During a continued divergence in the crypto markets, where ether posted new all-time highs while bitcoin wallowed at levels almost $10,000 below its peak, the politics and buzz around both continue to spur thought and debate. 

In the spirit of that, this week’s newsletter dives into Iran’s ostensibly pro-bitcoin strategy and shows how it contravenes the level playing field values on which bitcoin is built. It also looks at the explosion in non-fungible token (NFT) sales and offers a lesson from Crypto Twitter on how to deal with rumors. 

After you’ve read all that, please find time to listen to this week’s excellent episode of our “Money Reimagined” podcast. 

In the latest stop on our world tour of crypto hot spots, Sheila Warren and I talk to two Nigerian entrepreneurs: Yele Bademosi, the CEO of payments app Bundle Africa, and Adia Sowho, a venture builder and operator. Among this entertaining pair’s many cool insights was the idea the Nigerian Central Bank’s February order that banks shut down crypto companies’ access backfired. It spurred even more innovation, inspiring local developers to dream up new decentralized solutions for getting around the banking sector’s gatekeepers.

Be careful what you wish for. 

News this week that Iran will allow a small set of qualified entities to pay for imports with cryptocurrency mined by licensed operators might sound like an enlightened move to some bitcoin enthusiasts. 

It fits a narrative that when governments start accepting bitcoin, they jump-start its role as a universal reserve asset. Meanwhile, the free trade-minded who chafe at all government intervention in markets may view Iran’s use of bitcoin to get around U.S. sanctions as a positive blow for global commerce generally.

But look closer and you’ll see in Iran’s bitcoin strategy the hallmarks of an authoritarian system that flouts the freedoms crypto advocates like to embrace. When viewed alongside a crackdown against unlicensed crypto mining, the regime’s moves could widen the divide between government-favored elites and average Iranians. (Below we delve into the lessons on this taken from Cuba’s destructive dual-currency system.)

It’s not clear if federal officials in Washington will care about that inequity. But it will view Iran’s bitcoin solution for sanction avoidance with alarm, as it undermines the United States’ self-appointed role as cop to the global financial system. Concerns about that will be amplified if it’s apparent that China, which is eager to knock the dollar off its international reserve currency perch, is directly or indirectly supporting Iran’s approach. (The pathways for Beijing to do so are already laid.)

The question is: How should the Biden administration respond? Let’s hope it avoids the temptation to roll this into a simplistic “bitcoin bad” narrative and imposes tighter controls on the cryptocurrency’s users in the U.S. and elsewhere. A more constructive approach would encourage Iran to abandon its strategy for a crypto policy that favors innovation, green infrastructure and economic freedom for all its citizens. 

The intent of the government of President Hassan Rouhani is hardly a mystery. 

Even though Iran is a major oil producer, years of crippling U.S. sanctions aimed at containing its nuclear weapons program have deprived its economy of dollars. That makes it very difficult for Iran to buy what it needs from the world, and ensures that the local currency, the rial, is under perpetual downward pressure, which in turn stokes inflation.

Now, by creating a legal framework in which bitcoin can be mined locally, taxed under a strict licensing system and used by regulated institutions to pay for imports, the government has a workaround. Iran will still struggle to sell its energy resources for dollars, but it can do the next best thing: It can convert that same local resource into bitcoin, a harder currency than dollars. 

At the same time, the regime is showing its authoritarian instincts. In January, it said that Iran had 24 officially registered mining farms, consuming 310 megawatts of power, and that the Ministry of Energy had shut down 1,620 illegal bitcoin mining operations with a capacity of 250 megawatts over the prior 18 months. It offered rewards of up to 100 million rials ($2,350) for information leading to the arrest of illegal miners. 

In a subsequent story by CoinDesk’s Anna Baydakova, one household miner, “Basir” (not his real name), said he spent a week in jail before he could scrounge up the large bail amount by selling his house, his car and his mining equipment. 

The premise for the crackdown is that illegal mining is disrupting Iran’s overstretched electricity grid. But bitcoin advocates say that is unfair as the country’s blackouts have continued even after the authorities have done their sweep. 

Regardless, by making itself the gatekeeper for domestically mined bitcoin and discriminating over which entities can access it, the government is laying the groundwork for societal divisions  – especially if bitcoin grows in importance, as many expect it will. 

To understand why, let’s go back to the early years of the post-Cold War era in Cuba, another country that has labored under the constraints of U.S. sanctions.

In 1993, Fidel Castro’s regime was broke. Its longtime benefactor, the Soviet Union, had collapsed and the island economy was reeling from four years of “Special Period” austerity. 

Castro reluctantly adopted a radical solution: He legalized the use of U.S. dollars, but only within designated, closely regulated industries such as government-sanctioned tourism resorts that could only accept foreigners as guests. It later entrenched this system by requiring all incoming foreign currency, including that carried by foreign tourists, be exchanged into “convertible pesos,” a new local currency pegged one-to-one with the dollar. The new notes would circulate in parallel with the traditional Cuban peso, known as “moneda nacional” (national currency), but could only be used in those same sanctioned settings. 

The strategy gave the regime a lifeline. With taxes from regulated foreign currency inflows, it continued to defy the Helms-Burton Act. 

But the system created two Cubas, one where a privileged elite got access to goods and services available only in de facto foreign currency. Everyone else earned near-worthless moneda nacional, which could buy only items listed on the “libreta,” or ration book, an artifact of Soviet communism that guaranteed necessities such as bread and milk but excluded anything deemed to be a “luxury” – in effect, anything imported. To give you an idea of how limiting the libreta was, it did not include the “luxury” of tampons. 

These deep divisions also bred rampant corruption because goods designated for the moneda nacional economy were hoarded and sold illegally in the convertible peso economy. 

Bakers would secretly deliver half their production to fancy foreign tourist-only restaurants, denying libreta holders their bread rations. Gas stations would siphon off gasoline intended for domestic customers and deliver it to companies operating in the convertible peso economy. Painters would thin out their paint so that they could sell half their supplies to hotels.  

The human effect of this stood out to me when I visited Cuba for book research in 2008. One day, I hired a rickshaw driver with my convertible pesos. Every time he saw a policeman up ahead, he urged me to dismount and walk to meet him two blocks down the road because he  couldn’t be seen to be servicing dollar-wielding foreign tourists. 

The system created a new class of predominantly white elites whose expat families in Miami and Madrid would send them foreign currency, while doing nothing for a disproportionately black community without such ties. 

By the standards of Communist Cuba’s professed egalitarian ideals, it was an abomination. Yet, it took the government 28 years – until January of this year – to unify the currencies. Such was the intoxicating appeal of this unjust system for the Castro dictatorship – first under Fidel, then under his brother, Raul.

Similar inequity lies ahead for Iran if it sticks with its crypto strategy and, as many of us believe, bitcoin becomes a sought-after store of value in a post-COVID era of high debt, slow growth and fiat currency depreciation. Some Iranians will become phenomenally rich. Others will be stuck with worthless rials. Attempts to cross the divide will encourage corruption and social tensions. 

Still, for the Iranian regime, the strategy is a tempting way to fund itself. Also, given Iran’s relationship with China – with which it recently struck a $400 billion, 25-year investment deal that included access to Iranian oil and a plan for a binational “bank” – it presents an opportunity to shift the geopolitical landscape. 

China has the largest bitcoin mining industry in the world, and so it’s not hard to imagine Chinese bitcoin miners building officially endorsed, fossil fuel-run facilities inside Iran. Once bilateral payment agreements are in place to use digital currencies that bypass the U.S.-led global financial system, one can foresee a feedback loop in which China gets oil, Iran gets hard currency, the dollar’s power is diminished, and bitcoin’s carbon footprint grows. 

How should the U.S. respond?

My fear is the rallying cry in Congress will be that bitcoin is “enabling” reprehensible sanctions-busting behavior, prompting calls for tougher crypto regulations. That will only drive more activity underground and encourage more dirty fuel installations in Iran and elsewhere –  in effect, strengthening the regime’s hand. 

The alternative is the U.S. government takes a more constructive approach, encouraging innovation and economic freedom. It could offer to work with domestic bitcoin miners to commit to zero greenhouse emissions and, in so doing, develop such energy sources, whether it’s the government’s nuclear plants or locally run solar and wind operations. 

As I wrote in a prior newsletter, I see a pathway for government incentives to make bitcoin mining a catalyst for green energy development. Iran, as an energy powerhouse, is well placed to work with U.S. scientists on such solutions. 

One can hope, right?

With “Saturday Night Live” making skits about NFTs, multiple sports stars and celebrities minting them and digital art selling for nosebleed prices, it seems like a good time to check in on how the NFT market has responded to all this attention. 

Thankfully, the latest quarterly report from ConsenSys on the state of the decentralized finance (DeFi) ecosystem on Ethereum contains a nice set of pie charts to tell the story:

As expected, sales of crypto art grew rapidly during the quarter as a mania for non-fungible tokens took hold. However, the spoils of the growing pie were not distributed evenly. Nifty Gateway, the NFT platform acquired by Gemini two years ago, has consistently gobbled up the biggest piece of it.

Why? In one word: Beeple. The March $69 million sale of the digital artist’s “Everydays – The First Five Thousand Days” digital collage was not only a major driver of the platform’s volume, it also reflected the established relationship Beeple had already built with Christie’s, Nifty Gateway and other sellers of high-value digital art.

Herein lies an old-school journalist’s crotchety warnings about treating rumors responsibly. 

Crypto Twitter can take some lessons from a saga that began with a tweet early Tuesday by Alistair Milne, whose Twitter profile (89,300 followers) says he is the CIO of the Altana Digital Currency Fund.

That got many, many, people excited – for obvious reasons. Bitcoin’s price did not immediately jump after the tweet, but for the 36-hour period (until the rumor turned out to be false), it brushed with its highest level for the week. Knowing the trigger-happiness of the crypto investor scene, it seems likely that Milne’s tweet, which was very widely shared, prompted many to buy. 

Now, before we discuss what Facebook actually announced, here’s a basic rule to which I was rightly subjected in financial newsrooms throughout my career: We could never report on potentially market-moving rumors, however interesting they might be, for the simple reason that you could cause people to unfairly lose or gain money on unsubstantiated hearsay. 

Rumors are prevalent in all markets, precisely because people have vested interests in the price impact they can have. The last thing you want to do as a respected news outlet with a large megaphone is to amplify the rumormonger’s message. A rumor is a prompt for a journalist to try to confirm the truth of it, not to report on it prematurely. 

Of course, Milne is not a journalist. But in the age of social media, and for the purposes of this discussion, it’s a distinction without a difference. He has 89,000 followers and a reputation as an early investor in the space. We all have a responsibility to our audience. 

Facebook’s earnings came and went on Wednesday evening with nary a mention of “bitcoin,” “cryptocurrency,” “blockchain,” “dogecoin,” or even “libra” or, for that matter, “diem.”

Some delighted in the non-eventness of it all:

But others were incensed. This Twitter user summed up Crypto Twitter’s reaction quite nicely (sound on):

As Milne came under attack, he stood his ground. He didn’t delete the tweet and found some lighthearted ways to laugh it off, asking whether he should delete his account and then declaring he would never tweet again until Facebook does buy bitcoin. 

But his mentions kept filling up. It probably didn’t help he had tweet-boasted 14 hours before the Facebook earnings release of taking profits, nor that he later defensively blamed the rumor on someone else.

Here, two old-school newsroom rules are useful: 1) the problem is not that you start a rumor per se, it’s that you amplify it and in so doing legitimize it, and 2) just putting the label “rumor” on an unsubstantiated claim does not get you off the hook. You’re still amplifying it.

That last tweet, 22 hours after the Facebook earnings report, suggests our culprit still has some learning to do.

Still, it’s heartening to know that an angry Twitter mob can have a sobering impact. Based on this last tweet from Alistair Milne on the topic Thursday night, he might think twice next time:

Bitcoin investors are hoping the U.S. Securities and Exchange Commission finally approves an exchange-traded fund for bitcoin, giving the price a boost. With at least three proposals before an SEC that’s now led by crypto-savvy Chairman Gary Gensler, and given the success of three Canadian ETFs, expectations are stronger than ever for a positive ruling.

By Shashidhar K.J. and Srinath Sridharan

Headlines have been awash with Bitcoin’s 15 percent crash last week as the price of the cryptocurrency fell below US$ 49,000.

Consequently, other cryptocurrencies like Ether token saw its price fall by 20 percent. The fall in price came coincidentally with two key statements.

• The first from Janet Yellen, the current United States treasury secretary, who called Bitcoin an extremely inefficient way of conducting transactions and called its price highly speculative.

Predictably, there have been sharp reactions from proponents of cryptocurrencies, as well as from those who oppose it or politely advise caution. Calmer minds need to prevail to understand the situation deeper.

Bitcoin’s history has seen much worse. There have been about 13 major crashes since 2011 and the crash in December 2017 saw the price of Bitcoin to plummet by 83.7 percent. These crashes were faced by individual investors called “Bitcoin-whales,” who hoarded the asset and drove up the value. These whales hyped other retail investors to participate and eventually cashed out at a peak. And one must remember that correlation does not mean causation and that Janet Yellen and Elon Musk’s statements might not have contributed to the fall in price. It is more likely that this was profit-booking by some investors and a price correction.

Bitcoin’s price is falling but believers in the community are still ‘hodl’-ing and waiting for the day when the price ‘reaches the moon.’ Volatility and speculation must be considered while dealing with cryptocurrencies. This is not a game for the faint-hearted.

Broadly, the interest of institutional investors in cryptocurrencies is a good thing and will act as a bulwark against retail whales in the cryptocurrency market and bring more accountability on the trades. But with more institutional investors taking an interest in cryptocurrencies, it becomes crucial that there is prudent-risk-management as asset management companies (AMCs) invest people’s savings and pensions in volatile cryptocurrencies. The government’s hands-off approach/hostile approach to cryptocurrencies cannot work here and they will have to build in protections for investments in cryptocurrencies, in the case of unforeseen externalities.

However, institutional investors coming into the picture also puts additional pressure on cryptocurrencies to find a purpose for themselves.

Janet Yellen is right — cryptocurrencies are not a viable currency due to their volatility. Companies like Stripe and Valve’s Steam games marketplace, which did accept Bitcoin as a form of payment have reversed their position considering the volatility of the Bitcoin while processing a transaction.

Cryptocurrencies like Bitcoin do not work securities as they do not make a promise of a fixed return. The former United States Securities and Exchange Commission (SEC) chairman Jay Clayton explains well why Bitcoin cannot be considered a security since it never sought public funds to develop its technology, but what it does is replace the value in fiat-currency and, therefore, it works a “store of value.”

The SEC said the same cannot be said of cryptocurrencies like Ripple’s XRP token where there was an initial buy in by early adopters who were given tokens that were already mined. Further, the token was advertised that it would give guaranteed returns on the buy in. This led to an investigation by the SEC, which filed a case against the company and its promoters for running an unregistered security. Since the XRP tokens were already mined and some were held by the promoters, it presented an information asymmetry allowing them profit as more people bought the token driving up its value. Therefore, cryptocurrencies have largely been operating akin to a commodity like gold, considering the limited number of tokens that can be mined or acquired.

Commodities too are subject to an immense speculation over their usage and its subsequent trading reflect that. During the COVID-19 pandemic, oil futures collapsed since all economic activity ground to a halt and the price of crude oil at one time was zero. However, oil’s usage would return and, therefore, it still held value. Similar speculation can be done with other commodities like steel, coffee, aluminum etc.

Gold is an interesting commodity since its real-world applications are limited. It derives its value due to its rarity and its non-corrosive properties. Therefore, it functions as a store of value and medium of exchange during uncertain times. But more importantly, now that the world has abandoned the gold standard for the convertible fiat-currency system after the Second World War, it now functions as a “hedge against other financial bets” in an investment portfolio for investors. If there is a crash in the equities market leading to a broad fall in the stocks invested, the value of the gold investment offsets the losses in the portfolio.

Cryptocurrencies function in a similar manner as gold right now, where its main use seems to be a hedge against other financial bets and the current inflationary regime. Asset managers who are not averse to decentralised finance advise investors to keep 1-2 percent of their portfolio in cryptocurrencies as a thumb rule.

However, on the flip side, a more bearish view on cryptocurrencies is worth keeping in mind. In the event of catastrophic events like war or climate-related calamities where electricity and Internet connectivity goes down, gold still has value as a medium of exchange. Bitcoin stored in a digital wallet will be useless in this scenario (of no electricity or internet access). This scenario, therefore, works as a sharp critique of the anarcho-capitalist philosophy the cryptocurrencies base themselves on. It becomes very crucial for regulators to understand the underpinnings of this philosophy.

This idea blends elements of the political philosophies of anarchism and capitalism.

Anarchism promotes the notion of stateless societies and no hierarchies in the power structure. While there are no power structures or governments, it doesn’t mean that there is no governance. Anarchism promotes self-governance (however good, bad and ugly) and the notion of non-aggression; it requires all individuals to act as rational actors, where competing self-interests will maintain order.

Anarcho-capitalists support the idea of a stateless-society, but also promote the idea of owning private property and support free-markets. All functions of society will be fulfilled by competing private companies and enforced by voluntary contracts.

Bitcoin’s creator Satoshi Nakamoto developed the first cryptocurrency as a critique on the inefficiency of central banks and monetary authorities, which debased currencies and criticised banks as they held people’s money but lent indiscriminately with very little reserve. Coupled with neo-liberal policies adopted through the the 1980s to the present time — which advocate for economic growth through debt — we saw the rise of income inequality where ordinary people were unable to generate wealth for themselves and move up the socio-economic ladder.

Bitcoin presented itself as a solution where the limited number of tokens that could be created would limit indiscriminate lending. Thus, people or entities who could contribute processing-power for mining Bitcoin would be rewarded with tokens and its value would only be dependent on “supply and demand dynamics.” The blockchain technology decentralised finance by keeping an immutable record of tokens mined by users and their subsequent transactions. In contrast, central banks control the production and issuance of money and centralise finance through monetary policy. It solved trust-issues with transactions in a limited way, as the blockchain was an immutable record of transactions which needed to be authenticated by all nodes in the system.

However, for this system to work, it requires a wholesale-rejection by citizens on the role of central banks and governments. Governments are loathe to give up power, particularly something as powerful as money.

Cryptocurrencies also relies on public goods provided by governments such as cheap electricity for mining and are beholden to corporations that provide Internet connectivity that must abide by rules set by the government. In countries such as India where the Internet is frequently snapped, the operation of cryptocurrencies is frequently disturbed.

Cryptocurrencies are also curtailed by the state in a much simpler manner: Bans through legislation. The Indian government is getting ready to pass a legislation which bans all cryptocurrencies, save for a virtual currency backed by the government. The Reserve Bank of India is reportedly working on building a central bank digital currency (CBDC) using many of the properties of cryptocurrencies including the blockchain technology.

CBDCs are uncharted waters again and there are several questions that need to be answered for acceptance, including state overreach and privacy where it would have a complete view of all transactions, the role of banks in this scenario, and if it really needs a decentralised system of money.

CBDCs conducting centralised finance operations is at odds with the idea of blockchain which seeks to promote decentralised finance. Permissioned-blockchains will limit the number of nodes, but the question remains: Who controls those nodes and what would be their objectives?

Despite varying views on policies, political power reigns supreme and it will be better to accept this reality. The State will want to have its influence in the society, especially in a socialist-democracy like India. It will have to take care of larger sections of the population, especially the vulnerable segments. Hence, the narrative of what’s good for the economy could be the prerogative of the State at its own discretion and decision.

However, the relationship between governments and cryptocurrencies need not be so antagonistic. Decentralised finance offers a great opportunity for better financial outcomes for people and addressing income inequality needs fresh ideas. The Indian government also needs to understand that cryptocurrencies have been regulated in other jurisdictions globally by applying existing frameworks to regulate them in some fashion.

Cryptocurrencies, on the other hand, must realise that they gain legitimacy as more governments and markets are accepting of them. Governments, ultimately, must realise that cryptocurrencies were created as a reaction to neoliberal policies and wholly strive to understand how the state can build better outcomes for citizens. And accept new processes, however inconvenient it is politically.

The opportunity is now — to show how much transparency we can build, as we develop our policies of digital-finance, in this century dominated by the 4th Industrial Revolution.

If the trick to living well with technology is balance—between scrolling and occasionally mustering up the energy to leave the house and see friends—2020 has not only tipped these delicate scales but managed to ensure that they were laid waste altogether. With billions of people isolated in their homes across the world with nothing but their screens to help them socialize, teach, learn, and work, many are discovering that digital relationships are a poor substitute for flesh and blood connections. We have gorged too much, too mindlessly, on this thing that ultimately doesn’t serve us awfully well, it seems; the only way forward is to deny, absolve ourselves, and repeat.BOOKS IN REVIEW

Xiaowei Wang’s Blockchain Chicken Farm: And Other Stories of Tech in China’s Countryside arrives in our oversaturated digital moment as a welcome reprieve, reminding us that there is more to technology than our thumbs hovering over our phones, unable to escape ourselves. Wang, who is the creative director at Logic magazine, visited a number of new businesses across China’s countryside during the past year to document the ways in which rural towns have become the engines of global consumer capitalism. Technology is steadily changing how work is done in these far-flung places. In a village in the southern province of Guizhou, chickens are tracked with Fitbit-like ankle bracelets; a 25-year-old man in the eastern province of Anhui remotely controls drones that spray pesticides on crops all over the country; in the southwest, small communities are being turned into manufacturing zones for online shopping.

Stories about technology, Wang (who uses “they”/”them” pronouns) writes, often focus on cities, influenced by the bias of what theorist Jack Halberstam has deemed “metronormativity.” While metronormativity posits that “rural culture and rural people are backward” subjects who must be “saved” by “internet, technology, and media literacy,” Wang’s travels show the centrality of China’s countryside to global life. What does it mean to hold on to the binaries of “rural versus urban, natural versus man-made, digital versus physical” at a time when—as one of Wang’s case studies shows—nearly all the Halloween costumes worn by children in suburban America come from one tiny remote village in western China? It is only by bringing the supposed periphery into the center that we can begin to unpack the ties that bind us and see the systems that make our lives tick.

Many Western narratives about contemporary China draw on the language of contradictions: the “gleaming skyscrapers alongside ramshackle food stalls, the chaos of crowds tracked by surveillance cameras, the steam of a wok reflecting the blue light of an iPhone.” Wang finds this play with predetermined symbols unsatisfactory; they deliver myth at the expense of actual insight. “I know you’re here writing about a book about Chinese technology, but the only way to understand China’s future is through its past,” the author’s great-uncle, a former doorboy at a local Western restaurant who is still haunted by memories of famine in the nation, tells Wang.

The countryside commands a mythic status in the narrative of the modern Chinese state. During the civil war with the Nationalists from 1927 to 1949, Mao Zedong had strongholds in rural areas and mobilized peasants to “encircle cities from the countryside”; when he established the People’s Republic of China in 1949, he made the countryside the site of his agrarian-centered revolution. As power has flowed to the cities over recent decades, resentments have accrued around the hukou system, a government household registration system that disincentivizes people from migrating by limiting their access to social benefits to which they would be entitled elsewhere, such as education and insurance. But mass migration to the cities for better jobs continues regardless.

Economists warn that China now faces an “agrarian transition,” which could further accelerate migration to urban sites as small-scale farming is supplanted by industrialized agriculture. In 2010, a state-affiliated think tank identified China’s 750 million rural workers—particularly dissatisfied younger workers living on the margins of a city—as a key threat to the government’s legitimacy: “Policy-making must confront the pressing reality that migrant workers now dominated by a younger generation will remain in towns and cities.” The government, in response, has spurred efforts to construct a “new socialist countryside” over the past decade, marshaling technology giants to develop a place, Wang writes, “filled with peasants starting e-commerce businesses, small-scale manufacturing, new data centers, and young entrepreneurial workers returning to their rural homes.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or Xiaowei Wang’s Blockchain Chicken Farm: And Other Stories of Tech in China’s Countryside arrives in our oversaturated digital moment as a welcome reprieve, reminding us that there is more to technology than our thumbs hovering over our phones, unable to escape ourselves. Wang, who is the creative director at Logic magazine, visited a number of new businesses across China’s countryside during the past year to document the ways in which rural towns have become the engines of global consumer capitalism. Technology is steadily changing how work is done in these far-flung places. In a village in the southern province of Guizhou, chickens are tracked with Fitbit-like ankle bracelets; a 25-year-old man in the eastern province of Anhui remotely controls drones that spray pesticides on crops all over the country; in the southwest, small communities are being turned into manufacturing zones for online shopping.

