Welcome in to This Week in Bitcoin, episode 117.
My name is Chris, chrislas.com and jupiterbroadcasting.com.
This has been a week.
In fact, it kind of feels like one long day since I saw the cold card news was breaking.
So if you missed episode 116 and you're a cold card user, you need to catch up on that
episode.
You need to act.
And I'm going to give you a big update on that this week.
So it'd be good to kind of be current on that, at least as far as episode 116 went.
But to be honest with you, I need to warm up with something a little simpler, something
a little easier on the nervous system to just kind of get us rolling.
Currency bailouts and central banks.
Now, kidding aside, this really does set the scene for the week, and it really does matter.
The big item is the U.S. stepping in to support the yen.
The yen had fallen to a multi-decade low near 164 USD to JPY in late July.
Now, the yen has faced a long-term structural downward trend.
This is not new.
It's been really happening since the late 90s.
But there has been accelerated weakness, you could call it, that's really intensified this year, driven in large part by interest rate differentials between Japan and the U.S.
And can you guess what else?
Energy prices.
The Iran war.
It's made the situation worse.
If you're interested more in kind of the yen carry trade stuff, I recommend you search the back catalog because we do have more information about that.
But what's important for you to understand this week and for this episode is that Japan is currently the largest holder of U.S. treasuries and has been for several years.
The United States has joined Japan in a rare coordinated intervention in foreign exchange markets.
The move aims to stabilize the yen after it hit a four-decade low.
Sol Eslake is an independent economist and he joins me now from Hobart.
Solis, great to have you with us to explain all of this. What is this intervention we're
talking about here? Well, as you said, it's highly unusual. 40 years ago, the United States, Japan,
Germany, the UK and France combined to intervene massively in currency markets to drive the US
dollar down after it had appreciated massively during Ronald Reagan's first term. And then two
years later, under what was known as the Louvre Accord, the same powers intervened massively in
currency markets to push the US dollar back up after it had depreciated substantially as a result
of the Plaza Accord initiated two years earlier. But since then, we've rarely seen major intervention
by the US and other Western powers to move currencies. Really, only that's happened during
financial crises like the GFC or briefly at the early point of COVID. There has been one
recent precedent where the Trump administration has intervened in support of the currency of one
of its allies, and that was in Argentina late last year, ahead of elections which President
Millay in Argentina appeared at risk of losing in the Argentine Congress.
Now, it seems to me to be the red flag here is it's obvious what they're doing, but they're gaslighting us about the reasons for this move.
That's the red flag.
The intervention is being framed as sort of this signal of friendship by the United States.
But it's really about deeper financial stress.
Mr. President, why is the U.S. intervening to support the Japanese currency?
at this time? To support who? To support the Japanese currency. Because we have a good
relationship with Japan. We're very strong, very, very strong financially. They are, you know,
they have a weakening yen and they wanted a little bit of help. And we're always there for
Japan. Japan's been very good to us, with the exception, of course, of Pearl Harbor.
Mr. President.
I just that that clip gets me.
I get this guy.
So he's framing it as like, oh, well, we're good friends.
We're good friends.
That's why we're doing it.
We've got a good, strong relationship.
The reality is, and everybody knows this, this is not a secret.
The U.S. is trying to prevent Japan from dumping U.S. treasuries.
That would spike our own yields out of control, which are already in the red zone.
So what we're really doing here is setting the stage for rising U.S. bond yields and market volatility.
And they're trying, in their attempt, they're trying to get ahead of it.
Treasury Secretary Scott Bessent weighed in during a kind of interesting off-the-cuff Q&A.
And, you know, he dismissed concerns about the yen.
In fact, he thinks it's a great deal.
I'm going to ask you about Japan.
It seems the Japanese intervened in their markets, in their currency markets, earlier today.
What do you, do you have a response to that?
Well, again, we think that excess volatility in the yen isn't healthy.
And I was in the currency business for 40 years, and Japanese yen seems very undervalued to me.
The currency is very cheap.
The economy is doing well.
The prime minister is very popular and enacting very strong policies.
And I think we're going to see the fundamentals come through at a point that the market will realize the yen is undervalued and should strengthen.
So you're not legitimate question. Does anybody have any idea what this guy's talking about? The yen has been in a 30 year funk. How is it? I mean, how does any of it really if you know what he's talking about, boosted and tell me because he thinks to think it's a great deal, which is just ridiculous.
this. I just I'm dumbfounded by that. It looks to me like a really bad deal. It looks to me like a
desperate plea to try to, you know, patch a few different things right now. I mean, I don't know.
That's a that's a pretty weak argument. So if anybody has anything on that.
I can't understand it. And it looked initially like the intervention wasn't working,
but then another bump came along from the U.S. and things have started to improve.
but when you zoom out on the yen chart, it looks real bad. It still looks real bad. So
temporary patch is my read. The administration is betting that they can wrap up the war with Iran
and ease the macro pressure on the yen. And they're hoping this move buys them some time,
but it's not a fix. Because the other issue is, this is impacting the yen in Japan,
is we've got these two central banks. They like to jibber jabber, but neither one of them have
taken any action recently. The bank of Japan keeps talking tough and it did raise rates once.
But it held them steady at their last meeting at the end of July.
And the U.S. Federal Reserve has held rates post-warsh steady two meetings in a row now, which is adding pressure to the yen carry trade situation in the yen.
And people are getting impatient.
They want a damn rate change one way or another.
I have a clip from the Q&A from the last Warsh song and dance that kind of shows us this.
Why should rates not be higher today?
Rates are higher today than they were 42 days ago.
markets have made decisions because we step back in part from trying to influence those
market judgments have moved up on what nominal rates are across the treasury curve that doesn't
mean we take them as by dictation but we're observing them so i think it's a mischaracterization
to say that markets haven't reacted because we didn't move today markets are reacting in real
time. This is it's actually just a horrible answer and it's not doing it for people. He's basically
saying, well, the market's raising rates for them, so we don't need to do anything. We can just sit
here and monitor the market. And then he takes credit for that. That's not the answer people
want. And the question around inflation, well, they're getting more aggressive as time goes on.
Hi, Anne Safir with Reuters. Nice to see you again. So I need a little help here, too. You've
said repeatedly you have no tolerance for inflation And yet we are seeing above target inflation repeatedly for five years and through your term so far And sure you have no magic wand but you have not taken action
You just gave us a little peek at your reaction function as well.
You said that if underlying inflation is rising, that you would tend to think that you might need to tighten.
And with the exception of the most recent inflation print, that is what we've been seeing.
So could you explain what you mean by no tolerance for inflation and what you plan to do about it?
Sure. So, Anne, I hear from you what I hear more broadly from households and businesses.
Impatience. Deliver it already.
This is not an excuse. This is a fact.
this FOMC, this board has been in business for eight and a half weeks.
The patience, the impatience that households and businesses feel have been going on for 63 months.
We are on the job. We will deliver. We are focused like a laser on making sure we can do it.
But the suggestion that we're going to be able to do it with our magic wand is one I want to
disabuse you and everyone else of. But the discussion in the last two days give me more
confidence even than I had eight and a half weeks ago. See, what the issue here really is,
is that Warsh comes along and tells us that, you know, business is going to be just as usual. We're
maintaining things. You know, it's new leadership, but we're a family. Sometimes we disagree,
but it's a robust conversation and we're keeping the train on the tracks. And then the next question
comes along and his response is, well, look, we're new at the job. We're only eight weeks in. You
can't expect us to fix inflation in eight weeks. So which is it? Is it a continuity of governance
at the Federal Reserve that is responsible for a continuous line of events? Or is it every time we
get a new Fed chair, we hit the reset button? That doesn't seem to make much sense to me.
So Worsh's answer here sucks so far. This team that we have at the FOMC,
the support that we have from board staff and the new hard questions we're asking,
we need to resolve those. And as we resolve those questions, get smarter on those,
we're going to deliver on the remit. You don't have to take my word for it. If you look broadly
at market prices, they are certainly not saying all clear, but they are working in concert to
keep us on our toes. And they have tightened financial conditions in this intra-meeting
period. And, and that has given us, that has provided us some, some, some comfort that,
that we've got the ability and capability to deliver. What? And, and, and is your read or your,
I guess, faith in markets ability to sort of make a judgment and then you to take signal from that
judgment. How does that affect you when you come up on the September meeting and markets
are seeing a near 100% chance of a rate hike as they see now? How does that
feed into your decision making and your thinking?
So we're not going to be constrained by market prices. We're not going to be constrained or
take verbatim from what the market's doing. But I think it's useful and to understand that markets
can be a very good source of information, not a determinative source, not a perfect source.
