On The Brink with Castle Island - Robby Gutmann (NYDIG) on the Institutionalization of Bitcoin (EP.193)

Episode Date: March 15, 2021

Robby Gutmann, CEO and Co-founder of NYDIG, and Co-founder of Stone Ridge, joins the show to talk about his firm's Bitcoin and digital asset ambitions. In this episode:  The origins of NYDIG and Stone Ridge NYDIG's product suite and differentiation  NYDIG's deliberate pro-Bitcoin stance  Why Bitcoin is such a compelling opportunity to Robby Bitcoin's pace of development  How much attention NYDIG pays to core development Is there a contradiction between open source money and institutionalization?  What explains client enthusiasm for Bitcoin in 2021 Sponsor notes: Copper is transforming how institutional investors engage with digital assets by developing award-winning custody and next-gen trading infrastructure. Headquartered in London, the firm is scaling rapidly across Asia and North America to bring its suite of products to a wider pool of institutional investors. To learn more visit copper.co or reach out on Twitter, @CopperHQ

What's up everyone? Welcome back to On the Rink with Castle Island. This episode is brought to you by copper. More about them later in the episode. So today we're sitting down with Robbie Gutman, who is the co-founder and CEO of Nidig. He's also the co-founder of Stone Ridge, the Nidig parent company. So in the last year, I would say Nidig has really gained a lot of salience in the crypto industry. They're an institutional service provider and asset manager for the crypto space with a heavy focus on Bitcoin. I was incredibly impressed by Ross Stevens, the founder and executive chairman of Nidig, his conversation with Michael Saylor, and I knew I wanted to talk to them and gain a better understanding of the firm and their approach to Bitcoin. So I asked Robbie some pretty tough questions in this episode. I wanted to get a feel for their approach as a business.

and how they feel about the institutionalization of the industry. I've been really impressed by Nighting from afar, and this was a great opportunity to learn more about the firm. Let's jump right into the episode. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac.

the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people started to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. So Robbie Gutman is the CEO and co-founder of Nidig. One of the, I would say, explosive entrance into the scene.

They've actually been around for a while. They were just relatively quiet for a long time. but now virtually everyone in the Bitcoin space has heard about them. I was so excited to get Robbie on the show. Robbie, thanks so much for coming on. Nick, thanks so much for having me. Big fan of the show and really excited to be here. All right.

I mean, this is just such an explosive time for Nydig. This morning you announced that the chairman and CEO of New York Life is joining your board of directors. not only that, I think it was yesterday, you announced a $200 million round of financing from some pretty stellar investors. So first of all, congrats. That's really unbelievable almost. Thank you. We are honored and thrilled to have each of those firms as partners and to have Ted join the board. Couldn't be more excited, couldn't be more grateful, exciting times for Bitcoin and for us. So Ted is the chairman of New York Life is an insurance company.

We've also seen Mass Mutual take a stake in Bitcoin. Tell us a little bit just before we get into it about, you know, why insurance firms would be interested in Bitcoin and the crypto space. and maybe how that also is representative of like changing market narratives and changing perceptions around the asset class. Sure. And, you know, I have to say that both New York Life and Mass Mutual are some of the most thoughtful, forward thinking, cautious yet bold investors that I've ever had the pleasure of working with and couldn't be more excited to expand our partnership with.

each of them. I think generally, especially for life and annuity companies like New York Life and Mass Mutual, they're, so those two companies specifically, in addition to being very thoughtful investors, they take their obligations to their policyholders extremely seriously. So New York Life is AAA, Mass Mutual is AA Plus. They've been around over 150 years, each of of them and, you know, they, they, they both plan to be around for another 150 years, if not more. So I think that's the big picture context within which I would set the answer, which is they have long dated dollar denominated liabilities. And in a world with yields at or below zero in some cases, life and annuity companies have to price their policies on a go forward basis,

on what they see in terms of the yields available to them on that particular day. And so I think of all the investors in the world, they're by the nature of their business, forced into a kind of acute honesty about what's going on in the world. And so because the yields of available to them in what they've historically done in their general account are so low. They are looking at prudent alternatives for ways to tweak their general accounts on the margin. Obviously, these are highly sophisticated conservative investors, but on the margin, they are looking for ways to tweak their general accounts to make them confident that they can meet their long-dated obligations to their policyholders. That makes perfect sense. It's just, it's so interesting to see

over 100-year-old firms, you know, starting to think seriously and embrace an asset class that's about a decade old and has only really been financialized for a couple of years. But it sort of makes you reflect on how stable Bitcoin has been over its short life. And it certainly gives me confidence that Bitcoin is going to be around for the foreseeable future. In terms of NIDIG itself, so there's this amazing presentation from your colleague, Ross Stevens, at the Michael Saylor conference where that was almost like a coming out party, I would say for Nye DeG in terms of, you know, that was the first time a lot of Bitcoiners heard about the firm. But you guys have actually been in market for a number of years now.