Stories about technology, Wang (who uses “they”/”them” pronouns) writes, often focus on cities, influenced by the bias of what theorist Jack Halberstam has deemed “metronormativity.” While metronormativity posits that “rural culture and rural people are backward” subjects who must be “saved” by “internet, technology, and media literacy,” Wang’s travels show the centrality of China’s countryside to global life. What does it mean to hold on to the binaries of “rural versus urban, natural versus man-made, digital versus physical” at a time when—as one of Wang’s case studies shows—nearly all the Halloween costumes worn by children in suburban America come from one tiny remote village in western China? It is only by bringing the supposed periphery into the center that we can begin to unpack the ties that bind us and see the systems that make our lives tick.

Many Western narratives about contemporary China draw on the language of contradictions: the “gleaming skyscrapers alongside ramshackle food stalls, the chaos of crowds tracked by surveillance cameras, the steam of a wok reflecting the blue light of an iPhone.” Wang finds this play with predetermined symbols unsatisfactory; they deliver myth at the expense of actual insight. “I know you’re here writing about a book about Chinese technology, but the only way to understand China’s future is through its past,” the author’s great-uncle, a former doorboy at a local Western restaurant who is still haunted by memories of famine in the nation, tells Wang.

The countryside commands a mythic status in the narrative of the modern Chinese state. During the civil war with the Nationalists from 1927 to 1949, Mao Zedong had strongholds in rural areas and mobilized peasants to “encircle cities from the countryside”; when he established the People’s Republic of China in 1949, he made the countryside the site of his agrarian-centered revolution. As power has flowed to the cities over recent decades, resentments have accrued around the hukou system, a government household registration system that disincentivizes people from migrating by limiting their access to social benefits to which they would be entitled elsewhere, such as education and insurance. But mass migration to the cities for better jobs continues regardless.

Economists warn that China now faces an “agrarian transition,” which could further accelerate migration to urban sites as small-scale farming is supplanted by industrialized agriculture. In 2010, a state-affiliated think tank identified China’s 750 million rural workers—particularly dissatisfied younger workers living on the margins of a city—as a key threat to the government’s legitimacy: “Policy-making must confront the pressing reality that migrant workers now dominated by a younger generation will remain in towns and cities.” The government, in response, has spurred efforts to construct a “new socialist countryside” over the past decade, marshaling technology giants to develop a place, Wang writes, “filled with peasants starting e-commerce businesses, small-scale manufacturing, new data centers, and young entrepreneurial workers returning to their rural homes.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or ies about technology, Wang (who uses “they”/”them” pronouns) writes, often focus on cities, influenced by the bias of what theorist Jack Halberstam has deemed “metronormativity.” While metronormativity posits that “rural culture and rural people are backward” subjects who must be “saved” by “internet, technology, and media literacy,” Wang’s travels show the centrality of China’s countryside to global life. What does it mean to hold on to the binaries of “rural versus urban, natural versus man-made, digital versus physical” at a time when—as one of Wang’s case studies shows—nearly all the Halloween costumes worn by children in suburban America come from one tiny remote village in western China? It is only by bringing the supposed periphery into the center that we can begin to unpack the ties that bind us and see the systems that make our lives tick.

Many Western narratives about contemporary China draw on the language of contradictions: the “gleaming skyscrapers alongside ramshackle food stalls, the chaos of crowds tracked by surveillance cameras, the steam of a wok reflecting the blue light of an iPhone.” Wang finds this play with predetermined symbols unsatisfactory; they deliver myth at the expense of actual insight. “I know you’re here writing about a book about Chinese technology, but the only way to understand China’s future is through its past,” the author’s great-uncle, a former doorboy at a local Western restaurant who is still haunted by memories of famine in the nation, tells Wang.

The countryside commands a mythic status in the narrative of the modern Chinese state. During the civil war with the Nationalists from 1927 to 1949, Mao Zedong had strongholds in rural areas and mobilized peasants to “encircle cities from the countryside”; when he established the People’s Republic of China in 1949, he made the countryside the site of his agrarian-centered revolution. As power has flowed to the cities over recent decades, resentments have accrued around the hukou system, a government household registration system that disincentivizes people from migrating by limiting their access to social benefits to which they would be entitled elsewhere, such as education and insurance. But mass migration to the cities for better jobs continues regardless.

Economists warn that China now faces an “agrarian transition,” which could further accelerate migration to urban sites as small-scale farming is supplanted by industrialized agriculture. In 2010, a state-affiliated think tank identified China’s 750 million rural workers—particularly dissatisfied younger workers living on the margins of a city—as a key threat to the government’s legitimacy: “Policy-making must confront the pressing reality that migrant workers now dominated by a younger generation will remain in towns and cities.” The government, in response, has spurred efforts to construct a “new socialist countryside” over the past decade, marshaling technology giants to develop a place, Wang writes, “filled with peasants starting e-commerce businesses, small-scale manufacturing, new data centers, and young entrepreneurial workers returning to their rural homes.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

Many Western narratives about contemporary China draw on the language of contradictions: the “gleaming skyscrapers alongside ramshackle food stalls, the chaos of crowds tracked by surveillance cameras, the steam of a wok reflecting the blue light of an iPhone.” Wang finds this play with predetermined symbols unsatisfactory; they deliver myth at the expense of actual insight. “I know you’re here writing about a book about Chinese technology, but the only way to understand China’s future is through its past,” the author’s great-uncle, a former doorboy at a local Western restaurant who is still haunted by memories of famine in the nation, tells Wang.

The countryside commands a mythic status in the narrative of the modern Chinese state. During the civil war with the Nationalists from 1927 to 1949, Mao Zedong had strongholds in rural areas and mobilized peasants to “encircle cities from the countryside”; when he established the People’s Republic of China in 1949, he made the countryside the site of his agrarian-centered revolution. As power has flowed to the cities over recent decades, resentments have accrued around the hukou system, a government household registration system that disincentivizes people from migrating by limiting their access to social benefits to which they would be entitled elsewhere, such as education and insurance. But mass migration to the cities for better jobs continues regardless.

Economists warn that China now faces an “agrarian transition,” which could further accelerate migration to urban sites as small-scale farming is supplanted by industrialized agriculture. In 2010, a state-affiliated think tank identified China’s 750 million rural workers—particularly dissatisfied younger workers living on the margins of a city—as a key threat to the government’s legitimacy: “Policy-making must confront the pressing reality that migrant workers now dominated by a younger generation will remain in towns and cities.” The government, in response, has spurred efforts to construct a “new socialist countryside” over the past decade, marshaling technology giants to develop a place, Wang writes, “filled with peasants starting e-commerce businesses, small-scale manufacturing, new data centers, and young entrepreneurial workers returning to their rural homes.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

The countryside commands a mythic status in the narrative of the modern Chinese state. During the civil war with the Nationalists from 1927 to 1949, Mao Zedong had strongholds in rural areas and mobilized peasants to “encircle cities from the countryside”; when he established the People’s Republic of China in 1949, he made the countryside the site of his agrarian-centered revolution. As power has flowed to the cities over recent decades, resentments have accrued around the hukou system, a government household registration system that disincentivizes people from migrating by limiting their access to social benefits to which they would be entitled elsewhere, such as education and insurance. But mass migration to the cities for better jobs continues regardless.

Economists warn that China now faces an “agrarian transition,” which could further accelerate migration to urban sites as small-scale farming is supplanted by industrialized agriculture. In 2010, a state-affiliated think tank identified China’s 750 million rural workers—particularly dissatisfied younger workers living on the margins of a city—as a key threat to the government’s legitimacy: “Policy-making must confront the pressing reality that migrant workers now dominated by a younger generation will remain in towns and cities.” The government, in response, has spurred efforts to construct a “new socialist countryside” over the past decade, marshaling technology giants to develop a place, Wang writes, “filled with peasants starting e-commerce businesses, small-scale manufacturing, new data centers, and young entrepreneurial workers returning to their rural homes.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

Economists warn that China now faces an “agrarian transition,” which could further accelerate migration to urban sites as small-scale farming is supplanted by industrialized agriculture. In 2010, a state-affiliated think tank identified China’s 750 million rural workers—particularly dissatisfied younger workers living on the margins of a city—as a key threat to the government’s legitimacy: “Policy-making must confront the pressing reality that migrant workers now dominated by a younger generation will remain in towns and cities.” The government, in response, has spurred efforts to construct a “new socialist countryside” over the past decade, marshaling technology giants to develop a place, Wang writes, “filled with peasants starting e-commerce businesses, small-scale manufacturing, new data centers, and young entrepreneurial workers returning to their rural homes.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

The titular blockchain chicken farm is one such effort to forge a new countryside, itself doubling as a way to cool down social discontent about food safety. This is a perennial concern in China: headlines over the years have warned of human hair being ground up in soy sauce and bubble tea balls being made with plastic peas. In the quiet Sanqiao village, two hours from the southwest megacity of Chongqing, farmer Jiang oversees the local blockchain chicken operation in his area. Launched by Lianmo Technology, the project affixes free-range chickens with a tamper-proof ankle bracelet that tracks their steps and location, logging this information through a blockchain ledger, which provides data on the chickens in an efficient format. Chickens are further tested every two weeks for the presence of illegal antibiotics. A QR code affixed to each ankle bracelet takes the (largely middle-class) consumers to a website where they can see the data of the chicken’s life cycle and be assured that the chicken they are consuming is sufficiently free-range. Although the project’s future is uncertain—last year, Lianmo ordered 6,000 blockchain chickens, but there is no such order this year—Jiang remains optimistic, Wang reports. But the problem is, Jiang continues, that while his region is remote, pollution-free, and enjoys fresh air and clean soil, “the villagers don’t quite know how to put a dollar value on that.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

Blockchain, now hailed as a way to ensure social trust, ironically has its roots in a paranoid way of thinking. We can’t trust institutions, and every system will have bad actors, the thinking goes, so why not create a decentralized “ledger” where records are distributed and synced among many people—in the case of the blockchain chickens, they include the farmers, the inspectors, and the consumers—ideally making the project impervious to a single effort to sabotage it? But as Wang observes, “technical systems are legible only to a select few,” and judging by the audiences of the bitcoin conferences held in California, these few are overwhelmingly white and male.

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

A similar hierarchy is evident in a conference for a high-tech drone company that Wang attends in the southern city of Guangzhou; investors and venture capitalists sit at the very front, followed by engineers and bored-looking journalists, with drone operators at the back. This typifies a paradox inherent in many tech circles today: “utopian” projects are undergirded by ideologies that have little faith in people, ushered through by rigidly hierarchical businesses, and they run on systems that are so, complex and esoteric that any avowed commitment to a democratic ideal feels thin. Moreover, the goals they chase, which involve a complete “connection” of the world’s people, optimized control of global supply chains, and the synthetic generation of social trust mediated by a surveillance complex, will always remain mere illusions. The pandemic has shown us how easily the vast sprawling machinery of our lives can collapse in the face of an aberrant threat.

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

It has also led to a ramping up of tensions between the United States and China. Blockchain Chicken Farm is more interested in seeing what unites the citizens of the two countries than what distinguishes them from each other. A brief visit to a facial recognition company in Beijing, an account that would have benefited from further detail given rising concern about China’s surveillance apparatus, finds Wang expecting to encounter a sinister, Soviet-like den. “[I]nstead, I was met with a total indifferent openness combined with the dry, surgical threat of a nondisclosure agreement. It didn’t remind me of Silicon Valley; it was Silicon Valley.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

And like Silicon Valley, the language of the hustle is everywhere. When visiting Sanqiao village, Wang chances upon a large red banner strewn across a local hospital that announces “Being lazy is a disgrace. Being self-reliant leads to strength,” a slogan that is “eerily reminiscent of several American values: Don’t be lazy. Pull yourself up by the bootstraps.” Wang later visits an oyster farm near the coastal province of Zhejiang, where they meet an entrepreneur who runs a global pearl business. The oysters that yield the pearls are packed up and sealed, then flown halfway across the world to America. Their pearls are sold by cheery white women influencers on Instagram via live “unshucking” videos. These influencers often hail from North Dakota, Iowa, Wyoming, and other places with some of the highest unemployment figures in the United States and are “consultants” for various Multilevel Marketing schemes (MLMs). They have bought the oysters at a hefty price and must offload them quickly to avoid spiraling into debt: “direct selling is not the cheerful respite from life it appears to be in ads, but a kind of desperate grab at survival.” Technology, along with globalization, has evidently helped to connect the world, but such connection feels overwhelmingly like a mutual race to the bottom for ever diminishing profits. It’s unsettling how what looks like joyful self-empowerment can edge so close to its opposite.

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

Discussions about tech, Wang writes, are often “caught in a long list of binaries: Tech is dehumanizing, tech brings liberation. Tech dragged the world into the mess it’s in, tech frees it from this mess.” Can we ever break out of the binaries? Wang’s cautiously optimistic approach advocates for the messy, imperfect power of being human: that an algorithm or data can never sum up who you are and will become; that technology, when harnessed properly, can one day serve open systems. It is also telling that one of Wang’s last case studies, concerning a group of countercultural nihilist Chinese youth known as shehui ren, those who believe they cannot advance to the “upper-middle-class life promised to them in advertisements” and who reject conventional values of jobs, marriages, and families, turn to live-streaming platforms and lifestyles that valorize the hustle.

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

One of the shehui ren Wang profiles, a young livestreamer named Nicly, shuns conventional beliefs in the value of education and hard work. School, she says, is lame and boring; besides, only the already wealthy can get rich from the usual paths of social advancement. Instead, she hustles, selling face masks and perfume on her live videos. Counterculturalism, in Nicly’s worldview, is indistinguishable from materialism—an approach that further enriches the wealthy few while occasionally rewarding the lucky striver. You could condemn her personal choices, but the space for a genuine alternative diminishes by the day.

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

Much has been written of the domination that tech giants exact on virtually every aspect of our lives, but increasingly attention is being given to ways we can challenge this, whether through pushing for policy changes or deleting apps and accounts that weigh us down. Wang appeals, counterintuitively, for us to look at the way we relate to ourselves and to others offline, gently exhorting us to continually exercise awareness and care. It’s the sort of work that asks us to set aside the values circulated by technology today—the continual hustle to secure one’s future; the placement of self-image at the center of one’s universe; the glinting promise of easy reward—and sit with indeterminacy, the present, and the unglamorous duties we owe to one another. “The present moment promises nothing—it only demands,” Wang concludes. What’s left is “the tender, honest work of attempting to make meaning, instead of looking, waiting, or wanting.”

that. And that causes hash rate to drop and you then get another buy signal. So there was speculation and even I had a little bit of, I suppose, nervousness about the strength of it because of that not being really a capitulation type event.

Charles Edwards (21:57): And whether or not that narrative is true, it doesn’t really matter because it worked. That may sound simple, but the hash ribbon or the hash rate assesses the entire network globally, sort of says it’s all factors and that’s the beauty of it in identifying those opportunities to buy. So what I’m trying to say in that story is that you should just trust the data until the data proves otherwise or unless the narrative is backed by some really strong data, like the 25% monetary inflation we have now, which will probably impact some metrics. So it’s better to kind of potentially use something which may work, which has historically worked really well until it maybe doesn’t work out well then it is to abandon a certain narrative.

Charles Edwards (22:37): So with that strong interest, I think the focus will probably continue or that we should be very careful at the end of it for a large drawdown because even if we have widespread institutional adoption, a lot of the large holders of Bitcoin have been around for five, 10 years. And even if it’s self-fulfilling behavior, you will see that their movements of coins and how they react to these metrics and things will drive outcomes and it can be self-fulfilling. That said, I’ll revise that if we get massive stimulus or some kind of economic meltdown situation or change of events. But for now, I would bet on the four-year cycle. Looking at further like 10, 20, 30, whatever years. I think those cycles will diminish. So the depth of them, it will kind of approach more of an exponential curve.

Charles Edwards (23:25): So instead of the big dips, you get shallow dips and so on. Because of two reasons, I think the impact of each of the miners reduces their relative share of supply and also the net impact of any individual holder or entity reduced. So historically, the Bitcoin has been really retail-driven, maybe speculation-driven. Now, we’re getting more institutions in, the coin share is getting more distributed. So all of these factors, I think, reduce the impact of capitulation events or massive sell-offs or the impact of an individual party, I suppose. And the other key factor is that all of the key components of Bitcoin, a novel and preprogram as we know, the supply model, hash rate model, difficulty, whatever metric it is you want to look at the chain, it’s all there for analysis.

Charles Edwards (24:11): And I think, in the long run, a lot of it is having priced in or so obviously it wasn’t [inaudible 00:24:16], wasn’t priced in, and we had a huge appreciation. But at some point, whether it’s five, 10, 15 years or whatever, maybe or one year, these events will get more and more priced in by institutions, I believe. And by the public in general and expectations. Maybe it will start to flow any model and that will smooth in the volatility side. In the long run, I think actually, bitcoin has a history of being considered volatile and risky. But that’s probably the least risky asset in the future, in my opinion, and it may be the least volatile asset in the long run as well.

Preston Pysh (24:48): Charles, do you see a possibility that a melt-up in Bitcoin could happen after a certain threshold is breached just as far as adoption rates go? So we all talk about these four-year cycles because that’s what we’ve seen to date. But is there a certain point in the future where trust breaks down, erodes from the traditional system and there’s this all-at-once flood into Bitcoin that causes the price to melt up, and then it just really never comes back from that. It just keeps on running. Almost like a German paper mark chart from the 1920s.

Charles Edwards (25:23): Exactly, that’s the one event I do think about, as I mentioned before, how do you… This volatile event may happen in the market because of a lack of trust. And it is probably a breaking point with people that I don’t want any of this currency. I think we’re quite away from that. But it could definitely happen. It’s an event that happens once every 100 years. And we’ve never seen it on a global scale, on digital assets. So it’s almost impossible to predict. It’ll probably be obvious when you’re in it. It’s a tough one to answer. I think at some point, obviously, leading Bitcoin to long-term growth in the adoption. But I don’t know if that event would be two years, 10 years, or 20 years away. But I think with every day that we have economic conditions right now and monetary stimulus right now, it gets closer.

Preston Pysh (26:09): Let’s talk about the contango trade, so this is something that you’ve posted about I’ve seen you post about what’s going on there. First, explain what contango is, and then talk us through why you think that this trade exists. Because I find this trade to be kind of mind-blowing, especially considering your cost of storage for Bitcoin is literally nothing or near nothing. And when you think of contango in the oil market, a lot of the time it comes down to the price of storing the oil because there’s been an oversupply that starts getting built into the future prices. But this is a strange one. So explain what it is and then give us some of your thoughts on it.

Charles Edwards (26:49): Yes, I think you’re talking about the long and short thread I posted about. So the one I specifically wrote about and there’s a number you can do but this is the one I know a bit more about. If you had bitcoin and you just want to make it interest-free rate or return on that, you can deposit it with a loan institution, BlockFi or Nexo, whatever it may be. There are lots of them now and you get 50% of that capital back. You got 10 Bitcoin, you get five back and with that, you can then short it on a perpetual futures contract. This is what I look at. And they historically have an average funding rate of 0.01% a day. So it’s roughly compounded 12% a year. And that’s the baseline rate. But that rate varies. So it will often be above or below that. And it depends on the markets.

Charles Edwards (27:35): If it’s a bear market, it might be below because it’s based on the positions that traders are taking. But in a bull-run right now and has lots of demand for Bitcoin, a lot of people speculating on price increases. It gets really high. So 10 times higher or five to 10 times higher is not unusual. So if you do that trade, you would deposit your 10 bitcoin, you get five back for free, so to speak, with some interest rate to pay five to 10% a year. And then you assure that, or the entire amount on a petrol contract and you get somewhere between 12 and probably 50 plus percent interest-free on that trade. There’s this platform risk that the exchange goes down, you lose your coins. All those, I would argue, smaller risks that we have today. But in terms of the actual trade itself, it’s zero risks. And you lock in somewhere between 12 to 30 plus percent interest on your coins.

Preston Pysh (28:35): So in this, you’re locking up coins. You’re taking the 10 that you originally started with, you’re locking those up, you’re getting five back, then you’re putting those into the market and you’re doing these activities that are putting coins into escrow, instead of letting the coins come into the underlying buying and selling market, which in my opinion, is driving, is an increased bid on the price because of supply, the suffocation of the coins. Do you see it the same way or do you think that it’s still net neutral or is this kind of a narrative you disagree with?

Charles Edwards (29:13): Yes, so you’re saying that because people are locking in their bitcoins, this applies less and not just pushing price up a bit more. Is that what you’re saying?

Preston Pysh (29:20): Yeah, I think it’s actually almost like a second happening event.

Charles Edwards (29:24): Yeah, it could be. I don’t know if that trade is that occupied yet. Probably I think it is on an institutional level and obviously, it’s a very attractive trade. So if it isn’t now, it will be even more in the future. So I think there’s a valid answer to that. And it’s hard because that’s one component of lock-up. There are other lock-ups of just huddlers buying. [inaudible 00:29:46] and its balance sheet. There are various levels of lock-up. So for that sort of supply-side, it’s great to look at things like the auto waves or the net flow of coins from exchanges.

Charles Edwards (29:57): So, which just gives you a bit more of a macro view of that phenomenon of supply drying up that you talk about. So a good example, I tweeted as well not too long ago about Coinbase is about 15,000 coins going out a week, so somewhere between a half billion a week, which is pretty obvious institutional buying. So we’re definitely seeing that supply being sucked out of the system, at least over the weekly and monthly level. So a lot of it… I don’t know the extent, but a good portion of it could be going into that trade.

Preston Pysh (30:28): What are your thoughts on the exchange, the number of coins that are being pulled off the exchange because relative to the previous four-year cycle. I mean, the quantities are drastic. It’s kind of crazy to see the amount of coins coming off the exchange. Do you have any thoughts on that?

Charles Edwards (30:43): Yeah, it’s really it’s been really bullish. I think the rate has slowed down a little bit in the last weeks. In particular, in the hotter waves, the percentage of people who have held Bitcoin for more than two years has kind of peaked near to the intermediate level and come down. And normally that drop happens around mid-cycle. So 30 to 50% through the cycle, which I’d argue is roughly around are now based on historical cycles anyway. And when that kind of starts to steepen, it indicates people selling out. So it’s a change of hands, right? I think a lot of it’s going to institutions that will probably have a stronger hand, but that trade is not as strong for me right now as it was three to four months ago when it was just straight down. It may continue to do that, but it seems to slow down for the time being on the shorter time horizon.

Preston Pysh (31:34): So a lot of people on Twitter were wanting to know, what are the big metrics you’re looking at, for where we’re at right now in the cycle and probably the next two or three months from now?

Charles Edwards (31:44): We’ve talked about hash ribbon, energy values, [inaudible 00:31:50] Dynamic NTV, so we touched on that. It’s a network value of the consumer market, kind of like the market divided by the transaction value. So essentially, what value is thrown to a network, kind of like a P-ratio. And when that gets above the two-year Bollinger Band, it signifies overvalue. So the pricing network is significantly higher than the historical level from a transactional perspective. So we touched into that recently the other day as well as the main multiple, when we had that 30% drop. So that’s a good one to watch. Stable coins are also good, large inflows or outflows in that, it can trigger the same or the opposite reaction of price. So I think a good description of that is when there’s a large demand for in particular USDT, which is the biggest one at the moment, the US dollar stable.

