Transcript

Aaron Lammer: Hello and welcome to Coin Talk. I am Aaron Lammer. I am so sorry that we missed you last week. We were bound to miss an episode, eventually. But thanks to everyone for bearing with us. I was on the road last week. This week Jay is on the road, but thankfully he’s on the line from undisclosed location. Do you want to disclose your location, Jay?

Jay Kang: No, no, no. But I also feel like the place I actually am is so unremarkable that disclosing it is almost embarrassing.

Aaron Lammer: Have you read Pale Fire by Nabokov?

Jay Kang: Yeah, of course. Not of course. I feel like that was very pretentious. But yes, I have read it.

Aaron Lammer: I feel like, he’s writing the book and that motel.

Jay Kang: Yes.

Aaron Lammer: That’s basically where I perceived you are right now. You’re holed up in some motel scribbling paranoid fantasies down on the page.

Jay Kang: That would actually much more glamorous and fun than the reality right now. But thank you. It’s good to be compared to Charles Kinbote, I guess.

Aaron Lammer: Before we forget, I just want to say, thanks to our partners over at Medium. They’ve got a really great collection of new crypto writing. If you’re enjoying it, become a member. It’s five bucks a month. You can find us at medium.com/cointalk. That’s all the transcripts. There is all kinds of stuff at me.dm/crypto. The collection, I forget the URL. Jay, I don’t even know what the URL for that special collection is.

Jay Kang: Me.dm/crypto, right?

Aaron Lammer: Well no, that’s their always collection. They have a special collection of 11 articles.

Jay Kang: Oh, well you can click … I bet that there is a link on me.dm/crypto that you should definitely click.

Aaron Lammer: You can figure it out. You people can figure it out.

Aaron Lammer: Okay, let’s play the music.

Speaker 1: This episode of Coin Talk was taped Tuesday, October 2nd at 8:00 p.m., Eastern Standard Time. The Bitcoin price index was $6,500.

Aaron Lammer: Okay, here we are. Two weeks have passed. Jay may or may not be visiting Harry Potter World.

Jay Kang: What is Harry Potter World? Is that a ride at Disney World or something like that?

Aaron Lammer: No, no. It’s an entire amusement park in Orlando.

Jay Kang: Oh, really?

Aaron Lammer: You could be there now instead of taping this podcast.

Jay Kang: I don’t think it’s open at 7:30. Just to divulge, I am in Orlando, and I am staying near the airport. I’m here for a reporting trip. I got to say, Aaron, I am somebody who travels quite a bit for work. My reporting generally takes me to places that are not the glamor cities of America.

Aaron Lammer: You self-identify as a rambling man.

Jay Kang: Yeah. It has installed in me a great tolerance for a lot of America’s shat on cities. I try and find something worthwhile, or else you just go crazy.

Aaron Lammer: Yeah, you’re in one of the most shat on cities in America right now.

Jay Kang: Yeah, yeah, yeah. When I was in Oklahoma City for basically two weeks, I found really good things. In the end I liked Oklahoma City. But I got to say, Orlando is fucking terrible.

Aaron Lammer: Well you say that, but you haven’t been to Harry Potter World.

Jay Kang: That’s true.

Aaron Lammer: Let me ask you, in the Harry … I think this actually is an important question for all crypto buyers, which is, which school within Hogwarts would you declare for there? Do you see yourself as a Hufflepuff?

Jay Kang: I got to be honest, I have never read the books. I saw the first movie and that’s it. I don’t know.

Aaron Lammer: Jay, I thought you were a literary man.

Jay Kang: I know one is Gryffindor, and the evil one is Slytherin. But I only know that through pop culture, like osmosis.

Aaron Lammer: Next Coin Talk book club is apparent gonna have to be Harry Potter book two.

Jay Kang: Definitely not. I haven’t even read book one. But I did see the movie, which if I remember right, isn’t the first move books one and two?

Aaron Lammer: No. I think it’s just one, ’cause it’s one school year for each one. I don’t want to give anything away. I’ll move on, come back to it. You probably don’t want to go to the amusement park until you’re at least halfway through the series. I guess you’re probably gonna catch it when your daughter is of the age, anyway. Maybe it’s a waste to read it right now.

Jay Kang: Yeah, I actually considered bringing her down here because when you’re on a reporting trip, the hotel and everything is paid for. First of all, I couldn’t go, so my wife would have had to take her by herself. I don’t think she’s really ready for the whole Disney experience, or even the Sea World experience. Generally her time is about 45 minutes before she can’t stand a place anymore. I just didn’t think it was worthwhile. But yes, I think for both of us in the next four years or so, we will probably be] back down in Orlando, unhappy.

Aaron Lammer: I like how we’ve both been doxing our locations. I feel like it’s part of our crypto moderate stance, where we’re just like, “I’m in Orlando, by the airport.”

Jay Kang: Come steel my Bitcoin.

Aaron Lammer: Come and get me if you got a problem.

Jay Kang: You ought to kidnap me for …

Aaron Lammer: Better come all the way down to Orlando for my Bitcoin.

Jay Kang: For 0.07 BTC. Please go for it. Yeah.

Aaron Lammer: It’s been a couple weeks. A lot of Bitcoin news, a lot of crypto news. I don’t know if we’re distinguishing those things or what. But should we just try and fire through it, as any of these things as we can?

