WBD541 Audio Transcription

Who Needs Bitcoin? With Junseth

Release date: Monday 15th August

Note: the following is a transcription of my interview with Junseth. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

Junseth is an OG Bitcoiner and the former co-host of Bitcoin Uncensored. In this interview, we discuss how the early days of Bitcoin mirror the issues we’re seeing in the ecosystem today: over leverage, unsustainable returns, greed and excessive confidence that the party won’t end.

“Any of these external effects like the fact that mining is good for attaching to an energy infrastructure, the fact that anything is useful as a result of Bitcoin, comes from the fact that Bitcoin is nothing interesting. It just contained value, that’s it. All things flow from that.”

— Junseth

Interview Transcription

Junseth: So, what price was Bitcoin at last time I was here?

Peter McCormack: It was like $42,000.

Junseth: $42,000

Peter McCormack: Something like that.

Junseth: Well that's not bad, we've only cut in half then.  There's more to go.

Peter McCormack: There's more to go.

Junseth: We could be $10,000 or $5,000, who knows?

Peter McCormack: Well, it's funny when people start making the calls, because you get to a point where you think, "Okay, I never thought we were going to $20,000 again".  Then we started getting near and I was like, "Well we're going to dip under, just to fuck with the people who set their stops at $19,000 or the people who were like, "I'm not going to say $19,000, so I'll set it at $18,000".  Everyone there was wiped out.  But it feels like all the bad news has happened that we think will happen.

Junseth: I've been wondering if the Bitcoin price has been driven down largely because of a lot of these bankruptcies and these leveraged loans that people had out, and the failures of all, you know, Celsius Network, Three Arrows Capital, who else?

Peter McCormack: LUNA.

Junseth: LUNA was a big one.

Peter McCormack: Voyager.

Junseth: Voyager!  They're stacking, I'm forgetting them.

Peter McCormack: Quite the voyage.

Danny Knowles: I just had a look; we were at $47,700 last time.

Junseth: $47,700?  Oh wow, a little more than half.

Peter McCormack: So, down about 60%?

Junseth: Yeah, that's a lot of money to lose.  I mean this is the thing, I just want to -- I'm going to look right into the camera, "Welcome to crypto winter.  If this is your first cycle, I'm sorry that you're poor again!"

Peter McCormack: That's a funny thing, though.  You could be in a far better position, far wealthier than you were prior to the crypto boom happening, but the ride up and down makes you feel poor.

Junseth: Yeah.  Well, I think you anchor yourself at the new high.  So, if you got to $30 million --

Peter McCormack: Jesus!  Can we go realistic numbers?

Junseth: Okay, $50 million or $60 million!  That's your new anchor and now you're worth $5 million.

Peter McCormack: But even some people never had much money in their life might have got to $100,000 or $150,000 and thought, "Holy crap, I can buy a house!"

Junseth: So, I go to YouTube and I type in "Celsius" or, "LUNA" or, "Voyager" and then the words, "Lost everything" and I go through the videos and I just watch them as people cry.  And the numbers they're talking about, you're right, they're like, "I lost $8,000" or, "I lost $30,000.  That was everything that I had", and I genuinely feel bad, but I also do enjoy the schadenfreude of all of this, because I feel like there's nothing else that people could have done.

We bitcoiners, in particular, Bitcoin maxis, have been warning people that this is what happens.  These coins, these institutions, everything around crypto, when crypto crashes, fails, always.  And, if you look at the first episode when we were in California, where I had my VR goggles on because we were in the metaverse, one of the things I talked about was --

Peter McCormack: By the way, do you know that's in, what is it, top 20?

Danny Knowles: Of our shows?  Yeah, I think it's top 20.

Junseth: Well, people like to see my tits!

Peter McCormack: Well, ignore YouTube, because those numbers are all over the place, just podcast listens, that's in the top 20 shows every made, out of 540 shows.

Junseth: Nice, that's a good one.  People liked the double-Ds.

Peter McCormack: No, because they're just listening, remember.

Junseth: Oh, really?

Peter McCormack: Yeah, there's no video with those guys.

Junseth: No?  Oh, poor them.  That's interesting.  Well, one of the things I remember we talked about was DeFi, and I said then that one of the things that is very likely to happen is the de-pegging, and voilà; we've now seen it with LUNA.  LUNA has de-pegged and it crashed that market, and then a lot of the DeFi protocols followed it, most of which I'm not really going to pay a lot of attention to the DeFi stuff.

But the big institutional collapses have been really interesting to me, that surround DeFi.  And the reason I find DeFi really a little uninteresting is because most of the people that got rich in DeFi started out real poor.  So, they came in poor, they got rich and then they got poor again, and to me I think that's what distinguishes a lot of these crypto crashes from Madoff, for example.

Peter McCormack: Yeah, although arguably, depending on how Celsius unwraps, the people involved in that could face similar consequences to Bernie Madoff?

Junseth: Yes, but it doesn't return the money to the people that lost it.

Peter McCormack: No.

Junseth: I'm amazed this time at the blatantness of the Ponzis.  And the other thing that surprises me is how these Ponzis, and they really are just Ponzis, how these Ponzis found this new way of earning money through leverage, which is ridiculous.  If you want your Ponzi to unfold faster, it seems like leverage is a really good way to go about that.

Peter McCormack: Well, let's go into that, because a Ponzi scheme -- actually, Danny, get the actual definition up so I don't screw it up.  I mean, I know what it is, but we should -- thank you.  Is it Charles Ponzi, was the guy?

Junseth: Charles Ponzi.

Peter McCormack: That was his name, yeah.

Junseth: They were called Peter-to-Paul schemes before him.  He just happened to popularise the name.

Peter McCormack: So, "A Ponzi scheme is a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors".

Junseth: Yeah, Bitcoin!

Peter McCormack: Yeah!  But I mean anything could be described as a Ponzi.  But in that structure, what we're saying, what Bernie Madoff did was he would raise new funds, he would claim that they were hitting these unbelievable returns every year, even in the downturns.

Junseth: They were paper returns, he would literally just give them paper.

Peter McCormack: And when people redeemed, he would pay them back.

Junseth: With the caveat that they could never come back.

Peter McCormack: Oh, was that the rule?

Junseth: Yeah.

Peter McCormack: I didn't know that.

Junseth: Yeah, that was how he did it.  He was like, "Okay, you can play your money out, but you can never invest again, not with me".

Peter McCormack: I mean, the consequences of what happened with Bernie Madoff was -- have you seen the film?

Junseth: Yeah.  A guy from my school I was in a play with in college was in that film, I believe, was one of the kids, Bernie's kids, in the movie.

Peter McCormack: Because I didn't realise one killed himself and the other died from cancer shortly afterwards.  I mean, that's devastating what happened, but multiple people killed themselves.  I mean, it was devastating, and that's the reality of these things that we should understand.

Junseth: Well, it's the distance of the fall, I think, that really gets people into these states.  If you go from having $1 billion to nothing, it's a lot different than $30,000 to nothing.  That's an Empire State Building-like fall; you're jumping off the top of that.

Peter McCormack: But I wonder if something like Celsius, if we're saying that a Ponzi is paying off the original investors with new investing, they weren't actually making trades; Bernie wasn't actually making trades.  But I wonder if Celsius is slightly different in that, I'm obviously not making an excuse because I always thought Mashinsky was a lying piece of shit --

Junseth: I've heard so many stories.

Peter McCormack: Yeah, I've got stories about him, but I wonder if it's slightly different in that they were able to generate returns to begin with, and they were then unable to generate returns.  I know they lost a bunch in a DeFi hack, and then they were just trying to trade their way out of it.

Junseth: Well, that's how a lot of Ponzis start.  So many Ponzis start with this problem where you make -- this is why, back at Bitcoin Uncensored, one of the things that I'm always fascinated by is the idea that markets are efficient, which in Bitcoin is not popular.  BitcoinTINA, a friend of mine and others, tell me I'm an idiot for thinking that markets are efficient.  But the principles around market efficiency lend to this world view that says that, when people are giving you money for holding something, or giving you money for anything, there is risk associated with that. 

I think the companies that are involved in this, they themselves don't believe this; so, they believe that there's magical internet money somewhere and they'll go and they'll lend it to some place, and everyone accepts the fact that they're get 9%, 10%, 20%.  I mean, what, Novogratz said that it was basically -- I think Novogratz and his whole cadre were describing LUNA as one of the least risky investments.  I mean, there's video of Mark Cuban saying that, I think, about Voyager, where he says that, "In crypto, nothing's riskless, but this is about as close to riskless as you can get", which is insane, because this is three months before they go.

It's not that this is a hard thing to predict.  As everything is going up in a crypto summer, I don't know what we call it really; the bull market?  As everything is going up, there is this mentality that percolates the person, which says that as it goes up, it can never come down.  You don't remember it.  It's like when you're sick and you just never remember what it's like to be better, even though you've been sick for one week.  That's how this works psychologically, and I see it all the time.  It starts going up, it goes from $20,000 to $30,000 and you're like, "Okay, we're going to $1 million!", and then it goes right back down to $20,000 like, "It's going to $5,000!"

The human psychology is really interesting, and we are willing to forgo the notion of risk in markets that feel like we can't lose, and we are unwilling to accept the consequences of risk in markets that go the opposite direction.  And it's really interesting to me, because I've seen this now, I don't know, seven or eight times in Bitcoin; I don't know how many pumps we've had, but it's been a lot in my Bitcoin lifetime.  And every single time, I see people do the same exact stuff, take out too much leverage.  And by the way, too much leverage this time is mind-blowingly small, because nobody thought, even in my own portfolios, I was thinking about it; I had estimated that at most, we have a 30% to 50% drawdown.  When it drew down 60% or 80% or 300%, or whatever the hell the drawdown is, about $60,000 to $20,000, it blew my mind.

Peter McCormack: Well, getting hit by LUNA followed by Three Arrows followed by Celsius and Voyager, that's a lot of hits to take, that's a lot of selling pressure.  I mean, in some ways, I'm surprised it didn't go further.

Junseth: Well, it could.  I mean, there's more loans outstanding.  I don't think people have considered the miners; the miners have loans outstanding.  There's all sorts of companies, and there's margin calls that are yet to come in.  Who knows, maybe we'll never get there, maybe we won't go low enough.  But I think a lot of these traders know where these levels are and they love the idea of trading down with them.  If they're whales and they can push the market down, I don't see why they wouldn't try, because these margin calls drive the price down, and they allow people to get Bitcoin at great prices, if you think Bitcoin's going somewhere.

Peter McCormack: And if they're shorting it as well.

Junseth: Yeah, if they're shorting it, that too.  The people that have a lot of Bitcoin and can push markets up and down, and libertarians like to call these people that control markets, that's ridiculous, these are just liquidity providers, big liquidity holders, which is why it's hard to compete in markets, because they exist; these people can make bets on the markets that they know they're going to have a high chance of making happen, and that's something that's really hard to compete with as an individual.

Peter McCormack: It's amazing how much leverage risk people take.

Junseth: I couldn't believe it.

Peter McCormack: And people who know better.  I mean, I leverage traded back in 2017, 2018, my first time trading, so it seems like, "What do you mean I can access ten times my capital?  What do you mean, when it goes up every dollar, I go up ten dollars?  And when Bitcoin goes up 1,000 --"

Junseth: They don't explain it to you either, you're just like, "This is cool!"

Peter McCormack: "This is magic!"  And then, ever since then, I've made one leveraged trade, but the only leveraged trade I made was a bank loan against Bitcoin, which up until a couple of weeks ago was in the good; now it's slightly under.  But I've paid off the majority of the loan, so it doesn't really matter.  But the idea being, that kind of leverage I think is okay when you can afford the loan, you've got an income.

Junseth: Well, the problem this time is people thought they could afford loans, they thought they could, because they estimated that Bitcoin would go down 5%, 10%, 20%.  I mean, what's the maths, is it 80% down, 70% down?

Danny Knowles: I think it's about 70% at the moment.

Junseth: It's 70%?

Peter McCormack: Go to percentagecalculator.net.

Danny Knowles: To the very bottom so far, it's 74%. 

Junseth: 74%.

Peter McCormack: Well, that's probably an increase on the previous bear market.

Danny Knowles: Yeah, it's normally 80%-plus, isn't it?

Junseth: But the thing is, I think people really were bent on -- because we stuck at $60,000, it was a different kind of market than all the other markets than we've had in Bitcoin; it stuck there.  And it dropped dramatically.  After so long sitting at $50,000s, $40,000s, somewhere up there, it really felt like it was going to trade in a band, everyone was telling me this, and it felt like that, but it didn't.  And I think a lot of people got caught with their pants down.  The DeFi stuff was just a very, very obvious leading indicator that this was all coming.

Peter McCormack: Let me ask you, because this is something I've thought about before, I've expressed thoughts, people don't agree; but in a future world, I don't know whether it's a decade away, two decades, three decades away, I don't see a world where everything is decentralised, I just don't.  I think certain things are better centralised, because you have to have people making decisions, and therefore you have to have governance process, and I think some things will be decentralised.

Something like a stablecoin, I find it hard -- well, I've found it hard to find a truly decentralised stablecoin that I don't think will de-peg.  Now, I know centralised ones can be, but a fully transparent, fully backed, centralised stablecoin should hold a peg, if it was transparent.

Junseth: Well, the humour of this market is that Tether is the one coin that has remained holding its peg pretty closely, even in spite of all the criticism that it's received from FUDsters.  Maybe Tether doesn't have its backing, who knows?  I'm not auditing it.  But it blows my mind that Tether is the one that seems to have ironically survived this world, where everyone's saying that Tether is definitely going down, and LUNA is the safest security that's ever given you 20% returns; it's absurd!

I think the other thing that's really interesting for me is, if you look at the history of finance, you have all of these examples where people have done particularly examples of leverage.  A good example in the 1990s that if you've been here long enough, you know about.  But LTCM, Long-Term Capital Management, ironically named, had all of these Russian --

Peter McCormack: What was that; I've never heard of it?

Junseth: You've never heard of Long-Term Capital Management?

Peter McCormack: No.

Junseth: Well, it was a firm started by, I think, Fisher Black of Black-Scholes formula and a few others.  They had two or three Nobel Prize-winning -- I think it was Fisher Black -- Nobel Prize-winning economists start this company.  The idea of it was, they were going to do as much basically arbitrage as they could.  Arbitrage generally in the financial sense means riskless returns.  So, they're rare, they're really hard to find these opportunities, and when you do, you can make a lot of money.

