Bitcoin Will Never Be the Same Again | Alex Thorn 的完整文字稿

and on tech. 54 00:04:42,240 --> 00:04:47,440 He was sent basically a cease and desist letter by the European Commission, which is like 55 00:04:47,440 --> 00:04:53,340 the executive branch of the European government for saying false and offensive things about 56 00:04:53,340 --> 00:04:53,660 Europe. 57 00:04:54,140 --> 00:04:56,960 I mean, that is not something that I agree with. 58 00:04:56,960 --> 00:05:03,200 And it's shocking the extent to which, you know, peer nations of ours don't have the 59 00:05:03,200 --> 00:05:07,220 same basic, what we consider basic human liberties that we have in America. 60 00:05:09,820 --> 00:05:31,543 And whether or not those things were actually false and offensive of course is probably a very subjective matter Well and also like if I say false things knowingly false things about you right that could be slander or some forms of civilly punishable speech in the U that you cannot be get in trouble for saying false things about the U government 61 00:05:31,543 --> 00:05:50,043 There is no you've a nearly an absolute right to freedom of political speech. Most of the, you know, legal exceptions to the First Amendment's free speech clause involve inciting violence. Right. And knowingly. And by the way, the bar for that's also pretty high. 62 00:05:50,043 --> 00:05:52,563 and I'm not a constitutional lawyer, 63 00:05:52,603 --> 00:05:54,223 so I won't like literally enumerate 64 00:05:54,223 --> 00:05:55,423 what the exceptions are. 65 00:05:55,843 --> 00:05:57,903 But even just saying like everyone, 66 00:05:58,143 --> 00:06:00,083 you know, bring a gun down to the public square, 67 00:06:00,243 --> 00:06:01,863 it's typically not illegal. 68 00:06:02,243 --> 00:06:04,243 It requires like knowledge 69 00:06:04,243 --> 00:06:06,343 that it will be taken seriously 70 00:06:06,343 --> 00:06:07,943 and a bunch of other prongs, right? 71 00:06:08,023 --> 00:06:12,323 So we have a near absolute freedom 72 00:06:12,323 --> 00:06:13,463 to criticize our government, 73 00:06:13,563 --> 00:06:15,083 whether or not our facts are in line, 74 00:06:15,243 --> 00:06:15,983 which I love. 75 00:06:17,503 --> 00:06:19,183 Last digression, then we'll move on. 76 00:06:19,183 --> 00:06:21,943 but I think it was American HODL was, I believe it was him, 77 00:06:22,403 --> 00:06:25,243 when I was getting my 40 hours per week of just American HODL, 78 00:06:26,063 --> 00:06:29,103 he was talking about this idea that one of the reasons that the British 79 00:06:29,103 --> 00:06:32,103 have developed such a, like, dry sense of humor 80 00:06:32,103 --> 00:06:35,323 is because they don't actually have the ability to speak freely, 81 00:06:35,463 --> 00:06:37,023 and so they have to be able to fall back on, like, 82 00:06:37,343 --> 00:06:39,783 oh, no, I was just taking the piss, mate, you know, like, 83 00:06:39,783 --> 00:06:43,603 it was just making it funny, you know. 84 00:06:43,723 --> 00:06:45,703 And I was like, damn, I hadn't thought about it that way. 85 00:06:45,983 --> 00:06:47,903 Yeah, even without, like, outright censorship, 86 00:06:47,903 --> 00:06:53,323 like still like their polite like culture probably dictates not telling the truth a lot of the time 87 00:06:53,323 --> 00:06:59,363 um yeah that that's pretty funny i mean that sounds like a hodl uh you know identified item 88 00:06:59,363 --> 00:07:03,823 there whether or not it's true i believe it because it came out of his mouth you know he's 89 00:07:03,823 --> 00:07:09,163 very convincing that's that's my president right there uh someday someday a guy can dream 90 00:07:09,163 --> 00:07:15,463 but alex mr thorne i'm stoked to have you here we've been playing a cat and mouse game for a 91 00:07:15,463 --> 00:07:19,963 while trying to get you on here so i'm very glad to make it happen thank you for doing this on short 92 00:07:19,963 --> 00:07:26,603 notice as well uh a lot has uh a lot has happened in the last few weeks i've been sort of watching 93 00:07:26,603 --> 00:07:30,583 from the sidelines because we were as we were just discussing just uh brought a brought a beautiful 94 00:07:30,583 --> 00:07:35,843 baby girl into the world and now i'm coming back and i'm like wow i you know i don't know if i 95 00:07:35,843 --> 00:07:40,163 picked the best or the worst time to sort of be a bit checked out like because there's just been 96 00:07:40,163 --> 00:07:46,243 there's been a lot there's been a lot you've been in bitcoin longer than i have does this feel like 97 00:07:46,243 --> 00:07:52,383 is is this time different in terms of like the you know the deluge of shit that hit the fan all at 98 00:07:52,383 --> 00:07:57,723 once or is it just is this still just par for the course in terms of shit hitting the fan in the 99 00:07:57,723 --> 00:08:05,283 bitcoin world well i mean the cold card exploit is um pretty unique i would say but in terms of 100 00:08:05,283 --> 00:08:11,983 the volume of news. I mean, Bitcoin has been a very in a very sleepy pattern here for really 101 00:08:11,983 --> 00:08:18,643 months. People forget that Bitcoin was at like 82, 84 K just in April. It ran that high and then 102 00:08:18,643 --> 00:08:24,863 came all the way back down to 58. And but like really for all of June and July, Bitcoin was just 103 00:08:24,863 --> 00:08:33,423 like pinned in like the 62 K area with effectively no news occurring. Some news about sailor, you 104 00:08:33,423 --> 00:08:37,303 selling some coins to fund his dollar reserve. 105 00:08:37,883 --> 00:08:40,523 Obviously, at the end of July, the cold card news. 106 00:08:40,843 --> 00:08:48,943 But that exploit was primarily conducted on a Thursday night and Friday 107 00:08:48,943 --> 00:08:52,343 with some follow-on after, and we can talk about that. 108 00:08:52,463 --> 00:08:55,843 But that next week, Saylor sold like $100 million of Bitcoin 109 00:08:55,843 --> 00:08:59,943 and the worst self-custody exploit in the history of Bitcoin had

occurred. 110 00:09:00,063 --> 00:09:01,863 And Bitcoin was up like 3% or 4%. 111 00:09:01,863 --> 00:09:06,243 So I would say it has been a very exciting time. 112 00:09:06,243 --> 00:09:16,703 Obviously, we're recording now on Thursday, August 20th, and Bitcoin has ripped 15 percent in three days and five days and is trading in like above 72 K. 113 00:09:16,963 --> 00:09:21,883 So there's that news as well, which has its own sort of catalyst. 114 00:09:22,223 --> 00:09:27,803 But, you know, in the history of Bitcoin, there have been busier times than the last couple of weeks. 115 00:09:27,803 --> 00:09:40,963 And I will say, obviously, and I will say most of those in a bull market, but I will say that, you know, following periods of very low volatility and there are several people I happen to tweet this like two days ago. 116 00:09:41,083 --> 00:09:45,443 Look how low volatility is. It looks like it's a spring that's coiling and is going to pop. 117 00:09:45,543 --> 00:09:48,003 I didn't actually necessarily mean the price. I meant the volatility. 118 00:09:48,563 --> 00:09:51,523 Obviously, both did it. 119 00:09:51,523 --> 00:09:58,003 We tend to sort of pop out of these quiet periods with like big moves and stuff coming to the surface. 120 00:09:58,003 --> 00:10:05,643 I think the nature of this the last couple of weeks since the end of July is different than others. 121 00:10:05,863 --> 00:10:09,623 I mean, the cold card, I think vulnerability makes it noticeably different. 122 00:10:09,763 --> 00:10:17,823 It's not the first time in crypto history that a seed entropy failure has occurred at the hardware wallet level or at the wallet level. 123 00:10:18,063 --> 00:10:33,546 It is the first time it really happened to a major Bitcoin wallet and it the cold card vulnerabilities by far the largest in terms of dollar damage So and as we talk about I mean I think that the cultural demographic 124 00:10:33,546 --> 00:10:41,606 that was impacted by the cold card exploit also makes it a uniquely Bitcoin story that really 125 00:10:41,606 --> 00:10:46,506 sort of it is a it is I don't know if it's a pivot point, but it's certainly a milestone here 126 00:10:46,506 --> 00:10:51,546 and that I think will have really wide-ranging effects on how people custody, 127 00:10:52,026 --> 00:10:55,606 how people talk about Bitcoin to the public, but also to newbies, 128 00:10:56,206 --> 00:11:01,006 how Bitcoiners judge each other, what it means to be a pure Bitcoiner. 129 00:11:01,126 --> 00:11:02,186 I think it will affect all of that. 130 00:11:02,186 --> 00:11:06,626 So pretty unique in that sense, the things that are happening. 131 00:11:07,326 --> 00:11:11,566 But I would say, you know, we've been through quiet periods and bursts before. 132 00:11:13,266 --> 00:11:15,486 I want to get into the cold cards side of things. 133 00:11:15,486 --> 00:11:16,926 in a little bit. 134 00:11:16,966 --> 00:11:17,646 But before we do, 135 00:11:17,686 --> 00:11:19,526

I do kind of want to double tap 136 00:11:19,526 --> 00:11:20,746 on just where we're at 137 00:11:20,746 --> 00:11:21,506 right now in the market 138 00:11:21,506 --> 00:11:22,966 because I think a lot of Bitcoiners 139 00:11:22,966 --> 00:11:24,286 have sort of, you know, 140 00:11:24,346 --> 00:11:25,326 they've been doing the right thing. 141 00:11:25,386 --> 00:11:26,046 They've been, you know, 142 00:11:26,066 --> 00:11:26,846 trying to stay humble 143 00:11:26,846 --> 00:11:27,666 and stack sats. 144 00:11:27,746 --> 00:11:28,406 Easy to stay humble 145 00:11:28,406 --> 00:11:29,386 in a bear market, right? 146 00:11:29,486 --> 00:11:31,546 Not so easy in a bull market. 147 00:11:31,786 --> 00:11:32,786 But we've been sort of, 148 00:11:33,006 --> 00:11:33,886 you know, to borrow a phrase 149 00:11:33,886 --> 00:11:34,826 from James Check, 150 00:11:34,946 --> 00:11:36,826 chop solidating for a while. 151 00:11:37,346 --> 00:11:38,566 Chop solidating down. 152 00:11:38,846 --> 00:11:41,086 A 58K gang was, you know, 153 00:11:41,586 --> 00:11:43,326 the best TAs out there 154 00:11:43,326 --> 00:11:44,706 was 58K gang, apparently. 155 00:11:44,706 --> 00:11:50,546 like they you know they called it right but that's been happening for a while now and meanwhile the 156 00:11:50,546 --> 00:11:56,946 vibes um as two members of vcm you know we do a lot of vibes based analysis and the vibes have 157 00:11:56,946 --> 00:12:02,946 just been weird the vibes have been bad uh then you throw all this other stuff on top of it and 158 00:12:02,946 --> 00:12:06,506 you know we'll get into the cold card stuff you've got a new you know a new shit coin fork 159 00:12:06,506 --> 00:12:13,346 that dropped as well pardon me and and somehow bitcoin comes out of that after all of this you 160 00:12:13,346 --> 00:12:14,206 Nobody cares. 161 00:12:14,946 --> 00:12:20,166 This peak apathy, to use another credit, James Check and Michael Sullivan, with that one. 162 00:12:20,666 --> 00:12:21,646 Nobody cares about Bitcoin. 163 00:12:21,766 --> 00:12:22,826 Bitcoin price is in the shitter. 164 00:12:23,966 --> 00:12:26,246 Horrible self-custody exploit happens. 165 00:12:26,606 --> 00:12:28,026 Data leak from Trezor happens. 166 00:12:28,146 --> 00:12:31,306 Shitcoin fork is launched with all of the FUD around that. 167 00:12:32,026 --> 00:12:33,126 And then Bitcoin just rips. 168 00:12:33,786 --> 00:12:36,946 So was this something where, I mean, like it's kind of incredible, right? 169 00:12:36,946 --> 00:12:44,066 but it also feels just like it felt like 58k was sort of the bottom or close to the bottom 170 00:12:44,066 --> 00:12:49,086 is that what you're seeing because you're looking at a lot more metrics than the average person 171 00:12:49,086 --> 00:12:54,746 uh what are you seeing in terms of that do you still abide by what a lot of the analysts are 172 00:12:54,746 --> 00:12:58,866 saying that actually the bottom's coming on this exact date in october and then

