The Insanity of Cults

Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. Today is March 12th, 2024, and I wanted to make a video to talk about something that’s been percolating in the cryptocurrency space. But first, a demonstration. Wow, how about that? Okay, so let’s open up Cleopatra.

Oh, Cleopatra! What we’re going to do is sign that. Oh my, and look at that—Satoshi’s key! Oh my, what’s going on? Well, it’s a fraud.

If you actually take a look here, this is a key that I created to demonstrate you can backdate a key. This is the actual key. The actual key ID for Satoshi Nakamoto has this fingerprint here. It was created a very long time ago; it’s a 1K key, very old, probably going to be broken at some point because methods are catching up. It’s just that simple for somebody to sign it.

It’s very easy to sign. In fact, I just double-signed. What’s so hard about that? Everything in the Bitcoin blockchain—every single thing that’s done, every transaction, every block generation event, and the white paper itself—is connected to a public-private key pair. Anyone who asserts and claims that they built Bitcoin should easily be able to do this.

It’s not hard. With any cryptographic asset, if you have custody of a single token and the private key, you can do this. See how simple and fast it was? I don’t have the associated private key for the Satoshi key. This one here—no one does that we know of except for Satoshi Nakamoto or someone related or connected to that project who got custody of it.

They had to have known him or been sent it. All I have to do is sign a message like that. Yet this guy, for years and years, has been incomprehensibly babbling nonsense and idiocy. There are so many layers of lies and plagiarism and narcissistic pathologies, and he still will not give up the game. He’s mentally unstable, and thank God they’re finally going to bury this.

But despite all of that, there’s no way to get through it. What’s really amazing to me is that I see people all the time say, “No, he’s really Satoshi,” and defend him, going to astronomical lengths to say this guy is Satoshi Nakamoto. You think to yourself, “Gosh, what is the burden of proof necessary?” The answer is what I just did. You have to do that, and you have to have the legit key.

Everybody who’s anybody in the space, who knows how the technology works, knows this is the key. They know the set of keys that would be candidates to indicate that somebody was involved in the creation of Bitcoin and would know what the burden of proof needs to be. They would know that they would know how to verify it. It’s so simple; it’s so easy. I just did it in front of you.

Years and years of lawsuits—this is one of the most egotistical men I’ve ever met. I’ve seen him twice, three times in my life: once in Tokyo, once at an airport in Turkey, and once in Rwanda, where I witnessed him go up on stage and brag that he has more money than their country and how brilliant he is. He doesn’t even know what an unsigned integer is, but he’s brilliant in every single detail. He doesn’t even know basic facts about his supposed creation and is pathologically incapable of doing this, which would end most of the discussion and debate or at the very least give him a very credible claim. So why do people believe it?

Well, there’s a lovely book called "Cults: Inside the World’s Most Notorious Groups." When you think about BSV and the whole Craig Wright thing, and you look at it from that lens, you start realizing that it’s not about the burden of proof. People who are trying to deceive you construct an elaborate, twisty, turny story where they are the hero and the victim of persecution. Any claim or assertion that they’re not the hero and not the victim is part of a grand conspiracy against them. Only through their wisdom, brilliance, insight, and vision can you get out.

We have this view that weak people and stupid people are the only ones who fall for that. It turns out, when you look at cults, a lot of small, smart people end up getting wrangled into them. This is relevant because every single thing in the cryptocurrency space, as we head into this new bull run—I’ve seen it so many times. I saw it in the bull run of 2012-2013, I saw it in the bull run of 2016-2017, and I saw it in the bull run of 2020-2021. We’re heading into a bull run; it looks it’s 2024, and we’re going to 2025.

Every single one of these cults, every single one of these leaders—whoever they are, whether they be Do Kwon or the Bitconnect people or the OneCoin people or Mark Karpeles—every one of these heroes that are going to save us and deliver us from perdition comes out of the woodwork like rats coming out of a sinking ship. They find a way to make themselves known, to be seen. You didn’t know they were there before, but now they’re here, and they’re going to mislead and manipulate people and make billions of dollars from it. Some will go to prison, some get caught, and some snake their way through. You have to inoculate yourself in this industry from these people.

