BTC Sessions - They Always Planned to Centralize Bitcoin | Jeff Booth & Scott Melker

Starting point is 00:00:00 The financialization of Bitcoin's, ETFs, custodians, the Treasury companies. I'm curious if those centralizations of Bitcoin, they actually risk the decentralization of Bitcoin. If it couldn't attack, if it couldn't kill it, it just kept getting stronger. And what would it have to do? It would have to co-opt it? I don't believe that it's being co-opted per se, but I believe that they will make every attempt that they can to co-opt it. It has to be as chaotic and messy on the way through, and lots of people are going to get wrecked. Self-custy is so, so early, man.

Starting point is 00:00:27 Listen, if we're being intellectually honest, I don't think that we've reached the mainstream adoption. You're really curious, your view of AI markets right now. What's the marginal cost of a line of code creating other lines of code? So how can the CAPEX be paid back? When that bubble pops, it's going to be one of this most spectacularly large bubble pops. It's going to create so much pain. I just don't think that that's coming. All right, good morning, gentlemen.

Starting point is 00:00:55 Thank you so much for joining me today. very excited to have this conversation. Scott, I actually wanted to start with you today because I feel like you set this interesting bridge between the everyday investor kind of watching price and Jeff who's thinking in decades about what money does to society. So to begin, I want to ask you, do you share Jeff's view that Bitcoin is inevitable so long as it stays decentralized, secure and private? And also, what's your read on the pace of adoption? Because my worry here is, especially kind of post-COVID, I'm concerned that more people are getting sucked into the existing system rather than escaping it.

Starting point is 00:01:25 Wow. Lots to unpack there. So first of all, thanks for having me and Jeff, great to see you twice in two weeks. No good. Big win for me regardless. I definitely share Jeff's belief, obviously, that Bitcoin is inevitable, but I think there can be endless debate as to what that means, right? Inevitable as what I think would be the big question, and that sort of leads into where things currently stand.

Starting point is 00:01:50 My belief is that most of the negative things we're seeing are just a function of price being down and it being a bare market. And for better or for worse, higher prices will probably change sentiment. We'll probably bring more people. And that's just the way that humans generally behave when it comes to what they view as financial assets. But, you know, I think we are in the best place we've ever been with Bitcoin ever. And because prices down, people don't see it that way. But I think if you, you know, take a time machine back four years, eight years, 12 years,

Starting point is 00:02:25 the inevitability was a lot harder to have conviction. And Jeff had the conviction. But I think for most people, it was a lot harder to have that sort of conviction. And now the level of adoption is almost something that would have made you pinch yourself a few years ago. Now, once again, we can endlessly debate whether that's the adoption that Bitcoiners want or what it means. But I think the only way that you can believe Bitcoin is inevitable if it goes directly through the existing financial system and has some meaningful. level of adoption from the biggest institutions and the government. So I think that it's right on schedule. To be quite frank, I think it's just an uncomfortable path to get there. I don't know if that

Starting point is 00:03:05 answers the question fully, but it certainly answers the first part. No, fair enough. I do want to just double tap on a few things there. We talk about Bitcoin being the best place. I'm curious exactly what you mean by that. And then additionally, it sounds to me like number go up is what we need. That adoption is going to come from number go up and hopefully that'll get some more excitement. But with everything going in AI and one of the ideas I've been playing around, with was that COVID kind of pulled forward demand, almost like using credit, that it was such a kind of unveiling, taking off the mass, such a totalitarian kind of crazy moment that we maybe sucked in people early. And I feel like we almost have this debt that's going to take a little while before we

Starting point is 00:03:38 really capture imagination again. But I'm curious how you see that playing out. I think it's just a hot ball of money that's circulating and crypto is no longer in vogue and AI and software memory are the things that are hot right now and that will inevitably return. So I think that what you're describing is more just about natural market cycles and less about actual adoption on the ground. I mean, when you talk about the best it's ever been, think about how many legitimate existential crises we had over the past decades, whether it was a block size, wars, of course, the collapses of CFI in 2022. By the way, it's hard not to conflate crypto and Bitcoin here. So I want to be clear that. I don't think any of those were crises for Bitcoin itself as an asset. But there was certainly a time when it felt like

Starting point is 00:04:26 because of those collapses and that conflation that there was a very contentious relationship with governments and institutions. And there was a legit effort, I think, to kill it. And I think now that is over. It's become a part of the mainstream conversation. The governments, for better or for worse, are planning the way that they're going to interact with it. And that's what I mean by it's the best that it's ever been. Right. I mean, if you zoom out and you, you you are depressed, the Bitcoin is in the 60,000s. I don't know what to tell you, right? Because 10 years ago, it was, you know,

Starting point is 00:04:59 I was buying it the first times in the 1,000, 1,800, 2,000 region. It's crazy, you know, that you could have a negative sentiment of something that's performed that exceptionally well. I just think it's hard to get past the price aspect of it for people to really see the meaningful level of adoption importance that Jeff, I think, can speak much more eloquently to. Well, Jeff, let me get your thoughts on that. Do you think we're in the best spot that we've ever been right now? And what are your feelings currently on adoption?

Starting point is 00:05:27 I think it needs to look exactly like this as it goes through us. When you say financial system, let's just park that for a minute. But it has to go through each of us and our changes in it to move forward. So those go back to the financial system, which most people focus on and most people focus on it. It needs to be going up in the existing financial system. But at first principles, what does that mean? We know that the debt is insolvent today, the $350 trillion a debt in the world is insolvent today, and it's only solvent by giving away your energy by debasing your currency.

Starting point is 00:06:14 That creates misallocation of capital and a whole bunch of people that centralized, money at the top, at the top, that controls everything, giant capital pools. And so when we're talking about those capital pools, they have to understand Bitcoin and they're going to grab Bitcoin, you're talking about something you know is insolvent that gives your, that only is a solvent by your time inside that system debasing you, saying that it wins when they debase you more. Right. That's right. They were the, that's what the, the, the, the crux of the first principle conversation that we're having there is exactly what I said. And so you're cheering that, that capital pool to come in because it's the only way for Bitcoin to work.

