2: Bitcoin, Cryptocurrency, and the Blockchain

Lots of people talk about Cryptocurrency. It's in the news all the time but who really knows what it is? In this episode, Wolf reports his research and together we dig into it and explain what it's all about.

Show notes:

Take-aways from the episode:

• Crypto is not really anonymous
• Crypto is both regulated and taxed (at least here in the US)
• Legal uses of crypto outweigh illegal uses.  This stuff is legitimate.  There are dangers, but crypto is something you might legitimately possess
• There are scammers everywhere.  Protecting the private key in your wallet is vital to keeping your money: don’t lose it, don’t let it be stolen, don’t give it away.  Stealing your private key is much easier than stealing US dollars out of your bank account.

Feedback from episodes:

Champ at Key 9 Identity sent us a couple of links for blog posts on passkeys.

https://blog.k9.io/p/passwords-must-die

https://blog.k9.io/p/key9-the-2025-security-key-shootout

Hosts:

Jim McQuillan can be reached at jam@RuntimeArguments.fm
Wolf can be reached at wolf@RuntimeArguments.fm

Follow us on Mastodon: @RuntimeArguments@hachyderm.io

If you have feedback for us, please send it to feedback@RuntimeArguments.fm

Theme music:

Dawn by nuer self, from the album Digital Sky

Transcript

Jim: 0:03

Welcome back to another episode of Runtime Arguments with Jim and Wolf. I'm Jim McQuillen, and my friend and partner in this show is Wolf. How are you doing today, Wolf?

Wolf: 0:12

I I'm actually doing pretty good. And uh we have a really interesting topic. To me, it was interesting. I hope I can present it in a way that is uh interesting to you all out there.

Jim: 0:26

All right, I'm really excited to get into that. Uh we'll describe what that is in just a minute. First, uh we've received some really great feedback from our first couple of episodes. I'd like to just say that we really value feedback from our listeners. It gives us a chance to improve the podcast, and we're all for that. For instance. Wolf, would you share some of the feedback that we've received on the past keys episode?

Wolf: 1:22

Yeah. Uh so we talked about past keys, a topic which uh when we started looking into talking about them, I didn't know anything, and I did a lot of research. Um when we made the episode, of course, and even right now, I didn't know everything about past keys, but I had learned how great they were. We talked about them and we got some feedback from Champ at Key9 Identity. Uh his he and his company deal with pass keys every day. That's his business. He's an expert. And he wanted to make sure that I understood myself and communicated to everybody else uh a couple of very important parts. Um, and possibly the most important one, is Jim and I talked about what do you do if you are going the simplest possible route and you have a passkey and you only have one device and there's no backup and there's no cloud? What do you do when that device gets broken or stolen? Um and I said, Jim asked, what's the backup for that? How do you get into that service after that? And I suggested that if you had a username and password, one that you had just made up after you registered, you know, stuff. Uh and Champ wanted to make sure I communicated that having any kind of name and password combination is the weakest link, and that's the thing the attackers are going to go after. Um so just considering this situation, I feel like the best thing we can say is keeping your OnePass key on your one device and not backing it up and not having a cloud service of some kind is a bad idea. You should either have multiple devices or use a cloud service like one password, um, or have it be in your OS or in your browser, but somehow backed up among multiple machines. Um the one device case is just bad. Um, the second thing uh is I went out of my way to say a thing that we always say as software engineers, which is you don't roll your own crypto. And um a thing that Champ points out um is that statement applies just as much to authentication as it does to encryption. You don't roll your own crypto, you don't roll your own authentication. There are libraries, plenty of them, vetted, open source. You can see what they do, and so can everybody else. Um, and finally, uh security keys, the hardware ones like USB C or NFC, uh, I talked a little bit about those and said that I use them, but they're inconvenient for uh people who aren't willing to deal with all those things. A thing you should know is that if the hardware key says it's compatible with FIDO 2, that means it supports pass keys. Um Champ has written a couple of posts that relate to this specific stuff, and in the show notes we are going to include links to those.

Jim: 5:05

Alright, great. Um can can we back up just a minute? Uh we talked about uh you have one device, you've got a pass key on it, and you drop that device and it breaks, and you you can't use it. So what is the alternative? You you have another device? Uh huh. What do you do?

