Latest / TFTC: A Bitcoin Podcast / #719: Bitcoin Is Winning Even In A Bear Market with Alex Leishman

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#719: Bitcoin Is Winning Even In A Bear Market with Alex Leishman · TFTC: A Bitcoin Podcast

0:00
Alex Leishman, CEO and CTO of River, one of the best and most focused Bitcoin financial institution now.
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How are we describing ourselves?
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Yeah, you call us a financial institution.
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Can't say bank yet, but.
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Yet, interesting, interesting characterization there, but one of the best in the world.
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Good friend.
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Been on the show many times, but it's time to catch up.
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The world is chaotic out there.
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Many people are worried Bitcoin's at $67,000.
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It's detached from the NASDAQ.
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Gold and silver are pumping.
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Epstein files have been released.
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It's all over, sir.
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Yeah, you know, apparently Epstein's Satoshi.
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It's been a combination of hilarious and tiresome,
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watching the narrative slow through over the last few weeks.
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But yeah, there's been a lot of new information.
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You know, I think one of the problems with the whole Epstein thing is sort of, you know, it's like the ultimate boogeyman.
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Right. And this guy who is very rich and connected for a long time emailed people in all walks of life all over the world.
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And unfortunately, some of those people were working on Bitcoin.
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And so everything seems to get sucked into his orbit.
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unfortunately. It's sort of like Wikipedia. How many hops does it take to connect two things?
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It's sort of like, what's the hop between anything important and Jeffrey Epstein? It's basically
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like one or two. And so I think everything, not just Bitcoin, is getting pulled into all of that.
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Yeah. It's almost like it was a concerted effort to wrap almost everything in his web.
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yeah exactly but we don't have to uh belabor the epstein files i think uh
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why i love catching up with you is because you have some deep behind the scene knowledge
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of what's actually happened happening uh in terms of adoption of bitcoin i mean you interact with
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your clients with individuals and businesses every day uh your research team shout out to sam
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and everybody putting putting a lot of effort into your research reports trying to figure out
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what's actually happening on the network and this morning you released your uh your basically state
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of bitcoin adoption light and uh reports and there was a lightning network report that went out
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yesterday um and so i think it'll be good to start there like what what are you guys seeing
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behind the scenes in terms of bitcoin adoption in this are we calling it a bear market or is this a
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bull market correction right now i'm i would call it a bear market i think it's a bear market um
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yeah we gave a little taste of our adoption research and we're going to have a much more
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thorough report coming out uh next next week um but but really i would call this a bear market um
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you know the price is down over the last year when you know tech stocks gold other things have rallied
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a lot. But what's different in this bear market, and we've been through a lot of bear markets at
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River, I've been through even more just personally, at this point, 13 years working on Bitcoin,
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adoption hasn't really been slowing down in this bear market. Historically, we saw capital flee,
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we saw adoption really come to a halt during previous bear markets when Bitcoin was in a much
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smaller era of its life. And that's not really happening right now. Business adoption of Bitcoin
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continues to grow. Individual adoption of Bitcoin continues to grow. The smart money continues to
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allocate to Bitcoin. And so that's, you know, happy to dig into that. But I think that's like,
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what's really interesting here. And so, you know, we detail a lot of those findings
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in this report we're going to put out well that's that's one of my favorite uh
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periodic updates you give is the type of businesses that are uh onboarding to river
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and adopting bitcoin i think that is high signal and i think this could dovetail into um the adoption
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and distribution of ownership charts that you guys have been putting out uh over the last week
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but this is a signal that I always look for is somebody runs a business yes we're a media
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business focused on Bitcoin specifically so it makes sense that we would invest in Bitcoin as
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a treasury asset and use it for payroll and other things as well but I think I've always been waiting
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for that sort of mainstream breakthrough for business owners who have nothing to do with
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Bitcoin, recognizing that it's worthwhile for them to hold some on their business balance sheet.
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And it seems like that's accelerating. Yeah. What we've seen in the last year is
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that the individual ownership of Bitcoin has decreased or, you know, the net sort of the
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amount of Bitcoin in existence, the percent held by individuals has gone down and the percent
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held by businesses has increased substantially. So yeah, if you look at this chart, you can see that
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basically the Bitcoin held by individuals has been eaten up by businesses. Now, it's important
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to point out, individuals at the end of the day are still the owners of businesses and DTFs and
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things like this. But I think what this is showing is Bitcoin is maturing. It's now like,
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this never would have happened in a previous bear market, right? In previous bear markets,
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who would have thought that, you know, the transfer of Bitcoin would be happening from
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individuals to businesses and Wall Street. And on the business side, what we're seeing is this
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isn't all just financial institutions.
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This is also Main Street businesses.
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The businesses at River...
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So in the last year, right,
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the Bitcoin prices went down
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and the amount of businesses
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that accumulated Bitcoin at River doubled.
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So, you know, we saw record growth
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in the amount of businesses buying Bitcoin
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despite the flat and down market.
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So, you know,
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So, you know, so then you could ask, then the obvious question is, well, if all of this is happening, then why is the price dropping?
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And I think that is actually like, you know, the most interesting question there is.
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And I don't think anyone knows the full answer.
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It's obviously a market full of millions of actors, each making their own decisions.
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But I think what we're seeing is while this transition is happening, there's some short-term price, you know, downward price movement because some of the individual Bitcoin being transferred is like early whales selling.
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We're definitely seeing some of the early big holders selling and sort of establishing, diversifying their wealth after holding Bitcoin for over a decade.
