WBD510 Audio Transcription
A Lesson in Bitcoin Volatility with Dan McArdle
Release date: Monday 6th June
Note: the following is a transcription of my interview with Dan McArdle. 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.
Dan McArdle is co-founder of Messari Crypto and creator of casebitcoin.com. Dan has been in Bitcoin since 2011. In this interview, we discuss the history of Bitcoin cycles and events: Mt. Gox hack, rise of altcoins and stablecoins, Ethereum DAO Hack, and 2017 Bitcoin cycle.
“Picking the highs and lows is an impossible game, so I think the best advice for people is: know what you own and why you own it.”
— Dan McArdle
Interview Transcription
Peter McCormack: Dan, good to see you, man.
Dan McArdle: Good to see you.
Peter McCormack: How are you?
Dan McArdle: I'm doing well. How about you?
Peter McCormack: I'm good. You wrote a brilliant thread the other day which was a good reminder for someone like myself about all the trials and tribulations that Bitcoin's been through. I was like, "We should make this into a show", because with every cycle, we have a whole bunch of new people. And, my experience in 2018 was one of panic, "What the hell's happening? I had lots of money, I'm now going to be broke. How bad is this going to get?" Then, in this cycle, I'm like, "Yeah, I've done it".
Dan McArdle: Yeah, it takes a few.
Peter McCormack: Takes a few, yeah. So, I thought it would be great to get you on and talk about this, talk about some of the stories. Obviously, you've been around in Bitcoin for a long time; you're a bit of a historian in some ways of Bitcoin. I think some of the people here would benefit from talking through some of this, but I don't normally do this, but just for context, do you want to just give people a bit of your background?
Dan McArdle: I discovered Bitcoin by the dollar parity Slashdot post, if I remember correctly, in February 2011. So that was when it crossed a dollar. I had a background in computer science start-ups, e-com to some extent, so it was interesting; but like many, I dismissed it out of hand in that first discovery.
Then a couple of months later, I saw it was crossing $6, hit $10 pretty quickly. I dived into it more and realised it was completely different than any of these other internet currencies that had been tried, specifically in the dotcom era, which always seemed kind of silly. So then it went on a quick run to $32 and then six months of just brutal down to under $2 after that.
So, I was still learning about it on a technical level, like economics, political. It interested me in many ways but yeah, that bear market was brutal; negative 94% from peak to trough. So anyway, that was my introduction to Bitcoin I guess. I didn't work in the industry until 2014 with something called the Digital Currency Council, which was trying to educate people on Bitcoin and the opportunities out there, mostly in building a professional network for Bitcoin people in the digital currency space at the time, which was almost entirely Bitcoin.
Peter McCormack: Yeah.
Dan McArdle: That ended up being too early; we had another long bear market after that which was difficult. Then 2017 rolled around. I built a product called OnChainFx, just as a side project, which was really trying to get more fundamental metrics for Bitcoin and crypto overall. That market was just a ton of ICOs that were kind of like what is happening now with a lot of DeFi projects and so forth and Alt L1s, where the supply is just being dumped on you by VCs who hold a very large percent of it.
So anyway we, with OnChainFx, were trying to get some quantitative data around the supplies of these things that were out there, and I ended up connecting with Ryan Selkis and formed Messari then.
Peter McCormack: It's a good background, man, a lot of history, been through a lot of the cycles. You've seen it go up, down, you've seen all the crazy shit, so I think it's going to be really useful to talk people through some of this. But even before we get into this, not everyone has agreed we're in a bear market. All the previous bear markets are obvious, there is that just continual drop, but we've had this weird thing where we hit a high and then we came down, then we hit a slightly higher high and then came down.
Dan McArdle: Yeah, that was weird.
Peter McCormack: It's a very weird scenario. I think people always look at previous cycles and they expect something to happen. They're like, "Oh, this is like 2013. This isn't like 2017". They try and find patterns and perhaps that's the mistake, but I think we're in a bear market but not everyone does. There are plenty of people who think, "Well, we've gone sideways, this cycle isn't finished".
Dan McArdle: Yeah, at some point it just depends on how you define a cycle. We're, what, 60% down from the highs; I'd call that a bear market.
Peter McCormack: Of course, yeah.
Dan McArdle: The double-top thing was weird and the fact that we only went up triple the prior high, a little more than a triple I guess, was less of a bull market or a parabolic run than priors. But part of that is probably, well first of all, the fact that it's just a much bigger asset class, but the involvement of institutions; they're going to attenuate the runs up and we will see, but hopefully they will attenuate the downside also. That's the theory anyway, yet to be seen.
Peter McCormack: Yeah. Also, just in my head, there's like a psychological side to this; the numbers seem bigger.
Dan McArdle: Yeah.
Peter McCormack: The percentages maybe are not as high, well, it's a 3X on the previous high, well 3X and a bit, 3.5X; but to get a 10X on the previous high, $20,000, Bitcoin gets to $50,000, and if you're somebody who holds maybe 20 Bitcoin from a previous cycle, suddenly you've got $1 million, it's very tempting to sell a bit.
Dan McArdle: Yeah, totally.
Peter McCormack: You could sell five and you can buy a house and then, when you've got somebody like Ruffer I think it was, the gold bars, who bought a bunch, they were suddenly much higher and they sold off a bunch. So ultimately, I hope at least a wider distribution over time, but I never saw this $200,000, $300,000 coming this cycle, maybe others did. I hoped, because Willy Woo would tell me it would, but I bet against it.
Dan McArdle: Yeah. It's fine if it needs to take another cycle or two. We're here for the long haul, right?
Peter McCormack: We're patient. All right, man, so listen, there are people who've got into Bitcoin recently, there will be some people who've bought certainly higher than this price, anything up to $69,000. Some may be nervous, or panicking. One of my biggest lessons is the hardest thing to do is tell a top or a bottom.
Dan McArdle: Yeah, sure.
Peter McCormack: I thought the top would be higher than $69,000. I thought we'd get over $100,000, and I don't know where the bottom will be. We're bouncing around near $30,000, I don't know if we hit back to $20,000, I don't know any of this. Finding tops and bottoms is super hard. But I think it would be good to talk through some crazy things that have happened to Bitcoin, some of the stories that some people may have heard of, may not know, may not know what the impact was. That's what your thread did really, it was a, "You know, we've been here before".
Dan McArdle: Yeah, for sure. The thread was a response to the whole thing with Terra LUNA where they sold, I forget, I don't know, 80,000 Bitcoins each, kind of market dumped in a day. So, had a big impact and people were freaking out and obviously, that's in altcoin land but affected Bitcoin because Terra had that much Bitcoin on their balance sheet that they used to shore up the asset. It's just like people are so emotional about that, and I'm just like, "Wait a minute, yeah, it's a top ten asset and, yes, it was $40 billion, which is a large number, but that's a small fraction of the entire ecosystem; it's a tiny fraction of even just Bitcoin".
We've had events, many, in Bitcoin's past that were much more all-encompassing than that. So, for people to be emotional and even questioning Bitcoin about something like that was just crazy to me. So I put that thread together of worse things that had happened.
