Author: CoinDesk

Second order effects are things that happen as unexpected outcomes of something else happening. These effects can create surprising causal chains. 

Take this for example: A pandemic makes everyone need to work from home leads to an increase in video calling leads to Walmart reporting that people are buying more shirts, but not pants. 

Emerson Spartz is one of the world’s foremost thinkers on virality and the internet. He founded Mugglenet - the world’s biggest Harry Potter fan site - as a middle school drop out, and would later found and raise tens of millions for Dose. 

In the past weeks, Emerson started an open crowdsourced document on the Coronavirus’ second order effects that has, itself, gone viral, especially among venture capitals and other investor circles trying to understand what the world looks like on the other side of this. 

Emerson brings a surprisingly optimistic perspective on where this could lead a generation of people who are now more fully plugged in to the internet than ever before.

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In Today's discussion we'll briefly talk about some of the knock-on, or second order affects which the coronavirus disruption is having on our world today, and which may continue into the future. Then for the meat of the show we'll dig into specific areas where bitcoin could, or perhaps is being improved with the creator of one of the most impactful peer to peer technologies live in the world today.

Shownotes for LTB! #433

• Topic 1 - Second Order Impacts of Coronavirus Lockdowns
• Social distancing and the revenge of the Hikikomori
• Coronavirus second order effects
• It’s an extroverts world but we’re all introverts this month
• The AOL moment for Zoom meetings and arguing the potato
• Interpersonal compression, zoomers and enforced quality time
• Will overall deaths go down because of pandemic lockdowns?
• The end of “Bus Mode” for Lyft and Uber
• Autonomous vehicles, grocery deliveries and the last mile problem
• Tampons, cocktail sausages and a very weird month
• This episode is sponsored by eToro
• A friendly government delivery service?
• Opportunities in sterilization and social changes that’ll last
• Automated cleansing cycles and Far-UVC
• Internet infrastructure, Netflix social signaling and the recycling dilemma
• Masks, headphones and the changing standard of social isolation

• TOPIC 2 - How the creator of BitTorrent thinks he’s created a less wasteful, more distributed, more secure approach to Nakamoto Consensus
• Decentralized systems and the critical success of BitTorrent
• Naming projects, vegetables and a list of grains
• Proof of Space and Time
• Warehouses of computers, competitive money burning and Keynesian stimulus
• Proof of Work works and that’s a huge accomplishment, but could be better
• Centralization, Nakamoto consensus and Proof of Stake
• Moats and losing the battle with ASIC-hard consensus algorithms
• “Grinding attacks” as the competitive strategy
• Fundamental economics, storage capacity and the loophole
• Airdrops for something over-resourced and under-provisioned
• Losing money on buying “farming” hardware
• The early days of bitcoin mining with CPUs
• Power and CPUs, GPUs, FPGAs, and ASICs
• Hard Drives ,hard drives, hard drives and hard drives
• Storing data as proof, but not peoples data is like Proof of Work; the work isn’t useful, it’s just a measuring stick that doesn’t need your name or a long term commitment
• Printing lottery tickets with ASICs vs. a hard drive full of bingo cards
• Proofs of Space need Proofs of Time
• Less wasteful by using an underutilized resource
• More distributed because excess hard drive capacity is already distributed and there is no “ASIC” equivalent possible for hard drives. Just better or faster hard drives
• More secure because less wasteful and more distributed equal better security in distributed consensus
• Breaking, tweaking and proving proofs of time and space
• Miners don’t run data centers
• UTXOs, message passing on-chain programming environments and walking a fine line between Bitcoin and Ethereum
• Rate limiting wallets and reversible paper wallets
• Improving colored coins
• Decentralized exchange doesn’t need decentralized exchanges
• Farming, pre-farming, farming rewards and trailing emissions
• Why pre-farm?
• Is it viable to farm with AWS?
• Carrying hundred dollar bills and Chia’s business model involves loaning Tokens To Large International Companies
• Covenants replicate many banking system benefits without requiring banks or centralization
• Complexity, Bitcoin Script and Protocol Level Improvements
• 
  

This episode was sponsored by eToro.com, with music by Jared Rubens, Gurty Beats and Adam B. Levine.  Today's show featured Bram Cohen, Andreas M. Antonopoulos, Stephanie Murphy, Jonathan Mohan and Adam B. Levine with editing by Jonas.

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In about 40 days, the world’s first and largest cryptocurrency by market capitalization, bitcoin, will undergo a pre-programmed block reward reduction known as the halving. 