So maybe just briefly recap us on the origins of the firm in Stone Ridge and your trajectory to date. Sure. So you heard from Ross at the micro strategy conference. I agree. It was outstanding discussion between him and Michael. And so Ross is founder and CEO of Stone Ridge. And myself and my colleague, Yenzo, are co-founders with him. Yen and I have worked together since 2007, and we joined up with Ross in late 2011, early 2012, for what ultimately became Stone Ridge.

And the original idea in the Stone Ridge asset management business was fairly simple, but has gained a lot of traction over the last 10 years or so, which was simply to index things that haven't been indexed before. Like, that was it. No second sentence. And if you look back over the last 40 years or so, you know, we have the view that the index fund in the equity market is one of the greatest financial innovations for the individual investor that we've seen in a half century or so. And but it took a long time, really only in the last 10 years or so, for that innovation to be applied in other asset classes. And so we've brought it to markets like marketplace lending, single family residential real estate and reinsurance. And as we as we ran together, the Stone Ridge Asset Management business, one of the things that we've really tried to focus on is a high level of discipline about what ultimately makes it to market and what doesn't. So as we've been doing this all together for going on 10 years, we've really only done nine things. Or rather, you know, only nine things have made it to Broadway.

Everything else has been left on the cutting room floor. And that's a particular focus of ours on creativity and innovation. We actually try a lot of things in-house and disregard most of them. And so the things that are left that we actually bring to, our investors have have been through a lot of work, a lot of deep thinking, a lot of iteration before we actually take them live. And so the genesis of the Bitcoin product or the digital asset side of the business, because I guess NIDIG obviously it stands the dig and NIDIG is digital investment group. Am I getting that right? That's right. So how did that emerge? Who, you know,

His idea was that, how did that get brought to bear? Sure. So Ross and I in particular have been interested in crypto broadly and Bitcoin specifically for a long time. And actually the idea of a, under this heading of indexing things that haven't been indexed before, an idea we had on the whiteboard for a long time was a cryptocurrency index fund. And we started incubating that in-house in late 2015. This is actually a process we follow with all our asset management strategies, which is we incubate them in-house with our own money before they ever see the light of day. And as we studied and learned and researched and got more

and more convicted in the strategy, we got bigger and bigger in our balance sheet investment. And we have the nature of that business is highly regulated, large institutional investors that do deep, deep, deep diligence. And what we found is that as that position grew, we were not satisfied with the vendors and service providers out in the market that we were using to accumulate and store the position. And so we embarked on a project to develop those capabilities in-house. And there were really three aspects of it. The first was, as I mentioned, execution. So how do you turn dollars into Bitcoin in a way that is compliant and auditable? Once you've done that, how do you store the Bitcoin in a way that is safe and auditable?

And once you've done that, actually, how do you account for the Bitcoin on your balance sheet in a way that fits within existing accounting guidance and literature? And so we developed those capabilities in-house first for our own balance sheet position, Then over the course of 2016 into 2017, more and more of the investors within the Stone Ridge asset management world wanted to express the same thesis as us. That is the idea of the long-term development of open-source monetary systems. Because by that point, that was really the framing under which we were looking at this. And so we made some enhancements to the infrastructure to be able to support running a commingled vehicle for institutional investors that would have an EY audit. And that's a fairly high bar. It was not something EI had done historically, but they were great, but though demanding partners in how we did that.

And so we got that up and running. And then finally, the third phase was a business decision to productize the infrastructure. Again, really those first three things, execution, custody, and accounting expertise in a separate business, making the underlying infrastructure available under the premise that, you know, at that point, we might be a little early, we might be a lot early, but we're not going to be the last people that have this issue of fiduciaries that need to access these networks in a highly regulated highly diligent way. So we contributed the IP into a separate subsidiary, called it NYDIG, took some outside equity investors into that subsidiary. That was not something we had done in the past in the Stone Ridge framework. And so by that point, we're talking Q4 2017.