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um and but then we're also seeing i think the result of some of some more sophisticated uh
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maybe less ideological instant large institutions own bitcoin um using using it for leverage
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trading it when needed selling it because it's the most liquid asset out there on their balance
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sheet to sell when there's any sort of um scare or or fear in the market and so um i think this
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basically like the price downturn is the result also of the institutional adoption of bitcoin
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for various reasons but i think long term this is bullish yeah as you see here on the chart too
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you have the 2024 figure of net bitcoin moving from individuals and it was negative i think 525
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000 bitcoin around there if i recall correctly so around 1.25 well let's just say one and a quarter
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million bitcoin moving out of the hands of individuals towards the sort of entities on the
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left side of this uh chart here you know that's what i think i think a lot of people look at
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businesses c plus 489 000 and they think oh this is the digital asset treasury company is scooping
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up all the bitcoin but and they're certainly getting a large amount of it but it's not just
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these types of businesses right yeah absolutely and you know we're also beyond just operating
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businesses well actually just to give you a taste of like who's buying you know bitcoin at river we
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really see it all we see uh summer camps um you know putting their excess cash in bitcoin or using
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our bitcoin interest on cash product to earn to hold some cash but also earn bitcoin on the interest
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We see construction companies, real estate companies, restaurant change, food manufacturers.
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There's a cool one, a really cool one is that there is this there's a an order of I won't be too specific, but sort of a a a Christian group, a Catholic group that has been saving in Bitcoin for a long time.
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And they're there. They use the capital gains on that to finance construction of new buildings.
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um and uh so we see we really see like a really broad array of uh of uh institutions and businesses
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buying and using bitcoin and it's really really cool to see because all the news on twitter you
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see is like this bitcoin treasury company blackrock and everything we see behind the scenes is real
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main street institutions uh allocating to bitcoin yeah and i think the um the pumping of the treasury
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companies and blackrock and all that and the blackrock stuff really drives my gears because
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everybody's like blackrock bought this amount of bitcoin today or blackrock sold that amount of
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bitcoin today and said well actually like they have customers that are buying their etf and then
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they have to go out there so i think the um the i mean blackrock is buying it on behalf their
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customers so technically they are buying it but there's a bunch of individuals um driving those
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flows in and out of that ibit etf but i think one thing because we did it was funny you guys dropped
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this chart last week the same day here at tftc we made this um ownership distribution sort of
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infographic video for lack of a better description on the go here and many people are looking at this
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chart watch that video and said oh my gosh like the individuals are giving up their sovereignty
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and it's true obviously to an extent it's undeniable from the chart more individuals
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are selling their bitcoin as you said earlier a lot of whales um but i think getting into the
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sort of the the nature of this rotation and is it okay is bitcoin losing its ethos this is peer-to-peer
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digital cash system for individuals to leverage? Or is this just the product of maturation? And
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should this be expected? I think that it's to be expected. If you look at any mature asset,
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there's a lot of institutional involvement, right? No asset can hit maturity and be globally
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important and have no major institutional involvement. I don't see how that could
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possibly work. But that said, I do think it's important that as actors in the Bitcoin community,
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if you want to call it a community or just in the Bitcoin network, we recognize that there's an
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increasing amount of actors in this network who are less principled and don't really share the
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early ethos of Bitcoin. And so we need to make sure that the governance and the governance of
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the protocol can't, doesn't get taken over too much by people who don't actually follow the ethos.
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So, you know, exactly how to accomplish that. I think it's, you know, it's going to be something
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we have to sort out over the coming years. And I'm not actually too worried about it,
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but it is something we should be thoughtful about.
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Yeah.
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No, I think people look at this chart right here.
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Institutions may own a majority of Bitcoin within a decade and shriek.
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I think MVK made this clear to me many years ago.
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It's like, hey, if Bitcoin's successful, everybody's going to want a piece.
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And whether we like it or not,
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these institutions have way more firepower in terms of capital to deploy into this.
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And as I was mentioning earlier,
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I think it's also important to recognize that many of these institutions
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represent thousands, sometimes millions of people as well.
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Yep.
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Yeah, exactly.
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And so this chart is really just like if we linearly extrapolate what we're seeing,
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which may or may not happen, but I do think it's illustrative of if this trend continues,
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here's what it looks like in 10 years.
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Yeah, which is wild to think.
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And I think I'm a big fan.
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of been reading a lot of scott adams books and a big uh big fan of reframing and i think
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reframing this is like wow it's been incredible that individuals have been the largest adopters
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up to this point 17 years in i think we should be incredibly thankful um that we were crazy
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enough to take the risk before any of these institutions did yeah um i mean this is you
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You had a lot of pioneering, crazy individuals driving this thing forward and risking, sometimes risking it all for over a decade to make this thing and to make Bitcoin important.
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And yeah, I love that reframing.
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Wow, how incredible.
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Yeah, we're going to win.
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We're going to win.
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And then, I mean, it's again, going back to like we're in a bear market, price is down.
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People are freaking out, wondering, oh, are we going to lower?
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Is it over?
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stuff that both you and I have seen throughout our more than a decade of experience in Bitcoin I find it funny when we get to these points especially now that we above a trillion dollar market cap and we
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have all these institutions adopting Bitcoin. It's never been more de-risked. And if the price goes
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to these levels, you should view it as an incredible opportunity. But this is just on the
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sort of adoption of Bitcoin as a store value asset.
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But the other research that you guys released yesterday
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that I was mentioning earlier on Lightning Network too,
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and Lightning's had this,
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I think Lightning has been besmirched
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and sort of thrown to the wayside,
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particularly by those in broader crypto
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who think there's better ways to do things.
