Episode 43: Is Self-Custodial Crypto Dead? (ColdCard Hack + ETF Rotation)

0:12

Uh, we’re back to Social Edge Report. So, we’ve been away for a moment. Um,

0:17

welcome back, Leon. It’s good to have you back. Um, how’s everything been for

0:20

you, by the way?

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>> It’s been a busy summer. I was in Mess and San Diego and Arizona, Michigan. So,

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I’m glad to be back at the home office and I don’t have a an office anymore.

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Just a home office. So,

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>> yeah. Um, should we should we talk about like what’s been happening in San

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Antonio startup scene? I know it’s a whole can of worms, but just a brief

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small life update maybe.

0:47

>> Yeah, totally. Um, so for everybody who doesn’t know and has any context,

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there’s a cool incubator, cool co-working space in San Antonio, uh,

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called Geekdom. It’s been around about 15

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about yeah better part of about 15 years.

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>> Uh and it is going to be closing uh the co-working spaces as of September 22nd

1:09

25th something like that. And then they’re going to go down to one uh floor

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which is essentially like a cafe style place um a lot like Corgi. So, I went

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and wrote a pretty indepth um you know post about um what what is happening in

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San Antonio. It’s quite a meaty meaty meaty post. Uh Lorenzo, he’s pretty cool

1:35

dude. Um got to talk to him a lot and become a little bit of friends with him.

1:40

So, got to talk about it and write about what I think about San Antonio, what I

1:45

think it can change, and essentially what what happens outside of these these

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metro areas that are, you know, Austin, SF, um, New York or places like that

1:56

because there’s these second tier cities that are always struggling.

2:02

>> Yep.

2:03

>> And this was the original post. Let’s see.

2:07

>> Star of the Chronicles. Yeah, made a post. It went a little

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little viral in terms of just like people were talking about it and stuff.

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And then um the blog post is what really took it off and kind of had a lot more

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conversation going from a lot of people in San Antonio, a lot of people from

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Austin uh in in aggregate. So it started a really good conversation of like what

2:30

is San Antonio as a startup hub? I don’t think it is. I think it’s an expansion

2:35

city. And then really what Texas is. I think Austin has a unique recipe for for

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tech, but what is that recipe and how do you

2:45

replicate it is an astonishingly hard thing to do.

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I think um because this is a crypto podcast like San Antonio, there’s

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probably when I was there three other founders who were building on crypto,

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but most of them were in Austin. So to your

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point, I feel like in Austin it’s a in a unique position where it’s more tech.

3:08

You know, San Antonio is more CPG, nothing related to crypto, nothing

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related to fintech. Maybe like well actually there was maybe like two

3:16

companies were building in fintech, but nothing to like the degree that you’d

3:21

find in Austin or even SF to put it lightly.

3:28

I think I’m asking Grock right now. I’m kind of curious like what is crypto

3:32

adoption in in San Antonio and Mexico? Yeah,

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>> because

3:37

>> Mexico is big

3:40

>> there. There is a really big remittance network and I and I think again it’s

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like a from what is

3:46

>> actually a startup to what is like user adoption is is kind of interesting. Um

3:53

>> 90,000 crypto investors in San Antonio, high number of crypto ATMs. Wow, that’s

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a lot. Um,

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>> yeah,

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>> but to where I was going with this is, you know, it’s a city of roughly 8

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million people. It’s uh

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>> I think it’s gorgeous.

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>> No, San Antonio.

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>> Oh [ __ ] There’s 8 million people in San Antonio.

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>> That’s like about DFW Metroplex.

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>> I I can’t I can’t do it. Uh, palp large San Antonio.

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>> I would be surprised if it’s like 1.5 mil cuz I think it’s not as big.

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>> It’s a metro area though. It’s It’s 8 million people. I believe the main is

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probably

4:44

>> three million people.

4:46

>> You mean like San Antonio, Austin metro?

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>> So 1.5 is there. is the seventh largest in the United States, but there’s about

4:56

>> about 8 million people. Yeah. San Antonio, Austin, the metroplex area that

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populate this whole this whole area. It’s just like DFW, you know, when you

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look at them uh aggregated, it’s it’s a massive massive area.

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>> It’s kind of crazy. Um it makes sense like DFW is 10 mil people

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like across the entire metroplex. So Beto, you know, when he was when he

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talks about like the state of affairs with San Antonio and Austin, it’s a

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growing metroplex and I’ve been able to get educated on that. Like it’s

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approaching the level of Chicago, you know, like that whole metroplex and I

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wouldn’t be surprised if it becomes even bigger in the next few years um or even

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triangle. So DFW and I’m I’m off on we’re both off on these stats. DFW is

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about 8.5 million. Okay, that’s fair.

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>> I I’m just getting real numbers because I’ve been off a little bit on this.

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>> No, you’re you’re fine.

5:59

>> We always inflate numbers like we’re delve.

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>> There we go. Man, those guys are crazy.

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Um,

6:10

>> it’s about six million people combined.

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>> Six million people.

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>> We’re off by two million on both sides. There we go.

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>> Well,

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>> very big metro areas in there.

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>> I think this I think this is all relevant in crypto still because um more

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and more adoption is growing especially in areas where there’s a larger density

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of population. Um I believe the rough estimate of American of Americans who

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hold crypto right now is 55% according to Coinbase’s um I want to say last

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year’s report. So about if you reflect that across this the slate that’s like

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what 4 something mill people who own crypto

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across the DFW area or the triangle.

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>> Yeah. Let’s see. Roughly 40 50 to 70 million Americans hold crypto.

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>> Okay. So I’m way off again.

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>> 67 million. One in four adults current holders.

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Pew. What about Coinbase? What does Coinbase say about this?

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>> Grock has gotten pretty good. Pretty good at all of this.

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>> What model is it? 4.5.

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>> Uh,

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>> okay. I’m seeing 4.5.

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>> It’s just running auto.

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>> Yeah, but like the only models that are available is 4.5. So auto is like either

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fast or expert.

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>> Mhm. only about 20% of of adults in Coinbase’s public figure fig figures.

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>> I am so way off my metrics today.

