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Wednesday, July 3 2019

Nouriel Opening
● Shitty behavior occurs in this industry -- scammers, criminals, so on
● Next to me is a gentleman who works with degenerate gamblers and suckers, not
accredited investors
● He allows them leverage 100x
● BitmexREKT says “fucked in the ass”
● No KYC, no AML
● Liquidation fund when people go into financial loss
● Insider trading desk at BitMEX, aka market making
● This is a description of how these markets work
● You can screw your clients and it doesn’t matter
● Officially US investors can’t participate
● BitMEX is just an example of everything that is sick and wrong in the industry

Arthur Opening
● I don’t even want to call you a professor, you went straight for me
● 100x leverage, so what [clapping]
● We don’t have any marketing, we don’t seek out people
● They’ve found an oasis
● People saw this phenomenon, real value, and they decided they wanted to speculate
● If we put some chickens on stage here and put QR codes on the chickens, we’d have $1
million wagered from the crowd in a few minutes
● We’re an honest platform

Nouriel: Is Arthur a crook?


● He makes money off of suckers
● We have regulations in all locations b/c people get hit by frauds and scams
● Arthur and the industry call people whales and suckers
● People in New York tell me they’ve been totally wiped up
● 20% of students in the US have used student loan money on cryptocurrency
● “These people don’t give a shit about anything… they make money of gambling”

Arthur: thoughts on the regulation point?


● Seychelles is a beautiful place, and we are regulated there
● Roubini may think NYAG and NYDFS is the only game and town, and we should take an
“ass fucking” from them
● I got out of that situation
● I don’t think everyone needs to follow the US
● Arthur gets asked how much he must pay to bribe the Seychelles authorities
○ “A coconut”, laughing
Nouriel
● There are rules b/c there are criminals and other bad people out there
● The POTUS said we can’t allow crypto to become the next Swiss bank account

Arthur
● Where is Bitcoin in all of this?

Referee: QUIET! No point in talking over one another

Arthur: What are the main benefits of crypto? Why is it a good thing, and why do we need it?
● WE need a choice in a world moving from analog to digital
● Physical cash is the most anonymous, but it will be stripped away
● Things will be monitored by governments and large corporations
● Open source software, cryptography and math is a great alternative to war and states to
manage financial transactions

Nouriel response
● Bitcoin is not scalable
● The revolution is actually happening in FinTech
● AI, Big Data, IOT will fix things
● Everything is already digital
● We have Alipay in China, a system in India and others like mPesa
● We don’t need your shit and your shitcoins, “we don’t need that cesspool of stinking
shitcoins”
● Everyone is talking their books 24/7

Arthur
● “You got paid to be here, didn’t you”
● WeChat Pay is very convenient, but you are getting all of your transactions viewed by
Tencent and the Chinese government
● This is fine when you pay for food but not when you are a political dissident
● Privacy is important
● It takes decades to scale: credit cards and traditional banking took decades
● 10 years of progress for Bitcoin is impressive
● Today, bitcoin does not compete on speed
● It could be 10x as fast and if people don’t use it, who cares
● “We need to get fucked by government” before we realize how important this is

Nouriel
● Bitcoin isn’t decentralized
● Mining, exchanges, etc are all centralized
● Core developers are judges, prosecutors, police and do what they want
● “It’s not secure, it’s not decentralized and it’s not even scalable”
● Cites Vitalik saying that crypto does not satisfy even one of them

Arthur response to centralization


● Security
○ $220B market cap represents a huge bug bounty, yet it has never successfully
ben hacked
● Exchange
○ “Don’t store your fucking Bitcoin on an exchange”
○ Hold your own keys
● Miners
○ Colluding doesn’t happen b/c it’s against economic incentives
○ It is not in their interest to violate these rules

Nouriel
● At a bank, if someone steals from me, I can get the money back
● At a crypto exchange, my money is gone for good if stolen
● Someone can come up to me at gunpoint
● Only way to be secure is to have it offline in cold storage
● Write your private key on some paper
● If you lose it, you’re “fucked for good”
● Money is stolen left and right every day
● Whereas in a credit card or bank, I can get my money back
● “I’d rather keep my fiat currency than you lousy crypto money”

Arthur
● Of course exchanges can get hacked, eg QuadrigaX
● If key people die at most exchanges, your money is safe
● There is a reason why in certain places, clunky bitcoin may be better than what we have
in the US and Europe
● Bitcoin is not being used to buy coffee, but we are only 10 years inn
● People will start to experience the joys and pitfalls of crypto with Libra

