Latest / Simply Bitcoin / Pierre Rochard | The Battle for Self-Custody | Simply Bitcoin IRL

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Pierre Rochard | The Battle for Self-Custody | Simply Bitcoin IRL · Simply Bitcoin

0:05
Hello everybody. Welcome to another episode of
0:10
Simply Bitcoin IRL. Today, I'm joined with a man
0:14
that needs, no introduction, Pierre Richard before I bring
0:19
him on stage. I want to give a shout-out to
0:21
the awesome Bitcoin company. That powers the show Swan,
0:24
Bitcoin.com, best place to buy Bitcoin, build bike bitcoiners
0:28
for bitcoiners. They incentivize dollar.
0:30
Cost averaging self custody. If you haven't already done so
0:34
visits. On Bitcoin.com today, want to
0:39
bring up here here. Thank you.
0:41
Thank you so much for joining us.
0:43
Your looks like you're experimenting with the many
0:46
Bitcoin backgrounds. Yeah, that's all right.
0:48
Thanks for having me on. It's excited to be here.
0:54
I'm excited. Look, so here and I know, you
0:57
know, Sure, you know exactly what I'm talking about.
1:11
I think that once you go down the Bitcoin Rabbit Hole, you
1:16
come to so many understandings like you learn something new.
1:20
Like it's, you know, and my current rabbit hole is holy
1:24
crap. This inflation thing is a scam,
1:26
is it really necessary for economies to work?
1:29
I asked I had the privilege to have Lynn and Jeff and this is
1:32
the first question. I asked him right off the rip is
1:35
Inflation necessary. So I'll I'll you know what we
1:39
could talk about that a little bit later, but where are you in
1:42
your Bitcoin Rabbit Hole experience, what what
1:45
realizations and understandings and things have you been
1:49
ruminating in your mind as of late like that, you're just like
1:53
holy cow. This is crazy because I don't
1:55
think I've ever met one person including, oh, geez, that have
1:59
really reached the bottom of this rabbit hole.
2:01
It's always a new realization, you know.
2:04
And it's funny because We all kind of collide and we reached a
2:09
similar conclusion but we're all coming at it from different
2:12
angles, different experiences in life.
2:15
So where are you in your, in your Bitcoin, rabbit-hole
2:18
journey. And what things have you been
2:20
thinking about as of late? Yeah, a realization I had
2:28
yesterday and maybe others have this might be obvious to others,
2:34
but Is that multisig allows custody to be decentralized.
2:41
And this wasn't aspect of decentralization in regards to
2:47
bitcoin that I'd really put much thought into and once once that
2:53
got into my head contrasted with gold being centralized at Fort
2:57
Knox. The really the most secure way
3:01
of custody and Bitcoin is not by putting it all in one basket.
3:05
And you know, surrounding it by the US military but rather by
3:10
doing a multisig and hiding the private keys and you know
3:14
discrete locations. That's yeah.
3:19
Yeah that was that was something that I had not really
3:22
internalized even if I'd perhaps heard about it from others
3:26
before. So what what what is it that
3:31
makes you so fascinating about that subject?
3:33
Because I went down that rabbit hole the the the The game theory
3:36
of geographically, separating your seeds, you can even do it
3:40
in different jurisdictions, right?
3:42
You can have fun with it. Some of those seeds can have a
3:44
25th word like there's so many things that you could do.
3:48
It could be a 2 of 3 3 or 5. I'm a big fan of the two or
3:52
three I think 305 is you know because if you over complicate
3:58
security can hurt you just as bad as having too little
4:02
security. So what are your thoughts on
4:05
that? Like It led you down that path
4:08
that you found that so fascinating.
4:11
Yeah, I mean I as part of providing kind of the Bitcoin
4:15
101 almost every week for the past four years, the I'd always
4:22
talked about multisig. But it was the first time that
4:25
I'd kind of said this is decentralized custody because I
4:31
still had it in mind that, you know, this.
4:34
It's like I said, Never used that terminology for multisig.
4:39
And also, I do want to say that there's a lot to be said for
4:42
single sake as well. So I'm not saying that multisig
4:47
is the only way or anything like that, but it does completely
4:51
change the kind of the, the equilibrium outcome over the
4:55
long term. I think, one of the challenges
4:58
is that over the short-term a common way that people acquire
5:01
Bitcoin is by purchasing it on a Sighs exchange and then just by
5:08
pure momentum, leaving it there, not not because it's complicated
5:14
to self custody, but rather because that's the easy path is,
5:20
you know, I like in from my point of view, if you look at
5:24
the hurdles involved, in setting up a hardware wallet versus
5:27
setting up an exchange account and securing a hardware wallet
5:31
and securing an exchange account.
5:33
Hardware wallets actually orders of Attitude easier than an
5:37
exchange account. It's just that in order to buy
5:40
Bitcoin, one has to start by or generally the path that people
5:45
go through is setting up and securing an exchange account and
5:50
and then they don't, they feel like they have enough kind of
5:54
economic exposure to bitcoin and they don't follow through on
5:58
setting up that Hardware wallet, maybe that'll change in the
6:02
future, it would be really cool if the Default path was like
6:07
that. You buy a hardware wallet and
6:10
then from there you buy Bitcoin I know that some of the hardware
6:14
wallet manufacturers. Now, bundle in the ability to
6:18
buy Bitcoin into their desktop software that they you know,
6:23
connect and and that might be what the angle that swans going
6:28
in with their acquisition of Spectre.