Charles Edwards (32:37): It indicates that people are either de-risking from crypto and getting out of it and into the US dollar, or there’s a lot of new entrants coming in. So a common onboarding way is to convert the US dollar straight to USDT, for example. So what does that mean? People usually get out of Bitcoin, all kinds of whatever it may be when they’re concerned or there’s fear and they want to do risk. And that often lines up with a bottom or a local price bottom. So when you say large relative increases in USDT or other stable clients versus Bitcoin, it’s actually a good indicator that there could be some appreciating bitcoin, whether it be from the new demand or from the sort of bottoming factor of existing players. And as vice versa, you can use that as well as an indicator when the talking process may be shorter term or probably less reliable as a Grayscale Premium.

Charles Edwards (33:28): So we’re seeing lately that I think right now it’s about the price of Grayscale stock is about 5% on the Bitcoin price. So there are only a few data points there. So I didn’t worry with it. But every time it’s been under 5%, which has only been three times, I think in five years, the price has done very well over the coming months. So we’re in now negative 5%. So I would suggest the next few months should be really good. And again, that’s just an indicator with a few data points. But that’s why it’s really important to combine a number of these metrics to get you an overall picture of what’s happening. So they’re the ones who probably really pay attention to right now is NVT main multiple USDT and different premiums.

Preston Pysh (34:12): What are your top three lessons that you would tell somebody younger, just about trading or value investing, just investing in general? What are your top three tips?

Charles Edwards (34:24): That’s a tough one on the spot. Yeah, I think you have to love it, and if you really want to do it seriously yourself and not get someone else to do it, so you can probably come back to the office [inaudible 00:34:39] just fine index if you’re not going to spend all your time with us. But if you really love it then definitely go for it, and I think the more reading and researching you can do, the better. So your podcast is a great start. Lots and lots of books, buffet books, trading books and just being a sponge and all the information out there. I think getting locked up in a camp of, “I’m only valet investor, I’m only a technical trader, or I’m only this.” It blocks you out to all the ideas that are out there.

Charles Edwards (35:06): And it did for me for years. And now, logically, you might say that doesn’t make sense, that this would lead to this price doing that and therefore I can’t pay. And that’s how you block it off mentally. But as soon as you say, “No, let’s open that up. Why could it be or maybe it is just because it’s statistically is.” Just being open-minded to everything, and all information will give you a huge advantage over everyone else who usually locks himself into one camp.

Preston Pysh (35:34): I totally agree with what you just said. Totally agree, like if I could have thought that I would be posting a chart on Twitter that had the MACD five years ago, I would have laughed at you out. I said, there’s absolutely no way that [crosstalk 00:35:49]. Yeah, but here we are.

Charles Edwards (35:53): Most of the people who shoot you down or disagree with your ideas say, “That’s crazy, that doesn’t happen, or it’s like this,” any closed-minded attitude like that is not going to help you grow in investing, I think. Particular in this world where every bit of data and information out there is now valuable.

Preston Pysh (36:11): We interviewed Bill Miller pretty early in our podcasting time, and that was one of the things I kind of distinctly remember after we were done talking to him because he was talking about incorporating technical indicators and things like that. And I just, I remember walking away from the interview just kind of like, “Wow, I’m kind of surprised that here I am talking to this legend of value investing.” And he was talking to us about things that I just really was not expecting him to be bringing up. I share your sentiment so much there, Charles. I really like that. Okay, what are your thoughts on DeFi, decentralized finance? And if you want to talk about the NFT stuff, feel free.

Charles Edwards (36:50): I’ll describe it is my expertise is in Bitcoin, and it’s basically my whole life, so I don’t take it with a grain of salt that even though I spend my whole life in crypto, it’s so deep. You need to be an expert in different areas. But I think it is a huge amount of value in DeFi to be honest, in the long term. I think right now what I was seeing is very similar to the 2007 ICO phase, where you got tons of new tokens and models and most of them will fail or go to zero.

Charles Edwards (37:19): And I think it’s two huge problems that any individual project has. If it’s genuine in that, it’s a startup and business model in this area, in itself is really hard. And then actually decentralizing that and handing over complete power and everything to a network is even harder. So doing a bunch of them, the chances of success are very slim. And Bitcoin’s anyone’s really done it today before decentralized. But having said that, the concepts that have come out of it, I think are really powerful. So even Bitcoin fails, you could say 10 or 20 or 30 years later, it might be a bit gold with different models that broke down because you couldn’t get a digital money, in which was, there was only one version of it. And I think we’re seeing it now in NFT, for example, where you can have millions of copies of it on different chains. So it doesn’t work now, in my opinion, but I think it will in the future in some format, which maybe we can’t consider right now.

Charles Edwards (38:14): But the DeFi so Dalles in particular, is a decentralized autonomous organization, really interesting to me. So the idea that a business can be sort of tokenized, decentralized and run by voting as opposed to having a command and control the CEO person in charge. I think that model with AI on top where people just find a general direction or a general concept, I think that would be a really powerful feature. I don’t know what networks that would run on, maybe it’s Ethereum, maybe it’s one of those newer polka dot, or whatever it may be, other networks, maybe it’s Bitcoin eventually. But the concepts of it, I think are really sound. I would be very careful, and to invest it now because your chances of success are extremely small. In terms of NFTs, I’ve struggled with them.

Preston Pysh (39:04): Let me go back to that other comment you just made. And it’s mostly because of the probabilities that you assign to all these potential arrays of outcomes. You just don’t have any type of confidence in any one of them.

Charles Edwards (39:17): Basically, I don’t have any confidence at any of the bitcoin is being properly decentralized and having a genuine model to build an infrastructure that works like this sustainable into the future. There are some tokens that I find interesting, like stock like tokens, like Nexo I’ve written about in the past where they’re trying to model a stock. They pay a dividend. Most of the other tokens that they’re trying to get value from voting rights and token bands. And I’ve tried doing a lot of different valuation approaches on token bands, I couldn’t find any which justified the values of this bitcoin in the past. I think the dividend model is interesting where you try to tokenize a stock essentially, but there is a trust element and securitization regulation element, which is probably missing in the audit element. So it’s the Wild West and the probability’s assignment success is extremely low.

Charles Edwards (40:08): But if you do get one of them or two of them, you’re going to do extremely well, I think. NFTs, I struggle with the concept of it because of the duplicity of synchronizing art, basically digital art. And I think the value of any… Even if you’ve got a great piece of artwork which is worth millions on one of these chains, I think the value of that artwork is intrinsically linked to the chain. So there are dozens of different crypto chains out there. Which one will survive? Probably most won’t and maybe it will be bitcoin, or NFTs in the future, we don’t know.

Preston Pysh (40:41): And on that topic, so just so folks know this NFT stuff, this is non-fungible tokens is what we’re talking about, where the idea is like, let’s say you create a piece of digital art, through encryption, maybe as is websites are sharing that piece of art that the person who actually owns the digital asset, they could somehow be stream some type of a value in the future for the use or the utility that it provides on the Internet. So I think a better example is a kind of music. So if a person would create a song, that person who created obviously owns it. As people listen to it, they get streamed money, they get streamed SATS, Satoshi, for the use of somebody listening to the song.

Preston Pysh (41:27): And if you’re dealing with an internet that has where the platforms where this music is getting streamed, can determine who’s listening to it, who the owner of the song is through that nonfungible token, then this streaming of value can then come back to the owner of it. My issue is the same as yours, Charles, which is just we are ways to the left of that being reality based on how the internet is currently the architecture of the internet and the encryption that is provided and the platforms, how they would interact with these tokens. I mean, we’re way far away from this being a reality. That’s the concept.

Charles Edwards (42:11): Yeah, that was well described, I agree. I think there’s a really intelligent and life-changing concept in here and probably the music streaming or art credibility sharing and maybe there’d be a way to say, if you’ve copied this art, you can’t or, to link it to shut down the network of [crosstalk 00:42:30].

Preston Pysh (42:30): Where it’s like 20 SATS or whatever it to have a copy of this JPEG or whatever.

Charles Edwards (42:35): Exactly. I can see a future where it’s basically tokenized in everything, putting a price on everything and giving the owner some ownership in that revenue model. And I can see that being happening in the future. But like I said, the way the world works so far away from that and the probability of an individual change being successful, and is really low. Obviously, that’s where the reward is as well. Like, if you can get it now and it ends up happening, you’re going to do amazingly well. But it’s super low probabilities, [inaudible 00:43:05].

Preston Pysh (43:05): The copy-paste element of media is just way too easy. I mean, Okay, it’s a song. I could just grab my external recorder and record it or it’s a picture, I can take a picture of the picture. I just don’t know how any of that will be enforced in the future. But, hey, you never know.

Charles Edwards (43:25): Yeah, exactly. I agree with you.

Preston Pysh (43:28): Going back to one of your points there, one of your lessons, keep an open mind. You never know. I want to talk a little bit more about this GBTC premium. You hit on it a little bit earlier that it got to a negative five of the value that’s actually inside of the trust. You said this has happened, I think you said three times previously in the last five years.

Charles Edwards (43:50): Sorry, it’s been under 5%, so positive 5% rate for the last five years and it got as low as I think, negative 10% a few days ago, and now, it’s negative five.

Preston Pysh (44:00): Yes, I think there’s a lot of people concerned about what does this mean now that it’s gone below the value that’s actually on the underlying. Is this a trend that you see persisting in the future because they’re now getting competition? What are some of your thoughts on that?

Charles Edwards (44:17): To be honest, I’m not sure. I think the competition factor could be a relevant narrative that is suppressing it a bit, but I think that it comes back to my point of this time is different when you got a relative undervaluation. It’s usually a good time to buy. And when you got overvaluation, it’s usually a good time to do risk. So when that premium is being as high as 20, 25%, historically, it’s actually been a good time to today risk or to… There’s been some kind of local type in bitcoin, whether it be just for a couple of weeks or not until that resets. But it gives you a good indication of sentiment towards the asset. I haven’t analyzed it in any doubts as to why it’s so low right now because for me it’s an interesting metric, but it only has a few data points. But nonetheless, it’s probably a good idea to go with the data and not the narrative. So the data says it’s undervalued, it’s probably good by.

Preston Pysh (45:12): So, Charles, when I think about a hurdle rate, that’s near impossible to outperform bitcoins at the top of the list, especially over the last year, and your fund has outperformed this hurdle rate, correct?

Charles Edwards (45:26): To be clear, our model algorithms, which we call Trend King, has, so last year, we got 680% with no leverage, some more than double behind vinyl and the fund that’s excited to say that we launched the US fund for Accredited Investors two weeks ago. So that’s newly launched. I can’t give you any data on that, obviously. But yes, today we’ve been doing pretty well.

Preston Pysh (45:52): How long have you guys been active and then I’m kind of curious, backtesting results prior to the time. So this 680% that you said is the last 12 months?

Charles Edwards (46:04): That was still 2020.

Preston Pysh (46:06): That was for 2020, okay. And then when did you guys launch the fund?

Charles Edwards (46:11): It’s been a big evolution, so we’ve grown very quickly, it started as we had these indicators, and then it has been a subscription model which people, it has been independently tracked. And we’ve got that’s where that 680% comes from. And the last six or so months, we’ve been doing some managed accounts and now we’ve launched the fund. So yeah, we’ve grown quickly now, managing over 40 million.

Preston Pysh (46:37): And if a person wanted to, do they subscribe to Trend King, how does that work?

Charles Edwards (46:43): As a business, we work with high levels investors, so if they’ve got a license to manage their assets if it’s 100,000.

Preston Pysh (46:54): I’m kind of curious when you run the model of your Trend King back during the market peaked in 2018, went through the big sell off the 80% correction that everyone’s well versed on. How did the model perform in backtesting during that period of time.

Charles Edwards (47:11): Pretty well.

Preston Pysh (47:12): I [crosstalk 00:47:13], but what were the numbers?

Charles Edwards (47:16): Well, the first thing is you should take better results with a grain of salt. Live performance is the better metric, in my opinion. Drawdowns of 30 to 40% aren’t unusual in this sort of model, is there’s always some drawdown. You can’t have a perfect model. But, yes, it performs pretty well. The returns we’re getting in real life are pretty comparable to the backtest results.

Preston Pysh (47:41): You basically doubled, so it was down 80 %, you were down 30 to 40%. Am I reading that right?

Charles Edwards (47:49): I wouldn’t light it up, so there’s a lot of the profit we make in those cycles from shorting as Bitcoin is falling. So the volatility we get is often at different times to when Bitcoin is experiencing volatility or it can be in a different direction.

Preston Pysh (48:05): Got it. So, Charles, what is a tail risk that concerns you the most?

Charles Edwards (48:11): This probably to me, and I know you’ve spoken about a lot of the podcast so I look forward to this. It’s the regulatory risk which of an outlaw, arguably, and then it’s the potential hacking risk or breaking of the value of the chain in some format, whether that be a 51% attack or, some super-computing, quantum computing outcome. I know there’s plenty of evidence against that. I’m not saying that high probability by any means is an outlier, super low probability events I don’t really worry about, but I think there’s still some validity to them. So we’re seeing everything move in the exact opposite direction. As you’ve spoken about your podcast, where it’s being integrated, particularly the US, into financial systems, its banks allowed to use it, companies are holding it, and a longer and longer that goes on, the harder it is to outlaw, and then for any individual country to outlaw it, it’s just a negative for them.

Charles Edwards (49:05): The only thing I can see is if there is this cataclysmic event or hyperinflation event, which we talked about earlier, where you get sort of mass adoption or change, would it be possible for the G7 or G20 to all align and say, “You can’t have this anymore or we’re going to buy it off from you like the US did with gold.” It’s super unlikely, right, or how they could unite and do that is super unlikely. But it comes back to being open-minded, I guess there’s always that small chance that could happen. So that’s probably the highest risk, I would say, even though it’s very small and seems improbable now. We never thought a year ago would be locked down for a year.

Preston Pysh (49:46): I don’t want to turn the risk into a positive. I’m just kind of curious how you would think about this. Let’s say a major country does ban it like the US. Let’s say the US would ban it. I think that’s probably the best risk scenario you could get it. Do you find that in the short term there is a massive price hit? But then, like we were discussing earlier, the energy cost for all the remaining countries that haven’t banned it, that energy costs that the miners supply or that floor that bottom that we suspect is being supplied by the miner production cost, would it just bring the price back to whatever?

Preston Pysh (50:24): We’re thinking, let’s say, 100,000 is where we think the production cost is now based on the stock, the flow, the US comes out and bans it. The price takes a massive hit initially. Maybe it doesn’t, but let’s just walk through that scenario that the price would take a major hit through a situation like that. Does that production cost that the miners supply bring the price back up to that 100,000 level, regardless of the country, the mega country that bans it?

Charles Edwards (50:49): I think, in short, it depends on the extent, so for something like the US, I mean there is going to be a big hit because they’re such a big player, such a big player in this in the space and the integration so deep globally. And there’s also a lot of mining in there now. So the production costs of all that stuff just got switched off overnight would drop. So the production costs may drop 30, 20, 40%. Who knows? And the value would probably drop in line with that. It depends when and where in a cycle that would happen. So I think it would be a price hit. It’s just an individual country, I don’t think that’s going to matter any more long term. Like I say, I think they’ll be a hit short term, whether it be three, six, 12 months. But unless everyone denies the incentive structure of Bitcoin is aligned to that, it’s better for the other countries if they support it. So it’s hard to see this playing out unless there’s a unified against it, which we’re just not seeing any indication of right now.

Preston Pysh (51:48): Okay, Charles, the last question, what is the thing that you look at on Bitcoin that kind of is the most impressive thing to you or the thing that you think so many people miss that is the secret sauce or something that just stands out to you?

Charles Edwards (52:05): It’s nothing special for me because it’s just the supply model, the halving event inflation model, having a supply model where it’s now on par with gold and it will be the hottest asset in the world. And the way that that is so decentralized, fungible, and instantaneously transactable people miss the power of that because they just see the volatility. But they don’t realize that if Bitcoin is going to be a success, that we think it is, and all signs show that it’s going this direction and it does become a reserve currency or at least equivalent with gold. We’re heading towards 10 or 100 trillion dollars or more.

Charles Edwards (52:44): So you can’t go from zero to 100 trillion or we’re one trillion, you can’t go 100 X without volatility. So people dismiss it because of that volatility. But it’s an essential ingredient of getting there. It’s like any startup going from zero to a billion dollars, except this is the biggest asset in history, doing the same thing. So I think that’s what people miss. They dismiss it because of the volatility, but the power of it in being the future currency and reserve asset of the world is you just can’t ignore it, I think, especially in this environment today.

Preston Pysh (53:19): Charles, I really enjoyed chatting with you. I’m glad we were able to do this face-to-face here on Skype at least. And man, I’ve been following you for a while and can’t thank you enough for making time to come on the show. Give people a handoff to some of your stuff, and then I’m going to have all of this in the show notes. I’m going to have your energy article there, Bitcoin’s production cost article in the show notes, but give people a handoff to some other stuff.

Charles Edwards (53:44): Thank you so much, Preston. It’s always great to catch up and talk about Bitcoin and the market dynamics, and it’s been a pleasure to be here. You can follow me on Twitter, it’s @caprioleio. So name our business Capriole, and our website is the same, capriole.io. You can reach out there and happy to chat.

Preston Pysh (54:03): Charles, thanks so much for your time.

Charles Edwards (54:05): Thank you, Preston.

Preston Pysh (54:07): Hey, so thanks for everybody listening to the show. If you enjoyed the conversation, be sure to subscribe to the show on whatever podcast app you’re using. We really appreciate that. And if you have time, leave us a review. So thanks for joining us this week and we’ll catch you next Wednesday.

Extra (54:22): Thank you for listening to TIP. To access our show notes, courses, or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.

On today’s show I talk with Bitcoin investor and fund manager, Charles Edwards, about onchain analytics and Bitcoin energy models.

What do you love about our podcast? Here’s our guide on how you can leave a rating and review for the show. We always enjoy reading your comments and feedback!

Preston Pysh (00:02): Hey everyone. Welcome to our Wednesday release of the show where we’re talking about Bitcoin. Today’s guest is a good friend and person I’ve been following for years, Mr. Charles Edwards. Charles is a quant investor and the creator of a popular trading metric called Hash Ribbons and Trade King. On today’s show, we talk about Charles’ opinion on energy costs, potentially setting the price floor for Bitcoin. We talk about some of his favorite metrics for understanding market trends, and much, much more, so without further delay, here’s my conversation with Charles Edwards.

Intro (00:35): You’re listening to Bitcoin Fundamentals by The Investor’s Podcast Network. Now, for your host, Preston Pysh.

Preston Pysh (00:54): All right, so here I am with Charles Edwards,l ike we said in the introduction. Charles, welcome to the show.

Charles Edwards (00:59): Thanks for having me, Preston. It’s great to be here.

Preston Pysh (01:02): We’ve been chatting for a long time now, and I’ll tell you, I really pay close attention to your messages on Twitter, more so than probably most people that I follow. The reason why is because you have a real knack, especially for Bitcoin, of just knowing where things are going. You have the ability to really be able to have your thumb on the pulse and to understand in an unemotional way where things are moving. So my question, just to start things off for you, is just how do you think about the valuation? We have tons of people from traditional finance that listen to this show, talk to us about some of those ideas of how you’re looking at the value of Bitcoin?

Charles Edwards (01:44): Just before I do, I must quickly say a big thank you to you and Steve. I think your podcast is amazing. I’ve been listening to it for years, almost every episode. It’s taught me a lot on investing and how I invest in and bit, trading with Bitcoin even, and probably maybe more importantly for me at the time was, in particular, a couple of episodes on entrepreneurship and making a leap of faith, I guess. Into the unknown. That really helped me start my adventure as well, so I owe a great debt of gratitude so it’s an honor to make it.

Preston Pysh (02:13): We’re honored. Yeah, we’re honored, man. We really appreciate that.

Charles Edwards (02:19): So yeah, in terms of valuation, my background was value investing as well. I was really into Buffet’s approach, Buffet’s essays; “The Intelligent Investor” for probably 10 years or so and went about and tried to go about an algorithmic approach to valuing stocks using a discounted cash flow approach and automating that. I did that for some time, a number of years quite well, but I obviously caught the Bitcoin bug and wanted to take that valuation approach to Bitcoin because I could see the power of it. A lot of the analysis was really just more price or speculation-based, I suppose. There was quite a lot of good work done by Willie Woo in particular. I wanted to build on that, so I looked at it from a fundamental perspective at the start. Now it’s grown into fundamental and technical analysis, is how I present that to people, but the reality here is that it’s grown to all sots of information.

Charles Edwards (03:11): Anything which comes into supply and demand, so four or five years ago I thought technical analysis was rubbish. I actually was at a John Bollinger presentation. I left halfway through because I just thought it was hocus-pocus and the irony is that it’s not. There are limitations to every method of investing and analysis you do, but there’s a lot of power in different information. I try and consider now anything from the technicals, momentum, fundamentals, onchain, sentiment, whatever you call it. I think all this information, any information is just input into a supply and demand calculation at the end of the day, which supply and demand set the price for any asset.

Charles Edwards (03:52): I would argue with, in value investing it’s the same thing when you’re discounting cash flows and trying to come up with intrinsic value. You’re basically saying, “At this price, if it’s worth $10, below that the supply of that dries up.” Because no-one’s willing to sell it. Because within a margin of safety of course, why would you sell it when the business is worth more? So you know that when you buy below that, there’s a statistical probability that there’s an upward pressure in price. I try to take that same approach to Bitcoin and basically consider anything which would set that, from whatever it be, onchain to price behavior, to different fundamental inputs or just even correlations with the stock market as well.

Preston Pysh (04:32): Talk to us about some of these metrics that you’re talking about because back before the halving event, you and I… And to be honest with you, I took the idea completely from you, but I was just talking about it a lot, which was the Hash Ribbons. This was an idea that you had talked about. There are many other ideas that you’re using various metrics for, so talk to us through some of these metrics. Maybe start off with the Hash Ribbons, and whether you find it valid today, or it’s only valid at certain points in the four-year cycle? Talk to us about some of that stuff.

Charles Edwards (05:02): Hash Ribbons is probably one of the most known for one of my early indicators and still today, I think, probably the best long-term buy signal for Bitcoin. I just try to come up with an approach to find out when a capitulation event in Bitcoin had ended. Every cycle is usually 80 or 90% down draw on the Bitcoin price and there’s been three or four of those type events. What I was trying to do with Hash Ribbons in particular is identify when that was over to get the best buy opportunity. It turns out that what or when the price drops from the cycle peak, say 20, 30, 40%, at some point the inefficient miners start to struggle to be profitable or they find other opportunities; maybe with higher profit margins in other old coins or in other business ventures with their equipment so they start to shut down. Particularly the miners with higher electrical costs.

Charles Edwards (05:52): The average bitcoin miner, which would cost around 3.5 cents per kilowatt. It varies widely. Some miners can do it for a cent and they’ll be fine no matter what, and some are like five cents or six and they will struggle when these events happen so they’ll potentially turn off. Some will shut down completely, go out of business and maybe sell off their Bitcoin to get out of that, and that’s where you have that real collapse in price. Another 30 or 40% type collapse. When that is over and they make a left for the efficient miners and difficulty adjusts down, it makes things a bit easier. Things start to bottom out and creep back up, and when you see that reflected in the hash rate and then also, even better, it matched with some price momentum, it’s a fairly great buy opportunity. That is like a bottoming of, I suppose, the supply. In general, with a lot of the metrics I look at, it’s much easier to identify undervalue and bottoming, than it is to identify tops.

Charles Edwards (06:47): I can talk about that a bit more later, but it is… Well, I’ll say it now, because when you… It’s like intrinsic value with a stock. When it’s under that price, you know you’ve got a good deal, whereas if the value… If the stocks were $10 but it’s now $50, you don’t know if it’s going to get it to a $200 or back to $10.

