Latest / CRYPTO 101 / Ep. 723 Paolo Ardoino Explains the Future of Bitcoin, AI & Global Finance

Transcript

Ep. 723 Paolo Ardoino Explains the Future of Bitcoin, AI & Global Finance · CRYPTO 101

0:08
[SPEAKER_01]: All right, everybody, welcome back to another episode of the crypto 101 podcast.
0:13
[SPEAKER_01]: I'm your co-host Bryce Paul as always joined by my good buddy, Brendan Vemen.
0:18
[SPEAKER_01]: Brendan, how are you this morning?
0:21
[SPEAKER_02]: Bryce, I'm doing fantastic.
0:23
[SPEAKER_02]: I'm feeling good.
0:25
[SPEAKER_02]: The markets are doing good.
0:27
[SPEAKER_02]: Man, we have you here for an early one, and what an important one it's gonna be.
0:31
[SPEAKER_02]: This is gonna be a legendary rating podcast.
0:35
[SPEAKER_02]: Lots of good stuff to talk about with one of the legends of the space.
0:39
[SPEAKER_01]: Yeah, we are very pleased and honored to have Paolo Arduino, the CTO of Bitfinex joining us.
0:46
[SPEAKER_01]: Paolo, how are you doing?
0:48
[SPEAKER_01]: I'm great.
0:48
[SPEAKER_01]: Thank you very much for having me.
0:50
[SPEAKER_01]: Absolutely.
0:51
[SPEAKER_01]: We're excited to dive into all things Bitfinex.
0:54
[SPEAKER_01]: Everything you guys are building over there for...
0:56
[SPEAKER_01]: more than a decade now.
0:58
[SPEAKER_01]: I mean, you guys are some of the OGs of crypto.
1:01
[SPEAKER_01]: We want to know the whole story and a little bit about what you guys are doing.
1:04
[SPEAKER_01]: But first, let's just dive into who you are, introduce yourself to our listeners here at Crypto 101. Who are you and how did you get into crypto?
1:13
[SPEAKER_01]: This crazy world of crypto.
1:15
[SPEAKER_00]: So, um, absolutely, Bitfinex was born in 2012, right?
1:20
[SPEAKER_00]: So, yeah, we could call it OG because, you know, not many exchanges before Bitfinex to arrive to this day.
1:28
[SPEAKER_00]: So, we tried to maintain that ethos that we don't so feel as I think was at the core of Bitcoin.
1:35
[SPEAKER_00]: And sometimes, you know, it's tougher over the years with, you know, players that joined late and might not have the same ambition of keeping Bitcoin true.
1:49
[SPEAKER_00]: But
1:50
[SPEAKER_00]: I was lucky enough to join Bitfinex into 2014.
1:54
[SPEAKER_00]: I joined as a senior software developer.
1:59
[SPEAKER_00]: I career has been all encoding.
2:02
[SPEAKER_00]: I started coding when I was 8 and then, wow, went up.
2:08
[SPEAKER_00]: hacker for as long as a care member and then went to university computer science and math and then become a researcher then was paid nothing as always happened as a researcher immediately and then decided to move on and learn about finance so I started finance by myself and then build some financial applications and then I
2:30
[SPEAKER_00]: Matt, the co-founder of Beatfinex, and the founder of Tether, Junkalo DeVazini, I joined in into Beatfinex.
2:40
[SPEAKER_00]: And since then, basically, I...
2:42
[SPEAKER_00]: I completed Focus, my life on this adventure.
2:47
[SPEAKER_00]: And I was extremely grateful for the first two years.
2:51
[SPEAKER_00]: It was just working on a trading engine, just the four part of the platform, purely designing the next phase of growth of performance and optimizations to sustain.
3:05
[SPEAKER_00]: When I joined all the exchanges,
3:12
[SPEAKER_00]: actual trading platforms.
3:15
[SPEAKER_00]: I had the opportunity to work on some important trading platforms.
3:18
[SPEAKER_00]: So I was like, when I joined, it was kind of weird.
3:23
[SPEAKER_00]: The space because it was the very amateurial.
3:28
[SPEAKER_00]: And then we could see or anything, 2014, the need of stepping up the game, and because the more professional traders were coming in.
3:37
[SPEAKER_00]: And so I was tasked to build it
3:42
[SPEAKER_00]: And you know, 2016 was a big year in negative and positive, so Bitcoin has was hacked, the second of August.
3:52
[SPEAKER_00]: And I was tough to rebuild entire platforms, so take care of the security, become the studio.
3:57
[SPEAKER_00]: And so, since then, you know, I'd probably became and still I am the CTO beat Phoenix trying to keep the platform running and, you know, now we have the amazing team that is continued to accrue the value to the platform at the same time and maintaining the, you know, old, good old standards of the security that we were able to, to stack, you know, every day is after 2016.
4:27
[SPEAKER_01]: Man, definitely a lot has changed since the unpaid days of a research and now a bit then X is one of the most profitable exchanges and you know, one of the most successful internationally in terms of many different metrics, so Bravo for finally escaping the unpaid research life and building something really incredible in lasting.
4:49
[SPEAKER_00]: Yeah, I mean, I'm sorry, go ahead.
4:54
[SPEAKER_02]: Oh, no, I was just going to agree.
4:55
[SPEAKER_02]: I've been around for a while in this space as well.
4:58
[SPEAKER_02]: And I remember you guys back in the day and you guys have just continued to grow and grow.
5:02
[SPEAKER_02]: What people don't realize as listeners is back in like 2012, 2014.
5:07
[SPEAKER_02]: Really anything like pretty pre like 2016-ish.
5:11
[SPEAKER_02]: If you wanted to get your hands on crypto, it wasn't like you do today where you can go to any brokerage, any account, you know, there's all these different crypto exchanges.
5:19
[SPEAKER_02]: There's lots of safe ways to do it.
5:20
[SPEAKER_02]: I mean, heck, I think now you can get, you can get exposure through like, PayPal and Venmo and everything, but it's, I was just gonna say it's been super interesting to watch the crypto space change over the last like 10, 15 years.
