Money Is a Collective Delusion
Read an imperfect transcript from this episode:
Michael Waitze 0:00
Michael Waitze Media Telling Asia’s Stories…
Okay, we’re on. Hi, this is Michael Waitze, and welcome back to the Asia Tech Podcast. This episode I think is going to be a little bit different than usual. Today we are joined by Ethan Lou, a journalist and the author of two books, “Field Notes from a Pandemic: a Journey Through a World Suspended”…and for anybody who’s been in this pandemic, that’s kind of what your life has felt like and his most recent book, which was released on October 19, “Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West”, Ethan, thank you so much for coming on the show.
Ethan Lou 0:38
Michael, thanks for having me excited to be here.
Michael Waitze 0:41
I’m super excited about this as well. Before we get into the main part of this conversation, for the listeners that maybe don’t know you, can we get a bit of your background for context.
Ethan Lou 0:51
I’m a journalist, I write cryptocurrency column in this newspaper in Canada, we call the Financial Post. And before that, I spent two years at Reuters and I spent three years at the Toronto Star before that, because we all contain multitudes. I’m also an early Bitcoin investor. And I know early is a subjective word. So I got in around 2013. And that, that aspect of my life has been a hell of a ride. And that’s what the books about.
Michael Waitze 1:22
So can you talk a little bit about what got you interested in Bitcoin in the first place? Is this a generational thing? I was probably introduced to Bitcoin around the same time you were 2012 2013. And I’m a technologist. Like I’m tech savvy, I get it. And it just maybe it was the people on the panel that were discussing it, it made zero sense to me what they were saying, Now, obviously, I completely get it. But back then it made no sense. And I was in that world, like, what was it about it that got you interested in said, I need to buy some of this stuff?
Ethan Lou 1:53
Yeah, so I can totally get what you say, like, I think I meet a lot of people, and they can understand how everything works. But they still don’t get it they even though they understand how it works. They don’t understand how people go so crazy about it. And I think part of it, it’s definitely a generational thing. I think, you know, my generation, we’ve gotten a raw deal, we always feel and, you know, we graduate into into an economy a set that has been a bit decimated by the whole financial crisis and everything. And that’s so many statistics about this, how my generation less likely to own houses less likely to full time jobs, and also even less likely to have as good health as our parents. And I think there is that building, mounting frustration, and, and Bitcoin, I think, ultimately, how it was made, it was a wire was made. It was made in the wake of the financial crisis that caused everything. So you know, like, people call it the the millennial gold, quote, unquote. And I do feel there’s quite a lot of substance to that, to the usage of those terms.
Michael Waitze 3:13
You’re talking about the 2007 2008 financial crisis, right? That was caused by all these derivatives. You saw the movie, The Big Short, all this kind of silliness. Right? How old were you back then?
Ethan Lou 3:24
I was I was 18. So I think I was
Michael Waitze 3:27
a perfect age to be influenced by all of this stuff. Yeah.
Ethan Lou 3:30
Yeah. between high school and university. And I think my whole existence at that time, it was kind of weighed by those circumstances around me.
Michael Waitze 3:42
And you said, you bought some bitcoin in what? 2000? And something I can’t remember.
Ethan Lou 3:47
Michael Waitze 3:49
You did? Yeah. And did you tell anybody about it? In other words, like, did you tell your parents and your friends and did everybody say to you, you’re insane? This is a scam kind of thing?
Ethan Lou 3:58
Yeah, I Well, I didn’t like broadcast it to the whole world. But, you know, through casual conversations every day today, I didn’t keep it a secret. So I did tell people and the thing is, when I bought Bitcoin, it was at the, it was at a peak. So it was a Bitcoin was at 1000 at the time, and we look back and think that Bitcoin 1000 That’s just, it’s so cheap, but back then, it had risen to 1000. And right after I bought, it fell 50%. And I was thinking, What the hell have I done?
