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Nick Andrews 0:22
Welcome to another episode of The Game Theory podcast, your podcast about strategy policy as a licensed Chris. Here a full episode today about cryptocurrency we're gonna do the sexy topic that everybody wants to talk about. We're not gonna do topics that we're scared of, like vaccines climate change, last time, next time, we're gonna do this one fun thing and how to change the world. But I will start by shouting out a couple of our listeners first, a guy that we have the high school with, potentially, Dr.
Chris Andrews 0:56
Jerry Stott. Yeah, that guy has some of the most unique and insightful views in the entire world. brilliant guy. Hilarious guy. Really great, great guy, big heart. Shout out to Jerry for having the courage to use some of our material in what appeared to be a real actual college class. The rest of whom, to whom we can only apologize.
Nick Andrews 1:19
Yeah, our back our bad. I hope that all of his Ph. D class really enjoyed Raiders vs. Chargers with the rest of us did. How do I explain Jerry is a guy who SAS and intellect was so on point at a young age. I imagine a lot of teachers were like, damn, I wish I could get drunk with that kid when he was like 16
Chris Andrews 1:39
Oh, for sure. I wish I could get drunk with Jerry right now. So Jerry, wherever you are, if you're listening, next time, we see each other whatever we're doing, we got to stop we're doing to get a drink, hang out.
Nick Andrews 1:48
100% Completely agree with that. I also want to give a shout out to we'll call her Dr. Ali, who's a resident who reached out wants to discuss medical communication and how can we make things more accessible to patients? Well, and this is what we kind of did. She and I had had a back and forth it's gonna be really hard because and we're gonna do a future episode on this to Chris. Media that's free is essentially voting, you get to decide what you like, but what you click on, and that's how tick tock works and everything. So it doesn't matter what's important. What matters is what gives you money. And that's sort of a good segue into we're talking about today, which is cryptocurrency in NF T's. It's something that exists, but also something that we agree that exists, and therefore it exists. And for those of you atheists out there screaming, that's what God's like, maybe one day we'll talk about that one one day. Yeah, maybe one day, maybe one day. So cryptocurrency took the world by storm back in 2017. When the graph started stopped going like this and just went straight up into the sky. And now it's up and it's down and it's up and it's down. And Chris, it's um, it's it's like any other invention like I call it the Nobel complex. I'm sure someone smarter than me has coined it something else. But Alfred Nobel famously invented dynamite, which is why we can mind and why we can do all of these incredible things, but also, why it's super easy to murder groups of people at one time. Like, things are as good as they are bad. The internet has the dark web, sex trafficking, but it also can connect people and we can have an economy from home during a pandemic. Because of the internet. Sometimes things are as good as they are bad. The cryptocurrency has such a strong positive thing going on right now that you don't hear about the negative parts. So we're gonna get into both sides of what this isn't. This is the second installment of our WTF series. We haven't done one in a while literally since the first episode. So what the fuck is cryptocurrency?
Chris Andrews 3:36
Yeah, cryptocurrency is absolutely wild. Okay, it's kind of like the realization of this futuristic dream of a cashless society. You know, the, the basic concept behind money is, you know, in an oversimplified nutshell, things have value. And people want to be able to trade that value without having to like physically trade things. I mean, instead of difference between bartering one good or service for another, and just saying, Okay, well, I here's this thing that represents the value of the goods or services. And I'll take the value instead of like some tangible object or some some receivable service. So cryptocurrency is basically a step beyond that. One of the big challenges with managing a whole financial system where you have this money that people just kind of agree is worth value of things in the economy, is that there has to be a base level of trust, trust in the system. And that means trust in major institutions like big banks, in the case of like state governments, you have to trust that the institutions that back those banks are going to act in the interest of investors to make sure that the money that people put into the banks the value they add there doesn't just go away. And that can be really challenging, especially in situations where like, for example, big banks don't act in the best interest of investors. No, they are do things like back a bunch of loans for people who can't afford homes and crash the entire global financial system? I'm not talking about anything in particular, this is a hypothetical.
Nick Andrews 5:11
And also, if that were to happen, we've solved the problem, and it's definitely never going to happen again.
Chris Andrews 5:16
Absolutely, yeah. All the roadblocks are in place, and we're completely safe. And those just in case
Nick Andrews 5:21
perpetrated the fraud or going to prison so that they can't do shit like that, again, with a cryptocurrency?