5:35
[SPEAKER_02]: And you guys have really been at the forefront getting to pioneer and being a part of a lot of those
5:41
[SPEAKER_00]: Yeah, we also tried to do that, as I said, to maintaining our spirit, right?
5:46
[SPEAKER_00]: So it has been,
5:51
[SPEAKER_00]: And in a certain way, the last few years, the change accelerator right now, you have also been TFs.
5:57
[SPEAKER_00]: I remember, since I joined in 2014, there was always the meme institutions are counting.
6:03
[SPEAKER_00]: For 10 years, since the crucial we're coming, but actually we're not coming.
6:06
[SPEAKER_00]: So every cycle was the new narrative of institutions coming to space.
6:10
[SPEAKER_00]: And then eventually in 2024, you had the TFs approved.
6:16
[SPEAKER_00]: And yes, institutions are fine in the coming,
6:21
[SPEAKER_00]: We were running an exchange that's so different market cycles.
6:25
[SPEAKER_00]: So it was the ICO movement in 2017.
6:30
[SPEAKER_00]: And there was a lot of craziness in 2018, the market tanked.
6:36
[SPEAKER_00]: And then I remember, was March 2020 with a pandemic.
6:41
[SPEAKER_00]: I think was still Trump that back then that announced closing of the Inbound flights into the United States because of COVID and so the market tent and I was very proud in that moment because we Everyone's single exchange was down.
6:56
[SPEAKER_00]: So the price of Bitcoin went from nine thousand dollars to four From five thousand dollars beatmags and everything was Beatmags will excuse it back then and the club is everyone was down and we were like there
7:09
[SPEAKER_00]: But running orders and liquidating in a good order, the load positions by the same time, we were able to serve everyone with the good latency.
7:22
[SPEAKER_00]: And so we always prepare beatfeanets for the worst of the markets so that we when that comes, we are basically the last men standing.
7:32
[SPEAKER_00]: So I like that about us.
7:34
[SPEAKER_00]: I mean,
7:34
[SPEAKER_00]: uh... volumes are uh... of course would uh... in uh... in the in the platform uh... but uh... really is the place where when cal brakes lose you can still find a quick and you can still trade yeah absolutely and i also think i saw recently i'm not sure if it was just momentary or if it was permanent now there's no fees to trade on bit for next is that right yeah that is that was a very interesting decision so um...
8:03
[SPEAKER_00]: But next, now that is a few months that is running without fees, remains highly profitable.
8:10
[SPEAKER_00]: And so, give me a minute we have a...
8:13
[SPEAKER_00]: from the biggest peer-speer lending market, we have so many services.
8:16
[SPEAKER_00]: And so when I went between, I started, make her and take her fees we're around 20 to 20 points each.
8:25
[SPEAKER_00]: And then after two years we came like 2010 and then we came like 20, zero and then basically start, it's basically fees, trading fees are raised to the bottom.
8:36
[SPEAKER_00]: And so the thing that is unfair about fees is that,
8:40
[SPEAKER_00]: rich guys don't pay fees.
8:41
[SPEAKER_00]: So the market makers are paid by most of the changes to their pay to trade there.
8:48
[SPEAKER_00]: And still, instead, the little guys are the ones that pay super high fees.
8:52
[SPEAKER_00]: Some of their retail exchanges, I would not name them, but the most known probably exchange in the United States, like you have super high fees for a deal.
9:01
[SPEAKER_00]: And so I think I always felt like it's a fair, right?
9:04
[SPEAKER_00]: So it is like the inverse room with room in it.
9:06
[SPEAKER_00]: And still,
9:09
[SPEAKER_00]: We did some calculations on our side.
9:11
[SPEAKER_00]: We saw that the exchange would remain extremely profitable.
9:16
[SPEAKER_00]: From once, I mean, if you have an exchange, it was never the case we never had negative fees for market makers.
9:23
[SPEAKER_00]: But if...
9:26
[SPEAKER_00]: If you need to pay some market makers and then you have to charge their Intel.
9:31
[SPEAKER_00]: So you have any way next to zero.
9:33
[SPEAKER_00]: So we calculated that.
9:35
[SPEAKER_00]: In our case, we're not subsidizing market makers.
9:38
[SPEAKER_00]: We were not charging high fees to retail.
9:41
[SPEAKER_00]: And in the end, fees like trading fees were negligible.
9:47
[SPEAKER_00]: In the grams came a fees of the Phoenix Profitability.
9:49
[SPEAKER_00]: And so we removed them.
9:51
[SPEAKER_00]: The volume went up.
9:52
[SPEAKER_00]: Actually, we acquired so much more user-based and our peer-to-peer landing market grew.
9:58
[SPEAKER_00]: It's like several settings in the peer-to-peer landing markets.
10:02
[SPEAKER_00]: And so the efficiency of the system just grew incredibly well.
10:08
[SPEAKER_00]: So it was the right decision.
10:10
[SPEAKER_00]: I believe that many changes will follow our path in the future.
10:14
[SPEAKER_01]: Yeah, and like you said, I mean, the products and services have expanded since day one day one, it was, you know, pretty much spot trading and then you guys is, you know, had lending and then all sorts of new derivatives products are coming out now and so I believe, you know,
10:33
[SPEAKER_01]: options are here, maybe, or options are coming to the platform.
10:37
[SPEAKER_01]: And so we just want to hear about sort of the roadmap for Bitfinex, what have you just recently launched and what's kind of near term expected.
10:47
[SPEAKER_00]: So options, we are servicing options through partner platform italics.
10:52
[SPEAKER_00]: They're doing a very good job.
10:53
[SPEAKER_00]: And so we have.
10:55
[SPEAKER_00]: So our offering is, of course, spot trading with you know highest efficient possible margin trading, where we have, I think the deepest liquidity in the lending, peer to peer lending book.
11:07
[SPEAKER_00]: We have perpetuals, we have
11:11
[SPEAKER_00]: We have options for my colleagues, but also we have between executorities.
