A Post-Merge Post-Mortem

Mike Mooch the third. Welcome back, Mad Mike moned the third. It's good to see you. Sir. I am still here in Sunny Dubai, where it is thirty eight degrees Celsius, a very mild thirty eight degree Celsius by by Dubai standards, and you are back in your man Cave in London. How is how is London? What's the mood like? What's what's the old weather like? It's it's the same, you know. We've got some sunshine but freezing cold temperatures. The Queen

is still dead. No undertaker, sort of last minute sort of resurrection. We're all getting on with life and it's all going okay. I mean things are pretty much the same, unlike maybe the world of Crypto, with some big changes have happened. But an absolutely beautiful segue. I really admire that. That's wonderful. Yeah, a lot has yeah, things are very

different from the last time we spoke. Obviously, last week we did our episode, are kind of on the hoof episode where we looked ahead to the merge, to ethereums merge, and this week we're going to look back on ethereums merge and and see kind of what the landscape is. What's changed, what's going on, what do we need to be aware of and, I think crucially as well, what

what might be around the corner? Yeah, well, that's that's what everyone wants to know and we can pontificate on that and I'm sure people will take advice, but not financial advice exactly, exactly, because of course it isn't financial advice, Um, which is, yeah, which is something everyone should remember. Um. So, yeah, I've I've kind of I made some notes about what I was going to talk about and I've kind of

divided it up. Part one I'm just going to call the bad news, because I'm afraid there is a little bit of bad news. Um, and but don't worry, anyone listening the good news. Part two is the good news and then part three is sort of any other business. So well, let's just start. Let's let's get on with the bad news, shall we? Well, in fact, we can start with some good news, which most people will probably be aware of if they've been paying any sort of

attention to crypto over the last well, since since last Thursday. Basically, the merge all went to plan and nothing, nothing went wrong. And so far nothing, nothing really has gone wrong with ethereum itself, which is which is great. Um, no portals to the other world have been opened or anything like that, certainly certainly not that fatalk or any of the other devs are admitting to. I don't think they opened up a gate of Hell beneath beneath the ethereum foundation or

anything like that. But but I mean, you know, they may. They may just be keeping that one under wraps. So that's not the bad news. So yeah, and it was. I don't I'm I I don't know if you were sort of paying attention at the time, Mikey. Obviously I was kind of glued to my laptop. I was watching it via a live stream from the ethereum foundation, and I mean talk about Geek Central. It was. It was

absolutely wonderful. It was a great thing to watch. It was it was kind of weird because, you know, everyone's there's there's quite a lot. There were quite a lot of devs on the on the Stream. Vitilt himself cropped up a couple of times, which was really cool. And Yeah, all of a sudden the block was the block was pushed and, you know, the block was created, the code was pushed and we would switch to proof of stake. It was and they had some little pandas appear, because

the Etherean community are very fond of pandas. Yeah, so it all went it all went smoothly and you could really sense watching the stream. You know, you could really sense the relief kind of flooding through all these people because they, yeah, they looked very tired. They'd obviously been, you know, working really, really hard for days, weeks, months, years on end really to to kind of get this, get this thing over the line. And Yeah, it was it was impossible not to feel sort of really really

happy for them because, yeah, they deserved it. It was it was a really monumental effort and yeah, it's. And there was this kind of brief sort of surge of optimism in the crypto markets, which we haven't seen really since, since the bullmarket ended, and I was kind of keeping half an eye on prices, you know, I was trying to get work done, but I slipped into that bad habit that so many of us crypto people have, sort of refreshing the price charts every two minutes or so. Um, well,

we've all been there. But it was it was exciting to see. I mean I I didn't expect it to last, but it was. It was kind of good to see this little sort of relief rally and obviously the price started shooting up as well as, you know, kind of crypt the market in general. It was it made a nice, nice change from sort of recent weeks. Um, however, that that relief rally didn't last all that lot. It was it was, you know, two or three hours or so,

maybe not even that. And Yeah, things started, things started tumbling back downward and it was obviously, you know, what what those in in investment circles call a kind of sell the news event. You know, you buy the rumor and then you sell the news, and I think the ethereum merge may go down as one of the classics

sell the news events in Crypto. Um, because, yeah, it's it's kind of looking at it's, you know, looking at it a few days onwards, it seems now like the merge was kind of a bit of a short break from reality and then, you know, after a couple of hours, reality sort of sidled back into the room and went right. Probably just raising a point before, seconds before you do, but didn't as soon as the merge happened. Proof of steak get basically hinted that it was going to be

anything that does that is going to be a security. Now. Yeah, yeah, absolutely, yeah, I was. Yeah, you're on the ball today, sir. Yeah, because at the same time that the merge was happening, the Chairman of the SEC, Gary Gensler, who's sort of, I guess, Krypto's biggest bogey man at the moment, he was actually testifying in Washington and here he said, you know, he he pretty much said that he and, Um, you know, the SEC, by extension, believe that the proof of state

cryptocurrencies could be designated as securities. And the timing on that is that malicious. It's hard to imagine otherwise, I think. I mean it may just be it may just be a coincidence. There seems to have been quite quite a few coincidences kind of knocking around the crypto space at the moment. But this, this seemed to be this seemed to be a curious coincidence perhaps, but yeah, it could it could well have been deliberate, um, but yeah, so that was that kind of that kind of hit the

markets a little bit. I'll talk about that in a moment because actually the what was more consequential had actually taken place the day before, because on the Wednesday, um, so less than kind of twenty four hours before before the merge was due, the latest inflation figures, the consumer price index, the CPI, came out in the US, and it wasn't all that good. It was it was it showed eight point three percent inflation over in the states. Now, this is actually this was actually down a couple of

