Loading summary
Transcript42 lines
- [00:00]
A
This first topic here, we want to talk about the Bitcoin Red team finding critical vulnerabilities. So you can see this message here. Essentially you have a team of operators, technologists, developers that have put their resources together, their token spend, their brains, compute, etc. To try to find as many vulnerabilities out there and essentially correct before the situation gets worse. And so Brian, I think you're closest to it on our team here. If you want to just give any additional context before giving the take on signal versus noise, please feel free to do so.
- [00:31]
B
Yeah, so I mean there's a lot of different angles to take this. I mean the sort of series of events, the timeline over the past several days. You know, it started with MK3 wallets, cold card wallets. It then sort of broadened out after Blocks Block put out a research report saying more things might be vulnerable than just the MK3. And really at this point it seems like all cold car devices are at least somewhat at risk. And so disclaimer psa like if you have funds on a cold card, you should be actively trying to move them off of those devices. But the sort of higher level scope of this news item, of people coming together, the community coming together to basically look at the rest of the industry and sift through software to make sure there aren't other bugs stems from this bug that happened in ColdCard was like fairly rudimentary in terms of it was a single line of code that had this disastrous sort of impact in that seeds being generated on those devices were not nearly random enough. And so they were weak private keys, effectively that someone was able to sleuth out. And so the knock on implication of this is that yes, there's sort of an AI story here in that allegedly whoever was the first attacker used an AI model. It's likely thought that Kimmy K3 was pointed at the code base of ColdCard and it found this vulnerability. And so the implication is like, well, what else is out there that humans, without the help of the latest AI models haven't been able to find yet? And so there's sort of this reckoning going on. And this isn't even just Bitcoin specific. I think this is broader technology and software space of basically the cost of intelligence is declining rapidly and people are bad. Actors alike are pointing these things at code bases to see if there are vulnerabilities. And so I think the meta here is that this is a massive signal just in terms of where we are in terms of AI accelerating, threat vectors accelerating. And then it's sort of a reckoning on the bitcoin space of like, hey, there was these mantras of don't trust verify. And no one verified this code base at least deep enough to find this for five years. And so I think there has been a lot of sort of purity tests in the space. Historically dogmatic nature around things mantra is like don't trust verify. And I think we're getting to the point of saying let's think from first principles, let's get down to the brass tacks of how these things work, whether or not they're secure or not, and how the best way to secure bitcoin is because for everyone, it's not rolling 100 dice. I think we can confidently say that, that not everyone is going to go through the steps to, you know, inject enough entropy into their seed phrase. So people do need help, but they also need to eliminate single points of failure and find a right solution for them.
- [03:29]
C
Yeah, that was a nice overview, Brian. I'm, I'll go next and keep it brief. I think that there is both signal and noise in this. I think that there are many bitcoin projects that are run by very lean teams that are both actual businesses as well as just open source developers just working on niche, almost hobbyist projects, either outside of their current job or just on the side. And I think that those likely do have bugs in them and they're probably being exploited here as it says. I think that they're finding a critical vulnerability per person per hour. And so. But I also think that there is noise in the fact that, you know, the bitcoin project is the most peer reviewed software in the world. There also are a lot of folks who are putting time, effort and energy into reviewing that software. And so there are under reviewed projects. But I think that to be overly concerned about bitcoin itself is a little bit of noise here.
- [04:34]
D
Nice. Yeah, it's definitely signal in the way I look at it is just having redundancy. So like Brian, you're talking about, don't trust verify was a very popular phrase. The one that's not nearly as sexy is eliminating single points of failure. And I think we'll see that across broader technology outside of bitcoin too with the notion that if there are even tail risk, tail risk type, you know, gaps in a security system, that now maybe it would have taken 100 years for someone to find and exploit that or you know, a very rare situation now with the proliferation of the AI tools like that can be done very quickly. So I think people who are managing critical systems, whether it's communications or city infrastructure, which was just hacked here in Minneapolis, we'll need to think about like, if the worst case scenario happened, do we have a backup for that or what would really be the fallout from it. So I think hopefully we'll see a lot more of an emphasis placed on trust, minimized systems and then redundancy built in.
