The seven reasons Bitcoin's price is tanked, updates on the Samurai Indictment, and why the godmother of Modern Monetary Theory thinks it's childish for governments to be held to budgets.
Sponsor: http://podhome.fm
Promo Code: TWIB
LINKS:
Music
Sponsor: http://podhome.fm
Promo Code: TWIB
LINKS:
- JPY/USD: Japanese Yen’s Slide and Dramatic Rebound Are Just the Start - Bloomberg
- Japan is wrong to try to prop up the yen
- Bitcoin (BTC) Trades At Slight Premium in Yen (JPY) Terms Amid Suspected BOJ Intervention
- Yen Drops to 155 against USD. Currency Collapse at Work, -32% against USD since 2021, -50% since 2012 | Wolf Street
- DOJ says Roman Storm did much more than just write code in response to defense’s dismissal motion | The Block
- Microsoft Word - Tornado Cash Govt Opp to Motions vF.docx
- Samourai Wallet Co-Founder Keonne Rodriguez Pleads Not Guilty, Released on $1M Bond
- Alert on Cryptocurrency Money Services Businesses
- Warren and Cassidy Send Bipartisan Letter to DOJ and DHS to Stop Crypto in the Illegal Trade of Child Sexual Abuse Material | U.S. Senator Elizabeth Warren of Massachusetts
- Fed rate decision May 2024: Fed holds rate steady
- Federal prosecutors are examining financial transactions at Block, owner of Cash App and Square
- Trampoline payments
Music
[00:00:00]
Unknown:
Music. Welcome in to This Week in Bitcoin, Episode 9. I know it. It's been a crazy week. I've gotten several notes from you, and I have to say I agree. There's more going on in the last seven days than I've seen in a long time. And I think I've isolated it down to seven major events that have landed in just the last seven days or so that are putting downward pressure, I should say aggressive downward pressure as we record, court on Bitcoin's short-term price and adding long-term risk to the quote-unquote Bitcoin industry and the potential legal precedent that could be getting set very soon and, signals coming from the federal government.
So I'll break these seven events down as we get into this week's episode to try to help put some context around all of this for you, for me, and just for those of us that want to look back at some point in the future and try to figure out what was going on during this critical moment of Bitcoin's adoption. And while I don't know if I would say this is the biggest, we're going to start with number one, which is certainly the context and a factor that sets the stage for what we see going on right now. And I have to tip my hat to the chart sniffers. They were right. They looked at the bars and they said, actually, guys, historically, Bitcoin slides for as long as, you know, nine months after the happening.
OK, I doubt we're going to see it slide for that long, but there is a legitimate market adjustment that has to take place after the block reward is halved. I mean, for the miners, the revenue is cut in half. That has to get sorted out. There may have to be market consolidation or adjustments or changes, business strategy, strategy adjustments. So history doesn't always repeat when it comes to these things. But once again, Bitcoin does seem to be repeating history in this particular pattern. So, what we're about to get into means we're already primed for it, and that means that when the number two thing that just really begun to pick up steam this last week landed, things just started to slide, and that is the yen is in trouble.
And big money's freaked out about this. The third largest fiat currency in the world is having problems that will impact every market, including the U.S. Treasury market, which just about impacts everything else. And if you go look at the price chart, the yen looks like a dog coin having a crash. Well, it was. The yen popping yesterday after a suspected intervention from the Japanese government. This comes as the currency saw its weakest levels against the dollar since all the way back to 1990. Not good. Going back to the 90s, now that pop that she talks about, it's funny how the traditional market press covered this.
The yen sees a surge. The yen sees a pop. Well, that surge and pop is the Ministry of Finance injecting $35 billion into the system to keep things going for just a couple of days. Just a couple of days because they have no fix for the systemic issue. Japan is trying to slow the weakening yen trend, but I think they know full well they can't turn the trend. This is Rebecca Patterson. She's a former Bridgewater Associates chief investment strategist, so she seems to know her stuff. Just by intervening. They can spend a lot of money to try to slow it down, but that's all they're going to get.
To have a real turn in a currency, you need coordinated intervention. So you have to have several countries working together, ideally including the U.S. That sends a big signal. And you want policy moving in the same direction as the intervention. So in this case, if they want a stronger yen, they would need to be raising interest rates by a lot more than what's currently expected in the market. What's so important here is a multidimensionality of it. The simplistic media approach is what about the Fed? Forget about that. They have to worry about the entire Pacific Rim.
They're getting a free lunch right now with enhanced exports. Are you going there this summer, Paul? Everybody else is. Going where? Japan's the new destination. Oh, I know. Warren Buffett told me about it. I know. Tourism's a huge, huge. You can get a lot of sushi right now with your dollars. Yeah, a lot of sushi right now. But it's a problem. The yen is in trouble, and that is going to cause pressure all over the place, which brings us to our number three macro situation that some would argue is really the biggest deal of them all, and that is U.S. Treasury concerns. Now, it also kind of all mixes in. You see, if Japan has to raise rates, well, that's going to accelerate Japanese investors dumping U.S.
Treasuries to kind of make up that. So that means we're going to have more sellers than buyers for treasuries, which is already a problem that seems to be facing the U.S. Treasury market. That's not my opinion. That's the former Dallas Fed President Richard Fisher. No relation. The biggest problem right now, Joe, are the treasury auctions. Everything's been front loaded. Obviously, assuming rates might come down, if that's what Yellen was assuming. And here we are, you know, in the fives. That's expensive money. A year ago, a year and a half ago, it was 2%, 2%.
The cost of carry has gone up big time. That's an excellent point. We don't talk enough about that. Thank you, Becky. Hmm. I wonder, Becky, who could do something about that, Becky? Yeah, it is a big problem. It is a big problem. It's not getting very attractive and they're looking for buyers. So on May 1st, the long-awaited Treasury buyback program was announced. The Treasury is going to begin the long-teased buyback program on May 29th. Weekly liquidity support buybacks will be held of up to $2 billion in coupons, and buybacks will begin under a cap of 20 separate CUSIPs, 20 separate bond issues, and that cap will eventually be lifted.
So buybacks are going to begin with off-the-run treasuries starting May 29th. And what this is signaling, besides the fact that the treasury market's in serious trouble, is that, hey, starting on May 29th, so in less than a month from now, a whale's going to show up every single week and buy $2 billion worth of product. Right? And how do they do that? by issuing debt, of course. And so what do we have happening? One hand, the Federal Reserve is tightening, and the other hand, the Treasury is spending and injecting liquidity. So while the Federal Reserve is trying to reduce liquidity, the Treasury is trying to increase liquidity because they need the dollar to remain deep and liquid.
Otherwise, people will use other fiats in the dollar. Now, they write in the announcement, quote, this initiative aims to ensure the Treasury market remains the deepest and most liquid in the world, addressing concerns about market functions and resilience. That's what it all comes down to. But this will also probably lead to the dollar value going lower to relieve pressure for the yen, which probably is going to be good for Bitcoin long term. And as Lynn Alden noted, quote, the fact that the Treasury has to provide liquidity for what is supposed to be the most deep and liquid market in the world, and that serves as the world's reserve asset, is notable.
Yeah, I'd say it's notable. I'd say it's actually historical. This is something that we have seen them teasing for more than seven months. And when they first announced it, it was a sign of a truly sick system. Rich investors are watching this carefully and staying cautious. The number four headwind this week, we talked about it last week as it broke the Samurai indictment. On April 23rd, the co-founders of the Samurai wallet, a non-custodial Bitcoin wallet known for its privacy features like everybody loved and what got them in trouble. They were indicted by the Southern District of New York for opening a, quote, unlicensed money services business, which they refer to as an MSB, and for, quote, conspiring to commit money laundering.
This case marks a significant moment in the ongoing debate over financial privacy, and this is something everyone is watching. And it's also sort of a significant case just in the regulation of digital currencies. The legal classification of Samurai Wallet as an MSB, a money services business, sets a precedent for how similar non-custodial privacy tools might be viewed in the U.S. law. So the outcome of this could affect future cases and set precedents. And the key thing here being is that Samurai Wallet didn't take control of user funds. They were more like the USB cable that transfers data or a PAM that transfers heat, as the U.S. government argues.