6:31
So that's, that's really cool. Now, the The yeah, I'll just
6:37
leave it there for. I rambling know if it is a it is
6:41
a fascinating conversation because you know you have for
6:46
example it not only you know Swan seems to be heading in that
6:49
direction right Casa. Right.
6:52
You know added but they they started the in the opposite
6:55
direction. They started with a multisig,
6:57
you know, type of solution collaborative custody and then
7:00
the like hey why don't we just add Bitcoin purchases?
7:03
And then unchain seems to be falling down that rabbit.
7:05
Whole as well. So all coming to the kind of the
7:08
same realization of making it as easy as possible for the user.
7:13
You know, with the click of a button to at least take
7:15
advantage of the security benefits of multisig, but
7:19
without jumping, all through these hoops, right?
7:21
And I think the reality is like, okay, you know, for for, you
7:25
know, Opti producer in the background, you know, Pierre
7:28
myself. Okay, you know, cold card, let's
7:30
do it, right. But I think for the average
7:33
person, It's specifically the people that have spent a lot of
7:37
the majority of their lives in the Fiat Matrix.
7:40
I would make the argument here that sending a wire is more
7:43
complex than taking self custody, but Crossing that
7:49
initial Bridge could seem daunting to, a lot of people
7:52
does it worry you at all the, what I call the, the self
7:56
custody aspect? Because the reality is that, if
8:00
the way that change is individuals, Taking if enough
8:09
people do. It is, if people don't do it, I
8:13
think it's just a continuation of the system that we've lived
8:16
for so long way they manipulate it you know that as the case
8:19
with FTX blowing up they they were selling Bitcoin they didn't
8:23
have. So does that worry about a
8:24
little bit the self custcity aspect.
8:26
And I know there's been Solutions like Feta minutes and
8:29
maybe you want to talk a little bit about that as well.
8:32
Yeah, so I just see it as as with many other parts of Bitcoin
8:37
that it's anti fragile. So If people you know, F around
8:44
they find out. So if they, you know, leave
8:48
their coins at Celsius, FTX block fi whatever they find out,
8:57
why they weren't supposed to do that.
9:00
So I'm not really worried about a situation where, you know,
9:04
this this problem is spiraling out of control and, you know,
9:10
Please holding their own Bitcoin.
9:13
The other point I would argue is that all of the Bitcoin are
9:18
currently being self custody 8, meaning that if you leave your
9:23
Bitcoin at coinbase, coinbase is self custody being there
9:28
Bitcoin. And what you have is an IOU.
9:32
So it's not like there's yeah, they're like, and If you, if
9:41
you're comfortable holding an IOU and that's, you know, that's
9:46
on you. But it if if then coinbase goes
9:50
belly-up, you know, there should definitely be clarity about the
9:54
fact that you don't, you never held Bitcoin and maybe it'll
9:59
take a bankruptcy judge to get you to understand that.
10:02
But yeah, I think that the the smart way to go about life in
10:09
general. Is to learn from other people's
10:11
mistakes, but I think that lots of people are going to learn the
10:16
hard way by making the mistake themself and that's just the way
10:21
life is ours. It's not really something that
10:23
worries me per se. Yeah, 100% is sometimes.
10:27
And and and you know, that's the case right now so far.
10:29
Right the hey, you see these record amount of outflows going
10:33
out of the exchanges. And it's exactly for what you
10:36
just said, Pierre, which is, people got spooked.
10:38
Yeah, we got spooked and they Eli's, not your keys, not your
10:41
Bitcoin. So yeah, the other thing I would
10:44
add is that like, we don't have to push self custody and like,
10:53
you know, be hindering over it because there are actual
10:57
businesses built around self custody.
10:59
So you mentioned Casa, Unchained Ledger Tresor cold card.
11:07
So their marketing department is Doing the heavy lifting for us,
11:12
right? They are the ones advertising.
11:14
Hey, not your keys, not your Bitcoin.
11:17
I don't feel like there's a gap here where if the community
11:22
doesn't get together and push self, custody that we're going
11:25
to have problems. It's like now there's, there's
11:28
profit making businesses that are going to that are
11:32
incentivized to promote self custody.
11:35
Yeah, 100%. And I think that I really
11:38
believe that it's just going to be Come more seamless over and
11:42
over time. So here what are your thoughts
11:45
on? You know the demonization right
11:48
and you know that you've heard politicians come up with terms
11:51
like unholstered wallet, right? As if you know, the hosted
11:55
wallet is the normal version and the on hosted wallet is some,
11:59
you know, some form of weird. You know, shadowy supercoder so
12:02
dangerous to society somehow holding your own wealth.
12:05
Is, you know, is dangerous. What are your thoughts on that?
12:08
And then That question with the recent bill that was introduced
12:14
by Senator Marshall and Senator Elizabeth Warren that really
12:17
showed their cards, right? It would have Force developed
12:20
which I don't know how this would be enforceable, but it
12:22
would have forced developers in the United States to register
12:26
with the state in order to write code for Bitcoin.
