The Delphi Podcast

Host Tom Shaughnessy talks to Dan Held, Director of Business Development for Kraken Digital, and Paul Sztorc, an independent Bitcoiner. They debate the Bitcoin security model, with Paul feeling skeptical that fee rates will climb and Dan believing that fees are already growing and could subsidize Bitcoin security solutions. Dan’s post (Bitcoin’s Security is fine) and Paul’s original post (Security Budget in the Long Run) for context on the episode. Episode Highlights: Paul wrote a blog post last year proposing that we should use merged mining to keep security costs low. Ultimately, Paul is skeptical that fee rates could climb to over $50 per transaction as Dan believes. Paul notes that the fee rate to the miners is different from the total fees on a transaction. Dan explains that when you transact across a blockspace, you have to consider the transaction fee and the volatility fee, and a space with a lower transaction fee may have a substantially higher volatility fee that ultimately nullifies your savings. Dan believes a linear model doesn’t represent the growth in fees, you have to look at a logarithmic model. Paul believes people generally won’t care about rising fees unless they rise above a certain threshold. Dan uses other asset classes like wire payments and their associated fees to look at equivalents in blockspace. There’s a distinction to be made between the cost of a Bitcoin as a commodity and the cost of the blockspace to transact Bitcoin. The forces of supply and demand work differently on Bitcoin itself versus blockspace. Paul agrees with Dan that there are a lot of positive feedback loops within Bitcoin cost trends. Dan and Paul agree that the network effect of an asset is crucial. They agree that Bitcoin provides a consistent monetary policy that has created its staying power through market volatility that we haven’t seen since 1929.   Key Points: There’s a significant debate about looking at transaction fees alone versus the full cryptocurrency exchange fee structure. It’s important to look at volatility as a potential cost when transacting cryptocurrency. The network effect of an asset is one of its most important components.   Tweetable Quotes “It’s not the case that new supply automatically lowers the price because it’s negligible when it’s less than $1-2, is my claim… People prefer having $1 or $2 to not having it, I don’t think they significantly care… I agree with you that there are many frictions.” –Paul Sztorc   “If the security budget collapsed that means the value of Bitcoin either collapsed or no one’s transacting. It’s circular logic to say no one cares about Bitcoin, which means the security budget is meaningless bc Bitcoin doesn’t need to be secure bc no one values it.” –Dan Held   Resources Mentioned:    Chain Reaction Twitter: https://twitter.com/chainpodcast Tom Shaugh

6 Huhti 20201h 16min

(Originally published February 1, 2020) On this exclusive Macro Matters Series, guest Host Kevin Kelly talks to Octavio “Tavi” Costa, Global Macro Analyst at Crescat Capital. Tavi discusses Crescat’s top investment themes, the favorable backdrop for precious metals, how the macro environment could impact Bitcoin, and much more. Key Points Crestcat is focused on China due to statistics predictive of major currency devaluation moving forward. Alongside Bitcoin, gold and other precious metals are poised to grow in value. Looking at the US job market, including unemployment rates, Tavi and his team believe we are at the peak of the U.S. business cycle. Quotes “The entire global financial market is addicted to cheap money and monetary and fiscal intervention. There’s no doubt about that. And what we see here today is that higher and higher units of debt are generating less and less growth.” –Tavi Costa “The reason I don’t mess with other cryptocurrencies is because I just don’t fully understand—I barely understand Bitcoin itself, to be honest, so it’s been hard for me to get my arms around the other ones.” –Tavi Costa “I believe that modern monetary theory is a total fallacy.” –Tavi Costa Episode Highlights What was Tavi’s upbringing like and how did he find his way to becoming a global macro analyst & portfolio manager? Crestcat is focused on the US business cycle, the China credit bubble, and precious metals. There are clear cracks in the US economy that lead Crestcat to be cautious. Several metrics indicate that we’re going to see a deceleration in economic growth. Countries like China are engaging in monetary experimentation aimed at driving inflation, which lowers debt burdens. Over the next ten years, Tavi predicts we will see higher commodity prices. Tavi is starting to see a correlation between Bitcoin and gold, partly because both assets are supply-constrained. We’re at a peak level of reliance on central banks. Bitcoin provides a huge opportunity for investors in terms of asset allocation while the likelihood of fiat currency debasement rises. These hypotheses are based on looking at the most overvalued currencies in the world, like in China where there’s unprecedented debt levels, economic slowdown, and signs of inflation. China is poised to see a major devaluation of its currency. Historically, when emerging markets collapse, gold tends to rise. For Tavi to reevaluate these predictions, there would have to be a fulfillment of the George Soros theory of reflexivity where the economy feeds on its own to improve itself. The next trends to look for are with the jobs market in the US. Support The Show Visit Delta Exchange For A $10 Welcome Bonus! Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Tom Shaughnessy owns tokens in ETH, BTC, XTZ, STX, SNX, RUNE, sUSD and HNT. Lets Talk Bitcoin is a distribution partner for the Chain Reaction Podcast, and our current show features paid sponsorships which may be featured at the start, middle and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product or service. Music Attribution: Cosmos by From The Dust | https://soundcloud.com/ftdmusic Music promoted by <a href='https://www.free-stock-music.com/

