On The Brink with Castle Island - Weekly News Roundup 5/15/20 (The end of the SAFT, the rebirth of seigniorage shares, halving recap) (EP.80)

Episode Date: May 15, 2020

Nic and Matt cover the week's deals and news. In this episode:  Bitcoin full node count Celo and the viability of seigniorage shares stablecoins Telegram winding down their TON project Why we think the SAFT window of opportunity is closed Why the SAFT is just ICOs in a suit Why the next global monetary asset will never be massively premined and disproportionately owned by VC funds How the success of Bitcoin drove VC funds crazy Stablecoins pass $10B ErisX announces Ethereum physically settled futures How futures contracts would handle contested hard forks The importance of JPM banking Coinbase and Gemini Our retrospective on the halving What we're reading and listening to this week Why we don't believe in space mining

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 Concentive Easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. We had another false start there with your bird clock. Your bird clocks are playing a big guest-starring role here. We have two bird clocks. They go off every hour. It's crazy. If we ever get back in the office, we should get a bird clock.

We can replace your dead cactus. Man, yeah, that's succulence. I'm dreading coming back to the, that thing. It's definitely not in a good place right now. Yeah, hopefully there's not like insects all over it. Are we going to have another up week here for the old orange coin? So orange coin is on the brink, you might say, of nine consecutive green weekly candles, which would be some kind of record. But it does have to close above 9,540.

Currently, we're looking like it will. So here's open. Well, we had the halving this week. There's a lot to talk about. Let's get right into it. And before we do, why don't we talk a little bit about CASA? So let's be honest, how confident are you feeling about the security of your Bitcoin? Every quarter we hear stories about exchange hacks, a new exit scam, a friend losing their pin, or someone passing away and having their family come up empty handed. And the best way to keep your Bitcoin safe is to hold it for yourself. Casa is the easiest and the safest way to do that. They have one of the most well-respected. teams in the industry. They have amazing design. They make it really easy with 24-7 support to help you every step of the way. And they have some premium features that are, that used to only really be available to ultra high net worth individuals around inheritance planning and white glove support for large purchases. But they're now available to mass scale. So if you're ready for a security upgrade, you can get started with a membership as little as $10 a month. And as a special offer, use the code to Castle and they'll get 10% off.

head over to keys.casa and keep that Bitcoin safe. Are you keeping your Bitcoin safe? Yeah. I mean, look, if you're going to own Bitcoin, you better own physical. There's nothing like the real thing. Okay. Exchange Ieuser nonsense. And if you own physical, you should probably have a Maltesec set up.

It's a no-brainer. Yeah. So definitely use it. We use it. We recommend it. We wouldn't say nice things about it if we didn't use it. So let's get right into it. You want to talk about some deals and some fundraising?

Yeah, things are heating back up again. Maybe, you know, maybe the recession's over and we're like out of the woods or something. Yeah, I don't know. Maybe there's some firms that are just choosing not to participate in the recession. It's also possible that they raised these rounds before. We'll see. But one of those companies is Wally. So Alex Edelman's company, he spoke at our conference a couple years ago.

So this is a Bitcoin Rewards company. They have a Chrome browser extension, which is really cool. They closed a $3 million seed two round. This was led by Founders Fund's Pathfinder Fund. Also had participation from Kraft Ventures, Sound Ventures, Bain Capital Ventures, DCG, and others. So congratulations to Lolly. Yeah, you guys all know Lolly, one of the best known Bitcoin startups in the breed of startups that is trying to help you earn crypto as opposed to inducing you to buy it.

So certainly a very important cornerstone of the Bitcoin industry. Another company, another New York company, Block Damon, the blockchain infrastructure company. They host nodes for their customers. They raised $5.5 million from a bunch of firms, hashkey, coin shares, blockchain, kinetics, spice VC, Comcast, and a bunch of others. So congrats to those folks. That infrastructure category, very hot, very required. I mean, running these nodes is tough.

And these guys are providing a real service. Yeah, I'm a fan of BlockDam, and I've experimented with their software to run a remote Bitcoin node. It's pretty convenient. If you talk to the CEO, Constantine, he'll always tell you Bitcoin is under-provisioned from a node perspective, that we just need to be running more nodes. And actually, if you look at some of luke dashes, node figures, the node count does appear to be dropping. So we might have a node crisis on our hands here. Well, you know, Bitcoin has a lot of nodes. How many people are running like a full node on EOS or Ethereum?