Wolf: 5:27

Yeah. Do you have a tablet? Do you have a computer? Do you have a second phone? Um, some of these systems allow you to set a um recovery contact. So for instance, um for specific IDs I have, my wife is my recovery contact, she has the power to recover my password, or it would in this case be a pass key. But essentially, the only answer that we have to this problem is redundancy.

Jim: 6:05

Okay. Okay. That makes perfect sense. Um that's you know, I've got two laptops, I've got a desktop, I've got a phone. Uh, I I think uh I think I'm well covered. I think I'm gonna remove those username passwords that I have for logging into the sites uh for which I've set up a pass key on. Um I think that makes sense. So thank you, Champ. Uh really appreciate that that feedback. Um and I uh I I look forward to more feedback from our listeners. Uh I think it just makes the show better, and that's what we want to do. Um so moving forward, um, you know, we're we're we're doing this podcast because Wolf and I, you know, we go to lunch and we sit and we talk about interesting things, and sometimes I'll bring up a question. Uh for instance, Wolf, what are pass keys? And then we have a little conversation about it, and neither one of us really knew what they were. We've always heard about them. We didn't really know what they were. So in this case, Wolf volunteered to do the research to figure it out so that we could present it on the podcast. Other times we do a podcast episode where we know something about that subject. Like the the podcast episode we did a couple of weeks ago on moving from uh the data center to the cloud. That's an experience I lived through. So I talked about it. So sometimes we're gonna do research about things we don't know and we're gonna find out as much information as we can about it. Other times we're gonna talk about things we do know very well. Uh, and again, if you have any uh any topic you'd like us to talk about, please send us some feedback. And again, the the information on how to do that it will be in the show notes. Um so that leads us to today's presentation. Um Wolf, you want to tell us what we're talking about today?

Wolf: 7:58

Uh I will. And uh I I also want to uh give a little bit of a disclaimer before I start. Today I want to talk about cryptocurrency in general, um, but the specific one I researched most was Bitcoin, which is the most popular. And uh most people consider it to be a currency and use it as money. So, right up front, I have to say, first of all, we're not experts. We're not cryptocurrency experts, we're not financial experts, we're not giving you advice, we're not telling you to mine, we're not telling you to buy, we're not telling you to sell, we're not telling you to invest. Uh, some of what I'm about to say is gonna be my personal opinion, and I'm gonna try to make sure that when I say something that's an opinion, I tell you. Um we're doing this because I think we just want you to know what the moving parts are. Uh we want you to know enough that if this is interesting to you, you know where to start. You know how to learn more. Um, it's my hope that at the end of this uh I've communicated to Jim and to you all uh what cryptocurrency really is, how money changes hands with respect to it, and how it works. Uh that's the plan.

Jim: 9:28

Uh great. So um you know this is one of those topics that uh I I know I'm gonna learn something from it. I know Wolf learned uh because he had to do a lot of research for this. So you want to get us started? Uh let's jump right into it.

