Holiday Retrospective 2022

Speaker 1: I don't have an introduction written for our 20 '22 urine review episode, Scott.

Speaker 2: Like, do you want me to wing one? Is that what you're asking? You just want me to, like, make this up?

Speaker 1: Well, I was thinking we just let ChatGPT write it for

Speaker 2: us. That brilliant idea.

Speaker 1: I I've got a prompt already, like, hot hot in the oven, kinda like a cooking show ready to go.

Speaker 2: I I fully support this decision. This is maybe the best decision you've ever made.

Speaker 1: I think this is the future we're getting on it early. Alright. Okay.

Speaker 2: So can we just use this to write our podcast episodes?

Speaker 1: I think we're about to find out.

Speaker 2: Out if this all Yeah. I think if this plays. Can we just go?

Speaker 1: I think we just outsource this whole thing.

Speaker 2: We get that Adobe sweet thing that, like, rep reproduces our voices. We just kind of feed it prompts. Let it read our old podcast and figure out, you know, kinda I'm the snappy one and you're like the storyteller one, and it just takes it from there.

Speaker 1: Yeah. We we we give it, like, a breakdown of us as characters, the subject we wanted to write about, and we see how it does. We're putting a lot of faith on this considering we haven't read a single word that it has produced for

Speaker 2: us yet.

Speaker 1: But I too think we can outsource our entire jobs to this artificial intelligence.

Speaker 2: I, for one, welcome our new AI overlords.

Speaker 1: 2022. It's been a wild ride with major data breaches, new advancements in AI, and the ongoing debate over privacy and surveillance. In this episode, we'll be discussing some of the biggest stories of the year, highlighting the major players and offering our insights on where the industry is headed.

Speaker 2: Okay. That's, like, a little too commercial for us, but, like, pretty like, I would fully expect to hear that on most podcasts. That sounds about right.

Speaker 1: I mean, it's a little commercial, and it's also making I'm gonna be honest. It's describing a better podcast than we're about to produce. Like, highlighting the major players. I'm like, I don't I don't have their names written down. I don't it it's writing it's making promises that we cannot keep.

Speaker 2: Hey. Hey. Hey. Fake it till you make it, Jordan. Fake it till you make it.

Speaker 1: Okay. I'm I'm telling it to make it dumber, use made up words like hacktacular. Alright. Twenty twenty twenty two year in review. From massive data breaches to sneaky phishing scams, it's been a wild ride. We'll be discussing the major players, the most epic hacks, and our it's pretty good. And offering our insights on what the future holds for the hack happy world of technology.

Speaker 2: Okay. Okay.

Speaker 1: So grab your favorite beverage, Scott. I'm still reading this. Put on your tinfoil hat, and join us as we take a deep dive into a hacktacular year.

Speaker 2: Wow. Not bad.

Speaker 3: Definitely, like, a a little too corny.

Speaker 2: A little more more corny than we'd go, but But Wow.

Speaker 1: I think it's been a pretty hack happy year, if you ask me. Wow.

Speaker 2: I can't wait to talk about crypto. You know? Like, I

Speaker 1: can't wait to talk about AI.

Speaker 2: I feel like I take every advantage on this podcast to bash crypto, and I feel like I'm, like, unabatedly doing so. And, like, I think we've seen a few

Speaker 3: of the crypto bros show up in the podcast reviews.

Speaker 2: There's been a few, like, salty ones. So I think the I could I could see it. I could see how people are how how people are responding to it. But you know what? I don't care.

Speaker 1: Yeah. I saw a comment. I mean, that's interesting because some of them might just be legitimate criticisms that maybe I say and you know a little bit much. But I like to imagine that it's just people that are salty about their crypto line going down. That's the new story I'm gonna tell myself whenever I read those negative little bits of feedback.

Speaker 2: Well, if you didn't already deduce it, that's exactly what I tell myself. Clearly, we can do no wrong. It has to be people upset with the line going down.

Speaker 1: The show is perfect. I'm sorry about your line.

Speaker 2: And now that we've got AI riding it, it's just gonna get better.

Speaker 1: So talking about a a it was a 2022 hacktacular year in review. I think there's, yeah, a handful of things we should talk about. I think we should talk about the crypto crash, like you mentioned, specifically FTX because I think it's a pretty important, maybe, cultural moment surrounding people's understanding of crypto. I think we gotta talk about that that

Speaker 2: for sure. Yeah. I feel like everybody's talking about it but

Speaker 1: I do agree I do agree. I think we should talk about sort of our standard beat cybersecurity hacking and ransomware you know we covered a lot Jeremy Kirkson friend of the show was able to put together a really fantastic whole series about, you know, this being the year of ransomware where it really reached maturity. I think we gotta talk about that.

