0:00Yo, welcome back to the Jack Mallers Show. I am your host Jack and you are listening to ask Jack, our weekly Q&A where anyone in the world can call in and ask anything that they'd like, even anonymously at ask.jackmallers.com. Hello, my favorite corner of the internet. How are you guys? Uh, listen.
0:26As you guys know, I'm in Europe and I caught the European flu. Whatever the noro-norovirus?
0:36Let me tell you something. I was going back and forth with the Europeans in the YouTube comments. Obviously just kidding, having some fun. But, you know, I was calling you guys soft like your version of football, you know, someone touches you on the shoulder, you roll around for 10 minutes and scream and cry. Our version of football, you know, 300-lb men clashing into each other.
0:57Um, but I take it back because this flu right here, man, I haven't had the flu in a while. I don't know what you guys got going on down here, but this thing has absolutely kicked my ass, no joke. So, um, that'll, you know, this episode, you guys can probably tell a little bit lower energy.
1:21Um, and it'll make my live stream, uh, you know, obviously we'll see how I'm feeling for that, but hey, I told you guys if I say I'm going to do it, I do it. I'll have to be dead for me not to do these episodes. Um, so, with that, uh, sorry, but it is what it is. Um, the European [clears throat] bug got my American ass.
1:47Uh, so, uh, let's do this thing. We got some good questions. Um, this episode will probably be a little bit shorter, but, um, nonetheless should be awesome. I'm excited to answer some of these. So, the first question, let's go Alexander. Let's hear from you, Alexander.
2:08Hey Jack. My name is Alexander. I'm a 53-year-old Norwegian running a chiropractic clinic in Spain. I did my studies in Davenport, Iowa back in the '90s when Jordan, Pippen, and Rodman were at their peak. I didn't miss a single Bulls game.
2:24Thanks to a technically click skilled friend of mine who is a hardcore Bitcoiner, I was able to secure my BTC savings I had on my cold wallet. So, thanks to him. But now my friend tells me there's another worry. He says Bitcoin is being captured by a small number of large mining pools that control a significant share of the network's hash rate.
2:43He argues that this could eventually lead to centralization, potentially turning Bitcoin into a base layer for a future programmable CBDC.
2:53So, is this a legitimate concern? Could mining centralization eventually compromise Bitcoin's properties as hard money?
3:01Lastly, I want to thank you for bringing hope and light in a very dark fiat area. In the morning, cheers. Alexander.
3:09Man, you guys are the best. What a What a question. Go Bulls. That's awesome. Michael Jordan's the best basketball player of all time. Uh and thanks for calling in, man. Shout out to Norway. Shout out to Nordics. I hope you don't get this flu, brother.
3:25Um all right, let's talk about uh mining and the risk of So, you talked specifically about pools and Bitcoin becoming a CBDC. Let's talk about it. The short answer to mining pools um and and and the how a few of them, a handful of them, I think three of them have a huge share of the network. I I say it's not not a concern.
3:53So, this is a legitimate topic that the Bitcoin community has been talking about and working on for quite some time. But, it's not the existential concern that this is sometimes made out to be.
4:05So, the way that your friend seemed to have put it to you, I disagree with like very much. So, let's take a step back. First of all, a mining pool is not a single miner. Behind a mining pool are thousands and thousands of most of the time thousands and thousands and thousands of miners.
4:26And these miners run their own machines, and these miners can switch off their machines whenever they want. And we've seen this happen many times. When a miner doesn't like what a pool is doing, the hash rate moves. And this is a broader idea I'll get into in a second of you know, Bitcoin's game theory and incentives. So, anyway, firstly, pools are not miners themselves. Behind these pools are thousands of independent
4:53miners, and these miners can always switch pools and shut off their machines if they feel as if the pool is not acting in their best interests or Bitcoin's best interests. As far as the risks, like what is a legitimate thing that the Bitcoin community has been talking about and working on for a little while now. A coalition of pools could potentially temporarily censor transactions.
5:24Meaning, a coalition of pools working together can try and leave them out of Bitcoin blocks for a while. So, you want to make a Bitcoin transaction, and they could try to leave your transactions out of blocks. But, I say temporary because other miners would still pick them up. And other miners would have an extreme incentive to pick them up cuz as long as you attach an fee to your transaction, you know, people get paid to put them in
5:54the block. And so, this isn't even like a permanent level of censorship. It would only be a temporary, whereas maybe your Bitcoin transaction usually gets confirmed, gets one confirmation within an hour, and maybe that is a bit delayed and there's some temporary um delays uh But, that that is like really the biggest risk. They could also try and do like a short reorg.