Wolf: 9:43

Absolutely. The first thing is um I want to communicate that Jim, uh, our friend Dave, and I were all together eating lunch and we started talking about cryptocurrency, and each of us believed we knew something about it. And we all started saying the things that we believed. And it soon became clear that the things we believed were all different. And as I learned later, uh, we were all a little bit right and a lot wrong. Um I've I I I used to think some very, very wrong things about cryptocurrency. And in my research, I learned a lot better. Uh I I I'll say some of the things at the end, but right up front, I want to say three things that were complete surprises to me. Uh, the first one was I assumed cryptocurrency was all about crime. That if you used cryptocurrency, it's because you were doing illicit things. That's not true. The second thing I thought was that uh cryptocurrency is anonymous. That's not true. There's a lot of anonymity in place or pseudonymity, um, but it turns out that the people you really don't want to know who you are, they can figure out who you are. And the third thing I thought was that cryptocurrency is um, you know, untaxed, unregulated, on on everything. And that's not true. Cryptocurrency is taxed uh as though it were a commodity most times. Um transactions are taxed. Um there are regulations about it, particularly regulations having to do with fraud. Um people are treating cryptocurrency like it's a real thing, like it's really used as a kind of money. It's used for more legitimate and honest and investment things than it is for crime, and it's it's the real deal. I started off thinking that today I was gonna talk about how not to be tricked into cryptocurrency. But the truth is, cryptocurrency is basically okay. Um let me tell you some things about it. First of all, there are so many different kinds of cryptocurrency, each brand of cryptocurrency. Almost certainly you've heard of Bitcoin, and maybe second on the list is Ethereum. These are the two most popular, the two most widespread cryptocurrencies. But when I looked around to see how many there were, there's disagreement, but it's in the neighborhood of 20,000. There's a lot of different cryptocurrencies, and cryptocurrencies are all based on an idea called the blockchain, and each one of those currencies has its own blockchain. Um for stuff where I had to look at a specific cryptocurrency, I looked at big Bitcoin. So when I am saying something, I'll probably say Bitcoin or crypto, and I won't mean sometimes that'll mean everything, and sometimes it'll specifically mean Bitcoin, and I'll do my best to make sure I communicate the difference. Um The second thing I want to say is why is crypto worth anything? I mean it it's there's it's not like there's a scarcity, there's kind of a scarcity, um, but who decides what it's worth? And uh it turns out that um it wasn't well, Bitcoin, it wasn't worth anything until somebody actually bought something with it. Um there was Bitcoin in the world, and then some guy spent, I think it was 10,000 Bitcoin on a pizza, and that established the first actual value of Bitcoin. And as people trade Bitcoin for real-life objects and or for cash, it's that exchange, it's it's worth what someone will pay for it. Just like anything else, it's worth what someone will pay for it. Um and it is mostly uh good as a currency, it's not considered a currency, and the kind of taxes that you pay on it, for instance, when you make a sale, cryptocurrency you've been holding, is capital gains. Um and there are some commodity-based taxes. Uh so the government at at this moment doesn't exactly think it's a currency, it thinks it's an asset. Um but uh in the US uh there are laws coming into being. Uh, I think Trump is uh looking specifically at a couple of them that will make cryptocurrency really be a kind of money. So there's three important things that we have to talk about if you want to know the machinery that goes into cryptocurrency. There is the blockchain itself, we're gonna have to talk a little bit about that, um, and that's associated with what what mining is. If there's anything about cryptocurrency that you've probably heard, it's that there's a thing called mining, and people with tons of money buy lots of videographics cards um to do mining with fleets of machines, and that that's how you discover new bitcoins. So that's a thing. Bitcoins uh belong to you by virtue of you having a wallet. Uh I'm gonna make this more clear later, but bitcoins don't live inside your wallet. If you lose your wallet, it's not like those bitcoins disappeared. Bitcoins live in the blockchain. That's where they are, that's where their data is. Um keychain, um, just like you would have for SSH or for GPG or for any key pair-based crypto. Your wallet is really a key pair, a public key that you share with everybody, um, and a private key that you keep secret from everybody. When you uh sign a transaction with your private key, everyone in the whole world can tell it was you because they've got your public key and they can decrypt your signature and see that it's valid. Um so the most important thing to keep track of is your private key. People do not steal your Bitcoin. Well, they do. But they start by stealing your private key. Somehow they get their hands on that. And once they have your private key, then they can make brand new transactions where they take the Bitcoin your wallet owns and they can send it to some wallet they control and sign it with your stolen key. And then you're out the money. It's not covered by FDIC, it's not insured. Um, and any crypto company that tells you they are insured by FDIC is lying, and the FDIC actually goes after such companies because they exist. Some crypto companies uh actually offer private insurance, um, but in general the problem with a crypto holding company, or a thing that's sort of like a bank, is that there's two problems, but the the one that's most dire in my mind is that to work with them, you have to give them your private key. Every word in the sentence I just said covers me with goosebumps. The idea of having a private key and giving it to someone, it it makes me want to throw up.

Jim: 18:52

Um, and there's plenty of Okay, so let me interrupt here just for a second. Can you have a wallet uh with your private key in it and not be connected to any sort of agency or or company? Um uh can you just do transactions on the blockchain uh with your private key without worrying about uh any other anybody else having your public your private key?

Wolf: 19:23

Yes. And in fact, that is my recommendation. Um there have been plenty of instances of these uh companies that hold your money for you by keeping your private key, like Mount Gox and Celsius, and you know, there's a couple others.

Jim: 19:46

Is and is Coinbase one of those such companies?

Wolf: 19:50

Uh you know, I don't think so. Um um I'm not exactly sure what Coinbase is.

Jim: 20:01

But okay.

