Bankless - ROLLUP: Will FAILING Banks Bring Down the Economy?!

Starting point is 00:00:00 The reason Powell is raising rates is because he's trying to fight inflation. And the more he raises rates, the more economic turmoil that seems to be causing. Namely, and we're going to get to this in a little bit, in the realm of bank failures. Okay, so that's starting to happen. Another bank failed this week, which we'll talk about it in a minute. Bankless Nation, it is the first Friday of May. It's Friday morning. Hope you brought your coffee.

Starting point is 00:00:25 David, what time is it? Ryan, it's the Bankless Friday weekly roll-up where we cover the entire weekly news in Crypto. which is always an ambitious endeavor, yet we persevere nonetheless into the frontier. How are you doing this weekend? David, I'm doing well. I don't know if the banks can say the same, though, because we got more bank failures on the menu. Season two. Season two of bank failures. That's a big topic. Big topic of conversation. We're also going to talk about Jerome Powell and the Fed raising interest rates. How high can they go? That's the question. We've got to ask. David, what else are we covering today?

Starting point is 00:00:57 Boloji waves the right white flag on his bet a little bit early. He capitulates as Bitcoin's not going to go to $1 million in the next six weeks. Yeah, by June 17th. June 17th was when it was over. Okay, well, it is May 4th. So he's waving the white flag. Donated $1.5 million. And so we're going to cover that.

Starting point is 00:01:21 And then also, there are some other main nets just drops. So eigenlayer main net, the Suey mainnet, the Axelier mainnet, the Axelie mainnet, the Axel Laura has an announcement and Lenz has a layer three that we talked about last week. We got some stats. And then speaking of main nets, not really main net, but Coinbase International, new exchange just got announced. So a bunch of stuff to run through in this Friday weekly rollout. Yeah, totally.

Starting point is 00:01:43 Always jam-packed for you guys. Of course, if you like this episode, if you like what we're doing over here at Bankless, make sure you like and subscribe. That's how we pop up on the charts on Spotify, on Apple Podcast, on YouTube. You know how to do it. It is really important. It's very important. Yeah, especially in the bear market.

Starting point is 00:02:00 Can you spare a light, guys? Counselor, please spare a lot. One thing before we get in the markets today, David, you got to talk about our friends and sponsors over at Swell. Swell is a staking protocol, and this is a staking season. I'm calling it, not just spring, but it's also staking season. David, tell them about Swell. Swell is a brand new staking as a service protocol entering the foray of the LSD world. But since they are brand new.

Starting point is 00:02:27 they are charging 0% staking fees. So they are the highest yielding staking provider out on the market. Brand new simple interface. And one of the new competitive advantages about Swell is that you can also get defyield along with your ETH yield. So some interesting new innovations to be competitive in this market. And they are also looking to frontier technologies to improve the product, something that's getting me excited like DVT is something that is on the Swell roadmap.

Starting point is 00:02:53 Decentralized staking. Yes. Yeah, squad staking. Squat staking, exactly. They have this thing called a voyage, which they are teasing. I don't know what's in the voyage, but it is starting soon, and they would like you to know about it. So there is a link in the show notes to go explore. It is staking season, David. Look at that APR, 4.5% on your ETH. And I don't know about you, David, but risk-free sounds pretty good right now with all the bank failures going around. I'd rather have my ETH in a staking protocol than in a bank account, that's for

Starting point is 00:03:24 sure protocol or bank protocol or bank what you want what you want speaking of that let's get to the markets today all right how are we looking on a bitcoin on the week are we up we down we sideways it we are sideways sideways week uh literally nothing to report 28000 dollars and 900 you tell me we could have just skipped this entire week it didn't even matter yeah yeah that's about right yeah not even one percent move on either bitcoin or ether or the same but Both just flat, flat. $1,88. The most interesting thing about Ether right now is that there are three eighths in the price.

Starting point is 00:04:01 Man, we could have just saved the last roll-up recording clip and just replayed it, huh? Same price. Nothing changed. I mean, we got some volatility. We went down to 800. Oh, yeah, almost got back above 2,000, but... Eiff Bitcoin ratio also flat? This is weirdly flat.

Starting point is 00:04:17 Yeah. But also, Banko Station, I'll remind you, please pull up your tracker apps, your price trackers, and make sure that the prices have not moved in the last 24 hours. And if you want some of the best charts in the biz, you got to go check out Cracken Pro over here, pro.crakken.com. Professional interface. So all of my charts look very professional these days, David.

Starting point is 00:04:37 It wasn't like that before. And I'm learning how to chart a little slowly. It's taking some time. Well, let's talk about the big news today, David, which is the Fed raising rates, the big news this week at least. So the Fed just raised rates, interest rates, by 0.25% or as you like to call it, 25 basis points. I love telling it that. I know. You always speaking in terms of basis points. So here's the press release if you want to read something

Starting point is 00:05:04 kind of boring and what the notes are about this. But 5.25% between 5 and 5.25% range, that's a 16 year all-time high. We haven't been higher in interest rate. In 16 years. It was 16 years ago. When was that, David? It was before 2008, before the financial crash. Yeah, we're talking like mid-2000s. What were you doing in the mid-2000s?

Starting point is 00:05:35 Last time the rates were this high. Were you buying a house? No. I was not under strain. Did you know that rates existed? Not at all. No, I just understood that my parents were stressed. Oh, like, no.

Starting point is 00:05:49 This was pre-housing crisis. Never mind. Yeah. Yeah. No, everything was fine. But it was about to get, things were about to get bad. Yeah, right, right, right, right. Okay.

Starting point is 00:05:59 Oh, it does make sense that high interest rates created the housing bubble to pop. That makes sense. Do you think kids in middle school right now are talking about inflation or interest rates at all? Are they still just kids in middle school? Way more than I was when I was in. The kids are getting smarter. Every generation.

Starting point is 00:06:14 That's what's happening, I think. But you know what? This is kind of the decision. point here, right? Because Jerome Powell has a question. They want, the reason Powell is raising rates is because he's trying to fight inflation. And the more he raises rates, the more economic turmoil that seems to be causing. Namely, and we're going to get to this in a little bit, in the realm of bank failures. Okay, so that's starting to happen. Another bank failed this week, which we'll talk about

Starting point is 00:06:42 in a minute. And I kind of feel like Powell is choosing maybe the worst of both worlds. So we're going to end up with high inflation anyway and also bank failures? That's my critique as to what's going on. On the other hand, I don't know, maybe the guy's actually not in control of anything. It just seems like what happens, David, if we tighten so much that we cause a cascade of 2008-like economic effects, right? We just had our third major bank failure this week. And we're still raising rates? it seems like a bad time to be raising rates.

Starting point is 00:07:20 But I'm not a central banker. I want to present the actually the counter argument to that point. Go for it. So we got to raise rates because inflation is still up, right? Core inflation has not gone down. The more volatile, more expressive inflation has come down. But core inflation, things like services and goods have gone up, right? That's the hard part.

Starting point is 00:07:43 So that's why we got to keep on raising interest rates. And then when the bank failures occur, that's a sign. It's a sign of raising interest rates, of course, economics and finance are just harder. And I think that what the Fed is able to do with bailing out these individual banks as they fail is like the Fed is raising the interest rates. And then they are catching the distressed banks on the way down. So it's not a like an impact. They're just cradling the bank failure into the ground. and then they're catching the next one.

Starting point is 00:08:17 And so they are actually able to continue to increase rates because they are surgically catching the catastrophes that they are causing, which allows them to continue to raise rates. Because they're like, oh, there's contagion, got to go catch it. And it's working so far. So far.

Starting point is 00:08:37 And maybe, but also has a whole bunch of unintended consequences as well that will get to you. And I worry about one of which is. bank consolidation into too big to fail banks so that the bank sector becomes nationalized doesn't sound like it's unintended. That's kind of what's happening, right? But I do think the picture you just painted is what the central bankers and Powell would like to have happen, right?

Starting point is 00:08:58 Right. I just worry, I think we're going to get, there's a very real possibility, David, at this point we get the worst of both worlds in that we're not able to cradle the banks on their way down, but we just get cascading bank failures and also massive high inflation, right? So just like, what was the point? I don't know. That's the risk that we're running. We get currency inflation but economic deflation.

Starting point is 00:09:20 Oh, that sounds awful. We'll have to see what happens. We do know this. That is what stagflation is. That is what stagflation is. From the policy statement this week, anyway, the language saying that the Fed, this has been a previous Fed language,

Starting point is 00:09:34 that it anticipates further rate increases would be needed. That wasn't in here. Right. So this does seem like this is the last rate of. rise and it was only 25 basis points, as you like to say. So I guess not that big. We were hoping for the pivot. The pivot of we are no longer increasing interest rates and now we're just going to hold it is not exactly the pivot that we were looking for as an industry that has very high risk crypto assets of this curve. I mean ultimately, though, David, I want crypto to deserve it.

Starting point is 00:10:10 I want our like industry to deserve it and not just be kind of a money printer hedge completely. Like I want us to provide pure utility. I want the U.S. economy to be in an okay shape. And I don't want things to kind of cascade downward and, you know, just the casino markets to rain. So I'm not sure what the best position is here. But Jim Bianco here has a different take. His take is the Fed knew the risks already of bank failures. Powell knew the risks and he's being a careless being here.

Starting point is 00:10:40 He's being reckless here. He puts this in a tweet thread. On February 14th, the Fed board was given a presentation that went through the risks to the banking system due to unrealized losses because of the rapidly rising interest rates. It gave this example of a bank sitting on unrealized losses and particularly vulnerable. This was February 14th, mind you, before the bank failures. After hearing this presentation, Powell went ahead with very hawkish testimony. That was on March 7th and 8th. The probability of a 50 basis point hike on March 22 soared based on Powell's words.