Michael Waitze 4:36
What did I do? Why did I? Yeah. Yeah, when you look back on it, now, it’s 60 times higher, depending on where it closed yesterday. I haven’t looked today. But yeah, it’s a very different market. Did you get the sense that amongst you, in all of your friends, there was this not complacency, but this sort of sadness about what the future looked like? In other words, was that really an overriding part of the way that you and your peers were thinking now? Not just then but even today.
Ethan Lou 5:03
Yeah, I think that is one aspect of it. And I think another aspect is that, since the 80s, parenting become increasingly restrictive, a child growing up a teenager now is less likely to know teens their own age within walking distance, they’re less likely to explore and do things on their own upbringing a lot more structured. And I think as a result, my generation perhaps grows up a little repressed in that sense. And I think that combined with all the harsh economic circumstances that create some sort of hunger within for for some sort of, you know, hunger for adventure, and to go into a new realm and new space, where were the lots of riches and opportunity, and it’s brand new. And in Bitcoin, the most experienced person is only like five to 10 years, they only have five to 10 years more experience than you, right. So yeah, it’s free from all the stuff that’s weighing you back home weighing on you back home.
Michael Waitze 6:16
Yeah, and there’s no legacy viewpoint. It’s not like, let’s say, in the insurance industry that’s been around for 300 years, the people that know Bitcoin, and let’s just say cryptocurrency and all the other coins that are out there better than you do, like you said, are only five years or six years in, so catching up to them, the learning curve is not that far away. It’s not that hard, right?
Ethan Lou 6:35
Yeah, and I think that is, that is a huge draw of, of Bitcoin. And, and, you know, while this technology is new, that whole idea of escaping to a place where you can wait, you’re free and free to find adventure, riches and fortunate coin, I like to think of it as really a self contained insular world, where you know, you can spend only crypto, so we only crypto friends, and it’s his own world. And in the past, I think people used to try to dream of the new continent, you know, a poor man in Ireland, they want to buy a ticket to the new world to begin a new. And we don’t have that anymore. But crypto is kind of like that.
Michael Waitze 7:21
It’s a really interesting point you make, you know, when I was 18 years old, and then when I graduated from college at 21, or 22, the whole world looked like an oyster to me. And there were parts of it that were still, there’s still parts of the world that are undeveloped or underdeveloped. But it seemed like everything outside the United States and Europe was I’ll just put it into quotes a possibility. And I have a daughter who’s probably eight or nine years younger than you are. And in a way I feel bad, because it doesn’t seem like the future is going to be better than the past. And that’s what it always looked like to me. Do you feel like as well, that there’s a an anti government or a lack of government trust parts of the popularity of Bitcoin in the sense that nobody controls it, no government can stop it. And that it makes it feel like you’re a little bit freer than you would be if you were just using regular fiat currency.
Ethan Lou 8:13
Oh, yeah, absolutely. And I think that’s a very good point, because I don’t think it’s a coincidence that Bitcoin was introduced in the aftermath of the, of the financial crisis. And the core value proposition of it is that it gets rid of the people who, in his creative view, has caused all those difficulties in crisis. So I think inherent in Bitcoin, is that rebellious anti establishment spirit? Yeah. And
Michael Waitze 8:43
do you understand? And do you think most people in your generation, your peers understand the power that the central banks have actually just the activity that the central banks do in relation to how they manage currency?
Ethan Lou 8:59
I wouldn’t say I’m an expert on this. But I think I know on a general level that money is a collective delusion, and why the system is the way it is, and lots of levers being pulled there.
Michael Waitze 9:14
Are you concerned at all and I want to get to the trip to Korea in a couple of minutes. But are you concerned at all about Central Bank digital currencies? And I’ll tell you why I asked. We used to joke when the internet first became popular back in the early to mid 90s. That the only people on the internet were criminals, right? Because it was a place where they could actually transact in a way that was seamless. It was very hard for anybody to track and most right most normal people didn’t even know what the internet was. So it had this sort of shady aspect to it. If you fast forward to today. The Internet now has almost very little criminal behavior on it in relation to the amount of just regular traditional behavior. And at the beginning, I think Bitcoin and cryptocurrency was the same way where again the Crim figured it out. And they could do these frictionless transactions with an alternate currency. But now it almost feels like with Central Bank digital currencies coming on, it’s a way again for the government to track what people are doing with digital currency. And now criminals will probably go back to cash, because it’s untraceable. But the digital currencies are completely traceable. Is there a concern at all in your generation about that traceability of the currency? Because if you look at companies like, Merkel science, they can literally go to any chain. And see, they don’t know who but they know which account right is doing what and transferring, what, is there a concern for you and your peers that that’s also going to be problematic?
