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Lindzanity – Episode 1 – Farbood Nivi | Convert video-to-text with Sonix

Announcer:
Howard Lindzon is the Founder and General Partner at Social Leverage. All opinions expressed by Howard and podcast guests are solely their own opinions and do not reflect the opinion of Social Leverage or StockTwits. This podcast is for informational purposes only and should not be relied upon for decisions. Guests may maintain positions and securities discussed in this podcast.

Welcome to the first edpisode of Lindzanity

Howard Lindzon:
Hey, everybody. Welcome to my first episode of Lindzanity. And I'm excited as the first guest to have Farbood, a friend of mine. And I'm not going to give his last name. It's like Madonna. And he's the Madonna of crypto. And so, Farbood is going to talk about Coinmine, and we're going to talk about crypto in the future.

Howard Lindzon:
Dude, welcome to Lindzanity.

Farbood Nivi:
Thanks for having me.

Howard Lindzon:
Guest number one.

Farbood Nivi:
Guest number one.

Howard Lindzon:
So, there's a little pressure that goes with that.

Farbood Nivi:
Am I the guest, or is this the guest?

Howard Lindzon:
Both.

Farbood Nivi:
Thanks.

Howard Lindzon:
This is Coinmine, everybody, but we're going to get to that. So, meet Farbood. Farbood is Canadian?

Farbood Nivi:
Canadian, yeah.

Howard Lindzon:
Born in Canada.

Farbood Nivi:
I wasn't born in Canada, but I grew up there since I was a little kid, so you know.

Howard Lindzon:
So, we have that in common.

Farbood Nivi:
Yeah.

Howard Lindzon:
I'm from Toronto. But we met through a friend, Brian Norgard. And so, I wanted him in my first show when I started Wall Street back in 2006. And that was a daily show. So, that was like it my whole business, was going to be the show. I'm not an actor. I'm not anything. I'm not a media person at the time. I just had an idea to do a show. And it was going to be a show about, like, trends. And at the time, I was so bullish on Apple, and the retail stores, and that was our first show.

Farbood Nivi:
How long ago was this?

Howard Lindzon:
It's 2006.

Farbood Nivi:
Okay.

Howard Lindzon:
And so, flash forward to 2018, obviously, there's a low budget, Lindzanity. And the idea is talk about trends, money, millennials, culture, fashion, technology, investing, and everything about that-

Farbood Nivi:
All my favorite things.

Howard Lindzon:
… is crypto.

Farbood Nivi:
Yeah.

Howard Lindzon:
And I know maybe if the world has all this knowledge, I know this little bit-.

Farbood Nivi:
Yeah.

Howard Lindzon:
… about crypto enough to be dangerous. And you know a lot more, but I can't put it in context how much you know.

Farbood Nivi:
Everyone in crypto knows very little about crypto. It's part of the nature of something that's that big, and moving that quickly, and that new.

Howard Lindzon:
And so, when Apple, in 2006, wasn't new, and the stores were like laughed at, and had 60 or 70 stores, and it's like, "You can't do retail," but in my mind, I knew it had kind of a jumped. Like retail was the thing. That was going to be their moat.

Farbood Nivi:
Right.

Bitcoin and crypto and why Farbood Nivi is a perfect guest

Howard Lindzon:
And so, Wall Street was about trends, and since the show is going to be about basically trends too, just a podcast, no better topic than polarizing, exciting, scary, out-there topic then Bitcoin and crypto. And then, compound that with how to make crypto or how to mine crypto. So, you're the perfect guest.

Farbood Nivi:
Thanks.

Howard Lindzon:
No pressure.

Farbood Nivi:
Thanks.

Howard Lindzon:
And we'll either look really smart in 10 years and go, "Wow, Howard had Coinmine on as his first guest."

Farbood Nivi:
That's right.

Howard Lindzon:
Or you'll be a hunted man.

Farbood Nivi:
Yeah. I mean-

Howard Lindzon:
So, you have to live with it.

Farbood Nivi:
That's fine. I'm okay with all that. I mean, bullish on Apple in 2006, that's about-

Howard Lindzon:
It feels the same.

Farbood Nivi:
… one-quarter of the market cap than it is today. So, that sounded like a pretty good call. So, if we go the same way with Bitcoin, I mean, I think we may go more. And, you know, the past couple of weeks, we've been seeing things move. But quite frankly, even when it doesn't move, I think it's actually important and interesting when, you know, especially bitcoin's price stays consistent for, you know, half a year. That says a lot about it as much as when it's highly volatile.

Howard Lindzon:
So, when did you get the bug?

Farbood Nivi:
Probably-

Howard Lindzon:
Do you remember?

Farbood Nivi:
What is it? 2019? So-

Howard Lindzon:
It's April 2018.

Farbood Nivi:
Yeah.

Howard Lindzon:
And Bitcoin today-

Farbood Nivi:
'19.

Howard Lindzon:
Oh, 2019.

Farbood Nivi:
Yeah.

Howard Lindzon:
And we are crypto right around 49.

Farbood Nivi:
Yeah, a bit about that.

Howard Lindzon:
Bitcoin's about 5K. What's the market cap, give or take?

Farbood Nivi:
You got me. It's above a hundred.

Howard Lindzon:
Okay. Let's say it's 100 billion.

Farbood Nivi:
Yeah.

Howard Lindzon:
It's been as high as 200-300 billion.

Farbood Nivi:
Yeah.

Howard Lindzon:
Almost 400 billion. So, bear market, crypto winner, whatever we want to call it. And it's been — you know, luckily, for me, it doesn't change my life, but I'm over the hump of believing. Now, my belief comes from I hate the banks, I don't trust the financial system. I mean, I use it, I respect it, I pay my bills, I don't get nervous when I send a wire, but I hate my bank for whatever reason, and there's a million reasons to hate it. And if I'm middle America, or I'm poor, and I overdraft my account, it's $20. And as we were talking on the way over, someone just did a Bitcoin transact-

Farbood Nivi:
$63 million, yes.

Howard Lindzon:
$63 million transaction for $4.

Farbood Nivi:
That's right.

Howard Lindzon:
So, you have something over. My son-

Farbood Nivi:
Probably sent over in like 10 minutes.

Howard Lindzon:
My son sent a Venmo that he couldn't clear himself. He didn't have money in his account. It cost him $7.50.

Farbood Nivi:
That's right.

Howard Lindzon:
Someone just cleared $63 million on Bitcoin for $4.

Farbood Nivi:
Yeah.

Howard Lindzon:
That's why I'm bullish. It's little anecdotes like that.

Farbood Nivi:
And, sometimes, wiring from one side of the planet to the other is a week. You know, you get an investor, they send their wire, and they're like, "Yeah, you should receive it in your bank sometime next week." People complain that a Bitcoin transaction can take 10 minutes or if it gets really busy, it might take a day or two. But it takes a week to wire, and it costs you hundreds of dollars.

Howard Lindzon:
The difference is you have some faith that you can go and yell at somebody if the transaction doesn't happen. Bitcoin's just that next leap of faith. So, there's where we've got to get over the hump. But the point is — so, when did you get the bug? And we'll get into all the rest.

Farbood Nivi:
2015.

Howard Lindzon:
And so, who got you into it?