- [05:42]
A
Yeah, definitely. I mean, I know we're pressed for time here, but I will go signal on this topic for a number of reasons. But most importantly, I would just say that this is challenging a lot of the assumptions of the industry. And Cam, it's actually not just isolated to the bitcoin industry by any means. So I think just in terms of technology advancing, there's going to be, if I were to keep it strictly to bitcoin, it's just going to rewire a lot of ways of, of which this industry operates and it's going to present opportunities, but also a lot of risk as well. But I know we got to get over to the next topic here.
- [06:11]
B
I'm fine getting buzzed. Let me just. I just want to add a little bit more context because I think what's being reported by Callie and Rob Hamilton and other folks that are sort of feverishly going through this, pointing the latest frontier models at all of these code bases, at least anecdotally it seems like they haven't found anything that would be a massive vulnerability in like any other hardware devices, at least to this point. It seems to be like the main things that they are finding are effectively these Bitcoin second layer, like DeFi platforms and bridges, which like Liam said is like typically very lean teams. And a lot of that stuff like we talk about on sort of the crypto side of Defi is like very fragile infrastructure. And so it's not entirely surprising that you might see some bugs. And so there are a few protocols that said, you know, we're shutting down the protocol at least temporarily to fix certain things. So at least at the moment it seems like there haven't been massive vulnerabilities elsewhere in the hardware wallet space or to your point, Liam, like, you know, bitcoin core and Bitcoin itself is fine, has been rigorously reviewed for many years. And so I think you're partially right in that sense, Liam, that there is some noise here. Like it is a healthy exercise that probably should have been done a while ago, but don't want to fear monger around any of this stuff either.
- [07:39]
A
Nicely said, Brian. We'll Give you a pass there in terms of your allocated time. There's a lot of good information. So it's all right. All right, so moving on here next we have some information, some news from OpenAI. So OpenAI solves 10 decade math and science problems. So we can kind of scroll through here, but there's just really speaking to the advancements. If you can pause here under the on the results for just a second, Nick. So essentially there was a problem, there was a science, math problems that have been provided. Essentially the gist of it is this newest model that they're working on, Astro, which is the latest frontier model from OpenAI. Total number of tokens to find solutions to these problems would roughly cost 2,000 at sole API rates but then are significantly cheaper under the new. And so the whole idea here is like to go back to the headline topic that we landed on solving 10 decade math and science problem. I guess I'll go first and just say that, you know, this is both a signal but also some noise as well in the sense that it's signal because to Cam's earlier point we can't even comprehend how quickly things are moving at this point. I mean, and these are for us models, these are closed source models. And we know as well that if you look at just frontier models, compare them across the close and open source and even what we were just talking about with the bitcoin vulnerabilities and where the token spend has been allocated in terms of trying to surface other vulnerabilities by the good guys, they're leaning on a lot of open source models from China. And so I think that ultimately the signal here is that problems, Cam, like you mentioned, problems that may have taken 100 years before are now going to take a matter of potentially minutes. Maybe that is hyperbolic, but that's essentially the contrast between where we were previously and now where we operate. And it's only going to get compressed in terms of how quickly these problems can be solved. It is a bit noisy as well just because at the end of the day like it's hard to discern what is actually, what is actually going on here. Unless like you're in, you're in the weeds on this every single day. And so I think it is a little bit noisy just for your bystander and trying to discern like okay, how does this actually apply to my life or how do I use this information to better my life? And I think that is going to be the ongoing challenge because really it is so hard to keep up with the pace of which this technology is advancing.
- [09:54]
B
Yeah, I mean I can go, I, I'm, I'm aligned with you. I think the signal is, and it relates to the last story pretty deeply in the sense that, you know, Bitcoin Red Team or whatever, like they're having to go outside of the bounds of basically closed US frontier models. They're having to use Kimi's open weights to actually find these things in a efficient way. And so I think it speaks to the place that we put ourselves in, in sort of like the US regulatory apparatus where you have OpenAI doing this great marketing of like saying, yeah, we've solved these previously thought to be unsolvable math problems, but it's with this model that no one has access to yet. And we're just kind of playing around with it. Like it just puts everyone in kind of a spot where you feel behind the eight ball relative to potential bad actors. Right. Like solving math problems is like a good positive thing, I suppose, but like the knock on effects of a model this powerful is that you could do some really bad things with it if it can do this and then it can do bad things too. And so I think it's just a signal about sort of the regulatory apparatus where we are, how we're dealing with these frontier companies and basically allowing them to gate these things in a way where people that are trying to actively solve problems have to go outside the bounds of US models to actually be able to do those things. Whether it's finding vulnerabilities in software or it's doing sort of frontier edge scientific research, all that stuff gets like thwarted on your closed US model. And so people are having to go to these open Chinese models, which is just a problem generally.