There are newcomers coming in because it’s a bull market, so there are some simple rules and simple logic that people should follow. First off, extraordinary claims require extraordinary proof. If somebody asserts to be something like Satoshi Nakamoto, for example, what you ought to do is make a list of things that that person should be able to do and know. Pretty simple, right? They should be able to have custody of some of the artifacts involved in the creation of Bitcoin—the PGP keys associated with blocks mined, early copies of the source code that were never publicly published but can be verified to be dated prior to launch, early copies of the white paper with the same facts and circumstances.

The person should know an enormous amount about C++, know a lot about cryptography—enough to make unorthodox choices in the elliptic curves. ECDSA secp256k1 is not a standard curve at the time; why would they pick that? It turned out it wasn’t compromised by the NSA, so it’s unusual. The scripting language was an unusual stack-based assembly language for Bitcoin script. There are a lot of warts and intricacies, some implementation mistakes with Bitcoin’s multisig, and the encoding that was done—base58 encoding—so typos and mistakes weren’t made.

This is probably a direct result of early versions of the software. So when did that switch over happen? Why did they decide on base58 to avoid typos? There are delicate intricacies, some discovered retroactively that were never stated directly but were only discovered upon research. A person who has that role should be able to speak very comfortably and fluently about all those things and also possess a complete copy of all the emails that Satoshi had and correspondences, including all the private messages on Bitcoin Talk with the official account.

They should be able to validate that—right? Simple stuff. Normal, everyday thinking people can take five minutes or talk to a subject matter expert and write all these things down. There have been half a dozen lawsuits now and this swarm of nonsense and elaborate manipulations that normal, thinking people would say there’s no threshold that’s been met to prove this. Yet a cult exists that pushes people in this direction.

This is no different than people who claim things like, “We solved the blockchain form,” “We solved scalability,” “We solved governance,” or “We solved pick your favorite thing.” You’re going to see all these new next-generation cryptocurrencies, these new concepts that come out into the industry. So you take a step back when you hear it and you ask yourself something very simple: what is the burden of proof? What evidence needs to be seen? When you ask for that, they should be able to provide it.

When you look at Cardano, for example, we publish all these papers. Well, papers go through peer review, and the first question you ask is: is that the same process we go through that your average scientist working at an unrelated university goes through? In other words, if you were a cryptographer at your favorite university—Arizona State University, the University of Florida, Tokyo Tech, whatever—and they’re publishing a paper in the same field, does our stuff go through the same level of rigor? More or less, the answer is the same. Is that verifiable?

Yes, because you can check the conferences the papers have been submitted to. You can talk to subject matter experts in cryptography and verify that the standard approved for computer science is done through conferences, typically not journals. It’s the opposite in most fields of science. The acceptance of those is done through a rigorous peer-review process. Now, does that mean the papers are right?

No. Does that mean that the papers are absolutely correct and solve every problem? No. What it does mean is that third parties, unrelated and unconnected, who are the standard bearers of academic rigor for that discipline have read the papers, found something novel in them, and decided they’re worthwhile to be accepted and discussed. You can look at citation counts.

GKL, for example, the bedrock of security from which things in Cardano are built, has 1,800 citations—publicly verifiable. You simply go to Google, GKL 15 ePrint, bring it up in the search results, and you can see a list of the citations of other people’s work citing that. It’s a good indicator that the preponderance of the academic community, given that this paper was written in 2015 with ample time for retraction, flaws, or other problems, has decided that not only is it noteworthy, but it should be the foundation upon which they cite as an example. Does this again mean that it’s useful? Does it solve major problems?

No, but at least it gives you independent validation and verification. Then you look at code and say, “How do I know the code is right?” Well, you can write it in a language that has fewer failures, like Spark, for example—a very common language in the Ada community in the high-assurance world. Idris, Agda—these dependently typed languages are very powerful for providing bugs. Haskell, with formal methods, does that mean the code is right?

No, but at least it gives you some certainty that the code has a higher degree of quality. You can then write a formal specification; you could prove properties of the code against that formal specification. Does that mean the code is bug-free and right? No, but it gives you a higher level of assurance. So if a project takes the time to do these things, there’s probably a case that can be made that there’s goodwill and a legitimate interest to do things right and correctly.