But if...
See, this is what I mean when I say they just jibber jabber. What he's doing here is he's saying,
well, look, maybe the markets have got it right. Maybe we're going to be tough and they're pricing
it accordingly. And by doing so, they're fixing things. So just by me jibber jabbering and
implying that we may raise rates. The market then forecast that and they price and raise rates.
And now I don't have to. Aren't I a genius? But the answer is actually he's done nothing.
And I kind of, you know, I guess I suppose the principle I agree with the Fed should not be
leading the market. The market should be leading the market and the Fed should be monitoring and
responding in theory, I guess, if whatever. But what a bunch of hogwash that is. What a bunch of
crap that is. The expansion of the currency is what drives the stock market. Overlay M2 money
supply with the S&P 500. Go look at that. So like, stop BSing us, right? Like, or he's out of touch,
which I doubt. Kevin is very, very rich. He knows how this works. He knows how the contillion effect
works. He's testified to that. So he knows what's going on here and he knows what the market's going
to be watching and not watching. So you look at these issues, you look at the problems with the
yen, the U.S. bailing out their biggest customer, like the central banks that are trapped between
a rock and a hard place and can't do anything because if they raise rates, they blow up the
AI trade and probably inflation goes crazy. If they lower rates, inflation definitely goes crazy.
You know what I mean? Like, because people get laid off in one scenario, inflation may go up.
I know the whole thing is just a mess. So they're really stuck between a rock and a hard place.
legitimately. It's a fair analogy. And you would think if you just considered these two issues
and not all the other systemic problems, just these two issues alone make the thesis for Bitcoin
stronger than ever over the long run. And each twist of history recently seems to be slowly
creating the pathway for a sovereign nation market for Bitcoin eventually, because they're
going to have no other choice. And if that's not enough to make you feel bullish long term,
well, Jim Cramer selling all of his Bitcoin should. I have some crypto. When I think about
the equations that people tell me could never be cracked to get to my crypto, it sounds to me like
the University of Chicago announcement. Should I be more careful? I think that you should give
yourself three or four years. And at that point, I would get rather paranoid about it. Really?
three or four years.
That's not that long.
No, that's not that long.
Oh, boy.
No, I realize some way.
And Ethereum, really, maybe even worse.
So I think that people have to take this man seriously
because they're doing commercial quantum.
And this Chicago study basically cracked a number.
It did an equation that no one felt could ever be solved.
Right.
Isn't that also what you think about Bitcoin?
Now, there'll be people in Bitcoin who say, look, I don't know what you're talking about, Jim.
You don't know anything.
I don't have to know anything.
I ask the questions.
I didn't give the answer.
Arvin Fisher knows quantum incredibly.
He knows Bitcoin and quantum.
I'm going to sell mine.
You are?
Yes.
Really?
Just on what he said?
Well, he's the man.
He's the man.
Three.
So there you go.
This is where Kramer gets his information from, a salesman, the CEO of IBM, the current CEO of IBM.
And the study he's talking about, we've debunked.
It was all theoretical.
The hardware to actually produce the results doesn't exist.
Incredible signal there from Jim Kramer.
Just, oh, man, love it.
OK, let's follow up on this cold card story.
I tried to break the news as fast as I could last week.
within the first hour of hearing legitimate reports,
I tried to verify it as fast as possible.
I started the process of moving my funds off of my cold card.
And while I was waiting for block confirmations,
I recorded TWIB 116 and published as fast as I could what I knew.
Since then, I mean, I must have answered over 200 questions or more
from people coming in.
And I've been helping friends and family move their funds
and trying to closely monitor the situation
so I could try to give you the most important update possible.
So here's where things stand as of April, or I wish, August 5th, but more appropriately, Blockhite 961,196.
We know that the first sweep of cold cards took about 40 minutes.
It happened within just 40 minutes.
Tragically, we also know that most of those wallets had never spent.
They'd only stacked for years.
And the majority of those wallets were not huge.
Now, there were a couple that were like 18 Bitcoin and such.
But most were clearly pleb wallets with one or two Bitcoin or less and that really hurts We also learned that CoinKite was likely warned multiple times about their random number generation process
The information we have publicly now seems to indicate that they brushed those reports off,
and sometimes were even aggressive in doing so.
A few heroes have emerged in this space, spending night and day helping people in projects.
Rob Hamilton from Anchor Watch, who has been jokingly called the CEO of Bitcoin this week, has truly been a hero.
And he shared some details about the initial attack wave on what Bitcoin did.
So when I first saw this, I assumed that it was a Lazarus North Korea type hack, very sophisticated.
But I've read some stuff online that says it's maybe a bit of an amateur doing this, doesn't really know exactly what he's doing, but still managed to exploit this bug.
the first the first attacker was i would say an amateur um there's a lot of on-chain heuristics
of what you could tell in the movement patterns they only moved bitcoin addresses that were more
than 0.15 bitcoin why someone wouldn't run a little extra logic and just get 0.1 bitcoin at
six thousand dollars for no extra cost really that's weird they did not properly scan full
addresses so people were getting hacked and they still had funds that were sitting in the addresses
was that i did see something about that was it because it was only looking at like the
the first 200 utxos or something like that it was looking uh what it was doing is looking for the
first gap so if you create an address and you didn't use it and then you made another address
and you use that second address the moment the bot saw that there was no more addresses it stopped
looking uh and this is initially would have kept you safe but this is going back to the point now
there are multiple attackers now executing this and i'm assuming they're getting more and more
sophisticated so like that's it and that's why you can see different on-chain movements and seeing
different wallets being used um different transaction behaviors you can just tell by
some basic fingerprinting that different actors are going about this that makes sense so but this
is something you can do trivially like i could do it on my laptop if i had like the skills yeah
uh there are reports of white hat hackers which is people who are trying to do it for the good
who started seeing this exploit started running code and came into dozens of bitcoin and they
swept them because they were trying to do they'd rather at least try to find a way to give it back
to the right owner and then try to uh let an attacker take it so people will be in a panic
hearing this if they're using a cold card. I want to talk about some of the other devices,
because cold card was initially like a fork of Trezor. And since then, Foundation has forked
cold card. Are those other forks from the same thing safe from the same original source code?
Yeah. Neither Trezor nor Foundation use the library that was compromised with the cold card.
Okay. So basically anywhere is safe apart from cold card right now. This isn't like a broader
self-custody attack, this is a specific cold card.
The use of this library was specific to cold card, or realistically mainly cold card.
Yeah, I want to get more into that in a moment. But I think to help understand what really
happened here, we should probably zoom out for folks that are just kind of coming up to speed.
The Bitcoin Policy Institute put out a video that really breaks down the basics of what went wrong.
A Bitcoin wallet is protected by a seed phrase,
a list of words that acts like the master key to the wallet.
If someone discovers that phrase, they can take control of the Bitcoin inside.
So what stops an attacker from simply guessing it?
The answer is the number of possible seed phrases.
A properly configured Bitcoin wallet chooses its seed from an incomprehensibly enormous pool.
The larger and less predictable that pool is, the harder it is for an attacker to search.
This is where randomness matters.
The wallet needs a reliable source of randomness so that no one can predict which seed it will choose.
But in affected cold card firmware, a bug caused the wallet to use a more predictable software generator.
The seed phrases still looked random to their owners, but they were being selected from a much smaller set of possibilities.
To understand how much smaller, let's turn those possibilities into something we can compare.
We will let one atom represent one potential Bitcoin seed phrase.
Somewhere in the full collection is one key atom, the seed that unlocks the wallet.
We begin with a single atom, representing a single possible seed.
Now zoom out to a protein.
A protein contains about 2 to the power of 10 atoms.
If this were the entire pool, a computer could test every possibility and find the key atom
almost instantly.
Zoom out again to a large virus, containing about 2 to the power of 30 atoms.
In our simplified model, every potential Bitcoin seed phrase created by the affected cold card
firmware fits inside this virus as atoms. A computer could search that full set in about
three hours. That may sound enormous, but how does it compare with the search pool of a correctly
generated 24-word Bitcoin seed phrase? Would it fill a grain of sand? A grain contains about 2
to the power of 60 atoms. Not even close. What about Jupiter? At roughly 2 to the power of 180
atoms, it is still nowhere near large enough. The entire Milky Way contains roughly 2 to the power
of 225 atoms. Surely that must be enough. Not quite. A properly generated seed has 2 to the
power of 256 possibilities. To represent every one of those possibilities with an atom,
we would need about 2 billion galaxies the size of the Milky Way.