This also goes against and counter to 2019 FinCEN guidance, which specifies that people exchanging money infrequently and not for profit are, quote, not regulated MSBs. So it seems to be there's a change perhaps because they feel like this is their moment to set precedent and then if they can execute this now they'll have something they can build on for years but what's happening is a chilling effect is rolling across the bitcoin industry, phoenix wallet which i think is one of the great wallets is out of the u.s, Earlier, WasabiWallet is out. TallyCoin retired. Untold number of plans for building things or wallets or re-architecting wallets have been put on hold.
The only good news in the Samurai Wallet stuff is the co-founder, Rodriguez, has pled not guilty and released on a $1 million bond, which he'll be able to stay out of jail for a while. So this case that we briefly touched on as it broke last week continues to have people reflect on the ramifications, which is chilling the market. Unfortunately, that's probably exactly what the feds wanted. Number five, the DOJ responds to Roman Storm's motion to dismiss the tornado cash charges. Yes, this happened this week. The DOJ's response freaked out many in the community. Now, you remember Tornado Cash, a smart contract for Ethereum privacy users, still running today.
Well, Roman Storm tried to have the entire thing thrown out. He had some good support behind it, some good reasoning. And government prosecutors now responded with a 111-page motion to the Tornado Cash co-founder, I should say, with his request. They say they're not having it. They charge Storm alongside his co-founder, who remains at large, with one count of conspiracy to commit money laundering and one count of conspiracy to violate the International Economic Emergency Powers Act, which carries a maximum sentence of 20 years in prison. Alongside a charge of conspiracy to operate, you guessed it, an unlicensed money-transmitting business, one of those MSBs, which also carries a maximum of five years in prison.
So 25, 45 years in prison here. So Storm files a motion to dismiss. He has some good technical arguments. They don't facilitate it. They don't hold the funds. They're not a money transmitter. The smart contract's still running today. But the government prosecution, led by U.S. attorney for the Southern District of New York, Damian Williams, wrote that 111-page response. He contests the characterization that Storm uses. And prosecutors argue that Tornado Cash, this is a quote, services caused all of these actions to take place behind the scenes without any further action by the customer. Under the ordinary meaning of the term, the Tornado Cash service was transferring funds when it executed customer deposits and withdraws in this way.
So what we have here are two cases, one directly related to Bitcoin and one tangentially related to Bitcoin. and it's in the cryptocurrency community. And in these cases, the government is saying that these developers, by creating this code that enabled this action, became money transmitter businesses. They standed up these services. They wrote that code. Now, the community is digesting that and seeing a wide range of responses to that, most of which I have to say are panic, especially that on social media. But if you read through the actual DOJ's response, which I have, In both cases, they don't really seem to be arguing that they are.
They're going close to it, but they're slightly, in my opinion, narrowing the focus and specifically saying, look at the way they advertised it or look what the things they said. They're backing it up with quotes or DMS or whatever it might be that they have from these people. I do agree with those that are saying we need to stay vigilant and we don't want a court precedent that does imply that writing this type of software creates a money-transmitting business. It would be very chilling for not just Bitcoin innovation, but just for financial innovation in general. Number six, the FBI released a PSA about not using KYC services that freaked out a bunch of services and wallet developers.
On April 25th, 2024, even though no one was asking and nothing came up, the FBI happened to release a public service announcement titled, quote, Alert on Cryptocurrency Money Services Businesses. And here's what the first paragraph reads in this public service announcement by the FBI. Aren't you don't you just feel like relieved that the FBI has your back and that they're making sure the more, you know. Quote, the FBI warns Americans against using cryptocurrency money transmitting services that are not registered as money services businesses. Again, MSBs, according to the United States federal law.
So anything that the U.S. federal law says is an MSB, you should, if they are acting like it, you should not use them. Does that make sense? So if the law says they should be an MSB, but they're not an MSB, then don't use them. And somehow you're supposed to know that. But the FBI has a shortcut for you. Since that's so confusing, they can't even honestly tell themselves if they're an MSB or not. They say, we recommend that you just avoid any services that don't do full KYC. Quote, avoid cryptocurrency money transmitting services that do not collect know your customer information for customers when required.
And then later in this PSA, they've got a line that implies you might lose your funds. They might have to steal your bag off of a service. You know, if you got coins on there, they might just have to take them during their legal actions. And that's just the way it is. Quote, people who use unlicensed cryptocurrency money transmitting services. Services, is this a new category, may encounter financial disruptions during law enforcement actions, especially if their cryptocurrency is intermingled with funds obtained through illegal means. Well, you better trace where every single coin you've ever got came from, because who knows if it's been intermingled?
You know, do you know if every dollar that you spend has been intermingled or every coin? Do you know that? How would you know that? No one knows that. And no one spends the time to look that up. These are ridiculous standards, and it does pose serious business risks to, I would say, operations that help facilitate lightning transactions. And it's something that's causing a lot of heartburn right now, like I said, in the quote-unquote industry. Number seven, won't someone think of the children? U.S. Senator Elizabeth Warren and Bill Cassidy have called for the Department of Justice and the Department of Homeland Security to redouble their efforts to stop the use of cryptocurrency to pay for child sexual abuse material online, a problem they claim has worsened.
Although I don't believe anything Elizabeth Warren says, but nonetheless came out in the last week. And a bonus round. The Fed is not cutting rates. So this is technically number eight. I'm throwing it in here. But no doubt some whales have been buying up Bitcoin, not because of its fundamental utility, not because it's the best asset, not because there's no second best, but because they expect the money printer to turn back on and simply pump their bags. Well, the federal funds rate has stayed at the same level since July of 2023. That's when the Fed last hiked rates. And today they announced they're staying where they're at for longer.
Many, especially the degens, expected rate cuts by now. So they have to internalize this new adjustment. Also, while we're just going for a few bonus rounds this week, fears of stagflation are rising. More reports of stagflation are coming out. The construction spending report came out, and construction is down. The employment cost index report came out, and the cost of employees is up. Consumer confidence report came out this week, and it's down. Employment is also hotter than expected, which the rich hate, because that means it's going to prolong rate cuts even more.
Whenever employment's hot, that means rate cuts are going to be further out, and that impacts the market too. All of that in just the last week. So I think the question is, what does all of this mean for Bitcoin? Bitcoin shows us how all of this is connected. So many idiots throw the word Ponzi scheme at Bitcoin. Meanwhile, they are living in one of the greatest Ponzi schemes ever constructed by humanity. But it's important for us to remember, in everything I just ran down, nothing has changed internally about Bitcoin. There has been no hack. There has been no major flaw discovered.
There has been no big outage. All of this going on is external to Bitcoin. The entire Western world is experiencing liquidity problems. And that impacts only one aspect of Bitcoin. The external aspect. The fiat price peg. That's what's been impacted, which means everything in Bitcoin remains fundamentally the same. Eventually, the price will correct. And Bitcoin, it's once again on sales. It's on sales. It's on sales for us plebs. That's what it means. The recent dumping we've seen in price, the drop in wallet creations that have happened recently, that's not because of some problem with Bitcoin.
That's what we have to remember. Remember, when everybody starts freaking out, the fundamental analysis remains the same. Music. Of the chilling effect, federal prosecutors are examining financial transactions at Block, the owner of Cash App and Square. Internal documents indicate the Block-processed crypto transactions for terrorist groups and Square-processed transactions involving nations subject to economic arbitrary sanctions. Federal prosecutors are digging into internal practices at Block, which of course is the technology firm launched by the Twitter co-founder Jack Dorsey. This all comes out, allegedly, because an internal whistleblower told the feds that they didn't have enough controls and good enough KYC inside Block's applications.
The former employee provided prosecutors from the Southern District of New York documents that they say show these insufficient information controls and insufficient information collected by Square. Roughly 100 pages of documents by the former employee were provided to NBC News, and NBC News has verified this. It seems that many of the amounts are very small dollar amounts involving entities and countries that appear to be subject to U.S. sanctions and restrictions like Cuba, Iran, Russia, Venezuela, just as recently as last year. And that, too, along with Roger Ver, getting arrested in spain for selling bitcoin that he supposedly didn't fully account for when he exited the united states these are not direct chilling effects but people are watching people notice i think it does kind of have an effect i don't know um.
