Sept 16, 17 & 18: The Merge, Hodlonaut v Wright, Do Kwon, Starbucks NFTs — weekly news roundup - Transcripts

September 16, 2022

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It's the weekend edition of CoinMarketRecap! Connor Sephton and Molly Jane Zuckerman chew over some of the biggest crypto stories from the past seven days. Ethereum successfully completes The Merge, a high-stakes trial between Hodlonaut and Craig Wright begins in Norway, and South Korea issues an arrest warrant for Do Kwon. Plus, Starbucks is planning to release NFTs. You can follow us on Twitter — @MollyJZuckerman, @ConnorSephton and @CoinMarketCap. 


Hello to you. Welcome to the weekend edition of coin market. We cap with Connor and molly jane on a very big week, isn't it?

It's huge.

It's huge, huge. It's extraordinary what's been going on. The merge has been completed. We'll be finding out what happened and whether it went smoothly hot or not. And Craig wright are currently in the middle of a trial in Norway will give you a recap of what's been happening there an arrest warrant issued for dough quan but they might have a bit of difficulty getting ahold of him, molly jane loves Starbucks and FTS. She'll be telling us all about why they're the best invention ever. And also we'll be talking about Justin Trudeau who doesn't like cryptocurrencies and has said so in very clear terms this week as well give our show follow Apple podcast, Spotify and google podcasts and we're on twitter at molly j Zuckerman and that's this week's crypto headlines. So we're going to start with the merge. It's been years in the making an ethereum has now officially made the switch from a proof work Blockchain to a proof of stake Blockchain. Now, molly jane. This might be the journalist in me but I got up super early to cover what was happening because it was happening about two or three in the morning us time and I've got to be honest. It seemed a bit anticlimactic because everything just went fine.

It just, it just went fine and I have to say I tried to stay up. I really tried to stay up,


It happen but when there was about an hour left, it was the decision between I have to record this podcast at 6:00 AM tomorrow. So what's more important? The podcast or the merge and I chose that. I just podcast.

Well, it's okay because you're going to relive it all now. This was the moment when proof of stake was activated. This is the moment of truth. Come on now, let's go, let's go, Let's go! Hey, I got pandas. Pandas, come on to come on

now, let's

go. Let's go. Panda panda woo! Built on it. So everyone, we knew this would happen, we knew that we would get this

far. There's nothing

Contentious yet. The next 13 minutes


the nail biting


So I don't know what my favorite bit of that clip is. It's either that guy going, let's go or is it or is just someone going panda?

That's real.

Yeah, that was from the ethereum Foundation viewing


and this isn't even the best bit molly jane. There was another song in celebration. Do you remember the girly song that they did? Well, there's a new song that marks this very special occasion. You can actually tell. He wrote lyrics for that one.

Did I miss something. What's up with the panda references.

So what happens is I'm going to explain this really badly. So forgive me. But so when, when the merger was about to happen, there was loads of code on screens and when it had been activated, a panda would emerge in the code, It's quite a sight,

you know, this doesn't, this is the kind of thing I think that makes people call this magical internet money.

Yes, I would agree with you with that, but by all accounts it went to plan. I mean there were a few kind of, there was nerves when the first park of the new Blockchain was going through


Validation process, that's a bundle of 32 blocks and they wanted to see that the participation rate of validators would remain high because of course by this point mining had become obsolete, miners were not part of the ecosystem anymore. It was entirely down to validators and overall in those first few blocks, about 4% of validators were lost. The developers themselves were anticipating that 10-20% of validators could be lost. So there was a lot of headroom there, everything just seemed to work exactly as it should, which is on one hand, yes, a triumph. But on the other hand, you know, they've done so many dress rehearsals, so many tests that it almost had to go perfectly, didn't it?

Well, I really did like that Edge case that they Hoffman explained to us during our first positive cast special, which was basically if two of the main nodes, both had a similar kind of very unlikely bug, then it would cause something like one billion ethereum to be minted in the price would just fall to zero. That was sort of always in the back of my mind, but that didn't happen. So

uh good

for ethereum.