11:16
[SPEAKER_00]: I'm in big love with bitfinex executorities because it's our, we wear the pioneers also in the tokenized security space.
11:24
[SPEAKER_00]: I think, every time we try to launch a feature, we think like, okay, what is, what would be the big one way to launch a feature like a bitfinex executorities?
11:37
[SPEAKER_00]: The way I run now is thinking about tokenized securities, right?
11:40
[SPEAKER_00]: So Apple's tokenized Apple shares and Tesla shares.
11:43
[SPEAKER_00]: And I think it's extremely boring.
11:45
[SPEAKER_00]: I think the,
11:46
[SPEAKER_00]: you know, the idea around Bitcoin was to create the highest level of inclusion possible for people that could not have a bank account and still create almost like an even playing field for other.
12:02
[SPEAKER_00]: And so if I have to think about the big one way to offer securities in an overly crowded word,
12:11
[SPEAKER_00]: would be focusing not on Tesla's and Apple's to can I share, but actually create a platform that would allow small companies that are deciding the United States that would have otherwise a very hard time to have access to liquid markets for capital raises, to have a capital raise, on big, big security.
12:27
[SPEAKER_00]: So we first built this capital raise platform that's over the years actually kept increasing the liquidity.
12:36
[SPEAKER_00]: Now we are going through raises that are in the tens or 50 or hundreds of millions of dollars through which the next capital rate is and on top of that we offer the secondary markets for these tokenized shares and not only shares but you can raise capital for bonds, tokenized bonds or even funds and so that to my opinion like think about a beautiful great company
13:06
[SPEAKER_00]: Imagine two companies, one in Argentina and one in the United States, and one in Argentina Alfred is the same exact product as the service of the one in the United States.
13:14
[SPEAKER_00]: The one in the United States was with a snap of the finger, which was probably 20, 30 times more capital than one in Argentina.
13:21
[SPEAKER_00]: That I think is a huge bottleneck for development in the merchant market.
13:28
[SPEAKER_00]: That's how we wanted the position between executorities.
13:31
[SPEAKER_00]: And I think that is the future of our platform.
13:37
[SPEAKER_00]: You could see over time, we had reduced the number of altcoins on the platform.
13:42
[SPEAKER_00]: So I think we probably had 400.
13:45
[SPEAKER_00]: And now we have, I think, less than 200.
13:48
[SPEAKER_00]: And we are decreasing those.
13:49
[SPEAKER_00]: We are removing all the ones that are not trading enough.
13:54
[SPEAKER_00]: They don't have good liquidity,
13:56
[SPEAKER_00]: The word in a way is shifting towards a real work, user, or real word assets.
14:02
[SPEAKER_00]: And again, we have been preuniting that.
14:05
[SPEAKER_00]: But I think everyone is focusing on their own thing, apart from X and BFNX is focusing on what matters the most, that is actually creating the right even playing field, also on their real word assets, landscape.
14:17
[SPEAKER_02]: Yeah, it's interesting to watch all of this unfold.
14:20
[SPEAKER_02]: I mean, the whole RWA tokenization revolution can lead to all these different global companies settling in their trades on something like BitThinex.
14:31
[SPEAKER_02]: Would you say that that's the end goal?
14:34
[SPEAKER_00]: I would love for our end goal would be all the companies in emerging markets
14:47
[SPEAKER_00]: and liquidity pool or a platform that would help them trace capital and list their shares.
14:54
[SPEAKER_00]: They have now an opportunity.
14:56
[SPEAKER_01]: So, so they can't listen to those on Nasdaq or New York Stock Exchange.
15:01
[SPEAKER_01]: Bitfinex opens their arms to them.
15:03
[SPEAKER_00]: Exactly, because usually they would be too, too, too little for NASDAQ, right?
15:08
[SPEAKER_00]: And Twitter, the listing on the United States is extremely expensive.
15:12
[SPEAKER_00]: That's right.
15:12
[SPEAKER_00]: You know, you have to go through 16 different bankers and, you know, everyone will meet you.
15:18
[SPEAKER_00]: The lawyers, man.
15:19
[SPEAKER_01]: I can't imagine how expensive those lawyers are.
15:23
[SPEAKER_00]: And, and keep in mind that we are doing all that process with good regulations under the Osvotor regime, very sensible piece of low, very, very conservative as well, and there is a good regulatory oversight and all that, but is much more accessible.
15:38
[SPEAKER_00]: And on big connects, you have already huge liquidity, you know, a lot of big coiners are, you know, the big coiners never wanted to have much exposure to out the outcoins and so big coiners are definitely the ones more interested to have access to if they want big coiners seek for alternatives that would seek out for alternatives in their young world, not in another separate token circle.
16:02
[SPEAKER_00]: We are trying to build something that is reasonable with our current use of these, that would allow them to invest their, you know, profits, for example, into something different, that would still make sense and would have an impact in their real world.
16:17
[SPEAKER_02]: Yeah.
16:17
[SPEAKER_02]: Yeah.
16:18
[SPEAKER_02]: It's, and it makes sense too.
16:19
[SPEAKER_02]: I like the idea that you can essentially get more people access to this stuff and you can open up exposure.
16:30
[SPEAKER_02]: Like, I was gonna say just more companies, but I think it can be so much more than that.
16:34
[SPEAKER_02]: You know, people who do music can open it up, people who put on shows can like open up getting ownership, brands or images or whatever, can give you essentially fractionalized ownership without you having to be a publicly traded company, which,
16:46
[SPEAKER_02]: I think it's cool.
16:47
[SPEAKER_02]: I mean, you see people that are on the up and up and you're like, man, like, I know that person's going to be big or I know that brand's going to be big.
16:54
[SPEAKER_02]: I know this fill in the blank is going to be big one day.
16:57
[SPEAKER_02]: I wish I could be a part of that.
17:00
[SPEAKER_02]: And it's really, really hard for investors in the current data to do that.
17:04
[SPEAKER_02]: Even if you are an accredited investor, even if you have that title,
17:09
[SPEAKER_02]: it doesn't make it that much easier.