That's got to be a very small, you know, percentage. Yeah, I don't want to get into the debate of like what full node means in an Ethereum context because that's this whole thing. But for EOS, full archival node, my guess is actually zero. My guess is my current best guess is zero. Speaking from experience, it's extremely difficult to run along. Let's move on. Falcon X. So they announced, I'm not sure if this was a raise all in one shot or if this was a cumulative number, but there's a tech crunch article that said they raised $17 million from investors including Accomplice and Avon, CMT Digital Excel and others, their trade execution software. And then CELO. So CELO is a public blockchain project. They raised $10 million in a token sale on the coin list platform. People love CELO. Yeah, I'm getting a lot of buzz around CELO.

So basically, CELO is a senior-ed shares style stable coin. That's a mouthful. You have C-Lo Gold, which is the sort of equity in the system, and then C-Lo dollars. And I believe it's quite similar to basis, really, base coin. And they've gone for a kind of developing world-first approach, because that's where there's demand for stable coins. That we know for sure. there's demand for stable coins in the developing world.

And they have some interesting stuff in terms of a phone number being your private key, I believe, and having mobile first wallets. So they're very much leaning into this theory that public blockchains are good for carrying dollars, which is a theory that's gaining in prominence for sure. The question is can senior shares models work? very much an open question. I mean, we've never really even seen someone authentically try. Yeah, that was a real, I would have loved to have seen base coin basis launch and be attempted. I think there are so many people that were talking about attack vectors on that. It would have been really interesting to see if that thing would have survived in the wild.

For regulatory purposes, we didn't see that. It'll be interesting to see if we can see that for CLO. I think some of the same regulatory issues around the ability for, a saft to transmute into, you know, non-security or probably at play here. But the ability to put dollars on blockchains, obviously this is a killer app. I think the big question to me is going to be, what does that spectrum of competition look like for stable coins? And maybe what is the convention to even bucket these things? So you have some that are like tether that are sort of at the shadowy fringes of regulated financial services. You have others like USDC that are kind of well-lit,

Coinbase in Circle or behind that project and others. And then I imagine you'll probably see others, you know, like Libra, so the tech firm version. You'll probably see the big banks get into the picture at some point. So how does competition emerge here? Do these things trade at parity? Are they all worth a dollar? What is the distribution for these things? Why would you opt for one versus the other?

And I guess Sealo, you know, you could see them competing here to just be this sense. censorship resistant kind of non-sovereign one. Is that sort of what they're going after? So CELO is kind of different from every other stable coin, I would say, because they're creating a whole blockchain to support the coin. So it's kind of like if you had Ethereum, but instead of ether, you know, being the native asset, you had a stable coin as the native asset. Whereas if you look at virtually all the other stable coins,

they just exist as tokens on top of other chains. So CELO is trying to do the full stack approach. and, you know, roll their own chain and, you know, also try and take charge of the stabilization mechanisms, which are non-trivial, in my opinion. So it's extremely ambitious. If I had to guess, I would say someone smart is going to figure out how to, you know, break the system. Because, you know, if Soros could break the Bank of England, like the Bank of England is certainly a lot better resourced than any stable coin is ever going to be. I want to go back to something you said, though.

So I think that's an important distinction that they're full stack is that you can't do one of these senior share models on top of someone like has an ERC 20. It would just seem, or maybe you can. It's just hard to imagine how that would work. You could. I mean, like the big question is can you build a willing pool of capital that's sufficiently big that will backstop the system if there's a confidence crisis? Can you effectively, you know, build a buyer of last resort?

What's interesting is that like Maker is actually partly a senior-ed-shared system. We saw it in action. It printed a bunch of Maker to cover up this debt that the system accumulated because it had this shortfall. And then you had effectively the big owners of Maker, purchase Maker at auction. It had a bunch of dilution. So it's effectively a buyer of last resort. We're the funds backing Maker. So in addition to having these algorithmic de-leveraging mechanisms, it also has a buyer of last resort, which is kind of interesting.

So Maker is partly a senior and chair system. It is, but it's also somewhat centralized, right? I mean, you can make an argument that there are these critical choke points where, you know, the system can be halted, right? So it's not a fully autonomous system. Well, I think senior chairs implies centralization by absolute definition. I mean, if you have a buyer of last resort, we're talking about a buyer that's effectively committed to backstopping the system.

