Zcash’s secret patch shatters trust in private money supply

Big Tech (1)

• Zcash's price fell 30% after security engineer Taylor Hornby disclosed a critical vulnerability in its Orchard pool that allowed unlimited counterfeit ZEC creation. The bug existed since May 2022 and was patched via a hard fork on June 3.

Markets (4)

• BitMEX co-founder Arthur Hayes sold his entire Zcash position due to the exploit, stating the Holy Trinity is dead, referencing ZEC, Hyperliquid, and NEAR Protocol. He remains a Bitcoin holder.
• Saylor's firm, MicroStrategy, sold 32 Bitcoin in early June, breaking a no-sale streak since late 2022. The firm also repurchased $1.5 billion of its convertible notes at an 8% discount, reducing its outstanding debt.
• Major equity indices faced steep declines, with the NASDAQ down 4.3% and the S&P 500 down 2.3%. Bitcoin traded near $59,330 with a market cap of $1.19 trillion and a network hash rate of 905 exahashes per second.
• Oil and metals saw broad declines, with West Texas Intermediate crude down 2.5% to $90.66, gold down 3.6%, and silver down 7.8%. Rough rice was a rare commodity in the green, up 0.48%.

BTC Markets (1)

• Michael Saylor framed Bitcoin's 22.7% drop as capital rotation into AI infrastructure, not a fundamental impairment. He cited $400 billion in AI buildout funding over six months and $4 billion in Bitcoin ETF outflows since May 14.

Banking (1)

• JP Morgan, Bank of America, and Citi plan to launch a shared tokenized deposit network called the Bridge or the Chain by 2027. The Clearinghouse will operate it to counter stablecoin competition and retain deposits within the banking system.

Mining (2)

• Bernstein analysts argue Bitcoin miners are becoming power landlords for the AI boom, having signed 17 deals worth over $110 billion to provide six gigawatts of power to companies like Google and Microsoft.
• Bernstein projects aggregate AI revenue for covered mining firms will rise from $1.2 billion in 2026 to $10.7 billion by 2030. TeraWulf is forecast to hit $1.7 billion in AI revenue with 84% EBITDA margins.

BTC Markets (4)

• Marty notes Bitcoin's price has dropped to early February levels, with WTI oil prices 50% higher now than when Bitcoin was at similar prices back then.
• MicroStrategy sold 32 BTC for $2.5 million, which hosts speculate was a round-number decision to cover dividend obligations, not a significant meme amount.
• The hosts argue Stretch and SATA bonds are not risk-free, pointing out they recently traded at discounts to par ($95.52 and $96.54) and carry significant counterparty risk dependent on Michael Saylor's priorities.
• Prediction markets like Polymarket have an unsolvable oracle problem, highlighted when it ruled a 'yes' bet on a MicroStrategy Bitcoin sale as 'no' because the sale was announced after the contract deadline.

Custody (1)

• Marty argues on-chain data dashboards are increasingly irrelevant because a huge portion of the Bitcoin market is now held in custodial accounts, not self-custody wallets.

Protocol (5)

• The hosts view Zcash's centralized response - where three people could freeze a pool holding billions of dollars - as proof of its inferior censorship resistance compared to Bitcoin.
• Marty claims it was an open secret in New York circa 2016-2017 that an inflation bug on Monero was being exploited to buy more Bitcoin, though it can't be proven.
• Treasure disclosed a laser fault injection attack vulnerability in its open-source Tropic 01 secure element chip but asserts user funds in the Treasure Safe 7 are safe because it requires compromising a second, closed-source secure element.
• The Blockchain Association's letter supporting the Digital Asset Market Clarity Act is signed by over 60 former national security and law enforcement officials, which the hosts see as a negative signal that the bill expands financial surveillance.
• Marty argues KYC/AML regulations are primarily a facade for tax enforcement, not crime prevention, citing the $600 Venmo reporting threshold as a tool to ensure plebs pay taxes.

Payments (1)

• The hosts speculate recent US sanctions seizures targeting Iranian crypto exchanges likely involved freezing stablecoins like Tether through backdoor portals, not seizing Bitcoin.

AI & Tech (1)

• Anthropic's fundraising claims that AI development is accelerating, with Claude now writing code at parity with humans and achieving a 52x speed-up on a model optimization task in May.

Protocol (4)

• He co-founded ZODL after leaving the Electric Coin Company to address governance and UX issues holding Zcash back. The ZODL team comprises the entire former core engineering team from ECC.
• The launch of the Zashi wallet, now ZODL, reversed declining shielded pool growth. Adding hardware wallet support and swap functionality via Nillion and Maya caused shielded adoption to go vertical.
• Swihart states the ZODL roadmap focuses on three areas: achieving post-quantum security, scaling for billions of users via Project Takion, and building a complete parallel financial system for usability.
• Swihart dismisses the store of value versus medium of exchange debate for ZEC, focusing on utility. He believes ZEC is technically superior to Bitcoin but remains drastically undervalued.

Startups (3)

• ZODL raised $25 million from Paradigm, A16Z, Winklevoss Capital, Coinbase Ventures, and Chapter One. Swihart prioritized investors aligned with the mission over just capital.
• Balaji Srinivasan framed ZODL's role as analogous to Coinbase's for Bitcoin. The thesis is that ZODL's value could 1000x by delivering user experience on the Zcash protocol.
• Swihart claims major investors allocated 75-90% of their Zcash-focused investment to buying ZEC directly, with the remainder funding ZODL to create a symbiotic growth relationship.

Politics (1)

• He engages with policymakers and says agencies have privately acknowledged citizen financial data exposure is a national security problem, but previous administrations intended to suppress crypto rather than solve it.