We sit down with journalist Ethan Lou, author of the book Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West, to talk about China’s digital currency, the fallout of speculative markets, and democratizing the metaverse.
Ethan's book, Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West, is available now.
The metaverse isn’t just inevitable; it’s already here (and it has a booming real estate market).
As we move more of our lives online onto platforms controlled by increasingly powerful digital giants, Ethan explains the democratizing power of cryptocurrency and blockchain.
On the other hand, China’s new digital currency (government-issued but crypto-inspired) raises questions about privacy and surveillance. And why did China declare all cryptocurrency transactions illegal?
Is crypto the new oil—an environmental disaster burning all this energy in the face of climate change? Bitcoin was using as much energy as Finland or Pakistan
Ethan Lou I think we will move more and more of our lives online as we go into the future. And crypto and blockchain is something, is the key to democratizing that so that we don't eventually live in a world just purely controlled by these digital masters that are increasingly powerful now.
Ben Popper With xMatters, you can respond and resolve issues with more agility through automated workflows, smart notifications, and event correlation, so that your team can focus on what's important, delivering products at scale. Get started for free at xmatters.com/stackoverflow.
BP Hello, everybody. Welcome back to the Stack Overflow Podcast, a place to discuss all things software and technology. I am Ben Popper, the Director of Content here at Stack Overflow. I'm joined as often by my colleague and collaborator Ryan Donovan. And today our guest is Ethan Lou, a journalist and author who is focused on the wild west of cryptocurrencies. Ethan, welcome to the show.
EL Thank you for having me.
BP So, Ethan, before you came on, I was telling Ryan, as it's happened to me many times before I missed the boat, I missed my chance to get rich. Last year, Sara Chipps was one of the hosts with me, and she told me about the ens Name Service, she got Sara.eth and she was like, oh, check it out. I was like, nah, it's not worth it. Now ENS just Air Dropped, you know, a couple billion dollars to all the early adopters to say thank you. So I feel like a real schmuck for having missed the boat once again. That, to me, feels like some of the Wild West is like, was there ever a previous iteration of software or sort of like internet services where early adopters got huge payouts? I mean, I understand, you know, early investors in Amazon or something, but I think we're in this web three world, there's kind of this new thing of tokenizing and financialized all this stuff. And suddenly, being the early adopter of this new domain name service, you wind up with five grand, 10 grand in your pocket. I don't know. It's kind of blowing my mind this morning.
EL It's funny, you mentioned that because I bought my ENS user name. I think just a month or two before the AirDrop. I had no idea of the AirDrop. I just thought this is going to be big in the future. I should get my username. I wasn't even able to get Ethan.eth or Eth.eth. That would have been amazing. But I had to get Ethan Lou. But I think early adopters gaining a lot when this stuff becomes big. I don't think it's something solely to be measured in monetary terms. I wish I had email@example.com.
BP Oh definitely.
EL I wish I had ethan.com. I wish I had lou.com.
BP The number of times I've regretted not getting something simpler. I think I was like two or three years into Gmail, not too early, not too late before it was mainstream. And I went with popper.b instead of BenjaminPopper or something like that. I just regret it's so much. Something simple that you can tell people they'll never forget, you know, right, Ethan Lou, right? Just email me, it's my name. And same for domain names, obviously. Yeah, like Benpopper.com actually was stolen from me. I had it through WordPress, and I changed credit cards and my domain registry expired and a squatter took it. I had written a few stories about E cigarettes for The Verge. And so it was squatted by like an e cigarette company that thought my name had some SEO juice or something. So now I have benpopper.net and I always feel sad about that. But Ethan, tell us a little bit about your background as a journalist and how you got into covering the world of cryptocurrency.
EL So I write a column currently with this Canadian newspaper called The Financial Post. And before that I was writing for Reuters and the Toronto Star before that. And I actually tend to view crypto as separate from what I do as a journalist because I didn't come into this world as a crypto journalist. I came into this world as a crypto guy separately. During my spare time, I first heard of Bitcoin in 2012, 2013, around that time, and I first bought Bitcoin then. And I bought quite a lot of Bitcoin in the beginning. And I sort of went through a lot in this space, lots of journeys, and I ended up writing a book about that, Once a Bitcoin Miner. That's my story.