17:10
[SPEAKER_02]: And you know, when you do this, again, what you have is you have more liquidity, more capital, and you have more money that can come into this.
17:17
[SPEAKER_02]: And I think it also gives people the more freedom to take part in the things that they know the best and the things that they're the most passionate about, which matters a lot.
17:27
[SPEAKER_02]: You know, circling back to what you were talking about a little bit earlier with the derivatives market.
17:31
[SPEAKER_02]: I had the chime in on this because I really like derivatives.
17:34
[SPEAKER_02]: I trade options a lot myself.
17:36
[SPEAKER_02]: I've always wondered, you know, why do we see an emphasis on futures in crypto, like the futures market or the perpetual markets?
17:44
[SPEAKER_02]: And not necessarily options.
17:46
[SPEAKER_02]: right you here when it comes to crypto trading here oh there's spot trading there's future there's perks but you rarely hear about options trading in crypto when it's such a gigantic part of traditional finance and in the stock market as a whole for instance i've seen you say that the total daily crypto derivatives volume off to exceed often exceeds around $100 billion
18:16
[SPEAKER_00]: The problem that it sees is not, of course, a rule, but most of the people in crypto that are trading crypto are, they understand very well, I buy one Bitcoin, I get one Bitcoin, I sell one Bitcoin, I sell one Bitcoin, right?
18:35
[SPEAKER_00]: So, but the options that are very complex instruments for the matured to the people.
18:41
[SPEAKER_00]: Like, a lot of people that approach crypto is to have an alternative, is to have exposure, to try to even speculate, find.
18:48
[SPEAKER_00]: But it's, they don't have the, the, the culture or the deep financial knowledge that would allow them to leverage the options in their right way.
19:01
[SPEAKER_00]: And so,
19:08
[SPEAKER_00]: coming from the traditional market with use options to protect them cells to hedge and stone.
19:12
[SPEAKER_00]: But for good reasons, either it's both the financial understanding of many crypto users in a good way, right?
19:24
[SPEAKER_00]: So again, many people coming to crypto they have bigger problems in their lives.
19:29
[SPEAKER_00]: They are maybe subject to very high devaluation, their national currencies in their country.
19:34
[SPEAKER_00]: They never had time to understand the complexity of options.
19:38
[SPEAKER_00]: And so, it's easier to trade derivatives because you are still subject.
19:41
[SPEAKER_00]: It's fairly easy now with perpetuals, right?
19:44
[SPEAKER_00]: So, and also perpetuals, think about these perpetuals, exceeded the volume of the standard futures.
19:50
[SPEAKER_00]: Because perpetuals is just, you put up a position, you pay funding every few hours, and it's neat, right?
19:57
[SPEAKER_00]: So, you don't have the complexity of rolling futures in here and there and periodically.
20:04
[SPEAKER_00]: So,
20:05
[SPEAKER_00]: Most of the people didn't have the time to learn all the complexities, and so, and also applies to options.
20:12
[SPEAKER_00]: So, and also the other party is actually, or the other side is purely their action, and they're just gambling.
20:20
[SPEAKER_00]: So, either way, it's one or the two, but to that, making it as derasant.
20:25
[SPEAKER_01]: Yeah, that makes a ton of sense.
20:27
[SPEAKER_01]: It seems like crypto trading, crypto spot trading originated first, and emulates a little bit more close to,
20:35
[SPEAKER_01]: perpetuals trading as opposed to the the options.
20:37
[SPEAKER_01]: I think that makes sense, but and I also wanted to circle back a little bit to some of the discussion that we touched on with the institutional adoption and there's many different kinds of institutions.
20:47
[SPEAKER_01]: I'm sure you guys deal with, you know, many different kinds.
20:51
[SPEAKER_01]: I'm curious what
20:53
[SPEAKER_01]: kind of institution, you think is the most impactful to the crypto space, meaning what is crypto benefit the most from in terms of an institution coming?
21:03
[SPEAKER_01]: Is it the asset manager is like black rock and fidelity who are launching these ETFs and their clients are buying it or is it a big banks?
21:13
[SPEAKER_01]: Is it some other, you know, more cloaked part of the market that's more
21:21
[SPEAKER_00]: So, I think the...
21:25
[SPEAKER_00]: It's tricky because, I think...
21:28
[SPEAKER_00]: If you have to, are not miss the lead positive for... for...
21:34
[SPEAKER_00]: crypto as an ecosystem I mean definitely there are there is these products like if 99.99% of the Bitcoin will be in all the ETFs how we would feel about it right so and that's pizza and
21:55
[SPEAKER_00]: I would say like funds like hedge funds are having the most positive contributors to the space where they would have an allocation and so they have, they have to expertise the built-in expertise in the house to trade on crypto platform state.
22:13
[SPEAKER_00]: They were the ones that were ambitious, they explored the crypto world before anyone else.
22:23
[SPEAKER_00]: And so they built, perpetrating desks inside themselves, that would understand the fear of the different API systems, of the different exchanges.
22:35
[SPEAKER_00]: And so that speaks very highly of these institutions.
22:41
[SPEAKER_00]: banks and it's almost funny because many changes now are trying to offer these tokenized securities like like Tesla's an Apple.
22:53
[SPEAKER_00]: So try to go work to capture some of the banking industry and the banks are trying to list some of the tokenized, well they list ETFs on Bitcoin or Ethereum or so on.
23:05
[SPEAKER_00]: So it's almost like there is a convergence, I'm all the two
23:10
[SPEAKER_00]: So probably crypto changes will become more like banks and banks will become a bit more like crypto changes over time and um, but
23:20
[SPEAKER_00]: I think the we need to be aware of the fact that not everything that is coming is going to be a positive result would not have a positive result on on the crypto space.
23:32
[SPEAKER_00]: And I think ETFs are in one of those examples, so you cannot stop them, right?
23:36
[SPEAKER_00]: So they did is a great tool is a great thing is just means to make people think about Bitcoin, right?