Farbood Nivi:
Just, you know, living in San Francisco, it's tough to not know about it. You know, I think, probably in 2015, most people outside of San Francisco's barely had even heard of it, but people had been talking about it in San Francisco for five years. And I think it started in 2009.

Howard Lindzon:
So, it didn't resonate with you until then?

Farbood Nivi:
It didn't really resonate with me until then, but, I think, it was probably mostly because I was just busy with startups, and so didn't really take the time to sit down, and look at it, and think through it. But I think when you do, it's tough to not kind of be bit by the bug when you actually, like, take a little bit of time.

Howard Lindzon:
And where were you working at the time?

Farbood Nivi:
I was working on a previous startup, I think, Learnist.

Howard Lindzon:
Okay. And your brother's famous.

Farbood Nivi:
Right, right.

Howard Lindzon:
Is he your one sibling?

Farbood Nivi:
Just one sibling. Yeah.

Howard Lindzon:
Your brother is the co-founder of AngelList.

Farbood Nivi:
Yeah. He started AngelList with Naval.

Howard Lindzon:
And what's he doing now?

Farbood Nivi:
Still doing some AngelList stuff and-.

Howard Lindzon:
He's living in LA like you?

Farbood Nivi:
A lot of advising, you know.

Howard Lindzon:
But he's a legend.

Farbood Nivi:
Citizen-

Howard Lindzon:
I didn't know you and didn't even connect the name. Many people are, but when I met you, I didn't connect that it was-

Farbood Nivi:
Yeah.

Howard Lindzon:
… you know, Nivi's brother.

Farbood Nivi:
He's slowly coming back out of the woodworks. You know, he's always been advising entrepreneurs like myself.

Howard Lindzon:
Is he older?

Farbood Nivi:
He's a couple of years older than I am.

Howard Lindzon:
Is he a Bitcoin believer or is he skeptical?

Farbood Nivi:
I'd say he's a believer, but he's not like a techno geek like I am. He's not a techno file like I am. You know, he likes to — the main thing he likes it do help entrepreneurs, to be honest.

Howard Lindzon:
Okay.

Farbood Nivi:
That's [crosstalk].

Howard Lindzon:
So, he's helping you. He's not part of the religion of it. How do you separate the religion from just building a business? And we'll get to Coinmine in a bit. How do you separate it? And what made you take the leap from like hearing about it, to believing about it, to starting Coinmine?

Farbood Nivi:
I don't think you can separate them. There's a lot of belief required in getting into anything that's new, that's trying to be big. You can't really separate the belief from it. The piece that, sort of, made me feel like we had to build Coinmine really comes out of the philosophy behind crypto, the philosophy behind Bitcoin. I think of it in terms of the printing press a lot. I talk about how, you know, the Gutenberg — the printing press existed for a long time, but only the people in power could use them. They were expensive, you couldn't print much, and it allowed people to control information and knowledge.

Farbood Nivi:
Gutenberg's innovations made it easy for anyone to do the printing press. It's sort of the situation, you know, where a genie gets out of the bottle and can't be put back in. And in certain places at certain times, it was illegal to have a printing press, and you might be put to death for having a printing press.

Howard Lindzon:
Well, you still may.

Farbood Nivi:
You still may.

Howard Lindzon:
Yeah.

Farbood Nivi:
But the genie couldn't be put back in the bottle.

Howard Lindzon:
Got it.

Where crypto all started – Satoshi and Bitcoin mining

Farbood Nivi:
And so, with crypto, you know, you get these. You know, it started out with Bitcoin mining. And part of the beauty of crypto is this insane idea that Satoshi came up with where it balances all these different parties together and creates an incentive structure for people to share their computing power. They get rewarded in this thing where, you know, if you were mining Bitcoin in 2010, and Bitcoin is essentially worth pennies, you're kind of like a crazy person. Why would you give up a perfectly good laptop to mine Bitcoin that's worthless?

Howard Lindzon:
On an A6-

Farbood Nivi:
No, no. This is like literally on laptops people were mining it back in the day.

Howard Lindzon:
But how? Like the processes were-

Farbood Nivi:
Yeah, it's fine because there wasn't that much hash power. So, a normal processor could mine Bitcoin.

Howard Lindzon:
And what's hash power?

Farbood Nivi:
That's just the amount of computing power that's sort of backing the network.

Howard Lindzon:
And back then, it didn't take that much?

Farbood Nivi:
Back then, at the beginning, it was just done on laptops.

Howard Lindzon:
Okay.

Farbood Nivi:
Right? So, you're a crazy person if you're wasting your laptop, and your electricity-

Howard Lindzon:
And your time.

Farbood Nivi:
Yeah, because you had to download all the software. You'd not have to know how to do all that stuff. So, very few people-

Howard Lindzon:
But you had to believe it would be worth more.

Farbood Nivi:
You had to believe in the mission.

Howard Lindzon:
Yeah.

Farbood Nivi:
If you believed it was going to be worth more, you were probably still kind of crazy. You just bought into the mission, right, thinking-

Howard Lindzon:
Got it. You need [crosstalk] five cents.

Farbood Nivi:
… thinking that Bitcoin was going to be $20,000 when it was 10 cents.

Howard Lindzon:
You didn't even think it was — you didn't think it would-

Farbood Nivi:
Nobody was running with that in their head. There was nobody who's running the math in their head of doing that.

Howard Lindzon:
Right, right.

Farbood Nivi:
That's why most those people became accidental billionaires, you know. Not like, "Oh, yeah, I knew Bitcoin was going to be $20,000 when I was mining it in 2010." You didn't, but you believed in the mission. You were just on the, — you know, getting into the total global economic collapse.

Howard Lindzon:
It's only [crosstalk].

Farbood Nivi:
Right, just after 2008. You know, the Times article about banks getting bailed out is in the original Bitcoin block, the genesis block. We printed on the cover of our coin mines-

Howard Lindzon:
Let me see. Let me see. Oh, the Times. That's a great idea.

Farbood Nivi:
And all this is the data from the first block. So, a large part of why Satoshi did that was as, sort of, a bit of a — you know, don't want a middle finger to the system, but like an alternative.

Howard Lindzon:
It was like you created it.

Farbood Nivi:
Yeah, right. So, you bought into that mission. And, you know, then, we got into a situation where people figured out that they could make specific circuits called A6 that only did Bitcoin calculations, basically, making it so that instead of like tons of people having it on their laptops, it now collapsed to very few people basically controlling all these hash power.

Howard Lindzon:
That was dangerous though.

Farbood Nivi:
Yeah, that can be dangerous.

Howard Lindzon:
Okay.

Farbood Nivi:
And so, it became — you know, theoretically you could go buy a little antminer that's an ASIC machine and, sort of, decentralize this again, but it's difficult. And so, I kind of, you know, lovingly kind of refer to what we built as the Gutenberg version of the miner.

Howard Lindzon:
Yeah, I call it the easy bake oven.

Farbood Nivi:
Yeah, the easy bake over.

Howard Lindzon:
I'm from a very different generation. So, we had these ovens that cost — the parents to pay for this hunk of steel that you'll plug in the wall-

Farbood Nivi:
They're probably $40, which is maybe a lot.

Howard Lindzon:
… and your sister would make two cakes in it, and then get bored of it. And I would melt GI Joe dolls in it. I'm 10 years old. And that was the easy bake oven.

Farbood Nivi:
Yeah.

