Bankless - Leaving the Bitcoin Religion with Nic Carter

Episode Date: July 5, 2022

Nic Carter is Partner of Castle Island VC, host of the On the Brink Podcast, repeat Bankless guest, and recent victim of a Bitcoin maximalist (cyber hornets) attack. Why was he swarmed? As a result and for many other reasons, he's distancing himself from these cyber hornets. Will others follow his lead? Many assumed Nic was a Bitcoin maximalist, but really he's just Nic Carter. Who are you and what do you stand for? ------ 📣JUNO | Crypto Friendly Banking https://juno.finance/bankless  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: 🚀ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool  ⚖️ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  ❎ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🦁BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave  🌴MAKER DAO | DECENTRALIZED LENDING https://bankless.cc/MakerDAO  🔐LEDGER | SECURE STAKING https://bankless.cc/Ledger  ------ Topics Covered: 0:00 Intro 7:50 The Cyberhornets Attack 14:45 Bitcoin Maxi Motivation 30:30 Bitcoin’s Intolerant Community 42:19 Bitcoin’s Long-term Sustainability 46:50 How Nic’s Feeling About the Bear 49:30 Macro & Crypto 58:55 Free Banking 1:05:53 Regulation 1:06:57 Why to Stay in Crypto 1:10:12 Closing & Disclaimers ------ Resources: Nic Carter https://twitter.com/nic__carter  Setting the record straight by Nic Carter https://medium.com/@nic__carter/setting-the-record-straight-b4e1b415e7d9  Nic’s Podcast https://onthebrink-podcast.com/   ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

I think Bitcoin maximalism is a genuinely like toxic, cancerous thing that harms Bitcoin. And to the extent I can harm that, I'm very happy to do my part. Hey, Bankless Nation. This is a pre-recorded State of the Nation episode. Super excited to talk to Nick Carter. In fact, David, we've already done that. Nick, I think people have thought of him as a Bitcoin maximalist in the past. And he recently got lit up by the Bitcoin maximalist.

and is officially, I'm going to call it, leaving the Bitcoin maximalist religion. Maybe he was never really a part in the first place, but people thought he was. And the first part of this episode, we go over that story. Then we touch on some macro themes. We talk a little bit about the bear market. We talk about BlockFi and Celsius and the concept of free banking that Nick has been in favor of in the past. A lot of great insights from Nick in this episode. What were some of your thoughts?

Yeah, you'll see the intelligence that Nick brings to the table. in the second half of the show. And I think he always frames this things in Austrian economics, like free banking, like you said, and also the role of gold throughout the world. And then he also has this intrinsic interest in Bitcoin. And so people have associated Nick Carter as being like, okay, when he talks about global macro politics,

when he talks about Austrian economics, is coming from the place of a bitconer. When actually the mistake, that was a mistake. It was actually coming from the place of Nick Carter. And so people have thought of Nick Carter as Nick Carter the Bitconer, or Nick Carter, the Bitcoin Maximilist, when, again, in reality, is just Nick Carter. And so when Nick and his VC fund, Castle Island announces this investment in like this

Web3 wallet with identity verification with a wallet-based sign-in, the Bitcoiners are like, the cyber hornets, if you will, come and descend upon him. Just by this association, that's this super, super smart guy who also likes Bitcoin, therefore as a Bitcoin maximalist, turns out to not be true. the Bitcoin culture descends. But like, it's one story to talk about this as just like, this was what was going on on like the crypto Twitter meal you

during the bear market. But the more interesting thing is about the way that Bitcoin works as a narrative. And this is where we conclude that conversation, where there's a relationship between Bitcoin, the code, and the culture that arises on top of it and how the asset actually manifests

in real life. And I think it's, if you can extrapolate it, the listener, extrapolate it to the tribe that you're probably in, dependent on what your chain you're on, or the token that you like, depending on what defy app that you enjoyed the most. You could also find all of these truths in whatever organization that you find yourself a part of. So it's one part, a story of what happened on crypto Twitter recently, but it's also something else that you can extrapolate into the wider world of crypto, because that's how this thing operates. And then we get into Nick's very well-informed thoughts

about the macro world, this coming decade, how is this bear market the same, how is it mostly different, and like what he's doing about it. Yeah, I think this is a story of tribalism. It's also a story of Bitcoin. So if you're really interested in learning more about Bitcoin culture as it is in 2020, there's no one that understands it better than Nick Carter. I mean, he's kind of a historian of the Bitcoin culture world, and he's been in the trenches as well. So a fantastic episode coming up for you. We also wanted to tell you about our friends at Juno. Juno is a crypto-friendly banking app. You can open a checking account on Juno. It's funny about this is you're hearing from bankless. We are telling you, you should go open a bank account, but that's exactly what you should do. Because Juno is a D5 friendly, a crypto-friendly bank account. They even allow you to exit your funds to layer two directly. Does your Wells Fargo account do that? Does your Bank of America account do that?

No, you need a bank account that is crypto-friendly for the 21st century, and I think all creative crypto-natives need something like Juno in their lives. David, what more would you say about Juno? Yeah, not only does your Wells Fargo not give, let you, like, go on to an Ethereum layer two, straight from your checking count, to a layer two in seconds. That's crazy. Also, 6% on your USDC. Ryan, what percentage are you getting in your Wells Fargo account? Well, sir, I'm making 0.01% in my Wells Fargo savings account at the moment. Those are different numbers. You can also get Ether and BTC clocking in at 3% as well.

And they also have a master card debit card that's metal, because everyone likes the metal cards these days. And so if you sign up with Juno and you make your crypto deposit into your crypto side of the on Juneau account, they'll give you $10. If you make a direct deposit into Juno on the checking side of your Juno account, they'll give you $100. And then what you do is you send that $100 over to the crypto side, straight to a layer two of your choice. Optimism, Obitron, Polygon, CK Sync is coming and Starknet is also coming. You can sign up. There's a link in the show notes. juno.com.com. And that's if you set up direct deposit, which is super cool. That means you receive your paycheck,

partially in crypto. It's pretty awesome. So go ahead and check that out. David, got to ask the question before you get into the Nick episode. What is the state of the nation today, sir? This one's a weird one, Ryan. This week, the state of the nation, we are inoculating. Because you know when bees sting you, they sting you with poison, but then you become resistant, right? When you take the poison, you actually become more and more resistant to it. So Nick Carter is getting inoculated from the cyber hornets. But also, going into the bear market, we are becoming inoculated from the drugs that is a bear from a bull market, the bull market. market mania, the bull market euphoria. So we're going through the bear market. It's going to be

tough. Next is going to kind of lay it out like how tough it's actually going to be. But then once we emerge right on the other side of it, we shall be inoculated from the bear market. That's how these things work. How'd you like that one? I like that. Resistant to you, I think some of the, I guess, falsehoods that are put forward because everything gets tested during a bear market, including our conviction and our resolve. And we end up on the other side, more inoculated, stronger, and that is the story here. So guys, we're going to get right to our episode with Nick Carter, but before we do, we want to thank the sponsors that made this episode possible.