Wolf: 20:03

But the companies that I named, and I I listed one other somewhere, uh, they went under and or just out and out stole crypto from all of their customers because they had their private keys, and the assets lost uh combined were in the multiple billions of dollars. Um so that gives me a bad feeling. I I I don't like that idea. Um I had bad thoughts about crypto originally. I thought it was used for crimes. That's that's really not the case. I mean it it is, just like money is. Um, but scamming is even more prevalent in crypto than it is with regular dollars. Um, there's plenty of opportunity, and they only want to get one thing from you. They want your private key.

Jim: 21:08

Okay. I uh I I just did a quick search of what Coinbase is. Uh they're an American cryptocurrency exchange. Isn't that what those other companies are that you were talking about? That is, yes. Okay, so they're yeah, that that's what they are. So it sounds like they are one of those companies. And the reason I'm interested in Coinbase is because they just announced like yesterday that they had a massive breach. And uh I don't know, they something like 65 million accounts were were leaked, uh, including information, personal information about you.

Wolf: 21:41

Um normally the blockchain. The blockchain doesn't have any information about you, except maybe your public key, but all of these exchanges participate in a set of rules. There's a thing called KYC. Know your customer. There's even whole businesses dedicated to implementing this particular uh requirement. And that means that these exchanges know your real identity, and they may know it very deeply. They may have your passport or your driver's license, they certainly have your name, possibly your address. So the fact that Coinbase was breached and they almost certainly implement know your customer, that means a bad thing. A lot of data uh and correlation to specific wallets.

Jim: 22:37

Yeah, because uh if I don't know where I got that number, 65 million, but if 65 million accounts were were leaked out on the internet and they contain your personal information, including probably your well, your public key and your private key, maybe. Um at least if they have your public key, now somebody can look at the blockchain, see a transaction, and know who that was based on. That is correct. That that seems bad.

Wolf: 23:06

That's super low effort on their point, on their part. Yeah. Um it's what I said earlier that the people you don't want to know who you are probably do. Uh that's like governmental agencies and stuff who can follow the trails of the uh actual transactions um and look at your IP address when you actually sent the transaction and all these things. They have technology to figure this stuff out. But in a breach where your public key is revealed and they know what wallet that goes to, well, you just did their job for them. Um it's trivial.

Jim: 23:50

Yeah, yeah. And I I just want to make note, I've been throwing the number 65 million around. The company is stating that less than 1% of its data has been impacted. So uh don't take my 65 million number as as the truth. Um, and at this point, I'm not sure I believe the company at 1% either. It's somewhere in the middle, I'm sure. Uh and more news of that will come up because that was just yesterday I heard about this.