What they were going to do was leverage the fuck out of their portfolio, so that they could make their money on arbitrage opportunities that were like quarters of a penny, you know, reducing spreads by tenths of a penny, hundredths of a penny.  It was sort of like the Office Space scheme.  They did this, because of their relationships and the people in the firm, they ran up, I don't remember what it was, but I think they had something like $10 billion, $3 billion to $10 billion under management and had $3 trillion in leverage!

What happened is, they'd set these up, all of their trades, in such a way that if there were failures, they would cascade.  They were like the financial equivalent of a prop bet.  They had like ten bets, all that as long as none of them broke down -- but it's arbitrage, so they're riskless, right?  And then one day, Russia wakes up, Vladimir Putin wakes up and the Russian economy starts to fail and he says, "Those bonds, how about we make good on them to Russians only, but not to foreigners".  That's a good Russian accent, right?

Peter McCormack: That's pretty good!

Junseth: So, they decide not to pay out, I think it was bondholders that were not national, they were not in Russia.  So all of a sudden, all of these Russian bets that they have, which are part of this cascading portfolio, aren't going to get paid.  So, LTCM goes into crisis.  There's like $3 trillion on the table in the 1990s.  This has the potential to collapse the economy.  The Fed gets involved, everyone gets involved.  So, this is the first time the Fed gets together.  They meet with everybody and they say, "Okay, banks, we're fucked, the whole economy's about to go.  So, we need someone to back LTCM", and all of the banks basically agreed to do this, except one; Bear Stearns.

Peter McCormack: Irony!

Junseth: It's not ironic, in fact there's a lot of people who strongly believe that the failure of Bear Stearns later was revenge for this.

Peter McCormack: Oh, right, "We're going to bail out --"

Junseth: Right, exactly.  So, Bear Stearns, in LTCM, refuses basically to help with this, and the other banks all get in and basically do this first bailout.  LTCM attempts to sell to everybody, they attempt to sell to Warren Buffet.  I think Warren Buffet rejects them at the price they ask for, because they really didn't -- I believe he sent them through fax machines because, again, it was the 1990s; I think he offered them a fraction of the amount that they thought they were worth and they were like, "We can hold out.  No biggie".  So they didn't sell to him early on, and that would have probably been enough, because he could have weathered the storm.

Peter McCormack: Leon Black?

Junseth: Leon Black?

Peter McCormack: You said he didn't sell to Leon.

Junseth: No, to Warren Buffet.

Peter McCormack: I thought you said Leon.

Junseth: No, to Warren Buffet.  So, Warren Buffet, I believe he offered a certain amount, a fraction of what they really thought they were worth, and they rejected it, and then no one else wanted to buy them.  So, they got basically liquidated.  And what's interesting, if you analyse their bets over time, if it had been able to be held, they would have been wildly, wildly wealthy; these bets were all great.

Peter McCormack: Have you found it, Danny?

Danny Knowles: I mean, I've found the story, yeah.  Do you want me to pull it up?

Peter McCormack: Yeah, pull it up.  Let's have a look.  "LTCM was wildly successful from 1994 to 1998, attracting more than $1 billion of investor capital with the promise of an arbitrage strategy…  However, LTCM's highly leveraged trading strategies failed to pan out and it suffered monumental losses".

Junseth: Monumental.

Peter McCormack: Monumental, "The reverberations were felt across the financial landscape.  Ultimately, the US Government had to step in and arrange a bailout…"  Keep going, don't worry about the business model.

Junseth: With John Meriwether, yeah.

Peter McCormack: The Demise, okay, "When Russia defaulted on its debt in August 1998, LTCM was holding a significant position in Russian Government bonds… highly leveraged nature, coupled with a financial crisis in Russia, led the hedge fund to sustain massive losses and be in danger of defaulting on its own loans.  This made it difficult for LTCM to cut its losses in its positions… totalling roughly 5% of the total global fixed-income market", Jesus!  "When losses approached $4 billion, the federal government of the United States feared that the imminent collapse of LTCM would precipitate a larger financial crisis and orchestrated a bailout to calm the markets.  A $3.65 billion loan was created, which enabled LTCM to survive the market volatility and liquidate in an orderly manner in early 2000".

What happened to the -- I mean, there was no crime there, they were just --

Junseth: No, there was no crime.  The real crime is the banks that lent to them, if there was a crime.  They used their connections basically, and these banks bypassed their internal mechanisms thinking "These guys have Nobel prizes, it's no problem".  Secretly, what they were doing is going from bank to bank basically and getting --

Peter McCormack: Three Arrows?

Junseth: Yeah!  They were going from bank to bank and secretly getting leverage from them, and all of the banks were extending more leverage than they would have normally given on any given day.  If I recall, Bear Stearns was the only bank that was exercising prudence, which is why they were like, "Fuck that!" at the end of all of this, because it was a crisis caused by imprudence in the market, and basically banks were not abiding by their normal standards and regulations, because they decided that these oracles were going to definitely make good on their returns, there's nothing that these people could do that wouldn't be astoundingly genius, and it's arbitrage so it's fucking riskless, right?

So, it's riskless until -- and this is the thing that happens in financial markets.  No one seems to realise that there are no rules.  They think that the rules of the financial markets exist and that we know how they operate, but we don't realise that the rules can change at any moment, and anyone can change them, anyone with power.  So in this case, Putin does something unprecedented.  He stands up and he goes, "We're not paying foreign debt", which no one had ever done before.

Peter McCormack: Well, do you know what?  We just did it to him.

Junseth: Yeah, right!  We took a lot of their money away.  But they're not holding bonds, we didn't cancel their bonds.

Peter McCormack: Their Treasuries.

Junseth: I'm not super-familiar with what we're doing to Russia or not.

Peter McCormack: Aren't Treasuries bonds?

Danny Knowles: Yeah.

Junseth: I imagine.

Peter McCormack: Yeah, it's like, $60 billion of Treasuries.

Junseth: Okay, we've farted on them now.

Peter McCormack: Yeah.

Junseth: But in this case, they were basically willing to default on global bonds for anyone that was holding bonds outside of Russia, and no one had seen anything like that before.

Peter McCormack: You say there's no rules; there's rules for the little guy.

Junseth: There's no rules.

Peter McCormack: There's rules for the little guy.

Junseth: There's rules for the little guy sometimes.  I mean, there's rules until -- the rules are constructed and deconstructed by those who have power.  So, I guess the little guy has no power, so he has to abide by the rules.

Peter McCormack: But he gets fucked when -- I mean, I've talked about it on this show so often, but in The Big Short, brilliant film, the thing that always leaves me is the end, when you see the family packing up their car, because they've lost their house; they got screwed.  I can't remember, how many people lost their home in the 2008 Financial Crisis, Danny?  In the US, it was a seven-figure number.  I don't know if it was 1 million, 2 million, but a lot of people lost their homes, and these were hard-working people.  They went to work, they played by the rules.  They went to work, they did their job, they paid their mortgage.  Boom, Financial Crisis, because of stupid, irresponsible products that were created, leveraged in the market, rehypothecation; and when it all unwinds, a couple of big banks fail, nobody goes to jail --

Junseth: Everyone loses their job.

Peter McCormack: Everyone loses their job, and it's the ability that people can risk the entire financial markets, not just of the country, but of the world, just for greed, just to make --

Danny Knowles: 10 million people.

Junseth: 10 million?

Peter McCormack: 10 million.  Can you read -- what's it saying?

Danny Knowles: It says, "About 10 million Americans lost their homes during the Financial Crisis, or were displaced".

Peter McCormack: But I wonder the amount of people actually involved in the decision-making that led to the creation of these products, you might be talking about a few thousand people.

Junseth: What are the products you're talking about that caused this; what do you think caused this?

Peter McCormack: Well, if you want to talk about what caused it, you can go back to different points in history.  You can go back to Clinton changing the rules of the housing game, because they wanted to put more people into homes, so they changed what was the borrowing rate; they got rid of the 20% rate.  I can't remember the details, because it was a long time ago.  Was it Glass-Steagall they repealed, or something?

Danny Knowles: Yeah.

Peter McCormack: So, they repealed Glass-Steagall.  Remind me, was that the responsibility of the banks?

Danny Knowles: I can't remember.

Peter McCormack: I haven't looked at this for a long time, but I know under the Clinton Administration, they wanted more people in homes, so they made it easier for banks to provide loans, and therefore they repealed Glass-Steagall, or something.  Now, anyone listening, if I've got that wrong, don't call me a dumbass; there's a lot to remember and I can't.  But there was something under the Clinton Administration that made the banks more responsible, so you can go back as far as that.  There's probably things you can go back to before that, but that's the start of the creation of products and contagion, that's the start of the creation of risks within the banks.

Junseth: So, I tend to think most risk in the financial sector is much like LTCM in cascading risk.  There are these levels of risk that we have; there's level 1, level 2, level 3, and if any of these cards are pulled out all of a sudden, particularly when it comes to leverage, all of a sudden the whole card castle that you've built collapses.  And I think a lot of this even, you can go back even further to the two-income households.  In a world where both the man and the woman in the house work, you end up with people going out and overextending themselves, because they're buying things like homes based on two incomes.

It's actually Elizabeth Warren who wrote a book called The Two-Income Trap, which is literally about this specific problem.  And it's basically saying that it used to be that, let's say you had a house, you had to pay a mortgage, whatever; you get fired from your job.  Well, your wife would go and be a secretary for six months as you looked for a job, and then you go find a job.  And during that time, you could pay the mortgage. 

Well, in a world where both people work, they're both maximally employed, both making good money, let's say you're both bringing in $5,000 every two weeks, so $20,000 a month.  You're going to go buy a home that's $1 million, maybe $2 million; let's say $2 million.  And if you're not saving a lot, you're going to be taking all of your money pretty much every month, putting it towards a mortgage, maybe saving a few thousand.

But in the end, when it comes down to it and the economy turns and you both lose your jobs, you might have eight months of mortgage money saved.  And in a bad economy, you might not be able to get a job that pays anywhere near what you had.  So, all of these things, that was one of them, and then in addition to that, you're right, the 1990s, changes in mortgage stuff, and etc.

Peter McCormack: Come on, how many people do you think have got eight months' breathing room?

Junseth: Oh, very few, but I'm being very generous; I'm trying to be very generous!

Peter McCormack: I know people who haven't got two months' breathing room.

Junseth: Yeah.  Well as an adult, it's really interesting, because when I was a kid, I remember thinking to myself, "If I had $1 million, I'd buy an aeroplane.  If I had $1 million, I'd have the biggest house you'd ever seen".  And now, as an adult, I don't know how people who are responsible can survive on any of these amounts.  It blows my mind, because the expenses that come with things like a $1 million mortgage, or anything like that, the impending expenses are things that you would never have considered as a kid.  A $1 million mortgage is, what, $15,000 a month, something like that?

Peter McCormack: No, no.

Junseth: $10,000 a month?

Peter McCormack: I mean, it depends on the rates you're getting now.  If you go back a year when you could get 2% interest rates, I would have thought $1 million would be, what, $4,000 a month?

Junseth: Something like that, but now, it's like 4.5%, so okay, $8,000.  For most Americans, that means that -- let's say it's $8,000.  So you're still talking, what, $96,000 a year that you have to put towards your house.  Most people don't think about the fact that that's income that has to come in.  You can do that for ten years; that's without eating, or anything else.  You have to be making a significant income to be able to afford these things.

I think what's really interesting, in places like the housing market, etc, you really do have these cascading failures where people believe -- and it's the same as the crypto market now.  People believe that that will always be the state of things.  And I think people don't realise that literally, the state of nature is to be impoverished.  You come into this world naked, you have nothing with you, and if you… 

The state of nature is to go into the forest and grow potatoes and not have money and have nothing.  That's the state of nature, and nature wants to bring you back there.  What people do, I see this in crypto all the time, "I really deserved this money.  I put money into LUNA and I made $4 million, and now I'm poor and I just can't believe that I've lost everything".  No one I've ever seen get rich deserved their wealth.  They worked really hard, they set up mechanisms, they preserve it, they make a lot of really good decisions.  But you are one absolutely insane decision, and not even necessarily knowing it's insane, one decision away from complete impoverishment.

Peter McCormack: Dude, you're not just one decision away, you're one personal decision, or you're one decision by somebody else away.

Junseth: Yeah, but this is like, if you put your money into Wells Fargo and you have, I don't know, $100 million in one bank account there and Wells Fargo collapses tomorrow, the FDIC has you insured to, what, $250,000 or something like that?  I'm sure you can buy official insurance, but maybe you got rich not knowing how those products work, so you haven't.  They give you $250,000 back; you made $100 million, they give you $250,000.

That isn't your decision.  That's what I'm saying.  The state of nature, the entire world is in constant decay and everything is turning.  It's like this very Buddhist concept, where Wells Fargo at some point is going to fail.  We don't know when, it might be 100 years from now, but you put your money in there, you're putting your money in a hot potato.  Every one of us is putting our money into hot potatoes, and some hot potatoes just kind of get cooked faster.  LUNA's a great example.

That's actually what I like about Bitcoin, is that Bitcoin is the ability, for the first time, to actually use the principles of the universe.  Entropy, the decay of the universe, is the thing that guards my money.  And the decay of the universe is the thing that we use to develop more Bitcoins, and that's literally what's amazing about Bitcoin, is it acknowledges this fact that decay is in fact -- the state of nature is to be impoverished.  It doesn't matter if you have your Bitcoin on a ledger, you can still get it back later.  If you hold it, it's a dangerous thing to do.  But I think that's also the case; that's a ramble too much, but…!

Peter McCormack: That's why I got you here!

Junseth: Yeah, I'm rambling.  But the idea that, in terms of compensation for risk, when you put your money into a bank, you kind of assume it's going to be there.  Well, that's not always the case.  Ukraine saw huge amounts of money lost back in the 1980s and the 1990s, banks failed.  In America in the 1930s, we had huge bank failures.  And again, in the 2000s.  Well, in the 2000s, the saving grace was in fact the insurance backing the banks, whether it was SIPC, your FDIC, the insurance backing the banks was their saving grace.

Peter McCormack: Not if you were in Cyprus.

