- Is there a “catch” to Apple’s savings account?
- It doesn’t pay to bet against Musk
- Crypto transactions that are easy and cheap
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in tech and biotech. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here. I always enjoy hearing from you.
Is Apple’s new savings account insured?
Apple offers a 4.15% savings account. But is it FDIC insured?
– Edward R.
Hi, Edward. It’s a fair question, especially now…
As I shared with readers on Monday, First Republic Bank has now supplanted Silicon Valley Bank as the second-largest bank failure in American history. The bank was seized by federal regulators last weekend and sold to JPMorgan in the span of just a few days.
It happened so fast that many people didn’t even know what had transpired until Monday morning…
And as I write, regional bank PacWest is imploding. It’s not yet clear if the bank will collapse altogether, but executives say they are “weighing strategic options.” That’s typically an indication that a company is going under and looking for a buyer as quickly as possible.
So I understand why we would be skeptical right now about a new savings account from a company like Apple. But the good news is that Apple’s new savings account is, in fact, secured by the FDIC.
That’s because Apple partnered with none other than Goldman Sachs to offer the new account.
The reality is that the accounts may be branded Apple – and users need an Apple credit card to open one – but the accounts themselves will be serviced on the backend by Goldman Sachs. As such, the accounts are insured.
And it’s important to remember that Goldman is considered a “systemically important bank.” In other words, it’s too big to fail. Said another way, the U.S. government would never let Goldman Sachs fail. Were Goldman ever to experience liquidity problems, the Fed and the federal government would have no choice but to come to its aid.
What Apple’s doing is very interesting. An amazing product and user interface for consumers, with the backing of Goldman Sachs. And the bigger play is that Apple is slowly, and quietly, getting into the financial services business… without actually having to be a bank.
This is an important distinction because it keeps Apple out of potential regulatory scrutiny, but it also gives it the ability to wrap around its customers with even more sticky services. Smart play. I’m excited to see what’s next.
Don’t bet against Elon Musk…
Elon Musk just did a two-part interview with Tucker Carlson. It is excellent, as it seems everything Elon touches is gold. He stated he was an early originator of OpenAI 10 years ago. He stated it was a non-profit to study the potential negative potential of AI. Well, we all know now it is NOT a non-profit and is setting the world on fire.
He went on to express his concern for the negative direction already that OpenAI is taking. He stated he wants to create a competitor to OpenAI that will NOT be biased. He also said that he knows he will be getting into the game well behind the competitors. Do you think he has a chance to actually pull this off?
– Mike C.
Hi, Mike. Thanks for your question. I enjoyed the interview as well. It’s always fun to listen to Musk’s thoughts. He’s always lucid, and in the last few years, he hasn’t strayed away from addressing some of the more sensitive topics that have caused so much division. Given the size of his audience, his rational and well-thought-out comments are very welcome in this crazy world we have found ourselves in.
Musk was actually a founder of OpenAI established in 2015. But he resigned his board seat in 2018 over issues around the direction of OpenAI, and what were clearly initiatives to create a for-profit entity.
In 2019, OpenAI Limited Partnership (OpenAI LP) was created as a for-profit entity to commercialize the technology that OpenAI had been working on. Oddly, the for-profit entity is managed by a single-member LLC, which is controlled by OpenAI, Inc. Which is the non-profit organization.
The non-profit still exists to support educational programs and policy initiatives related to AI. We just don’t hear much about it because of all the attention the for-profit side has been receiving.
As for your question, yes, Musk can pull it off. At this stage, large language models (LLMs) and how to train them are well understood. Musk and his team simply need to curate an unbiased training set from which the AI can “learn” and then program in certain guardrails to ensure that the AI doesn’t “hallucinate” too much.
Musk certainly has the ability to assemble the team and fund the computational power to train the unbiased competitor to ChatGPT. And as we already know, he has already purchased 10,000 GPU systems to build the AI supercomputer to do just that.
He has also registered a website called X.ai. This is the possible future home for a generative AI meant to rival ChatGPT. It has already been referred to as “TruthGPT,” probably a working name.
The domain name suggests that his new AI will be housed within X Corp. – a corporate entity Musk set up years ago. This is interesting because X Corp. is also the entity that now houses Twitter, which has become a brand and is no longer a corporation.
Musk’s clear goal is to train his AI to be objective, rather than biased. He specifically pointed to the proven bias demonstrated by OpenAI and Google and how it is reflected in the outputs of their generative AIs.
We can view this as a form of censorship. The AIs don’t know that they are censoring information. They are just producing outputs based on the information that they have been provided. And in the case of biased implementations, companies like OpenAI, Google, and Facebook also program responses to “their” most important political narratives that they wish to propagate. It is a very dirty, intellectually corrupt process and a form of Orwellian control.