Wolf: 24:15

Yeah. All right. Um, so uh there's other things to say. Um but what I want to talk about is where do bitcoins come from? Uh how do you get them? What would you use them for? Uh, and how do you turn them back into US dollars or whatever you use wherever you are? Um this was one of my huge misconceptions. Uh I didn't know very much, and I thought that there were two totally different things. One was that these miners had all these fleets of machines that were solving problems, and that the result, the answer of a problem, was a bitcoin. And that once you found that answer, that was your bitcoin. And the next thing you would do is you would register it with the blockchain to say that you found it. So two things finding it and then registering it. That's not at all how it works. Uh here's how it works. Uh, first of all, uh I'm gonna talk specifically about Bitcoin. There is one blockchain, but every computer in the Bitcoin peer-to-peer network, and you can join that network if you want, and if you have 10,000 computers, all 10,000 can join if you want. Every peer in that network has a copy of the blockchain. They're all identical, unless um one has gotten ahead of the others, and sometimes they disagree, and there's specific rules for if they do disagree, which one is right. And eventually whatever is right spreads to all of them. So everybody, sooner or later, up to some given point, has the same blockchain, and no one of them, there's not a single individual one that you can point to is the true one. They're all true. So what happens, um, and this is different for each kind of coin, um, is that people try to make transactions, that is, uh coins from that cryptocurrency move from one wallet to another for whatever reason. And the person, at least who is sending the money, has to sign that transaction. And I I actually think both sides have to sign it. Um, and these transactions are submitted to the peer-to-peer network. They want to go on the blockchain, but they're not immediately added to the blockchain. The blockchain is called the blockchain because it groups together collections of transactions into blocks, and then it only adds one block at a time. There's limits on how big these blocks can be, several limits. One is, for instance, for Bitcoin, um, it only considers transactions within about a 10-minute span. Um, and that's wildly different between different current cryptocurrencies. Ethereum, for instance, is somewhere between 10 and 15 seconds. Uh so Ethereum moves very quickly. Um, uh, a block can only go up to a specific size. Third, a block can only have a certain maximum of transactions in it. So whatever you build, it has to be small enough, have few enough transactions, and have happened recently enough. With those three things in mind, every one of these computers that you've heard about is trying to build a block. And they're all building different blocks because maybe they've picked different transactions. Uh they've they have to choose from a zillion transactions that have recently been submitted to the peer-to-peer network. Um and it picks what it thinks there's a specific reward for um uh paid uh for for getting your transaction included into the block. That that's a reward the person who submits the transaction pays to the one miner that successfully built the block. Um hundreds of thousands of these individual computers are trying to build the block, and the thing that they are trying to build is that they've arranged a collection of uh transactions in a specific order where everything that I've just said meets the criteria I just gave. And then they are imagine this is something like git. In git, um a new commit is a hash of everything that came before it every file, every directory, every commit, every message, everything. That's all hashed together to make the tip of the very next commit. Well, it's almost exactly identical to that for the blockchain. The thing a miner is trying to create is just like a git commit hash, except um it sort of happens in a backwards way. It has to discover it. It can't just calculate it. Um it needs to look at the individual pieces and kind of do a special kind of search to collect together what is actually the result, the hash. What is called by the cryptocurrency cryptocurrency people a nonce, N-O-N-C-E. And as soon as you have solved this problem, as as soon as you have made a block that satisfies all the rules and has the nonce, you start sending it to your peers. And um somebody is going to be first. And whoever's first starts getting added to the blockchains everywhere. Now, uh sometimes, I don't even know how often, maybe often, um, more than one machine will be so close in time that you don't know which one is the winner. And what happens then is well defined by the rules. Um whoever one of them's gonna be first for a specific peer, that peer is gonna say, This one obeys all the rules, I'm gonna add it to my blockchain. Um so here's a point where two different peers are gonna have two different blockchains. They're identical up to a point, and then they branch. Um what happens is they're gonna keep going, and sooner or later one of them is going to be longer than the other. And when one is longer, that one wins. And that's how it works. Now, there there are here's here why is this called mining? Where where how do these people with thousands of computers get paid? Um, first of all, um there's a transaction fee. Second of all, um there are uh extra rewards paid by some of the people who submitted transactions to give their transactions a higher priority. So usually miners will focus on those transactions, they'll try to include as many of those as they can. And third, there's a thing called the blockchain block reward. Now, the blockchain block reward is that whoever submits the final block, and remember, this is one single machine in a in an ocean of tens of thousands, hundreds of thousands, maybe more, machines, they get the blockchain reward. And the blockchain reward, um, which I think every four years for Bitcoin gets cut in half, right at this moment, according to what I read, is a little over six Bitcoin. That's the reward a miner gets for solving a block and adding it to the blockchain. Uh that's a lot of reward. It's huge.

Jim: 33:50

I mean, considering the the current price of a of a Bitcoin is hovering around$104,000. So we're talking$624,000, if my math is right. That's a huge reward for that company or or individual to be rewarded. Yeah. That's amazing.

Wolf: 34:18

Yeah.

Jim: 34:18

So that's uh yeah. Uh let me let me let me say something here. Uh you talk about tens or hundreds of thousands of computers all competing to to do this, to generate this block with special math and all kinds of things. Uh we've got a friend, uh Gib from the local user group, that uh he he was doing some mining. He had like six Raspberry Pis involved. What are his chances of of uh of uh in the competition for him to actually solve that when other people are using uh uh racks and racks of computers with NVIDIA uh GPUs? Uh what kind of hope does somebody have with their little their little uh cluster of six Raspberry Pis?

Wolf: 35:07

Uh this makes me want to say a couple things. One thing is um if asked the question by somebody, should I get into mining? Um I have an immediate answer, and that is no. You you can't possibly make any money mining.

Jim: 35:26

Um I can make$600,000.

Wolf: 35:30

The thing that Gibb said to us when he was describing this setup that he had was that he paid more in electricity than he could get back in generating Bitcoin.

Jim: 35:43

Yeah, I think that's common.