we'll go up from 173 00:12:58,866 --> 00:13:07,166 there or or is are they missing something throughout this yeah I just I want to double 174 00:13:07,166 --> 00:13:13,766 tap before I go into that on your 58k gang they they 58k is held multiple times here as the bottom 175 00:13:13,766 --> 00:13:19,346 it's sort of like in a world where fifty eight thousand dollars was the only price for Bitcoin 176 00:13:19,346 --> 00:13:25,306 like one man decided to launch a fork to destroy it all but it didn't work you know it's like 177 00:13:25,306 --> 00:13:28,486 Like the best in a world voice. 178 00:13:28,846 --> 00:13:30,246 My voice is a little sick. 179 00:13:30,426 --> 00:13:34,166 We got to go back and forth later on some in the world. 180 00:13:36,306 --> 00:13:36,706 Yeah. 181 00:13:36,826 --> 00:13:40,566 Look, I mean, in terms of like bottoming indicators, I mean, it's a great question. 182 00:13:40,566 --> 00:13:47,346 And like I've been, you know, in 24 and 25, I was questioning the validity of the four year cycle. 183 00:13:47,346 --> 00:13:49,086 Remember, that was a big question then. 184 00:13:49,246 --> 00:13:51,006 Like, is the four year cycle over? 185 00:13:51,006 --> 00:14:05,926 And it makes a lot of sense to say yes, because, you know, the having impact in an absolute basis is so small at this point. You had all these, you know, non-Bitcoin native market participants, primarily through the ETFs. 186 00:14:05,926 --> 00:14:16,766 And once those ETFs are in like managed portfolios, they tend to become like like contrarian reflexive, right? 187 00:14:16,766 --> 00:14:22,346 Like when the position grows above one percent, they may sell some when it falls below one percent, they may buy some. 188 00:14:23,326 --> 00:14:26,706 And so that can compress volatility and like all these things should have. 189 00:14:27,266 --> 00:14:32,986 And I still believe in the long run should dampen this concept of a four year cycle in Bitcoin. 190 00:14:32,986 --> 00:14:50,726 But with October 6, 2025 is the all time high. And then, of course, the events of October 10th, like causing that huge deleveraging that empirically was right about the time that the four year cycle would have suggested the top be in. 191 00:14:50,726 --> 00:15:00,866 And I think if you look at the time frame between prior cycle tops and prior cycle bottoms, that would put the cycle bottom here. 192 00:15:01,026 --> 00:15:04,926 I mean, it's almost it's almost perfect, the prior cycles. 193 00:15:05,386 --> 00:15:11,726 And if this cycle followed that same pattern, then you would be looking at a bottom in like early October ish. 194 00:15:12,846 --> 00:15:19,746 Now, here we are in August, not October, and we haven't been at 58 K for, I don't know, a month and a half or so. 195 00:15:19,746 --> 00:15:25,626 So, you know, should then people be waiting till October for the bottom? 196 00:15:25,626 --> 00:15:30,586 I mean, no, because the the pattern itself, it's empirical. 197 00:15:30,586 --> 00:15:32,086 It's not prescriptive. 198 00:15:32,086 --> 00:15:43,048 Like we don know There no reason why Bitcoin should bottom in October We just saying that in the past there an identifiable pattern if we replay it here But there were also things of the last 199 00:15:43,048 --> 00:15:46,869 cycle that didn't line up to the pattern, the all time high before the having. 200 00:15:47,409 --> 00:15:52,689 Right. And to James Chex, chop solidation. That was the famous period between February 2024, 201 00:15:53,029 --> 00:15:59,209 all time high and November 2024, all time high during the Trump election. It was like something 202 00:15:59,209 --> 00:16:05,428 like 237 days of no new all-time high in between all-time highs. None of that makes sense from a 203 00:16:05,428 --> 00:16:13,889 prior cycle analysis. And just like 2021, 2024 in the initial peak, most of the topping metrics 204 00:16:13,889 --> 00:16:23,609 actually topped in March 21 and February 24, not in November 21 and November 24, right? So the 205 00:16:23,609 --> 00:16:30,709 topping metrics didn't quite hit properly. And in October 25, I mean, most of the most of the 206 00:16:30,709 --> 00:16:36,649 topping classical topping metrics either never hit or hit a year plus earlier during the prior 207 00:16:36,649 --> 00:16:42,428 run up to all time highs in 24. So the cycles do look different. But I would say, you know, 208 00:16:42,428 --> 00:16:48,289 another reason to not hold out for it to play out exactly, you know, one of my theses has been that, 209 00:16:48,449 --> 00:16:52,548 you know, we didn't quite top high enough. Most of those most of the metrics topping metrics didn't 210 00:16:52,548 --> 00:16:59,149 hit at all. And I've got a scorecard of, you know, 13 bottoming metrics that hit reliably on all three 211 00:16:59,149 --> 00:17:05,069 prior cycles and only like four have hit now. And so, you know, and also we're looking at, I think, 212 00:17:05,109 --> 00:17:12,269 a max like 54 percent drawdown that's happened from the current all time high to today. And, you know, 213 00:17:12,269 --> 00:17:21,889 prior ones are like 75 to 85 percent. So I think part of my thesis is that, you know, we had a dampened cycle top and that 214 00:17:22,549 --> 00:17:26,329 probably also contributed to a dampened cycle bottom, right? 215 00:17:26,389 --> 00:17:32,289 So compressed cycle as opposed in terms of amplitude, if not in time. 216 00:17:32,409 --> 00:17:35,369 I mean, time looks pretty like accurate overall. 217 00:17:35,369 --> 00:17:40,629 I mean, I wouldn't be quibbling about, you know, a July bottom versus an October bottom. 218 00:17:40,789 --> 00:17:43,089 I mean, it's, you know, it's close enough like that. 219 00:17:43,208 --> 00:17:48,649 I think if we're in cycle five and four years from now, looking back, wondering whether that 220 00:17:48,649 --> 00:17:52,508 cycle's bottom will be the same length as these will probably look. 221 00:17:52,549 -->

00:17:55,429 back on this one and say, yeah, August, October, like whatever. 222 00:17:55,508 --> 00:17:56,429 It's basically the same thing. 223 00:17:56,849 --> 00:17:57,089 Right. 224 00:17:57,149 --> 00:17:59,389 So I think you're close enough from a turn. 225 00:17:59,468 --> 00:18:02,649 You know, James also James check also has a phrase time pain. 226 00:18:03,429 --> 00:18:05,129 You know, you do need time pain. 227 00:18:05,129 --> 00:18:05,529 Right. 228 00:18:05,609 --> 00:18:10,589 When people when markets go down a lot, like it takes a while for people to get interested 229 00:18:10,589 --> 00:18:15,369 again for the people that did make profit to feel comfortable entering again, et cetera. 230 00:18:16,029 --> 00:18:17,849 I think it's been enough time. 231 00:18:17,948 --> 00:18:21,228 I think I don't think that means we're headed straight up here. 232 00:18:21,228 --> 00:18:28,589 at all. But, you know, like if you look at the macro backdrop as well, like, you know, 233 00:18:29,129 --> 00:18:33,809 valuations are stretched across the other hot trades. Right. So there are people looking, 234 00:18:33,809 --> 00:18:39,069 you know, if you asked me five months ago, you know, in February or March, like, 235 00:18:39,689 --> 00:18:44,208 yes, a normal investor, like, what do you think you don't own enough of right now? Is it Bitcoin 236 00:18:44,208 --> 00:18:50,208 or NVIDIA? And I think most, almost all people would have said NVIDIA. And, you know, I think a 237 00:18:50,208 --> 00:18:56,769 lot of those people own like ai stocks now and also they're really stretched and so now maybe 238 00:18:56,769 --> 00:19:01,129 you've got profits you're taking from other trades or you're looking to allocate cash and you're 239 00:19:01,129 --> 00:19:07,968 looking at something trading at like historic p levels um versus something that can provably go to 240 00:19:07,968 --> 00:19:14,869 125 and is you know was trading in the low 60s like that the risk return on a long there looks 241 00:19:14,869 --> 00:19:21,448 a lot better to me when Bitcoin's in the 60s than, you know, the AI trade that's perpetually 242 00:19:21,448 --> 00:19:22,069 at the top. 243 00:19:22,589 --> 00:19:26,269 And then also, like, you know, a huge factor here is just like, who is left to sell this 244 00:19:26,269 --> 00:19:26,508 thing? 245 00:19:26,889 --> 00:19:30,988 Even if you meant to sell Bitcoin at 125, oh, no, I missed selling the top. 246 00:19:31,569 --> 00:19:33,649 You didn't sell at 110 as it was going down. 247 00:19:34,208 --> 00:19:34,789 It goes all the way. 248 00:19:34,869 --> 00:19:36,549 It went back to 90. 249 00:19:36,549 --> 00:19:40,309 It later in April went to 82, 82 and above. 250 00:19:40,309 --> 00:19:47,188 Like you had multiple chances to get out at higher prices than the 60K range chop solidation we just had. 251 00:19:47,289 --> 00:19:57,889 So by the time you get to cold card and and like, you know, sailors selling Bitcoin like, you know, nobody else is there aren't any speculators and tourists left. 252 00:19:57,948 --> 00:19:59,789 They've all already sold. Right. 253 00:19:59,789 --> 00:20:11,109 So and that's why if you look at that URPD chart, like I think the biggest change of hands in coins in the current UTXO set is all between like 62 and 65K. 254 00:20:11,529 --> 00:20:15,389 That's basically the range of the last several months and earlier in the year. 255 00:20:16,448 --> 00:20:21,948 I don't know, people like me buying from tourists who are selling because I to me like the 60s looks pretty cheap. 256 00:20:22,468 --> 00:20:27,008 And to them, I don't know, they wanted to sell their Bitcoin to buy AI stocks. 257 00:20:27,089 --> 00:20:28,389 I don't know why. Right. Who knows why? 258 00:20:28,389 --> 00:20:49,968 So I think it's very likely that we have bottomed. It doesn't mean that even from 72.6 when we talk today, can't go back to 58 again. I just think 58 looks pretty durable at this point. It's held multiple times. There's a whole meme around it that 58K gain was right, apparently, or they were at least right as of the importance of the level, right? 259 00:20:50,011 --> 00:21:17,471 I mean, that we have to give to them. And so I think you're in a pretty good spot for Bitcoin at this point. Most of the juice has been squeezed on the short. I can't believe the amount of shorts that were carried out during this move the last couple of days. Who in their right mind is shorting Bitcoin at like 63 K? Like you meant to be shorting it. James said this, too. He's totally right. Like you meant to be shorting this thing like in January, February, March. Like that's when you knew it was probably trending lower and it was still elevated. 260 00:21:17,471 --> 00:21:21,631 And shorting it, it's in the 60s in July, 2026, the year of our Lord. 261 00:21:21,831 --> 00:21:23,271 I don't know what you were thinking. 262 00:21:23,931 --> 00:21:26,971 Wish you could access cash without selling your Bitcoin? 263 00:21:27,511 --> 00:21:28,891 Ledin makes that possible. 264 00:21:28,891 --> 00:21:34,851 And the global leader in Bitcoin backed lending, Ledin, has introduced their lowest rates ever. 265 00:21:35,091 --> 00:21:36,951 No complexity, no fine print. 266 00:21:37,311 --> 00:21:39,931 The larger the loan, the lower the rate. 267 00:21:40,391 --> 00:21:45,011 These new rates apply to all new loans, refinances and renewals. 268 00:21:45,011 --> 00:21:48,571 You'll see the rates up front before you apply. 269 00:21:48,971 --> 00:21:52,391 The new lower rates come with Ledin's gold standard protection. 270 00:21:52,971 --> 00:21:56,991 Your Bitcoin remains custodied and is never lent out for interest. 271 00:21:57,371 --> 00:22:06,111 Perfect 8-year track record of keeping clients' assets safe, auto top-up, LTV alerts, and partial repayments to keep you in control. 272 00:22:06,671 --> 00:22:11,011 Repay whenever you want with zero penalties or monthly payments. 273

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Sleep better. Stack harder. 297 00:24:47,391 --> 00:24:50,451 This is just a fluffing James Check episode, by the way, guys. 298 00:24:50,591 --> 00:24:52,051 Sorry if you're doing it for anything else. 299 00:24:52,191 --> 00:24:59,151 But another thing he points out is like this is exactly what you would observe near a bottom is overconfident bears, right? 300 00:24:59,191 --> 00:25:02,291 Just like at the top, you observe overconfident bulls. 301 00:25:02,291 --> 00:25:11,331 One thing I do want to get your thoughts on is you mentioned that depressed amplitude, that decreased dampened volatility that we've seen this cycle. 302 00:25:11,411 --> 00:25:19,911 Assuming we don't nuke down to 30k and it becomes, oh look, it just followed exactly the 70 to 80% drawdown that we've seen in prior cycles. 303 00:25:21,731 --> 00:25:26,131 Let's say this holds. Let's say 58k was the bottom. We're dealing with this set of numbers. 304 00:25:26,131 --> 00:25:32,391 is that dampened volatility that depressed amplitude is that simply a function of like 305 00:25:32,391 --> 00:25:37,131 a market maturing is that a function of institutional adoption i mean are those 306 00:25:37,131 --> 00:25:43,471 just basically the same thing also do you know what i mean yeah it's a i don't know um i do have 307 00:25:43,471 --> 00:25:48,831 the thesis that you know bitcoin's growing adoption is an institutional macro asset will 308 00:25:48,831 --> 00:25:55,551 also feature reduced volatility if you look at the historical realized vol like chart like it is 309 00:25:55,551 --> 00:26:11,788 compressing to the downside for years So that shouldn be a surprise as it gets bigger right Like and you know more adopted by long holders as you know percentages of portfolios or whatever else let alone if you 310 00:26:11,788 --> 00:26:16,568 have like, you know, sovereign wealth funds or, you know, central banks or whomever, you know, 311 00:26:16,648 --> 00:26:22,308 they're less short-term traders than people had traded Bitcoin in the past. It is also like a 312 00:26:22,308 --> 00:26:26,928 little bit of a self-fulfilling prophecy, right? A huge reason that people have been drawn to Bitcoin 313 00:26:26,928 --> 00:26:29,768 is the chance for outsized returns. 314 00:26:30,028 --> 00:26:31,508 If that's not the case anymore, 315 00:26:32,148 --> 00:26:33,548 you know, what is the transition 316 00:26:33,548 --> 00:26:36,768 to a new buyer and holder base look like, right? 317 00:26:36,788 --> 00:26:38,488 What is the composition of that base? 318 00:26:39,808 --> 00:26:41,348 I don't think that's a bad thing. 319 00:26:41,408 --> 00:26:42,768 I think you're always about to, 320 00:26:42,948 --> 00:26:44,648 you're always striving to get there. 321 00:26:45,248 --> 00:26:46,548 You know, gold is less volatile, 322 00:26:46,548 --> 00:26:48,948 not because, not for some inherent reason. 323 00:26:49,468 --> 00:26:50,748 It's because, you know, 324 00:26:50,808 --> 00:26:53,008 the world is so familiar with it as an asset. 325 00:26:53,008 --> 00:27:00,168 But investors worldwide have already made up their minds how they think about gold,