Musk is remarkably resourceful and incredibly innovative at solving complex problems. As we have seen with the Twitter files, the “rot” within Twitter and the collusion with several government agencies was extraordinary – actually, mind-blowing. Making matters worse, Twitter and those government agencies were driving narratives that were false, untrue, and not backed by scientific evidence. These initiatives were also designed to manipulate election outcomes.
It has been heartbreaking, disgusting, and very scary to see how deep and dark the situation has become. And we still don’t know everything. Things are worse than what we know.
I believe that Musk will prevail, and Twitter will be a fantastic success. I also believe that he’ll deliver the world “TruthGPT,” which will be an incredible resource for learning and education, as well as for productivity.
My biggest concern is that the powers in charge, whoever they are, decide that Musk is too great of a threat. That’s my biggest fear.
But we need him to stay healthy, and we need him to succeed. SpaceX is currently humanity’s best shot at becoming a multi-planetary species, and it is the single most important company enabling an entirely new space economy.
Tesla is not only the world’s most successful electric vehicle (EV) company but one of the most important AI companies on the planet. It will be the first to deliver fully autonomous cars, which will save millions of lives. And Tesla is building Optimus, which may very well become the world’s dominant humanoid robotic assistant, which will have a positive impact on everything from logistics to healthcare facilities.
And The Boring Company is well… not so boring. It has already revolutionized the construction industry with its tunneling technology. And it will lead to future transportation systems. And we shouldn’t forget that Musk was the one to envision hyperloop technology, which will get developed one way or another.
I could go on and on… but his string of successes won’t end. And we can be sure that he’ll create his generative AI product within the next 12 months, hopefully six. I can’t wait to use it.
A crypto project’s making transactions faster AND cheaper…
I just finished reading the article by Andrew Hodges, Senior Blockchain Analyst on Unchained Profits.
He talks about what is happening to make using digital transactions easier so it can take the place of writing checks and dealing with banks/middlemen.
However, he didn’t say anything about the cost of digital transactions. I took about $200 of ETH to explore the Arbitrum network and some exchanges. Almost 3/4 of the ETH has been used in setting up wallets and accounts and performing exchanges.
I can walk into a bank and set up an account, pay bills, and make transfers, and it won’t cost me anything. I think the digital world needs to make more changes than just setting up ways to make transfers easier.
– Greg L.
I asked Andrew Hodges to have a look at your question and prepare a response for you. You raise an important point. Here’s Andrew:
You raise a great point. That cost is not only a barrier to entry for some users. It’s also expensive. The cost to explore these new chains, dApps, and solutions is nothing to gloss over.
I distinctly remember deploying a smart contract vault onto Ethereum back when DeFi Summer happened in 2020. It was a time when financial innovation was sky-high for on-chain tooling on Ethereum.
To create the contract cost me about $100 at the time. Then to swap assets in and out of the vault cost about $10-15. At the time, I thought it was pretty cost-prohibitive. But I was willing to spend that amount to simply experiment.
Well, a year later those costs exploded.
To generate that same contract at certain periods would run somebody four figures in gas fees. And to swap two assets, it was in the hundreds of dollars at certain times.
Subscribers to Unchained Profits Pro might recall how we would time the network for when gas fees would be low. We used a heatmap to showcase the time of days and what days of the week are best for on-chain activities like moving from Ethereum to Arbitrum, staking assets, or swapping assets using a DEX.
The feedback I would get was mostly related to gas fees. And unfortunately, this meant anybody wanting to give these new features and tooling a try would need to move larger sums of money for the experiment to make sense.
After all, moving $200 between two assets would cost you $50-100. And if you wanted to move to an L2 (layer-two scaling solution) like Arbitrum, the transaction from Ethereum to the bridge would result in half your amount getting eaten up by transaction costs.
How is this financial innovation? Which is exactly your point.
And I’m glad you asked this question. Because – during my writeup – I failed to mention that account abstraction I wrote about can eliminate gas costs for users.
Just like a bank has certain costs associated with opening an account, they don’t pass this fee to you. At least not very often anymore.
The same applies to account abstraction (EIP-4337). Protocols or platforms can now pay for fees associated with an account a user sets up, if they choose.
This can help with onboarding a new user onto a L2. Arbitrum, for instance, can take advantage of EIP-4337 and can decide to front the cost for new users if they deposit $50 onto the chain.
All they need to do is follow a certain set of instructions and they are good. This is pretty significant, especially when we think of applications that want to attract new users.
This can be something like an on-chain trading platform. It might be willing to cover all gas fees for the first 3 months as long as a user deposits $100. This is the type of innovation that lowers barriers to entry. It also encourages users to experiment without needing to risk larger sums of money for it to make sense. And as these tools are refined, it will only make it easier for new users to get started.
Thanks again for the question, Greg.
– Andrew Hodges
That’s all the time we have for this week. I wish all subscribers a great weekend, and I’ll speak to you again on Monday.
Editor, The Bleeding Edge