BP So you were mining back then, as well as just experimenting, dabbling and holding.
EL I would say mining is just one of the things I did. But the publishers and I and the agent, you know, the name of a book, it's a thing people debate over and we just thought that was a cool name.
BP So Ethan, in your book, you were in North Korea with a relatively well known programmer. Can you describe to me what happened and how that led up to the events that are currently playing out today?
EL So North Korea held cryptocurrency conference in 2019. And I was among the people who went, there were eight foreigners And among them was Virgil Griffith. He was then head of special projects at the Ethereum Foundation. And he gave a talk there at the conference. And so later, he is accused of trying to help North Korea evade sanctions by teaching them about cryptocurrency and blockchain. And he was arrested toward the end of 2019. And he pleaded guilty in September of this year, and in January, he will be sentenced.
RD Who arrested him?
EL The FBI.
BP It's fascinating because this really does get to, you know, sort of the heart of some of the things we discussed, which is that people with the abilities as software programmers, who are working on some of these new concepts and tools, are entering into a geopolitical fray, they may not be aware of, you know, the ability to move money in new ways, or create money in new ways, is very threatening to different governments, whether that's the US, China, North Korea. So it's fascinating to think that this person may have just been excited about the potential of Ethereum and sharing it there because they held a conference. And now unfortunately, is facing legal consequences because of that.
EL I should say that, because I think we have a lot of laws, and the laws are very broad. And Virgil probably did break the letter of the law. But I was there listening to what he said, it was no more than publicly available information, Wikipedia stuff. And so I feel very bad for him.
BP Yeah, he wasn't giving them any thing top secret, he was just sort of working at the bleeding edge of something.
RD I mean, I don't think the law has ever done right, by technology. I know, the creator of Curl is no longer allowed to enter the US because one of his libraries was used and ransomware. And they blame him for it.
BP And we run into this issue every year when we do the developer survey, you know, the tools we use just aren't available in Iran or North Korea or few other places because of sanctions. And you know, like you said, broad legal or geopolitical conflicts, unfortunately. Playing in this space for a while, you know, from the Bitcoin days through Aetherium, and smart contracts through now, you know, DAOs and web 3, when you look at this space today, what are you excited about? And what are you nervous about? You know, what, what makes you feel like, oh, this is something really cool that could maybe change the web for the better. And what makes you think, here comes Mt. Gox, you know, all over again?
EL Well, I'm very excited about the whole metaverse thing. And I think the metaverse is not only inevitable, but in a way already here, as we talked about how purely digital milestones like having Ethan.com is considered something to be very valuable. And so I think we will move more and more of our lives online as we go into the future. And crypto and blockchain is something is the key to democratizing that, so that we don't eventually live in a world of just purely controlled by these digital masters that are increasingly powerful now. And what worries me is China with its Chinese digital currency, it's technically not a cryptocurrency. But it's inspired by that. And I think it'll have huge, not just geopolitical ramifications, but also on a smaller level privacy and how the government oversees the people's lives over there.
EL That and a whole bunch of other things I think, as you describe, China has increasingly already moved in a way that everyone is already paying digitally. When I go to China, I used to go quite a bit before the pandemic started. I would still pay with cash and people just instantly know that, hey, this guy's not from here. And the Chinese digital currency, how it works. It's also programmable. So they can say, we'll give you this money. It's going to expire in 10 days you have to use in 10 days. Or you can only use this money in certain ways. And it's just a way for the government to exert more control over its people and how they're able to observe all the transactions is just going to be a huge surveillance state.
RD Do you think they'll come a time where cash is actually the the free currency? Cash is transferable pretty easily between people.
RD It sounds like China's is locking down the digital currency. So it's extremely controlled.
EL Oh, yeah, absolutely. I think I read this headline from Australia, they've already outlawed I think cash transactions above 10,000.
BP Yeah. And India too, I think was trying to take small bills out of the market, or forgive small bills or big bills, maybe it was really big bills, right? That you could, you know, bundle into a suitcase and use for bribes. It's like, only singles, which you can't, like, get enough into a suitcase to matter. Otherwise, it has to be digital. And then it can be tracked and be, you know, aboveboard, and all that kind of stuff.