23:44
[SPEAKER_00]: Again, as as Vick Phoenix, we also want to educate and promote
23:50
[SPEAKER_00]: on the south of custodial aspects, I think that if we lose the ability to South Cassidy and eventually all the bitcoins will be in a segregated Cassidy, you know, it's going to be a shame.
24:04
[SPEAKER_00]: Even, you know, when even if Bitcoin excels, probably one of the top three or top two,
24:12
[SPEAKER_00]: Every single day, I'm like, people are treating us as a bank.
24:16
[SPEAKER_00]: Of course, it's like flattering great.
24:19
[SPEAKER_00]: We have the best security in the world.
24:21
[SPEAKER_00]: I'm yes.
24:22
[SPEAKER_00]: That I'm very confident about Bitcoin security, but I wish people would take more ownership of the Bitcoin they have.
24:30
[SPEAKER_00]: It's like that is all a bit, a bit, a bit, a bit.
24:34
[SPEAKER_00]: Although, makes more money to us to pass to the staff on behalf of people,
24:41
[SPEAKER_00]: Not necessarily is their eye thing and I believe that the finish should always do their eye thing for the ecosystem and try to continue to do Kate.
24:48
[SPEAKER_00]: Again, we feel very confident in our infrastructure.
24:51
[SPEAKER_00]: We feel very confident in our security.
24:53
[SPEAKER_00]: We proved in the last 10 years, how seriously we take this stuff.
24:57
[SPEAKER_00]: But also being serious means that we shouldn't be trying to source people and push people to deposits that the assets they don't need to trade.
25:09
[SPEAKER_00]: We won't deacetate people want to trade.
25:12
[SPEAKER_00]: But we
25:13
[SPEAKER_00]: It's, you know, supporting, and we've invested in things like RGB, we build, we are helping building protocols that will move a lot of activity on second layers on top of Bitcoin because exactly that.
25:25
[SPEAKER_01]: Yeah, I was just gonna bring that up.
25:27
[SPEAKER_01]: I know, yeah, RGB's one protocol, I believe you guys are pretty also involved in the lightning network.
25:33
[SPEAKER_01]: And are these initiatives, well, they're supposed to speed up the transaction time and make, you know, crypto or particularly Bitcoin, more easy to store, more usable?
25:45
[SPEAKER_01]: Could you tell us a little bit about sort of,
25:48
[SPEAKER_01]: the user experience with lightning and with RGB and, you know, how is this improved things and how are you really integrating it and encouraging folks to get off the exchange and go to cold storage or go to a hot wallet where they can spend easy.
26:05
[SPEAKER_00]: So lightning so far is the most successful layer 2 on top of Bitcoin allows only to move south.
26:14
[SPEAKER_00]: I think lightning is the still a bit immature in its form is I don't think lightning
26:24
[SPEAKER_00]: lifetime-style channels would be the best way to scale payments, coming towards a future where you have the eye agents sending transactions to each other.
26:36
[SPEAKER_00]: How many of the eye agents will make three of those of the transactions per day or any way tensed of billions of transactions per day?
26:49
[SPEAKER_00]: The agents will negotiate among each other without intermediaries, collaborations, I mold themselves.
26:57
[SPEAKER_00]: And the will negotiate and will use a crypto asset, likely they will use Bitcoin.
27:04
[SPEAKER_00]: And it's quite interesting to me and I'd like to think more about it.
27:09
[SPEAKER_00]: You have, on one side, you have the eye agents where the price, their energy in tokens, right?
27:15
[SPEAKER_00]: The generic tokens, and basically there is a clear relationship between the cost of energy and the token.
27:20
[SPEAKER_00]: And on the other side, you have Bitcoin.
27:23
[SPEAKER_00]: That has a relationship, also with energy, because cost energy to mine Bitcoin.
27:28
[SPEAKER_00]: technically there should be, there could be a mathematical formula that would express, you know, the conversion rate between any, and like an, and an, and I'm token generated and physically a Satoshi that has been known, right?
27:41
[SPEAKER_00]: So, so I see that correlation on the other side,
27:47
[SPEAKER_00]: you every single blockchain layer one has money sure that is called single share state.
27:53
[SPEAKER_00]: So a person who told you needs to see what another person is doing is Switzerland to avoid double spending.
28:01
[SPEAKER_00]: And like in that synchronization is basically it's very complex required global consensus and it's very slow.
28:12
[SPEAKER_00]: Lightning instead tries to solve that problem where two parties can speed up a channel and commit some Bitcoin on mainchain, but then all the other subsequent transactions will happen blazing fast and only the two parties would have knowledge of those transactions until the channel is settled.
28:32
[SPEAKER_00]: So you can send a convenient transactions in that peer-to-peer channel until you decide to step up.
28:37
[SPEAKER_00]: So that is the only way physically, I mean, talking about human physics, that is the only way physically to scale payments for the eye agent economy.
28:48
[SPEAKER_00]: So the other side, I mean, that overall technology and that was tracked for me, is their right way to do.
28:55
[SPEAKER_00]: So to build super scalable payments,
28:59
[SPEAKER_00]: But I think still life needs is not in its final four needs, more development, more thinking, more maturity that has definitely some downsides and that needs to be sold in my opinion when it comes to routing and the complexity of routing and so on.
29:15
[SPEAKER_00]: That's, like, we are on the right path, but I think we need to spend more time on research, probably with, you know, a searcher paid a bit more, then what I was paid at the beginning, but we need to invest a lot of research.
29:29
[SPEAKER_00]: And the, um, and there isn't even around the RGBs to learn from like in channels and like in network and actually expand that to other assets that are
29:41
[SPEAKER_00]: So people might want to have the reality is that what we see is people want to spend in stablecoins and want to bold Bitcoin.
29:50
[SPEAKER_00]: So almost like stablecoins are their check-in account and Bitcoin is their savings account.
29:54
[SPEAKER_00]: And so I think having the ability to move both on the high speed to like-in-stike channels and that's the purpose of RGB and that's basically why Bitcoin is so interested in today.
30:07
[SPEAKER_01]: Yeah.
30:07
[SPEAKER_01]: I love it.