Starting point is 00:07:03 And likely if you were there, so the way I describe Bitcoin is different than that capital system. And it's really important because, because I describe it if, if it stays the centralized and secure, that all prices fall like they should in a free market. So I don't describe it in the terms of the existing financial system. I describe it in the terms of what would have to happen, what would be imposed upon us, should Bitcoin stay decentralized and secure. Now, going back to Scott's question, what would you expect if this is, because they can't coexist.

Starting point is 00:07:42 They actually, over a long period of time, they cannot coexist because they're opposites. You have a centralizing system that's only centralizing because you give it more of your energy and government gets bigger, more surveillance, companies get bigger, those companies are the same AI companies that you use everything in and get bigger and bigger by extracting more of your time. So that just turns into one giant surveillance system. And of course, that system would try to attack Bitcoin. And then if it couldn't attack it, if it couldn't kill it, which had been going on for 16 years, if it couldn't kill it through China is going to shut it down, we're going to do this, like every single it's bad for the environment, every single attack, social attack and everything

Starting point is 00:08:33 else. If it couldn't attack, if it couldn't kill it, just kept getting stronger, then what would it have to do it? It would have to co-opt it. Not bad people. Not bad. Just it would have to because the systems are incompatible. One is the free market. One's not. So underneath that conversation, this is why it's such a deep, deep process. We have to decide where we're giving our energy, each of us. And each of us, for Bitcoin to remain decentralized and secure, more people need to move their energy to Bitcoin, spend in Bitcoin.

Starting point is 00:09:14 It has to be private. It has to add a whole bunch of different layers. And that battle, kind of our own hypocrisy in that, trying to make more money in the thing that we know is stealing our time and energy and blaming somebody else and cheering for more of it would have to resolve in us. right and so what that would mean each of us what that would mean is this would be a really chaotic transition because we've never seen a transition like this before in our lives and we're part of the transition there is no bitcoin is us right we're the run we either run nodes or we

Starting point is 00:10:01 don't we either we either spend in it or we don't we either invest in in building layers to add privacy or we don't um so so so so it is so so And there is no thing outside of us. So if we choose, broadly choose, we're going to give all our time to a system that's entrapping us that we know is insolvent. And we're cheering for more money from where did that money come from? Came from us. And so we're cheering for more of the money that's coming from us because those people

Starting point is 00:10:37 know better for Bitcoin price to go up relative to that system. So, but what I just described is so, so difficult to see in each of us because it challenges our own identity. And it's not, and that's why that's why this thing I actually agree with Scott is it's stronger than ever. Even against all of these wars that are happening, BIP 110, Core, Cold Card, everything else, it has to look like this. because we've never experienced something that we actually had agency in that we could decide. And most people, and the vast majority of people are blaming somebody else and living in the system that they're creating from that. But we either have a choice or we don't. Interesting.

Starting point is 00:11:27 Scott, kind of in response to that, I want to get your take on this first because I have a sneaking suspicion which way Jeff would go, but I'm curious to take. So you talked about, I think you both kind of described it would always look this way. And what I'm thinking about is the financialization of Bitcoin. So specifically like ETFs, the custodians, the treasury companies, I agree that I was kind of always going to happen at some point in time. I'm curious, Scott, in your view, if those centralizations of Bitcoin in any way actually risk the decentralization of Bitcoin, if it is a co-opting of Bitcoin. And the kind of catch-22 that I'm thinking of there is that I largely agree the best marketing is number go up.

Starting point is 00:12:00 So them and their hotball of money will probably drive up the price, which would then drive up adoption as well, too. so it almost seems like counter-forces. But I just wanted to get your take on the overall financialization of Bitcoin. Once again, I think that that's the inevitable process and the messy path that Jeff described. So it's funny because when Jeff was speaking, I looked up one of my old tweets because I remember that I once made the unfortunate mistake of using the word co-opted in a tweet about Bitcoin. And I had to look it up to see because every Bitcoinser jumped down my throat. This is in July of 2025.

Starting point is 00:12:30 I said, Bitcoin's amazing, but it's obviously been co-opted to some degree by the very people that it was created as a hedge against. Many of the most ardent early whales have seen their faith shaken and have been selling at these prices. So this was below, it was a sub-tweet to me saying that we were seeing massive selling

Starting point is 00:12:45 from early whales that said that they would never sell, which factually we can see on chain and was true. And in conversations that I had with, quite a few of them, I'm trying to eat on Yago, Bruce Fenton, they said that they had a lot of early Bitcoin friends who had given up because they didn't like the way that it was interacting

Starting point is 00:13:01 with institutions of Wall Street and the government. I'm not saying I disagree, agree. I was trying to state something that I believed was factually true that I had heard on the ground. And people, the Bitcoin community attacked the how could it be co-opted, people sell for different reasons, all these things. I don't believe that it's being co-opted per se. But to Jeff's point, I believe that they will make every attempt that they can to co-opt it. But I think historically what we've seen is regardless of the wrapper that you put Bitcoin in, a meaningful percentage of people who interact with it over a certain amount of time,

Starting point is 00:13:34 eventually come home to doing it what we would consider the right way. Right? So like, I mean, there's plenty of people who first bought Dogecoin or first bought an NFT and are now Bitcoiners, right? Jeff, nobody probably has watched someone's trajectory more closely than Jeff has watched mine

Starting point is 00:13:50 from, and I remember, you know, Nathan, your first question to me was, are you Bitcoin only now, Scott? Because I can't really have you on if you're not, right? I think I responded on Bitcoin mostly. You know, like, I think my joke was, I still own a house, buddy, you know? But, you know, So I think there's levels to it, and we're all sort of on that path.

