Latest / Simply Bitcoin / Adam Back | Simply Bitcoin IRL

Transcript

Adam Back | Simply Bitcoin IRL · Simply Bitcoin

• 0:00
  The amount of Bitcoin buying is much higher than a Bitcoin being
• 0:03
  mined, so it's just a question of when the sellers run out of
• 0:07
  Bitcoin to sell or decide they don't want to sell anymore.
• 0:09
  Is that your target? The half?
• 0:11
  Any prediction? Maybe it's more, I don't know.
• 0:14
  It's it's a, I mean, I think a good starting point is.
• 0:18
  There is very little retail involvement this cycle.
• 0:21
  Yeah, I mean, I guess that's from things like Google search
• 0:24
  trends and things like that, right?
• 0:26
  It's probably a last time to buy at 62 Bitcoin prices.
• 0:30
  It's a race. And so, you know, Sailor has
• 0:32
  said things like, well, he's he's just going to keep buying,
• 0:35
  right? And he's fearful about not
• 0:36
  buying enough. And so you've got new buyers
• 0:40
  coming in and if you don't buy them, they will basically, will
• 0:44
  Bitcoin reach parity with gold? Do you think it's a good thing
• 0:48
  that nation states start accumulating Bitcoin?
• 0:51
  There's a saying that everybody buys Bitcoin at the price they
• 0:53
  deserve, and I think the governments deserve, you know, a
• 0:55
  certain rate figure price, right, Yeah.
• 1:01
  Welcome to another episode of Simply Bitcoin IRL.
• 1:03
  We're here in the beautiful Lugano, and I've joined with
• 1:06
  someone that doesn't need an introduction.
• 1:08
  Adam, thank you so much for joining me today.
• 1:10
  Hi Niko, how you doing? Good.
• 1:12
  So Adam, it's been a pretty historic year for Bitcoin
• 1:17
  regarding the Bitcoin treasury companies as a whole,
• 1:19
  congratulations. With the Bitcoin Standard
• 1:22
  Treasury Company, you're #5 with 30,000 and 21 Bitcoin on the
• 1:27
  balance sheet. Well, it depends because we are
• 1:30
  funded on close and we'll wait for regulator approval.
• 1:33
  So there is 30,000 and 21 Bitcoin, but there's also $1.3
• 1:38
  billion and we don't yet know how many Bitcoin that will buy.
• 1:41
  So it depend on the Bitcoin price at the close.
• 1:43
  So, Adam, I think one of the things that I've noticed this
• 1:46
  year is just what the market is signaling, right?
• 1:49
  So a lot of the treasury companies have gone a little bit
• 1:52
  lower, you know, some have gone below M NAV.
• 1:55
  Where do you see Bitcoin treasury companies and the
• 1:58
  future of finance in general? Yeah.
• 2:00
  I mean, I think the treasury company phenomena is making
• 2:05
  genuine and sustainable advantage of the capital market
• 2:09
  mechanisms. Obviously a raise for capital
• 2:11
  formation for building products, but work fine as a vehicle for
• 2:15
  running an operating company and reinvesting in the products, in
• 2:19
  the services in them to develop more revenue and in putting the
• 2:23
  cash reserves of the company into Bitcoin as a better
• 2:26
  inflation hedged approach. So I think what you're seeing is
• 2:29
  that active behavior like active Bitcoin management, active
• 2:33
  operating companies going to be favored in the future most
• 2:36
  likely because the markets developed a view on the Mnasses.
• 2:40
  There are a lot of people shorting them at the moment.
• 2:43
  Gotcha. And another question for you, do
• 2:45
  you, because I think this is the main topic of this year, which
• 2:49
  is you believe that the four year cycle is over?
• 2:52
  We'll see. I'm thinking that you'll still
• 2:56
  have cycles, but it may not line up with previous cycles.
• 3:02
  And and I mean the reason you get cycles is the halving cycle.
• 3:07
  I think it's a real effect. People are often sceptical that
• 3:11
  it's a smaller percentage each time, but actually it's sort of
• 3:15
  followed by another effect which is the Hoddle wave.
• 3:17
  I people that learn the hard way the cold storing and dollar cost
• 3:23
  averaging Bitcoin is a safer and more conservative approach than
• 3:26
  market timing and so on. And so over time, the bigger
• 3:30
  percentage of Bitcoin are long term stored, saved, called
• 3:34
  stored. And so the percentage drop in
• 3:38
  halving it should really be considered related to, you know,
• 3:41
  as a proportion of the Bitcoin are on the market and these cold
• 3:45
  stored Bitcoin are not on the market.
• 3:46
  And so then effectively that ratio is not diminishing in the
• 3:51
  way that people think it is. And also most technology
• 3:54
  adoption curves goes through a kind of mass adoption surge and
• 3:58
  I don't think that coin has seen that yet.
• 4:00
  So, you know, could get the opposite dimension returns.
• 4:02
  But this this cycle could be an interesting one for that.
• 4:05
  There's a lot of people taking profit and new money coming in.
• 4:09
  The people that are taking profit will eventually run out
• 4:12
  of coins that they want to sell or the allocation that they want
• 4:15
  to sell, the allocation they want to get called on to.
• 4:16
  And there is a large amount of sustained buying from ETF buyers
• 4:20
  from institutions. About 30% of the BlackRock ETF
• 4:24
  has apparently the institutional.
• 4:25
  And you know, most of that means most of the ETF buying is
• 4:28
  actually just a new more accessible way to buy Bitcoin
• 4:31
  for probably mostly people in the bracket of the top 10% by
• 4:35
  wealth in the UK minus top 1%. So just people in a professional
• 4:38
  like business owners, doctors, dentists, lawyers, people with a
• 4:42
  share portfolio, small business operators, and when they decide
• 4:46
  to buy Bitcoin, they just call their broker or financial
• 4:48
  advisor and they reallocate from something else.
• 4:50
  So it's not necessarily new money, it's reallocated money.
• 4:53
  And so I think the ETFs enabled that second wave, the first wave
• 4:57
  being people who bought on Bitcoin exchanges or OTC cash
• 5:00
  transactions. And a third way of being
• 5:02
  institutional, I think the institutional wave is actually
• 5:05
  very new. Like that's, that's in effect,
• 5:07
  it takes a long time to ramp up, but nevertheless, the amount of
• 5:10
  Bitcoin buying is much higher than a Bitcoin being mined.
• 5:14
  So it's just a question of when the sellers run out of Bitcoin
• 5:17
  to sell or decide they don't want to sell anymore.
• 5:20
  And then presumably that will have an effect on the price.
• 5:22
  And then some of the people that sold my FOMO back in, because,
• 5:25
  you know, they may be thinking that looking at the history of
• 5:28
  Harvang and if they see that invalidated, that will change
• 5:30
  their behaviour as well. So there's a lot of market
• 5:32
  psychology in there. It's hard to predict.
• 5:34
  Bitcoin typically surprises people in some way or other.
• 5:38
  It definitely does. Bitcoin has a tendency of doing
• 5:40
  the exact opposite of what everyone anticipates.
• 5:44
  There's been the history of Bitcoin for sure.
• 5:46
  Does it surprise you that so many OGS Adam have been selling
• 5:50
  as much Bitcoin as they have been?
• 5:52
  I'm a little surprised for the reason that anybody who's been
• 5:57
  through prior cycles wouldn't feel that this is a particularly
• 6:01
  high point. Like to a lot of people that
• 6:03
  seems like this is relatively early in a cycle sort of price
• 6:07
  wise in the distance from prior all times highs and the distance
• 6:13
  from the prior all time low. But the price like was low and
• 6:15
  things like that, right? Should bear in mind, people
• 6:17
  forget quickly that in the last cycle there was a third all time
• 6:22
  high shortly before the Harvin, you know which replace you if
• 6:25
  you if you is out still for this cycle, right?