- [11:37]
C
Yeah, I think that to your point, there's a lot of signal in here that there will be that there is already starting to be an inflection point both in how we look at math, cryptography, health and science. And that is going to bring just both a lot of opportunity to upgrade, essentially make people safer, come out with new drugs that allow them to people to live longer, be less in pain, et cetera, as well as upgrading all of our security systems around the world. But at the same time, the open source models are maybe anywhere from weeks to a year behind everything that's closed source. And there are probably some other proprietary models that OpenAI and Claude even have that they aren't telling everybody about at this point. But it likely means just that while there is, there's a very short period of Time for to upgrade and to protect ourselves from some bad actors that are coming along. But ultimately they're all going to have the same type of tools. And I think that I don't have the perfect answer, but there's going to be a way for or going to need to be a way to have people use these responsibly. Maybe it's just through social contract, but. And maybe it's something else. But I think that we're going to go through an interesting period of. Of change here.
- [13:07]
D
My gut was that it was noise right off the bat. It's like if you have super advanced computers, I would expect that the first one, the first thing they would do would be to solve harder and harder math problems. Like that seems very, very much within their wheelhouse. So, yeah, I don't know the magnitude of the kind of the second order effects of these being solved. I'm sure it's all useful, but it'd be interesting, more interesting to me to see what's actually created, what new products
- [13:31]
B
or services
- [13:33]
D
are created as a result of solving some of these problems.
- [13:38]
B
That's fair because it's like in that sense it is just a nice marketing ploy for them. What are the. What are the impacts of solving these math equations? Like, unclear from this if I was.
- [13:49]
D
Because, you know, we're always looking for the kind of the steel man too.
- [13:52]
A
Is it?
- [13:52]
D
So is their development kind of so slow and boring as they kind of head toward the IPO or whatever their end goal is, that they're trying to kind of fill the news cycle with some other big advancement and it's solving a bunch of esoteric math problems that have little to no impact in the short term. You could be too. But yeah, when I first saw this, I go, this is exactly what I would expect from a massively more intelligent and a vast computing system.
- [14:17]
A
Yeah, Cam, that reminds me of just a few months back where Dario was doing a lot of interviews just about how AI is going to replace 50% of the workforce. And potentially there's some truth to that, but it also is just great marketing in terms of how powerful their business is. Right. So I like that point. All right, so let's move on to the next topic here. Scroll up here. Producer Nick. So an emerging deal could cement Iran's control of Strait of Hormuz situation Monitor. Brian, pinging you in here. What's the read? What's going on? What's the latest?
- [14:56]
B
I mean, the latest is a continuation in my mind of what we've seen really since the beginning of this conflict, war, whatever you want to call it back in February where we say there's a deal and then Iran says, wait a minute, that's not true, there's no deal. And then we back off the deal. And it's sort of been this back and forth for a long time now where it seems like we escalate and we're at war on the weekend when the market is closed. And then once the market is open, there's a new deal on the horizon. And so until further notice, like, I'm just not going to believe any of this shit. I like Bessant. I think he's a reasonable guy, at least relative to some other people in the Trump administration. But I don't see how you can believe anything on face value from this administration at this point. They are seemingly trying to make a deal. I mean, whatever deal they make at this point I think will be looked at in hindsight as a massive loss. We engaged in this conflict and are probably going to end up in a place where Iran has more control over the Strait of Hormuz than they started with. So I think on net it's going to look like a loss. If they're being honest about it now, they'll spin it as we made a deal and here's all the reasons why. This is great, great. But again, like, this deal could fall through just like the last one did. So this is firmly noise in my mind.