There was a plea for minors now that they were thanked miners were thanked for their role in making the theory and what it is today and then they were told you should move over now to proof of stake. Do you think that's likely

depends how much a theory of the mast?

Yeah, I guess I guess. And it's interesting that really price hasn't really moved all that much ever since the merge happened, nope.

I guess it proves that ethereum was actually the murder was priced in.

Yeah, I, I completely agree with you on that. I, yeah, I wrote something very similar to that recently.

Oh, that's interesting. I mean it's not like I woke up at 555 newsletter and then started recording the podcast.

Honestly, the preparation that goes into this guy's, you know, it's extraordinary. We did do a lot of notes last night, but


play you now. What Vitaly Budarin said after the merge happened in one of these viewing parties. Um, he has described it as, you know, a big moment for ethereum but I just feel that this particular quote was actually quite a bit cautious from him. Almost a bit like, you know, let's not get ahead of ourselves. Let's take a listen, The first step in aquariums. Um, big journey toward being a very, a very mature system and there's still steps off to go. We still have to scale, we still have to fix privacy. We still have to make the, make the thing actually secure for regular users and um, all of this stuff and you know, I think we all just, we all need to work hard and do our part to make all of those other things happen as well. So I mean I'm, you know, like to me the merge just like symbolizes from the difference between sort of early stage ethereum and you know, the ethereum, we've always wanted early stage ethereum to, to become So let's go and build out all of the other parts of that ecosystem and monitoring ethereum into being what we wanted to be because he said before, hasn't he that ethereum would only be 55% complete once the murder had taken place.

He did say that. But I also think that one of the criticisms of crypto projects is often that, you know, they're not centralized, they have this leader, you know, nothing is like Bitcoin that doesn't have a leader going around making statements that could move the market move the price. So metallic is still very clearly associated with ethereum obviously. And I think it's kind of nice. He's not out here, you know, saying a theory into the moon now. It's sort of cautious optimism. I like it,

but he's never felt like this imposing leader, Ozzy, he's always come across like, you know, one of the guys, if that makes sense. There was there was a picture of him at the Kiev tech summit, he went to Ukraine completely under the radar to go to their conference and there's a picture of him and he's just chatting away and it just, it just seems like a really accessible kind of individual who hasn't let all of his influence kind of go to his head, if that makes sense?

Well, I wouldn't know because when I tried to interview him, he just said no and walked away once.

Well there you go. Um but another way of looking at how significant this is is the fact that because proof of work and the mining is now gone, there's going to be substantial effect on the amount of energy that the ethereum Blockchain uses. Justin, drake explained this in quite powerful terms during the viewing party, let's listen to what he said,

You know, at a high level, we're going to be reducing the energy consumption of the whole world by roughly 0.2%. So a film right now is consuming 0.2% of all the electricity that is produced. Bitcoin is on the order of 0.5 and I can't think of a single technological innovation that reduces worldwide, you know, electricity consumption as much as the move to proof of stake does and one of the really cool things about this electricity reduction is that the mainstream understands it's something that's so obviously good. Um you know, there's so many advantages to the merge, but things like the security improvements, things like the monetary improvements are much, much, much harder to to understand. So I think as a community we we shouldn't be shy and we should really should be proud.

So do you think that ethereum newfound eco friendly credentials will make people start to like Blockchain technology more? Or do you still think that that visceral hatred surrounding N. F. T. S is still going to exist?

It's difficult, it's difficult question. What do you think running it back around on you?

It's times like this where I really value having a co host. Um, so I think that we may start to see more big brands, more institutions feel a little bit more emboldened to get involved with things like N. F. T. S. Now, because one of the biggest criticism surrounding this technology, the fact that uses a lot of energy has now gone away. However, I still think that the image problem that N. F. T. S have is going to endure for some time yet, because of course it isn't just the environmental impact of N. F. T.