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of Castle Island V.C., hosts of On the Brink podcast, repeat bankless guests, and also the recent victim of a Bitcoin Maxwell's attack on Twitter. And I think, Nick, we're going to start right there. But how you doing, man? You survived. Ivan out there? I made it, you know, the cyber hornets, they gave me the best they had. You know, they swarmed. I beat them off. I jumped into a nearby pond. You know, I think they lost interest. You swatted them away. And I read your post that you wrote earlier this week about kind of like the death of Bitcoin maximalism that sets in the context for this. But like David is the one who always calls them cyber hornets. David, why do you call Bitcoin Maximilist Cyberhornets? Can you give people

context for that term? That term just kind of emergently was discovered, but it definitely is emblematic of an organization of people that emergently coordinate without any, it's like, there's just this emergent coordination of these cyber hornets. Like, they descend upon you, there's no, like, central actor, there's no central leader, and they all, like, kind of move together, and when something kicks the hornet nest, like, the cyber hornets make themselves known. And so Nick, accidentally, I guess, kicked the cyber hornet's nest and fell victim to a cyber hornet attack.

Nick, you look okay. You look pretty good. Can you talk about, like, what did you do that, pissed off through the cyber hornet's nest? I'm laughing because it's just so stupid. It's so stupid. Yeah, I mean,

most of the people that actually some of the like stalwart, like old time Bitcoin hardliners also piled on, which is disappointing because, like, I considered some of them friends, and it's like I would go doing their podcast, so it's basically putting money in their pocket,

you know, going to their events, speaking at their events, like doing things for them, right? For five years, right, since I've been a full-time, you know, person in this industry. And so to see them turn on me over something so just completely stupid is, like, really disappointing. But also, it just reveals who has character and who doesn't, right? And at the same time, I've had so many people reach out, to me, but like, thank you for saying that. I, you know, have experienced the same kind of struggles.

And I think this is opening a lot more doors than it closes, frankly. So just to catch over and up, not that I assume everybody's, like, following, like, you know, the tiny details of my, like, arguments on Twitter. And it started when we announced investment in Dynamic, which is a Web3, um, wallet-based sign-on authentication startup, uh, which I actually think is a great, awesome use case. Like, I think that's one of the killer. for Web 3. And I was like out and about, I don't know what I was doing, but I looked back at the tweet, which is just like a normal, I think I was buying shoes, actually. I was buying some pair of loafers. Blue Scarpa. It's a really cool Miami brand. Shout out Blue Scarpa.

And I came back and there was like a hundred replies on the tweet. People were like, wow, don't, Samson, Mao replied. He's like, you shouldn't be proud of this. The tweet of you announcing that you were part of the tweet. participated in this. It was like funding around. The Castle Island invested. Yeah. People were going crazy. It's like, well, this is like I announced all the deals we do. Why didn't you have a problem with any of the other 50 deals? And so basically a whole bunch of Bitcoiners piled on. It's like mostly the class of 2021. The newer guys, you know, maybe they stacked a few sets here and there. And they like, they probably just didn't know a lot about me. They probably didn't know anything about Castle

Island. And so they'd sort of maybe read some of my stuff. They kind of assumed I was a maximalist. and then I just wasn't. And the whole thing gave them whiplash, and then they freaked out and took it as their opportunity to just try and sort of paint me as like a, you know, a postate or like a Bitcoin defector, like, you know, like a scam artist or something. Even though, like, as you guys know,

what we do mostly as a fund is we invest in startup equity. So I'm not really shilling anything to anyone. I'm just announcing that we invest in a startup. Like dynamic doesn't even have a token, right? No. No token. They have like a traditional business model.

model. They're doing something great. Doesn't require a token. Obviously uses blockchains. It's not built on Bitcoin. I know it's heretical. But it's really cool. It's like it's Web 3 like kind of you know, private key user authorization to centralized ID similar to like the the Jack Dorsey project that was recently announced in some ways. Completely. Conceptually I would say very similar. I think they're more of DID direction. We don't really know what what they're doing really. But yeah, like the idea is to restore user power of the internet, to get rid of the centralized authentication services. You know, I think that's a great thing, right? We probably should definitely move away from the world where Apple and Google and whatnot.

Own your identity, right? And move to a model where you sort of secure cryptographic information, use that to log into things. I mean, anybody that's ever logged into anything with a mask before knows that this is way, way better. And it creates a more resilient internet. and just a better experience for everyone. Funny to me, this is not even, like, this is not even competitive in any way, shape, or form to Bitcoin. Not at all.

It's complimentary, maybe, but it's not even in the realm of, like, it's not a separate blockchain. It's not a separate asset that you buy. No. It can't be in competition with Bitcoin, like, in any way, even, like, just given the nature of the product and what the thing is. Yeah. Not remotely similar from a categorical,

perspective. So it's really just, actually, I would say, like, the laser eye sort of toxymaxy people have kind of been after me for a while. And I think they seized on this. They noticed, people were angry, first of all, because it's just they lost money. And then they sort of thought this would be a great issue to like use to try and discredit me and be like, Nick's not a real Bitcoin or something, which is fine. Like, if I don't want to be part of whatever they are, right? These people are like basically lunatics. And I'll be what I am, which is not like them. I think a decent amount of bankless listeners and viewers,

this is a world that they actually aren't very much exposed to. Can you put us into the mind of a Cyber Hornet or a Bitcoin Maxi? What's their motivation for doing this? Like why do they participate in this sort of just like crypto cancel culture in order to protect Bitcoin? What are they up to? Yeah, so, well, a lot of people like to, a lot of them see it as their higher purpose, right? Like, they believe that they're actually defenders of the protocol or something.

A lot of these ideas are holdovers from maybe like the UASF wars back in 2017 where we had the big block wars and the small block faction one. And that's at least, you know, being charitable here. There's a segment of the cyber hornets that are these guys that have been around for a few years. And they, you know, think they're Bitcoin's immune system. they're protecting Bitcoin. To be clear, I'm not trying to change Bitcoin in any way. I love Bitcoin. Bitcoin's great. So whatever the immune system is doing, it's misfiring, right? So there's one cohort that does that. They think, oh, we can't consider or contemplate any changes or revisions to Bitcoin or any departure from sort of the ordained path. And that's sort of

like a bad thing, I would say, because it leads to total intellectual stagnation. And, you know, it means that actually altering Bitcoin in any way is virtually impossible. I think it's too difficult. There's probably a balance, but I think it's too difficult. Then there's sort of like the whole like the cyber hornet, like the Toxia maxis, whatever. A lot of these people are really new. They're new to the industry. They came in in 2020, 2021. They're not like OGs with tons and tons of Bitcoin. A lot of these people are pretty brand new. So maybe they kind of knew I was a little bit, but I'm actually not shocked that they didn't know about Castle Island. They didn't know about my views.