Jay Kang: Yeah, yeah. There is one thing that really did interest me over the past couple weeks. I think this happened when you were in Spain, which is that there was a Bitcoin bug. It made a lot of crypto news, but it didn’t really make that much of the mainstream news. I have a theory about that, and I wanted to run it by you, like a journalism theory.

Aaron Lammer: I’m interested in your take. I’ll tell you about how I heard about this bug, just before you give me your journalism theory which was, I was walking the Camino Santiago which meant I only had WiFi at the inns. Just as I was leaving at six in the morning and it was dark out, I got a push Twitter thing that was like, “Bug discovered in Bitcoin. Could affect 80%.” I was like, “Ugh, guess I lost all my money. I don’t have the wifi to investigate this any further.”

Jay Kang: Are the people that you were walking the Spanish roads with, were they Bitcoin people?

Aaron Lammer: There was some coiners, and then there was some no-coiners. I will say, yes it did come up a lot.

Jay Kang: Okay. I would think that if I was a no-coiner and I was doing this once in a lifetime trip to walk across parts of Spain, that the last thing I would want to talk about is Bitcoin. It’s like hearing about somebody’s fantasy team if you don’t like sports, I think.

Aaron Lammer: I’ll say this, there’s a lot of free time. You’re walking 100 miles with the same group of people. Bitcoin comes up once every 90 minutes.

Jay Kang: That’s sounds not great.

Jay Kang: The Bitcoin bug was a … Look, if you are really into crypto and you’re listening to this, you already know. But to recap, it was a security flaw that Bitcoin Core was dealing with, that they were just alerted with. The implication of it was that if it wasn’t patched and it wasn’t closed, then anybody could have accessed it, and exploited the vulnerability, and printed as many Bitcoins as they wanted. Instead of hav …

Aaron Lammer: This doesn’t even just affect Bitcoin. This would be pretty much everything that forked itself off of Bitcoin.

Jay Kang: Anything that used the Bitcoin code.

Aaron Lammer: The entire family tree of Bitcoin. I think we could agree that if this were to happen in full, this would be the end on some level.

Jay Kang: It would be the end. Yeah.

Aaron Lammer: More realistically, they would have to wield Bitcoin back, and the whole myth of decentralization would end, and probably the price would crater, and it would be very bad.

Jay Kang: I think it would have bee close to fatal because the one thing that has been keeping to Bitcoin … I think the mystique and the intrigue around is that these types of things don’t happen very much. For the most part it really is seen as being something that hasn’t had any major failures since it launched out of Satoshi’s Caribbean cabana, 10 years ago. This would have been a disaster.

Jay Kang: But let’s go back to my journalism theory, which is that I think the reason why this wasn’t covered that much is because I actually think that crypto … You know how journalism works, which is that these places, whether The Times, or Buzzfeed …

Aaron Lammer: George Soros runs them all..

Jay Kang: Yeah. That’s a global level. I’m talking about the George Soros worker bees.

Aaron Lammer: You’re talking about the local level.

Jay Kang: Yeah, yeah. Amongst the Soros bees, they assign pieces a little bit ahead of schedule. They are trying to anticipate what the market is going to be and where the interest level is gonna be. I think at the point, maybe six months ago, maybe a little bit longer, that a lot of people banked a lot of anti-Bitcoin stories because the media is generally no-coiner media. I think that they are basically releasing those on auto schedule, and they have stopped paying attention to crypto, because the stories that we read in mainstream media outlets, they’re all reported, they’re all pretty good, they’re all negative uniformly, but they don’t feel particularly timely or relevant to this market. I think what’s happened is because there’s so little interest in Bitcoin compared to what there was last year around Christmas time, that people aren’t really paying attention.

Jay Kang: But this should have been a huge story because it wasn’t just the fact that this was a potentially fatal bug. It was that Bitcoin Core revealed itself to be a real centralized power here because they were the ones that had to patch it, they also withheld information from the public after they first announced that there was some sort of problem. They didn’t tell everything how bad the problem was. Then they had to go around and basically go on Reddit, go on Twitter, go in any type of thing and tell anyone who had downloaded the Bitcoin Core software, which is a lot of people, that they have to update it and put in the patch, or else the whole thing can crumble. ’Cause it really only takes one person creating a vulnerability to do something that fucks this whole thing up.

Aaron Lammer: Well, it’s not like one person can individually fuck it up. But if the ecosystem is not thoroughly patched, for the most part, then it’s vulnerable, at least until that patch happens. I think you’re right to say it’s difficult to get everyone to patch things without being a dictator.

Aaron Lammer: This is a problem that is dealt with in the world of iOS software, by being like, “This is a mandatory upgrade. You can no longer use this app until you upgrade it.” It’s actually pretty seamless in situations like that. You just put a hard kill switch and the kill switch says, “I’m no longer gonna connect until this is updated.” This is one of these problems that exists in decentralization land that I seriously thought for a minute, “Maybe this is it.”

Jay Kang: Really? It was that bad.

Aaron Lammer: I feel like there’s a little bit of an element in crypto of not with a bang, but with a whimper where we’ve always said, “If it all goes down in flames it’s not gonna be what we expected.” It’s not gonna be the FBI raiding a bunch of Bitcoin exchanges. It’s probably gonna be something weird and off-brand, like this …

Jay Kang: That nobody knew about.