Howard Lindzon:
This is an easy bake oven. But when you plug it in a wall, instead of making a cake, it makes money.

Farbood Nivi:
It makes money. It makes you Bitcoin.

Howard Lindzon:
And what's funny is when — and I'm hopping ahead here. The biggest laugh is when people go, "What's the ROI why on this?" And I'm like, "What was the ROI on an easy bake oven that your parents spent $300.?"

Farbood Nivi:
Well, what was the ROI on mining Bitcoin on your laptop in 2010? You were just made fun of.

Howard Lindzon:
Yeah. And what's your ROI on learning how to invest and trade, when you're buying penny stocks, and you're getting tips from your friends, and you're blowing thousands of dollars of your money, which most people still do.

Farbood Nivi:
Yeah.

Howard Lindzon:
So I look at this as I'm trying to get educated. So, what made you think, okay, of all the crypto business I can get into, why mining?

Farbood Nivi:
So, to me, you know, there was a ton of people doing exchanges. There were a ton of people ICO'ing protocols all over the place. None of that really appealed to me. I like the core of the mission more than anything else, this decentralizing information and knowledge. Money is one of the most important types of information that we have.

Howard Lindzon:
So, Gutenburg.

Farbood Nivi:
Yeah. So, supporting that seemed to me like the most interesting place to spend my time.

When Coinmine was started and why?

Howard Lindzon:
Okay. So, when did you start Coinmine?

Farbood Nivi:
We started Coinmine just about 12 months ago.

Howard Lindzon:
Okay. So, it was luck what happened, I just met Brian.

Farbood Nivi:
Yeah.

Howard Lindzon:
And the first thing he came out is, "You got to meet Farbood."

Farbood Nivi:
It was in New York actually.

Howard Lindzon:
Yeah, it was in New York. Brian Norgard, who's like almost a co-founder, I guess.

Farbood Nivi:
Basically, yeah.

Howard Lindzon:
And built the app for Coinmine. He says, "You got to," you know. And I'm like, "I was into crypto, but not — I was into it because of the exchange." I had an investment in eToro, and Robin Hood, and obviously running StockTwits. So, I just knew about it from a price, and trading, and, you know, hype, you know, because a lot of the CEOs we're talking about it.

Farbood Nivi:
Totally.

Howard Lindzon:
I don't really understand it. I still can't say I fully understand, I'm starting. You know, you're teaching me, and I'm understanding it more or more. But where are we at in the curve of guys like me kind of believe but like do want to put all our money into it? We still believe as bad as the government is that there's going to be a parallel, a best of parallel universe where governments are going to continue to print money and do stupid things, and mining and crypto should be interesting, but will never be currency per se. So-

Farbood Nivi:
Oh, I think it will. But one of the most important things I think Bitcoin and crypto can do is actually just get the existing players to change their behavior and get them to improve their behavior.

Howard Lindzon:
And have you seen that happen?

Farbood Nivi:
That's a good question. I don't know. I mean, you're seeing banks getting into crypto, depending on how they want to get into it. If they want to get into it in the way that inspires the same confidence and a mission-driven purpose that Bitcoin has, yes, they'll have to change their behaviors. Like if you can send $63 million to someone for $4.50 as a fee in ten minutes, now, the bank has to compete with that.

Howard Lindzon:
Yeah.

Farbood Nivi:
Right?

Howard Lindzon:
Yeah.

Farbood Nivi:
So, maybe they can't charge you this much.

Howard Lindzon:
Plus it's different, like you don't know who the players are. I mean, it's even better than somebody-

Farbood Nivi:
Yeah, in the-

Howard Lindzon:
It's not about just the money, it's about security and it's about-

Farbood Nivi:
That's right.

Howard Lindzon:
… and know who the other party is.

Farbood Nivi:
Every country is different. Some countries are more scandalous and more corrupt than others. Some countries, the people in charge completely destroy the economy on a regular basis. The average fiat currency I think lives about 25 or 35 years before it's gone. The oldest one ever is the British Pound. The US Dollar has lost 90% of its value in the past hundred years. We printed four times more money than we had in 2008 because of the financial crisis. Most of these people admit they don't even know what they're doing, and they're trying to — and we're trusting our entire while civilization.

Howard Lindzon:
Well, and we said it. Jamie Dimon, even if he really believed, he can't really make a bet because he'll be dead or out of power anyways.

Farbood Nivi:
Yeah, that's right.

Howard Lindzon:
So, he'll get-

Farbood Nivi:
He's been sentenced.

Howard Lindzon:
He has a risk of getting fired if he goes all in on crypto.

Farbood Nivi:
That's right.

Howard Lindzon:
And if the stock went to 70 from a hundred, people would start questioning, "What are you thinking?" even if it was the right thing-

Farbood Nivi:
I mean, the disruption never comes from the top down. It comes either from the bottom up or from the side.

Howard Lindzon:
So, that's why people — I think, that was my point is like if people are looking to Warren Buffett, they have no — even if they wanted to believe, like who cares if they believe or not because even if they wanted to believe and spend every last minute of their lives working on it, they're not going to see the benefits of it.

Farbood Nivi:
Marc Andreessen did a great interview pretty recently. And I guess there's this New York Times reporter that he swears the New York Times essentially hired just to trash the internet when the internet was coming out. And you look at these articles that they were writing about the internet being a fad, no one's going to use it, no business will be done on the internet was what the New York Times-

Howard Lindzon:
The Times.

Farbood Nivi:
… was proclaiming to everybody. So, if you were looking to the New York Times to, you know, predict the future of business, information, communication, it wasn't going to be the internet. Yeah. I think we're going to look back at crypto and Bitcoin in 10 years, 20 years, and it's going to be the same thing. You're going to read these articles about people calling it all a joke, and the whole world will be running on this system.

Howard Lindzon:
No one will care, they'll move on to the next thing. So, you go from an idea to building this beautiful product.

Farbood Nivi:
Yeah. Thanks.

Howard Lindzon:
So, we end up being, you know, disclosure, Social Leverage, our fund, is an investor, but, more importantly, that you're educating me on this. And I come out up from an old person who just wants to experiment. I've blown my brains out trading and doing stupid things. So, this, to me, isn't about the end unit cost to me. If I'm going to truly understand this, no different than trading a stock, I got to have a brokerage. I got to understand this. So, you decided you want to make a machine, and what happened next?

Farbood Nivi:
So, I started working on the hardware and, sort of, hacking together the software part of it. My Co-founder, Justin, who's a-

Howard Lindzon:
You can't play games on this, and you can't get online on this?

Farbood Nivi:
Not yet.

Howard Lindzon:
Yeah. But the point is, so, you had to go build a special machine.

Farbood Nivi:
Yeah. So, we built it. Built the-

Howard Lindzon:
So, you got your founder friend. You founder, your co-founder.

Farbood Nivi:
He's the designer-

Howard Lindzon:
Of Pebble?

Farbood Nivi:
Yeah, that's right. He designed Pebble Watch 2.

Howard Lindzon:
So, he almost got to go. Like at one point, Pebble was $750 million valuation.

Farbood Nivi:
Yeah.

Howard Lindzon:
So, he's seen the other side, and then had it come crashing down on him.

Farbood Nivi:
Yeah.

Howard Lindzon:
So, you dragged him.

Farbood Nivi:
He sort of dragged me. He's the one who came up with this.