Starting point is 00:11:13 And less than 48 hours later, Silicon Valley Bank failed and the Fed backed off to a 25 basis point hike. The point Bianco is making here is that Powell's getting into reckless territory, right? He's making these policy decisions and then he's seeing bank failures and he's adjusting them a little, but he's still edging towards kind of the brink of cascading bank failures. I think Bianco's criticism is he knows this is a risky game. Why are we playing this game with the U.S. banking system right now? So that is the critique of Powell's actions. I guess the illustration that I gave is that, oh, bank failure, Fed steps in and cradleses it on the way down,

Starting point is 00:11:57 really depends on that they fail in a very orderly manner. And I don't think that that's how that works. I think orderly and contagion baking crisis are not things that I would put into the same sentence. It's a little bit like the bike wobbling downhill, you know, when you start to oscillate. And it's like, okay, now we're oscillating right here. And then it gets to a point where it's catastrophic, unrecoverable, and the bike tips over if it's going too fast. And that is the worry here. If it's going too slow.

Starting point is 00:12:28 And if it's going too slow, it's because interest rates are adding friction. to economic transactions. And so in order to correct our wobbles, we needed to go faster, which means we got to lower the interest rate, baby. We got to take them down. Let's get that Fed Pivotit going. Well, David, I think that's what we have to talk about next. First Republic bank failure, the biggest since 2008. That's coming up next. What else we got? Coinbase International launches in Bermuda, so one trad bank down, but one crypto bank up. Aginlear main net is incoming as well. The suey main net, as well. The suey main net, as well, bankless listener, put a number in your mind as to what you think the market cap of Suey is

Starting point is 00:13:07 because that number will come later in the show as soon as we talk to these fantastic sponsors that make the show if possible, especially Cracken, a preferred crypto exchange for 2023, the one that we all know and love while we watch the charts earlier in this episode. If you do not have an account with Cracken, consider signing up using that link in the show notes. Let's go hear from Cracken right now. Cracken Pro has easily become the best crypto trading platform in the industry. the place I use to check the charts and the crypto prices, even when I'm not looking to place a trade. On Cracken Pro, you'll have access to advanced charting tools, real-time market data, and lightning-fast

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Starting point is 00:14:58 bankless token hub lets you learn from your fellow citizens to rate these tokens yourself. The bankless token hub is launching right now and has already been beta tested by your fellow bankless citizens. So stay tuned in the bankless Discord for updates. And if you're not a bankless citizen, well, you better sign up if you want access because this corner of bankless is available for citizens only. I'll see you in the Discord. David, we have bank failure season two. The second biggest bank failure ever in U.S. history just happened this week. And I feel like people are barely talking about it. They're kind of talking about it. This is a first republic bank based in San Francisco, California. Pretty big. 200 billion plus in assets. So this was a big one. David,

Starting point is 00:15:42 what happened? Well, I'll think of other question to you, Ryan. What happened that was different than any of the other banks? So banks bought a long, a lot of long term dated securities. And then the Fed jacked up the interest rates. And then the bank, this, bank failed just like the other ones. This one was different in that it got a $30 billion injection from JP Morgan and a number of other too big to fail banks. And then that depleted. That also ran out because customers chose to withdraw. And then eventually the FDIC said, like, man, this bank's not going to make it. We're going to throw the white flag on behalf of First Republic. That was my interpretation of events. So regulators took possession of First Republic

Starting point is 00:16:24 on Monday. This is the biggest bank failure since 2008. the second biggest in U.S. history when there's a bank called Washington Mutual that exploded in the 2008 crisis. That was my first bank ever as a child. That was my first checking account. Your first was Washington Mutual? Is that based in the Seattle area? Yeah.

Starting point is 00:16:43 Washington State? Yeah. Well, so it no longer exists. I'm not sure what happened to them. I'm sure they became part of a bigger bank here. But, yeah, I think. It's still there. You still got it, Dan.

Starting point is 00:16:58 I think this has a lot of similarities with the first bank failures that we saw, including Silicon Valley Bank. The difference here is, you know, how Silicon Valley Bank, their big kind of debt was in startups, various Silicon Valley startups. Well, for First Republic, they were in the jumbo mortgage business. Oh, not crypto? Not crypto. That's not what Gary Gensler said.

Starting point is 00:17:22 It's another asset. Well, he'll probably blame this one on crypto too, David. Don't worry. Give him some time. All right. Have faith in Gensler. Jumbo mortgages were their shtick. Okay. And so when rates were low, of course, they gave out a ton of these loans, you know, as one does. And then the Fed raised rates, the value of the mortgages, the collateral went down, of course. But then also, yeah, the treasuries on the balance sheet also went down in value too, under par value, thus making the bank

Starting point is 00:17:51 insolvement. So for me, it reminds me a lot of Silicon Valley Bank. So all the lessons that we learned a couple of weeks ago have come into play here, except the asset class wasn't Silicon Valley tech companies. It was jumbo mortgages. It also wasn't United States treasuries. And so I think this is probably like where the fear kind of strikes. Two reasons. One, we have another bank crisis, bank failure, excuse me, not I guess a single bank failure isn't a crisis. But like all of the other banks that failed happened those numbers of weeks ago in that like pocket of time. It's all related. Now we have this bank failing for the same reasons. Different asset class, so mortgages, not treasuries. They did have some treasuries on the balance sheet,

Starting point is 00:18:36 so that didn't help. But yes, go on. I think the point is this is like the balance sheet, doesn't matter what the balance sheet is. Doesn't matter what the asset class is. The issue was that the Fed raised interest rates too fast. So it doesn't matter, like, was it United States treasuries or just like long-dated or whatnot, like all banks are getting distressed by the whiplash of the rising interest rates. And also the timing, like how long ago were the other banking crises like six weeks ago, right?

Starting point is 00:19:05 Yeah. And so six weeks later, we have another big banking crisis. It would have been made, it would, I would have felt better. It would be easier to be comfy if all of the banks collapsed in the same time frame. And now we have one. And then it was over. But now we have one that's six weeks later. And so the question is to me that I have is like, okay, clearly the common denominator is not the asset class. This is not, this contagion is not contained to a specific type. It's not just crypto. It's not just Silicon Valley tech companies for sure. This is something different. And that's the big common denominator is the whiplash behind the rising interest rates, which affects all banks. And now six weeks later from the crisis, we have another bank that fails, which begs,

Starting point is 00:19:50 the question, how do you know when it's over and are, is, are there more shoes to drop? Are there more banks to fail? So this is, are we at the beginning of this thing? Another pattern here for you is another mid-sized bank, basically. It's not one of the two big to fail banks here, right? It's another Silicon Valley bank-sized bank that just went belly up. And, yeah, so in the common denominator, as you said, is rising interest rates. So here's what happened.

Starting point is 00:20:18 the bank failed effectively. The FDIC stepped in. That happened on Monday. And then what they do is they auction off all of the assets. All the people's savings account in First Republic, somebody's got to bank them still. Right. The FDIC is not going to just say, sorry, your money's gone, right? Of course, shareholders get wiped out in these sorts of situations. So that means a bigger bank has to go buy the assets by First Republic. So it can still say functional in operations. That bigger bank happened to be our friends over at J.P. Morgan, Jamie Diamond and company. There was an auction. J.P. Morgan won the auction against two other bidders. Those other bidders were also very large banks. And so J.P. Morgan ended up with the $92 billion in deposits,

Starting point is 00:21:08 which includes $30 billion that it and the other large banks put into First Republic to try to prop them up, previously, as you mentioned, and 137 billion in loans and 30 billion in securities. Okay, so that's what they took over. So the bigger bank just got even bigger. And then the FDIC absorbed the losses on the mortgages and the commercial loans. And it also provided a $50 billion credit line. So it's going to cost the FDIC deposit insurance fund about $13 billion. SVB costs $20 billion for comparison. These losses, David, what happens to them? Oh, the FDIC just takes care of them. They were socialized. Taxpayers. Like, it cost us. And so these risky investments and the interest rate rise is ultimately costing taxpayers. So that is a cost. We're talking about like earlier of,

Starting point is 00:22:03 you know, John Powell is hopefully like cradling these banks down as they die. Well, there is a cost to this. And the cost is J.P. Morgan gets bigger. J.P. Morgan, David, now has 10% of all American deposits. All right? Under federal regulation, it actually can't rise anymore. They made an exception for J.P. Morgan to actually make this acquisition. So the banks just get even bigger. The too big to fail banks get bigger.

Starting point is 00:22:32 And then also these losses are socialized, right? It's like the average taxpayer wasn't responsible for that loan for a jumbo mortgage. I mean, this is reminiscent of 2008 all over again. And you also can't say, I don't think Congress. Before you move on. So I heard a slightly different story, so I wanted to throw in what I think could be a correction here. Taxpayers are not, it's not going to the taxpayers. It's going because of the FDIC deposit insurance fund.

Starting point is 00:23:00 That comes from banks. Banks pay for that. So that comes from bank money to fill up the deposit insurance funds. That's coming out of that. but where does the banks get the money to pay for the insurance fund like fees on customers and in the economy and so while taxpayers aren't being charged directly it ultimately goes back to the consumer because banks are going to have to

Starting point is 00:23:23 charge higher rates for all their products and services down the line that was the take that I heard and then the other thing that I the take that I heard is like you said that they made an exception so that JPM Morgan could buy this bank that was not an exception made Right now, that was an exception already made in Dodd-Frank forever ago, where big banks that are so large above a certain threshold can't get bigger by buying banks unless that bank is failing. And so this was an exception built into Dodd-Frank forever ago.