points from the previous months. So these were the inflation figures for August. So they were slightly lower than the inflation figures have been for July, which does kind of suggest that inflation, you know, maybe starting to go down a little bit. But you know, everyone was kind of everyone was kind of hoping that they'd be a lot

lower than that. So that, if you like, you know, before the merge it even happened, that the sort of wider world that you know, the global macro landscape, had sort of, you know, poked its head round the door and sort of said, you know, I'm still here, things are still really worry we're all still fucked M it. Exactly, yeah, exactly. Um. So, yeah, so that kind of that really dampened enthusiasm in the markets that that kind of took any winds that there

was out of the sales. And I should also point out that that that the core CPI, which is the same measure but excludes energy and food, that actually went up by over half a percentum. Yeah, and that is that is not good news at all. So basically, inflation in the US, in in case anyone had missed it, is still really, really high. And this means that the Federal Reserve, which meets, we're recording this on Tuesday, so

the Federal Reserve will meet tomorrow, on Wednesday one. This is going to be their first meeting since there, since they all went off on their on their summer break, and they are going to hike interest rates again. And Yeah, previously, you know, a few weeks ago, the EXPECTA Asian was that they probably hike it by hike them by half a percent, fifty basis points. Actually, it now looks much more likely that they're going to hike it by three

quarters of a percent, seventy five basis points. So, yeah, you know, it's interest rates are going to have another big, big pump. And actually there is, you know, a more than there's about a kind of eighteen chance at the moment as we record this, that they could actually hike it a full one percent. That doesn't seem to be

off the table now. If they hiked rates a full one percent, yeah, that would not be markets, especially Crypto, but you know, kind of all markets would really, you know, would really soil, soil the sheets, because a one percent rate hike would be the largest in forty years, which

is a pretty, yeah, pretty sobering thought really. So, yeah, it really Um basically the kind of the the outlook at the moment, what everyone's kind of looking towards is that we're that we are going to see a big old drop across all markets, and some people are actually predicting that it could be even worse than the drop that we saw in two thousand and eight, after the after the finite, in the wake of the financial crisis. So, yeah,

it's it's not too cheerful from that perspective. I'm afraid a lot of people are, you know, are really kind of bracing themselves for for more pain. Well, I'm enjoying these sessions each week where where we we, we, we call each other, you tell us how life is going to be even worse. Uh, and then and then we we, we sign off on a sort of cheery note and then it gets worse next week again. So great for next week when when the sun is extinguished. So yeah,

so the giant meteorite heading towards that. That has kind of really that has really got that sped up worried. Now due Wednesday. Yeah, we've now got a definite date for that. That's impact. I mean. Is this? Is this? Is this not just reminiscent of the of the eighties? Wasn't? Didn't we have se interest rates or something like that in the eighties or something like that? Yeah, back in

the seventies. Yeah, yeah, so that was that's kind of fame and that that era is getting talked about a lot at the moment, obviously because, you know, we're seeing we're starting to see comparable levels of inflation. And actually, back in the back in the seventies, the the chairman of the Federal Reserve was a chap called Paul Volca, and his name is cropping up a lot in, you know, in the kind of financial, financial media at the moment because he hyped rates to around tw to to get

that inflation under control. Um, now, for context, we're we're not we're we're sort of, you know, pushing towards the three percent level. We're we're kind of hovering around there at the moment. So there's there's lots of upside for for interest rates. Unfortunately, Um, it remains to be seen whether, you know, whether we'll whether we'll get anywhere near that figure. I think things will have to get really pretty bad

for rates to go that high. But I mean, you know, the Fed and other central banks have, you know, our hiking rates a lot now. I think I think there's due to be another one in the UK, maybe even tomorrow, at the same time that the Fed is is hiking rates. The the European Central Bank the ECB there hiking rates now. You know, the higher interest rates are just going to be a thing for you know, for the next few, possibly years. So that's that's something too. That's something to

look forward to. Um. Yeah, so kind of already ahead of the merge, there were there were concerns, there were you know, there were things weighing on the market. So the merge came, it was a success. The market's kind of pumped a little bit in, you know, as if to kind of acknowledge that, and then they started crashing again, and I mean they are still crashing. Let's just have a quick look at the child. Like yesterday seems to be a bit of a dip and it's gone up

a little bit today. Um, that's my scientific look at it. That's your technical analysis done. Yeah, it is up a little bit today. Yeah, that's true. Bitcoin, Bitcoin and Etherorum are both up over three percent today, but I mean they're both still, oh yeah, yeah, massively down, especially especially etherorum.

ethereums down over on the week. Yeah, exactly. So, yeah, Bitcoin, Bitcoin is below twenty k which is you know that that's a that's a twenty K is is a fairly sort of strong psychology call support level for for Bitcoin ethereum is kind of around thirteen and a half K as we record this Um, but I think there's a lot more. There's a lot more downside for both which will which we'll talk about a little later on. I think another thing worth pointing out so that you know

we're now sort of moving post events, post merge. So there was a lot of expectation that institutions would kind of start piling into ethereum, you know, buying up eas once it's once it got, you know, whence it went green and its electricity consumption dropped. And Yeah, that that did not happen. Um. Now I think there are I

think there are probably a few reasons for this. I think possibly it's it's a case institutions are sort of like, well, I think we're just going to wait a little longer and see that everything really is okay, because I think that's I think that's a wise moved, really very imprudent, I think. I think also it's just kind of representative of what's going on again in the wider markets. If, if, if, if, interest rates are going up in markets are about to tank,

people are not investing exactly. Yeah, exactly. It's it's it's a time, I think, to be very much sitting on the sidelines and waiting to get a better picture of of where markets are going. Because, yeah, I think everyone, as I said earlier, so many people, are expecting a big old crash across the board. So, yeah, why would you? Why would you be investing now? Why would you be buying up stuff now if you think it's going to be much, much cheaper in a few yeah, exactly. So