They didn't know anything about me because they're newcomers, right? And they like to just post memes and like they like to be part of this Bitcoin culture, which goes beyond just the asset itself, right? It's about acetism. It's about like deprivation, privation, right? It's about stacking Bitcoin at the exclusion of other kind of earthly pleasures. It's certainly about considering Bitcoin the only moral asset to hold to the exclusion. of everything else,

certainly other L1s, other blockchain tokens. And this ideology, which is quasi-religious, actually, if you really look into it, it's got an eschat, I don't know how it pronounce this,

eschatology. There's an eschatological component, which is, whatever, I don't know how to pronounce that. I've only ever read the word. Okay, give me a break. So there's a component which is like,

basically it has to do with the, like, final judgment. Like, looking forward into the future, it's the view, view that everything else in crypto is like Sodom Gamora and it's like sinful. And they'll come a day where the hellfire rains down and all of the other liquidity, everything good and, you know, sort of like worth saving out there and like the sinful Sodom and Gamora land is going to sort of like

collapse back to Bitcoin. Like just you wait. One day it'll all come back to Bitcoin. Like we'll build it all on liquid. And that is what allows them to tolerate the reality, the ugly reality. The ugly which they can't tolerate, which is there's a lot of innovation, like actual real, economic, genuine, important stuff happening elsewhere. In fact, the vast, vast, vast, vast, vast majority of all economic activity in crypto does not happen on Bitcoin, as we all know. And so they need to observe this reality. They can't help but observe it.

And they need to justify it somehow. And so for them, they rely on this like judgment day ideology where eventually, you know, some catalyst, I don't know, whether it's Gary. Gensler like destroying Ethereum or, you know, something else means that everything will come back to Bitcoin. All the innovation would build on Bitcoin. And that's just, you know, like a completely delusional thing, right? But that's part of the ideology. And then, of course, there's the idea that, you know, the asset issuance has to be completely perfect, completely free of original sin, right? So, like, I'm using religious words, but that's because this is a secular religion, right? It is a

secular religion. If the issuance isn't perfect with the proof of work, and look, you can hold me responsible for expressing some of these ideas historically I have. If the issuance wasn't absolutely perfect with, you know, the founder, you know, being Satoshi, being this like unhumanly, inhuman, altruistic entity, superhuman, Promethean entity, if it wasn't perfect with the proof of work and with the miners not having advantage and like no ICA or no pre-mine, whatever, then the The whole coin is tainted forever, thanks to the original sin. There's no absolution possibility. There's no ability to, you know, get past the sin and to be, you know,

rechristen, brought back into the light. That's not possible. And so Bitcoin is also hold that Ethereum is inherently sinful because of the launch structure. And so that's the ideology. Beyond that, there's like a cultural fact where people sink their whole lives into this thing. Look, I'm the last person to really have a moral high ground there, because I'm sort of all in, but, you know, they do the sick dilliners and they do like the safe aden and like the book readings and like it becomes an obsession, becomes all-consuming,

it becomes much more than a financial position. And so they can't tolerate, you know, they can't handle like the selling off because that, like, they can't handle these models being invalidated, right? They can't handle the stock to flow model being like discredited. So because they're all in, it's so much more painful when it sells off. which it has done recently, because it's not just they lost money, but their credibility is selling off too, right? And their self-worth.

And so that's sort of like what it's like to be a cyber hornet. It's not a pleasant existence. It's a sad existence. You're just buzzing around and you're going, finding victims to sting all the time. But let me ask you, so you mentioned a cohort from like, you know, 2020, 2021, 2022, but there are actually some kind of like more OGs, Bitcoin hardliners that are part of this cyber hornet attack too.

Is that the case as well that there are like Bitcoiners that have been maximalists for years and years that kind of are the de facto leaders of these hornets? What can you say about the people that have been in crypto and in Bitcoin for a while? Or there's some of those that you found as part of the group attacking? Yeah, of course. So look, I mean, a lot of friends, people are considered friends, just completely. totally turned on me. That's fine.

That's their prerogative. They can do whatever we want. It's actually really funny. Within like the pleb space, like there are a lot of people where I've gone out of my way to like help get these people into the industry.

They called DM me, you know, I would do a call with these people, give them advice. And then I turn around, you know, a couple of years go by and then like you see them calling me like a scammer and stuff. It's like,

you like, should we, like you remember what I, what you DM'd me like years ago? Why did they do that? Do you think this is like just a human group kind of mentality where the hardliners have to be in a position where they kind of attack the more moderate factions in order to, I don't know, achieve some sort of social end or, you know. As a political group radicalizes, it always purges the moderates. And, you know, because you need to find unison. Yeah, correct.

You can't show a weakness. You always punish the people engaging in apostasy the hardest. Like the outsiders, you just hate them. they're the outsiders. But man, the insiders that waiver, oh, you know, they really suck, right? Because you can't tolerate any defection because, like, that could trigger more defections. So the, like, long-time bitcoins that, like, turned on me that I, you know, considered friends or whatever, I think that's actually just very cynical and opportunistic. They know what my fund does. They know me, right? Like, I don't just invest in Bitcoin. If you're, like, if you've been around for the last five years of my career,

I haven't been quiet about it. You know what I do. And so why are they like leading the hordes here? It's very simple. They think Bitcoin is content. Like a lot of them are content creators right there, like quote unquote educators. They think it's a zero sum game. And if one educator is rising, another must be falling.

And I do the education and stuff on the side. It's not my job. I don't really make any money from it, right? My job is my job. Right? They want to secure more like space. They want to secure more market share, more attention. And so of course, they're a great opportunity to be like, wow, we can discredit this guy.

We can like paint him as a shit corner and then no bit corners are ever going to listen to him, whatever. Like the unfortunate thing for them is that, you know, distancing myself from the Toxie-Maxies is one of, is the best thing I've ever done, actually. And it's making me much more credible. and it's opening a lot of doors, actually. And my star will continue to rise here. That's the problem for them. So by attempting to like come to get, like their camp is getting smaller and less relevant.

And, you know, having defections like me from that camp is really, really going to hurt them, right? Because like there's not that many people that are sort of like thoughtful and like more balanced about this within the Bitcoin camp. There's very few remaining, right? Like Hasu left. Eric Wall left.

You know, like thoughtful, Udi, obviously high profile defector. Like the more of these that have myself now, there's not that many people that I consider like super like actually thoughtful, sensible, understands finance deeply, realistic, is interested in real objective reality as opposed to just delusional myths. Like I still have a few friends like that. But it's more like the fingers of one hand. So the more. the more defections there are, the more radical and niche and basically irrelevant, the, like,

hardliner crew becomes. You know, this whole, like, culture of, like, Bitcoin maximalism reminds me of this old, like, joke from, like, World War II. I'm going to, like, butcher it, so I'm going to, like, speed run it. But it's, like, there's a, somebody dies in World War II, and for some reason they get sent to hell. And there's three, like, pits of just, like, pitch. And, like, the devil is showing this guy around.

I'm like, well, here's the American, here's where we put the pit that we put the Americans. And, like, there's a bunch of Americans in this very hot, like, pitch. And, like, there's devils, like, many devils, like, pushing, pitch-forking the Americans back into the pitch. And then he shows them to the second pitch. And then it's the British. And it's even hotter.