Howard Lindzon:
Okay.

Farbood Nivi:
We were roommates in San Francisco, and I've been building computers since I was a kid. My first startup was in high school selling computers that I'd made. So-

Howard Lindzon:
You just go get the parts and make it?

Mining Ethereum

Farbood Nivi:
I decided to make a miner myself, horrible decision, didn't leave the house for five days, turned into a crazy person. Finally, I got the thing up and running. And it was just like-

Howard Lindzon:
You were mining a Ethereum or Bitcoin?

Farbood Nivi:
Yeah, I was mining a Ethereum.

Howard Lindzon:
Okay.

Farbood Nivi:
And it was this ugly gnarly thing that you wouldn't even know where to put it because it was disgusting.

Howard Lindzon:
Right.

Farbood Nivi:
And then he decided to come up with the idea of doing what he called the Apple of crypto devices. He's like, "What if Apple did something like this? What would it look like?" And my first response was, "I don't know if it's possible."

Howard Lindzon:
God bless him for his big vision.

Farbood Nivi:
For sure.

Howard Lindzon:
Okay.

Farbood Nivi:
And my response was, "I don't think it's possible," but I couldn't get it out of my head.

Howard Lindzon:
But you have this huge machine, and this is still, theoretically, a big machine.

Farbood Nivi:
That's right, yeah.

Howard Lindzon:
Okay.

Farbood Nivi:
I couldn't get it out my head. And when it clicked for me was when I realized that we could control the device with an app. And, now, if you have an app-

Howard Lindzon:
That's what got me excited.

Farbood Nivi:
That's what gets me excited too because, now, when the whole experience is through an app, you can start doing really interesting things, you know. So, now, Coinmine is a combination of hardware, software, and services. So, you plug this into your wall, you connect it to your WiFi, you're pretty much done with it.

Howard Lindzon:
And it disappears.

Farbood Nivi:
That's right.

Howard Lindzon:
Like I have it in my house, and just-

Farbood Nivi:
That's right.

Howard Lindzon:
… other than noise, in the closet, it disappeared.

Farbood Nivi:
The rest of your experiences is in an app.

Howard Lindzon:
Yeah, the rest of my experience-

Farbood Nivi:
You open it up and you see your crypto go up a little bit.

Howard Lindzon:
And they'll interspersed the app into a small show.

Howard Lindzon:
Cool, yeah. And you'll see it scroll up. You'll have a little more crypto. So, that's going on. But then, soon you'll be able to open the app, and we'll have services available to you. So, if you've been making some a Ethereum, maybe you'll be able to work with compound finance that earns you interest on your Ethereum.

Howard Lindzon:
Yes. Instead of it just sitting in your account.

Farbood Nivi:
Instead of just sitting there. Same thing with Bitcoin, Blockify is doing, I think, 5%-6% EPR on your Bitcoin through them. Coinbase custody is offering staking as a service, where you can stake your Ethereum and, sort of, get a little bit of fees that you earn for staking your Ethereum. So, now, you're doing all of this through our app. You're turning your electricity — literally dollar cost averaging your electricity into crypto of your choice.

Howard Lindzon:
Yes. That's the big, what people don't understand. You're turning electricity into money.

Farbood Nivi:
Yeah.

Howard Lindzon:
And, obviously, that's-

Farbood Nivi:
And you can plug it in at the office, or the dorm, or your parents' place, you're not even covering the electricity cost.

Howard Lindzon:
Eventually, this becomes money, you're just carrying it with you, and just taking other people's electricity.

Farbood Nivi:
That's right.

Howard Lindzon:
Yeah.

Farbood Nivi:
And, eventually, we may just release the operating system, so that you can turn-

Howard Lindzon:
And you call that Mine?

Farbood Nivi:
We call it MineOS.

Howard Lindzon:
So, that's the big idea too. But that, we'll get into that. But, eventually, you see the hardware disappearing?

Hardware is commoditized

Farbood Nivi:
I mean, the hardware is — hardware is, ultimately, commoditized everywhere. So, the way you can do hardware is you have to go to the edge of the commoditization, right? And so, we've been lucky to do that in the sense that our hardware person, our founding hardware person is a native Chinese.

Howard Lindzon:
So, there's three of you.

Farbood Nivi:
Yeah. I mean, there's four of us. There's a software, sort of, lead as well. But our hardware guy has been building, you know, hardware in Shenzhen for years. And that's the only way you can really do hardware is to go to that edge of commoditization where someone really can't out-commoditize you.

Howard Lindzon:
And you did that. So, I remember your trips to Shenzhen.

Farbood Nivi:
Yeah.

Howard Lindzon:
So, was that the first? He took you, didn't he?

Farbood Nivi:
I went, yeah, yeah. I mean, he's there most of the time. I went a little bit crazy when I went there. It was like a pretty eye-opening experience.

Howard Lindzon:
That was just last year.

Farbood Nivi:
It was just last year. And it was my first trip to China. And Shenzhen is, obviously, a super-modern city. And you walk around at night.

Howard Lindzon:
10 million people.

Farbood Nivi:
Yeah. And it feels like you're in the middle of New York. Everybody dresses like you'd do in New York, and they're hanging out, and all the young people are out. The city is beautiful. I actually wrote a whole twit storm on my flight back-

Howard Lindzon:
I remember, yeah.

Farbood Nivi:
… that sort of went off a little bit. And some people got angry with me because I think they thought I was excusing the Chinese government for everything its ever done of its entire history. But the point that I was making is we went into a bookstore. I think it was 10:00 p.m.. There's blockchain books everywhere, There's kids sitting on the ground just consuming these books in the bookstore. That's where they go to find dates and stuff. And I was just really sort of enamored and blown away by it all.

Howard Lindzon:
Eventually, we can argue forever. Some things move forward whether we like it or not.

Farbood Nivi:
That's right.

Howard Lindzon:
So, you go to Shenzhen, you scope out the machine, that's where these are made. They're designed in Los Angeles basically, and engineered in Los Angeles-

Farbood Nivi:
That's right.

Howard Lindzon:
… and put together in Los Angeles, but you still are partnered with China?

Farbood Nivi:
Yeah, to make all the casing.

Howard Lindzon:
And so, I have one, what are these going to cost?

Farbood Nivi:
So, right now, they retail for $799.

Howard Lindzon:
And you can go at coinmine.com.

Farbood Nivi:
coinmine.com.

The future of crypto

Howard Lindzon:
And tell me about the future. Like, let's talk about crypto in the future. The future, as I see it, is people are arguing over price. Where do you think, in terms of, you know, what's happening, interesting, do you care what the price is? You, as a founder, in this industry, where does it matter to you?

Farbood Nivi:
I think usage is more important than price in the end because what we're trying to do is not make a little — we're not trying to get 1% of the human population to make a bunch of money. We're trying to get 100% of human population using a whole new system.

Howard Lindzon:
Yeah.

Farbood Nivi:
Right?

Howard Lindzon:
And so, this powers a whole new system. Let's get people to understand that. Why is it — we're maybe 1% global. What do you think?

Farbood Nivi:
My guess is it's under 5%. It's a few percent probably. In some places like Korea, it's enormous.

Howard Lindzon:
What's enormous?

Farbood Nivi:
In South Korea, I think 80% of millennials own some crypto.

Howard Lindzon:
Wow.