in times of crisis. So in the case of Celo would be the Celo gold holders, I think. I'm not even sure it's possible to have a genuinely decentralized stable coin at all. It's certainly something that I'd love to see more attempts at. So let's see

what happens here with Cilow. Speaking of platforms that are launching their own cryptocurrency, the big news this week was Telegram announced that it will discontinue its plan to introduce TAN, its cryptocurrency. So this is after ongoing litigation with the SEC, the agency is saying that this looks and feels like a cryptocurrency that is actually

a security. Not looking like they were going to win that lawsuit, the SEC had sought an injunction to prevent them from launching the network. Keep in mind that these guys raised $1.8 billion in 2018, and it was a deal that every fund basically is in. I mean, there's very few funds in this industry that are not in it. There's also some very high profile traditional funds like Kleiner Perkins, benchmark, Sequoia. So there's a ton of different angles here. I think, you know, one interesting thing is what happens to the capital. They're said to be this clause that say investors get 72% of their funds back or whatever is unused. It'll be interesting to see what happens there. I think it also just raises this question around what does this mean for the SAF? I mean,

is the SAFD? I mean, does this mean the SAFD is dead? I guess is the first question. I triggered a lot of crypto lawyers when I said this earlier this week, but I think the window of opportunity for new token issuances is firmly closed. I think it's closed. I'm declaring it closed. The SAFT was like the legal engineering, the reaction to the vanilla ICO being rendered effectively illegal in that 2017 SEC guidance. The SAFT was the 2.0 version of that. And now that legal theory has been debunked. And I got a whole bunch of crypto lores in my mention saying not necessarily, okay fine like go win in court against the SEC then I think it's over I think it's over this whole the whole theory behind the SAFT was you could enlist VC funds as distributors for these tokens on

the secondary market so that the issuers themselves weren't distributing the tokens directly but you still wanted US individuals to be buying up those tokens to be the ultimate buyers you wanted US retail investors to be the ultimate buyers and you have the like the VC funds play the intermediary role, that should be regulated. I mean, it is a regulated activity underwriting. So this legal theory felt to me really shoddy all along, and it's no surprise at all that the SEC has effectively killed it off.

And like if we're talking about like an entity that's as well resourced as telegram, literally the second biggest ICO ever, I very much doubt that anybody else is able to push this thing through or succeed with this theory. I tend to agree with you. I mean, I'd be shocked if the rest of the, these SAFs are actually able to turn from a security into not a security. It's not clear to me how that would even remotely be possible. No one has explained to me that in plain English how that would even be possible. But I guess the fundamental thing around whether or not you think that the SAF is a good

idea comes down to what is your opinion on value accrual on these networks. And my position on this is that the most interesting projects, the ones that will actually have enduring value at the protocol layer are the ones that are competing to be money. And so if you have a non- sovereign money. I think that's really interesting. You could see a clear holding preference for that. I think the velocity of a kind of a non-sovereign store of value would be pretty low. So you could actually see how that would have a lot of value from a monetary perspective. But for something like a utility token network where you just need the token to run a specific app, I still haven't had anyone explain to me how you would actually see value accrual at the protocol level. So even fishing in this

pond for some of these things makes no sense to me. Then layer on the fact that you're supposing that one of these networks will achieve scale and be worth a lot if a bunch of VCs in Silicon Valley own 25% of it. That just seems preposterous to me. I mean, would Bitcoin be successful if Andreessen Horowitz and Castle Island own 25% of it? I mean, I would love that, but like there's just no way that you'd get people to buy into this shared fiction. So like, am I going to go own a bunch of Ava Labs? It just doesn't make any sense. So someone explain this to me. Like, what are we doing here? Yeah, I think we're going to look back of this period as a period of absolute lunacy where a bunch of otherwise reputable firms very much

compromised their reputations, buying into these awful theories, really, about believing that they could be, you know, future oligarchs by owning 20% of the world's future monetary asset. It's just nonsense. We're very lucky that Bitcoin had this period of open issuance where there was no senior age. It was issued in a free market way with miners in free market competition so that you couldn't buy a dollar of Bitcoin for less than a dollar

on a reliable long-term basis. That's the whole notion of proof of work. It's a fair distribution method. And then, you know, we've had five years of, five years of insanity where people said, no, proof work is terrible. Just let us sell the tokens to you.

And initially people push back against the pre-mines. that gave up and stopped pushing back and no one question the pre-mines anymore. But the pre-mines are still illegitimate. They're still illegitimate. They always have been. There's never going to be a global monetary asset that's heavily pre-mined. That just doesn't make sense. And we've always had a way to issue monetary assets to the world in a way that's totally compliant with the SEC. It's called a proof-of-work fair launch. It's still possible. It's just people gave up on trying because they preferred to print 80% of the initial allocation for themselves.

Yeah, I mean, so much of this is driven by, you know, I guess a couple different things. One is that Bitcoin ends up being the best venture investment in the history of venture investments and not a single venture capitalist invested in it, right? So there's no way to like buy a piece of it. None of the VCs were out there running CPU mining equipment. Like no one was mining this thing. So everyone missed that. And then several years later, Ethereum launches and it's the exact same thing.