Ethan Lou 10:45
I can’t speak for my peers. But I definitely think that’s going to be problematic. And yeah, very good point that you raised. Because when I think of central bank, digital currencies, I think of what China’s doing. And China, it’s heavily spying on its citizens. For a long time, I remember during the pandemic, a very interesting thing that China did was that they implemented a system where they gave you a number to send a text message to, and when you send a text message to that number, it shows you a list of places that you have been list of provinces, and they use this to control access, you know, if you’ve been to this province, you have the quarantine and it just shows you that all this time, they could track you by your number. And with the central bank, digital currency is introducing and China has gone completely cashless in the past few years. They all use the Chinese brand of digital payments. And with the central bank, digital currency, I think that is going to really amplify China’s ability to track and monitor the spending habits of all of us citizens. Yeah, I do think that’s a scary prospect.
Michael Waitze 11:53
When was the last time you were in China proper? Oh, last year 2020. Perfect. Perfect. So because I’ll tell you when I was there in 2017. And I want to go back a little bit further, just to make this point. I was a Kol for Huawei, right. So I went to this big conference that Huawei had. And we walked outside the conference to go into a coffee shop. And we had been given some some cash to buy incidentals, right, because we didn’t have any Yuan on us. And we went to this coffee shop and the woman in front of us just like took her phone, probably used WeChat or some kind of payment, you know, automated payment thing and just like swiped it and looked at me and said in perfect English. You don’t have this in your country, just like completely making fun of us. But it was hilarious, right? Because back then even back then and four years ago doesn’t seem like a long time ago. But in the technology world, it’s a lifetime. And even back then you have to be sure that governments not just in China, but globally, we’re setting up systems, particularly through digital transformation, that are tracking their citizens and everything that they do. And I think the central bank, digital currencies will do the same thing. Anyway, talk to me about your trip to Korea. And I guess my first question is, like, what did everybody think they were doing when they went there? What was the whole point before you got on the plane? And went there? What did you think was gonna happen? Like, why would you do that? What’s the big fascination with North Korea?
Ethan Lou 13:22
So I have quite a long answer for that go. So. So I think that there are there are two, two main reasons of why I wanted to go and so before I get into that, I would say that going to North Korea is a thing people do. It’s been open to tourism for
Michael Waitze 13:42
ya know, this forever. So 10 years ago,
Ethan Lou 13:46
and the blockchain conference, it was advertised to the public, they were telling people to go, and for me, I was born in China. And my I used my parents, you know, North Korea has lots of weird stuff comes out of there. And I will tell them about it. And my father would say, that’s not very weird. That’s kind of like the China in which I grew up. And, yeah, but China has changed all these years, China has changed so much. And North Korea has stayed stagnant. So I kind of feel that if I go to North Korea, I can see the sort of like a time capsule, I can see the land that my father grew up there. And so that’s one reason
Michael Waitze 14:32
where’s your dad from?
Ethan Lou 14:34
China? He was he was born in this city in the outskirts of Beijing called Suja drom.
Michael Waitze 14:42
Just so you know, my first time in China was March of 1991.
Ethan Lou 14:50
Ah, that was like a year after I was born.
Michael Waitze 14:53
Yeah, I didn’t I don’t remember seeing you there but I’m sure
Ethan Lou 14:58
Oh, that that must have been You must have seen China like totally different from now like seas of bicycles.