Starting point is 00:14:07 But I think that a lot of people who buy iBit for the first time will inevitably find their way on that path. So just because they buy it through an institutional wrapper, even if you believe that institution is trying to co-opt it, the inevitable conclusion is it a meaningful percentage of those people end up holding spot Bitcoin in some form of self-custody and believing that it's money. Right. So I am not particularly concerned about the centralization. I mean, I think, you know, there's always these arguments. First, it was, you know, by the way, that mining was too centralized in China. Yep. Right?

Starting point is 00:14:43 And that was the big problem. And then all of a sudden in 21, China banned mining for the 700th time. And then apparently that meant it was centralized in the United States. So what everyone cheered for was that we would, you know, kill the centralization in China and it would go elsewhere, and immediately the same narrative carried through, even though we got the result that we wanted, which was a lack of centralization in China, right? So I think these narratives are extremely sticky, and they take a long time to wash their way through the system. But, I mean, I would hope that all three of us would agree here that anyone gaining exposure to Bitcoin in almost any

Starting point is 00:15:17 fashion for the first time is a good step in the right direction. No, I would largely agree. I actually want to expand on that a little bit, Mark. I think it's a really interesting point that maybe some people share something to be fascinated by, you kind of hinted at maybe that Jeff might have been helping you down the path a little bit or pulling you down the path over the years, maybe sending you some text and bugging you a bit there. I'm curious what it's personally looked for you moving more of your time and energy into Bitcoin. When did this transition maybe start or when you kind of identify was maybe a major turning point and kind of where have you landed now? Do we have a node in the office yet? Are we running a node in the office yet? How far along this path

Starting point is 00:15:50 have we gone? I was also running a node those things are things I did. I don't want to make, I don't want to give the impression that I wasn't passionate about it or didn't understand it from the beginning. It was sort of that I had to, unfortunately, like many humans, learn all the hard lessons very personally to slowly make my way down the path. Right. And listen, I'm not of the belief that every other crypto asset in existence is necessarily a scam. I think there's some good faith efforts for people to do the thing. It's just, I think, that structurally, a lot of them are broken or uninvestable when you start to take a look. And I also, I've always viewed Bitcoin as a completely separate asset class from the rest of crypto, which I don't think a lot of people understand my view on that, but it is how I view it.

Starting point is 00:16:35 It's sort of like, I think you can buy gold and buy Amazon and it's okay. You know, you haven't violated the code of the gold bug. But that said, my time and energy is in Bitcoin because the more you wash through the rest of the ecosystem and the more you kind of see the pain that, people go through and the cycles and the centralized washouts, the more you realize that this doesn't really need to be complicated and there's only, you know, one system that you want to be a part of. And, you know, I think that Jeff, once again, articulates that much better. But once you're in Bitcoin and you start to nominate your life in Bitcoin, and I'm not saying that I'm 100% there, right? You know, it's still living a world where I pay my kids tuition and I go on trips and I spend and I mentally find myself caring about it.

Starting point is 00:17:25 But once you start down that path, everything else seemingly becomes voice because you just realize that it's a waste of your time and energy and certainly a waste of your money. No, 100%. Jeff, I saw you nodding. I wanted to get your response there. Yeah, I think Scott just did a really good job explaining that process. And it's this process that I've watched happened to thousands of people, how it happened to me. Right. And it's why I'm, it's why I don't judge people for where they are, right? So I agree.

Starting point is 00:17:57 It's whatever gets people into Bitcoin the first way that it, and then take more steps. And you'll see as you take more steps that everything gets easier. But you can't see that from the other system. And you can't see it when you're measuring from the other system, what you would do. What would be normal, just a rational actor. Their food prices are going up. house prices are going up. They want a house. They have an idea in their mind of my family living in this house. The house is only going up. The food prices are only going up because money is going down. And so the rational actor is inside that system, which is everything. They're on Twitter, hearing it, everything else, all the economists that they look up to, the telling them, here's how you do this, all of the financial advisors that tell them, the government telling them

Starting point is 00:18:48 exactly why everything looks like this and it's this other person's fault. And so they're in this every day. They're in the news media every day. And their rational thing is not there's a new system outside of that system that I can self-secure and be completely in. All of their energy is inside that system. All of their life is being from that system. So if you gave somebody the rational choice of prices go up,

Starting point is 00:19:17 just naturally, right? And they didn't know all of these things, and they didn't know how they could just remove all of the bullshit, step out of that system. The rational choice would be, oh, I could take Bitcoin and get 11.5% interest rate. I don't have to hold it. Somebody else is going to hold it, and I get money.

Starting point is 00:19:42 Right. And that rational choice, that rational choice, when Scott did it himself with Celsius, What you find is it's not rational because it's built on theft. And those things always get liquidated and you thought you were taking no risk and you get destroyed. And then you, if you don't just wash out and you're completely wrecked, because that's what the financial system is doing, eventually you start to realize what I thought was rational isn't rational at all. And you start to move deeper and deeper.

Starting point is 00:20:12 But how could I judge any single person from making that rational choice and their life, right, and all of this thing, when I had to go through all of the same things myself, and I had to realize at the bottom of everything, I was also a hypocrite that I was telling people what to do in Bitcoin. Well, I wasn't. Right. And so, so, so once I've made that choice, now I can, I can be like, it's okay, right? That nobody controls me. I can do what I want. I am free. I'm investing in freedom tech. I'm completely free. And everything gets easier. Everything gets easier.

Starting point is 00:20:51 But I can only see how much easier now from a new position that I wasn't in before. Right. And so now I look at all of these people in their belief system that's trapped within the greater belief system because money is superordinate to everything. And they believe it so, so strongly, they're giving it more and more strengths. You say what I'm saying. I sound like a lunatic. But they're born with it. They're born with it.

Starting point is 00:21:17 Parents were born with it. They're, every single piece of media, it's all the same structural problem. They have no idea and they're listening to, to charlatans or people, well-meaning people trying to, inside a system that cannot fix it.