• 6:28
  And I think also the cycle has seen smaller drawbacks.
• 6:31
  In previous cycles you'd see maybe a dozen 3035% drops.
• 6:35
  So they haven't really seen that this time around.
• 6:37
  So the the drawdowns are smaller I think because the ETF buyers,
• 6:41
  retail ETF buyers, institutional buyers and the treasury company
• 6:45
  buyers are not panic sellers, they're long term holders.
• 6:48
  And so they are actually buying the dips and there's less
• 6:52
  proportion of the new incoming Bitcoin holders in this cycle
• 6:55
  that are prone to be shaken out by a drop does.
• 6:57
  This surprise you that 2025 hasn't been as explosive as a
• 7:03
  lot of people anticipated. And I know having anticipations
• 7:06
  in Bitcoin is a terrible idea, having expectations in general.
• 7:10
  But I'm going to get your opinion.
• 7:11
  Well, I mean, it's kind of waiting game until people run
• 7:16
  out of Bitcoin to sell basically.
• 7:18
  I think because if you look at the imbalance, it's huge.
• 7:20
  It's like 4 or five times, maybe 6 times the amount of Bitcoin
• 7:23
  being mined are being bought on a regular basis.
• 7:26
  You know, micro strategy is buying a couple of times the
• 7:29
  amount mined. You know, since the halving
• 7:31
  BlackRock ATF about the same. There are traders who are buying
• 7:35
  4, 150 a day just tactically buying up cheap Bitcoin at any
• 7:39
  time it pulls back reactively and you know, then you've got
• 7:42
  the ETF buyers, there's really a lot of buying.
• 7:44
  You know, I think the treasury companies are a factor as well
• 7:47
  in total, in addition to, you know, micro strategy and the
• 7:49
  rest because they are not sellers.
• 7:53
  They've been buying and holding. So you know, if there's a
• 7:55
  pullback that affects their share price, but it doesn't flow
• 7:58
  through to the Bitcoin price, which is interesting.
• 8:00
  So Pierre Rashad had described that, that the treasury
• 8:04
  companies are bitcoins, shock absorber might price shock
• 8:07
  absorber because price pulls back.
• 8:10
  They don't sell right and say, you know, if you get a lot of
• 8:13
  good investors, investors who buy and hold for the long term,
• 8:17
  that changes the price structure for the bear.
• 8:19
  So I think the price structure is surprisingly good.
• 8:21
  You know, the big liquidation cascade we had in the last few
• 8:24
  weeks didn't pull the price back that much, and there's a lot of
• 8:27
  heavy buying as it pulled back. So I think that shows that it's
• 8:30
  quite robust when people's confidence is quite high.
• 8:33
  It's, it's different the way that it's behaved this cycle and
• 8:36
  it, it seems like it's more institutionally driven.
• 8:39
  It's this, you know, small tick up very methodically.
• 8:43
  And one of the things I've noticed, Adam, is that there is
• 8:46
  very little retail involvement this cycle.
• 8:49
  Yeah. I mean, I guess that's from
• 8:51
  things like Google search trends and things like that, right?
• 8:54
  Yeah. I mean, I think, you know, it's
• 8:58
  probably a last time to buy at the six digit Bitcoin prices,
• 9:02
  right? So, you know, for people who
• 9:06
  are, you know, skeptical because I think it's still early,
• 9:09
  Obviously, you know, the percentage of people that own
• 9:11
  Bitcoin is quite low. It's a race.
• 9:13
  And so, you know, Sailor has said things like, well, he's,
• 9:17
  he's just going to keep buying, right?
• 9:18
  And he's fearful about not buying enough.
• 9:20
  And so you've got new buyers coming in and if you don't buy
• 9:25
  them, they will basically, right.
• 9:27
  So I think, you know, if there's no, you know, the average person
• 9:32
  doesn't really have an excuse. They've had a really long time
• 9:34
  to buy. It's still early and, you know,
• 9:37
  but sometimes people prefer to buy a higher price.
• 9:40
  They feel more confidence at a higher price.
• 9:42
  And that's been the case historically as well, right?
• 9:43
  The and the price rise has generally been kind of bouncing
• 9:47
  around the confidence and conviction that people have and
• 9:50
  new people come, a number of new people coming in.
• 9:52
  And so I think that continues to be the case.
• 9:55
  It's human psychology right when the price is pumping.
• 9:58
  Everyone just smashed by his. Yeah.
• 9:59
  And that's that's also how you get the blow off top, which I
• 10:02
  don't think we've seen yet in this cycle.
• 10:04
  Do you think that's going to happen?
• 10:06
  Do you think we'll see a parabola?
• 10:08
  And I know we're getting into speculation territory.
• 10:10
  But it, you know, it's sort of somewhat inherent in markets,
• 10:15
  but maybe it'll be more muted and we don't know actually.
• 10:18
  Of course, you know, what will happen if it will just keep
• 10:21
  grinding higher for go through through to the next cycle or if
• 10:25
  we'll have like moderate pullbacks.
• 10:26
  Of course, you always have volatility.
• 10:28
  But yeah, I think it's a slightly different price regime
• 10:31
  and the and the retail may come back in, you know, some higher
• 10:34
  price later in this cycle. So, Adam, I remember a long time
• 10:38
  ago, I was watching one of your interviews and you had a market
• 10:42
  order to buy all the Bitcoin. Yeah.
• 10:45
  Do you still have that market order open and at what price?
• 10:48
  So it was a 2 cent. So it was Alistair Milne, who's
• 10:53
  kind of a very early Bitcoiner. He has a tweet from 2011 saying
• 10:56
  something about Bitcoin and started a Bitcoin alpha fund in
• 11:00
  Monaco. So he had placed an order for
• 11:03
  18.7 million Bitcoin, I think it was, which was all the Bitcoin
• 11:06
  that had been mined at that time at 1 cent.
• 11:09
  And so I thought let's outbid him.
• 11:11
  I put an order for 21 million just to be sure at 1 cent, at 2
• 11:14
  cents rather which is $120,000. So it was actually a live order,
• 11:19
  but I think if in practice it couldn't get filled because you
• 11:23
  know, it was on the bid for next exchange and there only so many
• 11:25
  Bitcoin on that exchange. So even if the Bitcoin price
• 11:29
  fell through the order, you could only possibly buy what's
• 11:32
  on the exchange. And of course anything like
• 11:34
  that, everybody else comes out of the woodwork and places
• 11:36
  orders. So it never gets there really.
• 11:37
  So you'd probably be more to place a bid for a much smaller
• 11:42
  amount of Bitcoin or a much higher price than you might
• 11:44
  actually catch something in a flash crash.
• 11:47
  I thought it was that was always.
• 11:48
  Funny when I heard that story for the first.
• 11:50
  Well, I mean, people like to say, oh, Bitcoin could fall to
• 11:52
  0. And I think Bruce Fenton said
• 11:54
  the same thing. It's like, no, because, you
• 11:56
  know, even if something absolutely calamitous happens,
• 11:59
  people try to buy them for collector's sake, right?
• 12:01
  And that would reboot the market very rapidly.
• 12:04
  So, Adam. You've been involved in Bitcoin
• 12:07
  since the early days you mentioned and literally in the
• 12:10
  white paper. How has that been?