Peter McCormack: Well, actually, let's talk a little bit about LUNA, the threat to Bitcoin. I had some friends get in touch and say, "Oh, I hear the whole market's crashed. There was a big scam with Bitcoin"; that was one of things I heard. I was like "No!"
Dan McArdle: Yeah, this is very annoying.
Peter McCormack: But actually, the ability for Bitcoin to essentially soak up the sell pressure of 80,000 Bitcoin, not just --
Dan McArdle: I know, and not just sell pressure but panicked sell pressure. They had to offload that in, I don't know if it was a day, but definitely a couple of days. That's selling under extreme duress and, yeah, I thought that was, if anything, pretty positive that the market just absorbed all that.
Peter McCormack: Yeah, and it's probably some additional sell pressure that was triggered by that sell.
Dan McArdle: Yeah, and you're going to hit trader stops and that kind of stuff, yeah, whatever the market structure there is; I'm not a trader. Bitcoin was off 10%, 15%, something like that, probably due to those sales, or at least that week. It's not that bad considering the size of that sale and how quickly it was done.
Peter McCormack: Well, let's tell people a little bit amount Mt. Gox. I covered it as a series with Danny. I'll get him to stick it in the show notes. I covered that back in, was in 2017?
Danny Knowles: 2018.
Peter McCormack: 2018. I made a bunch of shows about it so people could understand it, and maybe people should go back on and listen. But tell me a little bit about the story of Mt. Gox. Hold on, did you have coins on Mt. Gox?
Dan McArdle: So, I think I left one satoshi on Mt. Gox.
Peter McCormack: But you had used it?
Dan McArdle: Yes.
Peter McCormack: So, did you get lucky?
Dan McArdle: No, this is also kind of annoying. It was like the writing was on the wall for Gox for months, and taking your coins off exchanges was a thing back in 2013/14. We have been saying that since the beginning, "Take control of your keys". I don't remember if, "Not your keys, not your coins", was such a meme at the time, but it was a definitely a well-understood best practice. Sorry, what were you going to say?
Peter McCormack: Well, I was going to say let's go back to 2011 and the Gox hack.
Dan McArdle: Okay. So, back to the beginning then. So, there have been a couple of Gox hacks and I'm not sure if it's fully known whether they're related or not, but yeah, that 2011 one. So I think Gox had only been official open as a Bitcoin exchange for about a year and so momentum was rising. Bitcoin was hitting all-time highs in the teens and the $20,000s, and then that high of $32,000. Then, right around then, somebody hacked Gox, got into the system and basically got control of, I don't know if it was altcoins, but enough that they just market dumped I don't know how many tens of thousands of Bitcoin, and dropped the price to literally a penny.
So, there are real time sites that hooked into Gox's API where you could watch this happen in real time. So, yeah, it was something watching that happen in real time. That was was where probably 80% plus of trading volume happened back then, so this was the entire market.
Now, the hacker, I believe they ended up only being able to get a couple of thousand coins off exchange before people at Mt. Gox got their system in order, but yeah, that was a pretty dramatic event for a very young industry.
Peter McCormack: I think the pattern we're going to see as we run through this is the growing resilience of the network and the price.
Dan McArdle: Yeah. So actually, coming out of Gox, that event, given that it was only a couple of thousand coins that were actually stolen, they reversed the trades. So those prices at a penny didn't stick, so people didn't get dramatically cheap Bitcoin then. But shortly thereafter, in the following weeks, Bitcoin was trading back in the teens, back to $14,000, $17,000. I remember seeing it pretty stable there and being like, "Oh, wow, there's a real community behind this. Not only is the technology fascinating, the implication's fascinating, but there are enough people who are into this that it's really stabilised after an event like this". For me at least, that was a very confidence-building thing to see it come back after that.
I think everybody goes through that, they seem some kind of dramatic event happen in the Bitcoin ecosystem and then it recovers and then they have conviction after that. It's like they've seen it come back from something nasty and it still survives and ends up thriving and, yeah, that gives people a lot of confidence.
Peter McCormack: Community-wise and narrative-wise, what was it like back then? Did it just feel like it was just a tiny little project that a few people around the world were in, or was there still the vision of what we're seeing today? Did people believe this could be something that could become a global reserve currency?
Dan McArdle: It was actually both. It was very weird, because it was a lot of people who really did see what the potential could be, and we'd talked about it in Bitcoin talk forums and everything, but it also seemed like a pipe dream because nobody cared about Bitcoin. There weren't VCs talking about it, there weren't politicians talking about it. It was basically, I don't know, something like 30,000 anons on BitcoinTalk who were talking about it.
Then we all saw the power of what it could be, but there was still that huge disconnect between getting from here to there, and it's happened a lot faster than I assumed. To be where we are now, I thought it would take a generation, but it took ten years, which is amazing to me.
Peter McCormack: Yeah, well, I'm going to come back to that towards the end. Okay, so this is an interesting one; you talked about when Pirate@40 blew up. I didn't know what that is; me and Danny and were like, "What is that?" I was like, "I don't know".
Dan McArdle: Yeah, so that was probably, if not the first, then the first substantial Ponzi scheme on top of Bitcoin. So, it was a guy who was running something called Bitcoin Savings and Trust. So, that was in 2012. So, there were a bunch of Bitcoin businesses that popped up in 2011, 2012. It was actually a fascinating time. A lot of the things that exist now as fully fledged venture-backed businesses, existed back then in different form; people spun them up very quickly.
So, anyway, in that environment, this thing called Bitcoin Savings and Trust comes up and this guy with the screenname Pirate@40, no one knew his real name then, promised 7% a week and took people's Bitcoin and then paid them out 7% more in Bitcoin a week later.
So, this went on for some amount of time, weeks or months, and got substantial and enough to move the market. There were, of course, many rational people being like, "This is ridiculous. There's no way this is real. It's got to be a Ponzi. What are you idiots doing putting your money into this?" But they had reasons. There's this belief that maybe he was mining and maybe there's demand for virgin‑mined coins in excess of the market price and so, somehow, he's able to arb that and get the 7% that way; that was one theory.
Yeah, so people want to believe this stuff. They'd see these numbers, they want to believe it's real and they're reading posts from people who are saying they'd been doing it for months and getting payouts and everything. Obviously it's going to blow up at some point, and it did, I believe, in September 2012, maybe August if I'm not mistaken. Yeah, it tanked price like 50% in a couple of weeks. I forget exactly what the market mechanics there were, but yeah, it was enough to drive the ecosystem at the time.
Peter McCormack: Was he a scammer who disappeared with a pile of coins?
Dan McArdle: No. So, he went bust somehow. He eventually got arrested and there was a trial and he got convicted and did some time. His name is Trendon Shavers, if I recall correctly. He did a podcast on Bitcoin Uncensored I think with DeRose and Junseth in 2016 I think, which was really interesting.
Who knows whether this guy is believable or not, but one of the things he said on the podcast was that the thing that blew up his scheme, which he claims was not supposed to be a Ponzi to begin with but who knows, one of the things that blew it up supposedly was when Karpelés failed to deliver -- so Mark Karpelés is the founder of Mt. Gox -- failed to deliver some, I think it was near a couple of hundred thousand Bitcoin to him that he had deposited on Gox supposedly, something like that.