Chris Andrews 5:26
Absolutely, yes. So one of the cool things about cryptocurrency is that it's in theory supposed to address these problems with like trusting big institutions, these big like centralized organizations that are supposed to kind of control the flow of value back and forth among consumers. Basically, one of the ways that cryptocurrency tries to address this problem of trust is by attempting to generate value, using some kind of technical means that doesn't require trust in a central institution, it's supposed to be decentralized. So once everybody agrees that they've generated value in some way, then you can just trade that value automatically without having to go through like a central organization like a bank or a credit agency.
Nick Andrews 6:07
Yeah. And we see this, this is a massive problem, because the central organizations, how every single aspect of business in most countries has always been run. And we'll get into some examples of how that's gone. Certain companies have had problems with that in the past, because where do you go? Where do you send mail, that kind of thing? Like, so the idea to me is like, what if Reddit were money, where like, everybody can be on the same page. And if you are a big fan of Reddit, you'd like this is a really earnest conversation about something that's really important. But what if it's bullshit?
Chris Andrews 6:37
Right? Yeah, I mean, that's one of the big issues is like, Okay, you're supposed to have this, this decentralized form of money, that's not linked to some kind of central banking system. But what that means is, it requires just like a ton of buy in from people who are free to participate in like that the egalitarian nature of Bitcoin, where, in theory, anybody can transact in it, and anybody can participate in sending it back and forth. That means that you have to have a lot of people who are buying and otherwise it's not really worth very much. And it's kind of just something that's made up. Yeah. And I think one of the ways that's illustrated, is in like looking at how many forms of cryptocurrency there are, it's not because there's like some magical thing called a Bitcoin that people realize like, Oh, yes, we made this huge scientific discovery. And Bitcoins have intrinsic value. No, they've just been bestowed with value by people who sit behind computers and say, Yep, I agree, this is valuable.
Nick Andrews 7:33
Yeah, and okay, so I suppose we should back up. So you can do things like mining Bitcoin in this blockchain technology, which is just assigning value to things that we agree have value. But this doesn't work without a deeper form of technology for the most part. And that form of technology is something called an NF T. And if you've had your head in your sand, had had your head in the sand, you haven't heard about NF T's. But it means a non fungible token, which all that really means is that you can, sort of through data on the internet, internet copyright, something that just exists on the internet, you can put a signature on it, like your thumbprint, essentially, and say mine, or mine, or unique or unique or unique or whatever. And so a non fungible token can be assigned to a Bitcoin. And then theoretically, that would limit the amount of them right so one of the problems that we've all thought about this with money when we were children, how do we agree that this stupid piece of paper is worth anything, it is a piece of paper, it's completely it's worthless, as this is a stupid idea that we all have, and cryptocurrency is no different at all, all we do is assign this value to this thing. However, if there were just pieces of paper everywhere on the internet, then theoretically, it would have no value and it would just crash to zero at any point in time similar to the the Danish tulip thing that happened in the 1600s. So this non fungible token can be assigned to things and therefore limit the amount of them that are in circulation. Now all not all cryptocurrencies have these NF T's but that NFT attachment to Bitcoin as a as a cryptocurrency and any other cryptocurrencies, like Aetherium or whatever. If they have an NF T attached to them, then theoretically, that is the beginning of decentralization. And now all we've done is made an internet dollar, but it's more volatile because it's not attached to a government.
Chris Andrews 9:16
Yeah, so So for those of you out there who like me, saw the term or heard the term non fungible token and started asking yourself the question, What in the hell is fungible? I just want to reiterate what that term means. I'm proud of myself for having learned it. It basically just means that a thing is a thing is fungible, if it can be traded back and forth equivalently with like others of the same kind. So in other words, we're talking about currency like $1. If you find $1 bill on the street, and it's like a real no kidding US dollar, you can go trade it in for the dollar value at any store that's willing to supply goods of that worth, you can trade it for any other dollar $1 $1 is $1 is $1. So, in that Since dollar bills in the US economy are fungible, but what you're saying Nick is non fungible tokens are not transferable one to one. So like one Bitcoin with a non fungible token is not the same as another Bitcoin with another non fungible token. And like these tokens can basically assign uniqueness to things on the internet. Is that am I? Am I getting that right? Yeah, so,
Nick Andrews 10:22
basically, so the idea was that when someone people discovered this non fungible token, there's a company in Vancouver, and I forget their name, my bad, but we'll link to, it's all in the show notes, the Wall Street Journal, how stuff works in The Economist, of course, great source source material for this. But there's this company in Vancouver that figured this out. And what they originally thought was, we could theoretically assign this non fungible value to something super important, like the deed to your house, or whatever. And then something that is just a piece of paper can become traded, it can be become valuable because it exists on the internet. So you can use things for collateral that you've never used before. But that was way ahead of its time. So they're like, well, that's not gonna work. No one's gonna care about that. It's too mind blowing situation. It's similar to like Bill Gates, inventing the touchscreen tablet in 1994, which he did. But it doesn't matter because there's no 4g network. It doesn't it doesn't matter. This is a completely useless technology. So they had this brilliant idea, Chris, this is so true. They're like, well, what are people what will work? Well, cats will work. Cats will work. And it did. So the idea was they created this game called, I think it was just called crypto kitties. And it was like it was very similar to Tamagotchi, but it had NF T's where you like can raise your cats and grow cats and like your cat. On the internet, your cat is a thing that exists with a non fungible token. And from there, the idea really exploded and it came to a fever pitch. For me with this piece of this artwork that sold try to I forget the guy's name, I think it's people, people sold a painting that he made on InDesign or on Photoshop or whatever, at an audit editing system for photos, he sold a digital painting for $69 million.
