The Mark Moss Show Dec 13, 2021

It should be the most important part of your week, the most powerful, the most profitable part of your week, because you're literally witnessing, like I said, a revolution, a decentralized revolution, a technological revolution that's literally going to change the way the world works. We've had about five technological revolutions over the last two d and fifty years. They happen um about every fifty years, and we're witnessing one right now. It's one of the key pivotal moments in history.

You know, when you study history like I do, you'll see that. You know, history books are written about key points right where history changes, and history books will be written about this point in time. And while you know, the future is uncertain and sometimes it's scary, UM, I think it's scary anyway, UM, it can be overwhelming. Sometimes I also like to step back and appreciate the fact that we are literally witnessing this happening. We're living through it, um,

and we have massive opportunity in front of us. So, UM, if you listen on a regular basis, thank you, welcome back. I'm gonna make sure that I'm gonna make it a priority to make sure it's the most important part of the week. If you're new to the Markma Show listening about bitcoin and cryptocurrencies, then UM, pull out your phone if you're not driving, and put a calendar reminder for this channel at this time to come back with me each and every week. Now, I try to talk about

There's a couple of things that I'm trying to do. One, I want to give you the education you need so you understand what's happening with bitcoin and cryptocurrencies in this decentralized revolution. You need to have the education, the education what is going on? What is this? How does it work? How? How can it make money for me? Right? How can it? How can it saved the world? Right? So you need

that education base and education is so important. That's why you know, you see people that win the lottery or pro athletes that make a hundred million dollars, or you know, rappers or musicians and they make all this money and then they go broke. And the reason why they go broke is because they got the money, but they didn't have the education. And so if you want to participate in this this revolution, in this wealth transfer, then you have to understand what's going on. Now you can get lucky.

You can you can go buy some random meme coin because one of your friends told you to, and you might get lucky. And that's great and and I hope it works out for you. You can also get lucky buying lottery tickets, and you can also get lucky going to Vegas as well. But it's not a good long term strategy. You need to have the edge. You need to have the education. And so I want to bring you that education eagent every week and kind of kind

of help you build that base. I also keep you up to date on the latest news and development, so you know what's going on, so you know you're not just being distracted by the price, but rather you know what's going on. And I keep you have to date. That way, when you you know you go to the go to the cocktail party this weekend, you can talk with your friends and you can sound like you're the smartest guy in the room. I'm gonna I'm gonna be

that secret weapon for you. And then of course I want to make it entertaining so it's fun while you're learning these things. Today, I want to start off with some good education that we have, and I want to talk about some of the big differences that are happening in the cryptocurrency space. And there's a big difference between UM how they work and how they achieve this decentralization UM. And there's two main ways that's done through proof of

work and proof of steak. So I'm gonna talk to you a little bit about what those means so you can understand what that is, the trade offs, the pros and cons, what are the differences of there. I then want to take that and I want to dig into a little bit into UM the proof of steak and then what kind of use cases it may have UM ways to look at that, and then we're gonna dig

into a little bit of defy. We're gonna talk about this decentralized finance UM, and then we'll even talk a little bit about some n f T s. All Right, it's a it's a it's a big subject to dive into. And I don't have a lot of time, so I'm gonna go through some of this a little bit faster, and then if I get some good feedback from you guys, we'll dig in a little bit more into each of these subjects. All right. So that's what I thought we'd cover today. Give you that foundation so you understand what

the heck is going on. Now if you're just tuning in, you listen to the markma Show and we're talking about bitcoin, and we're talking about cryptocurrencies, and we're talking about the decentralized revolution. So when we say decentralized, what does that even mean. Well, it's the opposite of centralized, right, So, um, most databases are all data based up and down now are centralized. So Facebook, Amazon, Netflix, these are giant databases. It's a giant computer that stores all the data in

a centralized database. Everything in the world is a centralized database. It's also why you see these major hacks happening, right. Experience was hacked. Everybody's information got leaked onto the onto the web. Facebook gets hacked. Um, even the n s A was hacked. And when they hacked the n s A, they stole the N s as hacking software, which is why we have all these ransomware attacks today. They say it's Bitcoin's fault, Cryptocurrenci's fault. No, no, no, no, it's

the NSA's fault. They're the one that got hacked. They could have just told Microsoft to fix the patch, but they didn't, and now we have this ransomware attack. But that's a whole another story. Um. But so those are centralized databases, and no matter if you have the best security in the history of the world, like the n s A UM in a in a secure building, with the best I T team in the world, UM and the best hypersecurity experts, you still get hacked. All right.