Roughly every 4 years, bitcoin’s block subsidy rewards are cut by 50 percent in order to prevent currency inflation. Recurring halving events also ensure that total supply over time is capped at 21 million coins. It will take an estimated 64 halving events before the last bitcoin is mined. So far, there have only been two. 

To commemorate bitcoin’s third halving, CoinDesk Research is launching today a new weekly podcast series about the bitcoin mining industry. Each episode features discussions with leading experts in bitcoin mining hardware, operations and pool management on a variety of topics related to block subsidy reward reductions and their impact on the crypto markets. 

Hosted by CoinDesk Research Analyst Christine Kim, the first episode of the Bitcoin Halving 2020 podcast series is about the impact of bitcoin’s third halving on the concentration of miners in China. 

Discussing and debating this topic is Ethan Vera, head of finance at one of North America’s largest cryptocurrency mining pools Luxor Technologies. Also joining Kim and Vera on the show is Wolfie Zhao, a veteran member of the CoinDesk editorial team who specializes in news coverage on the Chinese bitcoin mining industry. 

For more information about the bitcoin halving, CoinDesk Research has recently published a 30-page explainer report on these events which features additional commentary from Vera and other mining industry experts. The report is free to download on the CoinDesk website.

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Matt Luongo got his start in bitcoin in 2013. In 2016, he watched a pivotal moment where the sound money, digital gold narrative subsumed the payments use case for bitcoin. While he agreed, ultimately, with the important of bitcoin as a new reserve asset, he still wanted to build and found his way to Ethereum. 

Now his company is launching tBTC, a trust-minimized bridge between bitcoin and ethereum. Among other uses, it is a new solution to enabling bitcoin to be used as collateral in DeFi applications. 

In this conversation, Matt and @NLW discuss these narrative shifts, as well as what the role and narrative for DeFi might be in a post-Covid crisis world.

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The economic outlook is grim. The jobless claims keep piling up and even the most intransigent states are shutting down business. There isn’t - yet - a realistic plan - for returning to any sort of economic normalcy. 

Yet in this bleak view, there are a handful of crypto indicators that suggest for cautious optimism. In this episode, @NLW discusses:

• The crypto community’s volatility resilience 
• A significant uptick in Stablecoin issuance 
• Proof that bitcoiners have been buying the dip 
• Evidence that new audiences are finding their way to bitcoin (and perhaps with a sound money narrative in mind) 
• Binance’s acquisition of CMC and the power of M&A signals

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After three weeks of listening, recording and talking bitcoin (BTC) in Africa, podcaster Anita Posch is back in part 3 of her six-part documentary podcast series.

In the first and second part of this six-part series you heard about the difficult living situation, the hyperinflation and about the multi-currency world that Zimbabweans have to live with since many years. In this - the third part - you will hear from two early bitcoin (BTC)  adopters based in Harare. We speak about the different use cases for bitcoin, how it can be exchanged to U.S. dollar and RTGS [the Zimbabwe dollar], what the obstacles and pros are, about regulation and what the two online entrepreneurs want to tell people outside of Africa.

In the third part of the six-part series about Bitcoin in Africa you will hear from two early bitcoin adopters based in Harare. Anita speaks with them about the different use-cases for bitcoin, how it can be exchanged to US Dollar and RTGS, what the obstacles and pros are, about regulation and what the two online entrepreneurs want to tell people outside of Africa.

After the interviews Anita answers a listener's question about the possibilities for rural communities to use bitcoin.

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“Some countries just aren’t going to emerge from the Coronavirus.”

Peter Zeihan is one of the world’s foremost geopolitical experts. In his new book “Disunited Nations: The Scramble for Power in an Ungoverned World,” Zeihan argues that we’re at the end of the largest expansionary period in human history. As America withdraws from global leadership, a totally new (and for most parts of the world, more painful) ‘normal’ will emerge. 

On this episode of The Breakdown, Zeihan joins @NLW to discuss why the Coronavirus crisis is rapidly accelerating the end of the era of globalization. 