12:28
Like it's so absurd, but I think it really shows that this thing
12:34
really freaks them out there scared, right?
12:36
So what are your thoughts on that Pier?
12:39
Yeah. So So I think that it is a very
12:42
small, minority of them who are scared and freaked out and
12:47
proposing these bad policies the supermajority and it's a
12:53
bipartisan supermajority of policymakers understand three
12:59
things. One, the reality is that
13:05
self-hosted wallets right. People holding their own private
13:08
keys. That is what you know folks
13:14
might call investors or Savers and that's what the data
13:20
reflects even from. If you go look at chain analysis
13:24
is public reports, they're pretty clear about the fact that
13:28
the folks accumulating on their own keys are are doing so for
13:34
investment or saving reasons. Criminals don't care about
13:42
Bitcoin as an investment or as a savings vehicle.
13:46
In fact, quite the opposite. They are in an urgent, hurry to
13:52
get out of Bitcoin and into Fiat and you know, to spend their
13:59
Fiat, right? Like, criminals are high time
14:03
preference, meaning that they're not.
14:07
Thinking about, oh, how do I increase my purchasing power in
14:11
10 years, right? By definition, these people are
14:15
thinking very short term and they are trying to realize Fiat
14:22
games right there. Fiat, Maxis criminals.
14:26
So that means that criminals, whenever they get proceeds in
14:32
Bitcoin immediately trying to convert it into A Fiat.
14:38
And that's actually if we look at all the examples of them
14:42
getting caught, that's why they get caught.
14:45
And there's just a Litany of cases where the criminal had
14:53
takes the Bitcoin deposits. It at a regulated exchange
14:58
hosted wallet, right? And because they want to convert
15:01
it to dollars or euros. Dollars and Euros are the
15:06
favorite currency of criminals. They don't like Bitcoin.
15:10
It's too volatile right there. You know for all the same
15:13
reasons that the Skeptics have. And and so that's that's the
15:20
first thing. The second is that the people
15:25
the honest people who are accumulating Bitcoin as savings,
15:31
you know, on their own keys. These people are one, they're
15:36
not criminals and to they are voters right there, they're
15:40
upstanding citizens and policymakers.
15:44
Understand that if they enact band policies that punish honest
15:51
innocent savers. And have zero effect on
15:57
criminals, right? Because it that these policies
15:59
would have zero effect on criminals that they are
16:03
alienating voters and donors, right?
16:06
And so it's really in the self-interest of politicians and
16:12
Regulators to look at the data and to you know accept the
16:18
reality that these self-hosted wallets are you know for
16:25
Completely legitimate purposes and there's no reason at all to
16:29
be focused in on them. If the policy goal is to punish
16:35
criminals. So that and then lastly that a
16:42
Crackdown on self-hosted wallets is entirely futile.
16:47
What a self-hosted wallet is is just it's math.
16:51
So they can't ban math. They can't ban open source
16:56
software, so it's just a bad policy and any effective policy
17:02
and that's why there's a very tiny minority of policymakers
17:08
who make lots of noise about it, but they're not serious people.
17:13
They and they are destroying their credibility by engaging
17:19
in, you know, tilting at windmills, and, you know,
17:23
concocting fantasies About you know something something that's
17:28
just not reality. Absolutely.
17:31
It's the it's futile. But I think a lot of these
17:36
politicians have been used to have been used to living in a
17:41
world where, you know, they snap their finger and just basically
17:46
things happen, right? And I would argue again, it's
17:49
not a lot of them. It's, it's a tiny handful of
17:54
them. who are have this mentality the majority of them
18:01
are looking at this as Innovative technology let's see
18:05
where it goes that every new technology you know sometimes
18:11
gets used by criminals right you know that was the case with the
18:14
internet that was the case with cars and so there, you know,
18:19
understanding is that there's there's legitimate use cases for
18:24
For Bitcoin. And that there's that that's the
18:29
super majority view that. And there's you know a tiny
18:33
handful of politicians who they? I think not only are they kind
18:39
of loud and their rhetoric but I also think that they get
18:43
Amplified within the Bitcoin Community because the Bitcoin
18:46
Community wants to fight these people and I share that
18:50
sentiment. Absolutely the you know we want
18:52
to be really Engaged and push back on them.
18:56
But we also, I think have to be realistic about the fact that
19:01
most politicians agree with us. And so on this topic of self
19:07
custody, and so there's not like, you know, a huge gap here
19:13
between reality, the Bitcoin, community and politicians.
19:18
So you said there's a small minority and I do agree with
19:22
you, but you could make the argument It's very, they're very
19:26
powerful minority, right? So you have Elizabeth Warren,
19:28
right? And not only that, Elizabeth
19:30
Warren has not enacted any substantive policies in her
19:34
time, in the Senate. I mean she is a partisan hack
19:39
who, you know, is very, very loud.
19:43
And but I mean, I think that a lot of her rhetoric is aimed
19:47
towards getting money from donors, rather than actually
19:53
making good. I see and getting buy-in from
19:58
her party and across the aisle to enact legislation.
20:04
And so we see a pattern with her of, you know, every week.
20:08
It seems like she's going on about a different topic.