What we have the opposite is we have decentralized databases. So Bitcoin was started as a decentralized database. So what does that mean. It means that it's study and having one computer with one database. Now you have hundreds of thousands or millions of computers, each with their own copy of the database. And then all of those computers, those millions of computers be spread all around the world in different locations, and they each run the exact copy of

the full database. And then in order for a transaction, to happen, the databases have to achieve consensus. That means they have to have fifty or more have to agree that that is a valid transaction, and that's what creates the decentralization. It would be kind of like if I had a billion dollars. If I had a hundred billion dollars sitting in a bank account, there would be a lot of people that want to break into that bank account. Bank robbers would be planning and scheming to break into

that bank. And and if it was a hundred billion dollars, they could spend a lot of money and time trying to break into that bank because the reward would be so high. Right, But what if I had a hundred billion banks that each had one dollar in them each? Mm hmmm. See, now it wouldn't be worth anyone's time. The cost to do the attack would be more than the reward they could potentially get. Now you're starting to get the idea. Now. Bitcoin is a lot of things,

and I talked about this on a regular basis. Um, it's sort of like digital cash, it's sort of like digital gold. Um, it's sort of like a lot of things. But one thing we do know for sure is it's the most secure computer network in the history of the world. While all those other centralized databases have been hacked, the Bitcoin network has never been hacked. As a matter of fact. Unlike the n s A that has an cybersecurity team and you know, impeneture walls and all these things protecting it.

Unlike that, the Bitcoin network is completely open. It's open source. Anybody can see it, anybody can see the code. It's permissionless, anybody can join it, anybody can build on it. And there's a trillion dollars of value sitting there in an open network that's not guarded, it's not protected, anybody can start programming on it, and it's never been hacked. It's pretty amazing. It's never been hacked. And the reason why is because it's a decentralized database. All right, So that

sets the foundation. Now stick with me. I'm gonna I'm gonna I'm gonna dig into a little bit of technical, technical stuff, but I'll try to keep it simple. So, how do these databases achieve consensus? Remember they all have to achieve better well, with Bitcoin, it's done via a proof of work protocol, a proof of work, all right, So there's proof of work, and then there's a new version that's come out with all these new protocols called proof of steak, and there's a big difference, and you

need to understand what the difference is. Proof of work is good for money. Proof of work is a decentralized database, where proof of steak is more like equity. It's more like a corporation um where you have these central players that can control it. But I want to explain to you, without going into super crazy detail, what the differences are, what type of programs would work on each one, and some pros and cons of each and then we're gonna

get them to defy. What defy is how it works, some dangers that you need to be watching out for. And then I'm gonna talk a little bit about about n f t s and some some real dangers and n f t s that you need to know about. I get asked all the time, and I want to bring this to you. You're listening to the markma Show. Of course we're talking about bitcoin, we're talking about cryptocurrencies,

and we're talking about the decentralized revolution. Trying to give you the information, the education you need to participate to profit from the largest wealth transfer in history. We're talking about proof of steak versus proof of work, and I'll be right back. Hey, welcome back. You are listening to the Markma Show, and of course each and every week I'm talking about bitcoin and cryptocurrencies and the decentralized revolution, which is the most important part of your week because

this is the biggest revolution that we're witnessing. All the humanity is gonna be changed, that's how powerful this is. And we're currently we're talking about UM. Why, well really what bitcoin and how this decentralized UM technology works. And I was explaining, how do you have all these individual databases and they achieve consensus? So the network has to agree with each other, and there's two main consensus protocols.

