Aug. 10, 2022
CD72: Privacy in Adversarial Environments with Tony and @sethforprivacy
EPISODE: 72
BLOCK: 748880
PRICE: 4242 sats per dollar
TOPICS: sanctions on ethereum privacy tool Tornado Cash, lessons learned, moving forward
https://citadeldispatch.com/cd72
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06:04 - Ethereum privacy tool Tornado Cash sanctioned by US Treasury
22:45 - Implications of the sanctions on privacy tools
39:55 - Differences between Ethereum and Bitcoin in terms of privacy
01:42:01 - Lessons for Bitcoin and Monero stakeholders
01:48:15 - Sanctions on tools as a sign of their effectiveness
01:49:17 - Possibility of future sanctions on Monero
01:51:12 - Comparison of Monero and Ethereum in adversarial environments
WEBVTT
NOTE
Transcription provided by Podhome.fm
Created: 3/17/2024 4:23:56 PM
Duration: 7483.69
Channels: 1
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Happy Bitcoin Wednesday, freaks. It's your boy Odell here for another Citadel dispatch.
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I know it's been a few weeks.
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Apologize for that. I have been on the road.
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I did bring my podcasting equipment with me,
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but
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the opportunity never presented itself to have a nice in person conversation.
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I hope you freaks have been enjoying
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the Bitcoin review episodes I've been doing with Justin Moon and MBK that are on the feed.
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It seems like we've gotten a lot of good feedback on those.
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So, fortunately, I did get a bunch of those out,
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over these last few weeks, but it's good to be back with you all for another proper dispatch.
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So dispatch
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is a live interactive show
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focused on Bitcoin and Freedom Tech.
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It is supported by you guys. No ads, no sponsors,
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100%
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audience funded,
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and I really appreciate you all for continuing to support the show.
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The easiest way to support the show
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is to subscribe on your favorite podcast app by searching searching Cielo Dispatch,
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or we have a new YouTube channel. You shouldn't use YouTube. You shouldn't use Google products, but
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a lot of freaks have told me that they want it on YouTube.
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So I put it on YouTube.
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If you use YouTube, consider subscribing there. That does help.
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Supposedly, I cannot get
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a custom
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channel name until I have a 1000 people
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subscribed on YouTube. So
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if you like YouTube, you can be part of that change.
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Also, this show runs on sets. Gotta pay the rent. Gotta pay for these mics.
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So I appreciate all the support you guys give me in terms of that. The easiest way to support the show with Sats
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is sidleldispatch.com.
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We have a BTC pay server instance there. You can pay with Lightning or on chain.
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You can also support the show via PayNIM. My PayNIM is Odell. Very easy to remember.
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PayNIMs are supported on both Samura
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Wallet and Sparrow Wallet.
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And, finally,
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a lot of freaks have been enjoying podcasting 2.0. You can support the show via various podcasting 2.0 apps,
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such as Fountain Podcasts,
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Breeze Wallet,
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and Podverse dot f m. So if you're doing that, thank you again for doing that.
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Supporting the show in podcasting 2.0 is as simple as searching Ciel dispatch in your favorite podcasting 2.0 app, pressing the subscribe button, choosing how many sats per minute you think dispatch is worth it to you. And then as you listen, it automatically stream sats from your lightning wallet to my lightning wallet.
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It's pretty cool. I get to see the flow
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as that is happening.
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You can also do something called a boostogram.
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Boostograms
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allow you to attach a message to a single payment of sats.
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And as is tradition, I read
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the top 4 boosts from the previous episode. We have Kobe with 10,000 sats saying great show. Keep it technical freaks. Fiat price is a distraction.
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We have letter 6173
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with 7,700
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177 SATs saying, you have saved lives with such great content. Thank you for all the years.
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We have Proboost
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at 5,000 SATs saying lorem ipsum satoshi dim sum.
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I think you got a kick out of that one.
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Then we have John Bea with 4,444
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sats. This was a fantastic episode, super in-depth and entertaining as hell. Payments is a really complex challenge, and the more educated and informed the end user is, the better. I think the best way to educate users is through the wallet interface,
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like how Sparrow Wallet displays the visualization of inputs and outputs. This is what separates Bitcoin only wallets from other multi coin wallets. It just need to find the right balance of informing the user without overwhelming them with too much info.
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Reminder that if you do a boost or stream SaaS through podcasting 2.0,
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your SaaS also go directly to open source projects
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that are awesome that are being worked on by teams,
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based on donations. You got raspi Raspberry Blitz, Robosats,
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Seed Signer, Sparrow Wallet, and Zeus.
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So if you support dispatch, you support those shows at the same time, which is pretty fucking cool.
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Last but not least, before we get started, sorry for the slightly longer intro than usual.
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A little bit rusty here.
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Shout out to all the freaks who continue to join our live chats while we broadcast. So if you subscribe on YouTube or Twitch, you'll get notified
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when we go live. If you open up those streams,
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your live comments show up on sale dispatch.
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They're not censored. There's probably some kind of algorithm that stops some of your comments from coming through, but I don't block any comments from coming through.
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And it's a key aspect of this conversation.
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So you're able to be a part of the conversation. We're able to answer your questions. We're able to react to your comments.
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If you don't want to use a tech platform,
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we have a matrix chat available,
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which has great conversation. We have over a 1000 Bitcorners in there right now. Great conversation
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on a daily basis even when the show isn't live. You can find a link to that at sidildispatch.com
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by clicking the sidildot chat button.
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Okay, guys. Anyway,
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with all that said, we're gonna keep today's rip very tight.
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Kinda happened last minute, so I wanna thank our guests for joining us.
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A lot of things have gone on this last week, particularly in the privacy world.
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We had the the the major news was we had this Ethereum privacy tool called Tornado Cash,
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was sanctioned by the US Treasury,
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and
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all Americans or anyone who lives in a country that honors American sanctions
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are forbidden from using it as a result.
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Their GitHub account
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was pulled.
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The lead devs,
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big, GitHub accounts were pulled.
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The website appears to have been seized. The website front end appears to be seized,
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and
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a a bunch of other things have gone down, which we will get into. So, anyway, we have 2 return guests here. We have Tony. What's going on, Tony?
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Sup, guys? Happy to be here. And we have Seth for privacy here. How's it going, Seth?
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Hey, Matt. Thanks for having me back on, man. Lots of lots of interesting stuff to talk about today.
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Thank you, guys, for join I literally messaged them both this morning.
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We have a I have a massive
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Bitcoin meetup, in a few hours.
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And this morning, I woke up, and I was like, I would like to talk to Tony and Seth
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about all this news. So once again, huge shout out to them for joining us. I think before we get started,
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it's it's important to say that first and foremost,
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nobody in this conversation is advocating for people
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to evade sanctions.
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You should follow all applicable laws in your country.
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Okay. So where do you guys wanna start after that?
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No. That's that's kind of it. That's the show, guys.
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Follow.
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Follow, subscribe.
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See you later.
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I don't I don't know. I mean, at at least maybe just a little bit of a summary for maybe the guy in the coma that just woke up.
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You know, what's interesting, Tornado Cash,
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this sort of, like, privacy
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tool on Ethereum,
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a smart contract
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that basically allows people to have some privacy, to achieve some privacy,
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sort of like,
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and I don't know how it technically operates, to be honest, but you can kind of, you know, say it's some sort of
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of,
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you know,
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I'm gonna say CoinJoin, but, you know, it's not actually coins that's going on here.
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Ethereum operates on know, the privacy tool. I I know. But, you know, the whole purpose of it is to achieve privacy. Right? And there's nothing wrong with trying to achieve privacy, especially,
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you know, there's a lot of legitimate uses of it. You know? There's a lot of legal uses of it. Like, people have the right to achieve privacy.
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So that that said,
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the the United States made the argument
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that,
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North Korea is using this tool
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on Ethereum,
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and it got sanctioned. And so,
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yeah, I I,
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I'm
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conflicted on this for, like, many reasons.
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Like, you know, how for 1, how centralized
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is Ethereum anyways? So, like, is this just akin to saying it's in the, you know, a centralized mixer?
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And and Ben Carmen's in the chat saying it is a centralized mixer but hosted on Ethereum rather
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than a server. And that's where I'm kind of gonna agree with on on him. If I'm There's 2 there's 2 terms here. Look. If we're gonna provide context, we need to provide clear context, I think.
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And I I I I think all 3 of us are not, you know, necessarily that familiar with,
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you know, how the e the the Ethereum ecosystem works. I think I'm I'm I'm pretty familiar with Tornado Cash if you want me to give a quick intro as to what it is and how it works. Yeah. That would be great. But before we do that, there's there's 2 key terms that I think we're gonna keep coming to,
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and that's centralized and custodial.
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Centralized
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is, obviously, you have a centralized entity that is involved in the process.
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Custodial, on the other hand,
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is also, obviously,
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is a subset of centralized or central yeah. It's a subset of centralized,
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but
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it takes it a step further, and that centralized entity also has custody of your funds and can take your money. My basic understanding of Tornado Cash is Tornado Cash
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is not a custodial mixer,
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but it is centralized.
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And with that,
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Seth, you can either disagree with that premise or just give us better context in general.
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Yeah. I think I think you're really close.
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I know that there's a lot of Ethereum hate, obviously. There are lots of good reasons for that,
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but I I certainly would argue that it's a decentralized, non custodial, privacy tool. It's not a mixer, so people can think of it more like Zcash on Ethereum. It uses essentially the same technology, something called zk SNARKS, to hide amounts
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and to hide the input in any given transaction so that within
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within Tornado Cash, in each denomination in the old smart contract, so, like, point one ETH,
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any output
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could have been any of the inputs in the pool,
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of all time.
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And in the new smart contracts that they have, it's also not fixed denominations, so any output could be any input at any point in time. So you gain strong input hiding and amount hiding within that smart contract.
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And it's decentralized in the sense that it runs on Ethereum. The creators of the smart contract have no control over it. They cannot edit it. They cannot roll it back.
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They can't stop it. And I think, we can get into that more, but I think that's a big reason why
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sanctions was the route taken here instead of legal action against the actual creators of the project of Tornado Cash.
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But I would argue that it's a decentralized non custodial privacy tool, because Tornado Cash also obviously never gains custody of funds. Essentially, when you use Tornado Cash,
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you send an Ethereum, you get a a private note, which is essentially a private key
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to that specific,
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input, and then you can use that private note to claim
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that input at any point in the future.
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So the general flow is you deposit funds, you wait for some amount of time, and you withdraw funds to a different address.
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There are a lot of problems with that, and most people using Tornado Cash have shot themselves in the foot and ruined their privacy by going back to an old address or linking
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their old account to the new account together at some point in the future. There's lots of ways that can go wrong, but I think it is a at least in the way that Ethereum is theoretically decentralized,
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This is theoretically decentralized.
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And and I think it's it may be a good
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showing that it is decentralized, that the US government has not shut down the smart contract, and it's not The smart contract's still going. Mhmm.
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The the front end is down,
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and the GitHub centralized GitHub repo's been
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pulled, but the smart contract's still going.
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Yep. And the the other latest censorship is that,
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the the main API
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providers within Ethereum, since most people and most services don't run their own Ethereum nodes,
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like Infura I can't remember the name of the other one, but Infura specifically. Alchemy. Yeah. Both of them are preventing the use of their API with the Tornado Cash smart contract.
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So even though the smart contract is there, it's getting harder and harder for people to actually access it unless they run their own Ethereum node, which, as we all know, almost no one runs an Ethereum node.
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So
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so the
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right. Right. So so that means the the actual end users have to run a node? I was a little bit confused on on that aspect of,
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apparently, there's, like, some kind of nuance there that if you
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it's, like, the specific
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tornado cache Infura nodes are down,
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but not
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if you use a separate Infura node or something. So if you're using a wallet that uses the Infura API set or if you're trying to use Infura directly, you can't interact with the Tornado controller. Okay. So that's what I thought. Mhmm.
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Okay. So, I mean, that just goes we there's a lot of an an it's a lot to unpack here, but that obviously goes back to why it's so important that users can easily and cheaply run their and use their own nodes
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rather than relying on large,
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companies that are hosting them on corporate cloud servers.
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Just to go back
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I'm trying to figure out the best way to do this. Just to go back,
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you made the claim that it's at least theoretically decentralized.
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I think everyone agrees it's noncustodial.
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The there's no, like, admin keys or anything that you know of that can just shut down the whole thing?
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Not that I know of. From my understanding, the way Tornado Cash was deployed, once it was deployed, they have no control over the smart contracts. Okay. So they did it the right way. Yeah. A lot of a lot of smart contracts on Ethereum always have, like, this upgrade path where, like, the admins can kinda get in there and change the code, but,
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sounds like that's not the case this time.
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Okay. So
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and
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then we have the okay. So so the reason why the custodial thing is important let's start with that. The reason the reason the custodial thing is important is because there's very established precedent,
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that the US government specifically believes that custodial mixers are,
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criminal in nature.
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We've had multiple custodial mixers get shut down.
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We've had Helix.
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The
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guy the main guy got arrested over it.
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He's in jail right now.
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He's actually not in jail. He works for the feds now. Nope. Yeah. He works for the feds now.
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Wow. Mhmm. What was his name again? Larry Dean Harmon. Harmon. Larry Dean Harmon. Yeah. Oh, is it Larry Harmon?
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Yeah. It's I think his full name is Larry Dean Harmon. Some people refer to him as Dean. Some as Larry. But, yeah, he, he took a plea deal
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and is now a CIA for the FBI.
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Wow.
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Okay. Did not know that. And he also ran some custodial lightning wallet that got rug pulled in that case, but that's besides the point.
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I guess blender.i0,
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did not get shut down, but they got sanctioned. Right?
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Mhmm.
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But, anyway, these custodial mixers
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have historically there's precedent been set that they're treated as criminal entities.
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I don't know of any cases where users
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specifically
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have been
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had cases brought against them, but the operators have.
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And so
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since
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those since those situations have happened, and and it's important to keep in mind that in Bitcoin land to and we're gonna keep bringing this back to Bitcoin
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and maybe Monero a little bit.
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In Bitcoin land, we've had custodial mixers since almost the very beginning. Like, the first iteration of Silk Road had a custodial mixer built into it.
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That was the main way people used to achieve better privacy on Bitcoin.
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And not only was it a regulatory point of failure, but, obviously,
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you have to trust,
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the entity running the custodial mixer
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with,
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not only your funds, you have to hope they don't rug pull you, but you also have to trust them with your privacy.
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And as a result, what you saw a lot of times with people using custodial mixers is that they would basically daisy chain them and go between multiple different custodial mixers.
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So since then,
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in Bitcoin land, we've had
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2 main centralized coin join protocols,
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get developed.
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1 is Whirlpool, and then the other one is Wasabi.
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And both of those,
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they're
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the actual protocols are very different, but the the key similarities, they both rely on this blinded centralized coordinator, where the coordinator
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is not able to link the inputs and the outputs, so they're not able to
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directly compromise your privacy,
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and they don't actually take custody of your funds.
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They just construct a collaborative Bitcoin transaction between the participants, and they're there to to help you construct that transaction's
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communication
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method.
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Now when I said they can't necessarily take away your privacy,
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both those systems have civil
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resistant mechanisms.
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The civil idea is if you flood
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in a non anonymity set with a bunch of your inputs
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to see you know, try and break down,
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you know, with a decent amount of probability process of elimination what the other UTXOs are.
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And both of these setups in a low fee Bitcoin environment, which is what we've been seeing as you can see on screen if you're watching,
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Wiz's mempool is showing,
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one sapper byte confirms in the next block,
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there's no civil resistance
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from the coordinator. So, presumably, if the coordinator wanted to be an active attacker, they
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could,
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compromise your privacy. But by by design, the way it's set up is if they're not actively attacking you, if they're not a malicious entity,
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they can't link your inputs and outputs, and they can't steal your funds.
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Now this is the first case that I've
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that I'm aware of where a non custodial
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privacy tool
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that is essentially just code running on Ethereum
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has been sanctioned,
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which is a big step. That's a big,
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leap that we've seen from the US Treasury. Right?
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Yeah. I think we've we've seen this continued crackdown on privacy tools on cryptocurrency,
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but like you mentioned,
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the easy ones to go after legally have been the custodial centralized mixers, because it's it's a person or central entity running this thing. They custody all funds, so it's very easy to hit them with money laundering,
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charges. And there there are a lot of easy ways to bring
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legal action against them. And I think you that's why we've seen things like Helix not be sanctioned,
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because they could just go after the operator, force them to comply,
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and bring all of these charges against them. But the the big change here is, like, they've gone from things like Helix, which are completely centralized and custodial.
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They sanctioned blender.io,
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which I think they sanctioned that rather than other legal action because it's most likely run out of Russia, so they don't have the legal jurisdiction to shut it down,
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but, obviously, want to prevent people from using it.
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And then now, like you mentioned, the the big change is this this kind of brings a lot of other privacy tools into the sites of the US government,
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because
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the thought process, I think, for many people was,
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if the thing is open source, if the thing is decentralized, if the thing is noncustodial,
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there's not a legal case to be brought against the tool because you're not actively facilitating anything. You have no control over who specifically is using your tool.
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So in theory, you couldn't be,
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like, under the gun for KYC AML laws or money laundering or Banking Secrecy Act or all of these things that are normally brought against,
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centralized mixers and happened in the past.
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Obviously, with Tornado Cash, this is a, at least, theoretically, decentralized,
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noncustodial
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privacy tool that that that Tornado Cash people have no ability to
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not only see who's using it, but to prevent anyone from using it, to control who uses it, or to to shut it down. So there's a there's a big difference here. And not only, like you mentioned at the beginning of the show, did they
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sanction the specific tool and the usage of that tool, but they went after the code and everyone who wrote the code as well, which is another massive leap because it's not just the people who are operating something and making money off of the service, but it's also just open source contributors who contributed on GitHub or getting their accounts
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shut down or suspended. Like you said, all GitHub repos are shut down. So there's a there's a
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a massive set of precedents
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being set here
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that could have broad implications for
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other privacy tools on Bitcoin
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and other cryptocurrencies. I mean, even something like a samurai wallet, in theory, could fall under sanctions if Tornado Cash could.
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Obviously,
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they have a lot of things in place where they're they think that they're prepared for that, and they have a kind of a plan. But,
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it it, I think, should bring into question this idea of app level privacy and how tenable that will be in severe
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adversarial
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environments like we we obviously are entering now. Like, I I think since the Freedom Convoy,
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this is the biggest piece of news in the cryptocurrency privacy space, and should be shaking everybody up and forcing a lot of really good conversations right now. And I think, thankfully, it does seem to be doing that.
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Yeah. I'd just like to add on here that, like, you know, I think you guys have brought it up, but, like, the idea is that, like, sanctions are basically the last thing
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that they can sort of do to quote, unquote,
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not stop it, but limit it, in any way. So, you know, instead of thinking of it as, like, they're going after
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the creators, they're really just trying to make it illegal to interact
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with,
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a a person or a service or a website or or things in that nature. Like, as an American citizen,
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they're just deeming it illegal to interact with it as an American business or anyone following United States sanction laws. They're making that illegal to assist in any way. So, I mean, GitHub has,
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you know, shut down,
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GitHub accounts and code that has been created by,
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Iranian ir Iranian coders before. Like, it's not a new thing of GitHub shutting down the accounts, and it's not necessarily,
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the, you know, it's not necessarily saying that anyone did anything wrong, that those accounts have,
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done any criminal or legal behavior. Right? Like, I don't like, they can't really go after
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or they don't seem to have gone after the creators for doing anything illegal.
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It's just like they're trying to make it now illegal to interact
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with it, and that's about, it seems as though, that's about as far as they can go. But it's a big sweeping measure. Like, anyone in the United States interacting with it, they're now facing up to, like, 30 years of jail time. Right?
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So it's a it's a very big serious thing for anyone
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that has been using it or has used it or continues to use it,
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but it's it's kind of an interesting dilemma. I think you guys are right. Like, this is basically all that they can do,
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under the assumption that Ethereum is sufficiently
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decentralized enough.
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I mean, I will
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I will echo the sentiment
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of Seth that, you know, I think this should be
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making people think and have conversations, and
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it seems
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it gets at least from a
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I've long held that, like, my optimistic case,
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for people caring about privacy is that people get burned. And as they get burned,
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they learn by essentially touching the stove. And it does kinda seem like this is what's happening in this situation,
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maybe even more so than the freedom convoy. In the freedom convoy, I was a little bit,
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disappointed how quickly everyone just forgot about any kind of lessons that could be learned, from that government action.
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I will say that one of the most
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dirty aspects of using
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sanctions as a tool here,
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is it does have a massive chilling effect. Most people will not wanna talk about these kind of things publicly
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As some of these listen as some of our listeners probably have already noticed,
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the 3 of us are well, Seth actually speaks quite eloquently and carefully, but me and Tony are pretty
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frank about how we speak, and and on this topic, you know, we are clearly watching our words.
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There was,
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that one Ethereum developer,
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Virgil,
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who got charged with sanctions violations
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for giving a speech. Now he did go to North Korea to give the speech.
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He went he literally went to a sanctioned country and
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gave them a speech about how to circumvent sanctions.
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So, I mean, that's not, like, the most crazy case, but it's a perfect example,
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that people that do talk about these things,
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do put themselves in enhanced legal risk, which is a very dirty element of the whole thing. I would also say
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that I strongly believe that code is speech
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and is protected by the first amendment,
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and I believe that financial privacy
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is protected by the 4th amendment.
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I do not think that we can rely on our
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legal protections. Otherwise, none of this would be necessary in the first place, but it is an important aspect to keep in mind here.
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Seth mentioned
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Samura Wallet.
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Samurai wallet did release something on Telegram
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talking about how they're thinking about this.
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There's a lot to unpack here.
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We We are gonna try and keep this episode as tight as possible.
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He goes, there isn't a starting point address to sanction Whirlpool.
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The addresses all belong to users, so they would need to go after either software distribution or end users.
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Our domain, they have others.
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See how Pirate Bay handled their domain seizures over the last decades.
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GitHub,
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they have a self hosted GitLab on their own hardware and a very strong privacy preserving jurisdiction that has a history of telling the US to get stuffed when they attempt to see servers,
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and they have backups and can deploy to a new server
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almost instantly.
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He goes on to say he
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$7,000,000,000
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worth, so they were significantly larger than any of these Bitcoin privacy tools.
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But a UTXO model is far superior than an account model.
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3rd, code is protected speech. This is a long established precedent, thanks to the original cyberpunks who fought this battle decades ago.
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It should be evident to anyone watching that we have been thinking about these possibilities for a long time. It is why we migrated away from GitHub years ago. It's why we rely on as few third party services as possible. It is why we set up in jurisdictions that have a history of protecting privacy.
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We do not bury our head in the sand hoping everything works out. We take proactive steps as early as possible.
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I'll end with a promise. If some aspect of our software were to be sanctioned by the US, we would fight that tooth and nail. We have a legal team on retainer ready to go. We'd rather put that money into development, but if it needs to be done,
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it needs to be done. So that was Samura wallet,
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statement on this, situation.
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Any thoughts there?
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There's a lot to unpack there.
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Yeah. I,
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you know, I I definitely
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you know, it is a little bit of a different situation,
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which is a good thing. I'm I'm pretty confident in
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the abilities to, like, kinda mitigate,
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you know, some of these denials, like like them hosting their own GitLab and and having failover safes and and stuff like that. And I will say, like, you know, at at at the end of the day, there is a
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point of contact that there is,
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to have with some of the Whirlpool servers.
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I'm sure they have failovers and redundancy and things like that, but there so there is, though,
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you know, a potential
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target point. Even if it's distributed, even if they're able to, like, you know, as as had have as much redundancy as possible, there is still
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opportunities to go after them.
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And I think, like, you know, when we talk about,
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you know, code is is free speech,
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Ideally,
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there isn't a centralized coordinator at all. Ideally, there's you know, if if you look where to look at, like Bitcoin itself, like, you know, there's not this centralized coordinator, you know, orchestrating transactions. You know? There's,
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there's a sufficient distribution
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across the entire Bitcoin network.
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So, like, you know,
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having sanctions on Bitcoin versus having sanctions on a,
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you know,
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an Ethereum,
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you know, privacy, smart contract, or a centralized coordinator. They're all kind of different stories, but,
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you know, I will say, though, you know, they are actively thinking about it because there is actually this point of attack that,
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unfortunately, the United States could go after if they if they show chose to.
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Yeah. And I I think Matt hit the nail on the head mentioning the the kind of the psychological and chilling effect that sanctions can have.
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And I think
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if you think about what sanctions actually are and what they do, I I think that's really the the broadest effect is that it it scares people off from doing a specific thing. And in this case, it's using
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Tornado Cash or writing code for Tornado Cash, which
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both of those are a big deal. But I think the the psychological impact is the the biggest power that the government sees that they have in a sanction,
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in a sanctioned action. And so that's one of the reasons why they're using this when they they don't seem to be able to technologically shut it down.
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And, apparently, they weren't able to trace funds well enough through it, to to feel comfortable in tracking down people after usage.
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So I I mean, it kinda proves that it works. Right? Yeah. Yeah. I mean, if if something gets sanctioned, it proves that they can't take it down and that they obviously can't
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manage it well enough for their own needs. And in this case,
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I mean, there's so much to get into in this, but I think one of the really interesting things is that
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they
423
00:32:21.045 --> 00:32:28.160
in their official press release, the US Treasury claims that all of the lifetime volume of tornado cash counts as laundering,
424
00:32:28.860 --> 00:32:30.215
which is fascinating,
425
00:32:30.835 --> 00:32:35.015
and that's a very big step from the previous ways that they approach these types of tools.
426
00:32:35.475 --> 00:32:36.855
Even though they specifically
427
00:32:37.830 --> 00:32:44.970
call out only 7% of the volume over the lifetime as being from hacks that they've specifically tracked as going into Tornado Cash.
428
00:32:45.794 --> 00:32:50.215
So, again, I think it's interesting that you Anyone who's ever used Tornado Cash
429
00:32:50.835 --> 00:32:51.575
was complicit.
430
00:32:51.875 --> 00:32:56.430
Is that what you're saying? That that is what they say. So to quote them specifically, they say,
431
00:32:56.810 --> 00:33:02.030
today, US department sanctioned virtual currency mixer, Tornado Cash, which has been used to launder more than $7,000,000,000
432
00:33:02.490 --> 00:33:03.710
worth of virtual currency,
433
00:33:04.235 --> 00:33:07.535
And the lifetime volume of Tornado Cash is 7,600,000,000.
434
00:33:08.635 --> 00:33:12.975
So, obviously, they're referring to the lifetime volume of Tornado Cash and saying that
435
00:33:13.380 --> 00:33:17.400
all transactions that have gone through Tornado Cash are in their eyes money laundering,
436
00:33:17.700 --> 00:33:19.720
which is a very big deal because,
437
00:33:20.425 --> 00:33:23.005
again, it's theoretically decentralized and noncustodial.
438
00:33:24.425 --> 00:33:29.245
And it's not like a mixer where you have direct connections to other inputs
439
00:33:29.580 --> 00:33:31.040
even if the output is,
440
00:33:31.580 --> 00:33:32.080
obfuscated.
441
00:33:32.780 --> 00:33:37.920
So there there is a lot to unpack there, but I think it's it's very telling that they claim that all of it is laundering,
442
00:33:38.335 --> 00:33:44.675
but they can only trace a very small portion of it to elicit activity and yet still sanction not only the tool itself, but
443
00:33:45.055 --> 00:33:45.555
developers,
444
00:33:46.289 --> 00:33:52.070
GitHub accounts, and all of the GitHub repos, and the website, and documentation sites, and all the other these other things.
445
00:33:54.305 --> 00:33:56.485
Yeah. I mean, there's another element here
446
00:33:58.625 --> 00:33:59.125
that
447
00:34:01.820 --> 00:34:02.480
you know,
448
00:34:02.780 --> 00:34:05.200
obviously, on this show, we talk about Bitcoin privacy,
449
00:34:06.380 --> 00:34:07.040
a lot.
450
00:34:09.260 --> 00:34:10.160
With Ethereum,
451
00:34:11.625 --> 00:34:12.525
there is
452
00:34:13.785 --> 00:34:16.045
a lot of differences between Ethereum and Bitcoin.
453
00:34:16.505 --> 00:34:17.885
One of the main differences
454
00:34:18.460 --> 00:34:21.920
is this idea of an account model versus a UTXO model.
455
00:34:22.460 --> 00:34:23.440
So in Bitcoin,
456
00:34:24.140 --> 00:34:26.079
you're told not to reuse addresses.
457
00:34:27.525 --> 00:34:28.744
Every time you receive
458
00:34:29.765 --> 00:34:31.785
Bitcoin, you use a new address.
459
00:34:33.444 --> 00:34:34.425
All those UTXOs,
460
00:34:34.805 --> 00:34:39.410
all those unspent transactions are sitting in your wallet. They almost look like bills in your wallet.
461
00:34:40.349 --> 00:34:52.110
Or you can imagine them as bills in your wallet of different denominations of Bitcoin. And when you make a spend, you're basically taking out a certain amount of those bills, and you're making the spend. You're combining them on the input side, and then they result in
462
00:34:52.510 --> 00:34:54.530
either one output or 2 outputs usually.
463
00:34:55.230 --> 00:35:02.755
If you overpay, it's 2 outputs because they pay the change back. If you send it all, then it's one output. There's obviously other transaction types.
464
00:35:04.255 --> 00:35:05.075
With Ethereum,
465
00:35:06.095 --> 00:35:12.140
from a Bitcoiner point of view, the way you can imagine it is that everyone is using a single reused address. They call them accounts.
466
00:35:13.240 --> 00:35:15.580
And as a result, those accounts have
467
00:35:16.360 --> 00:35:22.055
your entire financial history is attached to those accounts on the Ethereum blockchain, completely viewable to everybody.
468
00:35:23.075 --> 00:35:28.180
That includes all the different tokens and everything else you do in Ethereum is all attached to that one account.
469
00:35:28.740 --> 00:35:29.800
Now those accounts
470
00:35:32.980 --> 00:35:33.720
are often
471
00:35:34.020 --> 00:35:39.725
obviously linked to your identity, and sometimes they're linked to your identity. Well, the majority of the time, they're linked to your identity because
472
00:35:40.745 --> 00:35:47.490
most people that are coming into this ecosystem come in through KYC regulated institutions, so they're coming in, linking it to their identity.
473
00:35:48.270 --> 00:35:51.410
But, also, a lot of people on Ethereum have voluntarily
474
00:35:51.710 --> 00:35:53.089
linked it to their identity.
475
00:35:54.845 --> 00:35:56.145
So we have addresses
476
00:35:56.605 --> 00:35:57.105
accounts.
477
00:35:57.565 --> 00:35:58.625
They call them accounts.
478
00:35:59.085 --> 00:36:00.705
We have accounts on Ethereum
479
00:36:01.405 --> 00:36:02.545
of known individuals,
480
00:36:03.710 --> 00:36:05.010
with their full financial
481
00:36:05.710 --> 00:36:09.810
transaction history, including all tokens and all contracts they've interacted with,
482
00:36:11.484 --> 00:36:19.900
immediately viewable to anybody with access to the chain. Or if you don't have access to the chain, you use one of these third parties, like, other scan or something, and you can see it.
483
00:36:21.339 --> 00:36:26.160
So what what is that implication here? Well, the implication here is, first of all, when they made the sanction,
484
00:36:26.619 --> 00:36:28.000
they sanctioned the
485
00:36:29.075 --> 00:36:30.375
the contracts account.
486
00:36:30.835 --> 00:36:34.135
So anyone who interacts with that account is connected to that.
487
00:36:34.515 --> 00:36:38.440
This is a single account. This is what Samura when Samura mentioned in their statement,
488
00:36:39.059 --> 00:36:39.799
they mentioned
489
00:36:40.420 --> 00:36:44.119
the UTXO model versus the account model. This is what they were referring to.
490
00:36:45.805 --> 00:36:47.105
But the second thing
491
00:36:48.365 --> 00:36:51.425
is because a lot of these accounts are viewable
492
00:36:52.045 --> 00:36:52.545
or
493
00:36:53.210 --> 00:37:00.190
the people know who they're attached to, like, people know where Vitalik's account is. People know where Jimmy Fallon's account is. People know where Puma's account is.
494
00:37:00.515 --> 00:37:03.095
People know where Brian Armstrong's account is.
495
00:37:04.915 --> 00:37:07.415
There are either 1 or a few people
496
00:37:08.115 --> 00:37:09.255
that have been
497
00:37:10.230 --> 00:37:10.730
sending,
498
00:37:12.390 --> 00:37:13.530
tornado withdrawals,
499
00:37:14.549 --> 00:37:15.609
to their accounts.
500
00:37:16.230 --> 00:37:18.250
And my understanding of Ethereum
501
00:37:19.865 --> 00:37:22.765
is they do not have coin control or anything.
502
00:37:24.265 --> 00:37:24.765
So,
503
00:37:26.160 --> 00:37:31.700
obviously, with these systems, you can't stop someone from sending you something, but they also can't choose not to spend something.
504
00:37:34.555 --> 00:37:36.335
So there's all these extra complications
505
00:37:37.915 --> 00:37:41.855
that seem to be becoming very apparent here. And I would say,
506
00:37:42.630 --> 00:37:45.050
1st and foremost, that these types of actions,
507
00:37:45.670 --> 00:37:47.690
should not be unexpected by people.
508
00:37:48.070 --> 00:37:48.570
Like,
509
00:37:49.030 --> 00:37:49.530
governments
510
00:37:50.125 --> 00:37:54.065
around the world pushing back against financial privacy is a tale as old as time.
511
00:37:57.619 --> 00:38:01.560
Unfortunately, on both Ethereum and Bitcoin, but even more so on Ethereum,
512
00:38:02.100 --> 00:38:04.040
a lot of early decisions were made
513
00:38:05.035 --> 00:38:06.735
that make using them privately
514
00:38:07.035 --> 00:38:11.375
more difficult, but particularly on Ethereum, it's really, really bad.
515
00:38:11.915 --> 00:38:16.290
So I'm curious what happens here with this dusting stuff,
516
00:38:17.550 --> 00:38:18.770
how that is treated.
517
00:38:19.070 --> 00:38:20.770
But also on the flip side,
518
00:38:21.925 --> 00:38:24.745
anyone who has interacted with Tornado Cash
519
00:38:25.285 --> 00:38:26.825
with a doxed account
520
00:38:27.925 --> 00:38:28.425
before
521
00:38:29.250 --> 00:38:32.950
the sanctions happened is technically wrapped up in this as well,
522
00:38:33.570 --> 00:38:35.670
and regulated services, presumably,
523
00:38:36.965 --> 00:38:40.585
at the very least, will blacklist them from interacting with
524
00:38:41.205 --> 00:38:41.945
their services,
525
00:38:42.245 --> 00:38:43.785
or we can expect that.
526
00:38:44.200 --> 00:38:53.660
And I don't know if if we even I would assume that the US treasury isn't gonna go after those individuals because we've never seen them go after users before, but they could. Right?
527
00:38:55.455 --> 00:39:03.840
And I don't think we need to expect them to do it logically. I mean, if they wanted to go after some of the people who've used Tornado Cash and not all of them, that
528
00:39:04.720 --> 00:39:06.900
they they can do that even though
529
00:39:07.200 --> 00:39:16.775
it's it's dumb that it's not an evenly distributed judgment or no judgment. I I wouldn't be surprised if they do go after some people, but not all of the people and especially the people being tested.
530
00:39:18.675 --> 00:39:22.615
Yeah. I mean, the the issues with privacy and Ethereum are really
531
00:39:23.359 --> 00:39:28.099
damning in a case like this as opposed to something like if we contrast Tornado Cash and Samura Wallet,
532
00:39:28.559 --> 00:39:29.220
for instance,
533
00:39:30.485 --> 00:39:38.105
And there's a lot of differences, obviously. But looking at them from, like, how would someone even detect that you're using that specific tool in Ethereum,
534
00:39:38.410 --> 00:40:00.990
like you mentioned, that that contract address or the contract addresses, because there are multiple for Tornado Cash, have been sanctioned and are obviously being surveilled now, and probably have been surveilled for a while. And so if you enter Tornado Cash, it's clearly visible on chain that you went from your account to the Tornado Cash smart contract. Yes. The funds then gained privacy after that, but the fact that you've chosen to use Tornado Cash is very transparent on chain.
535
00:40:01.850 --> 00:40:04.250
And, also, as you mentioned, everyone reuses address
536
00:40:04.775 --> 00:40:08.395
addresses in Ethereum because you generally just have an account and you use that one.
537
00:40:08.775 --> 00:40:15.870
Another way that people link their identity or other NIMs to their Ethereum activity is using ENS. They're using those dot ETH addresses.
538
00:40:16.330 --> 00:40:22.910
And so they'll tie that to their Ethereum accounts, which again could be tied back to using Tornado Cash past, present, or future.
539
00:40:24.025 --> 00:40:33.740
And there's a lot of issues with actually trying to be able to to do something like that in an adversarial environment. Again, not advocating someone break these sanction laws, but just saying in this kind of situation,
540
00:40:34.359 --> 00:40:47.145
it's very easy to detect when someone tries to use Tornado Cash. Whereas with Samurai Wallet, even though you could see that they are entering a coin join, if you well, no. If you knew their specific address, like the the user's address
541
00:40:47.630 --> 00:40:50.530
or a UTXO, you could see that they enter Whirlpool.
542
00:40:51.150 --> 00:40:54.210
But like you mentioned from the Samurai Wallet Telegram message,
543
00:40:54.815 --> 00:41:04.195
there's no static address or something associated with samurai wallet where they can tell that that's specifically a samurai wallet usage, and they can't just monitor samurai wallet themselves
544
00:41:04.799 --> 00:41:09.859
and see what transactions are flowing through Whirlpool and the the other post mix spending tools.
545
00:41:10.240 --> 00:41:16.775
So there are a lot of benefits to not only the UTXO model, but also the the Tor First model of samurai wallet.