Does that mean the project is competitive? Does that mean the project is going to be commercially successful? Does that mean the project is going to have adoption? No, it doesn’t mean any of those things. It just means the protocols are probably reasonable and the code is probably a correct representation of those protocols.

Then you’ve got to do more diligence, and you keep going down that way. The problem is that you move from the objective to the subjective. If you’re in a cult, if you’re in a confidence game, if you’re in a scam, none of those things exist. No one will tell you that things can fail, that at some point you lose the ability to completely know the future, and that everything is subject to additional knowledge and review. Facts and circumstances can change.

What they’ll tell you is nothing will fail; it’s going to go to the moon, guaranteed. Trust us because we’re super brilliant, and any criticism is illegitimate and wrong. That’s what they’re going to say. I have seen no greater case study of that than the Craig Wright affair. This miasma of fear and bullying exists.

If you even have the audacity to say things I’m saying, there’s a risk of litigation just by making this video. There’s a chance we could be sued after all of these things. Just by making this video, the people in that cult are going to attack us now. But it has to be said. It takes a little bit of courage to go out there because it’s such a great example of how, regardless of how much evidence to the contrary, people get trapped into bad mindsets.

The burden is on us as a broader crypto community to look out for each other. At the end of the day, Ethereum fights, Solana fights, Cardano fights, Bitcoin fights. Yes, there are commercial disagreements, but we’re all in the same broader ecosystem. We’re all in the same club. We’re all trying to teach people about the value of decentralization.

We’re all trying to teach people how to be their own bank, own their own identity, and be in charge of their own life. It doesn’t matter if you’re Satoshi Nakamoto or a completely new person who just started today in the field. None of that matters. What matters is you’re here, and we’re one broader community. One of the goals, duties, and responsibilities of that broader community is to look out for each other, particularly when we see dark holes that suck people in and convince them of things that are very problematic.

You have to speak out against it. I remember years ago talking to certain exchanges and asking them why they listed Bitconnect. They’d say things like, “Well, it’s a scam, but we’re making great trading fees.” I remember years ago talking to people about things like Luna, for example, and I said, “I think there’s going to be a cascading failure here.” I’ve been in the stablecoin business, the algorithmic stablecoin business, since BitShares.

We did all these models; we thought about the design. Anything that’s not over-collateralized tends to have a cascading risk whenever you have a high degree of volatility on the downside. “Well, we don’t care because we’re making lots of money.” You have so many people come out and say, “Look how brilliant this is! Look how beautiful this is!

” They get tattoos on their arms and brag about how their ten brightest friends told them to do it. Meanwhile, the industry as a whole—the insiders—they kind of know something’s a little off here because nothing goes up forever. Nothing goes to the moon. For every dollar you’re making in a zero-sum game, it had to have come from somewhere else. So as a broader ecosystem, did they speak up, speak out, and say there’s an issue?

No, because they’re making the money. Unfortunately, that means you, the consumer, have to be a little bit more aware and cognizant of these things. After reading some of the latest transcripts, I figured it’s about time to make a video about this. 2025 is going to be likely the biggest year in the history of the cryptocurrency space. There is a non-zero probability we could see $200,000 Bitcoin.

Rising tides mean the altcoin space is going to grow as well because of that speculation and interest. Tens of millions of people are going to flood into the cryptocurrency space, and this is the first time ever that they’ve been exposed to it. It’s a joyous occasion, and we have an opportunity as an industry to win the hearts and minds of so many. The reality is, though, that during that flood, many of these people will be victimized by scams and cults, and unfortunately, too few people in this industry seem to care very much about that. Remember in 2017, I was on Bloomberg, and at the time, the age of the ICO— all these ICOs were happening.

They said, “What do you think of ICOs?” I said, “ICO mania is a ticking time bomb.” You can still Google and find the article from 2017, and very rightfully so, I predicted that the bubble would burst and it would harm a lot of people. And it did. We went into a dry spell for several years until it came back again in 2021.

This is just how these cycles work; it seems to be the way that the crypto industry as a whole works. I believed cycle by cycle that we grow up a little bit as an industry; we get a little bit better at this. Unfortunately, it seems we’re headed to make the same mistakes again. That’s why we spent so much time thinking about things the Edinburgh Decentralization Index and why Sean Ford is working on a macroeconomic survey of cryptocurrency value. We’re also talking around an objective measurement for performance and throughput in networks.