Speaker 2: Yep. Yep.

Speaker 1: And then probably AI. We opened on that. I think we should talk about that because I was thinking about this a calendar year ago. If you'd brought up the idea of using AI to make media, like making stuff with AI, I wouldn't have known what you meant beyond the individual words in the phrase. And now, if you bring up AI media synthesis, I have to clarify which one you're talking about. So a lot has happened in the last year when it comes to comes to people actually using AI, and that's probably worth talking about.

Speaker 2: AI based content or AI created content. It's been on the rise. Exactly. Wouldn't say it's very cybersecurity yet, but I'm sure there'll be an application for it. Yet. Maybe we can talk about that too.

Speaker 1: Man, I've been playing around with it. I think there's I think there's gonna be. When you start seeing the way folks are using it, I don't think there have been any stories, where it's been used in cybersecurity, Mostly because chat gbt and natural language AI media synthesis or a like AI natural language, has existed for about a week now. It was it it it is pretty young, but I imagine by this time next year, twenty twenty three year in review, there will be a lot of stories of this being used to do some pretty fascinating stuff.

Speaker 2: One of my favorite things is the amount of sites that are now banning it, like, banning its use in their comments and forums. Sure. Like, I think I actually just recently got an email from Stack Overflow, which is kinda like a code question site for developers. And I think they recently banned it from responding. It's like it's kind of it's kind of yeah. It's gonna be interesting to see how they how they track and remove it and and how much of a how much noise it makes on the Internet. I guess, like and when I say, like, noise, I mean, like, signal noise. Like, when you're trying to get to some real data and all you're reading is, like, AI generated bits that don't contain the answer you're looking for. Sure. Sure.

Speaker 1: Well, we already kinda live in a world where most information is buried under an ocean of blogs that were hastily written for pennies a word in order to, like, optimize search engine results. Like, there there's such a deluge of content getting in the way of a good answer on the Internet that this inevitably is going to make worse. I think a lot of cool stuff's gonna come out of it, but I think you bring up a good point that noise is not going to get better.

Speaker 2: Well, like, think about think about googling best food processor 2022. All you get is affiliate marketing sites that have Yep. You know, fiverr.com articles written and that are just knockoffs of other articles written by somebody else. Sure. That stuff's all just gonna get auto generated now. You're gonna be able to be, like, prompt Cuisinart food processor review 2022 blah blah blah and bang. It'll, like, write you the review content.

Speaker 1: Mhmm.

Speaker 2: So, like, imagine the one minor headache of running an affiliate marketing site is gonna just get automated. For sure. Like, it's just gonna make it's just gonna make the Internet unusable.

Speaker 1: Well, I mean, you just brought up a really interesting thing, which is the scene you just painted describes both side of the discovery process. It starts with a person googling something, and then it switches over to the person who's creating the answer. And I think what's interesting about this is that it touches both sides of that transaction.

Speaker 2: For sure.

Speaker 1: Like, people are using it at this point essentially as Google, but you can also use it to generate the content that Google would otherwise be parsing.

Speaker 2: Correct.

Speaker 1: The Google thing feels important because of just the sheer numbers of people that are already using it a week in. I think it was November 30 Sam Altman over at open AI posted a tweet saying today we launched chat gbt try talking with it here. That's when it goes live. And then someone broke down, it took Facebook ten months to reach a million users. It took Spotify five months, took Instagram two and a half months. It took chat GPT five days. Lovely. So people are using it not just to create content, but to find answers. And I don't think I'd really anticipate when you when you play around with an image creation AI like Dolly or Midjourney, it's purely generative. You're not thinking about finding information, getting answers through it. But immediately, it became clear that people are using this kind of as they would use Google, and that feels very, very different.

Speaker 2: So we're gonna get a we're gonna get a chicken and the egg thing here where, like, the AI is gonna be generating the content that the AI then consumes to respond to answers. So you'll be like, hey, AI. What's the best food processor this year? And then it'll be like, well, we've written 3,000,000 articles about this one. So here you go.

Speaker 1: Yeah. At at what point does most of the information it's parsing come from itself is gonna be a really fascinating, conversation.