To hack a properly configured Bitcoin wallet,
an attacker would need to find one specific atom
hidden somewhere across those 2 billion galaxies.
That is the scale of the cold card bug.
It reduced the challenge from finding one atom across 2 billion galaxies
to finding one atom inside a large virus.
i think that really puts it into perspective um so a massive catastrophe and what strikes me is
the initial information and reactions were contained to social media and podcasts like mine
when we have an actual organic event within bitcoin which i kind of consider this to be one
i.e something that isn't from like an outside influence or macro event but something that
happens locally to Bitcoin. The information spreads quickly to the perpetually online,
but there's a massive, massive lag between perpetually online and breaking outside that
bubble. And I, I am left with the idea that that means tens of thousands at least that don't even
know this has happened. It really, it really, it really, it strikes me. And so this is a scenario
where the mainstream media stepping in can actually be useful because they can get it to
that next echelon of people that can spread the word. Of course, how they cover it is just awful.
How did this happen? I mean, I was reading about one of the victims here and he said his
part of the system was in like a safety deposit box at a bank.
Yeah. I mean, people had the perception that if you have a cold wallet, that it's secure. And I think this is kind of upended that impression. There was a security flaw in CoinKite's system that someone, it seems, might have even hacked into it all the way back in April times. But then the news kind of blew up over the weekend because a lot of other users were complaining about their accounts getting drained. And so they have a whole mess on their hands now.
Oh, man, that has to be the most tech.
Honestly, if they would have given her a script produced by ChatGPT, it would have been less slop than that.
I mean, that's how bad that was.
That was really bad.
Some of the other mainstream media, that was Bloomberg.
Shameful, shameful, Bloomberg.
You should do better.
You're a financial network.
The CBC has done slightly better coverage and maybe in part because CoinKite was a Canadian company.
Bitcoin worth more than $100 million, allegedly stolen from devices called cold wallets.
You were told that moving your crypto onto a cold wallet was the safest thing you could possibly do but thousands of people just had their funds stolen Made by Canadian company CoinKite the cold card was sold as a way to keep Bitcoin secure by keeping a type of password or seed stored physically instead of on the Internet
But thieves apparently found a five-year-old universal weakness in the cold card.
They were able to reverse engineer it, figure it out, and therefore get access to the wallets and drain individuals' Bitcoin accounts.
In an online post, CoinKite wrote, users have suffered real losses and also suggested users move their crypto off affected cold cards.
This might be safe if it worked as advertised, but it didn't.
And it didn't for five years.
And now a lot of people know that.
So that's the problem.
It's not just the fact that this shouldn't have happened and that these people did nothing wrong.
It's also that it strikes at the core of the Bitcoin ethos that you can store these keys yourself securely, that cold card was trusted.
It's not clear who or where the hackers are, and victims may not be able to get much from the cold card company.
You can't sue us and win more than you paid for the device.
And the problem here is the device is worth at most a couple hundred dollars.
Like this is like a really expensive calculator in terms of the money that's involved here.
There's also speculation this is a new type of attack.
AI is stronger than it's ever been.
And it's being used by both attackers and defenders alike to identify vulnerabilities across all companies.
While some victims have said they've reported their losses to authorities as theft,
it remains very unclear if anything can be done.
Anis Hadari, CBC News, Toronto.
I think I'm still in shock, really, over all of this.
You know, and it was such a monumental failure.
I think it's really a black swan event for the most serious Bitcoin holders, and it's still ongoing.
We just, as a community, screwed up so big.
And we're still putting everything together.
There's still a lot of questions, like, why is all this kind of just going to, like, one address?
What's the plan here?
supposedly they use some commercial blockchain services that might have been KYC'd.
But what we do know is the cold card had a good and tested hardware and it could generate random
numbers. We do know that. But the hardware number generator was being bypassed and a
micro Python number generator was being called that wasn't nearly random enough.
We have more information in this last week's episode of Linux Unplugged, where we kind of
break this down technically in linuxunplugged.com slash 678. And we also get into some historical
times where Linux screwed this up and what Linux had to do over the years to make its random number
generation actually reliable. And it's relevant to this week. So linuxunplugged.com slash 678,
if you're curious about that. Every key generated using that Python script was exposed the day they
set up the wallet. That's what's such a mind bender. This has been lurking for five years.
And the worst part, think about this, the worst part.
If CoinKite had found out ahead of time and then had to disclose it when they released a firmware update or updated their GitHub, there would have been a race then.
The AI tools would have been fired up and put to the task, and everyone would have had to scramble.
It's an ironic twist that we would have been nearly in the same spot we are now, if not perhaps with more lead time, hopefully.
Maybe CoinKite could have said, hey, update your firmware, we're going to tell you why soon.
from where I sit as a podcaster,
I think that Bitcoin influencer community needs to do better.
To be clear, I don't think it's any one particular podcaster
or YouTuber's fault.
This is CoinKite's fault.
I mean, there is a reality, though.
Too many Bitcoin content creators just trusted and never verified.
And worse than that, they bent to pressure by MVK and CoinKite
to talk crap about other wallets and feature them less.
and many of them took money from CoinKite to market the cold card,
which once you do that, to keep that ad deal,
it means you talk less about the other wallets.
And I know that for a fact. I'll get into that in a second.
But first, you need to get your head around this.
And I don't want to have to repeat myself.
You have got to be more mindful about your sources of information.
Even well-intentioned Bitcoiners here bent the knee to cold card for sponsorship.
I hate to say it, but you've got to understand it's so tempting
as a podcaster.
I mean, until this week,
CoinKite and ColdCard
seemed like a safe bet.
So who cares if you talk less
about the other wallets
because you're recommending ColdCard
and that's great.
But as a result of this
and this little tiny compromise
across the landscape,
consumers of Bitcoin content
were left uninformed
about alternatives.
That's just a fact.
Many listeners and viewers
of these content creators
directly bought cold cards based on a sponsored recommendation.
And until last week, that was fine.
Until it wasn't.
And this is why Bitcoin, this week in Bitcoin, is value for value.
I need you to understand how important it is that there isn't bias in a show like this.
I mean, there can be bias, right?
My stupid brain probably has biases.
But my stupid brain is incentivized to self-correct to serve you in the value for value model.
This isn't a pitch for the show, but I need you to understand how important your information diet is going to be if you want to hold on to your stack.
You've got to wrap your head around this.
It happens to be that it does directly benefit the narrative of the show.
But the reason why it directly benefits my narrative of the show is because I've been doing this for over 20 years and 10 years ago and more than that, I had sponsorships go bad.
I had GoDaddy sponsoring the Linux Action Show and they became a SOPA supporter, which was the most controversial thing on the Internet at the time.
And I had a good deal go real bad quick.
And I had to get rid of that sponsor and I had to take a massive financial loss.
So, you know, I learned my lesson 10, 15 years ago.
And I built this show on those lessons learned.
A month ago, I was approached by CoinKite to do sponsorship on This Week in Bitcoin.
Obviously, we did not go forward with that sponsorship.
And I never mentioned it on air because, honestly, I figured at the time, you'd all think I was crazy.
I mean, JB needs income badly.
The other shows, they need sponsorships.
And here's Twib, and it's getting offers, right?
It's like, you know, it's the Apple, right?
I'm being offered the Apple right there.
And everyone loves Cold Card.
So if I came on air and I told you I turned them down, you'd think I was crazy.
If I told you that the show really can't go on unless you continue to support it, but
Cold Card wanted to sponsor me, you would have thought I was crazy.
And honestly, I didn't need to explain myself.
I'm a big boy.
I don't need to explain my decisions to you.
I know what's best for the show.
But here we are.
Here we are.
Just two weeks later, really.
Conversation ended like two weeks ago.
imagine if I had been chilling cold card for the last month or so imagine if I stopped talking
about the other wallets kind of silently and just sort of gave preference to cold card
that's just a hot mess none of us need
I want to do the show for you not for a sponsor and you need to be able to trust my take even if
I'm getting it wrong because I misunderstood something you need to know it's not because
of some bias because I'm getting paid by a sponsor. And it just matters in the DNA of the show because
of what we're talking about here. You've really got to wrap your head around this. Bitcoin is on
the front lines of this thing. It sits on the shoulders of giant open source projects that are
also on the front lines, constantly getting attacked by new AI tools. And like, who doesn't
want to hack Bitcoin or any Bitcoin software? There's real money. You get real money right away.
the incentive because it's it because it's a real money b generates massive headlines and c
is a very interesting technical challenge with lots of open source software as just public
reference and you combine it with these things like kimmy k3 you really have a powerful combination
here we are on the front lines and it just matters so so much that we keep a clear head
this cold card hack is the starting line.