How do you feel when companies like Square get investigated or when Elizabeth Warren comes out? Does it hamper your enthusiasm? I doubt it. I doubt it does. But I bet you could understand why investors who don't truly understand what Bitcoin is, but just think it's a way to make a quick buck, why they start to panic. Put all that together. I think that's where we're at right now. All right, standby. Coming up on the show, your boosts and one heck of a clip of the week. You're not going to believe this thing. But first, I want to thank Podhome.fm, my sponsor, and I think the best podcasting 2.0 platform.
It's my hosting platform of choice with unlimited shows and episodes powered by unlimited Podhome AI. They have tools that will balance your audio, transcribe your podcast, automatically create chapters, clips, and they'll even suggest episodes and title descriptions. It's easy to go live, too, if you want to do a little podcasting 2.0 streaming or do some value for value music. And new features have just rolled out for Clips and Chapters, a new beautiful visual audio helper, a new transcript editor, a beautiful way to just note things right there in the browser, super quick, make a marker and go.
That's what Podhome FM is all about. If you use the promo code TWIB, you'll get the first three months for free. That's a great deal and you can really kick the tires. Podhome FM, TWIB. Music. We got some boosts this week. Our first one is a baller boost from Wise Hoddle coming in at 34,567 sats. That's a great show. I can't remember what I was doing last having exactly, but this last Epoch has been an amazing journey. And zooming out, I'm doing way better than I was then. Looking forward to saying the same thing next happening. I hope so, sir. You know, before I move on from your boost, something that I've thought about is how much better is an Epoch goal than like a New Year's resolution?
Resolution. Four years is a real chunk of time to actually execute change in your life. And so I am starting to like the idea of measuring things in four-year increments at the happening as a way, as a reflection point and a point to reorient and goal, but to be able to actually commit to real life changing things over a four-year period, not just like some silly one-year new resolution. I guess as I get a bit older and I got more things going on in life, It takes more time to turn the ship, I think. And so I love that sentiment, wise hodl. I think that's, well, if you will, very wise. And I see that Spaceballs boost in there, too. So the combination is 1, 2, 3, 4, 5.
That's the stupidest combination I ever heard in my life. And he sent a row of McDucks, too, 22,222 sats. This old duck still got it. I have my Bitcoin tech stack fairly set in stone, but I appreciate the recommendations for new users. It's good to know what I can recommend to others. Yeah, I think that's great. I love that idea of still being open to new implementations for other folks, but finding something that works for you long term. Bitcoin lizards way up there in the baller boost this week, too, with 25,000 sats. I hoard that which all kind covet.
He writes from Podverse, I have no interest in what I believe are imaginary rare sats. I asked if you'd buy a Satoshi sat, like one of Satoshi's actual sats. I would, however, love to get my hands on the under-reamed Caucasian coin. I'm so awful. These are physical. Oh, oh, oh, these physical Bitcoin representations from the early on in Bitcoin history. The Caucasus coin, right? No, that wasn't it. What was it called? Gosh, I can't remember the name. Unfortunately, the denominations are one Bitcoin and higher, and the coins carry a premium to spot. I wonder if I can find this right now.
So that's a physical thing you'd be willing to spend a little extra on, even though back in the day they were pegged to one Bitcoin. I don't know that to me actually feels less appealing because then it's something I could lose, The nice thing about digital is that I can always restore it with a seed phrase. But that's an, you know what, Lizard? I had completely forgotten about those. And if I could remember the name of them, I'd love to find a picture of that. Thank you, sir, for the boost. I really appreciate it. No second best comes in with 5,555 sets. B-O-O-S-T.
You were on top of that Samurai Waltz story. The first place I heard of it was from you. Thank you very much, sir. And he says boost. B-O-O-S-T. Dang right. Right. Thank you. Appreciate that. Faraday Fedora sends in a row of ducks. 2,222 sats. I see these special sats as kind of like old quarters that are worth more than a current quarter. Hmm. Hmm. Yeah, you know, I hadn't even made that connection. You know, that, if anything, is the proof that this isn't going away. Is that there always are people out there that, even like with U.S. Quarter, which is technically worth less, They'll pay more for it.
I don't know how I like... I don't think I like that is what I'm saying. The more I talk about this issue, the more I just think one sat should equal one sat. But I realize how much we are not walking this back. I just think, yeah, Faraday Fedora, you got me there. Of course, if we're doing it with quarters, we're going to do it with sats. Anonymous comes in with 8,976 sats. Coming in hot with the boost. I was sad to hear about Samurai. It was a useful privacy tool. After the show, I opened up Samurai Wallet and discovered that I couldn't even show my balance. Seems the DOJ sees Samurai's infrastructure rendering their wallet non-functional in the absence of a self-hosted backend like the Samurai Dojo.
So, a PSA for anyone else in this situation. You can easily regain access to your funds by importing your Samurai Wallet into the Sparrow Wallet. In Sparrow, select File, Import Wallet, then choose the BIP39 option. Input your 12 seed words. If you lost the seed words in the Samurai app, you can tell it how to show them to you in the settings view. After inputting these words, be sure to tick the quote use passphrase box and input the passphrase which was specified when Samurai Wallet was created. Passphrases are optional in BIP39, but Samurai Wallet UI unconditionally asks for one when a wallet is created.
So it is necessary to provide it to Sparrow or the import will fail. Unlike seed words, the Samurai app cannot show the passphrase. So hopefully you wrote it down or remember it. You could instead import to another wallet that supports BIP-39 passphrases, but Sparrow Wallet has the advantage that it is a Samurai Whirlpool client, so it understands the structure of the Samurai Wallet from which it is derived. That is a great tip. Thank you very much. Boost! That's a great boost. I had read that online, but I had not planned to put that in the show just because it was, Well, it seemed like a thick thing to go through, but you did a great breakdown there.
It's really about the fact that you can import your old Samurai wallet into Sparrow wallet and that we'll understand the structure of the Samurai wallet. That seems like a huge win. Sparrow is really great too. So it's a recommendation anyways. Even if you weren't going to make a migration and you just wanted to start fresh, I would recommend Sparrow. Jordan Bravo comes in with a suspicious 6,666 sats. I am programmed in multiple techniques. That's because he sent 3,333 sats twice and said I'd never pay for more than one sat for a sat. There's no such thing as rare Satoshis.
I think I agree other than obviously than people are doing it. He says ordinal theory is a complete fiction projected onto Bitcoin. Agree with that. It's a game played by those who choose to participate in it, but it doesn't actually exist in the Bitcoin protocol. I agree with all of that. Doesn't mean they won't do it. He also sent his current software stack. He says, I buy non-KYC on RoboSats. I use Strike to send that fiat to the seller. Then I receive the sats in my Phoenix wallet. Uh-oh. Oh, no. Oh, no. What are you doing about Phoenix wallet? I repeat this until the amount in Phoenix gets to a certain size, at which point I swap into a cold storage multisig, which I use Sparrow wallet to manage. That is brilliant.
Minimizes on-chain fees. Nice and secure. I like all of that except for Phoenix wallets on the out. So I'm curious what you're going to replace. Are you going to try a Zeus wallet? I think it's pretty good. Jin from Matik comes in with 2,000 cents. Hi, Chris. Thank you for another great episode. I started with a paper wallet last year, and to me, I still think it's... Oh, he says, I still... I started with a paper wallet last year, and to me, it's still a think, because you have border wallets, borderwallets.com. After explaining your Bulletproof Stacker self-custody guide last week, what would be your take on this guide?
You know, the Border Wallets idea is brilliant. I don't have time to go into it right now, but I do think Border Wallets is something people should look into. There's also, he points out, Bitcoiner.guide with tons of resources on Bitcoin to discover. That's Bitcoiner.guide and BorderWallets.com. Border Wallets is a really neat idea. It's a way to quickly and reliably memorize your Bitcoin seed phrase so you can cross the border with all of your money in your head. Which, how are they going to stop that? How are they going to stop that?
Oppie1984 comes in with 4,000 sats. I have been told paper wallets are unsafe, but I just prefer to trust something I created on a permanently air-gapped machine. I just can't feel secure with a hardware and software wallet. Just because I'm paranoid doesn't mean they're not out to steal my Bitcoin. coin. I'd asked him last week if he was how he felt about paper wallets. I agree with you there. The way I like to think about my wallet security is you want to get it right, but you don't want to overdo it so that you never actually take action. And when you're building towards your ultimate wallet security, you want to think about what you would do to protect something that's worth millions of dollars one day.