Michael Waitze 15:05
So when I went to Shanghai and for the last time in 1992, before my recent trip in 2017, there was no Pudong. Yeah. Oh, there was nothing there. I remember looking across the Bund across the river and just seeing what looked to me like wheat fields. I mean, there was very, very little there. We stayed at the Peace hotel on the Bund. And we could look across and there was nothing there anyway. So I know what you’re talking about China’s changed drastically, just in the last 20 years. If you go back 50 years. I mean, it’s it’s an identifiable?
Ethan Lou 15:38
Oh, yeah. Yeah. The second reason was the crypto reason that North Korea is subject to lots of sanctions. And crypto, theoretically as a way to cut through those sanctions and North Korea had been accused of lots of shady stuff with crypto. And I thought, if I were to go there, I hear from North Korean people that they will they will tell me about what they’ve been doing. And I’ll get to interact with North Korean crypto people, because that was the way at least to me, the conference was advertised. But of course, it turned out to be totally opposite.
Michael Waitze 16:15
Tell me though, because it seems to me. And with all due respect, it seems to me like a really naive view. Right? If you again, if you go back and look at what the North Korean government is. I mean, I can’t imagine them sharing any information. But how about the guys from Etherium like Virgil Griffith and some of the other people that were on this trip? And and frankly, did you know those guys before you went like, did you all get on a plane together and go there? Or did you all just show up separately and figured, oh, you’re the English speaking people? So I’m going to hang out with you like, how did that happen?
Ethan Lou 16:49
While we did meet in Beijing, like, the night before, but we did not know each other before. And the first thing that one of them said to me was why the hell would you do such an outlandish thing like going to North Korea? And I said, Well, what about you?
Michael Waitze 17:06
Yeah, that’s good. Is there a mirror out here that I can show you?
Ethan Lou 17:12
And we all laughed. And so I think we all share a certain, I guess, passion for adventure. And you know, when my friends describe me, they’ll politely say that I’m eccentric. So yeah, I guess we’ll be all have a preference sometimes for weird hobbies. And I would say that I did. I did think that, you know, North Korea is secretive, and why would they show this to people, but I read a lot about the trip beforehand. And experts were saying that North Korea was using this as a show of force, tell the world that they’re able to harness blockchain technology. So that was what the experts were saying. And I trusted them. And we went in,
Michael Waitze 17:56
you know, as a crypto I don’t know, if you’re an enthusiast you call yourself whatever you want. Rapid is a guy who’s into cryptocurrency, who started buying Bitcoin back in 2013. You know, Aetherium is a thing, right? I mean, and even when it came out, if you go back and look at some of the old videos of fitout computer and talking about it, like the world freaked out when he started talking about, you know, smart contracts, and just that whole presentation. I’ve watched it a bunch of times. The audience went nuts. But I mean, the world of cryptocurrency just freaked out. Yeah. I don’t know. Virgil Griffith. I mean, obviously, I’ve done my research. But did you know who he was when you were there? And was there an excitement for you just personally, like, Oh, my God, this guy’s like, really senior at Aetherium, where we just like, I’ve met famous people before, I don’t really care.
Ethan Lou 18:44
I, I had to google him. Like when he told me he was Virgil. I guess he didn’t tell me his last name is it? And Virgil and you work for Aetherium? I didn’t realize he was that big. But
Michael Waitze 18:56
I did. Um, Steve? Apple kind of thing.
Ethan Lou 19:01
Which Steve though? Yeah. So I, but I did realize how big of a deal he was and interacting with him. Yeah, I think I was more impressed by the way he interacted rather than his title and his reputation, because he was a very smart guy, and it’s very apparent.
Michael Waitze 19:23
But so when I asked you like, what your reasons were for going there, I can imagine that in a quiet time, you know, sitting around in a bar somewhere, maybe in Beijing, how I don’t know how many guys you’re with. But at some point, you must everybody must have asked the other, like, what are you doing here? And what are you expecting to get out of it? Or what are you expecting to give? Right? Now, I know that there were all these reports prior to this event, that it was going to be a show for us and that it was the way for the North Koreans to show Hey, you know, we’re not left out of the world and we understand how Bitcoin and cryptocurrency works. And I guess they were meant to give presentations, but the bit got flipped, right and they kind of hold everybody. No, no, we’re gonna get presentations from you. But was everybody ready for this? And I want to talk about Virgil, specifically, because you’ve been quoted and tell me if I’m wrong of going, I decided I wasn’t going to do that. That’s correct. It did us. Did you send some kind of danger? Or were you just like, I’m not prepared? Like, if you’d had something prepared? Would you have done it? You know what I mean?