S that people don't like. It's the fact that they're seen as very speculative assets and that they're seen as a way of making money and, you know, kind of grift ID and getting people to spend large sums of money that on things that don't really have much value in the eyes of these critics. So I still think that N. F. T. S. Are going to be disliked but it can't be on environmental grounds anymore potentially.

I just put it this way if you're using a lot of something like a lot a lot a lot of something if now you're suddenly using 99.95% less. But it was so much to begin with. You see my point where I'm going with this.


Couldn't the end results still be way more than people wanted to be.

Yeah but I mean the way he characterized it 0.2% of the world's energy ethereum was using Now that's going to be like 0.002%. It's gonna be negligible. I think that assuming that these figures are right from the ethereum foundation energy use is not it can't be as much of a concern as it was.

That's true I guess that yeah. No. Okay fine, I'm done. You're right.

Well so yes a very successful launch. Um It's worth noting that the w hard fork is now active and that that token is also active hasn't been performing well on thursday which is when obviously the merge happened At the time we're recording this it's fallen by 30% in 24 hours from $60 to $24. So hasn't really had the impact that the likes of Justin Sun and channel ago probably wanted,

there is an ethereum proof of work twitter that is actively tweeting this whole morning and I'm assuming will still be actively tweeting when this podcast comes out. It's explaining how to run an ethereum proof of work. Full node get going in all caps, three exclamation points they're trying doesn't

look especially promising for them is what I would say, I think the


Oh wow! Well in that case then, yes, so that's the merge, it's all done and obviously the hard work begins now for ethereum because this doesn't have an impact on gas fees, it doesn't have an impact on scalability. So there's still a lot more work to be done there. So we're going to move on now and we're gonna talk about Hotline ought and craig wright, the trial's beginning in Norway this week and it all relates to tweets that Hodler not wrote in 2019 where he accused dr right of being a fraud and a scammer and dismissed Dr Wright claims that he was Satoshi Nakamoto. Now this legal showdown in Norway aims to determine whether or not these tweets are protected by freedom of speech and if if a judge rules in his favor, this would affect dr wright's ability to collect damages for libel during separate proceedings in London, it's gonna be, it's already shaping up to be an interesting trial because dR rights has said that he won't be providing any new cryptographic proof that he is Satoshi Nakamoto. Well, Bitcoin magazine have got a live stream of the court proceedings in Oslo that they very kindly given us access to. And Wednesday's hearing was especially interesting because Craig Wright was being questioned by Hodler Nauts lawyers and there was a particularly interesting part where he talked about the fact that he actually sought to destroy the hard drive that would give him access to Satoshi Nakamoto is private keys. Let's take a listen drive in the USB stick. Yes, and you destroyed both with the hammer. Yes, and stomped on one with my foot. So that's a bit different. So that's Doctor Right?

They're actually saying that he stomped on a hard drive that contained the information he needed to access Sakamoto's private keys and he says it's incredibly difficult for him to give further cryptographic proof that he's the pseudonymous creator of Bitcoin. He's attempting to prove his identity in other ways. And he also went on a rather passionate I'm trying to be polite here, a rather passionate monologue about Bitcoin. Bitcoin is not encrypted. Bitcoin can be seized can be frozen. Bitcoin acts within the law. There is a lot of misinformation from Btc maximalist who want to go back to drug markets. Child porn pedophilia. And they don't want legal enforcement of Bitcoin. I want to make sure that judges and courts understand that Bitcoin is not encrypted and it can be seized frozen and accessed under a court order. I want to make sure that the lies about thousands and thousands of nodes are understood and that people understand that BTC has 15 nodes, three of which control 59% of the hash power today. I want it known that these lies these slanderous accusations about how law enforcement can't take Bitcoin from criminals are wrong.

Those clips courtesy of Bitcoin magazine. So not to impact there. And

what I think,

yes, what's your reaction to that clip?