And as I think you know and a lot of the listeners know, the bottom pretty promptly fell out of the market. And so, you know, we had at that point what we felt and I think has now been validated as a really unique set of infrastructure for allowing institutional investors to access. the market, safely, securely, compliantly. But for 10 quarters, nobody cared. Like, there was, there was just no market for it. Right. But not, not for lack of trying. So, yeah, it's funny because, you know, I'm sure you remember in 2017, a lot of the narratives were that, you know, retail was quote unquote front running, the institutions, institutions were coming. But I think my recollection is that there is virtually no institutional interest in Bitcoin or cryptocurrency, nor was there the capacity on the part of most institutions to actually engage with the asset

class because the tools were so primitive. So, you know, I think that's, you know, that distinguishes then from now where, you know, thanks to NIDIG and others, the plumbing is just much more sophisticated and more mature. Yeah, I mean, I think I would agree with the first part and, you know, quibble maybe slightly with the second part. I think we were, we found exactly the same thing. There was no interest. Our infrastructure was there. People just weren't moving. Right, right. So tell us a little bit about this change in market narratives, you know, from what you've seen in the broader market too. You know, what is different about today, 2021, why would a pension fund or insurance company or family office or, you know, who knows,

even a sovereign wealth fund, why would they care about digital assets and Bitcoin today as opposed to 2017? Yeah, I mean, I think for a lot of people, the thing that changed the narrative was the public health crisis in 2020 and into today. and then the resulting changes in the macro backdrop and especially the stimulus that resulted in 2020 and you know that we're seeing again today. I think the if you have dollar denominated liabilities and you're a fiduciary, you have an obligation to consider whether holding all of your assets in dollars is in the best interests of the assets that you look after. And I think if you asked that question up through February 2020,

it was quite possible to get an answer that, yes, it is in the best interests of the assets that I look after to have them entirely in dollars. And I think what's happened over the last year is various places on the curve, professional investors are now coming to a different answer than that. And, you know, it's slow. It's not wholesale. But where I think at least our experience was everyone said, yeah, I'm cool. Now, not everyone is saying that that's obviously the right answer. And when you look at a portfolio of potential inflation hedges, there's all kinds of instruments you could potentially opt for various commodities, you know, various structured products.

And of course, Bitcoin, cryptocurrency. What distinguishes Bitcoin? What makes it special in your mind relative to those other sort of inflation hedges? I think there are a couple of things. So I really think it's the unique perspective of Bitcoin as an asset. having value in proportion to your expectation of participation on Bitcoin the network. So I think going back to that fundamental thesis, you know, are we going to see the growth and thriving of an open source monetary system to complement some number of the existing fiat monetary

systems? So I think one other way of framing what's changed about the narrative is not just about inflation, though I certainly think that's part of it. I think what's changed is people saying in the wake of the policy response to COVID, saying, yes, I could actually see the growth and thriving of an open source monetary system. So while certainly part of the narrative is about inflation, I think a much bigger, in many ways, more acute part of it is people re-underwriting the possibility of such a network getting to scale.

Right. And it's worth noting that, you know, I mean, we've been in an expansionary monetary environment for a decade or so, but that hasn't translated into, you know, money supply growth in terms of the monetary aggregates that you would look at in terms of, you know, money in the real economy. So despite that, Bitcoin has grown. all the while. So it doesn't seem strictly a necessary condition for Bitcoin's growth for there to be any real monetary chaos. I think that's exactly right. And I think that, as I said, that's to me the actually much more interesting part of the narrative and in many ways the part

that's finding more traction in our conversations. Often, let's have a conversation about inflation is a way in. But then that gives way to a much bigger picture conversation about what's really happening here is 10 years ago, a technology was invented that's going to allow a change in how humans interact with each other from a monetary perspective. And over, you know, up until February 2020, I think it was quite easy for professional investors to listen to us, say, that and hear a bunch of wackos. And now over the last year, I think for professional investors look out at the world and say, ah, now I understand why you guys thought that was at least possible, if not likely. This episode is brought to you by Copper. Copper is the global provider