It’s time we as an industry take a step back and start talking about unifying North Stars—things that we all can agree on, regardless of who we are, that are objective metrics of whether a network is doing something interesting or not. What’s nice about that is if everybody accepts it, maybe just maybe everyday people can start using these to find and separate the wheat from the chaff, to separate the good projects from the bad projects. It’s a long road, and there’s a lot to do, but I’m getting pretty tired, more than ten years into this, seeing the same things happen again and again and again, cycle after cycle, and just seeing the same comments and the same statements. It’s an extraordinary thing. Maybe I’m just too experienced and I’ve been around too long, and it’s easy for me, but it’s so hard for others.

Or maybe people are being blinded by greed, or maybe people’s human nature is just being sucked out of them. I don’t know; I can’t give you an accurate answer. All I can do is talk as an industry as a whole and question why more people don’t stand up and question why more people don’t ask basic questions. there’s a simple axiom in life: if you don’t understand something, don’t get involved in that thing. There’s never going to be a rush.

So many people try to tell you, “You have to invest now! You have to do something now! You have to take this action now!” Unless somebody is literally hanging on a rope and they’re just about to fall off the cliff and the rope is breaking, you don’t have to act now. Whether you act today, tomorrow, or the next day, there are always going to be opportunities.

I missed the dot-com boom in the 1990s because I was born in 1987. By the time I got com, which became PayPal. Then, later in life, the cryptocurrency boom came, and I caught the first generation of it in the late 2010s. I started as a speculator and miner—nothing significant—and then I made it my full-time job in 2013. I rode the smart contract revolution and was a major player in the third generation cryptocurrency space.

Now, I'm old news; I'm the old guy. Look at the white hair and the beard. The new generation is doing completely new things—gaming, metaverses, and entirely new types of DeFi. I haven't launched a single successful DeFi project; maybe we'll have some success there, but I'm already a fossil, just the boomers. The current generation didn't have OpenAI just a few years ago.

It wasn't a mainstream commercial thing; no one cared about it. Now, everybody's talking about large language models, and they'll be discussing open-source decentralized large language models. We didn't have truly decentralized social networks, but now we're starting to see some interesting ones, like Farcaster, for example. I didn't even know anything about it until a few weeks ago when somebody mentioned it to me. We've been talking about this forever—Mastodon, Gab, and all that.

That's old tech; we have something completely new. If you missed that, well, in three years, four years, five years, or a decade, there will be something completely new. Before crypto, there was the cell phone revolution, the Web 2.0 mobile revolution. All these people came in and made billions of dollars creating apps like Instagram and others.

Before that, it was the internet, and before that, the computer hardware revolution with Steve Jobs. If you don't understand something and you really want to get involved, take the time to learn. If you miss a train, another train will come. Scam artists will tell you this is the only window; there will never be another opportunity. They say you’ve lost your chance forever.

That's just not true. No one—neither a government agency, your attorney general, nor your priest—is going to protect you. This truly is one of the last frontiers of unrestricted capitalism by design, and the only person who's going to take care of you is you. When you look at those old cowboy movies, it dawns on you how risky it was to travel westward and how people truly had to be self-reliant. If you got bitten by a snake in the 19th century, you were done.

If you didn't pack enough supplies, you'd run out and die on the road. If you weren't prepared for the elements, you'd freeze to death. Look at the history of the Oregon Trail, for example. Yet, the people who survived made America; they built the West. It's the history of Wyoming, Montana, Colorado, and so on.

Just like this, when you look at the cryptocurrency industry, you have to inoculate yourself and protect yourself against the crazies. Remember those basic principles that will never change, regardless of the cycle and who you are: extraordinary claims require extraordinary proof. If someone claims something, the burden is on them to prove it, not on you to disprove it. If people are building things, there should be evidence of their correctness and the use and adoption of what they have. It should be straightforward to understand why such things will grow, be adopted, and be successful.

They should be open and honest about the trade-offs of what they've constructed and why those trade-offs are important, acknowledging that reasonable people can disagree. Furthermore, if you miss something, it's like missing a train; another opportunity will come. Never use the excuse of missing a window to avoid doing your due diligence. Anyone who tells you otherwise is either a pawn of someone trying to steal from you or a person trying to steal from you. They’re basically the same—a vampire and a vampire spawn.