Speaker 2: We should also just briefly touch on has nothing to do with cybersecurity, but touch on the fact that Sure. Google became Google by having a quality search algorithm that gave you what you looked for when you asked for it. Certainly. The fact that they haven't dealt with affiliate marketing is shocking to me, honestly, because it's completely ruined any search results. Like, you can't find any real information.

Speaker 1: Mhmm.

Speaker 2: You have to know where to go to find it. A lot of those sites now are turning into paywalls because they know that they have good content, and everybody wants real content.

Speaker 1: Sure. Honest question, in the last like year have you googled anything where you needed a detailed answer that you didn't tack Reddit on the end or some kind of thing to narrow what part of the internet you wanted to go find information from? Because otherwise Google broke itself. Like it doesn't get me good answers to stuff anyway.

Speaker 2: No. Totally. I have

Speaker 1: to tell it to go looking through some other site that just happens to have bad search. So I'm basically using Google's search ability to navigate some other website for me. I'm not using it to find me the answer unless it's one of those answers that Google has sort of indexed for itself and just presents to you before the like deluge of ads and affiliate marketing content that follows

Speaker 2: below? Well, two things. One, no. I typically always tack on Reddit or some forum that I wanted wanted to look in. You gotta. And two, I'm surprised that affiliate marketers haven't ruined Reddit yet because Right. I'm sure I'm sure we're not the only people out there that are, like, the only place to find real content about things anymore is coming out of real people's, like, you know, fingertips. So that's yeah. Surprising that affiliate marketers just haven't started spamming Reddit. So, you know, I'm sure after this episode, please don't, but I'm sure we'll see more of it.

Speaker 1: I guess since this is now the chunk of the show where we're talking about this to bring it back to chat g p t and that big shift that happened in the last, like, week, I guess to try and tie it back to the stuff that we talk about here, bleeping computer did do a pretty cool write up of some of the stuff that people have started figuring out, both good and bad to be done with this tool. There's really obvious things like take a phishing email, classic thing that we we might end up talking about. A lot of the ways that you immediately identify, a fake email has to do with the fact, that the grammar and spelling probably isn't typically too good. It seems really simple, but you got a person who's not writing in their native language, trying to, you know

Speaker 2: Convince you that that that they are their boss. Yeah.

Speaker 1: Yeah. That's a pretty good way to tell. And suddenly you now have a tool to eradicate that. I can type something in very very very broken natural language and tell it to fix it. Tell it to rewrite it in perfect English grammar, and it will do so. I guess on one hand that you can imagine insidious uses for that, but there's a kinda hopeful part of me that thinks that's pretty incredible for all the people that experience barriers because they don't speak the language that's popular or common where they live, suddenly being able to completely perfect the grammar and spelling of their text instantaneously. Like, that feels like it opens up a lot of doors for some people.

Speaker 2: Let's talk about cheating in university.

Speaker 1: Oh, man. Could do

Speaker 2: you think this thing could generate you a paper?

Speaker 1: So I found I was reading an article the other day and it was I think it was The Guardian. I'll try and find a link to it and put it in the show notes. But it was someone who it was a journalist who asked that question and went to talk to a bunch of university professors in different disciplines, some TAs. And the sort of conclusion they came to I think the headline of the article was the essay is dead. And it was basically that you can now instantaneously generate about a bunch of topics about a B. You can produce about a b grade paper

Speaker 2: Instantly.

Speaker 1: With a click of a button, pretty much instantaneously. So, yeah, I think you're probably right to bring up academics as a a space where, like, yeah, people were doing some pretty, boilerplate writing with pretty high stakes associated with it, and now there's a robot that can do boilerplate writing. Wow. And that's for sure gonna change some stuff.

Speaker 2: What a fascinating time we live in, Jordan. And think and think we both went to university and actually had to write papers.

Speaker 1: Well, here's the thing. Yes. We were idiots for doing that, clearly. The future will judge us harshly for paying money. Man, I I majored in English. There's, like, a John Mulaney bit about that. It's, like, I paid money to study a language I already spoke. And to have and now it's to have papers written in that language, graded by people that I could have just had grading a robots papers but you majored in comm sci

Speaker 2: I did

Speaker 1: where you don't I don't really know what ratio of stuff you're submitting in natural language versus code, but it brings up the question of what does this thing do for non natural language.

Speaker 2: Great question. I'm sure I'm sure they're working on it. It would be pretty amazing if you could just fire it in a queue, and it would spit you out a template of, like, the application you're trying to build mostly coded.

Speaker 1: Sure.

Speaker 2: And you just customize it.