Wolf: 35:46

And an article I just read, and I think I quoted this to you, Jim, was that um these people who have these incredible fleets of computers, that the actual cost of running all those computers to do the transactions to generate one Bitcoin, um that I think the number I saw was that they have to spend about eighty-two thousand dollars worth of electricity and resources to generate one Bitcoin, and the Bitcoin's worth$100,000. So profits are going down for miners. Yeah. And it's worse in some other countries. Like in Germany, it's it's I I don't know what the conditions are in Germany that make it terrible, but my understanding is uh in Germany mining is a no-profit situation. That's what I understand.

Jim: 36:46

I I think the cost of electricity is just much higher there.

Wolf: 36:50

That is very possible.

Jim: 36:51

Thereby increasing your cost of of mining a bitcoin.

Wolf: 36:56

That's crazy. So uh, how many blockchains are there? Um, and I'm gonna talk just about uh Bitcoin for a minute for a minute. Um there's tens of thousands. You can have one of your own. You can download it and just look at it. You can get just a fraction of it. You don't have to get the actual um transactions that are in it. You can just get the headers that say what happened for each block. So that's a very uh lightweight version of the blockchain. How big is a blockchain? Right now the Bitcoin blockchain weighs in, if you've got a full one, just shy of 600 gigabytes. Uh if you set up a peer.

Jim: 37:52

It's not that big. For us, it's not that big. Yeah. But it's downloadable.

Wolf: 38:02

It is downloadable. You've got a fast connection, yeah. Um when you start up a brand new peer, and if you do that, there's already software that you can download that does the whole thing for you. Uh it will start to fetch the blockchain of whatever coin you're working with. Um it usually takes several days when you first start out to get the entire blockchain. Wow. And there are a great many peers. Um, but there's lots of ways for you to look at the blockchain. Uh you could have one of your own. There's software libraries that you can include. There's stuff in Python, there's stuff in C, there's stuff in C, there's stuff in Rust, whatever you want, um, there are libraries because the format of a block is very, very simple. The math problem to find the nonce is a hard problem, but what actually gets stored in the blockchain is simple. Um you don't even have to download the blockchain yourself. There are lots of peers who make uh give some kind of public read-only access to their blockchains. Uh they'll give you a viewer, uh, a web view. Uh maybe it only shows you the most recent couple of blocks, maybe it shows you everything. Um, but there's a zillion different ways to look. Um so I think uh what's left for me to say um is what how would you how would a normal ordinary person uh like me or Jim or any one of you actually come into possession of crypto? Why would we We have it? What would we do with it? How would we have gotten it in the first place? Um and the answer is, um, sometimes people want to pay with Bitcoin. Uh there are for instance, um, immigrants in the United States who are trying to help their families back home are often limited in the amount of cash they can send, wire, or transport. But Bitcoin, or whatever cryptocurrency, isn't regulated by those same rules. So they can send a great deal more Bitcoin and pay a great deal less in fees than they would otherwise. So ordinary immigrants get Bitcoin to send to their families. That's a thing. Um, you could easily be paid in Bitcoin. Um there are lots of places that want to use Bitcoin, that want to get Bitcoin. There are even, believe it or not, Bitcoin ATMs. Um there are services that will help you exchange your Bitcoin for whatever the currency is in your country. Now, usually these exchanges uh come with uh some unfortunate side effects. One is huge fees, um, a low fee might be 1.5%, a high fee might be 10%, they're gonna want to know who you are, all that know your customer stuff. They're gonna need to have pictures of you and your passport, all those things. Whatever it is that they need to know, they're gonna want to know it. You could also um uh go to a I don't want to say Craigslist uh or PayPal, but it's what I'm talking about is a person-to-person transfer of crypto to cash where you probably didn't know the person in advance, um and there are no identity requirements, and usually there are almost or no fees at all. Um that sounds attractive, but this is full of scams. You really, really have to be careful. So it's at the boundaries where you're turning your crypto into cash or turning your cash into crypto where problems arise. Um I think I have four things that I want to say um that are the key takeaways. Before I do that, though, I just want to make sure I've answered all of Jim's questions.