So Bitcoin uses something known as proof of work Ethereum also uses proof of work, but then a lot of these newer ones use something called proof of steak. Now, people are proposing these proof of steak protocols because they say they're more efficient. They don't use as much electricity or energy that bitcoin does, and so supposedly that makes them better. In my opinion, it doesn't. But what what I think most people are lacking some context on is

that everything in life requires a trade off. Everything in life has a trade off. Right, there's no such thing as a free lunch. So in order to go from a proof of work to a proof of steak, maybe it is less energy efficient, but what are the tradeoffs? What are you giving up? All? Right? So I think I wanted to touch on that real quickly, and so

real quickly. Um, you hear the term blockchain, So blockchain you could typically you could read any um it's called a white paper, any white paper for any cryptocurrency that there fifteen thousand of them, and as you're reading it, you could just substitute the word blockchain for database. You could read any of those papers and just substitute that word blockchain for database, and it would read exactly the same way. Now, in the Bitcoin white paper, they didn't

reference the word blockchain. But the blockchain is basically the database and every tent on the Bitcoin blockchain, every ten minutes, a new block is added, which has thousands of transactions inside of it, and it adds one block onto the next, onto the next, onto the next. That's how it works. And what happens is you have all these computers that are specifically made for this purpose. Um. They didn't used to be in the beginning, you could do on your

home computer. But today they've gotten to be very powerful computers. And this this powerful computer is now hooked in and to the critics point, that uses energy, and it uses quite a lot of energy. It could cost two hundred bucks or three hundred bucks a month to run this computer. And what what this computer is doing is it's solving. These millions of computers that are supporting the Bitcoin network are solving a puzzle, and they're trying to solve this

mathematical puzzle to create the next block. So there's like this feedback and mechanism, and like I said, they're created about every ten minutes. And regardless of how many miners are on the network or not, it doesn't matter. The same amount of rewards will be created and released. Um. And what's important to understand about this is they all

do this in this decentralized way. Now, if a minor, if one of these computers were to create an invalid block, then nobody else, none of the other nodes in the network would approve it, and that minor would have wasted the electricity they paid for and so it's the incentive. Right, Bitcoin changes the incentive structures. So UM show me the incentive, I show you the outcome. That's what Charlie Monger says. And so all of these miners are incentivized to be

good actors. I spent a lot of money on the computer. I spent a lot of money on the electricity, and so now I'm incentivized to put up good blocks, to be a good actor on the network. If I don't, then the electricity I paid for and the money I spent on my mining computer would be wasted. All right. This is what's called proof of work. Millions of machines using electricity to apply processing power to guess the answer to a cryptographic puzzle that was left by the most

recent block. Right, that's proof of work. It's a proof of work. We know the work was done. There's proof of it because they spent the money. Now this may seem like a waste of energy, but this is what keeps the system decentralized, all right, the work itself, the

cost of the work. It's the arbiter of truth, right, because in this case, there's no central authority that decides what a valid block is so there's nobody there, there's no central authority that decides at Instead, it's the longest blockchain that wins and is recognized as the truth by the rest of the network based off that code. All right. Now, the more energy that bitcoin network uses, the more secure that its latest transaction is against attacks. So we we

don't want the bitcoin network to use less energy. As a matter of fact, we want the bitcoin network to use more energy. The more energy it uses, the more resistant it is to attacks. Now, there's a lot of uh tiny or actually say smaller block chains that are not Bitcoin that have been victims to attacks. We call them attacks. So a single entity could temporarily get control of a bunch of processing power, so I can go

rent it. Right now, I can go rent the hash power and for a few hundred thousand dollars or a few hundred for a few million dollars, I could rent that hashpower, that computer power, and I can attack a smaller network by taking over majority of the processing power. I could reorganize their blocks and do what's called a double spend, basically, create my money, create money from than air. All right, And and we've seen this happen over and over and over with these smaller coins, all right, And

that's why this proof of work is important. And this is also why there will never be another Bitcoin, all right. And the reason why is because when other blockchains try to start a proof of work and set up like what Bitcoin has done, they don't have enough miners, enough computers supporting the network. There's not enough energy being used

to secure it, and they get attacked all the time. Um. So, Like one good example is if we look at Bitcoin and then in two seventeen there was a fork of Bitcoin, and so bitcoin cash was spun off of that, and then bitcoin SV was spun off of that, and so a lot of people are saying, well, bitcoin cash is the real Bitcoin or Bitcoin SV, But both of those other blockchains have one percent or less of bitcoin network total processing power, all right, and they've both been hit

by these attacks by these reorganizations. In fact, if just one percent of the Bitcoin miners decided that they wanted to just one percent of the mining miners and Bitcoin decided they want to attack on either of those two hard works, they could totally do it. But it's not true the other way. Bitcoin cash and bitcoin SV could not attack Bitcoin because there're only one percent of that. So that shows you the importance of the network effects.