You know, it's like Joe Lubin and Vitalik and a bunch of the buddies who, are in the cabal there, create their own version of this thing and has no VC participation. And now there's a pattern of recognition that emerges here. It says, all right, here's how you launch one of these things. The Ethereum guys sort of did the blueprint. They didn't get in trouble with the SEC. They've sort of been grandfathered into this. Now let's just run this playbook and, you know, people are raising money. Plus, you have this really difficult to understand technology that not a lot of people can actually diligence. So you have this complexity theater where people are coming in with their advanced degrees and kind of status and they're raising $100 million

off of something that actually probably doesn't even work. And so no one's doing the work on the diligence front either. It's just a confluence of events that's really led to this frothy environment that was kind of typified by the ICO run up. And I guess we're still, you know, kind of seeing it. The SAFs are no different from ICOs. They're the exact same thing, except retail was no longer allowed to participate in that value extraction, VCs decided that they wanted to monopolize all of that instead. That's the only difference. They're just ICOs and suits. It's the exact same concept. It's the same nonsense. It has better PR, better marketing, better lobbying even, but it's the exact same concept. So it can't die soon enough as far as I'm concerned. Yeah, not to beat a dead horse here,

but there are so many projects that have done SAFs here. And so many of them just have no future. if you believe that the way that these things will accrue value is that they will somehow be integrated to large pools of capital that can actually buy these freaking stupid things. Right. So, like, you have to connect to legacy financial services. People with all the money are the asset allocators. They're going to start buying it. Paul Tudor Jones just now started buying Bitcoin.

Like, is he going to go out and buy something, some file storage scheme that, like, no one uses that we don't even know works? Like, when is this going to happen? Like why are people continuing to add these assets onto their brokerage platforms? Just someone explain how this makes sense to me. So given that this potentially signals a death knell for the SAFT, what are some of the other SAFT projects outstanding, which might be in trouble here? There's a bunch, right?

Like there's a bunch of projects that have raised a lot of money via the SAFT and have some really high profile VC, like DFINITY, Filecoin. Pocodot, Orchid, Ava Labs, DaG Labs, Newsefer, Space Mesh, Mobile Coin, Oasis Labs, Scale, Coda, Celo, Dapper Labs, like a lot more. I don't know. There's a lot of them. Well, stay tuned on that front, I guess. Seems like the SEC is kind of sick of this nonsense. Yeah, well, I'm kind of sick of it, too, as you can tell. Maybe moving on to some more things.

Did you see that Visa had an application this week for a patent around stable coins? Yeah, I haven't had the chance to read the patent application yet, but I know that it mentioned public blockchains. Visa's Crypto League, Kai Sheffield, is super interested and engaged on the topic of crypto dollars. We're actually rebranding stable coins to crypto dollars now, by the way. Oh, is that what we're calling them? All right. Yeah, they're crypto dollars now. And it's interesting to see institutions like Visa.

They were part of Libra. They're not now, I think, but still super engaged on the topic of stable coins. and then, you know, there's a sliding scale from stable coins to CBDCs, I guess. TBD, where they end up, where, you know, what kind of constructs we end up with. But, yeah, pretty exciting stuff, I would say, all around. It's clear that, you know, stable coins have really got the attention of a lot of these, you know, payment processors. Killer app. It's a total killer app here. It's happening right before our eyes in terms of the amount of AUM that's getting put onto these things.

It's happening. We passed a threshold this week. We passed $10 billion on stable coins on public blockchains this week. That actually reminds me. So Circle continues to do a ton of interesting things here. I'm a huge fan of what Jeremy and team are doing here with the new products. So they released their production APIs for the USDC stablecoin this week. So I checked it out.

I mean, I'm not super technical. But if you're a developer, a merchant, business looking to integrate with these stable coin payments, I think they would be really interesting to check out. And they also, I don't know if you saw this. They have a like a new show. It's called The Money Movement. And they talked about stable coins and Safe Haven assets this week. So check that out.

I think Circle is really onto something here. Yeah, they are the number two crypto dollar project in terms of monetary base. Certainly the most transparent crypto dollar project, that's for sure. Yeah, yeah, I'm a big fan. All right. let's talk about ErisX. So this is a little, this is good news for the Ethereum fans here. So with ErisX, which is a regulated spot and derivatives exchange, we're investors, they announced the rollout of their Ethereum futures contracts. So these are the first, as far as I know,

these are the first U.S. exchange traded future contracts for Ether. And they're also physically delivered, which I think is really a good feature versus cash settled. I think that's a lot better product. So, you know, this is a good. This is good. If you're a fan of Ethereum, this is a big news. Yeah, I like how we talk about physical delivery for cryptocurrencies, because it just always makes me think of like solemnly handing over an open dime to settle a contract. Because it's still digital. It's just a different kind of set of bits that are being transported.