6:22Um but and they they'd only be able to really try and double spend their own transactions. So, to be clear, both of those things are incredibly expensive.
6:33Both would hurt the value of Bitcoin uh and devalue the assets that these miners are getting paid in or these pools are getting paid. So, and this goes back to a lot of what, you know, Satoshi initially designed in the game theory is that, you know, as a miner, one, you don't have any control over the rules of the network.
6:56And I'll get into that in a second. And two, you're always better off acting in the best interest of Bitcoin because it's incredibly expensive and destructive to harm Bitcoin. Uh you you like if I have a bunch of hash rate, I'm best off just doing as full nodes want me to do cuz I get paid.
7:20Um it's really, really expensive and there's not a lot of payoff. So, like I can spend a lot of money to try and leave some transactions out of Bitcoin blocks for a temporary amount of time because another miner is going to include them. And so, I can waste a lot of money, harm my reputation on the network, probably lose all the miners that are on my pool, destroy my business.
7:47Like temporary So, you know, I think as a Well, I I I I think that as a topic in the Bitcoin community, this is more a political conversation.
8:02Where, you know, could regulators try and abuse um you know, if there were a bunch of pools in the United States, could regulators try and abuse those pools and try and get them to do things and impose and enforce regulation. So, I don't think that the this isn't a technical concern. Do you know what I mean? So, I guess like taking a step back again.
8:30A a set of mining pools couldn't change the 21 million supply cap. They can't seize your coins. They can't rewrite history. Like they can't There's no real threat technically and for the hardness or the monetary policy the asset. And this goes to this really important idea that miners don't set the rules. Nodes set the rules. Nodes enforce the rules.
8:54Nodes reject invalid blocks that don't follow the rules. No matter how much hash power or nation-state or whatever, it doesn't matter. Um nodes are the ones that accept blocks that miners produce. And if miners give an invalid block, it doesn't matter the United States is behind it or all the hash None of that matters.
9:18Um and so, this is why the way you um phrased the question or your friend, uh this idea that Bitcoin can become a CBDC, I think that that's an egregious leap that um is just factually wrong. Because a CBDC is implied that unlimited debasement, censorship, people can seize your assets, um they have control over your identity and your permissions, and none of that is true
9:46even in the worst case scenario here given what we're talking about. So, in a in a worst case mining cartel, you still hold your keys, you still run the node, transactions are still peer-to-peer, the hard limit is still 21 million, um and, you know, back in 2017, during the block size wars, you know, there was even this is an incredibly important um
10:13day and moment in Bitcoin's history was what is called UASF, a user activated soft fork, and we all the the nodes, we patched our own node, and we all upgraded to enforce new rules on miners because they were being malicious. And so, there's always this nuclear option where nodes can say, "Screw you guys.
10:38Like, if you don't act in the best interest of the network, you know, we are the network. You guys get paid to support us. You don't have any power on your own.
10:50And so, anyways, like in summary, I think the risk is more political. You know, it's easier for a regulator to pressure two or three pools that are operating in a single jurisdiction. And if you guys want to look into the work that the Bitcoin community is doing. By the way, guys, there'll always be it Let me put it to you this way. If gold was a software project, people will still have been working on gold and how to marginally improve it
11:19and how to further secure it even though gold's been around for thousands and thousands of years. There's always ways to make it a little better, harden it a little further, make it more accessible.
11:29Bitcoin's a software project, so it's not a bad thing that there's always things to work on and always ways to improve it. If you guys want to take a look at some of the work, you can look up Stratum V2. Um and this is one of the many efforts that are going into decentralizing pools.
11:47And the whole idea is letting miners build their own block uh block templates. So, instead of taking a pool's block template, if miners can build their own block templates, that actually matters. And um this is also why running your own node is one of the most useful things you can do for the network itself is being another [clears throat] person or business or whoever that are enforcing rules.
