Magical Crypto Friends Episode 8 Coverage

Vlad Costea
  • After mismanaging the sound equipment and compromising the sound during the Consensus live show, Riccardo "Fluffy Pony" Spagni gets roasted by the other magical crypto friends.
  • He also gets to talk about his new project Tari and startling passion for watches. 
  • Important topics include cryptocurrency resistance to quantum computing, 51% attacks and how difficult or costly they are to start and sustain, as well as the strange trust relationship between Jihan Wu and Zooko Wilcox.

In a nutshell, the sound quality of the seventh episode (which was broadcast live from Consensus 2018) was terrible. The impromptu fabulous sound engineer Fluffy Pony, despite having spent some time to do a proper audio set-up, forgot to turn on the lavalier microphones and allowed the entire transmission to carry on using a small built-in camera microphone which seemed to pick up the crowd noises better.

However, in spite of this shortcoming, the show was a success for reaching out to a physical crowd of enthusiasts, and the format has suffered slight adjustments to incorporate questions from the audience. You can read more about the seventh episode here.

The first five minutes of the show are mostly spent making fun of Fluffy Pony – Riccardo - and blaming him for messing up the sound for the live broadcast. There's a lot of humor thrown in and the cute animals really unleash the polished trolling skills they must have acquired on Twitter. This part won't get explained into much detail, as it's best enjoyed in its pure original form.

How Consesus Has Become Less Exciting

All four members seem to agree that 2018's edition featured too many ICOs and proponents of tokenization and the "Blockchain, not Bitcoin" philosophy (or, in more colloquial language, "scams"). Mainly this is a consequence of cryptocurrencies taking a bigger step in the mainstream financial system, while people who already invested in Bitcoin early on are self-sufficient, financially-independent, and uninterested in attending events which charge high prices for tickets, just to offer sales pitches.

When discussing the actual talks from Consensus, there are three key moments that stand out and revolve around remarkable personalities from the space: the talk between Twitter founder Jack Dorsey and Lightning Labs' Elizabeth Stark, the Jimmy Song and Joe Lubin debate (which concluded with a bet on the state of decentralized apps within five years), and the privacy panel.

In itself, being able to conclude that only three key moments from the Consensus schedule have been remarkable says a lot about the decaying quality of big cryptocurrency conferences which become increasingly populated by business people.

Riccardo's Watch(es).

Fluffy Pony was spotted wearing a very expensive watch during the Monero party from Consensus, and people on Twitter have been speculating on his supposedly-lavish cryptobro lifestyle. Now the cute caballine finally gets the chance to speak his mind on the topic and refute all the naysayers.

First, watches are good investments: they only get more valuable in time, they hold a historical value, and represent an apex of mechanical engineering where human precision is tested to its limit. Second, the way somebody spends money shouldn't really be a concern for everyone around and unknowledgeable claims are just purposely rude.

Riccardo lives in South Africa and makes it clear that he's often exposed to a cruel reality on a daily basis. Consequently, he does donate to charitable causes, but chooses not to brag about it because he doesn't see the virtue of boastful good deeds. Being generous is a personal choice that shouldn't be made in exchange for recognition, acknowledgment, and social capital - and Whale Panda seems to agree the most.

In its most humorous moments, this section also includes jokes about Riccardo supposedly not wearing the watch on the right wrist and how polo timepieces are exclusive to successful Poloniex traders. The four crypto influencers trade some subtle jokes and throw jabs at each other just like animals in a decentralized jungle where the lion has given up his authoritative role (but works for Blockstream).

Magical Crypto Friends Crypto Globe 2.jpg

Quantum Computing Against Cryptography.

On a more serious note, Whale Panda reminds the folks about the informative roots of the show and how they initially discussed more technical issues. As such, he brings up an IBM statement according to which quantum computing would be available in the next 5 years and could seriously damage the future of Bitcoin and other cryptocurrencies.