Farbood Nivi:
And in the United states-

Howard Lindzon:
And what did they use as a wallet, per se, or do you know?

Farbood Nivi:
Probably one of the many different exchanges there, but they're very techno-savvy, and they get it. It's easy for them.

Howard Lindzon:
Yeah. They don't have enough money that they care, per se.

Farbood Nivi:
Yeah.

Howard Lindzon:
And so, they got a couple hundred bucks on the blockchain-

Farbood Nivi:
That's right.

Howard Lindzon:
… or on crypto, they don't care.

8% of US own some crypto

Farbood Nivi:
But even in the United States, I think some 8% of the US own some crypto. And if you look at like bitcoin's price, for example, bitcoin's price dropped, you know, 80% from its all-time high.

Howard Lindzon:
And most all dropped 90% to 95%.

Farbood Nivi:
That's right.

Howard Lindzon:
The computing power that's backing them did not drop that much.

Howard Lindzon:
Yeah, that's the important thing.

Farbood Nivi:
That's a really important thing to keep in mind because those people are putting literal skin in the game, right, especially if they're technically underwater at the moment in terms of their electricity, your CapEx and OpEx, for what they're able to pull out. They didn't all closed shop. You'll see people with-

Howard Lindzon:
I have friends that closed shop.

Farbood Nivi:
… closed pictures of A6 thrown into the street. There's some of that.

Howard Lindzon:
Yeah. The same thing with bikes and scooters.

Farbood Nivi:
Seriously.

Howard Lindzon:
There's no different.

Farbood Nivi:
You'll see it in San Francisco there.

Howard Lindzon:
Yeah.

Farbood Nivi:
They're just literally throwing it in the streets.

Howard Lindzon:
People, they're those like, "Wait. You're talking about mining when we're doing this shit with bikes, and scooters, and all these other things, just throw in the river.

Farbood Nivi:
That's right. So, we didn't see the computing power drop 80%.

Howard Lindzon:
Exactly.

Farbood Nivi:
It's basically what it was when it was at its all-time high. So, people are still bullish on — they're using it, right? They're making it happen. I think it would've been a real big problem if we've seen bitcoin's hash power drop 80% because that's where you're like, "Okay, this whole thing could just disappear overnight if that's if this is what's happening, if people are literally just shutting the whole thing down," but they didn't. And that's what's important. That's what says a lot more than price.

Howard Lindzon:
I mean, people didn't mind losing a little bit if they're mining on the edge on their own. They didn't care if they were losing a little bit. Like us, like we're not going to do the ROI even though the ROI should work. We're not thinking about that.

Farbood Nivi:
Yeah.

Howard Lindzon:
We're just thinking about what could be.

Farbood Nivi:
Yeah. And we call it — We, also, you know, if you're talking in financial terms, you can kind of look at this as plug-and-play speculation.

Howard Lindzon:
Yeah.

Farbood Nivi:
Right? Grin is a really popular cryptocurrency that's out.

Howard Lindzon:
In terms of new-

Farbood Nivi:
It's new. It just came out in January.

Howard Lindzon:
I mean, a new — is it software? It's a staked software.

Farbood Nivi:
No, it's like Bitcoin.

Howard Lindzon:
Okay.

Farbood Nivi:
It's proof of work.

Howard Lindzon:
Okay.

Farbood Nivi:
And, in fact, even Bitcoin maximalists don't talk too much trash about Grin because it's pretty solid. It's sort of pseudo anonymous like Bitcoin. We don't really know who the original founder was. It's proof of work. So, it's not this, sort of, just — it actually needs computing power to do it. And currently, it's worth $2.50 for a Grin.

Howard Lindzon:
Yeah.

Farbood Nivi:
Now, if you're grin-bullish, you're not going to mine it and sell it at the end of the week for $2.50. You're going to mine it and hold it for two or three years because you think Grin's going to hundreds of dollars or thousands of dollars. If it does, and you do, then this device will make you tens of thousands of dollars, but you have to believe that, and that has to happen.

Howard Lindzon:
And you have to do your own work.

Farbood Nivi:
Yeah.

Howard Lindzon:
It's no different than stocks, except you are the market.

Farbood Nivi:
That's right.

Howard Lindzon:
So, I was mining Grin at the beginning at like $5-$6.

Farbood Nivi:
Good. It didn't have a couple of issues. It's still young, yeah.

Howard Lindzon:
Then, I switched to Ethereum because I just got sick of seeing, you know. And I don't know what I'm doing other than, you know, open up the app.

Farbood Nivi:
Technically, Ethereum makes you-

Howard Lindzon:
And, literally, what's beautiful about the app is I can go Ethereum, Monero, Zcash, and Grin. I don't even know if you do Grin right now.

Farbood Nivi:
Right now, Grin's having some issues. So, we just pulled it down a little. It'll be back the next month or so.

Howard Lindzon:
For people who have Grin, it's still there.

Farbood Nivi:
It is still there, yeah.

Howard Lindzon:
So, I switched to Ethereum, but, you know, that's why the app is so important. People need to see, and interact, and interface with their money. You can't just have a piece of hardware, and you go, "I'm going to forget the password." So, how do you take all that out of it? What's the other things that you're think about? Forgetting the hardware. So, now, I'm mining Ethereum.

Farbood Nivi:
Yeah.

Howard Lindzon:
Okay.

Farbood Nivi:
I mean even simpler.

Howard Lindzon:
So-

Launching Bitcoin mode

Farbood Nivi:
We're going to launch here in the very near future is what we call Bitcoin mode. And so, what the device will do is algorithmically-

Howard Lindzon:
Because, right now, you can't make Bitcoin on this?

Farbood Nivi:
Right now, it does not make you Bitcoin. So, when we launch Bitcoin mode, it will-

Howard Lindzon:
Let's move this off to the side.

Farbood Nivi:
When we launch Bitcoin mode, it will algorithmically mine whatever converts to Bitcoin the best.

Howard Lindzon:
So, that sweeps your convert.

Farbood Nivi:
And we just convert it.

Howard Lindzon:
So, it just sweeps your account.

Farbood Nivi:
That's right. And because everything in crypto is, sort of, you know, digital native, right, I can just have a software engineer do all of this. We don't need to do deals with banks, and we don't need to do business partnerships. It's all just done by one person sitting at a computer. So, you don't know what it will be powering. It could be powering Ethereum, Monero, Zcash, some other thing. It will algorithmically power whatever converts to Bitcoin. It will convert it to Bitcoin for you, keep it in your Bitcoin wallet. And then, again, for working with folks like Blockify, you'll be able to earn interest on that Bitcoin.

Farbood Nivi:
Or it also shifts with what's called a Bitcoin Lightning node, which is sort of these peer-to-peer payment systems. And if you fund your Lightning node with a little bit of Bitcoin, and other people send their payments through your channel, they call it, you'll earn a little bit of a fee. So, it'll earn you Bitcoin, and then earn new fees on your Bitcoin. And, again, if you're bullish on Bitcoin, you think it's going to $100,000 in five years, you're going to do great. If you think Bitcoin is going into the ground, then I recommend you have nothing to do with crypto at all. So, that's the real choice to make. It's not that complex. It's like decide if you think it's going to the moon in a few years, make your decision based on that.

Howard Lindzon:
And what makes eventually the price go up in the end?

Farbood Nivi:
Usage.

Howard Lindzon:
It's usage?