RD And in the US, I think, if you have over $10,000 in cash, and you're pulled over, the police can basically seize it, and assume that you are using it for illegal activities.
BP Ethan, I guess it's interesting, you know, to think about what you said, you know, the government will give this money, it only last 10 days, and you can only spend it on certain things. In the United States, that's true, in a sense, you can get these, you know, food stamp cards from the government, you know, you can only use them to buy certain things, and they reset, you know, once a month, or they're reloaded once a month. And so in essence, that's kind of a similar approach. And many people who focus on sort of social good or social safety nets will argue, the best thing to do is to give people cash and let them decide how to use it. But the idea of programmable money through a government is fascinating. You know, when you look at the current situation, the government gave everybody money, averted a depression, which is great. Now, everybody has more money than when they started, and now we have are starting to have fears of inflation. So if we could have programmed that money out to say you could spend it now, but only on these things, it will expire at this time, you know, we might have been able to have greater control over what is essentially financial planning or government level monetary intervention, because basically what we did was we sent people checks and they turned it into cash. And now they can sit on it or spend it as they like, which causes all kinds of distortions in the economy when you send out a couple of trillion bucks.
EL Yeah, I can totally see that. But I think also that in western democracies, for all their faults, there are checks and balances. And I just don't see China, if they have this power, I don't see them always using it in the best interest of their citizens.
BP So I guess China was a huge player in the Bitcoin mining world. And then they recently disallowed that which I have some friends who are involved with Bitcoin mining operations, and it just changed the calculus for everybody. China had access to these very cheap sources of energy or subsidized energy. And so they were able to mine Bitcoin. From your perspective, looking at this world and as a previous as a bitcoin miner, what how do you feel about mining, both at a geopolitical level, but also an environmental level, which is something we've talked about a few times on this podcast and the you know, the argument some people make that cryptocurrency is kind of an environmental disaster. To be burning all of this energy to mint digital coins or NFTs seems inappropriate when climate change is one of the existential challenges we face?
EL I'll answer the shorter question. First, the geopolitical implications. It's actually quite baffling to me that China banned Bitcoin. For the longest time, I thought China would want more Bitcoin miners in the country, so that it can, theoretically by controlling these Bitcoin miners, it can control Bitcoin. And I think the fact that all these miners are out of China, it's a very good thing. The centralization, that was never a good thing to begin with. And with respect to the environmental concerns, I would say that I think any activity that's practiced across the world uses as much electricity as a country. So when people say, I think at last count, Bitcoin was using more, I think, more electricity than Finland and as much as Pakistan or something.
RD I believe it was like the 40th most used power.
EL But I think that statement is true for every activity as well. And I know the song Despacito, simply streaming that song, that's it's more than a couple of countries put together. And so I think simply existing on this earth, we humans are a virus and a disease. We are a blight.
BP Oh! So you're team Thanos? You're team--what's the agent from The Matrix who makes that great speech?
EL Agent Smith.
BP Yeah, you're Agent Smith.
EL Yeah, but speaking of Thanos, just to go on a tangent a little, I'm always off the camp that why doesn't he just create double the amount of resources rather than cutting the number of people? But anyway, I think so this criticism of Bitcoin, it comes at it from quite a loaded perspective, because we don't criticize dryers as much, even household dryers even when they use more electricity. And that's because we have used dryers and we use them for decades. We understand that utility and purpose, and I think people just don't understand what crypto does.
BP Okay Ryan, here's your turn.
RD I'm a bit of a crypto skeptic. The dryer comparison is interesting because people understand the utility of dryers. I think a lot of people see crypto as this speculative market and sort of just a speculative market. So what is the actual utility of Bitcoin and blockchain?
EL Well, before I get into that, I should say, the standard also shouldn't be utility. If simply playing with this gives me gratification, it shouldn't be less deserving of electricity use than then your dryer, for example.