Jim: 42:54

Yeah, I uh I I have a lot of questions. I have to think about this for a while, though, to to put those into words. This is an awful lot to take in. Uh you you talked about the wallet and the uh public and private key pair. I I think if we're gonna talk about crypto, we gotta talk about the guy uh that lost his hard drive. Um and okay, there's a guy, uh James Howells. He's in Wales. And apparently in 2013, he had a hard drive with 8,000 Bitcoin on it. And it was a it was a hard drive in a computer. He was using for gaming, and the the computer overheated. He played around and moved things around, and he had a he had the hard drive, I guess, sitting on a shelf containing the private key uh that would unlock his 8,000 bitcoin, and somehow that hard drive got thrown away by accident. Um in 2013, I think that was worth about$75,000. So that's hard to lose$75,000. Today, it's worth about$800 million. Uh, that hard drive is still missing, it's in a landfill somewhere in Wales. He has tried everything to search the landfill. The city just won't let him. Uh, it's one of those deals where the city says, it's ours now. You threw it away. Once you throw something away, it doesn't belong to you anymore. It belongs to whoever you threw it away at. So it belongs to the landfill, which is owned or managed by the city. He has tried taking that landfill or the city to court to sue them to let him search that landfill. And imagine that. It it's it's the real idea of a needle in a haystack trying to find a hard drive uh in acres, acres, and acres of land uh that's at this point covered up with dirt and trash and everything else. Uh anyway, he has been unsuccessful in even trying to search for it. Um I uh I'm interested in that to see where it goes, but uh you've probably heard that story before. And I did a little research just to see what really happened, and it's apparently true.

Wolf: 45:15

That reminds me of how we started this whole show talking about a single pass key on a single phone and losing the phone. And the answer is redundancy. If you've got a private key and it's worth$800 million, you better have more than one.

Jim: 45:35

Or or$75,000 is still a lot of money. Um back that thing up.

Wolf: 45:42

Absolutely. Anything else on your mind?

Jim: 45:46

No, no, let's get to the summary. I uh I want to hear what uh what your uh what your takeaway is on this.

Wolf: 45:52

Alright, I've told you enough about how it works to get you started, but there's four specific things I want to say. First, crypto is not really anonymous. Um the people who can use it to hurt you can figure out who you are, and I'm mostly talking about the government here. They have the tools to know who owns what wallet. Second, crypto is both regulated and taxed, at least in the United States. Uh so there are laws and you do pay money. Um, a thing that was a surprise to me, the third item, legal uses of crypto outweigh the illegal uses. This stuff is legitimate. There are dangers, but crypto is something you might legitimately possess or invest in or spend or use to get things-whatever it's a real thing. It's it's time now. Maybe it's okay. I might even get some, who knows? And I'm I'm kind of I'm kind of backwards about some stuff. Um, and finally, a thing that I could say almost every time we talk is that there are scammers everywhere. Protecting your private key in your wallet is vital to keeping your money. Don't lose it. Don't get it thrown away, don't get it stolen, don't give it away. Um, stealing your private key is much easier than stealing US dollars out of your bank account. Um, especially since people know more about dollars and bank accounts than they do about private keys and wallets. Um, you can be tricked. I don't want you to be tricked. I want you to keep your money. Those four things, I think if you could only take one thing away from this show, it would be that. Um, and I think that's what I've got to say, Jim.

Jim: 48:01

Uh that's fantastic, Wolf. Uh I I certainly learned something here. Um I'm gonna have to re-listen to this episode to see what I missed. And I'm watching you talking about it. Uh uh so thank you for that. Uh I I want to say thank you for listening. If you made it this far, uh thank you so much for listening. Uh please tell your friends about this podcast. We want this to grow. Um if you haven't already subscribed, please do. You can find us wherever you find your podcasts. Uh, we're on all the services. Um if you'd like to leave a review, we'd sure appreciate that too. As I mentioned at the top of the show, if you have any feedback, we'd love to hear it. You can contact us at uh at runtimearguments at hackyderm.io. That's our Mastodon account. Uh, or you can send us an email at feedback at runtimearguments.fm. Uh and I will include those uh those links in the show notes as well. Um and that's it. Wolf, uh, got anything anything to say here at the end?

Wolf: 49:07

Uh I want to say I found this to be really interesting, and I I learned so much and corrected so many misconceptions. I hope that if you're listening out there, uh there was something interesting in here for you too.

Jim: 49:22

All right. Thank you very much. Uh looking forward to doing the next episode, and uh talk to you later. Bye.