So anyone could copy Bitcoin, sure, they could fork it, no problem, but they can't replicate the network. They can't get the mining power that secures the network. All right. It would be like trying to copy, um, Facebook. I mean, I could probably hire developer for you know, ten dollars and build a very good copy of Facebook. But that doesn't mean I would have any traffic. That doesn't mean they can get all the users to come over, right. Uh, it would just be an empty shell. All right. Now

let's compare that to a proof of steak. So that was proof of work. Hopefully that makes sense. I wasn't trying to go to too technical, but I want to give you this rough overview. Now I do want to say that this maybe doesn't matter that much. Um. Right now, you're hearing my voice come over the radio. How how is it that my voice from my studio is showing up in your car or your headphones? Do you know how that works? Of course the answer is no. Do you know who the Do you know who the developer

is that designed this radio system? No? Of course you don't know that either. So none of this really matters, UM. But I think at a at a at an at least at least a high level, it's a good idea to understand this because there's a lot of confusion going in into the space, and I at least want to give you the two main you know, consensus mechanisms. You can understand that by the way. You're listening to Mark

Moss the Mark mos Show. We're talking about bitcoin, we're talking about cryptocurrencies, and we're talking about the decentralized revolution. I'm explaining to you the difference of the two big consensus mechanisms, the proof of work, which we just went over with bitcoin, and then we're gonna talk about what proof of steak is and what's being done with that and how you should look at that UM again from

a high level. Then we're gonna talk about defy, and we're gonna talk about n f T s and some danger that you may not be aware of in the n f T space, but I want you to be aware of it. So don't go away. I'm gonna be right back. Hey everyone, welcome back. You are listening to the Mark Moa Show, and we're talking about bitcoin. Of course, each and every week, and we're talking about cryptocurrencies and

we're talking about the de centralized revolution. Now I was talking about how bitcoin, what what what what the decentralized technology is, and I'm explaining the two basic consensus mechanisms. Proof of work, which we just went over, which is what bitcoin a ethereum used today, and now we're going to talk about proof of steak, which is what a lot of other blockchains are using. And Ethereum is trying to transition from a proof of work to a proof

of steak. Now, as I explained before the break, I said that proof of work is a system where miners compete with electricity and processing power to build the longest blockchain, which then becomes the accepted blockchain and the digital blockchain via a proof of work. Right, proof of work because they to prove their work by spinning that capital um. And it's proof of work because it's connected to real world natural resources. So they're taking a real world natural resource,

electricity and converting it into a virtual asset. It's the only thing that's ever been done like this in the history of the world. All Right. It's been operated as proof of work since since it started in two thousand nine. Now Ethereum is the second largest network out there, and it's also operated proof of work as well since the beginning. But as I said, a lot of new smart contract block chains UM that have launched after that are now

using this proof of steak network. Now, proof of steak is a system where holders of the cryptocurrency lock it up or they quote unquote steak um not like you eat but s T a k E. Steake their coins and by staking their coins by locking them up, they get to vote on the valid blockchain, and then they get rewarded with more coins for successfully creating the new blocks instead of like the proof of work, instead of having to commit electricity, instead of having to actually put

money up for the electricity and the processing power to create new blocks on the blockchain. Instead, all they're doing is staking their coins. They're putting them up without actually giving them up. All right, now, proof of proof of work or simple right, there's no need to punish these bad miners. Remember, they're incentivized to do good work UM because if they do it wrong, they lose their UM,

they lose the money they spent on electricity. Okay, easy um that they lose it they self inflict their own wound, and and so that that doesn't ever happen because there's a tangible connection between the blockchain and the real world resource of energy. But proof of stakes way more complex, way more complex than I can get into in this short segment. But there's no connection to the real world resources.