12:18So, anyway, in summary, in my opinion, you know, your friend, like the idea, you know, mining pool centralization, it's not wrong. You know, I think we watch it, we build against it, but we certainly don't lose sleep over it, especially it threatening Bitcoin's hard money properties as Bitcoin's not a CBDC. Uh I mean, you know, in a worst-case scenario, I think, you know, regulators try and, you know, abuse uh two or three
12:46mining pools that share jurisdiction to try and with Bitcoin. And, you know, some transactions may be delayed for a little bit, but I mean, again, I think that people blow it out of proportion. It's not something that we shouldn't focus on and talk about and build against, but it's not something you should be losing sleep over um that I think is like a life-threatening existential thing for Bitcoin. I think it gets blown out of proportion. Another thing that
13:14happens in Bitcoin is people, obviously, this is something this is just human nature. You could you see it used in politics all the time as people try and derive fear um or like just any really strong emotion out of you in order to sell you their interests.
13:32So, you know, people will take something like mining that or is any Bitcoin technical topic that people don't really understand that much about, and then they contort it and they exaggerate it to convince you that it's uh, you know, like an existential thing and and and ultimately they're all selling you something. That's why you need to use my coin or that's why you need to use my fork or that's why you need to use my business. And they're really selling you by instilling,
14:01you know, a a fear, uh, some really strong emotion that is not very [clears throat] realistic. My two cents, um, but yeah, Bitcoin's hardness and the reason it's ultimately valuable lives in the rules that all of us enforce, not who finds the next Bitcoin block. So, we'll work on it.
14:24There's been a lot of work. Look up Stratum V2, really cool stuff and all the other decentralized pool work that's been going on and it's something we should pay attention to. But, um, yeah [clears throat], I'm in. There's all sorts of work to do. There's quantum resistance stuff.
14:39There's now this new, you know, entirely new era of cyber security with AI. You know, Bitcoin's going to be around for thousands of years and, you know, there's always going to be stuff to marginally improve. Hopefully that was useful and uh, yeah, thanks again for calling in man and for all the kind words. You guys are the best. These questions are awesome. Uh, okay. Let's do uh, Oh, an anonymous question. That's great.
15:07Let's do that. Anonymous question. Here we go. Let's hear from you.
15:19Hi, Jack. I'm a massive fan of the show. I every week all the way from Scotland. I just have a question regarding the UK.
15:28Uh if the US was to start devaluing the dollar, do you think countries like the UK and Europe would be forced to devalue their currencies as well?
15:42And do you think they're waiting on the US to move first before they do this?
15:52Um I think ultimately everyone's currency has to be devalued. You know, you can argue about First of all, thanks for the question. Killer accent, by the way. I love a Scottish accent. Um so I appreciate you, brother. Uh I think all the currencies have to be devalued cuz they're the escape valve for all the debt that can't be paid back, you know? So, you know, something Um I've always struggled to articulate this in an accessible way.
16:25Like something has to realize the loss, right? Like you can for the US, there's 40 trillion, but, you know, for all of these nations, there's there's a loss that has to be realized, and the question is, well, like who's going to realize the loss? And ultimately, I think the currency, the value of the currency itself, you know, is does the lion share of helping realize that loss? And so all these currencies have to be devalued
16:51substantially. Now, whether the UK is waiting for [snorts] the US, um you know, all of these are complicated.
17:00Ultimately, we'll never know. A lot of this is political as well, you know?
17:04I've learned a lot about European elections, like the election that's going on in France, uh and all the politics that are going on in the UK. And so, you know, there's this tension of you know, all of these countries that are in so much debt that need to find a way to finance themselves and then things like inflation and combating that. And so, you know, in UK, Europe, US, you have persistent and growing inflation and a level of
17:33indebtedness that you know, in those there's competing tensions there. Uh and so, you know, I I I think that um uh yeah, to answer your question, yes, I think all of countries will end up, you know, debasing their currencies together.
17:51Um but uh you know, it is one waiting for the other. I don't know. It's all it's all political. It's all about winning election like things like midterm elections and like all of that is is unfortunately relevant in their decision-making. Uh it's a reality of the situation. Um and the other thing more specifically about the EU and the UK that I think is interesting is just uh things like defense.
18:18Uh it's becoming an increasing reality that the United States is saying,"Hey, you might not be able to rely on us for like your defense. You might have to defend yourself uh in the future." And that is incredibly inflationary, obviously.
18:38Um and so, you know, I also think that the EU UK region of the world is going to have to print a lot of money to build up the military capabilities that, you know, may need to replace a lot of what the United States has provided. And this is we've talked about on the show a lot, this kind of reordering of the world.
18:58This like post post-World War II, which then did turned into this post-1971 version of the dollar and fiat and these kind of relationships. China's the world's factory. The United States is, you know, a lot of the world's military and the United States just consumes and exports debt and currency and inflation and all of that is just not sustainable.