30:08
[SPEAKER_01]: And so how else are you guys, you know, working on the AI ecosystem?
30:13
[SPEAKER_01]: I know you're really focused on basically giving the foundation for these AI agents to pay people to pay each other to scour different wallets and stuff.
30:26
[SPEAKER_01]: Or is Bipfinex going to have like a front end where people can build and deploy crypto-related AI agents?
30:32
[SPEAKER_01]: Are you guys just going to be in the background, licensing and technology to other companies?
30:37
[SPEAKER_01]: How do you see yourselves positioned for the AI race?
30:41
[SPEAKER_00]: I think there's a huge opportunity in creating skills that could be used by AI agents to trade.
30:49
[SPEAKER_00]: I mean.
30:50
[SPEAKER_00]: Yeah, agents will need anyway deal with the global economy and their real world and so they will need to pay They will need to even land right so you you might have an eye agent that a crew money for an eye agent offer services across money
31:07
[SPEAKER_00]: And once you earn a yield, out of that money, and you could earn a yield for some USDT or Bitcoin through the Bitcoin XP or to peer lending market.
31:16
[SPEAKER_00]: And so you won't have one to deposit it.
31:18
[SPEAKER_00]: And so if you have capital that is sitting doing nothing, you might want to deposit them with Bitcoin X, and then withdraw it when you need it.
31:25
[SPEAKER_00]: So
31:25
[SPEAKER_00]: I think there is a lot of orchestration that the AI agents can do with the right skills, developed with the connectivity to an exchange like between it.
31:33
[SPEAKER_00]: So we are thinking a lot about that, and we believe that there will be important developments in the next few months.
31:41
[SPEAKER_01]: Yeah, no, that makes a ton of sense.
31:43
[SPEAKER_01]: And on the topic of AI and all of this complicated technology, we would be remiss if we didn't touch on quantum in Q-Day, as people are starting to refer to it.
31:57
[SPEAKER_01]: And I just, you know, you're the CTO of one of the oldest and largest exchanges.
32:02
[SPEAKER_01]: I know all the banks are working on quantum resistance very quickly.
32:05
[SPEAKER_01]: I saw other exchanges start to come out with their own plans
32:10
[SPEAKER_01]: I guess the question's too part.
32:13
[SPEAKER_01]: First, is all of this just fun or is it real?
32:17
[SPEAKER_01]: And how are you dealing with it at Bitfinex?
32:20
[SPEAKER_00]: So I think the issue is out there.
32:25
[SPEAKER_00]: So I don't think we should take it lightly by the same time, is overstate.
32:29
[SPEAKER_00]: I mean, I think that people are too panicky.
32:32
[SPEAKER_00]: So there's a lot of I can next year, the Satoshi Wallet will be hacked.
32:40
[SPEAKER_00]: I mean, banks might work on it, but the problem is the entire internet is going to be having bigger issues before Bitcoin, also, right?
32:48
[SPEAKER_00]: Not many people realize that, let's say that you have many in the middle that can record a lot of, uh,
32:57
[SPEAKER_00]: I can imagine that you store all your private conversations and your private emails and your private documents in an encrypted form somewhere on an art drive or like somewhere else and you thought they were protected.
33:08
[SPEAKER_00]: There, yes, they are protected for now, but there is someone in the history over the last three years.
33:14
[SPEAKER_00]: So imagine if you had an intelligence agency or an institution or whatever that had access or like a malicious actor that had access
33:25
[SPEAKER_00]: documents encrypted stored on any hard drive and they had a copy.
33:32
[SPEAKER_00]: With print computing, they would be able to decrypt all the information that was not to be able to, was not able to be decrypt in the past.
33:40
[SPEAKER_00]: So imagine like people could go back 50 years and say, oh, I got that document from like was encrypted 50 years ago.
33:47
[SPEAKER_00]: And now I can decrypt it.
33:48
[SPEAKER_00]: And like or 20 years about 10 years ago, you imagine how many weeks it will be on
33:55
[SPEAKER_00]: they were encrypted but a club and encrypted copying leaked and now can be decrypted.
34:00
[SPEAKER_00]: And so, all the the communication channels that we have and think are secure, even the in-flight communications if they were recorded could be decrypted.
34:10
[SPEAKER_00]: So, the amount of the craziness that will happen will be far superior.
34:16
[SPEAKER_00]: than the issue of Bitcoin.
34:17
[SPEAKER_00]: You know why?
34:18
[SPEAKER_00]: Because I believe that Bitcoiners are not stupid people, they would come if you could add a new signature scheme that is quantum resistant.
34:27
[SPEAKER_00]: The people that are live and have access to the wallets will have two or three years to move us at the
34:37
[SPEAKER_00]: It's not like your handle guy in the street will have access to a counter-computer.
34:41
[SPEAKER_00]: What will happen is that Google or IBM or the US government or the Chinese government will have access to these, they will be the only ones to have access to the technology probably five years before anyone else.
34:55
[SPEAKER_00]: And so,
34:57
[SPEAKER_00]: Will the U.S. government hack the as a social wallet?
35:01
[SPEAKER_00]: Will Chinese government to hack the social wallet?
35:04
[SPEAKER_00]: Everything is possible.
35:05
[SPEAKER_00]: But then it will be a state hack.
35:07
[SPEAKER_00]: So there is, there are so many implications on some from legal point of view.
35:11
[SPEAKER_00]: So I would really not be to panicking about it.
35:15
[SPEAKER_00]: It's good that we are thinking about it.
35:17
[SPEAKER_00]: It's good that we're tracking it.
35:18
[SPEAKER_00]: But you know,
35:20
[SPEAKER_00]: I think the word will have bigger problems before Bitcoin.
35:25
[SPEAKER_00]: Because Bitcoin is actually, Bitcoin does not need to be completely changed.
35:32
[SPEAKER_00]: Like instead, internet needs to have a series of great and in many forms, Bitcoin has an easier path to be fixed.