Peter McCormack: Gox lost 800,000-ish Bitcoin, so he's claiming of the quarter of them are his?
Dan McArdle: I don't know what the claims are, but yes, there was -- I remember listening to that interview and being like, "Oh, wow, so this guy is potentially actually the first victim of Mt. Gox if what he's saying is true". It's conceivable in one way because later on, I think it was BitMEX Research put out an in-depth piece on what really happened at Gox and what the source of the loss of funds was, and it did date back to a hack that occurred in, I believe, fall of 2011. So, it is possible that Gox was insolvent that early.
Peter McCormack: Well, I interviewed Jed and got part of the way in and, as I remember it, Danny, correct me if I'm wrong, but as I remember it, when Jed sold it to Mark Karpelés --
Dan McArdle: The 80,000, yeah.
Peter McCormack: Yeah, the 80,000 were missing.
Dan McArdle: And they knew about that.
Peter McCormack: They knew about that, and they had a plan to recover it but I can't remember how. So, I could see something like that.
Dan McArdle: It's probably just fees and buying the Bitcoin, from the trader fees.
Peter McCormack: Yeah, perhaps. I always felt like Jed offloaded a problem to someone else.
Dan McArdle: Yeah, maybe.
Peter McCormack: So, let's actually talk about the real Mt. Gox hack, because that, to a lot of people around that time, that was devastating, well it still is for some people, but that felt like one of those incidents that could have been the end of Bitcoin, it felt like.
Dan McArdle: So it did to a lot of people, and it did to people who had gotten into Bitcoin I think after the 2011 bear market, so people who came in 2013 with that bull market cycle. Bitcoin did 100X in 2013, so that's a monster bull market. Yeah, so drew a ton of people, and that was the first bull market where we got greater visibility, a ton of more prominent people talking about Bitcoin all the time.
Anyway, so yeah, Mt. Gox went under in February 2014, is when they declared bankruptcy as a result of a hack that had probably occurred several years prior. So, they'd been running fractional for who knows how long and I don't know how long the management there even knew they were running fractional, but they were. But the writing was on the wall for a while. There was dramatically different pricing on Mt. Gox versus other exchanges and that price kept getting wider, and you could get your coins off Gox for a while, while that price gap was significant. So, that was the big red flag.
Then, yeah, when Mt. Gox went under, there's just like a deluge in the media of people associating Mt. Gox with Bitcoin and the protocol itself and the ecosystem as a whole. Gox was 80% of volume at the time, still, and so it was the key player in the industry and the market. It didn't help that there was this thing called transaction malleability, which some might call it a bug in Bitcoin's early pre-SegWit design, where basically transactions could be fudged in a way. It's not like a double-spend or anything like that. But anyway, it's a relatively minor detail, but Gox lost a few hundred Bitcoin as a result of people spoofing them in that way.
Karapelés initially came out when Gox went bankrupt and tried to blame the entire thing on that, which was a Bitcoin protocol issue, and the media ran with that. So there's this association between, "Oh my gosh, Bitcoin has this core flaw and it cost us a huge, 850,000 Bitcoin implosion", which was not the case at all. Gox was an important business, but just one business built on top of Bitcoin. Yeah, I think, on the day they went bankrupt, I think I tweeted exactly that, that Gox was one node, and people who think it was anything more are suffering from centralised thinking, that this is fundamentally a decentralised ecosystem and will continue to grow from there. But yeah, it did precipitate a nasty bear market and a lot of people left.
Peter McCormack: Well, I was very new to Bitcoin in 2013, but I wasn't a bitcoiner; I was an acquirer of Bitcoin on LocalBitcoins because I was a Silk Road user. So I wanted to buy something, maybe a Bible.
Dan McArdle: Of course.
Peter McCormack: So I'd gone to LocalBitcoins, which was always a really interesting experience, because there was still a weird amount of trust, because you would go on and you would select your buy and the person would ask for a photo of you holding a piece of paper. You'd get their bank details but you'd have to pick somebody with a bunch of transactions before.
Dan McArdle: So you're not doing this face-to-face?
Peter McCormack: No, this was, what do you call it when you put something into --
Danny Knowles: Escrow.
Peter McCormack: An escrow. It was like into an escrow, and there was a bit trust involved.
Dan McArdle: Yeah, sure.
Peter McCormack: I remember my ex thinking, "What the hell are you doing?" I was like, "Well, I have to prove who I am. They want a photo of me holding a piece of paper". I can't remember what I had to have on the piece of paper.
Dan McArdle: It was probably the date.
Peter McCormack: Yeah, or no, I think it might have been something to do with the bank account it was coming from.
Dan McArdle: Oh, okay.
Peter McCormack: Then you would send them the money, but you're talking like -- the first one I did, I remember it was £80 for a Bitcoin, so that might have been 2012 actually; I can't really remember.
Dan McArdle: That would have been 2013.
Peter McCormack: 2013?
Dan McArdle: Yeah.
Peter McCormack: Right at the start it would have been, in January.
Dan McArdle: Yeah, in the spring.
Peter McCormack: Yeah, and so I would be doing that and then I'd get my Bitcoin and then I would transfer it to Silk Road, make my purchase and done, and that's all I did. I did some CDF trading of Bitcoin, just because it was so crazy, and I would make and lose lots of money. But I didn't study Bitcoin, I didn't read about Bitcoin, I didn't know about libertarians or Austrian Economics; I just didn't care. Then the price crashed from $1,200 down to whatever, and I was like, "I'm done", and forgot about it. I was just done.
So, I heard about Mt. Gox but I wasn't a bitcoiner so it was just like, "Oh, that's just some thing"; didn't pay any attention to it. But if you're an actual bitcoiner, you've been around for years, what was that day like when you heard about it?
Dan McArdle: Well, again, the writing was on the wall, so I wouldn't say I was terribly surprised. It was just like, "Okay".
Peter McCormack: Were there rumours?
Dan McArdle: Yeah, and it's kind of like LUNA; it happened in dramatic fashion, not surprised that it happened, just surprising that it happened in such a binary way. Mt. Gox didn't just slowly bleed out and lose some money, etc; they lost most the money overnight, it felt like.
Peter McCormack: It think it was about 150,000 Bitcoin they eventually recovered.
Dan McArdle: I think 200,000.
Peter McCormack: Was it 200,000?
Dan McArdle: Then a bunch of that went to lawyer fees and stuff. So, I think people are getting back about 15% of what they had in Gox, and I think they're getting it back, potentially this year or next year which is interesting; if you had Bitcoin in Mt. Gox in late 2013, early 2014, and you're getting 15% of it back now, nine years later, are you better off having been a forced hodler with basically a lock-up with an 85% fee, or are you better off than if you had control of those keys?
Peter McCormack: That's a really good point, and I think, for some, certainly; for others, maybe.
Dan McArdle: I think probably for most.
Peter McCormack: Yeah. You see that every cycle, that tweet comes out with that guy going, "I can't believe I sold my 1,800 Bitcoin for $7; it's now at $30", or whatever that tweet is.
Dan McArdle: Right, exactly.
Peter McCormack: It's like, "Fucking hell, man". Everyone's got their Bitcoin story, like I heard about it and I didn't -- you heard about it when it was a $1 and you didn't buy $10,000 worth.