Preston Pysh (07:06): Because of the emotional piece that’s driving it, it’s too hard to determine emotionally how much more-

Charles Edwards (07:13): Yeah, it’s easier to identify the fair value, but not when the overvalue is over, I suppose. So with Bitcoin, in particular, it’s a one or two-percent reduction reliably. So the upside potential is if demand in stocks is huge so it can go do massive, historical levels of overvalue action very quickly, and it’s harder trying to find the top. I’m not saying you can’t do it. It’s just, you can do it much more accurately with the bottoms because you know that the supply’s gone and this is where it usually start to trend up. So if it tops, there are the metrics that we’re looking at like HODL waves, which is basically a metric of what percentage of the Bitcoin miners have been holding Bitcoin for more than say two years? Because it has been the baseline so the longer terms mining money and if they’re selling or buying, it’s very interesting. From tradings and discounts, of Grayscale trading for example. The stable climb prints of the supply of Tether, in particular, USDT.

Charles Edwards (08:09): Another one I really like I wrote an article about as well about a couple of years ago, Dynamic NVT; so Network Value to Transactions, so it’s like a paid ratio for Bitcoin. That one in particular, when they get into an overextended red zone, it’s often a good time to take up some risk. Same with the main model, which has actually worked really well the last few months, which I know you’re a big fan of, and that’s been about to run for 2.5 hours. That high leverage area, it depends on your time horizon, but it’s a good idea to manage risk. So probably, I should come with all these metrics. It really depends on your time horizon. So if you’re investing for five-years plus, there’s basically only one metric, which is buying more.

Charles Edwards (08:49): Obviously, not investment advice, but any metric you look at, one to two cycles onwards, it almost says everything is undervalued for Bitcoin, that you’d be struggling to see it under 200,000 in five, six, seven years time, and you spending a huge anomaly, or black swan type event we cannot foresee right now. When I tweet or one of the articles I write, it’s usually looking at that wonderful year period or monthly level period of how can we try and manage those big down drawers of 80% and when’s a good time to buy? So that’s another time horizon where a lot of these measures that I just talked about I think are valuable. And then if you want to gain more high frequency, which is some of the tradings that we do at Caprioli and buying and selling on the hourly top level, it’s a different set of data. It’s a completely different supply and demand model.

Preston Pysh (09:38): So somebody who would hear the previous part that we were talking about, as far as it being difficult to understand a top because of the emotional aspects of the market participants. I think a person would hear that and say, “Well, the same thing could be said about a bottom.” But I suspect your answer goes to the electrical cost and minor stepping in. But I’m curious how you respond to something like that, considering you should expect the exact same thing on the bottom?

Charles Edwards (10:05): I suppose the demand is infinite, relative to the current price, so they can get 100 X, whereas the supply isn’t, that’s probably the highest level summary. But you’re right, production cost is a great metric for that because it’s looking at the electrical cost of mining bitcoin and the number of Bitcoin per day to calculate what is the price to mining bitcoin. And once bitcoin price goes below that, it starts making sense to start shutting down your operations. There’s kind of two levels of production cost, and [inaudible 00:10:36] in the article I wrote, considers more generally business costs. So it might be a rent and warehousing profit margins everything, but even below that, there are electrical costs. So that’s the price at which you literally wouldn’t they just turn off your bitcoin mining rigs because the price of Bitcoin has broken that threshold. That has never happened historically until March of 20 last year, where we dipped under it for a few hours and you had the ultimate buy Signal ever at 3.5, $4000.

Preston Pysh (11:04): It’s hard to believe that was less than a year ago.

Charles Edwards (11:06): In three days, a year ago, and that was a 70% drop in a day, which is happening all the time for Bitcoin, an extremely rare that time of the cycle. So an unusual event. So when you get into this, whether there’d be Hash Ribbons or production costs or extreme levels of undervaluation there, the Bitcoin and considering where we think this is going particularly in the macroeconomic environment we’re in, it’s a great buy signal statistically.

Preston Pysh (11:36): So Charles, you’ve written an amazing article on this whole idea that you’re talking about as far as the electrical cost and there being almost like a floor to the Bitcoin price based on these electrical expenses that the miners are producing. What’s the name of the article? And then is there any other highlights that you would point out from that?

Charles Edwards (11:55): I think that would be Bitcoin’s production cost, as the article, yeah Medium, so I’ve got a few articles there which go through all of the metrics we’re talking about here in greater detail. So, yes, feel free to check that out. And then any questions people can shoot them through.

Preston Pysh (12:10): Are you firmly of the opinion, so when you look at the price chart and you see that it almost is like a perfect representation of Metcalfe’s law, especially when you look at the base at the bottom of the price action over the last decade, you’re of the opinion that the miners and the energy to mine the Bitcoin is setting that floor. Would that be a correct assumption?

Charles Edwards (12:34): Yeah, it plays into Metcalfe’s law and also the Lindy effect and the domination that Bitcoin now has in this market. So you’d be a bit more questionable maybe about these theories four or five or six years ago. But now, it’s very clear, [inaudible 00:12:48] in your point, I was spoken about as well, that Bitcoin is the clear winner in this decentralized monetary space. So you can, I suppose, trust in these metrics a bit more. You see, it recently when we broke out a trillion dollars and Bitcoin is the fastest-growing asset to get to that faster than Facebook and the Internet and these other metrics.

Preston Pysh (13:08): Do you see that production cost pulling in governing the top of the price, or do you feel that maybe the price could just keep on running and it could become a dominant global currency without the price, the energy costs pulling it back down into a lower level?

Charles Edwards (13:26): Yes, I think you go through cycles, I think right now the production costs are not very useful for us because we’re so far above it. The energy value is also less valuable, that’s around 25,000. But the main thing with those metrics is its main reverting to the energy in particular, so that is a model which maps the energy input in joules almost 1:1 to bitcoin. So it assesses the hash rates, the mining hardware efficiency, and supply growth rate of Bitcoin. And basically, you calculate it all out and it’s just joules of energy in and multiplied by a price multiple. And you get the energy value. Their prices may revert to that consistently for the last 10 years, it’s, I think, certainly very powerful in my opinion.

Charles Edwards (14:06): But it comes back to intrinsic value, like your value investing approach when the price’s below it, it’s a great buy. When it’s above it, you’re in a little bit, maybe extended territory, and need to be more careful or it provides less value. Historically, though, the last cycle’s prices extended pretty consistently. Four to 500% above energy value at the top, it doesn’t mean it will this time, but that’s the regions where you want to be a bit careful. We’re now about twice energy value, and the things to look out for there when hash rates and energy value just start to drop, that’s when you probably want to start either managing risk or definitely not be buying when you’ve seen a network drop.

Charles Edwards (14:44): And that’s just one element. So does the hash rates, which gives you an insight to the miners that you might see institution start unloading coins on the exchanges or the multiple might be really high as well. You really want to get a confluence of factors to line up and give you an insight as to whether the top may be in. But yeah, certain metrics are more useful when you’re near fair value. So production cost, energy value, and other metrics are better when you’re extended or maybe more valuable, such as many multiples or the Dynamic NTV ratio.

Preston Pysh (15:17): Talk to us a little bit about your opinions on the macro backdrop, particularly in the past year, and how you think that kind of plays into the Bitcoin narrative?

Charles Edwards (15:28): So I think [inaudible 00:15:29] probably got a pretty similar view to you, in that probably the best [inaudible 00:15:35] and his views on these cycles. So, yes, a strong believer in what he writes about where we are, that we’re near the end of 100-year debt cycle. And it’s a period where there’s a lot of debt restructuring, potentially currency collapse. And in the midst of that, we have Bitcoin appearing as the perfect candidate. So I think that plays into Bitcoin’s hands. Same time, even before last year or last year recession was pretty obviously going to happen. A lot of the macroeconomic factors were screaming towards it, such as the yield curve inversion, which is a perfect hit rate. And you’ve now got this situation where we’re at the end of a huge cycle, we’ve got recession, we’ve got lockdowns and a struggling economy, with GNP down, stocks rallied and gold is still down from 2008. And so when I look at it, the macro, you see the economy doesn’t look very healthy.

Charles Edwards (16:26): It’s propped up with continual monetary stimulus and you see stocks flying high. So I’m not here to say that stocks are overvalued because it’s hard to say that when you’ve got this much printing, people need to put their capital somewhere. And that’s either gold, bitcoin or stocks. Obviously, we think Bitcoin is a great choice there, but it’s hard to know where that trend ends. I think the optimistic scenario is the beautiful deleveraging that [Dahlia 00:16:53] talks about, where we hopefully have some great policies implemented, debt reduction by government, which lines up perfectly with monetary printing. But I’m personally not saying that. I don’t know if you’ve got any insights there for us some.

Preston Pysh (17:07): Yeah. No, I’m with you, I think when you’re looking at that, you’re just saying… I think this is where Ray gets the most grief from a lot of his followers is I think people say this whole beautiful deleveraging thing that you talk about at the end. How does that work again?

Charles Edwards (17:22): Yeah. It seems very optimistic. I’d love it to be true, but I think that it’s going to… They can’t stop printing. So the question is if they’ll implement policies to manage the debt down, which I am not saying. So for me, at some point, it feels like it’s going to buckle in terms of people… There’ll be switching point, we’re seeing Bitcoin every day with a price appreciation will be somewhere. There’ll be some point where we’ll be like, “This money’s worthless,” like it has happened at the end of every debt cycle.

Charles Edwards (17:48): And there’s probably a more clear, obvious hyper-inflationary type event, which I think we’re seeing now in asset inflation, but not really in day to day living so much yet. So what does that mean? I think for stocks, it means there’s probably going to be a lot of volatility to the upside for sure, that if things collapse also potentially to the downside, as we saw in Weimar, Germany and some of other inflationary cases. The Bitcoin, I think it’s great in the long term because it’s the obvious contender to fiat currencies right now.

Charles Edwards (18:20): In the short term, there is some risk in large down draws or collapses like we had in March last year. So it really depends on its high rise. And if you can’t handle volatility like that, if 30, 40, 50% drops, which could happen if the stock market drops 30% tomorrow, then Bitcoin’s probably not for you. But if you are willing to accept that it’s possible and stick around for a number of years, probably going to be a great option to navigate in this economic situation.

Preston Pysh (18:48): So Charles, what are your thoughts on this cycle that we’re currently experiencing in bitcoin? I’m assuming you believe in these four-year cycles, but give us your thoughts on that and then where do you see us right now in this bull run that we’re currently experiencing?

Charles Edwards (19:04): There’s probably two parts for this cycle and where we are now. So coming into this year, I thought we were going to get to one or 200,000, at least I wouldn’t be surprised if we touched the 300. And that’s based on about a year ago, long term forecast with energy values, pretty simple regression, but also a number of other metrics. You look at whether we start to flow, for example, or different things. Even Fibonacci sequence is amazing how closely and there’s something else. This thing is crazy, but how closely the long term and low time frame price action of bitcoin matches into different golden ratios sequence, so almost every Bitcoin top is about 17 to 18 times the Fibonacci retracement of the prior top.

Charles Edwards (19:47): So that puts us around 300K. Yes, all the metrics kind of point to that region. And I think we will get into most likely 200K and possibly higher. And from there, the bounds are overly dependent on economic stimulus. I think the 25% inflation we’ve now had, which we never had before in terms of monetary printing, will ratchet that up and more than 25% factor. So the price appreciation we’ve had just in the last few months of Bitcoin is significantly faster in 2017 when there was maybe arguably more hype at that time, but closer to 2013, and I think the speed maybe contributed or probably contributed from the institutional buy and the hedge against that monetary inflation.

Charles Edwards (20:34): So I think we’re going to that region, but I would adjust that based on new information that may come out in the months, if we’re going four or five trillion stimulus. So who knows what in the next six, 12 months that will probably impact it by significant ways. In terms of the cycles, I think we’re still on the four year cycles for now. So a learning for me has been in investing and trading to be careful of this time is different. So it’s easy to do that, particularly in hype and mania, and top of cycles, “We’re never going to crash again and bitcoin is the new thing.” Usually if it statistically happens one way, that those odds will continue. So a good example is the hash ribbons, for example, we had a buy Signal in December and we’ve had four buy Signal since I release that. And they’re all up between 150 and 600% since that was released without any change.

Charles Edwards (21:28): With the one in December, there was a good narrative going around it because the end of the wet season for their miners and the Chinese miners, during the wet season, they relocated across the country, use hydropower because that’s cheaper. And then after that, they relocated and also turn on and off their rigs to do

Mustafa Yilham, VP of global business development at Bixin, joins the show. Bixin is an early Asia-based Bitcoin miner; they operate a popular wallet app, and they run a Bitcoin-denominated quant fund of funds. We cover prevailing myths around industrial Bitcoin mining and the reality of sourcing energy at competitive prices for mining. In this episode:

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Nic Carter 0:00 Mustafa, welcome to the show. It’s such a pleasure to have you with us today.

Mustafa Yilham 0:07 Yes, thank you so much for having me today, Nic, really appreciate it.

Nic Carter 0:11 I’ve really been looking forward to this conversation. Actually, I think we’re gonna learn a lot about mining in particular. You’re a wealth of knowledge on the topic. So I’m super, super pumped. Why don’t you tell us a little bit about your role at Bixin and your responsibilities over there? And also, tell us about Bixin too, because I don’t think Americans are sort of as familiar with it.

Mustafa Yilham 0:41 Sure, sure. So my current role at Bixin is vice president of global business development. And my main task, you know, is to help different subsidiaries on their Bixin group to expand internationally. And to tell you a bit more about Bixin mostly have two different business focus. One of them is Bixin wallet, and another is Bixin finance. We are one of the largest blockchain crypto wallet provider in Asia is I think, currently, 1 million registered users and Bixin wallet offer different services to its retail clients such as custody, escrow, trading, lending, payment, cloud mining, etc as part of its ecosystem. And at Bixin finance, we run two very large operation like Bixin mining and fund of fund. We currently manage around 300 megawatt of power roughly that’s currently equivalent to 2% of global Bitcoin network. We are also very early investor in Whatsminer which is one of the largest mining manufacturer. And on the fund of funds side, which we announced earlier this year. We currently have an asset under management around 7000 Bitcoin with the main purpose of investing in global crypto quant funds. And you know, the fund is completely Bitcoin denominated and also supported by our prop capital. And lastly, we also have $100 million fund that is focused on open finance venture investment. Previously, we invested in companies such as micro bt, whatsminer, nervos, algorand, arweave, etc. And, you know, our newest investment is to a $2 million Asia lead investment to Mina protocol, formerly known as Coda.

Nic Carter 2:40 That’s a lot of separate concerns within one institution. Mustafa.

Mustafa Yilham 2:45 Yes [laughs].

Nic Carter 2:46 I dont know how you manage it all. There’s so many things we can cover, maybe we can start with the Bitcoin denominated quant funds, because that totally blew my mind when I first heard about it. So the objective of that fund is to invest Bitcoin in sort of arbitrage for quant funds. And actually, you’re not targeting fiat returns, you’re targeting returns against your Bitcoin benchmark, right?

Mustafa Yilham 3:14 Yes, so the fund of fund is completely Bitcoin denominated. So we are targeting returns only in BTC. And you know, the main goal is to obviously increase our Bitcoin holding and at the same time hopefully provide liquidity to global Bitcoin network.

Nic Carter 3:37 Have you found that the managers that you approach have been amenable to using Bitcoin as the index and only kind of taking carry if they beat Bitcoin?

Mustafa Yilham 3:49 So I think that have a slight difference between quant fund in the West and Asia. And, you know, we we actually started investing in crypto fund quant funds since last year in China. And after we announced the news this year, we started to build more global presence on the investment side, in US, Europe, Russia, the Singapore. In China, most of the quant managers are very used to Bitcoin denominated terms when investing in crypto funds. And outside of China and most team we spoke to offered USD denominated terms. I think that’s mostly due to regulation and institutional investor preference that these teams are there are potential investors. But I think that’s like rapidly changing now, starting quarter two this year, more team actually have come back to us and told us, you know, they now have a Bitcoin denominated terms on more us teams we spoke to no also have a Bitcoin denominated terms.

Nic Carter 5:06 And so your perspective as an institution as you’re just interested in increasing your stock of bitcoins, as opposed to its value in fiat terms, because I guess in your view, that’s the most important thing is gradually growing your share of bitcoins. Kind of on your balance sheet is that right?

Mustafa Yilham 5:27 Yes. And you know, when we first announced the news, us it was a huge surprise to a lot of people. I think it was May where we put in right 6600 Bitcoin and at the time, you know, people were very surprised because this this portion is all hatched. It’s one zero Fiat 100% Bitcoin denominated, but you know, six months later now, the original value, I believe was around $66 million with 6600 Bitcoin now the asset under management is at 7000. Bitcoin with overall value in fiat value over $130 million at the fund of fund alone. So that’s like two x, then, I think now six months, and, you know, people start to change their view on whether it be a right decision or not,

Nic Carter 6:21 right. So as a as a firm, like bixin, you’re miners, but you’re not trying to actually hedge your exposure and be market neutral, you are sort of directionally long on Bitcoin, generally.

Mustafa Yilham 6:37 Generally, we are Bitcoin denominated. But you know, as a miner, we still have operational costs, such as electricity, labor costs, etc. So, you know, obviously, we do have a risk department that constantly ensure, you know, we are hedged to certain degree, but largely speaking, yes, we are very Bitcoin dominated.

Nic Carter 7:02 So, let’s talk about mining for a little bit. This is an topic of endless fascination for me, I think a lot of traders are paying attention to mining, there’s been a huge amount of chatter recently about miners not being able to sell their coins. So that was the rumor, at least, which I think you helped dispel a little bit on social media.

I think the one big question that people ponder is, you know, what is the effect of miner behavior behavior on Bitcoin cycles? You know, because there’s this one theory that, you know, miners have a pro cyclical effect on Bitcoin in terms of, they sort of hoard the coins that they’re mining during bull phases. And then in bear markets, they are forced to liquidate a lot of their coins. And so that actually adds to the sell pressure and bear market. So it sort of intensifies the price action in both directions. Is that kind of consistent with your experience? I mean, that’s definitely the popular narrative around miners. Is that does that align with what you’ve seen?

Mustafa Yilham 8:11 Yes, most miners are like this. But I think it’s very important to note that it has nothing to do is the situation that’s going on in China right now, it has always been like this, and this for a very similar reason. Because, you know, for most miner, after they invested a lot in purchasing mining machine and setting up operation, they don’t have a lot of extra capital just sitting there to pay for electricity. So they need to sell their Bitcoin to cover that. Now, obviously, during a bull market, you can sell less to cover your cost. So you can hold more Bitcoin and during the bear market, you know, our experiences that electricity cost can be as high as as high as 90%. So for most miners, you know, during the bear market, you would have to sell more to cover your cost. So I think that statement hold true. But again, it I don’t see it have anything to do with what’s going on in the China ecosystem currently.

Nic Carter 9:11 Right, right. Yeah, I didn’t mean to imply they’re related. Would you say just, as far as attitudes go, I mean, the entrepreneurs that set up mining farms, are they doing it because they want to accumulate as much Bitcoin as possible? Or are they doing it because they see an arbitrage and they feel that they can get they can mined Bitcoin more cheaply than the sort of median Bitcoin is mined, and they just want to play that arbitrage and they don’t really care about the asset in the long term.

Mustafa Yilham 9:40 Um, I think that really depends on different miners from our experience in China. Most large scale miners are very firm believers into bitcoin take Bixin as an example the founder actually started mining Bitcoin, I believe in 2009. And since then, himself and the firm have been a very firm believer into bitcoin and we are Bitcoin denominated, and I think there are other miners that hold different view and constantly liquidate their portfolio. So I think it really varies.

Nic Carter 10:25 Yeah. Yeah, that’s fair. So part of your mandate in your role is actually finding suitable electricity for mining. And this is another topic, which really fascinates people, because there’s all this chatter, you know, about, like, you want to have a cold climate and you want cheap electricity, you want sort of geopolitical stability and so on. But I figured I would ask you, you know, what are the traits you look for? In a, an energy, you know, center, you know, when you’re scouting for a suitable place to mine? What are sort of the key considerations for you?

Mustafa Yilham 11:08 Yeah, so when we are looking at different market to source electricity, I think the most important thing to note is that we’re looking for electricity surplus or waste energy. And to give you an example, China has a lot of electricity surplus during summer months, especially in the Sichuan region, which produce a lot of hydro power during the rainy season. So the price of electricity is much cheaper compared to you know, rest of the world. In addition, we also consider costs such as like logistic cost and labor costs. And we have also been paying attention to overseas market and already made some significant investment in Central Asia. And during the due diligence process of mining, farm investment, there are a few key factors we look for, such as energy type, price, voltage, and capacity, and location, geolocation. The price of electricity normally is the most important crucial component in crypto mining. And the voltage, you know, oftentimes determines our potential cost for infrastructure investment. I think in addition, we also pay very close attention to other factors such as local regulation, policy, taxations, governmental support, we also want to pay close attention to reliability of the local energy company, our local partners background. So I think during this initial due diligence, and the sourcing process of electricity, there’s a lot of factors that we normally put in taking place.

Nic Carter 13:00 And so, I mean, your role basically involves scouring the globe and scouting out these locations. I mean, is that are you even during sort of COVID times, are you still sort of trotting around finding cheap electricity sources?

Mustafa Yilham 13:17 Yes, that is part of my role, because, you know, I spend like, like three to six months in Siberia, and this far east of Russia, for example, in end of 2018, and 2019, which was a very fascinating experience. And, but during the COVID time, our overseas expansion was kind of put in halt temporarily, just because labor and logistic are very difficult to arrange at this time.

Nic Carter 13:56 What are the most promising jurisdictions that I mean, you know, he don’t have to give up the full secret sauce, because I’m sure there’s some, some proprietary, you know, information as far as it pertains to your business, but what generally, you know, geographically, what are some interesting locations that you’ve discovered for mining purposes?

Mustafa Yilham 14:21 So I would say like, you know, when we look at a geolocation. So, you know, price, regulation, temperature are like the most important factors. I think Central Asia is great for mining outside of China, speaking in Central Asia is great. Russia, I think have huge potential. North America, I think has the probably most potential in next few years, for a few different reason. But I think those are generally the regions we look at when I sourced electricity?

Nic Carter 15:04 And so with North America, I mean, would it be because I know there is hydro here I actually visited an old aluminum smelting plant in in in Massena New York, which was powered by hydro which had been converted into bitcoin mine. So you know, I’ve certainly seen some of that firsthand what it what is it that makes you bullish on on North America as a potential venue for mining?

Mustafa Yilham 15:33 So, I think based on our conversation with different mining manufacturers, on average, right, like around 60%, of the mining machine sell in past two quarters or so have been outside of China, in recent months, and mostly actually in North America. And I think that there’s few factors that plays into why North America could be huge in mining in future. One of them is price. I think you’ll be surprised to hear that. In fact, the price right now in North America notice are cheaper than the average price in China. And in the past, we used to think, you know, US high labor costs, less mining ecosystem, and, but we can clearly feel that things are changing rapidly, who’s in past one to two years. And I think during the next cycle, you will see a much higher involvement from us and other country into mining. And I think the most important factor also for us miner, is that they have access to cheap capital cost, meaning, you know, they have the ability to go out there and, you know, basically borrow at a much cheaper rate than Chinese miners are able to.

Nic Carter 16:59 Is there an element of political stability that comes in I know, certain jurisdictions in the US, you know, kicked out foreign miners who said they didn’t even want Bitcoin mining to happen at all, but I guess there’s probably slightly less capriciousness in terms of, you know, local regulators changing their minds on mining, as compared with China. That’s sort of just me speculating. Does that political stability come into play at all for you?

Mustafa Yilham 17:30 Um, so I think for the next two to three years, I think you will see more local miners from US increase their hash rate, but I think the cross border geo relocation, we don’t see that happening quite a lot. Just because, at least under the current environment, like you said, there are a lot of uncertainty on political, economical, and overall macro side. And so I think you’ll see Chinese miners continue to grow in China, but a lot of the hash rate will also start to grow in other countries like Russia. And, you know, US and North America excetera.

Nic Carter 18:22 Have you I’m sure you’ve looked at this. Have you looked at the Cambridge center for alternative finance their dashboard on Bitcoin mining? location wise?