generally speaking, how they're going to trade it. 326 00:27:00,268 --> 00:27:01,608 It doesn't mean everyone owns it. 327 00:27:01,688 --> 00:27:06,108 It means people, they're aware of it and they've decided whether to own it or not. 328 00:27:06,428 --> 00:27:14,448 I think as Bitcoin gets closer to that level of knowledge and adoption, and we are not there yet by any means. 329 00:27:14,588 --> 00:27:18,988 I mean, go ask an average person about Bitcoin and then ask them about gold. 330 00:27:19,088 --> 00:27:21,168 I think you'll find they know more about gold than Bitcoin. 331 00:27:21,168 --> 00:27:37,448 But I do think it's probably a feature of growing adoption. You know, people like Jeff Park have argued the opposite. I just don't see the data to support that. To me, the data shows clear dampening and volatility over time as the asset has grown in market cap. 332 00:27:37,448 --> 00:28:02,868 And so I don't know if that means the tops are going to be lower. I mean, I think there's a good argument to be made that 21 should have been higher and so should have 25. Like it didn't. 125 is pretty anemic for a top, given that we opened the year around 100. I mean, all it could do is a 25 percent in the entire year of 2025. Like that doesn't seem like a Bitcoin level return, you know. 333 00:28:02,868 --> 00:28:08,868 but I also don't I don't think that caps it in the future I don't I don't think it really tells 334 00:28:08,868 --> 00:28:14,308 us much of anything unfortunately but I do think you're going to see reduced volatility empirically 335 00:28:14,308 --> 00:28:20,508 you have seen that just as more people own it not everyone is going to be you know buying Bitcoin on 336 00:28:20,508 --> 00:28:26,548 Bitfinex in 2016 to send to an exchange and then buy an ICO like that was a huge use of Bitcoin in 337 00:28:26,548 --> 00:28:32,768 the past. I think now you're, I mean, the thesis of holding it for a number of years, 338 00:28:33,008 --> 00:28:40,168 thinking of it as non-sovereign, non-debasable money is a widely believed thesis. And that 339 00:28:40,168 --> 00:28:46,968 thesis inherently means less volatility. Do you think that part of the, let's say, 340 00:28:47,448 --> 00:28:51,488 disappointment with Bitcoin's, you know, performance, let's say, again, you talked 341 00:28:51,488 --> 00:28:54,928 about how this was a fairly anemic top at 125. 342 00:28:54,928 --> 00:28:56,768 Is part of that just a framing issue? 343 00:28:56,768 --> 00:28:59,888 Like if you look at cycle top to cycle top, right? 344 00:28:59,888 --> 00:29:01,808 Like I think that tells one story. 345 00:29:01,808 --> 00:29:04,568 If you look at cycle, you know, prior bottom 346 00:29:04,568 --> 00:29:07,628 to next cycle top, like that tells a different story. 347 00:29:07,628 --> 00:29:10,548 Do you think, I mean, is looking at these tops 348 00:29:10,548 --> 00:29:12,248 the best way to look at this from, 349 00:29:12,248 --> 00:29:14,048 in terms of a trajectory standpoint? 350 00:29:14,048 --> 00:29:16,648 Or is that just what we've become accustomed to? 351 00:29:16,648 --> 00:29:18,748 Because people think about the big number, right? 352 00:29:18,748 --> 00:29:20,348 They don't want to look at kind of the small number 353 00:29:20,348 --> 00:29:21,348 or the change. 354 00:29:21,488 --> 00:29:29,708 I love the question. I think it is more instructive to look at the bottoms, the cycle bottoms or the yearly lows is another way to say it. 355 00:29:30,388 --> 00:29:41,528 I think there's reasons in different cases, even in 21 and 25, possibly why we topped where we did that are not systemic or structural, but instead were idiosyncratic. 356 00:29:42,288 --> 00:29:49,888 You know, 1010 is a possibility as a catalyst for, you know, a deleveraging that simply can't be recovered from in 25. 357 00:29:49,888 --> 00:30:02,028 You know, FTX could be a reason in 21. There's theories that they were selling Bitcoin, you know, at the end of the cycle there to, you know, try to shore up their own balance sheet and stuff like that. 358 00:30:02,028 --> 00:30:06,988 There could be reasons why the tops, you know, I think were disappointing to some. 359 00:30:07,388 --> 00:30:17,548 I think if you look at the cycle lows or the yearly lows, another way, you see a steady rise, right, year over year, cycle over cycle. 360 00:30:17,548 --> 00:30:25,488 I mean, you know, we started 2023 at like 15.7 K, you know, a month or two after FTX collapsed. 361 00:30:25,788 --> 00:30:31,068 We ran to 30 K ish around this collapse of Silicon Valley Bank in March of that year. 362 00:30:31,688 --> 00:30:34,908 Then BlackRock announced their ETF in June. 363 00:30:35,128 --> 00:30:36,848 Grayscale won their ruling in August. 364 00:30:36,848 --> 00:30:43,108 And then all of the fall of 23 was this drumbeat into the ETF launch, which was January 24. 365 00:30:43,108 --> 00:31:08,368 And like, you know, 15, seven as a bottom to start 2023, you know, 58 K as a bottom in this cycle, you know, assuming it holds the material uplift. I mean, that is four plus X, you know, four X over the prior low. When people ask me, like, is the digital gold thesis dead? Because gold traded a bit higher, like slightly longer than Bitcoin did at the end of 25. 366 00:31:08,368 --> 00:31:20,684 You know newsflash gold also did come off And and and by the way in the last couple of days it wasn equities that rallied when the Treasury signaled their intent to buy the long end of the curve It the dollar went down 367 00:31:20,944 --> 00:31:27,124 Stocks were flat to down. Gold, Bitcoin, commodities all went up. Right. Like hard money assets went up. 368 00:31:27,124 --> 00:31:32,124 So but again, where's the digital gold thesis? They said when Bitcoin was coming down and gold 369 00:31:32,124 --> 00:31:36,244 ran a little longer. Well, I'm sorry. It's right there at the, you know, 58K level, like the people 370 00:31:36,244 --> 00:31:48,424 buying at

15.7 in 23 or at, you know, 3,200 in 2018 or at 58K in 2026. That is the digital gold 371 00:31:48,424 --> 00:31:54,084 thesis. Those buyers are the long-term believers, you know, buying at levels that look cheap to them 372 00:31:54,084 --> 00:32:00,264 because they expect, you know, appreciation both in real and nominal terms. So like, I think it's 373 00:32:00,264 --> 00:32:11,024 It's very intact. I think looking at the the rising floor is possibly more instructive about Bitcoin's long term adoption than, you know, any any topping. 374 00:32:11,024 --> 00:32:19,904 and it's interesting too because i think part of the the bad vibes out there has been because 375 00:32:19,904 --> 00:32:26,704 while bitcoin has been uh languishing at these you know deplorable levels it seems like every 376 00:32:26,704 --> 00:32:29,564 like everything else you could have bought has been running right like you could have bought 377 00:32:29,564 --> 00:32:33,484 s and you know the s&p 500 and you'd be outperforming right so i think there's a lot of 378 00:32:33,484 --> 00:32:38,764 sort of fomo from some bitcoiners who are like oh why didn't you know why didn't i put it all into 379 00:32:38,764 --> 00:32:43,984 x y and z i don't think you see that as much from the hard you know hardcore stackers who are like 380 00:32:43,984 --> 00:32:48,644 well great this is a depressed price level for me to accumulate more sats at like you said like 381 00:32:48,644 --> 00:32:55,824 yeah bitcoin hit 58k amazing i'm buying as much as i possibly can uh but i'm curious if you think 382 00:32:55,824 --> 00:33:01,824 i mean obviously generally markets have been performing pretty well while bitcoin's been just 383 00:33:01,824 --> 00:33:08,944 kind of dumping around, right? Do you think we have a bit of a, and there's a bit too much froth 384 00:33:08,944 --> 00:33:14,264 in, let's say, traditional markets, a bit too much froth in the AI trade? Or is it like, hey, 385 00:33:14,264 --> 00:33:19,104 that bubble just never pops because it's never going to be allowed to pop. Yeah, Bitcoin will 386 00:33:19,104 --> 00:33:23,024 run up, but these things are going to keep running. We're not going to see a rotation of capital, 387 00:33:23,244 --> 00:33:28,204 in other words, from some of these other assets, which may seem, you know, short-term toppy, 388 00:33:28,204 --> 00:33:33,104 and Bitcoin, which is very much obviously in a bottom formation, if that makes sense. 389 00:33:33,764 --> 00:33:34,544 No, I think that's right. 390 00:33:34,844 --> 00:33:39,384 And I mean, look, the NASDAQ and S&P are up like 11 and 12 percent on the year. 391 00:33:39,384 --> 00:33:42,524 It's not they've been up higher at other points. 392 00:33:42,644 --> 00:33:48,684 But I mean, like, you know, they're up 20 and 21 percent one year, you know, year over year. 393 00:33:49,064 --> 00:33:55,244 You know, Bitcoin is down 17 percent on the year and down 37 percent year over year. 394 00:33:55,244 --> 00:33:59,924 that's not that bad for a Bitcoin drawdown. 395 00:33:59,924 --> 00:34:02,764 And people know that it's volatile. 396 00:34:03,364 --> 00:34:11,044 I would say, you know, that is a reason for, you know, people being upset with Bitcoin, I think is true. 397 00:34:11,164 --> 00:34:13,744 I mean, you know, they're saying, well, I could have just bought S&P 500. 398 00:34:13,884 --> 00:34:20,124 I could have bought, you know, industrials, chips, AI-themed names, the Mag-7 or whatever we call it now. 399 00:34:20,724 --> 00:34:24,684 And yeah, during this period, they'd have been better off. 400 00:34:24,684 --> 00:34:42,864 It depends on the period, though. If you bought Bitcoin at 15, seven, like I've been buying at 58 and 60, like you are doing great. Right. Like this is the thing that people are, you know, they get mad at Bitcoin. Like and I do think like everybody gets caught up in the bull market. 401 00:34:42,864 --> 00:34:49,264 a lot of influencers and, you know, professionals in the space and whatnot and like, you know, 402 00:34:49,284 --> 00:34:50,484 arguing it's going up forever. 403 00:34:50,484 --> 00:34:56,224 Like if you look at like people's predictions for Bitcoin price at the end of a year, like 404 00:34:56,224 --> 00:35:00,284 if you look at the January 25 predictions, I mean, they're insane. 405 00:35:00,384 --> 00:35:03,304 I was called a bear because I said 185. 406 00:35:03,484 --> 00:35:09,364 And of course, I was I was like fifty thousand dollars above where we even got to. 407 00:35:09,364 --> 00:35:12,804 So others were calling for, you know, 500K, a million. 408 00:35:13,104 --> 00:35:17,144 I mean, that type of rhetoric makes people think you might be going there. 409 00:35:17,144 --> 00:35:21,164 And the reality is, well, those didn't play out. 410 00:35:21,824 --> 00:35:27,944 But, you know, it's not nearly as safe an asset as like U.S. stocks. 411 00:35:28,104 --> 00:35:29,544 I mean, in terms of volatility. 412 00:35:30,124 --> 00:35:30,404 Right. 413 00:35:30,464 --> 00:35:37,004 And you're right that like, you know, you're not buying, you're not buying, you don't have 414 00:35:37,004 --> 00:35:44,324 pensions buying Bitcoin every day, putting it in their plan participants accounts, the way the 415 00:35:44,324 --> 00:35:50,584 perpetual bid exists for U.S. equities. Right. You may one day, you know, for Bitcoin or through the 416 00:35:50,584 --> 00:35:56,164 ETFs. So there's some truth to that. I think, you know, the prudent course, and this is something 417 00:35:56,164 --> 00:36:02,384 that, you know, Bitcoin people on socials and, you know, if you don't live on a Bitcoin standard, 418 00:36:02,384 --> 00:36:06,924 you're not a real Bitcoiner. I mean, the reality is people need to live in a fiat world today. 419 00:36:07,004 --> 00:36:13,724 and they need to diversify their investments and cash positions in a way that works for their lives. 420 00:36:14,164 --> 00:36:20,504 So, you know, if you