Aaron Lammer: Yeah, it’s also a little bit of our human nature to imagine operative outcomes, and not simple code based outcomes that this is all pretty uncharted territory. But to their credit, they did fix it. In the same week there was the biggest breach in Facebook history.

Jay Kang: I don’t know, did they fix it? Do we know. I don’t think that we can really fundamentally say that it is definitely fixed given the fact that all this started with some disinformation on their end.

Aaron Lammer: I agree with that. It seems like we’re out of the most dangerous zone around it. I will say also, I was shocked and I’m surprised. I wonder what your take is on this. I fully expected, when I got to the next inn, and I immediately refresh Blockfolio that we were gonna be talking about at least a five or a 10% hit. Just the knowledge that this could happen, even if it wasn’t a full catastrophe, just seemed like it was a pretty bad beat for the market. Nothing happened. No one cared.

Jay Kang: I have a question then. Do you feel like … Are you fully confident that this can’t be replicated? If this was a problem that they didn’t know about, there might be other problems they don’t know about, right?

Aaron Lammer: I think it would be fair to say in the full Rumsfeldian unknown unknowns that there are other problems in Bitcoin that we don’t know about it yet. Yes.

Jay Kang: I would say that is a known unknown. That they’re most likely …

Aaron Lammer: Yeah, exactly. That’s a known unknown.

Aaron Lammer: I think if we had thought hard intellectually about this, we would have said, yes, that these things are looming out there. But think our theme today. Can I set a theme and an intention today for us, Jay?

Jay Kang: Sure.

Aaron Lammer: I think the theme is stability. The final question I want to ask for our final segment today is, is Bitcoin stable? If so or if not, what would stability look like? This event made me think about how if Bitcoin is stable. Let’s say I could guarantee you Bitcoin’s probably gonna be worth, within a fact, up or down a few percent the same next year. Okay, that’s not a terrible thing to imagine, but knowing there might be this land mine sitting out in the water, I don’t know how much I’d want to hang around with stable Bitcoin.

Jay Kang: Yeah, yeah. I mean stable Bitcoin, if we all we think about it is not as you and I being Bitcoin moderates, but also gamblers who have get-rich-quick impulses, stable Bitcoin is not a great get-rich-quick investment. I don’t even know if it’s a good stable investment.

Aaron Lammer: Yeah, it’s clearly not a great get-rich-quick investment if we assume it’s stable. But stable investments are generally okay. A stable investment in the stock market could be a blue chip stock that’s never gonna appreciate rapidly in a year, but is not risky. Bitcoin, even outside of its own stability, is risky.

Jay Kang: Yeah, yeah, yeah. I don’t think that there is any corollary between Bitcoin and any big U.S. corporation that you can invest in. Our blue chip large cap stock, it’s certainly is way more volatile because nobody really knows what’s going on with it.

Jay Kang: I will say that this bug did frighten me a little bit more than I expected, partially because I think that the fact that there are a lot of shit coins that are built, that just basically copy and pasted part of the Bitcoin code. All of those are also vulnerable. Today, about a few hours ago, one of those shit coins was exploited. It was called Pigeoncoin, which I didn’t know existed, but I actually like the name. But somebody within Pigeoncoin printed out 235 million Pigeoncoins using this exploit because of people who were writing Pigeoncoin who may or may not exist anymore, they didn’t patch it up. That is worth about $15,000. I do wonder if these types of vulnerabilities, there must be people who are looking for them, not only in Bitcoin, but also in some of the larger alt-markets as well. I just think it’s gonna keep happening. Everything expanded so quickly. There are so many projects that were not made in good faith. I feel like this type of fraud and this type of hacking is just gonna continue.

Jay Kang: I don’t want to be Mr. Negative because the thing that I’ll say to that is I feel like you should have known that if you wanted to get into crypto.

Aaron Lammer: Yeah, we should have known better.

Jay Kang: But at the same time, I will say that I don’t think it’s disputable that these types things will keep happening. I don’t think that anybody who goes out and says, “We fixed this thing and nothing bad is gonna happen again at this level,” either they’re delusional or they’re lying. It does factor in a lot more risk, especially if it is not counterbalanced by possibility of meteoric Bitcoin now. If you’re a Bitcoin maximus, and you’re in this for the philosophy, or if you’re in it for …

Aaron Lammer: The friends.

Jay Kang: Yeah. Or like the community or any of those things, then you shouldn’t care, because you can see it as a evolving project.

Aaron Lammer: Even if you care about the community, if the whole five years of community you have invested gets wiped out in a bug, at the very least it’s a bummer. At the very least it sucks.

Jay Kang: Yeah, it definitely sucks.

Aaron Lammer: The other thing that it made me think a little bit about is we have this idea of holding your private keys. Where usually if something bad happens, it’s like, “You should have held your private keys. You had your stuff on the exchange.” That’s what happens with these exchange hacks.

Aaron Lammer: What’s happening here is an event that could destroy the value of a coin while you still hold your coins. I think this idea that if you live on a desert entirely meat-based diet island and never deal in anything but Bitcoin, that you’re walled off from the problems of Bitcoin, I don’t really buy that. It’s the same way that Saif Ammous would say, “No one’s immune to Bitcoin. Your currencies gonna sink against Bitcoin.” Simultaneously, no one’s immune to Bitcoin bugs.