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But last year was a banner year for Lightning.
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I think in November alone, Sam's data, and again, you have to sort of guesstimate because you guys think it would be helpful for you to describe how you guys actually go about that Lightning research specifically.
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But it was a $1.1 billion in volume in November 2025 alone.
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Yeah, exactly.
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Exactly. And, you know, one of the cool things about Lightning is, you know, it's built the Bitcoin way.
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It's built in a decentralized, it's a decentralized L2.
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So unlike a lot of the, you know, Ethereum or other L2 networks that just are basically just databases, centralized databases,
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the Lightning Network has no central place where you can observe all of the payments happening.
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So you have to kind of triangulate the metrics.
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And we're in a pretty good place to do this because we've been a pretty sizable node on the Lightning Network since we started, really, for almost seven years now.
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And what we do is we look at our own data, and then we partner with other big participants in the Lightning Network, other node providers, other exchanges and node operators.
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And we info share with them.
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We have them share their data.
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And then from that, we sort of extrapolate and make an estimate of what we think at least a lower bound is on the transaction volumes happening in the network.
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So, yeah, it's great to see.
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It's nice to see the growth.
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And I think what we're seeing is a lot of this is driven by more and more exchanges having adopted Bitcoin.
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I mean Coinbase, sorry, having adopted Lightning.
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Coinbase, I believe the latest is like around 10% of their Bitcoin transactions are on the Lightning network, which is pretty good.
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I think where we see where the challenge still is for Lightning is self-custody consumer Lightning wallets.
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Because of the way the Lightning network works, it's challenging to get those functioning really effectively.
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there's some cool companies really trying to you know level things up there um and you know i think
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like let's see it's a hard technical problem it's a hard economic problem so let's see what progress
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those companies can make in the coming years companies like moon wallet um async uh light
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sparks kind of got its own l2 lightning hybrid uh called spark so well pulling on that thread i think
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2025 was another
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banner year for Lightning in terms of
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having a
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clear product market fit.
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The meme
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has been its best
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product market fit is this connective tissue
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between all these disparate
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sub-protocols that exist outside
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of Lightning like Spark, Liquid,
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Chomian,
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Mint's ARC, the ARC protocol
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now.
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What are your ideas about
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around that and
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particularly when it comes to like scaling and creating these um consumer consumer apps to make
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it easy to use bitcoin like you have bull bitcoin with their um liquid uh liquid to lightning sort
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of up uh functionality breeze i believe they're leveraging spark in their sdk and so you're
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beginning to see all these different sort of implementations of um of a wallet infrastructure
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uh that that leverages multiple protocols to provide a different trade-offs for end users
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yeah um i think i think really the the the bigger question is um what is bitcoin's
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short to medium term potential as a medium of exchange.
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Because I think that if Bitcoin is highly desired as a medium of exchange,
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that economic force will pull forward all of this innovation and we'll just figure it out.
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I think the actual biggest headwind to these technologies really getting in the hands of
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consumers, the self-custody payment network type scaling technologies is just there isn't that big
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of a demand for Bitcoin as a medium of exchange today. It's growing, but it's not like, you know,
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Tether is still far more popular than Bitcoin, for example, right? The global demand for a
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medium of exchange is still overwhelmingly dollars. And I think that's actually like the
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biggest thing and i don't know that any technological innovation solves that i think you could say let's
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say we develop the perfect scaling technology that was perfectly decentralized perfectly
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censorship resistant perfectly private infinitely scalable for bitcoin tomorrow um i don't know how
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much that actually moves the needle on people using bitcoin as money um i think that's like
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the right thought experiment and so i think like there's a you know until like the inflation really
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starts getting crazy with the dollar i don't think we'll see bitcoin widely used as a medium of
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exchange i think i would agree there unless you're like die hard like living on a bitcoin standard
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okay or demand it like the other thing like merchants need to demand it employees need to
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demand it um we have many tftc that do and so this would be a nature of those demands that get paid
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in bitcoin we have to use it as a medium of exchange to make sure we can make payroll for
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them uh but yeah i mean bring this to stable coins like and obviously i think we can combine
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a bunch of things here you got stable coins you've got the political environment here in the united
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states particularly around crypto and the very specific focus on stable coins and at the same
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time we've got this emergence of this ai agentic economy and everybody's racing to give these agents
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different types of wallets and um it seems like this administration has been overly favorable
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towards the uh crypto lobby because they threw a lot of money at the administration during the
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election uh and now they're getting a lot of influence on on capitol hill how do you how do you
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what are your thoughts on this sort of nature of we're sort of in the room now but crypto's in the
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the room as well and a lot of what i would deem to be idiotic ideas are being taken seriously and
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maybe some distractions away from the signal that is bitcoin yeah i think um you know the
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unfortunate reality is you know the confluence of politics and capitalism is that sort of short-term
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money even if it's coming from bad ideas or scammy things can get a lot of influence in politics
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and I think that's what we're seeing a lot of.
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And, you know, I think that it's overall probably good
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that they're just like chilling out a bit
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from a regulatory perspective.
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The real challenge for all of us was getting debanked
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and the fact that that risk is basically,
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is a fraction of what it was,
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is, you know, better for everybody in this industry.
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I also, yeah, so, you know,
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As it relates to all the legislation being debated, yeah, it is kind of interesting, right?
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Because you have a small group of the Bitcoin crowd like us that are just sitting there watching all these other people debate in D.C. about things we really don't care about.
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All the debates are around the things that are going to make the big guys, the big crypto casinos, a lot of money.