But yes, physically delivered futures. I was actually there at the FinTech conference when CFTC commissioner, Heath Tarbert got up on stage and said, we're giving Ether the same treatment as Bitcoin here. We consider it a commodity. It's under our Aegis. And yes, we expect to see futures contracts built on ETH soon. ERIS has now delivered. Pretty interesting. It'll be interesting to see what happens if Ethereum goes through this 2.0 transition. What I understand from that is that there actually might be two sort of Ethereums simultaneously existing at the same time. So I don't know how a contract like this would account for that. That's kind of the complexity that you don't

expect as a commodities trading engine, you know, your asset duplicating itself. That's something, like that doesn't happen with like soybean futures, you know. I think that this is, this is something that's pretty easily protected though because they have a third party custodian. I'm not sure if it's public who it is, but they have at least one third party custodian. I think it's sort of their issue to figure out the fork policy there. And then you probably just halt trading if you're heading into some sort of a fork where you're not clear what's going to happen. I mean, I'm sure they've thought about it.

But just with Ethereum, there's more uncertainty in terms of the potential future trajectory. I think with Bitcoin, it's very clear that it's unlikely for there ever to be a fork, you know, especially given the failure of the other high-profile forks, which, you know, competes for the Bitcoin brand or whatever, with Ethereum, you know, I could conceivably see Ethereum 1.0 staying on proof of work, even after 2.0, you know, launches. Yeah, it's interesting. A couple of years ago, you and I were always talking that maybe we'll have a confidential

transactions fork for Bitcoin at some point. It just seems like that's nowhere to, like, that's not going to happen, it seems like. Yeah, that seems very unlikely now. There, every, virtually every privacy coin has had an inflation bug of some sort. And the thing is with inflation bugs on strong privacy scheme, like confidential transactions, is it's very hard to detect. And undetectable inflation is a killer. One of the biggest stories this week, other than the fact that the SAF died and no one wanted to talk about it.

and pretty much the whole industry owned SAFs. I mean, I guess that was a pretty big story. But the second biggest story maybe was J.P. Morgan Chase announced that it will extend banking services to crypto infrastructure companies. So Coinbase and Gemini being the first. I think people don't realize how big of a deal this is. I mean, banking has historically been just the most difficult thing about running a startup in the blockchain crypto space because just having the word block and chain in an application

to a bank was enough to, for them to say no. And so if you can't have a bank account, how do you pay your employees? How do you conduct your business? And so historically over the years, you've seen banks kind of come in and out of this. There was a time when Silicon Valley Bank was banking Coinbase and then they had some issues and I think they moved over to Metropolitan Bank. And you've seen Signature Bank and Silvergate recently build up pretty good franchises here. But it's risky, right? So you have these startups that are kind of losing bank accounts left and right. All the exchanges have had a lot of issues, crack in. Obviously, Biffinex has had some issues probably for good reason. But this is a great sign.

I mean, JPMorgan entering, I think this could potentially trigger a bunch of banks to reevaluate their stance on this and will help startups a lot. Like these picks and shovels companies, this is great. Yeah, I mean, I happen to know that JPM has banked crypto startups for years. I know two off the top my head that have had JPM accounts for a while. It's not that they haven't been doing it, but I mean, they're clearly doing it in a big way here publicly with high-profile crypto custodians. So this is a real seal of approval. And yeah, I mean, if you listen to our podcast with Dan Medashevsky, like the early story of this industry, the winners and losers was solely a function of who got banking and who didn't. And I think that's a huge part of the Coinbase

success story. They were able to get and retain banking, although now they're getting it from like a more serious bank, which is, yeah, pretty great for crypto overall. For sure. Yeah, it's great, great sign. Another story I thought was interesting, so Rialto markets, which is in the security token space, they received approval this week from FINRA for their ATS application. So this is going to enable them to trade digitally native securities, security tokens basically. So this didn't get a ton of coverage, but this strikes me as something that's pretty interesting. So there have been something like 45, I think, broker dealers that have applied to FINRA and interned the SEC and tried to get clarity on whether or not they can hold digital securities. And so far, Finner's been super slow to approve these things.

So this is one of the first that I've seen. I think Templum has one as well, so Chris Pilata's company. So Rialto, really good for them. They also have Lee Saba over there, former Wellington guy, doing a great job. So congratulations to Rialto. Yeah, this is one of your things. This is one of your kind of bet noirs that you've been talking about for a long time is these outstanding ATS applications.