Jay Kang: That is true. But that is also saying if you drive around a safety approved Volvo Tank, you can still die. You might as well just drive a motorcycle around. There are differently levels of risks.

Aaron Lammer: No, no, no. What I’m saying is just that there is no walling yourself off from the risk of Bitcoin collapsing.

Jay Kang: Oh, yeah, yeah, yeah. Of course.

Aaron Lammer: A Bitcoin collapse would take down all of crypto. Even the person who’s doing everything perfect is vulnerable. There is no person whose approach to crypto is completely without vulnerabilities.

Aaron Lammer: Did you see this big Facebook hack this week?

Jay Kang: Yeah.

Aaron Lammer: Facebook lost 50 million accounts, the worst breach in Facebook history. It’s a big deal, I guess. Although, for the most part they’re just like, “Sorry, reset your passwords.” If the people …

PART 1 OF 3 ENDS [00:21:04]

Aaron Lammer: Sorry. Reset your passwords. If the people who are trying to protect Facebook can’t do it perfectly, I’m going to assume that Bitcoin Core also can’t do it perfectly. I know they’re different pursuits, but let’s just say people who are excellent at their job, there’s always flaws.

Aaron Lammer: There’s such a different amount of risk when you’re just talking about identifying data about people and their passwords versus their money.

Jay Kang: Yeah. So what are you saying here, Aaron? Are you out? Are you out of Crypto?

Aaron Lammer: I can’t get out now, Jay. We need a little run here. Come on. Come on. All right. Well, speaking of runs, I don’t know if you caught Joe Weisenthal’s article for Bloomerg, but-

Jay Kang: I did.

Aaron Lammer: … he wrote an article about the overlap between the weed boom and the Crypto boom, included a quote from your cohost, truly, over here. So thanks to him for really showing me as an expert in both fields when I am actually not one in either.

Jay Kang: I forget. Did it say host of Coin Talk?

Aaron Lammer: It said, I think, that he hosts podcasts on both topics or something like that.

Jay Kang: Come on, Joe. Get that name in there.

Aaron Lammer: Yeah, I encouraged him to show note it, okay?

Jay Kang: Get the subscribe link in to Bloomberg.

Aaron Lammer: Well, as long as I’m showing, I will say everyone should subscribe to my other podcast, Stoner, which is about creative people and the relationship to marijuana. It actually has nothing to do with weed penny stocks, which is a shame because if it was about weed penny stocks, I probably would have bought some and then went fucking crazy last week.

Aaron Lammer: Jay, were you still in the game at this point? I can’t remember how your weed penny stock bags were holding up.

Jay Kang: I have one weed penny stock that I had a lot of shares in, but not for that much money. But let’s say it was … I don’t know. It wasn’t that much money. But-

Aaron Lammer: Yeah. You maximized the amount of shares you could get for the least amount of money. Is that the hypothesis?

Jay Kang: Yeah, exactly. It was with Ripple. I was like, what can I buy the most of for the-

Aaron Lammer: You like it?

Jay Kang: Yeah.

Aaron Lammer: So far, I like it. So far, I like it.

Jay Kang: It was like Ripple times … Like I would say … I think it was probably, like, 3,000. If you say Ripple was a dollar, it was like each share was 3,000% less than Ripple. That stock went down 96% or something like that while I was holding it, and it did not recover at all. I think the company is probably dead. So I did not hold any weed penny stocks that went crazy, which is too bad because weed penny stocks really were something that I was very interested in, being the speculative person I was.

Aaron Lammer: You were the first person who was trying to get me into weed penny stocks, and I’m sorry I said no, although, as I understand it, and I’ll admit I didn’t follow this run that closely because I didn’t have any skin in the game, but it wasn’t the penny stocks that were really going so crazy. But as the quasi-legitimate Canadian exchange stocks … I think the big one is Tilray, which owns a bunch of subsidiary companies that you’ve probably heard of, I think.

Aaron Lammer: So what do we make of this? What do we make of this big Crypto run followed by a big weed run?

Jay Kang: I think a few things it probably points to. One is that I think that young people are uninterested in investing in traditional ways. I think that there’s many reasons for that. The first is that there are so much more sources of information out there right now, which is a very banal thing to say, but it is true.

Jay Kang: When you and I were growing up, if either of us had had any money in our 20s, which I … I don’t know about you, but I certainly didn’t. I assume you didn’t either.

Aaron Lammer: I didn’t even have a bathroom in my apartment in my 20s.

Jay Kang: Yeah. I barely had a bathroom. I lived in many apartments without a kitchen, though … that if we had had money in, let’s say, 2002, 2003 to invest money that we would have probably been pushed into thinking that a stock like Apple or something like that was very, very risky and that all of our investments would be in stuff like GE, GM, most likely some sort of mutual fund.

Jay Kang: I think that partly was because there wasn’t that … It was similar to TV, how when there weren’t that many channels, everyone just watches the same thing. I think that now that everybody can figure out how to invest in these weird OTC markets that more people are doing so. Same with Crypto; it’s just a lot easier.