Starting point is 00:21:35 It's not a person problem. It's a system problem. And so, so that would be, that's why this has to look exactly like it looks. There have to be blowups. There have to be, Because what would I do?

Starting point is 00:21:49 I would, not I would because I understand this to the core, right? But I understand why people would take leverage against their Bitcoin to buy a house. And the Bitcoin price goes down and they get margin cold on the Bitcoin. They don't own Bitcoin anymore. And it has to go through that because we've never lived in the free market. All of our ideas for what it looks like are coming from a manipulated market. and it gives so much weight to all of the ideas within the system, we can't even see that how simple, how absolutely simple the premise is.

Starting point is 00:22:26 The interesting thing, whenever I hear Beth talk about the, you know, the abundance of deflation. And when I talk to my friends who are as deeply ingrained in this as possible, the Wall Street guys, you know, I went to Penn in the 90s. All my friends are either private equity hedge fund or somewhere, they think I'm a lunatic, right? But imagine a world where you didn't worry about the price of Bitcoin going up, and that wasn't the big billboard advertising why people would want it,

Starting point is 00:22:56 whether we don't say that's the reason, but we know that people line up at the door to buy something when it's going up and they don't like it when it's down. If we just talked about the fact that if it just stayed the same price, but everything became cheaper, how excited they would be. If we could somehow eliminate the entire price part of the Bitcoin story and just say, as Jeff has told me before, you've told I don't know the exact numbers,

Starting point is 00:23:17 but the value of your house in Bitcoin is it's, you know, obviously like I buy a house, you know, and my friend CJ Constantinos, he always talks about how he bought a house for 100 Bitcoin, you know, however many years ago and what that's now, you know, what is going to do that? 10. Yeah, so I think if we could somehow, you know,

Starting point is 00:23:37 follow in what Jeff has written and make people understand that you could just hold Bitcoin, not look at the price in dollars and watch everything else go down, how compelling that would be for most people. Like if you understood that your groceries were a tenth of the price that they used to be, right? And then you start to realize that that system that you give all your energy to, the only reason the prices go up is because you're giving all your energy to it. And you're thinking that there's a different, it's either Trump or it's Biden or somebody else. It's not capitalism.

Starting point is 00:24:10 It's not the free market. is has nothing to do. It's a control system. So if all these other people are being controlled and they don't know the answer and you look at all these people and it's getting crazier and crazier and crazier and crazier, shouldn't you ask,

Starting point is 00:24:28 what don't I see? Where might I be getting controlled to? But once you understand that, you tune it all out. You know it has to look like this. You don't give it any more weight than it deserves because it's a system completely built on theft. Completely.

Starting point is 00:24:49 The money can't be paid back. It only can be paid back by stealing more from you. So what would you expect from that vantage point everything to look like? If you're measuring Bitcoin within that system, what would you expect Bitcoin to look like from your, perspective. So it's just, all these things become really evident. And I've spent a lot of time, as you know, Nathan, and Scott, a lot of that thinking of kind of what this would look like across populations and why they would misunderstand this, what would what people would do to try to

Starting point is 00:25:29 co-opt it, all of the different layers on this, and what would be with the response from Bitcoin. And so I just want, as the, the fights and they even, the co-option if it existed, also creates a reflexive action for a whole bunch of people to say, say, to create value in the market, to keep it more secure, to make sure it's private, to, to create. So, so I don't even, I'm not mad at all about all of the fights and everything and all the centralization because it creates the opportunity for entrepreneurs to solve the real problem underlying that centralization in the first place. One company I like pointing people to when they ask about Bitcoin mining is abundant mines.

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Starting point is 00:27:03 Scott, I want to kind of do that. double tap on something going back for just a moment here. I think you mentioned that you were, was it Penn State? That had that correct? It was Penn State. University of Pennsylvania, but everybody thinks it's fine. My apologies. This is my Canadian lack of knowledge about the United States.

Starting point is 00:27:16 Hilarious. There was such an insecurity about it at my school that they sold T-shirts in the gift shop that said not Penn State. Okay. That's true story. So, yes. The old crew from university, the frenzy still have in the existing financial system, they're already very well aware of Bitcoin. I'm just kind of curious.

Starting point is 00:27:33 and I'm gauging, so I have this idea. We've heard it kind of an academia that kind of science moves forward one funeral at a time. Like I think everyone's aware of Bitcoin at this point in time. The people that are most open to we've probably already got, it might be generational kind of transitions going fired. It might take a little bit longer than maybe any of us wanted to. But with the friends in the existing system,

Starting point is 00:27:53 I'm curious, there's been so much that happened to Bitcoin over the last couple weeks between Cold Card and we had bolts and we had BTC pay server and Zeus wallet. And then we had the BitFle. intent softwork. Did they have any, did it make it outside? No, they had no idea.

Starting point is 00:28:09 No, so listen, it did, I think Cold Card hit the Bloomberg terminal. Okay. For about five minutes. And, you know, I think most people are savvy enough to say that Bitcoin wasn't, they didn't believe Bitcoin was hacked, right?

Starting point is 00:28:22 They understood that it was some, a custody solution. I think that that was a very internal crisis, you know. In fact, I think we were talking about this. I was talking about this, with someone this morning. But if you're at an institution, first of all, these guys are all

Starting point is 00:28:38 wealthy, which is why they don't care about Bitcoin. For better or worse, they're in that system, but they're doing quite well. If you're, you know, in your house in the Hampton driving your singer Porsche, I don't think you really, you know, are going to need to get it necessarily as fast as everybody else. But having a conversation this morning that for the, if, let's say that at the most cynical view institutions are trying to co-opt it, or at least they're trying to meaningfully, you know, gather assets under management. These are the kind of things that would theoretically excite them, right? Because we've seen a narrative in the past few weeks that, okay, if self-custody is broken, people are just going to buy the UTF and call it a day.