Starting point is 00:23:53 That was, these are my interpretations of what I've heard. Yeah, I think you're right, David. Those are definitely worthwhile details to clarify. So the banks got bigger. The losses were socialized in the form of higher, you know, bank fees, you know, taxpayers. ultimately get paid by the people. I also think that it's becoming less defensive. I haven't heard anyone in Congress, anyone in the U.S. government, blame a particular party for this one, right? Very easy to blame kind of the crypto bros first. And then more widely, kind of the tech bros,

Starting point is 00:24:27 Silicon Valley people for the second. But when you have this pattern of mid-sized banks failing, right? And like, who are you going to blame now? This is starting to look systemic. guys, starting to look like a problem. I want to pull up this chart. I think this was the graphic of the week. Did you see this, David? Yeah. Describe what we're looking at. This is a timeline. I'll start by describing this is timeline from 2002 all the way to 2023. And we see on this timeline a series of circles, series of what look like dots. And the size of the circle represents the number of assets in the bank that failed. So for every bank failure, there's a circle. And the really big banks get bigger circles. And so, David, describe what we see in bank failures around the 2008 to 2012

Starting point is 00:25:15 time range. What are we looking at? Yeah, so we talked about how the first Republic Bank is the second largest bank failure in U.S. history. Well, the first largest is the big circle that is in the 2008 housing crisis, Washington Mutual Bank, $307 billion. And then you see, like, how would you describe it? Just like dots and... Stacked snowballs all the way up like a mountain. Big circle and then a mountain of tiny little snowballs that you actually can't. Spiking Mountain. There's like 300 dots in there of various sizes, but they're all small.

Starting point is 00:25:51 And only three of these dots, I can actually have the names of the banks in them. So Indy Mac Bank, Colonial Bank, Guarantee Bank, all the other ones are just dots because they're too small to actually fit the names of the banks into. These are all bank failures. All big failures. So what happened to these dots? What happened to these dots, David? Omnam, nom, nom, nom, nom.

Starting point is 00:26:13 Is that a technical term? Yeah. They got gobbled up by the bigger banks. Yeah. And so fast forward to where we are today, 2003. There are only three big dots for the public bank at $229 billion. Silicon Valley Bank at $2,000 billion in signature bank at $110 billion. Which goes back to my question.

Starting point is 00:26:33 This is just season two of the big crisis. TV show. How many seasons are there? Is the right side of this timeline, which we are about to go into in the 2023, 2024, going to be similar to what we see on the left, but with bigger dots? Right. And look how big these dots are already. There's a lot more money out there in banks. And right, like, they're like 300 dots in 2008. We got three dots. We got three dots. I picture if you're trying to describe this the best way is just to go to YouTube and get the visual okay podcast listeners so sometimes you just got it capitially and look at the video here to get to get the graphic but what we're looking at is a mountain of snowballs in in 2008 versus a snowman in 2023 right right we just got big circles and a slightly smaller circle and then kind of a head circle that's what that's what we're looking at and this represents David what looks like the second third and fourth largest bank failure in U.S. history and it all happened this year. Yeah. It's pretty big. Like, this doesn't look good. This doesn't look healthy. And yeah, to your question is,

Starting point is 00:27:47 what happens next? David, do you want to hear Arthur Hayes take? If it's hit me with it. All right. So here's Arthur Hayes. Of all of the season one banking crisis conversations we had, the Arthur Hayes conversation sticks out the most in my mind and I think is maybe the most predictive of what we're seeing start to happen. And if you recall, David, from that conversation, in fact, you were on it, I was and I just listened to it a couple times after that episode. He basically predicted, okay, I will remind you. I will pod explain it to you, David. It's like he said that the midsize and small banks were in real trouble in the U.S. that they're basically insolvent, but slow motion type insolvent. So he wasn't

Starting point is 00:28:33 predicting that Bitcoin would go to a million and 90 days and, you know, massive bank crisis. He said like it could take a year or two and the Fed would have to basically step in and do something absolutely massive that would result in a whole bunch of money printing, trillions and trillions of dollars worth of money printing. So here's his take after the FRC, the First Republic collapse. A longer essay coming soon on my take, this JP Morgan First Republic deal means the U.S. regulators decided to nationalize the banking system. Nationalize the banking system. He goes on, the eight too big to fail banks are effectively nationalized because they have

Starting point is 00:29:13 government guarantee on their entire deposit base. They will not be allowed to fail regardless of decisions they make. Socialized losses, privatized gains, it's a great deal. But when called upon, the eight too big to fail banks must absorb their shitty cousins who couldn't handle the rough and tumble free market. The prodigal children's equity holders will get a zero first, but the depositors will find a new home and a safe too big to failed bank. That bank, of course, is JPMorgan in this case. The government will provide rule exemptions and mates rates on loans, like how the OCC waive deposit concentration limits and FDIC loaned $50 billion to get them to do the deal.

Starting point is 00:29:51 But a deal will get done. The whole point is for the federal government to claim it isn't bailing out a failed bank, but a private company is. It's a bit of left-hand, right-hand, but those are the public. policies of the day. Just look at how China allocates losses as a blueprint for the U.S. As long as inflation remains high and the politics surrounding banking credit and debit are toxic, there will be more contorted solutions to try to confuse you as to who bears the loss. If you aren't one of the eight too big to fail banks, you are effed. As long as inflation is sticky at these high levels and possibly rising. Today, I will choose a bank with large

Starting point is 00:30:24 CRA exposure in 50% to 50% OTP puts that expire before June. This is Arthur, of course, being trader and betting against small and mid-sized banks. What do you think of this idea, nationalizing? We are de facto nationalizing the U.S. banking system. Well, it reminds me of the article that he wrote, which brought him on to the podcast last time, which the whole theme of that article is, the destination is known, but the route is uncertain. He was actually applying it in a different way, but I'll apply it here.

Starting point is 00:30:52 The destination is a nationalized financial system because that is the era that we live in, the era of the CBDC. It becomes really easy to roll out a CBDC when there's only eight banks in the commercial banking sector. And so like that is the conclusion of things. A financial system that is just highly centralized controlled with a ton of oversight and a ton of regulation because it's not hard to control things when there's only eight banks. And so this is to me a convergence upon that we talk about CBDCs and like the evils of CBDCs because it just means central control. So this is the conversions that we're going towards. Here's the

Starting point is 00:31:32 insidious thing about this too. It's like you heard him talk about like these contorted measures that were being made. They're not going to announce that the US banking system is being nationalized. There's never going to be legislation that goes in front of Congress which is like check yes

Starting point is 00:31:48 or no. Let's do a vote. Should the US banking system be nationalized or not? It'll happen like this slowly. And with them doing the theater, of basically, we're not nationalizing it. It's private. See, JP Morgan, look,

Starting point is 00:32:03 a private company went and won the bid. Right. So it'll happen, like, no one will directly tell you that that is what is actually happening. As an investor and as a participant in this economy, you just have to keep your eyes open and connect the dots and see the pattern playing out. And you're right.

Starting point is 00:32:20 I think that is the destination of this. Don't expect the trumpet from Jerome Powell saying, we are nationalizing the banking system because they know that that would be soundly rejected by the American people. Well, the way that you're saying is that they are the puppeteers of this master plan and they want that. I'm not necessarily sure that they do want that. It is, if you zoom out and see nation state and fiat currency systems as the powers that be

Starting point is 00:32:51 and with the mind of its own, that is a conclusion because the aggregate incentives pushes it there. Oh, yeah. Like individual players, like Jerome Powell's like, I'm going to nationalize the banking sector. I don't, he's not doing that. No, no, no. He's just one cell in a larger body with a direction that it wants to go in. I agree with that too.

Starting point is 00:33:08 I don't think that there's like an intent to like, I'm an evil emperor to nationalize this system. But there is an intent not to tell you that that is the game being played. That's 100% true. That is exactly right. They're not going, like they know what they're doing. They know where this inevitably goes. They're not stupid is kind of what I'm saying.

Starting point is 00:33:26 They're not like, oops. I guess we have to take over another bank. What's going to happen? They know exactly where this is leading, but they're not going to tell you that this is where it's leading. They're going to boil the frog, which is exactly what's happening. So meanwhile, speaking of this,

Starting point is 00:33:40 Bology, all right? Do you remember the 90-day Bitcoin bet? He's capitulated on it. So six weeks, it was due June 17th. He bet that Bitcoin would hit a million dollars. There'd be a cascade of bank failures. What is the status update on that, David? Bologi tweets out, I just burned a million to tell you they're printing trillions.

Starting point is 00:34:03 He really loves his like limericks. He's good. He's good at it. He's rhyming little like quips. The million dollar bet is now closed by mutual agreement. I made one million dollar improbable on-chain donations, which you can verify, half a million to Bitcoin core development, half a million to give directly half a million to Medlock, who I think is the winner of the bet.

Starting point is 00:34:23 And then he goes on to explain like why did he do this. He's basically saying the whole like bit signal was a marketing stunt that he is paid. He just took $1 million to the face to broadcast that they are going to print a trillion dollars. So that's what he's, that's what he said. Did you watch his video, David? I watched it. It was good. It was a lot of our episode with him.

Starting point is 00:34:48 Yeah. It actually made me a little bit frustrated. It was like, apology. Like you can say things in nine minutes. next time we do a podcast Can you do something like that's please? I don't know. I enjoy the long form with Bologi.

Starting point is 00:35:00 Although I think we had like two and a half hours of content. We kind of prepared that down to like, you know, under two hours or something. An hour 40, yeah. So I think the TLDR for people, we'll include a LinkedIn show notes is Balogy says it's still going to happen. It's just not going to happen in 90 days.