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And that's stable coins and moving tokens away from the SEC as the regulator into the CFTC.
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And so, yeah, it's kind of like I watch it.
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I watch the debates, but I also don't really care about what they're talking about because it just like, you know, it's just none of it's about Bitcoin.
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So that's how I feel. I think stable coins are like, I think they're interesting if you live in a country that has capital controls and you want dollars.
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Other than that, I have a hard time seeing where they're really going to take off.
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I could be totally wrong, but it just doesn't seem like for a domestic use case in the United States, stable coins just don't seem that compelling.
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Well, hey, they're going to get this yield on their savings now.
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yeah it's like i mean i could already have get that right uh so it's it's kind of just like this
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weird abstraction in a bank account that is unclear anyone really needs uh well it seems to
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be a big uh big topic of contention right now on capitol hill between the banks and queen base
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specifically i mean this whole and then that's another interesting sort of sub theme this
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sort of clash or intersection who knows ultimately what it will prove to be but it seems like the
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trad fi guys are looking at um bitcoin and crypto becoming more prominent and um clutching their
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pearls a bit this this fight over sharing the yield on stablecoin is very interesting
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yes the banks don't want the stablecoin issuers to be able to pay back interest to the holders
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because then they're worried that that will put,
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that will give them competition
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because these big banks are scamming everyone, basically.
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Like you're checking in savings accounts.
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If you just have like the default ones
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at the largest banks, JP Morgan, Chase,
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Bank of America, Wells Fargo,
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they're paying like 0.01%,
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like most of their account holders.
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And they're just eating all of that money for free.
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And so they don't really want super consumer friendly ways
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to earn actual market interest rates.
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So, you know, they're fighting that.
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But, I mean, we already offer a high-yield interest rate at River.
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Like, if you have cash from River, you earn 3.3% and you earn it in Bitcoin.
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So, you know, fintechs are already competing with them.
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But I think, like, just bank accounts are so sticky in general
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that, you know, you get so many people that they've just had to chase the account
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their whole life.
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and they're okay just with chase basically taking all of their interest um yeah taking it putting it
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in a carry trade levering it up like 10x more so they can profit yeah that's the interesting i
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talked to some guys at a treasury i was at a bpi event in dc and they're saying the banks are worried
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because they have to unwind all that it makes them have to have a much more narrow focus but to your
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point these um alternatives already exist exist at river when cash in uh get yield it's automatically
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converted into bitcoin and i think this gets to an interesting point because like um the again the
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big clash right now on capitol hill is coinbase for us the banks like we want to share the yield
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and the market's treating this like the banks are withholding this innovation from the market like
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if coinbase wins we'll be able to get our yield it's like hey it already exists which points to
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maybe a positioning and narrative problem that we have in bitcoin like these these things already
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exist you just need to find you just need to go out and find them yeah you know i do wonder if
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the stablecoin debate is more around the international uh like opportunity um but
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it's also like coinbase and circle see what tether's doing they're like i want to box them out
27:19
Totally. I do think that really, you know, we're still in this build mode. And then when the economic forces that are basically set in stone really start to hit inflation and continue to devalue people's saving, the dollar savings, we'll see – like in the future, we'll see a large exodus from these big banks.
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um you know wherever we're building the financial institution for a future that's where the dollar
27:51
is still um you know you're still stuck using the dollar as a medium of exchange because of
27:56
the network effect but you it's not something you want to be saving in and so um you know we we
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envision a future we call it like a dual money future where people save in bitcoin but they
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continue to primarily still spend and earn in dollars and we think that that type of account
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is going to replace the traditional bank accounts.
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And that's what we're building towards.
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And it's pretty compelling today
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for people who actually believe in Bitcoin.
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But the real unlock is when people really start to see
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that saving in dollars just isn't going to work.
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Yeah.
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Well, what would you say to people
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who are looking at the banks racing
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to integrate Bitcoin and crypto
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and saying that all these Bitcoin startups
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that are Bitcoin first, Bitcoin only,
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they're going to get blown out by these institutions because they're going to have
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the capital, the scale, the network effect of a client base already to just implement this overnight.
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Yeah, I think that I'm not really worried at all about that because I don't see a future where
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JP Morgan is putting Bitcoin side by side in your checking account in the near future. They just
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don't actually, they don't believe that. They don't believe in that future. It'll always be
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this like side thing that uses a third party That kind of a crappy user experience And like we get some people using it but like you not they not actually going to build a competitive product because the organization and its dna does not believe this is the future um and so and if it
29:27
is and if they eventually like realize that and they catch up well you know the markets move like
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you know a rising tide lifts all ships if jp morgan eventually integrates bitcoin as a first
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class citizen, we will have grown tremendously as a business as well. And it's, it will because
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like a company like river has taken market share. That's why they would start doing it.
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And the, the inertia that they have is so large. It's, it's, it's not like they're going to die,
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but we also, it's, it wouldn't be like a, they would just be trying to catch up with us.
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Yeah. I'm a big believer in that too. This is like a big quater and you knows we're early adopters
30:07
And who knows if the later waves, the later adoption waves and the people come on those waves will care at all.
30:14
But I would find it very hard to believe to trust JP Morgan with my Bitcoin.
30:19
Yeah. I mean, at the end of the day, they'll care about user experience and they'll care about what they're getting.
30:24
Right. And I think that that's where you compete.
30:28
They care about service, user experience and economics.
30:30
Yeah. I think the upstarts definitely be on UX and it's easier.