3 Huhti 202055min

Host Tom Shaughnessy talks to Kathleen Breitman, the co-founder of Tezos and Coase, whose first game is Emergents, a highly anticipated blockchain base game.   After following Tezos for years, it was incredible to be able to talk with Kathleen about her journey. We covered a lot on Tezos, layer-1 blockchains, governance and upgrading mechanisms. Post this, we discussed Coase and Emergents, all of the details that go into designing a blockchain based game from cards and designs to game play and even Magic the Gathering. This conversation was an absolute blast.  Kathleen's BIO: Kathleen Breitman is the co-founder of Tezos, a blockchain-based smart contract platform with an on-chain governance mechanism to coordinate and push upgrades to its network. Previously, she was a senior strategy associate for R3, a blockchain consortium of more than 70 financial firms. She has also worked at Accenture, Bridgewater Associates and the Wall Street Journal.   Support The Show ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15. https://bit.ly/3bundEl Visit Delta Exchange For A $10 Welcome Bonus! https://www.delta.exchange/Tom   Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Tom Shaughnessy owns tokens in ETH, BTC, STX, SNX, RUNE, sUSD and HNT. Lets Talk Bitcoin is a distribution partner for the Chain Reaction Podcast, and our current show features paid sponsorships which may be featured at the start, middle and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product or service.    Music Attribution: Cosmos by From The Dust | https://soundcloud.com/ftdmusic Music promoted by https://www.free-stock-music.com Creative Commons Attribution 3.0 Unported License https://creativecommons.org/licenses/by/3.0/deed.en_US

1 Huhti 202056min

Host Tom Shaughnessy talks to Pat Larsen, CEO, and co-founder of ZenLedger. They discuss the issues with filing taxes when you have cryptocurrencies, what gaps ZenLedger fills, possible future use cases, and more. Episode Highlights: Pat went to the US Marine Academy and became a Navy officer, completing two combat tours. He proceeded to work in investment banking and tech, including for Amazon and several startups, before founding ZenLedger. Between his time in the Navy and his education, Pat is experienced both in math and science and in risk-taking and decision making. ZenLedger is a browser-based cryptocurrency tax software. The software handles the crypto portion of your taxes and allows you to export the data to use in their main tax filing. Because Congress hasn’t passed many laws regulating or providing guidance on taxation of crypto, so ZenLedger has to lean on the IRS for that information on complex things like mining, staking, airdrops, etc. One of ZenLedger’s founding offerings was their customer service and automation. TurboTax is a partner with ZenLedger. They generate new customers in various ways from talking about tax-loss harvesting to organic outreach on podcasts to building partnerships. It only takes about 10 minutes to use the software as a new user; the biggest step is connecting to your exchanges. ZenLedger demonstrates that you’re covering your bases and making good-faith efforts to file your taxes correctly. The automatically generated 1099-K forms from exchanges only show your aggregate trading, not your net capital gains and losses. Pat and Tom think a possible future use case could be using ZenLedger to file your basic income tax if it ends up being earned entirely through cryptocurrency. Pat’s Navy background taught him to make contingency plans for everything. Right now in the midst of all the macroeconomic changes happening due to COVID-19, Bitcoin has been largely unaffected.   Key Points: Most CPAs have no idea how to handle cryptocurrency in tax filings. Using ZenLedger saves you hours of aggregating information manually.   Tweetable Quotes “The IRS obviously cares. They’ve sent out tens of thousands of warning letters. They’re using blockchain analytic software. So I think the enforcement actions are stepping up, there will be audits, so you just want to take care of yourself.” –Pat Larsen “At its core, we’re saving you time, we’re giving you accurate reports, and we’re giving you peace of mind whether you’re in a corporate capacity or an individual capacity.” –Pat Larsen “You’re going big wave surfing & you just have to pick a place that has good waves & you need to trust that you’ve trained with your skills to be able to ride those waves, & if you fall down as you inevitably will, that you’re gonna get back up & ride another wave.” –Pat Larsen Support The Show ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain

30 Maalis 202040min

Host Tom Shaughnessy talks to Pankaj Balani, CEO and co-founder of Delta Exchange. They discuss the differences between derivatives exchanges vs traditional exchanges, market stability, current engineering challenges, and more.   Episode Highlights: Pankaj began in derivatives trading in Hong Kong before moving into hedge funds. Pankaj believes his old colleagues view crypto as another asset class and are receptive to it. The reaction has been positive to the recent Supreme Court decision in India to lift the ban on banks handling cryptocurrencies. There has been significant growth in crypto in India in the last 2-3 months, more than many other markets have seen. Even in the US, a lot of the major banks are difficult to work within crypto. More and more people are viewing Bitcoin as a stable investment. Delta’s focus is on retail and professional traders; there is a demand for hedging, but there is more demand for speculation. They have more coins listed with them than any other peer exchange. Delta plans to launch a product that marries DeFi and CeFi  They realized they had to build technology that could monitor as many as 100 coins over every customer throughout the day’s fluctuations. These engineering challenges are comparable to the engineering challenges in video streaming. Pankaj doesn’t attribute the current market fluctuations entirely to coronavirus but it’s certainly a factor.   Key Points: The lack of cooperation from major banks has held the development of crypto back. No one in the derivatives space has truly solved the problem of scale across multiple assets. Trading on futures is necessary in crypto.   Quotes “The genesis of derivative products, the need, it basically arose from the fact that people need to protect themselves against price movements.” –Pankaj Balani   “We are always very available to any kind of discussions. That’s the beauty of working in cryptos—you run a company and you’re interacting with your customers.” –Pankaj Balani Support The Show ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15. https://bit.ly/3bundEl Visit Delta Exchange For A $10 Welcome Bonus! https://www.delta.exchange/Tom Resources Mentioned:  Chain Reaction Twitter: https://twitter.com/chainpodcast Tom Shaughnessy Twitter: https://twitter.com/Shaughnessy119 ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15. <li style="font-weigh

25 Maalis 202049min

Host Tom Shaughnessy talks to Catherine Coley, CEO of Binance.US. They discuss Binance.US’s origin story, how Catherine made the switch from traditional finance to digital assets, how she sees them differing, and more.   Key Points: The scale of digital assets is wildly different from traditional finance. Digital assets allow users to have more agency and voice in their financial choices. Being in crypto gives you an expanded skillset and toolbox.   Episode Highlights: They are recording on the day the US stock market dropped 1,000 points, but it feels different from the crash in 2008. Binance.US offers an opportunity for Americans to get into digital assets through dollar onramps, over 30 coins, and more. Binance.US only launched 166 days ago. A high concentration of traditional finance professionals have moved into crypto and digital assets. People who appreciate efficiency are drawn to digital asset management. Technologically, what an exchange has to deal with on a daily basis is huge, but when you compare it to trades at Morgan Stanley or something comparable, it’s a matter of $20 million vs $600 million. There is a fear that the US will lose out on talent because our regulations are so strict that they constrain innovation. By virtue of coming into the game late, Binance has the advantage of having a clear view of the market and what the gaps are. We have a lot of time before we have to worry about the consolidation of the crypto space to mimic Wall Street. Binance is also involved with staking and governance. Their goal is to allow a wide range of users to access staking and trading at various levels of complexity to fit their needs. Binance.US has a referral program that sets it apart from other platforms. Catherine is only interested in Binance.US building features and products that her customers are interested in. Current society keeping money as a taboo conversation topic prevents people from gaining the confidence to handle their own finances. While Catherine was at Morgan Stanley, she watched the pipeline of traditional analysts and traders dry up and they lost people to Square and Twitter, which led her to realize she had to be fluent in tech in addition to finance.   Key Points: The scale of digital assets is wildly different from traditional finance. Digital assets allow users to have more agency and voice in their financial choices. Being in crypto gives you an expanded skillset and toolbox.   Tweetable Quotes “The quality of service that you receive at Morgan Stanley or Goldman Sachs is one that should be democratized and shared with all. So I think that’s a positive that you’d see the quality of research be able to go further downstream.” –Catherine Coley “There’s a part of me that goes, ‘Would trader Coley really be pleased right now?’ The answer is usually no, we’ve got to do more. So that keeps me pushing forward to improve the product, to improve the expe