Junseth: Well, except in Cyprus, where they haircut everybody.  And if you were rich, you were allowed to get out of Cyprus; there were a lot of people that were wealthy that moved their money.  So, people don't understand, and I don't know that they can, the risks that they're taking on when they do anything, when they buy stocks or when they put their money into Celsius or when they put their money into a hedge fund or a VC firm, or when they take a huge amount of unilateral risk and put all of their money into new start-ups as a VC, if they themselves want to be the VC.  People don't seem to understand the risk that they're taking on, and it's amazing to me, because every single time in the crypto cycle, we see the exact same outcomes constantly.

Peter McCormack: Well, this is an interesting thing.  We've got an interview with David Morris next week from CoinDesk, and he's written an article about the similarities between what's happening over these last few weeks in the crypto and what happened in 2008, from which Bitcoin was born.  And it's got me in this kind of headspace where I'm thinking about, whether it's a centralised or decentralised system, it doesn't matter, because it can still happen, because we still have humans taking risk, we still have humans taking out leverage.

Junseth: Well, the corruption is different.  In a centralised system, it's the people who are corrupt often.  But I think bitcoiners overestimate the amount of effect that these external institutions have on an economy.  Interest rates, for example, are basically set by the market, I don't care what the Fed says.  The market really does basically choose and control interest rates.  The Fed has some control over certain things, bank rates, etc, but for the most part, the whole market adjusts, people adjust their leverage and housing mortgages go up; when the mortgage price goes up, housing prices come down; the whole market just adjusts.  It's this giant balancing mechanism, it really is.

So bitcoiners tend to, I think, overestimate the amount of inefficiency provided by corruption in the system, that's always been the case.  And I think they underestimate the level of danger that individuals with no regulations can cause to the system.  And maybe ultimately, the no-regulation world is a better world, and we root that out somehow by, I don't know, maybe mathematical mechanisms.  

But to your point earlier, where you said that you don't see a future where the whole world is decentralised in 30 or 40 years, well yeah.  Just because it's decentralised doesn't make it good.  There are only two things in history that we've figured out how to maybe decentralise in a cryptographic way, or a computer way: one might be Torrents, pretty decentralised way to do filesharing.

Peter McCormack: It just works.

Junseth: It just works.  It could fail, but it works pretty well.  The other is money, and money apparently works really well decentralised.  It doesn't work yet, we're seeing a lot -- I don't think it's good when Bitcoin drops 50% as a pitch for money; it's just not.  But I think this will be money someday.  It's good for that use, it's a good ledger, it's used by some people as money; drug dealers and hookers!  But it is some kind of money, we know that.  It's value, at the very least; it's contained value.

So, we've figured out how to decentralise this thing, but it doesn't mean that everything has to be decentralised, or that decentralisation is better ever.  Decentralisation isn't a good simply because we can do it, and that's the problem I think, is everyone has looked at Bitcoin and decided that because Bitcoin removes the corruption from the people that hold and control the system, that somehow Bitcoin and the decentralisation of everything else will do exactly the same, and that's just not the case.

Peter McCormack: Yeah.  Well I think it's created -- this ability that someone came out with this idea in 2008 as a white paper and then delivered a protocol in 2009, and 13 years later it's still here, and at some point it was worth over $1 trillion, and millions of people own it and can move it around the world instantly on the Lightning Network, or within an hour on the base chain; the fact that it's delivered and survived, I think it's given people a lot of hope.

I said to you earlier, we had a guy in to discuss A Progressive's Case for Bitcoin, and the great thing about Bitcoin being apolitical is, it doesn't matter where you are, left, right, middle, you have to abide by the same set of rules, and it just works.  And I think what that's done, people have identified other things which are corrupt and broken and thought, "Perhaps we can decentralise that".  I just don't see it working in that way.

Junseth: I think the problem for me is that a large number of people have this understanding of where corruption is, and they misidentify things all the time.  A good example is, right now, there's an accusation by the conservative right that Joe Biden sold our Strategic Petroleum Reserves to China, and everyone's up in arms about this, very, very angry.  Well, you can go look at how the Strategic Petroleum Reserves are always dealt with; oil's a commodity, it's fungible, it's a global market.

By statute, the SPR, the Strategic Petroleum Reserves, the SPR has to be sold to the highest bidder, by statute, and the highest bidder was China!  It's not a scandal.  The entire world right now is looking at that and screaming about corruption, and no one goes to the source document and finds out why it was done this way.  And I find that to be the case with most forms of corruption that people are obsessed with.

Peter McCormack: Hold on a second, just give me a second on that.  I don't understand that Strategic Petroleum Reserves; what is that; how does it work?

Junseth: So, we have a national supply of petroleum.  It's supposed to be released in times of war if we need it, or something.  Trump filled it up for very cheap during COVID, and now gas prices are up, Biden has been releasing it, the Biden Administration has been releasing it, in order to solve some of the backwardation or contango problems, whatever the case, I'm not a trader.  But I think backwardation is what's been going on, so they're trying to basically fill the supply chain a little bit, and if they can do that, it just relieves a little bit of the pressure.  That's the idea.

So, there's accusations that this is a misuse of the SPR; it might be.  But this big one, this big accusation that we sold the SPR to China, that we sold big portions of it, it's just absurd.  Again, my big problem with corruption generally is the level of understanding that people have about corruption in the system is zero.  They have no idea where the corruption is.  They're obsessed with the corruption in the system, and they're wrong about it. 

The last year, I've been hearing libertarians talking about how Vanguard and BlackRock are the worst enemies in the world, because they own the most of X stock, and it just seems to me that these people don't understand how the world is constructed.  Vanguard and BlackRock own the most of these stocks because they have the most people putting money into them, and that's not owned by Vanguard and BlackRock, it's owned by the people that give them money for their ETFs.

So, there's these sources of corruption that I see people identify all the time, and they're just wrong about where the corruption is, completely wrong, and it's very frustrating.

Peter McCormack: So, where is it in the system that you think people should be focusing on?

Junseth: Well, I think politicians themselves can be very corrupt; that worries me.  I don't care that much about corruption.  I tend to think that the markets route a lot of the cost of corruption out of the system, but there are very obvious spots.  I think it's very corrupt when people who are in power can do things that people who are not in power can do explicitly by the rules.  For example, insider trading by congressmen in the United States, that seems to me to be very corrupt, and it's explicitly legal.

Peter McCormack: Nancy Pelosi.

Junseth: Yeah, but it's explicitly legal.

Peter McCormack: She's a very good trader.

Junseth: Yeah, she is a very good trader.  But there's dozens.

Peter McCormack: That one to me is crazy.

Junseth: I can't believe it.

Peter McCormack: I mean, I don't know what the case is in the UK, but I'd be surprised if they're allowed.

Junseth: Here, it's explicitly allowed.  It is allowed and Congress is the only one that can change it.  They have to vote on the bill themselves as to whether they are allowed or not allowed to do it.

Peter McCormack: The turkeys have to vote for Christmas?

Junseth: Yes.

Peter McCormack: But it does seem like the obvious thing to remove, one of the most obvious things to remove.

Junseth: So, that kind of thing to me, that seems like corruption mainly because I think -- again, I don't think that Nancy Pelosi making a lot of money really affects me; it could, I guess, in theory, but it doesn't really affect me.  It does kind of feel a little bit fuckered though that she has this opportunity that's very obvious and clear that I don't have.  Maybe they just make insider trading legal for everybody; I don't know!

Peter McCormack: Anything on the UK?

Danny Knowles: I've not seen that, but did you see this week that Nancy Pelosi bought a load of Nvidia stock before a big vote?

Peter McCormack: I did.

Junseth: She's really into Bitcoin!

Danny Knowles: I've not seen anything on the UK.

Peter McCormack: Yeah, $8 million of shares.

Junseth: There's entire ETFs that people are tweeting what the trades are that they're --

Danny Knowles: Like the Pelosi one?

Junseth: Yeah!  I love that people are just following her.  And maybe that's the thing, again, technology a lot of times uproots corruption.  So, if they have to disclose to us what they're buying, then I don't know that it matters at all, because you can just buy it too.

Peter McCormack: Yeah, going back to all this contagion that we've had, maybe this is where the more hardcore maxis are right, and maybe I haven't paid enough attention to them in terms of, "Hold your private keys; screw these companies that offer leverage or interest on your loans; screw financial services".  I don't personally believe it, but they've been right on certain areas.  We take this very seriously, we really consider the things that we talk about and the influence it has.  Maybe they were right, or maybe this shit just happens anyway; that's what I don't know.

Junseth: Okay, I mean the thing is, this is why I think it's such an important thing to understand.  I believe very strongly markets are efficient.  It leads you to a lot of principles that are very important, like for example, I believe very strongly that the best way to hold risk, to be compensated adequately for risk that you're holding, is to diversify away the risk, the unilateral risk; I diversify it away.  So, I don't know, if there's one taxi company and all of my money is in that taxi company, that's a lot of risk.  But if there's ten taxi companies, which one's going to win?  I don't know, I'll have all of them.

That means I'm going to miss out on the biggest gains, because I'm going to miss out on Uber, Uber's rise, but I'm going to get a little bit of it.

Peter McCormack: And save yourself from the biggest losses.

Junseth: And I'm going to save myself from the biggest losses.  And humans are notoriously bad at remembering that they picked losses, notoriously bad at it.  And I think that's the thing with Bitcoin.  Bitcoin is highly volatile.  I think the best you can do is either just hold it and sit on it and say, "This is my investment".  But the other thing you can do is you could volatility trade it, where you're just buying low, selling high, buying low, selling high.  Buying low, selling high? 

Peter McCormack: Yeah, you got it right! 

Junseth: Buying low and selling high, you can do that.

Peter McCormack: But what's low and what's high?

Junseth: Well, volatility trading allows you to do that essentially algorithmically.  I mean, Bitcoin's pretty good for a velocity strategy, and I do think you can get extra returns on maybe the Vanguard or the SPY's, like the Vanguard Total Market or the SPY's.  But your return on something like that, doing that, instead of a 9% per year, you're going to get 11% per year, or 13%, maybe 20% in really good years.  It's not huge.

In Bitcoin and in crypto generally, particularly in DeFi, what was amazing to me is people were looking for these 50% returns, 80% returns, 200% returns, and Bitcoin early on wasn't any different, it was the same thing.  This was how people like Pirateat40 got their start.  They were promising these 1% returns per day and 15% returns per month. 

Peter McCormack: Was that the thing Dan McArdle talked to us about?

Danny Knowles: It was.  I can't remember exactly what -- will you explain what that was?

Junseth: Pirateat40?  Absolutely.  I mean, there were a lot of Ponzis early on the Bitcoin Network, particularly dealing with miners.  But Pirateat40 was the most interesting.  It was this guy, named Trendon Shavers, released his own name, he was very public.  And he seemed to be doing something legitimate.  He took investment, people gave him X number of Bitcoins, and nobody knew where he was getting the returns.  It was speculated that the returns were coming from lending to drug markets and stuff like that.  I think ultimately, what I have come to conclude, is he was probably lending to Mt. Gox. 

So, the returns were coming from Mt. Gox, covering liquidity and maybe some other nefarious things, but that was a large part of it.  So, Trendon Shavers was returning these massive profits, and he was doing it for months and months, and this thing started to grow.  He needed more liquidity, because they needed more liquidity.  Then all of a sudden, I think it was around August/September of that year, he just doesn't pay out one day and people wonder what the hell's going on, because they know his name, they've met him, they've done steak dinners together, they've met him at conferences, he goes to conferences; he's a public guy.  So, they're all very confused, and he just doesn't pay out.

There's a number of weird events that happen around this.  Matthew N Wright, who's not really in the community at this moment, I haven't seen him in years ever since this; Matthew N Wright, who was actually the owner of Bitcoin Magazine at the time, before they sold it to Tony Gallippi, Matthew N Wright makes a bet with everybody.  I think it was 13 September or something, "Trendon will make a payout.  And if he doesn't, I'll pay", I don't remember how much; $10,000 or it might have been 10,000 Bitcoin; it was big.  You can actually find the spreadsheet online of all the people that registered to take this bet. 

He was like, "Trendon's going to pay, and if he doesn't, I'll give you this much.  And if I don't pay, you can give me the scammer tag".  This was the way we monitored ourselves early on in Bitcoin, is in the forums; if you fucked up, you got a scammer tag and nobody would deal with you.  You'd have to remake an account and start basically fresh rebuilding reputation.  So, he commits himself to this, "If I don't pay, you can give me a scammer tag".

The day comes around, Trendon doesn't pay, Pirateat40 doesn't pay and Matt says to the community, "Fuck you, I'm not paying you!  I was just doing this to show you all how gullible you are.  You guys will fall for any scam", and he doesn't pay.  So they give him the scammer tag, he exits the community, this leads to the collapse of the Bitcoin Magazine team at the time, so Bitcoin Magazine's in trouble.  Tony Gallippi steps in, Tony Gallippi buys it, and here we are today, where I think Gallippi has sold it on to David and that team.  I'm pretty sure it was Gallippi, yeah, and all of this stuff.

It's a weird history that only a few people were around to witness.  So, yeah, we had early Ponzis and bitcoiners were looking for returns in excess of the normal market.  So they would give money to cloud mining operations, they gave money to Trendon Shavers.

Peter McCormack: What happened to Trendon?

Junseth: He went to jail.  I think he went to Texarkana, if I recall, the resort jail of jails, federal prison.  He was there for a number of months, he got out, and immediately started trading shitcoins.  What's remarkable about Trendon is that if you look back on it, again, classic Bitcoin story.  He probably had 20,000, 15,000 Bitcoins to himself, because Bitcoin was worth nothing.  This was when Bitcoin was worth $1, 80 cents, 70 cents, maybe less.  It was cheap, really cheap.  Maybe 10,000, 20,000 Bitcoin. 

So when he doesn't pay out, no one knows why, and it causes this weird -- tons of people that were in his little thing, he tries to pay them out and that's when it turns into a Ponzi, right; he starts paying them out with new entrants.  It turns into a very classic Ponzi, thinking the person he's lent to, I believe, this is what he said; he believes the person he's lent the money to is going to return him the money eventually, so no biggie.  Well, he's never made whole, so his investors were never made whole, and he starts paying out some of them with new investment funds of people that are waiting.

Peter McCormack: Have you found him?

Danny Knowles: I mean, I've found him.  I can't find him on what he's doing right now.