Dan McArdle: Right, exactly.
Peter McCormack: Yeah, everyone's got that story or the mistakes or their trading mistakes. I think a lot would have traded down, I think a lot would have sold during various cycles. If you had 1,000 Bitcoin, you're going to have 150 Bitcoin; that's a nice stack.
Dan McArdle: Yeah, and a good number of people are getting life-changing money, I would think.
Peter McCormack: Yeah, but I also think there are some people who can't rationalise it that way and they're going to be, "Oh, I definitely would have still had this".
Dan McArdle: Right, yeah, but 95% of people are going sell a 5X or 10X and be very happy about that.
Peter McCormack: What about the ones who sold their claim because a lot of people sold their claims? There was that fund, who were willing to buy it at a discount?
Dan McArdle: Yeah. That was three or four years ago, right? That was before COVID, so before this last cycle, yeah. So, interesting, right?
Peter McCormack: That might turn out to be a great buy for them.
Dan McArdle: Yeah, totally.
Peter McCormack: What was the recovery from Gox like?
Dan McArdle: Well, 2015 was just like total bear market. We went from $1,200-ish, as you said, in late 2013 to the low was then January 2015 at $155 or something, and we traded in the $200s almost the whole year. But it was a year when people were building; a lot of the companies and products in the space are form that era. Yeah, so didn't really come out of it until late 2015, then it took all of 2016 to get back to those highs that we were at in 2013.
Peter McCormack: Do you feel like, with each of these cycles, bitcoiners had an accelerated maturity during those bear markets of products being built, the kind of investors coming have been interested?
Dan McArdle: Yeah, I think it's felt each time the people come into the space it gets more sophisticated, which is good and bad I guess; it gets institutionalised more and more, but also you get a ton of deep thinkers about Bitcoin in greater context, greater economic and political context. That stuff was always there early on but, I don't know, it gets more professionalised. So, there's been a lot of great Bitcoin content that has come out of those periods, which I put together a lot of that. It was part of the impetus for CaseBitcoin.com, it's getting a lot of that content in one place.
Peter McCormack: Yeah. We'll put a link to that in the show notes as well; it's a great website. Okay, let's talk about the ETH DAO hack, and one specific question I have for that, and I'll explain why afterwards, but did the ETH DAO hack have any impact on Bitcoin?
Dan McArdle: Let's see, if I remember correctly that was, what, May 2016?
Peter McCormack: Yeah.
Dan McArdle: I don't remember a lot of impact on Bitcoin. That was the recovery period for Bitcoin. Late 2015, we came out of the bear market with one big candle, much like April 2019, came out of that bear market in similar 25% in a day kind of thing. So then after that, the first half of 2016 was trading in the $400 to $500 range if I remember right, and I don't recall the DAO hack having a lot of impact on Bitcoin specifically then.
Peter McCormack: The reason I ask is because dramatic things in Bitcoin affect the rest of the crypto market. If Bitcoin suddenly had a 20% down day, you know every other shitcoin's going to have a 25% down day or whatever. But we were talking earlier about the ETH node that's coming, and if that is some kind of disaster, could that have a contagion effect into Bitcoin? And I don't know.
Dan McArdle: It's probably more possible now than it was years ago, just because other assets are bigger relative to Bitcoin now. Bitcoin dominance has been going up lately, but it's still, what is it, 50% or something now, I don't know exactly, but it was still 90%-something, as flawed as that metric is.
Peter McCormack: It's a massively flawed metric.
Dan McArdle: I hear you, but to your point, I think it is relevant in terms of if you're asking the question, can things from another large asset spill over into Bitcoin land, there's some possibility of that. I think if ETH catastrophically blew up, yeah, it might affect Bitcoin similarly to how LUNA did, where people who don't now all that much about the space just want to be risk-off about the whole thing for a certain period of time. But it won't take that long for it to become clear that these are very different things, and then smarter people come in and understand the difference.
Peter McCormack: So, a good question for you regarding ETH, because again I wasn't really around in 2016. I didn't get back in until I think it was maybe December 2016, January 2017. It was a very small crypto scene, highly dominated by Bitcoin. What was the view towards altcoins around that time, pre‑ETH? Right now, it's obviously reputationally for bitcoiners, some of them just fucking hate everything, some of them call everything a shitcoin and they won't have anything to do with anything. But when the first altcoins came around, was there some excitement about it or was there instant...?
Dan McArdle: I mean, a lot of people instantly wrote a lot of it off, because the first altcoins were clones of Bitcoin. So, the very first ones in 2011 were interesting technical experiments, right. It wasn't an environment where they're clearly trying to steal Bitcoin's network effect or grab some monetary value, because that time period was a nasty bear market and the price stuff wasn't as big a deal.
Then, the big alt wave that created maximalism really, I would argue, was 2013 when we had just a ton of clone coins. Litecoin was created in 2011 but started getting a lot more popular in 2013, and it's just a handful of parameter changes to Bitcoin. It doesn't fundamentally do anything different than Bitcoin. It doesn't add anything that Bitcoin doesn't do and will never do. So there's no way, in my opinion, to argue that there's any value creation there. There are a ton of coins like that, just Feathercoin and Quark and all sorts of stuff that doesn't exist anymore.
There were still altcoiners. There was still a bunch of traders who just wanted to ride a wave and get their charts out and do technical analysis and buy these things and talk them up at the time, like Reddit or Bitcointalk, and Twitter was a thing too then. But that did result in a lot of bitcoiners being like, "This is ridiculous and all the altcoins we've seen are dumb".
Peter McCormack: When ETH first started getting talked about, was that seen as different?
Dan McArdle: ETH was different, yes; not everybody thought it was different, but I think it was one of the first that proposed to do something fundamentally different than Bitcoin, just like occupy a different domain. Bitcoin wasn't going to offer Turing-complete smart contracts; Bitcoin took this security first, simplicity first viewpoint and was trying to do global money. That's different than what Ethereum was trying to do, even at the beginning; they've somewhat changed the mission over the years.
So, there's some room there for even ardent bitcoiners I would say, even bitcoiners who hated all prior alts to be like, "Okay, well this one is actually different". There were a few prior to that. Monero was another one that offered something that Bitcoin probably never would, namely protocol level privacy.
Peter McCormack: Monero's a funny one. In all of my time, started as a bitcoiner just because I needed Bitcoin, and then started going down the Bitcoin rabbit hole and becoming an altcoiner and trading altcoins and shitcoins to becoming a maxi, but I've never, ever, I don't think I've ever called Monero a shitcoin. We talked about it earlier, it's always been the one I can have a very solid argument for why I would use it. Someone might want to give me an argument for why it's a shitcoin, because it's not Bitcoin or problems they see with it, but right now I can think of multiple use cases I could have with that right now that I can't do with Bitcoin; I've always felt that.
When I interviewed Fluffypony for the first time, I said, "There's Bitcoin maximalists and there are Bitcoin maxis who are like, 'Yeah, Monero's okay'".