For some reason, whoever wrote this, this story, this joke says that the British pitch is even hotter. And there's even more devils pushing people back in. And then they turn to the Russian pitch, where all the Russian, like, communists are. And it's the hottest one. alive. But there aren't any like doubles on the edge of this one pushing people back in. So whenever any one Russian tries to escape the, the pitch of communist hell, the other Russians just pull them back in. Right? I say, no, no, you can't leave. And it's just very as much reminiscent on this like

Bitcoin maximalists, don't break the ranks because if you do, we will pull you back in and you will never leave. And like, something that fascinates me about the world of crypto is like the thing that I get compelled to the most is like this relationship between code and culture, as in the code of something works its way up and starts to define the culture that's on top of it. And like the Ethereum critique of like Bitcoin itself is that so much of it is in a story form. So much of it is in like meme form where like you have to believe the story of Bitcoin to really see its purpose in the world. And as a result of that, I think that kind of incentivizes this like maximumly

this culture who like not only do they believe the story but they're enforcing this story and they're enforcing the story by like if you break ranks we will shun you you you are either 100% a bitcoin maximalist or you're not a bitcoins at all does this kind of like story resonate with you nick yeah you're spot on it's crabs in a bucket um the problem is that the like testable claims that these people rely on are like they're basically false or they're invalidated or they're trending towards invalidation. Now, look, I'm not going to sit here and be like super negative on Bitcoin. I am still positive on it.

I think it's great. I'm not approaching it from the framework of the maximalists, right? You don't have to. Most people worldwide don't, right? I'm extricating myself from that. But yeah, the sort of like core, like more testable empirical beliefs about Bitcoin that they relied on are there. It's just like a graveyard of falsehoods.

So look at the stock to flow model. They all believed it. Now that it's basically like really hard to believe. I mean, it's not like you can't invalidate it or not. It's just like dots moving around on like a, you know, like chart. So it's the creator of the model never allowed it to be invalidated. So it's just whatever. It's a bad model.

But so that model is like basically clearly off base now. Virtually every single hardcore like Bitcoin maximalist, every Bitcoin educator, they believed this thing. There was virtually no one that didn't. The people that spoke out about it were like the more moderates like me or Paul Stortz, like people with sort of more economics training.

You're not going to find a lot of the people that you think of as like the key hardliner bitcoiners that were speaking out against this model. They were all like, oh, well, what if it's true? And it was like a very seductive thing. That pulled in a lot of people into Bitcoin. Those people are very angry now, by the way.

If you want to explain, for why people are so mad. It's because they really believed in this thing. So that thing is false. Like the halvings is obviously related. Basically every single hardcore like Bitcoiner believed in the halving thing, which is like one of the stupidest things imaginable, man. Like you're going from 1.8% inflation issuance to 0.9%.

That's this tiny supply side modulation. Demand is what matters here, guys. Demand. not supply. The supply dynamics are known, right? It's like, it's not even econ 101. It's just like rationality and like logic 101. So that, you know, the having is basically invalidated.

I would say, what else? The theory that everything would just be built on Bitcoin, that the side chains theory obviously just like not happening, right? Stable coins were on Bitcoin, then they left. NFTs were on Bitcoin than they left, right? So any theory of utility along those lines didn't work. The theory that like a thing would collapse under its weight, it's just like that thing has been meant it.

Like it's just a denial of reality to think the thing's just going to, you know, not exist anymore. So like the idea that everything interesting, all the alt-coin tech is going to be built on Bitcoin, none of that happened, right? It wouldn't make sense. Like Bitcoin is a specific thing. You don't want it to like, you know,

you don't want to do all. all the altcoins on Bitcoin. Why would you? So like all these beliefs are just trending in the wrong direction. What's interesting here, Nick, is you mentioned sort of the extremists push out the moderates, right? I actually consider myself a moderate bitcoiner, right? Like I hold Bitcoin. I'm inherently bullish on Bitcoin's future, but I have felt very much like not recently, but in years past, kind of pushed out by that community of hardliners, right? so much so that it feels weird to call myself a Bitcoiner, even though what is a Bitcoiner?

Someone who owns Bitcoin, someone who believes in the potential this decentralized technology. But there was a time, Nick, where I would talk to Bitcoiners, more hard-line people, Bitcoin Maximilist. I even remember conversations with Hasu back in like 2018 or 2019 or so, where the point would be made that, hey, this intolerant minority is actually good for an asset like Bitcoin. other communities should actually strive to recruit this intolerant minority of hardliners.

And part of the reason I may be bearish on a community like Ethereum is because there isn't this intolerant minority of hardline Ethereum people who are very excited about the number go up of ether, the asset, and all of these other things. And particularly in like 2019, Ethereum had none of that. It didn't even have anything reminiscent of a hardline community. you even thought the asset was valuable. So what do you say about this? Do you think this intolerant minority

is kind of an asset to Bitcoin in some ways? Or are you increasingly viewing it as a liability for the community? I would say it's actually like the structure, but like people kind of give too much credit to the people on Twitter during like the Four Quarres and too little credit to just like the nature of Bitcoin. You know, like I would say Bitcoin itself. just by virtue of the soft fork model is hard to change. And that probably did a lot more to protect it

than like people wearing user-activated soft fork hats or, you know, no 2x hats or anything like that. Bitcoin just has a lot of inertia just by virtue of the way it is and the way it's set up and the fact that you just sort of opt into new upgrades. So like something like the laser eyes. Is this helpful to Bitcoin or not? Irrelevant, I would say.

irrelevant. The people that like fought the last war five years ago, you know, which was sort of like the really big battle, those people are like barely even active, right? They're not like still holding the line. So that didn't tolerate minority. Like I wouldn't even say it exists today. You have a different set of people for the most part. It's pretty different, which sort of like is doing a cargo cult of that, right? Instead of looking at Bitcoin's underlying principles and the values that the protocol on shrines and trying to uphold those principles. They're just sort of like doing the very surface level thing, which is yelling at people on the internet.

Like they don't have any like real appreciation for the like actual underlying values here. It's more like, oh yeah, we can, you know, get a dopamine rush by attacking people online because that's what our predecessors did, you know, in the wars of yore. So they're just like cargo cullting like previous battles. Which I get, there's like not like big wars to be fought every day. So they're bored. It's like Civil War reenactments, basically. It's not the real thing.

You know, there's no, like, bullets in the muskets. So, yeah. If you want to, like, really defend Bitcoin, then I think you have to start from, like, the actual true, like, principles and, you know, work upwards from there. And I would say with the, with Ethereum, like, you guys do have, you know, ideas and underlying, you know,

components that you want to uphold and you want to prioritize. So I would say that definitely exists, you know, like the idea of making Ether valuable in its own right that was then like expressed into a bunch of design decisions and things like that. You know, even the striking the balance between sort of like the aggressive pace of innovation versus the required slowness in terms of making sure you're not breaking anything. Ethereum has a different cadence compared to like some of its more aggressive competitors, right. You know, so like it's definitely got its own set of like core values, I would say. Now, whether it's sort of occupying the right location on the continuum, I couldn't tell you.