When Bitcoin is worth a lot of money, the incentives for everybody around you are going to change. So that's just something to keep in mind. And who you tell today might not concern you, but in 10 years, you might have a different feeling about that. So these things when I'm designing my Bitcoin wallet security are also things I take into consideration. But I hesitate to overemphasize that because I don't want to scare people away. From self-custody. Anything's better than nothing, really. Halleck comes in with 10,000 sats. It's over 9,000! I wouldn't pay for a rare sat, but people will. It's human nature.
People are going to do degen things with money, but I would like to hear more about how it hurts us when they do. We all know scaling solutions are needed, so aren't they ultimately pushing us where we need to go? Halleck, that's a take that some people argue. I think the other side is that non-monetary uses of the Bitcoin network are immoral. I'd love to know where people fall on that. I think it's a good question. Dexord comes in with 4,567 sats and says, I am boosting for the show. Well, thank you very much. Keep the change, you filthy animal. On rare sats, while I don't particularly like to compare Bitcoin to fiat, humans love rare coins, bills, etc.
A rare quarter is, well, worth more than a quarter. A rare sat is going to be worth more than a regular sat. If anything, it's more proof that the true acceptance of Bitcoin coin as a global currency. Hmm. Hmm. I'd love you to expand on that a little bit if you wouldn't mind. Adversary 17's back again with 2,000 sats. Boost! No, I would not trade for uneven sat amounts. I like that, uneven sat amounts. They're all worth the same to me, and really to the Bitcoin network. One equals one. You know what? Nailed it. Crashmaster comes in with Spaceballs Boost. One, two, three, four, five. Yes. That's amazing. I've got the same combination on my luggage. I think Episode 8 was the best yet, Chris.
Great, tight coverage of Bitcoin news, mainstream media narratives, and software stacks, with an added bonus of a nice how-to. Occasionally, if you could cover mining news and software stacks, you have a winner. I know you need a certain scale to mine efficiently, but that might be a good topic as well. Many of us do a lot of uneconomical things just for fun. Crashmaster, are you mining at home just for fun? That's what I take from that. You know, I've got an old S9 in a box that I'm thinking about maybe hooking up if I get cheap power somewhere that, you know, I don't feel guilty about because I just want to add some hash.
You know, I just want to add some hash. And if I got lucky, I don't know. I saw a post this morning that looked back at the last six years and about once a year or so, some lone rando, you know, gets a block reward. So maybe that could be you. What? I wonder where I could get more information on that. Mining is definitely an area I'd love to dig into more, and it's an area I would love to hear more from the audience. What are you doing with mining, if anything? Maybe nothing. But I have also felt like perhaps I should get into it, even if I didn't do it for profit, if I just did it for the experience, if I just did it, I don't know, to get back into the network to computing, which is kind of what got me into it a long time ago.
I was, I mean, what brought me into Bitcoin originally was mining. And then I just kind of went from there. Mega Strike 3 comes in with 7,777 sats. Tough little ship. Little. Thanks for your explanation about your stacking methodology. I have a question, though. How does running a lightning node play into this? Since lightning nodes need inbound and outbound channels, are nodes more for using sats than stacking sats? You don't really need a lightning node in your stacking setup. And you've got to remember, to have a lightning node, you have to have channels. To open up channels, you need to have funds to put in those channels.
Sats to put in those channels. You could absolutely use a Lightning node to move funds around to make your transactions more private, especially if it's on your own node, but you wouldn't so much use it for stacking. And the fees that you'd generate from the Lightning network probably aren't going to amount to much on a small node these days. So I think that's where something like the Aqua Wallet comes in nice, because you can take advantage of the Lightning network without having to stand up a node, because you're just doing a quick peg into liquid, peg out of liquid. And they do Lightning swaps for that.
Running your own node is a good idea for a lot of reasons, but stacking over Lightning is probably not one of them. Probably not, although I'd be totally willing to have anybody else's opinions or thoughts on that if you feel differently. And our last boost that goes on air this week comes from Torped, 5,150 sats. This is the way. Wouldn't trampoline payments help alleviate the title of money transmitter off of all Lightning nodes? nodes. So trampoline payments are a way of moving funds between nodes as kind of like a relay. It does increase fees, but it also increases privacy.
I don't know if they're very economical. And I don't think that solves the problem of being a money transmitter so much, because the issue that the government seems to be putting forward is that if you make the infrastructure and code available, you're essentially a money transmitter business, a money services business, an MSB, as they put it. Not an MTB, but an MSB. And that, I think, balloon, I should say balloon, trampoline payments would not solve. It would cover up some of the source and destinations. It's an interesting technology. I don't think it solves the case that the federal government, the DOJ, is making.
At least in my opinion, I would love to be wrong about that, but unfortunately, I don't think I am. Good technology, though. Thank you, everybody who boosted in. We had 24 boosters. Not bad at all, really. Nice to hear from all of you. I have a 2,000-sat cutoff just to kind of keep it tighter on air, but I really do appreciate it. We stacked 136,184 sats. Thank you very much. And here's something for your trouble. There you go. You get a little sonic ding for your troubles. Appreciate everybody who boosted in. If you would like to boost in, all you got to do, get a new podcast app, podcastapps.com.
Something like Fountain or Podverse, Cast-O-Matic. Fountain has easy integration with Strike if you're already going that route. Something to definitely check out. Music. Okay, our last clip of the week's a doozy. If you have stuck with me this long, you have earned it. I'm about to play for you the godmother of modern monetary theory. And she's going to explain to you why it is childish to expect that a government would have budgetary constraints of a household or a business. We live in the future where we have MMT, baby. Economics is widely known as the dismal science, right? Right.
Because you've got to get better branding. Well, that's what MMT is trying to do. Better branding. Because, you know, in the dismal science, it's all about scarcity. And we can never have the things that we want because there's always this really intrusive problem, which is how are you going to pay for it? Where is the money going to come from? Yeah, it's so hard when you have limits and actual resources that are tied to real world things and that you have constraints on what you can actually do. You can't have nice things like endless wars and you can't have nice things like crazy government programs that are rife with corruption.
So you need unlimited money that isn't tied to anything scarce, clearly. Of the things that we want, because there's always this really intrusive problem, which is how are you going to pay for it? Where is the money going to come from? And the problem is that we treat money like just any other scarce good or service in the economy. And what MMT is doing is saying, hold on a second, we're not on a gold standard anymore. We have this thing called a fiat currency. And it does make people nervous because a fiat currency sort of opens up space. And it's kind of like, wait, is money real after all?
It opens up space and it's like, wait, is money real after all? That's that's her explanation of why people are concerned about Fiat. This is the woman. This is the the godmother, as they say, of MMT. And this is how she explains Fiat. You can tell what I think is actually interesting is that she even has to address that people are aware of what Fiat is and have concerns about Fiat. That's relatively new. And now she has to deal with that. But that's that's not the part that's really, really making this a doozy of a clip. Currency sort of opens up space and it's kind of like, wait, is money real after all?
And so MMT is an economic framework that tries to have an honest conversation, that talks to people like grownups, not insulting people by telling them that you have to treat the government's budget like a household budget and speaking down to people. But we want to be honest about the monetary system we have today, the capacities of the government to spend when you have a fiat currency and you're not tying your currency to gold and promising to convert into something that you could run out of like physical gold. So we're opening up a conversation where there are still limits and you still have to make choices.
But we can have an adult conversation about how the government can actually operate its budget when it doesn't face the same kinds of constraints that a household or a business face. I just feel so childish now thinking that my government should have had to follow constraints and have a balanced budget. I should have remembered that they can just print money and it has absolutely zero ramifications. There's no problems at all. I better go back and just undo the whole top of the show that laid out the seven things that are causing us problems this week that just happened in one week.
I should probably just go delete all of that, cut all that out from the show. I am so grateful that Stephanie set me straight. Stephanie Kilton is her name. She was on The Daily Show, and she was making the case for MMT and why governments should not have to have the same financial constraints of businesses and households. And if you think otherwise, well, that's just childish. I'll put a link to that in the show notes if you'd like to get it for yourself. Maybe you listen to it again and just shake your head. That'll be over at thisweekinbitcoin.show along with all of the previous shows.