I think they're doing that. There is a kind of general trend towards just holding mostly dollars at the moment because risky, risky investments just aren't too popular when when interest rates are high, people, people want to have cash on hand in order to pay down debts and things like that. So yeah, there's that. There's been a lot of selling going on in order to get into dollars

and also, yeah, not much buying. So so that's something I think you know that kind of that expectation was was snuffed out pretty quickly, and I think also there's a there's a sense that the institutions are waiting for some regulatory clarity as well, and this is tied into what you were saying, you know, about at the at the very time the merge was happening, the chairman of the SEC was making these comments that he believes could

be a security. And again, I think if you were if you were a, you know, a large institution or or any kind of investor, you would want to have a better idea of what the regulatory landscape is going to look like, because you don't want to buy, you know, buy up an asset and then find that you've unwittingly bought an unregistered security or something like that. That would

that would not be good. So yeah, those, uh, those are those are some of the reasons why why, you know, ethereum hasn't done so well post merge and again, the kind of wider crypto market as well. And Yeah, the the the SEC thing is quite worrying and in fact we've had a bit of a we've had another development on that front just in the past twenty four hours or so. News just breaking. Yeah, this is very much

the news coming in over the wires. So yeah, so first of all, obviously, yeah, Gary Ginster, the SEC chairman, he views as a security because he argues that there is an identifiable person or entity behind it driving the expectation of profit, and this is this is key to how the SEC evaluates whether an asset is a security or not, and it's it's this thing, the how we test,

which I think I might have talked about before. But there's a fourth criterion on it which says that an asset is a security if there is an identifiable third party driving the expectation of profit. So if you were, you know, if you were buying a stock, if you're buying a stock in Tesla, say, then that third party is, you know, Tesla the company, or you know, Elon Musk or you know anything like that. It's pretty easy to identify. Now the argument with ethereum has been that it's, quote unquote,

sufficiently decentralized. This is what a former SEC officials said about ethereum a few years ago and we've kind of assumed since then that would be safe from a security securities classification. But that doesn't seem to be the case and I think Um Gary Ginsler's argument is that. Well, someone like fatal, I say, or the ethereum foundation or the ETHEREUM DEV team, you know, these are these, to him,

are identifiable third parties driving the expectation of profit. And also, surely if they if they hold a lot of e, then it's not decentralized. Do you know what I mean? Like that's the whole the whole proof of steak thing is it's kind of okay, cool, those who've got the cash have got the power and can be leaned on and can be influential. Yeah, yeah, there are certainly a lot of a lot of centralization concerns around around ethereum is. Actually, now that it's that it's moved to proof of stake,

what's for Tarlic and crude? I thought they were kind of pushing to be less less of a focal point around. How? How? How is that happening? Well, this is I mean this is something that's common with a lot of crypto projects now and you know, some, some have woken up to it pretty pretty Um, you know, in a big way, like Polka dot's a good example. So the guy who the guy who founded polka dot, Gavin Wood, who was

one of the founders of ethereum as well. He has basically spent most of his time over the past year or so trying to decentralize Polka dot more because he has, you know, he has very much read the way the wind is blowing. Um. So yeah, I mean it's it's a difficult thing because how do you disassociate yourself? How do you as as say that the potemic figure of the project, like well, Gavin Wood is still polka dot really,

and vitarlk certainly is for ethereum. How do you kind of distance yourself from it and and how do you argue that you don't have any kind of influence on on the price of ether or the price of DART or whatever it might be? Um. And it's I think it's a difficult thing to do. You know, vital it can argue. He's like, well, you know, I can't. I can't push code on my own, I can't decide on particular updates or anything like that. You know, it has to be it has to be a decision taken among

the entire team. Um. But I mean you could still argue that Vitali could just, you know, he could take to twitter and and and move the markets because that, you know, people listen to him like that. So it's it's a difficult thing and there's lots of stuff going on behind the scenes. You know, if Um, ethereum. Sort of most crypto projects, I sort of you know, have a nonprofit, usually based in Switzerland, that sort of coordinates

their development, quote unquote. So's it's just a testament to to the for D chess of yeah, like like, unless that was just a coincidence, but he kind of knew right, I can't be the figurehead for this and just vanished well before, like decade before any of this was really coming to come into a head. Yeah, it's very true.

I think that is you know that. That's my personal theory on it, that whoever Satoshi is or was, took themselves yeah, realized that that you know, this, this this thing, can't work if there is an identifiable person, you know, at the heart of it, if you like, which is why they you know, they've they've disappeared. I mean you could argue that perhaps they're they're dead, but I for one thing that, yeah, that that is that is probably

the most likely explanation. They've kind of removed themselves from the stage for this very reason, you know, in order that the project, you know, in this case Bitcoin, has a life of its own. Can't be can you know, decent realizes itself. And Yeah, that the difficulty is, how does something like ethereum and all these other crypto projects, particularly ones that are proof of steak, how do they move towards decentralization? It's a it's a very good question.