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>> One in five about 52 million a little bit of Sunday scar is getting us the

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wrong numbers. So um if you want to go high one and four is about 67 million

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Coinbase which is probably more conservative is one and five which is

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about 50 to 52 million.

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>> No, I believe you. Um, so

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>> I don’t know where we were going with this, but uh,

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>> we with it.

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>> I think it’s relevant to talk about the state of affairs or the the the status

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quo. And, you know, we’re now changing where we’re building. Like, we’re no

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longer going to be in San Antonio as much, if at all. Where we would go next,

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probably Austin if we’re staying in S in Texas. Otherwise, I’d be eyeing more at

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SF and um well, I’d be adding more New York and Miami, probably Miami because

8:38

that’s the crypto hub if you’re a builder, but New York is just a fintech

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hub in regardless, which is where crypto’s headed anyways. Um

8:47

>> Miami, beautiful women, beautiful weather, but the hurricanes scare me.

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like dude. Yeah.

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>> The thought of having to evacuate, you know, possibly once a year, you know, if

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not more, is just

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>> like it’s not scared, but more of just like what a what a pain in the butt.

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Like, you know, New York gets some stuff, but you hunker down. You know,

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when you’re in inland in Texas, you know, you just hunker down and you let

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it be. But that’s my one qualm with that. You know, SF is great. I love it.

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I don’t really love the vibe there. I think it’s a totally different thing.

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New York is definitely the place that I I I I’m more attracted to in the end.

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>> You know, I’m also going to do a video, well, I’m going to do a video talking

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about San Antonio. I think what is missing is, and I think this is what’s

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missing, several places, like its own corgi cafe, 24-hour

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place that’s open, and you can just go in there, vibe code, meet other people

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of similar interests. Like I’m I made two connections when I was in SF at

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Corgi Cafe. Um, just one more thing I wanted to mention about that. Like I

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think any place that is trying to be a startup hub should have to some capacity

9:57

a a spot where it’s open 24 hours, good internet, you can get coffee, you can go

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in and out whenever you please, and you’re going to meet other people who

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are in the similar boat like you. Like that would be [ __ ] fun.

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>> There’s one in uh there’s one in New York now.

10:12

>> Yeah, there is. Awesome.

10:14

>> Also in London. They’re opening soon, which is kind of cool. Um,

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>> yes. I believe they’re I saw on Reddit a little bit of rumor of an Austin one,

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too.

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>> Austin one, dude. That would be fun. The [ __ ] Like,

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we need that. Uh, I’d be down. Um, but yeah, I mean, I think it was fun talking

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about that. Um, I want to pivot real quick to some interesting stories that I

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found this week, Leon. Um, so while you while you’ve been away for a moment, I

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feel like there’s not a lot been I mean I’ve been away for a moment too, but

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like there’s been a lot of things unfolding with crypto or not much with

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crypto for the last few weeks and then suddenly we have like some pretty big

10:57

things happening this week with crypto. Um, so for starters, I want to talk

11:03

about like some ETF flows from Black Rock. like we have like hundreds of

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millions just inflowing in the ETF which means these large institutions are

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buying which Bitcoin has been sitting at 65,000. So what the [ __ ] does that mean?

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It means you know people are still institutions are still buying Bitcoin.

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That’s kind of a big deal I think. Um and the next story is well we have some

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technical ones. So this is like a like a Bitcoin mainet um soft fork. it was

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BIP110 and it collapsed like it wasn’t doing

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very well. Um or I guess people just cons in a consensus way like rejected

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that fork which I think it’s a good use case for the technology behind crypto,

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right? Like it’s like behind Bitcoin which is very I’m very bullish on. Um,

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and then speaking of like San Antonio’s startup ecosystem like evolving,

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uh, there’s been a lot of projects on crypto that have been like breaking

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lately. Like they’ve just been collapsing kind of like a dot aftermath,

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if that sounds familiar. Um, and then cold card exploit, which is a a a hard

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wallet. Um, it’s probably one of the biggest, most

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recent stories in crypto because there’s this large memo going that, you know,

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not your keys, not your crypto, um, not your coins. Like, this kind of questions

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that if if companies are selling hardware wallets and they’re actually

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vulnerable, like where are people going to put their money? So, those are some

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pretty big deal things.

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>> Um,

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>> let’s do it. Let’s start with the Bitcoin inflows, outflows.

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>> Yeah. Yeah. So, let me share. So, so I pulled some relevant stories from

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Twitter this time talking a little bit more about like the the more technical

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inflows and outflows of the ETF. So for Black Rockcks, IBIT, um IBID and ETHA

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absorbed 83% of the 1.7 billion that flowed in the US crypto ETF just last

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week and Bitcoin’s 2.2% into a tight 65,000 resistance. This is all technical

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um nuance for Bitcoin is sitting steady. It did pump a

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little bit, but you know there’s a lot of money going in and Black Rockck’s

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IBID and its other ETF absorb most of the inflows. So that means Black Rockck

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is buying a lot. So

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>> yeah, but it it also just like I and I think this is a nobody’s looking like I

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I don’t know. Have you looked at it? Like there’s still a net outflow for the

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year. Um, I have not looked at it, but there’s

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this full brief here by Inflow Scan. We can look at it.

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>> Yeah. So, it’s it’s a a losing streak with one week like POP doesn’t

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essentially deal with the the $4.4 billion in net

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outflows. Like, this is just one good week.

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>> Yeah, this was a really good week, it seems. Um,

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>> but the one good week doesn’t like

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>> fix the

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>> the the millions and millions that are still going out. It’s still extremely

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low trading volume. Um, it’s the second lowest full week since 2024. Influes are

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still low volume. consider and then others are like you know just because

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there’s there inflow

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>> there’s still a large selling demand on the ETFs because the order books are

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showing like very very like low u volume and then they’re showing a lot of sales

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still um I think it’s just possible custody rotation rather than pure new

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capital

14:56

>> okay so they’re just rotating like wherever they’re holding their tokens

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like they’re

15:00

>> well you got to this ties into the other the other one and this is Why I thought

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you put it in there um is the uh the part that that’s Well, no. So, I I

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thought you put this one in there because I thought this was possibly

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custody rotation and it’s about the cold the cold card hardware wallet problem.