• How the American-led global order used the dollar as the tool to keep the world together 
• Why geopolitics and demography are coinciding to end the era of globalization 
• Why Covid-19 will spark a massive return of American manufacturing 
• Why, when it comes to the dollar’s status as the world’s reserve currency “Never before has the “exorbitant privilege” of being the world’s reserve currency felt more exorbitant or more like a privilege. 
• Why the crisis could spell the end for the Euro 
• Why China isn’t nearly as well positioned in the post globalization era as many assume 
• Why the best positioned countries in the coming era are the US, Japan, Argentina, France and Turkey

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In this wide-ranging discussion, Castle Island Ventures founding partner and Coin Metrics co-founder Nic Carter joins @NLW to discuss:

• Why corporations weren’t adequately prepared for any serious economic trouble, much less a global pandemic 
• Why government backstopping the corporations leads to inappropriate risk-taking 
• How stock buybacks became a boogeyman of the current crisis 
• Why the crisis is actually four crises in one: health, economic, financial, and geopolitical
• How Covid-19 could accelerate the US’ withdrawal from the world and China stepping into the void 
• Why the response to the handling of Covid-19 could lead some to authoritarianism 
• How stablecoins are allowing global market exposure to the world’s most in-demand currency: the USD 
• Why stablecoins and central bank digital currencies look the same but are functionally opposite 
• Why a ‘naive safe haven’ narrative was never correct for bitcoin
• Why bitcoin was designed for exactly this type of moment.

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On January 28th, Bloomberg’s Joe Weisenthal tweeted “Notable overlap on here between the most alarmist people tweeting about the virus and those who are obsessed with the size of the Fed balance sheet.” 

There is no doubt that the bitcoin and crypto community broadly were far earlier in recognizing the potential significance of the Covid-19 crisis than most professional communities. Today , America preps for at least another month of lockdown and social distancing. The markets continue their chaotic swing as investors are simply unable to price in such a once in a lifetime event. 

A question for the crypto community becomes: how is this impacting narratives about our own industry? 

In this episode, @NLW looks at the impact of the Covid-19 crisis on narratives around:

• Bitcoin
• Stablecoins
• Digital Dollars and Central Bank Digital Currencies
• DeFi 
• Privacy

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In the aftermath of the so-called "Black Thursday" crash from several weeks ago, MakerDAO's "DAI" ethereum backed dollar pegged stablecoin came untethered and was, for a time at least, functionally insolvent. In the aftermath, holders of the MKR token which allows holders to participate in governance decisions opted to do a couple of things, including adding the centralized stablecoin USDC to the list of acceptable collateral, which drew both condemnations mostly around centralized risk being added to the system and praise for making the system more robust against sudden ETH collateral price crashes.

And now most recently, the Maker Foundation which had held some centralized control over the protocol completed their long-planned exit with all authorities now transferred to the holders of MKR tokens, removing both a point of control which had been used as a safety check and a point of risk in that centralized control can be co-opted and used to disrupt a system as we've seen in other examples.

On today's show we're digging into:

• What is Decentralized Finance (DeFi)?
• How does decentralized finance differ from traditional banking?
• Fractional reserve vs over-collateralized loans 
• Liberty Dollars’s missing collateral and USDC’s risky name
• MakerDAO, DAI dollar-pegged stablecoins and how this DeFi stablecoin actually works
• SDAI (Single Collateral DAI) vs. DAI (Multi Collateral DAI)
• Smart contract ‘vaults’
• Lending money to yourself: 150%, 300%, insurance and auctions
• What happened on ‘Black Thursday’ as the price of Ether dropped more than 50%
• What happened when transaction fees went through the roof
• A bug in the collateral auction smart contract
• A surprising crash: as the system became functionally insolvent the price of the dollar pegged stablecoin actually went up.
• Oasis.app vaults are transparent, take a look!
• Loaning yourself money using your ether (at interest)
• How MakerDAO’s approach differs from SALT Lending
• The other half of the DAI system: saving vault smart contracts
• DAI Saving Rate (DSR) and the new certificate of deposit
• The reward for using MKR tokens to administer a good system
• Can savings vaults be liquidated?
• Smart contract risks, consensus risks, systemic risks and response time risks
• Sponsors: eToro.com and Purse.io
• What specifically went wrong with the auction smart contracts?
• Recapitalizing the system by diluting MKR governance stakeholders
• Even with bugs, market mechanisms to fill the solvency hole seemed to work better than government bailout equivalents.
• Completing the transition from foundation-overseen to full tokenized governance.
• Decentralization transition - A necessary step or a natural one?
• Single collateral vs. Multi-collateral
• Why would a decentralized stablecoin want to allow a centralized stablecoin for collateral?
• External political risks vs. internal technological risks
• “Life finds a way” and DeFi’s natural circuit breakers (also Mt.GOX)
• Whats the point of putting USDC in to get DAI out?
• How does DeFi insurance work?
• A modular ecosystem 
• How DeFi and traditional finance are similar
• DeFi vs. 2nd layer protocols

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