Mustafa Yilham 18:32 Yes. And I think most of you are looking at it in China, right?

Nic Carter 18:37 Yeah. Maybe I’ll pull it up right now. They we had Apolline Blandin on the show to talk about it. They partnered up with pools, and did some work on geolocation. I let me see if I can. Yeah, so right now China’s got 65% US 7%, Russia, 7%, Kazakhstan, 7%, Malaysia 4%, around three 3.8%? Do these numbers seem kind of reliable to you? No. You do see these numbers and think, yeah, this is sort of roughly, you know, consistent with my experience, or is it sort of wildly, wildly, you know, different in your experience?

Mustafa Yilham 19:25 Um, I think for now, it is consistent with our experience, but I think within next one or two years, those data will change drastically.

Nic Carter 19:38 What do you make of the kind of significant mining in Iran do does that strike you? Is the state subsidizing Bitcoin mining? I know the Iranian government has recently sort of indicated their desire to be more active with Bitcoin or have you you know, anecdotal Seen, you know, big mining operations kind of locating themselves in Iran?

Mustafa Yilham 20:05 Yeah. So this might come quite surprise to you. But I think even as a Chinese miner where we like, like Bixin, for example, I’m sure they are some miners who does not pay too much attention to, you know, OFAC and other sanction list. But yeah, as we have always avoided Iran, and we I mean, I haven’t even looked at the region or did any due diligence on that. Just because, you know, the, I think it has a Chinese miner, we do not want to, you know, just violate any OFAC regularly. That’s right.

Nic Carter 20:55 Yeah, that strikes me as a good idea. Yeah, I know. I, I, you don’t have to answer this if you don’t want to, but um, what would you say, you know, to someone who’s like thinking of getting into mining, what would you say would be a good electricity price for them to even be competitive in the market today? Would you say it’s sort of in the 5-6 cent per kilowatt hour range?

Mustafa Yilham 21:20 I think it depends on the scale you’re trying to go for. And the price of bitcoin? I think under I mean, right now, if you are you a retail customer, and you’re trying to go into bitcoin, I think it’s very difficult for a few reasons. Number one, you need to purchase mining machine, which I think both what’s Whatsminer and Bitmain are, are booked out until next year, April to June.

Nic Carter 21:49 Right.

Mustafa Yilham 21:49 You need to find mine like investment very large scale investment mining farm. build that out. I mean, that it requires a lot of capital, and it requires a lot of experience to run a mining operation properly. If you are just trying to purchase mining machine, and there is a way for you to purchase a you try to host I think maybe, you know, four to five cents. Five point five could be a competitive price. I think that on the current bitcoin price. And I think that that’s general price we seeing North America for hosting at the moment.

Nic Carter 22:29 Yeah, but so you wouldn’t encourage anyone listening to to get into mining as an individual as a as a profession

Mustafa Yilham 22:38 At this stage of mining cycle, probably wouldn’t.

Nic Carter 22:44 What does it tell you that the hardware from whatsminer in bitmain is sort of spoken for? I mean, that sort of implies that people are like everything about what a an asyik is, it’s like a physical instantiation of future Bitcoin rewards. So it’s kind of like people have bought these forwards or these these physically settled Bitcoin futures in hardware form. I mean, that strikes me is pretty bullish. What’s your interpretation of that?

Mustafa Yilham 23:13 I think, you know, a lot of the purchaser, like we discussed earlier for this round of purchasing are from outside of China. A lot of them are very large institution, some even publicly listed company in United States. I think where you previously worked out fidelity’s, one of the large minor in North America, alone side few others, for institution to mine Bitcoin. You know, I think that’s really due to the fact that for them, you’re right, it’s a very long option, and also, probably better option than to buy bitcoin directly.

Nic Carter 23:55 So there was a huge discussion point earlier this year, I’m sure you saw this hash rate dropped dramatically, a couple of months ago, and a lot of people were speculating that it was due to this seasonal migration, where I believe it’s, you know, the rainy season, this dry season, and the volume of water flowing through hydro in, you know, provinces like Sichuan declines. And so then maybe the miners base their migrate their hardware to other regions in China, with sort of non renewable sources of energy. That was certainly the speculation out here in the west to explain the hash power dynamics. Is that something you’ve noticed, I mean, are you aware of this, this seasonal migration? People talk about it, but, you know, is that something that they you know about?

Mustafa Yilham 24:51 Absolutely. seasonal migration, I think really depends on geolocation, but it does hold true for Chinese minor. So like for Bixin during the summer months in the rainy season, our operation are mostly based in Sichuan. You know, and during the winter, we migrate to Xinjiang and Inner Mongolia. We also have mining farm in Kazakhstan, where we deploy some of our mining machine. But in countries like Kazakhstan price are same all year round. So migration is not required within the border. But it definitely holds true for Chinese mining community.

Nic Carter 25:34 Do you think that actually explains the rate the really dramatic drop we saw in hash rate? Or, you know, is it could it just be normal variance?

Mustafa Yilham 25:44 Yeah, I think during I think during the past cycles, each year, during the miners are migrating during the rainy and dry season, you will see a drop in the hash rate. And I think it’s just normal because, you know, see, if you look at China is very huge. And, you know, most of them are going by train and so trying to sit down have quite a distance for them to do that. I’ll just take I set it up locally afterwards.

Nic Carter 26:16 Yeah, it is a long way. Yeah. Besides the country entirely.

Nic Carter 26:23 I’ve so I’m so so curious about mining. This is amazing. It’s amazing. All the information. There’s so many, like myths that were busting or confirming? You wouldn’t believe. I mean, I guess you would the chasm in understanding between kind of east and west. I guess one thing is, you know, you have these withdrawal issues that the major Chinese exchanges, you mentioned on Twitter that you didn’t think that was the cause of the Bitcoin rally. I certainly agree with that. I mean, I had the team at coin metrics, look at this. And they found that miners were able to liquidate their coins as normal. So I guess we can sort of put that one to rest. In your view, the withdrawal issues at various Chinese exchanges did not cause this current rally, correct?

Mustafa Yilham 27:16 Yeah, I think that statement is not true. That’s for several reasons, which, you know, I didn’t- I made that statement

Crypto needs financial products — simply positioned and simply transparent — to preserve and grow people’s assets in difficult times. 18034 Total views 46 Total shares Listen to article 0:00 Opinion With the COVID-19 crisis showing no signs of abating in the United States, central banks around the world have deployed financial airbags in the form of quantitative easing, and they plan to do a lot more. Modern Monetary Theory has taken center stage, and we are witnessing it in action. It’s a sight that will leave you awestruck: like witnessing the financial version of the first atomic explosion of Los Alamos and the Manhattan Project.  What is going on with the world’s economy is unprecedented. We are entering completely new and uncharted territories, and all bets are off with respect to inflation/deflation. How will different asset classes react to the stimulus? Will we see price inflation, price stability or chaos? No one knows. One thing is certain: More absurdity is surely in store, and one should keep their wits about them and pay close attention. In 2008, the QE money printed did not enter circulation — it stayed at the Federal Reserve in a charter account of the member banks in the form of accounting entries on computers. This was just ignorance of how the financial flows worked, even though the net effect was positive: Bitcoin () was born as a reaction to QE. The QE of today is, however, one of a different animal — it is meant to go to households and small businesses to pay for food and rent, or simply put, prevent famine, mass homelessness, general riots and societal breakdown. What we have been witnessing is the end of 19th-century industrial capitalism and the reign of monetary capitalism. This has been true since the end of the Bretton Woods Agreement some 50 years ago, but not entirely evident for all. The goal is humanistic: to avoid death, misery and social upheaval. This new money has entered circulation all at once — no questions asked — directly into the bank accounts of households and small businesses as deposits pumped by the Fed, and these have inadvertently found their way into the financial markets. The result: a monster rally in the equity markets that has snapped a few necks and caught sociopathic short-sellers by surprise. Do not bet against the Fed. Doing so will give you a quick, unglamorous and leveraged death. While Robinhood traders are typically thought to be behind the market’s rallies, the truth is, operators directly linked to the Fed do the bulk of the “behind-the-scenes” buying, and they buy everything from bonds to index funds and single equities, and soon –– cryptocurrencies. Ironically, crypto heads are uniquely conditioned to understand what is going on with the current monetary system and market-led shenanigans — it’s all in the market-making order books. Cryptos never had a real economy backing them — they have no endogenous cash flows. Their main economic value propositions are (1) speculation; (2) drugs and tax evasion; and (3) alternative stores of value outside the traditional banking system. In short, they are valid financial instruments. Increasingly, stocks are becoming uncorrelated from the underlying economic value and rely solely on the supply and demand dynamics of the financial markets, without economic underpinning. The economy is crashing, yet stocks are going skywards — this is not a paradox, but a feature: This is exactly what is happening with cryptocurrencies. The paradox of zero cash flows and infinite valuations is one of perception. Asset backing is important. Cryptos, in general, have held their own as an investment class even with little asset backing and –– perhaps! –– because of it. Since cryptos are not directly linked to the health of the economy, their movements have been largely independent of economies. They performed well as stores of value by paring March’s losses and seem poised, as of this writing, to break out going forward. This is pure supply and demand logic — the psychology of a numerus clausus financial assets (limited supply of only 21 million BTC) and a seemingly infinite wall of liquidity chasing them. What you are seeing is an inflow of financial and monetary demand, not economic demand on the demand side of the order books of market makers, both in stock and crypto markets. Forget fundamentals, narratives and traditional valuation methodologies. Stocks are now like crypto: a store of value that exists in the traditional economy and purely in exchanges. Something’s value is determined by whatever someone is willing to pay for it. Pay attention to the flow of new money and the technical depth of the order books in front of it. The wall of liquidity is huge, yet the order book pales in comparison. The main way to value a stock is not through its economic value but through the exchanges and the technical arcana of market-making bots. A stock’s worth is determined by whatever someone is willing to pay for it, similar to that of crypto. This layer of indirection among economy, exchanges and stocks/coins allows for a decoupling of price from cash flow and can be a blessing when the economy crashes. This is at the heart of what is generally going on in the financial markets at the moment. When Tesla’s stock to increase twofold in a couple of months while Elon Musk blabs incoherently about weed, predatory Lithium mining and a regime change he instigated, you would think that the company’s stock is the new darling overachieving asset class in an attempt to rationalize the rally. When analysts and your friends cry in disbelief at what is going on in delusional public markets, the crypto cultists should feel smug in their knowledge that ab initio stores of value can and do in fact exist, with BTC as the poster child. You are not witnessing an increase in economic demand for electric Tesla cars, or whatever Musk is tripping about at the moment, you are witnessing an increase in the monetary demand for Tesla’s stock, probably helped by the unhinged rants of Musk himself. These are purely technical financial moves, not economic, and are nothing new. Stocks behave more like cryptos now in how they find valuations, and investors are the main source for demanding cashing financial instruments. This is why trusted brands are so important. What is this economy you speak of? At a time of economic hardship, it is somewhat sociopathic to focus on the narrow and cold-hearted technical details of a speculative financial instrument and the arcana of monetary issuance — but herein may lie the keys to social stability and the future of money. The wall of liquidity that has hit the public markets is now finally finding its way, almost by overspill or trickle-down, to the crypto markets. Money has been looking to take new shapes, for such is the spirit of money. QE will reach more people through these channels. It’s QE that will soon land us on the moon. It is ironic. We actually expected this sooner, but it seems to be underway at the moment. What was seen first as a rally in alt-coins is now a rally in Bitcoin and Ether. Where alt-coins don’t move is a bullish sign for cryptos in general. This may spell the beginning of a monster rally — the pendulum has swung from the crypto winter and the trough of disillusionment. With literally nothing to anchor the valuations, the price of cryptos is technically and psychologically positioned to exponentially blow up. And this price is a direct function of the fiat QE sloshing around the financial markets and a direct function of the monetary levels. It is ironic that QE is actually propping BTC when it was born in antagonism to said QE. What may have delayed the move up is that getting into crypto is still a complicated affair. Liquidity in the crypto markets remains opaque. Most exchanges are vast washing machines that do not serve any social purpose but perpetuate pump-and-dump schemes, which are just proxies for degenerate gambling. Dealing with custody and keys is still a thing and a complicated affair for most people. Wallets are mostly useless, and there are a plethora of them — but they are making progress. We should all pay close attention to the fact that U.S. banks have just been cleared to do crypto custody, thereby removing one of the biggest technical hurdles to retail and institutional growth outside of the crypto ghetto. While we are still a long way from the Federal Deposit Insurance Corporation insurance on deposits, this is a significant step, and crypto may yet play a central role in the future of money and banking. Bank custody will create unprecedented retail and institutional comfort and, thus, demand. Those who want to live outside the banking system, for whatever reason, ideological or legal, still can, and those who want the security of the traditional banking system (essentially, the vast majority) can do that as well. Having more options is always good, and crypto maximalism and dogmatism are just that — a series of “isms.” Understanding the different schemes of crypto is difficult and time-consuming even for savvy investors. Due diligence is meaningless and almost impossible — you really have to take a deep dive to know whom to trust, what to trust, who knows what they are doing, who is still high on the unicorn powder of blockchain for good, and who will preserve and grow your money as opposed to blow it all on flimsy tech no one needs or has asked for. Similarly, some newfangled financial products have raised eyebrows, prompting people to ask themselves: “How can anyone offer 8% APY on crypto when we are entering an era of negative interest rates on fiat?” These are still the many elephants in the crypto room. All those things that seem to defy (pun intended) logic and financial gravity are enough to deter newbies — for if it seems too good to be true, it is probably too good to be true. We need to shed all linguistic pretense of tech pompousness and grandiose societal schemes. Cryptos work well as stores of value — they are either volatile stores of value, such as BTC or ETH, or stablecoins. In short, we need stable growth coins. We are seeing the rise of stable growth hybrid coins, such as FF1 by TwoPrime or Bitcoin trust by Greyscale, that marry upside potential with downside protection and leverage what the crypto markets do well. Expect more to come as the DeFi wave stabilizes and cashes in. All in all, the crypto markets have been lagging behind the equity markets in terms of feeling the impact of QE. It simply means the critical mass is still not here. It’s easier, safer, more liquid and simply more expedient to buy Tesla stock for twice the return in three months via your 401K than to gamble on an obscure pump-and-dump that promises gains of up to 10 times. But with thinner and lower liquidity, cryptos will also feel the pressure in an exponential way when the QE tsunami hits its shores — it won’t be doubled... It may increase by 40 times. Who knows. We may be in the middle of this movement — the mother of all rallies. It will be swift and brutal. Don’t miss out; don’t short out; don’t hold out; and don’t chicken out. Pay attention to what is happening around you — these are once-in-a-lifetime events. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Home » Interviews » Ryan X. Charles: ‘It will take me rest of my life to master all of the material’ Few bothered to try to understand Bitcoin in its early days, and some manipulated it to suit their own purposes. Over the years, misunderstanding Bitcoin—deliberately or just misguided—has led to a lot of wasted time, missed opportunities, lost money, and confusion. Money Button founder Ryan X. Charles has made it his mission to find Bitcoin’s true meaning, and educate himself and others. To that end, he and Dr. Craig S. Wright have created the “Theory of Bitcoin” series of very in-depth discussions on both the broader philosophy and finer points of Bitcoin. We chatted to Charles about why Bitcoin and its creator have been so misunderstood. Bitcoin is both radically new and yet timeless, and to build something truly worthwhile, it helps to understand which parts of its nature fall into those categories. That said, Bitcoin’s true nature isn’t exactly obvious. Charles himself says it wasn’t until recent years that he began to understanding it better, and even now it would take him the rest of his life to master it. One key to understanding Bitcoin is, you need to learn a lot more than just Bitcoin. A proper classical education with all the history, accumulated human knowledge and guiding principles it provides is rare these day. But it’s not impossible. Educate yourself, and you’ll begin to understand the “why” of Bitcoin as much as the “what.” And you’ll also realize that the “why” was probably the most important thing all along. If you’re reading this article then you’re already on the right track, and that’s an advantage. Charles has written a lengthy blog post about what he’s learned so far, and why it’s important, but read on to hear a little more about where he thinks Bitcoiners went wrong and why, and how they can fix it. Interview with Ryan X. Charles, Money Button CEO/founder and co-host, “Theory of Bitcoin” series Do you think there’s a difference between Craig Wright the public figure, and Craig Wright the person? If yes, what is it? Yes. Many people in the cryptocurrency industry have an interest that is in opposition to the Craig’s original vision for Bitcoin. They have done a good job using Craig’s weaknesses against him in order to create an image that suits their interests. Craig’s weaknesses are essentially that he is not good at interacting with people (although he is getting better). They have taken snapshots of Craig’s public failures, like his faux pas about Rwanda, “I have more money than your country,” and use it against him over and over. But the real Craig Wright is nothing like this public image. The real Craig Wright is a hyperfocused knowledge geek who obsessively tries to learn everything and who is generous with his time with people who help him. Are all the people working in “crypto” or “blockchain” outside the BSV world actually wasting their time and energy? Yes. Every single one that is not BSV has limitations that will prevent them from achieving mass adoption. The only one that has a chance is BSV. How much of the “other 99%” of Bitcoin do you feel you understand, at the present time? I’m not sure, but I will say that I have learned immensely by talking with Craig in this interview series. In every single interview I learned something important that grew my understanding of Bitcoin, and many other subjects as well. I estimate that it will take about five to ten years to master the most important background material for Bitcoin. I believe it will take the rest of my life to master all of the material. You said the conversations with Dr. Wright had led to you changing your very definition of Bitcoin. If you could take your knowledge of Bitcoin now, and give it to yourself in 2011, what’s the best advice you would give? I would tell myself to adopt maximum responsibility for the success of Bitcoin (and for my own success). A key mistake I made early on was to assume that other people would understand the incentives of Bitcoin and would identify and fulfill their niche in the ecosystem. That is not what happened. Instead, almost no one bothered to understand Bitcoin, but rather manipulators got involved who twisted the narrative in a direction of shallow scams and crime. If I had taken responsibility early on to understand Bitcoin completely, and to explain it to people, and to make sure all the components of the ecosystem were filled in properly, we would be substantially further ahead today. I could have prevented the creation of the alternative narrative had I done this back then. How will your newly-acquired knowledge change your approach to your company, or business in general, from this point on? My vision has become much bigger but also much more long-term. I used to have fantasies that we would have global success very quickly because people would simply understand Bitcoin and adopt it. However, I now realize that rapid success is unlikely because understanding Bitcoin is difficult and most people aren’t bothering to do so, and so long as they misunderstand the incentives, they will continue to build the wrong things. I can now see how difficult it is to learn Bitcoin and to explain it to people and that this limits the speed with which we can grow. In my new vision, I think global adoption for one use-case, such as tokenized digital assets, is possible in five to ten years, but the full vision for Bitcoin will take several decades to accomplish. This is not unlike the internet. Do you see your work as a developer/entrepreneur moving in different directions as a result of these conversations? Yes. Out of necessity I am becoming more focused on learning and teaching. I can be more effective if I can properly explain Bitcoin to a handful of driven entrepreneurs rather than trying to program things myself. My new emphasis is on adopting responsibility for making sure the ecosystem develops properly. This is what I should have done back in 2011. A classical, broad education is necessary to really understand the world… and Bitcoin. Has this notion disappeared from most universities, or is it still in place? As best I can tell, the separation between the arts and sciences occurred in the 20th century and has gotten worse with time, and is quite extreme today. Artists don’t know logic and scientists don’t know Shakespeare. This is an educational disaster because people have become substantially less educated and are on average less competent than educated people of a hundred or two hundred years ago. This can be resolved only by the adoption of individual responsibility. You can’t shove knowledge into other people’s minds. They must actively try to learn. How many books can you read in a week/month? I can read or listen to up to five books a day, but my average is more like one book every two days. This is much more than most people, but I assure you I do not have any special abilities in this respect. I just like reading and listening to books because I am able to improve my life every day from the knowledge contained within. The most important trick for this I learned from Konstantinos Sgantzos, who said, paraphrasing, “Concentrate on learning things that are useful.” The way I interpret this is that I always and everywhere follow my own curiosity. I stay motivated to learn because it is so useful. Bitcoin is a more honest system that makes everyone equal under the law. However it appears sometimes that those in power would resist change to the (existing) system they’re able to ‘game’ to their advantage. If this is true, how does Bitcoin overcome any obstacles they may put in place to resist it? Maybe my take is a bit cynical? People are equal under the law whether Bitcoin exists or not. The elimination of all issues with society can only be accomplished one way, which is with the adoption of maximum responsibility by every individual. So long as people try to blame others for issues, and to take from others so as to give to themselves, then we will have problems. The resolution to this can be facilitated through education. One must start with oneself. What (if any) special skills are needed to communicate Dr. Wright’s message to the wider public? I think everyone who is interested in Bitcoin has something unique to offer to help. The interview series is a way that I can uniquely contribute. I would suggest that people ask themselves, “What is the most valuable way I can spend my time?” For some people, part of the answer to that question will involve helping to educate people about Bitcoin. People need to answer this question for themselves. If the “other 99% of Bitcoin” is something most people don’t know or understand, what’s the best way communicators (like CoinGeek and its contributors) change this? For CoinGeek specifically, I think you are on the right track with respect to the constant creation and publication of material that markets and explains Bitcoin. However, there is a lot of work to be done to establish the full background material for Bitcoin, and I believe CoinGeek’s content covers only a small fraction of this material. I am not sure what is the best way for CoinGeek to improve this, but I will tell you what I am doing, and this may spark ideas inside CoinGeek. I am using the interview series to frame the full scope of theory that needs to be explained, I am understanding it myself (over years), and I am compiling the information into a structure that will allow me to explain it and pitch it to companies inside Silicon Valley. In the next one to two years, I hope to have fifty or so presentations for every major Silicon Valley company. I believe this holistic and deep approach will be effective at rectifying the misunderstanding of Bitcoin and compelling Silicon Valley to adopt Bitcoin as the base layer of their systems. New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

Rachel-Rose O’Leary is a cryptocurrency writer and trainee C++ developer at PolyTech. Currently a contributor to CoinDesk and the Defiant newsletter, she has written about cryptocurrency since 2015. She holds an MA in digital art and philosophy.

These days I spend most of my time tweaking the code of a bitcoin wallet that runs in Terminal. Based on Libbitcoin, it’s built to work over Nym Technologies’ anonymizing mixnet. I call it the Dark Renaissance wallet.

It’s mostly a learning exercise to hone my C++ skills, but the Dark Renaissance wallet is a harbinger for what is to come.

Working with a small, focused and ideological team, my comrades at PolyTech are upending some of the key assumptions on which the crypto industry has been built, and are plotting an all-out privacy offensive.

Our mission – the Dark Renaissance – is strategic and philosophical. At a personal level, it relates to a lifelong obsession with the philosophy of technology, and an intense awareness of the power of software.

It represents a desire to reconnect with bitcoin’s crypto-anarchist roots and fend off the forces of surveillance that creep into every aspect of our lives in 2020.

But first, it requires an understanding of the distant past.

Like the ancient Irish poets, the filí, programmers have the ability to alter reality with an utterance. Code is an incantation, an act of summoning ideas and inclinations into material reality. It is a conduit between the sphere of ideation and that of politics and sociality. 

But technology isn’t merely the product of ideas – it actively shapes belief systems, reconfiguring the world in which it is applied.

Programmers know this: When a user’s behavior is influenced by code, it’s called opinionated software. When a user is manipulated for corporate interests, it is known as a dark pattern.

Software also has unintended consequences. Released into the wild, code propagates ideology in unpredictable and chaotic ways. Inevitably, it backfires, and innovation flows through human society, irrespective of, and indifferent to, political difference. 

To what extent technology is informed by and produces belief systems has haunted me throughout my adult life.

It has also given me dreams. I believe it is within humanity’s power to reshape the narrative by which technology is formed. In doing so, it becomes possible to take back the reins of runaway technological innovation and re-orientate human destiny.

Crypto is at the front line of this struggle.

I came to crypto through encryption. I saw hash functions as a kind of abstract poetry that spoke of the secrecy of nature and the unknown.