So kind of a lot of these small, seemingly small, but still relatively important things are all happening at the same time, which is pretty exciting. Yeah, I mean, people don't really. get this because so like no broker dealers have the ability to transact in cryptocurrencies or digitally native securities for the most part right like gray scale has a broker dealer they're doing a lot of stuff but like if a broker dealer wanted to hold a security token it's just not clear how they would do that under the good control location law so 15c3-3-3 and so there's just a lot of there's a lot of confusion there and I think getting approvals like this is interesting

I'm more interested, actually, in why the other approvals have not been kind of pushed through. So if anyone out there wants to get in touch with us and wants to talk a little bit more about what's going on with FINRA in this approval process, I think it would be a pretty interesting conversation. Maybe we'll have them on the podcast. Yeah, let's cover it for sure. And then another new story that I thought was interesting. So Allison Davis, who's really influential in the crypto asset, blockchain ecosystem, has just joined the board of directors at Silicon Valley Bank, which is obviously a bank that's involved with a number of startups. I think most of our companies use SVB. So she has held leadership

roles at AT Kearney, McKinsey. She was head of strategy at Barclays, Global Investors, as well as the CFO there. And she's an active investor in the ecosystem through blockchain co-investors, which are really nice firm and building a great franchise over there. She's on the advisory board of a bunch of startups in the space. So I think it's a great ad. I mean, what a really good addition to a board of directors to have that voice in the room talking about, you know, what some of these companies are going through, what banking services they need. And then just what this digital transformation is going to look like more broadly. I think she's just very well positioned to do that. So I think this is a really important hire. Yeah, she's a great advocate for crypto. So this is an awesome role for her to

get. All right. So moving on. What else happened this week? Any TV appearances you paid particular attention to? There's so many. There's just so much good content this week. I think that's people are spending this their time in quarantine, just creating content, which is, which is pretty cool. So Paul Trudeau-Jones went on CNBC to talk about his kind of Bitcoin thesis. We'll put a link in the show notes. It was great. He is a really endearing southern accent. It's awesome.

Yeah, he's very disarming and he really just broke it down very clearly. Yeah, it's a great appearance. I highly recommended. We also have Chamath. Chimath is like on the content circuit like crazy these days. But I always watch him because he's so just entertaining. I don't know. I can't get enough of Chamath.

Joe Kernan in that Chimoth hit revealed that he owns Bitcoin. He was like, I have to disclose. I own Bitcoin. Yeah, I mean, that wasn't exactly a surprise. Pretty good. Pretty good. Everyone's getting orange-pilled all at the same time. Did you read Matt Wang from Paradigms piece, Bitcoin for the Open Minded Skeptic? I thought that was really good. Yeah, really well done. You know, we still need these introductory pieces. We sometimes forget what it's like not to know anything about Bitcoin. And it's important that we have material, which explains the fundamental value proposition for Bitcoin in a simple manner, assuming limited familiarity. And so heavily

recommend Matt's letter. It's really good and quite concise as well. You know, like sometimes the Bitcoin theses go on for like 50 pages. I've been guilty of doing that stuff too. but this is a very concise and solid piece. What's that saying from Michael Scott in the office? Explain it to me like I'm eight. Actually, explain it to me like I'm five. Yeah, I don't think a five-year-old would be able to grasp this. But it's a good point around, you know,

we have to make some of these things more accessible. I think some of what we're talking about even on this podcast is inaccessible, but we have to rant about the SAFT, so we have no choice. Yeah, we kind of assume familiarity. Our listeners are highly intellectual. breed. They are. They are. Speaking of highly intellectual, Hasu wrote another great piece for Derbit Insights. Yeah. So he has a new blog called The Future of Money Could Be Discretionary. And it's great. So he looks at Maker and says they should actually impose negative interest rates, which is kind of funny. So

Maker is having a deflationary crisis right now. So you have like the real world deflationary crisis. and then you have many versions playing out on our crypto central banks. So they've had an issue with dye trading at premium to par, which normally you'd think, well, why don't they just issue a bunch of dye out of thin air and push the price to eat? You know, it's rare that you have a problem because your money is worth too much because there's no encumbrance to creating more. But I guess for legal reasons, they can't do that.

And so the problem is that technically die doesn't have a way to impose negative interest rates, although they could, right? There's nothing really stopping them from doing it. And so Hoss's conclusion from all this is that actually we're about to enter the golden age of monetary policy with new sort of non-discretionary rules for monetary systems. Now that we have blockchains, we have smart contracts. In theory, you could encode any sort of rule into the monetary policy. of your protocol, not just Bitcoins like capped issuance or, you know, a commitment to a stable issuance. You could do all sorts of rules, which I think makes a ton of sense. Yeah, anything that Hasu writes I listen to, or I read rather, I think that he's just one of the

most original thinkers in the space, just very first principle kind of builds it up himself from those first principles. So I'd recommend checking this out. I think it's really interesting. You could see some projects like following some of this advice actually Yeah, so I played in a poker game Poker tournament put on by Paradigm this weekend And it wasn't like there was no prize It was just for I don't know for the glory I guess

And unsurprisingly, Hasu being the ex poker pro That he has won the tournament Oh wow In fairness I did get fourth so Wow. You're not on the podium. Not quite. Yeah.