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quickly and securely. And now back to the episode. So, Robbie, as a firm, you've taken a very pro-Bitcoin approach. So you mentioned Nideg holds Bitcoin on its balance sheet. You've built products that facilitate Bitcoin exposure for institutional investors. How do you think about Bitcoin, both from the perspective of an asset manager and then also from a service provider perspective. If you compare NIDIG with some of the other service providers, at least my subjective views that you guys seem decidedly more pro-Bitcoin, more avowedly pro-Bitcoin than some of the other service providers,

which seem more sort of agnostic to me. Yeah, I mean, so I would get, our perspective is always evolving, and shifting, and it is certainly the case today that the most important thing we see going on is this big picture idea of open source monetary system, and within that thesis, see the, it seems pretty obvious that the thing that is most likely to be that of all the things that exist today is Bitcoin. And what I would say is I would give you an analogy from our Stone Ridge asset management business. So one of our franchises, as we mentioned, is we run a single family residential real estate

strategy on behalf of a couple very large institutional investors. And we actually launched that strategy in January 2020, but we had, as we always do, been studying, thinking, working, preparing for a little over three years. So we started our work in early 2017 on that strategy. And over the course of the three years that we studied the market, what we came to realize is under the header of single family residential real estate, which is just, you know, we go out, we buy houses, we fix them up, we rent them out to people, we make sure the tenants have a great experience.

There were actually two really fundamentally distinct strategies that we were, we were actually that were being run under that header. And we ended up only running one of them. And so the two distinct strategies running under that header are you can try and pick which markets, which housing markets in the United States are going to appreciate faster than the average and buy a bunch of houses in those markets.

So what you saw in the wake of the financial crisis was a bunch of really smart investors, have to tip my hat to them, buying houses in really depressed markets like Miami, Detroit, places like that, Las Vegas, and really making great returns on the home price appreciation. And that was really what that investment strategy was about. And what we ultimately found is for, at least for our investors purposes, and at the intersection of where we felt we could execute, the other strategy was actually better. And so the other strategy is in other markets than those boom and bust prevalent markets, buying up stock, and really focusing on the

rental income net of the costs to service the properties to make sure that the tenants have a great experience. And, you know, in the boom times doing that, you know, you. you miss out on the 20 plus returns that are available in Phoenix and Atlanta over the last couple of years, but it's a much steadier, much more stable return stream being in secondary markets like San Antonio or Birmingham or Cincinnati, places like that. And so that's the strategy we run on behalf of our investors. So what I'm bringing it back to the broad heading of crypto, Given that we've been focused on this for so long, studying, learning, evolving, where we've come out is there are really at least three, if not more, distinct macro trends that are going on under the header of crypto. And so one is this idea, will there be an open source monetary system?

So in our view, that's a very important question for humanity. And our strong thesis is yes. And conditional on that, looking out at the landscape today, as I mentioned, seems pretty clear that of all the things out there, Bitcoin is by far the most likely to be the winner. That's a distinct trend in question from, for example, will, will, will, you? there be a global open source Turing complete distributed computer? That's also an interesting question, but not one we're as focused on ultimately. And there's even, even I would argue, a third macro trend, which is will there be faster dollar settlement networks? So I put the stable coin activity and the central bank digital currency questions under that header.

That's that's also an important question, but not one we're as focused on. So I think to come back to your question, yes, having been looking at this for a long time, this idea, again, just to reiterate, you know, will will billions of people globally have access to the to an open source financial system, we think the answer to that is pretty clearly yes, and we think that's going to be Bitcoin. And so therefore, we build products and services around that. Now, to your question, NIDIG at this point is a broadly diversified financial services and technology company. And different of our product verticals, those opinions matter more and less. So about half of our business is an asset management business where we are investment

managers on behalf of institutional investors. And whether it's the Stone Ridge asset management business or the NIDIG asset management business in an asset management business, investors are paying us for our opinions about how they should invest their money. And so today, if you ask us for our opinion about how you should invest your money and pay us to give it to you, the advice is you should own Bitcoin because that is the strategy we have the most conviction in. It's not that I'm short the others. I just, I don't, I don't have enough conviction to let people pay me to give them investment advice to do the other thing. In other parts of our business, to your point, we're a different kind of provider. Like people are not paying us.

for our opinions about what is important and what will appreciate in dollar terms in the long run. And so in those parts of our business, we do provide services for a couple of other assets, mostly at this point, what people want is Ethereum. So one analogy I use, if you look at Morgan Stanley, they have the Morgan Stanley Investment Management business where their asset managers, people pay them for their opinions about what they should do with their money. That's like our night of asset management business, where my opinion is you should own Bitcoin, but they also have the sales and trading business where they offer prime brokerage services,

for example. We have an analogous business. In that business, the clients actually don't care what my opinion is. They just want the best execution, the most secure custody, the best research. And so we give it to them. Wow, two analogies in one answer. You like that? That's incredibly comprehensive.