546
00:41:17.815 --> 00:41:19.174
There's a there's a lot there.
547
00:41:19.655 --> 00:41:24.410
I I guess the main weakness with something like a samurai wallet in a a situation like this would be
548
00:41:25.589 --> 00:41:27.130
if they were forced to comply,
549
00:41:27.910 --> 00:41:36.335
they could turn over information associated with people who have not used their own dojo. They could turn over those x pubs, and some information about transactions could be given up.
550
00:41:37.435 --> 00:41:45.329
But, again, that's very, very unlikely. That's just one of the downsides there as opposed to within Tornado Cash. Even the creators of Tornado Cash can't tell you
551
00:41:45.630 --> 00:41:48.655
what transactions are linkable between the entry and exit.
552
00:41:50.175 --> 00:41:56.275
But there are there are a lot of differences, and Ethereum makes it much more difficult to gain privacy. Because even if you choose to gain privacy, it's it's
553
00:41:56.710 --> 00:41:59.930
extremely transparent that you have chosen to gain privacy on Ethereum.
554
00:42:01.029 --> 00:42:05.289
Yeah. I mean, one thing we talk about specifically when we talk about, like, VPNs and stuff
555
00:42:05.795 --> 00:42:09.335
is this idea that it's impossible to prove if people are keeping logs.
556
00:42:12.195 --> 00:42:13.655
And it's kind of a similar
557
00:42:13.990 --> 00:42:14.490
situation,
558
00:42:15.110 --> 00:42:17.850
with light client users on Samura Wallet.
559
00:42:20.710 --> 00:42:23.290
Obviously, Samura admits that they hold those XPUBs
560
00:42:23.635 --> 00:42:24.535
for those users.
561
00:42:24.915 --> 00:42:27.575
They don't have them connected to an ID specifically.
562
00:42:28.755 --> 00:42:31.015
Obviously, it's connected to Bitcoin chain information,
563
00:42:32.880 --> 00:42:36.180
but they have and and it goes through Tor, so they don't have an IP address.
564
00:42:36.720 --> 00:42:37.380
But, presumably,
565
00:42:38.960 --> 00:42:44.224
I have to imagine I would hope at least the very least that they have precautions in place
566
00:42:46.765 --> 00:42:50.224
to make sure those servers are secure and to make sure that they
567
00:42:51.859 --> 00:42:53.640
are wiped in adversarial environments,
568
00:42:54.260 --> 00:42:56.040
if they're compromised in some way.
569
00:42:56.420 --> 00:43:06.795
But, yeah, that that's probably, like, the the biggest concern from any kind of action, whether that's an official government action or a malicious actor trying to compromise their servers and get that x pub information.
570
00:43:09.350 --> 00:43:10.970
And that goes for
571
00:43:11.350 --> 00:43:13.370
Samurais obviously gets more
572
00:43:13.830 --> 00:43:16.330
flack about that than other projects in the space
573
00:43:16.724 --> 00:43:20.585
because they're a privacy focused project, but that goes for pretty much all Bitcoin
574
00:43:21.365 --> 00:43:22.185
like clients.
575
00:43:23.045 --> 00:43:26.670
If you're not using your own node, you're using someone else's node, and you're trusting
576
00:43:27.130 --> 00:43:29.390
who's ever running that node with your privacy
577
00:43:29.690 --> 00:43:34.075
and, the validation of the Bitcoin rules, which is why it's so important to use your own node.
578
00:43:34.635 --> 00:43:40.575
That's one of like, there's so many things to unpack here. The fact that it's so difficult to use your own node with Ethereum,
579
00:43:44.710 --> 00:43:47.050
you know, makes this even more dangerous
580
00:43:47.510 --> 00:43:49.770
of a situation for them, I feel like.
581
00:43:50.405 --> 00:43:52.905
I mean, it just clearly does. It's not even a feeling.
582
00:43:55.125 --> 00:43:57.224
Yeah. It's both the aspect of,
583
00:43:57.685 --> 00:44:05.160
you know, making it hard to to run a note, but then also, you know, the combination of the address thing. Right? So people getting tested attacked right now.
584
00:44:06.019 --> 00:44:08.200
You know, if they're really not
585
00:44:08.924 --> 00:44:09.825
still participating
586
00:44:10.444 --> 00:44:12.684
or have any association with actively
587
00:44:13.005 --> 00:44:16.065
it's like there's no consent involved in that. You just received from,
588
00:44:16.710 --> 00:44:27.105
a tornado address, and you didn't do anything wrong. So, like, they'll But maybe Jimmy Fallon manually withdrew from tornado himself. We don't know if someone else sent it to you. Right. So they're probably
589
00:44:27.485 --> 00:44:30.385
you know, they have I guess, the United States has every,
590
00:44:33.900 --> 00:44:38.480
can they they they can at least question these people. I don't think they're,
591
00:44:39.580 --> 00:44:43.925
you know, I think worst case scenario for someone that was just innocently, you
592
00:44:45.025 --> 00:44:48.405
know, dusted attacked in this way, they may be questioned.
593
00:44:48.705 --> 00:44:50.565
They may, you know, go through hassle,
594
00:44:51.140 --> 00:44:51.960
etcetera, etcetera. But,
595
00:44:52.580 --> 00:45:04.085
you know, I think worst case scenario, they just end up having to, like, send as much as they received back, you know, to the United States because there isn't this UTXO model that you can easily just,
596
00:45:04.464 --> 00:45:05.125
like, avoid,
597
00:45:06.625 --> 00:45:08.224
avoid the these these,
598
00:45:08.545 --> 00:45:12.619
transactions. So I think I don't think they're like, someone just innocently getting
599
00:45:12.920 --> 00:45:18.540
swept up in this is gonna, like, get in trouble, but, it's probably gonna be a pain in the ass,
600
00:45:19.125 --> 00:45:27.045
to deal with it because they're like and then who what about the people that don't even know? Like, you know, even in Bitcoin, we we can detect a a dusting attack,
601
00:45:27.940 --> 00:45:33.480
a lot easier. I think Samurai even helps highlight when there's a potential dusting attack to your wallet.
602
00:45:33.940 --> 00:45:38.165
So, like, shout out to them. But, like, you know, someone could just be naively receiving,
603
00:45:38.705 --> 00:45:44.885
you know, these funds and not have any idea where it came from. They don't keep up with every address that's sanctioned,
604
00:45:45.240 --> 00:45:46.700
you know, in in Ethereum
605
00:45:47.319 --> 00:45:51.420
or or other places. So, like, yeah, there's there's probably gonna be a lot of, like,
606
00:45:51.880 --> 00:45:56.855
knocking on the door for, you know, some of these people, and they have no idea what's going on.
607
00:45:59.395 --> 00:46:02.135
And I think Seth made an interesting point on Twitter,
608
00:46:04.280 --> 00:46:05.100
which is,
609
00:46:09.400 --> 00:46:16.674
Seth, you make a lot of interesting points on Twitter. I just lost the I was gonna say, I made a I made a lot of points about Oh, okay. So,
610
00:46:17.320 --> 00:46:17.820
tornado
611
00:46:18.200 --> 00:46:19.900
for the Bitcoiners in the house,
612
00:46:20.520 --> 00:46:21.740
which is most of you,
613
00:46:22.200 --> 00:46:22.700
presumably,
614
00:46:24.765 --> 00:46:29.184
Tornado did something similar to what Wasabi did, and they proactively
615
00:46:29.565 --> 00:46:32.625
decided to incorporate chain analysis, chain surveillance,
616
00:46:33.640 --> 00:46:34.859
to prevent blacklisted
617
00:46:35.400 --> 00:46:37.819
accounts from interacting with their contract.
618
00:46:38.760 --> 00:46:43.235
And they were still sanctioned regardless. So I think there's a good lesson here
619
00:46:44.095 --> 00:46:44.595
in,
620
00:46:46.095 --> 00:46:47.795
you know, proactive doesn't
621
00:46:48.175 --> 00:46:49.395
really protect you.
622
00:46:49.830 --> 00:46:53.530
Just hurts everybody. Turn tornado was actively trying
623
00:46:54.710 --> 00:46:55.370
to prevent,
624
00:46:56.310 --> 00:46:57.450
blacklisted addresses?
625
00:46:58.315 --> 00:46:58.815
Yeah.
626
00:46:59.355 --> 00:47:02.734
About, I don't know, maybe 7 months ago now. Maybe maybe longer.
627
00:47:03.595 --> 00:47:04.095
They
628
00:47:05.570 --> 00:47:08.470
they received pressure in some way that was unclear,
629
00:47:09.090 --> 00:47:10.870
and they implemented a,
630
00:47:11.410 --> 00:47:11.910
Chainalysis
631
00:47:12.370 --> 00:47:13.350
OFAC sanctions
632
00:47:14.195 --> 00:47:27.559
block tool, essentially, into their their front end for Tornado Cash. So not into the smart contract because, again, they have no ability to edit that. But into their front end, which is the way the vast majority of people use Tornado Cash, they implemented this
633
00:47:27.940 --> 00:47:28.680
free analysis
634
00:47:29.059 --> 00:47:30.520
tool, yeah, into the the website.
635
00:47:31.380 --> 00:47:31.880
And
636
00:47:32.375 --> 00:47:36.955
all what that did was blocked OFAC sanctioned entities from using Tornado Cash.
637
00:47:37.255 --> 00:47:46.470
So OFAC has sanctioned Ethereum addresses before. It's not new. And Bitcoin addresses. Yeah. And a couple of Monero addresses and some payment IDs for some reason.
638
00:47:47.650 --> 00:48:03.359
But they so they they blocked these specific OFAC sanctioned entities from using Tornado Cash, which in theory is all that the US Treasury wanted because the US Treasury is is claiming that the reason for this is to prevent North Korean hackers who are stealing funds within the Ethereum ecosystem
639
00:48:03.740 --> 00:48:05.040
from being able to
640
00:48:05.635 --> 00:48:08.115
gain financial privacy through Tornado Cash.
641
00:48:08.995 --> 00:48:09.495
And
642
00:48:09.875 --> 00:48:13.095
so in theory, that blocking of the front end from effect sanction
643
00:48:13.620 --> 00:48:15.640
entities would have been good enough. But,
644
00:48:16.100 --> 00:48:18.360
obviously, I mean, we've seen this over and over again,
645
00:48:19.620 --> 00:48:21.175
giving in, like, preemptively
646
00:48:21.875 --> 00:48:25.415
doing things to try to appease just it it doesn't work.
647
00:48:25.955 --> 00:48:31.400
And it's it's odd because you think that the government would be happy with people doing that and want to incentivize people to preemptively
648
00:48:31.859 --> 00:48:32.359
comply.
649
00:48:33.140 --> 00:48:42.815
But it seems like, yet again, they just preemptively complied and and gained nothing from it, and now are still under the the sanction hammer and in a much harsher way than I think anyone expected,
650
00:48:43.595 --> 00:48:49.480
much less them. That's that's really interesting because, like, you know, if you read through the US Treasury's,
651
00:48:50.180 --> 00:48:50.680
official,
652
00:48:51.300 --> 00:48:52.840
post that they made on this,
653
00:48:53.620 --> 00:49:08.170
I mean, you could read the entire article. There's a there's a lot of really interesting language that they use here. But, specifically to what Seth just said here, like, it that even surprised me. I didn't I didn't, again, know much about Tornado Cash, but the treasury is specifically saying,
654
00:49:09.030 --> 00:49:13.130
and I quote, like, they repeatedly failed to impose effective controls.
655
00:49:13.775 --> 00:49:21.714
So it's it's not even that they didn't even try. It's like, well, they they did try. Right? But they're still making the claim that,
656
00:49:22.299 --> 00:49:25.680
they, like, failed to do something that they were asked to do,
657
00:49:26.220 --> 00:49:30.079
even though it sounds like they even they tried. So, like, maybe there's even,
658
00:49:31.345 --> 00:49:33.285
I don't know, like, warrant to getting this,
659
00:49:33.905 --> 00:49:35.365
repealed in some way,
660
00:49:35.985 --> 00:49:42.150
or, you know, something along the facts. But I think that's that's really interesting that they they at least tried to do something.
661
00:49:43.250 --> 00:49:44.950
And, I mean, even in Ethereum,
662
00:49:45.730 --> 00:49:47.030
like, a static
663
00:49:47.330 --> 00:49:47.830
blacklist
664
00:49:48.345 --> 00:49:50.045
is very hard to be an effective
665
00:49:50.345 --> 00:49:51.244
tool to prevent
666
00:49:52.345 --> 00:49:55.484
a specific entity from using Tornado Cash. Like,
667
00:49:56.340 --> 00:50:05.585
that's one of the interesting things is that I I don't really know how they were supposed to effectively block it because they can't change something in the smart contract, and they can implement the Sofaq sanctions list.
668
00:50:06.065 --> 00:50:07.285
But I doubt that
669
00:50:07.585 --> 00:50:22.930
the US Treasury was keeping the list up to date enough with every single account that these North Korean hackers were using. So it's it it's really it seems like a catch 22 where they want you to do this, but then you do it and it's ineffective even though they're doing the things you say, and then you just get wrecked anyways.
670
00:50:33.319 --> 00:50:37.420
Okay. What else do we wanna unpack? I the way I wanna end it is,
671
00:50:38.440 --> 00:50:41.019
I I mean, I wanna have a discussion over,
672
00:50:41.994 --> 00:50:44.015
you know, how Bitcoiners should act.
673
00:50:44.795 --> 00:50:45.295
Like,
674
00:50:45.675 --> 00:50:49.055
like, how Bitcoiners that care about financial privacy should proceed,
675
00:50:49.670 --> 00:50:52.970
impact on Monero. But before we get there, I just feel like there's
676
00:50:53.430 --> 00:50:57.050
there's a little bit more to unpack on the Ethereum side of things here.
677
00:51:00.295 --> 00:51:01.755
What else do we have? GitHub.
678
00:51:03.895 --> 00:51:05.994
Should we have a conversation about how
679
00:51:06.780 --> 00:51:08.240
GitHub is this centralized
680
00:51:09.420 --> 00:51:09.920
server
681
00:51:10.540 --> 00:51:12.800
it's it's a centralized service for Git.
682
00:51:14.780 --> 00:51:15.280
I
683
00:51:16.125 --> 00:51:24.224
I think an important takeaway here when these things kind of happen, I think it's really important that people take them as learning experiences, and we learn from them
684
00:51:24.630 --> 00:51:27.930
as much as possible because the best way to learn is to live.
685
00:51:28.550 --> 00:51:31.609
So if we're living through these things, we should learn from them,
686
00:51:32.285 --> 00:51:33.505
And it's a,
687
00:51:36.845 --> 00:51:40.465
it's it's a commonality that I've I've tried to practice,
688
00:51:40.925 --> 00:51:41.425
throughout
689
00:51:43.070 --> 00:51:45.570
my time in in in the Bitcoin space.
690
00:51:48.830 --> 00:51:49.810
And so
691
00:51:50.225 --> 00:51:53.765
with all these things, the way I kind of look at it on a high level
692
00:51:55.105 --> 00:51:55.605
is
693
00:51:56.065 --> 00:51:57.845
everything has trade offs,
694
00:51:58.470 --> 00:51:59.690
and, ultimately,
695
00:52:01.350 --> 00:52:04.490
people will always choose the most convenient option,
696
00:52:05.884 --> 00:52:11.184
or most people will choose the most convenient option. And usually when we look at trade offs,
697
00:52:11.805 --> 00:52:16.370
there is a trade off, a direct trade off between convenience and privacy and security.
698
00:52:17.710 --> 00:52:18.210
And
699
00:52:18.750 --> 00:52:20.770
when we look at the Bitcoin
700
00:52:21.435 --> 00:52:22.415
privacy space,
701
00:52:23.035 --> 00:52:26.095
we see that trade off in action. And you see,
702
00:52:27.435 --> 00:52:30.255
the centralized blinded coordinators like Whirlpool
703
00:52:30.910 --> 00:52:31.650
and Wasabi
704
00:52:32.430 --> 00:52:34.690
that are making a convenience trade off
705
00:52:37.309 --> 00:52:41.665
that the trade off is, you know, there's a centralized entity that could be pressured,
706
00:52:43.085 --> 00:52:47.790
by governments. And then you have something like join market that is significantly less convenient to use,
707
00:52:51.230 --> 00:52:53.490
that is made to be more robust.
708
00:52:53.790 --> 00:52:54.270
And I
709
00:52:55.204 --> 00:52:58.984
from government regulation, pressure, centralized choke points.
710
00:52:59.525 --> 00:53:00.025
And
711
00:53:00.405 --> 00:53:03.385
I think it's prudent to realize that there's nothing
712
00:53:04.529 --> 00:53:05.509
inherently wrong,
713
00:53:06.210 --> 00:53:08.950
and it's probably the best decision in general
714
00:53:09.490 --> 00:53:10.309
to use.
715
00:53:11.705 --> 00:53:14.285
If you don't need, you know, the full
716
00:53:14.905 --> 00:53:15.405
most
717
00:53:15.785 --> 00:53:18.925
sovereign, censorship resistant thing at the time,
718
00:53:19.410 --> 00:53:20.550
then it's not necessarily
719
00:53:20.850 --> 00:53:25.110
a bad decision to choose something that trades that off a little bit for convenience.
720
00:53:25.730 --> 00:53:27.190
But you need to be prepared
721
00:53:27.885 --> 00:53:28.705
for a situation
722
00:53:29.165 --> 00:53:32.385
where you don't have the liberty of that convenience anymore,
723
00:53:32.685 --> 00:53:36.785
and you need to use the more robust option. You need to use the more sovereign option.
724
00:53:37.130 --> 00:53:40.350
And I think there's examples of this in multiple places,
725
00:53:42.570 --> 00:53:44.270
with this tornado situation.
726
00:53:45.244 --> 00:53:46.465
One of them is,
727
00:53:47.325 --> 00:53:52.225
the front end, which was accessible on clear net and hosted I believe it was hosted on AWS.
728
00:53:54.590 --> 00:53:58.370
That makes a more friendly experience to people who wanna use it.
729
00:53:58.750 --> 00:54:02.610
Now it can presumably be run as a Tor Onion service
730
00:54:04.214 --> 00:54:05.674
and not host on AWS.
731
00:54:06.375 --> 00:54:08.795
I wouldn't be surprised if that happens going forward.
732
00:54:09.494 --> 00:54:10.954
Another aspect here
733
00:54:11.760 --> 00:54:13.060
is the GitHub repo.
734
00:54:14.079 --> 00:54:16.500
Git was designed to be distributed
735
00:54:17.200 --> 00:54:25.895
that anyone could self host it and you can interact with each other, But GitHub provides this nice central spot where everyone can communicate with each other.
736
00:54:26.435 --> 00:54:30.589
You have profiles. You have almost like, a LinkedIn for devs type of situation.
737
00:54:32.890 --> 00:54:40.025
And people gravitate towards that, I would say, for convenience. You I think you can map all of that stuff into convenience.
738
00:54:42.484 --> 00:54:44.184
With Bitcoin Core specifically,
739
00:54:46.840 --> 00:54:49.580
they mainly use GitHub for their communication.
740
00:54:50.600 --> 00:54:55.660
Well, not for for all the communication and coordination around Bitcoin Core development.
741
00:54:56.355 --> 00:54:57.975
It is one of the main staples.
742
00:54:58.435 --> 00:55:00.535
But backups are kept, and, theoretically,
743
00:55:01.075 --> 00:55:02.055
not even theoretically,
744
00:55:02.355 --> 00:55:05.655
in a situation where GitHub is censoring Bitcoin core,
745
00:55:06.070 --> 00:55:11.610
they can move off of GitHub, and they don't need to be reliant on GitHub. And they there'll be a convenience hit there,
746
00:55:13.110 --> 00:55:15.290
but they're capable of doing that.
747
00:55:16.855 --> 00:55:19.675
What do you guys think about that framing? Did I do a good job?
748
00:55:20.214 --> 00:55:23.585
Yeah. And and I I I think the convenience factor too,
749
00:55:24.640 --> 00:55:26.900
you know, it's not I well,
750
00:55:27.680 --> 00:55:28.500
the issues,
751
00:55:29.119 --> 00:55:32.740
and sorry. The issues, quote, like the GitHub tickets that are created,
752
00:55:33.125 --> 00:55:37.625
like bug reports and conversations and stuff, those and pull requests are probably,
753
00:55:38.405 --> 00:55:40.345
like, some of the the biggest
754
00:55:40.750 --> 00:55:47.809
lock ins that really you know, I'm a developer myself, and, of course, I I I have a GitHub account, and, you know, I have code
755
00:55:48.455 --> 00:55:54.855
being hosted in one of their in the GitHub repository. You know? So, like, this it's it's a struggle, but then it's also like
756
00:55:55.500 --> 00:56:03.119
I think, it was a a year ago or 2 years ago that, I guess, like, the CEO of of GitHub says something along the lines of,
757
00:56:04.225 --> 00:56:16.099
you know, I I have I have complete confidence that if we were to take down the GitHub or sorry, the Bitcoin repository on GitHub, that everything will be fine. Like, I they would get a lot you know, everything will just keep,
758
00:56:16.500 --> 00:56:18.180
you know, trucking along just fine.
759
00:56:18.740 --> 00:56:26.525
And he got a lot of backlash for saying that, but I think the like, he wasn't implying that he would take it down. He wasn't implying that,
760
00:56:28.265 --> 00:56:31.180
that, you know, he wouldn't do it.
761
00:56:32.280 --> 00:56:38.619
He was just saying, like, look. Git is still distributed in nature. The underlying protocol for pushing code,
762
00:56:38.955 --> 00:56:39.695
making branches,
763
00:56:41.515 --> 00:56:42.735
merging code even.
764
00:56:43.515 --> 00:56:48.175
So if he he it was more of a testament to believing in the Bitcoin community
765
00:56:48.480 --> 00:56:56.740
that they they have enough backups everywhere, that they have enough people that are can coordinate outside of GitHub. You you did say, like, a lot of coordination happens
766
00:56:57.115 --> 00:57:01.934
on GitHub. A lot of coordination also still happens in IRC as well.
767
00:57:03.115 --> 00:57:08.950
So it was kind of kind of a testament that, like, hey. Look. Like, sure. GitHub is the most convenient option. And
768
00:57:09.650 --> 00:57:11.430
if they needed to take it down,
769
00:57:11.810 --> 00:57:17.115
they can host it somewhere else, and, you know, maybe they lose the issues. Maybe they lose, like, the pull requests.
770
00:57:18.775 --> 00:57:19.734
But it's,
771
00:57:20.214 --> 00:57:29.440
I don't know. Like, I struggle with this. Right? Like like, I my preference as as a developer is to continue using GitHub until I no longer can,
772
00:57:30.204 --> 00:57:33.984
for one reason or another, and then go coordinate in another
773
00:57:34.285 --> 00:57:36.785
manner and and point my repository
774
00:57:37.085 --> 00:57:37.825
somewhere else.
775
00:57:38.850 --> 00:57:54.375
So that's, like, in my opinion, my fail safe. And now I do appreciate the fact that samurai has you know, they started out that way too on GitHub. And then they said, okay. For redundancy reasons, let's host it somewhere else. And I think that was a great move, but I don't necessarily think it has to be the move.
776
00:57:54.849 --> 00:57:56.150
Like tornado cash,
777
00:57:56.890 --> 00:58:03.589
or, no. I'll I'll stop there. But there's enough mechanisms for people to point code in a different location
778
00:58:04.825 --> 00:58:08.205
with an with enough confidence that, like, the code will continue on.
779
00:58:10.025 --> 00:58:10.925
Yeah. There's
780
00:58:11.680 --> 00:58:14.980
there's the NICE side of Git, which is the underlying
781
00:58:15.440 --> 00:58:22.025
tool and protocol that underlies GitHub, GitLab, Gittee, all of these different tools. They're just front ends for Git.
782
00:58:23.125 --> 00:58:27.224
And the fact is everyone who has ever cloned Bitcoin Core's code
783
00:58:27.525 --> 00:58:35.599
has a copy of that, and anyone who is doing active development will have a current and up to date copy of that. So, like, even in the worst case scenario where,
784
00:58:36.859 --> 00:58:39.520
GitHub takes down all the repos and there are no backups,
785
00:58:39.974 --> 00:58:53.920
Every single developer will have a copy of Bitcoin Core's code on their computer, and many people who aren't devs will just because they cloned it at some point. So there's even in those worst case scenarios, there are recovery mechanisms. It it would be tricky because you have to figure out what the actual
786
00:58:54.355 --> 00:58:57.655
state is you want to restore and start from, but it's it's definitely doable.
787
00:58:58.915 --> 00:59:03.815
But I think, like, looking at it from that perspective of having fail safes in place
788
00:59:04.490 --> 00:59:09.710
and being willing to jump to those if you need to. Like, I I think GitHub gets a lot of
789
00:59:10.250 --> 00:59:18.735
shade because they are owned by Microsoft, but it is an extremely effective service. And one of the very important things within free and open source software
790
00:59:19.115 --> 00:59:24.040
is the ability of getting other people's eyes on the code, getting other contributors coming in,
791
00:59:24.500 --> 00:59:29.880
and easing that process of people being able to contribute. And and GitHub, with the traction that it has,
792
00:59:30.224 --> 00:59:42.470
if you choose to go to another service, if you choose to host your own GitLab or something like that, you're going to lose eyes on the code. You're going to lose contributors. You're going to lose people who would have stumbled across it or wanted to open a PR or something like that.
793
00:59:43.010 --> 00:59:51.244
And that's just a that's an unfortunate consequence of GitHub being such a central piece of, really, the open source movement as a whole.
794
00:59:52.185 --> 00:59:57.760
But there are lots of great alternatives that can be used. And GitLab was mentioned. That's what Samurai wallet uses.
795
00:59:58.220 --> 00:59:59.600
There's a a more lightweight,
796
01:00:00.460 --> 01:00:03.280
front end for Git called Gitea, g I t e a.
797
01:00:03.820 --> 01:00:09.745
That's really, really great, especially for self hosting. Like, I self host Mincents, and I mirror all of my GitHub repos
798
01:00:10.205 --> 01:00:24.025
to my gitie. And so it automatically keeps them all up to date and synced so that if if something happened, if my GitHub account was deleted and everything I'd ever worked on was gone, I'd still have a copy. It all be up to date, and I could just expose my Gitcheid instance and be good to go. And they have that as
799
01:00:24.325 --> 01:00:27.065
they have that as a one click install on Umbrel too.
800
01:00:27.444 --> 01:00:32.400
Yeah. It's a really common software, and it's it's so lightweight. It it runs great on a Raspberry Pi or whatever.
801
01:00:32.880 --> 01:00:43.955
It's it's an excellent tool. So it it is important to have those alternatives, but I I do agree with Tony that, like, stay on GitHub till you have to get off. Like, I I think that's a reasonable approach,
802
01:00:44.255 --> 01:00:52.990
and just making sure that you have those backups in place. You know, I can speak for, like, the Monero project has gone through this same situation of not wanting to be dependent on
803
01:00:53.450 --> 01:00:56.510
GitHub itself and wanting to to be resilient, and
804
01:00:57.265 --> 01:01:01.525
the Git the Minera community explored moving to a self hosted GitLab,
805
01:01:01.905 --> 01:01:04.120
but it was, it was a a big hassle
806
01:01:12.765 --> 01:01:16.705
And I think that's a viable method. And then there are great tools out there for keeping
807
01:01:17.244 --> 01:01:19.425
backups of not only the code itself,
808
01:01:19.725 --> 01:01:22.590
which everyone running Git and doing git clone and all that would have
809
01:01:27.470 --> 01:01:30.530
the code, but they wouldn't have any of the issues, any of the comments, pull requests where a lot of the the meat of what happens in an open source project is.
810
01:01:31.145 --> 01:01:45.480
So having a backups in place that include those issues, include those PRs, and include all of that tertiary information that's not code, but is key to figuring out why things were done, when they were done, how discussions went, is also a very important piece there.
811
01:01:46.405 --> 01:01:48.105
Would we do we all agree
812
01:01:48.485 --> 01:01:48.985
that,
813
01:01:50.085 --> 01:01:52.105
GitHub removing the repo
814
01:01:52.805 --> 01:01:53.305
was
815
01:01:53.619 --> 01:01:57.000
both the least surprising aspect of this whole situation
816
01:01:57.460 --> 01:01:58.599
and the least impactful
817
01:01:58.980 --> 01:01:59.480
aspect?
818
01:02:00.845 --> 01:02:17.850
I I was surprised by it. I'm not gonna lie. I Really? I figured that they would just go after the smart contracts, and the code would stay. I mean, I I didn't expect the Tornado Cash people to go and deploy a smart contract or anything, but I I didn't expect them to go after the code and much less to go after the contributors themselves
819
01:02:18.595 --> 01:02:19.255
and to
820
01:02:19.795 --> 01:02:20.295
delete
821
01:02:20.675 --> 01:02:22.295
unrelated GitHub repos
822
01:02:22.595 --> 01:02:35.675
that were just created by the contributors who had contributed to TriNet cache in the past. I I didn't expect that to be anything else they were maintaining, basically. Right? Yep. Yep. Yep. And and that's that and that's by order of the sanction as well.
823
01:02:37.035 --> 01:02:40.575
Any anything that they own directly or indirectly,
824
01:02:41.035 --> 01:02:44.960
50% or more should also have been, you know, blocked as well.
825
01:02:45.420 --> 01:02:45.819
So,
826
01:02:46.539 --> 01:02:50.319
yeah, I I am I I agree with you, Matt. I'm I'm the least surprised
827
01:02:50.619 --> 01:02:53.635
about this, the GitHub aspect of it too because,
828
01:02:54.335 --> 01:02:56.275
GitHub has done this before, and especially
829
01:02:56.575 --> 01:02:58.355
right after it was bought by Microsoft,
830
01:02:59.600 --> 01:03:03.060
there is a there you know, an order you know, because, like, GitHub,
831
01:03:03.520 --> 01:03:06.180
you know, Microsoft probably has better frameworks, technically,
832
01:03:06.960 --> 01:03:08.000
to to to,
833
01:03:08.695 --> 01:03:09.675
comply with,
834
01:03:10.055 --> 01:03:11.195
and way more lawyers
835
01:03:11.655 --> 01:03:15.230
and lawyers too. And then and then processes in place are ready for,
836
01:03:15.950 --> 01:03:16.450
obeying,
837
01:03:16.990 --> 01:03:18.450
all laws that they're,
838
01:03:18.910 --> 01:03:23.410
in knowledge of. So they've done this before, and they've shut down accounts, and they've shut down code.
839
01:03:23.904 --> 01:03:24.484
They essentially
840
01:03:24.785 --> 01:03:25.125
They
841
01:03:25.804 --> 01:03:28.805
Iranians. Yeah. They I mean, they bought GitHub, and then, like,
842
01:03:29.184 --> 01:03:34.720
almost immediately following buying GitHub, they, like, banned all Iranians from the platform. And And, like projects.
843
01:03:35.500 --> 01:03:37.040
And I it's it's tough.
844
01:03:38.380 --> 01:03:38.860
I
845
01:03:39.900 --> 01:03:42.515
it's I don't think it's from Malish
846
01:03:42.815 --> 01:03:46.675
on on GitHub side. It's like, they basically have 2 options here.
847
01:03:46.975 --> 01:03:50.994
It's comply with the laws or try to fight back.
848
01:03:52.200 --> 01:03:52.700
And,
849
01:03:53.640 --> 01:03:54.540
yeah, I
850
01:03:55.240 --> 01:03:58.220
I I just don't see them fighting back for just the,
851
01:03:59.385 --> 01:04:01.724
you know, the the the the, you know,
852
01:04:02.025 --> 01:04:05.724
the small cases that they're presented with. It's just way easier just to
853
01:04:06.140 --> 01:04:10.880
swat the flies than to really try to change the frameworks and laws in the United States.
854
01:04:14.725 --> 01:04:18.585
Yeah. I mean, at the end of the day, they're a centralized multibillion dollar corporation.
855
01:04:19.445 --> 01:04:19.945
Yeah.
856
01:04:20.885 --> 01:04:21.205
They
857
01:04:21.810 --> 01:04:23.670
those types of corps tend to,
858
01:04:24.610 --> 01:04:25.990
if anything, over comply.
859
01:04:27.410 --> 01:04:29.510
And and can I over comply?
860
01:04:29.984 --> 01:04:33.125
Yeah. I wanna bring up another point too on sanctions,
861
01:04:33.665 --> 01:04:36.565
and Super Fat Arrow, I see your comment as well.
862
01:04:38.529 --> 01:04:39.430
If if you
863
01:04:39.730 --> 01:04:47.190
look more into, like, why why sanctions exist and what they try to stop, I mean, one of the big aspects of it too is,
864
01:04:48.275 --> 01:04:59.230
United States resources and United States financial rails and the US dollar and things like that. Right? Like, all the things that the United States, quote, unquote, owns, including its people and including the people,
865
01:05:00.330 --> 01:05:01.070
that wanna
866
01:05:01.530 --> 01:05:03.390
stay in good faith through United States.
867
01:05:07.035 --> 01:05:10.734
That said, there was on the Ethereum thing that we haven't touched yet,
868
01:05:11.755 --> 01:05:16.175
there were a lot of stable coin or, I guess, a lot. I think USDC was the main one.
869
01:05:16.900 --> 01:05:20.599
They're you know, stablecoins are inherently centralized as well,
870
01:05:20.900 --> 01:05:22.520
and the sanctions, you know,
871
01:05:22.980 --> 01:05:27.605
even applied to them so that they were able to go in and freeze all the,
872
01:05:28.165 --> 01:05:28.665
USDC
873
01:05:29.045 --> 01:05:29.545
associated
874
01:05:29.845 --> 01:05:30.325
with,
875
01:05:31.125 --> 01:05:34.185
with this as well. So, like, you know, the sanctions are,
876
01:05:34.730 --> 01:05:36.349
you know, when you get into
877
01:05:37.049 --> 01:05:38.589
other countries using cryptocurrencies,
878
01:05:38.970 --> 01:05:45.625
well, like, that's not a United States financial tool. Right? So I'm, you know, I'm not gonna say too much more on
879
01:05:46.005 --> 01:05:47.545
Iranians using cryptocurrency
880
01:05:47.925 --> 01:05:53.349
because I don't I haven't read that article yet. But it's it's kind of designed to, like, prohibit
881
01:05:53.730 --> 01:05:54.230
Americans
882
01:05:54.849 --> 01:05:56.470
from doing something and prohibit,
883
01:05:57.170 --> 01:05:59.349
resources that are United States owned,
884
01:06:00.075 --> 01:06:02.095
financial tools from the United States,
885
01:06:02.474 --> 01:06:03.935
and contributing towards,
886
01:06:05.755 --> 01:06:08.815
a specific entity that they don't want using it?
887
01:06:09.330 --> 01:06:11.270
So there's a couple of things here. 1st,
888
01:06:15.730 --> 01:06:21.385
first, the the link that he that he commented about was what Superfat Arrow put in,
889
01:06:22.565 --> 01:06:25.785
the matrix chat, which is this, Reuters report,
890
01:06:27.190 --> 01:06:28.250
that came out yesterday
891
01:06:28.870 --> 01:06:30.170
that said Iran,
892
01:06:30.790 --> 01:06:33.290
made its first import order using cryptocurrency.
893
01:06:35.865 --> 01:06:39.805
They insinuated in the report that it was an attempt to evade sanctions.
894
01:06:40.505 --> 01:06:41.805
That's probably an accurate,
895
01:06:42.505 --> 01:06:43.850
insinuation. I mean,
896
01:06:44.330 --> 01:06:45.470
Iran is sanctioned
897
01:06:47.450 --> 01:06:47.950
significantly.
898
01:06:49.450 --> 01:06:50.590
The report states,
899
01:06:50.970 --> 01:06:56.065
it's pretty vague. The report says that the order was for $10,000,000 worth of something.
900
01:06:56.525 --> 01:06:57.825
Doesn't say for what,
901
01:06:58.579 --> 01:07:02.680
and it doesn't say which cryptocurrency was used or how it was used.
902
01:07:04.260 --> 01:07:06.335
So it's a very basic report. It
903
01:07:06.895 --> 01:07:07.395
is
904
01:07:08.175 --> 01:07:08.675
interesting
905
01:07:09.615 --> 01:07:12.994
to me most that it happened on the same day
906
01:07:15.650 --> 01:07:16.789
that all the
907
01:07:17.329 --> 01:07:19.029
tornado cache stuff came out.
908
01:07:21.525 --> 01:07:27.065
So that makes it more relevant, I think, to this discussion than it would otherwise. I mean, I I think people should assume
909
01:07:27.845 --> 01:07:32.210
that sanctioned con con countries are gonna have more use for Bitcoin and other cryptocurrencies,
910
01:07:33.230 --> 01:07:36.849
than nonsanctioned countries because they don't have access to the traditional financial system.
911
01:07:37.215 --> 01:07:39.715
Specifically if they're energy rich countries like Iran
912
01:07:40.015 --> 01:07:40.595
or Russia,
913
01:07:41.455 --> 01:07:45.610
where they can also have access to mining, which gives them a permissionless way of
914
01:07:46.250 --> 01:07:48.110
accessing the networks to begin with.
915
01:07:48.810 --> 01:07:52.030
So that is something we've expected for quite a while.
916
01:07:52.970 --> 01:07:57.654
But to see it basically drop in the same days as as the tornado cache stuff,
917
01:07:58.355 --> 01:08:01.575
is definitely an interesting development. The other thing
918
01:08:02.319 --> 01:08:09.299
Tony mentioned, which is one of the last two things I have on my list on the Ethereum side of things that I wanted to unpack here,
919
01:08:10.055 --> 01:08:12.315
is Tornado Cash allowed you to
920
01:08:13.015 --> 01:08:13.515
to,
921
01:08:16.055 --> 01:08:17.595
to use mixed assets,
922
01:08:18.780 --> 01:08:20.159
to use wrapped assets.