I'm still, like, I still favor a very slow, deliberate approach. But yeah, I don't think, you know, the like intolerant minority is doing much of anything on Bitcoin. these days. During this middle of this cyber hornet attack, I noticed you had the dot-eath in your name, the nick carter.d-eath. Do you own nick carter.com. No, please do not send funds to that. Was that just a troll? Sorry. I was just trolling people. I thought it was funny. Like, okay, it's like, oh, you're being attacked. It's like, whatever. I can still laugh about it and still make fun of these people. I'm piss. I piss them off more. Whatever. I don't care. Like, I don't, I don't, I don't need these people for anything, right?

They're not coming to me for investment. These are not the founders that I invest in. These are certainly not the people that invest in my fund. I'll tell you that. Nick, I keep waiting for Bitcoin maximalism to die, though. Is it going to die? This could be it.

I'm not going to, I'm not going to, you know, be so presumptuous as to think that I killed it. But, man, this has got to fucking hurt. You know, there's not that many defectors left. Yeah. To be clear, I was never a maximalist, though. I never self-identified that way. Right, but people across, like, the Ethereum ecosystem, like, there's like a number of group chats that I, in the Ethereum ecosystem. I was like, oh, wow, go look at Nick Carter getting attacked by the Bitcoin Maxis. Like, they're eating their own at the moment. But, like, I don't really think, like, you're not a Bitcoin maximalist. You are Nick Carter, right? You're a free thinker. And I think, like, and we've seen, like, Hazu also a free think. thinker more or less kind of just like leave the space entirely a few years ago.

And like really stopping. He completely left. He completely left, right? And like, and I don't know if he ever really got in a fight with them or not. But like the, what I've noticed is that there's this kind of like brain drain out of like the Bitcoin space. Because if you don't fit the mold, if you don't fit the, the chant of the cyber hornets, then like where do you fit?

Right. And it takes a decent amount of just a lack of critical thinking. to be able to do that comfortably, right? Like, no one who's intrinsically curious, perpetually curious, wants to explore things, will find themselves, like, satisfied just like chanting the chant of, like, Bitcoin Maxlis. And so, to me, like, you were, like, one of the last people that did, no?

Yeah, no, you're right. I mean, I was one of the last rats off the sinking ship, is the way I think about. Oof. I was, like, half drowned, you know, when they found me. And, like, the last, independent thinker who like produces really informative, really in-depth, very well-researched content, that people in the ecosystem associate loosely with Bitcoin, or maybe more than loosely, maybe more tightly with Bitcoin.

Oh, I think a lot of people probably thought, Nick, that you were a Bitcoin maximalist. Right. Yeah, that was the problem. I probably should have done more to defray that. Like, I guess I wasn't clear enough, maybe, but yeah, I certainly am not. Maybe we should define the term. I see it as someone that thinks. So there's like the narrow and the broad form.

One is like touching or investing or using any other blockchain is just sinful. Maybe that's the broad form. And then sort of like maybe the other one is like someone who only holds Bitcoin. That's, you know, maybe that's the narrow form. Like I pretty much mostly hold Bitcoin in my personal portfolio. My main exposure to things is through my funds, though, right? Obviously, that goes to me the most leverage. And the funds invest in all kinds of stuff, mostly startups and all over the industry.

I mean, like dozens of blockchains. My startup coin metrics, they run nodes like everywhere, every node. They run all the nodes. That was, I did that before anybody knew who I was. So coin metrics and analytics, basically an analytics company that investigates all of the blockchain. Every blockchain. Yeah, I remember you guys were like doing in-depth stuff with EOS back in like 2017. Yeah, I was so annoying to run in EOS. But like like that thing began in 2016. I was in business school. I wanted to compare like Bitcoin to Ethereum basically and there was nowhere to do it.

So from the beginning, from the beginning, I've been curious about other blockchains, right? Because I just want to know where is the economic activity happening? Where's the vibrancy? So that's, I'm a data driven person. I love data, right? So, like, the fact that people thought it was some, like, extreme hardliners. It's like I was running these nodes, you know, like, CM is like one of the only entities in the world that runs full archival nodes for all these blockchains. Some of these blockchains, I won't name names, run life support because there's, like,

three analytics firms that run the nodes, you know? So it's just crazy that people thought otherwise. I don't know. Maybe I should have been more clear. Well, I think this is a fantastic lesson in just kind of what makes the cryptosy to world tick a little bit, like every single blockchain has a little bit of this, right? Like a little bit of tribalism, a little bit of identity, even down to the tokens. It just so happens that Bitcoiners got like a lot of it, and it's kind of like starting to drown

out everything that's not about Bitcoin. And so just like the lesson here is that like this is a little bit true in all communities no matter what. So Nick, I'm sorry that this community came and descended upon you, but like knowing you that it's not really going to, it's just. going to be sweat off your back at the end of the day. Well, first of all, I found out who my friends were, which is very useful, right? So I know who's a snake, basically, and who's willing to throw their friend under the bus because for a little dopamine rush. Second of all, like a lot more people

respect me now, people that I respect, respect me now for saying this. Third of all, I think Bitcoin maximalism is a genuinely like toxic, cancerous thing that harms Bitcoin. And to the extent I can harm that, I'm very happy to do my part. And I owe the world a debt, right? Because I wasn't ever a maximalist, but I was like definitely aggressive at times in defending Bitcoin. And maybe that encouraged these people. I don't know. Like the ultimately is their financial assets.

And yes, there's an underlying philosophy beneath Bitcoin. I've done my best to describe it and so on. But, you know, there's more to life than Bitcoin. If someone has a more nuanced or mixed view or heterodox view, that they're not a bad person, right? They just have different views. And the intellectual, like, I've had core devs reach out to me and thank me for writing this, right? There's like an intellectually stilted environment, holds everything back,

people are afraid to discuss any idea. I mean, just look at the discussions of, you know, Peter Todd brought up the other day adding inflation into Bitcoin. I don't think that's a good idea, but that discussion was so incredible. heated. People couldn't handle that. You're right. Bitcoin isn't the place people go for intellectually stimulating discussions. That's a shame. I want to reopen that. Well, there's also this conversation going around. Hazu was definitely part of this conversation, many in the Ethereum Kampar of Bitcoin's long-term sustainability. And like there's a number of different ways to fix

Bitcoin's long-term sustainability, but they all start at the path of admitting that this is the problem. And I think that's what a lot of, you know, Cyber Hornets will refuse to admit, right? Like the issuance of Bitcoin runs out to zero. We don't really think that the transaction fees can sustain that. You put out a tweet like about 10 days ago, seven days ago, and you said, since it's a bear market, maybe I won't be yelled at.