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So that exploit a portion of those may represent

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>> existing Bitcoin holders moving into regulated ETFs and selling their Bitcoin

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on that side and just kind of like moving around where their Bitcoin lies

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because if you’ve you you’re scared of, you know, the hacks and everything,

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you’re probably just going to flow into something that’s an institution and deal

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with it. And then there’s also you’ve got the macro and the market structures

15:49

are still out there. So, payroll data is down. Um, you know, they say there’s

15:54

more jobs and stuff, but, uh, there’s a higher, you know, market rate on

15:58

mortgages right now. And then, um, there’s still capital preference for AI

16:04

capital. So, I would say the appetite for risk is pretty muted. And Bitcoin

16:10

still down, you know, what

16:12

>> 45%. I’m looking at the chart, the price

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about 45% from the peak of 126 in October.

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>> So, I still say this is like a market draw down and consolidation phase.

16:26

>> Yeah. I mean, the market dropped

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>> kind of hard one year ago or or about a year now. Um, no, you have

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a good point there. Um, no. So yeah, I mean I I I did find a connection there.

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That’s why I did include it. But it’s just that is it really that’s all that

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it is like people just moving like wherever they’re putting their money on

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because obviously you know this exploit with the cold card is a pretty big deal.

16:56

I’ve never used cold card prior to this, but I’ve heard of people like using it

17:00

as an option next to treasure or like uh Ledger. But I mean, I think at the end

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of the day, these large institutions are not going to have like all their money

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spread out into all these cold wallets. It’s all going to be in one place,

17:15

probably in Coinbase business or something. It’s very regulated. Like you

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have people actively, you know, protecting your money and, you know,

17:24

helping you out in case anything happens like with their 24/7 customer support.

17:28

So, I think you can’t beat that. So, um that is a really good connection that

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you pointed out like um like just wherever the money is moving in

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general. Like I really like the way you put it. Um but yeah, no, I mean I think

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that was a kind of a big deal. That’s why I wanted to mention it otherwise. Um

17:47

while we were talking about cold wallet security, let’s talk about

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>> can real quick. Hold on. Also, part of that Bitcoin resistance,

17:57

>> the Clarity Act, I I want to pull up KHI real quick.

18:02

>> Oh, yeah. Because she

18:05

>> But the Clarity Act,

18:08

>> there is um let’s see. Let’s see.

18:11

>> There should be a vote on it before October 1st, 2026. I really think this

18:15

is a no.

18:16

>> I just You really think so?

18:17

>> I I don’t think Congress is going to act on this before October 1st. I could see

18:22

January 1st being being there, but I think, you know, I think this is a no.

18:30

Let’s see.

18:31

>> Is it because election season or what’s Mickey?

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>> Yes. Like uh Well, no. Is there is there is this midterms?

18:41

>> It’s midterms. It’s like November as well.

18:46

>> Okay. Yeah. So, I don’t think they’ll they’ll do it before midterms. Um, I

18:50

couldn’t thinking that it’s next year, but I don’t know why. Like,

18:54

>> no, you’re good.

18:56

>> I I just think Let’s see what the volume is. Hold on. What’s this volume? So,

19:00

that’s about a million

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>> millions. 6 million. So, this one’s a better representation of it,

19:09

>> if it becomes law at all.

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>> Yeah. like I I

19:16

>> the clarity act is there and I think a lot of these inflows and all of the

19:21

price of Bitcoin and everything is is hedging on the bet that

19:25

>> or or hedging that this becomes law at some point. But I think the fact that

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Bitcoin stayed at that 65k with,

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>> you know, still net net negative inflows out or outflows is because this clarity

19:38

act just not moving. Yeah, I know it’s stalling like

19:42

um a lot of Democrat um senators are the ones who are stalling it right now. So

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um I wouldn’t be also like um banking bank lobbyists are also doing everything

19:52

they can to stall it out. So it makes sense like

19:57

that’s a really good point. Um I didn’t even thought about covering it because I

20:00

haven’t seen a lot of movement. But I mean I think it’s good that you brought

20:03

it up. Also that volume shown demonstrated with Kowi, it’s actually

20:08

kind of a big deal because the more volume it means more people are like

20:12

actively monitoring the situation with at least the the bills movement. So

20:18

>> yeah, market makers in there too. So you know that

20:22

>> at that volume you should have a market maker or two that that

20:27

>> that’s a good point

20:28

>> that’s pushing it in some direction. So I I see it if it’s below a million

20:33

generally I don’t think there’s market maker to like do it. There’s a few of

20:38

them like the reality show stuff that I I trust just because I you know 500k in

20:43

volume on a reality TV show is makes sense to me but uh 6 million on clarity

20:49

becoming law that that’s enough volume for me to trust it to some degree.

20:55

>> Absolutely. So, I mean, good co good analysis. I

21:00

appreciate you putting it like that. Um, why don’t we talk about like security

21:06

with like the wallets now? Um, like whole card. It was kind of a big deal

21:10

actually. Um, I didn’t realize how big of a deal it was until I looked more

21:14

into it. But basically, um, you probably heard this word glow float around San

21:19

Antonio. Um, the best way I can describe why this security breach happened was

21:26

because of the entropy of the cold wallet’s um, seed phrase generation,

21:31

which basically means entropy um, how random and how hard it is to guess the

21:38

math behind the generation of the seed phrase um, in this in this case. But

21:43

um basically in in if you’re if you’re talking about like crypto encryption in

21:50

general, you want to use like 128 bit um complexity, like 128 bit uh entropy

21:57

complexity when you’re generating these things because it’s harder to guess. But

22:02

this bug dropped it down to 40 bits in some of those cold card models which

22:08

it’s really from what I understand easier to brute force through. Like you

22:12

create some sort of algorithm you can brute force it like in not a long time

22:17

from now. So essentially what happened is the firmware of the cold card is like

22:21

a fivey year has a 5-year-old bug that nobody addressed I guess not even with

22:26

bite coding. Um actually I wouldn’t be surprised if the hackers used like Fable

22:31

5 in hindsight to you know break this but um attackers were essentially able

22:37

to brute force into the seed phrase offline and withdrew like over 100 to

22:43

130 million uh dollars in Bitcoin from people’s wallets. Um,

22:50

yeah. So, so now people are questioning, hey, is not your keys, not your coins

22:56

still something that people should trust? Do I keep my money on cold

23:01

wallets on certain models that are more trusted that pass um like security

23:06

audits or should I put in an institution like Coinbase or Binance, you name it,

23:11

where you know, at least Coinbase now is becoming more of a option now because if