Starting point is 00:35:16 And he gave the parallels to this is like 2008. He said Bernanke said it was fine, that the economy is fine. and then two quarters later, we got hit with 2008 major recession, and so he draws parallels to that. He also draws parallels to COVID. By the way,

Starting point is 00:35:32 all of the federal chair members and everyone else is like, the economy is totally sound. Banking system's fine, guys. Like, that was the messaging this week. Yeah, he basically pulled up press releases in the same time period, and he's like, look what Bernanke said,

Starting point is 00:35:46 we're fine, you know, didn't use the exact same terms as, you know, kind of the landing, the plane term, that Powell uses, but basically said, we're fine, mild, no recession, it'll be fine. And then two quarters later didn't happen. So he's basically saying, look at the signals. We got debt at astronomical levels. We've got de-dollarization happening. He's got some charts about that. We've got gold buying from central banks at all-time highs outside of the U.S.

Starting point is 00:36:12 particular. And now we have bank failures and runs. And so he's basically saying, I lost the bet, but I still got the word out on the most important thing. That's kind of his take on it. which is interesting because he didn't exactly tell us in that conversation we asked him if this was sort of just a marketing stunt he said no it wasn't so i remember i remember thinking about that part uh because he i can't remember the details but i think there he might have been saying i am not doing this to pump the bitcoin price to make a profit which is different than saying i am doing this as a marketing stunt. I also think he still views that there is a probability that it could happen in 90 days.

Starting point is 00:36:56 And when we had that conversation with him, he was like, yeah, there's a probability that could happen. It's not a certainty. All of this is like probabilistic. And actually, this is, I think, worth watching. I think we should watch this clip because the question is, okay, apology, if you still think it's going to happen, and it's not happening in 90 days now, and you're willing to capitulate on that, when is it going to happen?

Starting point is 00:37:17 So this is what he says here. And so then, of course, the question is, okay, but when? Everybody wants to know exactly when things are going to happen. So I don't have a crystal ball. My guess is 10% months, 70% years, 19% decades, 1% centuries. Okay. I can give a case for each of those, that when I say 10% months, what I'm saying is, you know, we have some serious crisis in months or 70% I think it happens in years.

Starting point is 00:37:42 And when we are thinking about this is sort of the, you know, stay in dollars or, exit spectrum. If you think the current status quo of printing can go on for an endless amount of time, the U.S. establishment de facto believes it can go on for centuries, then you stick on one side. If you are seeing fire alarms, you're seeing Claxins, then you exit, whatever that means to you. Personally, as I said, I'm like 10% months, 70% years, 90% decades, 1% centuries. You should figure out what your own percentage is there. If you think that all of this is totally stupid, you know, and the U.S. of course, has infinite hit points and the Fed can print forever, then you're at centuries and you should ignore all of this. But if you have some probability that

Starting point is 00:38:21 actually system collapse may happen sooner than people think, then you should, you know, take, take appropriate action. What do you think of that, David? So he's giving a much more probabilistic bet here, right? And this kind of implies, you know, for him, if it's 10% months, maybe he has 10% in Fiat, for example, 10% in the dollar. And that's how he allocates his, his portfolio. Yeah. I reminded that there's that quote that sometimes there are decades when weeks happen and then sometimes there are weeks when decades happen. And I'm also reminded that biology was way ahead of the curve with COVID, which was an exponential event. 2008 was an exponential event. The worry that we had with the snowman and what could happen in the future, like what we're saying is like there could be an exponential event in the future. So it's not like, it's not like if Bitcoin goes to a million, it's not going to be like at the last second it touches a million and it just gets there and then it comes back down. It's going to be like, no, it sky rockets and it breaks the meter because of an exponential event. 10% is exactly

Starting point is 00:39:31 like what he said is an exponential event. It's a 10% chance. Like we live in a time of chaos. The pendulum of the global order is no longer in the time. in the era of stability. That was the last four decades. It's been shifting towards chaos and it's been shifting that way for a long time now. Yeah.

Starting point is 00:39:54 Yeah. This, when you break it down, here's what you can do. What I love about this sort of thing is you can actually bet whether apology is right or not. And it doesn't have to be a binary all or nothing type of thing.

Starting point is 00:40:06 You have to be like, oh, it's certain. And it's certain it's going to happen in the next six months. Therefore, I'm going to take all of my fiat, I'm going to convert it to crypto, right? You could just do a little bit of it, or a lot of it, depending on where you are in kind of this spectrum. But I will say, over the long run, I will not, I'm definitely not betting that Bology is wrong over like the long time period. It's like, this seems totally reasonable to me that 10% probability happens in

Starting point is 00:40:36 months, 70% years. 10% in months sounds like 10% in 2023. There's a 10% chance that Bitcoin hits $1 million this year. And we know, David, that it's a 100% probability that Fiat is going to like trend towards zero over a long enough time span. That's every single Fiat system. Like go chart it over time. Ray Dahlia does this wonderfully, right? It's like all of them hit a reset mark.

Starting point is 00:41:01 And we're like, what, 50 years into this experiment with, you know, the 1970s and the US dollar. So it's going to happen at some point. It's just a matter of when. And I don't think people fully understand that. And Bology does. So I'm glad he's getting that message out. Did you, I don't know if we have it in the agenda, but the conversation of the one trillion dollar coin is back on the menu.

Starting point is 00:41:23 Oh, yes. I saw some of this. Yeah. This is, um, we got some takes later in the show. But yeah, so the, the establishment has resurfaced the possibility of minting a one trillion dollar coin. What does that tell you? I mean, I'm sure that was a snippet in Bologi's video too.

Starting point is 00:41:40 I think he's brought that up, actually. Well, that's that. Bank failures, Bologi, capitulating on his bet, but not really. He still thinks he's going to be right in the long term. David, we'll talk about Coinbase for a minute. They are going international. What does that mean? The Coinbase International Exchange has launched. This is up and running, offering Bitcoin and Ether perpetual futures settled in USC with up to 5x leverage to institutional clients and people in eligible jurisdictions outside of the U.S. So Coinbase, Enter. is the international game. Just at a high level, Ryan, like, what do you think about this? What's your take? I think they're not putting their eggs in the U.S. basket anymore, at least not all of them. It's just smart. And the other thing I think is like, wow, I'm an American.

Starting point is 00:42:26 And if you're in the U.S., if you're American listening to this episode, you don't have access to these products. Because your government won't let you. You live in a financial prison that will not allow you. It doesn't think that you are able to handle Coinbase, Bitcoin, Eat, Perpetuals. Yeah. And that kind of sucks. Big Boy toys. So this is like, this is not an unregulated marketplace that they're running.

Starting point is 00:42:51 This is, you know, in the EU. They can offer this sort of thing. And so, but they can't do that in America. It's sad, I think. My take on this is this is really bullish for Coinbase. Because we know that they're like the FTX US versus FTX back before we thought it knew it was a fraud. FTX, international, dominions.

Starting point is 00:43:12 in spot revenue and pert's revenue, just like it was just a gargantuan. So someone's got to step in, basically? Yeah, there's a huge void in the market. And so, like, it's bullish for Coinbase because Coinbase gets to step into that market and service that demand that we know is verifiably there. And of all the other offshore derivative exchanges that have all come and gone in the world of crypto, this is the first time that we have seen a meaningful, entrenched, established player that people trust that

Starting point is 00:43:44 operates by the rules and operates in the light, not in the shadows. And so, it's bullish for Coinbase. I also think it's bullish for this industry because finally we have a legitimate player to fill that void. And we have a legitimate player answering towards that demand. So it's bullish

Starting point is 00:44:00 for two reasons. Yeah. At some level, the crypto exchange game is very much about just outlasting everyone else. I mean, I throw cracking in this category, too, of like just over a decade of servicing crypto and just not necessarily being fastest, but just being the most secure, most stable, most predictable, like doing the core things really well. And at the end of

Starting point is 00:44:22 the day, the FTX is they burn out. I mean, like being fast is a huge liability in this industry. Look at through our capital. I think so. The low and slow game plays out real well in crypto. Yeah, tortoise not hair. David, there's an entire episode about this with Tom Duff Gordon, who's the VP of International Policy that we put out. You guys will catch that on the feed will include a link in the show notes as well. Also, some more news from Coinbase. Do you remember they picked a fight with Gary Gensler? They're bringing the SEC to court.

Starting point is 00:44:53 What's this tweet say, David? Here's an update on that. Yeah, so they got a response from the court. So the Third Circuit court just issued a text-only order directing the SEC to file response to our mandamus petition. I hate legal talk. Within 10 days. How do you pronounce it?

Starting point is 00:45:11 And what does that mean? Do you know? No, I don't. Amas. Let's go with that. Anyways. Someone can, the lawyer can correct us. The CDC has to respond to Coinbase's petition that they filed last July in 2022 in the next 10 days because

Starting point is 00:45:25 Coinbase said they were going to take the SEC to court if they didn't. And so at the direction of the court, the respondent is ordered to file any answer to the petition within 10 days of the date of this order. So Gary, you got nine days from the time. From the time that this episode releases, if you're hearing us, you got nine days to reply to this. All right, David, what do we have coming up next? A bunch of stuff, Ryan. We got Venmo bringing crypto walls to 60 million Americans.