There's a lot of ways we could take it. I think we'll touch on stable coins because I see so interesting, I see CBDCs mentioned actually as a potential competitor to Bitcoin, and people will often say, well, just you wait until, you know, CBDCs are created and, you know, we'll have digitized. you know, final settlement and that's going to make Bitcoin irrelevant. It's interesting to me because I see CBDCs is almost diametrically opposed to Bitcoin

in terms of what you get from them, what they give you. But yeah, I'm very curious to hear your thoughts on that too. Yeah, I mean, I would say I see it more as orthogonal than diametrically opposed. If anything, I see the central bank digital currencies as competition for the, for the stable coins. So again, going back, you're sort of always trying to zoom out to see what's like the big picture question that's going on. And so to us, the big picture question that's going on is, what will the solution to faster dollar settlement networks be? And so today, in the absence of a government-sponsored solution, you see what effectively are private market solutions in the

form of stable coins like USDC and Tether and others. I think for, at least the way I see the central bank digital currencies is it's still just a dollar. It might be a dollar with better technology. And as an American, I would love to have a dollar with better technology. But I don't, I don't think it's the same or competition to Bitcoin at all because it's still the supply. is controlled or not in a way that's just very different to the way the supply of Bitcoin is controlled. And so I think as you see the development of central bank digital currencies, it could go a couple of different ways. And I think which way it goes will really inform whether ultimately the private market solutions are valuable and necessary or not. So like as a, you know,

fantasy, weird fantasy I know, you could imagine a Fed dollar where instead of being intermediated by a commercial bank, everyone with a tax ID number could have an account directly at the Fed. And I could hold my dollars directly as a liability of the central bank without having a commercial bank as an intermediary in between me and the central bank. That would be pretty cool. I would actually really like that. That wouldn't change my long-term bullishness on the value of a Bitcoin in dollar terms, because again, it's still the case that, at least in our current framework, the

central bank can just make more of those digital dollars in a way that the Bitcoin network can't make more Bitcoin. And I think if you were to get that form of central bank, central bank digital currency that allowed me to directly hold the liabilities of the central bank. I have a hard time imagining a lot of use for a private market solution in that case. But if instead you get the direction that it's really just improved technology for how commercial banks interact with the Fed, and it's still the case that individual citizens are intermediated by commercial banks. then I can imagine a lot of different use and value for these private market solutions that I think are close to what we call stable coins today.

Right. One thing I reflect on with the potential rise for CBDCs is some of it seems motivated by desire for more sort of granular control over the money supply in the economy generally so that central bankers can press new levers and, you know, impose negative rates, you know, maybe on savers directly in a way that they can't do to the existence of physical cash right now. And whenever I see discourse around CBDCs, I see statements like, well, we have to embed, you know, KYC or counterterrorist financing or AML into this system. We have to embed some necessary minimum amount of surveillance into the system itself. I rarely see a discussion of trying to create a digital equivalent of physical cash, which of course has no metadata associated with it.

To me, it seems like the rise of a CBDC would be more motivation for a monetary and financial system, which is distinct from that state apparatus as it sort of gets more intrusive. Yeah, potentially. I think pretty hard to say at this point how the development of those things will interact. I think there are a lot of complex interwoven things at play there. Yeah, it's hard to reason about too because we see a lot of working papers on CBDCs, but very few proofs of concept yet. So it's hard to know what it'll look like in the U.S. at least. Yeah, exactly. And, you know, again, like I, everyone's entitled to their own view. I actually think, you know, for myself, a world with a Fed dollar is probably a net better world for me, but I totally acknowledge and appreciate other views. I have no knowledge on the matter one way or another, but, but sort of, what I often tell people is I think it's probably 10 years while we all decide what to do in that regard and then 10 years to design the system and then 10 years to implement it. If you just think about how much plumbing there is in the dollar system today, what a giant