Chris Andrews 12:04
Just to put that in perspective, in in 2020, there was a painting by a guy named David Hockney who was like, he was like, the the image of 1960s Los Angeles with like the Stark, the bright color fields and the kind of minimalist design with like a pop of really exciting stuff like his painting, the splash in 2020, this iconic painting in the art world sold for $23 million. So like a third of this, this digital NFT ized painting that somebody else created just using their computer.
Nick Andrews 12:41
Yeah, and now we've seen that was one of the first big ones that happened. And I remember reading the story in The Wall Street Journal. And the art editor of The Wall Street Journal was invited to the auction I forget by it was so the bees are one of those Christie's or somebody was doing the auction. And the email said, the bidding will this is the this is a quote, the bidding will start at $100 period, it's going to be huge period. And they're like oh pass, we're actually not going to go to that. Thanks, though, for this digital art auction. $69 million, this software, and that was the beginning, right. And now we see these NF T's assigned to things like basketball, highlights and whatever. And ironically, crypto, whatever punk or whatever the company's name is in Canada, they have started to lead the charge on like, well, now your marriage license can be NFT on the internet. And we can do all of these entities, we can assign this intrinsic value to things that perhaps didn't have value in the past where maybe you can put a painting on the internet, that's worth $69 million, and put that up for a loan or whatever, in any way that you want. So this is attaching these NF T's and making things on the internet unique is a is a meme and a fad. And owning a meme that you really liked on the internet would be really cool. And Millennials are nostalgic and all that. But the practicality of this has a lot more to do with turning invaluable things into value that you can have in your hand. And then of course, regulating ish or making limited cryptocurrency. And when you can do that, then it's an idea that people can wrap their minds around but Chris, not all of them have NF T's.
Chris Andrews 14:06
Yeah, so well. So I think one of the one of the ways I try to understand NF T's is by considering the difference between NF T's that are assigned to stuff like art, like digital images. Yeah. And then the NF T's that you're talking about where you can get like real world things assigned some token in some digital universe or maybe a Metaverse and consider what that means for like social implications. So like, I think, I think for the average person who's not like a crypto bro, who's really into this kind of stuff, and like has bought into the NFT concept and, and sees how big and important this whole art sale thing is. It's hard to understand like, okay, so it's a non fungible token for a digital image that I can just right click and save as, and then I have exactly the same copy of the image. So like, I basically just made it fungible or I can I can like take a screenshot and take this non fungible thing and make it fungible and just steal it. Well, kinda. I mean, that's not really the point of what the non fungible token is. It's just a silly example, because anybody can right click and save an image on the internet. Yeah, where the fungibility, or the non fungibility comes into play is when it does represent, like unique individual created things. And I think that's easier to see in other things other than art. So, recently, the metaverse has become a concept that's kind of like in vogue for like the next. Okay, what's the next step? Like we have the Internet of Things, where you're all your devices, like your refrigerators and cell phones, and laptops, and TVs, and washing machines, and all that kind of stuff is connected by electronic signals that can communicate with each other. And it's great. And it's linked to the internet, and you can browse the web and all this stuff. Yeah, well, the next step beyond that is to just say, Okay, well, let's just take everything digital. And all of a sudden, all these like unique important things like the deed to your house, or your wedding certificate, or the you the parking tickets, you have,
Nick Andrews 16:00
I often said that, and this is the thing that people don't know about you that for years in high school, when you would travel, we would go to sports camps, and you would do speech and debate and all this stuff. Me and our parents would have really liked it, if there was some sort of copy of your driver's license when you flew that you couldn't physically lose. That's what you're talking about. Right? So that you don't have to get searched. It's airport security, because you forgot your ID.