- [16:21]
A
Yeah, I mean, I agree, no one, no one wants to give a take on this one, but yeah, it's incredibly noisy. I think I've said it from the start, at least back in February, that I just was going to try to tune this out as much as possible. It just seems to your point, Brian, it is such a back and forth. It's a ping pong between what's open, what's closed. Is it war, is it peace? And so it's incredibly hard to just figure out what the hell is actually going on. And I feel like people are just naturally better off tuning this out. I mean, the, the main impact it has, of course, is cost of living. Right? So anyone who's paying pain at the pump, you can see that's higher gas prices than it was like six or 12 months ago. But at the end of the day, do we have any ability to influence the direction of which this is going? I don't, I don't know about you guys. So it's really hard for me to spend too much of my time and attention on this topic just because There is some minor, you know, minor could get more severe in terms of price inflation, but at the end of the day, out of my control. It seems like the markets want to completely ignore it. Like it's totally immune at this point. I remember initially, early on in the war that there was actually some market response, there was uncertainty. But now it's just immune to this constant ping pong week in, week out. And I'm not sure how it resolves or where we go from here, but I think it's noise. And I, I don't want to spend too much of my life monitoring the situation. In particular, just to be honest with you all.
- [17:51]
D
Did you guys not read that it's the last chance before decapitation? I mean, this is a big deal. This is purely signal. I was texting with a friend the other day. I was like, imagine if you spent every day trying to keep up with the latest in this Hormuz situation with Iran. And then we're trying to also position your portfolio based on like the new information that you had. Yeah, I think it's. You drive yourself nuts. Which made me think like, I wonder if that's actually the point. If like, it's actually the point to like kind of cause you just like the psychosis of the American people by like a literal 1984 type, like war is peace or we've, we've never been at war with Iran. We're always at war with Iran. I mean, that's really right out of that novel. So just try to have a more serious take a little bit. It's like, yeah, it is pure noise. Like even if the death is real, the, the consequences are terrible for a lot of people. But like for the layman to try to discern, you know, the games that are being played at the highest levels halfway across the world and then try to orient my life in Minnesota around that, like, is just a futile. Would be a futile exercise.
- [19:06]
C
Yeah, this has no impact on any of our lives. It's pure noise. I don't know how this made it on the list.
- [19:12]
B
I mean, just to extend what Cam was alluding to, like, what if this is just to drive subscriptions for the truth social API? Because if you, if you, if you know when these announcements are coming of we're at war now, we're not at war. You just go long and short oil on that. And it's the most fascinating thing to me about all this stuff is that like the market, you know, if you think about oil prices and generally the S and P, like is still reacting to all of these headlines like in lockstep, like deal, S and P goes up. No deal S and P goes down. It's like, well, when are we going to just like actually wait for the truth? And it seems like, you know, markets are just so short term in their thinking and reactionary that we've just oscillated back and forth. But you know, if you had inside information and you could get long and short at the right time, you'd probably be making an absolute killing.
- [20:03]
A
I like that lens, Brian. The grift that keeps on grifting. I mean, come on, it's just, it's crazy out there. All right, let's move on. Let's, let's save our time. Let's save everyone's time. Move on Here we had another macro topic. This one might be a little bit more interesting. So US Japan intervened to boost yen for the first time since 1998. Intervention comes after the end touched a 40 year low against the dollar late last month. I'm going to switch up here a little bit. I'm going to give it to Liam. Liam, you better be locked in. I want to hear your take on signal versus noise for the latest intervention intervention. Almost over actually 20 years.
- [20:41]
C
Pure noise. This is the complete direction that like we continue to offer mini bailouts all around the world in many different ways. I don't think this one was very significant there. Yeah, this is just something that is directionally signaling the fact that the US needs to boost its currency and trading partners currency in order to not let the yen carry trade completely unwind. But you just can't pay too much attention to each one of these specific events because there are so many of them and they continue to ramp up on a daily basis.