Dan McArdle: Yeah, there is some of that, and I think it's because it was the first altcoin that came around that credibly offered something different than Bitcoin. So I think, if you just understand what the use cases are, and if this thing is just trying to ride Bitcoin's coattails and people say affinity scam off of it, then it's one thing, but if it is doing something technically different that has value, then that's another. I think that's a distinction that happened sometime in that 2014, the 2016 period, and ETH launched, I believe, in 2015.
Peter McCormack: Yeah, and ETH, I'm not a fan of ETH; I've got no use for it. Well actually, that's not true. I think there's a solid argument for stablecoins, and I think some protocols offer a much better pathway and use case for stablecoins than Bitcoin has right now. I expect high-quality stablecoins to come to Bitcoin or Lightning somehow, I can't tell you how.
Dan McArdle: I hope so. I'd love to see stablecoins on Lightning, yeah.
Peter McCormack: I would love -- a stablecoin on Lightning would be incredible. I don't know how it can be done but I'm sure it can be, and I know people are working on it.
Dan McArdle: Yeah, exactly. I've heard a little bit about that, yeah.
Peter McCormack: That would be awesome, and that's the only stablecoin then I would need to use, it would make a lot more sense to me. But there are people right now who need stablecoins all around the world, there's an absolute fundamental need. If they have to use ETH or trying to do it, fine, I have no issue with that, but one thing I will say about ETH, despite me not being a fan, is it's started to prove it has its own resiliency outside of Bitcoin.
The way Bitcoin has survived its own, I mean we will talk about the DAO hack in a minute, it survived a constant attack from bitcoiners with some highly valid criticisms; it's suffered from a wave of ICO failures and maybe NFTs as well, we will see; but it has its own resiliency. Some of what people might be feeling with ETH right now is similar to what people have felt with Bitcoin, but you can explain what's happened with the DAO hack.
Dan McArdle: Yeah, ETH is a cycle behind Bitcoin, I think. Just to follow up on what you just said there, yeah, I think ETH and Bitcoin are very different things; they do stand alone relative to most of the other assets in the space, which just feel like start-up equity, whereas Bitcoin and ETH are different than that set and very different from each other, I think. That's my own mental model there anyway. Anyway, yeah, with the DAO hack, that was basically ETH's fork wars event, very different than what happened with Bitcoin a year later.
Peter McCormack: It was a fork war on launch.
Dan McArdle: Yeah. So, let's see, there was a DAO that had collected some egregious percent of total supply of ETH that then got hacked, and the hacker controlled these coins. The Ethereum community, I believe led by the Foundation, got together and decided to basically, I don't think this is technically accurate, but for all intents and purposes, roll back the chain to undo the hack, just a very aggressive thing to do in a blockchain, right. It's all supposed to be about immutability and uncensorability.
Peter McCormack: Code is law.
Dan McArdle: Yeah, exactly, code is law. Like, "Why are we all here for reinventing committee‑based systems?" So yeah, that was a big existential moment for ETH, like which way are they going to go, etc, etc. Yeah, Ethereum Classic came out of that, and the version that didn't roll back the hack, but the community went with the version that did, which was the Ethereum we all refer to today. I think a bunch people had a lot of opinions about that.
Peter McCormack: What did you think?
Dan McArdle: I was very much opposed to rolling it back. I thought it should stick to being immutable and code is law and that smart contracts that did what they say and wouldn't be messed with by people's whims or opinions, I thought that was the interesting thing that ETH brought to the table. So, when they rolled it back, it was like, "Okay, well, I'm not sure how much we can rely on that anymore".
Peter McCormack: Is it fair to call it a hack, or is an exploitation of a weakness in code?
Dan McArdle: Exploit's probably a better description. All hacks are exploits in a way, but I don't know the semantics of it.
Peter McCormack: Well, I think of hacking as diving into a system, a locked system and then stealing something out of it.
Dan McArdle: But hackers are always exploiting some software bug usually, almost, like guessing passwords or whatever, but they are typically exploiting some code that does something that the developer did not intend, right; that's what happened with how the smart contract for the DAO, it was called, ETH was --
Peter McCormack: Well, let me put it a different way. Say if I figured out a way to hack into a bank account and take your money, I don't see that as an exploit, I see that as theft. Was this similar?
Dan McArdle: Well, yeah, people came down on both sides of that.
Peter McCormack: Yeah. It's a tricky one because I'm wondering whether, say, if that person had kept their ETH and they had been found, had they committed a crime?
Dan McArdle: Right. So, I would argue it's all about the social contract and expectations of the ecosystem. You put your money in a bank, you expect that it's going to be there and they're not going to give it to an attacker; whereas, when you put your money in a smart contract system, I think the deal you're agreeing to is whatever that code says you are okay with.
Peter McCormack: Code is law again.
Dan McArdle: Yeah. That's my opinion. Some might say that's an extreme opinion of smart contracts, but it is what it is.
Peter McCormack: Laura Shin's recent book from that, she believes she identified who it was.
Dan McArdle: Right, yeah.
Danny Knowles: I think it was one of the co-founders of TenX, was it?
Dan McArdle: Oh, yeah.
Peter McCormack: TenX, I remember TenX.
Danny Knowles: Yeah, it was like a debit card or something. I'll try and find who it was.
Dan McArdle: 2017 ICO.
Peter McCormack: Yeah. TenX, did that become something else?
Danny Knowles: I think it died because it lost its partnership with Visa or whoever it was.
Peter McCormack: That was it, yeah. A really interesting time. I don't know why Ethereum Classic survived for so long, it didn't seem to have anything happening on it.
Dan McArdle: Yeah, the development was stagnant there I think, yeah.
Peter McCormack: Yeah, okay, let's talk about 2017, that's where it did become a bitcoiner as such. January and February 2017, I started buying Bitcoin. I was buying ETH as well, I was aggressively buying ETH at about $9. I did well out of that.
Dan McArdle: So, early 2017 then?
Peter McCormack: Actually, I bought my first Bitcoin, I think it was in -- this was when my mum was sick, because I bought the Bitcoin at the end of December. Silk Road wasn't available, so I had to use another website to get some cannabis oil to treat her, and she died on 12 January. So, I went back into Coinbase to sell the remaining Bitcoins and then saw this ETH thing and looked it up and said, "Actually, I'm going to get back into this". I started reading about blockchains, and I was sold on this idea that this was the dotcom bubble again but for blockchains, and I thought I'd buy it, and I literally bought everything. Dash was one I was really into.
Dan McArdle: Yeah, AKA Darkcoin, which was XCoin before that.
Peter McCormack: Yeah, XRP; I actually bought some of that at this ridiculous low price. Honestly, at one point, I had a spreadsheet because I had so many shitcoins. But that's when I got back in and I rode up 2017, an unbelievable year, and I rode down 2018, and that was brutal.
Dan McArdle: Yeah. 2018 was like lower highs for 11 months straight, and then we dumped 50% after that.
Peter McCormack: Yeah. I'm trying to remember, because there was time we actually came back to $14,000, no, yeah.
Dan McArdle: That would have been earlier, earlyish in the year, yeah.
Peter McCormack: That as the during the conference, the Bitcoin 2019 conference, we had a jump.
Dan McArdle: Oh, 2019 you're talking about then?
Peter McCormack: Yeah, and I'm just trying to remember that 2019 conference for that. So, we came down. Did it get down to like a $6,000 was it?