Chris Andrews 16:21
Yeah, exactly. And it would have to be a thing that's like, that's different than just somebody taking a picture of a driver's license and saying like, Oh, I swear, it's my driver's license. Somehow, through the through like the crypto process. The the non fungible token would have to be assigned in a way that like other people couldn't just like replicate, they could just copy and paste and say, like, oh, no, that's actually my driver's license. That's actually my social security card.
Nick Andrews 16:46
Right? A good starting point of this might be like vaccine cards. No, it didn't.
Chris Andrews 16:51
Yeah, so like, you have to generate some kind of unique signal or some kind of unique identifier that gets assigned to a person and that you can look it up in some kind of database and just scan a thing. It's like, Yep, okay. We know without replication or copying, this thing has been assigned a value and that value is all right, you've been vaccinated or exactly whatever the case is.
Nick Andrews 17:13
So that's how the NFT that that's part of this is NF T's. And that's a really important thing, and that's a bit of a sidetrack for us. So like, with regard to cryptocurrency, they don't all have those bitcoin does. I think Aetherium does, but some of them don't. Which means that theoretically, you could just create more of your own now there are some meme ones, the most famous of which is called Dogecoin. No, a Dogecoin. Yes, yes. Dogecoin is a dog that was a meme. It's the dog that looks like you like her. And it's, I think it's a Japanese breed of dog. And it's a famous meme on the internet. It's a picture of a dog and they turn that thing into a cryptocurrency because screw it, why not? And then Elon Musk got involved in his like this God of cryptocurrency, so that that's where this gets dangerous. That's called a pyramid scheme. But if there's fungibility in these these cryptocurrencies, then theoretically, they could be a currency now, using cryptocurrency is a being incredibly bullish on the general economy and people continuing to buy into this. And be, I think, I think incredibly optimistic that everyone's going to agree. But Chris, it presents enormous challenges and things that nobody could see coming like any other mind blowing bit of technology. So when $1 is not $1, but $1 is a thing that doesn't exist except for on the internet. There are huge problems. And we're going to get into some of those problems. But first, I want to take a break I want to talk about I want to do a recommendation segment, we usually save this for the end. But I have a recommendation for all of you this woman, Chris, her name is Heather Robertson, and Heather Robinson. Heather Robertson is a YouTuber and she's a fitness person. She's got a line of gear, and she sells, you know, leggings and sports bras and things like that. So Heather Robertson is who my wife used during the pandemic to work out and you couldn't go to gyms and what we found out about her is that a her workouts are incredible. From a YouTube standpoint, this is amazing. She does every motion with multiple angles. My favorite thing about it is one things I hate the most about workout classes and spinning classes is that I don't want to talk to you and I don't want to hear you talking to me. I want my podcasts. I want my audio books and want my music Shut up. She doesn't talk. She does emotion. And it's got huge numbers on this. Like when I would do peloton, it doesn't say what the instruction is. I have to listen to them. And I don't want to hear Chad in Brooklyn, tell me what he's doing. I don't care. But Heather's just like she does like the three second explainer like this is the motion. And then okay, in 10 seconds, we're going to do the motion and she does the motion. There. I don't know how many videos she has, I would ballpark like two to 400 Somewhere in there. There are playlists of workouts for based on time based on body size based on whatever you're trying to work on based on your goals, cardio strength, stretching all of that. She's incredible. And there are Facebook support groups. She's got meal planning, but it's all non judgmental. It's done in a studio. It's incredible work. And I've done a couple and they're really hard. bodyweight shit is hard. I don't care how much you can lift or how much you can run. bodyweight calisthenics are hard. So that's my recommended For anybody that wants to do something simple, not judgmental, not have like a fitness guru yell at you, Heather Robinson, and it will be in the show notes.
Chris Andrews 20:08
Would it be better to do those workouts if you just kept increasing your body weight?
Nick Andrews 20:14
But yeah, well one way to do that would be to do the workouts and he protests but I suppose
Chris Andrews 20:18
I'm going for a different approach. It seems like a good recommendation.