if you don't want to stomach, you know, volatility hasn't been that bad now, 421 00:36:20,524 --> 00:36:35,540 but historical you know 50 100 vol asset as your entire portfolio or net worth then don you know if you you know I own stocks like it not crazy to not put everything into a thing that you know 422 00:36:35,600 --> 00:36:41,840 yeah, it goes up three or four X pretty frequently historically, but it also goes down 50% plus, 423 00:36:41,840 --> 00:36:46,640 like, you know, this is the same type of question though. This is just like, is it deja vu all over 424 00:36:46,640 --> 00:36:50,840 again? Like, you know, yeah, Bitcoin's down. So all the questions, you know, no one's going to be 425 00:36:50,840 --> 00:36:57,860 Same thing with the CAGRs and the, you know, if you look at like a five-year CAGR from today backwards, it doesn't look as good. 426 00:36:58,080 --> 00:37:03,020 If you start it from October 6, 25 backwards, it looks good, right? 427 00:37:03,080 --> 00:37:04,700 I mean, it's just a volatile asset. 428 00:37:05,100 --> 00:37:11,800 So I think that volatility historically has been positive, drives a lot of attention to the asset. 429 00:37:12,380 --> 00:37:20,040 But it also drives a lot of speculators, and they pile on like price on top of what is that growing floor of digital gold buyers. 430 00:37:20,040 --> 00:37:27,000 like i almost think of price as like an air stacked area chart and you've got like the yearly lows is 431 00:37:27,000 --> 00:37:31,800 like the long-term believers and then you've got these waves of fluctuation on top which are you 432 00:37:31,800 --> 00:37:37,900 know hype cycle driven business cycle driven liquidity cycle driven and you know you should 433 00:37:37,900 --> 00:37:44,860 never be surprised when that happens yeah i think that that point and this actually just maybe a good 434 00:37:44,860 --> 00:37:52,480 bridge into the cold card saga. Because that point about, look, it's okay to diversify. It doesn't 435 00:37:52,480 --> 00:37:56,980 make you an inferior Bitcoin. I think that that becomes abundantly clear to when you have kids, 436 00:37:57,480 --> 00:38:02,460 at least it became clear for me, like it became clear that now your job is not just looking out 437 00:38:02,460 --> 00:38:06,940 for yourself and how much you can make personal number go up. It is about making sure that you 438 00:38:06,940 --> 00:38:11,500 are managing risk appropriately for your family. And everyone's individual situation is different, 439 00:38:11,500 --> 00:38:16,740 right i'm not going to tell anyone what to do with their money but like the ability to uh handle 440 00:38:16,740 --> 00:38:22,700 unforeseen expenses during a bitcoin bear market you should be able to do that and it may be more 441 00:38:22,700 --> 00:38:29,500 difficult and require you to actually sell bitcoin if you are not uh otherwise let's say uh diversified 442 00:38:29,500 --> 00:38:34,240 now i'm not saying that you need to uh there's anything bad with being all in bitcoin if that's 443 00:38:34,240 --> 00:38:39,820 what works for you i own some stocks as well guys i also keep a little bit of fiat cash you know like 444 00:38:39,820 --> 00:38:45,680 yeah like just in case right because shit happens if this year's taught me anything it is that 445 00:38:45,680 --> 00:38:52,440 but that's okay to do and you really need to make sure you look at your own personal risk profile 446 00:38:52,440 --> 00:38:56,960 your family's risk profile what it is going to take to make sure you can still be a provider for 447 00:38:56,960 --> 00:39:01,640 that family regardless of what drawdowns there may be and the reason that made me think of the 448 00:39:01,640 --> 00:39:06,660 cold card side of things is because and first of all i'd like to say this is fucking horrible like 449 00:39:06,660 --> 00:39:11,840 this was the night but this started happening the night before my uh uh carla was scheduled to go 450 00:39:11,840 --> 00:39:15,080 into surgery and my daughter was scheduled to be born so it happened that thursday night friday 451 00:39:15,080 --> 00:39:22,600 morning and boy it is horrible and i'm so sorry to everyone who's affected and i know you've had 452 00:39:22,600 --> 00:39:28,600 more probably firsthand experience with people who lost a lot of bitcoin than maybe anyone else 453 00:39:28,600 --> 00:39:32,500 in the industry at this point because you've been doing a ton of great let's say pro bono 454 00:39:32,500 --> 00:39:37,080 investigative work. So thank you for that. But one of the things, Alex, that really just stuck 455 00:39:37,080 --> 00:39:43,980 out at me was hearing that there were so many people who not only like, again, being all in 456 00:39:43,980 --> 00:39:49,540 Bitcoin, completely fine, right? Like Bitcoin is by far the largest bucket of things that I own. 457 00:39:50,200 --> 00:39:56,940 But the people had everything, all of their sats on a single device, on a single key. 458 00:39:57,400 --> 00:40:02,140 Like I use a distributed multi-sig now. I still have some other single sigs too. Like I don't even 459 00:40:02,140 --> 00:40:06,560 trust all of mine to just multi-sig like i i spread some things out right i keep a little bit 460 00:40:06,560 --> 00:40:10,980 on an exchange i keep a little bit on river shout out to the river guys not sponsored just love what 461 00:40:10,980 --> 00:40:15,160 leishman and the team are doing because they're awesome it was kind of mind-blowing to me that 462 00:40:15,160 --> 00:40:21,200 people had everything at one single point of failure but the hard part is they did everything 463 00:40:21,200 --> 00:40:26,640 that you were supposed to do that they were told was the right thing to do which is use the most 464 00:40:26,640 --> 00:40:32,180 cypherpunk device that you can use you know that you you're not locked into vendor software you 465 00:40:32,180 --> 00:40:37,220 know generating your own entropy all of these things hooking

up a battery to it so that you 466 00:40:37,220 --> 00:40:42,860 know the NSA can't backdoor your USB cable or whatever like doing all these things and then 467 00:40:42,860 --> 00:40:50,120 getting screwed like it was like it it did not affect me uh personally but seeing people that 468 00:40:50,120 --> 00:40:55,420 I know and you know respect in the Bitcoin community get wrecked that was that's brutal 469 00:40:55,420 --> 00:41:01,700 that is gut-wrenchingly brutal and my heart goes out to all of these people and I would love if 470 00:41:01,700 --> 00:41:04,840 maybe you can share like now with a little bit I know you've talked about this in a decent number 471 00:41:04,840 --> 00:41:10,880 of podcasts already but if you can sort of share like where we're at right now with the state of 472 00:41:10,880 --> 00:41:17,100 this because I think a lot of people rightly so are still looking for answers looking for someone 473 00:41:17,100 --> 00:41:22,600 to be held accountable looking for the actual culprit in this whole thing is there anything 474 00:41:22,600 --> 00:41:27,160 new that we know or what can you sort of tell us about the state of things from your uh your 475 00:41:27,160 --> 00:41:34,380 observational point which i think is quite unique in the industry yeah it is truly devastating and 476 00:41:34,380 --> 00:41:39,960 um you know i think these people thought they did everything right right they didn't it's sad anytime anyone 477 00:41:39,997 --> 00:41:45,337 loses money. I dare say it's even sad if you gamble on low cap meme coins and lose your money. 478 00:41:45,677 --> 00:41:51,357 It's less sad, though, than people who just stack sats and thought they were storing it in cold 479 00:41:51,357 --> 00:41:56,557 storage. They weren't speculating. They weren't putting it on even on an exchange, which, you know, 480 00:41:56,657 --> 00:42:02,897 has risks. They weren't bridging it to DeFi and chasing yield down a risk curve. Right. 481 00:42:03,617 --> 00:42:07,077 They were storing it in their safes, in their homes, in their closets. 482 00:42:07,077 --> 00:42:14,437 many of them had never spent before right so they're only sending in savings into these 483 00:42:14,437 --> 00:42:21,057 addresses the average dormancy of coins stolen is like four years so like they're not they're 484 00:42:21,057 --> 00:42:28,477 not even recent right these are long-term hodlers you know i think that that makes it particularly 485 00:42:28,477 --> 00:42:35,997 sad and like i said it's sad anytime something like this happens even to a low-cap alt corner 486 00:42:35,997 --> 00:42:44,537 I'll dare say. But again, this is sort of the purest, longest term thinking cohort in all of crypto. 487 00:42:45,457 --> 00:42:53,837 And yes, among in the Bitcoin community, like particularly low risk, taking long time horizon, having individuals. 488 00:42:54,737 --> 00:42:58,177 So, yeah, very sad. I've talked to more than 200 of them. 489 00:42:58,177 --> 00:43:02,197 And some stories are truly devastating. 490 00:43:02,857 --> 00:43:09,457 Talking about, you know, someone who realized they might be vulnerable on that Thursday night, but their wife was in labor. 491 00:43:09,597 --> 00:43:11,457 And so they could not race home. 492 00:43:11,457 --> 00:43:14,937 And by the time they got home to their cold car the next day, it was gone. 493 00:43:16,277 --> 00:43:25,037 People who had moved to a new country to set up a whole new life and were going to use their coins to buy their house there and set up their family there that lost everything. 494 00:43:25,037 --> 00:43:29,677 tons of stories that are as heart-wrenching as you can imagine. 495 00:43:31,337 --> 00:43:34,677 I would say, you know, I think where it stands today, 496 00:43:35,317 --> 00:43:38,177 you have about 1,800 Bitcoin confirmed stolen, 497 00:43:38,917 --> 00:43:40,697 that I am confirming as stolen. 498 00:43:41,457 --> 00:43:44,197 High confidence is what I call it, stolen. 499 00:43:44,717 --> 00:43:49,457 Probably almost half of that directly confirmed by the victims themselves. 500 00:43:49,457 --> 00:44:05,597 The rest of it is either co-spent by attackers along with other confirmed victims funds. Remember, because the attackers possess the private keys to the coins, they can spend many victims coins in the same transaction to themselves. 501 00:44:05,597 --> 00:44:13,957 So wave one and two featured a lot of this, like co-spending multiple victims in the same transaction to the attacker's address. 502 00:44:14,157 --> 00:44:19,757 So when some victims send me a transaction ID and I look at the transaction, it's got 200 inputs. 503 00:44:20,157 --> 00:44:23,117 I have to say, you know, unfortunately, can you go into cold card? 504 00:44:23,197 --> 00:44:24,177 Can you go into Sparrow? 505 00:44:24,557 --> 00:44:27,517 Can you actually export a list of all of your addresses? 506 00:44:27,517 --> 00:44:32,277 Because I can't figure out which ones are yours by looking only at the transaction. 507 00:44:32,277 --> 00:44:53,077 In some instances, I've helped people send me their X pubs, which are the master public keys from which all other of the wallets, private public keys are derived. I've said this to them and said it before, like there are privacy implications to doing that. I can derive all possible addresses in your wallet from that. 508 00:44:53,077 --> 00:44:56,457 I don't have the keys, but I could see all of your spending. 509 00:44:56,697 --> 00:45:00,217 So if you don't want if you have anything you want to hide, don't send me that. 510 00:45:00,337 --> 00:45:04,237 But it's the surefire best way for me to get all of your addresses. 511 00:45:04,237 --> 00:45:09,197 That way I can give you a report that is fulsome and complete about the state of your coins. 512 00:45:09,617 --> 00:45:10,897 Many have done that. Right. 513 00:45:11,517 --> 00:45:14,537 You know, if you don't have anything to hide, you're never using

that seat again. 514 00:45:14,637 --> 00:45:20,477 So it's frankly, in my view, no, no real issue with sharing the XPUB again, unless they're spending. 515 00:45:20,477 --> 00:45:37,677 And by the way, I also tell them, like, I have absolutely zero interest and have spent exactly zero seconds interrogating prior spends from those addresses. Like, you know, I technically I would possess the X pub so I could, but I don't give a shit about that. I'm only looking to confirm all the addresses that were stolen. 516 00:45:37,677 --> 00:45:59,097 So it's about 1,800 Bitcoin. It's $1,16 million stolen at the point that they were stolen. You know, with this uplift in price, we're now talking about about $130 million in actual value. Something like almost 90% of it is still held by attackers in their initial collector addresses. 517 00:45:59,097 --> 00:46:23,077 So most has not been attempted to be exfiltrated one way or another, sent to an exchange, sent to whatever. There are some later copycats in the hack that once the vulnerability was disclosed and understood, if you had compute, you could direct some computer trying to grind these private keys and execute the attack yourself. 518 00:46:23,077 --> 00:46:38,677 I'm very confident there's at least 10 to 15 operators that have, you know, exploited this vulnerability beyond the sort of biggest chunk, which is the first three waves, which is, you know, 1500 of the 1700, 1800 BTC. 519 00:46:40,057 --> 00:46:42,737 Some of those have very different profiles. 520 00:46:42,977 --> 00:46:44,337 The funds are not always sitting. 521 00:46:45,197 --> 00:47:00,673 One smaller wave and I call those footprints one of the biggest footprint E which is a pattern very likely the same attacker inside that footprint They sending funds into coin joins doing peel chains 522 00:47:00,813 --> 00:47:09,213 elaborate things, bridging to other networks. It's all different modus operandi than wave one, 523 00:47:09,313 --> 00:47:15,753 two, and three attackers, which are just sitting inert on chain. So there is a variety of things 524 00:47:15,753 --> 00:47:17,853 that people are, you know, attackers are doing, 525 00:47:18,093 --> 00:47:20,853 most of the coins are sitting inert, right? 526 00:47:20,913 --> 00:47:22,413 And we're monitoring those addresses. 527 00:47:23,693 --> 00:47:27,533 Every day or two, I send an updated CSV to the FBI, 528 00:47:27,693 --> 00:47:30,633 to FinCEN, to Chainalysis and TRM and Elliptic 529 00:47:30,633 --> 00:47:33,413 and other exchanges just flagging, like, 530 00:47:33,853 --> 00:47:37,093 the updated set of attacker addresses, right? 531 00:47:37,133 --> 00:47:38,493 The hope being that, you know, 532 00:47:38,573 --> 00:47:40,853 if the attackers one day move funds 533 00:47:40,853 --> 00:47:42,333 to a centralized intermediary, 534 00:47:42,813 --> 00:47:45,373 they'll be flagged by compliance software 535 00:47:45,373 --> 00:47:51,353 because I told the entity to flag it, because the law enforcement is telling them to flag, whichever. 536 00:47:51,733 --> 00:47:59,513 I mean, at this point, I'm trying to propagate those around the crypto industry and law enforcement agencies as widely as possible 537 00:47:59,513 --> 00:48:04,033 in the hope they get frozen if they land at a centralized intermediary. 538 00:48:04,953 --> 00:48:10,793 And that's why, you know, I encourage, I've been giving back to the, you know, the victims helped me by providing, you know, 539 00:48:10,793 --> 00:48:26,213 information about their the theft and in sort of an exchange, I'm providing them with a report that traces their coins and they can use that report to file with law enforcement, you know, these victim reports with FBI's IC3. 540 00:48:26,873 --> 00:48:38,873 So, you know, one of the really interesting things from an investigative standpoint about the cold card incident is that we have to trace the funds upstream and downstream. 541 00:48:38,873 --> 00:48:59,193 So what I mean by that is normally when, let's say a crypto exchange is hacked, Bybit was hacked, right? Or, you know, a smart contract in DeFi or a bridge is hacked. These are centralized points. And so the forensic exercise is tracing the funds as they flow out of the, you know, exploited address. 542 00:49:00,033 --> 00:49:01,493 We don't have to trace up. 543 00:49:01,693 --> 00:49:04,513 We can see that they started here at the exchange and now they're being stolen. 544 00:49:04,773 --> 00:49:11,173 And so it's all about following the funds as they move around on chain to try to figure out where they go and notify law enforcement. 545 00:49:11,653 --> 00:49:20,313 Here, the funds are flowing from many, many disparate addresses with no prior connection to one another. 546 00:49:20,453 --> 00:49:24,633 Right. Because these are regular people's self-custody, you know, wallets. 547 00:49:24,733 --> 00:49:27,593 They're not sitting in a centralized point of control. 548 00:49:27,593 --> 00:49:44,453 So the only way to trace the attackers is from victim reports. So the engineers at Block, who identified wave one, they published a blog about this and they highlighted the features of the wave that they used. 549 00:49:44,453 --> 00:49:49,933 they occurred between, you know, in 41 minutes across just a few blocks that they used the same 550 00:49:49,933 --> 00:49:54,033 like lock time and wallet fingerprints and fixed fee rates and blah, blah, blah. 551 00:49:54,673 --> 00:49:59,513 So I mapped, I was easily by their description able to find all those transactions and that's 552 00:49:59,513 --> 00:50:05,933 wave one. And that's subsequently been confirmed by dozens of victims that it is a true wave one. 553 00:50:06,013 --> 00:50:09,633 And in wave one, the attacker co-spent a lot of inputs from any victims in the same 554 00:50:09,633 --> 00:50:14,353 transaction. So like if I confirm one or two, then I can just fold in the rest of them as all 555 00:50:14,353 --> 00:50:16,913 being