It's the starting line of this.
And I want to finish just my line of thinking with this.
BIP-110 has been a huge distraction.
I warned about this a few weeks ago, and here we are.
Every single prolonged bear market, we usually have Bitcoiners turn on themselves,
but this has been an absolute slop show.
BIP-110 debacle has been the lead character of the Bitcoin bear market,
and we have completely ignored the fundamentals as a result.
We have been completely distracted by baby brain thinking and vibes
and not paying attention to the fundamental issues that matter.
It's embarrassing.
And the market is punishing us for it right now.
It's embarrassing.
BIP-110 has been an attack on the social layer of Bitcoin.
And now we're all collectively being punished for it.
It's just, it's such an embarrassment as we get close to the fork day.
And it's all vibes.
Yeah, this was a totally humbling event for, really, for the market.
And like we were talking about a bit earlier, Matt, is everybody's been tested in this bear market and just tested in different ways.
And, you know, like our volatility event and now the self-custody event, I wouldn't be surprised to see a little bit of cohesion here as every single person that's involved in the Bitcoin network is going to push that much harder now.
Right.
The security is going to get better.
People are going to be testing and using these AI tools to test all of their platforms as much as possible.
and that's going to be an ongoing task that people are doing. Corporations are going to be
doing it. Corporations are going to be pushing their custodians to strengthen and harden the
network. They're going to question, they're going to verify. And ultimately, I think this will be
really strong for the Bitcoin network. A couple of crazy things that came to my mind. This event
happened and the price of Bitcoin is trending up. This is the largest theft in Bitcoin history on
sovereign cold storage wallets, yet the price of Bitcoin didn't really move. If this would have
happened in 2017, the price of Bitcoin would have nuked, right? It would have nuked significantly.
It would have been dropped to 50%, 60%. Yet here we are and the market is improving.
Just a couple of other things that are mathematically interesting if you're thinking
about risk, if you're a sovereign Bitcoin holder and you're holding Bitcoin in cold storage,
the concept is be your own bank. I even have a sticker on my water bottle that says,
be your own bank. And it's not for everybody. It is difficult. There are things you need to
take into consideration. And I think that mathematical risk perspective is going to
become a bit more apparent to everybody now that this event has occurred. It changes the risk
calculus. It changes how you would think about managing your funds, whether that be single
point of failure or multi-sig, multi-point of failure, and how you interface with that.
If you are not interested in understanding what those are, there are now options to get Bitcoin
exposure where you don't have to take those things into consideration. You can outsource that to
other parties. That was one of the biggest developments in the entire Bitcoin ecosystem
was the development of the Bitcoin ETF
and companies that are holding Bitcoin on their balance sheet,
taking leverage positions on the balance sheet.
And that is all the evolution of the entire market here.
The crazy reality is the ETF holders were better off.
People that kept their Bitcoin on Coinbase better off.
That's the painful reality.
And what I witnessed, what I saw,
was real Bitcoiners coming to the rescue and putting the work in.
And what I saw on the BIP-110 side was vibes.
I saw baby brain conspiracy theories just being cooked up.
They're so self-focused that they think this cold card hack
was some sort of, you know, nation-sponsored attack
by big Bitcoin to delay BIP-110.
It's absolutely wild.
And it really was a stark contrast of real Bitcoiners getting to work
and honestly some of the very technologies
that BIP-110ers are against saving the day.
And then you saw a lot of folks on the BIP-110 side
just sitting around picking their nose,
eating their boogers,
and cooking up baby brain conspiracy theories.
It was really a stark contrast.
They are completely unaware of the bubble that they live in.
This is really something.
And here's my take from all of this,
and hopefully your take.
Trusting the vibes is what got us into this mess with Coldcard.
We trusted the vibes.
And BIP110 is all about vibes.
It's all about being heroes.
And I'm sick of it.
I'm done with the vibes.
Bitcoin is better than vibes.
This is ridiculous.
So I have a question for you, and I'd like you to go to boost.jupiterbroadcasting.com
to support the show and answer this.
When I look at this entire situation and I see the collective fault, we trusted we didn't
verify.
and my question is, is Bitcoin toxic maximalism dead?
Has it failed us here?
We focused on air gaps and powering cold cards
with nine volt batteries and SD cards
and we told ourselves collectively a lie
to guess help us sleep at night.
We all wanted to believe it was safer.
And when I think about BIP-110,
the temporary software created
because a config option was changed,
the default config option was changed
that you could go back and change yourself in core.
the response was BIP-110
which fundamentally changes the rules
and is now considering a proof of work change
not so temporary I guess
and they compare themselves to dropping a grenade at a wedding
and then blame everyone else for it
they still are doing it this week
and all the Bitcoin loving plebs that fell for their good vibes slop
they turned on some of the very OGs
that created some of the fundamental stack Bitcoin relies on,
some of whom were out there helping people this week
while they were picking their nose.
And they did it simply because their favorite YouTuber
or ex-personality convinced them about the vibes.
It's really something.
And all of it, the cold card lack of verifying,
the BIP 110 stuff,
it's all the same lack of critical thinking
and toxic behavior.
So here's my question.
as Bitcoin toxic maximalism,
I can't even say it now,
failed us.
I never liked the term,
but I used to think of it as an immune system
that built up over time
to fight affinity scams and FUD.
But just look where it's left us.
You would have been better with your keys
in somebody else's wallet,
on somebody else's exchange,
with an IOU.
And I hate to say that.
But the moment that wallet was created
five years ago,
you were doomed.
and so the bitcoin toxi maximum culture would have told us that you were a bad bitcoiner
that you were at risk in reality they were putting you at risk
and i was a cold card user i thought it was the best wallet possible now i wasn't exclusively a
cold card user thankfully in fact none of the jb infrastructure uses cold card because i've
always believed in diversified vendors.
But
this is where we're at now. And I'd like you to weigh in
if you think that the Bitcoin culture
has failed us here. And what do
we do now? Do we be more open-minded
about things like the ETF?
Do we be more open-minded
about things like devices
that support other coins? Because those devices
would have been a lot safer than a cold card.
You know? We've always said, keep it simple.
would have been a lot better.
So, this is what I'm reflecting on.
This is what I'm thinking about.
The BIP-110 sheep are a brace-to-fork Bitcoin
after a proof-of-work code change.
It's just crazy.
They're going to end up on a dead, worthless chain.
They've been completely misled by vibes
and Bitcoin-toxic maximalism.
We were focused on 9-volt batteries and SD cards
instead of random seed generators.
I feel humbled by all of this,
And it's made me rethink my risk profile when it comes to self-custody.
So I'd like to know where your head's at, boost.jupiterbroadcasting.com.
Let me know.
Boost didn't support the show.
And let's weigh in on this.
And I'll continue to monitor the story.
And I'll probably have more updates for you next week.
Another story I was personally really disappointed to see is the start of this week we learned
that Bolts, the amazing swap service between on-chain Bitcoin, Lightning, and Liquid, is
shutting down indefinitely due to an underlying stack attack that seems to have been ongoing.
And Bolts believes it's a major paradigm shift for Bitcoin services built on open source
softwares warning users not to expect swap services to return anytime soon and the situation
appears to be that bolts has been under constant ai attack ai assisted attack you know these tools
get better and better and i guess there were some issues with their evm earlier a few weeks ago that
they had to shut down some of their stablecoin support bitcoin news writes the service first
went offline early on august 3rd without explanation several hours later the company
confirmed the shutdown would continue, quote, until further notice as it reviews its security
in response to the attacks. The company said that no user funds were lost during the attacks.
Instead, Bolts itself covered the financial losses caused by the security incidents.
So I read that to be that Bolts took a loss, maybe from their wallets. Now,
they said it wasn't related to the cold card situation.
They said that user funds were never at risk because Bitcoin never came under the company's
control. They were not custodian the Bitcoin. They were non-custodial by design, but the losses were
there alone. Bolt said some services will remain available. The refund API continues to work.
The fallout from this really is going to be felt for the most part by Aqua users, Aqua Wallet,
Bull Wallet users. The services and wallets and built-in swap services that I really like,
I'm a big fan of all of this, but I was always a little hesitant about the Bolts as a central point of failure.
I love, though, that they were non-custodial, so that reduced some of my concern.
I was a big fan of Bolts.
This is really sad to see.
I think others will step up and fill the gap.
Bull Wallet sounds like they're working on infrastructure and sounds like they are a Liquid Network Federation partner, so they can peg in and peg out directly.
Whoo!
That's a hit.
And I think it again, it really, Bolt has it right.
It is a major paradigm shift.