Riccardo Spagni once again steps into the spotlight to present his expertise, and this time it's serious. The Pony reveals he's spoken to a quantum computer researcher from the University of Eindhoven. In a nutshell, he was told that the nature of these advanced devices is still uncertain and nobody knows exactly when they will get released in a functional form that meets the technical expectations.

Moreover, the issue at stake is so much bigger than SHA256, Scrypt, or other encryption systems used in cryptocurrencies. Even the security of http or TLS can be broken to interfere with the system, and the safest way of remaining anonymous in such a case is to stay away from the internet.

Charlie Lee adds cryptocurrencies really are a small concern as opposed to every other application of cryptography which can become completely redundant with quantum computing. If everything that is encrypted gets revealed, then the threat is posed in many other fields including national security. However, Chikun is positive that the systems will adapt by the time quantum computing gets released.

Samson Mow also says that cracking down SHA256 is still costly in terms of energy, and it's questionable whether or not performing the action is profitable in a cost-benefit calculation.

Fluffy Pony concludes that second layer encryption can be added to all popular cryptocurrencies in order to resist quantum computing attacks or make them unprofitable, and new solutions will definitely arise as soon as the threat emerges.

Whale Panda quickly changes the subject to address a memorable moment involving Vitalik Buterin, when the Ethereum co-founder tried to raise funds for Bitcoin quantum computer mining. Excellion, jokingly, implies that maybe the failure of this first initiative led to the creation of Ethereum, so the entire project can serve as an ICO that funds the development of this proposed quantum mining rig.

51% Attacks.

Now this is the section of the show that made me wonder what the Magical Crypto Friends do in their spare time, as they seemed to know quite a lot about doing 51% attacks and trading strategies that involve shorting a coin.

 It's also a sad reflection on the speculative state of the market, as coins that are worth hundreds of millions of dollars are built on blockchains that can easily be attacked at the expense of a few hundred dollars per hour. In their examples, Verge, ZenCash, and even Bitcoin Gold were mentioned.

A natural question that arose was "Why do the attackers decide to go against the system?". After all, you could use the same hashing power to mine the coin and make money, guaranteed. Riccardo Spagni points out that sometimes the reward and incentive system is flawed, so it no longer brings great benefits to waste electricity mining coins. On the other hand, there are those who attack just for fun, to see the process and how well they can withstand it.

That's when Charlie Lee proves that he knows a little too much about making money from attacks, as he presents a strategy where attackers exchange the stolen coins into Bitcoin, launch a secondary parallel chain to enable the double spend to happen, and then bail leaving the entire network with a loss.

If they're extra zealous, thieves can also use some of their own money to short the respective coins on exchanges,  to take advantage of the moment when the press announces the dips and FUD spreads.

The rivalry argument is also brought up, as Fluffy Pony suggests some coin miners might want to destroy the competition, ruin its reputation, and have it delisted from exchanges.

Whale Panda inquires whether or not doing a 51% attack on Ethereum would grant the hackers access to its ERC20 tokens, so they could also be double-spent. Fluffy Pony confirms that it's possible, and then implies that the attack, priced at $450.000 per hour, can actually be used to make money from some of the most valuable tokens (which can be both double spent and shorted on exchanges).

However, Charlie Lee adds that the website which lists attack prices isn’t exact due to the fact people honestly mine the biggest cryptocurrencies, keeping the financial threshold growing. Yet Samson Mow comes with the ultimate argument on Ethereum and its tokens: if someone attacks it, there is a strong and irrefutable precedent to do a rollback.

Why wouldn't they do it again to secure their credibility? Lee adds that security is directly tied to the coin's mining incentives and communities which legitimately make money creating new blocks. Therefore, in the case of Bitcoin it's much more profitable to respect the mining rules than try to initiate an attack.

Riccardo Spagni and Tari.

After a series of jokes about Fluffy Pony leaving the Monero project at an all-time high just like Charlie Lee sold all of his LTC at a similar moment, the loveable caballine reveals that a decentralized asset protocol will be built on top of XMR.