There's a disconnect, and the system needs a way to punish the stakers that would improperly vote on the wrong chain. Now there's there's a very complex issue that doesn't have any UM way to do it, and that's part of the reason why Ethereum has been trying to move from proof of work to proof of steak for the last like four or five years and still hasn't been able to do it. It's such a complex issue. There's obviously other blockchains that are doing that, but they all have

their problems. I don't have the time to dig into each one of those right now. But besides the larger amount of complexity that's involved UM, the trust that you have to give up so Bitcoin is what's known as trust to lists. You don't have to trust anybody because you can verify everything UM, but these are more complex. They don't have the trust and they have a bigger attack surface. Um, the bigger issue is that proof of steak is that it can be prone to centralization. And

the entire revolution is decentralization. What is the problem we're trying to solve. We're trying to solve centralization. That's it. That's that's it. We're not trying to manage supply chains better. We're not trying to find a better way to buy tickets from ticket agencies. We're trying to solve centralization. And so the problem with of of steak is that's easy

to be centralized. The proof of stake system basically says the more coins that I have, the more voting power I have, and those with the coins are also the ones that are earning new coins from staking. Now, since I don't need to expend any more resources to steak, then I can simply just increase my overall staking amount as I earn ongoing coins from my own staking rewards, which then exponentially grows my influence on the network over

time and forever. And because of this, network dominance tends to lead to more network dominance. All right, so let me explain. Let me let me use an analogy. It'd be like a political system. Imagine a political system where you get a vote for every hundred dollars that you have, and then you also get paid a dollar by the government for casting each vote. So let's say that you're a school teacher and you have thirty thousand dollars in net worth, So you get three hundred votes and you

earn three hundred dollars from the government for voting. You have thirty thousand, you get three votes, and you earned three hundred bucks for those votes. But then you have just Jeff Bezos with two hundred billion dollars in net worth, so he gets two billion votes and he earns two

billion dollars from the government for voting. So now, in this system and this type of a system, he would be a more valuable citizen than the school teacher by a factor of a million, and he would also be getting paid more by the government for already being wealthy. Does that sound like a system that you want to live in, because it sure it doesn't sound like a system I want to live in. The rich only get richer.

That leads to this centralization. Eventually, it would lead to a consolidation of power where a handful of multibillionaires would control all the vote votes and they would rule everything. And if it gets too centralized, it kind of defeats the purpose of a decentralized blockchain. Right now, who who has the most coins to stake right now today? Well, it's the people that create the blockchain, because they did

what's called a pre mind. So when they created the blockchain, they gave themselves thirty, forty or seventy percent of the tokens. So you might think you hold a lot of tokens, but the creator might have. So guess what they're going to stake the most, and guess what they're always going to control the network? Sort of sounds like the central bank system that we have today, doesn't it. Let's keep going now, UM, I would That is why I would

kind of look at these as as different things. If I was looking at a proof of steak model for UM a corporation, I mean, it's kind of like how corporation works. Right. If I buy stock in a corporation, UM, I get a vote, and the more stock I have than the more votes I get, and the more stock I have, the more dividends I get paid on my stock, which then means I own even more stock, which the means I get even more votes. So like that works pretty good. We kind of already have that model today.

I don't see what's revolutionary about that. I mean, instead of a stock that I have in my E trade account. Now it's a token, But isn't it the same sort of a system? Sounds like it to me. Now. The thing you have to understand about money, like commodity money, like physical gold, um is a system that's always worked

because the money has a cost. Um. Money that doesn't have a cost ultimately ends up being a being political in nature, So the people that are closer to the money have the most advantages, called the cancel on effect. All right, that's a problem. Now, there's so much to dig into here. I want to. I'd like to dig into some of the importance of why this matters. But man, we could just we could jump into so much some of the technical difficulties here. There's a lot to dig into,

but I want to. I want to try to skip ahead here a little bit. Let's talk about um I want to. I want to. I want to cover some stable Well, let's talk about the decentral as a first, right, So how important is decentralization, Well, it depends right, Um, in a ball market or in a time, in a time when things are good and a time when there's no regulatory crackdowns, when there's no drama any of that,

then it probably doesn't matter, right. Um. That's why Wall Street loves defy right and from a tactical sense, because they can understand the idea of leveraging liquidity. They can management exchanging, arbitrage and all these inefficiencies. They don't care

about decentralization. They don't care about technical details, all right, But for cipherpunks, the creators, for people that are sound money advocates like myself, those who care about censorship, resistant immutability, and they care about the money supply being assured over decades, over centuries that I could keep my money. Um. Those who care about security laws, well they notice I care.