Made that part was wrong. Now you know why they wanted to cancel my ass, right? Right. And you go, again, this is in response to the long-term plan of securing the Bitcoin blockchain. Some options, do nothing, too. that's option one. Two, bust the 21 million hard cap and create a perpetual subsidy, extremely contentious with like core thought of around Bitcoin,

recycle ancient coins saying 10 years into minor subsidy, I think implying that like any Bitcoin that hasn't been moved on the Bitcoin blockchain in 10 years starts to become like part of the issuance or the subsidy for block rewards. And then the last option, creating a fee target by growing and contracting the block size. The point is, it's like there's a number of different ways to like think about Bitcoin long sustainability. And if Bitcoin wants to get there, it has to start having these conversations. Nick, are you optimistic that these conversations might actually start now that we're starting to see some like general defection from the Bitcoin hive mind?

I think there could be a sea change here. Yeah, I am. We could do a whole episode on that tweet, probably. But yeah, a lot of people reach out to me and were like, yeah, I think something's changing around these parts. Because like the people holding the line, here they haven't really said anything new in in years and years and years and years and then the newcomers that are like the foot soldiers they they don't have ideas they're just regurgitating things from like the sort of half dozen thought leaders um so yeah like let's bring back some dynamism to the conversation i think it'll happen well that is and going to be an interesting thing to look forward to in this bear market and there's perhaps perhaps we have a long bear market ahead of us to figure out some of these

very hard questions. And then we also have some questions around around this bear market that we want to ask you, Nick, such as just like lessons that you learned in this 20-21 bull market and like also questions about the shattered state of the crypto market today. And like overall your thoughts on macro and regulatory. So we're going to get to all these questions and more right after we get back from some of these fantastic sponsors that make the show possible. The layer two era is upon us. Ethereum's layer two ecosystem is growing every day and we need layer two bridges to be fast and efficient in order to live a layer two life. A cross is the fastest, cheapest, and most secure cross-chain bridge.

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It's yield farming, but with Ethereum nodes. You can get started at rocket pool.net. And you can also join the rocket pool community in their Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. All right, guys, we are back with Nick Carter, the recent lever of the Bitcoin Max most religion. Maybe we'll say that. But Nick, you've got a lot of perspective on bare and bull markets and macro and crypto and crypto banks and everything. And in the second part of this, we just want to get your take on some of these things. But first, let me just kind of check in with you. So we're in

a bare market. I think that is blatantly obvious confirmed and Bitcoin's off 70%. I mean, ether is getting close to 80% if not surpassing 80% down to like triple digits. Hard to believe, how are you feeling about things? Like, what's, what's, what's your vibe right now in this, in this bear market? Well, I'm in a relatively lucky position because, you know, our timing was really good with our third fundraise and most of the capital that I will have deployed to date across the three funds is, it lays ahead of me, right? So, um, if you just wait it that way, the economic opportunity looks amazing right now. I mean, so you raise during the bull market and deployed during the bear?

The bull market, yeah. That's always the goal. That was what we did with our first fund as well. And it worked perfectly. You can't really plan for these things. But yeah, your entry price matters, your vintage matters a lot. And, you know, maybe things could grind down for another three years. Who knows?

But I feel really, really great about valuations. And this is all, like, selfishness isn't necessarily stuff that generalizes. But, you know, in terms of the pendulum, the dynamics between founders and investors. things are definitely swinging back in favor of investors, which is refreshing. So I feel good. Obviously, it's going to be a long road. Like, you know, we're in this for the long game. So companies who invest in today might, those investments might be realized in 8 to 10 years.

But yeah, I think the macro is troubling. Like, we're definitely headed for recession. The Fed, I believe, acted far too aggressively in a panicked way, too late. they eased for too long and they waited to tighten until it's too late. There's basically no precedent for tightening into a recession. So, like, we'll see if they really stay committed to that. But yeah, I mean, it's a very, very, like people talk about the macro. The macro is very, very, very challenging.

You know, it's hard to ignore. It affects everything. The best chart I found explaining actually Bitcoin Price Action is, just the change year-of-a-year in global M2 money supply. So that's just a proxy for the amount of liquidity sloshing around. That basically varies really closely with the price of Bitcoin. So obviously, money supply is shrinking right now, basically, right? You know, you tighten, you raise interest rates that basically shrinks the amount of liquidity floating around. So until that reverses, I'd have a hard time seeing things get better. The other thing I'll say is,

Like, I'm seeing a lot of VCs, like generalist VCs, be like, yeah, if this is anything like 2008, then, you know, you're going to have to do this and that. It's like, well, you know, the world's been around for much longer than, you know, 20 years. And this isn't necessarily 2008. 2008 things recovered really quickly because we got QE, right? Things rocketed off the bottom. So it was like, actually, people say the Great Recession. For financial assets, it was like nothing. Housing prices, like, fell a little bit and then recovered.

stocks rocketed off the bottom. What about 1929? What about the 30s with hyperinflation? What about post-war monetary repression? What about the 70s with stagflation? There's a lot of other things you could look at as your historical analogs. Just because we haven't ourselves lived through them,

doesn't mean we're not going to. And if you look at the level of debt in the system, sovereign debt, just the amount of leverage that's been built up, Like we there's going to be a dramatic and difficult time ahead of us. We are going to have to deal with monetary repression here, which is high inflation, low interest rates. And yeah, it looks like we're in for stagflation. The Fed doesn't have any really firepower here, right?

You know, rates are still pretty low. So, you know, like I would encourage people to look beyond just like the most recent data point 2008. I would actually look further back in history for parallels. So, Nick, what's your take on this? Because people in crypto really haven't seen, like, crypto as an asset class, hasn't seen a macro climate like this at all. Right? I mean, crypto wasn't even around 2008 when that financial bomb went off.

So what do you expect here? What do you think could happen, right? So crypto people are very much used to like these four-year cycles. So I tweeted out, I think, yesterday I was like, hey, how long will the bear market last? I did like just a very informal Twitter survey of like one year, two years, three to four years or five plus years. Eight percent of people thought it was one or two years. So like everyone is still in this. Oh, we're in crypto, of course, it recovers that.

It crashes every, every two, three years. And then it comes back every two, three years. Expect to be served at bull market on a golden platter in two years. Exactly. Do you think that's the case or do you think that this time things could be different given the macro? And like if the macro is more at play here, how long do you think this could take to heal? I don't think that there's any guarantee that some of these assets would ever recover their prior highs. I mean, this is the same case last time, right? You know, you have churn, right? So yeah, maybe the index does recover its prior high, but some assets just go to zero. So there's always churn. So it's not necessarily. the case if you hold like feather coin and peer coin and you know 20 they hit their peak and whenever it was you're not making you like they're not hitting their peak again in 2020 or 2021 so you have to be mindful of that so you have to be dynamic um I don't think there's any

mathematical requirement that you know it's like a two three or four year cycle and I think the four year cycle thing is illusory and that's built on sort of two or three data points we've also been against a backdrop of almost endless QE and really loose liquidity, the loosest conditions in living memory over the last 10 years. That's changing, right? There's like a fundamental policy change. We're moving into, we're looking at generational lows in the sort of commodities to financial assets ratio. It looks like commodities are going to be much more important than financial assets going forward. Crypto is in the category of financial assets, right? So it could just be that there's sort of like structurally less interest in the asset class on a go forward basis.