thefts. 556 00:50:18,113 --> 00:50:20,593 Every other wave and footprint 557 00:50:20,593 --> 00:50:22,693 that I reported on up to like footprint, 558 00:50:22,933 --> 00:50:24,213 like AP now, 559 00:50:24,333 --> 00:50:26,933 like many different patterns of attack, 560 00:50:27,653 --> 00:50:29,393 all the ones that I published 561 00:50:29,393 --> 00:50:31,293 as high confidence or victim confirmed, 562 00:50:31,673 --> 00:50:33,573 every single one except wave one 563 00:50:33,573 --> 00:50:36,293 was discovered by victim reporting, right? 564 00:50:36,593 --> 00:50:38,673 Discovered, not just corroborated 565 00:50:38,673 --> 00:50:39,573 and further mapped, 566 00:50:39,633 --> 00:50:41,933 but actually identified in the first place 567 00:50:41,933 --> 00:50:43,813 because a victim came forward to say 568 00:50:43,813 --> 00:50:45,593 that their funds were stolen, right? 569 00:50:45,653 --> 00:50:48,533 So it's essential that victims do that reporting 570 00:50:48,533 --> 00:50:50,733 so that we can widely identify 571 00:50:50,733 --> 00:50:54,333 and then propagate these attacker addresses 572 00:50:54,333 --> 00:50:56,513 to hopefully not just freeze the funds, 573 00:50:56,613 --> 00:50:58,753 but maybe also catch these assholes. 574 00:50:59,613 --> 00:51:02,753 But that from an investigative standpoint 575 00:51:02,753 --> 00:51:06,273 is very unique for a crypto hack, quote unquote. 576 00:51:06,513 --> 00:51:07,893 Like they almost always start 577 00:51:07,893 --> 00:51:09,833 in one centralized location and flow out. 578 00:51:10,233 --> 00:51:12,093 Here they start in many locations 579 00:51:12,093 --> 00:51:17,933 and sometimes flow together, other times flow into a whole new path because it's an ongoing 580 00:51:17,933 --> 00:51:21,973 vulnerability that's being exploited by a new copycat. It's not even the same person. 581 00:51:22,313 --> 00:51:26,693 So there's many different threads to pull, and it makes the investigation really complicated. 582 00:51:27,313 --> 00:51:32,813 It also means that once I became a shelling point for these victim reports, which, you know, 583 00:51:32,813 --> 00:51:38,473 was incidental, was not a goal of mine, I started mapping it and posting about it, 584 00:51:38,473 --> 00:51:40,713 And then people started sending me their stories. 585 00:51:40,973 --> 00:51:44,273 So then I started cataloging them and then it sort of snowballed from there. 586 00:51:44,893 --> 00:51:47,593 You can't really do this without the victim reports. 587 00:51:47,713 --> 00:51:47,893 Right. 588 00:51:47,933 --> 00:51:53,333 So that's why I've also been working so hard to make sure I share the, you know, threat 589 00:51:53,333 --> 00:51:58,293 actor information, the on-chain addresses, the patterns with law enforcement and, you 590 00:51:58,293 --> 00:51:58,653 know, freely. 591 00:51:58,793 --> 00:52:11,809 It not I not treating it like proprietary information I just happen to be the only one that has it So like I also sharing right like those addresses as widely as possible because I also can you know track these funds 592 00:52:11,809 --> 00:52:17,209 downstream in perpetuity. Like I can't be following one piece of coin that goes through five peel 593 00:52:17,209 --> 00:52:22,389 chains into a coin joint and eventually on a bridge and is now in a DeFi smart contract. I simply don't 594 00:52:22,389 --> 00:52:27,849 have the bandwidth for that. Others may. Right. So I've been sharing it widely, but it makes it a 595 00:52:27,849 --> 00:52:34,849 very, very unique exercise in data analysis, the sort of topography of the cold card exploit. 596 00:52:35,469 --> 00:52:41,709 You know, that topography also is a really good marker to tell the story, again, of how tragic it is. 597 00:52:43,249 --> 00:52:49,709 I'm curious, too, because this is something that I sort of, I guess, thought was interesting from 598 00:52:49,709 --> 00:52:55,789 the initial reports. And you've sort of just corroborated here this idea that whatever this 599 00:52:55,789 --> 00:53:00,329 initial whoever this primary attacker or attackers group you know individual group whatever was 600 00:53:00,329 --> 00:53:07,889 seems to have perhaps not been the most uh like sophisticated like the fact that they didn't start 601 00:53:07,889 --> 00:53:12,609 just immediately coin joining this before anybody even got wind of it the fact they didn't you know 602 00:53:12,609 --> 00:53:17,809 go through these steps to obfuscate what they had done uh that they were even like i think i saw one 603 00:53:17,809 --> 00:53:22,889 report that they were like paying for some sort of uh blockchain analysis tools they had an account 604 00:53:22,889 --> 00:53:32,549 So there's all these different things that if you were a sophisticated attacker, either individual or group, you would presumably never have done because that would just be like rookie mistake number one. 605 00:53:33,189 --> 00:53:37,709 Do you have any hypotheses around why that's the case? 606 00:53:37,849 --> 00:53:43,789 Like, was this just somebody who was like just, you know, prompting one of the frontier models and stumbled across this? 607 00:53:43,989 --> 00:53:46,929 Like, did they just say, you know, get me as much Bitcoin as you can? 608 00:53:47,009 --> 00:53:48,389 And then all of a sudden you're like, oh, shit. 609 00:53:48,589 --> 00:53:50,229 Like, do you have any thoughts on that? 610 00:53:50,409 --> 00:53:52,009 It definitely could be that. 611 00:53:52,009 --> 00:53:53,849 for the early waves. 612 00:53:54,029 --> 00:53:55,389 The report you're talking about 613 00:53:55,389 --> 00:53:57,289 was Clay from Block 614 00:53:57,289 --> 00:53:59,989 who posted that they had seemed to identify, 615 00:54:00,209 --> 00:54:01,929 I think relating to the Wave 1 attacker, 616 00:54:02,589 --> 00:54:03,529 that they may have used 617 00:54:03,529 --> 00:54:06,869 a common RPC data service 618 00:54:06,869 --> 00:54:08,929 which

exists to query 619 00:54:08,929 --> 00:54:10,629 Bitcoin blockchain data 620 00:54:10,629 --> 00:54:12,629 in service of committing the attack, right? 621 00:54:12,769 --> 00:54:14,169 And so this is like, you know, 622 00:54:14,689 --> 00:54:15,689 either you're a business 623 00:54:15,689 --> 00:54:18,529 that can't solely rely on their own node 624 00:54:18,529 --> 00:54:20,149 for the state of the Bitcoin blockchain. 625 00:54:20,409 --> 00:54:21,129 There are many such 626 00:54:21,129 --> 00:54:29,629 totally legitimate businesses that serve Bitcoin data to others over API or through an RPC endpoint 627 00:54:29,629 --> 00:54:34,709 or whatever. Even if you do run your own node, you may still also need these things, right? 628 00:54:34,809 --> 00:54:38,969 For whatever you're running a big exchange or any kind of brokerage, even if it's just for 629 00:54:38,969 --> 00:54:45,169 redundancy. I don't know how they did this, but they said that they figured out that the attacker 630 00:54:45,169 --> 00:54:51,789 was querying a popular data provider with a paid account, using a paid account, and that they talked 631 00:54:51,789 --> 00:54:56,329 to the provider, and they confirmed that it was the same, I don't know, maybe the attacker was 632 00:54:56,329 --> 00:55:00,469 looking up all the target addresses right before they enacted the attack, right? I mean, that, 633 00:55:00,889 --> 00:55:05,329 something like that, and that they've been in touch with authorities. Haven't seen any updates 634 00:55:05,329 --> 00:55:12,889 on that, so I don't know. If the attacker did do that, you're totally right. That is sloppy, 635 00:55:12,889 --> 00:55:39,349 Right. This is like Mars spits bars. Right. Not going to node. Even the attacker couldn't run a Bitcoin node. Right. Like I have a Bitcoin node. I can easily query the balance of every address. The reason, by the way, just for background for the audience, like the nature of this vulnerability is such that if you know the cryptographic space that a key could have been generated in because it had insufficient entropy in the beginning, what you do is you go and grind and create as many keys as possible. 636 00:55:39,349 --> 00:55:56,949 I don't know. I'm not a mathematician. I haven't been working on this part of it, but bajillions of possible private keys. Right. Then you derive addresses, maybe like the first hundred or some number, however much compute you have and want to devote to this, to deriving all the possible addresses those keys could have created. 637 00:55:56,949 --> 00:56:14,829 Then you search those addresses on the blockchain to see if any of them have money. Then you go and construct transactions using those ones private keys to take the money. Right. So you do need to query the blockchain here to know which transactions to actually build, which theft transactions to go ahead and create and submit. 638 00:56:14,829 --> 00:56:19,629 if they used a paid service rather than just spinning

up a Bitcoin node for that, 639 00:56:19,709 --> 00:56:23,409 which you absolutely could do, I can query all these now. 640 00:56:23,409 --> 00:56:27,709 I can use Kimmy, a local model, to actually, if you give me an XPub 641 00:56:27,709 --> 00:56:30,429 or a private seed to generate every private key, 642 00:56:30,749 --> 00:56:35,489 if I have a million seeds, I can, with AI, generate all the correct private keys 643 00:56:35,489 --> 00:56:39,029 and then drive the first hundred of all of those addresses 644 00:56:39,029 --> 00:56:42,169 and then query my node to see if any of them have money. 645 00:56:42,169 --> 00:56:48,149 that you could use a local model locally with a local Bitcoin node and you wouldn't have had this 646 00:56:48,149 --> 00:56:55,669 leak that may have happened that block engineers identified. So that that is positive for victims 647 00:56:55,669 --> 00:57:00,829 for wave one. The funds haven't moved. And again, I don't have an update on the state of that, 648 00:57:00,829 --> 00:57:05,049 but it's possible the attacker can be identified. Right. If they even paid with a credit card, 649 00:57:05,109 --> 00:57:10,509 there's some paper trail for that node, that node data service. There's some paper trail to follow. 650 00:57:10,509 --> 00:57:26,726 So I think it very clear that the first wave attacker wave one wave two wave three and I happen to believe wave one and two are the same and wave three might be a second Wave one swept many addresses and 651 00:57:26,726 --> 00:57:36,146 over a thousand Bitcoin in 41 minutes, like early in the morning on Thursday, July 30th, 652 00:57:36,146 --> 00:57:41,306 UTC time. So like the evening East Coast, Wednesday, July 29th. 653 00:57:42,946 --> 00:57:49,746 To construct those transactions, they almost certainly used AI just again to just operationalize the attack. 654 00:57:49,886 --> 00:57:52,406 They didn't need AI to find this vulnerability. 655 00:57:52,406 --> 00:57:58,246 If you have been following, if you're a security researcher following hardware wallets or crypto wallets, 656 00:57:58,246 --> 00:58:04,966 like you've known that an entropy bug is one of the main bugs that could make those wallets insecure. 657 00:58:04,966 --> 00:58:29,686 And these have been found in the past, you know, to a lesser blast radius, but in crypto wallets. So like it's a known vulnerability type. It's not totally novel. So you didn't need it to find it, need AI to find it. They probably used it. They probably did use it to find it. I mean, Kimi K3, very, very powerful local model, open source model came out like two weeks before this was exploited. 658 00:58:29,686 --> 00:58:33,526 but they almost certainly used it to operationalize it. 659 00:58:34,246 --> 00:58:41,346 I don't see necessarily a lot in wave one or two that in terms of on-chain patterns and 660 00:58:41,346 --> 00:58:44,266 topography that suggest they were definitely not sophisticated. 661 00:58:45,046 --> 00:58:46,226 I will

say those two. 662 00:58:46,226 --> 00:58:52,966 So wave one swept a bunch of coins and left a few UTXOs in some victim addresses unswept. 663 00:58:53,766 --> 00:58:56,726 The ones they left unswept, wave two mostly came and drained, right? 664 00:58:56,726 --> 00:59:04,186 So it's sort of like a cleanup wave two, which is why I think wave one and two might be the same person or attacker wave three. 665 00:59:04,186 --> 00:59:12,886 And those funds were swept into like three collectors and now sitting in two or three like holding addresses that we presume belong to the attacker. 666 00:59:13,106 --> 00:59:19,326 So they co-spent, they co-mingled, and now they're sitting there in a pile and a couple piles. 667 00:59:20,146 --> 00:59:30,706 Wave three, mostly something like, I don't know, 290 out of 293 transactions only had inputs from one victim, each of them. 668 00:59:30,926 --> 00:59:38,526 And they each went into one intermediate address and they're each sitting at one scripted vault address, one per attack, per victim. 669 00:59:38,786 --> 00:59:40,546 So they're segregated almost. 670 00:59:40,746 --> 00:59:46,626 I think there may be one or two where I noticed that they might not be segregated, but the vast majority are totally segregated by victim. 671 00:59:47,286 --> 00:59:50,086 That alone is a much more sophisticated topography. 672 00:59:50,326 --> 00:59:52,486 There is no co-spending across vaults. 673 00:59:52,586 --> 00:59:57,686 The way I know this is a wave is that I've got many victims and they all look the same 674 00:59:57,686 --> 01:00:01,666 right across the same blocks with the same types of transactions landing in the same 675 01:00:01,666 --> 01:00:03,546 types of holding addresses, right? 676 01:00:03,946 --> 01:00:10,486 But there isn't like direct spending history between those 293 attacker output vaults. 677 01:00:10,486 --> 01:00:12,046 They just look the same, right? 678 01:00:12,046 --> 01:00:19,906 And I've got enough victim confirmation of victims in wave three that, to me, prove the pattern is high confidence. 679 01:00:20,106 --> 01:00:21,926 And so I call it one full wave. 680 01:00:22,166 --> 01:00:26,026 But it's a much more sophisticated topography than one and two. 681 01:00:27,886 --> 01:00:28,806 Still haven't moved. 682 01:00:29,066 --> 01:00:33,346 Then you look at something like what I call footprint E, which is the largest of the footprints. 683 01:00:33,906 --> 01:00:39,566 That's the one that, honestly, it looks like a sophisticated actor that's done these types of thefts before. 684 01:00:39,566 --> 01:00:53,386 Or we may see waves one, two and three eventually go into coin joins, eventually go into peel chains to try to make it difficult for me to track, eventually bridge to other networks and blah, blah, blah, like the whole sort of money laundering MO. 685 01:00:54,206 --> 01:00:56,466 Maybe they need to figure out how to do that. 686 01:00:56,506 --> 01:00:57,406 And that's why they haven't