Starting point is 00:29:12 Right? And so I, and I think there's people even point to the data and say that there was a spike in UTF buying. I don't know that I necessarily buy that or if it's, you know, just coincidence. But either way, I do think that there are a meaningful amount of people on the margin who haven't gone down the self-custy rabbit hole or new to it who are just going to say, F this, I'm going to buy an ETF and put it in my Schwab account, because I know it's quote unquote safe, right? And those are the people who I maybe still haven't quite gone far enough down the rabbit hole to view it as money.

Starting point is 00:29:40 They still view it as an investment. They're still concerned with price going up or how it performed in the sharp ratio and all those things which I think are irrelevant to talk about. But on the margin, I do think that more people will be pushed towards, quote unquote QC, qualified custodians, trusted entities to hold their Bitcoin for them because they're more scared of self-custy

Starting point is 00:30:03 than they were a few weeks ago. So it's a long way of saying, I think the people who are not deeply in the echo chamber never got that far any ways to care about those things. But if you are here, there could be a bit of a crisis of confidence for some people on the margin. No, 100%.

Starting point is 00:30:16 And then even, I think I saw, again, I'm not saying that this was, it was like suspicious timing. I think it was I bit lowered the in-kind redemption from like $25 million to $1 million. I was like, oh, that was convenient. We're just lowering the door a little bit. I started from all my friend Hunter at Bitwise,

Starting point is 00:30:27 you know, who I love. And I think he kind of put it in, you know, like qualified it. He said, I'm not saying this is a good thing for Bitcoiners, but somebody did just convert $8 million in spot Bitcoin to the Bitwise spot ETF, right? And he kind of pointed out the fact that it's happening

Starting point is 00:30:42 without necessarily saying, I believe people should move their money from the end to the ETF, right? So it's out there. The narrative is out there, and I would imagine that there's institutions who see an opportunity there because they believe in their product.

Starting point is 00:30:57 And I don't think that that makes them evil or anything, right? They deeply believe in their product and want people to, to buy more of it. So I do think we're going to see some of that while this self-custody situation sort of washes through. No, fair enough. And before I come to Jeff, Scott, I just want kind of like your personal take on this. From all that that happened, and again, I am in no way trying to minimize I'm in no way trying to minimize the huge loss in like personal suffering that people that got affected by this went through. But I think we're just like over 2,000 coins. And if I compare it back to like

Starting point is 00:31:29 Mount Cox, like 170,000 coins, if I compare it back to like Mount Cox, like 170,000 coins, if I compare it back to, was it Codriga CX, I think it was like 60,000. It was, it was relatively small compared to like Bitfinex and other big hacks and things we've had in the past. And even hearing that, like, you know, it didn't, like it made you cross the Bloomberg terminal for all the five minutes. That actually kind of put me back on my heels a little bit in the sense that I feel like we have a lot of work still ahead of us. We're not nearly as far along the self-custody journey as I perhaps thought. I, in some ways, like I'm glad less people were necessarily affected, but I realized that Maybe we're not as far along in Bitcoin adoption as I would have hoped or would have thought at the time.

Starting point is 00:32:05 I just want to get your personal take. Well, it goes back to what I said before. The adoption, because of where we are at on the trajectory through the institutions of government, I think most of the adoption is now going to start with the wrapped products and then find its way down to self-custody. I don't think the majority of people who are getting into Bitcoin right now, and maybe I'm cynical, are buying Bitcoin for the first time and sending it to self-custody. That said, I was pretty shocked at how much. many people's data, Treasor and bits of gold and SafePow were able to leak, because that means

Starting point is 00:32:38 tens of thousands of people have been buying hardware wallets. So I could be wrong, actually, because that, I will say, I was shocked that it was like, you know, 35,000 people or whatever the number, I think SafePow was 35, the other one was 20, whatever it was, that many people have bought wallets in the past six months to gear and were able to have their data leaked. So maybe I'm just kind of not seeing the forest of the trees here. But I think we're very, I mean, self-custy is so, so early, man. Listen, if we're being intellectually honest about where we're at, like when the arguments come down to rolling dice for entropy

Starting point is 00:33:11 and the quality of your dice, I don't think that we've reached the mainstream adoption level yet. Yeah, but keep going on that. So there needs to be different implementations that, that obviously there was a kind of a free market attack here or failure here, that it got seen really quickly, and then the reaction is one of two things, right, or one of three things.

Starting point is 00:33:38 I'm going back. I'm going to trust somebody else. At the bottom of all Bitcoin, self-custody is the same thing, right? Whether it's an institution or yourself, right? So I'm going to trust somebody else, and I'm going to increase a different tail risk that I'm not actually, I don't actually have Bitcoin. I have an institutional version of Bitcoin. that is going to get captured in one way.

Starting point is 00:34:02 Or I'm going to learn more about, because even at the bottom of that cold card, if you didn't dice roll, what you were actually saying, I'm not saying people should dice roll, but what we were saying is I trust them to do the job because, and they say, don't trust, don't verify. And their entire marketing was don't trust verify.

Starting point is 00:34:21 Yet most people trusted. Right. And most people do the easy thing. So they don't see their own agency in it. Now that will create the third, that kind of radical agency that we've never had, that we have to trust ourselves. Now that creates the third thing,

Starting point is 00:34:38 a market opportunity to solve that problem in a different way, that a whole bunch of entrepreneurial talent goes to solve to make this easier to be able to do this, to be able to, and this is, but those are the choices that come from these things, and it's not just one, it's all of the choices combined.

Starting point is 00:34:57 All are happening at the same time, across this new paradigm. And each person is welcome to make whatever choice they want. But what ends up happening is they also have to live with the consequences of that choice. Because this new thing is going to liquidate people over and over and over again because they've never actually lived in the free market. They've never lived with the consequences of their choices as deep as the, is this is. So this is kind of why this has to play out like this.