19:23It never was. It's coming to an end and yeah, I think in order to reorder the world uh there's an immense amount of destruct value value destruction of the currencies. So, we'll see. I mean I talk about it on the live streams all the time. The value just taking a look at EURJPY. I mean, it took another leg down since the last episode. So, this all this stuff is playing out in real time. It usually takes longer than
19:52people expect. Like, once we we figure it out, we're like,"Oh man, like we figured it out. This is going to take, you know, next week we're going to be back on a hard money standard."And, you know, unfortunately markets can remain irrational far longer than, you know, we can remain solvent.
20:09So, you got to stay patient, stay humble, stack sats, never too much leverage. But, yeah, I think it's abundantly clear the direction the world is going, for sure. For sure.
20:22Let's do Let's do a few more. There were some strike ones that uh I would love to answer. Okay, let's do Harrison. What number? Harrison. Here it is. Let's hear from you, Harrison.
20:40Hey Jack, long time listener, first time caller. Just wanted to start by saying congrats on getting engaged. That's super exciting. And uh thank you to you and your team for all the awesome features you guys have shipped over the last year. Um my favorite's been interest paid in Bitcoin.
20:55But, yeah, just curious when you guys are going to have joint custody accounts. So, like I know you have beneficiary [clears throat] plans, but it would be great to add my wife to the same account uh so we can have Strike kind of just be our all-in-one banking app. Anyways, yeah. I appreciate your time, man.
21:14Nice. Thanks for the call, man. And I appreciate the kind words. Yeah, I think the Strike team has been absolutely killing it. We're releasing so much stuff. Uh, to answer the question directly, it's a 2027 feature. Uh, very likely the first half. So, hopefully right on the other side of the new year.
21:32Um, and this is this this idea of joint account where you and whoever you want, but the use case is usually your significant other shares the Strike account and you can even set certain permissions or limits.
21:45Um, so it's a frequent request. Uh, something that is on the road map and we've done a lot of infrastructure work to enable it. Um, and hopefully in the meantime, uh, feature like Stacks, uh, this new you know, it's certainly not a direct apples-to-apples equivalent to what you're asking for but these are all features that, um, it's exciting that you guys want them because, uh, it's increasingly the case that Strike is
22:15a better financial account, um, at the margins than, like, a Chase bank account. You know, whether it's the interest on your cash balance, the ease of use when it comes to things like Bitcoin and buying it, borrowing against it. Um, soon on the other side of the New Year as well, you know, different ways of custodying it. We're We're working on a lot of custody stuff. So, all in all, um, exciting. I appreciate all the requests.
22:39Keep them coming. And the direct answer to your question is, yeah, hopefully, um, shortly after the New Year. Um, Q1, maybe Q2 is, uh, is the goal. So, fingers crossed. And, uh, anything else, uh, Harrison, that you you and your wife need, just let me know, brother. Thanks again for for calling and for the support. Okay, last one, another Strike one.
23:02Uh yeah, let's do I don't know how to pronounce this guy's name. Padrick? Let's see if he says it. Let's hear from you, Padrick.
23:23Um big fan of the show on Strike. Uh been using Strike for last 2 years. Um DCA'ing every day.
23:34Um from Ireland here. I'm just want to know if there's any services um sorry, when the services will expand to the likes of Europe and Ireland for loans, credit lines, etc. And is there a potential to have between 2 to 5-year um loans?
23:57Uh so, not sure 12 months or maybe it would be at a higher rate. Um just thinking longer-term loans for higher percentage rates. Is that something that might come down the line? I know there's some other services that offer 48 um month loans. And so, I'm just wondering if that's in the the pipeline.
24:21Yeah, definitely. Uh thanks for calling in, dude. Good question. Uh so, I just want to be clear. Uh for Europe for the longest time we were working on getting our MiCA license. Even before MiCA was a thing, Europe was always this gray area. It's a very difficult regulatory environment, if I'm being honest, for for Bitcoin companies.
24:42But we got our MiCA license. So, we're officially in Europe, and I can talk more about it. Um and so, you guys should know we offer Bitcoin-backed loans in Europe. We actually just lowered our pricing. I assume we'll start tweeting and and marketing that today is my guess, but we lowered our pricing pretty substantially. We're really excited to like finally be there and be able to be more aggressive and launch more features for all of you guys out in Europe. So, we do do Bitcoin back loans. Uh some of the things that are
25:11missing in Europe that the United States has are volatility proof loans, which is our loans where you can't get margin called or line of credit. Um but you guys have, you know, our most popular product by far is the Bitcoin back loan, the classic loan. Uh and you guys all have access to that.