There are and you know, we don't have, we don't have all the answers to that yet, which and I think that's going to be a big theme of the coming I say year, I mean I think a big theme of the coming few years really is how do these how do these crypto projects, decentralize? How do you put decentralization into action, because I think that's one of the you know, that's one of the only ways that

these that these projects, can keep themselves safe from from regulations. Yeah, Um, so it's it's it's an exciting but kind of scary time for Ethereum, especially from the point of view of what regulators make of it as well. And then, Um, I so I alluded earlier to this news that are kind of just come through. So this is pretty crazy. I'm gonna I'm going to give you a little bit of background and then the quote here. So the SEC um sort of yesterday, yesterday evening in the US, I

think yesterday afternoon. Um, they have charged a kind of Crypto influencer called Ian Bellina. They've charged him with promoting unregistered I C O S. now, this goes back. I think this is from about five years ago or something. Um, and there's this crazy line in in the filing. I'm going to quote it here. So this is what the SEC said and just kind of just kind of bear this in mind. So this is referring to. Sorry, this is referring to an investment pool that Ian Berllina started

for for a particular I C O quote. The US based investors in Bellina's pool irrevocably committed to the transaction when, from within the United States, they sent their contributions to Berlina's pool. At that point, their contributions were validated by a network work of nodes on the ethereum blockchain which are clustered more densely in the United States than in any other country. As a result, those transactions took place in the United States. Okay, that's a that's an interesting

take on it. If they're, you know, how do they how can they prove where those nodes were Um based? You can look online. There are various resources online where you can where, you can see where where nodes are clustered. So it's it's fairly you know, it's it's fairly easily obtainable information. Um, but I mean this, this is, you know, enormous kind of overreach, I think, by the SEC. It's like, well, most, you know, the majority of ethereum nodes are in the

United States. Therefore ethereum is American. That is that is pretty that is a pretty large imaginative leap. And is that something that's going to be the contested in court? Oh, yeah, yeah, I think Ian Bellina has already as already sort of, you know, hit back and, you know, denied the claims. Obviously it's a bit crazy. It's a crazy thing to see really because, yeah, it's, as I say, it does

kind of smack of overreach. This is something that, you know, Ian Bellina's lawyers, I think we'll will kind of hone in on when they you know, if if the case, if the case comes to court, that that's something that they'll that they will push back against. But I mean, yeah, the the implications that are crazy. So I mean let's say, you know, according to the SEC, then let's say you and I, let's say I sent you, any transaction from here in Dubai over there to where you are in London.

You know, because not involving, you know, any U S entities at all, but in the secs terms, oh well, because you know most of the validator on the network or American, you know that transaction falls within our jurisdiction and because Mad Mike Mooch is on the U S sanctions list, I have, I have potentially committed a crime by by interacting with you. You know, I'm I'm violating sanctions. Um, yeah, I mean that's a you know, it's a bit of a bit of a far fetched example. Or no, but

it's kind of I kind of get it. It's kind of I don't get it, but I understand the point you're making. It's kind of like, okay, cool. Well, if, if, if you're gambling, if if you are, if you're playing online poker and the servers that the poker game is going through are based in America, does that mean you're gambling in America? No, surely not? Yeah, no, it's very true.

It's very true. It's Um, it's it's a pretty as you say, it's a pretty bold claim for the SEC to make and I personally I don't think it will stand up, personally, but I mean don't show the extent towards to which the SEC seems to be, you know, going for Crypto. And one of the reasons I think it's doing this is because this is something I've kind

of speculated about a few times. But we're coming towards the end of September and this is also going to be the end of the SEC's fiscal year and me and a few few colleagues here at Coinbureau we've kind of been speculating now that that we can expect to see a lot of a lot of action taken by

the SEC. Yeah, to try and to try and justify a bigger budget, in the same way that, you know, councils always dig up the road towards the end of the taxia so they spend their entire budget and then they can argue that they need a bigger one for, you know, for the next fiscal year. This is this is something I think the sec is kind of doing

something similar. It's saying, look, you know, we've got all these actions out against various entities in the crypto space, but we're going to need more money to fight them all, etcetera, etcetera, etcetera.

So yeah, so that's that's a concern certainly. Another thing that I think, you know, it's going to a kind of way on on the crypto market in general over thecoming you know, over thecoming weeks and months, Um, and just too quickly before we before we take a quick break and move on to some good news, because I think it's I think we probably need to get in that sepreaction. Um, there are yeah, going back to these

concerns around centralization, you know, they haven't gone away. So a good example is the of the first one thousand blocks validated after the merge, four and twenty of those, in other words, were validated by, we're validated by coin base and Lido Finance, so just two large validator entities. Obviously, coin base is bay in the United States. Lido finance

is a Dow, a decentralized autonomous organization. It's not based in the United States, but a lot of the vcs who hold the LD O token, you know, who hold voting power within the Dow, they are based in the

United States. So you could argue that, you know, of those first thousand blocks were validated by entities answerable to US authorities, you know, subject to your US jurisdiction, which again is pretty worrying and especially worrying when you factor in these kind of continued concerns around protocol level censorship. You know that we saw when we when we talked about the tornado cash sanctions and things like that. Yeah, Hmmm, how do they do this? Can they just can they

move to Mexico? That could be an option. That could be an option. Coin Base has actually said that it's going to, you know, it's going to fight this in court, which is, you know, which is pretty pretty good going

by coin base. Um. And actually, Brian Armstrong, the coin based CEO, said, you know, around the time the tornado cash sanctions were kind of kicking off, he said that, you know, he would prefer coin base sort of not to, you know, not to to validate on the network if it meant if doing so meant that they had to know, censor transactions. Um. But I mean remember, you know, validating

on ethereum. If you're if you're a big validator, that's that that's a lucrative business that, you know, you can earn. You can earn good rewards for that, so we don't have to see. Because they're public, they're probably gonna need

to to to, you know, be mindful of their shareholders, exactly. Yeah, they they really have to step into line because, you know, okay, however much you believe in decentralization, however much you want to, you know, you don't want to enact protocol level censorship if you you know, if if you're based in the US and doing so means you're violating sanctions. As I said in a previous episode, that's thirty years in jail or a ten million dollar fine, or possibly both, and

no one is going to risk that. You know, however however much they they may, you know, they may believe in decentralization or what have you, no one is going to is going to willingly violate sanctions unless they're crazy. So yeah, it's it's it's there's a lot of there's

a lot of headwinds facing ethereum at the moment. There are a lot of challenges to overcome in the coming months and and this is this is the case for ethereum and you know, especially with all the kind of action that we're seeing from the SEC and others, it's a case for the whole crypto market as well. So really, I think, going back to that what I was saying about an upcoming crash, I think we can definitely expect lower lows from here. Okay, so just just be aware

of that, my you. On that positive note, shall we take a quick break? Welcome back everyone, to part two and the good news. Finally, some good news. Mikey, I know you were, I know you were sort of you were worrying whether there was going to be any good news, whether I just dangled good news in front of you to try and keep you interested, whilst I just hit you repeatedly over the head with bad news. I've got the Good News Air Horn. There we go, good news coming.