Nick Andrews 20:21
Yeah, I highly recommend her she's, she's the best and you may have already heard about it. She's incredibly popular. Okay, so now we're gonna talk about some of the negatives of cryptocurrency and one big negative is the volatility of this cryptocurrency so we're going to talk about everybody knows it's up, it's down, Bitcoin up and down, it should go up, it should go down like you should have got in back in 2012. Here's an anecdote of how weird this can get. And this is an anecdote of a the volatility of cryptocurrency and be how regulators have no idea what to do with it. Odell Beckham Jr. is a very trendy, hip, and I'm pretty smart. By all intents and purposes marketing person, he's very smart, professional football player for the Los Angeles Rams. This year when he signed a signing bonus for $750,000. He elected slash demanded which you're allowed to do, it's a legally recognized tender sort of now in the United States to be paid in cryptocurrency. At that time, they gave him $750,000 worth of cryptocurrency. As of the payday of his his roster bonus, cryptocurrency had experienced a crash, which as we're recording this happen, depending on when you're listening, 710 20 days ago, early 2022, it crashed, and it didn't go to zero, but it went way down. So people lost hundreds of millions of billions of dollars. In some instances, Odell Beckham Jr. Lost 50% of that value. However, the United States government was like, I don't care what bitcoins worth the dollar is worth one. And so you need to be taxed at the original amount was 750,000. So that tax rate was about 480,000. That means that he had about 500,000, about 480,000 He was taxed about 480,000. At the end of the day, his $750,000 signing bonus, he was paid less than 40 grand
Chris Andrews 22:05
unbelievable very unbraid a guy in the NFL who's making that kind of crazy money. It's It's unreal, that he basically just ended up making a bad bet. The the currency that he was paid was so volatile, and its value so I don't know if misunderstood is the right term. It's not universally agreed upon enough, right to like remain relatively stable. So like, for this NFL guy like that. I mean, that's, that's crazy. I mean, he can afford that kind of loss, right? And that's absolutely wild.
Nick Andrews 22:36
Right? So and Bitcoin can go back up for those of you crypto bros yelling at us, I know it can go back up. But at the end of the day, if you aren't making disposable income, like Odell Beckham is making, you cannot have this happen. And there are practical implications of this. Let's see El Salvador who went and use this as a national currency Chris.
Chris Andrews 22:53
Yeah, so in so in September, last year, in 2021, El Salvador officially became the first country that would accept cryptocurrency, as legal tender, it accepts the dollar and crypto. But, you know, when the market for cryptocurrency plummets, and it's or when its value is so unpredictable, that makes it really challenging for government to try to control the economy within its borders, and like, make sure that people can like afford to buy things that they need to survive. In fact, it's so bad. The IMF is formally pushing for El Salvador to like stop accepting bitcoin as legal tender. Yeah, they released a statement this week, is this is the week of recording on the 26th of January 22. The IMF said, there are large risks associated with the use of Bitcoin on financial stability, financial integrity and consumer protection, as well as the associated fiscal contingent liabilities. They, they want El Salvador to stop doing this, because it's so dangerous and so risky, and they could stand to lose so much value and really hurt people by trying to like be the first to catch this wave of the future.
Nick Andrews 24:07
Yeah. And so that, like, there are political motivations here, the guy in El Salvador who's president is, has become a bit of an authoritarian and he is a very scary person, very young, very sexy, got rid of all of the judges in opposition. He also forced through the ability to become elected president for a second term, which was previously illegal in El Salvador. So this guy is kind of just in charge. It just kind of took over El Salvador.
Chris Andrews 24:27
Yeah, on on Friday, James is at present now you boo Kayla. On Friday, he tweeted that he bought an additional $15 million of what he described as really cheap Bitcoin as the market plummeted. So in considering that, apparently, according to CNBC, right now, the Bitcoin value is down 50% from its all time high, which happened in November like two months ago, so it lost half its value in less than two months. It's unbelievable to me that the President of a country is trying to like just generate some buy in with his social media account, because the value of cryptocurrency and really the fate of his presidency, like his legacy country is tied to like people buying in and just like influencing people to say like, Okay, well, I agree this does have value after all. Yeah,
Nick Andrews 25:18
well, that's what the volatility is because then everybody's like, Oh, it's cheaper by some and then there's more stuff in the market, which seems a lot like a pyramid scheme. And perhaps it is at the end of the day, but unlike Odell Beckham, Jr, one of the most highly compensated Americans on the planet, or people on the planet, probably in the 1% of all earners in the world, he can afford to lose $400,000 on day. That's, I mean, I'm sure it's gonna piss him off. But I'll be like, alright, he can sit on it for years. And, oh, look, it's back at four times, whatever it was, and I can cash it out. Now. He can do that. El Salvador's economy is in the gutter because of a civil war, which was backed on both sides, the government and the guerrillas were backed by drug lords, of course. And they're having all of these enormous problems. So and this is what's crazy, the veterans of the El Salvadorian army and the guerrilla army are both in agreement that please stop accepting this as cryptocurrency now, I will give El Salvador credit in like when your country is in such a shithole economically, trying something aggressive, makes a ton of sense. Now, I think that rolling this out as like a soft opening and seeing that like okay, here are the positives of this. We can be global. The negatives of this are like people can't buy bread if Elon Musk tweets a weird GIF about the value of Bitcoin
Chris Andrews 26:27
is tweeting a GIF similar to tweeting a GIF? To you?