20:11
Very passionately, right? Like she knows everything and
20:15
she's got the solution to every problem, but I also just don't
20:19
think that she has the attention span to kind of follow through
20:22
on any particular topic. She's always seems to be coming
20:26
to the next thing, whatever will get her a media soundbite rather
20:31
than her actually doing the work of passing legislation and
20:36
influencing her fellow members of Congress.
20:40
Yeah, so I completely agree, but I was, so I was going to mention
20:44
Elizabeth Warren and then more specifically, Janet Yellen,
20:48
which had, you know, the US Treasury Secretary of which
20:53
Cynthia lummis has said. By name, she did this.
20:55
Epic block. Boom at the US.
20:57
Treasury is the most hostile. Know the way I'm going with this
21:01
Pierre is US. Treasury was they for the first
21:05
time in American history from my understanding?
21:07
They did sanction open source software.
21:11
And I would, I believe what they're really trying to do is
21:13
set a precedent, right? Because the reality is that
21:16
Bitcoins in open monetary Network and it is a threat to
21:21
current US sanctions policy. The US government gets a
21:24
tremendous, Of power from bees babysit basically being the
21:28
police of money. And getting to dictate what
21:31
countries what individuals are allowed to use dollars.
21:34
And now Bitcoin comes along and it allows countries to Sir,
21:38
potentially potentially circumvent that we had a lot of
21:41
interest from Russia. You had a lot of interest from
21:43
Iran, right? So I believe that influence the
21:46
treasury to at least try to see if they can get away with it and
21:52
we do have an open source developer.
21:54
That is Sitting in jail without bail in the Netherlands today
21:58
for writing code, right? Which is absolutely absurd.
22:01
So I mean, what are your, what are your thoughts on that it and
22:07
on top of this pier, you know, because of etherium
22:09
centralization, it did lead but did you see that that tweet by
22:13
Odell, right, that blog post led to?
22:17
I think it's 60 to 70% of a theory in validators.
22:20
Today are actively censoring for a branch of the u.s. government,
22:24
right? You know, it's absolutely crazy.
22:26
So what are your thoughts on that?
22:28
Because it is very aggressive hostility, you know, completely
22:33
against the First Amendment, you know?
22:34
I don't know. I don't know how much they care
22:36
about that nowadays, but what are your thoughts on that?
22:40
Yeah, absolutely. So the I think the senator Lamas
22:46
has analysis is correct, and then action from the executive
22:52
branch is very different from where the legislative branch and
22:59
the judicial branch are on this topic and so ultimately though
23:06
that that has to be reconciled and so either that can be
23:11
reconciled through litigation, through the the courts and the
23:15
judicial process or it can be reconciled and or reconciled
23:21
through the legislative process of essentially Passing
23:25
legislation that clarifies the intent of, you know what?
23:30
What, Congress wants executive branch agencies to be doing or
23:34
not doing? And so I think both are
23:37
necessary at this point. I think that if we look at the
23:41
history of AML kyc in the United States, and the bank, secrecy
23:46
act, I think the third party Doctrine is unconstitutional and
23:51
violates the Fourth Amendment. So I think that Either that
23:56
needs to be taken to the Supreme Court and overturned or there
24:03
does need to be legislative, you know, something past
24:08
legislatively, in order to protect Americans, you know,
24:13
constitutional rights and the right to privacy and being able
24:18
to control your own data and so on and so forth.
24:20
So, I think that the there, Is currently an imbalance that is
24:27
not sustainable so that I hope will see movement on to is that
24:37
if we look at what treasury did with the tornado cash, ethereum
24:45
contract, I don't think it's necessarily clear that they that
24:54
they're trying. To do a Power.
24:55
Grab it might have just been something clumsy on their part
25:00
where they were trying to figure out how to crack down on this.
25:06
It seems like they were effective though, so I think
25:12
that raises questions. Yes.
25:15
On it raises questions about, you know, is is treasury
25:20
overstepping here and violating First Amendment, but it also
25:23
raises question on. The tornado cash side of and on
25:26
the ethereum side of if Theory, mm and tornado cashiers.
25:31
So decentralized and censorship resistant.
25:35
Why was treacheries action effective here?
25:39
And I think that it's a travesty and it's horrifying that that
25:47
developer is you know under custody and arrested for this.
25:54
This contract, I don't know all the facts.
25:58
You know, maybe that's part of the problem is that there's not
26:03
a whole lot of clarity on why he's being held.
26:06
But I have to go, you know, dig into that Europe is certainly
26:13
more authoritarian in this regard than the United States is
26:18
and we've even seen this in terms of the conversation around
26:22
Bitcoin mining with the European commission last year.
26:27
So I think that there definitely has to be some some changes over
26:35
there. The Now, with the ofac
26:39
compliance and a theorem, I haven't seen any evidence of
26:42
actual aetherium transactions being censored.
26:45
I know that they are signaling. The dese takers are signaling
26:50
that they would sensor etherium transaction but it seems as
26:56
though that hasn't actually the there there isn't an example of
27:02
hey this transaction is waiting to get confirmed and it still
27:06
hasn't been included in. In aetherium block by the stake
27:09
or so maybe the audience will correct me on this but I haven't
27:13
seen any evidence of that. Yeah, no, it's maybe, maybe it's
27:19
a matter of time. Maybe they haven't come knocking
27:22
yet but we shall see here. One of the things that I think
27:27
spooked a lot of people in the community and I wanted to get
27:32
your take on that, you know, based on your experience.