Ethan Lou 20:20
Oh, it’s a little bit of everything. So, I did sense a bit of danger. But I’m not, I’m going to, I’m not going to pretend that I was able to see the future, I think I sensed a bit of danger with maybe like a three or four definitely not attend. Right. And that, like, I think about a lot of things. So that was one of the things I thought about, but the thought came in and the thought went out. But yeah, ultimately, you know, I, I guess I was among the more hesitant people by presenting awesome questions. And, and the organizers were I feel they were of the position that, you know, if you’re not interested in presenting, that’s totally fine. That was how I went. Yeah.
Michael Waitze 21:00
So my whole life has been about, you know, taking risk. If you look at the jobs that I did, right, trading securities, and even managing a trading desk, it’s all about risk return. It’s not about not taking risks. It’s about risk mitigation. And if you go all the way back to the beginning of my trading career, your risk managers will always tell you like, what’s your risk return analysis, what are you? What’s the worst thing that can possibly happen? What’s your upside? And what’s your downside? Yeah. So to me in that situation, my downside would be, oh, I could end up in some kind of jail somewhere, I could end up in a North Korean jail, which would obviously be punitive. But just as a citizen interacting with what the world considers, and I’m not making any value judgments like a rogue government. Do you sense the end even in the writing of this book? Did you sense the the thought process that this guy Virgil Griffith was going through? At all? And was the blowback to him immediate like when he is he American English? I can’t remember.
Ethan Lou 22:01
He is American. That’s what they mean.
Michael Waitze 22:04
Yeah, and it’s weird because Virgil is a very British name. That’s why I remember looking it up and just going really, but anyway, cuz I don’t believe everything I read. But was it was the blowback came immediate? Like when he got off the plane back in the States? Did they just go grab him? I don’t remember what happened here.
Ethan Lou 22:19
Oh, you know, they say in the book, The Sun Also Rises. There’s a guy talking about financial ruin and how this bankruptcy come to you. I mean, when it comes,
Michael Waitze 22:28
Yeah, guess what, first and then it goes really fast.
Ethan Lou 22:31
Yeah, so it was like that for Virgil, even in North Korea. So backtracking a little Go ahead, because he’s American Americans can’t go to North Korea. So he had to seek permission.
Michael Waitze 22:43
So he asked the US government if you could go before he went. Yeah. And they said, Okay.
Ethan Lou 22:50
No, they said no way. Anyway. Yeah.
Michael Waitze 22:54
So again, can I just give you a little perspective on this? In 1991, or 1992? I can’t remember anymore. So Americans were not allowed to travel directly from the United States to Vietnam, it’s hard to remember that at some point, Vietnam was this dangerous country right? Now, it’s now it’s just like a big startup ecosystem. So I flew to Japan, I flew to Vietnam from Japan, and they never stamped my passport. All they did was staple something in and when I left, they took that stapled piece of paper out, so I didn’t go anywhere, even though I left Japan. So it’s just curious, like, you can always I have plenty of American friends that have been to North Korea, from Japan, and from other places, but he specifically asked the government, and they said no, and he went anyway.
Ethan Lou 23:37
That’s That is correct.
Michael Waitze 23:39
Because this is like asking your parents, if you can go to your friend’s keg party on a Saturday night, they say no. And then you go anyway, and you come home and vomit on your mom’s carpet. Yeah.
Ethan Lou 23:48
Yeah. But I think if he was like any other normal tourists, though, if he had been denied, if he went, he wouldn’t have gotten into so much trouble, because when he was eventually charged, he wasn’t charged with going to North Korea, the charge was breaking sanctions.