Danny Knowles: It went down to $3,000.
Peter McCormack: What, in 2018?
Danny Knowles: It was at $6,000 for a long time. That was like the bottom for ages and then it dropped down to $3,000-and-a-bit.
Dan McArdle: Yeah, and then it would trade in the $3,000s for four months and came out of that, I think, on 1 April 2019.
Peter McCormack: What happened in March 2020?
Danny Knowles: That's when it had the COVID crash.
Peter McCormack: Yeah. That went down to $6,000 at that point, didn't it?
Dan McArdle: That was also in the $3,000s.
Peter McCormack: That was also in the $3,000s? So, we had two hits in the $3,000s, the two separate ones?
Dan McArdle: Yeah. So, the 2019 low, or it might have been late 2018, was $3,122 I think, and then the COVID low was about $3,500, $3,600.
Danny Knowles: I think about $4,000.
Dan McArdle: Yeah. I know it went under $4,000, I think.
Danny Knowles: Yeah, maybe just under $4,000, yeah.
Peter McCormack: This is one of those important lessons to anyone listening who panics, and by the way this isn't financial advice, do what the fuck you want, but I remember when, in that first bit in 2018 when it kept getting lower, and lower, and lower, and then it got to, I think, about $8,000 and I panicked and sold, or about $6,000, I panicked and sold some. Essentially, I kind of sold at the bottom and ended up rebuying a little bit higher, because I was like, "Well, if it goes to $1,000, I've got fucking nothing left", whereas I should have just gritted my teeth.
Dan McArdle: Yeah. It's hard to do, right?
Peter McCormack: Very hard.
Dan McArdle: I think the people who, just from a financial standpoint, do the best are the ones probably who can figure out when we're going pretty parabolic and sell a little bit into these big parabolas and then re-buy at the lowest bit. Like you were saying earlier, picking the highs and lows is an impossible game.
So, I think the best advice for people is, know what you own and why you own it. If you've really done your research and you're not going to be pushed around that much by price, if you understand Bitcoin deeply and you have some reasonable market cap target for what it could be and you understand why and you understand those fundamentals and that price going from $6,000 to $3,000, or from $60,000 to $30,000, doesn't change the fundamentals, you have a lot more conviction to either hold or buy the lows too, if you want to do that.
Peter McCormack: Well, I remember in 2017, I was in a pub in Donegal with my dad and I'd been aggressively buying Bitcoin at the start of the year, and I remember when we went from $1,000 up to $2,000, and I was like, "Holy shit, Dad, look, it's like $2,000", and I was blown away by it hitting that price. I had no idea it going to go to $20,000, I had no idea; it just blew my mind. That period from about $4,000 to $20,000, or $6,000 to $20,000, was very short; it was fast, weeks. I think there were a lot of people who thought something similar was going to happen here; we were going to suddenly go from $60,000 to $150,000 and it never happened.
Dan McArdle: Right, the blow off top idea, yeah.
Peter McCormack: Yeah, we just didn't have it.
Dan McArdle: Right, and if I had to pin an explanation for that, I would guess it's probably that institutions are involved now. So, if you're one of these funds that buys a bunch of Bitcoin in late 2020, so in the high teens, something like that, so when Bitcoin's at $60,000, you're sitting on a 3X or 4X in a few months.
Peter McCormack: You've crushed it.
Dan McArdle: Most institutional money managers are at least going to rebalance that, so that creates a bunch of sell pressure when we get to those highs that, in prior bull markets, with the markets being mostly retail driven, or people trading for their own account, there's much less pressure to take some off the table and take that more disciplined approach where people just get excited. We'll hold it a lot longer versus, I think, institutional money managers.
The flip side of that, I think, is also true, that institutional people, maybe they're not going to panic as much as retail will, and are used to coming in and buying when there's blood in the streets as they say. So, we'll see.
Peter McCormack: I also think it's one of those that's ultimately good for the health of Bitcoin. As much as a bitcoiner may enjoy when the price goes up, and there was a time where I was tweeting every thousand up, which I won't do again; but as much as if Bitcoin hit $250,000, $300,000, economically for me it would be great, I'm a lot more interested in the health of Bitcoin now. If it turns out this year we don't have another dump below $28,500, just imagine we range around here, even for a year, and then we grow again, when you look at this chart --
Dan McArdle: Yeah, that would be great.
Peter McCormack: Yeah, it would be great because the volatility's dropping.
Dan McArdle: Totally.
Peter McCormack: If in the next one it's even less, maybe we just double and come back, and rather than a 60% drop, we have a 45% drop; if the kind of money that's coming in and the algos at play and the trading that's at play means there's less volatility, I think that solves one of our big problems in Bitcoin.
Dan McArdle: Yeah, that's been a common FUD vector forever, "It's too volatile to be money". It's like, "Well, okay, it's also very young and at a much smaller market cap than it would need to be to be global money". So, it'll be like, "You should expect it to be volatile in these growth periods". But, yes, I agree that getting volatility should, long term, very long term, like decade to decade, volatility should be going down. That's what you would want to see for a global store of value asset.
Peter McCormack: It becomes a lot more useful as money, it becomes a lot more easy to tell the story, it becomes a lot less scary for people to get involved. The dream scenario is there's just like a constant slow uptick.
Dan McArdle: Yeah, right.
Peter McCormack: Like 7% a week.
Dan McArdle: Yeah. The markets will never give you that for long.
Peter McCormack: They won't give you that for long, but if we get away from 10X up, 80% down, like I say, it's fun but it's -- we're getting into a world where Bitcoin's super-serious now. We have a country where it's legal tender; we have Tesla with it; we have Square with it; we have institutions with it; we have it discussed on a global scale; it's discussed in every government and every parliament in the world. This is a serious asset. If it can become more stable, it would serve such a better purpose for so many people.
Dan McArdle: Yeah, I agree. So, I think what you're describing there is, it's really graduated to being a global macro asset in the last two years. So, I think part of what's healthy for Bitcoin is its volatility going down over time, but also it responding, as you might expect a fixed supply global hedge asset to respond to macro events. So it's funny, people are complaining now that Bitcoin's down while we have these high CPI prints, so they're using that to say that it hasn't been an inflation hedge, but I would argue --
Peter McCormack: I think I know what you're going to say.
Dan McArdle: -- that it front-ran that, because it responded phenomenally well to the money printing. If you look at when Bitcoin launched in 2020, it was basically the day the Fed announced that they're going to do QE forever and inject tons of money, tons of liquidity into the system. And yes, other risk assets also took off, but Bitcoin took off a lot more. It has held a lot more of those gains. The poster child for high-growth tech, the ARK's ETF, so their flagship ETF, ARKK, has retraced its COVID gains completely; it's done a full round trip, and here's Bitcoin still sitting up 500% from that time.
I think it did respond very well to how a rational expectation of a fixed supply of money might, when the world's biggest central bank says they're going to inject unlimited liquidity into the system.
Peter McCormack: Bitcoiners were predicting these inflation numbers. We had Janet Yellen coming out this week saying -- have you seen the video?
Dan McArdle: I don't think I've seen a video yet.