- [21:25]
B
I think it's signal. I think it's signal because we talked about last week, 30 year yield in the US touching the highest in over 20 years. And it's related to that in the sense that Japan is the largest owner of, or I think the largest owner of U.S. treasury debt. And so typically in order to defend their own currency, they would sell treasuries. And so this is a move to basically get them to not sell treasuries and be able to help them sort of stabilize their currency. And so there's a few signals here to me. One is that it kind of reminds me of like the whole strategy thing of like inoculating the market to selling bitcoin. Like they're inoculating the market to US yen intervention for the first time in 30 years. Because to your point, you're right. You're rightly. I'm like, this was a small. It wasn't like a massive actual amount of intervention per se, but I think it's a foreshadowing of what's to come because, you know, the problems that they're trying to impact here aren't going away, and they're only being exacerbated. So they're going to have to do more of this. But it's kind of just like a little inoculation, if you will.
- [22:34]
C
I don't know about that. I think we have socialism at home. I don't know if we have enough to go around overseas, especially when they're going to be new changes in the administration after this. So we'll see.
- [22:47]
A
Can I just say what happened, Liam? Last weekend you just came back. You just came back ready? You came back a new man, almost. What happened to this vendor over the weekend?
- [22:57]
C
I don't know, man.
- [22:58]
A
That's. Is that off the record? All right, sorry. Go ahead, cam
- [23:02]
D
it. Yeah, Brian, See what you're saying. And I want to believe that there could be some signal in here to some degree, but every time I see Japan and, like, yen crisis come across the headlines, it just seems like the boy who cried wolf to me. And, like, I'll see a macro person retweet a yen chart, and they'll get like, 300 likes. And then, you know, they're just loving it. They're just loving the engagement, and it's so easy. And they're providing no commentary. So it's like until something really breaks or until my personal bags are pumped as a result of the ensuing qe, then it's hard for me to get excited about it.
- [23:41]
A
Yeah, look, I mean, I think a number of you hit on it. There's just a lot of intervention. It's not a free market. You know, I generally agree with that. I do think the most important thing to pay attention to would just be the scale of intervention, the continued nature of intervention in this market and others. But at the end of the day, we have to remember what the incentive is. The incentive is the mandate is for the S&P 500 to continue to go up. And so when Brian mentions. Or maybe it was Liam, I forget yen carry trade blowing up. Well, there are downstream effects to not intervening in markets at this point, and they're pretty significant. They can be pretty significant impact to back at home. And so that's the interest of the United States is while we naturally don't want everything to get chaotic. We don't want to have a disorderly economy. A disorderly, more importantly, financial markets. I think, you know, most of the people in the bottom 50% or even bottom 75%, let's say, would probably be better off with much weaker S&P 500 would probably be better off with a housing correction. Like these are things that would be naturally good for an economy to kind of work through the pain. But we know the incentive is let's continue to intervene, let's continue to kick the can down the road. So this would just be another example of that. And time will tell just in terms of how much intervention is needed to fend off any sort of, you know, collapse or any sort of maybe collapse is harsh, but any sort of like significant volatility in these markets. And if that rounds out four topics, then we have to get into the lightning round. I'm just really curious at this point what Liam has. Liam is bringing the heat today. He's not holding back. He's clearly not going back to his life in the hedge fund world because he's not, he's not afraid to share what's on his mind. So Liam, what's going on over there? What's the lightning round take today?
- [25:34]
C
Come back to me at the end. I need to, I need to get my thoughts in, in one place. You can go first, Brian.
- [25:41]
B
My, my lightning round signal is it relates to our first topic around all this cold card stuff. I think, you know, it's, it's hard to avoid it on the timeline, particularly if you are in the bitcoin space. I mean it's, it sort of has broken containment. There's been a few mainstream headlines around this attack, but I think what I want to call attention to is effectively a, what I view as like a knee jerk reaction of the community to basically say, you know, self custody is dead and now we're just going to put everything in ETFs on one hand. Self custody is certainly not dead. I think what happened here with ColdCard is a, seems to be a relatively isolated incident in terms of a catastrophic bug that wasn't seen for way too long of a time. But private keys can still be generated in a proper way with enough entropy. And so self custody will continue to be a thing that hardens the network, makes it more decentralized and distributed. And the alternative is not just an etf. And so I think we have to be cognizant of there's downstream risks of Bitcoin centralizing in the coffers of a few custodians. It's why we work on what we work on at onramp and have another path for this industry to evolve. But there is a lot of sort of reflection and reckoning going on in the space and I just want to call out that, you know, the knee jerk reaction should not just be let's put everything in the etf.