BP I mean, yeah, Despacito brings great joy to many people, it's worth the juice, juice worth the squeeze. In the same, I sort of said this before, in a similar way to you. And if you added up all the gaming systems and gaming PCs around the world, I'm sure they would also be the 30th or 40th, you know, biggest country in terms of electricity usage, you know, is playing video games worth that environmental damage? It's not really a question of the industry has to take on, collectively.
EL But to go into utility, I have a story about an Afghan refugee. And this is a true story. I've heard that when Kabul was falling to the Taliban, when everyone was trying to flee, these people, they often don't get to take their money with them. But there was a period of westernization that and women were going to schools and there was this young woman who had Bitcoin, and she crossed Iran and Turkey and her ship sank in the Mediterranean. But ultimately, when she landed in Germany, she was able to memorize her passphrase. And she essentially carried two bitcoins in her head. And she was able to fund a new life for herself with that. I think we in the West, we take a lot of these things for granted our financial infrastructure, our currency, but I think these things are very fragile. And I think crypto is essentially an anti fragile version of that.
RD Yeah, it's a currency not tied to national governments. And I think that's one of the reasons that China especially finds it dangerous, that it is a currency that is not nationalized.
BP Yeah, Ethan, to your earlier point about, you know, it kind of being, it almost seemed counterproductive or against their own interests, right to remove so much of their power that they have within the Bitcoin universe, it seems that the Communist Party has made that choice. They've done significant damage to a number of their largest tech companies and their Bitcoin industry recently. And I think the overarching goal there was to say, you have too much data and influence or you have too much, right, you know, decentralized financial resources, we'd rather sacrifice that now, you know, then let you get so far ahead, that we can't continue. It's not almost like too big to fail, but it's more like too big to control, you know, too big to sort of centralize.
EL This approach that China's taking is actually quite baffling to me, like I said, and not just this approach to tech, but I think its approach to tech is, is one small part of its approach to everything because Xi Jinping, he has been turning his country in a direction that it wasn't really going in, before he came to power. And I think China used to be on the rise, like, at least I don't just mean in a military sense by its standing in the world is economy. And I think his current direction is actually detrimental to that.
BP Yeah, it was always fascinating to me to work at DJI, which you know, was sort of far and away the leader in terms of innovation in the drone space, and in a number of southern sort of other areas connected to cameras and imaging. And they really grew out of the free economic zone in Shenzhen, which was connected to Taiwan and the semiconductor industry there. And it was really the decision by earlier generations of the Communist Party to say like, this is a laboratory to play around with free market economics and different approaches to intellectual property and education that produced the miracle of Shenzhen. And now that China has kind of leapfrogged a certain distance ahead, it does seem like they're pulling back and saying, you know, kind of hold on a minute, you know, we can't let this get too far. You know, they're kind of right, as you said, turning and turning away from that direction they went throughout the 90s and early aughts. From the perspective of a software developer who is interested in playing in this space, do you have any sense of like, what kind of tools and platforms are out there that people might find? Interesting. I know, Ethereum is sort of the language of choice for smart contracts. And Solana is one that's coming up quickly. Places like uniswap and FTX, to me are fascinating, you know, they were created through these sort of these smart contract platforms. And people write all kinds of brilliant adversarial code to try and leapfrog each other or arbitrage each other or, you know, unwind a contract in a way nobody predicted. But yeah, I guess I don't know to what degree Ethan you're connected to the world of programming. But I'd be interested to hear your thoughts on developers, which is who typically listens to this show. If they wanted to get involved in this world, and they were looking at all these different platforms and currencies and trying to decide where to spend time, what you think is some of the most interesting and sort of ripe territory?
EL Not that connected to that world, but I think as a developer, I think the most interesting thing would be the metaverse, I really think that is the new frontier. And I think when Facebook rebranded itself, it's not really a new thing that kind of chasing a train that's already running. And it's been running in crypto for quite a while, like Decentraland, for example. And I think those are going to be very big.
BP For folks who don't know Decentraland is kind of like a virtual property company, second life style thing where there's a sort of a big Metaverse, but unlike a previous generation, where the gaming company might own that stuff, and you only own it in game, you now own it on chain. And so I guess technically you could take it to a different Metaverse or a different land, you know, virtual world if you wanted to. Do I have that right?