Nick Andrews 26:31
Yeah, I think so. I can't decide. I thought I was gonna buy into the gift thing. Are we gonna? What are we doing?
Chris Andrews 26:36
Well, are you gonna? Are you gonna give your friends a bunch? Are you gonna give your friends gifts at Christmas?
Nick Andrews 26:41
That's a good call. Actually, I appreciate that.
Chris Andrews 26:44
I don't I don't care. I don't care what the guy who invented the file format says gi F is gift. The AI F is JIFF it's also delicious peanut butter, which is my recommendation by GIF. Stop saying it describe a GI F file. Now
Nick Andrews 26:58
there are je FF files as well. But those there are GIF files. That's good point. I appreciate that. That is that is a good call. So on top of the volatility of this El Salvadorian stuff, there are other problems. There are two major major major problems one of which is that hey, this shit is decentralized and unstable. A
Chris Andrews 27:19
well there's a third problem is because I think I know what you're gonna say for the second one. Yeah, and just real quick, I want to jump in with that one. cryptocurrencies, arguably are easier to use for money laundering and terrorism financing Correct. Which is why countries like Russia, for example, are considering a ban on cryptocurrency even though Russia is the third largest mining like Bitcoin mining country in the world.
Nick Andrews 27:44
Yeah, so we and this is what i This is a report that I listened to to about that was published about six months ago in preparation for this podcast. The United States was in a place where like, and other European countries mostly were had to beg countries who they famously didn't get along with, like, hey, there's some fucking problems here. Like we can't trade it, people are losing stuff. And what are we going to do? So there's this company by Nance, which was a bitcoin exchange, it was like the New York Stock Exchange, Toronto Nikkei all rolled into one this is where crypto is traded on by Nance. Well, people lost a ton of money one time finance crashed, and people lost millions and millions of dollars because the app didn't work by Nance was just a company that was formulated and founded in the image of cryptocurrency, decentralization. It's just on the internet, whatever, no headquarters. Well, when Americans lost their money as Americans are want to do. They're like, we're gonna sue the shit out of you. Yes. What do you send the letter? I couldn't send the letter. Right.
Chris Andrews 28:41
So like, that's, that's one of the big challenges that people have with cryptocurrencies like, Okay, this if it's supposed to represent a system of finance, where people can easily generate value. Yeah, the the decentralization means that, well, okay, people are losing all kinds of value, we have to regulate this somehow. And then we're back to square one. Like, this is the exact function of central banks. This is the exact function of finance ministries in governments to prevent catastrophic loss of value like this. And so, to me, this is kind of invalid. You know, I don't want to be just some kind of backward Luddite that's like, oh, yeah, well, this is a new thing. And so therefore, it must be bad, all technology is wrong, blah, blah, blah. I mean, odds are there's going to be a cashless society at some point in the future. I don't think we're ready for that. Now, though. It to me, it's kind of emblematic of this, like, general approach to like, there's like a certain lifestyle that just wants to go we um, disrupting we, and not really thinking about what the actual consequences are like, it's the embodiment of we figured out that we could, but we didn't ask if we should, like, Well, yeah, of course. People want to have stuff free regulations, because that means I can make all kinds of crazy Gamble's and risks and whatever, but when it's other people's livelihood on the line, like for example, the citizens of a country it can be up to crypto bros who just want to convince everybody to like add value to their portfolio by buying in, right to determine like the economic well being of people who don't really understand this stuff or aren't involved or don't really care about it. And so this like, need this, this impulsive drive to just Disrupt is really creating a lot of problems in places where that we're not ready for this kind of move.
Nick Andrews 31:11
Yeah, and like the idea of a cashless society, like I'm on board with both sides of this argument, I definitely think that Bitcoin is a thing that will exist and that we'll have, but it's like anything else, you've got to be in it. We saw this in and famously depicted in the movie, The Social Network at a point in time, like, it's time to put on your suit and tie and be a fucking company, and you have investors and you're gonna have a boardroom, and like, you can disrupt and have sleeping pods on campus at Facebook. But if Facebook's gonna be Facebook, you've got to be a company that's like, this is how things are gonna function. And yes, you're right, the the monkey suit crap. And Wall Street is bullshit. However, you still have to be an adult at some point. And so that's that's where I'm at with cryptocurrency. I think it is, right now. It's just chaos. And people are like, it's a great way to buy like sex slaves. It's a great way to buy weapons. It's so dark that nobody knows what to do with it. And if you don't think this is happening, that's it's a gold rush right now.