30:37
Yeah. Well, that's like, that's another interesting topic we dive into, like with this wave of AI tools coming to market. I don't think I've talked to you directly about this. Like, are you guys leveraging these tools at River? And if so, has it changed perspective on what the future trajectory of the growth of your business from a revenue profitability standpoint, but more importantly, from a headcount standpoint?
31:05
standpoint uh has it has it affected your views on this at all i have kind of a two competing
31:13
thoughts in my head at the same time about these things um on one hand i do believe that as these
31:20
tools continue to accelerate in their capabilities it'll unlock tremendous potential to move faster
31:27
for our business um it's already you know pretty heavily improved the productivity
31:33
for our engineering team in a, in a number of places, but not every place.
31:38
And I think that really what a lot of these tools are surfacing to people is
31:44
the hard part was never really writing the code for most things.
31:48
Anyways, there are certain like tasks and aspects of building an application
31:54
or a tech company where just like writing the code and getting this thing done
31:58
is like just a lot easier now,
32:01
But all of the consequential things that you do are usually not that. The consequential things that you do are usually require humans to synthesize complexity and apply taste and their understanding of their client base to prioritize and make changes to the product.
32:21
and ai is accelerating like subsets of tasks that allow you to do that but it doesn't really
32:28
accelerate a lot of our human decision-making bottleneck there and i'm i don't see a short-term
32:33
future where it does so but there are some areas where it really accelerates things like yesterday
32:39
for example like when we generate account statements for uh for our customers right we
32:44
we have historically we had to use this like pdf tool where we like generate the data and then like
32:49
we use this other system that like generates the PDFs,
32:52
PDFs are like super complicated to understand how to make them.
32:56
But with AI, I, I, you know, I was like, Hey guys,
32:58
like try and just make the PDF directly now from,
33:01
and write the code to just generate the PDF directly.
33:04
Cause these AIs understand how to make PDFs, you know,
33:07
and they have all that information. And they were like, you know,
33:10
they were like a little hesitant cause like no one ever,
33:12
no one really does this.
33:13
It's very unusual to do something like this. And I was like, Hey guys,
33:16
like, look, it's a different world right now. Let's just try it.
33:18
and we experimented for like half a day yesterday and it actually worked beautifully.
33:22
And so we're able to delete like this whole, you know, subsystem that we just don't need anymore.
33:29
And so there are things like that where it's really like magical.
33:32
But I don't think like it isn't unlocking us like making better product decisions or it's not prevent.
33:39
It's not like saving us time sitting in a room and debating like the right, you know, design decisions.
33:44
uh so that those are like my two sort of competing takes no and i i would completely agree i mean
33:51
it's been we've been leaning in heavily over the last month and a half i mean we've been leaning in
33:57
heavily for the last two years really but now like the the open claw um phenomena we've been using
34:05
that for like six weeks now or five or six weeks and it's really extended what we can do and to
34:11
your point about taste like there's a ton of ideas i've had it was like okay i would love to do this
34:17
but we're bootstrapped we run lean we only have so much capacity to try these things and now
34:22
with open claw like it's allowing us to like sprint towards a lot of the the goals but taste
34:29
is like we revamped our uh morning newsletter five days a week and it's pretty much not automated but
34:37
the AI or a little clanker builds it.
34:41
But there's a lot of taste and it's collaborative
34:45
sort of endeavor between myself and my agent
34:49
Martin, who's a more sophisticated version of Marty, throughout the day
34:53
to sort of just get the
34:56
stories that we're going to include in the newsletter and the structure.
35:01
But there's a lot of taste. It's like curating. But now I have the ability, instead of spending
35:05
two or three hours actually formatting and putting putting things into the newsletter i can just
35:12
throughout the day put links in a google sheet with some notes voice the text notes about what
35:18
i want to touch on with a particular topic and then at the end of the day hit up martin be like
35:22
okay go to the google sheet look at what i put in there and let's put together the newsletter and
35:26
30 minutes later it's ready to go um like that the taste is extremely important but
35:33
But in terms of being able to get stuff done, particularly with small teams, it's accelerating that.
35:39
And I think there's a misnomer going around out there, too, which is you're not going to have to work more.
35:45
But if you have eye agency and willpower, it's just like I've had more 1 a.m. nights over the last four weeks than I have in the last two years because I'm just like, oh, we can go after these ideas now.
35:55
Absolutely. And I think what it does, and from a hiring perspective and headcount perspective is it honestly hasn't changed our headcount projections.
36:07
It's just solidified and hammered home the qualifiers that we have for who we hire.
36:15
Like we just will only hire people we think are high agency, who have taste, who can synthesize and understand the business problems.
36:22
and
36:24
hire people who have the qualities that we need
36:28
to solve the real human bottlenecks that still exist, that these AIs aren't
36:32
solving. And you can still get more done by
36:36
hiring more of those people. You just don't need the people who are doing busy work
36:40
and the code monkeys who aren't thinking from first principles and understanding the
36:44
business. So that's my take.
36:48
Yeah. It's a brave new world. It's so funny because
36:51
I get the sense that we're just like teetering.
36:55
The world right now is like equally exhilarating and completely unnerving.
37:03
Because it's like we can go many different directions, obviously geopolitically.
37:08
Everybody's meeting the straight-hand moves right now to figure out what we're going to do with Iran.
37:12
We got, like we said, the Epstein files here.
37:15
We got this AI explosion.
37:17
You've got the high-velocity trash economy just accelerating.