23:16

you’re a subscriber to their Coinbase One subscription, they can like sort of

23:22

quasi insure your Bitcoin or your crypto that’s in their platform up to a certain

23:27

cap based on how much you’re paying. So, I think these are the questions that are

23:31

being addressed right now or like that people are raising like should I put my

23:35

money in an exchange that you know has this form of quote unquote insurance or

23:41

should I just change to another cold wallet? Me personally, I would probably

23:46

still keep it on like more trusted cold wallets just because I wouldn’t trust an

23:51

exchange ever to put a lot of money into. Now grant I don’t have like

23:55

millions in Bitcoin but you know like well what do you think I know this is

24:02

more of a technical

24:04

>> yeah like so they were open source they did say that there was AI like tools

24:08

that essentially did this and it’s been open source for 5 years so the fact that

24:13

this took 5 years out there but um

24:17

>> yeah I think I think the the big thing is you got to look for audits you got to

24:21

look for um the ones that are trusted said the those I just asked rock the

24:26

Traaser Safe 5, the Bitbox one, Foundation, Passport Core, Blockstream,

24:33

Jade Plus, Seed Signer. Those are all really good wallets um

24:38

>> out there that are physical, but they they take a lot of they take a lot of

24:44

effort to get stuff on there. You got to do multi-IG verification, track records,

24:49

careful seed generation, dice rolls. Like there’s a lot to this to deal with

24:53

with this. And and I still think this is a massive barrier to the the common

24:58

thing. Like I think that’s why a lot of this just like our US dollar is going to

25:02

be put institutionally into Coinbase and a lot of people are going to have that

25:09

stuff on there and then, you know, some set of people won’t trust the government

25:12

and put them in their own wallets. um keep a majority of my crypto in large

25:18

scale like Coinbase vaults. Like it just it makes sense. It’s insured. It’s

25:23

there. I Yeah, I get that an exchange could fail, but honestly, Coinbase is a

25:28

one that it’s too big to fail. The US government would probably stop step in

25:32

and

25:33

>> help in some capacity. And also if they get hacked that that ruins a you know a

25:38

large institution with millions of dollars their their outcome is to

25:43

protect users money. So I think in the end it’s probably safest. I keep some of

25:48

it in airgapped u you know uh open- source Bitcoin only multi-IG you know

25:54

cold wallet but uh that stuff’s really hard to deal with and most people won’t

25:59

also a USB key at some point deteriorates and there you could have a

26:04

>> EMP you could have just random things that that set it off and do it so I

26:09

don’t think there’s any good way but I also think this is why a lot of crypto

26:12

will not ever become mainstream is because of this exact fact.

26:17

>> Yeah. Like people don’t want to deal with that [ __ ] They just want something

26:20

reliable, something that they don’t even have to think twice about like setting

26:23

up their security or taking all these extra hurdles just to set up their

26:27

security. Like do you remember when the Salana founder jokingly well I don’t

26:31

know how much of a joke it was but the the guy who founded Salana was saying

26:35

how he basically has uh a second set of Apple ecosystem devices just to handle

26:42

his crypto and another one like he has another MacBook another iPhone possibly

26:47

an iPad you name it just for his personal use but like aside from that he

26:53

has like one strictly for his crypto I don’t know activities So, I don’t

26:59

think that is

27:00

>> I understand that. It’s just like, you know, you see all of these um like the

27:04

Israeli prime minister Netanyahu, like every time he has his phone, uh it’s

27:09

it’s got and and I just put my phone the camera, you got to be careful on the

27:14

camera because the camera can read QR codes and then download stuff to the

27:18

device if the device is there. like there’s a lot of uh just like OBSE when

27:24

you’re you’re a high net worth and and a very uh powerful person. So the more

27:31

notoriety that you get on the internet, the more you are a victim of of hacks no

27:36

matter what like no matter what you are going to be a victim of a hack at some

27:40

point no matter how good your security is and everything. There’s now uh there

27:45

was that that trend over the weekend or over the week about uh the person was

27:50

able to essentially take two cameras, two camera phones that were not

27:53

connected to the internet anything and send data between them with just uh

27:58

flashing QR codes really quickly. Did you see that?

28:01

>> No, that’s actually kind of crazy. I was like

28:06

like I was I understood everything you said, but I was like how the how’s

28:09

anyone able to do that offline? Like maybe if you’re using like

28:15

>> what is it? Jack Dorsey’s messaging message.

28:18

>> You don’t need Wi-Fi to send files. No Wi-Fi, no Bluetooth, no network. QR

28:21

codes flashing on one phone and camera phone. Essentially, they just they just

28:25

used a piece of software to like send the data one bit at a time with the QR

28:31

codes flashing.

28:33

>> Dude, that’s actually crazy. That guy got [ __ ] Rick rolled. But like

28:37

classic internet use case, but like

28:40

>> Yes, it’s it’s amazing. it’s like 100% offline. They’re able to send a bunch of

28:44

data across. Um but it’s becoming scarier and scarier for your your phone

28:50

and then also like what is secure, what is not, what is, you know, your

28:54

property. that US citizen that came into the United States, he was using that

28:58

graphine phone OS and he typed in a you know an SOS code and it wiped the whole

29:03

device while in um uh uh the what was it called when he was detained

29:11

essentially at the border. So, you know, nothing’s safe. Like, even when I travel

29:16

internationally, my passwords are inside of vaults on my phone and I don’t carry

29:21

a bunch of of um vaults across the borders just because you never know

29:26

what’s happening. A lot of those are banking stuff. And you can’t you don’t

29:29

you don’t have to give those up. You just get, you know, detained or kicked

29:33

back to your country of origin.