Jay Kang: But the other thing is … And I think that this is also a sort of banal point that’s said about young people all the time but also is true, which is that they don’t have any promise of stability at all, and so their impulse, I think, is closer to the impulse that you and I just have because we have a mental illness, but they’re doing it out of necesity.

Aaron Lammer: You’re saying we’re like millennials because we like gambling?

Jay Kang: Yeah. But for millennials, it makes more sense because … You and I, it makes no sense. We have families.

Aaron Lammer: I agree. If I was writing a cultural history of this, I would also say they came of age in the great boom in fantasy sports.

Jay Kang: Yeah, yeah, yeah. For sure. I think that all that sort of … And video games. All this stuff becomes normalized.

Aaron Lammer: Yeah, and video games. Well, as I’ve said, the biggest cultural forces in the world are weed, rap, and video games.

Jay Kang: Sure. I agree with that. Yeah.

Aaron Lammer: Crypto is like their shitty cousin.

Jay Kang: Yeah, who’s kind of related to all of them.

Aaron Lammer: Yeah. The Crypto mining rig sits on top of the slightly broken video game system.

Jay Kang: That’s true. That is true. I just bought … Aaron, I have to admit something. I bought a gaming PC, like a high-end … Not a high-end, but a high-powered gaming PC.

Aaron Lammer: Oh my God. Does it have crazy lights and stuff like that?

Jay Kang: Oh yeah, yeah. My wife is trying to buy a screen for our room because my gaming computer is in our bedroom, and she was like, “I’m going to buy a Japanese screen so I can block off all those stupid lights that are coming out of your computer.”

Aaron Lammer: It does seem like there’s all these weird coincidences and overlaps in the world, like Crypto mining and high-end gaming chips coming of age at the same time and might be competing.

Jay Kang: One goes with the other. But the only reason I mentioned it is because I now have a high-powered GPU that could be employed for crypto money.

Aaron Lammer: Okay. Well, I’m going to say let’s fire that up and at least catch a little background Monero. But here’s what I think about the weed and Crypto. I don’t really know … As I said, while I do host a podcast about weed, it is not about investing. The main thing I told Joe Weisenthal was these Crypto stocks remind me of shit coins because I actually do follow weed brands a little bit. If I go to a dispensary, I kind of know what’s for sale. And the stuff that’s available on the stock market has no relation to the sellable products you can get in legalization states. This is a purely speculative market of people trying to build big medical conglomerates out of thin air. It’s a ton of smoke in mirrors.

Aaron Lammer: The main thing that this run made me think is maybe people got a little bored of Crypto and are moving on to other speculative markets that are also fun. Crypto kind of, for me, invented gamified investing. Or it didn’t invent it; it took it to another step further in terms of just being purely nonsense speculation. But it doesn’t have any sort of a patent on that kind of behavior. That whole shit coin market could just become the weed shit coin market, and no one would blink and nothing would change very much.

Jay Kang: Yeah. Look. If I’m being am empiricist and the type of person who points out that-

Aaron Lammer: Please only bring Socratic logic into this.

Jay Kang: All right. But everything-

Aaron Lammer: I don’t want to hear any relativism at all.

Jay Kang: Okay. Thank you. I would say that speculative investing has been around in America for a long time and that we’ve seen it in both type rooms, etc., etc., etc. But I will say that it generally frustrates me having conversations with people when they do this, where they just point out that there’s something else that is similar in the past and therefore we shouldn’t talk about the new crazy thing that’s happening.

Jay Kang: I think that media people do that a lot because it is a way to sound both knowledgeable and smart. I’m not going to do that to you, even though obviously there were other things. I am going to focus on what I think your point was, which was that it made everything into the realm of the absurd in a way that was far beyond the tech market, that people were literally … You and I, who are … We do have gambling problems, but we were speculating based on logos and stuff like that. People are just buying and selling this stuff like crazy.

Aaron Lammer: I don’t know why we’re talking about this in past tense. I still have Sumokoin. The reason I don’t have any of this weed stuff is because I didn’t get out of shit coins. But it will say, and I think you’ve captured this correctly, that blockchain isn’t that cool. If I can get a similar thrill of gambling on weed or the blockchain, it’s not like all this blockchain stuff is just … It’s so fun to innovate cross-border bank transfers that I just can’t stop being involved in it. You know?

Jay Kang: Exactly. Yeah. No, I agree. Just to take it further, for example, if you could take all these SoundCloud rappers and you could buy shares in them, you get some portion of their future earnings and it’s just speculating, don’t you feel like that would also be a huge market that would be way more fun than Crypto?

Aaron Lammer: I think you joke. You kid with me.

Jay Kang: No, I’m not kidding. I would.

Aaron Lammer: But I think that’s a little bit where we’re going. Let’s look at what this weed thing really is. It’s individual consumers getting really, really early access to a market that could be huge and also could be a total bust. Generally, in American history, everyone else gets a-

Jay Kang: Wait. Why do you think it could be a total bust? I think these stocks most likely will bust, but I don’t think that the market will bust.

Aaron Lammer: Well, here’s what I think, and I am arguing against my own beliefs here. But it’s just like Bitcoin in that the regulatory response is strongly going to define price over the next few years. As long as Jeff Sessions is the attorney general of this country, I believe that weed is not going to achieve its full potential.