Michael Waitze 24:03
Yeah, I want to get to the breaking sanctions thing in a second. I completely understand that. And it’s almost the same thing. Like I said, Is your mom saying you can’t go to the party, and you go, and then it’s just a Get Out of Jail Free card for your mom. It’s the same thing, because now they can make a decision. When you come home, they can just say, Oh, it’s okay. At least you learned your lesson. But now, don’t ever define me again. But they can always have it hanging over your head. And I feel like sometimes governments do that. Sorry. Go ahead.
Ethan Lou 24:36
Oh, yeah, I was just gonna agree with you. I think when when you enter the US, sometimes they ask you, like, are you coming here to like, commit a terrorism activity or something? Right. And, you know, if you’re a true terrorist, you’ll say no, but eventually, if they can’t charge you with anything else, they’ll charge you with lying. Yeah,
Michael Waitze 24:53
that’s what it’s the same thing. Right. Can you imagine a terrorist coming to United States? Are you here for terrorism? Yes, I am. whereas New Jersey Anyway, go ahead. So you said it happened slowly and then it happened really fast. Yeah.
Ethan Lou 25:11
Yeah. So he, even in North Korea, he was telling us that he was gonna go talk to State Department officials when he got back. And yeah, he very voluntarily told them and I don’t think he was suspecting anything. I don’t think he thought he did anything wrong. And he basically was very transparent and open. And I imagine that’s how the FBI got wind. And he met with the FBI very voluntarily. He even gave them permission to search his phone. And I think somewhere along there, things started to turn very badly. And he didn’t realize that until it was too late.
Michael Waitze 25:50
Did he really do anything wrong? Well, I
Ethan Lou 25:53
think there’s a difference between breaking the letter of the law and, and doing something morally wrong. And I think in this case, he probably did break the letter of the law. But as the defense has been saying, All that was presented at the conference, which was a bit of a glorified dog and pony show. I don’t think there was anything of substance and it was all just publicly available material being discussed. But the charges against him the prosecution is saying the, you know, whether it’s publicly available, it doesn’t matter. And the charge against them is that he had the intention of helping North Korea, and he had acted on the intent and whether he had actually benefited North Korea. It doesn’t matter that much.
Michael Waitze 26:40
Yeah, I mean, that’s like most crimes, right? In other words, if I break into your house, and I shoot you in the head, and you live, it’s still attempted murder, it’s still a crime. It’s not like, well, it didn’t work. So it doesn’t matter kind of thing. Yeah.
Ethan Lou 26:52
Oh, yeah. But I think for him, it’s the charge against them. It’s more like he was planning to shoot someone in the head without actually shooting.
Michael Waitze 26:59
Yeah, I mean, I think it’s really nuanced in a way and I don’t have enough information, obviously, and maybe you have more than I do. But anytime you go up against the government, you just run the risk that you become an example of something. Right? Oh, yeah,
Ethan Lou 27:13
I think he’s definitely made an example of and not so much about what he specifically did, but to show that this is going to happen to someone like this to deter others.
Michael Waitze 27:25
So what else about Virgil story? Do we need to know has he been in custody for a long time?
Ethan Lou 27:32
Well, I guess it depends on how you define long. So he, he was he was granted bail. But his and this is what what I find really sad about the story. He one of the bail conditions was that he can’t access his cryptocurrency. So he broke the bail conditions. But the reasoning was that he had to sell it to pay his lawyers. And that’s quite sad, because the slides were really, really expensive. And because of that, he was thrown into thrown back in jail. And he has been there since I think since July, honestly. Yeah, I think sometime July, he has been there, six and a half years, he entered into a PDO. So likely going to get that much.
Michael Waitze 28:22
So for those people that haven’t been in jail, I presume that one night in jail is too long.
Ethan Lou 28:30
As a good way to put it. He said he had depression in court.