Please do boost in. Let me know what you like, didn't like, or would you like to hear more of in the show or any responses or thoughts on anything I talked about today. I'd love for this to be the number one Bitcoin news podcast for the JB audience, for the podcasting 2.0 community, et cetera. And one of the ways you can do that is by boosting because it helps us get discovered on the fountain charts. Every boost goes up there to just click, click, click up that chart and helps others discover it when they go search. I really appreciate that. Thank you so much for joining me. I'm going to wrap it up today with a value for value song.
If you boost in during the song, your sats go to support the track directly. And this week it's self-destruct. Music.
Music. Welcome in to This Week in Bitcoin, Episode 9. I know it. It's been a crazy week. I've gotten several notes from you, and I have to say I agree. There's more going on in the last seven days than I've seen in a long time. And I think I've isolated it down to seven major events that have landed in just the last seven days or so that are putting downward pressure, I should say aggressive downward pressure as we record, court on Bitcoin's short-term price and adding long-term risk to the quote-unquote Bitcoin industry and the potential legal precedent that could be getting set very soon and, signals coming from the federal government.
So I'll break these seven events down as we get into this week's episode to try to help put some context around all of this for you, for me, and just for those of us that want to look back at some point in the future and try to figure out what was going on during this critical moment of Bitcoin's adoption. And while I don't know if I would say this is the biggest, we're going to start with number one, which is certainly the context and a factor that sets the stage for what we see going on right now. And I have to tip my hat to the chart sniffers. They were right. They looked at the bars and they said, actually, guys, historically, Bitcoin slides for as long as, you know, nine months after the happening.
OK, I doubt we're going to see it slide for that long, but there is a legitimate market adjustment that has to take place after the block reward is halved. I mean, for the miners, the revenue is cut in half. That has to get sorted out. There may have to be market consolidation or adjustments or changes, business strategy, strategy adjustments. So history doesn't always repeat when it comes to these things. But once again, Bitcoin does seem to be repeating history in this particular pattern. So, what we're about to get into means we're already primed for it, and that means that when the number two thing that just really begun to pick up steam this last week landed, things just started to slide, and that is the yen is in trouble.
And big money's freaked out about this. The third largest fiat currency in the world is having problems that will impact every market, including the U.S. Treasury market, which just about impacts everything else. And if you go look at the price chart, the yen looks like a dog coin having a crash. Well, it was. The yen popping yesterday after a suspected intervention from the Japanese government. This comes as the currency saw its weakest levels against the dollar since all the way back to 1990. Not good. Going back to the 90s, now that pop that she talks about, it's funny how the traditional market press covered this.
The yen sees a surge. The yen sees a pop. Well, that surge and pop is the Ministry of Finance injecting $35 billion into the system to keep things going for just a couple of days. Just a couple of days because they have no fix for the systemic issue. Japan is trying to slow the weakening yen trend, but I think they know full well they can't turn the trend. This is Rebecca Patterson. She's a former Bridgewater Associates chief investment strategist, so she seems to know her stuff. Just by intervening. They can spend a lot of money to try to slow it down, but that's all they're going to get.
To have a real turn in a currency, you need coordinated intervention. So you have to have several countries working together, ideally including the U.S. That sends a big signal. And you want policy moving in the same direction as the intervention. So in this case, if they want a stronger yen, they would need to be raising interest rates by a lot more than what's currently expected in the market. What's so important here is a multidimensionality of it. The simplistic media approach is what about the Fed? Forget about that. They have to worry about the entire Pacific Rim.
They're getting a free lunch right now with enhanced exports. Are you going there this summer, Paul? Everybody else is. Going where? Japan's the new destination. Oh, I know. Warren Buffett told me about it. I know. Tourism's a huge, huge. You can get a lot of sushi right now with your dollars. Yeah, a lot of sushi right now. But it's a problem. The yen is in trouble, and that is going to cause pressure all over the place, which brings us to our number three macro situation that some would argue is really the biggest deal of them all, and that is U.S. Treasury concerns. Now, it also kind of all mixes in. You see, if Japan has to raise rates, well, that's going to accelerate Japanese investors dumping U.S.
Treasuries to kind of make up that. So that means we're going to have more sellers than buyers for treasuries, which is already a problem that seems to be facing the U.S. Treasury market. That's not my opinion. That's the former Dallas Fed President Richard Fisher. No relation. The biggest problem right now, Joe, are the treasury auctions. Everything's been front loaded. Obviously, assuming rates might come down, if that's what Yellen was assuming. And here we are, you know, in the fives. That's expensive money. A year ago, a year and a half ago, it was 2%, 2%.
The cost of carry has gone up big time. That's an excellent point. We don't talk enough about that. Thank you, Becky. Hmm. I wonder, Becky, who could do something about that, Becky? Yeah, it is a big problem. It is a big problem. It's not getting very attractive and they're looking for buyers. So on May 1st, the long-awaited Treasury buyback program was announced. The Treasury is going to begin the long-teased buyback program on May 29th. Weekly liquidity support buybacks will be held of up to $2 billion in coupons, and buybacks will begin under a cap of 20 separate CUSIPs, 20 separate bond issues, and that cap will eventually be lifted.
So buybacks are going to begin with off-the-run treasuries starting May 29th. And what this is signaling, besides the fact that the treasury market's in serious trouble, is that, hey, starting on May 29th, so in less than a month from now, a whale's going to show up every single week and buy $2 billion worth of product. Right? And how do they do that? by issuing debt, of course. And so what do we have happening? One hand, the Federal Reserve is tightening, and the other hand, the Treasury is spending and injecting liquidity. So while the Federal Reserve is trying to reduce liquidity, the Treasury is trying to increase liquidity because they need the dollar to remain deep and liquid.
Otherwise, people will use other fiats in the dollar. Now, they write in the announcement, quote, this initiative aims to ensure the Treasury market remains the deepest and most liquid in the world, addressing concerns about market functions and resilience. That's what it all comes down to. But this will also probably lead to the dollar value going lower to relieve pressure for the yen, which probably is going to be good for Bitcoin long term. And as Lynn Alden noted, quote, the fact that the Treasury has to provide liquidity for what is supposed to be the most deep and liquid market in the world, and that serves as the world's reserve asset, is notable.
Yeah, I'd say it's notable. I'd say it's actually historical. This is something that we have seen them teasing for more than seven months. And when they first announced it, it was a sign of a truly sick system. Rich investors are watching this carefully and staying cautious. The number four headwind this week, we talked about it last week as it broke the Samurai indictment. On April 23rd, the co-founders of the Samurai wallet, a non-custodial Bitcoin wallet known for its privacy features like everybody loved and what got them in trouble. They were indicted by the Southern District of New York for opening a, quote, unlicensed money services business, which they refer to as an MSB, and for, quote, conspiring to commit money laundering.
This case marks a significant moment in the ongoing debate over financial privacy, and this is something everyone is watching. And it's also sort of a significant case just in the regulation of digital currencies. The legal classification of Samurai Wallet as an MSB, a money services business, sets a precedent for how similar non-custodial privacy tools might be viewed in the U.S. law. So the outcome of this could affect future cases and set precedents. And the key thing here being is that Samurai Wallet didn't take control of user funds. They were more like the USB cable that transfers data or a PAM that transfers heat, as the U.S. government argues.
This also goes against and counter to 2019 FinCEN guidance, which specifies that people exchanging money infrequently and not for profit are, quote, not regulated MSBs. So it seems to be there's a change perhaps because they feel like this is their moment to set precedent and then if they can execute this now they'll have something they can build on for years but what's happening is a chilling effect is rolling across the bitcoin industry, phoenix wallet which i think is one of the great wallets is out of the u.s, Earlier, WasabiWallet is out. TallyCoin retired. Untold number of plans for building things or wallets or re-architecting wallets have been put on hold.
The only good news in the Samurai Wallet stuff is the co-founder, Rodriguez, has pled not guilty and released on a $1 million bond, which he'll be able to stay out of jail for a while. So this case that we briefly touched on as it broke last week continues to have people reflect on the ramifications, which is chilling the market. Unfortunately, that's probably exactly what the feds wanted. Number five, the DOJ responds to Roman Storm's motion to dismiss the tornado cash charges. Yes, this happened this week. The DOJ's response freaked out many in the community. Now, you remember Tornado Cash, a smart contract for Ethereum privacy users, still running today.