35:43
[SPEAKER_01]: It's an interesting point, because I totally agree, but I've also heard in the media, which is probably the tell that it's not true, but I've heard in the video that, you know, oh Bitcoin is the most vulnerable because it's decentralized.
35:58
[SPEAKER_01]: And so all of these upgrades take so many people all around the world to coordinate and the miners and the validators whereas JP Morgan just has Jamie Diamond give a top-down initiative.
36:08
[SPEAKER_01]: Say, hey, we're gonna all become quantum resistant,
36:13
[SPEAKER_01]: I don't know, a year or two, it's done.
36:15
[SPEAKER_01]: And so I like to hear your perspective because you're saying, it's actually the opposite.
36:20
[SPEAKER_01]: Bitcoiners have been coordinating and coming to consensus on very important things for 16 years and they're able to do it pretty quickly and get things done.
36:30
[SPEAKER_01]: of course there's forks here and there and you get some very how do I say bombastic characters that persuade people to do Satoshi's vision or Bitcoin cash but in in all in all you know Bitcoin core has existed and has thrived for 16 years and so I think that quantum when it comes because it's not if it's a kind of a win the community has been hardened
36:59
[SPEAKER_01]: stuff over the years and will come come towards a nice solution.
37:04
[SPEAKER_01]: So it's encouraging to hear that from you.
37:06
[SPEAKER_00]: Yeah, I mean, for sure, but yeah, you can worry.
37:09
[SPEAKER_00]: It's one bank, but there are six casino banks with all the banks of greater same time.
37:13
[SPEAKER_00]: And also not only banks, all the shops, will all the shops upgrade, will every single male provider will upgrade in time.
37:22
[SPEAKER_00]: So you have internet is still distributed.
37:25
[SPEAKER_00]: So it's not like
37:26
[SPEAKER_00]: Well, sure, maybe the JP Morgan customers will be fine, but there will be other good zooming people that might not be fine if their decision makers are not good enough or smart enough or fast enough.
37:36
[SPEAKER_00]: And so we had that thing, user activated stuff forks with, you know, you had the top root changes.
37:43
[SPEAKER_00]: So we proved that we could add the new signature schemes without how it can lose on Earth.
37:49
[SPEAKER_00]: So I think, again, I don't think,
37:52
[SPEAKER_00]: Bitcoiners will let Bitcoin die.
37:54
[SPEAKER_00]: I mean, that's the only thing we learn in the last 16 years is exactly that.
37:59
[SPEAKER_01]: so true.
38:02
[SPEAKER_01]: Speaking of not letting Bitcoin die, I think a lot of people over Q4 and Q1 either did get liquidated and knocked out of the market or lost faith in Bitcoin because they bought high at 120k and things fell all the way down on February 6th to a low of $60,000 and so there's been this big, you know,
38:24
[SPEAKER_01]: bull market correction, maybe a bear market, you know, middle innings, you know, not financial advice, of course, or anything of that nature.
38:32
[SPEAKER_01]: But I just want to get your sense as to where we're at in the market today.
38:36
[SPEAKER_01]: You know, the stages set here were now kind of crawling up off that 60,000 lows, breaking above $80,000 as we speak.
38:45
[SPEAKER_01]: So where are we in the cycle?
38:47
[SPEAKER_01]: Is there
38:50
[SPEAKER_01]: you know is the the having kind of diminishing in its power and the institutions are kind of coming and propping up price so we're not going to have a 80, 90% you know draw down every four years.
39:01
[SPEAKER_00]: Well I think um I mean I'm always bullish on Bitcoin so that's a problem but um you know
39:17
[SPEAKER_00]: I buy because it's my, I think it's the best exposure I can have.
39:23
[SPEAKER_00]: And so, on the other hand, I think hard to say if we have four years cycles, I don't believe that, you know, we mind, you know, 95% of the Bitcoin that can ever be mined.
39:36
[SPEAKER_00]: And so, you know, the inflation that you would have had through mining will not justify, you know, huge price bumps.
39:45
[SPEAKER_00]: But I think still, there is, I mean, I'm very bullish on Bitcoin because I believe that, you know, it's not anything more about the health and it's like actual global adoption.
39:56
[SPEAKER_00]: And I think we'll continue relentlessly.
39:58
[SPEAKER_00]: We keep adding more, more use cases to Bitcoin.
40:02
[SPEAKER_00]: We add more interest.
40:03
[SPEAKER_00]: We do more education.
40:05
[SPEAKER_00]: People are seeing that fear of currency and currencies anyway are inherently and inevitably going down.
40:13
[SPEAKER_00]: It will take time.
40:14
[SPEAKER_00]: I know if it will take to months, six months, one year, but I think having is becoming less exciting as an event is a good reminder.
40:24
[SPEAKER_00]: I think I like it as a reminder of the move, WDT of Bitcoin.
40:30
[SPEAKER_00]: You know, it will continue.
40:32
[SPEAKER_00]: It's like Chrome, right?
40:37
[SPEAKER_00]: You know,
40:41
[SPEAKER_00]: B20s, B20s unique has been the try to cope with so many times, the try to make so many forks.
40:47
[SPEAKER_00]: I remember, you know, the old days, you have Bitcoin Diamond, Bitcoin, gold, Bitcoin's, you know, all the kind of crazy.
40:53
[SPEAKER_00]: I'm super, yeah, you know, that's it, right?
40:58
[SPEAKER_00]: So it's going through a cycles or enforcement, and but I'm very positive for it, doesn't it?
41:05
[SPEAKER_02]: Nice.
41:06
[SPEAKER_02]: Well, I mean, there's clearly a lot going on.
41:08
[SPEAKER_02]: There's a lot to digest.
41:09
[SPEAKER_02]: We've listened.
41:10
[SPEAKER_02]: We've talked about AI, we've talked about derivatives, we've talked about institutional adoption, you're in the weeds on all of these.
41:17
[SPEAKER_02]: What else do people need to be paying attention towards?
41:19
[SPEAKER_02]: That can either make our lives better or potentially make us more money.