• 12:12
  Can you ever have imagined where Bitcoin is today?
• 12:16
  You're the CEO of two major companies, the Bitcoin Standard
• 12:20
  Treasury Company and of course Block Stream, which is fantastic
• 12:25
  work. The Jade, I love the wallet and
• 12:27
  all the other incredible stuff, the satellite and space.
• 12:30
  So could you ever have imagined this from the early days of just
• 12:35
  working on Bitcoin? Yeah.
• 12:37
  I mean, I think the sort of probability or the risk
• 12:44
  perception about Bitcoin reaching mass adoption was much
• 12:49
  as much more uncertainty early on.
• 12:51
  So, you know, people were hopeful and excited about the
• 12:55
  prospect of finally a deployed bare electronic cash that was
• 12:59
  decentralized, that the previous ones were centralized and that
• 13:01
  was ultimately the cause of their failure.
• 13:03
  And so that started the kind of hunt or the applied research for
• 13:09
  a way to make decentralized bare electronic cash that ultimately
• 13:12
  Satoshi found the missing ingredient and made it happen.
• 13:15
  But I think, you know, at least for myself in August 2008 when I
• 13:20
  first heard about Bitcoin and then when it was released in
• 13:22
  January 2009 source code, my thought was, so she has solved
• 13:28
  the technical challenge, but now comes the market test.
• 13:31
  Will it bootstrap? Will it get enough interest that
• 13:34
  it doesn't kind of remain a kind of techie computer geek
• 13:40
  experiment that fizzles or never takes off as opposed to gets a
• 13:44
  sustainable market, you know, maybe volatile, but that that
• 13:47
  will last Test of time. So I think that took some years,
• 13:50
  obviously. So, you know, hope hoped it
• 13:52
  would happen because, you know, people might might myself have
• 13:55
  been working on trying to make something like that happen for a
• 13:58
  long time. And we're very, there's a lot of
• 14:00
  excitement in a sort of Bitcoin like vibe in the mid 90s with
• 14:03
  Digicash, for example. But it failed.
• 14:06
  And the lesson people took from it failing was not, oh, it's
• 14:09
  over this give up. But what went wrong?
• 14:11
  How can we engineer a solution to fix it?
• 14:14
  And now some of the ingredients that went into that were
• 14:16
  discussed and later used or rediscovered by Bitcoin.
• 14:20
  So I think the motivation was there, the desire to see it, but
• 14:26
  you know, the confidence about whether it's actually going to
• 14:28
  happen grew organically over time.
• 14:30
  And you know, when block stream started in 2014, even then there
• 14:34
  was still a lot of uncertainty about the regulatory reception,
• 14:38
  you know, where the major companies, countries would ban
• 14:41
  Bitcoin and things like that, right?
• 14:42
  So actually Bitcoin has had a relatively smooth and dramatic
• 14:46
  growth and acceptance among users and even amongst
• 14:50
  establishment tax authorities, regulators and so on, which has
• 14:54
  been interesting to see. So do you think it's a good
• 14:57
  thing that nation states start accumulating Bitcoin?
• 15:00
  Well, I think there's two parts to answer. 1 is I think it's a
• 15:04
  good thing that they're open for business because there was some
• 15:07
  behind the scenes friction trying to slow down Bitcoin and
• 15:11
  doing undisposed things like trying to debank Bitcoin
• 15:14
  companies, trying to make it hard for them to get banks, hard
• 15:17
  to have exchange on ramps and things like that.
• 15:19
  So it's good that, you know, now we have a more level playing
• 15:21
  field like, you know, maybe the there was a phenomena in the
• 15:25
  Internet where they had a kind of let's just let it run and see
• 15:29
  a developed value, right, rather than try to fight it.
• 15:31
  So you see that more of that kind of vibe.
• 15:32
  And then the other side of it is should we actually 1 government
• 15:35
  super and up all the Bitcoin? And you know, I think there's a
• 15:39
  saying that everybody buys Bitcoin at the price they
• 15:41
  deserve. And I think the government's
• 15:42
  deserve A7 or 8 figure price, right.
• 15:44
  And so now, of course, selfishly for a small country, you kind of
• 15:48
  want your governments by Bitcoin because then they'll have more
• 15:51
  sovereign welfare, they'll be able to reduce taxes, improve
• 15:53
  services and make a nicer, more economic country.
• 15:57
  But on the other hand, it's actually better for the
• 16:00
  individual if governments continue to be slow to adopt,
• 16:03
  give individuals more time to buy Bitcoin.
• 16:06
  And Bitcoin is really the one of the very few technology waves
• 16:10
  where the individual front run the professional investors by a
• 16:13
  decade or more. So I want to tell you about the
• 16:16
  best place to build your automatic self custody Bitcoin
• 16:19
  stack bitcoinwell.com. What makes Bitcoin well
• 16:23
  different? What makes it unique?
• 16:24
  It's an automatic self custody Bitcoin on ramp.
• 16:27
  What does that mean? That means that when you buy
• 16:29
  Bitcoin on Bitcoin well, as soon as the funds clear, it goes
• 16:33
  straight to yourself custody Bitcoin wallet address which
• 16:36
  perfectly aligns with the simply Bitcoin ethos because after all,
• 16:40
  self custody is the revolution. By the way, if you go to Bitcoin
• 16:45
  dot com slash simply as soon as you make your first purchase you
• 16:48
  get 3 opportunities to win up to 1,000,000 Satoshi's just for
• 16:53
  signing up and buying a little bit of Bitcoin.
• 16:56
  Seems like a win win. What are you waiting for?
• 16:58
  Go to bitcoinwell.com/simply today.
• 17:01
  What will be the role of Bitcoin treasury companies in the
• 17:06
  traditional financial system in the future?
• 17:08
  Well, I think, I mean, I've, I've said that Bitcoin is the
• 17:11
  huddle rate, by which I mean, in their hedge funds, they have a
• 17:15
  concept of a hurdle rate, which is, you know, if they have a
• 17:18
  fund which is trying to get a 20% return, they might charge
• 17:22
  typically a 2% management fee because off the top.
• 17:25
  And then they would say, and then you as the investor would
• 17:28
  say, well, wait a minute, I don't want to, you know, pay you
• 17:31
  20% on the return for the 1st 5% because I can get that in
• 17:35
  something at low risk like Treasury.
• 17:36
  So you haven't achieved anything by doing that.
• 17:37
  So they OK, OK, we'll take off that.
• 17:39
  So they didn't charge you the success rate above 5%.
• 17:42
  And that's that 5% is the hurdle rate.
• 17:43
  Another kind of hurdle rate or benchmark is, you know, what the
• 17:47
  S&P 500 rate or what big stock index does, because you know,
• 17:49
  that generally represents economic progress.
• 17:52
  Now I think Bitcoin is the hurdle rate because it's
• 17:54
  basically it's out of performed everything else.
• 17:56
  And so in any kind of long time framework where you make an
• 18:00
  investment and you leave it there for a long duration,
• 18:02
  Bitcoin has outperformed anything else.
• 18:03
  And so I think, you know, it's a neat thing to say to fund
• 18:06
  managers that bitcoins are over Rakes, which says, well, you
• 18:08
  know, if you're funded, there's no chance of keeping up with
• 18:11
  Bitcoin, you should close it down and like start a Bitcoin
• 18:13
  fund or tell your investors to buy Bitcoin.
• 18:16
  And I think that translates for companies because a lot of
• 18:19
  people have invested in startups that have obviously understood
• 18:22
  underperformed Bitcoin even in the Bitcoin space, right?