Junseth: He was trading shitcoins pretty quick after he got out!  But he had a shit ton of coins.  He lost basically everything when the government showed up and took everything from him, and he goes to jail and he spends a few years there.  This has been the story of Bitcoin.  If you did nothing, you got rich!  Again, it goes back to like, "You don't deserve this".  But if you did nothing, you got rich; if you did something, you lost your coins.

Peter McCormack: That's so true!

Junseth: It's kind of a bad message actually, in the grand scheme of things, when you think about an economy.  If you do nothing, you'll get rich; if you do something, then you will give up wealth.

Peter McCormack: Yeah, but that's not true.  To get to that starting point, you've got to do something.

Junseth: You're 100% right.

Peter McCormack: You've got to mine, or you've got to go to work, you've got to expend energy and choose to --

Junseth: Absolutely.  But it's a pretty minimal thing that anyone had to do in the early days to get rich.  I don't that's the case going forward; I don't think that's going to be the case.

Peter McCormack: Yeah, but think about the opposite with the fiat currency world, where we're experiencing now quite high inflation, where you've got to do a lot and you can end up with nothing.  I prefer a world where you can do nothing and end up with more!

Junseth: Yeah, everyone wants that.  That's the millennial dream right there!

Peter McCormack: Yeah, but you look at those two extremes, neither are correct, but there's an ounce of truth in both of them.

Junseth: Yeah, and I think that Bitcoin's early days are not indicative of where it's going to go, I don't think that's necessarily the case.  But it's just interesting to look at the history of Bitcoin.  The number of people who spent time in prison for doing things in Bitcoin that are maybe nefarious, whereas the holders themselves, I mean Mt. Gox is a perfect example.  I don't know how many people are going to be made wealthy when the Gox stuff gets paid out.

Peter McCormack: The forced hodl.

Junseth: Yeah, where they were forced to hold for ten years, eight years; they were forced to hold.  Most of them would not have.  I know that, you know that.

Peter McCormack: Of course not, everyone knows that.

Junseth: Everyone knows that.  So, it doesn't matter what haircut they end up taking, there are going to be so many people made wealthy by accidentally losing their money in Gox in an early bankruptcy, and I don't know that that's a story that's going to be repeated again and again.

Peter McCormack: Do you look back at the early days of Bitcoin fondly?

Junseth: Yeah.  But I look on today's Bitcoin days fondly as well.  I look back on the earliest days of Bitcoin fondly, because I think that there were very few people recording the history.  I feel like I got to be at the centre of it, because there were eight of us, most of us under pseudonyms.  I don't know that even those early guys would know who I was on the forums, or on the Skype comments.

Peter McCormack: Have you ever declared who you were?

Junseth: To some, I've talked to them about it, they're like, "Oh my God, that was you?"  It's not a big secret, it's just early on, I was an anarchist, I thought we were overthrowing the government, and I got to do it in secret.  So, I think there was very few people recording history, I didn't write it town until Bitcoin Uncensored.  We really did do kind of a weekly brief on the history of Bitcoin, which was awesome, because it perfectly encapsulates that time.  

I think we basically got a cycle in, a pump cycle, so that's really an important period, because people can listen to that now every pump cycle, and realise that every single time, it's the same.  It's the same shit every goddam time.  But that was the time when we recorded history, so there's a lot of history that I've lost in my memory.  I'm sure that when you listen to Bitcoin Uncensored, it's very detailed.  But the early years, there just wasn't a lot of people and we were geeks living in our mum's basements, or sitting in our living rooms unmarried, getting broken up with by our girlfriends, who thought we were nutters.  And the history, it was slow.

For us, if we saw an article in any sort of newspaper, anything, a small-town newspaper talked about Bitcoin, we thought that like, "Oh, fuck, the price is going to go, it's going to 10X today!"  It was just every little movement.  It reminds me very much of a parent looking at their child and applauding that they're pooping.  These are the accomplishments of a neonate, this little child, "Oh my God, he pooped on his own, I'm so proud of him".  That was Bitcoin early on; it was, "Oh my God, it just took its first steps" and the things that we thought were big deals were not.

I remember when Bitcoin Magazine came out, Issue number 1, Barnes & Noble put it in some chains, I don't know how many, maybe all of them.  But they put like one copy in, and I guess it's really fairly easy to get distribution there.  I don't think they sold it, I don't think they did that again until -- it's probably there now!  But I remember when Barnes & Noble -- it was like, "This is it.  We're in Barnes & Noble".  You go into Barnes & Noble, there's like 400 magazines on that rack.  Nobody's going to buy it just because it's there. 

But when they got into Barnes & Noble, it was the biggest deal in Bitcoin, it was the biggest news in the world, and that was true of everything, every time an exchange was launched, every time it got a little easier to purchase.  I remember when Circle launched.  Circle, I don't know who they hired, but they inundated Reddit with, "This is the most innovative exchange.  No one's ever seen anything like it.  This is the most exciting thing we've ever seen in Bitcoin", and it was just an exchange.  But I remember even Chris and the other people that were coming to our Meetups, they were hyped about Circle.  I remember saying, "It's going to be just the same, guys.  It's going to be Coinbase, it's going to be the same thing".

Peter McCormack: But were there any moments where you thought, "Okay, this is significant.  This is a significant change".  In my Bitcoin lifetime, El Salvador is a significant thing.  Whether it works out or not will be seen, or how it works out, but that's a significant thing.  What Michael Saylor did is a significant thing.  Tesla coming out and buying $1.5 billion of Bitcoin, that's a significant thing.

Junseth: I find rich people doing rich people things to be completely insignificant in this space.  It's because, when Michael Saylor buys all those coins, he's putting everything on black on maybe a weighted roulette board that generally falls on black, I don't know.  When Elon Musk does that, he's the world's richest person, it's just taking a small portion of his wealth.  It's $1 billion, it's a small portion of his wealth and putting it in.

Rich people make stupid bets all the time, they're idiots.  Mark Cuban is an absolute moron.  He put his money into Voyager, I could have told him what was going to happen with these things.  I'm afraid of Coinbase.  Coinbase gives these loans, and leverage kills eventually if it's unmanaged.  Maybe Coinbase is managing it, but we've just witnessed numerous companies that didn't manage their leverage.  So, I'm uninterested in what rich people do. 

The moments in Bitcoin for me where I have had that "A-ha!" moment have always been when impoverished people, like El Salvador perhaps, but I think El Salvador's a bad example of that even; when impoverished people are forced into a position to use this.  And again, this is Bitcoin Uncensored, we're obsessed with this, "Who needs it?" because this thing is like this new thing we have, it's digital scarcity, what's it good for?  The answer is nothing for me or for you.  You don't need it, you've got Great Britain pounds and you can use US dollars, you're allowed into a bank.

Peter McCormack: Well, this is exactly what we said at the Meetup last night.  There were a bunch of people in there asking different questions and I came out and said, "Us people in this room today are the people who need Bitcoin the least".

Junseth: Yeah, you don't need Bitcoin, I don't need Bitcoin.  But I remember when Backpages --

Peter McCormack: No, I need it; I need it the least.  I still need it.

Junseth: Yeah, well you might need it someday, you don't need it today; you don't need it.

Peter McCormack: But all insurance you buy in advance.

Junseth: Yes, I'm with you, I'm with you on this.  I'm a bitcoiner, I'm with you, I'm fully with you.  But there's people that need it today, they need it, there's no other options.  It's really interesting to me that the governments didn't do a lot of this stuff.  For the history of humanity, we've had all of these very centralised systems that show up and they fuck you.  They're just, "Here's your asshole, here's the cock, and right in there", and they just fuck you, and there's nothing you can do.  There's history and stories of all of this.

So, I don't know, maybe in 1990, if Backpages existed, the government could have shown up and been like, "Okay, turn off the Visa, turn off the Mastercard", and then Backpages would have gone away.  Well, they did that in, what, 2016 or in 2015.  Now, they ultimately had to arrest the people that owned Backpages to get rid of them.  But what did Backpages do?  Backpages switched the day that they took away all of their financial options and just said, "Fine, we'll take Bitcoin".

Wikipedia early on got cut off from their banks, got cut off from PayPal and Mastercard and Visa accounts, everything.

Danny Knowles: You mean WikiLeaks, not Wikipedia?

Junseth: Yes.  Did I say Wikipedia?

Peter McCormack: He meant WikiLeaks.

Junseth: I meant WikiLeaks.  WikiLeaks got cut off from all that and I remember this distinctly.  Bitcoin had just been mentioned on MPR, it had gone from just under $1 to $30 as a result of that mentioning on MPR, that story, and then on the way down at around $15 or $20, WikiLeaks announces that they're going to start taking Bitcoin donations, which infuriated Satoshi.  He was not happy about this.

Peter McCormack: Well, he didn't want the eye on them.

Junseth: Yeah.  But WikiLeaks needed it.  Drug dealers need Bitcoin; I mean, I hate to say it, but they need it.

Peter McCormack: Drug users.

Junseth: Drug users need Bitcoin, they need to get meds, they need to get heroin, whatever it is, from dark markets.  These infrastructures exist all over the world where people need a thing that does what Bitcoin does.  And maybe you don't like what they do, maybe you don't like who they are, but they need it.

Peter McCormack: Or maybe you don't admit publicly you like what they do --

Junseth: Maybe.

Peter McCormack: -- but you secretly engage in the same activity.

Junseth: As long as there are people that need it, this thing that exists that is decentralised, that is essentially oil, value; it's like a container of value.  As long as this thing exists, these people can and will use it, and there's nothing you can do about it.  That to me is the "A-ha!" moment for me.  I don't care what rich people do, but I care about the people all over the world, wherever they are, whether it's North Korea, whether it's Iran, whether it's black people in the ghetto selling drugs, it doesn't matter who it is; there are people that need it and that's something that's really unique.

This isn't an iPhone, this isn't conceptually something that comes out of Steve Jobs' head where he says, "I think people want this and if they don't, I'm going to make them want it"; it's not that.  It's literally unique in all aspects in everything that it does.  It's the first time we've ever been able to contain value digitally in a way that's scarce and yours and not anybody else's, and we didn't know exactly what that would be used for, but now it's obvious.  That's why those "A-ha!" moments for me are when I see the impoverished -- for me, that is moving in the way that Roger Ver cries whenever he's on video talking about kids getting bombed by war.  For me it's very moving similarly to see impoverished people, people that need something, find access to it.  It's incredible, and to me that is the Bitcoin One moment.

The ATMs, I think the Bitcoin ATMs are a great example of the way in which this is -- you see Bitcoin winning at ever Bitcoin ATM.  You go there, you meet the people that are doing it.  These are people that are converting their assets into this digital good, and they're doing it because they think it's better than anything else they have, and they need it.  Before this, they had gold chains that they would buy, or gold necklaces or just gold coins, or whatever, or they'd put it in their teeth.  Now they can hold Bitcoin.

Peter McCormack: So what Bitcoin means to you, is it still fundamentally the same then; has it not changed?

Junseth: Yeah, nothing's changed.  There's nothing interesting here; I mean, this is just value.  Bitcoin's not interesting.  I hate bitcoiners for the most part, because they're absurdly obsessed about the interesting things about Bitcoin.  There's nothing interesting here.  This is the same as it's always been.  Bitcoin is contained digital value; that's it, it does nothing else.  You can be creative, you can span the chain and run a botnet with it maybe, but it's just value, there's nothing interesting.  The thing about it, what it will do is the same thing value has always done, it will move from here to there, that's what it will always do.

Peter McCormack: I'm going to challenge you on that one.

Junseth: Okay, go.

Peter McCormack: I'm just going to bring up one example.  I'm going to say mining has become infinitely more interesting than it was four years ago.

Junseth: Sure, but that's fine.

Peter McCormack: That is interesting.

Junseth: I think mining is going to become part of the national infrastructure, I'm with you there.

Peter McCormack: But it's not even just that.  We had this guy on, Adam Wright, the other day, and he's taking Bitcoin miners to landfill sites, and he's turning methane, which is 86 times worse for the environment than carbon, and he is -- and by the way, these landfill sites, they have to deal with the methane.

Junseth: We have one just north of -- waste management, actually!

Peter McCormack: You can put a miner on there, and you can take the methane, and you can turn it into Bitcoin.  That is interesting, and that is interesting for multiple reasons, because it is this external use case for Bitcoin that wasn't thought about.  I know how I said, "I wonder what Bitcoin can do for the climate --"

Junseth: Well, the question in all cases with Bitcoin mining is, "What is the second best use of the energy?"  So in, for example, waste management up in Fort Lauderdale does the same thing.  They extract the methane and they convert it, I think, to natural gas which they put in their trucks.  So the question is whether that is more or less profitable than putting a miner on that thing, or maybe they have too much gas, so they need to do something with it, I don't know.  They do have a flame running at one of their --

Peter McCormack: But I think the thing is for the bitcoiners, it's not whether the movement of value is interesting, which it is interesting, because at certain times you're opening up a value exchange that people didn't have before, they didn't have access to that value exchange; but it's the consequences of Bitcoin that can be interesting, like what does it mean; what are the implications of everyone holding it?

Junseth: But all of those consequences fall from one truth, which is that this contained digital value.  None of them matter.  Of course mining has other uses, not that it has other uses; mining is very simply the act of generating a random receipt that proves that you burned energy, that's all it is.  It's a global receipt, it's an NFT of energy burnt; that's all it is.  It's a very boring, mundane thing.  But because this random number, which validates against this other number, this nonce, is so hard to generate, because it's random, truly, truly random; because it's so hard to generate, you basically have a global competition for it, it's Charlie and the Chocolate Factory looking for the gold ticket, this global competition for the golden ticket every ten minutes.  And someone finds it.

It's very boring, very mundane, but that's all Bitcoin is; it's contained value.  So, any of these external effects, like the fact that mining is good for attaching to an energy infrastructure, the fact that anything is useful as a result of Bitcoin, comes from the fact that Bitcoin is nothing interesting, it's just contained value; that's it, all things flow from that.

Danny Knowles: I think the show title, "There's nothing interesting about Bitcoin"!