Starting point is 00:45:56 We got Aigenlayer, stage one main net set to launch. We got the suey main net. Again, pull out the number of the market cap that you think that it is. We got an Axelar announcement and then also the newest Zach XBT victim just dropped. So all of that and more. But first, I want to talk about some of our fantastic sponsors that make the show possible, especially Metamask, who not only makes the show possible, but also makes Web3 jargon easy to comprehend. So if there's ever a word that Ryan or I use that is a crypto word that is confusing to you, Metamask has built Metamask learn at learn. Metamask.io, which is a place to get onboarded into the world of Web3, not just for you, bankless listener, but you builder of a crypto company that needs to onboard. your new employees to get them to understand what your other employees are talking about,

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Starting point is 00:48:31 development the way it was meant to be. Secure, fast, cheap, and friction-free. David, this is absolutely huge. No one's talking about it. Venmo is bringing crypto wallets, the gateway to cryptocurrency. wallets anyway to 20 million Americans. Do you want to hear the Ryan Sean Adams hype tweet about this before we get into what happened? I'm straight into my veins, sir. All right, let's go. Okay, Venmo is now allowing its 60 million customers to withdraw directly to a non-custodial crypto wallet. Exit the banks and go bankless. Fintech has become a gateway to crypto. Crypto is quietly eating the world. Just no one is noticing because it's a bear market. That's the take here. There's a lot of words in that tweet that I like, man.

Starting point is 00:49:09 Well, tell us what really happened. Ground us in reality. What's going on with Venmo when we get past the hype tweets here? Introducing crypto transfers for Venmo customers. What does that mean? The big news here is that Venmo is no longer a place to buy crypto assets, but you can now make ledger updates to these crypto assets because these things are money,

Starting point is 00:49:30 and you need to make ledger updates to money because that's how money work. So you can send your crypto to other Venmo users inside of the Venmo ledger. the Venmo centralized database ledger, but you can also, side chain, but you can also make a decentralized open permissionless blockchain ledger update by sending your crypto assets to another wallet.

Starting point is 00:49:52 This is just basically Venmo doing payments, so which isn't any surprise, but it's a very big company with 60 million users making on-chain ledger updates of ether transfers and stable coin transfers in using our blockchain payment rails. And so this is all rolling out to customers May of 2023.

Starting point is 00:50:11 I know it's like it's a small deal because yes, we can we can now transfer crypto. We've already been transferring crypto. But now Venmo, 60 million people are able to transfer crypto using Venmo. I think it's the big thing here is to non-custodial wallets. That's the exit. Right? Like this is like defy-mullet thesis playing out, which is basically like fintech provides a user interface for a crypto, which is more difficult. but it's all built on top of those ledgers, the decentralized ledger of Ethereum, Bitcoin,

Starting point is 00:50:43 other cryptocurrencies, and now we can hold our own private keys. So our job, I think, as a crypto community, is to get those 60 million people into bankless wallets. That's where we got to go do next. We got to go do that. Before they shut the gates. Before they shut the gates, before they stop letting us. David, we got main net season here.

Starting point is 00:51:01 Who's going to main net this week? Coming up first in main net season, we got eigenlayers. eigenlayer has been extremely hyped. This is the topic of restaking. Eganlayer really opened up the door to the concept of restaking. And so they are launching their main net stage one, stage one main net, soon T.M. They said they've got over 9,000 submissions with interest between 0.1Eth and 30,000 Eth to all begin doing restaking things, to restake for other networks. What does restaking mean for people, right?

Starting point is 00:51:34 I'm so glad you asked, Ron. restaking is when you stake your eth to Ethereum, and then you stake it again. Double stake? Do you have further questions? Okay, so does that mean I get, like, I could stake it twice in Ethereum, or am I staking in somewhere else? What does that mean? So restaking, are you familiar with merge mining?

Starting point is 00:51:56 I know some listeners aren't, so I'll answer the question anyways. Merge mining is when you have an ASIC, like a Bitcoin ASIC, and you use your ASIC to mine Bitcoins, but you could also mine another network at the same time that operates on the same hashing algorithm. So if you're mining for Bitcoin, but you're just doing a Shaw 2506 mining algorithm, you can also simultaneously mine for another chain because it uses the same hashing algorithm. Restaking is the same concept for Ethereum proof of state. So you take a token. For a token, exactly. Ether. Exactly. So you stake your ether to Ethereum. But then instead of also, So when you stake your ether to Ethereum, you are signing up for slashing conditions.

Starting point is 00:52:36 If you propose an invalid block, you get slashed. If you missed your block slot, you get marginally penalized. There are certain slashing conditions that come with a responsibility of being an ether holder, an ether staker. And restaking lets you sign up for new slashing conditions for new networks, completely new networks. Another layer two, an Oracle network, literally anything. And so this is why when I just leave it open-ended and let you stake it again, it's intentionally open-ended. You can stake it to any network that needs security just by signing on for new slashing conditions. And I can learn, it's like the hub for all of this.

Starting point is 00:53:16 You're not just signing up for new slashing conditions because that doesn't sound too fun. You're signing up for rewards as well. Higher interest, higher rates. You're getting paid for it. Exactly. And so the risk is the slashing, but the reward is basically, if you have a 4.4,000, 5% APR on Ether staked in that protocol. You can also take that staked ETH and you can use it to secure another protocol.

Starting point is 00:53:39 Now you have some risk there, of course, but then you get some reward for that. So this is really cool. This is like Ether as an internet bond. I think we're going to do entire episodes on this concept of restaking the future because it is that big for ETH as a monetary unit and also for like the entirety of cryptocurrency. I mean, it's going to shake everything up if this is successful, I think. Yeah, and if bankless listeners, minds are boggled and you have further questions, I have great news for you. An article that I wrote went out on the bankless newsletter Thursday yesterday for the

Starting point is 00:54:11 time of listening, which are kind of the theme is like the big questions that restaking brings to the table, that eigenlayer brings to the table. And so I explain restaking in further detail, and I go through what I'm calling the restaking meta. This is a big deal, by the way. I would like to put my flag and say, this is a big. It's true big. I would like to I just put my flag and say, this is a significant deal. And in the same way that, like, once upon a time we had these arbitrage bots. And then one of these arbitrage bots did something weird by, like, reordering transactions when they were proposing a block. And then we discovered the world of MEV.

Starting point is 00:54:42 And like, our minds were blown. And it's like that. And it's like the entire industry shifted. This is like restaking. And so the whole, like, Justin Drake, Dankrad, Vitalik are all talking about how does restaking change the natural equilibrium of these. staking industry because we don't know the answer to that question. MEV is a good analogy here because there's some good things about it, right? And it increases, you know, yield and rates and all sorts of things. But there's also some scary things about it in

Starting point is 00:55:11 the way they could shake things up and change protocol incentive. So we're doing episodes on this too, right? In the futures, we have an episode for you. But that was just the first of a couple of main nets. What's this one, David? Sui, the Sui network. I think the sister network to Aptos, I think these are like coming around the same time, the newest, shiniest layer one blockchain on main nets. So they are boasting a whopping number of 100 globally distributed validators to achieve a peak throughput of 300,000 transactions per second with finality inside of 480 milliseconds.

Starting point is 00:55:48 So these are the numbers, a super speedy layer one. I have not looked under the hood of this thing, but I'm going to classify this as what I would call a juice layer one. Ryan, have you come up with your number? I already knew the number, so it's not fair for me to actually say what that number is, but I will say it surprised me when I first learned what the number was. The market cap of fully diluted evaluation of Suey is coming in at $13 billion. $13 billion.

Starting point is 00:56:17 Wow. Just launched to Mainnet. So went from Series A, Series B, launched the Mainnet, coming in at $13 billion, making it the number 66 crypto asset. It's got a market cap of $700 million. And I would like to point out the discrepancy between the market cap and the fully diluted valuation. I will also say that some layer two's have this discrepancy as well. 13 billion dollars is a fully diluted valuation. $700 million is the market cap. That means there are $12.3 billion of tokens locked up that have not been issued to the network that has to be absorbed by

Starting point is 00:56:55 sufficient buying pressure to justify a $13 million valuation. Because the way like Sui and Coin Gecko values market cap is based on the circulating supply, which is very low right now. Right. I mean, this is a normal thing at the beginning of all networks, but it is also a symptom of a VC chain. It's something you have to watch out for because when you're buying a sui token, you're actually, I think you're totally, I always value these things as a fully diluted value. because this is a long term what it's going to be.

Starting point is 00:57:27 Yeah. Yeah. The series B, Ryan, do you know who led the Suee, Suey, Sui, Sui, Series B? Polychain, multi-coin, one of the big layer two investors. You know, you know the names. Am I right? No. FTX Ventures.

Starting point is 00:57:46 Oh! They were forced to sell their stake for $96 million recently, which was probably a fumble because if, I don't know how they valued it. They sold, they made, they had to liquidate for $96 million. I don't know what the valuation is, but like the series B valuation was $2 billion. And we are currently at a 6.5x of that. And so I don't know if that was a fumble or not, but I'm assuming they sold it somewhere between $2 billion and $13 billion, but not $13 billion.

Starting point is 00:58:17 I guess they didn't want to speculate, huh? All right, so we got some more. I was to say that the tone that I just gave about Sue, was totally biased and definitely negative, and I'm totally aware of that, and that's my deal. Wait, your deal is being biased and negative? Yeah, towards centralized new layer ones. Totally.

Starting point is 00:58:37 Why? Because they have to prove themselves, or because you hate them, or because you're bad biased, and you're angry that you didn't get on this deal? Why is your tone negative? Because I believe in constrained layer ones that are not led by,

Starting point is 00:58:53 VCs. We've done this before. We've done this before. We've seen this game. We already know how this works. Many times. You definitely have to prove yourself. That's a hefty valuation for just shipping to Mainnet on a new layer. For an empty ghost chain. Yeah. Hefty valuation. There's a lot of growth priced in there. All right. Axelar. What's what's up with them? Going to MayNet 2. That's number three. Yeah. So Axel R is a network. It's a IBC Cosmos network that connects Cosmos to Arbitrome. So it's a bridge protocol, which previously Banclos has been dubious about

Starting point is 00:59:25 and I'm still not totally sold but something's new about Axelar. We did a show with them, which is why I know about this. They have this thing called GMP general messaging protocol. So instead of Ryan, instead of sending tokens cross-chain, they send computation

Starting point is 00:59:41 cross-chains. So the tokens stay on the respective chains but the logic passes through chains. So there's Well, that seems totally... Yeah, I don't have a problem with that. The challenge with Bridges is kind of like the security risk you expose yourself to. Token security risk.