41:27
[SPEAKER_00]: Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha
41:37
[SPEAKER_00]: I think that there is, I think there is, should be a goal, I mean, it's very difficult goal and I appreciate it not everyone can achieve that, but I think having one beat coin, one single beat coin, it could be an amazing achievement, I know many friends that started the where beats kept going the past and, you know, with artwork, very hard work, you know, the kept saving, the kept saving, now they have one beat coin, one full
42:06
[SPEAKER_00]: Oh, I'm I'm set.
42:08
[SPEAKER_00]: I'm set.
42:08
[SPEAKER_00]: That is, you know, I will leave it to my children.
42:11
[SPEAKER_00]: I don't care, but I will never sell it.
42:13
[SPEAKER_00]: I want to keep it.
42:14
[SPEAKER_00]: That is some that is my parachute.
42:16
[SPEAKER_00]: That is my parachute for, you know, whatever will happen in the world.
42:20
[SPEAKER_00]: And I see more people actually have that ambition.
42:24
[SPEAKER_00]: I think it's a health ambition to have one single Bitcoin.
42:28
[SPEAKER_00]: And this, again, might be too hard for many people, right?
42:31
[SPEAKER_00]: So there are people that earn like $12 per month.
42:35
[SPEAKER_00]: It will be, is very hard, but doesn't have to be one Bitcoin, but it should be, I think people should have a goal in a current value in Bitcoin.
42:45
[SPEAKER_00]: Because it's, I'm,
42:48
[SPEAKER_00]: I think word is not going there either actually.
42:51
[SPEAKER_00]: We see all the chaos that is happening in macro.
42:55
[SPEAKER_00]: We see geopolitical instability.
42:58
[SPEAKER_00]: And so Bitcoin is the true hedge.
43:02
[SPEAKER_00]: I think people have actually seen Bitcoin still to correlate it to the deterioration of financial markets.
43:11
[SPEAKER_00]: Now it's like maybe, and that's normal.
43:15
[SPEAKER_00]: Bitcoin is one tenth of the market cup of gold, and so, probably a bit last, and so it feels too volatile, and it's still the liquidity solo that, you know, who moves a lot, and also it's the only asset can be traded over at weekends, and so, you know, it's people if there are some announcements, and suddenly, most of these announcements on geopolitical side happen on Friday, and so the only thing that you can sell on Friday is Bitcoin.
43:43
[SPEAKER_00]: was affected by certain of these actions, but there would be a company.
43:51
[SPEAKER_00]: I don't know when, but you might want to have exposure to be going and have all your own Bitcoin when that happens.
43:57
[SPEAKER_01]: Yeah, I love that phraseology of parachute, you know, if your money goes to crap, if your country goes to crap, no matter where you are in the world, if you remember those 24 words and sequence or if you have your 24 words written down in a safe area, you know, you could bring that with you anywhere in the world at any time with virtually no cost.
44:21
[SPEAKER_01]: And so it's something
44:23
[SPEAKER_01]: just so unique, and when people ask me, like, oh, Bryce, should I just buy the Bitcoin ETF?
44:29
[SPEAKER_01]: Like, well, if your only desire is to get Bitcoin price exposure, sure, that's one thing.
44:36
[SPEAKER_01]: But if your desire is to get the censorship resistance and the permissionless nature of spending your money anywhere and the ability to use it in travel across the world and all that kind of stuff and have that parachute, and the ETF does not capture any of that.
44:50
[SPEAKER_01]: you have to have a spot bit coin on a wallet and they're like oh wow it really is different and so there could be one you know world eventually maybe we're even the price of the ETF diverges from spot bit coin maybe i don't know um even though it's spot back but there could be a premium placed on spot bit coin like i remember back in the day there was you know uh discounts on certain bit coin that was mined by certain actors because it was you know not really able to be used many places and so
45:18
[SPEAKER_01]: There's a, there's a lot of different dynamics here, but Palo, I mean, man, we could go on and on and we really do hope that we get a chance to bring you back to have a great conversation again in the future with all the developments that you guys are working on.
45:31
[SPEAKER_01]: But we want to let you go.
45:33
[SPEAKER_01]: Last question is just, you know, what's one person in the crypto space that you really admire that maybe you've learned from that you would say, you know what?
45:43
[SPEAKER_01]: you know that's one of the the best that we have here in crypto just one quick shout out sometimes we like to to get inside people's head.
45:51
[SPEAKER_00]: Um, one person.
45:52
[SPEAKER_00]: I mean, I don't know.
45:54
[SPEAKER_00]: There's a million.
45:55
[SPEAKER_00]: Give it in.
45:56
[SPEAKER_00]: Yes.
45:57
[SPEAKER_00]: One person that I admire, um, one person is very private.
46:02
[SPEAKER_00]: Is, of course, my, my co-founder, partner, John Caludevazini.
46:05
[SPEAKER_00]: And the other person that that I think is very public is Jack Mollers.
46:10
[SPEAKER_00]: I think he's doing a fantastic job in, in, in standing the ground for all the big corners.
46:16
[SPEAKER_01]: Love it.
46:16
[SPEAKER_01]: Yeah, I know he's got a new a new is it publicly traded company the jackmollers is working on Renjuan.
46:24
[SPEAKER_01]: Yeah, 21.
46:25
[SPEAKER_01]: Yes 21.
46:25
[SPEAKER_01]: I was gonna say canter equity partners, but yeah 21 is is the official name of the company.
46:31
[SPEAKER_01]: So yeah, we're
46:31
[SPEAKER_01]: We're hopeful that we can interview Jack Mueller's one day and he's got a great podcast and he's busy on CNBC.
46:36
[SPEAKER_01]: It seems like all the time, but I feel make time for us.
46:39
[SPEAKER_01]: We'll have to be happy to have you jack if you're listening.
46:42
[SPEAKER_01]: But with that being said, Palo, we appreciate your time and all of the knowledge you shared with us.
46:48
[SPEAKER_01]: We hope you have a great rest of your day and everybody at home watching Hope you listen and we'll see you back Same time, same place next week with some more great guests.
46:54
[SPEAKER_01]: Take care.