37:21
at a crazy pace with prediction markets uh now we have attention markets that just dropped on zora
37:28
but it's a 10 markets oh yeah yeah remember zora was like a
37:33
base they they pivoted and they're on salada now but you can coin your content kind of thing it's
37:39
like well not only that but people can um can bet on trends can and basically ride trends and
37:44
monetize it somehow i don't understand how it works or why you would want to do it but
37:48
it well i think i think there is this thing where you know what we've seen in the last 10 years
37:55
especially in our industry um and what we're seeing now leaving crypto and just moving elsewhere
37:59
with prediction markets is um you just have this like class of people that chases financialization
38:06
and new games they can convince normies to to play because they can just extract um and i think
38:13
that's like we're just seeing that now i think prediction markets is a big example of that it
38:18
has like some really legitimate cool use cases like trying to just understand what's going to
38:22
happen with the truth um which i think is actually very cool and innovative um but actually like 90
38:28
something percent of the volume just sports betting um so it's like you know uh at the end
38:35
of the day like you take these this technology and then it's just like oh let's just yeah like
38:39
extract from a subset of the population who we can farm well i will say
38:48
this is like sports betting is um especially if you're spending all your money on it or all your
38:53
time on it you shouldn't be doing that but if you're trying to compare it to like draft kings
38:57
or like the big books it's like okay i can see the argument like prediction markets um make more
39:03
sense because there's no house to take a big and to play both sides like it's peer-to-peer if you
39:08
you want to take that risk uh you can also trade in and out of a position uh which is interesting
39:13
you can only get out right yeah so like compared to the status quo i think it is net benefit for
39:19
consumers from a fairness perspective but if you don't have impulse control you can still lose all
39:26
your money um in these prediction markets i mean the real fight is the state the state level where
39:32
you had texas and california had just swords betting was illegal and now the prediction
39:37
markets are going oh we're federally you know regulated everywhere and then all of a sudden
39:44
everyone in california and texas can now sports bet when they couldn't before and it's like this
39:49
big states rights question uh which is also like kind of an interesting thing we'll see how that
39:54
might end up in the supreme court yeah i feel like we're fighting all these battles i think the core
40:00
of the battle is the uh the essence of our humanity as we transition to the digital age
40:06
Like, what are we going to get? Are we going to get like a Bitcoin standard with lower time preference and better capital allocation and better incentive alignment?
40:14
Or do we just steamroll into Weimar version two for the 21st century?
40:21
It's unclear. It's unclear. I mean, we might get it. It might allow us to go back to focusing on real things like, I don't know, a bulkhead, you know, a white pill scenario would be these AIs.
40:35
allow us to get out of the email jobs, like the email jobs go away and everyone actually has to
40:40
go back to doing real things. Um, and, uh, this like, you know, the last few decades where
40:48
everything was just a financial abstraction and, um, um, you know, like fewer and fewer people
40:57
did like real things, uh, in the real world. Um, you know, maybe that gets reversed because
41:02
like a lot of that can just be done by AIs and we all go back to, you know,
41:07
manufacturing or farming or, I don't know.
41:09
Or maybe all of that just also gets automated with robotics because the AI
41:12
advances so fast that, and then we're all like, well,
41:14
what do we even do now?
41:17
And there's actually just like a thousand people who are like high agency and
41:20
high IQ enough to actually be valuable. And everyone else is just like, you know,
41:25
permanent underclass. Right. Exactly. Like, I don't know.
41:28
I honestly don't know.
41:29
I had a conversation with Justin Moon last week about this, and it's something I've been trying to grapple with in my head.
41:36
I think particularly our generation, I think we broke out of it, but there's kind of like preconceived notions of how the world works and how humans operate.
41:47
And I think one of those is that there's just like a natural distribution of people who are high agency and those who have the fluoride stare, if you will.
41:56
and I don't know I've been trying to think like is there a way that you can instill
42:00
and engender a culture of high agency
42:04
if we recognize it is what you're going to need
42:09
to have to be successful in this new age I go back and forth
42:12
like I can totally and I probably lean actually towards there's just a natural
42:17
distribution of people who have it and people who don't but I'm curious
42:21
like is there like a Spartan like culture you could
42:24
you could put out there to convince people that you need to develop the skills to have agency.
42:31
I think, I think there'll also, you know, be it more and more interesting conversations around
42:37
collectivism, or I think, I think people like might start thinking about collectivism a little
42:42
bit differently as the technology progresses, if it really does truly begin to advance.
42:47
um and and you know i think there is like this is like in the last sort of 30 years or or so or
42:55
maybe in 50 years you could say like americans like frowned upon collectivism because everything
43:00
was just working really well for us and like being individual being independent and high agency
43:05
this like made you wealthy um and if that stops being the case then all of a sudden collectivism
43:11
might start being viewed differently like hold on a second like we need to all like
43:14
who is my group who I band together with to make sure that like we all benefit and we protect
43:21
ourselves and put ourselves our group first because being a being alone you know just doesn't
43:28
work anymore and maybe like the fact that you know we were able to be have this ethos at all
43:35
was just because the U.S. just worked so well and you know what's the future of that there's some
43:42
informed thoughts.
43:44
Yeah.
43:46
Because it all I mean I seen it up close and personal like it definitely massively beneficial but it still It still not perfect Like I have to slap my clanker around every once in a while Like Hey
43:59
you did that wrong. You're not autonomous yet.
44:03
They don't learn. And I think there's still some major,
44:06
like break there's some major breakthroughs before these things are actually
44:11
changing everything.