EL I actually don't know about the specifics. But I think like technically in a theoretical way, you can do that. Because these blockchain games, I think they currently still have a lot of problems.
BP Yeah, I guess that's where the rubber meets the road is people are always like, well, it's decentralized. You really own it. And you could take it anywhere. Actually doing that or having somewhere to actually go with it. You know that? I'm not sure the metaverse is fully fleshed out or fully formed yet so that people can sort of take all the steps in that, you know, that utopian dream. But pieces of it are coming together. And certainly, I think this is what bothers Ryan is like, the value of some of this stuff has skyrocketed in a way that's kind of jaw dropping. So real estate in Decentraland is worth 10s of millions, even though really right you own it on chain. But can you really take it anywhere? And is anybody else like really using your real estate?
RD I mean, in general, I am I'm against speculative markets, I think they are harmful to the whatever think they're speculating on. As a comic book collector in the 90s, I saw how comic books were sort of destroyed by it. Took them a while to recover. Do you think there's any harm to the speculative market with Bitcoin?
EL Well, I definitely think maybe not Bitcoin, but NFTs and how much they are valued. And I think that it's definitely overhyped. And I think Ethereum itself, it also has a lot of problems now, because of how overhyped everything is. There's a lot of network congestion. For example, when if I were to receive the ENS tokens, I still haven't claimed them yet. I have to pay like $100 transaction fee to to essentially get everything. Yeah, I think this is something that's it's only a little more than 12 years old, so I'm not expecting the faction. And in fact, it's quite understandable how everything is not entirely up to scratch.
RD Yeah, once it matures, it'll be a more stable currency. Be traded on, you know, Forex exchanges and all that.
BP Yeah. I mean, it is funny how sort of like, co-opted by mainstream finance, some of the big platforms like Coinbase have become they did a traditional IPO. And I hear them advertising on podcasts all the time for this sort of white glove service, where they'll help traditional institutions and investors get into crypto, and custody their funds in a way that's FDIC insured. And so I think there's sort of two things happening at once. There's the wild west and the FTX and the Uniswap, which are growing and generally a lot of interest. And then there's also the sort of coin base and Geminis of the world that are trying to give people like a sort of walled garden and in which to play with crypto.
EL Yeah. And I think if you look at I think Coinbase's disclosures, a great chunk of its money, it's coming in from the institutional players. And I guess that's where the big money is, companies like Chainalysis. They make all that money from from the government contracts.
RD Yeah. I mean, the big players come in once the smell the money.
BP What's that last thing you mentioned, I'm not familiar with it.
EL Chainalysis. So it's like a company that analyzes blockchain stuff. So they track how payment a payment goes through the blockchain. And I think when that pipeline was hacked, and how the FBI was able to track the payments, I think is in part through to companies like that.
Yeah. And I've seen people talking about this recently, which is to say, you know, a lot of the things they were excited about, the anonymity and the ability to sort of move money without being traced. Now some of those things right are getting on wound by people who have clever approaches to tracking this stuff.
BP Alright, everybody, it is that time of the show. I am going to shout out a lifeboat badge winner. Somebody came on Stack Overflow and helped answer a question, saved it from the dustbin of history, awarded 19 hours ago to Evan. ''Composition of interfaces Go lang.'' So is there a way to make an interface also include the methods defined by another interface in Go? Alright, if you're wondering, we have the answer for you. And thanks very much to Evan for the lifeboat. I am Ben Popper, Director of Content here at Stack Overflow. You can always find me on Twitter @BenPopper, email us firstname.lastname@example.org. And if you'd like to show, leave a rating and review. It really helps.
RD I'm Ryan Donovan, I edit the blog and the newsletter here at Stack Overflow. You can find me on Twitter @RThorDonovan. And if you have a great idea for a blog post, please email me at email@example.com.
EL I'm Ethan Lou and my book is Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West. It's narrative nonfiction, looks at everything through the lens of the human condition. You can find it wherever you buy books, but I always say if you can bear the inconvenience, avoid Amazon.
BP Hope people check out the book. Alright everybody, thanks for listening. We'll talk to you soon.