27:35
And you know, how long you've been in the industry, Is, you
27:38
know, the tragic news news that Luke Dash right.
27:42
He had, you know, apparently he was hacked.
27:46
He did make the claim that his coins were in Cold Storage.
27:51
What do you think the lesson is there?
27:53
What can people take from that and most importantly our peoples
27:58
coins safe in you know if they store it correctly with their
28:03
Hardware wallets. Yeah.
28:06
So I don't know all the facts. I don't know that anyone knows
28:11
all the facts. In this case, from the outside,
28:16
it seems as though Luke had developed his own custody
28:22
solution in house heater old, his own approach to custody, and
28:29
I think that's All too common especially among folks who have
28:39
a lot of experience with computer security and with
28:44
software and Hardware that, you know, from their perspective
28:48
that they can build something that they can trust because they
28:54
are the ones who built it, and they are not having to trust the
28:58
third party. I think the problem with that
29:02
approach is the lack of peer review and kind of third-party
29:10
input especially so like, for example, the hardware wallets
29:17
out there on the market. The major ones, right?
29:20
Ledger treasure called card, they have gotten a lot of
29:24
attention from security researchers who are looking for
29:30
vulnerabilities. It's a big badge of honor in the
29:34
security industry to file a vulnerability on a hardware
29:41
wallet because it's extremely hard.
29:46
So when I think about the contrast between rolling your
29:53
own custody and using an off-the-shelf commercially
29:58
available, Tried and true, you know, approach like our Hardware
30:02
wallet. That's gotten a lot of peer
30:06
review. I think that it's better to go
30:12
with a hardware wallet, and I think that one of the challenges
30:19
for making that decision is one's Pride versus ones
30:26
humility. So I think that admitting the
30:32
hey look, I might know a lot about computer security.
30:36
I might have Decades of experience with software and
30:39
Hardware, but the reality is that, if I come up with a
30:44
solution for Elf it just will not ever be as good as a
30:50
solution that has been deployed at scale to millions of
30:55
consumers and has been pain tested by numerous different
31:00
security researchers. Some of whom might be as
31:04
qualified as me if not more so right in all humility and so
31:09
that's where I think that it's really important to accept ones
31:13
limitations. Into kind of.
31:17
Yeah. Now, the other part of it too,
31:19
is that with multisig, you don't even necessarily have to rely on
31:24
one particular Hardware while it manufacturer.
31:28
So, I think it makes a lot of sense.
31:29
If you're, you know, particularly concerned about the
31:34
security Montour, sorry, the trust model with a hardware
31:39
wallet, manufacturer that you do a two or three multisig with
31:43
three of the different, major Hardware wallet.
31:45
Manufacturers or you know one of them is a software wallet or
31:49
whatever you want to do but again the more creative you try
31:54
to be and kind of off the beaten path because you know you you
32:00
know everything the more likely that you're going to find
32:04
yourself in an edge case that is either you get hacked or you
32:09
lock yourself out of your Bitcoin because you try to be
32:11
too clever. Yeah, of course, it's a balance
32:15
Necessary between between the two.
32:19
I completely, I completely agree with you.
32:22
So here, you know, and specifically from someone from
32:27
your background, your experience.
32:29
This has been a very rough year for Bitcoin miners.
32:33
What would you say is the state of the industry?
32:36
You know, we did have a core scientific massive, you know
32:40
mining operation go under a good buddy of mine is Ben ganyan from
32:48
from, from bit Farms. So yeah.
32:52
It's been a, it's definitely been a roller coaster ride for
32:56
for Bitcoin Miners and you could even make an argument that it's
33:00
been quite a bloodbath really from my perspective, you know,
33:05
but I guess it's just because, you know, you've been here a
33:09
couple Cycles. He's just start to notice
33:11
patterns as like this is just history repeating itself.
33:14
It's just there's A lot more eyeballs and there's a lot more
33:17
money involved are minors going to be.
33:20
Okay. Is the industry going to be okay
33:22
is nature healing. Yeah, absolutely.
33:26
I mean I think that it's no secret that Bitcoin is has a
33:33
volatile exchange rate, volatile, purchasing power.
33:38
And you know anybody getting into Bitcoin mining would
33:42
understand that not only is the Bitcoin price.
33:45
Volatile, but that mining being a derivative on top of the
33:53
Bitcoin. Price, look, you're you're in
33:57
for a roller coaster ride. So that's where I think it makes
34:01
a lot of sense to have a capital structure strategy that is very
34:09
resilient and conservative. So I think that's that's been
34:15
Rights approach to to its benefit is steering away from
34:20
Leverage during the bull market and continues to not have
34:27
leverage. The the other part is really
34:31
around the cost of mining. So if you want to build a mining
34:38
operation, that has a low cost so that you have good margins in
34:44
the bull market. Get great margins and bull
34:46
market and then in the bear Market that you're not going
34:50
into kind of negative territory where you're better off just
34:54
shutting down. And so, right.
34:56
It's been really effective that namely because one we're in
35:02
Texas, the energy capital of the world to we have just the best
35:09
construction people in the industry and outside of the
35:14
industry. They are, you know, building a
35:18
custom facility for Bitcoin mining.