29:35

>> No, that’s a good point. Um yeah, I guess the more OBSC you have, the better

29:40

you’ll be safe. And even then, like anything could happen. Um, but it

29:44

totally makes sense like once you’re a high target user like imagine if Satoshi

29:47

Nakamoto Nakamoto I believe um Satoshi was identified like that guy would be

29:52

the number one target of every [ __ ] hacker.

29:56

>> Yes. It’s just like Trump. It’s just like Netanyahu. They are some of the

30:00

largest targets. Whether

30:02

>> whatever you think about them, positive or negative, they are the biggest

30:05

targets in the world. Um but again the big part here is

30:11

>> don’t just like blindly trust any service anything like do they have

30:14

audits like you know even Mitlock it’s like the stuff that we’ve discussed is

30:18

does it have an audit how do we get audits how do we afford audits audits

30:21

are very expensive and if somebody can afford it it’s probably a platform you

30:26

should trust um you know Galaxy Research you know have said and essentially back

30:32

to this thing is um there’s a high confidence about uh Yeah, about um 11

30:38

million one one

30:42

>> 111 million dollars worth of Bitcoin were stolen, which is about 1700

30:48

Bitcoin. It was 1,719 to be exact, stolen across multiple waves.

30:53

>> Um there’s probably more just out there on on research that’s out out now. Um

30:59

drained a bunch of this. So there is a bunch of of stuff out there and there

31:03

was no user error required. Um, you know, cold card was considered elite.

31:08

The bug lasted for 5 years. Um, you know, the update of the firmware doesn’t

31:13

fix existing seeds out there. So, there’s a lot of problems. And I think

31:19

it’s just a fact of what’s the, you know, what is the internet these days?

31:23

It’s just a lot of security holes that AI is essentially finding over and over

31:28

and over again. And nobody can fix them fast enough. Uh, and I’m sure every

31:34

piece of software out there has an astonishing amount of security holes

31:38

that nobody realizes, dude. Yeah, it’s it’s actually crazy.

31:42

Um, we’ll link the the thread on Twitter. I’m I’m calling Twitter and Nex

31:49

a little bit more interchangeably. So, I’ll leave that thread on description.

31:54

>> Dude, it it it actually makes sense. Like X is becoming the everything

31:57

platform. Not yet. I’m I’m pro I’m a premium not a premium plus subscriber.

32:03

So I think that’s why

32:04

>> you’re a peasant.

32:07

>> I mean

32:08

>> I love X Money here. I’ll share my screen.

32:11

>> Yeah. Why don’t we review it real quick?

32:14

>> No, no worries. Not much. And it’s like 10,000.

32:19

>> Um not.

32:20

>> But I think it’s pretty cool. Like it’s just in here. You know, you’ve got your

32:24

earnings and everything like

32:26

>> just all of that. And then you can see your deposit like you’re there. I just

32:30

deposited a little bit of money again. Um

32:33

>> you sent Jason 69 cents.

32:35

>> Yeah, I love that.

32:36

>> That was funny. And then just, you know, I’ve used it a bit, but 3% back on stuff

32:40

and then you get your X card. Um

32:42

>> how how is the card? Is it like cheap plastic?

32:45

>> No, it like the X card like I think it weighs more than um Wow, I

32:54

just butchered the heck out of that. No worries.

33:00

It weighs almost as much as Yeah. the platinum card. Here it is. Um

33:05

>> dude,

33:06

>> damn.

33:09

>> One I know it weighs one gram less than um the MX Platinum card.

33:14

>> Okay. Yeah, the Robin Hood debit is just [ __ ] cheap plastic.

33:19

>> Yeah, I love the gold.

33:20

>> Gold is nice. So essentially what I’m trying to get over to is use my and I

33:25

have multiple X accounts. So uh the use my u Robin Hood Gold for the base stuff

33:33

uh just like you know everyday spending out there and then anything that I need

33:37

debit cards access to which is a surprising amount of things out there in

33:42

the world. Um the the 3% back on it is is really useful. Uh because any bill

33:49

pay service out there, they charge you extra if you’re using a a credit card

33:54

and if you use a debit card with 3% back, you know, you’re only going to

33:57

charge 1% on that debit card. So I’ve swatch swapping a bunch of stuff over

34:01

now. Um and you know, I I run my own business, so I can just autopay myself

34:07

into there. But you can auto reload. Like I got cash the other day. I’ll load

34:11

it in there for free from like CVS. It’s It’s really great service. I think you

34:15

should look to it. And it makes paying for premium plus totally worth it.

34:20

>> $400 a year or whatever it costs.

34:23

>> Mhm.

34:24

>> Plus, you get Gro like unlimited whatever the heck Grock is now these

34:28

days. And that’s accessed in your Tesla and you know like they keep

34:33

consolidating more and more. Like if they offer phone service through that

34:36

and you get a discount because you’re on premium plus like it it makes it worth

34:41

it so much and I’ve kind of always been against them to some extent. So they’ve

34:47

brought me over

34:49

>> [ __ ] I mean that was the most shill I’ve heard you ever give X or Twitter.

34:55

So I mean I believe it. Um my only question for you now that you’ve

35:00

experienced um X money and X like as a whole the way it’s evolving.

35:05

Do you think crypto and maybe this is for anyone building in the space or

35:09

anyone way anyone building in crypto I would say um what do you think crypto

35:14

needs in order to be as sticky as X money is be turning out to be and like

35:19

as good as it is?

35:21

>> You need a service like that where it it’s just it’s just easy to use like

35:25

nobody wants to send you Bitcoin. Nobody wants to send you this stuff. Like until

35:29

a service just says like, “Hey, Salana is the same as US dollars and you can

35:33

send it vice versa and it just autocon converts with the the intermediary

35:37

banks.” That that’s easy. Like if you send somebody

35:40

>> kind like Plaid.