I mean does that have anything to do with anything?

Yeah, I mean obviously a big part of this case concerns the fact that you know craig right to an extent does need to give some proof that he's Satoshi Nakamoto because that's central to what has been saying in his tweets. Um another point which interested me is the fact that huguenots lawyers this week said, hey thousands of tweets questioning craig Wright were written before Hodler naught started writing his own tweets and dr rights lawyers especially took issue with the fact that produced the hashtag craig wright is a fraud because in their eyes this encouraged other people to use that hashtag and launch other toxic attacks but huguenots lawyers also making the point craig wright has also used strong words and strong statements of his own in the past, he's they pointed to public remarks where he's branded his critics scum losers and frauds. So you could argue, well,


being mean,

well everyone's being mean, but are they being mean and in a legal way I guess is the question I just I have I just have so many questions about someone that wants to prove they're someone so badly. They will go to court about it over and over. But any possible way to prove it, they stomped on it.

Yeah, but craig wright's argument, there is there are other ways for me to prove this. And he says by destroying this cryptographic proof, it's actually prevented him from being forced into doing things that he doesn't want to do. So he he says there are still ways for me to prove that I am Satoshi Nakamoto and he says that he's getting together a list of 70 to 100 people who would help him back this up as

well. I mean if I had a hard drive with proof and I could show it as proof or I could smash it and then gather 7200 people to help me find different proof. What would you do? Which one would you choose? It's just anyway, that's not what we're debating right now. We're debating, what are we debating right now? We're

discussing the trial molly


Well, that's still going to go on, it's going to go on for probably the rest of this month actually. And we will hear more from Hodler naught and also witnesses on both sides of the debate. So still going to be plenty more to discuss on that in next week's podcast. But we'll move on and we're going to talk about dough quan. Big news this week that an arrest warrant has been issued for juan and five others, they're believed to be based right now in Singapore. South Korea says that all of these people are accused of violating the capital markets law. And of course you remember that four months ago the terror Blockchain collapsed spectacularly taking luna in Ust whether tens of billions of dollars gone in the blink of an eye and investigations over this have been taking place in both the U. S. And South Korea. So that's a problem isn't it? The fact that an arrest warrant has been issued for jo kwon but he's not in South Korea, he's in Singapore.

So I did some really great sleuthing last night and I found out that Singapore and South Korea do not have a mutual extradition treaty. So unless they do something Singapore is not going to send da quanto them. There are some things they can do. There was a spokesperson for the Seoul South district prosecutor's office I believe who said that there are some other ways for extradition um adding him to a Interpol red list which would make it impossible really for him to fly or actually nullifying his South korean

passport. Yeah, so those are some of the options. Um and effectively prosecutors are just trying to pile on a bit of pressure aren't they to get Dequan to come back. But your argument was is what he did illegal.

Yes. My argument is what he did illegal. I read a lot of matt Levine money stuff newsletter and he often debates about what things in crypto are illegal and what things because they are so new and unique. They could be morally or ethically wrong but aren't actually covered by the law. Um So my question, I started posited to you last night and our notes was what exactly did doc kwon do that A single country could say you have broken our laws because on the face of it building an algorithmic stable coin and ostensibly good faith and then having the algorithm not work and it go to zero. That is not illegal. But you told me that there are some things that were illegal.

The argument is that he he's allegedly fallen afoul of South Korea's capital markets law because U. S. T. Was a security. So of course there have been investigations ongoing surrounding potential mismanagement at terror as well. Um But it seems like this particular arrest, this particular charge relates to us tea and the claim that it's a financial security if I'm not mistaken

and that makes sense to me, people are getting in trouble in the US all the time for selling unregistered securities that they believe are you know, cryptocurrencies tokens. I guess my bigger question is, you know, what's stopping every other country in the world from from doing the same thing. You know, why is he, why is south Korea? I mean because the company is registered there just the crypto such a global thing. That's that's sort of my overarching question is could the U. S. Issue a similar warrant? Could china could Russia, you know, could everyone start piling on him?