We are watching a major paradigm shift and Bitcoin's going to be on the front line for this.
But consider this as well.
What just came for Bitcoin and what is still coming for Bitcoin will come for every bank, right?
They're sharpening their teeth and they're learning with Bitcoin.
And that's going to make them massive weapons.
and they will then come for the banks
and the banks will not be ready
and they will not adapt as quickly.
And Bitcoin will have spent this time in the fire,
getting harder and smarter.
That is the legitimate upside of all of this
is by being on the front line,
by being one of the first to get attacked
and watching the response to this
and the organization to this.
I think we'll learn how fast Bitcoin can respond.
And I think that's one of the things this incident is showing us, is how fast a decentralized community can respond. And we will be harder and sharper for this, and then it will come for everyone else. That, to me, is going to be absolutely wild.
You can support the show just by doing what you do.
If you're not a booster, you can buy Sats on River using our link.
In fact, all these links are in the show notes.
If you're all about self-custody and you're doubling down, the Bitcoin Well,
they have been stepping up during all of this.
And they'll also be looking at providing more swap services as well.
And they are an amazing self-custody platform, the Bitcoin Well.
Then there's the Bitcoin Company, a lightning-based service that you can go from Sats to gift card in just seconds.
You can even log in using the Lightning Network.
If you use my link in the notes, I get a few sats back for that.
Then there's the fold card.
You can just stack sats by paying for your daily living.
That's what it is.
It's like a debit card and a Visa system and an ACH to pay your bills.
Salt Lending is great to get access to your liquidity.
Strike has lots of services as well.
I have links to all of those.
No official relationship, but I use them and I recommend them.
You can find links in the show notes or in your podcast app of choice.
We do have some boosts to get to.
Four score and seven boosts to go.
And this is going to be across three shows, so...
Stay a while and listen.
I do think there's some good stuff in here.
We're going to get into some of the recent topics.
But Derivation Dingus kicks us off with a baller boost on discount,
coming in with 30,600 sats.
Hey, rich lobster!
Hey, Chris, and thank you for the baller boost.
I hope you're enjoying your time away from the podcast studio.
I really enjoyed this episode and wouldn't mind more episodes like it.
That was the before Satoshi episode.
I did the stereotypical things you aren't supposed to do back in the day.
I got swept up in the 2017 hype, bought a little Bitcoin.
I felt I missed the boat, so I bought a bunch of crap coins, got wrecked, sold everything
and swore I'd never touch any of that again.
Bitcoin included.
Later, though, I discovered Linux Unplugged and self-hosted where I eventually heard about
the Bitcoin dad pod.
and that's when I actually got the path
of learning about Bitcoin.
Also, if anyone is looking for something
even more in-depth,
I thought the Genesis book by Aaron Van Windrum
was a decent read and quite thorough.
Thank you, Derivation.
I appreciate that recommendation too
and it's nice to hear from you.
Hope you're doing well
and I did enjoy my time away from the studio.
I'm glad I made it back when I did.
If the cold card situation happened a week sooner,
I would have been cooked, man.
Nakamoto 6102 comes in with 26,000 Satoshis.
I hoard that which your kind
says thanks for the value and thanks
for the update. Well, thank you for the value.
Adversary 17 is here with
24,576
Satushers.
I had ETH for all about a
month before I learned to go down the straight and narrow
path from Bitcoin DadPod. Sold my
ETH and now I'm all in on sats. Thank you
for the easily downloadable Plan B episodes.
I'm touring them now and committing to
seed them for a very long time so others
will download them as well. Oh, that's great.
adversaries uh if you find anything uh any nuggets let me know i appreciate the boost
derivation dingus is here with a mcduck boost that's 22 2222 satoshis things are looking up
for all the duck emergency pod boost thanks chris and i can't say i saw this one coming
crazy clinkers i agree i wish i would have saw this one coming uh you know part of the problem
was is people tested some of the code paths and people tested the hardware with lasers and all
kinds of stuff. But that sort of on or off condition wasn't checked. They looked right
around it. Such a shame. Thanks, Darivation. Appreciate you. Producer Jeff's here with a row
of McDucks. This old duck still got it. I really enjoyed the history lesson and hearing some old
plan B again. I remember when you launched the show, and even though I had heard of Bitcoin before,
I never gave it any thought until plan B and other JB shows started discussing it. While plan B was
running, I was more concerned about what my next meal would be rather than buying and saving for
the future. I did attempt to mine on
a GPU back then. I failed to grasp and gave up
quickly. Thanks for you, though, these boosts and
a lot of time to stabilize, I finally get to buy
and mine. Yeah, PJ, I love it!
Thank you, sir. Good to hear from
you. OB is here
with 21,000 Satoshis.
Hmm.
It's a long history of me. 21 gigawatts!
Hmm. Cold card.
Industry leader. Dot, dot, dot.
Yeah.
Yeah. Oh, adversaries
is back. You didn't get included in the... Oh, man,
That's too bad.
That's a shame.
Coming in hot with the booze.
Adversaries has no message, just value.
But thank you, sir.
We should include that in your total.
I appreciate that.
MDS comes in with 10,000 sats.
You're doing very well.
Dive for value forever.
Yeah, you get it, buddy.
I hope you get it.
Thank you very much.
Appreciate you.
Hey, there's Gene Bean.
Gene Bean comes in with 16,006 Satoshis.
Oh, my God.
This drawer is filled with fruit loops.
He says so early before podcasting 2 Here some story time though I got into Bitcoin because of you talking about on various shows and the broader podcasting 2 movement I did my toe in with lightning and boosting and I got more curious
I listened to an audio book called Broken Money
and I was a convert afterwards.
I followed that with the Bitcoin standard
and hidden repression,
how the IMF and the World Bank sell exploitation
as development.
And I'll never turn back
now that I've seen the money printer behind the curtain.
Hard money is the way.
Gene, that's so great.
I love those books too.
Follows up with,
even though I had not used cold card,
I agree. It's time to move from using single hardware wallet to a multi-sig vendor hardware
wallet. Step out just out of an abundance of caution. Time to order that other wallet.
I had my eye on. Yeah. You know, right now, these days, I'm looking at the Jade pretty fondly.
The Jade wallet, I think the SeedSigner, those are kind of top of my list. And I think for a lot
of folks, the BitKey should be a consideration as well. So sort of a long list, but I'd like to dive
more into that and hear what people think as well. Landlocked came in with 5,000 sats.
Make it so.
Watch the last episode on YouTube, so here's some value.
Keep up the work.
Thank you, sir.
Boost!
Appreciate you actually doing that.
Not many people will take the time to do that.
Forty Deuce comes in with 4,200 sats.
Everything's under control.
Great track.
Oh, he sent it to our artist.
Another excellent site for value for value music I haven't heard you mention is lnbeats.com.
Maintained by any links to the Noster profile.
I forget.
I know the person.
They're known for music side projects, split kick, hero caster, very, very great, prolific developer in podcasting.
Yeah, and I'll co-sign LN Beats.
I like V for V music and Fountain FM as well and LN Beats.
That's kind of my triangle of getting value for value music right there.
That's the secret sauce, 40 Deuce.
Thank you very much.
The GWJW comes in with 3,333 Satoshis.
Just pump the brakes right there.
Cool tune.
Cool summer.
Thank you for supporting the artist.
Appreciate it, the.
bug-eyed stormtroopers here with 4,200 sats everything's under control my bitcoin journey
began with linux unplugged to introduce me to podcasting 2.0 paradigm thanks wow that's great
that's been i've got to hear a few of you said that that's awesome uh orange mart is here with
5,000 sats big bitcoin boost yeah big bitcoin was right all along it turns out big bitcoin was
right. Thank you, Orange Mart. Cronk the Donk Doggo comes in with 2,114 sats.
Cronk the Donk, I don't know if I got that right. No messages value. I appreciate that
very much. And then we got 5,555 satoshis from Ace Ackerman.
Bitcoin found me in 2018, although I first heard about it when it was $1.
And Andreas Andanopoulos' book on the Internet of Money was my intro.
But American Kingpin by Nick Bolton really put me on the hook.
I am a real estate investor, and I think that that shaped my view of Bitcoin as more of a store of value than money.
Ah, that's nice, Ace.
Also, great episode, and thank you for your courage.
Rest in peace, John C. Dvorak.
Yes, indeed.
That's been a hard one to process as well.
Thank you very much, Ace.
Appreciate that.
Kiwi Bitcoin guides here with 14,332 satoshis.
Hey, hey, Ron.
I didn't know that's what that button did.
This is a tasty burger.
Road trip booze from New Zealand at the BitWiki event on the weekend here.