So I went all in with Queen Queen against someone with 7-7 pre-flop, right? Okay. And he flopped four of a kind, which is something I don't think has ever happened to me. Wow. That's tough. Yeah.

So I felt a little hard done by because I was like a heavy favorite in that hand. That's interesting. So but not playing for like even a little bit of Bitcoin, like a couple Satoshes? Yeah, so I guess you can't do that or something in this country. I don't know how it works. So, yeah, it was just for play chips, basically.

Yeah, now you can't do that, but investing $1.8 billion in an unregistered security is cool. Yeah, if you're big enough, I guess you can get away with it. What a golden age of podcasts we're in. Did you listen to any of these podcasts that we're putting out in the newsletter this week? So there are some good ones. So the problem is that I don't commute anymore. I don't have a commute. So when would I get the chance to listen to a podcast?

That's my podcast listening time, you know? So I've been listening while I run or I got a Peloton. So I listen to some of these podcasts on the Peloton, actually. I can't listen to a podcast while I run. It's not safe. You know, you shouldn't do that actually. Oh, wow. Well, there are some great ones.

So we had, so Amanda Fabiano, former coworker at Fidelity, her title is Director of Bitcoin Mining, is probably the best title I've ever heard in my life. She was on a pod with Chris Beddixon. Bendixen. I never say his name right on Unchain. They talked about the having. By the way,

we haven't talked about the having at all and we're like 30 minutes into this podcast. There was a Bitcoin halving this week. The having happened. It was really cool. There was like a little mini holiday. A bunch of people got on live streams all day. It was really fun.

I enjoyed it. Nothing actually happened, really, aside from the block reward, So the price didn't really move very much, which kind of exactly as expected. So I don't know if we can say that any of these models that claim that price is a function of issuance are debunked yet. But, you know, if you mechanically look at the models, they effectively posit that the price should have doubled on the halving and didn't. So that's a strike against the model. But we'll give it time.

Maybe the models will jam themselves. Does the model not also imply that the price goes to infinity? Infinity, yeah, to infinity. So how do we feel about that? I mean, I wouldn't complain, though. You know, if any of these models actually ended up being true, you know, I guess I'd be intellectually defeated, but, you know, I'd be happy. So it would be okay consolation.

Yeah, let's just think about the model a little bit in the context of like pick an extreme end of either of them. and if one of them's infinity, like maybe let's just calm down a little bit. Yeah, so the various having hypotheses, you know, I guess maybe the markets are more efficient that people give them credit for. I don't know. Has anybody written anything about that or, you know, like. The mission efficient markets guy. I don't know.

I hope that Dan Moorhead is right, actually. So he went on a podcast this week. I liked it. All these, like macro guys are really good. Novigratz, Moorhead, Raupol, they're really good. We're going to get more macro guys into this fold here pretty soon, I think, with this Tudor Jones news, especially. But Moorhead went on and said that Bitcoin could be at 115k next year, which, you know, that's good. That would be fine.

I don't know where they got these numbers from, though. Like, why 115 specifically, you know? It's a good number. It's a good number. I mean, I'm not going to complain. Again, I'm not going to complain. It's just where does the number come from? All right.

So we're heading into another weekend. I have some tips, actually, on things that you, everyone should check out is the Michael Jordan documentary. It's been excellent so far. Episode seven was probably my favorite documentary hour of, I've ever seen. It was just awesome. That's fiat culture, Matt. Why is that fiat culture?

You should be reading, you know, treaties on money by Rothbard and so on. that's well I am I am actually reading a bunch of interesting things I there's actually a new audible book that came out called Kings of Crypto by jeff john roberts it's about the early days of coin base so started doing that one I didn't know about that yeah that just came out actually I just started listening to it this morning um I read band of brothers that was an awesome book I've been reading peter zahan's new book on geopolitics disunited nations it's called Yeah, I like him. But what's the, you know, is there a word for, you know, someone that you, let's say you're listening to someone and you think everything they're saying makes a ton of sense.

And then they start talking about something that you know a lot about and they don't make any sense whatsoever. And so it makes you question everything that they've ever said. Yeah, there is a word for that actually, typically in the context of the press. I don't know what the word is though. But I have that with Peter Zahan because he went on Pomp's podcast, which I thought was a really good podcast. And by the way, Pomp is like crushing podcasts. He's like, what a great podcast host he is. He's like churning out so much good content these days.