Was that so hard? Signing a message now, I did it for all of you. I even took the time—five seconds—to create a counterfeit key that's backdated. It's not hard; just a point to prove. If one truly had that, not only could they sign, but they could broadcast it, and it would silence everyone.

Instead, we have lawsuit after lawsuit, all these extraordinary serpentine claims. This won't end here because he's a mentally ill person; he's pathological. That's a shame, but it's an even greater shame that so many still follow. Extraordinary claims require extraordinary evidence, and we have to help each other. We have to work together as an industry and do better.

There have been a lot of great heroes who have taken the time to help people try to recover funds, and many in law enforcement have taken the time to get educated and really try to help their communities. Thank you for that; it means the world to all of us who lead projects. It makes me sad, though, because 2025, in addition to being the largest bull market we’re likely to see, is also going to be the largest set of scams we've ever seen in the history of the space. I'm making a video; I'm talking to you. This is the real Charles Hoskinson.

Within 12 to 24 months, multimodal AI with large language models will grow to the extent that someone will make a video that looks like this—my voice, my face, looking real, and it's AI-created. What I'm saying can be anything the AI makes me want to say. Some people will use this for fun, making me talk about purple leprechauns with yellow hats. Others will use it to say I'm giving away money, or you should invest in something, or that I’ve resigned from some position to manipulate the market. They'll even do dark and twisted things, like saying I have cancer or I'm going to prison.

Why? Because they want to short-sell the market, create a disruption, and they know that as a public figure, a small window of time can create cascading problems and consequences. Even after the record's been corrected, the damage is already done; the value has already been stolen. They're going to do this across the board with every public figure in the cryptocurrency space, using generative AI—Metallic Muin, Brad Garlinghouse, every single figure down the line. They’re going to impersonate and attempt to steal money, and some people are going to fall for it.

Now, there are solutions. We created a TLR prism, for example, that allows you to attach a DID to an identity, and then any message can be authenticated. You can have a video stream, and with better software, it will appear red until I sign the stream, in which case it will appear green. But the problem is that the web is still stuck in the past and doesn't yet acknowledge the non-repudiation existence of digital signatures to the extent that we need to defeat generative AI. In that gap, cascading problems are going to happen, and those will be used to steal your money and convince you of things that are not true.

Now is the time to realize that we’re entering a true Wild West, and you have to protect yourself. You have to properly pack, and the single most important thing to carry with you is wisdom. The single most important thing to carry with you is common sense. You don’t get something for nothing. Extraordinary claims require extraordinary evidence.

If you don’t understand something, don’t rush it; spend the time to understand it. People should be willing to give you that time. Life should work that way. Any violation of those basic axioms is a good indicator that you’re being defrauded. If you’re surrounded by people who believe differently, it’s a pretty good indicator that you’re in a cult.

Just think about that. So anyway, it’s going to be a fun year. Next year is going to be fun too, but it’s going to be a rocky one. There’s a lot going on, a lot of really cool things happening. I’m very excited about the tens of millions of people who will likely enter the industry.

It’s going to be fun to see what happens, but it’s also going to be a very frustrating year in many respects. It’s going to be sometimes challenging to navigate and sometimes really deeply demoralizing and depressing to navigate. But I was here a long time ago, and I’ll be here a long time after. I’m not going anywhere; there’s nowhere in the world I’d rather be. I recovered some spools from the bottom of the ocean over in Papua New Guinea last year, and one of the people who came on the expedition with me was a sea captain named Art Wright.

Art is 89 years old; I think he’s now 90. He was one of the most experienced sea salvage experts alive. He outlived all the others—Navy captain in the '50s and '60s, fought in Vietnam, and then he became the salvage guy that the Navy would use to find really important stuff, whether it be a crashed Russian submarine or some other classified thing they cared a lot about. He made a career out of being a mercenary to help entrepreneurs and others find shipwrecks and gold—in our case, spools on the bottom of the ocean. What was extraordinary about being around Art was that at 89 years old, he was still on a ship and still working.

He would get up every morning at 5:00 AM.