• 18:25
  And so the obvious thing for a company to combat that effect is
• 18:28
  to buy Bitcoin with your own treasury, your own cash reserves
• 18:32
  because they have to deal with volatility.
• 18:34
  So maybe they keep a certain amount in Fiat and arrest in
• 18:37
  Bitcoin for the long term. And so I think ultimately every
• 18:40
  company becomes a Bitcoin company now, you know, for the
• 18:44
  individual, you know, who feels like Bitcoin was for the little
• 18:47
  guy, for the average person, I think that's true.
• 18:49
  But you got to expect that anything which is a successful
• 18:53
  new money is going to be adopted by all segments of the ecos of,
• 18:58
  you know, the financial ecosystem of the modern economy.
• 19:00
  So you see it in pension funds, you see it in sovereign wealth
• 19:02
  funds, see it in governments, in states, in individuals, in
• 19:06
  retirement plans, in companies. Why not, right?
• 19:09
  I mean, companies are ultimately just a collection of humans.
• 19:14
  And a lot of modern societies economic progress is actually
• 19:19
  derived from the invention of, you know, limited companies and
• 19:23
  organized by shares and a capital formation to build new
• 19:26
  products. So, you know, some people are
• 19:29
  kind of upset about companies or think that companies are the big
• 19:33
  evil in the picture. But really companies are just
• 19:36
  groups of people organizing to do something.
• 19:38
  And if they're successful, they can grow.
• 19:40
  They can become public initially in a small cap stock market and
• 19:44
  then they can use the capital markets to raise money to grow
• 19:47
  what they do. Do you think eventually I'll use
• 19:50
  your company as an example? Do you, do you think eventually
• 19:53
  the Bitcoin standard treasury company will become some type of
• 19:57
  new type of bank? And I'm referencing how Finney's
• 20:01
  original, you know, post from a long time ago or he's talking
• 20:05
  about in the future there will be Bitcoin banks.
• 20:07
  Do you see? Do you foresee that happening?
• 20:09
  And the reason I'm asking you this, Adam, is the Bitcoin
• 20:11
  treasury companies are going to be the ones that have all the
• 20:13
  Bitcoin or a big portion of the Bitcoin.
• 20:16
  Right. So I think the, you know,
• 20:19
  bookstreams, sorry, the B star as we call it.
• 20:22
  I got to. I got to call it that B.
• 20:24
  Star Bitcoin center treasury, it just rolls off it's under there
• 20:27
  as B star. So B star is trying to do some
• 20:30
  things differently. Firstly, it's mostly Bitcoin
• 20:32
  capital. About 2/3 of the money in came,
• 20:34
  you know, is, is Bitcoin came from bitcoiners and reinvest,
• 20:38
  you know, investing Bitcoin into a company that's going to
• 20:40
  actively manage a Bitcoin, try to achieve a return on Bitcoin.
• 20:43
  And we talked about that being a Berkshire Hathaway type of
• 20:48
  endeavour, which is a long term capital where you try to achieve
• 20:52
  a long term return and then you acquire companies, operating
• 20:56
  companies that you put under the umbrella that generate
• 20:58
  additional revenue to reinvest, create the capital and do it
• 21:01
  again basically. So it's a kind of long term
• 21:04
  capital growth activity. And you know, I think that
• 21:08
  that's that's one approach. Another approach is just a, you
• 21:11
  know, existing operating company plus of course all the pure
• 21:13
  plays at the moment, as we discussed, the pure plays are
• 21:15
  not doing as well. So one of your quotes that I
• 21:18
  absolutely love is Bitcoin is not just a currency, it's a
• 21:21
  revolution and how we preserve and grow value in the digital
• 21:24
  age. You want to elaborate on that?
• 21:26
  Yeah, I mean, it's, I think the younger generation has more
• 21:31
  confidence in Bitcoin than they would in investing in shares and
• 21:35
  stocks and bonds and even government bonds, let's say.
• 21:38
  Right. And I think that's it's
• 21:40
  basically because the Fiat money is being debased.
• 21:43
  So, you know, when I was sitting in my mid 20s, I was just trying
• 21:49
  to invest my own savings and, you know, looking at whatever
• 21:52
  the highest rate accounts were, deposit accounts of those
• 21:56
  accounts, shares, IPOs, things like that.
• 21:59
  And one of the things you realize you start to look, well,
• 22:01
  what's the benchmark? What's the total rate?
• 22:02
  You look for the government inflation figures and as the
• 22:07
  consumer price index and the retail price index.
• 22:09
  And that's, you know, you've got to outperform that.
• 22:11
  You're actually going backwards. Your savings are losing spending
• 22:13
  power. And then you, you know, you do a
• 22:15
  bit more research and you realize that, well, these
• 22:18
  government inflation metrics are manipulated politically and they
• 22:24
  don't represent the actual inflation that the average
• 22:27
  person experiences. And you know, they're
• 22:29
  continuingly to sort of erode and redefine them in creative
• 22:33
  ways. So then it becomes uncertain if
• 22:38
  you, you know, if you're achieving A4 or 5% return
• 22:41
  actually becomes uncertain if you're actually losing money
• 22:44
  because maybe the inflation rate is 7.
• 22:45
  And of course, now probably inflation rates even higher,
• 22:48
  right? So I think at this point people
• 22:50
  need to primary concern is protect themselves from the
• 22:54
  value erosion inflation and Bitcoin is a good way to do that
• 22:57
  because it's much more scarce than any other asset and get
• 23:01
  increasing this case at the time.
• 23:02
  So it's kind of ultimately a fixed supply and a growing
• 23:05
  population. And there's also a growth curve
• 23:08
  because it's still early in the adoption.
• 23:09
  So I think it's a good bet for both of those reasons as as an
• 23:13
  inflation hedge. And you know, if not for
• 23:15
  Bitcoin, I think you know what, what I would be inclined to do
• 23:19
  is buy real estate like a rental apartment or something with a
• 23:23
  mortgage, because in that way the inflation is working for
• 23:27
  you, right? You, you benefit from the
• 23:30
  inflation if you are buying hard assets with all people's money.
• 23:34
  And if you like, that's kind of what treasury companies are
• 23:37
  doing with convertible notes and the bonds and preferred shares
• 23:40
  and things like that. They're buying a higher asset
• 23:42
  with money from people who just want a fixed income or risk
• 23:45
  return profile. That's something more
• 23:48
  conservative. Do you think that the movement
• 23:50
  has changed a little bit since, you know, Bitcoin has entered
• 23:56
  Triadfy? I hope not, but I recently
• 23:59
  posted a paragraph from the Eric Hughes 1993 Cyprus Manifesto to
• 24:06
  ask the provocative question Are people prone to reinneur
• 24:10
  themselves? Inuring was this kind of matrix
• 24:12
  quote about the system that people in the system being
• 24:14
  hopelessly inured with it, and so are we are people in a
• 24:18
  Bitcoin space Bitcoiners looking to renew themselves as Bitcoin
• 24:23
  gets, you know, more mass adoption?
• 24:26
  And so my hope is that Bitcoin remains the slife plug money
• 24:30
  because, you know, part of the story for me.
• 24:32
  So you mentioned a revolutionary idea is that Bitcoin changes the
• 24:36
  world, not that Bitcoin gets some success and then we mute it
• 24:39
  and put it in a box and, you know, lose all of the bearer
• 24:42
  properties or something, they say.
• 24:44
  And I think some people are kind of more concerned about muting
• 24:49
  Bitcoin or changing it to kind of conform to what they think
• 24:54
  establishment might want, which is not really the point.