35:22
And three is the power strategy that right has is really focused
35:28
on. You know, how do we manage our
35:31
risk just in case the electricity price where were to
35:35
go up? Like and indeed it has gone up
35:39
unfortunately over the past couple of years due to natural
35:42
gas prices, going up and all sorts of other events in the
35:47
energy industry so the Bitcoin mining as as a whole it's it's
35:57
not going anywhere but you know the key players in the industry
36:04
have to constantly be thinking about hey look like a bear
36:07
markets are going to happen. It's not always just up into the
36:12
right. I think that As far as the
36:18
overall state of the industry going into 2023, you know, it's
36:24
as anybody can see the Bitcoin price has gone up over the past
36:29
couple weeks. I don't know if that's
36:31
sustainable or if you know, we're going to go sideways for a
36:33
while but in any case it seems to have it seems to reach the
36:37
bottom or to be stabilizing but it's anyone's guess.
36:43
And it's all about. Yeah.
36:45
Building something that is sustainable through the cycle,
36:49
and I think right has succeeded at that.
36:52
Absolutely. So you said something really
36:55
interesting, which is this idea of Leverage, right?
36:58
And I think that the companies that use leverage not even not
37:02
including not only mining companies, right?
37:04
Just companies in general. That have used leverage have
37:08
been absolutely wrecked. I was hearing stories of miners
37:14
borrowing money from, you know, from the now-defunct Celsius and
37:19
using miners themselves as collateral How does that even
37:23
work? Like why did they even accept
37:25
those types of agreements? Like it was, it was absolute
37:28
absurdity. It was that really, what caused
37:33
this? Huge blow-up at the end, right?
37:36
This cascading effect of all these companies going under.
37:41
Well I don't think it caused that and look you know when we
37:47
say a company going under it's really you know if you have a
37:52
Company that has too much leverage and the finds itself in
37:58
default or and bankruptcy. And you know, reorganization
38:02
it's definitely the equity holders who are suffering, but
38:08
at the end of the day, it's because the Bitcoin price went
38:11
down, right? And and that the even in a
38:17
situation where you don't have any Leverage.
38:21
The The when the Bitcoin price goes down the value for the
38:25
shareholders just mechanically goes down as well.
38:29
Because ultimately what these Bitcoin mining rigs are mining
38:33
is Bitcoin. Yeah.
38:36
Okay, makes sense. All right Pierre.
38:39
So, I save this because I thought this was fascinating and
38:42
I just want to get an idea of what this was like in the room
38:47
for audio listeners. This is a screenshot that Pierre
38:49
posted and it says, I Plane to j.p.
38:53
Morgan. How verifiable Bitcoins open
38:55
source, monetary policy is with node software and again it's
38:59
just an image of pier in a suit. I might add speaking to, you
39:03
know, it looks like a bunch of people that work in the banking
39:07
industry. How is that like is there you
39:11
know like what was the reception?
39:13
I'll start with that. Yeah so that picture is from
39:18
2019. I dug it up because of Jamie
39:22
dimon's comments yesterday about that Bitcoin.
39:28
And, you know, the definitely wore a suit, you know, you got
39:32
to know your audience and when in Rome, you know, do is the
39:36
surrounds. And I was up on stage with
39:41
wences. From previously, from zap.
39:44
Oh, I don't know if any. Oh, jeez are listening.
39:46
They'll know about zap. Oh, and yeah, it was a great
39:51
conversation. and I think that the You know, I think that
39:58
there's just a lot of Education that needs to happen for folks
40:02
to understand what Bitcoins fundamentals are.
40:04
I mean to see Jamie dimon on National Television?
40:08
Say that asked the question, how do you know there's only going
40:12
to be 21 million Bitcoins? You know?
40:16
I I wish that Joe who was answered his question, had
40:24
answered it a little bit differently than he did.
40:26
Joe said, well, Satoshi, and and then Jamie dimon hopped in with.
40:31
Yeah. How do you notice?
40:32
The, so she's not going to change it.
40:33
You know, the answer is not about Satoshi, right?
40:36
It's not an appeal to Authority. It's not like, well, you know,
40:39
Satoshi told us there were only be 21 million Bitcoins, not at
40:43
all. It's the fact that you can go
40:47
and find the source code, And read the source code and do the
40:53
math. Run the numbers and see that
40:55
there were only ever be less than 21 million Bitcoins.
40:59
And so then you can take that source code, you can compile it
41:05
and run it and verify for your own self.
41:09
That hey look, you know, so far we're only at 19 million Bitcoin
41:14
and every having has happened and so So while you know, the
41:21
next having Czar in the future, there's zero reason to doubt
41:25
that those having's will happen. I mean, it is basically asking
41:30
the question of, how do we know the sun will rise?
41:33
Tomorrow? Look, the sun's going to rise
41:36
tomorrow. I you can have as much
41:40
uncertainty as you want to inject into yourself there, but
41:45
I guarantee you 100%, promise you this He's going to write and
41:50
you know, you might ask yourself.
41:52
How is this guy going to fall? No, this guy is not going to
41:55
fall, right? It's but I also find it
42:00
hilarious that Jamie dimon's asking this question and it's
42:04
like, hey Jamie there's 21 trillion dollars pure
42:08
coincidence, 50 21 trillion dollars in M2 monetary policy.