44:15
Well, that's the other thing I wonder, like how much,
44:16
how much of like what's being put out there by sam altman by dario others is just like them
44:22
pushing their book and like trying to get their valuations up raise another hundred bill
44:26
exactly it's hard to say um it's hard to really because obviously these things are revolutionary
44:32
but at the same time um there's obviously something missing with them right um you know
44:40
it's it's like that classical conversation of why does why do we need to train these things
44:45
with gigawatts of compute or hundreds of megawatts of compute
44:50
and all of the information on the internet
44:52
when a human doesn't need any of that.
45:00
A human doesn't need to tell the information on the internet
45:03
to be able to be useful.
45:05
So there's something fundamental missing
45:07
in our understanding of building intelligence.
45:11
and the real maybe scary thing is if we figure that out
45:16
that's when it gets scary and until then maybe it's actually just kind of like
45:19
I don't know these things are just really smart but dumb at the same time
45:24
yeah that's the I mean I think
45:27
there's been more discussion
45:29
arising around this too I mean the just separating intelligence and consciousness
45:35
like can you actually be genuinely
45:39
intelligent in the sense that you can learn new things and have creative thought if you're not
45:44
conscious and can these things ever be conscious i think the answer is probably at some point
45:51
we can get we'll get there but i'm also not convinced it's like gonna happen in the next
45:56
few years yeah i'm not convinced it's like i could be wrong i i don't have like you know i
46:04
wouldn't have predicted how good these things are today um five years ago so i want to like you know
46:10
i i do think we should consider a world where extrapolating these things getting smarter and
46:15
smarter and accelerating pace does happen but at the same time i just like from the first
46:20
principles perspective i have a hard time seeing how throwing more energy a compute
46:24
solves that fundamental problem of these things aren't learning um these things can't aren't like
46:31
aren't handling novel tasks.
46:36
And, you know, every time you send it something,
46:38
like it has a context window, it doesn't remember anything, right?
46:41
And those are problems that they're working on.
46:42
The question is, like, how will they actually be solved
46:46
in any near-term future? I don't know.
46:48
Yeah. Is there a problem as insurmountable
46:51
as scaling logical qubits for quantum computers?
46:54
Who knows?
46:55
Yeah. That's been a big...
46:59
What are your thoughts on...
47:01
whole quantum debate? You know, I hate, I hate being in a position where you're, where, where
47:11
my argument is betting against humans figuring something out. Right. So like, I hate sort of
47:21
being somebody who sits there and says quantum computing will never work. And here's why.
47:27
And the problem, I hate being in that position because it's non-falsifiable, right?
47:32
You can't prove they won't figure something out.
47:38
But at the same time, there is some truth to it.
47:43
It's a really hard problem.
47:45
I think it's probably overblown.
47:49
But also, what if it's not, right?
47:51
There's a lot of information asymmetry here.
47:53
Like understanding quantum computing is not easy.
47:56
It's a highly specialized field. And from what I can tell, there is real progress happening.
48:04
And I don't think, and if the, you know, what makes Bitcoin great is that I know,
48:13
I have high confidence that it's going to be functioning effectively 10, 20, 30 years into
48:19
the future. And so we always want that to be true. We always want people to believe that Bitcoin will
48:26
always function and be secure many, many years into the future. So because of that,
48:31
I do think we do need to care about this. I do think we need to, we are, I mean, there is a lot
48:36
of development effort already going into post-quantum signature algorithms for Bitcoin
48:42
and what transitioning to that could look like. And I think that's important work. And I think
48:46
it should be done with conservatively, but with some urgency. But we also don't want to rush
48:54
something that creates a vulnerability. So that's
48:58
my take. I completely agree. I think that's been the most
49:02
frustrating thing about the whole narrative around Bitcoin and its
49:06
relationship with potential quantum breakthroughs at some
49:10
point in the future is that people are saying, you're not doing anything. Will the devs
49:14
do something? It's like, well, this has been an ongoing discussion for over a decade.
49:18
There's a lot of research being done. There's a BIP out there that
49:22
could potentially be merged if you want to put your Bitcoin in an address that's nested in a
49:32
tap leaf that is quantum resistant. You may be able to do that at some point soon.
49:37
But then to your point, I mean, you don't want to rush it because you could
49:40
introduce some sort of critical vulnerability that destroys the network itself. But I think
49:48
another interesting perspective that somebody like you could provide like what what would the
49:52
logistics of your business like the transition to this for your business look like like how many
49:58
different sort of things would you have to change um if we were to transition to this
50:04
so there's a few components here one is cold storage one is a hot wallet which is where you
50:12
know most transactions are going in and out of every day what we would probably do is um so let's
50:19
like let's just put totally aside how do we handle like the lost coins or you know the coins that
50:26
don't get moved over to a new quantum secure signature um let's just assume you know okay
50:32
we have a soft fork it introduces a quantum secure signature um like sphinx plus like something like
50:39
you know, Jonas Nick is working on. What we would probably do is move all cold storage coins over to
50:46
that once it was, you know, once we felt really, really confident about it. We wouldn't do it like
50:52
right away because presumably this would be, this upgrade would happen many years before a viable
50:57
quantum computer actually existed. So we would, you know, let it run its course, you know, test,
51:03
do a lot of testing, have it live on the network for hopefully a year or two. We'd move all cold
51:08
storage coins over to this new signature scheme. And the hot wallet, we probably still keep running
51:16
with the old signature scheme, but we'd start building and getting things in place to support
51:23
this new signature scheme. Now, there's a lot of open questions from a wallet experience perspective
51:29
for both consumer self-custody and also businesses where some of the things that make operating
51:36
while it's very convenient today might not work. For example, like BIP32 derivation, right? Being
51:43
able to derive addresses from a public key, those tools probably won't exist for post-quantum
51:56
algorithms. And so things might get a little clunkier. We might see longer, or just a transaction
52:06
might be bigger right the um you know that might be more expensive and so it would be a it would be a
52:12
um a hit to uh self-custody usability unfortunately but you know if that's if that's where the tech
52:23
goes it's we don't really have choice yeah yeah i had jonas and uh mikhail on we talked about this
52:29
that's like what i think uh many people are like pushing a rush to this don't realize it's like hey
52:34
we have a bunch of standards, partially signed Bitcoin transactions,
52:38
the Lightning Network, you have the HTLCs,
52:41
you have all these things you can't just upgrade now
52:43
and bork all this stuff that's been built over the course of 17 years.