• 24:57
  I mean, the Internet didn't contort itself to, you know,
• 25:00
  comply with the establishment control of media and stuff.
• 25:03
  The Internet was just though, you know, the freewheeling soft
• 25:06
  suffered individual space and largely kept that.
• 25:10
  So I think it's important that Bitcoin keep that phenomena.
• 25:15
  I think self custody, I want to get your opinion on this.
• 25:17
  I think self custody plays a crucial role in that.
• 25:20
  So I want to get your opinion on that the the role of self
• 25:24
  custody specifically with individuals.
• 25:26
  Yeah. I mean, I think that Bitcoin
• 25:29
  held in self self custody is a a more bearer asset.
• 25:34
  It's it's a better insurance policy and actually Bitcoin that
• 25:39
  you somehow acquire without there being a record in a
• 25:44
  traditional finance collective memory that gets reported on tax
• 25:47
  returns and things. The better because money that
• 25:50
  you know hard money and better form that nobody knows you have
• 25:53
  is even a better insurance policy because the establishment
• 25:56
  can't come in some kind of adverse situation where you need
• 25:59
  the insurance policy. They don't even know you have
• 26:01
  it. That's even better, right?
• 26:03
  So I think Barack Obama, he gave one of the best inadvertent
• 26:08
  advertisements for Bitcoin when he said, you know, well, if we
• 26:12
  can't crack it, you know, he's talking about his security of
• 26:15
  wallets on phones. Then everybody's walking around
• 26:18
  the Swiss bank account in their pocket.
• 26:19
  And I'm like, yes, that's that's correct.
• 26:22
  I mean, he was thinking this is a very bad thing.
• 26:24
  But I'm like, no, that's a very good thing.
• 26:26
  And so here we are sitting in Switzerland and, you know, the
• 26:28
  third Swiss private banking city actually.
• 26:30
  So this is this is the competition, right?
• 26:32
  The Bitcoin is lowering the barrier to entry to which is
• 26:36
  asset protection, financial privacy and making it hard for
• 26:42
  the establishment to seize your assets in your home country.
• 26:45
  And in bitcoins case that's achieved through key storage.
• 26:48
  So you know, it's it's a bonus setting if you get into some
• 26:53
  unexpected situation where you need the insurance policy that
• 26:57
  the establishment has to come through you to get to your
• 26:59
  assets. Whereas if they just place a
• 27:02
  phone call or write a letter to your broker or your bank and
• 27:05
  then all your assets are frozen. Now you have a problem, which is
• 27:07
  you can't even afford a lawyer to and defend your innocence in
• 27:11
  whatever, you know, whatever they're thrown at you.
• 27:14
  So the establishment, the governments are civil servants,
• 27:19
  they work for society, they work for us, right?
• 27:22
  And so, you know, some of the changes that they've bought in
• 27:26
  in the name of law enforcement and criminal justice have swung
• 27:32
  too far. And I think the South Park
• 27:35
  technology is the way to re establish your, yeah, actually
• 27:39
  legally protected rights that they've overridden or just to
• 27:43
  reassert, you know, just to assert them individually.
• 27:45
  Do you think central banks and Bitcoin can coexist?
• 27:50
  Yeah, I mean, it's, it's a very interesting question because a
• 27:52
  few years ago my worry would have been that the incentive
• 27:58
  sort of the market incentives around Bitcoin that make it
• 28:00
  work. You know, the miners, the users,
• 28:02
  the the, the market people buying something Bitcoin, the
• 28:05
  miners mining new Bitcoin. And they're incentive to do so
• 28:07
  honestly, that there's a bit of a question if those incentives
• 28:12
  would continue to function smoothly and effectively as the
• 28:16
  ownership spread into public companies, sovereign wealth
• 28:20
  funds, individual states, governments.
• 28:23
  And, you know, when you would have politicians talking about
• 28:26
  Bitcoin, I think, you know, with the benefit of seeing what's
• 28:29
  happened in the last few years that actually it works better
• 28:32
  than might be expected, which it was.
• 28:33
  It turned out to be more of, you know, you don't change Bitcoin.
• 28:36
  Bitcoin is you. And it seemed to change, you
• 28:39
  know, the sitting president of the US and his kind of business
• 28:42
  empire, his sons who work in it, that they got debanked
• 28:45
  politically and they learned first hand why having very hard
• 28:49
  money matters. And, you know, you have
• 28:51
  politicians in the US who are, you know, seem to be
• 28:54
  philosophically motivated, like they personally hold Bitcoin.
• 28:57
  They seem to understand it. And so Bitcoin does change the
• 29:00
  incentives of all kinds of people.
• 29:03
  So it turns out the, you know, effectively incentives matter
• 29:06
  and wholesome incentives are a very powerful force in the
• 29:09
  world. So and actually quite hopeful at
• 29:11
  this point that it will scale all the way.
• 29:14
  And of course, there's still a lot of distance to go, right,
• 29:16
  with bigger countries buying meaningful amounts of Bitcoin,
• 29:19
  doing larger amounts of sovereign buying.
• 29:21
  And what happens to the geopolitics in this new era?
• 29:24
  And it's, you know, it's not without precedent in a sense of
• 29:27
  a shift in the asset that people cover in a kind of global
• 29:31
  geopolitics. And it used to be gold, and then
• 29:34
  it became black gold like oil. And now it's Bitcoin.
• 29:37
  And the resource is cheap, abundant power, access to
• 29:42
  silicon fabs to manufacturer miners.
• 29:45
  And that seems to be sort of mapped out to be the, the
• 29:50
  geopolitical underpinnings of, you know, the next 50 years or
• 29:52
  something saying, I think we haven't, you know, I think
• 29:55
  there's a lot more interesting things to come.
• 29:57
  Do you need liquidity without having to sell your Bitcoin?
• 30:00
  For more than six. Years now, Leaden has been the
• 30:03
  trusted source for Bitcoin back lending with transparency,
• 30:07
  security and trust at their core, backed by $9 billion of
• 30:12
  Bitcoin loans funded and over 1005 star reviews.
• 30:17
  I absolutely love these guys because of their flexibility.
• 30:21
  You can pay back your loan whenever you want and there are
• 30:26
  no monthly payments so you pay at the end of the term.
• 30:29
  You get lightning fast access to capital as soon as you send your
• 30:34
  Bitcoin as collateral. You get the cash into your
• 30:37
  account within 18 hours. Unlock the liquidity of your
• 30:41
  Bitcoin without having to sell your Bitcoin.
• 30:44
  Simply Bitcoin viewers get .25. Percent off their first loan by
• 30:49
  using the link in the video slash podcast description.
• 30:53
  What are you waiting for check out leaden today so Adam block
• 30:58
  streams play a key role in trying to crack the crack the
• 31:02
  crack the nut. I don't know if that's the right
• 31:04
  expression, but trying to figure out the scaling.
• 31:08
  So I think there's been a tremendous amount of progress
• 31:11
  with Liquid, with Lightning, but nothing's, you know quite there
• 31:16
  yet, right? I love Samsung's recent
• 31:19
  implementation with the Aqua Wallet.
• 31:22
  You got Liquid involved. So I want to get your take on
• 31:25
  the current state of Layer 2 scaling solutions.
• 31:28
  What's on your radar? What has you the most excited?
• 31:31
  Yeah. So I mean, actually block stream
• 31:34
  is kind of, you know, Bitcoin layer two company, but also
• 31:37
  there's a lot of kind of core R&D.