42:13
How do you know it's you know, not going to be more than that.
42:18
And the reality is that it's absolutely going to be more than
42:23
that. They the it'll be 50 trillion,
42:26
it'll be a hundred trillion they're going to continue to
42:28
print dollars like there's zero doubt about that and so it's
42:32
like okay on one hand you might have some skepticism about the
42:37
you know, 30-second having in the year 2140.
42:43
But I have zero skepticism, I have zero.
42:48
The about the fact that they're going to print a lot more
42:52
dollars in within the next, you know, five years, right?
42:57
There's there's zero doubt in my mind so it I thought it was a
43:02
fascinating conversation between Jamie dimon and CNBC house.
43:09
So do you mean he's not stupid? He's not a dumb guy, you know
43:14
and neither is Elizabeth Warren like that they're not
43:17
necessarily Good. So you can't say they're naive.
43:22
I've met lots of people who didn't realize, like what it
43:25
means that Bitcoins open source. Like then, if you're not either,
43:32
you know, and I have the benefit of in high school, I went down
43:35
the rabbit hole free and open source software.
43:38
And so I was, I was installing Linux on my parents computer and
43:41
I was listening to Richard. Stallman lecture is about the
43:44
rights that users should have with their software.
43:48
The Is that the mainstream including Jamie dimon like they
43:53
use Windows. They only know about proprietary
43:57
software, it would never cross their minds that they would you
44:00
know, they would even want access to the source code and so
44:05
I would it would not surprise me at all.
44:07
If Jamie dimon does not know that Bitcoin software is open
44:12
source. He might know that Bitcoin
44:15
somehow decentralized but he might think that it's a
44:19
proprietary binary is provided by the Bitcoin foundation.
44:24
And you know, you've got all these computers running it like
44:27
you've got all these computers running Spotify or whatever.
44:30
So I would, I would really, you know, challenge the assumption
44:36
that Jamie dimon knows what he's talking about and I would take
44:42
him at face value, right? They he is very early on in his
44:45
educational Journey but the, his ego is actually Stopping him
44:49
from learning more. And he ended the interview that
44:52
way. He said, look, I don't like this
44:54
topic, I don't want to talk about this topic and so when
44:58
you're in that mindset, then you're closing yourself off from
45:02
any further education. And you never even get to the
45:05
point where you realize, oh, this is open source software
45:09
than anybody in the world, can can compile and can look out
45:13
their own eyeballs, and Satoshi is not going to Spring a
45:16
surprise, on us, you know, in the year. 21:40.
45:19
Yeah I mean even if you even if it's so she came right came back
45:23
which I agree. I think it's highly improbable
45:27
but even if he did he didn't change anything now and there
45:33
was a an article from Pete Rizzo that looked into when Satoshi
45:41
left the project and Soto she never explicitly stated why he
45:46
left the project. But based on On the tone of the
45:51
Bitcoin talk forums when he left the project and kind of some of
45:56
the, his last interactions one could make the argument that.
46:00
So, she left the project because Bitcoin are started being toxic
46:03
towards him that they, they were, they were not like they
46:10
were pushing back on things. He was saying and like they were
46:14
not treating him, like some kind of benevolent dictator or some
46:18
some God, you know that that yeah, the the the toxicity
46:25
driving away developers, arguably starts with Satoshi
46:29
Nakamoto himself. And that's why I think that even
46:33
if he came back and he was like, Hey, we're going to do 22
46:37
million Bitcoin. The big winners were tell him to
46:40
F off, right? There's no doubt in my mind that
46:44
they would, you know, be like, hey Slater Heroes.
46:47
Screw this guy. What a clown and, you know, tell
46:53
them to have fun staying poor, and that they're going to sell
46:56
the fort coin, right? So, that's why I love Bitcoin
47:02
toxicity. By the way, I mean, they, they
47:04
even if Satoshi came back that he would have zero power Over
47:09
the network and over the plebs. Yeah, 100%.
47:12
And, you know, a meme came to mind when you were saying that,
47:16
you know, the Tom Hanks and the guy like I'm the captain now.
47:19
Yeah. The the Bitcoin is just like I'm
47:23
the captain now. That's so funny.
47:25
Okay. So here, do you think that it
47:30
was necessary for? I believe it was necessary for
47:33
stuff. It's just I believe that it was
47:36
a it was a net positive. It was a good.
47:39
That Satoshi stepped down. That's the to she left.
47:42
Right? Is very similar to the founding
47:44
of the United States. By the way, like one of the one
47:45
of the most important things in American history, was the fact
47:49
that after two terms, George Washington step down and that
47:53
set a precedent for, you know, all you know, really FDR kind of
47:57
broke the rules, but then they finally caught a fight it right?
47:59
Like, you know, two terms, that's it, right?
48:01
So I believe that it was a good thing, right?
48:04
That you took the human being the, the I'm glad the Anonymity
48:10
of Satoshi is what it is because I think it embodies the
48:14
importance of it, not being about an individual, or putting
48:20
an individual on a pedestal, but about being a movement about
48:23
being this thing. And I don't think any other
48:26
cryptocurrency shit coin, they haven't even come close to that.