So Wall Street probably doesn't care. I care. Um. As I was saying that the blockchain is basically an inefficient data base, and so some users are willing to trade inefficiency to ensure decentralization. That's basically tradeoff. So the tradeoff is do I want it to be decentralized or am I willing to and and and am I willing to be be inefficient or do I want to be efficient

and centralized? That leads us into defy and then that leads us into n f t s. There's some danger lurking and n f t s that probably you're not aware of. And I want to explain to you what's going on. So don't go away. I'm gonna be right back after this break. All right, welcome back. You're listening to the Mark Moss Show, and we're talking about bitcoin.

We're talking about cryptocurrencies. We're talking about the decentralized revolution, and we're talking about the difference in what makes these decentralized. We're talking about the consensus mechanism of bitcoin, and we're talking about how Bitcoin and etherem today use what's called proof of work, and how these new smart contract platforms are using something called proof of steak. And I was

breaking those down for you. Now, if you've missed all this, UM, just know that you can go catch it on the catch the podcast this week you'll be be able to hear this back. UM. You can just search Mark Moss on my Heart and you can find the podcast. You can listen to that. UM, because I've gone over some

important stuff, I can't recap it all. But I was basically talking about the trade off of going fully decentralized and being inefficient, and then being totally centralized and being totally efficient, right, And so those are the two sides of the coin, the two the two trade offs. There. There's so much more we can dig into UM, but we're kind of running out of time, and so I want to jump into UM something else. I want to

jump into some DEFY. I want to jump into some define, jump into some n f T s, and maybe I may have to bring these back for another show and UM depend on some feedback, maybe we'll digging deeper. All right, So let's talk about D five for a second. So UM DEFY as this stands for decentralized Finance, and then there's also n f T s and so these are probably the two most popular mark contract applications that are

happening on these proof of stake platforms. UM. These are, you know, aside from just storing and transmitting value like what happens on on Bitcoin, and DEFY includes decentralized exchanges where then users can trade various tokens just between themselves, and it includes UM, you know, decentralized platforms for leveraging tokens UM, so then users can then earn yield by lending them out or they can pay yield to borrow

with collateral and then UM. What we've seen is that many of them still have these very centralized companies that run them. So you might have heard of unite swap or compound or those are like decentralized exchanges or ways that you can earn like either loan out or earn yield, But both of these are centralized venture capital backed companies. Right now, they do have an open source code component UM and you can kind of see that, but they are backed by centralized VC companies. Now, n f t

s are what's called a non fungible token. So a fungible token means one is worth one. So if I have an old, torn up, marked up dollar bill, it's worth a brand new dollar bill. One dollar bill is worth the dollar bill, doesn't matter how old or what condition it's in. One bitcoin is worth one bitcoin. One ethereum is worth one ethereum. But an n f T is a non fungible that that means one token isn't worth one token. These are things like digital art UM,

unique game items, digital movie tickets, or UM. Things that exist as unique items on a blockchain, and there's a lot of nuance in there. I can give me some feedback if I'm gonna dig into it more. UM. And then we have things like digital art UM. So for example, UM, digital art doesn't really exist on the blockchain, but rather there's a pointer on the blockchain that links to where the image is stored somewhere else. UM. It's kind of like owning a signed receipt from the artist of that image.

So you've got a picture from an artist and then he gives you a receipt somewhere. Then we have unique game items, and these would be like digital pets or in game items or in game land or property. UM could be a skin for your gun or a new backpack or something like that, and they can be that. These can be owned, they can be sold to other players, or even removed from the game potentially at some point,

and maybe they could even go into another game. I think that's kind of where the future goes, all right. But one of my concerns is that the biggest use case for decentralized apps is that a lot of these use case are are there. It's a circular economy, it's all within itself. So let let's let let me give

an example. So Ethereum is heavily used for decentralized exchanges of crypto tokens crypto stable coins that serve as units of account for trading these crypto tokens, and then used for lending and earning interest on crypto tokens, which is a practice that is served as liquidity and borrowing sources for traders of crypto tokens. So to lesser extent, it's also used for gamified ways to earn or trade various

crypto tokens. So it's a big operating system powered by crypto tokens for the purpose of moving around crypto tokens. That makes sense. It's one giant circular economy. It's it's an operating system powered by crypto tokens for the purpose

of moving around crypto tokens. That's it. Now, a healthy banking system in the real world would consist of people depositing money and the bank's making various loans for mortgages or businesses that would generate real world utility, not just system powered by cryptotkens for the purpose of moving around cryptotokens.