Peter McCormack: She's saying, "Well, I was wrong. We got this wrong".
Dan McArdle: I saw the tweets on that today, yeah.
Peter McCormack: We've seen so much fucking nonsense around inflation, blaming Russia for gas prices and blaming greedy corporations by Liz Warren.
Dan McArdle: It was ridiculous.
Peter McCormack: There was all this bullshit where --
Danny Knowles: It was big Turkey.
Peter McCormack: I know, as a bitcoiner, I was watching smarter people than me who have been saying for a couple of years now, "Inflation is coming, you cannot keep printing money". We just had Peter Doyle in earlier and he said, "Inflation will usually match the increase in monetary expansion".
Dan McArdle: Over time, yeah.
Peter McCormack: Yeah, over time, we'll catch up with this. So, we've had 36% increase, he would expect a 36% over a certain period of time, and there's a lag for it all, but eventually you'll see a 36% inflation. Bitcoiners were talking about this back when Bitcoin was at $10,000, $12,000, and buying it because of that. They were the ones telling everyone else and no one did, and then the price started to move and, for me, it has been an inflation hedge because I front-run it with the rest of us.
Dan McArdle: Yeah, exactly. So, it's this distinction between money printing and inflation, right. They often go hand-in-hand. Money printing is going to eventually lead to inflation, but it's like people can't get their head around the fact that we have these CPI prints now and Bitcoin isn't performing right now. Well, it did all the performance in the prior two years, because it got ahead of the money printing when that side of things happened. Now that the Fed has turned around and is withdrawing liquidity, it makes sense for Bitcoin to be far less performant in that environment, because Bitcoin is a counter to fiat money debasement.
So, if we're going through a period where, remarkably, central banks aren't debasing their currency, I wouldn't expect Bitcoin to go nuts during that phase, but I do expect central banks to continue to debase long term. The Fed will have to pivot at some point, just with debt-to-GDP, where it is globally. There's no way to not print a lot more money over the next 10, 20 years. So, as far as Bitcoin's health, I would like to see it perform very well again when the Fed pivots or when they -- they probably won't do a 180° pivot, but they'll slow down, etc, and then when QE starts up again, that's when I'd like to see Bitcoin perform again.
Peter McCormack: Everyone loves to hear a prediction but nobody likes to make one. Do you think we've bottomed out? Do you think we're ranging for the next piece?
Dan McArdle: Yeah, I again not a trader, so I tend to think in scenarios. I guess, if I had to peg it, I'd say a 50/50 chance that we range here for a while or go down into the low $20,000s for a while, potentially.
Peter McCormack: But you don't see an up scenario from here?
Dan McArdle: Probably not quickly unless the Fed breaks something and has to pivot quickly, which they did in late 2019. The repo market blew up; I don't know if you remember that.
Peter McCormack: Yeah, I do.
Dan McArdle: They had sold off 15% of the balance sheet from the QE that they had done in response to the 2008 Financial Crisis. They only drew it down 15% before they broke the market mechanics and had to reverse course. People think it was COVID that caused them to reverse course, and of course, they to do massive stimulus because of that, but they had actually reversed before that because of whatever the liquidity dynamics in the Treasury market are.
Peter McCormack: One thing I'm going to be interested to see, Dan, is in two years' time, whether the halving is just a narrative or a real thing. My gut instinct is largely it's a narrative.
Dan McArdle: Yeah, well, again, its effect is 50% less every time just in terms of the raw market mechanics. So, whether or not people front run it, the actual market impact should be half as much every time.
Peter McCormack: But I think it's even less now because, having spoken to miners or people who are running large mining operations, a lot of them are saying, "We don't sell our Bitcoin because we leverage it. We leverage it to build out the infrastructure". I'm not sure it's entirely true, but I don't believe the 900 a day that are being mined are being sold straight into the market.
Dan McArdle: No, I agree, I think miners are often bulls.
Peter McCormack: Yeah. So, the majority of the sell pressure in the market I don't believe is coming from miners. I can see scenarios where exchanges have created sell pressure, because they need to sell to be able to fund their business and pay their staff, because they're not all paying them in Bitcoin. I don't know if the halving is just narrative. I think it is, but I wonder if it still plays in, because we all talk about it.
Dan McArdle: Yeah, it might matter, who knows? The way I like to describe it is, if there's a demand surge, if that surge happens in an environment before halving, it's going to have a lot less impact than if it happens right after, because there is just less supply being dripped into the market. So, yes, people front run it, but also an unexpected demand surge will have more impact in the post‑halving world versus the pre. So, you can argue that's there's structural effect there, even though, yes, people do front run it, but there's some efficiency to the market there.
Peter McCormack: What does Bitcoin mean for you now? I kind of think of Bitcoin in your tour of duty ride, that every four years is like a tour of duty and I'm in my second tour of duty and I'm looking to the future thinking, "I'm not going to do four or five of these. I'm not going to spend 20 years riding the coalface". I have a feeling I'll always be around it and considering and liking it, but there will come a time when I'm not going a Bitcoin podcast, I might not be doing any podcast, but there will come a time and I don't know if that's in four years or eight years, I just don't know.
You see people come and go and you see the baton get handed over, and every cycle there are new people who come in, whether that's new podcasters doing podcasts, or new writers writing new ideas and people with new projects and businesses, but you do seem to see waves of people leave as well as come. What does it mean for you in terms of that? What is Bitcoin for you now because you've done over a decade? You've done three tours of duty.
Dan McArdle: A few tours of duty there, yeah. Well, in 2020, I created CaseBitcoin because I did feel like people needed to better understand the case for Bitcoin. They needed all those resources in one place, explained in a way that made sense at the time, like the institutional money managers, who were a big target audience, people were coming into the space. But yeah, I feel like in the last two years, people get it now. There's market timing and cycles and the Fed and all that, but broadly people do understand the overall value prop, I think.
So, where does that leave me as somebody who does consider myself, to some degree, an educator on Bitcoin over the years? I think I'll always be doing this to an extent. I don't know if I'll be launching any Bitcoin projects but, I don't know, it's tied with my world view, it's tied with what I want to see happen in the world. So, when people come out with dumb ESG FUD or whatever it is on any given day, I probably won't be able to resist getting into the arguments.
Peter McCormack: What's the FUD that's frustrates you most?
Dan McArdle: Well, right now, it's probably the ESG thing.
Peter McCormack: Okay.
Dan McArdle: It's been different things over the years. It's just because, on absolute numbers, it's such a small percentage of anything else people might care about. I think this guy, Daniel, on Twitter, I don't know his last name but I think his handle's @csuwildcat, so Daniel's been vocal on this and coming up with stats that really contextualise things.
He likes to point out that clothes dryers globally use 15 times more energy than Bitcoin. Another one he did the maths on recently I think was that wasted food results in something like 60X more emissions than Bitcoin produces. Then, he contextualises that further by saying, if you reduce food waste by 1.7%, that has the same emissions impact as all of Bitcoin. It's clearly just a ridiculous politically-motivated thing when people come after Bitcoin for the ESG stuff.
Peter McCormack: I think it's two things actually. I agree it's politically motivated, I also think it is uninformed as well.
Dan McArdle: Yeah, ignorance.