48:30
There's always a figure there's always a person behind the
48:33
project and think makes Bitcoin very unique in that sense.
48:37
How do you feel about that? How do you feel Oh, about
48:39
Satoshi leaving. Yeah, I mean, in many regards
48:44
it's almost miraculous, you know, I don't know of any other
48:51
examples of somebody staying pseudonymous on the internet and
48:55
not getting doxxed, many have tried, right?
48:59
But ultimately there's there's kind of a paper trail somewhere
49:02
and to this day, satoshi's identity remains a mystery.
49:08
So I think it's excellent that he left Bitcoin the but I think
49:20
he could have stayed and I don't think that again the toxicity is
49:28
layer 0 and the, it would have certainly prevented Satoshi from
49:33
doing anything that would harm Bitcoin even if he had stayed
49:38
and kind of had, you know, influence and clout the It
49:46
speaks to his humility and I also think that anybody who
49:50
comes along and gets interested in Bitcoin and then decides they
49:55
can do something better than Bitcoin, they've got an ego.
49:59
They've got pride and they're not going to Humble themselves
50:03
into writing a bit and you know doing a soft fork and you know,
50:11
it's staying in Bitcoin. They are NG to create something
50:16
new. Because of honestly, they
50:21
whether it's avarice of, hey, look, I don't want to make
50:25
somebody else Rich by improving Bitcoin.
50:27
I want to get rich. And so I'm going to have a pre
50:30
mine and a pre allocation and all this, or its kind of hubris
50:38
of, oh, Bitcoins poorly engineered.
50:40
I can't fix it, nobody can fix it.
50:42
And I, we've got to start from scratch.
50:45
Whatever it is that it's actually great.
50:49
That those people have an outlet, it would be terrible if
50:53
those people somehow felt like they couldn't get out of
50:56
Bitcoin. So to me the multiplicity of
51:01
founder driven altcoins is a pressure release valve at the
51:07
social layer so that Bitcoin can continue to be pure and highly
51:12
toxic while other coins. Can, you know, flatter the egos
51:17
of their founders? 100%, And I think that's what
51:24
makes it, you know, that's what makes that's what makes Bitcoin
51:29
unique. That's what makes it special.
51:30
That's what that's what. That's what sets.
51:34
That's what sets it apart. And I don't think, I don't
51:37
think, I don't think I don't think anything.
51:40
I don't think anything's going to match that to be to be
51:43
perfectly Frank anyways here. Well, I just want to add one
51:46
more thing. Sorry, I know we might be
51:48
getting to time but this is an important lesson. 74 for
51:52
bitcoiners which is that look Satoshi left?
51:57
Bitcoin was fine if you leave Bitcoin Bitcoin will be fine
52:01
like don't don't think that you're so important that you
52:06
know Bitcoin depends on you which is 1 you know should
52:11
humble you but also give you such a sigh of relief, right?
52:14
Like it's okay you don't have to you're not like Atlas you know,
52:19
holding the world. And on his shoulders you there's
52:24
a very deep bench of talent in Bitcoin and you don't have to
52:29
feel like hey you need to get everything done and do
52:31
everything yourself and you know that Bitcoin is going to fail
52:34
without you. So combination of humility but
52:38
also that don't don't put too much pressure on yourself 100%
52:44
here. It's been an absolute honor.
52:47
Thank you so much for joining me on simply bit.
52:50
I mean IRL where can people find you online and why don't you
52:56
tell anybody what you're working on these days?
52:59
Yeah, find me at Bitcoin Pierre on Twitter, or Pierre, Richard
53:04
on LinkedIn. Make sure it's not an
53:07
impersonator. If they ask you how your trade
53:11
is going, I guarantee you it's an impersonator.
53:15
Never asked you that. I'd ask you how are your savings
53:18
doing but now, Now the you know might so you're not going to
53:23
send me to bitcoin back. I'm sorry I'm keeping the
53:27
Bitcoin. Ha ha ha.
53:31
So working on research and education at Riot and this week
53:36
I went to Texas A&M University and gave a Bitcoin guest
53:42
lecturer. They're so going to continue to
53:45
do you know where ever? I can help out with education.
53:53
This past year was with Joe brunette from block.
53:57
We're on transaction fees this year.
54:02
It'll be later this year. I don't know what topic it will
54:04
be but right now really focused on the education aspect.
54:09
So I think that's there's a giant information asymmetry and
54:13
you know we saw it with with Jamie dimon but there's many
54:19
such cases of folks who really Need a some some mentorship and
54:25
guidance in their educational Journey.
54:27
Absolutely. Well Pierre, it's been an honor
54:30
love to have you back on in a couple months ago I mean a
54:33
couple months or so. Thank you so much for joining me
54:37
today. Yeah sure thing.
54:38
Looking forward to coming back. Take care.
54:41
Alright guys, those another episode of Simply bitcoind IRL,
54:45
by the way, if you want. If you want to, if you want more
54:49
Bitcoin content, the party continues.
54:52
Six pm about two or three minutes live.
54:55
BTC sessions news Roundup Pierre.
54:57
Thank you so much for joining us guys.
54:59
The live show will be back tomorrow 12:15 p.m.
55:03
Eastern Standard Time, love you all.
55:05
Catch you guys later.