Well, I think there's different ways of assessing this and we saw this recently because there was an extradition granted in relation to the one coin case and this was a british man. Um and a judge has now said yes he can be extradited to the US because although it seems that there were more victims of one coin in the U. K. The U. K. Doesn't actually currently have any active legal proceedings related to one coin. So it makes more sense for this man to be extradited to the U. S. Because that's where other co defendants are. And that's where a case is currently active. So it can be a multitude of factors that can be where we're most of the victims. Where is a case currently active?

Where is the defendant based in some cases, all of this can kind of have a role. But yes you are right that the cross border nature of cryptocurrencies can make it difficult to establish a jurisdiction in some cases story, you really love molly jane, you love this story and this is the blocker Chaigneau, Starbucks and FTS the plans have been revealed it's going to be called Starbucks Odyssey, tell us about it, what is it going to do?

So sometime in the future Starbucks is loyalty rewards program will have a crypto option using polygon where loyal Starbucks users can get N. F. T. S. That will be Blockchain based that will give them experiences and ownership that was not possible before. So I'm definitely a bit of a skeptic. Um I got most of my information about this initiative from Gizmodo article which was called Starbucks explains how it's done mass out of two program works and I guess my issues are that just kind of why you know you can apparently by the end of T. S with a credit card it will give you access to things like virtual espresso martini making classes I guess. I mean yes delicious but I don't know maybe it's a bit of a purist. I want my crypto to be crypto and this is crypto not being crypto, this is crypto being a giant brand doing something I don't know

Blockchain not crypto isn't it?

It is Blockchain not crypto. Okay that's fine I guess the Blockchain is being Blockchain then but

you touched on something before that I kind of want to delve into. So bearing in mind Starbucks odyssey is going to be a complement to their existing Starbucks rewards program. So the idea will be if you've got Starbucks reward logging you will be able to use that to access these N. F. T. S. And brady brewer wow what a name he was, he was built for this job, He's the executive vice president of Starbucks. He said leveraging Web three technology will allow our members to access experiences and ownership that was not possible before. What I want to ask you molly jane. How do how do N. F. T.

S specifically allow Starbucks to offer something that they couldn't do before? What's the technical innovation that allows suddenly espresso martini making classes to be rewarded to people? Why couldn't this be done without?

This is my question too. I think it could be done with it is this is just an opt in and you're still using your credit card so there's no sort of on chain. I mean I you know I think one argument that I wrote about in my music for the newsletter this week was that if you're trying to ease people in to web three, this is definitely an easy step because you're not forced to do it and you can just use a credit card. On the other hand the only real benefit of this was something that mirage from coin center tweeted. Which was basically that if Starbucks did not exist tomorrow you would still have your N. F. T. Rewards. So it's uh you know prolonging the longevity of the Starbucks brand for eternity on the Blockchain. But um the counter argument is if Starbucks didn't exist for whatever reason then what would really be the point of my you know espresso martini online course N. F. T.

Is it a good thing though? Is it a good thing despite the fact that we're both scratching our heads here thinking okay why why does this need an F. T. S. Is it not a good thing for the crypto industry that a big brand like Starbucks is starting to offer N. F. T. S. Is this not the whole you know big adoption milestones that so many encrypts I regularly talk about.

Sure. I mean people love to say that they expect Blockchain technology to be adopted at such a level that you won't even know you're when you're using Blockchain you know it'll just be like using an app and then in the back end Blockchain will be

because I


you know there's been some particular use cases where I've kind of gone okay well that's pretty cool and I've talked about this before. I think food safety being one of them where the provenance of of produce whether it's fruit, vegetables. Meat is traced on the Blockchain from field to fork. And apparently this really dramatically reduces the amount of time it takes to identify when they there is like a breakout of something like e coli or something makes it easier to trace specifically where that outbreak began. So instead of having to recall tons of perfectly good food, you can pinpoint it exactly to okay, it was this particular crop and it was sent to these particular stores. So we need to take those off the shelves.