Peter McCormack: As somebody who cares about the environment, but is mildly hypocritical in his own use of energy and waste that I arguably create, flying around the world and stuff, I've tried to educate myself a lot more about it. The more you learn, the more you realise that this is a much more complex problem than I think a lot of environmentalists and environmental scientists want to make out; and that's been a real process for me. It's a humbling experience of holding a position and being vocal about it and then having to take a step back, and I've had to do it on many issues.
But I know when I get into discussions, say, on Twitter or in public or meet people, and when they first want to criticise Bitcoin, it's the same shit, it's terrorists and drug dealers and it's terrible for the environment, and I think what it is, is the mainstream media has done such a terrible job of writing about Bitcoin. The Economist and the FT I would expect better from, but they've both been terrible, and because of that, people see a headline and they repeat a headline.
So, I think that's done a really, really poor job for us, and there have been people out there who've had an opportunity to do a better job, who are kind of Bitcoin-aware people who work in some areas of mainstream, and they haven't helped. Then, you've got shitcoins attacking as well.
Dan McArdle: Oh yeah. That's going to get worse when ETH goes to proof of stake, that's going to get much worse.
Peter McCormack: That is one of the things I'm really worried about because I know what those motherfuckers are going to do. We saw it that fucking dickhead from Ripple recently.
Dan McArdle: Oh yeah, Chris Larsen, yeah.
Peter McCormack: Like, fuck off, man! So, I think it is politically motivated, but I do also think there are lot of uninformed people.
Dan McArdle: I agree. I think a lot of the media headlines are politically motivated. They associate Bitcoin with political ideology, they don't like them and so then they're just going to attack it on any grounds they can find. The ESG thing is something that resonates with a lot of people, so they're going to ignore any semblance of correctness or nuance and just hammer Bitcoin on that point. I think that's what the media and a lot of people, like Chris Larsen, are doing.
It is a very nuanced, complex issue. So, then it's hard for people who are just doing their nine-to-five and trying to get their kids to eat dinner and go to bed to dive in and really understand the issue. So, yeah, I think we just have to keep putting out the real numbers and making our points and, ten years from now, maybe it won't be such a thing.
Peter McCormack: Yeah. I also think we need to create some alliances. I think sometimes there are people out there being critical, and they could be from the mainstream or they could be from a scientific background, and maybe they're parroting themselves. You go on the tweet, and when you go into a tweet you see the people you follow first and they're dogpiling in, and so there's this aggressive memeing and whatever. But one of the things I've really appreciated about somebody like Michael Saylor, which I think he is actually the best at this, he'd never criticise, he never dogpiles, he will always reply with a considered and educated response to that person.
Dan McArdle: Yeah, reply with data.
Peter McCormack: Yeah, reply with data and civility.
Dan McArdle: Yeah, agreed.
Peter McCormack: He's certainly orange-pilled some important people and, in some ways, he's become one of the best at doing this. He's incentivised to do it, of course, but he's doing it in a really good way, and I admire him for that. I think sometimes some of us, and I'm a complete hypocrite, could probably do a better job at saying, "Hey, come on, let's sit down and talk about this".
So, for example, I did the Alex Epstein interview, he wrote Fossil Futures; now I don't agree with him on everything, but I got a lot from it. Now, I'm going to do the other side, I'm going to Andrew Dessler, who is a climate scientist who debated Alex Epstein, and I want to interview him just to get his alternative opinion to Alex Epstein. I kind of want to orange-pill him.
I want him to be aware of the benefits of Bitcoin and the things Bitcoin can do, because having a known vocal environmentalist say, "Hey, by the way, this Bitcoin thing doesn't use much energy compared to other things, but also offers this whole other area of helping the environment, the flaring side of things which --"
Dan McArdle: Yeah, the flaring thing. There's more flare capacity in the US alone to power all of Bitcoin, and that reduces emissions versus if Bitcoin didn't exist.
Peter McCormack: Exactly. So, we can build up this really solid case. It's ironic really that if the ESG people are attacking Bitcoin, and we can 180° and turn it on its head and weaponise it against the narrative --
Dan McArdle: Yeah, well, so Nic Carter's done a lot of very consistent work on getting the right information out there. So yeah, I agree, if there's a consistent message with data points that are easy to say and back up, that could go a long way with people, yeah.
Peter McCormack: Is your conviction the same or has your conviction grown? Also, actually, has it every waned?
Dan McArdle: It hasn't changed substantially. The only reason I hesitate is because, in the early part of the fork wars I was a big blocker. So, I was concerned that Bitcoin was going down a path that would basically open up the ground for altcoins to take away what I felt could be Bitcoin's use case as money. So, my view is there are a bunch of different aspects to money and, yes, store of value first makes sense, but I think you also need some direct connection to the economy, some ability for it actually to make sense and to use it as money. That doesn't have to be the majority or anything, doesn't have to be ubiquitous for coffee and all those clichés, but something.
So, I was worried that Bitcoin was going down this path where it was going to completely ignore payments and whatnot. People talked about Lightning in 2015, and I think it was created then, and talked about a bit in 2016, but it seems so far off. I was concerned other assets would gain a lot of ground that I thought should have been Bitcoin's. But yeah, despite being a big blocker, yeah, I never supported Bcash or, God forbid, BSV, or anything like that.
Peter McCormack: For anyone to deny there were logical arguments for bigger blocks I find amazing. I think there were logical arguments for both sides. It was completely rational to think about it. In hindsight, it's obviously --
Dan McArdle: In hindsight, it's like, okay, the narrative that Bitcoin is immutable no matter what, yes, that is extremely valuable for Bitcoin to have that aura of, it's just not going to change no matter what you throw at it. That's hugely beneficial and I'm, in retrospect, very glad that happened. At the time, I would have argued that we should be able to change a technical detail while it's still being well understood that the monetary policy was untouchable, but okay, now we're adding nuance, and that's hard for people to understand.
Peter McCormack: All right, I'm going to finish with one question. What are you looking forward to most with Bitcoin? By the way, I could talk to you for hours. It's very rare you get to talk to somebody who was around in 2011, because there weren't that many people, and you get a different level of conversation. It's almost like you get the wisdom of 10, 12 years in Bitcoin, and I love it, but also just super-interested in what are your hopes for the future and what you're interested in.
Dan McArdle: Yeah, I hope Lightning continues to have more success, I think it will; I hope we see more adoption on the level of El Salvador and similar; I hope mining continues to become a key part of energy infrastructure globally, because it does solve a lot of problems there; I hope Bitcoin just becomes a global macro asset that serves as an escape valve on bad central bank monetary policy. I think we're well on the way to all that.
Peter McCormack: Man, listen, this was amazing, it's fascinating to talk to you. Where do you want to send people; is it CaseBitcoin?
Dan McArdle: Sure. Yeah, casebitcoin.com. I mean, I don't really have anything to show, it's just like a community resource and it's in desperate need of some updating, but yeah, still a great resource, I think.
Peter McCormack: All right, Dan, appreciate you, man, I appreciate you coming on and, yeah, I hope we get to do this again soon.
Dan McArdle: Yeah, sounds good.
Peter McCormack: Take care, man.
Dan McArdle: Thanks for having me.