It's been too long. It's been too long. Yeah, there is good news. There's lots of there's lots of good news around the merge, for instance. Let's start well, first of all, is going to become a more attractive investment in the long term. Keywords long and term, because well, let's let's look at the headline thing, if you like. Ethereums electricity use is now absolutely minimal. Um Not, and this is a crazy statistic, I think so. Not only

did ETHEREUM's energy. Energy used declined by Um, but the merge apparently reduced global electricity consumption by zero point two, which is yeah, I think that's nuts. Really, that is crazy. It did make me think as well. Are there many other industries out there that have addressed their carbon footprint to the same extent that Crypto has? I mean, you know, people, people, you know. It's a it's a stick that people use to beat crypto. We're saying, oh well, it uses all

this energy and stuff like that. The cryptosector can now turn around and say, well, we've just we've just reduced our energy used by this much. What's your industry done? I mean, it made in that we're all violating security sanctions, but we have reduced energy by we're all going to prison, but at least the air in the exercise yard will be nice. No, no, it's, it is, it's, it's it's very good, it's very noble and it's kind of and it's it's the way we should be going if possible, while,

you know, keeping the integrity of of the project. So it is great. It will. It is a long term view. I think you know, the nerds over ethereum have been thinking about this, have been concerned about this, have got a plan where only fifty of the way there now. Is that right? Yeah, yeah, that was that was metallic statistic.

Ethereum is now apparently complete. Okay. So, and I think that's kind of good news in a way as well, because I think a lot of people may have been sort of looking at the merge and going, well, this will be, you know, the final transition and it will use, you know, a negligible amount of electricity and everything we find and no, we're we've still got a long way to go and in a way I think that is that is a good thing, because there's still a lot

of work to be done on ethereum. It looks like the team are, you know, now very much focused on on those upcoming stages, which obviously we we talked a bit about last week. You know that the verge, surge, your favorite, the purge, and then the SPLURG as well, which we'll talk about a little later on. But yeah, I mean this, this energy reduction of Ethereum, I think is is a wonderful thing and for, you know, a

number of reasons. I think one of the one of the things that occurred to me was that the argument that N F T S are bad for the planet has kind of evaporated like that, which I think that could open up a lot of a lot of adoption. I think a lot of artists, musicians, you know, are the others who are likely, you know, who have a have a use for N F T s. They are going to be able to do that in good conscience now. So that could be. That could but I think the

long term good for the for the network. Yeah, no, for sure. Yeah, and obviously the the the energy used reduction. That means that E S G focused firms, they each is a much, much more attractive proposition for them now because you know, they're very much they're very much bound by these E S G concerns. So that gives them, you know, that gives them an excuse, or or perhaps you could say one less excuse. Not It removes a

barrier to investment from from them. So you know, it's it's Um it's attractive, more attractive proposition, which is which is good, because you want more money in it, you want more more people adopting it and more technology to

be driven by it. Damn Straight, damn straight, and I think you know again from an institutional perspective, I think obviously these these guys do lots of due diligence, you know, they look into the project, they look at the people behind the project and stuff, and I think the fact that the ethereum team managed to pull off this merge, which really was a big, big deal, you know, and it was a difficult thing to have done, I think that investors doing their their due diligence will be able

to look at that team and go these guys clearly know what they're doing. You know, okay, they look like they could use a wash and a new wardrobe. I think that's what you want in a nerd. Like if a nerd is is too well kept, they're not really in nerve. They need to have some sort of hot source on their top. Um, flagrant disregard for for the their health. B M I. UH, closer to to to to their age. Uh. And and you know, a receding hairline.

That that's does the tell tell signs of someone who cares about a project because they have no care about anything else in their life. Very true. That is that. That is a good investment philosophy. So yeah, I think again,

long term this is this is going. All these factors are going to make a much more, much more attractive asset for for when those institutional investors do actually decide to ape in, which obviously they didn't in the in the immediate aftermath of the merch and yeah, going back to what you were saying, as more people join the network, as more people invest in ease, as the ethereum network gets used more, because hopefully more people are minting and transacting n f t s and things like that, that

means that as the network gets busier, more e is burned in transaction ease and that means that itself could become deflationary with enough network activity. And this, as you know, just as an investment case, that is a is a huge deal because if the if the supply is decreasing but the demand is increasing, the price goes up. That's that's what basically that's what economics one, Oh one, says. Now you can actually look at this on ultrasound dot money. Issuance.