Nouriel
● You are wrong Arthur. Digital payments are much more used in 3rd world and
developing countries
● UPI in India, AliPay, etc are used elsewhere
● Payment systems outside the US are much more sophisticated than in the states
● It is happening every day in emerging markets, so stop the bullshit about emerging
markets, it’s a total scam, the people saying this are total scammers

Arthur
● Respond to Nouriel’s claim that emerging markets don’t need crypto
● Less than 1% of people own crypto today
● It’s clear that people don’t value it globally today
● But it’s worth more than zero
● People value financial privacy
● In 50 years, if Alibaba, Facebook and Google control everything, people will like that
thing that isn’t controlled by the large companies
● Bitcoin won’t be a niche market
○ Gold is a significant standard with value
○ People can exchange gold for a currency
● Today, it is too clunky to compete with centralized systems on performance, but it gives
you a long term choice

Nouriel
● The reason you don’t give a shit Arthur is that you want more suckers to make money on
● The reality is that there is no financial privacy, scalability, decentralization or security
● “It’s all talk. You keep saying things and repeat them and repeat them as if it’s true”
○ [crowd laughs when Arthur says “you do too”]
● Most shitcoins lost 95-99% last year, including some in the top 10
● Bitcoin fell 30% in one week
● This conference doesn’t even accept bitcoin
● All these suckers get suckered

Moderator: you repeat yourself 10x


● Why didn’t Bitcoin go into a hole to zero, why did it recover?

Nouriel
● “There are still tons of suckers” out there
● Tether is used to push up the price
● The Google searches on Bitcoin aren’t coming back
● There are a bunch of whales dumping Tether
● Systemic pump and dump with 5,000 separate chat rooms where they are planned, front
running by exchanges probably including yours and wash trading
● 95% of transactions are fake

Arthur: is the activity on exchanges artificial? It gives the impression of volume. Respond to
Bitwise
● “Bitcoin and crypto markets are the only real free market left in the world”
● Just about anyone can start a crypto exchange, but if you don’t have liquidity and do bad
things, I’m non coming back
● Charlatans can work for a little while, but eventually fucking the customer will make them
lose
● The term manipulation is used very very broadly
● The Big Stack Rule: if I have more money than you, I can move the market more than
you. If you think you, with your small amount of money can move the market, go fuck
yourself”
● Fair trading is price x priority
● People jumping ahead in priority is not manipulate

Nouriel: what do you make of Facebook Libra?


● They are saying it’s a cryptocurrency, but it’s not a cryptocurrency
● It’s going to private, permissioned, not trustless and centralized
● It is a symbol of crypto failing
● People talk about enterprise blockchain
● The corporate initiatives are “blockchain in name only”
● They are using these names b/c they are catchy
● No large entity would want to put a public blockchain on their balance sheet
● Everyone invests in blockchain “proof of concepts”, but we can’t find a way to implement
it
● Remittance study showed 43 case studies of using blockchain for social good proof of
concepts. Zero of these were successful
● All this nonsense that “we care about the poor” is bullshit
● Crypto is the mother of all boom and busts in history
● “Blockchain is the most hyped technology in human history; it’s no better than a
database or a spreadsheet”

Arthur on Libra
● “Libra is definitely not a cryptocurrency”
● Blockchain consortiums are generally a waste of money

Arthur on crypto getting enmeshed in scandals


● Responding to Tether -- are you concerned?
● “Tether is not a cryptocurrency, it’s a money market fund with us dollars “potentially”
sitting in a bank account”
● I found it amazing that they raised $1 billion from the crypto community in 2 weeks, and
the community wants to keep the biggest companies alive
● This is similar to Central Banks keep their ilk alive

Nouriel
● The bitcoin runup recently is totally connected to Tether

Arthur on where crypto is going in 5 years time


● It will be a trillion ndollar plus asset class which is still very tiny
● The volatility, the doomsayers, the acolytes will cause more people to check it out
● Most won’t buy, but those few who put a little money who do take this call action, we will
grow
● “This industry is going to blow the fuck up!”

Nouriel on 5 years from now


● 99% of shitcoins have lost most of their value
● Even Bitcoin is far down from the peak
● This will all go to zero
● “Museum of failed coins” will exist where people will collect bitcoin, ether and monero

Arthur’s response to Nouriel


● I’m optimistic in people having a choice
● There are problems in the world
● We all have devices, change is happening
● If you believe human society needs a choice in this new digital age, crypto is worth
considering