Well, Roman Storm tried to have the entire thing thrown out. He had some good support behind it, some good reasoning. And government prosecutors now responded with a 111-page motion to the Tornado Cash co-founder, I should say, with his request. They say they're not having it. They charge Storm alongside his co-founder, who remains at large, with one count of conspiracy to commit money laundering and one count of conspiracy to violate the International Economic Emergency Powers Act, which carries a maximum sentence of 20 years in prison. Alongside a charge of conspiracy to operate, you guessed it, an unlicensed money-transmitting business, one of those MSBs, which also carries a maximum of five years in prison.
So 25, 45 years in prison here. So Storm files a motion to dismiss. He has some good technical arguments. They don't facilitate it. They don't hold the funds. They're not a money transmitter. The smart contract's still running today. But the government prosecution, led by U.S. attorney for the Southern District of New York, Damian Williams, wrote that 111-page response. He contests the characterization that Storm uses. And prosecutors argue that Tornado Cash, this is a quote, services caused all of these actions to take place behind the scenes without any further action by the customer. Under the ordinary meaning of the term, the Tornado Cash service was transferring funds when it executed customer deposits and withdraws in this way.
So what we have here are two cases, one directly related to Bitcoin and one tangentially related to Bitcoin. and it's in the cryptocurrency community. And in these cases, the government is saying that these developers, by creating this code that enabled this action, became money transmitter businesses. They standed up these services. They wrote that code. Now, the community is digesting that and seeing a wide range of responses to that, most of which I have to say are panic, especially that on social media. But if you read through the actual DOJ's response, which I have, In both cases, they don't really seem to be arguing that they are.
They're going close to it, but they're slightly, in my opinion, narrowing the focus and specifically saying, look at the way they advertised it or look what the things they said. They're backing it up with quotes or DMS or whatever it might be that they have from these people. I do agree with those that are saying we need to stay vigilant and we don't want a court precedent that does imply that writing this type of software creates a money-transmitting business. It would be very chilling for not just Bitcoin innovation, but just for financial innovation in general. Number six, the FBI released a PSA about not using KYC services that freaked out a bunch of services and wallet developers.
On April 25th, 2024, even though no one was asking and nothing came up, the FBI happened to release a public service announcement titled, quote, Alert on Cryptocurrency Money Services Businesses. And here's what the first paragraph reads in this public service announcement by the FBI. Aren't you don't you just feel like relieved that the FBI has your back and that they're making sure the more, you know. Quote, the FBI warns Americans against using cryptocurrency money transmitting services that are not registered as money services businesses. Again, MSBs, according to the United States federal law.
So anything that the U.S. federal law says is an MSB, you should, if they are acting like it, you should not use them. Does that make sense? So if the law says they should be an MSB, but they're not an MSB, then don't use them. And somehow you're supposed to know that. But the FBI has a shortcut for you. Since that's so confusing, they can't even honestly tell themselves if they're an MSB or not. They say, we recommend that you just avoid any services that don't do full KYC. Quote, avoid cryptocurrency money transmitting services that do not collect know your customer information for customers when required.
And then later in this PSA, they've got a line that implies you might lose your funds. They might have to steal your bag off of a service. You know, if you got coins on there, they might just have to take them during their legal actions. And that's just the way it is. Quote, people who use unlicensed cryptocurrency money transmitting services. Services, is this a new category, may encounter financial disruptions during law enforcement actions, especially if their cryptocurrency is intermingled with funds obtained through illegal means. Well, you better trace where every single coin you've ever got came from, because who knows if it's been intermingled?
You know, do you know if every dollar that you spend has been intermingled or every coin? Do you know that? How would you know that? No one knows that. And no one spends the time to look that up. These are ridiculous standards, and it does pose serious business risks to, I would say, operations that help facilitate lightning transactions. And it's something that's causing a lot of heartburn right now, like I said, in the quote-unquote industry. Number seven, won't someone think of the children? U.S. Senator Elizabeth Warren and Bill Cassidy have called for the Department of Justice and the Department of Homeland Security to redouble their efforts to stop the use of cryptocurrency to pay for child sexual abuse material online, a problem they claim has worsened.
Although I don't believe anything Elizabeth Warren says, but nonetheless came out in the last week. And a bonus round. The Fed is not cutting rates. So this is technically number eight. I'm throwing it in here. But no doubt some whales have been buying up Bitcoin, not because of its fundamental utility, not because it's the best asset, not because there's no second best, but because they expect the money printer to turn back on and simply pump their bags. Well, the federal funds rate has stayed at the same level since July of 2023. That's when the Fed last hiked rates. And today they announced they're staying where they're at for longer.
Many, especially the degens, expected rate cuts by now. So they have to internalize this new adjustment. Also, while we're just going for a few bonus rounds this week, fears of stagflation are rising. More reports of stagflation are coming out. The construction spending report came out, and construction is down. The employment cost index report came out, and the cost of employees is up. Consumer confidence report came out this week, and it's down. Employment is also hotter than expected, which the rich hate, because that means it's going to prolong rate cuts even more.
Whenever employment's hot, that means rate cuts are going to be further out, and that impacts the market too. All of that in just the last week. So I think the question is, what does all of this mean for Bitcoin? Bitcoin shows us how all of this is connected. So many idiots throw the word Ponzi scheme at Bitcoin. Meanwhile, they are living in one of the greatest Ponzi schemes ever constructed by humanity. But it's important for us to remember, in everything I just ran down, nothing has changed internally about Bitcoin. There has been no hack. There has been no major flaw discovered.
There has been no big outage. All of this going on is external to Bitcoin. The entire Western world is experiencing liquidity problems. And that impacts only one aspect of Bitcoin. The external aspect. The fiat price peg. That's what's been impacted, which means everything in Bitcoin remains fundamentally the same. Eventually, the price will correct. And Bitcoin, it's once again on sales. It's on sales. It's on sales for us plebs. That's what it means. The recent dumping we've seen in price, the drop in wallet creations that have happened recently, that's not because of some problem with Bitcoin.
That's what we have to remember. Remember, when everybody starts freaking out, the fundamental analysis remains the same. Music. Of the chilling effect, federal prosecutors are examining financial transactions at Block, the owner of Cash App and Square. Internal documents indicate the Block-processed crypto transactions for terrorist groups and Square-processed transactions involving nations subject to economic arbitrary sanctions. Federal prosecutors are digging into internal practices at Block, which of course is the technology firm launched by the Twitter co-founder Jack Dorsey. This all comes out, allegedly, because an internal whistleblower told the feds that they didn't have enough controls and good enough KYC inside Block's applications.
The former employee provided prosecutors from the Southern District of New York documents that they say show these insufficient information controls and insufficient information collected by Square. Roughly 100 pages of documents by the former employee were provided to NBC News, and NBC News has verified this. It seems that many of the amounts are very small dollar amounts involving entities and countries that appear to be subject to U.S. sanctions and restrictions like Cuba, Iran, Russia, Venezuela, just as recently as last year. And that, too, along with Roger Ver, getting arrested in spain for selling bitcoin that he supposedly didn't fully account for when he exited the united states these are not direct chilling effects but people are watching people notice i think it does kind of have an effect i don't know um.
How do you feel when companies like Square get investigated or when Elizabeth Warren comes out? Does it hamper your enthusiasm? I doubt it. I doubt it does. But I bet you could understand why investors who don't truly understand what Bitcoin is, but just think it's a way to make a quick buck, why they start to panic. Put all that together. I think that's where we're at right now. All right, standby. Coming up on the show, your boosts and one heck of a clip of the week. You're not going to believe this thing. But first, I want to thank Podhome.fm, my sponsor, and I think the best podcasting 2.0 platform.
It's my hosting platform of choice with unlimited shows and episodes powered by unlimited Podhome AI. They have tools that will balance your audio, transcribe your podcast, automatically create chapters, clips, and they'll even suggest episodes and title descriptions. It's easy to go live, too, if you want to do a little podcasting 2.0 streaming or do some value for value music. And new features have just rolled out for Clips and Chapters, a new beautiful visual audio helper, a new transcript editor, a beautiful way to just note things right there in the browser, super quick, make a marker and go.