Jay Kang: Yeah, but look. It’s not like Crypto.

Aaron Lammer: That said, it’s priced in, and Trump keeps shit-talking Jeff Sessions, and every time he does, I go, “I should just go all-in on weed stocks right now,” because the minute that Jeff Sessions is gone, it’s going to go away up. And I agree with you: it’s probably going to work. But there is a way in which weed doesn’t work. It’s not a 100% hole-in-one; it’s absolutely going to happen.

Jay Kang: Oh, I think it is the closest thing to 100% that some market will exist that will be massive. I mean, people are going to smoke weed, and-

Aaron Lammer: But it’s like Ripple, where it’s already been … The mania has already rallied several times. So it’s not like you’re buying in at no one believes in weed.

Jay Kang: Oh, sure. But-

Aaron Lammer: You’re buying in at pretty deep speculation, particularly if you buy it after that run.

Jay Kang: I’m just comparing it to Crypto.

Aaron Lammer: Okay, yeah.

Jay Kang: There is a decent chance that Bitcoin does not exist in 15 years.

Aaron Lammer: That’s true. Or three.

Jay Kang: There is zero chance that a weed market of some sort does not exist across the world.

Aaron Lammer: No, it’s true. At the end of the day, you can put weed in your pipe and smoke it. The blockchain has no value.

Jay Kang: Wow. I gotta say this is the most negative that I’ve ever heard you on this podcast about Crypto.

Aaron Lammer: I’m just salty about how I missed the weed boom because I was stuck over here in jerk-off shit coin land.

Jay Kang: And you’re blaming Crypto?

Aaron Lammer: Yeah. I blame Crypto for getting my eye off the prize.

Jay Kang: You’re like, “Let me get your shit coin,” like, “Oh my God. If it wasn’t for you guys, I would be rolling in.”

Aaron Lammer: I only have so much dumb money, and clearly I was interested in putting dumb money into weed because I started a podcast on the topic. But it happened to occur during the tail end of a bear market when I couldn’t exit Crypto and still can’t. If I had money, I would put it into weed. I still think that weed’s probably a good buy.

Jay Kang: Should we just do that? Should we just take the rest of both of our Crypto holdings and just buy penny weed stocks and then turn this into a penny weed stock podcast?

Aaron Lammer: I was looking at the Auger odds on Jeff Sessions, and Jeff Sessions is less than 50% to make it to the end of the Trump term.

Jay Kang: That’s his predicted?

Aaron Lammer: Yeah. You can see why, based on the way he’s being treated with the Trump administration. So I feel like this is a 2x potential the minute he resigns for the weed market. I mean, we just saw it go crazy on basically no news.

Jay Kang: I don’t know if that’s going to be a sustained rise because I don’t know how much these markets are stagnating, especially speculatively based on this Jeff Sessions thing because I think what most people assume, and I think correctly, is that Jeff Sessions can’t be the attorney general of America forever. Most likely, he will be less than the next two years.

Jay Kang: So I think that maybe some of the price spike that might happen when he’s gone is probably already baked in because it’s not like this is an intractable situation, like somebody who is pro weed-

Aaron Lammer: It’s possible that that’s true, but I just think, based on the fact that it’s now in the Crypto bull run mania narrative story where people just saw it spike a bunch here, I would expect we have a few more of those to go before we reach whatever the top is. But I think there’s an argument, so let’s talk about this: should we just split the difference and be buying pot coin or whatever?

Jay Kang: Definitely not. One thing I would say is that I think if you and I just wanted to keep the same speculative risk that you shouldn’t just think, “Hey, I’m way too deep into Crypto and it’s too down for me to sell it.” Some of these coins, there is no chance that they’re going to recover, and if you are down 80% and you have $2 from 10 left, it’s better to put that $2 into penny weed stocks … And this is terrible advice, by the way, not investment advice.

Aaron Lammer: Well, but I’m not really holding that many of my worst bags. I’m basically just sitting here waiting for Bitcoin and Ethereum to recover, mostly Ethereum. If I see Ethereum, $500, I’m happy.

Jay Kang: Do you think that’s going to happen?

Aaron Lammer: I do think that’s going to happen in the next year.

Jay Kang: That would be double from here, right?

Aaron Lammer: In the next year, I expect that to happen.

Jay Kang: Okay. I’m going to bet that it won’t happen.

Aaron Lammer: I mean, it’s going to happen or Ethereum’s dead. Ethereum has got to recover to some extent.

Jay Kang: Why does it have to go to 500? That-

Aaron Lammer: 500 would still be flat for the last six months or something. Let’s talk a little about that. Let’s actually … I was just poking around at Bitcoin, some Bitcoin charts here. What do you think Bitcoin has done over the last three months?

Jay Kang: The last three months? I don’t know. It went up to-

Aaron Lammer: -3% over the last three months.

Jay Kang: Yeah, but it went up and went down, and went up and went down. It never-

Aaron Lammer: No, no, this is serving my point. Over the last six months, it’s -7%. If you ignore the rollercoaster that’s happening to produce that, everyone previously was saying, “Well, maybe I’ll buy some Bitcoin when it’s stable. How could anyone possibly invest in this while it’s so volatile?” If not this, what would stable Bitcoin really look like? Is this stable Bitcoin we’re talking about?