Speaker 1: So I didn't I didn't play with this when it comes to a programming language. My brain immediately just went to, like, markup language websites. And I started, I just, I wanted to do a little experiment. Let's imagine I have a startup, a little new company, an idea for a product it's called text reverser. And I want to create a website that reverses text for people. I think it's gonna be a huge, huge market for this, Scott. Lots of people need text reversed.

Speaker 2: Okay. Yeah. Yeah. Yeah. So I'm with you. I'm with you.

Speaker 1: I don't write a lick of HTML. I understand the basic premise of how it works, but I don't write it even to do something incredibly simple like that. I would be looking up every individual part, or I would have to go to a person that knows how to write HTML and ask them how to do it. I have to explain to them my brilliant business idea. Right.

Speaker 2: Mhmm.

Speaker 1: Mhmm. Which is, create an HTML document that has a text box and a button that says enter. And whatever text is written in the box when you say enter, present it back to the user reversed below. That's the idea for the for the little bit of software I want to write I could ask a real human being to do that for me or I could type what I just said into chat gpt and it would produce the HTML document that I just slacked to you, which when I open it in a browser works.

Speaker 2: I'm opening it. I'm I'm very curious. First, I'm gonna open it in a code editor just to see Mhmm. And make sure there's nothing embedded in it.

Speaker 1: This this was all a long con. I'm actually this is when I finally try and hack you.

Speaker 2: That would be so funny. What a wrap up to the year. Jordan hacks Like

Speaker 1: a three year deep long kong.

Speaker 2: Wow. I'm looking at it right now, the code, and it's pretty much exactly what you would do to build a proof of concept of it. And it works.

Speaker 1: And it works. Oh, I also mentioned I had some design prompts. I wanted it to center those assets and put it against a black backdrop and make everything else white. Wow.

Speaker 2: I could do that as well. It quite literally wrote the JavaScript for you. Mhmm. And it works? And it works. Well, I guess it's time to find a new career, Jordan. I'm sure

Speaker 1: a person that speaks a like, I'm sure a person that writes HTML could have done that in not much longer than it took me to tell the computer to do it. But importantly, I don't know how to write HTML, and I produce that document. Mhmm. And it works. Like, that we we we always talk about hacking through the lens of, like, hackers and people doing duplicitous stuff with technology. But there's that other definition of hacking stuff together and making things from scratch and building stuff. And that it feels like a really powerful tool for that kind of hacking, for hacking things together.

Speaker 2: Yeah. I I don't know. It's very I'm impressed, I gotta say. I'm impressed. It's pretty cool. Like, it's not complicated, but it's still No. Generated instantly.

Speaker 1: Based on three sentences.

Speaker 2: Based on three sentences.

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Speaker 2: All of the all of the the crypto crash and the frauds and the cons and the and the I I do I do We only

Speaker 1: have so much time.

Speaker 2: I do love that Sam Bankman Fried is now just SPF. Like, the world knows him as a three letter acronym. Like, I guess that's probably now his largest success is that he's so well known, but he's infamous, not famous.

Speaker 1: Yeah. He reached, like, KFC levels of the acronym will suffice.

Speaker 2: Yeah. Brand awareness.

Speaker 1: Yeah. Exactly. Set a land speed record for that one. Exactly. Yeah. He kinda he was sort of the cherry on top at the end of the year because it all started way back I think in April is when it the value of Bitcoin and Ethereum Ethereum along with it starts to tank. And it's about June when I I think it kinda hits the bottom of that gully. It was down from, like, a high of about $70,000 per coin. And I think that's when it bottoms out at about $919, lost most of its value.

Speaker 2: Yeah. It's been down to in that two month chunk. Down to the fifteens, I think, this year. But I think in that period, it it broke 20, and that was a big news.

Speaker 1: Really?

Speaker 2: Yeah. The Bitcoin. Anyway, we're talking about Bitcoin, not the rest of the altcoins and meme coins and shit coins and etceteras. The,

Speaker 1: Got got caught up in the crypto winter.

Speaker 2: Yeah. The it was really strange. Like, I remember watching it and, like, I kind of have a a pretty decent knowledge on finance. Sure. Like, I'm not by no means an expert, but, like, I'm I'm knowledgeable.

Speaker 1: You're an econ nerd, I would say.

Speaker 2: I am an econ nerd. Affectionately. Affectionately. Thank you, Jordan. The, thanks for clarifying. There was this whole movement because, like, everybody was, like, inflation's coming.