It's it hasn't gone deflationary yet, but it has slowed to zero point to one percent since the merge. So issuance is is very much on the decline. And Yeah, I think with enough, with enough activity will become deflationary due to those due to those fee burns. So yeah, there's also and then we've got these these other upgrades coming up, verge, surge, purge and splurge, that these are going to help further decentralize the network. They're going to

make it faster and cheaper to you is Um. They're going to make it easier to become a validator as well, and this means that, you know, we could see some of these, some more of these investors decided to become validators. That would help further decentralize the network. Ideally, will have more people joining as validators from outside the United States so that becomes less regulatory capture from Yah, regulatory capture

by the SEC becomes less of an issue. So yeah, the next kind of big upgrades is the Shanghai upgrade, which is set for some time in early three now. There's going to be some quite technical stuff going on with that, but it should allow some eth stakers to withdraw, so some validators will be able to unstake there if they want to. It should also make some improvements to gas prices as well. Now this ties into another bit of good news around the merge, because there was a

lot of concern. Now, this was a bit of a misconception that suddenly, after the merge, people would be able to unstake their eath and there would be a flood of hitting the market and that would not only tank the price of eight but compromise the security of the network. Now, this didn't happen because that's not what the merge was about. But after the Shanghai upgrade next year you will be some some validators will be able to unstake. But fortunately

the ethereum depths of have anticipated this. So withdrawals of steak teth are going to be staggered. So they can you know, they can only be done at a at a fairly slow pace. So we're not going to see a kind of mass dumping of steak teeth onto the market, which would not be not be good for ethereum Um. And I also think that you know that there was there was some data released recently that showed a lot

of steak teeth was bought at around the SEV dollar mark. Now, if we take a look at those prices again, you know currently hovering around marks. So that would mean that any validators who did want to to unstake and sell. They're currently underwater anyway. So you you'd have to ask like why they would do that. And you know, if you're a validator, you you know that you're locking up

your eath for for a long, long time. So I think these concerns that some validators might dump their onto the market as soon as they can, I think those are kind of unfounded. I'm sure we I'm sure we will see a bit of selling, but I don't think it will be anything, anything near enough to to crash the price or or really have any noticeable effect on

eath security either. Well, that's good. I mean, I I it seemed to me as an ignoramers from the outside, that being if you've got some eath, unless you're day trading with it, Um, you, if you, if you stake it, it's just kind of a way of making it make money for your own money, for you, yeah, passive income. So it's kind of it's for those savers. It's kind

of stick it there, forget about it. It can. It can make you a little bit of money and unless you know it crashes, then just yeah, that's what that's

what it's kind of an investment. Yeah, if you believe in if you believe in ethereum in the long term, if you believe that it's a is a viable project and it's going to it's going to achieve all that it can all that it promises to, then staking is a great way of, you know, not only helping secure the network but also, yeah, earning this earning this passive income through through staking rewards. Um. So yeah, for me IT'S A it's a bit of a no brainer really,

if you if you've got a long term view. And again, this is I think is something that could that could really help attract bigger investors as well, because big investors love passive I mean, who doesn't love passive income? Um, but you know, these guys will, I think, look at it in the same kind of way that they view

dividends from from certain stocks. You know, it's like okay, it's it's worth having, it's worth having capital locked up for a long period of time because we get this, you know, we get this drip feed of income in the form of dividends or like a government bond. Yeah,

it's the same. Yeah, it's the same reason why why people, yeah, invest in bonds because, yeah, you put a large you put a large sum down, you lock up liquidity, in other words, but you you earn interest on it over over a slower period and obviously the great thing about bonds is that you can, you know, you get that money back that you've invested as well after after a fixed term, after the term of the of the bond

has expired. So, yeah, it makes a good case case for as an asset to earn passive income with which again, I think is going to make it a much more attractive long term investment. So that is yeah, that is some of that is some of the good news post merge. And Yeah, maybe maybe not quite as again, this is something we're going to have to not only kind of wait a long time for, we're just going to have to we we don't we don't really know how how

the next few months are going to play out. I mean, as I say, we've got a pretty good idea that we're you know, we're going to see lots of regulatory action. We're also likely to see a crash in asset prices across the board and we're also like to see more inflation and all this sort of stuff. So this good news is something that you've kind of got to park for the time being and and look ahead to look quite a long way ahead too, sort of brighter days

in the future. Well, Um, I can't wait for next week. How patient are you feeling? Like you you're you're not, are you? Are you a patient man? I I'm a lazy man. I think that's the most important thing to remember. So, like, I'm not going to be selling or shipping anything because I can't be bothered. Um, and you know, it's it's it's a way out. I think it'll be fine. I mean, unless you know you need a new kidney and you have to buy one off the black market, then then

sell your eath. Okay, I should also point out that that is not financial advice. Let's take even worse. Guy On a podcast said that I had to sell my kidney anyhow. Let's take one more quick break and then we'll just kind of look ahead to what else. You know, I look at a couple of other things that are having post merged. Welcome back everyone. Part three. We've had the bad news, we've had the good news, and now for kind of any other business. The News, the ugly news.

You forgot the last news was bad. Wait, did you see this Um? Yeah, I suppose, the ugly news. Yeah,

that's that's a good term for it. The other question I kind of wanted to address that some people have been asking is, like what happened to this proof of work fork of ethereum that everyone was kind of lots of people were getting kind of out this idea that ethereum minor because remember that some of the big some of the biggest losers from from the merge have been ethereum miners because, yeah, their main source of revenue is now gone and there's been a lot of speculation about

what ethereum miners would do post merge. And again, actually, I think that kind of also ties into some of the some of the bad news or some of the some of the reasons why ethereum especially kind of struggled price wise in the days after the merger, because there was a lot of data are saying that in the lead up to the merge, exchange inflows of were really high. So what that meant was that lots of people were

moving their too exchanges. Now there's only one reason generally why people do this, or one big reason, and that is in anticipation of selling it. So what we what we think is that a lot of ethereum miners kind of sold straight after the merge, you know, especially when that when when that little price pump went on Um,

and that may have been them kind of capitulating. That may have been them just kind of selling all their all their assets and just getting out of the of the mining business altogether or, you know, just selling a lot to kind of cover their costs and advance things like that. So that that, I think, is another reason why the price uh tanked in in the days following the merge. So eth miners have kind of gone and