project it is going to be to move to version 2.0 of that system. It's a lot. Right. So returning to your prior answer on, you know, how you think about treating Bitcoin from a service provider perspective, you know, tell us about the importance of the sort of soundness of the underlying protocol. And then I guess maybe touch on Bitcoin's rate of change. So, of course, the last protocol changed to Bitcoin was Segway in 2017. We have another putative change coming up here with Tau. prute maybe in 2021 if you're lucky you know as a firm do you pay attention to that does it matter to you is it too fast too slow um so yes yes we pay attention we pay a lot of attention um i think

another analogy i would give you uh would be similar to my participation here on your show today where i've i've actually i don't know if i've listened to every single episode but like pretty close but this is the first time I'm here today speaking I think that's a pretty good analogy for how we think about core protocol engagement is that we're we're highly highly highly paying attention and about to start a round of engagement where we we we try to contribute in a way that's meaningful to the community the my my personal opinion is that slower is better by a lot for the long-term growth of the network. As I'm pretty sure I got this from Michael Saylor.

Like, I think the one thing that takes this network down and therefore, you know, makes a financial services and technology company built on the network much less valuable is trying to add features to the protocol. before they're ready and something going wrong there. So I personally favor much slower, much more deliberate, much more thoughtful rate of change in the protocol because I really think this is a 50-year thing and there's no rush. And if anything going too fast could be a real problem. So I definitely agree there.

one interesting thing we've seen is, you know, large custodians, sort of economic nodes, as you might call them, large exchanges, brokers and custodians in prior years, you know, have sort of sought to exert their influence on the core protocol. Like we certainly saw that with, you know, the 2x phenomenon in 2017, whereas to oversimplify it was kind of a matter a handful of large service providers and the antagonists or crypto community, Bitcoin community was sort of largely opposed to the proposed changes. And in the end, the DCGs and the Coinbase is backed down. How do you think about your role as kind of a steward of the network as you become more influential in the Bitcoin space? And what that means.

in terms of engaging or not, you know, with with core development, with governance effectively. Yeah, I think I think it's a really important question. And it's one that we're highly focused on today because you're exactly right. We've got to be thoughtful, credible, and careful. So I think as we look around the market, we see more or less three potential models for engagement. and then kind of a fourth one that's a meta, that's a combination of the three. And before getting into that, I guess the meta thing I see is that you really do have a problem of the commons here, which is if I assume that somebody else is going to do it,

and everyone assumes that somebody else is going to do it, that nobody does it. But at the same time, given the nature of what's happening here, It's important to not let our commercial exigencies dictate too much into where it's going. So I really do like the term stewardship. I think that's exactly right. So the models we see for engagement are, number one, the individual core developer sponsorship. and that's got some pros and cons. The second model we see is engaging with one of the academic projects,

so the MIT one we spent some time with and have a lot of respect for what they're doing. And then the third one is an in-house team, you know, where they would be, you know, whether they're square employees or NIDIG employees, but Wall Street. walled off somehow from the commercial business, but given, you know, salaries and health care and freedom to make contributions and engagement with the core protocol. And then the fourth model would be, you know, some some kind of meta, you know, capital and time allocation across those three approaches. And so I think what you're what you're likely to see from us is, is that fourth model that focuses on a kind of allocation approach across the other three.

Well, that's really encouraging to hear. It sounds like you're extremely thoughtful on this. We tend to measure 80 times cut once kind of people. Right. So when you look at the, I call it patronage, the system of subsidizing core development and actually increasingly non-core. development, ancillary services built on top of Bitcoin, like Bitcoin Pay Server, Lightning, etc.

You know, my subjective view is that it's sort of relatively well funded and supported, especially compared with historically, where there is a really small number of sponsors. What do you make of the current nature of funding for those sort of public good kind of resources for building Bitcoin's infrastructure? So we tend to be engaged pretty broadly across some of the second layer protocols. So we have a lot of respect and support for the work that Elizabeth Stark and the team at Lightning Labs are doing. And, you know, tend to view it similarly as, you know, how do we engage without being overbearing? how do we support the work while also trying to leverage it in a production capacity

and grow the network? I think hard for us to say, hard for me to say, are they? Well, well funded or not? I did, you know, myself, a few other people from the NIDIG team went to the Lightning Conference in Berlin, learned a lot, had a great time, felt good to contribute to the ecosystem. So one question that I often ask firms, especially that are on this pro-institutionalization side, which is also where we sit as a firm. I mean, that's really ultimately what we invest in. We have a hypothesis that the financial system and the crypto financial system will eventually converge to a certain degree.