Junseth: Yeah, that's a great show title.  There's nothing interesting about it!  So, yeah, for me it's the same as it's always been.  This is value, and this is the most exciting thing that anyone's ever figured out, is that out of this weird maths equation, this maths problem that we have, where we combine computer science and economics, called The Byzantine generals problem, out of this, the fart of this maths problem is this little thing we call Bitcoin, we didn't know what it was.  Incidentally, it's something that a lot of people have found use, to the tune of Bitcoin being worth $20,000 right now.

Peter McCormack: I mean, I find that pretty interesting!

Junseth: That fact is interesting, but the thing is not; it's mundane, it's a pool noodle, it's not interesting!

Peter McCormack: So, back in the Bitcoin Uncensored days, this was a big part of your life.  What is it now, though?  Is it something you still daily pay attention to, you're thinking about all the time, or has it changed?  You haven't become resentful like some.  You can see the lifecycle of some people; they come in, they stay, they leave and the become resentful, like a Mike Hearn, a Gavin Andresen.

Junseth: Yeah.  Well okay, I've never felt I had anything to do with what we're doing here, ever.  I've never been self-important about Bitcoin, I've never felt like I'm a crucial figure here.  I've always felt tangential, and there's no room for a tangential person to get bitter.  At Bitcoin Uncensored, I felt like John Madden sitting in the booth announcing a football game.  He has no bearing on the outcome of the game, I'm just, "Look at the Core devs.  The Core devs right now are lining up on the field, and they're up against the Dash devs.  Oh, look at that, the Dash devs have been just decimated!  Touchdown, Core devs!"  That's what I felt like for the years that we were doing Bitcoin Uncensored.

So, I've never felt like I had anything to do with this.  And to me, if this thing that we have, which is digital scarcity, matters, then the only one that matters is Bitcoin, and there's a lot of reasons for that.  But it's clear to me that the competition for this space leads to the emergence of a single winner.  And there's a lot of reasons for that.  I don't think today is the, "Why am I a Bitcoin maxi?" episode, but there's a lot of reasons for that.  And once you've decided that, once you've figured that out and you realise that Bitcoin is the only one that matters, I just don't see any room for resentment.

What can I be resentful about?  Not being a billionaire?  I'm not resentful about that, there's plenty of time.  Bitcoin isn't for me, it's for the world.  This is a thing that's important because it's something that's needed.  There's a lot of people that are late to the party, because they didn't see or understand what it was, and those who are late to the party probably still don't understand what they're looking at.  They think it's interesting, like we were talking about; they think it's interesting, and it's not.

We are all sitting here in purgatory waiting for Bitcoin to make us wealthy, all of us, the bitcoiners, the Bitcoin maxis.

Peter McCormack: But are we?

Junseth: No, well I'm not.

Peter McCormack: But I think we start that way.  So, you get in early, you perhaps have your first 5X, 10X, whatever happens, and then you can become addicted to price.  But then I think you start to care less about price.

Junseth: Well, that's the Mr Bean meme.  But even still, I think there's a tendency to sit around and wait.  My life around Bitcoin, I've always loved Bitcoin, I do Bitcoin things, I think about Bitcoin, I think what I think are original thoughts about Bitcoin, whether they are or not.  And all through that time, whether it was Bitcoin uncensored, or whether it's my married life now, or whether in the future it's having kids, or whether it's with my family, whatever the hell it is, I've always tried to live, to make sure that I'm not doing the Bitcoin purgatory thing, and that I'm living my life in such a way that I am able to continue it, and not just wait for Bitcoin to go up in price as the world changes.

It's actually remarkably simple for me.  And like I said, Bitcoin isn't that interesting, so it's not that hard.  And I'm always fascinated by -- oh, I love Angel's Envy -- I'm always fascinated by --

Peter McCormack: We need some ice.

Junseth: Yeah, maybe you do.

Danny Knowles: Shoutout Sahil for the whiskey!

Peter McCormack: Yeah, thank you, Sahil, for the whiskey.

Junseth: I'll pour yours first.

Peter McCormack: Not like last time.

Junseth: There you go.

Danny Knowles: I thought you were going to have to sing.

Peter McCormack: Hey, come on, man, we haven't got any glasses here.

Junseth: This is good enough, the Junseth pour.

Peter McCormack: Having it in a mug!  Cheers.

Junseth: That's how you do it.  This is the Florida way.  I do think that Bitcoin's pretty uninteresting, and I do think that there's a lot of people waiting in purgatory, in conclusion.  The purgatory thing to me is sad, because it's a lot of people waiting around for other people to do work that will make them rich, and I find that to be a valueless life. 

We talked about this last time, how I view work, but I've always tried to avoid getting into a position where I'm waiting for other people to do stuff for me.

Peter McCormack: Maybe I'm different, but I've gone on a different journey with this.

Junseth: You are kind of lazy.

Peter McCormack: Fuck off, man, Jesus!

Junseth: You've done nothing in the last few years!

Peter McCormack: It's been a different journey.  The more I've learned about Bitcoin and money, the less I care about being super-rich anymore, and the more I care about what I do with my time.

Junseth: I actually agree with that in some way.

Peter McCormack: It sounds very virtuous.

Junseth: No, it's not that it's virtuous.  What you realise is that the obsession of money is like an obsession with putting fuel in your car.  People dream of getting to this place where they're living off the fumes of the gas in their engine, I guess like a perpetual motion idea, where the money generates more money and then that money generates more money, and then I'm just rich forever.  I guess there might be a theoretical amount where that's possible.

But when you start realising -- you have to live your life at some point, and you start to realise that there is more to life than just earning dollars.  You have to go on vacation; you have to see people; you have to get married; you have to move on, you have to get to the next stage.  I do feel like Bitcoin has stunted a lot of people in that way.  This was originally a question about resentment though!

Peter McCormack: But I did start that way, and in that first cycle, I made a lot of money, I lost a lot of money.

Junseth: Were you resentful at first?

Peter McCormack: No, because it never felt real.  I was disappointed in myself, but not resentful; I was just disappointed.  I was like, "Oh, I got greedy", whatever --

Junseth: Everyone gets greedy.

Peter McCormack: -- then I was like, "Well, I'm not going to be a trader, so I'll just work and I work my nuts off in this podcast, and Danny as well, and as a team we've just really worked hard.  But it's never really been that much about the money.  Don't get me wrong, it's a business, we want to make money.  But the whole get super-rich thing, we might laugh about it or joke about it, or talk about, "If Bitcoin does this…".  But genuinely, I think what it is, you get exposed to -- once you start to understand how money works, you start to learn how the system fucks so many people.  Then it becomes a little bit more mission driven, "How can this help other people to be less fucked?"

Junseth: Well, that's I think for me too, the guarding against the resentment stuff, because for me Bitcoin has always -- again, I've never felt like I had an actual role.  I've just been a cloudy announcer.  And for me, any participation in this at all has always been about the fact that if this works, we've changed the world, maybe not as significantly as bitcoiners think, but maybe as significantly.  But maybe we've changed the world 2%, maybe we've made it 2% better.  Maybe this is 2% better than the system that exists, I don't know, maybe 10%.  But a 10% leap, I don't think people realise, you have a 10% leap forward in tech, that's astounding.  The compounding effect of that in the future would be ridiculous.

Peter McCormack: Well, you make 10% people's lives better, it's 800 million people.

Junseth: Well, I don't mean 10% of people's lives.  If the system is more efficient 10%...

Peter McCormack: But I'm saying, if you can make 10% of the people's lives better.

Junseth: Yeah.  But in this case, let's say that Bitcoin's 2% better, and you're right, maybe 10% of people, specifically their lives would be better, but let's say that Bitcoin's 2% better.  That's astounding, that's an astounding reality.  And I view Bitcoin as possibly one of those things that could be 2% better than what exists.  And if that's the case, just holding a little bit will make a person phenomenally rich.  That's the VC problem, because VCs are always looking for companies that are going to make an industry 1% or 0.25% better than it is.

Peter McCormack: Well, that's why a16z now cares about a lot of things outside of Bitcoin.

Junseth: Yeah, well they should.

Peter McCormack: They can't make those percentages on Bitcoin, so now it has to be Web3 and DeFi.

Junseth: You know that's not true.

Peter McCormack: I know it is true.

Junseth: Bitcoin could go 10X again and 15X.

Peter McCormack: Yeah, but the only way they can do that is by holding it.  They have to do more than hold, they have to build or invest in people.  And making money in Bitcoin is hard, creating companies that can make good money on top of Bitcoin is hard.

Junseth: It's ridiculously hard; and again, that's the volatility thing.  I don't know exactly what -- again, my vision, my dream is like a play where you have a guy sit his family down and go, "Honey, kids, I've got good news, we're really wealthy, we're to the moon wealthy, you wouldn't even believe it!"

Peter McCormack: "We are fucking rich!"

Junseth: "We are rich.  Honey, quit your jobs tomorrow.  Kids, stop going to school, you're unschooled, now you're playing in the back yard.  That's your life now.  So, congrats guys, we did it, familial wealth, we did it".  And then, scene two is, he brings them together and goes, "Okay, guys, I've got some bad news.  We are impoverished, we have no money, Bitcoin's down, you're going to have to get a job.  Kids, you're going to set up a lemonade stand outside".  Then, scene three is him opening the windows and kind of insouciantly yelling, "Kids, shut the lemonade stand, our Bitcoin's back up!" 

I view this as a cycle of bitcoiners.  It's constant for them.  Bitcoiners do this and they make the same mistakes every cycle, where they're declaring themselves wealthy, and then they become poor, and then they're wealthy again, and then they're poor.  But their level of poverty is always hilarious.  It's like, "I'm rich, I have $0.5 million!"  Then, "I'm rich, I have $3 million!"  Then, "I'm poor, I have $1 million!" and "I'm rich, I have $6 million!"  "Oh, I'm poor, I only have $3 million", and there's this constant rise and fall and rise and fall of levels.

When Bitcoin's down, you're impoverished; when Bitcoin's up, you're rich, and it just resets your levels for the next cycle, or whatever the hell it is that we're living in, I don't know.

Peter McCormack: Danny, are you impoverished right now?

Danny Knowles: I'm feeling pretty impoverished.

Junseth: Everyone feels impoverished in the down market.

Peter McCormack: You don't care about price, I'm pretty zen about it all.

Junseth: Yeah, I don't give a shit, I don't really care!

Peter McCormack: I don't give a shit.

Junseth: I do watch it.  I care a little bit, because I separate it out into my earnings.  I'm like a hooker.  I have my money that I made hooking, that's my Bitcoin money; and then I have the money that I made waiting tables over here.  So, the waiting tables money, I put it into more traditional finance products, and a part of that is GBTC, and I do trade volatility just for fun.  But I feel like that's the money that I earn; that's the stuff I got, that's the stuff I did, which is different from the Bitcoin, which I just feel like I sat down, did nothing with, and it went up.  And I feel very kind of bad about that.  I don't feel guilty; I feel a little guilty about that.

Peter McCormack: You've served your time here in the Bitcoin world, even as a stadium announcer.  You worked and you did your time and you shouldn't feel guilty about that.

Junseth: I don't truly feel like utterly guilty, but it's just funny, because I think when you look back at Bitcoin, you have to acknowledge that a large number of us didn't do much.  The work of the Core devs, the people that are involved, they did a ton.  Even those going forward, the work of the future Core devs, the people that are going to come here later, they're going to do way more than I ever did, and they're going to be able to afford fractions of the Bitcoin that I was able to get, and that's going to be true forever and ever.  And I just think that's interesting.

Maybe just being here early was a giant contribution, but it is interesting to me that the people who are going to make interesting discoveries, the Luke Dashjrs and whatever, the future Luke Dashjrs, are going to do what I would perceive as way more influential things and have access to less of it.

Peter McCormack: But maybe you will support those people?

Junseth: I think that's kind of contingent on the old bitcoiners to do.

Peter McCormack: By the way, we haven't really touched on the DeFi stuff!

Junseth: Oh, we can touch on DeFi!

Peter McCormack: Well, it's an important thing to talk about.  Mine's a Bitcoin show, but I have plenty of people listen to it who are crypto people as well.

Junseth: Well, DeFi's important, because this cycle, it's been basically the catalyst for the downfall of the price for every instrument here, whether it's Ethereum or Bitcoin or Cardano, or whatever; DeFi's the thing that's led the way for the price destruction.

Peter McCormack: Yeah, well there's something every cycle.  I think that's the memory of this cycle, is going to be the DeFi contagion; the previous one would have been the ICO hell; what was previous to that?

Junseth: Let's see.  ICOs; Mt. Gox crash, that's the big one there.  What scams were run then?  Oh, there were a lot of token scams, it was token scams again.

Peter McCormack: Was it Colored Coins; were they scams?

Junseth: They didn't call them Colored Coins, but in that cycle there were a bunch of projects: Storj and other types of projects like that, where everything was --

Peter McCormack: Put everything on a blockchain.

Junseth: Yes, everything on a blockchain, everything had to be on a blockchain.  It was "blockchain my business" era.  I think Don Tapscott showed up and a bunch of others, it was the books.  Then before that, maybe it was Mt. Gox.  Yeah, because the $20,000 rise, that was the era of the gurus too, or it was $1,000, I don't remember, but the era of the gurus.  But basically, blockchain my business.

Early on, all of the price destruction was pretty much led by collapsing exchanges, so you had Cryptsy and Mt. Gox and stuff like that, always, it was halted because an exchange would collapse.  And it's interesting this time, because it's not so much -- this time, the price collapse is a leading indicator of exchange collapses, which is a little different than the last times.  This time, the price collapse caused the exchange collapses.

Peter McCormack: Well, have we had any exchange collapse in this cycle?

Junseth: Voyager, Celsius.

Peter McCormack: Do you consider those exchanges?  I don't consider them exchanges.

Junseth: I guess.  I mean, they're different from Coinbase, but they're exchanges; BlockFi.  These are exchange-like, they're at least tangential to.  But I think Voyager was an exchange, wasn't it?

Peter McCormack: I consider them -- I mean, I can't think of a name for them, but they're borrowing and lending services.  I consider them financial services.

Junseth: But Coinbase borrows and lends, right?  I thought you could buy and sell on Voyager as well.

Peter McCormack: I guess what it is is the primary product on Coinbase is to exchange and you can borrow and lend; and I think --

Junseth: Voyager, the primary product was to borrow and lend, and then you could also buy.

Peter McCormack: Look, I know some of these services aren't popular.  I know, because one of my sponsors is BlockFi, and I get criticised a lot for having them as a sponsor.