923
01:08:21.260 --> 01:08:24.000
And what that means is they allowed you to use USDC,
924
01:08:24.380 --> 01:08:24.880
centralized
925
01:08:25.864 --> 01:08:29.804
coin attached to US dollars held in a bank account by Circle
926
01:08:30.425 --> 01:08:32.925
and Coinbase backed by Goldman and BlackRock,
927
01:08:34.185 --> 01:08:35.005
with Tether
928
01:08:35.790 --> 01:08:37.330
and with wBTC,
929
01:08:37.790 --> 01:08:42.140
which is the same kind of product, but with Bitcoin held by a BitGo.
930
01:08:42.745 --> 01:08:44.285
And all 3 of those,
931
01:08:44.745 --> 01:08:45.805
as soon as
932
01:08:46.345 --> 01:08:49.085
as soon as, the sanction order went out,
933
01:08:49.465 --> 01:08:50.525
they got frozen
934
01:08:52.630 --> 01:08:53.850
by those custodians.
935
01:08:56.310 --> 01:08:57.130
So, obviously
936
01:08:58.230 --> 01:09:00.010
I mean, it's just a perfect example
937
01:09:00.864 --> 01:09:02.644
of of why these,
938
01:09:05.264 --> 01:09:10.160
this idea of wrapped assets is such a dangerous trust proposition. It's it's
939
01:09:10.480 --> 01:09:12.660
specifically the trust proposition that was
940
01:09:13.360 --> 01:09:17.140
attempted that that was solved by Bitcoin and other cryptocurrencies,
941
01:09:17.760 --> 01:09:18.260
right,
942
01:09:19.155 --> 01:09:23.495
where you don't have a third party holding an asset in a bank account
943
01:09:23.875 --> 01:09:26.935
or them or if in Bitcoin's case, on their keys,
944
01:09:27.320 --> 01:09:31.260
you have this native bearer instrument that you have full control over.
945
01:09:37.295 --> 01:09:39.215
Yeah. I I Yeah. I think it's,
946
01:09:39.775 --> 01:09:50.039
you know, the only other thing you you brought up Bitco, and I, I didn't realize they were also involved in this as well. They is it I wanted to just note that, you know, Bitco has been hit with,
947
01:09:50.920 --> 01:09:52.860
you know, fines in the past for,
948
01:09:53.745 --> 01:09:58.565
not being as strict about sanctions in the past too. So,
949
01:10:00.440 --> 01:10:03.660
specifically, with Iran, I believe it was just a multisig,
950
01:10:04.840 --> 01:10:09.815
that they helped assist with. So it wasn't even, like, a completely custodial thing. But
951
01:10:10.995 --> 01:10:13.895
that was to in my mind, like, that set really
952
01:10:15.555 --> 01:10:17.574
interesting precedent for
953
01:10:18.550 --> 01:10:20.250
even being involved in a multisig
954
01:10:20.870 --> 01:10:22.170
and, you know, participating
955
01:10:22.470 --> 01:10:26.330
in a in a quorum and assisting with that when it comes to,
956
01:10:26.790 --> 01:10:28.165
when it comes to sanctions.
957
01:10:28.625 --> 01:10:34.965
So, I'm I'm not surprised that they I was I didn't know they were involved in this, but I'm not surprised that they were really quick
958
01:10:35.290 --> 01:10:39.230
to act, based on them getting hit with fines previously.
959
01:10:41.370 --> 01:10:42.830
Yeah. I mean, this was particularly
960
01:10:43.290 --> 01:10:44.590
relevant to me because
961
01:10:48.405 --> 01:10:50.985
there's some outspoken members of
962
01:10:51.925 --> 01:10:53.625
Bitcoin Twitter who
963
01:10:54.219 --> 01:11:00.560
insisted to me many times that the best Bitcoin privacy tool was using wrapped Bitcoin and tornado cash,
964
01:11:02.545 --> 01:11:04.005
and this is a perfect example
965
01:11:04.305 --> 01:11:08.885
of wrapped Bitcoin not being Bitcoin and bringing in additional third party risk.
966
01:11:11.240 --> 01:11:15.660
So that's why I pinpointed the wrapped Bitcoin situation pretty quickly.
967
01:11:17.614 --> 01:11:20.114
Yep. It's basically just a custodian,
968
01:11:20.974 --> 01:11:22.114
someone else's keys.
969
01:11:22.815 --> 01:11:25.800
Yeah. You have a custodian holding it, and they can freeze it at will.
970
01:11:27.719 --> 01:11:31.099
And then do you have anything to add there, Seth, on the wrap side?
971
01:11:33.375 --> 01:11:35.935
I don't think so. It sounded like y'all y'all covered it well.
972
01:11:36.655 --> 01:11:42.275
It would be interesting to consider pediments from this angle, but I don't know if that's something you wanna get into today.
973
01:11:42.830 --> 01:11:45.890
I mean, I think fetiments are highly relevant to this discussion.
974
01:11:48.670 --> 01:11:50.850
I think it goes hand in hand with
975
01:11:53.165 --> 01:11:54.865
what I said earlier about
976
01:11:57.005 --> 01:12:03.620
using a more convenient option if available to you. But if it's no longer available to you, then moving to the more sovereign option.
977
01:12:05.120 --> 01:12:06.420
I think Fedimins
978
01:12:09.915 --> 01:12:11.375
have a different strategy
979
01:12:12.155 --> 01:12:13.695
than Tornado Cash
980
01:12:14.155 --> 01:12:14.895
in that
981
01:12:15.850 --> 01:12:18.989
the goal is not, you know, one large Fediment,
982
01:12:19.450 --> 01:12:22.350
but it's anyone can spin up a Fediment anywhere in the world,
983
01:12:23.725 --> 01:12:25.825
and they're all interoperable with each other,
984
01:12:27.085 --> 01:12:29.025
which obviously does make enforcement
985
01:12:29.325 --> 01:12:30.145
more difficult.
986
01:12:32.330 --> 01:12:39.150
And I think, you know, when we were on your show discussing it, this is one of the key reasons why I said
987
01:12:40.045 --> 01:12:40.785
it's important
988
01:12:41.245 --> 01:12:41.745
that
989
01:12:43.165 --> 01:12:51.570
that, essentially, to me, Fedimint are dead on arrival if it's not easy for people to spin up self hosted federation servers,
990
01:12:52.190 --> 01:12:53.250
Federman servers
991
01:12:53.790 --> 01:12:56.770
that operate through Tor and don't dox their IP address.
992
01:12:59.415 --> 01:13:04.695
And so that's that it's a it's a different strategy in this situation, which is basically a
993
01:13:06.770 --> 01:13:08.630
almost like a whack a mole strategy,
994
01:13:09.330 --> 01:13:15.510
just that there'll be so many small pediments all around the world that are operated through tour that it's like,
995
01:13:16.995 --> 01:13:22.535
you know, it it's it's hard to enforce in that level, and that's kind of I I don't think
996
01:13:24.920 --> 01:13:28.860
I don't think my thinking on Fedimans has really changed based on this
997
01:13:29.480 --> 01:13:29.980
development,
998
01:13:31.945 --> 01:13:34.685
but that's also probably because I was already
999
01:13:35.785 --> 01:13:36.685
more pessimistic
1000
01:13:37.225 --> 01:13:40.605
and paranoid than most people when thinking about this kind of stuff.
1001
01:13:41.330 --> 01:13:43.090
Yeah. And I think a little bit of,
1002
01:13:44.850 --> 01:13:48.870
when when bringing up Fedimint and and this kind of thing, it's more akin to
1003
01:13:49.330 --> 01:13:50.870
you can just consider each
1004
01:13:51.235 --> 01:13:51.735
federation
1005
01:13:52.195 --> 01:13:53.494
as its own
1006
01:13:54.675 --> 01:13:58.454
service that it's providing, right, its own custodian. So
1007
01:13:58.790 --> 01:14:03.450
there probably won't be, like, a sweeping change that says, like,
1008
01:14:03.830 --> 01:14:12.675
okay. All Fedimint servers are now sanctioned. Like, that's probably not what's gonna happen. Right? Because you could have like, Coinbase could switch to Fedimint.
1009
01:14:13.375 --> 01:14:16.660
Right? Like so it's like it's it's it's more of an implementation.
1010
01:14:17.200 --> 01:14:20.980
Like, who can sign up? You know? Are are Fedimint servers,
1011
01:14:21.360 --> 01:14:23.060
if they get large enough, are they
1012
01:14:23.405 --> 01:14:23.905
appropriately
1013
01:14:24.285 --> 01:14:30.625
complying with all laws and regulations? Are they doing this? Are they doing that? Right? So, like, it's not gonna be a,
1014
01:14:31.180 --> 01:14:32.080
like, a sweeping,
1015
01:14:33.420 --> 01:14:35.920
Fedimint is banned or, like, anyone that's operating
1016
01:14:36.699 --> 01:14:44.135
Fedimint software is, like, put on a list or is going to prison or anything like that. So I think it's it's all gonna come down to,
1017
01:14:45.474 --> 01:14:45.974
implementations
1018
01:14:46.434 --> 01:14:47.255
and policies.
1019
01:14:47.790 --> 01:14:51.730
And and and then, Matt, like you said, like, if I'm a Fedimint server for just
1020
01:14:52.190 --> 01:14:59.865
my family, right, that's a completely different story than, like, a Fedimint server that's, like, trying to operate globally. So I think it's gonna be
1021
01:15:00.885 --> 01:15:03.865
no. They they almost just, like, shares any risk that any,
1022
01:15:04.170 --> 01:15:06.329
you know, custodian really has. It's just
1023
01:15:07.849 --> 01:15:08.349
yeah.
1024
01:15:08.650 --> 01:15:10.429
Yeah. I mean, we've seen custodians
1025
01:15:11.050 --> 01:15:17.705
get targeted in the past. Pretty much the assumption everyone should make is that any custodian that gets large enough will be targeted.
1026
01:15:18.485 --> 01:15:21.465
We saw that the most recent large case was BitMEX.
1027
01:15:22.580 --> 01:15:23.720
But I think we also,
1028
01:15:24.900 --> 01:15:26.200
a lot of us overestimate
1029
01:15:26.580 --> 01:15:28.760
how quickly regulators move,
1030
01:15:30.844 --> 01:15:33.985
And a perfect example is, you know, Wallet of Satoshi,
1031
01:15:35.005 --> 01:15:37.665
which is a completely custodial lightning wallet,
1032
01:15:38.750 --> 01:15:44.210
that's been doing decent volumes and has lasted way longer than I expected without any kind of KYC.
1033
01:15:45.870 --> 01:15:47.150
Now that shouldn't be
1034
01:15:49.105 --> 01:15:54.645
I don't want that to be taken the wrong way. I still expect them to either implement KYC or shut down at some point.
1035
01:15:56.930 --> 01:15:59.510
But the point is is that's a single custodian
1036
01:16:01.010 --> 01:16:04.630
that has full view of funds, that can rug pull at any time,
1037
01:16:05.195 --> 01:16:08.735
that is being run by a known entity in Australia.
1038
01:16:10.955 --> 01:16:14.175
So if you talk about a multi sig custodian that can't see
1039
01:16:16.340 --> 01:16:20.760
transactions that needs to collude with each other, that can presumably be run anonymously,
1040
01:16:21.300 --> 01:16:22.199
which is key,
1041
01:16:22.675 --> 01:16:26.695
once again, to the whole thing to me is that you're able to run these servers over Tor
1042
01:16:27.155 --> 01:16:29.175
and self host them relatively cheaply.
1043
01:16:31.719 --> 01:16:34.540
You're just improving that status quo of what already exists,
1044
01:16:35.159 --> 01:16:38.060
then if that convenient option if that option
1045
01:16:38.840 --> 01:16:39.659
is not
1046
01:16:40.745 --> 01:16:42.925
workable in the current landscape,
1047
01:16:43.465 --> 01:16:43.965
then
1048
01:16:44.265 --> 01:16:45.965
you move to less convenient,
1049
01:16:46.825 --> 01:16:47.325
more
1050
01:16:50.450 --> 01:16:52.390
robust and sovereign methods,
1051
01:16:53.250 --> 01:16:53.750
tools.
1052
01:16:55.890 --> 01:16:57.110
That does that make sense?
1053
01:16:57.875 --> 01:17:00.455
Yeah. Yeah. I definitely think so. And I think the
1054
01:17:01.955 --> 01:17:07.750
the importance, like you said, of how easy it is to spin this up and how easy it is to do so in an adversarial
1055
01:17:08.770 --> 01:17:09.270
environment,
1056
01:17:10.210 --> 01:17:13.510
will really dictate how useful something like Fedevents could be.
1057
01:17:14.155 --> 01:17:24.170
I mean, I think Tornado Cash sets an interesting precedent that maybe they could go after anyone contributing to something like Fedimint at at a developmental level. They could take down repos.
1058
01:17:25.110 --> 01:17:29.770
They could say that anyone operating an instance of Fedimint is breaking sanctions laws because
1059
01:17:30.385 --> 01:17:37.125
some Iranian or some North Korean uses Fedimence to try to to move funds. So I definitely think that is something to be
1060
01:17:38.080 --> 01:17:39.600
concerned about and thinking about,
1061
01:17:40.240 --> 01:17:52.035
because it it could happen. And, I mean, I think Tornado Cash is like, I wouldn't have thought that very I would have thought that in, like, a worst case scenario before this, but I think it seems much more realistic that we have to think about them going after
1062
01:17:52.575 --> 01:17:55.875
broad privacy tools and not just specific instances.
1063
01:17:56.320 --> 01:17:57.040
Well, I'm
1064
01:17:57.680 --> 01:18:00.340
I I don't know. I I kinda have to push back a little bit.
1065
01:18:00.880 --> 01:18:05.780
I mostly agree, but I think, like, there's this distinction here that's important. And I'm not trying to
1066
01:18:09.824 --> 01:18:10.324
justify,
1067
01:18:12.065 --> 01:18:15.690
certain certain rules and regulations that we put in effect, but,
1068
01:18:16.250 --> 01:18:18.830
I think there is a difference when it comes down to
1069
01:18:20.650 --> 01:18:21.630
software versus
1070
01:18:22.570 --> 01:18:23.710
hosted software,
1071
01:18:25.304 --> 01:18:28.445
Software that anyone can, like, run on their computer,
1072
01:18:29.545 --> 01:18:45.125
and utilize, like, that's more akin to free speech. Right? But I when it comes to host a software, as in even if it's hosted on Ethereum, if it's on a domain, if it's on a Tor address, if if it's, like, wherever it's being hosted and people are interacting with it, like, that can,
1073
01:18:45.585 --> 01:18:55.699
be, quote, unquote, an illegal service or, quote, unquote, something that could be sanctioned. Right? But I think, like, there's a big distinction here between, like, what the treasury service did,
1074
01:18:56.385 --> 01:18:57.685
the US Treasury did.
1075
01:18:58.545 --> 01:19:04.645
And you could even argue, like, okay. Just because GitHub took down the source code like, the source code wasn't the problem.
1076
01:19:05.580 --> 01:19:10.160
GitHub just had to take down the source code because it was owned and operated by a sanctioned
1077
01:19:10.780 --> 01:19:11.280
entity.
1078
01:19:11.820 --> 01:19:14.080
The software itself was not,
1079
01:19:15.385 --> 01:19:17.224
what was sanctioned here. And,
1080
01:19:17.704 --> 01:19:18.364
you know,
1081
01:19:19.224 --> 01:19:20.525
and if and if FETI,
1082
01:19:21.065 --> 01:19:21.965
the company,
1083
01:19:23.050 --> 01:19:36.375
well, I'm not even gonna say the it's an open source software. Right? So, like, anyone could contribute to it. Yeah. MIT license, FOSS. MIT license, FOSS. It's not a hosted entity. It's not being hosted itself. Right? So, like, I think there's a big distinction
1084
01:19:37.155 --> 01:19:38.295
between running
1085
01:19:39.100 --> 01:19:40.080
software locally
1086
01:19:40.860 --> 01:19:41.360
and,
1087
01:19:42.060 --> 01:19:49.425
interacting with a hosted service that is running specific software in a specific way. So I I I have to push
1088
01:19:49.805 --> 01:19:50.945
back a a little bit on
1089
01:19:51.565 --> 01:19:58.830
just the idea that, like, they're going like, yeah. They wanna go after privacy tools. Right? Yeah. But I don't think, like, just simply
1090
01:19:59.530 --> 01:20:00.750
running or using
1091
01:20:01.770 --> 01:20:05.310
software locally is the problem. I think it's interacting with
1092
01:20:06.074 --> 01:20:09.375
host of software that's more of a problem than locally
1093
01:20:09.755 --> 01:20:22.070
local software, that's open source. And I and, I just think that's, like, an important distinction to keep in mind here, not justifying one thing or another, but, there is kind of a little bit of a difference between
1094
01:20:23.685 --> 01:20:24.985
software as free speech
1095
01:20:25.525 --> 01:20:26.985
and host of software.
1096
01:20:27.764 --> 01:20:29.784
But, I mean, I think if we look at Fedimence,
1097
01:20:30.085 --> 01:20:38.240
they're they're in a worse it seems like they would be in a worse legal position than something like Tornado Cash. They are centralized, and they are custodial.
1098
01:20:38.985 --> 01:20:46.260
I mean, you could argue they're decentralized because it's a federation, but not really because the federation members have to know each other. It's each individual
1099
01:20:46.639 --> 01:21:05.920
federation, right, as a host of service, not the software itself. But the same thing could be done with Tornado Cash. I mean, it it wasn't it was running on Ethereum, but anyone running an Ethereum node is running that smart contract and can interact with it at any point in time. Obviously, that's less people than, like, a Bitcoin node, but it's it's not as if it was a centralized
1100
01:21:06.860 --> 01:21:07.360
hosted
1101
01:21:08.220 --> 01:21:09.440
custodial tool.
1102
01:21:09.980 --> 01:21:15.065
It's the opposite. And the fact that it is undergoing sanctions and its code and its contributors,
1103
01:21:15.765 --> 01:21:17.385
I think, is a
1104
01:21:17.925 --> 01:21:26.370
something we need to be mindful of moving forward for sure and something we need to be considering how how we build these things so that they can function in adversarial environments.
1105
01:21:28.025 --> 01:21:30.125
I I I think I agree with both of you guys.
1106
01:21:31.945 --> 01:21:35.565
I think a a useful example here to me is
1107
01:21:35.960 --> 01:21:37.340
is signal messenger.
1108
01:21:40.199 --> 01:21:42.139
Or at least what I'm trying to get
1109
01:21:43.895 --> 01:21:48.235
to make clear here is is is with the trade off signal mix.
1110
01:21:49.895 --> 01:21:53.070
So signal obviously allows you to easily and conveniently
1111
01:21:53.450 --> 01:21:54.990
communicate with friends and family
1112
01:21:55.930 --> 01:21:57.230
in an encrypted way.
1113
01:21:57.850 --> 01:21:59.050
Now I don't think
1114
01:22:00.025 --> 01:22:01.485
I I personally think
1115
01:22:01.865 --> 01:22:03.325
our laws protect
1116
01:22:04.425 --> 01:22:05.245
using encryption,
1117
01:22:05.545 --> 01:22:07.645
and they protect freedom of speech,
1118
01:22:08.105 --> 01:22:09.325
and they protect
1119
01:22:10.200 --> 01:22:10.700
privacy.
1120
01:22:12.600 --> 01:22:13.580
But, obviously,
1121
01:22:14.200 --> 01:22:20.425
history has shown that we can't rely on those laws. I think it's relatively reasonable to expect a scenario
1122
01:22:21.364 --> 01:22:24.425
where signal essentially is made illegal in America.
1123
01:22:26.620 --> 01:22:29.280
And there's been some narratives out of
1124
01:22:29.820 --> 01:22:31.200
different members of congress
1125
01:22:31.820 --> 01:22:35.200
and rebuttals from signal in that regard and stuff to
1126
01:22:35.865 --> 01:22:39.165
in that in that notion, in that idea that, okay,
1127
01:22:40.105 --> 01:22:42.845
if they if signal doesn't implement some kind of backdoor,
1128
01:22:44.330 --> 01:22:45.390
it's made illegal.
1129
01:22:46.010 --> 01:22:46.990
In that situation,
1130
01:22:48.170 --> 01:22:50.910
we still have false tools available to us
1131
01:22:53.415 --> 01:22:56.155
to communicate with each other in an encrypted private way.
1132
01:22:56.935 --> 01:22:57.435
But
1133
01:22:58.510 --> 01:22:59.489
signal itself
1134
01:22:59.869 --> 01:23:02.289
is obviously completely dead in the water,
1135
01:23:03.389 --> 01:23:06.690
fighting a legal battle, hopefully, winning the legal battle. Right?
1136
01:23:07.565 --> 01:23:09.905
So I I feel like it's a good example of
1137
01:23:11.805 --> 01:23:18.510
if you're able to use a slightly more convenient tool, we have way more people using encrypted messaging than if they were using PGP.
1138
01:23:19.290 --> 01:23:27.225
But at the end of the day, you're able to move to a more sovereign tool, and we have those tools available to us if the need arises in the future.
1139
01:23:27.765 --> 01:23:36.190
And practice those more sovereign tools before you need them, I think, is a big call out as you you don't wanna be blindsided and have no no idea what you're doing
1140
01:23:37.210 --> 01:23:44.175
when you enter that adversarial environment. So practice and understanding those tools ahead of time, even if you use the more convenient option, is important.
1141
01:23:44.475 --> 01:23:44.975
100%.
1142
01:23:48.155 --> 01:23:51.889
And then that brings me to our last item on the Ethereum side,
1143
01:23:52.510 --> 01:23:53.330
which is
1144
01:23:54.510 --> 01:23:58.210
they are planning on moving to proof of stake shortly.
1145
01:24:00.155 --> 01:24:02.094
There has been a lot of talk
1146
01:24:02.795 --> 01:24:04.895
about the concept of freezing
1147
01:24:06.074 --> 01:24:08.175
Ethereum that is being used in Tornado,
1148
01:24:08.820 --> 01:24:10.040
similar to the way
1149
01:24:10.740 --> 01:24:11.240
WBTC
1150
01:24:11.700 --> 01:24:13.320
and USDC got frozen.
1151
01:24:13.940 --> 01:24:15.480
And, also, I've had
1152
01:24:16.100 --> 01:24:16.600
some
1153
01:24:19.725 --> 01:24:21.105
anti Freedom Bitcoiners
1154
01:24:21.565 --> 01:24:22.705
call me out on Twitter
1155
01:24:23.085 --> 01:24:24.385
asking the likelihood
1156
01:24:24.685 --> 01:24:28.730
of CoinJoin Bitcoin or Bitcoin that has some kind of collaborate
1157
01:24:29.530 --> 01:24:30.030
collaboration
1158
01:24:30.969 --> 01:24:33.389
transaction history on it getting frozen.
1159
01:24:34.865 --> 01:24:41.445
When we talk about these native assets getting frozen, not these wrapped assets that are held by a third party,
1160
01:24:44.450 --> 01:24:47.350
we are talking about, essentially, what is a sophisticated
1161
01:24:47.970 --> 01:24:49.830
mining censorship attack,
1162
01:24:50.285 --> 01:24:52.705
where the miners who are including transactions
1163
01:24:53.405 --> 01:24:54.225
in a block,
1164
01:24:55.725 --> 01:24:56.545
are coerced
1165
01:24:57.085 --> 01:24:57.905
or forced
1166
01:24:59.040 --> 01:25:02.739
are they collude with each other to not include certain transactions
1167
01:25:04.000 --> 01:25:08.275
in a block, so you're not able to essentially send the Bitcoin or send the ETH.
1168
01:25:10.594 --> 01:25:14.135
Now Ethereum is currently still using proof of work. They have miners.
1169
01:25:14.995 --> 01:25:17.175
The mining set is relatively distributed.
1170
01:25:18.690 --> 01:25:21.510
In a world where Ethereum moves to proof of stake,
1171
01:25:22.770 --> 01:25:24.949
I think there's very good reason to believe
1172
01:25:25.305 --> 01:25:27.965
that those validators will centralize
1173
01:25:28.265 --> 01:25:31.245
among regulated entities, such as exchanges,
1174
01:25:32.185 --> 01:25:33.324
Binance, Coinbase,
1175
01:25:34.260 --> 01:25:34.760
Kraken.
1176
01:25:38.900 --> 01:25:40.600
It is interesting to me
1177
01:25:41.780 --> 01:25:46.305
that really if, you know, fortunately, I'm not an Ethereum stakeholder.
1178
01:25:46.844 --> 01:25:48.225
But if I owned Ethereum,
1179
01:25:48.605 --> 01:25:50.225
to me, this should be,
1180
01:25:51.060 --> 01:25:55.400
like, almost perfect timing wake up call to abort the proof of stake transition.
1181
01:25:56.660 --> 01:25:57.800
It seems like
1182
01:25:58.364 --> 01:26:01.025
the Ethereum side is kinda just ignoring that aspect.
1183
01:26:05.460 --> 01:26:07.239
Would you guys agree with me
1184
01:26:08.579 --> 01:26:09.079
that
1185
01:26:11.139 --> 01:26:14.679
this situation becomes an even more interesting scenario
1186
01:26:14.980 --> 01:26:19.625
or even more dangerous scenario in a pro post proof of stake world.
1187
01:26:21.205 --> 01:26:23.305
Yeah. I definitely think so. I mean,
1188
01:26:23.845 --> 01:26:26.520
like you mentioned, the the control
1189
01:26:27.060 --> 01:26:34.015
over percentages in the network once proof of stake happens is gonna rapidly shift towards centralized staking services.
1190
01:26:34.955 --> 01:26:40.415
Not that they'll necessarily be dominant, not that one will have over 51% control or anything like that, but
1191
01:26:40.730 --> 01:26:45.150
there will be a at least a large percentage of the network in those centralized
1192
01:26:45.530 --> 01:26:46.270
and regulated
1193
01:26:46.650 --> 01:26:47.550
staking services.
1194
01:26:48.650 --> 01:26:49.390
And so
1195
01:26:49.975 --> 01:26:57.675
if this had happened after proof of stake, it would have been interesting if the US Treasury had tried to pressure those regulated entities to
1196
01:26:58.550 --> 01:27:08.295
prevent transactions that were to or from the Tornado Cash smart contract, because in theory, they could. I don't know how slashing would work in that scenario. I don't know enough about the
1197
01:27:08.775 --> 01:27:23.300
the approach taken in proof of stake by Ethereum to know how the rest of the network would respond if there was a I think we're gonna find out. Yeah. It see it seems like it. It seems we're heading that way. Entering an an adversarial environment and switching a proof of stake at the same time is a
1198
01:27:23.605 --> 01:27:25.545
a spicy set of things to combine.
1199
01:27:25.925 --> 01:27:34.440
But it it really will be the true test of if all of the proof of stake advocates have have truth in the things they've been claiming or if it's gonna backfire in a massive way.
1200
01:27:35.060 --> 01:27:40.645
I've got a I've got a hot take too from from Ben Carmen. He's being censored on Twitch right now.
1201
01:27:41.685 --> 01:27:48.560
The Not by me. He's being he's being censored by Amazon. He's not going to Matrix chat. Yeah. He probably said
1202
01:27:48.860 --> 01:27:51.040
Tornado Cash, and that's why it got censored.
1203
01:27:51.740 --> 01:28:00.465
The f two point o beacon contract on Ethereum was also created by coins from Tornado Cash too. So it's kind of a you know, it's it's an interesting
1204
01:28:00.765 --> 01:28:06.739
aspect as well. But, yeah, I I agree. I mean, the Bitcoin Wait. Wait. Wait. Wait. The beacon contract was? Yeah.
1205
01:28:07.920 --> 01:28:15.635
So that that's, like, the original contract of I think I think so. I don't know exactly how that works, so that's that's his,
1206
01:28:15.935 --> 01:28:16.494
that's his take.
1207
01:28:17.855 --> 01:28:24.720
But going back back to it, like, I I I I think you're right. And not only is it, like, does the power shift
1208
01:28:25.260 --> 01:28:31.195
to large stakeholders, but it's like who those stakeholders are and those typically, like, regulated cucks.
1209
01:28:31.994 --> 01:28:35.855
So we're we're definitely gonna see a big, big change, I think.
1210
01:28:36.554 --> 01:28:47.219
I think was it Marathon a while back, the one that tried to censor transactions and they walked that back? Full fact compliant clean blocks. Yeah. Which is so funny too because then, like, after enough
1211
01:28:47.725 --> 01:28:54.465
hate on Twitter, they backtracked it. So it was like, what were you doing in the first place? Like, the white like, you obviously didn't need to do that.
1212
01:28:55.710 --> 01:29:00.050
So, yeah, I I agree. When the more the more regulated cocks that are controlling
1213
01:29:00.350 --> 01:29:01.710
the the chain,
1214
01:29:02.190 --> 01:29:04.449
you're just gonna you're gonna see it massively
1215
01:29:05.505 --> 01:29:07.685
change what they censor and what they don't censor.
1216
01:29:10.625 --> 01:29:11.685
And there's definitely
1217
01:29:11.985 --> 01:29:12.485
some
1218
01:29:15.150 --> 01:29:17.410
validity there on the
1219
01:29:18.670 --> 01:29:22.290
something that I've a lot of us have been very vocal about, which is
1220
01:29:22.775 --> 01:29:27.115
that we don't want, you know, too many large regulated US miners
1221
01:29:30.830 --> 01:29:33.409
in the on the bit you know, securing the Bitcoin network,
1222
01:29:34.030 --> 01:29:36.050
for that for a similar reason.
1223
01:29:36.350 --> 01:29:41.495
Now there there is an interesting aspect of this mining censorship is that,
1224
01:29:43.155 --> 01:29:48.055
if a large group of miners are choosing not to include your transaction in a block,
1225
01:29:48.739 --> 01:29:50.679
you can raise your transaction fee.
1226
01:29:51.540 --> 01:29:54.040
Presumably I mean, the same thing applies
1227
01:29:54.820 --> 01:29:57.400
in a proof of stake system, all else equal,
1228
01:29:58.315 --> 01:30:00.655
and you increase your transaction fee until,
1229
01:30:01.595 --> 01:30:04.175
it is included in the block. At that point,
1230
01:30:06.050 --> 01:30:07.670
the miners who are attempting
1231
01:30:08.050 --> 01:30:08.550
to
1232
01:30:09.329 --> 01:30:11.909
censor that transaction have a choice to make.
1233
01:30:12.805 --> 01:30:16.505
They can choose not to build on top of your block and essentially try and,
1234
01:30:18.245 --> 01:30:19.670
create their, you know,
1235
01:30:20.550 --> 01:30:23.050
a fork of that chain and and build
1236
01:30:23.350 --> 01:30:24.810
themselves. If they have
1237
01:30:25.270 --> 01:30:30.215
a significant majority of the hash rate that could be successful for them, it will be very expensive,
1238
01:30:31.715 --> 01:30:34.375
gets more expensive the less hash they have.
1239
01:30:35.635 --> 01:30:36.695
On proof of stake,
1240
01:30:37.199 --> 01:30:39.699
with Ethereum, there is a slashing component
1241
01:30:40.880 --> 01:30:42.020
that Seth mentioned.
1242
01:30:42.880 --> 01:30:48.905
They are constantly changing how all of that works, and I do not have enough time in the day to pay attention to it.
1243
01:30:50.085 --> 01:30:52.105
What changes, like, 5 times a day.
1244
01:30:52.805 --> 01:30:53.305
But
1245
01:30:53.640 --> 01:30:56.300
but I will stand by my previous statement
1246
01:30:57.000 --> 01:31:03.905
that it does appear that if they move forward with proof of stake, which it appears they are planning on doing full steam ahead,
1247
01:31:04.285 --> 01:31:05.985
we will find out pretty soon
1248
01:31:08.765 --> 01:31:13.760
how that all works out in practice, and I you know, it will be very expensive lessons for people
1249
01:31:14.780 --> 01:31:15.840
is my expectation.
1250
01:31:16.540 --> 01:31:26.375
Yeah. I mean, the the other saving grace here is that we're not we're not gonna change the Bitcoin transaction fee model. Right? Like, even if we like, the whole idea of tail emissions and all that bullshit,
1251
01:31:27.540 --> 01:31:32.600
like, no one's no one's gonna be no one's gonna be going along with that. Right? But Ethereum, they change
1252
01:31:32.900 --> 01:31:43.585
difficulty adjustments all the time, difficulty bombs. They change the the ways the incentives work all the fucking time. So it's like, if it became a situation where, like, a, you know, a bunch of minor,
1253
01:31:44.000 --> 01:32:03.960
you know, proof of stake fees were, like, coming from transactions, but then there are a lot of transactions being censored and, you know, money on the table and, like, regulated institutions are just refusing to mine them. Like, if it ever came down to, like, all the the proof of stake miners want more money, they'll just fucking change the code, and everyone will go along with it. Right? So it's like,
1254
01:32:04.440 --> 01:32:07.340
the incentives just don't line up, and they don't have
1255
01:32:07.755 --> 01:32:10.655
solid foundations for how the incentive should be.
1256
01:32:11.355 --> 01:32:14.655
And when with the rich people controlling the chain,
1257
01:32:15.700 --> 01:32:17.640
they can just fucking change it at will.
1258
01:32:19.780 --> 01:32:23.720
And there's there's a there's a key aspect here that I wanna make clear.
1259
01:32:24.204 --> 01:32:26.465
Here, we're talking about protocol level censorship.
1260
01:32:29.085 --> 01:32:32.840
Most you know, 99% of the time, what we see is,
1261
01:32:34.980 --> 01:32:38.679
if you go for protocol level censorship, I would say, is
1262
01:32:40.875 --> 01:32:45.135
the hardest reach in all these situations. And usually, when you see
1263
01:32:46.235 --> 01:32:48.495
actions made, it it it
1264
01:32:49.110 --> 01:32:51.130
focuses on the lowest hanging fruit,
1265
01:32:51.430 --> 01:32:52.810
easiest things to enforce,
1266
01:32:53.350 --> 01:32:55.050
impacts 90% of people,
1267
01:32:56.070 --> 01:32:58.010
best bang for your buck type of situation,
1268
01:32:58.535 --> 01:33:00.155
and that's usually by,
1269
01:33:01.335 --> 01:33:04.075
weaponizing the regulated services in the industry.
1270
01:33:04.935 --> 01:33:07.595
So what I do expect to see play out here
1271
01:33:09.280 --> 01:33:17.219
is people that interact with Tornado Cash. People that indirectly interact with Tornado Cash are gonna start seeing their accounts frozen, closed,
1272
01:33:17.615 --> 01:33:18.675
unregulated services.
1273
01:33:19.375 --> 01:33:22.595
We've already seen that happen with collaborative transactions in the past.
1274
01:33:23.135 --> 01:33:25.475
Services like BlockFi explicitly state,
1275
01:33:26.620 --> 01:33:30.000
you can't use CoinJoin before or after using BlockFi.
1276
01:33:32.300 --> 01:33:36.185
So, like, when we go back to, like, the Jimmy Fallon dusting example,
1277
01:33:36.645 --> 01:33:45.449
like, I could see a world where Jimmy Fallon goes to deposit some ETH into Coinbase or withdraw ETH from Coinbase to his Jimmy Fallon account. And,
1278
01:33:46.949 --> 01:33:59.735
like, Coinbase's automatic change surveillance tool just flags his account, freezes it, and then he has to go through, like, a customer service quagmire for weeks or months. And because of Jimmy Fallon, he'll probably get it reversed, but if it's just an average person, they might never get it reversed.
1279
01:34:00.070 --> 01:34:02.409
So a lot of these pain points do kind of
1280
01:34:06.630 --> 01:34:12.395
affect people that are are focused on using these regulated services that connect with the traditional banking system.
1281
01:34:14.295 --> 01:34:14.795
But
1282
01:34:15.790 --> 01:34:22.210
it doesn't mean that if you don't interact with them, you're completely immune. It just means you're more resistant to those tactics
1283
01:34:23.125 --> 01:34:24.824
than those who rely on them.
1284
01:34:27.445 --> 01:34:48.515
Yeah. It's much more likely that the regular person, whether they're just part of the dust attack or if they actually have used Tornado Cash in the past, they're much more likely to just run into fungibility issues like you mentioned with coin joints. So I don't think they would need to worry about some kind of sanctions action against them, but we'll obviously have to see. But, definitely, the more likely one is regulated entities are
1285
01:34:48.949 --> 01:34:53.770
gladly going to comply with the NOFAX sanctions list. So if you have funds that have touched Tornado Cash,
1286
01:34:54.150 --> 01:34:55.610
I'm curious to see what happens.
1287
01:34:55.925 --> 01:35:00.985
Yeah. And just to go to show how messy this type of situation can be on these open ledgers,
1288
01:35:02.005 --> 01:35:03.125
is, like, you could send
1289
01:35:03.690 --> 01:35:05.870
someone could go buy a sandwich with Ethereum,
1290
01:35:07.370 --> 01:35:10.510
and the sandwich owner can then take that Ethereum and then
1291
01:35:11.025 --> 01:35:12.485
send it to Tornado Cash,
1292
01:35:13.585 --> 01:35:20.405
and that could still flag the person who was buying the sandwich even if they didn't even know that Tornado Cash was being used by the recipient.
1293
01:35:22.370 --> 01:35:26.150
Yeah. And the cost of compliance is also really high too. So, like, sometimes
1294
01:35:26.610 --> 01:35:35.655
and not to, you know, justify some of the actions by some of these exchanges and custodians, but, like, sometimes it's like they don't they don't want to have to deal with it if, like, 0.1%
1295
01:35:35.955 --> 01:35:36.614
of users
1296
01:35:37.120 --> 01:35:59.580
are coming in with with with funds, from Tornado Cash or whatever. You know? It's just easier. It's probably just easier to not even question a thing. Just say, sorry. Your account's closed. They you know, Coinbase has how many, you know, other millions and millions of users. You know? That's they're not a problem case. So it's like you know, even just like, creating support tickets or whatever, it's, like, costing them money, and they're already
1297
01:36:00.040 --> 01:36:00.620
a nonprofitable
1298
01:36:01.000 --> 01:36:03.975
business. So it's like, it's just easier just to overcomply,
1299
01:36:04.835 --> 01:36:12.200
not have to not have to deal with customer support tickets and say, like, sorry. You're high risk and shut down their account.