Farbood Nivi:
Usage.

Howard Lindzon:
And so, with usage, how does that make the price go up? So, explain that.

Farbood Nivi:
I mean, the bottom line is there's 21 million theoretical Bitcoins will ever be made, but don't even get close to that because millions of Bitcoin have already been lost forever.

Howard Lindzon:
So maybe there'll be 16 million.

Farbood Nivi:
16 to 17 million ever. Now, the cool thing about Bitcoin is each Bitcoin is divided into 100 million Satoshis.

Howard Lindzon:
Yeah. I think people don't understand this, you can buy fractions of them.

Farbood Nivi:
Yeah, and people, we kind of think that Satoshis will be the dollar of the future.

Howard Lindzon:
Bad marketing. What the fuck is Satoshi?

Farbood Nivi:
That's fair, yeah.

Howard Lindzon:
You know, maybe dollar sounded dumb at the beginning and pennies but-

Farbood Nivi:
That's fine. Call them dollars. It doesn't-

Howard Lindzon:
Yeah. I think that's part of the marketing and branding of others. Beyond Bitcoin, the branding has been terrible.

Farbood Nivi:
The branding has been terrible. Bitcoin is a great brand.

Howard Lindzon:
Yeah.

Farbood Nivi:
Yeah. But in each Bitcoin, there are hundreds of millions of smaller pieces of it.

Howard Lindzon:
Right.

Farbood Nivi:
So, it doesn't matter if a single Bitcoin is worth a billion dollars because each Satoshi, I could just send you a Satoshi, and that's going to be $10 or $1. So, it's fun, you know. So, it's really just a supply and demand thing. If you imagine like some chunk of the global economy running on Bitcoin, that's going to sort of determine the price of a Bitcoin, and it doesn't matter. You don't need to buy one Bitcoin. If one Bitcoin is $100,000, it doesn't matter, you can buy 10 Satoshis.

Howard Lindzon:
Yes. And so, usage drives it. And then, let's talk about transaction costs because there's just talk — you know, I really like Lightning Network.

Farbood Nivi:
Yeah.

Howard Lindzon:
Because that makes sense for me. You know, the one objection is, listen, in the United States, my kids use Venmo, my wife uses USA, I have Wells Fargo. I hate them, but like what's the point? Like I just leave a minimum amount of money in there, they do my monthly work and try not to give them any money in fees. And Visa and MasterCard. So, in the United States it's like, "What? I've got to learn something new?" So, how do you get over that hump?

Howard Lindzon:
Yeah. Here's where I get a little vague, a little animated because this stuff gets me fired up. I mean, I think of the — so, in the US alone, there's, I think, $200 billion dollars a year or something stupid spent on, basically, credit card transaction fees. You're running a little coffee shop in San Francisco. So, that makes your cup of coffee, like, you know, $7 or something like that. You're paying 25 cents per transaction, plus another 3% on top of it.

Farbood Nivi:
So, to sell a $5 cup of coffee, you have to spend 50 cents in transaction fees. And if you're like a little coffee shop, all you're doing is selling $5 cups of coffees.

Howard Lindzon:
That's your margin, yeah.

Farbood Nivi:
That's 10% of your revenue is going to someone to process an electronic payment. Do you think it-

Howard Lindzon:
And it's a small transaction. It's a micro transaction.

Farbood Nivi:
That's right.

Howard Lindzon:
You trust everybody. Like, I mean-

Farbood Nivi:
That's right. They're going to lose $5, it'll be fine.

Howard Lindzon:
Yeah.

Farbood Nivi:
So, to me, it's — like this is one of those, you know, the emperors running around naked, and none of us are noticing. We've all grown accustomed to a world where like 3.5% of your revenue just goes to someone for processing your payment. That's a business. That's a margin, but it's a literal business. People have businesses with smaller margins than that.

Howard Lindzon:
Yeah.

Farbood Nivi:
So, this is just because we're stuck into this mode of thinking that this is like some law of nature that like to send a $5 transaction from one person to another, 10% of it has to go to a bank. That's just not the case. On the Lightning Network, you'll be able to do that $5 transaction, and it might cost you less than a penny.

Howard Lindzon:
Yeah. I mean, to me, no one's talking about it. I mean, the geeks are talking about it. So, I'm going to geek. I want to know what Lightning network-

Farbood Nivi:
They're starting though those squares. Going into its squares.

Howard Lindzon:
Oh, I understand.

Farbood Nivi:
Filing patents on Lightning Network hardware and things like that.

Howard Lindzon:
Yeah.

Farbood Nivi:
You know, Jack just said he'll pay open source developers on Bitcoin out of their own Square's pocket just to have them there.

Howard Lindzon:
So, to me, it's like a highway system. You got to clog Bitcoin highway that's expensive.

Farbood Nivi:
Yeah.

Howard Lindzon:
It's crowded all the time.

Farbood Nivi:
It can be, yeah.

Howard Lindzon:
Expensive, blah, blah, blah. And Lightning Network is just this on-ramp for smaller transactions.

Farbood Nivi:
Yeah, let's off some of the steam. The smaller transactions can happen on Lightning when it gets-

Howard Lindzon:
Because the guy who is running the coffee shop doesn't need to worry, and he's dealing in Satoshis in $3 and $5 transaction.

Farbood Nivi:
Yeah.

Howard Lindzon:
He gets — I mean, he-

Farbood Nivi:
He can't wait 10 minutes for a transaction to clear for the person who's buying a cup of coffee.

Howard Lindzon:
Well, he's still on the hook if someone screws him with the debit card.

Farbood Nivi:
That's right.

Howard Lindzon:
So, he's going to be on the hook anyways. And if all the transactions are small, there's a certain amount of crime and, you know, fraud.

Farbood Nivi:
Yeah.

Howard Lindzon:
But he can take it on himself if he's not paying or she the 3.5% or more that they're doing on every transaction.

Farbood Nivi:
And it'll be fine if it was 3.5%. When it's $5 and the transaction cost 25 cents plus 3.5%.

Howard Lindzon:
Yeah.

Farbood Nivi:
You know, just the 25 cents are almost at 5% revenue.

Howard Lindzon:
So, what happens if Lightning Network doesn't take off?

Farbood Nivi:
There's-

Howard Lindzon:
That's risk? There's risk there?

Farbood Nivi:
There's risk there. There's other technologies that will come up.

How did Lightning start

Howard Lindzon:
But how did Lightning start?

Farbood Nivi:
That's a good question. I'm not 100% sure. So, Lightning is not necessarily limited to just Bitcoin.

Howard Lindzon:
Okay.

Farbood Nivi:
It's sort of a — it's a concept of running a, sort of, side chain that resolves back to some main chain and has certain attributes of its own. So, theoretically, you can do other blockchains using a Lightning methodology.

Howard Lindzon:
Yes. But, eventually, this would come with a Lightning note or you'll ship one to the people-

Farbood Nivi:
Every one of these ships this entire blockchain on. That's why it's kind of heavy. No, just kidding.

Howard Lindzon:
So, you turn that on. Automatically, you can start sweeping in this machine into Bitcoin?

Farbood Nivi:
Yeah.