A few of us were swapping notes about podcasts.
Twib came up as the one with the most signal.
We have a saying here, world famous in New Zealand.
Love it.
Thanks for the update, Chris.
Keep them coming.
People afraid and a bit freaked out.
So some calm words and solid advice from an OG like you were really helpful.
Interesting spin on random numbers in LUP too.
Seems like this is not the first time generating random numbers has led to problems.
No, in fact, years ago, there was a massive Bitcoin wallet wipeout
because of Android's random number generator not being sufficient enough.
Thank you for the boost.
Appreciate it, sir.
Nice to hear from you, Kiwi.
Magnolia Mayhams here with 2,320 Satoshis.
Yes, zip code is a better deal.
Oh, that's what that button does.
I got new buttons.
I was wondering where all my Stacker News sats were going.
It turns out Fountain was linked as my primary wallet, not Albi.
So enjoying some of my S-Post earnings.
Also, I first learned about Bitcoin around 2011 from an article claiming that Bitcoin was the reason why GPUs were dying.
Oh, that's fascinating.
The FUD brought you in.
For way too long, I was making people angry because I thought it was called Bitcoin.
They thought I was calling it names.
Oh, BitCon. I thought it was called Bitcoin. What a mess that last boost was. No, it came in fine.
BitCon! BitCon! Moon Knight comes in and it is for 10,000 satushes.
I hoard that which your kind covet.
B-O-O-S-T!
Oh, this is not the kind of 2 a.m. fire drill I needed. Thanks for the heads up. Moving my funds now. Good. Moon Knight. Man, I know, right?
I had just made it home.
Checked the news, saw it, and was like, oh, man.
Started the process and then got in the car and drove to the studio and, like, got here, went through everything as fast as possible, checked mempool, see if everything was going okay, and then sat down and did the show.
I mean, it was nuts.
It was awful, actually.
It was awful.
Lee, Lee, Lee, Lee, Lee is here with 5,000 sats.
The traders love the vol.
Such sad news.
Multi-vendor, multi-sig, and maybe even multi-institution calling OnRamp an anchor.
This was a serious and worth spending time to resolve, unlike BIP110's general waste of everyone's time.
Oh, man.
Nailed it.
I need to give you something for that.
Here you go.
Make it so.
Nailed it.
Oh, my God.
You get a Picard.
Thank you.
I'm glad you and I are on the same page.
That actually makes me feel a lot better because I feel like I've been going crazy in the sense that everybody else is going crazy and I'm sitting around having to watch.
attention now stricts comes in with 10 000 sets oh yeah chris sending you some support support for
taking the time to provide the emergency coverage staying on top of what's happening and keeping
everyone informed thank you it was a hustle i appreciate you recognizing that thank you mal
really do appreciate that hey chance of dizzy spells comes in with 19 291 satushes
ah also recognizing the effort in the emergency pod thank you everyone for taking the time thank
you for taking the time to warn us about all the exploits. Yet again, you're keeping me on my finger
and my pulse of the events and news that really mattered. Thank you and bless you for the service.
May the roads be clear and scenic. By the way, the boost value is not code, just the max
palidromic value I could send you. Okay, right on. Why you got to put numbers and letters together?
Why can't you just go? No, I really do appreciate it. Thank you very much. You're doing very well.
All right. Sloppy Joe's here with 5,700 sats.
Let's hear it, good buddy.
Oh, BIPT110. As you know, fees have remained low. However, my primary concern is permanent data bloat.
Prunable data burdens bandwidth temporarily, but UTXO bloat creates an unprunable prunable cost for every node and operator forever.
Do you view unchecked UTX growth as a real threat to decentralization?
if running a full node becomes prohibitively expensive does the network risk ever becoming
a truly robust globally distributed network even if it's just enough to have a it's not just enough
to have a lot of nodes in waiting i think he got cut off but i got i grok your point i do think out
of all of the arguments about spam this is the most immediate short-term issue right like this
is it. So I'm looking at the data. And right now, the current blockchain size is 865.4 gigabytes.
And the Opratern data makes up about 5.89 gigabytes of that 865 gigabytes.
So you'd still have 860 gigs without the Opratern data. Being generous here.
So is this awful? I don't think so. And what I noticed this week is Opratern was being used by
the victims of this attack. I don't know if it's going to be to any success, but they were trying
to reach out to the attackers, sending them notes. We also saw things like Mars Sleepstream become
useful for the plebs to save their multisig Mark III cold card setups. So I've been thinking about
a lot of this, and it seems like the stuff that the BIP-110 folks have been warning us about,
some of it just became very useful this week. And I'm kind of done with the vibes. I kind of
want to go by data And to me 5 gigabytes to let people use Satoshi creation however they want and let the economic incentive system play out doesn seem like a high cost to pay Now if this was
200 gigabytes, I'd be very alarmed. But under six gigabytes, it doesn't really alarm me. I hope that
does that seem reasonable to you, Sloppy Joe? Let me know what you think about that. Great question,
though i do appreciate it monty came in with a row of ducks that's 2 222 sats thanks for the two
great episodes this history was well done and i learned a ton the cold card psa was also very
informative can you recommend how we protect ourselves from attacks should all wallets have
a password should we be creating new wallets and rolling our own entropy you know i don't want to
have to recommend people have to start rolling dice i'm not opposed to it especially if you enjoy
it um and it does give you some peace of mind but i i don't think that's what the uh i that cannot
be the bar. That cannot be the bar for self-custody. I do think multi-vendor is smart because we're
going to see more and more AI attacks. And I think one of the things perhaps to consider,
I'm not saying this is a rule, but something to consider is maybe buy a wallet from a company
that has a team of more than three or four people, that has serious researchers that are doing
serious work. Block and BitKey come to mind. I mean, apparently Trezor and others. SeedSigner
seems like they're holding up really well in all of this, doesn't it?
Even though they were some of the most fudded by CoinKite.
So I think multi-vendor, maybe multi-wallet,
and I don't think anybody should not consider,
I mean, there's other things like,
in this case, River would have been a lot better.
An ETF would have been a lot better.
And I just think, I'm not saying that should be hard recommendations and advice,
but as we work through this and we get on the other side of that,
I think these are the things we should be humble about and ponder more.
Thank you, Monty.
And if you have any follow-up questions, please do follow up.
I think that's a very important topic.
Sleet Stats comes...
I never get that right.
Sleet Stack Stats comes in with one, one, one, one, one Satoshis.
Hmm.
Oh, my God.
This drawer is filled with fruit loads.
You know, 11,111 Satoshis feels like a message.
Boy, they are doing a lot with mayo these days.
Thanks for the emergency update, Chris.
I'm going to share an unpopular opinion that there were two issues with this exploit.
The first and most infuriating issue is the CoinKite entropy code.
That's unexcusable and horrible.
The second issue is hodlers choosing a niche security first hardware wallet and not rolling their own entropy and not using a strong passphrase.
They would have been better off with a mainstream user friendly hardware wallet like Ledger or Trezor.
Yeah.
So let's talk about the passphrase thing because that was on the last boost too.
I do think it is smart at this point to enter a passphrase.
It's it is it does add complexity.
and the only reason why I'm a little hesitant
is on wallets like the Jade,
it's a real pain in the ass.
And if you get that wrong on the Jade,
if you get your passphrase wrong on the Jade,
it can be really disorienting
because it opens up a new wallet.
Now, this is a feature
that allows you to have multiple wallets,
but if you go in there
and you get the passphrase wrong on this device,
it's really hard to enter the passphrase.
And then it goes in,
you got a zero Bitcoin bounce,
you freak out, right?
and it turns out you just created a new wallet.
Now, if you get the passphrase right,
you'll get the right wallet.
But any nuance, any difference in the capitalization,
spacing, anything can be very confusing.
So it is a little device dependent.
That's what makes this tricky.
And then I do think I agree with you.
If you're going to buy a small niche hardware product,
you better be responsible for your own entropy.
Bring your own entropy, I suppose, as they say.
Thanks, Leets. Appreciate that.
I got a Fiat boost from Doma.
Doma came in with $30.
Well, I'll be dipped.
All right.
Enjoy every episode, but appreciate you doing the emergency episode for the community.
God bless.
Thank you, Doma.
Appreciate you recognizing the value in that.
Michael's of Binbo's.
Okay.
Microsoft Binbo's 98 comes in with $10.
Test boost.
I'm so glad I can send you fiat money.
I listened to all your podcasts, but I didn't want to set up Bitcoin right now.
Well, there you go.
Thank you, sir.
Appreciate it.