1300
01:36:14.500 --> 01:36:15.400
Okay. So
1301
01:36:16.020 --> 01:36:25.715
I think this was a very productive conversation. I'm glad we had it because I don't think many people will have it just because of the chilling effect of sanctions, and people just don't like talking about privacy in general because,
1302
01:36:27.000 --> 01:36:30.940
our society has groomed people to think that talking about privacy publicly,
1303
01:36:32.040 --> 01:36:35.180
is something you should be ashamed of or concerned about.
1304
01:36:37.755 --> 01:36:38.415
But, ultimately,
1305
01:36:38.875 --> 01:36:41.295
Ethereum is a shitcoin that is,
1306
01:36:42.235 --> 01:36:43.695
built on very poor fundamentals,
1307
01:36:44.075 --> 01:36:48.660
and I don't think can handle adversarial environments, and I think we will see that.
1308
01:36:49.200 --> 01:36:50.820
So the question here is
1309
01:36:51.600 --> 01:36:52.820
for the you know,
1310
01:36:53.435 --> 01:36:56.735
to before we wrap up this conversation, the question here is
1311
01:36:57.115 --> 01:36:57.935
what lessons,
1312
01:36:58.635 --> 01:37:00.655
you know, should should Bitcoin users,
1313
01:37:01.140 --> 01:37:07.080
Bitcoin stakeholders, and Monero stakeholders take from this? And I I throw Monero in the bucket because we have Seth here.
1314
01:37:09.105 --> 01:37:13.925
And, obviously, because Monero is a group of stakeholders that are very focused on privacy.
1315
01:37:16.600 --> 01:37:17.659
I think the
1316
01:37:18.120 --> 01:37:22.139
a lot of the big ones we've already covered, but I I think the key takeaways for me are
1317
01:37:22.840 --> 01:37:25.805
build these tools if you're a developer or someone who's
1318
01:37:26.285 --> 01:37:27.745
even just active in the community,
1319
01:37:28.205 --> 01:37:32.225
build these tools in a way that they can be resilient to adversarial environments. Because
1320
01:37:32.765 --> 01:37:35.070
I think we've been very spoiled over the last
1321
01:37:35.630 --> 01:37:39.329
decade plus where Bitcoin has really had an a very easy path.
1322
01:37:39.710 --> 01:37:42.909
Many people don't feel like that, but I think it really has had an easy path,
1323
01:37:43.515 --> 01:37:48.475
in usage and in adoption and has not been in this type of adversarial environment before.
1324
01:37:48.875 --> 01:37:57.200
So I I think for the the builders, make sure that you're thinking about how your tool, how your code, how your service can function in adversarial environments.
1325
01:37:58.300 --> 01:38:01.120
And, again, not specifically saying sanctions evasion, but,
1326
01:38:01.554 --> 01:38:10.695
in authoritarian regimes and countries that crack down on Tor usage and in all of these different scenarios that we see worldwide. Make sure that your tool has the ability to function
1327
01:38:11.090 --> 01:38:12.150
in spite of those.
1328
01:38:13.330 --> 01:38:21.454
For the average user, I I think the big thing, like, you also mentioned is, like, yes, use the convenient tool that also protects your privacy for now, but
1329
01:38:21.914 --> 01:38:30.540
spend the time now before you have to to understand what other tools are available and how to use them, so that if your favorite tool I mean, if you're an Ethereum user
1330
01:38:30.840 --> 01:38:36.985
and suddenly Tornado Cash is sanctioned, how are you going to gain privacy on Ethereum? Like, what is your approach there going to be?
1331
01:38:37.705 --> 01:38:42.764
And you could take you could approach that from the Bitcoin angle. If if you use Samurai Wallet right now,
1332
01:38:43.385 --> 01:38:54.040
but you're worried that Samurai Wallet somehow would get taken down or sanctioned or whatever, figure out a path towards what you can do for privacy on Bitcoin if you don't have that tool for some reason.
1333
01:38:54.765 --> 01:39:00.545
So making sure that you have those options available, that you have that ability to keep yourself sovereignty and autonomy open
1334
01:39:01.005 --> 01:39:03.265
no matter what happens to your favorite tools.
1335
01:39:04.430 --> 01:39:07.010
And I think the last one is just not to let the
1336
01:39:08.110 --> 01:39:17.075
the propaganda and psychological pressure that goes with things like this get to you. I'm I'm glad that I've seen a lot of responses on Twitter that are very focused on
1337
01:39:17.455 --> 01:39:21.270
the need for personal privacy and how privacy is a right and is not a
1338
01:39:21.750 --> 01:39:25.510
is not a criminal thing. It's not something only only criminals need. But just,
1339
01:39:25.910 --> 01:39:33.085
I definitely hope that people continue to keep their heads up, keep understanding why privacy is important, and don't let actions against privacy tools
1340
01:39:33.545 --> 01:39:41.000
lead you to think that the the fight for privacy is over, or that it's it's pointless. And I think we've seen the the beautiful ways that both cryptography,
1341
01:39:41.620 --> 01:39:42.920
the free and open source
1342
01:39:43.220 --> 01:39:47.000
software movement, and Cypherpunks have continued to push forward
1343
01:39:47.535 --> 01:39:49.635
either alongside of or against,
1344
01:39:50.335 --> 01:39:55.715
the current legal system that they're in and the current environment that they're in. So I'm I'm optimistic
1345
01:39:56.015 --> 01:39:56.995
that's gonna continue,
1346
01:39:57.599 --> 01:40:00.420
and I'm thankful for all the tools we have at our disposal right now.
1347
01:40:03.039 --> 01:40:08.025
That was, that was so well said, Seth. I'm not even gonna attempt to
1348
01:40:08.405 --> 01:40:13.385
add on to that. That, yeah. I mean, you can go out your time to talk about Monero. So Well,
1349
01:40:13.845 --> 01:40:15.980
before we before we do,
1350
01:40:17.820 --> 01:40:18.320
the,
1351
01:40:19.500 --> 01:40:22.960
so there is a similarity here, and it's a question I've been getting
1352
01:40:24.895 --> 01:40:26.035
by people privately
1353
01:40:26.495 --> 01:40:27.555
since this unfolded.
1354
01:40:29.935 --> 01:40:34.210
There there's a there's a similarity here that if you used
1355
01:40:35.150 --> 01:40:38.770
if you used Tornado Cash on Ethereum, it's explicitly visible
1356
01:40:41.045 --> 01:40:45.065
on chain. Like, it's very obvious if an account interacted with Tornado Cash.
1357
01:40:46.485 --> 01:40:48.185
It is also the similarity
1358
01:40:48.660 --> 01:40:50.120
at play here is it's also
1359
01:40:50.500 --> 01:40:53.880
very clear if someone uses collaborative transactions on Bitcoin.
1360
01:40:55.460 --> 01:40:56.920
You can see them on chain.
1361
01:40:57.264 --> 01:41:00.804
Now there's some kind of there's some collaborative transactions like PayJoint,
1362
01:41:01.985 --> 01:41:04.724
which are designed to look like normal transactions,
1363
01:41:05.665 --> 01:41:06.645
but the main
1364
01:41:08.440 --> 01:41:10.139
but those provide more,
1365
01:41:11.320 --> 01:41:11.820
probability
1366
01:41:12.199 --> 01:41:12.699
busting
1367
01:41:13.000 --> 01:41:13.739
type of
1368
01:41:14.040 --> 01:41:15.260
defense at scale,
1369
01:41:15.800 --> 01:41:16.300
while
1370
01:41:16.895 --> 01:41:18.435
coin joints are more,
1371
01:41:19.935 --> 01:41:24.915
explicit tools that are designed to to break your own personal
1372
01:41:25.640 --> 01:41:32.140
trail on chain, and they're very visible because they use equal outputs. So you can see them on chain,
1373
01:41:33.885 --> 01:41:35.425
and you know someone used CoinJoin.
1374
01:41:36.925 --> 01:41:40.385
So there's a lot of people out there right now that are thinking to themselves,
1375
01:41:42.780 --> 01:41:43.519
is this
1376
01:41:43.820 --> 01:41:44.639
a situation
1377
01:41:45.019 --> 01:41:50.079
that shows me that I should use CoinJoin now, or is this a situation that shows me
1378
01:41:50.515 --> 01:41:53.335
that I should wait and not use CoinJoin now?
1379
01:41:55.875 --> 01:41:56.375
What
1380
01:41:56.755 --> 01:41:58.935
what would you say to those users, Seth?
1381
01:42:01.240 --> 01:42:01.820
I mean,
1382
01:42:02.680 --> 01:42:04.380
I I'm definitely a
1383
01:42:05.960 --> 01:42:20.110
a person who's focused on privacy, and I I worry that if you don't need privacy now, you will in the future. So if you take that approach of, I don't need on chain privacy today, so I'm gonna forego the fungibility issues that go along with using privacy tools on Bitcoin,
1384
01:42:20.810 --> 01:42:24.110
you risk the activity that you do today being something that
1385
01:42:24.594 --> 01:42:26.855
ends up being harmful to you in the future.
1386
01:42:27.235 --> 01:42:32.614
Because, ultimately, once you make those transactions, you cannot take them back, and they're on a permanent immutable ledger.
1387
01:42:33.030 --> 01:42:35.610
So that's that's the big deal with Bitcoin.
1388
01:42:36.310 --> 01:42:37.290
And that's why
1389
01:42:37.750 --> 01:42:57.039
and I said this on Twitter in the past couple days. I still advocate if you're using Bitcoin, you need to be using something like Samara Wallet. And, specifically, Samara Wallet is is still my recommendation, but you need to be using privacy tools because, otherwise, your finances are just in the wind. Everyone can see them, and that could come back to bite you in the future.
1390
01:42:58.585 --> 01:43:05.885
Obviously, there is some downside to that, and that downside really only comes with using centralized and regulated exchanges and tools like that.
1391
01:43:06.265 --> 01:43:07.965
But that that is the
1392
01:43:08.380 --> 01:43:16.080
that's the cost of the choices made with Bitcoin and the choices made for the protocol itself to be transparent by default and by design,
1393
01:43:16.860 --> 01:43:17.360
and
1394
01:43:18.045 --> 01:43:21.185
privacy being brought in in an optional app layer.
1395
01:43:21.965 --> 01:43:35.790
It works well when you use it properly, but it is it's visible on chain. Everyone if if you bought funds in Coinbase, you send them to your samurai wallet and you mix them, Coinbase knows you're using samurai wallet. It is very, very simple. The fingerprint is very clear.
1396
01:43:37.344 --> 01:43:50.719
And that's just one of those downsides. It's clear that you're opting into privacy above and beyond what the regular Bitcoin user does. And that those are those are really just critical downsides of the protocol itself not being private by design,
1397
01:43:51.179 --> 01:43:55.600
and that that just comes with the territory. But for me, it is not worth the cost to
1398
01:43:56.005 --> 01:43:57.945
not gain financial privacy today
1399
01:43:58.965 --> 01:44:02.985
over just that fear of a a an issue with fungibility or funds being,
1400
01:44:03.900 --> 01:44:12.320
flagged or something in the future. And if you're really worried about that, what you need to be doing is learning how to use the decentralized alternatives to centralized exchanges, the things like Robosats,
1401
01:44:12.625 --> 01:44:13.605
the things like Bisc,
1402
01:44:14.385 --> 01:44:27.110
the places where you won't get funds flagged because there's not a central entity who's doing KYC AML and all the stuff who's who's gonna be at, kind of running the running the show there. So those things are important. I can also touch on,
1403
01:44:27.995 --> 01:44:33.375
like, why that's one of the reasons I appreciate Monroe's approach there, but I'll let Tony jump in before I get to that.
1404
01:44:34.960 --> 01:44:40.340
Yeah. I think that was well said. And the only other thing that I would add on to it is, like, you know, the thing
1405
01:44:41.199 --> 01:44:41.815
that you're
1406
01:44:42.775 --> 01:44:51.035
you, you know, may be doing legally and fine today, may be illegal tomorrow. And even if, you know, you're still like, okay. Well, I'm not gonna and this goes well beyond
1407
01:44:51.730 --> 01:44:58.310
legality and and and things like that. Right? Like, I'm not trying to say, like, you only need privacy if if you're doing legal things
1408
01:44:59.535 --> 01:45:07.395
or not. But, like, I think the point is, like, you know, laws change. Like, cancel culture changes. Like, it's an ever changing landscape. Right?
1409
01:45:07.820 --> 01:45:15.040
And, I I think, like, you know, you should seek privacy as much as you can in order so you don't just get swept up in bullshit tomorrow,
1410
01:45:15.705 --> 01:45:34.264
even if you're doing something completely legit and, you know, no problem at all, like, you know, you don't wanna get swept up in bullshit. So I and then, like, going back, like, going back to, like, okay. Well, I just I just, quote, unquote, tainted my coins by, like, being in the coin join, and now I can't go back in the coin base. And my my only thing is, like, well,
1411
01:45:34.565 --> 01:45:36.585
what were you in it for in the first place?
1412
01:45:37.525 --> 01:45:49.660
If it's just number go up and that's the only thing you cared about, then, you know, I I don't know what to tell you. Like, I I didn't I didn't get in Bitcoin, so I can go back into the financial rails. So that's that's my only thing.
1413
01:45:50.040 --> 01:45:50.940
Yeah. I mean
1414
01:45:52.545 --> 01:45:53.045
so
1415
01:45:53.425 --> 01:45:54.325
from my perspective,
1416
01:45:55.985 --> 01:45:57.525
as a law abiding citizen,
1417
01:45:59.590 --> 01:46:01.850
there's something to be said here about
1418
01:46:02.630 --> 01:46:04.010
the fact that
1419
01:46:06.685 --> 01:46:07.505
my perception
1420
01:46:08.685 --> 01:46:11.905
of our laws as currently stands in the United States,
1421
01:46:13.165 --> 01:46:15.345
since I'm an American, and you should,
1422
01:46:15.670 --> 01:46:17.849
you know, apply that to wherever
1423
01:46:18.230 --> 01:46:19.690
your jurisdiction is,
1424
01:46:21.510 --> 01:46:23.690
is that using collaborative transactions
1425
01:46:23.995 --> 01:46:25.614
for basic financial privacy
1426
01:46:27.514 --> 01:46:29.534
is not a criminal act.
1427
01:46:29.835 --> 01:46:31.614
It's not an illegal act by itself.
1428
01:46:32.155 --> 01:46:32.655
Now
1429
01:46:34.860 --> 01:46:39.440
our country has been known to pass unjust laws in the future better than the past.
1430
01:46:40.460 --> 01:46:42.720
They might pass unjust laws in the future.
1431
01:46:43.385 --> 01:46:47.885
And, obviously, the stakes become significantly higher if you're using
1432
01:46:48.745 --> 01:46:53.290
collaborative transaction tools if they are made explicitly illegal in the future.
1433
01:46:56.310 --> 01:46:58.090
And where I'm going with that
1434
01:46:59.405 --> 01:47:03.585
is to say, obviously, the main trade off here is collaborative transactions
1435
01:47:03.965 --> 01:47:06.065
are very visible on chain.
1436
01:47:06.420 --> 01:47:09.240
Your usage of them is very obvious on chain.
1437
01:47:10.020 --> 01:47:13.480
You might have trouble with using regulated services in the future.
1438
01:47:15.135 --> 01:47:17.075
If you're comfortable with that trade off,
1439
01:47:18.575 --> 01:47:20.835
you get financial privacy today
1440
01:47:22.560 --> 01:47:24.660
without explicitly breaking any laws.
1441
01:47:25.760 --> 01:47:26.660
And there's
1442
01:47:27.600 --> 01:47:29.300
a strong argument, I think,
1443
01:47:30.085 --> 01:47:31.545
that this type of action
1444
01:47:31.925 --> 01:47:32.824
in this direction
1445
01:47:34.085 --> 01:47:34.585
shows
1446
01:47:35.045 --> 01:47:35.545
that
1447
01:47:36.244 --> 01:47:38.744
it's important to get your privacy in order before
1448
01:47:40.330 --> 01:47:43.310
using certain privacy tools become explicitly illegal.
1449
01:47:48.545 --> 01:47:51.685
And I hate having to watch my words when I talk about this shit.
1450
01:47:54.020 --> 01:47:57.000
Yeah. That is the fun part of publicly talking about these things.
1451
01:47:57.460 --> 01:48:00.600
So, Seth, I have a great question for you. Mhmm.
1452
01:48:01.585 --> 01:48:04.885
Someone on Twitter, Monero guy on Twitter said,
1453
01:48:05.505 --> 01:48:10.725
that he's personally embarrassed that an Ethereum privacy tool got sanctioned before Monero.
1454
01:48:12.130 --> 01:48:12.630
Thoughts?
1455
01:48:15.810 --> 01:48:17.010
The memes are good.
1456
01:48:17.810 --> 01:48:23.575
I mean, there there's the there's the bit of it that I think is true and, like, what we talked about earlier where
1457
01:48:23.955 --> 01:48:31.370
when something gets sanctioned, it shows that the the US government is both worried about the usage of the tool, so they they see it as a threat.
1458
01:48:31.830 --> 01:48:32.330
They
1459
01:48:33.430 --> 01:48:42.525
feel impotent to solve it, obviously, because they can't just take it down. They can't just stop it. So when sanctions are taken instead of other legal action, I think it is an interesting
1460
01:48:42.985 --> 01:48:44.685
tell that at least the
1461
01:48:45.545 --> 01:48:48.205
the US government sees the tool as working pretty well.
1462
01:48:50.770 --> 01:49:01.405
So, I mean, in in some ways, it is interesting that something like Monero hasn't been sanctioned yet, but I think that's also another one of the strengths that comes with the entire protocol being privacy preserving.
1463
01:49:01.785 --> 01:49:12.110
And so if they want to sanction Monero, they can't just sanction a specific app that some people use within Monero. They have to sanction the entire decentralized network, the desire the entire protocol,
1464
01:49:12.890 --> 01:49:15.675
and that's a very difficult thing to do.
1465
01:49:17.114 --> 01:49:23.054
So you don't think you don't think Monero will be the target of
1466
01:49:24.540 --> 01:49:26.720
this type of financial action in the future?
1467
01:49:29.420 --> 01:49:32.165
I definitely would not be surprised to see something like this,
1468
01:49:32.725 --> 01:49:40.345
mostly for the psychological effect. Again, like we talked about earlier, I think the main reason to do something like that would be to dissuade,
1469
01:49:41.390 --> 01:49:43.330
quote, unquote, compliant citizens
1470
01:49:43.710 --> 01:49:44.530
from using
1471
01:49:44.910 --> 01:49:46.050
something like Monero
1472
01:49:46.510 --> 01:49:49.570
because they're worried about the implications for them legally.
1473
01:49:50.105 --> 01:49:53.245
So I think that would be the main reason why something like that would be done, but
1474
01:49:53.705 --> 01:49:56.525
the simplest route for them is what they've been doing, which is
1475
01:49:56.960 --> 01:50:02.020
continue to constrict the easy ways to get access to Monero, getting it delisted from exchanges
1476
01:50:02.800 --> 01:50:03.300
using
1477
01:50:03.760 --> 01:50:08.175
regulatory bodies, not laws, but regulatory bodies and banking
1478
01:50:09.995 --> 01:50:13.775
ties to prevent exchanges from being able to easily support Monero.
1479
01:50:14.200 --> 01:50:21.935
So I think that's the that's the easiest path for them right now and the easiest path to dissuade the the regular person from getting access to Monero and using it.
1480
01:50:22.495 --> 01:50:27.635
But if Monero's usage continues to increase, especially in in places that they don't like,
1481
01:50:28.095 --> 01:50:30.120
I I wouldn't be surprised to see it. I mean,
1482
01:50:30.600 --> 01:50:32.780
it's growing in usage of darknet markets.
1483
01:50:33.240 --> 01:50:37.100
In the past, it has been linked to at least mining of it has been linked to North Korea.
1484
01:50:37.640 --> 01:50:45.085
So, yeah, as it grows, as people understand what does and what it does well, I wouldn't be surprised to see some sort of legal action, but this is
1485
01:50:45.465 --> 01:50:53.059
precisely the environment that Monero has been designed for. Not, again, sanctions evasion, but this concept of an adversarial environment and ensuring that
1486
01:50:53.440 --> 01:50:57.940
in this worst case scenario, in in an oppressive regime, in an authoritarian regime,
1487
01:50:58.320 --> 01:51:01.925
Monero is built as much as possible to be resilient.
1488
01:51:02.305 --> 01:51:05.845
And so all of the different trade offs that go into effect, the pros and the cons,
1489
01:51:06.545 --> 01:51:11.090
make it something that I think is extremely resilient and in an adversarial environment
1490
01:51:11.710 --> 01:51:23.755
and is prepared for this. I think Ethereum is quite the opposite, where it's it's built by developers who are optimistic about the future and and want to build something that is kind of building for the best case and not for adversarial environments.
1491
01:51:24.280 --> 01:51:41.515
And I think Bitcoin is is definitely more towards the Monero side of things and has been built for adversarial environments. But I think that I mean, you've talked about it a ton on the show. I've talked about it a lot. I think that the privacy piece has been missed and has very sweeping implications for how effective Bitcoin can be in adversarial environments.
1492
01:51:42.690 --> 01:51:55.375
That's so that's why I think, like, I wouldn't be surprised to see some action against my arrow, but it is very resilient and, in some ways, even more so than Bitcoin. And and so it would be interesting to see what that type of sanction would mean for
1493
01:51:55.675 --> 01:51:56.975
Monero and its usage.
1494
01:51:57.675 --> 01:52:00.699
But I I wouldn't be surprised to see something like like that in the future.
1495
01:52:02.920 --> 01:52:03.159
Do
1496
01:52:03.960 --> 01:52:05.020
does your view
1497
01:52:05.515 --> 01:52:09.215
does your view on the path forward for Monero as a
1498
01:52:10.555 --> 01:52:11.055
project
1499
01:52:11.515 --> 01:52:14.415
change based on this tornado cash situation?
1500
01:52:18.500 --> 01:52:24.895
Say that one more time. Sorry. Does your does your view on the path forward from the Monero project, has it changed based
1501
01:52:25.775 --> 01:52:27.235
on this tornado situation?
1502
01:52:28.895 --> 01:52:30.495
No. No. Not at all.
1503
01:52:31.375 --> 01:52:34.835
Like I mentioned, I think this is, like, this is what has been in mind
1504
01:52:36.159 --> 01:52:42.580
when building Monero and when building out the ecosystem around Monero is what what does it look like for someone to use Monero,
1505
01:52:43.120 --> 01:52:44.420
buy Monero, etcetera,
1506
01:52:45.105 --> 01:52:45.605
under
1507
01:52:46.065 --> 01:52:47.285
worst case conditions.
1508
01:52:48.225 --> 01:52:52.485
And so I I think that the project has been well pointed towards this goal
1509
01:52:52.889 --> 01:52:56.030
and has been built for this kind of use case. So I'm I'm not
1510
01:52:56.889 --> 01:53:01.070
I don't think there's much to really change at this point. I mean, even, like, the specifics of this,
1511
01:53:01.585 --> 01:53:05.925
Monero has been prepared for years for GitHub takedowns or anything like that.
1512
01:53:06.945 --> 01:53:07.925
Mining decentralization
1513
01:53:08.225 --> 01:53:10.539
is is improved through,
1514
01:53:11.079 --> 01:53:28.190
commodity hardware mining, so they couldn't sanction mining hardware. It's improved through on chain privacy, so they can see specific transaction details and try to censor specific transactions, although they could try to enforce mining IPTI blocks, but again that gets very difficult because the miners aren't large scale industrial regulated miners.
1515
01:53:29.210 --> 01:53:37.555
There are a lot of aspects of Anero. Again, they've just they've been built for this. Like, this is this is what has been in mind by the people who have been working on Monero for the last
1516
01:53:38.095 --> 01:53:38.995
8 years now.
1517
01:53:39.455 --> 01:53:43.540
So I I don't think there's any need for a big shift there, and I think a lot of
1518
01:53:44.159 --> 01:53:46.659
the the things that have been seen as excessive or,
1519
01:53:47.280 --> 01:53:47.780
unnecessary
1520
01:53:48.159 --> 01:53:51.540
in Monero's approach, I think, will rapidly be seen as
1521
01:53:51.925 --> 01:53:56.985
smart. And, yes, they have trade offs that do have drawbacks, that do have associated risks,
1522
01:53:57.525 --> 01:54:00.185
but I think people will start to understand why
1523
01:54:00.640 --> 01:54:09.060
the Monero community has made the choices it's made in the project's direction over the last 8 years even though we've been in a non adversarial environment for most of that time.
1524
01:54:11.195 --> 01:54:29.815
Yeah. There's something to appreciate about that aspect of it. Right? Like, it's not the most convenient option, and people realize that's not the easiest to use. It's not the most widely available thing. And people have figured out a way, and people are using it, in the ways that they they can in in in in a pretty good private way. I look at a lot of ways I wish
1525
01:54:30.275 --> 01:54:35.000
we could just, like, rip the fucking Band Aid off and on Bitcoin and just say, like, okay. Like, we're,
1526
01:54:36.280 --> 01:54:39.580
you know, we're not we're not trying to be using these regulated
1527
01:54:40.135 --> 01:54:46.475
custodians so much. We're not trying to we're not playing this happy go lucky world where everyone just, like, cares about number go up.
1528
01:54:47.310 --> 01:54:50.370
You know, in some ways, I wish we would just rip that Band Aid off, but,
1529
01:54:51.310 --> 01:54:53.810
you know, it is it is what it is currently.
1530
01:54:54.155 --> 01:54:59.135
Well, then if we don't rip the Band Aid off, like, the Band Aid's gonna be basically ripped off
1531
01:55:00.395 --> 01:55:01.135
by others.
1532
01:55:01.515 --> 01:55:04.050
You know? Like, I mean, a lot of
1533
01:55:06.989 --> 01:55:13.485
Yeah. I mean, who have however the band that gets ripped off, let's someone rip it off. Like, let's, like, let's quit playing that.
1534
01:55:14.105 --> 01:55:21.270
I mean, just so, like like, super fat hour makes a good point on the matrix chat. Right? Which is something that I've said for a while, which is
1535
01:55:21.810 --> 01:55:23.989
the the single largest attack on Bitcoin
1536
01:55:24.369 --> 01:55:25.270
has been extremely
1537
01:55:26.425 --> 01:55:27.485
and has been ongoing,
1538
01:55:27.785 --> 01:55:29.565
and that's KYC
1539
01:55:30.185 --> 01:55:31.405
AML identification
1540
01:55:31.945 --> 01:55:33.965
on all of these regulated services.
1541
01:55:34.410 --> 01:55:37.070
And as a result, then those identities
1542
01:55:37.449 --> 01:55:39.390
are linked on chain
1543
01:55:40.410 --> 01:55:43.070
and then tracked through the system hurting everybody else.
1544
01:55:45.025 --> 01:55:48.485
When we look at the type of attacks that are possible
1545
01:55:48.785 --> 01:55:51.925
on users achieving trying to achieve
1546
01:55:52.320 --> 01:55:54.020
financial privacy when using Bitcoin.
1547
01:55:54.640 --> 01:55:59.700
Most of the attacks, especially the low hanging fruit stuff resolve rev revolves around
1548
01:56:00.875 --> 01:56:07.455
blocking access to those regulated services. And, usually, those regulated services are where you're connecting between,
1549
01:56:08.320 --> 01:56:10.820
the Fiat world and the Bitcoin world.
1550
01:56:15.015 --> 01:56:16.795
Monero already lives in that situation.
1551
01:56:17.495 --> 01:56:23.675
Like, Monero already like, how many exchange how many bank exchanges offer Monero, Seth? Just Kraken?
1552
01:56:24.580 --> 01:56:29.400
If we're talking US, we're only Kraken at this point. Yeah. Yep. So, like,
1553
01:56:31.355 --> 01:56:38.815
so when we're talking about, like, worst case scenario for Bitcoin privacy users, it's like, okay. So they can't use 99% of exchanges
1554
01:56:43.349 --> 01:56:45.770
Like, you can't do that on Monero already.
1555
01:56:47.864 --> 01:56:55.724
Yeah. I mean, you you can still at this point, but that I mean, I do think that will likely continue to to change.
1556
01:56:56.905 --> 01:56:57.370
But,
1557
01:56:57.850 --> 01:57:08.494
yeah, we kind of have never had the chance to have a Band Aid. So, I mean, I wonder, like, what I kind of expect to happen is, like, to see, like, almost like a bifurcation of the network in the short term
1558
01:57:08.875 --> 01:57:10.255
or, like, medium term,
1559
01:57:10.635 --> 01:57:14.700
which basically, like, there's Bitcoin users that use it in a self sovereign way,
1560
01:57:15.420 --> 01:57:16.480
that use it privately,
1561
01:57:16.940 --> 01:57:23.200
that don't interact with the block fives and the coin bases of the world, and then there's this whole other subset that is
1562
01:57:24.235 --> 01:57:27.695
this this whole other group of Bitcoin stakeholders that are basically
1563
01:57:28.395 --> 01:57:30.975
using it in this regulated environment.
1564
01:57:34.640 --> 01:57:39.380
I I do wanna push back a little bit on that idea that if we don't have KYC AML,
1565
01:57:40.235 --> 01:57:45.934
Bitcoin is fine, and we don't need to worry about that. So exchanges are the only risk. I mean, even in that scenario,
1566
01:57:46.554 --> 01:57:52.560
you if you're gonna use a currency, you're gonna use it in person. You're gonna use it to buy things that may
1567
01:57:52.940 --> 01:57:56.480
connect to your ID in some way. If you're running a business that's using Bitcoin,
1568
01:57:56.825 --> 01:58:09.100
you're gonna pay suppliers. You don't want people seeing that info. So it's it's not like removing KYC removes all of the privacy No. Yeah. It's definitely not everything. It just makes everything so much more complicated when talking about a privacy perspective.
1569
01:58:09.560 --> 01:58:10.940
It does. And it it provides
1570
01:58:12.120 --> 01:58:12.620
broader
1571
01:58:13.725 --> 01:58:14.865
pseudo anonymity
1572
01:58:15.405 --> 01:58:19.585
than otherwise is possible with KYC. It it it makes at least that fragile pseudonymity
1573
01:58:21.830 --> 01:58:23.130
not broken instantly.
1574
01:58:23.670 --> 01:58:30.730
I guess, like, my my perspective on it is, like so we see in the digital privacy world so often
1575
01:58:32.455 --> 01:58:33.255
that it's the
1576
01:58:33.815 --> 01:58:35.355
all it takes is one mistake,
1577
01:58:36.055 --> 01:58:41.355
and that one mistake is usually what gets you. Right? And you see this in the high profile cases all the time.
1578
01:58:42.020 --> 01:58:52.425
And it's not just Bitcoin or cryptocurrency or Monero. It's it's it's everything on the Internet. Right? We have that term like the Streisand effect where Barbara Streisand tried to remove a photo from the Internet,
1579
01:58:53.045 --> 01:58:53.545
and
1580
01:58:54.085 --> 01:58:57.864
instead, the photo got reposted everywhere. And and so with with
1581
01:58:58.200 --> 01:59:05.020
when it comes to blockchains, obviously, that's on steroids because we expect the Bitcoin ledger to outlast all of us if it's successful.
1582
01:59:05.435 --> 01:59:06.335
Like, this thing's immutable,
1583
01:59:06.955 --> 01:59:08.175
shared around the world,
1584
01:59:09.355 --> 01:59:09.855
transparent,
1585
01:59:10.235 --> 01:59:12.335
and is expected to last forever.
1586
01:59:13.034 --> 01:59:14.815
If you make a mistake on there,
1587
01:59:15.960 --> 01:59:21.660
you're not gonna be able to remove that mistake. Now when we talk about the little mistakes that people tend to make,
1588
01:59:22.255 --> 01:59:27.715
a lot of times that comes down to some kind of connection to KYC, and that is just my
1589
01:59:28.415 --> 01:59:30.835
that's that's basically where I'm coming from here.
1590
01:59:31.540 --> 01:59:37.400
And, like, the Bitfinex hacker, the the richest rapper of all time is a perfect example of that where they were
1591
01:59:38.020 --> 01:59:41.364
buying gift cards, and it was attached to their real life identity,
1592
01:59:43.505 --> 01:59:44.645
their legal name.
1593
01:59:50.810 --> 01:59:54.909
Yep. And, yeah, and I agree with that. Like, Bitcoin isn't sufficient enough. Like,
1594
01:59:55.210 --> 02:00:04.550
if if we're when we use Bitcoin connected to our identity, we're doing it wrong. I'm like, well, if you it's almost like the example case that you brought up, Matt, where, like, if you go to a sandwich shop,
1595
02:00:05.030 --> 02:00:09.270
you know, your identity is right there, right in front of the sandwich shop owner. Right? So it's
1596
02:00:10.070 --> 02:00:19.915
I wouldn't I wouldn't go as hard and fast as superfat arrow is here, but, he he's, you know, he's on the right track. Like, KYC AML is the list of activity here.
1597
02:00:20.375 --> 02:00:23.400
But we still need, you know, Bitcoin privacy to be a lot better.
1598
02:00:26.180 --> 02:00:29.080
Yeah. I mean, I will a 100% cosign that,
1599
02:00:32.085 --> 02:00:37.465
and I think I've been a big proponent of it. I think Bitcoin privacy tools have improved tremendously over the last few years.
1600
02:00:38.325 --> 02:00:43.559
I think they need to continue to improve, and I think they need to get easier to use, and I think time is of the essence.
1601
02:00:46.099 --> 02:00:46.599
Agreed.
1602
02:00:48.500 --> 02:00:49.000
Awesome.
1603
02:00:55.885 --> 02:00:56.684
Okay. Let's,
1604
02:00:57.490 --> 02:01:01.670
it's been a great conversation, boys. Let's wrap up with some, final thoughts.
1605
02:01:02.210 --> 02:01:03.350
Seth, final thoughts.
1606
02:01:04.530 --> 02:01:05.910
Oh, it was hard to go first.
1607
02:01:07.250 --> 02:01:12.455
I I think final thoughts for me are just I don't know. We've I've touched on it so many times already, but
1608
02:01:12.995 --> 02:01:14.375
just learn the tools,
1609
02:01:15.290 --> 02:01:22.110
Get ahead of the game. We're we are heading towards an adversarial environment, and anybody that wants self sovereignty, that wants autonomy
1610
02:01:22.545 --> 02:01:27.764
is going to need to be able to to leverage the the power that has been given to us through cryptography
1611
02:01:28.304 --> 02:01:29.605
and through open source code.
1612
02:01:30.224 --> 02:01:31.525
And so learning to
1613
02:01:32.160 --> 02:01:43.775
to harness those tools and use them to benefit you and your family and your loved ones is is gonna be more and more vital over time. So just go ahead and start today. I mean, that's why I love Citadel dispatch. It's it's actually actionable,
1614
02:01:44.635 --> 02:01:51.135
and there's a lot of stuff in here that that you can take and start to make changes to your your usage of Bitcoin and other tools today.
1615
02:01:52.139 --> 02:01:56.559
So I think that's really the takeaway here. I mean, obviously, we talked a lot about Tornado Cash and
1616
02:01:56.940 --> 02:02:13.909
and other privacy tools, but just important to have an understanding of those and and have alternatives in case the one that you happen to be using or something that you like gets shut down. You need to be able to to to switch and to switch over again, not just yourself, but hopefully your family and the people you love and and bring people with you on that journey.
1617
02:02:14.885 --> 02:02:24.880
Awesome. Thanks again for joining, Seth. I appreciate you, and, to all the freaks out there, if you like listening to Seth, he has a fantastic podcast. Just search opt
1618
02:02:25.340 --> 02:02:29.040
out pod on your favorite podcast app. Thanks, Marcia.
1619
02:02:29.855 --> 02:02:32.034
Yeah. Of course. Tony, final thoughts?
1620
02:02:33.295 --> 02:02:49.715
Yeah. I mean, like, Seth is hitting the hit the nail with the hammer here. He's he's doing a final job. I I almost don't need to say anything at all, but I would I will echo that point. Like, you know, you know, don't be scared by all the privacy stuff or, like, quote, unquote, takedowns and enforcements against it.
1621
02:02:50.355 --> 02:02:56.295
You know, keep learning. It's Bitcoin's, you know, always gonna be a a changing landscape. All the
1622
02:02:57.370 --> 02:03:06.815
laws and enforcements and everything are ever changing. So just just keep learning, keep going at it, keep pushing yourself forward with the tools that you use and the things that you learn.
1623
02:03:07.675 --> 02:03:14.660
And and, yeah, it's just a shout out to, like, shows like so to all dispatch that are out there helping helping educate people.
1624
02:03:15.680 --> 02:03:23.724
Awesome. Thanks, Tony. I wanna thank our guests, second time for joining me on short notice to talk about about such a sensitive yet important topic.
1625
02:03:24.425 --> 02:03:33.520
To all the freaks out there, thank you for continuing to support the show via stats or subscribing or joining the live chat. I love all you freaks to join the live chat. Cortic,
1626
02:03:33.900 --> 02:03:36.560
we've seen all your comments. I love that you're here participating.
1627
02:03:38.355 --> 02:03:42.295
We have 2 more I have 2 more solo dispatches set up for this week,
1628
02:03:42.915 --> 02:03:43.895
both on Friday.
1629
02:03:45.370 --> 02:03:53.790
We're gonna have Sid in the studio. We're gonna be talking about grassroots Bitcoin adoption. He drove his motorbike around the country going to all the different Bitcoin meetups.