Junseth: That first tweet, when I heard you advertise them, I was like, "You're going to regret that one"!

Peter McCormack: I mean, we can talk about that.

Junseth: Yeah, that's fine, we should.

Peter McCormack: I've taken a lot of criticism for it, and recently people have been questioning, why have I not got rid of them as a sponsor; and, what's my opinion on it?  I've always been very clear, I use their services, so I use their borrowing service, no, their lending service; which one do I use?

Danny Knowles: Lending.

Peter McCormack: Lending.

Junseth: You lend.

Peter McCormack: Yeah, I lend and get an interest payment back.  I would use their borrowing.  Unfortunately, it's not set up in the right way for me.  But if I was to buy a house and I had enough Bitcoin to be able to borrow against that to pay a mortgage, again I would consider something like that.  My service with them hasn't been interrupted in any way at all, and I'd actually use their card, but their card isn't available in the UK.  But they've never paused withdrawals.

Junseth: No, they didn't.

Peter McCormack: Never had their funds withheld.

Junseth: They've been the most legitimate.  I'm glad Sam Bankman-Fried --

Peter McCormack: Well, Ledn as well.

Junseth: Yeah, SBF, Sam Bankman-Fried stepped in and basically made them solvent.

Peter McCormack: Actually, their interest rate dropped heavily.  People are like, "Well, why would you use them, their interest rates are so low?  You can get 5% here, 6% there".  The reason you got low interest rates is they didn't do any exotic weird shit, they didn't wrap your Bitcoin.  They made their interest by lending the Bitcoin out to other people.

Junseth: BlockFi's been screwed twice in this recent downfall.  I think they've probably learned a lot, but before that, their interest was heavily contingent on the GBTC premium.  I think that as I see these crypto cycles happen, and these companies that are offering traditional products, you can get a credit line against your equities as a priority credit line, get it from Wells Fargo, Fidelity.  There's all sorts of companies that offer these.  If you're giving -- it's a legitimate product, credit line, and you need to be compensated interest-wise.  But this is a legitimate product.

So, as these companies fail, as they make mistakes, as they watch their competitors fail, I think it becomes very clear where the risks are, and it makes them resilient.  So, I could see a company like BlockFi coming out of this with an enormous understanding of where they failed, and the possibility of actually making a much more robust lending product and other such.

Peter McCormack: Well, we got more robust exchanges after Mt. Gox, and it might even not be BlockFi, it might be somebody else.

Junseth: It might be Nasdaq that launches.  I mean, these products, what is it?  NYDIG has a lending product.  I don't love a lot of the terms of these lending products.  Coinbase has a lending product.  These lending products I think are dangerous, only because of the volatility of Bitcoin, but I don't think they always have to be.  And I do like the experiment that we're allowed to do on this.  As well, I think people have got to recognise, I think you have to figure out the CeFi stuff, the centralised finance stuff, before we move into the era of DeFi.  You have to figure out where CeFi plugs into Bitcoin very specifically.  And is Bitcoin gold?  If it is then, yeah, lending against it is a great idea.

Peter McCormack: But I do want to reiterate that point, because I've taken a lot of punches on Twitter for it and, "Why would you have them as a sponsor?"  Why would I not?  I use their products, I like their products.  You might not, you might think they're bad for people, and you should tell people what you think.  But I use it, so why would I not have it as a sponsor, I'm okay with that.  I rejected Celsius.  I actually met Mashinsky in Hong Kong, I met him in Hong Kong.  He asked to buy out, he wanted to outbid BlockFi, and I refused to work with him, I knew their product was shit.  I'm not sure if I should be saying this, but whatever.  But the point is, BlockFi is a product I use and I would use them if they weren't a sponsor, so where is my moral requirement; where is my ethical boundary?

Junseth: Yeah.  I tend to say, "Do all things with irony".  I think it's a very hard thing.  I think people need to shut the fuck up, because taking money is a problematic thing to do in all cases for a journalist, always, especially when it's a small team, like you know where the money comes from.  There's not a back office that does the sales of the ads, and then the front office that has no idea what those ads are.  You know all of your sponsors.

Peter McCormack: I know all the sponsors I've turned down as well.

Junseth: Yeah, of course.  But the point is, it really does make it so that there is, sure, absolutely a bias.  But I think that if you're putting yourself in a position, like let's say you're advertising things; I get mad at people like Ben Shapiro.  I don't know how many mattresses he's advertised as being his favourite mattress.  I think to myself, "Does that guy have 14 mattresses stacked on each other?"  He's got the Helix and the Casper, and they're stacking on top of each other!

Peter McCormack: He's got a pea at the bottom!

Junseth: Yeah, each one's his favourite mattress.  I am really turned off by that kind of advertising.  I think the fact that you're advertising stuff that you're in, it doesn't validate it for me, but I think that people in this space really need to understand that there is a conflict.  And I think about this like investments.  When I'm putting money into something in this space, I don't do very many individual investments, but when I do, I feel very reluctant to talk about them, because I don't know if eventually it might blow up.  And I don't like the idea of getting people into this thing that I'm putting money into, getting people to use it, based on my name or anything like that, or my level of trust.  I don't know if I have any.

But I do very strongly want to guard the little credibility I have in that way, and so I've been very careful about talking about that stuff.  But a podcast is very different.  And when you run a podcast, I think you're taking money from people, and it can be a little hard to criticise them.  I think you do a pretty good job of willingly taking the criticism.

Peter McCormack: Yeah, look, there is certainly a conflict.  I am taking product; can I be openly critical about these companies?  And then it's like, "What is my role in this?"  Is my role a journalist or an interviewer.  If I'm a journalist, should I be investigating these companies?  Well, I'm not investigating Celsius or Voyager; I have people on and have interviews.  Will I talk about my relationship with BlockFi?  Sure, I'm happy to talk about it, and they've sponsored the show for plus three years now.

We take our sponsors very seriously.  I talk through them with Danny.  One of our sponsors is a Bitcoin casino.  We talked about this and said, "Should we be doing this?  What about if people lose money on that?"  Well, I go to Vegas, I lose money all the time.  These aren't scams, they operate within the law, but they are things where you have to understand the trade-offs and the risks, because you want to have a gamble.  I think everybody who gambles knows there's a risk of losing, and I think most people these days know with something like BlockFi, you're handing over your private keys and there's a risk.

Junseth: I'll tell you what I dislike about BlockFi.  Again, it's in the same space as everything else in Bitcoin.  I do not think they are compensating you appropriately for the risk that you are taking on, and I think this market is proving it.  I don't know what they're giving now; 3% a year?

Peter McCormack: It depends on how much you hold, but yeah, let's say it is that.

Junseth: And yet, two weeks ago, they had to be bailed out and nearly went bankrupt.

Peter McCormack: Yeah, but they weren't in a situation where they might have gone bankrupt and not been able to return funds.  Their risk was a run on the bank and what does he call it?  It's to do with the time difference they've got your Bitcoin that they hold and the Bitcoin they lend out.

Junseth: Yeah, so they can't call all the loans in and they can't pay you, yeah.  That makes sense.  It's an inventory problem.

Peter McCormack: Yeah, an inventory problem and a liquidity problem, but it's not a problem where they've lost your funds, which appears to be the case with Celsius.  It appears to be the case there's actually a black hole, and it doesn't appear to be the case --

Junseth: That's right, that's why they were able to find a buyer.  Sam Bankman-Fried stepped in and he's like, "Well, it looks like these books balance".  I'm sure Celsius' books do not balance.

Peter McCormack: And how much stress on the BlockFi system came from the contagion of other things, and maybe they do come out of this stronger and we get stronger products from that.  My view on it is that these are optional products, no one forces you to use them and the risks are there and you should and could be aware of them.  I mean, we don't even advertise their yield at the moment, but it is a tricky one.  I mean, I have thought about this, I've thought about it a lot, "What is our responsibility here with every one of our sponsors?  How much responsibility do we have?"  We wrestle with it.  Me and Danny talk about it a lot.

Junseth: I never wrestled with it.  With Bitcoin Uncensored, the reason we never took any money was because we then never had to wrestle with that question.  And the reason we never wanted to wrestle with that question is this exact same issue.  You've got to wrestle with it; we never did.  We also didn't make any money on Bitcoin Uncensored; that's the thing!  It was never profitable, we just did it because it was fun.

Peter McCormack: Well, we did, but we have seven employees.

Junseth: You have a whole operation.  We had nothing.  It was Chris and me and just fucking having fun; it was just a blast!  And that's what I loved about it, it was really fun to just do it.  But it was also tedious and arduous and there was never any money.  It was us just making content and just having fun.  And I do think that that is the difference.  If you're running this as a business, it's a little different.  We were able to do something that was a little bit more artistic, a little bit more journalistic, confusing to everybody, but sort of post-modern journalism, and I think it's very difficult for anybody else to do that.  It's an era, it's a different type of thing and I think nowadays, people are here to -- they're building something a little different than we were.

Peter McCormack: Well, that's another thing people have said, "Well, why don't you charge for the content; why don't you do that instead?"

Junseth: Nobody buys content.

Peter McCormack: Nobody does.

Junseth: I've been in content forever.  No one buys content, it's not fair to ask, it's never fair to ask.

Peter McCormack: Do you remember when we did?  How many subscribers did we have for our content?

Danny Knowles: On Patreon?

Peter McCormack: No, not on Patreon.  You know when we had that email list of people who paid.  12?!

Danny Knowles: Oh, yeah, I think maybe 14 was our top.

Peter McCormack: 14 and $60 a year.

Danny Knowles: Yeah, and of them, some of them were sponsors who had bought it anyway.

Peter McCormack: Yeah, so 14 at $60 a year, so what's that?  $840.

Junseth: People don't buy content.  And that might change in the future, but people just don't.  It's a very difficult pitch to make people buy content.

Peter McCormack: Yeah, very difficult.  I subscribe to some content.  There's a couple of podcasts I subscribe to.  I don't know how well they do, but people won't subscribe to content.  So, the only model is the advertising model, and then what are the rules?  We have a very -- I say "we", I'm not going to put this on Danny, they're my rules.  My rules are, "Are you a Bitcoin company, or do you have a Bitcoin product?  If you have a Bitcoin product, okay, you're considered".  And the second one, "Will I use it, or am I using it?  So, if you've got a Bitcoin product and I do or will use it, then I'm happy for you to be a sponsor".

I use BlockFi, I use Gemini, I use Casa.  If you go through our list of sponsors, I literally use all of them.  So, it's very hard for me to say, why would I not accept their sponsorship revenue for a product I would use?  Now, I've turned down stuff that I won't use or wouldn't use or don't use, and that's fine.  We've turned down a lot.

Junseth: We should talk about that, because I think that ties into the DeFi.  I think that was what was interesting to me in this cycle, in this growth.  Now we're in crypto winter, this is a time to reflect, a time to think back on the last year or few months, and I think what was interesting to me was the number of bitcoiners that I watched get sucked into things that they know are bullshit.  The NFT stuff, for example.  I have story after story after story of bitcoiners who came up to people, or me, or others and were like, "I have some NFTs and I love them".  And you're just sitting there, like programmers, people that know what these things are.  They're literally receipts.

I would say to everybody, "If you want to buy NFTs, I don't care.  I don't find them to be scammy, I find them to be Beanie Babies, they're just collectibles and you're buying a receipt, that's it".  It's a very dumb purchase, but right now for some reason there's prestige coming with it, so do it with irony, go forth.  But there's a lot of bitcoiners that were buying NFTs.

I think similarly, there were a lot of bitcoiners that were enticed by the DeFi pitches.  Like Novogratz, he's not a bitcoiner.  Novogratz has always had a love for Ethereum.  I think it's because he was brought into this space by Joe Lubin, but he's always had a love for Ethereum and Ethereum-type products.  He got a tattoo, a goddam tattoo of LUNA!

Peter McCormack: He's got a lot of tattoos now. 

Junseth: Yeah, well he's got to cover it up, he's got to distract from the LUNA tattoo he has!  So, he got a tattoo of a LUNA; it's a wolf howling at the moon, and I would get something like that, but he was not the only one who got enticed.  I saw bitcoiners left and right.  I knew a guy up in Boca, insane set of text messages.  I messaged him the day that LUNA de-pegged, and I'll call him John.  I go, "John, are you still in DeFi?" because I'd been having dinners with John for months.  And John had been telling me all of the DeFi shit he was in, and I was saying to him every time, "You're going to lose all your money.  This is hot potato, you don't know when the music's going to stop.  It's over, you've got to get out.  It's good now, get the fuck out".  "It's a long way's off".  We'd have this discussion, it's always a long way's off.

Nobody knows when the market's going to explode, and no one ever knows when it's going to collapse.  And when it collapses, it collapses quick; when it explodes, it explodes quick, it happens all the time here in this industry, and I've witnessed it.  I thought I had more time to buy $7 Bitcoin, then all of a sudden it was $800.  So, I asked him, I said, "Do you have some DeFi?"  He messaged me back, "Oh, nothing, not too much, just the safe stuff like LUNA and a few others".  And I'm like, "I guess he feels comfortable in these things, even though LUNA's clearly de-pegging.  Weird".

A week or two goes by, I don't see him, I message him back, "Hey, what's going on?"  He messaged me back, he says, "I've lost huge amounts, I lost everything.  I was on vacation, I hadn't been watching the prices, I didn't know LUNA was de-pegging", and this happened to a lot of people, this kind of thing.  People were really very comfortable sitting in their DeFi, not because they knew it wouldn't collapse, but because they really thought that it had been up for months, up for months, and this will not be the day.

Peter McCormack: This will not be the day.

Junseth: This will not be the day.

Peter McCormack: We've got one more day.

Junseth: It's not going to be the day.  I'm going to go on vacation.  It won't be this week, I'm on vacation, I'll come back next week, maybe it will be next week.  That's the week it collapses.  And they don't realise how quickly it collapses.  BitcoinTINA tells me this joke.  A guy goes into his stockbroker and he's like, "Oh my God", and there's this thinly-traded stock and he goes, "I want to buy this", and he buys it and the stock price goes up $30.  He's like, "Oh my God, I've made so much money, I want to buy more".  So he buys more, and the price goes up $60.  He's like, "Oh my God, I'm so rich, I want to buy more".  He buys it and it goes up another $30.  He's like, "Oh my God, this is crazy, sell it, sell it all" and his stockbroker looks at him and says, "Sell to whom?"