Starting point is 00:35:34 No, fair enough. It kind of even just immediately reminds me of something like the education system and the public education system where we've had it for so long now. People can't envision like, well, if you take it away, you're taking away schools. It's like, no, we can still have teachers in schools. It's just going to be provided by the free market. And funny enough, Jeff, to that point, I just dropped a recent interview where I had someone from Jade from passport, from Trezer and from Seed Siner, kind of all discussing what it happened. And one of the, I think the big takeaway from that is that we need the free market of competition in order to figure out the best kind of custody solutions and optionality kind of going forward. So diving in a little bit deeper, Jeff, putting maybe on

Starting point is 00:36:08 your, you know, maybe your investor hat for just a moment here, how do you think about it in terms of usability for Bitcoin adoption and self-custy versus the security and trust tradeoffs? How do you, what's your kind of take on the situation? How do you view that going forward? So I loved Scott's tweet about what the, so I realize I'm in an echo chamber. And at the very tip of that echo chamber, we see tons of companies competing to provide more value and tons of different ideas. We're going to get that wrong. Some of the things we're investing are going to fail in the free market.

Starting point is 00:36:43 Some are going to be successful. And it's hard to tell you exactly what that looks like. It's an explosion of ideas that most people don't see until they're using the thing. Right. and all of the different ideas of that. But if I just said, take my mom into Bitcoin or to somebody and or most of my friends that I would have this conversation, the mental bandwidth it takes to be able to do this, right, and across all of this things and this different thing and compare that to,

Starting point is 00:37:21 I just want to live my life, right? I just want this to be easy. The tradeoff is simplicity. We use Google. We fall into a trap. Right now in AI, what's happening is in some of the frontier models that are guardrail to not let you see everything else are actually, but they're better because they know you.

Starting point is 00:37:47 You're giving them feeding your information and you're trapped in an ecosystem. You don't see some of the other models. So people will make these choices over and over and over again, because the simplicity a lot of times comes, and I'm going to trust somebody else at the bottom. I'm going to trust somebody else not to take advantage of me. Look at the entire monetary system where money is lent into existence. And you have a bank that protects your money,

Starting point is 00:38:14 but it's not protecting your money. It's stealing your money. Yeah. Big institution, big walls, giant, giant, places you go to because they have vaults and everything else. The money is not taken from the vault. It's underneath that, right? When you don't know it.

Starting point is 00:38:31 But what it says is it's so easy for us to abdicate our responsibility to somebody else because we believe in them. The monetary system wouldn't look like it did, does, and all of these things if we didn't do that. So it's just the big point, Nathan, is it has to be as chaotic. and messy on the way through and lots of people are going to get wrecked. I'd wish that didn't it wouldn't happen. I wish people would take more responsibility. I wish more people would move their time, but that's up to them to decide. Yeah, I asked the question, I guess, to both of you. So you talk about bringing grandma and, you know, inviting your mom or your friend. Like, I'm actually torn at how I would tell a brand new person in 2026 right now.

Starting point is 00:39:23 now to custody their Bitcoin the first time that they buy 0.1 Bitcoin and want to hold it, right? Because that, what Jeff just described in the dice and the entropy, it's kind of this infinite regress of responsibility. The people who got hacked on cold card thought they did everything right. And they, and it's very hard to say to them, hey, you should have done more, you know, you should have educated yourself further and known, right? I mean, you hear the catchphrase, self-custody, you are told that this is a device, you actually generated a seed phrase and you put it on metal and you hit it away and you still lost your money, right? Or you have gone down the rabbit hole and bought multiple devices and then all of a sudden your data is leaked

Starting point is 00:40:12 and some guy shows up at your house. Right? So it's a very, I think it is challenging time. Maybe for the first person who does buy Bitcoin, if it's just a little bit and they're interested in it, buying it and, you know, keeping it on an exchange isn't the worst thing in the world for the first little while while they learn more about self-custody. I'm just not sure self-custody is ready to be the first solution that somebody who knows nothing jumps into in 2026. And that's saying something for me because I deeply believe in it. No, 100%. I'll jump in there. And then, Jeff, I'm curious, your response there as well, too. This whole event, fiasco, calamity has been unbelievably eye-opening. It's been horrifying and shocking in some respects. It's been,

Starting point is 00:40:53 incredibly encouraging in terms of the response from the Bitcoin community at large people jumping on this the red team people getting out there we had like uh wicked and Portland hoddle and Shinobi were in spaces for what felt like 24 hours a day for maybe like nine days straight just helping people and get or get off the cold card get the safety get the information out there and so one of the big takeaways that i've had that i've been really playing around this idea and and Scott to your point i'm having similar sort of thoughts and in conversations is i think that originally um i had a bad sort of here bad sort of analogy in terms of gold, where, you know, if somebody goes and purchases gold and they put that in their vault, they're kind of done. It's over. The way that I've been looking at

Starting point is 00:41:32 self-custody as of late, particularly with needing to stay up on updates and security updates with regards to what the Red Team's finding, what everyone's finding using like Kimmy K3 now, is that I don't think Bitcoin self-custody can ever be a passive state. Kind of like nutrition or exercise, you must always be participating it in some way, whether it be that improving your skill set, whether it be learning about any updates or things that are going on, we're about improving your overall security model. One of the most horrifying things that I unfortunately saw a lot of when we were helping people move is that there were people that I directly worked with.

Starting point is 00:42:06 And we got set up a couple of years ago. It could be a cold card with like a passphrase or straight to multi-sig. And at the time that we worked together, they'd mastered everything. But they hadn't touched it in like two years. Things change. And they completely forgot. They completely forgot how to use. use the device. And especially in a high emotion in a panic situation, they just weren't able to do it.

Starting point is 00:42:27 So to your point, I've had what happened by the way. Really? Well, not exactly, but there was a time where I had like, you know, in the earlier days, I had an old ledger and it wouldn't come online. And then I typed it in twice. And I was like, how is this wrong? And the third time it's over. And where, you know, like, I think everybody probably has those panic modes with self-custody in the earlier times of doing it. So I'm not, yeah, I'm not surprised to hear those stories. I do agree that it's an active pursuit. I just don't think most people probably have the time and energy for it, if that's how it eventually evolves.