Starting point is 01:00:00 And you're saying it's not taking that type of risk. It can take that type of risk. But it does the correct, in my opinion, the correct order of operations, which is it passes data, which is less valuable. And then once you build a secure messaging protocol and you go to Mainnet with that and you and that's what you ship for production and let that be battle tests in the wild you can then layer tokens on top of that and like this was like the breakthrough that I had

Starting point is 01:00:26 is like wait a second why did all the other cross-chain bridges not do that why do they just get to the tokens so there's a there's a bank what kind of data like what kind of data is it okay so part of this announcement is this thing called somelier which Zach Manion from the cosmos ecosystem we've had him on bank list that's his project

Starting point is 01:00:43 somelier is like this cross-chain yearn if you will, and manages assets across chains, but because of Axilar is able to manage, so this is actually plugged into Arbitrum. So this is an Arbitrum, Axelar Cosmos, partnership, collaboration, where Somelier, Zaki's DFI app is able to reach across chains

Starting point is 01:01:05 and manage yield and assets across chains. Yeah. Manage yield and assets, but not actually transfer them. So you're not actually changing the security profile of the assets. sets themselves. Yes, correct. Huh.

Starting point is 01:01:19 Yeah. That's kind of cool. Right. Yeah. I mean, personally, I am, I mean, we know that bridges are going to be necessary. With all these changes, we need a lot of bridges. Yeah. I think you're just, you're more in favor of kind of like trustless bridges, like layer two style bridges.

Starting point is 01:01:37 Right. Rather than having kind of a mesh network of dubious multi-sig bridges and things that have. Yeah. They get spun up inside of a bull market, inside of fervors that are like, Our bridge is totally safe. Yeah. Oops. Hack.

Starting point is 01:01:51 North Korea's got our money now. I'm a big fan of putting logic at risk before putting tokens at risk. Hey, there you go. That seems logical, David. It does. All right. And lastly, David, we've got a main net update. This is really cool, actually, from Lens.

Starting point is 01:02:04 So they just launched a layer three, I believe. Tell us what they launched and then give us the stats. Yeah, so they renamed the layer three and we weren't able to fit it into last week's roll-ups. This layer three is called Mamoka by Lens. So Stani tweets out seven days later, Lenz has finalized 5.4,000 transactions for a total cost of $4.4. That's for all of the transactions. So the average transaction on Mamoka is 0.008 cents with a peak of 25,000 transactions per second. That is awesome.

Starting point is 01:02:38 He says close to S3 pricing. That is Amazon, AWS, data storage pricing. I needed you for that one. Well, you know what? I think this is awesome. This is basically, remember Lens, of course, is Web3 Social Protocol. So Web3 Social can be cheap now because we have broadband. That's what's so exciting about this.

Starting point is 01:02:57 And I'm really excited about these use cases moving forward now that we have very cheap transactions. Right. And now I will remind bankless listeners, does that $13 billion, Suey Network, look all that great to you? Stop. You said you would stop, David. Did I say I would stop? No, you didn't. No, I didn't.

Starting point is 01:03:16 You said that is the new you, actually. Yeah. Never mind. That's David's deal now. So now I feel like I have to compensate by being nicer to the alternative layer ones. I don't think you need to do that. No, I don't need to bring balance in the universe.

Starting point is 01:03:29 You don't need to feel compelled to do that. How about this? Newest Zach XPT victim. One crypto wallet launched 114 dodgy meme coins in 45 days. David, what's the story here? Yeah, so there's just a business model. I guess in like spinning up random new meme coins. Zach says every time stolen funds from the scam are then sent to the same deposit address.

Starting point is 01:03:54 So I'm guessing like some like weird new term comes up and then some this one person makes a token that is that term and then convinces every people to buy it and then makes them profit and then rinses and repeats that. Zach found them because they were using the same wallet. Wow, look at that graphic. That is insane. I mean, let me just remind you, listener, and I'm reminding myself, buying a meme coin is a choice. That's a choice that you are making, all right? You don't have to do this. You don't have to invest, quote unquote, in crypto this way. In fact, like, I think you're diluting yourself if you're calling it an investment.

Starting point is 01:04:33 You take 1%, 2% of your crypto portfolio and you do something like this, totally D-Gen. That's one thing. But, like, I think a lot, I don't understand why people are playing these games, David. when there's active scammers out there just stealing their money. And yet we continue to play them. Yeah. David, speaking of exhausting, the dame tax, or is that damn tax? I don't know.

Starting point is 01:04:55 Feels like a damn tax. The dame tax, making crypto miners pay for costs they impose on others. This is from the White House. Biden administration is proposing a 30% tax on crypto proof of work mining. What's your take on this? Negative. because in the same way that I do not think that we should politicize our banking sector, I also think that we should not politicize our public infrastructure, our energy grids.

Starting point is 01:05:23 Grids, who should and can access energy should be not governed by politics. And so my take is that if you are deeming some consumption of energy as some reasons to consume energy as legitimate and others illegitimate, that is bad, and we should not have that involved with our government. Our government should not be able to dictate who can access energy. Energy is real important. And so, yes, it's easy to harp on crypto miners. No one likes crypto miners, except for the crypto industry, and honestly not even all the crypto industry.

Starting point is 01:05:59 And so it's really easy to go after crypto miners to pay for the cost that they impose on others, quote unquote. But it's also not saying that, hey, anytime you consume electricity, for any reason, you are increasing the prices for everyone else because there's only so much electricity to go around and that's how gris work. And so my take on this, this is politicizing our public infrastructure to say that some things are good and some things are bad and that is not the role of government is my take. I think that's a controversial take in some places because they'll say, David, are you ignoring the energy problem? Are you ignoring climate change?

Starting point is 01:06:34 Are you doing that sort of thing? I think I agree with your take, too. With one kind of caveat or addendum, I think you were also saying this is when you're saying you don't think we should politicize our energy grid. Some people will point out, well, David, it's already politicized. All right. Like we regulate solar and wind farms and dirty coal and all of these things. And my take is it's different when you regulate the supply versus regulating the demand. Right.

Starting point is 01:07:06 The demand part of things is where I think you get into particular. trouble. Who is the government to decide how energy should be used based on anything, right? Like, that seems to be a slippery slope. Let's say, you know, the Grinch gets elected as president in 2024. And the Grinch just hates Christmas and puts a 40% tax on Christmas lights, right? I mean, like, and Bitcoiners make this argument all the time. Christmas lights actually cost more energy to the grid than Bitcoin mining. That's insane. It's like, And so, like, you get into this slippery slope of creating kind of like politicizing the demand, I would say, the demand side of the energy grid. And that's where I think you get in trouble.

Starting point is 01:07:51 But that's also a controversial opinion because people say, David, you're ignoring climate change. But I don't know that you're saying that. I think you'd probably be in favor of, like, regulating dirty coal plants on the supply side, for instance. Tax the carbon output of energy producers. That's a simple answer there. There you go. Well, that's what's happening. administration, unfriendly to crypto for sure. We got your jobs of the week. Even in a bare market,

Starting point is 01:08:14 crypto companies, crypto protocols, everybody's hiring. We've got a lot of jobs on the board. Why don't you tell them about the first one, an investment analyst intern? What is this? Oh, I'd be happy to, Ryan. Bankless Ventures has an investment analyst intern job. Yes, bankless ventures. Ryan and I, if you have not heard, are starting a VC firm with our good friend Ben Lakeoff. And we need an intern. I think this is probably one of these things. biggest jobs that exists in the crypto world. So if you are interested in interning for BBC, bankless ventures, click the link in the show notes, go to or go to bankless.com slash jobs. And I'll be talking a little bit more about bankless ventures and what I am

Starting point is 01:08:54 bullish about. And I'm perhaps bullish on bankless ventures. There you go. Coinbase needs a staff blockchain engineer as well and a staff smart contract engineer, a software engineer for mobile and a software engineer front end at Phantom. David's dancing now. You know he's excited about PREMIA. The Web 3 product management architect lead role. De NARA, smart contract engineer, uniswap, hiring a ton. Backend engineer, product designer, senior mobile engineer. We got a whole bunch more over the bankless job boards.

Starting point is 01:09:23 It's feeling a little bullish on the job boards right now. Talent is firing. This is a good time to get a job in crypto. Guys, we got a lot coming up. David, why don't you tell them? Coming up, we got the takes from the week. We got some good ones. Eric Warhees on fire this week.

Starting point is 01:09:38 We also got some questions for the nation. We've got three questions from the nation we're going to run through, and then we're going to go to what David and Brian are excited about. Hold your breath, you'll never guess. But first, I'm going to talk about some of these fantastic sponsors

Starting point is 01:09:49 that make the show possible. You know Uniswop. It's the world's largest decentralized exchange with over $1.4 trillion in trading volume. You know this because we talk about it endlessly on bank lists. It's Uniswop.

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Starting point is 01:11:16 sign up at ambire.com. And while you're there, sign up for the web app wallet experience as well. So thank you, Ambire, for pushing the frontier of smart contract wallets on Ethereum. Back with the questions for the week. The first one from Scotty, how bullish is 4844 for eigenlayer? It must be referring to EIP-4844. Explain that and tell Scotty, why or if it's bullish for eigenlayer. Okay, so EIP 484 makes this thing called blob space. Instead of block space, you got blob space, which is first class blob space.

Starting point is 01:11:49 That is just for layer two's to put call data on. It's layer two blocks. It's layer two block space. We call it blob space because we're weird. And when we have 48404 or four, layer twos can use all that block space, and they can go super fast. And so it takes off the brakes for layer twos.