25:28So, you can go in your app, um can open a Bitcoin back loan. Probably some of the best pricing you'll find, some of the best product quality you'll find. Um at least in the United States, I think. You know, I I'll have no way of ever proving this, um but I think we're the largest consumer and small to medium business Bitcoin back loan issue in the United States at this point.
25:50Um so, hopefully that answers uh one of your questions. For the, you know, when can we start bringing more features? Uh kind of touched on that. As now that we have MiCA, we'll be able to do it, which is really, really, really exciting. And just so you guys know, Strike and I will be at the Bitcoin Amsterdam conference, um which is in like a week and a half at this point, which is incredibly exciting. Um I'll be giving a keynote there. We'll have a booth. We're going to and and uh
26:18participating in a lot of events cuz we now can do Europe full on and we're really interested and excited to hear from you guys. We know it's not the same market as the United States. Not all the same features are going to translate.
26:33So, we're really, really curious to hear from you guys and learn about what you need. Um if you're not using Strike, why aren't you using Strike? What else are you guys using? Um how do different countries within the Eurozone how do they differ? How do they work? Um we've heard different things from Germans then uh folks in the Netherlands, from folks in Norway, folks in Ireland. So, uh if you are going to the Bitcoin Amsterdam conference, come
27:01say hi, come to our booth. I'll be there. We just want to learn from you guys, hear from you guys. But, we're officially in Europe. Our Bitcoin backed loan product is there, and we're looking forward to, especially throughout 2027, now that we're officially there and we can talk about it and we can do things that we want to do. Previously, the regulators didn't let us, and that was frustrating, but now that's not the case.
27:22So, hopefully 2027 is a big year for our European customers and the region for us, and uh we're looking forward to just learning from you guys so that we can build things that you want. So, looking forward to Amsterdam. Hopefully, that answers your question, brother. Well, some of it. Oh, 48-month loans.
27:40Yeah, I mean, listen, uh a lot of it just has to do with where we're getting the money from. So, if someone's willing to give me money over a longer duration, I'm more than happy.
27:49I I wish I'd give you a 30-year Bitcoin backed loan. That'd be the best, like a mortgage. Um but uh there's certainly ways we can do it. Um you know, uh 48 months may It certainly would be more expensive. There's no doubt about that. But, um uh there's cer-Short answer, yes, we can do it. Uh longer answer is for us to do it at scale. I don't know of anyone that's doing this at scale.
28:15You know, maybe there's some smaller shops that are offering this with not like the largest loan book or largest volumes, but if we wanted to issue billions of dollars of worth of these loans, then I mean, I'd have to have billions of fiat that were willing to, you know, do it at duration with me. And the reason that people don't want to do it at duration is because, you know, like w- For example, think about the yields that we talk about in the United States.
28:42Like, you know, there's a curve to it, right? Like, the 30-year is higher than the 10-year, higher than the 2-year, and that's because the longer durate the longer that you're lending the money out, you should be compensated more.
28:54So, um any hoot, the reason that people aren't saying,"Oh, yeah, here, take my fiat and lend it against Bitcoin and I'll get I'll take the same rate as if I were to give it to you for a year."Obviously not the case. So, um, to do it at scale, I think the Bitcoin backed market is going to have to get a little bit more mature, but there's certainly things we can do in the interim, and maybe it's kind of like a private client type of product or something that we can pilot in beta.
29:21There's certainly ways that we can pull it off in the interim, so I'll pass this feedback along to the team. Um cool. All right, guys. Like I said, I apologize this one's a bit shorter. Uh I'm a bit lower on energy. Man, this European flu kicked my butt. Um but I'm on the other side. I'm on the the bottom is in. The bottom is in.
29:42We've bounced. Buy the dip. Buy the jacked dip, okay?
29:47Um I'm in Europe for another 2 weeks and uh I'm going to do the live stream. So, like I said, I got to be buried 6 ft under as a dead corpse to not do these shows. So, I'll see you guys on the live stream.
30:01Um and uh for all the Europeans out here, I'll see you guys at all the events and conferences and on the street. Definitely say hi. Definitely let us know how we can better serve you. Uh and I love you guys. I appreciate you, my favorite corner on the internet. Uh we'll talk soon. Much love.