Chris Andrews 32:05
And it's a huge problem. And then, on top of all that, I'm going to get to what I think was going to be the third problem on the list. He said, you said there were two and well, yeah,
Nick Andrews 32:13
so like, crime was one one. I like the ransomware is really big part of this. But yes.
Chris Andrews 32:18
The third one, I think Grace is one that's pretty clear to everybody. And it's on the minds of a lot of people especially like the younger you are, I think the more attention you pay to this now. There are huge environmental problems, which is while mining cryptocurrencies, while we didn't really explain the mechanics of how this works, but it requires a lot of computers basically just running all the time and doing a lot of calculations in in order to do those calculations. I mean, you need just like a ton of servers, you need just a lot of computers doing a lot of things. And that takes a lot of energy. And so the more cryptocurrency that's mined, that means a lot of energy output, a lot of energy costs. And so in addition to introducing the possibility of protecting yourself from being discovered for like committing crimes, like money laundering, terrorism, financing, sex trafficking, you name it. Ransomware. Yep. In addition to the crazy volatility, that cryptocurrency introduces markets when everybody hasn't bought in yet, and because a decentralized and not regulated, you're also just absolutely taking a dump on the environment. Yeah. I mean, it's just it's it's not it's not good. And then the the carbon footprint of cryptocurrency mining is just, it's just unbelievable. So
Nick Andrews 33:32
that's part of this, I think, is really interesting because like volatility, solvable, decentralization, solvable, tracking it to find illegal activity, activity, solvable, this one does not seem solvable. This one just seems like it's bad. It will never not
Chris Andrews 33:46
be bad. Yeah. So there are some, you know, obviously, people are aware that this is a huge environmental problem. It's not like there's these big cryptocurrency barons that are like trying to convince everybody that it's not happening, right. So there are some ways that people are trying to get around the the huge energy cost. One of those is called Proof of stake. The basic idea is to use your decisions about updating blockchain aren't made through like computers trying to like out compute each other. But instead, their decisions about the value based on the votes of the holders of cryptocurrency, like the people who are making decisions, like you mentioned earlier, voting power, as well as I share the rewards depend on how much holders are willing to like wage on what the end result is going to be. So it's kind of like a collective game theory decision making process on what the value of the currency is. And that does use less energy. But it's also much more complicated. It's a difficult process, and it's not applicable to every major currency. I mean, for example, bitcoin does not use proof of stake. Yeah, as a means of establishing value. Yeah, so I just don't know if these methods are going to be enough to make a dent in it, especially when a lot of the crypto currency mining takes place in countries that don't have like, incentives to stop using energy like Russia, Kazakhstan, the United States.
Nick Andrews 35:11
Yeah, exactly. And I think when you look at where there's fat that can be trimmed. In terms of environmental impact, that's a really big one that sticks out like a sore thumb. Because even though that the crypto conversation really dominates media, and this is something that you learn in Journalism School, hahaha, let's play I went to party school. One thing that happens in media is that these stories are not applicable to the majority of people. Man bites dog, right? The famous journalist manages dog bites man, not a story. Man bites dog is a story. Well, hundreds of 1000s of people will be playfully or aggressively bitten by about a dog today. That's impactful. That's why it's not a story. But hundreds of 1000s of men will not aggressively buy the dog today. That's why that happened. I was like, yeah, it seems like a Michael Bay movie, to be honest with Mark Wahlberg will save the day.