Howard Lindzon:
Wow, okay. And so, MineOS, the big, big idea that you guys have it. And explain quickly that before we-

Farbood Nivi:
Sure. So, you know, the real brains behind this is the operating system. Like I said, hardware is ultimately commoditized. You can do well at hardware if you go to the edge of the commoditization, but you can do better with hardware and software. So, MineOS is something that we're planning on releasing in the future, basically, as a standalone device. We'll sell little thumb drives. We, sort of, liken it to the, you know, original square card readers, you know. You could buy those.

Howard Lindzon:
Or what Iomega was back in the day with storage.

Farbood Nivi:
Yeah.

Howard Lindzon:
It was just like a way to store and take it with you.

Farbood Nivi:
That's right, that's right.

Howard Lindzon:
Okay.

Farbood Nivi:
So, you can imagine our operating system being on a little thumb drive. And any old computer you have or a new computer, you just plug this thing in, and it turns your device into a coin mine. And, again, you're running it all through our app. So, you could have a-

Howard Lindzon:
10 machines, all that-

Farbood Nivi:
That's right. They don't need screens. They don't need keyboards. They don't need mice.

Howard Lindzon:
They just need a USB and power.

Farbood Nivi:
They just need a USB, and power, and some internet, and you're controlling it from your phone.

Howard Lindzon:
Okay.

Farbood Nivi:
So, now, you have your old desktops, your old laptops, maybe one day, your Playstation, you know, all just — it already works on these, like, sort of, at-home mining rigs that people make. They get seven or eight GPUs. We're already in beta testing, MineOS, on those. It's quite-

Howard Lindzon:
You're saying it's cool.

Farbood Nivi:
Yeah, yeah, it's really cool.

Howard Lindzon:
And so, if that works, the price comes down infinitely.

Farbood Nivi:
Yeah, that's right. I mean, the way we look at market size for us is it's purely a function of these sort of specs of the device, which is what it does, how much it costs, what it generates for you. So, as, you know, just stealing from Bezos better, faster, cheaper, right, as each Coinmine product becomes better, faster, and cheaper, more and more people will come on.

Howard Lindzon:
Yeah.

Farbood Nivi:
And all we want to do is climb up that curve.

Howard Lindzon:
And so, people are going to be aware of these. You've only raised with seed round. So, you've gone a long way with a little bit of money. What's that like? What's it been like selling? Because I'm an easy sell.

Farbood Nivi:
It's the coolest thing ever. It was-

Howard Lindzon:
How? It's been different, or easy, or harder, or what?

Farbood Nivi:
It's way harder, way cooler. Again, it comes down to people. Our guy, Stephen, in Shenzhen, we wouldn't be able to do with him. Obviously, couldn't do without my co-founder, couldn't do without the software team.

Howard Lindzon:
Yeah.

Farbood Nivi:
You know, we're a very small team, and every single-

Howard Lindzon:
10 people? 12 people?

Farbood Nivi:
Not even. We're eight people.

Howard Lindzon:
Okay, eight people.

Farbood Nivi:
The company wouldn't be here weren't any of those people being-

Howard Lindzon:
Yeah, and you can see the experience. I mean, from the packaging to the care. I mean, there's so many things that can go wrong when you're making.

Farbood Nivi:
Yeah.

Howard Lindzon:
It's one thing to ship software and, you know, be like StockwTits where as long as the site's running, people are doing their thing.

Farbood Nivi:
Yeah.

Howard Lindzon:
But to go to China, build this machine, raise the money, squeeze everything then, deal with customer experience because I'm like your-

Farbood Nivi:
They can deal with hard-

Howard Lindzon:
I'm your nightmare customer, right? You ship me one earlier, and I'm like everything breaks.

Farbood Nivi:
Like all the traveling-

Howard Lindzon:
Like for me, I break everything.

Farbood Nivi:
… investor problem that would cost in trying to get it resolved.

Howard Lindzon:
Yeah, I break everything. So, I've had one now for a few months, and it works great a worry. But, you know, if there's a bug, I'm going to find it because I don't know how to use anything. So, how do you deal with that on hte — how are you thinking through that?

Farbood Nivi:
That part's the easiest because you can just use software to troubleshoot with people, you know. And since, you know, our operating system is essentially a distributed network. So, to the extent that, you know, we can essentially go into your device and address any issue, it'll update itself overnight constantly, different platforms or, sorry, different protocols change – Monero, for example – forks every six months to kick the A6 off of it. You don't have to do anything. Your device will just automatically update.

Howard Lindzon:
But people have to trust you.

Farbood Nivi:
Yeah.

Howard Lindzon:
So, the big leap of faith, they have to trust Coinmine as an entity.

Farbood Nivi:
Yeah. Yeah, that's right.

Howard Lindzon:
And you and the team. And so-

Farbood Nivi:
But if you don't move your crypto out of our wall that we make for you and-

Howard Lindzon:
That's the cool part.

Farbood Nivi:
… put it on your own cold storage, and swallow it, and-

Howard Lindzon:
I think that's what people are missing. At some point, you're going to let people just move wherever they want.

Farbood Nivi:
Yeah.

Howard Lindzon:
You know, you don't want to-

Farbood Nivi:
And when you're starting, there's not a lot. It's not yet — day one is not a million dollars' worth of crypto.

Howard Lindzon:
Yeah, you have a couple of pennies the first day.

Farbood Nivi:
Yeah. So, you decide how much you want to trust us, and where you want to, you know, hold your crypto.

One wallet to rule them all?

Howard Lindzon:
And how do you see it happening? Well, is it going to be one wallet to rule them all, or people just going to — where do you see it in the-

Farbood Nivi:
I see it would be a lot of different wallets, just like people have a lot of different wallets, and a lot of different bank accounts, with a lot of different places. You might have small amounts in this one, larger amounts in a different one. You may have, you know, Coinbase Custody controlling, you know, your $20 million of crypto, but you have like a smaller entity that has, you know, $10,000 of your crypto in there that you're using on a regular basis because the money that you have with Coinbase, you know, is being put to use, and earning you fees, and earning you interests or something like that.

Howard Lindzon:
Is there anything that I'm missing about Coinmine? Because I know we've been talking for a while. Is there anything like on the-

Farbood Nivi:
We even revealed a few things that we haven't told others yet.

Howard Lindzon:
Yeah. So, if people really want to speculate, is there something out there that — so, we're talked about Lightning, we talked about Grin, we talked about staking staking as a service just right. Talk about software staking, what that means versus mining.

Farbood Nivi:
That's a — It's really early on that.

Howard Lindzon:
Okay. So-

Farbood Nivi:
It's not happening much. There's a few protocols where it's working. that were words working. Tezos, for examples. It's out there, and it's working. It's another, sort of, forum of crypto economics, basically. With staking, you're saying, "Hey, I'm going to put up this amount of, you know, Tezos or Ethereum. And if I do something nefarious on the computing side, right, it's going to be taken away."

Farbood Nivi:
So, it, basically, gets people to behave correctly by saying, "If you try to mess with the system, then you'll lose what you staked," you know. And if you don't-

Howard Lindzon:
That's cool.

Farbood Nivi:
… you'll earn a little bit of a fee for what you're staking because people are going to use your computer, so you deserve to be paid for it.