done a few things. Some of them are mining other coin, other proof of work coins, of which there aren't an enormous amount. There's one called Raven coin, which has attracted quite a lot of you know, it's a Hash Ray to shut up Um. There's one called Ergo, which is kind of affiliated with Charles Hoskinson, who's the guy who found the founder of Cardano, which is obviously a rival to ethereum Um, and used to and was one of

the ethereum co founder as well. He was the guy who was sort of CEO for a while until until he was booted out. So his sort of little side project ERGO. That's attracted a bit of Hash power from from ethereum miners. But there was also this proof of work fork. So Um, that was something that a lot of people were kind of worried about. The ticker for that is e w e. t e. w. Now this has kind of struggled really since the merge. It hasn't attracted all that much interest. There were a few setbacks

for the networks as well. It suffered something called a relay attack, something, not a replay attack, Um, and it's it's now down. W is down sort or more from its all time high earlier in September, you know, kind of ahead of the merge. So yeah, it's it doesn't seem to be gaining much traction. It doesn't seem to be gaining an awful lot of support and, as you know, as a lot of people have pointed out, like why

would it? We have ethereum classic already, that fork, that proof of work fork of ethereum from from the Dow Hack, which I think we mentioned in advance of the merge as well. So that's another I don't think that the proof of work fork thing doesn't it's still it's still going. It's still a thing, but it doesn't really appear to have played out and I don't think it's going to be. I don't think it's going to have any sort of real effect going forward. Okay, well, I feel for them.

I do feel for the miners. Yeah, yeah, no, it's it's tough, isn't it? It's Um. Yeah, you've got to have some sympathy for them and stuff like that. It's they are, they are a big kind of casualty of the move to proof of steake Um. But yeah, Crypto, like any other business, can be ruthless sometimes, can't it? M Hm. Okay, so let's what let's kind of let's conclude. So there's lots to look forward to for ethereum and Crypto in general, but there's lots to be concerned about

two Um. And I think the important thing perhaps to remember for for anyone, you know, all the listeners, is the bear market is going to continue for some time to come and, as you said, it could get a lot worse. Bear markets tend to, you know, they can last for a long time, and I think really the kind of, in a way, kind of good news is that this, this is a bear market that has been driven by much more kind of much more general factors.

It's not a crypto specific bear market, even though there are, you know, particular there are kind of unique challenges facing the crypto sector, especially from centralization and especially from regulators like the SEC. This is still this is still a global problem. You know, global markets are are struggling with this as well. So, although it's although we've got a long time of it left, it will, it will come to an end. And well, there was a bit of

good news. I don't know if you saw this, but there a few days ago the chief of the World Health Organization said that the pandemic could, the end of the pandemic could in fact be in sight. I thought it already was. Yeah, well, quite possibly. Yeah, yeah, no, the pandemic is still is still a thing, but according according to the World Health Organization, we could be, we could be about to see the end of that, which would be yeah, that would be great. I don't think

anyone would anyone would be sad to the best. How are things going to improve? What is gonna what? What? What are we going to see? Is it gonna be gradual,

improved is. It is if, if there is a ceasefire in the Ukraine, if if the pandemic is kind of slowly coming to an end and China stops this uh, this national citywide lockdowns, and production is going to start, Um, happening a bit more in and and and ships with full of goods are going to come out of China and across the world's sort of like as a catalyst for the economy. ARE PEOPLE GOING TO START IF inflation rates go down, how long is that gonna last? Is

gonna last six months? Is gonna last a year? What? What? What are? What are your thoughts on all of this? When is the end of the tunnel happening? It's a good question. It's a good question and I think a lot of it is tied in with these with these interest rate hikes, because obviously the the driving factor behind those is high inflation. Um, now, when when interest rate gets high, interest rates get hiked, they take a while

for the impact to be felt. Um, it can, you know, it can be a few months down the line that you know that you feel that you get a you know you get a sense that interest rate hikes are making a difference. So, yeah, in terms of time. I mean I think probably. I think three is going to be another tough year, but I would hope that by the end of next year we could we could be starting to see, I suppose, what you'd call green shoots. You know, hopefully by then inflation is, if not under control,

you know, is starting to noticeably decline. These high interest rates are starting to have the desired effect. Um and, as you say, sort of by that point you would hope that trade has resumed somewhat, certainly that the war in Ukraine has come to end. I mean, we seem to have that seemed that situation, I think, seems to have kind of improved slightly over the last couple of weeks or so, because Ukraine is actually doing quite well,

you know, they they've actually pushed the Russians back a lot. Um. I don't think that means that the end of the war is in sight, but it could say. I think it certainly suggests that it's a war Ukraine could win

and that, you know, that an end could come. But yeah, so, I mean I think in answer to your question how long we can expect, I think we've got another know, another year of this at least, but I would hope that by, you know, sort of early four a lot of these a lot of these problems would have been, you know, will have reduced a lot. Will hopefully have much lower inflation. The situation in Ukraine hopefully, you know, hopefully peace will have will have been restored. Um, and obviously, yeah,

as pandemic restrictions. You know, if the pandemic really has gone, really is brought to an end, then then, yeah, manufacturing cranks back up, it should be. It should be noted actually at this point that if, if the pandemic is kind of officially, you know, officially declared over, it could actually have a negative effect on markets because some people are speculated that because of these Chinese lockdowns at the moment, because so much of China is on the lockdown still. Um,

this has manufacturing output there. Remember China. I mean it makes pretty much everything. Manufacturing output has actually been way down in China. Now. If manufacturing in China suddenly restarts, the demand for energy from that will be massive and obviously energy is a big, big problem at the momentum. Energy shortages and rising energy prices are one of the big drivers of inflation and, you know, unrest as well.