Speaker 1: Mhmm.

Speaker 2: And, like, you know, a lot of people usually buy hard assets to combat that. So they buy gold and and things like that. And people were like, no. Crypto is the new gold. And I was like, what? Right. I was like, it just I don't know where that messaging came from and where that thesis came from. So then you had a bunch of people piling into crypto being like, I need to protect my money and crypto is the answer here. It's not about making money anymore. It's about wealth preservation. And I was just scratching my head being like, this has to be manipulation. Like, somebody has to be out there selling this message to buy them out of their positions before this, like, implodes.

Speaker 1: Interesting.

Speaker 2: And, you know, here we are. Yeah. And it's very, very, very interesting year for the crypto and well, the economic world, let's say, but the crypto as attached to that. You know, being a high risk asset, saw a ton of play, you know, like the a lot of people, there was no sports betting during COVID lockdowns and things like that. So a lot of people moved to gambling on the stock market, you know, people that have that personality trait, you know, like me. The the, they went to the they went to the stock market. They went to crypto. They went to things like that. And people were making boatloads of money, like the whole meme stock press. Like, at least there was, like, a structured financial argument for, like, you know, GameStop. Like, the the short positions were so large that, like, if they could hold the value of the company up high enough, people would have to start cleaning those short positions. I don't know if we wanna get into a full economic breakdown of what a short position is and how they work, but, essentially, it costs money to short a company. You pay a carrying interest for the short. And if they could prop the stock up long enough, these, like like, I think GameStop at one point was shorted, like, a 100% of their shares. Mhmm. Like so, anyway, so the gist is if they could prop it up, they could cash out because these people would eventually have to close their short positions. And so I think that was kind of like I wouldn't say a smart play, but at least had a thesis. And the crypto world, I think, just benefited from the fact that, like, it seemed like an easy way to make a boatload of money.

Speaker 1: When you and you mentioned the thesis earlier, which was that this is a hedge. This is such an alternative to the traditional markets that if they tank it's probably not going to affect this because it's totally separate. Totally. And that was revealed to not that thesis was revealed to be incorrect. And it turned out if you had you know, elevated inflation, interest rates going up a land war in Europe and COVID lockdowns and supply chain chaos and all of those things affecting how people want to spend their money and invest. It's also gonna affect how they invest in crypto. Totally. That thesis was proven false.

Speaker 2: The CEO of JPMorgan, Jamie Dimondimon, I can't remember how you pronounce his name, came out and said that, like, crypto was essentially just pet rocks. He literally used he literally Pet rocks. Used a simile to to refer to them as pet rocks. And and the thing is is, like, they were great rocks to own. And, like, a lot of people that own them

Speaker 1: Got rich off those rocks.

Speaker 2: Were owning them at well, and we're owning them at, like, crazy margins. You know? So you put a $100 into your crypto account, then you buy $5,000 worth of crypto, which which buys you little variation. Like, if if the if the price goes down, you get margin called, and you lose all your money. But if it keeps going up like it did at the beginning of COVID, all of a sudden, you take that $100 and you make it into $50 if if you keep, you know, rebuying and stuff like that, maybe even more. But then the second it turns against you, pop, pop, pop, pop, pop, margin call, margin call, margin call, it just burns. So I think there was a lot of artificial wealth created and then destroyed in, like, the period of a year.

Speaker 1: I know I'm not a gambling man, but, man, the idea of buying crypto on margin is just a level

Speaker 2: of wow. People buy stocks and options on margin all the time, notably me. The the the but crypto, I don't know. Like, it would just it seemed like, you know, when it went from '20 to '60 or '66 or whatever it was, like, I'm sure there were people that on for made millions. Sure. And, like, not financial gurus and hedge fund managers, but we're talking, like, regular everyday people who just, like, their friend was, like, buy Doge, and they're like, okay. I got $300. And then bang, all of a sudden, in a series of rebuys in a perpetual motion upward, they're maybe millionaires.

Speaker 1: They're Doge rich. Yeah.

Speaker 2: Yeah. They're Doge rich. They got a Lambo with a Doge plate. Anyway, then it all popped. You know, it turns out that risk assets are risk assets. And when people's portfolios, real world portfolios and stuff started going down, interest rates and their access to capital started to go away, people started selling. And then, bang, there comes down. Same as anything else.