All right. According to the largest blockchain analytics firm called chain Analysis, DEFY is almost entirely a trading, leveraging and arbitrage environment for institutional scale traders and professional whales, with hardly with almost no individual rate reta traders being in the system. So while all these individual people thinking that defies the coolest thing in the world, you probably don't

realize that. The largest analysts company, Chainalysis, said that all of almost entirely all trading leverage and arbitroed is done on an institutional scale and professional whales. Um. There's a saying that if you're playing a game of poker and you don't know who the sucker is the table, you're the sucker. And unfortunately that's pretty much the case in the DeFi space. You have institutions and professional whales that are using this system and you're probably the sucker at

the table. So be aware of that now. The same is also generally true for n f T s. There's a huge um frenzy speculation around crypto punks. You might have heard of that, for example, Uh, it's crazy that everybody's all of a sudden and art collector everyone's in art collector all of a sudden. But the key problem is that these types of n f t s are very easy to manipulate. And this is what you need

to be aware of. This is the danger. By the way, you're into the Markmas show, we're talking about bitcoin and cryptocurrencies and the decentralized revolution um and I'm just one are the dangers of n f t s that they're very easily to manipulate because each one has a unique price, and because each one has a unique price, it's very hard to establish what the real demand is, what the

real market value is. Now, there's two scams that can be done very easily, and they're done on a regular basis, And I want you to be aware of these two scams right um and And they're done most easily because it's not a fungible liquid asset. So the first scam is to basically bit up buyer, bit up the asset prices.

So because I can create a bunch of a theory addresses, I could buy an n f T, I can buy crypto punk and I could I could buy it for a hundred dollars and I could sell it to my other address for five dollars, sell to my other edges for a thousand dollars, my other address for a million dollars, and then you buy it for me for one point one million. But then there's no one else to buy it.

You're the unsuspecting newcomer. You're the sucker at the table because I created a market, or me and a bunch of friends created a market for this, and when we finally sell it to you as an outsider, you find yourself without a buyer. And it happens all the time. So um, you can't know there's there's it's very difficult to find out how this happens until you're the sucker. You get stuck with this asset. So it's something to

be very very careful of. Another scam that happens is to create a big loss to reduce tax liabilities in a fraudulent way. Um. And so again you create several wallets like I said, um, and you can link one to your real name, and then all the other ones are linked to an anonymous name. So then you buy an n f T with an anonymous account that you control for stay two hundred. You sell it to another anonymous account for two and fifty. Then you sell it

to your real name account for five hundred thousand. Your real name account then sells it to another one of your anonymous accounts for two hundred thousand, which then locks in a massive three hundred thousand dollar loss. Then with that loss, you can write that off of your taxes. Your anonymous account can then potentially sell it for roughly what you paid for it the two since the market value didn't change, but you can lock in that loss. Now,

to be clear, this is both illegal. I don't want you doing either of these unless you like spending your vacations in the prison with handcuffs on um. But these are scams that are happening, and I want you to be aware of them because I don't want you to be the sucker at the table. Um. You might wonder why some of these n f T s take off like they do, and now you probably know why. Now I'm not saying that all liquid and price action is a fraud, but like I said, these are things that

you should be aware of. I'm just doing my best to educate you. Here. Public service announcement. Now you're listening to the Mark Moss Show. Of course, we're talking about bitcoin, We're talking about cryptocurrencies, We're talking about the decentralized revolution. We talked about the different consensus mechanisms of proof of work versus proof of steak. We talked about defile a little bit. We talked about n f t S a

little bit. If you want to hear more about any of these topics and want me to dig in deeper, make sure to give me some feedback than that you listen to Mark Moss, and thanks for listening