done it. 687 01:00:57,506 --> 01:00:58,646 Maybe they never intend to do it. 688 01:00:58,726 --> 01:00:59,266 We don't know. 689 01:00:59,926 --> 01:01:03,506 But footprint E knew exactly what they wanted to do with the funds. 690 01:01:03,506 --> 01:01:06,526 They instantly started peeling and coin joining and bridging. 691 01:01:06,666 --> 01:01:12,466 And like, that's not something you learn in the time between stealing the funds and enacting the transactions on chain. 692 01:01:12,686 --> 01:01:17,226 This is an actor who knows, has a modus operandi, knows how to execute it. 693 01:01:17,446 --> 01:01:25,006 So for something like that, I mean, it's much more likely that it's a, you know, common hacking group, even possibly a nation state. 694 01:01:25,006 --> 01:01:29,466 Like they have a whole process for trying to launder these funds and exfiltrate them. 695 01:01:29,466 --> 01:01:32,186 so I don't know that's a long answer 696 01:01:32,186 --> 01:01:34,346 Walker to your question like 697 01:01:34,346 --> 01:01:36,406 wave one 698 01:01:36,406 --> 01:01:38,586 and two also 699 01:01:38,586 --> 01:01:40,246 if it's the same party 700 01:01:40,246 --> 01:01:42,606 if they leaked their ID to a 701 01:01:42,606 --> 01:01:44,526 paid service like that's a huge 702 01:01:44,526 --> 01:01:45,766 fuck up for them 703 01:01:45,766 --> 01:01:48,846 but you know 704 01:01:48,846 --> 01:01:50,266 commingling the funds 705 01:01:50,266 --> 01:01:51,946 and one thing you know that's 706 01:01:51,946 --> 01:01:54,406 helps us categorize 707 01:01:54,406 --> 01:01:56,066 the blast radius of their operation 708 01:01:56,066 --> 01:01:57,986 more easily than say wave three 709 01:01:57,986 --> 01:02:02,746 where technically I don't have co-spends to definitively state that they're related, 710 01:02:03,006 --> 01:02:05,506 but we can still trace pretty well. 711 01:02:05,646 --> 01:02:12,806 I don't think it's the on-chain topography as much as the leaking of the ID to the RPC provider. 712 01:02:13,886 --> 01:02:19,586 Last thing I'll say, if you look at the Bitfinex hacker, Razzle Khan and her husband, 713 01:02:20,366 --> 01:02:24,666 they sat on billions of dollars worth of Bitcoin inert for years. 714 01:02:24,666 --> 01:02:29,946 I think if I recall correctly, they were eventually caught because they peeled some off to buy Walmart gift cards. 715 01:02:29,982 --> 01:02:32,082 and they were caught that way. 716 01:02:34,162 --> 01:02:35,962 They were not sophisticated. 717 01:02:36,182 --> 01:02:39,602 I've never quite learned how they managed to get those funds. 718 01:02:40,082 --> 01:02:46,502 I'd seen disputes between BitGo and Bitfinex on the timeline in the past as to who was to blame. 719 01:02:46,922 --> 01:02:49,122 I guess Bitfinex used BitGo for some portion. 720 01:02:49,722 --> 01:02:50,782 But we never quite understood. 721 01:02:51,022 --> 01:02:57,162 Most likely that was some kind of insider or phishing situation, you know, meaning not that sophisticated. 722 01:02:57,162 --> 01:03:02,262 not like they breached the firewall and hacked through the matrix right and not as sophisticated 723 01:03:02,262 --> 01:03:07,582 frankly as enacting this attack which requires compute and you know even if ai helped you it's 724 01:03:07,582 --> 01:03:14,822 it's i mean you're reproducing private keys from a vulnerable entropy like keygen like that's you 725 01:03:14,822 --> 01:03:20,022 know more sophisticated than bitfinex but the bitfinex hackers also sat on the funds for years 726 01:03:20,022 --> 01:03:26,602 before doing anything with them so whether or not the on-chain behavior of waves one two and three 727 01:03:26,602 --> 01:03:29,902 means they're sophisticated or not, no matter what. 728 01:03:29,902 --> 01:03:34,962 I mean, it could just sit there for a long, long time before it could sit there forever. 729 01:03:35,202 --> 01:03:38,962 I mean, for all we know, the attacker could decide it's too risky to even try to move 730 01:03:38,962 --> 01:03:40,242 and they just never move it. 731 01:03:40,642 --> 01:03:41,722 It's totally possible. 732 01:03:42,322 --> 01:03:43,682 So I do. 733 01:03:43,842 --> 01:03:50,542 All of that being said, the RPC, possible paid account leak as a nuance. 734 01:03:51,362 --> 01:03:56,202 I don't think there's quite much to say how sophisticated the attackers are or not. 735 01:03:56,602 --> 01:04:03,602 With the exception of both the paid RPC endpoint and the difference in behavior, 736 01:04:04,022 --> 01:04:08,582 footprint E and a couple of the smaller ones are immediately being laundered. 737 01:04:09,422 --> 01:04:13,762 So those are at least people with experience. 738 01:04:14,582 --> 01:04:19,482 But we can't say for certain that the others are not experienced attackers. 739 01:04:19,482 --> 01:04:30,602 i mean it is uh it is horrific and tragic it is also fascinating just because i think one of the 740 01:04:30,602 --> 01:04:36,002 reasons this really and doesn't seem to have gotten much coverage outside of the bitcoin 741 01:04:36,002 --> 01:04:40,602 community actually you didn't really see headlines like you probably would have a few years ago saying 742 01:04:40,602 --> 01:04:45,442 bitcoin has been hacked you know what i mean that would have been the the fud that was thrown out a 743 01:04:45,442 --> 01:04:49,182 few years ago then you would have had to have a bunch of people explaining well no bitcoin wasn't 744 01:04:49,182 --> 01:04:54,382 hacked bitcoin is you know we didn't really see that maybe that's an another example of market 745 01:04:54,382 --> 01:04:59,962 maturity here but something you and i were just talking about a bit before we got recording was 746 01:04:59,962 --> 01:05:06,522 this idea of what this actually means for the culture moving forward because this is very much 747 01:05:06,522 --> 01:05:13,122 an earth-shattering thing again as you highlighted these are people who did the right thing they did 748

01:05:13,122 --> 01:05:18,062 what you were supposed to do they did they didn't keep their key their their bitcoin on exchange they 749 01:05:18,062 --> 01:05:23,422 you know they had their own keys right not your keys not your coins they got a super cypherpunk 750 01:05:23,422 --> 01:05:28,522 uh you know kind of not the best like ux hardware wallet right they struggled through that 751 01:05:28,522 --> 01:05:33,782 and then they still got rugged and so if you do everything right and you can still be rugged i 752 01:05:33,782 --> 01:05:39,822 think a lot of people fairly lost or you know feel a bit lost or lost a lot of confidence in that 753 01:05:39,822 --> 01:05:44,802 and it's like meanwhile they see people with bitcoin sitting in coinbase or in you know 754 01:05:44,802 --> 01:05:47,642 Obviously, if you have a Bitcoin ETF, you don't have the Bitcoin, right? 755 01:05:47,682 --> 01:05:49,142 But you've got exposure to the price. 756 01:05:49,222 --> 01:05:54,422 And I think a lot of people might be sort of rethinking this whole paradigm a bit. 757 01:05:54,842 --> 01:05:56,282 Can you give your thoughts on that? 758 01:05:56,322 --> 01:05:59,642 Because again, it's like you're hearing 200 plus of these stories. 759 01:05:59,862 --> 01:06:02,182 Like you're on the front lines of this. 760 01:06:02,822 --> 01:06:06,842 Are people giving you any indication of kind of what they're going to do next? 761 01:06:06,922 --> 01:06:10,422 If they even want to keep holding Bitcoin, maybe they just feel too burned by this to 762 01:06:10,422 --> 01:06:11,802 even try again. 763 01:06:11,842 --> 01:06:12,262 I don't know. 764 01:06:12,702 --> 01:06:14,102 Yeah, I've heard some of that. 765 01:06:14,802 --> 01:06:20,422 I've also heard stories of, you know, I'm going to rebuild and start stacking again. 766 01:06:20,542 --> 01:06:22,322 I mean, I've heard both across the spectrum. 767 01:06:22,522 --> 01:06:29,502 Total disillusionment forever going forward, as well as, you know, this is a wake-up call about better self-custody. 768 01:06:30,722 --> 01:06:35,962 In terms of, like, the media not covering this, like, there's been a little bit, but I agree. 769 01:06:36,102 --> 01:06:41,342 Like, this was not widely covered in mainstream media, even in, like, mainstream financial media. 770 01:06:41,522 --> 01:06:42,482 You know, a story here or there. 771 01:06:42,862 --> 01:06:43,702 I went on Bloomberg. 772 01:06:43,962 --> 01:06:44,702 They talked about it there. 773 01:06:44,702 --> 01:06:55,982 They did an episode about it. So I think in sort of Wall Street and traditional like active markets finance, this was known and like and understood. 774 01:06:56,562 --> 01:07:02,722 And it didn't impact price and it didn't hasn't, I don't think, impacted institutional interest in Bitcoin. 775 01:07:03,582 --> 01:07:08,242 One, because they are a lot smarter about Bitcoin than, you know, they were a couple of years ago. 776 01:07:08,822 --> 01:07:14,622 You know, not saying it's just because of me, but I've been trying to teach these people about Bitcoin for a long time. 777 01:07:14,622 --> 01:07:22,542 And I was very clear and I continue to be and try to be that this vulnerability is related to a specific hardware vulnerability. 778 01:07:22,542 --> 01:07:24,902 It is not a Bitcoin protocol vulnerability. 779 01:07:25,762 --> 01:07:30,282 This specific vulnerability does not impact other hardware wallets, as far as we can tell. 780 01:07:30,422 --> 01:07:37,442 Not saying they're always going to be safe either, but like this is a limited to one hardware wallet key gen. 781 01:07:37,442 --> 01:07:50,485 And by the way the demographic that owns Cold Card I think both of us included are you know a cultural like cultural specific cultural niche in Bitcoin ownership 782 01:07:50,785 --> 01:08:00,205 It is not the, and I think the largest victim reported loss is about 60 Bitcoin, which is fucking tragic. 783 01:08:00,385 --> 01:08:01,605 That's an enormous amount of money. 784 01:08:02,825 --> 01:08:05,345 But the, you know, the median is like one BTC, right? 785 01:08:05,345 --> 01:08:24,145 And for some of these people, that's they've told me that's their life savings. So one, that's absolutely devastating for them. But, you know, two, from a mark, you know, even 116 mil in, you know, at the point it was stolen as the blast radius here. It's really just not that big in terms of the overall Bitcoin market. 786 01:08:24,145 --> 01:08:42,605 So it hasn't dramatically impacted the market. I think the institutional investors and by, you know, along the way with them, also the financial journalists realize this isn't, you know, systemic to Bitcoin price, like in the scheme of things. 787 01:08:42,605 --> 01:08:48,785 It may, though, have a lot of implications for how people get exposure to Bitcoin going forward. 788 01:08:49,465 --> 01:08:55,985 Right. You know, in some ways, I think HODL had a great American HODL had a great tweet that was like, you know, the upside is like not that many people listen to us. 789 01:08:56,625 --> 01:09:00,625 Well, some did. And I don't want to downplay the tragedy that's befallen them. 790 01:09:00,625 --> 01:09:07,445 But, you know, many didn't, you know, to be frank, if it had been Trezor or Ledger, the blast radius would have been way larger. 791 01:09:07,745 --> 01:09:11,665 Like those are much more widely owned like than cold cards were. 792 01:09:11,665 --> 01:09:27,505 So that's one reason is that although incredibly tragic to many people in terms of the size of the blast radius in the market, it's not quite big enough to make a real impact here. 793 01:09:28,845 --> 01:09:35,825 And that's just I mean, it's now been three weeks since it happened and you just you've seen Bitcoin flat to dramatically up in the more recent days. 794 01:09:35,945 --> 01:09:37,685 It's not being impacted by it. 795 01:09:37,685 --> 01:09:52,185 But I think people are right to wonder,