Michael Waitze 28:34
I can only imagine and I want to talk about the play that you just talked about in a second. But for those people that have actually spent a night in a room with a bunch of people, they don’t know it a door that’s locked from the outside with all of your belongings taken away. Your phone, and even your pens and pencils, because they were afraid you’re going to stab other people with it, or people might stab you with it. That feeling of like not being on this planet and being completely disconnected is so mind bending. That, particularly if you haven’t done anything wrong, and you’re just wondering, why am I here? So spending that much time in prisons really, really hard.
Ethan Lou 29:18
Ah, you don’t happen to be speaking from experience, would you?
Michael Waitze 29:23
I don’t think you can make that up. Uh huh. Yeah, I don’t think you can make that up. And that type of experience, I think changes your perception of a bunch of different things. But that lack of freedom is something that’s very, very tenuous. When Virgil was first asked to plead mostly in the United States, it’s either guilty or not guilty. And he said innocent.
Ethan Lou 29:50
Oh, yeah, he did.
Michael Waitze 29:52
So this isn’t very interesting, right? He didn’t say not guilty. And I’m guessing so I’m I’m tracking writing that into? What are you talking about? Right, like, this is not even. I’m neither guilty nor not guilty. I’m uninvolved. Is that a fair characterization? I mean, what do you think innocent? I mean, I know what the word innocent means obviously.
Ethan Lou 30:18
Yeah. And I think like I said earlier, I think verge, bad guy. So I think he definitely knows that there are only two choice. And I, when he said innocent, I think he quite deliberately, quite deliberately said it. And I think maybe to make a statement that he feels he is just completely hadn’t done what he was accused of.
Michael Waitze 30:41
So now what’s happening in this case? Well,
Ethan Lou 30:44
that he is going to be sentenced on January in January. And so the judge isn’t bound by the six and a half years of the plea deal. So could be anything. And so I guess his main objective right now would be to get as low of a sentence as possible.
Michael Waitze 31:04
So sometimes when you cooperate with the government, and what is this the Southern District of New York, where he’s being prosecuted?
Ethan Lou 31:10
Oh, yeah, the notorious Southern District.
Michael Waitze 31:13
That’s why I wanted to make sure that I understood where the prosecution was taking place, the sovereign District of New York. So he, he changed his plea, obviously. Right. And I think part of it has to just do with fear. And that’s one of the things that jail does to you. It just makes you so scared, like, I can’t be here for the rest of my life kind of thing. What more do you know about this now that that plea has taken place?
Ethan Lou 31:39
Well, there there is actually a lot I don’t know, because his lawyers have not elaborated publicly on what caused this change of stance because he had been pleading not guilty for the, for the better part of better part of two years. And, yeah, and I think but if you read through, like all the documents filed to court, a lot of the developments leading up to the case, they were not in his favor. And I think ultimately, I he’s being held in the quiet, notorious jail in the US. So I think I believe it’s the MDC, I might have to look that up, see that the MDC or the MCC? I believe it’s made famous in that. In that TV show, there was this whole TV show about a guy who went in and just completely changed by by jail, and taught not to, but yeah, that’s before his trial. So still had the presumption of innocence. Anyway, it’s I still don’t know, you know, with precision. Why exactly. He changed his plea.
Michael Waitze 32:48
I get it. I want to go back to the beginning of this conversation. And I asked you, was the sort of belief in the following of Bitcoin generational and wasn’t related at any level to a distrust of government. And this idea that Bitcoin is this frictionless and seamless way to transact. One of the government’s biggest levers that they have, particularly if you’re a criminal, and if you’ve done criminal activity overseas, is that they can freeze your bank accounts, right? They just call JP Morgan or Citibank and say, you know, freeze Michaels money. And actually, if you’re getting paid, they can actually take your wages away as well. Does it change your view, about the safety of interacting in Bitcoin and other cryptocurrencies that they couldn’t stop him from accessing his crypto accounts, but once he did, they could punish him? Regardless,
Ethan Lou 33:55
also, for Virgil’s case, he is crypto accounts that he access, they will actually centralize accounts, he was Coinbase accounts. So they were they were frozen on the orders of the government. And he was trying to unfreeze them. And he was actually being cooperative in the whole bail process. So he handed over his his cold wallets. But yeah, I do think you know, you make a great point that Bitcoin, it’s very, very hard for the government to seize. I remember reading about this case, in Germany, the prosecutor revealed that they arrested a hacker and they sentenced him to jail, but they could not take his clients and there was really nothing they could do about it.