Unlike Monero, Tari will mainly focus on scalability but may still use privacy options. Nevertheless, it is still about 2 years away from launching, just because building protocols is difficult and Mr. Spagni is a perfectionist who wouldn't bring bad projects into the space.

Tari will be able to issue ERC20 tokens, in-game assets, loyalty points, and tickets as native digital assets. When Whale Panda jokes about doing Crypto Kitties on the platform, Riccardo responds that the game would get called "Crypto Ponies" instead and the scenario is feasible.

Charlie Lee here asks where he can buy tokens, and Pony makes it clear that there will be no pre-mine, no special sale before launch, and no ICO. The jokes continue, as the poor caballine gets roasted for not serving any good purpose on the show. If you've always wanted to see Riccardo Spagni become the subject of mean jokes, then this might just turn out to be your favorite episode.

Fan Question 1: When Zooko Wilcox Looked Into Jihan Wu's Eyes

Making fun of other crypto projects has been a trademark of the show since episode one, and the tradition stands. Whale Panda reads a fan question that asks the four cute anthropomorphic animals to provide their opinions on the Zooko and Jihan situation.

Specifically, the Zcash creator stated he believed in the words and good intentions of the Bitmain co-founder after exchanging a memorable eye contact, which assured him no secret Monero mining had occurred.

Fluffy Pony suggests that the way business is done in Eastern cultures is different, and that handshakes and smiles don't always imply complete trust between partners. Whale Panda completes the statement with a personal anecdote about expectations of deceit: supposedly, Chinese partners expect mutual lies to get embedded in their business deals. Samson Mow adds that these deals involve more beating around the bush, and the parties don't address the issues as directly as they do in the West.

Then comes the sudden realization of Charlie Lee and Riccardo Spagni: the show unexpectedly became pretty racist. Whale Panda tries to mend it by pointing out to the different business traditions in the West and the East, which usually lead to communication issues and misunderstandings between partners.

Furthermore, the fact that Monero ASICs were delivered with broken fans and dust on the cases only proves that Jihan Wu has quite a lot to lie about, and consequently there might be some Zcash mining going on before their specific ASICs get delivered.

Fan Question 2: On Litecoin's Partnership With VRPorn.

Here, Charlie Lee reveals that the situation doesn't really have similarities with the Verge partnership: there was no payment involved, there is no exclusivity clause, and the VR website added Litecoin payments because it likes the coin's quickness, low transaction fees, and security.

It was also a response to a mean Twitter reply from the PornHub community, in the sense that VRPorn has decided to contact Charlie for a partnership. Also, Chikun revealed that he hasn't received a lifetime membership and had to pay for it just like everyone else.

Fan Question 3: On Samson Mow's T-shirt Store.

If you're reading this right now, then you can already purchase some t-shirts from the Blockstream Store website. When the episode was filmed, Excellion promised that the addition would be made within 2 weeks. The disappointing part is that you can't buy any Magical Crypto Friends merchandise yet, and the only available t-shirts feature the insightful "Don't trust, verify" message.

 Other products include stickers, but Samson promised that plush toys are also in the works. This was a great opportunity for all the folks to mention the Magical Crypto Friends stickers which they gave away during Consensus, and how selling them would be a pretty good idea.

Fan Question 4: On Microsoft Buying GitHub.

The general consensus (no pun intended) is that GitHub is a centralized service, akin to Coinbase: it can be acquired, but it won't affect the safety of Bitcoin (or, in our case, Git). There are plenty of open-source and decentralized alternatives (such as GitLab) offering the exact same features, without being backed by greedy corporate money. The issue with GitHub is that lots of useful reviews, repositories and user contributions are being transferred under the ownership of Microsoft.

Fan Question 5: John McAfee Running For President In 2020.

They all agree that John McAfee, regardless if he runs for the Libertarian Party or with his own party, has no chances of winning and has already had a failure in 2016. However, Riccardo Spagni comes with the ultimate joke about the situation: if McAfee becomes president, will the national currency change every other week?