I liked your username too.
anonymous came in with a free member boost he's a good guy he's a real good guy no great guy i
assume so remember i just started four days off the grid when the news dropped oh my god scary to
think how i could have lost all my stash because i was away from my hardware wallet and couldn't
update my firmware in time my heart goes out to those affected do you think coin kite can ever be
trusted again no no and i think as more information comes out it'll be clear why
and I'm watching that information.
So I just dodged that bullet.
I was up in BC,
you know, 12 hours away from home,
12 hours through wildfires.
And if this had been just a few days earlier,
I just would have been absolutely sick.
I just made it back.
Just crazy, just absolutely crazy.
And it's made me rethink too.
That aspect, the physical,
having to be there physically aspect.
I actually thought my thinking had been the friction in spending and getting access to the Bitcoin was a positive in terms of, you know, not accessing my stack.
Right.
But then it turned out the real thing I needed to be worried about was actually being able to move it quick.
And who knows?
But that seems like that risk profile remains just as we enter this new era, at least of Sam Altman and Dario over there.
Right.
You know what I mean?
But I appreciate that.
Thank you, Anonymous, for the free member boost.
Remember, jupiter.party members get to boost the show for free.
All right.
That's everybody that was beloved the 2000sat cutoff.
I think that actually works.
I have to stop there for time, but I do read all of them and keep all of them in my show
doc for prosperity.
And thank you, everybody who streams sats.
30 of you did that, and collectively, it's a nice boost.
You stacked 86,518 satoshis.
You're doing very well.
Thank you, sat streamers.
When you combine that with our fiat boosts, our SAP boosts, and you take it at current market value, that means for the last three episodes, because this is across the last three episodes, we did pretty darn well.
The show stacked collectively 527,501 Satoshis.
Not bad.
That's kind of a cool number, if nothing else.
So I really do appreciate that.
And if you would like to support the show, you can do it in a couple different ways.
you can become a member with Fountain or jupiter.party,
and then you get access to the free member boost,
or just send a boost at boost.jupiterbroadcasting.com.
Support the show directly.
I think it's obvious why it's important
the show remained value for value.
I can't believe what a bullet.
I dodged.
I was tempted.
And I think if I hadn't been burned by sponsors in the past,
and to be completely clear and frank with you,
if I hadn't got the sniff and the smell
that me talking about other wallets
was going to be an issue for them,
it could have happened.
I don't know.
I don't,
maybe I would have eventually thought about,
I don't know.
But this has reinforced my belief
that this show either lives and dies
on value for value.
It's necessary for what we're talking about
so you can plan for yourself,
your family,
your business,
and your future.
And just trust that I'm doing the best job
I possibly can for you.
I'm not saying I will always get it right,
but I'm telling you I'm doing the best job
I possibly can for you.
And I hope,
I hope the last 117 or so episodes proves that.
And so you got to keep me going.
And I think, you know,
there are times like this
that show it's worth the investment.
So you got to go to
boost.jupiterbroadcasting.com to do that.
And thank you everybody who gets it.
A lot of you do.
And I'm very, very grateful.
But we still have more to get into.
This next one's real bad.
Your buddy Tom Lee has lost it.
Lost it.
He's got ETH goggles so bad.
He was on CNBC a couple of days after that Kramer clip that I played earlier about him selling all his coins because of the IBM CEO.
Poor old Tom, you know, his price calls just ain't working out.
And the guy's bitmine company is sitting on roughly $8.8 billion of unrealized losses on its ETH treasury.
and ETH is down about 45% from his average purchase price.
And it seems that might be impacting Tom's critical thinking engine.
But in July, Ethereum was up 25, outperformed the NASDAQ by 2,500 basis points.
That hasn't happened in more than a year.
And the last time it happened,
was the start of a big crypto up move.
So in a way, it's constructive that it was-
You're saying that on a month-on-month basis,
not because you could argue the NASDAQ
has outperformed Bitcoin, obviously, over the past-
Oh, yes, I'm talking about monthly return,
just like in the past month.
It says, yeah, that July-
Yeah, so it's an unusual break in pattern
because normally if the NASDAQ was down this month,
you'd expect crypto prices to be down.
Yeah, Katie Stockton said that last week
it was no longer, the correlation with the NASDAQ had broken down.
Jim Cramer spoke with Arvind Krishna last week,
and Arvind said that the way quantum computing is going,
that in three or four years, he'd be a little concerned
that quantum computers would be able to break the code
for any of these assets, you know, Bitcoin, Ethereum,
all the way down the line.
Do you worry about that?
Yeah, I mean, that's Q-Day.
You know, Q-Day, isn't that cute?
He calls it QDay. He gets real cute.
Notice his tone, if you're watching the video, his body language.
He knows that he's being a little cute here, and he's got a little brand name for it, QDay.
Ethereum all the way down the line. Do you worry about that?
Yeah, I mean, that's QDay.
Google researchers think QDay could be 2028 to break all encryption.
a lot of the crypto blockchains are developing quantum resistance so it's uh it's probably not
going to be a problem for ethereum or solana or canton no for bitcoin they haven't come to a
consensus on how to prevent q day will it be this is so this is so bad for tom this is so embarrassing
for him uh i mean you know he's being cute here you can tell he knows it uh but i'm not having
this. Of all weeks, I am not having this. We have witnessed an amazing, organic, decentralized
response to this cold card hack. You know, it has been incredible watching Rob Hamilton of Anchor
Watch and the Galaxy Digital Research folks step up. All the companies, really, I mean, that are,
you know, in sort of the well-known groups. It's been really interesting. And the amazing of organic,
decentralized response to this cold card hack is teaching us that when incentives align,
the Bitcoin community moves faster than you can believe.
Also, there's multiple research projects.
Blockstream's got a couple of really advanced ones to solve quantum.
And this idea that Ethereum, because it has central management, all of a sudden,
it's Ethereum's decentralized until it's not, right?
And now it's not.
And it's got central management and they're on it.
They're going to solve it, guys.
They got a proposal.
It's going to go great.
What a joke.
Ethereum has literally never shipped anything on time.
And the quantum risk for Ethereum is extremely higher than it is for Bitcoin.
With Bitcoin, your private keys could be at risk.
Well, guess what?
We're going through that right now.
The worst case scenario for Bitcoin with quantum is happening right now, and it wasn't even a quantum attack.
And the price is up.
The price is up.
Ethereum, Ethereum's core consensus system is vulnerable to quantum attack.
The consensus mechanism.
Ethereum's validators use BLS signatures to propose blocks and vote on a canonical chain.
BLS depends on elliptic curve cryptography.
And any quantum computer that would be sufficiently powerful enough to break Bitcoin keys,
or anything like that,
would also be sufficiently powerful enough
to break Shor's algorithm,
which Bitcoin doesn't use and Ethereum does,
which would mean they could crack Ethereum's consensus
and forge valid-looking votes and block proposals.
Think about the impact of that
on a proof-of-stake network.
The risk for Ethereum is exponentially bad.
The risk for Bitcoin is we go through
exactly what we're going through right now.
And the people that have to solve it for Bitcoin,
at the end user, the worst is probably going to be
you have to move yet again to another wallet.
You have to generate yet another wallet.
But you heard that clip.
You heard it's like finding an atom
across multiple galaxies.
We're a way off from that.
But that's going to be the worst case scenario.
And the theory, like, they have, well,
they've got a proposal to solve it over there at Ethereum.
so it's fine.
It's ridiculous.
The proof of stake merge
took seven years longer
than users expected.
And Ethereum's challenge here
is massive.
Replacing BLS
without losing
any kind of efficient
signature aggregation
is going to be nearly impossible.
And they already have
such high gas fees.
Currently,
as their theory lays it out,
as their proposal lays it out,
their post signatures are substantially larger and harder to aggregate and will centralize Ethereum substantially more That their current proposal that Tom all worked up about and they won even ship
it on time.
And the worst case for Bitcoiners is what we're going through right now.
So he knows what he's doing.
He has full on ETH brain now.
It's just so embarrassing.
All right, next story.
The clarity deadline has been missed.
I bet you probably noticed if you're paying attention.
but we did see some positive late additions for Bitcoin since my last coverage of it.
Recent Senate revisions added a full title focused on software developers
and non-custodial infrastructure providers.
The protections largely come from folding in the Bipartisan Blockchain Regulatory Clarity Act
in the Section 604 of Clarity.
And I boiled down the basic principle to this.
It's a protection for developers that says writing or operating software
is just not the same thing as being a financial intermediary.
This is huge.
You know, it's basically the money transmitter issue.
So that's big.
And that's under the current draft.
A developer or provider generally cannot be treated as a money transmitter
just because they wrote the software that enables it.