35:42

>> Yeah. A little bit like Plaid. Um I would say it’s kind of like if you go to

35:46

a foreign country and just swipe your debit card, most debit cards that are

35:50

premium or even credit cards just they have no foreign exchange fees. they just

35:55

convert the currency right then and there. Maybe there’s like a small spread

35:59

on that, but as soon as that starts happening, I think that’s the path. Like

36:03

for example, Cash App with Bitcoin on the Lightning Network, everyone’s just

36:08

using Bitcoin on there because it’s so easy to convert back and forth. There’s

36:12

no fees, you know, super small spread, I believe. Actually, I don’t even think

36:16

they have a spread on Cash App. But as soon as that becomes the

36:20

>> the outcome, that is going to be the way people do it. right now it’s there’s

36:24

there’s too much. You got to think of it as a whole another currency. You got to

36:27

do currency exchange rates. Most people do not know currency exchange rates.

36:31

They don’t know, you know, for example, I know a Filipino pesos is about one US

36:35

dollar to 60 Filipino pesos. I know the Colombian pesos is about one to I think

36:44

I think it’s one to like 14,000 or something. And then um

36:49

>> you know I know that

36:51

>> one US dollar equals about 50 pesos in Mexican, right? Yeah. Right. One USD

36:58

US.

36:59

>> It’s about 16 17 Mexican pesos. I actually looked this up the other day.

37:04

>> Oh, it’s about Yeah, 17. I’m I’m thinking of a different currency. So

37:07

many pesos that that’s there. But you got to think about that all the time.

37:10

Most people do not think about it there. So if you think one soul equals,

37:15

>> you know, $1 equals about 100 180, you know, to to one soul. So it’s like what?

37:21

How many souls to $1? You know, that that stuff is hard to think about for

37:25

most people. No, dude. Like that makes sense. Um I

37:30

think crypto is a very hard tool to use even till this day where it’s evolved so

37:35

much. It’s a proumer tool. Um and also the yield is not that good anymore. like

37:41

6% APY. I was like, “Holy [ __ ] 6% is a lot of APY.” Um,

37:49

what like Capital One is 3.5 and other banks run similar. If you’re not like

37:55

adding a lot of money on their on their bank, like if you put like 5 10,000 or

38:00

even more, they’ll give you like a a nicer uh interest, which is still not

38:04

6%. Like that’s Yeah. crypto if crypto wants to win like

38:09

people who want to build on the space like a neo bank or something like you

38:12

need to give really good interest and then have like a really good debit card

38:16

to go with it and if it’s like metallic as well that that would be really nice

38:20

like people are going to

38:21

>> and X money is still a neo bank so I’m not a fully trusting them like 100% I

38:26

still bank with USAA and I still deal with that but for a lot of stuff like

38:32

I’m you know outside of paying like my mortgage and my car insurance and all

38:35

that stuff I’m moving a lot of money to tax.

38:38

>> Well, that’s good. Um, I’m excited to try it out. Like, I’m actually going to

38:43

reconsider my life choices at this point and go into Premium Plus. I’m going to

38:49

my my stock is my USAA bank account’s like where all the money lands. It goes

38:54

out to everywhere else. Robin Hood uh gets my credit card and it, you know,

38:59

it’s where I’m investing fully now. Um, X gets a lot of stuff. So, Bill pays in

39:03

there now. And then um my American Express gold card is what I use for like

39:08

restaurants and everything else. So those are like the three, you know, the

39:12

there’s three cards is the gold MX, the the X debit card, and then the gold

39:19

Robin Hood card. So just wherever I’m going to get the best percentage with

39:23

the least amount of fees is what I’m going to do.

39:25

>> I love that. Well, I’m going to become a premium plus higher class citizen of X.

39:32

So, I’ll let you know how that goes if hopefully I get my X money soon. I think

39:37

the next thing we should talk about while we’re on the subject of security

39:40

wallets and like all that stuff. The BIP 1100 well numbers um the BIP110

39:47

uh soft fork. So, when I was exploring all this stuff, I couldn’t find too much

39:55

reliable sources about what the hell is happening. So, we’re going to go to the

39:59

place we trust, which is X. Uh, this is from God, this name is so funny. Bitcoin

40:05

Hopium. Uh, Bitcoin’s BIP 1110 soft fork officially fails. It’s mined. It mined

40:13

just two blocks with a meager 2.53% minor support. The minority chain split

40:19

at block this one, whatever that block that is, and stalled behind the main

40:24

chain instantly. It inerted a whooping 127.48 trillion in mining power. [ __ ] I

40:31

mean that’s that seems like a lot but like the mining power today in Bitcoin

40:35

is like astronomical. It’s like in the PETA something uh mining what is it

40:41

mining hash rate which

40:45

in my opinion nowhere near as much as it’s taking from AI data centers. Um

40:51

exa

40:52

>> do you mean almonds?

40:54

>> Wait what?

40:56

>> Almonds. Almonds take more electricity and water than data centers. Have you

41:01

seen that?

41:02

>> No. What?

41:04

>> Yeah, dude. Almonds are [ __ ] terrible for the environment. I I hate when

41:07

people say data centers are bad. Here, I’m going to share my screen.

41:11

>> So, I’ve gone I’ve changed my opinion on data centers a lot recently because of

41:16

Betto’s content on anywhere really. You you look up Betto Ali Mariano. He has

41:22

been shedding some really much needed light on data centers. It’s not about

41:27

the data data centers themselves that are bad. It’s about how they’re run,

41:31

which we can explore that if you’d like. Um

41:35

um it’ll be But yeah, I mean that’s [ __ ] new to me. Like almonds

41:40

>> if I spell spell almonds, but

41:43

>> it’s like you’re a dumbass, but here

41:46

>> No, like almonds use far more water. Can you

41:51

>> [ __ ] why is

41:57

okay I have like thoughts and concerns because I have a background in AI like

42:03

before Chad was cool like I was doing AI research um

42:10

a simple comparison Californian almonds they’re 1.5 or 1.8 8 billion gallons.

42:19

All US data centers direct cooling uses 17 to 73 billion gallons. What the [ __ ]

42:27

That is insane. And yet we consume almond like crazy. Like I like almonds

42:32

like the salted, you know, with like some flavor in it like um some

42:38

like salt and other like seasoning in the almonds. Like I love that [ __ ] But

42:42

man,

42:45

>> North American centers are great everywhere. Like when they put them next

42:48

to homes and [ __ ] Like I I think that’s bad zoning. But that’s just on the city

42:53

government’s terrible zoning practices. Like look at Houston. It’s like zoning

42:58

[ __ ] hell. There’s no zoning out there.