Crypto was immersed in a romantic glow. In Ethereum’s early days, I believed I was witnessing the emergence of Skynet. It was the promise of Turing Complete, general computation and if artificial intelligence was going to emerge anywhere, it would be there, I believed at the time.

It was my doomer phase, and Ethereum was a source of dark fascination. Inspired by the Ethereum yellow paper, I wrote my master’s thesis in 2016 on what I felt was a sadomasochistic dynamic between natural language and code. It included an erotic poem featuring a kind of vampire DAO (far before I had familiarized myself with the unicorns and rainbows that better represent the Ethereum community).

But while my approach was unconventional, the idea dates back to a problem as old as philosophy itself. To borrow a metaphor from computers, human experience consists of abstractions: mere interfaces that we interact with. Base reality occurs on a lower level, corresponding to hardware and raw machine code.

This hierarchization of reality – of partitioning nature into the more and less real – occurs across philosophy in different guises and names. For some philosophers, such a partition gets us no further in understanding the “things-in-themselves.” Humans are encased by a sphere of representation, wholly cut off from an inaccessible and inhuman outside.

At the time, I believed the reality hierarchy had a linguistic equivalent. At the bottom were operational languages such as computer programming. At the top were descriptive, natural languages.

With this philosophical backdrop, code acquires a profound metaphysical weight. It became a way to transmute the lowest level of reality into human experience.

The DAO hack was the first crack in this worldview.

Implicitly, I maintained at the time that natural language was somehow inferior to the perfect objectivity of code.

Not only that, but I believed the behavior of technology within capitalism – its tendency toward monopolization, value-extraction and surveillance – was technology’s true nature revealing itself.

Martin Heidegger – a philosopher known for supporting the Nazi party and for transforming Western philosophy – calls this tendency Gestell, or enframing. 

According to Heidegger, technology is a process of dismantling, quantifying and repackaging for export. In modernity, it has captured humanity, reducing people and everything else into a resource, a “standing reserve” to be exploited by the technological regime.

An equally controversial philosopher called Nick Land takes this process and gives it an agency. 

According to Land, technology exposes an inhuman intelligence optimizing itself at the expense of the human. Stimulated by finance and a strange, contorting temporality, this inhuman intelligence is climbing its way up the reality hierarchy, threatening to replace the human as the world’s top predator.

It might sound like science fiction but crypto is full of this kind of rhetoric. Early efforts toward smart contracts promise nothing short of optimizing humans out of the equation. The blockchain is described as pure, trustless and incorruptible, turning all that it touches into glacial, inalterable code.

Ethereum’s infamous experiment in corporate governance, The DAO, echoed this language.

As Ethereum Classic fans will no doubt remember, The DAO was a high-profile fundraising campaign for a decentralized incubator. Its marketing spoke of “the steadfast iron will of unstoppable code” – a phrase whose irony is hard to forget.

Due to a vulnerability discovered in Solidity smart contracts not long after its launch, The DAO was subject to a re-entrancy attack, in which a hacker exploited a function within the code to drain 3.6 million ether out of it.

Following a heated discussion that resulted in the birth of a new cryptocurrency, ethereum classic (ETC), Ethereum developers implemented a controversial upgrade to refund DAO investors.

The DAO episode exposed many myths about blockchain, but this one stands out: Despite claims to the contrary, crypto contains an inextricably human element.

I spent the subsequent years following the ebb and flow of Ethereum software development as a reporter for CoinDesk.

For two years I attended every single Ethereum core developer call. I tracked decision-making on the platform like a jealous lover, refreshing Twitter handles, expanding sprawling GitHub discussions, quietly watching chat groups.

During this time, Ethereum faced the fallout of its DAO refund and dealt with the challenge of informal, decentralized governance. This challenge was intensified by a few simple facts: Ethereum has a leadership that is ideologically opposed to authority, and a vision that is inclusive to the point of being meandering.

Criticisms aside, Ethereum was in uncharted territory. And despite the odds, the platform managed to keep its course, even with pressure from monetary interest pulling it from each side.

Over time, I understood the mistakes I had made. Ethereum is not Skynet, and code has much more in common with natural languages than the raw mechanics of primary nature. I learned that sometimes, developers actually trade efficiency for readability; favoring clear, modular code over code which is fast.

I also learned power exists on all decentralized networks, but it is typically nameless and therefore unaccountable. Over time, power relations solidify. Networks become institutionalized and the rift between users and developers deepens.

Software, I decided, is a social good, like water and clean air. To maintain the balance of power, coders must elevate those around them. They must discourage passive user-ship, inspire users to become active network participants and train the next generation of coders to replace them.

Armed with a newly found focus, I left the Ethereum beat to join the Rojava revolution in North Syria.

Inspired by the writings of Kurdish ideologue Abdullah Ocalan, the Rojava revolution sprang up during the Syrian Civil War. Its supporters maintain that the nation-state is an abstraction badly suited to the Middle East. In its place, Rojava is pioneering new forms of decentralized social organization.

But it is not merely a social organization that binds Rojava together. Rather, Rojava is governed by a collective idea: the concept of democratic modernity.

In his five-book manifesto written from Turkish prison island İmralı, Ocalan essentially agrees with Heidegger’s “Gestell” – there is a reductive, exploitative process at work within modernity. 

But Ocalan does not identify this process with technology. According to him, it is the logic of capitalist civilization itself.

The task of democratic modernity is to decouple technology from globalization. In its place, new modernities can be built, based on a plurality of logics – not merely Western-style reductionism that has come to dominate the world.

In Rojava, learning is paramount. People are encouraged to develop “xwe zanîn,” or self-knowledge, inspired by the Ancient Greek maxim “know thyself.” This is a project of remembering, of resurfacing histories worn away by globalization.

Here, I spent my time establishing technical academies. Inspired by the scientific centers of the ancient world, like Plato’s Academy and the House of Baghdad, our goal was to train a new generation of philosophical programmers.

But my time in Rojava was cut short. 

During the nine months I spent there, the risk of a Turkish invasion weighed heavily. It cast a dark shadow across all of our work, like a storm cloud looming in the distance.

Finally, the storm came, and the sky rained bullets and bombs. Disguised as a man, I was among the last foreigners to cross the border to safety before the death count started to rise. 

I found myself at the Devcon5 Ethereum conference in Osaka, Japan, one week after leaving Syria. 

With friends on the front line, I found it hard to look people in the eye. Ethereum’s unicorn-punk aesthetic set against the backdrop of war was hard to stomach. 

Sleeplessly refreshing the Syrian Civil War subreddit and Syria Live Map on my phone, I watched the war play out in total horror.

Airstrikes, bombings, body counts. On stage, well-meaning developers called for diversity and social justice, innocent to, or oblivious of, the blanket of physical safety that surrounded them. 

It was overpriced and sparsely attended. At a panel on Ethereum-based mixers an audience member warned that facilitating “bad guys” through privacy-tech could alienate the “average user” – a statement that was met with broad approval.

Maybe it was my state of mind, but it felt like the dissonance between cryptocurrency’s stated aims and its material reality was reaching a fever pitch. The general effort toward compliance was not only enabling certain forms of oppression but at times actively supporting it. 

At that moment, I decided that anonymity is where all philosophy of technology collides. In technical terms, it is synonymous with freedom. Practically, it can mean life or death. 

Since then, I have set about orchestrating the Dark Renaissance.

The Dark Renaissance is a revolution within cryptocurrency. It is a rallying cry to all who still believe in crypto’s true potential. It calls for a rebirth back to bitcoin’s original principles: to be autonomous, censorship-resistant and dark-by-design.

While crypto-anarchist in origin, bitcoin has lost its way. Rather than empowering black markets, it has allied with state and corporate interests – traded its radical potential for mainstream adoption.

But by suppressing its crypto-anarchist roots and whitewashing its aims to appeal to bankers, crypto has cut itself off from its source of power. The Dark Renaissance seeks to resurface that power, to allow the truly disruptive potential of cryptocurrency to realize itself.

That truly disruptive potential lies in cryptocurrency’s ability to extend the space of illegality outward: to increase the remit and power of unauthorized black market activity and strip resources away from the nation-state.

Our methods are part educational, part software production. We are setting up the PolyTech Academy, where technical skills are taught in tandem with a philosophy curriculum.

Read more: Code as a Weapon: Amir Taaki Wants You to Join the Real Crypto Revolution

Through education, we want to elevate the culture of the cryptocurrency space, to create a community of active network participants and to inspire a new generation of programmers to succeed us.

In our code, we build tools to practically enforce our ideology. Advocating autonomy, anonymity and censorship-resistance, we will lead with the launch of several financial products, and iterate into a full-fledged dark financial system.

These tools will enable us to create a new economic paradigm. We are building financial networks to disintermediate local economies away from the state and large banks, and to usher in a more democratic alternative.

Rather than controlling people through mechanism design as much crypto-economics often intends to do, we are instead seeking to inspire people – to create a vision of technology that empowers people from within.

We are in the midst of a turning point. Technologists today are faced with a choice: Either passively advance the interests of a system fated for destruction or undertake a psychic reversal.

As the bitcoin price gets crushed amid the Crypto Winter, financial commentators are warning stock market investors to not fall prey to reckless buying decisions rooted in FOMO (fear of missing out).As crypto bulls are aware, FOMO was cited as a key driver of the record bitcoin price at the height of the crypto bull market in December 2017.“The most powerful force in the market is fear,” financial commentator James DePorre writes at Real Money.When fear of losing takes hold, it creates powerful downside momentum. And when fear of missing out (FOMO) takes hold, it creates powerful upside. The recent market action is ideal for creating fear of missing out.DePorre pointed to the example of Facebook, whose stock soared this week after it beat analyst estimates for Q4 earnings and revenue. For the fourth quarter ended Dec. 31, the social media monopoly earned $2.38 a share on revenue of $16.9 billion.Wall Street analysts had expected Facebook to earn $2.19 a share on revenue of $16.4 billion. Shortly after Facebook beat analyst estimates on both the top and bottom lines, its shares surged on heavy buying action.But James DePorre cautions investors to not impetuously follow the herd, which moves in lockstep based on daily stock fluctuations. This is a trend mirrored in the crypto market, where plunging cryptocurrency prices lead to noisy, premature wails that bitcoin is dead.Despite Facebook’s strong week, keep in mind that it’s still struggling with the ongoing data-breach scandals that tanked its stock just months ago. A good week does not mean the embattled company is out of the woods yet.Facebook Has 1 Billion Fake Accounts, Mark Zuckerberg ‘Greatest Con Man in History’: Researcher https://t.co/3mqsNk4Ux7DePorre explained that FOMO often leads to overly aggressive dip buying, while the fear of losing out triggers irrational selling. Both approaches suck because the animating emotion driving them is primal fear, and not rational analysis.The Fear of Missing Out is the main driving force in this market, but that doesn’t mean that we have to embrace that emotion ourselves. Stick to your methodology and don’t let worry of underperformance push you to shift your approach.So what’s the solution to fear-based investing? A rational reliance on fundamentals, and a steadfast approach to the latest news that’s moving the stock market.For example, right now there are differing opinions about whether a US recession is imminent. Perma-bears like Robert Shiller ― the bitcoin-bashing Yale University professor ― insists that one is around the corner. And what does he base his gloomy outlook on? Why emotions, of course!Shiller ― an academic who has never worked in the private sector ― predicts that a protracted bear market looms on the horizon, based on “psychology” and “narratives” ― not based on market fundamentals.I’m writing a book on ‘narrative economics,’ and think it is stories that drive markets more than fundamentals.So Professor Robert Shiller is predicting a harsh bear market while writing a book about how “bear-market narratives” can trigger them. Let that sink in.Stock Market ‘Deflation’ Could Trigger Bear Market: Nobel Laureate Robert Shiller https://t.co/shRDdrOLJaMeanwhile, economists who have real-world experience with money say concerns over an imminent recession are emotionally-based and overblown.Mohamed El-Erian — the chief economic adviser at German mega-bank Allianz — warned that the breathless media hysteria about an impending recession could actually trigger one. So we should be careful what we put out into the universe, he warns.“I’m stunned by all this talk of recession,” El-Erian told CNBC in December 2018 (video above). “We’ve got to be careful because we can talk ourselves into a recession. That’s how bad technicals become bad economics.Samantha Chang is a politics writer at BizPac Review and a financial editor. She is a law school graduate and an alum of the University of Pennsylvania. You can follow her on Twitter at Samantha_Chang.

As the bitcoin price gets crushed amid the Crypto Winter, financial commentators are warning stock market investors to not fall prey to reckless buying decisions rooted in FOMO (fear of missing out).As crypto bulls are aware, FOMO was cited as a key driver of the record bitcoin price at the height of the crypto bull market in December 2017.“The most powerful force in the market is fear,” financial commentator James DePorre writes at Real Money.When fear of losing takes hold, it creates powerful downside momentum. And when fear of missing out (FOMO) takes hold, it creates powerful upside. The recent market action is ideal for creating fear of missing out.DePorre pointed to the example of Facebook, whose stock soared this week after it beat analyst estimates for Q4 earnings and revenue. For the fourth quarter ended Dec. 31, the social media monopoly earned $2.38 a share on revenue of $16.9 billion.Wall Street analysts had expected Facebook to earn $2.19 a share on revenue of $16.4 billion. Shortly after Facebook beat analyst estimates on both the top and bottom lines, its shares surged on heavy buying action.But James DePorre cautions investors to not impetuously follow the herd, which moves in lockstep based on daily stock fluctuations. This is a trend mirrored in the crypto market, where plunging cryptocurrency prices lead to noisy, premature wails that bitcoin is dead.Despite Facebook’s strong week, keep in mind that it’s still struggling with the ongoing data-breach scandals that tanked its stock just months ago. A good week does not mean the embattled company is out of the woods yet.Facebook Has 1 Billion Fake Accounts, Mark Zuckerberg ‘Greatest Con Man in History’: Researcher https://t.co/3mqsNk4Ux7DePorre explained that FOMO often leads to overly aggressive dip buying, while the fear of losing out triggers irrational selling. Both approaches suck because the animating emotion driving them is primal fear, and not rational analysis.The Fear of Missing Out is the main driving force in this market, but that doesn’t mean that we have to embrace that emotion ourselves. Stick to your methodology and don’t let worry of underperformance push you to shift your approach.So what’s the solution to fear-based investing? A rational reliance on fundamentals, and a steadfast approach to the latest news that’s moving the stock market.For example, right now there are differing opinions about whether a US recession is imminent. Perma-bears like Robert Shiller ― the bitcoin-bashing Yale University professor ― insists that one is around the corner. And what does he base his gloomy outlook on? Why emotions, of course!Shiller ― an academic who has never worked in the private sector ― predicts that a protracted bear market looms on the horizon, based on “psychology” and “narratives” ― not based on market fundamentals.I’m writing a book on ‘narrative economics,’ and think it is stories that drive markets more than fundamentals.So Professor Robert Shiller is predicting a harsh bear market while writing a book about how “bear-market narratives” can trigger them. Let that sink in.Stock Market ‘Deflation’ Could Trigger Bear Market: Nobel Laureate Robert Shiller https://t.co/shRDdrOLJaMeanwhile, economists who have real-world experience with money say concerns over an imminent recession are emotionally-based and overblown.Mohamed El-Erian — the chief economic adviser at German mega-bank Allianz — warned that the breathless media hysteria about an impending recession could actually trigger one. So we should be careful what we put out into the universe, he warns.“I’m stunned by all this talk of recession,” El-Erian told CNBC in December 2018 (video above). “We’ve got to be careful because we can talk ourselves into a recession. That’s how bad technicals become bad economics.Samantha Chang is a politics writer at BizPac Review and a financial editor. She is a law school graduate and an alum of the University of Pennsylvania. You can follow her on Twitter at Samantha_Chang.

The Norwegian press has been obsessively dealing with a kidnapping case for around a year and a half. Anne-Elisabeth Hagen, the wife of one of the richest Norwegians, was kidnapped in late 2018. The kidnappers demanded a high ransom from the multi-millionaire – in the cryptocurrency Monero. The drama has not stopped since then and has led to unexpected suspicions. Was it kidnapping – or even a planned murder? It is said that Scandinavians love crime novels, and I like to imagine a tall, pale Norwegian with white hair sitting in front of the fireplace in his wooden house by the fjord and reading his crime story. The current top thriller of the Norwegians was not released as a book. Instead, the newspapers report on it. After a long time, there was another spectacular crime in Norway, and the whole country is closely following all the news. For the media, that’s almost as good as Corona. The case is the kidnapping of Anne-Elisabeth Hagen. This is the wife of Tom Hagen, the country’s 172-th richest individual. In Norwegian krone, the entrepreneur is a billionaire; if you translate it into euros, he is a three-digit millionaire. Anne-Elisabeth was kidnapped on October 31, 2018, in her house in Lørenskog, a small community near Oslo. The kidnappers left a letter in broken Norwegian consisting of five A4 pages. Tom Hagen read in him that he would not go to the police or the press if he wanted to see his wife again and that he had to pay nine million euros in the cryptocurrency Monero. Two days later, Hagen informed the police in Lillestrøm, also near Oslo. Since then, there has been a criminal case that has given the Monero currency an unsightly fame in Norway, and in which the press has eagerly tried to uncover all the details. There is still no trace of Hagen’s wife Anne-Elisabeth. The kidnappers know pretty well about cryptocurrencies. As is well known, kidnappings often fail when the money is handed over. Bank transfers are out of the question, and cash must be deposited in some physical location where the police can often arrest the perpetrators. Cryptocurrencies are a “good” tool here, because they can be received anonymously and without contact. For this reason, it has been feared for around eight years that virtual currencies are making a comeback of kidnapping. Bitcoin, however, leaves a clear transaction trail that has often led to arrests. The tools to disguise bitcoins may be sufficient for minor crimes. However, in the event of a capital crime such as a kidnapping, the police could investigate long enough to break the mixing of coins. That’s why Anne-Elisabeth Hagen’s kidnappers chose Monero, a cryptocurrency that uses various cryptographic methods to achieve the highest possible level of anonymity. This was confusing for Tom Hagen. He told the police that while he had “some knowledge” about cryptocurrencies, he was generally “technically backward”. He wondered if the kidnappers had deliberately given him an almost impossible task. Because it is not easy to change nine million euros in Monero. This was also clear to the kidnappers. You probably know the markets and know that the stock exchanges do not have enough liquidity to buy so many Monero in one go. So they advised Hagen in the letter not to change more than a million crowns a day in Monero. The kidnappers also invented an interesting system for communicating with Hagen. The Norwegian press calls it a “Bitcoin Morse Code”, which they explain in the extortion letter. They gave a bitcoin address, and Hagen should send them messages by sending certain amounts to them. They gave him twelve amounts that represent different messages: “I confirm that I will pay”, “I am currently exchanging money for Monero”, “I will send the Monero in seven days”, “I need more time”, “I sent the Monero” and so on. In the same way, the kidnappers can send messages to Hagen. Amounts that you send to this – or to another – address represent different messages, such as “too late, she is dead”, “quickly, or she dies”, “the police are involved, she is dead”, ” The Monero went to the wrong address ”or“ Thank you, Anne Elisabeth will be released in the next 24 hours. ” Over the course of November, the two sides exchanged several messages using this Bitcoin morse code. However, the method was too clumsy to actually negotiate. Apparently, the kidnappers’ knowledge of Bitcoin has limits, because otherwise they might have suggested OP_Return outputs, through which you can insert up to 140 bytes of free text in a transaction. The police advised Hagen to ask for evidence that his wife was still alive. But there was no code for it, and there was no other option to contact them. So what to do? The police suggested a bold approach: On January 24, police officer Sven Holden would like to hold a press conference to inform the public about the kidnapping and the progress of the investigation. Hagen and his family agree, the kidnappers react promptly. A few days later, they write an encrypted email to Holden, in which they contact Hagen. Linguists compare the email to the original ransom note and confirm that they are the same person. In the email, the kidnappers are ready to provide evidence that Anne-Elisabeth is still alive – when Hagen pays a quarter of the money, i.e. pays them 2.25 million euros or 24 million crowns in Monero. Hagen bought Monero for 30 million crowns on an exchange shortly thereafter. However, the deadline set by the kidnappers lapses without payment. Over the course of April, the police proposed that Hagen send an email to the kidnappers and then explain at a press conference that the money would be sent. Hagen is dissatisfied with the idea. He wanted to negotiate in peace and not endanger his wife’s life through press conferences. Therefore the idea is not implemented. In May, Hagen made independent contact with the kidnappers without consulting the police. He offers them to pay the subtotal if they give him proof within a certain period that his wife is still alive. These negotiations drag on until the police are turned on again in July. The kidnappers are now threatened more violently. Anne-Elisabeth was sick and they could not provide the necessary health care. They offer proof of life for 1.35 million euros in Monero. Hagen agrees to pay the full amount – if he only receives proof of his life. But this also seems to be drying up, so that the year passes. Hagen may have paid part of the money, but still no proof that his wife is still alive. In February 2020, the businessman continues to try to contact the kidnappers. In the meantime, the relationship between Hagen and the police has cooled down. Both sides often disagree on how to proceed, and just as Hagen acts independently, the police also sent a message to the kidnappers without his consent using the Bitcoin code. At this point, the police’s investigation is already moving in a different direction: against Tom Hagen himself. He is now considered the main suspect. The charge is no longer kidnapping but murder. The police arrested and interrogated Hagen on April 28, 2020. Hagen vehemently denies the allegations and has since been released. Tom Hagen is suspected of an almost classic motif: Things weren’t going well in marriage. Anne-Elisabeth has already asked how she can end the partnership without risking too negative financial consequences. Because between the two there is a somewhat idiosyncratic marriage contract, which says that in the event of a divorce she gets next to nothing. However, Anne-Elisabeth had a lawyer check whether the contract did not violate Norwegian law. In this case, she would have received half of the now common property in the event of a divorce. Is this enough evidence to suspect Hagen of murdering his wife? The police may have found this because the negotiations were so slow. Perhaps it seemed to her that Hagen was deliberately hesitating to put stones in the way of the police. However, the Hagen family seems to blame the police for putting Anne-Elisabeth at risk through the aggressive negotiation. The Hagens’ children deny the suspicion of their father. They think the couple’s marriage went well. Other family members confirm this. In addition, the police also find swords that confirm that the marriage was about to end. The police are currently trying to enforce the search of Hagen’s houses. However, the process still depends. The competent court in Oslo also believes that there is insufficient evidence against Hagen to detain him. The case changes with another arrest on May 7. The police arrest a man in his thirties. She suspects that he murdered Anne-Elisabeth or that she was partly responsible for the murder. The man had met Tom Hagen repeatedly in the past, even in his house, perhaps even exactly in the one where Ms. Hagen was kidnapped. It was about a business collaboration in the recovery of cryptocurrencies. After at least ten meetings there was no further collaboration; the meetings ended in autumn 2018 – shortly before Ms. Hagen’s kidnapping. That is already suspicious. Did Hagen inquire with the man about how he uses cryptocurrencies for a kidnapping? Or did he take advantage of the moment to kidnap Hagen’s wife after gaining access to his property as a consultant? The profound knowledge that the kidnappers have about cryptocurrencies and the markets could speak for this. But it remains, like the suspicion against Hagen, pure speculation. Therefore, this crime thriller will continue to occupy the Norwegian police and public for a while. Anne-Elisabeth Hagen is probably already dead.