Speaker 1: When then you get that, that all kicks off at the start of the year. And then you get this sort of trough that we've been in ever since. And then I think it the year kinda bookended itself with FDX happening. And for as much as I think for outsiders, seeing the value of a thing that's value is famously erratic, being erratic isn't that new for them. The value went down and they go, oh, yeah, it goes down, it goes up, who cares? But the story of FTX, I think, grounds it for a lot of people. In the same way that a lot of people learn something about how our economy works by the Bernie Madoff story or about the subprime mortgage crisis. FTX is a story that outsiders can easily grasp. Because for all of the crypto bullshit that's wrapped up inside of it, allegedly, it's allegedly a pretty classic, robbing Peter to pay Paul type story. It's pretty easy to grasp when you grasp the basics of it.

Speaker 2: Well, I think the I think, you know, the persistence of the crypto I don't know what you might call it. Fraud, scams, Ponzi's unregulated, completely unregulated as an unregulated investment vehicle. I think Sure. I think the real question is is FTX, you know, crypto winter or is it the crypto extinction event? Because I feel like I think it might I think it might be an extinction level event in its current form. Like, the government has to stand back and look at this stuff and be like, wow. We have Larry David, Brady. You know, we've got like, Taylor Swift apparently, like, was in discussions allegedly into yeah. Allegedly in discussions for, like, a $100,000,000 sponsorship from FTX. So cool. Like, like, it's being marketed, sold as an investment vehicle, but it's not. So it's like I think I think the libertarian crypto that we know now, I think, is at an extinction level event. Like, you know, what I believe it's value to be inherently, me and the CEO of JPMorgan feel the same, but I'll I'll lean on his credibility.

Speaker 1: Yeah. Sure. Sure.

Speaker 2: Sure. The I think that it if it's if it's gonna stay around, the government and the people who are responsible for keeping people safe from from fraud and scams

Speaker 1: Mhmm.

Speaker 2: Need to are are about to show up in a big way.

Speaker 1: Sure. You think this is gonna result in a bunch of regulation?

Speaker 2: Yeah. Could be. Yeah. I think it has to. Right. I think it has to. Interesting. Like, there's there's like, you can't like, if you and I, Jordan, decide that we're gonna create, you know, some AI company that's gonna auto generate code.

Speaker 1: Typing this into ChadGPT right

Speaker 2: now. We have the idea to start this company, and we're gonna go out and raise a billion dollars Yes, sir. For this company. We can't go knock on your neighbor's door, my neighbor's door, and be like, hey. Can we have $500? Yeah. Sure. Unless they're like an accredited investor. You know, there's rules about risk capital, and the government doesn't allow you to do things unless you show competency to protect people from situations where, you know, they might get hugely burned. And none of those safeguards have been in place in crypto. This is completely unregulated.

Speaker 1: If I had to guess and this is assuming that there giant onslaught of regulation coming, because I could see that really going either way. There's a part of me that's could imagine a world in which everyone goes, no, we're actually not going to regulate this. It seems to be ending itself. We'd like to not get in the way of that process. So may maybe regulation comes, but if it doesn't, I would guess that the libertarian corners of it are actually all that survives. I think for all the normal folks that were interested in investing in it, because it seemed like a great way to make your money go up, FTX was sort of the death knell for those people, that undecided middle of people that weren't sure if they wanted to get in in the into this, didn't quite know enough about it. I think a lot of those people now have SBF's sort of shining face in their brain when they think about cryptocurrency and they go, I've heard there's a lot of fraud in that space now. Like, it it almost put a face to all of those doubts. And I think that all you're left over assuming there isn't a bunch of regulation that acts as out the the sort of free market libertarian side of things. I think they're they're really all who's gonna be left after after all the normies flood out of the room.

Speaker 2: Yeah. Well and, like, the thing is is no. I I still think the regulations have to show up. Yeah. Like, they have to. Because the reality is is, like, you look at something like BlockFi. It was a company that FTX owned part of, and they essentially offered ridiculously high interest savings if you, like, deposited your crypto with them.

Speaker 1: Mhmm.

Speaker 2: So you give them your your crypto, and they give you, like, weekly compounding 9% interest or something just insane. I think it was annualized 9% interest, but that's still an insane return for doing nothing.

Speaker 1: Yeah. You can't guarantee that. You can't guarantee that.