• 31:40
  So the Schnorr signatures, the music that was a group effort
• 31:44
  with independent researchers, people from other companies,
• 31:48
  academics. But you know, a lot of the heavy
• 31:50
  lift was actually done by Blockstream researchers,
• 31:53
  Blockstream art labs and we have been active in a lot of layer
• 31:57
  twos because we got into lightning early and then liquid.
• 32:02
  So with Core Lightning, that was the first Lightning
• 32:04
  implementation that we had live value, which is where the
• 32:07
  reckless tag came from, because we're the first to put like an
• 32:10
  experiment of implementation with live value.
• 32:14
  And then with Liquid itself, partly A scaling solution, but
• 32:19
  mostly about the ability to innovate permissionlessly on a
• 32:23
  second layer, which is technically a side chain and not
• 32:26
  unilateral withdraw layer 2 like Lightning.
• 32:30
  But we also implemented, you know, did the R&D on what became
• 32:34
  Fediment. So that was the block stream R&D
• 32:37
  project as well. And you know, they're doing very
• 32:39
  interesting things with that. Of course, you didn't have
• 32:40
  cashew as well. And the other new phenomena are,
• 32:45
  you know, arcade and spark productizing staging or mercury
• 32:51
  layer. So they kind of, you know, made
• 32:53
  A twist on somebody else's project.
• 32:55
  And of course, they're also the kind of colour coin, Lightning
• 32:58
  enabled colour coins like RGB and separate assets.
• 33:02
  But one of the surprise scaling things, I always like it when
• 33:07
  you know, because I think that technology evolution is not
• 33:10
  something you can fully plan. You would just try to
• 33:13
  organically build what you think is the best thing you can build
• 33:15
  with the current state of the R&D.
• 33:17
  But sometimes the market surprises you, finds a novel use
• 33:20
  for something. And that's what happened with
• 33:21
  this kind of hybrid Lightning liquid wallet, which is now
• 33:26
  growing faster than Lightning wallets.
• 33:29
  You know, so a pre event then yesterday Francis Pouillet
• 33:33
  bought Bitcoin was talking about, you know, the new build
• 33:36
  Bitcoin wallet, which is using the same model.
• 33:38
  And there are Breeze was also there.
• 33:41
  They have, you know, their own Lightning wallet, but they also
• 33:44
  have SDKS to help other people integrate lighting into their
• 33:47
  products, about 50 different wallets or applications built
• 33:50
  using that. They're also seeing much faster
• 33:52
  adoption of liquid Lightning hybrid wallets.
• 33:56
  And you know, even the evolution of the trustless swap that
• 34:01
  enables that came about because of the NFT spam wave a couple of
• 34:05
  years ago where bolts exchange, which historically was operating
• 34:10
  a trustless swap between main chain Bitcoin Utxos and
• 34:15
  Lightning. So you could take money out of a
• 34:16
  lightning channel or you could have money back to a lightning
• 34:18
  channel without closing the channel.
• 34:19
  And the spam is so annoying, this spamming stuff, but you
• 34:24
  know, they, they pushed the fees up and it kind of broke their
• 34:27
  application like it made it so expensive, it came unreliable.
• 34:31
  And so they did a hackathon and hit on the idea of swapping
• 34:34
  liquid Bitcoin for lightning main chain lightning channel
• 34:38
  rebalancing. And even after the spam
• 34:40
  subsided, now all the NFTS got rug pulled, etcetera.
• 34:44
  Then that remained their highest value and highest volume use
• 34:48
  case. And then Aqua Bitcoin was the
• 34:50
  1st to get the idea of, well, let's use this liquid to
• 34:52
  Lightning trust the swap because it's a, you know, so submarine,
• 34:55
  non custodial trestle swap and it gives you a lot of
• 34:57
  advantages. You know, it gives you the kind
• 35:00
  of usability experience of a custodial wallet, but it's not
• 35:03
  custodial. Of course, liquid has a
• 35:05
  different trust model, the main chain or Lightning, but it's
• 35:08
  quite compatible with lightning in some ways.
• 35:10
  It's more secure. It's, you know, not as hot and
• 35:12
  all this kind of thing. So it gives you that advantage.
• 35:15
  Plus, you don't need the LSP setup stage where, you know, if
• 35:18
  you want to receive some Bitcoin on Lightning as a new user and
• 35:21
  you just installed a wallet while somebody has to send some
• 35:23
  Bitcoin towards you or that can't.
• 35:25
  And you know, that becomes a funding problem and it has a set
• 35:28
  cost. So with Bolts Exchange, it's
• 35:31
  actually it's using the liquidity of Bolts Exchange
• 35:33
  basically. So that's all very interesting.
• 35:36
  The one kind of area it's not able to do as well is the really
• 35:39
  small zapping, because the minimum fee is basically the
• 35:42
  minimum fee on liquid. Yeah.
• 35:44
  Now I think the new area which is quite interesting as an Ave.
• 35:48
  for improved Layer 2 security. So I think we're where the
• 35:51
  action is, is improving the security of Layer 2 until you
• 35:55
  can get more of the same security assurances to get on
• 35:58
  the mainstream. So I think ultimately we can
• 36:00
  need that for lots of people who are the soft custody or Bitcoin
• 36:03
  to behave like the Internet of money where other things are
• 36:06
  built in Layer 2, like, you know, on top of TCPIP that you
• 36:10
  need to improve the security of Layer 2.
• 36:13
  And Robin Linus Boot VM idea is, is a novel prospect that you can
• 36:17
  actually verify a zero knowledge proof or some kind of challenge
• 36:21
  response protocol in a lightning like reactive way and verify,
• 36:26
  you know, disproofs about, you know, a small subset of a proof
• 36:30
  that where the the cheat happened, where it's invalid in
• 36:33
  existing Bitcoin scripts, which nobody saw coming.
• 36:36
  It's a very interesting proposition.
• 36:38
  And you know, I think there's there are multiple projects that
• 36:42
  are improving on that rapidly. So there's bit VM 2 bit VM 3 bit
• 36:45
  VMX and Glock, which are all using increasingly more
• 36:49
  efficient anchors and proofs. But I think ultimately what
• 36:52
  Bitcoin can do is add the mature sort of high security assurance
• 36:59
  version of something like this natively or something like
• 37:02
  simplicity. And then, you know, that might
• 37:04
  require some OP codes or simplicity to have the
• 37:07
  extensibility. Then we get closer to being on a
• 37:09
  practically ossified Bitcoin, which I think is also important
• 37:13
  for the long term. And it's getting increasingly
• 37:15
  risky to have Bitcoin change and this this is so I think so also
• 37:19
  by Bitcoin, we really need to be able to move all the
• 37:22
  permissionless innovation into layer 2.
• 37:24
  For that we need security. So we need things like bit VM.
• 37:27
  So I think that's, you know where the new action is and
• 37:29
  block stream has been active and some of those things as well
• 37:32
  with Bulletproofs and Bulletproof Plus Plus and
• 37:35
  collaborating with some of these projects with the cryptography.
• 37:38
  I never forget one of the videos that you made and it always it
• 37:42
  always stuck with me. But basically, I'm paraphrasing
• 37:44
  here. So but you essentially said I
• 37:48
  spent 6 to 9 months trying to see how I can make Bitcoin
• 37:51
  better. And you obviously have the
• 37:54
  background to do that. And the thing, the conclusion
• 37:58
  that you got to was basically like, look, there's gonna come
• 38:01
  trade-offs and none of those trade-offs are worth it.
• 38:03
  Yeah, that seemed to be the case.
• 38:05
  Yeah. It wasn't what I'd expected.