1630
02:03:54.475 --> 02:03:57.615
And then I'm gonna have Rockstar in the studio later that afternoon,
1631
02:03:58.235 --> 02:04:03.055
to talk more on this subject and to talk about a variety of things. Rockstar is always an interesting character
1632
02:04:03.590 --> 02:04:06.329
to have on the show. So if you haven't subscribed already,
1633
02:04:07.510 --> 02:04:09.929
open your favorite podcast app, type in dispatch,
1634
02:04:10.230 --> 02:04:11.530
click the subscribe button.
1635
02:04:11.835 --> 02:04:14.415
That auto download button really helps as well.
1636
02:04:15.755 --> 02:04:20.655
And then if you like the video stuff, you know, pick your favorite platform, whether that's Twitch or YouTube
1637
02:04:20.990 --> 02:04:21.490
or
1638
02:04:22.590 --> 02:04:29.175
Bitcoin TV. If you subscribe there, you get notified. On Bitcoin TV, you do not get notified if you click subscribe, but they're all streamed there.
1639
02:04:29.735 --> 02:04:35.434
But if you subscribe on YouTube or Twitch, you'll get notified, and the archives are also posted to Rumble and Telegram.
1640
02:04:36.375 --> 02:04:40.840
With all that said, I do appreciate you all. Stay smart out there. Stay humble.
1641
02:04:41.940 --> 02:04:42.440
Peace.
NOTE
Transcription provided by Podhome.fm
Created: 3/17/2024 4:23:56 PM
Duration: 7483.69
Channels: 1
1
00:00:32.860 --> 00:00:39.840
2
00:00:40.375 --> 00:00:41.914
I know it's been a few weeks.
3
00:00:42.855 --> 00:00:44.954
Apologize for that. I have been on the road.
4
00:00:45.975 --> 00:00:48.554
I did bring my podcasting equipment with me,
5
00:00:49.254 --> 00:00:49.754
but
6
00:00:51.239 --> 00:00:54.780
the opportunity never presented itself to have a nice in person conversation.
7
00:00:55.719 --> 00:00:57.899
I hope you freaks have been enjoying
8
00:00:58.595 --> 00:01:03.575
the Bitcoin review episodes I've been doing with Justin Moon and MBK that are on the feed.
9
00:01:04.195 --> 00:01:06.775
It seems like we've gotten a lot of good feedback on those.
10
00:01:07.220 --> 00:01:09.480
So, fortunately, I did get a bunch of those out,
11
00:01:10.100 --> 00:01:15.400
over these last few weeks, but it's good to be back with you all for another proper dispatch.
12
00:01:16.915 --> 00:01:17.895
So dispatch
13
00:01:18.435 --> 00:01:20.375
is a live interactive show
14
00:01:20.994 --> 00:01:23.015
focused on Bitcoin and Freedom Tech.
15
00:01:23.850 --> 00:01:28.030
It is supported by you guys. No ads, no sponsors,
16
00:01:28.650 --> 00:01:29.150
100%
17
00:01:29.530 --> 00:01:30.590
audience funded,
18
00:01:31.165 --> 00:01:34.465
and I really appreciate you all for continuing to support the show.
19
00:01:35.244 --> 00:01:36.945
The easiest way to support the show
20
00:01:38.340 --> 00:01:42.280
is to subscribe on your favorite podcast app by searching searching Cielo Dispatch,
21
00:01:42.740 --> 00:01:48.040
or we have a new YouTube channel. You shouldn't use YouTube. You shouldn't use Google products, but
22
00:01:48.565 --> 00:01:51.545
a lot of freaks have told me that they want it on YouTube.
23
00:01:51.924 --> 00:01:53.065
So I put it on YouTube.
24
00:01:54.085 --> 00:01:57.065
If you use YouTube, consider subscribing there. That does help.
25
00:01:58.229 --> 00:01:59.850
Supposedly, I cannot get
26
00:02:01.030 --> 00:02:01.770
a custom
27
00:02:02.710 --> 00:02:05.210
channel name until I have a 1000 people
28
00:02:05.625 --> 00:02:07.085
subscribed on YouTube. So
29
00:02:07.625 --> 00:02:09.885
if you like YouTube, you can be part of that change.
30
00:02:10.745 --> 00:02:15.320
Also, this show runs on sets. Gotta pay the rent. Gotta pay for these mics.
31
00:02:16.180 --> 00:02:22.965
So I appreciate all the support you guys give me in terms of that. The easiest way to support the show with Sats
32
00:02:23.985 --> 00:02:24.645
is sidleldispatch.com.
33
00:02:25.585 --> 00:02:30.220
We have a BTC pay server instance there. You can pay with Lightning or on chain.
34
00:02:30.840 --> 00:02:35.340
You can also support the show via PayNIM. My PayNIM is Odell. Very easy to remember.
35
00:02:36.295 --> 00:02:38.075
PayNIMs are supported on both Samura
36
00:02:38.694 --> 00:02:40.314
Wallet and Sparrow Wallet.
37
00:02:40.935 --> 00:02:41.834
And, finally,
38
00:02:42.135 --> 00:02:47.850
a lot of freaks have been enjoying podcasting 2.0. You can support the show via various podcasting 2.0 apps,
39
00:02:49.190 --> 00:02:50.810
such as Fountain Podcasts,
40
00:02:51.510 --> 00:02:52.410
Breeze Wallet,
41
00:02:52.915 --> 00:02:57.575
and Podverse dot f m. So if you're doing that, thank you again for doing that.
42
00:02:58.595 --> 00:03:13.715
Supporting the show in podcasting 2.0 is as simple as searching Ciel dispatch in your favorite podcasting 2.0 app, pressing the subscribe button, choosing how many sats per minute you think dispatch is worth it to you. And then as you listen, it automatically stream sats from your lightning wallet to my lightning wallet.
43
00:03:14.095 --> 00:03:15.875
It's pretty cool. I get to see the flow
44
00:03:16.575 --> 00:03:18.195
as that is happening.
45
00:03:19.019 --> 00:03:21.040
You can also do something called a boostogram.
46
00:03:22.379 --> 00:03:22.879
Boostograms
47
00:03:23.180 --> 00:03:26.719
allow you to attach a message to a single payment of sats.
48
00:03:27.505 --> 00:03:29.525
And as is tradition, I read
49
00:03:30.625 --> 00:03:39.790
the top 4 boosts from the previous episode. We have Kobe with 10,000 sats saying great show. Keep it technical freaks. Fiat price is a distraction.
50
00:03:40.250 --> 00:03:41.390
We have letter 6173
51
00:03:43.130 --> 00:03:43.870
with 7,700
52
00:03:44.625 --> 00:03:48.644
177 SATs saying, you have saved lives with such great content. Thank you for all the years.
53
00:03:49.265 --> 00:03:50.325
We have Proboost
54
00:03:50.944 --> 00:03:54.680
at 5,000 SATs saying lorem ipsum satoshi dim sum.
55
00:03:55.060 --> 00:03:56.760
I think you got a kick out of that one.
56
00:03:57.060 --> 00:03:58.920
Then we have John Bea with 4,444
57
00:03:59.939 --> 00:04:11.640
sats. This was a fantastic episode, super in-depth and entertaining as hell. Payments is a really complex challenge, and the more educated and informed the end user is, the better. I think the best way to educate users is through the wallet interface,
58
00:04:12.020 --> 00:04:23.565
like how Sparrow Wallet displays the visualization of inputs and outputs. This is what separates Bitcoin only wallets from other multi coin wallets. It just need to find the right balance of informing the user without overwhelming them with too much info.
59
00:04:24.585 --> 00:04:28.890
Reminder that if you do a boost or stream SaaS through podcasting 2.0,
60
00:04:30.230 --> 00:04:33.450
your SaaS also go directly to open source projects
61
00:04:35.715 --> 00:04:37.895
that are awesome that are being worked on by teams,
62
00:04:38.594 --> 00:04:42.055
based on donations. You got raspi Raspberry Blitz, Robosats,
63
00:04:42.514 --> 00:04:45.014
Seed Signer, Sparrow Wallet, and Zeus.
64
00:04:45.530 --> 00:04:49.870
So if you support dispatch, you support those shows at the same time, which is pretty fucking cool.
65
00:04:50.490 --> 00:04:54.830
Last but not least, before we get started, sorry for the slightly longer intro than usual.
66
00:04:55.275 --> 00:04:56.735
A little bit rusty here.
67
00:04:58.235 --> 00:05:05.380
Shout out to all the freaks who continue to join our live chats while we broadcast. So if you subscribe on YouTube or Twitch, you'll get notified
68
00:05:05.840 --> 00:05:08.180
when we go live. If you open up those streams,
69
00:05:08.639 --> 00:05:11.300
your live comments show up on sale dispatch.
70
00:05:12.194 --> 00:05:18.854
They're not censored. There's probably some kind of algorithm that stops some of your comments from coming through, but I don't block any comments from coming through.
71
00:05:19.155 --> 00:05:21.095
And it's a key aspect of this conversation.
72
00:05:21.770 --> 00:05:27.630
So you're able to be a part of the conversation. We're able to answer your questions. We're able to react to your comments.
73
00:05:28.490 --> 00:05:30.990
If you don't want to use a tech platform,
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we have a matrix chat available,
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which has great conversation. We have over a 1000 Bitcorners in there right now. Great conversation
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on a daily basis even when the show isn't live. You can find a link to that at sidildispatch.com
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by clicking the sidildot chat button.
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Okay, guys. Anyway,
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with all that said, we're gonna keep today's rip very tight.
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Kinda happened last minute, so I wanna thank our guests for joining us.
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A lot of things have gone on this last week, particularly in the privacy world.
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We had the the the major news was we had this Ethereum privacy tool called Tornado Cash,
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was sanctioned by the US Treasury,
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and
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all Americans or anyone who lives in a country that honors American sanctions
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are forbidden from using it as a result.
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Their GitHub account
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was pulled.
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The lead devs,
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big, GitHub accounts were pulled.
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The website appears to have been seized. The website front end appears to be seized,
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and
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a a bunch of other things have gone down, which we will get into. So, anyway, we have 2 return guests here. We have Tony. What's going on, Tony?
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Sup, guys? Happy to be here. And we have Seth for privacy here. How's it going, Seth?
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We have a I have a massive
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Bitcoin meetup, in a few hours.
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And this morning, I woke up, and I was like, I would like to talk to Tony and Seth
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about all this news. So once again, huge shout out to them for joining us. I think before we get started,
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it's it's important to say that first and foremost,
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nobody in this conversation is advocating for people
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to evade sanctions.
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You should follow all applicable laws in your country.
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Okay. So where do you guys wanna start after that?
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Follow.
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See you later.
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You know, what's interesting, Tornado Cash,
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this sort of, like, privacy
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tool on Ethereum,
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a smart contract
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that basically allows people to have some privacy, to achieve some privacy,
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sort of like,
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and I don't know how it technically operates, to be honest, but you can kind of, you know, say it's some sort of
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of,
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you know,
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I'm gonna say CoinJoin, but, you know, it's not actually coins that's going on here.
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Ethereum operates on know, the privacy tool. I I know. But, you know, the whole purpose of it is to achieve privacy. Right? And there's nothing wrong with trying to achieve privacy, especially,
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you know, there's a lot of legitimate uses of it. You know? There's a lot of legal uses of it. Like, people have the right to achieve privacy.
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So that that said,
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the the United States made the argument
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that,
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North Korea is using this tool
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on Ethereum,
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and it got sanctioned. And so,
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yeah, I I,
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I'm
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conflicted on this for, like, many reasons.
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Like, you know, how for 1, how centralized
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is Ethereum anyways? So, like, is this just akin to saying it's in the, you know, a centralized mixer?
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And and Ben Carmen's in the chat saying it is a centralized mixer but hosted on Ethereum rather
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And I I I I think all 3 of us are not, you know, necessarily that familiar with,
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you know, how the e the the Ethereum ecosystem works. I think I'm I'm I'm pretty familiar with Tornado Cash if you want me to give a quick intro as to what it is and how it works. Yeah. That would be great. But before we do that, there's there's 2 key terms that I think we're gonna keep coming to,
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and that's centralized and custodial.
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Centralized
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is, obviously, you have a centralized entity that is involved in the process.
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Custodial, on the other hand,
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is also, obviously,
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is a subset of centralized or central yeah. It's a subset of centralized,
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but
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it takes it a step further, and that centralized entity also has custody of your funds and can take your money. My basic understanding of Tornado Cash is Tornado Cash
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is not a custodial mixer,
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but it is centralized.
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And with that,
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Seth, you can either disagree with that premise or just give us better context in general.
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I know that there's a lot of Ethereum hate, obviously. There are lots of good reasons for that,
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but I I certainly would argue that it's a decentralized, non custodial, privacy tool. It's not a mixer, so people can think of it more like Zcash on Ethereum. It uses essentially the same technology, something called zk SNARKS, to hide amounts
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and to hide the input in any given transaction so that within
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within Tornado Cash, in each denomination in the old smart contract, so, like, point one ETH,
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any output
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could have been any of the inputs in the pool,
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of all time.
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And in the new smart contracts that they have, it's also not fixed denominations, so any output could be any input at any point in time. So you gain strong input hiding and amount hiding within that smart contract.
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And it's decentralized in the sense that it runs on Ethereum. The creators of the smart contract have no control over it. They cannot edit it. They cannot roll it back.
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They can't stop it. And I think, we can get into that more, but I think that's a big reason why
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sanctions was the route taken here instead of legal action against the actual creators of the project of Tornado Cash.
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But I would argue that it's a decentralized non custodial privacy tool, because Tornado Cash also obviously never gains custody of funds. Essentially, when you use Tornado Cash,
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you send an Ethereum, you get a a private note, which is essentially a private key
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to that specific,
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input, and then you can use that private note to claim
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that input at any point in the future.
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So the general flow is you deposit funds, you wait for some amount of time, and you withdraw funds to a different address.
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There are a lot of problems with that, and most people using Tornado Cash have shot themselves in the foot and ruined their privacy by going back to an old address or linking
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their old account to the new account together at some point in the future. There's lots of ways that can go wrong, but I think it is a at least in the way that Ethereum is theoretically decentralized,
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This is theoretically decentralized.
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And and I think it's it may be a good
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showing that it is decentralized, that the US government has not shut down the smart contract, and it's not The smart contract's still going. Mhmm.
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and the GitHub centralized GitHub repo's been
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pulled, but the smart contract's still going.
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the the main API
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providers within Ethereum, since most people and most services don't run their own Ethereum nodes,
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like Infura I can't remember the name of the other one, but Infura specifically. Alchemy. Yeah. Both of them are preventing the use of their API with the Tornado Cash smart contract.
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So even though the smart contract is there, it's getting harder and harder for people to actually access it unless they run their own Ethereum node, which, as we all know, almost no one runs an Ethereum node.
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so the
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right. Right. So so that means the the actual end users have to run a node? I was a little bit confused on on that aspect of,
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apparently, there's, like, some kind of nuance there that if you
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it's, like, the specific
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tornado cache Infura nodes are down,
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but not
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rather than relying on large,
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companies that are hosting them on corporate cloud servers.
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Just to go back
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I'm trying to figure out the best way to do this. Just to go back,
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you made the claim that it's at least theoretically decentralized.
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I think everyone agrees it's noncustodial.
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The there's no, like, admin keys or anything that you know of that can just shut down the whole thing?
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sounds like that's not the case this time.
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and
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then we have the okay. So so the reason why the custodial thing is important let's start with that. The reason the reason the custodial thing is important is because there's very established precedent,
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that the US government specifically believes that custodial mixers are,
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criminal in nature.
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We've had multiple custodial mixers get shut down.
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We've had Helix.
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The
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guy the main guy got arrested over it.
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He's in jail right now.
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and is now a CIA for the FBI.
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Okay. Did not know that. And he also ran some custodial lightning wallet that got rug pulled in that case, but that's besides the point.
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I guess blender.i0,
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did not get shut down, but they got sanctioned. Right?
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have historically there's precedent been set that they're treated as criminal entities.
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I don't know of any cases where users
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specifically
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have been
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had cases brought against them, but the operators have.
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And so
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since
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those since those situations have happened, and and it's important to keep in mind that in Bitcoin land to and we're gonna keep bringing this back to Bitcoin
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and maybe Monero a little bit.
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In Bitcoin land, we've had custodial mixers since almost the very beginning. Like, the first iteration of Silk Road had a custodial mixer built into it.
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That was the main way people used to achieve better privacy on Bitcoin.
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And not only was it a regulatory point of failure, but, obviously,
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you have to trust,
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the entity running the custodial mixer
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with,
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not only your funds, you have to hope they don't rug pull you, but you also have to trust them with your privacy.
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And as a result, what you saw a lot of times with people using custodial mixers is that they would basically daisy chain them and go between multiple different custodial mixers.
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So since then,
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in Bitcoin land, we've had
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2 main centralized coin join protocols,
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get developed.
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1 is Whirlpool, and then the other one is Wasabi.
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And both of those,
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they're
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the actual protocols are very different, but the the key similarities, they both rely on this blinded centralized coordinator, where the coordinator
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is not able to link the inputs and the outputs, so they're not able to
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directly compromise your privacy,
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and they don't actually take custody of your funds.
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They just construct a collaborative Bitcoin transaction between the participants, and they're there to to help you construct that transaction's
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communication
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method.
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Now when I said they can't necessarily take away your privacy,
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both those systems have civil
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resistant mechanisms.
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The civil idea is if you flood
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in a non anonymity set with a bunch of your inputs
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to see you know, try and break down,
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you know, with a decent amount of probability process of elimination what the other UTXOs are.
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And both of these setups in a low fee Bitcoin environment, which is what we've been seeing as you can see on screen if you're watching,
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Wiz's mempool is showing,
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one sapper byte confirms in the next block,
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there's no civil resistance
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from the coordinator. So, presumably, if the coordinator wanted to be an active attacker, they
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could,
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compromise your privacy. But by by design, the way it's set up is if they're not actively attacking you, if they're not a malicious entity,
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they can't link your inputs and outputs, and they can't steal your funds.
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Now this is the first case that I've
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that I'm aware of where a non custodial
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privacy tool
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that is essentially just code running on Ethereum
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has been sanctioned,
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which is a big step. That's a big,
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leap that we've seen from the US Treasury. Right?
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but like you mentioned,
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the easy ones to go after legally have been the custodial centralized mixers, because it's it's a person or central entity running this thing. They custody all funds, so it's very easy to hit them with money laundering,
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charges. And there there are a lot of easy ways to bring
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legal action against them. And I think you that's why we've seen things like Helix not be sanctioned,
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because they could just go after the operator, force them to comply,
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and bring all of these charges against them. But the the big change here is, like, they've gone from things like Helix, which are completely centralized and custodial.
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They sanctioned blender.io,
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which I think they sanctioned that rather than other legal action because it's most likely run out of Russia, so they don't have the legal jurisdiction to shut it down,
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but, obviously, want to prevent people from using it.
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And then now, like you mentioned, the the big change is this this kind of brings a lot of other privacy tools into the sites of the US government,
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because
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the thought process, I think, for many people was,
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if the thing is open source, if the thing is decentralized, if the thing is noncustodial,
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there's not a legal case to be brought against the tool because you're not actively facilitating anything. You have no control over who specifically is using your tool.
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So in theory, you couldn't be,
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like, under the gun for KYC AML laws or money laundering or Banking Secrecy Act or all of these things that are normally brought against,
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centralized mixers and happened in the past.
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Obviously, with Tornado Cash, this is a, at least, theoretically, decentralized,
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noncustodial
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privacy tool that that that Tornado Cash people have no ability to
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not only see who's using it, but to prevent anyone from using it, to control who uses it, or to to shut it down. So there's a there's a big difference here. And not only, like you mentioned at the beginning of the show, did they
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sanction the specific tool and the usage of that tool, but they went after the code and everyone who wrote the code as well, which is another massive leap because it's not just the people who are operating something and making money off of the service, but it's also just open source contributors who contributed on GitHub or getting their accounts
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shut down or suspended. Like you said, all GitHub repos are shut down. So there's a there's a
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a massive set of precedents
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being set here
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that could have broad implications for
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other privacy tools on Bitcoin
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and other cryptocurrencies. I mean, even something like a samurai wallet, in theory, could fall under sanctions if Tornado Cash could.
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Obviously,
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they have a lot of things in place where they're they think that they're prepared for that, and they have a kind of a plan. But,
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it it, I think, should bring into question this idea of app level privacy and how tenable that will be in severe
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adversarial
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environments like we we obviously are entering now. Like, I I think since the Freedom Convoy,
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this is the biggest piece of news in the cryptocurrency privacy space, and should be shaking everybody up and forcing a lot of really good conversations right now. And I think, thankfully, it does seem to be doing that.
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308
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that they can sort of do to quote, unquote,
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not stop it, but limit it, in any way. So, you know, instead of thinking of it as, like, they're going after
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the creators, they're really just trying to make it illegal to interact
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with,
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a a person or a service or a website or or things in that nature. Like, as an American citizen,
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they're just deeming it illegal to interact with it as an American business or anyone following United States sanction laws. They're making that illegal to assist in any way. So, I mean, GitHub has,
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you know, shut down,
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GitHub accounts and code that has been created by,
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Iranian ir Iranian coders before. Like, it's not a new thing of GitHub shutting down the accounts, and it's not necessarily,
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the, you know, it's not necessarily saying that anyone did anything wrong, that those accounts have,
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done any criminal or legal behavior. Right? Like, I don't like, they can't really go after
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or they don't seem to have gone after the creators for doing anything illegal.
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It's just like they're trying to make it now illegal to interact
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with it, and that's about, it seems as though, that's about as far as they can go. But it's a big sweeping measure. Like, anyone in the United States interacting with it, they're now facing up to, like, 30 years of jail time. Right?
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So it's a it's a very big serious thing for anyone
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that has been using it or has used it or continues to use it,
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but it's it's kind of an interesting dilemma. I think you guys are right. Like, this is basically all that they can do,
325
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under the assumption that Ethereum is sufficiently
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decentralized enough.
327
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328
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I will echo the sentiment
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00:25:00.274 --> 00:25:03.575
of Seth that, you know, I think this should be
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making people think and have conversations, and
331
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it seems
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it gets at least from a
333
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I've long held that, like, my optimistic case,
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for people caring about privacy is that people get burned. And as they get burned,
335
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they learn by essentially touching the stove. And it does kinda seem like this is what's happening in this situation,
336
00:25:27.555 --> 00:25:31.575
maybe even more so than the freedom convoy. In the freedom convoy, I was a little bit,
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disappointed how quickly everyone just forgot about any kind of lessons that could be learned, from that government action.
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I will say that one of the most
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00:25:43.360 --> 00:25:45.220
dirty aspects of using
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sanctions as a tool here,
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is it does have a massive chilling effect. Most people will not wanna talk about these kind of things publicly
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As some of these listen as some of our listeners probably have already noticed,
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the 3 of us are well, Seth actually speaks quite eloquently and carefully, but me and Tony are pretty
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00:26:12.010 --> 00:26:18.190
frank about how we speak, and and on this topic, you know, we are clearly watching our words.
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There was,
346
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that one Ethereum developer,
347
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Virgil,
348
00:26:26.440 --> 00:26:28.540
who got charged with sanctions violations
349
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for giving a speech. Now he did go to North Korea to give the speech.
350
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He went he literally went to a sanctioned country and
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gave them a speech about how to circumvent sanctions.
352
00:26:41.300 --> 00:26:45.240
So, I mean, that's not, like, the most crazy case, but it's a perfect example,
353
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that people that do talk about these things,
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do put themselves in enhanced legal risk, which is a very dirty element of the whole thing. I would also say
355
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that I strongly believe that code is speech
356
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and is protected by the first amendment,
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and I believe that financial privacy
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is protected by the 4th amendment.
359
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I do not think that we can rely on our
360
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legal protections. Otherwise, none of this would be necessary in the first place, but it is an important aspect to keep in mind here.
361
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Seth mentioned
362
00:27:24.690 --> 00:27:25.990
Samura Wallet.
363
00:27:26.645 --> 00:27:29.625
Samurai wallet did release something on Telegram
364
00:27:29.925 --> 00:27:32.105
talking about how they're thinking about this.
365
00:27:34.005 --> 00:27:35.705
There's a lot to unpack here.
366
00:27:36.165 --> 00:27:38.809
We We are gonna try and keep this episode as tight as possible.
367
00:27:39.910 --> 00:27:43.290
He goes, there isn't a starting point address to sanction Whirlpool.
368
00:27:44.035 --> 00:27:49.095
The addresses all belong to users, so they would need to go after either software distribution or end users.
369
00:27:49.635 --> 00:27:51.575
Our domain, they have others.
370
00:27:52.160 --> 00:27:55.460
See how Pirate Bay handled their domain seizures over the last decades.
371
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GitHub,
372
00:27:57.280 --> 00:28:05.885
they have a self hosted GitLab on their own hardware and a very strong privacy preserving jurisdiction that has a history of telling the US to get stuffed when they attempt to see servers,
373
00:28:06.980 --> 00:28:10.280
and they have backups and can deploy to a new server
374
00:28:10.580 --> 00:28:11.640
almost instantly.
375
00:28:14.020 --> 00:28:15.475
He goes on to say he
376
00:28:21.875 --> 00:28:22.375
$7,000,000,000
377
00:28:23.235 --> 00:28:27.110
worth, so they were significantly larger than any of these Bitcoin privacy tools.
378
00:28:28.690 --> 00:28:31.990
But a UTXO model is far superior than an account model.
379
00:28:32.585 --> 00:28:38.925
3rd, code is protected speech. This is a long established precedent, thanks to the original cyberpunks who fought this battle decades ago.
380
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It should be evident to anyone watching that we have been thinking about these possibilities for a long time. It is why we migrated away from GitHub years ago. It's why we rely on as few third party services as possible. It is why we set up in jurisdictions that have a history of protecting privacy.
381
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We do not bury our head in the sand hoping everything works out. We take proactive steps as early as possible.
382
00:28:57.840 --> 00:29:08.675
I'll end with a promise. If some aspect of our software were to be sanctioned by the US, we would fight that tooth and nail. We have a legal team on retainer ready to go. We'd rather put that money into development, but if it needs to be done,
383
00:29:09.055 --> 00:29:12.035
it needs to be done. So that was Samura wallet,
384
00:29:13.135 --> 00:29:15.075
statement on this, situation.
385
00:29:18.270 --> 00:29:19.409
Any thoughts there?
386
00:29:20.590 --> 00:29:22.289
There's a lot to unpack there.
387
00:29:22.590 --> 00:29:23.570
388
00:29:23.895 --> 00:29:25.275
you know, I I definitely
389
00:29:25.735 --> 00:29:28.075
you know, it is a little bit of a different situation,
390
00:29:28.775 --> 00:29:32.075
which is a good thing. I'm I'm pretty confident in
391
00:29:32.760 --> 00:29:34.540
the abilities to, like, kinda mitigate,
392
00:29:35.160 --> 00:29:48.195
you know, some of these denials, like like them hosting their own GitLab and and having failover safes and and stuff like that. And I will say, like, you know, at at at the end of the day, there is a
393
00:29:50.050 --> 00:29:52.230
point of contact that there is,
394
00:29:52.850 --> 00:29:55.590
to have with some of the Whirlpool servers.
395
00:29:56.365 --> 00:30:01.825
I'm sure they have failovers and redundancy and things like that, but there so there is, though,
396
00:30:03.245 --> 00:30:04.304
you know, a potential
397
00:30:04.710 --> 00:30:12.890
target point. Even if it's distributed, even if they're able to, like, you know, as as had have as much redundancy as possible, there is still
398
00:30:13.565 --> 00:30:15.805
opportunities to go after them.
399
00:30:16.285 --> 00:30:18.705
And I think, like, you know, when we talk about,
400
00:30:19.085 --> 00:30:21.105
you know, code is is free speech,
401
00:30:22.510 --> 00:30:23.010
Ideally,
402
00:30:23.550 --> 00:30:36.855
there isn't a centralized coordinator at all. Ideally, there's you know, if if you look where to look at, like Bitcoin itself, like, you know, there's not this centralized coordinator, you know, orchestrating transactions. You know? There's,
403
00:30:37.735 --> 00:30:39.515
there's a sufficient distribution
404
00:30:39.815 --> 00:30:41.595
across the entire Bitcoin network.
405
00:30:42.600 --> 00:30:43.900
So, like, you know,
406
00:30:44.440 --> 00:30:48.460
having sanctions on Bitcoin versus having sanctions on a,
407
00:30:49.560 --> 00:30:50.220
you know,
408
00:30:51.644 --> 00:30:52.465
an Ethereum,
409
00:30:53.004 --> 00:30:58.910
you know, privacy, smart contract, or a centralized coordinator. They're all kind of different stories, but,
410
00:30:59.710 --> 00:31:06.450
you know, I will say, though, you know, they are actively thinking about it because there is actually this point of attack that,
411
00:31:06.975 --> 00:31:11.555
unfortunately, the United States could go after if they if they show chose to.
412
00:31:13.135 --> 00:31:19.889
413
00:31:20.370 --> 00:31:21.110
And I think
414
00:31:21.570 --> 00:31:32.925
if you think about what sanctions actually are and what they do, I I think that's really the the broadest effect is that it it scares people off from doing a specific thing. And in this case, it's using
415
00:31:33.310 --> 00:31:36.770
Tornado Cash or writing code for Tornado Cash, which
416
00:31:37.150 --> 00:31:44.524
both of those are a big deal. But I think the the psychological impact is the the biggest power that the government sees that they have in a sanction,
417
00:31:46.264 --> 00:31:52.610
in a sanctioned action. And so that's one of the reasons why they're using this when they they don't seem to be able to technologically shut it down.
418
00:31:53.070 --> 00:32:01.715
And, apparently, they weren't able to trace funds well enough through it, to to feel comfortable in tracking down people after usage.
419
00:32:02.975 --> 00:32:10.940
So I I mean, it kinda proves that it works. Right? Yeah. Yeah. I mean, if if something gets sanctioned, it proves that they can't take it down and that they obviously can't
420
00:32:11.400 --> 00:32:15.020
manage it well enough for their own needs. And in this case,
421
00:32:15.320 --> 00:32:19.545
I mean, there's so much to get into in this, but I think one of the really interesting things is that
422
00:32:20.085 --> 00:32:20.245
they
423
00:32:21.045 --> 00:32:28.160
in their official press release, the US Treasury claims that all of the lifetime volume of tornado cash counts as laundering,
424
00:32:28.860 --> 00:32:30.215
which is fascinating,
425
00:32:30.835 --> 00:32:35.015
and that's a very big step from the previous ways that they approach these types of tools.
426
00:32:35.475 --> 00:32:36.855
Even though they specifically
427
00:32:37.830 --> 00:32:44.970
call out only 7% of the volume over the lifetime as being from hacks that they've specifically tracked as going into Tornado Cash.
428
00:32:45.794 --> 00:32:50.215
So, again, I think it's interesting that you Anyone who's ever used Tornado Cash
429
00:32:50.835 --> 00:32:51.575
430
00:32:51.875 --> 00:32:56.430
431
00:32:56.810 --> 00:33:02.030
today, US department sanctioned virtual currency mixer, Tornado Cash, which has been used to launder more than $7,000,000,000
432
00:33:02.490 --> 00:33:03.710
worth of virtual currency,
433
00:33:04.235 --> 00:33:07.535
And the lifetime volume of Tornado Cash is 7,600,000,000.
434
00:33:08.635 --> 00:33:12.975
So, obviously, they're referring to the lifetime volume of Tornado Cash and saying that
435
00:33:13.380 --> 00:33:17.400
all transactions that have gone through Tornado Cash are in their eyes money laundering,
436
00:33:17.700 --> 00:33:19.720
which is a very big deal because,
437
00:33:20.425 --> 00:33:23.005
again, it's theoretically decentralized and noncustodial.
438
00:33:24.425 --> 00:33:29.245
And it's not like a mixer where you have direct connections to other inputs
439
00:33:29.580 --> 00:33:31.040
even if the output is,
440
00:33:31.580 --> 00:33:32.080
obfuscated.
441
00:33:32.780 --> 00:33:37.920
So there there is a lot to unpack there, but I think it's it's very telling that they claim that all of it is laundering,
442
00:33:38.335 --> 00:33:44.675
but they can only trace a very small portion of it to elicit activity and yet still sanction not only the tool itself, but
443
00:33:45.055 --> 00:33:45.555
developers,
444
00:33:46.289 --> 00:33:52.070
GitHub accounts, and all of the GitHub repos, and the website, and documentation sites, and all the other these other things.
445
00:33:54.305 --> 00:33:56.485
446
00:33:58.625 --> 00:33:59.125
that
447
00:34:01.820 --> 00:34:02.480
you know,
448
00:34:02.780 --> 00:34:05.200
obviously, on this show, we talk about Bitcoin privacy,
449
00:34:06.380 --> 00:34:07.040
a lot.
450
00:34:09.260 --> 00:34:10.160
With Ethereum,
451
00:34:11.625 --> 00:34:12.525
there is
452
00:34:13.785 --> 00:34:16.045
a lot of differences between Ethereum and Bitcoin.
453
00:34:16.505 --> 00:34:17.885
One of the main differences
454
00:34:18.460 --> 00:34:21.920
is this idea of an account model versus a UTXO model.
455
00:34:22.460 --> 00:34:23.440
So in Bitcoin,
456
00:34:24.140 --> 00:34:26.079
you're told not to reuse addresses.
457
00:34:27.525 --> 00:34:28.744
Every time you receive
458
00:34:29.765 --> 00:34:31.785
Bitcoin, you use a new address.
459
00:34:33.444 --> 00:34:34.425
All those UTXOs,
460
00:34:34.805 --> 00:34:39.410
all those unspent transactions are sitting in your wallet. They almost look like bills in your wallet.
461
00:34:40.349 --> 00:34:52.110
Or you can imagine them as bills in your wallet of different denominations of Bitcoin. And when you make a spend, you're basically taking out a certain amount of those bills, and you're making the spend. You're combining them on the input side, and then they result in
462
00:34:52.510 --> 00:34:54.530
either one output or 2 outputs usually.
463
00:34:55.230 --> 00:35:02.755
If you overpay, it's 2 outputs because they pay the change back. If you send it all, then it's one output. There's obviously other transaction types.
464
00:35:04.255 --> 00:35:05.075
With Ethereum,
465
00:35:06.095 --> 00:35:12.140
from a Bitcoiner point of view, the way you can imagine it is that everyone is using a single reused address. They call them accounts.
466
00:35:13.240 --> 00:35:15.580
And as a result, those accounts have
467
00:35:16.360 --> 00:35:22.055
your entire financial history is attached to those accounts on the Ethereum blockchain, completely viewable to everybody.
468
00:35:23.075 --> 00:35:28.180
That includes all the different tokens and everything else you do in Ethereum is all attached to that one account.
469
00:35:28.740 --> 00:35:29.800
Now those accounts
470
00:35:32.980 --> 00:35:33.720
are often
471
00:35:34.020 --> 00:35:39.725
obviously linked to your identity, and sometimes they're linked to your identity. Well, the majority of the time, they're linked to your identity because
472
00:35:40.745 --> 00:35:47.490
most people that are coming into this ecosystem come in through KYC regulated institutions, so they're coming in, linking it to their identity.
473
00:35:48.270 --> 00:35:51.410
But, also, a lot of people on Ethereum have voluntarily
474
00:35:51.710 --> 00:35:53.089
linked it to their identity.
475
00:35:54.845 --> 00:35:56.145
So we have addresses
476
00:35:56.605 --> 00:35:57.105
accounts.
477
00:35:57.565 --> 00:35:58.625
They call them accounts.
478
00:35:59.085 --> 00:36:00.705
We have accounts on Ethereum
479
00:36:01.405 --> 00:36:02.545
of known individuals,
480
00:36:03.710 --> 00:36:05.010
with their full financial
481
00:36:05.710 --> 00:36:09.810
transaction history, including all tokens and all contracts they've interacted with,
482
00:36:11.484 --> 00:36:19.900
immediately viewable to anybody with access to the chain. Or if you don't have access to the chain, you use one of these third parties, like, other scan or something, and you can see it.
483
00:36:21.339 --> 00:36:26.160
So what what is that implication here? Well, the implication here is, first of all, when they made the sanction,
484
00:36:26.619 --> 00:36:28.000
they sanctioned the
485
00:36:29.075 --> 00:36:30.375
the contracts account.
486
00:36:30.835 --> 00:36:34.135
So anyone who interacts with that account is connected to that.
487
00:36:34.515 --> 00:36:38.440
This is a single account. This is what Samura when Samura mentioned in their statement,
488
00:36:39.059 --> 00:36:39.799
they mentioned
489
00:36:40.420 --> 00:36:44.119
the UTXO model versus the account model. This is what they were referring to.
490
00:36:45.805 --> 00:36:47.105
But the second thing
491
00:36:48.365 --> 00:36:51.425
is because a lot of these accounts are viewable
492
00:36:52.045 --> 00:36:52.545
or
493
00:36:53.210 --> 00:37:00.190
the people know who they're attached to, like, people know where Vitalik's account is. People know where Jimmy Fallon's account is. People know where Puma's account is.
494
00:37:00.515 --> 00:37:03.095
People know where Brian Armstrong's account is.
495
00:37:04.915 --> 00:37:07.415
There are either 1 or a few people
496
00:37:08.115 --> 00:37:09.255
that have been
497
00:37:10.230 --> 00:37:10.730
sending,
498
00:37:12.390 --> 00:37:13.530
tornado withdrawals,
499
00:37:14.549 --> 00:37:15.609
to their accounts.
500
00:37:16.230 --> 00:37:18.250
And my understanding of Ethereum
501
00:37:19.865 --> 00:37:22.765
is they do not have coin control or anything.
502
00:37:24.265 --> 00:37:24.765
So,
503
00:37:26.160 --> 00:37:31.700
obviously, with these systems, you can't stop someone from sending you something, but they also can't choose not to spend something.
504
00:37:34.555 --> 00:37:36.335
So there's all these extra complications
505
00:37:37.915 --> 00:37:41.855
that seem to be becoming very apparent here. And I would say,
506
00:37:42.630 --> 00:37:45.050
1st and foremost, that these types of actions,
507
00:37:45.670 --> 00:37:47.690
should not be unexpected by people.
