean, I've seen a lot of, and I'm sure you've talked about a lot of the possible applications of this in the home buying market to simplify all of the... Yeah, like escrow, yeah. Yeah, all of that sort of thing. Yeah. Yeah, that's like a very... Often when I explain what a smart contract is, that's the explanation I give actually that you can use a program rather than a person. Because a lot of people have familiarity with that. Not everybody's bought a house, but more people have bought a house than have invested in mortgage-backed securities or collateralized debt loans or... Exactly. Yeah. Well, we're going to shut the video down now. We're going to keep the audio going. So video folks, thanks for watching. Audio folks, stick around. There is more to come.