• 38:06
  So you know, when people come to Bitcoin and they're sort of
• 38:11
  dismissive or say, well, you know, it's the Model T Ford,
• 38:14
  we're going to have much fancier cars with more technology in the
• 38:17
  future or the same for the first, you know, the Wright
• 38:19
  brothers kind of bicycle powered airplane, right?
• 38:22
  So for the technology in general, it's a reasonable
• 38:25
  assumption, but somehow Bitcoin exists in a narrow area of
• 38:29
  design space where it's much more low level, fundamental,
• 38:34
  connected to physical scarcity, free mining.
• 38:38
  It's in a way it's a more low tech thing.
• 38:40
  I mean, I know the programming in the game theory is not so
• 38:42
  simple, but ultimately it's low tech and fundamental.
• 38:48
  And it seems to me that anything you try to change to improve on
• 38:52
  that, if you know faster processing time, ability to mine
• 38:55
  with smaller equipment directly rather than using calls, add
• 38:58
  more privacy, add more scalability, you know, it just
• 39:01
  made it worse. It tend to break something will
• 39:04
  get worse and the small gain you made was not worth it.
• 39:08
  So it was kind of surprising thing I came to learn that now
• 39:12
  you got to respect the building blocks.
• 39:13
  The building block is like, you know, it's like the gold items
• 39:17
  in the gold bars. When people's much started using
• 39:19
  gold as money that you know, we have gold 6000 years later and
• 39:22
  nothing changed. I mean, yeah, maybe gold as a
• 39:25
  technology, X-rays and stuff like some stuff around it
• 39:28
  improved. But gold is gold.
• 39:30
  I think that's the way it is with Bitcoin.
• 39:32
  The, you know, you can incrementally improve the
• 39:35
  network protocols, add opt in, you know, smart contracting
• 39:38
  things to help with layer 2 or to help us cold storage.
• 39:42
  But the fundamentals now, the 21 million limit, the supply curve,
• 39:45
  the mining, I think none of this stuff is ultimately proven to be
• 39:51
  improvable. So now of course, it's not a
• 39:54
  message that the altcoin phenomena wants to hear because
• 39:56
  they're marketing improvements or branding and stuff like that,
• 40:00
  but I think it's fundamentally true.
• 40:02
  I want to give a shout out to our partnersat123.com.
• 40:05
  Sovereignty isn't just about your money, it's about your
• 40:08
  communications, too. When the grid goes down, most
• 40:11
  people go dark. Cell towers fail, and
• 40:13
  hurricanes, cyber attacks and blackouts.
• 40:16
  But satellite phones? They don't rely on local
• 40:18
  infrastructure. Iridium has 77 satellites in
• 40:21
  orbit, giving you a Direct Line anywhere in the US, even
• 40:24
  offshore. If you hold your own Bitcoin
• 40:26
  keys, you should hold your own. commstoosat123.com also has
• 40:31
  everything you need to start building your Bitcoin.
• 40:34
  Citadel, Starlink, battery backups, Faraday bags to protect
• 40:38
  your hardware wallets, and much much more.
• 40:40
  It's a one stop shop for anyone serious about resilience and off
• 40:44
  grid independence. Stay connected, stay
• 40:46
  independent, stay sovereign. Go to sat123.com/simply today
• 40:51
  and use promo code simply to get 15% off anything on the store.
• 40:56
  One of the things that surprised me the most is the fact that
• 41:01
  ultimately at the end of the day, I am not a technical guy,
• 41:04
  I'm a media guy, right? So I interact with layer 2 as a
• 41:09
  user and I tried setting up a self custodial lightning wallet
• 41:15
  and it was an absolute nightmare and I could not figure it out.
• 41:18
  But what really resonated with me was the custodial lightning
• 41:22
  wallets. They worked extremely well.
• 41:25
  And I think a lot of the success came from that wallet of Satoshi
• 41:28
  and you know, became extremely popular.
• 41:30
  The primal guys I think are doing a great job.
• 41:32
  Do you think? But it kind of defeats the
• 41:34
  purpose in a way, right, right. Do you think we'll ever get to a
• 41:37
  point where we'll have we'll where we will have layer 2 non
• 41:41
  custodial solutions? Yeah, I mean, that's the hope.
• 41:44
  So I think that it's not easy to transfer the kind of bearer
• 41:55
  unsusable security properties from the base layer to the layer
• 41:59
  2. So Lightning partly achieves it,
• 42:02
  but even that's making trade-offs, right?
• 42:04
  To do it, you have a hot wallet, there are watchtowers, it's not
• 42:09
  as cold. It's reactive security.
• 42:12
  Whereas Bitcoin mainchain, you know, you can make a cold
• 42:15
  storage backup, store it in a hole in the ground or a safe and
• 42:19
  still receive money in it, right?
• 42:20
  It's a much different picture, a higher assurance picture.
• 42:23
  But Lightning has a lot of Vantages.
• 42:25
  It's nearly instant payment, it's much more scalable, it's a
• 42:28
  little more private, it's much faster settlement, It's much
• 42:32
  better experience for retail trade uses.
• 42:34
  So I do think the, you know, the hybrid wallet, the liquid
• 42:37
  lightning wallet, which breeze is calling nerdless lightning to
• 42:40
  give it give the concept a name. And I think that's sticking
• 42:43
  because nobody else had thought to name the phenomena is is a
• 42:47
  new interesting news sweet spot. And I think people are just
• 42:50
  generally trying to converge and improve the usability, improve
• 42:54
  the backup so that it feels safer, easy to understand and
• 43:00
  just works, you know. And I think some of these, the
• 43:04
  hybrid apps are getting there. And the other interesting thing
• 43:07
  is that Lightning is finding a new home as well, which is a
• 43:11
  connector between different Bitcoin layer 2's.
• 43:14
  Do you think Bitcoin was discovered or invented?
• 43:16
  I think it's a discovery. So people like to talk about
• 43:20
  Drake's equation, which is the sort of probability there's
• 43:24
  intelligent life on another planet in a Galaxy universe,
• 43:27
  what have you. And so I think 1, you know,
• 43:30
  indicator, new indicator now is, you know, is, is the thing
• 43:33
  glowing hot from like all the mining around the Dyson sphere
• 43:36
  or something, right? It's a new sign for intelligent
• 43:39
  life. But they rediscovered Bitcoin
• 43:41
  because I think it's, you know, it is a sort of very sort of
• 43:46
  fundamental basic thing that would eventually be
• 43:49
  rediscovered. And effectively, a lot of things
• 43:53
  that were mechanical and analog got improved by the digital
• 43:57
  world. Digital ignition on a car, you
• 43:59
  know, once you have a digital capability, you can just make a
• 44:03
  lot of things like, you know, combination digital analog
• 44:07
  variants or pure digital variants better than the
• 44:10
  original and say Bitcoin is that it's it's a better monetary
• 44:14
  technology because it involves digital assurances, mathematical
• 44:17
  assurances. And yet it's still, you know, as
• 44:20
  physically rooted in the physical space as gold.
• 44:24
  But you know, because the digital phenomena, you can have
• 44:27
  much higher real time assay assurances and who who the heck
• 44:30
  knows? You know how much gold is in
• 44:32
  Fort Knox, right? It's hard to hard to tell and
• 44:34
  they're not going to tell you. But with Bitcoin, you know how
• 44:36
  many Bitcoin there are. You're talking about the hurdle
• 44:38
  rate earlier. What do you think the and again
• 44:42
  heading into speculation territory, but what do you think
• 44:45
  the the CAGR is going to be moving forward?
• 44:49
  I don't know. I haven't really been tracking
• 44:51
  it, but I guess it's been between 60% and 30% generally.