Starting point is 01:12:06 so our current layer twos get better. We have more room for more layer twos. Overall, 4844 is bullish for the layer two ecosystem. It makes Ethereum turn the idea and the whole vertical of layer twos into something that's just way better. Eigen layer, I explained it earlier. It is not, these two things are not directly coupled. They are inside of the same sector. And so they experience bullishness because both grow, but there's no intimate-relations.

Starting point is 01:12:36 between 4844 in eigenlayer. Eigenlayer can secure more layer twos. It can secure types of layer twos. There's a layer two network out there called Mantle that's using eigenlayer for data availability, but there's no intimate connection between eigenlayer and 4844. So it's just like bullish for the sector at large and gives eigenlayer more opportunity.

Starting point is 01:12:56 So they're unrelated. They're kind of orthogonal then. Igon layers restaking. It's like actually just like they're only... Completely unrelated? You're saying they're... They're... They're...

Starting point is 01:13:06 in parallel with each other. They're going towards the same goal, but Eigenlayer is not like waiting for bated breath on 4844 or anything like that. Got it. Igan layer, of course, is restaking, which we were talking about earlier in this episode. David, here's another question. This one is from Jakara. Here they go. My smart friend, oh, smart friend. Everyone should have a smart friend. My smart friend said that in 24 months, every visa credit card will have an associated 4337 wallet attached to it. What is 4337? And how would that happen? And by the way, I love bankless, the bankless nation, giving us precise EIP numbers in their question. Okay, these are advanced questions.

Starting point is 01:13:45 Thank you for these questions. EIP 4337. First, remind everyone. Actually, not EIP 4337, Ryan. It's not? What is this? ERC. E-R-C.

Starting point is 01:13:55 He got me. You got me. It's an Ethereum request for comment rather than Ethereum infrequent proposal. Also, a completely unhelpful phrasing of what these things are. EIP, Ethereum Improvement Proposal, 4844 is dank sharding. Also a crazy name. God, no wonder. No one comes into this industry. But the difference between an EIP, which is an Ethereum Improvement request,

Starting point is 01:14:19 is it's going to take some code deployed to get it working. And an ERC, it's just let's all agree on a standard. It doesn't actually require a fork, a change in the code, not underlying protocol. So EIP versus ERC, that's the difference here. EIP is like, hey, let's put this bit of code into Ethereum. ERC is like, let's agree that this is the standard that we use, add the smart contract layer. Yeah, yeah, like ERC 20s, a famous ERC. Let's all agree that this is the way we do tokens.

Starting point is 01:14:49 Top three ERC. Top three ERC, sure? Yeah. I would also put ERC 4337 in there. Just since we're going down this rabble hole, we're answering questions that wasn't asked. ERC 4337 could turn into an EIP. I don't think it would be called EIP 4337, but like you could take the guts and turn it into an EIP. How a bill becomes a law?

Starting point is 01:15:11 Yeah, exactly. I don't know. Yeah. Okay. Anyway, to return to the question, my smart friend said in 24 months, every visa credit card will have an associated 4337 wallet attached to it. What is 4337? How could that happen? 4337 is account abstraction.

Starting point is 01:15:25 It's a smart contract wallet. Your smart friend is smart. They are paying attention. So Visa with the leadership of Kai Sheffield has done primary research and innovation into smart contract wallets using 4337 on Visa. They are building out a smart contract implementation standard so that they can use it for reoccurring and subscription payments on the Visa Network. I don't know about the idea of every Visa credit card having a smart contract wallet associated to it, but two years is a long time. Visa is directly pioneering this effort, and that conclusion would make sense. I don't have any further information beyond that, but we know that Visa is pioneering into the world of smart contract wallets.

Starting point is 01:16:13 That's what 4357 is. So your smart friend is connecting some dots and perhaps knows something. Your smart friend is smart. Don't know about that timeline, but this is a decent prediction. It's based in some realities here. It's technically possible. David, you're ready to get some takes of the week? Love it.

Starting point is 01:16:30 We got three. number one, why don't you read this? Yeah, because you don't want to read your own tweet. Ryan Sean Adams says, you'll never get a country to adopt Eath as money, in quotes. We don't need a country to adopt ETH as money, he says. We need an economy to adopt ETH. The largest economy in the world will be built by AI agents.

Starting point is 01:16:48 Oh, it's an AI tweet. It's an AI tweet. Yeah, it's an AI tool. They'll prefer a digitally native money, unencumbered by nation states, ETH is machine money. Tell us about this one. That's it.

Starting point is 01:17:00 That's it? I mean, the tweet speaks for, itself. I think that we have created a program money system that AIs are going to use and AI agents are going to become major economic players. Like AI agents are the future associations and nonprofits and corporations. They are the A in autonomous. Remember DOWs? Digital Autonomous organizations? Well, we needed the A part. This is the A part. This is the autonomous part. The AIOs. Basically. Wow. Do we just create something here?

Starting point is 01:17:33 So I am actually less, I think it's less important to get America to put ETH in its central bank balance sheet. Because the robots are going, the AIs are going to prefer a programmable money system that has no string, that has no geographic boundaries, has no strings attached. You don't have to file in Delaware for this thing. You spend up private keys in a multi-sig and you've got a Dow cooking, right? Like robots aren't going to be able to get bank accounts. they can on Ethereum. All right.

Starting point is 01:18:02 Now, hopefully that this all goes well for us, David. I know we've been talking about AI alignment. That's a separate issue. Don't open up the AI-Rabit. Don't do it. Not going to do it. ETH is machine money, though. And by the way, when I said this,

Starting point is 01:18:14 people are like, you're changing the narrative already. I thought it was ultrasound money. And people are like, oh, this is, you know, world's computer to ETH's machine money narrative switch. I will remind people again. Like the internet. They all go together. They all go together.

Starting point is 01:18:28 Like the internet, there are many use cases of the internet. The internet's just email. The internet is like just e-commerce. I mean, how, like, of course, these are all narratives of the internet. It's like Ethereum has many narratives. Of course it would. It has many use cases. That's a strength. And by the way, ETH being machine money makes it even more freaking ultrasound. Okay. ETH is ultrasound AI money to pay for computation on the Ethereum world computer. Why is that hard? So hard to understand. I don't know why it's difficult. But anyway, that's the take, David. Let's get to you another one.

Starting point is 01:19:03 This is yours. Can I read it? Yeah, but this is just Ryan and David read their own tweets. Wow, wow, we've gotten, you know, cringe. We're just reading their tweets back and forth. Okay, no problem. David Hoffman goes,

Starting point is 01:19:15 you should create an Annon account so I can read your tweets without really reading your tweets. Open money systems are public goods. The unit of account of money is a public utility. When EIP 1559 burns ETH, it's growing the value of a very widely distributed public good. EIP 1559 is a public goods mechanism. Man, your brain was thinking about

Starting point is 01:19:34 money as well this week. What do you mean by this? Hang on, you got to read the other two tweets. Oh, there's more. Yeah. Normalized thinking of money systems is public goods. We easily understand what happens when money systems break down due to currency devaluing. We should understand that increasing the value of money is something universally beneficial to the money system. How much investment and reinvestment has Ethereum received from ETH appreciation. How much has been donated to public goods because ETH went from 80 to 4K, how many startups and jobs have been created

Starting point is 01:20:05 due to the Ethereum wealth effect? Heath is the most important public good. So this was inspired by Hayden Adams' recent tweet about how we should redirect EIP-1559 ETH-Burning away from burning ETH to public goods. And I'm like, Hayden, no, don't do that. We've already, A, we've already had that discussion. B, stop thinking that it's not already doing that.

Starting point is 01:20:27 at burning heath is the most credibly neutral thing to do and it's also contributing to public goods the money that invest in this entire economy so that's my take i get it i get it good take here's a take from eric vorhe's on a headline that he's reading from a news publication saying a trillion dollar platinum coin could save the u.s from economic catastrophe in less than a month it would be fast, legal, and no bigger than a regular coin. He goes, Eric goes this, thank God it would be no bigger than a regular coin. What does that even mean? What is this headline?

Starting point is 01:21:07 A trillion dollar platinum coin. This is a real thing. And it would be fast, legal, and no bigger than a regular coin. Yeah, just the idea of like, it's really important that people know that it wouldn't be bigger. And we're not going to waste any more metal printing this one trillion. dollar coin. What would, I guess people are thinking it's like, you know, like a dinner plate size coin because it's worth of a trillion dollars. Do you need multiple people to hold the trillion dollar how heavy is it? What's it made out? Oh, it's made out of platinum. They're really trying to make

Starting point is 01:21:40 this out of platinum. What's the point of using a precious metal? Because like, how is the point? Unforgeable, David. You can't forge it. Why not you can print it on a paper? This is, this is a real So what is the context of the trillion-dollar platinum coin? It's arising again, isn't it? Right. It's because we need a trillion dollars to backstop the banking crisis. Is why this conversation's happening. Isn't it the debt ceiling in Congress again? Have you been following this, David? It's raising its head again again for the, I don't know, 11th billionth time. It's like a part of our regular cadence. Yeah. So we're like, well, rather than have Congress kind of raise the debt ceiling, well, let's just have Treasury mint a trillion-dollar platinum coin. That's why this is coming up again.

Starting point is 01:22:23 Right. I will, so for bankless listeners, there is a moment of Zen, which is Eric Vorky's being a stand-up comedian unintentionally. That is a very logical continuation of this conversation. So stay tuned for the very end of the episode for that. You can enjoy that. All right, David, what do you bullish on this week? I am bullish on bankless ventures. Ryan and I and Ben Lekoff are raising a fund. Bankless Ventures, $30 million early stage fund. The line that I like to give is bankless media. the podcast you're listening to right now, teaches you how to explore the frontier, and then bankless ventures gives you the money you need to establish a settlement out there on the frontier.