- [27:09]
C
Yeah, I'm happy to go next. Now I think that the real signal is how willing everybody has been to help each other out. I know that the on ramp team's been working nonstop trying to make sure that if folks have been impacted that they've been working, helping them out either, you know, just to move to a different self custody wallet, to move to an exchange, even if it's not on ramp. And I think that there has been a great movement in the community in order to really educate and get the world a word out to as many people as possible to try to help people secure their money. So, you know, in the time when, you know, it's easy to be negative, pessimistic too about just the, the fact that this happened and where the industry is going, you know, there's obviously going to be improvements made in self custody, recommendations for setups as well as exchange products. I think that one positive out of this too is just the, the people behind the movement too and how, how quickly and willing they're able to move as well as just their generosity with their time and education.
- [28:25]
A
Yeah, I mean, I can just, I'm gonna give one that's unrelated to today's topics, but I think it's important, actually. I know it's important. RFK Jr, he wants to prove healthy eating doesn't have to be expensive. He's launching a new cooking show.
- [28:41]
B
Is this signal, Jackson? This is your lightning round signal.
- [28:44]
A
It is, it is, it is actually, it is signal. Because look, if I put it in the context of anything that we discuss today or we talk about bitcoin prices down 50% at the end of the day, if you don't have your health, you don't have anything. And so it's a, it's a bear market signal because look, you have to invest in yourself in order for you to reap the rewards of your prudence of your savings for the long term. And so I like the fact that we've got to get people back on track. We have a very unhealthy country, we have a very fat country. And it is actually, it is a major problem because it actually impacts you as taxpayers, you're paying for this. And so I want people to know that you can eat healthy, doesn't have to be expensive. And yeah, that's my signal for the week.
- [29:28]
C
Use the promo code RFK for inexpensive healthy eating.
- [29:36]
D
This administration has done so little that the thing that they're doing is launching a cooking show. It's truly impressive at this point. So mine is so that there's an article Wells Fargo to roll out tokenized deposits for corporate clients. So normally when I would see something like this in the WSJ and they're talking about a bank adopting blockchain, it would scream noise. But when you read into that, they're trying to figure out how to settle off hours, how to settle over the weekend. So it's signal in that sense, have a strong bias or believing that this is heading toward ultimately settling in Bitcoin, but they're going to try to keep control as long as they can. And it's also the signal in the sense that even while sentiment could not be worse in Bitcoin from a retail perspective, that the institutions are still working to push and create new products. Tbd. And what if the Clarity act passes now or later, but it's a foregone conclusion at some point over the next year because there's just so much money to be made. So I think that's the real signal to look toward is that the institutions have no problem with Bitcoin or trying to implement Bitcoin like qualities into their business, even though they may have been digging their heels in for years. But it's happening.
- [30:57]
A
I'm just going to actually give one more as well because all of you seemed displeased with my previous one. So I actually think this is interesting and it ties back to our AI conversation and it's actually a complete reversal of what we've all grown up with, the four of us here. Private colleges admit more students who didn't apply. So this is a story from Bloomberg about Wingate University telling thousands of high schoolers they were accepted into the class of 2030 with $24,000 of scholarships and no applications required. So one example. But I think it is something just to be mindful of, right? Like there's this huge, huge disruption happening in higher education. It's been incredibly expensive, private tuition. People are just saddled with debt. It's part of like the whole permanent underclass narrative and where people sit today. And I think in the context of AI, like for parents, right? I mean, especially if you have children that are in middle school, high school. This is a big, a big decision to make. And fortunately, education is going to be disrupted significantly. So that's better for for all of us here and those for you. For those of you who have not tuned in before, signal versus noise Tuesday, Thursdays, 12:30 Eastern, comes out Wednesday and Friday mornings. Please, like subscribe, leave a comment and appreciate you being here today. Thank you.
- [32:10]
B
Thanks boys.
- [32:11]
C
Thanks everyone.