So remember when I got poisoned by milk that could have been

you could have been saved, you could have been saved. I

wasn't, no, I wasn't.

We've talked about your oat milk fiasco consecutively now for four weeks. Do you know that?

But why, why have we done

that? Oh dear. Um right,

by the way, you know, specifically relates to the topic of our conversation, we're

going to be in the middle of talking about something to do with the Securities and Exchange Commission next week. You're going to go, well, when I got poison with oat milk,


know, you

know, I have been drinking milk again, I have to just say,

oh dear. Well the last story that we're going to talk about this week is the fact that Pierre Lelievre has been named Canada's newly elected leader of the Conservative Party. He's a prominent supporter of Bitcoin. And this is significant because it means that he's likely going to be taking on Justin Trudeau in the next election, which is going to take place sometime before October 2025 polyester has previously said that the government has ruined the Canadian dollar and that the population should have the freedom to use alternatives like Bitcoin. He was also a supporter of the freedom convoy protests which you may remember happened earlier this year now he believes that Canada should be the Blockchain capital of the world. And interestingly Justin Trudeau shot back this week on twitter attacking poorly Evra's economic policies and he said that telling people they can opt out of inflation by investing in cryptocurrencies is not responsible leadership. What do you think of that molly jane? Is it reckless for countries to explore Bitcoin as part of their economic policies?

No but I do think telling people to ape into Cryptocurrency to escape inflation is very reckless because you're aping away from inflation and sort of diving into volatility so

but it's still the case isn't it? We sit in many countries especially countries hit by hyperinflation. People have resorted to Bitcoin. I'm thinking Venezuela Turkey in particular

that it I know that that's true but it just always still surprises me that people there use Bitcoin and not a stable coin. Uh It's just it's surprising I guess I mean I understand it on some levels Bitcoin was first it's pretty easy to deal with. Um there's a lot of infrastructure for it. There's a chance of making a lot of money that goes up but I feel like if I was living in a country with such a crazy inflation, I would want to just sort of take the safe stable coin route out if it was offered to me but I don't live there so I can't really

but this this is what's really confused me you know in recent months because Bitcoin for years was described as a hedge against inflation and


Had some of the highest levels of inflation for 40 years in countries including the UK where I am in the us where you are and you think that given the fact that Bitcoin has a fixed supply of 21 million and in some cases the supply of dollars and pounds has increased rather substantially. You think that Bitcoin would perform better at a time when inflation is high and then Tyler Winklevoss who co founded the Gemini exchange with this twin Cameron tweeted about this this week and said Bitcoin was down the news that inflation for august in the U. S. Came in higher than expected. Bitcoin should be up today. Its properties dictate that it should be inversely correlated to inflation. The fact that it is down shows just how early it

is why everyone, this is like me saying wait and see whenever it does something that is not what it should do, everyone goes well we're just too early. Just so early. We're too early. Should go back to sleep and wake up a little bit later is what I want to tell them.

So you're not buying his argument

I mean whenever Bitcoin does correlate to what people think should happen when the rest of the world has inflation, no one says it's too early, then they just say oh it's doing what it should do. It's just a very handy excuse in my opinion.

It's also when people go like if you understand this, so you're you're basically

just calling

everyone else stupid. Well few people understand that. That's all we've got time for this week. Thank you very much for listening. And don't forget, please do leave us a review if you've enjoyed this and we can find us in all the usual places and we've got news throughout the week on coin market cap, Alexandru as well, plenty of features surrounding the merge. What's happened, what's going to happen next molly jane? It's been a pleasure to speak with you on this big week for ethereum

as always.

You can crawl back to bed now

as I will

have a great weekend everybody, we are going to be back on monday and we'll have all of the latest news for you then. But until then goodbye for now.