• 44:59
  And there is a, you know, I mean of course fear is a moving
• 45:03
  target, it's getting inflated heavily.
• 45:04
  But even if you use sort of net present value inflation adjusted
• 45:09
  dollars as your benchmark, I think there is an addressable
• 45:13
  market that will eventually get saturated.
• 45:16
  And we don't know if it's a full Bitcoin standard of like safer
• 45:19
  move safety and a moose likes to talk about or if it's, you know,
• 45:23
  a gold analog that gets more adoption than gold.
• 45:27
  And you know, the Fiat currencies continue as a
• 45:29
  parallel system. And this is for saving and the
• 45:31
  Fiat currency is for borrowing and spending.
• 45:33
  So we don't know where that's going to shake out or how fast
• 45:36
  it's going to be to get there. But you can see that, you know,
• 45:39
  how Finney's crazy prediction before, like on the first day
• 45:44
  the network launched of 200 trillion or 10 million a coin is
• 45:50
  already, you know, 100 times out roughly from where we are now,
• 45:54
  right? And there's realistically been
• 45:56
  quite a bit of quantitative easing driven inflation since he
• 46:00
  said that, right? So, and maybe the addressable
• 46:02
  market is actually a bit bigger than that because, you know,
• 46:05
  it's the crude analysis and there's a lot of money and money
• 46:11
  substitutes in the world between, you know, the stock
• 46:14
  market, bonds, real estate, all of the things where people are
• 46:18
  just trying to preserve spending power.
• 46:20
  So it's not, it's not clear how how long it will take to get
• 46:23
  there. You know, where that's another
• 46:25
  decade or two decades or what have you, you don't know.
• 46:28
  So it's hard to say what the inflation rate, you know, or the
• 46:32
  Kaga would be. But I think even once it's
• 46:36
  reached saturation, the other interesting thing is, you know,
• 46:39
  would you diversify away from Bitcoin at that time?
• 46:42
  And I think the answer's no because, you know, it's a, the
• 46:46
  scarce hard money that preserves its value in the same way that
• 46:49
  gold has over remarkably long periods of time, right?
• 46:53
  But you know, the, the adoption curve would slow down at that
• 46:58
  point because it's basically reached some kind of stable
• 47:01
  point where everybody that wants Bitcoin exposure has got Bitcoin
• 47:05
  exposure at the ratio, you know, the level they want.
• 47:09
  So I'm I'm not sure. Where are we on the adoption
• 47:12
  curve? Right, because there's the
• 47:13
  innovators, the early adopters. I don't know what comes after
• 47:17
  that, but you know the, the, the bell that makes the the rounds
• 47:20
  on. XI mean if you look at the half
• 47:23
  any addressable market, we're at 1%, right.
• 47:27
  So that's a long way. And but I think it's also a
• 47:30
  little misleading because there's a capital multiplier in,
• 47:33
  in any investment asset where prices set at the margin.
• 47:38
  So, you know, for the price to go up 100 times for half,
• 47:41
  Philly's target doesn't require 100 times more money.
• 47:45
  Because, you know, if you if you try to, if a government tried to
• 47:48
  buy Bitcoin in volume, they'd exhaust what's on the market and
• 47:52
  push the price up ahead of themselves.
• 47:54
  So it's a plausible amount of money that would have to go in
• 47:57
  over the next decades to to make that happen.
• 48:00
  And you think is that your target, the half?
• 48:02
  Any prediction? Maybe it's more, I don't know.
• 48:05
  It's it's AI mean. I think a good starting point is
• 48:09
  will Bitcoin reach parity with gold And gold is on a all time
• 48:14
  high right now, right? But it's still.
• 48:16
  It's like one point, something million.
• 48:18
  Right, Yeah, yeah. So I think it used to be like a
• 48:22
  million, now maybe it's a million, two per Bitcoin for
• 48:25
  gold parity. But I do think there is some
• 48:29
  feedback loop between gold and Bitcoin if it gets closer,
• 48:35
  because the people investing in Bitcoin ETFs are reallocate from
• 48:39
  something else. And you know, an obvious answer
• 48:42
  if a broker asks you, well, what do you want to sell to buy the
• 48:45
  digital gold is who sell well, sell the physical gold, right?
• 48:48
  And the proportion of physical gold that is in ETFs is a much
• 48:53
  smaller proportion than the Bitcoin that's in Bitcoin ETS.
• 48:57
  So if, if the, I don't know if it's the case, but you know, for
• 49:00
  the price formation there's in the ETF markets, it's it's much
• 49:04
  closer to parity in terms of market, you know, available
• 49:07
  market size. So if that were the market
• 49:09
  that's sort of transitioning and normalizing, it could start to
• 49:13
  cannibalize and take the shrine off of gold along the way.
• 49:16
  So it's not just that it has to, you know, meet gold as a static
• 49:19
  target. It can see a reallocation from
• 49:21
  gold. I think it's also a generational
• 49:23
  thing. I think gold is something the
• 49:24
  older generation probably likes more.
• 49:26
  As the younger generation inherits portfolios with gold
• 49:29
  and stocks in it, they're more likely to reallocate to Bitcoin.
• 49:33
  Final question, Adam and I have a caveat.
• 49:36
  I have a there's one rule. If you can go back 20 years and
• 49:41
  tell one thing to your younger self, what would it be?
• 49:43
  And it couldn't be buy Bitcoin. OK, that's my good tool.
• 49:48
  I think it's important for technology to publish early and
• 49:51
  often. So sometimes I will sort of self
• 49:54
  criticize an idea and not publish it.
• 49:57
  So I'm like, oh, that's not good enough.
• 49:58
  It's not, you know, it's not efficient enough.
• 50:01
  It's not practical enough. Try harder, like try to work on
• 50:04
  it privately to get to be better.
• 50:05
  But actually that was the case with confidential transactions.
• 50:09
  I thought, oh, it's not efficient enough.
• 50:11
  So I just kept working on it. And then I made some kind of
• 50:14
  mistink and I thought, oh, I found a way to make it
• 50:16
  efficient. I published it and I realized,
• 50:17
  oh, that's wrong. You know, that that that
• 50:19
  efficiency is actually worse than I thought.
• 50:21
  But then it was out there. I know people tried to improve
• 50:24
  it, never really managed to improve it very much.
• 50:26
  Greg Maxwell made a like an incremental improvement and then
• 50:28
  we implemented it, but it got implemented at an efficiency
• 50:31
  level. So I was like this is this is
• 50:33
  not good enough. And now of course my target was
• 50:35
  actually Bitcoin adoption or Bitcoin later 2 adoption.
• 50:38
  But still, it shows you that you should publish everything often
• 50:41
  because it invites collaboration.
• 50:45
  And effectively the bulletproof direction came out of the
• 50:49
  confidential transactions track in a way because we and they
• 50:53
  reached out to some academics with block stream and to see if
• 50:56
  they had any ideas how to improve confidential
• 50:58
  transactions. And what they came out with was
• 51:01
  bulletproof, which does like to make a more compact confidential
• 51:04
  transaction, but it's also a whole, you know, snark like
• 51:08
  competitor with a more Bitcoin like security model.
• 51:11
  So it's basically iterate as fast as possible and then that's
• 51:16
  how you'll run into discoveries. Yeah, well, I mean, and, and
• 51:19
  also, you know, share the, you know, publish, share, discuss
• 51:23
  the pot finish solutions because you get more brainpower and
• 51:28
  feedback from interacting with other people.
• 51:30
  Gotcha. Adam back, thank you so much for
• 51:33
  joining me. Thank you.