Dan Held is a Texan who doesn’t drive a truck, drink beer, love Trump, or watch sports. He’s a tech enthusiast who isn’t into coding. He looks like a typical preppy dude, wearing a white-button-up shirt and carrying a swoop haircut, but he flies drones, tinkers on full nodes, and writes about libertarian principles. He doesn’t match the usual stereotypes. “It’s been hard to reconcile that in terms of where I fit in.” Football, Held says, is a big deal in Texas. Years ago, the growth lead at cryptocurrency exchange Kraken enjoyed success as a football player there, going 16-0 and winning state in his senior year of high school. He played tight end, a position that requires a high degree of versatility as a combination of offensive lineman and receiver. At Kraken, he’s continued in a similar vein spending his first year on business development, and now working on growth. Even while going undefeated in high school football, the self-described “jock-nerd” was also crushing advanced placement exams. But Held has grown accustomed to the ongoing dichotomies that have built his character — and, ultimately, his career. He grew up all over the political and societal map in an unusual melange of experiences, spending time in Colorado, Minnesota, and Texas, eventually landing in San Francisco.   He was one of the few people in his circles who was really into Bitcoin in its early days, yet was decidedly non-techie. What really grabbed him was Bitcoin’s value proposition as a solution to the failures of modern monetary policy. During his college days, the 2008 financial crisis caused him to question the system. He soon was captivated by Bitcoin’s monetary policy and how well it fit with the libertarian ideology of free markets.  Studying finance as an undergrad in 2008, Held recalled a breakdown in his faith in the financial system and in the experts that were supposed to explain and defend it. “My professors didn’t know what they were talking about, everyone on TV didn’t know what they were talking about, all the institutions that we had formally trusted, we couldn’t trust anymore.” It shook his foundational trust in the financial system that most of us take for granted.  Surrounded by the textbooks of his economics classes, he was hit with a revelation: “Wait. So, all these books are bullshit?” Years of being yelled at by demanding football coaches have immunized Held from caving under pressure.  It probably also helped that his father was an extreme sports enthusiast who bicycled across America at 60 years old. He would take the teenaged Held boys out on “14er” hikes, climbing 14,000 foot mountain peaks in Colorado. “One slip, and it’s a thousand feet until you hit something. That’s what I grew up with.” To say it instilled a sense of ruggedness and perseverance would be an understatement. The lessons have stuck with Held throughout his career, serving him well when he needed to make quick decisions under pressure. It’s also hardened his resolve when it comes to squaring up against competitors. “It’s kind of funny in the crypto space where people whine about competition and they whine about fierceness and I’m like ‘Well, welcome to how the world works.’ There are winners and losers. Not everyone wins.” In Held’s view, the winner in business is the company that builds a product that serves humankind in a better way. Texans, Held says, are a unique type of people. It is one of a handful of states that was an independent republic before voluntarily choosing to join the United States. “So, in schools in Texas, in elementary school, middle school, high school, you pledge allegiance to the American flag and the Texas flag.” Texan culture is fiercely independent, Held elaborates. The University of Texas took physical delivery of their gold from the Federal Reserve because they did not trust them with their gold. “That’s the extent of being a Texan.” This core underpinning made the concept of Bitcoin immediately palatable when he first heard about it. At the time, ZeroHedge was breaking news of corruption on Wall Street, from high-frequency trading cheats to metals manipulation, all before mainstream media was willing to touch the stories. Against this backdrop, Bitcoin’s monetary policy stood out as an elegant solution. “I’m a libertarian Austrian economics sort of guy, so I heard about Bitcoin and was like, ‘Oh this is perfect. 21 million hard cap? Genius.’ The disinflationary monetary policy is the breakthrough.” It was a stroke of luck that landed Held in San Francisco at just the right time. Working for a small investment firm out of Dallas, Held was relocated to San Francisco in January, 2013. There he met crypto pioneers like Jed McCaleb, Fred Ehrsam, Brian Armstrong, Charlie Lee and now-Kraken CEO, Jesse Powell. “I’m one of the only non-billionaires from that group,” Held chuckles. Held approached the sector from a different angle, working on products that solve problems rather than fixating on shiny new technological tricks. His first crypto-oriented solution was a popular mobile app that tracked real-time crypto market data called ZeroBlock. Held admits he stumbled through the building process, but created a solution to a problem he was experiencing. “I didn’t know what I was doing. I was just laser-focused on solving this problem.” To gain users for the app, Held employed a clever tactic. The FBI had recently seized funds from the Silk Road. The funds, being held in Bitcoin addresses, were trackable on the blockchain.info explorer. Held took advantage of being one of the earliest to see the wallets, alerting major news outlets about the FBI’s movement of the confiscated funds to new addresses. “I knew a bunch of eyeballs were about to land on that URL,” Held explains, so he sent tiny transactions worth pennies to the FBI’s wallet with a simple marketing message: “Download ZeroBlock, the number one app in the app store for crypto trading.” He figures he spent around two dollars in “advertising” to gain over 2,000 app installs. Along with a few other growth hacks, Held’s ZeroBlock app found success as a simple but useful product. It was soon picked up by Blockchain, where Held acted as director of product. Held kept his rebellious streak going during his time at Blockchain, using guerilla advertising tactics to invigorate his customer base. In 2014, a Reddit post based on a Blockchain press release criticized Apple’s rampant Bitcoin wallet banning practices. The post stirred up intense emotions from readers, many of whom filmed themselves shooting their iPhones as an act of protest against the policy. In a subsequent press release, Held copied and pasted Steve Jobs’ classic “Here’s to the rebels” quote as an ironic rebuke against Apple’s stance. “That very much fit the early experience of crypto, which was rebellious.” Held feels this rebellious spirit has sadly faded. The early Bitcoin ethos, he says, was about “fighting the state and being free, being able to do what you want with your money and your body. That’s why Silk Road was popular.” Now, Held says, the space is diluted by distracting narratives like Crypto Kitties on the blockchain. “It feels a bit more silly because the original focus was so clear and distinct and revolutionary.” “People talk about ‘Oh, wouldn’t it be really boring if Bitcoin is the only thing that a blockchain is useful for?’ and I’m like, ‘Why? It’s a couple hundred trillion dollar total addressable market!’” “There’s nothing more important than money,” Held insists. “It’s the underpinning of all value in society.” Bitcoin, built for this singular purpose that solves a crucial problem: building an immutable store of value. The early innovators were looking at the crypto space as a revolution, Held says. “We thought we might get arrested. We didn’t know. There weren’t a lot of regulations back then. We weren’t sure if the state was going to clamp down really hard immediately and go ‘we want to squash this.’” Now, the industry is filled with opportunists looking for a quick exit, Held says. But one key narrative lives on: Bitcoin as digital gold. After a brief period working on social media micropayments with a company called ChangeTip that was acquired by Airbnb, Held moved on to another effort in decentralization outside the crypto space: Uber. The growth team at Uber was composed of a legendary team, Held says. The ex-Amazon and ex-Facebook project managers collected to lead the company were masters of execution. Under their leadership, Held developed a data-driven growth mindset that has shaped his work since that time.  Uber broke taxi laws in every city it launched in, Held says. “Uber was fiercely libertarian. It was data-driven meritocracy, focused on, ‘Let’s go, execute and build at all costs.’” “I loved that we were like, ‘Oh, that law? Why does it exist? What if we break that law?’ Laws aren’t inherently moral. They just exist. That’s what drew me to it.” Equipped with his newfound skills, Held carried over his growth mindset and libertarian passions to Interchange, an accounting tool for institutional trading firms. Returning to crypto at the peak of the ICO craze in 2017, he was baffled to see an industry that was “devoid of any product-thinking.” People were busily building fancy tech and then looking for a problem to retrofit to their products. Held estimates that more than 99% of the projects had little to no grasp of product management.  “Ultimately, a product has to solve a problem for someone… Most engineers build shiny things looking for a problem. When you attach speculation to that, things can get pretty wild pretty quick.” As the narrative shifted away from ICOs, Interchange was acquired by Kraken, where an independent spirit remains alive and well today. Held came on board in a business development role, but shifted over to growth lead, removing points of friction for new users and optimizing the onboarding process.  Held exhibits another interesting dichotomy in his work at Kraken. While he is a self-proclaimed Bitcoin realist, he embraces the libertarian principle of enabling others to freely choose their investment and trading practices. “I’ve been tasked with helping weave growth principles into product with the objective of increasing trading volume. Publicly, with my own personal brand, I’m a hodl guy — buy and hodl.” “Someone who works at an ice cream store doesn’t have to like every flavor. They might prefer chocolate or vanilla.” Held says he is concentrating on the performance of Kraken regardless of Bitcoin. He strives to layer in Bitcoin whenever he can, making it easier to understand and surfacing content inside the app that can explain the value of Bitcoin to users.  Held is steadfast in his defense of the principle of Bitcoin, not blockchain. The genius of Bitcoin, Held explains, is its ability to be Gold 2.0. It solves this particular problem very well. “When people look at blockchains, sure they might be useful for a few other things, but they’re inherently bad at doing almost everything.” “I’m still obsessed and I’m still a huge Bitcoin believer… I think it’s cool people want to try new things, but I’m pretty focused on Bitcoin and I’m going to defend Bitcoin.” This staunch defense of Bitcoin brought Held considerable fame in the public space. A bevy of frustrated tweetstorms and a broad range of articles argued against efforts to undermine confidence in Bitcoin. Held set out to dismantle a series of what he considered to be intellectually dishonest arguments.  “In 2018, I started writing about these things that just nagged me, like the concept that hodlers were free-riders. That triggered me to start writing.” Hodlers, Held wrote, are the revolutionaries. It’s not just about making a cheap alternative to PayPal, Held says. It’s about changing the world. “I’m going to defend it. I will write articles that will adequately explain a good rational defense of certain attributes of Bitcoin. I do it because I think it’s our best shot at freeing humankind.” Held believes that economies are nearing a tipping point where the whole world will reject government money in favor of Bitcoin. “As long as people want to preserve value, I think Bitcoin will win.” If Bitcoin fails, Held says, there isn’t an alternative that will simply take its place. Bitcoin isn’t just code, he says, it’s a belief. “It’s not like all that faith and trust that’s built into the Bitcoin ledger is instantly transferable. That dies forever. That fundamentally impacts every other chain, too.” Now, Held is dedicated to growth in his work at Kraken and to defending Bitcoin in his public life. He will soon launch his own YouTube channel with evergreen content to introduce viewers to the value proposition of Bitcoin and to basic principles of monetary freedom. “You can’t have freedom over your body if you don’t have freedom over your money. Your money is an extension of your body. You spent time and energy using your body to generate that money. It’s a compression of all of your life’s energy.” “The preservation of that wealth — the ability to store that wealth and transfer it to anyone you’d like — is a natural human right.”

News Bitcoin NewsEthereum NewsAltcoin NewsBlockchain NewsScam NewsRegulation NewsLitecoin NewsRipple NewsMonero News Features Hodlers DigestFollow-UpAnalysisOpinionIn DepthQuizInterview Price Analysis Top 10 CryptocurrenciesWeekly OverviewMarket Analysis Market Tools Price IndexesICO CalendarHeatmap Cryptopedia ExplainedPeopleBitcoin101Ethereum101Bitcoin Cash101ICO101Ripple101Lightning Network101BTC Anniversary Industry DApplistEventsPress ReleasesJobs Store BlockShow 9 HOURS AGOBy How Tyler Winklevoss Converted His Biographer Into a Bitcoin Believer Tyler and Cameron Winklevoss are portrayed as the good guys this time in Ben Mezrichs new book.Cointelegraph speaks with Tyler Winklevoss and author Ben Mezrich about Mezrichs new book, Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption2196Total views172Total sharesThis interview has been edited and condensed.I dont normally write the stories here at Cointelegraph I edit them. But when I got an email from a publicist asking if I was interested in speaking with Ben Mezrich, author of Bitcoin Billionaires, and oh, did I want the Winklevoss twins to jump in on the interview? I couldnt say no.Ben had the lucky chance as he calls it to already have an in with , as they had been portrayed as the Men of Harvard, slightly bad guys in his book that ended up being adapted into the film The Social Network. As Ben tells it, after he saw about their bitcoin billionaire success, a book about their crypto escapades that picks up right as their court battle with Mark Zuckerberg ends seemed to be an obvious next step.The timing for the publication of Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption couldnt be better or more ironic. The book spends almost 300 pages detailing the journey of how the Winklevoss twins have succeeded in crypto to the extent that it has wiped away the stain left by their battle over Facebooks origin with Zuckerberg, only to then coincide with Facebooks of the Libra cryptocurrency project.However, Bens latest book involving both the Winklevii and Zuckerberg which was by Cointelegraph this week reverses his previous narrative of Zuckerberg as the good guy and the Winklevii as his opponents. But, as Ben explained, it wasnt the writing that got it initially wrong, but the reality that changed the perspective over time. He told me:I think reality flipped everything on its head, not just in the writing of it, but Facebook went from being something that everyone saw as this revolution and Zuckerberg as this revolutionary that was going to free the internet and make us all happy, into something much more nefarious, and Zuckerberg is now somewhat reviled.And Zuckerbergs cryptocurrency project has not been without criticism from those that align themselves more with the cypherpunks of the 1990s than with the Winklevii of today. That is an important distinction that Ben makes in his book, shown through the twins highly skeptical attitudes toward the manic bitcoin passion of and the slightly dangerous libertarianism of. The twins, albeit very sincere bitcoin believers, could kind of care less about the sacredness of decentralization.When asking Tyler Winklevoss about Facebooks Libra project, I expected potential scorn, derision, maybe even thinly veiled frustration about losing some crypto limelight to a past adversary. But Tyler surprised me with his even keel:So, first off, I think that Facebook being in this space is huge validation for it.I waited for him to continue.I think that if you are a company in 2019, and you don't have a crypto story or game plan, it's kind of crazy. And if you don't, I'm sure youre scrambling around to get one.Ultimately we think it's great validation in the space. I've read some of the technical papers and whatnot and it looks like it is evolving and they're still figuring out exactly all the details. But there's a plan to start, in some way move it to more decentralization.It's still really early, and this is all one big experiment and iteration on the evolution of money. And I think it's really healthy that people are trying different approaches. It's not necessarily one size fits all.If you're trying to be digital gold, decentralization may be the most important thing. If you're trying to be more like a currency, then perhaps you can give on decentralization for speed. So I think it is really good. All approaches are very valid and we'll sort of see how it plays out.On the straight and narrowThe main takeaway from Tylers comments throughout our entire conversation was regulation, regulation, regulation. Once you got past the bitcoin does gold better than gold standard line, he was ready to explain his somewhat unusual (what I would dub hodler traditionalist) views.For starters, he was not onboard with my joking idea about selling Bitcoin Billionaires for actual bitcoin:Maybe you shouldn't buy it with bitcoin, because if you believe in bitcoin, it is going to only appreciate in value.According to Tyler, there is no reason for bitcoin to even become a medium of exchange or a good currency because of how regulation is allowing that to play out, at least in the U.S.And now that hes started speaking about regulation, he gets on a roll that is nevertheless persuasive despite being well-practiced.We need to speak the same language as the largest funds and players in capital markets today, Tyler said over the phone, in as far a cry from a cypherpunk as can be found. I think it's just really important to do things the right way. And that may not be the fastest way in the short term, but I think in the long term, it's the one that ultimately will bring in the right audience and be the pay-off in the long term. Our sort of motto is: Look, we're just trying to be the fastest tortoise in the race. And we're playing on a game board that not everybody else is necessarily playing on.We're playing chess and, you know, there is checkers, but that's a different game and were not playing that.What bitcoin lacksWhen asked about the upcoming physically-backed bitcoin futures , as well as the seemingly never-ending process of the United States s on a bitcoin exchange-traded fund (), Tyler continued to play the role of the tortoise in it for the long haul:I think that people, traders, investors and consumers will ultimately want to see the same opportunities to express opinions through financial instruments in bitcoin as they see in gold. But because we live in the world of cryptocurrency, there may be much more, too. There may be decentralized exchanges and more decentralized finance applications that you can't create outside of the crypto world.I think you'd expect to see what exists in gold but also much more in crypto.This attitude toward regulation, compliance and doing things the right way came from the twins negative experience with now defunct crypto exchange , when they first started acquiring their bitcoin hoard. This is the main goal of the Winklevoss cryptocurrency exchange, the New York-based to do everything the opposite of Mt. Gox.And according to Tyler, doing things the right way is really the only way:We don't believe in hacking our way around regulation or being too clever about it. We are transparent. We go into the front door, not the side door or in the back door. And that's been our strategy and our DNA from day one.Ben Mezrichs interest is piquedAccording to Ben, Tylers passion for crypto and its regulation, obvious even over the phone on a group call, was one of the things that got him interested in the story and kept him interested:If there is a really, really smart person who gets incredibly passionate about something and everyone else is telling him that he's wrong, that often leads to that thing that changes the world. People who are very smart get truly passionate about something, and you have to wonder why. How did they get so into this? Thats sort of rabbit hole that you go down.In fact, Ben who admits that he knew almost nothing about cryptocurrency before he began this book has become a bitcoin evangelist in a way that is abundantly clear both in the book and in our conversation. He tells me this on the phone with the conviction of a true believer:There's no question that cryptocurrency is the future. That's the way we're going. It's the science fiction money that we read about. And now, suddenly, it's going to be adopted by everybody in the next couple of years.And Ben underlines that he was inspired specifically by the Winklevii, compliant, right path way:If you just talked to the Charlie Shrems and the Rogers of the world, it would frighten me, because it comes from this kind of crazy libertarian, anarchistic, Silk Road world, which is not something that would appeal to me, necessarily. But the way I think the twins came at it was completely different, and that perspective really won me over and it just made sense.The idea of digital money and the idea of digital gold and something that you trust because it's math and not people just made a lot of sense to me.Bens goal in writing the book may have originally been to chase down his next interesting story, but his conversation with me sounds a lot like the Winklevoss twins in their early circuits of the crypto conferences back when bitcoin was still in its nascency.And according to Ben, people have seemed to take his past books to heart as he noted that Accidental Billionaires and The Social Network actually launched many people toward Silicon Valley which could spread the bitcoin gospel even further.He told me confidently:I think this will launch all these people into this whole new world of money, and not just that, but the whole philosophy behind it.Tyler agreed with Bens assessment of the previous past influence of his books, noting that if someone invested behind what Ben Mezrich found interesting, theyd probably have done pretty well.Ben concurred, joking that a hedge fund had once even wanted to rent him an office so that it could pick his brain as he searched for a new book topic. He didnt end up taking the fund up on its offer.Ben did add the caveat that I foolishly never invest in anything I write about for a couple of reasons, stating that he didnt want to own bitcoin while also promoting his book, a highly moral stance for someone that also admitted he didnt buy Facebook stock when writing Accidental Billionaires almost a decade ago.Friend or foe?I was curious how the characters that were portrayed in a more negative light viewed the book. After all, Ben had obviously gotten close to them in order to write a book that detailed all the various ways that BitInstants could be sweaty.His answer also surprised me:Charlie loves it. Charlie read the book and the first thing he did was he texted me and said he cried, and thank you, thank you, thank you.I think Charlie's a complicated character. So, even though you saw him warts and all, it really was his story. So, he liked it.Tyler chimed in to say, very seriously, that he and his brother Cameron are cordial with everyone in the book. Im friends with Eric [Vorhees], cordial with Roger [Ver], weve exchanged emails, obviously it's no secret that we've had our differences with Charlie, but that's all behind us now. He went on, saying:I feel like we're all cordial and respectful of the different viewpoints and opinions we have and paths weve taken.Everybody's entitled to their different views and philosophies, and you know we don't always have to agree, but we can respectfully have our differences.When I noted that his speech was more respectful than what goes on in crypto Twitter, he replied someones got to set the example, you know?As for speaking with Zuckerberg for the second iteration of the Facebook-turned-crypto saga, Ben seemed doubtful, but as he said, you never know, you never know.I like to think of it like The Avengers. You have The Avengers as The Social Network, and like the Marvel Universe, we go off into each character. Now, we're talking about Wolverine, and next we'll be talking about whatever. But it is really an incredible story that just keeps on going. And it's definitely not finished yet. Editors Choice