Aaron Lammer: My argument for Ethereum, why I do think we will see $500, is simply that that would just be Ethereum recovering some of its ground against Bitcoin while Bitcoin has been relatively flat. So I would think that Ethereum eventually has to make a move here or become a more obscure coin, whereas Bitcoin … This has not really happened before, at least in the run of this show, where we’re talking … Like I was just listening to an old episode, and the price was within $20 of the price right now.

Jay Kang: Yeah, but first of all, it has happened in Bitcoin historically, right? Like their one-and-a-half-year-long bear markets.

Aaron Lammer: Yeah. There were some protracted flat periods. Yeah.

Jay Kang: Yeah. So I don’t really think that your logic is particularly sound, Aaron. I don’t think that Ethereum has to gain back against Bitcoin here. It just seems like it could just go down, or it could just stay here. Those are also two options.

Aaron Lammer: What has fundamentally changed about Bitcoin and Ethereum, I guess, would be my question. How has the situation materially changed?

Jay Kang: Well, the whole thing was based on speculation and frenzy, the bull run. And that’s all gone now. So that is a fundamental change.

Aaron Lammer: Right, but does that explain a shift between Bitcoin and Ethereum that Ethereum would lose a third to half of its value against Bitcoin, I guess, would be my question.

Jay Kang: Oh, sure. Of course. Yeah, because I think that part of the Ethereum speculation was based on the fact that people were bored with Bitcoin but also because I think there was a narrative out there amongst retail investors, which is best exemplified by the fact that … Like I was out late one night, and I’m never out late, but I was around NYU talking to a friend. We were talking about Bitcoin, and this drunk NYU dude walks by and is like, “No, dude. Ethereum.”

Aaron Lammer: There was a lot of that. I like how you’re Thomas Friedman. Thomas Friedman talks to the cab driver. You talk to the dude drunk buying a piece of pizza.

Jay Kang: Yeah, NYU bro. Exactly. The only bravado I had in my entire journalistic career is talking to drunk NYU bros. That’s basically my-

Aaron Lammer: Okay. Let me reframe the question, then. If you don’t think this is stability, what would stability look like? We talk about Bitcoin reaching the second stage eventually-

Jay Kang: No, no, no. I agree with you. I think that this is relative stability, but I don’t think that the stability is meaningful because I don’t think that it has proven itself to be something like old General Motors stock or Philip Morris or whatever, like RJR Nabisco, where these are massive blue-chip companies where the stock itself is … There’s the assumption that it’s always going to appreciate, even if it appreciates slowly. You’ve read Barbarians at the Gate, right?

Aaron Lammer: Yeah, yeah, yeah. Well, the way I look at it is I think we’ve established something of a floor. Obviously, I could be wrong, but listen to our last episode, which myself and Mike Novogratz collectively, without actually.. calling a bottom, but … It’s always safe to call a bottom. That’s like me saying I’m not going to eat anymore tonight. Then it’s like, I’m calling a moratorium not eating, but not the moratorium not eating.

Jay Kang: That’s true.

Aaron Lammer: And I still might eat more. So we’ve got this bottom under us, and it also seems like we’ve exhausted the interest in menial-type buying. There doesn’t seem to be a huge swell of people who are like, “I’ll buy Bitcoin at any price.” We have none of that feeling we had before where it was like, “If you don’t buy it now, it’s probably going to be double next month.”

Jay Kang: Oh yeah. Nothing like that.

Aaron Lammer: Does anyone think that?

PART 2 OF 3 ENDS [00:42:04]

Aaron Lammer: If you don’t buy it now it’s probably going to be double next month. Does anyone think that right now?

Jay Kang: Good Lord, no.

Aaron Lammer: So it almost feels like one of those situations like, did you play chess?

Jay Kang: No.

Aaron Lammer: It feels like a little like one of those situations where it’s like easy to defend but it’s very hard to attack. Like there isn’t an easy way out of this price that I see. Which is kind of a weird pants on backwards way to achieve stability.

Jay Kang: But it also could go down, Aaron, you know?

Aaron Lammer: I could. I thought it would when a massive bug was discovered. I thought a piece of bad news would be the thing that would really cause that floor to be tested. What did you think?

Jay Kang: I don’t know at this point what would cause the price to go up or down. But it does seem like I agree with you in the sense that it is hard to envision a scenario in which it moonshots again in the near future. Because in our basement tapes, but also in the first episodes that we were taping, we would go through Twitter, we would go through Reddit, we would talk to, not talk to, but we would read more mainstream economists and people who were bullish on bitcoin. And every single one of them had a scenario as to why this thing was going to be the entire future, whether it was block chain technology or whether it was just bitcoin speculation.

Aaron Lammer: And very few of those narratives have actually been invalidated at this point.

Jay Kang: No I agree with that. But I would say that it is harder to see them becoming eminent. You know there was a time when I could envision that a country’s failing economy, if it was a catastrophic failure, that it would be propped up in some significant part by bitcoin. Now that could still happen, but I don’t think that it is the go to move that a lot of people used to think it was, if that makes sense. I think people are much more wary about it.