Like what really matters in the world today? Like we live very insulated lives. What really matters is like can we pull oil and gas out of the ground efficiently and create fertilizer and grow food and keep the lights on? There's going to be like large portions of the globe where the answer that is no. So sort of, you know, I would expect more of society's resources to go in that direction. It's like keeping people alive and keeping the lights on, you know, things like that, you know, pulling nickel and tin out of the ground and building batteries for the sort of the renewable

transition and stuff like that. Not to be too depressing, guys. Well, I was going to say, but like, so all of that's true. And yet at the same times, we have very challenging macro conditions where the Fed probably has to raise rates, I don't know, four or five percent, who knows? Got to curtail inflation, you know, some way. But the U.S. is in such a worse place. I mean, you're talking about the 1970s.

Our debt to GDP is much worse than the 1970s. It's greater than even the post-World War II years. So we've got that as a challenging backdrop. But isn't that the promise of crypto? I mean, you know, in these events where we have the Fiat monetary supply completely debasing, which is what you have to expect regardless of any other condition over the next 10 years, is more fiat debasement. Isn't that where crypto is supposed to shine?

Is there some silver lining there, Nick? Yeah, I have contradictory. ideas in my head. You know, I wish I could go back to being a Toxie maxi where like everything's very simple. Not to pile on. I think I've trashed them enough. But yeah, on the one hand, you know, the more that major fiats debase themselves, I think that's good for your, you know, your crypto assets.

Although not like not every cryptocurrency is competing with fiat currency, right? So like, let's just say from a big, I would say Ethereum is really more a function of like the things that are built on top of Ethereum. And it's got its own like kind of pretty, obviously it does have a beta to, you know, like liquidity and things like that. But it's also more like can you do a lot of transactions and burn a lot of ether and, you know, things like that. Bitcoin, I would say, you know, I would expect it to do well as you have sovereign

currencies start to inflate. And in the 30s, after World War I, and an attempted return and a failed return of the gold standard, the 20s and 30s, you had hyperinflation in the developed world, right? Germany was the most developed industrial nation in the world. So when you have a massive overhang from like having fought a war, something like that, you get inflation. In the 40s, 50s, the world had fought another war, you got significant inflation, like just in the U.S. case study, where they had to reset the 40s is the situation, I would say, it's really analogous in the U.S. Significant inflation to reset the debt, and you'd hyperinflation in certain European countries. So are conditions primed such that sovereign currencies are going to be really debased

aggressively in the next decade? 100% yes, I think so. doesn't mean it could be an extremely bumpy road. Also, yes, it is bumpy. Are we kind of reliant on the Fed to basically pivot and stop hiking? Also, yes, right? I think they're going to quell inflation for now. We're actually looking things rolling over if you look at basically any indicator you want.

Inflation is coming down sort of for now. Is inflation solved? I don't think so. What are the key drivers of inflation? energy is becoming harder to pull out of the ground. We don't have as much of it. We haven't invested in it. Energy is everything, basically.

No one trusts each other globally anymore. There's a war on, but also, like, tensions arising with China. We're like, have less globalization. That's going to make things more expensive, too. Are those two, and then we're also trying to do this green transition, which is very, very expensive. We'll see if we're able to do that. You know, are those factors solved?

by the Fed hiking rates, certainly not. So there's like kind of fundamental inflationary factors, I think, here. So yeah, I do think that you're like independent or like algorithmic or like code-based monetary systems do look better by contrast. Nick, I know you've been a fan and probably still are of the concept of like free banking, right? Particularly around like Bitcoin banks. And like more recently, as part of this cycle, maybe it's, We haven't seen this in previous cycles.

We've actually had some crypto banks being brought low and being brought down. So Celsius, of course, looks completely insolvent, not even sure if hopefully depositors are able to get some funds out of this at some point. But things are not looking good at this point. BlockFi as well, not completely insolvent, but has some similarities. Of course, they're still allowing withdrawals and that sort of thing. But they've definitely had a tough time of it through this bear market as a result of, you know, lends going bad to the three errors capital of the world. What do you think about this concept of free banking?

Has it really, like, taken a hit? Or do you think this is a, you know, a healthy cleansing process? Like what should happen in the free market when banks make bad decisions is they should go out of business and, you know, equity holders should be wiped out. What's your take now? Yeah, it's kind of one of those things that did take me by surprise was the level of I guess you kind of expect interrelatedness. You do expect contagions, especially when they're all lending to the same borrowers.

I didn't expect the three arrows thing to occur. I mean, I didn't really have knowledge of their operation. But it was shocking. And yeah, I've been disappointed. I mean, if you look at the historical free banking eras in places like Scotland or Canada or Switzerland or Sweden, those are sort of the major case studies. We had one in the U.S., but it wasn't true free banking. Those were very stable systems.

They weren't characterized by panics, and they didn't have lenders of last resort. It's just that the expansion of credit was limited by the nature of the system, by the kind of structure and the incentives were in place. In our case, in sort of like the crypto-free banking era of 2017 to now, credit was wildly over-expanded, ended up, you know, investments were made in these like Ponzi-like things, which collapsed.

And the consequence of this was just like massive holes in everyone's balance sheet and insolvencies and liquidity crises, runs on the bank. And when all of a sudden done, I mean, I don't think we've seen the extent of this thing so far. I'm just finding out about new lenders that I'd never heard of that are like magically insolvent. So it's like, God, I wish I hadn't heard about you for the first time knowing that now there's like, like some of like liquidity crisis. But yeah, I think when it's all said and done, there's going to be massive consolidation. There's going to be a small handful of these lenders.

You know, maybe fewer than half a dozen. They might all be the major exchanges, basically. Are you still like a believer in the concept? Or do you think the concept has taken a hit? Or what sort of reforms would you like to see in kind of like crypto banking, free banking, to make it a bit more, you know, sustainable? I think part of what caught me by surprise is not only like the everyone lending to like the

three hours capital of the world and how bad of shape they were actually in it turned out. But I also had partially in the crypto banking side, especially with the blockfires of the world, a false sense of security maybe because these loans are collateralized loans. So what could possibly go wrong? But like they were collateralized by assets that were trading off peg and GDPC. and you kind of see in the details that things were not as you're clean as they seen. They seem, but the concept of free banking, are you still a believer? What kind of reform should we be making?

Oh, I mean, like the, yeah, completely I do believe in it. I don't think this episode in crypto discredits the sort of overall idea, which is just that you can have a functional banking system without a central bank, right? That's the idea and without real oversight from the state. Um, what reforms would I like to see? I mean, I, I, I, so a lot of people use this as an opportunity to be like, oh, defy is better, but they're kind of doing a different thing.