43:00

>> But like

43:01

>> dude, for sure it

43:04

>> it takes small percentages of like electricity and stuff like manufacturing

43:10

takes huge more out there. like there’s a lot of stuff out there like that takes

43:17

a lot more usage of electricity than data centers. So I I think the data

43:22

center hate is is there but like if you look at it and I think this is a really

43:26

interesting dichotomy of of a human

43:29

>> is everyone’s like I hate chat GPT what’s the number one rated app on the

43:34

the app store and with the most downloads chat GPT like people from what

43:39

they say to what they do is is very different and I think there’s a cultural

43:43

push right now to say AI is the devil and all of that just because they don’t

43:46

understand it and they’re worried about their jobs being taken just like data

43:50

centers are scaring people. So, just just aside on your comment of of that.

43:55

>> No, no, no. I love that because um I think I’ve had some thoughts. I don’t

44:00

think AI is inherently bad. I think it’s bad the way we are practicing it and

44:04

like all the PR that’s happening behind AI. Like [ __ ] Darien um Dario, the

44:11

founder of Anthropic, that guy is just scaring everybody with his comments now.

44:16

Uh, like Fable 5, there was so much PR about like, dude, this shit’s gonna

44:20

[ __ ] like Mythos, like that shit’s gonna hack everything. You name it, it’s

44:24

going to be Terminator 2.0, whatever. Um, like there was a lot of FUD like

44:29

that. And that guy is probably the only person right now. And then maybe Sam

44:32

Alman for a while. They were like fighting over like, oh, you know, AI is

44:37

going to take jobs like Elon also like work is going to be uh optional. You

44:42

don’t need to work. Do you think people are going to abandon

44:46

money? Like do you think these rich people are going to abandon their wealth

44:50

because it’s going to become optional? No. Like it’s it’s still going to be

44:54

around for a while long. Like I mean maybe they’ll control the means of

44:58

production which is going to give them the ultimate power. But I mean the point

45:00

is is uh data centers are taking a lot well I don’t want to go into a different

45:07

rabbit hole but to keep it concise with with BIP 1110 like a lot of miners which

45:12

uses less electricity than like you know data centers which uses less money than

45:18

almond water production I guess or almond production in general. Um,

45:25

I mean BIP failed, 110 failed, and that’s good. I think the takeaway from

45:30

that is the consensus. Um, the social consensus of Bitcoin, you just can’t

45:35

beat it. You know, there’s no other financial system that can do that. Like

45:38

the dollar, as powerful as it is, it’s going to continue printing money.

45:42

Bitcoin, you only have like what, 21 million bitcoins ever, and that’s it.

45:47

And on top of that, you can approve where the route or the direction of the

45:53

technology is going to go. Now, what’s BIP10?

45:58

Great question. I actually don’t know what BIP 1110’s proposition was.

46:07

So, I’m going to share my screen about that. Now, I don’t know if it’s my ADHD,

46:13

but I can tell you were like I was talking about a lot of subjects right

46:17

now and and I could kind of see you being like, well, where’s this headed?

46:21

But like,

46:22

>> yeah, I I don’t know where you’re heading.

46:24

Uh, so we went off tangent talking about data centers, but I mostly wanted to

46:29

talk about like the BIP110’s consensus with like the miners, you

46:34

know, mining Bitcoin and like having direct control of where where it’s

46:39

headed like the technology because they can approve it by migrating from one

46:44

protocol to another with Bitcoin. So uh BIP110 says reduce data temporary

46:52

softwork was proposed temporary softwork that aimed to limit how much arbitrary

46:58

non-financial data could be stored in Bitcoin transactions. So, that’s kind of

47:03

interesting because um the layman terms that I can think of is basically when

47:08

you’re looking at a mining block on Bitcoin, you can see all the transaction

47:12

details like the recipient, the sender, who got the money, who who sent it,

47:17

whatever, the time stamp when it was sent. Um I guess they wanted to add more

47:22

data like um I don’t know. I don’t know what kind of data like maybe a message,

47:26

maybe some sort of customized memo, you name it. But

47:33

uh at least that’s my understanding from that. But it breaks it down here what it

47:37

tried to do. Ordinals inscriptions like sending out images, text or NFTTS on

47:43

Bitcoin. BRC20 tokens, runes, I’m not sure what runes are. Uh BRC20 tokens is

47:50

like um they’re like the like the [ __ ] I forgot what it’s called, but like

47:56

Ethereum has its own ERC20 tokens. That’s what it is. Um, so it’s kind of

48:00

like pseudo Bitcoin coins. Um, which is kind of weird. Large OP return data

48:06

payloads, certain tap routts used mainly for data storage. So yeah, it seems like

48:11

they were just trying to add more into the Bitcoin network, which in hindsight,

48:16

I don’t know how it would have worked. Like if I look at it from a high level

48:19

because Bitcoin is old as [ __ ] Like it’s old.

48:24

It’s ancient compared to modern standards. So it’s already slow. I don’t

48:28

know how much how well would have been able to handle adding more data into it.

48:32

It would have probably overloaded the network.

48:36

That’s my theory. So, I would probably look more into this. But yeah, I mean

48:41

this is kind of like the takeaway. Like it was very interesting how this

48:44

happened. Um do you have any thoughts?

48:48

>> Nope. I don’t understand this. So

48:51

>> I think it means nothing for Bitcoin in the end. Like

48:54

>> it means nothing. Yeah. So like I don’t I don’t really have an opinion other

48:58

than bunch of [ __ ] nerds are fighting about some protocols.

49:01

>> Yeah, you could you could see the oozing nerdness coming out of me for a moment

49:05

there. Um you know in hindsight I feel like

49:09

Bitcoin is headed the right direction given this because I don’t give a [ __ ]

49:14

about storing NFTTS or Bitcoin based um tokens or Bitcoin based NFTts. Like I

49:20

don’t give a [ __ ] about that. Um I just care about Bitcoin. Um,

49:24

so one more thing I guess in light of all of this, like we’ve talked about a

49:29

bunch of [ __ ] today, but why don’t we as the last piece of the last subject

49:35

covered today. Um, why don’t we talk about the failed projects on crypto?