Speaker 2: Yeah. They're bankrupt now and everybody lost all their money. No surprise. But but the thing is is, like, how like, if I'm a a person like, I'm a regular person. You're a regular person. We have retirement savings and things like that. And, you know, maybe if you buy I don't know. If you if you're a mutual funder, like, a real regular person, you're looking at, like, 4% max plus fees, usually. So all of a sudden, you you're at, you know, coffee with your buddy, and he's like, yeah. I made, like, you know, 14% last year staking crypto. You're like, wow. Imagine how fast Tell me more. Tell me more. And it's like they they they have to step in and stop that stuff. Like, they they can't let it go. There's their returns the whole market is a Ponzi scheme scheme because the only way that those returns are possible is if they can get the crazy uplift in the value of the crypto that they're that that we were seeing. The second it started going down, the whole paper foundation of this house crumbled and lit on fire.

Speaker 1: The line goes up? Line goes up.

Speaker 2: I think we should also just talk about what happened at FTX because Yeah. Break it down. Well, it's all alleged and based on, you know, things I've read, and I watched the interview with with SBF. I think it was Financial Times. Had him at, like, a conference, and he spoke. Mhmm. And they kinda grilled him a bit. And he kept referencing one thing. He didn't realize how big Almeda's is the hedge fund. How Almeda's margin position was. So the typical way and I don't know how many people that listen to this podcast do any kind of investing, especially margin investing. But the typical way margins work is I put in a $100. They offer me 50 times that value, and I'd spend $5,000 on it doesn't have to be 50. It can be 2. It can be 5. It could be 500 on some places. But I take that inflated amount of money, and I buy an asset. The second that asset position moves against me, so if it starts to go down if I'm long the second the loss is the equivalent to the amount of money I put in, exchanges will often instantly close your position just so that you don't go into the negative and you don't owe them money. And it sounds like what happened is is that the risk managers and the people who monitored that system essentially turned off the margin call function for for Alameda. That's the read I get from the situation. And they let them they probably were holding billions of dollars of positions that were deep in the negative. So negative, in fact, that they literally lost everybody's money. Like, what are they looking for? $10,000,000,000 in missing money at this point? Something like that. So all of the risk mitigation and risk management systems that they had in place for the regular people, for the yous and I's, they probably disabled for their internal, you know, friendly hedge fund. And I think that's what cost them everything.

Speaker 1: So why would someone turn off the margin call safety net? I get that they're doing a favor for their someone they're friendly to, allegedly. But why would you do that? How is that doing someone a favor to remove the safety net?

Speaker 2: Well, essentially, what they were doing is not bankrupting Alameda because the second they closed that position, Alameda would owe them billions of dollars. Right. So as SPF was a part owner of that company or a substantial owner, if I'm not mistaken, he probably didn't want that either. So they probably were betting everything, literally betting everything. And this is all alleged in my own read on the situation. But probably betting everything on a lift in the value of crypto.

Speaker 1: Right.

Speaker 2: If we can just get crypto back to $30.40 k, you know, we'll be right sided again. And we just need people not we just people need people to stay chill and hold on, hold on, and buy back in and push the value of this up. And it that's not what happened. Right. It got blown up by Yeah.

Speaker 1: If we margin call you, it'll, if we margin call you, it'll essentially lock in all of these devastating bankrupting losses. So let's just sort of keep the party going a little bit longer, a little bit longer, a little bit longer, and then the whole thing collapses. Exactly.

Speaker 2: Like, the you gotta at least that's what my read is because he kept he always keeps mentioning this one margin position. So you know that Almeda ran a huge negative loss. Like, it was a huge margin loss. And it wasn't a big deal until they had to call it. Because if they would have called it, Almeda would have owed FTX, you know, billions of dollars, I assume. And then FTX's books would have been written down billions of dollars. Mhmm. So it would have just blown up everything, which is essentially what happened. At least that's my read.

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Speaker 1: I think we've actually managed to cover a lot of the big stories of the year in episodes we did throughout the year. You know, we talked about the Conti attack against Costa Rica, kind of one of the first big nation state level attacks against a country involving ransomware. We talked about Lapsus' sort of big extortion spree. We talked a little bit about Russia and Ukraine hacking, and we've talked a lot about decentralized finance platforms getting hacked. We we got in some AI conversation right at the finish line of the year. We hadn't really touched on that too much, but it's been a very busy year on the hacked beat, on the spooky technology stories beat. And I guess I just wanna wrap up the year by thanking everyone for coming along with us.

Speaker 2: Yeah. For sure. Thanks to everybody. You know, all the listeners, commenters, reviewers, patrons, you know, people that engage with us on social media even though we're not hyper social media users. The, we appreciate it all. So you guys are you guys are great. You people are great. So we appreciate it.