That's what Podhome FM is all about. If you use the promo code TWIB, you'll get the first three months for free. That's a great deal and you can really kick the tires. Podhome FM, TWIB. Music. We got some boosts this week. Our first one is a baller boost from Wise Hoddle coming in at 34,567 sats. That's a great show. I can't remember what I was doing last having exactly, but this last Epoch has been an amazing journey. And zooming out, I'm doing way better than I was then. Looking forward to saying the same thing next happening. I hope so, sir. You know, before I move on from your boost, something that I've thought about is how much better is an Epoch goal than like a New Year's resolution?
Resolution. Four years is a real chunk of time to actually execute change in your life. And so I am starting to like the idea of measuring things in four-year increments at the happening as a way, as a reflection point and a point to reorient and goal, but to be able to actually commit to real life changing things over a four-year period, not just like some silly one-year new resolution. I guess as I get a bit older and I got more things going on in life, It takes more time to turn the ship, I think. And so I love that sentiment, wise hodl. I think that's, well, if you will, very wise. And I see that Spaceballs boost in there, too. So the combination is 1, 2, 3, 4, 5.
That's the stupidest combination I ever heard in my life. And he sent a row of McDucks, too, 22,222 sats. This old duck still got it. I have my Bitcoin tech stack fairly set in stone, but I appreciate the recommendations for new users. It's good to know what I can recommend to others. Yeah, I think that's great. I love that idea of still being open to new implementations for other folks, but finding something that works for you long term. Bitcoin lizards way up there in the baller boost this week, too, with 25,000 sats. I hoard that which all kind covet.
He writes from Podverse, I have no interest in what I believe are imaginary rare sats. I asked if you'd buy a Satoshi sat, like one of Satoshi's actual sats. I would, however, love to get my hands on the under-reamed Caucasian coin. I'm so awful. These are physical. Oh, oh, oh, these physical Bitcoin representations from the early on in Bitcoin history. The Caucasus coin, right? No, that wasn't it. What was it called? Gosh, I can't remember the name. Unfortunately, the denominations are one Bitcoin and higher, and the coins carry a premium to spot. I wonder if I can find this right now.
So that's a physical thing you'd be willing to spend a little extra on, even though back in the day they were pegged to one Bitcoin. I don't know that to me actually feels less appealing because then it's something I could lose, The nice thing about digital is that I can always restore it with a seed phrase. But that's an, you know what, Lizard? I had completely forgotten about those. And if I could remember the name of them, I'd love to find a picture of that. Thank you, sir, for the boost. I really appreciate it. No second best comes in with 5,555 sets. B-O-O-S-T.
You were on top of that Samurai Waltz story. The first place I heard of it was from you. Thank you very much, sir. And he says boost. B-O-O-S-T. Dang right. Right. Thank you. Appreciate that. Faraday Fedora sends in a row of ducks. 2,222 sats. I see these special sats as kind of like old quarters that are worth more than a current quarter. Hmm. Hmm. Yeah, you know, I hadn't even made that connection. You know, that, if anything, is the proof that this isn't going away. Is that there always are people out there that, even like with U.S. Quarter, which is technically worth less, They'll pay more for it.
I don't know how I like... I don't think I like that is what I'm saying. The more I talk about this issue, the more I just think one sat should equal one sat. But I realize how much we are not walking this back. I just think, yeah, Faraday Fedora, you got me there. Of course, if we're doing it with quarters, we're going to do it with sats. Anonymous comes in with 8,976 sats. Coming in hot with the boost. I was sad to hear about Samurai. It was a useful privacy tool. After the show, I opened up Samurai Wallet and discovered that I couldn't even show my balance. Seems the DOJ sees Samurai's infrastructure rendering their wallet non-functional in the absence of a self-hosted backend like the Samurai Dojo.
So, a PSA for anyone else in this situation. You can easily regain access to your funds by importing your Samurai Wallet into the Sparrow Wallet. In Sparrow, select File, Import Wallet, then choose the BIP39 option. Input your 12 seed words. If you lost the seed words in the Samurai app, you can tell it how to show them to you in the settings view. After inputting these words, be sure to tick the quote use passphrase box and input the passphrase which was specified when Samurai Wallet was created. Passphrases are optional in BIP39, but Samurai Wallet UI unconditionally asks for one when a wallet is created.
So it is necessary to provide it to Sparrow or the import will fail. Unlike seed words, the Samurai app cannot show the passphrase. So hopefully you wrote it down or remember it. You could instead import to another wallet that supports BIP-39 passphrases, but Sparrow Wallet has the advantage that it is a Samurai Whirlpool client, so it understands the structure of the Samurai Wallet from which it is derived. That is a great tip. Thank you very much. Boost! That's a great boost. I had read that online, but I had not planned to put that in the show just because it was, Well, it seemed like a thick thing to go through, but you did a great breakdown there.
It's really about the fact that you can import your old Samurai wallet into Sparrow wallet and that we'll understand the structure of the Samurai wallet. That seems like a huge win. Sparrow is really great too. So it's a recommendation anyways. Even if you weren't going to make a migration and you just wanted to start fresh, I would recommend Sparrow. Jordan Bravo comes in with a suspicious 6,666 sats. I am programmed in multiple techniques. That's because he sent 3,333 sats twice and said I'd never pay for more than one sat for a sat. There's no such thing as rare Satoshis.
I think I agree other than obviously than people are doing it. He says ordinal theory is a complete fiction projected onto Bitcoin. Agree with that. It's a game played by those who choose to participate in it, but it doesn't actually exist in the Bitcoin protocol. I agree with all of that. Doesn't mean they won't do it. He also sent his current software stack. He says, I buy non-KYC on RoboSats. I use Strike to send that fiat to the seller. Then I receive the sats in my Phoenix wallet. Uh-oh. Oh, no. Oh, no. What are you doing about Phoenix wallet? I repeat this until the amount in Phoenix gets to a certain size, at which point I swap into a cold storage multisig, which I use Sparrow wallet to manage. That is brilliant.
Minimizes on-chain fees. Nice and secure. I like all of that except for Phoenix wallets on the out. So I'm curious what you're going to replace. Are you going to try a Zeus wallet? I think it's pretty good. Jin from Matik comes in with 2,000 cents. Hi, Chris. Thank you for another great episode. I started with a paper wallet last year, and to me, I still think it's... Oh, he says, I still... I started with a paper wallet last year, and to me, it's still a think, because you have border wallets, borderwallets.com. After explaining your Bulletproof Stacker self-custody guide last week, what would be your take on this guide?
You know, the Border Wallets idea is brilliant. I don't have time to go into it right now, but I do think Border Wallets is something people should look into. There's also, he points out, Bitcoiner.guide with tons of resources on Bitcoin to discover. That's Bitcoiner.guide and BorderWallets.com. Border Wallets is a really neat idea. It's a way to quickly and reliably memorize your Bitcoin seed phrase so you can cross the border with all of your money in your head. Which, how are they going to stop that? How are they going to stop that?
Oppie1984 comes in with 4,000 sats. I have been told paper wallets are unsafe, but I just prefer to trust something I created on a permanently air-gapped machine. I just can't feel secure with a hardware and software wallet. Just because I'm paranoid doesn't mean they're not out to steal my Bitcoin. coin. I'd asked him last week if he was how he felt about paper wallets. I agree with you there. The way I like to think about my wallet security is you want to get it right, but you don't want to overdo it so that you never actually take action. And when you're building towards your ultimate wallet security, you want to think about what you would do to protect something that's worth millions of dollars one day.
When Bitcoin is worth a lot of money, the incentives for everybody around you are going to change. So that's just something to keep in mind. And who you tell today might not concern you, but in 10 years, you might have a different feeling about that. So these things when I'm designing my Bitcoin wallet security are also things I take into consideration. But I hesitate to overemphasize that because I don't want to scare people away. From self-custody. Anything's better than nothing, really. Halleck comes in with 10,000 sats. It's over 9,000! I wouldn't pay for a rare sat, but people will. It's human nature.
People are going to do degen things with money, but I would like to hear more about how it hurts us when they do. We all know scaling solutions are needed, so aren't they ultimately pushing us where we need to go? Halleck, that's a take that some people argue. I think the other side is that non-monetary uses of the Bitcoin network are immoral. I'd love to know where people fall on that. I think it's a good question. Dexord comes in with 4,567 sats and says, I am boosting for the show. Well, thank you very much. Keep the change, you filthy animal. On rare sats, while I don't particularly like to compare Bitcoin to fiat, humans love rare coins, bills, etc.