Around the world. So it might be that the end of the pandemic isn't quite the isn't quite the sort of White Swan that that we might have hoped for. But I think still by their energy mostly from Russia, though I think China gets a lot of its energy

from Russia. But I mean in this sort of situation it doesn't really matter where particular countries get their energy from, because all that really matters is that because, because we live in such a globalized world, shortages somewhere, shortages, let's say the energy shortages in Europe, have an effect on global prices because the commodity, that the amount of the commodity in circulation, has dropped thereby the price goes up.

So this is why, you know, when people say, oh well, you know these these energy these energy concerns are, you know, their Europe's problem. There there's something between Europe and Russia. It's it's not the case prices go up across the world because there's less energy to go around. But there's not less energy. The reason why there's an energy sorted is because of the sanctions. I thought that. So like Russia has still got the gas. They're just not we're

not able to buy it because they're being rascals. Yeah, yeah, certainly. Yeah, so that sounds like. This is my sort of trying to just figure it out and understand. Okay, cool, or if if China comes back online and and and starts making stuff again, if they buy their it's not good for the war in Ukraine, because the sanctions mean less Um and and. But I assumed basically people. I thought we were buying Russian oil from India anyway, not Russian

gas from India. That's what I was I was told, you know, because we're buying gas from India now and they're buying it from Russia, and it's just, HMM, yeah, it just gets it just goes through different sources now,

I think. Yeah, I mean the sanctions are the sanctions are a big, big you know, the main reason why there are these these energy shortages because Russia isn't able to export so much of its gas or its oil, Um and, I mean, look, you know again, this is this is something, this is something to to think about in in terms of the future because, let's say, let's say the war in Ukraine comes to an end, let's say because of the way it's going at the moment

that Ukraine is actually Ukraine actually wins, that the West is prepared to keep pumping enough money and weapons and all that stuff, sort of stuff into Ukraine to actually to actually mean they're able to kick the Russians out and the war comes to an end. What happens with Russia then, you know, do do do Western countries? Does Europe and America turn around and go, okay, well, you take the L Putin will lift the sanctions now because the war is is over. You know, I don't think that.

I can't see that happening. I think the only way that we could see sanctions lifted is if, is if Russia voluntarily pulled out, you know, and said look, well, we're sorry, it won't happen again. Let's let's all be friends and let's start trading against stuff. Can you see that happen, because I I certainly can't. So, you know, there's perhaps perhaps this idea of sort of looking further along the line and thinking, when is everything going to

get back to how it was? It won't, you know, things are going to be very, very different, and already there's a lot of talk about food and energy independence, because this, you know this. This war and this sanction and these sanctions have really exposed like, especially for Europe,

but I think in general as well. You know how how delicate everything is, and covid has done this as well, how delicate supply chains are, how delicate the whole this whole kind of globalized world is, and actually the only way that you can really prepare for an unforeseen crisis like a war or a pandemic or whatever, is to try and be as energy independent as you can or grow as much as your own food as you can.

You don't, and I think this is something that we're going to see a big trend towards, and this is from an environmental perspective as well, because I think people are becoming more and more concerned about the fact that food gets shipped around the world and obviously you know

that that's carbon emissions and things like that. So I think we are going to see a trend towards countries trying to produce more of their own energy and more of their own food, you know, more of their own goods and things like that, and some people are are really kind of talking about a possible end to globalization, which is I mean I think that's a fairly bold call at this stage, but I don't think you can, I don't think you can deny that we're going through

a period of enormous change and things aren't you know, things are hopefully going to look a lot better in, you know, in four say, but they're also going to look a lot different as well, and we just got to hope, I think, that they look different in a good way. MM HMM. So we're going to have to

be off grid as a country? Yeah, and everyone's going to have to grow their own vegetables, have get solar panels on your on your house, dig up your garden and turn it into a vege patch, insulate your roof, Um, keep lots of tin foods. Guy, that was that was the cheeriest news I've heard from you. But it's about eye opening. You know, maybe, maybe, maybe it is is more of a shift in our life than than we

are acknowledging. And you know, higher energy prices are something that's going to be here for a while until we adopt Um, nuclear or some other sort of which don't. Don't. Don't try to own all the nuclear power stations in the UK anyway. Yeah, I think so. They're basically paying for them. I think. Um, yeah, that's the if they if. If you wanted an example of globalization in action, there

you go it. Yeah, I think this is a this is a very long term thing, but the future is going to the future is going to look a lot different. MM HMM. There's food for thought. Um. So, Mikey, I'm glad I've been able to to to dampen your mood. It's all right, the my I q will mean that I will forget about this shortly. Ignorance is bliss, and I will have a cup of tea and will be all right. But couple a couple of a couple of cups of tea, a donut or two and you'll be

right as rain. Yeah, you had to sort a little fat. I've been there, noted. You'll remember that. Um, I will try and for next week's episode, I will try and talk about something more cheerful. How about that? Why don't we do that? Why don't we? Why don't we? Let's get into the WHATSAPP and start thinking about some some brighter topics that we can sort of divulge into and explore. Okay, okay, good idea. I am I am sort of trying to work towards doing an episode on Toshi Nakamoto as well,

because I've seen a few people asking for that. I did sort of promise that. We did kind of promise to do that a while ago and a few people have held me to that and I think it's something. I think it's something we'd both enjoy. I think, yeah, I'd love to learn more about that, but without doing any of the research myself. Okay, well, that's fortunately where I come in. I'm wonderful. All right, man. Well, it's been lovely to talk to you and to everyone in light.

We'll see see you next week. Thanks for listening, everyone. Thank you so much for listening to the Coin Bureau podcast. If you'd like to learn more about cryptocurrency, you can visit our Youtube Channel at Youtube Dot Com forward slash coin bureau. You can also go to coin bureau dot Com for loads more information about all things crypto. You can follow me on twitter at Coin Bureau all on word, and I'm also active on Tiktok and Instagram as well.

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