Michael Waitze 34:39
Yeah, and it probably makes the government even more upset and makes the punishments more potentially punitive because they think that you’re kind of spitting in their face. In a way Oh, yeah. In a way I told you, so I don’t need you. I can transact without you. And your authority is in question to me. They could say Then the governments act in a much more punitive way. Does that sound fair?
Ethan Lou 35:04
Yeah. It sounds fair. Like I think that that German guy, I bet his wallet is sparked, you know, if he moves a single Satoshi, right, I bet the government’s gonna track where it goes to. Right. And
Michael Waitze 35:15
this gets back to what I was talking about earlier, there are companies that I spoke to on other of my podcasts that can track they literally, it’s almost like they’re, they’re scraping blockchains and distributed ledger technology everywhere to see which transactions aren’t because it’s just all numbers to them, right. It doesn’t have like, Ethan’s name or it doesn’t say like Ethan’s account and have your home address on it. But it can it tries to figure out using algorithms and artificial intelligence, whether there have been illicit transactions depending on how often things happen, and to where the other accounts to which it’s transferring value, and make a value judgment about whether you should trust not just the person or the account from which it’s coming. But because it’s come from other accounts that may be under question that you can’t trust this account as well. So all this is getting built, right. I feel like technology moves at a much faster speed today than it did even just five or six years ago. And the more that we again, we talked about earlier, the central bank, digital currencies become prominent, where they say, okay, there are no more dollar bills, they’re just dollar coins, meaning digital coins. If you think about the programmability. And I was having this conversation with somebody a few days ago, because cryptocurrency is essentially software with rules, right? Imagine a world where the central bank, digital currency only allows you to buy certain things. It’s just programmed into it. Right? So if they want to stop, like, if they want to have prohibition like they did in the 20s, they just make it impossible to transact for liquor, or the reverse, or you give money to somebody on welfare. And it can only be used to buy food.
Ethan Lou 36:55
Yeah, I actually read that in China, the central bank, this digital currency, they, they were going to add expiry options, when they want to stimulate the economy and make people spend faster, they’re going to say, I’m going to give you 100 bucks, expires within 10 days. And it really is a way for the government to exert control over how people live their lives.
Michael Waitze 37:19
Right. So I mean, I think and I’ve seen cycles like this before. And I think it’s just an incentive for people to rebel against governments, but also to continue to create other technologies that governments can’t see. And you just keep moving down further and further away from Central Bank control over stores of value. And I see no reason why even if those things aren’t digital, I could go right back to you and say, in the same way that currency was created, here’s a promissory note for something. This has value because you trust me. And then we just transact in paper again. Anyway.
Unknown Speaker 38:03
Back to paper.
Michael Waitze 38:05
I think in the end, it’s all gonna go back to paper, but we’ll see what happens or some other digital currency that governments can control. What else about this book that’s being released today? Because today in Thailand, it’s October 19th. The people need to know.
Ethan Lou 38:19
Well, it’s, it looks at it from a non technical perspective, and I think it’s written for the lay person, because I always feel that people have always tried to explore crypto either through the lens of monetary policy or, or computer science. So right, I’m trying to look at it from the level of the human condition. And so this is, this is at its heart. It’s a story. And it’s driven by plots and by the bias plot and characters.
Michael Waitze 38:47
Well, I’ll put a link in the show notes to the book as well. It was awesome talking to you, Ethan Lou, like we said, a journalist and the author of two books, his most recent book, once a bitcoin miner, scandal and turmoil in the crypto currency Wild West. Thank you so much for doing this today.
Ethan Lou 39:02
Oh, thank you for having me. It’s been an absolute pleasure.
Transcribed by https://otter.ai