Starting point is 00:43:00 But we will find something. I agree. When you tell somebody now, you know, like what's your first want to buy a little Bitcoin? Yeah, no, everything you guys are saying, I think, is exactly. I think it's an active process. I think that that active process will inspire a whole bunch of new solutions that are easier to use out of this crisis. And it's really hard right now to tell somebody what to do.

Starting point is 00:43:24 In fact, so I never promoted the cold card or never talked to people about that thing, partially because it is such an active process and people need to learn themselves. And they need to, so because the security model has tradeoffs everywhere. So the tradeoff, if you said multi-sig security, different vendors and security, the trade-off is a complexity. If you're never going to look at it again, you're going to forget. what are the how to put this together and that becomes a real risk so so um so um and and so and so scott i and i agree and nathan i just want to say and some of i know you guys

Starting point is 00:44:04 were kind of promoted partly promoting uh gold card but in the right way dice rolls and everything else but what you guys did um i can even just imagine like how much time you guys spent i sent a note to ben i had a whole bunch of people that uh that i was helping and behind the scenes So you see the other side of all of the people that giving their time to try to help people, and then in some cases donate to people who lost capital in this too. So you saw the brutal side of this and the beautiful side of this at the same time, which you'd expect in who we are. I didn't promote Gold Card, but I promoted Voyager, and I was using it, right?

Starting point is 00:44:47 So it's part of, unfortunately, it's part of the learning curve. when you yourself are deeply passionate about something, doesn't mean you can see every potential pitfall, right? And you go down, you know, I'm very open about that, obviously. And it is what it is. But you tried to help people. I tried to help people. And here we are.

Starting point is 00:45:06 It's just very, it's a very interesting crossroads, I think. I think a lot of people have their kind of come to God moment in the Bitcoin community over the past few months. Yeah, it feels like it all got shoved into like a 10-day period. Like we just took everything and rammed it into a 10-day period. And even like I did. Like I loved the cold cart. I used it almost every day. It was one of my favorite tools out there.

Starting point is 00:45:30 I promoted it and shared it and put my friends on it, put my family on it. And I was wrong for that. It's been incredibly, let me say, incredibly humbling and having to reevaluate prior assumptions and things that I was building up to begin with. But even just quickly jumping back for a second, Scott, to your early point of like someone brand new, one of the things that I would definitely be encouraging to that point. is even before you get off the exchange, like just show me, show yourself, can you move this to a hot wallet? Just a small amount and move it back?

Starting point is 00:46:00 Can you recover it from your seed phrase? Like really make sure that the base knowledge that we're building on is in fact there, that you've got at least that before we start adding to Jeff's point, additional additional complexity. I mean, I use CASA multi-sig and have for years. I should never, none of us should probably share exactly what we're doing. but you know for part of it you know and they're very active

Starting point is 00:46:23 in reminding you so it's definitely on you if you haven't like you know rotated your keys or refreshed your devices or any of those things or tested it every once a while you know

Starting point is 00:46:33 so there are I think providers you know that at least do their best to make sure that you're following the recommended steps to remain on top of it but it's a job yeah I think I think just

Starting point is 00:46:48 one of the the ideas and it's still kind of hot wall as there could be a risk of the code malicious code and over but if you but if you looked at fedament overall right and if you looked at that type of solution inside this type of solution you can run a multi-sig setup or or guardian setup and you don't have to know the guardians so and those guardians are completely private from anything else and all the transactions that happen on top of that. So if like Bitcoin core or Bitcoin, the software that runs the whole thing is secure, then then there would be no way to find the individual guardians and there would be no way to attack that. So so so as that ends up happening,

Starting point is 00:47:44 So then you could store an amount of money and you could be totally in a private federation that no one had access to, to did you even have it? Right. What did it look like? If you trusted that in your own federation, you might be able to add your family members to that same federation. And you provide a different security model to look at this. I'm just highlighting there's a whole bunch of work behind the scenes that will evolve into different. security models with different tradeoffs and the like that will spread this and make it,

Starting point is 00:48:20 I suspect, make it a lot easier to use too. That's what I hope. And I imagine that we will get there again for those entrepreneurial forces, people trying to provide value. We're going to see new solutions, things we might not have even thought of yet come. I want to quickly actually do a bit of a hard pivot because I want to talk a little bit about AI as a forcing function and whether or not we'll see kind of AI calamity before maybe seeing Bitcoin adoption.

Starting point is 00:48:41 But even before that, because out of my own curiosity, it'd be remitimate. if I didn't ask. Scott, you probably have forgotten more about the markets than I'll ever possibly know. So I'm just actually really curious your view of AI markets right now in Toteli. To me, it looks bubbly and frothy, but maybe I'm wrong. Markets can remain irrational longer than you can remain solvent as well. I remind myself every time I try to call a bubble. It's definitely a bubble, but within the system that Jeff often describes it's hard to handicap,

Starting point is 00:49:14 how long those bubbles can exist or how large they can blow up. But I think we're still in the midterms of expanding AI bubble. So I would be really remiss to try to call the top of that. I think that it's a hard question because once you realize that most of it is the denominator, not the actual value of it, it's hard to kind of express an opinion. I think that AI will continue up. I think they're going to spend billions and billions, you know, hundreds of people, billions of dollars a year increasing the CAPEX.

Starting point is 00:49:47 So the fact that we're still in the infrastructure build out, I think, and you can see it with Bitcoin miners, all becoming AI data centers, right? I can see where the excitement is. I think it will continue to grow and rise, but this is one of those things where when that bubble pops, it's gonna be one of the spectacularly large bubble pops is gonna create so much pain.