Starting point is 01:23:04 And so we talked about this a while ago when CoinDus broke the news before we were really able to talk about it now. But I wrote an article on bankless. Bankless.com. You can find it. It's called Why We Are Launching Bankless Ventures, puts some of the backstory and the ideas and the thesis behind Bankless Ventures. People are asking me like, okay, like, what's the?

Starting point is 01:23:23 What's the thesis behind bankless ventures? Like, what's the deal? And the thesis is that Ryan and I have really good deal flow, and we're putting it all into bankless VC. There's certain sectors that we, of course, are looking at. Who's going to buy all the layer two block space? Like, we need startups to buy the layer two block space. Account abstraction.

Starting point is 01:23:42 The inevitable AI meets crypto intersection. Like all of these things are things that we're looking at. But really the idea is because of the position of bankless media, we're at the center of crypto, put all the deal flow in front that we get from the media network that we've created into bankless VC. So if you're interested in learning more about

Starting point is 01:23:59 bankless ventures, and also the inevitable conflicts of interest section, which I'm sure some people are curious about, that is available as a link in the showouts. Yeah. And we've got some cool advisors. Justin Drake coming aboard for this, Anthony Sasano, and I heard you pitch in startups to come contact us as well.

Starting point is 01:24:15 If you're building something really cool in crypto, get in touch. Yeah. We are mostly full lots of fun, but if you are interested in being an LP, that window is still open. True. Accredited investor, all that jazz. Gary May does do that part, the accredited investor part. I know. Sad. It's sad. It is sad. Ryan, what do you bullish on?

Starting point is 01:24:34 I am bullish on another accumulation opportunity for Ether, that asset. We've been talking a lot about in the show. It's low. I think the price of Heath is low relative to its value. Maybe it's kind of like fair market value. Yeah. I mean, I was just looking at, you know that website that lists all the assets. like worldwide assets. Do you know Home Depot, the company is worth more than all the ETH in existence. That's not right. David, is Home Depot stock ultrasound? Is it burning?

Starting point is 01:25:07 Okay. Like, is it like the cornerstone of the internet financial system? Can Home Depot stock be restaked to secure other decentralized? I'm just like, it's silly. When you zoom out and you look at it. this context. And yeah, Ethan is in one of those places again. It's pretty close. I'm not going to say it's exactly how I felt about this asset in like 20, I would say 2019, end of 2019 and early 2020 where it's just like, oh, we're definitely coming back. We're dead like look at all this stuff

Starting point is 01:25:42 that's being built. And we went on kind of basically like a rampage of like, eth is undervalued. It's undervalued. Hello. It's undervalued. I'm not quite there, but I'm getting closer. I mean, Home Depot, David, all right? When Ryan in 8 to 20 years when Home Depot stock

Starting point is 01:26:03 becomes a security token on Ethereum and also collatering on the wagon layer, I'm going to come back and be like, actually you can restake Home Depot. Yeah, you know what? What's cool is there's accumulation opportunities where other people get a chance

Starting point is 01:26:19 to get on board into crypto. and I'm so glad we have these. It's like you have the opportunity to be a settler, not a tourist. When other people aren't looking, you're doing your research, you're seeing what's going on here, you're bullish on it,

Starting point is 01:26:31 you could take a very risky bet. I think ETH is kind of like that right now and it's a good time to buy, in my opinion. Not financial advice. David, we got a meme the week. What are we looking at? Mem, the week, here we go. So this, I think, was a great illustration

Starting point is 01:26:47 of the AI alignment problem. And so that particular one, yeah, you sent this to me, Ryan. So this is the AI alignment problem. So that little, there's this, okay, for the podcast listeners, there is this, I don't even know what you call it, a fucking monster. A Lovecraftian tentacles. Like, it's spaghetti, like, monster with teeth.

Starting point is 01:27:08 And then all of these tentacles are converging to, like, put up this puppet face so that it's making this face because that's what you want to interact with. That's like Chad GPT. So, like, the interface that you need to, to talk to this monster of like tentacles and eyeballs and sensors and all that stuff. And then you makes the face. And then the face outputs this like little nugget, which is like your input into chat

Starting point is 01:27:31 GPD is like, hey, what is like, you know, the information that I want. And then it spits out exactly what you want. Behind the scenes, there's this like Cthulhu that is making that happen. And it's unsupervised learning. Unsupert like in the back, in the black box, you don't know what the hell's going on. And then you have this face that it's making because we trained it to make that face, but the face is just like a puppet of Cthulhu.

Starting point is 01:27:55 And then it spits out this little nugget, which is exactly a little bit of gold. It's like, here. A little happy smiley face. There you go. It's RLHF. So reinforcement learning with human feedback. That's how it kind of learns.

Starting point is 01:28:08 That's a smiley face. Right. David, I thought memes were supposed to be funny. This is making me sad. This wasn't a meme. This was a rugpole. This was education about the alignment. Okay.

Starting point is 01:28:17 Yeah. This is us turning makes us into an alignment. podcast. I hope this is not true is the bottom line, right? I hope this is just an artist rendition and we need to work to make it not true. But the truth is, the truth is from everything that we've done so far in this AI alignment series is we have no idea the nature of this thing that we've built. We don't know if it's a lovecraftian monster or if it's just a friendly unicorn or if it's a zombie that we can kind of like train it to do what we want or whether it's some kind of like an early stage consciousness, like we have no idea.

Starting point is 01:28:51 And that is the scary part of the above. Yeah. So right here at Montenegro, I've done two AI conversations right now, which I'm going to throw over to the podcast that it is an underhand to you. The line that has stuck with me, which I did a full-length podcast with this guy, where the reason why AI alignment problem is an issue is because it is simply a reflection of human alignment, as in when we look into that black box of AI. We don't understand what's going on. And then people see doom and people see misalignment.

Starting point is 01:29:22 It's because it's actually not a black box. It's a mirror. And we are looking back at ourselves and be like, man, that's a human problem, which... The monster's us. The monster's us. Which does not make me feel any better. On that note, we should get to the moment of Zen. David, teed it up for us. It's much more. Yeah, tee this up for this is Eric Voorhees giving a speech as part of a debate. A classic speech from 2018. I think you're going to enjoy this. Got to let you know before we fade into that. Risk and Disclaimers.

Starting point is 01:29:54 Of course, none of this has been financial advice. Crypto is risky. You could lose what you put in, but we're 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.

Starting point is 01:30:04 Next, let's discuss why Fiat is bad money. Why should we care about cryptocurrencies and their attributes when we already have Fiat? Fiat works pretty well, right? It's got pyramids and government buildings printed on it, so you know it's valuable. Also, it is backed by paper. Paper can be burned if you're cold in the winter. There's its intrinsic value.

Starting point is 01:30:28 Try that with gold. But a skeptical observer should know that fiat money is an absolute scam, and something altogether inappropriate for an ethical market-based society. As I like to say, you cannot have a free market when the most important good, money itself is centrally planned and controlled. Fiat money and a market economy are mutually exclusive concepts. Like oil and water, they can certainly be mixed up together when forests is applied, but they will naturally separate and dispel one another over time. Indeed, the average lifespan of fiat is less than 50 years.

Starting point is 01:31:01 The U.S. dollar only became fiat in 1971. That's less than the length of William Shatner's career. And as it happened, last week he announced that he has started to mine bitcoins as well. Regardless, when examining its specific properties as money, most ways fiat is unimpressive. First, it is not scarce. It is systematically created out of thin air, with no limit on supply, nor can supply even be known. Fiat is willed into existence by politicians and banks because printing money enriches the printer at the expense of the public who holds the previously printed money. The phenomenon is known as inflation or currency debasement.

Starting point is 01:31:43 Fiat also struggles with durability. Your fiat will only last so long as your bank permits, and even then it slowly loses its value. Your bank can destroy your fiat with the click of a button. Ask a Cypriot. Ask an Argentinian how durable fiat is. With fiat, you were ever dependent on a third party with your wealth. Is that an attribute of money that you find attractive? Some people are comfortable with it because they trust their government, but requiring trust in politicians seems a poor foundation upon which to build a prosperous society. Finally, fiat is not nearly as portable as Bitcoin. Try to send an international wire right now. You can't because it's after 5 o'clock. How quaint is that? You can try tomorrow morning as long as it's not Sunday

Starting point is 01:32:25 because apparently God doesn't want you to use the financial system on the Sabbath. But even when successful, you'll discover it takes three to five days for your wire to arrive. You often have to physically go to the bank to do this. You have to fill out a form on paper while someone making $15 an hour takes that info and types it back into a computer. Why do people put up with this nonsense? Indeed, it is faster to strap cash to an anvil and Fed exit to Tokyo than it is to send an international wire.

Starting point is 01:32:51 Do you really think that that system is going to out-compete Bitcoin in an open marketplace? And you can only send Fiat if you have permission. Try to send it to a family member in Russia. You'll be censored. Want to donate to a relief effort perhaps in Venezuela. Too bad, you'll be censored. Are you sending a suspicious amount? Your payment will be blocked and you better get ready for questioning or outright confiscation.

Starting point is 01:33:12 Yep. The Orwellian nanny state is alive and well, and Fiat currency is one of its most insidious tentacles. Fiat has these poor monetary attributes because it is a tool, and appendage of the state. It exists to serve the state, not to exist market participants. Its attributes as money are intentionally constrained and inferior so as to siphon wealth to the state through debasement and to surveil and control the behavior of the king's subjects. Remember that fiat means value by decree, not by merit.

Bankless - ROLLUP: Will FAILING Banks Bring Down the Economy?!

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