I think that's where everyone got caught, is they didn't realise they were playing merry-go-round, they were playing some sort of Ponzi game, and it ends at some point.  And they don't know, you never know when that's going to happen, and when it does, it's quick.

Peter McCormack: But also sometimes you think it's a dip and it's going to come back.

Junseth: You convince yourself of that.  That's bargaining.

Peter McCormack: Back in 2017, when I first got in, I traded at $32,000, I was up over $1 million in Bitcoin and various other shitcoins.  And I remember, I went to this place called Center Parcs.  It's a place in the UK, you go with your family, and it's a bunch of cabins and a water park and activities.  It's great.  I went with my kids and my dad, and we're sat there, me and my dad one night, having a drink and talking about how well it's gone. 

My dad said, "Do you know what you should do?"  He said, "You have over $1 million here.  Just take out a half.  You can go buy two or three houses, and that's your retirement and that's it, you're done".  I was like, "Do you know what, that's a good idea".  He's like, "You should do it".  I was like, "All right, when I get back I'll do it".  Anyway, it gets back to January and I don't do it.  And whatever the date was in January, it drops.  And there was like a 30% dip, I think, I can't remember exactly.  I was like, "I'll wait for the bounce and I'll do it", and the bounce never comes and it just slowly, slowly goes all the way down.

Junseth: This is the story of everybody in Bitcoin.

Peter McCormack: Yeah, I know.

Junseth: I was talking to people when Bitcoin was at $60,000.  They're like, "I'm waiting for better prices, I'm going to sell".  They waited until Bitcoin was at better prices; $20,000.  Better prices for me to buy it from them!

Peter McCormack: But do you know what, this is the point now.  This is why I don't care about price so much, because what I'd done in my head is I'd spent the money in my head, "That money now enables this.  I can do XYZ".  I don't do that anymore.  I have an income, this podcast, I have an income and that pays for my mortgage and my kids to go on holiday and do my shopping.  And do you know what, very occasionally when I want to do something a little bit different, like get my dad a car, sold a little bit of Bitcoin.

Junseth: Do you remember the Dogecoin millionaire?

Peter McCormack: Oh, man, yeah.

Junseth: So, he just did a video call, "I regret everything".

Peter McCormack: Yeah, I bet he does.

Junseth: And he talks about, "If I did it again…", he talks about his commitment to the community, and commitment to it going to a dollar.  First of all, I have critiques of this ideology of, "I'm going to hodl until it goes to $1".  Dogecoin's a shitcoin, it has no use, stop.  Tim Pool, stop talking about it as a dollar alternative and Bitcoin as the same.

Peter McCormack: Is that what Tim Pool's talking about?

Junseth: When Doge was rising, Tim Pool was saying that Doge was going to be the daily transactional currency and Bitcoin would be the savings.  I was like, you know, I heard that from him, I started hearing that rhetoric from others, and the Dogecoin millionaire was in a similar boat, and people talking about Doge to a dollar.  It's interesting to me, because if everyone's waiting for Doge to a dollar, I just ask you, "What happens at $1?"

Peter McCormack: Well, it's not reached it.

Junseth: Well, let's say it hits a dollar, what happens then?

Peter McCormack: Everyone sells.

Junseth: Everyone sells, everyone knows we're going Doge to a dollar.  It's like an orchestrated pump.

Peter McCormack: You should probably sell at 70 cents.

Junseth: Yeah, exactly!  When Doge hits 70 cents, you should be, "Well, everyone else is going to sell at $1, I'll front run that.  I'll buy it back at 30 cents, whatever".  But he held it and he felt like it was a responsibility of his.  And he talks about it like, "Well, if I did it again, I'd probably sell 1 million and hold on to 2 million", and he'd have $1 million cash, or he'd probably put it back into Doge, but he'd have a lot more Doge now.

But I think that people don't realise that that is an option, that you can take some off the table.  And it's okay to do things like buy a house or buy a car, buy the things that you need.  Live your fucking life, stop being in purgatory.  The purgatorial idea that I get with bitcoiners, like they're sitting in Clubhouse, they're sitting in other places, they're looking at content, they're fucking in purgatory waiting for the price to do up.  The problem with that is, you never know.  You don't have a number in your head as to when it's okay to walk into Heaven.

Peter McCormack: That's why I don't ever have a number anymore.

Junseth: I'm with you.

Peter McCormack: The Bitcoin I have sits there, and very occasionally I did into it.

Junseth: When you need it!

Peter McCormack: No, I don't need it.  There are things I want and Bitcoin will only ever be for things I want in life, or a rainy-day fund.  Say this goes to shit, I get cancer, whatever, okay, I'm going to have to make some tough decisions in life, hopefully that doesn't happen.  Therefore, it's only ever there for the wants.  My needs are covered by my salary: my mortgage, my holidays, my kids' needs, that's all covered.  But there are times when I want something, like I wanted to get my dad a car.  So, I sold some Bitcoin and I bought my dad a car. 

Junseth: Nice.

Peter McCormack: Next summer, I might go, "Do you know what, I want to take my kids on a safari holiday of a lifetime.  I can't afford it with my salary, I'll sell a bit of Bitcoin".

Junseth: Well notably, you sold the Bitcoin, how much was Bitcoin when you sold it?

Peter McCormack: What, for my dad's car?

Junseth: For your dad's car.

Peter McCormack: That was a decent price, wasn't it, if you think historically now?

Junseth: What's interesting to me is for every story of a Rasa, where he sold Bitcoin to buy a car, and that car would now be $2 billion, or something like that --

Peter McCormack: Well, I sold half a Bitcoin to buy my son a car, and that car was £20,000.  So, whenever £40,000 was, I sold half a Bitcoin.  And for my dad, that wasn't long before that.  So both of those, near high prices.

Junseth: So, there's an equal number of stories of people who bought Bitcoin and sold at higher prices when they bought their car, and that car, they've made money on that.

Peter McCormack: That car's a store of value.

Junseth: Yeah, and they can buy the Bitcoin back.  It's very interesting to me that these things happen.  This is why I advocate people living their lives, and taking a little off the table as things go up.  Just put it into fiat alternatives, put it into the total stock market.  I'm a strong believer that as the economy of Bitcoin develops, we're going to see more and more Bitcoin companies do things like enter the stock market, enter the traditional financial markets.  Fidelity will soon expose itself to Bitcoin; Vanguard will have Bitcoin exposure; all of these companies will have Bitcoin exposure.  I don't think Vanguard is a public company, but Fidelity -- I don't think they are either, but a lot of these companies will have Bitcoin exposure, whether it's MSTR, whether it's Tesla, whether it's whatever company, Walmart, I don't know.

So, as that happens, Bitcoin starts to get integrated into the global economy very naturally and starts to reflect in market returns, and I can't wait for that day; I think that's a really amazing day to come.  But to me, it's just a very slow process, and I think that's where Bitcoin will go, is very integrated into the economy every day.  And that's probably also where Bitcoin levels out and flattens and stops with this ridiculous volatility.

Peter McCormack: Well, that would be a good day, I think.

Junseth: Wouldn't it?

Peter McCormack: Well, like I say, I'm at that point where I don't really care about price too much anymore.  I don't want my Bitcoin to capitulate and be worth nothing, but I'm happy where I'm at.

Junseth: I think you're at this place, but I think we both don't think that it's a possibility that it will be worth nothing.

Peter McCormack: Yeah, but what I mean is, now I care about the use case of Bitcoin, and a more stable Bitcoin makes it become more usable for people around the world, the people you talked about who need it.  And for me, the closer we get to that point, the better.  Sadly, I don't think we will be there.  I'm just wondering what is the next bull cycle crazy shit that's going to tear everybody up.

Junseth: I think they've cued it right up.  I think metaverse is probably coming.

Peter McCormack: The metaverse collapse!

Junseth: Metaverse obsession.

Peter McCormack: The metaverse doesn't exist.

Junseth: It doesn't exist.  They're going to try though, they're going to push it.  I think I was reading, I don't know how true this is, but I was reading on Reddit r/Ethereum, and they were saying that I guess Polygon has been included in some Disney programme.

Peter McCormack: Oh, was that not a troll?

Junseth: It might be a troll, I wouldn't be surprised.

Peter McCormack: Are you on about that it was like some kind of Accelerator programme?

Junseth: Yeah, that was the claim.  It might be a troll, a complete lie.

Peter McCormack: I thought that was a joke.

Junseth: It might be a complete joke, might be a complete lie.  But that's the sort of thing that we're going to start seeing in the next cycle, is this metaverse application, all the metaverse applications going nuts.  I don't even understand what it would mean to have Polygon in an Accelerator programme, it doesn’t make sense.

Danny Knowles: A lot of people are reporting on it, I don't know if it's true.

Peter McCormack: I mean, I assumed it was a joke.

Junseth: I don't know what it means.  Polygon is a decentralised product.  Do they have a specific team; is it a company?

Danny Knowles: Here you go, I'll pull it up.

Junseth: Look at that.

Peter McCormack: "MATIC Surges as Disney Chooses Polygon for Accelerator Program: the Ethereum scaling too is one of six companies selected by the media and entertainment giant to be a part of its programme to develop AR, NFT and AI experiences", etc, bollocks.

Danny Knowles: It sounds real though.

Junseth: Well, it's on CoinDesk!

Peter McCormack: Must be real!  Yeah, I don't know.

Junseth: But that to me is coming.  I wouldn't be surprised if that just kind of -- it seems like they're cuing that up, they're putting the little ball on the tee and getting ready to drive that.  That'll be as dumb as every other one.  It will involve a combination of every other scam we've seen before in the space.  This is like a stew.  Every single time we pump, the witches get there and they just brew the next one, they just add another thing to it.  So, this will add metaverse to the previous scams.  It will be an ICO, plus --

Peter McCormack: NFT.

Junseth: -- NFT, plus metaverse, plus whatever fucking scams have come before.  And it's a little enervating, but it's also very funny to me, because you know as well as I do that this next cycle's going to be filled with people that come in, tell us that we're stupid, that we don't see the innovation --

Peter McCormack: We're not open-minded.

Junseth: -- we're not open-minded, they're the ones that see the innovation.

Peter McCormack: We're boomers.

Junseth: We're boomers, which is always ironic, because I'll be accused every time these pump of not being the one to see the innovation.  Meanwhile I'm like, "You guys made fun of me when I was playing with Bitcoin early on.  You guys missed the innovation".  People that come later to these pumps, they're not the innovators, they're not people that saw innovation early on in this space, and that's super-interesting to me.

Peter McCormack: Let's go to art bars and hang out with them.

Junseth: Yeah, gladly.  They're interesting people.  The artists that showed up to this space really was to me very interesting.

Peter McCormack: I find it hard to criticise them, even though I criticise the technology.  When an artist comes along and somehow is able to forge a career and actually be able to create more art, I'm like, "Well, fuck it, go on then".

Junseth: What's funny is, I don't mind that.  NFTs for me were interesting, because to me it was just literally prestige; that's what people were buying.  I get it, fine.  Damien Hirst seemed to know that right away.  Damien Hirst I think made a lot of money playing the game, doing what Damien Hirst does, and knowing that these are such worthless receipts.  Other artists I think made some money, and anticipated that the NFT revolution was going to be something that would carry them on to the future, not the pump-and-dump cycle that it was.

I think the people that come out best from the NFTs are people like Gary Vaynerchuk.  They're not artists, they're not interesting, and they saw it exactly for what it was, and they got here and they did it with all the irony, and they understood that this was a short-lived, very quick cash grab.

Peter McCormack: Those fucking drawings he was selling!

Junseth: Yeah, squigglies!

Peter McCormack: Find his drawings.

Junseth: Yeah, we've got to talk about them, show them; they're so funny.

Peter McCormack: Okay, listen, you probably don't know this, I collect sneakers, we call them trainers.

Junseth: Oh, yeah, that doesn't surprise me.

Peter McCormack: I collect rare pairs, I've got like 200 of them.

Junseth: Rare Pepes?

Peter McCormack: Rare pairs.  I've got like Dunk Londons, where there's only like 200 --

Junseth: Dunk Londons?!

Peter McCormack: Dude, these trainers, they only made 202 of them.  I bought them 15 years ago.  But it's almost an addiction buying them.

Junseth: There's a lot of bitcoiners that collect sneakers.  I've learned this in this space.

Peter McCormack: But fundamentally, I know I can wear them, but I don't wear them, because that destroys the value.  So fundamentally, what's the difference between that and an NFT?

Junseth: There isn't.  That's why I've always said collectibles are not scams, collectibles are collectibles.

Peter McCormack: Yeah.

Junseth: And if you want to collect receipts…  The thing about collectibles is they have their time in the sun, I've seen this numerous times.  This is why I think the tulip bubble is the most uninteresting bubble to compare anything else after it to, because the tulip bubble fundamentally is a collectibles bubble, it's not an economics bubble.  Fundamentally it was about collecting individual types of tulip, Augustus Semper, for example.  And I don't even know if there's enough evidence that it even existed, but that was fundamentally what the tulip bubble was about, was collecting.  So, it was a collectors' bubble, if it existed.

I don't think that you get any economic lessons from collecting prestige items, I don't think there's anything there.  Maybe there's a solution to why markets bubble and collapse maybe, but there's no information there.  So, when the NFT stuff happened I was like, whatever.  There's nothing different between my Beanie Baby collection, your sneaker collection --

Peter McCormack: Have you got a Beanie Baby collection?

Junseth: Oh, fuck yeah.  Go look it up in the Financial Times, you can bring it up.

Peter McCormack: You've actually got it?

Junseth: Yeah, I've got a nice Beanie --

Danny Knowles: What do I need to search in the Financial Times?

Junseth: "Junseth Financial Times Beanie Babies", probably just "Financial Times Beanie Babies", it's not like they write about them often.

Peter McCormack: Do they still have value; do people still collect them?

Junseth: To me?

Peter McCormack: No, do people still collect them?

Junseth: Yeah, people do.  There's a very small community of us.

Peter McCormack: Do you have any particularly rare ones that are highly valued?

Junseth: I have them all.

Peter McCormack: What do you mean, you have them all?

Junseth: I may have all the rare ones.  I have Humphrey the Camel, you've got the royal blue Elephant, Digger the Orange Crab, Lizzie the Tie Dye Lizard.