A rare quarter is, well, worth more than a quarter. A rare sat is going to be worth more than a regular sat. If anything, it's more proof that the true acceptance of Bitcoin coin as a global currency. Hmm. Hmm. I'd love you to expand on that a little bit if you wouldn't mind. Adversary 17's back again with 2,000 sats. Boost! No, I would not trade for uneven sat amounts. I like that, uneven sat amounts. They're all worth the same to me, and really to the Bitcoin network. One equals one. You know what? Nailed it. Crashmaster comes in with Spaceballs Boost. One, two, three, four, five. Yes. That's amazing. I've got the same combination on my luggage. I think Episode 8 was the best yet, Chris.
Great, tight coverage of Bitcoin news, mainstream media narratives, and software stacks, with an added bonus of a nice how-to. Occasionally, if you could cover mining news and software stacks, you have a winner. I know you need a certain scale to mine efficiently, but that might be a good topic as well. Many of us do a lot of uneconomical things just for fun. Crashmaster, are you mining at home just for fun? That's what I take from that. You know, I've got an old S9 in a box that I'm thinking about maybe hooking up if I get cheap power somewhere that, you know, I don't feel guilty about because I just want to add some hash.
You know, I just want to add some hash. And if I got lucky, I don't know. I saw a post this morning that looked back at the last six years and about once a year or so, some lone rando, you know, gets a block reward. So maybe that could be you. What? I wonder where I could get more information on that. Mining is definitely an area I'd love to dig into more, and it's an area I would love to hear more from the audience. What are you doing with mining, if anything? Maybe nothing. But I have also felt like perhaps I should get into it, even if I didn't do it for profit, if I just did it for the experience, if I just did it, I don't know, to get back into the network to computing, which is kind of what got me into it a long time ago.
I was, I mean, what brought me into Bitcoin originally was mining. And then I just kind of went from there. Mega Strike 3 comes in with 7,777 sats. Tough little ship. Little. Thanks for your explanation about your stacking methodology. I have a question, though. How does running a lightning node play into this? Since lightning nodes need inbound and outbound channels, are nodes more for using sats than stacking sats? You don't really need a lightning node in your stacking setup. And you've got to remember, to have a lightning node, you have to have channels. To open up channels, you need to have funds to put in those channels.
Sats to put in those channels. You could absolutely use a Lightning node to move funds around to make your transactions more private, especially if it's on your own node, but you wouldn't so much use it for stacking. And the fees that you'd generate from the Lightning network probably aren't going to amount to much on a small node these days. So I think that's where something like the Aqua Wallet comes in nice, because you can take advantage of the Lightning network without having to stand up a node, because you're just doing a quick peg into liquid, peg out of liquid. And they do Lightning swaps for that.
Running your own node is a good idea for a lot of reasons, but stacking over Lightning is probably not one of them. Probably not, although I'd be totally willing to have anybody else's opinions or thoughts on that if you feel differently. And our last boost that goes on air this week comes from Torped, 5,150 sats. This is the way. Wouldn't trampoline payments help alleviate the title of money transmitter off of all Lightning nodes? nodes. So trampoline payments are a way of moving funds between nodes as kind of like a relay. It does increase fees, but it also increases privacy.
I don't know if they're very economical. And I don't think that solves the problem of being a money transmitter so much, because the issue that the government seems to be putting forward is that if you make the infrastructure and code available, you're essentially a money transmitter business, a money services business, an MSB, as they put it. Not an MTB, but an MSB. And that, I think, balloon, I should say balloon, trampoline payments would not solve. It would cover up some of the source and destinations. It's an interesting technology. I don't think it solves the case that the federal government, the DOJ, is making.
At least in my opinion, I would love to be wrong about that, but unfortunately, I don't think I am. Good technology, though. Thank you, everybody who boosted in. We had 24 boosters. Not bad at all, really. Nice to hear from all of you. I have a 2,000-sat cutoff just to kind of keep it tighter on air, but I really do appreciate it. We stacked 136,184 sats. Thank you very much. And here's something for your trouble. There you go. You get a little sonic ding for your troubles. Appreciate everybody who boosted in. If you would like to boost in, all you got to do, get a new podcast app, podcastapps.com.
Something like Fountain or Podverse, Cast-O-Matic. Fountain has easy integration with Strike if you're already going that route. Something to definitely check out. Music. Okay, our last clip of the week's a doozy. If you have stuck with me this long, you have earned it. I'm about to play for you the godmother of modern monetary theory. And she's going to explain to you why it is childish to expect that a government would have budgetary constraints of a household or a business. We live in the future where we have MMT, baby. Economics is widely known as the dismal science, right? Right.
Because you've got to get better branding. Well, that's what MMT is trying to do. Better branding. Because, you know, in the dismal science, it's all about scarcity. And we can never have the things that we want because there's always this really intrusive problem, which is how are you going to pay for it? Where is the money going to come from? Yeah, it's so hard when you have limits and actual resources that are tied to real world things and that you have constraints on what you can actually do. You can't have nice things like endless wars and you can't have nice things like crazy government programs that are rife with corruption.
So you need unlimited money that isn't tied to anything scarce, clearly. Of the things that we want, because there's always this really intrusive problem, which is how are you going to pay for it? Where is the money going to come from? And the problem is that we treat money like just any other scarce good or service in the economy. And what MMT is doing is saying, hold on a second, we're not on a gold standard anymore. We have this thing called a fiat currency. And it does make people nervous because a fiat currency sort of opens up space. And it's kind of like, wait, is money real after all?
It opens up space and it's like, wait, is money real after all? That's that's her explanation of why people are concerned about Fiat. This is the woman. This is the the godmother, as they say, of MMT. And this is how she explains Fiat. You can tell what I think is actually interesting is that she even has to address that people are aware of what Fiat is and have concerns about Fiat. That's relatively new. And now she has to deal with that. But that's that's not the part that's really, really making this a doozy of a clip. Currency sort of opens up space and it's kind of like, wait, is money real after all?
And so MMT is an economic framework that tries to have an honest conversation, that talks to people like grownups, not insulting people by telling them that you have to treat the government's budget like a household budget and speaking down to people. But we want to be honest about the monetary system we have today, the capacities of the government to spend when you have a fiat currency and you're not tying your currency to gold and promising to convert into something that you could run out of like physical gold. So we're opening up a conversation where there are still limits and you still have to make choices.
But we can have an adult conversation about how the government can actually operate its budget when it doesn't face the same kinds of constraints that a household or a business face. I just feel so childish now thinking that my government should have had to follow constraints and have a balanced budget. I should have remembered that they can just print money and it has absolutely zero ramifications. There's no problems at all. I better go back and just undo the whole top of the show that laid out the seven things that are causing us problems this week that just happened in one week.
I should probably just go delete all of that, cut all that out from the show. I am so grateful that Stephanie set me straight. Stephanie Kilton is her name. She was on The Daily Show, and she was making the case for MMT and why governments should not have to have the same financial constraints of businesses and households. And if you think otherwise, well, that's just childish. I'll put a link to that in the show notes if you'd like to get it for yourself. Maybe you listen to it again and just shake your head. That'll be over at thisweekinbitcoin.show along with all of the previous shows.
Please do boost in. Let me know what you like, didn't like, or would you like to hear more of in the show or any responses or thoughts on anything I talked about today. I'd love for this to be the number one Bitcoin news podcast for the JB audience, for the podcasting 2.0 community, et cetera. And one of the ways you can do that is by boosting because it helps us get discovered on the fountain charts. Every boost goes up there to just click, click, click up that chart and helps others discover it when they go search. I really appreciate that. Thank you so much for joining me. I'm going to wrap it up today with a value for value song.
If you boost in during the song, your sats go to support the track directly. And this week it's self-destruct. Music.
Introduction
Bitcoin Market Adjustment
U.S. Treasury Concerns
Samurai Wallet Indictment
DOJ Response to Tornado Cash Charges
FBI PSA on Cryptocurrency Money Services
Chilling Effect of DOJ Actions
Block Investigation by Federal Prosecutors
Listener Boosts
Clip of the Week: Modern Monetary Theory Critique