6102 Bitcoin is a pseudonymous bitcoiner known for his contributions with various Bitcoin resources and how to sites, and infographics. He joins me for a discussion about bitcoin privacy, why he does this under a pseudonym, contributing in the Bitcoin space, Blockstream’s Liquid network and more.  6102 Bitcoin links: Sponsor links: Stephan Livera links: 6102 Transcript: SL: Why 6102 as your name? Tell us about the executive order and why you chose this 6102: Executive Order 6102 was a presidential directive which forbade the hoarding of gold in the United States – citizens were instructed to deliver their gold to the Federal Reserve within a month of the signing of the order in April 1933. Violating the order carried a punishment of 10 years in prison, a $10,000 fine or both. The $10,000 fine is equivalent to almost $200,000 today due inflation of the US Dollar. This won’t be anything new for the people who have heard about this before, but for those listeners who are hearing about this for the first time I think it will be quite surprising. Less than 100 years ago, in the United States of America, it was ILLEGAL to hoard gold. it was ILLEGAL to have a shiny rock in your home. I find that fact astonishing. To me, executive order 6102 clearly marks the start of the end of the dollar as the global reserve currency, and maybe even the end of fiat. With the signing of executive order 6102 and the seizing of this physical gold it was clear that fiat money had failed to compete in a free market against gold. Coercion was required to force people to abandon good money (gold) in favour of bad money (fiat). Historically fiat money has been backed by gold – you could take a $1 bill to a bank and redeem it for physical gold equal to the amount written on the promissory note. Interestingly many people still mistakenly believe that this is how fiat money works today, which is unsurprising given that many fiat currencies carry misinformation, for example the British £10 Sterling Note carries a message, signed by the governor of the Bank of England which states “I promise to pay the bearer on demand the sum of 10 pounds”. Originally this meant that you could exchange the note for 10 pounds weight of gold. The adoption of gold certificates or gold IOU’s was quite natural and occurred voluntarily because banks had a good track record of honouring the claims, and physical gold was, and remains, inconvenient for a number of reasons. That said, physical gold remained superior for many people for long term savings and they held gold either on property they owned or in bank deposit boxes. In the great depression the Federal Reserve was required to have 40% gold backing. This limited the amount of credit creation that was possible, and this was thought at the time (and in many Keynesian circles today) to have been stalling recovery in two ways, firstly because the government couldn’t create credit and effectively print its way out of trouble, like we are seeing now. The second reason is that people were storing value in gold rather than investing into companies, which in turn was restricting economic growth and suppressing employment rates. By banning the, “hoarding” of gold, the Government could kill two birds with one stone, they could increase the money supply and force investment into productive goods. I mentioned earlier that executive order 6102 marked the failure of fiat because coercion was required to persuade gold holders to sell for fiat. But it was also a clear demonstration of a serious weakness of gold. There are obvious disadvantages of gold compared to bitcoin; But at the time of executive order 6102 its biggest weakness was made clear – that through a combination of the aforementioned weaknesses it is unsuitable for widespread use under a hostile regulatory regime. Good money should be useful despite it’s use being outlawed. Gold is not. Sven Schnieders has written a great article called Stop Calling for a Free market in Money The name 6102 reminds me that it is critical to ensure that bitcoin becomes useable even in a hostile environment. Bitcoin has properties which I believe can make coercion ineffective, and therefore a repeat of executive order 6102 with bitcoin unlikely. SL: Were you already into Austrian economics and libertarianism before bitcoin? 6102 Until I discovered bitcoin I had no idea that Austrian economics existed. The study of money & markets always seemed like a waste of time to me prior to discovering bitcoin, having watched the global financial system edge close collapse in 2008 it seemed to me that economists were generally an obstacle to progress. It was refreshing to discover Austrian economics through bitcoin, and realise that economics is a fascinating field when you start from the correct axioms and build up from there in a pregeological manner. Fundamentally, Austrian economics is about people and how they act. I think anyone who thinks poorly of economics has simply not encountered Austrian economics. Similarly, I only understood libertarianism after discovering bitcoin. Previously I believed that individuals acting in their own best interest was a long winded way of describing someone as selfish. I thought that if everyone acted in this self interested manner there would be significantly more hardship in the world than if everyone worked together for a collective goal, for the collective good. In discovering bitcoin I interacted with a vast range of individuals with experiences and opinions vastly different to my own. This eventually led to the realisation that no collective goal can ever exist because there is no universal moral code, no universal agreement between what is good and what is bad. That coordinating a group of people to act against their own self interest requires a violation of their liberty which cannot be justified. That the best outcome is reached where individuals are free to take actions to satisfy their own needs, provided they do not impede on the ability of others to do the same. That an individual knows what they need better than any authority or bureaucracy ever could. Libertarianism also opened my eyes to the fact that it is logically inconsistent to seize private property through the use of force, even if the intention is to then distribute that property to other people. Bitcoin makes this ideology practically meaningful, because public key cryptography gives the individual a huge defensive advantage against an attacker. SL: Tell us about your different projects and why you started them: 6102 I make educational material to help people better understand bitcoin & use bitcoin in more secure and private ways. I do this to aid with my own understanding, to help other people fast track their learning and ultimately to make bitcoin harder to 6102. I have a number of projects which I try to juggle which are listed on my website 6102bitcoin.com/projects. Bitcoin Only In January 2019 I built a bitcoin-only.com to list projects that exclusively support bitcoin. Since then the project has grown significantly and now tracks a wide range of bitcoin tools, products, events, meetups, wallets, hardware, podcasts, stores, conferences, and more. People submit suggestions for projects to add and I evaluate whether the project is actually bitcoin-only. This has worked very well and there are now 16 contributors. Some people take submissions and turn them into pull requests so that I can quickly merge the branch which speeds up everything significantly. Shout out to pardus79 for their help in this regard – I don’t know who they are, but they appeared one day and made a pull request which closed an issue, and have been helping ever since. The project is open-source and licensed under the MIT License meaning anyone is free to fork the project and make their own version. Some people fork the project for translations or to create their own self hosted version to share with friends and family which is great because they can then easily push useful changes upstream to the bitcoin-only repository. Bitcoin intro Another key project is Bitcoin-Intro.com which is a simple on boarding guide which newcomers can work through to develop their understanding of bitcoin whilst discovering how easy it is to use. It is founded on a number of guiding principles. First is that starting simply and improving is better than than not starting at all. Often I find that people are reluctant to start because they have information overload, each time they are about to use a tool they hear that there is some additional thing to consider from a security / privacy perspective – this frequently means that people don’t bother and just leave their bitcoin on an exchange. The idea behind bitcoin-intro.com is that it guides you step by step, starting simple so that you actually do start. The second principle is that it’s more engaging to use tools before reading a detailed explanation. Often bitcoin guides give a detailed explanation of what bitcoin is and why is is needed before people even have an opportunity to just try it out. With bitcoin-intro.com you are encouraged to get a wallet and get some bitcoin first, so you can see the magic. Then, once you have been hooked in we point you to some excellent resources to learn why bitcoin is useful (‘Why Bitcoin’ by Wiz, ‘The Bullish Case for Bitcoin’ by Vijay Boyapati & ‘Why Bitcoin Matters’ by Aleks Svetski). Then, having used bitcoin and started to understand why bitcoin is useful we finally get into what bitcoin is with the superb 800 word intro by Greg Walker amongst other things. I won’t go through the full guide but to summarise, you are then guided through improving your seed backups, running a node, attending a meetup, improving your privacy and using lightning. The third principle is to always keep full control of your bitcoin (use non-custodial tools). New users won’t understand the extreme ownership which bitcoin enables, so I think it’s important to show them this from the outset rather than on boarding into a custodial solution which misses the point of bitcoin (elimination of trusted third parties). The final principle is to stay focused and avoid scams (use bitcoin-only tools & services). Again, new users won’t understand why bitcoin is so unique and may fall for the altcoin narratives if exposed to them before they have a deep understanding of bitcoin. The easiest way to avoid this is to simply point them to bitcoin-only tools so that they don’t get exposed to the altcoin side of things. An alternate approach could be to link to a robust explanation as to why newcomers should ignore altcoins – if anyone has a suggestion please make a pull request. Bitcoin Privacy I think it’s incredibly important to help people improve their privacy when using bitcoin, it benefits everyone if a significant proportion of bitcoin use is private. Conversely, it would affect everyone negatively if the vast majority of bitcoin use was not private, because it would be far easier to 6012. I think that the easiest thing that people can do to improve their privacy is look to avoid address reuse, avoid posting transaction information publicly & to switch to a bitcoin wallet that prioritises privacy over convenience. Avoiding address reuse is an absolute no-brainer. It costs nothing to generate new addresses and makes a huge difference to your privacy. The good news is that almost all wallets will generate a new address each time you hit receive, so in normal use people probably won’t accidentally re-use addresses. The one time where people do re-use addresses frequently is in receiving donations, for example by putting an address in their twitter bio or on their website. These people should research paynyms / set up a btcpayserver donations page. CoinJoin is a powerful tool which bitcoin privacy enthusiasts have been working to make mainstream for some time now. The three implementations are JoinMarket, Wasabi and Whirlpool. I have done some work to help users understand both Wasabi & Whirlpool as well as catalogue all other CoinJoin work that has been done over the years in the form of a Research Repository on my github. Timing analysis was something that I noticed no wallets had considered so I made a python script which takes signed transactions and broadcasts them at random times. Information can be found on txCast.org All things bitcoin privacy related can be found on btcprivacy.org, which hopefully will be expanded in the near future. SL: What are your favourite Privacy tools? 6102: Within bitcoin I am a big supporter of the Samourai Wallet stack. I use Samourai Wallet on my Android phone, connected via tor to my Ronin Dojo Full Node which lets me use send and receive bitcoin with confidence. There are a number of innovative privacy features which make using bitcoin in a private manner a slick and pretty seamless experience. I think that Whirlpool is a great innovation which lets Samourai Wallet users CoinJoin with ease. It’s important that users run their own node which is made easy by the Ronin DOJO project, and I think its important that users are encouraged down this path. JoinMarket is, by all accounts, a superb project which uses a market based approach to drive the fees down really low. Chris Belcher & Adam Gibson have quietly been building this powerful tool, but because it has historically been more difficult to setup than the aforementioned projects it hasn’t seen widespread adoption. My mission for this year is to get to grips with JoinMaket. More generally I think Tor & Linux are privacy tools which everyone should lean to use. Connecting directly to a tor hidden service provides a reasonable level of network level anonymity and using the web browser is incredibly easy – There are some occasions, for example if you need to use a block explorer, where I think everyone should be encouraged to use Tor, even if they don’t use it for anything else. Linux is vital if you are interested in remaining private online. If you use OSx or Windows then there is a significant data leak and you are far more susceptible to common malware. SL What’s your view on bitcoin blockchain ‘taint’ ? Does it exist and in what sense does it exist? 6102: Bitcoin UTXOs are sometimes described as ‘Tainted’, for example if they are the known proceeds of a crime. But what does this practically mean for a bitcoin user? Should they be concerned about inadvertently accepting ‘Tainted’ bitcoin? I don’t think so – taint can’t be objectively measured and it is completely subjective, it relies upon heuristics which are becoming increasingly invalidated. Taint is not an intrinsic property of a utxo (unlike, for example, the value of the utxo in satoshis), it is an extrinsic property imposed on the utxo by the analyst. Nevertheless, some businesses attempt to try and track taint in a desperate and misguided effort to be seen to be taking steps to comply with regulations. I have produced infographics to explain why none of these methods are viable, which you can find on my website or in the shownotes. The key thing to realise is that exchanges are only using these models because chain analysis companies present them as an easy way to avoid regulatory issues and overstate their usefulness in order to generate sales. SL: What are your thoughts on the hopes for the non-KYC bitcoin economy? 6102: Bitcoin is a tool. Being technologists or economists we can easily forget this. Bitcoin is not in itself going to change the world, it is the people using bitcoin who will change the world. Originally bitcoin was promoted as a way of transferring value in a trustless manner, and the scarcity was a useful extra feature which lets us experiment with the first example of a truly limited money supply. It seems that increasingly people are only interested in the potential for bitcoin to increase in value relative to the dollar which it was designed to obviate. This ignores that fact that for the buying power of bitcoin to be important you need to actually eventually exchange it for goods or services. Or, if you intend to pass the bitcoin on to your children, that they will have to exchange it for goods and services. As a result of this Number Go Up obsession there has been an explosion of on-ramps which, in requiring KYC, are antithetical to bitcoin. Those who insist that in order to acquire $5 worth of bitcoin you must submit photos of yourself and your passport to a trusted third party are, in an ideological sense, diametrically opposed to the ideology of the cypherpunks who created bitcoin. KYC Creep has infected bitcoin businesses because of a fundamental misunderstanding of what bitcoin is. Bitcoin is a database, whey you buy bitcoin you are just paying for a change to be made to the database. This can’t be legally regulated in America without violation of the first amendment as Beautyon has pointed out time and time again. In any free country there is some protection of free speech, and bitcoin, being text, is simply speech. I am hopeful that eventually anti-bitcoin regulations will be challenged in court, and it will be clear that the emperor has no clothes. I am hopeful that companies and individuals who have spent years designing complicated regulations and selling methods of meeting them will be cast out and finally bitcoin businesses will have the courage to reject the mischaracterization of bitcoin as money. Bitcoin, being a database should be no more regulated than an equivalent system using excel or mySQL, like in-game currency. Regardless, just like strong encryption, which faced significant legal resistance in the USA, bitcoin is unstoppable and can and will be used regardless of the law. Let me quote a section of The Soverign Individual, a book written 43 years ago, in 1977! “You need merely lodge your transactions in cyberspace. This will, of course, be illedal in many jurisdictions. But old laws seldom can resist new technology. In the 1980s, it was illegal in the United States to send a fax massage. The U.S. Post Office considered faxes to be firt-class mail, over which the U.S. Post Office claimed an ancient monopoly. … Billions of fax messages later, it is unclear whether anyone ever complied with that law. … Widespread adoption of public-key/private key encryption technologies will soon allow many economic activities to be completed anywhere you please.” Bitcoin users have a choice. They can either opt for the convenience of buying/selling bitcoin via a KYC’d exchange, potentially putting themselves at risk of extortion and theft or they can support those companies / individuals who are challenging the status quo by offering an alternate and legal method of acquiring bitcoin without using the legacy rails. The simplest such method is doing work and getting paid directly in bitcoin. My hope is that people become more aware of the options available and support those businesses and individuals who are challenging the assumption that bitcoin sales need to be KYC’d. For example, bitcoin voucher companies like Azteco or FastBitcoins offer a way to buy bitcoin without any KYC information, within certain limits. The other option is BISQ which connects individual buyers and sellers via a decentralised p2p platform which uses tor to maintain network level privacy. To reiterate, in many countries these methods are completely legal and are actually not significantly less convenient than KYC’d exchanges – I encourage listeners to look into these projects. Governments around the world will eventually realise the potential income from a hands off regulatory regime combined with competitive income tax for bitcoin businesses, so though the current KYC issues limit bitcoin adoption in some locations (for example New York) other locations are unaffected. Another thing to note here is that KYC is a security risk. If you give your personal data to a company to verify your identity there is a real risk that this data could be leaked or sold following a hack of the company. A recent example of this is BlockFi who were hacked leading to physical addresses of their users being accessed. To date they have failed to make a public announcement about this and some users have reported that they have heard nothing from the company directly. It is highly likely that the hacker will sell this data to criminals and that we will eventually have a reports from BlockFi customers of receiving blackmail or even being victims of theft. Once this kind of information is leaked it is impossible to get back, for many users of this service it may even be worth moving house – especially given that account activity was leaked. This is the hidden side of KYC that is rarely considered by a newcomer buying their first coins for example. Submitting this information does increase the risk that one day you will be the victim of theft. To summarise, KYC creep developed due to a misunderstand of what bitcoin is and has been exacerbated by regulatory capture. New companies and services are appearing which challenge the status quo, and allow people to use bitcoin properly. SL: Do you see it like we will have two parallel sides of bitcoin, the ‘regulatory compliant Bitcoin’ side and the grey market bitcoin side? 6102: Bitcoin as a protocol is completely unaware and unaffected by regulation. If individual countries misunderstand bitcoin and legislate that all bitcoin sales must be KYC’d then those countries will fade into insignificance regarding bitcoin. Similarly, if companies misunderstand regulations and overzealously require users to submit KYC documentation for all purchases/sales then they will eventually lose business to those companies that understand, test and change the limits of regulations. Bitcoin is a global system, and each country has autonomy to create unique rules and regulations. As some countries tighten regulation, others will loosen regulation in order to entice bitcoin companies. I don’t think the distinction between ‘compliant bitcoin’ and ‘grey market bitcoin’ is useful or a good message to be promoting. Do people talk about the dollar having a grey market side and a compliment side? No – A dollar in the hands of a criminal can be exchanged for white market goods, and within a day be cashed in a bank. Similarly, cash withdrawn by a seemingly law abiding citizen can be in the hands of a criminal within minutes. There exists a white market, black market and grey market, but the dollars used are interchangeable. At what point does bitcoin used for black market activity become acceptable to a regulated entity? Suppose a regulated entity were to take a whitelist approach, that is they only let you deposit a utxo if they can fully trace back the coins origin to another regulated entity. This would make it impossible for the users of this regulated entity to receive bitcoin from anyone without first checking that these coins could be fully traced. Quickly it becomes apparent that such an approach will hinder the ability of both the regulated entity and the users to engage in economic activity. Everyone would be anxious to accept bitcoin, because they would be at risk of corrupting their whole stash. Unbanked individuals will be on-boarded onto bitcoin over the coming years and they will want to buy products and services from around the world – a user of the whitelist system would be unable to accept payment from these individuals who have no bank account, no passport, no driving license. Clearly any users who engage in such a whitelisting system will loose out economically to users of entities which take a more sensible hands off approach. It is tempting to then propose a less extreme form of regulatory compliance, somewhere between a hands off approach and full whitelisting only. This middle ground does not exist – it is an illusion. If the compliant world is willing to accept a coin which may, or may not, be linked to crime then the criminal simply has to manage their coins to ensure that they pass this test. For example, suppose there is ambiguity in the flow of value in a bitcoin transaction, with some inputs being from known entities and others from unknown entities. A middle ground approach may assign an equal risk score to each output, effectively diluting the degree of ‘taint’ which the analyst has assigned to the coin. In this case a criminal must simply partake in a number of these transactions consecutively in order to reduce the ‘degree of taint’ of their coins below that required to be deemed compliant. As such, there is no meaningful middle ground approach between a complete hands off approach and a whitelisting approach. The idea that such a middle ground exists is primarily due to PR by surveillance companies who profit from selling their black box ‘Middleground’ services to exchanges. In some jurisdictions these surveillance companies have influenced the writing of the laws to mandate the use of their technology as was seen in New York with the BitLicense. In other jurisdictions they simply mislead exchanges and other entities into believing that their tools are required to meet the legal requirements, though this is not the case. A quick aside – people often think that the unbanked refers to people in non-western countries, but there are, according to 37 million unbanked adults in Europe & 8.4 million unbanked households in the USA. SL: Do you recommend that others follow your path and use a pseudonym and go only by that nym? 6102: I recommend people try using a nym at least for a while. You are forced to build your network from scratch, without the benefit of being able to leverage your social network. This forces you to refine your arguments and contribute something meaningful to be noticed. I am pleasantly surprised at the level of trust I have been able to establish with true name bitcoiners. I would have thought that many people would reluctant to share thoughts and opinions in confidence with someone who’s name is a number, but in fact that doesn’t seem to be the case. Using a NYM is liberating, you are able to express yourself freely, and it often seems that people are more receptive to some ideas when they come from a NYM. I encourage everyone to read the book TRUE NAMES by Vernor Vinge, an early cypherpunk book which explores the idea of using NYM’s and the dangers of revealing your True Name. I think that satoshi releasing bitcoin under a NYM was a powerful statement – that he remains unknown is a testament to the degree of privacy which can still be achieved. SL: Thoughts on attending local meet ups – being able to learn quickly and share ideas, make contacts, vs opsec and privacy risk? 6102: Meetups are great for many reasons, but I remind people to carefully consider their actions at meetups, particularly amongst people they have only met a few times. The bitcoin VR meetup is great for this reason although obviously is doesn’t beat meatspace in terms of the personal connections you can form. It is obviously possible to attend a meetup without revealing your nym, but you should take care to use a burner / secondary phone & think before you speak. If I met someone in meatspace who knew me under my nym it would likely be challenging to avoid telling them – It would feel like a violation of their trust if they knew me as 6102bitcoin and as [REDACTED] but did not know that we are one and the same. I imagine it would be hard to tell them some time after having become acquainted – I would love to hear from people who have had this experience and can share their thoughts from either perspective, please drop me a DM. Generally, I suppose attending a bitcoin meetup may increase your chance of being put under targeted digital surveillance, but I think that unless you are very careful online a sophisticated government could identify you as a bitcoin user. You only have to make one mistake, download one block over clearnet, and they know. That said, in an authoritarian country I would be very cautious about attending a widely advertised meetup – it could be a honeypot. For most people, think a more realistic risk is that you are identified as a bitcoin user by a thief attending the meetup, or someone who is willing to sell information to a thief. For this reason I think that it is critical that you never discuss your bitcoin security setup at a meetup. Check out bitcoin-only.com/#meetups to see if there is a meetup in your city. If you run a bitcoin meetup which isn’t listed please raise an issue on github – send me a DM if you need help doing this. SL: Do you think there are bigger govt attacks on bitcoin coming? Or do you think that bitcoin eventually builds up enough of a ‘bitcoin electorate’ to make it less politically palatable to attack? 6102 I agree that it is possible for a sufficient bitcoin electorate to dissuade politicians from attacking bitcoin, but I think its even more likely that bitcoin businesses will make it known to governments that any efforts to over regulate will result in an immediate relocation to international waters. As mentioned previously, some countries will structure regulation to be very light regarding bitcoin, to attract bitcoin companies and the tax revenue they bring, from around the world. The switching cost will be negligible and the process will be completed within hours without the need for physical contract signing or a physical headquarters. This will place pressure on governments around the world to tread very lightly. Some governments will undoubtedly try and regulate against bitcoin or worse, attempt to confiscate bitcoin from their citizens. I don’t imagine that these regulations or attempts at seizure would be particularly effective for a number of reasons. Firstly, bitcoin can move at the speed of light (with a 10 minute lag). Regulations take time to develop and in most countries a vote would be needed to confiscate bitcoin. Before the vote even takes place most owners of bitcoin would have transferred ownership outside the country, beyond regulatory reach. Secondly, Bitcoin can be controlled my numerous parties who operate under different regulations making such confiscation unworkable. Finally, bitcoin can be hidden in plain sight and owners can build plausible deniability into the scheme used to hold bitcoin. I expect the tools to enable shared ownership of bitcoin to develop to the point that they are very user friendly and secure long before any western country attempts such a feat. It may well be that the development and widespread use of these tools dissuades a government from even attempting to seize bitcoin – so these tools can’t be developed soon enough. SL: You’ve commented about Blockstream Liquid and L-BTC being an IOU, what risks do you see if L-BTC is used by retail users? Is it mainly the risk of having your peg-out denied and govt (or other) permissioning entering the system that way? 6102: Liquid is a complex IOU that you buy with bitcoin. Liquid Bitcoin tokens aka L-BTC are tokens on an a network managed by a consortium thus you have no guarantee that bitcoin you peg into liquid will be available for you to peg out in the future. Effectively you send your bitcoin to a group of companies in the hope that you’ll get it back. As such, L-BTC is not bitcoin, it’s an IOU. The risk is that retail users get on boarded into Liquid, mistakenly think that they own bitcoin and do not take steps to take self custody of bitcoin in the future. The peg-out could be denied or the consortium could go rogue and steal the bitcoin (due to pressure from governments) or get hacked and have the bitcoin stolen from the consortium. The consortium uses hardware secure modules to try and limit the risk of theft, but as more bitcoin gets pegged into liquid the cost, and therefore the sophistication of an attack can increase and still be wildly profitable. All that said, I think that liquid and private banking systems in general will become increasingly common in the future – Many people will use them, especially once it becomes economically infeasible to regularly make small transactions on chain. My main concern is that liquid provides a new attach vector against bitcoin in general. Currently, if a single exchange gets hacked and looses a significant amount of bitcoin to a thief, there is no chance that an economic majority would support a fork to roll back the transaction in which the coins were stolen. We saw the massive pushback on social media when Binance was hacked and CZ commented that they considered trying a roll back. The social media reaction is not particularly meaningful, it is the economic supermajority which matters. In this case, with one exchange being hacked, the large players had no interest in helping binance. If anything, all the other exchanges would be against such a move because they are in competition with binance. With liquid however, you have a huge list of companies who are locking an increasing about of bitcoin into the pool of bitcoin belonging to the federation. Over time, there could well be a significant fraction of the ‘voting’ weight which would support a roll back in the scenario where a 2/3rds majority of the Hardware Security Modules are hacked and the federation bitcoin is withdrawn to a previously compromised exchange cold address and then either burned or send to a hackers address. If every exchange was at risk of financial collapse due to the hack then they would all be ideologically aligned and the push for a roll back would be immense. They could make it hard or slow to access the coins on the original chain in the case of a fork, making it difficult for those holding coins on an exchange to sell the fork coin. They could allow buying and withdrawing of the fork coin to increase it’s price. They could bribe miners to switch to mine their chain, or to perform re-org attacks on the original chain. The percentage of bitcoin users weighted by their economic activity who are actively engaged with running their own node and enforcing the network rules has only been decreasing over time since bitcoins inception. There are huge players who hold vast sums of bitcoin who are completely detached from the nuance of forks and consensus wars, and I expect the amount of bitcoin held by such entities to continue to grow. As such, the fraction of the economic activity that would actively resist a hostile fork like this is likely reducing, making such an attack increasingly viable. Another element to this is that any government interested in damaging bitcoin would identify this as a possible route to weakening bitcoin – they would support such a fork with whatever means they could, including huge financial support for the new coin (making mining the new coin increasingly profitable), seizing mining equipment where possible either overtly or covertly, in order to attack the original chain and perform large and repeated deep reorgs which disrupt economic activity. For these reasons I think that Liquid could pose a significant new attack vector to bitcoin if it continues to grow and expand across bitcoin exchanges and services. SL: Why is it important for people to self-custody their Bitcoin? 6102: Unless you self custody bitcoin you don’t actually have any bitcoin, you have an IOU for bitcoin. The number shown on an exchange under labelled bitcoin balance is the amount of bitcoin the exchange owes you. This is painfully obvious for individuals who had bitcoin deposited on Mt. Gox – when the exchange was hacked they were unable to withdraw their bitcoin, that is to say, they were unable to exchange their exchange IOU for bitcoin. Self custody brings a number of significant benefits; for one you don’t need to rely on a third party – you can do whatever you want with your bitcoin including spending and securing it however you want. Secondly, you can verify that you have actually received bitcoin by running your own node. If your node shows that you have received bitcoin then you know that it will be there when you need it, whereas if you are trusting someone else to tell you whether you have received bitcoin then you might be in for a surprise when you try and spend that bitcoin. SL: What are your thoughts on bitcoin citadels? Are they necessary and how will they take shape? 6102: I love the idea that there will be actual bitcoin citadels – walled towns where all commerce is denominated in bitcoin – but hopefully enough people will adopt bitcoin to make this unnecessary. Governments will realise the huge economic boom that will inevitably follow the globe-trotting bitcoin rich. I expect small countries with pragmatic governments to compete to make an attractive place for the bitcoin rich to live, for example by having no capital gains tax and a high degree of personal freedom. It could be that entire countries become bitcoin citadels in this manner – or I suppose you could have individual states in America which take a more favourable approach. SL: Closing thoughts and tips for the listeners? 6102: Historians generally deem the Western Roman Empire to have fallen with the deposition of Romulus Augustulus in the year 476, but the Roman Senate which was established in the first days of the city of Rome continued to exist, almost powerless, for another century. It is very hard for most people to acknowledge that the world they inhabit today is significantly and meaningfully different to the world they were born into, and yet if you take the time to look you can see the cracks. In my opinion it is highly likely that the collapse of the welfare state has already begun – Bitcoin is a tool which can help you survive and hopefully thrive over the coming decades. You can find me on twitter @6102bitcoin, if you have any questions my DM’s are open Bitcoin is not going to change the world by itself – but if enough people start using it, we just might.