49:40

Over 100 projects have shut down this year. Did you know that, Leon? Most of

49:44

them were either shut down, gone dark, or filed for bankruptcy.

49:50

>> It makes sense. like I get it.

49:55

>> So, let me share again. Okay, so this is from CoinDesk and it’s kind of talking

50:02

about the same thing. We’ll add a link to the description below if you want to

50:05

read it all. I’ll just kind of give you a highlevel overview of it. So,

50:09

basically 100 projects shut down in 2026.

50:12

Some of those projects were like Kelp Dow, um, BitMEX, BitMart, Movement Labs,

50:19

Storage Labs. I have another list composed that didn’t include these. So,

50:22

it’s kind of a big deal. Um, uh, so a couple of things. So, the exits

50:28

span every layer of the industry, including wallets, DeFi, lending

50:32

protocols, NFT marketplaces, and layer 1 blockchains, which is kind of a big

50:36

deal. Um, Polka Dot, it looks like it’s shutting down. Did you know that? Or I

50:41

guess u not Polka Dot itself, but like Moon Beam from Polka Dot.

50:45

>> I’m not sure what I’m not sure what the [ __ ] Moon Beam is. So, that kind of

50:48

explains

50:49

>> Yeah. Like I think like a large like the polka dot ones a large part is just like

50:52

that whole chain has been dying and then alt prices are or altcoin prices are

50:57

down like anywhere from like 50 to 70%.

51:00

>> And then money is expensive right now. So VC money and rescue funding has just

51:05

dried up. And then

51:06

>> most of these projects never drove any real revenue like they they were just

51:11

token hype and

51:13

>> and speculative farming. So it just it doesn’t matter. And then a big part of

51:17

that too is the ongoing hacks and exploits. Like

51:21

>> it’s like a billion dollars has been stolen this year and that’s that’s like

51:26

a hard part of it. And I think the survivors that are staying out they’re

51:31

you know the projects that are growing out there like Agava sorry Agava a um

51:38

>> Hyperlid they’re they’re the ones that are

51:42

driving a lot of revenue.

51:44

>> Yeah. Yeah, like Hyperlquid is more than fine. They’ve mentioned it briefly in

51:47

here which um you can look at if you want to read it more. But uh what’s cool

51:52

is for every this is a post from Twitter. Um this is just a quote which

51:56

if you want to link it, you’ll find it there. Um for every crypto project that

52:01

you hear about shutting down, creative destruction for the next cycle perhaps.

52:06

That’s kind of a good way to put it up. So um you guys can read the rest. I’m

52:10

not going to go through it. But the last thing I want to share that’s relevant to

52:13

this is here’s a highle overview. This is from this is according to March. It

52:19

was created in March and it was updated like this week and this is from root

52:24

data. So these are all that pretty much died. Either died, they went bankrupt or

52:31

just turned off the lights without much explanation. Um,

52:37

a lot of this I can see some patterns like Socialifi and NFT platform like

52:43

Socialifi [ __ ] died a long time ago. Um, NFT platforms they’re really just

52:49

there is some activity but not to the level that we once saw in 2021. Um,

52:57

zero fee blockchain. I think that’s a layer one or something. And then

53:00

decentralized NFC marketplace, web 3 gaming project,

53:06

centralized exchange. Like some of these people are doing the same thing other

53:10

people are. I guess it’s all just execution at the end of the day. Um the

53:15

only big name here that I can recognize, I mean 99% of these people I would bet

53:21

my left kidney, nobody has heard of him. Uh Bitmex. Oh, there is BitMX. So,

53:28

that’s one of them that I recognize. Tally, I do recognize a DAO operations

53:34

platform. DAO never took off in general. Milky Way, I did hear about it. Um, but

53:41

I mean, it wasn’t as big. And yeah, I think that’s everything.

53:44

>> I think it’s good. I think it’s a good outcome for the stuff to consolidate and

53:48

to bring in. Like, it is like the dot boom. Like, we need some consolidation.

53:52

I think VC money uh flooding flood flooded into crypto

53:58

and it was not moving fast enough and that that’s the reason why a lot of the

54:05

stuff is closing down. It just it’s too early for their cycles and I think we’re

54:10

still 10 years from like mass adoption of crypto y

54:15

>> uh in regular financial markets. So more and more it’s going to be

54:22

a lot of consolidation, a lot of closing. I think you’ll see a lot more

54:25

things get purchased over the next like 10 years and then you’ll see a lot of

54:29

stuff die. The only part about this is like a lot of these things will just

54:33

turn into zombies and be floating around and

54:37

>> that’s the the hard part of the crypto space.

54:41

So in that subject there is a section that talks about the

54:46

zombie problem which this will be the last thing I will cover to this subject.

54:49

So not every debt project the zombie problem is not every debt protocol

54:55

disappears cleanly when teams dissolve and companies file for bankruptcy. The

55:00

smart contracts they deployed keep running and the code never actually

55:04

dies. In July, a $6 million exploit at Lazy Summer Protocol was traced directly

55:11

back to Stream Finance, a protocol that collapsed in November 2025, 8 months

55:17

after Stream Finance went dark. Unresolved code from the dead protocol

55:21

became the attack vector for a live one. So yeah, I mean [ __ ] if you’re using

55:29

any tool and they go dark, I would just pivot from using that tool because

55:33

people are not addressing the code. They’re they’re not keeping it up to

55:36

date. And now that AI is kind of like just making it easy for some of these

55:41

exploits to happen. Like you can’t be safe. So

55:45

just do your due diligence would be my takeaway from this. Know what you’re

55:49

using. That’s the theme for crypto is just do your research, do your due

55:54

diligence, and you know, you you won’t always be right, but I think you’ll uh

55:58

mitigate a lot of risk if you do your research.

56:02

>> 100%. Man, this was fun. Um I know it was a

56:06

bit of a longer episode, but you can always look at the footnotes for any

56:09

subject you want to cover, you want us you want to explore um in this episode.

56:14

So, let us know what you think. If you’ve made it this far, like and

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