20 Maalis 202049min

Host Tom Shaughnessy talks to Uri Kolodny and Eli Ben Sasson of StarkWare, and Will Harborne from DeversiFi. They discuss the pros and cons of centralized and decentralized exchanges, the development of Layer 2 technologies, scalability, and more. Episode Highlights: StarkWare is an Israeli startup that develops proof systems for scalability, security, and permissions for blockchain. DeversiFi is a decentralized exchange that allows people to connect to any Ethereum wallet and can reach up to 9,000 TPS. DeversiFi is now working to scale up beyond Ethereum to its own centralized exchange, and is using StarkWare technology to do that. The biggest benefit of having all the benefits of a decentralized exchange operating on a centralized exchange is a higher number of trades per second. Starks are a type of zero-knowledge proof system with extreme scalability and transparency that rely on a lot of complex mathematics behind the scenes. What this technology results in is essentially a receipt for your transaction, a guarantee that your trade was handled correctly and that there was computational integrity. There are differences between Snarks and Starks—Starks have no trusted setup and have post-quantum security. When you want to scale, you don’t want a trusted setup limiting you to generating new sets of keys but allows you to operate more universally. It’s a plausible security threat that eventually hackers will be able to breach coins and blockchains that are not post-quantum secured. Adding zero-knowledge to the settlement process doesn’t automatically give you privacy, so they’re working on boosting those privacy demands. Pure centralized exchange technology is rapidly becoming a commodity, including cloud-based services. They are starting to look at non-fungible tokens. Key Points: In terms of scalability, the next step is to have all the security benefits of a decentralized exchange with the speed of a centralized exchange. Centralized exchanges will always be needed for simple retail exchanges. This partnership is one of the first Layer 2 scaling technologies being used to power an existing business model. Tweetable Quotes “We all believe that this technology of zero-knowledge proofs is going to be used someday by even the most powerful of monopolies or governments to attest to the citizens that everything has been done with computational integrity.” –Eli Ben Sasson   “I think the fiat on-ramp is naturally the hardest thing to decentralize if it can be at all.” –Will  “Our scalability can basically be considered a means of saving the application gas cost on Ethereum and allowing it to scale essentially indefinitely. Think of us as a compression service.” –Uri Kolodny Support The Show ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15. https://bit.ly/3bundEl <li

14 Maalis 202038min

Host Tom Shaughnessy talks to Anatoly Yakovenko, Founder of Solana. They discuss how to make blockchain technology faster, its use cases, and how to accrue value in this space. They also discuss the philosophy behind where blockchain, math, and time intersect.   Key Points Processing speed has less to do with hardware than software; it’s the software that currently does not take full advantage of the processing speed some hardware is capable of. Solana is almost like a hardware in itself because other blockchains can run on it if they require the speed and the scale. Technology like Solana allows software to become more flexible.   Quotes “There’s a constant trade-off between performance, security, and decentralization.” –Anatoly Yakovenko   “Imagine in 1996 if someone told you that the internet was going to become 3 billion people and we’re just going to connect them and get them to share pictures of their cats, and that’s going to be worth half a trillion dollars.” –Anatoly Yakovenko   “I think what we’ll see is the projects that will succeed the most are the ones that can cannibalize everybody else. That can actually lift pieces out and start integrating them as fast as possible.” –Anatoly Yakovenko   Episode Highlights   Solana is a high-performance blockchain that Anatoly believes is the fastest computing possible. Hardware is going to keep getting faster and faster. Most blockchain tech right now works through synchronization, meaning all of the computers worldwide need to talk to each other and synchronize before moving onto the next step. With Solana, each node of the blockchain can run time by itself and timestamp messages with high TPS and without having to be in contact with each other. There are very few collisions, but when there are, they are able to solve them with consensus.  It’s essentially a global computer synchronized within 400 milliseconds.  Solana is focused on scaling without sharding their layer one blockchains. Anatoly believes DeFi will need hundreds of millions of users before it accrues real value. If blockchains have the need, they will come to Solana; why would someone who’s achieved success building on Ethereum pack up and move to a different platform? But if eventually, Ethereum becomes too slow, then they may have a reason to switch to Solana. One major misconception about Solana is that it’s a single node when really it’s a single virtual clock that is recomputed across many nodes. Another misconception is that validators are too expensive to run on Solana. You can deploy a 1,000 TPS droplet for $5/month. Hardware is flexible; you only have to pay for what you use. Anatoly predicts that the projects that will succeed the most will be the ones that can take the best pieces of other projects and integrate them faster than others. To Anatoly, Solana is an engine of price discovery as a high-performance blockchain. Solana can do up to 30,000 price updates per second. <li style="

11 Maalis 202054min