you know, if they rolled their own custody with cold card and didn't work out clearly if, you know, if they were in a single SIG or, you know, no passphrase, no entropy. 796 01:09:52,325 --> 01:09:54,905 And to be clear, like I've used cold card in a multi SIG. 797 01:09:55,025 --> 01:09:56,145 I didn't introduce any entropy. 798 01:09:56,145 --> 01:10:01,785 Like the idea that you should have known, I totally disagree with like hardware wallets supposed to create a good key. 799 01:10:02,225 --> 01:10:04,485 Like that's that's not your fault. 800 01:10:04,525 --> 01:10:04,805 Right. 801 01:10:04,865 --> 01:10:05,745 It's kind of nothing wrong. 802 01:10:05,745 --> 01:10:05,985 Right. 803 01:10:06,085 --> 01:10:07,305 Like, yeah, it's kind of. 804 01:10:07,445 --> 01:10:07,605 Yeah. 805 01:10:07,685 --> 01:10:24,025 I mean, I don't get me wrong. I think if I'm going to roll my own custody in the future, self custody, I probably will do dice rolling. Now, it's not actually that hard, but it is a ridiculous thing to ask a like a new entrant to do. They're supposed to just be able to buy this device and it makes the key for them. 806 01:10:24,025 --> 01:10:40,245 And, you know, and they did the irony is, you know, a lot of people were powering them off batteries and keeping them in Faraday bags. And it turned out, you know, to protect from the NSA, like we were talking about before, and like turns out that the actual primary function of the thing was catastrophically broken. So that did nothing. 807 01:10:40,245 --> 01:10:57,165 Look, I think it's reasonable for people to wonder whether self-custody is for them. And, you know, I'm still a huge proponent of self-custody. I think there's ways to do it safely that mitigate even the risk of one hardware wallet or several being compromised. 808 01:10:57,165 --> 01:11:05,985 specifically, I like collaborative custody, multi-sig, Nunchuck, Casa, Unchained, like 809 01:11:05,985 --> 01:11:11,845 Anchor Watch, Liana Wallet, like it's a bunch of ways to do that, which I think people should 810 01:11:11,845 --> 01:11:17,585 look into. But honestly, no one should store Bitcoin in a way they feel uncomfortable doing, 811 01:11:17,905 --> 01:11:23,225 you know, especially if you're doing self-custody. You really got to know how to do it. And you can 812 01:11:23,225 --> 01:11:29,785 watch, you know, Walker or my pods or BTC sessions, you know, excellent tutorials, but like 813 01:11:29,785 --> 01:11:34,065 you need to feel comfortable doing it. Know that you're taking it into your own hands and 814 01:11:34,065 --> 01:11:38,525 understand that there are risks. And I don't think we as a, you know, Bitcoin educational 815 01:11:38,525 --> 01:11:43,065 community did a good enough job explaining that like you really can't take a shortcut. 816 01:11:43,065 --> 01:11:47,485 You can't rely on a podcaster to make you feel comfortable storing your own coins. 817 01:11:47,485 --> 01:12:12,385 So if you don't, do not stretch yourself. Like, you know, River is highly regulated. Coinbase is highly regulated. They have, you know, they're not without risk. It's a different risk, right? And you should know those risks, but totally reasonable, I think, to either use whatever you feel comfortable for custody, whether that's a custodian, whether that's just owning the ETF. 818 01:12:12,385 --> 01:12:18,265 Jeff, you know, I think the era of judging people for those decisions really has to be over. 819 01:12:20,465 --> 01:12:22,125 I think that that's fair. 820 01:12:22,245 --> 01:12:30,465 And again, I, you know, I will continue to, as you just said that you will as well, be a proponent and personal user of self-custody. 821 01:12:30,465 --> 01:12:38,645 I also like collaborative self-custody or if you want to do it all yourself, you know, as you mentioned, a bunch of things that you can do there. 822 01:12:39,245 --> 01:12:40,865 But like, I like that. 823 01:12:40,865 --> 01:12:42,265 I like that, 824 01:12:42,265 --> 01:12:44,265 that peace of mind. 825 01:12:44,265 --> 01:12:45,505 And like the fact that, 826 01:12:45,525 --> 01:12:45,745 you know, 827 01:12:45,805 --> 01:12:49,165 as my wife was about to go into surgery in a few hours, 828 01:12:49,205 --> 01:12:49,785 the next morning, 829 01:12:49,785 --> 01:13:03,208 she asked me are we affected by this And I could say nope we good That was a pretty great feeling because I mean the story you shared about like my God someone wife being in labor and like that that was that that very much could have been could have been my story 830 01:13:03,668 --> 01:13:08,508 That could have been my story. And that's just horrific. Like you, you don't want to be in that 831 01:13:08,508 --> 01:13:13,248 position, but I think that it is fair. I was going to say just real quick too, 832 01:13:13,308 --> 01:13:17,668 like the ETFs, I think can make a lot of sense for some people, but you don't own coins if you 833 01:13:17,668 --> 01:13:23,408 own the ETFs. Yes. And you may want to use coins in the future. So personally, again, this is just 834 01:13:23,408 --> 01:13:30,008 me personally. And by the way, I do own the ETFs in accounts where I can't own coins like that, 835 01:13:30,108 --> 01:13:34,908 where I want Bitcoin exposure. I think they're really useful for certain investors at certain 836 01:13:34,908 --> 01:13:40,848 times and maybe many types of investors. However, if I want to own Bitcoin and I don't feel 837 01:13:40,848 --> 01:13:45,428 comfortable self-custodying, I can tell you I'm storing it at a regulated exchange that I have an 838 01:13:45,428 --> 01:13:52,308 account with, because at least I can decide later to withdraw them. And I think that's an important 839 01:13:52,308 --> 01:13:59,168 caveat about the ETFs. The ETFs give you economic exposure to the asset that you're not going to be 840 01:13:59,168 --> 01:14:05,168 able to, you know, in a, you know, economic catastrophe, like, you know, it's not quite

clear 841 01:14:05,168 --> 01:14:09,408 whether you're going to be able to access your, you know, fiat brokerage accounts in which those 842 01:14:09,408 --> 01:14:14,448 are held. Whereas Bitcoin, you can send around the world for, you know, a dollar or less at any time, 843 01:14:14,448 --> 01:14:15,328 as long as there's internet. 844 01:14:15,628 --> 01:14:17,008 And even without the internet, 845 01:14:17,148 --> 01:14:18,508 possibly with a ham radio 846 01:14:18,508 --> 01:14:19,768 or the Blockstream satellite, 847 01:14:20,048 --> 01:14:21,608 like I am, 848 01:14:21,708 --> 01:14:23,068 I would prefer personally 849 01:14:23,068 --> 01:14:25,148 to own Bitcoin at an exchange 850 01:14:25,148 --> 01:14:26,508 than Bitcoin in ETF. 851 01:14:27,468 --> 01:14:29,088 Of course, with all the caveats 852 01:14:29,088 --> 01:14:30,468 necessary about exchanges 853 01:14:30,468 --> 01:14:31,668 and, you know, 854 01:14:31,768 --> 01:14:32,668 making sure you trust, 855 01:14:32,968 --> 01:14:33,208 you know, 856 01:14:33,368 --> 01:14:34,468 have the level of trust 857 01:14:34,468 --> 01:14:35,528 that you can be comfortable with 858 01:14:35,528 --> 01:14:36,608 with that exchange, 859 01:14:36,648 --> 01:14:37,208 like a river, 860 01:14:37,308 --> 01:14:38,288 which I also use. 861 01:14:38,908 --> 01:14:39,928 Big fan of river. 862 01:14:40,108 --> 01:14:40,588 Again, also, 863 01:14:40,708 --> 01:14:41,948 I don't have any sponsors 864 01:14:41,948 --> 01:14:43,508 on my podcast. 865 01:14:43,508 --> 01:14:46,048 Thank you, Galaxy, for paying for my podcast. 866 01:14:47,028 --> 01:14:48,468 But I am a user of River. 867 01:14:48,648 --> 01:14:54,388 And again, like I like River and I would rather have coins on River than in an ETF as an individual. 868 01:14:54,668 --> 01:14:56,408 I mean, obviously, there are different situations. 869 01:14:56,848 --> 01:14:58,468 And again, I'm not here to judge. 870 01:14:58,808 --> 01:15:04,188 Certainly, I think less so than ever before am I not here to judge how people choose to store. 871 01:15:04,248 --> 01:15:06,368 This is people's money and livelihood and savings. 872 01:15:06,948 --> 01:15:09,668 I think you should store it however you feel comfortable. 873 01:15:09,668 --> 01:15:16,648 one of the things and again this is not to make light of it but just to like look at the kind of 874 01:15:16,648 --> 01:15:22,348 absurdity of this situation how shocking it was i might have been i forget what account made it so 875 01:15:22,348 --> 01:15:25,928 i'm sorry for not crediting you maybe you know because you've been deeper in this than i have 876 01:15:25,928 --> 01:15:32,128 but they were like you know get your bitcoin on exchanges now you know and it's like boy you know 877 01:15:32,128 --> 01:15:37,768 like shit yeah i like that for a lot of people that's exactly what they did it was like to keep 878 01:15:37,768 --> 01:15:42,208 my Bitcoin safe. I had to transfer it out of my self-custody onto

the exchange. 879 01:15:42,408 --> 01:15:47,308 This is like the reverse. People have called it the reverse FTX. So like when FTX collapsed, 880 01:15:48,208 --> 01:15:53,408 coins fled into self-custody. They didn't know if the contagion was going to spread or if other 881 01:15:53,408 --> 01:16:00,028 exchanges were implicated in it. Whereas here, I know Sani from Time Chain Index, I think in the 882 01:16:00,028 --> 01:16:06,148 first three days, there was like a net inflow of 22,000 Bitcoin into exchanges. I saw CryptoQuant 883 01:16:06,148 --> 01:16:10,708 had posted something saying that, I forget the timeframe, but like, you know, at least a very 884 01:16:10,708 --> 01:16:17,588 long time, it was the largest count of sub one Bitcoin deposits into exchanges. So yeah, there 885 01:16:17,588 --> 01:16:22,248 was a lot of fear. I think there's going to, it's going to take some time, I think for the, 886 01:16:22,248 --> 01:16:28,448 you know, Bitcoin, general Bitcoin investor and owner to feel comfortable self-custodying like 887 01:16:28,448 --> 01:16:35,248 this. This has done some damage to the self-custody narrative, but it is not dead and it will not be 888 01:16:35,248 --> 01:16:41,048 dead. And I really, like I said, like I love using collaborative multi-sig. I think it is, 889 01:16:41,108 --> 01:16:47,488 it gives me great peace of mind. I don't even, you know, in a multi-sig quorum, you don't even 890 01:16:47,488 --> 01:16:52,268 have to store the seed phrases necessarily for those hardware wallets because you have redundancy 891 01:16:52,268 --> 01:16:57,148 in other ways. So you're not, because that's also been a thing. Let's say you store it perfectly. 892 01:16:57,588 --> 01:17:02,508 It's another thing that these cold card victims didn't do that makes it further not their fault. 893 01:17:02,508 --> 01:17:13,848 A lot of times people get funds stolen out of cold storage because they store the seed phrase somewhere in a last pass and last pass gets hacked or they, you know, store it in their Gmail and their Gmail gets hacked. 894 01:17:13,968 --> 01:17:21,148 I mean, searching for 12 or 24 words on a fixed list of possible words is like one of the very first things cyber criminals do. 895 01:17:21,268 --> 01:17:24,028 Like it is easy for them to locate a seed phrase. 896 01:17:24,428 --> 01:17:30,208 And oftentimes people who self-custody and did everything otherwise correctly accidentally leak their seed phrase. 897 01:17:30,488 --> 01:17:30,928 Right. 898 01:17:30,928 --> 01:17:42,328 And so that's another thing I like about multi-sig is that you don't necessarily have to keep all the seed phrases because you have redundancy from your signing threshold in your quorum. 899 01:17:42,948 --> 01:17:51,348 Right. So you can not only could I lose the cold card seed phrase, I could lose the whole device and throw in the ocean and still recover my funds with redundancy. 900 01:17:51,988 --> 01:17:59,008 So I think I tweeted this. Some people are mad. They're like, no, no, the perfect single seed treasure is still safe. 901 01:17:59,008 --> 01:18:16,371 I not saying it is or isn I just saying that multi I think is the pinnacle of self And there are some great services that can help you do it for pretty cheap you know a couple hundred dollars a year And they also provide redundancy if they go away right 902 01:18:16,471 --> 01:18:18,011 And they won't go out of business or whatever. 903 01:18:18,651 --> 01:18:23,131 So I really recommend that if I had to pick a way to do self-custody going forward. 904 01:18:24,131 --> 01:18:25,951 That's what gives me, I'm good at Bitcoin. 905 01:18:26,211 --> 01:18:29,031 I still am pretty worried about fucking up my own self-custody. 906 01:18:29,211 --> 01:18:30,811 And these things help me sleep at night. 907 01:18:30,811 --> 01:18:37,191 yeah and if you are going to do single sig even single sig with a passphrase like i would just 908 01:18:37,191 --> 01:18:42,271 again do whatever you want but personally i wouldn't be comfortable having more than a third 909 01:18:42,271 --> 01:18:47,971 of my stack on any single single sig like at least you know at least spread that out so that 910 01:18:47,971 --> 01:18:53,811 if there is another unforeseen vulnerability that you can't get totally wiped out by that 911 01:18:53,811 --> 01:18:58,491 at that time right uh and maybe the the last thing we're running out of time here but i did 912 01:18:58,491 --> 01:19:03,671 when I ask you just in these last couple of minutes, though, perhaps out of this horrible 913 01:19:03,671 --> 01:19:09,271 tragedy, one thing that has been, I think, very positive is this red teaming effort. 914 01:19:10,191 --> 01:19:17,631 You know, Callie, Rob from Anchor Watch, Charlie, like, I can't even list all of them, 915 01:19:17,971 --> 01:19:23,611 doing incredible work to basically go down the line. And I know OpenSats threw some grant money 916 01:19:23,611 --> 01:19:29,191 Adam. So it wasn't just Rob maxing out his credit card for tokens. Like this to me has been this 917 01:19:29,191 --> 01:19:33,751 incredible thing. That's the best example that I have in recent memory of like, you can just do 918 01:19:33,751 --> 01:19:38,331 things like you can just go out there and audit every open source Bitcoin project and check for 919 01:19:38,331 --> 01:19:42,451 vulnerabilities. Like, was that as heartening to you as it was to me? Cause that was like a 920 01:19:42,451 --> 01:19:47,631 coming together moment that I thought was just beautiful to see. Yeah. It's one of the good 921 01:19:47,631 --> 01:19:53,071 things to come out of the event and it is good. And it's this, you know, we used to say, don't 922 01:19:53,071 --> 01:19:58,911 trust verify. And the reality is most people weren't verifying and most people couldn't 923 01:19:58,911 --> 01:20:04,671 verify. I mean, I couldn't, I'm not a software developer. I wasn't going to be auditing, 924 01:20:04,811 -->