It's just called the Pomp podcast now, too. How lucky is he that his name is like something that's related to like the price of Bitcoin going up? Like, what are the odds? I don't know. He's like doing an exceptional job. I listen to everything he puts out. But so he had Peter Zahan on and they were talking about kind of like the doing the Patrick O'Shaughnessy thing, like talking about different countries.

and what's going on there and what the outlook is. And then Zahan started talking about Bitcoin. He's like, yeah, I'm not like, I don't think it's going to be as big as everyone thing because I'm not sold on like the mining thing. The mining thing doesn't work. And I was just kind of like, come on, man. Like, don't. Know your audience, man.

Like, you're on a Bitcoin podcast right now. What are you doing? Pomp was nice to him. He didn't, like, jump in and question him, which I guess would have been awkward. But, yeah, it's, that's, he's a, like, I've read some of his stuff too. I think that's really, um, he has an interesting perspective for sure. All these guys, the write books about geopolitics, like they all seem to trace back to Stratfor. Say more about that.

Well, so do you ever read like the, that book, the next hundred years or the next 10 years? Yeah, I have. I've read both. Yeah. So those are both traced back to Stratford. Peter Zahun worked to Stratford. That thing is like a content factory for like long-term geopolitics predictions. Yeah, those are some of the most thought-provoking books I've ever read, actually. Yeah, the consistent theme is that, like, the USA is amazing and is never going to fail and is a great empire. So, I mean, I guess you love to hear it, but I don't know if it's true. Let's go.

Just pump the tires. Let's go. Put more money. It's going to be fun. Yeah, we can still win. They tend to really emphasize, like, the deepwater navy. That's really key here. Deepwater Navy, we got both coasts.

We got the Pacific. We got the Atlantic. The agricultural heartlands. We have, you know, this like lots of rivers. It's always heavily indexed on geography, which I find to be kind of interesting. Yeah. And then we get the work ethic. Oh, yeah. Yeah, we do work pretty hard, I guess. You know, give Americans some credit for that. It's certainly like, you know, comforting to hear. I don't know if any of it's true. Well, the risky book was the next 10 years because people kind of, you know, we're like 10 years in right now. Yeah, because you can be wrong.

You can be wrong within 10 years. You can't be wrong. You talk about the next 100 years. No, you can't be. No one's going to go back in fact check you. But yeah, I think he talked about Poland becoming like a big regional power. Like Turkey becoming a big regional power. Yeah, Turkey was like our enemy, I think.

He said Mexico too. He said Japan would have like a renaissance kind of thing. The next war would be all space. He'd be like fighting in space. That was cool. like that. Maybe the space force was inspired by that book. It's possible. I like the idea of having like a battle over the moon. It was very like when I read that, I was like, I could see that. Yeah, but the Bitcoin satellite would be potentially impaired. That'd be catastrophic.

We're up there like mining gold on asteroids. It's a very futuristic feel to his books. Yeah, I'm, I totally disagree with a lot of the space mining stuff because you need a way to efficiently vent heat. in space and space doesn't have a lot of matter so you can't really vent heat so like it seems like implementation detail though there's structural flaws with the space mining hypothesis i just want to get way ahead of that before anybody tries to do it or raises a saff to do it or anything well i think there's a tesla saft uh in the works on some of this stuff it's coming Tesla's stock is behaving like an ICO. It's, yeah, it really is.

Same contempt for securities laws, too. Yeah, that's true. All right, you want to plug any of our podcasts before we say, say happy weekend? So we did two podcasts this week. We did one with Matt Alborg, who spends a lot of time covering P-to-P markets in Latin America and Africa. So got a lot of really good feedback on that one. And then we did one with Patrick Duggan, who is the guy that coined the phrase

crypto dollarization back in the day. So both of those are part of our crypto dollarization miniseries, which rest assured, we're going to add more episodes to. It's maybe not quite a mini series anymore. Might just be a series because we keep adding episodes. Might be its own podcast. I mean, there's so much to talk about. Yeah, it turns out it's like people really love the idea.

It makes sense. Now everyone's talking about, you know, Ethereum being displaced by the stable coin invasion. It's like a foreign currency and you don't have an army or capital controls. You can't stop the invasion. You know, potentially Ethereum being marginalized on its own chain. Kind of interesting hypothesis. So not only is dollarization happening in the physical world, it's also happening on these blockchains. Those are two really good conversations.

So I'm looking forward to the next installment. The one on Monday, we're going to drop an episode. I won't reveal the guest yet, but we're going to talk about derivatives contracts in the mining space. So hash right derivatives and difficulty swaps and things like that. I had a lot of fun with that one. It's a really hot topic these days. These things are finally being productized.

People speculate about it forever. Now we're talking real financial products. For sure. All right. So I think that's it for the week. Everyone have a safe weekend and we will see you next week