508
00:37:48.070 --> 00:37:48.570
Like,
509
00:37:49.030 --> 00:37:49.530
governments
510
00:37:50.125 --> 00:37:54.065
around the world pushing back against financial privacy is a tale as old as time.
511
00:37:57.619 --> 00:38:01.560
Unfortunately, on both Ethereum and Bitcoin, but even more so on Ethereum,
512
00:38:02.100 --> 00:38:04.040
a lot of early decisions were made
513
00:38:05.035 --> 00:38:06.735
that make using them privately
514
00:38:07.035 --> 00:38:11.375
more difficult, but particularly on Ethereum, it's really, really bad.
515
00:38:11.915 --> 00:38:16.290
So I'm curious what happens here with this dusting stuff,
516
00:38:17.550 --> 00:38:18.770
how that is treated.
517
00:38:19.070 --> 00:38:20.770
But also on the flip side,
518
00:38:21.925 --> 00:38:24.745
anyone who has interacted with Tornado Cash
519
00:38:25.285 --> 00:38:26.825
with a doxed account
520
00:38:27.925 --> 00:38:28.425
before
521
00:38:29.250 --> 00:38:32.950
the sanctions happened is technically wrapped up in this as well,
522
00:38:33.570 --> 00:38:35.670
and regulated services, presumably,
523
00:38:36.965 --> 00:38:40.585
at the very least, will blacklist them from interacting with
524
00:38:41.205 --> 00:38:41.945
their services,
525
00:38:42.245 --> 00:38:43.785
or we can expect that.
526
00:38:44.200 --> 00:38:53.660
And I don't know if if we even I would assume that the US treasury isn't gonna go after those individuals because we've never seen them go after users before, but they could. Right?
527
00:38:55.455 --> 00:39:03.840
528
00:39:04.720 --> 00:39:06.900
they they can do that even though
529
00:39:07.200 --> 00:39:16.775
it's it's dumb that it's not an evenly distributed judgment or no judgment. I I wouldn't be surprised if they do go after some people, but not all of the people and especially the people being tested.
530
00:39:18.675 --> 00:39:22.615
Yeah. I mean, the the issues with privacy and Ethereum are really
531
00:39:23.359 --> 00:39:28.099
damning in a case like this as opposed to something like if we contrast Tornado Cash and Samura Wallet,
532
00:39:28.559 --> 00:39:29.220
for instance,
533
00:39:30.485 --> 00:39:38.105
And there's a lot of differences, obviously. But looking at them from, like, how would someone even detect that you're using that specific tool in Ethereum,
534
00:39:38.410 --> 00:40:00.990
like you mentioned, that that contract address or the contract addresses, because there are multiple for Tornado Cash, have been sanctioned and are obviously being surveilled now, and probably have been surveilled for a while. And so if you enter Tornado Cash, it's clearly visible on chain that you went from your account to the Tornado Cash smart contract. Yes. The funds then gained privacy after that, but the fact that you've chosen to use Tornado Cash is very transparent on chain.
535
00:40:01.850 --> 00:40:04.250
And, also, as you mentioned, everyone reuses address
536
00:40:04.775 --> 00:40:08.395
addresses in Ethereum because you generally just have an account and you use that one.
537
00:40:08.775 --> 00:40:15.870
Another way that people link their identity or other NIMs to their Ethereum activity is using ENS. They're using those dot ETH addresses.
538
00:40:16.330 --> 00:40:22.910
And so they'll tie that to their Ethereum accounts, which again could be tied back to using Tornado Cash past, present, or future.
539
00:40:24.025 --> 00:40:33.740
And there's a lot of issues with actually trying to be able to to do something like that in an adversarial environment. Again, not advocating someone break these sanction laws, but just saying in this kind of situation,
540
00:40:34.359 --> 00:40:47.145
it's very easy to detect when someone tries to use Tornado Cash. Whereas with Samurai Wallet, even though you could see that they are entering a coin join, if you well, no. If you knew their specific address, like the the user's address
541
00:40:47.630 --> 00:40:50.530
or a UTXO, you could see that they enter Whirlpool.
542
00:40:51.150 --> 00:40:54.210
But like you mentioned from the Samurai Wallet Telegram message,
543
00:40:54.815 --> 00:41:04.195
there's no static address or something associated with samurai wallet where they can tell that that's specifically a samurai wallet usage, and they can't just monitor samurai wallet themselves
544
00:41:04.799 --> 00:41:09.859
and see what transactions are flowing through Whirlpool and the the other post mix spending tools.
545
00:41:10.240 --> 00:41:16.775
So there are a lot of benefits to not only the UTXO model, but also the the Tor First model of samurai wallet.
546
00:41:17.815 --> 00:41:19.174
There's a there's a lot there.
547
00:41:19.655 --> 00:41:24.410
I I guess the main weakness with something like a samurai wallet in a a situation like this would be
548
00:41:25.589 --> 00:41:27.130
if they were forced to comply,
549
00:41:27.910 --> 00:41:36.335
they could turn over information associated with people who have not used their own dojo. They could turn over those x pubs, and some information about transactions could be given up.
550
00:41:37.435 --> 00:41:45.329
But, again, that's very, very unlikely. That's just one of the downsides there as opposed to within Tornado Cash. Even the creators of Tornado Cash can't tell you
551
00:41:45.630 --> 00:41:48.655
what transactions are linkable between the entry and exit.
552
00:41:50.175 --> 00:41:56.275
But there are there are a lot of differences, and Ethereum makes it much more difficult to gain privacy. Because even if you choose to gain privacy, it's it's
553
00:41:56.710 --> 00:41:59.930
extremely transparent that you have chosen to gain privacy on Ethereum.
554
00:42:01.029 --> 00:42:05.289
555
00:42:05.795 --> 00:42:09.335
is this idea that it's impossible to prove if people are keeping logs.
556
00:42:12.195 --> 00:42:13.655
And it's kind of a similar
557
00:42:13.990 --> 00:42:14.490
situation,
558
00:42:15.110 --> 00:42:17.850
with light client users on Samura Wallet.
559
00:42:20.710 --> 00:42:23.290
Obviously, Samura admits that they hold those XPUBs
560
00:42:23.635 --> 00:42:24.535
for those users.
561
00:42:24.915 --> 00:42:27.575
They don't have them connected to an ID specifically.
562
00:42:28.755 --> 00:42:31.015
Obviously, it's connected to Bitcoin chain information,
563
00:42:32.880 --> 00:42:36.180
but they have and and it goes through Tor, so they don't have an IP address.
564
00:42:36.720 --> 00:42:37.380
But, presumably,
565
00:42:38.960 --> 00:42:44.224
I have to imagine I would hope at least the very least that they have precautions in place
566
00:42:46.765 --> 00:42:50.224
to make sure those servers are secure and to make sure that they
567
00:42:51.859 --> 00:42:53.640
are wiped in adversarial environments,
568
00:42:54.260 --> 00:42:56.040
if they're compromised in some way.
569
00:42:56.420 --> 00:43:06.795
But, yeah, that that's probably, like, the the biggest concern from any kind of action, whether that's an official government action or a malicious actor trying to compromise their servers and get that x pub information.
570
00:43:09.350 --> 00:43:10.970
And that goes for
571
00:43:11.350 --> 00:43:13.370
Samurais obviously gets more
572
00:43:13.830 --> 00:43:16.330
flack about that than other projects in the space
573
00:43:16.724 --> 00:43:20.585
because they're a privacy focused project, but that goes for pretty much all Bitcoin
574
00:43:21.365 --> 00:43:22.185
like clients.
575
00:43:23.045 --> 00:43:26.670
If you're not using your own node, you're using someone else's node, and you're trusting
576
00:43:27.130 --> 00:43:29.390
who's ever running that node with your privacy
577
00:43:29.690 --> 00:43:34.075
and, the validation of the Bitcoin rules, which is why it's so important to use your own node.
578
00:43:34.635 --> 00:43:40.575
That's one of like, there's so many things to unpack here. The fact that it's so difficult to use your own node with Ethereum,
579
00:43:44.710 --> 00:43:47.050
you know, makes this even more dangerous
580
00:43:47.510 --> 00:43:49.770
of a situation for them, I feel like.
581
00:43:50.405 --> 00:43:52.905
I mean, it just clearly does. It's not even a feeling.
582
00:43:55.125 --> 00:43:57.224
583
00:43:57.685 --> 00:44:05.160
you know, making it hard to to run a note, but then also, you know, the combination of the address thing. Right? So people getting tested attacked right now.
584
00:44:06.019 --> 00:44:08.200
You know, if they're really not
585
00:44:08.924 --> 00:44:09.825
still participating
586
00:44:10.444 --> 00:44:12.684
or have any association with actively
587
00:44:13.005 --> 00:44:16.065
it's like there's no consent involved in that. You just received from,
588
00:44:16.710 --> 00:44:27.105
589
00:44:27.485 --> 00:44:30.385
590
00:44:33.900 --> 00:44:38.480
can they they they can at least question these people. I don't think they're,
591
00:44:39.580 --> 00:44:43.925
you know, I think worst case scenario for someone that was just innocently, you
592
00:44:45.025 --> 00:44:48.405
know, dusted attacked in this way, they may be questioned.
593
00:44:48.705 --> 00:44:50.565
They may, you know, go through hassle,
594
00:44:51.140 --> 00:44:51.960
etcetera, etcetera. But,
595
00:44:52.580 --> 00:45:04.085
you know, I think worst case scenario, they just end up having to, like, send as much as they received back, you know, to the United States because there isn't this UTXO model that you can easily just,
596
00:45:04.464 --> 00:45:05.125
like, avoid,
597
00:45:06.625 --> 00:45:08.224
avoid the these these,
598
00:45:08.545 --> 00:45:12.619
transactions. So I think I don't think they're like, someone just innocently getting
599
00:45:12.920 --> 00:45:18.540
swept up in this is gonna, like, get in trouble, but, it's probably gonna be a pain in the ass,
600
00:45:19.125 --> 00:45:27.045
to deal with it because they're like and then who what about the people that don't even know? Like, you know, even in Bitcoin, we we can detect a a dusting attack,
601
00:45:27.940 --> 00:45:33.480
a lot easier. I think Samurai even helps highlight when there's a potential dusting attack to your wallet.
602
00:45:33.940 --> 00:45:38.165
So, like, shout out to them. But, like, you know, someone could just be naively receiving,
603
00:45:38.705 --> 00:45:44.885
you know, these funds and not have any idea where it came from. They don't keep up with every address that's sanctioned,
604
00:45:45.240 --> 00:45:46.700
you know, in in Ethereum
605
00:45:47.319 --> 00:45:51.420
or or other places. So, like, yeah, there's there's probably gonna be a lot of, like,
606
00:45:51.880 --> 00:45:56.855
knocking on the door for, you know, some of these people, and they have no idea what's going on.
607
00:45:59.395 --> 00:46:02.135
608
00:46:04.280 --> 00:46:05.100
which is,
609
00:46:09.400 --> 00:46:16.674
Seth, you make a lot of interesting points on Twitter. I just lost the I was gonna say, I made a I made a lot of points about Oh, okay. So,
610
00:46:17.320 --> 00:46:17.820
tornado
611
00:46:18.200 --> 00:46:19.900
for the Bitcoiners in the house,
612
00:46:20.520 --> 00:46:21.740
which is most of you,
613
00:46:22.200 --> 00:46:22.700
presumably,
614
00:46:24.765 --> 00:46:29.184
Tornado did something similar to what Wasabi did, and they proactively
615
00:46:29.565 --> 00:46:32.625
decided to incorporate chain analysis, chain surveillance,
616
00:46:33.640 --> 00:46:34.859
to prevent blacklisted
617
00:46:35.400 --> 00:46:37.819
accounts from interacting with their contract.
618
00:46:38.760 --> 00:46:43.235
And they were still sanctioned regardless. So I think there's a good lesson here
619
00:46:44.095 --> 00:46:44.595
in,
620
00:46:46.095 --> 00:46:47.795
you know, proactive doesn't
621
00:46:48.175 --> 00:46:49.395
really protect you.
622
00:46:49.830 --> 00:46:53.530
623
00:46:54.710 --> 00:46:55.370
to prevent,
624
00:46:56.310 --> 00:46:57.450
blacklisted addresses?
625
00:46:58.315 --> 00:46:58.815
626
00:46:59.355 --> 00:47:02.734
About, I don't know, maybe 7 months ago now. Maybe maybe longer.
627
00:47:03.595 --> 00:47:04.095
They
628
00:47:05.570 --> 00:47:08.470
they received pressure in some way that was unclear,
629
00:47:09.090 --> 00:47:10.870
and they implemented a,
630
00:47:11.410 --> 00:47:11.910
Chainalysis
631
00:47:12.370 --> 00:47:13.350
OFAC sanctions
632
00:47:14.195 --> 00:47:27.559
block tool, essentially, into their their front end for Tornado Cash. So not into the smart contract because, again, they have no ability to edit that. But into their front end, which is the way the vast majority of people use Tornado Cash, they implemented this
633
00:47:27.940 --> 00:47:28.680
free analysis
634
00:47:29.059 --> 00:47:30.520
tool, yeah, into the the website.
635
00:47:31.380 --> 00:47:31.880
And
636
00:47:32.375 --> 00:47:36.955
all what that did was blocked OFAC sanctioned entities from using Tornado Cash.
637
00:47:37.255 --> 00:47:46.470
So OFAC has sanctioned Ethereum addresses before. It's not new. And Bitcoin addresses. Yeah. And a couple of Monero addresses and some payment IDs for some reason.
638
00:47:47.650 --> 00:48:03.359
But they so they they blocked these specific OFAC sanctioned entities from using Tornado Cash, which in theory is all that the US Treasury wanted because the US Treasury is is claiming that the reason for this is to prevent North Korean hackers who are stealing funds within the Ethereum ecosystem
639
00:48:03.740 --> 00:48:05.040
from being able to
640
00:48:05.635 --> 00:48:08.115
gain financial privacy through Tornado Cash.
641
00:48:08.995 --> 00:48:09.495
And
642
00:48:09.875 --> 00:48:13.095
so in theory, that blocking of the front end from effect sanction
643
00:48:13.620 --> 00:48:15.640
entities would have been good enough. But,
644
00:48:16.100 --> 00:48:18.360
obviously, I mean, we've seen this over and over again,
645
00:48:19.620 --> 00:48:21.175
giving in, like, preemptively
646
00:48:21.875 --> 00:48:25.415
doing things to try to appease just it it doesn't work.
647
00:48:25.955 --> 00:48:31.400
And it's it's odd because you think that the government would be happy with people doing that and want to incentivize people to preemptively
648
00:48:31.859 --> 00:48:32.359
comply.
649
00:48:33.140 --> 00:48:42.815
But it seems like, yet again, they just preemptively complied and and gained nothing from it, and now are still under the the sanction hammer and in a much harsher way than I think anyone expected,
650
00:48:43.595 --> 00:48:49.480
651
00:48:50.180 --> 00:48:50.680
official,
652
00:48:51.300 --> 00:48:52.840
post that they made on this,
653
00:48:53.620 --> 00:49:08.170
I mean, you could read the entire article. There's a there's a lot of really interesting language that they use here. But, specifically to what Seth just said here, like, it that even surprised me. I didn't I didn't, again, know much about Tornado Cash, but the treasury is specifically saying,
654
00:49:09.030 --> 00:49:13.130
and I quote, like, they repeatedly failed to impose effective controls.
655
00:49:13.775 --> 00:49:21.714
So it's it's not even that they didn't even try. It's like, well, they they did try. Right? But they're still making the claim that,
656
00:49:22.299 --> 00:49:25.680
they, like, failed to do something that they were asked to do,
657
00:49:26.220 --> 00:49:30.079
even though it sounds like they even they tried. So, like, maybe there's even,
658
00:49:31.345 --> 00:49:33.285
I don't know, like, warrant to getting this,
659
00:49:33.905 --> 00:49:35.365
repealed in some way,
660
00:49:35.985 --> 00:49:42.150
or, you know, something along the facts. But I think that's that's really interesting that they they at least tried to do something.
661
00:49:43.250 --> 00:49:44.950
662
00:49:45.730 --> 00:49:47.030
like, a static
663
00:49:47.330 --> 00:49:47.830
blacklist
664
00:49:48.345 --> 00:49:50.045
is very hard to be an effective
665
00:49:50.345 --> 00:49:51.244
tool to prevent
666
00:49:52.345 --> 00:49:55.484
a specific entity from using Tornado Cash. Like,
667
00:49:56.340 --> 00:50:05.585
that's one of the interesting things is that I I don't really know how they were supposed to effectively block it because they can't change something in the smart contract, and they can implement the Sofaq sanctions list.
668
00:50:06.065 --> 00:50:07.285
But I doubt that
669
00:50:07.585 --> 00:50:22.930
the US Treasury was keeping the list up to date enough with every single account that these North Korean hackers were using. So it's it it's really it seems like a catch 22 where they want you to do this, but then you do it and it's ineffective even though they're doing the things you say, and then you just get wrecked anyways.
670
00:50:33.319 --> 00:50:37.420
671
00:50:38.440 --> 00:50:41.019
I I mean, I wanna have a discussion over,
672
00:50:41.994 --> 00:50:44.015
you know, how Bitcoiners should act.
673
00:50:44.795 --> 00:50:45.295
Like,
674
00:50:45.675 --> 00:50:49.055
like, how Bitcoiners that care about financial privacy should proceed,
675
00:50:49.670 --> 00:50:52.970
impact on Monero. But before we get there, I just feel like there's
676
00:50:53.430 --> 00:50:57.050
there's a little bit more to unpack on the Ethereum side of things here.
677
00:51:00.295 --> 00:51:01.755
What else do we have? GitHub.
678
00:51:03.895 --> 00:51:05.994
Should we have a conversation about how
679
00:51:06.780 --> 00:51:08.240
GitHub is this centralized
680
00:51:09.420 --> 00:51:09.920
server
681
00:51:10.540 --> 00:51:12.800
it's it's a centralized service for Git.
682
00:51:14.780 --> 00:51:15.280
I
683
00:51:16.125 --> 00:51:24.224
I think an important takeaway here when these things kind of happen, I think it's really important that people take them as learning experiences, and we learn from them
684
00:51:24.630 --> 00:51:27.930
as much as possible because the best way to learn is to live.
685
00:51:28.550 --> 00:51:31.609
So if we're living through these things, we should learn from them,
686
00:51:32.285 --> 00:51:33.505
And it's a,
687
00:51:36.845 --> 00:51:40.465
it's it's a commonality that I've I've tried to practice,
688
00:51:40.925 --> 00:51:41.425
throughout
689
00:51:43.070 --> 00:51:45.570
my time in in in the Bitcoin space.
690
00:51:48.830 --> 00:51:49.810
And so
691
00:51:50.225 --> 00:51:53.765
with all these things, the way I kind of look at it on a high level
692
00:51:55.105 --> 00:51:55.605
is
693
00:51:56.065 --> 00:51:57.845
everything has trade offs,
694
00:51:58.470 --> 00:51:59.690
and, ultimately,
695
00:52:01.350 --> 00:52:04.490
people will always choose the most convenient option,
696
00:52:05.884 --> 00:52:11.184
or most people will choose the most convenient option. And usually when we look at trade offs,
697
00:52:11.805 --> 00:52:16.370
there is a trade off, a direct trade off between convenience and privacy and security.
698
00:52:17.710 --> 00:52:18.210
And
699
00:52:18.750 --> 00:52:20.770
when we look at the Bitcoin
700
00:52:21.435 --> 00:52:22.415
privacy space,
701
00:52:23.035 --> 00:52:26.095
we see that trade off in action. And you see,
702
00:52:27.435 --> 00:52:30.255
the centralized blinded coordinators like Whirlpool
703
00:52:30.910 --> 00:52:31.650
and Wasabi
704
00:52:32.430 --> 00:52:34.690
that are making a convenience trade off
705
00:52:37.309 --> 00:52:41.665
that the trade off is, you know, there's a centralized entity that could be pressured,
706
00:52:43.085 --> 00:52:47.790
by governments. And then you have something like join market that is significantly less convenient to use,
707
00:52:51.230 --> 00:52:53.490
that is made to be more robust.
708
00:52:53.790 --> 00:52:54.270
And I
709
00:52:55.204 --> 00:52:58.984
from government regulation, pressure, centralized choke points.
710
00:52:59.525 --> 00:53:00.025
And
711
00:53:00.405 --> 00:53:03.385
I think it's prudent to realize that there's nothing
712
00:53:04.529 --> 00:53:05.509
inherently wrong,
713
00:53:06.210 --> 00:53:08.950
and it's probably the best decision in general
714
00:53:09.490 --> 00:53:10.309
to use.
715
00:53:11.705 --> 00:53:14.285
If you don't need, you know, the full
716
00:53:14.905 --> 00:53:15.405
most
717
00:53:15.785 --> 00:53:18.925
sovereign, censorship resistant thing at the time,
718
00:53:19.410 --> 00:53:20.550
then it's not necessarily
719
00:53:20.850 --> 00:53:25.110
a bad decision to choose something that trades that off a little bit for convenience.
720
00:53:25.730 --> 00:53:27.190
But you need to be prepared
721
00:53:27.885 --> 00:53:28.705
for a situation
722
00:53:29.165 --> 00:53:32.385
where you don't have the liberty of that convenience anymore,
723
00:53:32.685 --> 00:53:36.785
and you need to use the more robust option. You need to use the more sovereign option.
724
00:53:37.130 --> 00:53:40.350
And I think there's examples of this in multiple places,
725
00:53:42.570 --> 00:53:44.270
with this tornado situation.
726
00:53:45.244 --> 00:53:46.465
One of them is,
727
00:53:47.325 --> 00:53:52.225
the front end, which was accessible on clear net and hosted I believe it was hosted on AWS.
728
00:53:54.590 --> 00:53:58.370
That makes a more friendly experience to people who wanna use it.
729
00:53:58.750 --> 00:54:02.610
Now it can presumably be run as a Tor Onion service
730
00:54:04.214 --> 00:54:05.674
and not host on AWS.
731
00:54:06.375 --> 00:54:08.795
I wouldn't be surprised if that happens going forward.
732
00:54:09.494 --> 00:54:10.954
Another aspect here
733
00:54:11.760 --> 00:54:13.060
is the GitHub repo.
734
00:54:14.079 --> 00:54:16.500
Git was designed to be distributed
735
00:54:17.200 --> 00:54:25.895
that anyone could self host it and you can interact with each other, But GitHub provides this nice central spot where everyone can communicate with each other.
736
00:54:26.435 --> 00:54:30.589
You have profiles. You have almost like, a LinkedIn for devs type of situation.
737
00:54:32.890 --> 00:54:40.025
And people gravitate towards that, I would say, for convenience. You I think you can map all of that stuff into convenience.
738
00:54:42.484 --> 00:54:44.184
With Bitcoin Core specifically,
739
00:54:46.840 --> 00:54:49.580
they mainly use GitHub for their communication.
740
00:54:50.600 --> 00:54:55.660
Well, not for for all the communication and coordination around Bitcoin Core development.
741
00:54:56.355 --> 00:54:57.975
It is one of the main staples.
742
00:54:58.435 --> 00:55:00.535
But backups are kept, and, theoretically,
743
00:55:01.075 --> 00:55:02.055
not even theoretically,
744
00:55:02.355 --> 00:55:05.655
in a situation where GitHub is censoring Bitcoin core,
745
00:55:06.070 --> 00:55:11.610
they can move off of GitHub, and they don't need to be reliant on GitHub. And they there'll be a convenience hit there,
746
00:55:13.110 --> 00:55:15.290
but they're capable of doing that.
747
00:55:16.855 --> 00:55:19.675
What do you guys think about that framing? Did I do a good job?
748
00:55:20.214 --> 00:55:23.585
749
00:55:24.640 --> 00:55:26.900
you know, it's not I well,
750
00:55:27.680 --> 00:55:28.500
the issues,
751
00:55:29.119 --> 00:55:32.740
and sorry. The issues, quote, like the GitHub tickets that are created,
752
00:55:33.125 --> 00:55:37.625
like bug reports and conversations and stuff, those and pull requests are probably,
753
00:55:38.405 --> 00:55:40.345
like, some of the the biggest
754
00:55:40.750 --> 00:55:47.809
lock ins that really you know, I'm a developer myself, and, of course, I I I have a GitHub account, and, you know, I have code
755
00:55:48.455 --> 00:55:54.855
being hosted in one of their in the GitHub repository. You know? So, like, this it's it's a struggle, but then it's also like
756
00:55:55.500 --> 00:56:03.119
I think, it was a a year ago or 2 years ago that, I guess, like, the CEO of of GitHub says something along the lines of,
757
00:56:04.225 --> 00:56:16.099
you know, I I have I have complete confidence that if we were to take down the GitHub or sorry, the Bitcoin repository on GitHub, that everything will be fine. Like, I they would get a lot you know, everything will just keep,
758
00:56:16.500 --> 00:56:18.180
you know, trucking along just fine.
759
00:56:18.740 --> 00:56:26.525
And he got a lot of backlash for saying that, but I think the like, he wasn't implying that he would take it down. He wasn't implying that,
760
00:56:28.265 --> 00:56:31.180
that, you know, he wouldn't do it.
761
00:56:32.280 --> 00:56:38.619
He was just saying, like, look. Git is still distributed in nature. The underlying protocol for pushing code,
762
00:56:38.955 --> 00:56:39.695
making branches,
763
00:56:41.515 --> 00:56:42.735
merging code even.
764
00:56:43.515 --> 00:56:48.175
So if he he it was more of a testament to believing in the Bitcoin community
765
00:56:48.480 --> 00:56:56.740
that they they have enough backups everywhere, that they have enough people that are can coordinate outside of GitHub. You you did say, like, a lot of coordination happens
766
00:56:57.115 --> 00:57:01.934
on GitHub. A lot of coordination also still happens in IRC as well.
767
00:57:03.115 --> 00:57:08.950
So it was kind of kind of a testament that, like, hey. Look. Like, sure. GitHub is the most convenient option. And
768
00:57:09.650 --> 00:57:11.430
if they needed to take it down,
769
00:57:11.810 --> 00:57:17.115
they can host it somewhere else, and, you know, maybe they lose the issues. Maybe they lose, like, the pull requests.
770
00:57:18.775 --> 00:57:19.734
But it's,
771
00:57:20.214 --> 00:57:29.440
I don't know. Like, I struggle with this. Right? Like like, I my preference as as a developer is to continue using GitHub until I no longer can,
772
00:57:30.204 --> 00:57:33.984
for one reason or another, and then go coordinate in another
773
00:57:34.285 --> 00:57:36.785
manner and and point my repository
774
00:57:37.085 --> 00:57:37.825
somewhere else.
775
00:57:38.850 --> 00:57:54.375
So that's, like, in my opinion, my fail safe. And now I do appreciate the fact that samurai has you know, they started out that way too on GitHub. And then they said, okay. For redundancy reasons, let's host it somewhere else. And I think that was a great move, but I don't necessarily think it has to be the move.
776
00:57:54.849 --> 00:57:56.150
Like tornado cash,
777
00:57:56.890 --> 00:58:03.589
or, no. I'll I'll stop there. But there's enough mechanisms for people to point code in a different location
778
00:58:04.825 --> 00:58:08.205
with an with enough confidence that, like, the code will continue on.
779
00:58:10.025 --> 00:58:10.925
780
00:58:11.680 --> 00:58:14.980
there's the NICE side of Git, which is the underlying
781
00:58:15.440 --> 00:58:22.025
tool and protocol that underlies GitHub, GitLab, Gittee, all of these different tools. They're just front ends for Git.
782
00:58:23.125 --> 00:58:27.224
And the fact is everyone who has ever cloned Bitcoin Core's code
783
00:58:27.525 --> 00:58:35.599
has a copy of that, and anyone who is doing active development will have a current and up to date copy of that. So, like, even in the worst case scenario where,
784
00:58:36.859 --> 00:58:39.520
GitHub takes down all the repos and there are no backups,
785
00:58:39.974 --> 00:58:53.920
Every single developer will have a copy of Bitcoin Core's code on their computer, and many people who aren't devs will just because they cloned it at some point. So there's even in those worst case scenarios, there are recovery mechanisms. It it would be tricky because you have to figure out what the actual
786
00:58:54.355 --> 00:58:57.655
state is you want to restore and start from, but it's it's definitely doable.
787
00:58:58.915 --> 00:59:03.815
But I think, like, looking at it from that perspective of having fail safes in place
788
00:59:04.490 --> 00:59:09.710
and being willing to jump to those if you need to. Like, I I think GitHub gets a lot of
789
00:59:10.250 --> 00:59:18.735
shade because they are owned by Microsoft, but it is an extremely effective service. And one of the very important things within free and open source software
790
00:59:19.115 --> 00:59:24.040
is the ability of getting other people's eyes on the code, getting other contributors coming in,
791
00:59:24.500 --> 00:59:29.880
and easing that process of people being able to contribute. And and GitHub, with the traction that it has,
792
00:59:30.224 --> 00:59:42.470
if you choose to go to another service, if you choose to host your own GitLab or something like that, you're going to lose eyes on the code. You're going to lose contributors. You're going to lose people who would have stumbled across it or wanted to open a PR or something like that.
793
00:59:43.010 --> 00:59:51.244
And that's just a that's an unfortunate consequence of GitHub being such a central piece of, really, the open source movement as a whole.
794
00:59:52.185 --> 00:59:57.760
But there are lots of great alternatives that can be used. And GitLab was mentioned. That's what Samurai wallet uses.
795
00:59:58.220 --> 00:59:59.600
There's a a more lightweight,
796
01:00:00.460 --> 01:00:03.280
front end for Git called Gitea, g I t e a.
797
01:00:03.820 --> 01:00:09.745
That's really, really great, especially for self hosting. Like, I self host Mincents, and I mirror all of my GitHub repos
798
01:00:10.205 --> 01:00:24.025
to my gitie. And so it automatically keeps them all up to date and synced so that if if something happened, if my GitHub account was deleted and everything I'd ever worked on was gone, I'd still have a copy. It all be up to date, and I could just expose my Gitcheid instance and be good to go. And they have that as
799
01:00:24.325 --> 01:00:27.065
800
01:00:27.444 --> 01:00:32.400
801
01:00:32.880 --> 01:00:43.955
It's it's an excellent tool. So it it is important to have those alternatives, but I I do agree with Tony that, like, stay on GitHub till you have to get off. Like, I I think that's a reasonable approach,
802
01:00:44.255 --> 01:00:52.990
and just making sure that you have those backups in place. You know, I can speak for, like, the Monero project has gone through this same situation of not wanting to be dependent on
803
01:00:53.450 --> 01:00:56.510
GitHub itself and wanting to to be resilient, and
804
01:00:57.265 --> 01:01:01.525
the Git the Minera community explored moving to a self hosted GitLab,
805
01:01:01.905 --> 01:01:04.120
but it was, it was a a big hassle
806
01:01:12.765 --> 01:01:16.705
And I think that's a viable method. And then there are great tools out there for keeping
807
01:01:17.244 --> 01:01:19.425
backups of not only the code itself,
808
01:01:19.725 --> 01:01:22.590
which everyone running Git and doing git clone and all that would have
809
01:01:27.470 --> 01:01:30.530
the code, but they wouldn't have any of the issues, any of the comments, pull requests where a lot of the the meat of what happens in an open source project is.
810
01:01:31.145 --> 01:01:45.480
So having a backups in place that include those issues, include those PRs, and include all of that tertiary information that's not code, but is key to figuring out why things were done, when they were done, how discussions went, is also a very important piece there.
811
01:01:46.405 --> 01:01:48.105
812
01:01:48.485 --> 01:01:48.985
that,
813
01:01:50.085 --> 01:01:52.105
GitHub removing the repo
814
01:01:52.805 --> 01:01:53.305
was
815
01:01:53.619 --> 01:01:57.000
both the least surprising aspect of this whole situation
816
01:01:57.460 --> 01:01:58.599
and the least impactful
817
01:01:58.980 --> 01:01:59.480
aspect?
818
01:02:00.845 --> 01:02:17.850
819
01:02:18.595 --> 01:02:19.255
and to
820
01:02:19.795 --> 01:02:20.295
delete
821
01:02:20.675 --> 01:02:22.295
unrelated GitHub repos
822
01:02:22.595 --> 01:02:35.675
that were just created by the contributors who had contributed to TriNet cache in the past. I I didn't expect that to be anything else they were maintaining, basically. Right? Yep. Yep. Yep. And and that's that and that's by order of the sanction as well.
823
01:02:37.035 --> 01:02:40.575
824
01:02:41.035 --> 01:02:44.960
50% or more should also have been, you know, blocked as well.
825
01:02:45.420 --> 01:02:45.819
So,
826
01:02:46.539 --> 01:02:50.319
yeah, I I am I I agree with you, Matt. I'm I'm the least surprised
827
01:02:50.619 --> 01:02:53.635
about this, the GitHub aspect of it too because,
828
01:02:54.335 --> 01:02:56.275
GitHub has done this before, and especially
829
01:02:56.575 --> 01:02:58.355
right after it was bought by Microsoft,
830
01:02:59.600 --> 01:03:03.060
there is a there you know, an order you know, because, like, GitHub,
831
01:03:03.520 --> 01:03:06.180
you know, Microsoft probably has better frameworks, technically,
832
01:03:06.960 --> 01:03:08.000
to to to,
833
01:03:08.695 --> 01:03:09.675
comply with,
834
01:03:10.055 --> 01:03:11.195
and way more lawyers
835
01:03:11.655 --> 01:03:15.230
and lawyers too. And then and then processes in place are ready for,
836
01:03:15.950 --> 01:03:16.450
obeying,
837
01:03:16.990 --> 01:03:18.450
all laws that they're,
838
01:03:18.910 --> 01:03:23.410
in knowledge of. So they've done this before, and they've shut down accounts, and they've shut down code.
839
01:03:23.904 --> 01:03:24.484
840
01:03:24.785 --> 01:03:25.125
They
841
01:03:25.804 --> 01:03:28.805
Iranians. Yeah. They I mean, they bought GitHub, and then, like,
842
01:03:29.184 --> 01:03:34.720
almost immediately following buying GitHub, they, like, banned all Iranians from the platform. And And, like projects.
843
01:03:35.500 --> 01:03:37.040
844
01:03:38.380 --> 01:03:38.860
I
845
01:03:39.900 --> 01:03:42.515
it's I don't think it's from Malish
846
01:03:42.815 --> 01:03:46.675
on on GitHub side. It's like, they basically have 2 options here.
847
01:03:46.975 --> 01:03:50.994
It's comply with the laws or try to fight back.
848
01:03:52.200 --> 01:03:52.700
And,
849
01:03:53.640 --> 01:03:54.540
yeah, I
850
01:03:55.240 --> 01:03:58.220
I I just don't see them fighting back for just the,
851
01:03:59.385 --> 01:04:01.724
you know, the the the the, you know,
852
01:04:02.025 --> 01:04:05.724
the small cases that they're presented with. It's just way easier just to
853
01:04:06.140 --> 01:04:10.880
swat the flies than to really try to change the frameworks and laws in the United States.
854
01:04:14.725 --> 01:04:18.585
855
01:04:19.445 --> 01:04:19.945
Yeah.
856
01:04:20.885 --> 01:04:21.205
They
857
01:04:21.810 --> 01:04:23.670
those types of corps tend to,
858
01:04:24.610 --> 01:04:25.990
if anything, over comply.
859
01:04:27.410 --> 01:04:29.510
And and can I over comply?
860
01:04:29.984 --> 01:04:33.125
861
01:04:33.665 --> 01:04:36.565
and Super Fat Arrow, I see your comment as well.
862
01:04:38.529 --> 01:04:39.430
If if you
863
01:04:39.730 --> 01:04:47.190
look more into, like, why why sanctions exist and what they try to stop, I mean, one of the big aspects of it too is,
864
01:04:48.275 --> 01:04:59.230
United States resources and United States financial rails and the US dollar and things like that. Right? Like, all the things that the United States, quote, unquote, owns, including its people and including the people,
865
01:05:00.330 --> 01:05:01.070
that wanna
866
01:05:01.530 --> 01:05:03.390
stay in good faith through United States.
867
01:05:07.035 --> 01:05:10.734
That said, there was on the Ethereum thing that we haven't touched yet,
868
01:05:11.755 --> 01:05:16.175
there were a lot of stable coin or, I guess, a lot. I think USDC was the main one.
869
01:05:16.900 --> 01:05:20.599
They're you know, stablecoins are inherently centralized as well,
870
01:05:20.900 --> 01:05:22.520
and the sanctions, you know,
871
01:05:22.980 --> 01:05:27.605
even applied to them so that they were able to go in and freeze all the,
872
01:05:28.165 --> 01:05:28.665
USDC
873
01:05:29.045 --> 01:05:29.545
associated
874
01:05:29.845 --> 01:05:30.325
with,
875
01:05:31.125 --> 01:05:34.185
with this as well. So, like, you know, the sanctions are,
876
01:05:34.730 --> 01:05:36.349
you know, when you get into
877
01:05:37.049 --> 01:05:38.589
other countries using cryptocurrencies,
878
01:05:38.970 --> 01:05:45.625
well, like, that's not a United States financial tool. Right? So I'm, you know, I'm not gonna say too much more on
879
01:05:46.005 --> 01:05:47.545
Iranians using cryptocurrency
880
01:05:47.925 --> 01:05:53.349
because I don't I haven't read that article yet. But it's it's kind of designed to, like, prohibit
881
01:05:53.730 --> 01:05:54.230
Americans
882
01:05:54.849 --> 01:05:56.470
from doing something and prohibit,
883
01:05:57.170 --> 01:05:59.349
resources that are United States owned,
884
01:06:00.075 --> 01:06:02.095
financial tools from the United States,
885
01:06:02.474 --> 01:06:03.935
and contributing towards,
886
01:06:05.755 --> 01:06:08.815
a specific entity that they don't want using it?