Chris Andrews 35:57
Yeah, you're exactly right. And like so when when the when the problem that we introduced at the very top of the show where people lose trust and faith in big institutions like that, when when that challenge shifts to like decentralization, basically, you end up coming all the way around full circle, to where now, okay, you're trusting a bunch of people who are like just using computers in far flung areas of the world, to generate us a ton of energy to generate non fungible value or in some cases, you know, with this, with this proof of stake concept, just decide how much cryptocurrency is worth. This guy, David Rosenthal, was kind of like on the leading edge of crypto many years ago. And he had this quotation in The Economist, when they ran a story on this, he said, You waste all these resources, only to end up with a system that is controlled by people, you have even less reason to trust than those who run conventional financial institutions. So now, instead of running into the problem, where we can't trust big banks and central monetary control mechanisms, now all of a sudden, we're supposed to just like what trust a bunch of crypto bros who were trying to convince you to buy into meme coin, or Dogecoin, or Avalanche or Aetherium, or Bitcoin or whatever the flavor of the month is,
Nick Andrews 37:09
yeah, and it's like just crazy. It's like any other pyramid scheme. And I'm not sure that it's quite a pyramid scheme. It's far, far, far, far more complicated than that. But the idea is, if you get in early on one of these things, you'll never have to work again. And that part of it is what's really scary, because it just incentivizes new crypto, new crypto, new crypto. And as a result of that, it's just going to be a race, I remember when, in Australia, people start to discover what synthetic marijuana was, and the regulator's couldn't keep up because it could just alter some of the genetic code and be like, Okay, now, it's a different thing. And this is legal, and this is legal, and this is legal, you just repeat the cycle over and over and over again. And so we're seeing that happen. But what I was gonna say, Chris, is that only 2% of people care about this. And that is a high estimation in the United States, where we are one of the most learned countries on the planet, the majority people just don't care. But it seems like everybody cares. Because the media is obsessed with it. And the media should be obsessed with it. Because it's crazy. Like, this is an unbelievable revelation, that we're able to do this kind of thing. But right now, it seems like the vast, vast majority of humans on the planet are in agreement. Like, I don't know about this. I don't like.
Chris Andrews 38:14
Yeah, it just feels kind of weird. It's It's precisely the decentralized aspect that leads people to withhold trust, I think, yeah, I mean, the concept of not having some kind of central controlling mechanism, like some kind of levers that the government can pull. It's basically like a libertarian wet dream, where like, oh, well let the people decide and let the market determine what the value is like, Okay, but what ends up happening in that situation is like, people lose control of the beast that they create. And when they do regain control, all of a sudden, the trust just isn't in a government, it's just in other people who have no means of accountability. So when it has to do with people's livelihood, yeah, like people have good reason to lack trust. Yeah, just just to kind of, kind of wrap up this whole concept of anybody can create it, and anybody can, can make value that we can all just potentially agree on. And like how this really easily accessible but not easily controllable thing has impacts in the real world. You mentioned Dogecoin earlier, so Billy Marcus was the guy who created Dogecoin. And he basically just used a bunch of computer methods to create Dogecoin. Like, that's the simplest possible explanation for it. And when Elon Musk got involved, he said, Well, you know, this can't be responsible for an increase in fossil fuel consumption or carbon output. And so somebody on Twitter asked Billy Marcus, did you consider the environmental impact of Dogecoin mining when you created it? To which he replied, I made Doge in like two hours, I didn't consider anything, which is true.
Nick Andrews 39:46
Nick, I listen to interviews that God He's like, he's just like anybody else. I can't believe this is happening. Right?
Chris Andrews 39:54
It's it's, it's just crazy. It's like one follow up boy wrote that song centuries, and then it got played everywhere for like three years. There's no way that could have known what kind of monster
Nick Andrews 40:02
they I know what that I think that was whichever band and if there's an older person out there who can remember bandsman 70s in the 80s I think cherry cherry pie was a song like that. And they were like the band was like, it's making us actually, it's impacting our mental health. We hate the song so much, because it's so much more popular than anything else. And like, it's like a meme. You gonna Google it? Google it? Yeah, I gotta go. I'm
Chris Andrews 40:24
embarrassed that I don't know.
Nick Andrews 40:26
She wants a warrant. J Yeah. Well, you don't know. Anything else. No, I know. I know. There was one hit wonders, girl walking, or an 80s movie cherry pie. Like it's, it's everywhere. So they were they been on interviews and Rolling Stone stuff saying like, we want to blow our brains out. Like we hate the song. We actually don't want to be a band anymore. Like, the song is so much more popular than anything else. Alright, Chris. So I do have a shout out. So about this time last year, you married me and my lovely wife. We're coming up on our on our one year anniversary, which is really exciting. I think the one year anniversary? Is the paper anniversary it is to paper and so I'm going to NFT one
Chris Andrews 41:02
of our wedding pictures, and fts. What kind of NF T are you going to print it on?
Nick Andrews 41:06
I have no idea. But I'm gonna sell it on eBay and see what happens to us. Maybe we'll never have to work again. Maybe, maybe just maybe like read reviews, subscribe. It's available on YouTube. You can watch on Spotify as well. If you have comments, there'll be a poll, there'll be a prompt. And we'll link to our Facebook page in the show notes as well. If you want to participate in any conversation,
Chris Andrews 41:23
Chris, I feel like giving us tips for the high-quality podcasts your appreciate We accept all kinds of digitally mind currencies
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