Starting point is 00:50:08 I just don't think that that's coming yet. So I think, but once again, that will probably look like the dot-com bubble where everything exploded and then the six or seven biggest companies in the world kind of arose from the ashes, right? So I'm not excited to buy stocks. I'll just say frankly, and I've been saying this for a while, so maybe I've missed some of the boat. But I'm much more excited to buy Bitcoin in the 60s if I'm viewing it through an investment perspective because you have to have multiple lenses that I would be to buy, you know, have bought, buy any of these big IPOs that are coming or, you know, Micron or any of these things.

Starting point is 00:50:48 Also, like, I think there's a degree where you just become comfortable with what you become comfortable with and you don't really need to look so far outside of that when you have conviction. And so, like, I have the part of my life where I spend hours a day trying to find the next big thing that's going to go up are over. You know, I'm very happy to just take, what I have and put it in Bitcoin and all of the days. So I think AI is, there's so many different angles to discuss on it, but it's hard to give one, I think, umbrella opinion. Beautiful. I love it. Jeff.

Starting point is 00:51:26 Yeah. So similarly to Scott, if you, if the only caveat, and it is the only one that Bitcoin remains decentralized and secure, it's imposing the first free market that ever exists. Not maybe. For sure. imposing and relative to the first free market that ever existed over time, not the bubbles and everything else. When liquidity drains everything out from everything else, you can't sell your house and you can sell Bitcoin. You can leverage Bitcoin and everything else. So you should expect these giant fluctuations in price of Bitcoin from the other system because of the massive

Starting point is 00:52:03 nonsense that happens in the other system. But if it stays decentralized and secure, now what I keep saying that, it is imposing the first. free market and all prices are falling relative to it, period. It isn't guessing what I just said. It is a function of that. And that would be really confusing. So then you can simplify your entire life and you can say, how does it say decentralized and secure? What are the risks? What does that look like? Is it what trend is happening? And am I a part of this system that is moving that way? And why am I buying all? Why am I over buying a house? Like if I want to sell my very coin to buy a house that's outrageously priced because it's going to get taxed back by this

Starting point is 00:52:48 existing system that's manipulating money, right? I could choose to do that or I could just choose to simplify my life. So that applies to everything. It applies to it. So what would you expect in the free market? Let's take what AI is. And you've heard me say this over and over. Prices in a free market trend towards the marginal cost of production. The marginal cost of production of a line of code is zero, is zero. That's why your calculator app is free. So the next question is, what's the marginal cost of a line of code creating other lines of code? It's zero.

Starting point is 00:53:26 So how can the CAPEX be paid back under what I just said? It can't. You're going to see that observed through Bitcoin because prices are falling at that rate. And this other system is driving more and more bubbles and energy and non-eastern. sense to try to get you to invest in things in it, right? When the whole thing's being repriced by what I just said, what I said. And so I run a self-learning model on a different laptop not connected to this that is constantly learning on it on itself and all of these different models.

Starting point is 00:54:04 Fable created it, deep seek audited it, created, found, found holes in it. then the entire thing started taking off, and it's not using one model, it's using all the models. And part of those, some of those models are on my laptop now. They're free. The one that's running on my laptop for free, completely free, that is competing with these ones and different pieces of it that are competing with these ones. Six months ago, the one that is free now would have been the best model. and I would have paid for it. Six months ago.

Starting point is 00:54:45 That's how fast this is going. So everything is going to free. So how do you pay back all of this cost? How do you invest in like Scaza? You're going to go and invest in one of these AI companies at the top, against what I just said? Put it in Bitcoin. And repriced it. And you're repracing everything instead of taking a bet on somebody's execution against this, against this,

Starting point is 00:55:10 against the free market. I did want to ask you, Jeff, quickly as well, too. So where, how do you think about where to invest? I know we have orange juice now. So what kind of calculations if we're looking outside of Bitcoin are you considering? So orange juice was a, and I said this on Scott's show too, orange juice was a revelation of what I just, what I've been saying a long time.

Starting point is 00:55:34 We had a whole bunch of LPs in our fund that had been watching what was happening and owned really good. cash flowing businesses and we're starting to ask us, how do we move more of our time into Bitcoin? We could sell our business for cash in the existing system to private equity and all of the capital structure of the existing system feeds on the same broken model and they're leveraging the business to be able to extract value. Sometimes their businesses would be really great, like take a food business and it does the right things, puts great ingredients in and everything else. and you sell it to somebody else who needs to leverage it,

Starting point is 00:56:10 and they change all the ingredients, and essentially fool buyers to keep buying it while they're, we'll put packaging up and selling it to someone else. That whole model looks the same because it's all broken. So we started getting inquiries from some of the businesses. How do we move more of our time into business? We've had this business for three generations,

Starting point is 00:56:33 and it's printing cash flow, and we, We love it. And so what we thought about is, what do we create a long-term capital? We never have to sell. We're just moving that capital into Bitcoin, into Bitcoin, and we take their business, and then we start accepting Bitcoin. We start potentially paying employees in Bitcoin.

Starting point is 00:56:54 We start to, so you're moving Bitcoin into Main Street, because those people who understand Bitcoin at the level that we do and what's happening, they also see, I want to build long-term value. I want this to be generational business. We're not looking to sell. We're looking to buy and run these forever and move the entire ecosystem to this.

Starting point is 00:57:19 So it's not a stock play. Love it. Gentlemen, this has been absolutely fantastic. Scott, where can everybody go to follow you, your videos, all that fun stuff? You can find me at Scott Melker on X. Everything else is linked there. Thank you. Beautiful, Jeff. We're going to go to follow you, my friend.

Starting point is 00:57:35 Well, no. Before they follow me, go to jeffreybooth.com just because there's only very few things that I'm actually in social media at all anymore and they'll be listed there. And too many people try to scam and try to pretend they're me and take your money.

Starting point is 00:57:51 I will never ask you for money. If you enjoyed this episode with Scott and Jeff, make sure to like and subscribe and check out last week's episode with the best and the brightest from the Bitcoin hardware industry.

BTC Sessions - They Always Planned to Centralize Bitcoin | Jeff Booth & Scott Melker

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