Speaker 1: We, I always love when shows and it I I don't normally hear it in the show itself. It's normally on on Twitter or somewhere else, but I always love when shows share numbers a little bit. So just for anyone that's still here. It's looking like our our big episode for the year, our top charting one was the chicken drumstick episode we did with Lorenzo Franceschi Bicarai. It was about the Chinese hacking, video game hacking gang. That's a super fun one. Published it kinda started the year. It's our, I think, our top charting episode, for 2022, followed by our episode about, our evil, the the hacking gang that pretended to die, but then just didn't and came back under a different name, followed lastly by you can't publish their names, which was about Lapsus. Those were our top three episodes for the year.

Speaker 2: It is the Spotify wrap up season. So we got our Spotify wrap up. And, we are a we are a top 1% podcast on Spotify. Boom. So we are one of the top podcasts. So that is, you know, entirely due to you guys and you people and, you know, completely like it. You know, I think we are cruising in year to date to be right around a million downloads. So

Speaker 1: Hell, yeah.

Speaker 2: Pretty pretty pretty solid year for the numbers. So, you know, I think as a collective audience and creators, you know, I think I think it's I think it's going pretty well. We've done it. So I think the other thing we should take a moment to announce is that we're gonna do some merch.

Speaker 1: Oh, we're gonna do on that hoodie game.

Speaker 2: We're gonna do some limited edition, hack podcast merch. It's not gonna be out by Christmas. Sorry about that. But we will have a merch for in the New Year, probably for q one of the New Year. And, yeah. So I think that's gonna be pretty good. I think we're gonna do some pretty standard stuff for our first run. So we're gonna do a couple limited edition clothing pieces, and then maybe a non limited edition t shirts and, some coffee mugs. It's like maybe even some some Yeti style, tumblers as I am a fan of using those things.

Speaker 1: Love a tumbler.

Speaker 2: Yeah. Love a tumbler. So I think that's big news for us, you know.

Speaker 1: Since, since they won't be available for Christmas, should we sell gift cards? I feel like that. I I know a great episode of a podcast that talks about how cool and good gift cards are.

Speaker 2: Yeah. Yeah. I think we'd be silly not to create some kind of system to generate gift cards.

Speaker 1: Maybe there's points. You can buy hacked points and those points are redeemable for for merchandise.

Speaker 2: There you go. There you go.

Speaker 1: In the haps store. It's all none of this real. It's all metaverse stuff. It's all digital hoodies, digital tumblers.

Speaker 2: We'll obfuscate the value through some complex internal currency system and then sell you

Speaker 1: My dude's so cryptic.

Speaker 2: Sell you digital skins. But don't worry. They're gonna have an NFT associated with them so you can ensure that you retain true ownership of the digital Tumblr you buy.

Speaker 1: Okay. I know how we end now, which is since you brought up NFT. 12/07/2022, it turns out that when FTX crashed I'm looping us back just right at the very end.

Speaker 2: Yeah.

Speaker 1: Bad storytelling. It turns out that when FTX crashed, NFTs that had been minted on FTX relied on metadata from an API that was hosted at that domain. Earlier this year, the FTX domain, was taken over and redirected to a page providing information on the bankruptcy proceedings, which means that all NFTs, those, non fungible assets, those things that you really truly own forever that were hosted on FTX, the safest of these platforms are now essentially pointed towards four zero four pages. So they're all they're all gone.

Speaker 2: Nice.

Speaker 1: Happy 2022, everybody. Thanks for listening, everybody. We recorded this conversation on November 8, which is why in twenty minutes talking about, SBF, we did not mention him being arrested days later because it did not happen. And in the twenty minutes we spent talking about AI, we also didn't talk about the really interesting push over the past week or so to allow visual artists to de index their work from AI databases. All really interesting stuff we didn't get to chat about. We're gonna be posting an episode next week, but just to give ourselves some time off to relax. It's probably gonna be a throwback episode from a previous holiday season, but we're gonna be back at it again in the new year. Thanks to our new patrons on Patreon, patreon.com/hackedpodcast. Great way to support the show. Steven Castle, thank you for editing your pledge. Sinclair Coons, thank you for being a patron. Josh Rorty, thank you so much. Z Glados,

Speaker 2: I'm

Speaker 1: a big Portal fan. Thank you so much for being a patron. And and Brandon Faso, thank you so much. We really appreciate all your support. Thank you so much for listening to this, year in review episode where we talked about basically two things. Neither of which had anything to do with cybersecurity. And for making it to the end, we will catch you in the next one.

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