Howard Lindzon:
It's a rent

Farbood Nivi:
So, you sort of put up this collateral. Yeah, exactly. Someone's using your computing power, and they pay you a little bit of that same type of-

Howard Lindzon:
How could that not work? I mean, in theory, that's going to be the way. So, pretty exciting. Now, we call this — I call it easy bake oven. You call it a plug-and-play speculation. Say, people want to put a hundred, what's today for an American? They got $5000 they want to speculate, what's the easiest way to get onboarded? If they don't want to buy a machine and do this themselves, they want to just put $1000 into Bitcoin, what's the easiest way today?

Farbood Nivi:
Coinbase.

Howard Lindzon:
Coinbase, huh?

Farbood Nivi:
Yeah.

Howard Lindzon:
So, they become synonymous with just opening an account.

Farbood Nivi:
I think so. They've got a pretty good slick UI. It's pretty easy. I personally would trust them with that amount of money. I do trust them with more money.

Howard Lindzon:
And with passwords, any tricks because, you know, sequences? What should human beings do? Should be a phrase in their mind?

Farbood Nivi:
There is a-

Howard Lindzon:
Should be-

Farbood Nivi:
This is good. There's a couple of things. One, never use a phone number to secure accounts. You know, you can-

Howard Lindzon:
How do get off of Horizon screwing you or AT&T?

Farbood Nivi:
It's impossible.

Howard Lindzon:
It's impossible.

Farbood Nivi:
It's always going to be a vector of, you know, vulnerability, people porting numbers-

Howard Lindzon:
Bastards.

Farbood Nivi:
… and things like that.

Howard Lindzon:
Okay.

Farbood Nivi:
But that's why it's very important to use either, you know, an app like Ofi or Google Auth. Don't use your phone number to secure as your-

Howard Lindzon:
Right, I use Google Auth.

Farbood Nivi:
… two-factor authentication because people can port your number. So, that's one very important one.

Howard Lindzon:
But in terms of Coinbase, I'm going to ask you set up a password, a phrase-

Farbood Nivi:
Yeah, with a phrase.

Howard Lindzon:
And you're going to die, and you're going to forget, you know, that you used your mother's maiden name, or her birth date, or somebody whose birthday. Was there any tricks to like phrases like-

Farbood Nivi:
There's no real tricks-

Howard Lindzon:
Should it be a name, should it be a word, or should it be numbers?

Farbood Nivi:
Well, they're going to-.

Howard Lindzon:
Like if you think in terms of what the average person do, do you use numbers or word?

Farbood Nivi:
Well, any time you're making passwords, you want to think in terms of phrases, right, because you can remember a phrase, and it's essentially impossible for someone to hack a phrase. If your phrase is, you know, "I love chocolate ice cream forever," no computer is ever going to hack that.

Howard Lindzon:
Right, it's in your head.

Farbood Nivi:
Yeah.

Howard Lindzon:
And you're not going to forget.

Farbood Nivi:
And you're not going to forget it.

Howard Lindzon:
Well, I could. I'm at the age where I forget-

Farbood Nivi:
It's impossible.

Howard Lindzon:
So, I really have-

Farbood Nivi:
But, also, you should use a password manager.

Howard Lindzon:
Okay. And what's the best password manager?

Farbood Nivi:
I mean, there's a bunch of them. I like 1Password. They're pretty good.

Howard Lindzon:
Okay. These are important things.

Farbood Nivi:
Yeah.

Howard Lindzon:
So, to get started, Coinbase, $1000. If you want to speculate, the easiest way I've ever seen is what you guys are building.

Farbood Nivi:
Yeah.

Howard Lindzon:
It's phenomenal.

Farbood Nivi:
Plug it in.

Howard Lindzon:
And just the apps, joy. And we'll show some demos of the app. The 1Password, if you're going to do any computing, 1Password, okay, and just do that. And then, for your money, I think a phrase matters, you know.

Farbood Nivi:
Yeah.

Howard Lindzon:
Obviously-

Farbood Nivi:
And no phone numbers

Howard Lindzon:
No phone number or birthdays. I love chocolate ice cream. To who do you have to share that with? Your wife?

Farbood Nivi:
Nobody.

Howard Lindzon:
Meaning it dies with you and that's it?

Farbood Nivi:
Yeah. You may want to trust your wife or, you know, if you have a custody solution out there, if it's a lot of money.

Howard Lindzon:
But first tender day, do you give out your favorite-

Farbood Nivi:
No, probably not.

Howard Lindzon:
Okay.

Farbood Nivi:
There's also-

Howard Lindzon:
Because I've done that.

Farbood Nivi:
There's also what they call multi-sig solutions where it's, essentially you could set something up where five people have different pieces of a password, essentially.

Howard Lindzon:
Oh my God. That's how the machines do it?

Farbood Nivi:
Yeah.

Howard Lindzon:
And to-

Farbood Nivi:
That's how critical it works-

Howard Lindzon:
But to clear it, then you can set the rules up that any three of them can cause something to happen. So-

Howard Lindzon:
So, I think for the average person, a phrase-

Farbood Nivi:
Yeah.

Howard Lindzon:
… that means something. It could be a movie phrase. It could be from a TV show. It could be-

Farbood Nivi:
Don't use the same password over and over. Use phrases. Use 1Password or a similar solution.

Howard Lindzon:
But don't let that be the reason you don't do this. Is that stupid?

Farbood Nivi:
No, no. I mean-

Howard Lindzon:
Like people are telling you it's going to get hacked or stolen.

Farbood Nivi:
Start with-

Howard Lindzon:
Only you are in control of that.

Farbood Nivi:
Only start with what you're willing to lose.

Howard Lindzon:
Yes. So, I think, you know, great advice. Thanks, man.

Farbood Nivi:
Yeah. Thanks for having me.

Howard Lindzon:
Hopefully, everybody learned a little bit from this first episode of Lindzanity, and they can check back in 10 years with Bitcoin at 5000 today.

Farbood Nivi:
Yeah. And see how we did.

Howard Lindzon:
See how we did.

Farbood Nivi:
Yeah.

Howard Lindzon:
I'm pretty happy about Apple. I mean, the first week of Wall Street, we did Apple. I just knew in my mind. I know in my mind today that, yeah, Bitcoin could drop to 1000 or 500. But, you know, risk reward, when I think about the big — that it should be dead already. If Bitcoin is going to be zero, why isn't it zero yet?

Farbood Nivi:
Yeah.

Howard Lindzon:
Because it should be. Everybody's given up on-

Bitcoin has more computing power behind it than any other computing system in human history

Farbood Nivi:
It a lot of computing power keeping it alive. It has more computing power behind it than any other computing system in human history.

Howard Lindzon:
Well, and I look at it as the brand of Bitcoin. You can go to any corner of the earth and say Bitcoin-

Farbood Nivi:
That's right.

Howard Lindzon:
… and people are like — it's not the first time they've heard of the word. They may not only even understand what it means-

Farbood Nivi:
Both of the TSA employees that were checking out my Coinmine-

Howard Lindzon:
Oh, that's a good start.

Farbood Nivi:
… you know, they were like, "Oh, is that a miner?" I'm like, "Yeah." And as I was walking away, the lady said, "Good luck."

Howard Lindzon:
So, people still think it's a bit — that's the opportunity is people still think there's luck involved, et cetera, but it's really a little bit of-

Farbood Nivi:
When you really get to understand Bitcoin, you'll see that it's the most sound money that's ever existed, even on gold.

Howard Lindzon:
All right. We'll end it on that. Thanks. man.

Farbood Nivi:
Thanks.

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