52:48
You have to think through this, strategically coordinate
52:51
across the Bitcoin network and all the individual actors within it
52:56
and put a concerted effort forth.
53:00
And then on the hardware wallets,
53:01
that's actually a business opportunity for somebody who can build a beefy hardware wallet
53:06
that is high power and can actually sign the signatures in a timely manner.
53:12
I would think as well.
53:15
Yeah.
53:16
It will lead to opportunities.
53:18
Like you said, it's hard to suss out the economic opportunists pushing the quantum fear
53:26
versus the actual technical reality.
53:28
And I think that at the end of the day, really no one knows, right? You can't, you don't know what's going to come out of the mind of some guy in the lab at Google.
53:40
Or some model. Maybe the models figure out how to learn actually. And they're like, hey, guess what?
53:45
I think what we do know for sure, and we've known for Bitcoin's lifetime, is theoretically, like the laws of physics do not prohibit this.
53:54
it is an engineering problem
53:57
it does not require
53:59
breaking the laws of physics
54:01
and at the end of the day
54:03
that's the scary thing
54:05
about cryptography in general
54:06
is there's no law of physics
54:09
that says a certain cryptographic
54:12
primitive is secure
54:13
it's more like
54:14
we haven't been able to prove
54:17
it's not hard but we can't prove it is
54:20
so
54:21
you know
54:23
that's the that's kind of the scary thing about math in general is it's not really constrained by
54:28
physics yeah um just gave the 2025 retrospective we're almost two months into 2026 what are you
54:38
um excited about what are you looking forward to what are you focused on uh yeah whether it's
54:46
that river or bitcoin generally right now we're focused a river we're focused on uh this dual
54:53
money vision. We want to, you know, historically, we were this place where people came to buy Bitcoin.
55:00
We want to be the central hub for people's money. We want to be that place where you bank.
55:06
And so, you know, the future for us is this year, like focusing on building the future of Bitcoin
55:13
banking, having dollars and Bitcoin in one place. We're not a chartered bank. We partner with a
55:19
a bank to provide dollar functionality. But, you know, I do believe that this is the future
55:26
of money. And so that's our focus. So we're working on things like bill pay, you know,
55:32
being able to pay your bills from your river account, making it just more and more compelling
55:37
and easy to use Bitcoin and dollars in one place. For Bitcoin more broadly, I think the quantum
55:41
stuff is going to be a big focus of conversation. I think that we have a big opportunity there to
55:48
show people that again bitcoin is the most secure and certain chain in the world and we think about
55:54
the long tail risks so i do think that conversation will dominate over the over the coming year and i
56:00
think every time a new blog post comes out from a quantum lab it'll reflame you know re reignite
56:05
these conversations about bitcoin and quantum and i think every month that happens we'll have better
56:11
and better answers for people.
56:13
Yeah.
56:14
That's funny too.
56:16
I think we caught at least some of the grifters yesterday
56:20
because two weeks ago we had a large downward difficulty adjustment.
56:25
There were many people on the quantum side saying,
56:28
look, the miners recognize the quantum risk.
56:30
They're unplugging.
56:31
They're giving up on their investment.
56:34
This was happening while a winter storm was taking over most of the United States.
56:38
And hash rate was either turning off because they were involved in demand response programs or the actual data center had some disruptions due to inches of ice falling from the sky.
56:53
And then yesterday we had an upwards adjustment of 14.7% or above where we were before that.
56:59
It's like, well, it wasn't quantum.
57:01
Yeah, exactly.
57:01
there's always someone who's got a bad take that goes viral and all of a sudden you know
57:08
everyone's texting you about it unfortunately yeah just wait two weeks wait two weeks well
57:13
it's always great catching up sir thanks for having me on honored to call you a friend and
57:19
a colleague in this bitcoin network are we colleagues colleagues in the network is that
57:23
what we're gonna call it i don't like community either i don't think yeah we're actors yeah
57:28
acting in the network is more of the mathematical term, I guess.
57:32
Colleague is, yeah, I like colleague.
57:34
Brothers.
57:36
Brothers, brothers.
57:37
Brothers in arms here.
57:41
We'll link to these reports in the show notes.
57:44
Keep crushing the research.
57:45
It's highly valuable.
57:47
And I think it's great to be able to have this research to point to,
57:52
to be like, hey, lightning's not dead.
57:54
Actually, it's better than ever.
57:55
Yes, individuals are losing.
57:57
their share Bitcoin overall, but businesses are adopting it alongside governments and
58:04
institutions. It's not just these large actors that people don't like coming in. It's mom and
58:12
pop mainstream businesses as well. I think it's very beneficial for the pitch to people who are
58:17
skeptical. Absolutely. Yeah. Excited to share more there. All right. Well, all right. A little
58:23
tease, a little tease to end it. We'll, uh, we'll, uh, we'll catch up again at some point soon.
58:28
All right. Looking forward. All right. Peace. Love freaks.