Aaron Lammer: I 100% agree with you. Look, there’s only two types of people who can buy bitcoin. The only way the price can go up is if people buy it. And that’s either institutional buyers or individual, we’ll call them retail buyers. And I think you and I both would agree, we don’t really understand institutional buyers very well.

Jay Kang: Yeah, that’s part of our problem.

Aaron Lammer: That’s part of our problem. Well I think that’s part of everyone’s problem, it’s a black hole. And clearly the institutional buyers are not piling on and buying because the price is flat to slightly down over the last six months.

Jay Kang: Sure.

Aaron Lammer: So I don’t know what the hell’s going on over there. But when I look at the retail buyers, who are the ones I can understand because that’s me and you, right? The Jays and Aarons of the world. Either you bought in before the bull run and subsequent crash, in which case your position’s probably pretty good right now but I don’t see why you’d really want to be piling on it right now. Like your original position’s probably better. Everyone would know this except me, the person who thought you should pile on a position above $10,000. But everyone else would know that’s stupid. Or you bought during that massive up swing, in which case you’re probably fucked and if you’re lucky, you bought around where we are now at $6,500. More likely you bought above that and are now under water. You’re definitely not buying anymore bitcoin.

Aaron Lammer: Or you’re someone who came in after this whole thing. But I feel like if you’re that person, you’re sitting there going, “Is this a good time to buy?” And no one’s telling you it’s a good time to buy anymore. I don’t see those people on Reddit who are like, “You have to buy now.”

Jay Kang: Yeah, no I agree and I think that the number of people who are coming to bitcoin now, it’s probably pretty small.

Aaron Lammer: Yeah. And they’re choosing like, “Should I do this or just buy some weed stocks? Or just some weed?”

Jay Kang: I think buying weed stocks at this point is probably way more fun and speculative and hopeful. So I think …

Aaron Lammer: I liked your tokenized sound cloud rapper thing though. Let’s keep an eye out for that. Because I think the idea that people just want to invest in whatever they think is going to appreciate is there and if anything maybe the crypto era gave people that bug that they could make small investments in whatever it was. And once you’ve got hat bug, I could see going a lot beyond blockchain investing with it.

Jay Kang: Yeah I mean micro investing is a thing, right? And it’s not as much of a thing as it was before but you know …

Aaron Lammer: Well it’s legally dubious. I mean the American government would prefer people who are not accredited not do that. So like everything else in crypto, the real innovation is doing something that would otherwise be illegal.

Jay Kang: I don’t know, but I do think that that type of model is definitely catching on. I mean you can argue that it’ll fail eventually but people, even in our field, are moving to Patrion with some success. I mean I subscribe to a couple of Patrions now, which I never thought I would do.

Aaron Lammer: I got a nice note from our friend, nocoinerpatient0, Adrian Chen, he’s got a newsletter over there on substack, which is a subscription newsletter service so everyone go subscribe to that.

Jay Kang: Okay. He didn’t tell me. I talked to Adrian the other day.

Aaron Lammer: We got to get him back on the show here to spread his lies. I feel like Adrian could rejump start the market because usually when he starts talking shit about bitcoin the bulls awaken.

Jay Kang: That’s true. We should get him an off head at the time so he can write another bitcoin article.

Aaron Lammer: Yeah. That’s what I’m talking about. But this whole idea that you can buy into whatever it is that you believe in or you think is gonna appreciate, it suggests this future in which you could have a portfolio that’s like bitcoin and like housing in Northwestern Philadelphia and this rapper. You have a little bit of each of those markets.

Jay Kang: Yeah, that sounds way more fun. It sounds way more fun.

Aaron Lammer: I think so too. And maybe that’s the ultimate goal. Maybe that’s where the blockchain and all this token stuff should go. Instead of tokenizing things that are obviously nonsense, if you tokenized real estate in some American city that I thought was going to come back up, Detroit real estate, I’d be a little interested in that if I thought it was all right.

Jay Kang: Some people have tried to do things like that. Like some of the ICOs were about buying shares and artists and stuff like that. But it was all nonsense. I mean, can you imagine like five years ago if you had bought an ETF of all teenage white rappers with face tattoos? You would be so rich right now and it would be so fun. Every song that came out would be amazing. You’d be like, “I’m making more money on my face tattoo, white teenage ETF.” I don’t know, I’m for this but I mean, I don’t know if the blockchain is really necessary for this either.

Aaron Lammer: Okay, can I talk about, to tie this show up I want to talk about two sponsored Instagram posts that came through my feed today. Okay?

Jay Kang: Okay. Tell me.

Aaron Lammer: The first one was for a car company called Fair in which you can buy a car, or I guess lease a car, but instead of a three year obligation, whatever, you just pay the month.

Jay Kang: Oh yeah, they have that and that must be like an app based version for some stuff that people do in LA on CraigsList.

Aaron Lammer: Yeah. So it’s like you use it until you’re done with it and they’re like, “We have enough people that we can just recirculate this. We have the proper liquidity in the car market to just keep this whole thing running.”

Jay Kang: Yeah that’s a smart idea.

Aaron Lammer: It’s a smart idea and it suggests that the missing ingredient, which I guess is the app and the large pool of people, that once you do that, you can start moving seamlessly in that way. And that does remind me a little of the token conversation we’re having. Which is some of these things can be made more efficient through things like group ownership and massively dividable expense and benefit. And you