01:20:10,611 you know, code repositories for vulnerabilities in the hardware wallets I use. It's not possible 925 01:20:10,611 --> 01:20:15,351 for most users, but it also turns out, I think a lot of people just assume somebody else was doing 926 01:20:15,351 --> 01:20:20,831 it. Um, in the case of cold card in particular, I think, you know, there's some history there of 927 01:20:20,831 --> 01:20:27,551 the team, you know, being hostile to other open source developers and creating an environment 928 01:20:27,551 --> 01:20:33,531 that discouraged other qualified open source developers from reviewing their code. And that 929 01:20:33,531 --> 01:20:39,851 I think contributed to why that vulnerability at Coldcard went unfound for so long, five years, 930 01:20:39,971 --> 01:20:45,851 five plus years it existed and wasn't, you know, probably wasn't exploited, but also wasn't 931 01:20:45,851 --> 01:20:54,511 publicly identified. But now you can. Rob, I'm a big fan of Rob and Calais and James O'Byrne and 932 01:20:54,511 --> 01:21:00,251 the others that are working. I think Rob said maybe 25 people have been officially working with them. 933 01:21:01,331 --> 01:21:08,371 Now with the quality of AI, you can. And by the way, you can run a pretty strong version of Quinn 934 01:21:08,371 --> 01:21:15,951 or Kimmy or GLM locally and do a little bit anyway of your own verification on open source code. 935 01:21:17,091 --> 01:21:23,631 But, you know, Rob and the team, I think, identified a real gap here, which was that no one was doing 936 01:21:23,631 --> 01:21:28,931 this at scale. And you've seen a couple. I saw Atomic Labs, which is like a cross-chain Bitcoin 937 01:21:28,931 --> 01:21:36,631 bridge, Bolts, both also basically said like the volume of AI-enabled attackers is like far 938 01:21:36,631 --> 01:21:41,331 exceeding their capability of defending their project. So they like have to close the project 939 01:21:41,331 --> 01:21:46,831 like they don't want people to lose money. They literally are trying to fight back against a 940 01:21:46,831 --> 01:21:55,491 deluge of attacks. And so AI has dramatically altered the threat environment for cybersecurity 941 01:21:55,491 --> 01:22:02,831 generally. I think Rob and the red team have they're sort of in the parabolic blow off top 942 01:22:02,831 --> 01:22:10,191 phase of catching up here, I think you're going to reach a bit of a plateau, not just in the Bitcoin 943 01:22:10,191 --> 01:22:18,111 repos, but in all and everything. Everything is at risk, to be clear. Every piece of software is 944 01:22:18,111 --> 01:22:24,071 at risk. This riverside we're on right now, it's at risk. You know, like there's the amount of 945 01:22:24,071 --> 01:22:30,131 effort you used to have to devote of highly trained developers, pen testers to identify 946 01:22:30,131 --> 01:22:31,891 zero-day vulnerabilities or new bugs. 947 01:22:32,291 --> 01:22:33,931 It was an enormous amount of resources 948 01:22:33,931 --> 01:22:35,571 that type of research required. 949 01:22:35,811 --> 01:22:38,231 So even when hackers found one, 950 01:22:38,391 --> 01:22:40,631 it had taken them a lot of time, typically. 951 01:22:41,271 --> 01:22:44,531 Now, like, it's not that the AI is better 952 01:22:44,531 --> 01:22:46,451 than any pen tester that's ever existed 953 01:22:46,451 --> 01:22:48,951 or hacker that has ever, you know, hacked. 954 01:22:49,091 --> 01:22:51,931 It's that the scale at which you can deploy it 955 01:22:51,931 --> 01:22:53,011 is so much grander. 956 01:22:53,671 --> 01:22:56,351 And so, I mean, vulnerabilities are being found 957 01:22:56,351 --> 01:22:58,191 across every, I can assure you, 958 01:22:58,251 --> 01:22:59,471 it's not just the open source, 959 01:22:59,471 --> 01:23:00,471 It's not just Bitcoin. 960 01:23:00,871 --> 01:23:08,871 Every company on Earth right now is finding like, you know, dozens or hundreds or thousands of previously unknown vulnerabilities and patching them. 961 01:23:09,311 --> 01:23:16,131 And I think this is sort of the opening salvo in the clanker wars that are going to be a big feature of our lives going forward. 962 01:23:16,671 --> 01:23:19,951 You know, every new step function increase in an AI capabilities. 963 01:23:19,993 --> 01:23:26,253 going to also come with step function increases in vulnerability identification. And I think part 964 01:23:26,253 --> 01:23:31,293 of the goal that Rob and his team are doing, they're playing catch up on the open source repos 965 01:23:31,293 --> 01:23:39,373 that service the Bitcoin ecosystem. Once they have caught up and I think they've done a lot 966 01:23:39,373 --> 01:23:45,393 already now, we're in a pretty good spot, I think now. But, you know, then there'll be a cooling off 967 01:23:45,393 --> 01:23:50,313 period where, you know, all the repos that could have had a bug have been scanned by both hackers 968 01:23:50,313 --> 01:23:55,673 and defenders alike to a large extent. But then you'll have a step function increase. And the goal, 969 01:23:55,833 --> 01:24:01,093 I think, from a policy standpoint is how to get the tools into the defenders, at least at the same 970 01:24:01,093 --> 01:24:07,433 time, if not before the attackers. And this is like a very common thing across history, right? 971 01:24:07,513 --> 01:24:14,093 Like the Mongols like took over most of the world because they had this crazy offensive innovation, 972 01:24:14,093 --> 01:24:20,213 which is basically shooting arrows from a horse that was just decimated all the defense all 973 01:24:20,213 --> 01:24:25,413 everywhere they went. Right. And there's probably, you know, tons of other examples. But think forward 974 01:24:25,413 --> 01:24:29,853 to the American Revolution, like turned out that hiding behind trees and popping out and shooting 975 01:24:29,853 --> 01:24:35,433 people, guerrilla warfare, which was an American invention, absolutely decimated the British line 976 01:24:35,433 -->

01:24:42,193 defense. Right. The attackers tend to have better technology because the incentive of war drives the 977 01:24:42,193 --> 01:24:47,753 innovation in the first place to create the new weapons. And, you know, you think about the phrase 978 01:24:47,753 --> 01:24:55,353 on defense, right? By definition, it's a reactive. The question is how, whether it's U.S. policy, 979 01:24:56,093 --> 01:25:02,073 maybe just policy at the Frontier Labs, you know, how can they get the top tier models in the hands 980 01:25:02,073 --> 01:25:08,413 of the good actors faster? Ideally before they're ever in the hands of bad actors, but just generally 981 01:25:08,413 --> 01:25:20,989 faster One of the big things that Rob has pointed out I encountered myself just in tracking this stuff You know I use frontier models and local models to traverse my own Bitcoin data stack 982 01:25:21,069 --> 01:25:25,969 right? You know, I'm not like thumbing through, you know, 300 million UTXOs to find the one you 983 01:25:25,969 --> 01:25:31,049 told me was stolen. Like I use AI for that. Sometimes merely asking, saying, hey, you know, 984 01:25:31,109 --> 01:25:36,069 a new victim reported this address was stolen by the cold card hacker. Literally, Fable will be like, 985 01:25:36,069 --> 01:25:38,369 oh, he said victim, like downgraded to Opus. 986 01:25:38,369 --> 01:25:42,929 Like this is just asking the AI to traverse my own data set, right? 987 01:25:43,009 --> 01:25:45,209 Not even doing penetration testing. 988 01:25:45,489 --> 01:25:46,789 That has to change. 989 01:25:47,169 --> 01:25:51,669 And so, you know, shout out to Rob and the team for doing, you know, this first initial 990 01:25:51,669 --> 01:25:58,789 wave of stuff I guess we thought always should have been being done, but definitely exposed 991 01:25:58,789 --> 01:26:05,109 the lack of resources, human resources in eyeballs on a lot of this code. 992 01:26:05,109 --> 01:26:16,169 And I think now if you're a software developer, open source or not, like you need to be writing a lot of your code with AI and then auditing your code with AI all the time forever. 993 01:26:16,569 --> 01:26:17,909 I mean, this is the new paradigm. 994 01:26:19,869 --> 01:26:23,109 Well, I know I've kept you a little bit long here, so I do apologize for that. 995 01:26:23,149 --> 01:26:25,689 But I appreciate you giving that breakdown here at the end. 996 01:26:26,049 --> 01:26:33,109 Real quick, where do you want to send folks, you know, your own podcast, perhaps your voice acting work, anywhere you want to direct people? 997 01:26:33,109 --> 01:26:51,729 Yeah, well, look, first, if you're a cold card victim, message me on X, DM me on X. That's the best way to reach me. I've triaged everybody on X. That's intangible coins. And yeah, I mean, I have a podcast. I got to have you on, Walker. I have a strong bias for in-person recording in New York. 998 01:26:51,729 --> 01:27:16,545 So whenever you in whenever you in New York at

some point you know I know whenever you leave your orchard that you have there come to New York and I love to have you on Galaxy Brains We cover markets and Bitcoin and you know sort of crypto adoption We don talk much about other coins but I interested in regulation tokenization of real things like stocks 999 01:27:17,545 --> 01:27:18,805 Anyway, I think it's a good show. 1000 01:27:18,865 --> 01:27:20,985 I've done like 260 episodes or something. 1001 01:27:21,065 --> 01:27:22,425 It's been like five years of episodes. 1002 01:27:23,425 --> 01:27:27,585 But, yeah, also, I would just say, like, you know, hang in there, guys. 1003 01:27:27,705 --> 01:27:29,005 Bitcoin ain't going nowhere. 1004 01:27:29,005 --> 01:27:36,645 it's got a long history ahead of it this is a hiccup cold card but as you can see like this 1005 01:27:36,645 --> 01:27:42,285 thing can go from the most boring asset on earth to you know the front page of cnbc.com in like 1006 01:27:42,285 --> 01:27:50,045 an hour i saw like 400 million in short liquidations in one hour um the other day and i think now as we 1007 01:27:50,045 --> 01:27:55,805 record like it's now been about 24 hours since this rip and it's like 1.3 billion in short 1008 01:27:55,805 --> 01:28:03,485 liquidations again who is shorting bitcoin 11 months after an all-time high you know near a 1009 01:28:03,485 --> 01:28:09,225 cycle low i don't know what you're doing i think that is hubris like james said so um yeah and just 1010 01:28:09,225 --> 01:28:15,765 you know maybe in a world where there's only one bitcoin podcast you can watch one man and his 1011 01:28:15,765 --> 01:28:20,685 orchard bring to you by the way whatever happened weren't you building something you ever finished 1012 01:28:20,685 --> 01:28:27,165 that thing was like swing set oh yeah yeah yeah well i got sidetracked by the uh i built all of 1013 01:28:27,165 --> 01:28:31,825 the uh the relevant parts to play on there's just some exterior finish work that needs to be done 1014 01:28:31,825 --> 01:28:37,285 but i got sidetracked building the wife of pergola and then building like 50 different other at home 1015 01:28:37,285 --> 01:28:43,145 projects i think you do well i'm assuming you do pretty well on bitcoin content because i know i 1016 01:28:43,145 --> 01:28:48,065 like it so it must do pretty well but there's a huge you got a huge future and like the those 1017 01:28:48,065 --> 01:28:53,665 really nice clipped edited like uh tick tocks of like building stuff like here's how to build 1018 01:28:53,665 --> 01:29:11,341 here how to build a pergola in like 12 hours and it like the really nice chopped up like cut cut like drop log drop lot you know like because that what i need i need a zoomer i need a zoomer intern is what i need if you a zoomer who is just innately good at that stuff and yeah the edits are hard i will pay you in 1019 01:29:11,341 --> 01:29:18,681 bitcoin uh or in fiat or whatever you want uh whatever you want no no meme coins i appreciate 1020 01:29:18,681 --> 01:29:24,061 you brother thank you for coming on here uh stoked for people to uh to dig into this a little bit and 1021 01:29:24,061 --> 01:29:28,021 thanks for the ongoing work that you do. I know there's, I've seen a lot of appreciation out there 1022 01:29:28,021 --> 01:29:31,961 for it. Uh, you didn't have to do it, but you're out there doing it. You know, you can just do 1023 01:29:31,961 --> 01:29:36,161 things and what you're doing is genuinely, I think helping a lot of people. So thanks, man. 1024 01:29:36,721 --> 01:29:38,341 Thank you, Walker. Thanks for having me, buddy. 1025 01:29:39,961 --> 01:29:42,661 And thank you to everybody at Noster. I almost forgot to thank you guys. Yeah. 1026 01:29:42,781 --> 01:29:46,861 You didn't think I'd forget you. Appreciate the Zaps guys. Much love. We'll see you next time. 1027 01:29:46,861 --> 01:29:58,221 And that's a wrap on this Bitcoin Talk episode of The Bitcoin Podcast. 1028 01:29:58,881 --> 01:30:02,841 Remember to subscribe to this podcast wherever you're watching or listening, 1029 01:30:03,101 --> 01:30:07,141 and share it with your friends, family, and strangers on the internet. 1030 01:30:07,141 --> 01:30:13,841 Find me on Noster at primal.net slash walker and this podcast at primal.net slash titcoin. 1031 01:30:13,841 --> 01:30:22,241 On X, YouTube, and Rumble, just search at Walker America and find this podcast on X and Instagram at Titcoin Podcast. 1032 01:30:22,981 --> 01:30:25,221 Head to the show notes to grab sponsor links. 1033 01:30:25,401 --> 01:30:30,041 Head to substack.com slash at Walker America to get episodes emailed to you. 1034 01:30:30,501 --> 01:30:33,821 And head to Bitcoin Podcast dot net for everything else. 1035 01:30:34,381 --> 01:30:37,941 Bitcoin is scarce, but podcasts are abundant. 1036 01:30:37,941 --> 01:30:43,561 So thank you for spending your scarce time listening to the Bitcoin podcast. 1037 01:30:43,841 --> 01:30:46,601 Until next time, stay free.