887
01:06:09.330 --> 01:06:11.270
888
01:06:15.730 --> 01:06:21.385
first, the the link that he that he commented about was what Superfat Arrow put in,
889
01:06:22.565 --> 01:06:25.785
the matrix chat, which is this, Reuters report,
890
01:06:27.190 --> 01:06:28.250
that came out yesterday
891
01:06:28.870 --> 01:06:30.170
that said Iran,
892
01:06:30.790 --> 01:06:33.290
made its first import order using cryptocurrency.
893
01:06:35.865 --> 01:06:39.805
They insinuated in the report that it was an attempt to evade sanctions.
894
01:06:40.505 --> 01:06:41.805
That's probably an accurate,
895
01:06:42.505 --> 01:06:43.850
insinuation. I mean,
896
01:06:44.330 --> 01:06:45.470
Iran is sanctioned
897
01:06:47.450 --> 01:06:47.950
significantly.
898
01:06:49.450 --> 01:06:50.590
The report states,
899
01:06:50.970 --> 01:06:56.065
it's pretty vague. The report says that the order was for $10,000,000 worth of something.
900
01:06:56.525 --> 01:06:57.825
Doesn't say for what,
901
01:06:58.579 --> 01:07:02.680
and it doesn't say which cryptocurrency was used or how it was used.
902
01:07:04.260 --> 01:07:06.335
So it's a very basic report. It
903
01:07:06.895 --> 01:07:07.395
is
904
01:07:08.175 --> 01:07:08.675
interesting
905
01:07:09.615 --> 01:07:12.994
to me most that it happened on the same day
906
01:07:15.650 --> 01:07:16.789
that all the
907
01:07:17.329 --> 01:07:19.029
tornado cache stuff came out.
908
01:07:21.525 --> 01:07:27.065
So that makes it more relevant, I think, to this discussion than it would otherwise. I mean, I I think people should assume
909
01:07:27.845 --> 01:07:32.210
that sanctioned con con countries are gonna have more use for Bitcoin and other cryptocurrencies,
910
01:07:33.230 --> 01:07:36.849
than nonsanctioned countries because they don't have access to the traditional financial system.
911
01:07:37.215 --> 01:07:39.715
Specifically if they're energy rich countries like Iran
912
01:07:40.015 --> 01:07:40.595
or Russia,
913
01:07:41.455 --> 01:07:45.610
where they can also have access to mining, which gives them a permissionless way of
914
01:07:46.250 --> 01:07:48.110
accessing the networks to begin with.
915
01:07:48.810 --> 01:07:52.030
So that is something we've expected for quite a while.
916
01:07:52.970 --> 01:07:57.654
But to see it basically drop in the same days as as the tornado cache stuff,
917
01:07:58.355 --> 01:08:01.575
is definitely an interesting development. The other thing
918
01:08:02.319 --> 01:08:09.299
Tony mentioned, which is one of the last two things I have on my list on the Ethereum side of things that I wanted to unpack here,
919
01:08:10.055 --> 01:08:12.315
is Tornado Cash allowed you to
920
01:08:13.015 --> 01:08:13.515
to,
921
01:08:16.055 --> 01:08:17.595
to use mixed assets,
922
01:08:18.780 --> 01:08:20.159
to use wrapped assets.
923
01:08:21.260 --> 01:08:24.000
And what that means is they allowed you to use USDC,
924
01:08:24.380 --> 01:08:24.880
centralized
925
01:08:25.864 --> 01:08:29.804
coin attached to US dollars held in a bank account by Circle
926
01:08:30.425 --> 01:08:32.925
and Coinbase backed by Goldman and BlackRock,
927
01:08:34.185 --> 01:08:35.005
with Tether
928
01:08:35.790 --> 01:08:37.330
and with wBTC,
929
01:08:37.790 --> 01:08:42.140
which is the same kind of product, but with Bitcoin held by a BitGo.
930
01:08:42.745 --> 01:08:44.285
And all 3 of those,
931
01:08:44.745 --> 01:08:45.805
as soon as
932
01:08:46.345 --> 01:08:49.085
as soon as, the sanction order went out,
933
01:08:49.465 --> 01:08:50.525
they got frozen
934
01:08:52.630 --> 01:08:53.850
by those custodians.
935
01:08:56.310 --> 01:08:57.130
So, obviously
936
01:08:58.230 --> 01:09:00.010
I mean, it's just a perfect example
937
01:09:00.864 --> 01:09:02.644
of of why these,
938
01:09:05.264 --> 01:09:10.160
this idea of wrapped assets is such a dangerous trust proposition. It's it's
939
01:09:10.480 --> 01:09:12.660
specifically the trust proposition that was
940
01:09:13.360 --> 01:09:17.140
attempted that that was solved by Bitcoin and other cryptocurrencies,
941
01:09:17.760 --> 01:09:18.260
right,
942
01:09:19.155 --> 01:09:23.495
where you don't have a third party holding an asset in a bank account
943
01:09:23.875 --> 01:09:26.935
or them or if in Bitcoin's case, on their keys,
944
01:09:27.320 --> 01:09:31.260
you have this native bearer instrument that you have full control over.
945
01:09:37.295 --> 01:09:39.215
Yeah. I I Yeah. I think it's,
946
01:09:39.775 --> 01:09:50.039
947
01:09:50.920 --> 01:09:52.860
you know, fines in the past for,
948
01:09:53.745 --> 01:09:58.565
not being as strict about sanctions in the past too. So,
949
01:10:00.440 --> 01:10:03.660
specifically, with Iran, I believe it was just a multisig,
950
01:10:04.840 --> 01:10:09.815
that they helped assist with. So it wasn't even, like, a completely custodial thing. But
951
01:10:10.995 --> 01:10:13.895
that was to in my mind, like, that set really
952
01:10:15.555 --> 01:10:17.574
interesting precedent for
953
01:10:18.550 --> 01:10:20.250
even being involved in a multisig
954
01:10:20.870 --> 01:10:22.170
and, you know, participating
955
01:10:22.470 --> 01:10:26.330
in a in a quorum and assisting with that when it comes to,
956
01:10:26.790 --> 01:10:28.165
when it comes to sanctions.
957
01:10:28.625 --> 01:10:34.965
So, I'm I'm not surprised that they I was I didn't know they were involved in this, but I'm not surprised that they were really quick
958
01:10:35.290 --> 01:10:39.230
to act, based on them getting hit with fines previously.
959
01:10:41.370 --> 01:10:42.830
960
01:10:43.290 --> 01:10:44.590
relevant to me because
961
01:10:48.405 --> 01:10:50.985
there's some outspoken members of
962
01:10:51.925 --> 01:10:53.625
Bitcoin Twitter who
963
01:10:54.219 --> 01:11:00.560
insisted to me many times that the best Bitcoin privacy tool was using wrapped Bitcoin and tornado cash,
964
01:11:02.545 --> 01:11:04.005
and this is a perfect example
965
01:11:04.305 --> 01:11:08.885
of wrapped Bitcoin not being Bitcoin and bringing in additional third party risk.
966
01:11:11.240 --> 01:11:15.660
So that's why I pinpointed the wrapped Bitcoin situation pretty quickly.
967
01:11:17.614 --> 01:11:20.114
968
01:11:20.974 --> 01:11:22.114
someone else's keys.
969
01:11:22.815 --> 01:11:25.800
970
01:11:27.719 --> 01:11:31.099
And then do you have anything to add there, Seth, on the wrap side?
971
01:11:33.375 --> 01:11:35.935
972
01:11:36.655 --> 01:11:42.275
It would be interesting to consider pediments from this angle, but I don't know if that's something you wanna get into today.
973
01:11:42.830 --> 01:11:45.890
974
01:11:48.670 --> 01:11:50.850
I think it goes hand in hand with
975
01:11:53.165 --> 01:11:54.865
what I said earlier about
976
01:11:57.005 --> 01:12:03.620
using a more convenient option if available to you. But if it's no longer available to you, then moving to the more sovereign option.
977
01:12:05.120 --> 01:12:06.420
I think Fedimins
978
01:12:09.915 --> 01:12:11.375
have a different strategy
979
01:12:12.155 --> 01:12:13.695
than Tornado Cash
980
01:12:14.155 --> 01:12:14.895
in that
981
01:12:15.850 --> 01:12:18.989
the goal is not, you know, one large Fediment,
982
01:12:19.450 --> 01:12:22.350
but it's anyone can spin up a Fediment anywhere in the world,
983
01:12:23.725 --> 01:12:25.825
and they're all interoperable with each other,
984
01:12:27.085 --> 01:12:29.025
which obviously does make enforcement
985
01:12:29.325 --> 01:12:30.145
more difficult.
986
01:12:32.330 --> 01:12:39.150
And I think, you know, when we were on your show discussing it, this is one of the key reasons why I said
987
01:12:40.045 --> 01:12:40.785
it's important
988
01:12:41.245 --> 01:12:41.745
that
989
01:12:43.165 --> 01:12:51.570
that, essentially, to me, Fedimint are dead on arrival if it's not easy for people to spin up self hosted federation servers,
990
01:12:52.190 --> 01:12:53.250
Federman servers
991
01:12:53.790 --> 01:12:56.770
that operate through Tor and don't dox their IP address.
992
01:12:59.415 --> 01:13:04.695
And so that's that it's a it's a different strategy in this situation, which is basically a
993
01:13:06.770 --> 01:13:08.630
almost like a whack a mole strategy,
994
01:13:09.330 --> 01:13:15.510
just that there'll be so many small pediments all around the world that are operated through tour that it's like,
995
01:13:16.995 --> 01:13:22.535
you know, it it's it's hard to enforce in that level, and that's kind of I I don't think
996
01:13:24.920 --> 01:13:28.860
I don't think my thinking on Fedimans has really changed based on this
997
01:13:29.480 --> 01:13:29.980
development,
998
01:13:31.945 --> 01:13:34.685
but that's also probably because I was already
999
01:13:35.785 --> 01:13:36.685
more pessimistic
1000
01:13:37.225 --> 01:13:40.605
and paranoid than most people when thinking about this kind of stuff.
1001
01:13:41.330 --> 01:13:43.090
1002
01:13:44.850 --> 01:13:48.870
when when bringing up Fedimint and and this kind of thing, it's more akin to
1003
01:13:49.330 --> 01:13:50.870
you can just consider each
1004
01:13:51.235 --> 01:13:51.735
federation
1005
01:13:52.195 --> 01:13:53.494
as its own
1006
01:13:54.675 --> 01:13:58.454
service that it's providing, right, its own custodian. So
1007
01:13:58.790 --> 01:14:03.450
there probably won't be, like, a sweeping change that says, like,
1008
01:14:03.830 --> 01:14:12.675
okay. All Fedimint servers are now sanctioned. Like, that's probably not what's gonna happen. Right? Because you could have like, Coinbase could switch to Fedimint.
1009
01:14:13.375 --> 01:14:16.660
Right? Like so it's like it's it's it's more of an implementation.
1010
01:14:17.200 --> 01:14:20.980
Like, who can sign up? You know? Are are Fedimint servers,
1011
01:14:21.360 --> 01:14:23.060
if they get large enough, are they
1012
01:14:23.405 --> 01:14:23.905
appropriately
1013
01:14:24.285 --> 01:14:30.625
complying with all laws and regulations? Are they doing this? Are they doing that? Right? So, like, it's not gonna be a,
1014
01:14:31.180 --> 01:14:32.080
like, a sweeping,
1015
01:14:33.420 --> 01:14:35.920
Fedimint is banned or, like, anyone that's operating
1016
01:14:36.699 --> 01:14:44.135
Fedimint software is, like, put on a list or is going to prison or anything like that. So I think it's it's all gonna come down to,
1017
01:14:45.474 --> 01:14:45.974
implementations
1018
01:14:46.434 --> 01:14:47.255
and policies.
1019
01:14:47.790 --> 01:14:51.730
And and and then, Matt, like you said, like, if I'm a Fedimint server for just
1020
01:14:52.190 --> 01:14:59.865
my family, right, that's a completely different story than, like, a Fedimint server that's, like, trying to operate globally. So I think it's gonna be
1021
01:15:00.885 --> 01:15:03.865
no. They they almost just, like, shares any risk that any,
1022
01:15:04.170 --> 01:15:06.329
you know, custodian really has. It's just
1023
01:15:07.849 --> 01:15:08.349
yeah.
1024
01:15:08.650 --> 01:15:10.429
1025
01:15:11.050 --> 01:15:17.705
get targeted in the past. Pretty much the assumption everyone should make is that any custodian that gets large enough will be targeted.
1026
01:15:18.485 --> 01:15:21.465
We saw that the most recent large case was BitMEX.
1027
01:15:22.580 --> 01:15:23.720
But I think we also,
1028
01:15:24.900 --> 01:15:26.200
a lot of us overestimate
1029
01:15:26.580 --> 01:15:28.760
how quickly regulators move,
1030
01:15:30.844 --> 01:15:33.985
And a perfect example is, you know, Wallet of Satoshi,
1031
01:15:35.005 --> 01:15:37.665
which is a completely custodial lightning wallet,
1032
01:15:38.750 --> 01:15:44.210
that's been doing decent volumes and has lasted way longer than I expected without any kind of KYC.
1033
01:15:45.870 --> 01:15:47.150
Now that shouldn't be
1034
01:15:49.105 --> 01:15:54.645
I don't want that to be taken the wrong way. I still expect them to either implement KYC or shut down at some point.
1035
01:15:56.930 --> 01:15:59.510
But the point is is that's a single custodian
1036
01:16:01.010 --> 01:16:04.630
that has full view of funds, that can rug pull at any time,
1037
01:16:05.195 --> 01:16:08.735
that is being run by a known entity in Australia.
1038
01:16:10.955 --> 01:16:14.175
So if you talk about a multi sig custodian that can't see
1039
01:16:16.340 --> 01:16:20.760
transactions that needs to collude with each other, that can presumably be run anonymously,
1040
01:16:21.300 --> 01:16:22.199
which is key,
1041
01:16:22.675 --> 01:16:26.695
once again, to the whole thing to me is that you're able to run these servers over Tor
1042
01:16:27.155 --> 01:16:29.175
and self host them relatively cheaply.
1043
01:16:31.719 --> 01:16:34.540
You're just improving that status quo of what already exists,
1044
01:16:35.159 --> 01:16:38.060
then if that convenient option if that option
1045
01:16:38.840 --> 01:16:39.659
is not
1046
01:16:40.745 --> 01:16:42.925
workable in the current landscape,
1047
01:16:43.465 --> 01:16:43.965
then
1048
01:16:44.265 --> 01:16:45.965
you move to less convenient,
1049
01:16:46.825 --> 01:16:47.325
more
1050
01:16:50.450 --> 01:16:52.390
robust and sovereign methods,
1051
01:16:53.250 --> 01:16:53.750
tools.
1052
01:16:55.890 --> 01:16:57.110
That does that make sense?
1053
01:16:57.875 --> 01:17:00.455
1054
01:17:01.955 --> 01:17:07.750
the importance, like you said, of how easy it is to spin this up and how easy it is to do so in an adversarial
1055
01:17:08.770 --> 01:17:09.270
environment,
1056
01:17:10.210 --> 01:17:13.510
will really dictate how useful something like Fedevents could be.
1057
01:17:14.155 --> 01:17:24.170
I mean, I think Tornado Cash sets an interesting precedent that maybe they could go after anyone contributing to something like Fedimint at at a developmental level. They could take down repos.
1058
01:17:25.110 --> 01:17:29.770
They could say that anyone operating an instance of Fedimint is breaking sanctions laws because
1059
01:17:30.385 --> 01:17:37.125
some Iranian or some North Korean uses Fedimence to try to to move funds. So I definitely think that is something to be
1060
01:17:38.080 --> 01:17:39.600
concerned about and thinking about,
1061
01:17:40.240 --> 01:17:52.035
because it it could happen. And, I mean, I think Tornado Cash is like, I wouldn't have thought that very I would have thought that in, like, a worst case scenario before this, but I think it seems much more realistic that we have to think about them going after
1062
01:17:52.575 --> 01:17:55.875
broad privacy tools and not just specific instances.
1063
01:17:56.320 --> 01:17:57.040
1064
01:17:57.680 --> 01:18:00.340
1065
01:18:00.880 --> 01:18:05.780
I mostly agree, but I think, like, there's this distinction here that's important. And I'm not trying to
1066
01:18:09.824 --> 01:18:10.324
justify,
1067
01:18:12.065 --> 01:18:15.690
certain certain rules and regulations that we put in effect, but,
1068
01:18:16.250 --> 01:18:18.830
I think there is a difference when it comes down to
1069
01:18:20.650 --> 01:18:21.630
software versus
1070
01:18:22.570 --> 01:18:23.710
hosted software,
1071
01:18:25.304 --> 01:18:28.445
Software that anyone can, like, run on their computer,
1072
01:18:29.545 --> 01:18:45.125
and utilize, like, that's more akin to free speech. Right? But I when it comes to host a software, as in even if it's hosted on Ethereum, if it's on a domain, if it's on a Tor address, if if it's, like, wherever it's being hosted and people are interacting with it, like, that can,
1073
01:18:45.585 --> 01:18:55.699
be, quote, unquote, an illegal service or, quote, unquote, something that could be sanctioned. Right? But I think, like, there's a big distinction here between, like, what the treasury service did,
1074
01:18:56.385 --> 01:18:57.685
the US Treasury did.
1075
01:18:58.545 --> 01:19:04.645
And you could even argue, like, okay. Just because GitHub took down the source code like, the source code wasn't the problem.
1076
01:19:05.580 --> 01:19:10.160
GitHub just had to take down the source code because it was owned and operated by a sanctioned
1077
01:19:10.780 --> 01:19:11.280
entity.
1078
01:19:11.820 --> 01:19:14.080
The software itself was not,
1079
01:19:15.385 --> 01:19:17.224
what was sanctioned here. And,
1080
01:19:17.704 --> 01:19:18.364
you know,
1081
01:19:19.224 --> 01:19:20.525
and if and if FETI,
1082
01:19:21.065 --> 01:19:21.965
the company,
1083
01:19:23.050 --> 01:19:36.375
well, I'm not even gonna say the it's an open source software. Right? So, like, anyone could contribute to it. Yeah. MIT license, FOSS. MIT license, FOSS. It's not a hosted entity. It's not being hosted itself. Right? So, like, I think there's a big distinction
1084
01:19:37.155 --> 01:19:38.295
between running
1085
01:19:39.100 --> 01:19:40.080
software locally
1086
01:19:40.860 --> 01:19:41.360
and,
1087
01:19:42.060 --> 01:19:49.425
interacting with a hosted service that is running specific software in a specific way. So I I I have to push
1088
01:19:49.805 --> 01:19:50.945
back a a little bit on
1089
01:19:51.565 --> 01:19:58.830
just the idea that, like, they're going like, yeah. They wanna go after privacy tools. Right? Yeah. But I don't think, like, just simply
1090
01:19:59.530 --> 01:20:00.750
running or using
1091
01:20:01.770 --> 01:20:05.310
software locally is the problem. I think it's interacting with
1092
01:20:06.074 --> 01:20:09.375
host of software that's more of a problem than locally
1093
01:20:09.755 --> 01:20:22.070
local software, that's open source. And I and, I just think that's, like, an important distinction to keep in mind here, not justifying one thing or another, but, there is kind of a little bit of a difference between
1094
01:20:23.685 --> 01:20:24.985
software as free speech
1095
01:20:25.525 --> 01:20:26.985
and host of software.
1096
01:20:27.764 --> 01:20:29.784
1097
01:20:30.085 --> 01:20:38.240
they're they're in a worse it seems like they would be in a worse legal position than something like Tornado Cash. They are centralized, and they are custodial.
1098
01:20:38.985 --> 01:20:46.260
I mean, you could argue they're decentralized because it's a federation, but not really because the federation members have to know each other. It's each individual
1099
01:20:46.639 --> 01:21:05.920
federation, right, as a host of service, not the software itself. But the same thing could be done with Tornado Cash. I mean, it it wasn't it was running on Ethereum, but anyone running an Ethereum node is running that smart contract and can interact with it at any point in time. Obviously, that's less people than, like, a Bitcoin node, but it's it's not as if it was a centralized
1100
01:21:06.860 --> 01:21:07.360
hosted
1101
01:21:08.220 --> 01:21:09.440
custodial tool.
1102
01:21:09.980 --> 01:21:15.065
It's the opposite. And the fact that it is undergoing sanctions and its code and its contributors,
1103
01:21:15.765 --> 01:21:17.385
I think, is a
1104
01:21:17.925 --> 01:21:26.370
something we need to be mindful of moving forward for sure and something we need to be considering how how we build these things so that they can function in adversarial environments.
1105
01:21:28.025 --> 01:21:30.125
1106
01:21:31.945 --> 01:21:35.565
I think a a useful example here to me is
1107
01:21:35.960 --> 01:21:37.340
is signal messenger.
1108
01:21:40.199 --> 01:21:42.139
Or at least what I'm trying to get
1109
01:21:43.895 --> 01:21:48.235
to make clear here is is is with the trade off signal mix.
1110
01:21:49.895 --> 01:21:53.070
So signal obviously allows you to easily and conveniently
1111
01:21:53.450 --> 01:21:54.990
communicate with friends and family
1112
01:21:55.930 --> 01:21:57.230
in an encrypted way.
1113
01:21:57.850 --> 01:21:59.050
Now I don't think
1114
01:22:00.025 --> 01:22:01.485
I I personally think
1115
01:22:01.865 --> 01:22:03.325
our laws protect
1116
01:22:04.425 --> 01:22:05.245
using encryption,
1117
01:22:05.545 --> 01:22:07.645
and they protect freedom of speech,
1118
01:22:08.105 --> 01:22:09.325
and they protect
1119
01:22:10.200 --> 01:22:10.700
privacy.
1120
01:22:12.600 --> 01:22:13.580
But, obviously,
1121
01:22:14.200 --> 01:22:20.425
history has shown that we can't rely on those laws. I think it's relatively reasonable to expect a scenario
1122
01:22:21.364 --> 01:22:24.425
where signal essentially is made illegal in America.
1123
01:22:26.620 --> 01:22:29.280
And there's been some narratives out of
1124
01:22:29.820 --> 01:22:31.200
different members of congress
1125
01:22:31.820 --> 01:22:35.200
and rebuttals from signal in that regard and stuff to
1126
01:22:35.865 --> 01:22:39.165
in that in that notion, in that idea that, okay,
1127
01:22:40.105 --> 01:22:42.845
if they if signal doesn't implement some kind of backdoor,
1128
01:22:44.330 --> 01:22:45.390
it's made illegal.
1129
01:22:46.010 --> 01:22:46.990
In that situation,
1130
01:22:48.170 --> 01:22:50.910
we still have false tools available to us
1131
01:22:53.415 --> 01:22:56.155
to communicate with each other in an encrypted private way.
1132
01:22:56.935 --> 01:22:57.435
But
1133
01:22:58.510 --> 01:22:59.489
signal itself
1134
01:22:59.869 --> 01:23:02.289
is obviously completely dead in the water,
1135
01:23:03.389 --> 01:23:06.690
fighting a legal battle, hopefully, winning the legal battle. Right?
1136
01:23:07.565 --> 01:23:09.905
So I I feel like it's a good example of
1137
01:23:11.805 --> 01:23:18.510
if you're able to use a slightly more convenient tool, we have way more people using encrypted messaging than if they were using PGP.
1138
01:23:19.290 --> 01:23:27.225
But at the end of the day, you're able to move to a more sovereign tool, and we have those tools available to us if the need arises in the future.
1139
01:23:27.765 --> 01:23:36.190
1140
01:23:37.210 --> 01:23:44.175
when you enter that adversarial environment. So practice and understanding those tools ahead of time, even if you use the more convenient option, is important.
1141
01:23:44.475 --> 01:23:44.975
1142
01:23:48.155 --> 01:23:51.889
And then that brings me to our last item on the Ethereum side,
1143
01:23:52.510 --> 01:23:53.330
which is
1144
01:23:54.510 --> 01:23:58.210
they are planning on moving to proof of stake shortly.
1145
01:24:00.155 --> 01:24:02.094
There has been a lot of talk
1146
01:24:02.795 --> 01:24:04.895
about the concept of freezing
1147
01:24:06.074 --> 01:24:08.175
Ethereum that is being used in Tornado,
1148
01:24:08.820 --> 01:24:10.040
similar to the way
1149
01:24:10.740 --> 01:24:11.240
WBTC
1150
01:24:11.700 --> 01:24:13.320
and USDC got frozen.
1151
01:24:13.940 --> 01:24:15.480
And, also, I've had
1152
01:24:16.100 --> 01:24:16.600
some
1153
01:24:19.725 --> 01:24:21.105
anti Freedom Bitcoiners
1154
01:24:21.565 --> 01:24:22.705
call me out on Twitter
1155
01:24:23.085 --> 01:24:24.385
asking the likelihood
1156
01:24:24.685 --> 01:24:28.730
of CoinJoin Bitcoin or Bitcoin that has some kind of collaborate
1157
01:24:29.530 --> 01:24:30.030
collaboration
1158
01:24:30.969 --> 01:24:33.389
transaction history on it getting frozen.
1159
01:24:34.865 --> 01:24:41.445
When we talk about these native assets getting frozen, not these wrapped assets that are held by a third party,
1160
01:24:44.450 --> 01:24:47.350
we are talking about, essentially, what is a sophisticated
1161
01:24:47.970 --> 01:24:49.830
mining censorship attack,
1162
01:24:50.285 --> 01:24:52.705
where the miners who are including transactions
1163
01:24:53.405 --> 01:24:54.225
in a block,
1164
01:24:55.725 --> 01:24:56.545
are coerced
1165
01:24:57.085 --> 01:24:57.905
or forced
1166
01:24:59.040 --> 01:25:02.739
are they collude with each other to not include certain transactions
1167
01:25:04.000 --> 01:25:08.275
in a block, so you're not able to essentially send the Bitcoin or send the ETH.
1168
01:25:10.594 --> 01:25:14.135
Now Ethereum is currently still using proof of work. They have miners.
1169
01:25:14.995 --> 01:25:17.175
The mining set is relatively distributed.
1170
01:25:18.690 --> 01:25:21.510
In a world where Ethereum moves to proof of stake,
1171
01:25:22.770 --> 01:25:24.949
I think there's very good reason to believe
1172
01:25:25.305 --> 01:25:27.965
that those validators will centralize
1173
01:25:28.265 --> 01:25:31.245
among regulated entities, such as exchanges,
1174
01:25:32.185 --> 01:25:33.324
Binance, Coinbase,
1175
01:25:34.260 --> 01:25:34.760
Kraken.
1176
01:25:38.900 --> 01:25:40.600
It is interesting to me
1177
01:25:41.780 --> 01:25:46.305
that really if, you know, fortunately, I'm not an Ethereum stakeholder.
1178
01:25:46.844 --> 01:25:48.225
But if I owned Ethereum,
1179
01:25:48.605 --> 01:25:50.225
to me, this should be,
1180
01:25:51.060 --> 01:25:55.400
like, almost perfect timing wake up call to abort the proof of stake transition.
1181
01:25:56.660 --> 01:25:57.800
It seems like
1182
01:25:58.364 --> 01:26:01.025
the Ethereum side is kinda just ignoring that aspect.
1183
01:26:05.460 --> 01:26:07.239
Would you guys agree with me
1184
01:26:08.579 --> 01:26:09.079
that
1185
01:26:11.139 --> 01:26:14.679
this situation becomes an even more interesting scenario
1186
01:26:14.980 --> 01:26:19.625
or even more dangerous scenario in a pro post proof of stake world.
1187
01:26:21.205 --> 01:26:23.305
1188
01:26:23.845 --> 01:26:26.520
like you mentioned, the the control
1189
01:26:27.060 --> 01:26:34.015
over percentages in the network once proof of stake happens is gonna rapidly shift towards centralized staking services.
1190
01:26:34.955 --> 01:26:40.415
Not that they'll necessarily be dominant, not that one will have over 51% control or anything like that, but
1191
01:26:40.730 --> 01:26:45.150
there will be a at least a large percentage of the network in those centralized
1192
01:26:45.530 --> 01:26:46.270
and regulated
1193
01:26:46.650 --> 01:26:47.550
staking services.
1194
01:26:48.650 --> 01:26:49.390
And so
1195
01:26:49.975 --> 01:26:57.675
if this had happened after proof of stake, it would have been interesting if the US Treasury had tried to pressure those regulated entities to
1196
01:26:58.550 --> 01:27:08.295
prevent transactions that were to or from the Tornado Cash smart contract, because in theory, they could. I don't know how slashing would work in that scenario. I don't know enough about the
1197
01:27:08.775 --> 01:27:23.300
the approach taken in proof of stake by Ethereum to know how the rest of the network would respond if there was a I think we're gonna find out. Yeah. It see it seems like it. It seems we're heading that way. Entering an an adversarial environment and switching a proof of stake at the same time is a
1198
01:27:23.605 --> 01:27:25.545
a spicy set of things to combine.
1199
01:27:25.925 --> 01:27:34.440
But it it really will be the true test of if all of the proof of stake advocates have have truth in the things they've been claiming or if it's gonna backfire in a massive way.
1200
01:27:35.060 --> 01:27:40.645
1201
01:27:41.685 --> 01:27:48.560
1202
01:27:48.860 --> 01:27:51.040
1203
01:27:51.740 --> 01:28:00.465
The f two point o beacon contract on Ethereum was also created by coins from Tornado Cash too. So it's kind of a you know, it's it's an interesting
1204
01:28:00.765 --> 01:28:06.739
aspect as well. But, yeah, I I agree. I mean, the Bitcoin Wait. Wait. Wait. Wait. The beacon contract was? Yeah.
1205
01:28:07.920 --> 01:28:15.635
So that that's, like, the original contract of I think I think so. I don't know exactly how that works, so that's that's his,
1206
01:28:15.935 --> 01:28:16.494
that's his take.
1207
01:28:17.855 --> 01:28:24.720
But going back back to it, like, I I I I think you're right. And not only is it, like, does the power shift
1208
01:28:25.260 --> 01:28:31.195
to large stakeholders, but it's like who those stakeholders are and those typically, like, regulated cucks.
1209
01:28:31.994 --> 01:28:35.855
So we're we're definitely gonna see a big, big change, I think.
1210
01:28:36.554 --> 01:28:47.219
I think was it Marathon a while back, the one that tried to censor transactions and they walked that back? Full fact compliant clean blocks. Yeah. Which is so funny too because then, like, after enough
1211
01:28:47.725 --> 01:28:54.465
hate on Twitter, they backtracked it. So it was like, what were you doing in the first place? Like, the white like, you obviously didn't need to do that.
1212
01:28:55.710 --> 01:29:00.050
So, yeah, I I agree. When the more the more regulated cocks that are controlling
1213
01:29:00.350 --> 01:29:01.710
the the chain,
1214
01:29:02.190 --> 01:29:04.449
you're just gonna you're gonna see it massively
1215
01:29:05.505 --> 01:29:07.685
change what they censor and what they don't censor.
1216
01:29:10.625 --> 01:29:11.685
1217
01:29:11.985 --> 01:29:12.485
some
1218
01:29:15.150 --> 01:29:17.410
validity there on the
1219
01:29:18.670 --> 01:29:22.290
something that I've a lot of us have been very vocal about, which is
1220
01:29:22.775 --> 01:29:27.115
that we don't want, you know, too many large regulated US miners
1221
01:29:30.830 --> 01:29:33.409
in the on the bit you know, securing the Bitcoin network,
1222
01:29:34.030 --> 01:29:36.050
for that for a similar reason.
1223
01:29:36.350 --> 01:29:41.495
Now there there is an interesting aspect of this mining censorship is that,
1224
01:29:43.155 --> 01:29:48.055
if a large group of miners are choosing not to include your transaction in a block,
1225
01:29:48.739 --> 01:29:50.679
you can raise your transaction fee.
1226
01:29:51.540 --> 01:29:54.040
Presumably I mean, the same thing applies
1227
01:29:54.820 --> 01:29:57.400
in a proof of stake system, all else equal,
1228
01:29:58.315 --> 01:30:00.655
and you increase your transaction fee until,
1229
01:30:01.595 --> 01:30:04.175
it is included in the block. At that point,
1230
01:30:06.050 --> 01:30:07.670
the miners who are attempting
1231
01:30:08.050 --> 01:30:08.550
to
1232
01:30:09.329 --> 01:30:11.909
censor that transaction have a choice to make.
1233
01:30:12.805 --> 01:30:16.505
They can choose not to build on top of your block and essentially try and,
1234
01:30:18.245 --> 01:30:19.670
create their, you know,
1235
01:30:20.550 --> 01:30:23.050
a fork of that chain and and build
1236
01:30:23.350 --> 01:30:24.810
themselves. If they have
1237
01:30:25.270 --> 01:30:30.215
a significant majority of the hash rate that could be successful for them, it will be very expensive,
1238
01:30:31.715 --> 01:30:34.375
gets more expensive the less hash they have.
1239
01:30:35.635 --> 01:30:36.695
On proof of stake,
1240
01:30:37.199 --> 01:30:39.699
with Ethereum, there is a slashing component
1241
01:30:40.880 --> 01:30:42.020
that Seth mentioned.
1242
01:30:42.880 --> 01:30:48.905
They are constantly changing how all of that works, and I do not have enough time in the day to pay attention to it.
1243
01:30:50.085 --> 01:30:52.105
1244
01:30:52.805 --> 01:30:53.305
But
1245
01:30:53.640 --> 01:30:56.300
1246
01:30:57.000 --> 01:31:03.905
that it does appear that if they move forward with proof of stake, which it appears they are planning on doing full steam ahead,
1247
01:31:04.285 --> 01:31:05.985
we will find out pretty soon
1248
01:31:08.765 --> 01:31:13.760
how that all works out in practice, and I you know, it will be very expensive lessons for people
1249
01:31:14.780 --> 01:31:15.840
is my expectation.
1250
01:31:16.540 --> 01:31:26.375
1251
01:31:27.540 --> 01:31:32.600
like, no one's no one's gonna be no one's gonna be going along with that. Right? But Ethereum, they change
1252
01:31:32.900 --> 01:31:43.585
difficulty adjustments all the time, difficulty bombs. They change the the ways the incentives work all the fucking time. So it's like, if it became a situation where, like, a, you know, a bunch of minor,
1253
01:31:44.000 --> 01:32:03.960
you know, proof of stake fees were, like, coming from transactions, but then there are a lot of transactions being censored and, you know, money on the table and, like, regulated institutions are just refusing to mine them. Like, if it ever came down to, like, all the the proof of stake miners want more money, they'll just fucking change the code, and everyone will go along with it. Right? So it's like,
1254
01:32:04.440 --> 01:32:07.340
the incentives just don't line up, and they don't have
1255
01:32:07.755 --> 01:32:10.655
solid foundations for how the incentive should be.
1256
01:32:11.355 --> 01:32:14.655
And when with the rich people controlling the chain,
1257
01:32:15.700 --> 01:32:17.640
they can just fucking change it at will.
1258
01:32:19.780 --> 01:32:23.720
1259
01:32:24.204 --> 01:32:26.465
Here, we're talking about protocol level censorship.
1260
01:32:29.085 --> 01:32:32.840
Most you know, 99% of the time, what we see is,
1261
01:32:34.980 --> 01:32:38.679
if you go for protocol level censorship, I would say, is
1262
01:32:40.875 --> 01:32:45.135
the hardest reach in all these situations. And usually, when you see
1263
01:32:46.235 --> 01:32:48.495
actions made, it it it
1264
01:32:49.110 --> 01:32:51.130
focuses on the lowest hanging fruit,
1265
01:32:51.430 --> 01:32:52.810
easiest things to enforce,
1266
01:32:53.350 --> 01:32:55.050
impacts 90% of people,
1267
01:32:56.070 --> 01:32:58.010
best bang for your buck type of situation,
1268
01:32:58.535 --> 01:33:00.155
and that's usually by,
1269
01:33:01.335 --> 01:33:04.075
weaponizing the regulated services in the industry.
1270
01:33:04.935 --> 01:33:07.595
So what I do expect to see play out here
1271
01:33:09.280 --> 01:33:17.219
is people that interact with Tornado Cash. People that indirectly interact with Tornado Cash are gonna start seeing their accounts frozen, closed,
1272
01:33:17.615 --> 01:33:18.675
unregulated services.
1273
01:33:19.375 --> 01:33:22.595
We've already seen that happen with collaborative transactions in the past.
1274
01:33:23.135 --> 01:33:25.475
Services like BlockFi explicitly state,
1275
01:33:26.620 --> 01:33:30.000
you can't use CoinJoin before or after using BlockFi.
1276
01:33:32.300 --> 01:33:36.185
So, like, when we go back to, like, the Jimmy Fallon dusting example,
1277
01:33:36.645 --> 01:33:45.449
like, I could see a world where Jimmy Fallon goes to deposit some ETH into Coinbase or withdraw ETH from Coinbase to his Jimmy Fallon account. And,
1278
01:33:46.949 --> 01:33:59.735
like, Coinbase's automatic change surveillance tool just flags his account, freezes it, and then he has to go through, like, a customer service quagmire for weeks or months. And because of Jimmy Fallon, he'll probably get it reversed, but if it's just an average person, they might never get it reversed.
1279
01:34:00.070 --> 01:34:02.409
So a lot of these pain points do kind of
1280
01:34:06.630 --> 01:34:12.395
affect people that are are focused on using these regulated services that connect with the traditional banking system.
1281
01:34:14.295 --> 01:34:14.795
But
1282
01:34:15.790 --> 01:34:22.210
it doesn't mean that if you don't interact with them, you're completely immune. It just means you're more resistant to those tactics
1283
01:34:23.125 --> 01:34:24.824
than those who rely on them.
1284
01:34:27.445 --> 01:34:48.515
1285
01:34:48.949 --> 01:34:53.770
gladly going to comply with the NOFAX sanctions list. So if you have funds that have touched Tornado Cash,
1286
01:34:54.150 --> 01:34:55.610
I'm curious to see what happens.