So to my eyes, that's like the entirety of the positive bits for Bitcoin.
But that is a positive thing.
The rest of the bill is supercharging KYC and anti-muttering laws,
really making crypto, you know, just as surveilled as the banks are.
But, you know, you might have noticed that we missed the August deadline.
So the question is, is Clarity dead?
Well, it may at least be really, really tough to pass at this point because it has, as I
warned, fully entered the realm of politics.
Now, the Democrats successfully stalled it debating over ethics and are now using it
as a voting issue, and they're even making ads around it.
How many Democrats have bowed to Donald Trump or sold out to corporate interests?
So you have a real choice. Angie Craig voted to let Trump make billions selling crypto coins.
I won't. She's with the insurance companies blocking Medicare for all. I'm fighting for it.
And Angie Craig was the only Democrat in this state to vote to let Trump unleash ICE.
I'll never cave to ICE or Donald Trump. I'm Peggy Flanagan.
I approve this message. Minnesota deserves a real fighter and a real Democrat.
The shame about that ad, right, is failing to pass the Clarity Act keeps the current laws in place that allowed Trump to make the profits he made.
And passing the Clarity Act would make it supposedly impossible, at least for Trump, to directly do that anymore in Trump-related members, I suppose.
So the irony that the Democrats are running on blocking clarity so that way Trump can't keep crypto scams going is really just pure, pure gaslighting.
It's really a shame to see it.
And, you know, the queen of crypto gaslighting is Liz Warren, and she has gone into full spin mode.
Liz knows that Trump made most of his money selling the crypto companies, not the crypto itself.
And she knows that he did that before he took office.
And she knows that the Clarity Act is entirely now almost a Democrat bill based on the amount of revisions and concessions that Lummis and her team made.
And it's loaded with new legal powers that never existed.
And that's why literally the intelligence agencies and every major law enforcement union in the United States has written letters in support of the Clarity Act because it gives them new capabilities and surveillance powers.
But even with all of that, she still makes this BS case.
because I see the clarity bill as insulting to the American people. Sometimes you get fooled.
Sometimes despite your best efforts, people get fooled. Sometimes Congress gets fooled. But boy,
not this time. Donald Trump has made clear what his scam is. Other scams are right out here where
we can see them, where criminals are able to step up their activity because crypto gives
them that special advantage to be able to get the money and hide who they are.
You know, it's also happening with terrorists being able to use crypto and the risk that
crypto poses to the entire financial system.
We've got the whole question about, in effect, shadow banking here and what that's going
to mean.
We know what the problems are.
We see a bill that's moving, and yet we don't fix it.
The Republicans like Loomis got played.
They made extensive changes to the Clarity Act.
They spent a year doing so after it was passed by the House, and it was all a play to just delay it.
And now they're just going with this line, even though they've got all the concessions they wanted.
And that's why perhaps the softest spoken senator I've ever known, maybe the nicest lady in D.C., has had it.
The ethics stuff around Trump seems to really grind her gears because she knows the kind of concessions that have been made Digital assets in a blind trust or divest himself of them entirely I still hear that not enough
I want to be very direct with this chamber because I'm done being careful about this.
I have spent my entire term working on this. I came here to simply ask what specifically is left
to give that's reasonable. Tell me the section number. My friends at some point continuing to
say not yet isn't cautious. It's a deliberate decision to run out the clock and kill a bill
rather than risk a no vote on the record with constituents and industry. I have more to say.
I'm going to say it. I'm going to say it before we get a vote on this bill. Just not today.
Well, just say it.
Why not?
Just say it.
Here's what I think could happen at this point is they have a tiny, tiny, tiny window in
September.
If they can do all of the procedural stuff now while some of the critters are on break,
there's still people there working and they can get a lot of the document stuff done and
there only has to be one small vote in September.
They have this tiny, tiny, tiny window where they can pass it.
Otherwise, I think the play becomes quite obvious.
The play here is that the Democrats make it a midterms campaign issue across the states as they need it.
It's just another arrow in their quiver, as they say.
They create the problem.
And then once they're in power, after a little bit of time, they pass their version of the Clarity Act, no doubt with new names and some more ways to go after the Trump administration.
And they pitch it as the solution to solve the crypto corruption that they ran on.
And the reason why I think this is likely is because the original version of this was created by the Democrats and Maxine Waters in participation with Sam Bankman-Fried at FTX.
The original regulation was created by the Democrats and was championed by the Democrats, which is why Lummis thought this was going to work.
But she forgot about the optics,
or at least she hoped the optics wouldn't win the day,
but they clearly have here.
And the Democrats now have themselves
a very handy thing they can run against.
Crypto and data centers are gonna be right up there
with all the other issues, and they got them.
And then they can come along and fix it later on,
after they're in power.
Seems like the solution to me.
If I were a politician, that'd be the play I'd be going for.
All right, let's wrap up with what may end up being a bit of irony and fate of history.
This cold card event might be looked back as the bottom of the bear market.
Maybe.
To be clear, not so convinced myself, but I guess such is the nature of bear markets.
But Arthur Hayes is, and Arthur Hayes is positioning to buy back into Bitcoin now.
He says it really depends on if we get any kind of deal with Iran at all.
By the way, this clip will have some mild language, so you may want to jump ahead 30 seconds.
But Arthur makes the case that the bottom is in.
firming up and so if we get sort of a um a dog shit seasire between the u.s and iran and things
slowly improve in terms of the amount of ships that go through the street and we don't progress
to an escalatory world war three and people just bombing each other um left right and center then
i think that on balance bitcoin probably bottomed at 60 000 and um myself and maelstrom will turn a
bit more constructive on risk going forward. All right, let's check in on the state of the
network. I am wrapping up at block height 961,198. The current Bitcoin price to US dollar is $64,830.
That puts our sats per dollar at 1,542 satoshis.
We're down from our all-time high at 48.6%, which was 303 days ago.
The next estimated difficulty change is an upward adjustment of 1.3% on August 8th.
We are up 2% in the seven-day.
Interesting.
Up 1.1 in the 24.
And, well, up 2% in the 30-day.
Huh.
I actually think that's pretty interesting.
All right.
And also, the fees are up.
The fees have been up.
Immediate right now is 4.6 sats per vbyte.
Half hour is 3 sats per vbyte So it is interesting to see the fee market responding to the increased on activity as both some lightning nodes are rebalancing which has also been happening this week quite a bit and as people move their funds to protect them But the network is delivering
and strong.
all right time for me to wrap it up i'd love you to go to thisweekinbitcoin.show and check out the
back catalog if you're new i'll also have links for all of the stuff i talked about and additional
things that didn't make it into the show that's thisweekinbitcoin.show and you can also go to
boost.jupiterbroadcasting.com and let me know how i did trying to create a show that doesn't get
distracted by the politics, but does analyze them and break them down for you so you can plan for
yourself, your friends, your family, your future, which seems to matter more than ever. So boost.jupiterbroadcasting.com
for that. And also, I'd love to know what else you'd like to hear from the show. If I miss something,
you're always welcome to suggest it. Now, I'm going to leave you with a value for value track.
So if you boost in while this track plays, 95% of the sats go to the artist. I don't know how much
longer I'll be doing this. This may be one of the last value for value tracks I play because I've had
some problems with this and I don't want to play tracks and I'll be able to credit the artist. So
this one should work great. I picked one that's been in the database for a long time.
It's an early winner in the Value for Value set. It's Empty Passenger Seat by Joe Martin.
And I'll see you back here next week. Thanks for joining me.
I know that they will someday.
Drinking all the backstage beer.
Trying to dry out your tears.
Man, it's been a long time since I've been home.
God, it feels like it leaves.
Mmm, forgive me for my confusion.
I got sold to rock and roll delusion.
Now it's taken its toll.
is catching up with me
got my foot to the floor
going nowhere fast
don't see how I can make this last
was convinced
that my life would be complete
beside an empty passenger seat
Another service stop
Oh, another train to hop
Another corner street busker
Singing in the rain
Stringing my J45
Sticks and nerves make me feel alive
But I think of you
To try and keep me safe
Oh, forgive me for my confusion
I got a soul to rock and roll illusion
Now it's taking its toll
It's catching up with me
Got my phone to the floor
Going nowhere fast
Don't see how I can make this last
Was convinced that my life would be complete
This diamond empty passenger seat
I got sold to rock and roll delusion
Now it's taking its toll
And it's catching up with me
Got my phone to the phone
Don't know where to pass
Don't see what can make this last
Now I know
That my life won't become free
Beside an empty passage to see
Beside an empty passenger seat