And there's no harm in that. And part of our job is to facilitate, you know, transformation of capital from, you know, legacy models to crypto-native settings. So, you know, we're part of this group as well that I might pose the question to. But, you know, of course, there's this ethos in crypto that, you know, it's meant to provide you property rights assurances outside the context of the state, outside the legal system. And then, you know, on the other hand, we, of course, have the, you know, institutionalization of Bitcoin, other protocols such that it can be an asset that highly regulated entities are comfortable holding with all the sort of compliance rigors that entails. How do you think about that process,

whether there is any inbuilt contradiction or whether Bitcoin can thrive as an asset that lives inside Wild Gardens on Wall Street and an asset that really circulates globally too? Yeah, I mean, I'm personally and institutionally on your side of this pretty strongly. I don't personally see any tension there at all. I would go even a step further and say, institutionally and certainly personally, I have a view that an open source monetary system that complements existing fiat networks,

that can be a $100 trillion market, an open source monetary system that competes with large fiat networks and wraps itself in a competitive antagonistic discourse is much less likely to be a $100 trillion asset class. And so I think we certainly view our place in this as first and foremost to build the products and services that allow regulated financial institutions primarily, but also other sophisticated investors of various stripes, to engage with the network within the realistic constraints that they have. Like if we didn't have the most rigorous AML KYC in the industry, then Bass Mutual wouldn't be able to use our solution and they wouldn't

be able to own the asset class. So that one, that one feels pretty clear to me. You know, I think you saw recently we made made an investment in unchained capital which is an absolutely phenomenal firm with a phenomenal leadership team and a phenomenal product that's very different than our product right like our our product is the thing that mass mutual has to have in order to invest in the asset class and then that's the thing they have to have in order to engage with the network to build products and services in a ways that's valuable to bring bitcoin to tens of millions of people. Unchained has a sovereign custody product essentially that's awesome. Like I'm a user myself for some of my individual needs. It's just a different product for a different segment.

And so I think like in any market, it's a good thing to have different kinds of products for different kinds of audiences that have different kinds of needs and uses. And I'm personally very excited by the proliferation of all of all the different kinds of solutions across the gamut of needs for users. Yeah, and not to answer my own question, but something I often say is that Bitcoin is an asset has this relatively unique ability to transcend or, you know, flow between these somewhat porous boundaries, whether it's in an institutionalized context where the Bitcoin has sort of been accounted for and checked for risk and so on. It can flow out relatively easily into the custody of individuals because Bitcoin is this very easy to verify, easy to take

physical delivery, cheap to verify asset, which is sort of unlike goal. in that respect. So that's kind of my view is that the boundary is relatively porous one. I think that's right. So we've had you on for a while. I want to let you go. Maybe before we do, what are your thoughts on some key milestones that you like Bitcoin to hit? If you have any markers of success, you know, what would be the things you'd want to see for you to say, wow, Bitcoin has really realized my ambitions here. Like this is, you know, we've officially made it kind of thing. Yeah.

You know, so I think going going all the way back to where we started, you know, with some of the strategic partners that we brought on or added to their position on the cap table in Nidig. I think, I don't think I know starting more or less next week, you're going to see an absolute drumbeat of pretty game-changing milestones from some of these firms that are really going to mark sort of each progressively new points in Bitcoin adoption, Bitcoin availability, Bitcoin products and services within the existing traditional financial landscape. So I'll leave it there with a little bit of a teaser on what's coming down the pipe. Okay.

Well, I'm going to have to rush to put this episode out so that it's not out of date by the time it comes out. Robbie, where would you recommend people go to follow your work and, you know, follow you as an individual? So I tend to let my voice be part of the NIDIG voice. So you can follow us on Twitter at NIDIG underscore BTC, as well as check us out at www. NIDIG, nydig.com. Well, I've been a fan from afar. I've been admirer of your firm. and so I was so thrilled that you agreed to participate.

Robbie, it's been a pleasure. Thanks for coming on. Likewise. Thank you so much for having me. Thanks for all that you do for the ecosystem. Love your content. Love the show. And I'll talk to you soon.