1287
01:34:55.925 --> 01:35:00.985
1288
01:35:02.005 --> 01:35:03.125
is, like, you could send
1289
01:35:03.690 --> 01:35:05.870
someone could go buy a sandwich with Ethereum,
1290
01:35:07.370 --> 01:35:10.510
and the sandwich owner can then take that Ethereum and then
1291
01:35:11.025 --> 01:35:12.485
send it to Tornado Cash,
1292
01:35:13.585 --> 01:35:20.405
and that could still flag the person who was buying the sandwich even if they didn't even know that Tornado Cash was being used by the recipient.
1293
01:35:22.370 --> 01:35:26.150
1294
01:35:26.610 --> 01:35:35.655
and not to, you know, justify some of the actions by some of these exchanges and custodians, but, like, sometimes it's like they don't they don't want to have to deal with it if, like, 0.1%
1295
01:35:35.955 --> 01:35:36.614
of users
1296
01:35:37.120 --> 01:35:59.580
are coming in with with with funds, from Tornado Cash or whatever. You know? It's just easier. It's probably just easier to not even question a thing. Just say, sorry. Your account's closed. They you know, Coinbase has how many, you know, other millions and millions of users. You know? That's they're not a problem case. So it's like you know, even just like, creating support tickets or whatever, it's, like, costing them money, and they're already
1297
01:36:00.040 --> 01:36:00.620
a nonprofitable
1298
01:36:01.000 --> 01:36:03.975
business. So it's like, it's just easier just to overcomply,
1299
01:36:04.835 --> 01:36:12.200
not have to not have to deal with customer support tickets and say, like, sorry. You're high risk and shut down their account.
1300
01:36:14.500 --> 01:36:15.400
1301
01:36:16.020 --> 01:36:25.715
I think this was a very productive conversation. I'm glad we had it because I don't think many people will have it just because of the chilling effect of sanctions, and people just don't like talking about privacy in general because,
1302
01:36:27.000 --> 01:36:30.940
our society has groomed people to think that talking about privacy publicly,
1303
01:36:32.040 --> 01:36:35.180
is something you should be ashamed of or concerned about.
1304
01:36:37.755 --> 01:36:38.415
But, ultimately,
1305
01:36:38.875 --> 01:36:41.295
Ethereum is a shitcoin that is,
1306
01:36:42.235 --> 01:36:43.695
built on very poor fundamentals,
1307
01:36:44.075 --> 01:36:48.660
and I don't think can handle adversarial environments, and I think we will see that.
1308
01:36:49.200 --> 01:36:50.820
So the question here is
1309
01:36:51.600 --> 01:36:52.820
for the you know,
1310
01:36:53.435 --> 01:36:56.735
to before we wrap up this conversation, the question here is
1311
01:36:57.115 --> 01:36:57.935
what lessons,
1312
01:36:58.635 --> 01:37:00.655
you know, should should Bitcoin users,
1313
01:37:01.140 --> 01:37:07.080
Bitcoin stakeholders, and Monero stakeholders take from this? And I I throw Monero in the bucket because we have Seth here.
1314
01:37:09.105 --> 01:37:13.925
And, obviously, because Monero is a group of stakeholders that are very focused on privacy.
1315
01:37:16.600 --> 01:37:17.659
1316
01:37:18.120 --> 01:37:22.139
a lot of the big ones we've already covered, but I I think the key takeaways for me are
1317
01:37:22.840 --> 01:37:25.805
build these tools if you're a developer or someone who's
1318
01:37:26.285 --> 01:37:27.745
even just active in the community,
1319
01:37:28.205 --> 01:37:32.225
build these tools in a way that they can be resilient to adversarial environments. Because
1320
01:37:32.765 --> 01:37:35.070
I think we've been very spoiled over the last
1321
01:37:35.630 --> 01:37:39.329
decade plus where Bitcoin has really had an a very easy path.
1322
01:37:39.710 --> 01:37:42.909
Many people don't feel like that, but I think it really has had an easy path,
1323
01:37:43.515 --> 01:37:48.475
in usage and in adoption and has not been in this type of adversarial environment before.
1324
01:37:48.875 --> 01:37:57.200
So I I think for the the builders, make sure that you're thinking about how your tool, how your code, how your service can function in adversarial environments.
1325
01:37:58.300 --> 01:38:01.120
And, again, not specifically saying sanctions evasion, but,
1326
01:38:01.554 --> 01:38:10.695
in authoritarian regimes and countries that crack down on Tor usage and in all of these different scenarios that we see worldwide. Make sure that your tool has the ability to function
1327
01:38:11.090 --> 01:38:12.150
in spite of those.
1328
01:38:13.330 --> 01:38:21.454
For the average user, I I think the big thing, like, you also mentioned is, like, yes, use the convenient tool that also protects your privacy for now, but
1329
01:38:21.914 --> 01:38:30.540
spend the time now before you have to to understand what other tools are available and how to use them, so that if your favorite tool I mean, if you're an Ethereum user
1330
01:38:30.840 --> 01:38:36.985
and suddenly Tornado Cash is sanctioned, how are you going to gain privacy on Ethereum? Like, what is your approach there going to be?
1331
01:38:37.705 --> 01:38:42.764
And you could take you could approach that from the Bitcoin angle. If if you use Samurai Wallet right now,
1332
01:38:43.385 --> 01:38:54.040
but you're worried that Samurai Wallet somehow would get taken down or sanctioned or whatever, figure out a path towards what you can do for privacy on Bitcoin if you don't have that tool for some reason.
1333
01:38:54.765 --> 01:39:00.545
So making sure that you have those options available, that you have that ability to keep yourself sovereignty and autonomy open
1334
01:39:01.005 --> 01:39:03.265
no matter what happens to your favorite tools.
1335
01:39:04.430 --> 01:39:07.010
And I think the last one is just not to let the
1336
01:39:08.110 --> 01:39:17.075
the propaganda and psychological pressure that goes with things like this get to you. I'm I'm glad that I've seen a lot of responses on Twitter that are very focused on
1337
01:39:17.455 --> 01:39:21.270
the need for personal privacy and how privacy is a right and is not a
1338
01:39:21.750 --> 01:39:25.510
is not a criminal thing. It's not something only only criminals need. But just,
1339
01:39:25.910 --> 01:39:33.085
I definitely hope that people continue to keep their heads up, keep understanding why privacy is important, and don't let actions against privacy tools
1340
01:39:33.545 --> 01:39:41.000
lead you to think that the the fight for privacy is over, or that it's it's pointless. And I think we've seen the the beautiful ways that both cryptography,
1341
01:39:41.620 --> 01:39:42.920
the free and open source
1342
01:39:43.220 --> 01:39:47.000
software movement, and Cypherpunks have continued to push forward
1343
01:39:47.535 --> 01:39:49.635
either alongside of or against,
1344
01:39:50.335 --> 01:39:55.715
the current legal system that they're in and the current environment that they're in. So I'm I'm optimistic
1345
01:39:56.015 --> 01:39:56.995
that's gonna continue,
1346
01:39:57.599 --> 01:40:00.420
and I'm thankful for all the tools we have at our disposal right now.
1347
01:40:03.039 --> 01:40:08.025
1348
01:40:08.405 --> 01:40:13.385
1349
01:40:13.845 --> 01:40:15.980
before we before we do,
1350
01:40:17.820 --> 01:40:18.320
the,
1351
01:40:19.500 --> 01:40:22.960
so there is a similarity here, and it's a question I've been getting
1352
01:40:24.895 --> 01:40:26.035
by people privately
1353
01:40:26.495 --> 01:40:27.555
since this unfolded.
1354
01:40:29.935 --> 01:40:34.210
There there's a there's a similarity here that if you used
1355
01:40:35.150 --> 01:40:38.770
if you used Tornado Cash on Ethereum, it's explicitly visible
1356
01:40:41.045 --> 01:40:45.065
on chain. Like, it's very obvious if an account interacted with Tornado Cash.
1357
01:40:46.485 --> 01:40:48.185
It is also the similarity
1358
01:40:48.660 --> 01:40:50.120
at play here is it's also
1359
01:40:50.500 --> 01:40:53.880
very clear if someone uses collaborative transactions on Bitcoin.
1360
01:40:55.460 --> 01:40:56.920
You can see them on chain.
1361
01:40:57.264 --> 01:41:00.804
Now there's some kind of there's some collaborative transactions like PayJoint,
1362
01:41:01.985 --> 01:41:04.724
which are designed to look like normal transactions,
1363
01:41:05.665 --> 01:41:06.645
but the main
1364
01:41:08.440 --> 01:41:10.139
but those provide more,
1365
01:41:11.320 --> 01:41:11.820
probability
1366
01:41:12.199 --> 01:41:12.699
busting
1367
01:41:13.000 --> 01:41:13.739
type of
1368
01:41:14.040 --> 01:41:15.260
defense at scale,
1369
01:41:15.800 --> 01:41:16.300
while
1370
01:41:16.895 --> 01:41:18.435
coin joints are more,
1371
01:41:19.935 --> 01:41:24.915
explicit tools that are designed to to break your own personal
1372
01:41:25.640 --> 01:41:32.140
trail on chain, and they're very visible because they use equal outputs. So you can see them on chain,
1373
01:41:33.885 --> 01:41:35.425
and you know someone used CoinJoin.
1374
01:41:36.925 --> 01:41:40.385
So there's a lot of people out there right now that are thinking to themselves,
1375
01:41:42.780 --> 01:41:43.519
is this
1376
01:41:43.820 --> 01:41:44.639
a situation
1377
01:41:45.019 --> 01:41:50.079
that shows me that I should use CoinJoin now, or is this a situation that shows me
1378
01:41:50.515 --> 01:41:53.335
that I should wait and not use CoinJoin now?
1379
01:41:55.875 --> 01:41:56.375
What
1380
01:41:56.755 --> 01:41:58.935
what would you say to those users, Seth?
1381
01:42:01.240 --> 01:42:01.820
1382
01:42:02.680 --> 01:42:04.380
I I'm definitely a
1383
01:42:05.960 --> 01:42:20.110
a person who's focused on privacy, and I I worry that if you don't need privacy now, you will in the future. So if you take that approach of, I don't need on chain privacy today, so I'm gonna forego the fungibility issues that go along with using privacy tools on Bitcoin,
1384
01:42:20.810 --> 01:42:24.110
you risk the activity that you do today being something that
1385
01:42:24.594 --> 01:42:26.855
ends up being harmful to you in the future.
1386
01:42:27.235 --> 01:42:32.614
Because, ultimately, once you make those transactions, you cannot take them back, and they're on a permanent immutable ledger.
1387
01:42:33.030 --> 01:42:35.610
So that's that's the big deal with Bitcoin.
1388
01:42:36.310 --> 01:42:37.290
And that's why
1389
01:42:37.750 --> 01:42:57.039
and I said this on Twitter in the past couple days. I still advocate if you're using Bitcoin, you need to be using something like Samara Wallet. And, specifically, Samara Wallet is is still my recommendation, but you need to be using privacy tools because, otherwise, your finances are just in the wind. Everyone can see them, and that could come back to bite you in the future.
1390
01:42:58.585 --> 01:43:05.885
Obviously, there is some downside to that, and that downside really only comes with using centralized and regulated exchanges and tools like that.
1391
01:43:06.265 --> 01:43:07.965
But that that is the
1392
01:43:08.380 --> 01:43:16.080
that's the cost of the choices made with Bitcoin and the choices made for the protocol itself to be transparent by default and by design,
1393
01:43:16.860 --> 01:43:17.360
and
1394
01:43:18.045 --> 01:43:21.185
privacy being brought in in an optional app layer.
1395
01:43:21.965 --> 01:43:35.790
It works well when you use it properly, but it is it's visible on chain. Everyone if if you bought funds in Coinbase, you send them to your samurai wallet and you mix them, Coinbase knows you're using samurai wallet. It is very, very simple. The fingerprint is very clear.
1396
01:43:37.344 --> 01:43:50.719
And that's just one of those downsides. It's clear that you're opting into privacy above and beyond what the regular Bitcoin user does. And that those are those are really just critical downsides of the protocol itself not being private by design,
1397
01:43:51.179 --> 01:43:55.600
and that that just comes with the territory. But for me, it is not worth the cost to
1398
01:43:56.005 --> 01:43:57.945
not gain financial privacy today
1399
01:43:58.965 --> 01:44:02.985
over just that fear of a a an issue with fungibility or funds being,
1400
01:44:03.900 --> 01:44:12.320
flagged or something in the future. And if you're really worried about that, what you need to be doing is learning how to use the decentralized alternatives to centralized exchanges, the things like Robosats,
1401
01:44:12.625 --> 01:44:13.605
the things like Bisc,
1402
01:44:14.385 --> 01:44:27.110
the places where you won't get funds flagged because there's not a central entity who's doing KYC AML and all the stuff who's who's gonna be at, kind of running the running the show there. So those things are important. I can also touch on,
1403
01:44:27.995 --> 01:44:33.375
like, why that's one of the reasons I appreciate Monroe's approach there, but I'll let Tony jump in before I get to that.
1404
01:44:34.960 --> 01:44:40.340
1405
01:44:41.199 --> 01:44:41.815
that you're
1406
01:44:42.775 --> 01:44:51.035
you, you know, may be doing legally and fine today, may be illegal tomorrow. And even if, you know, you're still like, okay. Well, I'm not gonna and this goes well beyond
1407
01:44:51.730 --> 01:44:58.310
legality and and and things like that. Right? Like, I'm not trying to say, like, you only need privacy if if you're doing legal things
1408
01:44:59.535 --> 01:45:07.395
or not. But, like, I think the point is, like, you know, laws change. Like, cancel culture changes. Like, it's an ever changing landscape. Right?
1409
01:45:07.820 --> 01:45:15.040
And, I I think, like, you know, you should seek privacy as much as you can in order so you don't just get swept up in bullshit tomorrow,
1410
01:45:15.705 --> 01:45:34.264
even if you're doing something completely legit and, you know, no problem at all, like, you know, you don't wanna get swept up in bullshit. So I and then, like, going back, like, going back to, like, okay. Well, I just I just, quote, unquote, tainted my coins by, like, being in the coin join, and now I can't go back in the coin base. And my my only thing is, like, well,
1411
01:45:34.565 --> 01:45:36.585
what were you in it for in the first place?
1412
01:45:37.525 --> 01:45:49.660
If it's just number go up and that's the only thing you cared about, then, you know, I I don't know what to tell you. Like, I I didn't I didn't get in Bitcoin, so I can go back into the financial rails. So that's that's my only thing.
1413
01:45:50.040 --> 01:45:50.940
1414
01:45:52.545 --> 01:45:53.045
so
1415
01:45:53.425 --> 01:45:54.325
from my perspective,
1416
01:45:55.985 --> 01:45:57.525
as a law abiding citizen,
1417
01:45:59.590 --> 01:46:01.850
there's something to be said here about
1418
01:46:02.630 --> 01:46:04.010
the fact that
1419
01:46:06.685 --> 01:46:07.505
my perception
1420
01:46:08.685 --> 01:46:11.905
of our laws as currently stands in the United States,
1421
01:46:13.165 --> 01:46:15.345
since I'm an American, and you should,
1422
01:46:15.670 --> 01:46:17.849
you know, apply that to wherever
1423
01:46:18.230 --> 01:46:19.690
your jurisdiction is,
1424
01:46:21.510 --> 01:46:23.690
is that using collaborative transactions
1425
01:46:23.995 --> 01:46:25.614
for basic financial privacy
1426
01:46:27.514 --> 01:46:29.534
is not a criminal act.
1427
01:46:29.835 --> 01:46:31.614
It's not an illegal act by itself.
1428
01:46:32.155 --> 01:46:32.655
Now
1429
01:46:34.860 --> 01:46:39.440
our country has been known to pass unjust laws in the future better than the past.
1430
01:46:40.460 --> 01:46:42.720
They might pass unjust laws in the future.
1431
01:46:43.385 --> 01:46:47.885
And, obviously, the stakes become significantly higher if you're using
1432
01:46:48.745 --> 01:46:53.290
collaborative transaction tools if they are made explicitly illegal in the future.
1433
01:46:56.310 --> 01:46:58.090
And where I'm going with that
1434
01:46:59.405 --> 01:47:03.585
is to say, obviously, the main trade off here is collaborative transactions
1435
01:47:03.965 --> 01:47:06.065
are very visible on chain.
1436
01:47:06.420 --> 01:47:09.240
Your usage of them is very obvious on chain.
1437
01:47:10.020 --> 01:47:13.480
You might have trouble with using regulated services in the future.
1438
01:47:15.135 --> 01:47:17.075
If you're comfortable with that trade off,
1439
01:47:18.575 --> 01:47:20.835
you get financial privacy today
1440
01:47:22.560 --> 01:47:24.660
without explicitly breaking any laws.
1441
01:47:25.760 --> 01:47:26.660
And there's
1442
01:47:27.600 --> 01:47:29.300
a strong argument, I think,
1443
01:47:30.085 --> 01:47:31.545
that this type of action
1444
01:47:31.925 --> 01:47:32.824
in this direction
1445
01:47:34.085 --> 01:47:34.585
shows
1446
01:47:35.045 --> 01:47:35.545
that
1447
01:47:36.244 --> 01:47:38.744
it's important to get your privacy in order before
1448
01:47:40.330 --> 01:47:43.310
using certain privacy tools become explicitly illegal.
1449
01:47:48.545 --> 01:47:51.685
And I hate having to watch my words when I talk about this shit.
1450
01:47:54.020 --> 01:47:57.000
1451
01:47:57.460 --> 01:48:00.600
1452
01:48:01.585 --> 01:48:04.885
Someone on Twitter, Monero guy on Twitter said,
1453
01:48:05.505 --> 01:48:10.725
that he's personally embarrassed that an Ethereum privacy tool got sanctioned before Monero.
1454
01:48:12.130 --> 01:48:12.630
Thoughts?
1455
01:48:15.810 --> 01:48:17.010
1456
01:48:17.810 --> 01:48:23.575
I mean, there there's the there's the bit of it that I think is true and, like, what we talked about earlier where
1457
01:48:23.955 --> 01:48:31.370
when something gets sanctioned, it shows that the the US government is both worried about the usage of the tool, so they they see it as a threat.
1458
01:48:31.830 --> 01:48:32.330
They
1459
01:48:33.430 --> 01:48:42.525
feel impotent to solve it, obviously, because they can't just take it down. They can't just stop it. So when sanctions are taken instead of other legal action, I think it is an interesting
1460
01:48:42.985 --> 01:48:44.685
tell that at least the
1461
01:48:45.545 --> 01:48:48.205
the US government sees the tool as working pretty well.
1462
01:48:50.770 --> 01:49:01.405
So, I mean, in in some ways, it is interesting that something like Monero hasn't been sanctioned yet, but I think that's also another one of the strengths that comes with the entire protocol being privacy preserving.
1463
01:49:01.785 --> 01:49:12.110
And so if they want to sanction Monero, they can't just sanction a specific app that some people use within Monero. They have to sanction the entire decentralized network, the desire the entire protocol,
1464
01:49:12.890 --> 01:49:15.675
and that's a very difficult thing to do.
1465
01:49:17.114 --> 01:49:23.054
1466
01:49:24.540 --> 01:49:26.720
this type of financial action in the future?
1467
01:49:29.420 --> 01:49:32.165
1468
01:49:32.725 --> 01:49:40.345
mostly for the psychological effect. Again, like we talked about earlier, I think the main reason to do something like that would be to dissuade,
1469
01:49:41.390 --> 01:49:43.330
quote, unquote, compliant citizens
1470
01:49:43.710 --> 01:49:44.530
from using
1471
01:49:44.910 --> 01:49:46.050
something like Monero
1472
01:49:46.510 --> 01:49:49.570
because they're worried about the implications for them legally.
1473
01:49:50.105 --> 01:49:53.245
So I think that would be the main reason why something like that would be done, but
1474
01:49:53.705 --> 01:49:56.525
the simplest route for them is what they've been doing, which is
1475
01:49:56.960 --> 01:50:02.020
continue to constrict the easy ways to get access to Monero, getting it delisted from exchanges
1476
01:50:02.800 --> 01:50:03.300
using
1477
01:50:03.760 --> 01:50:08.175
regulatory bodies, not laws, but regulatory bodies and banking
1478
01:50:09.995 --> 01:50:13.775
ties to prevent exchanges from being able to easily support Monero.
1479
01:50:14.200 --> 01:50:21.935
So I think that's the that's the easiest path for them right now and the easiest path to dissuade the the regular person from getting access to Monero and using it.
1480
01:50:22.495 --> 01:50:27.635
But if Monero's usage continues to increase, especially in in places that they don't like,
1481
01:50:28.095 --> 01:50:30.120
I I wouldn't be surprised to see it. I mean,
1482
01:50:30.600 --> 01:50:32.780
it's growing in usage of darknet markets.
1483
01:50:33.240 --> 01:50:37.100
In the past, it has been linked to at least mining of it has been linked to North Korea.
1484
01:50:37.640 --> 01:50:45.085
So, yeah, as it grows, as people understand what does and what it does well, I wouldn't be surprised to see some sort of legal action, but this is
1485
01:50:45.465 --> 01:50:53.059
precisely the environment that Monero has been designed for. Not, again, sanctions evasion, but this concept of an adversarial environment and ensuring that
1486
01:50:53.440 --> 01:50:57.940
in this worst case scenario, in in an oppressive regime, in an authoritarian regime,
1487
01:50:58.320 --> 01:51:01.925
Monero is built as much as possible to be resilient.
1488
01:51:02.305 --> 01:51:05.845
And so all of the different trade offs that go into effect, the pros and the cons,
1489
01:51:06.545 --> 01:51:11.090
make it something that I think is extremely resilient and in an adversarial environment
1490
01:51:11.710 --> 01:51:23.755
and is prepared for this. I think Ethereum is quite the opposite, where it's it's built by developers who are optimistic about the future and and want to build something that is kind of building for the best case and not for adversarial environments.
1491
01:51:24.280 --> 01:51:41.515
And I think Bitcoin is is definitely more towards the Monero side of things and has been built for adversarial environments. But I think that I mean, you've talked about it a ton on the show. I've talked about it a lot. I think that the privacy piece has been missed and has very sweeping implications for how effective Bitcoin can be in adversarial environments.
1492
01:51:42.690 --> 01:51:55.375
That's so that's why I think, like, I wouldn't be surprised to see some action against my arrow, but it is very resilient and, in some ways, even more so than Bitcoin. And and so it would be interesting to see what that type of sanction would mean for
1493
01:51:55.675 --> 01:51:56.975
Monero and its usage.
1494
01:51:57.675 --> 01:52:00.699
But I I wouldn't be surprised to see something like like that in the future.
1495
01:52:02.920 --> 01:52:03.159
1496
01:52:03.960 --> 01:52:05.020
does your view
1497
01:52:05.515 --> 01:52:09.215
does your view on the path forward for Monero as a
1498
01:52:10.555 --> 01:52:11.055
project
1499
01:52:11.515 --> 01:52:14.415
change based on this tornado cash situation?
1500
01:52:18.500 --> 01:52:24.895
Say that one more time. Sorry. Does your does your view on the path forward from the Monero project, has it changed based
1501
01:52:25.775 --> 01:52:27.235
on this tornado situation?
1502
01:52:28.895 --> 01:52:30.495
1503
01:52:31.375 --> 01:52:34.835
Like I mentioned, I think this is, like, this is what has been in mind
1504
01:52:36.159 --> 01:52:42.580
when building Monero and when building out the ecosystem around Monero is what what does it look like for someone to use Monero,
1505
01:52:43.120 --> 01:52:44.420
buy Monero, etcetera,
1506
01:52:45.105 --> 01:52:45.605
under
1507
01:52:46.065 --> 01:52:47.285
worst case conditions.
1508
01:52:48.225 --> 01:52:52.485
And so I I think that the project has been well pointed towards this goal
1509
01:52:52.889 --> 01:52:56.030
and has been built for this kind of use case. So I'm I'm not
1510
01:52:56.889 --> 01:53:01.070
I don't think there's much to really change at this point. I mean, even, like, the specifics of this,
1511
01:53:01.585 --> 01:53:05.925
Monero has been prepared for years for GitHub takedowns or anything like that.
1512
01:53:06.945 --> 01:53:07.925
Mining decentralization
1513
01:53:08.225 --> 01:53:10.539
is is improved through,
1514
01:53:11.079 --> 01:53:28.190
commodity hardware mining, so they couldn't sanction mining hardware. It's improved through on chain privacy, so they can see specific transaction details and try to censor specific transactions, although they could try to enforce mining IPTI blocks, but again that gets very difficult because the miners aren't large scale industrial regulated miners.
1515
01:53:29.210 --> 01:53:37.555
There are a lot of aspects of Anero. Again, they've just they've been built for this. Like, this is this is what has been in mind by the people who have been working on Monero for the last
1516
01:53:38.095 --> 01:53:38.995
8 years now.
1517
01:53:39.455 --> 01:53:43.540
So I I don't think there's any need for a big shift there, and I think a lot of
1518
01:53:44.159 --> 01:53:46.659
the the things that have been seen as excessive or,
1519
01:53:47.280 --> 01:53:47.780
unnecessary
1520
01:53:48.159 --> 01:53:51.540
in Monero's approach, I think, will rapidly be seen as
1521
01:53:51.925 --> 01:53:56.985
smart. And, yes, they have trade offs that do have drawbacks, that do have associated risks,
1522
01:53:57.525 --> 01:54:00.185
but I think people will start to understand why
1523
01:54:00.640 --> 01:54:09.060
the Monero community has made the choices it's made in the project's direction over the last 8 years even though we've been in a non adversarial environment for most of that time.
1524
01:54:11.195 --> 01:54:29.815
1525
01:54:30.275 --> 01:54:35.000
we could just, like, rip the fucking Band Aid off and on Bitcoin and just say, like, okay. Like, we're,
1526
01:54:36.280 --> 01:54:39.580
you know, we're not we're not trying to be using these regulated
1527
01:54:40.135 --> 01:54:46.475
custodians so much. We're not trying to we're not playing this happy go lucky world where everyone just, like, cares about number go up.
1528
01:54:47.310 --> 01:54:50.370
You know, in some ways, I wish we would just rip that Band Aid off, but,
1529
01:54:51.310 --> 01:54:53.810
you know, it is it is what it is currently.
1530
01:54:54.155 --> 01:54:59.135
1531
01:55:00.395 --> 01:55:01.135
by others.
1532
01:55:01.515 --> 01:55:04.050
You know? Like, I mean, a lot of
1533
01:55:06.989 --> 01:55:13.485
1534
01:55:14.105 --> 01:55:21.270
1535
01:55:21.810 --> 01:55:23.989
the the single largest attack on Bitcoin
1536
01:55:24.369 --> 01:55:25.270
has been extremely
1537
01:55:26.425 --> 01:55:27.485
and has been ongoing,
1538
01:55:27.785 --> 01:55:29.565
and that's KYC
1539
01:55:30.185 --> 01:55:31.405
AML identification
1540
01:55:31.945 --> 01:55:33.965
on all of these regulated services.
1541
01:55:34.410 --> 01:55:37.070
And as a result, then those identities
1542
01:55:37.449 --> 01:55:39.390
are linked on chain
1543
01:55:40.410 --> 01:55:43.070
and then tracked through the system hurting everybody else.
1544
01:55:45.025 --> 01:55:48.485
When we look at the type of attacks that are possible
1545
01:55:48.785 --> 01:55:51.925
on users achieving trying to achieve
1546
01:55:52.320 --> 01:55:54.020
financial privacy when using Bitcoin.
1547
01:55:54.640 --> 01:55:59.700
Most of the attacks, especially the low hanging fruit stuff resolve rev revolves around
1548
01:56:00.875 --> 01:56:07.455
blocking access to those regulated services. And, usually, those regulated services are where you're connecting between,
1549
01:56:08.320 --> 01:56:10.820
the Fiat world and the Bitcoin world.
1550
01:56:15.015 --> 01:56:16.795
Monero already lives in that situation.
1551
01:56:17.495 --> 01:56:23.675
Like, Monero already like, how many exchange how many bank exchanges offer Monero, Seth? Just Kraken?
1552
01:56:24.580 --> 01:56:29.400
1553
01:56:31.355 --> 01:56:38.815
1554
01:56:43.349 --> 01:56:45.770
Like, you can't do that on Monero already.
1555
01:56:47.864 --> 01:56:55.724
1556
01:56:56.905 --> 01:56:57.370
But,
1557
01:56:57.850 --> 01:57:08.494
1558
01:57:08.875 --> 01:57:10.255
or, like, medium term,
1559
01:57:10.635 --> 01:57:14.700
which basically, like, there's Bitcoin users that use it in a self sovereign way,
1560
01:57:15.420 --> 01:57:16.480
that use it privately,
1561
01:57:16.940 --> 01:57:23.200
that don't interact with the block fives and the coin bases of the world, and then there's this whole other subset that is
1562
01:57:24.235 --> 01:57:27.695
this this whole other group of Bitcoin stakeholders that are basically
1563
01:57:28.395 --> 01:57:30.975
using it in this regulated environment.
1564
01:57:34.640 --> 01:57:39.380
1565
01:57:40.235 --> 01:57:45.934
Bitcoin is fine, and we don't need to worry about that. So exchanges are the only risk. I mean, even in that scenario,
1566
01:57:46.554 --> 01:57:52.560
you if you're gonna use a currency, you're gonna use it in person. You're gonna use it to buy things that may
1567
01:57:52.940 --> 01:57:56.480
connect to your ID in some way. If you're running a business that's using Bitcoin,
1568
01:57:56.825 --> 01:58:09.100
you're gonna pay suppliers. You don't want people seeing that info. So it's it's not like removing KYC removes all of the privacy No. Yeah. It's definitely not everything. It just makes everything so much more complicated when talking about a privacy perspective.
1569
01:58:09.560 --> 01:58:10.940
It does. And it it provides
1570
01:58:12.120 --> 01:58:12.620
broader
1571
01:58:13.725 --> 01:58:14.865
pseudo anonymity
1572
01:58:15.405 --> 01:58:19.585
than otherwise is possible with KYC. It it it makes at least that fragile pseudonymity
1573
01:58:21.830 --> 01:58:23.130
not broken instantly.
1574
01:58:23.670 --> 01:58:30.730
1575
01:58:32.455 --> 01:58:33.255
that it's the
1576
01:58:33.815 --> 01:58:35.355
all it takes is one mistake,
1577
01:58:36.055 --> 01:58:41.355
and that one mistake is usually what gets you. Right? And you see this in the high profile cases all the time.
1578
01:58:42.020 --> 01:58:52.425
And it's not just Bitcoin or cryptocurrency or Monero. It's it's it's everything on the Internet. Right? We have that term like the Streisand effect where Barbara Streisand tried to remove a photo from the Internet,
1579
01:58:53.045 --> 01:58:53.545
and
1580
01:58:54.085 --> 01:58:57.864
instead, the photo got reposted everywhere. And and so with with
1581
01:58:58.200 --> 01:59:05.020
when it comes to blockchains, obviously, that's on steroids because we expect the Bitcoin ledger to outlast all of us if it's successful.
1582
01:59:05.435 --> 01:59:06.335
Like, this thing's immutable,
1583
01:59:06.955 --> 01:59:08.175
shared around the world,
1584
01:59:09.355 --> 01:59:09.855
transparent,
1585
01:59:10.235 --> 01:59:12.335
and is expected to last forever.
1586
01:59:13.034 --> 01:59:14.815
If you make a mistake on there,
1587
01:59:15.960 --> 01:59:21.660
you're not gonna be able to remove that mistake. Now when we talk about the little mistakes that people tend to make,
1588
01:59:22.255 --> 01:59:27.715
a lot of times that comes down to some kind of connection to KYC, and that is just my
1589
01:59:28.415 --> 01:59:30.835
that's that's basically where I'm coming from here.
1590
01:59:31.540 --> 01:59:37.400
And, like, the Bitfinex hacker, the the richest rapper of all time is a perfect example of that where they were
1591
01:59:38.020 --> 01:59:41.364
buying gift cards, and it was attached to their real life identity,
1592
01:59:43.505 --> 01:59:44.645
their legal name.
1593
01:59:50.810 --> 01:59:54.909
1594
01:59:55.210 --> 02:00:04.550
if if we're when we use Bitcoin connected to our identity, we're doing it wrong. I'm like, well, if you it's almost like the example case that you brought up, Matt, where, like, if you go to a sandwich shop,
1595
02:00:05.030 --> 02:00:09.270
you know, your identity is right there, right in front of the sandwich shop owner. Right? So it's
1596
02:00:10.070 --> 02:00:19.915
I wouldn't I wouldn't go as hard and fast as superfat arrow is here, but, he he's, you know, he's on the right track. Like, KYC AML is the list of activity here.
1597
02:00:20.375 --> 02:00:23.400
But we still need, you know, Bitcoin privacy to be a lot better.
1598
02:00:26.180 --> 02:00:29.080
1599
02:00:32.085 --> 02:00:37.465
and I think I've been a big proponent of it. I think Bitcoin privacy tools have improved tremendously over the last few years.
1600
02:00:38.325 --> 02:00:43.559
I think they need to continue to improve, and I think they need to get easier to use, and I think time is of the essence.
1601
02:00:46.099 --> 02:00:46.599
1602
02:00:48.500 --> 02:00:49.000
1603
02:00:55.885 --> 02:00:56.684
Okay. Let's,
1604
02:00:57.490 --> 02:01:01.670
it's been a great conversation, boys. Let's wrap up with some, final thoughts.
1605
02:01:02.210 --> 02:01:03.350
Seth, final thoughts.
1606
02:01:04.530 --> 02:01:05.910
1607
02:01:07.250 --> 02:01:12.455
I I think final thoughts for me are just I don't know. We've I've touched on it so many times already, but
1608
02:01:12.995 --> 02:01:14.375
just learn the tools,
1609
02:01:15.290 --> 02:01:22.110
Get ahead of the game. We're we are heading towards an adversarial environment, and anybody that wants self sovereignty, that wants autonomy
1610
02:01:22.545 --> 02:01:27.764
is going to need to be able to to leverage the the power that has been given to us through cryptography
1611
02:01:28.304 --> 02:01:29.605
and through open source code.
1612
02:01:30.224 --> 02:01:31.525
And so learning to
1613
02:01:32.160 --> 02:01:43.775
to harness those tools and use them to benefit you and your family and your loved ones is is gonna be more and more vital over time. So just go ahead and start today. I mean, that's why I love Citadel dispatch. It's it's actually actionable,
1614
02:01:44.635 --> 02:01:51.135
and there's a lot of stuff in here that that you can take and start to make changes to your your usage of Bitcoin and other tools today.
1615
02:01:52.139 --> 02:01:56.559
So I think that's really the takeaway here. I mean, obviously, we talked a lot about Tornado Cash and
1616
02:01:56.940 --> 02:02:13.909
and other privacy tools, but just important to have an understanding of those and and have alternatives in case the one that you happen to be using or something that you like gets shut down. You need to be able to to to switch and to switch over again, not just yourself, but hopefully your family and the people you love and and bring people with you on that journey.
1617
02:02:14.885 --> 02:02:24.880
1618
02:02:25.340 --> 02:02:29.040
out pod on your favorite podcast app. Thanks, Marcia.
1619
02:02:29.855 --> 02:02:32.034
Yeah. Of course. Tony, final thoughts?
1620
02:02:33.295 --> 02:02:49.715
1621
02:02:50.355 --> 02:02:56.295
You know, keep learning. It's Bitcoin's, you know, always gonna be a a changing landscape. All the
1622
02:02:57.370 --> 02:03:06.815
laws and enforcements and everything are ever changing. So just just keep learning, keep going at it, keep pushing yourself forward with the tools that you use and the things that you learn.
1623
02:03:07.675 --> 02:03:14.660
And and, yeah, it's just a shout out to, like, shows like so to all dispatch that are out there helping helping educate people.
1624
02:03:15.680 --> 02:03:23.724
1625
02:03:24.425 --> 02:03:33.520
To all the freaks out there, thank you for continuing to support the show via stats or subscribing or joining the live chat. I love all you freaks to join the live chat. Cortic,
1626
02:03:33.900 --> 02:03:36.560
we've seen all your comments. I love that you're here participating.
1627
02:03:38.355 --> 02:03:42.295
We have 2 more I have 2 more solo dispatches set up for this week,
1628
02:03:42.915 --> 02:03:43.895
both on Friday.
1629
02:03:45.370 --> 02:03:53.790
We're gonna have Sid in the studio. We're gonna be talking about grassroots Bitcoin adoption. He drove his motorbike around the country going to all the different Bitcoin meetups.
1630
02:03:54.475 --> 02:03:57.615
And then I'm gonna have Rockstar in the studio later that afternoon,
1631
02:03:58.235 --> 02:04:03.055
to talk more on this subject and to talk about a variety of things. Rockstar is always an interesting character
1632
02:04:03.590 --> 02:04:06.329
to have on the show. So if you haven't subscribed already,
1633
02:04:07.510 --> 02:04:09.929
open your favorite podcast app, type in dispatch,
1634
02:04:10.230 --> 02:04:11.530
click the subscribe button.
1635
02:04:11.835 --> 02:04:14.415
That auto download button really helps as well.
1636
02:04:15.755 --> 02:04:20.655
And then if you like the video stuff, you know, pick your favorite platform, whether that's Twitch or YouTube
1637
02:04:20.990 --> 02:04:21.490
or
1638
02:04:22.590 --> 02:04:29.175
Bitcoin TV. If you subscribe there, you get notified. On Bitcoin TV, you do not get notified if you click subscribe, but they're all streamed there.
1639
02:04:29.735 --> 02:04:35.434
But if you subscribe on YouTube or Twitch, you'll get notified, and the archives are also posted to Rumble and Telegram.
1640
02:04:36.375 --> 02:04:40.840
With all that said, I do appreciate you all. Stay smart out there. Stay humble.
1641
02:04:41.940 --> 02:04:42.440
Peace.