Danny Knowles: Is this the Gary Vee stuff, I've got no idea about this?

Peter McCormack: What's that?

Junseth: That looks very Gary Vee-ish.  They might have been dumber than that.  Those are too well-drawn to be Gary Vee drawings.

Danny Knowles: It's called Veefriends.

Peter McCormack: So, that's essentially $12,000?

Junseth: Yeah.

Peter McCormack: What is that, is that a cow?

Junseth: Well, it's probably been listed there since ETH was $3,000.

Peter McCormack: But people buy these, yeah?

Junseth: Yeah, Gary Vee literally listed these things.

Danny Knowles: Crazy.

Junseth: And I think these are the Gary -- these look very Gary Vee-ish.  Some of them look very complicated.

Peter McCormack: They look like drawings either a child does, or somebody on drugs.

Junseth: Yeah, Gary Vee!

Peter McCormack: We had him on the show once.

Danny Knowles: Twice.

Peter McCormack: Twice.

Junseth: I knew him, he used to go to a lot of the conferences I was at, and this is before he was really famous.  He was doing the Wine Show back then.

Peter McCormack: Oh yeah, the Wine Show was cool.

Junseth: Yeah, it was great.

Peter McCormack: Fair play doing that.

Junseth: He's turned into a Tony Robbins-ish kind of guy, it's kind of weird. 

Peter McCormack: "Do not give you kids pocket money, they will never learn the value of money!"

Junseth: Are you trying to do an impression, because you sound like an English guy! 

Peter McCormack: Well, I am English.

Junseth: There you go, that's a lot of my Beanies right there. 

Peter McCormack: Oh my God!

Junseth: Yeah, that's Rex, Bronty, Steg, Waddle.

Danny Knowles: How many do you have?

Junseth: Oh, many more than that.  A lot of these are not necessarily rare.  I buy them in lots and I get about five to ten emails a day, people asking me to help value their collections, of which I rarely see anything valuable.  It's very interesting.

Danny Knowles: I like the last line of this article.

Junseth: "Josh is now a collector of --"  Yeah, it's a little denigrated!  But yeah, it's interesting to me, because I don't think there's anything wrong with collecting.  I think that NFTs were fine, I think they're collecting in general.  It's just a kind of interesting thing to do.  And generally when collectibles have their time in the sun, you're just buying prestige.

I remember when Bitcoin -- not Bitcoin, when Beanie Babies, to me they're the same, when Beanie Babies were being collected by people.  People would go and they would say things like, "I have Humphrey the Camel, it's an early 1993, one of the first few sets and this thing, it's worth $800 today.  By the time you're in college, it will probably pay for your college", and I remember people saying that very seriously. 

For me, the reason I collect them is as this very important reminder to myself that none of this shit is valuable, none of it; nothing's valuable.  Prestige is temporary.  When the NFT stuff happened, I watched it and I was like, "This is temporary, it has to be, because his is just a prestige buy".

Peter McCormack: Well, I hope it isn't with sneakers.  I actually have no one to share that.

Junseth: The sneakers?

Peter McCormack: Yeah, because I don't know anyone else who collects them.

Junseth: Well, here's how you can know whether something's a prestige buy.  The people that are making the product, are they taking in exchange for the production of the product money; or are they taking the product, the past production of the product in exchange?

Peter McCormack: I don't understand the question, sorry.

Junseth: Can I buy a Beanie Baby with another Beanie Baby, or do you want money for it?  If the company wants money, then it's very likely that they think the money is more valuable than the Beanie Baby.

Peter McCormack: But we're talking about Nike.

Junseth: Yes, Nike wants money.

Peter McCormack: Yeah, but they don't want the sneakers.

Junseth: Of course not.  But that's what I'm saying.  Sneakers' collectability, they make literal collectable sneakers, right?

Peter McCormack: Yeah.

Junseth: People at Nike are probably collecting those.  Ty Warner didn't want more Beanie Babies.  He wasn't like, "Beanie Babies are inherently valuable, I'm Ty Warner, give me all of the Humphrey Camels in the world, and I'm going to pay for every kid's college in the future".  No, he was like, "Give me the cash, it's $6, I'll take it, please".

Peter McCormack: I think for Nike, there's a couple of things going on here.  Firstly, they've realised that by releasing something that's rare, there's a demand, but they don't tend to release things -- you're still, if you're a first-round buyer, you're still paying $100, $150 a pair.  They're not releasing rare ones and charging thousands of dollars.  But for them, there's a brand thing going on.

Junseth: But also, there's collectibles, there are people that are wanting those things.  The same thing with Lamborghini.  If you look at the Lamborghini profits, like look at the Lamborghini profits, that's the most astounding thing about Lamborghini.  If you want to get the most car for your money, buy a Lambo, because you can look at their profits.  They make like $5 million a year.  It's astoundingly low.  They give you the car that is worth the car.  It's probably $150,000 a car, it's probably got $135,000 worth of tech in it.

Peter McCormack: I should get a Lambo!

Junseth: But that's the thing.  Collectibles are collectibles.  Like a Beanie Baby, I'm buying a collectable thing.  If I go to Ty Warner, he's not going to buy all the Humphreys back, he's going to keep his money, and he's going to run his Four Seasons Hotels in Chicago.  He wants cash.  And that's the thing with the NFTs.  CryptoPunks wasn't taking past CryptoPunks for CryptoPunks; they were taking money, they wanted your ETH.

Peter McCormack: Of course.

Junseth: They found the ETH more valuable than the CryptoPunks.  They were giving up the CryptoPunks, their dumb drawings, in exchange.

Peter McCormack: But isn't that the case for every artist?  Every artist wants the money for the art they're creating.

Junseth: Well eventually when artists become -- there's a purpose to that initially.  The artists, for example, will take the cash for the money.  Most artists don't become incredibly wealthy in their own lifetime.

Peter McCormack: Most don't become even moderately comfortable.

Junseth: Yes, very few.  Maybe Jeff Koons might be an example, Hirst is another good example, Damien Hirst.  But artists, they sell early because they have people that want their art.  They're selling to get them on their walls, maybe they catch the eye of a really big collector.  They're playing their own game.  But later on in the career of an artist, the art becomes like, if you were to say, "Hey, Damien, I have this piece.  Honestly, it's your first piece, but I prefer this new piece that you just made.  Can I exchange it?" he'd probably be like, "Yeah, absolutely.  I'll take that piece in exchange".

Peter McCormack: Yeah, but there are people who own sneakers who will trade for sneakers.

Junseth: Yes, that's what I'm saying.  Individual collectors might trade for things.  I find Beanie Babies very interesting.  I will trade among other collectors of Beanie Babies for Beanie Babies.  But my point is that the company that's making them, Ty Warner, they want cash, they want the money.  They're like the Federal Reserve of Beanie Babies, and this idea that these collectibles are going to go to $1 million, or that they're going to be collectable for more than -- every collector's item has its 15 minutes of fame essentially.

Peter McCormack: Well, this is why I'm okay with the sneakers thing, because we're 20 years in now and they're going up.  Get up StockX, I want to show you some.

Junseth: I'd love to, but sneakers are a little different because again, what happens with collectibles is they happen and then there's this later-on cycle, where people who are a bit nostalgic about it will come back to them.  Sneakers actually have some utility as well, which is a little different than other collectibles.

Peter McCormack: Yeah, but the utility destroys the value.

Junseth: Yeah, of course.  But I think that sneakers, other things, they have this nostalgic thing, and sometimes a market actually shows up around it, and there's enough people that have nostalgia --

Peter McCormack: You've literally done the search I was going to tell you to do!

Junseth: Wow!

Peter McCormack: He's done the Dunk search.  So, I'll tell you, the ones I most want are those third ones, the Pigeons.

Junseth: Look at that.

Peter McCormack: Is that Australian dollars?

Danny Knowles: Yeah.

Peter McCormack: Okay.

Junseth: You can afford that!

Peter McCormack: So, I'll tell you, that was interesting.  So, they only made 150 pairs of those, and they were released in this store in Brooklyn.  The day they came out, there was a literal riot.  And I remember them going up on eBay afterwards, and you could get a pair for about $4,000 or $5,000 and I was like, "Fuck that!"

Junseth: I bet you wish you did.

Peter McCormack: Yeah, of course, look at it now. 

Danny Knowles: I'm going to get it up in US dollars for you.

Junseth: This is the thing, Peter, there's enough people collecting sneakers, enough people doing it, that it can maintain a value; there's a lot of people doing that.  Beanies, there's like 300 of us maybe.  But sneakers, there's thousands of people who continually want to collect.

Peter McCormack: Here you go, "From $48,000".

Junseth: Also, I think fashion's very different.  Sneakers are fashion, purses are fashion.  It's not like the Hermès purse, the Birkin bag, has disappeared from the market.

Peter McCormack: So, those Dunk Londons I've got, I bought them on their initial release.

Junseth: The upper left?

Peter McCormack: No, middle left, the blue one.

Junseth: Oh, the $24,000 ones?

Peter McCormack: Yeah.  I bought them for £120. 

Junseth: Oh, you showed up and they --

Peter McCormack: No, I bought them online.  They were meant to be released.  But I'm addicted.  I've got those Zoo Yorks, I'm addicted to buying these.

Junseth: Well, I think sneakers have a long time in them.  And by the way, all you're doing is inventorying them for Jay-Z, who's eventually going to buy them and wear them!

Peter McCormack: He can buy the whole -- my son's like, "They're going to be mine one day, aren't they?" and I'm like, "Yeah".

Junseth: "I want to put them on my feet!"

Peter McCormack: You can't fucking wear them.

Junseth: No, but I think fashion's fundamentally different from most collectors' stuff, because fashion has, like I said, the Hermès Birkin Bag, it doesn't have the same fervour around it.  I don't know that sneakers have the same fervour that Beanie Babies did.  Do you remember Beanies?

Peter McCormack: I remember there was a real hype cycle on it.

Junseth: Yes.  These collectors' items are marked by this hype cycle.

Peter McCormack: But I think the difference is, people felt a need to get Beanie Babies, even though they weren't into it, because they thought it was -- they're like shitcoins.

Junseth: Women were punching each other in Macy's to get a Beanie Baby.  They're like, "I want Spooky the Ghost with the curved mouth instead of the pointy mouth, because I don't have it yet", so they'll buy like 60.  These collections people are sending me, Peter, they have like 32 Princess Beanie Babies, or 100 Garcia Beanies.

Peter McCormack: Let me ask you, did they buy these purely because they thought they were going to make money?

Junseth: Yes.  Well, why do you buy 100?  Why do you buy 100 Garcias; why would you buy 100 Peace Beanies; why would you buy 100 of them?

Peter McCormack: But I'm not buying these because I think I'm going to make money.  I don't get them and go, "Fuck that, in ten years they'll be worth $6,000".

Junseth: You buy them because you like them.

Peter McCormack: I like the collection.  I'm thinking about the display.

Junseth: But that's the same as art collecting, right.  To your point about art, there's not ever going to be a fervour over Damien Hirst.  However, when Damien Hirst is an NFT and he's selling lots of shit for $50, originals, there might be a fervour.

Peter McCormack: I actually, for Damien Hirst -- has he actually done that?

Junseth: Yeah.

Peter McCormack: I find that a bit gross.  That to me devalues other Damien Hirst work.

Junseth: He's a billionaire, he doesn't give a shit!  But yeah, to me the fervour around something, it's very unique.  Collectibles for me are very obvious when they come about.  I see them and I think to myself, "Oh, it's a collectible.  This market will last X number of…"  And I always hear the same things in collectible markets, people declare that, "This collectible market's different than other collectible markets.  This collectible market's going to pay for my kid's college.  This collectible market is X, this collectible market is Y", and it's always the exact same.

Meanwhile, every collectible market that I've ever seen in my entire life, every single one collapses, and you have a couple of things that remain valuable to the nostalgic collectors, and everything else goes to $5.

Peter McCormack: So, what's the lesson, Junseth?

Junseth: Buy NFTs!  No, I think the lesson is that your shit doesn't matter.  Value is the only commodity that matters.  Bitcoin is not a collectible, I don't think, and you should be very wary of attaching yourself to things.  The DeFi stuff, I think you should be very wary of attaching yourself to high returns.  I think that you should accept that you don't deserve the wealth that you have, I think you don't deserve that, and very thankful if you happen to be lucky enough to be wealthy, or to have even your basic needs taken care of.

Peter McCormack: Good finish, man.  Right, that's a wrap for Miami, we're done.  Junseth, great way to finish off, man.

Junseth: Nice, love to be here.

Peter McCormack: Always appreciate you.

Junseth: I'm glad you're in my neck of the woods.  I hope that you guys come back some day.

Peter McCormack: We will come back many times, and we'll always see you and always talk to you.  It's always a pleasure having you on the show.  Love you, dude.

Junseth: Love you guys.

Danny Knowles: Sing us out, Junseth.

Peter McCormack: Oh, sing us out, bro.

Junseth: Oh, right.  I think we're doing a Christmas song, right, or are we doing something else?

Danny Knowles: No, we've had the Christmas song.

Peter McCormack: Can you do some Justin Timberlake?

Junseth: I don't know, I don't know any Justin Timberlake.

Peter McCormack: Oh, sing us something.

Junseth: A little Backstreet Boys?  "As Long as You Love Me"?

Peter McCormack: Dude, we're going to New York tomorrow, and they're playing in New York.

Danny Knowles: We're not going to watch that!

Peter McCormack: Jeremy really wants to go!

Junseth: Really?  "As Long As You Love Me", that's the only pop song I remember!

Peter McCormack: Jeremy's like, "Can we go, please?"  He wants to get a T-shirt and everything.

Junseth: Oh, really. 

Jeremy: Backstage pass.

Junseth: Backstage pass? 

Peter McCormack: Yeah, we're not going.

Junseth: You're not going to do it.

Jeremy: Backstage pass or we're not going!

Junseth: I can't even believe they still exist as a band.

Peter McCormack: They probably look like shit though.

Junseth: Hanson's a band, you know Hanson?

Peter McCormack: Mmmbop, bop ba doo…

Junseth: Isn't it weird, isn't it strange, how we all feel a little bit weird sometimes...  That's all I remember of Hanson.

Peter McCormack: All right, we're out of whiskey, we are finished.

Junseth: All right, guys.

Peter McCormack: All right, bro.

Junseth: Goodnight.