You know, like this, these are like more wrapped in a legal, uh, structure. Um, and some of them were fully collateralized, some under collateralized. Um, but there's like a sort of default process and like it's wrapped in an orderly legal wrapper, whereas like the, you know, obvious and compounds of the world, that's, it's kind of like a different thing. You know, you're borrowing against, like, highly liquid assets. So I wouldn't, I mean, I do think that defy looks well, looks like it's done well, comparatively speaking.

What I would be interested to see would be more of more transparency. And it's kind of funny because, you know, I have a little debate in my head, which is do you actually want that much transparency when it comes to banking? So let's say you're going to go put some money in the bank, right? they don't hold on to the money. They go and deploy it into a bunch of small business loans or mortgages or whatever.

And so let's say what you were able to do would be to look at the mortgage portfolio, which you can't, right? You can't go to your bank and be like, where are you putting the money? But let's say you were able to go and get an itemized look at their mortgage portfolio. You'd probably be horrified. You'd be like, oh, so you're lending, you know, to like a stripper and like an only fan's model and like you're lending to like such and such. It's like, never mind.

Somebody in crypto? My God. Yeah. Yeah, exactly. So, you know, you actually kind of want there to be some opacity, I would say, to build credibility. There's like an interesting blog post about this. Which I kind of believe. But at the same time, for the sake of repairing people's confidence here, I like the model of some of these under collateralized defy lenders that do

have a kind of institutionalization built in and where you can see who the counterparties are. So you put some funds in a pool and then there's like a delegate or some NAD that administers it. They do real underwriting. They lend. And then, you know, it is actually transparent where the funds are going. That's not foolproof. It doesn't mean there's never going to be defaults. But at least sort of then you have a better idea of the portfolio and maybe you're going to sort of assess it better.

So I think that would be like an interesting. And because, you know, the problem is you have certain big counterparties that borrow from everyone and maybe they're pledging collateral many times over, right? Maybe the lenders aren't talking to each other, right? So I think there's some common sense reforms you can see there. I worry that, you know, the regulator is just going to come in, like, nuke the whole space. Well, what do you think about this? So there was a recent interview you did in Forbes and they quoted you as Nick Carter expects regulatory response to recent carnage to be harsh, aggressive, and warranted. Maybe at the time you were talking about like Tara, UST,

or something like that, and it's a different context. But what do you think about this? Harsh, harsh, aggressive and it may be warranted. Do you think that, and we've been talking a lot about sins and sinners in this episode. Do you think that regulators should make the crypto industry pay for their sins? We're sinners, yeah, for sure. That's the thing. Whenever there's like a financial crisis, you get regulation.

Like clockwork, basically, because that's when there's the popular support for regulation. Before, when everyone was making money, we didn't want a regulation. Now that everybody's lost money, it's like, oh, yeah, maybe this regulation thing makes sense. So I think if you asked a bunch of crypto people, they probably be like, yeah, kind of sympathetic here. Let's impose some common sense regulation. So, yeah, I do think that we'll get something in the U.S. here. So, Nick, I know we're at about time, but, you know, want to finish with maybe something that's a bit more optimistic. because you've decided to stay in crypto during the last, you know, bear cycle.

And I'm assuming you're deciding to stay in crypto for this bear cycle as well. There must be a reason for this, all right? Like, why should people stay in crypto? Why are you staying in crypto? What should we expect on the other side of this bear market? What makes you optimistic? Well, it's the most exciting market in the world. I mean, it moves the fastest.

It's the most active, you know, important. information gets priced in, it's 24-7, like, how could the, I don't know, man, this is just like so turbocharged, it's fine, even when it's like, feels like you're, you know, being hit with an artillery strike or something, like, all your, like, friends and businesses are just, like, blowing up and, you know, things like that. Yeah, obviously, I believe in what's going on. I mean, like, look, Bitcoin is worth 120th of the value of gold. I think that's, I think it's terminal values obviously way higher than that. Stable coins, I think we're going to see crypto dollarization. I think that's going to be good, right? I think we're going to see a ton of these sovereign currencies.

I think in emerging markets, I think you're going to see a ton of these currencies wiped out. And I'm not like a dollar enthusiast, but the dollar is just going to basically destroy these things on crypto rails. And that's going to be good because it means that regular savers can adopt this. They can adopt the currency of their choice and protect themselves. So I think the the effect is that the fact that crypto infrastructure exists is going to bring about the failure of these sovereign currencies faster than it would have otherwise occurred. So it's going to be like hyper-capitalism. You know, things just happen faster. Everything's happening faster now. I think defy is a powerful and important thing. I think there's been a structural failure in this

country to create credit. Credits become very politicized and so have financial rails generally, but especially credit. After Dodd-Frank, you know, small banks got crushed as interest rates fell as well, as it became much harder to be a financial institution. Small banks lend to small businesses. There's just a structural positive credit now, and it's a very political thing, who gets access to credit. Now it's sort of like who has access to these government stimulus programs, basically.

I think that's a terrible situation. That's not a market-based situation. I'd love to see DFI fill that gap. and actually, you know, make credit equitable and abundant once again. So, yeah, I think there's a huge amount of positive stuff here. A lot of defy, I've been very critical of defy. I mean, I've written a few things. I think there's a lot of bad ideas that need to be eliminated, the circularity,

certainly the Ponzi structures that seem to appear everywhere. And I think they will because these financial conditions are tight and maybe Ponzi's aren't going to work in our sort of brave new world here. But yeah, I mean, I still think fundamentally what we're building is an incredibly important thing. Nothing about that's changed. And there's going to be a lot of chaos out there in the real world. And it's important that we build structures that actually work and work for people and are neutral and are predictable and do what they say they do. Well, I'm sure you would agree, Nick.

The best time to be in the space and to do those things is during the bare market. That's when the most signal comes through and the best opportunities reveal themselves. So I'm glad you're you're sticking true during the spare market. And, you know, glad that you're on the other side of the cyber hornet attack. Nick Carter no longer never was a Bitcoin Maxi. And you know how I knew this because it's like your fifth time on bankless. We don't get many Bitcoin Maximus coming on bankless anyway. By the way, I've been asked to tell you my co-host, my On the Brink co-host, Matt Walsh,

he's a, he told me he's the largest holder of the bankless token. Oh my God. Wow. It's pretty bullish, that. Tell him we're not going to let him down. So he says that at least one of you has to return in the favor and reciprocate into our show. You know, we're big fans of... Oh, my God.

So you're officially invited onto the brink. Wow. Did you know the weekly roundup on the brink was the inspiration for the bankless weekly rollout? Yeah, we called it a roll-up instead of a round-up. Oh, my God. That's a blatant copy, David. That's clever. No, that's okay.

We just have theoryed your Bitcoin. Sorry, Nick. We celebrate innovation. That's awesome. But anyway, so Matt's going to be Matt. Matt, he made sure that I asked. That's awesome. Well, we'll be there for sure.

Absolutely. Bankless listeners, go catch us on the brink. We'll be there in the future. We'll include some links in the show notes to the On the Brink podcast as well. So you go subscribe to that. As always, none of this has been financial advice. Bitcoin and Ether are super risky. So are the communities and cultures around them, apparently.

As is defy, you could definitely lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.